Merger Agreement - 9/18/99

MERGER AGREEMENT


This MERGER AGREEMENT (this "Agreement") is entered into as of August 18, 1999, by and among AMERICA'S SENIOR FINANCIAL SERVICES, INC., a Florida corporation ("ASFS"); AMSE ACQUISITION 2 CORP., a Florida corporation and wholly-owned subsidiary of ASFS (the "ASFS Merger Sub," and together with ASFS, the "ASFS Companies"); JUPITER MORTGAGE CORPORATION, a Florida corporation (the "Company") and DEANNE J. ANDERSON ("Anderson") and MICHAEL J. BUONO ("Buono"), each a resident of the State of Florida who together constitute all of the shareholders of the Company (the "Shareholders"). Certain other capitalized terms used herein are defined in Article X and throughout this Agreement.


RECITALS


The Boards of Directors of ASFS and the Company have determined that it is in the best interests of their respective shareholders for ASFS, through its wholly owned subsidiary, to acquire the Company upon the terms and subject to the conditions set forth in this Agreement. In order to effectuate the transaction, ASFS has organized the ASFS Merger Sub as a wholly-owned subsidiary of ASFS, and the parties have agreed, subject to the terms and conditions set forth in this Agreement, to merge the ASFS Merger Sub with and into the Company so that the Company continues as the surviving corporation. As a result of the Merger, the Company will become a wholly-owned subsidiary of ASFS, and the Shareholders will be issued certain shares of common stock of ASFS and other consideration.


TERMS OF AGREEMENT


In consideration of the mutual representations, warranties, covenants and agreements contained herein, the parties hereto, intending to be legally bound hereby, agree as follows:


ARTICLE I


THE MERGER


1.1 THE MERGER. Subject to the terms and conditions of this Agreement and in accordance with the Florida Business Corporation Act (the "Corporations Code"), at the Effective Time (as defined below), the ASFS Merger Sub will be merged with and into the Company (the "Merger") pursuant to the Plan of Merger annexed hereto as EXHIBIT A (the "Plan of Merger"). The terms and conditions of the Plan of Merger are incorporated herein by reference as if fully set forth herein. As a result of the Merger, the separate corporate existence of the ASFS Merger Sub shall cease and the Company shall continue as the surviving corporation ("Surviving Corporation") and a wholly-owned subsidiary of ASFS.


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1.2 THE CLOSING. Subject to the terms and conditions of this Agreement, the consummation of the Merger (the "Closing") shall take place not later than August 31, 1999, subject to satisfaction or waiver of the conditions set forth in Articles VI and VII, at the offices of Akerman, Senterfitt & Eidson, P.A., in Fort Lauderdale, Florida, or such other time and place as the parties may otherwise agree.


1.3 DIRECTORS AND OFFICERS. The initial Board of Directors of the Surviving Entity will consist of five Directors. ASFS shall be entitled to nominate three members of the Board of Directors of the Surviving Corporation. The Shareholders shall be entitled to nominate two members of the Board of Directors of the Surviving Corporation. ASFS shall use its best efforts to cause the election of the following persons to the Surviving Corporation's Board of Directors, as indicated below, for as long as Michael J. Buono, Deanne J. Anderson and Lori Hetzel are employed by the Surviving Corporation in the capacities indicated below. The following persons shall serve in the capacities indicated next to their respective names with respect to the initial Directors and Officers of the Surviving Corporation.


Nelson Locke -- Director and Chairman of the Board


Michael J. Buono --- Director and Chief Executive Officer


Deanne J. Anderson --- Director and President


Lori Hetzel -- Chief Operating Officer


Thomas Sherman - Director


Elly Shea -- Director


Michael J. Buono and Deanne J. Anderson shall be considered for purposes hereof nominees of the Shareholders. These Directors and Officers will hold office until their successors shall have been duly elected or appointed and qualified. The Shareholders shall also serve on the Executive Committee of the ASFS Board of Directors. The Executive Committee shall report to the Board of Directors of ASFS from time to time to assist the Board of Directors of ASFS, when and to the extent so requested, in formulating and implementing business and managerial decisions.


