Reorganization Agreement By & Among AmeriNet Group.com, Inc., a Delaware corporation, and Lorilei Communications, Inc., a Florida corporation Table of Contents Article I: Plan of Reorganization 1.1 Definitions 1.2 Reorganization 1.3 Effect of the Reorganization 1.4 Articles of Incorporation & Bylaws 1.5 Directors and Officers 1.6 Maximum Shares to Be Issued & Effect on Capital Stock 1.7 Exchange of Certificates 1.8 No Further Ownership Rights in Lorilei's Securities 1.9 Lost, Stolen or Destroyed Certificates 1.10 Tax Consequences and Accounting Treatment 1.11 Taking of Necessary Action & Further Action Article II: Lorilei's Representations and Warranties 2.1 Organization of Lorilei 2.2 Lorilei's Capital Structure 2.3 Subsidiaries 2.4 Authority 2.5 Lorilei's Financial Statements 2.6 No Undisclosed Liabilities 2.7 No Changes 2.8 Tax and Other Returns and Reports 2.9 Restrictions on Business Activities 2.10 Title of Properties, Absence of Liens and Encumbrances & Condition of Equipment 2.11 Intellectual Property 2.12 Agreements, Contracts and Commitments 2.13 Interested Party Transactions 2.14 Governmental Authorization 2.15 Litigation 2.16 Accounts Receivable 2.17 Minute Books 2.18 Environmental and OSHA 2.19 Brokers' and Finders' Fees 2.20 Labor Matters 2.21 Insurance 2.22 Compliance with Laws 2.23 Complete Copies of Materials 2.24 Binding Agreements & No Default 2.25 Regulation SB Disclosure Document 2.26 FIRPTA 2.27 Employee Benefit Plans 2.28 Distribution Agreements 2.29 Disclosure to Lorilei's Stockholders 2.30 Representations Complete Article III: AmeriNet's Representations and Warranties 3.1 Organization, Standing and Power 3.2 Capital Structure 3.3 Authority 3.4 Exchange Act Reports & AmeriNet's Financial Statements 3.5 Broker's and Finders' Fees 3.6 Ownership of Lorilei's Common Stock 3.7 Litigation 3.8 Limited Activities 3.9 No Undisclosed Liabilities 3.10 No Changes 3.11 Tax and Other Returns and Reports 3.12 Environmental and OSHA 3.13 Representations Complete Article IV: Conduct Prior to the Closing 4.1 Conduct of Business of Lorilei 4.2 No Solicitation 4.3 Conduct of Business of AmeriNet Article V: Additional Agreements 5.1 Report on Form 8-K 5.2 Consent of Lorilei's Stockholders 5.3 Access to Information 5.4 Confidentiality 5.5 Expenses Page 35 5.6 Public Disclosure 5.7 Consents 5.8 Affiliate Agreements 5.9 Legal Requirements 5.10 Blue Sky Laws 5.11 Best Efforts, Additional Documents and Further Assurances 5.12 Employment Agreements 5.13 Investment by AmeriNet in Lorilei 5.14 Board of Directors 5.15 Additional Covenants by Lorilei Article VI: Conditions to The Reorganization 6.1 Conditions to Obligations of Each Party to Effect the Reorganization 6.2 Additional Conditions to Obligations of Lorilei 6.3 Additional Conditions to the Obligations of AmeriNet Article VII: Survival of Condition Subsequent, Representations and Warranties, Covenants and Undisclosed Liabilities Escrow 7.1 Survival of Condition Subsequent, Representations and Warranties & Covenants 7.2 Escrow Arrangements Article VIII: Termination, Amendment and Waiver 8.1 Termination 8.2 Effect of Termination 8.3 Amendment 8.4 Extension & Waiver Article IX: General Provisions 9.1 Interpretation 9.2 Notice 9.3 Merger of All Prior Agreements Herein 9.4 Survival 9.5 Severability 9.6 Governing Law 9.7 Indemnification 9.8 Dispute Resolution 9.9 Benefit of Agreement 9.10 Further Assurances 9.11 Counterparts 9.12 License Schedules Schedule 1.4 Lorilei's Constituent Documents Schedule 1.7(C) Lorilei's Final Stockholder Data Schedule 2 Exceptions to Lorilei's Representations & Warranties Schedule 2.5(A) Lorilei's Financial Statements Schedule 2.10(A)(1) Real Property Schedule 2.10(C) Equipment Schedule 2.11 Intellectual Property Schedule 2.12 Contracts, Agreements & Commitments Schedule 2.14 Governmental Authorization Schedule 2.15 Litigation Schedule 2.20 List of Employees Schedule 2.21 Insurance Schedule 2.27 Employee Benefit Plans Schedule 2.28 Distribution Agreements Schedule 4.1 Exceptions to Prohibited Pre- Closing Actions Schedule 5.7 Consents Schedule 5.8 Affiliates Schedule 5.12 List and Summary of Employment Agreements Schedule 5.13-1 Detailed Three Year Projections Schedule 5.13-2 Use of Proceeds Exhibits Exhibit 2.25 Regulation SB Disclosure Document Exhibit 3.4 AmeriNet Draft Annual Report Exhibit 5.8 Affiliate Agreements Exhibit 5.12 Copies of Contracts, Agreements & Commitments Exhibit 6.2(D) AmeriNet Legal Opinion Exhibit 6.3(E) Lorilei Legal Opinion Exhibit 6.3(K) Confidentiality Agreements Exhibit 7.2 Escrow Allocation Information Page 36 Reorganization Agreement This Reorganization Agreement (the "Agreement") is made and entered into by and among AmeriNet Group.com, Inc., a publicly held Delaware corporation with a class of securities registered under Section 12(g) of the Securities Exchange Act of 1934, as amended ("AmeriNet" and the "Exchange Act," respectively); Lorilei Communications, Inc., a Florida corporation ("Lorilei"); Gerald R. Cunningham, a Florida resident ("Mr. Cunningham"); and, Leigh A. Cunningham, a Florida resident and Mr. Cunningham's spouse ("Mrs. Cunningham;" Mrs. Cunningham being hereinafter collectively referred to with Mr. Cunningham as either "Mr. & Mrs. Cunningham or as the "Former Lorilei Stockholders" and generically as a "Former Lorilei Stockholder");" AmeriNet, Lorilei and the Former Lorilei Stockholders being sometimes hereinafter collectively referred to as the "Parties" or generically as a "Party"). Preamble: WHEREAS, the boards of directors of AmeriNet and Lorilei believe it is in the best interests of each corporation and their respective stockholders that Lorilei become a wholly owned subsidiary of AmeriNet and, in furtherance thereof, have approved the Reorganization; and WHEREAS, pursuant to the terms of the Reorganization, as hereinafter set forth, among other things, all of the outstanding and reserved securities of Lorilei (the "Lorilei's Securities") will be exchanged for between 90,839 and 1,145,037 shares of AmeriNet's common stock, $0.01 par value ("AmeriNet's common stock"), depending on Lorilei's EBITDA during the fiscal period starting on July 1, 2000 and ending on June 30, 2003 and certain contingencies involving disputed Lorilei accounts payable, as hereinafter described; and WHEREAS, the Parties intend that AmeriNet invest up to $500,000 within 180 days after completion of the Reorganization and the filing of required reports with the United States Securities and Exchange Commission (the "Commission"); and WHEREAS, Lorilei, AmeriNet and the Former Lorilei Stockholders desire to make certain representations and warranties and other agreements in connection with the Reorganization and their subsequent operating and business relationships; and WHEREAS, the Parties intend, by executing this Agreement, to adopt a plan of reorganization within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code"): NOW, THEREFORE, in consideration of the covenants, promises and representations set forth herein, and for other good and valuable consideration, the Parties, intending to be legally bound, hereby agree as follows: Witnesseth: Article I Plan of Reorganization 1.1 Definitions The following terms, whether or not initially capitalized, will have the meanings set forth below: Page 37 (A) 1999 10-KSB: AmeriNet's report on Commission Form 10-KSB for the fiscal year ended June 30, 1999. (B) 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 (C) Affiliate: An entity or person that controls, is controlled by or is under common control with another person. (D) AmeriNet Financial Statements: Financial statements, including all related schedules and the notes thereto, of AmeriNet included in the report on Commission Form 10-KSB for the period ended June 30, 1999, as amended; the reports on Commission Form 10-QSB filed subsequent to June 30, 1999 and the financial statements for subsidiaries subsequently acquired by AmeriNet included in current reports on 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," (E) AmeriNet Schedules: The schedules referenced by the Section designations of this Agreement as to which they apply, annexed at the direction of AmeriNet to this Agreement and constituting a material component of this Agreement. (F) (1) Brashear Escrow: The special escrow arrangement established using the Brashear Escrow Shares. (2) Brashear Escrow Agent: Mr. Brashear and any successors in interest as the escrow agent for the Brashear Escrow Shares. (3) Brashear Escrow Shares: 376,176 of the initial 572,519 shares of AmeriNet's common stock issuable to Lorilei's Stockholders at the Closing Bruce Brashear, Esquire, as escrow agent for the Parties pending determination of certain contingencies involving Lorilei following the Closing, as provided for in this Agreement. (4) Mr. Brashear: Bruce Brashear, Esquire, a Florida attorney who serves as legal counsel to the Lorilei Declarants but who will be acting as escrow agent for the Parties with reference to the Brashear Escrow. (G) Capital Stock: The generic term used for equity securities, whether common, preferred or otherwise. (H) Closing: The event at which the exchange of all of the Lorilei securities will be exchanged for the initial 572,519 shares of AmeriNet's common stock. (I) Closing Date: The date that the Closing takes place. (J) Commission: The United States Securities and Exchange Commission. Page 38 (K) Code: The Internal Revenue Code of 1986, as amended. (L) Commercial Software Rights: Packaged commercially available software programs generally available to the public through retail dealers in computer software which have been licensed to end-user licenses and which are used in the licensee's business but are in no way a component of or incorporated in any of its products and related trademarks, technology and know-how. (M) EBITDA: Earnings before interest, taxes, depreciation and amortization, determined in accordance with GAAP. (N) (1) Escrow Agents: The persons or entities acting as escrow agents pursuant to the terms of this Agreement, including Yankees and Mr. Brashear. (2) Escrow Funds: The accounts maintained by the Escrow Agents for the Escrow Shares and related distributions. (O) (1) Escrow Shares: The collective term for all shares of AmeriNet common stock held by the Escrow Agents in the Escrow Funds. (2) Escrow Terms: The periods of time during which the Escrow Agents hold the Escrow Shares. (P) Exchange Act: The Securities Exchange Act of 1934, as amended. (Q) Exchange Act Reports: All reports filed by AmeriNet with the Commission pursuant to the Exchange Act, including all exhibits filed therewith, and the Draft Annual Report included as Exhibit 3.4. (R) Exchange Agent: The person or entity responsible following the Closing, for issuing and delivering the initial 572,519 shares of AmeriNet's common stock to Lorilei's Stockholders and the Escrow Agents. (S) Exchange Ratio: The quotient obtained by dividing the initial 572,519 shares of AmeriNet's common stock by the 111 shares of Lorilei's common stock. (T) GAAP: Generally accepted accounting principles, consistently applied. (U) Initial Funding Installment: The sum of $100,000 payable to the order of Lorilei in satisfaction of AmeriNet's commitment under Section 5.13(A) (i) of this Agreement but to be expended solely as provided for in Schedule 5.13-2. (V) IRS: The United States Internal Revenue Service. (W) 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 a senior 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. Page 39 (X) Lorilei Declarants: Lorilei, Mr. Cunningham and Mrs. Cunningham, acting severally. (Y) Lorilei's Financial Statements: Lorilei's unaudited financial statements (balance sheets, income statements and related schedules and footnotes) as of and for the fiscal year ending December 31, 1999, the calendar quarter ended March 31, 2000 and Lorilei's balance sheet as of the day preceding the date of this Agreement, all prepared in conformity with GAAP. (Z) Lorilei Schedules: The schedules referenced by the Section designations of this Agreement as to which they apply, annexed at the direction of Lorilei to this Agreement and constituting a material component of this Agreement. (AA) 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. (BB) NASD: The National Association of Securities Dealers, Inc., a Delaware corporation and self regulatory organization registered with the Commission. (CC) OTC Bulletin Board: The over the counter electronic securities market operated by the NASD. (DD) Performance Shares: Up to 572,518 shares of AmeriNet's common stock to be issued to Lorilei's Stockholders in the future, based on the performance of Lorilei during the period starting on July 1, 2000 and ending on June 30, 2003. (EE) Projections: The detailed projections of Lorilei's income and expenses during the fiscal period starting on July 1, 2000 and ending on June 30, 2003 included as Schedule 5.13-1 to this Agreement. (FF) Securities Act: The Securities Act of 1933, as amended. (GG) 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. (HH) Subsequent Exchange Act Reports: AmeriNet's reports filed with the Commission pursuant to requirements of the Exchange Act prior to the date of Closing on this Agreement. (II) Subsequent Quarterly Reports: AmeriNet's reports on Commission Form 10-QSB for the quarterly periods following the 1999 10-KSB filed prior to the date of this Agreement. (JJ) 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. Page 40 (KK) 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. (LL) Ten-Day Average: Price: The average closing transaction price of a share of AmeriNet's publicly traded common stock for the ten most recent days that AmeriNet's common stock has traded ending on the trading day prior to the date in question, as reported on the OTC Bulletin Board. (MM) Undisclosed Liabilities Escrow Number: The 114,504 shares of AmeriNet's common stock held in escrow as a means of generating funds that may be required to pay for undisclosed liabilities of Lorilei or to rectify other violations of Lorilei's obligations under this Agreement. (NN) Undisclosed Liabilities Escrow Agent: The Yankee Companies, Inc., a Florida corporation, or such other person designated for such role by AmeriNet (also sometimes referred to in roles other than as an escrow agent, as "Yankees"). (OO) Additional defined terms are specified in certain sections and subsections below and are characterized by the use of initial letter capitalization. 1.2 Reorganization (A) The Reorganization. (1) At the Closing on this Agreement all of the Lorilei's Stockholders will exchange all of their Lorilei securities, being an aggregate of 111 shares of common stock, $0.01 par value (the remaining 1,889 shares being unreserved treasury or authorized but heretofore unissued shares of common stock), for up to 1,145,037 shares of AmeriNet's common stock, as called for by this Agreement. (2) The initial 572,519 shares of AmeriNet's common stock will be issued by the Exchange Agent following the Closing and will be distributed as follows: (a) 376,176 shares will be issued to Bruce Brashear, Esquire (who serves as legal counsel to the Lorilei Declarants but who will be acting as escrow agent for the Parties as to this matter), to be released as follows: 1. As soon after June 30, 2001, as Lorilei's EBITDA can be definitively determined based on the annual audit of AmeriNet, 286,260 of the shares will be transferred to: A. Mr. & Mrs. Cunningham, as tenants by the entirety, if Lorilei's EBITDA for the fiscal year ended June 30, 2001 is at least $250,000; or Page 41 B. To AmeriNet if Lorilei's EBITDA for the fiscal year ended June 30, 2001 is less than $250,000. 