UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
December 1, 1999
Date of Report (date of earliest event reported)
AmeriNet Group.com, Inc.(Exact name of registrant as specified in its chapter)
Delaware(State or other jurisdiction of incorporation
000-03718
(Commission File Number)
11-2050317 (IRS Employer Identification No.)
2500 North Military Trail, Suite 225-C; Boca Raton, Florida 33431
(Address of principal executive offices) (Zip Code)
902 Clint Moore Road, Suite 136-C; Boca Raton, Florida 33487 code(Former
name or former address, if changed since last report)
(561) 998-3435
Registrant's telephone number, including area
Dated December 15, 1999
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INFORMATION INCLUDED IN THE REPORT
AVAILABLE INFORMATION.
The public may read and copy any materials filed by the Registrant with
the Commission at the Commission's Public Reference Room at 450 Fifth Street,
Northwest, Washington, D.C. 20549. The public may obtain information on the
operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. The Commission maintains an Internet site that contains reports,
proxy and information statements, and other information regarding the Registrant
and other issuers that file reports electronically with the Commission, at
http://www.sec.gov. the Registrant's wholly owned operating subsidiaries,
Wriwebs.com, Inc., and Trilogy International, Inc., maintain web sites at
Www.wriwebs.com and www.trilogyonline.coM, respectively.
CAVEAT PERTAINING TO FORWARD LOOKING STATEMENTS
The Private Securities Litigate Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain of the statements contained
herein, which are not historical facts, are forward-looking statements with
respect to events, the occurrence of which involve risks and uncertainties.
These forward-looking statements may be impacted, either positively or
negatively, by various factors. Information concerning potential factors that
could affect the Registrant is detailed from time to time in the Registrant's
reports filed with the Commission. This report contains "forward looking
statements" relating to the Registrant's current expectations and beliefs. These
include statements concerning operations, performance, financial condition and
anticipated growth. For this purpose, any statements contained in this
information statement that are not statements of historical fact are
forward-looking statements. Without limiting the generality of the foregoing,
words such as "may", "will", "expect", "believe", "anticipate", "intend",
"could", "estimate", or "continue", or the negative or other variation thereof
or comparable terminology are intended to identify forward-looking statements.
These statements by their nature involve substantial risks and uncertainties
which are beyond the Registrant's control. Should one or more of these risks or
uncertainties materialize or should the Registrant's underlying assumptions
prove incorrect, actual outcomes and results could differ materially from those
indicated in the forward looking statements.
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TABLE OF CONTENTS
ITEM PAGE
Available information 2
Item 2 Acquisition or Disposition of Assets 4
Item 101 Description of Business 5
Item 102 Description of Property _
Item 103 Legal Proceedings _
Item 303 Management's Plan of Operation; Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 304 Changes in Accountants 15
Item 401 Directors and Executive Officers 16
Item 402 Executive Compensation 21
Item 403 Security Ownership of Certain Beneficial Owners and Management 24
Item 404 Certain Relationships and Related Transactions 27
Item 504 Risk Factors 28
Use of Proceeds 32
Item 701 Recent Sales of Unregistered Securities 33
Item 702 Indemnification _
Item 5 Other Events 34
Yankees Consulting Agreement 34
Amendment of Bylaws 34
Item 7 Financial Statements and Exhibits 35
Financial Statements of Businesses Acquired 35
Pro Forma Financial Information 37
Exhibits Required by Item 601 of Regulation SB 37
Signatures 38
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 1, 1999, the Registrant acquired Trilogy International, Inc., a
development stage Florida corporation (hereinafter referred to as Trilogy")
engaged in the business of selling pet care and human nutritional supplement
products through a network marketing (also referred to commonly as multi-level
marketing) program and over the Internet. The acquisition was effected by
merging Trilogy into a newly organized, wholly owned subsidiary of the
Registrant (Trilogy Acquisition Corporation, a Florida corporation), as a result
of which all of the capital stock of Trilogy was converted into 1,817,273 shares
of the Registrant's common stock, all outstanding Trilogy options and warrants
were converted into options and warrants to purchase 1/3 share of the
Registrant's common stock for every share of Trilogy capital stock covered
subject thereto, at an exercise price of $0.75 per share. At the time of the
acquisition, Trilogy had reserved 1,016,819 shares of its common stock for
issuance subject to outstanding, unexercised five year warrants (744,818 shares)
and ten year incentive stock options (272,001), there being no other obligations
directly or indirectly obligating Trilogy to issue any of its securities to any
person for any purpose; consequently, the Registrant has reserved 338,939 shares
of its common stock for issuance to former Trilogy option and warrant holders at
such time, if ever, that they elect to exercise their options or warrants. A
copy of the acquisition agreement, including exhibits and schedules thereto, is
filed as an exhibit to this report and the foregoing summary is qualified in its
entirety by reference thereto.
The following information pertaining to Trilogy has been provided to the
Registrant by Trilogy's management and is provided under headings based on
Commission Regulation S-B:
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ITEM 101 DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT.
Trilogy is a Florida based network marketing / e-commerce company that
provides products which enhance the quality of life for people, the planet and
our pets. Trilogy offers consumers an opportunity to own and operate their own
"turn-key" Internet and network marketing business selling the Trilogy products.
Trilogy's independent field representatives can develop a customer base and earn
retail profit and bonuses from the sale of products as well as building a sales
force and earn commissions on the sales of others in their organization.
Trilogy began by offering consumers a proprietary line of wholesome,
effective and non-toxic products for the pet care industry, sold under the
"Trilogy's Best Friends" label. The next step in the Trilogy business plan was
to offer products in the consumer health care market with a line of nutritional
supplements. The first product in the consumer health care line was Trilogy's
"Essence of Life Colostrum Formula with Astragalus." Trilogy is currently
negotiating with a number of companies to add other products.
Trilogy was incorporated in Florida effective August 3, 1998 and became
operational in July 1999. During that eleven month period, Trilogy developed a
business plan, built an infrastructure, hired professional staff, designed and
implemented their e-commerce website and created the marketing materials
necessary to launch the business. Due to the fact that Trilogy's e-commerce was
not fully operational until December 1, 1999, there has been minimal active
recruiting or significant training of independent field representatives.
Currently, Trilogy has 152 independent field representatives and has implemented
a plan to recruit and train leaders in the network marketing field to generate
sales momentum.
PRINCIPAL PRODUCTS OR SERVICES AND THEIR MARKETS
All of the following products are marketed under the Trilogy's "Best
Friends" label:
<TABLE>
<S> <C> <C> <C>
PRODUCT DESCRIPTION RETAIL MARKET
PRICE
Count Down Supports a healthy $25.95 Overweight dogs and cats
weight loss program
Agility with Vitamin, mineral $38.95 Senior dogs and cats and
Glucosamine and herbal formula large and long-backed dogs
healthy bones and joints
Skin and Coat Formula Multivitamin and mineral $27.95 Kittens and cats with skin and coat problems
for cats and Kittens with formula for healthy skin
Fish Oil and Taurine and coat
Advanced Multivitamin Supports dog's overall $23.95 All Puppies and dogs
and Mineral Formula well being and natural
with Colostrum defenses
Advanced Multivitamin Supports cat's overall $21.95 All kittens and cats
and Mineral Formula with well being and natural
with Colostrum defenses
Herbal Skin and Coat For normal or problem $15.95 All dogs, cats, ferrets and horses
Shampoo with Tea skin and coat
Tree Oil and Aloe Vera
Odor Remover Removes odors $11.95 Consumers who are pet owners or have
a need to remove household odors
Soothing Mist with Tea Natural skin relief for $11.95 Dogs, cats and ferrets of all ages
Tree Oil and Aloe Vera skin and coat
Herbal Shed Less Reduces excessive $21.95 Puppies, dogs, kittens, cats and ferrets
shedding
Sampler Package One of each product $226.50 Those who sign up as Trilogy
in the Trilogy's Best independent field representatives
Friends pet care line
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In addition, Trilogy offers the following products under Trilogy's "Essence
of Life" label:
PRODUCT DESCRIPTION RETAIL PRICE MARKET
Trilogy's Essence of Supports a healthy $26.95 Health conscious consumers of all ages
Life Colostrum Formula immune system
with Astragalus
Trilogy's Essence of A case of Essence of $323.40 Those who sign up as Trilogy independent
Life Colostrum Formula Life Colostrum Formula field representatives
with Astragalus Sampler with Astragalus
Package
</TABLE>
Independent field representatives are also encouraged to purchase a Trilogy
Replicator Internet E-commerce website cross linked to Trilogy's professionally
operated and maintained corporate website. The purchase price ($14.95) has been
waived for independent field representatives who elect to acquire the Trilogy
Replicator E-commerce Site prior to March 1, 2000. In addition to the purchase
price, independent field representatives who elect to acquire the Trilogy
Replicator E-commerce Site pay a monthly fee of $10.95.
DISTRIBUTION METHODS OF THE PRODUCTS OR SERVICES
Trilogy utilizes a network of independent field representatives throughout
the United States to distribute all of its products. The independent field
representatives pay a sign-up fee of $34.95 which grants them the conditional
right promote Trilogy products by either sending customers to their own
personalized Trilogy e-commerce site or by direct one-on-one sales. Trilogy
sells field representatives sales tools and promotional materials designed to
increase traffic to their web sites and to make professional one-on-one sales
presentations. Field Representatives can gain additional profit by growing their
sales force, thus continuously expanding Trilogy's distribution base (a
marketing program frequently described as network or multi-level marketing).
STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCT OR SERVICE
All products and services previously announced are currently available and
are being marketed. Trilogy expects to be regularly developing new products and
to be regularly considering new products developed by outside suppliers, in
order to provide its independent field representatives an expanding source of
quality products to sell to their expanding consumer markets. Trilogy
disseminates all information regarding new products and services through its
network of independent field representatives. This is done through the mail, via
phone conference calls, e-mail and faxes. To date, two articles have been
published on Trilogy. The National Association of Professional Pet Sitters, a
registered field representative of Trilogy, released an article in their
December 1999 newsletter which discussed the pet products available for sale and
the opportunity to profit by selling the products. Trilogy founders, Dennis and
Carol Berardi, were also interviewed for an article that appeared in the
December/January 2000 issue of Network Marketing Lifestyles magazine.
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COMPETITIVE BUSINESS CONDITIONS AND THE SMALL BUSINESS ISSUER'S COMPETITIVE
POSITION IN THE INDUSTRY AND METHODS OF COMPETITION
Currently, Trilogy competes in two very aggressive markets in the United
States, premium pet nutraceutical products and human nutritional supplements.
The field is characterized by a broad range of participants ranging from
multinational corporations to "mom and pop" businesses. Many competitors or
potential competitors are very well capitalized and staffed, and would have
strong advantages in competition with Trilogy for products, personnel and
consumers. While most of these are not currently in direct competition with
Trilogy, they can be expected to enter Trilogy's market niche and provide
serious competition as Trilogy experiences material success. Trilogy plans to
overcome such risks by establishing an early brand name recognition, product
identity and reputation for quality and reliability.
Trilogy markets a proprietary line of wholesome, effective, non-toxic
products for the multi-billion dollar pet care industry, sold under the
Trilogy's Best Friends label. Trilogy's pet products are formulated by
nationally recognized veterinarian, Jane R. Bicks, D.V.M., who uses only the
highest quality ingredients. Only a handful of network marketing companies offer
premium nutritional supplements for pets. Amway, Oxyfresh USA, Inc. and Body
Wise International may be considered direct competitors because they offer
similar product lines through network marketing.
Trilogy's human supplement, Essence of Life Colostrum Formula with
Astragalus, is formulated by Yale educated physician, Kamau Kokayi, M.D. The
product is designed to help boost immune function. Many nutritional oriented
companies offer supplements to boost the immune system. However, because the
ingredients in Trilogy's formula are so unique, the primary competitors are only
those companies which offer nutritional products containing colostrum. The major
competitor in this area is New Life Foods based in Marietta, Georgia. New Life
Foods offers colostrum in capsule, powder and liquid formats, chewable tablets
for children, nutritional bars and a skin cream. To the best of our knowledge,
there is only one other company on the Internet selling an immune boosting
nutritional supplement with both colostrum and astragalus. Matol International,
a network marketing company based in Lachine, Quebec, Canada, offers Biomune OFS
Plus, a nutritional supplement that combines both of these ingredients.
By stressing direct inter-personal contact and providing competitive
compensation and a professionally developed training program, Trilogy expects
that its independent field representatives will be motivated to continuously
increase their customer base and expand their sales force. This, in turn,
provides Trilogy with a competitive advantage against traditional retailers and
e-commerce companies by materially reducing Trilogy's corporate advertising
expenses and increasing its profit margins.
Notwithstanding the foregoing, despite Trilogy's best efforts to develop
and market its products, no assurances can be provided that it will successfully
overcome current or future competition.
SOURCES AND AVAILABILITY OF RAW MATERIALS AND THE NAMES OF PRINCIPAL SUPPLIERS
The only raw material purchased directly by Trilogy is dendritic salt which
is the main ingredient in Trilogy's Best Friends Odor Remover. This product is
purchased from Eco-aromatic Systems Inc. in Decatur, Illinois. Dendritic salt is
a simple salt compound which would be readily available at competitive prices
from other sources.
Trilogy's current principal product and component suppliers are: Innovative
Chemical Corporation, Amherst, New York; Pharma Chemie, Syracuse, Nebraska;
Professional Pet Products, Miami, Florida; Promise Printing, Stuart, Florida;
Fawcett's Videomarketing, Laguna Niguel, California; Video Plus Inc., Lake
Dallas, Texas; Consolidated Label Co., Longwood, Florida; Tabco Inc., Kansas
City, Kansas.
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PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR
LABOR CONTRACTS, INCLUDING DURATION
ROYALTY AGREEMENTS:
Trilogy is a party to the following royalty arrangements involving its
products or marketing tools, copies of which are files as exhibits to this
report:
An agreement dated June 24, 1999 with Richard Berardi, with no expiration
date, which requires Trilogy to pay him $0.05 per video tape for the Trilogy's
Best Friends theme song.
An agreement dated May 15, 1999 with Tana Henke, with no expiration date,
which requires Trilogy to pay her 5% of the price paid by Trilogy for its Best
Friends Advanced Multivitamin & Mineral Formula with Colostrum for Dogs and
Cats.
An agreement dated October 26, 1999 with Dr. Kamau Kokayi, with no
expiration date, which requires Trilogy to pay him 2% of the price paid by
Trilogy for its Essence of Life Colostrum Formula with Astragalus.
Copies of each of the foregoing agreements are filed as exhibits to this
report and the foregoing summaries are qualified in their entirety by reference
thereto.
TRADEMARKS:
Trilogy has applied for federal trademarks covering the name "Trilogy" for
a number of its products in the following classes, copies of which are filed as
exhibits to this report:
INTERNATIONAL SUPPLEMENTS IN INTERNATIONAL CLASS 005:
The application, dated June 11, 1999 was filed on June 7, 1999. If granted,
it could provide protection from unauthorized use for a period of ten years,
subject to renewal for an additional ten years. United States Trademark
Application Number 75/726,820. First use of the mark was June of 1998. Even if
granted, however, under certain circumstances courts may decline to enforce it
against a party infringing it that overcomes the presumptions under which it was
granted.
PET FOODS AND SUPPLIES IN INTERNATIONAL CLASS 031:
The application, dated June 11, 1999 was filed on June 7, 1999. If granted,
it could provide protection from unauthorized use for a period of ten years,
subject to renewal for an additional ten years. United States Trademark
Application Number 75/726,820. First use of the mark was June of 1998. Even if
granted, however, under certain circumstances courts may decline to enforce it
against a party infringing it that overcomes the presumptions under which it was
granted.
DIRECT SALES, NAMELY ADVERTISING DISTRIBUTED BY MAIL AND VIA GLOBAL
COMPUTER INFORMATION NETWORK IN INTERNATIONAL CLASS 035:
The application is currently in preparation.
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EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON THE BUSINESS
Trilogy's products are currently subject to regulation by the United States
Food and Drug Administration, and by comparable state agencies. Its current
products are subject to the Food and Drug Administration's regulation of
labeling under the Dietary Supplement and Health Education Act of 1994 for its
human nutritional supplement product, Trilogy's Essence of Life Colostrum
Formula with Astragalus. Trilogy complies with the standards set by the Center
for Veterinary Medicine of the United States Food and Drug Administration and
the American Association of Feed Control Officials for its nutritional pet
supplement products under the Trilogy's Best Friends label. Trilogy's e-commerce
corporate website is operated according to the regulations governing
communication activities regarding privacy rights, receipt of unsolicited
communications and Internet fraud. Trilogy has established policies that
independent field representatives must follow, which were designed to avoid such
problems. However, no assurances can be provided that in the future inadvertent
activities by Trilogy independent field representatives will not subject it to
regulatory actions or civil liabilities.
Although Trilogy will use best efforts to comply with applicable laws,
regulations and industry standards, in light of the dynamic nature of
legislation and regulation, especially on a state by state basis, no assurances
can be provided that it will always be in full compliance therewith. This is
especially the case because Trilogy relies on third parties for production and
delivery of its products. In order to alleviate the likelihood of possible
regulation, Trilogy carefully selects the companies with which it does business,
and monitors their performance for quality control purposes, timeliness and
customer relations.
NUMBER OF TOTAL EMPLOYEES AND NUMBER OF FULL TIME EMPLOYEES
As of November 30, 1999, Trilogy employed twelve people on a full time
basis. Currently, there are no part time staff employed. Most of Trilogy's sales
are conducted through independent representatives and its production and
delivery activities are conducted through third party contractors. Management of
Trilogy believes that all of its current and foreseeable personnel requirements
can be met from locally available personnel at competitive prices. None of
Trilogy's employees are, or have expressed an interest in, being represented by
unions or other organizations on the basis of collective bargaining agreements.
Trilogy's twelve current employees are comprised of six executives, two
marketing persons, three field representative coordinators and one ethics and
compliance manager.
ITEM 102 DESCRIPTION OF PROPERTY
DESCRIPTION OF TRILOGY'S ASSETS
As of September 30, 1999, the net assets of Trilogy were valued by
management at $306,160 and were comprised of product inventory and sales
material inventory ($143,339 at cost), and, furniture, fixtures and equipment
with a depreciated book value of $138,420, comprised of telephone equipment,
five Encore Binaural Headsets with modular adapters, one HP ScanJet 6200C
scanner, five printers, one Brother All-in-One fax, two Toshiba Tecra laptop
computers, seven computer stations including monitors, three servers and related
software, one backup power supply system, computer software, miscellaneous
computer hardware and office equipment, office furniture and leasehold
improvements.] being modified in e-mail message.
Trilogy leases the following office equipment and furniture at a monthly
cost of $2,702.34: one Panasonic Digital 816 Telephone System with eight lines
and eight stations, one Executone Telephone System, one Toshiba copier, one Dell
laptop computer , three field support computer stations, two desktop publishing
computer stations, one Internet server, one HP LaserJet printer, fifteen desks,
thirty-one chairs, four filing units and one conference table.
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DESCRIPTION OF REAL ESTATE
Trilogy's corporate offices are located at 526 Southeast Dixie Highway,
Stuart, Florida 34994. The Trilogy phone number is 561-781-7278. Trilogy's
website address is www.trilogyonline.com. Trilogy's offices total approximately
4,400 square feet with 2,000 square feet used for order entry, field support and
sales and marketing and 2,200 for executive offices, conference room and
training facilities. The remaining 200 square feet are dedicated to computer and
telecommunication equipment. The office is leased with a five-year term at a
monthly cost of $4,975.50. The building was completely renovated to Trilogy's
specifications prior to occupancy.
ITEM 103 LEGAL PROCEEDINGS
The only material litigation to which Trilogy is known to be a party
involves a single claim by a former consultant, Deborah George. On November 29,
1999, an action for damages (breach of an oral consulting agreement) was filed
by Deborah George against Trilogy in the Circuit Court of the 19th Judicial
Circuit in Martin County, Florida Case No. 99-842-CA. Ms. George claims that she
and Trilogy orally agreed that she would provide a variety of consulting
services such as recruitment, training, securing financing, and general
consulting. Ms. George claims the compensation for such services was to be
payment of three thousand dollars per month plus additional fees for specific
projects and an option to purchase twenty thousand shares of Trilogy's common
stock. Ms. George claims Trilogy owes her for services rendered in the amount of
$36,000..00 plus the value of her stock options. Trilogy denies the allegations
in the Complaint and intends to vigorously defend this action and contest the
claim.
ITEM 303 MANAGEMENT'S PLAN OF OPERATION; DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The information required by this item will be provided, together with the
financial statements and pro forma financial information pertaining to the
transaction which is the subject of this report, by amendment hereto to be filed
by the Registrant with Commission on or before the sixtieth day following the
date of this report. The financial data included in the following information is
based on unaudited data that may not comply with generally accepted accounting
principals, consistently applied and will be superseded in the subsequent
amendment. Accordingly, the information may not prove accurate and should not be
relied on other than as a good faith effort by Trilogy's management to provide
useful information on an interim basis.
PLAN OF OPERATION:
During the twelve months ending on November 30, 2000, Trilogy intends to
materially expand its business operations using the funding that the Registrant
provided upon the closing of the acquisition of Trilogy ($250,000) and the
funding that the Registrant has agreed to provide (up to an additional $650,000)
within the next 180 days.
Trilogy is a network marketing and e-commerce company selling its products
through a network of independent field representatives. Although Trilogy was
founded in May of 1998 and was formally organized as a Florida corporation in
August of 1998, product sales were not initiated until the end of July 1999.
Since July 1999, 152 individuals have signed agreements to become independent
field representatives.
Trilogy's business development was limited until recently because a major
component of its marketing plan involved use by its independent marketing
representatives of individual replicator sites based on Trilogy's Internet and
e-commerce site. Because the replicator sites were not fully functional and
therefore not available to independent field representatives until early
December of 1999, independent field representatives were not actively recruited
during the last four months. Consistent with management's belief in their
importance, Trilogy's web site (www.trilogyonline.com) and the corresponding
independent field representative's replicator sites will constantly be updated
and improved by the Trilogy information systems and marketing departments.
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During the next twelve months, assuming that the replicator sites remain
functional and available and that the Registrant provides funding for ongoing
operations during the next six months, Trilogy's chief executive officer and its
president will be devoting a major portion of their time to recruiting,
enlisting and training additional independent field representatives for Trilogy.
Trilogy's management believes that the number of active independent field
representatives necessary to produce revenues sufficient to generate net
operating income (approximately 5,000) can be recruited and trained within nine
months after the date of this report and that it will have trained and recruited
7,000 independent field representatives within twelve months after the date of
this report.
As Trilogy's marketing capabilities expand, management anticipates that it
will expand its product offerings to meet the perceived requirements of its
existing consumer base and to expand into other areas deemed potentially
profitable and synergistic. Its product development and marketing departments
will be responsible for assuring that required products are developed, tested
and test marketed in time to meet demand therefor.
Trilogy currently maintains its own product development and marketing
departments; however, all product development activities following the
formulation stage are conducted through third party anticipated suppliers. In
addition, a major source of new products in the future is expected to involve
marketing rights to products developed by other persons. Products under
consideration at this time include an expansion of Trilogy's current line of pet
care and human nutritional supplement products. In most instances, information
concerning products under development or products for which Trilogy is
negotiating marketing rights will be kept confidential and if disclosure
pursuant to Commission rules is required, the information will be provided under
requests for confidential treatment. Such policy is based on competitive and
negotiating factors.
MANAGEMENT DISCUSSION AND ANALYSIS
From the date of its organization in August of 1998 through late July of
1999, Trilogy had no revenues. From May of 1998 through December 31, 1998
Trilogy incurred start-up expenses of $93,608. Of this amount, $89,131 was
capitalized for tax purposes and then expensed in July of 1999. For the six
months ending June 30, 1999 Trilogy incurred expenses of $565,498. For the three
months ending September 30, 1999 Trilogy had revenues of $38,571 and expenses of
$477,502 for a net loss from operations of $438,931. Management estimates that
an additional loss from operations of approximately $150,000 was incurred for
the two months ending November 30, 1999.
Trilogy does not expect to be able to meet all anticipated operating
expenses during the next twelve months from internally generated operational
income. Management expects that loses from operations will continue to be
substantial for at least the next six months while a viable network of
independent field representatives is being established. Net operating loss from
operations for the next six months is projected to be approximately $475,000. If
projections are met, of which there can be no assurance at this time, operations
are expected to become marginally profitable in the third calendar quarter of
2000.
Through November of 1999, the employees of Trilogy have funded a
substantial portion of the operating expenses of Trilogy through the deferral of
a portion of their salaries. Trilogy's liability for this deferred compensation
amounted to $390,224 through November 30, 1999 and an additional liability for
deferred compensation in December 1999 is expected in the amount of $22,460. The
total, expected to be $412,684 at December 31, 1999, is not payable until
Trilogy becomes profitable and is able to make payments to reduce this
obligation from positive cash flow from operations. However, Trilogy is
committed to start paying its employees at their full salaries as of January 1,
2000, which will increase the cash, requirements of Trilogy's operations by
approximately $14,543 per month.
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If revenues are realized as projected, additional personnel will be
required in Trilogy's call center, administrative and finance departments.
Management anticipates that it will add a receptionist in March of 2000 and an
administrative assistant in July of 2000. An additional field support agent is
planned for the call center department in each of the months of April, June,
August, October and November, 2000. The finance department expects to add a
bookkeeper in April of 2000 and a staff accountant in November of 2000. An
assistant to the director of information systems is planned for November of 2000
but this position my have to be filled sooner depending on the demands created
by Trilogy's web site and the field representatives' replicator sites. The cost
of adding the personnel listed above is estimated to be $110,000 during the next
twelve months.
As additional personnel are employed, there will be a corresponding
requirement for capital expenditures for office furniture, computer hardware and
computer software. During the next twelve months, Trilogy's management
anticipates spending approximately $40,000 for such purpose.
Trilogy's current level of product inventory is sufficient to fill
anticipated orders for its current product line over the next several months and
current levels will be maintained by replacement as sold, funded by revenues.
However, a higher level of available inventory must be established and
maintained as new products are added to Trilogy's existing product line.
Management anticipates that as much as $100,000 could be required during the
next twelve months to establish and maintain inventories at the required levels.
To increase the network of independent field representatives, to expand
operations and make necessary capital expenditures as projected, Trilogy will be
dependent on up to $650,000 in funding from the Registrant over the next six
months in order to meet its ongoing financial obligations.
RESULTS OF OPERATIONS
For the eight-month period from the founding of Trilogy in May 1998 through
December 31, 1998, Trilogy had no revenues and incurred $93,608 of start-up
expenses. $89,131 of these expenses were capitalized for tax purposes as of
December 31, 1998 and subsequently expensed when Trilogy opened for business in
July 1999.
For the six-month period ending June 30, 1999, Trilogy had no revenues and
incurred expenses of $565,498. Of this amount payroll expense was $362,860 and
consulting expense was $96,408. Of this $459,268 total, $188,521 has been paid
and employees and consultants have deferred $270,747until Trilogy attains
profitable operations. Legal costs were $32,403 of which $24,739 was incurred in
conjunction with Trilogy's February 22, 1999 participating preferred offering.
Travel expense was $21,033, telephone expense $12,177 and other general and
administrative expenses including rent, utilities, insurance, facilities
maintenance and supplies totaled $40,617. Trilogy fiscal resources during this
period were employed principally to establish its infrastructure and to develop,
test and test market its existing product lines and marketing materials.
Trilogy began to book sales in August of 1999 and for the three month
period ending September 30, 1999 had net revenues from sales of its products and
sales materials of $38,571. Cost of sales was $20,888 yielding a gross profit of
$17,683. Departmental and other expenses for the period were $456,614 and net
operating loss was $438,931. Payroll expense was $247,793 and consulting expense
$45,316, of which $214, 273 was paid to employees and consultants and the
balance was accrued, increasing Trilogy's liability for deferred compensation by
$78,836. Travel expense was $44,452; telephone expense was $29,768; legal
expense was $18,311 and other departmental and general and administrative
expenses for the period were $61,652.
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ACCOUNTING POLICIES AND PROCEDURES
Generally, Trilogy recognizes revenues from sales of products when its
products or sales materials are shipped. Generally, credit card, check, cash or
electronic transfer prepays all orders. Because its policy of prepayment is
generally applied, Trilogy's accounts receivable are minimal and are expected to
remain so.
INTERNAL AND EXTERNAL SOURCES OF LIQUIDITY
From its founding in May 1998 through late July 1999, Trilogy generated no
revenues. Trilogy financed its operations from its start-up through launch
phases using a combination of capital contributions, debt, lease financing,
extended credit terms from vendors and deferral of compensation by its officers,
employees and consultants.
CONTRIBUTIONS BY FOUNDERS
From the founding of Trilogy in May of 1998 and its organization as a
Florida corporation in August 1998 through March 1999, Dennis Berardi, the chief
executive officer and co-founder of Trilogy and his wife Carol Berardi, the
president and co-founder of Trilogy, contributed $96,818 of their own funds to
paid in capital. In addition, Mr. and Mrs. Berardi received no salary from
Trilogy from inception through November 1998 and deferred their full salaries
for the period from December 1, 1998 through March 1999 until such time as
Trilogy becomes sufficiently profitable to repay the deferred compensation from
positive cash flow generated by operations.
PRIVATE PLACEMENT TO ACCREDITED INVESTORS
In May of 1999, Trilogy completed a participating preferred offering in
reliance on Section 4(6) of the Securities Act in the amount of $660,000, the
net proceeds of which were $625,261 (after deduction for legal expenses in
connection with the offering). A total of 18 accredited investors participated
in the placement subscribing for $10,000 to $120,000 each. In accordance with
the terms of the participating preferred offering approximately $40,000 of the
proceeds were used to reimburse officers and employees of Trilogy for expenses
incurred on behalf of Trilogy during the period from January 1, 1999 through
April 30, 1999. No reimbursement for salaries deferred during the period
December 1, 1998 through March 31, 1999 were made, as required in accordance
with the terms of the Offering. As a condition of the participating preferred
offering and in order to conserve operating capital, the officers and management
employees of Trilogy agreed to defer 25% of their salaries for the four months
following the closing of the offering. The deferred portion of their salaries
was also to be paid only upon Trilogy's becoming profitable and having the
ability to repay the deferred compensation from positive cash flow generated by
operations.
RECENT SALARY DEFERRALS
The opening of Trilogy for business was delayed beyond the date that
management originally anticipated. As a result, in August 1999, in a further
effort to conserve Trilogy's operating capital, its officers, management
employees and consultants who had been deferring 25% of their salaries for the
prior four months agreed to continue to defer at least 25% of their salaries
through December 1999. Trilogy's Chief financial officer, upon being hired in
late July 1999, also agreed to defer 25% of his salary through December 1999. In
September two additional management employees agreed to defer 25% of their
salaries through the end of December 1999.
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LOANS
In May of 1999, Trilogy borrowed $7,118 from a member of its board of
directors for the purchase of computer equipment. $1,000 of the subject loan was
subsequently repaid. The balance of the loan in the principal amount of $6,118
plus interest at 20.65% per annum (the lenders' interest cost based on
applicable credit card rates) from June 15, 1999, remains unpaid.
EXPENDITURE ARRANGEMENTS
In addition to the operating losses generated by Trilogy during the six
months ending June 30, 1999, Trilogy made capital expenditures in the amount of
$115,492 for computer hardware and software, office equipment and furniture;
purchased $33,415 of products and sales materials for inventory; and, made
security deposits for rent and utilities totaling $18,648.
During the three-month period ending September 30, 1999, Trilogy increased
its inventory on hand by $109,924 bringing the total value of inventory on hand
to $143,339 and purchased $27,118 of additional computer hardware, $22,366 of
which was leased, reducing the capital expenditure required to $4,752; and, made
additional capital expenditures for computer software; office furniture and
equipment; telephone equipment and lease hold improvements to its new office
space in the total amount of $26,822. After funding accrued expenses of
approximately $40,000 and funding the operating expenses and capital
expenditures through June 30, 1999, Trilogy retained approximately $229,339 of
the net proceeds of its participating preferred offering as working capital.
The operating loses and capital expenditures for the three month period
ending September 30, 1999, as detailed above, excluding start up expenses
recognized during the period but previously funded, were $486,164, resulting in
a requirement for additional working capital of $256,825. Trilogy was able to
deal with the shortfall for the period:
* Through deferring internal compensation in the amount of $78,836;
restructuring payment of accounts payable to vendors and reimbursement
of expenses to employees, resulting in a deferral of $138,815;
* By obtaining short term loans from officers, management employees and
families of officers in the total amount of $25,500 (based on Trilogy's
agreement to repay them from the proceeds of the investment anticipated
from the Registrant); and,
* Through an additional equity investment by two of the original
investors in Trilogy's participating preferred offering totaling
$33,000.
Subsequent to September 30, 1999, Trilogy continued to sustain substantial
loses from operations which required additional funding. In October of 1999 two
of the original investors in Trilogy's participating preferred offering made
additional equity investments which totaled $41,818 and in November of 1999 one
of the original investors made an additional $10,000 equity investment. In
October of 1999 a short-term loan in the amount of $7,000 was obtained from
members of officers families and in November of 1999 a short-term loan in the
amount of $12,000 was obtained from a member of Trilogy's board of directors.
During the period from October 1 through November 30, 1999, accounts payable
increased by approximately $27,931 to $166,746 and accrued compensation for
employees and consultants increased by approximately $33,942 to a total of
$383,525.
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CURRENT CAPITAL REQUIREMENTS
On December 3, 1999 Trilogy received $220,000 of the $250,000 funded by the
Registrant upon closing of the acquisition of Trilogy which is the subject of
this report. $30,000 was retained by Trilogy's legal counsel for legal expenses.
Of the $30,000 retained by counsel, approximately $8,000 was to satisfy
outstanding accounts payable for services unrelated to the acquisition and
approximately $22,000 was retained for legal services rendered in connection
with the acquisition.
Upon receipt of the $220,000 in net proceeds from the initial funding
provided by the Registrant, Trilogy disbursed funds to reduce accounts payable
by approximately $119,153 leaving an accounts payable balance of approximately
$47,593 (the majority of which is past due). Short-term loans in the principal
amount of $44,500 were repaid together with accrued interest in the amount of
$908. In addition to deferring 25% of their salaries as agreed, Carol and Dennis
Berardi deferred payment of $16,442 of their salaries until the closing of the
acquisition and receipt of the initial funding from the Registrant. This amount
was paid from the proceeds of the Registrant's initial funding. The funds
remaining from the Registrant's initial funding of Trilogy combined with the
cash flow expected to be generated by Trilogy's operations will not be
sufficient to meet anticipated operating expenses through December 31, 1999 and
reduce the current accounts payable balance to an acceptable level.
Subject to a number of conditions involving Trilogy's compliance with its
obligations under the acquisition agreement (including providing required
audited financial statements for filing with the Commission in a timely manner
and the accuracy of representations and warranties), the Registrant indicated
that it intended to provide Trilogy with funding in addition to the initial
$250,000 provided, within 180 days after the acquisition of Trilogy, which took
place on December 1, 1999. The funding was anticipated in two equal
installments, the first of which was to be provided within 90 days after the
acquisition. However, subsequent to the closing Trilogy's management provided
the Registrant with projections of income, expense and cash flow indicating that
it would require accelerated funding of $50,000 during December of 1999, $75,000
during January of 2000 and $75,000 during February of 2000 from the first
$325,000 installment and Trilogy's management is endeavoring to persuade the
Registrant to provide such funding in a manner allowing Trilogy to meet its
revised, anticipated operating expense schedule. While no assurances can be
provided that the funding requested by Trilogy will be available, the Registrant
believes that funding can be arranged at level's deemed adequate for Trilogy by
the Registrant, provided that Trilogy's business operations and prospects
reflect the projections provided by Trilogy's management, as reflected by the
acquisition agreement and its schedules and exhibits, all of which are filed as
exhibits to this report. The failure of the Registrant to provide funding in a
manner sufficient to meet Trilogy's cash flow requirements could substantially
inhibit Trilogy's ability to expand its network of independent field
representatives, introduce new products or continue to operate its business as
planned.
ITEM 304 CHANGES IN ACCOUNTANTS
The firm of Nora F. Catano, CPA, of Stuart, Florida compiled a statement of
assets, liabilities and equity on an income tax basis for Trilogy as of December
31, 1998. As stated in Ms. Catano's compilation report dated March 5, 1999, the
financial statements for the partial year ending December 31, 1998 were prepared
on the accounting basis used by Trilogy for income tax purposes which is a
comprehensive basis of accounting other than generally accepted accounting
principles. Ms. Catano also stated in her compilation report that management had
elected to omit substantially all of the disclosures ordinarily included in
financial statements. If the omitted disclosures were included in the financial
statements, they might influence the user's conclusions about Trilogy's assets,
liabilities, capital, revenue and expenses. Accordingly, those financial
statements were not designed for those who are not informed about such matters.
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During calendar year 1999, Trilogy did not use the services of Nora F.
Catano, CPA, other than for the December 31, 1998 compilation report and the
preparation of payroll tax returns for the first two quarters of 1999. The
decision not to use such firm for any other matters did not involve any
disagreements over accounting issues, rather, they reflected Trilogy's
management's decision to perform such work in house.
From January 1, 1999 through the closing of the acquisition agreement
between the Registrant and Trilogy on November 30, 1999, all bookkeeping and
preparation of financial statements have been performed by Trilogy employees. No
employee of Trilogy is a certified public accountant. None of Trilogy's
financial statements prepared during the eleven months ending November 30, 1999
have been either reviewed by or audited by an independent accounting firm.
Management of Trilogy has used its best efforts to maintain current accounting
records for its business according to generally accepted accounting principals.
However, in as much as the financial data produced by Trilogy employees has not
been audited, it may not comply with generally accepted accounting principals
consistently applied.
As a result of its acquisition by the Registrant, Trilogy is now required
to provide certified financial statements, since inception, in compliance with
generally accepted accounting principals consistently applied, and complying
with the requirements of Commission regulation SB. Trilogy intends to retain the
services of the Registrant's auditor, the firm of Daszkal, Bolton, Manela,
Devlin & Co., Certified Public Accountants, Boca Raton, Florida ("Daszkal") to
conduct the audit of Trilogy's financial statements through June 30, 1999, an
unaudited quarterly update for the quarter ended September 30, 1999, and a final
unaudited update from the period starting on October 1, 1999 and ending on
November 30, 1999, the first two of which must be filed with and not rejected by
the Commission as an amendment to this report on or before the earlier of the
seventy-fifth day after the acquisition or the sixtieth day following this
report. In the event such financial statements were deemed by the Commission not
to meet the requirements of Regulation SB, the Registrant would have the several
options, including rescission of the acquisition, restructuring of the
acquisition and availing itself of remedies involving reduction of the
consideration for the acquisition of Trilogy by up to 20%. The firm of Daszkal,
Bolton, Manela, Devlin & Co., was selected because it also serves as the
Registrant's auditor.
ITEM 401 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
DIRECTORS AND EXECUTIVE OFFICERS
The following persons served as Trilogy's officers and directors at the
time of its acquisition by the Registrant, and are expected to continue to serve
in such roles for the foreseeable future, albeit at the pleasure of Trilogy's
board of directors. Pursuant to the terms of the acquisition agreement between
the Registrant and Trilogy, the Registrant, as Trilogy's sole stockholder, has
agreed to elect designees of Trilogy's former stockholders to two-thirds of the
seats on Trilogy's board of directors, subject to SPECIFIED PERFORMANCE CRITERIA
(E.G., subject to attaining earnings projections, compliance with fiduciary
obligations and with applicable law). Trilogy's former stockholders have
designated Mrs. Berardi and Messrs. Berardi, Holmes and Calabro as their initial
designees. The Registrant has also elected its president, Michael Harris Jordan,
as a member of Trilogy's board of directors and is expected to elect Ryan D.
Chamberlin, the son of the Richard G. Chamberlin, Esquire (a member of the
Registrant's board of directors, its former secretary and its current general
counsel) as the final member of Trilogy's board of directors.
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NAME AGE ELECTED POSITION
Dennis Berardi 54 (1) Director, chairman of the board of
directors and chief executive officer
Carol Berardi 45 (1) Director, president and chief
operating officer
John Holmes 55 (2)(3) Director and secretary
Michael Harris Jordan 46 (5) Director
Ryan D. Chamberlin 25 (5) Director
Arthur Yorke Calabro 54 (2) Director
David Cantley 62 (4) Chief financial officer
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(1) Mr. and Mrs. Berardi have held these positions since Trilogy's inception
and will serve as members of Trilogy's board of directors until the next
annual meeting of Trilogy's stockholders, expected to be held during
December of the year 2000. The Registrant is required to continue to elect
designees of Mr. and Mrs. Berardi to two thirds of the seats on Trilogy's
board of directors, as long as Trilogy meets its financial projections
which may not be changed without unanimous board of directors approval, and
remains in material compliance with applicable laws and fiduciary
obligations.
(2) Elected to Trilogy's board of directors on September 25, 1999 and will
serve as members of Trilogy's board of directors until the next annual
meeting of Trilogy's stockholders, expected to be held during December of
the year 2000.
(3) Elected as Trilogy's secretary on December 1, 1999, replacing Mrs. Berardi
who served in such role since inception.
(4) Elected on September 25, 1999, to serve at the pleasure of the board of
directors, subject to compensation rights under his employment agreement
with Trilogy.
(5) Elected, effective as of December 16, 1999, as the Registrant's designees
to the board of directors, to serve thereon at the pleasure of the
Registrant (which holds all of Trilogy's capital stock).
BIOGRAPHICAL DATA FOR DIRECTORS AND EXECUTIVE OFFICERS
DENNIS A. BERARDI
Dennis Berardi, age 54, was recently elected as a member of the
Registrant's board of directors and serves as chief executive officer of the
Registrant's subsidiary, Trilogy. He began his career in the music industry as a
professional drummer. Mr. Berardi was drafted into the United States Army Band
in 1963 and was subsequently appointed to the Presidential Band in Washington,
D.C. In 1968, Mr. Berardi founded Town Music, a national chain of music stores
that he owned and operated. In 1976, he started Kramer Guitar, a major music
instrument company headquartered in Neptune, New Jersey. He sold Kramer Guitar
(now owned by Gibson Guitar) in 1989. In 1987, Mr. Berardi became involved in
the music promotion industry, brought the first Russian band, Gorky Park, to the
United States and obtained a major recording deal for the band with Polygram
Records. In the same year, Mr. Berardi founded Berardi-Thomas Management to help
oversee the careers of major recording artists. A year later, Mr. Berardi
organized the Moscow Peace Festival, which brought United States and Russian
rock and roll bands together for a concert at Moscow's Lenin Stadium. In 1990,
Mr. Berardi founded Uniquest, a direct sales company based in New Jersey that
specialized in the sale of non-run pantyhose. In 1995, Mr. Berardi and his wife,
Carol Berardi, started a distributorship with Nashua, New Hampshire based Envion
International, a direct sales company with a focus on nutritional products for
humans. In May of 1998, Mr. and Mrs. Berardi founded Trilogy, a direct
sales/e-commerce company specializing in the sale of products to enhance the
quality of life for people, the planet and pets.
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CAROL A. BERARDI
Mrs. Berardi, age 45, was recently elected as a member of the Registrant's
board of directors and serves as president of the Registrant's subsidiary,
Trilogy. In 1980, Ms. Berardi founded Wayne, New Jersey based Jakits
Personnel/Transworld Temporaries, a permanent placement and temporary help
service firm, which she operated until 1990. In 1990, Mrs. Berardi joined Dennis
Berardi, now her husband, to co-found Uniquest, a direct sales company
specialized in the sale of non-run pantyhose, headquartered in Lakewood, New
Jersey. In 1992, Mrs. Berardi was retained as a consultant for Nashua, New
Hampshire based Envion International Inc., a start up company in the direct
sales industry with a product line of nutritional meal replacement bars. In
1995, upon completion of her assignment as a consultant to Envion, Mr. and Mrs.
Berardi started their own Envion distributorship. In May of 1998, Mr. and Mrs.
Berardi founded Trilogy, a direct sales/e-commerce company specializing in the
sale of products to enhance the quality of life for people, the planet and pets.
JOHN HOLMES
John Holmes, age 55, has served as a member of Trilogy's board of directors
since September 25, 1999 and as Trilogy's secretary since December 1, 1999. In
1967, Mr. Holmes graduated from Central Michigan University with a master degree
in business administration. He joined General Motors immediately following
graduation and has been with General Motors since that time. He has held
positions in human resources, manufacturing, engineering and operations. His
most recent position was chief operating officer of OnStar a division of General
Motors.
ARTHUR YORKE CALABRO
Arthur Calabro, age 54, recently retired as a teacher of the handicapped
after over thirty years of service, the last twenty-eight of which were spent in
the Lakewood (NJ) School District. He received his master of arts degree special
education in 1972 from the New Jersey City University and in 1969 received his
bachelor of science degree in English from St. Peter's College, Jersey City, New
Jersey. During his years as a teacher, he was also involved in many
entrepreneurial ventures and he served as president of Yorkjon Associates, Inc.,
a residential construction company from 1975 to 1978. Since 1978 he has been a
New Jersey licensed insurance agent. Since June of 1989 he has served as the
president and owner of Calabro Enterprises, Inc., a company that is most
recently involved in the brokering of contract packaging, distribution, filling
and general fulfillment. Mr. Calabro possesses a NASD Series 6 License and is a
representative with United Securities Alliance Inc. of Colorado. He remains
active in the insurance and financial services industries, providing his
expertise to municipalities, businesses and individuals. Mr. Calabro has been a
member of the Trilogy Board of Directors since September 25, 1999.
DAVID K. CANTLEY
David K. Cantley, age 62, has served as chief financial officer for the
Registrant's subsidiary Trilogy International since August 1999. Mr. Cantley was
graduated from Yale University in 1959. From 1959 through 1964, except for six
months active duty with the Pennsylvania National Guard, he worked in his
family's structural steel contracting business, Cantley & Co., Inc.,
Philadelphia, Pennsylvania. In 1965 he joined the Stouffer Corporation,
headquartered in Cleveland, Ohio where he held various management positions from
1965 through 1974. In 1974 he returned to Philadelphia and rejoined the family
business, Cantley & Co., Inc., where he served as vice-president until 1978.
From 1978 to 1981 Mr. Cantley was employed as general manger of the Greate Bay
Resort & Country Club, Somers Point, New Jersey. In 1981 he joined Bally's Park
Place Casino, Atlantic City, New Jersey where he was employed as dealer,
floorman and pit boss until 1984. From 1984 to 1992 he served as vice-president
of Hotel Properties, Inc., Somers Point, NJ, a private company in the
hospitality real estate development, construction and management business. He
served as president of Full House Resorts, Inc. (NASDAQ: FHRI) from its
inception in 1992 to 1995. From 1995 to 1999, Mr. Cantley was associated with
Nevada Gold & Casinos, Inc. (OTCBB: UWIN) as project director and financial
advisor. He remains an advisory director of Nevada Gold & Casinos. Mr. Cantley
joined Trilogy International in July 1999.
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MICHAEL HARRIS JORDAN
Michael Harris Jordan, 46 years old, is a resident and native of Miami,
Florida. From 1972 until 1973 he attended the University of Miami where he
studied English literature. In 1979, Mr. Jordan obtained a Series 7 and a series
63 license from the NASD and in 1982 he obtained a Series 24 license from the
NASD (general securities principal). In conjunction with his activities as an
individual licensed to engage in securities transactions by the NASD, he was
also licensed by the securities regulatory authorities of a number of states.
Since 1985, Mr. Jordan has been engaged in business as a private investor. In
1992, Mr. Jordan incorporated Securities Counseling and Management, Inc., a
private consulting firm headquartered in Miami, Florida, for which he serves as
president and sole director. In January of 1996, Mr. Jordan became secretary,
treasurer and a member of the board of directors of Zagreus, Inc., a publicly
held Delaware corporation then headquartered in Miami, Florida ("Zagreus").
Zagreus is an inactive public company in the process of reorganization. In 1998,
Mr. Jordan became an independent consultant for the Southeast Companies, inc., a
Florida corporation engaged in providing business and political consulting
services and consumer financial services as a licensed mortgage brokerage
company and during 1998, became president of a division thereof operating in
compliance with Florida fictitious name laws as Southeast Counseling &
Management. In 1999, Mr. Jordan became a registered principal (NASD Series 24
license) of Sunshine Securities, Inc., an NASD member firm located in Orlando,
Florida. On August 6, 1999, Mr. Jordan became a member of the Registrant's board
of directors and was elected as its president.
RYAN D. CHAMBERLIN
Ryan D. Chamberlin, age 25, graduated from Central Florida Community
College in 1996, with an associate of arts degree in business. His network
marketing experience started in 1994, with Amway Corporation, where he served in
a position equivalent to that of an independent field representative and
eventually developed a network of 20 persons through which he received
compensation. Since 1995 he has been involved in a position equivalent to that
of an independent field representative with Excel Telecommunications Inc., where
he attained group leadership positions as a regional director and regional
training director over a 500+ person sales team assembled by him in the States
of Florida, Georgia, Maryland, New York, Texas and Utah. Since October, 1, 1999,
he has been involved in a position equivalent to that of an independent field
representative with Team Nationwide, an Atlanta based network marketing company
where he has already developed a network of 75 persons through which he receives
compensation. In addition to his network marketing activities, Mr. Chamberlin
has been active in the commercial finance field, where he started with Mercury
Finance Company at its Central Florida office in Ocala, Florida in 1995. In
1997, Mr. Chamberlin founded and served as president and chief executive officer
for Ryan Marketing Group, Inc., a consumer finance company headquartered in
Marion County, Florida, which specialized in sub-prime auto loans. In 1999, he
became senior vice president and chief operating officer for Southern Capital
Group, Inc., a consumer finance company and licensed mortgage brokerage business
headquartered in Marion County, Florida, where he also serves as president and
chief executive officer of its automobile finance division. Prior to entering
the finance and network marketing industries, Mr. Chamberlin was employed as a
manager by Kash - Karry, a large chain of grocery and consumer products stores
at various facilities in Marion County, Florida from 1991 until 1994, while he
attended Central Florida Community College.
SIGNIFICANT EMPLOYEES
NAME AGE APPOINTED POSITION
Jane R. Bicks, D.V.M. 51 April, 1999 Chief new product development
and education officer
Stephen Berardi 42 May, 1998 Chief administrative officer
Dr. Bicks and Mr. Berardi serve at the pleasure of Trilogy's board of
directors. However, Dr. Bicks' compensation rights contained in her employment
agreement with Trilogy would survive any premature termination.
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BIOGRAPHICAL DATA FOR SIGNIFICANT EMPLOYEES
JANE R. BICKS, D.V.M.
Jane R. Bicks, D.V.M. has served as chief new product development and
education officer for the Registrant's subsidiary, TRILOGY SINCE APRIL OF 1999.
IN 1977, SHE GRADUATED SUMMA CUM LAUDE from the University of Parma, Italy,
where she received her doctor of veterinary medicine degree. In 1992, Dr. Bicks
served as the president and founder of Dr. Jane Enterprises, Ltd., where she
offered a line of holistic pet care products that were marketed throughout the
United States. She served as the president of the Veterinary Medical Association
of New York City in 1991. From 1978 to 1991, Dr. Bicks served as supervisor of
product formulation and development, technical services and education for Fauna
Food, a major pet food supplier and as a product formulation consultant for
various other major food suppliers. Dr. Bicks has been involved with many
advisory boards including Canine Companions for Independence, Cornell Feline
Health Center and Animal Care & Control in New York City. She is the author of
three national books, revolution in cat nutrition (Rawson Associates, New York,
1986), Dr. JAne's thirty days to a healthier, happier dog (Berkley Publishing,
New York, 1997) and Dr. Jane's Natural Guide to a Healthier, Happier Dog
(Berkley Publishing, New York, 1999). Dr. Bicks joined Trilogy in April of 1999.
STEPHEN BERARDI
Stephen Berardi, 42 years old, joined Trilogy in May of 1998 nad has served
as Trilogy's chief administrative officer for the Registrant's subsidiary,
Trilogy since December 1998. He attended Rider College in New Jersey from 1975
until 1978, majoring in accounting and management. In 1982, Mr. Berardi
graduated first in his class with high honors from the Culinary Institute of
America in Hyde Park, New York. That same year, he became a distributor for
Cambridge Plan International, a direct sales company based in Monterey,
California. In 1983, Mr. Berardi worked as Assistant Manager of Shenanigans, a
restaurant in Wall, New Jersey. In 1985, he designed and developed the theme for
a new restaurant named Josh's Place in Colts Neck, New Jersey. Prior to the
restaurant's completion, Mr. Berardi was offered the position of General
Manager, which he accepted. Mr. Berardi joined Kramer Guitar as the Director of
Purchasing in 1987. In 1990, he helped launch Uniquest, a direct sales company
that sold non-run panty hose based in New Jersey, where he served as the
Director of Materials Management. From 1993 to 1998, Mr. Berardi served as the
Director of Banquet Operations for The Molly Pitcher Inn, a 5 diamond hotel in
Red Bank, New Jersey.
FAMILY RELATIONSHIPS
BERARDI FAMILY
Dennis and Carol Berardi are the co-founders of Trilogy and are husband and
wife. In addition, Stephen Berardi, Richard Berardi and Michael Berardi, all
brothers of Dennis Berardi and are involved with Trilogy as follows: Stephen
Berardi serves as Trilogy's chief administrative officer; Richard Berardi
provided Trilogy with proprietary marketing and musical materials for which he
receives royalty payments; and, Trilogy is currently negotiating with a company
in which Michael Berardi is employed for rights to market products.
CHAMBERLIN FAMILY
Ryan D. Chamberlin, a member of Trilogy's board of directors designated by
the Registrant, is the son of G. Richard Chamberlin, Esquire, currently a member
of the Registrant's board of directors and its general counsel, and formerly its
secretary.
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INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Based on information provided to the Registrant's legal counsel, during the
five year period ending on June 30, 1999, no current director, person nominated
to become a director, executive officer, promoter or control person of Trilogy
has been a party to or the subject of:
(1) Any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the
time of the bankruptcy or within two years prior to that time;
(2) Any conviction in a criminal proceeding or pending criminal
proceeding (excluding traffic violations and other minor offenses);
(3) Any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or,
(4) Been found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading Commission to
have violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated.
ITEM 402 EXECUTIVE COMPENSATION
The following tables disclose all plan and non-plan compensation awarded
to, earned or paid by any person for all services, in all capacities to Trilogy
during the last fiscal year, to all persons serving as Trilogy's chief executive
officer (or similar capacity), regardless of the compensation level; and, if
their aggregate compensation exceeded $100,000, Trilogy's four most highly
compensated executive officers and up to two additional persons who would have
been subject to the foregoing but for the fact that they were not executive
officers.
SUMMARY COMPENSATION TABLE
No person was paid more than $100,000 for services to Trilogy during the
last fiscal year. Because the responsibilities of chief executive officer and
president are held by different, albeit related persons, the Registrant has
elected to provide information concerning compensation of both persons. In
addition, Trilogy has not been in existence for three fiscal years and thus
information is provided from inception until June 30, 1999 (the Registrant's
year end). During the next fiscal year, Jane R. Bicks, D.V.M., is expected to
receive compensation in excess of $100,000 as called for by her employment
agreement with Trilogy (summarized below), and it is possible that Mr. and Mrs.
Berardi will also earn in excess of $100,000 in total compensation based on the
bonus provisions in their employment agreements with Trilogy (as also summarized
below).
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SUMMARY COMPENSATION TABLE
YEAR ENDED JUNE 30, 1999
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL COMPENSATION LONG TERM COMPENSATION
AWARDS PAYOUTS
SECURITIES LONG
NAME UNDERLYING TERM
AND OTHER RESTRICTED OPTIONS/STOCK INCENTIVE ALL
PRINCIPLE ANNUAL STOCK APPRECIATION PLAN OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARD(S) RIGHTS PAYOUTS COMPENSATION
Dennis 1999 $17,814 0 (3) 0 0 0 0
Berardi (1)
Carol 1999 $17,814 0 (3) 0 0 0 0
Berardi (2)
</TABLE>
- -------
(1) Chairman of the board of directors and chief executive officer.
(2) President and chief operating officer.
(3) $55,417 was to have been received as salary but only $17,814 was paid.
OPTIONS AND STOCK APPRECIATION RIGHTS
No options or stock appreciation rights were granted by Trilogy during the
fiscal year ended June 30, 1999, to any person for whom disclosure would be
required by Item 402 of Regulation SB. The only options or stock appreciation
rights granted by Trilogy during such period to any person are listed below. The
following information is provided as converted to securities of the Registrant,
generally based on a three shares of Trilogy common stock for one share of the
Registrant's common stock basis.
OPTION/STOCK APPRECIATION RIGHT GRANTS IN LAST FISCAL YEAR
YEAR ENDED JUNE 30, 1999
INDIVIDUAL GRANTS
<TABLE>
<S> <C> <C> <C> <C>
Number of Percent of
Securities Underlying Total Options or
Options or Stock Stock Appreciation
Appreciation Rights Rights Granted to Exercise or
Name Granted Employees in fiscal year Base Price Expiration Date
- --------------------------------------------------------------------------------------------------
Stephen Berardi 4,667 100% $0.75 December 20, 2008
Jane R. Bicks, D.V.M. 16,667 100% $0.75 April 12, 2009
</TABLE>
OTHER INFORMATION CONCERNING OPTIONS, STOCK APPRECIATION RIGHTS OR PLANS
No options or stock appreciation rights were exercised during the fiscal
year ending June 30, 1999, nor have any been exercised during the period from
June 30, 1999 until the date of this report. Trilogy does not have any long term
incentive plans, as that term is defined in Item 402(a)(iii) of Commission
Regulation SB.
22
<PAGE>
COMPENSATION OF DIRECTORS
The non-employee members of the Trilogy's Board of Directors are not
compensated for any services provide as directors. The two members to be
designated by the Registrant will be compensated by the Registrant either under
other compensation arrangements, if otherwise employed by the Registrant, or at
one half the rate that the Registrant's directors receive compensation under its
director compensation programs if the director is independent of other roles
with the Registrant and Trilogy. Trilogy has recently requested that the
non-employee designees of Trilogy's former stockholders to its board of
directors receive the same compensation that the Registrant has agreed to
provide to Mr. Chamberlin; however, such subject will require further
discussions and probable concessions from Trilogy and may not be deemed
acceptable by the Registrant's board of directors (since such compensation is
provided by the Registrant). If it is agreed to, such compensation, including
the compensation to Mr. Chamberlin, would constitute a charge against Trilogy's
earnings and affect its ability to meet its projections.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Jane R. Bicks, D.V.M., Dennis Berardi and Carol Berardi each have
employment agreements with Trilogy. Each of the agreements provides that the
employee will not enter the employ of or serve as a consultant to, or in any way
perform any services with or without compensation to, any other persons,
business or organization without the prior consent of the President of Trilogy
JANE R. BICKS, D.V.M.:
Dr. Bicks agreement established a base salary of $100,000 per
year with bonus as determined by Trilogy. Her contract expires in
April 2004. Dr. Bicks will devote all of her time, attention and
energies during normal business hours to the affairs of Trilogy.
However, Dr. Bicks is permitted to devote a limited amount of her
time, without compensation, to professional, charitable or
similar organizations. Any product, formulation, formula,
invention, procedure, know-how, concept or other invention or
proprietary information developed by Dr. Bicks during the term of
her employment agreement or subsequently conceived or developed
based on research or marketing conducted during the term of her
employment agreement will be owned exclusively worldwide by
Trilogy and Dr. Bicks will have no property interest in any of
such tangible or intangible property. Dr. Bicks' employment
agreement is assignable and the rights and obligations of Trilogy
under her agreement will inure to the benefit of and be binding
upon the successors and assigns of Trilogy, provided that such
successor or assign acquire all or substantially all of the
securities or assets and business of Trilogy. Dr. Bicks's
obligations may not be assigned or alienated and any attempt to
do so by Dr. Bicks will be void.
DENNIS BERARDI:
Dennis Berardi's employment agreement expires on December 31,
2004. His contract is automatically renewed unless specifically
canceled by Trilogy or Mr. Berardi. Mr. Berardi has an annual
base salary of $80,000. His salary may be adjusted at six-month
intervals to reflect his performance as reflected in the
performance of Trilogy during such period. He is also eligible
for an annual bonus payable in a cash sum equal to 2.5% of the
net, pre tax profits of Trilogy and a bonus payable in the
Registrant's common stock, equal to the number of shares obtained
by dividing 20% of Mrs. Berardi's salary for the subject year by
the closing transaction price for the Registrant's common stock
on the last trading day of the subject year. Mr. Berardi will,
unless specifically otherwise authorized by Trilogy's board of
directors, on a case by case basis, devote all of his business
time exclusively to the affairs of Trilogy. Trilogy will defend,
indemnify and hold Mr. Berardi harmless from all liabilities,
suits, judgments, fines, penalties or disabilities, including
expenses associated directly, therewith (e.g., legal fees, court
costs, investigative costs, witness fees, etc.) resulting from
any reasonable actions taken by Mr. Berardi in good faith on
behalf of Trilogy, its affiliates or for other persons or
23
<PAGE>
entities at the request of the board of directors of Trilogy, to
the fullest extent legally permitted, and in conjunction
therewith, will assure that all required expenditures are made in
a manner making it unnecessary for Mr. Berardi to incur any out
of pocket expenses; provided, however, that Mr. Berardi permits
the majority stockholders of Trilogy to select and supervise all
personnel involved in such defense and that Mr. Berardi waive any
conflicts of interest that such personnel may have as a result of
also representing Trilogy, its stockholders or other personnel
and agrees to hold them harmless from any matters involving such
representation, except such as involve fraud or bad faith.
CAROL BERARDI:
Carol Berardi's employment agreement expires on December 31,
2004. Her contract is automatically renewed unless specifically
canceled by Trilogy or Mrs. Berardi. Mrs. Berardi has an annual
base salary of $80,000. Her salary may be adjusted at six-month
intervals to reflect her performance as reflected in the
performance of Trilogy during such period. She is also eligible
for an annual bonus payable in a cash sum equal to 2.5% of the
net, pre tax profits of Trilogy and a bonus payable in the
Registrant's common stock, equal to the number of shares obtained
by dividing 20% of Mrs. Berardi's salary for the subject year by
the closing transaction price for the Registrant's common stock
on the last trading day of the subject year. Mrs. Berardi will,
unless specifically otherwise authorized by Trilogy's board of
directors, on a case by case basis, devote all of her business
time exclusively to the affairs of Trilogy. Trilogy will defend,
indemnify and hold Mrs. Berardi harmless from all liabilities,
suits, judgments, fines, penalties or disabilities, including
expenses associated directly, therewith (e.g., legal fees, court
costs, investigative costs, witness fees, etc.) resulting from
any reasonable actions taken by Mrs. Berardi in good faith on
behalf of Trilogy, its affiliates or for other persons or
entities at the request of the board of directors of Trilogy, to
the fullest extent legally permitted, and in conjunction
therewith, will assure that all required expenditures are made in
a manner making it unnecessary for Mrs. BERARDI TO INCUR ANY OUT
OF POCKET EXPENSES; PROVIDED, HOWEVER, that Mrs. Berardi permits
the majority stockholders of Trilogy to select and supervise all
personnel involved in such defense and that Mrs. Berardi waive
any conflicts of interest that such personnel may have as a
result of also representing Trilogy, its stockholders or other
personnel and agrees to hold them harmless from any matters
involving such representation, except such as involve fraud or
bad faith.
REPORT ON REPRICING OF OPTIONS OR STOCK APPRECIATION RIGHTS
Except as a result of its acquisition by the Registrant, Trilogy has never
repriced any of its options and has never had any stock appreciation rights. As
a result of the acquisition of Trilogy by the Registrant's, all of Trilogy's
outstanding options and warrants were converted into the right to receive 1/3 of
the number of shares in the Registrant's common stock at three times the
exercise price.
ITEM 403 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables disclose information concerning ownership of the
Registrant's common stock by Trilogy's officers, directors and former principal
stockholders (now holders of 5% or more of the Registrant's common stock). All
footnotes follow the second table. The Registrant's currently outstanding shares
of common stock, for purposes of these calculations, are calculated based on
information available as of December 15, 1999, and include both currently
outstanding securities (10,363,126) and securities which a named person has a
right to acquire within 60 days following the date of this report. Consequently,
the number of shares deemed outstanding for purposes of Table A will vary
materially from those deemed outstanding for purposes of Table B.
24
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of December 15, 1999, the following persons associated with Trilogy
(including any "group") are, based on information available to the Registrant,
beneficial owners of more than five percent of the Registrant's common stock
(its only class of voting securities). Of the number of shares shown in column
3, the associated footnotes indicate the amount of shares with respect to which
such persons have the right to acquire beneficial ownership as specified in
Commission Rule 13(d)(1), within 60 days following the date of this report. For
purposes of this Table, 10,363,126 shares of the Registrant's common stock are
assumed to be outstanding.
Footnotes follow Table B.
Table A
PRINCIPAL STOCKHOLDERS:
<TABLE>
<S> <C> <C> <C>
Title Amount and Nature Percent
Of Class Name and Address of Beneficial Owner Ownership of Class
Common Dennis Berardi 525,864 shares 5.1%
1050 Chapman Way; Palm City, Florida 34990
Common Carol Berardi 525,864 shares 5.1%
1050 Chapman Way; Palm City, Florida 34990
- --------
Footnotes follow Table B.
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
As of December 15, 1999, the following Table discloses the Registrant's
common stock (the only outstanding class of equity securities for the
Registrant, its parents or subsidiaries held by persons other than the
Registrant) other than directors' qualifying shares, beneficially owned by:
* all of Trilogy's directors and nominees, naming them each;
* each of the named Trilogy executive officers as defined in Item 402(a)
of Commission Regulation S-B;
* and all directors and executive officers of Trilogy as a group,without
naming them.
The Table shows in column 3 the total number of shares beneficially owned
and in column 4 the percent so owned. Of the number of shares shown in column 2,
the associated footnotes indicate the amount of shares, if any, with respect to
which such persons have the right to acquire beneficial ownership as specified
in Commission Rule 13(d)(1), within 60 days following the date of this report
(none being applicable). For purposes of this Table, 10,433,127 shares of the
Registrant's common stock are assumed to be outstanding. Footnotes for Table A
and Table B follow this Table.
25
<PAGE>
Table B
SECURITY OWNERSHIP OF MANAGEMENT:
<TABLE>
<S> <C> <C> <C>
BENEFICIAL AMOUNT OF NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER (1) EQUITY OWNED BENEFICIAL OWNERSHIP OF CLASS
Dennis Berardi 525,864 shares (1) 5.0%
1050 Chapman Way; Palm City, Florida 34990
Carol Berardi 525,864 shares (1) 5.0%
1050 Chapman Way; Palm City, Florida 34990
John Holmes 106,667 shares (2) (1) 1.0%
49504 Nautical Drive; Chesterfield, Michigan 48047
Arthur Calabro 26,667 shares (3) (1) 0.3%
661 Rolling Hills Court; Brick, New Jersey 08724
Michael Harris Jordan None (4) None None
21131 Northeast 24th Court; Miami, Florida 33180
Ryan D. Chamberlin None (5) None None
5410 Southeast 110th Street; Belleview, Florida 34420
Jane R. Bicks, D.V.M. 16,667 shares (6) (1) 0.2%
13619 Deer Creek Drive; Palm Beach Gardens, Florida 33418
David Cantley 8,667 shares (1) 0.1%
4197 Southeast Bayview Street; Stuart, Florida 34997
Stephen Berardi 17,667 shares (7) (1) 0.2%
1484-A Southwest Silverpine Way; Palm City, Florida 34990
All of Trilogy's Executive 1,178.395 shares (1) 11.4%
Officers and Directors
- --------
</TABLE>
FOOTNOTES TO TABLES A AND B.
(1) Record and beneficial ownership.
(2) Includes options to purchase 20,000 shares of the Registrant's common stock
at $0.75 per share until November 30, 2004 and 26,667 shares of the
Registrant's common stock at $0.75 per share until November 30, 2008.
(3) Includes options to purchase 6,667 shares of the Registrant's common stock
at $0.75 per share until November 30, 2004.
(4) Mr. Jordan serves as a director of Trilogy and of the Registrant and as the
Registrant's president. Does not include 100,000 shares of the Registrant's
common stock that Mr. Jordan is entitled to purchase pursuant to the terms
of his employment agreement with the Registrant because they are not
exercisable within the next 60 days.
(5) Does not include 7,500 shares of the Registrant's common stock that Mr.
Chamberlin is entitled to purchase pursuant to the terms of his agreement
with the Registrant to serve as one of its designees on Trilogy's board of
directors because they are not exercisable within the next 60 days.
26
<PAGE>
(6) Includes options to purchase 16,667 shares of the Registrant's common stock
at $0.75 per share until November 30, 2009.
(7) Includes options to purchase 16,667 shares of the Registrant's common stock
at $0.75 per share until November 30, 2004.
CHANGES IN CONTROL
The Registrant is not aware of any arrangements that may result in a change
in control of Trilogy, other than the change of control pursuant to which the
Registrant acquired Trilogy.
ITEM 404 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH DIRECTORS, NOMINEES FOR ELECTION AS A DIRECTOR, EXECUTIVE
OFFICERS, TEN PERCENT+ STOCKHOLDERS OR THEIR IMMEDIATE
FAMILIES
Since Trilogy's inception, it was a party to the following transactions in
which:
* a director or executive officer of Trilogy,
* a nominee for election as a director,
* a beneficial owner of ten percent or more of Trilogy's common
stock, or
* any member of the immediate family of any of the foregoing;
had or will have a direct or indirect interest, and did not involve: rates or
charges determined by competitive bids; services at rates or charges fixed by
law or governmental authority; services as a bank depository of funds, transfer
agent, registrar, trustee under a trust indenture; or, similar services:
<TABLE>
<S> <C> <C> <C>
Relationship Nature of Interest Amount of
Name to Trilogy in the Transaction Such Interest
- --------------------------------------------------------------------------------------------
Richard Berardi Brother of Dennis Berardi (1) (1)
Trilogy's chief executive officer
John Holmes Director and secretary (2) (2)
</TABLE>
- -------
(1) Provided Trilogy with certain marketing materials and songs, including the
Trilogy's Best Friends video, in consideration for $1,800 (of which only
$700 has been paid) and a royalty payments of $0.05 per copy.
(2) A consulting company owned by relatives has provided services to Trilogy
for which it is owed $95,000.
In addition to the foregoing, Trilogy is currently negotiating with a
company that employs Michael Berardi, a brother of Dennis Berardi, Trilogy's
chief executive officer, for product marketing rights.
27
<PAGE>
(B) PARENTS OF TRILOGY
As defined in Rule 405 of Commission Regulation C, a "parent" of a
specified person is an affiliate controlling such person directly, or indirectly
through one or more intermediaries. The same rule defines an affiliate as a
person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the person specified.
Based on such definitions, Mr. and Mrs. Berardi were the parents of Trilogy
until its acquisition by the Registrant, at which time the Registrant became the
"parent" of Trilogy.
ITEM 504 RISK FACTORS
TRILOGY MAY NOT BE ABLE TO ESTABLISH THE NUMBER OF INDEPENDENT FIELD
REPRESENTATIVES NECESSARY TO ACHIEVE ITS REVENUE PROJECTIONS OR ACHIEVE
PROFITABILITY.
As a network marketing company, Trilogy will be dependent upon a large
network of independent field representatives' to generate sufficient revenues
for it to be profitable. Trilogy's projections indicate that it will need to
establish a network of approximately 4,000 independent field representatives
each generating average revenues in excess of $100 per month in order to cover
operating expenses and not experience negative cash flow from operations. It has
been projected by Trilogy's management that this combination of active
independent field representatives and average monthly sales can be reached by
July of 2000. Trilogy's management has projected continued growth during the
balance of the next twelve months based on the assumption that approximately
7,200 active independent field representatives would be generating average
monthly revenues of approximately $163 per month (each) by the end of November
of 2000. Trilogy may not be able to recruit and properly train such number of
independent field representatives or they may not attain the average monthly
sales per representative necessary to achieve Trilogy's revenue projections or
attain profitability.
TRILOGY HAS NO E-COMMERCE OPERATING HISTORY AND MAY NOT BE ABLE TO SUCCESSFULLY
MANAGE ITS BUSINESS OR ACHIEVE PROFITABILITY.
Trilogy began selling its products through its independent field
representatives in late July 1999 but did not begin sales through the Internet
until early December of 1999. Trilogy's projections for the next twelve months
assume that a large portion of its sales will come through the Internet by way
of replicator sites of the www.trilogyonline.com corporate Web site. Trilogy
believes that the replicator sites will be a valuable sales tool for its
independent field representatives and will enable them to reach the sales goals
projected. However, Trilogy has a limited operating history on which to base an
evaluation of its business and prospects. Trilogy's prospects should be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development, particularly
companies in new and rapidly evolving markets such as online commerce. Such
risks for Trilogy include, but are not limited to an evolving and unpredictable
business model and the proper management of growth. To address such risks,
Trilogy must, among other things, develop, train and retain its network of
independent field representatives, develop and maintain its customer base,
implement and successfully execute its business and marketing strategy, continue
to develop and upgrade its technology and transaction-processing systems,
improve its host Web site and corresponding replicator sites, provide superior
support to the network of independent field representatives, provide superior
customer service and order fulfillment, respond to competitive developments, and
attract, retain and motivate qualified personnel. Trilogy may not be able to
successfully address such risks, or manage its business to achieve or maintain
profitability. The failure to do so could have a material adverse effect on
Trilogy's business, prospects, financial condition and results of operations.
28
<PAGE>
TRILOGY HAS INCURRED NET LOSSES SINCE INCEPTION AND ANTICIPATES CONTINUED LOSSES
AND NEGATIVE CASH FLOWS
From inception of its business in May of 1998 through September 30, 1999,
Trilogy incurred net operating losses of $1,007,942 (unaudited). As of September
30, 1999 Trilogy had a negative net equity of $219,290 (unaudited). Trilogy
anticipates that its losses from operations will continue for at least the next
seven months and that losses during the period from December 1, 1999 through
June of 2000 will be approximately $500,000. Trilogy's ability to become
profitable given its current and planned expenses depends on its ability to
generate and sustain substantial sales from a large but yet to be established
network of independent field representatives and from e-commerce operations. If
Trilogy does achieve profitability, it cannot be certain that it can sustain or
increase profitability on a quarterly or annual basis in the future. If Trilogy
cannot achieve and sustain operating profitability or positive cash flows from
operations, it may be unable to meet its working capital requirements without
seeking additional financing.
TRILOGY REQUIRES SUBSTANTIAL WORKING CAPITAL TO FUND ITS BUSINESS AND IS
DEPENDENT UPON THE REGISTRANT TO FUND ONGOING OPERATIONS
The Registrant has indicated that it intends to provide Trilogy with
funding in the amount of $650,000 over the next six months in addition to the
initial $250,000 already provided. Trilogy's projections indicate that
approximately 90% of such funding will be expended to cover negative cash flow
from operations during the next six to nine months. If Trilogy fails to meet its
projections or the Registrant is unable or unwilling to provide such funding,
its ability to continue operating its business could be jeopardized.
GENERAL ECONOMIC CONDITIONS
Trilogy's financial success may be detrimentally affected by a number of
factors wholly outside of its control, such as GENERAL OR SPECIAL ECONOMIC
CONDITIONS, WHETHER OR NOT SUCH CHANGES ARE GENERALLY PERCEIVED AS NEGATIVE
(E.G., recession, inflation, unemployment and interest rate fluctuations).
Changes can affect the costs of supplies, insurance, transportation, labor and
other expenses and could affect Trilogy's business. Changes can provide new or
improved opportunities but they can also negatively change the financial
environment in which Trilogy operates. To the extent that changes increase
net-operating expenses for Trilogy without permitting corresponding increases in
prices charged, such changes could reduce demands in the marketplace for its
services creating losses of business. While Trilogy will keep informed
concerning economic trends and developments and intends to develop plans for
dealing with them, no assurances can be provided that such efforts will succeed
in predicting or dealing with uncontrollable economic forces.
THE INDUSTRY
The Internet services industry is characterized by the constant emergence
of new technologies and markets which displace existing technologies and
markets. Such innovation can prove either positive or negative based on the
ability of Internet businesses to predict and participate in such changes rather
than to be replaced by them. Consumer's tastes and desires fluctuate and are
difficult to predict. There are no assurances that Trilogy will be able to
accurately predict industry trends or to keep pace with industry changes.
TRILOGY MAY BECOME SUBJECT TO ADDITIONAL GOVERNMENT REGULATION
Laws and regulations directly applicable to communications or commerce over
the Internet are becoming more prevalent. The laws governing the Internet,
however, remains largely unsettled, even in areas where there has been some
legislative action. It may take years to determine whether and how existing laws
such as those governing intellectual property, privacy, libel, contracts and
taxation apply to the Internet. In addition, the growth and development of the
market for online commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on companies conducting
business online. The adoption or modification of laws or regulations relating to
the Internet could adversely affect Trilogy's business.
29
<PAGE>
YEAR 2000 RISK MAY ADVERSELY AFFECT TRILOGY
Many existing computer programs use only two digits to identify a year.
These programs were designed and developed without addressing the impact of the
upcoming change in the century. If not corrected, many computer software
applications could fail or create erroneous results by, at or beyond the Year
2000. Trilogy has assessed its systems which permit the sale, order, processing
and delivery of products to its independent field representatives and customers
to determine Year 2000 compliance. Based on Trilogy's review and the results of
limited testing, Trilogy believes all of such systems are Year 2000 compliant.
Trilogy also uses software, computer technology and other services internally
developed and provided by third-party vendors that may fail due to the Year 2000
phenomenon. For example, Trilogy is dependent on the institutions involved in
processing its independent field representatives' and customers' credit card
payments. Trilogy is also dependent on telecommunications vendors and leased
point-of-purchase vendors to maintain network reliability. Consequently, errors
or defects that affect the operation of its systems could result in delay or
loss of revenue, interruption of shopping services, cancellation of customer
contracts, diversion of development resources, damage to its reputation, costs
and litigation costs, any of which could adversely affect its business,
financial condition and results of operations. The expenses associated with
Trilogy's assessment and potential remediation plan cannot be determined.
Further, at this time, Trilogy does not have enough information to determine the
most reasonably likely worse case scenario. Therefore, Trilogy does not have a
contingency plan in place to handle the most reasonably likely worse case
scenario, and it does not intend to create one. TECHNOLOGICAL OBSOLESCENCE
The Internet industry involves two of the most obsolescence sensitive areas
of modern business: computers and communications. Changes, especially in
computer systems involving both hardware and software seem to appear weekly and
require a balance between not permitting equipment and software to become stale
and non-competitive, resulting in lost business, and, making premature
expenditures on unproven systems. Failure to make the correct decision, at the
right time, could materially impair Trilogy's business prospects and
profitability.
TRILOGY'S MANAGEMENT TEAM IS NEW AND IT WILL NEED ADDITIONAL PERSONNEL
Trilogy is substantially dependent on the efforts of Dennis Berardi, its
chief executive officer and Carol Berardi, its president, to attract, train,
retain and motivate a large and extensive network of independent field
representatives that it will be dependent on for the bulk of its revenues. Mr.
and Mrs. Berardi have been successful in the past in building such a network of
field representatives for other companies and Trilogy expects that they will be
successful in building the organization for Trilogy as projected, but such
success cannot be assured. During the next twelve months Trilogy expects to add
additional personnel to manage the anticipated growth of its operations.
However, the e-commerce market is highly competitive, and retaining both
existing employees and new personnel could be costly in terms of cash
compensation or equity necessary, or such personnel may not be available to
Trilogy on any terms. Competition for qualified individuals to either replace or
supplement existing personnel is intense and Trilogy may be unable to
successfully attract, assimilate or retain sufficiently qualified personnel in
the future.
TRILOGY RELIES ON MANUFACTURERS FOR ITS PRODUCTS
Trilogy is dependent upon the manufacturers that supply it with
products for resale, and the availability of these products, which Trilogy
believes will be adequate to meet its demand, cannot be assured. As is common in
the industry, Trilogy has no long-term or exclusive arrangements with any
manufacturer that guarantees the availability of any of its products for resale.
30
<PAGE>
TRILOGY IS SUBJECT TO RISK OF SYSTEM FAILURE
Trilogy's success, in particular its ability to successfully receive and
fulfill orders and provide high quality customer service, largely depends on the
efficient and uninterrupted operation of its computer and communications
systems. Trilogy contracts with third parties to host its computer and
communications hardware systems and to maintain its critical connection to the
Internet.
Trilogy's systems and operations are vulnerable to damage or interruption
from fire, flood, power loss, telecommunications failure, break-ins and similar
events. Trilogy has no formal disaster recovery plan and carry no business
interruption insurance to compensate it for losses that may occur. Furthermore,
Trilogy's security mechanisms or those of its suppliers may not prevent security
breaches or service breakdowns. Despite Trilogy's implementation of security
measures, its servers may be vulnerable to computer viruses, physical or
electronic break-ins and similar disruptions. These events could cause
interruptions or delays in its business, loss of data or render it unable to
accept and fulfill orders.
TRILOGY IS SUBJECT TO RISKS ASSOCIATED WITH ONLINE COMMERCE SECURITY AND CREDIT
CARD FRAUD
A significant barrier to online commerce and communications is the secure
transmission of confidential information over public networks. Trilogy's
business may be adversely affected if its security measures do not prevent
security breaches. Trilogy cannot assure that it can prevent all security
breaches. To the extent that Trilogy's activities, or those of third-party
contractors, involve the storage and transmission of proprietary information
(such as credit card numbers), security breaches could damage its reputation,
and expose Trilogy to a risk of loss or litigation and possible liability. Under
current credit card practices, a merchant is liable for fraudulent credit card
transactions where, as is the case with the transactions that it processes, that
a merchant does not obtain a cardholder's signature. Fraudulent use of credit
card data in the future could adversely affect Trilogy's business.
TRILOGY IS SUBJECT TO CAPACITY CONSTRAINT RISKS; RELIANCE ON INTERNALLY
DEVELOPED SYSTEMS AND SYSTEM DEVELOPMENT RISKS
A key element in Trilogy's strategy is to generate a high volume of traffic
on, and use of, its corporate Web site and the replicator Web sites that it
anticipates will be purchased by its independent field representatives.
Accordingly, Trilogy's Web site transaction processing systems and network
infrastructure performance, reliability and availability are critical to its
operating results. These factors are also critical to Trilogy's reputation and
its ability to attract and retain independent field representatives and
customers and maintain adequate support to its independent field representatives
and adequate customer service levels. The volume of goods Trilogy sells and the
attractiveness of its product and service offerings will decrease if there are
any system interruptions that affect the availability of its Web sites or its
ability to fulfill orders. Trilogy intends to continually enhance and expand its
technology and transaction processing systems, and network infrastructure and
other technologies, to accommodate increases in the volume of traffic on Trilogy
Web sites. Trilogy may be unsuccessful in these efforts or it may be unable to
accurately project the rate or timing of increases in the use of its Web sites.
Trilogy may also fail to timely expand and upgrade its systems and
infrastructure to accommodate these increases.
31
<PAGE>
PROJECTIONS
Trilogy's proposed expansion and growth is largely based on confidential
internal projections predicated primarily on management's expectations of the
future performance of Trilogy and its network of independent field
representatives. The projections are based upon certain assumptions concerning
the economy and potential growth of the Internet and related industries, which
management cannot control, and on anticipated rapid and sustained growth in
Trilogy's network of independent field representatives. One of the material
assumptions is that there will be a demand for and acceptance of Trilogy's line
of products sufficient to generate projected revenues. Another material
assumption is that the replicator web sites will be received favorably by
Trilogy's independent sales representatives and will enable then to generate the
revenues projected. While management discussions with current and prospective
independent field representatives have led to optimistic expectations, there are
usually differences between expectations and actual results caused by events and
circumstances that do not occur as expected. There can be no assurance that past
or current indications of interest from the relatively small number of
independent field representatives attracted to date will result in the
generation of revenues projected or Trilogy's attainment of profitability.
TRILOGY'S MARKETS ARE HIGHLY COMPETITIVE
The online commerce market is new, rapidly evolving and intensely
competitive. Trilogy expects competition to intensify in the future because
barriers to entry are minimal. In addition, the pet nutraceutical and the human
nutritional supplements industry are highly competitive. Trilogy competes with a
growing number of manufacturers that sell their products directly online.
Trilogy also competes with traditional store-based retailers and mail order
and/or direct marketers. Competitive pressures created by any one of these
current or future competitors, could have a material adverse affect on Trilogy's
operations.
ITEM 504 USE OF PROCEEDS
The Registrant intends to invest a total of $900,000 in Trilogy, subject to
the accuracy of representations made by Trilogy it the acquisition agreement and
Trilogy's compliance with a number of its obligations under the acquisition
involving providing information that the Registrant is required to file with the
Commission in an accurate, complete and timely fashion. The Registrant provided
Trilogy with $250,000 of such funds on the effective date of the acquisition and
intended to provide another $325,000 on March 1, 2000 and the final $325,000 on
June 1, 2000. However, Trilogy's anticipated operations require an adjustment to
the contractual funding schedule (see Item 303).
Trilogy intends to use such funds as follows:
Purposes for Which Proceeds are to be Used Amounts
Payment of Merger Related Legal Expenses $ 22,000
Reduction in Accounts Payable on Effective Date $119,153
Balance of Accounts Payable on Effective Date $ 49,824
Repayment of Obligations to Officers, Employees and Affiliates $ 61,850
Payroll Tax Liability as of Effective Date $ 11,766
Sales Tax Liability as of Effective Date $ 2,614
Negative Cash Flow from Operations during December, 1999 $ 61,385
Negative Cash Flow from Operations January, 2000 $ 75,653
Negative Cash Flow from Operations February, 2000 $ 78,129
Negative Cash Flow from Operations March, 2000 $ 75,392
Negative Cash Flow from Operations April, 2000 $ 70,145
Negative Cash Flow from Operations May, 2000 $ 52,746
Negative Cash Flow from Operations June, 2000 $ 18,865
Additions to Average Inventory On Hand $100,000
Additional Furniture and Equipment $ 40,000
Working Capital $ 60,478
Total $900,000
32
<PAGE>
ITEM 701 RECENT SALES OF UNREGISTERED SECURITIES
In 1998 Trilogy issued to its co-founders, Dennis and Carol Berardi, a
total of 3,240,000 unregistered shares of its common stock, $0.001 par value per
share, in consideration for $92,946 in cash. The shares were issued in reliance
on the exemption from registration under the Securities Act provided by Section
4(2) thereof.
On May 6, 1999, Trilogy completed a participating preferred offering to
private accredited investors in the amount of $660,000, involving the issuance
of 1,320,000 unregistered shares of its common stock, $0.001 par value per share
and 660,000 unregistered shares of its Series A preferred stock, $0.50 stated
value per share. The shares were issued in reliance on the exemption from
registration under the Securities Act provided by Section 4(6) thereof.
During the period from August 19, 1999 until November 12, 1999, Trilogy
completed a second round of investment by six of the original accredited
investor subscribers to its participating preferred offering in the total amount
of $84,818. In exchange for this investment Trilogy issued 84,818 new
unregistered shares of common stock, $0.001 par value per share, re-issued
84,818 unregistered shares of common stock, $0.001 par value per share that were
returned to Trilogy by Dennis and Carol Berardi and issued 84,818 unregistered
shares of its Series A preferred stock, $0.50 stated value per share. The shares
were issued in reliance on the exemption from registration under the Securities
Act provided by Section 4(6) thereof.
Prior to the closing of the acquisition of Trilogy by the Registrant,
Trilogy issued a total of 62,184 shares of unregistered common stock, $0.001 par
value per share to ten of its employees and affiliates in consideration for
services rendered.
Prior to the acquisition of Trilogy by the Registrant, there were a total
of 4,707,001 unregistered shares of Trilogy's common stock, $0.001 par value per
share issued and outstanding and 744,818 unregistered shares of its Series A
preferred stock, $0.50 stated value per share issued and outstanding with all
shares of Trilogy's Series A preferred stock, $0.50 stated value per share,
converted, on a share per share basis, into shares of Trilogy's common stock,
$0.001 par value. The conversion was effected without registration under the
Securities Act in reliance on the exemption provided by Section 3(a)(10)
thereof. Because legal counsel to Trilogy failed to effect the actual manual
exchange of common for preferred shares called for by the acquisition agreement
prior to the closing, the actual transaction between the Registrant and Trilogy
may be deemed to have involved an exchange of shares of the Registrant's common
stock for shares of Trilogy's common stock and shares of Trilogy's preferred
stock, on a one share of the Registrant's common stock for three shares of
Trilogy's common stock or three shares of Trilogy's preferred stock basis. In
either case, the Registrant issued 1,817,273 shares of its unregistered common
stock to the former stockholders of Trilogy in exchange for all of Trilogy's
capital stock, the exchange having been effected in reliance on the exemptive
provisions of Section 4(2) of the Securities Act.
ITEM 702 INDEMNIFICATION:
Article X of Trilogy's articles of incorporation provides as follows:
"Subject to the qualifications contained in Section 607.0850, Florida Statutes,
[Trilogy] ... shall indemnify its officers and directors and former officers and
directors ... to the fullest extent against expenses (including attorneys fees),
judgments, fines and amounts paid in settlement arising out of his or her
services as an officer or director of ... [Trilogy]."
33
<PAGE>
ITEM 5. OTHER EVENTS.
