AGREEMENT AND
PLAN OF REORGANIZATION
DATED AUGUST , 1996
BY AND AMONG
AMERINET FINANCIAL SYSTEMS, INC.,
XXXXX XXXXXXXX ENTERTAINMENT, INC.,
REAL ESTATE TELEVISION NETWORK, INC.
AND
AMERINET, INC.
TABLE OF CONTENTS
PAGE
1. Certain Definitions. . . . . . . . . . . . . . . . . . . . 1
1.1 "Affiliate". . . . . . . . . . . . . . . . . . . . . . . 1
1.2 "ANFS Financial Statements" . . . . . . . . . . . . . . 1
1.3 "ANFS Products/Services" . . . . . . . . . . . . . . . . 1
1.4 "ANFS Series A Stock". . . . . . . . . . . . . . . . . . 2
1.5 "Closing". . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 "Closing Date" . . . . . . . . . . . . . . . . . . . . . 2
1.7 "Code" . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 "Commission" . . . . . . . . . . . . . . . . . . . . . . 2
1.9 "Dissenting Shares". . . . . . . . . . . . . . . . . . . 2
1.10 "Effective Time" . . . . . . . . . . . . . . . . . . . . 2
1.11 "GAAP" . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 "JNE Escrow Shares". . . . . . . . . . . . . . . . . . . 2
1.13 "Material Adverse Effect". . . . . . . . . . . . . . . . 2
1.14 "Notice of Claim". . . . . . . . . . . . . . . . . . . . 2
1.15 "Notice of Objection". . . . . . . . . . . . . . . . . . 2
1.16 "RETN Common Stock". . . . . . . . . . . . . . . . . . . 2
1.17 "RETN Disclosure Schedule" . . . . . . . . . . . . . . . 2
1.18 "RETN Financial Statements". . . . . . . . . . . . . . . 3
1.19 "RETN Products/Services" . . . . . . . . . . . . . . . . 3
1.20 "Securities Act" . . . . . . . . . . . . . . . . . . . . 3
1.21 "Transaction Documents". . . . . . . . . . . . . . . . . 3
1.22 "AMERINET Disclosure Schedule" . . . . . . . . . . . . . 3
2. Plan of Reorganization . . . . . . . . . . . . . . . . . . 3
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 ANFS Series A Stock. . . . . . . . . . . . . . . . . . . 4
2.3 Conversion of Shares . . . . . . . . . . . . . . . . . . 4
2.4 Fractional Shares. . . . . . . . . . . . . . . . . . . . 4
2.5 Escrow Agreement . . . . . . . . . . . . . . . . . . . . 4
2.6 Contingent Shares. . . . . . . . . . . . . . . . . . . . 5
2.7 The Closing. . . . . . . . . . . . . . . . . . . . . . . 5
2.8 Effective Time . . . . . . . . . . . . . . . . . . . . . 5
2.9 Tax Free Reorganization. . . . . . . . . . . . . . . . . 5
3. Representations and Warranties of JNE and RETN . . . . . . 5
3.1 Organization . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . 6
3.3 Power, Authority and Validity. . . . . . . . . . . . . . 6
3.4 Financial Statements . . . . . . . . . . . . . . . . . . 7
3.5 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Tax-Free Reorganization. . . . . . . . . . . . . . . . . 8
3.7 Absence of Certain Changes or Events . . . . . . . . . . 8
3.8 Title and Related Matters. . . . . . . . . . . . . . . .10
3.9 Proprietary Rights . . . . . . . . . . . . . . . . . . .10
3.10 Employee Benefit Plans . . . . . . . . . . . . . . . . .12
3.11 Bank Accounts. . . . . . . . . . . . . . . . . . . . . .12
3.12 Contracts. . . . . . . . . . . . . . . . . . . . . . . .12
3.13 Insider Transactions . . . . . . . . . . . . . . . . . .14
3.14 Insurance. . . . . . . . . . . . . . . . . . . . . . . .14
3.15 Disputes and Litigation. . . . . . . . . . . . . . . . .14
3.16 Compliance with Laws . . . . . . . . . . . . . . . . . .14
3.17 Subsidiaries . . . . . . . . . . . . . . . . . . . . . .15
3.18 Environmental Matters. . . . . . . . . . . . . . . . . .15
3.19 Corporate Documents. . . . . . . . . . . . . . . . . . .16
3.20 No Brokers . . . . . . . . . . . . . . . . . . . . . . .16
3.21 Disclosure . . . . . . . . . . . . . . . . . . . . . . .16
4. Representations and Warranties of ANFS and AMERINET. . . .16
4.1 Corporate Existence and Authority of ANFS. . . . . . . .17
4.2 Capitalization of ANFS . . . . . . . . . . . . . . . . .17
4.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . .17
4.4 Execution of Agreement . . . . . . . . . . . . . . . . .17
4.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . .18
4.6 Disputes and Litigation. . . . . . . . . . . . . . . . .18
4.7 Compliance with Laws . . . . . . . . . . . . . . . . . .19
4.8 Guaranties . . . . . . . . . . . . . . . . . . . . . . .19
5. Preclosing Covenants of RETN and JNE . . . . . . . . . . .19
5.1 Notices and Approvals. . . . . . . . . . . . . . . . . .19
5.2 Employment Agreements, Other Commitments Terminated. . .19
5.3 Advice of Changes. . . . . . . . . . . . . . . . . . . .19
5.4 Information for ANFS s Statements and Applications.. . .20
5.5 Conduct of Business by RETN. . . . . . . . . . . . . . .20
6. Mutual Covenants . . . . . . . . . . . . . . . . . . . . .21
6.1 No Public Announcement . . . . . . . . . . . . . . . . .21
6.2 Other Negotiations . . . . . . . . . . . . . . . . . . .21
6.3 Due Diligence, Investigation, and Audits . . . . . . . .22
6.4 Regulatory Filings; Consents; Reasonable Efforts . . . .22
6.5 Further Assurances . . . . . . . . . . . . . . . . . . .22
7. Closing Matters. . . . . . . . . . . . . . . . . . . . . .22
7.1 Filing of Certificate of Merger. . . . . . . . . . . . .22
7.2 Exchange of Certificates . . . . . . . . . . . . . . . .23
7.3 Delivery of Contingent Shares. . . . . . . . . . . . . .23
7.4 Delivery of Documents. . . . . . . . . . . . . . . . . .23
8. Conditions to RETN's Obligations . . . . . . . . . . . . .23
8.1 Accuracy of Representations and Warranties . . . . . . .23
8.2 Covenants. . . . . . . . . . . . . . . . . . . . . . . .23
8.3 No Litigation. . . . . . . . . . . . . . . . . . . . . .23
8.4 No Adverse Development . . . . . . . . . . . . . . . . .24
8.5 Authorizations . . . . . . . . . . . . . . . . . . . . .24
8.6 Government Consents. . . . . . . . . . . . . . . . . . .24
8.7 Opinion of AMERINET's Counsel. . . . . . . . . . . . . .24
8.8 Filing of Certificate of Merger. . . . . . . . . . . . .24
8.9 Registration Rights Agreement. . . . . . . . . . . . . .24
9. Conditions to ANFS' and AMERINET's Obligations . . . . . .24
9.1 Accuracy of Representations and Warranties . . . . . . .24
9.2 Covenants. . . . . . . . . . . . . . . . . . . . . . . .25
9.3 No Litigation. . . . . . . . . . . . . . . . . . . . . .25
9.4 Authorizations . . . . . . . . . . . . . . . . . . . . .25
9.5 No Adverse Development.. . . . . . . . . . . . . . . . .25
9.6 Government Consents. . . . . . . . . . . . . . . . . . .25
9.7 Opinion of RETN's Counsel. . . . . . . . . . . . . . . .25
9.8 Filing of Certificate of Merger. . . . . . . . . . . . .25
10. Termination of Agreement . . . .. . . . . . . . . . . . .25
10.1 Termination. . . . . . . . . . . . . . . . . . . . . . .25
10.2 Liability for Termination. . . . . . . . . . . . . . . .26
10.3 Certain Effects of Termination . . . . . . . . . . . . .26
10.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . .26
11. Indemnification. . . .. . . . . . . . . . . . . . . . . .27
11.1 Survival of Representations, Warranties, Covenants and
Agreements . . . . . . . . . . . . . . . . . . . . . . .27
11.2 Indemnification by JNE . . . . . . . . . . . . . . . . .27
11.3 Indemnification by ANFS and AMERINET . . . . . . . . . .27
11.4 Claims for Indemnification.. . . . . . . . . . . . . . .28
11.5 Arbitration. . . . . . . . . . . . . . . . . . . . . . .28
11.6 Limitation on Indemnification. . . . . . . . . . . . . .29
11.7 Escrow . . . . . . . . . . . . . . . . . . . . . . . . .29
12. Miscellaneous. . . . . . . . . . . . . . . . . . . . . .30
12.1 Governing Laws . . . . . . . . . . . . . . . . . . . . .30
12.2 Binding upon Successors and Assigns. . . . . . . . . . .30
12.3 Severability . . . . . . . . . . . . . . . . . . . . . .30
12.4 Entire Agreement . . . . . . . . . . . . . . . . . . . .31
12.5 Counterparts . . . . . . . . . . . . . . . . . . . . . .31
12.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . .31
12.7 Amendment and Waivers. . . . . . . . . . . . . . . . . .31
12.8 Survival of Agreements . . . . . . . . . . . . . . . . .31
12.9 No Waiver. . . . . . . . . . . . . . . . . . . . . . . .31
12.10 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . .31
12.11 Notices. . . . . . . . . . . . . . . . . . . . . . . . .32
12.12 Time . . . . . . . . . . . . . . . . . . . . . . . . . .32
12.13 Construction of Agreement. . . . . . . . . . . . . . . .33
12.14 No Joint Venture . . . . . . . . . . . . . . . . . . . .33
12.15 Pronouns . . . . . . . . . . . . . . . . . . . . . . . .33
12.16 Further Assurances . . . . . . . . . . . . . . . . . . .33
12.17 Absence of Third-Party Beneficiary Rights. . . . . . . .33
Exhibits and Schedules
Exhibit A Certificate of Merger
Exhibit B Certificate of Incorporation
Exhibit C Form of Legal Opinion to be Delivered by
Counsel to RETN
Exhibit D Form of Legal Opinion to be Delivered by
Counsel to AMERINET
AMERINET Schedule
RETN Schedule
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is
entered into this day of August, 1996, by and among AMERINET
FINANCIAL SYSTEMS, INC., a Florida [Delaware?] corporation ("ANFS"),
XXXXX XXXXXXXX ENTERTAINMENT, INC., a Colorado corporation ("JNE"),
REAL ESTATE TELEVISION NETWORK, INC., a Nevada corporation ("RETN"),
and AMERINET, INC., a Delaware corporation ("AMERINET" and
"Surviving Corporation").
