UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 10-QSB
Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the
quarterly period ended March 31, 2000
Commission file number 000-03718
AmeriNet Group.com, Inc.
(Name of small business issuer in its charter)
Delaware
--------
(State of incorporation or organization)
11-2050317
-----
(I.R.S. Employer Identification No.)
2500 North Military Trail Suite 225, Boca Raton, Florida 33431
--------------------------------------------------------------
(Address of principal executive offices)
33431
-----
(Zip Code)
Issuer's telephone number: (561) 998-3435
--------------
State the number of shares outstanding of each of the small business
issuer's classes of common equity, as of the latest practicable date. As of
March 31,2000, there were 11,344,300 shares of the small business issuer's
common stock outstanding.
Transitional Small Business Disclosure Format (Check one): Yes No x
Page 1
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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 subsidiary, Trilogy
International, Inc, maintains a web site at http://www.trilogyonline.com.;
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 Report and Form 10-KSB 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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<PAGE>
Table of Contents & Cross Reference Sheet
Part Item Page
Number Number Number Caption
I 1 Financial Statements
4 Condensed Consolidated Financial Statements
5 Condensed Consolidated Balance Sheet (Unaudited) as
of March 31, 2000
6 Condensed Consolidated Statements of Operations
(Unaudited), for the Nine Months Ended March 31,
2000 and 1999, and for the three months ended
March 31, 2000 and 1999.
7 Condensed Consolidated Statements of Cash Flows
(Unaudited) for the Nine Months Ended March 31,
2000 and 1999
8 - 11 Notes to Condensed Consolidated Financial Statements
2 Management's Discussion and Analysis or Plan of Operation
12 Plan of Operation
12 General
13 Recent Developments Pertaining to Plan of Operation
13 Results of Operations
14 Liquidity and Capital Resources
II 1 15 Legal Proceedings
2 15 Changes in Securities
3 * Defaults Upon Senior Securities
4 * Submission of Matters to Vote of Securities Holders
5 18 Other Information
6 21 Exhibits and Reports on Form 8-K
- - - -------------
* Not Applicable
Page 3
<PAGE>
Part I - Financial Information
Item 1. Financial Statements:
AMERINET GROUP.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000
(UNAUDITED)
ASSETS
Current assets:
Cash $ 197,638
Accounts receivable, net 80,632
Inventory 137,636
Prepaid expenses 49,717
------------------
Total current assets 465,623
-----------------
Property and equipment, net 181,118
-----------------
Other assets:
Goodwill, net 4,049,978
Loan costs, net 4,375
Loan receivable - WRIwebs.com, Inc. 211,515
Investment in WRIwebs.com, Inc. 703,083
Deposits 21,140
Intangibles, net 6,956
Total other assets 4,997,047
Total assets $ 5,643,788
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 196,175
Accrued expenses 461,320
Loans Payable related parties $ 271,300
Loans payable - other 95,692
Total current liabilities 1,024,487
Equity subject to potential redemptions 748,104
Stockholders' equity:
Preferred stock, no par value, 5,000,000 shares
authorized, -0- issued and outstanding -
Common stock, $0.01 par value, 20,000,000
shares authorized, 11,344,300 shares issued
and outstanding 113,443
Outstanding stock options 17,270
Additional paid in capital 9,527,044
Accumulated deficit (5,786,560)
Total stockholders' equity 3,871,197
Total liabilities and stockholders' equity $ 5,643,788
===============
See accompanying notes to condensed consolidated financial statements.
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AMERINET GROUP.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED MARCH 31, 2000 AND 1999 AND
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
- ---------------------------------------------------------------------------------------------------------------------------
3/31/00 3/31/99 3/31/00 3/31/99
------- ------- ------- -------
Revenues earned $ 45,063 $ - $ 249,941 $ -
- --------------- ---------------- -------------------- --------------- -------------------
Cost of revenues earned 18,398 - 176,476 -
- ----------------------- ----------------- ------------------------------------- --------------------
Gross profit (loss) 26,665 - 73,465 -
- ------------------- ----------------- ------------------------------------- --------------------
Selling, general and administrative expenses 522,096 8,396 1,318,983 8,396
- -------------------------------------------- ---------------- ------------------ --------------- --------------------
Depreciation and amortization 342,084 - 554,527 -
- ----------------------------- ---------------- ------------------------------------- --------------------
Goodwill - charges and transactions - - 522,201 -
- ----------------------------------- -------------------------------------------------------- --------------------
Total operating expenses 864,180 8,396 2,395,711 8,396
- ------------------------ ---------------- ------------------ --------------- --------------------
Income (loss) from operations (837,515) (8,396) (2,322,246) (8,396)
- ----------------------------- ---------------- ------------------ --------------- ---------------------
Other income (expense):
Interest expense (8,853) - (34,290) -
- -------------------- ------------------ ------------------------------------- --------------------
Equity in losses of subsidiary (38,269) - (45,021) -
- ---------------------------------- ----------------- ------------------------------------- --------------------
Total other income (expense) (47,122) - (79,311) -
- ---------------------------- ----------------- ------------------------------------- --------------------
Provision for income taxes - - - -
- -------------------------- -----------------------------------------------------------------------------
Loss from discontinued operations - (5,000) - (386,696)
- --------------------------------- ------------------------------------- ------------------------------------
Net loss $ (884,637) $ (13,396) $ (2,401,557) $ (395,092)
- -------- =============== ---------------- --------------- ---------------
Basic loss per share $ (0.08) $ - $ (0.27) $ (0.09)
- -------------------- ------------------ ---------- ------------------ ------------------
Weighted average shared outstanding 10,482,350 4,174,778 8,951,827 4,174,778
- ----------------------------------- =============== =============== =============== ==============
Fully diluted loss per share $ (0.08) $ - $ (0.27) $ (0.09)
- ---------------------------- ------------------- --------------- ------------------ ------------------
Fully diluted average shares outstanding 10,482,350 4,222,191 8,951,827 4,222,191
- ---------------------------------------- =============== =============== --------------- ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 5
<PAGE>
AMERINET GROUP.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<S> <C> <C>
2000 1999
- ---- ----
------------------ ------------------
Net cash used by operations (1,130,198) $ (300,506)
--------------------------- ----------------- -----------------
Cash flows from investing activities:
Purchase of property and equipment (36,650) -
-------------------------------------- ------------------- ---------------------
Cash overdraft acquired in acquisition (69,838) -
------------------------------------------ ------------------- ---------------------
Net cash used by investing activities: (106,488) -
-------------------------------------- ------------------ ---------------------
Cash flows from financing activities:
Common stock issued for cash, net of costs 906,950 35,000
---------------------------------------------- ------------------ ------------------
Capital contributions 25,000 -
------------------------- ------------------- -
(Increase) decrease in mortgage and notes receivable - 1,570,888
-------------------------------------------------------- -------------------------------------
Increase (decrease) in mortgage and notes payable 345,500 (1,299,828)
----------------------------------------------------- ------------------ -----------------
Net cash provided by financial activities 1,277,450 306,060
----------------------------------------- ----------------- -----------------
Net increase in cash 40,764 5,554
-------------------- ------------------- ------------------
Cash at beginning of period 79,021 (28)
--------------------------- ------------------- ---------------------
Cash at end of period $ 119,785 $ 5,526
--------------------- ================= ------------------
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 25,601 $ -
------------ ================= ---------------------
Non-cash transactions affecting investing and
financing activities:
Common stock issued for equipment $ 6,075 $ -
------------------------------------- =================== ---------------------
Common stock issued for interest $ 22,500 $ -
------------------------------------ ================== ---------------------
Common stock issued for acquisitions $ 4,851,562 $ -
---------------------------------------- ================ ---------------------
Contribution of professional services $ 644,295 $ -
----------------------------------------- ================= ---------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 6
<PAGE>
AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- - - ----------------------------------------------------------------------------
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required for complete financial
statements. In the opinion of management, all adjustments necessary for a fair
presentation of the results for the interim periods presented have been
included.
These results have been determined on the basis of generally accepted accounting
principles and practices applied consistently with those used in the preparation
of the Registrant's Annual Financial Statements for the year ended June 30,
1999. Operating results for the three and nine months ended March 31, 2000 are
not necessarily indicative of the results that may be expected for the year
ending June 30, 2000.
It is recommended that the accompanying condensed financial statements be read
in conjunction with the consolidated financial statements and notes thereto
include in the Registrant's 1999 Annual Report on Form 10-KSB.
AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- - - ----------------------------------------------------------------------------
NOTE 2 - ACQUISITIONS
Vista Vacations International, Inc.
On March 13, 2000, the Registrant acquired all of the outstanding common stock
of Vista Vacations International, Inc. (Vista is a cruise and leisure travel
marketing, training and reservations organization serving home-based
professional sellers of vacation travel.) As consideration, the Registrant
issued 286,667 unregistered shares of the Registrant's common stock issued in
reliance on Section 4(6) of the Securities Act. In addition the Registrant will
issue 22,000 shares of its common stock to certain parties as consideration for
their assistance in completing the acquisition. These shares are included in the
outstanding shares as of March 31, 2000 as reported. The Registrant, in
accordance with the Reorganization Agreement with Vista, has reserved an
additional 750,000 shares of its common stock for issuance to former Vista
Stockholders and/or employees subject to Vista's earning certain agreed upon pre
tax profits during the three years beginning July 1, 2000 and ending June 30,
2003. At the closing of the acquisition, the Registrant provided initial funding
to Vista in the amount of $125,000. In addition, subject to Vista's substantial
compliance with its material obligations under the Reorganization Agreement, the
Registrant intends to invest up to and additional $525,000 in Vista within
approximately one year of the date of the acquisition.
The acquisition of Vista was accounted for using the purchase method of
accounting with an effective date of March 31, 2000. The acquisition of Vista is
reflected on the balance sheet of the Registrant as of March 31, 2000, but no
revenues or cost of revenues for Vista are included in the consolidated
statement of operations of the Registrant for the period. Goodwill of $482,631
was recorded in this transaction and is being amortized over three (3) years,
using the straight-line method.
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The following summarizes the fair value of the Vista assets acquired and the
liabilities on the date of acquisition:
Cash in Banks (60,576)
Accounts Receivable 80,632
Deposits 10,039
Prepaid Expenses 49,718
Fixed Assets 63,435
Less: Accum Depreciation ( 15,116)
Trademark & Org. Cost 7,624
Less: Accum Amortization ( 668)
Accounts Payable (119,240)
Payroll Tax Liabilities ( 14,786)
Loans Payable ( 20,692)
Net Assets ( 19,631)
NOTE 3 - GOODWILL
Goodwill represents the amount by which the purchase price of businesses
acquired exceeds the fair market value of the net assets acquired under the
purchase method of accounting.
At March 31, 2000, the excess of the fair value of the net assets of Trilogy
International, Inc. is $4,011,107 and is recorded as goodwill, and is being
amortized on a straight-line basis over three (3) years. The accumulated
amortization at March 31, 2000 was $443,760.
At March 31, 2000, the excess of the fair value of the net assets of Vista is
$482,631 and is recorded as goodwill, and commencing April 1,2000 is being
amortized on a straight-line basis over three (3) years.
NOTE 4 - STOCKHOLDERS' EQUITY
During the three months ended March 31, 2000, the Registrant issued common stock
for cash and consideration for acquisition and services.
(a) The Registrant issued 833,334 shares of common stock for cash during the
three months ended March 31, 2000. The total amount obtained from the issuance
was $580,000.
(b) The Registrant issued a total of 308,667 shares for the acquisition of Vista
Vacations International, Inc.
(c) The Registrant issued 7,000 shares to Yankees for services in connection
with obtaining loan from Xcel Associates.
(d) Additional paid-in capital of the Registrant increased by $171,570 This
increase was due to a capital contribution of professional services provided to
the Registrant during the three-month period January 1, 2000 through March 31,
2000.
Page 8
<PAGE>
AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- - - ----------------------------------------------------------------------------
NOTE 5 - BORROWINGS
During the three months ended March 31, 2000, the Registrant increased its
borrowing from various shareholders and other related parties from a total of
$200,800 at December 31, 1999 to $271,300 at March 31,2000. A net increase in
debt to those parties of $70,500 for the period. Interest rate on the notes is
2% over the Chase Manhattan Bank N.A.'s prime rate adjusted on a monthly basis
and the notes are due on demand. Borrowings are secured by substantially all
assets of the Company.
On September 27, 1999, Xcel Associates ("Xcel) loaned AITC $75,000; the note was
due on December 31, 1999. In lieu of interest, Xcel received 15,000 shares of
the Registrant's common stock in November 1999. Yankees pledged 35,000 shares of
its common stock as collateral, and the Registrant agreed to indemnify Yankees
in the event that Xcel retains the collateral for non-payment of the note by
AITC. The Registrant will issued 7,000 shares of its common stock to Yankees as
compensation for pledging such shares.
NOTE 6 - INVESTMENTS IN WRIWEBS.COM, INC., AT EQUITY
The Registrant accounts for the investment in WRIwebs.com Inc. under the equity
method. The Registrant recognizes 20% of WRI's net losses.
Page 9
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
Plan of Operation
General
The Registrant is currently a holding company with an affiliate,
Wriwebs.com, Inc. ("WRI") (formerly known as American Internet Technical Center,
Inc.), and two wholly owned operating subsidiaries, Trilogy International, Inc.
("Trilogy") and Vista Vacations International, Inc. ('Vista").