YANKEES CONSULTING AGREEMENT
As of November 23, 1999, the Registrant became obligated to pay the Yankee
Companies, Inc., a Florida corporation which serves as the Registrant's
strategic consultant and which has become one of the Registrant's principal
stockholder ("Yankees"), a monthly fee of $5,000, together with hourly fees and
document licensing fees, pursuant to the terms of a consulting agreement entered
into on November 24, 1998. Because the Registrant requires all available cash to
fund operations of existing subsidiaries and for continuation of its acquisition
program, its management requested that Yankees agree to an amendment of the
consulting agreement pursuant to which Yankees will waive cash payments for an
additional period ending on December 31, 2000. Yankees has agreed to such
amendment, except that it will not cover payments to Yankees for the services of
its general counsel to AmeriNet, payments due to clerical employees of Yankees
for services provided to AmeriNet, or the services of Yankees personnel as
officers or directors of AmeriNet. In does cover all hourly consulting fees for
services provided by Yankees principals, all document licensing fees, and the
$5,000 monthly fee, all of which will be waived (not accrued) until December 31,
2000. In conjunction with arrangements where cash PAYMENTS ARE REQUIRED (E.G.,
for use of Yankees general counsel, secretarial and clerical personnel, or
reimbursement of out of POCKET COSTS, ETC.), the Registrant has requested that
Yankees consider accepting shares of the Registrant's unregistered common stock
issued in reliance on the exemptive provisions of Section 4(6) of the Securities
Act as compensation and Yankees has agreed to consider such arrangement, on a
case by case basis, subject to a 50% discount from the price paid by any other
subscriber for shares of the Registrant's unregistered common stock within a
reasonable period before or after the transaction in question.
In consideration for Yankees agreement to such amendment, the term of its
existing option to purchase shares of the Registrant's common stock was extended
until the later of December 31, 2003 or the sixth month following registration
of the options and the underlying common stock with the Securities and Exchange
Commission; and, the quantity of the Registrant's common stock subject to the
option was increased from 10% to 12.5% of its outstanding or reserved common
stock. However, option exercise was precluded until after June 30, 2000, and the
aggregate cost for exercise was increased from $60,000 to $90,000. In addition,
Yankees preferential right to subscribe for any securities offered by the
Registrant (a right of first refusal at a price equal to 50% of the price paid
by any other subscriber to the subject offering, limited offering, rights
offering or private placement) was confirmed and extended.
A copy of the amended agreement, dated effective as of November 23, 1999,
is filed as an exhibit to this report and the foregoing summary is qualified in
its entirety by reference to the actual language of the amended agreement.
AMENDMENT OF BYLAWS
The Registrant's board of directors also amended the Registrant's bylaws in
order to more closely conform provisions thereof pertaining to meetings of the
Registrant's stockholders to legal requirements under the Exchange Act. A copy
of the amended bylaws, dated December 14, 1999, is filed as an exhibit to this
report and the foregoing summary is qualified in its entirety by reference to
the actual language of the amended agreement.
34
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
As permitted by Item 7(d) of Form 8-K, the Registrant has elected to
provide certified financial statements called for by Item 301(c) of Commission
regulation SB for Trilogy not later than 60 days after the date that of this
report on Form 8-K but has elected to include the following unaudited financial
statements for Trilogy, prepared by management thereof in this report on Form
8-K.
Trilogy International, Inc.
Statements of Income
For the period May 1, 1998(date of inception) to December 31, 1998
and for the Six Months Ended June 30, 1999
and for the Nine Months ended September 30, 1999 (unaudited)
<TABLE>
<S> <C> <C> <C>
SIX MONTHS NINE MONTHS
PERIOD ENDED ENDED ENDED
DEC. 31, 1998 JUNE 30, 1999 SEPT. 30, 1999
Net revenues - - 38,571
Cost of revenues - - 20,888
--------------------------------------------------
Gross Profit - - 17,683
Selling, general and administrative expenses - 540,367 987,659
--------------------------------------------------
Operating Loss - (540,367) (969,976)
Other income:
Lease hold improvements abandoned (3,513)
Offering costs (24,739) (24,739)
Interest expense (213) (888)
Taxes (179) (179)
Depreciation - - (8,647)
--------------------------------------------------
Net Loss (3,513) (565,498) (1,004,429)
</TABLE>
35
<PAGE>
Trilogy International, Inc.
Balance Sheets
December 31, 1998, June 30, 1999 and September 30, 1999
ASSETS
<TABLE>
<S> <C> <C> <C>
DEC. 31, JUNE 30, SEPT.30,
-----------------------------------------------
1998 1999 1999
------------------------------------------------
Current assets:
Cash - 229,339 2,247
Deposits in transit - - 3,531
Accounts Receivable - - 2,132
Due from related party 3,240 3,240 -
Inventory 33,415 143,339 -
------------------------------------------------
Total current assets 3,240 265,994 151,249
Computer hardware, net - 64,159 -
Computer Software, net - 35,012 50,455
Office furniture and equipment, net - 16,322 18,072
Leashold improvements, net - - 5,662
Deposits - 18,648 15,675
Organizational costs 575 575 575
Start-up expenses 85,618 85,618
================================================
89,433 486,328 305,919
================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts Payable - - 138,815
Accrued expenses - 290,329 352,067
Related party obligations - 9,712 31,618
Sales Tax Payable - - 2,709
------------------------------------------------
Total current liabilities - 300,041 525,209
Stockholders' equity (deficit)
Series A Preferred, $.50 Stated Value per share: - 330,000 346,500
(See Notes)
Common Stock, $.001 par value per share: 3,240 4,560 4,626
30,000,000 shares authorized (See Notes)
Additional paid-in capital 89,706 420,737 437,526
Deficit (3,513) (569,010) (1,007,942)
Total Stockholders' equity (deficit) 89,433 186,287 (219,290)
------------------------------------------------
89,433 486,328 305,919
================================================
Notes:
SERIES A PREFERRED STOCK: June 30, 1999 660,000 shares authorized and 660,000 shares oustanding.
September 30, 1999, 900,000 shares authorized, 693,000 shares outstanding.
COMMON STOCK: December 31, 1998, 3,240,000 shares outstanding; June 30, 1999 4,560,000 shares
outstanding; September 30, 1999, 4,626,000 shares outstanding.
</TABLE>
36
<PAGE>
PRO FORMA FINANCIAL INFORMATION.
As permitted by Item 7(d) of Form 8-K, the Registrant has elected to
provide pro forma information called for by Item 301(d) of Commission Regulation
SB pertaining to its acquisition of Trilogy not later than 60 days after the
date that of this report on Form 8-K but has elected to include the following
unaudited pro forma information pertaining to its acquisition of Trilogy in this
report on Form 8-K.
EXHIBITS REQUIRED BY ITEM 601OF REGULATION S-B
The exhibits listed below and designated as filed herewith (rather than
incorporated by reference) follow the signature page in sequential order.
Designation Page
of Exhibit Number
as Set Forth or Source of
in Item 601 of Incorporation
Regulation S-B By Reference Description
(2) Plan of acquisition, reorganization,
arrangement, liquidation or succession:
.14 39 Agreement and Plan of Merger dated December
1, 1999 between the Registrant, Trilogy
and Trilogy Acquisition Corporation.
(3) (ii) Bylaws:
.3 214 Registrant's bylaws, as amended
(10) Material Contracts
.40 242 First amendment to Yankees Consulting
Agreement, dated November 23, 1999.
.41 244 First Amendment to Yankee Warrant Agreement,
dated November 23, 1999.
.42 Material agreements to which Trilogy is a
party or by which its is bound:
.1 258 AVN Communications
.2 259 Bellsouth Relay Agreement
.3 261 Bellsouth PRI Agreement
.4 263 Ciberlynx Contract
.5 267 Comco Equipment Lease
.6 272 Copyco Equipment Lease
.7 275 Consulting Agreement with MiPro, Inc.
.8 276 Deferred Compensation Agreement Carol Berardi
.9 277 Deferred Compensation Agreement Robert Rowe
.10 278 Deferred Compensation Agreement Debbie George
.11 279 Deferred Compensation Agreement David Cantley
.12 280 Deferred Compensation Agreement Dennis Berardi
.13 281 Deferred Compensation Agreement Dr. Jane Bicks
.14 282 Deferred Compensation Agreement Stephen Berardi
.15 283 Dr. Jane Enterprises Transition Agreement
.16 * Employment Agreement with Carol Berardi
.17 * Employment Agreement with Dennis Berardi
.18 * Employment Agreement with Dr. Jane Bicks
.19 284 Fawcett Video Marketing
.20 * Field Representative Terms of Agreement
.21 287 Genesis CCM Contract
.22 299 Genesis Webpage Genie contract
.23 311 Haskett - Trilogy Lease
.24 326 Replicator Site Terms of Agreement
.25 328 Royalty Agreement with Dr. Kamair Kokayi
.26 329 Royalty Agreement with Richard Berardi
.27 330 Royalty Agreement with Tana Henke
.28 * Trilogy Affiliate Agreement
.29 331 Trademark Registration
- --------
* Included as exhibits to or in the schedules to the Agreement and Plan
of Merger dated December 1, 1999 between the Registrant, Trilogy and
Trilogy Acquisition Corporation, filed herewith as exhibit 2.14
37
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERINET GROUP.COM, INC
Dated: December 15, 1999
/s/ Michael H. Jordan
---------------------------------
Michael Harris Jordan
President
38
Agreement of Merger
& Plan of Reorganization
BY AND AMONG
AMERINET GROUP.COM, INC., A DELAWARE CORPORATION
TRILOGY ACQUISITION CORPORATION, A FLORIDA CORPORATION; AND,
TRILOGY INTERNATIONAL, INC., A FLORIDA CORPORATION
TABLE OF CONTENTS
ARTICLE I: PLAN OF REORGANIZATION
1.1 The Merger; Definitions
1.2 Effective Date & Time
1.3 Effect of the Merger
1.4 Articles of Incorporation; Bylaws
1.5 Directors and Officers
1.6 Maximum Shares to Be Issued; Effect on Capital Stock
1.7 Dissenting Shares
1.8 Surrender of Certificates
1.9 No Further Ownership Rights in Trilogy's Securities
1.10 Lost, Stolen or Destroyed Certificates
1.11 Tax Consequences and Accounting Treatment
1.12 Taking of Necessary Action; Further Action
ARTICLE II: REPRESENTATIONS AND WARRANTIES OF
TRILOGY
2.1 Organization of Trilogy
2.2 Trilogy's Capital Structure
2.3 Subsidiaries
2.4 Authority
2.5 Trilogy's Financial Statements
2.6 No Undisclosed Liabilities
2.7 No Changes
2.8 Tax and Other Returns and Reports
2.9 Restrictions on Business Activities
2.10 Title of Properties; Absence of Liens and Encumbrances; Condition of
Equipment
2.11 Intellectual Property
2.12 Agreements, Contracts and Commitments
2.13 Interested Party Transactions
2.14 Governmental Authorization
2.15 Litigation
2.16 Accounts Receivable
2.17 Minute Books
2.18 Environmental and OSHA
2.19 Brokers' and Finders' Fees
2.20 Labor Matters
2.21 Insurance
2.22 Compliance with Laws
2.23 Complete Copies of Materials
2.24 Binding Agreements; No Default
2.25 Current Report on Form 8-K
2.26 FIRPTA
2.27 Employee Benefit Plans
2.28 Distribution Agreements
2.29 Representations Complete
39
<PAGE>
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
AMERINET AND TRILOGY ACQUISITION
3.1 Organization, Standing and Power
3.2 Capital Structure
3.3 Authority
3.4 Exchange Act Reports; AmeriNet's Financial Statements
3.5 Broker's and Finders' Fees
3.6 Ownership of Trilogy's Common Stock
3.7 Litigation
3.8 Limited Activities
3.9 No Undisclosed Liabilities
3.10 No Changes
3.11 Tax and Other Returns and Reports
3.12 Environmental and OSHA
3.13 Representations Complete
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business of Trilogy
4.2 No Solicitation
4.3 Conduct of Business of AmeriNet
ARTICLE V ADDITIONAL AGREEMENTS
5.1 Report on Form 8-K
5.2 Meeting of Trilogy's Stockholders
5.3 Access to Information
5.4 Confidentiality
5.5 Expenses
5.6 Public Disclosure
5.7 Consents
5.8 Affiliate Agreements
5.9 Legal Requirements
5.10 Blue Sky Laws
5.11 Best Efforts; Additional Documents and Further Assurances
5.12 Employment Agreements
5.13 Investment by AmeriNet in Surviving Corporation
5.14 The Surviving Corporation's Board of Directors
5.15 Credit for Time Employed
ARTICLE VI CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger
6.2 Additional Conditions to Obligations of Trilogy
6.3 Additional Conditions to the Obligations of AmeriNet and Trilogy
Acquisition
ARTICLE VII SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; ESCROW
7.1 Survival of Condition Subsequent; Representations and Warranties
7.2 Escrow Arrangements
ARTICLE VIII TERMINATION, AMENDMENT AND
WAIVER
8.1 Termination
8.2 Effect of Termination
8.3 Amendment
8.4 Extension; Waiver
40
<PAGE>
ARTICLE IX GENERAL PROVISIONS
9.1 Interpretation
9.2 Notice
9.3 Merger of All Prior Agreements Herein
9.4 Survival
9.5 Severability
9.6 Governing Law
9.7 Indemnification
9.8 Dispute Resolution
9.9 Benefit of Agreement
9.10 Further Assurances
9.11 Counterparts
9.12 License
SCHEDULES
Schedule 1.4 The Surviving Corporation's Constituent Documents
Schedule 1.6(B)(3) Trilogy's Options and Warrants
Schedule 2.2(B) Trilogy's Capital Structure
Schedule 2.4(D) Conflicts with Obligations
Schedule 2.5(A) Trilogy Financial Statements
Schedule 2.7 Changes Since Trilogy's Financial Statements
Schedule 2.8(A) Tax Disclosure Schedule
Schedule 2.10(A) Leased Real Property
Schedule 2.10(C) Equipment
Schedule 2.11 Intellectual Property
Schedule 2.12 Contracts and Agreements
Schedule 2.12(A)(12)Debt & Guarantee Instruments
Schedule 2.13 Related Party Transactions
Schedule 2.14 Governmental Authorization
Schedule 2.15 Litigation
Schedule 2.19 Brokers' and Finders' Fee
Schedule 2.20 List of Employees
Schedule 2.21 Insurance
Schedule 2.27 Employee Benefit Plans
Schedule 2.28 Distribution Agreements
Schedule 3.4(I) Outstanding Comment Letter
Schedule 4.1 Permitted Pre-Merger Actions
Schedule 5.7 Third Party Consents
Schedule 5.8 Affiliates
Schedule 5.12 List and Summary of Employment Agreements
Schedule 5.13 Use of Proceeds
Schedule 5.14 Projections
Schedule 6.3(M) Non-accredited investors
EXHIBITS
Exhibit 2.25 The Form 8-K Information
Exhibit 5.8 Affiliate Agreements
Exhibit 5.12 Copies of Employment Agreements
Exhibit 6.2(D) AmeriNet & Trilogy Acquisition Legal Opinion
Exhibit 6.3(E) Trilogy Legal Opinion
Exhibit 6.3(L) Confidentiality Agreements
Exhibit 7.2(A) Escrow Information
41
<PAGE>
AGREEMENT OF MERGER & PLAN OF REORGANIZATION
This Agreement of Merger & Plan of Reorganization (the "Agreement") is
made and entered into by and among Amerinet Group.com, Inc., a publicly held
Delaware corporation with a class of securities registered under Section 12(g)
of the Securities Exchange Act of 1934, as amended ("Amerinet" and the "Exchange
Act," respectively), Trilogy Acquisition Corporation, a Florida corporation and
a recently organized wholly-owned subsidiary of Amerinet ("Trilogy Acquisition")
and Trilogy International, Inc., a Florida corporation ("Trilogy;" AmeriNet,
Trilogy Acquisition and Trilogy being sometimes hereinafter collectively
referred to as the "Parties" or generically as a "Party").
PREAMBLE:
WHEREAS, the board of directors of AmeriNet, Trilogy Acquisition and
Trilogy believe it is in the best interests of each corporation and their
respective stockholders that Trilogy and Trilogy Acquisition combine into a
single company through the statutory merger of Trilogy with and into Trilogy
Acquisition (the "Merger") and, in furtherance thereof, have approved the
Merger; and
WHEREAS, pursuant to the terms of the Merger, as hereinafter set forth,
among other things, all of the outstanding and reserved securities of Trilogy
("Trilogy's Securities") shall be converted into shares of AmeriNet's common
stock, $0.01 par value ("AmeriNet's Common Stock") as hereinafter described; and
WHEREAS, the Parties intend that AmeriNet invest up to $900,000 within
180 days after completion of the Merger and the filing of required reports with
the United States Securities and Exchange Commission (the "Commission"); and
WHEREAS, Trilogy, AmeriNet and Trilogy Acquisition desire to make
certain representations and warranties and other agreements in connection with
the Merger and their subsequent operating and business relationships; and
WHEREAS, the Parties intend, by executing this Agreement, to adopt a
plan of reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code") in a manner qualifying for accounting on a
pooling of interest basis:
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the Parties, intending to be legally bound, hereby agree as follows:
Witnesseth:
ARTICLE I
PLAN OF REORGANIZATION
1.1 THE MERGER; DEFINITIONS.
(A) The Merger.
At the Effective Time (as defined in Section 1.2) and subject to and
upon the terms and conditions of this Agreement and Sections 607.1101,
607.1103, 607.1105, 607.1106, 607.1301, 607.1302 and 607.1320, Florida
Statutes (the "Florida Corporate Merger Laws"), Trilogy shall be merged
with and into Trilogy Acquisition, the separate corporate existence
of Trilogy shall cease and Trilogy Acquisition shall continue as the
surviving corporation.
42
<PAGE>
(B) Definitions.
The following terms, whether or not initially capitalized, will have the
meanings set forth below:
(1) Aggregate Common Stock Number:
The "Aggregate Common Stock Number" shall mean the aggregate
number of shares of Trilogy's Common Stock outstanding
immediately prior to the Effective Time.
(2) Aggregate Option Number:
The "Aggregate Option Number" shall mean the aggregate number of
shares of Trilogy's Common Stock issuable upon the exercise of
all outstanding options, warrants and other convertible
securities (if any) to acquire shares of Trilogy's Common Stock
(whether vested or unvested) immediately prior to the Effective
Time.
(3) Aggregate Share Number:
The "Aggregate Share Number" shall be 1,817,273.
(4) Affiliate:
An entity or person that controls, is controlled by or is under
common control with another person.
(5) Capital Stock:
The generic term used for equity securities, whether common,
preferred or otherwise.
(6) The Commission:
The United States Securities and Exchange Commission.
(7) Code:
The Internal Revenue Code of 1986, as amended.
(8) Escrow Number:
The "Escrow Number" shall be that number of shares of AmeriNet
Common Stock equal to the Aggregate Share Number multiplied by
twenty percent.
(9) Escrow Stock:
The shares of AmeriNet common stock issuable to Trilogy's
stockholders retained for the purpose described in Article VII.
(10) Exchange Act: The Securities Exchange Act of 1934, as amended.
(11) Exchange Act Reports:
43
<PAGE>
All reports filed by AmeriNet with the Commission pursuant to
Sections 12(g), 13 and 15(d) of the Exchange Act.
(12) Exchange Ratio:
The "Exchange Ratio" shall mean the quotient obtained by dividing
(x) the Aggregate Share Number by (y) the Aggregate Common Stock
Number.
(13) Florida Corporate Merger Laws:
Sections 607.1101, 607.1103, 607.1105, 607.1106, 607.1301,
607.1302 and 607.1320, Florida Statutes.
(14) Knowledge:
When used to qualify a representation or warranty, the word
"knowledge" or any derivations or variations thereof, whether in
the form of a word or phrase, shall mean knowledge after
reasonable inquiry by an executive officer of the legal entity on
whose behalf the assertion is made and will include information
that such legal entity should have had in the exercise of
reasonable diligence.
(15) Material:
When used to qualify a representation or warranty, the word
"material" or any derivations or variations thereof, whether in
the form of a word or phrase, shall mean a variance that could
have negatively affected a decision by a reasonably prudent
person to engage in the transactions contemplated by this
Agreement, and shall be measured both on the occasion in which
such term is referenced as well as on an aggregate basis with
other similar matters.
(16) NASD:
The National Association of Securities Dealers, Inc., a Delaware
corporation and self regulatory organization registered with the
Commission.
(17) Options or Warrants:
The terms "Option[s]" and "Warrant[s]," as used in connection
with Trilogy, shall be deemed to include Trilogy's currently
outstanding ten year options, its currently outstanding five year
warrants and any other rights to receipt of securities of
Trilogy, unless the context clearly requires a different
interpretation.
(18) OTC Bulletin Board:
The over the counter electronic securities market operated by the
NASD.
44
<PAGE>
(19) Securities Act:
The Securities Act of 1933, as amended.
(20) Substantial Compliance:
Compliance which the Party for whose benefit or at whose request
an act is performed, or for whose benefit or at whose request an
act is refrained from could under the circumstances be reasonably
expected to accept as full compliance.
(21) Surviving Corporation:
Trilogy Acquisition, as the surviving corporation after the
Merger, but operating under the name "Trilogy International,
Inc.".
(22) Tax: For the purposes of this Agreement, a "Tax" or, collectively,
"Taxes," means any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or
measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions
imposed with respect to such amounts and any obligations under
any agreements or arrangements with any other person with respect
to such amounts.
(23) Additional defined terms are specified in certain sections and
subsections below and are characterized by the use of initial
letter capitalization.
1.2 EFFECTIVE DATE & TIME.
(A) As promptly as practicable after the satisfaction or waiver of the
conditions set forth in Article VI, the Parties shall cause the Merger
to be consummated by filing articles of merger (the "Articles of
Merger") with the Secretary of State of the State of Florida, in such
form as required by, and executed in accordance with the relevant
provisions of the Florida Corporate Merger Laws.
(B) The effective date and time of the Merger shall be the time on which
the Articles of Merger are recorded as having been filed by the
Secretary of State of the State of Florida on Monday, November 29,1999
(the "Effective Date" and the "Effective Time," respectively).
(C) (1) This Agreement is being executed on November 27, 1999 and the
Parties hereby acknowledge that:
(a) AmeriNet has caused $250,000 to be deposited in an
attorneys' trust account maintained by Michael
Harris, P.A., a Florida professional corporation
which is acting as legal counsel to Trilogy in
conjunction with the Merger (the "Closing Deposit"
and the "Harris Firm");
(b) The Closing Deposit is intended to meet AmeriNet's
obligation to invest at least $250,000 in Trilogy
Acquisition, as called for by Section 5.13(A) of this
Agreement.
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(2) In the event that on the Effective Date the Parties have
completed execution of this Agreement and have thereafter
confirmed in writing to each other and to the Harris Firm that
they are satisfied that all conditions precedent to the Merger
have been met or are being waived, deferred or converted to
conditions subsequent, the Harris Firm will cause the Merger
to be effected by filing the articles of merger provided to it
by AmeriNet's legal counsel with the Department of State of
the State of Florida in the manner required by the laws of the
State of Florida to effectuate the Merger, and, upon receipt
of confirmation that the filing is effective, shall release
the proceeds of the Closing Deposit to the Successor
Corporation (the "Closing").
(3) In the event that the Merger does not take place on the
Effective Date, the Harris Firm will immediately return the
proceeds of the Closing Deposit to the order of AmeriNet.
1.3 EFFECT OF THE MERGER.
(A) At the Effective Time, the effect of the Merger shall be as provided
under the Florida Corporate Merger Laws.
(B) Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time all the property, rights, privileges, powers and
franchises of Trilogy and Trilogy Acquisition shall vest in the
Surviving Corporation and all debts, liabilities and duties of Trilogy
and Trilogy Acquisition shall become the debts, liabilities and duties
of the Surviving Corporation.
1.4 ARTICLES OF INCORPORATION: BYLAWS.
Unless otherwise determined by AmeriNet prior to the Effective Date,
provided that they are materially similar to the forms of articles of
incorporation and bylaws included in Schedule 1.4, at the Effective Time:
(A) The articles of incorporation of Trilogy Acquisition, as in effect
immediately prior to the Effective Time, shall be the articles of
incorporation of the Surviving Corporation until thereafter amended as
provided by LAW AND SUCH ARTICLES OF INCORPORATION; PROVIDED, HOWEVER,
that Article I of the articles of incorporation of the Surviving
Corporation, shall be amended to read as follows: "The name of the
corporation is Trilogy International, Inc."
(B) The bylaws of Trilogy Acquisition, as in effect immediately prior to
the Effective Time, shall be the bylaws of the Surviving Corporation
until thereafter amended.
1.5 DIRECTORS AND OFFICERS.
Subject to the requirements of Section 5.14, the directors of Trilogy
Acquisition immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the articles of incorporation and bylaws of the Surviving Corporation, and the
officers of Trilogy Acquisition immediately prior to the Effective Time shall be
the initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
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1.6 MAXIMUM SHARES TO BE ISSUED: EFFECT ON CAPITAL STOCK.
(A) (1) The number of shares of AmeriNet Common Stock to be issued
(excluding the shares of AmeriNet Common Stock to be reserved for
issuance upon exercise of Trilogy's Options and Warrants assumed
by AmeriNet) in exchange for the cancellation of all of Trilogy's
Common Stock (the only Trilogy securities to be outstanding or
reserved at the Effective Time); shall be determined immediately
prior to the Effective Date and shall be equal to the Aggregate
Share Number [as defined, along with other capitalized terms used
herein, in Section 1.1(b)]; provided, however, that such
Aggregate Share Number shall be adjusted as provided in Section
1.6(B)(5) below and to reflect the exercise of any Dissenters'
Rights which will result in a pro rata adjustment to the
Aggregate Share Number, as provided for in Section 1.7 below.
(2) No adjustment shall be made in the number of shares of AmeriNet
Common Stock issued in the Merger as a result of any cash
proceeds received by Trilogy from the date hereof to the
Effective Date pursuant to the exercise of currently outstanding
Options or Warrants to acquire Trilogy's common stock; provided
that:
(a) The proceeds therefrom are retained in a segregated
escrow account by Trilogy's legal counsel and are not
directly or indirectly (through the incurrence of
debt or otherwise) expended prior to the conclusion
of the Merger;
(b) Such funds are credited against the $250,000 in
funding to be provided by AmeriNet to the Surviving
Corporation pursuant to Section 5.13 of this
Agreement; and
(c) The securities issuable upon exercise of the Options
and Warrants are held in abeyance until the Effective
Time, whereupon AmeriNet common stock shall be issued
as provided in Section 1.6 below.
(B) Subject to the terms and conditions of this Agreement, as of the
Effective Time, by virtue of the Merger and without any action on the
part of Trilogy Acquisition, Trilogy or the holder of any of the
following securities:
(1) Conversion of Trilogy's Securities.
Each share of Trilogy's common stock, par value $0.001 per
share [ ("Trilogy's Common Stock") including all of Trilogy's
formerly outstanding preferred stock par value $0.001 per
share which will have been converted to or exchanged for
Trilogy's Common Stock prior to the Effective Time ("Trilogy's
Preferred Stock,")] outstanding immediately prior to the
Effective Time [other than any shares of Trilogy's Capital
Stock to be canceled pursuant to Section 1.6 and any
Dissenting Shares, as defined and to the extent provided in
Section 1.7] will be canceled and extinguished and be
converted automatically into the right to receive that number
of shares of AmeriNet Common Stock equal to the Exchange Ratio
upon surrender of the certificate representing such shares of
Trilogy's Common Stock in the manner provided in Section 1.8.
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(2) Cancellation of AmeriNet Owned and Trilogy Owned Stock.
Each share of Trilogy's Common Stock owned by Trilogy
Acquisition, AmeriNet, Trilogy or any direct or indirect
wholly owned subsidiary of AmeriNet, Trilogy Acquisition or of
Trilogy immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof.
(3) Stock Options & Warrants.
(a) All of Trilogy's Common Stock purchase Options and
Warrants are disclosed in Schedule 1.6(B)(3) and no
additional rights to purchase any Trilogy securities
will be granted without the prior written consent of
AmeriNet.
(b) At the Effective Time, all Options and Warrants to
purchase Trilogy's Common Stock shall be assumed by
AmeriNet and entitle the holder to purchase one share
of unregistered AmeriNet Common Stock for every three
shares of Trilogy's Common Stock that was issuable
pursuant to such Option or Warrant prior to the
Merger, at $0.75 per share; PROVIDED, THAT:
(i) The shares of AmeriNet Common Stock issuable
upon exercise of the Option or Warrant will
be issued in reliance on the exemptive
provisions of Section 4(2) of the Securities
Act of 1933, as amended (the "Securities
Act") and that at the time of exercise the
AmeriNet Common Stock may be legally issued
in reliance of Section 4(2) of the
Securities Act;
(ii) The Warrants will be exercisable for a
period of five years following the Effective
Time; and
(iii) The terms of the Options or Warrants after
their conversion to AmeriNet options and
warrants, other than as specifically set
forth in this Agreement, shall be identical
to the terms at the time of their issuance.
(c) In the event that AmeriNet files a registration
statement on Commission Form S-8 registering
securities to be issued or held by employees of
AmeriNet or of AmeriNet's subsidiaries, the AmeriNet
common stock purchase Options received by and held by
employees and consultants of the Surviving
Corporation and former employees and consultants of
Trilogy, shall be included therein, to the extent
that they are legally eligible for inclusion therein.
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(4) Capital Stock of Trilogy Acquisition.
Each stock certificate of Trilogy Acquisition evidencing
ownership of any such shares shall continue to evidence
ownership of such shares of Common Stock of the Surviving
Corporation, all of which will be held by AmeriNet.
(5) Adjustments to Exchange Ratio.
The Exchange Ratio shall be adjusted to reflect fully the
effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities
convertible into AmeriNet Common Stock or Trilogy's Common
Stock), reorganization, recapitalization or other like change
with respect to AmeriNet Common Stock or Trilogy's Common
Stock occurring after the date hereof and prior to the
Effective Time, and the exercise of any Dissenters' Rights.
(6) Fractional Shares.
No fraction of a share of AmeriNet Common Stock will be
issued, but in lieu thereof each holder of shares of Trilogy's
Common Stock who will otherwise be entitled to a fraction of a
share of AmeriNet Common Stock (after aggregating all
fractional shares of AmeriNet Common Stock to be received by
such holder) shall be entitled to receive from AmeriNet a
whole share of AmeriNet Common Stock.
1.7 DISSENTING SHARES.
(A) Notwithstanding any provision of this Agreement to the contrary, any
shares of Trilogy's Capital Stock held by a holder who has demanded and
perfected appraisal rights for such shares in accordance with the
Florida Corporate Merger Laws and who, as of the Effective Time, has
not effectively withdrawn such appraisal rights ("Dissenting Shares"),
shall not be converted into or represent a right to receive AmeriNet
Common Stock pursuant to Section 1.6, but the holder thereof shall only
be entitled to such rights as are granted by the Florida Corporate
Merger Laws.
(B) Notwithstanding the provisions of subsection (A), if any holder of
shares of Common Stock of Trilogy who demands appraisal of such shares
under the Florida Corporate Merger Laws shall effectively withdraw the
right to appraisal, then, as of the later of the Effective Time and the
occurrence of such event, such holder's shares shall automatically be
converted into and represent only the right to receive AmeriNet Common
Stock, without interest thereon, upon surrender of the certificate
representing such shares.
(C) (1) Trilogy shall give AmeriNet:
(a) Prompt notice of any written demands for appraisal of
any shares of Capital Stock of Trilogy, withdrawals
of such demands, and any other instruments served
pursuant to the Florida Corporate Merger Laws and
received by Trilogy; and
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(b) The opportunity to participate in all negotiations
and proceedings which take place prior to the
Effective Time with respect to demands for appraisal
under the Florida Corporate Merger Laws.
(2) Trilogy shall not, except with the prior written consent of
AmeriNet, voluntarily make any payment before the Effective
Time with respect to any demands for appraisal of Capital
Stock of Trilogy or offer to settle or settle any such
demands.
(D) The Aggregate Share Number shall be reduced to reflect the quantity of
AmeriNet Common Stock that would have been issued to person's electing
to exercise Dissenters's Rights.
(E) All payments to Trilogy Capital Stockholders that exercise Dissenters'
Rights shall be made by Trilogy.
1.8 SURRENDER OF CERTIFICATES.
(A) Exchange Agent.
Unless modified by AmeriNet, Liberty Transfer Co., Inc., of Huntington,
New York, AmeriNet's current transfer agent, shall serve as exchange
agent (the "Exchange Agent") in the Merger.
(B) AmeriNet to Provide Common Stock.
Promptly after the Effective Time, AmeriNet shall make available to the
Exchange Agent for exchange in accordance with this Article I the
shares of AmeriNet Common Stock issuable pursuant to Section 1.6 in
exchange for outstanding shares of Trilogy's Common Stock.
(C) Exchange Procedures.
(1) Promptly after the Effective Time, the Surviving Corporation,
shall cause to be mailed to each holder of record of a
certificate or certificates (the "Certificates") which
immediately prior to the Effective Time represented
outstanding shares of Trilogy's Common Stock whose shares were
converted into the right to receive shares of AmeriNet Common
Stock pursuant to Section 1.6:
(a) A letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent
and shall be in such form and have such other
provisions as AmeriNet may reasonably specify); and
(b) Instructions for use in effecting the surrender of
the Certificates in exchange for certificates
representing shares of AmeriNet Common Stock.
(2) Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be
appointed by AmeriNet, together with such letter of
transmittal, duly completed and validly executed in accordance
with the instructions thereto, the holder of such Certificate
shall be entitled to receive in exchange therefor a
certificate representing the number of whole shares of
AmeriNet Common Stock (less the number of shares of AmeriNet
Common Stock to be deposited in the Escrow Fund on such
holder's behalf pursuant to Article VII hereof) to which such
holder is entitled pursuant to Section 1.6, and the
Certificate so surrendered shall forthwith be canceled.
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(3) As soon as practicable after the Effective Time, and subject
to and in accordance with the provisions of Article VII
hereof, AmeriNet shall cause to be distributed to the Escrow
Agent (as defined in Article VII) a certificate or
certificates representing that number of shares of AmeriNet
Common Stock equal to the Escrow Number which shall be
registered in the name of the Escrow Agent.
(4) Such shares shall be beneficially owned by the holders on
whose behalf such shares were deposited in the Escrow Fund but
shall be available to compensate AmeriNet for certain damages
as provided in Article VII.
(5) Until so surrendered, each outstanding Certificate that, prior
to the Effective Time, represented shares of Trilogy's Common
Stock will be deemed from and after the Effective Time, for
all corporate purposes, other than the payment of dividends,
to evidence the ownership of the number of full shares of
AmeriNet Common Stock into which such shares of Trilogy's
Common Stock shall have been so converted in accordance with
Section 1.6.
(D) Distributions With Respect to Unexchanged Shares.
(1) No dividends or other distributions declared or made after the
Effective Time with respect to AmeriNet Common Stock with a
record date after the Effective Time will be paid to the
holder of any unsurrendered Certificate with respect to the
shares of AmeriNet Common Stock represented thereby until the
holder of record of such Certificate shall surrender such
Certificate.
(2) Subject to applicable law, following surrender of any such
Certificate, there shall be paid to the record holder of the
certificates representing whole shares of AmeriNet Common
Stock issued in exchange therefor, without interest, at the
time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of AmeriNet
Common Stock.
(E) Transfers of Ownership.
If any certificate for shares of AmeriNet Common Stock is to be issued
in a name other than that in which the certificate surrendered in
exchange therefor is registered, it will be a condition of the issuance
thereof that the certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to AmeriNet or any agent
designated by it any transfer or other Taxes required by reason of the
issuance of a certificate for shares of AmeriNet Common Stock in any
name other than that of the registered holder of the certificate
surrendered, or established to the satisfaction of AmeriNet or any
agent designated by it that such Tax has been paid or is not payable.
(F) No Liability.
Notwithstanding anything to the contrary in this Section 1.8, none of
the Exchange Agent, the Surviving Corporation, or any other Party shall
be liable to a holder of shares of AmeriNet Common Stock or Trilogy's
Capital Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
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1.9 NO FURTHER OWNERSHIP RIGHTS IN TRILOGY'S SECURITIES.
(A) All shares of AmeriNet Common Stock issued upon the surrender for
exchange of shares of Trilogy's Common Stock in accordance with the
terms hereof (including any cash paid in respect thereof) shall be
deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Trilogy's Common Stock, and there shall be
no further registration of transfers on the records of the Surviving
Corporation, of shares of Trilogy's Capital Stock which were
outstanding immediately prior to the Effective Time.
(B) If, after the Effective Time, Certificates are presented to the
Surviving Corporation, for any reason, they shall be canceled and
exchanged as provided in this Article I.
1.10 LOST, STOLEN OR DESTROYED CERTIFICATES.
In the event any certificates evidencing shares of Trilogy's Common
Stock shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed
certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of AmeriNet Common Stock and cash FOR
FRACTIONAL SHARES, IF ANY, AS MAY BE REQUIRED PURSUANT TO SECTION 1.6;
PROVIDED, HOWEVER, that AmeriNet may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificates to deliver a bond in such sum as
it may reasonably direct as indemnity against any claim that may be
made against AmeriNet or the Exchange Agent with respect to the
certificates alleged to have been lost, stolen or destroyed.
1.11 TAX CONSEQUENCES AND ACCOUNTING TREATMENT.
(A) It is intended by the Parties that the Merger shall constitute a
reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended, and the Parties agree that if
modification of the terms of this Agreement in a non-material manner to
attain such qualification is necessary, they will negotiate in good
faith to make such required modifications.
(B) The Parties intend that this reorganization qualify for accounting
treatment as a pooling of interests rather than as a purchase and the
Parties agree that if modification of the terms of this Agreement is
necessary to attain such accounting treatment they will negotiate in
good faith to make such required modifications; however, the Parties
acknowledge that the exchange of the outstanding Trilogy Preferred
Stock for shares of Trilogy's Common Stock immediately prior to
execution of this Agreement may make pooling of interest accounting for
the Merger unavailable and such unavailability will not have any effect
on the rights or obligations of the Parties under this Agreement.
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1.12 TAKING OF NECESSARY ACTION: FURTHER ACTION.
If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement
including, without limitation: (i) the vesting in the Surviving
Corporation of full right, title and possession to all assets,
property, rights, privileges, powers and franchises of Trilogy and
Trilogy Acquisition; (ii) compliance with the requirements of Code
Section 368; and, (iii) use of the pooling of interest method to
account for the reorganization in the audited financial statement of
AmeriNet and the Surviving Corporation; the officers and directors of
AmeriNet, Trilogy and Trilogy Acquisition are fully authorized in the
name of their respective corporations or otherwise to take, and will
take, all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TRILOGY
Trilogy hereby represents and warrants to AmeriNet and Trilogy
Acquisition, as a material inducement to their entry into this Agreement,
subject to the exceptions specifically disclosed in the schedules (referencing
the appropriate section number) supplied by Trilogy to AmeriNet and certified by
Trilogy (the "Trilogy's Schedules"), as follows:
2.1 ORGANIZATION OF TRILOGY.
(A) Trilogy is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida.
(B) Trilogy has the corporate power to own its property and to carry on its
business as now being conducted and as proposed to be conducted by
Trilogy.
(C) Trilogy is duly qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which the failure to be so
qualified would have a material adverse effect on the business, assets
(including intangible assets), financial condition, or results of
operations of Trilogy.
(D) Trilogy has delivered a true and correct copy of its articles of
incorporation and bylaws (or similar governing instruments), each as
amended to date, to counsel for AmeriNet.
2.2 TRILOGY'S CAPITAL STRUCTURE.
(A) (1) The authorized Capital Stock of Trilogy consists of
30,000,000 shares of Common Stock, par value $0.001 per
share and 2,500,000 shares of Preferred Stock, $0.001 par
value per share;
(2) Pursuant to Article V (c) of the second amendment to Trilogy's
articles of incorporation filed with the Florida Department of
State (the "Second Amendment"), 660,000 shares of the
Preferred Stock have been designated as Class A Preferred with
a stated value of $0.50 per share and with the attributes
described in Trilogy's articles of incorporation;
(3) Pursuant to rights granted to Trilogy's board of directors in
the Second Amendment, an additional 84,818 shares of the Class
A Preferred Stock have been authorized by Trilogy's board of
directors.
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(4) Prior to the Effective Time, all shares of Trilogy's Preferred
Stock shall have been converted to or exchanged for shares of
Trilogy's Common Stock, on a share per share basis.
(B) There are 4,707,001 shares of Trilogy's Common Stock and 744,818 shares
of Trilogy's Class A Preferred Stock issued and outstanding, held by
the persons, and in the amounts, set forth on Schedule 2.2(B).
(C) All outstanding shares of Trilogy Capital Stock are duly authorized,
validly issued, fully paid and nonassessable and not subject to
preemptive rights created by statute, the articles of incorporation or
bylaws of Trilogy or any agreement to which Trilogy is a party or is
bound.
(D) (1) Trilogy has reserved 1,016,819 shares of Common Stock for
issuance subject to outstanding, unexercised five year
Warrants (744,818) and ten year incentive stock Options
(272,001), there being no other obligations directly or
indirectly obligating Trilogy to issue any of its securities
to any person for any purpose.
(2) (a) Schedule 1.6(B)(3) sets forth for each
outstanding option and warrant the name of the holder
of such option or warrant, the number of shares
subject to such option or warrant, the exercise price
of such option or warrant, the number of shares as to
which such option or warrant is exercisable and, if
the exercisability of such option or warrant will be
accelerated in any way by the transactions
contemplated by this Agreement, an indication of the
extent of such acceleration.
(b) Schedule 1.6(B)(3) also describes any repricing of
Trilogy's Options or Warrants which has taken place.
(3) Except as set forth in Schedule 1.6(B)(3), there are no other
options, warrants, calls, rights, commitments or agreements of
any character to which Trilogy is a party or by which it is
bound obligating Trilogy to issue, deliver, sell, repurchase
or redeem, or cause to be issued, delivered, sold, repurchased
or redeemed, any shares of the Trilogy Capital Stock or
obligating Trilogy to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement.
2.3 SUBSIDIARIES.
Trilogy has no subsidiaries or affiliated companies and does not
otherwise own any shares of stock or any interest in, or control,
directly or indirectly, any other corporation, partnership,
association, joint venture or business entity.
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2.4 AUTHORITY.
(A) Trilogy has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby.
(B) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Trilogy, subject only to the
approval of the Merger and the other transactions contemplated hereby,
by Trilogy's stockholders as contemplated by Section 6.1(A).
(C) This Agreement has been duly executed and delivered by Trilogy and
subject to the proper authorization of this Agreement by the respective
boards of directors of AmeriNet and Trilogy Acquisition and its due
execution and delivery by AmeriNet and Trilogy Acquisition to Trilogy,
constitutes the valid and binding obligation of Trilogy.
(D) Except as specifically disclosed in Schedule 2.4(D), the execution and
delivery of this Agreement by Trilogy does not, and the consummation of
the transactions contemplated hereby will not, conflict with, or result
in any violation of, or default under (with or without notice or lapse
of time, or both), or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of a material benefit under
(i) any provision of the articles of incorporation or bylaws of Trilogy
or (ii) any material mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Trilogy or its properties or assets.
(E) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality
("Governmental Entity"), is required by or with respect to Trilogy in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for (i)
the filing of the Articles of Merger with the Florida Secretary of
State and (ii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under
applicable state and federal securities laws (notification on Form D)
and the laws of any foreign country.
2.5 TRILOGY'S FINANCIAL STATEMENTS.
(A) Schedule 2.5(A) includes Trilogy's unaudited financial statements
(balance sheets, income statements and related schedules and footnotes)
as of and for the fiscal year ending June 30, 1999 and for the three
months ended September 30, 1999 (collectively, the "Trilogy Financial
Statements").
(B) The Trilogy Financial Statements are complete and correct in all
material respects and have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a basis consistent
throughout the periods indicated.
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(C) The Trilogy Financial Statements present fairly the financial condition
and operating results of Trilogy as of the dates and during the periods
indicated therein, subject to normal year-end audit adjustments, which
will not be material in the aggregate.
(D) The unaudited balance sheet of Trilogy as of September 30, 1999 is
hereinafter referred to as "Trilogy's Balance Sheet."
(E) (1) The Trilogy Financial Statements can and will be audited,
at Trilogy's expense, as required to comply with the
requirements for material acquisitions under Commission
Regulation S-B in a manner permitting AmeriNet to comply with
its obligation under the Exchange Act to provide information
concerning Trilogy in current reports on Commission Form 8-K.
(2) The compliance of the Trilogy Financial Statements on a timely
basis with the requirements of Commission Regulation S-B shall
constitute a condition subsequent to the obligations of
AmeriNet and Trilogy Acquisition under this Agreement and in
the event of the failure of such condition subsequent, then,
at AmeriNet's sole option:
(a) The Merger may be rescinded, and all funds advanced
by AmeriNet to the Surviving Corporation shall be
repaid, with interest at the annual rate of 8%, to
AmeriNet within 30 days after such rescission; or
(b) The Escrow Shares shall be deemed defaulted to
AmeriNet and the Merger shall be restructured in a
manner complying with AmeriNet's reporting and other
obligations under the Exchange Act, including the
sale by AmeriNet of the Surviving Corporation.
2.6 NO UNDISCLOSED LIABILITIES.
Trilogy does not have any material liabilities or obligations, either
accrued or contingent (whether or not required to be reflected in financial
statements in accordance with generally accepted accounting principles), and
whether due or to become due, which individually or in the aggregate, (i) have
not been reflected in the Trilogy Balance Sheet (including the notes thereto) or
(ii) have not been specifically described in this Agreement or in the Trilogy
Schedules.
2.7 NO CHANGES.
Except as specifically disclosed in Schedule 2.7, since the date of the
Trilogy Financial Statements there has not been, occurred or arisen any:
(A) Transaction by Trilogy except in the ordinary course of business as
conducted on that date;
(B) Capital expenditure by Trilogy, either individually or in the aggregate,
exceeding $5,000;
(C) Destruction, damage to, or loss of any assets (including without limitation
intangible assets) of Trilogy (whether or not covered by insurance), either
individually or in the aggregate, exceeding $5,000;
(D) Labor trouble or claim of wrongful discharge, sexual harassment or other
unlawful labor practice or action;
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(E) Change in accounting methods or practices (including any change in
depreciation or amortization policies or rates, any change in policies in
making or reversing accruals, or any change in capitalization of software
development costs) by Trilogy;
(F) Declaration, setting aside, or payment of a dividend or other distribution
in respect to the shares of Trilogy, or any direct or indirect redemption,
purchase or other acquisition by Trilogy of any of its shares;
(G) Increase in the salary or other compensation payable or to become payable
by Trilogy to any of its officers, directors or employees, or the
declaration, payment, or commitment or obligation of any kind for the
payment, by Trilogy, of a bonus or other additional salary or compensation
to any such person;
(H) Acquisition, sale or transfer of any asset of Trilogy except in the
ordinary course of business;
(I) Formation, amendment or termination of any distribution agreement or any
material contract, agreement or license to which Trilogy is a party, other
than termination by Trilogy pursuant to the terms thereof;
(J) Loan by Trilogy to any person or entity, or guaranty by Trilogy of any loan
except for expense advances in the ordinary course of business consistent
with past practice;
(K) Waiver or release of any material right or claim of Trilogy, including any
write-off or other compromise of any material account receivable of
Trilogy;
(L) The notice or, to Trilogy's knowledge, commencement or threat of
commencement of any governmental proceeding against or investigation of
Trilogy or its affairs;
(M) Other event or condition of any character that has or would, in Trilogy's
reasonable judgment, be expected to have a Material Adverse Effect on
Trilogy;
(N) Issuance, sale or redemption by Trilogy of any of its shares or of any
other of its securities other than issuances of shares of Common Stock
pursuant to outstanding Options and Warrants;
(O) Change in pricing or royalties set or charged by Trilogy except for
discounts extended in the ordinary course of business consistent with past
practice; or
(P) Negotiation or agreement by Trilogy to do any of the things described in
the preceding clauses (A) through (O) (other than negotiations with
AmeriNet and its representatives regarding the transactions contemplated by
this Agreement).
2.8 TAX AND OTHER RETURNS AND REPORTS.
(A) Tax Returns and Audits.
(1) Trilogy has accurately prepared and timely filed all required
federal, state, local and foreign returns, estimates,
information statements and reports ("Returns") relating to any
and all Taxes relating or attributable to Trilogy or its
operations
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(2) The Returns are true and correct in all material respects and
have been completed in accordance with applicable law in all
material respects.
(3) Trilogy has timely paid all Taxes required to be paid with
respect to such Returns and has withheld with respect to its
employees all federal and state income Taxes, FICA, FUTA and
other Taxes it is required to withhold.
(4) The accruals for Taxes on the books and records of Trilogy are
sufficient to discharge the Taxes for all periods (or the
portion of any period) ending on or prior to the Effective
Date.
(5) Trilogy has not been delinquent in the payment of any Tax nor,
except as set forth in Schedule 2.8(A), is there any Tax
deficiency outstanding, proposed or assessed against Trilogy,
nor has Trilogy executed any waiver of any statute of
limitations on or extending the period for the assessment or
collection of any Tax.
(6) (a) No audit or other examination of any Return of
Trilogy is presently in progress. Except as set forth
in Schedule 2.8(A), Trilogy does not have any
liabilities for unpaid federal, state, local and
foreign Taxes, whether asserted or unasserted, known
or unknown, contingent or otherwise and Trilogy has
no knowledge of any basis for the assertion of any
such liability attributable to Trilogy, or their
respective assets or operations.
(b) Trilogy is not (nor has it ever been) required to
join with any other entity in the filing of a
consolidated Tax return for federal Tax purposes or a
consolidated or combined return or report for state
Tax purposes.
(7) Trilogy is not a party to or bound by any Tax indemnity, Tax
sharing or Tax allocation agreement.
(8) Trilogy has provided, or made available, to AmeriNet or its
legal counsel copies of all federal, provincial and state
income and all sales and use Tax Returns of Trilogy for all
periods since its date incorporation.
(9) There are (and as of immediately following the Effective Date
there will be) no liens on the assets of Trilogy relating to
or attributable to Taxes.
(10) Trilogy has no knowledge of any basis for the assertion of any
Tax claim which, if adversely determined, would result in
liens on the assets of Trilogy.
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(11) Trilogy has no property which is being sold, conveyed or
transferred pursuant to this Agreement which in the hands of
AmeriNet would be treated as being owned by persons other than
AmeriNet pursuant to Section 168(f)(8) of the Internal Revenue
Code of 1954 as in effect immediately prior to the enactment
of the Tax Reform Act of 1986, or any analogous provisions of
any state law.
(12) None of the assets of Trilogy are treated as "Tax-exempt use
property" within the meaning of Section 168(h) of the Code.
(13) There is no contract, agreement, plan or arrangement,
including but not limited to the provisions of this Agreement,
covering any employee or former employee of Trilogy that,
individually or collectively, could give rise to the payment
of any amount that would not be deductible pursuant to
Sections 280G, 162 or 404 of the Code.
(B) No Penalty.
Trilogy is not subject to any penalty by reason of a violation of any
order, rule or regulation of, or a default with respect to any return,
report or declaration required to be filed with, any Governmental
Entity to which it is subject, which violations or defaults,
individually or in the aggregate, would have a material adverse effect
on Trilogy.
2.9 RESTRICTIONS ON BUSINESS ACTIVITIES.
There is no agreement (assuming the Parties thereto other than Trilogy
performed their respective obligations thereunder as required), judgment,
injunction, order or decree binding upon Trilogy which has or could reasonably
be expected to have the effect of materially prohibiting or materially impairing
any business practice of Trilogy, any acquisition of property by Trilogy or the
conduct of business by Trilogy as currently conducted or as currently proposed
to be conducted.
2.10 TITLE OF PROPERTIES: ABSENCE OF LIENS AND ENCUMBRANCES: CONDITION OF
EQUIPMENT.
(A) (1) Trilogy owns no real property.
(2) Schedule 2.10(A) sets forth a true and complete list of all
real property leased by Trilogy and the aggregate annual
rental or other fee payable under any such lease.
(3) To the knowledge of Trilogy, all such leases are in good
standing, valid and effective in accordance with their
respective terms, and there is not with respect to Trilogy
under any of such leases, any existing default or event of
default (or event which with notice or lapse of time, or both,
would constitute a default and in respect of which Trilogy has
not taken adequate steps to prevent such default from
occurring), except where the lack of such good standing,
validity and effectiveness or the existence of such default or
event of default would not have a material adverse effect on
Trilogy.
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(B) Trilogy holds good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its
tangible properties and assets, real, personal and mixed, used in its
business, free and clear of any liens, charges, pledges, security
interests or other encumbrances, except as reflected in Trilogy
Financial Statements and except for such imperfections of title and
encumbrances, if any, which are not substantial in character, amount or
extent, and which do not materially detract from the value, or
interfere with the present use, of the property subject thereto or
affected thereby.
(C) (1) The equipment (the "Equipment") owned or leased by Trilogy
is listed in Schedule 2.10(C), except individual pieces of
equipment owned by Trilogy with an individual value of less
than $100.
(2) To the knowledge of Trilogy, the Equipment is, taken as a
whole:
(a) Adequate for the conduct of the business of Trilogy
consistent with its past practice;
(b) Suitable for the uses to which it is currently employed;
(c) In good operating condition;
(d) Regularly and properly maintained, reasonable wear and
tear excepted; and
(e) Not obsolete, dangerous or in need of renewal or
replacement, except for renewal or replacement in the
ordinary course of business.
2.11 INTELLECTUAL PROPERTY.
(A) (1) Trilogy owns, or is licensed to use, all patents,
trademarks, trade names, service marks, copyrights, and any
applications therefor, maskworks, net lists, schematics,
technology, know-how, computer software programs or
applications and tangible or intangible proprietary
information or material (excluding Commercial Software Rights
as defined in paragraph [B] below) that are used or currently
proposed to be used in the business of Trilogy as currently
conducted or as currently proposed to be conducted ("Trilogy's
Intellectual Property Rights").
(2) Schedule 2.11 sets forth a complete list of all patents,
trademarks, registered and material unregistered copyrights,
trade names and service marks, and any applications therefor,
included in Trilogy Intellectual Property Rights, and
specifies the jurisdictions in which each such Trilogy's
Intellectual Property Right has been issued or registered or
in which an application for such issuance and registration has
been filed, including the respective registration or
application numbers and the names of all registered owners,
together with a list of all of Trilogy's currently marketed
software products and an indication as to which, if any, of
such software products have been registered for copyright
protection with the United States Copyright Office and any
foreign offices and by whom such items have been registered.
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(3) (a) Schedule 2.11 also sets forth a complete list of (i) any
requests Trilogy has received to make any such registration,
including the identity of the requestor and the item
requested to be so registered, and the jurisdiction for
which such request has been made and (ii) all licenses,
sublicenses and other agreements as to which Trilogy is a
party and pursuant to which Trilogy or any other person is
authorized to use any Trilogy's Intellectual Property Right
or other trade secret material to Trilogy, and includes the
identity of all parties thereto, a description of the nature
and subject matter thereof, the applicable royalty and the
term thereof.
(b) Trilogy is not, nor will it be as a result of the execution
and delivery of this Agreement or the performance of its
obligations hereunder, in violation of any license,
sublicense or agreement described on such list.
(4) Trilogy is the sole and exclusive owner or licensee of, with
all right, title and interest in and to (free and clear of any
liens or encumbrances), Trilogy Intellectual Property Rights,
and has sole and exclusive rights (and is not contractually
obligated to pay any compensation to any third party in
respect thereof) to the use thereof or the material covered
thereby in connection with the services or products in respect
of which Trilogy Intellectual Property Rights are being used.
(5) To the knowledge of Trilogy, no claims with respect to Trilogy
Intellectual Property Rights have been asserted or are
threatened by any person, nor, to the knowledge of Trilogy, is
there any valid grounds for any bona fide claims (i) to the
effect that the manufacture, sale, licensing or use of any
product as now used, sold or licensed or proposed for use,
sale or license by Trilogy infringes on any copyright, patent,
trade mark, service mark or trade secret, (ii) against the use
by Trilogy of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how or computer software
programs and applications used in Trilogy's business as
currently conducted or as proposed to be conducted, or (iii)
challenging the ownership, validity or effectiveness of any of
Trilogy Intellectual Property Rights.
(6) All trademarks, service marks and copyrights held by Trilogy
are valid and subsisting.
(7) To the knowledge of Trilogy, there is no material unauthorized
use, infringement or misappropriation of any of Trilogy
Intellectual Property Rights by any third party, including any
employee or former employee of Trilogy.
(8) Trilogy has not been sued or charged as a defendant in any
claim, suit, action or proceeding which involves a claim of
infringement of any patents, trademarks, service marks,
copyrights or violation of any trade secret or other
proprietary right of any third party and which has not been
finally terminated prior to the date hereof nor does it have
any knowledge of any such charge or claim, and there is not
any infringement liability with respect to, or infringement or
violation by, Trilogy of any patent, trademark, service mark,
copyright, trade secret or other proprietary right of another.
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(9) To Trilogy's knowledge, no Trilogy's Intellectual Property
Right or product of Trilogy is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting
in any manner the licensing thereof by Trilogy.
(10) There is no outstanding order, judgment, decree or stipulation
on Trilogy, and Trilogy is not party to any agreement,
restricting in any manner the licensing of Trilogy's products
by Trilogy.
(11) Trilogy has not entered into any agreement to indemnify any
other person against any charge of infringement of any
Trilogy's Intellectual Property Right.
(12) Each current and former employee of and consultant to Trilogy
has signed a confidentiality agreement substantially in
Trilogy's standard form as certified by Trilogy, delivered to
AmeriNet and included in Schedule 2.12.
(B) (1) "Commercial Software Rights" means packaged commercially
available software programs generally available to the public
through retail dealers in computer software which have been
licensed to Trilogy pursuant to end-user licenses and which
are used in Trilogy's business but are in no way a component
of or incorporated in any of Trilogy's products and related
trademarks, technology and know-how.
(2) To the best of Trilogy's knowledge, Trilogy has not breached
or violated the terms of its license, sublicense or other
agreement relating to any Commercial Software Rights and has a
valid right to use such Commercial Software Rights and has a
valid right to use such Commercial Rights under such license
and agreements.
(3) Trilogy is not, nor will it be as a result of the execution
and delivery of this Agreement or the performance of its
obligations hereunder, in violation of any license, sublicense
or agreement relating to Commercial Software Rights.
(4) No claims with respect to the Commercial Software Rights have
been asserted or, to the knowledge of Trilogy, are threatened
by any person against Trilogy, nor to the knowledge of Trilogy
is there any valid grounds for any bona fide claims (i) to the
effect that the manufacture, sale, licensing or use of any
product as now used, sold or licensed or proposed for use,
sale or license by Trilogy infringes on any copyright, patent,
trade mark, service mark or trade secret, (ii) against the use
by Trilogy of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how or computer software
programs and applications used in Trilogy's business as
currently conducted or as proposed to be conducted, or (iii)
challenging the validity or effectiveness of any of Trilogy's
rights to use Commercial Software Rights.
(5) To the knowledge of Trilogy, there is no material unauthorized
use, infringement or misappropriation of any of the Commercial
Software Rights by Trilogy or any employee or former employee
of Trilogy during the period of their employment.
(6) To the knowledge of Trilogy, no Commercial Software Right is
subject to any outstanding order, judgment, decree,
stipulation or agreement restricting in any manner the use
thereof by Trilogy.
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2.12 AGREEMENTS, CONTRACTS AND COMMITMENTS.
(A) Except as specifically disclosed in Schedule 2.12, Trilogy does not have,
is not a party to nor is it bound by:
(1) Any collective bargaining agreements;
(2) Any agreements that contain any unpaid severance liabilities or
obligations;
(3) Any bonus, deferred compensation, incentive compensation,
pension, profit-sharing or retirement plans, or any other
employee benefit plans or arrangements;
(4) Any employment or consulting agreement, contract or commitment
with an employee or individual consultant or salesperson or
consulting or sales agreement, contract or commitment with a firm
or other organization, not terminable by Trilogy on thirty days
notice without liability, except to the extent general principles
of wrongful termination law may limit Trilogy's ability to
terminate employees at will;
(5) Agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase
plan, any of the benefits of which will be increased, or the
vesting of benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated
by this Agreement;
(6) Any fidelity or surety bond or completion bond;
(7) Any lease of personal property having a value individually in
excess of $2,000;
(8) Any agreement of indemnification or guaranty not entered into in
the ordinary course of business;
(9) Any agreement, contract or commitment containing any covenant
limiting the freedom of Trilogy to engage in any line of business
or compete with any person;
(10) Any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of
$10,000 in any single instance or $20,000 in the aggregate;
(11) Any agreement, contract or commitment relating to the disposition
or acquisition of assets not in the ordinary course of business
or any ownership interest in any corporation, partnership, joint
venture or other business enterprise;
(12) Any mortgages, indentures, loans or credit agreements, security
agreements or other agreements or instruments relating to the
borrowing of money or extension of credit, including guaranties
referred to in Schedule 2.12(A)(12) hereof;
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(13) Any purchase order or contract for the purchase of raw materials
or acquisition of assets involving $1,000 or more in any single
instance or $20,000 or more in the aggregate;
(14) Any construction contracts;
(15) Any distribution, joint marketing or development agreement;
(16) Any other agreement, contract or commitment which involves $2,000
or more in any single instance or more than $45,000 in the
aggregate and is not cancelable without penalty within thirty
(30) days other than standard end-user licenses of Trilogy's
products and services in the ordinary course of business
consistent with past practice, or
(17) Any agreement which is otherwise material to Trilogy's business.
(B) (1) Trilogy has not breached, or received any claim or threat that it
has breached, any of the terms or conditions of any agreement,
contract or commitment to which it is bound (including those set
forth in any of Trilogy Schedules) in such manner as would permit
any other party to cancel or terminate the same.
(2) Each agreement, contract or commitment required to be set forth
in any of Trilogy Schedules is in full force and effect (assuming
such agreement, contract or commitment has been duly authorized,
executed and delivered by the other party or parties thereto)
and, except as otherwise disclosed or defaults fully remedied or
resolved, is not subject to any material default thereunder of
which Trilogy has knowledge by any party obligated to Trilogy
pursuant thereto.
2.13 INTERESTED PARTY TRANSACTIONS.
Except as specifically disclosed in Schedule 2.13, no officer, director
or stockholder of Trilogy (nor any parent, sibling, descendant or spouse of any
of such persons, or any trust, partnership, corporation or other entity
(provided, that ownership of no more than one percent of the outstanding voting
stock of a publicly traded corporation shall not be deemed an "interest in any
entity" for purposes of this Section 2.13) in which any of such persons has or
has had an interest), has or has had, directly or indirectly:
(A) An interest in any entity which furnished or sold, or furnishes or sells,
services or products which Trilogy furnishes or sells, or proposes to
furnish or sell;
(B) Any interest in any entity which purchases from or sells or furnishes to,
Trilogy, any goods or services; or
(C) A beneficial interest in any contract or agreement required to be set forth
in Schedule 2.12.
2.14 GOVERNMENTAL AUTHORIZATION.
(A) Schedule 2.14 accurately lists each material federal, state, county, local
or foreign governmental consent, license, permit, grant, or other
authorization issued to Trilogy:
(1) Pursuant to which Trilogy currently operates or holds any interest in
any of its properties; or
(2) Which is required for the operation of its business or the holding of
any such interest (herein collectively called "Trilogy
Authorizations").
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(B) Trilogy Authorizations are in full force and effect and constitute all the
material authorizations required to permit Trilogy to operate or conduct
its business or hold any interest in its properties.
2.15 LITIGATION.
(A) Schedule 2.15 annexed hereto accurately lists all suits, actions and legal,
administrative, arbitration or other proceedings and governmental
investigations and all other claims, pending or, to Trilogy's knowledge,
threatened or which Trilogy expects will ultimately be threatened or
commenced.
(B) None of such suits, actions, proceedings, investigations or claims seek to
prevent the consummation of the Merger.
(C) There is no judgment, decree or order enjoining Trilogy in respect of, or
the effect of which is to prohibit, any business practice or the
acquisition of any property or the conduct of business of Trilogy.
(D) Schedule 2.15 also lists all suits and legal actions initiated by Trilogy.
2.16 ACCOUNTS RECEIVABLE.
(A) All receivables of Trilogy arose in the ordinary course of business at the
aggregate amounts thereof, are to the best of Trilogy's knowledge
collectible (except to the extent reserved against as reflected in
Trilogy's Financial Statements) and are carried at values determined in
accordance with generally accepted accounting principles consistently
applied.
(B) To the knowledge of Trilogy, none of the receivables of Trilogy is subject
to any claim of offset, recoupment, setoff or counterclaim and there are no
facts or circumstances (whether asserted or unasserted) that would give
rise to any such claim.
(C) No receivables are contingent upon the performance by Trilogy of any
obligation or contract except for Trilogy's maintenance obligations under
its maintenance agreements (although no customer has claimed that Trilogy
has failed to perform its maintenance obligations).
(D) No person has any lien, charge, pledge, security interest or other
encumbrance on any of such receivables and no agreement for deduction or
discount has been made with respect to any of such receivables.
2.17 MINUTE BOOKS.
The minute books of Trilogy made available to counsel for AmeriNet contain
a complete and accurate summary of all meetings of directors and stockholders
since the time of incorporation of Trilogy, and reflect all transactions
referred to in such minutes accurately in all material respects.
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2.18 ENVIRONMENTAL AND OSHA.
(A) Hazardous Material.
(1) As of the Effective Date, no material amount of any substance
that is regulated by any Governmental Entity or that has been
designated by any Governmental Entity to be radioactive,
toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos,
urea-formaldehyde and all substances listed pursuant to the
United States Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended from time
to time, and the United States Resource Recovery and
Conservation Act of 1976, as amended from time to time, and
the regulations and publications promulgated pursuant to said
laws (a "Hazardous Material"), is present, as a result of the
actions of Trilogy (excluding failure of Trilogy to remedy the
presence of a Hazardous Material resulting from the actions of
any previous owner or occupier of Trilogy's Property of which
presence Trilogy does not have knowledge) in violation of any
law in effect on or before the Effective Date, in, on or under
any property, including the land and the improvements, ground
water and surface water thereof, that Trilogy or any of its
past or present subsidiaries has at any time owned, operated,
occupied or leased (collectively, "Trilogy's Property").
(2) In any event, Trilogy does not know of the presence of any
Hazardous Material in, on or under any Trilogy's Property.
(B) Hazardous Materials Activities.
At no time prior to the Effective Date has Trilogy transported, stored,
used, manufactured, released or exposed its employees or others to
Hazardous Materials in violation of any law in effect on or before the
Effective Date, nor has Trilogy disposed of, transferred, sold, or
manufactured any product containing a Hazardous Material (collectively
"Hazardous Materials Activities") in violation of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, the Resource Conservation and Recovery Act of 1976, the Toxic
Substances Control Act of 1976 and any other applicable state or
federal acts (including the rules and regulations thereunder) as in
effect on or before the Effective Date.
(C) Permits.
Trilogy currently holds no environmental approvals, permits, licenses,
clearances and consents and none are necessary for the conduct of
Trilogy's Hazardous Material Activities and other businesses of Trilogy
as such activities and businesses are currently being conducted.
2.19 BROKERS' AND FINDERS' FEES.
Except as set forth in Schedule 2.19, Trilogy has not incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
2.20 LABOR MATTERS.
(A) Trilogy is in compliance in all material respects with all currently
applicable laws and regulations respecting employment, discrimination
in employment, terms and conditions of employment and wages and hours
and occupational safety and health and employment practices, and is not
engaged in any unfair labor practice.
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(B) Trilogy has not received any notice from any Governmental Entity, and
to the knowledge of Trilogy, there has not been asserted before any
Governmental Entity, any claim, action or proceeding to which Trilogy
is a party or involving Trilogy, and there is neither pending nor, to
the knowledge of Trilogy, threatened, any investigation or hearing
concerning Trilogy arising out of or based upon any such laws,
regulations or practices.
(C) Trilogy has not received notice of and to the best of its knowledge,
there are no pending claims against Trilogy under any workers
compensation plan or policy or for long term disability.
(D) To the best of Trilogy's knowledge, it has complied in all material
respects with all applicable provisions of the Consolidated Omnibus
Budget Reconciliation Act of 1985 and has no obligations with respect
to any former employees or qualifying beneficiaries thereunder.
(E) Schedule 2.20 lists all current employees of Trilogy and their current
salary and vacation accruals.
2.21 INSURANCE.
(A) Schedule 2.21 lists all insurance policies and fidelity bonds covering
the assets, business, equipment, properties, operations, software
errors and omissions, employees, officers and directors of Trilogy as
well as all claims made under any insurance policy by Trilogy since its
incorporation.
(B) There is no claim by Trilogy pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by
the underwriters of such policies or bonds.
(C) All premiums payable under all such policies and bonds have been paid
and Trilogy is otherwise in compliance in all material respects with
the terms of such policies and bonds (or other policies and bonds
providing substantially similar insurance coverage).
(D) Such policies of insurance and bonds are of the type and in amounts
customarily carried by persons conducting businesses similar to those
of Trilogy.
(E) Trilogy does not know of any threatened termination of or material
premium increase with respect to any of such policies.
(F) Trilogy has never been denied insurance coverage nor has any insurance
policy of Trilogy ever been canceled for any reason.
2.22 COMPLIANCE WITH LAWS.
Trilogy has not received any notices of violation with respect to and
to the best of its knowledge has complied in all material respects with and is
not in violation in any material respect of any federal, state or local statute,
law or regulation with respect to the conduct of its business, or the ownership
or operation of its business, assets or properties.
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2.23 COMPLETE COPIES OF MATERIALS.
Trilogy has delivered or made available true and complete copies of
each document (or summaries of same) which has been requested by AmeriNet or its
counsel.
2.24 BINDING AGREEMENTS: NO DEFAULT.
Each of the contracts, agreements and other instruments shown on the
Exhibits and Schedules referred to in this Agreement to which Trilogy is a party
is a legal, binding and enforceable obligation in favor of or against Trilogy
(assuming that such contracts, agreements and instruments are binding on all
other parties thereto, Trilogy having no reason to believe that they are not),
in accordance with its terms, and no party with whom Trilogy has an agreement or
contract is, to Trilogy's knowledge, in default thereunder or has breached any
material terms or provisions thereof (subject to all applicable bankruptcy,
insolvency, reorganization and other laws applicable to creditors' rights and
remedies and to the exercise of judicial discretion in accordance with general
principles of equity).
2.25 CURRENT REPORT ON FORM 8-K
(A) The information supplied by Trilogy for inclusion in the current report
on Commission Form 8-K within 15 days after the Effective Date annexed
hereto as Exhibit 2.25 and in all other reports which AmeriNet will
file thereafter pursuant to Sections 12(g), 13 and 15(d) of the
Exchange Act, shall not contain any statement which, at such time and
in light of the circumstances under which it shall be made, is false or
misleading with respect to any material fact, or shall omit to state
any material fact necessary in order to make the statements made
therein not false or misleading; or omit to state any material fact
necessary to correct any statement which has become false or
misleading.
(B) If at any time prior to the Effective Date any event relating to
Trilogy or any of its affiliates, officers or directors should be
discovered by Trilogy which should be set forth in the Current Report
on Form 8-K, Trilogy shall promptly inform AmeriNet and Trilogy
Acquisition.
(C) Notwithstanding the foregoing, Trilogy makes no representation or
warranty with respect to any information supplied by AmeriNet or
Trilogy Acquisition which is contained in any of the foregoing
documents.
2.26 FIRPTA.
Trilogy is not, and has not been at any time, a "United States real
property holding corporation" within the meaning of Section 897(c)(2) of the
Code.
2.27 EMPLOYEE BENEFIT PLANS.
(A) Schedule 2.27 lists all employee benefit plans [as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended,
"ERISA"] and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar fringe
or employee benefit plans, programs or arrangements, and any current or
former employment or executive compensation or severance agreements,
written or otherwise, for the benefit of, or relating to, any employee of
Trilogy, any trade or business (whether or not incorporated) which is a
member or which is under common control with Trilogy (an "ERISA Affiliate")
within the meaning of Section 414 of the Code, or any subsidiary of Trilogy
(together, the "Employee Plans"), and a copy of each such Employee Plan has
been provided to AmeriNet.
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(B) (1) None of the Employee Plans promises or provides retiree medical or
other retiree welfare benefits to any person except as required by
applicable law, including but not limited to COBRA;
(2) (a) To the best of Trilogy's knowledge: all Employee Plans are in
compliance in all material respects with the requirements
prescribed by any and all applicable statutes (including ERISA
and the Code), orders, or governmental rules and regulations
currently in effect with respect thereto (including all
applicable requirements for notification to participants or
beneficiaries or the Department of Labor, Internal Revenue
Service (the "IRS") or Secretary of the Treasury), and Trilogy
has performed in all material respects all obligations required
to be performed by it under, is not in default under or violation
of, and has no knowledge of any default or violation by any other
party to, any of the Employee Plans;
(b) Each Employee Plan intended to qualify under Section 401(a) of
the Code and each trust intended to qualify under Section 501(a)
of the Code either has received a favorable determination letter
with respect to each such Employee Plan from the IRS or still has
a remaining period of time under applicable Treasury Regulations
or IRS pronouncements in which to apply for such a determination
letter and to make any amendments necessary to obtain a favorable
determination;
(c) No Employee Plan is or within the prior six years has been
subject to, and Trilogy has not incurred and does not expect to
incur any liability under, Title IV of ERISA or Section 412 of
the Code; and
(d) To the best of Trilogy's knowledge, nothing in any Employee Plan
precludes or interferes with AmeriNet's ability to cause Trilogy
to terminate (or consolidate, at AmeriNet's option) any Employee
Plan after the Effective Date; provided that: (i) the Employee
Plans may be terminated prospectively only, subject to rights
accrued by Trilogy's employees at the time of such termination
and (ii) not more than sixty days notice may be required to
terminate certain Employee Plans.
(3) None of the following now exists or has existed within the six-year
period ending on the date hereof with respect to any Employee Plan:
(a) Any act or omission by Trilogy constituting a violation of
Section 402, 403, 404 or 405 of ERISA;
(b) Any act or omission by Trilogy which constitutes a violation of
Sections 406 and 407 of ERISA and is not exempted by Section 408
of ERISA or which constitutes a violation of Section 4975(c) of
the Code and is not exempted by Section 4975(d) of the Code;
(c) Any act or omission by Trilogy constituting a violation of
Section 503, 510 or 511 of ERISA; or (IV) any act or omission by
Trilogy which could give rise to liability under Section 502 of
ERISA or under Sections 4972 or 4975 through 4980 of the Code.
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(4) (a) Each Employee Plan has been maintained in substantial compliance
with its terms, and all contributions, premiums or other payments
due from Trilogy or any of its subsidiaries to (or under) any
such Employee Plan have been fully paid or adequately provided
for on the audited Trilogy's Financial Statements for the most
recently-ended fiscal year.
(b) To the best of Trilogy's knowledge, all accruals thereon
(including, where appropriate proportional accruals for partial
periods) have been made in accordance with generally accepted
accounting principles consistently applied on a reasonable basis.
(c) There has been no amendment, written interpretation or
announcement (whether or not written) by Trilogy with respect to,
or change in employee participation or coverage under, any
Employee Plan that would increase materially the expense of
maintaining such plans or arrangements, individually or in the
aggregate, above the level of expense incurred with respect
thereto for the most recently-ended fiscal year.
(5) Trilogy has made available to AmeriNet complete, accurate and current
copies of all Employee Plans and all amendments, documents,
correspondence and filings relating thereto, including but not limited
to any statements, filings, reports or returns filed with any
governmental agency with respect to the Employee Plans at any time
within the three-year period ending on the date hereof.
2.28 DISTRIBUTION AGREEMENTS.
No third party or parties have the right to distribute Trilogy's
products or to market its services except as disclosed in Schedule 2.28, which
discloses the names, addresses, telephone numbers, fax numbers, e-mail addresses
and federal Tax identification numbers of each such person, together with a
summary of the agreements pursuant to which Trilogy's products are distributed
or its services are marketed.
2.29 REPRESENTATIONS COMPLETE.
None of the representations or warranties made by Trilogy, nor any
statement made in any Schedule, Exhibit or certificate furnished by Trilogy
pursuant to this Agreement, when read in its entirety, contains or will contain
any untrue statement of a material fact at the Effective Time, or omits or will
omit to state any material fact necessary in order to make the statements
contained herein or therein, in the light of the circumstances under which made,
not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AMERINET AND TRILOGY ACQUISITION
AmeriNet and Trilogy Acquisition represent and warrant to Trilogy as a
material inducement to its entry into this Agreement, subject to the exceptions
specifically disclosed in the schedules supplied and initialed by AmeriNet to
Trilogy (the "AmeriNet Schedules") and AmeriNet's Exchange Act Reports, as
follows:
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3.1 ORGANIZATION, STANDING AND POWER.
(A) AmeriNet is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(B) (1) Trilogy Acquisition is a corporation organized for purposes of
the Merger by the Harris Firm, legal counsel to Trilogy, and
based on the representations of the Harris Firm, Trilogy
Acquisition is duly organized, validly existing and in good
standing under the laws of the State of Florida organized solely
to effect the transactions contemplated by this Agreement
immediately prior to its execution.
(2) All representations concerning Trilogy Acquisition in this
Agreement, including the Exhibits and Schedules, are based on
information provided to AmeriNet by legal counsel to Trilogy.
(C) AmeriNet and Trilogy Acquisition have the corporate power to own their
properties and to carry on their business as now being conducted and
are duly qualified to do business and are in good standing in each
jurisdiction in which the failure to be so qualified would have a
material adverse effect on AmeriNet and Trilogy Acquisition taken as a
whole.
(D) AmeriNet has made available a true and correct copy of the articles of
incorporation and bylaws of AmeriNet and Trilogy Acquisition, as
amended to date, to counsel for Trilogy.
3.2 CAPITAL STRUCTURE.
(A) (1) The authorized stock of AmeriNet consists of 20,000,000 shares of
Common Stock, par value $0.01 per share, and 5,000,000 shares of
Preferred Stock, $0.01 par value per share, the attributes of
which are to be determined on a case by case basis by AmeriNet's
board of directors.
(2) AmeriNet had 8,354,126 shares of Common Stock issued and
outstanding as of November 15, 1999 and no shares of Preferred
Stock have ever been issued.
(3) AmeriNet has reserved 4,368,980 shares of Common Stock (excluding
those issuable pursuant to the terms of this Agreement) for
issuance as described in AmeriNet's 10-KSB for the year ended
June 30, 1999 and 10-QSB for the calendar quarter ended September
30, 1999.
(4) There are no other options, warrants, calls, rights, commitments
or agreements of any character to which AmeriNet is a party or by
which it is bound obligating AmeriNet to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of the Capital Stock of
AmeriNet or obligating AmeriNet to grant, extend or enter into
any such option, warrant, call, right, commitment or agreement,
other than as may be required in conjunction with other
acquisitions under negotiation and as disclosed in the Exchange
Act Reports.
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(5) Pursuant to AmeriNet's articles of incorporation, they may be
amended by action of the board of directors without stockholder
approval to increase the amount of authorized Capital Stock.
(B) (1) The authorized Capital Stock of Trilogy Acquisition consists of
7,500 shares of common stock, par value $1.00 per share;
(2) 100 shares of Trilogy Acquisition's common stock are currently
issued and outstanding, all of which and are held by AmeriNet;
and
(3) No shares of Trilogy Acquisition's common stock are reserved for
any purpose.
(C) All of AmeriNet's and Trilogy Acquisition's shares of common and
preferred stock have been duly authorized, and all of their issued and
outstanding shares of common stock have been validly issued, are fully
paid and nonassessable and are free of any liens or encumbrances other
than any liens or encumbrances created by or imposed upon the holders
thereof.
(D) The shares of AmeriNet Common Stock to be issued pursuant to the Merger
will be duly authorized, validly issued, fully paid, and nonassessable.
3.3 AUTHORITY.
(A) AmeriNet and Trilogy Acquisition have all requisite corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
(B) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of AmeriNet and Trilogy
Acquisition.
(C) This Agreement has been duly executed and delivered by AmeriNet and
Trilogy Acquisition and, subject to having also been approved by
Trilogy's board of directors and properly executed and delivered by
Trilogy, constitutes a valid and binding obligation of AmeriNet and
Trilogy Acquisition.
(D) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default (with or without notice
or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material
benefit under:
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(1) Any provision of the articles of incorporation or bylaws of
AmeriNet and Trilogy Acquisition; or
(2) Any mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation
applicable to AmeriNet or its properties or assets, other than
any such conflicts, violations, defaults, terminations,
cancellations or accelerations which individually or in the
aggregate would not have a material adverse effect on the ability
of AmeriNet to consummate the transactions contemplated hereby.
(E) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by or
with respect to AmeriNet and Trilogy Acquisition in connection with the
execution and delivery of this Agreement by AmeriNet and Trilogy
Acquisition or the consummation by AmeriNet and Trilogy Acquisition of
the transactions contemplated hereby, except for:
(1) The filing of the Articles of Merger with the Florida Secretary
of State;
(2) Such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable
state and federal securities laws (a Form D Notification
Statement) and the laws of any foreign country; and
(3) Such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not have a
material adverse effect on the ability of AmeriNet to consummate
the transactions contemplated hereby.
3.4 EXCHANGE ACT REPORTS; AMERINET FINANCIAL STATEMENTS.
(A) All materials required to be filed by AmeriNet with the Commission
pursuant to Sections 13 or 15(d) of the Exchange Act since current
management took office starting in November of 1998, have been filed
and are available on the Commission's Internet web site at www.sec.gov
in its EDGAR Archives sub-site.
(B) To the best of AmeriNet's knowledge, the Exchange Act Reports comply in
all material respects with the requirements of the Exchange Act, other
than in conjunction with filing deadlines, and do not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not
misleading, except to the extent corrected by a subsequently filed
document with the Commission or by information provided by AmeriNet to
Trilogy.
(C) The financial statements of AmeriNet (the "AmeriNet Financial
Statements"), including the notes thereto, included in the report on
Commission Form 10-KSB for the period ended June 30, 1999 (the "1999
10-KSB") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of
the Commission with respect thereto, have been prepared in accordance
with generally accepted accounting principles consistently applied and
fairly present the consolidated financial position of AmeriNet at the
date thereof and of its operations and cash flows for the period then
ended.
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(D) There has been no change in AmeriNet accounting policies or estimates
except as described in the notes to AmeriNet's Financial Statements or
in subsequently filed Exchange Act Reports.
(E) AmeriNet has no material obligations, other than:
(1) Those set forth in AmeriNet's Financial Statements
(obligations not required to be set forth in AmeriNet's
Financial Statements under generally accepted accounting
principles being deemed not material);
(2) Those resulting from ongoing acquisition activities which
developed after the date of AmeriNet's Financial Statements
but are not yet definite enough to require filing in the
Exchange Act Reports;
(3) Those pertaining to confidential letters of intent; or
(4) Those disclosed by AmeriNet to Trilogy in writing.
(F) The information supplied by AmeriNet for inclusion in the Current
Report on Form 8-K pertaining to this merger will not contain any
statement which, at such time and in light of the circumstances under
which it shall be made, is false or misleading with respect to any
material fact, or shall omit to state any material fact necessary in
order to make the statements therein not false or misleading.
(G) If at any time prior to the Effective Date any event relating to
AmeriNet, Trilogy Acquisition or any of their respective affiliates,
officers or directors should be discovered by AmeriNet or Trilogy
Acquisition which should be set forth in the Current Report on Form
8-K, AmeriNet or Trilogy Acquisition will promptly inform Trilogy.
(H) Notwithstanding the foregoing, AmeriNet and Trilogy Acquisition make no
representation or warranty with respect to any information supplied by
Trilogy which is contained in any of the foregoing documents.
(I) To the best of AmeriNet's knowledge, there are no currently outstanding
comment letters from the Commission that have not been responded to and
complied with, except for the comment letter annexed hereto and made a
part hereof as Schedule 3.4(I), which is expected to be complied with
prior to the Merger.
3.5 BROKER'S AND FINDERS' FEES.
Except as disclosed in the Exchange Act Reports, AmeriNet has not
incurred, and will not incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement, the Merger or any transaction contemplated
hereby.
3.6 OWNERSHIP OF TRILOGY'S CAPITAL STOCK.
As of the date of execution of this Agreement, AmeriNet does not own
any shares of Trilogy's Capital Stock.
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3.7 LITIGATION.
There are no suits, actions or legal, administrative, arbitration or
other proceedings or governmental investigations against AmeriNet pending or, to
AmeriNet's knowledge, threatened, which (i) if determined adversely to AmeriNet,
could be expected to result in a material adverse effect on the financial
condition or results of operations of AmeriNet, or (ii) seek to prevent the
consummation of the Merger.
3.8 LIMITED ACTIVITIES
(A) AmeriNet is a holding company with no material operations or assets
other than the shares of its subsidiaries common stock and operations
pertaining to supervision and coordination of the activities of its
subsidiaries, provision of support services for its subsidiaries,
acquisition related activities and compliance with applicable laws,
including federal securities and internal revenue laws.
(B) AmeriNet has one subsidiary, American Internet Technical Center, Inc.,
a Florida corporation, which it expects to merge with Wriwebs.com,
Inc., also a Florida corporation, as a result of which the surviving
entity will be a wholly owned subsidiary of AmeriNet.
3.9 NO UNDISCLOSED LIABILITIES.
AmeriNet does not have any material liabilities or obligations, either
accrued or contingent (whether or not required to be reflected in financial
statements in accordance with generally accepted accounting principles), and
whether due or to become due, which individually or in the aggregate, (i) have
not been reflected in the AmeriNet Financial Statements (including the notes
thereto) or (ii) have not been specifically described in this Agreement or in
the Exchange Act Reports.
3.10 NO CHANGES.
Since the date of the latest AmeriNet Exchange Act Report there has not
been, occurred or arisen any:
(A) Destruction, damage to, or loss of any assets (including without limitation
intangible assets) of AmeriNet or its subsidiaries (whether or not covered
by insurance), either individually or in the aggregate, exceeding $30,000,
other than losses by subsidiaries in the ordinary course of business.
(B) Labor trouble or claim of wrongful discharge, sexual harassment or other
unlawful labor practice or action;
(C) Change in accounting methods or practices (including any change in
depreciation or amortization policies or rates, any change in policies in
making or reversing accruals, or any change in capitalization of software
development costs) by AmeriNet or its subsidiaries;
(D) Declaration, setting aside, or payment of a dividend or other distribution
in respect to the shares of AmeriNet or its subsidiaries, or any direct or
indirect redemption, purchase or other acquisition by AmeriNet or its
subsidiaries of any of their shares;
(E) The notice of or to AmeriNet or its subsidiaries's knowledge, commencement
or threat of commencement of any governmental proceeding against or
investigation of AmeriNet or its subsidiaries or their affairs;
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(F) Other event or condition of any character that has or would, in AmeriNet or
its subsidiaries's reasonable judgment, be expected to have a material
adverse effect on AmeriNet or its subsidiaries;
(G) Negotiation or agreement by AmeriNet or its subsidiaries to do any of the
things described in the preceding clauses (A) through (F) other than
negotiations with AmeriNet or its subsidiaries and their representatives
regarding the transactions contemplated by this Agreement or other
acquisitions.
3.11 TAX AND OTHER RETURNS AND REPORTS.
(A) Tax Returns and Audits.
(1) AmeriNet and its subsidiaries have accurately prepared and
filed all required federal, state, local and foreign returns,
estimates, information statements and reports ("Returns")
relating to any and all Taxes relating or attributable to
AmeriNet or its subsidiaries or their operations and such
Returns are true and correct in all material respects and have
been completed in accordance with applicable law in all
material respects.
(2) AmeriNet and its subsidiaries have timely paid all Taxes
required to be paid with respect to such Returns and have
withheld with respect to its employees all federal and state
income taxes, FICA, FUTA and other Taxes they are required to
withhold.
(3) The accruals for Taxes on the books and records of AmeriNet
and its subsidiaries are sufficient to discharge the Taxes for
all periods (or the portion of any period) ending on or prior
to the Effective Date.
(4) AmeriNet and its subsidiaries have not been delinquent in the
payment of any Tax nor, except as disclosed in the Exchange
Act Reports, is there any Tax deficiency outstanding, proposed
or assessed against AmeriNet or its subsidiaries, nor has
AmeriNet or its subsidiaries executed any waiver of any
statute of limitations on or extending the period for the
assessment or collection of any Tax.
(5) Except as disclosed in the Exchange Act Reports:
(a) No audit or other examination of any Return of
AmeriNet or its subsidiaries is presently in
progress.
(b) AmeriNet and its subsidiaries do not have any
liabilities for unpaid federal, state, local and
foreign Taxes, whether asserted or unasserted, known
or unknown, contingent or otherwise and AmeriNet and
its subsidiaries have no knowledge of any basis for
the assertion of any such liability attributable to
AmeriNet or its subsidiaries, or their respective
assets or operations.
(6) AmeriNet and its subsidiaries are not parties to or bound by
any tax indemnity, tax sharing or tax allocation agreement.
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(7) AmeriNet and its subsidiaries have provided, or made available
to Trilogy or its legal counsel copies of all federal,
provincial and state income and all sales and use Tax Returns
of AmeriNet or its subsidiaries for all periods since January
1, 1998.
(8) There are (and as of immediately following the Effective Date
there will be) no liens on the assets of AmeriNet or its
subsidiaries relating to or attributable to Taxes.
(9) AmeriNet and its subsidiaries have no knowledge of any basis
for the assertion of any Tax claim which, if adversely
determined, would result in liens on the assets of AmeriNet or
its subsidiaries.
(10) There is no contract, agreement, plan or arrangement,
including but not limited to the provisions of this Agreement,
covering any employee or former employee of AmeriNet or its
subsidiaries that, individually or collectively, could give
rise to the payment of any amount that would not be deductible
pursuant to Sections 280G, 162 or 404 of the Code.