RECITALS
A. RETN is a wholly-owned subsidiary of JNE and AMERINET is a
wholly-owned subsidiary of ANFS.
B. Subject to and in accordance with the terms and conditions
of this Agreement and pursuant to the Certificate of Merger attached
hereto as Exhibit A ("Certificate of Merger"), the parties intend
that RETN will merge with and into AMERINET (the "Merger"), whereby
at the Effective Time, all of the RETN Common Stock will be
converted into one million (1,000,000) ANFS Series A Preferred Stock
Shares.
C. For federal income tax purposes, it is intended that the
Merger shall qualify as a tax free reorganization within the meaning
of Section368(a)(2)(D) of the Code.
D. The parties hereto desire to set forth certain
representations, warranties and covenants made by each to the other
as an inducement to the consummation of the Merger.
AGREEMENT
NOW, THEREFORE, in reliance on the foregoing recitals and in and
for the consideration and mutual covenants set forth herein, the
parties agree as follows:
1. Certain Definitions.
1.1 "Affiliate" shall have the meaning set forth in the rules
and regulations promulgated by the Commission pursuant to the
Securities Act.
1.2 "ANFS Financial Statements" shall mean ANFS' unaudited
balance sheet as of June 30, 1996, and statements of operations,
stockholders' equity and cash flow for the six (6) month period
then-ended, and the audited balance sheet as of December 31, 1995,
and statements of operations, stockholder's equity and cash flow for
the twelve (12) month period then ended.
1.3 "ANFS Products/Services" shall mean all products or services
which have been, or are being, marketed by AMERINET or are currently
under development, and all trade secrets, copyrights, trademarks,
trade names and other proprietary rights related to such products or
services.
1.4 "ANFS Series A Stock" shall mean the Series A Preferred
Stock of ANFS issued to JNE in the Merger, the rights of which are
described in Section 2.2.
1.5 "Closing" shall mean the closing of the transactions
contemplated by this Agreement.
1.6 "Closing Date" shall mean the date of the Closing.
1.7 "Code" shall mean the United States Internal Revenue Code of
1986, as amended.
1.8 "Commission" shall mean the United States Securities and
Exchange Commission.
1.9 "Dissenting Shares" shall mean those shares held by holders
who perfect their appraisal rights under the applicable state laws.
1.10 "Effective Time" shall mean the date and time of the
effectiveness of the Merger under Delaware law.
1.11 "GAAP" shall mean generally accepted accounting principles.
1.12 "JNE Escrow Shares" shall mean the shares of ANFS Series A
Stock issued to JNE in the Merger and deposited in escrow pursuant
to Section 2.5.
1.13 "Material Adverse Effect" shall mean an effect on the
operations, assets or financial condition of an entity considered as
a whole which would lead a reasonable business person to conclude
that entering into the Merger would not be advisable in light of the
effect.
1.14 "Notice of Claim" shall mean a notice of a claim of
indemnification arising under Section 11.
1.15 "Notice of Dbjection" shall mean a notice of an objection to
a claim of indemnification arising under Section 11.
1.16 "RETN Common Stock" shall mean all of the outstanding shares
of Common Stock of RETN.
1.17 "RETN Disclosure Schedule" shall mean the disclosure
schedule provided to ANFS and AMERINET by JNE and RETN disclosing
such items and matters as are required to be disclosed under this
Agreement.
1.18 "RETN Financial Statements" shall mean RETN's unaudited
balance sheet as of June 30, 1996, and statements of operations,
stockholders' equity and cash flow for the six (6) month period
then-ended, and the audited balance sheet as of December 31, 1995,
and statements of operations, stockholder's equity and cash flow for
the twelve (12) month period then ended.
1.19 "RETN Products/Services" shall mean all products or services
which have been, or are being, marketed by RETN, or are currently
under development, and all patents, patent applications, trade
secrets, copyrights, trademarks, trade names and other proprietary
rights related to such products or services.
1.20 "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and
regulations thereunder, all as the same shall be in effect at the time.
1.21 "Transaction Documents" shall mean all documents or
agreements attached as an exhibit or schedule hereto, and set forth
on the Table of Contents.
1.22 "AMERINET Disclosure Schedule" shall mean the disclosure
schedule provided to JNE and RETN by ANFS and AMERINET disclosing
such items and matters as are required to be disclosed under this
Agreement.
2. Plan of Reorganization.
2.1 The Merger. Subject to the terms and conditions of this
Agreement and the Certificate of Merger, RETN shall be merged with
and into AMERINET in accordance with the applicable provisions of
the laws of the State of Delaware, and with the terms and conditions
of this Agreement and the Certificate of Merger, so that:
(a) At the Effective Time (as defined in Section 2.7
(below)), RETN shall be merged with and into AMERINET. As a result
of the Merger, the separate corporate existence of RETN shall cease,
and AMERINET shall continue as the surviving corporation, and shall
succeed to and assume all of the rights and obligations of RETN in
accordance with the laws of Delaware.
(b) The Certificate of Incorporation and Bylaws of
AMERINET in effect immediately prior to the Effective Time shall be
the Certificate of Incorporation and Bylaws, respectively, of the
Surviving Corporation after the Effective Time unless and until
further amended as provided by law.
(c) Subject to the terms of this Agreement, the directors
and officers of AMERINET immediately prior to the Effective Time
shall be the directors and officers of the Surviving Corporation
after the Effective Time. Such directors and officers shall hold
their position until the election and qualification of their
respective successors or until their tenure is otherwise terminated
in accordance with the Bylaws of the Surviving Corporation.
2.2 ANFS SERIES A STOCK. The ANFS Series A Stock shall have the
following preferred rights:
(a) The ANFS Series A Stock shall have no voting rights
except as required by law and as provided in AMERINET'S Certificate
of Incorporation attached hereto as Exhibit B.
(b) Each of the Preferred Shares will have a liquidation
preference of Dollars ($ ) per share.
Following the payment of the foregoing liquidation preference, the
Preferred Shares will participate with the ANFS Common Stock equally
on a share-for-share basis in any remaining liquidating distributions.
(c) Each of the Preferred Shares will have an annual,
noncumulative dividend preference equal to Dollars
($ ) per share. Following the payment of this dividend
preference in any year, the Preferred Shares will participate with
the ANFS Common Stock equally on a share-for-share basis in any
remaining dividend distributions.
(d) The Preferred Shares will automatically convert into
ANFS Common Stock, on a one-for-one basis, upon the closing of an
underwritten public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended, covering the
offering and sale of shares of Common Stock for the account of ANFS
(other than a registration statement effected solely to implement an
employee benefit plan, a transaction in which Rule 145 of the
Securities and Exchange Commission is applicable or any other form
or type of registration in which the shares of Common Stock issuable
upon conversion of the shares of ANFS Series A Stock cannot be
included pursuant to the Securities and Exchange Commission rules or
practices) which results in aggregate net cash proceeds to ANFS of
at least $20,000,000 and at a per share price of at least $ per
share (appropriately adjusted for subdivisions, combinations and
stock dividends on the Common Stock).
2.3 Conversion of Shares. Each share of RETN Common Stock,
issued and outstanding immediately prior to the Effective Time,
will, by virtue of the Merger, and at the Effective Time, and
without further action on the part of any holder thereof, be
converted into one thousand (1,000) shares of fully paid and
nonassessable shares of ANFS Series A Stock.
2.4 Fractional Shares. No fractional shares of ANFS Series A
Stock will be issued in connection with the Merger.
2.5 Escrow Agreement. At the Effective Time, certificates
representing thirty-seven and one-half percent (37.5%) of the shares
of the ANFS Series A Stock issued to JNE in the Merger shall be
deposited in escrow. The JNE Escrow Shares shall be held as
collateral for the indemnification obligations of RETN and JNE under
Section 11 and pursuant to the provisions of an escrow agreement to
be entered into between the parties, with the terms of such
agreement to be mutually agreed upon, which terms shall not be
inconsistent with the terms set forth in this Agreement.
2.6 Contingent Shares. JNE shall be issued an additional Five
Hundred Thousand (500,000) ANFS Series A Stock shares (the
"Contingent Shares") on the six month anniversary date following the
Closing Date (the "Contingent Share Date") if, on, or before such
anniversary, RETN shall have sold, delivered and received payment
subsequent to the Closing Date for not less than real estate
satellite systems to new clients and ANFS shall have raised not less
than $ in equity financing following the Closing.
2.7 The Closing. Subject to termination of this Agreement as
provided in Section 10 (below), the Closing shall take place at the
offices of Pezzola & Xxxxxx, Lake Xxxxxxx Plaza, 1999 Xxxxxxxx
Street, Oakland, California, as soon as possible upon the
satisfaction or waiver of all conditions set forth in Sections 8 and
9 hereof, or such other time and place as is mutually agreeable to
the parties.
2.8 Effective Time. Simultaneously with the Closing, the
Certificate of Merger shall be filed in the office of the Secretary
of State of the State of Delaware. The Merger shall become
effective immediately upon the filing of the Certificate of Merger
with such office.
2.9 Tax Free Reorganization. The parties intend to adopt this
Agreement as a tax-free plan of reorganization and to consummate the
Merger in accordance with the provisions of Section368(a)(2)(D) of
the Code. Each party agrees that it will not take or assert any
position on any tax return, report or otherwise which is
inconsistent with the qualification of the Merger as a
reorganization within the meaning of Section368(a) of the Code.
Except for cash paid in lieu of fractional shares, no consideration
that could constitute "other property" within the meaning of
Section356 of the Code is being paid by AMERINET for the RETN Common
Stock. In addition, AMERINET represents now, and as of the Closing
Date, that it presently intends to continue RETN's historic business
or use a significant portion of RETN's business assets in a business.
3. Representations and Warranties of JNE and RETN. Except as
otherwise set forth in the RETN Disclosure Schedule attached hereto,
JNE and RETN jointly and severally represent and warrant to ANFS and
AMERINET as set forth below. No fact or circumstance disclosed
shall constitute an exception to these representations and
warranties unless such fact or circumstance is set forth in the RETN
Disclosure Schedule or such supplements thereto as may mutually be
agreed upon in writing by JNE, RETN, ANFS and AMERINET.
3.1 Organization. RETN and JNE are corporations duly organized,
validly existing and in good standing under the laws of the state of
incorporation of such entity and have
the corporate power and authority to carry on their respective
businesses as it is now being conducted. RETN and JNE are duly
qualified or licensed to do business and are in good standing in
each jurisdiction in which the nature of their respective businesses
or properties makes such qualification or licensing necessary except
where the failure to be so qualified would not have a Material Adverse
Effect on RETN and JNE. The RETN Disclosure Schedule contains a true
and complete listing of the locations of all sales offices, manufacturing
facilities, and any other offices or facilities of RETN, and a true
and complete list of all states in which RETN maintains any
employees. The RETN Disclosure Schedule contains a true and
complete list of all states in which RETN is duly qualified to
transact business as a foreign corporation. True and complete
copies of RETN's Articles of Incorporation and Bylaws, as in effect
on the date hereof and as to be in effect as of the Closing, have
been provided to ANFS, AMERINET or its representatives.
