AMENDED AND RESTATED AGREEMENT
and
PLAN OF REORGANIZATION
This AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION,
effective the 2 day of May, 1997 (the "Effective Date"), by and between Messrs.
Brent Crabtree ("Mr. Crabtree") and Steven Comer ("Mr. Comer") (individually, a
"Shareholder" and collectively, the "Shareholders"), and FORTUNE FINANCIAL
SYSTEMS, INC., a Nevada corporation ("FFS"),
WITNESSETH:
WHEREAS each of the Shareholders owns 416,750 shares of common stock of
Internet Development, Inc. (the "Company"), which collectively constitute 83.35%
of the issued and outstanding shares of the Company (collectively, the "Company
Shares"); and
WHEREAS FFS holds at least one million (1,000,000) shares of common
voting stock of FFS, which shares constitute approximately five and one-half
percent (5.5%) of the issued and outstanding shares of FFS, which will
constitute approximately 5.5% of the common voting stock of FFS after
consummation of the transaction described herein and in related reorganization
agreements with other shareholders of the Company; and
WHEREAS FFS wishes to acquire, and the Shareholders wish to transfer to
FFS all of their issued and outstanding Company Shares in exchange for 916,750
shares of common voting stock of FFS (the "FFS Shares") in a transaction
intended to qualify as a reorganization within the meaning of Internal Revenue
Code Section 368(a)(1)(B), as amended;
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
DEFINITIONS
The following terms, as used herein, have the following meanings:
"Closing" means the consummation of the transactions contemplated
herein, as described herein. The Closing shall be deemed to have occurred May 2,
1997.
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"Material Adverse Effect" means a material adverse effect on the
business (including the continued conduct or the operation thereof in
substantially the manner currently conducted), assets, liabilities, financial
condition or results of operations.
"Party" means each of FFS and each of the Shareholders.
ARTICLE 2
STATEMENT OF INTENT; TRANSFER AND ASSIGNMENT OF SHARES
2.1 Statement of Intent. Effective May 2, 1997, the Parties entered
into that certain agreement between and among them (the "May 2 Agreement"),
pursuant to which the Shareholders agreed to transfer and assign to FFS all of
the Company Shares, and FFS agreed to transfer and assign to the Shareholders
all of the FFS Shares. It is the intention of the Parties, under the terms of
this Agreement, to amend and re-state the general agreements and consummate the
transaction described therein, set forth in the May 2 Agreement, effective May
2, 1997. To the extent that any of the terms of this Agreement are inconsistent
with the terms of the May 2 Agreement, the terms of this Agreement shall govern.
2.2 Assignment and Transfer of Company Shares. Subject to the terms of
this Agree ment, the Shareholders agree to transfer and assign the Company
Shares to FFS. At the Closing, the Shareholders shall deliver to FFS a
certificate or certificates evidencing the Company Shares owned by the
Shareholders, in a form ready for transfer and duly endorsed to FFS. At the
Closing, and from time to time thereafter, FFS and each of the Shareholders
shall execute and deliver such other documents and instruments, and take such
other actions, as the other Parties may reasonably request, in order more fully
to vest in each of the Parties and perfect its title to all right, title and
interest in and to the Company Shares, in the case of FFS and the FFS Shares, in
the case of each of the Shareholders.
2.3 Assignment and Transfer of FFS Shares. Subject to the following
conditions and in accordance with the following schedule, FFS agrees to issue,
as of the effective date set forth above, Nine Hundred Sixteen Thousand Seven
Hundred Fifty (916,750) FFS Shares in the aggregate, and to transfer and assign
to the Shareholders FFS Shares, which shall be duly assigned and transferred to
the Shareholders as follows:
(a) At the Closing, FFS shall deliver to the Shareholders two stock
certificates, each such certificate representing Two Hundred Twenty-nine
Thousand One Hundred Eighty-seven and one-half) (229,187.5) shares of FFS's
common stock and issued in the name of each of the Shareholders, respectively.