(B) No Penalty.
Neither AmeriNet nor its subsidiaries are subject to any penalty by
reason of a violation of any order, rule or regulation of, or a default
with respect to any return, report or declaration required to be filed
with, any Governmental Entity to which it is subject, which violations
or defaults, individually or in the aggregate, would have a material
adverse effect on AmeriNet or its subsidiaries.
3.12 ENVIRONMENTAL AND OSHA.
(A) Hazardous Material.
(1) As of the Effective Date, no material amount of any substance
that is regulated by any Governmental Entity or that has been
designated by any Governmental Entity to be radioactive,
toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos,
urea-formaldehyde and all substances listed pursuant to the
United States Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended from time
to time, and the United States Resource Recovery and
Conservation Act of 1976, as amended from time to time, and
the regulations and publications promulgated pursuant to said
laws (a "Hazardous Material"), is present, as a result of the
actions of AmeriNet or its subsidiaries (excluding failure of
AmeriNet or its subsidiaries to remedy the presence of a
Hazardous Material resulting from the actions of any previous
owner or occupier of AmeriNet or its subsidiaries's property
of which presence AmeriNet or its subsidiaries do not have
knowledge) in violation of any law in effect on or before the
Effective Date, in, on or under any property, including the
land and the improvements, ground water and surface water
thereof, that AmeriNet or its subsidiaries own, operate,
occupy or lease (collectively, "AmeriNet or its subsidiaries's
property").
(2) In any event, AmeriNet and its subsidiaries do not know of the
presence of any Hazardous Material in, on or under any of
their property.
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(B) Hazardous Materials Activities.
At no time prior to the Effective Date has AmeriNet or its subsidiaries
transported, stored, used, manufactured, released or exposed its
employees or others to Hazardous Materials in violation of any law in
effect on or before the Effective Date, nor has AmeriNet or its
subsidiaries disposed of, transferred, sold, or manufactured any
product containing a Hazardous Material (collectively "Hazardous
Materials Activities") in violation of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the
Resource Conservation and Recovery Act of 1976, the Toxic Substances
Control Act of 1976 and any other applicable state or federal acts
(including the rules and regulations thereunder) as in effect on or
before the Effective Date.
(C) Permits.
AmeriNet or its subsidiaries currently holds no environmental
approvals, permits, licenses, clearances and consents and none are necessary for
the conduct of AmeriNet or its subsidiaries's Hazardous Material Activities and
other businesses of AmeriNet or its subsidiaries as such activities and
businesses are currently being conducted.
3.13 REPRESENTATIONS COMPLETE.
None of the representations or warranties made by AmeriNet or its
subsidiaries, nor any statement made in any Schedule, Exhibit or certificate
furnished by AmeriNet or its subsidiaries pursuant to this Agreement, when read
in its entirety, contains or will contain any untrue statement of a material
fact at the Effective Date, or omits or will omit to state any material fact
necessary in order to make the statements contained herein or therein, in the
light of the circumstances under which made, not misleading.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS OF TRILOGY.
(A) During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, Trilogy
agrees (except to the extent that AmeriNet shall otherwise consent in
writing), to carry on its business in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted and, to the
extent consistent with such business, use all reasonable efforts consistent
with past practice and policies to preserve intact Trilogy's present
business organizations, keep available the services of its present officers
and key employees and preserve their relationships with customers,
suppliers, distributors, licensors, licensees, and others having business
dealings with it, to the end that Trilogy's goodwill and ongoing businesses
shall be unimpaired at the Effective Time.
(B) Trilogy shall promptly notify AmeriNet of any event or occurrence or
emergency not, in the reasonable judgment of Trilogy, in the ordinary
course of business of Trilogy, and any event which could, in the reasonable
judgment of Trilogy, have a material adverse effect on Trilogy.
(C) Except as expressly contemplated by this Agreement or set forth in Schedule
4.1, Trilogy shall not, without the prior written consent of AmeriNet:
(1) Except pursuant to existing contractual provisions of Options or
Warrants outstanding on the date hereof, accelerate, amend or change
the period of exercisability of Options, Warrants or restricted stock
granted under the employee stock plans of Trilogy or authorize cash
payments in exchange for any Options or Warrants granted under any of
such plans;)
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(2) Enter into any commitment or transaction not in the ordinary course of
business (i) to be performed over a period longer than six (6) months
in duration, or (ii) to purchase fixed assets for a purchase price in
excess of $5,000;
(3) Grant any severance or termination pay to any director, officer or
employee except (i) payments made pursuant to standard written
agreements outstanding on the date hereof or (ii) in the case of
employees who are not officers, grants which are made in the ordinary
course of business in accordance with Trilogy's standard past
practices;
(4) Except for licenses granted to end-users pursuant to Trilogy's
standard license agreements, transfer to any person or entity any
rights to Trilogy's Intellectual Property;
(5) Enter into or amend any agreements pursuant to which any other party
is granted exclusive marketing or other rights of any type or scope
with respect to any products of Trilogy;
(6) Violate, amend or otherwise modify the terms of any of the contracts
or agreements required to be set forth in Trilogy Schedules;
(7) Commence any litigation;
(8) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its Capital
Stock, or split, combine or reclassify any of its Capital Stock or
issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of Capital Stock of Trilogy,
or repurchase or otherwise acquire, directly or indirectly, any shares
of its Capital Stock except from former employees, directors and
consultants in accordance with agreements providing for the repurchase
of shares at cost in connection with any termination of service to
Trilogy;
(9) Issue, deliver or sell or authorize or propose the issuance, delivery
or sale of, or purchase or propose the purchase of, any shares of its
Capital Stock or securities convertible into, or subscriptions,
rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or
other convertible securities except for the issuance of shares of
Capital Stock upon exercise of Options or Warrants outstanding on the
date hereof;
(10) Cause or permit any amendments to its articles of incorporation or
bylaws;
(11) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire
or agree to acquire any assets which are material, individually or in
the aggregate, to the business of Trilogy;
(12) Sell, lease, license or otherwise dispose of any of its properties or
assets which are material, individually or in the aggregate, to the
business of Trilogy, except in the ordinary course of business;
(13) Incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities of Trilogy or
guarantee any debt securities of others;
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(14) Adopt or amend any employee benefit plan, or enter into any employment
contract, pay any special bonus or special remuneration to any
director or employee, or increase the salaries or wage rates of its
employees;
(15) Revalue any of its assets, including without limitation writing down
the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business;
(16) Pay, discharge or satisfy in an amount in excess of $5,000 in any one
case any claim, liability or obligation (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business of
liabilities reflected or reserved against in Trilogy Financial
Statements (or the notes thereto);
(17) Make or change any material election in respect of Taxes, adopt or
change any accounting method in respect of Taxes, file any material
Return or any amendment to a material Return, enter into any closing
agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable
to any claim or assessment in respect of Taxes; or
(18) Take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1(C)(1) through 4.1(C)(17) above, or any
action which would make any of the representations or warranties or
covenants of Trilogy contained in this Agreement materially untrue or
incorrect.
4.2 NO SOLICITATION.
(A) Prior to the Effective Time, except as required by applicable fiduciary
duties and permitted by applicable law, Trilogy will not (nor will
Trilogy permit any of Trilogy's officers, directors, stockholders
affiliated with any officer or director or Trilogy's agents,
representatives or affiliates to) directly or indirectly, take any of
the following actions with any party other than AmeriNet and its
designees:
(1) Solicit, encourage, initiate or participate in any
negotiations or discussions with respect to, any offer or
proposal to acquire all or substantially all of Trilogy's
business and properties or Capital Stock whether by merger,
purchase of assets, tender offer or otherwise;
(2) Except as required by law and except for disclosures made to
financial institutions and others in the ordinary course of
business, disclose any information not customarily disclosed
to any person other than its attorneys or financial advisors
concerning Trilogy's business and properties or afford to any
person or entity access to its properties, books or records,
or
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(3) Assist or cooperate with any person to make any proposal to
purchase all or any part of Trilogy's Capital Stock or of its
assets (other in the ordinary course of business).
(B) In the event Trilogy shall receive any offer or proposal, directly or
indirectly, of the type referred to in Section 4.2(A)(1) and (3) above,
or any request for disclosure or access pursuant to clause 4.2(A)(2)
above, Trilogy shall immediately inform AmeriNet as to any such offer
or proposal and will cooperate with AmeriNet by furnishing any
information it may reasonably request.
4.3 CONDUCT OF BUSINESS OF AMERINET.
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, as the
case may be, AmeriNet agrees (except to the extent that Trilogy shall otherwise
consent in writing), that AmeriNet shall promptly notify Trilogy of any event or
occurrence or emergency which is not in the ordinary course of business of
AmeriNet and which is material and adverse to the business of AmeriNet and its
subsidiaries taken as a whole.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 REPORT ON FORM 8-K.
(A) Within fifteen days following the Effective Date, AmeriNet, with the
assistance and cooperation of Trilogy's current officers, shall prepare
and file with the Commission a current report on Commission Form 8-K
(the "8-K Report") disclosing the Merger and containing information
concerning Trilogy required by Commission Regulation S-B, except for
audited financial statements that may be filed within 75 days after the
Effective Date.
(B) (1) AmeriNet, with the full cooperation and assistance of
Trilogy's current officers, attorney's and accountants, shall
make all necessary filings with respect to the Merger under
the Securities Act and the Exchange Act and the rules and
regulations thereunder, under applicable Blue Sky or similar
securities laws, rules and regulations and shall use all
reasonable efforts required approvals and clearances with
respect thereto.
(2) AmeriNet and Trilogy shall use their reasonable best efforts to
secure the Commission's acceptance of the audited Trilogy
Financial Statements as complying with the requirements of
Regulation S-B, and Trilogy will make any reasonable
modification's to the Trilogy Financial Statements which it can
make, at the request of the Commission; and, if required, will
use best efforts to secure required extensions from the
Commission of time in which to provide materials complying with
Commission Regulation S-B.
(C) The provision of the audited Trilogy Financial Statements on a timely
basis in full compliance with the requirements of Commission Regulation
S-B shall constitute a condition subsequent to the obligations of
AmeriNet and Trilogy Acquisition under this Agreement and in the event
of the failure of such condition subsequent, then, at AmeriNet's sole
option:
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(1) The Merger may be rescinded, and all funds advanced by
AmeriNet to the Surviving Corporation shall be repaid, with
interest at the annual rate of 8%, to AmeriNet within 30 days
after such rescission; or
(2) The Escrow Shares shall be deemed defaulted to AmeriNet and
the Merger shall be restructured in a manner complying with
AmeriNet's reporting and other obligations under the Exchange
Act, including the sale by AmeriNet of the Surviving
Corporation.
5.2 MEETING OF TRILOGY'S STOCKHOLDERS.
(A) Trilogy either has or shall promptly after the date hereof take all
action necessary in accordance with the Florida Corporate Merger Laws
and its articles of incorporation and bylaws to convene a meeting of
its stockholders or obtain a written consent in-lieu of meeting
executed by the requisite majority of its stockholders, as permitted
under applicable law, for the purpose of ratifying this Agreement (the
Trilogy Stockholders' Meeting").
(B) Trilogy shall consult with AmeriNet and use all reasonable efforts to
hold the Trilogy Stockholders' Meeting on a day acceptable to AmeriNet.
(C) In connection with the Trilogy Stockholders' Meeting, Trilogy shall
prepare and deliver to its stockholders all information necessary for
them to vote at such meeting on the issue of ratification of this
Agreement under the laws of the United States, the State of Florida and
their respective states of domicile.
5.3 ACCESS TO INFORMATION.
(A) Trilogy shall afford AmeriNet and its accountants, counsel and other
representatives, reasonable access during normal business hours during
the period prior to the Effective Time to all:
(1) Of its properties, books, contracts, commitments and records; and
(2) Other information concerning the business, properties and
personnel of Trilogy as AmeriNet may reasonably request.
(B) Trilogy agrees to provide to AmeriNet and its accountants, counsel and
other representatives copies of internal financial statements promptly
upon request.
(C) No information or knowledge obtained in any investigation pursuant to
this Section 5.3 shall affect or be deemed to modify any representation
or warranty contained herein or the conditions to the obligations of
the Parties to consummate the Merger.
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5.4 CONFIDENTIALITY.
(A) From the date hereof to and including the Effective Date, the Parties
shall maintain, and cause their directors, employees, agents and
advisors to maintain, in confidence and not disclose or use for any
purpose, except the evaluation of the transactions contemplated hereby
and the accuracy of the respective representations and warranties of
the Parties contained herein, information concerning the other Parties
and obtained directly or indirectly from such Parties, or their
directors, employees, agents or advisors, or as was in the possession
of such Party prior to obtaining such information from such other Party
as to which the fact of prior possession such possessing Party shall
have the burden of proof and such information as is or becomes:
(1) Available to the non-disclosing Party from third parties not
subject to an undertaking of confidentiality or secrecy;
(2) Generally available to the public other than as a result of a
breach by the non-disclosing party hereunder; or
(3) Required to be disclosed under applicable law.
(B) In the event that the transactions contemplated hereby shall not be
consummated, all such information which shall be in writing shall be
returned to the party furnishing the same, including to the extent
reasonably practicable, copies or reproductions thereof which may have
been prepared.
5.5 EXPENSES.
Whether or not the Merger is consummated, all expenses incurred in
connection with the Merger and this Agreement ("Expenses") shall be the
obligation of the Party incurring such expenses.
5.6 PUBLIC DISCLOSURE.
Unless otherwise required by law, prior to the Effective Date no
disclosure (whether or not in response to an inquiry) of the subject matter of
this Agreement shall be made by any Party unless approved by AmeriNet and
TRILOGY PRIOR TO RELEASE, PROVIDED THAT such approval shall not be unnecessarily
withheld, subject, in the case of AmeriNet, to AmeriNet's obligation to comply
with applicable securities laws.
5.7 CONSENTS.
AmeriNet and Trilogy shall promptly apply for or otherwise seek, and
use their best efforts to obtain, all consents and approvals required to be
obtained by them for the consummation of the Merger, and Trilogy shall use its
best efforts to obtain all consents, waivers and approvals under any of
Trilogy's agreements, contracts, licenses or leases in order to preserve the
benefits thereunder for the Surviving Corporation, and otherwise in connection
with the Merger; all of such consents and approvals being set forth in Schedule
5.7.
5.8 AFFILIATE AGREEMENTS.
(A) Schedule 5.8 sets forth those persons who are, in Trilogy's reasonable
judgment, "affiliates" of Trilogy within the meaning of Commission Rule
145 (the "Affiliate[s]").
(B) Trilogy shall provide AmeriNet such information and documents as
AmeriNet shall reasonably request for purposes of reviewing such list.
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(C) Trilogy shall use its best efforts to deliver or cause to be delivered
to AmeriNet, concurrently with the execution of this Agreement (and in
any case prior to the Effective Date) from each of the Affiliates of
Trilogy, an executed Affiliate Agreement in the form annexed hereto as
Exhibit 5.8.
(D) AmeriNet and Trilogy Acquisition shall be entitled to place appropriate
legends on the certificates evidencing any AmeriNet Common Stock to be
received by such Affiliates pursuant to the terms of this Agreement,
and to issue appropriate stop transfer instructions to the transfer
agent for AmeriNet Common Stock, consistent with the terms of such
Affiliate Agreements, in addition to the legends and stop transfer
instructions placed and issues on all certificates to be issued to
Trilogy's stockholders in conjunction with the Merger based on the
Parties reliance on Section 4(2) of the Securities Act
5.9 LEGAL REQUIREMENTS.
(A) AmeriNet, Trilogy Acquisition and Trilogy will take all reasonable
actions necessary to comply promptly with all legal requirements which
may be imposed on them with respect to the consummation of the
transactions contemplated by this Agreement and will promptly
cooperate with and furnish information to any Party in connection with
any such requirements imposed upon such other Party in connection with
the consummation of the transactions contemplated by this Agreement
and will take all reasonable actions necessary to obtain (and will
cooperate with the other Parties in obtaining) any consent, approval,
order or authorization of, or any registration, declaration or filing
with, any Governmental Entity or other person, required to be obtained
or made in connection with the taking of any action contemplated by
this Agreement.
(B) The foregoing obligations shall not be construed to require Trilogy to
pay money or other consideration to stockholders of Trilogy to undue
influence such stockholders to vote in favor of the Merger and the
transactions contemplated hereby.
5.10 BLUE SKY LAWS.
Legal counsel to Trilogy, with the cooperation of legal counsel to
AmeriNet and Trilogy Acquisition, shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of AmeriNet Common Stock pursuant hereto.
5.11 BEST EFFORTS: ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES.
(A) Each of the Parties to this Agreement shall use its best efforts to
effectuate the transactions contemplated hereby and to fulfill and
cause to be fulfilled the conditions to the Merger and the condition
subsequent under this Agreement.
(B) Each Party, at the request of another Party, shall execute and deliver
such other instruments and do and perform such other acts and things as
may be reasonably necessary or desirable for effecting completely the
consummation of this Agreement and the transactions contemplated
hereby.
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5.12 EMPLOYMENT AGREEMENTS.
The individuals set forth on Schedule 5.12 will as of the Effective
Date be parties to the employment agreements included in composite Exhibit 5.12
hereto (the "Employment Agreements"), which shall supersede all prior employment
agreements or arrangements with any such persons.
5.13 INVESTMENT BY AMERINET IN SURVIVING CORPORATION.
Subject to Trilogy's substantial compliance with its material
obligations under this Agreement, including those involving provision of audited
financial statements for its operations for the time period and in the form
required by Commission Regulation S-B for purposes of the Merger, AmeriNet
hereby covenants and agrees to provide the following funds, to be expended
solely for the purposes set forth in Schedule 5.13, to the Surviving
Corporation:
(A) As provided in Section 1.2(C), the sum of $250,000;
(B) Within 90 days after the Effective Date, provided that audited
financial statements for Trilogy required pursuant to Commission
Regulation S-B (the "Audited Trilogy Statements") have been provided to
AmeriNet, filed with the Commission and not found deficient by the
Commission, the sum of $325,000, and
(C) Within 180 days after the Effective Date, provided that the Audited
Trilogy Statements have been provided to AmeriNet, filed with the
Commission and not found deficient by the Commission, the sum of
$325,000.
5.14 THE SURVIVING CORPORATION'S BOARD OF DIRECTORS.
(A) Subject to (i) compliance with all of obligations under this Agreement
by the Former Trilogy Stockholders, Trilogy and the Surviving
Corporation, including, without limitation, those involving provision
of audited financial statements for Trilogy's operations for the time
period and in the form required by Commission Regulation S-B for
purposes of the Merger, (ii) compliance by the members of the board of
directors of the Surviving Corporation with their fiduciary
obligations to AmeriNet as the Surviving Corporation's stockholder and
with applicable laws and (iii) the attainment by the Surviving
Corporation, on a quarterly basis of at least 80% of the financial
projections established in Schedule 5.14 (the "Projections"), AmeriNet
hereby covenants and agrees that it will maintain membership on the
board of directors of the Surviving Corporation in the following
ratio: two thirds of the members will be designees of Mr. Dennis A.
Berardi and Ms. Carol A. Berardi and one third will be designees of
AmeriNet, provided, however, that:
(1) A quorum for meetings of the board of directors of the
Surviving Corporation and action by such board of directors
will require the participation of Amerinet's designees;
provided further, that, if a meeting deemed to involve
material issues is adjourned due to the inability to attain a
quorum as a result of the absence of the AmeriNet designees,
then, upon receipt of written notice from the Surviving
Corporation's board of directors, AmeriNet must assure that
its designees attend the reconvened meeting, which will be
held by telephone conference at a time during a business day
designated by AmeriNet within three days after AmeriNet is
provided with the written notice of the adjourned meeting.
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(2) The board of directors of the Surviving Corporation will not,
without AmeriNet's prior written consent specifying the action
authorized, be authorized to engage in any material change in
the Surviving Corporation's business not contemplated by the
Projections, to sell a material portion of the Surviving
Corporation's assets outside the normal course of business, to
issue any securities, to authorize the borrowing of any funds
or pledge of any assets, for so long as the Surviving
Corporation remains a subsidiary of AmeriNet; and
(3) (a) The initial determination by AmeriNet as to the
attainment of the Projections shall not be made until
two complete fiscal quarters have passed since the
Effective Date;
(b) After the first year following the Effective Date,
the Projections may be modified periodically by
unanimous action (including the affirmative votes of
all AmeriNet designees) of the board of directors of
the Surviving Corporation.
(c) In the event that the right of Mr. & Mrs. Berardi to
designate two thirds of the membership on the board
of directors of the Surviving Corporation is
suspended due to failure to meet the Projections,
such right shall be reinstated at such time as the
deficiency in meeting the Projections, on a
cumulative basis, has been cured.
5.15 CREDIT FOR TIME EMPLOYED.
For purposes of determining the eligibility of any Trilogy employee to
receive benefits under any employee benefit plan, or for determining the amount
or scope of any such benefit for which a Trilogy employee is eligible, the time
such employee was employed by Trilogy shall be credited to such employee as if
such employee had been EMPLOYED BY THE SURVIVING CORPORATION FOR SUCH PERIOD;
AND, in addition, the Surviving Corporation shall credit Trilogy employees with
all vacation accrued as of the Effective Date.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party to this Agreement to effect
the Merger shall be subject to the satisfaction at or prior to the Effective
Date of the following conditions:
(A) Stockholder Approval.
This Agreement and the Merger and other transactions contemplated
hereby (including without limitation the Employment Agreements) shall have been
approved and adopted by the requisite vote of the stockholders of Trilogy at the
Trilogy Stockholders' Meeting or through the written consent in lieu of meeting.
(B) No Injunctions or Restraints: Illegality.
No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger shall be in
effect, nor shall any proceeding brought by an administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending; nor shall there be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger, which makes the consummation of the Merger
illegal.
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(C) Trilogy Information Required by Commission Regulation S-B
The provision by Trilogy on a timely basis in full compliance with the
requirements of Commission Regulation S-B of all information concerning its past
operations, including audited Trilogy Financial Statements, shall constitute a
condition subsequent to the obligations of AmeriNet and Trilogy Acquisition
under this Agreement and in the event of the failure of such condition
subsequent, then, at AmeriNet's sole option:
(1) The Merger may be rescinded, and all funds advanced by
AmeriNet to the Surviving Corporation shall be repaid, with
interest at the annual rate of 8%, to AmeriNet within 30 days
after such rescission; or
(2) The Escrow Shares shall be deemed defaulted to AmeriNet and
the Merger shall be restructured in a manner complying with
AmeriNet's reporting and other obligations under the Exchange
Act, including the sale by AmeriNet of the Surviving
Corporation.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF TRILOGY.
The obligations of Trilogy to consummate and effect this Agreement and
the transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Date of each of the following conditions, any of which
may be waived, in writing, exclusively by Trilogy:
(A) Representations, Warranties and Covenants.
The representations and warranties of AmeriNet in this Agreement shall
be true and correct in all material respects on and as of the Effective
Date as though such representations and warranties were made on and as
of such time and AmeriNet shall have performed and complied in all
material respects with all covenants, obligations and conditions of
this Agreement required to be performed and complied with by it as of
the Effective Date.
(B) Certificate of AmeriNet.
Trilogy shall have been provided with a certificate executed on behalf
of AmeriNet by its President and its Chief Financial Officer, Treasurer
or officer exercising such functions to the effect that, as of the
Effective Date:
(1) All representations and warranties made by AmeriNet and
Trilogy Acquisition under this Agreement are true and complete
in all material respects; and
(2) All covenants, obligations and conditions of this Agreement to
be performed by AmeriNet and Trilogy Acquisition on or before
such date have been so performed in all material respects.
(C) Satisfactory Form of Legal Matters.
The form, scope and substance of all legal and accounting matters
contemplated hereby and all documents and other papers delivered
hereunder prior to and on the Effective Date shall be reasonably
acceptable to counsel to Trilogy.
(D) Legal Opinion.
Trilogy shall have received a legal opinion from legal counsel to
Trilogy Acquisition and AmeriNet, substantially in the form of Exhibit
6.2(D) hereto.
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(E) No Material Adverse Changes.
There shall not have occurred any event, fact or condition that has had
or reasonably would be expected to have a material adverse effect on
AmeriNet.
(F) Tax Opinion.
(1) Trilogy shall have received a written opinion from Trilogy
Acquisition's Counsel to the effect that the Merger will
constitute a reorganization within the meaning of Section 368
of the Code.
(2) In rendering such opinion counsel may rely on (and to the
extent reasonably required, the Parties and Trilogy's
stockholders shall make) reasonable representations related
thereto.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF AMERINET AND TRILOGY
ACQUISITION.
The obligations of AmeriNet and Trilogy Acquisition to consummate and
effect this Agreement and the transactions contemplated hereby shall be subject
to the satisfaction at or prior to the Effective Date of each of the following
conditions, any of which may be waived, in writing, exclusively by AmeriNet:
(A) Representations, Warranties and Covenants.
(1) The representations and warranties of Trilogy in this
Agreement shall be true and correct in all material respects
on and as of the Effective Date as though such representations
and warranties were made on and as of such time and Trilogy
shall have performed and complied in all material respects
with all covenants, obligations and conditions of this
Agreement required to be performed and complied with by it as
of the Effective Date.
(2) AmeriNet shall have no remedy against the Escrow Fund in
respect of an untrue representation or warranty if prior to
the Effective Date Trilogy delivers to AmeriNet in accordance
with Section 9.2 a written statement:
(a) Advising AmeriNet that an event (a "Post-Execution
Event") has occurred (specifying in reasonable detail
such event) subsequent to the date of execution of
this Agreement that would render any representation
or warranty made by Trilogy in this Agreement untrue
if such representation or warranty were made as of
the Effective Time; and
(b) Confirming that such representation or warranty was
true as of the date of execution of this Agreement,
and
(c) AmeriNet subsequently waives the failure to satisfy
the condition set forth in Section 6.3(A) with
respect to such representation or warranty.
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(B) Certificate of Trilogy.
AmeriNet shall have been provided with a certificate executed on behalf
of Trilogy by its President and Chief Financial Officer to the effect
that, as of the Effective Date, all:
(1) Representations and warranties made by Trilogy under this
Agreement are true and complete in all material respects; and
(2) Covenants, obligations and conditions of this Agreement to be
performed by Trilogy on or before such date have been so
performed in all material respects.
(C) Third Party Consents.
Any and all consents, waivers and approvals required from third Parties
relating to the contracts and agreements of Trilogy so that the Merger
and other transactions contemplated hereby do not adversely affect the
rights of, and benefits to, Trilogy thereunder shall have been
obtained.
(D) Satisfactory Form of Legal and Accounting Matters.
The form, scope and substance of all legal and accounting matters
contemplated hereby and all documents and other papers delivered
hereunder prior to and on the Effective Date shall be reasonably
acceptable to AmeriNet's counsel (provided that the condition
subsequent concerning the compliance of information provided by Trilogy
with the requirements of Commission Regulation S-B, on a timely basis,
shall survive the Merger).
(E) Legal Opinion.
AmeriNet shall have received a legal opinion from legal counsel to
Trilogy, in substantially the form of Exhibit 6.3(E) hereto.
(F) No Material Adverse Changes.
There shall not have occurred any event, fact or condition which has
had or reasonably would be expected to have a material adverse effect
on Trilogy.
(G) Affiliate Agreements.
AmeriNet shall have received from each of the Affiliates of Trilogy an
executed Affiliate Agreement which shall be in full force and effect.
(H) Dissenters.
The number of shares of Trilogy's Common Stock held by holders who
either (i) have exercised appraisal rights or (ii) retain the ability
to exercise such appraisal rights shall not exceed nineteen percent of
Trilogy's outstanding Common Stock, by class and series, in the
aggregate.
(I) Employment Agreements.
The Employment Agreements shall have been duly executed and delivered
and shall be in full force and effect.
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(J) Minimum Net Worth.
Trilogy shall on the Effective Date have net tangible assets of at
least $300,000 and will have received at least $800,000 in proceeds
form the sale of its securities or capital contributions from its
founders
(K) Tax Opinion.
(1) AmeriNet shall have received a written opinion of Trilogy
Counsel, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code.
(2) In rendering such opinion, counsel may rely on (and to the
extent reasonably required, the Parties and Trilogy's
stockholders shall make) reasonable representations related
thereto.
(L) Confidentiality Agreements.
Each current employee, consultant or other person having access to
trilogy's confidential information shall have executed a
confidentiality agreement in the form annexed hereto as Exhibit 6.3(L).
(M) Accredited Investors.
Except as specifically disclosed in Schedule 6.3(M), immediately prior
to the Effective Time, there shall be no stockholders of Trilogy who
are not "accredited investors," as that term is defined in Rule 501 of
Regulation D promulgated under the Securities Act.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW
7.1 SURVIVAL OF CONDITION SUBSEQUENT; REPRESENTATIONS AND WARRANTIES.
(A) All conditions subsequent to the Merger and covenants to be performed
prior to the Effective Time, and all representations and warranties in
this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Merger and continue until the date the
audit of AmeriNet's financial statements for the year ending June 30,
2000 has been completed and AmeriNet has received a signed opinion from
its independent auditors certifying such financial statements (the
"2000 Audit Date").
(B) All covenants to be performed after the Effective Time shall continue
indefinitely.
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7.2 ESCROW ARRANGEMENTS.
(A) Escrow Fund.
(1) As soon as practicable after the Effective Date, a portion of
the shares of AmeriNet's Common Stock to be issued in the
Merger equal to the Escrow Number [as defined in paragraph
1.1(B)] (plus any additional New Shares (as defined below) as
may be issued in respect thereof after the Effective Date)
(collectively, the "Escrow Shares"), without any act of any
stockholder, will be registered in the name of a person or
legal entity selected by AmeriNet prior to the Effective Time
as escrow agent (the "Escrow Agent"), and will be deposited
with a financial institution acceptable to AmeriNet and the
Agent [as defined in Section 7.2(H) below)], such deposit to
constitute an escrow fund (the "Escrow Fund") to be governed
by the terms set forth herein and at AmeriNet's sole cost and
expense.
(2) (a) The portion of AmeriNet Common Stock in the Escrow Fund
contributed on behalf of each stockholder of Trilogy is
listed opposite such stockholders' name on Exhibit 7.2(A).
(b) The Escrow Fund shall be available to compensate AmeriNet
and its affiliates for any claim, loss, expense, liability
or other damage, including reasonable attorneys' fees that
AmeriNet or any of its affiliates has incurred or reasonably
anticipates incurring by reason of the breach by Trilogy of
any representation, warranty, covenant or agreement of
Trilogy contained herein, (collectively, "Losses"), but only
to the extent that such Losses exceed $40,000 in the
aggregate.
(c) AmeriNet and Trilogy each acknowledge that such Losses, if
any, would relate to unresolved contingencies existing at
the Effective Time, which if resolved at the Effective Time
would have led to a reduction in the total number of shares
of AmeriNet Common Stock AmeriNet would have agreed to issue
in connection with the Merger.
(3) Nothing herein shall limit the liability of Trilogy for any
breach of any representation, warranty or covenant if the
Merger does not close. Resort to the Escrow Fund shall be the
exclusive contractual remedy of AmeriNet and its affiliates
for any such breaches and misrepresentations if the Merger
DOES CLOSE; PROVIDED, HOWEVER, that nothing herein shall limit
any noncontractual remedy for fraud.
(B) Escrow Period; Distribution upon Termination of Escrow Periods.
(1) Subject to the following requirements, the Escrow Fund shall
remain in existence until the 2000 Audit Date (the "Escrow
Period").
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(2) Upon the expiration of such Escrow Period, the Escrow Fund
shall terminate with respect to all ESCROW SHARES; PROVIDED,
HOWEVER, that the number of Escrow Shares, which, in the
reasonable judgment of AmeriNet, subject to the objection of
the Agent and the subsequent arbitration of the matter in the
manner provided in Section 7.2(G) hereof, are necessary to
satisfy any unsatisfied claims specified in any Officer's
Certificate delivered to the Escrow Agent prior to the
expiration of such Escrow Period with respect to facts and
circumstances existing on or prior to the 2000 Audit Date
shall remain in the Escrow Fund (and the Escrow Fund shall
remain in existence) until such claims have been resolved.
(3) As soon as all such claims have been resolved, the Escrow
Agent shall deliver to the Former Trilogy Stockholders all
AmeriNet Common Stock and other property remaining in the
Escrow Fund and not required to satisfy such claims.
(4) Deliveries of AmeriNet Common Stock and other property to the
Former Trilogy Stockholders pursuant to this Section 7.2(B)
shall be made in proportion to their respective original
contributions to the Escrow Fund.
(C) Protection of Escrow Fund.
The Escrow Agent shall hold and safeguard the Escrow Fund during the
Escrow Period, shall treat such fund as a trust fund in accordance with
the terms of this Agreement and not as the property of AmeriNet and
shall hold and dispose of the Escrow Fund only in accordance with the
terms hereof.
(D) Distributions; Voting.
(1) (a) Any shares of AmeriNet Common Stock or other
equity securities issued or distributed by AmeriNet
(including shares issued upon a stock split) ("New
Shares") in respect of AmeriNet Common Stock in the
Escrow Fund which have not been released from the
Escrow Fund shall be added to the Escrow Fund and
become a part thereof.
(b) New Shares issued in respect of AmeriNet Common Stock
which have been released from the Escrow Fund shall
not be added to the Escrow Fund, but shall be
distributed to the holders thereof.
(c) When and if cash dividends on AmeriNet Common Stock
in the Escrow Fund shall be declared and paid, they
shall not be added to the Escrow Fund but shall be
paid to those on whose behalf such AmeriNet Common
Stock is held who, prior to the Merger, held
Trilogy's Common Stock.
(2) Each stockholder of Trilogy shall have voting rights with
respect to the shares of AmeriNet Common Stock contributed to
the Escrow Fund on behalf of such stockholder (and on any
voting securities added to the Escrow Fund in respect of such
shares of AmeriNet Common Stock) so long as such shares of
AmeriNet Common Stock or other voting securities are held in
the Escrow Fund.
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(E) Claims Upon Escrow Fund.
Subject to the objection procedure established in Section 7.2(F) below,
the Escrow Agent shall deliver to AmeriNet out of the Escrow Fund, as
promptly as practicable, shares of AmeriNet Common Stock or other
assets held in the escrow fund in an amount equal to losses by
Amerinet, provided that
(1) A written claim of loss has been provided by AmeriNet to the
Escrow Agent at any time on or before the last day of the
Escrow Period in the form of a certificate signed by any
officer of AmeriNet (an "Officer's Certificate"), with a copy
to the Surviving Corporation:
(a) Stating that AmeriNet has paid or properly accrued or
reasonably anticipates that it will have to pay or
accrue Losses, and
(b) Specifying in reasonable detail the individual items
of Losses included in the amount so stated, the date
each such item was paid or properly accrued, or the
basis for such anticipated liability, and the nature
of the misrepresentation, breach of warranty or claim
to which such item is related, the Escrow Agent
shall, subject to the provisions of Section 7.2(F)
hereof.
(2) For the purposes of determining the number of shares of
AmeriNet Common Stock to be delivered to AmeriNet out of the
Escrow Fund pursuant to Section 7.2(E)(1), the shares of
AmeriNet Common Stock shall be valued at the price actually
received therefor upon their disposition, which shall be
effected as follows:
(a) First the shares will be offered, pro rata, to the Former
Trilogy Stockholders, based on their respective ownership of
shares then comprising the Escrow Fund, at a price equal to
the closing transaction price for AmeriNet's Common Stock as
reported on the OTC Bulletin Board or if the shares are not
quoted on the OTC Bulletin Board, on such public quotation
medium, other stock market or stock exchange on which
AmeriNet's Common Stock is publicly traded, on the day
following the day on which written notice of such offer is
sent by AmeriNet (the "Notice of Sale");
(b) On the close of business on the tenth day after the Notice
of Sale has been sent the offer included in the Notice of
Sale shall lapse and AmeriNet may thereafter sell all shares
of the Escrow Stock required to discharge the obligation
involved that have not been subscribed and paid for by the
Former Trilogy Stockholders, on such terms as AmeriNet deems
appropriate under the circumstances, including volume
discounts, discounts based on the absence of registration
under applicable securities laws and discounts based on
factors designed to avoid negative impact on the price of
AmeriNet's publicly trading Common Stock.
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(F) Objections to Claims.
(1) At the time of delivery of any Officer's Certificate to the
Escrow Agent, a duplicate copy of such certificate shall be
delivered to the Agent [as defined in Section 7.2(H)] and for
a period of thirty (30) days after such delivery, the Escrow
Agent shall make no delivery to AmeriNet of shares of AmeriNet
Common Stock, pursuant to Section 7.2(E) hereof unless the
Escrow Agent shall have received written authorization from
the Agent to make such delivery.
(2) After the expiration of such thirty (30) day period, the
Escrow Agent shall make delivery of the shares of AmeriNet
Common Stock or other property in the Escrow Fund in
accordance with Section 7.2(E) hereof, provided that no such
payment or delivery may be made if the Agent shall object in a
written statement to the claim made in the Officer's
Certificate, and such statement shall have been delivered to
the Escrow Agent prior to the expiration of such thirty (30)
day period.
(G) Resolution of Conflicts; Arbitration.
(1) (a) In case the Agent shall so object in writing to
any claim or claims made in any Officer's
Certificate, the Agent and AmeriNet shall attempt in
good faith to agree upon the rights of the respective
Parties with respect to each of such claims.
(b) If the Agent and AmeriNet should so agree, a
memorandum setting forth such agreement shall be
prepared and signed by both Parties and shall be
furnished to the Escrow Agent.
(c) The Escrow Agent shall be entitled to rely on any
such memorandum and distribute shares of AmeriNet
Common Stock or other property from the Escrow Fund
in accordance with the terms thereof.
(2) (a) If no such agreement can be reached after good
faith negotiation, either AmeriNet or the Agent may
demand arbitration of the matter unless the amount of
the damage or loss is at issue in pending litigation
with a third party, in which event arbitration shall
not be commenced until such amount is ascertained or
both Parties agree to arbitration; and in either such
event the matter shall be settled by arbitration
conducted by three arbitrators.
(b) AmeriNet and the Agent shall each select one
arbitrator, and the two arbitrators so selected shall
select a third arbitrator.
(c) The arbitrators shall set a limited time period and
establish procedures designed to reduce the cost and
time for discovery while allowing the Parties an
opportunity, adequate in the sole judgment of the
arbitrators, to discover relevant information from
the opposing Parties about the subject matter of the
dispute.
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(d) The arbitrators shall rule upon motions to compel or
limit discovery and shall have the authority to
impose sanctions, including attorneys fees and costs,
to the extent as a court of competent law or equity,
should the arbitrators determine that discovery was
sought without substantial justification or that
discovery was refused or objected to without
substantial justification.
(e) The decision of a majority of the three arbitrators
as to the validity and amount of any claim in such
Officer's Certificate shall be binding and conclusive
upon the Parties to this Agreement, and
notwithstanding anything in Section 7.2(F) hereof,
the Escrow Agent shall be entitled to act in
accordance with such decision and make or withhold
payments out of the Escrow Fund in accordance
therewith.
(f) Such decision shall be written and shall be supported
by written findings of fact and conclusions which
shall set forth the award, judgment, decree or order
awarded by the arbitrators.
(3) (a) (i) Judgment upon any award rendered by the arbitrators
may be entered in any court having jurisdiction.
(ii) Any such arbitration shall be held in Broward
County, Florida, under the rules then in effect of
the American Arbitration Association.
(b) For purposes of this Section 7.2(G), in any
arbitration hereunder in which any claim or the
amount thereof stated in the Officer's Certificate is
at issue, AmeriNet shall be deemed to be the
Non-Prevailing Party in the event that the
arbitrators award AmeriNet less than the sum of 50%
of the disputed amount plus any amounts not in
dispute; otherwise, the Former Trilogy Stockholders
as represented by the Agent shall be deemed to be
the Non-Prevailing Party.
(c) The Non-Prevailing Party to an arbitration shall pay
its own expenses, the fees of each arbitrator, the
administrative fee of the American Arbitration
Association, and the expenses, including without
limitation, reasonable attorneys' fees and costs,
incurred by the other party to the arbitration.
(H) Agent of the Stockholders: Power of Attorney.
(1) (a) (i) In the event that the Merger is approved, effective upon
such vote, and without further act of any stockholder, Carol
A. Berardi (or in her absence, Dennis A. Berardi) shall be
appointed as agent and attorney-in-fact (the "Agent") for
each stockholder of Trilogy (except such stockholders, if
any, as shall have perfected their appraisal rights under
the Florida Corporate Merger Laws, for and on behalf of the
Former Trilogy Stockholders, to give and receive notices and
communications, to authorize delivery to AmeriNet of
AmeriNet Common Stock or other property from the Escrow Fund
in satisfaction of claims by AmeriNet, to object to such
deliveries, to agree to, negotiate, enter into settlements
and compromises of, and demand arbitration and comply with
orders of courts and awards of arbitrators with respect to
such claims, and to take all actions necessary or
appropriate in the judgment of Agent for the accomplishment
of the foregoing.
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(ii) Such agency may be changed by the Former Trilogy
Stockholders from time to time upon not less than thirty
(30) days prior written notice to Amerinet; provided that
the Agent may not be removed unless holders of a two-thirds
interest of the Common Stock comprising the Escrow Fund
agree to such removal and to the identity of the substituted
agent.
(iii) No bond shall be required of the Agent, and the Agent shall
not receive compensation for his or her services. Notices or
communications to or from the Agent shall constitute notice
to or from each of the Former Trilogy Stockholders.
(b) The Agent shall be entitled to submit a claim and receive
reimbursement from the Escrow Fund for all reasonable, documented
out-of-pocket expenses incurred by the Agent as a result of his
acting as the agent; provided, however, that such right to
reimbursement shall be subordinate to AmeriNet's claims on the
Escrow, if any, and shall be paid only after all such claims have
been satisfied.
(c) Any such reimbursement shall be paid in shares of AmeriNet Common
Stock out of the Escrow Fund.
(d) For purposes of such reimbursement of the Agent only, such shares
shall be valued at the average of the closing prices of AmeriNet
Common Stock for the fifteen trading days ending on the day prior
to the date the Escrow Agent pays such reimbursement amount.
(2) (a) The Agent shall not be liable for any act done or omitted
hereunder as Agent while acting in good faith and in the exercise
of reasonable judgment.
(b) The Former Trilogy Stockholders on whose behalf shares of
AmeriNet Common Stock were contributed to the Escrow Fund shall
severally indemnify the Agent and hold the Agent harmless against
any loss, liability or expense incurred without negligence or bad
faith on the part of the Agent and arising out of or in
connection with the acceptance or administration of the Agent's
duties hereunder, including the reasonable fees and expenses of
any legal counsel retained by the Agent.
(I) Actions of the Agent.
(1) A decision, act, consent or instruction of the Agent shall constitute
a decision of all the stockholders for whom shares of AmeriNet Common
Stock otherwise issuable to them are deposited in the Escrow Fund and
shall be final, binding and conclusive upon each of such stockholders,
and the Escrow Agent and AmeriNet may rely upon any such decision,
act, consent or instruction of the Agent as being the decision, act,
consent or instruction of every such stockholder.
(2) The Escrow Agent and AmeriNet are hereby relieved from any liability
to any person for any acts done by them in accordance with such
decision, act, consent or instruction of the Agent.
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(J) Third-Party Claims.
(1) In the event AmeriNet becomes aware of a third-party claim which
AmeriNet believes may result in a demand against the Escrow Fund,
AmeriNet shall notify the Agent of such claim, and the Agent and the
Former Trilogy Stockholders shall be entitled, at their expense, to
participate in any defense of such claim.
(2) Amerinet shall have the right in its sole discretion to settle any
such claim; provided, however, that except with the consent of the
Agent, no settlement of any such claim with third-party claimants
shall alone be determinative of the validity of any claim against the
Escrow Fund.
(3) In the event that the Agent has consented to any such settlement, the
Agent shall have no power or authority to object under any provision
of this Article VII to the amount of any claim by AmeriNet against the
Escrow Fund with respect to such settlement.
(k) Escrow Agent's Duties.
(1) (a) The Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth herein, and as set
forth in any additional written escrow instructions which the
Escrow Agent may receive after the date of this Agreement which
are signed by an officer of AmeriNet and the Agent, and may rely
and shall be protected in relying or refraining from acting on
any instrument reasonably believed to be genuine and to have been
signed or presented by the proper party or Parties.
(b) The Escrow Agent shall not be liable for any act done or omitted
hereunder as Escrow Agent while acting in good faith and in the
exercise of reasonable judgment, and any act done or omitted
pursuant to the advice of counsel shall be conclusive evidence of
such good faith.
(2) The Escrow Agent is hereby expressly authorized to disregard any and
all warnings given by any of the Parties or by any other person,
excepting only orders or process of courts of law, and is hereby
expressly authorized to comply with and obey orders, judgments or
decrees of any court. In case the Escrow Agent obeys or complies with
any such order, judgment or decree of any court, the Escrow Agent
shall not be liable to any of the Parties or to any other person by
reason of such compliance, notwithstanding any such order, judgment or
decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
(3) The Escrow Agent shall not be liable in any respect on account of the
identity, authority or rights of the Parties executing or delivering
or purporting to execute or deliver this Agreement or any documents or
papers deposited or called for hereunder.
(4) The Escrow Agent shall not be liable for the expiration of any rights
under any statute of limitations with respect to this Agreement or any
documents deposited with the Escrow Agent.
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(5) The Escrow Agent may resign at any time upon giving at least thirty
(30) days written notice to Amerinet and the Agent to this Agreement;
provided, however, that no such resignation shall become effective
until the appointment of a successor escrow agent which shall be
accomplished as follows:
(a) AmeriNet and the Agent shall use their best efforts to mutually
agree upon a successor agent within thirty (30) days after
receiving such notice.
(b) If the Parties fail to agree upon a successor escrow agent within
such time, AmeriNet shall have the right to appoint a successor
escrow agent authorized to do business in Florida.
(c) The successor escrow agent selected in the preceding manner shall
execute and deliver an instrument accepting such appointment and
it shall thereupon be deemed the Escrow Agent hereunder and it
shall without further acts be vested with all the estates,
properties, rights, powers, and duties of the predecessor Escrow
Agent as if originally named as Escrow Agent.
(d) Thereafter, the predecessor Escrow Agent shall be discharged for
any further duties and liabilities under this Agreement.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION.
This Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Date, as follows:
(A) By mutual consent of Trilogy and AmeriNet.
(B) By AmeriNet if it is not in material breach of its obligations under
this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement contained in this
Agreement on the part of Trilogy and such breach has not been cured
within fifteen days after notice to Trilogy.
(C) By Trilogy if it is not in material breach of its respective
obligations under this Agreement and there has been a material breach
of any representation, warranty, covenant or agreement contained in
this Agreement on the part of AmeriNet or Trilogy Acquisition and such
breach has not been cured within 15 days after notice to AmeriNet;
(D) By any Party if:
(1) The Merger has not occurred by November 30, 1999;
(2) There shall be a final nonappealable order of a federal or
state court in effect preventing consummation of the Merger;
(3) There shall be any action taken, or any statute, rule,
regulation or order enacted, promulgated or issued or deemed
applicable to the Merger by any Governmental Entity which
would make consummation of the Merger illegal; or
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(4) There shall be any action taken, or any statute, rule,
regulation or order enacted, promulgated or issued or deemed
applicable to the Merger by any Governmental Entity, which
would:
(a) Prohibit AmeriNet's or Trilogy's ownership or
operation of all or a material portion of the
business of Trilogy, or compel AmeriNet or Trilogy to
dispose of or hold separate all or a material portion
of the business or assets of Trilogy or AmeriNet as a
result of the Merger; or
(b) Render AmeriNet, Trilogy Acquisition or Trilogy
unable to consummate the Merger, except for any
waiting period provisions.
(E) Where action is taken to terminate this Agreement pursuant to this
Section 8.1, it shall be sufficient for such action to be authorized by
the board of directors (as applicable) of the Party taking such action.
8.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement as provided in Section
8.1, this Agreement shall forthwith become void and there shall be no liability
or obligation on the part of AmeriNet, Trilogy Acquisition or Trilogy or their
respective officers, directors or stockholders, except if such termination
results from the breach by a Party of any of its representations, warranties,
covenants or agreements set forth in this Agreement (it being understood that
termination of this Agreement because of failure of Trilogy to satisfy the
condition set forth in Section 6.3(A) as a result of the occurrence of a
Post-Execution Event shall not be deemed to be a termination resulting from such
a breach of representation or warranty.)
8.3 AMENDMENT.
(A) This Agreement may be amended by the Parties at any time before or
after approval of matters presented in connection with the Merger by
the stockholders of those Parties required by applicable law to so
approve but, after any such stockholder approval, no amendment shall be
made which by law requires the further approval of stockholders of a
party without obtaining such further approval.
(B) This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the Parties.
8.4 EXTENSION; WAIVER.
(A) At any time prior to the Effective Time any Party may, to the extent
legally allowed:
(1) Extend the time for the performance of any of the obligations or
other acts of the other Parties;
(2) Waive any inaccuracies in the representations and warranties made
to such party contained herein or in any document delivered
pursuant hereto; or
(3) Waive compliance with any of the agreements or conditions for the
benefit of such Party contained herein.
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(B) Any agreement on the part of a Party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on
behalf of such Party.
ARTICLE IV
GENERAL PROVISIONS
9.1 INTERPRETATION.
(A) When a reference is made in this Agreement to Schedules or Exhibits,
such reference shall be to a Schedule or Exhibit to this Agreement
unless otherwise indicated.
(B) The words "include," "includes" and "including" when used herein shall
be deemed in each case to be followed by the words "without
limitation."
(C) The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(D) The captions in this Agreement are for convenience and reference only
and in no way define, describe, extend or limit the scope of this
Agreement or the intent of any provisions hereof.
(E) All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the
Party or Parties, or their personal representatives, successors and
assigns may require.
(F) The Parties agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction
providing that ambiguities in an agreement or other document will be
construed against the party drafting such agreement or document.
9.2 NOTICE.
(A) All notices, demands or other communications given hereunder shall be
in writing and shall be deemed to have been duly given on the first
business day after mailing by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
(1) To AmeriNet:
AMERINET GROUP.COM, INC.
2500 North Military Trail, Suite 225-C; Boca Raton, Florida 33431
ATTENTION: MICHAEL HARRIS JORDAN, PRESIDENT
Telephone (561) 998-3435, Fax (561) 998-3425; and, e-mail
[email protected]; with a copy to
G. RICHARD CHAMBERLIN, ESQUIRE; GENERAL COUNSEL
AMERINET GROUP.COM, INC.
14950 South Highway 441; Summerfield, Florida 34491
TELEPHONE (352) 694-6714, FAX (352) 694-9178; AND, E-MAIL,
[email protected].
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(2) To Trilogy:
TRILOGY INTERNATIONAL, INC.
526 Southeast Dixie Highway; Stuart, Florida 34494
ATTENTION: CAROL A. BERARDI, PRESIDENT
Telephone (561) 781-7278; Fax (561) 781-7282; web site www.trilogyonline.com;
with a copy to
MICHAEL D. HARRIS, ESQUIRE; MICHAEL HARRIS, P.A.
1645 Palm Beach Lakes Boulevard, Suite 550; West Palm Beach, Florida 33401
Telephone (561) 478-7077; Fax (561) 478-1817; and, e-mail [email protected]
(3) To Agent:
MS. CAROL A. BERARDI
526 Southeast Dixie Highway; Stuart, Florida 34494
Telephone (561) 781-7278; Fax (561) 781-7282; web site www.trilogyonline.com;
with a copy to
MICHAEL D. HARRIS, ESQUIRE; MICHAEL HARRIS, P.A.
1645 Palm Beach Lakes Boulevard, Suite 550; West Palm Beach, Florida 33401
TELEPHONE (561) 478-7077; FAX (561) 478-1817; AND, E-MAIL [email protected]
(4) To the Escrow Agent:
To the person and at the contact information provided for such
purpose by AmeriNet.
(5) To Yankees:
THE YANKEE COMPANIES, INC.
2500 North Military Trail, Suite 225; Boca Raton, Florida 33431
ATTENTION: LEONARD MILES TUCKER, PRESIDENT
TELEPHONE (561) 702-3631, FAX (561) 998-3425;
AND, E-MAIL [email protected];
or such other address or to such other person as any Party shall
designate to the other for such purpose in the manner hereinafter set
forth.
(B) At the request of any Party, notice will also be provided by overnight
delivery, facsimile transmission or e-mail, provided that a
transmission receipt is retained.
(C) (1) The Parties acknowledge that Yankees serves as a strategic
consultant to AmeriNet and has acted as scrivener for the Parties
in this transaction but that Yankees is neither a law firm nor an
agency subject to any professional regulation or oversight.
(2) Because of the inherent conflict of interests involved, Yankees
has advised all of the Parties to retain independent legal and
accounting counsel to review this Agreement and its exhibits and
incorporated materials on their behalf.
(3) The decision by any Party not to use the services of legal
counsel in conjunction with this transaction shall be solely at
their own risk, each Part acknowledging that applicable rules of
the Florida Bar prevent AmeriNet's general counsel, who has
reviewed, approved and caused modifications on behalf of
AmeriNet, from representing anyone other than AmeriNet in this
transaction.
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9.3 MERGER OF ALL PRIOR AGREEMENTS HEREIN.
(A) This instrument, together with the instruments referred to herein,
contains all of the understandings and agreements of the Parties with
respect to the subject matter discussed herein.
(B) All prior agreements whether written or oral are merged herein and
shall be of no force or effect.
9.4 SURVIVAL.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and the Merger and shall be
effective regardless of any investigation that may have been made or may be made
by or on behalf of any Party.
9.5 SEVERABILITY.
If any provision or any portion of any provision of this Agreement,
other than one of the conditions precedent or subsequent, or the application of
such provision or any portion thereof to any person or circumstance shall be
held invalid or unenforceable, the remaining portions of such provision and the
remaining provisions of this Agreement or the application of such provision or
portion of such provision as is held invalid or unenforceable to persons or
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby.
9.6 GOVERNING LAW.
This Agreement shall be construed in accordance with the substantive
and procedural laws of the State of Delaware (other than those regulating
Taxation and choice of law).
9.7 INDEMNIFICATION.
(A) Each Party hereby irrevocably agrees to indemnify and hold the other
Parties harmless from any and all liabilities and damages (including
legal or other expenses incidental thereto), contingent, current, or
inchoate to which they or any one of them may become subject as a
direct, indirect or incidental consequence of any action by the
indemnifying Party or as a consequence of the failure of the
indemnifying Party to act, whether pursuant to requirements of this
Agreement or otherwise.
(B) In the event it becomes necessary to enforce this indemnity through an
attorney, with or without litigation, the successful Party shall be
entitled to recover from the indemnifying Party, all costs incurred
including reasonable attorneys' fees throughout any negotiations,
trials or appeals, whether or not any suit is instituted.
9.8 DISPUTE RESOLUTION.
(A) In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement any
proceedings pertaining directly or indirectly to the rights or
obligations of the Parties hereunder shall, to the extent legally
permitted, be held in Broward County, Florida, and the prevailing Party
shall be entitled to recover its costs and expenses, including
reasonable attorneys' fees up to and including all negotiations, trials
and appeals, whether or not any formal proceedings are initiated.
(B) Except for the arbitration procedures outlined in paragraphs 7.2(G)(2)
and 7.2(G)(3) which shall govern any arbitration proceeding described
therein, in the event of any dispute arising under this Agreement, or
the negotiation thereof or inducements to enter into the Agreement, the
dispute shall, at the request of any Party, be exclusively resolved
through the following procedures:
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(1) (a) First, the issue shall be submitted to mediation before a
mediation service in Broward County, Florida to be selected
by lot from six alternatives to be provided, three by
AmeriNet and Three by the Surviving Corporation.
(b) The mediation efforts shall be concluded within ten business
days after their initiation unless the Parties unanimously
agree to an extended mediation period;
(2) In the event that mediation does not lead to a resolution of the
dispute then at the request of any Party, the Parties shall
submit the dispute to binding arbitration before an arbitration
service located in Broward County, Florida to be selected by lot,
from six alternatives to be provided, three by AmeriNet and Three
by the Surviving Corporation.
(3) (a) Expenses of mediation shall be borne equally by the Parties,
if successful.
(b) Expenses of mediation, if unsuccessful and of arbitration
shall be borne by the Party or Parties against whom the
arbitration decision is rendered.
(c) If the terms of the arbitral award do not establish a
prevailing Party, then the expenses of unsuccessful
mediation and arbitration shall be borne equally by the
Parties involved.
9.9 BENEFIT OF AGREEMENT.
The terms and provisions of this Agreement shall be binding upon and
inure to the benefit of the Parties, their successors, assigns, personal
representatives, estate, heirs and legatees but are not intended to confer upon
any other person any rights or remedies hereunder.
9.10 FURTHER ASSURANCES.
The Parties agree to do, execute, acknowledge and deliver or cause to
be done, executed, acknowledged or delivered and to perform all such acts and
deliver all such deeds, assignments, transfers, conveyances, powers of attorney,
assurances, stock certificates and other documents, as may, from time to time,
be required herein to effect the intent and purpose of this Agreement.
9.11 COUNTERPARTS.
(A) This Agreement may be executed in any number of counterparts.
(B) All executed counterparts shall constitute one Agreement
notwithstanding that all signatories are not signatories to the
original or the same counterpart.
(C) Execution by exchange of facsimile transmission shall be deemed legally
sufficient to bind the signatory; however, the Parties shall, for
aesthetic purposes, prepare a fully executed original version of this
Agreement which shall be the document filed with the Commission.
9.12 LICENSE.
(A) This form of agreement is the property of Yankees and has been
customized for this transaction with the consent of Yankees by G.
Richard Chamberlin, Esquire.
(B) The use of this form of agreement by the Parties is authorized hereby
solely for purposes of this transaction.
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(C) The use of this form of agreement or of any derivation thereof without
Yankees' prior written permission is prohibited.
In Witness Whereof, AmeriNet, Trilogy Acquisition and Trilogy have caused
this Agreement to be executed by their duly authorized respective officers, all
as of the last date set forth below:
SIGNED, SEALED AND DELIVERED
IN OUR PRESENCE:
AMERINET GROUP.COM, INC.
_________________________________ (A Delaware corporation)
_________________________________ By: ______________________________
MICHAEL H. JORDAN, PRESIDENT
(CORPORATE SEAL)
Attest: ______________________________
G. Richard Chamberlin, Esquire
Dated: November 26, 1999
STATE OF FLORIDA }
COUNTY OF MARION } SS.:
On this 26th day of November, 1999, before me, a notary public in and
for the county and state aforesaid, personally appeared Michael H. Jordan and G.
Richard Chamberlin, Esquire, to me known, and known to me to be the president
and general counsel, respectively, of AmeriNet Group.com, Inc., the
above-described corporation, and to me known to be the persons who executed the
foregoing instrument and acknowledged the execution thereof to be their free act
and deed, and the free act and deed of AmeriNet Group.com, Inc., for the uses
and purposes therein mentioned.
In witness whereof, I have hereunto set my hand and affixed my notarial
seal the day and year in this certificate first above written. My commission
expires the ___day of ______________, ____.
{Seal}
--------------------------------
Vanessa H. Lindsey, Notary Public
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TRILOGY ACQUISITION CORPORATION
_________________________________ (a Florida corporation)
_________________________________ By: ______________________________
CAROL A. BERARDI, PRESIDENT
(CORPORATE SEAL)
Attest: ______________________________
Dated: November 27, 1999
STATE OF FLORIDA }
COUNTY OF PALM BEACH } SS.:
On this 27th day of November, 1999, before me, a notary public in and
for the county and state aforesaid, personally appeared Carol A. Berardi and
John Holmes, to me known, and known to me to be the president and secretary of
Trilogy Acquisition Corporation, the above-described corporation, and to me
known to be the persons who executed the foregoing instrument, and acknowledged
the execution thereof to be their free act and deed, and the free act and deed
of Trilogy Acquisition Corporation, for the uses and purposes therein mentioned.
In witness whereof, I have hereunto set my hand and affixed my notarial
seal the day and year in this certificate first above written. My commission
expires the ___day of _____________, ____.
(Seal)
-----------------------------
Notary Public
TRILOGY INTERNATIONAL, INC.
________________________________ (a Florida corporation)
_________________________________ By: _____________________________
CAROL A. BERARDI, PRESIDENT
(CORPORATE SEAL)
Attest: _____________________________
JOHN HOLMES, SECRETARY
Dated: November 27, 1999
STATE OF FLORIDA }
COUNTY OF PALM BEACH } SS.:
On this 27th day of November, 1999, before me, a notary public in and
for the county and state aforesaid, personally appeared Carol A. Berardi and
John Holmes, to me known, and known to me to be the president and secretary of
Trilogy International, Inc., the above-described corporation, and to me known to
be the persons who executed the foregoing instrument, and acknowledged the
execution thereof to be their free act and deed, and the free act and deed of
Trilogy International, Inc., for the uses and purposes therein mentioned.
In witness whereof, I have hereunto set my hand and affixed my notarial
seal the day and year in this certificate first above written. My commission
expires the ___day of _______________, ____.
(Seal)
-----------------------------
Notary Public
105
<PAGE>
Schedules and Exhibits to Agreement of Merger and Plan of Reorganization
Agreement dated December 1, 1999.
ARTICLES OF INCORPORATION
OF
TRILOGY ACQUISITION CORPORATION
Article I - Name
The name of this corporation is Trilogy Acquisition Corporation.
Article II - Principal Address
The principal address of the corporation shall be 526 SE Dixie Highway,
Stuart, Florida 34994.
Article III - Commencement
This corporation shall commence on the date of execution and
acknowledgement of these Articles.
Article IV - Purpose
This corporation is organized for the purpose of transacting any or all
lawful business.
Article V - Capital Stock
This corporation is authorized to issue 7,500 shares of $1.00, par value,
common stock.
Article VI - Initial Registered Office and Agent
The street address of the initial registered office of this corporation is
1645 Palm Beach Lakes Blvd., Suite 550, West Palm Beach, Florida 33401 and the
name and address of the initial registered agent is Michael D. Harris, 1645 Palm
Beach Lakes Blvd., Suite 550, West Palm Beach, Florida 33401.
Article VII - Initial Board of Directors
This corporation shall have between one and nine directors. There shall be
initially one director and the name and address of the initial director is:
Michael Harris Jordan, 902 Clint Moore Road, Suite 136, Boca Raton, FL 33487.
The initial director shall serve until the next annual meting of shareholders or
until his successor is duly elected and seated. The number of directors may be
increased or decreased from time to time in the manner provided in the Bylaws.
Article VIII - Incorporator
The name and address of the person signing these articles is:
Michael D. Harris
1645 Palm Beach Lakes Blvd. Suite 550
West Palm Beach, Florida 33401
Article IX - Bylaws
The power to adopt, alter, amend or repeal bylaws shall be vested in the
shareholders.
Article X - Indemnification
Subject to the qualifications contained in Section 607.0850, Florida
Statutes, the Company shall indemnify its officers and directors and former
officers and directors (the "Indemnitee") to the fullest extent against expenses
(including attorneys fees), judgments, fines and amounts paid in settlement
arising out of his or her services as an officer or director of the Company.
106
<PAGE>
Article XI - Amendment
The corporation reserves the right to amend or repeal any provisions
contained in these Articles of Incorporation or any amendment hereto, and any
right conferred upon the shareholders is subject to this reservation.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
articles of incorporation this 19th day of November, 1999.
Michael D. Harris, Incorporator
/S/ Michael D. Harris
STATE OF FLORIDA )
COUNTY OF PALM BEACH ) SS.:
Before me, a notary public authorized to take acknowledgments in the state
and county set forth above, personally appeared Michael D. Harris, known to me
and known by me to be the person who executed the foregoing articles of
incorporation, and he acknowledged before me that he executed those articles of
incorporation.
In witness whereof, I have hereunto set my hand and affixed my official
seal this 19th day of November, 1999.
Notary Public
My commission expires:
107
<PAGE>
Certificate designating place of business or domicile for the service
of process within Florida, naming agent upon whom process may be
served.
In compliance with Section 48.091, Florida Statutes, The following is
submitted:
First-that Trilogy Acquisition Corporation
(Name of Corporation)
desiring to organize or qualify under the laws of the state of Florida, with its
principal place of business at the City of , State of Florida , has named
Michael D. Harris located at 1645 Palm Beach Lakes Boulevard, Suite 550, City of
West Palm Beach, Florida 33401, State of Florida, as its agent to accept service
of process within Florida.
SIGNATURE:___________________________
TITLE: Incorporator .
DATE: November 19, 1999
Having been named to accept service of process for the above stated
corporation, at the place designated in this certificate, I hereby agree to act
in this capacity, and I further agree to comply with the provisions of all
statutes relative to the proper and complete performance of my duties.
SIGNATURE:
Registered Agent
DATE: _______________________________
108
<PAGE>
Schedule 1.6(B)(3) Trilogy's Options and Warrants Outstanding
Name $.25 $.25
Warrants Options
Investors
Arthur Calabro 20,000
George Campen 10,000
Antares Capital Management 141,818
Daniel Conroy 30,000
William DeRosa 15,000
Donald Downs 38,000
Peter Glint 40,000
John Goodman 60,000
Max Hazelwood 15,000
John Holmes 60,000
Stephen Holmes 60,000
Robert Imparato 15,000
SOG Investments 60,000
Robert Lewis 60,000
John Meeks 10,000
Ronald Musich 60,000
Bernard Rudd 30,000
James Engstrom 20,000
Sub Total 744,818
Employees & Consultants
Stephen Berardi 50,000
Dale Hernandez 15,000
Jane Bicks 50,000
Mi Pro Inc 80,000
Rock n Rowe 8,667
Business Design & Development 3,334 See Note
Tom Bashara 20,000
John Quigley 20,000
Earl Pike 20,000
Michael Harris 5,000
744,818 272,001 1,016,819
Note: Debbie George of Business Design & Development was granted 20,000 Options
on December 31, 1998. 3,334 options vested upon grant with 3,333 to vest each 6
months if consultant was still retained by the Company. Consultant was no longer
associated with Company after April 1999 so balance of options were canceled.
Consultant is contesting cancelation but Company believes there is no merit to
her claim.
109
<PAGE>
Schedule 2.2(B) Trilogy's Capital Structure as of October 26, 1999
Name Common Series A
Shares Preferred
Arthur Calabro 40,000 20,000
George Campen 20,000 10,000
Antares Capital Management 283,636 141,818
Daniel Conroy 60,000 30,000
William DeRosa 30,000 15,000
Donald Downs 76,000 38,000
Peter Glint 80,000 40,000
John Goodman 120,000 60,000
Max Hazelwood 30,000 15,000
John Holmes 120,000 60,000
Stephen Holmes 120,000 60,000
Robert Imparato 30,000 15,000
SOG Investments 120,000 60,000
Robert Lewis 120,000 60,000
John Meeks 20,000 10,000
Ronald Musich 120,000 60,000
Bernard Rudd 60,000 30,000
James Engstrom 40,000 20,000
Sub Total 1,489,636 744,818
Dennis Berardi 1,577,591
Carol Berardi 1,577,590
Stephen Berardi 3,000
Dale Hernandez 3,000
Sheila Honan 2,160
Lester Thornhill 2,160
Jane Bicks 2,000
David Cantley 26,000
Margaret McEver 1,159
Linda Logue 1,159
Ruth Shinnick 1,546
Donald Downs 20,000
3,217,365
Total 4,707,001 744,818
110
<PAGE>
Schedule 2.4(D) - Conflicts with Obligations
Equipment and Property leases currently held by Trilogy International, Inc.
state that any assignment must be approved by Lessor. Trilogy does not believe
that the proposed Merger & Reorganization Plan constitutes an assignment of
obligations in as much as surviving entity will still have the same name and
business address.
Schedule 2.5 (a) Financials
Balance Sheet & Income Statement Year Ending December 31, 1998 (Unaudited)
Balance Sheet for 6 Months Ending June 30, 1999 (Unaudited)
Profit and Loss for 6 Months Ending June 30, 1999 (Unaudited)
Statement of Cash Flows January 1 through June 30, 1999 (Unaudited)
Balance Sheet for 9 Months Ending September 30, 1999 (Unaudited) (Revised as of
November 4, 1999)
Profit and Loss for 3 Months Ending September 30, 1999 (Unaudited)
Statement of Cash Flow July 1, 1999 through September 30, 1999 (Unaudited)
Profit and Loss for 9 Months Ending September 30, 1999 (Unaudited).
(Revised as of November 4, 1999)
Statement of Cash Flows January 1 through September 30, 1999 (Unaudited).
Undisclosed Liabilities
111
<PAGE>
TRILOGY INTERNATIONAL, INC.
Balance Sheet As of June 30, 1999
ASSETS
Current Assets
Checking/Savings
1015o Fleet Bank 1,000.00
1010o Riverside National 1142 228,339.03
Total Checking/Savings 229,339.03
Other Current Assets
1100o Product inventory 22,271.49
1105o Sales materials 11,143.37
Total Other Current Assets 33,414.86
Total Current Assets 262,753.89
Fixed Assets
1310o Computer software 35,012.34
1320o Computer hardware 64,158.28
1330o Office equipment 1,152.52
1350o Office furniture 1,859.49
1360o Telephone equipment 13,310.00
Total Fixed Assets 115,492.63
Other Assets
1050o S.H. Loans receivable 3,240.00
1040o Start-up expenses 85,617.94
1005o Organizational costs 575.00
1020o Deposits 18,648.06
Total Other Assets 108,081.00
TOTAL ASSETS 486,327.52
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Other Current Liabilities
2300o Accrued salaries payable 270,747.08
2400o Officer loans payable 2,043.30
2405o Other loans payable 7,668.86
2100 o Payroll liabilities
2125o Medicare 757.17
2140o Fla unemployment 1,109.07
2130o Ffuta 328.63
2120o Fica 3,237.31
2110o Fed witholding 4,145.88
2100o Payroll Liabilities - Other 10,004.19
Total 2100o Payroll Liabilities 19,582.25
Total Other Current Liabilities 300,041.49
Total Current Liabilities 300,041.49
Total Liabilities 300,041.49
Equity
3006 o Series a preferred 330,000.00
3005 o Common stock 4,560.00
3010 o Paid in capital 420,737.10
3900 o Retained Earnings -3,513.19
Net Income -565,497.88
Total Equity 186,286.03
TOTAL LIABILITIES & EQUITY 486,327.52
112
<PAGE>
TRILOGY INTERNATIONAL, INC.
Balance Sheet as of September 30, 1999
ASSETS
Current Assets
Checking/Savings
1025o Nations Bank 1,086.58
1010o Riverside National 1142 1,160.12
Total Checking/Savings 2,246.70
Accounts Receivable
1200 o Accounts Receivable 2,132.12
Total Accounts Receivable 2,132.12
Other Current Assets
1111o Dep.in transit/ (inc. clearing) 3,531.15
1100o Product inventory 109,910.61
1105o Sales materials 33,428.50
Total Other Current Assets 146,870.26
Total Current Assets 151,249.08
Fixed Assets
1310o Computer software 53,134.84
1320o Computer hardware 68,910.24
1330o Office equipment 1,152.52
1350o Office furniture 2,995.83
1360o Telephone equipment 15,115.99
1370o Leasehold improvements 5,757.65
1400o Less Depreciation -8,646.67
Total Fixed Assets 138,420.40
Other Assets
1005o Organizational costs 575.00
1020o Deposits 15,674.62
Total Other Assets 16,249.62
TOTAL ASSETS 305,919.10
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
2000 o Accounts Payable 138,815.40
Total Accounts Payable 138,815.40
Other Current Liabilities
2410o Commissions payable 1,553.38
2300o Accrued salaries payable 349,582.64
2400o Officer loans payable 3,000.00
2405o Other loans payable 28,617.58
2406o Accrued interest payable 675.05
2100o Payroll liabilities
2140o Fla unemployment -0.01
2130o Futa -220.04
2100o Payroll Liabilities - Other 476.81
Total 2100o Payroll Liabilities 256.76
2200 o Sales Tax Payable 2,708.66
Total Other Current Liabilities 386,394.07
Total Current Liabilities 525,209.47
Total Liabilities 525,209.47
Equity
3006 o Series a preferred 346,500.00
3005 o Common stock 4,626.00
3010 o Paid in capital 437,525.68
3900 o Retained earnings -3,513.19
Net Income -1,004,428.86
Total Equity -219,290.37
TOTAL LIABILITIES & EQUITY 305,919.10
113
<PAGE>
TRILOGY INTERNATIONAL, INC.
Statement of Cash Flows January through June 1999
Jan - Jun '99
OPERATING ACTIVITIES
Net Income -565,497.88
Adjustments to reconcile Net Income
to net cash provided by operations:
1100o product inventory -22,271.49
1105o Sales materials -11,143.37
2300o Accrued salaries payable 270,747.08
2400o Officer loans payable 2,043.30
2405o Other loans payable 7,668.86
2100o Payroll Liabilities 10,004.19
2100o Payroll Liabilities:2125o Medicare 757.17
2100o Payroll Liabilities:2140o Fla unemployment 1,109.07
2100o Payroll Liabilities:2130o Futa 328.63
2100o Payroll Liabilities:2120o Fica 3,237.31
2100o Payroll Liabilities:2110o Fed Witholding 4,145.88
Net cash provided by Operating Activities -298,871.25
INVESTING ACTIVITIES
1310o Computer software -35,012.34
1320o Computer hardware -64,158.28
1330o Office equipment -1,152.52
1350o Office furniture -1,859.49
1360o Telephone equipment -13,310.00
1050o S.H. loans receivable -3,240.00
1040o Start-up expenses -85,617.94
1005o Organizational costs -575.00
1020o Deposits -18,648.06
Net cash provided by Investing Activities -223,573.63
FINANCING ACTIVITIES
3006o Series a preferred 330,000.00
3005o Common stock 4,560.00
3010o Paid in capital 420,737.10
3900o Retained Earnings -3,513.19
Net cash provided by Financing Activities 751,783.91
Net cash increase for period 229,339.03
Cash at end of period 229,339.03
114
<PAGE>
TRILOGY INTERNATIONAL, INC.
12/10/99 Statement of Cash Flows January through September 1999
Jan - Sep '99
OPERATING ACTIVITIES
Net Income -1,004,428.86
Adjustments to reconcile Net Income
to net cash provided by operations:
1200o Accounts Receivable -2,132.12
1111o Dep.in transit/ (inc. clearing) -3,531.15
1100o Product inventory -109,910.61
1105o Sales materials -33,428.50
2000o Accounts payable 138,815.40
2410o Commissions payable 1,553.38
2300o Accrued salaries payable 349,582.64
2400o Officer loans payable 3,000.00
2405o Other loans payable 28,617.58
2406o Accrued interest payable 675.05
2100o Payroll Liabilities 476.81
2100o Payroll Liabilities:2140o Fla Unemployment -0.01
2100o Payroll Liabilities:2130o Futa -220.04
2200o Sales Tax Payable 2,708.66
Net cash provided by Operating Activities -628,221.77
INVESTING ACTIVITIES
1310o Computer software -53,134.84
1320o Computer hardware -68,910.24
1330o Office equipment -1,152.52
1350o Office furniture -2,995.83
1360o Telephone equipment -15,115.99
1370o Leasehold improvements -5,757.65
1400o Less depreciation 8,646.67
1005o Organizational costs -575.00
1020o Deposits -15,674.62
Net cash provided by Investing Activities -154,670.02
FINANCING ACTIVITIES
3006o Series a preferred 346,500.00
3005o Common stock 4,626.00
3010o Paid in capital 437,525.68
3900o Retained Earnings -3,513.19
Net cash provided by Financing Activities 785,138.49
Net cash increase for period 2,246.70
Cash at end of period 2,246.70
115
<PAGE>
TRILOGY INTERNATIONAL, INC.
Statement of Cash Flows July through September 1999
Jul - Sep '99
OPERATING ACTIVITIES
Net Income -438,930.98
Adjustments to reconcile Net Income
to net cash provided by operations:
1200o Accounts Receivable -2,132.12
1111o Dep.in transit/ (inc. clearing) -3,531.15
1100o Product inventory -87,639.12
1105o Sales materials -22,285.13
2000o Accounts payable 138,815.40
2410o Commissions payable 1,553.38
2300o Accrued salaries payable 78,835.56
2400o Officer loans payable 956.70
2405o Other loans payable 20,948.72
2406o Accrued interest payable 675.05
2100o Payroll Liabilities -9,527.38
2100o Payroll Liabilities:2125o Medicare -757.17
2100o Payroll Liabilities:2140o Fla Unemployment -1,109.08
2100o Payroll Liabilities:2130o Futa -548.67
2100o Payroll Liabilities:2120o Fica -3,237.31
2100o Payroll Liabilities:2110o Fed Witholding -4,145.88
2200o Sales Tax Payable 2,708.66
Net cash provided by Operating Activities -329,350.52
INVESTING ACTIVITIES
1310o Computer software -18,122.50
1320o Computer hardware -4,751.96
1350o Office furniture -1,136.34
1360o Telephone equipment -1,805.99
1370o Leasehold improvements -5,757.65
1400o Less Depreciation 8,646.67
1050o S.H. Loans receivable 3,240.00
1040o Start-up expenses 85,617.94
1020o Deposits 2,973.44
Net cash provided by Investing Activities 68,903.61
FINANCING ACTIVITIES
3006o Series a preferred 16,500.00
3005o Common stock 66.00
3010o Paid in capital 16,788.58
Net cash provided by Financing Activities 33,354.58
Net cash increase for period -227,092.33
Cash at beginning of period 229,339.03
Cash at end of period 2,246.70
116
<PAGE>
TRILOGY INTERNATIONAL, INC.
Profit and Loss January through June 1999
Jan - Jun '99
Ordinary Income/Expense
Expense
6000 o Finance Department
6005 o Outside Accountants 1,890.00
total 6000 o Finance Department 1,890.00
6100 o Call Center
6130 o Payroll
6131 o Salaries & wages 31,666.69
total 6130 o Payroll 31,666.69
6150o Consulting fees 18,527.13
6170o Telephone 2,914.37
6180 o Travel
6185o Car rental 682.81
6181o Airfares 2,268.00
6182o Lodging 563.27
Total 6180o Travel 3,514.08
Total 6100o Call Center 56,622.27
6300 o Corp. Headquarters
6330 o Payroll Expense
6335o Officers' salaries 110,833.34
6332o Payroll taxes 3,215.56
Total 6330o Payroll expense 114,048.90
6350o Consulting fees 35,079.96
6311o Bank charges 66.92
6361o Security 1,237.50
6388o Contributions 45.00
6379o Employment expense 1,088.43
6351o Training 750.01
6310o Promotion 94.60
6340o Legal fees 7,664.03
6345o Professional fees 500.00
6352o Dues and subscriptions 414.95
6355o equipment leasing 2,509.51
6360o Facilities maintenance 1,200.00
6370 o Insurance
6372 o Liability ins 1,640.00
Total 6370 o Insurance 1,640.00
6380o Miscellaneous expense 1,286.24
6381o Office supplies 6,972.48
6382o Postage & courier 2,851.92
6383o Rent 6,534.36
6385o Telephone 5,148.15
6387o Licenses & fees 1,601.50
6390 o Travel
117
<PAGE>
6391o Airfares 1,645.00
6392o Lodging 1,201.32
6393o Meals & entertainment 3,872.80
6394o Mileage & auto 226.80
6390o Travel - other 2,737.79
total 6390o Travel 9,683.71
total 6300o Corp. Headquarters 200,418.17
6400 o Marketing
6410 o Payroll expense
6411o Salaries & wages 70,076.92
6412o Payroll taxes 1,458.11
total 6410o Payroll expense 71,535.03
6450o Consulting fees 42,800.58
6470o Collateral material 180.00
total 6400o Marketing 114,515.61
6500 o Mis department
6520o Consulting fees 8,178.04
6575o Repairs & maintenance 235.00
6550o Internet expense 295.75
6570o Supplies 155.66
total 6500o Mis Department 8,864.45
6600 o Operations dept
6610 o payroll expense
6611o Salaries & wages 113,750.03
6612o Payroll taxes 1,679.39
6613o Employee benefits 3,500.80
total 6610o Payroll expense 118,930.22
6620o Supplies 273.45
6630o Telephone 4,114.97
6640 o Travel
6645o Car rental 1,806.41
6644o Mleage & auto 1,731.76
6643o Meals & entertainment 875.20
6642o Lodging 274.40
6641o Airfares 3,137.00
Total 6640o Travel 7,824.77
6660 o Misc. 233.39
Total 6600 o Operations Dept 131,376.80
6700 o Product Development
6710 o Payroll Expense
6711o Salaries & wages 25,000.02
6712o Payroll taxes 1,679.39
Total 6710o Payroll expense 26,679.41
Total 6700o Product Development 26,679.41
Total Expense 540,366.71
Net Ordinary Income -540,366.71
Other Income/Expense
Other Expense
9600o Offering costs 24,739.08
9100o Interest expense 213.09
9800 o Taxes
9810o Fla intangible tax 179.00
Total 9800o Taxes 179.00
Total Other Expense 25,131.17
Net Other Income -25,131.17
Net Income -565,497.88
118
<PAGE>
TRILOGY INTERNATIONAL, INC.
Profit and Loss January through September 1999
Jan - Sep '99
Ordinary Income/Expense
Income
4015o Sample packs 9,246.30
4010o Product sales 18,860.04
4020o Starter kits 3,584.00
4030o Sales aids 3,174.55
4040o Shipping & handling 3,706.41
Total Income 38,571.30
Cost of Goods Sold
5005o Product cost 5,754.34
5006o Sales aids cost 4,986.56
5020o Credit card fees 1,390.05
5030o Shipping charges 2,594.93
5035o Sales commisssions 2,512.93
5040o Royalty expense 108.79
5015o Quick start bonus 2,750.00
5010o Packaging 393.79
5050o Shrinkage/inv.write down 396.75
Total COGS 20,888.14
Gross Profit 17,683.16
Expense
6000 o Finance department
6030 o Payroll expense
6031o Salaries & wages 15,384.60
6032o Payroll taxes 1,127.70
total 6030o Payroll expense 16,512.30
6005o Outside accountants 2,361.00
6050o Supplies 81.41
total 6000o Finance department 18,954.71
6100 o Call center
6130 o Payroll
6131o Salaries & Wages 73,309.49
6132o Payroll Taxes 3,772.40
total 6130o Payroll 77,081.89
6150o Consulting fees 18,947.80
6160o Supplies 543.19
6170o Telephone 3,587.83
6180 o Travel
6185o Car Rental 859.94
6181o Airfares 3,261.58
6182o Lodging 663.71
6184o Mileage & auto 8.60
total 6180o Travel 4,793.83
119
<PAGE>
total 6100o Call Center 104,954.54
6300 o Corp. Headquarters
6330 o Payroll expense
6336o Temporary labor 4,096.98
6335o Officers' salaries 158,698.72
6331o Salaries & wages 848.13
6332o Payroll taxes 4,777.69
total 6330o Payroll expense 168,421.52
6350o Consulting fees 78,004.81
6311o Bank charges 281.72
6361o Security 1,841.27
6388o Contributions 95.00
6379o Employment expense 1,529.43
6351o Training 975.01
6310o Promotion 2,816.22
6340o Legal fees 25,975.05
6345o Professional fees 812.50
6352o Dues and subscriptions 1,098.55
6355o Equipment leasing 12,385.84
6360o Facilities maintenance 2,612.20
6370 o Insurance
6372o Liability ins 3,368.81
6375o Workers comp ins 1,149.00
Total 6370o Insurance 4,517.81
6380o Miscellaneous expense 1,867.64
6381o Office supplies 11,447.41
6382o Postage & courier 7,339.04
6383o Rent 16,122.16
6384o Service contracts 98.45
6385o Telephone 28,364.07
6387o Licenses & fees 2,052.75
6390 o Travel
6391o Airfares 4,501.19
6392o Lodging 2,013.43
6393o Meals & entertainment 12,360.00
6394o Mileage & auto 1,786.45
6395o Rental car 678.99
6390o Travel - other 17,133.32
Total 6390o Travel 38,473.38
6386 o Utilities 2,056.11
Total 6300 o Corp. headquarters 409,187.94
6400 o Marketing
6410 o Payroll expense
6411o Salaries & wages 98,346.14
6412o Payroll taxes 3,564.82
Total 6410o Payroll expense 101,910.96
6450o Consulting fees 43,860.58
6425o Design services 2,125.00
6430o Supplies 72.87
6460o Printing 9,136.38
6470o Collateral material 1,980.00
Total 6400o Marketing 159,085.79
120
<PAGE>
6500 o Mis department
6585o Telephone 140.13
6510 o Payroll expense
6511o Salaries & wages 20,192.34
6512o Payroll taxes 1,679.39
Total 6510o Payroll expense 21,871.73
6520o Consulting fees 9,088.04
6575o Repairs & maintenance 640.70
6550o Internet expense 5,093.70
6570o Supplies 674.19
Total 6500o Mis department 37,508.49
6600 o Operations dept
6610 o Payroll expense
6611o Salaries & wages 163,269.29
6612o Payroll taxes 3,010.80
6613o Employee benefits 4,647.88
Total 6610o Payroll expense 170,927.97
6620o Supplies 572.85
6630o Telephone 9,853.26
6640 o Travel
6645o Car rental 6,005.21
6644o Mileage & auto 2,622.76
6643o Meals & entertainment 1,287.39
6642o Lodging 765.74
6641o Airfares 10,458.87
Total 6640o Travel 21,139.97
6660 o Misc. 233.39
Total 6600 o Operations dept 202,727.44
6700 o Product Development
6740o Supplies 151.53
6735o Telephone 85.07
6730o Research aand development 9.50
6710 o Payroll expense
6711o Salaries & wages 50,769.27
6712o Payroll taxes 3,157.94
Total 6710o Payroll expense 53,927.21
6720 o Travel
6725o Meals & entertainment 171.00
6724o Auto 33.81
6723o Rental car 178.82
6722o Lodging 407.28
6721o Airfares 276.00
Total 6720o Travel 1,066.91
Total 6700o PRoduct development 55,240.22
Total Expense 987,659.13
Net Ordinary Income -969,975.97
Other Income/Expense
Other Expense
9500o Depreciation 8,646.67
9600o Offering costs 24,739.08
9100o Interest expense 888.14
9800 o Taxes
9810o Fla Iintangible Tax 179.00
Total 9800o Taxes 179.00
Total Other Expense 34,452.89
Net Other Income -34,452.89
Net Income -1,004,428.86
121
<PAGE>
TRILOGY INTERNATIONAL, INC.
Profit and Loss July through September 1999
Jul - Sep '99
Ordinary Income/Expense
Income
4015o Sample packs 9,246.30
4010o Product sales 18,860.04
4020o Starter kits 3,584.00
4030o Sales aids 3,174.55
4040o Shipping & handling 3,706.41
Total Income 38,571.30
Cost of Goods Sold
5005o Product cost 5,754.34
5006o Sales aids cost 4,986.56
5020o Credit card fees 1,390.05
5030o Shipping charges 2,594.93
5035o Sales commisssions 2,512.93
5040o Royalty expense 108.79
5015o Quick start bonus 2,750.00
5010o Packaging 393.79
5050o Shrinkage/inv.write down 396.75
Total COGS 20,888.14
Gross Profit 17,683.16
Expense
6000 o Finance department
6030 o Payroll expense
6031o Salaries & wages 15,384.60
6032o Payroll taxes 1,127.70
total 6030o Payroll expense 16,512.30
6005o Outside accountants 471.00
6050o Supplies 81.41
total 6000o Finance department 17,064.71
6100 o Call center
6130 o Payroll
6131o Salaries & wages 41,642.80
6132o Payroll taxes 3,772.40
total 6130o Payroll 45,415.20
6150o Consulting fees 420.67
6160o Supplies 543.19
6170o Telephone 673.46
6180 o Travel
6185o Car rental 177.13
6181o Airfares 993.58
6182o Lodging 100.44
6184o Mileage & auto 8.60
total 6180o Travel 1,279.75
122
<PAGE>
Total 6100o Call center 48,332.27
6300 o Corp. headquarters
6330 o Payroll expense
6336o Temporary labor 4,096.98
6335o Officers' salaries 47,865.38
6331o Salaries & wages 848.13
6332o Payroll taxes 1,562.13
total 6330o Payroll expense 54,372.62
6350o Consulting fees 42,924.85
6311o Bank charges 214.80
6361o Security 603.77
6388o Contributions 50.00
6379o Employment expense 441.00
6351o Training 225.00
6310o Promotion 2,721.62
6340o Legal fees 18,311.02
6345o Professional fees 312.50
6352o Dues and subscriptions 683.60
6355o Equipment leasing 9,876.33
6360o Facilities maintenance 1,412.20
6370 o Insurance
6372o Liability ins 1,728.81
6375o Workers comp ins 1,149.00
total 6370o Insurance 2,877.81
6380o Miscellaneous expense 581.40
6381o Office supplies 4,474.93
6382o Postage & courier 4,487.12
6383o Rent 9,587.80
6384o Service contracts 98.45
6385o Telephone 23,215.92
6387o Licenses & fees 451.25
6390 o Travel
6391o Airfares 2,856.19
6392o Lodging 812.11
6393o Meals & entertainment 8,487.20
6394o Mileage & auto 1,559.65
6395o Rental car 678.99
6390o Travel - Other 14,395.53
Total 6390o Travel 28,789.67
6386 o Utilities 2,056.11
Total 6300 o Corp. Headquarters 208,769.77
6400 o Marketing
6410 o Payroll expense
6411o Salaries & wages 28,269.22
6412o Payroll taxes 2,106.71
Total 6410o Payroll Expense 30,375.93
6450o COnsulting fees 1,060.00
6425o Design services 2,125.00
6430o Supplies 72.87
6460o Printing 9,136.38
6470o Collateral material 1,800.00
Total 6400o Marketing 44,570.18
123
<PAGE>
6500 o Mis department
6585o Telephone 140.13
6510 o Payroll expense
6511o Salaries & wages 20,192.34
6512o Payroll taxes 1,679.39
Total 6510o Payroll expense 21,871.73
6520o Consulting fees 910.00
6575o Repairs & maintenance 405.70
6550o Internet expense 4,797.95
6570o Supplies 518.53
Total 6500o Mis department 28,644.04
6600 o Operations dept
6610 o Payroll expense
6611o Salaries & wages 49,519.26
6612o Payroll taxes 1,331.41
6613o Employee benefits 1,147.08
total 6610o Payroll expense 51,997.75
6620o Supplies 299.40
6630o Telephone 5,738.29
6640 o Travel
6645o Car rental 4,198.80
6644o Mileage & auto 891.00
6643o Meals & entertainment 412.19
6642o Lodging 491.34
6641o Airfares 7,321.87
total 6640o Travel 13,315.20
total 6600o Operations Dept 71,350.64
6700 o Product development
6740o Supplies 151.53
6735o Telephone 85.07
6730o Research aand development 9.50
6710 o Payroll expense
6711o Salaries & wages 25,769.25
6712o Payroll taxes 1,478.55
Total 6710o Payroll expense 27,247.80
6720 o Travel
6725o Meals & entertainment 171.00
6724o Auto 33.81
6723o Rental car 178.82
6722o Lodging 407.28
6721o Airfares 276.00
Total 6720o Travel 1,066.91
Total 6700o Product development 28,560.81
Total Expense 447,292.42
Net Ordinary Income -429,609.26
Other Income/Expense
Other Expense
9500o Depreciation 8,646.67
9100o Interest expense 675.05
Total Other Expense 9,321.72
Net Other Income -9,321.72
Net Income -438,930.98
124
<PAGE>
TRILOGY INTERNATIONAL, INC.