3.2 Capitalization.
(a) The authorized capital of RETN will consist, prior to
the Closing, of shares of Common Stock, of which
one thousand (1,000) shares will be issued and outstanding. JNE is
the record and beneficial owner of all such shares of RETN Common
Stock, free and clear of any and all claims, liens, encumbrances or
security interests.
(b) Except as set forth in the RETN Disclosure Schedule,
RETN does not have outstanding any preemptive rights, subscription
rights, options, warrants, rights to convert or exchange, capital
stock equivalents, or other rights to purchase or otherwise acquire
any RETN capital stock or other securities.
(c) All of the issued and outstanding shares of RETN
capital stock have been duly authorized, validly issued, are fully
paid and nonassessable, and such capital stock has been issued in
full compliance with all applicable federal and state securities
laws. None of RETN's issued and outstanding shares of capital stock
are subject to repurchase or redemption rights.
(d) Except for any restrictions imposed by applicable
state and federal securities laws, there is no right of first
refusal, option, or other restriction on transfer applicable to any
shares of RETN's capital stock.
(e) RETN is not under any obligation to register under the
Securities Act any shares of its capital stock or any other of its
securities that might be issued in the future if the Merger were not
consummated.
(f) RETN is not a party or subject to any agreement or
understanding (and, to JNE's and RETN's actual knowledge, there is
no agreement or understanding between or among any persons) that
affects or relates to the voting or giving of written consent with
respect to any security.
3.3 Power, Authority and Validity. JNE and RETN have the
corporate power to enter into this Agreement and the other
Transaction Documents to which they are parties and to carry out
their obligations hereunder and thereunder. The execution and
delivery of this Agreement and the Transaction Documents and the
consummation of the transactions contemplated hereby and thereby
have been duly authorized by the Boards of Directors of JNE and RETN
and no other corporate proceedings on the part of RETN are necessary
to authorize this Agreement, the other Transaction Documents and the
transactions contemplated herein and therein. JNE and RETN are not
subject to, or obligated under, any charter, bylaw or contract
provision or any license, franchise or permit, or subject to any
order or decree, which would be breached or violated by or in
conflict with its executing and carrying out this Agreement and the
transactions contemplated hereunder and under the Transaction
Documents. Except for (i) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which
RETN is qualified to do business, and (ii) filings under applicable
securities laws, no consent of any person who is a party to a
contract which is material to RETN's business, nor consent of any
governmental authority, is required to be obtained on the part of
RETN to permit the transactions contemplated herein and to permit
RETN to continue the business activities of RETN as previously
conducted by RETN without a Material Adverse Effect. This Agreement
is, and the other Transaction Documents when executed and delivered
by JNE and RETN shall be, the valid and binding obligations of JNE
and RETN, enforceable in accordance with their respective terms.
3.4 FINANCIAL STATEMENTS.
(a) RETN has delivered to ANFS copies of the RETN
Financial Statements.
(b) The RETN Financial Statements are complete and in
accordance with the books and records of RETN and present fairly the
financial position of RETN as of its historical dates. The RETN
Financial Statements have been prepared in accordance with GAAP
(except for the absence of footnotes) applied on a basis consistent
with prior periods. Except and to the extent reflected or reserved
against in such balance sheets (including the notes thereto), RETN
does not have, as of the dates of such balance sheets, any
liabilities or obligations (absolute or contingent) of a nature
required or customarily reflected in a balance sheet (or the notes
thereto) prepared in accordance with GAAP. The reserves, if any,
reflected on the RETN Financial Statements are adequate in light of
the contingencies with respect to which they are made.
(c) RETN has no debt, liability, or obligation of any
nature, whether accrued, absolute, contingent, or otherwise, and
whether due or to become due, that is not reflected or reserved
against in the RETN Financial Statements, except for those (i) that
may have been incurred after the date of the RETN Financial
Statements; or (ii) that are not required by GAAP to be included in
a balance sheet or the notes thereto, except that RETN has not
established any reserves with respect to the costs and fees
associated with this Agreement, the other Transaction Documents, and
the transactions contemplated hereby and thereby. All
material debts, liabilities, and obligations incurred after the
date of the RETN Financial Statements were incurred in the ordinary
course of business, and are usual and normal in amount both individually
and in the aggregate.
3.5 Tax matters.
(a) RETN has fully and timely, properly and accurately
filed all tax returns and reports required to be filed by it,
including all federal, foreign, state and local tax returns and
estimates for all years and periods (and portions thereof) for which
any such returns, reports or estimates were due. All such returns,
reports and estimates were prepared in the manner required by
applicable law. All income, sales, use, occupation, property or
other taxes or assessments due from RETN have been paid. There are
no pending assessments, asserted deficiencies or claims for
additional taxes that have not been paid. The reserves for taxes,
if any, reflected on the RETN Financial Statements are adequate and
there are no tax liens on any property or assets of RETN. There
have been no audits or examinations of any tax returns or reports by
any applicable governmental agency. No state of facts exists or has
existed which would constitute grounds for the assessment of any
penalty or of any further tax liability beyond that shown on the
respective tax reports, returns or estimates. There are no
outstanding agreements or waivers extending the statutory period of
limitation applicable to any federal, state or local income tax
return or report for any period.
(b) All taxes which RETN has been required to collect or
withhold have been duly withheld or collected and, to the extent
required, have been paid to the proper taxing authority.
(c) RETN is not a party to any tax-sharing agreement or
similar arrangement with any other party.
(d) At no time has RETN been included in the federal
consolidated income tax return of any affiliated group of corporations.
(e) No payment which RETN is obliged to pay to any
director, officer, employee or independent contractor pursuant to
the terms of an employment agreement, severance agreement or
otherwise will constitute an excess parachute payment as defined in
Section280G of the Code.
(f) RETN is not currently under any contractual obligation
to pay any tax obligations of, or with respect to any transaction
relating to, any other person or to indemnify any other person with
respect to any tax.
3.6 Tax-Free Reorganization.
(a) Neither RETN nor JNE has taken or agreed to take any
action that would prevent the Merger from constituting a
reorganization qualifying under the provisions of Section368(a) of
the Code.
(b) There is no present plan or intention by JNE to sell,
exchange or otherwise dispose of the ANFS Series A Stock to be
received in the Merger.
(c) Neither JNE nor RETN is an investment company as
defined in SectionSection368(a)(2)(F)(iii) and (iv) of the Code.
3.7 Absence of Certain Changes or Events. Since June 30, 1996,
RETN has not:
(a) suffered any material adverse change in its financial
condition or in the operations of its business, nor any material
adverse changes in its balance sheet, (with the RETN Financial
Statements and any subsequent balance sheet analyzed as if each had
been prepared according to GAAP), including but not limited to cash
distributions or material decreases in the net assets of RETN;
(b) suffered any damage, destruction or loss, whether
covered by insurance or not, materially and adversely affecting its
properties or business;
(c) granted or agreed to make any increase in the
compensation payable or to become payable by it to its officers or
employees, except those occurring in the ordinary course of
business;
(d) declared, set aside or paid any dividend or made any
other distribution on or in respect of the shares of its capital
stock or declared any direct or indirect redemption, retirement,
purchase or other acquisition by it of such shares;
(e) issued any shares of its capital stock or any
warrants, rights, options or entered into any commitment relating to
its shares except for the issuance of its pursuant to the exercise
of outstanding options;
(f) made any change in the accounting methods or practices
it follows, whether for general financial or tax purposes, or any
change in depreciation or amortization policies or rates adopted
therein;
(g) sold, leased, abandoned or otherwise disposed of any
real property or any machinery, equipment or other operating
property other than in the ordinary course of business;
(h) sold, assigned, transferred, licensed or otherwise
disposed of any patent, trademark, trade name, brand name, copyright
(or pending application for any patent,
trademark or copyright) invention, work of authorship, process,
know-how, formula or trade secret or interest thereunder or other
intangible asset except in the ordinary course of its business;
(i) suffered any labor dispute;
(j) engaged in any activity or entered into any material
commitment or transaction (including without limitation any
borrowing or capital expenditure) other than in the ordinary course
of business;
(k) incurred any liabilities except in the ordinary course
of business and consistent with past practice which would be
required to be disclosed in financial statements prepared in
accordance with GAAP;
(l) permitted or allowed any of its property or assets to
be subjected to any mortgage, deed of trust, pledge, lien, security
interest or other encumbrance of any kind, except those permitted
under Section 3.8 hereof, other than any purchase money security
interests incurred in the ordinary course of business;
(m) made any capital expenditure or commitment for
additions to property, plant or equipment individually in excess of
Ten Thousand Dollars ($10,000), or in the aggregate, in excess of
Fifty Thousand Dollars ($50,000);
(n) paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets to, or entered into
any agreement or arrangement with any of its Affiliates, officers,
directors or stockholder or any Affiliate or associate of any of the
foregoing;
(o) made any amendment to or terminated any agreement
which, if not so amended or terminated, would be required to be
disclosed on the RETN Disclosure Schedule; or
(p) agreed to take any action described in Sections 2.9,
3.6 or 3.7 or outside of its ordinary course of business or which
would constitute a breach of any of the representations contained in
this Agreement.
3.8 Title and Related Matters. RETN has good and marketable
title to all the properties, interests in properties and assets,
real and personal, reflected in the RETN Financial Statements or
acquired after the date of the RETN Financial Statements (except
properties, interests in properties and assets sold or otherwise
disposed of since the date of the RETN Financial Statements in the
ordinary course of business), free and clear of all mortgages,
liens, pledges, charges or encumbrances of any kind or character,
except the lien of current taxes not yet due and payable and except
for liens which in the aggregate do not secure more than Ten
Thousand Dollars ($10,000) in liabilities. The equipment of RETN
used in the operation of its business is in good operating condition
and repair. All real or personal property leases to which RETN is a
party are valid, binding, enforceable obligations of RETN effective
in accordance with
their respective terms. There is not under any of such leases any
existing material default or event of default or event which, with
notice or lapse of time or both, would constitute a material default.
The RETN Disclosure Schedule contains a description of all real and
personal property leased or owned by RETN, identifying such property and,
in the case of real property, stating the monthly rental due, term of lease
and square feet leased. True and correct copies of each of RETN's leases
have been provided to ANFS, AMERINET or its representatives.