(b) Four Hundred Fifty-eight Thousand Three Hundred Seventy-five
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(458,375) FFS Shares, half of which shall be duly endorsed to the order of each
of the Shareholders (the "Escrow Shares") shall be issued on the Effective Date,
and shall be placed into escrow with a mutually- acceptable escrow agent, in
trust for the Shareholders. If Net Profits (as defined herein) during any period
of twelve consecutive months during the period beginning May 2, 1997 and ending
December 31, 1998 equal or exceed (i) Two Million Dollars ($2,000,000), then
each of the Shareholders shall be entitled to receive 125,000 Escrow Shares, or
(ii) Three Million Five Hundred Thousand Dollars ($3,500,000), then each of the
Shareholders shall be entitled to receive 229,187.5 Escrow Shares. For purposes
of this paragraph, "Net Profits" means net pre-tax profits of the Company
(before calculation of profit-sharing under employee compensation plans) for the
period described, as calculated in accordance with generally accepted accounting
principles, consistently applied, excluding from such calculation net profits
derived from sales to leads provided by FFS ("FFS Leads") to the extent that net
profits derived from sales to FFS Leads exceed fifty-five percent of all Net
Profits. All Escrow Shares to be delivered to the Shareholders under this
paragraph shall be transferred and delivered by the escrow agent not later than
June 2, 1998, and all remaining Escrow Shares shall be returned by the escrow
agent to FFS on such date, to be canceled.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
As a material inducement to FFS to enter into this Agreement and to
consummate the transactions contemplated hereby, each of the Shareholders,
severally, represents and warrants to FFS as follows:
3.1 Ownership of the Shares. He is the true and lawful owner of his
Shares, has good title to and is the beneficial and record owner of his Company
Shares, and has the absolute right to sell, assign and transfer his Company
Shares to FFS. His Company Shares will be conveyed to FFS free and clear of all
liens, claims, restrictions, covenants, conditions, pledges, options,
encumbrances and rights of any Persons, other than pursuant to restrictions
under applicable federal and state securities laws. He has not entered into any
other agreement to sell or otherwise transfer his Company Shares, or entered
into any agreement limiting the ability to vote or transfer his Company Shares.
All of the Company Shares are duly authorized, validly issued, fully paid and
non-assessable. There are no outstanding options, warrants, agreements, rights,
conversion privileges or other agreements of any kind to acquire any share of
capital stock in the Company, nor any outstanding rights or privileges to
acquire any such interest. No share of capital stock of the Company has been
registered under the Securities Act of 1933, as amended, nor under the
securities laws of any state in which they were or may be offered for sale. The
Company Shares constitute 83.35% of the issued and outstanding capital stock of
the Company.
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3.2 Organization of the Company. The Company (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State in
which it was incorporated, (ii) has all requisite corporate power and authority
to own all of its properties and assets and to carry on its business as it is
now being conducted, (iii) is duly qualified to do business and is in good
standing, and is duly licensed, authorized or qualified to transact business in
each jurisdiction in which the ownership or lease of real property or the
conduct of its business requires it to be so qualified, except where the failure
to be so qualified or to be in good standing or to be duly licensed, authorized
or qualified to transact business, would not, individually or in the aggregate,
have a Material Adverse Effect on the Company, and (iv) has all federal, state
and local government licenses, permits, approvals and other authorizations
necessary to own its properties and assets and carry on its business as it is
now being conducted, except where the failure to have such governmental
licenses, permits, approvals or other authorizations would not, individually or
in the aggregate, have a Material Adverse Effect on the Company.
3.3 Authority and Approval. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action on
the part of Shareholders. This Agreement is a legal, valid and binding
obligation of the Shareholders, enforceable against each of the Shareholders in
accordance with its terms, except to the extent limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws or decisions
relating to or affecting creditors' rights generally, by equitable limitations
on its enforceability, and by other laws or decisions of general application
relating to general principles of equity.
3.4 No Conflict. The execution, delivery and performance of this
Agreement by the Shareholders do not, and the consummation by the Shareholders
of the transactions contemplated hereby and thereby will not, violate any
provision of the Company's Articles of Incorporation or By-laws.
3.5 Brokers. The Shareholders have not employed any investment banker,
broker or finder in connection with the transactions contemplated hereby who
might be entitled to a fee or other remuneration from the Shareholders, the
Company or FFS.