The Registrant seeks to acquire operating companies that can benefit from
the Registrant's public reporting and trading status, from the experience of the
Registrant's directors, from synergy resulting from consolidation of non-
operating aspects of the subsidiaries' business at the holding company level,
from the related operations of the Registrant's subsidiaries and from the
resulting ability to concentrate on the continued development of its core
businesses without the distractions required to operate independently in an
extensive regulatory environment. As a holding company, the Registrant provides
its subsidiaries with centralized functions such as accounting and legal
services.
Over the next fiscal year, the Registrant plans to acquire additional
companies and recruit operating and research and development personnel that are
complementary to its operating subsidiaries.
The Registrant is currently a party to a letter of intent with Custom
Software Systems, Inc. ("CSSI") which it hopes will provide the research and
development capabilities called for under the Registrant's strategic plan. The
subject letter of intent can be found as an exhibit to the Registrant's 10-QSB
for the period ended December 31, 1999 as filed. The Registrant expects to close
on the acquisition of CSSI before the end of its fiscal year, June 30, 2000.
Lorilei Communications, Inc., a full service advertising and
communications company based in Ocala, Florida which the Registrant believes
will generate material synergy with the Registrant's other subsidiaries and
proposed acquisitions. See Item 5 of this report "Material Subsequent Events"
for additional details.
The Registrant is currently a party to a letter of intent with
iDVDBox.com Inc., a corporation headquartered in Boca Raton, Florida. ("iDVD").
Acquisition of iDVD by the Registrant is expected to be completed by the end of
its fiscal year, June 30, 2000.
Page 10
<PAGE>
Recent Developments Pertaining to Implementation of Plan of Operation
The Registrant's ability to continue as a going concern is dependent upon
its ability to attain a satisfactory level of profitability and to continue to
have access to suitable financing. As stated in the 10-QSB for the quarter ended
December 31, 1999 and 10-KSB for the period ending June 30, 1999, in order for
the Registrant to re-attain profitable operations, management will have to
re-establish internal service and capabilities, diversify the services offered,
focus on new challenges and take advantage of new opportunities. Management
believes that such capabilities are in place through the assistance of Yankees.
The Registrant provided its affiliate WRIwebs.com, Inc. with $100,000
in expansion capital at the closing of the merger of WRI and American Internet,
as reported in the Registrant's 10-QSB for the quarter ended December 31,
1999and has provided it with an additional $111,515 as of the date of this
report. It may invest up to an additional $88,485 during the fiscal year ending
on June 30, 2000, based on WRI's performance if issues pertaining to the Caputa
option can be resolved. Like American Internet, WRI is engaged in the design,
sale and hosting of Internet web sites. Unlike American Internet, it performs
almost all functions in house and is implementing a plan to upgrade the quality
and complexity of its web sites in order to attract more profitable business.
On December 1, 1999 the Registrant acquired a second subsidiary,
Trilogy International, Inc. As of March 31, 2000 the Registrant has provided
Trilogy with $544,515 in funding since its acquisition and has continued to
provide additional funding as of the date of this report. Detailed information
concerning Trilogy can be found at its Internet web site at
www.trilogyonline.com.
On March 13, 2000 the Registrant acquired a third subsidiary, Vista
Vacations International, Inc. The acquisition involved an exchange of 220,000
shares of the Registrant's common stock with Vista's then current stockholders;
the issuance of 66,667 shares of the Registrant's common stock to a creditor of
Vista for the conversion of a loan due from Vista in the amount of $180,000 and
the issuance of 22,000 shares of the Registrant's common stock to parties
instrumental in arranging the acquisition. At the closing of the acquisition the
Registrant provided initial funding to Vista in the amount of $125,000.
Results of Operations
Because WRI's former principal stockholder has an option to acquire between
70% and 80% of WRI's common stock until November 11, 2001, by repaying all
advances from the Registrant (with interest) and returning all securities or
other distributions received from the Registrant, generally accepted accounting
principals do not permit consolidation of WRI's financial statements with those
of the Registrant. Rather, the WRI acquisition is accounted for as though the
Registrant acquired between 20% and 30% of WRI's common stock as an investment.
The stock purchase option was designed to provide the former controlling
stockholder of WRI with an opportunity to reconsider his decision to become
associated with the Registrant should he find that the relationship was not
working to his satisfaction.
Page 11
<PAGE>
During the three months ended March 31, 2000 the Registrant reported
revenue of approximately $45,063 as compared to no revenue from all sources
during the comparable three month period in 1999.
During the three months ended March 31, 2000 the Registrant's cost of
revenues was $18,398 as compared to no cost of revenue during the comparable
three month period in 1999. The increase was attributed to discontinued
operations in the prior year and a change of business in the current year.
During the three months ended March 31, 2000 the Registrant reported a
net loss of approximately $(884,637) or $(.08) loss per share, compared to
$(13,396) net loss or $(.00)per share in the comparable three month period in
1999.
A large portion of the current periods loss was attributable to the
accounting treatment required under generally accepted accounting principles for
the accounting of "goodwill". For the quarter ended March 31, 2000 the
Registrant had an amortization expense of Trilogy's goodwill in the amount of
$332,820. Yankees provided services worth $171,570 for the quarter ended March
31, 2000, which were treated as an expense and then as a donation of an
equivalent sum by Yankees to the Registrant's capital.
The majority of the balance of the current periods loss was
attributable to the operating losses of the Registrant's operating subsidiary
Trilogy. For the period, Trilogy had revenues of $45,063 with a cost of goods
sold of $18,398 for a gross profit of $26,665. With General, Administrative and
other expenses (excluding the cost of amortizing goodwill as listed above,
depreciation and interest) of $285,082 for a earnings before taxes, depreciation
and interest of $258,417.
Trilogy has not established its base of independent distributors as
quickly as expected and its original product line has not gained the market
acceptance that was expected. Revenues for the period, therefore, were
substantially below expectations resulting in substantially greater losses for
the period than expected. Trilogy is in the process of expanding its product
line to better meet the needs of its market and has initiated a broad marketing
and advertising campaign to be conducted over the next several months at
expenses in excess of those originally projected. As a result, Trilogy now
projects that the total investment that the Registrant intended to make in
Trilogy will not be adequate to meet its capital requirements until such time as
its operations turn profitable. In order to obtain the additional capital
investment needed, the President and Chairman of Trilogy have agreed to
concessions including the pledging of the majority of their common stock in the
Registrant, received in exchange for their stock in Trilogy, as collateral for
additional loans to Trilogy. The Registrant is currently negotiating such an
arrangement with the Trilogy principles.
The effective date for the Registrant's acquisition of Vista is March
31, 2000. Therefore no revenues or expenses of the Vista subsidiary were
included in those of the Registrant for the 3 months ended March 31,2000.
WRI reported a loss of $191,345 for the three months ended March 31,
2000, approximately $105,000 of this amount was for the amortization of
goodwill. 20% of this amount ($38,269) is included in the Registrant's reported
losses for the period in accordance with the equity method of accounting.
Liquidity and Capital Resources
The Registrant had cash on hand in the amount of $197,638 at March 31,
2000, compared to $5,526 at March 31, 1999. The working capital deficit
increased from $(4,875) at March 31, 1999 to $(558,864) at the end of the
current period. The increase in the working capital deficit was related
principally to the structural difference between the prior business of the
Registrant and the current business activities. The Registrant, Trilogy and
Vista have accumulated a net deficit of $(5,786,560) since its inception in
1964, 1998 and 1999 respectively.
The financial results of WRI's operations would have had a material
impact on the Registrant's liquidity and capital resources if its financial
statements had been consolidated with the Registrant's. The Registrant's cash on
hand would have been increased to $186,704 at March 31, 2000 compared to $5,526
at March 31, 1999 and its working capital deficit would have been $(660,548) at
the end of the current period.
Page 12
<PAGE>
During the quarter ended March 31, 2000, the Registrant continued to
provide its subsidiaries with access to required capital principally through
loans arranged or provided by Yankees or capital raised in private placements of
the Registrant's common stock to existing stockholders, including Yankees.
Subsequent to March 31, 2000, the Registrant's relationship with Xcel
deteriorated as a result of Xcel's conclusion that the Registrant took an overly
legalistic approach to business deals, especially with reference to the
agreement between Trilogy and Dr. Yip covering rights to distribute Trilogy
products in China. Xcel's displeasure was expressed by declaring Xcel's $75,000
loan to the Registrant in default on April 18, 2000 (see "Part II, Item 5, Other
Information - Notice of Default from Xcel"). While the relationship with Xcel
remains cordial, the Registrant is no longer confident that Xcel will exercise
its warrant rights during their 120 day term following the effectiveness of the
required S-3 registration statement. Consequently, the Registrant has entered
into a revolving loan agreement with Yankees pursuant to which Yankees has
agreed to make up to $1,000,000 in capital available to the Registrant (see"Part
II, Item 5, Other Information - Loan Agreement between Yankees and the
Registrant").
As a material subsequent event, on May 15, 2000, Yankees advised the
Registrant that it was suspending the availability of capital for use by
Trilogy, Vista or WRI based on their failure to meet their projections or, in
Yankees' opinion in the case of WRI and Vista, their failure to provide accurate
information and meet their obligations under their reorganization agreements.
However, Yankees reaffirmed its commitment to provide capital for use by Lorilei
and future acquisitions. Yankees has recommended that the Registrant spin off
Trilogy and Vista as of June 30, 2000, and that it initiate mediation and
arbitral proceedings in order to resolve existing issues as to whether or not
Mr. Caputa's option rights continue in effect. Yankees has advised the
Registrant that prospects for Lorilei, CSSI and iDVD appear materially more
promising than those for Trilogy and Vista and suggested that the Registrant's
capital should be allocated accordingly, with less promising operations
discontinued or spun off. The Registrant's board of directors is considering
Yankees' recommendations and exploring the possibility that other alternatives
may be available, including other sources of capital for its less productive
operations.
Part II - Other Information
Item 1. Legal Proceedings
Neither the Registrant nor its subsidiaries have been involved in any
material legal proceedings, except as disclosed in the Registrant's report on
Form 10-KSB for the fiscal year ended June 30, 1999, or disclosed on the Form
10-QSB for the quarters ending September 30, 1999 and December 31, 1999 and the
Form 8-KSB filed on December 16, 1999.
Item 2. Changes in Securities
a. Recent sales of unregistered securities
Since January 1, 2000, the Registrant sold the securities listed in the
tables below without registration under the Securities Act in reliance on the
exemption from registration requirements cited. All footnotes follow the last
table.
<TABLE>
<S> <C> <C> <C> <C> <C>
Amount of Total Total Registration
Securities Offering Discounts Exemption
Date Shares Sold Subscriber Consideration or Commissions Relied on
January 26 4,400 Donald Downes (4) (5) (3) (1)
January 31 100,000 J. Eichner $ 75,000 (6) None (2)
January 31 100,000 Debra Elenson $ 75,000 (6) None (2)
January 31 133,334 K. Walker $ 100,000 (7) None (2)
February 15 100,000 K. Walker $ 75,000 (6) None (2)
February 28 100,000 Scott Heiken $ 75,000 (6) None (2)
March 13 66,667 Nellie Tippery (8) (3) (2)
March 13 220,000 Vista (9) (3) (2)
March 13 22,000 Yankees (10) (3) (2)
March 15 200,000 Bolina Trading $ 120,000 (11) None (2)
March 23 100,000 K. Walker $ 60,000 (11) None (2)
March 31 7,000 Yankees $ 2,100 (12) None (2)
</TABLE>
Consequently, as of March 31, 2000, 11,344,300 shares of the Registrant's
common stock were outstanding.
Page 13
<PAGE>
Common equity subject to outstanding options or warrants to purchase,
or securities convertible into, common equity of the Registrant.
During the period starting on January 1, 2000 and ending on March 31,
2000, the Registrant reserved 875,000 additional shares of its common stock for
issuance in conjunction with obligations incurred during such period. The
following table provides summary data concerning such obligations, options and
warrants:
Designation Nature of Exercise or Number of Shares
or Holder Security Conversion Price Currently Reserved
David K. Cantley Option 1.4325 50,000
Former Vista Stockholders &
Vista Employees Common Stock 750,000
Yankees Common Stock 75,000
Consequently, as of March 31, 2000, 7,273,815 shares of the
Registrant's common stock were reserved for future issuance.
(1) Section 4(2) of the Securities Act. In each case, the subscriber was
required to represent that the shares were purchased for investment purposes,
the certificates were legended to prevent transfer except in compliance with
applicable laws and the transfer agent was instructed not to permit transfers
unless directed to do so by the Registrant, after approval by its legal counsel.
In addition, each subscriber was directed to review the Registrant's filings
with the Commission under the Exchange Act and was provided with access to the
Registrant's officers, directors, books and records, in order to obtain required
information.
(2) Section 4(6) of the Securities Act. In each case, the subscriber was
required to represent that the shares were purchased for investment purposes,
the certificates were legended to prevent transfer except in compliance with
applicable laws and the transfer agent was instructed not to permit transfers
unless directed to do so by the Registrant, after approval by its legal counsel.
Each subscriber was directed to review the Registrant's filings with the
Commission under the Exchange Act and was provided with access to the
Registrant's officers, directors, books and records, in order to obtain required
information; and, a Form D reporting the transaction was filed with the
Commission.