2. At such time as a final, legally binding determination is made as to the amount, if any, payable to HGTV based on the liability currently being challenged by Lorilei, then a pro rata portion of the remaining 80,916 shares being held in escrow by Mr. Brashear shall be transferred to Mr. & Mrs. Cunningham, as tenants by the entirety, representing the portion of such liability that was not payable (e.g., if only 50% of the liability was payable, then 40,458 shares would be transferred to Mr. & Mrs. Cunningham), with the balance, if any, transferred to AmeriNet. (b) 114,504 of the shares will be issued to The Yankee Companies, Inc. (a Florida corporation that serves as AmeriNet's strategic consultant and which, unless replaced by AmeriNet, is expected to serve as the Undisclosed Liabilities Escrow Agent), to be used from time to time to discharge undisclosed liabilities of Lorilei or other violations of its obligations under this Agreement, as described in Article Seven, with the balance, if any, transferred to Mr. & Mrs. Cunningham, as tenants by the entirety, at such time as AmeriNet's audited financial statements for the year ended June 30, 2001 are filed with the Commission. (c) 90,839 of the shares will be issued to Mr. & Mrs. Cunningham, as tenants by the entirety (Lorilei's Stockholders, in proportion to their holdings of Lorilei common stock immediately prior to the Closing). (3) (a) In addition to the initial 572,519 shares of AmeriNet's common stock, 572,518 shares of AmeriNet's common stock, $0.01 par value (the "Performance Shares") will be reserved by the Exchange Agent following the Closing, to be issued to the Former Lorilei Stockholders, on the following terms and subject to the following requirements: (i) If Lorilei attains EBITDA of at least $500,000 during the period starting on July 1, 2000 and ending on June 30, 2001, then Lorilei's Stockholders will be issued an aggregate of 114,504 of the Performance Shares; (ii) If Lorilei attains EBITDA of at least $1,400,000 during the period starting on July 1, 2001 and ending on June 30, 2002, then Lorilei's Stockholders will be issued an aggregate of 305,343 of the Performance Shares (including the 114,504 that either were or could have been earned as of June 30, 2001); (iii) If Lorilei attains EBITDA of at least $2,900,000 during the period starting on July 1, 2002 and ending on June 30, 2003, then Lorilei's Stockholders will be issued all 572,518 of the Performance Shares (including the 305,343 that either were or could have been earned as of June 30, 2002); however, all rights to any of the Performance Shares not earned as of such date will thereupon expire. (b) The Performance Shares will be allocated among the Lorilei's Stockholder's, pro rata, based on their ownership of Lorilei's common stock immediately preceding the Closing, will be reserved for future issuance immediately following the Closing and will be issued within 30 days after completion and filing of AmeriNet's audit for the subject fiscal year confirming the calculations called for, with the Commission. Page 42 (B) As promptly as practicable after the satisfaction or waiver of the conditions set forth in Article VI, the Parties will cause the Reorganization to be consummated by effecting the exchange all of Lorilei's common stock for the initial 572,519 shares of AmeriNet's common stock. (C) The Closing Date and time of the Reorganization will be the date and time on which the Closing of this Reorganization Agreement is consummated. (D) (1) At the Closing the Parties will exchange all closing documentation, certificates, resolutions, exhibits, schedules and opinions called for by this Agreement, and (a) All stockholders of Lorilei will have repaid Lorilei all debts theretofore owed by them to Lorilei (either in the form of loans to stockholders or advances to employees, consultants or independent contractors); (b) All of Lorilei's outstanding securities (being solely 111 shares of its common stock) will be exchanged with AmeriNet for 572,519 shares of AmeriNet's common stock; provided that delivery of the certificates for the initial 572,519 shares of AmeriNet's common stock will be made directly to Lorilei's Stockholders and the Escrow Agents by AmeriNet's stock transfer agent after the Closing; and (c) AmeriNet will arrange to wire the Initial Funding Installment to Lorilei's account at AmSouth Bank in Ocala, Florida; provided that, if Closing takes place after normal banking hours, the wire will be arranged at the opening of business on the following business day. 1.3 Effect of the Reorganization. At the Closing, the effect of the Reorganization will be that Lorilei's will become a wholly owned subsidiary of AmeriNet and that the stockholders of Lorilei immediately prior to the Closing will become stockholders of AmeriNet at the Closing, with no further rights, title or interest in Lorilei, other than indirectly as stockholders of AmeriNet. 1.4 Articles of Incorporation & Bylaws. Unless otherwise determined by AmeriNet prior to the Closing Date, the articles of incorporation and bylaws of Lorilei will be amended to conform with those included in Schedule 1.4. 1.5 Directors and Officers. Subject to the requirements of Section 5.14(A), the directors of Lorilei will continue in office following the Closing until their respective successors are duly elected or appointed and qualified, in accordance with the requirements of this Agreement. 1.6 Maximum Shares to Be Issued & Effect on Capital Stock. (A) The number of shares of AmeriNet's common stock to be issued in exchange for all of the Lorilei Capital Stock (the only Lorilei securities to be outstanding or reserved at the Closing) will be up to 1,145,037, 572,519 of which will be issued by the Exchange Agent following the Closing, and up to 572,518 additional shares may be issued subject to Lorilei's EBITDA during the period starting on July 1, 2000 and ending on June 30, 2003 (as hereinbefore established). Page 43 (B) Adjustments to Exchange Ratio. The Exchange Ratio (as provided in the foregoing paragraph) will be adjusted to reflect fully the effect of any stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into AmeriNet's common stock or Lorilei's common stock), reorganization, recapitalization or other like change with respect to AmeriNet's common stock or Lorilei's common stock occurring after the date hereof and prior to the Closing. (C) Fractional Shares. No fraction of a share of AmeriNet's common stock will be issued, but in lieu thereof each holder of shares of Lorilei's common stock who will otherwise be entitled to a fraction of a share of AmeriNet's common stock (after aggregating all fractional shares of AmeriNet's common stock to be received by such holder) will be entitled to receive from AmeriNet a whole share of AmeriNet's common stock. 1.7 Exchange of Certificates. (A) Exchange Agent. Unless modified by AmeriNet prior to the Closing Date, Liberty Transfer Co., Inc., of Huntington, New York, AmeriNet's current transfer agent, will serve as the Exchange Agent. (B) AmeriNet to Provide Common Stock. Promptly after the Closing, AmeriNet will make available to the Exchange Agent for exchange in accordance with this Article I the shares of AmeriNet's common stock issuable pursuant to Section 1.6 in exchange for all of the outstanding shares of Lorilei's common stock. (C) Exchange Procedures. (1) All certificates for shares of Lorilei's outstanding common stock will be tendered to AmeriNet at the Closing, with medallion signature guarantees or otherwise in proper form for immediate transfer to the order of AmeriNet, whereupon AmeriNet will issue instructions to the Exchange Agent to issue shares of AmeriNet's common stock, in the quantities and names set forth in Schedule 1.7(C), subject to Brashear Escrow and the Undisclosed Liabilities Escrow requirements of Article VII. (2) (a) As soon as practicable after the Closing, and subject to and in accordance with the provisions of Article VII hereof, AmeriNet will cause to be distributed to the Undisclosed Liabilities Escrow Agent a certificate or certificates representing that number of shares of AmeriNet's common stock equal to the Undisclosed Liabilities Escrow Number which will be registered in the name of the Undisclosed Liabilities Escrow Agent. (b) The shares registered in the name of the Undisclosed Liabilities Escrow Agent will be beneficially owned by the holders on whose behalf such shares were deposited in the Undisclosed Liabilities Escrow Fund but will be available to compensate AmeriNet for certain damages as provided in Article VII. (3) (a) As soon as practicable after the Closing, and subject to and in accordance with the provisions of Section 1.2(A)(2)(a) hereof, AmeriNet will cause to be distributed to the Brashear Escrow Agent a certificate or certificates representing that number of shares of AmeriNet's common stock equal to the Brashear Escrow Number which will be registered in the name of the Brashear Escrow Agent. Page 44 (b) The shares registered in the name of the Brashear Escrow Agent will be beneficially owned by the holders on whose behalf such shares were deposited in the Brashear Escrow but will be available for the purposes described in Section 1.2(A)(2)(a). (D) Transfers of Ownership. If any certificate for shares of AmeriNet's common stock is to be issued in a name other than that in which the certificate surrendered in exchange therefor is registered, it will be a condition of the issuance thereof that the certificate so surrendered will be properly endorsed and otherwise in proper form for transfer and that the person requesting such exchange will have paid to AmeriNet or any agent designated by it any transfer or other Taxes required by reason of the issuance of a certificate for shares of AmeriNet's common stock in any name other than that of the registered holder of the certificate surrendered, or established to the satisfaction of AmeriNet, or any agent designated by it, that such Tax has been paid or is not payable. (E) No Liability. Notwithstanding anything to the contrary in this Section 1.7, neither the Escrow Agents, the Exchange Agent, AmeriNet, Lorilei or any other person will be liable to a holder of shares of AmeriNet's common stock or Lorilei's Capital Stock for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law. 1.8 No Further Ownership Rights in Lorilei's Securities. (A) All shares of AmeriNet's common stock issued upon the surrender for exchange of shares of Lorilei's common stock in accordance with the terms hereof will be deemed to have been issued in full satisfaction of all rights pertaining to such shares of Lorilei's common stock, and there will be no further registration of transfers on the records of Lorilei, of shares of Lorilei's Capital Stock which were outstanding immediately prior to the Closing. (B) If, after the Closing, Certificates are presented to Lorilei, for any reason, they will be canceled and exchanged as provided in this Article I. 1.9 Lost, Stolen or Destroyed Certificates. In the event any certificates evidencing shares of Lorilei's common stock will have been lost, stolen or destroyed, Lorilei's transfer agent or share registrar will, prior to the Closing, have issued in exchange for such lost, stolen or destroyed certificates, upon the making of an affidavit of that fact by the holder thereof, such shares of its common stock as may have been required pursuant to Section 1.6; provided, however, that AmeriNet may, in its discretion and as a condition precedent to the issuance of the shares of AmeriNet's common stock to be exchanged therefor, require the owner of such lost, stolen or destroyed certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against AmeriNet or the Exchange Agent with respect to the certificates alleged to have been lost, stolen or destroyed. 1.10 Tax Consequences and Accounting Treatment. (A) It is intended by the Parties that the Reorganization will constitute a reorganization within the meaning of Section 368(a)(1)(B) of the Code and the Parties agree that if modification of the terms of this Agreement in a non-material manner to attain such qualification is necessary, they will negotiate in good faith to make such required modifications. Page 45 (B) The Parties understand that because of the inclusion of contingencies in determining the quantity of AmeriNet's common stock being exchanged for Lorilei's common stock, the reorganization may not qualify for accounting as a pooling of interests but rather, may be accounted for under the purchase method. 1.11 Taking of Necessary Action: Further Action. If, at any time after the Closing, any further action is necessary or desirable to carry out the purposes of this Agreement including, without limitation the vesting in AmeriNet of full right, title and possession to all of Lorilei's Capital Stock or compliance with the requirements of Code Section 368(a)(1)(B); the officers and directors of AmeriNet and Lorilei are fully authorized in the name of their respective corporations or otherwise to take, and will take, all lawful and necessary action. Article II Representations and Warranties of Lorilei The Lorilei Declarants hereby represent and warrant to AmeriNet, as a material inducement to its entry into this Agreement, subject only to the exceptions specifically disclosed in Schedule 2, as follows: 2.1 Organization of Lorilei. (A) Lorilei is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida. (B) Lorilei has the corporate power to own its property and to carry on its business as now being conducted and as proposed to be conducted by Lorilei. (C) Lorilei is duly qualified to do business and in good standing as a foreign corporation in each jurisdiction in which the failure to be so qualified would have a material adverse effect on the business, assets (including intangible assets), financial condition, or results of operations of Lorilei. (D) Lorilei has delivered a true and correct copy of its articles of incorporation and bylaws (or similar governing instruments), each as amended to date, to counsel for AmeriNet. 2.2 Lorilei's Capital Structure. (A) The authorized Capital Stock of Lorilei consists of 2,000 shares of common stock, $0.01 par value; (B) There are 111 shares of Lorilei common stock issued and outstanding, held by the persons, and in the amounts, set forth on Schedule 1.7(C). (C) All outstanding shares of Lorilei common stock are duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights created by statute, the articles of incorporation or bylaws of Lorilei or any agreement to which Lorilei is a party or is bound. (D) Lorilei has no other outstanding or securities reserved for issuance for any purpose, there being no other obligations directly or indirectly obligating Lorilei to issue any of its securities to any person for any purpose, there are no other options, warrants, calls, rights, commitments or agreements of any character to which Lorilei is a party or by which it is bound obligating Lorilei to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of the Lorilei Capital Stock or obligating Lorilei to grant, extend or enter into any such option, warrant, call, right, commitment or agreement. Page 46 2.3 Subsidiaries. Lorilei has no subsidiaries or affiliated companies and does not otherwise own any shares of stock or any interest in, or control, directly or indirectly, any other corporation, partnership, association, joint venture or business entity. 2.4 Authority. (A) Lorilei has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. (B) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Lorilei. (C) This Agreement has been duly executed and delivered by Lorilei and, subject to the proper authorization of this Agreement by AmeriNet's board of directors and its due execution and delivery by AmeriNet to Lorilei, constitutes the valid and binding obligation of Lorilei. (D) The execution and delivery of this Agreement by Lorilei does not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a material benefit under (i) any provision of the articles of incorporation or bylaws of Lorilei or (ii) any material mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Lorilei or its properties or assets. (E) No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality ("Governmental Entity"), is required by or with respect to Lorilei in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, except for such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable state and federal securities laws (e.g., notification on Form D) and the laws of any foreign country. 2.5 Lorilei's Financial Statements. (A) Schedule 2.5(A) includes Lorilei's Financial Statements. (B) Lorilei's Financial Statements are complete and correct in all material respects and have been prepared in accordance GAAP throughout the periods indicated. (C) Lorilei's Financial Statements present fairly the financial condition and operating results of Lorilei as of the dates and during the periods indicated therein, subject to normal year-end audit adjustments, which will not be material in the aggregate. (D) The unaudited balance sheet of Lorilei as of the day prior to the date of this Agreement is hereinafter referred to as "Lorilei's Balance Sheet." (E) Lorilei's financial statements can and will be audited, at Lorilei's expense, as required to comply with the requirements for material acquisitions under Commission Regulation S-B and in a manner permitting AmeriNet to comply with its obligation under the Securities Act and the Exchange Act in conjunction therewith. Page 47 2.6 No Undisclosed Liabilities. Lorilei does not have any material liabilities or obligations, either accrued or contingent (whether or not required to be reflected in financial statements in accordance with generally accepted accounting principles), and whether due or to become due, which individually or in the aggregate, (i) have not been reflected in the Lorilei Balance Sheet (including the notes thereto) or (ii) have not been specifically described in this Agreement or in the Lorilei Schedules. 