3.6 Litigation. To the Shareholders' best knowledge, except as set
forth in Exhibit 3.6, there is no litigation, investigation or proceeding of or
before any arbitrator, court, agency or governmental authority pending or
threatened by or against the Company or affecting the Company Shares.
3.7 Compliance with Laws. To the best knowledge of the Shareholders,
the Company is in compliance with all laws, rules, regulations, orders, writs,
injunctions and decrees to which it or any of its assets are subject, except
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where the failure would not have a Material Adverse Effect on the Company.
3.8 No Undisclosed Liability. To the best knowledge of the
Shareholders, there is no liability or obligation of any kind, whether accrued,
absolute, fixed or contingent, of the Company that is not disclosed, reflected
or reserved against in the Company's financial statements.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF FFS
As a material inducement to the Shareholders to enter into this
Agreement and to consummate the transactions contemplated hereby, FFS represents
and warrants to the Shareholders as follows:
4.1 Ownership of the Shares. FFS is the true and lawful owner of the
FFS Shares, has good title to and is the beneficial and record owner of the FFS
Shares, and has the absolute right to sell, assign and transfer the FFS Shares
to the Shareholders. The FFS Shares are owned by FFS and will be conveyed to the
Shareholders free and clear of all liens, claims, restrictions (except as
required under Rule 144 of the Securities and Exchange Commission), covenants,
conditions, pledges, options, encumbrances and rights of any Persons, other than
pursuant to restrictions under applicable federal and state securities laws. The
FFS Shares are common voting stock of FFS, eligible to vote in the election of
corporate directors of FFS. The FFS Shares constitute approximately five and
one-half percent (5.5%) of the issued and outstanding capital stock of FFS. FFS
has not entered into any other agreement to sell or otherwise transfer the FFS
Shares, nor has FFS entered into any agreement limiting the ability to vote or
transfer the FFS Shares. All FFS Shares transferred pursuant to this Agreement
are duly authorized, validly issued, fully paid and non-assessable, and are not
subject to dilution except in the same proportion as all other shares of FFS, in
connection with new issues for public distribution or for the purpose of
facilitating an acquisition or merger.
4.2 Organization of the Company. FFS (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State in
which it was incorporated, (ii) has all requisite corporate power and authority
to own all of its properties and assets and to carry on its business as it is
now being conducted, (iii) is duly qualified to do business and is in good
standing, and is duly licensed, authorized or qualified to transact business in
each jurisdiction in which the ownership or lease of real property or the
conduct of its business requires it to be so qualified, except where the failure
to be so qualified or to be in good standing or to be duly licensed, authorized
or qualified to transact business, would not, individually or in the aggregate,
have a Material Adverse Effect on FFS, and (iv) has all federal, state and local
government licenses, permits, approvals and other authorizations necessary to
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own its properties and assets and carry on its business as it is now being
conducted, except where the failure to have such governmental licenses, permits,
approvals or other authorizations would not, individually or in the aggregate,
have a Material Adverse Effect on FFS.
4.3 Authority and Approval. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action on
the part of FFS. This Agreement is a legal, valid and binding obligation of FFS,
enforceable against FFS in accordance with its terms, except to the extent
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws or decisions relating to or affecting creditors' rights generally,
by equitable limitations on its enforceability, and by other laws or decisions
of general application relating to general principles of equity.
4.4 No Conflict. The execution, delivery and performance of this
Agreement by FFS do not, and the consummation by FFS of the transactions
contemplated hereby and thereby will not, violate any provision of FFS's
Articles of Incorporation or By-laws.
4.5 Brokers. FFS has not employed any investment banker, broker or
finder in connection with the transactions contemplated hereby who might be
entitled to a fee or other remuneration from the Shareholder, the Company or The
Shareholders.
4.6 Disclosure. No representation or warranty of FFS contained in this
Agreement and no statement contained in any certificate, list, schedule, exhibit
or other instruments furnished or to be furnished to the Shareholders pursuant
hereto, or in any connection with the transaction contemplated hereby, contains
or will contain any untrue statement of a material fact, or omits or will omit
to state any material fact which is necessary in order to make the statements
contained herein not misleading.