1.4 AGGREGATE CONSIDERATION; CONVERSION OF SECURITIES.


(a) AGGREGATE CONSIDERATION. For purposes of this Agreement "Aggregate Consideration" means:


(i) a number of shares (the "Stock Consideration") of
common stock, par value $.001 per share, of ASFS (the "ASFS
Common Stock") determined by dividing


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$2,500,000 by the average closing price of a share of ASFS
Common Stock as reported by the OTC Bulletin Board and/or
National Quotation Bureau for the twenty (20) consecutive
trading day period ending three calender days prior to the
Effective Time (the "Exchange Price"); and


(ii) an amount (the "Closing Date Payment") equal to
Five Hundred Thousand Dollars ($500,000).


(b) At the Effective Time, each share of common stock of ASFS Merger Sub issued and outstanding at the Effective Time shall be converted into one share of the common stock of the Surviving Corporation.


(c) At the Effective Time by virtue of the Merger and without any action on the part of the Company, ASFS Merger Sub or the Shareholders, all of the common stock, par value $1.00 per share of the Company ("Company Common Stock") issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive the Aggregate Consideration, which shall be delivered to the Shareholders and First Fidelity Capital Markets, Inc. in the amounts set forth on SCHEDULE 1.4(C).


1.5 MANNER OF PAYMENT OF AGGREGATE CONSIDERATION. At the Closing, each of the Shareholders shall deliver the certificates representing all issued and outstanding shares of the Company Common Stock to ASFS for cancellation; and ASFS shall pay the Aggregate Consideration to the Shareholders and First Fidelity Capital Markets, Inc. as follows: (i) the Closing Date Payment shall be made in immediately available funds by wire transfer to the accounts designated by the Shareholder to whom the payment is owed in accordance with SCHEDULE 1.4(C) and (ii) delivery to the Shareholders of certificate(s) issued in the name of the Shareholders representing the Stock Consideration in accordance with SCHEDULE 1.4(C). The shares of ASFS Common Stock issuable by ASFS in the Merger are sometimes referred to herein as the "ASFS Shares."


1.6 ADJUSTMENT TO AGGREGATE CONSIDERATION. If, at the first year anniversary of the Closing (the "Adjustment Date"), the average closing price of the ASFS Common Stock for the previous twenty (20) consecutive trading day period is less than Seven Dollars ($7.00) (the "Current Share Price"), ASFS shall, within ten (10) days following the Adjustment Date, issue pro-rata to the Shareholders additional shares of ASFS Common Stock (the "Additional Shares") to the Shareholders in such amount so that the PRODUCT of the number of Price Protection Shares, as defined below, held by the Shareholders (or their assigns) on the Adjustment Date plus the number of Additional Shares TIMES the Current Share Price is equal to the PRODUCT of the number of Price Protection Shares held by the Shareholders (and their assignees) on the Adjustment Date times $7.00; provided that, ASFS will in no event be obligated to issue an aggregate number of additional shares of ASFS Common Stock in excess of such number as shall equal $2,000,000 divided by the Exchange Price. The aggregate number of Additional Shares issued pursuant to this Section 1.6 shall be divided pro rata among the Shareholders based upon the percentage of the aggregate Stock Consideration shares issued to each Shareholder.


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For purposes of this Section 1.6, "Price Protection Shares" is defined as the number of shares of ASFS Common Stock issued as Stock Consideration pursuant to Section 1.4 determined by dividing $2,000,000 by the Exchange Price.


By way of example and not limitation, if (1) the Exchange Price is $7.00, (2) the Current Share Price is $5.00, (3) the number of Price Protection Shares held by the Shareholders and their assignees is 1,000 on the Adjustment Date, then the aggregate number of Additional Shares to be issued by ASFS to the Shareholders would be determined as follows:


(a) 1,000 x $7.00 = $7,000
(b) 1,000 x $5.00 = $5,000
(c) Deficiency Amount = $2,000
(d) Additional Shares = 400 ($2,000/$5.00)


For purposes of this Section 1.6, the average closing price of the ASFS Common Stock shall be determined by reference to the closing prices reported by (1) the NASDAQ Stock Market or a national securities exchange, if the ASFS Common Stock is listed for trading therein or (2) the OTC Bulletin Board and/or National Quotation Bureau, if the ASFS Common Stock is traded in the over-the-counter market. If no prices are reported for the twenty business days prior to the Adjustment Date, then the price used to make the calculations required in this Section 1.6 shall be the reported closing price on the first preceding day on which so reported.


The number of shares and the share price used in the calculations required to be made in this Section 1.6 shall be proportionately adjusted to reflect any division, combination or other reclassification of the ASFS Common Stock occurring on or prior to the Adjustment Date.