3.9 Proprietary Rights.
(a) RETN owns all right, title and interest in and to, or
valid licenses for use of, all patents, copyrights, technology,
software, software tools, know-how, processes, trade secrets,
trademarks, service marks, trade names and other proprietary rights
used in or necessary for the conduct of RETN's business as conducted
to the date hereof or contemplated, including, without limitation,
the technology and all proprietary rights developed or discovered or
used in connection with or contained in the RETN Products/Services,
free and clear of all liens, claims and encumbrances (including
without limitation distribution rights) (all of which are referred
to as "RETN Proprietary Rights") and RETN has the right to transfer
all such rights to AMERINET as contemplated hereby. The foregoing
representation as it relates to RETN Third-Party Technology (as
hereinafter defined) is limited to RETN's interest pursuant to the
RETN Third-Party Licenses (as hereinafter defined), all of which are
valid and enforceable and in full force and effect and which grant
RETN such rights to the RETN Third-Party Technology as are employed
in or necessary to the business of RETN as conducted or proposed to
be conducted. The RETN Disclosure Schedule contains an accurate and
complete description of (i) all patents, trademarks (with separate
listings of registered and unregistered trademarks), trade names,
and registered copyrights in or related to the RETN Products/
Services, all applications and registration statements therefor, and
a list of all licenses and other agreements relating thereto; and
(ii) a list of all licenses and other agreements with third parties
(the "RETN Third-Party Licenses") relating to any inventions,
technology, know-how, or processes that RETN is licensed or
otherwise authorized by such third parties to use, market,
distribute or incorporate into products distributed by RETN (such
software, inventions, technology, know-how and processes are
collectively referred to as the "RETN Third-Party Technology").
RETN's trademark or trade name registrations related to the RETN
Products/Services and all of RETN's copyrights in any of the RETN
Products/Services are valid and in full force and effect, and
consummation of the transactions contemplated hereby will not alter
or impair any such rights. No claims have been asserted against
RETN (and RETN is not aware of any claims which are likely to be
asserted against it or which have been asserted against others) by
any person challenging RETN's use, possession, manufacture, sale,
provision or distribution of the RETN Products/Services under any
patents, trademarks, trade names, copyrights, trade secrets,
technology, know-how or processes utilized by RETN (including,
without limitation, the RETN Third-Party Technology) or challenging
or questioning the validity or effectiveness of any license or
agreement relating thereto (including, without limitation, the RETN
Third-Party Licenses). There is no valid basis for any claim of the
type specified in the immediately preceding sentence which could in
any material way relate to or interfere with the currently planned
continued enhancement and exploitation by RETN of any of the RETN
Products/Services. None of the RETN
Products/Services nor the use or exploitation of any patents,
trademarks, trade names, copyrights, technology, know-how or processes
by RETN in its current business infringes on the rights of, constitutes
misappropriation of, or in any way involves unfair competition with respect
to, any proprietary information or intangible property right of any third
person or entity, including without limitation any patent, trade secret,
copyright, trademark or trade name.
(b) No employee of RETN is in violation of any term of any
employment contract, patent disclosure agreement or any other
contract or agreement relating to the relationship of any such
employee with RETN or, to JNE's or RETN's actual knowledge, any
other party because of the nature of the business conducted by RETN
or proposed to be conducted by RETN.
(c) Each person presently or previously employed by RETN
(including independent contractors, if any) with access to
confidential information has executed a confidentiality and
non-disclosure agreement pursuant to the form of agreement
previously provided to AMERINET or its representatives. Such
confidentiality and non-disclosure agreements constitute valid and
binding obligations of RETN and such person, enforceable in
accordance with their respective terms. Neither the execution or
delivery of such agreements, nor the carrying on of their business
as employees by such persons, nor the conduct of their business as
currently anticipated, will conflict with or result in a breach of
the terms, conditions or provisions of or constitute a default under
any contract, covenant or instrument under which any of such persons
is obligated.
(d) No product or service liability or warranty claims
which individually or in the aggregate could exceed One Thousand
Dollars ($1,000) individually or Ten Thousand ($10,000) in the
aggregate have been communicated to, or threatened against, RETN
nor, to RETN's actual knowledge, is there any specific situation,
set of facts or occurrence that provides a basis for such claim.
3.10 Employee Benefit Plans. There is no unfunded prior service
cost with respect to any bonus, deferred compensation, pension,
profit-sharing, retirement, stock purchase, stock option, or other
employee benefit or fringe benefit plans, whether formal or
informal, maintained by RETN. Each bonus, deferred compensation,
pension, profit-sharing, retirement, stock purchase, stock option,
and other employee benefit or fringe benefit plans, whether formal
or informal, maintained by RETN conforms to all applicable
requirements of the Employees Retirement Income Security Act of
1974. The RETN Disclosure Schedule lists and describes all
profit-sharing, bonus, incentive, deferred compensation, vacation,
severance pay, retirement, stock option, group insurance or other
plans (whether written or not) providing employee benefits.
3.11 Bank Accounts. The RETN Disclosure Schedule sets forth the
names and locations of all banks, trusts, companies, savings and
loan associations, and other financial institutions at which RETN
maintains accounts of any nature and the names of all persons
authorized to draw thereon or make withdrawals therefrom.
3.12 Contracts.
(a) RETN has no agreements, contracts or commitments that
provide for the sale, licensing or distribution by RETN of any of
its products, services, inventions, technology, know-how, trademarks
or trade names except in the ordinary course of its business.
(b) RETN has no agreements, contracts or commitments that
call for fixed and/or contingent payments or expenditures by or to
RETN of more than Ten Thousand Dollars ($10,000).
(c) Without limiting the provisions of Section 3.9 and
except for any agreements with ANFS or AMERINET, RETN has not
granted to any third party any exclusive rights of any kind with
respect to any of the RETN Products/Services.
(d) There is no outstanding sales contract, commitment or
proposal of RETN that is currently expected to result in any loss to
RETN (before allocation of overhead and administrative costs) upon
completion or performance thereof.
(e) RETN has no outstanding agreements, contracts or
commitments with officers, employees, agents, consultants, advisors,
salesmen, sales representatives, distributors or dealers that are
not cancelable by it on notice of not longer than thirty (30) days
and without liability, penalty or premium.
(f) RETN has no employment, independent contractor or
similar agreement, contract or commitment that is not terminable on
no more than thirty (30) days' notice without penalty or liability
of any type, including without limitation severance or termination pay.
(g) RETN has no currently effective collective bargaining
or union agreements, contracts or commitments.
(h) RETN is not restricted by agreement from competing
with any person or from carrying on its business anywhere in the world.
(i) RETN has not guaranteed any obligations of other
persons or made any agreements to acquire or guarantee any
obligations of other persons.
(j) RETN has no outstanding loan or advance to any person;
nor is it party to any line of credit, standby financing, revolving
credit or other similar financing arrangement of any sort which
would permit the borrowing by RETN of any sum not reflected in the
RETN Financial Statements.
(k) All material contracts, agreements and instruments to
which RETN is a party are valid, binding, in full force and effect,
and enforceable by RETN in accordance with their respective terms.
No such material contract, agreement or instrument contains any
material liquidated-damages, penalty or similar provision. RETN has
not received any notice from any party to any such material
contract, agreement or instrument that such party intends to cancel,
withdraw, modify or amend such contract, agreement or arrangement.
(l) The RETN Disclosure Schedule lists all material
agreements pursuant to which RETN has agreed to supply to any third
party RETN Products/Services.
(m) RETN is not in default under or in breach or violation
of, nor, to its actual knowledge, is there any valid basis for any
claim of default by RETN under, or breach or violation by RETN of,
any contract, commitment or restriction to which RETN is a party or
to which it or any of its properties is bound, where such defaults,
breaches, or violations would, in the aggregate, have a Material
Adverse Effect on RETN. To RETN's actual knowledge, no other party
is in default under or in breach or violation of, nor is there any
valid basis for any claim of default by any other party under or any
breach or violation by any other party of, any material contract,
commitment, or restriction to which RETN is bound or by which any of
its properties is bound, where such defaults, breaches, or
violations would, in the aggregate, have a Material Adverse Effect
on RETN.
(n) All agreements, contracts and commitments (the
"Material Contracts") listed or described in the RETN Disclosure
Schedule pursuant to this Section 3.12 are assumable, or will
otherwise be the property of, the Surviving Corporation following
the Merger without further action by the Surviving Corporation or
AMERINET. If any of the Material Contracts are not assumable by or
will not be the property of, the Surviving Corporation following the
Merger, then RETN has described in the RETN Disclosure Schedule such
actions as is necessary for assumption of the Material Contract by
the Surviving Corporation.
(o) True and correct copies of each document or instrument
described in the RETN Disclosure Schedule pursuant to this Section
3.12 have been made available to ANFS, AMERINET, or their
representatives.
3.13 Insider Transactions. No Affiliate of RETN or JNE has any
interest in (i) any material equipment or other property, real or
personal, tangible or intangible, including, without limitation, any
item of intellectual property, used in connection with or pertaining
to the business of RETN; or (ii) any creditor, supplier, customer,
agent or representative of RETN; provided, however, that no such
Affiliate or other person shall be deemed to have such an interest
solely by virtue of the ownership of less than one percent (1%) of
the outstanding stock or debt securities of any publicly-held
company, the stock or debt securities of which are traded on a
recognized stock exchange or quoted on the National Association of
Securities Dealers Automated Quotation System.
3.14 Insurance. The RETN Disclosure Schedule contains a list of
the principal policies of fire, liability and other forms of
insurance held by RETN.
3.15 Disputes and Litigation. There is no suit, action,
litigation, proceeding, investigation, claim, complaint, or
accusation pending, or to its knowledge threatened against or
affecting RETN or any of its properties, assets or business or to
which RETN is a party, in any court or before any arbitrator of any
kind or before or by any governmental agency (including, without
limitation, any federal, state, local, foreign or other governmental
department, commission, board, bureau, agency or instrumentality),
and to its knowledge, there is no basis for such suit, action,
litigation, proceeding, investigation, claim, complaint, or
accusation; (b) there is no pending or threatened change in any
environmental, zoning or building laws, regulations or ordinances
which affect or could affect RETN or any of its properties, assets
or businesses; and (c) there is no outstanding order, writ,
injunction, decree, judgment or award by any court, arbitrator or
governmental body against or affecting RETN or any of its
properties, assets or business. There is no litigation, proceeding,
investigation, claim, complaint or accusation, formal or informal,
or arbitration pending, or any of the aforesaid threatened, or any
contingent liability which would give rise to any right of
indemnification or similar right on the part of any director or
officer of RETN or any such person's heirs, executors or
administrators as against RETN.
3.16 Compliance with Laws. RETN has at all times been, and
presently is, in full compliance with, and has not received notice
of any claimed violation of, any applicable federal, state, local,
foreign and other laws, rules and regulations. RETN has filed all
returns, reports and other documents and furnished all information
required or requested by any federal, state, local or foreign
governmental agency and all such returns, reports, documents and
information are true and complete in all respects. All permits,
licenses, orders, franchises and approvals of all federal, state,
local or foreign governmental or regulatory bodies required of RETN
for the conduct of its business have been obtained, no violations
are or have been recorded in respect of any such permits, licenses,
orders, franchises and approvals, and there is no litigation,
proceeding, investigation, arbitration, claim, complaint or
accusation, formal or informal, pending or threatened, which may
revoke, limit, or question the validity, sufficiency or continuance
of any such permit, license, order, franchise or approval. Such
permits, licenses, orders, franchises and approvals are valid and
sufficient for all activities presently carried on by RETN.