4.7 Litigation. To FFS's best knowledge there is no litigation,
investigation or proceeding of or before any arbitrator, court, agency or
governmental authority pending or threatened by or against FFS or affecting the
FFS Shares.
4.8 Compliance with Laws. To the best knowledge of FFS, FFS is in
compliance with all laws, rules, regulations, orders, writs, injunctions and
decrees to which it or any of its assets are subject, except where the failure
would not have a Material Adverse Effect on FFS.
4.9 No Undisclosed Liability. To the best knowledge of FFS, there is no
liability or obligation of any kind, whether accrued, absolute, fixed or
contingent, of FFS that is not disclosed, reflected or reserved against in the
FFS financial statements.
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ARTICLE 5
COVENANTS OF FFS AND SHAREHOLDERS
5.1 Mutual Cooperation. Following the execution of this Agreement, FFS
and
Shareholders agree:
(a) If any event should occur, either within or without the knowledge
or control of FFS or Shareholders, which would prevent fulfillment of the
conditions to the obligations of any party hereto, to use his or their
commercially reasonable efforts to cure the same as expeditiously as possible;
and
(b) To cooperate fully with each other in preparing, filing,
prosecuting and taking any other actions which are or may be reasonable and
necessary to obtain the consent of any governmental instrumentality or any third
party, to accomplish the transactions contemplated by this Agreement.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SHAREHOLDERS
The obligations of the Parties to consummate the transactions
contemplated by this Agreement are subject to the satisfaction of the following
conditions, any of which may be waived by the Shareholders.
6.1 Filings; Consents; Waiting Periods. All registrations, filings,
applications, notices, transfers, consents, approvals, orders, qualifications,
waivers and other actions of any kind required of any Persons in connection with
the consummation of the transactions contemplated in this Agreement have been
filed, made or obtained and all applicable waiting periods shall have expired or
been terminated.
6.2 Deliveries by FFS. FFS shall have made delivery to the Shareholders
of the documents and items specified in Section 8.3.
6.3 Representations and Warranties of FFS. All representations and
warranties made by FFS in this Agreement shall be true and correct on and as of
the Effective Date, as if made by FFS on and as of that date.
6.4 Performance of Obligations of FFS. FFS shall have performed and
complied with the covenants, agreements, obligations and conditions required by
this Agreement to be performed or complied with by FFS at or prior to the
Effective Date.
6.5 Absence of Action Restraining or Affecting Transaction. No action
or proceeding by any Person or court shall have been instituted or threatened to
restrain or prohibit the consummation of the transactions contemplated by this
Agreement.
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ARTICLE 7
TERMINATION
7.1 Events of Termination. Notwithstanding any provision to the
contrary herein, this Agreement may be terminated at any time on or prior to the
Effective Date:
(a) By mutual written consent of the Shareholders and FFS;
(b) By either the Shareholders or FFS in the event any federal or
state agency having jurisdiction over the approval of the transactions
contemplated hereby disapproves of any part of such transactions;
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF FFS
The obligations of FFS to consummate the transactions contemplated by
this Agreement are subject to the satisfaction on or prior to the Effective Date
of all of the following conditions, any of which may be waived by FFS:
8.1 Filings; Consents; Waiting Periods. All registrations, filings,
applications, notices, transfers, consents, approvals, orders, qualifications,
waivers and other actions of any kind required of any Persons in connection with
the consummation of the transactions contemplated in this Agreement have been
filed, made or obtained and all applicable waiting periods shall have expired or
been terminated.
8.2 Deliveries by the Shareholders. The Shareholders shall have made
delivery to FFS of the documents and items specified in Section 8.2.
8.3 Representations and Warranties of the Shareholders. All
representations and warranties made by the Shareholders in this Agreement shall
be true and correct on and as of the Effective Date, as if made by the
Shareholders on and as of that date.
8.4 Performance of Obligations of the Shareholders. The Shareholders
shall have performed and complied with all the covenants, agreements,
obligations and conditions required by this Agreement to be performed or
complied with by the Shareholders at or prior to the Effective Date.
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and Plan of Reorganization
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8.5 Absence of Action Restraining or Affecting Transaction. No action
or proceeding by any Person or court shall have been instituted or threatened to
restrain or prohibit the consummation of the transactions contemplated by this
Agreement.