1.7 FILING OF ARTICLES OF MERGER. At the time of the Closing, the parties shall cause the Merger to be consummated by filing duly executed Articles of Merger (with the completed Plan of Merger annexed thereto) with the Secretary of State of the State of Florida, in such form as ASFS reasonably determines is required by, and is in accordance with, the relevant provisions of the Corporation Code (the date and time of such filing is referred to herein as the "Effective Date" or "Effective Time").


1.8 ACCOUNTING AND TAX TREATMENT. The parties hereto acknowledge and agree that the transactions contemplated hereby are intended to be treated for tax purposes as a reorganization under Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"), and for accounting purposes as a purchase.


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ARTICLE II


REPRESENTATIONS AND WARRANTIES OF THE ASFS COMPANIES


As a material inducement to the Shareholders to enter into this Agreement and to consummate the transactions contemplated hereby, each of the ASFS Companies makes the following representations and warranties to the Shareholders:


2.1 CORPORATE STATUS. Each of the ASFS Companies is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation and has the requisite power and authority to own or lease its properties and carry on its business as now being conducted. ASFS Merger Sub is a wholly owned subsidiary of ASFS. Each of the ASFS Companies is duly qualified and in good standing as a foreign corporation in all jurisdictions where such qualification is required under applicable law, except where the failure to be so qualified would not have a Material Adverse Effect on either of the ASFS Companies.


2.2 CORPORATE POWER AND AUTHORITY. Each of the ASFS Companies has the corporate power and authority to execute and deliver this Agreement, to perform its respective obligations hereunder and to consummate the transactions contemplated hereby. Each of the ASFS Companies has taken all action necessary to authorize its execution and delivery of this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereby.


2.3 ENFORCEABILITY. This Agreement has been duly executed and delivered by each of the ASFS Companies and constitutes a legal, valid and binding obligation of each of the ASFS Companies, enforceable against each of the ASFS Companies in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and general equitable principles regardless of whether such enforceability is considered in a proceeding at law or in equity.


2.4 ASFS COMMON STOCK. Upon consummation of the Merger and the issuance and delivery of certificates representing the ASFS Shares to the Shareholders, the ASFS Shares will be validly issued, fully paid and non-assessable shares of ASFS Common Stock.


2.5 NO COMMISSIONS. None of the ASFS Companies has incurred any obligation for any finder's or broker's or agent's fees or commissions or similar compensation in connection with the transactions contemplated hereby, other than fees payable to ViStra Growth Partners, Inc, which are solely obligations of, and payable by, the ASFS Companies.


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ARTICLE III


REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
AND OF THE COMPANY


As a material inducement to each of the ASFS Companies to enter into this Agreement and to consummate the transactions contemplated hereby, each of the Company and the Shareholders, jointly and severally, makes the following representations and warranties to ASFS:


3.1 CORPORATE STATUS. The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation and has the requisite power and authority to own or lease its properties and to carry on its business as now being conducted. The Company is, and has been since inception, an "S Corporation" pursuant to Subchapter S of the Code. Each jurisdiction in which the Company is qualified to do business as a foreign corporation is listed on SCHEDULE 3.1. The Company has fully complied with all of the requirements of any statute governing the use and registration of fictitious names, and has the legal right to use the names under which it operates its business. There is no pending or threatened proceeding for the dissolution, liquidation, insolvency or rehabilitation of the Company.


3.2 POWER AND AUTHORITY. The Company has the corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The Company has taken all action necessary to authorize the execution and delivery of this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereby. Each of the Shareholders represent that they are individuals residing in the State of Florida, and have the requisite competence and authority to execute and deliver this Agreement, to perform their respective obligations hereunder and to consummate the transactions contemplated hereby.


3.3 ENFORCEABILITY. This Agreement has been duly executed and delivered by the Company and the Shareholders, and constitutes the legal, valid and binding obligation of each of them, enforceable against them in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and general equitable principles regardless of whether such enforceability is considered in a proceeding at law or in equity.