(3) No commissions or discounts were paid to anyone in conjunction with the sale
of the foregoing securities, except that Yankees exercised preferential
subscription rights granted by the Registrant in its consulting agreement, or
Yankees may be entitled to compensation based on the terms of its Consulting
Agreement with the Registrant.
(4) Donald Downes is a former stockholder of Trilogy.
(5) Shares issued to Donald Downes in connection with the acquisition of
Trilogy in December 1999 were incorrect. 4,400 additional shares were issued to
him to correct the discrepancy.
(6) Part of a private placement of up to 500,000 shares of the Registrant's
common stock for up to $200,250, the initial 67,000 shares being placed at $0.75
per share and the remaining shares to be placed for $0.75 per share to Joseph
Radcliffe, his designees or assigns, or members of the board of directors
desiring to participate in the offering, their designees or assigns or persons
or entities approved by the Board of Directors. Any of the shares not purchased
by any of the above would be offered to Yankees at the preferred rate pursuant
to the Yankee's consulting agreement.
(7) A private placement of 133,334 shares of the Registrant's common stock for
$100,000, the shares being issued to K. Walker at $.75 per share.
Page 14
<PAGE>
(8) At the closing of the acquisition of Vista, Nellie Tippery, a creditor of
Vista, irrevocably converted all of Vista's liabilities to her or her
affiliates, including without limitation, loans aggregating at least $180,000
into 66,667 shares of the Registrant's common stock.
(9) 176,000 shares of the Registrant's common stock were issued to the capital
stockholders of Vista pursuant to the terms of a Reorganization Agreement and an
additional 44,000 have been placed in escrow for distribution pursuant to the
escrow instructions contained in the Reorganization Agreement, in consideration
for the merger of Vista into the Registrant and the cancellation of all of
Vista's capital stock.
(10) Shares issued to Yankees and certain of its personnel or designees at the
direction of Yankees, in consideration for its services in locating Vista,
structuring and negotiating the acquisition, and integration of its operations
in a revised strategic plan for the Registrant, pursuant to the Yankees'
Consulting Agreement. The 22,000 shares were distributed as follows: Dennis and
Carol Berardi 11,000; Vanessa Lindsey 2,500; International Marketing partners
2,500; and K. Walker LTD. 6,000.
(11) Part of a private placement of up to 500,000 shares of the Registrant's
common stock for up to $300,000 all shares being placed at $.60 per share.
(12) Yankees has preferential rights to subscribe for securities offered by the
Registrant pursuant to the Yankees Consulting Agreement dated November 11, 1998,
amended November 23,1999. Pursuant to this amended agreement, authorizes Yankees
to receive shares in conformity with a price equal to 50% of the price paid by
other subscribers. For consideration due Yankees for arranging the loan from
Xcel, 7,000 shares of common stock were issued to Yankees at $.30 per share.
Page 15
<PAGE>
Item 5. Other Information
Material Subsequent Events
Acquisition of Lorilei Communications, Inc.
On May 11, 2000, the Registrant closed on the acquisition of Lorilei
Communications, Inc., a full service advertising and communications company
based in Ocala, Florida.
The Registrant issued 572,519shares of its common stock to the former
Lorilei stockholders in exchange for all of their Lorilei securities. In
addition, the Registrant has reserved 572,518 shares of the Registrant common
stock for future issuance to former stockholders of Lorilei based upon Lorilei's
attaining certain established levels of earnings before interest, taxes,
depreciation and amortization ("EBITDA") during the three year period commencing
July 1, 2000 and ended June 30, 2003 and has reserved 335,378 shares for
issuance to Lorilei employees pursuant to incentive stock options, subject to
Lorilei's attaining EBITDA during the three year period commencing July 1, 2000
and ended June 30, 2003
At closing, the Registrant provided initial funding to Lorilei in the
amount of $100,000 and within 180 days after the audited financial statements
for Lorilei required pursuant to Commission Regulation S-B have been provided to
the Registrant, filed with the Commission and not found deficient by the
Commission (the "Funding Trigger Date"), intends to invest an additional
$400,000 in Lorilei as expansion capital.
Lorilei's management has projected EBITDA of $500,000, $1,400,000 and
$2,900,000 for the twelve month periods ending June 30, 2001, 2002 and 2003
respectively. It is these levels of EBITDA that must be obtained in order for
the former stockholders and/or employees of Lorilei to earn the performance and
incentive shares of the Registrant's common stock reserved for future issuance.
Additional information on Lorilei and the acquisition, together with
the final Reorganization Agreement will be filed with the United States
Securities and Exchange Commission on or before May 26, 2000. Information on
Lorilei can be found on its internet website at www.callthefirm.com
Notice of Default from Xcel
On April 18, 2000 the Registrant received a notice of default on its
$75,000 loan from Xcel, payment of which had been due since December 31, 1999.
Xcel advised the Registrant that it was exercising its risk to liquidate the
collateral shares of the Registrant's stock that Yankees pledged to guarantee
the note and to apply the proceeds to the outstanding balance due on the note.
Based upon the closing price of AmeriNet stock on April 18, 2000, the 35,000
shares of the Registrant's common stock had a market value of $41,664.90. This
amount was deducted from the balance due Xcel together with $10,000 owed to the
Registrant by Xcel for the cost of the option granted to them which had not been
previously paid. A remaining balance of $23,335 remains due and payable to Xcel.
Yankees was entitled to $41,664.90 from the Registrant for its loss on
the defaulted collaterals, but at the Registrant's request, accepted restricted
shares of the Registrant's common stock instead. Based on Yankees preferential
subscription rights, such shares were issued at $0.30 per share.
Xcel retains its option to purchase up to 1,000,000 shares of the
Registrant's common stock at $.75 per share for a period of 120 days following
the effective date of a registration statement registering the underlying shares
with the Commission. The Registrant is unable to determine if Xcel will exercise
such option in whole or in part.
Loan Agreement between Yankees and the Registrant
Since September 1999 Yankees has been a major source of capital for the
Registrant making loans as needed for acquisitions and funding of the
Registrant's investments in its subsidiaries. At March 31, 2000 the Registrant's
loan balance due to Yankees was $176,300. Subsequently, through the date of the
filing of this report, Yankees loaned an additional $190,000 to the Registrant
for use in funding the $100,000 initial investment in Lorilei and to fund the
continuing periodic investments in the Registrant's other subsidiaries. On May
5, 2000 the Registrant entered into a revolving loan agreement with Yankees
whereby the Registrant agreed to pledge all of its assets as collateral and
Yankees agreed to loan the Registrant up to $1,000,000, including the $336,300
already loaned to date, on a revolving basis at an interest rate of 2% over the
prime rate of Chase Manhattan Bank, N.A. A copy of the Loan Agreement is filed
as an exhibit to this report. See Part II, Item 6(b).
Page 16
<PAGE>
Additional Sales of the Registrant's Securities
On April 18, as detailed above under "Notice of Default from Xcel",
Yankees exercised its rights under the existing preferential subscription
agreement and purchased 138,883 of the Registrant's common stock at a price of
$.30 per share for a total consideration of $41,664.90.
On April 27, Palmair exercised an existing warrant, which it had
acquired on December 11, 1998, and purchased 200,000 shares of the Registrant's
common stock at $.02 per share for $4,000.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Required by Item 601 of 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
(10)
.43 19 Lorilei Communications, Inc. Letter of
Intent
.44 24 Yankees Loan Agreement
(99) .51 49 Xcel Default Notice
(b) Reports on Form 8-K Filed During Quarter Ended March 31, 2000
During the calendar quarter ended March 31, 2000, the Registrant filed the
following reports on Form 8-K with the Commission:
<TABLE>
<S> <C> <C>
Financial
Items Reported Date Filed Statements Included
5 and 7 (amended) January 26, 2000 8-K;(see 10-QSB for the quarter ending September 30, 1999
for further information on WRI) Audited Financial Statements
of WRI for the years ended December 31, 1998, and Unaudited
Financial Statements for the nine months ended September 30,
1999 in conjunction with the acquisition of WRI, on November
11, 1999. Also Registrant's Pro Forma Combined Balance
Sheets at December 31, 1998; Pro Forma Combined Statements
of Operations for the twelve months ended December 31, 1998
and three and six months ended September 30, 1999.
5 and 7 (amended) February 8, 2000 8-K (A); Audited Financial Statements of Trilogy for the
years ended December 31, 1998, and Unaudited Financial
Statements for the nine months ended September 30, 1999
in conjunction with the acquisition of Trilogy, on December 1,
1999. Also Registrant's Pro Forma Combined Balance
Sheets at December 31, 1998; Pro Forma Combined
Statements of Operations for the twelve months ended
December 31, 1998 and six months ending June 30, 1999, and
three months ending September 30,1999.
5 and 7 (amended) March 3,2000 (see 10QSB-12/31/99) Audited Financial Statements of WRI
for the years ended December 31, 1998 and Unaudited
Financial Statements for the nine months ended September 30,
1999. AmeriNet Group.com, Inc. Pro Forma Combined
Balance Sheets at December 31, 1998; Pro Forma Combined
Statements of Operations for the twelve months ended
December 31, 1998 and three months ended September 30,
1999 and its six months ended June 30, 1999.
303, 5 and 7(amended) March 8, 2000 AmeriNet Group.com, Inc. Pro Forma Combined Balance
Sheet at December 31, 1998; Pro Forma Combined Statements
of Operations for the six months ended June 30, 1999 and the
tree months ended September 30, 1999.
1 and 7 March 29, 2000 Vista Vacations International, Inc. Unaudited Balance Sheet
and Profit and Loss Statement from inception through
December 31, 1999.
</TABLE>
Signatures
In accordance with the requirements of the Exchange Act, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
AmeriNet Group.com, Inc.
May 15, 2000
By: /s/ Michael Harris Jordan /s/
---------------------
Michael Harris Jordan
President & Director
Page 17
<PAGE>
Additional Information:
Registrant:
AmeriNet Group.com, Inc.
Corporate Headquarters:
-----------------------
2500 North Military Trail, Suite 225; Boca Raton, Florida 33431
Telephone Number: (561) 998-3435; Facsimile Transmission (561) 998-3425
E-mail [email protected]
Officers
---------------------
President, Michael Harris Jordan; Secretary, Vanessa H. Lindsey
Acting General Counsel, George Franjola, Esquire
Board of Directors
------------------
Michael Harris Jordan * +
G. Richard Chamberlin, Esquire *
Edward Carl Dmytryk **
Saul B. Lipson ** +
Anthony Q. Joffe * **
Vanessa H. Lindsey *
J. Bruce Gleason
Michael A. Caputa
Dennis A. Berardi
Carol A. Berardi
Subsidiaries:
Wriwebs.com, Inc.
a Florida corporation
245 North Ocean Boulevard, Suite 201; Deerfield Beach,
Florida 33441 Telephone (954) 360-0636, Fax (954) 360-0377;
and, web site www.wriwebs.com;
Trilogy International, Inc.
a Florida corporation
526 SE Dixie Highway; Stuart, Florida 34994
Telephone (561) 781-7278, Fax (561) 781-7282 and web
site:
[email protected]
Independent Public Accountants:
Daszkal, Bolton & Manela, P.A.
240 West Palmetto Park Road, Suite 300; Boca Raton, Florida 33432
----------------------
Transfer Agent:
Liberty Transfer Company
191 New York Avenue, Huntington, New York 11743
Telephone (516)-385-1616: Facsimile Transmission (516) 385-1619
Exhibits to the Form 10-QSB are available on the Securities and
Exchange Commission's web site located at www.sec.gov in the EDGAR archives, on
the Registrant's website located at www.amerinetgroup.com and will be provided
subject to payment of copying and transport charges to stockholders of the
Registrant upon written request addressed to Michael Harris Jordan, President;
AmeriNet Group.com, Inc.; 2500 North Military Trail, Suite 225-C; Boca Raton,
Florida 33431.
The Securities and Exchange Commission has not approved or disapproved
of this Form 10-QSB and Quarterly Report to Stockholders nor has it passed upon
its accuracy or adequacy.
- - - --------
+ Committee chairperson
* Executive Committee Member
** Audit Committee Member
Page 18
<PAGE>
Administrative Offices
The Yankee Companies, Inc.
A Florida corporation
- --------------
Leonard Miles Tucker
President & Chief Executive Officer
William A. Calvo, III, Ll.M.
Vice President & Treasurer
Vanessa H. Lindsey
Secretary & Chief Administrative Officer
Charles J. Scimeca
Acquisitions Officer
G. Richard Chamberlin, Esquire
Leslie Quinn, Esquire
Office of the General Counsel
1941 Southeast 51st Terrace
Ocala, Florida 34471
Telephone (352) 694-9182
Service (352) 368-6525
Mobile Number (352) 895-0452
Fax Number (352) 694-9178
E-Mail [email protected]
Please respond to Ocala address
Crystal Corporate Center
2500 North Military Trail, Suite 225
Boca Raton, Florida 33431
Telephone (561) 998-2025
Fax Number (561) 998-3425
E-Mail [email protected]
March 17, 2000
Gerald R. Cunningham, President
Lorilei Communications, Inc.
7325 Southwest 32nd Street
Ocala, Florida 34477
Re: Acquisition by AmeriNet Group.com, Inc. ("AmeriNet")
Dear Mr. Cunningham:
Pursuant to your latest conversations with Leonard Miles Tucker and
officers of AmeriNet and its subsidiaries, we are convinced that an association
of Lorilei Communications, Inc., a Florida corporation ("Lorilei") with our
client, AmeriNet, a publicly held Delaware corporation with a class of
securities registered under Section 12(g) of the Securities Act of 1934, as
amended (the "Exchange Act"), would be of great mutual benefit.