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and Plan of Reorganization
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ARTICLE 9
MANAGEMENT OF THE COMPANY
9.1 Management. FFS will appoint either Mr. Comer or Mr. Crabtree to
the Board of Directors of FFS, upon assurance of appropriate corporate
indemnities, insurance and protection for directors. In accordance with an
employment agreement to be executed between the Company and each of Mr. Comer
and Mr. Crabtree, Mr. Comer and Mr. Crabtree will retain their existing
positions as officers of the Company, and shall have full authority to continue
to operate the Company under the supervision of the Board of Directors and in
accordance with the Articles of Incorporation and the By-laws of the Company.
FFS agrees to appoint a three-person Board of Directors for the Company,
consisting of two Directors nominated by Mr. Comer and Mr. Crabtree, and one
person nominated by FFS. Mr. Comer and Mr. Crabtree will be entitled to retain
their existing positions as officers of the Company for a period of at least
five years, and they shall not be removed from their positions for any reason
other than for gross malfeasance. They shall have full authority to continue to
operate the Company under the supervision of the Board of Directors and in
accordance with the Articles of Incorporation and the By-laws of the Company,
and this Agreement. The headquarters of the Company shall remain in Utah. The
Company shall be the exclusive provider of Internet-related products, of the
type falling within the scope of the Company Business Plan, to FFS; provided
that such products shall be provided on a competitive basis in terms of quality
and price. FFS agrees to permit the Company to budget at least 35% of its annual
gross revenues for the purpose of financing capital improvements and expansion,
based on an annual budget to be approved by the Board of Directors of the
Company from time to time.
9.2 Financial Management. FFS agrees that it will permit the Company to
operate autonomously so long as the Board of Directors of the Company meets its
obligation to exercise good business judgment and to fulfill its obligations to
shareholders as set forth in the By-laws of the Company. FFS agrees not to adopt
a dividend policy for the Company inconsistent with the provisions of this
Agreement.
9.3 Compensation Policy. The Company shall enter into employment
agreements with Mr. Comer and Mr. Crabtree, and other key employees, providing
for compensation consistent with the provisions of Exhibit 9.3.
9.4 Actions Requiring Unanimous Consent. Notwithstanding any other
requirement set forth herein or the Articles of Incorporation of the Company,
the Parties expressly agree that a unanimous vote of all of the directors of the
Company who form a quorum of Directors convened to discuss such issues, after
due notice, shall be obtained before any of the following actions shall be taken
by the Company: (a) the appointment of any new or replacement Directors of the
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Company; (b) the issuance of any shares, or of any warrants or debentures,
options or rights in or to shares of the common or other capital stock of the
Company; (c) any pledge, mortgage, sale, lease or other transfer, except in
normal course of business or as part of a complete dissolution or winding up, or
any material portion of its business; (d) any merger, consolidation or
amalgamation with or into another company or corporation; (e) any change to, or
the conduct of any business outside, the general business of the Company; (f)
the incurring of any indebtedness to any third person or entity for borrowed
funds or for the deferred purchase price of purchased goods, or any other
indebtedness of any kind, except as otherwise permitted herein; (g) the
extension of credit to any one debtor in an amount exceeding US$250,000 or its
equivalent in another currency; (h) the agreement of the Company to waive or not
enforce any rights it may have under any agreements, or in respect of
transactions to which it may be a party; (i) the adoption of any dividend policy
calling for the payment of dividends greater than the amounts required to meet
the objectives of this Agreement, or any departure from the dividend policies
set forth herein or in any of the Articles of Incorporation; provided, however,
that the Board of Directors may establish the initial dividend policy consistent
with the terms of this Agreement; or (j) any change in the outside auditors of
the Company.
9.5 Change of Control or Corporate Objectives. In the event that there
shall occur a sale of a majority of the capital stock of FFS, or a change of
control of FFS, or a failure of FFS to meet any of the objectives of FFS
described below on or before July 22, 1998, then the Shareholders shall have the
right (but not the obligation) to re-acquire all of the Company Shares from FFS
in exchange for all of the FFS Shares transferred and delivered to them under
the terms of this Agreement. For purposes of this clause, the objectives
described above are the following: (i) the production of at least three
infomercials, and (ii) the consummation or one or more financing transactions
resulting in an acquisition of capital investment in an amount at least
sufficient to meet stated corporate objectives as set forth in public disclosure
documents.