2.7 No Changes. Since the date of Lorilei's Financial Statements there has not been, occurred or arisen any: (A) Transaction by Lorilei except in the ordinary course of business as conducted on that date; (B) Capital expenditure by Lorilei, either individually or in the aggregate exceeding $5,000; (C) Destruction, damage to, or loss of any assets (including without limitation intangible assets) of Lorilei (whether or not covered by insurance), either individually or in the aggregate, exceeding $5,000; (D) Labor trouble or claim of wrongful discharge, sexual harassment or other unlawful labor practice or action; (E) Change in accounting methods or practices (including any change in depreciation or amortization policies or rates, any change in policies in making or reversing accruals, or any change in capitalization of software development costs) by Lorilei; (F) Declaration, setting aside, or payment of a dividend or other distribution in respect to the shares of Lorilei, or any direct or indirect redemption, purchase or other acquisition by Lorilei of any of its shares; (G) Increase in the salary or other compensation payable or to become payable by Lorilei to any of its officers, directors or employees, or the declaration, payment, or commitment or obligation of any kind for the payment, by Lorilei, of a bonus or other additional salary or compensation to any such person; (H) Acquisition, sale or transfer of any asset of Lorilei except in the ordinary course of business; (I) Formation, amendment or termination of any distribution agreement or any material contract, agreement or license to which Lorilei is a party, other than termination by Lorilei pursuant to the terms thereof; (J) Loan by Lorilei to any person or entity, or guaranty by Lorilei of any loan except for expense advances in the ordinary course of business consistent with past practice; (K) Waiver or release of any material right or claim of Lorilei, including any write-off or other compromise of any material account receivable of Lorilei; (L) The notice or, to Lorilei's Knowledge, commencement or threat of commencement of any governmental proceeding against or investigation of Lorilei or its affairs; (M) Other event or condition of any character that has or would, in Lorilei's reasonable judgment, be expected to have a Material Adverse Effect on Lorilei; (N) Issuance, sale or redemption by Lorilei of any of its shares or of any other of its securities other than issuances of shares of common stock pursuant to outstanding Options and Warrants; Page 48 (O) Change in pricing or royalties set or charged by Lorilei except for discounts extended in the ordinary course of business consistent with past practice; (P) Any event that if occurring or undertaken during the interim between the execution of this Agreement and its Closing or earlier termination, would have required disclosure to AmeriNet pursuant to Section 4.1; or (Q) Negotiation or agreement by Lorilei to do any of the things described in the preceding clauses (A) through (Q) (other than negotiations with AmeriNet and its representatives regarding the transactions contemplated by this Agreement). 2.8 Tax and Other Returns and Reports. (A) Tax Returns and Audits. (1) Lorilei has accurately prepared and timely filed all required federal, state, local and foreign returns, estimates, information statements and reports ("Returns") relating to any and all Taxes relating or attributable to Lorilei or its operations. (2) The Returns are true and correct in all material respects and have been completed in accordance with applicable law in all material respects. (3) Lorilei has timely paid all Taxes required to be paid with respect to such Returns and has withheld with respect to its employees all federal and state income Taxes, FICA, FUTA and other Taxes it is required to withhold. (4) The accruals for Taxes on the books and records of Lorilei are sufficient to discharge the Taxes for all periods (or the portion of any period) ending on or prior to the Closing Date. (5) Lorilei has not been delinquent in the payment of any Tax nor is there any Tax deficiency outstanding, proposed or assessed against Lorilei, nor has Lorilei executed any waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax. (6) (a) No audit or other examination of any Return of Lorilei is presently in progress. (b) Lorilei does not have any liabilities for unpaid federal, state, local and foreign Taxes, whether asserted or unasserted, known or unknown, contingent or otherwise and Lorilei has no Knowledge of any basis for the assertion of any such liability attributable to Lorilei, or their respective assets or operations. (c) Lorilei is not (nor has it ever been) required to join with any other entity in the filing of a consolidated Tax return for federal Tax purposes or a consolidated or combined return or report for state Tax purposes. (7) Lorilei is not a party to or bound by any Tax indemnity, Tax sharing or Tax allocation agreement. (8) Lorilei has provided, or made available, to AmeriNet or its legal counsel copies of all federal, provincial and state income and all sales and use Tax Returns of Lorilei for all periods since its date incorporation. (9) There are (and as of immediately following the Closing Date there will be) no liens on the assets of Lorilei relating to or attributable to Taxes. Page 49 (10) Lorilei has no Knowledge of any basis for the assertion of any Tax claim which, if adversely determined, would result in liens on the assets of Lorilei. (11) Lorilei has no property which is being sold, conveyed or transferred pursuant to this Agreement which in the hands of AmeriNet would be treated as being owned by persons other than AmeriNet pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954 as in effect immediately prior to the enactment of the Tax Reform Act of 1986, or any analogous provisions of any state law. (12) None of the assets of Lorilei are treated as "Tax-exempt use property" within the meaning of Section 168(h) of the Code. (13) There is no contract, agreement, plan or arrangement, including but not limited to the provisions of this Agreement, covering any employee or former employee of Lorilei that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to Sections 280G, 162 or 404 of the Code. (B) No Penalty. Lorilei is not subject to any penalty by reason of a violation of any order, rule or regulation of, or a default with respect to any return, report or declaration required to be filed with, any Governmental Entity to which it is subject, which violations or defaults, individually or in the aggregate, would have a material adverse effect on Lorilei. 2.9 Restrictions on Business Activities. There is no agreement, judgment, injunction, order or decree binding upon Lorilei which has or could reasonably be expected to have the effect of materially prohibiting or materially impairing any business practice of Lorilei, any acquisition of property by Lorilei or the conduct of business by Lorilei as currently conducted or as currently proposed to be conducted. 2.10 Title of Properties, Absence of Liens and Encumbrances & Condition of Equipment. (A) (1) Schedule 2.10(A)(1) sets forth a true and complete list of all real property owned and leased by Lorilei and the aggregate annual mortgage, rental or other fee payable therefor or under any such lease. (2) All real property owned by Lorilei is held in fee simple absolute, and is subject to no liens, encumbrances, assessments, obligations running with the land, charges, pledges, security interests or other impediments to transfer of title by full warrant deed without exceptions of any kind or nature whatsoever. (3) All deeds, titles, leases and mortgages are in good standing, valid and effective in accordance with their respective terms, and there is not with respect to Lorilei under any of such deeds, titles, leases or mortgages, any existing default or event of default (or event which with notice or lapse of time, or both, would constitute a default and in respect of which Lorilei has not taken adequate steps to prevent such default from occurring), except where the lack of such good standing, validity and effectiveness or the existence of such default or event of default would not have a material adverse effect on Lorilei. (B) Lorilei holds good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its tangible properties and assets, real, personal and mixed, used in its business, free and clear of any liens, charges, pledges, security interests or other encumbrances, except as reflected in Lorilei's Financial Statements and except for such imperfections of title and encumbrances, if any, which are not substantial in character, Page 50 amount or extent, and which do not materially detract from the value, or interfere with the present use, of the property subject thereto or affected thereby. (C) (1) The equipment owned or leased by Lorilei is listed in Schedule 2.10(C) (the "Equipment"), except individual pieces of equipment owned by Lorilei with an individual value of less than $100. (2) The Equipment is, taken as a whole: (a) Adequate for the conduct of the business of Lorilei consistent with its past practice; (b) Suitable for the uses to which it is currently employed; (c) In good operating condition; (d) Regularly and properly maintained, reasonable wear and tear excepted; and (e) Not obsolete, dangerous or in need of renewal or replacement, except for renewal or replacement in the ordinary course of business. 2.11 Intellectual Property. (A) (1) Lorilei owns, or is licensed to use, all patents, trademarks, trade names, service marks, copyrights, and any applications therefor, maskworks, net lists, schematics, technology, know- how, computer software programs or applications and tangible or intangible proprietary information or material (excluding Commercial Software Rights as defined in paragraph [B] below) that are used or currently proposed to be used in the business of Lorilei as currently conducted or as currently proposed to be conducted ("Lorilei's Intellectual Property Rights"). (2) Schedule 2.11 sets forth a complete list of all patents, trademarks, registered and material unregistered copyrights, trade names and service marks, and any applications therefor, included in Lorilei Intellectual Property Rights, and specifies the jurisdictions in which each such Lorilei's Intellectual Property Right has been issued or registered or in which an application for such issuance and registration has been filed, including the respective registration or application numbers and the names of all registered owners, together with a list of all of Lorilei's currently marketed software products and an indication as to which, if any, of such software products have been registered for patent or copyright protection with the United States Office of Patents and Trademarks or the United States Copyright Office and any foreign offices and by whom such items have been registered. (3) (a) Schedule 2.11 also sets forth a complete list of (i) any requests Lorilei has received to make any such registration, including the identity of the requestor and the item requested to be so registered, and the jurisdiction for which such request has been made and (ii) all licenses, sublicenses and other agreements as to which Lorilei is a party and pursuant to which Lorilei or any other person is authorized to use any Lorilei's Intellectual Property Right or other trade secret material to Lorilei, and includes the identity of all parties thereto, a description of the nature and subject matter thereof, the applicable royalty and the term thereof. (b) Lorilei is not, nor will it be as a result of the execution and delivery of this Agreement or the performance of its obligations hereunder, in violation of any license, sublicense or agreement described on such list. Page 51 (4) Lorilei is the sole and exclusive owner or licensee of, with all right, title and interest in and to (free and clear of any liens or encumbrances), Lorilei Intellectual Property Rights, and has sole and exclusive rights (and is not contractually obligated to pay any compensation to any third party in respect thereof) to the use thereof or the material covered thereby in connection with the services or products in respect of which Lorilei Intellectual Property Rights are being used. (5) To the Knowledge of Lorilei, no claims with respect to Lorilei Intellectual Property Rights have been asserted or are threatened by any person, nor, to the Knowledge of Lorilei, is there any valid grounds for any bona fide claims (i) to the effect that the manufacture, sale, licensing or use of any product as now used, sold or licensed or proposed for use, sale or license by Lorilei infringes on any copyright, patent, trade mark, service mark or trade secret, (ii) against the use by Lorilei of any trademarks, trade names, trade secrets, copyrights, patents, technology, know-how or computer software programs and applications used in Lorilei's business as currently conducted or as proposed to be conducted, or (iii) challenging the ownership, validity or effectiveness of any of Lorilei Intellectual Property Rights. (6) All trademarks, service marks and copyrights held by Lorilei are valid and subsisting. (7) To the Knowledge of Lorilei, there is no material unauthorized use, infringement or misappropriation of any of Lorilei Intellectual Property Rights by any third party, including any employee or former employee of Lorilei. (8) Lorilei has not been sued or charged as a defendant in any claim, suit, action or proceeding which involves a claim of infringement of any patents, trademarks, service marks, copyrights or violation of any trade secret or other proprietary right of any third party and which has not been finally terminated prior to the date hereof nor does it have any Knowledge of any such charge or claim, and there is not any infringement liability with respect to, or infringement or violation by, Lorilei of any patent, trademark, service mark, copyright, trade secret or other proprietary right of another. (9) To Lorilei's Knowledge, none of Lorilei's Intellectual Property Rights or products is subject to any outstanding order, judgment, decree, stipulation or agreement restricting in any manner the licensing thereof by Lorilei. (10) There is no outstanding order, judgment, decree or stipulation on Lorilei, and Lorilei is not party to any agreement, restricting in any manner the licensing of Lorilei's products by Lorilei. (11) Lorilei has not entered into any agreement to indemnify any other person against any charge of infringement of any Lorilei's Intellectual Property Right. (12) Each current and former employee of and consultant to Lorilei has signed a confidentiality agreement substantially in Lorilei's standard form as certified by Lorilei, delivered to AmeriNet and included in Schedule 5.8. (B) (1) To Lorilei's Knowledge, Lorilei has not breached or violated the terms of its license, sublicense or other agreement relating to any Commercial Software Rights and has a valid right to use such Commercial Software Rights and has a valid right to use such Commercial Rights under such license and agreements. (2) Lorilei is not, nor will it be as a result of the execution and delivery of this Agreement or the performance of its obligations hereunder, in violation of any license, sublicense or agreement relating to Commercial Software Rights. Page 52 (3) No claims with respect to the Commercial Software Rights have been asserted or, to the Knowledge of Lorilei, are threatened by any person against Lorilei, nor to the Knowledge of Lorilei is there any valid grounds for any bona fide claims (i) to the effect that the manufacture, sale, licensing or use of any product as now used, sold or licensed or proposed for use, sale or license by Lorilei infringes on any copyright, patent, trade mark, service mark or trade secret, (ii) against the use by Lorilei of any trademarks, trade names, trade secrets, copyrights, patents, technology, know-how or computer software programs and applications used in Lorilei's business as currently conducted or as proposed to be conducted, or (iii) challenging the validity or effectiveness of any of Lorilei's rights to use Commercial Software Rights. (4) To the Knowledge of Lorilei, there is no material unauthorized use, infringement or misappropriation of any of the Commercial Software Rights by Lorilei or any employee or former employee of Lorilei during the period of their employment. (5) To the Knowledge of Lorilei, no Commercial Software Right is subject to any outstanding order, judgment, decree, stipulation or agreement restricting in any manner the use thereof by Lorilei. 