3.17 Subsidiaries. RETN has no subsidiaries. RETN does not own
or control (directly or indirectly) any capital stock, bonds or
other securities of, and does not have any proprietary interest in,
any other corporation, general or limited partnership, firm,
association or business organization, entity or enterprise, and RETN
does not control (directly or indirectly) the management or policies
of any other corporation, partnership, firm, association or business
organization, entity or enterprise.
"Subsidiary" or "Subsidiaries" means all corporations,
trusts, partnerships, associations, joint ventures o other Persons,
as defined below, of which a corporation or any other Subsidiary of
such corporation owns not less than twenty percent (20%) of the
voting securities or other equity or of which such corporation or
any other Subsidiary of such corporation possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies, whether through ownership of voting shares,
management contracts or otherwise. "Person" means any individual,
corporation, trust, association, partnership, proprietorship, joint
venture or other entity. There are no Subsidiaries of RETN.
3.18 Environmental Matters.
(a) As of the date hereof, no underground storage tanks
are present under any property that RETN has at any time owned,
operated, occupied or leased. As of the date hereof except as set
forth in the RETN Disclosure Schedule, no material amount of any
substance that has been designated by any governmental entity or by
applicable federal, state or local law to be radioactive, toxic,
hazardous or otherwise a danger to health or the environment,
including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances
pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, or defined as a hazardous
waste pursuant to the United States Resource Conservation and
Recovery Act of 1976, as amended, and the regulations promulgated
pursuant to said laws (a "Hazardous Material"), excluding office,
janitorial and other immaterial supplies, are present, as a result
of the actions of RETN or, to RETN's actual knowledge, as a result
of any actions of any third party or otherwise, in, on or under any
property, including the land and the improvements, ground water and
surface water, that RETN have at any time owned, operated, occupied
or leased.
(b) At no time has RETN transported, stored, used,
manufactured, disposed of, released or exposed its employees or
others to Hazardous Materials in violation of any law in effect on
or before the Closing Date, nor has RETN disposed of, transported,
sold, or manufactured any product containing a Hazardous Material in
violation of any rule, regulation, treaty or statute promulgated by
any governmental entity to prohibit, regulate or control Hazardous
Materials or any Hazardous Material Activities.
(c) RETN currently holds all environmental approvals,
permits, licenses, clearances and consents necessary for the conduct
of its business as such business is currently being conducted, the
absence of which would be reasonably likely to have a Material
Adverse Effect on RETN.
(d) No action, proceeding, revocation proceeding,
amendment procedure, writ, injunction or claim is pending or, to the
actual knowledge of RETN, threatened concerning any Environmental
Permit. RETN is not aware of any fact or circumstance which
could involve it in any environmental litigation or impose upon it any
environmental liability which would be reasonably likely to have a
Material Adverse Effect on RETN.
3.19 Corporate Documents. RETN has furnished to ANFS for its
examination: (i) copies of its Certificate or Articles of
Incorporation and Bylaws; (ii) its Minute Book containing all
records required to be set forth of all proceedings, consents,
actions, and meetings of the stockholders, the board of directors
and any committees thereof; (iii) all permits, orders, and consents
issued by any regulatory agency with respect to RETN, or any
securities of RETN, and all applications for such permits, orders,
and consents; and (iv) its stock transfer books setting forth all
transfers of any capital stock. The corporate minute books, stock
certificate books, stock registers and other corporate records of
RETN are complete and accurate in all material respects, and the
signatures appearing on all documents contained therein are the true
signatures of the persons purporting to have signed the same. All
actions reflected in such books and records were duly and validly
taken in compliance with the laws of the applicable jurisdiction.
3.20 No Brokers. Neither JNE nor RETN is obligated for the
payment of fees or expenses of any broker or finder in connection
with the origin, negotiation or execution of this Agreement or the
Certificate of Merger or in connection with any transaction
contemplated hereby or thereby.
3.21 Disclosure. No statements by JNE or RETN contained in this
Agreement and the Exhibits and RETN Disclosure Schedule attached
hereto, any other Transaction Document or any written statement or
certificate furnished or to be furnished pursuant hereto or in
connection with the transactions contemplated hereby and thereby
(when read together) contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make
the statements contained herein or therein not misleading in light
of the circumstances under which they were made.
4. Representations and Warranties of ANFS and AMERINET. Except
as otherwise set forth in the AMERINET Disclosure Schedule attached
hereto, ANFS and AMERINET represents and warrants to RETN as set
forth below. No fact or circumstance disclosed to JNE shall
constitute an exception to these representations and warranties
unless such fact or circumstance is set forth in the AMERINET
Disclosure Schedule or such supplements thereto as may mutually be
agreed upon in writing by ANFS and JNE.
4.1 Corporate Existence and Authority of ANFS. ANFS is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Florida (Delaware?). It has all
requisite corporate power, franchises, licenses, permits and
authority to own its properties and assets and to carry on its
business as it has been and is being conducted. It is in good
standing in each state, nation or other
jurisdiction in each state, nation or other jurisdiction wherein
the character of the business transacted by it makes such
qualification necessary.
4.2 Capitalization of ANFS. The authorized equity securities of
ANFS consists of shares of common stock, of which
shares are issued and outstanding, and
shares of Preferred Stock, of which no shares are issued and
outstanding. No other shares of capital stock of ANFS are issued
and outstanding. All of the issued and outstanding shares have been
duly and validly issued in accordance and compliance with all
applicable laws, rules and regulations and are fully paid and
nonassessable. There are no options, warrants, rights, calls,
commitments, plans, contracts or other agreements of any character
granted or issued by ANFS which provide for the purchase, issuance
or transfer of any shares of the capital stock of ANFS nor are there
any outstanding securities granted or issued by ANFS that are
convertible into any shares of the equity securities of ANFS, and
none is authorized. ANFS is not obligated or committed to
purchase, redeem or otherwise acquire any of its equity. All
presently exercisable voting rights in ANFS are vested exclusively
in its outstanding shares of common stock, each share of which is
entitled to one vote on every matter to come before it's
shareholders, and other than as may be contemplated by this
Agreement, there are no voting trusts or other voting arrangements
with respect to any of ANFS s equity securities.
4.3 Subsidiaries. There are no Subsidiaries of ANFS, except as
identified in the AMERINET Disclosure Schedule.
4.4 Execution of Agreement. The execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated hereby will not: (a) violate, conflict with, modify or
cause any default under or acceleration of (or give any party any
right to declare any default or acceleration upon notice or passage
of time or both), in whole or in part, any charter, article of
incorporation, bylaw, mortgage, lien, deed of trust, indenture,
lease, agreement, instrument, order, injunction, decree, judgment,
law or any other restriction of any kind to which ANFS is a party or
to its knowledge by which it or any of its properties are bound; (b)
result in the creation of any security interest, lien, encumbrance,
adverse claim, proscription or restriction on any property or asset
(whether real, personal, mixed, tangible or intangible), right,
contract, agreement or business of ANFS; (c) to its knowledge
violate any law, rule or regulation of any federal or state
regulatory agency; or (d) to its knowledge permit any federal or
state regulatory agency to impose any restrictions or limitations of
any nature on ANFS or any of its actions.
4.5 Taxes.
(a) All taxes, assessments, fees, penalties, interest and
other governmental charges with respect to ANFS which have become
due and payable on the date hereof have been paid in full or
adequately reserved against by ANFS, (including without
limitation, income, property, sales, use, franchise, capital stock,
excise, added value, employees' income withholding, social security and
unemployment taxes), and all interest and penalties thereon with
respect to the periods then ended and for all periods thereto;
(b) There are no agreements, waivers or other
arrangements providing for an extension of time with respect to the
assessment of any tax or deficiency against ANFS, nor are there any
actions, suits, proceedings, investigations or claims now pending
against ANFS, nor are there any actions, suits, proceedings,
investigations or claims now pending against ANFS in respect of any
tax or assessment, or any matters under discussion with any federal,
state, local or foreign authority relating to any taxes or
assessments, or any claims for additional taxes or assessments
asserted by any such authority, and there is no basis for the
assertion of any additional taxes or assessments against ANFS, and
(c) The consummation of the transactions contemplated by
this Agreement will not result in the imposition of any additional
taxes on or assessments against ANFS.
4.6 Disputes and Litigation. There is no suit, action,
litigation, proceeding, investigation, claim, complaint, or
accusation pending, or to its knowledge threatened against or
affecting ANFS or any of its properties, assets or business or to
which ANFS is a party, in any court or before any arbitrator of any
kind or before or by any governmental agency (including, without
limitation, any federal, state, local, foreign or other governmental
department, commission, board, bureau, agency or instrumentality),
and to its knowledge there is no basis for such suit, action,
litigation, proceeding, investigation, claim, complaint, or
accusation; (b) to its knowledge there is no pending or threatened
change in any environmental, zoning or building laws, regulations or
ordinances which affect or could affect ANFS or any of its
properties, assets or businesses; and (c) there is no outstanding
order, writ, injunction, decree, judgment or award by any court,
arbitrator or governmental body against or affecting ANFS or any of
its properties, assets or business. To its knowledge, there is no
litigation, proceeding, investigation, claim, complaint or
accusation, formal or informal, or arbitration pending, or any of
the aforesaid threatened, or any contingent liability which would
give rise to any right of indemnification or similar right on the
part of any director or officer of ANFS or any such person's heirs,
executors or administrators as against ANFS.
4.7 Compliance with Laws. To its knowledge, ANFS has at all
times been, and presently is, in full compliance with, and has not
received notice of any claimed violation of, any applicable federal,
state, local, foreign and other laws, rules and regulations. ANFS
has filed all returns, reports and other documents and furnished all
information required or requested by any federal, state, local or
foreign governmental agency and all such returns, reports, documents
and information are true and complete in all respects. To its
knowledge, all permits, licenses, orders, franchises and approvals
of all federal, state, local or foreign governmental or regulatory
bodies required of ANFS for the conduct of its business have been
obtained, no violations are or have been recorded in respect of any
such permits, licenses, orders, franchises and approvals, and there
is no litigation, proceeding, investigation, arbitration, claim,
complaint or accusation, formal or informal, pending or threatened,
which may revoke, limit, or question the validity, sufficiency or
continuance of any such permit, license, order, franchise or
approval. Such permits, licenses, orders, franchises and approvals
are valid and sufficient for all activities presently carried on by
ANFS.