Lorilei requires an infusion of $500,000 in order to accelerate its current
strategic plans. AmeriNet seeks to develop its own strategic plans by acquiring
an Internet knowledgeable advertising oriented business on terms that will
protect its investment. All parties need to provide a mechanism for accurately
measuring Lorilei's value. After considering each prospective parties' concerns,
we believe that a transaction structured along the lines of an acquisition of
Lorilei by AmeriNet in compliance with the requirements of Section 368(a)(1)(B)
of the Internal Revenue Code of 1986, as amended (the "Code"), as proposed
below, would meet Lorilei's objectives and be acceptable to AmeriNet's board of
directors.
If you find it acceptable, we will present it to AmeriNet on your behalf
and secure its immediate consideration. If, as we expect, this letter is
accepted and executed on AmeriNet's behalf, it will constitute a non- binding
letter of intent, however, the parties will immediately proceed to conduct due
diligence investigations;
Page 19
<PAGE>
Gerald R. Cunningham
March 17, 2000
Page 2
Diversified consulting services for the corporate and financial communities
Yankees will arrange for the preparation of proposed definitive agreements which
the parties will endeavor to close within 45 days; and, during such period, the
parties will not solicit or participate in negotiations with any other persons
concerning the matters contemplated hereby.
Proposed Terms
1. A. Lorilei would consolidate all current operations of its
affiliates and related business enterprises (if any) permitting
consolidation of their financial statements pursuant to generally
accepted auditing procedures, consistently applied ("GAAP"), the
consolidated entity being hereinafter referred to as "Lorilei+."
B. Lorilei+ would have net tangible assets (tangible assets in
excess of liabilities) based on replacement cost valuation, of
not less than $300,000; no net current payables (excess of
current payables over current receivables), a total of $270,000
in long term payables; at least $162,000 in earnings before
interest, taxes, depreciation and amortization for calendar year
1999 based on revenues of at least $1,100,000, with a pre-tax net
profit of approximately $20,000; and, projected earnings before
interest, taxes, depreciation and amortization for the fiscal
years ending June 30, 2001, 2002 and 2003 of $500,000, $900,000
and $1,500,000.
2. A. AmeriNet would acquire all Lorilei+'s common stock in exchange
for an initial base valuation of $750,000 in shares of AmeriNet's
common stock, $0.01 per share par value (the "AmeriNet Common
Stock"); however, the valuation would be subject to adjustment
based on Lorilei+'s having attained the following annual revenues
and earnings before interest, taxes, depreciation and
amortization, during the times specified, in which case the
additional shares listed below would be issued to Lorilei+'s
stockholders immediately prior to closing on the reorganization,
pro rata based on their last holdings of Lorilei+ common stock,
inter se:
Time Period EBITDA1 Shares
----------- ------ -----------
July 1, 2000 to June 30, 2001 $500,000 75,000;
July 1, 2001 to June 30, 2002 $900,000 125,000; and
July 1, 2002 to June 30, 2003 $1,500,000 174,999.
B. The AmeriNet Common Stock would be valued at its average last
transaction price reported on the OTC Bulletin Board during the
ten trading days preceding execution of the definitive agreement
and would be issued in reliance on the exemption from
registration under the Securities Act of 1933, as amended,
provided by Section 4(6) thereof.
3. AmeriNet would invest $500,000 in Lorilei+ over a 180 day period
following the completion of the Lorilei+ audit in accordance with GAAP,
based on the following schedule.
A. $100,000 at closing;
Page 20
<PAGE>
Gerald R. Cunningham
March 17, 2000
Page 3
B. $100,000 within 60 days after the completion and filing of the
Lorilei+ audit with the United States Securities and Exchange
Commission (the "Commission");
C. $100,000 within 120 days after the completion and filing of the
Lorilei+ audit with the Commission;
D. $100,000 within 150 days after the completion and filing of the
Lorilei+ audit with the Commission; and
E. $100,000 within 180 days after the completion and filing of the
Lorilei+ audit with the Commission.
4. Lorilei+'s day to day business operations would remain under the
control of its current stockholders who would have the right to elect
two thirds of its directors, provided that:
A. The participation of all AmeriNet's designee(s) to Lorilei+'s
board of directors would be required to constitute a quorum;
B. Lorilei+ would not have the right to make material changes in its
operations (on which its valuation was based); and
C. The Lorilei+ designees to its board of directors could not engage
in any violations of law or of their fiduciary duties to
AmeriNet, as Lorilei+'s sole stockholder.
5. A. The two most senior former stockholders of Lorilei+ who also
serve as its executive officers (the "Senior Executives") would
be parties to long term employment agreements calling for initial
annual salaries of $45,000 each, plus an aggregate of $1,250 each
in monthly benefits involving health and life insurance,
automobile expenses and child care expenses, on terms negotiated
by the parties and acceptable to AmeriNet concurrently with
negotiation of the definitive acquisition agreement.
B. AmeriNet would allocate shares of the AmeriNet Common Stock
currently reserved pursuant to AmeriNet's Non-Qualified Stock
Option & Stock Incentive Plan, Effective as of January 1 , 2000,
a copy of which is enclosed herewith and made a part hereof (the
"Plan"), for issuance as incentive stock options pursuant to
Section 422 of the Code (the "Options") to the Senior Executive
Officers based on Lorilei+ having attained the annual revenue and
earnings before interest, taxes, depreciation and amortization
targets specified below, subject to the implementing provisions
also set forth below.
(1) AmeriNet would allocate an aggregate of 990,002 shares of
the AmeriNet Common Stock for issuance to the Senior
Executives (the "Senior Executives' Option Shares").
(2) The Senior Executives' rights to the Options would vest as
follows:
Page 21
<PAGE>
Gerald R. Cunningham
March 17, 2000
Page 4
(a) If Lorilei+'s earnings before interest, taxes, depreciation
and amortization, determined in accordance with GAAP, were
at least $500,000 during the period starting on July 1, 2000
and ending on June 30, 2001, then the Senior Executives
would cumulatively have the right to purchase 51.85% of the
Senior Executives' Option Shares at a price equal to the
closing transaction price for AmeriNet's Common Stock
reported on the date the reorganization agreement is
executed in the most generally recognized securities
exchange or securities market on which AmeriNet's Common
Stock was then eligible for trading.
(b) If Lorilei+ earnings before interest, taxes, depreciation
and amortization, determined in accordance with GAAP, were
at least $900,000 during the period starting on July 1, 2001
and ending on June 30, 2002, then the Senior Executives
would cumulatively have the right to purchase 18.52% of the
Senior Executives' Option Shares at a price equal to the
closing transaction price for AmeriNet's Common Stock
reported on the date the reorganization agreement is
executed in the most generally recognized securities
exchange or securities market on which AmeriNet's Common
Stock was then eligible for trading.
(c) If Lorilei+ earnings before interest, taxes, depreciation
and amortization, determined in accordance with GAAP, were
at least $1,500,000 during the period starting on July 1,
2002 and ending on June 30, 2003, then the Senior Executives
would cumulatively have the right to purchase 29.63% of the
Senior Executives' Option Shares at a price equal to the
closing transaction price for AmeriNet's Common Stock
reported on the date the reorganization agreement is
executed in the most generally recognized securities
exchange or securities market on which AmeriNet's Common
Stock was then eligible for trading.
C. If Lorilei+ failed to attain the earnings requirements for
exercise of the Options during a measuring year, all of the
Senior Executives' rights to the Senior Executives' Option
Shares that would have become vested on such year would lapse
and be of no further force or effect.
D. The Options would be exercisable for a period ending on the
earlier of the final day of the fifth fiscal year after which
they first become vested or the 90th day after termination of
the Senior Executives' employment by Lorilei+, all other terms
pertaining to the Options being reflected in the Plan.
6. It is understood that Lorilei+, with AmeriNet's assistance will seek to
refinance current liabilities guaranteed by its principals and their
affiliates in a manner removing such personal guarantees and that in
the event such efforts are not successful, Lorilei+ will enter into an
agreement with such guarantors guaranteeing direct payment of such
obligations by Lorilei+, and will secure such guarantee with an
additional mortgage on the real estate owned by Lorilei+.
In conjunction with the foregoing, you and other people associated with
Lorilei+ have been and will be provided with information concerning AmeriNet
which constitutes material inside information, as defined for purposes
Page 22
<PAGE>
Gerald R. Cunningham
March 17, 2000
Page 5
of Sections 20A and 21A of the Securities Exchange Act of 1934, as amended. Such
information was or will be provided in conjunction with pending negotiations and
pursuant to AmeriNet's obligations under the Securities Act of 1933, as amended,
and the Securities Exchange Act of 1934, as amended, to provide full and
complete disclosure. Such information may not be disclosed to anyone other than
pursuant to compulsory legal process or with the prior written consent of
AmeriNet, after such information has been publicly disseminated. Improper
disclosure of such information constitutes a violation of the civil and criminal
provisions of Sections 20A and 21A of the Securities Exchange Act of 1934, as
amended. During the pendency of negotiations, neither you nor anyone who is made
privy to the foregoing information should engage in any transactions involving
publicly traded AmeriNet securities.
While the forgoing proposal is a bare outline, we believe that it is
sufficient to form the basis of a letter of intent for an appropriate
"engagement period". If you find this proposal acceptable as the basis to begin
formal negotiations with AmeriNet, please sign a copy of this letter in the
spaces provided and return it to us for submital to AmeriNet's board of
directors.
Looking forward to a mutually profitable relationship, we are
Very truly yours,
The Yankee Companies, Inc.
/s/William A. Calvo, III
Vice President
The forgoing is acceptable in principal and we authorize you to arrange
for the immediate preparation of proposed definitive agreements.
Lorilei Communications, Inc.
/s/Gerald R. Cunningham
President
Dated: March 17, 2000
AmeriNet Group.com, Inc.
/s/Michael H. Jordan
President
Dated: March 18, 2000
Encl.:
Copies: Leslie Quinn, Esquire
David K. Cantley
Bruce Brashear, Esquire
Page 23
<PAGE>
Loan Agreement
This loan agreement (the "Agreement" or the "Loan Agreement") is entered
into by and between The Yankee Companies, Inc., a Florida corporation
("Yankees") and AmeriNet Group.com, Inc., a Delaware corporation ("AmeriNet";
Yankees and AmeriNet being sometimes hereinafter collectively referred to as the
"Parties" and each being sometimes hereinafter generically referred to as a
"Party").
Preamble:
WHEREAS, AmeriNet requires significant capital for miscellaneous corporate
purposes; and
WHEREAS, AmeriNet is willing to pledge all of its assets, wherever located
or whenever acquired, as security for such financing (the "Collateral"); and
WHEREAS, subject to the following terms and conditions, Yankees is willing
to loan AmeriNet a sum of up to $1,000,000, on a revolving basis, upon the
collateral security of the Collateral, subject to the terms and conditions set
forth below:
NOW, THEREFORE, in consideration of the sum of $10, other good and valuable
consideration, the receipt of which is hereby acknowledged, and, upon the mutual
covenants and conditions contained herein, the Parties hereby agree as follows:
Witnesseth:
1. DEFINITIONS & INTERPRETATION
(a) Definitions:
The following terms, whether or not initially capitalized, will have the
meanings set forth below:
(1) Accredited Investor:
A person or entity that meets the asset or income
requirements for treatment as an accredited investor
specified in Rule 501 of Commission Regulation D promulgated
under the Securities Act
(2) Affiliate: An entity or person that controls, is controlled by or is
under common control with another person.
(3) AmeriNet: The term for AmeriNet Group.com, Inc., a publicly held
Delaware corporation with a class of securities registered
under Section 12(g) of the Exchange Act, and a Party to this
Agreement, together with all of its subsidiaries.
(4) AmeriNet Financial Statements:
Financial statements, including all related schedules and
the Notes thereto, of AmeriNet included in AmeriNet's last
report filed on Commission Form 10-KSB; the reports on
Commission Form 10-QSB filed subsequent thereto and the
financial statements for subsidiaries subsequently acquired
by AmeriNet included in current reports on
Page 24
<PAGE>
Commission Form 8-K filed since the dates of the Subsequent
Quarterly Reports (the "Subsequent Current Reports"); all
such financial statements being hereinafter collectively and
generically referred to as the "AmeriNet Financial
Statements,"
(5) Capital Stock:
The generic term used for equity securities, whether common,
preferred or otherwise.
(6) Collateral: All of AmeriNet's assets, whenever acquired or wherever
located, whether real or personal, tangible or intangible,
current or inchoate, including, without limitation, all of
the Capital Stock of its subsidiaries, rights under
agreements, notes, financial accounts, intellectual property
rights and all other things of whatever nature which the
Parties may define as Collateral subject to this Agreement
in any future agreements.
(7) Commission: The United States Securities and Exchange Commission.
(8) Code: The Internal Revenue Code of 1986, as amended.