2.12 Agreements, Contracts and Commitments. (A) All of Lorilei's currently effective agreements, contracts and commitments are listed in Schedule 2.12, including the name of the contracting part, date of execution and termination, and copies of all such agreements, contracts and commitments are annexed as exhibits to schedule 12. (B) Lorilei does not have, is not a party to nor is it bound by: (1) Any collective bargaining agreements; (2) Any agreements that contain any unpaid severance liabilities or obligations; (3) Any bonus, deferred compensation, incentive compensation, pension, profit-sharing or retirement plans, or any other employee benefit plans or arrangements; (4) Any employment or consulting agreement, contract or commitment with an employee or individual consultant or salesperson or consulting or sales agreement, contract or commitment with a firm or other organization, not terminable by Lorilei on thirty days notice without liability, except to the extent general principles of wrongful termination law may limit Lorilei's ability to terminate employees at will; (5) Any agreement or plan, including, without limitation, any stock option plan, stock appreciation right plan or stock purchase plan, any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement; (6) Any fidelity or surety bond or completion bond; (7) Any lease of personal property having a value individually in excess of $2,000; (8) Any agreement of indemnification or guaranty not entered into in the ordinary course of business; Page 53 (9) Any agreement, contract or commitment containing any covenant limiting the freedom of Lorilei to engage in any line of business or compete with any person; (10) Any agreement, contract or commitment relating to capital expenditures and involving future obligations in excess of $2,000 in any single instance or $10,000 in the aggregate; (11) Any agreement, contract or commitment relating to the disposition or acquisition of assets not in the ordinary course of business or any ownership interest in any corporation, partnership, joint venture or other business enterprise; (12) Any mortgages, indentures, loans or credit agreements, security agreements or other agreements or instruments relating to the borrowing of money, extension of credit or guaranties; (13) Any purchase order or contract for the purchase of raw materials or acquisition of assets involving $1,000 or more in any single instance or $10,000 or more in the aggregate; (14) Any construction contracts; (15) Any distribution, joint marketing or development agreement; (16) Any other agreement, contract or commitment which involves $1,000 or more in any single instance or more than $10,000 in the aggregate and is not cancelable without penalty within thirty (30) days other than standard end-user licenses of Lorilei's products and services in the ordinary course of business consistent with past practice, or (17) Any agreement which is otherwise material to Lorilei's business. (C) (1) Lorilei has not breached, or received any claim or threat that it has breached, any of the terms or conditions of any agreement, contract or commitment to which it is bound (including those set forth in any of Lorilei Schedules) in such manner as would permit any other party to cancel or terminate the same. (2) Each agreement, contract or commitment required to be set forth in any of Lorilei Schedules is in full force and effect (assuming such agreement, contract or commitment has been duly authorized, executed and delivered by the other party or parties thereto) and, except as otherwise disclosed or defaults fully remedied or resolved, is not subject to any material default thereunder of which Lorilei has Knowledge by any party obligated to Lorilei pursuant thereto. 2.13 Interested Party Transactions. No officer, director or stockholder of Lorilei (nor any parent, sibling, descendant or spouse of any of such persons, or any trust, partnership, corporation or other entity (provided, that ownership of no more than one percent of the outstanding voting stock of a publicly traded corporation will not be deemed an "interest in any entity" for purposes of this Section 2.13) in which any of such persons has or has had an interest), has or has had, directly or indirectly: (A) An interest in any entity which furnished or sold, or furnishes or sells, services or products which Lorilei furnishes or sells, or proposes to furnish or sell; (B) Any interest in any entity which purchases from or sells or furnishes to, Lorilei, any goods or services; or (C) A beneficial interest in any contract or agreement required to be set forth in Schedule 2.12. Page 54 2.14 Governmental Authorization. (A) Schedule 2.14 accurately lists each material federal, state, county, local or foreign governmental consent, license, permit, grant, or other authorization issued to Lorilei: (1) Pursuant to which Lorilei currently operates or holds any interest in any of its properties; or (2) Which is required for the operation of its business or the holding of any such interest (hereinafter collectively referred to as the "Lorilei Authorizations"). (B) Lorilei Authorizations are in full force and effect and constitute all the material authorizations required to permit Lorilei to operate or conduct its business or hold any interest in its properties. 2.15 Litigation. (A) Schedule 2.15 annexed hereto accurately lists all suits, actions and legal, administrative, arbitration or other proceedings and governmental investigations and all other claims, pending or, to Lorilei's Knowledge, threatened or which Lorilei expects will ultimately be threatened or commenced. (B) None of such suits, actions, proceedings, investigations or claims seek to prevent the consummation of the Reorganization. (C) There is no judgment, decree or order enjoining Lorilei in respect of, or the effect of which is to prohibit, any business practice or the acquisition of any property or the conduct of business of Lorilei. (D) Schedule 2.15 also lists all suits and legal actions initiated by Lorilei. 2.16 Accounts Receivable. (A) All receivables of Lorilei arose in the ordinary course of business and the aggregate amounts thereof are the best of Lorilei's Knowledge collectible (except to the extent reserved against as reflected in Lorilei's Financial Statements) and are carried at values determined in accordance with generally accepted accounting principles consistently applied. (B) To Lorilei's Knowledge, none of the receivables of Lorilei is subject to any claim of offset, recoupment, setoff or counterclaim and there are no facts or circumstances (whether asserted or unasserted) that would give rise to any such claim. (C) No receivables are contingent upon the performance by Lorilei of any obligation or contract except for Lorilei's maintenance obligations under its maintenance agreements (although no customer has claimed that Lorilei has failed to perform its maintenance obligations). (D) No person has any lien, charge, pledge, security interest or other encumbrance on any of such receivables and no agreement for deduction or discount has been made with respect to any of such receivables. 2.17 Minute Books. The minute books of Lorilei made available to counsel for AmeriNet contain a complete and accurate summary of all meetings of directors and stockholders since the time of incorporation of Lorilei, and reflect all transactions referred to in such minutes accurately in all material respects. Page 55 2.18 Environmental and OSHA. (A) Hazardous Material. (1) As of the Closing Date, no material amount of any substance that is regulated by any Governmental Entity or that has been designated by any Governmental Entity to be radioactive, toxic, hazardous or otherwise a danger to health or the environment, including, without limitation, PCBs, asbestos, urea-formaldehyde and all substances listed pursuant to the United States Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended from time to time, and the United States Resource Recovery and Conservation Act of 1976, as amended from time to time, and the regulations and publications promulgated pursuant to said laws (a "Hazardous Material"), is present, as a result of the actions of Lorilei (excluding failure of Lorilei to remedy the presence of a Hazardous Material resulting from the actions of any previous owner or occupier of Lorilei's Property of which presence Lorilei does not have Knowledge) in violation of any law in effect on or before the Closing Date, in, on or under any property, including the land and the improvements, ground water and surface water thereof, that Lorilei or any of its past or present subsidiaries has at any time owned, operated, occupied or leased (collectively, "Lorilei's Property"). (2) In any event, Lorilei does not know of the presence of any Hazardous Material in, on, under, adjacent to or in any way effecting any Lorilei's Property. (B) Hazardous Materials Activities. At no time prior to the Closing Date has Lorilei transported, stored, used, manufactured, released or exposed its employees or others to Hazardous Materials in violation of any law in effect on or before the Closing Date, nor has Lorilei disposed of, transferred, sold, or manufactured any product containing a Hazardous Material (collectively "Hazardous Materials Activities") in violation of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Resource Conservation and Recovery Act of 1976, the Toxic Substances Control Act of 1976 and any other applicable state or federal acts (including the rules and regulations thereunder) as in effect on or before the Closing Date. (C) Permits. Lorilei currently holds no environmental approvals, permits, licenses, clearances and consents and none are necessary for the conduct of Lorilei's Hazardous Material Activities and other businesses of Lorilei as such activities and businesses are currently being conducted. 2.19 Brokers' and Finders' Fees. Lorilei has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby. 2.20 Labor Matters. (A) Lorilei is in compliance in all material respects with all currently applicable laws and regulations respecting employment, discrimination in employment, terms and conditions of employment and wages and hours and occupational safety and health and employment practices, and is not engaged in any unfair labor practice. (B) Lorilei has not received any notice from any Governmental Entity, and to the Knowledge of Lorilei, there has not been asserted before any Governmental Entity, any claim, action or proceeding to which Lorilei is a party or involving Lorilei, and there is neither pending nor, to the Knowledge of Lorilei, threatened, any investigation or hearing concerning Lorilei arising out of or based upon any such laws, regulations or practices. Page 56 (C) Lorilei has not received notice of and to the best of its Knowledge, there are no pending claims against Lorilei under any workers compensation plan or policy or for long term disability. (D) To Lorilei's Knowledge, it has complied in all material respects with all applicable provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 and has no obligations with respect to any former employees or qualifying beneficiaries thereunder. (E) Schedule 2.20 lists all current employees of Lorilei and their current salary and vacation accruals. 2.21 Insurance. (A) Schedule 2.21 lists all insurance policies and fidelity bonds covering the assets, business, equipment, properties, operations, software errors and omissions, employees, officers and directors of Lorilei as well as all claims made under any insurance policy by Lorilei since its incorporation. (B) There is no claim by Lorilei pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds. (C) All premiums payable under all such policies and bonds have been paid and Lorilei is otherwise in compliance in all material respects with the terms of such policies and bonds (or other policies and bonds providing substantially similar insurance coverage). (D) Such policies of insurance and bonds are of the type and in amounts customarily carried by persons conducting businesses similar to those of Lorilei. (E) Lorilei does not know of any threatened termination of or material premium increase with respect to any of such policies. (F) Lorilei has never been denied insurance coverage nor has any insurance policy of Lorilei ever been canceled for any reason. 2.22 Compliance with Laws. Lorilei has not received any notices of violation with respect to and to the best of its Knowledge has complied in all material respects with and is not in violation in any material respect of any federal, state or local statute, law or regulation with respect to the conduct of its business, or the ownership or operation of its business, assets or properties. 2.23 Complete Copies of Materials. Lorilei has delivered or made available true and complete copies of each document (or summaries of same) which has been requested by AmeriNet or its counsel. 2.24 Binding Agreements: No Default. Each of the contracts, agreements and other instruments shown on the Exhibits and Schedules referred to in this Agreement to which Lorilei is a party is a legal, binding and enforceable obligation in favor of or against Lorilei (assuming that such contracts, agreements and instruments are binding on all other parties thereto, Lorilei having no reason to believe that they are not), in accordance with its terms, and no party with whom Lorilei has an agreement or contract is, to Lorilei's Knowledge, in default thereunder or has breached any material terms or provisions thereof (subject to all applicable bankruptcy, insolvency, reorganization and other laws applicable to creditors' rights and remedies and to the exercise of judicial discretion in accordance with general principles of equity). Page 57 2.25 Regulation SB Disclosure Document (A) The information supplied by Lorilei responding to each Item in Commission Regulation S-B (other than Items 201, 501, 502, 506, 512 and, to the extent of audit requirements, Item 310) annexed hereto as Exhibit 2.25 (the "Regulation S-B Disclosure Documents"), part of which must be included in a current report on Commission Form 8-K to be filed by AmeriNet within 15 days after the Closing Date, as well as in all other reports which AmeriNet files thereafter pursuant to the Exchange Act, will not contain any statement which, at such time and in light of the circumstances under which it is made, is false or misleading with respect to any material fact, or will omit to state any material fact necessary in order to make the statements made therein not false or misleading or omit to state any material fact necessary to correct any statement which has become false or misleading. (B) If at any time prior to the Closing Date any event relating to Lorilei or any of its affiliates, officers or directors should be discovered by Lorilei which should be set forth in the Regulation S-B Disclosure Document, Lorilei will promptly provide such information to AmeriNet, in writing. 