9.6 Competition; Corporate Opportunity. Mr. Comer and Mr. Crabtree
agree they will in good faith provide adequate management time, good faith and
best efforts in managing the operations of the Company in accordance with a
business plan to be adopted by the Company (as amended from time to time, the
"Company Business Plan"), and consistent with the overall business plan of FFS
(the "FFS Business Plan") (the Company Business Plan and the FFS Business Plans
being referred to collectively as the "Business Plans"). With respect to any
business or investment opportunity falling within the scope of the Business
Plans, Mr. Comer and Mr. Crabtree agree to present such opportunity to the board
of directors of the Company or of FFS, as the case may be. Such investment or
business opportunity shall be undertaken by the Company or by FFS only upon
approval of a majority of the disinterested directors. If FFS or the Company
elect not to undertake such opportunity, then Mr. Comer and Mr. Crabtree shall
be free to undertake any such investment upon the following terms: Mr. Comer and
Mr. Crabtree agree to provide to the Company and to FFS a right to invest in
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such proposed business venture with Mr. Comer and Mr. Crabtree, on a basis to be
determined by the circumstance of such proposed venture but in no case less
favorable to the Company or to FFS, as the case may be, than the opportunity
available to Mr. Comer and Mr. Crabtree. Such notice shall be written and shall
set forth sufficient information, and shall allow a reasonable time under the
circumstances, to permit adequate deliberation. FFS shall have a right, at any
time before, or up to sixty days after, the date of such investment, to
participate in any such opportunity by contributing up to 50% of the overall
initial investment, in the same or equivalent type of cash, goods or services
and upon the same terms and conditions of the participation by Mr. Comer and Mr.
Crabtree. In any such case, whether or not FFS elects to participate in such
business opportunity, (i) Mr. Comer and Mr. Crabtree shall not, without the
approval of FFS, utilize employees, assets (including lists of prospective
customers, good will and intellectual property) of the Company or its
affiliates, and (ii) the proposed venture shall be conducted in a manner that
does not devalue FFS or its affiliates or deprive them of business opportunities
within their scope.
It is understood and acknowledged that Mr. Comer and Mr. Crabtree have
established, previous to the beginning of any talks or negotiations between IDI
and Fortune, (i) a company known as Nautica Achievement Systems, which provides
non-competitive corporate coaching programs to businesses and consulting and
coaching support to certain distributors of IDI products and services, and (ii)
Pinnacle Management Corporation ("Pinnacle"), which provides research and
development services and receives royalties from the Company for Company
products. The parties agree that FFS shall acquire all of the capital stock of
Pinnacle under the terms of a separate plan of reorganization.
ARTICLE 10
MISCELLANEOUS
10.1 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the Parties and delivered to each other Party.
10.2 Governing Law; Arbitration. This Agreement shall be governed by
and construed in accordance with the laws of the State of Utah without reference
to the choice of law principles thereof. Any controversy or claim arising out of
or in connection with this Agreement shall be finally settled in accordance with
the Commercial Arbitration Rules and supplementary procedures for commercial
arbitrations of the American Arbitration Association (the "AAA") then in force,
by submitting such dispute for binding arbitration before a jointly-designated
arbitrator. If the Parties are unable to agree on a single arbitrator, then such
binding arbitration shall be conducted before a panel of three arbitrators that
shall be chosen as follows: each Party shall designate one arbitrator and such
arbitrators shall designate a third arbitrator. This arbitration provision shall
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be deemed to be self-executing, and in the event that either Party fails to
appear at any properly noticed arbitration proceeding award may be entered
against such Party notwithstanding such failure to appear. Any award granted by
such arbitral panel shall be self-executing, to the greatest extent permitted by
applicable law, and in any case shall be eligible for entry of judgment and for
enforcement by a court of appropriate and competent jurisdiction. The location
or site of such arbitration proceeding shall be (i) Salt Lake City, Utah, or
(ii) another location mutually accept able to the Parties, or (iii) if for any
reason it is or becomes impossible or impracticable for the Parties to conduct
arbitration proceedings in Salt Lake City, Utah and the Parties are unable to
agree on another location, then at a location determined by the American
Arbitration Association. Nothing in this Section shall be construed or deemed to
prevent either party from seeking injunctive relief pursuant to the terms hereof
in a court of appropriate jurisdiction.