3.4 CAPITALIZATION. As of the date hereof, the Company has (a) 1,000 authorized shares of Company Common Stock at $1.00 per share par value and no other shares of any class of capital stock, and (b) 1,000 shares of Company Common Stock issued and outstanding, none of which is held in treasury. All of the issued and outstanding shares of capital stock of the Company (i) have been duly authorized and validly issued and are fully paid and non-assessable, (ii) were issued in compliance with all applicable state and federal securities laws, and (iii) were not issued in violation of any preemptive rights, rights of first refusal or similar rights. No preemptive rights, rights of first


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refusal or similar rights exist with respect to the shares of capital stock of the Company and no such rights arise by virtue of or in connection with the transactions contemplated hereby. There are no outstanding or authorized rights, options, warrants, convertible securities, subscription rights, conversion rights, exchange rights or other agreements or commitments of any kind that could require the Company to issue or sell any shares of its capital stock (or securities convertible into or exchangeable for shares of its capital stock). There are no outstanding stock appreciation, phantom stock, profit participation or other similar rights with respect to the Company. There are no proxies, voting rights or other agreements or understandings with respect to the voting or transfer of the capital stock of the Company.


3.5 SHAREHOLDERS OF THE COMPANY. The Shareholders are the holders of all issued and outstanding shares of capital stock of the Company, and own such shares free and clear of all Liens, restrictions and claims of any kind whatsoever.


3.6 NO VIOLATION. The execution and delivery of this Agreement by the Company and the Shareholders, the performance by them of their respective obligations hereunder and the consummation by them of the transactions contemplated by this Agreement will not (i) violate or conflict with any provision of the articles of incorporation or bylaws of the Company, as amended, (ii) violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any Governmental Authority or of any arbitration award which is either applicable to, binding upon or enforceable against either of the Company or the Shareholders, (iii) except as set forth on SCHEDULE 3.6, conflict with, result in any breach of, or constitute a default (or an event which would, with the passage of time or the giving of notice or both, constitute a default) under, or give rise to a right to terminate, amend, modify, abandon or accelerate, any Contract which is applicable to, binding upon or enforceable against each of the Company or the Shareholders, (iv) result in or require the creation or imposition of any Lien upon or with respect to any of the property or assets of the Company, or (v) require the consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, any court or tribunal or any other Person.


3.7 COMPANY RECORDS. The copies of the articles of incorporation and bylaws of the Company which were provided to ASFS are true, accurate and complete and reflect all amendments made through the date of this Agreement. The minute books for the Company made available to ASFS for review were correct and complete in all material respects as of the date of such review, no further entries have been made through the date of this Agreement, such minute books contain the true signatures of the persons purporting to have signed them, and such minute books contain an accurate record of all corporate actions of the shareholders and directors (and any committees thereof) of the Company taken by written consent or at a meeting since incorporation. All material corporate actions taken by the Company have been duly authorized or ratified. All accounts, books, ledgers and official and other records of the Company have been fully, properly and accurately kept and completed in all material respects, and there are no material inaccuracies or discrepancies of any kind contained therein. The stock ledgers of the Company, as previously made available to ASFS, contain accurate and complete records of all issuances, transfers and cancellations of shares of the capital stock of the Company.


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3.8 FINANCIAL STATEMENTS. The Shareholders have delivered to ASFS (i) the financial statements of the Company, including the notes thereto, for the years ended December 31, 1998, and December 31, 1997, audited by Wisneski, Blakiston & Leslie, P.A., and (ii) the financial statements of the Company for the period ended June 30, 1999 prepared by the Company, copies of all of which are attached to SCHEDULE 3.8 hereto (collectively, the "Financial Statements"). The balance sheet of the Company dated as of June 30, 1999, included in the Financial Statements is referred to herein as the "Current Balance Sheet." The Financial Statements fairly present in all material respects the financial position of the Company at each of the balance sheet dates and the results of operations for the periods covered thereby, and have been prepared in accordance with GAAP consistently applied throughout the periods indicated except, in the case of the Current Balance Sheet and the accompanying income statement which (i) are subject to normal year-end audit adjustments (which will not be material, individually or in the aggregate) and (ii) lack footnotes. The books and records of the Company fully and fairly reflect in all material respects all of its transactions, properties, assets and liabilities. There are no extraordinary or material non-recurring items of income or expense (subject to fluctuations in the ordinary course of business) during the periods covered by the Financial Statements and the balance sheets included in the Financial Statements do not reflect any write-up or revaluation increasing the book value of any assets, except as specifically disclosed in the notes thereto. The Financial Statements reflect all adjustments necessary for a fair presentation of the financial information contained therein, except for the Current Balance Sheet and the accompanying income statement to the extent indicated above.