(9) Default: The occurrence of any of the following events during the
term of this Agreement or any extensions or renewals
thereof:
(A) The failure of AmeriNet to pay any amount when due hereunder
for a period of 20 business days after written notice by
Yankees to AmeriNet;
(B) The failure by AmeriNet to perform any material agreement or
material undertaking under this Agreement or any other
material agreement or material document given to evidence or
secure any of the Secured Obligations;
(C) The material inaccuracy of any warranty, representation,
covenant or agreement made by AmeriNet to Yankees under this
Agreement relating to any related document or this
Agreement, at the time when made;
(D) AmeriNet's insolvency, termination of business as a going
concern or inability to pay debts generally as they become
due;
(E) The filing of a petition or order for relief under the
bankruptcy laws or insolvency laws or for reorganization,
composition, adjustment, or other relief of debtors under
any law by or against AmeriNet if such petition is not
dismissed within 30 days;
(F) The making of an assignment for the benefit of creditors by
AmeriNet, or the appointment of a receiver or liquidator for
AmeriNet;
(G) The order by a court of competent jurisdiction winding up or
liquidation of the affairs of AmeriNet;
(H) The dissolution of AmeriNet; or
(I) The initiation of a lawsuit or quasi-judicial or
administrative proceeding by any person or entity or
governmental instrumentality against AmeriNet or any part of
the Collateral; or
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(J) Any event defined as a default under any of the agreements,
Notes or instruments ancillary to this Agreement.
(10) Exchange Act:
The Securities Exchange Act of 1934, as amended.
(11) Exchange Act Reports:
All reports filed by AmeriNet with the Commission pursuant
to Sections 12(g), 13 and 15(d) of the Exchange Act.
(12) GAAP: Generally accepted accounting principles, consistently
applied.
(13) Initial Funding Installment:
The sum of $100,000 payable to the order of Lorilei
Communications, Inc., in satisfaction of AmeriNet's
commitment thereto.
(14) IRS: The United States Internal Revenue Service.
(15) 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, will 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.
(16) Loans: The funds advanced by Yankees to AmeriNet from time to time,
including all funds heretofore advanced by Yankees to
AmeriNet, which are the objects of this Agreement.
(17) 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, will 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 will be measured both on the occasion in
which such term is referenced as well as on an aggregate
basis with other similar matters.
(18) NASD: The National Association of Securities Dealers, Inc., a
Delaware corporation and self regulatory organization
registered with the Commission.
(19) Note(s): The negotiable instruments in the form of promissory notes
issued to evince the Loans, substantially in the form
annexed hereto and made a part hereof as exhibit 1(a)(19).
(20) Obligations:
Yankees rights and AmeriNet's duties under this Agreement
and the ancillary instruments referred to herein, including,
without limitation, the Note(s) to be executed from time to
time by AmeriNet in favor of Yankees, as described in this
Agreement executed concurrently herewith and incorporated by
reference herein, together with all other indebtedness of
AmeriNet or its affiliates to Yankees, direct or indirect,
primary or secondary, fixed or contingent, or otherwise due
or to become due now existing or hereinafter acquired.
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(21) OTC Bulletin Board:
The over the counter electronic securities market operated
by the NASD.
(22) Secured Obligations:
All indebtedness and other obligations of AmeriNet to
Yankees under or arising out of this Agreement, including
any currently outstanding or future loans, or any extensions
or renewals thereof.
(23) Securities Act:
The Securities Act of 1933, as amended.
(24) Subsequent Current Reports:
AmeriNet's reports on Commission Form 8-K filed after the
Subsequent Quarterly Reports but prior to the date of this
Agreement.
(25) Subsequent Quarterly Reports:
AmeriNet's reports on Commission Form 10-QSB for the
quarterly periods following AmeriNet's last 10-KSB filed
with the Commission.
(26) 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.
(27) 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.
(b) Interpretation
(1) When a reference is made in this Agreement to schedules or
exhibits, such reference will be to a schedule or exhibit to
this Agreement unless otherwise indicated.
(2) The words "include," "includes" and "including" when used
herein will be deemed in each case to be followed by the words
"without limitation."
(3) The table of contents and headings contained in this Agreement
are for reference purposes only and will not affect in any way
the meaning or interpretation of this Agreement.
(4) 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) All pronouns and any variations thereof will 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.
(6) 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
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construction providing that ambiguities in an agreement or
other document will be construed against the party drafting
such agreement or document.
2. LOANS.
Subject to the terms of this Agreement, Yankees agrees to lend AmeriNet, on
the terms hereof, the sum of no more than $1,000,000 on a revolving basis (the
"Loan(s)"), as follows :
(a) The obligations of Yankees to loan funds to AmeriNet shall commence on
the date hereof and shall terminate as provided in Section 3, at which
time all outstanding loans hereunder must be repaid, together with
accrued interest.
(b) Loans hereunder will be made in $50,000 increments, and each loan will
be represented by its own separate negotiable Note and security
agreement.
(c) Each Note shall be:
(1) For a term of one year; shall bear interest at the annualized
rate of 2% over the prime rate charged during the subject
period by Chase Manhattan Bank, N.A. (New York City) to its
most favored corporate borrowers for unsecured obligations
having a term of one year or less; and shall be payable in 12
equal consecutive, monthly installments;
(2) Secured by a security interest in all of AmeriNet's assets,
including after acquired assets, subject only to the prior
liens reflected in exhibit 2.1(c)(2) annexed hereto and made a
part hereof and to the sale of assets in the ordinary course
of business, provided that the proceeds of such sales are
re-invested in inventory or used to pay operating expenses of
AmeriNet, it being the intent of the Parties that no proceeds
be used for payment of dividends or unusual compensation to
the principals of AmeriNet.
(d) AmeriNet shall be directly responsible for payment of all taxes, fees
and recording costs associated with the Loans, the hereinafter
described Notes, required stock transfers, UCC-1 financing statement,
security agreements and collateral assignments.
(e) This Agreement is being executed simultaneously with a Security
Agreement, a UCC Form One, and a Note the terms and conditions of which
are all hereby incorporated by reference herein.
3. TERM.
(a) This Agreement shall commence on the date hereof and shall terminate on
the 730th day after its execution, provided that it shall be
automatically renewed thereafter on a continuing one year basis unless
the Party desiring not to renew provides the other with written notice
of intent not to renew within 60 days prior to the end of the then
current term or renewal term.
(b) Notwithstanding the foregoing, this agreement will terminate on the
occurrence of the following events:
(i) The date of the full and complete discharge by AmeriNet of all
obligations to Yankees under this agreement;
(ii) The completion of a public offering of securities yielding at
least $2,000,000 in net proceeds by AmeriNet or any corporate
entity with which AmeriNet becomes subject to a reorganization
under Section 168 of the Internal Revenue Code, as amended.
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(iii) Upon the occurrence of a default by AmeriNet, as defined
herein, provided that Yankees elect to terminate this
agreement by reason of such default.
4. RIGHT OF FIRST REFUSAL
(a) Throughout the term of this Agreement and any renewals thereof, Yankees
shall have a right of first refusal to provide any debt or debt-equity
hybrid financing required by AmeriNet and its subsidiaries (the "Right
of First Refusal").
(b) In the event that AmeriNet has a definite opportunity to obtain
financing from some person or entity other that Yankees, it shall
reduce such offer to written form specifying each and every applicable
term and identifying the person or entity involved (the "Notice of
Offer") and shall provide the Notice of Offer to Yankees in the manner
generally hereinafter provided for submission of notices.
(c) Within ten business days following receipt of a Notice of Offer,
Yankees shall, by written response to AmeriNet in the manner generally
hereinafter provided for submission of notices either:
(1) Consent to the proposed funding;
(2) Request additional data which AmeriNet shall immediately
provide; or
(3) Agree to provide the funding on the terms contained in the
Notice of Offer.
(d) In the event that Yankees demands additional data, the ten business day
response period shall not commence until Yankees is provided with the
required data.
(e) If Yankees has been provided with all required data but has not
responded to the Notice of Offer within the ten business days response
period, it shall be presumed that Yankees has consented to the funding;
however, no consent to funding or presumed consent to funding shall
result in the waiver of Yankees' Right of First Refusal to provide any
future funding.
(f) In the event that the terms of the proposed funding vary in any
material manner from the terms described in the Notice of Offer, then
any consent or presumed consent shall be deemed void and AmeriNet will
be required to notify Yankees of such change and resubmit the Notice of
Offer to Yankees, on the revised basis.
5. CONDITIONS PRECEDENT.
The obligation of Yankees to make the Loan shall be subject to the
following conditions:
(a) There shall have occurred no material adverse change in the business or
the financial condition of AmeriNet since the date of the latest
financial information filed by AmeriNet with the Commission, copies of
which shall be contemporaneously furnished by AmeriNet to Yankees;
(b) All acts, conditions and things (including, without limitation, the
obtaining of any necessary regulatory approvals and the making of any
required filings, recordings or registrations) required to be done or
performed and to have happened precedent to the execution, delivery and
performance of this Agreement and the related security agreements,
collateral assignments and Notes shall have been done and performed to
the satisfaction of Yankees and its legal counsel;
(c) All corporate, and legal proceedings and all documents and instruments
in connection with the authorization of this Agreement and the related
security agreements, collateral assignments and Notes and all related
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instruments and ancillary documentation thereto shall have been
delivered to Yankees and its legal counsel and Yankees shall have
received all information and copies of all other related documents and
instruments, including records of corporate proceedings, which Yankees
and its legal counsel may reasonably have requested in connection
therewith, such documents and instruments, where appropriate, to be
certified by proper corporate, or governmental authorities;
(d) Yankees shall have received the duly executed originals of this
Agreement and the related security agreements, collateral assignments
and Notes and all related ancillary documentation thereto and copies or
originals of all other documents, agreements and instruments relating
to any aspect of the transactions contemplated hereby, including
evidence of insurance coverage required by Yankees; and
(e) Yankees shall have received, in form and substance satisfactory to
Yankees and its legal counsel, such legal opinions, consents, and/or
additional documents relating to any of the foregoing which it may
reasonably require.
6. MANDATORY PREPAYMENT IN THE EVENT OF LOSS; LOAN REPAYMENT.
(a) AmeriNet shall keep all of the Collateral (as that term is defined
hereinafter and from time to time in documents entered into by the
Parties) fully insured under all risk insurance policies acceptable in
form and substance to Yankees, such insurance to be in an amount
adequate to fully replace all the Collateral in the event of its damage
or loss.
(b) In the event that the Collateral shall be lost, stolen, destroyed,
damaged beyond repair or rendered permanently unfit for normal use, or
in the event of any condemnation, confiscation, seizure, or requisition
of title to or use of the Collateral, AmeriNet agrees to make available
any insurance proceeds for the exclusive purpose of replacing the
Collateral.
(c) If, however, AmeriNet elects not to repair or replace the Collateral
within 30 days of AmeriNet's receipt of the insurance proceeds, all
insurance proceeds shall be applied to a then mandatory prepayment of
the Secured Obligations by paying in full an amount determined by:
(1) Obtaining a fraction, the numerator of which will be the total
number of payments remaining due on the Note unpaid after such
prepayment is made (including the payment, if any, due on the
date on which prepayment is made) multiplied by the actual
dollar amount of each payment due and the denominator of which
shall be the total number of payments required to be paid
under the Note, multiplied by the actual dollar amount of each
payment due under the Note;
(2) Multiplying the resultant fraction by 10%;
(3) Multiplying the resulting percentage by the outstanding
balance due on the Note on the date of such prepayment;
(4) Adding the resulting dollar amount to the outstanding balance
then due on the Note (such aggregate sum being the mandatory
prepayment required to be paid hereunder).
(d) Notwithstanding the foregoing, Yankees shall be named as the primary
beneficiary on all insurance policies carried by AmeriNet which
directly, indirectly or incidentally cover the Collateral.
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7. PLACE OF PAYMENTS.
Payment of principal, interest and other sums due or to become due with
respect to the Loan and all the Secured Obligations are to be made at the
principal executive offices of Yankees, or such other place as Yankees shall
designate to AmeriNet in writing, in lawful money of the United States of
America in immediately available funds.
8. LATE PAYMENTS & OTHER CHARGES.
(a) If any installment or other amount due with respect to the repayment of
the Loan or any portion of the Secured Obligations is not paid when the
same shall be due, AmeriNet will pay interest on any such overdue
amount at the highest rate permitted by law until the date such amount
is paid.
(b) AmeriNet shall pay or cause to be paid, in addition to all other
amounts payable hereunder:
(1) Premiums for insurance required to be obtained in connection
with the Loan and the Collateral;
(2) Fees paid for filing documents in public offices in connection
with the Loan and the transactions contemplated hereby; and
(3) Actual expenditures, including reasonable attorney's fees, for
proceedings to collect the Secured Obligations or to enforce,
preserve and protect the Collateral (as such term is defined
herein) and the rights and interest of Yankees therein.
9. ASSIGNMENT, GRANT OF SECURITY INTEREST & LIMITED SUBORDINATION.
(a) As collateral security for the payment of the Secured Obligations,
AmeriNet, for the benefit and enforcement of its payment of the Secured
Obligations, hereby sells, assigns, and transfers to Yankees, its
successors and assigns, and grants to Yankees, a continuing first
priority security interest in and to all of its present and future
right, title and interest in and to all of its securities in other
corporations (including subsidiaries), assets, receivables, chattel
paper and all cash and non-cash proceeds (including proceeds of
insurance), subject only to the prior liens reflected in exhibit
2.1(c)(2)
(b) (1) Subject to cancellation for any future financing upon provision
of written notice to such effect by Yankees, Yankees hereby and
herewith subordinates the obligation to receive payments under
the Notes to any institutional lender where such financing is
required by AmeriNet for the development of corporate property,
provided such property is increased in value by an amount equal
to or greater than the amount of the subordinated loan and that
Yankees' legal counsel has ratified all documents and instruments
pertaining to such financing, including associated mortgages,
collateral assignments and security instruments.