ADJUSTMENTS TO SEPTEMBER 30, 1999 FINANCIALS SUBSEQUENT
TO OCTOBER 17 SUBMISSION TO AMERINET
Balanace Sheet Changes
<TABLE>
<S> <C> <C> <C> <C>
AS OF AS OF CHANGE FOOTNOTE
OCT 17 NOV 2 NUMBER
ASSETS
1025 Nations Bank 1,086.58 1,086.58 -
1010 Riverside Bank (46.77) 555.37 602.14
1200 Accounts receivable 2,132.12 2,132.12 -
1111 Deposits in transit 5,155.30 4,377.27 (778.03)
1100 Product inventory 104,588.96 109,910.61 5,321.65 (1)
1105 Sales materials 32,695.81 33,428.50 732.69 (2)
1310 Computer software 53,134.84 53,134.84 -
1320 Computer hardware 67,425.59 68,910.21 1,484.62 (3)
1330 Office equipment 1,152.52 1,152.52 -
1350 Office furniture 2,995.83 2,995.83 -
1360 Telephone equipment 15,115.99 15,115.99 -
1370 Leasehold improvments 5,757.65 5,757.65 -
1400 Less: depreciation (8,646.67) (8,646.67) (4)
1005 Organizational costs 575.00 575.00 -
1020 Deposits 18,728.06 15,674.62 (3,053.44) (5)
--------------------------------------------
TOTAL ASSETS 310,497.48 306,160.44 (4,337.04)
LIABILITIES
2000 Accounts payable 133,597.30 138,907.21 5,309.91 (6)
2100 Payroll liabilities 256.76 256.76 -
2200 Sales tax payable 2,708.66 2,708.66 -
2300 Accrued salaries 349,582.64 349,582.64 -
2400 Officers loans payable 3,000.00 3,000.00 (7)
2405 Other loans payable 6,117.58 28,617.58 22,500.00 (8)
2406 Accrued interest 675.05 675.05 (9)
2410 Commissions payable 1,553.38 1,553.38 (10)
TOTAL LIABILITIES 492,262.94 525,301.28 33,038.34
</TABLE>
(1) Adjusted to Physical+Add Dr Jane
(2) Adjusted for Promo items
(3) On Late April-Sept Expense Statement
(4) Schedules not previously completed
(5) Rent Expense not previously deducted
(6) $25,500 reclassified to Loan Payable
$9,879.23 add. Inventory purchase
$1,484.62 add. hardware purch
$19,202.25 add. Expense
(7) Reclassified from A/P
(8) Reclassified from A/P
(9) Not previously booked
(10) Not run until 10/20
125
<PAGE>
TRILOGY INTERNATIONAL, INC.
ADJUSTMENTS TO SEPTEMBER 30, 1999 FINANCIALS SUBSEQUENT
TO OCTOBER 17 SUBMISSION TO AMERINET
PROFIT AND LOSS JANUARY THROUGH SEPTEMBER 1999
<TABLE>
<S> <C> <C> <C> <C>
AS OF AS OF CHANGE FOOTNOTE
OCT 17 NOV 4 NUMBER
INCOME
38,571.30 38,571.30 -
-------------------------------------------
COST OF GOODS SOLD
5005 Product cost 5,012.05 5,754.34 742.29 (1)
5006 Sales aids cost 4,986.56 4,986.56 -
5020 Credit card fees 1,109.88 1,258.05 148.17 (2)
5030 Shipping charges 2,567.21 2,594.93 27.72 (3)
5035 Sales commissions 959.55 2,512.93 1,553.38 (4)
5040 Royalty expense - 108.79 108.79 (5)
5015 Quick start bonus 2,750.00 2,750.00 -
5010 Packaging 393.79 393.79 -
5050 Write down of inv. 396.75 396.75
TOTAL COGS 17,779.04 20,756.14 2,977.10
GROSS PROFIT 20,792.26 17,815.16 (2,977.10)
EXPENSE
6000 Finance dept 18,954.71 18,954.71 -
6100 Call center 104,954.54 104,954.54 -
6300 Corporate hdqts.
6310-Promotion 2,135.37 2,816.22 680.85
6382-Postage 7,247.24 7,339.04 91.80
6383-Rent 13,068.72 16,122.16 3,053.44 (6)
6385-Telephone 24,369.52 28,455.88 4,086.36 (7)
6386-Utilities 1,585.64 2,056.11 470.47 (8)
6400 Marketing
6425-Design 1,990.00 2,125.00 135.00
6460-Printing 7,131.38 9,136.38 2,005.00 (9)
6470-Collateral 880.00 1,980.00 1,100.00 (10)
6500 Mis dept 37,508.49 37,508.49 -
6600 Operations dept
6620-Supplies 463.02 572.85 109.83 (11)
6630-Telephone 5,636.88 9,853.26 4,216.38 (11)
6640-Travel 12,409.80 21,139.97 8,730.17 (11)
6700 Product development
6720-Travel 906.25 1,066.91 160.66 (12)
6735-Telephone 85.05 85.05 (12)
6740-Supplies 151.53 151.53 (12)
9500 Depreciation - 8,646.67 8,646.67 (13)
9100 Interest expense 213.09 888.14 675.05 (14)
TOTAL INCREASE IN EXPENSES 34,398.26
NET INCOME (966,903.95) (1,004,279.33) (37,375.38)
</TABLE>
(1) Inc. in cost of Starter Pack
(2) Amex Charges Not Booked
(3) Missing UPS Invoice
(4) Missing UPS Invoice
(5) Not Previously booked
(6) Not Previously Deducted from Deposit
(7) Sept chgs on Oct invoice
(8) Invoice not received
(9) Dr. Jane letters not deducted from inventory
(10) Old A/P not previously booked
(11) April-Sept Expense Account
(12) Late Expense Account
(13) Schedules Not Completed as of 10/17
(14) Int on Notes not previously booked
126
<PAGE>
Undisclosed Liabilities
As of September 30, 1999, as disclosed on the Company's unaudited Financial
Statements, Trilogy has a liability for the payment of $349,582.64 in accrued
Salaries and Consulting Fees. These accrued obligations have been booked based
upon base salary or base fee only without provision for payroll taxes that may
be due at time of payment.
Of the $349,582.64 total, $141,791.70 is due to independent contractors who
worked for the Company as consultants for a period of time prior to the
Company's actually opening for business. When paid, these fees will not be
subject to any employer paid payroll taxes.
Of the $207,790.94 owed to Company employees as of September 30, 1999,
$169,816.59 is owed to employees whose base yearly salary substantially exceeds
the upper limit for FICA tax obligations. The Company believes, therefore that
at the time of payment of these deferred sums, the Company will not incur FICA
expense in excess of its obligations for FICA tax on the employees regular
annual salary. As there is no upper limit on Medicare tax payments, the Company
would incur additional expense in the amount of $2,462.34 (1.45% of deferred
salary payment) at the time of payment.
The remaining $37,974.35 is owed to employees at lower salaries that do not
exceed the FICA limitation. The Company, therefore, could incur payroll tax
expense on this amount, at the time paid in the amount of $2,905.04. (7.65% of
deferred salary payment.)
Total potential additional liability for employer paid payroll taxes, over and
above what would be paid on salaries in the normal course of business in the
year that the deferred compensation is paid, as of September 30, 1999 the
Company believes will not exceed $5,367.38
127
<PAGE>
Nora F. Catano, CPA, PA
PO Box 507
Stuart, Florida 34995-0507
561-286-5669
Fax 561-286-6537
Member:
American Institute of Certified Public Accountants
Florida Institute of Certified Public Accounts
To the Board of Directors
Trilogy International, Inc.
Palm City, Florida
I have compiled the accompanying statement of assets, liabilities & equity -
income tax basis of Trilogy International, Inc. (a corporation) as of December
31, 1998, and the related statement of revenue & expenses - income tax basis
from the period of inception (August 7, 1998) through December 31, 1998, in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants. The financial
statements have been prepared on the accounting basis used by the Company for
income tax purposes which is a comprehensive basis of accounting other than
generally accepted accounting principles.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. I have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures ordinarily
included in financial statements. If the omitted disclosures were included in
the financial statements, they might influence the user's conclusions about the
Company's assets, liabilities, capital, revenue and expenses. Accordingly, these
financial statements are not designed for those who are not informed about such
matters.
Nora F. Catano, CPA, PA
March 5, 1999
128
<PAGE>
Financial statements
Of
Trilogy Iinternational, Inc.
For the Period Ended December 31, 1998
See Accountant's Compilation Report
TRILOGY INTERNATIONAL, INC.
Statement of Assets, Liabilities & Equity
Income Tax Basis
December 31, 1998
Liabilities and Stockholder's Equity
Stockholder's Equity
Common Stock 3,240.00
Paid-In Capital 89,706.13
Current Income (Loss) (3,513.19)
Total Stockholder's Equity 89,432.94
Total Liabilities & Stockholder's Equity $89,432.94
See Accountant's Compilation Report
TRILOGY INTERNATIONAL, INC.
Statement of Revenue & Expenses
Income Tax Basis
For the Period Ended December 31, 1998
5 Months Ended
Dec. 31, 1998Pct
Other Income (Expense)
Loss-LHI Abandoned 3,513.190.00
Total Other Income (Expenses) (3,513.19)0.00
Net Income (Loss) (3,513.19)0.00
See Accountant's Compilation Report
TRILOGY INTERNATIONAL, INC.
Paid-in Capital Disbursement
Consulting Expenses $38,832.85
Dues & Subscription $ 131.70
Entertainment & Meals $ 5,741.42
Lease Equipment $ 2,239.99
Mileage Reimbursement $ 1,365.00
Office Expenses $ 1,691.87
Organizational Costs $ 575.00
Postage $ 1,681.49
Professional Fees $11,870.00
Promotional Expense $ 426.65
Repairs $ 615.24
Supplies & Expenses $ 146.66
Telephone $ 6,479.54
Travel $14,395.53
Lease Hold Improvements $ 3,513.19
Total $89,706.13
129
<PAGE>
Schedule 2.7
Changes Since Trilogy's Financial Statements of September 30, 1999
(A) At a meeting held Friday November 5, 1999, Trilogy's Board of Directors
approved the granting of the following shares of the Company's Common Stock
for services previously rendered by Company Employees, Directors and
Consultants:
Stephen Berardi - Compensation for salary deferral 3,000
Dale Hernandez - Compensation for salary deferral 3,000
Sheila Honan - Compensation for salary deferral 2,160
Lester Thornhill - Compensation for salary deferral 2,160
Jane Bicks - Compensation for salary deferral 2,000
David Cantley - Compensation for salary deferral 1,000
David Cantley - Employment Incentive 25,000
Margaret McEver - service beyond scope of employment 1,159
Linda Logue -service beyond scope of employment 1,159
Ruth Shinnick - Consulting Services 1,546
Donald Downes - Personal Guarantee of Equipment Lease 20,000
Total 62,184
All of the above shares of stock grants had been previously negotiated by
management to be granted subject to Board approval and the shares
underlying the grants were included in the original share count given to
AmeriNet as part of the Due Diligence materials supplied by the Company.
(M) On October 15, 1999 the Company borrowed $7,000 from Michael Lobosco and on
November 10, 1999 the Company borrowed $12,000 from Arthur Calabro (a
Director of the Company). Both loans were made on a demand basis to be paid
upon closing of the proposed Merger.
(N) Trilogy's Board of Directors approved a plan whereby former investors in
the Company would be offered participation in a 2nd round of financing on
the same terms as the Company's February 22, 1999 Participating Preferred
Offering. The offering as approved called for a maximum of $240,000 of
total subscriptions that could be accepted. Board's approval was also
contingent upon Carol Berardi's being willing to contribute 50% of the
Common Shares of Trilogy Common Stock to be issued as a result of
subscriptions received as a result of this offering.
As of November 3, 1999, subscriptions received by the Company totaled
$84,818.18 which resulted in the issuance of 84,818 additional shares of
Common stock, 84, 818 shares of Series A Preferred Stock and 84,818
Warrants to purchase Common Stock at $.25 per share.
The Subscribers to the Offering were:
Arthur Calabro 10,000.00
Donald Downes 23,000.00
Antares Capital Management 21,818.18
James Engstrom 10,000.00
Ronald Musich 20,000.00
(O) On October 26, 1999 Trilogy signed a Consulting Agreement with Dr. Komau
Kokayi wherein the Company will pay Dr. Kokayi a royalty to 2% of the
Company's cost for all of the Company's product "Trilogy's Essence of Life"
colostrum for humans that is sold by the Company.
REVISED NOVEMBER 10, 1999
130
<PAGE>
Schedule 2.8 (A) Tax Disclosure Schedule
(5) Trilogy has collected the appropriate sales tax for each state where
Company sales have been made. The sales tax liability as shown on the
Company's September 30, 1999 Balance Sheet represents the total liability
for payment of said taxes as shown on the attached schedule.
The tax as due to the State of Florida was paid on a timely basis prior to
the due date of October 20, 1999.
Certificate of Authority was received from the State of California November
3, 1999 and taxes due in the amount of $393.00 were paid on November 4,
1999, leaving a balance due to all other states through September 30, 1999
of $1777.45.
The Company is awaiting registration from New Jersey for which it has
applied. It is the intention of the Company to pay the amount due upon
receipt of said registration and believes that the initial return to New
Jersey will not be considered a late or delinquent filing.
The Company is in the process of obtaining license to collect and pay sales
tax in the other 37 states wherein it has made sales to date. The process
of obtaining such license is time consuming and expensive, so the Company
has chosen to prioritize its obtaining such licenses in those states
wherein there have been significant sales. The Company does not believe
that the collected but unpaid taxes in the 37 jurisdictions other than
Florida, California and New Jersey are material nor does it believe that it
has a material contingent liability for late filings over and above the
amount due as carried on the Company's books when those taxes are reported
and paid
In accordance with the terms of office premises lease, the Company is
responsible for two thirds of the common expenses including real estate
tax. The landlord has not yet received the tax assessment for 1999. The
Company has been accruing this unknown liability for its pro rata share of
real estate taxes since taking occupancy on September 17. This liability
has not been reflected on the financial statements of the Company as of
September 30, 1999.
REVISED NOVEMBER 10, 1999
131
<PAGE>
Schedule 2.10A
Leased Real Property
Trilogy International leases offices a 526 SE Dixie Highway, Stuart,
Florida 34994
Annual Rent is $54,000.
Schedule 2.10(C)
Equipment
Panasonic Digital 816 Telephone System
Electronics for 8 Lines and 8 Stations
One (1) KX-TVS75 2-Port Voice Mail System
Two (2) KX-T7235 Display Speakerphones
Three (3) KX-T7220 Display Telephones
One (1) Battery Backup Unit
One (1) A/C Surge Protection Unit
One (1) C.O. Surge Protection Unit
Bankers Leasing Association - $207.00/month (36 months)
1st payment - 8/14/98
Executone Telephone System
One (1) IDS/Operator Terminal Kit
One (1) IDS/108 Cabinet Assembly Kit
One (1) ACPU w/Eclipse 2.0 4 Meg Ram
One (1) IDS/Expanded VCM Card
Two (2) ISD/Digital Station Card (LS1/11)
One (1) IDS/ISDN Pri Trunk Card Kit
One (1) I/O - MDF Package
Two (2) IDS/DIG Voice Announcer 120 Sec One (1) Custom ACD (5) One (1) EVX
4PT 100HR REL 7
JDR Capital- $975.84/month (36 months)
1st payment - 10/99
Toshiba Copy Machine
One (1) Model DP2570 wRADF, ADU, Finisher, LCT, embedded controller, 2 paper
pedestal
Copyco Inc. - $192.00/month (60 months)
1st payment - 11/99
Dell Laptop Computer
One (1) Model #Inspiron D266XT
Dell Financial Services Acceptance Co. - $182.66/month (24 months)
1st payment - 5/15/98
132
<PAGE>
Computer Hardware
Two (2) Desktop Publishing Workstations w/Intel Pentium III 450Mhz processor
One (1) Jazz Drive Disks
Three (3) Field Rep. Workstations w/Intel Pentium II 400Mhz processor
One (1) Internet Server w/2 Intel Pentium III Xeon processors w/512 cache
One (1) Ascend Pipeline 130
One (1) DFE - 26216 Fast Ethernet Hub
One (1) HP Laserjet 1100X1 8ppm Printer
One (1) 3COM AF-200 Anti-Glare/Radiation
One (1) APC BackUPS 300
Furniture
One (1) Oversized Reception Counter Desk w/Keyboard Drawer
Three (3) Peninsula Desks w/Keyboard Drawer
Three (3) Oversized Computer Desks w/Keyboard Drawer
One (1) Oversized "U" Shape Workstation w/Keyboard Drawer
Four (4) Computer Workstations w/Keyboard Drawer
One (1) Access Table
Three(3) Field Support 24" x 60" Desks w/Keyboard Drawers
Five (5) High Back Executive Seats
Six (6) Side Chairs
Twelve(12)High-Back Conference Room Chairs
Eight(8) Task Seats
Four (4) Filing Units
All of above included on:
Linc Comstock- $1144.84/month (60 months)
1st payment 9/7/99
One (1) HP Scanjet 6200C Scanner
Five (5) Encore Binaural Headsets w/modular adapters
Two (2) HP Deskjet Inkjet Printers
One (1) Brother All-In-One Machine Model #MFC 4350
One (1 Laser Scanner, Scale and Thermal Printer
One (1) CAT 5 48 Port Patch Panel
One (1 Relay Rack
Two (2) Toshiba Tecra Laptop Computers w/Zip Drive and Mouse
Two (2) 128 Meg Ram for Tecra 8000
Two (2) Network DockPortRep for Tecra 8000
Three (3) Executive Workstation
One (1) Dlink DFE2616IX 16 port hub
Three (3) US Robotics 56K External V90 56K modem
One (1) Omniview SE PS/2 AT 4PT w/ 4 cables
One (1) APCC Matrix 5000XR UPS Lineint
Three (3) SYNCMASTER 9000P 19IN
One (1) Workstation Computer P II 350MHZ System W/Intel Ethernet Card
One (1) Credit Card Server
One (1) Apaptec #2940UW PCI Ultra Wide SCSI
One (1) Webramp 3101 RTR 4PT HUB
One (1) EXABYTE EZ17SK 8900S EXT Autoldr Tape Library
One (1) EXABYTE EXAPAK For Mammouth EZ17
One (1) HP Color Laserjet 4500N One (1) Server for Backup, DNS and IMAL
One (1) Dual Xeon 500 MHZ Server w/15" Monitor
Six (6) APCC Backup 300VA
Two (2) Samsung Syncmaster 900P 19" Monitor
One (1) Viewsonic Optiquest 17" Monitor
One (1) Executive Workstation w/speakers
Two (2) 400MHZ Computer Workstation-Intel 400MHZ System
One (1) GE TV/VCR 13"
One (1) Storage Cabinet 72"
All equipment listed above owned by Trilogy International Inc.
133
<PAGE>
Schedule 2.11 Intellectual Property
(A) (2,10) Trilogy will be a reseller of Internet "Replicator Sites" to be
used by Field Representatives. This software is copyrighted by
the original company Vanguard Technology Group. Trilogy has been
licensed to use various business and graphics software packages
by Microsoft, Corel and others. The agreement with Dr. Jane Bicks
gives Trilogy the rights through license and assignment to all of
Dr. Jane, Inc. formulas and any product, formulation, formula,
invention, procedure, know-how, concept or other invention or
proprietary information developed during the 5 year term of her
agreement. In the event Trilogy ceases operations for any reason
other than the sale of all or substantially all of the assets of
the Company or the merger of the Company into another entity
where the products will no longer be sold by the Company, all
formulas owned by Dr. Jane prior to this agreement that were
licensed and assigned to the Company shall become the property of
Dr. Jane.
In addition Trilogy has applied for trademarks for the following:
Trilogy and Design in both Nutritional Supplements and Pet Food
and Supplies
(12) Confidentiality Agreements
Confidentiality Agreements have been signed by all employees
listed in schedule 2.20 (e). See sample of the agreement in
schedule 2.12. In addition, consultants and advisors have signed
similar confidentiality agreements.
(B) (2,3&5) Trilogy currently has six (6) computers that have Microsoft
Office 2000 that are not licensed. Some of these computers may
not require the full version of Microsoft Office 2000 but rather
a specific software like Microsoft Word. A complete review will
be conducted and unnecessary software will be removed. Those that
do require the full version of Microsoft Office 2000 will be
licensed.
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Schedule 2.12 Contracts and Agreements
(A) (2) The deferred compensation agreements with Rock n Rowe and Business
Design and Development, Inc. have not been signed. The Proceeds from
the agreement with Rock n Rowe is in the process of being assigned to
Mr. Rowe's ex wife as part of a revision to alimony payments. Mr. Rowe
does not contest the amount or terms of the agreement but has been
advised by his attorney that the agreement must be signed by his ex
wife after the order has been entered. The agreement with Business
Design and Development, Inc. is under dispute at this time. Debbie
George, the principle has made a claim that hours beyond her agreed
upon fee were expended. Management had a similar discussion with Ms.
George at the time she was paid for April and May and had resolved the
issue. Ms. George reopened the issue within the last 10 days and
management is in the process of attempting to resolve her concerns.
The amount claimed by Ms. George over the currently accounted for
accruals for Business Design and Development is $24,000.
(3) Trilogy has deferred employee compensation through October 1,1999 as
follows:
Name Amount
Carol Berardi $ 51,943.53
Dennis Berardi $ 51,943.53
Stephen Berardi $ 47,948.74
Dr. Jane Bicks $ 12,692.33
Dale Hernandez $ 36,820.51
David Cantley $ 3,846.15
Lester Thornhill $ 1,442.32
Sheila Honan $ 1,153.84
Total $207,790.94
(3) Trilogy has deferred advisor/consultant pay through October 1, 1999 as
follows:
Name Amount
Rock'N Rowe $ 50,625.00
Business Design $ 12,000.00
MiPro, Inc. $ 79.166.70
Total $141,791.70
(A) (4) A general commitment was made to the non-employee members of the Board
of Directors and the Pet Advisory Board that they would be compensated
for their time and commitment through a stock option grant. No
specific amount was mentioned or agreed to. This remains an open issue
to be addressed by management.
(4) The following are the current consulting, advisor and royalty
agreements:
Fawcett Video Marketing - Video Tape
Richard Berardi - Trilogy Theme Song
Dr. Kamau Kokaui - Royalty for human colostrums
MiPro, Inc. - consulting/advisor agreement
Tana Henke - Royalty for dog and cat colostrums
AVN Communications - Trilogy-by-phone Voicemail System
The following employees currently have employment agreements:
Dennis Berardi
Carol Berardi
Dr. Jane Bicks
(7) The following leases have are valued at greater than $2,000:
COPYCO - Copier
Dell Financial Services - Computer
JDR Capital - Telephone System
Bankers Leasing Association - Original Telephone System
Linc Comstock - Computers and Furniture
(13) Outstanding purchase order for over $1,000:
Pharma Chemie- Colostrum $ 8,508.40
Capitol Printing- Colostrum Brochures $ 1,080.31
Trilogy's confidentiality agreement is attached.
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TRILOGY INTERNATIONAL, INC.
SUMMARY OF ACCRUED SALARIES & CONSULTING FEES
AS OF SEPTEMBER 30, 1999
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NAME Dec-98 Jan-99 Feb-99 Mar-99 Apr-99 May-99 Jun-99 Jul-99 Aug-99 Sep-99 9/30/99
Employees
Carol Berardi 7,916.67 7,916.67 7,916.67 7,916.67 1,978.67 1,978.67 1,978.67 1,978.67 7,916.67 4,445.51 51,943.53
Dennis Berardi 7,916.67 7,916.67 7,916.67 7,916.67 1,978.67 1,978.67 1,978.67 1,978.67 7,916.67 4,445.51 51,943.53
Stephen Berardi 8,333.33 8,333.33 8,333.33 8,333.33 2,083.34 2,083.34 2,083.34 1,634.61 1,923.08 4,807.70 47,948.74
Jane Bicks 2,083.34 2,083.34 2,083.34 1,634.61 1,923.08 2,884.62 12,692.33
Dale Hernandez 6,666.67 6,666.67 6,666.67 6,666.67 1,666.67 1,666.67 1,666.67 1,307.69 1,538.46 2,307.69 36,820.51
David Cantley 1,538.46 2,307.69 3,846.15
Lester Thornhill 1,442.32 1,442.32
Sheila Honan 1,153.84 1,153.84
Consultants
Rock N Rowe 11,250.00 11,250.00 11,250.00 11,250.00 2,812.50 2,812.50 50,625.00
Business Design 3,000.00 3,000.00 3,000.00 3,000.00 12,000.00
Mi Pro Inc 7,916.67 7,916.67 7,916.67 7,916.67 7,916.67 7,916.67 7,916.67 7,916.67 7,916.67 7,916.67 79,166.70
53,000.00 53,000.00 53,000.00 53,000.00 20,519.86 20,519.86 17,707.36 16,450.92 30,673.09 31,711.55 349,582.64
106,000.01 159,000.01 212,000.01 232,519.87 253,039.73 270,747.08 287,198.00 317,871.09 349,582.64
</TABLE>
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MUTUAL CONFIDENTIAL DISCLOSURE AND BUSINESS AGREEMENT
BETWEEN
TRILOGY INTERNATIONAL INC. (Trilogy) AND
----------------------------------------
1.0 PURPOSE:
Trilogy and ______________________________ wish to explore a business
relationship under which each may disclose certain business information, some of
which is confidential, to the other.
2.0 DEFINITION
"Confidential Information" means any information, technical data, or
know-how, including, but not limited to, that which relates to research, product
software, services, development, inventions, processes, designs, drawings, food
technology, marketing, or finances, which such Confidential Information is
designated as unique and individual to the business operation of Trilogy or
_______________________________ would be considered to be confidential or
proprietary. Confidential Information does not include information, technical
data or know-how which (i) was in the possession of the receiving party before
the beginning of a business relationship as shown by the receiving party's files
and records immediately prior to the time of disclosure; or (ii) prior or after
the time of disclosure becomes a part of the public knowledge or literature, not
as a result of any inaction or action of the receiving party, or (iii) approved
for release by the disclosing party.
3.0 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
The parties hereto agree not to use the Confidential Information disclosed
to each other for his own use or for any purpose except to carry out discussions
concerning the completion of any business relationship between the two. Neither
will disclose the Confidential Information of the other to third parties or to
its employees unless mutually agreed upon in writing. Each agrees that it will
take all reasonable steps to protect the secrecy of and avoid falling into the
public domain or the possession of unauthorized persons. Each agrees to notify
the other in writing of any misuse or misappropriation of such Confidential
Information of the other which may come to its attention.
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4.0 RETURN OF MATERIALS
Any material or document of which have been furnished by one party to the
other will be promptly returned, accompanied by all copies of such documentation
after the business possibility has been rejected or concluded.
5.0 PATENT OR COPYRIGHT INFRINGEMENT
Nothing in this agreement is intended to grant any rights under any patent
or copyright of Trilogy .
6.0 TERM
The foregoing commitments in this Agreement shall terminate five (5) years
following the date of this Agreement but may be renewed at that time for any
additional period to be mutually determined by both parties.
7.0 MISCELLANEOUS
This Agreement shall be binding upon and for the benefits of the
undersigned parties, their successors and assigns, provided that Confidential
Information may not be assigned without consent of the disclosing party. Failure
to enforce any provision of this Agreement shall not constitute a waiver of any
term hereof.
The undersigned officer of Trilogy being a duly authorized company
representative, and the party who has a business relationship with Trilogy, both
agree to the conditions set forth herein.
Signature_______________________________ Date______________________
Signature_______________________________ Date______________________
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Schedule 2.12 (A)(12) Debt and Guarantee Instruments
(12) Loans payable to Employees and Consultants in accordance with Deferred
Compensation Agreements in the amount of $349,582.64 as of September 30,
1999. (Per Attached Exhibit)
Demand Loans from Officers, Employees, Directors and Others payable from
proceeds of Merger closing:
Stephen Berardi - September 3, 1999 $17,500.00
John Holmes - June 15, 1999 6,117.58
Carol Berardi - September 20, 1999 3,000.00
Leona Van De Velde -September 21, 1999 5,000.00
Michael Lobosco- October 15, 1999 7,000.00
Arthur Calabro - November 12, 1999 12,000.00
Accounts Payable $142,450.62 as of October 31, 1999 per attached listing.
Additionally, attorney fees for this merger will be due to Michael Harris
and is footnoted in the use of proceeds schedule 5.13 (Exh).
Dennis and/or Carol Berardi have personally guaranteed the following:
Dell Computer - Laptop computer
Promise Printing - Printed materials and brochures Merchant Accounts from:
Bank of Oakland 4616773010000499
Superior Bankcard Services 4492600147059844
Riverside National bank 4301357800199346
First Bank of Beverly Hill 4223693000076699
Cardservices International 5433420100704782
Building lease for 526 SE Dixie Hwy, Stuart Florida
Bankers Leasing Association - Original phone system
Video Plus - Audio tape duplication
Office Depot - Trilogy Revolving Credit Card
JDR Capital - New office phone system
American Express Credit Card
David Cantley personally guaranteed the Copyco lease for the copy machine.
Donald Downes personally guaranteed the Linc Comstock lease for office
furniture and some computer equipment.
Post Merger the Surviving Company will use its best efforts to have the
personal guarantees listed above removed.
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TRILOGY INTERNATIONAL, INC.
12/10/99 Unpaid Bills
Type Date Due Date Agi Open Balance
BELL SOUTH
Bill 11/7/1999 12/7/1999 3 544.76
Bill 11/14/1999 12/14/1999 35.81
Bill 11/22/1999 12/22/1999 219.75
Total BELL SOUTH 800.32
BROWARD PAPER & PACKAGING
Bill 11/19/1999 12/4/1999 6 101.58
Bill 11/26/1999 12/11/1999 127.12
Total BROWARD PAPER & PACKAGING 228.70
CAROL BERARDI*
Credit 9/23/1999 -8,000.00
Bill 9/23/1999 10/3/1999 68 8,000.00
Total CAROL BERARDI* 0.00
CIBERLYNX
Bill 12/1/1999 12/16/1999 295.75
Total CIBERLYNX 295.75
CONSOLIDATED LABEL
Credit 8/4/1999 -71.22
Total CONSOLIDATED LABEL -71.22
Copyco
Bill 11/5/1999 11/15/1999 25 7.00
Total Copyco 7.00
DELL FINANCIAL SERVICES
Bill 12/2/1999 12/2/1999 8 185.40
Total DELL FINANCIAL SERVICES 185.40
EARL PIKE
Bill 8/8/1999 8/18/1999 114 52.90
Bill 10/4/1999 10/14/1999 57 65.26
Total EARL PIKE 118.16
FEDERAL EXPRESS
Bill 10/12/1999 10/27/1999 44 296.20
Bill 11/16/1999 12/1/1999 9 461.87
Bill 11/23/1999 12/8/1999 2 134.50
Total FEDERAL EXPRESS 892.57
GENESIS
Bill 7/15/1999 8/14/1999 118 17,156.66
Total GENESIS 17,156.66
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GRIMES & REESE
Bill 7/21/1999 7/21/1999 142 180.00
Total GRIMES & REESE 180.00
HARBOR SPECIALTY INS CO
Bill 11/17/1999 12/17/1999 383.00
Total HARBOR SPECIALTY INS CO 383.00
JANE BICKS -
Bill 10/4/1999 10/4/1999 67 328.27
Bill 10/18/1999 10/18/1999 53 677.28
Total JANE BICKS - 1,005.55
JOHN HOLMES
Bill 9/30/1999 10/30/1999 41 14,541.00
Total JOHN HOLMES 14,541.00
KEVIN J NOLAN
Bill 11/30/1999 12/10/1999 50.00
Total KEVIN J NOLAN 50.00
LESTER THORNHILL - X
Bill 11/4/1999 11/14/1999 26 136.79
Total LESTER THORNHILL - X 136.79
MCHALE & SLAVIN
Bill 8/3/1999 8/13/1999 119 310.00
Total MCHALE & SLAVIN 310.00
MICHAEL HARRIS
General Journal 12/2/1999 -29681.16
Bill 7/27/1999 8/26/1999 106 2,563.38
Bill 7/27/1999 8/26/1999 106 3,387.64
Bill 10/15/1999 11/14/1999 26 85.96
Bill 10/15/1999 11/14/1999 26 1,946.17
Bill 11/19/1999 12/19/1999 123.25
Bill 11/19/1999 12/19/1999 16,113.01
Bill 11/30/1999 12/30/1999 5,461.75
Total MICHAEL HARRIS 0.00
NEWCOURT FINANCIAL
Bill 11/16/1999 12/11/1999 205.44
Total NEWCOURT FINANCIAL 205.44
PENGUIN PUTNAM INC
Bill 10/12/1999 11/11/1999 29 705.83
Bill 10/22/1999 11/21/1999 19 1,003.80
Bill 10/22/1999 11/21/1999 19 368.40
Total PENGUIN PUTNAM INC 2,078.03
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PETER GLINT
Bill 8/5/1999 8/5/1999 127 793.00
Total PETER GLINT 793.00
PRUDENTIAL GEISINGER REALTY
General Journal 10/5/1999 -3,053.44
Bill 8/24/1999 9/3/1999 98 3,053.44
Total PRUDENTIAL GEISINGER REALTY 0.00
RICHARD BERARDI x
Bill 7/14/1999 7/24/1999 139 1,100.00
Bill 9/30/1999 10/10/1999 61 61.60
Total RICHARD BERARDI x 1,161.60
SOURCE INFORMATION SERVICES
Bill 11/1/1999 11/1/1999 39 94.64
Bill 12/1/1999 12/1/1999 9 94.64
Total SOURCE INFORMATION SERVICES 189.28
STEPHEN BERARDI - X
Credit 9/23/1999 -17500.00
Bill 9/23/1999 10/3/1999 68 17,500.00
Total STEPHEN BERARDI - X 0.00
TABCO, INC
Bill 10/12/1999 11/11/1999 29 989.21
Total TABCO, INC 989.21
TANA HENKE
Bill 9/30/1999 10/10/1999 61 47.19
Total TANA HENKE 47.19
TERREL F. TRANSTRUM
Bill 9/7/1999 10/7/1999 64 312.50
Total TERREL F. TRANSTRUM 312.50
THE BUREAU
Bill 8/16/1999 8/26/1999 106 1,571.34
Total THE BUREAU 1,571.34
UPS
Bill 8/7/1999 8/17/1999 115 61.00
Total UPS 61.00
ZEPHYRHILLS
Bill 11/18/1999 12/3/1999 7 92.23
Total ZEPHYRHILLS 92.23
TOTAL 43,720.50
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Schedule 2.13 Related Party Transactions
A member of Trilogy's Board of Directors, Arthur Calabro, is an insurance
agent and has arranged for some of the insurance coverage for the Company.
An investor, Scott Seltzer, through his company AVN provides the Trilogy
by-Phone service for Trilogy field representatives.
Schedule 2.14 Governmental Authorization
Martin County Occupational License #2000 275 017
City of Stuart Occupational License #1190
City of Stuart Alarm Users Permit #1494
Federal Tax ID #65-0879154
Florida Sales Tax Resale #53-07-026043-48-1
Florida Articles of Incorporation filed 8/7/98 - Doc.# P98000070358
Individual State Registrations as a Multilevel Marketing Company - See attached
document
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GRIMES & REESE
A PROFESSIONAL COMPANY
ATTORNEYS AND COUNSELORS
I 270 SOUTH WOODRUFF AVENUE
IDAHO FALLS, IDAHO 83404-5544
TELEPHONE (208) 524-0699
INTERNET - http://www.mlmlaw.com
FACSIMILE (208) 524-5686
E-mail - [email protected]
October 27, 1999
Via E-Mail and Facsimile - (877) 329-8745
Ms. Dale Martin
Director of Compliance
Trilogy International, lnc.
526 SE Dixie Highway
Stuart, Florida 34994
Re: MLM State Registration
Dear Dale,
This letter is in response to your inquiry regarding the status of Trilogy
International's ("Trilogy") registration as a multilevel marketing ("MLM")
company in the states that require such registration.
We prepared the MLM registration documents for the states of Georgia, Louisiana,
Massachusetts, and Wyoming, which we forwarded to Trilogy on May 17, 1999. On or
about June 17, 1999, we received a letter dated June 11, 1999 from Georgia's
Office of the Secretary of State indicating receipt of the registration
documents for Trilogy. On or about June 20, 1999, we received a letter dated
June 14, 1999 from Massachusetts's Office of the Attorney General indicating
receipt of the registration documents for Trilogy. We have never heard from
Wyoming, however, we have confirmed that its Office of the Attorney General has
received Trilogy's registration documents.
In early August, we received a letter dated July 26, 1999 from Louisiana's
Office of the Attorney General. The letter explained that the nature of
Trilogy's products were not clear from the information that was submitted with
the registration packet, and further claimed that Trilogy's contractual
documents did not comport with Louisiana's jurisdictional requirement. As you
are aware, every MLM registrant has had problems with Louisiana, because the
individuals in the office who process MLM registrations do not read the
submitted documents. In any event, we responded to Louisiana's letter on August
13 and showed the reviewer where Trilogy's document complied with Louisiana's
jurisdictional requirements. In early September, we received a letter dated
August 25, 1999 from Louisiana's Office of the Attorney General which indicated
that Trilogy's registration was effectives.
Earlier this year, Montana enacted an MLM registration requirement that became
effective October 1, 1999. I have forwarded the registration documents to you,
which I understand Trilogy will complete, execute, and submit to Montana.
Dale, if you have any further questions or concerns, please do not hesitate to
call me.
Sincerely,
Kevin Grimes
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Schedule 2.15(A) Litigation.
Trilogy has been notified of pending legal action by Debbie George. This
information and the documents received by Trilogy has been previously submitted
to AmeriNet.
Schedule 2.19
Brokers and Finders Fees
None
Schedule 2.20 List of Employees
(E) List of Current Employees
Name Annual Salary Remaining 1999 Vacation (*)
Carol Berardi $ 95,000 3 weeks
Dennis Berardi $ 95,000 3 weeks
Stephen Berardi $100,000 2.8 weeks
Dr. Jane Bicks $100,000 3 weeks
David Cantley $ 80,000 0 weeks
Dale Hernandez $ 80,000 2.8 weeks
Lester Thornhill $ 75,000 2
Sheila Honan $ 60,000 0
Linda Logue $ 45,000 0
Ann McEver $ 35,000 0
Donna Ragosa $ 11.50 per hour 0
Bonney Sattler $ 11.50 per hour 0
(*) No written vacation policy has been developed, however, Trilogy management
has discussed and in some cases communicated to employees the following:
1. Employees would be eligible for vacation after six months of
employment.
2. When employees, other than those listed above, are hired prior to July
1st of a year, that years vacation would be prorated for the number of
months of employment i.e. an employee working 8 months would be
eligible for 3/4th of their vacation time.
3. Recognizing that 1999 is a start up year for Trilogy management's
intent is that when employees are unable to take vacation because of
business necessity that unused vacation will be carried over to 2000.
At the end of 2000 all vacation will have been taken or employees will
be compensated.
4. The vacation eligibility is Officers 4 weeks; Heads of Departments 3
weeks; all other salary employees 2 weeks; hourly employees 1 week.
In addition, as part of the original agreement with Stephen Berardi, the Company
reimburses Mr. Berardi for $382.36 per month for family health care.
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Schedule 2.21 Insurances
Nautilus Insurance Company - commercial general liability
General Star Indemnity Company - commercial property insurance
Harbor Specialty Insurance Company - workman's compensation
Keyman Life Insurance Policies - $ 1,000,000 policies for Carol Berardi and
Dennis Berardi have been issued.
Certificates of Liability Insurance from the following Manufacturers:
1. Professional Pet Products
2. Pharma Chemie
3. Innovative Chemical Corp.
4. Eco-Aromatic System, Inc.
Certificate of Liability Insurance from Seagull Industries (our Fulfillment
Center) for loss or damage of inventory
Schedule 2.27 Employee Benefit Plans
(A) The only formalized benefit plan that Trilogy has is the "1998 Stock Plan".
An incentive (bonus) plan was discussed with some employees but a formal
plan was never developed.
Schedule 2.28 Distribution Agreements
Omitted due to confidentiality and competition purposes.
Enclosed is Trilogy's Distributor Agreement.
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TERMS OF AGREEMENT
I understand and agree to the following:
1. Trilogy's Commission Structure and Policies and Procedures, which I have
carefully read, are incorporated into and made a part of, and are
collectively referred to as the "Agreement," and constitute the entire
agreement between Trilogy International, Inc. and myself. Any promises,
representations, offers, or other communications not expressly set forth in
this Agreement are of no force or effect.
2. I understand that these Terms and Conditions, the Policies and Procedures,
or the Commission Structure may be amended from time to time, and I agree
that any such amendment will apply to me. Notification of amendments shall
be published in official Trilogy materials and sent to all Field
Representatives. The continuation of my Trilogy distributorship or my
acceptance of bonuses or commissions shall constitute my acceptance of any
and all amendments.
3. To the extent of any conflict or inconsistency between this Agreement and
any other agreement (other than the Policies and Procedures), this
Application/Agreement shall supersede and prevail over any term of any
other agreement as to the matters addressed herein. To the extent of any
conflict or inconsistency between this Agreement and the Policies and
Procedures (current form or as subsequently modified), the Policies and
Procedures shall in all instances supersede and prevail over any term of
this Agreement as to the matters addressed herein.
4. No other promises, representations, guarantees or agreements of any kind
shall be valid unless in writing and signed by Trilogy and myself.
5. I am of legal age in the state of my residency.
6. If applying as an entity (partnership, corporation or business trust), I
have the legal right to represent the entity in this Agreement, and I have
attached to this Application a Trilogy Entity Addendum form.
7. Upon acceptance of this Application by Trilogy International, Inc.
("company") at its offices in Stuart, Florida, I will become an Independent
Trilogy Field Representative ("Representative"), with the right to sell
Trilogy products and services, and benefit from the Trilogy Commission
Structure. Trilogy reserves the right to approve or decline any Application
at its discretion.
8. I may not assign any rights or delegate my duties under this Agreement
without the prior written consent of Trilogy. Any attempt to transfer or
assign this Agreement without the express written consent of Trilogy
renders this Agreement voidable at the option of Trilogy and may result in
termination of my Trilogy business.
9. Trilogy is not responsible for any Application and/or funds not delivered
directly to the company. Should an Applicant allow another person to
forward his or her Application/funds to Trilogy, it is at their own risk.
10. No purchase or investment is necessary to become a Trilogy Representative,
other than the purchase of a Trilogy Starter Kit, which is sold at cost and
contains Trilogy's Policies, Commission Structure, and marketing materials
not for resale.
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11. Becoming a Trilogy Representative does not constitute the sale of a
franchise or security. As a Trilogy Representative I am an independent
contractor, and not an employee, agent, partner, legal representative, or
franchisee of Trilogy.
12. I am not authorized to and will not incur any debt, expense, obligation, or
open a checking account on behalf of, for, or in the name of Trilogy.
13. I shall control the manner and means by which I operate my Trilogy
business, subject to my compliance with this Agreement.
14. I will be solely responsible for paying all expenses incurred by myself,
including but not limited to travel, food, lodging, secretarial, office,
long distance phone and other expenses.
15. I shall not be treated as an employee of trilogy for federal or state tax
purposes. Trilogy is not responsible for withholding, and shall not
withhold or deduct from my bonuses and commissions, FICA, or taxes of any
kind, unless such withholding becomes legally required. I agree to be bound
by sales tax collection agreements between Trilogy, Inc. and all
appropriate taxing jurisdictions, and all related rules and procedures.
16. Neither Trilogy nor any Trilogy Field Representative has made any claims to
me of guaranteed earnings that might result from my efforts as a
Representative, nor will I make such claims to others.
17. This Agreement will be renewed upon the timely payment of an annual renewal
fee, which is due on each 12-month anniversary of the month my Application
is accepted by Trilogy. Failure to renew will result in termination of this
Agreement.
18. Before marketing Trilogy products or services and sponsoring others into
Trilogy, I will familiarize myself with the Policies and Procedures and the
Commission Structure.
19. I will only use materials produced by Trilogy when Trilogy's name or logo
is displayed, and will market Trilogy on the Internet only in conjunction
with Trilogy's corporate site.
20. I will represent the Trilogy Commission Structure fairly and completely,
emphasizing that retail sales are a requirement, and that no fee can be
derived from the mere act of sponsoring.
21. I do not hold, nor will hold, a beneficial interest in any other Field
Representative's Trilogy business, with the exception of my spouse, under
whom I may be directly sponsored on this Application, or whom I may
directly sponsor.
22. Violation of any terms of this Agreement may result in disciplinary action,
including monetary fines, suspension or termination of this Agreement. If
this Agreement is terminated for any reason, voluntarily or involuntarily,
I understand that I will permanently lose my rights as a Field
Representative, including rights to my downline organization, bonuses and
commissions pursuant to the Commission Structure.
23. In order to be eligible to receive bonuses and commissions, I must develop
and service customers. At least 70% of my Personal Volume must be sold to
an end consumer. I will not purchase products solely to qualify for
commissions or bonuses.
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24. After six months, I must maintain five customers per month in order to
receive commissions or bonuses.
25. I must provide support to Trilogy Field Representatives whom I sponsor, and
who are in my commissionable downline.
26. If any provision of this Agreement is found to be invalid, illegal or
unenforceable, only the invalid portion(s) of the provision shall be
severed and the remaining terms and provisions shall remain in full force
and effect and shall be construed as if such invalid, illegal or
unenforceable provision(s) never comprised a part of the Agreement.
27. Field Representatives must attempt to resolve directly with Trilogy's
corporate office any claim, dispute, or other difference they may have with
the company. If found not to be resolvable to the satisfaction of either
party, all disputes and claims relating to Trilogy, the Representative
Agreement, the Commission Structure or its products and services, the
rights and obligations of an independent Field Representative and Trilogy,
or any other claims or causes of action relating to the performance of
either an independent Representative or Trilogy under the Agreement or the
Trilogy Policies and Procedures shall be settled totally and finally by
arbitration in Stuart, Florida, or such other location as Trilogy
prescribes, in accordance with the Federal Arbitration Act and the
Commercial Arbitration Rules of the American Arbitration Association,
except as set forth in the Trilogy Policies and Procedures, or unless the
laws of the state in which I reside expressly prohibit the consensual
jurisdiction and venue provisions of this Agreement, in which case its laws
shall govern. If a Representative files a claim or counterclaim against
Trilogy, a Representative shall do so on an individual basis and not with
any other Representative or as part of a class action. The decision of the
arbitrator shall be final and binding on the parties and may, if need be,
be reduced to a judgment in any court of competent jurisdiction. If any
legal action is brought to enforce the terms and conditions of the
Agreement, the prevailing party (as determined by the arbitrator or the
Court) shall be entitled to its costs and expenses (including reasonable
attorneys' fees) in addition to any other relief to which it may be
entitled. This agreement to arbitrate shall survive any termination or
expiration of the Agreement.
28. In the event that a provision of this Agreement is held to be invalid or
unenforceable, such provision shall be reformed only to the extent
necessary to make in enforceable, and the balance of the Agreement will
remain in full force and effect.
29. I understand that I have the right to terminate my distributorship at any
time, with or without reason. I agree that such termination must be in
writing.
149
<PAGE>
Schedule 4.1 Permitted Pre-Merger Actions
(9) Trilogy's Board of Directors approved a plan whereby former investors in
the Company would be offered participation in a 2nd round of financing on
the same terms as the Company's February 22, 1999 Participating Preferred
Offering. The offering as approved called for a maximum of $240,000 of
total subscriptions that could be accepted. Board's approval was also
contingent upon Carol Berardi's being willing to contribute 50% of the
Common Shares of Trilogy Common Stock to be issued as a result of
subscriptions received as a result of this offering.
As of October 27, 1999, subscriptions received by the Company totaled
$84,818.18 which resulted in the issuance of 84,818 additional shares of
Common stock, 84, 818 shares of Series A Preferred Stock and 84,818
Warrants to purchase Common Stock at $.25 per share.
(13) In connection with the deferred compensation agreements with Trilogy
employees, the Company continues to incur debt to such employees on a
regular bi-weekly basis. The compensation accrued and the corresponding
increase in the Company's debt since September 30, 1999 and through
November 12, 1999 will be $26,907.03
On October 15, 1999 the Company borrowed $7,000 from Michael Lobosco.
Demand Note was issued with a per annum interest rate of 12%. Loan to be
repaid from proceeds of closing of merger.
On November 10, 1999 the Company borrowed $12,000 from Arthur Calabro.
Demand Note was issued with a per annum interest rate of 12%. Loan to be
repaid from proceeds of closing of merger.
In addition to deferring 25% of their salaries per agreement, Carol and
Dennis Berardi drew no pay for the periods ending October 29, 1999 and
November 12, 1999. $5480.77 will be payable to each of them from the
proceeds of the Merger Funding upon closing. (75% of their salaries for the
four subject weeks.)
REVISED NOVEMBER 19, 1999
150
<PAGE>
Schedule 3.4(I) Outstanding Comment Letter
OFFICER'S ACKNOWLEDGMENT
for
AMERINET GROUP.COM, INC.
Before me, the undersigned authority, on this date personally appeared
Michael Harris Jordan, ("Mr. Jordan") who first being duly sworn, deposes, and
says: that he is the duly elected President and Chief Financial Officer for
Amerinet Group.com, InC., and that he has read and reviewed the following
documents listed below:
A. Agreement of Merger & Plan of Reorganization;
B. Affiliate Agreement;
C. Article of Merger.
To the best of my knowledge after due inquiry, no representation,
warranty or statement by AmeriNet or Trilogy Acquisitions, in any of
the above documents contains any untrue statement of a material fact,
or omits or will omit to state a fact necessary in order to make such
representations, warranties or statements not materially misleading.
Mr. Jordan further states that all representations and warranties made
by AmeriNet or Trilogy Acquisition under the Agreement of Merger &
Plan of Reorganization is true and complete in all material respects;
and
All covenants, obligations and conditions of the Agreement of Merger &
Plan of Reorganization; to be performed by AmeriNet and Trilogy
Acquisition on or before such date have been so performed in all
material respects.
Sworn to and subscribed before me this 30th day of November 1999.
/s/ Michael H. Jordan
________________________________
Michael Harris Jordan, President
Before me, the undersigned authority, on this date personally appeared
Michael Harris Jordan who first being duly sworn, deposes, and says: that he has
read the same, knows the contents thereof, and that the same is true and correct
to the best of her knowledge and belief.
Sworn to and subscribed before me this___ day of November, 1999
My commission expires:
----------------------
Notary Public
Personally Known or produced I.D. Type of I.D. Produced:
151
<PAGE>
OFFICER'S CERTIFICATION
for
AMERINET GROUP.COM, INC.
a publicly held Delaware corporation
EXHIBIT 2.1: WARRANTY EXCEPTIONS
I, Michael H. Jordan, President, elected and currently serving
President of Amerinet Group.com, Inc., a publicly held Delaware corporation,
(hereinafter referred to as the "Corporation"), hereby certify, they reasonably
believe that the following is a true and correct listing of all Warranty
Exceptions as of November 29, 1999 for the Corporation:
General: We call your attention to the fact that any information filed
with the Securities and Exchange Commission to the extent that it is contrary to
the information provided in this Agreement of Merger and Plan of Reorganization,
the Affiliate Agreement, or the Articles of Merger, is a warranty exception to
Agreement of Merger and Plan of Reorganization, the Affiliate Agreement, or the
Articles of Merger signed and executed between the parties.
In witness whereof, we have hereunto set our hand and seal, effective
as of the 29th day of November, 1999.
AMERINET GROUP.COM, INC.
/s/ Michael H. Jordan
___________________________
Michael H. Jordan, President
President
Before me, the undersigned authority, on this date personally appeared
Michael H. Jordan who first being duly sworn, deposes, and says: that he is the
duly elected and currently serving President of AmeriNet Group.com, Inc., a
publicly held Delaware, corporation ; and he has read the same, know the
contents thereof, and that the same is true and correct to the best of his
knowledge and belief. Sworn to and subscribed before me this 29th day of
November 1999.
My commission expires:
---------------------------
Notary Public
Personally Known or produced I.D. Type of I.D. Produced:
152
<PAGE>
Schedule 5.7 - Third Party Consents
Commercial Lease between H.N.S. Properties (Landlord) and Trilogy International
(Tenant) requires approval of Landlord for subletting of premises or assignment
of lease. Since merger does not entail either of these actions and the personal
guarantees of Dennis and Carol Berardi remain in effect, Trilogy does not
believe approval is required from H.N.S Properties.
Schedule 5.8 Affiliates
Board of Directors:
Dennis Berardi
Carol Berardi
Arthur Calabro
Donald Downes
Peter Glint
John Holmes
Ron Musich
Bernard Rudd
Ken Wang
Schedule 5.12 List and Summary of Employment Agreements
Dennis Berardi, Carol Berardi and Dr. Jane Bicks have Employment Agreements. See
Exhibit 5.12 for copies of each.
153
<PAGE>
Schedule 5.13-Use of Proceeds
Initial $250,000:
As detailed on the attached schedule of Unpaid Bills as of October 31, 1999,
Trilogy has accounts payable in the amount of $142,450.62, a large portion of
which is overdue. It is the intention of the company to bring all accounts
payable current by use of a portion of the $250,000 proceeds of the Merger
closing.
Sales Tax liability in the amount of $2,189.03 would be satisfied.
As detailed on Schedule 2.12, during the period September 3, 1999 and November
15, 1999 the Company borrowed $44,500 from officers, family of officers and
employees on a demand basis. The company is committed to repaying these loans
from the proceeds of the Merger closing.
In addition to deferring 25% of their salaries per agreement, Carol and Dennis
Berardi also deferred the other 75% of their salaries for the two week periods
ending October 29 and November 12, 1999 in order to conserve cash for the
Company until the closing of the Merger. The Company is obligated to pay each of
them $5480.77 (4 weeks @ 75%) from the proceeds of the closing.
The Company is committed to paying the legal fees incurred as a result of the
proposed merger at the time of closing. $7,500 has been allocated on the
attached Use of Proceeds for this purpose, but the fees incurred may exceed this
amount.
At the currently reduced salary structure negotiated in accordance with the
deferred compensation agreements in place between the Company and its officers
and employees, the Company will incur payroll expense in the amount of
approximately $26,500 every two weeks. Payroll is paid in arrears every two
weeks. The payroll for the period ending November 26 and all subsequent two week
periods through December 110, 1999 will be paid and all payroll taxes and
employee withholdings will be deposited as required.
The Company will incur ongoing expenses, as detailed on the Pro Forma Income
statements attached to Schedule 5.15, for which no extended credit terms are
available. These expenses will be paid on a current basis and are not reflected
in the attached listing of unpaid bills as of October 28, 1999. These required
payments include rent and utility expense, telephone, postage and courier, lease
payments, insurance premiums and travel expense among others.
Out of pocket cost of sales including shipping, credit card expense and
commissions will be funded by revenues from sale of product. The company does
not expect to incur any expense for replacement of product inventory during the
next 60 to 90 days. This could change, however, if the future sales exceed
expectations or the sales mix of products varies materially from that projected.
As detailed on the attached Exhibit to Schedule 5.15, the company expects the
gross profit on sales and reduction of inventory through December 31, 1999 to
provide positive cash flow of approximately $31,886. This amount combined with
the $250,000 proceeds of the Merger closing will not be sufficient to fund
projected negative cash flow beyond mid-December 1999. The Company plans to
renew efforts to obtain lease-back financing on some of the equipment currently
owned to provide additional working capital. There is no assurance, however,
that this financing will become available.
Subsequent Investment by AmeriNet
The additional $650,000 to be invested in the Surviving Corporation by AmeriNet
will be used as working capital to fund the negative cash flow resulting from
expenses exceeding revenues as projected on Schedule 5.14 - Projections. In
addition, a portion of the funds provided will be used for acquisition of
additional computer hardware, computer software and office equipment and
furniture needed as the business expands and staffing increases. Use of funds
for purposes other than expenses projected on Schedule 5.14, replacement of
inventory and capital expenditures required in the normal course of business,
must be approved by the Board of Directors of the surviving Corporation.
154
<PAGE>
Trilogy International, Inc.
Proposed Use of Proceeds
Proceeds of November 22, 1999 Closing 250,000
Use of Proceeds:
Accounts Payable as of Oct 31 142,451
Merger Legal Expense 7,500 149,951
Repayment of Short Term Loans 44,500 194,451
Unpaid Portion of 10/29 and 11/12 Payroll 17,000 211,451
Payroll at Reduced Rates November 26 26,500 237,951
November Lease Payments 2,510 240,461
November Rent and Utilities 2,534 242,995
November Phones 3,000 245,995
November Insurance 960 246,955
November Travel 2,000 248,955
November Postage, Courier, Supplies 500 249,455
Keyman Life Premium 2,114 251,569
Payroll at Reduced Rates December 10 26,500 278,069
December Rent and Utilities 5,117 283,186
December Lease Payments 2,510 285,696
December Phones 3,000 288,696
December Insurance 960 289,656
December Travel 2,000 291,656
December Postage, Courier, Supplies 500 292,156
Payroll at Reduced Rates December 24 26,500 318,656
Gross Profit on Sales and Reduction of Inventory 31,886
281,886
Shortage 36,770
155
<PAGE>
Schedule 5.14 Trilogy Financial Projections
Trilogy Management has reassessed its business plan and analyzed its limited
operating history to date and as of November 4, 1999 has prepared revised
projections of income and expense for the three years beginning November 1, 1999
and ending October 31, 2002. Those projections are attached herewith.
The projections are based upon management's expectations for attainable future
levels of sales and profits. However, the Company has a limited operating
history and there is no assurance that the projections can be met.
TRILOGY INTERNATIONAL
PRO FORMA INCOME AND EXPENSE STATEMENT
NOVEMBER 1999 THROUGH OCTOBER 2000
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REPS NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT
1 35 35 150 225 300 450 600 950 1150 1200 1000 600
2 143 35 35 150 225 300 450 600 950 1150 1200 1000
3 143 35 35 150 225 300 450 600 950 1150 1200
4 143 35 35 150 225 300 450 600 950 1150
5 or more 143 143 178 328 553 853 1303 1903 2853
GROWTH RATE 65% 20% 70% 62% 45% 53% 46% 50% 40% 30% 19% 10%
DISTRIBUTORS 178 213 363 588 853 1303 1903 2853 4003 5203 6203 6803
INCOME NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT 1st Year
SAMPLE PACKS 4375 2188 9375 14063 16563 28125 37500 59375 71875 75000 62500 37500 418438
PRODUCT SALES 6840 19850 15475 26750 48400 64475 98225 157725 234850 343350 484350 657600 2157890
SHIPPING 1122 2204 2485 4081 6496 9260 13573 21710 30673 41835 54685 69510 257633
INTRO KITS 2450 1225 5250 7875 9275 15750 21000 33250 40250 42000 35000 21000 234325
WEB SITE SIGN UP 1682 2243 3551 4298 4485 3738 2243 22238
WEB SITE MTH 994 1610 2335 3567 5209 7810 10958 14243 16981 18623 82330
SALES AIDS 1026 2978 2321 4013 7260 9671 14734 23659 35228 51503 72653 98640 323684
-------------------------------------------------------------------------------------------------------
TOTAL 15813 28444 35900 58391 90329 132530 192483 307079 428131 572416 729906 905116 3496537
COST OF SALES
PRODUCT COST 2057 3657 4539 7374 11388 16504 23966 38299 53389 71436 91246 113466 437319
SHIPPING COST 1009 1983 2237 3673 5847 8334 12215 19539 27605 37652 49217 62559 231869
KIT COST 1960 980 4200 6300 7420 12600 16800 26600 32200 33600 28000 16800 187460
WEB SITE COST 0 0 800 800 800 800 800 888 1075 1121 934 561 8578
SALES AIDS COST 718 2084 1625 2809 5082 6770 10314 16561 24659 36052 50857 69048 226578
Q. START BONUS 1750 875 3750 5625 6625 11250 15000 23750 28750 30000 25000 15000 167375
SALES BONUS 1368 3970 3095 6688 14520 22566 39290 63090 93940 137340 193740 263040 842647
CREDIT CARD EXP. 474 853 1077 1752 2710 3976 5774 9212 12844 17172 21897 27153 104896
ROYALTIES 32 57 72 117 181 265 385 614 856 1145 1460 1810 6993
---------------------------------------------------------------------------------------------------------
TOTAL 9337 14403 21322 35020 54391 82800 124159 197939 274461 364373 460891 567627 206723 63%
---------------------------------------------------------------------------------------------------------
GROSS PROFIT 6476 14041 14578 23371 35938 49731 68324 109141 153670 208043 269015 337489 1289814 37%
PAYROLL EXPENSE
HEADQUARTERS 17045 17045 17045 17045 19191 19191 19191 19191 21337 21337 21337 21337 230292
OPERATIONS 17493 17493 8971 8971 8971 8971 8971 8971 8971 8971 8971 8971 124696
PRODUCT DEVEL. 8971 8971 8971 8971 8971 8971 8971 8971 8971 8971 8971 8971 107652
MARKETING 9419 9419 9419 9419 9419 9419 9419 9419 9419 9419 9419 9419 113028
MIS 6728 6728 6728 6728 6728 6728 6728 6728 6728 6728 6728 6728 80736
CALL CENTER 11648 11648 11648 11648 11648 13794 13794 15940 15940 18086 18086 20232 174112
FINANCE 7177 7177 7177 7177 7177 10317 10317 10317 10317 10317 10317 10317 108104
---------------------------------------------------------------------------------------------------------
78481 78481 69959 69959 72105 77391 77391 79537 81683 83829 83829 85975 938620 27%
156
<PAGE>
TRILOGY INTERNATIONAL
PRO FORMA INCOME AND EXPENSE STATEMENT
NOVEMBER 1999 THROUGH OCTOBER 2000
NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT 1st Year
GENERAL & ADMIN. EXPENSE
TRAVEL 2000 2000 7000 7000 13000 13000 13000 13000 13000 13000 13000 13000 130600
RENT, UTILITIES & MAINT 5000 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6501 76501
TELEPHONE 2974 3353 3577 4252 4126 4886 5965 8027 10206 12803 15638 18792 94600
INSURANCE 1775 1775 1775 1775 1775 1775 1775 1775 1265 1564 1879 2240 21148
EQUIPMENT LEASES 2700 2700 2700 2700 2700 2700 2700 2700 2700 2700 2700 2700 32400
POSTAGE & COURIER 428 463 613 838 1103 1553 2153 3103 4253 5453 6453 7053 33466
SUPPLIES 579 642 679 792 952 1163 1462 2035 2641 3362 4150 5026 23483
PRINTING 1000 1000 1363 1000 1000 2303 1000 1000 5003 1000 1000 1000 17669
CORP LEGAL 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
NETWORK MRKT LEGAL 500 500 500 500 500 500 500 500 500 500 500 500 6000
AUDIT 1500 1500 1500 1500 2500 2500 2500 2500 2500 2500 2500 2500 26000
PROMOTIONAL EXPENSE 1500 1500 179 292 452 663 962 1535 2141 2862 3650 4526 20261
INTERNET 99 161 234 262 373 568 763 936 1036 1043 5475
CONTINGENCY 1996 2193 2149 2231 2384 2680 2789 3224 4047 4218 4801 5388 38100
----------------------------------------------------------------------------------------------------------
23952 26127 30635 31541 39225 42485 43679 48469 57518 59399 65806 72269 541104 15%
EXPENSE SUB TOTAL 102433 104608 100594 101500 111330 119876 121070 128006 139201 143228 149635 158244 1479724 42%
----------------------------------------------------------------------------------------------------------
NET INCOME -95957 -90567 -86016 -78129 -75392 -70145 -52746 -18865 14469 64815 119380 179245 -189909 -5%
CASH FLOW
Investment by AmeriNet 250000 325000 325000
Beginning Cash 7769
October 31 A/P -146524
Short Term Loan Repayment -44500
Merger Legal Expense -15000
Unpaid Portion of 10/29 PR -5900
Net Income -95957 90567 -86016 -78129 -75392 -70145 -52746 -18865 14469 64815 119380
Deferred Salaries 19551 22460 -59690
Partial 11/12 Payroll Paid 13777
Inventory Reduction 4735 6722 10363
Increase in Month End A/P 23952 12713 4508 906 7684 3260 1194 4790 9050 1881 6407
Capital Expenditures -2500 -2500 -2500 -2500 -2500
Software -11000
MONTHLY CASH FLOW 11903 -48673 -71144 247777 -70208 -69385 262448 -16575 21018 64195 66097
WORKING CAPITAL BALANCE 11903 -36770 -107914 139863 69655 269 262718 246142 267160 331356 397453
NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP
ACCRUED SALARIES 390223 412684 412684 412684 412684 412684 412684 412684 412684 412684 352994
Investment by AmeriNet 900000
Beginning Cash 7769
October 31 A/P -146524
Short Term Loan Repayment
Merger Legal Expense
Unpaid Portion of 10/29 PR
Net Income 179245 -189909
Deferred Salaries -89622 -107302
Partial 11/12 Payroll Paid
Inventory Reduction 21820
Increase in Month End A/P 6463 82807
Capital Expenditures -2500 -15000
Software -11000
MONTHLY CASH FLOW 93585 491038
WORKING CAPITAL BALANCE 491038
OCT 1st Year
ACCRUED SALARIES 263371
157
<PAGE>
TRILOGY INTERNATIONAL
PRO FORMA INCOME AND EXPENSE STATEMENT (DETAIL)
NOVEMBER 2000 THROUGH OCTOBER 2001
REPS NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT
1 680 720 566 383 753 776 801 825 852 884 916 475
2 600 680 720 566 383 753 776 801 825 852 884 916
3 1000 600 680 720 566 383 753 776 801 825 852 884
4 1200 1000 600 680 720 566 383 753 776 801 825 852
5 or more 3715 4544 5089 5180 5342 5527 5540 5369 5585 5803 6023 6246
GROWTH RATE 6% 5% 1% -2% 3% 3% 3% 3% 4% 4% 4% -1%
DISTRIBUTORS 7195 7543 7654 7528 7763 8005 8253 8524 8840 9165 9501 9374
INCOME NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT 2nd Year
SAMPLE PACKS 42500 44969 35358 23920 47051 48519 50032 51580 53275 55247 57281 29691 539422
PRODUCT SALES 865750 1011600 1127090 1191120 1210950 1235001 1258084 1267219 1282683 1332396 1382826 1434229 14598949
SHIPPING 90825 105657 116245 121504 125800 128352 130812 131880 133596 138764 144011 146392 1513837
INTRO KITS 23800 25183 19800 13395 26349 27170 28018 28885 29834 30938 32077 16627 302077
WEB SITE SIGN UP 2542 2689 2114 1430 2814 2901 2992 3084 3186 3304 3425 1776 32257
WEB SITE MTH 18615 19696 20649 20954 20608 21251 21914 22592 23335 24198 25089 26010 264911
SALES AIDS 129863 151740 169064 178668 181643 185250 188713 190083 92402 199859 207424 215134 2189842
--------------------------------------------------------------------------------------------------------------------
TOTAL 1173894 1361534 1490320 1550991 1615215 1648445 1680564 1695324 1718311 1784707 1852133 1869859 19441295
COST OF SALES
PRODUCT COST 156953 182315 199738 207992 216683 221110 225382 227291 230309 239214 248255 250648 2605888
SHIPPING COST 81743 95091 104620 109354 113220 115517 117730 118692 120236 124888 129610 131753 1362453
KIT COST 19040 20146 15840 10716 21079 21736 22414 23108 23867 24751 25662 13302 241661
WEB SITE COST 8717 9223 9317 9097 9650 9951 10261 0579 10927 11331 11748 11292 122093
SALES AIDS COST 90904 106218 118344 125068 127150 129675 132099 133058 134682 139902 145197 150594 1532890
Q. START BONUS 17000 17988 14143 9568 18820 19407 20013 20632 21310 22099 22912 11876 215769
SALES BONUS 346300 404640 450836 476448 484380 494001 503234 506888 513073 532958 553130 573692 5839579
CREDIT CARD EXP. 35217 40846 44710 46530 48456 49453 50417 50860 51549 53541 55564 56096 583239
ROYALTIES 4696 5446 5961 6204 6461 6594 6722 6781 6873 7139 7409 7479 77765
---------------------------------------------------------------------------------------------------------------------
TOTAL 755872 876467 957548 994771 1039439 1060850 1081550 1091107 1105954 1148684 1192078 1199252 12503573 64%
---------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 418022 485067 532772 556219 575775 587595 599014 604217 612357 636023 660055 670607 6937722 36%
PAYROLL EXPENSE
HEADQUARTERS 41147 43962 45894 46804 47767 48266 48747 48969 49314 50310 51321 51587 574087
OPERATIONS 14354 14354 14354 14354 14354 14354 14354 14354 14354 14354 14354 14354 172248
PRODUCT DEVEL. 9868 9868 9868 9868 9868 9868 9868 9868 9868 9868 9868 9868 118416
MARKETING 13456 13456 13456 13456 13456 13456 13456 13456 13456 13456 13456 13456 161472
MIS 11886 11886 11886 11886 16372 16372 16372 16372 16372 16372 16372 16372 178520
CALL CENTER 22378 24524 26670 26670 28816 30962 33108 35254 37400 39546 41692 41692 388712
FINANCE 17807 17807 17807 17807 17807 17807 17807 17807 17807 17807 17807 17807 213684
---------------------------------------------------------------------------------------------------------------------
130896 135857 139935 140845 148440 151085 153712 156080 158571 161713 164870 165136 1807139 9%
NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT 2nd Year
GENERAL & ADMIN EXPENSE
TRAVEL 7000 11000 9000 7000 13000 13000 13000 13000 13000 13000 13000 13000 138000
RENT, UTILIT & MAINT 5000 6500 6500 6500 6500 6500 6500 6500 6500 6500 6500 6501 76501
TELEPHONE 37717 43346 47210 49030 31574 32172 32750 33016 33430 34625 35838 36157 446864
INSURANCE 3002 3402 3680 3806 3973 4052 4130 4171 4229 4378 4529 4565 47918
EQUIPMENT LEASES 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 12000 144000
POSTAGE & COURIER 7445 7793 7904 7778 8013 8255 8503 8774 9090 9415 9751 9624 102345
SUPPLIES 6369 7308 7952 8255 8576 8742 8903 8977 9092 9424 9761 9849 103206
PRINT & ADVERTISE 11739 13615 14903 15510 16152 16484 16806 16953 17183 17847 18521 18699 194413
CORP LEGAL 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000
NETWORK MRKT LEGAL 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 12000
AUDIT 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000 36000
PROMOTIONAL EXPENSE 5869 6808 7452 7755 8076 8242 8403 8477 8592 8924 9261 9349 97206
INTERNET 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 18000
CONTINGENCY 9764 10927 11610 11913 10336 10495 10649 10737 10861 11161 11466 11524 131445
------------------------------------------------------------------------------------------------------------------
114406 131199 136711 138047 126700 128443 130143 131104 132476 135773 139127 139769 1583900 8%
EXPENSE SUB TOTAL 245302 267056 276646 278892 275140 279528 283856 287184 291047 297486 303997 304905 3391039 17%
------------------------------------------------------------------------------------------------------------------
NET INCOME 172719 218011 256126 277327 300635 308067 315158 317033 321310 338537 356058 365702 3546683 18%
158
<PAGE>
TRILOGY INTERNATIONAL
PRO FORMA INCOME AND EXPENSE STATEMENT (DETAIL)
NOVEMBER 2001 THROUGH OCTOBER 2002
REPS NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT
1 937 1000 799 555 1125 1198 1275 1357 1446 1543 1647 879
2 475 937 1000 799 555 1125 1198 1275 1357 1446 1543 1647
3 916 475 937 1000 799 555 1125 1198 1275 1357 1446 1543
4 884 916 475 937 1000 799 555 1125 1198 1275 1357 1446
5 or more 6786 7331 7881 7962 8501 9076 9422 9505 10155 10845 11579 12357
GROWTH RATE 7% 7% 4% 1% 6% 6% 6% 7% 7% 7% 7% 2%
DISTRIBUTORS 9999 10660 11093 11253 11980 12753 13575 14461 15432 16468 17572 17872
INCOME NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT 3rd Year
SAMPLE PACKS 58587 62494 49967 34664 70332 74877 79709 84843 90383 96451 102923 54913 860144
PRODUCT SALES 1477379 1578959 1683216 1771819 1835586 1935400 2036942 2123455 2222463 2373243 2533496 2703952 24275910
SHIPPING 153597 164145 173318 180648 190592 201028 211665 220830 231285 246969 263642 275886 2513605
INTRO KITS 32809 34997 27982 19412 39386 41931 44637 47512 50615 54013 57637 30751 481681
WEB SITE SIGN UP 3504 3737 2988 2073 4206 4478 4767 5074 5405 5768 6155 3284 51437
WEB SITE MTH 25661 27372 29181 30366 30806 32796 34912 37161 39588 42246 45080 48104 423273
SALES AIDS 221607 236844 252482 265773 275338 290310 305541 318518 333369 355986 380024 405593 3641386
-------------------------------------------------------------------------------------------------------------------
TOTAL 1973144 2108548 2219134 2304756 2446245 2580820 2718172 2837394 2973108 3174676 3388958 3522483 32247437
COST OF SALES
PRODUCT COST 264630 282797 297639 309182 328226 346240 364613 380501 398607 425635 454367 472302 4324738
SHIPPING COST 138237 147731 155986 162584 171533 180925 190499 198747 208156 222272 237278 248298 2262245
KIT COST 26247 27997 22385 15530 31509 33545 35709 38010 40492 43210 46109 24601 385345
WEB SITE COST 12016 12818 13166 13183 14425 15357 16348 17401 18538 19782 21109 20883 195028
SALES AIDS COST 155125 165791 176738 186041 192736 203217 213879 222963 233359 249191 266017 283915 2548971
Q. START BONUS 23435 24998 19987 13866 28133 29951 31883 33937 36153 38581 41169 21965 344058
SALES BONUS 590952 631584 673286 708728 734234 774160 814777 849382 888985 949297 1013399 1081581 9710364
CREDIT CARD EXP. 59194 63256 66574 69143 73387 77425 81545 85122 89193 95240 101669 105674 967423
ROYALTIES 7893 8434 8877 9219 9785 10323 10873 11350 11892 12699 13556 14090 128990
----------------------------------------------------------------------------------------------------------------------
TOTAL 1269836 1356971 1425762 1478255 1574184 1660820 1749253 1826063 1913483 2043208 2181117 2259219 20738171 64%
-----------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 703308 751578 793372 826501 872061 920001 968919 1011330 1059625 1131468 1207841 1263264 11509267 36%
PAYROLL EXPENSE
HEADQUARTERS 54597 56628 58287 59571 61694 63712 65773 67561 69597 72620 75834 77837 783712
OPERATIONS 18660 18660 18660 18660 18660 18660 18660 18660 18660 18660 18660 18660 223920
PRODUCT DEVEL. 12828 12828 12828 12828 12828 12828 12828 12828 12828 12828 12828 12828 153936
MARKETING 17493 17493 17493 17493 17493 17493 17493 17493 17493 17493 17493 17493 209916
MIS 21284 21284 21284 21284 21284 21284 21284 21284 21284 21284 21284 21284 255408
CALL CENTER 48146 50646 53146 55646 58146 60646 63146 65646 68146 70646 73146 75646 742752
FINANCE 23149 23149 23150 23151 23152 23153 23154 23155 23156 23157 23158 23159 277843
----------------------------------------------------------------------------------------------------------------------
196157 200688 204848 208633 213257 217776 222338 226627 231164 236688 242403 246907 2647487 8%
NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT 3rd Year
GENERAL & ADMIN EXPENSE
TRAVEL 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 180000
RENT,UTILI&MAINT 9750 9750 9750 9750 9750 9750 9750 9750 9750 9750 9750 9750 117000
TELEPHONE 61694 65756 69074 71643 46532 48955 51427 53573 56016 59644 63501 65905 713721
INSURANCE 4927 5221 5463 5653 5959 6251 6548 6808 7102 7533 7990 8280 77732
EQUIPMENT LEASES 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 180000
POSTAGE &COURIER 10249 10910 11343 11503 12230 13003 13825 14711 15682 16718 17822 18122 166118
SUPPLIES 10366 11043 11596 12024 12731 13404 14091 14687 15366 16373 17445 18112 167237
PRINTING 19731 21085 22191 23048 24462 25808 27182 28374 29731 31747 33890 35225 322474
CORP LEGAL 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000
NETWORK MRKT LEGAL 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
AUDIT 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 48000
PROMOTION EXPENSE 9866 10543 11096 11524 12231 12904 13591 14187 14866 15873 16945 17612 161237
INTERNET 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
CONTINGENCY 15458 16231 16851 17314 15190 15808 16441 17009 17651 18564 19534 20101 206152
--------------------------------------------------------------------------------------------------------------------
185042 193538 200363 205458 182086 188883 195855 202099 209164 219202 229877 236106 2447672 8%
EXPENSE SUB
TOTAL 381199 394227 405211 414091 395343 406659 418192 428726 440327 455890 472280 483014 5095159 16%
----------------------------------------------------------------------------------------------------------------------
NET INCOME 322109 357351 388161 412409 476719 513342 550726 582604 619298 675578 735561 780250 6414108 20%
</TABLE>
159
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Schedule 6.3(M) Non-accredited investors
Trilogy International, Inc.
Common Stock held by other than Accredited Investors
Name Relationship Number of
to Company Shares
Dennis Berardi Founder 1,577,591
Carol Berardi Founder 1,577,590
Stephen Berardi Employee 3,000
Dale Hernandez Employee 3,000
Sheila Honan Employee 2,160
Lester Thornhill Employee 2,160
Jane Bicks Employee 2,000
David Cantley Employee 26,000
Margaret McEver Employee 1,159
Linda Logue Employee 1,159
Ruth Shinnick Consultant 1,546
Exhibit 2.25 - The Form 8-K Information
Trilogy International, through its response to AmeriNet's requests for Due
Diligence, has provided to AmeriNet essentially all of the information relative
to its business that it believes will be required by AmeriNet as part of the
information required for filing of Form 8-K reporting the acquisition of Trilogy
by AmeriNet.
Some of the information provided to AmeriNet may not be in the format required.
Following the Effective Date, the information required by AmeriNet relative to
the business of Trilogy will be resubmitted as requested by AmeriNet if
necessary to conform to the format required for filing with the SEC. Unaudited
Financial Statements will be prepared as of the Effective Date by Trilogy's CFO
and submitted to AmeriNet for inclusion in their 8-K filing within 15 days of
the Effective Date. Audit procedure will be initiated as soon as practical after
the Effective Date to assure completion of audited financials within 75 days of
the Effective Date.
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Exhibit 5.8 Affiliate Agreements
The form of the Affiliate Agreement is attached. All Trilogy International Board
of Directors members as shown in Schedule 5.8 have executed this agreement.
Affiliate Agreement
This Affiliate Agreement (this "Agreement") is made and entered into by and
between Trilogy International, Inc., a Florida corporation ("Trilogy "),
AmeriNet Group.com, Inc., a publicly held Delaware corporation with a class of
securities registered under Section 12(g) of the Securities Exchange Act of
1934, as amended ("AmeriNet" and the "Exchange Act," respectively), and person
identified in the signature page of this Agreement as the Affiliate (the
"Affiliate").
Preamble:
WHEREAS, concurrently with the execution of this Agreement, Trilogy and
AmeriNet have entered into an Agreement & Plan of Merger (the "Reorganization
Agreement") which contemplates that Trilogy will be merged into Trilogy
Acquisition Corporation, a Florida corporation ("Trilogy Acquisition") and all
outstanding capital stock of Trilogy will be converted into AmeriNet common
stock (the "Merger"); and
WHEREAS, the Affiliate is either an officer or director of Trilogy or is
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of such
quantity of common stock in Trilogy as requires that the Affiliate to be deemed
an "affiliate" of Trilogy (within the meaning of Rule 405 promulgated by the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), as a result of which the Affiliate
will be subject to restrictions on disposition of the shares of AmeriNet's
common stock received as a result of the Merger; and
WHEREAS, the determination of the accounting and tax treatment of the
Merger will depend, in part, upon the accuracy of certain of the representations
and warranties made by the Affiliate in this Agreement, as well as upon the
Affiliate's compliance with certain of the agreements set forth herein; and
WHEREAS, Affiliate and AmeriNet further desire to provide for an
arrangement under which Affiliate will grant to AmeriNet an irrevocable proxy to
vote all of the Affiliate's shares of Trilogy 's common stock in favor of the
Merger at a special meeting of the stockholders of Trilogy to be held for the
purpose of voting on the Merger.
NOW, THEREFORE, the Parties agree as follows:
Article I
Agreement to Retain Shares.
1.1 Transfer and Encumbrance.
(A) As used herein, the term "Determination Date" shall mean the earlier of:
(1) The date AmeriNet shall have publicly released a report including the
combined financial results of AmeriNet and Trilogy for a period of at
least thirty (30) days of combined operations of AmeriNet and Trilogy
; or
(2) The date the Reorganization Agreement shall be terminated pursuant to
Article VIII thereof.
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(B) The Affiliate agrees not to transfer, sell, exchange, pledge or otherwise
dispose of or encumber the Affiliates Trilogy common stock or the shares of
AmeriNet common stock received in exchange therefor as a result of the
Merger (collectively or generically hereinafter referred to as the
"Shares") or any New Shares (as defined in Section 1.2) acquired or to make
any offer or agreement relating thereto:
(1) At any time prior to the Determination Date;
(2) Except in full compliance with the requirements of Rule 144
promulgated by the Commission under authority granted by the
Securities Act;
(3) Except in full compliance with the requirements of Sections 13 and 16
of the Exchange Act, including requirements pertaining to timely
filing of Commission Forms 3, 4 and 5 or Schedule 13-D; and
(4) In full compliance with the procedures established by AmeriNet
(including requirements imposed upon its transfer agent) to assure
compliance with the foregoing.
1.2 New Shares.
The Affiliate agrees that any shares of capital stock of Trilogy or
AmeriNet that Affiliate purchases or with respect to which Affiliate otherwise
acquires beneficial ownership after the date of this Agreement ("New Shares")
shall be subject to the terms and conditions of this Agreement to the same
extent as if they constituted Shares.
Article II
Agreement to Vote Shares.
2.1 Voting
At every meeting of the stockholders of Trilogy called with respect to any
of the following, and at every adjournment thereof, and on every action or
approval by written consent of the stockholders of Trilogy with respect to any
of the following, the Affiliate shall vote the Shares and any New Shares,
including, with respect to stock options held by Affiliate, only those stock
options immediately exercisable:
(A) In favor of approval of the Reorganization Agreement and the Merger
and any matter that could reasonably be expected to facilitate the
Merger; and
(B) Against approval of any proposal made in opposition to or competition
with consummation of the Merger and against any merger, consolidation,
sale of assets, reorganization or recapitalization, with any party
other than AmeriNet and its affiliates and against any liquidation or
winding up of Trilogy (each of the foregoing is hereinafter referred
to as an "Opposing Proposal").
2.2 Actions
In amplification of the obligations assumed by this Agreement, the
Affiliate agrees not to take any actions contrary to Trilogy 's obligations
under the Reorganization Agreement or the Affiliate's obligations under this
Agreement.
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Article III
Irrevocable Proxy.
Concurrently with the execution of this Agreement, the Affiliate agrees to
deliver to AmeriNet a proxy in the form attached hereto as Exhibit A (the
"Proxy"), which shall be irrevocable to the extent permissible under Florida
law, with the total number of Shares beneficially owned (as such term is defined
in Rule 13d-3 under the Exchange Act) by the Affiliate set forth therein.
Article IV
Tax Treatment.
The Affiliate understands and agrees that it is intended that the Merger
will be treated as a "reorganization" within the meaning of Code Section 368(a)
for federal income tax purposes.
Article V
Reliance Upon Representations, Warranties and Covenants.
(A) The Affiliate has been informed that the treatment of the Merger as a
reorganization for federal income tax purposes requires that a
sufficient number of former stockholders of Trilogy maintain a
meaningful continuing equity ownership interest in AmeriNet after the
Merger.
(B) The Affiliate understands that the representations, warranties and
covenants of the Affiliate set forth herein will be relied upon by
AmeriNet, Trilogy and their respective legal counsel and accounting
firms.
Article VI
Representations, Warranties and Covenants of Affiliate.
The Affiliate represents, warrants and covenants to AmeriNet as follows:
6.1 Power and Authority.
The Affiliate has full power and authority to execute this Agreement, to
make the representations, warranties and covenants herein contained and to
perform Affiliate's obligations hereunder.
6.2 Shares Owned.
Set forth following the Affiliate's signature below is the number of Shares
owned by the Affiliate, including all Shares as to which the Affiliate has sole
or shared voting or investment power and all rights, options and warrants to
acquire Shares owned or held by the Affiliate.
6.3 Restrictions on Transfer.
The Affiliate will not sell, transfer, exchange, pledge or otherwise
dispose of, or make any offer or agreement relating to any of the foregoing with
respect to, any shares of common stock of AmeriNet (the "AmeriNet Common Stock")
that the Affiliate may acquire in connection with the Merger, or any securities
that may be paid as a dividend or otherwise distributed thereon or with respect
thereto or issued or delivered in exchange or substitution therefor (all such
shares and other securities of AmeriNet are sometimes collectively referred to
as "Restricted Securities"), or any option, right or other interest with respect
to any Restricted Securities, unless:
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(A) Such transaction is permitted pursuant to Rule 145(c) and 145(d) under
the Securities Act;
(B) (1) Legal counsel representing the Affiliate (which legal counsel is
reasonably satisfactory to AmeriNet), shall have advised AmeriNet
in a written opinion letter satisfactory to AmeriNet and
AmeriNet's legal counsel, and upon which AmeriNet and its legal
counsel may rely, that no registration under the Securities Act
would be required in connection with the proposed sale, transfer
or other disposition and that all requirements under the Exchange
Act, including Sections 13 and 16 thereof have been complied
with; or
(2) A registration statement under the Securities Act covering
AmeriNet's Stock proposed to be sold, transferred or otherwise
disposed of, describing the manner and terms of the proposed
sale, transfer or other disposition, and containing a current
prospectus, shall have been filed with the Securities and
Exchange Commission (the "Commission") and made effective under
the Securities Act; or
(3) An authorized representative of the Commission shall have
rendered written advice to the Affiliate (sought by Affiliate or
Affiliate's legal counsel, with a copy thereof and all other
related communications delivered to AmeriNet) to the effect that
the Commission would take no action, or that the staff of the
Commission would not recommend that the Commission take any
action, with respect to the proposed disposition if consummated.
6.4 No Present Plan of Disposition.
(A) The Affiliate has, and as of the Effective Time (as defined in the
Reorganization Agreement) will have, no present plan or intention (a
"Plan") to sell, transfer, exchange, pledge or otherwise dispose of,
including by means of a distribution by a partnership to its partners,
or a corporation to its stockholders, or any other transaction which
results in a reduction in the risk of ownership (any of the foregoing
being hereinafter referred to generically as a "Sale") of any of the
shares of AmeriNet common stock that the Affiliate may acquire in
connection with the Merger, or any securities that may be paid as a
dividend or otherwise distributed thereon with respect thereto or
issued or delivered in exchange or substitution therefor, which, when
taking into account those Trilogy stockholders who dissent from the
Merger, will reduce the Trilogy stockholders' ownership of AmeriNet
Stock, in the aggregate, to less than fifty (50%) of the number of
shares of AmeriNet Common Stock issued in the Merger.
(B) (1) The Affiliate is not aware of, or participating in, any Plan on
the part of Trilogy stockholders to engage in Sales of the shares
of AmeriNet Stock to be issued in the Merger.
(2) For purposes Section 6.4(B)(1), Shares with respect to which a
pre-Merger Sale occurs in a Related Transaction (as defined
below), shall be considered to be Shares that are exchanged for
AmeriNet Stock in the Merger and then disposed of pursuant to a
Plan.