10.3 Entire Agreement. This Agreement and the Exhibits attached hereto
and made a part hereof contain the entire agreement between the Parties, and
there are no agreements, understandings, representations or warranties between
the Parties other than those set forth or referred to herein.
10.4 Expenses. Except as set forth in this Agreement, FFS and the
Shareholders shall be responsible for their own legal and other costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby.
10.5 Notices. All notices hereunder shall be sufficiently given for all
purposes hereunder if in writing and (i) delivered personally, (ii) sent by
certified mail, postage prepaid, (iii) sent by overnight courier or (iv) sent by
facsimile transmission, to the appropriate address as set forth below. Notices
to the Shareholders shall be addressed to:
Mr. Steven Comer
Mr. Brent Crabtree
c/o Internet Development, Inc.
443 South Commerce Road
Orem, Utah 84058
Telephone: (801) 224-4444
Facsimile: (801) 224-4457
or at such other address and to the attention of such other person as
Shareholders or the Company may designate by notice to FFS. Notices to FFS shall
be addressed to:
Fortune Financial System, Inc.
1200 West State Road 434
Longwood, FL 32750
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Attention: Mr. James Byrd
Telephone: (407) 331-1272
Facsimile: (407) 331-3327
or at such other address and to the attention of such other person as FFS may
designate by notice to Shareholders.
Any notice hereunder shall be deemed to have been served or given as of
(a) the date such notice is personally delivered, (b) three business days after
it is mailed certified U.S. mail, First Class postage prepaid, (c) one business
day after it is sent for overnight delivery by Federal Express or similar
next-day courier, or (d) the same day as it is sent by facsimile transmission
with confirmation of receipt.
10.6 Successors and Assigns. The rights and obligations of any party to
this Agreement shall not be assignable by such party without the prior written
consent of all other Parties. Notwithstanding the previous sentence, this
Agreement may be assigned by FFS to any Affiliate of FFS without the
Shareholders's prior written consent; provided, however, no such assignment
shall have the effect of releasing or reducing the obligations of FFS pursuant
to this Agreement, or any other instruments, agreements or covenants provided in
or contemplated by this Agreement. This Agreement shall inure to the benefit and
shall be binding upon the respective successors and permitted assigns of the
Parties. Nothing herein expressed or implied is intended to confer upon any
person, other than to the Parties or their respective heirs, personal
representatives, successors or permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
10.7 Headings. The headings contained in this Agreement are solely for
convenience of reference and shall not affect its interpretation.
10.8 Severability of Provisions. In the event that any of the
provisions contained herein would be held to be invalid, prohibited or
unenforceable in any jurisdiction for any reason because of the scope, duration
or area of its applicability or for other reasons, unless narrowed by
construction, such provision shall for purposes of such jurisdiction only, be
construed as if such invalid, prohibited or unenforceable provision had been
more narrowly drawn so as not to be invalid, prohibited or unenforceable (or if
such language cannot be drawn narrowly enough, the court making any such
determination shall have the power to modify, to the extent necessary to make
such provision or provisions enforceable in such jurisdiction, such scope,
duration or area or all of them, and such provision shall then be applicable in
such modified form). If, notwithstanding the foregoing, any such provision would
be held to be invalid, prohibited or unenforceable in any jurisdiction for any
reason, such provision, as to such jurisdiction only, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability, without
Internet Development, Inc.
Amended and Restated Agreement
and Plan of Reorganization
page 14
invalidating the remaining provisions. No narrowed construction,
court-modification or invalidation of any provision shall affect the
construction, validity or enforceability of such provision in any other
jurisdiction. Subject to the foregoing, in case any one or more of the
provisions contained in this Agreement or any other documents executed in
connection herewith should be invalid, illegal or unenforceable in any respect,
the validity, legality and unenforceability of the remaining provisions
contained herein and therein shall not be affected in any way thereby.