4.8 Guaranties. ANFS has not guaranteed any dividend,
obligation or indebtedness of any Person; nor has any Person
guaranteed any dividend, obligation or indebtedness of ANFS.
5. Preclosing Covenants of RETN and JNE.
5.1 Notices and Approvals. JNE agrees: (a) to give and to cause
RETN to give all notices to third parties which may be necessary or
deemed desirable by ANFS in connection with this Agreement and the
consummation of the transactions contemplated hereby; (b) to use its
best efforts to obtain and to cause RETN to obtain, all federal and
state governmental regulatory agency approvals, consents, permit,
authorizations, and orders necessary or deemed desirable by ANFS in
connection with this Agreement and the consummation of the
transaction contemplated hereby; and (c) to use its best efforts to
obtain, and to cause RETN to obtain, all consents and authorizations
of any other third parties necessary or deemed desirable by ANFS in
connection with this Agreement and the consummation of the
transactions contemplated hereby.
5.2 Employment Agreements, other Commitments Terminated. Prior
to the Closing, all employment agreements to which RETN is a party
shall be reviewed by RETN and ANFS and, as agreed between them,
either terminated prior to the Closing or assumed by AMERINET as of
the Closing with such modifications as may be acceptable to RETN,
ANFS and the employee party to such agreement.
5.3 Advice of Changes. RETN and JNE will promptly advise ANFS
in writing (i) of any event occurring subsequent to the date of this
Agreement which would render any representation or warranty of RETN
or JNE contained in this Agreement, if made on or as
of the date of such event or the Closing Date, untrue or inaccurate
in any material respect and (ii) of any material adverse change in
RETN's business, taken as a whole.
5.4 Information for ANFS's Statements and Applications. JNE and
RETN and their employees, accountants and attorneys shall cooperate
fully with ANFS in the preparation of any statements or applications
made by ANFS to any federal or state governmental regulatory agency
in connection with this Agreement and the transactions contemplated
hereby and to furnish ANFS with all information concerning JNE and
RETN necessary or deemed desirable by ANFS for inclusion in such
statements and applications, including, without limitation, all
requisite financial statements and schedules.
5.5 Conduct of Business by RETN. Until the Closing, RETN will
continue to conduct its business and maintain its business
relationships in the ordinary and usual course and will not, without
the prior written consent of ANFS:
(a) borrow any money which borrowings exceed in the
aggregate Ten Thousand Dollars ($10,000) or incur or commit to incur
any capital expenditures in excess of Ten Thousand Dollars ($10,000)
in the aggregate;
(b) lease, license, sell, transfer or encumber or permit
to be encumbered any asset, intellectual property right or other
property associated with the business of RETN (including sales or
transfers to Affiliates of RETN), except for sales of inventory in
the usual and ordinary course of business;
(c) dispose of any of its assets, except in the regular
and ordinary course of business;
(d) enter into any lease or contract for the purchase or
sale of any property, real or personal except in the ordinary course
of business;
(e) pay any bonus, increased salary, or special
remuneration to any officer or employee, including any amounts for
accrued but unpaid salary or bonuses (other than amounts not in
excess of normal payments made on a regular basis in prior periods);
(f) change accounting methods;
(g) declare, set aside or pay any cash or stock dividend
or other distribution in respect of capital, or redeem or otherwise
acquire any of its capital stock;
(h) amend or terminate any contract, agreement or license
to which it is a party except in the ordinary course of business;
(i) loan any amount to any person or entity, or guaranty
or act as a surety for any obligation;
(j) issue or sell any shares of its capital stock of any
class or any other of its securities, or issue or create any
warrants, obligations, subscriptions, options, convertible
securities, or other commitments to issue shares of capital stock,
other than stock options granted as part of existing stock option
program or pursuant to any recapitalization plan disclosed to and
approved by ANFS in its discretion;
(k) split or combine the outstanding shares of its capital
stock of any class or enter into any recapitalization affecting the
number of outstanding shares of its capital stock of any class or
affecting any other of its securities;
(l) amend its Certificate of Incorporation or Bylaws
except as necessary to carry out a recapitalization plan;
(m) make or change any election, change any annual
accounting period, adopt or change any accounting method, file any
amended tax return, enter into any closing agreement, settle any tax
claim or assessment, surrender any right to claim refund of taxes,
consent to any extension or waiver of the limitation period
applicable to any tax claim or assessment, or take any other action
or omit to take any action, if any such election, adoption, change,
amendment, agreement, settlement, surrender, consent or other action
or omission would have the effect of increasing the tax liability of
RETN;
(n) do anything that would cause there to be material
adverse changes in its Financial Statements (with such Financial
Statements analyzed as if it had been prepared according to GAAP,
and including but not limited to cash distributions or material
decreases in the net assets of RETN), except as would occur in the
ordinary course of RETN's business, between the date of the RETN
Financial Statements and the Closing Date; or
(o) agree to do any of the things described in the
preceding clauses Section 6.1(a) through (n).
6. Mutual Covenants.
6.1 No Public Announcement. The parties shall make no public
announcement concerning this Agreement, their discussions or any
other memos, letters or agreements between the parties relating to
the Merger until such time as they agree to the contents
of a mutually satisfactory press release which they intend to
publicly-release on the date of this Agreement. Either of the
parties, but only after reasonable consultation with the other, may
make disclosure if required under applicable law.
6.2 Other Negotiations. Between the date hereof and the
Closing, or such earlier date as ANFS and JNE mutually agree to
discontinue discussions of the Merger, neither ANFS nor JNE will
take any action to solicit, initiate, seek, encourage or support any
inquiry, proposal or offer from, furnish any information to, or
participate in any negotiations with, any corporation, partnership,
person or other entity or group (other than discussions pursuant to
this Agreement) regarding any acquisition, any merger or
consolidation with or involving RETN, or any acquisition of any
material portion of the stock or assets. JNE and ANFS agree that
any such negotiations in progress as of the date hereof will be
terminated or suspended during such period.
6.3 Due Diligence, Investigation, and Audits. At such time
prior to the Closing as may be reasonably requested, each party
shall make available to the other party and the other party's
employees, agents and representatives all information concerning the
operation, business and prospects of such party as may be reasonably
requested by the other party, including, without limitation, making
the working papers of such party's independent certified public
accountants available for inspection by the other party's
independent certified public accountants. Each party will cooperate
with the other party for the purpose of permitting the other party
to discuss such party's business and prospects with such party's
customers, creditors, suppliers and other persons having business
dealings with such party, subject to reasonable confidentiality
obligations between the parties.
6.4 Regulatory Filings; Consents; Reasonable Efforts. Subject
to the terms and conditions of this Agreement, JNE, RETN, ANFS and
AMERINET shall use their respective best efforts to (i) make all
necessary filings with respect to the Merger and this Agreement
under the Securities Act, and applicable blue sky or similar
securities laws and shall use all reasonable efforts to obtain
required approvals and clearances with respect thereto and shall
supply all additional information requested in connection therewith;
(ii) make merger notification or other appropriate filings with
federal, state or local governmental bodies or applicable foreign
governmental agencies and shall use all reasonable efforts to obtain
required approvals and clearances with respect thereto and shall
supply all additional information requested in connection therewith;
(iii) obtain all consents, waivers, approvals, authorizations and
orders required in connection with the authorization, execution and
delivery of this Agreement and the consummation of the Merger; and
(iv) take, or cause to be taken, all appropriate action, and do, or
cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement.
6.5 Further Assurances. Prior to and following the Closing,
each party agrees to cooperate fully with the other parties and to
execute such further instruments, documents and agreements and to
give such further written assurances, as may be reasonably requested
by any
other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect
the intents and purposes of this Agreement.
7. Closing Matters.
7.1 Filing of Certificate of Merger. On the date of the
Closing, but not prior to the Closing, the Certificate of Merger
shall be filed with the offices of the Secretary of State of the
State of Delaware and Nevada and the merger of RETN with and into
AMERINET shall be consummated.
7.2 Exchange of Certificates. At the Closing, JNE shall
exchange its RETN Common Stock certificate(s) for a certificate
representing the ANFS Series A Stock.
7.3 Delivery of Contingent Shares. Subject to fulfillment of
the conditions subsequent for the issuance of the Contingent Shares,
ANFS shall deliver a share certificate for the Contingent Shares to
JNE of the Contingent Shares Date.
7.4 Delivery of Documents. On or before the Closing, the
parties shall deliver the documents, and shall perform the acts,
which are set forth in Sections 8 and 9, as specified in such
Sections, including delivery of the counterpart signature pages of
the Transaction Documents executed by JNE, RETN, ANFS and/or
AMERINET, as the case may be. All documents which JNE or RETN shall
deliver or cause to be delivered shall be in form and substance
reasonably satisfactory to ANFS. All documents which ANFS or
AMERINET shall deliver or cause to be delivered shall be in form and
substance reasonably satisfactory to JNE.
8. Conditions to RETN's Obligations. Unless otherwise provided
below, JNE's and RETN's obligations to close the transactions
contemplated under this Agreement are subject to the fulfillment or
satisfaction by Closing of each of the following conditions (any one
or more of which may be waived by JNE, but only in a writing signed
by JNE):
8.1 Accuracy of Representations and Warranties. The
representations and warranties of ANFS and AMERINET set forth in
Section 4 shall be true in all material respects on and as of the
Closing with the same force and effect as if they had been made at
the Closing, and JNE shall receive a certificate to such effect
executed by the Presidents of ANFS and AMERINET.
8.2 Covenants. ANFS and AMERINET shall have performed and
complied with all of its covenants contained in Sections and
on or before the Closing, and JNE shall receive a certificate from
ANFS and AMERINET to such effect executed by the Presidents of ANFS
and AMERINET.
8.3 No Litigation. On and as of the Closing, no litigation or
proceeding shall be threatened or pending against ANFS or AMERINET
with the purpose or with the probable effect of enjoining or
preventing the consummation of any of the transactions contemplated
by this Agreement, and JNE shall receive a certificate to such
effect executed by the Presidents of ANFS and AMERINET.
8.4 No Adverse Development. There shall not have been any
material adverse changes in the financial condition, results of
operations, assets, liabilities, business or prospects of ANFS since
the date of this Agreement, and JNE shall receive a certificate to
such effect executed by the President of ANFS.
8.5 Authorizations. JNE shall have received from ANFS written
evidence that the execution, delivery and performance of ANFS' and
AMERINET's obligations under this Agreement and the Certificate of
Merger have been duly and validly approved and authorized by the
Board of Directors of ANFS.
8.6 Government Consents. There shall have been obtained at or
prior to the Closing such permits or authorizations, and there shall
have been taken such other action, as may be required by any
regulatory authority having jurisdiction over the parties and the
subject matter and the actions herein proposed to be taken.
8.7 Opinion of AMERINET's Counsel. At the Closing, JNE shall
have received from counsel to ANFS an opinion dated as of the
Closing Date in substantially the form attached hereto as Exhibit D.