(3) A Sale of AmeriNet Stock shall be considered to have occurred
pursuant to a Plan if, among other things, such Sale occurs in a
Related Transaction.
(4) For purposes of this Section 6.4, a "Related Transaction" shall
mean a transaction that is in contemplation of, or related or
pursuant to, the Merger or the Merger Agreements.
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<PAGE>
(C) If any of the Affiliate's representations in this Section 6.4 cease to
be true at any time prior to the Effective Time, the Affiliate will
deliver to each of Trilogy and AmeriNet, prior to the Effective Time,
a written statement to that effect, signed by the Affiliate.
6.5 Consultation with Counsel.
(A) The Affiliate has carefully read this Agreement and discussed its
requirements and other applicable limitations upon the sale, transfer
or other disposition of AmeriNet Shares to be acquired by Affiliate in
the Merger, to the extent the Affiliate felt necessary, with legal
counsel for the Affiliate.
(B) The Affiliate has carefully read the Reorganization Agreement and
discussed its requirements and its impacts upon Affiliate's ability to
sell, transfer, encumber, pledge or otherwise dispose of the AmeriNet
Shares to be acquired by Affiliate in the Merger, to the extent
Affiliate felt necessary, with legal counsel for Affiliate.
6.6 Ownership of Shares.
The Affiliate is the record owner of the Shares shown on the signature page
hereto, which at the date hereof and at all times up until the Determination
Date will be free and clear of any liens, claims, options, charges or other
encumbrances; does not beneficially own any shares of capital stock of Trilogy
other than such Shares; and, has full power and authority to make, enter into
and carry out the terms of this Agreement and the Proxy.
6.7 No Proxy Solicitations.
The Affiliate will not, and will not permit any entity under Affiliate's
control to:
(A) Solicit proxies or become a "participant" in a "solicitation" (as such
terms are defined in Regulation 14A under the Exchange Act) with
respect to an Opposing Proposal or otherwise encourage or assist any
party in taking or planning any action that would compete with,
restrain or otherwise serve to interfere with or inhibit the timely
consummation of the Merger in accordance with the terms of the Merger
Agreement;
(B) Initiate a stockholders' vote or action by consent of Trilogy
stockholders with respect to an Opposing Proposal; or
(C) Become a member of a "group" [as such term is used in Section 13(d) of
the Exchange Act] with respect to any voting securities of Trilogy
with respect to an Opposing Proposal.
Article VII
No Limitation on Discretion as Director.
This Agreement is intended solely to apply to the exercise by the Affiliate
in his individual capacity of rights attaching to ownership of the Shares, and
nothing herein shall be deemed to apply to, or to limit in any manner the
discretion of the Affiliate with respect to, any action which may be taken or
omitted by him acting in his fiduciary capacity as a director of Trilogy .
165
<PAGE>
Article VIII
Rules 144 and 145.
From and after the Effective Time and for so long as is necessary in order
to permit the Affiliate to sell AmeriNet's Stock held by Affiliate pursuant to
Rule 145 and, to the extent applicable, Rule 144 under the Securities Act,
AmeriNet will use its reasonable efforts to file on a timely basis all reports
required to be filed by it pursuant to Sections 13 or 15(d) of the Exchange Act
referred to in paragraph (c)(1) of Rule 144 under the Securities Act, in order
to permit the Affiliate to sell AmeriNet's Stock held by it pursuant to the
terms and conditions of Rule 145 and the applicable provisions of Rule 144.
Article IX
Limited Resales.
The Affiliate understands that, in addition to the restrictions imposed
under Section 6 of this Agreement, the provisions of Rule 145 limit Affiliate's
public resales of Restricted Securities, in the manner set forth in subsections
(a), (b) and (c) below:
9.1 Rule 145(d)(1).
(A) Unless and until the restriction "Cut-off" provisions of Rule
145(d)(2) or Rule 145(d)(3) set forth below become available, public
resales of Restricted Securities may only be made by the Affiliate in
compliance with the requirements of Rule 145(d)(1).
(B) Rule 145(d)(1) permits such resales only:
(1) While AmeriNet meets the public information requirements of Rule
144(c); (iii) in brokers' transactions or in transactions with a
market maker; and
(2) Where the aggregate number of Restricted Securities sold at any
time together with all sales of restricted AmeriNet Stock sold
for Affiliate's account during the preceding three-month period
does not exceed the greater of
(a) One percent (1%) of AmeriNet's Common Stock outstanding; or
(b) The average weekly volume of trading in AmeriNet Common
Stock on all national securities exchanges, or reported
through the automated quotation system of a registered
securities association, during the four calendar weeks
preceding the date of receipt of the order to execute the
sale.
9.2 Rule 145(d)(2).
The Affiliate may make unrestricted sales of Restricted Securities pursuant
to Rule 145(d)(2) if:
(A) The Affiliate has beneficially owned (within the meaning of Rule
144(d) under the Securities Act) the Restricted Securities for at
least one year after the Effective Time of the Merger;
(B) The Affiliate is not an affiliate of AmeriNet; and
(C) AmeriNet meets the public information requirements of Rule 144(c).
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<PAGE>
9.3 Rule 145(d)(3).
The Affiliate may make unrestricted sales of Restricted Securities pursuant
to Rule 145(d)(3) if the Affiliate has beneficially owned (within the meaning of
Rule 144(d) under the Securities Act) the Restricted Securities for at least two
years and is not, and has not been for the three months preceding the date of
sale, an affiliate of AmeriNet.
9.4 Acknowledgment.
AmeriNet acknowledges that the provisions of Section 6.3 of this Agreement
will be satisfied as to any sale by the holder of the Restricted Securities
pursuant to Rule 145(d), by a broker's letter and a letter from the undersigned
with respect to that sale stating that each of the above-described requirements
of Rule 145(d)(1) has been met or is inapplicable by virtue of Rule 145(d)(2) or
Rule 145(d)(3); provided, however, that AmeriNet has no reasonable basis to
believe that such sales were not made in compliance with such provisions of Rule
145(d).
Article X
Legends.
(A) The Affiliate also understands and agrees that stop transfer
instructions will be given to AmeriNet's transfer agent with respect
to certificates evidencing the Restricted Securities and that there
will be placed on the certificates evidencing the Restricted
Securities legends stating in substance:
"The shares represented by this certificate were issued pursuant to a
business combination which was structured to comply with the tax free
reorganization provisions of Section 368(a) of the Internal revenue
Code of 1986, as amended (the "Code") and was not registered under the
Securities Act of 1933, as amended (the "Securities Act") in reliance
on applicable exemptions therefrom and from comparable provisions of
the securities laws of the recipients state of domicile, and may not
be sold, nor may the owner thereof reduce his or her risks relative
thereto in any way, until such time as AmeriNet Group.com, Inc.
("AmeriNet"), has published the financial results covering at least
thirty (30) days of combined operations after the effective date of
the merger through which the business combination was effected. In
addition, the shares represented by this certificate may not be sold,
transferred or otherwise disposed of except or unless (1) covered by
an effective registration statement under the Securities Act, (2) in
accordance with Commission Rule 145(d) (in the case of shares issued
to an individual who is not an affiliate of AmeriNet) or Commission
Rule 144 (in the case of shares issued to an individual who is an
affiliate of AmeriNet) of the rules and regulations of such act, or
(3) in accordance with a legal opinion satisfactory to counsel for
AmeriNet that such sale or transfer is otherwise exempt from the
registration requirements of such act."
(B) (1) Upon the request of the Affiliate, AmeriNet shall cause the
certificates resenting the Restricted Securities to be reissued
free of any legend relating to restrictions on transfer by virtue
of ASR 130 and 135 as soon as practicable after the requirements
of ASR 130 and 135 have been met.
(2) In addition, if the provisions of Rules 144 and 145 are amended
to eliminate restrictions applicable to the Restricted Securities
received by Affiliate pursuant to the Merger, or at the
expiration of the restrictive period set forth in Rule 145(d), or
upon registration of my such shares, AmeriNet, upon the request
of Affiliate, will cause the certificates representing the
Restricted Securities to be reissued free of any legend relating
to the restrictions set forth in Rules 144 and 145(d).
167
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Article XI
Miscellaneous Provisions.
11.1 Further Assurances.
The Parties agree to do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged or delivered and to perform all such acts and
deliver all such deeds, assignments, transfers, conveyances, powers of attorney,
assurances, stock certificates and other documents, as may, from time to time,
be required herein to effect the intent and purpose of this Agreement.
11.2 Consent and Waiver.
The Affiliate hereby gives any consents or waivers that are reasonably
required for the consummation of the Merger under the terms of any agreements to
which Affiliate is a party or pursuant to any rights Affiliate may have.
11.3 Binding Agreement.
This Agreement will inure to the benefit of and be binding upon and
enforceable against the Parties and their successors and assigns, including
administrators, executors, representatives, heirs, legatees and devisees of the
Affiliate and any pledgee holding Restricted Securities as collateral.
11.4 Waiver.
No waiver by any party hereto of any condition or of any breach of any
provision of this Agreement shall be effective unless in writing and signed by
each party hereto.
11.5 Governing Law.
This Agreement shall be governed by and construed, interpreted and enforced
in accordance with the laws of the State of Delaware, except for any choice of
law provisions that would result in the application of the law of another
jurisdiction, and except for laws involving the fiduciary obligations of Trilogy
's officers and directors, which shall be governed under Florida law.
11.6 Third Party Reliance.
Legal counsel to and accountants for the Parties shall be entitled to rely
upon this Agreement.
11.7 Amendments and Modification.
This Agreement may not be modified, amended, altered or supplemented except
upon the execution and delivery of a written agreement executed by the Parties.
11.8 Specific Performance: Injunctive Relief.
The Parties acknowledge that AmeriNet will be irreparably harmed and that
there will be no adequate remedy at law for a violation of any of the covenants
or agreement of Affiliate set forth herein; therefore, it is agreed that, in
addition to any other remedies that may be available to AmeriNet upon any such
violation, AmeriNet shall have the right to enforce such covenants and
agreements by specific performance, injunctive relief or by any other means
available to AmeriNet at law or in equity.
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11.9 Notices.
All notices, requests, claims, demands and other communications hereunder
shall be in writing and sufficient if delivered in person, by cable, telegram or
telex, or sent by mail (registered or certified mail, postage prepaid, return
receipt requested) or overnight courier (prepaid) to the respective Parties as
follows:
(1) To the Affiliate:
At the contact information provided to the registrar of Trilogy 's shares
of common stock and, after the Merger, at the contact information provided to
and maintained by AmeriNet's transfer agent.
(2) To AmeriNet:
AmeriNet Group.com, Inc.
902 Clint Moore Road, Suite 136-C; Boca Raton, Florida 33487 Attention: Michael
Harris Jordan, President Telephone (561) 998-3435, Fax (561) 998-3425; and,
e-mail [email protected]; with a copy to
General Counsel
AmeriNet Group.com, Inc.
1941 Southeast 51st Terrace; Ocala, Florida 34471
Telephone (352) 694-6714, Fax (352) 694-9178; and, e-mail,
[email protected].
(3) To Trilogy :
Trilogy International, Inc.
526 Southeast Dixie Highway; Stuart, Florida 34994
Attention: Carol A. Berardi, President
Telephone (954) 781-7278, Fax (954) 781-7282; and,
web site [email protected];
(4) To Yankees:
The Yankee Companies, Inc.
902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487
Attention: Leonard Miles Tucker, President
Telephone (561) 998-2025, Fax (561) 998-3425; and,
e-mail [email protected];
or such other address or to such other person as any Party shall designate to
the other for such purpose in the manner hereinafter set forth, except that
notices of change of address shall only be effective upon receipt.
11.10 Interpretation.
(A) When a reference is made in this Agreement to Schedules or Exhibits,
such reference shall be to a Schedule or Exhibit to this Agreement
unless otherwise indicated.
(B) The words "include," "includes" and "including" when used herein shall
be deemed in each case to be followed by the words "without
limitation."
(C) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of
this Agreement.
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(D) The captions in this Agreement are for convenience and reference only
and in no way define, describe, extend or limit the scope of this
Agreement or the intent of any provisions hereof.
(E) All pronouns and any variations thereof shall be deemed to refer to
the masculine, feminine, neuter, singular or plural, as the identity
of the Party or Parties, or their personal representatives, successors
and assigns may require.
(F) The Parties agree that they have been represented by counsel during
the negotiation and execution of this Agreement and, therefore, waive
the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement
or document.
11.11 Merger of All Prior Agreements Herein.
(A) This instrument, together with the instruments referred to herein,
contains all of the understandings and agreements of the Parties with
respect to the subject matter discussed herein.
(B) All prior agreements whether written or oral are merged herein and
shall be of no force or effect.
11.12 Survival.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and the Closing hereon and
shall be effective regardless of any investigation that may have been made or
may be made by or on behalf of any Party.
11.13 Severability.
If any provision or any portion of any provision of this Agreement, other
than one of the conditions precedent or subsequent, or the application of such
provision or any portion thereof to any person or circumstance shall be held
invalid or unenforceable, the remaining portions of such provision and the
remaining provisions of this Agreement or the application of such provision or
portion of such provision as is held invalid or unenforceable to persons or
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby.
11.14 Indemnification.
(A) Each Party hereby irrevocably agrees to indemnify and hold the other
Parties harmless from any and all liabilities and damages (including
legal or other expenses incidental thereto), contingent, current, or
inchoate to which they or any one of them may become subject as a
direct, indirect or incidental consequence of any action by the
indemnifying Party or as a consequence of the failure of the
indemnifying Party to act, whether pursuant to requirements of this
Agreement or otherwise.
(B) In the event it becomes necessary to enforce this indemnity through an
attorney, with or without litigation, the successful Party shall be
entitled to recover from the indemnifying Party, all costs incurred
including reasonable attorneys' fees throughout any negotiations,
trials or appeals, whether or not any suit is instituted.
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11.15 Dispute Resolution.
(A) In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement any
proceedings pertaining directly or indirectly to the rights or
obligations of the Parties hereunder shall, to the extent legally
permitted, be held in Broward County, Florida, and the prevailing
Party shall be entitled to recover its costs and expenses, including
reasonable attorneys' fees up to and including all negotiations,
trials and appeals, whether or not any formal proceedings are
initiated.
(B) Except for the arbitration procedures outlined in paragraphs 7.2(G)(2)
and 7.2(G)(3) which shall govern any arbitration proceeding described
therein, in the event of any dispute arising under this Agreement, or
the negotiation thereof or inducements to enter into the Agreement,
the dispute shall, at the request of any Party, be exclusively
resolved through the following procedures:
(1) (a) First, the issue shall be submitted to mediation before a
mediation service in Broward County, Florida to be selected
by lot from six alternatives to be provided, two by the
Affiliate, two by AmeriNet and two by Trilogy .
(b) The mediation efforts shall be concluded within ten business
days after their initiation unless the Parties unanimously
agree to an extended mediation period;
(2) In the event that mediation does not lead to a resolution of the
dispute then at the request of any Party, the Parties shall
submit the dispute to binding arbitration before an arbitration
service located in Broward County, Florida to be selected by lot,
from six alternatives to be provided, two by the Affiliate, two
by AmeriNet and two by Trilogy .
(3) (a) Expenses of mediation shall be borne equally by the Parties,
if successful.
(b) Expenses of mediation, if unsuccessful and of arbitration
shall be borne by the Party or Parties against whom the
arbitration decision is rendered.
(c) If the terms of the arbitral award do not establish a
prevailing Party, then the expenses of unsuccessful
mediation and arbitration shall be borne equally by the
Parties involved.
11.16 Benefit of Agreement.
The terms and provisions of this Agreement shall be binding upon and inure
to the benefit of the Parties, their successors, assigns, personal
representatives, estate, heirs and legatees but are not intended to confer upon
any other person any rights or remedies hereunder.
11.17 Counterparts.
(A) This Agreement may be executed in any number of counterparts.
(B) All executed counterparts shall constitute one Agreement
notwithstanding that all signatories are not signatories to the
original or the same counterpart.
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(C) Execution by exchange of facsimile transmission shall be deemed
legally sufficient to bind the signatory; however, the Parties shall,
for aesthetic purposes, prepare a fully executed original version of
this Agreement which shall be the document filed with the Commission.
11.18 License.
(A) This form of agreement is the property of Yankees and has been
customized for this transaction with the consent of Yankees by G.
Richard Chamberlin, Esquire.
(B) The use of this form of agreement by the Parties is authorized hereby
solely for purposes of this transaction.
(C) The use of this form of agreement or of any derivation thereof without
Yankees' prior written permission is prohibited.
11.19 Information Concerning the Affiliate's Share Ownership.
(A) Shares beneficially owned:
(1) ___________ shares of Trilogy Common Stock; and
(2) ___________ shares of Trilogy Common Stock subject to options,
warrants or other rights.
* * *
Execution Pages
In Witness Whereof, the Affiliate, AmeriNet, and Trilogy have caused this
Agreement to be executed by themselves or their duly authorized respective
officers, all as of the last date set forth below:
Signed, sealed and delivered
In Our Presence:
The Affiliate
____________________________________ ----------------------------
Print name
____________________________________ ----------------------------
Signature
Dated: November 22, 1999
AmeriNet Group.com, Inc.
- ----------------------------
____________________________ By:________________________
Michael H. Jordan, President
(Corporate Seal)
Attest:________________________
Vanessa H. Lindsey, Secretary
Dated: November 22, 1999
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Trilogy Acquisition Corporation
_________________________________ (A Florida corporation)
_________________________________ By:______________________________
Carol A. Berardi, President
(Corporate Seal)
Attest:______________________________
John Holmes , Secretary
Dated: November 22, 1999
Trilogy International, Inc.
- ----------------------------
____________________________ By:______________________________
Carol A. Berardi, President
(Corporate Seal)
Attest:______________________________
John Holmes, Secretary
Dated: November 22, 1999
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Exhibit "A"
Irrevocable Proxy
The undersigned stockholder of Trilogy International, Inc., a Florida
corporation ("Trilogy"), hereby irrevocably to the extent provided by Florida
law) appoints the directors on the Board of Directors of AmeriNet, Inc., a
Delaware corporation ("AmeriNet"), and each of them, as the sole and exclusive
attorneys and proxies of the undersigned, with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
the shares of capital stock of Trilogy beneficially owned by the undersigned,
which shares are listed on the final page of this Proxy (the "Shares"), and any
and all other shares or securities issued or issuable in respect thereof on or
after the date hereof, until such time as that certain Agreement & Plan of
Merger dated as of November 27, 1999 (the "Reorganization Agreement"), among
AmeriNet, Trilogy Acquisition Corporation, Inc., a Florida corporation,
("Trilogy Acquisition"), and Trilogy , shall be terminated in accordance with
its terms or the Merger (as defined in the Reorganization Agreement) is
effective.
Terms:
1. Upon the execution hereof, all prior proxies given by the undersigned with
respect to the Shares and any and all other shares or securities issued or
issuable in respect thereof on or after the date hereof are hereby revoked
and no subsequent proxies will be given.
2. This proxy is irrevocable (to the extent provided by Florida law), is
granted pursuant to the Affiliate Agreement dated as of November 27, 1999,
between AmeriNet, Trilogy , and the undersigned stockholder (the "Affiliate
Agreement"), and is granted in consideration of AmeriNet entering into the
Reorganization Agreement.
3. The attorneys and proxies named above will be empowered at any time prior
to termination of the Reorganization Agreement in accordance with Article
VIII thereof to exercise all voting and other rights (including, without
limitation, the power to execute and deliver written consents with respect
to the Shares) of the undersigned at every annual, special or adjourned
meeting of Trilogy 's stockholders, and in every written consent in lieu of
such a meeting, or otherwise, in favor of approval of the Merger and the
Reorganization Agreement and any matter that could reasonably be expected
to facilitate the Merger, and against any proposal made in opposition to or
competition with the consummation of the Merger and against any merger,
consolidation, sale of assets, reorganization or recapitalization of
Trilogy with any party other than AmeriNet and its affiliates and against
any liquidation or winding up of Trilogy .
4. The attorneys and proxies named above may only exercise this proxy to vote
the Shares subject hereto at any time prior to termination of the
Reorganization Agreement in accordance with Article VIII thereof at every
annual, special or adjourned meeting of the stockholders of Trilogy and in
every written consent in lieu of such meeting, in favor of approval of the
Merger and the Reorganization Agreement and any matter that could
reasonably be expected to facilitate the Merger, and against any merger,
consolidation, sale of assets, reorganization or recapitalization of
Trilogy with any party other than AmeriNet and its affiliates, and against
any liquidation or winding up of Trilogy , and may not exercise this proxy
on any other matter.
5. The undersigned stockholder may vote the Shares on all other matters.
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6. Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
7. This proxy is irrevocable and coupled with an interest.
8. Stockholder Data:
1. Full name:_____________________________________________
First Middle Last
2. Tax identification number:_____________________________________
3. Domicile Address:_____________________________________
4. Telephone, fax and e-mail:___________ _______________________
E. Shares Information:
(1) Number of Trilogy Shares owned or controlled as to voting matters:
-----------------
Signed, sealed and delivered
In Our Presence:
Stockholder:
- ----------------------------
____________________________ By:______________________________
Dated:________________
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Exhibit 5.12
Copies of Employment Agreements
Employment Agreements for Dennis Berardi, Carol Berardi and Dr. Jane Bicks
are attached herewith.
Executive's Employment Agreement
This Executive's Employment Agreement (the "Agreement") is entered into by
and among Carol A. Berardi, an individual residing in the State of Florida (the
"President"); Trilogy International, Inc., a Florida corporation (collectively
and generically hereinafter referred to with its successors in interest, if any,
as "Trilogy"; Trilogy and the President being sometimes hereinafter collectively
to as the "Parties" or generically as a "Party".
Preamble:
WHEREAS, Trilogy's board of directors is of the opinion that in conjunction
with effectuation of Trilogy's future plans it must memorialize, confirm and
assure itself of the continuing the services of Trilogy's founder, who currently
serves as its president and director, on a long term basis; and
WHEREAS, the President is thoroughly knowledgeable with all aspects of
Trilogy's operations and plans; and
WHEREAS, the President is agreeable to serving as Trilogy's president, on
the terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements hereby exchanged, as well as of the sum of Ten ($10.00) Dollars and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the Parties, intending to be legally bound, hereby agree as
follows:
Witnesseth:
Article One
Term, Renewals, Earlier Termination
1.1 Term.
Subject to the provisions set forth herein, the term of the President's
employment hereunder shall be deemed to commence on the date of this Agreement's
execution by all of the Parties and shall continue until December 31, 2004.
1.2 Renewals.
This Agreement shall be renewed automatically, after expiration of the
original term, on a continuing annual basis, unless the Party wishing not to
renew this Agreement provides the other Party with Written notice of its
election not to renew ("Termination Election Notice") on or before the 30th day
prior to termination of the then current term.
1.3 Earlier Termination.
(a) Trilogy shall each have the right to terminate this Agreement prior to the
expiration of its Term, as it applies to them (without affecting the
Agreement as it applies to the other, except in conjunction with the
compensation aspects thereof), or of any renewals thereof, subject to the
provisions of Section 1.4, for the following reasons:
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(1) For Cause:
(A) Trilogy may terminate the President's employment under this
Agreement at any time for cause.
(B) Such termination shall be evidenced by Written notice thereof to
the President, which notice shall specify the cause for
termination.
(C) For purposes hereof, the term "cause" shall mean:
(a) The inability of the President, through sickness or other
incapacity, to discharge the President's duties under this
Agreement for ninety or more consecutive days or for a total
of 120 or more days in a period of twelve consecutive
months;
(2) The refusal of the President to follow the directions of Trilogy's
board of directors;
(3) Dishonesty; theft; or conviction of a crime involving moral turpitude;
(4) Material default in the performance by the President of the
President's obligations, services or duties required under this
Agreement (other than for illness or incapacity) or materially breach
of any provision of this Agreement, which default or breach has
continued for twenty days after Written notice of such default or
breach and such material default or breach has resulted in material
damage to Trilogy.
(D) In the event of a dispute concerning termination due to breach or
default, the President's compensation shall be continued until
resolution of such dispute by a tribunal of competent
jurisdiction, it being understood that the President must repay
any amounts so paid upon final determination that the President
was not entitled to such compensation.
(2) Discontinuance of Business:
In the event that Trilogy discontinues operating its business, this
Agreement shall terminate as of the last day of the month on which it
ceases operation with the same force and effect as if such last day of
the month were originally set as the termination date hereof;
provided, however, that a reorganization of Trilogy shall not be
deemed a termination of its business.
(3) Death:
This Agreement shall terminate immediately on the death of the
President; however, all accrued compensation at such time shall be
promptly paid to the President's estate.
(b) The President shall have the right to terminate this Agreement if
Trilogy fails to obtain at least $900,000 in funding during the
period starting on November 15, 1999 and ending on June 30, 2000;
unless the failure to obtain such funding is based on a default
by Trilogy or its successors in interest in its obligations under
any agreement pursuant to which such funding was to have been
provided or the failure of Trilogy to meet the conditions
required for such funding.
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1.4 Final Settlement.
Upon termination of this Agreement and payment to the President of all
amounts due to the President hereunder, the President or the President's
representative shall execute and deliver to the terminating entity on a form
prepared by Trilogy, a receipt for such sums and a release of all claims, except
such claims as may have been submitted pursuant to the terms of this Agreement
and which remain unpaid, and, shall forthwith tender to Trilogy all records,
manuals and Written procedures, as may be desired by it for the continued
conduct of its business.
Article Two
Scope of Employment
2.1 Retention.
Trilogy hereby hires the President and the President hereby accepts such
employment, in accordance with the terms, provisions and conditions of this
Agreement.
2.2 General Description of Duties.
(a) The President shall be employed as the president of Trilogy and
perform the duties generally associated with the position of president
thereof.
(b) Without limiting the generality of the foregoing, the President shall:
(1) Have control of all aspects of Trilogy's day to day operations,
subject only to compliance with the directions of Trilogy's board
of directors, applicable laws and fiduciary obligations to
Trilogy's stockholders;
(2) Supervise all inferior officers;
(3) Assure Trilogy's compliance with applicable laws and with its
obligations under binding agreements unless otherwise directed by
Trilogy's board of directors.
(4) Coordinate the activities of Trilogy with the activities of
Trilogy's parent corporation, if any, and of its sibling
corporations, if any, especially with reference to timely
collection and transmittal of information required to comply with
legal obligations, including, without limitation, reporting
obligations under federal securities and income tax laws.
(c) The President covenants to perform the President's employment duties
in good faith, devoting substantially all of the President's business
time, energies and abilities to the proper and efficient management of
the business of Trilogy.
2.3 Status.
(a) Throughout the term of this Agreement, the President shall serve as a
member of the board of directors of Trilogy and as its president.
(b) In the event that the President is not elected to such positions,
then, at the option of the President, this Agreement may be deemed
terminated effective as of the earliest time that it can be reasonably
determined that such election will not take place, provided that
Written notice of such election is provided to Trilogy within 30 days
after it failed to elect the President to the required office.
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2.4 Exclusivity.
The President shall, unless specifically otherwise authorized by Trilogy's
board of directors, on a case by case basis, devote all of the President's
business time exclusively to the affairs of Trilogy.
Article Three
Compensation
3.1 Compensation.
As consideration for the President's services to Trilogy the President
shall be entitled to:
(a) A salary in an aggregate gross sum equal to $80,000 per year (the
"Base Salary"); provided that, with the consent of Trilogy's
stockholders, who will be deemed third party beneficiaries of
Trilogy's rights under this Agreement, such compensation may be
adjusted at six month intervals to reflect the performance of the
President during such period, as reflected in the performance of
Trilogy during such period.
(b) Provided that Trilogy earned a net, pre tax profit for the subject
year, an annual bonus payable within 15 days after preparation and
delivery of final audited annual financial statements for Trilogy to
Trilogy's stockholders:
(1) In a cash sum equal to 2.5% of the net, pre tax profits of
Trilogy and
(2) In the event that Trilogy or its successors interest are publicly
held corporations (or if Trilogy is a subsidiary of a publicly
held corporation), a bonus payable in the common stock of the
closest level publicly held corporation, equal to the number of
shares obtained by dividing 20% of the President's salary for the
subject year by the closing transaction price for the issuer's
securities involved on the last trading day of the subject year.
3.2 Benefits.
During the term of this Agreement, the President shall also be entitled to
the following benefits:
(a) Two weeks paid vacation per year subject to adjustment after annually
after the first year with the consent of the stockholders of Trilogy.
(b) Health insurance, provided that when aggregated with health insurance
provided to any other member of the President's immediate family, the
monthly cost of such aggregate insurance does not exceed $500.
(c) An automobile allowance, provided that when aggregated with any
automobile allowance provided to any other member of the President's
immediate family, the monthly cost of such aggregate automobile
allowance does not exceed $1,500.
(d) During the period of the President's employment, the President shall
be reimbursed for reasonable traveling, telephone and other direct
business expenses required in connection with the performance of the
President's duties hereunder, subject to verification required by
Trilogy for audit purposes, for tax deduction purposes and in order to
assure compliance with applicable laws and regulations.
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(e) The President shall be entitled to receive all benefits of employment
generally available to all of Trilogy's employees.
3.3 Indemnification.
Trilogy will defend, indemnify and hold the President harmless from all
liabilities, suits, judgments, fines, penalties or disabilities, including
expenses associated directly, therewith (e.g. legal fees, court costs,
investigative costs, witness fees, etc.) resulting from any reasonable actions
taken by the President in good faith on behalf of Trilogy, its affiliates or for
other persons or entities at the request of the board of directors of Trilogy,
to the fullest extent legally permitted, and in conjunction therewith, shall
assure that all required expenditures are made in a manner making it unnecessary
for the President to incur any out of pocket expenses; provided, however, that
the President permits the majority stockholders of Trilogy to select and
supervise all personnel involved in such defense and that the President waive
any conflicts of interest that such personnel may have as a result of also
representing Trilogy, its stockholders or other personnel and agrees to hold
them harmless from any matters involving such representation, except such as
involve fraud or bad faith.
Article Four
Special Covenants
4.1 Confidentiality.
(1) The President acknowledges that, in and as a result of the President's
employment hereunder, the President will be developing for Trilogy,
making use of, acquiring and/or adding to, confidential information of
special and unique nature and value relating to such matters as
Trilogy's trade secrets, systems, procedures, manuals, confidential
reports, personnel resources, strategic and tactical plans, advisors,
clients, investors and funders; consequently, as material inducement
to the entry into this Agreement by Trilogy, the President hereby
covenants and agrees that the President shall not, at anytime during
or following the terms of the President's employment hereunder,
directly or indirectly, personally use, divulge or disclose, for any
purpose whatsoever, any of such confidential information which has
been obtained by or disclosed to the President as a result of the
President's employment by Trilogy, or Trilogy's affiliates.
(2) In the event of a breach or threatened breach by the President of any
of the provisions of this Section 4.1, Trilogy, in addition to and not
in limitation of any other rights, remedies or damages available to
Trilogy, whether at law or in equity, shall be entitled to a permanent
injunction in order to prevent or to restrain any such breach by the
President, or by the President's partners, agents, representatives,
servants, employers, employees, affiliates and/or any and all persons
directly or indirectly acting for or with the President.
4.2 Special Remedies.
In view of the irreparable harm and damage which would undoubtedly occur to
Trilogy as a result of a breach by the President of the covenants or agreements
contained in this Article Four, and in view of the lack of an adequate remedy at
law to protect Trilogy's interests, the President hereby covenants and agrees
that Trilogy shall have the following additional rights and remedies in the
event of a breach hereof:
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(a) The President hereby consents to the issuance of a permanent
injunction enjoining the President from any violations of the
covenants set forth in Section 4.1 hereof; and
(b) Because it is impossible to ascertain or estimate the entire or exact
cost, damage or injury which Trilogy may sustain prior to the
effective enforcement of such injunction, the President hereby
covenants and agrees to pay over to Trilogy, in the event the
President violates the covenants and agreements contained in Section
4.2 hereof, the greater of:
(i) Any payment or compensation of any kind received by the President
because of such violation before the issuance of such injunction,
or
(ii) The sum of One Thousand ($1,000.00) Dollars per violation, which
sum shall be liquidated damages, and not a penalty, for the
injuries suffered by Trilogy as a result of such violation, the
Parties hereto agreeing that such liquidated damages are not
intended as the exclusive remedy available to Trilogy for any
breach of the covenants and agreements contained in this Article
Four, prior to the issuance of such injunction, the Parties
recognizing that the only adequate remedy to protect Trilogy from
the injury caused by such breaches would be injunctive relief.
4.3 Cumulative Remedies.
The President hereby irrevocably agrees that the remedies described in
Section 4.3 hereof shall be in addition to, and not in limitation of, any of the
rights or remedies to which Trilogy is or may be entitled to, whether at law or
in equity, under or pursuant to this Agreement.
4.4 Acknowledgment of Reasonableness.
The President hereby represents, warrants and acknowledges that the
President has carefully read and considered the provisions of this Article Four
and, having done so, agrees that the restrictions set forth herein are fair and
reasonable and are reasonably required for the protection of the interests of
Trilogy, its officers, directors and other employees; consequently, in the event
that any of the above-described restrictions shall be held unenforceable by any
court of competent jurisdiction, the President hereby covenants, agrees and
directs such court to substitute a reasonable judicially enforceable limitation
in place of any limitation deemed unenforceable and, the President hereby
covenants and agrees that if so modified, the covenants contained in this
Article Four shall be as fully enforceable as if they had been set forth herein
directly by the Parties. In determining the nature of this limitation, the
President hereby acknowledges, covenants and agrees that it is the intent of the
Parties that a court adjudicating a dispute arising hereunder recognize that the
Parties desire that this covenant not to compete be imposed and maintained to
the greatest extent possible.
4.5 Unauthorized Acts.
The President hereby covenants and agrees that the President will not do
any act or incur any obligation on behalf of Trilogy of any kind whatsoever,
except as authorized by its board of directors or by its stockholders pursuant
to duly adopted stockholder action.
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Article Five
Miscellaneous
5.1 Notices.
(a) (1) All notices, demands or other communications hereunder shall be
in writing, and unless otherwise provided, shall be deemed to
have been duly given on the first business day after mailing by
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
To the President:
Carol A. Berardi
1050 Southwest Chapman Way; Palm City, Florida 34990
Telephone (561) 219-4569; Fax (561) 781-7686
To Trilogy:
Trilogy International, Inc.
526 Southeast Dixie Highway; Stuart, Florida 34494
Attention: Carol A. Berardi, President
Telephone (561) 781-7278; Fax (561) 781-7282;
web site www.trilogyonline.com; with a copy to
Michael D. Harris, Esquire; Michael Harris, P.A.
1645 Palm Beach Lakes Boulevard, Suite 550; West Palm Beach, Florida 33401
Telephone (561) 478-7077; Fax (561) 478-1817; and,
e-mail [email protected]
(2) In each case, copies of notices will also be provided to:
AmeriNet Group.com, Inc.
902 Clint Moore Road, Suite 136-C; Boca Raton, Florida 33487
Telephone (561) 998-3435, Fax (561) 998-3425; and,
e-mail [email protected]
Attention: Michael Harris Jordan, President; and
AmeriNet Group.com, Inc.
1941 Southeast 51st Terrace; Ocala, Florida 34471
Telephone (352) 694-9182; Fax (954) 694-1325; and e-mail [email protected]
Attention: Vanessa H. Lindsey, Secretary;
(3) Copies of notices will also be provided to such other address or
to such other person as any Party shall designate to the other
for such purpose in the manner hereinafter set forth.
(b) (1) The Parties acknowledge that The Yankee Companies, Inc., a
Florida corporation ("Yankees") has acted as scrivener for the
Parties in this transaction and that Yankees is neither a law
firm nor an agency subject to any professional regulation or
oversight.
(2) Yankees has advised all of the Parties to retain independent
legal and accounting counsel to review this Agreement on their
behalf.
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5.2 Amendment.
(1) No modification, waiver, amendment, discharge or change of this
Agreement shall be valid unless the same is in writing and signed by
the Party against which the enforcement of said modification, waiver,
amendment, discharge or change is sought.
(2) This Agreement may not be modified without the consent of a majority
in interest of Trilogy's stockholders.
5.3 Merger.
(a) This instrument contains all of the understandings and agreements of
the Parties with respect to the subject matter discussed herein.
(b) All prior agreements whether Written or oral, are merged herein and
shall be of no force or effect.
5.4 Survival.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and shall be effective
regardless of any investigation that may have been made or may be made by or on
behalf of any Party.
5.5 Severability.
If any provision or any portion of any provision of this Agreement, or the
application of such provision or any portion thereof to any person or
circumstance shall be held invalid or unenforceable, the remaining portions of
such provision and the remaining provisions of this Agreement or the application
of such provision or portion of such provision as is held invalid or
unenforceable to persons or circumstances other than those to which it is held
invalid or unenforceable, shall not be effected thereby.
5.6 Governing Law and Venue.
This Agreement shall be construed in accordance with the laws of the State
of Florida but any proceeding arising between the Parties in any matter
pertaining or related to this Agreement shall, to the extent permitted by law,
be held in Broward County, Florida.
5.7 Litigation.
(a) In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement, the
prevailing Party shall be entitled to recover its costs and expenses,
including reasonable attorneys' fees up to and including all
negotiations, trials and appeals, whether or not litigation is
initiated.
(b) In the event of any dispute arising under this Agreement, or the
negotiation thereof or inducements to enter into the Agreement, the
dispute shall, at the request of any Party, be exclusively resolved
through the following procedures:
(1) (A) First, the issue shall be submitted to mediation before a
mediation service in Broward County, Florida, to be selected
by lot from six alternatives to be provided, three by
Trilogy's majority stockholder, one by Trilogy and two by
the President.
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(B) The mediation efforts shall be concluded within ten business
days after their initiation unless the Parties unanimously
agree to an extended mediation period;
(2) In the event that mediation does not lead to a resolution of the
dispute then at the request of any Party, the Parties shall
submit the dispute to binding arbitration before an arbitration
service located in Broward County, Florida to be selected by lot,
from six alternatives to be provided,, three by Trilogy's
majority stockholder, one by Trilogy and two by the President.
(3) (A) Expenses of mediation shall be borne by Trilogy, if
successful.
(B) Expenses of mediation, if unsuccessful and of arbitration
shall be borne by the Party or Parties against whom the
arbitration decision is rendered.
(C) If the terms of the arbitral award do not establish a
prevailing Party, then the expenses of unsuccessful
mediation and arbitration shall be borne equally by the
Parties.
5.8 Benefit of Agreement.
(1) This Agreement may not be assigned by the President without the prior
Written consent of Trilogy and Trilogy's stockholders.
(2) Subject to the restrictions on transferability and assignment
contained herein, the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of the Parties, their
successors, assigns, personal representative, estate, heirs and
legatees.
5.9 Captions.
The captions in this Agreement are for convenience and reference only and
in no way define, describe, extend or limit the scope of this Agreement or the
intent of any provisions hereof.
5.10 Number and Gender.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the Party or
Parties, or their personal representatives, successors and assigns may require.
5.11 Further Assurances.
The Parties hereby agree to do, execute, acknowledge and deliver or cause
to be done, executed or acknowledged or delivered and to perform all such acts
and deliver all such deeds, assignments, transfers, conveyances, powers of
attorney, assurances, recipes, records and other documents, as may, from time to
time, be required herein to effect the intent and purposes of this Agreement.
5.12 Status.
Nothing in this Agreement shall be construed or shall constitute a
partnership, joint venture, agency, or lessor-lessee relationship; but, rather,
the relationship established hereby is that of employer-employee in Trilogy.
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5.13 Counterparts.
(a) This Agreement may be executed in any number of counterparts.
(b) Execution by exchange of facsimile transmission shall be deemed
legally sufficient to bind the signatory; however, the Parties shall,
for aesthetic purposes, prepare a fully executed original version of
this Agreement, which shall be the document filed with the Securities
and Exchange Commission.
5.14 License.
(a) This Agreement is the property of Yankees and the use hereof by the
Parties is authorized hereby solely for purposes of this transaction.
(b) The use of this form of agreement or of any derivation thereof without
Yankees' prior Written permission is prohibited.
(c) The interpretation of this Agreement shall not be directly or
indirectly affected in any manner as a result of its authorship.
In Witness Whereof, the Parties have executed this Agreement, effective as
of the last date set forth below.
Signed, Sealed & Delivered
In Our Presence
President
- --------------------------
- -------------------------- ------------------------
Carol A. Berardi
Dated: November ___, 1999
Trilogy Internationals, Inc.
a Florida corporation.
- --------------------------
__________________________ By: --------------------------
Carol A. Berardi, President
(CORPORATE SEAL)
Attest:__________________________
John Holmes
Secretary
Dated: November ___, 1999
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Executive's Employment Agreement
This Executive's Employment Agreement (the "Agreement") is entered into by
and among Dennis A. Berardi, an individual residing in the State of Florida (the
"Chief Executive Officer"); Trilogy International, Inc., a Florida corporation
(collectively and generically hereinafter referred to with its successors in
interest, if any, as "Trilogy"; Trilogy and the Chief Executive Officer being
sometimes hereinafter collectively to as the "Parties" or generically as a
"Party".
Preamble:
WHEREAS, Trilogy's board of directors is of the opinion that in conjunction
with effectuation of Trilogy's future plans it must memorialize, confirm and
assure itself of the continuing the services of Trilogy's founder, who currently
serves as its Chief Executive Officer and director, on a long term basis; and
WHEREAS, the Chief Executive Officer is thoroughly knowledgeable with all
aspects of Trilogy's operations and plans; and
WHEREAS, the Chief Executive Officer is agreeable to serving as Trilogy's
Chief Executive Officer, on the terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements hereby exchanged, as well as of the sum of Ten ($10.00) Dollars and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the Parties, intending to be legally bound, hereby agree as
follows:
Witnesseth:
Article One
Term, Renewals, Earlier Termination
1.1 Term.
Subject to the provisions set forth herein, the term of the Chief Executive
Officer's employment hereunder shall be deemed to commence on the date of this
Agreement's execution by all of the Parties and shall continue until December
31, 2004.
1.2 Renewals.
This Agreement shall be renewed automatically, after expiration of the
original term, on a continuing annual basis, unless the Party wishing not to
renew this Agreement provides the other Party with Written notice of its
election not to renew ("Termination Election Notice") on or before the 30th day
prior to termination of the then current term.
1.3 Earlier Termination.
(a) Trilogy shall each have the right to terminate this Agreement prior to the
expiration of its Term, as it applies to them (without affecting the
Agreement as it applies to the other, except in conjunction with the
compensation aspects thereof), or of any renewals thereof, subject to the
provisions of Section 1.4, for the following reasons:
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(1) For Cause:
(A) Trilogy may terminate the Chief Executive Officer's employment
under this Agreement at any time for cause.
(B) Such termination shall be evidenced by written notice thereof to
the Chief Executive Officer, which notice shall specify the cause
for termination.
(C) For purposes hereof, the term "cause" shall mean:
(a) The inability of the Chief Executive Officer, through
sickness or other incapacity, to discharge the Chief
Executive Officer's duties under this Agreement for ninety
or more consecutive days or for a total of 120 or more days
in a period of twelve consecutive months;
(2) The refusal of the Chief Executive Officer to follow the directions of
Trilogy's board of directors;
(3) Dishonesty; theft; or conviction of a crime involving moral turpitude;
(4) Material default in the performance by the Chief Executive Officer of
the Chief Executive Officer's obligations, services or duties required
under this Agreement (other than for illness or incapacity) or
materially breach of any provision of this Agreement, which default or
breach has continued for twenty days after Written notice of such
default or breach and such material default or breach has resulted in
material damage to Trilogy.
(D) In the event of a dispute concerning termination due to breach or default,
the Chief Executive Officer's compensation shall be continued until
resolution of such dispute by a tribunal of competent jurisdiction, it
being understood that the Chief Executive Officer must repay any amounts so
paid upon final determination that the Chief Executive Officer was not
entitled to such compensation.
(2) Discontinuance of Business:
In the event that Trilogy discontinues operating its business, this
Agreement shall terminate as of the last day of the month on which it
ceases operation with the same force and effect as if such last day of the
month were originally set as the termination date hereof; provided,
however, that a reorganization of Trilogy shall not be deemed a termination
of its business.
(3) Death:
This Agreement shall terminate immediately on the death of the Chief
Executive Officer; however, all accrued compensation at such time shall be
promptly paid to the Chief Executive Officer's estate.
(b) The Chief Executive Officer shall have the right to terminate
this Agreement if Trilogy fails to obtain at least $900,000 in
funding during the period starting on November 15, 1999 and
ending on June 30, 2000; unless the failure to obtain such
funding is based on a default by Trilogy or its successors in
interest in its obligations under any agreement pursuant to which
such funding was to have been provided or the failure of Trilogy
to meet the conditions required for such funding.
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1.4 Final Settlement.
Upon termination of this Agreement and payment to the Chief Executive
Officer of all amounts due to the Chief Executive Officer hereunder, the Chief
Executive Officer or the Chief Executive Officer's representative shall execute
and deliver to the terminating entity on a form prepared by Trilogy, a receipt
for such sums and a release of all claims, except such claims as may have been
submitted pursuant to the terms of this Agreement and which remain unpaid, and,
shall forthwith tender to Trilogy all records, manuals and Written procedures,
as may be desired by it for the continued conduct of its business.
Article Two
Scope of Employment
2.1 Retention.
Trilogy hereby hires the Chief Executive Officer and the Chief Executive
Officer hereby accepts such employment, in accordance with the terms, provisions
and conditions of this Agreement.
2.2 General Description of Duties.
(a) The Chief Executive Officer shall be employed as the Chief Executive
Officer of Trilogy and perform the duties generally associated with
the position of Chief Executive Officer thereof.
(b) Without limiting the generality of the foregoing, the Chief Executive
Officer shall:
(1) Help direct Trilogy to ensure the realization of its mission,
philosophy and goals
(2) Provide the leadership to ensure that Trilogy remains focused on
providing Field Representatives with the necessary tools,
products, operational support, compensation and commitment
necessary for success. This is a cornerstone of Trilogy and will
always be of the utmost importance
(3) Oversee all Trilogy financial decisions
(4) Develop long term strategic planning and goals
(5) Provide overall support to all Team Leaders
(6) Work with the Trilogy Board of Directors to ensure the stability
of the company
(7) Approve compensation and benefit programs
(8) Develop a minimum of eight frontline Field Representatives. Guide
the front line in building a sales force to meet or exceed the
annual sales projections
(9) Train and motivate the Field Representatives by being in the
field supporting their efforts
(10) Ensure that Trilogy is profitable and all shareholders can
realize the maximum return on their investment.
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2.4 Exclusivity.
The Chief Executive Officer shall, unless specifically otherwise authorized
by Trilogy's board of directors, on a case by case basis, devote all of the
Chief Executive Officer's business time exclusively to the affairs of Trilogy.
Article Three
Compensation
3.1 Compensation.
As consideration for the Chief Executive Officer's services to Trilogy the
Chief Executive Officer shall be entitled to:
(a) A salary in an aggregate gross sum equal to $80,000 per year (the
"Base Salary"); provided that, with the consent of Trilogy's
stockholders, who will be deemed third party beneficiaries of
Trilogy's rights under this Agreement, such compensation may be
adjusted at six month intervals to reflect the performance of the
Chief Executive Officer during such period, as reflected in the
performance of Trilogy during such period.
(b) Provided that Trilogy earned a net, pre tax profit for the subject
year, an annual bonus payable within 15 days after preparation and
delivery of final audited annual financial statements for Trilogy to
Trilogy's stockholders:
(1) In a cash sum equal to 2.5% of the net, pre tax profits of
Trilogy and
(2) In the event that Trilogy or its successors interest are publicly
held corporations (or if Trilogy is a subsidiary of a publicly
held corporation), a bonus payable in the common stock of the
closest level publicly held corporation, equal to the number of
shares obtained by dividing 20% of the Chief Executive Officer's
salary for the subject year by the closing transaction price for
the issuer's securities involved on the last trading day of the
subject year.
3.2 Benefits.
During the term of this Agreement, the Chief Executive Officer shall also
be entitled to the following benefits:
(a) Two weeks paid vacation per year subject to adjustment after annually
after the first year with the consent of the stockholders of Trilogy.
(b) Health insurance, provided that when aggregated with health insurance
provided to any other member of the Chief Executive Officer's
immediate family, the monthly cost of such aggregate insurance does
not exceed $500.
(c) An automobile allowance, provided that when aggregated with any
automobile allowance provided to any other member of the Chief
Executive Officer's immediate family, the monthly cost of such
aggregate automobile allowance does not exceed $1,500.
(d) During the period of the Chief Executive Officer's employment, the
Chief Executive Officer shall be reimbursed for reasonable traveling,
telephone and other direct business expenses required in connection
with the performance of the Chief Executive Officer's duties
hereunder, subject to verification required by Trilogy for audit
purposes, for tax deduction purposes and in order to assure compliance
with applicable laws and regulations.
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(e) The Chief Executive Officer shall be entitled to receive all benefits
of employment generally available to all of Trilogy's employees.
3.3 Indemnification.
Trilogy will defend, indemnify and hold the Chief Executive Officer
harmless from all liabilities, suits, judgments, fines, penalties or
disabilities, including expenses associated directly, therewith (e.g. legal
fees, court costs, investigative costs, witness fees, etc.) resulting from any
reasonable actions taken by the Chief Executive Officer in good faith on behalf
of Trilogy, its affiliates or for other persons or entities at the request of
the board of directors of Trilogy, to the fullest extent legally permitted, and
in conjunction therewith, shall assure that all required expenditures are made
in a manner making it unnecessary for the Chief Executive Officer to incur any
out of pocket expenses; provided, however, that the Chief Executive Officer
permits the majority stockholders of Trilogy to select and supervise all
personnel involved in such defense and that the Chief Executive Officer waive
any conflicts of interest that such personnel may have as a result of also
representing Trilogy, its stockholders or other personnel and agrees to hold
them harmless from any matters involving such representation, except such as
involve fraud or bad faith.
Article Four
Special Covenants
4.1 Confidentiality.
(1) The Chief Executive Officer acknowledges that, in and as a result of the
Chief Executive Officer's employment hereunder, the Chief Executive Officer
will be developing for Trilogy, making use of, acquiring and/or adding to,
confidential information of special and unique nature and value relating to
such matters as Trilogy's trade secrets, systems, procedures, manuals,
confidential reports, personnel resources, strategic and tactical plans,
advisors, clients, investors and funders; consequently, as material
inducement to the entry into this Agreement by Trilogy, the Chief Executive
Officer hereby covenants and agrees that the Chief Executive Officer shall
not, at anytime during or following the terms of the Chief Executive
Officer's employment hereunder, directly or indirectly, personally use,
divulge or disclose, for any purpose whatsoever, any of such confidential
information which has been obtained by or disclosed to the Chief Executive
Officer as a result of the Chief Executive Officer's employment by Trilogy,
or Trilogy's affiliates.
(2) In the event of a breach or threatened breach by the Chief Executive
Officer of any of the provisions of this Section 4.1, Trilogy, in addition
to and not in limitation of any other rights, remedies or damages available
to Trilogy, whether at law or in equity, shall be entitled to a permanent
injunction in order to prevent or to restrain any such breach by the Chief
Executive Officer, or by the Chief Executive Officer's partners, agents,
representatives, servants, employers, employees, affiliates and/or any and
all persons directly or indirectly acting for or with the Chief Executive
Officer.
4.2 Special Remedies.
In view of the irreparable harm and damage which would undoubtedly occur to
Trilogy as a result of a breach by the Chief Executive Officer of the covenants
or agreements contained in this Article Four, and in view of the lack of an
adequate remedy at law to protect Trilogy's interests, the Chief Executive
Officer hereby covenants and agrees that Trilogy shall have the following
additional rights and remedies in the event of a breach hereof:
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(a) The Chief Executive Officer hereby consents to the issuance of a
permanent injunction enjoining the Chief Executive Officer from any
violations of the covenants set forth in Section 4.1 hereof; and
(b) Because it is impossible to ascertain or estimate the entire or exact
cost, damage or injury which Trilogy may sustain prior to the
effective enforcement of such injunction, the Chief Executive Officer
hereby covenants and agrees to pay over to Trilogy, in the event the
Chief Executive Officer violates the covenants and agreements
contained in Section 4.2 hereof, the greater of:
(i) Any payment or compensation of any kind received by the Chief
Executive Officer because of such violation before the issuance
of such injunction, or
(ii) The sum of One Thousand ($1,000.00) Dollars per violation, which
sum shall be liquidated damages, and not a penalty, for the
injuries suffered by Trilogy as a result of such violation, the
Parties hereto agreeing that such liquidated damages are not
intended as the exclusive remedy available to Trilogy for any
breach of the covenants and agreements contained in this Article
Four, prior to the issuance of such injunction, the Parties
recognizing that the only adequate remedy to protect Trilogy from
the injury caused by such breaches would be injunctive relief.
4.3 Cumulative Remedies.
The Chief Executive Officer hereby irrevocably agrees that the remedies
described in Section 4.3 hereof shall be in addition to, and not in limitation
of, any of the rights or remedies to which Trilogy is or may be entitled to,
whether at law or in equity, under or pursuant to this Agreement.
4.4 Acknowledgment of Reasonableness.
The Chief Executive Officer hereby represents, warrants and acknowledges
that the Chief Executive Officer has carefully read and considered the
provisions of this Article Four and, having done so, agrees that the
restrictions set forth herein are fair and reasonable and are reasonably
required for the protection of the interests of Trilogy, its officers, directors
and other employees; consequently, in the event that any of the above-described
restrictions shall be held unenforceable by any court of competent jurisdiction,
the Chief Executive Officer hereby covenants, agrees and directs such court to
substitute a reasonable judicially enforceable limitation in place of any
limitation deemed unenforceable and, the Chief Executive Officer hereby
covenants and agrees that if so modified, the covenants contained in this
Article Four shall be as fully enforceable as if they had been set forth herein
directly by the Parties. In determining the nature of this limitation, the Chief
Executive Officer hereby acknowledges, covenants and agrees that it is the
intent of the Parties that a court adjudicating a dispute arising hereunder
recognize that the Parties desire that this covenant not to compete be imposed
and maintained to the greatest extent possible.
4.5 Unauthorized Acts.
The Chief Executive Officer hereby covenants and agrees that the Chief
Executive Officer will not do any act or incur any obligation on behalf of
Trilogy of any kind whatsoever, except as authorized by its board of directors
or by its stockholders pursuant to duly adopted stockholder action.
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Article Five
Miscellaneous
5.1 Notices.
(a) (1) All notices, demands or other communications hereunder shall be
in writing, and unless otherwise provided, shall be deemed to
have been duly given on the first business day after mailing by
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
To the Chief Executive Officer:
Dennis A. Berardi
1050 Southwest Chapman Way; Palm City, Florida 34990
Telephone (561) 219-4569; Fax (561) 781-7686
To Trilogy:
Trilogy International, Inc.
526 Southeast Dixie Highway; Stuart, Florida 34494
Attention: Dennis A. Berardi, Chief Executive Officer
Telephone (561) 781-7278; Fax (561) 781-7282;
web site www.trilogyonline.com; with a copy to
Michael D. Harris, Esquire; Michael Harris, P.A.
1645 Palm Beach Lakes Boulevard, Suite 550; West Palm Beach, Florida 33401
Telephone (561) 478-7077; Fax (561) 478-1817; and, e-mail [email protected]
(2) In each case, copies of notices will also be provided to:
AmeriNet Group.com, Inc.
902 Clint Moore Road, Suite 136-C; Boca Raton, Florida 33487
Telephone (561) 998-3435, Fax (561) 998-3425; and, e-mail [email protected]
Attention: Michael Harris Jordan, Chief Executive Officer; and
AmeriNet Group.com, Inc.
1941 Southeast 51st Terrace; Ocala, Florida 34471
Telephone (352) 694-9182; Fax (954) 694-1325; and e-mail [email protected]
Attention: Vanessa H. Lindsey, Secretary;
(3) Copies of notices will also be provided to such other address or
to such other person as any Party shall designate to the other
for such purpose in the manner hereinafter set forth.
(b) (1) The Parties acknowledge that The Yankee Companies, Inc., a
Florida corporation ("Yankees") has acted as scrivener for the
Parties in this transaction and that Yankees is neither a law
firm nor an agency subject to any professional regulation or
oversight.
(2) Yankees has advised all of the Parties to retain independent
legal and accounting counsel to review this Agreement on their
behalf.
5.2 Amendment.
(1) No modification, waiver, amendment, discharge or change of this
Agreement shall be valid unless the same is in writing and signed by
the Party against which the enforcement of said modification, waiver,
amendment, discharge or change is sought.
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(2) This Agreement may not be modified without the consent of a majority
in interest of Trilogy's stockholders.
5.3 Merger.
(a) This instrument contains all of the understandings and agreements of
the Parties with respect to the subject matter discussed herein.
(b) All prior agreements whether Written or oral, are merged herein and
shall be of no force or effect.
5.4 Survival.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and shall be effective
regardless of any investigation that may have been made or may be made by or on
behalf of any Party.
5.5 Severability.
If any provision or any portion of any provision of this Agreement, or the
application of such provision or any portion thereof to any person or
circumstance shall be held invalid or unenforceable, the remaining portions of
such provision and the remaining provisions of this Agreement or the application
of such provision or portion of such provision as is held invalid or
unenforceable to persons or circumstances other than those to which it is held
invalid or unenforceable, shall not be effected thereby.
5.6 Governing Law and Venue.
This Agreement shall be construed in accordance with the laws of the State
of Florida but any proceeding arising between the Parties in any matter
pertaining or related to this Agreement shall, to the extent permitted by law,
be held in Broward County, Florida.
5.7 Litigation.
(a) In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement, the
prevailing Party shall be entitled to recover its costs and expenses,
including reasonable attorneys' fees up to and including all
negotiations, trials and appeals, whether or not litigation is
initiated.
(b) In the event of any dispute arising under this Agreement, or the
negotiation thereof or inducements to enter into the Agreement, the
dispute shall, at the request of any Party, be exclusively resolved
through the following procedures:
(1) (A) First, the issue shall be submitted to mediation before a
mediation service in Broward County, Florida, to be selected
by lot from six alternatives to be provided, three by
Trilogy's majority stockholder, one by Trilogy and two by
the Chief Executive Officer.
(B) The mediation efforts shall be concluded within ten business
days after their initiation unless the Parties unanimously
agree to an extended mediation period;
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(2) In the event that mediation does not lead to a resolution of the
dispute then at the request of any Party, the Parties shall
submit the dispute to binding arbitration before an arbitration
service located in Broward County, Florida to be selected by lot,
from six alternatives to be provided,, three by Trilogy's
majority stockholder, one by Trilogy and two by the Chief
Executive Officer.
(3) (A) Expenses of mediation shall be borne by Trilogy, if
successful.
(2) Expenses of mediation, if unsuccessful and of arbitration shall be borne by
the Party or Parties against whom the arbitration decision is rendered.
(3) If the terms of the arbitral award do not establish a prevailing Party,
then the expenses of unsuccessful mediation and arbitration shall be borne
equally by the Parties.
5.8 Benefit of Agreement.
(1) This Agreement may not be assigned by the Chief Executive Officer without
the prior Written consent of Trilogy and Trilogy's stockholders.
(2) Subject to the restrictions on transferability and assignment contained
herein, the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the Parties, their successors, assigns,
personal representative, estate, heirs and legatees.
5.9 Captions.
The captions in this Agreement are for convenience and reference only and
in no way define, describe, extend or limit the scope of this Agreement or the
intent of any provisions hereof.
5.10 Number and Gender.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the Party or
Parties, or their personal representatives, successors and assigns may require.
5.11 Further Assurances.
The Parties hereby agree to do, execute, acknowledge and deliver or cause
to be done, executed or acknowledged or delivered and to perform all such acts
and deliver all such deeds, assignments, transfers, conveyances, powers of
attorney, assurances, recipes, records and other documents, as may, from time to
time, be required herein to effect the intent and purposes of this Agreement.
5.12 Status.
Nothing in this Agreement shall be construed or shall constitute a
partnership, joint venture, agency, or lessor-lessee relationship; but, rather,
the relationship established hereby is that of employer-employee in Trilogy.
5.13 Counterparts.
(a) This Agreement may be executed in any number of counterparts.
(b) Execution by exchange of facsimile transmission shall be deemed
legally sufficient to bind the signatory; however, the Parties shall,
for aesthetic purposes, prepare a fully executed original version of
this Agreement, which shall be the document filed with the Securities
and Exchange Commission.
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5.14 License.
(a) This Agreement is the property of Yankees and the use hereof by the
Parties is authorized hereby solely for purposes of this transaction.
(b) The use of this form of agreement or of any derivation thereof without
Yankees' prior Written permission is prohibited.
(c) The interpretation of this Agreement shall not be directly or
indirectly affected in any manner as a result of its authorship.
In Witness Whereof, the Parties have executed this Agreement, effective as
of the last date set forth below.
Signed, Sealed & Delivered
In Our Presence
Chief Executive Officer
- --------------------------
------------------------- -------------------------
Dennis A. Berardi
Dated: November ___, 1999
Trilogy Internationals, Inc.
a Florida corporation.
- --------------------------
__________________________ By: -------------------------
Dennis A. Berardi,
Chief executive officer
(CORPORATE SEAL)
Attest:__________________________
John Holmes
Secretary
Dated: November ___, 1999
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of this 1st day
of April, 1999, between Trilogy International Inc., (the "Company"), and Jane
Bicks (the "Executive").
WHEREAS, the Company desires to employ the Executive and to ensure the
continued availability to the Company of the Executive's services, and the
Executive is willing to accept such employment and render such services, all
upon and subject to the terms and conditions contained in this Agreement; and
WHEREAS, the Company acknowledges that the Executive is currently running
advertisements and otherwise marketing pet products under the name of "Dr. Jane"
through Dr.Jane, Inc.;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
set forth in this Agreement, and intending to be legally bound, the Company and
the Executive agree as follows:
1. Term of Employment.
(a)Term. The Company hereby employs the Executive, and the Executive
hereby accepts employment with the Company for a period of five years commencing
on the date of this Agreement.
(b)Continuing Effect. Notwithstanding any termination of this Agreement at
the end of the Term or otherwise, the provisions of Sections 6 and 7 shall
remain in full force and effect and the provisions of Section 7 shall be binding
upon the legal representatives, successors and assigns of the Executive.
2. Duties.
(a) General Duties. The Executive shall serve as the Executive Director of
New Products for the Company with duties and responsibilities which include the
active management of the day-to-day product development and marketing, subject
to the directions of the President. The Executive shall use her best efforts to
perform her duties and discharge her responsibilities pursuant to this Agreement
competently, carefully and faithfully.
(b)Specific Duties with Regard to Dr. Jane, Inc. This Agreement is
specifically contingent upon and subject to the Executive taking the actions
listed below:
(i)Upon execution of this Agreement, the Executive shall immediately
communicate her plans to join the Company as its Executive Director of New
Products in all her appearances, whether in person or via audio, visual or other
media and in all articles, advertisements, interviews, marketing materials and
other promotional material she writes and/or distributes. Additionally the
Executive shall immediately communicate her role with the Company to any company
or organization in which she sits on the board of directors or advisors or as
for which she provides services.
(ii)Two weeks prior to the Company commences marketing of its products,
(which date may be communicated to the Executive in writing), all customers of
the Executive shall be contacted or on behalf of by the Executive in writing,
informing them that she has joined the Company as its Executive Director of New
Products and advising the customers of the Company's expanded product line. The
Company shall be responsible for preparing the written materials that the
Executive shall send to her customers. Additionally all those customers shall be
placed in James Rapp "downline" organization and that term as defined in the
Company's commission structure.
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(iii)Once the Company commences marketing its products, the Executive shall
individually (and shall cause Dr. Jane, Inc. to) cease all marketing of "Dr.
Jane" products. However, the Executive may retain the revenue from sales of Dr.
Jane products resulting from advertisements placed prior to such time.
(iv)On or before July 16, 1999 all "Dr. Jane" calls shall be routed to the
Company's call center.
(v)The Executive shall cause Dr. Jane, Inc. to license and assign to the
Company its entire customer list as shown on Schedule 2(a)(vi) and authorize the
Company to market its products to that customer list; and
(vi) The Executive shall cause Dr. Jane, Inc. to enter into an agreement
with the Company, in the form shown on Schedule 2(b)(iv) to assign and give it a
99 year royalty-free license to all formulas owned by Dr. Jane, Inc. In the
event that the Company ceases operations for any reason other than the sale all
or of (substantially all of the assets of the Company or the merger of the
Company into another entity where the products will no longer be sold the
Company, all formulas owned by Dr. Jane, Inc. and licensed and assigned to the
Company shall become the property of James Rapp and all customers assigned to
the Company shall continue as customers of James Rapp.
(c)Devotion of Time. Subject to the last sentence of this Section 2(c), the
Executive shall devote all of her time, attention and energies during normal
business hours (exclusive of periods of sickness and disability and of such
normal holiday and vacation periods as have been established by the Company) to
the affairs of the Company. The Executive shall not enter the employ of or serve
as a consultant to, or in any way perform any services with or without
compensation to, any other persons, business or organization without the prior
consent of the President of the Company; provided, that the Executive shall be
permitted to devote a limited amount of her time, without compensation, to
professional, charitable or similar organizations.
(d) Travel. The Executive shall be required to travel as may be necessary
in order to carry out her duties.
3. Compensation and Expenses.
(a)Salary. For the services of the Executive to be rendered under this
Agreement, the Company shall pay the Executive an annual salary of $ (the "Base
Salary"). The Base Salary may be increased each year by an amount that will be
determined by the Company based on an annual performance evaluation. The Company
shall also grant options to purchase shares of the Company's common stock
exercisable at $____ per share.
(b)Expenses. In addition to any compensation received pursuant to Sections
3(a) and (c), the Company will reimburse or advance funds to the Executive for
all reasonable travel, entertainment and miscellaneous expenses incurred in
connection with the performance of her duties under this Agreement, provided
that the Executive properly accounts for such expenses to the Company in
accordance with the Company's practices. Such reimbursement or advances will be
made in accordance with policies and procedures of the Company in effect from
time to time relating to reimbursement of or advances to the employees.
(c) Management Bonus. During the term of this Agreement, the Company shall
review the Executive's performance no less than annually and has the discretion
to grant the Executive a management bonus.
(i) Eligibility. In order for the Executive to be eligible for a bonus
under the Company's Management Bonus Plan, the Executive must be an employee of
the Company. Should the Executive cease to be employed by the Company, all
remaining payments or unvested stock option grants shall be forfeited.
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4. Benefits.
(a)Vacation. For each 12-month period during the Term, the Executive shall
be entitled to three weeks of vacation without loss of compensation or other
benefits to which she is entitled under this Agreement, to be taken at such
times as the Executive may select and the affairs of the Company may permit.
(b)Employee Benefit Programs. The Executive is entitled to participate in
any pension, 401(k), insurance or other employee benefit plan that is maintained
by the Company for its executive officers, including programs of life, medical
and disability insurance and reimbursement of membership fees in civic, social
and professional organization.
5. Termination.
(a)Termination for Cause. For purposes of this Section 5(a), "cause" shall
mean: (i) the Executive is convicted of a felony or commits a felonious act
which is related to the Executive's employment or the business of the Company;
(ii) the Executive, in carrying out her duties hereunder, has acted with
negligence or intentional misconduct resulting, in either case, in harm to the
Company; (iii) the Executive misappropriates Company property or funds or
defrauds the Company; (iv) the Executive breaches her fiduciary duty to the
Company resulting in profit to her, directly or indirectly; (v) the Executive
materially breaches any agreement with the Company; (vi) the Executive
materially fails to perform her duties under Section 2 (vi) the Executive fails
to perform her duties or performs such duties in a manner not customary for an
executive of similar status and compensation; (viii) the Executive suffers from
alcoholism or drug addiction or otherwise uses alcohol to excess or uses drugs
in any form except strictly in accordance with the recommendation of a physician
or dentist; or (ix) it is later determined that the Executive fraudulently
concealed facts or made misrepresentations concerning the formulations, trade
secrets, technical "know-how" and proprietary information assigned and licensed
by Dr. Jane, Inc. to the Company.
(b)Death or Disability. Except as otherwise provided in this Agreement, it
shall terminate upon the death, or disability of the Executive. For purposes of
this Section 5(b), "disability" shall mean that for a period of three
consecutive months in any 12-month period the Executive is incapable of
substantially fulfilling the duties set forth in Section 2 because of physical,
mental or emotional incapacity resulting from injury, sickness or disease. In
the event of death of the Executive, the Executive's estate shall receive the
Executive's compensation and benefits for the remainder of the term of this
Agreement or 24 months whichever is greater.
6. Non-Competition Agreement.
(a)Competition with the Company. The Company intends to engage in the sale
and marketing of its products throughout the United States or any other
countries. Except as outlined in Section 2(b)(vi)Until termination of her
employment and for a period of 12 months commencing on the date of termination,
the Executive, directly or indirectly, in association with or as a stockholder,
director, officer, consultant, employee, field representative, partner, joint
venturer, member or otherwise of or through any person, firm, corporation,
partnership, association or other entity, whether or not involved in direct
sales, network marketing or multi-level marketing, shall not compete with the
Company or its affiliates in the offer, sale or marketing of products or
services that are competitive with the products or services offered by the
Company, within any metropolitan area in the United States or any other
countries or elsewhere in which the Company is then engaged in the offer and
sale of competitive products or services.
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(b)Solicitation of Customers or Field Representatives. Except as
specifically permitted by this Agreement, during the periods in which the
provisions of Section 6(a) shall be in effect, the Executive, directly or
indirectly, shall not seek Prohibited Business, as defined, from any Customer or
Field Representative, as defined, on behalf of any enterprise or business other
than the Company, refer Prohibited Business from any Customer or Field
Representative to any enterprise or business other than the Company or receive
commissions based on sales or otherwise relating to the Prohibited Business from
any Customer or Field Representative, or any enterprise or business other than
the Company. For purposes of this Section 6(b), the term "Customer" means any
person, firm, corporation, partnership, association or other entity to which the
Company or affiliates sold or provided goods or services during the 24-month
period prior to the time at which any determination is required to be made as to
whether any such person, firm, corporation, partnership, association or other
entity is a Customer or Field Representative. The term "Field Representative"
refers to any representative of the Company who sells or delivers products and
services or has otherwise completed an application to become a Company Field
Representative and includes a Field Representative's Genealogy. Genealogy is
defined as a Field Representative's downline organization which includes all
lines starting with their personally sponsored Field Representatives regardless
of their ranks. The term "Prohibited Business" includes any business whose
products, services, or marketing or distribution plans are the same as or
similar to the Company's.
(c)No Payment. The Executive acknowledges and agrees that no separate or
additional payment will be required to be made to her in consideration of her
undertakings in this Section 6.
7. Non-Disclosure of Confidential Information.
(a)Confidential Information. Confidential Information includes, but is not
limited to, trade secrets as defined by the common law of Florida, the Florida
Uniform Trade Secrets Act, as it may be amended, or any future Florida statute,
processes, policies, procedures, techniques, designs, drawings, know-how,
show-how, technical information, specifications, computer software (including,
but not limited to, computer programs developed, improved or modified by the
Company for or on behalf of the Company for use in the Company's business, and
source code), information and data relating to the development, research,
formulations and formulas, testing, manufacturing, costs, marketing and uses of
the Products (as defined herein), the Company's budgets and strategic plans, and
the identity and special needs of customers for the Products, databases, data,
all technology relating to the Company's marketing and Internet businesses,
systems, methods of operation, Genealogies or Genealogy Reports (as defined
below), employee lists, field representatives, customer lists, customer
information, solicitation leads, marketing and advertising materials, methods
and manuals and forms, all of which pertain to the activities or operations of
the Company, names, home addresses and all telephone numbers and e-mail
addresses of the Company's employees, field representatives and former field
representatives, and former employees. Confidential Information also includes,
without limitation, Confidential Information received from the Company's
subsidiaries and affiliates. For purposes of this Agreement, the following will
not constitute Confidential Information (i) information which is or subsequently
becomes generally available to the public through no act of the Executive, and
(ii) information which is lawfully obtained by the Executive in writing from a
third party (excluding any affiliates of the Executive) who did not acquire such
confidential information or trade secret, directly or indirectly, from Executive
or the Company. As used herein, the term "Products" shall include all computer
software, formulations and formulas, services and tangible goods researched,
developed, tested, manufactured, sold, licensed, leased or otherwise distributed
or put in to use by the Company, together with all services and tangible goods
in the planning stages, provided by the Company during the term of Executive's
employment. The term "Genealogy Reports" are reports containing a list or
description of a Field Representative's Genealogy or containing the business
activity of a Field Representative's downline organization.
(b)Legitimate Business Interests. The Executive recognizes that the Company
has legitimate business interests to protect and as a consequence, the Executive
agrees to the restrictions contained in this Agreement because they further the
Company's legitimate business interests. These legitimate business interests
include, but are not limited to (i) trade secrets as defined in Section 7(a),
(ii) valuable confidential business or professional information that otherwise
does not qualify as trade secrets including all Confidential Information; (iii)
substantial relationships with specific prospective or existing Customers or
Field Representatives or clients; (iv) Customer goodwill associated with the
Company's business; and (v) specialized training relating to the Company's
technology, methods and procedures.
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(c)Confidentiality. For a period of five years from the Executive's
termination of employment, the Confidential Information shall be held by the
Executive in the strictest confidence and shall not, without the prior written
consent of the Company, be disclosed to any person other than in connection with
Executive's employment by the Company. The Executive further acknowledges that
such Confidential Information as is acquired and used by the Company or its
affiliates is a special, valuable and unique asset. The Executive shall exercise
all due and diligence precautions to protect the integrity of the Company's
Confidential Information and to keep it confidential whether it is in written
form, on electronic media or oral. The Executive shall not copy any Confidential
Information except to the extent necessary to her employment nor remove any
Confidential Information or copies thereof from the Company's premises except to
the extent necessary to her employment and then only with the authorization of
the Company. All records, files, materials and other Confidential Information
obtained by the Executive in the course of her employment with the Company are
confidential and proprietary and shall remain the exclusive property of the
Company. The Executive shall not, except in connection with and as required by
her performance of her duties under this Agreement, for any reason use for her
own benefit or the benefit of any person or entity with which she may be
associated or disclose any such Confidential Information to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever
without the prior written consent of the board of directors or the chief
executive officer of the Company.
8. Ownership of Inventions.
Any product, formulation, formula, invention, procedure, know-how, concept
or other invention or proprietary information developed by the Executive during
the term of this Agreement or subsequently conceived or developed based on
research or marketing conducted during the term of this Agreement shall be owned
exclusively worldwide by the Company and the Executive shall have no property
interest in any of the above tangible or intangible property.
9. Equitable Relief.
(a)The Company and the Executive recognize that the services to be rendered
under this Agreement by the Executive are special, unique and of extraordinary
character, and that in the event of the breach by the Executive of the terms and
conditions of this Agreement or if the Executive, without the prior consent of
the board of directors of the Company, shall leave her employment for any reason
and take any action in violation of Section 6 or Section 7, the Company will be
entitled to institute and prosecute proceedings in any court of competent
jurisdiction referred to in Section 9(b) below, to enjoin the Executive from
breaching the provisions of Section 6 or Section 7. In such action, the
Executive will not allege or argue and the Company will not be required to plead
or prove irreparable harm or lack of an adequate remedy at law and post a bond
or other security. Nothing contained in this Section 8 shall be construed to
prevent the Company from seeking such other remedy in arbitration in case of any
breach of this Agreement by the Executive, as the Company may elect.
(b)Any proceeding or action must be commenced in Florida and venue shall be
in the appropriate court for Martin County. The Executive and the Company
irrevocably and unconditionally submit to the exclusive jurisdiction of such
courts and agree to take any and all future action necessary to submit to the
jurisdiction of such courts. The Executive and the Company irrevocably waive any
objection that they now have or hereafter irrevocably waive any objection that
they now have or hereafter may have to the laying of venue of any suit, action
or proceeding brought in any such court and further irrevocably waive any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. Final judgment against the Executive or the
Company in any such suit shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment, a certified or true copy of which shall
be conclusive evidence of the fact and the amount of any liability of the
Executive or the Company therein described, or by appropriate proceedings under
any applicable treaty or otherwise.
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10. Assignability.
The rights and obligations of the Company under this Agreement shall inure
to the benefit of and be binding upon the successors and assigns of the Company,
provided that such successor or assign shall acquire all or substantially all of
the securities or assets and business of the Company. The Executive's
obligations hereunder may not be assigned or alienated and any attempt to do so
by the Executive will be void.
11. Severability.
(a)The Executive expressly agrees that the character, duration and
geographical scope of the non-competition provisions set forth in this Agreement
are reasonable in light of the circumstances as they exist on the date hereof.
Should a decision, however, be made at a later date by a court of competent
jurisdiction that the character, duration or geographical scope of such
provisions is unreasonable, then it is the intention and the agreement of the
Executive and the Company that this Agreement shall be construed by the court in
such a manner as to impose only those restrictions on the Executive's conduct
that are reasonable in the light of the circumstances and as are necessary to
assure to the Company the benefits of this Agreement. If, in any judicial
proceeding, a court shall refuse to enforce all of the separate covenants deemed
included herein because taken together they are more extensive than necessary to
assure to the Company the intended benefits of this Agreement, it is expressly
understood and agreed by the parties hereto that the provisions of this
Agreement that, if eliminated, would permit the remaining separate provisions to
be enforced in such proceeding shall be deemed eliminated, for the purposes of
such proceeding, from this Agreement.
(b)If any provision of this Agreement otherwise is deemed to be invalid or
unenforceable or is prohibited by the laws of the state or jurisdiction where it
is to be performed, this Agreement shall be considered divisible as to such
provision and such provision shall be inoperative in such state or jurisdiction
and shall not be part of the consideration moving from either of the parties to
the other. The remaining provisions of this Agreement shall be valid and binding
and of like effect as though such provision were not included.
12. Notices and Addresses.
All notices, offers, acceptance and any other acts under this Agreement
(except payment) shall be in writing, and shall be sufficiently given if
delivered to the addressees in person, by Federal Express or similar receipted
delivery, by facsimile delivery or, if mailed, postage prepaid, by certified
mail, return receipt requested, as follows:
To the Company:
Trilogy International, Inc.
2363 SE Ocean Boulevard
Suite 201
Stuart, FL 34996
With a Copy to:
Michael D. Harris, Esq.
Michael Harris, P.A.
1645 Palm Beach Lakes, Blvd., Suite 550
West Palm Beach, FL 33401
Facsimile (561) 478-1817
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To the Executive:
Ms. Jane Bicks
13619 Deer Creek Drive
Palm Beach Gardens, Florida 33418
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.
13. Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument. The execution of this Agreement may be by actual or
facsimile signature.
14. Arbitration.
Except for a claim for equitable relief, any controversy, dispute or claim
arising out of or relating to this Agreement, or its interpretation,
application, implementation, breach or enforcement which the parties are unable
to resolve by mutual agreement, shall be settled by submission by either party
of the controversy, claim or dispute to binding arbitration in Martin County,
Florida the parties agree in writing to a different location, before three
arbitrators in accordance with the rules of the American Arbitration Association
then in effect. In any such arbitration proceeding, the parties agree to provide
all discovery deemed necessary by the arbitrators. The decision and award made
by the arbitrators shall be final, binding and conclusive on all parties hereto
for all purposes, and judgment may be entered thereon in any court having
jurisdiction thereof.
15. Attorney's Fees.
In the event that there is any controversy or claim arising out of or
relating to this Agreement, or to the interpretation, breach or enforcement
thereof, and any action or proceeding is commenced to enforce the provisions of
this Agreement, the prevailing party shall be entitled to a reasonable
attorney's fee, costs and expenses.
16. Governing Law.
This Agreement and any dispute, disagreement, or issue of construction or
interpretation arising hereunder whether relating to its execution, its
validity, the obligations provided therein or performance shall be governed or
interpreted according to the internal laws of the State of Florida without
regard to choice of law considerations.
17. Entire Agreement.
This Agreement constitutes the entire Agreement between the parties and
supersedes all prior oral and written agreements between the parties hereto with
respect to the subject matter hereof. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, except by a
statement in writing signed by the party or parties against which enforcement or
the change, waiver discharge or termination is sought.
18. Additional Documents.
The parties hereto shall execute such additional instruments as may be
reasonably required by their counsel in order to carry out the purpose and
intent of this Agreement and to fulfill the obligations of the parties
hereunder.
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19. Section and Paragraph Headings.
The section and paragraph headings in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first above written.
Witnesses:
Trilogy International, Inc.
By:_______________________
Carol Berardi, President
Executive
By: _____________________
Jane Bicks
Dr. Jane, Inc.
13619 Deer Creek Drive
Palm Beach Gardens, Florida 33418
Trilogy International, Inc.
2363 SE Ocean Boulevard
Suite 201
Stuart, FL 34996
Dear Sirs:
Dr. Jane, Inc. is the owner of certain proprietary information and formulas
essential for the preparation for various pet products (the "Proprietary
Information"). All of the products marketed and sold by Dr. Jane, Inc. are owned
exclusively by Dr. Jane, Inc., and not by any individual or other entity. In
consideration of Trilogy International, Inc., (the "Company") entering into an
employment agreement with Jane Bicks, the President and owner of Dr. Jane, Inc.
we hereby grant the Company a worldwide, exclusive 99 year royalty-free license
and assignment to all rights to the Proprietary Information, including but not
limited to the right to manufacture, package, market and sell all products
currently developed or developed in the future from the Propriety Information.
This Agreement shall not terminate at any period prior to 99 years except in
accordance with Subsection 2(b)(vi) of the Employment Agreement to which this
License and Assignment Agreement is an Exhibit.
Dr. Jane, Inc.
By:_________________________________
Jane Bicks, D.V.M., President
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Exhibit 6.2(D) AmeriNet and Trilogy Acquisition Legal Opinion
The Opinion Letters are attached.
AmeriNet Group.com, Inc.
A publicly held Delaware corporation
Michael Harris Jordan Michael Harris Jordan
President & Chief Executive Officer G. Richard Chamberlin
Anthony Q. Joffe
Vanessa Lindsey Penny L. Adams Field
Secretary J. Bruce Gleason
Edward Dymytrk
G. Richard Chamberlin, Esquire Saul B. Lipson
General Counsel ------
Board of Directors
American Internet Technical Center, Inc.
- -------
Operating Subsidiary
440 East Sample Road, Suite 204
Pompano Beach, Florida 33056
Telephone (954) 943-4748
Fax (954) 943-4046
Web site and e-mail www.aitc.net
Please respond to Ocala address
1941 Southeast 51st Terrace 902 Clint Moore Road, Suite 136
Ocala, Florida 34471 Boca Raton, Florida 33487
Telephone (352) 694-6714 Telephone (561) 998-3435
Fax (352) 694-9178 Fax (561) 998-3425
e-mail, [email protected] e-mail [email protected]
November 22, 1999
Trilogy International, Inc.
526 SE Dixie Highway,
Stuart, Florida 34494
fax: 561 781-7282
email: [email protected]
Re:Trilogy International, Inc./AmeriNet Group.com, Inc. Merger Closing
Ladies and Gentlemen:
We have acted as counsel to AmeriNet Group.com, Inc., a Delaware corporation
("AmeriNet") in connection with the Agreement and Plan of Merger among AmeriNet,
(the "Acquiror"), Trilogy Acquisition Corporation ("Trilogy Acquisition") and
Trilogy International , Inc. ("Trilogy International") dated November 22, 1999.
We are providing this opinion to you pursuant to Section 6.2(D) of the Merger
Agreement. Capitalized terms used but not otherwise defined herein shall have
the meanings given them in the Merger Agreement.
A.Basis of Opinion
In rendering the following options, we have reviewed copies of each of the
following documents:
1. The Merger Agreement, including the disclosure schedules and exhibits
thereto;
2. The Certificate of Incorporation, as amended, and the Bylaws of the
Company;
3. Certificates of Good Standing for AmeriNet issued by the Secretary of
State of the State of Delaware;
4. Minutes of proceedings of the Boards of Directors of AmeriNet with
respect to the Merger Agreement duly adopted at a meeting of the Board
of Directors of the AmeriNet held on November 12, 1999;
5. The Certificate of Merger dated as of the date hereof, between
AmeriNet and Trilogy
6. The Articles of Merger dated November 2_, 1999, between Trilogy
International and Trilogy Acquisition;
7. Certificate of Counsel dated as of the date of this letter;
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8. Officers' Certificate delivered to Counsel as of the date of this
letter.
9. Such other agreements and documents and such matters of law as we have
considered necessary or appropriate for the expression of the opinions
contained herein.
The Merger Agreement and the other documents and information referred to in this
Section A are collectively referred to as the "Transaction Documents."
B.Assumptions
This opinion has been prepared and is to be construed in accordance with the
Report on Standards for Florida Opinions dated April 8, 1991, as amended and
supplemented, issued by the Business Law Section of the Florida Bar, 46 The
Business Lawyer, No. 4 (the "Report"). The Report is incorporated by reference
into this opinion letter.
In rendering the following opinions, we have made no assumptions other than
those set forth in the Report, the assumption that the Company complies with all
laws and regulations relating to multi-level marketing, or those in the opinions
below.
C.Opinions
Based solely upon our examination and consideration of the foregoing Transaction
Documents, and in reliance thereon, and subject to the comments, assumptions,
exceptions, qualifications and limitations set forth in the Report, we are of
the opinion that:
1. AmeriNet is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware. AmeriNet is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required, and where, to our knowledge, the lack of
such qualification would not have a material adverse effect on the financial
condition of AmeriNet and its subsidiaries taken as a whole (a "Material Adverse
Effect"). We do not pass upon qualification in any other state where the
Agreement is void or voidable due to lack of qualification.
2. AmeriNet has the corporate power and authority to carry on the business in
which it is engaged and to own and use the properties owned and used by it.
3. As of the date hereof, AmeriNet has one subsidiary, Wriwebs.com, Inc., f/k/a
American Internet Technical Center, Inc., a Florida corporation..
4.The authorized capital stock of AmeriNet consists of 20,000,000 shares of
Common Stock and 5,000,000 of Preferred Stock, of which there are outstanding
8,354,126 shares of Common Stock shares of Common Stock and 0 shares of
Preferred Stock. There are 4,368,980 shares of common stock reserved for future
issuances.
5. All of the issued and outstanding shares of Common Stock have been duly
authorized and are validly issued, fully paid, and nonassessable. Except as set
forth in the Merger Agreement, to our knowledge there are no outstanding
Options, Warrants, or other outstanding or authorized purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require AmeriNet to issue, sell, or otherwise cause to
become outstanding any shares of its capital stock. To our knowledge, there are
no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to AmeriNet.
6. The Merger Agreement and the transactions contemplated thereby have been
duly authorized by all necessary corporate action on the part of AmeriNet.
AmeriNet has the full power and authority, corporate and otherwise, to execute
and deliver the Merger Agreement and to assume and perform all of its
obligations thereunder. The Merger Agreement has been duly executed and
delivered by AmeriNet and constitutes a legal, valid, and binding obligation of
AmeriNet, enforceable against AmeriNet in accordance with its terms. .
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7. Neither the execution and the delivery of the Merger Agreement, nor the
consummation of the transactions contemplated thereby, will (i) to our
knowledge, violate any material statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which AmeriNet is subject (ii) violate any
provision of the Certificate of Incorporation or Bylaws of AmeriNet or (iii) to
our knowledge, conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument or other arrangement to which AmeriNet is a
party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any security interest upon any of the assets),
except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, or failure to give notice would not
have a Material Adverse Effect. Other than in connection with the provisions of
the Florida Business Corporation Act, or as otherwise contemplated by the Merger
Agreement, AmeriNet is not required to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order for AmeriNet to consummate the transactions
contemplated by the Merger Agreement.
8. To our knowledge, no judgment is presently filed of record against the
AmeriNet and there is no litigation, arbitration, investigation, inquiry or
other proceedings by or before any federal, state, county or other local
governmental agency or authority, or by any other person or entity pending, or
that would materially adversely affect AmeriNet's ability to perform its
obligations as set forth in the Transaction Documents and we have no knowledge
of any material basis for any such litigation, proceeding, arbitration, claim,
investigation, inquiry or proceeding that would materially adversely affect
AmeriNet; and
9. To the best of our knowledge after due inquiry, no representation, warranty
or statement by AmeriNet in the Transaction Documents contains any untrue
statement of a material fact, or omits or will omit to state a fact necessary in
order to make such representations, warranties or statements not materially
misleading.
Without our prior written consent, this opinion letter may not be quoted in
whole or in part or otherwise referred to in any document or report and may not
be furnished to any person or entity including any governmental agency.
Very truly yours
AmeriNet Group.com, Inc.
/s/ G. Richard Chamberlin
G. Richard Chamberlin, Esquire
General Counsel
cc: Michael H. Jordan
Leonard M. Tucker
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Trilogy Acquisition Corporation
A Florida corporation
1645 Palm Beach lakes Boulevard
Suite 550
West Palm Beach, Florida 33401
November 24, 1999
Trilogy International, Inc.
526 SE Dixie Highway,
Stuart, Florida 34494
fax: 561 781-7282
Re: Trilogy International, Inc./AmeriNet Group.com, Inc. Merger Closing
Ladies and Gentlemen:
We have acted as counsel to Trilogy Acquisition Corporation, a Florida
corporation ("Trilogy Acquisition") in connection with the Agreement and Plan of
Merger among AmeriNet Group.com, Inc., (the "Acquiror"), Trilogy Acquisition
Corporation ("Trilogy Acquisition") and Trilogy International , Inc. ("Trilogy
International") dated November 24, 1999. We are providing this opinion to you
pursuant to Section 6.2(D) of the Merger Agreement. Capitalized terms used but
not otherwise defined herein shall have the meanings given them in the Merger
Agreement.