2.26 FIRPTA. Lorilei is not, and has not been at any time, a "United States real property holding corporation" within the meaning of Section 897(c)(2) of the Code. 2.27 Employee Benefit Plans. (A) Schedule 2.27 lists all employee benefit plans [as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, "ERISA"] and all bonus, stock option, stock purchase, incentive, deferred compensation, supplemental retirement, severance and other similar fringe or employee benefit plans, programs or arrangements, and any current or former employment or executive compensation or severance agreements, written or otherwise, for the benefit of, or relating to, any employee of Lorilei, any trade or business (whether or not incorporated) which is a member or which is under common control with Lorilei (an "ERISA Affiliate") within the meaning of Section 414 of the Code, or any subsidiary of Lorilei (together, the "Employee Plans"). (B) (1) None of the Employee Plans promises or provides retiree medical or other retiree welfare benefits to any person except as required by applicable law, including but not limited to COBRA; (2) (a) To Lorilei's Knowledge: all Employee Plans are in compliance in all material respects with the requirements prescribed by any and all applicable statutes (including ERISA and the Code), orders, or governmental rules and regulations currently in effect with respect thereto (including all applicable requirements for notification to participants or beneficiaries or the Department of Labor, the IRS or Secretary of the Treasury), and Lorilei has performed in all material respects all obligations required to be performed by it under, is not in default under or violation of, and has no Knowledge of any default or violation by any other party to, any of the Employee Plans; (b) Each Employee Plan intended to qualify under Section 401(a) of the Code and each trust intended to qualify under Section 501(a) of the Code either has received a favorable determination letter with respect to each such Employee Plan from the IRS or still has a remaining period of time under applicable Treasury Regulations or IRS pronouncements in which to apply for such a determination letter and to make any amendments necessary to obtain a favorable determination; Page 58 (c) No Employee Plan is or within the prior six years has been subject to, and Lorilei has not incurred and does not expect to incur any liability under, Title IV of ERISA or Section 412 of the Code; and (d) To Lorilei's Knowledge, nothing in any Employee Plan precludes or interferes with AmeriNet's ability to cause Lorilei to terminate (or consolidate, at AmeriNet's option) any Employee Plan after the Closing Date; provided that: (i) the Employee Plans may be terminated prospectively only, subject to rights accrued by Lorilei's employees at the time of such termination and (ii) not more than sixty days notice may be required to terminate certain Employee Plans. (3) None of the following now exists or has existed within the six-year period ending on the date hereof with respect to any Employee Plan: (a) Any act or omission by Lorilei constituting a violation of Section 402, 403, 404 or 405 of ERISA; (b) Any act or omission by Lorilei which constitutes a violation of Sections 406 and 407 of ERISA and is not exempted by Section 408 of ERISA or which constitutes a violation of Section 4975(c) of the Code and is not exempted by Section 4975(d) of the Code; (c) Any act or omission by Lorilei constituting a violation of Section 503, 510 or 511 of ERISA; or (IV) any act or omission by Lorilei which could give rise to liability under Section 502 of ERISA or under Sections 4972 or 4975 through 4980 of the Code. (4) (a) Each Employee Plan has been maintained in substantial compliance with its terms, and all contributions, premiums or other payments due from Lorilei or any of its subsidiaries to (or under) any such Employee Plan have been fully paid or adequately provided for on the audited Lorilei's Financial Statements for the most recently-ended fiscal year. (b) To Lorilei's Knowledge, all accruals thereon (including, where appropriate proportional accruals for partial periods) have been made in accordance with generally accepted accounting principles consistently applied on a reasonable basis. (c) There has been no amendment, written interpretation or announcement (whether or not written) by Lorilei with respect to, or change in employee participation or coverage under, any Employee Plan that would increase materially the expense of maintaining such plans or arrangements, individually or in the aggregate, above the level of expense incurred with respect thereto for the most recently-ended fiscal year. (5) Lorilei has provided to AmeriNet complete, accurate and current copies of all Employee Plans and all amendments, documents, correspondence and filings relating thereto, including but not limited to any statements, filings, reports or returns filed with any governmental agency with respect to the Employee Plans at any time within the three-year period ending on the date hereof. Page 59 2.28 Distribution Agreements. Schedule 2.28 discloses the names, addresses, telephone numbers, fax numbers, e-mail addresses and federal Tax identification numbers of each third party or parties who have the right to distribute Lorilei's products or to market its services, together with a summary of the agreements pursuant to which Lorilei's products are distributed or its services are marketed. 2.29 Disclosure to Lorilei's Stockholders Each of Lorilei's Stockholders hereby represents and warrants that he, she or it: (A) Has had access through the Commission's Internet web site at www.sec.gov, in the EDGAR Archives sub-cite, to all of AmeriNet's reports filed with the Commission during the past two fiscal years, has reviewed all such reports and has, either directly or through a representative, been granted access to all of AmeriNet's officers and directors, and to all officers and directors of AmeriNet's operating subsidiaries, for purposes of providing all disclosure required under applicable federal and state securities laws in conjunction with the exchange contemplated by this Agreement; (B) Has been advised that: (1) The securities to be issued to them by AmeriNet in exchange for their shares of Lorilei's common stock have not been registered under the Securities Act, the Exchange Act or any comparable state securities laws, but rather, are being issued in reliance on the exemption from registration under the Securities Act provided by Section 4(2) thereof; (2) All certificates for their shares of AmeriNet's common stock will bear legends restricting any transactions therein, directly or indirectly, unless they are first registered under applicable federal and state securities laws or the proposed transaction is exempt from such registration requirements, and such facts are demonstrated to the satisfaction of AmeriNet and its legal counsel, based on such third party legal opinions, affidavits and transfer agency procedures as AmeriNet will reasonably require or have in place generally; (3) AmeriNet's transfer agent has been instructed to decline transfers of certificates for their shares of AmeriNet's common stock, unless the foregoing requirements have been met and have been confirmed as having been met by a duly authorized officer of AmeriNet. (C) Has independently determined through his, her or its own legal counsel, that all requirements of their states of domicile for the issuance of the shares of AmeriNet's common stock called for by this Agreement have been met, or will have been met, prior to Closing, by such legal counsel acting on behalf of the Parties to this Agreement. 2.30 Representations Complete. None of the representations or warranties made by Lorilei or its stockholders, nor any statement made in any Schedule, Exhibit or certificate furnished by Lorilei pursuant to this Agreement, when read in its entirety, contains or will contain any untrue statement of a material fact at the time the Closing takes place, or omits or will omit to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading. Page 60 Article III Representations and Warranties of AmeriNet AmeriNet represents and warrants to Lorilei as a material inducement to its entry into this Agreement, subject to the exceptions specifically disclosed in the AmeriNet Schedules or in AmeriNet's Exchange Act Reports, as follows: 3.1 Organization, Standing and Power. (A) AmeriNet is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. (B) AmeriNet has the corporate power to own its properties and to carry on its business as now being conducted and is duly qualified to do business and is in good standing in each jurisdiction in which the failure to be so qualified would have a material adverse effect on AmeriNet taken as a whole. (C) A true and correct copy of its articles of incorporation and bylaws, as amended to date, are available at the Commission's web site in the EDGAR archives, filed as exhibit's to the report on Form 10-KSB for the year ended June 30, 1999 and any future modifications thereof will be filed with the Commission and will also be available at such site. 3.2 Capital Structure. (A) (1) The authorized stock of AmeriNet consists of 20,000,000 shares of common stock, par value $0.01 per share, and 5,000,000 shares of Preferred Stock, $0.01 par value per share, the attributes of which are to be determined on a case by case basis by AmeriNet's board of directors. (2) AmeriNet had approximately 11,722,410 shares of common stock issued and outstanding as of March 31, 2000 and no shares of Preferred Stock have ever been issued. (3) As of March 31, 2000, AmeriNet had reserved 7,273,815 shares of common stock (excluding those issuable pursuant to the terms of this Agreement) for issuance as described in AmeriNet's annual report on Form 10-KSB for the year ended June 30, 1999 and the quarterly reports on Form 10-QSB for the calendar quarters ended September 30, 1999 and December 31, 1999 and any Subsequent Current Reports or Subsequent Exchange Act Reports. (4) There are no other options, warrants, calls, rights, commitments or agreements of any character to which AmeriNet is a party or by which it is bound obligating AmeriNet to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of the Capital Stock of AmeriNet or obligating AmeriNet to grant, extend or enter into any such option, warrant, call, right, commitment or agreement, other than as may be required in conjunction with other acquisitions under negotiation, rights granted to investors under common stock purchase warrants since December 31, 1999 and as disclosed in the Exchange Act Reports. (5) AmeriNet's articles of incorporation permit their amendment by action of AmeriNet's board of directors without stockholder approval to increase the amount of authorized Capital Stock. (B) All of AmeriNet's shares of common and preferred stock have been duly authorized, and all of their issued and outstanding shares of common stock have been validly issued, are fully paid and nonassessable and are free of any liens or encumbrances other than any liens or encumbrances created by or imposed upon the holders thereof. Page 61 (C) Subject to the Lorilei Declarants' compliance with their obligations under this Agreement, the shares of AmeriNet's common stock to be issued pursuant to the Reorganization will be duly authorized, validly issued, fully paid, and nonassessable. 3.3 Authority. (A) AmeriNet has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. (B) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of AmeriNet. (C) This Agreement has been duly executed and delivered by AmeriNet and, subject to having also been approved by Lorilei's board of directors and properly executed and delivered by Lorilei, constitutes a valid and binding obligation of AmeriNet. (D) The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under: (1) Any provision of the articles of incorporation or bylaws of AmeriNet; or (2) Any mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to AmeriNet or its properties or assets, other than any such conflicts, violations, defaults, terminations, cancellations or accelerations which individually or in the aggregate would not have a material adverse effect on the ability of AmeriNet to consummate the transactions contemplated hereby. (E) No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity, is required by or with respect to AmeriNet in connection with the execution and delivery of this Agreement by AmeriNet or the consummation by AmeriNet of the transactions contemplated hereby, except for: (1) Such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable state and federal securities laws (a Form D Notification Statement) and the laws of any foreign country; and (2) Such other consents, authorizations, filings, approvals and registrations which if not obtained or made would not have a material adverse effect on the ability of AmeriNet to consummate the transactions contemplated hereby. 3.4 Exchange Act Reports; AmeriNet Financial Statements. (A) All materials required to be filed by AmeriNet with the Commission pursuant to Sections 13 or 15(d) of the Exchange Act since current management took office starting in November of 1998, have been filed and are available on the Commission's Internet web site at www.sec.gov in its EDGAR Archives sub-site. (B) To the best of AmeriNet's Knowledge, the Exchange Act Reports comply in all material respects with the requirements of the Exchange Act and do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they Page 62 were made, not misleading, except to the extent corrected by a subsequently filed document with the Commission or by information provided by AmeriNet to Lorilei. (C) The AmeriNet Financial Statements comply as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto, have been prepared in accordance with generally accepted accounting principles consistently applied and fairly present the consolidated financial position of AmeriNet at the date thereof and of its operations and cash flows for the period then ended, subject to normal year end audit adjustments. (D) There has been no change in AmeriNet accounting policies or estimates except as described in the notes to AmeriNet's Financial Statements or in subsequently filed Exchange Act Reports. (E) AmeriNet has no material obligations, other than: (1) Those set forth in AmeriNet's Financial Statements (obligations not required to be set forth in AmeriNet's Financial Statements under generally accepted accounting principles being deemed not material); (2) Those resulting from ongoing acquisition activities which developed after the date of AmeriNet's Financial Statements but are not yet definite enough to require filing in the Exchange Act Reports; (3) Those pertaining to confidential letters of intent; or (4) Those disclosed by AmeriNet to Lorilei in writing. (F) The information provided by AmeriNet in the Current Report on Form 8-K pertaining to this Reorganization (excluding information provided by or on behalf of Lorilei, as to which AmeriNet makes no representation) will not contain any statement which, at such time and in light of the circumstances under which it will be made, is false or misleading with respect to any material fact, or will omit to state any material fact necessary in order to make the statements therein not false or misleading. (G) If at any time prior to the Closing Date any event relating to AmeriNet or any of its affiliates, officers or directors should be discovered by AmeriNet which should be set forth in a current report on Form 8-K, AmeriNet will promptly inform Lorilei. (H) AmeriNet makes no representation or warranty with respect to any information supplied by Lorilei which is contained in any of the foregoing documents. 3.5 Broker's and Finders' Fees. Except as disclosed in the Exchange Act Reports, AmeriNet has not incurred, and will not incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Agreement, the Reorganization or any transaction contemplated hereby. 3.6 Ownership of Lorilei's Capital Stock. As of the date of execution of this Agreement, AmeriNet does not own any shares of Lorilei's Capital Stock. Page 63 3.7 Litigation. There are no suits, actions or legal, administrative, arbitration or other proceedings or governmental investigations against AmeriNet pending or, to AmeriNet's Knowledge, threatened, which (i) if determined adversely to AmeriNet, could be expected to result in a material adverse effect on the financial condition or results of operations of AmeriNet, or (ii) seek to prevent the consummation of the Reorganization. 3.8 Limited Activities (A) AmeriNet is a holding company with no material operations or assets other than the shares of its subsidiaries common stock and operations pertaining to supervision and coordination of the activities of its subsidiaries, provision of support services for its subsidiaries, acquisition related activities and compliance with applicable laws, including federal securities and internal revenue laws. (B) AmeriNet currently has three operating subsidiaries, Wriwebs.com, Inc., Trilogy International, Inc., and Vista Vacations International, Inc., all Florida corporations, and is a party to letters of intent to acquire Custom Software Systems, Inc., a Virginia corporation currently headquartered in Houston, Texas, and iDVDBox.com, Inc., a Florida corporation being organized (collectively referred to for purposes of this Section 3.8 as the "AmeriNet Subsidiaries and Acquisition Candidates"). (C) Lorilei, through its officers, has become familiar with the operations and prospects of AmeriNet and the AmeriNet Subsidiaries and Acquisition Candidates, to the extent that information concerning them is available to AmeriNet or has been filed by AmeriNet with the Commission. 