8.8 Filing of Certificate of Merger. As of the Closing, the
Certificate of Merger shall have been filed with the Secretary of
State of the State of Delaware.
8.9 Registration Rights Agreement. As of the Closing, ANFS will
have entered into registration rights agreements with JNE that they
be included in any ANFS-initiated registrations of ANFS Series A
Stock, or Common Stock, subject to the right of ANFS in an
underwritten public offering to exclude all or a portion of such
stock should the underwriters determine that inclusion of such
shares would jeopardize the success of the offering; and provided,
however, that none of the shares of such holders shall be excluded
from the public offering unless a pro rata portion (based on the
number of shares of ANFS Series A Stock held by such parties
participating in the offering) of the shares of ANFS Class A
Preferred Stock (or the Common Stock exchanged therefore) not
acquired in this Merger are also excluded from the offering. The
registration rights agreements will also provide that JNE will not
sell, transfer or otherwise dispose of ANFS Series A Stock during
the one hundred eighty (180) day period following the effective date
of the initial public offering of ANFS.
9. Conditions to ANFS' and AMERINET'S Obligations. Unless
otherwise provided below, the obligations of ANFS and AMERINET are
subject to the fulfillment or satisfaction by Closing, of each of
the following conditions (any one or more of which may be waived by
ANFS, but only in a writing signed by ANFS):
9.1 Accuracy of Representations and Warranties. The
representations and warranties of JNE and RETN contained in Section
2 shall be true in all material respects on and as of the Closing
with the same force and effect as if they had been made at the
Closing, and ANFS shall receive a certificate from JNE and RETN to
such effect with respect to the representations and warranties of
RETN executed by the Presidents of JNE and RETN.
9.2 Covenants. JNE and RETN shall have performed and complied
with all of its covenants contained in Sections 5 and 6 on or before
the Closing, and AFNS shall receive a certificate from JNE and RETN
to such effect signed by the Presidents of JNE and RETN.
9.3 No Litigation. On and as of the Closing, no litigation or
proceeding shall be threatened or pending against JNE or RETN for
the purpose or with the probable effect of enjoining or preventing
the consummation of any of the transactions contemplated by this
Agreement, and ANFS shall receive a certificate from JNE and RETN to
such effect signed by the Presidents of JNE and RETN.
9.4 Authorizations. ANFS shall have received from RETN written
evidence that the execution, delivery and performance of this
Agreement and the Certificate of Merger have been duly and validly
approved and authorized by RETN's Board of Directors and by JNE's
Board of Directors. ANFS shall have received a certificate from
RETN to such effect signed by the President of RETN.
9.5 No Adverse Development. There shall not have been any
material adverse changes in the financial condition, results of
operations, assets, liabilities, business or prospects of RETN since
the date of this Agreement. ANFS shall have received a certificate
from RETN to such effect signed by the President of RETN.
9.6 Government Consents. There shall have been obtained at or
prior to the Closing such permits or authorizations, and there shall
have been taken such other action, as may be required by any
regulatory authority having jurisdiction over the parties and the
subject matter and the actions herein proposed to be taken
9.7 Opinion of RETN's Counsel. At the Closing, AFNS shall have
received from counsel to RETN, an opinion dated the Closing Date in
substantially the form attached hereto as Exhibit C.
9.8 Filing of Certificate of Merger. As of the Closing, the
Certificate of Merger shall have been filed with the Secretary of
State of the State of Delaware.
10. Termination of Agreement.
10.1 Termination. This Agreement may be terminated at any time
prior to the Closing by the mutual written consent of each of the
parties hereto. This Agreement may also be terminated and abandoned:
(a) By ANFS or AMERINET if any of the conditions precedent
to ANFS' and AMERINET's obligations pursuant to Section 9 shall not
have been fulfilled at and as of the Closing.
(b) By JNE or RETN if any of the conditions precedent to
JNE's and RETN's obligations pursuant to Section 8 above shall not
have been fulfilled at and as of the Closing.
(c) By either JNE or ANFS, if the Merger is not effected
by , 1996.
Any termination of this Agreement under this Section 10.1 shall be
effected by the delivery of written notice of the terminating party
to the other parties hereto.
10.2 Liability for Termination. Any termination of this
Agreement pursuant to this Section 10 shall be without further
obligation or liability upon any party in favor of any other party
hereto; provided, that if such termination shall result from the
willful failure of a party to carry out its obligations under this
Agreement, then such party shall be liable for losses incurred by
the other parties as set forth in Section 10.5. The provisions of
this Section 10.2 shall survive termination.
10.3 Certain Effects of Termination. In the event of the
termination of this Agreement as provided in Section 10.1 hereof,
each party, if so requested by the other party, will (i) return
promptly every document (other than documents publicly available)
furnished to it by the other party (or any subsidiary, division,
associate or affiliate of such other party) in connection with the
transactions contemplated hereby, whether so obtained before or
after the execution of this Agreement, and any copies thereof which
may have been made, and will cause its representatives and any
representatives of financial institutions and investors and others
to whom such documents were furnished promptly to return such
documents and any copies thereof any of them may have made; or (ii)
destroy such documents and cause its representatives and such other
representatives to destroy such documents, and such party shall
deliver a certificate executed by its president or vice president
stating to such effect; and
10.4 Remedies. No party shall be limited to the termination
right granted in Section 10.1 hereto by reason of the nonfulfillment
of any condition to such party's closing obligations but may, in the
alternative, elect to do one of the following:
(a) proceed to close despite the nonfulfillment of any
closing condition, it being understood that consummation of the
transactions contemplated hereby shall be deemed a waiver of any
misrepresentation or breach of warranty or covenant and of any
party's rights and remedies with respect thereto to the extent that
the other party shall have actual knowledge of such
misrepresentation or breach and the Closing shall nonetheless take
place; or
(b) decline to close, terminate this Agreement as provided
in Section 10.1 hereof, and thereafter seek damages to the extent
permitted in Section 10.5 hereof.
11. Indemnification.
11.1 Survival of Representations, Warranties, Covenants and
Agreements.
(a) The Escrow as provided in Section 2.5 shall terminate
on the later of (i) one (1) year after the Closing Date or (ii) the
date the first audit of ANFS's financial statements, which includes
the results of operations of AMERINET, has been completed and ANFS
has received a signed opinion from its independent auditors
certifying such financial statements (the "Escrow Termination
Date"). Except as set forth in below all warranties and
representations of the parties hereto shall terminate on the Escrow
Termination Date.
(b) The representations, warranties, covenants and
agreements of the parties contained in Sections 3 and 4 of this
Agreement or in any writing delivered pursuant to such sections, to
the extent that a breach or default in any such representations,
warranties, covenants or agreements is not as a result of fraud,
shall not terminate at, but rather shall survive, the Closing Date
and shall terminate on the Escrow Termination Date; provided,
however, that such representations, warranties, covenants and
agreements shall survive as to any claim or demand made prior to the
Escrow Termination Date until such claim or demand is fully paid or
otherwise resolved by the parties hereto in writing or by a court of
competent jurisdiction. Notwithstanding the foregoing, in the event
of fraud, or any breach of JNE's or RETN's representations set forth
in Section 3.2 (capitalization), the representations and warranties
of the parties hereto and their respective indemnity obligations
under this Section 11 shall not terminate.
11.2 Indemnification by JNE. JNE shall indemnify and hold
harmless ANFS, AMERINET, their directors and officers, and each
other person, if any, who controls ANFS or AMERINET within the
meaning of the Securities Act ("Controlling Persons") in respect of
any and all claims, losses, damages, liabilities, demands,
assessments, judgments, costs and expenses (including, without
limitation, settlement costs and any legal or other expenses for
investigating,
bringing or defending any actions or threatened
actions) reasonably incurred by ANFS or AMERINET, any of its
directors, officers or Controlling Persons in connection with any
misrepresentation or breach of any warranty made by JNE or RETN in
this Agreement or in any schedule, exhibit, certificate or other
instrument contemplated by this Agreement.
11.3 Indemnification by ANFS and AMERINET. ANFS and AMERINET
shall, jointly and severally, indemnify and hold harmless JNE in
respect of any and all claims, losses, damages, liabilities,
demands, assessments, judgments, costs and expenses (including,
without limitation, settlement costs and any legal or other expenses
for investigating, bringing or defending any actions or threatened
actions) reasonably incurred by JNE in connection with any
misrepresentation or breach of any warranty made by ANFS or AMERINET
in this Agreement or in any schedule, exhibit, certificate or other
instrument contemplated by this Agreement.
11.4 Claims for Indemnification.
(a) Whenever any claim shall arise for indemnification
under this Section 11, the indemnified party shall describe such
claim in a Notice of Claim to the other party and, when known,
specify the facts constituting the basis for such claim and the
amount or an estimate of the amount of such claim. Each Notice of
Claim shall (A) be signed by the indemnified party, (B) contain a
description of the claim, (C) specify the amount of such claim, and
(D) state that, in the opinion of the signer thereof, such Notice of
Claim is valid under the terms of Section 11 hereof, and is being
given in good faith.
(b) The indemnified party shall give the other party
prompt notice of any claim for indemnification hereunder resulting
from, or in connection with, any claim or Third-Party Claim and,
with respect to any Third-Party Claim, the indemnified party shall
undertake the defense thereof by representatives reasonably
satisfactory to the indemnified party and the other partie(s)
hereto. The indemnified party shall not have the right to settle or
compromise or enter into any binding agreement to settle or
compromise, or consent to entry of any judgment arising from, any
such claim or proceeding in its sole discretion without the prior
written consent of the other party. Each party shall have the right
to participate in any such defense of a Third-Party Claim with
advisory counsel of its own choosing at its own expense. In the
event the indemnified party, within a reasonable time after notice
of any Third-Party Claim, fails to defend, the other party shall
have the right to undertake the defense, compromise or settlement of
such Third-Party Claim on behalf of, and for the account of, JNE,
ANFS or AMERINET, at the expense and risk of all parties to the
extent of their liability set forth in Section 11. No party shall,
without the indemnified party's written consent, settle or
compromise any such Third-Party Claim or consent to entry of any
judgment that does not include, as an unconditional term thereof,
the giving by the claimant or the plaintiff to the indemnified
party, or affiliate or affiliates, as the case may be, an
unconditional release from all liability in respect of such
Third-Party Claim.
11.5 Arbitration. If a party makes a good faith determination
that a breach (or potential breach) of any of the confidentiality,
non-competition, or intellectual property rights provisions of this
Agreement by the other party may result in damages or consequences
that will be immediate, severe, and incapable of adequate redress
after the fact, so that a temporary restraining order or other
immediate injunctive relief is necessary for a realistic and
adequate remedy, that party may seek immediate injunctive relief
without first seeking relief through arbitration. After the court
has ruled on the request for injunctive relief, the parties will
thereafter proceed with arbitration of the dispute and stay the
litigation pending arbitration. Subject to the foregoing, any
dispute arising out of this Agreement, or its performance or breach,
shall be resolved by binding arbitration conducted by JAMS/Endispute
under the JAMS/Endispute Rules for Complex Arbitration (the "JAMS
Rules"). This arbitration provision is expressly made pursuant to
and shall be governed by the Federal Arbitration Act, 9 U.S.C.