A. Basis of Opinion
In rendering the following options, we have reviewed copies of each of the
following documents:
1.The Merger Agreement, including the disclosure schedules and exhibits
thereto;
2.The Certificate of Incorporation, as amended, and the Bylaws of Trilogy
Acquisition;
3.Minutes of proceedings of the Boards of Directors of Trilogy Acquisition
with respect to the Merger Agreement duly adopted at a meeting of the Board of
Directors of the Company held on November 24, 1999;
4.Minutes of proceedings of the stockholders of Trilogy Acquisition regarding
approval of the Merger Agreement at the Special Meeting of the Stockholders of
the Company held on November 24, 1999.
5.The Articles of Merger dated November 24, 1999, between Trilogy
International and Trilogy Acquisition;
6.Such other agreements and documents and such matters of law as we have
considered necessary or appropriate for the expression of the opinions contained
herein.
The Merger Agreement and the other documents and information referred to in this
Section A are collectively referred to as the "Transaction Documents."
B.Assumptions
This opinion has been prepared and is to be construed in accordance with the
Report on Standards for Florida Opinions dated April 8, 1991, as amended and
supplemented, issued by the Business Law Section of the Florida Bar, 46 The
Business Lawyer, No. 4 (the "Report"). The Report is incorporated by reference
into this opinion letter.
In rendering the following opinions, we have made no assumptions other than
those set forth in the Report, the assumption that Trilogy Acquisition complies
with all laws and regulations relating to multi-level marketing, or those in the
opinions below.
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C.Opinions
Based solely upon our examination and consideration of the foregoing Transaction
Documents, and in reliance thereon, and subject to the comments, assumptions,
exceptions, qualifications and limitations set forth in the Report, we are of
the opinion that:
1.Trilogy Acquisition is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Florida. Trilogy Acquisition
is duly authorized to conduct business and is in good standing under the laws of
each jurisdiction where such qualification is required, and where, to our
knowledge, the lack of such qualification would not have a material adverse
effect on the financial condition of Trilogy Acquisition and its subsidiaries
taken as a whole (a "Material Adverse Effect"). We do not pass upon
qualification in any other state where the Agreement is void or voidable due to
lack of qualification.
2. Trilogy Acquisition has the corporate power and authority to carry on
the business in which it is engaged and to own and use the properties owned and
used by it.
3.As of the date hereof, Trilogy Acquisition has no subsidiaries.
4. The authorized capital stock of Trilogy Acquisition consists of 7,500
shares of Common Stock of which there are issued and outstanding 100 shares of
Common Stock.
5.All of the issued and outstanding shares of Common Stock have been duly
authorized and are validly issued, fully paid, and nonassessable. Except as set
forth in the Merger Agreement, to our knowledge there are no outstanding
Options, Warrants, or other outstanding or authorized purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require Trilogy Acquisition to issue, sell, or otherwise
cause to become outstanding any shares of its capital stock. To our knowledge,
there are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Trilogy Acquisition.
6. The Merger Agreement and the transactions contemplated thereby have been
duly authorized by all necessary corporate action on the part of Trilogy
Acquisition. Trilogy Acquisition has the full power and authority, corporate and
otherwise, to execute and deliver the Merger Agreement and to assume and perform
all of its obligations thereunder. The Merger Agreement has been duly executed
and delivered by Trilogy Acquisition and constitutes a legal, valid, and binding
obligation of Trilogy Acquisition, enforceable against Trilogy Acquisition in
accordance with its terms. The Merger Agreement and the transactions
contemplated thereby were approved by the Company's stockholders at a duly
called and held meeting of the Company's stockholders. Assuming that the
necessary filings have been made under the Florida Business Corporation Act, the
Merger referred to in the Merger Agreement will be consummated and become
effective.
7.Neither the execution and the delivery of the Merger Agreement, nor the
consummation of the transactions contemplated thereby, will (i) to our
knowledge, violate any material statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Trilogy Acquisition is subject (ii)
violate any provision of the Certificate of Incorporation or Bylaws of Trilogy
Acquisition or (iii) to our knowledge, conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument or other arrangement
to which Trilogy Acquisition is a party or by which it is bound or to which any
of its assets is subject (or result in the imposition of any security interest
upon any of the assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, or failure to give notice
would not have a Material Adverse Effect. Other than in connection with the
provisions of the Florida Business Corporation Act, or as otherwise contemplated
by the Merger Agreement, Trilogy Acquisition is not required to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for Trilogy Acquisition to
consummate the transactions contemplated by the Merger Agreement.
208
<PAGE>
8. To our knowledge, no judgment is presently filed of record against the
Trilogy Acquisition and there is no litigation, arbitration, investigation,
inquiry or other proceedings by or before any federal, state, county or other
local governmental agency or authority, or by any other person or entity
pending, or that would materially adversely affect Trilogy Acquisition's ability
to perform its obligations as set forth in the Transaction Documents and we have
no knowledge of any material basis for any such litigation, proceeding,
arbitration, claim, investigation, inquiry or proceeding that would materially
adversely affect Trilogy Acquisition; and
9. To the best of our knowledge the contemplated merger constitutes a
reorganization within the meaning of Section 368 of the Code.
10.To the best of our knowledge after due inquiry, no representation,
warranty or statement by Trilogy Acquisition in the Transaction Documents
contains any untrue statement of a material fact, or omits or will omit to state
a fact necessary in order to make such representations, warranties or statements
not materially misleading.
Without our prior written consent, this opinion letter may not be quoted in
whole or in part or otherwise referred to in any document or report and may not
be furnished to any person or entity including any governmental agency.
Very truly yours
Trilogy Acquisition Corporation
/s/ G. Richard Chamberlin
G. Richard Chamberlin, Esquire
General Counsel
cc: Michael H. Jordan
Leonard M. Tucker
209
<PAGE>
Exhibit 6.3 (E) Trilogy Legal Opinion
Michael Harris, P.A.
1645 Palm Beach Lakes Boulevard, Suite 550
West Palm Beach, Florida 33401
561-478-7077
November 30, 1999
AmeriNet Group.com, Inc. Trilogy Acquisition Corporation
902 Clint Moore Road 902 Clint Moore Road
Suite 136-C Suite 136-C
Boca Raton, Florida 33487 Boca Raton, Florida 33487
Re: Trilogy International, Inc./AmeriNet Merger Closing
Ladies and Gentlemen:
We have acted as counsel to Trilogy International, Inc., a Florida
corporation (the "Company") in connection with the Agreement and Plan of Merger
among AmeriNet Group.com, Inc., (the "Acquiror"), Trilogy Acquisition
Corporation ("Trilogy Acquisition") and the Company dated November 30, 1999. We
are providing this opinion to you pursuant to Section 6.2(D) of the Merger
Agreement. Capitalized terms used but not otherwise defined herein shall have
the meanings given them in the Merger Agreement.
A. Basis of Opinion
In rendering the following options, we have reviewed copies of each of the
following documents:
1. The Merger Agreement, including the disclosure schedules and exhibits
thereto;
2. The Articles of Incorporation, as amended, and the Bylaws of the
Company;
3. Secretary's certificate as to approvals of the Boards of Directors of
the Company with respect to the Merger Agreement duly adopted at a
meeting of the Board of Directors of the Company held on November 6,
1999 and November 23, 1999;
4. Certificate to Counsel dated as the date hereof;
5. Officers' Certificate delivered to the Acquiror dated as of the date
hereof;
6. Consents of the a majority of the outstanding shares of the common and
preferred stock of the Company approving the Merger Agreement;
7. The Articles of Merger dated November 30, 1999 between the Company and
Trilogy Acquisition; and
8. Such other agreements and documents and such matters of law as we have
considered necessary or appropriate for the expression of the opinions
contained herein.
The Merger Agreement and the other documents and information referred to in
this Section A are collectively referred to as the"Transaction Documents."
210
<PAGE>
B. Assumptions
This opinion has been prepared and is to be construed in accordance with
the Report on Standards for Florida Opinions dated April 8, 1991, as amended and
supplemented, issued by the Business Law Section of the Florida Bar, 46 The
Business Lawyer, No. 4 (the "Report"). The Report is incorporated by reference
into this opinion letter.
In rendering the following opinions, we have made no assumptions other than
those set forth in the Report, the assumption that the Company complies with all
laws and regulations relating to multi-level marketing, or those in the opinions
below.
C. Opinions
Based solely upon our examination and consideration of the foregoing
Transaction Documents, and in reliance thereon, and subject to the comments,
assumptions, exceptions, qualifications and limitations set forth in the Report,
we are of the opinion that:
1. The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Florida. The Company is
duly authorized to conduct business and is in good standing under the
laws of each jurisdiction where such qualification is required, and
where, to our knowledge, the lack of such qualification would not have
a material adverse effect on the financial condition of the Company
and its subsidiaries taken as a whole. We do not pass upon
qualification in Louisiana or any other state where the Agreement is
void or voidable due to lack of qualification.
2. The Company has the corporate power and authority to carry on the
business in which it is engaged and to own and use the properties
owned and used by it.
3. As of the date hereof, the Company has no subsidiaries.
4. The authorized capital stock of the Company consists of 30,000,000
shares of Common Stock of which there are outstanding 5,451,819 shares
of Common Stock.
5. All of the issued and outstanding shares of Common Stock have been
duly authorized and are validly issued, fully paid, and nonassessable.
Except as set forth in the Merger Agreement, to our knowledge there
are no outstanding Options, Warrants, or other outstanding or
authorized purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require
the Company to issue, sell, or otherwise cause to become outstanding
any shares of its capital stock. To our knowledge, there are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Company.
6. The Merger Agreement and the transactions contemplated thereby have
been duly authorized by all necessary corporate action on the part of
the Company. The Company has the full power and authority, corporate
and otherwise, to execute and deliver the Merger Agreement and to
assume and perform all of its obligations thereunder. The Merger
Agreement has been duly executed and delivered by the Company and
constitutes a legal, valid, and binding obligation of the Company,
enforceable against the Company in accordance with its terms. The
Merger Agreement and the transactions contemplated thereby were
approved by the written consent of a majority of the outstanding
shares of Common Stock and Preferred Stock. Assuming that the
necessary filings have been made under the Florida Business
Corporation Act, the Merger referred to in the Merger Agreement will
be consummated and become effective.
211
<PAGE>
7. Neither the execution and the delivery of the Merger Agreement, nor
the consummation of the transactions contemplated thereby, will (i) to
our knowledge, violate any material statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
the Company is subject (ii) violate any provision of the Articles of
Incorporation or Bylaws of the Company or (iii) to our knowledge,
conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument or other
arrangement to which the Company is a party or by which it is bound or
to which any of its assets is subject (or result in the imposition of
any security interest upon any of the assets), except where the
violation, conflict, breach, default, acceleration, termination,
modification, cancellation, or failure to give notice would not have a
Material Adverse Effect. Except that the consent of the lessors is or
may be required for real property and a certain personal property
leases. Other than in connection with the provisions of the Florida
Business Corporation Act, or as otherwise contemplated by the Merger
Agreement, the Company is not required to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Company to
consummate the transactions contemplated by the Merger Agreement.
8. To our knowledge, no judgment is presently filed of record against the
Company and there is no litigation, except for an action filed on
November 29, 1999 by Deborah George, arbitration, investigation,
inquiry or other proceedings by or before any federal, state, county
or other local governmental agency or authority, or by any other
person or entity pending, or that would materially adversely affect
the Company's ability to perform its obligations as set forth in the
Transaction Documents and we have no knowledge of any material basis
for any such litigation, proceeding, arbitration, claim,
investigation, inquiry or proceeding that would materially adversely
affect the Company; and
9. To the best of our knowledge after due inquiry, no representation,
warranty or statement by the Company in the Transaction Documents
contains any untrue statement of a material fact, or omits or will
omit to state a fact necessary in order to make such representations,
warranties or statements not materially misleading.
This opinion is furnished solely to the addresses by us as counsel for the
Company, is solely for your benefit and is rendered solely in connection with
the transaction as to which this opinion relates. Without our prior written
consent, this opinion letter may not be quoted in whole or in part or otherwise
referred to in any document or report and may not be furnished to any person or
entity including any governmental agency.
Very truly yours,
/s/ Michael Harris
Michael Harris, P.A.
212
<PAGE>
Exhibit 6.3(L) Confidentiality Agreements
Refer to Schedule 2.12.
Exhibit 7.2(A) Escrow Information
Trilogy International Capitalization
29-Oct-99
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Investor Common Series A Total AmeriNet Escrow Direct
Shares Preferred Trilogy Shares Shares Issue
Shares @ 20%
Arthur Calabro 40,000 20,000 60,000 20,000 4,000 16,000
George Campen 20,000 10,000 30,000 10,000 2,000 8,000
Antares Capital Management 283,636 141,818 425,454 141,818 28,364 113,454
Daniel Conroy 60,000 30,000 90,000 30,000 6,000 24,000
William DeRosa 30,000 15,000 45,000 15,000 3,000 12,000
Donald Downs 76,000 38,000 114,000 38,000 7,600 30,400
Peter Glint 80,000 40,000 120,000 40,000 8,000 32,000
John Goodman 120,000 60,000 180,000 60,000 12,000 48,000
Max Hazelwood 30,000 15,000 45,000 15,000 3,000 12,000
John Holmes 120,000 60,000 180,000 60,000 12,000 48,000
Stephen Holmes 120,000 60,000 180,000 60,000 12,000 48,000
Robert Imparato 30,000 15,000 45,000 15,000 3,000 12,000
SOG Investments 120,000 60,000 180,000 60,000 12,000 48,000
Robert Lewis 120,000 60,000 180,000 60,000 12,000 48,000
John Meeks 20,000 10,000 30,000 10,000 2,000 8,000
Ronald Musich 120,000 60,000 180,000 60,000 12,000 48,000
Bernard Rudd 60,000 30,000 90,000 30,000 6,000 24,000
James Engstrom 40,000 20,000 60,000 20,000 4,000 16,000
1,489,636 744,818 2,234,454 744,818 148,964 595,854
Dennis Berardi 1,577,591 1,577,591 525,864 105,173 420,691
Carol Berardi 1,577,590 1,577,590 525,863 105,173 420,691
Stephen Berardi 3,000 3,000 1,000 200 800
Dale Hernandez 3,000 3,000 1,000 200 800
Sheila Honan 2,160 2,160 720 144 576
Lester Thornhill 2,160 2,160 720 144 576
Jane Bicks 2,000 2,000 667 133 533
David Cantley 26,000 26,000 8,667 1,733 6,933
Margaret McEver 1,159 1,159 386 77 309
Linda Logue 1,159 1,159 386 77 309
Ruth Shinnick 1,546 1,546 515 103 412
Donald Downs 20,000 20,000 6,667 1,333 5,333
3,217,365 3,217,365 1,072,455 214,491 857,964
4,707,001 5,451,819 1,817,273 363,455 1,453,818
</TABLE>
213
Bylaws
of
AmeriNet Group.com, Inc.
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings
(a) (1) The annual meeting of the stockholders of the Corporation shall
be held at the principal office of the Corporation in the State
of Delaware or at such other place within or without the State of
Delaware as may be determined by the Board of Directors and as
may be designated in the notice of such meeting.
(2) The meeting shall be held on the 15th day of July of each year or
on such other day as the Board of Directors may specify.
(3) If said day is a legal holiday, the meeting shall be held on the
next succeeding business day not a legal holiday.
(b) Business to be transacted at such meeting shall be the election of
Directors to succeed those whose terms are expiring and such other
business as may be properly brought before the meeting.
(c) In the event that the annual meeting, by mistake or otherwise, shall
not be called and held as herein provided, a special meeting may be
called as provided for in Section 2 of this Article I in lieu of and
for the purposes of and with the same effect as the annual meeting.
(d) Subject to compliance with requirements imposed under Section 14 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
proposals by stockholders for action at an annual meeting must be
submitted to the Corporation's principal executive offices so that
they are received thereat on or BEFORE THE 120TH day prior to the
annual anniversary of the last preceding annual meeting, unless such
proposal relates to the nomination of directors, in which case it must
be submitted to the Corporation's principal executive offices so that
the name, address, telephone number and if available, fax number and
e-mail address of the nominee, together with biographical data
covering the nominees activities during the preceding five years
satisfying the disclosure requirements of Regulation SB are received
thereat on OR BEFORE THE 60TH day prior to the time that the
Corporation first files materials with the Commission pertaining to
such meeting on either Schedule 14A or 14C promulgated under authority
of the Exchange Act.
214
<PAGE>
SECTION 2. Special Meetings
(a) A special meeting of the stockholders of the Corporation may be called
for any purpose or purposes at any time by the Chairman or President
of the Corporation, by the Board of Directors or by the holders of not
less than 10% of the outstanding capital stock of the Corporation
entitled to vote at such meeting.
(b) (1) At any time, upon the written direction of any person or persons
entitled to call a special meeting of the stockholders, it shall
be the duty of the Secretary to send notice of such meeting
pursuant to Section 4 of this Article I.
(2) It shall be the responsibility of the person or persons directing
the Secretary to send notice of any special meeting of
stockholders to deliver such direction and a proposed form of
notice to the Secretary not less than 15 days prior to the
proposed date of said meeting.
(c) Special meetings of the stockholders of the Corporation shall be held
at such place, within or without the State of Delaware, on such dates,
and at such time as shall be specified in the notice of such special
meeting.
SECTION 3. Adjournment
(a) When the annual meeting is convened, or when any special meeting is
convened, the presiding officer may adjourn it for such period of time
as may be reasonably necessary to reconvene the meeting at another
place and time.
(b) The presiding officer shall have the power to adjourn any meeting of
the stockholders for any proper purpose, including, but not limited
to, lack of a quorum, securing a more adequate meeting place, electing
officials to count and tabulate votes, reviewing any stockholder
proposals or passing upon any challenge which may properly come before
the meetings.
(c) (1) When a meeting is adjourned to another time or place, it shall
not be necessary to give any notice of the adjourned meeting if
the time and place to which the meeting is adjourned are
announced at the meeting at which the adjournment is taken, and
any business may be transacted at the adjourned meeting that
might have been transacted on the original date of the meeting
(2) If, however, after the adjournment the Board fixes a new record
date for the adjourned meeting, a notice of the adjourned meeting
shall be given in compliance with Section 4(a) of this Article I
to each stockholder of record on the new record date entitled to
vote at such meeting.
215
<PAGE>
SECTION 4. Notice of Meetings; Purpose of Meeting; Waiver
(a) (1) Each stockholder of record entitled to vote at any meeting shall
be given in person, or by first class mail, postage prepaid,
written notice of such meeting which, in the case of a special
meeting, shall set forth the purpose(s) for which the meeting is
called, not less than 20 or more than 60 days before the date of
such meetin
(2) If mailed, such notice is to be sent to the stockholder's address
as it appears on the stock transfer books of the Corporation,
unless the stockholder shall be requested of the Secretary in
writing at least 15 days prior to the distribution of any
required notice that any notice intended for him or her be sent
to some other address, in which case the notice may be sent to
the address so designated.
(3) Notwithstanding any such request by a stockholder, notice sent to
a stockholder's address as it appears on the stock transfer books
of this Corporation as of the record date shall be deemed
properly given.
(4) Any notice of a meeting sent by United States mail shall be
deemed delivered when deposited with proper postage thereon with
the United States Postal Service or in any mail receptacle under
its control.
(b) (1) A stockholder waives notice of any meeting by attendance, either
in person or by proxy, at such meeting or by waiving notice in
writing either before, during or after such meeting.
(2) Attendance at a meeting for the express purpose of objecting that
the meeting was not lawfully called or convened, however, will
not constitute a waiver of notice by a stockholder who states at
the beginning of the meeting, his or her objection that the
meeting is not lawfully called or convened.
(c) A waiver of notice signed by all stockholders entitled to vote at a
meeting of stockholders may also be used for any other proper purpose
including, but not limited to, designating any place within or without
the State of Delaware as the place for holding such a meeting.
(d) Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of stockholders need be specified in any
written waiver of notice.
SECTION 5. Closing of Transfer Books; Record Date; Stockholders' List
(a) In order to determine the holders of record of the capital stock of
the Corporation who are entitled to notice of meetings, to vote a
meeting or adjournment thereof, or to receive payment of any dividend,
or for any other purpose, the Board of Directors may fix a date not
more than 60 days prior to the date set for any of the above-mentioned
activities for such determination of stockholders.
(b) If the stock transfer books shall be closed for the purpose of
determining stockholders entitled to notice of or to vote at a meeting
of stockholders, such books shall be closed for at least 10 days
immediately preceding such meeting.
216
<PAGE>
(c) In lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the date for any such determination of
stockholders, such date in any case to be not more than 60 days prior
to the date on which the particular action, requiring such
determination of stockholders, is to be taken.
(d) If the stock transfer books are not closed and no record date is fixed
for the determination of stockholders entitled to notice or to vote at
a meeting of stockholders, or to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such
determination of stockholders.
(e) When a determination of stockholders entitled to vote at any meeting
of stockholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof, unless the Board
of Directors fixes a new record date under this Section for the
adjourned meeting.
(f) (1) The officer or agent having charge of the stock transfer books of
the Corporation shall make, as of a date at least 10 days before
each meeting of stockholders, a complete list of the stockholders
entitled to vote at such meeting or any adjournment thereof, with
the address of each stockholder and the number and class and
series, if any, of shares held by each stockholder.
(2) Such list shall be kept on file at the registered office of the
Corporation, at the principal place of business of the
Corporation or at the office of the transfer agent or registrar
of the Corporation for a period of 10 days prior to such meeting
and shall be available for inspection by any stockholder at any
time during usual business hours.
(3) Such list shall also be produced and kept open at the time and
place of any meeting of stockholders and shall be subject to
inspection by any stockholder at any time during the meeting.
(g) The original stock transfer books shall be prima facie evidence as to
the stockholders entitled to examine such list or stock transfer books
or to vote any meeting of stockholders.
(h) If the requirements of Section 5(f) of this Article I have not been
substantially complied with, then, on the demand of any stockholder in
person or by proxy, the meeting shall be adjourned until such
requirements are complied with.
(i) If no demand pursuant to Section 5(h) of this Article I is made,
failure to comply with the requirements of this Section shall not
affect the validity of any action taken at such meeting.
(j) Section 5(g) of this Article I shall be operative only at such time(s)
as the Corporation shall have 6 or more stockholders.
SECTION 6. Quorum
(a) At any meeting of the stockholders of the Corporation, the presence,
in person or by proxy, of stockholders holding a majority of the
issued and outstanding shares of the capital stock of the Corporation
entitled to vote thereat shall be necessary to constitute a quorum for
the transaction of any business.
217
<PAGE>
(b) If a quorum is present, the vote of a majority of the shares
represented at such meeting and entitled to vote on the subject matter
shall be the act of the stockholders.
(c) If there shall not be a quorum at any meeting of the stockholders of
the Corporation, then the holders of a majority of the shares of the
capital stock of the Corporation who shall be present at such meeting,
in person or by proxy, may adjourn such meeting from time to time
until holders of a quorum of the shares of the capital stock shall
attend.
(d) At any such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the
meeting as originally scheduled.
SECTION 7. Presiding Officer; Order of Business
(a) (1) Meetings of the stockholders shall be presided over by the
Chairman of the Board, or, if he or she is not present or there
is no Chairman of the Board, by the President or, if he or she is
not present, by the senior Vice President present or, if neither
the Chairman of the Board, the President, nor a Vice President is
present, the meeting shall be presided over by a chairman to be
chosen by a plurality of the stockholders entitled to vote at the
meeting who are present, in person or by proxy.
(2) The presiding officer of any meeting of the stockholders may
delegate his or her duties and obligations as the presiding
officer as he or she sees fit.
(b) The Secretary of the Corporation, or, in his or her absence, an
Assistant Secretary shall act as Secretary of every meeting of
stockholders, but if neither the Secretary nor an Assistant Secretary
is present, the presiding officer of the meeting shall choose any
person present to act as secretary of the meeting.
(c) The order of business shall be as follows:
Call of meeting to order.
Proof of notice of meeting.
Reading minutes of last previous stockholders' meeting or a waiver thereof.
Reports of Officers.
Reports of committees.
Election of Directors.
Regular and miscellaneous business.
Special matters.
Adjournment.
(d) (1) Notwithstanding the provisions of Section 7(c) of this Article I,
the order and topics of business to be transacted at any meeting
shall be determined by the presiding officer of the meeting in
his or her sole discretion.
(2) In no event shall any variation in the order of business or
additions and deletions from the order of business as specified
in Section 7(c) of this Article I invalidate any actions properly
taken at any meeting.
218
<PAGE>
SECTION 8. Voting
(a) Unless otherwise provided for in the Certificate of Incorporation,
each stockholder shall be entitled, at each meeting and upon each
proposal to be voted upon, to one vote for each share of voting stock
recorded in his name on the books of the Corporation on the record
date fixed as provided for in Section 5 of this Article I.
(b) (1) The presiding officer at any meeting of the stockholders shall
have the power to determine the method and means of voting when
any matter is to be voted upon.
(2) The method and means of voting may include, but shall not be
limited to, vote by ballot, vote by hand or vote by voice.
(3) No method of voting may be adopted, however, which fails to take
account of any stockholder`s right to vote by proxy as provided
for in Section 10 of this Article I.
(4) In no event may any method of voting be adopted which would
prejudice the outcome of the vote.
SECTION 9. Action Without Meeting
(a) (1) Any action required to be taken at any annual or special meeting
of stockholders of the Corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may
be taken without a meeting and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by
the holders of a majority of the Corporation's outstanding voting
stock; provided that, prior to such action the Corporation shall
have filed with the Commission and delivered to the stockholders
an information statement in the form required by Section 14 of
the Exchange Act, unless the Corporation no longer has a class of
securities registered under Section 12 of the Exchange Act.
(2) Such instrument may be executed in counterparts or as a unitary
document.
(b) In the event that the action to which the stockholders consent is such
as would have required the filing of a certificate under the Delaware
General Corporation Law, the effect of such consent shall be as if
such action had been voted on by stockholders at a meeting thereof,
however, the certificate filed under such other section shall state
that written consent has been given in accordance with the provisions
of Section 9 of this Article I.
(c) If the Corporation no longer has a class of securities registered
under Section 12 of the Exchange Act and stockholder action is taken
by written consent in lieu of meeting without prior notice, signed by
less than all of the Corporation's stockholders, then all non
participating stockholders shall be provided with written notice of
the action taken within 10 days after the effective date of the
written instrument taking such action.
(d) No action by written consent in lieu of meeting shall be valid if it
is in contravention of applicable proxy or informational rules adopted
pursuant to the Exchange Act including, without limitation, the
requirements of Section 14 thereof.
219
<PAGE>
SECTION 10. Proxies
(a) Every stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent without a meeting, or his or her duly
authorized attorney-in-fact, may authorize another person or persons
to act for him or her by proxy.
(b) (1) Every proxy must be signed by the stockholder or his or her
attorney-in-fact.
(2) No proxy shall be valid after the expiration of 11 months from
the date thereof unless otherwise provided in the proxy.
(3) Every proxy shall be revocable at the pleasure of the stockholder
executing it, except as otherwise provided in this Section 10.
(c) The authority of the holder of a proxy to act shall not be revoked by
the incompetence or death of the stockholder who executed the proxy
unless, before the authority is exercised, written notice of any
adjudication of such incompetence or of such death is received by the
corporate officer responsible for maintaining the list of
stockholders.
(d) Except when other provisions shall have been made by written agreement
between the parties, the record holder of shares held as pledges or
otherwise as security or which belong to another, shall issue to the
pledgor or to such owner of such shares, upon demand therefor and
payment of necessary expenses thereof, a proxy to vote or take other
action thereon.
(e) A proxy which states that it is irrevocable is irrevocable when it is
held by any of the following or a nominee of any of the following: (i)
a pledgee; (ii) a person who has purchased or agreed to purchase the
shares: (iii) a creditor or creditors of the Corporation who extend or
continue to extend credit to the Corporation in consideration of the
proxy, if the proxy states that it was given in consideration of such
extension or continuation of credit, the amount thereof, and the name
of the person extending or continuing credit; (iv) a person who has
contracted to perform services as an officer of the Corporation, if a
proxy is required by the contract of employment, if the proxy states
that it was given in consideration of such contract of employment and
states the name of the employee and the period of employment
contracted for; and (v) a person designated by or under an agreement
as provided in Article XI hereof.
(f) (1) Notwithstanding a provision in a proxy stating that it is
irrevocable, the proxy becomes revocable after the pledge is
redeemed, the debt of the Corporation is paid, the period of
employment provided for in the contract of employment has
terminated, or the agreement under Article XI hereof has
terminated and, in a case provided for in Section 10(e) (iii) or
Section 10(e) (iv) of this Article I, becomes revocable three
years after the date of the proxy or at the end of the period, if
any, specified therein, whichever period is less, unless the
period of irrevocability of the proxy as provided in this Section
10.
(2) This Section 10(f) does not affect the duration of a proxy under
Section 10(b) of this Article I.
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(g) A proxy may be revoked, notwithstanding a provision making it
irrevocable, by a purchaser of shares without knowledge of the
existence of the provisions unless the existence of the proxy and its
irrevocability is noted conspicuously on the face or back of the
certificate representing such shares.
(h) (1) If a proxy for the same shares confers authority upon two or more
persons and does not otherwise provide, a majority of such
persons present at the meeting, or if only one is present then
that one, may exercise all the powers conferred by the proxy.
(2) If the proxy holders present at the meeting are equally divided
as to the right and manner of voting in any particular case, the
voting of such shares shall be prorated.
(i) If a proxy expressly so provides, any proxy holder may appoint in
writing a substitute to act in his or her place.
(j) Notwithstanding anything in the Bylaws to the contrary, no proxy shall
be valid if it was obtained in violation of any applicable
requirements of Section 14 of the Exchange Act or the Rules and
Regulations promulgated thereunder.
SECTION 11. Voting of Shares by Stockholders
(a) (1) Shares standing in the name of another corporation, domestic or
foreign, may be voted by the officer, agent, or proxy designated
by the bylaws of the corporate stockholder; or, in the absence of
any applicable bylaw, by such person as the Board of Directors of
the corporate stockholder may designate
(2) Proof of such designation may be made by presentation of a
certified copy of the bylaws or other instrument of the corporate
stockholder.
(3) In the absence of any such designation, or in case of conflicting
designation by the corporate stockholder, the chairman of the
board, president, any vice president, secretary and treasurer of
the corporate stockholder, in that order, shall be presumed to
possess authority to vote such shares.
(b) (1) Shares held by an administrator, executor, guardian or
conservator may be voted by him or her, either in person or by
proxy, without a transfer of such shares into his or her name.
(2) Shares standing in the name of a trustee may be voted as shares
held by him or her without a transfer of such shares into his
name.
(c) (1) Shares standing in the name of a receiver may be voted by such
receiver.
(2) Shares held by or under the control of a receiver but not
standing in the name of such receiver, may be voted by such
receiver without the transfer thereof into his name if authority
to do so is contained in an appropriate order of the court by
which such receiver was appointed.
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(d) A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the
pledgee.
(e) Shares of the capital stock of the Corporation belonging to the
Corporation or held by it in a fiduciary capacity shall not be voted,
directly or indirectly, at any meeting, and shall not be counted in
determining the total number of outstanding shares.
ARTICLE II
DIRECTORS
SECTION 1. Board of Directors; Exercise of Corporate Powers
(a) (1) All corporate powers shall be exercised by or under the authority
of, and the business and affairs of the Corporation shall be
managed under the direction of, the Board of Directors except as
may be otherwise provided in the Certificate of Incorporation or
in a stockholders' agreement.
(2) If any such provision is made in the Certificate of Incorporation
or in a stockholders' agreement, the powers and duties conferred
or imposed upon the Board of Directors shall be exercised or
performed to such extent and by such person or persons as shall
be provided in the Certificate of Incorporation or stockholders'
agreement.
(b) Directors need not be residents of this state or stockholders of the
Corporation unless the Certificate of Incorporation so requires.
(c) The Board of Directors shall have authority to fix the compensation of
Directors unless otherwise provided in the Certificate of
Incorporation.
(d) A Director shall perform his or her duties as a Director, including
his or her duties as a member of any committee of the Board upon which
he may serve, in good faith, in a manner he or she reasonably believes
to be in the best interests of the Corporation, and with such care as
an ordinarily prudent person in a like position would use under
similar circumstances.
(e) In performing his or her duties, a Director shall be entitled to rely
on information, opinions, reports or statements, including without
limitation, financial statements and other financial data, in each
case prepared or presented by: (i) one or more officers or employees
of the Corporation whom the Director reasonably believes to be
reliable and competent in the matters presented; (ii) legal counsel,
public accountants or other persons as to matters which the Director
reasonably believes to be within such persons' professional or expert
competence; or (iii) a committee of the Board upon which he or she
does not serve, duly designated in accordance with a provision of the
Certificate of Incorporation or these Bylaws, as to matters within its
designated authority, which committee the Director reasonably believes
to merit confidence.
(f) A Director shall not be considered to be acting in good faith if he or
she has knowledge concerning the matter in question that would cause
such reliance described in Section 1(e) of this Article II to be
unwarranted.
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(g) A person who performs his or her duties in compliance with Section 1
of this Article II shall have no liability by reason of being or
having been a Director of the Corporation.
(h) A Director of the Corporation who is present at a meeting of the Board
of Directors at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless he or she votes
against such action or abstains from voting in respect thereto because
of an asserted conflict of interest.
SECTION 2. Number; Election; Classification of Directors; Vacancies
(a) (1) The Board of Directors of this Corporation shall consist of not
less than one Director.
(2) The Board shall have authority, from time to time, to increase
the number of Directors or to decrease it to not less than one
member, provided that no decrease in the number of Directors
shall deprive a serving Director of the right to serve throughout
the term of his or her election.
(b) Each person named in the Certificate of Incorporation as a member of
the initial Board of Directors shall serve until his or her successor
shall have been elected and qualified or until his or her earlier
resignation, removal from office, or death.
(c) (1) At the first annual meeting of stockholders and at each annual
meeting thereafter, the stockholders shall elect Directors to
hold office until the next succeeding annual meeting, except in
case of the classification of Directors as permitted by the
Delaware General Corporation Law.
(2) Each Director shall hold office for the term for which he or she
is elected and until his or her successor shall have been elected
and qualified or until his or her earlier resignation, removal
from office, or death.
(d) (1) The stockholders, by amendment to these Bylaws, may provide that
the Directors be divided into not more than four classes, as
nearly equal in number as possible, whose terms of office shall
respectively expire at different times, but no such term shall
continue longer than four years, and at least one fourth of the
Directors shall be elected annually.
(2) If Directors are classified and the number of Directors is
thereafter changed, any increase or decrease in Directorship
shall be so apportioned among the classes as to make all classes
as nearly equal in number as possible.
(e) (1) Any vacancy occurring in the Board of Directors, including any
vacancy created by reason of an increase in the number of
Directors, may be filled only by the Board of Directors.
(2) A Director elected to fill a vacancy shall hold office only until
the next election of Directors by the stockholders.
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SECTION 3. Removal of Directors
(a) At a meeting of stockholders called expressly for that purpose, any
Director or the entire Board of Directors may be removed, with or
without cause, by the vote of the holders of 60% of the shares then
entitled to vote at an election of Directors; provided that at least
one Director remains in office or one Director is elected as a
replacement Director concurrently with such removal.
(b) In the event that the number of Directors is reduced below that number
mandated in the Certificate of Incorporation as a result of the
removal of one or more Directors by the stockholders, then the
remaining Directors or the contemporaneously elected replacement
Director will promptly elect replacement Directors, to serve until the
next meeting of the Corporation's stockholders, and until their
replacements have been elected, qualified and assume their office.
SECTION 4. Director Quorum and Voting
(a) A majority of the Directors fixed in the manner provided in these
Bylaws shall constitute a quorum for the transaction of business.
(b) A majority of the members of an Executive Committee or other committee
shall constitute a quorum for the transaction of business at any
meeting of such Executive Committee or other committee.
(c) The act of a majority of the Directors present at a Board meeting at
which a quorum is present shall be the act of the Board of Directors.
(d) The act of a majority of the members of an Executive Committee present
at an Executive Committee meeting at which a quorum is present shall
be the act of the Executive Committee.
(e) The act of a majority of the members of any other committee present at
a committee meeting at which a quorum is present shall be the act of
the committee.
(f) Directors may, if not contrary to applicable law, vote either in
person or by proxy, provided that the proxy holder must be either
another Director, an officer or a stockholder of the Corporation;
however, any Director who elects to vote by proxy more than three
times during any single fiscal year shall, unless otherwise determined
by the Board of Directors, be automatically removed as a Director.
SECTION 5. Director Conflicts of Interest
(a) No contract or other transaction between this Corporation and one or
more of its Directors or any other corporation, firm, association or
entity in which one or more of its Directors are Directors or officers
or are financially interested shall be either void or voidable because
of such relationship or interest or because such Director or Directors
are present at the meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or
transaction or because their votes are counted for such purpose, if:
(i) The fact of such relationship or interest is disclosed or
known to the Board of Directors or committee which authorizes,
approves or ratifies the contract or transaction by a vote or
consent sufficient for the purpose without counting the votes
or consents of such interested Directors; or
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(ii) The fact of such relationship or interest is disclosed or
known to the stockholders entitled to vote and they authorize,
approve or ratify such contract or transaction by vote or
written consent; or
(iii) The contract or transaction is fair and reasonable as to the
Corporation at the time it is authorized by the Board, a
committee, or the stockholders.
(b) Interested Directors, whether or not voting, may be counted in
determining the presence of a quorum at a meeting of the Board of
Directors or a committee thereof which authorizes, approves or
ratifies such contract or transaction.
SECTION 6. Executive and Other Committees; Designation; Authority
(a) The Board of Directors, by resolution adopted by the full Board of
Directors, may designate from among its Directors an Executive
Committee and one or more other committees each of which, to the
extent provided in such resolution or in the Certificate of
Incorporation or these Bylaws, shall have and may exercise all the
authority of the Board of Directors, except that no such committee
shall have the authority to : (i) approve or recommend to stockholders
actions or proposals required by the Delaware General Corporation Law
to be approved by stockholders; (ii) designate candidates for the
office of Director for purposes of proxy solicitation or otherwise;
(iii) fill vacancies on the Board of Directors or any committee
thereof; (iv) amend these Bylaws; (v) authorize or approve the
re-acquisition of shares unless pursuant to a general formula or
method specified by the Board of Directors; or (vi) authorize or
approve the issuance or sale of, or any contract to issue or sell,
shares or designate the terms of a series of a class of shares, unless
the Board of Directors, having acted regarding general authorization
for the issuance or sale of shares, or any contract therefor, and, in
the case of a series, the designation thereof has specified a general
formula or method by resolution or by adoption of a stock option or
other plan, authorized a committee to fix the terms upon which such
shares may be issued or sold, including, without limitation, the
price, the rate or manner of payment of dividends, provisions for
redemption, sinking fund, conversion, and voting or preferential
rights, and provisions for other features of a class of shares, or a
series of a class of shares, with full power in such committee to
adopt any final resolution setting forth all the terms of a series for
filing with the Department of State under the Delaware General
Corporation Law.
(b) The Board, by resolution adopted in accordance with Section 6(a) of
this Article II, may designate one or more Directors as alternate
members of any such committee, who may act in the place and stead of
any absent member or members at any meeting of such committee.
(c) Neither the designation of any such committee, the delegation thereto
of authority, nor action by such committee pursuant to such authority
shall alone constitute compliance by a member of the Board of
Directors, not a member of the committee in question, with his
responsibility to act in good faith, in manner he reasonably believes
to be in the best interests of the Corporation, and with such care as
an ordinarily prudent person in a like position would use under
similar circumstances.
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(d) The Board of Directors shall at every organizational meeting thereof
designate the following committees comprised in each case of a
majority of independent Directors:
(1)An audit committee;
(2)A compensation committee; and
(3)A regulatory compliance committee.
SECTION 7. Place, Time, Notice and Call of Directors' Meeting.
(a) Meetings of the Board of Directors, regular or special, may be held
either within or without the State of Delaware.
(b) (i) A regular meeting of the Board of Directors of the Corporation
shall be held for the election of officers of the Corporation and
for the transaction of such other business as may come before
such meeting as promptly as practicable after the annual meeting
of the stockholders of this Corporation without the necessity of
notice other than this Bylaw.
(ii) Other regular meetings of the Board of Directors of the
Corporation may be held at such places as the Board of Directors
of the Corporation may from time to time resolve without notice
other than such resolution.
(iii) Special meetings of the Board of Directors may be held at any
time upon call of the Chairman of the Board of Directors or a
majority of the Directors of the Corporation, at such time and at
such place as shall be specified in the call thereof.
(iv) (A) Notice of any special meeting of the Board of Directors must
be given at least two days prior thereto, if by written
notice delivered personally; or at least five days prior
thereto, if mailed; or at least two days prior thereto, if
by telegram; or at least two days prior thereto, if by
telephone or E-mail, receipt confirmed.
(B) If such notice is given by mail, such notice shall be deemed
to have been delivered when deposited with the United States
Postal Service addressed to the business address of such
Director with postage thereon prepaid.
(C) If notice be given by telegram, such notice shall be deemed
delivered when the telegram is delivered to the telegraph
company.
(D) If notice is given by telephone (including facsimile
transmission), such notice shall be deemed delivered when
the call is completed.
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(E) If notice is given by E-mail, such notice shall be deemed
delivered when confirmation of receipt is obtained.
(c) (1) Notice of a meeting of the Board of Directors need not be
given to any Director who signs a waiver of notice either
before or after the meeting.
(2) Attendance of a Director at a meeting shall constitute a
waiver of notice of such meeting and waiver of any and all
objections to the place of the meeting, the time of the
meeting, or the manner in which it has been called or
convened, except when a Director states, at the beginning of
the meeting, any objection to the transaction of business
because the meeting is not lawfully called or convened.
(d) Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
(e) (1) A majority of the Directors present, whether or not a quorum
exists, may adjourn any meeting of the Board of Directors to
another time and place.
(2) Notice of any such adjourned meeting shall be given to the
Directors who were not present at the time of the
adjournment and, unless the time and place of the adjourned
meeting are announced at the time of the adjournment, to the
other Directors.
(f) (1) Members of the Board of Directors may participate in a
meeting of such Board by means of a conference telephone or
similar communications equipment by means of which all
persons participating in the meeting can communicate with
each other at the same time.
(2) Participation by such means shall constitute presence in
person at a meeting.
SECTION 8. Action by Directors Without a Meeting
(a) (1) Any action required by the Delaware General Corporation Law
to be taken at a meeting of the Directors of the
Corporation, or any action which may be taken at a meeting
of the Directors or a committee thereof, may be taken
without a meeting if a consent in writing, setting forth the
action so to be taken, signed by all of the Directors, or
all of the members of the committee, as the case may be, and
is filed in the minutes of the proceedings of the Board or
of the committee.
(2) Such consent shall have the same effect as a unanimous vote.
(b) If not contrary to applicable law, Directors may take action as
the Board of Directors or committees thereof through a written
consent to action signed by a number of Directors sufficient to
have carried a vote of the Board of Directors or committee
thereof with all members present and voting; provided, that all
Directors not joining in such written instrument shall be deemed
for all purposes to have cast dissenting votes, and that all
Directors not parties to such instrument shall receive written
notice of all action taken through such instrument within three
days after such instrument shall have been subscribed by the
requisite number of Directors required for such action.
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SECTION 9. Compensation
(a) The Directors and members of the Executive and any other committee of
the Board of Directors shall be entitled to such reasonable
compensation for their services and on such basis as shall be fixed
from time to time by resolution of the Board of Directors.
(b) The Board of Directors and members of any committee of that Board of
Directors shall be entitled to reimbursement for any reasonable
expenses incurred in attending any Board or committee meeting.
(c) Any Director receiving compensation under this Section shall not be
prevented from serving the Corporation in any other capacity and shall
not be prohibited from receiving reasonable compensation for such
other services.
SECTION 10. Resignation
(a) Unless he is the sole serving Director, any Director of the
Corporation may resign at any time by providing the Board of Directors
with written notice indicating the Director's intention to resign and
the effective date thereof.
(b) A sole serving Director of the Corporation must, at least concurrently
with his or her resignation, elect one or more successor Director(s)
at least one of whom must assume his or her office concurrently with
the subject resignation, and the resignation shall be effected by
providing the successor Director(s) with written notice indicating the
Director's intention to resign and the effective date thereof.
ARTICLE III
OFFICERS
SECTION 1. Election; Number; Terms of Office
(a) (1) The officers of the Corporation shall consist of a Chairman of
the Board of Directors whose title may be designated as
"Chairman," a Chief Executive officer, a President, a Chief
Operating Officer, a Chief Financial Officer, one or more
Vice-Presidents, a Secretary and a Treasurer, each of whom shall
be elected by the Board of Directors at such time and in such
manner as may be prescribed by these Bylaws.
(2) Such other officers and assistant officers and agents as may be
deemed necessary may be elected or appointed by the Board of
Directors.
(3) The officers of the Corporation shall be hereinafter collectively
referred to as the "Officers."
(b) All Officers and agents, as between themselves and the Corporation,
shall have such authority and perform such duties in the management of
the Corporation as are provided in these Bylaws, or as may be
determined by resolution of the Board of Directors not inconsistent
with these Bylaws.
(c) Any two or more offices may be held by the same person, except for the
offices of President and Secretary.
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(d) A failure to elect a Chairman of the Board, Chief Executive Officer,
President, Chief Operating Officer, Chief Financial Officer, a Vice
President, a Secretary or a Treasurer shall not affect the existence
of the Corporation.
SECTION 2. Removal
(a) An Officer of the Corporation shall hold office until the election and
qualification of his successor; however, any Officer of the
Corporation may be removed from office by the Board of Directors
whenever in its judgment the best interests of the Corporation will be
served thereby.
(b) Such removal shall be without prejudice to the contract rights, if
any, of the person so removed.
(c) Election or appointment of an officer shall not of itself create any
contract right to employment or compensation or create an employer -
employee relationship.
SECTION 3. Vacancies
Any vacancy in any office from any cause may be filled for the
unexpired portion of the term of such office by the Board of Directors.
SECTION 4. Powers and duties
(a) (1) The Chairman of the Board of Directors shall preside over
meetings of the Board of Directors and the stockholders.
(2) Unless a separate Chief Executive Officer is elected, the
Chairman shall exercise the powers hereafter granted to that
office.
(3) Unless a Chairman of the Board is specifically elected, the
President shall be deemed to be the Chairman of the Board.
(b) (1) The Chief Executive Officer shall be the principal Officer of the
Corporation to whom all other Officers shall be subordinate.
(2) In the event no Chief Executive Officer is separately elected,
such office shall be assumed by the Chairman of the Board, and if
no such office has been filled, by the President.
(3) Except where by law the signature of the President is required or
unless the Board of Directors shall rule otherwise, the Chief
Executive Officer shall possess the same power as the President
to sign all certificates, contracts and other instruments of the
Corporation which may be authorized by the Board of Directors.
(c) (1) The Chief Operating Officer of the Corporation shall be
responsible for management of the day to day affairs of the
Corporation, subject to compliance with the directions of the
Board of Directors and of the Chief Executive Officer.
(2) He shall be responsible for the general day-to-day supervision of
the business and affairs of the Corporation.
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(3) He shall sign or countersign all certificates, contracts or other
instruments of the Corporation, as authorized by the Board of
Directors or as assigned by the Chief Executive Officer.
(4) He may, but need not, be a member of the Board of Directors.
(5) Unless otherwise provided by specific resolution of the Board of
Directors, the President shall be the Chief Operating Officer of
the Corporation.
(d) (1) In the absence of a separately elected or available Chief
Executive Officer or Chairman of the Board, the President shall
be the Chief Executive Officer of the Corporation and shall
preside at all meetings of the stockholders and the Board of
Directors.
(2) The Board of Directors will at all times retain the power to
expressly delegate the duties of the President to any other
Officer of the Corporation.
(e) (1) The Chief Financial Officer shall be responsible for coordinating
all financial aspects of the Corporation's operations, including
strategic financial planning, supervision of the Corporation's
Treasurer, Comptroller and outside auditors.
(2) In the event an Audit Committee of the Board of Directors is
designated and serving, he shall be responsible for keeping such
committee fully and timely informed of all matters under its
jurisdiction.
(3) The Chief Financial Officer shall, unless otherwise specifically
provided by the Board of Directors, serve as the Corporation's
principal compliance officer and shall be responsible for
overseeing preparation and filing of all reports of the
Corporation's activities required to be filed, either
periodically or on a special basis with the United States
Internal Revenue Service, the Securities and Exchange Commission
and with other federal, state or local governmental agencies.
(f) (1) The Vice President(s), if any, in the order designated by the
Board of Directors, shall exercise the functions of the President
in the event of the absence, disability, death, or refusal to act
of the President.
(2) During the time that any Vice President is properly exercising
the functions of the President, such Vice President shall have
all the powers of and be subject to all restrictions upon the
President.
(3) Each Vice President shall have such other duties as are assigned
to him from time to time by the Board of Directors or by the
President of the Corporation and shall be subject to such
specializing designations (e.g., "senior," executive," etc.) as
the Board of Directors may select.
(g) (1) The Secretary of the Corporation shall keep the minutes of
the meetings of the stockholders of the Corporation, and,
unless provided otherwise by the Chairman at any meeting of
the Board of Directors, the Secretary shall keep the minutes
of the meetings of the Board of Directors of the
Corporation.
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(2) The Secretary shall be the custodian of the minute books of
the Corporation and such other books and records of the
Corporation as the Board of Directors of the Corporation may
direct.
(3) The Secretary of the Corporation shall have the general
responsibility for maintaining the stock transfer books of
the Corporation, or of supervising the maintenance of the
stock transfer books of the Corporation by the transfer
agent, if any, of the Corporation.
(4) The Secretary shall be the custodian of the corporate seal
of the Corporation and shall affix the corporate seal of the
Corporation on contracts and other instruments as the Board
of Directors may direct.
(5) The Secretary shall perform such other duties as are
assigned from time by the Board of Directors, the Chief
Executive Officer, the Chairman, the Chief Operating Officer
or the President of the Corporation.
(h) (1) The Treasurer of the Corporation shall be directly subordinate to
the Chief Financial Officer.
(2) In the absence of a Chief Financial Officer, such office shall be
filled by the Treasurer.
(3) Unless otherwise specified by the Board of Directors, the
Treasurer shall have custody of all funds and securities owned by
the Corporation.
(4) The Treasurer shall cause to be entered regularly in the proper
books of account of the Corporation full and accurate accounts of
the receipts and disbursements of the Corporation.
(5) The Treasurer of the Corporation shall render a statement of the
cash, financial and other accounts of the Corporation whenever he
is directed to render such a statement by the Board of Directors
or by the President of the Corporation.
(6) The Treasurer shall at all reasonable times make available the
Corporation's books and financial accounts to any Director of the
Corporation during normal business hours.
(7) The Treasurer shall perform all other acts incident to the Office
of Treasurer of the Corporation, and he shall have such other
duties as are assigned to him from time to time by the Board of
Directors, the Chief Executive Officer, the Chairman, the Chief
Operating Officer or the President of the Corporation.
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(i) (1) The Corporation's Board of Directors shall designate a person
licensed to practice law in one of the states comprising the
United States as the Corporation's General Counsel and Chief
Legal Officer;
(2) The Corporation's General Counsel and Chief Legal Officer shall
coordinate the Corporation's legal affairs under the directions
of the Board of Directors and in coordination with the Chief
Executive Officer, to whom he or she shall report;
(3) The Board of Directors may appoint such subordinate legal
officers and assign them such functions as it may deem
appropriate.
(j) Other subordinate or assistant Officers appointed by the Board of
Directors or by the Chief Executive Officer, the Chairman, the Chief
Operating Officer or the President, if such authority is delegated to
them by the Board of Directors, shall exercise such powers and perform
such duties as may be delegated to them by the Board of Directors, the
Chief Executive Officer, the Chief Operating Officer or by the
President, as the case may be.
(k) In case of the absence or disability of any Officer of the Corporation
and of any person authorized to act in his place during such period of
absence or disability, the Board of Directors may from time to time
delegate the powers and duties of such Officer or any Director or any
other person whom it may select.
SECTION 5. Salaries
(a) The salaries of all Officers of the Corporation shall, except as
otherwise determined or required by an agreement entered into among
all the stockholders of the Corporation, be fixed by the Board of
Directors.
(b) No Officer shall be ineligible to receive such salary by reason of the
fact that he is also a Director of the Corporation and receiving
compensation therefor.
ARTICLE IV
LOANS TO EMPLOYEES AND OFFICERS;
GUARANTEE OF OBLIGATIONS OF EMPLOYEES AND OFFICERS
(a) This Corporation may lend money to, guarantee any obligation of, or
otherwise assist any Officer or other employee of the Corporation or
of a subsidiary, including any Officer or employee who is a Director
of the Corporation or of a subsidiary, whenever, in the judgment of
the Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the Corporation.
(b) The loan, guarantee or other assistance may be with or without
interest, and may be unsecured, or secured in such manner as the Board
of Directors shall approve including, without limitation, a pledge of
shares of stock of the Corporation.
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(c) Nothing in this Article shall be deemed to deny, limit or restrict the
powers of guarantee or warranty of this Corporation at common law or
under any statute.
ARTICLE V
STOCK CERTIFICATES; VOTING TRUSTS; TRANSFERS
SECTION 1. Certificates Representing Shares
(a) (1) Every holder of shares of this Corporation shall be entitled to
one or more certificates, representing all shares to which he is
entitled and such certificates shall be signed by the Chairman,
Chief Executive Officer, Chief Operating Officer, the President
or a Vice President and the Secretary or an Assistant Secretary
of the Corporation and may be sealed with the seal of the
Corporation or a facsimile thereof.
(2) The signatures of the Chairman, the Chief Executive Officer, the
Chief Operating Officer, the President or Vice President and the
Secretary or Assistant Secretary may be facsimiles if the
certificate is manually signed on behalf of a transfer agent or a
registrar other than the Corporation itself or an employee of the
Corporation.
(3) In case any Officer who signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such
Officer before such certificate is issued, it may be issued by
the Corporation with the same effect as if it were executed by
the appropriate Officer at the date of its issuance.
(b) Every certificate representing shares issued by this Corporation
shall, if shares are divided into one or more classes or series with
differing rights, state that the Corporation will furnish to any
stockholder upon request and without charge a full statement of: (i)
the designations, preferences, limitations, and relative rights of the
shares of each class or series authorized to be issued, and (ii) the
variations in the relative rights and preferences between the shares
of each such series, if the Corporation is authorized to issue any
preferred or special class in series and so far as the same have been
fixed and determined, and the authority of the Board of Directors to
fix and determine, the relative rights and preferences of subsequent
series.
(c) Every certificate representing shares which are restricted as to sale,
disposition or other transfer (including restrictions based on federal
or state securities and other laws) shall state that such shares are
restricted as to transfer and shall set forth or fairly summarize upon
the certificate, or shall state that the Corporation will furnish to
any stockholder upon request and without charge a full statement of,
such restrictions.
(d) Each certificate representing shares shall state upon the face
thereof:
(i) the name of the Corporation;
(ii) that the Corporation is organized under the laws of the State of
Delaware;
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(iii) the name of the person or persons to whom issued;
(iv) the number and class of shares, and the designation of the
series, if any, which such certificate represents; and
(v) the par value of each share represented by such certificate, or a
statement that the shares are without par value.
(e) No certificate shall be issued for any shares until they are fully
paid for and in the event that a certificate is erroneously issued or
compensation paid is subsequently discovered to be other than as
represented (e.g., dishonored checks, securities of a corporation
acquired in a reorganization where the representations and warranties
provided prove to be materially false, etc.), then the Board of
Directors shall promulgate a certified resolution detailing the nature
of the misrepresented consideration, and shall submit such certified
resolution to the person responsible for recording and effecting
transactions in the Corporation's securities; whereupon such
securities will be restricted from transfer and treated as no longer
outstanding for all purposes unless the Corporation becomes subject to
a judgment of a court of competent jurisdiction providing otherwise.
SECTION 2. Transfer Books
(a) The Corporation shall keep at its registered office or principal place
of business or in the office of its transfer agent or registrar, a
book (or books where more than one kind, class, or series of stock is
outstanding) to be known as the Stock Book, containing the names,
alphabetically arranged, addresses and Social Security numbers of
every stockholder and the number of shares each kind, class or series
of stock held of record.
(b) Where the Stock Book is kept in the office of the transfer agent, the
Corporation shall keep at its principal office copies of the stock
lists prepared from said Stock Book and sent to it from time to time
(but not less frequently than every month) by said transfer agent.
(c) The Stock Book or stock lists shall show the current status of the
ownership of shares of the Corporation provided that, if the transfer
agent of the Corporation be located elsewhere, a reasonable time shall
be allowed for transit or mail.
SECTION 3. Transfer of Shares
(a) The name(s) and address(es) of the person(s) to whom shares of stock
of this Corporation are issued, shall be entered on the Stock Transfer
Books of the Corporation, with the number of shares and date of issue.
(b) (1) Transfer of shares of the Corporation shall be made on the Stock
Transfer Books of the Corporation by the Secretary or the
transfer agent, subject to compliance with any restrictions
specified on such certificate, only when the holder of record
thereof or the legal representative of such holder of record or
the attorney-in-fact of such holder of record, authorized by
power of attorney duly executed and filed with the Secretary or
transfer agent of the Corporation, shall surrender the
Certificate representing such shares for cancellation.
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(2) Lost, destroyed or stolen Stock Certificates shall be replaced
pursuant to Section 5 of this Article V.
(c) The person or persons in whose names shares stand on the books of the
Corporation shall be deemed by the Corporation to be the owner of such
shares for all purposes, except as otherwise provided pursuant to
Sections 10 and 11 of Article I, or Section 4 of Article V.
(d) Shares of the Corporation's capital stock shall be freely transferable
without required Board of Directors' consent, unless such shares are
subject to transfer restrictions under Securities and Exchange
Commission Rule 144 or a consent requirement has been imposed pursuant
to a binding written contract subscribed to by the holder or his or
her predecessor in interest.
(e) (1) All transactions in securities subject to any restrictions
imposed under Securities and Exchange Commission Rule 144
("restricted securities" and "Rule 144," respectively) shall, as
a condition to transfer, require the following documentation, to
be reviewed and approved by legal counsel to the Corporation:
(A) An affidavit from the holder (the "Holder") providing
details concerning acquisition of the subject shares;
providing evidence of the date when consideration for the
shares was paid in full; detailing all transactions in the
Corporation's securities during the immediately preceding 90
days; affirming a present intent to dispose of the subject
securities; affirming that a Form 144 has been filed with
the Securities and Exchange Commission covering the proposed
transaction (and providing a copy thereof); affirming
compliance with any reporting obligations under Sections
13(d), 13(g) or 16(b) of the Exchange Act and providing such
other facts or representations as legal counsel to the
Corporation may reasonably require;
(B) A written confirmation by the Corporation's transfer agent
based on records available thereto of all transactions in
the Corporation's securities by the Holder and anyone with
whom the holder is required to aggregate sales or securities
holdings for purposes of Rule 144, as well as confirmation
of the percentage of outstanding securities of the
Corporation held of record by the Holder and anyone with
whom the holder is required to aggregate sales or securities
holdings for purposes of Rule 144;
(C) Except as provided below, a written confirmation from the
broker through whom the Holder is effecting the proposed
transaction verifying that the transaction will be effected
in full compliance with Rule 144; and
(D) A legal opinion from counsel to the Holder (who may not also
be the counsel to the Corporation) specifically addressing
all aspects of Rule 144 and detailing the manner in which
they are being complied with or the reasons that they are
not applicable.
(2) Transactions in restricted securities that are not being effected
in reliance on Rule 144 shall require, as a condition to
transfer, the following documentation, to be reviewed and
approved by legal counsel to the Corporation:
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(A) An affidavit from the holder (the "Holder") providing
details concerning acquisition of the subject shares;
providing evidence of the date when consideration for the
shares was paid in full; the identity and qualifications of
the person to whom the securities are being transferred; the
manner in which such person has been provided with required
information concerning the Corporation; affirming compliance
with any reporting obligations under Sections 13(d), 13(g)
or 16(b) of the Exchange Act and providing such other facts
or representations as legal counsel to the Corporation may
reasonably require;
(B) A legal opinion from counsel to the Holder (who may not also
be the counsel to the Corporation) addressed to the
Corporation in a manner creating enforceable privity between
such legal counsel and the Corporation, specifically
addressing all aspects of the exemptions relied on to effect
the proposed transaction without registration under
applicable federal and state securities laws and
regulations, and detailing the manner in which they are
being complied with or the reasons that they are not
applicable.
(3) No transactions in the Corporation's restricted securities
failing to materially comply with the foregoing requirements will
be honored, nor will any holding period required under Rule 144
be deemed to commence until all such requirements are materially
complied with (material compliance to be determined in the sole
discretion of the Corporation's Board of Directors).
SECTION 4. Voting Trusts
(a) (1) Any number of stockholders of the Corporation may create a voting
trust for the purpose of conferring upon a trustee or trustees
the right to vote or otherwise represent their shares, for a
period not to exceed ten years, by: (i) entering into a written
voting trust agreement specifying the terms and conditions of the
voting trust; (ii) depositing a counterpart of the agreement with
the Corporation at its registered office; and (iii) transferring
their shares to such trustee or trustees for the purposes of this
Agreement.
(2) Prior to the recording of the agreement, the stockholder
concerned shall render the stock certificate(s) described therein
to the Corporate Secretary who shall note on each certificate:
"This Certificate is subject to the provisions of a voting trust
agreement dated ..........., recorded in Minute Book
............, of the Corporation.
(b) (1) Upon the transfer of such shares, voting trust certificates shall
be issued by the trustee or trustees to the stockholders who
transfer their shares in trust.
(2) Such trustee or trustees shall keep a record of the holders of
voting trust certificates evidencing a beneficial interest in the
voting trust, giving the names and addresses of all such holders
and the number and class or the shares in respect of which the
voting trust certificates held by each are issued, and shall
deposit a copy of such record with the Corporation at its
registered office.
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(c) The counterpart of the voting trust agreement and the copy of such
record so deposited with the Corporation shall be subject to the same
right of examination by a stockholder of the Corporation, in person or
by agent or attorney, as are the books and records of the Corporation,
and such counterpart and such copy of such record shall be subject to
examination by any holder of record of voting trust certificates
either in person or by agent or attorney, at any reasonable time for
any proper purpose.
(d) (1) At any time before the expiration of a voting trust agreement as
originally fixed or as extended one or more times under this
Section 4(d), one or more holders of voting trust certificates
may, by agreement in writing, extend the duration of such voting
trust agreement, nominating the same or substitute trustees, for
an additional period not exceeding 10 years.
(2) Such extension agreement shall not affect the rights or
obligations or persons not parties to the agreement, and such
persons shall be entitled to remove their shares from the trust
and promptly to have their stock certificates reissued upon the
expiration of the original term of the voting trust agreement.
(3) The extension agreement shall in every respect comply with and be
subject to all the provisions of this Section 4, applicable to
the original voting trust agreement except that the 10 year
maximum period of duration shall commence on the date of adoption
of the extension agreement.
(e) The trustees under the terms of the agreements entered into under the
provisions of this Section 4, shall not acquire the legal title to the
shares but shall be vested only with the legal right and title to the
voting power which is incident to the ownership of the shares.
(f) Notwithstanding generally applicable prohibitions against a
corporation's voting of treasury stock, if the Corporation is the
trustee under a voting trust, it shall have full authority to vote
such shares in accordance with the terms of the voting trust
agreement, even if such agreement vests absolute and unfettered voting
discretion in the trustee and notwithstanding that the voting trust
was created at the prompting or direction of the Corporation, its
officers or Directors.
SECTION 5. Lost, Destroyed, or Stolen Certificates
No Certificate representing shares of stock in the Corporation shall be
issued in place of any Certificate alleged to have been lost, destroyed, or
stolen except on production of evidence, satisfactory to the Board of Directors,
of such loss, destruction or theft, and, if the Board of Directors so requires,
upon the furnishing of an indemnity bond in such amount (but not to exceed twice
the fair market value of the shares represented by the Certificate) and with
such terms and with such surety as the Board of Directors may, in its
discretion, require.
ARTICLE VI
BOOKS AND RECORDS
(a) The Corporation shall keep correct and complete books and records of
account and shall keep minutes of the proceedings of its stockholders,
Board of Directors and committees of Directors.
(b) Any books, records and minutes may be in written form or in any other form
capable of being converted into written form within a reasonable time.
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(c) Any person who shall have been a holder of record of shares, or the holder
of record of voting trust certificates for, at least five percent of the
outstanding shares of any class or series of the Corporation, upon written
demand stating the purpose thereof, shall; subject to the qualifications
contained in subsection (d) hereof, have the right to examine, in person or
by agent or attorney, at any reasonable time or times, for any purpose, its
relevant books and records of account, minutes and records of stockholders
and to make extracts therefrom.
(d) (1) No stockholder who within two years has sold or offered for sale any
list of stockholders or of holders of voting trust certificates for
shares of this Corporation or any other corporation; has aided or
abetted any person in procuring any list of stockholders or of holders
of voting trust certificates for any such purpose; or has improperly
used any information secured through any prior examination of the
books and records of account, minutes, or record of stockholders or of
holders of voting trust certificates for shares of the Corporation of
any other corporation; shall be entitled to examine the documents and
records of the Corporation as provided in Section (c) of this Article
VI.
(2) No stockholder who does not act in good faith or for a proper purpose
in making his demand shall be entitled to examine the documents and
records of the Corporation as provided in Section (c) of this Article
VI.
(e) Unless modified by resolution of the stockholders, this Corporation shall
prepare not later than 90 days after the close of each fiscal year, audited
financial statements, including all required schedules, prepared in
accordance with Generally Accepted Accounting Principals ("GAAP")
consistently applied; and shall prepare not later than 45 days after the
close of each fiscal quarter (other than the fourth quarter), quarterly
unaudited financial statements, including all required schedules, prepared
in accordance with Generally Accepted Accounting Principals ("GAAP").
(f) Upon the written request of any stockholder or holder of voting trust
certificates for shares of the Corporation, the Corporation shall mail to
such stockholder or holder of voting trust certificates a copy of its most
recent balance sheet and profit and loss statement.
(g) Such financial statements shall be filed and kept for at least five years
in the registered office of the Corporation in the State of Delaware and
shall be subject to inspection during business hours by any stockholder or
holder of voting trust certificates, in person or by agent.
ARTICLE VII
DIVIDENDS
The Board of Directors of the Corporation may, from time to time, declare,
and the Corporation may pay dividends on its own shares, except when the
Corporation is insolvent or when the payment thereof would render the
Corporation insolvent, subject to the following provisions:
(a) Dividends in cash or property may be declared and paid, except as otherwise
provided in this Article VII, only out of the unreserved and unrestricted
earned surplus of the Corporation or out of capital surplus, however
arising, but each dividend paid out of capital surplus shall be identified
as a distribution of capital surplus, and the amount per share paid from
such capital surplus shall be disclosed to the stockholders receiving the
same concurrently with the distribution.
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(b) If the Corporation shall engage in the business of exploiting natural
resources or other wasting assets and if the Certificate so provides,
dividends may be declared and paid in cash out of depletion or similar
reserves, but each such dividend shall be identified as distribution of
such reserves and the amount per share paid from such reserves shall be
disclosed to the stockholders receiving the same concurrently with the
distribution thereof.
(c) Dividends may be declared and paid in the Corporation's treasury shares.
(d) Dividends may be declared and paid in the Corporation's authorized but
unissued shares, out of any unreserved and unrestricted surplus of the
Corporation, upon the following conditions:
(i) If a dividend is payable in the Corporations' own shares having a par
value, such shares shall be issued at not less than the par value
thereof and there shall be transferred to stated capital at the time
such dividend is paid an amount of surplus equal to the aggregate par
value of the shares to be issued as a dividend.
(ii) If a dividend is payable in the Corporations' own shares without par
value, such shares shall be issued at a stated value fixed by the
Board of Directors by resolution adopted at the time such dividend is
declared, and there shall be transferred to stated capital at the time
such dividend is paid an amount of surplus equal to the aggregate
stated value so fixed and the amount per share so transferred to
stated capital shall be disclosed to the stockholders receiving such
dividend concurrently with the payment thereof.
(e) No dividend payable in shares of any class shall be paid to the holders of
shares of any other class unless the Certificate of Incorporation so
provides or such payment is authorized by the affirmative vote or the
written consent of the holders of at least a majority of the outstanding
shares of the class to which the payment is to be made.
(f) A split or division of the issued shares of any class into a greater number
of shares of the same class without increasing the stated capital of the
Corporation shall not be construed to be a stock dividend within the
meaning of this Article VII.
ARTICLE VIII
SEAL
The Board of Directors shall adopt a Corporate Seal which shall be circular
in form and shall have inscribed thereon the name of the Corporation, the state
of incorporation and the year of incorporation.
ARTICLE IX
INDEMNIFICATION
This Corporation shall indemnify its officers, Directors and authorized
agents for all liabilities incurred directly, indirectly or incidentally to
services performed for the Corporation, to the fullest extent permitted under
Delaware law existing now or hereinafter enacted.
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ARTICLE X
AMENDMENT OF BYLAWS
The Board of Directors shall have the power to amend, alter, or repeal
these Bylaws, and to adopt new Bylaws.
ARTICLE XI
FISCAL YEAR
The fiscal year of this Corporation shall be determined by the Board of
Directors.
ARTICLE XII
MEDICAL REIMBURSEMENT
SECTION 1. Benefits
(a) The Corporation may, subject to approval of the Board of Directors
reimburse all employees for expenses incurred by themselves and their
dependents, as defined in Section 152 of the Internal Revenue Code of 1986,
as amended (the "IRC"), for medical care, as defined in IRC Section 213(e)
or any successor section thereto, subject to the conditions and limitations
hereinafter set forth.
(b) It is the intention of the Corporation that the benefits payable to
employees hereunder will be excluded from their gross income pursuant IRC
Section 105 or any successor section thereto.
SECTION 2. Employees Defined
The term "employees" as used in this medical expense plan is hereby defined
to include all individuals employed by the corporation except the following:
(a) Employees who have not completed three months of service as is provided in
IRC Section 105(h)(3) (b)(i), or any successor section thereto;
(b) Employees who have not attained the age of 25 years;
(c) Employees who are part-time or seasonal as is defined in IRC Section
105(h)(3)(B)(iii) or any successor section thereto;
(d) Employees who are included in a unit of employees covered by an agreement
between employee representatives and one or more employers found to be a
collective bargaining agreement; where accident and health benefits were
the subject of good faith bargaining between such employee representatives
and such employer(s) as is defined in IRC Section 105(h)(3)(B)(iv) or any
successor section thereto;
(e) Employees who are nonresident aliens and who receive no earned income from
the employer which constitutes income from sources within the United States
as is further defined in IRC Section 105(h)(5)(B)(v) or any successor
section thereto.
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SECTION 3. Limitations
(a) The Corporation will reimburse any employee no more than $5,000.00 in any
fiscal year for medical care expenses;
(b) Reimbursement or payment provided under this plan will be made by the
Corporation only in the event and to the extent that such reimbursement or
payment is not provided under any insurance policy(ies), whether owned by
the Corporation or the employee, or under any other health and accident or
wage continuation plan;
(c) In the event that there is such an insurance policy or plan in effect
providing for reimbursement in whole or in part, then to the extent of the
coverage under such policy or plan, the Corporation will be relieved of any
and all liability hereunder.
SECTION 4. Submission of Proof
(a) Any employee applying for reimbursement under this plan will submit to the
Corporation, at least quarterly, all bills for medical care, including
premium notices for accident or health insurance, for verification by the
Corporation prior to payment.
(b) Failure to comply herewith, may at the discretion of the Board of
Directors, terminate such employee's right to said reimbursement.
SECTION 5. Discontinuation
This plan will be subject to termination at any time by vote of the Board
of Directors; provided, however, that medical care expenses incurred prior to
such termination will be reimbursed or paid in accordance with the terms of this
plan.
SECTION 6. Determination
(a) The Chief Executive Officer will determine all questions arising from the
administration and interpretation of the Plan except where reimbursement is
claimed by the Chief Executive Officer.
(b) Where reimbursement is claimed by the Chief Executive Officer determination
will be made by the Board of Directors.
The Undersigned, being the duly elected and acting Secretary of the
Corporation, hereby certifies that the foregoing constitute the validly adopted
and true Bylaws of the Corporation, as of the date set forth below.
Dated: December 14th 1999
/s/ Vanessa H. Lindsey
------------------------
Vanessa H. Lindsey
Secretary
(Corporate Seal)
241
Consulting Agreement Amendment
This Consulting Agreement Amendment (the "Amendment") is made and
entered into by and between AmeriNet Group.com, Inc., a publicly held Delaware
corporation with a class of equity securities registered under Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
currently trading on the over the counter bulletin board operated by but not a
part of the NASD under the symbol "ABUY" ("AmeriNet"); and, The Yankee
Companies, Inc., a Florida corporation ("Yankees"; AmeriNet and Yankees being
hereinafter collectively referred to as the "Parties" and generically as a
"Party").
Preamble :
WHEREAS, the Parties entered into a long term consulting agreement
during November of 1998, which calls for the payment of cash fees
starting on November 24, 1999, but AmeriNet lacks the liquid resources
to make such payments, and has requested that Yankees consider
alternative compensation arrangements; and
WHEREAS, Yankees is agreeable to such a modification but believes that
the arrangements must be adequately flexible to permit additional
modifications if required to avoid distortion of the accounting
treatment of AmeriNet's earnings; and
WHEREAS, the Parties have determined that amendment of the Agreement as
set forth below is in their mutual best interests:
NOW, THEREFORE, in consideration for Yankees's agreement to render the
hereinafter described services as well as of the premises, the sum of
TEN ($10) DOLLARS, and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Parties,
intending to be legally bound, hereby agree as follows:
Witnesseth:
FIRST: Amendments
Section 1.4 of the Agreement is hereby amended as follows:
(A) The initial 365 day period during which AmeriNet is not required to pay
hourly or licensing fees for Yankees services or the use of proprietary
Yankees documents is extended until December 31, 2000, provided,
however, that AmeriNet shall pay compensation in shares of its common
stock for the use of Yankees general counsel as its general counsel, or
for the use of any other Yankees personnel as an officer or director,
based on negotiations and agreements separate and apart from the
Agreement or this Amendment.
(B) The term of the Yankees Class A Options and the related Warrant is
hereby extended to the later of December 31, 2003 or the sixth month
following registration of the Class A Options and the underlying common
stock with the Securities and Exchange Commission; provided that no
part of the Class A Options may be exercised until after January 1,
2001 unless the Agreement is terminated.
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(C) The quantity of the Registrant's common stock subject to the Class A
Options and the related Warrant is hereby increased from 10% to 12.5%
of AmeriNet's outstanding or reserved common stock (the term reserved
indicating stock not issued but allocated for a specific purpose such
as to cover obligations under existing options or agreements and shall
not merely refer to authorized common stock not so specifically
allocated), measured as of the time the last share of common stock
subject to the Warrant is issued, and the aggregate cost for exercise
thereof is hereby increased from $60,000 to $90,000.
(D) Yankees shall continue to have preferential rights to subscribe for any
securities offered by the Registrant by being entitled to a right of
first refusal with reference to subscription therefor at a price equal
to 50% of the price paid by any other subscriber to the subject
offering, limited offering, rights offering or private placement.
SECOND: Survival of Non-amended provisions
Except as amended hereby or as required to fully implement the intent of
the amendments effected hereby, the Agreement shall remain in full force and
effect, except that the Parties hereby agree that to the extent possible under
generally accepted accounting principals and the auditing rules of the
Securities and Exchange Commission, the compensation granted to Yankees under
the Agreement, as amended hereby, shall not be interpreted to require AmeriNet
to treat non-cash compensation as though it had been paid in cash, as an
expense, and then the cash received had been contributed by Yankees to AmeriNet
as a capital contribution, and if such interpretation cannot be legally avoided,
the Parties agree to make negotiate in good faith to modify the terms of the
Agreement so as to provide the compensation called for in a manner that avoids
such accounting treatment.
In Witness Whereof, the Parties have executed this Agreement, effective as
of the last date set forth below.
Signed, Sealed & Delivered
In Our Presence
AmeriNet Group.com, Inc.
- ----------------------------
/s/ Micahel H. Jordan
____________________________ By: ____________________________
Michael Harris Jordan, President
Dated: November 23, 1999
The Yankee Companies, Inc.
- ----------------------------
/s/ Leonard M. Tucker
____________________________ By: ____________________________
Leonard Miles Tucker, President
Dated: November 23, 1999
243
Warrant Agreement
THIS WARRANT AGREEMENT is made and entered into by and between AmeriNet
Group.com, Inc., a Delaware corporation (the "Issuer") and The Yankee Companies,
Inc., a Florida corporation (hereinafter referred to variously as the "Holder"
or "Yankees").
PREAMBLE:
WHEREAS, the Issuer and Yankees entered into a certain strategic
consulting agreement during November of 1998 (hereinafter the "Advisory
Agreement"), pursuant to which Yankees is entitled to receive certain
compensation, including among other things, warrants ("Warrants") to purchase
shares of the Issuer's common stock, $0.01 par value per share ("Common Stock"),
upon and subject to the terms and conditions of the Advisory Agreement; and
WHEREAS, the Parties have amended the Advisory Agreement in a manner
that changed the terms of the original warrant agreement also executed during
November of 1998 (the "Original Warrant"), and have determined that a new
warrant agreement must be executed and exchanged for the Original Warrant
Agreement:
NOW, THEREFORE, in consideration of the premises, the payment by the
Holder to or for the benefit of the Issuer of FIVE ($5.00) DOLLARS, the
agreements herein set forth, the cancellation of the Original Warrant Agreement
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agrees as follows:
WITNESSETH:
1. Grant
The Holder is hereby granted the right to purchase shares of the
Issuer's Common Stock in an amount equal to 12.5% of the Issuer's
outstanding or reserved Common Stock immediately following complete
exercise of all the Warrants, at any time from June 30, 2000 until the
later of the close of business on December 31, 2003 or the 183rd day
after this Warrant and the shares of Common Stock into which it can be
exercised are registered for sale to the public under applicable
federal and state securities laws, provided, however, that the Holder
shall have the option of exercising this Warrants prior to such
registration at a 50% discount from the otherwise applicable exercise
price, subject to the resale restrictions imposed by Securities and
Exchange Commission Rule 144, but subject to the piggy back and
registration provisions hereinafter set forth.
2. Warrant Certificates.
The warrant certificates (the"Warrant Certificates") delivered and to
be delivered pursuant to this agreement shall be in the form set forth
in Exhibit A attached hereto and made a part hereof, with such
appropriate insertions, omissions, substitutions, and other variations
as required or permitted by this Agreement.
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3. Exercise of Warrant.
ss.3.1 Method of Exercise
(a) The Warrants initially are exercisable at an initial exercise price
(subject to adjustment as provided in Section 8 hereof) per share of
Common Stock set forth in Section 6 hereof payable by certified or
official bank check in New York Clearing House funds, subject to
adjustment as provided in Section 8 hereof.
(b) Upon surrender of a Warrant Certificate with the annexed Form of
Election to Purchase duly executed, together with payment of the
Exercise Price (as hereinafter defined) for the shares of Common Stock
purchased at the Issuer's principal offices, as reflected in the
records of the Securities and Exchange Commission maintained on its
EDGAR Internet site, the registered holder of a Warrant Certificate
("Holder" or "Holders') shall be entitled to receive a certificate or
certificates for the shares of Common Stock so purchased.
(c) The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder thereof, in whole or in part
(but not as to fractional shares of the Common Stock underlying the
Warrants).
(d) Warrants may be exercised to purchase all or part of the shares of
Common Stock represented thereby.
(e) In the case of the purchase of less than all the shares of Common Stock
purchasable under any Warrant Certificate, the Issuer shall cancel said
Warrant Certificate upon the surrender thereof and shall execute and
deliver a new Warrant Certificate of like tenor for the balance of the
shares of Common Stock.
ss.3.2 Exercise by Surrender of Warrant.
(a) (1) In addition to the method of payment set forth in Section 3.1 and in
lieu of any cash payment required thereunder the Holder(s) of the
Warrants shall have the right at any time to and from time to time
exercise the Warrants in full or in part by surrendering the Warrant
Certificate in the manner specified in Section 3.1 in exchange for the
number of shares of Common Stock equal to the product of (x) the
number of shares to which the Warrants are being exercised multiplied
by (y) a fraction, the numerator of which is the Market Price (as
defined in Section 8.1 hereof) of the Common Stock less the Exercise
Price and the denominator of which is such Market Price.
(2) The Parties acknowledge that this optional form of exercise is
designed to permit tacking of the Warrant holding period to that of
the Common Stock received upon exercise thereof, for purposes of SEC
Rule 144, under the concept commonly referred to as "cashless
exercise."
(b) Solely for the purposes of this Section 3.2, Market Price shall be
calculated either (i) on the date on which the form of election
attached hereto is deemed to have been sent to the Issuer pursuant to
Section 13 hereof ("Notice Date") or (ii) as the average of the Market
Price for each of the five trading days preceding the Notice Date,
whichever of (i) or (ii) is greater.
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4. Issuance of Certificates.
(a) Upon the exercise of the Warrant the issuance of certificates for shares of
Common Stock or other securities, properties or rights underlying such
Warrants, shall be made forthwith (and in any event such issuance shall be
made within five [5] business days thereafter) without charge to the Holder
thereof including, without limitations any tax which may be payable in
respect of the issuance thereof and such certificates shall (subject to the
provisions of Sections 5 and 7 hereof) be issued in the name of, or in such
names as may be directed by, the Holder thereof; provided, however, that
the Issuer shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any such
certificates in a name other than that of the Holder arid the Issuer shall
not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the
Issuer the amount of such tax or shall have established to the satisfaction
of the Issuer that such tax has been paid.
(b) The Warrant Certificates and the certificates representing the shares of
Common Stock (and/or other securities, property or rights issuable upon
exercise of the Warrants) shall be executed on behalf of the Issuer by the
manual or facsimile signature of the then present Chairman or Vice Chairman
of the Board of Directors or President or Vice President of the Issuer
under its corporate seal reproduced thereon, attested to by the manual or
facsimile signature of the then present Secretary or Assistant Secretary of
the Issuer.
(c) Warrant Certificates shall be dated the date of execution by the Issuer
upon initial issuance, division, exchange, substitution or transfer.
5. Restriction On Transfer of Warrants.
The Holder of a Warrant Certificate, by its acceptance thereof, covenants
and agrees that the Warrants are being acquired as an investment and not with a
view to the distribution thereof, unless they are properly registered as
contemplated hereby or are eligible for applicable exemptions from registration.
6. Exercise Price.
ss.6.1 Initial and Adjusted Exercise Price.
(a) (1) The initial exercise price of each Warrant shall be based on dividing
the sum of $90,000 by 12.5% of the number of the Issuer's authorized
and outstanding shares of Common Stock plus 12.5% of the number of the
Issuer's shares of Common Stock reserved for issuance under currently
determinable circumstances (e.g., outstanding options, warrants,
convertible debentures, commitments under employment, reorganization
or acquisition agreements or shares issuable in conjunction with
pending acquisitions) at the time of exercise.
(2) For purposes of illustration, if the Issuer had 20,000,000 shares of
Common Stock authorized, of which 9,000,000 were outstanding and
1,000,000 were reserved for issuance under currently determinable
circumstances, then the Holder would be entitled to purchase 1,500,000
shares and the Warrant exercise price per share would be determined by
dividing $90,000 by 1,500,000 shares = ($0.06).
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(3) Consequently, any increase in the aggregate of authorized and reserved
shares will result in a decrease in the exercise price per share and
any decrease thereof will result in an increase in the exercise price
per share, the product of the shares of Common Stock underlying this
warrant and the exercise price per share always equaling $90,000.
(b) The adjusted exercise price shall be the price which shall result from time
to time from any and all adjustments of the initial exercise price in
accordance with the foregoing provisions and the provisions of Section 8
hereof.
ss.6.2 Exercise Price.
The term "Exercise Price" herein shall mean the initial exercise price or
the adjusted exercise price, depending upon the context.
7. Registration Rights.
ss.7.1 Registration Under the Securities Act of 1933.
(a) The Warrants and the shares of Common Stock issuable upon exercise of the
Warrants and any of the other securities issuable upon exercise of the
Warrants have not been registered under the Securities Act of 1933, as
amended (the "Act") for public resale.
(b) Upon exercise, in part or in whole, of the Warrants, certificates
representing the shares of Common Stock and any other securities issuable
upon exercise of the Warrants (collectively, the "Warrant Securities")
shall bear the following legend:
(c) The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended ("Act') for public resale, and
may not be offered or sold except pursuant to (i) an effective registration
statement under the Act, (ii) to the extent applicable, Rule 144 under the
Act (or any similar rule under such Act relating to the disposition of
securities), or (iii) an opinion of counsel, if such opinion shall be
reasonably satisfactory to counsel to the issuer, that an exemption from
registration under such Act is available.
ss.7.2 Piggyback Registration.
(a) If, at any time after the date hereof the Issuer proposes to register any
of its securities under the Act (other than in connection with a merger or
pursuant to Form S-8, S-4 or comparable registration statement) it will
give written notice by registered mail, at least thirty (30) days prior to
the filing of each registration statement, to Yankees and to all other
Holders of the Warrants and/or the Warrant Securities of its intention to
do so.
(b) If Yankees or other Holders of the Warrants and/or Warrant Securities
notify the Issuer within twenty (20) days after receipt of any such notice
of its or their desire to include any such securities in such proposed
registration statement, the Issuer shall afford Yankees and such Holders of
the Warrants and/or Warrant Securities the opportunity to have any such
Warrant Securities registered under such registration statement.
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ss.7.3 Demand Registration.
(a) At any time during the term of this Warrant, the Holders of the Warrants
and/or Warrant Securities representing a "Majority" (as hereinafter
defined) of such securities (assuming the exercise of all of the Warrants)
shall have the right (which right is in addition to the registration rights
under Section 7.2 hereof), exercisable by written notice to the Issuer, to
have the Issuer prepare and file with the Commission, on one occasion, a
registration statement and such other documents, including a prospectus, as
may be necessary in the opinion of both counsel for the Issuer and counsel
for Yankees and Holders, in order to comply with the provisions of the Act,
so as to permit a public offering and sale of their respective Warrant
Securities for nine (9) consecutive months by such Holders and any other
Holders of the Warrants and/or Warrant Securities who notify the Issuer
within ten (10) days after receiving notice from the Issuer of such
request.
(b) The Issuer covenants and agrees to give written notice of any registration
request under this Section 7.3 by any Holder or Holders to all other
registered Holders of the Warrants and the Warrant Securities within (10)
days from the date of the receipt of any such registration request.
(c) (1) Notwithstanding anything to the contrary contained herein, if the
Issuer shall not have filed a registration statement for the Warrant
Securities within the time period specified in Section 7.4(a) hereof
pursuant to the written notice specified in Section 7.3(a) of a
Majority of the Holders of the Warrants and/or Warrant Securities, the
Issuer agrees that upon the written notice of election of a Majority
of the Holders of the Warrants and/or Warrant Securities it shall
repurchase (i) any and all Warrant Securities at higher of the Market
Price (as defined in Section 8. l) per share of Common Stock on (x)
the date of the notice sent pursuant to Section 7.3(a) or (y) the
expiration of the period in Section 7.4(a) and (ii) any and all
Warrants at such Marker Price less the exercise price of such Warrant.
(2) Such repurchase shall be in immediately available funds and shall
close within two (2) days after the later of (i) the expiration of the
period specified in Section 7.4(a) or (ii) the delivery of the written
notice of election specified in this Section 7.3.
ss.7.4 Covenants of the Issuer, With Respect to Registration.
In connection with any registration under Section 7.2 or 7.3 hereof, the
Issuer covenants and agrees as follows:
(a) The Issuer shall use its best efforts to file a registration statement
within sixty (60) days of receipt of any demand therefor, shall use its
best efforts to have any registration statements declared effective at the
earliest possible time, and shall furnish the Holder desiring to sell
Warrant Securities such number of prospectuses as shall reasonably be
requested.
(b) (1) The Issuer shall pay all costs (excluding any underwriting or selling
commissions or over charges of any broker-dealer acting on behalf of
Holders), fees and expenses in connection with all registration
statements filed pursuant to Sections 7.2 and 7.3(a) hereof including,
without limitation, the Issuer's legal and accounting fees, printing
expenses, blue sky fees and expenses.
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(2) If the Issuer shall fail to comply with the provisions of Section
7.4(a), the Issuer shall, in addition to any other equitable or other
relief available to the Holder(s), be liable for any or all damages
due to loss of profit sustained by the Holder(s) requesting
registration of its Warrant Securities.
(c) The Issuer will take all necessary action which may be required in
qualifying or registering the Warrant Securities included in a registration
statement for offering and sale under the securities or blue sky laws of
the state requested by the Holder.
(d) The Issuer shall indemnify the Holder(s) of the Warrant Securities to be
sold pursuant to any registration statement and each person, if any, who
controls such Holder within the meaning of Section 15 of the Act or Section
20(a) of the Securities Exchange Act of 1934, as amended ("Exchange Act"),
against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which any of them may become subject under
the Act, The Exchange Act or otherwise, arising from such registration
statement.
(e) Nothing contained in this Agreement shall be construed as requiring the
Holder(s) to exercise their Warrants prior to the initial filing of any
registration statement or the effectiveness thereof.
(f) The Issuer shall not permit the inclusion of any securities other than the
Warrant Securities to be included in any registration statement filed
pursuant to Section 7.3 hereof, or permit any other registration statement
to be or remain effective during the effectiveness of a registration
statement filed pursuant to Section 7.3 hereof, without the prior written
consent of the Holders of the Warrants arid Warrant Securities representing
a Majority of such securities (assuming an exercise of all of the
Warrants).