(2) Notwithstanding the security interests held by Yankees, AmeriNet
shall be permitted to make purchases and sales, and to pay
operating expenses, as incurred in the ordinary course of
business, provided, however, that until all obligations to
Yankees have been completely discharged by full payment AmeriNet
shall make no distributions to stockholders, or repay any
obligations to stockholders except normal and reasonable salaries
for services in fact rendered to AmeriNet (it being understood
that the term "stockholders" applies to the stockholders of
AmeriNet and to the stockholders of any corporate entity that may
subsequently acquire AmeriNet).
(c) Notwithstanding the foregoing:
(1) Yankees' agreement to subordinate its rights under its Loans to
AmeriNet shall not apply to the first lien on any property other
than that directly benefitted by such acquisition and development
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financing and, in no event, shall Yankees' first lien on all of
the authorized capital stock of AmeriNet's subsidiaries be
subordinated to any other entity, whether private, public or
governmental.
(2) No subordination permitted pursuant to this Section shall be
effective until Yankees has been provided with copies of all
documentation pertaining to the subject acquisition or
development financing and its legal counsel has agreed to the
form and substance thereof, which agreement may not be
unreasonably withheld.
10. RIGHTS AND POWERS WITH RESPECT TO THE COLLATERAL.
AmeriNet hereby authorizes Yankees to do every act and thing in the name of
AmeriNet or Yankees or otherwise which Yankees may deem advisable to enforce
effectively its rights and interest in and to the Collateral and AmeriNet hereby
irrevocably appoints Yankees, with full power of substitution and delegation, as
its true and lawful attorney-in-fact, with full right to demand, enforce,
collect, receive, receipt and give releases for any funds due or to become due
under or arising out of or with respect to, any of the Collateral and to endorse
all deeds, notes, receipts, checks, stock certificates and other instruments,
and to do and take all such other actions relating to any of the Collateral, to
file any claims or institute any proceedings with respect to any of the
foregoing which Yankees deems necessary to advisable and to compromise any such
demand, claim or action.
11. ASSIGNMENTS, ENCUMBRANCES, TRANSFERS.
(a) AmeriNet will not, without the prior consent of Yankees, assign or
transfer any of its rights or delegate any of its obligations with
respect to this Agreement or sell, dispose or otherwise grant any
interest in or to any of the Collateral, incur or suffer to exist any
lien, charge, mortgage, security interest or encumbrances upon any of
the Collateral, except the lien of Yankees created by this Agreement.
(b) In the event of any conveyance, foreclosure or other disposition of the
Collateral without Yankees's consent, then the entire principal
balance, together with all accrued interest shall be immediately due
and payable.
12. ACKNOWLEDGMENTS, REPRESENTATIONS AND WARRANTIES.
AmeriNet acknowledges, represents and warrants that:
(a) As of the date of this Agreement, AmeriNet is not insolvent within the
meaning of applicable state and federal laws dealing with debtors and
creditors, including, without limitation, the Federal Bankruptcy Code;
(b) AmeriNet is a Delaware corporation duly organized and validly existing
in good standing under the laws of the State of Delaware, all of its
subsidiaries are duly organized, validly existing and in good standing
under the laws of their respective states of organization, AmeriNet and
all of its subsidiaries are qualified to engage in business in all
jurisdictions where such qualification is required and AmeriNet has
full power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby and thereby;
(c) This Agreement and the related security agreements, collateral
assignments and Notes provided for herein have been duly authorized by
all necessary corporate action and hereby and thereby constitute the
legal, valid and binding obligations of AmeriNet enforceable in
accordance with their respective terms;
(d) The making and performance by AmeriNet of this Agreement and the
related security agreements, collateral assignments, Notes and any
related documents and the transactions contemplated hereby and thereby
do not contravene any provisions of law applicable to AmeriNet and do
not conflict or are not inconsistent with, and will not result (with or
without the giving of notice or both) in a breach of or constitute a
default or require any consent under, or result in the creation of any
lien, charge or encumbrance upon the Collateral pursuant
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to the terms of any credit agreement, indenture, mortgage, purchase
agreement, deed of trust, security agreement, lease guarantee or other
instrument to which AmeriNet is a party or by which AmeriNet or its
assets may be bound or to which its properties may be subject;
(e) All sales, use, property or other taxes, licenses, tolls, inspection or
other fees, bonds, permits or certificates which were or may be
required to be paid or obtained in connection with the acquisition or
ownership by AmeriNet of the Collateral will have been, or when due
will be, paid in full or obtained;
(f) AmeriNet has good, valid and marketable title to the Collateral free
and clear of all liens, claims and encumbrances, except as specifically
disclosed in exhibit 2.1(c)(2), if any;
(g) Concurrently with or prior to the time the initial Loan is made,
Yankees will have a perfected continuing first priority security
interest in and to all the Collateral, except as specifically disclosed
in exhibit 2.1(c)(2), if any; and
(h) AmeriNet has not entered into any understanding or agreement, (oral or
in writing) relating to the transactions contemplated herein, or any
other transactions contemplated or permitted by this Agreement, with
any person or entity which understanding, agreement or other writing
would, in the reasonable determination of Yankees, affect the
Collateral in any manner whatsoever or any of the rights or interests
of Yankees with respect thereto.
13. DEFAULT; REMEDIES.
(a) If a Default occurs under this Agreement, Yankees may accelerate the
full amount of the then outstanding Secured Obligations (in which event
such amount will become immediately due and payable by AmeriNet)
without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived, and, if not paid in full within
10 business days thereafter, Yankees shall, at its election, become
vested with the Collateral in fee simple absolute, without further
action or legal recourse, this Section being deemed a full warranty
bill of sale absolute with reference to the Collateral.
(b) In the event that for any reason Yankees is not in possession or
control of any of the Collateral, or disclaims its right to assume
ownership thereof because of public policies or otherwise, then,
Yankees may pursue all of the rights and remedies with respect to the
Collateral accruing to Yankees hereunder or by operation of law as a
secured creditor under the Uniform Commercial Code or other applicable
law and all such available rights and remedies, to the full extent
permitted by the law, shall be cumulative and not exclusive.
14. APPLICATION OF PROCEEDS.
In the event that Yankees is unable or unwilling to take possession of all
the Collateral in the event of a Default, then, upon enforcement of this
Agreement, all funds received upon the foreclosure and liquidation of the
Collateral shall be applied by Yankees in the following order:
(a) To the payment of all costs, expenses, liabilities and compensation of
Yankees (including fees and expenses of its agents and legal counsel)
incurred or accrued in connection with any action or proceeding brought
by Yankees or in connection with the maintenance , sale or other
disposition of the Collateral or any portion thereof;
(b) To the payments of all interest then due and payable on the Loans;
(c) To the payments of all principal then due and payable on the Loans;
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(d) To the payment of all other obligations to Yankees;
(e) To the payment of all other Secured Obligations;
(f) To the payment of any surplus then remaining to AmeriNet or other
person legally entitled thereto.
15. RECEIPT OF FUNDS BY AMERINET.
Notwithstanding the granting to Yankees of a first priority security
interest in and to the Collateral, if, at any time while the Secured Obligations
remain unsatisfied, AmeriNet shall receive any amount representing funds due, or
proceeds of, any of the Collateral, such sums shall be held by AmeriNet in trust
for Yankees and shall be immediately paid by AmeriNet to Yankees in the form so
received, together with any necessary endorsement thereon.
16. FURTHER ASSURANCES.
AmeriNet agrees to execute and deliver to Yankees, or cause to be executed
and delivered to Yankees, such further instruments and documents as may be
reasonably requested by Yankees to carry out fully the intent and accomplish the
purposes of this Agreement, and the transactions referred to herein and therein,
and to protect and maintain the first priority security interest of Yankees in
and to the Collateral or the immediate conveyance of the Collateral to Yankees
in the event of a default hereunder.
17. FINANCIALS.
AmeriNet hereby represents, warrants, and covenants to Yankees that it will
cause to be delivered to Yankees as soon as practicable, but in any event within
90 days after the end of each fiscal year, statements of earnings and retained
earnings and changes in its financial position for such year, and its balance
sheet at the end to such fiscal year, setting forth in each case in comparative
form the corresponding figures of the previous annual audit, all in reasonable
detail and certified by, and accompanied by a report or opinion of, independent
certified public accountants of recognized standing acceptable to Yankees, and
(b) within 45 days after the end of each fiscal quarter, its statements of
earnings and retained earnings and changes in financial position for such fiscal
quarter, and its balance sheet at the end of such fiscal quarter, setting forth
in each case in comparative form the corresponding figures of the previous
quarterly audit, all in reasonable detail and prepared in accordance with
generally accepted accounting principles, consistently applied, and certified by
AmeriNet's Chief Financial Officer.
18. 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 will, to the extent legally
permitted, be held in Broward County, Florida, and the prevailing Party
will be entitled to recover its costs and expenses, including
reasonable attorneys' fees up to and including all negotiations, trials
and appeals, whether or not any formal proceedings are initiated.
(b) In the event of any dispute arising under this Agreement, or the
negotiation thereof or inducements to enter into the Agreement, the
dispute will, at the request of any Party, be exclusively resolved
through the following procedures:
(1) (A) First, the issue will 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 Yankees.
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(B) The mediation efforts will 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 will
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 Yankees.
(3) (A) Expenses of mediation will be borne equally by the
Parties, if successful.
(B) Expenses of mediation, if unsuccessful and of
arbitration will 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 will be borne equally by
the Parties involved.
(c) Jurisdiction.
(1) AmeriNet irrevocably consents to service of any summons and/or
legal process by registered or certified United States air
mail, postage prepaid, to AmeriNet at the address set forth in
Section 18(b) hereof, such method of service to constitute, in
every respect, sufficient and effective service of process in
any such legal action or proceeding.
(2) Nothing in this Agreement shall affect the right to service of
process in any other manner permitted by law or limit the
right of Yankees to bring actions, suits or proceedings in the
courts of any other jurisdiction.
(3) AmeriNet further agrees that final judgment against it in any
such legal action, suit or proceeding shall be conclusive and
may be enforced in any other jurisdiction, within or outside
the United States of America, by suit on the judgment, a
certified or exemplified copy of which shall be conclusive
evidence of the fact and the amount of AmeriNet's liability.
18. MISCELLANEOUS.
(a) No Waiver; Cumulative Remedies.
(1) No failure or delay on the part of Yankees in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any
other or further exercise thereof or the exercise of any other
right, power or privilege.
(2) No right or remedy in this Agreement is intended to be
exclusive but each shall be cumulative and in addition to any
given Yankees at law or in equity; and the exercise by Yankees
of any one or more of such remedies shall not preclude the
simultaneous or later exercise by Yankees of any or all such
other remedies.
(3) No express or implied waiver by Yankees of any future or
subsequent Default.
(4) To the extent permitted by law, AmeriNet waives any rights now
or hereafter conferred by statute or otherwise which limit or
modify any of Yankees's rights or remedies under this
Agreement.
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<PAGE>
(b) Notices.
(1) All notices, requests and demands to or upon any party hereto
shall be deemed to have been duly given or made when deposited
in the United States mail, first class postage prepaid,
addressed to such party at such address as may be hereafter
designated in writing by such party to the other party hereto.
(2) Notices will initially be addressed as follows:
(A) To AmeriNet:
AmeriNet Group.com, Inc.
Crystal Corporate Center; 2500 North Military Trail, Suite 225-C;
Boca Raton, Florida 33431
Attention: Michael Jordan, President
Telephone (561) 998-3435, Fax (561) 998-4635; and, e-mail
[email protected].
(B) To Yankees:
The Yankee Companies, Inc.
Crystal Corporate Center; 2500 North Military Trail, Suite 225;
Boca Raton, Florida 33431
Attention: Leonard Miles Tucker, President
Telephone (561) 998-2025, Fax (561) 998-3425; and, e-mail [email protected];
----------------------
(3) 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.
(4) (A) 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.
(B) Because of the inherent conflict of interests
involved, Yankees has advised AmeriNet to retain
independent legal counsel to review this Agreement
and its exhibits and incorporated materials on its
behalf.
(C) The decision by any Party not to use the services of
legal counsel in conjunction with this transaction
will be solely at its own risk, each Party
acknowledging that applicable rules of the Florida
Bar prevent Yankees' general counsel, who has
reviewed, approved and caused modifications on behalf
of Yankees, from representing anyone other than
Yankees in this transaction.
(D) This Agreement shall not be construed more strictly
against Yankees nor will it be interpreted in any
manner based on the fact that it was authored by
Yankees.
(c) Payment of Expenses and Taxes; Performance by Yankees of AmeriNet's
Obligations.
(1) AmeriNet agrees, whether or not the transactions contemplated by
this Agreement shall be consummated, to pay
(A) All costs and expenses of Yankees in connection with the
negotiation, preparation, execution and delivery of this
Agreement, and the other documents relating hereto;
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<PAGE>
(B) All fees and taxes in connection with the recording of this
Agreement or any other document or instrument required
hereby; and
(C) All costs and expenses of Yankees in connection with the
enforcement of this Agreement including all legal fees and
disbursements arising in connection therewith.