Sections 1-14. The parties hereto agree that pursuant to Section 9
of the Federal Arbitration Act, a judgment of the United States
District Courts for the Northern District of California shall be
entered upon the award made pursuant to the arbitration. A single
arbitrator, who shall have the authority to allocate the costs of
any arbitration initiated under this paragraph, shall be selected
according to the JAMS Rules within ten (10) days of the submission
to JAMS/Endispute of the response to the statement of claim or the
date on which any such response is due, whichever is earlier. The
arbitrator shall conduct the arbitration in accordance with the
Federal Rules of Evidence. The arbitrator shall decide the amount
and extent of pre-hearing discovery which is appropriate. The
arbitrator shall have the power to enter any award of monetary
and/or injunctive relief (including the power issue permanent
injunctive relief and also the power to reconsider any prior request
for immediate injunctive relief by either of the parties and any
order as to immediate injunctive relief previously granted or denied
by a court in response to a request therefor by either of the
parties), including the power to render an award as provided in Rule
43 of the JAMS Rules; provided, however, that the arbitrator shall
not have the power to award punitive damages under any circumstances
(whether styled as punitive, exemplary, or treble damages, or any
penalty or punitive type of damages) regardless of whether such
damages may be available under applicable law, the parties hereby
waiving their rights to recover any such damages. The arbitrator
shall award the prevailing party its costs and reasonable attorneys'
fees, and the losing party shall bear the entire cost of the
arbitration, including the arbitrator's fees. All arbitration shall
be held in Ontario, California. In addition to the above court,
the arbitration award may be enforced in any court having
jurisdiction over the parties and the subject matter of the
arbitration. Notwithstanding the foregoing, the parties irrevocably
submit to the nonexclusive jurisdiction of the state and federal
courts situated where the respondent is domiciled or resides as of
the Effective Date in any action to enforce an arbitration award.
With respect to any request for immediate injunctive relief, that
state and federal courts in San Bernardino County, California shall
have exclusive jurisdiction and venue over any such disputes.
11.6 Limitation on Indemnification. No indemnified party
hereunder will be entitled to make a claim against any indemnifying
party under Section 11.2 or 11.3 unless and until (i) the aggregate
amount of losses indemnifiable by JNE exceeds Fifty Thousand Dollars
($50,000) and (ii) the aggregate amount of losses indemnifiable by
ANFS and/or AMERINET
exceeds Two Hundred Fifty Thousand Dollars
($250,000), respectively, and then only to the extent of the excess.
11.7 Escrow.
(a) JNE Escrow Shares shall be placed with an escrow
agent, satisfactory to AFNS and JNE for a period beginning on the
Closing Date and ending on the Escrow Termination Date, to be
disbursed solely upon the joint signatures of ANFS, AMERINET and
JNE, all as set forth below. Disbursements from the escrow shall be
made for the payment of amounts, if any, to satisfy the
indemnification rights of ANFS and AMERINET pursuant to Section 11
hereof.
(b) The JNE Escrow Shares shall be disbursed during the
term hereof at any time, or from time to time, as ANFS or AMERINET
may give JNE a Notice of Claim. Such Notice of Claim must be for a
specified amount.
(i) JNE may give AMERINET a written Notice of Objection:
(1) attaching a copy of such Notice of Claim; (2) stating that, in
the good faith opinion of JNE, the claim described in such Notice of
Claim is invalid (either in whole or in specified party) under the
terms of Section 11 hereof; (3) giving the reasons for the alleged
invalidity; and (4) stating that, based on such alleged invalidity,
JNE object to the payment of any portion of the JNE Escrow Shares to
the requesting party on account thereof. In the event that a Notice
of Objection alleges that a Notice of Claim is only partially
invalid, JNE, within thirty (30) days of the receipt of such Notice
of Claim, agrees to pay over to ANFS or AMERINET, as applicable,
that portion of the amounts specified in such Notice of Claim as to
which no objection is made. JNE is not required to agree to make
any payments to ANFS or AMERINET in respect of a Notice of Claim
that has been objected to in a Notice of Objection except as
provided in the immediately preceding sentence.
(ii) ANFS, AMERINET, RETN and JNE agree to submit to final
and binding arbitration any and all disputes JNE has specified in a
Notice of Objection or ANFS or AMERINET have specified in a Notice
of Claim to which JNE has not responded within thirty (30) days of
receipt of such Notice of Claim. Any such dispute is subject to
arbitration in accordance with the JAMS Rules as provided in Section
11 hereof.
(c) The escrow shall be terminated on the Escrow
Termination Date; provided, however, that the escrow may continue
beyond such date if ANFS or AMERINET has asserted an indemnification
claim, and any such claim remains unsatisfied.
12. Miscellaneous.
12.1 Governing Laws. It is the intention of the parties hereto
that the internal laws of the State of California (irrespective of
its choice of law principles) shall govern the validity of this
Agreement, the construction of its terms, and the interpretation and
enforcement of the rights and duties of the parties hereto.
12.2 Binding upon Successors and Assigns. Subject to, and unless
otherwise provided in, this Agreement, each and all of the
covenants, terms, provisions, and agreements contained herein shall
be binding upon, and inure to the benefit of, the permitted
successors, executors, heirs, representatives, administrators and
assigns of the parties hereto.
12.3 Severability. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be
invalid or unenforceable, the remainder of this Agreement and
application of such provision to other persons or circumstances
shall be interpreted so as best to reasonably effect the intent of
the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and
enforceable provision which will achieve, to the extent possible,
the economic, business and other purposes of the void or
unenforceable provision.
12.4 Entire Agreement. This Agreement, the exhibits hereto, the
documents referenced herein, and the exhibits thereto, constitute
the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersede all
prior and contemporaneous agreements or understandings, inducements
or conditions, express or implied, written or oral, between the
parties with respect hereto and thereto. The express terms hereof
control and supersede any course of performance or usage of the
trade inconsistent with any of the terms hereof.
12.5 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original as against any
party whose signature appears thereon and all of which together
shall constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually or
taken together, shall bear the signatures of all of the parties
reflected hereon as signatories.
12.6 Expenses. Except as provided to the contrary herein, each
party shall pay all of its own costs and expenses incurred with
respect to the negotiation, execution and delivery of this
Agreement, the exhibits hereto, and the other Transaction Documents.
12.7 Amendment and Waivers. Any term or provision of this
Agreement may be amended, and the observance of any term of this
Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only by a
writing signed by the party to be bound thereby. The waiver by a
party of any breach hereof for default in payment of any amount due
hereunder or default in the performance hereof shall not be deemed
to constitute a waiver of any other default or any succeeding breach
or default.
12.8 Survival of Agreements. All covenants, agreements,
representations and warranties made herein shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby notwithstanding any investigation
of the parties hereto and shall terminate on the date one year after
the Closing Date.
12.9 No Waiver. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right
of such party thereafter to enforce such provisions.
12.10 Attorneys' Fees. Should suit be brought to enforce or
interpret any part of this Agreement, the prevailing party shall be
entitled to recover, as an element of the costs of suit and not as
damages, reasonable attorneys' fees to be fixed by the court
(including without limitation, costs, expenses and fees on any
appeal). The prevailing party shall be the party entitled to
recover its costs of suit, regardless of whether such suit proceeds
to final judgment. A party not entitled to recover its costs shall
not be entitled to recover attorneys' fees. No sum for attorneys'
fees shall be counted in calculating the amount of a judgment for
purposes of determining if a party is entitled to recover costs or
attorneys' fees.
12.11 Notices. Any notice provided for or permitted under this
Agreement will be treated as having been given when (a) delivered
personally, (b) sent by confirmed telex or telecopy, (c) sent by
commercial overnight courier with written verification of receipt,
or (d) mailed postage prepaid by certified or registered mail,
return receipt requested, to the party to be notified, at the
address set forth below, or at such other place of which the other
party has been notified in accordance with the provisions of this
Section 12.11.
RETN:
Xxxxx Xxxxxxxx Entertainment, Inc.
0000 Xxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn. Xxx Xxxxxxxx
With copy to:
The Law Offices of M. Xxxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attn: M. Xxxxxxx Xxxxxx, Esq.
ANFS and AMERINET:
Xxxx X. Pembroke
AMERINET FINANCIAL SYSTEMS, INC.
0000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
With copy to:
Pezzola & Xxxxxx
Lake Xxxxxxx Plaza Bldg.
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Such notice will be treated as having been received upon actual
receipt.
12.12 Time. Time is of the essence of this Agreement.
12.13 Construction of Agreement. This Agreement has been
negotiated by the respective parties hereto and their attorneys and
the language hereof shall not be construed for or against any party.
The titles and headings herein are for reference purposes only and
shall not in any manner limit the construction of this Agreement
which shall be considered as a whole.
12.14 No Joint Venture. Nothing contained in this Agreement
shall be deemed or construed as creating a joint venture or
partnership between any of the parties hereto. No party is by
virtue of this Agreement authorized as an agent, employee or legal
representative of any other party. No party shall have the power to
control the activities and operations of any other and their status
is, and at all times, will continue to be, that of independent
contractors with respect to each other. No party shall have any
power or authority to bind or commit any other. No party shall hold
itself out as having any authority or relationship in contravention
of this Section 12.14.
12.15 Pronouns. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as the identity of the person, persons, entity
or entities may require.
12.16 Further Assurances. Each party agrees to cooperate
fully with the other parties and to execute such further
instruments, documents and agreements and to give such further
written assurances, as may be reasonably requested by any other
party to better evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement.
12.17 Absence of Third-Party Beneficiary Rights. No
provisions of this Agreement are intended, nor shall be interpreted,
to provide or create any third-party beneficiary
rights or any other rights of any kind in any client, customer,
affiliate, stockholder, partner of any party hereto or any other
person or entity except employees and stockholders of RETN specifically
referred to herein, and, except as so provided, all provisions hereof
shall be personal solely between the parties to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
AMERINET FINANCIAL SYSTEMS, INC.
By:
Title:
XXXXX XXXXXXXX ENTERTAINMENT, INC.
By:
Title:
AMERINET, INC.
By:
Title
REAL ESTATE TELEVISION NETOWRK, INC.
By:
Title
EXHIBIT A
CERTIFICATE OF MERGER
EXHIBIT B
CERTIFICATE OF INCORPORATION
COUNSEL TO RETN
EXHIBIT C
EXHIBIT D
FORM OF LEGAL OPINION TO BE DELIVERED BY
COUNSEL TO AMERINET