10.9 Gender. Whenever in this Agreement any masculine, feminine or
neuter pronoun is used, such pronouns shall also include the other genders
whenever required by the context.
10.10 Further Assurances. The Shareholders and FFS shall each execute
and deliver instruments and take such other actions as may be reasonably
required in order to carry out the intent of this Agreement.
10.11 Public Announcement. Neither FFS, Shareholders nor the Company
shall make any announcement or issue any press release relating to this
Agreement or the transactions contemplated hereby without the consent of the
other Parties.
10.12 Amendment; Waiver. This Agreement may be amended, modified,
superseded or canceled, and any of its terms, covenants, representations,
warranties or conditions hereof may be waived, only by a written instrument
executed by FFS and the Shareholders or, in the case of a waiver, by the party
waiving compliance. The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
party at a later time to enforce the same. No waiver by any party of any
condition, or of the breach of any provision, term, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation or warranty of this Agreement.
10.13 Costs. In the event litigation is instituted between or among any
of the Parties, with respect to all or any part of this Agreement, the
prevailing party therein shall be entitled to recover, in addition to all other
relief obtained, its costs, expenses and fees, including reasonable attorneys'
fees incurred in such litigation.
IN WITNESS WHEREOF, this Amended and Restated Agreement and Plan of
Reorganization has been signed by or on behalf of the Parties as of the day and
year first above written.
Shareholders
Internet Development, Inc.
Amended and Restated Agreement
and Plan of Reorganization
page 15
/s/ R. Brent Crabtree
Brent Crabtree
/s/ Steven Comer
Steven Comer
Fortune Financial Systems, Inc.
By: /s/ Douglas S. Hackett
Name: Douglas S. Hackett
Title: Vice President
Internet Development, Inc.
Amended and Restated Agreement
and Plan of Reorganization
page 16
Exhibit 9.3
Compensation Policy. For a period of five years after the date of this
Agreement,
1. Each of Mr. Comer and Mr. Crabtree shall be entitled to receive
compensation from the Company, as follows: Monthly salary of $10,000, payable at
the beginning of each calendar month, plus (i) a reasonable automobile allowance
and reimbursement of ordinary and necessary business expenses incurred on behalf
of the Company, and (ii) a cash bonus equal to twenty-five percent (25%) of the
Company's net profit for each fiscal quarter, as calculated in accordance with
generally accepted accounting principles and payable within ten days after the
end of such fiscal quarter; provided, however, that each such quarterly cash
bonus shall not exceed $40,000.
2. Each of Mr. Comer and Mr. Crabtree shall be entitled to receive,
within thirty days after the end of each fiscal year, an option to purchase
additional FFS Shares having a net value, after deduction of the option purchase
price, equal to ten percent of annual net profits of the Company, as calculated
in accordance with generally accepted accounting principles, for such fiscal
year; provided, however, that the net value of such annual option (that is, the
option price subtracted from the market price for FFS Shares on the date of the
grant of such option) for each of Mr. Comer and Mr. Crabtree shall not exceed
$320,000 with respect to the first fiscal year after the date of this Agreement,
or $320,000 compounded annually at a rate of 3% with respect to each subsequent
fiscal year.
3. The Company will maintain its current compensation policy for
non-officer employees, unless amended by action of the Board of Directors.
Internet Development, Inc.
Amended and Restated Agreement
and Plan of Reorganization
page 17
Exhibit 3.6
Claims and Litigation
1. The Company provided approximately $170,000 of product in connection with
products and services sold by Home Business Technology, a company affiliated
with Mr. Ed Beckley ("HBT"). HBT has come under investigation by the Iowa
Attorney General's office. The Company has received no notice that any of its
activities in connection with such sales are under investigation.
2. The Company provided approximately $200,000 of products to Financial Freedom
Report, Inc., a company that is the subject of an enforcement action by the
Federal Trade Commission. The Company has received no notice of any related
complaint against it.
Internet Development, Inc.
Amended and Restated Agreement
and Plan of Reorganization
page 18