(2) AmeriNet agrees to pay, and to indemnify and hold Yankees
harmless from any delay in paying, all taxes, including
without limitation, sales, use, stamp and personal property
taxes (other than any corporate income, capital, franchise or
similar taxes payable by Yankees with respect to the payments
made to Yankees hereunder or thereunder) and all license,
filing, and registration fees and assessments and other
charges, if any, which may be payable in connection with the
execution, delivery and performance of this Agreement, or any
modification thereof.
(3) If AmeriNet fails to perform or comply with any of its
agreements contained herein and Yankees shall itself perform
or comply, or otherwise cause performance or compliance, with
such agreement, the expenses of Yankees incurred in connection
with such performance or compliance, together with interest
thereon at the rate provided for in the Notes shall be payable
by AmeriNet to Yankees on demand and until such payment shall
constitute part of the Secured Obligations secured hereby.
(d) Survival of Representations and Warranties.
All representations and warranties made in this Agreement and any
documents delivered pursuant hereto or thereto shall survive the
execution and delivery of this Agreement and the making of the Loans
hereunder.
(e) Amendments.
Neither this Agreement, nor any instruments related thereto, may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the Party against whom enforcement of a
change, waiver, discharge or termination is sought.
(f) Counterparts & Facsimile Execution.
(1) This Agreement may be executed by the Parties hereto on any
number of separate counterparts, each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same
instrument.
(2) Execution by original signature on a document delivered to a
Party through facsimile transmission shall be deemed full
execution for all purposes by the Party executing and
transmitting such document.
(g) Headings.
The headings of the Sections and Paragraphs are for convenience only,
are not part of this Agreement and shall not be deemed to effect the
meaning or construction of any of the provisions hereof.
(h) Successors or Assigns.
This Agreement shall be binding upon and inure to the benefit of
AmeriNet and Yankees and their respective successors and assigns,
except that AmeriNet may not assign or transfer its rights or
obligations hereunder or any interest herein without the prior written
consent of Yankees.
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<PAGE>
(i) Governing Law
This Agreement shall be governed by, and construed and interpreted in
accordance with the laws of State of Delaware, other than its rules
pertaining to conflicts of laws.
(j) Severability & Reconstruction.
(1) 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 affected thereby.
(2) In the event any provision in this Agreement or related
instruments is found to be unenforceable, the Parties hereby
request that the Court interpreting such provision restructure
it in the manner consistent with applicable law most closely
meeting the intent of the Parties, as reflected hereby.
(k) 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.
(j) License.
(1) This Agreement is the property of Yankees.
(2) The use hereof by the Parties is authorized hereby solely for
purposes of this transaction and, the use of this form of
agreement or of any derivation thereof without Yankees's prior
written permission is prohibited.
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<PAGE>
In Witness Whereof, the Parties have caused this Agreement to be executed
on their behalf by their duly authorized representatives as of the day last set
forth below.
Signed, Sealed and Delivered
In Our Presence
AmeriNet Group.com, Inc.
- -------------------------------
_______________________________ By: /s/ Michael Jordan
Michael Jordan, President
Dated: May 5, 2000 [Corporate Seal]
Attest: /s/ Vanessa H. Lindsey
Vanessa H. Lindsey, Secretary
STATE OF FLORIDA }
COUNTY OF PALM BEACH } SS.:
BEFORE ME, an officer duly authorized to administer oaths, did
personally appear on this 5th day of May, 2000, Michael Jordan and Vanessa H.
Lindsey, known to me who, being duly sworn, did state that they are the duly
elected and serving president and secretary of AmeriNet Group.com, Inc., a
Delaware corporation ("AmeriNet"), and that pursuant to authority duly delegated
by its board of directors, they executed the foregoing Agreement on behalf of
AmeriNet, effective as of the date set forth therein. My commission expires:
[NOTARIAL SEAL] /s/ Charles J. Scimeca
-------------------------------
Notary Public
The Yankee Companies, Inc.
- -------------------------------
_______________________________ By: /s/ Leonard M. Tucker
Leonard Miles Tucker, President
Dated: May 5, 2000 [Corporate Seal]
Attest: /s/Vanessa H. Lindsey
Vanessa H. Lindsey, Secretary
STATE OF FLORIDA }
COUNTY OF PALM BEACH } SS.:
BEFORE ME, an officer duly authorized to administer oaths, did
personally appear on this 5th day of May, 2000, Leonard Miles Tucker and
Vanessa H. Lindsey, known to me who, being duly sworn, did state that they are
the duly elected and serving president and secretary of The Yankee Companies,
Inc., a Florida corporation ("Yankees"), and that pursuant to authority duly
delegated by its board of directors, they executed the foregoing Agreement on
behalf of Yankees, effective as of the date set forth therein. My commission
expires:
[NOTARIAL SEAL] /s/ Charles J. Scimeca
-------------------------------
Notary Public
Page 39
<PAGE>
Security Agreement
THIS SECURITY AGREEMENT (the "Agreement") is entered into by and between
The Yankee Companies, Inc., a Florida corporation ("Yankees") and AmeriNet
Group.com, Inc., a Delaware corporation ("AmeriNet"; Yankees and AmeriNet being
sometimes hereinafter collectively referred to as the "Parties" and each being
sometimes hereinafter generically referred to as a "Party").
Witnesseth
In consideration of the sum of TEN DOLLARS ($10.00) and other good and
valuable consideration given by Yankees to AmeriNet, and for other value
received by AmeriNet; the Parties, intending to be legally bound, hereby agree
as follows:
1. DEFINITIONS:
The definitions and rules of constructions contained in Section 1 of the
loan agreement executed by the Parties concurrently herewith (the "Loan
Agreement") are hereby incorporated by reference.
2. ASSIGNMENT OF COLLATERAL:
(a) As security for the payment of the Obligations and all Loans and
advances heretofore made, made concurrently with the execution of the
Loan Agreement or made in the future made by Yankees to AmeriNet and
for all AmeriNet's liabilities to Yankees, including any extensions,
renewals or changes in form of any thereof, AmeriNet hereby assigns to
Yankees and grants to Yankees a security interest under the Uniform
Commercial Code in the Collateral.
(b) The Collateral shall be deemed to have been constructively delivered by
AmeriNet to Yankees immediately following execution of this Agreement
and shall be deemed to remain in the possession of AmeriNet, as trustee
for Yankees, for so long as any obligations of AmeriNet to Yankees
remain unfulfilled; provided, however, that, if AmeriNet defaults in
its obligations to Yankees, then at Yankees sole option and without any
required further action or legal process by Yankees, all of the
Collateral shall become the sole and exclusive property of Yankees,
this Section being deemed a full warranty bill of sale, deed and
securities power separate from certificate for all of the Collateral.
3. RESTRAINT:
So long as any Liability to Yankees is outstanding, AmeriNet will not
without prior written consent of Yankees borrow from anyone on the security of,
or pledge, or grant any security interest in, any Collateral, or permit any lien
or encumbrance to attach to any of the foregoing, or any levy to be made
thereon, or any financing statement to be on file with respect thereto.
4. OFFICE:
(a) AmeriNet represents that its principal place of business is at Crystal
Corporate Center; 2500 North Military Trail, Suite 225-C; Boca Raton,
Florida 33431.
(b) AmeriNet will immediately advise Yankees in writing of the opening of
any new place of business or the closing of its existing places of
business, and of any changes in the location of the place where any new
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<PAGE>
Collateral not in the possession of Yankees is kept or where AmeriNet's
records concerning the Collateral are kept.
5. DOCUMENTS:
AmeriNet will promptly:
(a) Join with Yankees in executing a financing statement and pay the cost
of filing the same in any public office deemed advisable by Yankees;
(b) Execute and deliver to Yankees upon demand such additional assurances
and instruments as may be required by Yankees to maintain the security
of Yankees in good standing and effectuate the intent of this
Agreement, including additional security agreements on a Loan by Loan
basis; and
(c) In the event of Default either of the terms hereof, or as enumerated in
the Loan Agreement or in the Notes, execute all such documents and do
all such acts necessary to have the Collateral transferred into the
name of Yankees as Yankees shall request.
6. INDEMNIFICATION:
AmeriNet hereby indemnifies and holds harmless Yankees for all loss, cost,
expense or damage resulting from AmeriNet's Default under this Agreement.
7. INSURANCE:
(a) In accordance with Section 6 of the Loan Agreement, AmeriNet shall keep
all Collateral insured under policies of all-risk insurance (which
shall include, but not be limited to, fire, extended coverage and
vandalism) placed with companies and agents approved by Yankees and
such insurance shall be carried in amounts which Yankees may deem
sufficient for its complete protection, but in no event less than the
greater of (i) the aggregate principal sum of the Liabilities or (ii)
the aggregate replacement value of the Collateral.
(b) (1) The premiums for all such insurance shall be paid by AmeriNet
not later than fifteen (15) days before the same are due.
(2) The original certificates of such policy or policies shall be
delivered to and held by Yankees and shall be made payable to
Yankees In the event any sum of money becomes payable under
such policy or policies, Yankees shall have the option to
receive and apply the same on account of the indebtedness
hereby secured against payments of principal in the inverse
order of their maturity, or to permit AmeriNet to receive and
use it, or any part thereof, for other purposes, without
thereby waiving or impairing any equity, lien or right under
and by virtue of this Agreement.
(3) The placing of such insurance and the paying of the premium of
such insurance, or any part thereof, by Yankees shall not be
deemed to waive or affect any right of Yankees hereunder.
(c) (1) If Yankees acquires title to the Collateral, any unearned
premiums on any hazard insurance covering the Collateral and
held by Yankees are hereby assigned to and shall belong to
Yankees.
(2) If at any time during the term of this Agreement any insurance
policies shall be canceled and returned premiums become
available (excluding return of premium in whole on or before
such time as a new fully paid insurance policy is issued in
accordance with the terms of this Agreement), these
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<PAGE>
returned premiums shall belong to Yankees and, at the option
of Yankees, may be credited by Yankees against the Liabilities
secured hereunder.
(d) Any rights of Yankees to any insurance proceeds shall in no way be
affected or impaired by reason of the fact that Yankees may have
exercised any remedy available to Yankees In the event any losses shall
be payable on any insurance policies covering the Collateral, AmeriNet
and all successors in title and all persons now or hereafter holding
inferior liens on such damaged and/or destroyed property hereby appoint
Yankees agent and attorney-in-fact to endorse such proceeds, checks(s)
or drafts(s) for the purpose, at the option of Yankees, of applying
them against the Liabilities.
8. COVENANTS:
AmeriNet covenants and agrees that it shall:
(a) (1) Receive as the sole property of Yankees and hold as
trustee for Yankees all funds, checks, notes, drafts, and
other property ("Items of Payment") representing the proceeds
of any Collateral in which Yankees has a security interest,
which come into the possession of AmeriNet;
(2) Deposit all such items of payment immediately in the exact
form received in a special account of AmeriNet in a federally
insured, state or federal savings and loan association or
commercial bank ("Bank") entitled "Cash Collateral Account;"
and
(3) Execute such documents and do such acts as Yankees may require
to insure that Yankees shall have a perfected security
interest in such Cash Collateral Account to additionally
secure all AmeriNet's Liabilities; provided, however, that
AmeriNet shall have the right to use all or a portion of the
Cash Collateral Account to purchase new Collateral of like
kind and quality free and clear of all liens;
(b) Furnish a landlord's waiver of lien where AmeriNet is a tenant in
possession of leased premises, in form acceptable to Yankees wherein
landlord waives its lien for rent and all claims and demands of every
kind against AmeriNet's Collateral and authorizes Yankees to enter upon
the leased premises for the purpose of enabling Yankees to take
possession of AmeriNet's Collateral, pursuant to the terms of this
Agreement;
(c) (1) Make all payments of taxes, including but not limited to
assessments, levies, liabilities, obligations and
encumbrances of every nature upon the Collateral before same
become delinquent;
(2) AmeriNet shall deliver to Yankees receipts evidencing the
payment of said taxes, assessments, levies, liabilities,
obligations, and encumbrances immediately on the payment
thereof as required in this Section.
(3) In default thereof, Yankees may at any time pay the same
without waiving or affecting any rights hereunder and every
payment so made shall bear interest from the date hereof at
the highest rate permitted by law;
(d) Pay on demand any cost, charge and expense, including reasonable
attorneys' fees through all trial and appellate levels, incurred or
paid at any time by Yankees arising out of the failure of AmeriNet to
perform timely and comply with and abide by any of the stipulations,
agreements, conditions and covenants of the Agreement and every such
payment after the same becomes due shall bear interest from date at the
highest rate permitted by law;
(e) Keep adequate records and books of account on accordance with generally
accepted accounting principles with respect to AmeriNet's business and
will permit Yankees, its agents, accountants and attorneys to visit and
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<PAGE>
inspect the Collateral and examine its records and books of account and
to discuss its affairs, finances and accounts with Yankees, at such
reasonable times during normal business hours, as may be requested by
Yankees upon twenty-four (24) hours notice;
(f) Keep the Collateral in good repair and operating order.
9. NO EXEMPTION:
AmeriNet hereby declares that the Collateral forms no part of any property
owned, used or claimed by AmeriNet as exempted from forced sale under the laws
of any state and disclaims, waives and renounces all and every claim to
exemption under any homestead exemption.