3.9 No Undisclosed Liabilities. AmeriNet does not have any material liabilities or obligations, either accrued or contingent (whether or not required to be reflected in financial statements in accordance with generally accepted accounting principles), and whether due or to become due, which individually or in the aggregate, (i) have not been reflected in the AmeriNet Financial Statements (including the notes thereto) or (ii) have not been specifically described in this Agreement or in the Exchange Act Reports. 3.10 No Changes. Since the date of its latest Exchange Act Report there has not been, occurred or arisen any: (A) Destruction, damage to, or loss of any assets (including without limitation intangible assets) of AmeriNet or its subsidiaries (whether or not covered by insurance), either individually or in the aggregate, exceeding $30,000, other than losses by subsidiaries in the ordinary course of business. (B) Labor trouble or claim of wrongful discharge, sexual harassment or other unlawful labor practice or action; (C) Change in accounting methods or practices (including any change in depreciation or amortization policies or rates, any change in policies in making or reversing accruals, or any change in capitalization of software development costs) by AmeriNet or its subsidiaries; (D) Declaration, setting aside, or payment of a dividend or other distribution in respect to the shares of AmeriNet or its subsidiaries, or any direct or indirect redemption, purchase or other acquisition by AmeriNet or its subsidiaries of any of their shares; (E) Other event or condition of any character that has or would, in AmeriNet or its subsidiaries' reasonable judgment, be expected to have a material adverse effect on AmeriNet or its subsidiaries; Page 64 (F) Negotiation or agreement by AmeriNet or its subsidiaries to do any of the things described in the preceding clauses (A) through (F) other than negotiations with AmeriNet or its subsidiaries and their representatives regarding the transactions contemplated by this Agreement or other acquisitions. 3.11 Tax and Other Returns and Reports. (A) Tax Returns and Audits. (1) AmeriNet and its subsidiaries have accurately prepared and filed all required federal, state, local and foreign returns, estimates, information statements and reports ("Returns") relating to any and all Taxes relating or attributable to AmeriNet or its subsidiaries or their operations and such Returns are true and correct in all material respects and have been completed in accordance with applicable law in all material respects. (2) AmeriNet and its subsidiaries have timely paid all Taxes required to be paid with respect to such Returns and have withheld with respect to its employees all federal and state income taxes, FICA, FUTA and other Taxes they are required to withhold. (3) The accruals for Taxes on the books and records of AmeriNet and its subsidiaries are sufficient to discharge the Taxes for all periods (or the portion of any period) ending on or prior to the Closing Date. (4) AmeriNet and its subsidiaries have not been delinquent in the payment of any Tax nor, except as disclosed in the Exchange Act Reports, is there any Tax deficiency outstanding, proposed or assessed against AmeriNet or its subsidiaries, nor has AmeriNet or its subsidiaries executed any waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax. (5) Except as disclosed in the Exchange Act Reports: (a) No audit or other examination of any Return of AmeriNet or its subsidiaries is presently in progress (b) AmeriNet and its subsidiaries do not have any liabilities for unpaid federal, state, local and foreign Taxes, whether asserted or unasserted, known or unknown, contingent or otherwise and AmeriNet and its subsidiaries have no Knowledge of any basis for the assertion of any such liability attributable to AmeriNet or its subsidiaries, or their respective assets or operations. (6) AmeriNet and its subsidiaries are not parties to or bound by any tax indemnity, tax sharing or tax allocation agreement. (7) AmeriNet and its subsidiaries have provided, or made available to Lorilei or its legal counsel copies of all federal, provincial and state income and all sales and use Tax Returns of AmeriNet or its subsidiaries for all periods since January 1, 1999. (8) There are (and as of immediately following the Closing Date there will be) no liens on the assets of AmeriNet or its subsidiaries relating to or attributable to Taxes. (9) AmeriNet and its subsidiaries have no Knowledge of any basis for the assertion of any Tax claim which, if adversely determined, would result in liens on the assets of AmeriNet or its subsidiaries. Page 65 (10) There is no contract, agreement, plan or arrangement, including but not limited to the provisions of this Agreement, covering any employee or former employee of AmeriNet or its subsidiaries that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to Sections 280G, 162 or 404 of the Code. (B) No Penalty. Neither AmeriNet nor its subsidiaries are subject to any penalty by reason of a violation of any order, rule or regulation of, or a default with respect to any return, report or declaration required to be filed with, any Governmental Entity to which it is subject, which violations or defaults, individually or in the aggregate, would have a material adverse effect on AmeriNet or its subsidiaries. 3.12 Environmental and OSHA. (A) Hazardous Material. (1) As of the Closing Date, no material amount of any substance that is regulated by any Governmental Entity or that has been designated by any Governmental Entity to be radioactive, toxic, hazardous or otherwise a danger to health or the environment, including, without limitation, PCBs, asbestos, urea-formaldehyde and all substances listed pursuant to the United States Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended from time to time, and the United States Resource Recovery and Conservation Act of 1976, as amended from time to time, and the regulations and publications promulgated pursuant to said laws (a "Hazardous Material"), is present, as a result of the actions of AmeriNet or its subsidiaries (excluding failure of AmeriNet or its subsidiaries to remedy the presence of a Hazardous Material resulting from the actions of any previous owner or occupier of AmeriNet or its subsidiaries' property of which presence AmeriNet or its subsidiaries do not have Knowledge) in violation of any law in effect on or before the Closing Date, in, on or under any property, including the land and the improvements, ground water and surface water thereof, that AmeriNet or its subsidiaries own, operate, occupy or lease. (2) In any event, AmeriNet and its subsidiaries do not know of the presence of any Hazardous Material in, on or under any of their property. (B) Hazardous Materials Activities. At no time prior to the Closing Date has AmeriNet or its subsidiaries transported, stored, used, manufactured, released or exposed its employees or others to Hazardous Materials in violation of any law in effect on or before the Closing Date, nor has AmeriNet or its subsidiaries disposed of, transferred, sold, or manufactured any product containing a Hazardous Material (collectively "Hazardous Materials Activities") in violation of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Resource Conservation and Recovery Act of 1976, the Toxic Substances Control Act of 1976 and any other applicable state or federal acts (including the rules and regulations thereunder) as in effect on or before the Closing Date. (C) Permits. AmeriNet or its subsidiaries currently holds no environmental approvals, permits, licenses, clearances and consents and none are necessary for the conduct of AmeriNet or its subsidiaries' Hazardous Material Activities and other businesses of AmeriNet or its subsidiaries as such activities and businesses are currently being conducted. Page 66 3.13 Representations Complete. None of the representations or warranties made by AmeriNet or its subsidiaries, nor any statement made in any Schedule, Exhibit or certificate furnished by AmeriNet or its subsidiaries pursuant to this Agreement, when read in its entirety, contains or will contain any untrue statement of a material fact at the Closing Date, or omits or will omit to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading. Article IV Conduct Prior to the Closing 4.1 Conduct of Business of Lorilei. During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Closing, Lorilei agrees (except to the extent that AmeriNet will otherwise consent in writing): (A) To carry on its business in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and, to the extent consistent with such business, use all reasonable efforts consistent with past practice and policies to preserve intact Lorilei's present business organizations, keep available the services of its present officers and key employees and preserve their relationships with customers, suppliers, distributors, licensors, licensees, and others having business dealings with it, to the end that Lorilei's goodwill and ongoing businesses will be unimpaired at the Time of Closing; and (B) Not to: (1) Enter into any commitment or transaction not in the ordinary course of business (i) to be performed over a period longer than six (6) months in duration, or (ii) to purchase fixed assets for a purchase price in excess of $1,000; (2) Grant any severance or termination pay to any director, officer or employee except (i) payments made pursuant to standard written agreements outstanding on the date hereof or (ii) in the case of employees who are not officers, grants which are made in the ordinary course of business in accordance with Lorilei's standard past practices; (3) Except for licenses granted to end-users pursuant to Lorilei's standard license agreements, transfer to any person or entity any rights to Lorilei's Intellectual Property; (4) Enter into or amend any agreements pursuant to which any other party is granted exclusive marketing or other rights of any type or scope with respect to any products of Lorilei; (5) Violate, amend or otherwise modify the terms of any of the contracts or agreements required to be set forth in Lorilei Schedules; (6) Commence any litigation; (7) Declare or pay any dividends on or make any other distributions (whether in cash, stock or property) in respect of any of its Capital Stock, or split, combine or reclassify any of its Capital Stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of Capital Stock of Lorilei, or repurchase or otherwise acquire, directly or indirectly, any shares of its Capital Stock except from former employees, directors and consultants in accordance with agreements providing for the repurchase of shares at cost in connection with any termination of service to Lorilei; Page 67 (8) Issue, deliver or sell or authorize or propose the issuance, delivery or sale of, or purchase or propose the purchase of, any shares of its Capital Stock or securities convertible into, or subscriptions, rights, warrants or options to acquire, or other agreements or commitments of any character obligating it to issue any such shares or other convertible securities; (9) Cause or permit any amendments to its articles of incorporation or bylaws; (10) Acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets which are material, individually or in the aggregate, to the business of Lorilei; (11) Sell, lease, license or otherwise dispose of any of its properties or assets which are material, individually or in the aggregate, to the business of Lorilei, except in the ordinary course of business; (12) Incur any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities of Lorilei or guarantee any debt securities of others; (13) Adopt or amend any employee benefit plan, or enter into any employment contract, pay any special bonus or special remuneration to any director or employee, or increase the salaries or wage rates of its employees; (14) Revalue any of its assets, including without limitation writing down the value of inventory or writing off notes or accounts receivable other than in the ordinary course of business; (15) Pay, discharge or satisfy in an amount in excess of $1,000 in any one case any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business of liabilities reflected or reserved against in Lorilei's Financial Statements (or the notes thereto); (16) Make or change any material election in respect of Taxes, adopt or change any accounting method in respect of Taxes, file any material Return or any amendment to a material Return, enter into any closing agreement, settle any claim or assessment in respect of Taxes, or consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes; or (17) Take, or agree in writing or otherwise to take, any of the actions described in Sections 4.1(C)(1) through 4.1(C)(16) above, or any action which would make any of the representations or warranties or covenants of Lorilei contained in this Agreement materially untrue or incorrect. (C) To promptly notify AmeriNet of any event: (1) Or occurrence or emergency which, in the reasonable judgment of Lorilei, is not in the ordinary course of business of Lorilei; and (2) Which could, in the reasonable judgment of Lorilei, have a material adverse effect on Lorilei. 4.2 No Solicitation. (A) Prior to the Closing Lorilei will not (nor will Lorilei permit any of Lorilei's officers, directors, stockholders affiliated with any officer or director or Lorilei's agents, representatives or affiliates to) directly or indirectly, take any of the following actions with any party other than AmeriNet and its designees: Page 68 (1) Solicit, encourage, initiate or participate in any negotiations or discussions with respect to, any offer or proposal to acquire all or substantially all of Lorilei's business and properties or Capital Stock whether by merger, purchase of assets, tender offer or otherwise; (2) Except as required by law and except for disclosures made to financial institutions and others in the ordinary course of business, disclose any information not customarily disclosed to any person other than its attorneys or financial advisors concerning Lorilei's business and properties or afford to any person or entity access to its properties, books or records; or (3) Assist or cooperate with any person to make any proposal to purchase all or any part of Lorilei's Capital Stock or of its assets (other in the ordinary course of business). (B) In the event Lorilei receives any offer or proposal, directly or indirectly, of the type referred to in Section 4.2(A)(1) and (3) above, or any request for disclosure or access pursuant to clause 4.2(A)(2) above, Lorilei will immediately inform AmeriNet thereof and will cooperate with AmeriNet by furnishing any information it may reasonably request. 4.3 Conduct of Business of AmeriNet. During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Closing, as the case may be, AmeriNet agrees (except to the extent that Lorilei will otherwise consent in writing), that AmeriNet will promptly notify Lorilei of any event or occurrence or emergency which is not in the ordinary course of business of AmeriNet and which is material and adverse to the business of AmeriNet and its subsidiaries taken as a whole. Article V Additional Agreements 5.1 Report on Form 8-K. (A) Within fifteen days following the Closing Date, AmeriNet, with the assistance and cooperation of Lorilei's current officers, auditors, employees and legal counsel, will prepare and file with the Commission a current report on Commission Form 8-K (the "8-K Report") disclosing the Reorganization and containing information concerning Lorilei required by Commission Regulation S-B, except for audited financial statements that may be filed within 75 days after the Closing Date. (B) Within sixty days following the Closing Date Lorilei, at its own expense, will provide AmeriNet with audited financial statements prepared in accordance with GAAP and meeting all requirements of the Commission for reports of material acquisitions under the Securities Act and the Exchange Act, including the requirements imposed by Commission Regulation S-B. (C) AmeriNet and Lorilei will use their best efforts to secure the Commission's acceptance of Lorilei's audited financial statements, as complying with the requirements of Regulation S-B, and Lorilei will make any modification's to its financial statements suggested by the Commission; and, if required, will use best efforts to secure required extensions from the Commission of time in which to provide materials complying with Commission Regulation S-B. Page 69 5.2 Consent of Lorilei's Stockholders. Because each Lorilei Stockholder has independently made the decision to exchange all of his, her or its Lorilei Securities for shares of AmeriNet's common stock, no formal stockholder action by Lorilei will be required in conjunction with authorization of this Agreement or the Closing; however, each Lorilei Stockholder must have become a party to this Agreement. 