(g) The Issuer shall furnish to each Holder participating in the offering, and
to each underwriter, if any, a signed counterpart, addressed to such Holder
or underwriter, of (i) an opinion of counsel to the Issuer, dated the
effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) a "cold comfort" letter
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering; a letter dated the
date of the closing under the underwriting agreement) signed by the
independent public accountants who have issued a report on the Issuer's
financial statements included in such registration statement, in each case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to agents subsequent to the date of such
financial statements, are as customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to underwriters in
underwritten public offering of securities.
(h) The Issuer shall as soon as practicable after the effective date of the
registration statement, and in any event within 15 months thereafter, make
"generally available to its security holders" (within the meaning of Rule
158 under the Act) an earnings statement (which need not be audited)
complying with Section 11(a) of the Act and covering a period of at least
12 consecutive months beginning after the effective date of the
registration agreement.
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(i) (1) The Issuer shall deliver promptly to each Holder participating in the
offering requesting the correspondence and memoranda described below
and the managing underwriter copies of all correspondence between the
Commission and the Issuer, its counsel or auditors and all memoranda
relating to discussions with the Commission or its staff with respect
to the registration statement and permit the Holder and underwriter to
do such investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the registration statement as
it deems reasonably necessary to comply with applicable securities
laws or rules of the National Association of Securities Dealers, Inc.
("NASD").
(2) Such investigation shall include access to books, records and
properties and opportunities to discuss the business of the Issuer
with its officers and independent auditors, all to such reasonable
extent and at such reasonable times and as often as any such Holder
shall reasonably request as it deems necessary to comply with
applicable securities laws or NASD rules.
(j) In addition to the Warrant Securities, upon the written request therefor by
any Holder(s), the Issuer shall include in the registration statement any
other securities of the Issuer held by such Holder(s) as of the date of
filing of such registration statement, including without limitation,
restricted shares of Common Stock, options, warrants or any other
securities convertible into shares of Common Stock.
(k) For purposes of this Agreement, the term "Majority" in reference to the
Holders of Warrants or Warrant Securities shall mean in excess of fifty
percent (50%) or the then outstanding Warrants or Warrant Securities that
(i) are not held by the Issuer, an affiliate, officer, creditor, employee
or agent thereof or any of their respective affiliates, members of their
family, persons acting as nominees or in conjunction therewith or (ii) have
not been resold to the public pursuant to a registration statement filed
with the Commission under the Act.
8. Adjustments to Exercise and Number of Securities.
ss.8.1 Computation of Adjusted Exercise Price.
The Adjusted Exercise Price shall be computed in the manner described and
illustrated in Section 6.1 of this Warrant Agreement.
ss.8.2 Dividends and Other Distributions.
(a) In the event that the Issuer shall at any time prior to the exercise of all
Warrants declare a dividend (other then a dividend consisting solely of
shares of Common Stock) or otherwise distribute to its stockholders any
assets, property, rights, evidences of indebtedness, securities (over than
shares of Common Stock), whether issued by the Issuer or by another, or any
other thing of value, the Holders of the unexercised Warrants shall
thereafter be entitled, in addition to the shares of Common Stock or other
securities and property receivable upon the exercise thereof, to receive,
upon the exercise of such Warrants, the same property, assets, rights,
evidences of indebtedness, securities or any other thing of value that they
would have been entitled to receive at the time of such dividend or
distribution as if the Warrants had been exercised immediately prior to
such dividend or distribution.
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(b) At the time of any such dividend or distribution, the Issuer shall make
appropriate reserves to ensure the timely performance of the provisions of
this Subsection 8.2.
ss.8.3 Subdivision and Combination.
In case the Issuer shall at any time subdivide or combine the outstanding
shares of Common Stock, the Exercise Price shall forthwith be
proportionately decreased in the case of subdivision or increased in the
case of combination.
ss.8.4 Adjustment in Number of Securities.
Upon each adjustment of the Exercise Price pursuant to the provisions of
this Section 8, the number of Securities issuable upon the exercise of each
Warrant shall be adjusted to the nearest full amount by multiplying, a
number equal to the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Securities issuable upon exercise of
the Warrants immediately prior to such adjustment and dividing the product
so obtained by the adjusted Exercise Price.
ss.8.5 Definition of Common Stock.
(a) For the purpose of this Agreement, the term "Common Stock" shall mean (i)
the class of stock designated as Common Stock in the Certificate of
Incorporation of the Issuer as may be amended as of the date hereof, or
(ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par
value.
(b) In the event that the Issuer shall after the date hereof issue securities
with greater or superior voting rights than the shares of Common Stock
outstanding as of the date hereof, the Holder, at its option, may receive
upon exercise of any Warrant either shares of Common Stock or a like number
of such securities with greater or superior voting rights.
ss.8.6 Merger or Consolidation.
(a) In care of any consolidation of the Issuer with, or merger of the Issuer
with, or merger of the Issuer into, another corporation (other than a
consolidation or merger which does not result in any reclassification or
change of the outstanding Common Stock), the corporation formed by such
consolidation or merger shall execute and deliver to the Holder a
supplemental warrant agreement providing that the holder of each Warrant
then outstanding or to be outstanding shall have the right thereafter
(until the expiration of such Warrant) to receive upon exercise of such
warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, by a holder of the
number of shares of Common Stock of the Issuer for which such warrant might
have been exercised immediately prior to such consolidation, merger, sale
or transfer.
(b) (1) Such supplemental warrant agreement shall provide for adjustments
which shall be identical to the adjustments provided in Section 8.
(2) The foregoing provision of this Subsection shall similarly apply to
successive consolidations or mergers.
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ss.8.7 No Adjustment of Exercise Price in Certain Cases.
No adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants or the shares of Common Stock
issuable upon the exercise of the Warrants; or
(b) If the amount of said adjustment shall be less than 1 cent ($.01) per
Security, provided, however, that in such case any adjustment that would
otherwise be required then to be made shall be carried forward and shall be
made at the time of and together with the next subsequent adjustment which,
together with any adjustment so carried forward, shall amount to at least 1
cent ($.01) per Security.
9. Exchange and Replacement of Warrant Certificates
(a) Each Warrant Certificate is exchangeable without expense, upon the
surrender thereof by the registered Holder at the principal executive
office of the Issuer, for a new Warrant Certificate of like tenor and date
representing in the aggregate the right to purchase the same number of
Securities in such denominations as shall be designated by the Holder
thereof at the time of such surrender.
(b) Upon by the Issuer of evidence reasonably satisfactory to it of loss,
theft, destruction or mutilation of any Warrant Certificate, and, in case
of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Issuer of all reasonable
expenses incidental thereto, and upon surrender and cancellation of the
Warrants if mutilated, the Issuer will make and deliver a new Warrant
Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests.
The Issuer shall not be required to issue certificates representing
fractions of shares of Common Stock upon the exercise of the Warrants, nor
shall it be required to issue scrip or pay cash in lieu of fractional
interests, it being the intent of the parties that all fractional interests
shall be eliminated by rounding any fraction up to the nearest whole number
of shares of Common Stock or other securities, properties or rights.
11. Reservation and Listing of Securities.
(a) The Issuer shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon
the exercise of the Warrants, such number of shares of Common Stock or
other securities properties or rights as shall be issuable upon the
exercise thereof.
(b) The Issuer covenants and agrees that, upon exercise of the Warrants and
payment of the Exercise Price therefor, all shares of Common Stock and over
securities issuable upon such exercise shall be duly and validly issued,
fully paid, non-assessable and not subject to the preemptive rights of any
stockholder.
(c) As long as the Warrants shall be outstanding, the Issuer shall use its best
efforts to cause all shares of Common Stock issuable upon the exercise of
the Warrants to be listed (subject to official notice of issuance) on all
securities exchanges on which the Common Stock issued to the public in
connection herewith may then be listed and/or quoted NASDAQ.
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12. Notice to Warrant Holders.
(a) Nothing contained in this Agreement shall be consented as conferring upon
the Holders the right to vote or to consent or to receive notice as a
stockholder in respect of any meetings of stockholders for the election of
directors or any other manner, or as having any rights whatsoever as a
stockholder of the Issuer.
(b) If, however, at any time prior to the expiration of the Warrants and their
exercise, any of the following events shall occur:
(1) the Issuer shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a
cash dividend or distribution payable otherwise than out of
current or retained earnings, as indicated by the accounting
treatment of such dividend or distribution on the books of the
Issuer; or
(2) the Issuer shall offer to all the holders of its Common Stock
any additional shares of capital stock of the Issuer or
securities convertible into or exchange for shares of capital
stock of the Issuer, or any option, right or warrant to
subscribe therefor: or
(3) a dissolution, liquidation or winding up of the Issuer other
than in connection with a consolidation or merger) or a sale
of all or substantially all of its property, assets and
business as an entirety shall be proposed;
then, in any one or more of said events the Issuer shall give notice of
such event at last fifteen (15) days prior to the date fixed as a record
date or the date of the closing the transfer books for the determination of
the stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale.
(c) Such notice shall specify such record date or the date of closing the
transfer books, as the case may be.
(d) Failure to give such notice or any defect herein shall not affect the
validity of any action taken in connection win the declaration or payment
of any such dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any proposed
dissolution, liquidation winding up or sale.
13. Notices.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made when delivered, or
mailed registered or certified mail, return receipt requested:
(a) If the Holders, The Yankee Companies, Inc., to 902 Clint Moore Road, 136;
Boca Raton, Florida 33487, WITH A COPY TO 1941 SOUTHEAST 51ST Terrace,
Ocala, Florida 34471, and as otherwise listed on the books of the Issuer,
or
(b) If to the Issuer, to the address set forth in Section 3 hereof or to such
other address as the Issuer may designate by notice to the Holders.
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14. Supplements and Amendments.
(a) Except as otherwise expressly provided herein, the provisions of this
Agreement may be amended or waived at any time only by the written
agreement of the parties hereto.
(b) Any waiver, permit, consent or approval of kind or character on the part of
each Company or the Holder of any provisions or conditions of this
Agreement must be made in writing and shall be effective only in the extent
specifically set forth in such writing.
15. Successors.
All the covenants and provisions of this Agreement shall be binding upon
and inure to the benefit of the Issuer, the Holder and their respective
successors and assigns hereunder.
16. Governing Law; Submission to Jurisdiction.
(a) This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Delaware and
for all the purposes shall be construed in accordance with the laws of said
State without giving effect to the rules of said State governing the
conflicts of laws.
(b) (1) The Issuer and the Holder hereby agree that any action, proceeding or
claim against it arising out of, or relating in any way to, this
Agreement shall be brought and enforced in the courts of the State of
Florida or of the United Slates of America for the Southern District
of Florida, and irrevocably submits to such jurisdiction, which
jurisdiction shall be exclusive.
(2) The Issuer, and the Holder hereby irrevocably waive any objection to
such exclusive jurisdiction or inconvenient forum.
(3) Any such process or summons to be served upon any of the Issuer and
the Holder (at the option of the party bringing such action,
proceeding or claim) may be served by transmitting a copy thereof, by
registered or certified mail, return receipt requested, postage
prepaid, address it at the address as set forth in Section 13 hereof.
(4) Such mailing shall deemed personal service and shall be legal and
binding upon the party so served in any action, proceeding or claim.
(5) The Issuer and the Holder agree that the prevailing party(ies) in any
such action or proceeding shall be entitled to recover from the other
party(ies) all of its/their reasonable legal costs and expenses
relating to such action or proceeding and/or incurred in connection
with the preparation therefor.
17. Entire Agreement Modification.
This Agreement and the Purchase Agreement (to the extent portions thereof
are referred to herein) contain the entire understanding between the
parties hereto with respect to the subject matter hereof and may not be
modified or amended except by a writing duly signed by the party against
whom enforcement of the modification or amendment is sought.
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18. Severability.
If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any
other provision of this Agreement.
19. Captions.
The caption headings of the Sections of this Agreement are for convenience
of reference only and are not intended, nor should they be construed as, a
part of this Agreement and shall be given no substantive effect.
20. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation over than the Issuer and the Holder any legal or equitable
right, remedy or claim under this Agreement; and this Agreement shall be
for the sole and exclusive 'benefit of the Issuer and the Holder.
21. Counterparts.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and,
such counterparts shall together constitute but one and the same
instrument.
In Witness Whereof, the Parties have executed this Agreement, effective as
of the last date set forth below.
Signed, Sealed & Delivered
In Our Presence
AmeriNet Group.com, Inc.
- ----------------------------
/s/ Michael H. Harris
____________________________ By: ____________________________
Michael Harris Jordan, President
[CORPORATE SEAL]
/s/ Vanessa H. Lindsey
Attest:____________________________
Vanessa H. Lindsey, Secretary
Dated: November 23, 1999
The Yankee Companies, Inc.
- ----------------------------
/s/ Leonard M. Tucker
____________________________ By: ____________________________
Leonard Miles Tucker
President
[CORPORATE SEAL]
/s/ Vanessa H. Lindsey
Attest:____________________________
Vanessa H. Lindsey, Secretary
Dated: November 23, 1999
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EXHIBIT A-1
FORM OF WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i)
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933; (ii) TO
THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH
ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL,
IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT
AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFERS OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE
IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, ___________ ___, ______
No. SB-1 _________
Warrants _________
---------
Warrant Certificate _________
---------
This Warrant Certificate certifies that The Yankee Companies, Inc., a
Florida corporation, or _________ registered assigns, is the registered holder
of Warrants to purchase initially, at any time from June 30, 2000, until 5:30
p.m. New York time on ___________ ___, ______ ("Expiration Date") up to
_________ fully- paid and non-assessable shares of common stock, $0,01 par value
per share ("Common Stock") of AmeriNet Group.com, Inc., a Delaware corporation
(the "Issuer"), at an initial exercise price, subject to adjustment in certain
events (the "Exercise Price"), of $_____ per share of Common Stock, upon
surrender of this Warrant Certificate and payment of the Exercise Price at an
office or agency of the Issuer or by surrender of this Warrant Certificate in
lieu of cash payment, but subject to the conditions set forth herein and in the
Warrant Agreement dated as of November 23, 1999 between the Issuer and The
Yankee Companies, Inc., (the "Warrant Agreement").
Unless the cashless exercise rights set forth in the Warrant Agreement are
exercised, payment of the Exercise Price shall be made by certified or official
bank check in New York Clearing House funds payable to the order of the Issuer.
No Warrant may be exercised after 5:30 p.m. New York time, on the
Expiration Date, at which time all Warrants evidenced hereby unless exercised
prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights,
obligations, duties and immunities thereunder of the Issuer and the holders (the
words "holders" or "holder" meaning the registered holders or registered holder)
of the Warrants.
In Witness Whereof, this instrument has been executed by the Issuer,
effective as of the last date set * forth below.
Signed, Sealed & Delivered
In Our Presence
AmeriNet Group.com, Inc.
- ----------------------------
____________________________ By: ____________________________
Michael Harris Jordan, President
[CORPORATE SEAL]
Attest:__________________________
Vanessa H. Lindsey, Secretary
Dated: November 23, 1999
256
<PAGE>
AmeriNet Group.com, Inc.
Warrant
Exercise Form
Date: _________ ___, ____
The Undersigned hereby irrevocably elects to exercise the subject Warrant
to the extent of purchasing ___ Shares and:
(A) [__] Hereby makes payment of $______, the actual exercise price thereof; or
(B) [__] Avails itself of the cashless exercise rights granted herein.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Please type or print in block letters
---------------------
(Name)
--------------------------------
--------------------------------
(Address)
Signature: _______________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, The Yankee Companies, Inc., a Florida corporation,
hereby sells, assigns and transfer unto:
(Please type or print in block letters)
-------------------------------
(Name)
-------------------------------
-------------------------------
(Address)
the right to purchase Shares represented by this Warrant to the extent of ______
Shares to which the within Warrant relates, and does hereby irrevocably
constitute and appoint ________________ attorney, to transfer the same on the
books of the Issuer with full power of substitution in the premises.
Dated: ____ ___, 199_
Signature: _______________________
Leonard Miles Tucker, President
of The Yankee Companies, Inc.,
a Florida corporation
NOTICE: The signatures to this partial
assignment of Warrant must
correspond with the name as written
upon the face of the Warrant in
every particular, without alteration
or enlargement or any change
whatever.
Signature Guaranteed:
IMPORTANT: SIGNATURE MUST BE GUARANTEED BY A FIRM WHICH IS A
MEMBER OF A REGISTERED NATIONAL EXCHANGE OR BY A
COMMERCIAL BANK OR A TRUST COMPANY!
257
AVN Communications
225 Gordons Corner Rd, Ste 2G
Manalapan, NJ 07726
Tel: 800-743-1208
Gax: 732-786-9044
www.avn.net
To: Trilogy International
1050 Southwest Chapman Way
Palm City, FL 34990
Attn: Carol Berardi
Per our previous discussions, we can set up the Trilogy-By-Phone voicemail
program with the following pricing structure:
Note: All time is charged at $.099 per minute for inbound or $.149 per
minute for follow-me or calling card.
PRICING:
1. Initial fee will be paid by Trilogy at a rate of $2.00 per customer,
including the first 30 minutes of calling time. 2. The monthly recurring fees
will be $15.95 with 30 minutes included in the plan. All subscribers must be on
automatic credit card or check draft options. 3. A commission of $3.00 per month
per subscriber will be paid to Trilogy.
(signature)
Scott Seltzer
AVN Communication
(signature)
Carol Berardi
Trilogy International
258
BELLSOUTH FRAME RELAY SERVICE AGREEMENT
The undersigned Subscriber requests BellSouth Telecommunications, Inc.
("Company") to provide Frame Relay Service and Broadband Exchange Line Service
at the following subscriber's location(s)
- ---------------------------------------------------------------------
================================================================================
Important tariff provisions relating to Frame Relay Service and Broadband
Exchange Line Service are set forth herein:
1. The Company will furnish, install, maintain and provide maintenance for Frame
Relay service ("Service") and Broadband Exchange Line Service ("Service") in
accordance with the Company's lawfully filed tariffs. The tariffs provide the
basis for this Agreement with the Subscriber. The Agreement period shall begin
the day Frame Relay Service is installed.
2. The Subscriber agrees to pay the Company for the provision of the Frame Relay
Service ("Service") and Broadband Exchange Line Service ("Service"). The Service
shall be offered for variable rate periods of 12 months to 60 months. This
monthly rate will continue for the elected service period and will not be
subject to Company initiated change during such period.
The monthly rates for Frame Relay Service and Broadband Exchange Line Service in
effect at the time the Service is installed and/or as of the service order
application date will be in effect until the expiration of the service period
chosen by the Subscriber. Other rates applicable to other services provided by
the Company, including but not limited to, feature charges and private line
channel services, that are connected to Frame Relay Service, may be increased
during this period.
3. The service period for this Agreement shall be months. The rates and charges,
per month, for items under this Agreement are:
Nonrecurring Recurring
Broadband Exchange Line FPO ____________ _________
Broadband Exchange Line Ext. ____________ _________
Customer Connection ____________ _________
4. In the event that any item of the Service is terminated prior to the
expiration of the service period, the Subscriber shall pay a Termination
Liability Charge as specified in the tariff. The Termination Liability Charge is
determined by multiplying the number of months remaining in the contract payment
period by the contracted monthly rate by 90 percent.
5. At the expiration of the service period, the Subscriber may continue the
Service according to renewal options provided under the tariff. If the
Subscriber does not elect an additional service period, or does not request
discontinuance of service, then the above Service will be continued at the
monthly rate then currently in effect for month-to-month rates. Service periods
may also be renewed prior to expiration in accordance with regulations and rates
then in effect.
6. Suspension of service is not permitted for Frame Relay Service or Broadband
Exchange Line Service.
259
<PAGE>
7. The Subscriber agrees to pay any added costs incurred by the Company due to a
Subscriber initiated change in the location of the Frame Relay Service prior to
the time it is placed in service.
8. In the event the Service requested by the Subscriber is canceled prior to the
establishment of Service, but after the date or ordering reflected herein, the
Subscriber is required to reimburse the Company for all expenses incurred in
handling the request before the notice of cancellation is received. Such
charge however, is not to exceed the sum of all charges which would apply if
the work involved in complying with the request had been completed.
9. Subject to the current provisions of applicable tariffs, the Subscriber may
arrange to have existing Service under this Agreement moved within the same
premises. Subscriber agrees to pay a non-recurring charge based upon the
estimated cost of such rearrangement without interruption or change in the
monthly rates.
10. Service may be transferred to another Subscriber at the same location upon
prior written concurrence of the Company. The new Subscriber to whom the Service
is transferred will be subject to all tariff provisions and equipment
configurations currently in effect for the present Subscriber.
This Agreement is effective when executed by the Subscriber and accepted by the
Company, and is subject to and controlled by the provisions of the Company's
lawfully filed tariffs, including any changes therein as may be made from time
to time.
ADDRESS:
BY: TITLE: _________________________
Print Name:______________________ Date: _________________________
BellSouth Telecommunications, Inc.
ACCEPTED: , 199 ,
BY: ________________________________
TITLE: ________________________________
260
LETTER OF ELECTION
The undersigned Subscriber requests BellSouth Telecommunications, Inc.
("Company") provide BellSouthR Primary Rate ISDN "PRI" at the central office
and/or Subscriber's location(s) at
1. The Company will furnish, maintain and provide maintenance of channel
services for PRI in accordance with the Company's lawfully filed tariffs. The
tariffs provide the basis for this Agreement with the Subscriber. The Agreement
period shall begin the day PRI service is installed.
2. The Subscriber agrees to pay Company for the provision of PRI ("Service").
The Service shall be offered for variable rate periods of 24 to 72 months. This
monthly rate will continue for the elected service period and will not be
subject to Company initiated change during such period.
3. Recognition of previous service will be given to the Subscriber who renews an
existing contract arrangement, for the same or larger system(s) and all
associated rate elements at the same location(s), provided that the length of
the new contract arrangement is a minimum 24 month service period or
equals/exceeds the remaining service period of the original contract
arrangement, whichever is greater.
4. Recognition of previous service will be given to the month-to-month
Subscriber with a service date of January 1, 1994 or later who converts to a
contract arrangement, provided the minimum service period has been met. For the
Subscriber whose service date is January 1, 1994 or earlier, recognition will be
given for the previous service back to January 1, 1994. For the Subscriber whose
service date is later than January 1, 1994, recognition for the previous service
will be given back to the actual service date.
-----------------------------------
Signature
Date
-----------------------------------
Printed Name Title
5. The service period for this Agreement shall be _____________ months. This
Agreement period includes months for recognition of previous service. The rates
and charges, per month, for items under this Agreement are:
QUANTITY
NON-RECURRING
RECURRING
PRI ACCESS LINE
PRI INTERFACE
PRI B CHANNELS
INTEROFFICE CHANNEL
ICE-MAX ONE CALL PER TELEPHONE NUMBER
261
<PAGE>
ICE-MORE THAN ONE SIMULTANEOUS CALL PER TELEPHONE NUMBER
ICE-ADDITIONAL PATHS
NEXT ROUTE INDEX-ANALOG
NEXT ROUTE INDEX-ANALOG/DIGITAL
OVERFLOW FEATURE FOR EXTENDED REACH SERVICE DEDICATED ROUTE ARRANGEMENT
6. In the event that any item of Service is terminated prior to the expiration
of the service period, the Subscriber shall pay a termination liability charge
as specified in the tariff.
-----------------------------------
Signature
Date
-----------------------------------
Printed Name Title
7. At the expiration of the service period, the Subscriber may continue the
Service according to renewal options provided under the tariff. If the
Subscriber does not elect an additional service period, or does not request
discontinuance of service, then the above Service will be continued at the
monthly rate currently in effect for month-to-month rates. Service periods may
also be renewed prior to expiration in accordance with regulations and rates in
effect.
8. Suspension of service is not permitted for PRI service.
9. The Subscriber agrees to pay any added costs incurred by the Company due to
a Subscriber initiated change in the location of the PRI service prior to the
time it is placed in service.
10. Subject to the current provisions of applicable tariffs, the Subscriber may
arrange to have existing Service under this Agreement moved within the same
premises. Subscriber agrees to pay a non-recurring charge based upon the
estimated cost of such arrangement without interruption or change in monthly
rates.
11. Service may be transferred to another Subscriber at the same location
upon prior written concurrence of the Company. The new Subscriber to whom
the Service is transferred will be subject to all tariff provisions and
equipment configurations currently in effect for the present Subscriber.
This Agreement is effective when executed by the Subscriber and accepted by the
Company, and is subject to and controlled b the provisions of the Company's
lawfully filed tariffs, including any changes therein as may be made from time
to time.
Customer Name __________________________________________________________
Signature _____________________________________ Date _____________________
Printed Name __________________________________ Title _____________________
BELLSOUTH TELECOMMUNICATIONS, INC
Signature ______________________________________ Date: ____________________
Printed Name ___________________________________ Title ____________________
262
Form CIC
CIBERLYNX INTERNET SERVICES AND EQUIPMENT
CONTRACT TERM COMMITMENT
This Agreement is made and entered into and between the undersigned,
Customer ("Customer"):
CiberLynx, Inc. ("CiberLynx"):
Trilogy
2363 SE Ocean Blvd
Stuart, Fl. 34996
and
A Florida Corporation,
550 Fairway Drive, Suite 210
Deerfield Beach, FL 33441
County of: Palm Beach
Effective Date: 8/6/99
and it sets forth the terms and conditions for the listed connection, as
provided by CiberLynx.
1. Service - CiberLynx shall provide access to its network pursuant to the
agreed upon specifications listed on Exhibit A, attached hereto. Maintenance of
the local circuit shall be the responsibility of the local carrier, and
CiberLynx shall not be responsible for service delays, disruption, loss, or
damage of any kind resulting from problems with the local circuit, or any long
distance affiliate.
2. Payment - The Initial Setup Fee of $0 and First Monthly Payment ("Monthly
Payment") of $395 shall be due upon execution of this Agreement. Failure of
Customer to make such payment up front will result in delay of service
connection, as CiberLynx will not order any services until such payment is
received. Applicable sales and gross receipts taxes may not be included in the
initial payment, but will, however, be included in Customer's first monthly
billing. CiberLynx will provide invoices to Customer for monthly services at
least one week in advance, prior to delivery of such service by CiberLynx (i.e.
Customer will be invoiced by January 23rd for February 1st - 28th, services).
Customer's Monthly Payment is due, in full, and without deductions or offset,
upon receipt of such Invoice. Failure of Customer to pay Monthly Payment when
due, or within five (5) days thereafter, shall constitute a default by Customer
and shall entitle CiberLynx to discontinue service without further notice.
CiberLynx may, in addition to other remedies, impose the maximum rate of
interest allowable by law on any overdue payments, partial payments or unpaid
balances thereof.
3. Installation of Service - CiberLynx will contact Customer upon receiving an
Installation Date by the local loop, or circuit provider. At this time, Customer
must commit to a date for which CiberLynx can connect Customer to complete the
Installation of Service(s). Customer agrees to have all necessary equipment
and/or personnel ready for the Installation of Service(s) by the agreed-upon
Installation Date. If Customer does not have the necessary equipment and/or
personnel ready for the Installation of Service(s) by the Installation Date, or
if Customer must change the Installation Date for any reason whatsoever,
Customer is liable for payment of the circuit, and for any other costs incurred
by CiberLynx in connection with Customer's Service(s) from the original,
agreed-upon Installation Date. This remains true whether Customer is fully
Installed or not. CiberLynx will bill the Customer for the partial Loop charge
by dividing the monthly Loop charge by thirty (30) days, and multiplying the
daily amount by the number of days between the Installation Date by the circuit
provider, and the Installation date by CiberLynx. This partial billing is due
upon receipt, and does not constitute the start of the contract term. The
contract term does not begin until Customer is fully connected with the
service(s) purchased. Any additional charges incurred by CiberLynx on Customer's
behalf, above and beyond the normal installation, or monthly access charges,
including additional wiring, services, or equipment supplied by the circuit
provider upon installation, or other service, will be passed on to Customer, and
will be due upon receipt.
263
<PAGE>
4. Domain Name Service - CiberLynx will provide primary Domain Name Service
(DNS) for one (1) Domain. Additional DNS domains must be purchased by Customer,
as well as any additional costs for the added domains. 5. Network Connection -
Only the directors, officers, and employees of Customer shall utilize the
Network connection provided by CiberLynx. However, customers of Customer may
have the ability to utilize and access Servers, Information, and other such
types of services contained on the Customer's connection. Except for assigning
IP addresses or DNS to customers in the normal course of business, Customer may
not sell, lease, license, rent, or assign the connection or any parts of the
connection to any party not named in this Agreement.
6. Equipment - All equipment needed for connection to CiberLynx will be
purchased and/or provided by Customer. The Customer hereby holds CiberLynx
harmless for any damage or injury to Customer's equipment or personnel resulting
from connection to CiberLynx.
7. Acceptable Use - Customer is prohibited from transmitting any communication
where the intention of the message, or its transmission or distribution, would
violate any U.S. Federal or State or Local law or regulation. Customer is
prohibited from transmitting any communication where its distribution would
likely be offensive to the recipient or recipients thereof. Customer shall
assure that its use of CiberLynx's network services shall not disrupt CiberLynx,
its associated networks, equipment, or any component part of the CiberLynx
system. "Bulk Messaging" is expressly prohibited under this Agreement. Use of
CiberLynx's connection in violation of any of the above mentioned manners may
result in cancellation of service, at the discretion of CiberLynx.
8. Liability of Warranties - Customer acknowledges that CiberLynx has made no
expressed or implied warranties (whether oral or written), including those of
merchantability or fitness, for any particular purpose with respect to the
services contemplated by this Agreement. Customer acknowledges that all services
are provided as is. CiberLynx does not warrant against interrupted operations of
service. CiberLynx specifically disclaims any liability for actual,
consequential or indirect damages suffered by Customer as a result of the
operation, or malfunction of the service, or delay in implementation,
reconfiguration, or repair of the service, in matters that are outside the
control of CiberLynx.
9. Remedies -
A. Customer:
Customer's remedy for any failure, or nonperformance of CiberLynx's connection
service shall consist of full restoration of Service by CiberLynx. In the event
that any interruption of service should exceed twenty-four (24) consecutive
hours, CiberLynx may disburse a pro-rata refund for any Customer prepaid fees
for the Service interruption. CiberLynx's liability for damages to Customer, or
its authorized users, and any other claims, regardless of the form of action,
shall be limited to the amount of charges paid by Customer for use of the
Service under this Agreement during the twelve month period preceding the date
of such breach.
B. CiberLynx:
CiberLynx's remedy for any failure, or nonperformance of this Agreement by
Customer depends on whether Service(s) have been provided, or not. If Service(s)
have not been performed by CiberLynx at the time of the Breach, then the remedy
is limited to the greater of: (1) The costs incurred by CiberLynx for
cancellation of any of Customer's Service(s), or (2) Forfeiture of Customer's
Initial Payment, or (3) The sum of $1,000.00 due and payable to CiberLynx upon
Cancellation of this Agreement, to cover the costs of CiberLynx's overhead
consumed for the partial performance of Customer's Agreement, and Cancellation
of such Agreement
264
<PAGE>
If the Service(s) have already been installed, or the Agreement has been
performed, or partially performed, at the time of Breach, then the remedy is
limited to: (1) Strict performance of the Agreement for the full term, or (2)
Restitution for the face value of the Agreement; that is, the total amount of
money that would have been received over the life of the Agreement, had the
Agreement been fully performed. Furthermore, if Customer does breach this
Agreement, for any reason whatsoever, and CiberLynx must pursue a claim for
Breach of Contract, or similar claim, in a court of law, or any other legal
proceedings, Customer agrees to pay for all costs of pursuing such claim.
10. Indemnification - Customer shall indemnify and hold CiberLynx harmless from
and against all liabilities, claims, damages, causes of action, losses, expenses
and judgements (including attorney's fees) arising out of, or in connection
with, the services to be provided under this agreement. Notwithstanding the
foregoing, CiberLynx can not be held responsible for performing its obligation
when its services are delayed or hindered by war, riots, embargoes, strikes,
acts of God, or actions or inactions of third parties (including interruption of
phone services). CiberLynx may cancel or delay performance, as long as such
performance is delayed by the above mentioned occurrence or occurrences. In such
event, CiberLynx shall have no liability to Customer.
11. Termination - CiberLynx may terminate this Agreement, in its sole
discretion, in whole or in part, or suspend the Service at any time upon: (a)
any failure of Customer to pay any amount due hereunder, (b) any Customer breach
of any material part of this agreement, (c) any insolvency, bankruptcy,
assignment for benefit of creditors, reorganization, liquidation, or proceeding
or similar events with respect to Customer, or (d) any governmental or other
regulation, that require alterations of the Services provided hereunder, or any
violation of applicable law, rule or regulation. No such termination shall
relieve Customer of its obligation under this Agreement, including and without
limitations, the obligation to make payments for the Service provided prior to
termination. The rights and obligations of the parties shall survive such
termination or other cancellations of this Agreement.
12. Automatic Renewal - CiberLynx will automatically renew this contract for the
length of the Agreement unless written notice is provided by either party to the
other party at least sixty (60) days prior to the anniversary of the Effective
Date.
13. Assignment - This Agreement may not be assigned or transferred by Customer
without the prior written consent of CiberLynx.
14. Entire Agreement - CiberLynx and Customer hereby agree and stipulate that
this contract and addendum represent the entire agreement between the parties
hereto, and it supersedes all prior written and/or oral communications.
15. Arbitration of Disputes - If any dispute or controversy arises in connection
with this Agreement, whether such dispute arises before, or after the Closing,
and the parties hereto are unable to settle the dispute or controversy
themselves, the parties hereto agree that such dispute or controversy shall be
resolved by a panel of arbitrators in Fort Lauderdale, Florida. This is pursuant
to the Commercial Arbitration Rules of the American Arbitration Association. The
decision of the arbitrators shall be final, binding, may not be appealed and
may, in the discretion of the arbitrators, include a provision for costs and
attorneys' fees. Upon mutual agreement, the parties may elect to waive this
provision and proceed to litigate their respective claims in a court of law.
265
<PAGE>
16. Acceptance - By signing below, you acknowledge your review and acceptance of
the terms and conditions contained in this document. This Agreement can only be
modified in a written document executed by both parties. Any attempts to make
modifications to these terms and conditions are void, and will not be
enforceable.
Exhibit "A"
CiberLynx Service Level Agreement
This is an addendum to Section 1 (Service) of Form CIC, CiberLynx Internet
Services and Equipment Contract.
1. Service - CiberLynx shall provide access to its Network pursuant to the
agreed upon specifications listed in this contract. Maintenance of the local
circuit shall be the responsibility of the local carrier. However, CiberLynx
will guarantee the following Service Level Agreement, hereafter referred to as
"SLA", to all its clients with term commitments of one or more years. The SLAs
offer the following guarantees:
* 99.99% availability to the CiberLynx Internet data backbone Network
* Median monthly latency of no more than 75 milliseconds roundtrip within
CiberLynx's backbone inside the United States * Delivery, or throughput
rates, of 99.99% of Frame Relay and Internet packets within the CiberLynx
data backbone Network
* Service installation, or provisioning, by the quoted date
* Service Level Agreement Compensation Schedule
* Client will receive a credit of one day's service on their next month's
invoice for each incident of downtime that is longer than 15 minutes, and
shorter than 4 hours * Client will receive a credit of two day's service on
their next months invoice for each incident of downtime extending past 4
hours * Client will receive a credit for a day's service fee if CiberLynx
does not meet the latency guarantee for two consecutive months * Client
will receive a credit for 50% of installation service fee if CiberLynx does
not install necessary equipment and software by the scheduled due date.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the first day and year written above:
Services Provided: 512kb port to Internet, Bump up existing circuit from 256kb
Fees:$395.00 per month
Terms:1yr
Customer: CiberLynx, Inc., a Florida Corporation:
By:__________________ __ By: ______________________
Name: __________________ Name: Ross Krisel
Title: ___________________ Title: Senior Account Executive
Date: ___________________ Date: 8/6/99
266
Comco Equipment Lease Agreement
EQUIPMENT LEASE AGREEMENT
AGREEMENT # 19271
LESSOR: COMCO EQUIPMENT LEASING GROUP
1611 Huron Trail
Maitland, FL 32751
EQUIPMENT QUANTITY MODEL# SERIAL#
DESCRIPTION
See Attached Schedule A
EQUIPMENT LOCATION IF OTHER THAT BILLING ADDRESS OF LESSEE
TERM & RENT
INITIAL TERM 36 MONTHS
MONTHLY RENTAL PAYMENT $912.00 (Plus applicable tax) ADVANCE 1ST & LAST PAYMENT
$1,824.00 (Check must accompany lease)
TERMS AND CONDITIONS
The words You and Your mean the Lessee. The words WE, US, and OUR refer to the
Lessor indicated on reverse.
1. Rental ("AgreemenT"): We agree to rent to you and you agree to rent from us
the equipment listed above ("Equipment"). You promise to pay us the rental
payment according to the payment schedule shown above. The parties intend this
Agreement to be a finance lease under Article 2A of the Uniform Commercial Code.
2. Terms and Rent: The initial term shall commence on the day that any of the
Equipment is delivered to you (The Commencement Date). The installments of rent
shall be payable in advance at the time and in the amounts provided above,
commencing on the Commencement Date and subsequent payments shall be due on the
same date of each successive period thereafter until all rent and any additional
rent or expenses chargeable under this Agreement shall have been paid in full.
Lessee obligation to pay the rent and other obligations hereunder shall be
absolute and unconditional and are not subject to any abatement, set-off,
defense or counter-claim for any reason whatsoever.
3. No Warranties: We are renting the Equipment to you "AS IS". We make no
warranties, express or implied, including warranties of merchantability, or
fitness for a particular purpose in connection with this Agreement. We transfer
to you for the term of this Agreement any warranties made by manufacturer or
supplier to us. Neither supplier nor any agent of supplier is an agent of lessor
or is authorized to waive or modify any term or condition of this Agreement.
Lessee Trilogy International Inc. Phone # 561-781-7278
Billing Address 526 SE Dixie Highway; Stuart, FL 34994
BY X__________________________________________________________________
Authorized Signature Title Date
Print name: Carol Berardi
267
<PAGE>
The terms and conditions printed within are made a part hereof
GUARANTY
To induce Lessor to enter into the within Agreement, the undersigned (jointly
and severally, if more than one) unconditionally guarantees to Lessor the prompt
payment when due of all Lessee's obligations to Lessor under the
Agreementincluding without limitation every rental installment, the accelerated
balance of rents, administrative charges, collection charges, and interest.
Lessor shall not be required to proceed against Lessee or Equipment or to
enforce any of its other remedies before proceeding against the undersigned. The
undersigned agrees to pay all reasonable attorney's fees, court costs and toher
expenses incurred by Lessor by reason of any default by Lessee. The undersigned
waives notice of acceptance hereof and all the other notices or demands of any
kind to which the undersigned may be entitled except demand for payment. The
undersigned consents to any extensions of time or modification of amount of
payment granted to Lessee and the release and/or compromise of any obligations
of Lessee or any toher obligors and /or guarantors without in any way releasing
the undersigned's obligations hereunder. This is a continuing Guaranty and shall
not be discharged or affected by your administrators, representatives,
successors and assigns. Guarantor waives any right of subrogation, indemnity,
reimbursement and contribution by Lessee. This Guaranty shall continue to be
effective or reinstated, as applicable. If at any time payment of any part of
the obligations under the Agreement is rescinded or otherwise required to be
returned by Lessor upon the insolvency, bankruptcy, or reorganization of Lessee
or upon the appointment of a receiver, trustee or similar officer for Lessee, or
it's assets, all as though such payment to Lessor had not been made, regardless
of whether Lessor protested the order requiring the return of such payment. This
Guaranty may be enforced by or for the benefit of any assignee or successor of
Lessor. Nothing shall discharge or satisfy the undersigned's liability except
the full performance and payment of all the Lessee's obligation to Lessor with
interest. The undersigned consents to the personal jurisdiction of the courts of
the State of New Jersey with respect to any action arising out of any lease,
guaranty settlement agreement, promissory note or other accommodation or
agreement with lessor. This means that any legal action filed against the lessee
and/or guarantors maybe filed in New Jersey and and that lessee and/or any of
the guarantors may be required to defend and litigate any such action in New
Jersey. Lessee and all Guarantors agree that service of process by certified
mail, return receipt requested,
Shall be deemed the equivalent of personal service in any such action. Any legal
action concerning this Agreement shall be governed by and construed according to
the laws of the State of New Jersey.
X_____________________________ X________________________________
WITNESS SIGNATURE GUARANTOR
SIGNATURE DATE
- ------------------------------ --------------------------------
PRINT NAME PRINT NAME
X________________________________
GUARANTOR SIGNATURE
--------------------------------
PRINT NAME
268
<PAGE>
TERMS AND CONDITIONS (CONTINUED)
4. Ownership Redelivery and Renewal: We are the owner of the Equipment and have
title to the Equipment. To protect our rights in the Equipment, in the event
this Agreement is determined to be a security agreement, you hereby grant to us
a security interest in the Equipment and all proceeds, products, rents or
profits therefrom. In states where permissible, you hereby authorize us to cause
the Agreement or any statement or other instrument in respect to this Agreement
showing our interest in the Equipment, including Uniform Commercial Code
Financing Statements, to be filed or recorded and re-filed and re-recorded and
grant us the right to execute your name thereto. You agree to execute and
deliver any statement or instrument requested by us for such purpose. You agree
to pay or reimburse us for any searches, filings, recordings, stamp fees or
taxes related to the filing or recording of any such instrument or statement. No
more that one hundred eighty (180) days but not less than ninety (90) days prior
to the expiration of the initial term or any renewal term of this Agreement you
shall give us written notice of your intention to either return the Equipment to
us or purchase the Equipment, as provided below. Provided you have given such
timely notice, you shall return the Equipment, freight and insurance prepaid, to
us, in good repair condition and working order, ordinary wear and tear excepted,
in a manner and to a location designated by us or remit the purchase option. If
you fail to notify us, or having notified us, you fail to return the Equipment
as provided herein, or fail to remit the purchase option, this Agreement shall
renew for additional terms of twelve (12) months each at a periodic rent equal
to 100% of the rent provided herein.
5. Option to Purchase: We hereby grant to you, provided you are not in default
hereunder, the option to purchase, "AS IS" without express or implied
warranties, all (not part) of the Equipment at the expiration of the term of
this Agreement for its then fair market value plus all applicable taxes.
6. Maintenance, Risk of Loss, and Insurance: You are responsible for installing
and keeping the Equipment in good working order. Except for ordinary wear and
tear, you are responsible for protecting the Equipment from damage and loss of
any kind. If the Equipment is damaged or lost, you agree to continue to pay
rent. You agree during the term of this Agreement, to keep the Equipment fully
insured against damage and loss, naming us as the loss payee, to obtain a
general public liability insurance policy from a company acceptable to us,
including us as an additional insured on the policy. You agree to provide us
certificates or other evidence of insurance. If you do not, you agree that we
have the right but not the obligation to obtain such insurances. In which event
you agree to pay us for all costs thereof.
7. Indemnity: We are not responsible for any losses or injuries caused by the
installation, removal or use of the Equipment. You shall indemnify and hold us
harmless from and against any claims, actions, proceedings, damages, expenses
and costs (including attorney's fees and costs) arising out of or in connection
with the Equipment of this Agreement including without limitation, the
possession, use, rental, operation and return of the Equipment.
8. Taxes and Fees: You agree to pay when due or reimburse us for all taxes,
fees, fines and penalties relating to use or ownership of the Equipment or to
this Agreement, now or hereafter imposed, levied or assessed by any state,
federal or local government or agency. You agree to pay us a fee of $67.50 to
reimburse us for the expense of preparing financing statements and for other
documentation costs. Equipment located in various states is subject to sales tax
,which require that tax be paid up front. If you choose to pay this tax up front
you may include, with your security deposit, your check for the current percent
of tax applied to the cost of Equipment. If you do not include payment up front,
you authorize us to advance the tax and increase your monthly payment by an
amount equal to the current tax percentage applied to the monthly rental shown
above.
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<PAGE>
9. Location of Equipment: You will keep and use the Equipment only at your
address shown above. You agree that the Equipment will not be moved from that
address unless you get our written permission in advance to move it.
10. Default and Remedies: If you (a) fail to pay rent or any other payment
hereunder when due; or (b) fail to perform any of the terms, covenants or
conditions of the Agreement after ten (10) days written notice; or (c) become
insolvent or make an assignment for the benefit of creditors; or (d) a receiver,
trustee, conservator or liquidator is appointed with or without your consent,
you shall be in default under the Agreement and, we may to the extent permitted
by applicable law, exercise any one or more of the following remedies;
(i)declare due, sue for and receive from you the sum of all rental payments and
other amounts then due and owing under this Agreement or any schedule thereto,
plus the present value of (x) the sum of the rental payments for the unexpired
term of this Agreement or any schedule hereto discounted at the rate of 6% per
annum and (y) the anticipated value of the Equipment at the end of the initial
term or applicable renewal term of the Agreement (but in no event less than 15%
of the original cost of the Equipment) discounted at the rate of 6% per annum
and upon recovery of the same in full, the Equipment shall become your property;
(ii) to similarly accelerate the balances due under any other agreements between
us; (iii) to take immediate possession of the Equipment, and to lease or sell
the Equipment or any portion thereof, upon such terms as we may elect, and to
apply the net proceeds, less reasonable selling and administrative expenses, on
account of your obligations hereunder; (iv) charge you interest on all monies
due us from and after the date of default at the rate of one and one third
percent (1 1/3%) per month until paid but in no event more than the maximum rate
permitted by law; (v) require you to return all Equipment at your expense to a
place reasonably designated by us; (vi) to charge you for all the expenses
incurred in connection with the enforcement of any of our remedies including all
costs of collection, reasonable attorney's fees and court costs. When ever any
payment is not made by you when due hereunder, you agree to pay us, not later
than one month thereafter, as an administrative charge to offset our collection
expenses, an amount calculated at the rate of ten cents per one dollar of each
such delayed payment, or $15 whichever is higher, but only to the extent
permitted by law. Such amount shall be payable in addition to all amounts
payable by you as a result of the exercise of any of the remedies herein. All
our remedies are cumulative, are in addition to any other remedies provided for
by law and may, to the extent permitted by law, be exercised either concurrently
or separately. Exercise of any one remedy shall not be deemed an election of
such remedy or to preclude the exercise of any other remedy. No failure on our
part to exercise any right or remedy and no delay in exercising any right or
remedy shall operate as a waiver of any right or remedy or to modify the terms
of this Agreement. A waiver of default shall not be construed as a waiver of any
other or subsequent default. We shall retain the sum set forth above as a
security deposit for your performance of your obligations hereunder. Upon lawful
termination of this Agreement, provided you are not in default, the Security
Deposit shall be returned to you. No interest shall be paid upon said Security
Deposit. In the event we may apply said Security Deposit to cure any default.
11. Assignment: You have no right to sell, transfer, assign this agreement or
sublease the equipment. We may sell, assign or transfer this agreement, without
notice. You agree that is we sell, assign or transfer this Agreement, the new
owner will have the same rights and benefits that we have now and will not have
to perform any of obligations. You agree that the right of the new owner will
not be subject to any claims, defenses, or set offs that you may have against
us. In the event of a sale, assignment or transfer, we agree to remain
responsible for our obligations hereunder.
270
<PAGE>
12. Consent to Jurisdiction and Governing Law: You consent to the personal
jurisidiction of the courts of the State of New Jersey with respect to any
action arising out of this agreement or the equipment. This means that any legal
action filed against you may be filed in New Jersey and that you may be required
to defend and litigate any such action in New Jersey. You agree that service of
process by certified mail, return receipt requested, shall be deemed the
equivalent of personal service in any such action. However, nothing in this
paragraph shall be construed to limit the jurisdictions in which suit may be
filed by any party to this Agreement or the means of obtaining service of
process in any such suit. This Agreement shall be governed by and construed
according to the laws of the State of New Jersey. To the next extent permitted
by law, you waive trail by jury in any action hereunder. You hereby waive any
all rights and remedies granted you by section 2a-508 of the Uniform Commercial
Code.
13. Customer P.O.: You agree that any Purchase Order issued to us covering the
rental of this equipment, is issued for purposes of authorization and your
internal use only, and none of its terms and conditions shall modify the terms
of this Agreement.
Entire Agreement: this Agreement contains the entire arrangement between you and
us and no modifications of this Agreement shall be effective unless in writing
and signed by the parties.
LESSEE: x__________________ TITLE: ________________DATE:_____________
BY:______________________TITLE:_____________DATE:______________
ACCEPTED:
LESSOR: COMCO EQUIPMENT LEASING GROUP
271
Lessee [ ] COPYCO
- A TOSHIBA COMPANY-
Name
Address "THE OFFICE COPIER AND FAX
[ ]
Deliver To (if other than Lessee's address)
QUANTITY DESCRIPTION: Model No., or other identification
IMPORTANT: Supplier and its representatives are not agents of Lessor, Neither
Supplier nor its representatives can waive, vary or alter any of the Terms And
Conditions. Lessor does not warrant merchantability of fitness for any
particular use of equipment and disclaims any other warranty, express, implied
or statutory. Lease payments will be due despite dissatisfaction with equipment
for any reason.
SCHEDULE OF PAYMENTS PAYABLE AT THE SIGINING OF LEASE
DURING ORIGINAL TERM OF LEASE $ __________
CHECK ONE
O $ _________ FIRST & LAST ________MONTH'S RENT
O $ _________ SECURITY DEPOSIT
NUMBER OF MONTHS______MONTHLY PAYMENT$ ______ + TAX
TERMS AND CONDITIONS
1. LEASE TERM: RENTAL: Lessor hereby leases to Lessee and Lesse hereby rents
from the Lessor the equipment described above and on any attached schedule
(hereinafter, with all replacement parts, repairs, additions and accessories
incorporated therein and/or affixed thereto, referred to as the "Equipment"), on
terms and conditions set forth above and below and continued on the reverse side
hereof; for the term indicated above, or on any schedule, commencing on the date
(the "Commencement Date") that any item of Equipment is delivered by the
supplier thereof, (each supplier hereinafter referred to as "Supplier") to
Lessee or an agent of the Lessee, and continuing thereafter until the
obligations of Lessee under the Lease have been fully performed. When you
receive the Equipment, you agree to inspect it and to verify by the telephone
such information as we may require or, at our request, send us a written
certificate of acceptance or other evidence of acceptance. Unless otherwise
provided herein, the first monthly payment of rent shall be payable on the
Commencement Date, and subsequent monthly payments shall be payable on the
corresponding day of each month thereafter, in amounts stated above, or on any
schedule, until the total rent and all other obligations of Lessee to Lessor
shall have been paid in full. All payments of rent shall be made to the Lessor
at its address or at such other place as Lessor may designate in writing. Lessee
hereby authorizes Lessor to insert in this lease the serial numbers and other
identification data of the Equipment, when determined by Lessor, and dates or
other omitted factual matters. Advance rentals are not refundable if for any
reason the lease term does not commence. Any security deposit shall be held by
Lessor to secure the Lessee's faithful performance of its obligations under the
Lease and will be returned to lessee without interest at the satisfactory
expiration of the Lease. To the extent permitted by law, we may charge you a fee
of up to $50.00 to cover our documentation and investigation costs.
272
<PAGE>
2. PURCHASE AND ACCEPTANCE: NO WARRANTIES BY LESSOR: Lessee requests Lessor to
purchase the Equipment from the Supplier and arrange for delivery to Lessee at
Lessee's expense, which shall be deemed complete upon the Commencement Date.
Lessor shall have no responsibility or delay of failure of Supplier to fill the
order for the Equipment. LESSEE ACKNOWLEDGES AND AGREES THAT LESSOR HAS MADE AND
MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KNID OF NATURE, DIRECTLY OR
INDIRECTLY. EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING HE
SUITABILITY OF SUCH EQUIPMENT, ITS DURABILITY, ITS FITNESS FOR ANY PARTICULAR
PURPOSE, ITS MERCHANTABILITY, ITS CONDITION AND /OR ITS QUALITY AND AS BETWEEN
LESSEE AND LESSOR, LESSEE LEASES THE EQUIPMENT 'AS IS' LESSOR SHALL NOT BE
LIABLE TO LESSEE FOR ANYLOSS, DAMAGE OR EZPENSE OF ANY KIND OR NATURE CAUSED
DIRECTLY OR INDIRECTLY BY ANY EQUIPMENT LEASED HEREUNDER OR THE USE OR
MAINTENANCE THEREOF OR THE FAILURE OF OPERATION THEREOF, OR THE REPAIRS, SERVICE
OR ADJUSTMENT THERETO OR BY ANY DELAY OR FAILURE TO PROVIDE ANY THEREOF, OR BY
ANY INTERRUPTION OF SERVICE OR LOSS OF USE THEREOF OR FOR ANY LOSS OF BUSINESS
OR DAMAGE OR CONSEQUENTIAL DAMAGES WHATSOEVER AND HOWSOEVER CAUSED. NO
REPRESENTATION OR WARRANTY AS TO THE EQUIPMENT OR ANY OTHER MATTER BY THE
SUPPLIER SHALL BE BINDING ON LESSOR, NOR SHALL THE BREACH OF SUCH RELIEVE LESSEE
OF, OR IN ANY WAY AFFECT ANY OF LESSEE'S OBLIGATIONS TO LESSOR AS SET FORTH
HEREIN. LESSOR DISCLAIMS AND SHALL NOT BE RESPONSIBLE FOR ANY LOSS, DAMAGE OR
INJURY TO PERSONS OR PROPERTY CAUSED BY THE EQUIPMENT HOWEVER ARISING.
3. STATUTORY FINANCE LEASE: Lessee agrees and acknowledges that it is the intent
of both parties to this Lease that it qualify as a statutory finance lease under
Article 2A of the Uniform Commercial Code. Lessee acknowledges and agrees that
Lessee has selected both: (1) the equipment; and (2) the supplier from whom the
Lessor is to purchase the equipment. Lessee acknowledges that Lessor has not
participated in any way in Lessee's selection of the equipment or the supplier,
and the Lessor has not selected, manufactured, or supplied the Equipment. Lessee
is advised that it may have rights under the contract evidencing the Lessor's
purchase of the equipment from the supplier chosen by Lessee and that Lessee
should contract the supplier of the equipment for a description of any such
rights. To the extent you are permitted by applicable law, you waive all rights
and remedies conferred upon a lessee by Article 2A (sections 508-522) of the
Uniform Commercial Code including, but not limited to you rights to: (a) cancel
or repudiate the Lease; (b) reject or revoke acceptance of the Equipment; (c)
recover damages from us for any breach of warranty or for any other reason, and
(d) grant a security interest in any Equipment in your prssession.
4. LESSOR TERMINATION BEFORE EQUIPMENT ACCEPTANCE: If within 60 days from the
date the lessor orders the Equipment, same has not been delivered, installed and
accepted by Lessee (in form satisfactory to lessor) Lessor ,may, on 10 days
written notice to Lessee terminate this Lease and its obligation to lessee. SEE
REVERSE SIDE FOR ADDITIONAL TERMS AND CONDITIONS WHICH ARE PART OF THIS LEASE.
THIS IS A NON-CANCELLABLE LEASE FOR THE TERM INDICATED ABOVE
Accepted in Florida
LESSOR COPYCO, Inc. LESSEE
By__________________________ By_________________________________
Date____________________ Date ________________________
Witness _______________________
273
<PAGE>
PERSONAL GUARANTY
To induce Lessor to enter into within Lease, the undersigned unconditionally
guarantees to Lesso the prompt payment when due to all of Lessee's obligations
to Lessor under the Lease. Lessor shall not be required to proceed against
Lessee or the Equipment or enforce any other remedy before proceeding against
the undersigned. The undersigned agrees to pay all attorney's fees and other
expenses incurred by Lessor by reason of default by Lessee or the undersigned.
The undersigned waives notice of acceptance hereof and of all other notices or
demands of any kind to which the undersigned may be entitled. The undersigned
consents to any extensions or modification granted to lessee and the release
and/or compromise of any obligations of Lessee or any obligors and guarantors
without in any was releasing the undersigned from his or her obligations
hereunder. The obligations of the undersigned shall continue even if Lessee
becomes insolvent or bankrupt or is discharged from bankruptcy and we agree not
to seek to be repaid by Lessee in the event we must pay Lessor. This is a
continuing Guaranty and shall not be discharged or affected by death of the
undersigned, shall bind the heirs, administrators, representatives, successors
and assigns of undersigned, and may be enforced by or for the benefit of any
assignee or successor of Lessor. The undersigned consents to the jurisdiction of
the federal or state courts located in Broward County, Florida, with respect to
any action hereunder and waive insofar as permitted by law any trial by jury for
any action between the parties.
X _________________________________________________________
PERSONAL GUARANTOR SIGNATURE DATED
- ---------------------------------------------------
WITNESS SIGNATURE DATED
X_________________________________________________________
PERSONAL GUARANTOR SIGNATURE DATED
- ---------------------------------------------------
WITNESS SIGNATURE DATED
274
CONSULTING AGREEMENT
This Agreement confirms the previously agreed to terms concerning deferred
compensation between Trilogy International, Inc. ("Company") and MiPro,
Inc.("Consultant").
Whereas, Consultant was retained on December 1, 1998 at an annual consulting fee
of $7,916.67 per month or $95,000 per year.
Whereas, Consultant agreed to defer payment of 100 % of their fees and not
demand payment of said deferred fees until such time as the Company has been
profitable for two consecutive months and then to accept payment of the accrued
fees due at that time in 4 monthly installments consistent with all employees of
the Company that have made like concessions,
The Company, also has granted to issue to Consultant 80,000 Options to purchase
Trilogy International, Inc Common Stock @ $.25 per share.
AGREED______________________ DATE_____________________________
Carol Berardi, President
For: Trilogy International, Inc.
("Company")
275
DEFERRED COMPENSATION AGREEMENT
This Agreement confirms the previously agreed to terms concerning deferred
compensation between Trilogy International, Inc. ("Company") and Carol A.
Berardi the Company's Co-Founder and President ("President")
Whereas, President was formally employed by the Company on December 1, 1998 at
an annual salary of $95,000 and
Whereas, President agreed to defer payment of 100 % of her salary for the period
from December 1, 1998 through March, 1999, and to defer 25% of her salary for
the period from May 1, 1999 through December 1999 and not demand payment of said
deferred salary until such time as the Company has been profitable for two
consecutive months and then to accept payment of the accrued salary due at that
time in 4 monthly installments pari pasu with all other employees of the Company
that have made like concessions,
The Company, therefore, has agreed to accrue all such deferred compensation that
may result from this agreement as a liability of the Company and/or its
successors and/or assigns and to make payment to President of the amount of
deferred compensation accrued at such time as the Company has been profitable
for two consecutive months and is able to make payments to President from
positive cash flow generated by the Company.
AGREED______________________ DATE_____________________________
Carol Berardi, President
For: Trilogy International, Inc.
("Company")
AGREED_______________________ DATE _____________________________
Dale Hernandez
276
DEFERRED COMPENSATION AGREEMENT
This Agreement confirms the previously agreed to terms concerning deferred
compensation between Trilogy International, Inc. ("Company") and Robert
Rowe("Consultant").
Whereas, Consultant was retained on December 1, 1998 at an monthly consulting
fee of $11,250 and
Whereas, Consultant agreed to defer payment of 100 % of his fees for the period
from December 1, 1998 through March, 1999, and not demand payment of said
deferred fees until such time as the Company has been profitable for two
consecutive months and then to accept payment of the accrued salary due at that
time in 4 monthly installments pari pasu with all other employees of the Company
that have made like concessions,
The Company, therefore, has agreed to issue to Consultant 8,667 Options to
purchase Trilogy International, Inc Common Stock @ $.25 per share as
consideration for the above fee payment concessions made by Consultant.
AGREED______________________ DATE_____________________________
Carol Berardi, President
For: Trilogy International, Inc.
("Company")
AGREED_______________________ DATE _____________________________
Robert Rowe
277
DEFERRED COMPENSATION AGREEMENT
This Agreement confirms the previously agreed to terms concerning deferred
compensation between Trilogy International, Inc. ("Company") and Debbie George
("Consultant").
Whereas, Consultant was retained on December 1, 1998 at an monthly consulting
fee of $3,000 and
Whereas, Consultant agreed to defer payment of 100 % of her fees ($12,000) for
the period from December 1, 1998 through March, 1999, and not demand payment of
said deferred fees until such time as the Company has been profitable for two
consecutive months and then to accept payment of the accrued salary due at that
time in 4 monthly installments in the same manner as the employees of the
Company that have made like concessions.
Further, the Company has issued to the Consultant 3,334 Options to purchase
Trilogy International, Inc Common Stock @ $.25 per share.
AGREED______________________ DATE_____________________________
Carol Berardi, President
For: Trilogy International, Inc.
("Company")
AGREED_______________________ DATE _____________________________
Debbie George
278
DEFERRED COMPENSATION AGREEMENT
This Agreement confirms the previously agreed to terms concerning deferred
compensation between Trilogy International, Inc. ("Company") and David K.
Cantley ("Employee").
Whereas, Employee was hired on July 24, 1999 at an annual salary of $80,000.00
and
Whereas, Employee agreed to defer payment of 25% of his salary for the period
from July 24, 1999 through December, 1999, and not demand payment of said
deferred salary until such time as the Company has been profitable for two
consecutive months and then to accept payment of the accrued salary due at that
time in 4 monthly installments pari pasu with all other employees of the Company
that have made like concessions,
The Company, therefore, has agreed to issue to Employee 1,000 Shares of Trilogy
International Common Stock and to accrue interest on said deferred salary at an
annual rate of 12% from September 1, 1999 until paid as consideration for the
above salary concessions made by Employee.
AGREED______________________ DATE_____________________________
Carol Berardi, President
For: Trilogy International, Inc.
("Company")
AGREED_______________________ DATE _____________________________
David K. Cantley
279
DEFERRED COMPENSATION AGREEMENT
This Agreement confirms the previously agreed to terms concerning deferred
compensation between Trilogy International, Inc. ("Company") and Dennis A.
Berardi the Company's Co-Founder and Chief Executive Officer ("CEO")
Whereas, CEO was formally employed by the Company on December 1, 1998 at an
annual salary of $95,000 and
Whereas, CEO agreed to defer payment of 100 % of his salary for the period from
December 1, 1998 through March, 1999, and to defer 25% of his salary for the
period from May 1, 1999 through December 1999 and not demand payment of said
deferred salary until such time as the Company has been profitable for two
consecutive months and then to accept payment of the accrued salary due at that
time in 4 monthly installments pari pasu with all other employees of the Company
that have made like concessions,
The Company, therefore, has agreed to accrue all such deferred compensation that
may result from this agreement as a liability of the Company and/or its
successors and/or assigns and to make payment to CEO of the amount of deferred
compensation accrued at such time as the Company has been profitable for two
consecutive months and is able to make payments to CEO from positive cash flow
generated by the Company.
AGREED______________________ DATE_____________________________
Carol Berardi, President
For: Trilogy International, Inc.
("Company")
AGREED_______________________ DATE _____________________________
Dale Hernandez
280
DEFERRED COMPENSATION AGREEMENT
This Agreement confirms the previously agreed to terms concerning deferred
compensation between Trilogy International, Inc. ("Company") and Dr. Jane
Bicks("Employee").
Whereas, Employee was hired on April 1, 1999 at an annual salary of $100,000.00
and
Whereas, Employee agreed to defer payment of 25% of her salary for the period
from May 1, 1999 through December, 1999, and not demand payment of said deferred
salary until such time as the Company has been profitable for two consecutive
months and then to accept payment of the accrued salary due at that time in 4
monthly installments pari pasu with all other employees of the Company that have
made like concessions, The Company, therefore, has agreed to issue to Employee
2,000 Shares of Trilogy International Common Stock and to accrue interest on
said deferred salary at an annual rate of 12% from September 1, 1999 until paid
as consideration for the above salary concessions made by Employee.
AGREED______________________ DATE_____________________________
Carol Berardi, President
For: Trilogy International, Inc.
("Company")
AGREED_______________________ DATE _____________________________
Jane Bicks
281
DEFERRED COMPENSATION AGREEMENT
This Agreement confirms the previously agreed to terms concerning deferred
compensation between Trilogy International, Inc. ("Company") and Stephen Berardi
("Employee").
Whereas, Employee was hired on December 1, 1998 at an annual salary of
$100,000.00 and
Whereas, Employee agreed to defer payment of 25% of his salary for the period
from May 1, 1999 through December, 1999, and not demand payment of said deferred
salary until such time as the Company has been profitable for two consecutive
months and then to accept payment of the accrued salary due at that time in 4
monthly installments pari pasu with all other employees of the Company that have
made like concessions,
The Company, therefore, has agreed to issue to Employee 3,000 Shares of Trilogy
International Common Stock and to accrue interest on said deferred salary at an
annual rate of 12% from September 1, 1999 until paid as consideration for the
above salary concessions made by Employee.
AGREED______________________ DATE_____________________________
Carol Berardi, President
For: Trilogy International, Inc.
("Company")
AGREED_______________________ DATE _____________________________
Stephen Berardi
DEFERRED COMPENSATION AGREEMENT
This Agreement confirms the previously agreed to terms concerning deferred
compensation between Trilogy International, Inc. ("Company") and Stephen Berardi
("Employee").
Whereas, Employee relocated from New Jersey and worked with the Company from May
1998 through November, 1998 for nominal consideration, and
Whereas, Employee was formally hired on December 1, 1998 at an annual salary of
$100,000.00 and
Whereas, Employee agreed to defer payment of 100% of his salary for the period
from December 1, 1998 through March 31, 1999, and not demand payment of said
deferred salary until such time as the Company has been profitable for two
consecutive months and then to accept payment of the accrued salary due at that
time in 4 monthly installments pari pasu with all other employees of the Company
that have made like concessions,
The Company, therefore, has agreed to issue to Employee 50,000 Options to
purchase Trilogy International Common Stock @ $.25 per share as consideration
for the above salary concessions made by Employee.
AGREED______________________ DATE_____________________________
Carol Berardi, President
For: Trilogy International, Inc.
("Company")
AGREED_______________________ DATE _____________________________
Stephen Berardi
282
Transition Agreement
July 7, 1999
It is agreed as of this date between Dr. Jane Enterprises (DJE) and Trilogy
International, Inc. (Trilogy) the following:
As of August 31, 1999:
DJE will cease all sales of Dr. Jane Products.
Trilogy will acquire all remaining inventory of Dr. Jane products in the care
custody and/or control of DJE.
As consideration for said inventory Trilogy will assume the debt of DJE to
Pharma Chemie and Professional Pet Products up to an amount not to exceed a
total of both debts of $9,000.
All orders for Dr. Jane Products received by DJE subsequent to August 31, 1999
will be forwarded by DJE to Trilogy International together with payment for any
such orders.
So long as Trilogy International has remaining inventory of Dr. Jane Products on
hand, such orders will be filled and shipped by Trilogy.
Other than that inventory on hand acquired by Trilogy from DJE as described
above, no additional Dr. Jane products will be ordered or purchased by Trilogy.
If orders are received by DJE and forwarded to Trilogy subsequent to the
exhaustion of said inventory, customers will be contacted by Trilogy and offered
Trilogy products.
- ---------------------------- ------------------------------
James Rapp, President Carol Berardi, President
Dr. Jane Enterprises Trilogy International, Inc.
283
Fawcett's VideoMarketing
Marketing - Production - Communications
DATE: AUGUST 1, 1999
TO: DENNIS BERARDI
FAX: (561) 781-7282
FROM: BILL FAWCETT
FAX: (949) 363-8609
SUBJECT: A WIN / WIN FOR BOTH OF US
FAWCETT AGREES TO: Price for Training Video in Kit $1.50
Price for Training Tape Sold Separately $2.50
Initial Order of Training Tapes - 1,000
Master has already been shipped to Florida for duplication (30 days term).
TRILOGY AGREES TO: Send 100 Pets Have Feelings Too Videos n/c to Fawcett.
Send 100 Training Tape Videos n/c/ to Fawcett.
Send 100 4/c Trilogy's Best Friends Catalogue and
100 Application Forms n/c to Fawcett.
DENNIS AGREES TO: Influence a major hitter (need not be CA) to sign up
in Fawcett's highly-promotional downline, that has
the 500 Club, the Travel Certs and the Special Events
Calendar.
FAWCETT AGREES TO: Supply 50 Vacation Travel Certificates for Dennis'
promotional use (sample enclosed)
Supply 250 Vacation Travel Certs paid for by Fawcett
will be used by Q and Bill to promote their 500 Club.
READ, AGREED & ACCEPTED
(signature)
William Fawcett
8/1/99
READ, AGREED & ACCEPTED
(signature)
Dennis Berardi, CEO
8/2/99
284
<PAGE>
Fawcett's VideoMarketing
Marketing - Production - Communications
March 19, 1999
Trilogy International, Inc.
1050 Southwest Chapman Way
Palm City, Florida 34990
Dear Dennis & Carol:
Pursuant to your request, Fawcett Productions, Inc. is pleased to submit, for
your approval, this simple Letter of Agreement that sets forth the terms and
conditions to produce the following:
* An innovative Trilogy Recruiting Video
* To Provide On-Going Marketing Consultation
CREATIVE TREATMENT
I envision producing the most innovative and talked-about Recruiting Video in
the MLM Industry. Instead of talking to the animals, the animals will talk. Dogs
and cats will pitch the petcare products. Who knows better than those who take
the products?
The video will be a combination of the "Wonder Years" technique, where the
animals think aloud with character voices and cartoon bubbles, along with
minimal dog and cat lip motion. Of course, there will be actual on-tape
interviews with Dr. Jane Bicks, Dr. Barry Sears and Dennis and Carol Berardi in
California studio.
It is further agreed and understood that Dennis and Carol will have final
approval of "people" talent prior to production.
CONDITIONS OF AGREEMENT - VIDEO & AUDIO
This Letter of Agreement will serve to confirm our conversations,
understanding, responsibilities and resulting verbal agreements, which shall be
stated as follows:
In consideration of Fawcett Productions, Inc. producing Trilogy's
Recruiting Video below cost, Trilogy agrees:
To grant: Fawcett Productions the exclusive right to duplicate its
Recruiting Video. Trilogy agrees to purchase the 1st 12,000 VHS, G-Zero tapes at
$2.25. Thereafter, Trilogy will purchase said tapes at $1.25 (plus S & h).
It is also understood that, if Trilogy wants 4/c labels, they'll print
video sketches and sleeves and ship to Fawcett for labeling.
To position: Trilogy agrees to place William Fawcett in a "preferential"
downline, a position where Dennis Berardi will place active distributors beneath
Fawcett. It's also understood that Fawcett will use his contacts, database &
marketing acumen to help build the downline.
To pay: Trilogy agrees to pay a good faith deposit of $8,500, upon
execution of the contract.
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To reimburse: Trilogy agrees to reimburse Fawcett's airfare to videotape
Dr. Jane Bicks and Dr. Barry Sears if tapings are in a location other than in
Fawcett's California studio.
Simply stated, everything is included...no surprises. Once the script is
approved, Fawcett Productions, Inc. assumes liability for delivery as outlined
in this Letter of Agreement. It is also understood that price changes,
additional costs or budget overruns, except where specifically noted in this
Agreement, will be the liability of Fawcett Productions, Inc.
PAYMENT SCHEDULE
* Upon Execution of Agreement $8,500 (Good Faith Deposit)
* Upon Completion of Video Trilogy agrees to order 750 VHS Dubs
* RETAIL VALUE OF THE VIDEO PRODUCTIONS $40,000
PROFESSIONAL TEAM
Director Bill Fawcett
Animation Sam Yano
Script Bill Fawcett, David Slaughter, Gloria Uhler
Input Dennis & Carol Berardi
Talent Coordinator Nancy Burkett
Cameramen John Gefrom, Jame Habig
Sound Sean Levin
Lighting Kelly Gee
Editor Dean Hamilton
Music/SFX Bill Trousdale
SCHEDULING
Fawcett Productions, Inc. is aware that "time is of the essence." Research and
scripting will commence upon the execution of this Agreement and receipt of the
first payment. Fawcett has cleared his April '99 Production Calendar to
accommodate the immediate production of Trilogy's Recruiting Videotape.
CLEARANCE
Upon receipt of final payment, all rights to this production will be transferred
to the client, Trilogy, for its exclusive use. These include music clearance,
talent releases and other such rights.
ENTIRE AGREEMENT
This Agreement constitutes and reflects the entire understanding of the parties
and supercedes and replaces all previous Agreements. No waiver, modification or
discharge of this Agreement shall be valid, binding or effective unless in
writing and executed by the party against whom enforcement thereof is sought.
Time shall be of essence in this Agreement.
ARBITRATION
Any dispute arising under, or in connection with, this Agreement or any other
aspect of the relationship between or among parties shall be submitted to and
settled by arbitration in accordance with the rules of the American Arbitration
Association then in effect. Any award rendered shall be final and binding upon
each and all of the parties and judgment may be entered thereon in any court of
competent jurisdiction.
ATTORNEY FEES
In any such proceedings, or any other further proceedings, instituted by one
party hereto against the other with respect to any controversy or matter arising
out of this Agreement, the prevailing party shall be entitled to recover from
the non-prevailing party reasonable attorney fees.
GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
California. In any such proceedings or any other further proceedings instituted
by one party hereto against the other with respect to any controversy or matter
arising out of this Agreement, the prevailing party shall be entitled to recover
from the non-prevailing parties reasonable legal costs.
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6503-H Hixson Pike Chattanooga, TN 37343
Telephone: 423-842-1347, Fax: 423-843-0338
E-Mail: [email protected]
Web Page: www.genconsult.com
June 2, 1999
Stephen Berardi
Trilogy
1050 SW Chapman Way
Palm City, FL 34990
Re: Contract, Proposal
Dear Stephen,
Here are the prices for the CCM Professional(tm) Software and related modules to
accomplish what we have discussed.
CCM Professional(tm) 5 User Software $ 26,995.00
(1) Additional 5 User Blocks @ $1500/Block $ 1,500.00
Genesis OnLine Office(tm) $ 9,995.00
(E-Commerce Web Site, Shopping Cart, Distributor/Customer
Sign Up, Downline Tracking, Invoice & Shipment Tracking)
Zip Master(tm) Zip Code Database $ 1,000.00
Freight + Multi User Software1 $ 1,995.00
Freight + Technical Support/Training 2 hrs. Online $ 200.00
(4) Days Training & Installation $ 4,000.00
Sub Total $ 45,685.00
* Note1 See Notes below for details
Yearly Maintenance:
Freight + UPS Rate Table Updates Yearly Subscription $ 1,000.00
(due in January of each year)
Zip Master(tm) Zip Code Database Yearly Subscription $ 1,000.00
(updated monthly, due on anniversary date of each year)
Optional:
Freight + Hardware (Laser Scanner, Scale, Thermal Printer) $ 2,785.00
Sales Tax by Zip Code Database Yearly Subscription $ 3,000.00
(updated monthly, due on anniversary date of each year)
Genesis Interactive Office(tm) Model # 4V1FD IVR $14,995.00
(4 Voice Ports/1 Fax Port, Deluxe Model, with Order Entry,
Customer Support, Fax-on-Demand)
We do not charge an on going monthly maintenance fee, the software is warranted
for the life of your software license to be free of any bug. If you find any
bugs we will fix them at no charge to you.
In order to meet your requirements I have added two paragraphs to the Agreement.
Under the Custom Programming and Modification Section. Paragraph 8 addresses you
concerns about Updates to CCM Professional(tm), Paragraph 9 addresses putting
the Source Code for CCM Professional(tm) in an Escrow Account. I have also made
adjustments to the Acceptance Clause for your clarification.
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If you do not want us to maintain your E-Commerce Web Site then here is what we
can do as far as the ASP, HTML and Webc Source Code is concerned. There are
certain pieces of the code that are highly proprietary, mainly the Genealogy
piece. I am willing to sell you the Source Code for everything but the Genealogy
section of the source code. For Trilogy's protection the Software Escrow
paragraph would also cover this piece of source code. This should not create any
problems for your company or your programmers since they will not need, nor
would we want them to change any piece of this code. The price would be an
additional $4000.00 for the E-Commerce Source Code. There would also be certain
restrictions and conditions, such as Trilogy's ability to use the code to
develop for other companies, to sell the source code or to sell the product of
the source code, Confidentiality Agreements etc. This would be laid out in a
separate document that would protect both Genesis and Trilogy. It would also be
necessary for Trilogy to purchase a Development License from the software
manufacturer for the development package I use to create parts of the E-Commerce
site. Your Programmers would probably also need to take a course in the Webc
language. If this is of interest to you let me know and I will draw up the
documents once you have signed this Agreement to do business with us.
If you need additions or modification to the software at any time, we will give
you a set price for that addition or modification upon request. In addition,
future needs to reach your projected goals can be addressed at the proper time
based on the company's growth and requirements.
I have also included our Standard Terms & Conditions as an article of this
proposal, should you have any questions please feel free to call me.
Sincerely,
Dennis R. Ashe
Dennis R. Ashe
President/CEO
Notes:
1. This is the new Freight + UPS Certified Online Compatible software and
interface (see enclosed Freight + letter and Pricing Sheet for details).
Training and UPS Online Commission is done online by Carrera Computers, included
with price shown.
Also the contact information of the company I told you about for all of your
audio, video, & CD requirements is:
Corporate Media Group
Rick Durand
President
874 S. McDonald Rd.
McDonald, TN 37353
(800) 759-1841
(423) 472-4298
System Proposal for
Trilogy
June 2, 1999
I. Other Services provided
II. Implementation Plan and schedule
III. Fees and payment schedule
IV. Mutual Responsibilities and Other Issues
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Appendices
1. Standard terms and conditions
2. Acceptance criteria
I. Other Services provided
In addition to the software, we would provide the following services at our
standard and or training rate:
1. Installation of software and any applicable equipment provided by Genesis.
(Included Above) 2. Training in the use of the software written by Genesis
Consulting excluding Freight + see Note 1 above.
(Included Above)
3. Custom programming of new applications.
4. Management consulting on design of additional information processing
requirements.
II. Implementation Plan and schedule
The implementation plan is as follows:
1. Commitment
Signing of agreement and placement of order.
2. Phase I - Within 1-5 days from commitment date Completion of Programming
Specifications for Project Manager.
3. Phase II - Within 2-3 Weeks from commitment date
Installation of Beta Version of Software for testing, Installation of Web/Online
features.
4. Phase III - Within 7-14 days of Beta Installation Completion and Fine Tuning
of all CCM Pro(tm) Functions
III. Fees and payment schedule
The prices shown above are exclusive of freight and any applicable Sales Tax.
A deposit of 1/3 of the total system bid is required upon placement of order.
1/3 is due in 2 weeks following the deposit payment. The balance is due upon
completion and installation of the software at you site.
If you are Leasing the System, we still require a 1/3, 1/3 deposit as outlined
above. However, when the system is installed and the leasing company sends us a
check for the total amount of the sale, then we will write you a check, that
day, for the deposit you paid.
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Our standard rate is $125.00 per hour for System Design, Network Engineering,
trouble shooting and $125.00 per hour for programming. Unless included above,
all On-Site Consulting, Training and Installation is at the rate of $1000.00 per
day. Support is at the rate of $125.00 per hour with a $45.00 minimum payable by
Credit Card or Phone Check.
All training and other services will be billed when performed and due upon
receipt, we do not run Accounts Receivable.
All reasonable and customary out of pocket expense incurred by Genesis
Consulting, such as travel and lodging shall be reimbursed upon presentation of
invoice.
IV. Mutual Responsibilities and Other Issues
A. Statement of mutual responsibilities
It is understood that the Client is responsible for the following:
1. Adequate backups of data and programs.
2. Making personnel available for training.
3. Proper Computer Equipment, to run the Application and supporting Software.
Genesis Consulting is responsible for the following:
1. Ordering and delivery of all applicable equipment and programs selected
above.
2. Installation of programs at client site (included in quote above).
3. Training of client personnel (on Genesis Products, included in quote above).
B. Acceptance Criteria
C. Standard Terms and conditions
The above proposal is valid until July 2, 1999.
If you would like to proceed with the system purchase, please sign below:
A deposit equal to 1/3 of the total price is enclosed.
BY:
- ----------------------------
for Trilogy
- ----------------------------
Date
STANDARD TERMS AND CONDITIONS
The following terms and conditions apply to all products and services provided
to Trilogy, hereinafter referred to as "Company", with offices at 1050 SW
Chapman Way, Palm City, FL 34990, by Genesis Consulting, hereinafter referred to
as "Consultant" with offices at 6503 Hixson Pike Suite H Chattanooga, TN 37343.
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PROPOSAL AND FUNCTIONAL SPECIFICATIONS
1. Ownership
The proposal and the functional specifications included therein represent the
application of Consultant's proprietary expertise and knowledge, and have been
developed as a result of substantial effort. These documents shall be considered
to be confidential property of Consultant, and must be returned on demand. While
in possession of Company, they may not be reproduced in any form or provided to
a third party without written consent by Consultant.
CUSTOM PROGRAMMING AND MODIFICATIONS
1. Detailed specifications
Any Detail Specification provided by Consultant to Company shall include the
following, as appropriate to the nature of the modifications or programs
required:
a. General systems flow charts and descriptions;
b. Input and output forms, layouts and designs;
c. File layouts; d. Visual display terminal layouts;
e. Hardware and system software requirements ("system configuration");
f. Coding and numbering schemes; and
g. Processing rules.
The Detail Specification shall be provided to Company within the time frame
specified in the Proposal planning and implementation schedule. Company shall
review the Detail Specification and Company and Consultant shall mutually agree
to any revisions which are to be made to the Detail Specification within the
time frame specified in the Planning and Implementation Schedule.
Consultant shall modify the Detail Specification as required by such revisions,
if any, and Consultant shall sign and deliver to Company the final version of
the Detail Specification. Company shall accept and sign the final version of the
Detail Specification within 15 days from delivery and the Detail Specifications
shall be incorporated by reference in this agreement. Payment shall be made as
set forth in accordance with Consultant's standard terms and conditions as
specified below and as indicated in the Payment and Implementation Schedule
agreed to by Company and Consultant.
Company understands that the process of developing a Detail Specification and
agreeing on any revisions thereto may alter the scope of the software
development effort. Consultant, therefore, reserves the right to amend all prior
estimates and quotes of price, delivery times and system configuration required
as a result of the development of the Detail Specification and as a result of
any revisions thereto. At the time of delivery to Company of such final version,
Consultant shall furnish Company with such amended prices, delivery times and
system configuration for the software development as defined by such final
version.
Any subsequent changes to the final version of the Detail Specification,
together with any additional costs or adjustments in delivery times or system
configuration, shall be by mutual agreement and set forth in a written Change
Order. Such Change Orders shall be signed by a duly authorized representative of
each party, and shall be incorporated by reference herein. In the event that the
parties are unable for any reason to agree on the initial Detail Specification,
revisions thereto, the final version of the Detail Specification, or any
corresponding amendments in price, delivery times, or system configuration
within the time frames set forth above, this Agreement shall terminate and
Company shall pay Consultant for the services rendered by Consultant's employees
based on Consultant's then prevailing hourly billing rates for such employees,
and Company shall reimburse Consultant for Consultant's out-of-pocket expenses.
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The Detail Specification and accompanying written material developed by
Consultant for Company shall belong to Company upon payment to Consultant of the
amounts due it under this Agreement for said material. The parties agree that
Consultant shall not be precluded from using and disclosing for any purpose the
ideas, concepts, systems designs, programs, techniques and written descriptions
thereof contained in the Detail Specification and accompanying written material
in any manner whatsoever.
2. Acceptance
A "Software Agreement Plan" (hereinafter the "Plan") describing in writing the
acceptance test procedures for each software product deliverable shall be
included with the Detail Specification initially delivered to Company by
Consultant. Company and Consultant shall review and finalize the Plan in the
same manner as set forth herein for the Detail Specification, and the final
version of the Plan shall be signed by a duly authorized representative of each
party and incorporated by reference herein. The Plan shall set forth each
party's obligations with regard to the equipment, facilities and personnel
availability, test files and test data.
Consultant shall notify Company of the completion of each software product
deliverable. Company shall conduct the applicable acceptance test as set forth
in the Plan within the time frame set forth in the Plan. Acceptance shall occur
upon the successful completion of the applicable acceptance test. If such
testing is delayed by Company for 15 days or as otherwise agreed to in writing
by both parties, then acceptance shall be deemed to have occurred for that
software product deliverable. In the event that an acceptance test is not
successfully completed, then the Consultant shall have 30 days to correct the
software and repeat the test until the test is successfully completed. If
Company refuses to complete the acceptance test within the period of time stated
immediately above, and provided further that Consultant has not unreasonably
refused to make any corrections to the software that are necessary in order to
successfully complete the acceptance test set forth in the Plan, then this
Agreement shall terminate, all amounts paid Consultant by Company shall be
non-refundable, all material including software delivered to Company (and all
copies thereof) shall be returned to Consultant, all software licenses shall
terminate, and the rights, obligations and liabilities of each party shall
cease.
3. Delivery
At the time specified in the applicable "Project Delivery Schedule", Consultant
shall deliver to Company one copy of the binary code for the software in machine
readable form compatible with the system configuration specified in the Detail
Specification. If the computer products specified the such system configuration
are operational at Company's site at the time of delivery, Consultant shall load
the software as well.
4. Documentation
At the time of delivery to Company of the final version of the Detail
Specification, Company and Consultant shall mutually agree to the contents and
description of the documentation to be furnished Company hereunder, and the same
shall be set forth in a writing entitled "Documentation Description" signed by
both parties, and incorporated herein by reference. At the time designated for
software delivery, or at the time of training, if required therefor, Consultant
shall provide to Company one copy of said copyrighted software documentation.
Company may copy said documentation, in whole or in part, for its internal
purposes with the proper inclusion of Consultant's copyright notice.
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5. Training
At the time of delivery to Company of the final version of the Detail
Specification, Company and Consultant shall mutually agree to an outline of the
training to be provided, and shall also specify any training, materials, dates,
duration, site, number of participants and their qualifications. The same shall
be set forth in a document entitled "Training Description", signed by both
parties, and incorporated herein by reference.
6. Software License
Any licensed software provided hereunder, including any subsequent improvements
or updates, and any parts thereof, may only be used on the single CPU or Network
on which the software is first installed, and may only be copied, in whole or in
part, for use on such CPU or Network. In the event that an equipment malfunction
occurs in the above single CPU or Network causing the software to become
inoperable on such single CPU or Network, the software (or copies thereof) may
be used on another single CPU or Network on a temporary basis during such
malfunction. Company shall not provide, or otherwise make available, the
software or any part or copies thereof in any form to any third party (except
Company's employees or agents directly concerned with Company's licensed use of
the software); and Company shall only use such software to process its own
business records. No title to or ownership of the software or any parts thereof
is transferred to the Company. Consultant shall have the right to terminate (i)
any software license for which the license fee has not been paid, and (ii) any
or all of the software licenses granted hereunder if Company fails to comply
with these license terms and conditions. Company agrees, upon notice of such
termination, to immediately return or destroy the software and documentation
provided under such terminated licenses and all portions and copies thereof.
7. Warranty
Consultant hereby warrants that the software furnished to Company hereunder
shall perform in accordance with the Detail Specification for a period of 90
days from the date of delivery. Consultant's sole obligation under this warranty
shall be to remedy any non-conformance to the Detail Specification as soon as is
reasonably possible after receipt by Consultant of written notice of such
non-conformance from Company at no charge to the Company. Company shall
reimburse Consultant on a time and materials basis for any warranty claim which
upon investigation Consultant determines is not due to non-conformance of the
software to the Detail Specification.
The above warranty shall not apply if Company modifies the software without
consultation with consultant or misuses the software. The above warranty shall
also not apply if Company fails to maintain the proper environmental conditions
for the computer products on which the software is operating, or if the software
is operating on a CPU other than that on which the software was first installed.
EXCEPT FOR THE EXPRESS WARRANTIES STATED ABOVE OR ON THE FACE HEREOF, Consultant
DISCLAIMS ALL WARRANTIES ON PRODUCTS FURNISHED HEREUNDER, INCLUDING ALL IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS; and the stated express warranties are
in lieu of all obligations or liabilities on the part of Consultant for damages,
including but not limited to special, indirect or consequential damages arising
out of or in connection with the use or performance of the products.
8. CCM Professional(tm) Updates & Customization
Any new features, refinements, or additions to the CCM Professional(tm) software
product that Consultant deems to improve or enhance the product shall be made
available to Company at no additional charge. However, this in no way is
intended to cover any customization request made by Company. Any Customization
requested by Company would be quoted at our then standard hourly rates.
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9. Escrow Account
In order to protect the Company's investment the Consultant agrees to place the
CCM Professional(tm) Source Code in an Escrow Account. Should the Consultant
become insolvent or go out of business for any reason the Source Code shall then
be made available to the Company at no additional charge. Consultant agrees to
keep Source Code in Escrow Account updated whenever changes or modifications are
made.
THIRD PARTY PRODUCTS
Third party products are defined as products purchased by Consultant from third
parties on behalf of Company. The specific products purchased are defined in the
Proposal and Functional or Detailed Specifications.
1. Delivery and Installation
Delivery will be made F.O.B. Third Party's plant with shipping charges to be
paid by Company. Risk of loss shall pass to Company upon delivery by Third Party
to carrier. Consultant will select the carrier, but by so doing, Consultant
assumes no liability in connection with the shipment nor shall the carrier be
construed to be the agent of Consultant. Company hereby grants Consultant a
security interest in the products (goods) and proceeds thereof (accounts
receivable).
At its expense, Company shall make available a suitable place of installation
with all facilities in accordance with Third Party's site specifications, which
specifications shall be provided to Company by Consultant.