3.9 CHANGES SINCE THE LAST AUDITED BALANCE SHEET DATE. Except as set forth on SCHEDULE 3.9, since December 31, 1998, the Company has not (i) issued any capital stock or other securities; (ii) made any distribution of or with respect to its capital stock or other securities or purchased or redeemed any of its securities; (iii) paid any bonus to or increased the rate of compensation of any of its officers or salaried employees or amended any other terms of employment of such persons; (iv) sold, leased or transferred any of its properties or assets other than in the ordinary course of business consistent with past practice; (v) made or obligated itself to make capital expenditures out of the ordinary course of business consistent with past practice; (vi) made any payment in respect of its liabilities other than in the ordinary course of business consistent with past practice; (vii) incurred any obligations or liabilities (including any indebtedness) or entered into any transaction or series of transactions involving in excess of $10,000 in the aggregate out of the ordinary course of business, except for this Agreement and the transactions contemplated hereby; (viii) suffered any theft, damage, destruction or casualty loss, not covered by insurance and for which a timely claim was filed, in excess of $10,000 in the aggregate; (ix) suffered any extraordinary losses (whether or not covered by insurance); (x) waived, canceled, compromised or released any rights having a value in excess of $10,000 in the aggregate; (xi) made or adopted any change in its accounting practice or policies; (xii) made any adjustment to its books and records other than in respect of the conduct of its business activities in the ordinary course consistent with past practice; (xiii) entered into any transaction with any Affiliate other than intercompany transactions in the ordinary course of business consistent with past practice; (xiv) entered into any employment agreement; (xv) terminated, amended or modified in any material respect any agreement involving


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an amount in excess of $10,000; (xvi) imposed any security interest or other Lien on any of its assets other than in the ordinary course of business consistent with past practice; (xvii) delayed paying any accounts payable which are due and payable except to the extent being contested in good faith; (xviii) made or pledged any charitable contribution in excess of $5,000; (xix) entered into any other transaction or, been subject to any event which has or may have a Material Adverse Effect on the Company; or (xx) agreed to do or authorized any of the foregoing.


3.10 LIABILITIES. The Company does not have any liabilities or obligations, whether accrued, absolute, contingent or otherwise, except (a) to the extent reflected or taken into account in the Current Balance Sheet and not heretofore paid or discharged, (b) liabilities incurred in the ordinary course of business consistent with past practice since the date of the Current Balance Sheet (none of which relates to breach of contract, breach of warranty, tort, infringement or violation of law, or which arose out of any action, suit, claim, governmental investigation or arbitration proceeding), (c) normal accruals, reclassifications, and audit adjustments which would be reflected on an audited financial statement and which would not be material in the aggregate, and (d) liabilities incurred in the ordinary course of business prior to the date of the Current Balance Sheet which, in accordance with GAAP consistently applied, were not recorded thereon.


3.11 LITIGATION. There is no action, suit, arbitration or other legal or administrative proceeding or governmental investigation pending, or to the knowledge of the Company and the Shareholders threatened, anticipated or contemplated against, by or affecting the Company, or any of its properties or assets, or the Shareholders, or which questions the validity or enforceability of this Agreement or the transactions contemplated hereby, and, to the knowledge of the Company and the Shareholders, there is no basis for any of the foregoing. There are no outstanding orders, decrees or stipulations issued by any Governmental Authority in any proceeding to which the Company is or was a party which have not been complied with in full or which continue to impose any material obligations on the Company.


3.12 ENVIRONMENTAL MATTERS.


The Company is and has at all times been in full compliance in all material respects with all applicable environmental laws.


3.13 REAL ESTATE


(a) The Company does not own any real estate.


(b) SCHEDULE 3.13(B) sets forth a list of all leases, licenses or similar agreements ("Leases") to which any of the Company is a party (copies of which have previously been furnished to ASFS), in each case setting forth (A) the lessor and lessee thereof and the date and term of each of the Leases, and (B) the street address of each property covered thereby (the "Leased Premises"). The Leases are in full force and effect and have not been amended, and no party thereto is in default or breach under any such Lease. No event has occurred which, with the passage of time or the


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giving of notice or both, would cause a material breach of or default under any of such Leases. There is no breach or anticipated breach by any other party to such Leases.


3.14 GOOD TITLE TO AND CONDITION OF ASSETS.


Except as set forth in SCHEDULE 3.14, the Company has good and marketable title t ...