10. CONVEYANCE:
(a) The sale, lease, transfer or other conveyance of the Collateral or any
part thereof to another party or parties without the prior written
consent of Yankees, shall at Yankees's option, constitute a default
under this Agreement. No Collateral shall be removed, demolished or
substantially altered, nor shall any Collateral be removed without the
prior written consent of Yankees.
(b) In the event that AmeriNet is in possession of any of the Collateral,
for whatever purpose or reason, upon the failure of AmeriNet to keep
such Collateral in good condition or repair, Yankees may at its option,
make such repairs, and any such sums expended by Yankees shall be
immediately due and payable and shall bear interest from the date
thereof at the highest rate permitted by law.
11. ENCUMBRANCES:
The encumbrance of the Collateral in any manner, including, without
limitation, the obtaining by AmeriNet or its successors or assigns of any
additional financing secured by any part of the Collateral, without the prior
written consent of Yankees (which consent shall be either granted or withheld in
Yankees's sole and unfettered discretion) shall constitute a Default under this
Agreement.
12. LAWFUL PURPOSE:
To the extent that it is in possession of any of the Collateral, AmeriNet
shall not use the Collateral or allow the same to be used for any unlawful
purpose or in violation of any law, ordinance or regulation now or hereafter
covering or affecting the use thereof.
13. DEFAULT:
The default provisions of the Loan Agreement, the Notes and of the other
agreements pertaining to this transaction executed concurrently herewith or
hereafter pursuant to the terms of the Loan Agreement are hereby, herein
incorporated by reference.
14. OTHER ACTIONS:
(a) In the event AmeriNet fails to pay any charges or obligations required
to be paid or perform any acts required to be performed by AmeriNet
hereunder within the time set forth for such payment or performance,
Yankees shall have the right to pay such charge or obligation and
perform such act without waiving or affecting the option of Yankees to
consider this Agreement in Default.
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<PAGE>
(b) All funds advanced by Yankees pursuant to this Section shall be deemed
additional funds owed by AmeriNet to Yankees, shall be payable with
interest from the date of advance thereof at the highest rate permitted
by law, upon demand of Yankees thereof and shall be secured by the lien
of this Agreement.
(c) If any action or proceeding shall be commenced by any person to which
action or proceeding Yankees is made a party, or in which it shall
become necessary to defend or uphold the lien of this Agreement, all
sums paid by Yankees for the expenses of any such litigation (including
reasonable attorney's fees through all trial and appellate levels)
shall be paid by AmeriNet to Yankees together with interest thereon at
the highest rate permitted by law.
15. COSTS:
AmeriNet shall pay to Yankees all lawful charges and disbursements,
including attorneys' fees through all negotiations, administrative, trial and
appellate levels incurred by Yankees in connection with the protecting or
enforcing the rights of Yankees hereunder and all such sums shall be secured by
the lien of this Agreement.
16. WAIVER:
(a) AmeriNet waives notice of non-payment and protest of all commercial
paper, including, but not limited to the liabilities at any time held
by Yankees on which AmeriNet is in any way liable.
(b) (1) No waiver by Yankees of any default shall operate as a waiver
of any other default or of the same default on a future
occasion.
(2) No delay or omission on the part of Yankees in exercising any
right or remedy shall operate as a waiver thereof, and no
single or partial exercise by Yankees of any right or remedy
shall preclude any other or further exercise thereof or the
exercise of any other right or remedy.
(3) Time is of the essence of this Agreement.
(4) The provisions of this Agreement are cumulative and in
addition to the provisions of any remedy under any Note or
other writing evidencing any liability secured hereby.
(c) AmeriNet releases Yankees from all claims for loss or damage caused by
any failure to protect the Collateral or by any act or omission on the
part of Yankees, its officers, agents and employees, except willful
misconduct.
17. MISCELLANEOUS:
The miscellaneous provisions of the Loan Agreement are hereby incorporated
by reference.
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<PAGE>
In Witness Whereof, the Parties have caused this Agreement to be executed
on their behalf by their duly authorized representatives as of the day last set
forth below.
Signed, Sealed and Delivered
In Our Presence
AmeriNet Group.com, Inc.
- -------------------------------
_______________________________ By: /s/ Michael Jordan
Michael Jordan, President
Dated: May 5, 2000 [Corporate Seal]
Attest: /s/ Vanessa H. Lindsey
Vanessa H. Lindsey, Secretary
STATE OF FLORIDA }
COUNTY OF PALM BEACH } SS.:
BEFORE ME, an officer duly authorized to administer oaths, did
personally appear on this 5th day of May, 2000, Michael Jordan and Vanessa H.
Lindsey, known to me who, being duly sworn, did state that they are the duly
elected and serving president and secretary of AmeriNet Group.com, Inc., a
Delaware corporation ("AmeriNet"), and that pursuant to authority duly delegated
by its board of directors, they executed the foregoing Agreement on behalf of
Yankees, effective as of the date set forth therein. My commission expires:
[NOTARIAL SEAL] /s/ Charles J. Scimeca
-------------------------------
Notary Public
The Yankee Companies, Inc.
- -------------------------------
_______________________________ By: /s/ Leonard M. Tucker
Leonard Miles Tucker, President
Dated: May 5, 2000 [Corporate Seal]
Attest: /s/ Vanessa H. Lindsey
Vanessa H. Lindsey, Secretary
STATE OF FLORIDA }
COUNTY OF PALM BEACH } SS.:
BEFORE ME, an officer duly authorized to administer oaths, did
personally appear on this 5th day of May, 2000, Leonard Miles Tucker and
Vanessa H. Lindsey, known to me who, being duly sworn, did state that they are
the duly elected and serving president and secretary of The Yankee Companies,
Inc., a Florida corporation ("Yankees"), and that pursuant to authority duly
delegated by its board of directors, they executed the foregoing Agreement on
behalf of Yankees, effective as of the date set forth therein. My commission
expires:
[NOTARIAL SEAL]
/s/ Charles J. Scimeca
-------------------------------
Notary Public
Page 45
<PAGE>
Full Recourse Secured Promissory Note
$ _______
FOR VALUE RECEIVED, AmeriNet Group.com, Inc., a publicly held Delaware
corporation with a class of securities registered under Section 12(g) of the
Exchange Act and with offices at Crystal Corporate Center; 2500 North Military
Trail, Suite 225-C; Boca Raton, Florida 33431 ("AmeriNet") hereby agrees to pay
to the order of The Yankee Companies, Inc., a Florida corporation, with offices
at The Crystal Corporate Center; 2500 North Military Trail, Suite 225; Boca
Raton, Florida 33431 ("Yankees"), the principal sum of $150,000, yielding
interest commencing to run from the date hereof at a compound annual rate of 2%
over the prime rate charged during the subject period by Chase Manhattan Bank,
N.A. (New York City) or its successor in interest to its most favored corporate
borrowers for unsecured obligations having a term of one year or less, on the
following terms:
Terms:
1. INCORPORATED TERMS
(a) The terms and provisions of the loan agreement entered into between
AmeriNet and Yankees on May 5, 2000, a copy of which is annexed hereto
and made a part hereof as exhibit 1 (the "Loan Agreement"), are hereby
incorporated by reference herein as if here fully set forth.
(b) Any provisions in this Note dealing with a subject or object also dealt
with in the Loan Agreement shall, to the extent of any inconsistencies,
be deemed to provide Yankees with additional rights and options which
will be exercisable in Yankees' sole discretion.
2. PAYMENTS & COLLATERAL
(a) This Note shall be payable in 12 equal consecutive, monthly
installments of principal and interest, all such payments, except for
the final installment, being in the sum of $____________, with the
final installment being in the sum of $___________.
(b) The first installment on this Note shall be due and payable on
____________ ____, 2000, and each subsequent installment shall be due
on or before the monthly anniversary of the initial installment.
(c) All payments are to be made at the offices of Yankees or at such other
address as Yankees shall designate for such purposes.
(d) This Promissory Note is secured by all of the Assets of AmeriNet.
3. ACCELERATION
In the event that any payment due hereunder is not made when due, or on the
occurrence of any one or more of the events of default specified in the Loan
Agreement, the entire remaining unpaid principal, all accrued interest and any
related reimbursements for costs and expenses shall immediately become due and
payable, without notice or demand, at the option of the holder hereof.
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<PAGE>
4. PREPAYMENTS
AmeriNet may prepay this Note, in whole or in part, without penalty, at any
time, provided however, that any partial payments shall first be applied to
related reimbursable costs and expenses, then to interest, and then to
principal; and, provided further, that in the event of a partial prepayment of
principal, the monthly payments shall be re-amortized, at AmeriNet's sole cost
and expense, over the remaining term of this Note.
5. ASSUMPTION
(a) This Note may be assigned at will by Yankees but shall be assumable
only with the express, prior written consent of Yankees.
(b) In the event of any permitted assumption, all prior obligors will
remain liable to Yankees as guarantors of the permitted assignee's
performance but Yankees shall have the right to enforce such guarantees
directly against them without first having to seek performance, payment
or relief from the permitted assignee.
6. DEMANDS & NOTICES
(a) Any demand or notice made or given by Yankees pursuant hereto or in
connection herewith, shall be made on or given to AmeriNet and its
successors in interest by registered mail, return receipt requested,
postage prepaid, directed to AmeriNet's address hereinbefore provided
or such updated address as Yankees shall have in its records, in each
case with copies to George Franjola, Esquire; General Counsel, The
Yankee Companies, Inc., 1941 Southeast 51st Terrace; Ocala, Florida
34471, attorney for Yankees, and to any legal counsel designated by
AmeriNet; but making or giving or attempting to make or give any demand
or notice shall not waive any right granted hereunder or otherwise to
act without demand or notice.
(b) Notice shall be effective when delivered by Yankees to United States
Post Office personnel, whether or not such personnel actually succeed
in effecting delivery on AmeriNet or its successors in interest.
7. EXPENSES
AmeriNet hereby agrees to pay all expenses, including the attorney's fees,
which the holder may incur upon default or at maturity.
8. COVENANTS
AmeriNet and any guarantor, surety or endorser, and all others who are, to
whom may become, liable for the payment hereof:
(a) Expressly consent to all extensions of time, renewals, postponements of
time of payment of this Note, from time to time, prior to or after the
day that they become due without notice, consent or consideration to
any of the foregoing; and
(b) Expressly agree to the additional release by Yankees of any party or
person primarily liable herein or any portion of the Collateral.
9. ENFORCEMENT
No delay by the holder in enforcing any covenant or right hereunder shall
be deemed a waiver of such covenant or right and no waiver by the holder of any
particular provision hereof shall be deemed a waiver of any other provision or a
continuing waiver of such particular provision, and except as so expressly
waived, all provisions hereof shall continue in full force and effect.
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10. SPECIAL WAIVERS
The undersigned, and all guarantors and all endorsers, hereby severally
waive presentment for payment, protest and notice of protest for non-payment of
this Note.
11. TIMELINESS
Time shall be of the essence.
12. LICENSE
(a) This form of Note is the property of The Yankee Companies, Inc.
("Yankees").
(b) The use hereof by the Parties is authorized hereby solely for purposes
of this transaction and, the use of this form of agreement or of any
derivation thereof without Yankees's prior written permission is
prohibited.
In Witness Whereof, AmeriNet has caused this Note to be executed on its
behalf by their duly authorized representatives as of the date first set forth
below.
Signed, Sealed and Delivered
In Our Presence
AmeriNet Group.com, Inc.
- -------------------------------
_______________________________ By:
Michael Jordan, President
Dated: May __, 2000 [Corporate Seal]
Attest:
Vanessa H. Lindsey, Secretary
STATE OF FLORIDA }
COUNTY OF PALM BEACH } SS.:
BEFORE ME, an officer duly authorized to administer oaths, did personally
appear on this 5th day of May, 2000, Michael Jordan and Vanessa H. Lindsey,
known to me who, being duly sworn, did state that they are the duly elected and
serving president and secretary of AmeriNet Group.com, Inc., a Delaware
corporation ("AmeriNet"), and that pursuant to authority duly delegated by its
board of directors, they executed the foregoing Note on behalf of AmeriNet,
effective as of the date set forth therein. My commission expires:
[NOTARIAL SEAL]
-------------------------------
Notary Public
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Richard H. Tanenbaum
Attorney at Law
4550 montgomery Avenue
Suite 775 North
Bethesda, Maryland, 20814
301-951-1585
301-951-0427 Facsimile
April 18, 2000
American Internet Technical Center
c/o Amerinet
Attn: Mike Jordan, President
2500 North Military Trail
Suite 225
Boca Raton, Florida 33431
Re: Default Under Xcel Note
Gentlemen:
I am writing to you as successor to American Internet Technical Center
("AITC") with regard to AITC's debt to Xcel Associates, Inc. ("Xcel"). This is
to provide you with the written notice of default required under Paragraph 2 of
the Promissory Note (the "Note"), dated September 30, 1999 by American Internet
Technical Center in favor of Xcel Associates, Inc. The payment due on or before
December 31, 1999 has not been made and Xcel hereby notifies you of the default
and its intent to sell the Amerinet Group.Com stock securing the $75,000 dept
pursuant to the terms of the Note and pursue its other remedies thereunder.
If you have any questions, please feel free to contact the undersigned.
Also enclosed is a similar letter addressed to AITC at the address stipulated in
the Note.
Sincerely,
/s/ Richard H. Tanenbaum
Richard H. Tanenbaum
Counsel for and on behalf of
Xcel Associates, Inc.
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