2. Acceptance
Company's acceptance of the Third Party's products sold to Company by Consultant
shall occur (i) upon successful completion of the test procedures and/or
programs established by Third Party as evidenced by an acceptance report signed
by Consultant's and/or Third Party's representative for products installed by
Consultant, or (ii) upon delivery, for products not installed by Consultant,
unless Consultant is otherwise notified in writing within ten (10) days from the
receipt of the products by Company that the products do not conform to the
product specifications. Consultant's obligations for such non-conforming
products shall be limited to repair or replacement at Consultant's option
pursuant to the Warranty provisions hereof.
3. Cancellation/reschedule charges
Company understands that Consultant will order the products set forth in the
proposal attached hereto from Consultant's suppliers in reliance upon Company's
promise to purchase these products under the provisions of this Agreement. In
the event Company cancels any order or portion thereof, or requests a
rescheduling and such request is accepted by Consultant, Company agrees to pay
to Consultant any cancellation charges imposed upon Consultant by any of its
suppliers resulting from Company's cancellation or rescheduling. Company may not
cancel or reschedule any order or portion thereof after delivery.
4. Product Specification Changes
Consultant reserves the right, without prior approval from or notice to Company,
to make changes to the products (i) which do not affect physical or functional
interchangeability or performance at a higher level of assembly or (ii) when
required for purposes of safety or (iii) to meet product specifications.
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5. Third Party Software License
Company understands that the standard software provided by Consultant to Company
is licensed to Company by Third Parties under the following terms. Such Third
Party licensed software provided hereunder, including any subsequent
improvements or updates, is furnished to Company under a license for use on a
single CPU and many only be copied, in whole or in part (with the proper
inclusion of Third Party's copyright notice on the software), for use on such
CPU. Company shall not provide or otherwise make available the software or any
part of copies thereof in any form to any third party, except as may be
permitted in writing by Third Party. No title to or ownership of the software or
any unmodified parts is hereby transferred to Company. Third Party and/or
Consultant shall have the right to terminate Company's license if Company fails
to comply with these license terms and conditions and Company agrees, upon
notice of such termination, to immediately return or destroy the software and
all portions and copies thereof.
6. Third Party Hardware Warranty
Third Party Hardware Products set forth in the attached Proposal, are warranted
against defects in workmanship and material for a period as specified by each
Third Party. If Consultant is to install any products but is prevented by causes
beyond its control from doing so within thirty (30) days from the date of
delivery, the warranty period will commence on the thirtieth (30th) day after
delivery. Consultant's sole responsibility under this warranty shall be to
either repair or replace, at its option, any component which fails during the
applicable warranty period because of a defect in workmanship and material,
provided Company has promptly reported same to Consultant in writing. All
replaced products or parts shall become Consultant's property. Services provided
under the warranty will be performed during the period of 8:00 a.m. to 5:00
p.m., Monday to Friday, excluding locally observed Consultant holidays.
It is Company's responsibility to return, at its expense, the allegedly
defective products to Consultant. Company must obtain shipping instructions from
Consultant prior to returning any products under the warranty. Transportation
charges for the return of the products to Company shall be paid by Consultant.
If Consultant determines that the products are not defective within the terms of
the warranty, Company shall pay Consultant all costs of handling, transportation
and repairs at the then prevailing Consultant repair rates.
7. Third Party Software Warranty
Third Party software set forth in the attached Proposal is warranted to conform
to the Third Party's Software Product Description ("SPD") applicable at the time
of order. Consultant's sole obligation hereunder shall be to remedy any
non-conformance of the software to the SPD for any non-conformance reported to
Consultant during the one (1) year period following delivery.
All of the above Hardware and Software warranties are contingent upon proper use
of the product. These warranties will not apply (i) if adjustment, repair or
parts replacements is required because of accident, unusual physical, electrical
or electro-magnetic stress, neglect, misuse, failure of electric power, air
conditioning, humidity control, transportation, failure of rotation media not
furnished by Consultant, operation with media not meeting or not maintained in
accordance with Third Party specifications or causes other than ordinary use, or
(ii) if the product has been modified by Company, or (iii) where Third Party
serial numbers or warranty date decals have been removed or altered. In addition
to the foregoing the on-site warranty will not apply (i) if prerequisite
products as specified by Consultant are missing, or (ii) if the product has been
installed by the Company, or (iii) if the product has been dismantled or
reinstalled by Company without the supervision of or prior written approval of
Consultant. Products may contain used parts which are equivalent to new in
performance when used in the products.
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GENERAL CLAUSES
1. Independent Contractor
Company understands that Consultant is an independent contractor and is not an
agent of its suppliers.
2. Credit and payment terms
The following general terms and conditions apply to all amounts due from Company
to Consultant, as specified in the attached proposal and Payment and
Implementation Schedule.
a. A completed credit application is required to consider payment terms.
b. All out of pocket expenses incurred on behalf of Company are due and
payable immediately upon billing.
c. All purchases of Third Party equipment and software purchased on behalf of
Company are payable as follows: 1/3 upon placement of order, 1/3 two week
following placement of order 1/3 upon delivery to Company's site
d. A written commitment by a "Leasing Consultant" acceptable to Consultant can
be used in lieu of the above.
e. All programming, training, and consulting services provided to Company are
payable as defined in the attached Proposal and Payment Schedule. All
payments are due in five days from date of invoice.
f. We reserve the right to withhold, documentation and other deliverables in
the event of non payment. We also reserve the right to disable the software
in the event of non payment.
g. We will charge interest of 1.5% per month on all past due accounts.
3. Non hiring of employees
If Company solicits for employment or hires any Consultant employee engaged in
fulfilling the terms of this Agreement, Company shall forthwith pay to
Consultant the full unpaid amount of the total dollar value of this Agreement,
this Agreement shall terminate, all material including software delivered to
Company (and all copies thereof) shall be returned forthwith to Consultant, all
software licenses shall terminate, and the rights, obligations and liabilities
of each party shall cease.
4. Severability
If any provision of this Agreement is determined to be unenforceable or invalid,
the remaining provisions of this Agreement shall not be affected thereby and
shall remain in full force and effect.
5. Taxes
Prices are exclusive of all sales, use and like taxes. Any tax, Consultant may
be required to collect or pay upon the sale, use of delivery of the products
shall be paid by the Company and such sums shall be due and payable to
Consultant upon delivery. Any personal property taxes levied after delivery
shall be paid by Company. It shall be solely the Company's obligation, after
payment to Consultant, to challenge the applicability of any tax by negotiation
with, or action against, the taxing authority. Consultant agrees to refund any
tax collected which is subsequently determined not to be proper and for which a
refund has been paid to Consultant by the taxing authority.
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6. Assignment by Company
Company shall not assign this Agreement or any of Company's rights or
obligations hereunder without the prior written approval of Consultant, and any
attempt by Company to assign any rights or obligations without such approval
shall be void.
7. Force Majeure
Consultant shall not be liable for any damages, resulting from any delay in
delivery or failure to give notice of delay which directly or indirectly results
from the elements, acts of God, delays in transportation, delays in delivery by
Consultant's vendors, or any other cause beyond the reasonable control of
Consultant. The delivery schedule shall be extended by a period of time equal to
the time lost because of any such delay.
8. Limitation of Liability
In no event shall consultant be liable to company for (i) indirect, special,
consequential or other similar damages, or (ii) any damages whatsoever resulting
from loss of use, data or profits, arising out of or in connection with this
contract or the use or performance of products furnished by consultant
hereunder, whether in an action of contract or tort including negligence.
consultant shall not be liable for any damages caused by delay in delivery,
installation or the furnishing of products or services under this agreement. in
no event shall consultant's liability, if any, exceed the amount paid to
consultant by company under the provisions of this agreement, and in no event
shall consultant be liable for any claim made by company after 2 years from the
effective date of this agreement.
9. Termination
Company may at its option cancel this Agreement at any time upon 30 days prior
written notice to Consultant. Consultant shall have the right to terminate this
Agreement if Company (i) assigns this Agreement or any of its rights hereunder
(the word "assign" to include, without limiting the generality thereof, a
transfer of a majority interest in Company), (ii) neglects or fails to perform
or observe any of its existing or future obligations to Consultant under this
Agreement, (iii) makes an assignment for the benefit of creditors, or a
receiver, trustee in bankruptcy or similar officer is appointed to take charge
of all or part of its property and/or (iv) is adjudged a bankrupt, and such
condition(s) is not remedied within 30 days after written notice thereof has
been given to Company.
In the event of cancellation and/or termination as set forth above, Company
shall pay Consultant for the services rendered by Consultant's employees as of
the effective date of cancellation and/or termination based on the then
prevailing hourly billing rates for such Consultant employees. Company shall
also reimburse Consultant for its out-of-pocket expenses, such as supplies and
travel, as well as any cancellation charges imposed on Consultant by its vendors
occasioned by the cancellation and/or termination of this Agreement. All
material, including software, delivered to Company (and all copies thereof)
shall be returned forthwith to Consultant. Any software licenses granted shall
terminate, and the rights, obligations and liabilities of each party shall
cease.
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10. Governing Law
This Agreement shall be governed by the laws of the State of Tennessee, both as
to interpretation and performance.
11. Attorney's Fees
Should either party be required to file a legal action to enforce any provision
of this Agreement, the prevailing party shall be paid its reasonable attorneys'
fees and costs by the other party.
12. Entire Agreement
The provisions of this Agreement supersede all prior agreements between the
parties and no change, termination or attempted waiver of any of the provisions
hereof shall be binding unless in writing and signed by a duly authorized
representative of each party.
13. Notices
Any notices required or permitted under this Agreement shall be in writing and
delivered in person or sent by registered or certified mail, return receipt
requested with proper postage prepaid, properly addressed. Notice shall be
effective when mailed, or upon delivery if delivered in person.
The above proposal is valid until July 2, 1999.
I have read and understand the terms of the Standard Terms and Conditions, and I
have received a copy of the same.
BY: ____________________________
for Trilogy
Printed Name: ____________________
Title: ___________________________
Date: _____/_____/______
298
September 14, 1999
Dennis Berardi
Trilogy International
526 S. E. Dixie Hwy.
Stuart, FL 34994
Re: Contract, Proposal
Dear Dennis,
Here are the prices for the Webpage Genie(tm) Distributor Replicator Web Sites
and Monthly Minimum Licensing/Maintenance Fees to accomplish what we have
discussed.
Setup Fees:
Waived for first 90 days, after 90 days we will split what Trilogy is charging
the Field Rep for a Setup Fee 50/50. See details below. Webpage Genie(tm)
Distributor Replicator Web Sites By Distributed Websites Corp.
( Initial Fee for setting up Trilogy's Graphics etc.)
Initial Up Front Total $ 3,500.00
* Note1 See Notes below for details
Monthly Minimum Licensing/Maintenance Fees:
Monthly Minimum Licensing/Maintenance $ 4.00ea.
(due ea. month billed directly to Trilogy )
* Note 2 See Notes below for details
NOTES:
1. Setup Fees
As we discussed Trilogy will pay a $3,500 up Initial Fee. This includes setting
up Trilogy's Graphics and preparation of the Webpage Genie(tm) to link with
Trilogy's Corporate Site and all set up, programming or other fees from Genesis
or third party suppliers associated with establishing Trilogy's Replicator
Sites.
All set-up fees will be waived for the first 90 days effective from the date the
Trilogy e-commerce site is fully functional and Field Representatives are able
to sign up for, and use, their replicator sites. After that period, Trilogy can
charge whatever Initial Setup Fee they determine, Genesis would get no less than
$7.00 Initial Setup Fee for each site following the 90 day period as described
above on going for the term of this Agreement.
Monthly Minimum Licensing/Maintenance Fees
On the Monthly Minimum Licensing/Maintenance Fees, Genesis will charge Trilogy
$4.00 per month up to 10,000 licenses. In other words should the number of
Replicator Sites exceed 10,000 then Genesis will only charge Trilogy for 10,000
Replicator sites per month. Trilogy is free to charge whatever monthly fee it
may establish.
The Monthly Minimum Licensing/Maintenance Fees would be no less than $800.00 per
month for the term of this Agreement.
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Delivery Schedule
All of the above assumptions are based on fully functional and
operational/marketable Replicator Sites being available to Trilogy no later than
September 17 with Trilogy providing appropriate graphics similar to those being
provided for the web site construction. Any delays as to the signing and
implementation of this agreement would be adjusted by the number of days of the
delays accordingly. Keeping in mind that the time of implementation is based on
information and graphics furnished to Genesis by Trilogy.
Invoicing
Genesis Consulting will track each Replicator site sold and invoice Trilogy
monthly for the Monthly Minimum Licensing/Maintenance Fees and the Initial Setup
Fees. Should a Field Rep not pay Trilogy for the Monthly Minimum
Licensing/Maintenance Fees and/or the Initial Setup Fees then it will be
Trilogy's responsibility to notify Genesis so that Genesis can deactivate the
Replicator Site(s) not paid for. Genesis will not invoice Trilogy for these
deactivated Sites as long as Genesis has received notice within one week of
Trilogy invoicing the Field Rep's. Genesis will invoice monthly and our Terms
are: Invoice is Due Upon Receipt, we do not run accounts receivable.
Term of Agreement
This Agreement shall be for a period of not less than 1 year (12 months) from
the signed date of this Agreement. This Agreement shall automatically renew for
a term of 12 months on the Anniversary Date 12 months from the signed date of
this Agreement unless Trilogy gives Genesis written notice of termination within
60 Days prior to the renewal date.
Confidentiality
Distributed Websites Corporation and Genesis both agree to treat all Graphics
and Confidential Information furnished by Trilogy as proprietary information
belonging to Trilogy.
In addition, future needs to reach your projected goals can be addressed at the
proper time based on the company's growth and requirements.
I have also included our Standard Terms & Conditions as an article of this
proposal, should you have any questions please feel free to call me.
Sincerely,
Dennis R. Ashe
Dennis R. Ashe
President/CEO
Replicator Sites Proposal for
Trilogy International
September 14, 1999
I. Other Services provided
II. Implementation Plan and schedule
III. Fees and payment schedule
IV. Mutual Responsibilities and Other Issues
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Appendices
1. Standard terms and conditions
2. Acceptance criteria
I. Other Services provided
In addition to the software, we would provide the following services at our
standard and or training rate:
1. Installation of software provided by Genesis. (Included Above)
2. Training in the use of the software written by Distributed Websites Corp.
(Included Above) 3. Custom programming of new applications at our standard
Hourly Rate. 4. Management consulting on design of additional information
processing requirements.
II. Implementation Plan and schedule
The implementation plan is as follows:
1. Commitment
Signing of agreement and placement of order.
2. Phase I - Within 1 day from commitment date
Completion of Programming Specifications for Distributed Websites Corp.
3. Phase II - Within 1-2 days from commitment date
Implementation of Web Genie Replicator Sites, for Installation and Setup on
Trilogy's Web Server.
III. Fees and payment schedule
The prices shown above are exclusive of freight and any applicable Sales Tax.
A one time up front Initial Fee of $3,500.00. After the 90 day Waived Setup Fee
period each additional site will be billed monthly according to terms shown
above.
Monthly Minimum Licensing/Maintenance Fees $4.00 per month per site up to a cap
of 10,000 as shown above. These Fees will also be invoiced monthly as shown
above.
Our standard rate is $125.00 per hour for System Design, Network Engineering,
trouble shooting, Perl Implementation on Trilogy's Server and $125.00 per hour
for programming. Unless included above, all On-Site Consulting, Training and
Installation is at the rate of $1000.00 per day. Support is at the rate of
$125.00 per hour with a $45.00 minimum payable by Credit Card or Phone Check.
All training and other services will be billed when performed and due upon
receipt, we do not run Accounts Receivable.
All reasonable and customary out of pocket expense incurred by Genesis
Consulting, such as travel and lodging shall be reimbursed upon presentation of
invoice.
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IV. Mutual Responsibilities and Other Issues
A. Statement of mutual responsibilities
It is understood that the Client is responsible for the following:
1. Adequate backups of data and programs.
2. Making personnel available for training.
3. Proper Computer Equipment, to run the Application and supporting Software.
Genesis Consulting is responsible for the following:
1. Ordering and delivery of all applicable equipment and programs selected
above.
2. Installation of programs at client site (included in quote above).
3. Training of client personnel (on Genesis Products, included in quote above).
B. Acceptance Criteria
C. Standard Terms and conditions
The above proposal is valid until September 30, 1999.
If you would like to proceed with the system purchase, please sign below:
An Initial up Front Setup Fee of $3,500.00 is enclosed.
BY:
- ----------------------------
for Trilogy
- ----------------------------
Date
STANDARD TERMS AND CONDITIONS
The following terms and conditions apply to all products and services provided
to Trilogy, hereinafter referred to as "Company", with offices at 526 S. E.
Dixie Hwy. Stuart, FL 34994, by Genesis Consulting, hereinafter referred to as
"Consultant" with offices at 6503 Hixson Pike Suite H Chattanooga, TN 37343.
PROPOSAL AND FUNCTIONAL SPECIFICATIONS
1. Ownership
The proposal and the functional specifications included therein represent the
application of Consultant's proprietary expertise and knowledge, and have been
developed as a result of substantial effort. These documents shall be considered
to be confidential property of Consultant, and must be returned on demand. While
in possession of Company, they may not be reproduced in any form or provided to
a third party without written consent by Consultant.
CUSTOM PROGRAMMING AND MODIFICATIONS
1. Detailed specifications
Any Detail Specification provided by Consultant to Company shall include the
following, as appropriate to the nature of the modifications or programs
required:
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a. General systems flow charts and descriptions;
b. Input and output forms, layouts and designs;
c. File layouts;
d. Visual display terminal layouts;
e. Hardware and system software requirements ("system configuration");
f. Coding and numbering schemes; and
g. Processing rules.
The Detail Specification shall be provided to Company within the time frame
specified in the Proposal planning and implementation schedule. Company shall
review the Detail Specification and Company and Consultant shall mutually agree
to any revisions which are to be made to the Detail Specification within the
time frame specified in the Planning and Implementation Schedule.
Consultant shall modify the Detail Specification as required by such revisions,
if any, and Consultant shall sign and deliver to Company the final version of
the Detail Specification. Company shall accept and sign the final version of the
Detail Specification within 15 days from delivery and the Detail Specifications
shall be incorporated by reference in this agreement. Payment shall be made as
set forth in accordance with Consultant's standard terms and conditions as
specified below and as indicated in the Payment and Implementation Schedule
agreed to by Company and Consultant.
Company understands that the process of developing a Detail Specification and
agreeing on any revisions thereto may alter the scope of the software
development effort. Consultant, therefore, reserves the right to amend all prior
estimates and quotes of price, delivery times and system configuration required
as a result of the development of the Detail Specification and as a result of
any revisions thereto. At the time of delivery to Company of such final version,
Consultant shall furnish Company with such amended prices, delivery times and
system configuration for the software development as defined by such final
version.
Any subsequent changes to the final version of the Detail Specification,
together with any additional costs or adjustments in delivery times or system
configuration, shall be by mutual agreement and set forth in a written Change
Order. Such Change Orders shall be signed by a duly authorized representative of
each party, and shall be incorporated by reference herein.
In the event that the parties are unable for any reason to agree on the initial
Detail Specification, revisions thereto, the final version of the Detail
Specification, or any corresponding amendments in price, delivery times, or
system configuration within the time frames set forth above, this Agreement
shall terminate and Company shall pay Consultant for the services rendered by
Consultant's employees based on Consultant's then prevailing hourly billing
rates for such employees, and Company shall reimburse Consultant for
Consultant's out-of-pocket expenses.
The Detail Specification and accompanying written material developed by
Consultant for Company shall belong to Company upon payment to Consultant of the
amounts due it under this Agreement for said material. The parties agree that
Consultant shall not be precluded from using and disclosing for any purpose the
ideas, concepts, systems designs, programs, techniques and written descriptions
thereof contained in the Detail Specification and accompanying written material
in any manner whatsoever.
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2. Acceptance
A "Software Agreement Plan" (hereinafter the "Plan") describing in writing the
acceptance test procedures for each software product deliverable shall be
included with the Detail Specification initially delivered to Company by
Consultant. Company and Consultant shall review and finalize the Plan in the
same manner as set forth herein for the Detail Specification, and the final
version of the Plan shall be signed by a duly authorized representative of each
party and incorporated by reference herein. The Plan shall set forth each
party's obligations with regard to the equipment, facilities and personnel
availability, test files and test data.
Consultant shall notify Company of the completion of each software product
deliverable. Company shall conduct the applicable acceptance test as set forth
in the Plan within the time frame set forth in the Plan. Acceptance shall occur
upon the successful completion of the applicable acceptance test. If such
testing is delayed by Company for 15 days or as otherwise agreed to in writing
by both parties, then acceptance shall be deemed to have occurred for that
software product deliverable. In the event that an acceptance test is not
successfully completed, then the Consultant shall have 30 days to correct the
software and repeat the test until the test is successfully completed. If
Company refuses to complete the acceptance test within the period of time stated
immediately above, and provided further that Consultant has not unreasonably
refused to make any corrections to the software that are necessary in order to
successfully complete the acceptance test set forth in the Plan, then this
Agreement shall terminate, all amounts paid Consultant by Company shall be
non-refundable, all material including software delivered to Company (and all
copies thereof) shall be returned to Consultant, all software licenses shall
terminate, and the rights, obligations and liabilities of each party shall
cease.
3. Delivery
At the time specified in the applicable "Project Delivery Schedule", Consultant
shall deliver to Company one copy of the binary code for the software in machine
readable form compatible with the system configuration specified in the Detail
Specification. If the computer products specified the such system configuration
are operational at Company's site at the time of delivery, Consultant shall load
the software as well.
4. Documentation
At the time of delivery to Company of the final version of the Detail
Specification, Company and Consultant shall mutually agree to the contents and
description of the documentation to be furnished Company hereunder, and the same
shall be set forth in a writing entitled "Documentation Description" signed by
both parties, and incorporated herein by reference. At the time designated for
software delivery, or at the time of training, if required therefor, Consultant
shall provide to Company one copy of said copyrighted software documentation.
Company may copy said documentation, in whole or in part, for its internal
purposes with the proper inclusion of Consultant's copyright notice.
5. Training
At the time of delivery to Company of the final version of the Detail
Specification, Company and Consultant shall mutually agree to an outline of the
training to be provided, and shall also specify any training, materials, dates,
duration, site, number of participants and their qualifications. The same shall
be set forth in a document entitled "Training Description", signed by both
parties, and incorporated herein by reference.
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6. Software License Any licensed software provided hereunder, including any
subsequent improvements or updates, and any parts thereof, may only be used on
the single CPU or Network on which the software is first installed, and may only
be copied, in whole or in part, for use on such CPU or Network. In the event
that an equipment malfunction occurs in the above single CPU or Network causing
the software to become inoperable on such single CPU or Network, the software
(or copies thereof) may be used on another single CPU or Network on a temporary
basis during such malfunction. Company shall not provide, or otherwise make
available, the software or any part or copies thereof in any form to any third
party (except Company's employees or agents directly concerned with Company's
licensed use of the software); and Company shall only use such software to
process its own business records. No title to or ownership of the software or
any parts thereof is transferred to the Company. Consultant shall have the right
to terminate (i) any software license for which the license fee has not been
paid, and (ii) any or all of the software licenses granted hereunder if Company
fails to comply with these license terms and conditions. Company agrees, upon
notice of such termination, to immediately return or destroy the software and
documentation provided under such terminated licenses and all portions and
copies thereof.
7. Warranty
Consultant hereby warrants that the software furnished to Company hereunder
shall perform in accordance with the Detail Specification for a period of 90
days from the date of delivery. Consultant's sole obligation under this warranty
shall be to remedy any non-conformance to the Detail Specification as soon as is
reasonably possible after receipt by Consultant of written notice of such
non-conformance from Company at no charge to the Company. Company shall
reimburse Consultant on a time and materials basis for any warranty claim which
upon investigation Consultant determines is not due to non-conformance of the
software to the Detail Specification.
The above warranty shall not apply if Company modifies the software without
consultation with consultant or misuses the software. The above warranty shall
also not apply if Company fails to maintain the proper environmental conditions
for the computer products on which the software is operating, or if the software
is operating on a CPU other than that on which the software was first installed.
Except for the express warranties stated above or on the face hereof, consultant
disclaims all warranties on products furnished hereunder, including all implied
warranties of merchantability and fitness; and the stated express warranties are
in lieu of all obligations or liabilities on the part of Consultant for damages,
including but not limited to special, indirect or consequential damages arising
out of or in connection with the use or performance of the products.
THIRD PARTY PRODUCTS
Third party products are defined as products purchased by Consultant from third
parties on behalf of Company. The specific products purchased are defined in the
Proposal and Functional or Detailed Specifications.
1. Delivery and Installation
Delivery will be made F.O.B. Third Party's plant with shipping charges to be
paid by Company. Risk of loss shall pass to Company upon delivery by Third Party
to carrier. Consultant will select the carrier, but by so doing, Consultant
assumes no liability in connection with the shipment nor shall the carrier be
construed to be the agent of Consultant. Company hereby grants Consultant a
security interest in the products (goods) and proceeds thereof (accounts
receivable).
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At its expense, Company shall make available a suitable place of installation
with all facilities in accordance with Third Party's site specifications, which
specifications shall be provided to Company by Consultant.
2. Acceptance
Company's acceptance of the Third Party's products sold to Company by Consultant
shall occur (i) upon successful completion of the test procedures and/or
programs established by Third Party as evidenced by an acceptance report signed
by Consultant's and/or Third Party's representative for products installed by
Consultant, or (ii) upon delivery, for products not installed by Consultant,
unless Consultant is otherwise notified in writing within ten (10) days from the
receipt of the products by Company that the products do not conform to the
product specifications. Consultant's obligations for such non-conforming
products shall be limited to repair or replacement at Consultant's option
pursuant to the Warranty provisions hereof.
3. Cancellation/reschedule charges
Company understands that Consultant will order the products set forth in the
proposal attached hereto from Consultant's suppliers in reliance upon Company's
promise to purchase these products under the provisions of this Agreement. In
the event Company cancels any order or portion thereof, or requests a
rescheduling and such request is accepted by Consultant, Company agrees to pay
to Consultant any cancellation charges imposed upon Consultant by any of its
suppliers resulting from Company's cancellation or rescheduling. Company may not
cancel or reschedule any order or portion thereof after delivery.
4. Product Specification Changes
Consultant reserves the right, without prior approval from or notice to Company,
to make changes to the products (i) which do not affect physical or functional
interchangeability or performance at a higher level of assembly or (ii) when
required for purposes of safety or (iii) to meet product specifications.
5. Third Party Software License
Company understands that the standard software provided by Consultant to Company
is licensed to Company by Third Parties under the following terms. Such Third
Party licensed software provided hereunder, including any subsequent
improvements or updates, is furnished to Company under a license for use on a
single CPU and many only be copied, in whole or in part (with the proper
inclusion of Third Party's copyright notice on the software), for use on such
CPU. Company shall not provide or otherwise make available the software or any
part of copies thereof in any form to any third party, except as may be
permitted in writing by Third Party. No title to or ownership of the software or
any unmodified parts is hereby transferred to Company. Third Party and/or
Consultant shall have the right to terminate Company's license if Company fails
to comply with these license terms and conditions and Company agrees, upon
notice of such termination, to immediately return or destroy the software and
all portions and copies thereof.
6. Third Party Hardware Warranty
Third Party Hardware Products set forth in the attached Proposal, are warranted
against defects in workmanship and material for a period as specified by each
Third Party. If Consultant is to install any products but is prevented by causes
beyond its control from doing so within thirty (30) days from the date of
delivery, the warranty period will commence on the thirtieth (30th) day after
delivery.
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Consultant's sole responsibility under this warranty shall be to either repair
or replace, at its option, any component which fails during the applicable
warranty period because of a defect in workmanship and material, provided
Company has promptly reported same to Consultant in writing. All replaced
products or parts shall become Consultant's property. Services provided under
the warranty will be performed during the period of 8:00 a.m. to 5:00 p.m.,
Monday to Friday, excluding locally observed Consultant holidays.
It is Company's responsibility to return, at its expense, the allegedly
defective products to Consultant. Company must obtain shipping instructions from
Consultant prior to returning any products under the warranty. Transportation
charges for the return of the products to Company shall be paid by Consultant.
If Consultant determines that the products are not defective within the terms of
the warranty, Company shall pay Consultant all costs of handling, transportation
and repairs at the then prevailing Consultant repair rates.
7. Third Party Software Warranty
Third Party software set forth in the attached Proposal is warranted to conform
to the Third Party's Software Product Description ("SPD") applicable at the time
of order. Consultant's sole obligation hereunder shall be to remedy any
non-conformance of the software to the SPD for any non-conformance reported to
Consultant during the one (1) year period following delivery.
All of the above Hardware and Software warranties are contingent upon proper use
of the product. These warranties will not apply (i) if adjustment, repair or
parts replacements is required because of accident, unusual physical, electrical
or electro-magnetic stress, neglect, misuse, failure of electric power, air
conditioning, humidity control, transportation, failure of rotation media not
furnished by Consultant, operation with media not meeting or not maintained in
accordance with Third Party specifications or causes other than ordinary use, or
(ii) if the product has been modified by Company, or (iii) where Third Party
serial numbers or warranty date decals have been removed or altered. In addition
to the foregoing the on-site warranty will not apply (i) if prerequisite
products as specified by Consultant are missing, or (ii) if the product has been
installed by the Company, or (iii) if the product has been dismantled or
reinstalled by Company without the supervision of or prior written approval of
Consultant. Products may contain used parts which are equivalent to new in
performance when used in the products.
8. Web Genie(tm) Updates & Customization
Any new features, refinements, or additions to the Web Genie(tm) software
product that Consultant deems to improve or enhance the product shall be made
available to Company at no additional charge. However, this in no way is
intended to cover any customization request made by Company. Any Customization
requested by Company would be quoted at our then standard hourly rates.
9. Escrow Account
In order to protect the Company's investment the Distributed Websites Corp.
agrees to place the Web Genie(tm) Source Code in an Escrow Account. Should the
Consultant become insolvent or go out of business for any reason the Source Code
shall then be made available to the Company at no additional charge. Consultant
agrees to keep Source Code in Escrow Account updated whenever changes or
modifications are made.
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GENERAL CLAUSES
1. Independent Contractor
Company understands that Consultant is an independent contractor and is not an
agent of its suppliers.
2. Credit and payment terms
The following general terms and conditions apply to all amounts due from Company
to Consultant, as specified in the attached proposal and Payment and
Implementation Schedule.
a. A completed credit application is required to consider payment terms.
b. All out of pocket expenses incurred on behalf of Company are due and
payable immediately upon billing.
c. All purchases of Third Party equipment and software purchased on behalf of
Company are payable as follows: 1/3 upon placement of order, 1/3 two week
following placement of order 1/3 upon delivery to Company's site
d. A written commitment by a "Leasing Consultant" acceptable to Consultant can
be used in lieu of the above.
e. All programming, training, and consulting services provided to Company are
payable as defined in the attached Proposal and Payment Schedule. All
payments are due in five days from date of invoice.
f. We reserve the right to withhold, documentation and other deliverables in
the event of non payment. We also reserve the right to disable the software
in the event of non payment.
g. We will charge interest of 1.5% per month on all past due accounts.
3. Non hiring of employees
If Company solicits for employment or hires any Consultant employee engaged in
fulfilling the terms of this Agreement, Company shall forthwith pay to
Consultant the full unpaid amount of the total dollar value of this Agreement,
this Agreement shall terminate, all material including software delivered to
Company (and all copies thereof) shall be returned forthwith to Consultant, all
software licenses shall terminate, and the rights, obligations and liabilities
of each party shall cease.
4. Severability
If any provision of this Agreement is determined to be unenforceable or invalid,
the remaining provisions of this Agreement shall not be affected thereby and
shall remain in full force and effect.
5. Taxes
Prices are exclusive of all sales, use and like taxes. Any tax, Consultant may
be required to collect or pay upon the sale, use of delivery of the products
shall be paid by the Company and such sums shall be due and payable to
Consultant upon delivery. Any personal property taxes levied after delivery
shall be paid by Company. It shall be solely the Company's obligation, after
payment to Consultant, to challenge the applicability of any tax by negotiation
with, or action against, the taxing authority. Consultant agrees to refund any
tax collected which is subsequently determined not to be proper and for which a
refund has been paid to Consultant by the taxing authority.
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6. Assignment by Company
Company shall not assign this Agreement or any of Company's rights or
obligations hereunder without the prior written approval of Consultant, and any
attempt by Company to assign any rights or obligations without such approval
shall be void.
7. Force Majeure
Consultant shall not be liable for any damages, resulting from any delay in
delivery or failure to give notice of delay which directly or indirectly results
from the elements, acts of God, delays in transportation, delays in delivery by
Consultant's vendors, or any other cause beyond the reasonable control of
Consultant. The delivery schedule shall be extended by a period of time equal to
the time lost because of any such delay.
8. Limitation of Liability
In no event shall consultant be liable to company for (i) indirect, special,
consequential or other similar damages, or (ii) any damages whatsoever resulting
from loss of use, data or profits, arising out of or in connection with this
contract or the use or performance of products furnished by consultant
hereunder, whether in an action of contract or tort including negligence.
consultant shall not be liable for any damages caused by delay in delivery,
installation or the furnishing of products or services under this agreement. in
no event shall consultant's liability, if any, exceed the amount paid to
consultant by company under the provisions of this agreement, and in no event
shall consultant be liable for any claim made by company after 2 years from the
effective date of this agreement.
9. Termination
Company may at its option cancel this Agreement at any time upon 30 days prior
written notice to Consultant. Consultant shall have the right to terminate this
Agreement if Company (i) assigns this Agreement or any of its rights hereunder
(the word "assign" to include, without limiting the generality thereof, a
transfer of a majority interest in Company), (ii) neglects or fails to perform
or observe any of its existing or future obligations to Consultant under this
Agreement, (iii) makes an assignment for the benefit of creditors, or a
receiver, trustee in bankruptcy or similar officer is appointed to take charge
of all or part of its property and/or (iv) is adjudged a bankrupt, and such
condition(s) is not remedied within 30 days after written notice thereof has
been given to Company.
In the event of cancellation and/or termination as set forth above, Company
shall pay Consultant for the services rendered by Consultant's employees as of
the effective date of cancellation and/or termination based on the then
prevailing hourly billing rates for such Consultant employees. Company shall
also reimburse Consultant for its out-of-pocket expenses, such as supplies and
travel, as well as any cancellation charges imposed on Consultant by its vendors
occasioned by the cancellation and/or termination of this Agreement. All
material, including software, delivered to Company (and all copies thereof)
shall be returned forthwith to Consultant. Any software licenses granted shall
terminate, and the rights, obligations and liabilities of each party shall
cease.
10. Governing Law
This Agreement shall be governed by the laws of the State of Tennessee, both as
to interpretation and performance.
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11. Attorney's Fees
Should either party be required to file a legal action to enforce any provision
of this Agreement, the prevailing party shall be paid its reasonable attorneys'
fees and costs by the other party.
12. Entire Agreement
The provisions of this Agreement supersede all prior agreements between the
parties and no change, termination or attempted waiver of any of the provisions
hereof shall be binding unless in writing and signed by a duly authorized
representative of each party.
13. Notices
Any notices required or permitted under this Agreement shall be in writing and
delivered in person or sent by registered or certified mail, return receipt
requested with proper postage prepaid, properly addressed. Notice shall be
effective when mailed, or upon delivery if delivered in person.
The above proposal is valid until September 14, 1999.
I have read and understand the terms of the Standard Terms and Conditions, and I
have received a copy of the same.
BY: ____________________________
for Trilogy
Printed Name: ____________________
Title: ___________________________
Date: _____/_____/______
6503-H Hixson Pike Chattanooga, TN 37343
Telephone: 423-842-1347, Fax: 423-843-0338
E-Mail: [email protected]
Web Page: www.genconsult.com
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COMMERCIAL LEASE
This Lease made and entered into on this ____ day of _________________,
1999, by and between H.N.S. PROPERTIES, LTD., its successors and/or assigns,
whose address is P.O. Box 1617, Stuart, FL 34995, hereinafter referred to as
"Landlord," and TRILOGY INTERNATIONAL, INC., whose address is 520 S. Dixie
Highway, Stuart, FL 34994, hereinafter referred to as "Tenant";
WITNESSETH
1. PREMISES: In consideration of the rents to be paid by Tenant hereunder
and the terms, covenants, conditions and agreements as herein set forth,
Landlord hereby leases unto Tenant and Tenant hereby leases from Landlord the
space, facilities and improvements (hereinafter referred to as the "Premises")
known as and described herein as:
520 S. Dixie Highway
Suites C, D, E & F
Stuart, Florida
consisting of approx. 4,650 sq. ft.
2. OCCUPANCY OF PREMISES: The premises shall be available for occupancy
approximately on or before September 1, 1999; provided the premises have
received a Certificate of Occupancy. If a Certificate of Occupancy is obtained
after September 1, 1999, the Lease shall commence thirty (30) days after receipt
of the Certificate of Occupancy.
The Tenant shall have access to the let premises for a period of 30 days
after a Certificate of Occupancy has been obtained, at no charge, in order for
the Tenant to complete Tenant's work in the way of installing telephones,
furniture and conducting other activities in order to be open for business.
3. COMMENCEMENT AND TERM OF LEASE: The term of this Lease shall be for a
period of five (5) years, commencing on or about September 1, 1999, (the
"Commencement Date") and continuing from said date until August 31, 2004, unless
extended per paragraph 2 above due to potential delay in obtaining a Certificate
of Occupancy.
4. OPTIONS TO EXTEND TERM: The Landlord hereby grants to the Tenant the
right to renew this Lease for one additional five- year option. If the option to
renew is exercised, an increase in the rent shall be assessed at the rate of an
increase of three percent (3%) per year, minimum, with a 4% maximum per year,
based upon the C.P.I, as calculated in paragraph 7 infra. The first option year
shall be calculated using the base rent for the last year of the initial
five-year term of this Lease, and increased accordingly. The option right shall
be conditioned upon the Tenant's satisfying all the following conditions:
(a) The option(s) for renewal and election for a five-year extension,
must be exercised with written notice of that intention delivered to
Landlord not less than 120 days prior to the expiration of the initial
lease term.
(b) The option(s) to renew granted herein is only exercisable in the
event that the Tenant is not in default of the Lease or in the performance
of any of the terms and conditions of this Lease at the time of exercise of
the option and at the commencement date of the option term.
(c) If the option to renew is exercised, all of the conditions in the
Lease shall remain the same, with the following exception:
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The Base Rent shall be increased and adjusted to the monthly
Base Rent payable according to the escalation provisions of
Paragraph 4 above, which revised Base Rent shall increase
annually thereafter according to the percentage increase
clause as provided in Paragraph 4 above.
5. BASE RENT: Tenant agrees to pay to Landlord as Base Rent for the
Premises the sum of $4,650.00, per month, plus any applicable sales tax thereon
(as such tax as may change from time to time), payable in advance without
demand, notice or set off, on the first day of each and every month. If the rent
is not paid by the 10th day of any month, the Landlord may collect a "late
charge" equal to one and one-half percent (1.5%) of any monthly payment which is
not paid within said 10-day period of the due date thereof, to cover the extra
expenses involved in handling delinquent payments, provided that collection of
said "late charge" shall not be deemed a waiver by the Landlord of any of its
rights under this Lease. The Tenant shall be in default if a rent payment has
not been received within 30 days of its due date, and the full amount of the
base rent for the balance of the lease term shall become due, owing and payable
at once in the event of a default.
Total Base Rent payable for the full initial term of this Lease shall be
$279,000.00, plus escalations in such Base Rent due according to the provisions
of Paragraph 7 below, plus any applicable sales tax as such sales tax may change
from time to time payable in monthly installments as set forth herein. The
amount of $10,575.47 is being paid upon execution of this Lease to be applied to
the first month's rent and last month's rent.
All payments of rent shall be made payable to H.N.S. PROPERTIES, LTD., at
Post Office Box 1617, Stuart, FL 34995, or to such other person or corporation
or such other place as shall be designated by Landlord in writing.
6. SECURITY DEPOSIT: Tenant shall deposit with Landlord a Security Deposit
in the amount of $4,975.50, which includes sales tax, as a security deposit to
be applied toward any damages that may occur to the Premises as a result of any
act of the Tenant, its employees, visitors, invitees, licensees or agents which
is in violation of any of the terms and conditions of this Lease or toward any
default in rent payments. If this Lease is not in default thirty (30) days after
the expiration of this Lease, the balance of the security funds, less the amount
actually applied toward damages or funds payable to Landlord, shall be returned
to the Tenant. The deposit shall be forfeited by Tenant upon default in any of
the terms, payments, or conditions of this Lease.
7. ANNUAL ESCALATION IN BASE RENT: This Lease is for a term of five years,
with one (1) five-year option. The Base Rent provided for above which the Tenant
shall pay for each succeeding one (1) year period [beginning on the anniversary
date after the commencement date of the Lease] or part thereof shall be
increased by a minimum of three percent (3%) per year for years two, three, four
and five of the lease term. (Sales tax is due in addition to and with all lease
payments.) If the C.P.I. increases in excess of 3% for any yearly period, then
in that event, the base rent shall increase up to a maximum of 4% for any yearly
period, based on the C.P.I. In no event shall rent have less than a 3% increase,
regardless of the C.P.I.
The C.P.I. shall be based upon the percentage of increase in the "Revised
Consumers Price Index" ("CPI") Cities (1982-84 = 100) published by the Bureau of
Labor Statistics of the United States Department of Labor comparing the index
for the first month of the term of this Lease with the index for the first month
of the next succeeding one (1) year period.
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8. OFFSET: The Tenant hereby waives any and all right to offset or charge
any amount owed to Tenant by Landlord against the Base Rent, Real Estate Tax or
Common Area Maintenance Reimbursements, or any other monies due the Landlord by
Tenant under this Lease.
9. USE OF PREMISES: The Premises shall be used and occupied solely by the
Tenant and Tenant's employees and for the purpose of professional office usage.
The Premises shall specifically not be used for any illegal purpose or any
purpose not in compliance with any statute or governmental regulation nor for
any use prohibited herein.
10. CONDITION OF PREMISES AND IMPROVEMENTS: Tenant shall take occupancy of
the leased premises in "as is" condition, under the following terms and
conditions:
(a) Landlord shall maintain the structural soundness of the Premises,
the outside walls and roof (except for conditions caused by or created by
Tenant, its agent or its invitees) of the Premises and sub-surface of all
parking areas, sidewalks and driveways, (but excluding resurfacing, the
expenses for which shall be treated as a tenant expense as provided below).
Tenant, at its expense, shall maintain and keep in good repair the inside
of the Premises, including the plumbing, HVAC, electrical wiring, interior
walls, partitions, doors, windows and floor coverings, and Tenant shall be
responsible for all damage to glass, glass windows, and glass doors.
Tenant, at its expense shall maintain and keep in good repair the heating,
ventilating and air conditioning systems (as installed and made operable by
Landlord), including wiring, duct work, and HVAC controls. Other than the
Tenant Improvement to be installed by Tenant as provided for herein, Tenant
shall not make any alterations in the Premises without prior written
consent of the Landlord. Tenant shall not perform any acts or carry on any
practice which may injure the Premises or be a nuisance or a menace. Tenant
shall not perform any acts or carry on any practice which may injure the
Premises or the Buildings. Tenant at all times shall also keep the Premises
under its control, as well as the common areas surrounding Tenant's
Premises, clean and free from rubbish and infestation caused by Tenant,
Tenant's employees, Tenant's customers, or Tenant's invitees.
Any and all structural repairs and/or improvements to the interior of the
Tenant's Premises that presently exist within the Premises or as modified or
newly installed by Landlord and all improvements including attached shelving,
bookcases and credenzas and any carpeting shall become the property of the
Landlord upon installation and shall remain the property of the Landlord upon
termination of the Lease, and shall only be made or installed by Tenant after
Landlord's written approval of such work and only after Tenant's compliance with
all applicable rules, regulations, ordinances and appropriate licenses required
thereof by any governmental or regulatory agency having jurisdiction over the
Premises and the buildings comprising the Premises.
All improvements made by the Tenant to the Premises which are so attached
to the Premises that they cannot be removed without injury to the Premises,
shall also become the property of the Landlord upon installation.
At the termination of the Lease, Landlord shall have the right to ask
Tenant to remove any property which may have been installed by Tenant and which
may be deemed to be Landlord's property as stipulated herein. If so requested
within 90 days of the termination date of the Lease (90 days before or 90 days
after), Tenant shall remove all such property and be responsible for repairing
all damage to the Premises caused by such removal. If Tenant does not remove
such property within 30 days of such Notice (but no later than 15 days after the
end of the Lease term), then Landlord may enter the Premises and remove such
property and Tenant shall reimburse Landlord for the costs of such removal and
the cost of any repairs needed which were caused by such removal. If Landlord
elects to remove such property, Landlord may but shall not be obliged to store
such property or dispose of such property as elected by Landlord in its sole
discretion, all of this shall be done at Tenant's expense. Any costs or
reimbursements due to Landlord from Tenant as may be owed by Tenant to Landlord
hereunder shall be deemed additional rent due under the Lease.
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(b) Not later than the last day of the term of the Lease, the Tenant,
at its expense, shall remove any of the Tenant's personal property which
has not become the property of the Landlord and surrender the Premises in
as good condition as they were at the beginning of the term of this Lease.
Any such personal property not removed as hereinbefore directed, shall
conclusively be deemed to have been abandoned and may be removed by the
Landlord, and the Tenant shall reimburse the Landlord for the cost of such
removal and any repairs caused by such removal, or Landlord may, at its
option, have any such property stored at Tenant's risk and expense and
either of such costs may be deducted from the Security Deposit, if any, or
shall be paid by Tenant to Landlord as additional rent within ten (10) days
of notice to Tenant.
11. JANITORIAL SERVICE: Tenant is responsible for arranging, contracting
for, and paying for all trash and garbage collection services required for
Tenant's use or occupancy of the Premises with the City, County or private
service entity. Tenant shall comply with all trash, rubbish and garbage removal
and collection regulations as established from time to time by the local utility
authority having jurisdiction over the Premises and Tenant's use thereof.
12. ELECTRIC AND OTHER UTILITIES REQUIRED BY TENANT: All water, gas,
electricity and any other utility services which Tenant may desire or require
for its use shall be the sole responsibility of Tenant. Tenant shall determine
if any utilities or extra capacities are required by Tenant prior to Tenant's
execution of this Lease and the responsibilities for the hook-up, deposits
(including reimbursement to Landlord or to a third party if such party has
previously advanced the deposit for the use of such utilities within the
Premises), and consumption for all such utilities shall be Tenant's obligation.
Any default by Tenant in its obligations to the respective utility companies
shall be a Default in this Lease.
Landlord shall not be responsible or liable for and the Tenant shall
indemnify and save Landlord harmless from any and all claims, liability and
expenses in connection with the quality, quantity, or interruption of sewer,
water, electric power, gas, telephone, heat, air conditioning or any other
utility service or the repair and/or replacement thereof. Tenant agrees that it
will not install any equipment which will exceed or overload the capacity of any
utility facility and that if Tenant desires to install any equipment which shall
require additional utility facilities, then Tenant shall require the prior
written approval of Landlord and if obtained, Tenant shall install such at
Tenant's expense and in accordance with plans and specifications if required by
Landlord (at Landlord's sole discretion).
Tenant hereby acknowledges with Landlord that Tenant has or will obtain its
own electrical meter for electric usage within Tenant's Premises including
Tenant's exterior signage and Tenant shall cause such bills to be paid on a
current basis, and any failure to so pay such bills to the electric company
shall be a Default in this Lease.
13. MAINTENANCE COSTS: Tenant shall pay 66% (on a monthly basis) of the
following costs which are deemed to be common to the Premises, plus state or
local taxes as required by law:
(a) the cost of all trash and garbage collection services;
(b) any impact fees, use fees or assessments levied against the
Premises after a Certificate of Occupancy has been delivered
(notwithstanding anything to the contrary set forth in this Lease, Tenant
shall pay 66% of the cost of any such local governmental impact fee or use
fee which is specifically imposed against or in regard to Tenant's specific
operations);
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(c) the cost of standard supplies for lighting, fixtures, maintenance
and repairs for all portions of the Building;
(d) the maintenance costs for all sprinkler, water and other
mechanical systems;
(e) window washing and other cleaning and refurbishing as frequently
as necessary to maintain the building;
(f) cleaning, resurfacing, and striping of the park area;
(g) repair of all concrete walkways, curbs, parking bumpers, and
exterior lighting facilities; (h) the cost of all sewer and water charges;
(i) repair and replacement of exterior and repainting of the exterior
portions of the Buildings, signage, and canopies;
(j) replacement and maintenance of landscaping and normal preventive
maintenance.
As stated, Tenant's share of the maintenance costs shall be paid on a
monthly basis, and will be adjusted annually by the Landlord.
14. REAL ESTATE TAX AND INSURANCE STOPS: Landlord shall pay all real estate
taxes affecting the Premises. Notwithstanding anything to the contrary contained
herein, the Tenant shall reimburse Landlord each year for Tenant's Share of any
real estate taxes assessed against the buildings and parking areas and/or
insurance costs for the building and parking areas which exceed the real estate
taxes and insurance costs incurred during the base year of this Lease, which is
hereby defined as the calendar year of 1999. Upon receipt of the yearly tax bill
and insurance statements, the Landlord will furnish copies of same to the
Tenant, along with a bill for any adjustments owed to the Landlord by the
Tenant. Tenant shall pay all taxes levied upon personal property in the
Premises, including trade fixtures and inventory, payable within 10 days of
receipt.
The insurance costs referred to herein shall include the multi-risk, all
peril, 100% replacement costs insurance as selected by Landlord in Landlord's
sole discretion and at Landlord's discretion such lesser coverage as Landlord
may choose which shall be applicable to all the buildings and grounds and shall
include personal liability and property insurance as may be required or selected
by Landlord for the use of any of the areas, walkways, parking areas, or any
properties adjacent thereto as selected and determined in Landlords' sole
discretion.
15. LIABILITY INSURANCE: Tenant shall, at its own costs and expense,
maintain in force continuously through the term of this Lease, public liability
insurance covering the Premises with limits of not less than $500,000 for death
or injury to one person; $1,000,000 for the death or injury to more than one
person; and $100,000 for property damage, and shall furnish to Landlord a
certificate of the insurer that such insurance is in full force and effect, as
stated, and may not be canceled or amended with respect to Landlord without ten
(10) days' notice by certified mail to Landlord. In the event that Tenant's use
of the Premises causes an increase in Landlord's insurance costs for the
building, then Tenant shall pay the differential caused by Tenant's individual
use and occupancy.
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16. EPA. In regard to the leased property to be occupied by Tenant, Tenant
hereby agrees to indemnify Landlord and hold Landlord harmless from and against
any and all losses, liabilities, including strict liability, damages, injuries,
expenses, including reasonable attorneys' fees, costs of any settlement or
judgment and claims of any and every kind whatsoever paid, incurred or suffered
by, or asserted against, Landlord by any person or entity or governmental agency
for, with respect to, or as a direct or indirect result of, the presence on or
under, or the escape, seepage, leakage, spillage, by Tenant or caused by Tenant,
discharge, emission, discharging or release from the premises of any Hazardous
Substance (including, without limitation, any losses, liabilities, including
strict liability, damages, injuries, expenses, including reasonable attorneys'
fees, costs or any settlement or judgment or claims asserted or arising under
the Comprehensive Environmental Response, Compensation and Liability Act, any so
called federal, state or local "Superfund" "Superlien" law, statute, ordinance,
code, rule, regulation, order or decree regulation, with respect to or imposing
liability, including strict liability, substances or standards of conduct
concerning any Hazardous Substance), regardless of whether within the control of
Tenant.
For purposes of this Contract, "Hazardous Substances" shall mean and
include those elements or compounds which are contained in the list of hazardous
substances adopted by the United States Environmental Protection Agency (EPA)
and the list of toxic pollutants designated by Congress or the EPA or defined by
any other Federal, State or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing liability or
standards of conduct concerning any hazardous, toxic or dangerous waste,
substance, or material as not or at any time hereunder in effect.
If Landlord and/or Tenant receive any notice of (i) the happening of any
material event involving the spill, release, leak, seepage, discharge or cleanup
of any Hazardous Substance on the land or in connection with current or prior
operations thereon or (ii) any complaint, order, citation or material notice
with regard to air emissions, water discharges, or any other environmental,
health or safety matters affecting Landlord (an "Environmental Complaint") from
any person or entity (including without limitation the EPA) the parties shall
immediately notify the other orally and in writing of said notice.
Landlord shall have the right but not the obligation, and without
limitation of Tenant's rights under this Lease, to enter onto the Property or to
take such other actions as it deems necessary or advisable to cleanup, remove,
resolve or minimize the impact of, or otherwise deal with, any such Hazardous
Substance or Environmental Complaint following receipt of any notice from any
person or entity (including without limitation the EPA) asserting the existence
of any Hazardous Substance or any Environmental Complaint pertaining to the
Property or any part thereof which, if true, could result in an order, suit or
other action or which, in the sole opinion of Landlord, could jeopardize the
Landlord. All reasonable costs and expenses incurred by Landlord in the exercise
of any such rights shall be secured by this Lease, and shall be payable by
Tenant upon demand, if caused or created by Tenant.
The Tenant, prior to taking possession, shall have the right to have the
property to be leased inspected by a certified environmental and groundwater
auditing firm, and Tenant shall pay for the costs of a Preliminary Hazardous
Wastes or "Phase I Audit."
To the best of the Landlord's knowledge and belief at the outset of the
Lease, the property has been audited by a professional environmental engineering
firm, to wit, Ardamann & Assoc., who have provided evidence to the Landlord that
the property at the commencement of the Lease, is free or pollution or hazardous
substances.
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17. LIGHTING: All interior ceiling lighting fixtures shall be in their
present "as is" condition as of the Commencement Date and shall be maintained
(including replacements) by Tenant. The existing lighting fixtures and any new
fixtures permanently affixed to the Premises shall become a part of the Premises
and shall be left in the Premises at the expiration of this Lease. Tenant
accepts the present night lighting in the parking areas as satisfactory to
Tenant and its invitees, and Tenant shall pay its Proportionate Share of such
costs for the exterior lighting as provided above.
18. ASSIGNMENT/SUBLET: Notwithstanding any other provision of this Lease,
this Lease shall only be assigned, mortgaged, or sublet in whole or in part by
Tenant with the prior written consent of Landlord, which consent may be withheld
by Landlord at Landlord's sole discretion. The Landlord's consent will not be
unreasonably withheld if the sub-tenant provides appropriate guaranties and
collateral, as in Landlord's discretion, and provides Landlord with adequate
security.
19. CONDEMNATION:
(a) In the event that the whole of the Lease Premises shall be
condemned or taken in any manner for any public or quasi-public use, this
Lease and the term and estate hereby granted shall forthwith cease and
terminate as of the date of vesting of title in the condemnor. In the event
that only a part of the Lease Premises shall be so condemned or taken,
then, effective as of the date of such vesting of title, the rent hereunder
for such part shall be equitably abated and this Lease shall continue as to
such part not so taken.
(b) In the event of any condemnation or taking hereinabove mentioned
of all or part of the Leased Premises, Landlord shall be entitled to
receive the entire award in the condemnation proceeding, including any
award made for the value of the estate vested by this lease in Tenant, and
Tenant hereby expressly assigns to Landlord any and all right, title, and
interest of Tenant now or hereafter arising in or to any part thereof, and
Tenant shall be entitled to receive no part of such award; provided,
however, Tenant shall have the right, at its sole cost and expense, to
assert a separate claim in any condemnation proceeding for its personal
property and trade fixtures.
(c) In the event of termination pursuant to subparagraphs (a) and (b)
above, this Lease and the term and estate hereby granted shall expire as of
the date of such termination with the same effect as if that was the date
hereinbefore set for the expiration of the term of this Lease, and the
rents hereunder shall be apportioned as of such date.
20. DEFAULT: In the event that the Tenant shall default in the payment of
the rental as required by this Lease, or shall default in any of the terms and
conditions hereof, such default shall be considered a material and significant
breach of this Lease and shall, at the option of the Landlord, work as a
forfeiture of this Lease or at the option of the Landlord, all sums payable
hereunder shall become immediately due and payable, or Landlord may enforce the
full and complete performance of all of the terms of this Lease in any manner
provided by law, or equity, including but not limited to specific performance,
or further, the Landlord may take such action as may be necessary to correct
such default, all at the expense of the Tenant. In the event of any breach or
default, in any of the terms and conditions of this Lease, the party causing
such breach or default shall hold the other party harmless and shall pay all
costs and expenses incurred in connection with the enforcement of the terms of
this Lease, including but not limited to, attorneys' fees. Attorney's fees shall
include any instance wherein it would be necessary to enforce the provisions of
this Lease, whether suit be brought or not, including defense or prosecution of
declaratory judgment.
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Any one of the following events shall be classified as a "Default" under
the terms of this Lease:
(a) if Tenant, or any guarantor of Tenant's obligations hereunder,
shall make an assignment for the benefit of creditors or file a petition,
in any state or federal court, in bankruptcy, reorganization, composition,
or make an application in any such proceedings for the appointment of a
trustee or receiver for all or any portion of its property;
(b) if any petition shall be filed under state or federal law against
Tenant, or any guarantor of Tenant's obligations hereunder, in any
bankruptcy, reorganization, or insolvency proceedings, and said proceedings
shall not be dismissed or vacated within thirty (30) days after such
petition is filed;
(c) if a receiver or trustee shall be appointed under state or federal
law for Tenant, or any guarantor of Tenant's obligations hereunder, for all
or any portion of the property of either of them, and such receivership or
trusteeship shall not be set aside within thirty (30) days after such
appointment;
(d) if in the event the herein described Premises remain unoccupied
and unattended or closed for business with Tenant's furniture and equipment
still within the Premises, or are vacated with Tenant having removed a
substantial portion of its fixtures for a period of thirty (30) consecutive
calendar days, or are not used for the purpose for which they were rented,
such shall constitute an event of default;
(e) if the Tenant is a corporation, if any part or all of its stock
representing effective voting control of Tenant, shall be transferred so as
to result in a change in the present effective voting control of Tenant
(but excluding inter-family transfers);
(f) If Tenant fails to pay any monthly installments of its Base Rent,
its share of Real Estate or Electric Expenses or any other payment or
charge required under this Lease (a monetary Default) when same shall
become due and payable and such failure continues for thirty (30) days
after the due date thereof;
(g) if Tenant shall fail to perform or observe any term, regulation,
or condition of this Lease except those monetary defaults referred to in
subparagraph (f) above, and such failure shall continue for twenty (20)
days after written notice from Landlord [except that such twenty (20) day
period shall be automatically extended for such additional period of time
as is reasonably necessary to cure such default, if such default cannot be
cured within such 20 day period and provided Tenant is in the process of
diligently curing the same];
(h) if Tenant shall be given three (3) notices of Default under
subsection (f) or (g) above, notwithstanding any subsequent cure of the
Default(s) the subject of such notices;
(i) if any execution, levy, attachment or other legal process of law
shall occur upon Tenant's goods, fixtures, or interests in the Premises; or
(j) if Tenant shall assign or sublet all or a portion of the Premises
without prior written consent of Landlord (voluntarily or by operation by
Law).
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21. LANDLORD'S REMEDIES: Upon the happening of any one of any one or more
of the aforementioned Defaults, Landlord shall have the exclusive right, in
addition to any other rights and remedies provided herein, to (i) terminate this
Lease by giving Tenant notice to end the term of this Lease at the expiration of
seven (7) days after the date of such notice (referred to herein as "Landlord's
Notice to Terminate"); or (ii) permit the Lease to remain in full force and
effect (including Landlord's right to re-entry to mitigate losses as provided
below).
If all such Defaults shall not have been cured within said seven (7) days
after Landlord's notice to Terminate (issued at Landlord's option), this Lease
shall cease and expire, and Tenant shall immediately surrender the Premises to
Landlord. Notwithstanding such termination, tenant's liability and obligation
under all provisions of this Lease including the obligation to pay Base Rent, it
share of expenses, and any and all other amounts due hereunder shall survive and
continue.
Upon the happening of any one or more of the aforementioned Defaults,
Landlord shall have the option of not terminating this Lease and of exercising
Landlord's right to re-enter the Premises immediately or thereafter without
notice or resort to legal process, which Tenant hereby expressly waives, and in
any event may dispossess the Tenant. No such re-entry or taking of possession of
the Premises by Landlord shall be construed as an election to terminate this
Lease unless Landlord delivers Tenant a written Notice of Termination.
Should Landlord elect to re-enter or should it take possession pursuant to
legal proceedings or pursuant to any notice provided for by law, Landlord may
make such alterations and repairs as Landlord deems necessary in order to re-let
the Premises or any portion thereof for such term or terms (which may be for a
term extending beyond the term of this Lease) and at such rentals and upon such
terms and conditions as Landlord, in its sole discretion, may deem advisable;
and upon such re-letting, all rentals received by Landlord from such re-letting
shall be applied, first, to the payment of any indebtedness other than rent due
hereunder form Tenant to Landlord; second, to the payment of any costs and
expenses of such reletting, including attorney's fees and costs of such
alterations and repairs including architect fees, overhead, accounting fees,
lease commissions, suppliers, laborers, etc.; third, to the payment of Base Rent
or any other payments, due and unpaid hereunder, and the residue, if any, shall
be held by Landlord and applied in payment of future rents as the same may
become due and payable hereunder and any remaining positive balance shall be
paid to Tenant. If such rentals received from such re-letting during any month
is less than that to be paid during that month by Tenant hereunder, Tenant shall
pay any such deficiency to Landlord. Such deficiency shall be calculated and
paid monthly. Landlord may recover from Tenant, immediately upon default by
Tenant, all damages it may incur by reason of Tenant's default, including the
cost of recovering the Premises, and reasonable attorney's fees, all of which
amounts shall be immediately due and payable from Tenant to Landlord.
22. ACCELERATION: In the event of any default by Tenant, as defined herein,
Landlord shall have the option of declaring the entire unpaid Base Rent for the
balance of the Lease at once due and payable, time being of the essence.
23. LITIGATION: The parties waive trial by jury in any action or proceeding
brought by either of the parties hereto on any matters arising out of or in any
way connected with this Lease. If Landlord commences any proceedings for
non-payment of Base Rent or any other amount as may be due Landlord, Tenant
shall not interpose any counterclaim of whatever nature in any such proceedings.
This shall not, however, be a waiver of Tenant's right to assert such claims in
any separate action.
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<PAGE>
24. REMOVAL OF TENANT'S PROPERTY: Should the Tenant not remedy a Default
within the time periods provided above, the Landlord shall have the immediate
right to enter and to remove all persons and property (person or other types)
from the Premises and to store, at the expense and risk of the Tenant, any and
all fixtures, inventory, property, and equipment within the Premises. Landlord
shall not be liable for and the Tenant shall hold the Landlord harmless from and
against, the cost for and damages to any and all such property or the removal
thereof.
25. LIEN OF LANDLORD: In addition to all rights or remedies of Landlord
under this Lease and the law, including the right to a judicial foreclosure,
Landlord shall have all the rights and remedies of a secured party under the
Uniform Commercial Code of the State of Florida, and Tenant shall execute a
UCC-1 Financing Statement simultaneously with Tenant's execution of this Lease.
This security agreement and the security interest created by this Lease exist
prior to a termination of this Lease and shall survive a termination of this
Lease (if elected by Landlord). The Landlord shall have a first lien for the
purpose of securing all obligations of Tenant hereunder, paramount to all
others, on fixtures, inventory, equipment, furnishings or other personal
property, whether or not permanently affixed to the improvements, with the
exception of any purchase money security interest therein having priority
pursuant to the requirements of Florida law, to satisfy said default, and the
Landlord shall be authorized to repossess such personal property of Tenant
previously on or within the Premises in order to satisfy arrears in rent or
other monies due and delinquent hereunder. Upon Tenant's full compliance
(including all required payments) with the terms of this Lease, upon termination
of the Lease Landlord will execute a UCC-3 Termination Statement.
26. CUMULATIVE REMEDIES AND INJUNCTIVE RELIEF: In action to any and all
other remedies which the Landlord may have to cure a Default, the Landlord shall
have injunctive relief for compelling performance hereunder or for restraining
violation or attempted or threatened violation of any provision under this
Lease. All remedies available to the Landlord are declared to be cumulative and
concurrent. No termination of this Lease by reason of the Default of Tenant nor
by taking or recovery of possession of the Premise following such Default, shall
deprive Landlord of any of its remedies or actions against Tenant and Tenant
shall remain liable for all past or future rent including all other charges and
rent payable for the balance of the term hereof. The bringing of any action for
rent or other Default shall not be construed as a waiver of the right to obtain
possession of the Premises nor shall it be construed as a termination of the
Lease unless Landlord specifically elects to terminate this Lease as provided
hereunder by giving written notice thereof.
27. RECORDING: This Lease shall not be filed for public record.
28. RETURN OF DEPOSIT: If, for any reason whatsoever, the Landlord shall be
unable to deliver the Premises in accordance with the provisions hereof, it is
agreed that the Landlord's liability shall be limited to the return of the
payment made by the Tenant on the signing hereof and upon the return of said
sum, this Lease shall be null and void.
29. ABATEMENT OF RENT: In the event the Premises are destroyed or damaged
by fire, (other than that caused by storm damage as provided below) rain, wind,
or other cause beyond the control of Tenant, the rent due hereunder shall abate
during the period that the Premises are untenantable and the Landlord shall
attempt to repair the Premises within a reasonable time. If the damage results
from the fault of the Tenant or Tenant's agents, servants, visitors, or
licensees, Tenant shall not be entitled to any abatement or reduction of rent.
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<PAGE>
30. STORM DAMAGE: The Landlord will in no way be responsible to the Tenant
for any damage to any property of the Tenant or of anyone holding or claiming
by, under or through the Tenant, or for any injury to person in either case
caused by windstorm, water, hurricane or by rain. Those risks are assumed by the
Tenant and that status will be unchanged by any act or omission nor commission.
The Landlord specifically does not agree to install storm shutters in the event
of a storm warning. There shall be no reduction in rent as a result of damage
caused by rain, water, storm or hurricane.
31. HEIRS, SUCCESSOR, ASSIGNS, ETC.: This Lease, and each and every
provision contained herein, shall bind and inure to the parties hereto and to
their heirs, successors, executors, administrators, and permitted assigns. In
the event Landlord and any successor owner of the Premises shall convey or
otherwise dispose of the Premises and/or the building of which the Premises
forms a part, all liabilities and obligations of the Landlord under this Lease
shall terminate and shall be assumed by such new owner.
32. LANDLORD'S RIGHT TO COLLECT RENT FROM ANY OCCUPANT: If (a) the Premises
are sublet, underlet, or occupied by anyone other than the Tenant with the prior
written consent of Landlord provided as required herein and the Tenant is in
default hereunder, or (b) this Lease is assigned by Tenant after the prior
written consent of Landlord as provided herein, then Landlord may collect rent
from the assignee, under-tenant, sublessee, or occupant, and apply the net
amount collected to the rent herein reserved; but no such collection shall be
deemed a wavier of the covenant herein against assignment and underletting, or
the acceptance of such assignee, under-tenant or occupant or sublessee as
Tenant, or a release of the Tenant from further performance of the covenants
herein contained -- the Tenant remaining primarily liable for all obligations
under this Lease.
33. LANDLORD'S RIGHT TO CURE TENANT'S BREACH: If Tenant breaches any
covenant or condition of this Lease, Landlord may, on reasonable notice to
Tenant (except that no notice need be given in case of emergency) cure such
breach at the expense of the Tenant and the reasonable amount of all expenses,
including attorney's fees, incurred by the Landlord in doing so (whether paid by
Landlord or not), together with interest at the maximum rate from time to time
permitted by law, shall be deemed additional rent payable on demand.
34. MECHANIC'S LIEN: Tenant, within ten (10) days after notice from the
Landlord, shall discharge any mechanic's lien for materials or labor claimed to
have been furnished to the Premises on Tenant's behalf.
35. NOTICES: Any notice by either party to the other shall be in writing
and shall be deemed to have been duly given (whether or not actually received)
only if sent by; (i) certified mail, return receipt requested, in a postpaid
envelope addressed (a) if to Tenant to TRILOGY INTERNATIONAL, INC., c/o DENNIS
BERRADI, at 520 S. Dixie Highway, Suite C, D, E & F, Stuart, Florida 34994, or
(ii) by Federal Express or other nationally-known overnight courier service to
Tenant's address as set forth above; and (b) if to Landlord to H.N.S.
PROPERTIES, LTD., Post Office Box 1617, Stuart, FL 34995, or at such other
addresses as Tenant or Landlord, respectively, may designate in writing. Any
notice by Landlord to Tenant shall also be deemed to have been duly given if
personally delivered to Tenant at the Premises.
36. LANDLORD'S RIGHT TO INSPECT AND REPAIR: Landlord may, but shall not be
obligated to, enter the Premises at any reasonable time, on reasonable notice to
Tenant (except that no notice need be given in case of emergency) for the
purpose of inspection or the making of such repairs replacements and additions,
in, to, on and/or about the Premises or the Building, as Landlord deems
necessary or desirable. Tenant shall have no claim or cause of action against
Landlord by reason thereof.
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<PAGE>
37. SEPARABILITY: If any term of this Lease, or the application thereof to
any person or circumstances, shall to any extent be invalid or unenforceable,
the remainder of this Lease, or the application of such term to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected thereby, and each term of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
38. INDEMNITY/AUTHORITY: Tenant hereby agrees to indemnify Landlord against
and hold Landlord harmless from, any and all damages, liability, costs and
expenses, including attorney's fees and disbursements, arising out of any injury
or damage to person or property at the Premises or as a result, in whole or in
part, of any action or failure to take action by Tenant, its servants, agents,
employees, guests, licensees and contractors. In case Landlord shall be made a
party to any litigation commenced by or against Tenant, Tenant shall protect and
hold Landlord harmless and pay all costs and expenses and reasonable attorneys'
fees at the trial and at the appellate levels. Tenant represents that the
execution and delivery of this Lease has been authorized: by its Board of
Directors; and/or by its owner or owners; and/or by the person or persons duly
authorized to execute and delivery this Lease.
39. QUIET ENJOYMENT/RIGHT TO SHOW PREMISES: Landlord covenants that if, and
so long as, Tenant pays the Base Rent and Expense Reimbursement as set forth
herein and performs the covenants thereof, Tenant shall peaceably and quietly
have, hold and enjoy the Premises for the term herein mentioned, subject to the
provisions of this Lease; however, Landlord may show the Premises to prospective
purchasers and mortgagees and, during the sixty (60) days prior to termination
of this Lease, to prospective tenants, during business hours or thereafter on
reasonable notice to Tenant.
40. EASEMENTS, ENCUMBRANCES, AND RESTRICTIONS: This Lease is made by
Landlord and accepted by Tenant subject to the following:
(a) Right of Tenants, licensees, concessionaires, or occupants in
possession.
(b) Any state of facts that an accurate survey or inspection would
show.
(c) Any presently existing defect of title, easement, covenant,
encumbrance, restriction, mortgage, or deed of trust, agreement, and lien
affecting the site.
(d) All zoning regulations affecting the buildings.
(e) Restrictive covenants and party wall agreements of record.
(f) Encroachments on any street or on adjacent property.
(g) All ordinances, statutes, regulations, and any presently existing
violations thereof, whether or not of record.
(h) The existing condition and state or repair of the Buildings.
(i) The non-exclusive and certain exclusive rights of other tenants to
the parking spaces located at the site.
41. ATTORNMENT: The Tenants shall, in the event any proceedings are brought
for the foreclosure of, or in the event of, exercise of the power of sale under
any mortgage made by the Landlord covering the Premises, attorn to the purchaser
upon any such foreclosure or sale and recognize such purchaser as the Landlord
under this Lease, provided that Tenant's Lease shall not terminate if Tenant is
in full compliance with all the terms of this Lease.
322
<PAGE>
42. ESTOPPEL: Tenant, shall, upon request by Landlord, execute and deliver
to Landlord a written declaration in recordable form: (1) ratifying this Lease;
(2) expressing the commencement and termination dates thereof; (3) certifying
that this Lease is in full force and effect and has not been assigned, modified,
supplemented or amended (except by such writings as shall be stated); (4) that
all conditions under this Lease to be performed by Landlord have been satisfied;
(5) that there are no defenses or offsets against the endorsement of this Lease
by the Landlord; (6) the amount of advance rental, if any (or none if such is
the case) paid by Tenant; (7) the date to which rental has been paid; and (8)
the amount of security deposited with the Landlord. such declaration shall be
executed and delivered by Tenant from time to time as may be requested by
Landlord. Landlord's mortgagees, lenders and/or purchasers shall be entitled to
rely upon the same. In addition to the above, the Tenant shall also execute any
other estoppel letters or other instruments as may be required by Landlord
and/or Landlord's mortgagees.
43. END OF TERM: Upon the expiration of the term hereof, the Tenant shall
quit and surrender the Premises to the Landlord in as good order, broom clean,
and condition as the commencement date of this Lease, except for ordinary wear
and tear and damage by fire or other casualties, or causes beyond the Tenant's
control and Tenant shall, at its expense, remove all of that personal property
which Tenant is permitted to remove pursuant to this Lease, all alterations to
the Premises not wanted by Landlord, and repair all damage caused by such
removal. Upon the termination of this Lease, Tenant shall execute and
acknowledge a quitclaim deed to Tenant's interest in the Premises, in recordable
form, in favor of the Landlord within ten (10) days after written notice and
demand therefore by Landlord, and Tenant hereby appoints Landlord its
attorney-in-fact, irrevocably to execute and deliver such quitclaim deed in the
event Tenant does not respond to Landlord's request within 10 days. This power
of attorney hereby granted shall be deemed to be coupled with an interest, and
shall be irrevocable and survive the death of the undersigned.
44. TIME OF ESSENCE: Time is of the essence of this Lease.
45. HEADINGS OF PARAGRAPHS: The paragraph headings in this Lease are
intended for convenience only and shall not be taken into consideration in any
construction interpretation of this Lease or any of its provisions.
46. COMPLETE AGREEMENT: This Lease contains the complete expression of all
agreements between the parties hereto and there are no promises, representations
or inducements except as herein set forth, and no change shall be made in any of
the terms and conditions hereof unless made in writing by both parties.
47. SUBORDINATION: The Tenant agrees that this Lease shall be subordinate
to any mortgages now or hereinafter placed of record (including renewals,
modifications and extensions thereof) now or hereafter in force against the land
in buildings of which the Premises are a part, and to all advances made or
hereafter to be made upon the security thereof and these provisions shall be
self-operative and no further instrument of subordination shall be required.
However, the Tenant, upon request of any party in interest, shall execute
promptly such instrument or certificates to carry out the intent hereof as shall
be required by the Landlord or Landlord's Mortgagee, and Landlord is hereby
irrevocably appointed and authorized to execute such instruments as the true and
lawful attorney-in-fact for Tenant and deliver such instrument for and in the
name of the Tenant. This power of attorney hereby granted shall be deemed to be
coupled with an interest, and shall be irrevocable and survive the death of the
undersigned.
323
<PAGE>
48. IMPROVEMENTS: It is hereby agreed that the premises shall be delivered
to the Tenant by the Landlord upon such time as the improvements per the
attached Exhibit "A" have been completed. The improvements as per the attached
Exhibit "A" shall be made in a diligent fashion by the Landlord, at Landlord's
expense. In the event that the cost of improvements exceed the sum of $25.00 per
square foot, the Tenant shall be responsible for any overage. The premises will
be deemed complete upon issuance of a Certificate of Occupancy.
As per paragraph 2 of this Lease, if the improvements are not completed by
September 1, 1999, the Tenant agrees to commence the Lease Term at the issuance
of a Certificate of Occupancy. At all times it is hereby agreed that in
consideration of the Landlord making the improvements that the Tenant and the
Personal Guarantors herein agree to honor the terms of this Lease, and towards
that end it is hereby agreed that the first month's rent, last month's rent,
security deposit and the personal guarantees as executed by the individuals may
be retained by, and collected upon as damages by the Landlord in the event that
the Tenant fails to take possession once the improvements are completed.
The Tenant agrees to furnish the Landlord a complete and sufficient list of
plans and specifications within 10 days of the execution of this Lease in order
to allow the Landlord to finish same in a timely manner.
Landlord will supply electrical and plumbing connections for Tenant's
dishwasher and refrigerator Tenants shall be responsible for the cost of the
appliances.
49. MISCELLANEOUS:
(a) Personal Guaranty: The Personal Guaranty of this Lease in the form
attached hereto as Exhibit "B" shall be delivered to Landlord simultaneous
with the execution of this Lease. Such guarantee shall apply to the first
five years of the Lease Term and shall not exceed $50,000.00 in total. Once
the Tenant reaches provable gross sales of $2,000,000.00+ per year, the
Personal Guaranties shall be converted to a Corporate Guaranty.
(b) It is hereby agreed that CAROL BERARDI and DENNIS BERARDI, each,
jointly and severally, agree to personally guaranty $50,000.00 for the
faithful performance of this Lease. Each party agrees that their respective
spouses shall sign a Personal Guaranty also.
(c) It is hereby agreed that the Landlord will be guaranteed five (5)
parking spaces at the leased premises at all times during the pendency of
this Lease.
(d) It is hereby agreed that the Tenant shall be allowed a prorata
share of signage on the existing monument sign located on the premises. All
signage must have the Landlord's written consent, which consent shall not
be unreasonably withheld, but all signage must be in good taste and in
keeping with the architecture of the building. In addition to space on the
existing monument sign, the Landlord will allow the Tenant to install
signage above the doors of the Tenant's let space, together with signage on
the doors themselves; again, all said signage must be approved, with the
Landlord's written consent, and be in appropriate taste in keeping with the
architectural style of the building.
324
<PAGE>
IN WITNESS WHEREOF, the parties have hereunder signed and sealed this
Lease on the day, month and year first above shown and written.
Signed, Sealed and Delivered in the presence of:
H.N.S. PROPERTIES, LTD.
_____________________________ By:___________________________
Its:
_____________________________ (corporate seal)
TRILOGY INTERNATIONAL, INC.
______________________________ By:___________________________
Its:
______________________________ (corporate seal)
------------------------------
Carol Berardi, as personal
guarantor per paragraph 49
------------------------------
Dennis Berardi, as personal
guarantor per paragraph 49
325
TRILOGY INTERNATIONAL, INC.
REPLICATOR SITE
TERMS OF AGREEMENT
Upon subscribing to Trilogy's Replicator Site, Trilogy's Independent Field
Representative (hereinafter "Representative") hereby agrees to the following:
(1) Representative agrees to the terms of payment for the Replicator Site as set
forth on the Replicator Site sign-up page which follows this document.
(2) Trilogy makes no warranties of any kind, expressed or implied, including any
implied warranty of merchantability or fitness of the services provided for a
particular purpose. Trilogy shall not be responsible for any damages suffered by
the Representative, including, but not limited to, loss of data from delays,
non-deliveries, mis-deliveries, or service interruptions caused by Trilogy's own
negligence or the Representative's errors and or omissions. The Representative
shall provide all telephone and other equipment necessary to access Trilogy
systems. Trilogy reserves the right to modify the service terms, standard rates
and operating procedures to establish usage priorities and to discontinue all or
any part of the provided services at anytime. The Representative is responsible
for implementing sufficient procedures and checkpoints to satisfy its
requirements for accuracy of data input and output and maintaining a means
external to Trilogy's system for the reconstruction of any lost data. Trilogy is
not responsible for service interruptions beyond its control, including acts of
nature or service interruptions by its suppliers.
(3) The Representative agrees to indemnify and hold harmless Trilogy from any
claims resulting from the Representative's use of the site.
(4) Use of any information obtained via this service is at the Representative's
risk. Trilogy specifically denies any responsibility for the accuracy or quality
of information obtained through its services. The Representative agrees to
protect and treat as confidential all Trilogy proprietary information, including
access codes and IDs provided by Trilogy for its system. Sharing of IDs/accounts
is expressly forbidden. If a Representative believes his or her access
ID/password has been compromised, immediate e-mail or telephone notification
must be provided to Trilogy. The Representative may be held responsible for all
acts/communications initiated or authorized by that account ID until receipt by
Trilogy of such notice.
(5) All Representative data shall be treated in a confidential manner as
outlined in our Privacy Statement. All data will be released only to those
individuals authorized by the Representative or upon service of a valid court
order.
(6) Neither party shall be liable to the other, except as set forth in Paragraph
(3) above, for any loss, damage, liability, claim or expense arising out of or
in relation to this Agreement or the provision of service or equipment, however
caused, whether grounded in contract, tort (including negligence) or theory of
strict liability. The parties agree to work in good faith to implement the
purposes of this Agreement but recognize the network connection and services to
be provided by Trilogy could not be made available under these terms, or other
similar terms, without a substantial increase in cost if the parties were to
assume a greater liability to each other.
(7) Trilogy adheres to commonly practiced Internet etiquette and requires its
Representatives to do so. If a Representative violates etiquette when presenting
the Trilogy products and/or opportunity, it could result in termination of the
Representative's Trilogy business, and/or prosecution to the fullest extent of
the law.
326
<PAGE>
(8) All Trilogy Independent Field Representatives must comply with the policies
set forth in Trilogy's Policies and Procedures Manual. Following are portions of
those Policies and Procedures which specifically address use of the Internet:
Section 4.9: Field Representatives may not use or transmit unsolicited faxes,
mass e-mail distribution, unsolicited e-mail or "spamming" relative to the
operation of their Trilogy businesses. The term "unsolicited e-mail means the
transmission of electronic mail of any material or information advertising or
promoting Trilogy, its products, its compensation plan or any other aspect of
the company which is transmitted to any person. These terms do not include a fax
or e-mail to: (a) any person with the person's prior express invitation or
permission; or (b) any person with whom the Field Representative has an
established business or personal relationship. The term "established business or
personal relationship" means a prior or existing relationship formed by a
voluntary two-way communication between a Field Representative and a person, on
the basis of: (a) an inquiry, application, purchase or transaction by the person
regarding products offered by such Field Representative; or (b) a personal or
familial relationship, which relationship has not been previously terminated by
either party. [The Representative's replicator site may not be the destination
of: unsolicited e-mail, or bulk e-mail (either solicited or unsolicited),
whether originated by the Representative, or on behalf of the Representative.]
Section 4.11: The official Trilogy corporate website (or home pages, and
possibly other uses which will be specified by Trilogy, tied to the corporate
site available to Trilogy's Field Representatives) must be the only use of the
Internet for selling or promoting Trilogy products and services. This will be
strictly enforced, and any violation on the Internet may lead to termination of
the Field Representative's Agreement with Trilogy.
(9) The only Internet sites that may market Trilogy's products and opportunity
(whether or not Trilogy's name is used) are Trilogy's corporate site and its
replicated sites that are sold to its Field Representatives.
(10) Trilogy will allow links to the replicator sites. Those links must contain
only specific language, which Trilogy will provide. If a Field Representative
has a site other than the replicator site which contains information about
Trilogy, its products or opportunity, that Field Representative will be subject
to disciplinary action, including possible termination of their Trilogy
business.
(11) No links may be made to Trilogy's corporate site.
(12) Clicking on the "Accept" button on the Replicator Site sign-up page,
confirming the purchase of a replicator site, constitutes acceptance of these
terms and conditions. Both parties agree to accept electronic mail as legally
binding documentation for billing and notification purposes. This Agreement will
be performed in and governed by the laws of the State of Florida.
327
October 26, 1999
CONSULTING AND ROYALTY AGREEMENT
WHEREAS, Dr. Kamau Kokayi ("Consultant") has assisted Trilogy International,
Inc. in the formulation of a human nutritional supplement commonly referred to
as "colostrum for humans" and,
WHEREAS, the Company plans to market the product under the brand name "Trilogy's
Essence of Life Colostrum",
The parties, therefore agree as follows:
Consultant will endorse the Company's "Essence of Life Colostrum" product and,
For his services in connection with the formulation of the product and his
endorsement of the product, the Company will pay to Consultant a royalty of 2%.
Royalties will be calculated based on the Company's cost of the product from the
product manufacturer. Royalties will be paid monthly in arrears based on units
of the product sold in the prior month.
BY:__________________________
Kamau Kokayi
ACCEPTED:_____________________ DATE____
Dennis Berardi, CEO
Trilogy International, Inc.
526 S.E. Dixie Highway, Stuart, FL 34994
Telephone 561-781-7278 (Fax 561-781-7282)
e-mail: [email protected]
328
Richard Berardi
Writer / Producer / Publisher
69 Narrumson Road
Mannasquan, NJ 08736
732-223-5225
Dennis Berardi
c/o Trilogy
1050 S.W. Chapman Way
Palm City, FL 34990
Dear Dennis:
As per our agreement, I hereby give Trilogy permission to use my composition,
BEST FRIENDS, in your promotional video. There shall be no time limit for its
use. I also give Trilogy permission to use the instrumental music composed by me
which is included in your video.
Trilogy agrees to pay me the sum of $1,800.00 for the use of the above musical
compositions. In addition Trilogy agrees to pay me royalties in the amount of
$.05 for each video sold. This royalty shall be paid on a quarterly basis.
Agreed to this 24th day of June, 1999.
TRILOGY:
BY: Dennis Berardi (Signature)
BY: Richard Berardi (Signature)
329
Royalty Agreement
May 15, 1999
Trilogy International, Inc. agrees to pay Tana Henke a royalty of 5% of
Trilogy's cost to purchase the following products:
A. Trilogy's Best Friends Advanced Multivitamin & Mineral Formula for Dogs
B. Trilogy's Best Friends Advanced Multivitamin & Mineral Formula for Cats
The cost basis will include only manufacturing cost, exclusive of label and
shipping costs.
(Signature)
Carol Berardi
President
Trilogy International, Inc.
(Signature)
Tana Henke
330
Atty. Doc. No. 2022.001
IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
APPLICATION FOR TRADEMARK REGISTRATION
PRINCIPAL REGISTER
Mark: TRILOGY and Design
Class: International Classes 005 and 031
TO THE ASSISTANT COMMISSIONER FOR TRADEMARKS
STATEMENT
Trilogy, a Florida corporation with its principal place of business at 1050
SW Chapman Way, Palm City, FL 34990, has adopted and is using the mark shown in
the accompanying drawing as a trademark for the following goods:
NUTRITIONAL SUPPLEMENTS in International Class 005;
and
PET FOODS AND SUPPLIES in International Class 031.
Applicant requests that said mark be registered in the United States Patent
and Trademark Office on the Principal Register established by the Trademark Act
of July 5, 1946. (15 U.S.C. 1051 et. seq., as amended.)
The mark was first used by the applicant on the goods for NUTRITIONAL
SUPPLEMENTS IN JUNE, 1998; and was first used in INTERSTATE COMMERCE IN JUNE,
1998 ; and is presently in use in such commerce by the Applicant; and
The mark was first used by the applicant on the goods for pet FOODS AND
SUPPLIES FOODS IN JUNE, 1998; and was first used in INTERSTATE COMMERCE IN JUNE,
1998; and is presently in use in such commerce by the Applicant.
The mark is further used on products, packaging, in brochures and
advertising, and in other ways customary to the trade. Three specimens showing
the mark as actually used are submitted herewith.
APPLICANT: TRILOGY
(a Florida corporation)
ADDRESS: 1050 SW Chapman Way
Palm City, Florida 34990
GOODS: NUTRITIONAL SUPPLEMENTS in
International Class 005.
USE IN COMMERCE: June, 1998
FIRST USE IN
INTERSTATE COMMERCE: June, 1998
GOODS: PET FOODS AND SUPPLIES
International Class 031.
USE IN COMMERCE: June, 1998
331
<PAGE>
FIRST USE IN
INTERSTATE COMMERCE: June, 1998
ATTORNEYS: Michael A. Slavin
McHALE & SLAVIN, P.A.
4440 PGA Blvd. Suite 402
Palm Beach Gardens, FL 33410
(561) 625-6575
Atty. Docket: 2022.001
CORPORATE DECLARATION
The undersigned, being hereby warned that willful false statements, and the
like so made are punishable by fine or imprisonment, or both, under 18 U.S.C.
1001, and that such willful false statements may jeopardize the validity of the
application or any resulting registration, declares that he/she is properly
authorized to execute this application on behalf of the applicant; he/she
believes the applicant to be the owner of the trademark/service mark sought to
be registered, or, if the application is being filed under 15 U.S.C. 1051(b),
he/she believes applicant to be entitled to use such mark in commerce; to the
best of his/her knowledge and belief no other person, firm, corporation, or
association has the right to use the mark in commerce, either in the identical
form thereof of in such near resemblance thereto as to be likely , when used on
or in connection with the goods/services of such other person, to cause
confusion, or to cause mistake, or to deceive, and that all statements made of
his/her own knowledge are true and all statements made on information and belief
are believed to be true.
Trilogy
DATE:
Carol Bernardi, President
POWER OF ATTORNEY AND
DESIGNATION OF ADDRESS FOR CORRESPONDENCE
Applicant corporation hereby appoints Michael A. Slavin (Patent Reg. No.
34,016), Erik C. Swans on (Agent No. 40,194), and Edward F. McHale of the firm
McHALE & SLAVIN, P.A., attorneys at law, duly authorized to practice law in the
State of Florida, with full power of substitution and revocation, its attorneys
to prosecute this application to register, to transact all business in the
Patent and Trademark Office in connection therewith, and to receive the
Certificate of Registration; and requests that all correspondence from the
Patent and Trademark Office concerning this application be addressed to:
Michael A. Slavin
McHALE & SLAVIN, P.A.
4440 PGA Blvd. Suite 402
Palm Beach Gardens, FL 33410
(561) 625-6575
Trilogy
DATE:
Carol Bernardi, President
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