5.3 Access to Information. (A) Lorilei will afford AmeriNet and its accountants, counsel and other representatives, reasonable access during normal business hours during the period prior to the Closing to all: (1) Of its properties, books, contracts, commitments and records; and (2) Other information concerning the business, properties and personnel of Lorilei as AmeriNet may reasonably request. (B) Lorilei agrees to provide to AmeriNet and its accountants, counsel and other representatives copies of internal financial statements promptly upon request. (C) No information or Knowledge obtained in any investigation pursuant to this Section 5.3 will affect or be deemed to modify any representation or warranty contained herein or the conditions to the obligations of the Parties to consummate the Reorganization. 5.4 Confidentiality. (A) From the date hereof to and including the Closing Date, the Parties will maintain, and cause their directors, employees, agents and advisors to maintain, in confidence and not disclose or use for any purpose, except the evaluation of the transactions contemplated hereby and the accuracy of the respective representations and warranties of the Parties contained herein, information concerning the other Parties and obtained directly or indirectly from such Parties, or their directors, employees, agents or advisors, or as was in the possession of such Party prior to obtaining such information from such other Party as to which the fact of prior possession such possessing Party will have the burden of proof and such information as is or becomes: (1) Available to the non-disclosing Party from third parties not subject to an undertaking of confidentiality or secrecy; (2) Generally available to the public other than as a result of a breach by the non-disclosing party hereunder; or (3) Required to be disclosed under applicable law. (B) In the event that the transactions contemplated hereby will not be consummated, all such information which will be in writing will be returned to the party furnishing the same, including to the extent reasonably practicable, copies or reproductions thereof which may have been prepared. 5.5 Expenses. Whether or not the Reorganization is consummated, all expenses incurred in connection with the Reorganization and this Agreement will be the obligation of the Party incurring such expenses. Page 70 5.6 Public Disclosure. Unless otherwise required by law, prior to the Closing Date no disclosure (whether or not in response to an inquiry) of the subject matter of this Agreement will be made by any Party unless approved by AmeriNet and Lorilei prior to release, provided that such approval will not be unnecessarily withheld, subject, in the case of AmeriNet, to AmeriNet's obligation to comply with applicable securities laws. 5.7 Consents. AmeriNet and Lorilei will promptly apply for or otherwise seek, and use their best efforts to obtain, all consents and approvals required to be obtained by them for the consummation of the Reorganization, and Lorilei will use its best efforts to obtain all consents, waivers and approvals under any of Lorilei's agreements, contracts, licenses, leases or mortgages in order to preserve the benefits thereunder for Lorilei and otherwise in connection with the Reorganization; all of such consents and approvals being set forth in Schedule 5.7. 5.8 Affiliate Agreements. (A) Schedule 5.8 sets forth those persons who are, in Lorilei's reasonable judgment, Affiliates of Lorilei. (B) Lorilei will provide AmeriNet such information and documents as AmeriNet will reasonably request for purposes of reviewing such list. (C) Lorilei will use its best efforts to deliver or cause to be delivered to AmeriNet, concurrently with the execution of this Agreement (and in any case prior to the Closing Date) from each of the Affiliates of Lorilei, an executed Affiliate Agreement in the form annexed hereto as Exhibit 5.8. (D) AmeriNet will be entitled to place appropriate legends on the certificates evidencing any AmeriNet's common stock to be received by such Affiliates pursuant to the terms of this Agreement, and to issue appropriate stop transfer instructions to the transfer agent for AmeriNet's common stock, consistent with the terms of such Affiliate Agreements, in addition to the legends and stop transfer instructions placed and issues on all certificates to be issued to Lorilei's stockholders in conjunction with the Reorganization based on the Parties reliance on Section 4(2) of the Securities Act 5.9 Legal Requirements. AmeriNet and Lorilei will take all reasonable actions necessary to comply promptly with all legal requirements which may be imposed on them with respect to the consummation of the transactions contemplated by this Agreement and will promptly cooperate with and furnish information to any Party in connection with any such requirements imposed upon such other Party in connection with the consummation of the transactions contemplated by this Agreement and will take all reasonable actions necessary to obtain (and will cooperate with the other Parties in obtaining) any consent, approval, order or authorization of, or any registration, declaration or filing with, any Governmental Entity or other person, required to be obtained or made in connection with the taking of any action contemplated by this Agreement. 5.10 Blue Sky Laws. Legal counsel to Lorilei has taken such steps as may be necessary to comply with the securities and blue sky laws of all jurisdictions which are applicable to the issuance of AmeriNet's common stock to the Former Lorilei Stockholders. Page 71 5.11 Best Efforts: Additional Documents and Further Assurances. (A) Each of the Parties to this Agreement will use its best efforts to effectuate the transactions contemplated hereby and to fulfill and cause to be fulfilled the conditions to the Reorganization and the condition subsequent under this Agreement. (B) Each Party, at the request of another Party, will execute and deliver such other instruments and do and perform such other acts and things as may be reasonably necessary or desirable for effecting completely the consummation of this Agreement and the transactions contemplated hereby. (C) The Parties acknowledge that allocation of AmeriNet overhead to its subsidiaries will constitute a material aspect of AmeriNet's subsidiaries ability to meet applicable Projections, and consequently, the management of AmeriNet, Mr. Cunningham and Mrs. Cunningham will use their best efforts as soon following closing as possible to persuade AmeriNet's board of directors to pass a resolution defining the method for allocation of AmeriNet's overhead among its subsidiaries. 5.12 Employment Agreements. (A) The individuals set forth on Schedule 5.12 will as of the Closing Date be parties to the employment agreements included in composite Exhibit 5.12 hereto (the "Employment Agreements"), which will supersede all prior employment agreements or arrangements with any such persons, and which will conform to the forms of employment agreements established by AmeriNet for use by all material employees of AmeriNet and its subsidiaries. (B) (1) AmeriNet will, immediately following the Closing, reserve 335,378 shares of its common stock for future issuance through incentive stock options (as defined in Section 422 of the Code) granted in certain of the Employment Agreements, provided, however, that rights to such shares will vest on an annual basis, subject to Lorilei's having complied with its obligations under this Agreement, the subject employees having complied with their obligations under their employment agreements with Lorilei and Lorilei's having attained the following EBITDA: (a) If Lorilei attains EBITDA of at least $500,000 during the period starting on July 1, 2000 and ending on June 30, 2001, then the first 67,976 shares of AmeriNet's Common stock reserved for issuance in the event of exercise of the subject incentive stock options will vest; (b) If Lorilei attains EBITDA of at least $1,400,000 during the period starting on July 1, 2000 and ending on June 30, 2002, then all rights to 179,769 (including the 67,976 shares vested, if any, on June 30, 2001) of the shares of AmeriNet's Common stock reserved for issuance in the event of exercise of the subject incentive stock options will vest; and (c) If Lorilei attains EBITDA of at least $2,900,000 during the period starting on July 1, 2000 and ending on June 30, 2003, then all rights to all of the 335,378 shares (including the shares vested, if any, on June 30, 2001 and June 30, 2002) of AmeriNet's Common stock reserved for issuance in the event of exercise of the subject incentive stock options will vest. (2) All rights to the incentive stock options in the subject employment agreements that have not vested as of July 1, 2003 will expire on such date, and no further rights of any kind thereto or to the underlying shares of AmeriNet's common stock reserved for such purpose will exist thereafter, the reservation therefor terminating on such date. Page 72 (3) The vested Options will be exercisable during the three fiscal year period after they vest at a price of $1.3125 per share, provided that as required by Code Section 422, all rights to or under the Options will expire within 90 days after termination of the Employees' employment by Lorilei. (C) AmeriNet acknowledges that pursuant to the terms of the Employment Agreements, Mr. & Mrs. Cunningham are each entitled to the following: (1) Annual salaries of $60,0000; (2) Annual cash bonuses in an amount equal to 2.5% of Lorilei's net, pre-tax profits; (3) Benefits not to exceed $12,000 per fiscal year; and (4) Election to Lorilei's board of directors. (D) The Parties acknowledge that Lorilei provides its employees, including Mr. & Mrs. Cunningham, with paid vacations based on the length of their employment with Lorilei, as follows: (1) One week paid vacation at normal weekly salaries after completion of one full year of employment; and (2) Two weeks paid vacation at normal weekly salaries after completion of three full years of employment. (E) The Parties acknowledge that notwithstanding the foregoing, none of the expenses referred to in this Section are to be paid using proceeds obtained from AmeriNet's investment in Lorilei but rather, will be paid solely from operating income generated by Lorilei. 5.13 Investment by AmeriNet in Lorilei. (A) Based on Lorilei's attainment of the Projections and subject to Lorilei's substantial compliance with its material obligations under this Agreement, including, without limitation, those involving provision of audited financial statements for its operations for the time period and in the form required by Commission Regulation S-B for purposes of material acquisitions, AmeriNet hereby covenants and agrees (1) To provide the following funds, to be expended solely for the purposes set forth in Schedule 5.13-2, to Lorilei: (a) The Initial Funding Installment ($100,000); (b) Within 60 days after the audited financial statements for Lorilei required pursuant to Commission Regulation S-B for material acquisitions have been provided to AmeriNet, filed with the Commission and not found deficient by the Commission (the "Funding Trigger Date"), the sum of $100,000; (c) Within 120 days after the Funding Trigger Date, the sum of $100,000; (d) Within 150 days after the Funding Trigger Date, the sum of $100,000; and (e) Within 180 days after the Funding Trigger Date, the sum of $100,000. Page 73 (2) To use diligent efforts to assist Lorilei and Mr. & Mrs. Cunningham to refinance current liabilities guaranteed by its principals and their affiliates in a manner removing such personal guarantees, provided that, if such efforts have not been successful prior to December 31, 2000, Lorilei will be permitted by AmeriNet to enter into an agreement with such guarantors guaranteeing direct payment of such obligations and to secure such guarantee with an additional mortgage on the real estate owned by Lorilei. (B) The Parties hereby acknowledge that Code Section 368(a)(1)(B) does not permit stockholders of the corporation whose stock is being acquired to receive any consideration therefor other than voting equity securities of the corporation acquiring their common stock; consequently, the Lorilei Declarants hereby covenant and agree that no part of the proceeds to be invested by AmeriNet in Lorilei will be used, directly or indirectly, to make any payments to the persons who were Lorilei's stockholders immediately prior to the Closing, including any of the payments required under Employment or other agreements with Lorilei, all such obligations to be funded solely from Lorilei's operating income. 5.14 Board of Directors. Subject to Lorilei's substantial compliance with its material obligations under this Agreement, including, without limitation, those involving provision of audited financial statements for its operations for the time period and in the form required by Commission Regulation S-B for purposes of material acquisitions; and, subject to continuing compliance by Mr. & Mrs. Cunningham with their obligations under their employment agreements with Lorilei and with their fiduciary obligations to AmeriNet: (A) (1) AmeriNet hereby covenants and agrees that it will maintain membership on the board of directors of Lorilei in the following ratio: two thirds of the members will be nominees of Mr. & Mrs Cunningham and one third will be nominees of AmeriNet, provided that: (a) Lorilei cumulatively attains EBITDA during the following fiscal periods equal to the following amounts: 1. During each quarter in the fiscal period starting on July 1, 2000 and ending on June 30, 2001, EBITDA of at least at least 70% of $125,000; 2. During each quarter in the fiscal period starting on July 1, 2001 and ending on June 30, 2002, EBITDA of at least at least 70% of $225,000; and 3. During each quarter in the fiscal period starting on July 1, 2002 and ending on June 30, 2003, EBITDA of at least 70% of $375,000; and (b) Lorilei and the Former Lorilei Stockholders must comply with all of their obligations under this Agreement, including, without limitation, those involving provision of audited financial statements for Lorilei's operations for the time period and in the form required by Commission Regulation S-B for purposes of the Reorganization. (2) Notwithstanding the provisions in Section 5.14(A)(1): (a) The initial determination by AmeriNet as to the attainment of the minimum acceptable EBITDA will not be made until two complete fiscal quarters have passed since the Closing Date; Page 74 (b) After the first year following the Closing Date, the minimum acceptable EBITDA may be modified periodically by unanimous action (including the affirmative votes of all AmeriNet nominees) of the board of directors of Lorilei; provided that after the third year, unless new minimum acceptable EBITDA are agreed to, the minimum acceptable EBITDA will increase annually to 150% of the EBITDA projected for the immediately preceding year; (c) In the event that the right of Mr. & Mrs. Cunningham to designate two thirds of the membership on Lorilei's board of directors is suspended due to failure to meet the minimum acceptable EBITDA, such right will be reinstated at such time as the deficiency in meeting the minimum acceptable EBITDA, on a cumulative basis, has been cured. (d) As a continuing condition to the right of Mr. & Mrs. Cunningham's designees on Lorilei's board of directors to take any corporate actions, such action may not violate any of the following restrictions or requirements and any action not in conformity with such continuing conditions shall be void: 1. The members of Lorilei's board of directors serving as nominees of Mr. & Mrs. Cunningham must fully comply with their fiduciary obligations to AmeriNet and Lorilei's Stockholders and with applicable laws; 2. A quorum for meetings of the board of directors of Lorilei and action by such board of directors will require the participation of AmeriNet's nominees; provided that, if a meeting deemed to involve material issues is adjourned due to the inability to attain a quorum as a result of the absence of the AmeriNet nominees, then, upon receipt of written notice from Lorilei's board of directors, AmeriNet must assure that its nominees (or their successors if AmeriNet elects to replace them) attend the reconvened meeting, which will be held by telephone conference at a time during a business day designated by AmeriNet within three days after AmeriNet is provided with the written notice of the adjourned meeting; and 3. The board of directors of Lorilei will not for so long as Lorilei remains a subsidiary of AmeriNet, without AmeriNet's prior written consent specifying the action authorized, be authorized to: A. Engage in any material change in Lorilei's business not contemplated by the Projections; B. Sell a material portion of Lorilei's assets outside the normal course of business; C. Issue any securities; D. Authorize the borrowing of any funds or pledge of any assets; or E. Confess any judgment or settle any material claim of liability. (B) Subject to Lorilei's attainment of at least 70% of its EBITDA targets set forth in the preceding subsection, AmeriNet will nominate Mr. & Mrs. Cunningham for election to AmeriNet's board of directors on a continuing basis for a period of not less than three years and shall use its best efforts to secure their election by AmeriNet's stockholders. Page 75 5.15 Additional Covenants by Lorilei As of Closing all accrued obligations by Lorilei to its employees, consultants and independent contractors involving payments due for services rendered, whether in the form of salaries, bonuses, benefits, benefit plans, or other fees or consideration of any kind, will be fully and irrevocably discharged, except for approximately $25,000 in accrued salary involving obligations for the most recent pay period and accrued vacation costs. Article VI Conditions to the Reorganization 6.1 Conditions to Obligations of Each Party to Effect the Reorganization. The respective obligations of each party to this Agreement to effect the Reorganization will be subject to the satisfaction at or prior to the Closing Date of the following conditions: (A) No Injunctions or Restraints: Illegality. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Reorganization will be in effect, nor will any proceeding brought by an administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, seeking any of the foregoing be pending; nor will there be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Reorganization, which makes the consummation of the Reorganization illegal. (B) Lorilei Information Required by Commission Regulation S-B The provision by Lorilei on a timely basis in full compliance with the requirements of Commission Regulation S-B for material acquisitions, of all information concerning its past operations, including audited financial statements, will constitute a condition subsequent to the obligations of AmeriNet under this Agreement and in the event of the failure of such condition subsequent, then, at AmeriNet's sole option: (1) The Reorganization may be rescinded, and all funds advanced by AmeriNet to Lorilei will be repaid, with interest at the annual rate of 8%, to AmeriNet within 30 days after such rescission; or (2) The Undisclosed Liabilities Escrow Shares will be deemed defaulted to AmeriNet and the Reorganization will be restructured in a manner complying with AmeriNet's reporting and other obligations under the Exchange Act, including the sale by AmeriNet of Lorilei. 6.2 Additional Conditions to Obligations of Lorilei. The obligations of Lorilei to consummate and effect this Agreement and the transactions contemplated hereby will be subject to the satisfaction at or prior to the Closing Date of each of the following conditions, any of which may be waived, in writing, exclusively by Lorilei: (A) Representations, Warranties and Covenants. The representations and warranties of AmeriNet in this Agreement will be true and correct in all material respects on and as of the Closing Date as though such representations and warranties were made on and as of such time and AmeriNet will have performed and complied in all material respects with all covenants, obligations and conditions of this Agreement required to be performed and complied with by it as of the Closing Date. Page 76 (B) Certificate of AmeriNet. Lorilei will have been provided with a certificate executed on behalf of AmeriNet by its President and its Chief Financial Officer, Treasurer or officer exercising such functions to the effect that, as of the Closing Date: (1) All representations and warranties made by AmeriNet under this Agreement are true and complete in all material respects; and (2) All covenants, obligations and conditions of this Agreement to be performed by AmeriNet on or before such date have been so performed in all material respects. (C) Satisfactory Form of Legal Matters. The form, scope and substance of all legal and accounting matters contemplated hereby and all documents and other papers delivered hereunder prior to and on the Closing Date will be reasonably acceptable to counsel to Lorilei. (D) Legal Opinion. Lorilei will have received a legal opinion from legal counsel to AmeriNet, substantially in the form of Exhibit 6.2(D) hereto. (E) No Material Adverse Changes. There will not have occurred any event, fact or condition that has had or reasonably would be expected to have a material adverse effect on AmeriNet. (F) Tax Opinion. (1) The Lorilei Declarants will have received a written opinion from their legal counsel or tax advisors to the effect that the Reorganization will constitute a reorganization within the meaning of Section 368(a)(1)(B) of the Code. (2) In rendering such opinion such legal counsel or tax advisor may rely on (and to the extent reasonably required, the Parties and Lorilei's stockholders will make) reasonable representations related thereto. 6.3 Additional Conditions to the Obligations of AmeriNet. The obligations of AmeriNet to consummate and effect this Agreement and the transactions contemplated hereby will be subject to the satisfaction at or prior to the Closing Date of each of the following conditions, any of which may be waived, in writing, exclusively by AmeriNet: (A) Representations, Warranties and Covenants. (1) The representations and warranties of Lorilei in this Agreement will be true and correct in all material respects on and as of the Closing Date as though such representations and warranties were made on and as of such time and Lorilei will have performed and complied in all material respects with all Page 77 covenants, obligations and conditions of this Agreement required to be performed and complied with by it as of the Closing Date. (2) AmeriNet will have no remedy against the Undisclosed Liabilities Escrow Fund in respect of an untrue representation or warranty if prior to the Closing Date Lorilei delivers to AmeriNet in accordance with Section 9.2 a written statement: (a) Advising AmeriNet that an event (a "Post-Execution Event") has occurred (specifying in reasonable detail such event) subsequent to the date of execution of this Agreement that would render any representation or warranty made by Lorilei in this Agreement untrue if such representation or warranty were made as of the Closing; and (b) Confirming that such representation or warranty was true as of the date of execution of this Agreement, and (c) AmeriNet subsequently waives the failure to satisfy the condition set forth in Section 6.3(A) with respect to such representation or warranty, in writing. (B) Certificate of Lorilei. AmeriNet will have been provided with a certificate executed on behalf of Lorilei by its President and Chief Financial Officer to the effect that, as of the Closing Date, all: (1) Representations and warranties made by Lorilei under this Agreement are true and complete in all material respects; and (2) Covenants, obligations and conditions of this Agreement to be performed by Lorilei on or before such date have been so performed in all material respects. (C) Third Party Consents. Any and all consents, waivers and approvals required from third Parties relating to the contracts and agreements of Lorilei so that the Reorganization and other transactions contemplated hereby do not adversely affect the rights of, and benefits to, Lorilei thereunder will have been obtained. (D) Satisfactory Form of Legal and Accounting Matters. The form, scope and substance of all legal and accounting matters contemplated hereby and all documents and other papers delivered hereunder prior to and on the Closing Date will be reasonably acceptable to AmeriNet's counsel (provided that the condition subsequent concerning the compliance of information provided by Lorilei with the requirements of Commission Regulation S-B, on a timely basis, will survive the Closing). (E) Legal Opinion. AmeriNet will have received a legal opinion from legal counsel to Lorilei, in substantially the form of Exhibit 6.3(E) hereto. (F) No Material Adverse Changes. There will not have occurred any event, fact or condition which has had or reasonably would be expected to have a material adverse effect on Lorilei. Page 78 (G) Affiliate Agreements. AmeriNet will have received from each of the Affiliates of Lorilei an executed Affiliate Agreement which will be in full force and effect. (H) Employment Agreements. The Employment Agreements will have been duly executed and delivered and will be in full force and effect. (I) Minimum Net Worth. Lorilei will on the Closing Date 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 not more than $280,000 in long term payables; at least $162,000 EBITDA 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 EBITDA for the fiscal years ending June 30, 2001, 2002 and 2003 of $500,000, $900,000 and $1,500,000, respectively. (J) Tax Opinion. (1) AmeriNet will have received a written opinion from its general counsel to the effect that the Reorganization will constitute a reorganization within the meaning of Section 368(a)(1)(B) of the Code. (2) In rendering such opinion, counsel may rely on (and to the extent reasonably required, the Parties and Lorilei's stockholders will make) reasonable representations related thereto. (K) Confidentiality Agreements. Each current employee, consultant or other person having access to Lorilei's confidential information will have executed a confidentiality agreement in the form annexed hereto as Exhibit 6.3(K). (L) Non-accredited Investors. Except as disclosed in the Lorilei Warranty Exceptions listed in Schedule 2, there will be no stockholders of Lorilei who are not Accredited Investors. (M) Obligations to Lorilei Personnel All obligations by Lorilei to its employees, consultants and independent contractors involving payments due for services rendered will have been fully discharged, as of the Closing date. Page 79 Article VII Survival of Condition Subsequent, Representations and Warranties, Covenants & Undisclosed Liabilities Escrow 7.1 Survival of Condition Subsequent, Representations and Warranties & Covenant. All conditions subsequent to the Reorganization and covenants to be performed after the Closing, and all representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement will survive the Closing and continue until the date the audit of AmeriNet's financial statements for the year ending June 30, 2001 has been completed and AmeriNet has received a signed opinion from its independent auditors certifying such financial statements (the "2001 Audit Date"). 7.2 Escrow Arrangements. (A) Undisclosed Liabilities Escrow Fund. (1) As soon as practicable after the Closing Date, a portion of the shares of AmeriNet's common stock to be issued in the Reorganization equal to the Undisclosed Liabilities Escrow Number plus any additional New Shares (as defined below) as may be issued in respect thereof after the Closing Date) (collectively, the "Undisclosed Liabilities Escrow Shares"), without any act of any stockholder, will be registered in the name of Yankees, AmeriNet's strategic planning consultant, or such other person or legal entity as may otherwise be selected by AmeriNet prior to the Closing, as escrow agent (the "Undisclosed Liabilities Escrow Agent"), and will be deposited with a financial institution acceptable to AmeriNet and the Agent [as defined in Section 7.2(H) below)], such deposit to constitute an escrow fund (the "Undisclosed Liabilities Escrow Fund") to be governed by the terms set forth herein and at AmeriNet's sole cost and expense. (2) (a) The portion of AmeriNet's common stock in the Undisclosed Liabilities Escrow Fund contributed on behalf of each stockholder of Lorilei is listed opposite such stockholders' name on Exhibit 7.2. (b) The Undisclosed Liabilities Escrow Fund will be available to compensate AmeriNet and its affiliates for any claim, loss, expense, liability or other damage, including reasonable attorneys' fees, that such person has incurred or reasonably anticipates incurring by reason of the successful assertion by a third party of any claims for liabilities of the Lorilei Declarants that were not disclosed as required pursuant to this Agreement ("Undisclosed Liabilities"), but only to the extent that such Undisclosed Liabilities exceed $20,000. (c) AmeriNet and Lorilei each acknowledge that such Undisclosed Liabilities, if any, would relate to unresolved contingencies existing at the Time of Closing which if resolved at the Closing would have led to a reduction in the total number of shares of AmeriNet's common stock AmeriNet would have agreed to issue in connection with the Reorganization or to AmeriNet's decision not to acquire Lorilei. (3) Nothing herein will limit the liability of the Lorilei Declarants for any misrepresentation or breach of warranty except that resort to the Undisclosed Liabilities Escrow Fund will be the exclusive contractual remedy of AmeriNet for recovery of monetary damages resulting from any such undisclosed liability; provided, however, that nothing herein will limit any noncontractual remedy for fraud or relief in the form of remedies other than recovery of monetary damages. Page 80 (4) (a) Subject to the following requirements, the Undisclosed Liabilities Escrow Fund will remain in existence until the 2001 Audit Date (the "Undisclosed Liabilities Escrow Period"). (b) Upon the expiration of such Undisclosed Liabilities Escrow Period, the Undisclosed Liabilities Escrow Fund will terminate with respect to all Undisclosed Liabilities Escrow Shares; provided, however, that the number of Undisclosed Liabilities Escrow Shares which, in the reasonable judgment of AmeriNet, subject to the objection of the Agent and the subsequent arbitration of the matter in the manner provided in Section 7.2(G) hereof, are necessary to satisfy any unsatisfied claims specified in any Officer's Certificate delivered to the Undisclosed Liabilities Escrow Agent prior to the expiration of the Undisclosed Liabilities Escrow Period with respect to facts and circumstances existing on or prior to the 2001 Audit Date will remain in the Undisclosed Liabilities Escrow Fund (and the Undisclosed Liabilities Escrow Fund will remain in existence) until such claims have been resolved. (c) As soon as all such claims have been resolved, the Undisclosed Liabilities Escrow Agent will deliver to the Former Lorilei Stockholders all AmeriNet's common stock and other property remaining in the Undisclosed Liabilities Escrow Fund and not required to satisfy such claims. (d) Deliveries of AmeriNet's common stock and other property to the Former Lorilei Stockholders pursuant to this Section 7.2(A) will be made in proportion to their respective original contributions to the Undisclosed Liabilities Escrow Fund. (B) Brashear Escrow Fund. (1) As soon as practicable after the Closing Date, a portion of the shares of AmeriNet's common stock to be issued in the Reorganization equal to the Brashear Escrow Number plus any additional New Shares (as defined below) as may be issued in respect thereof after the Closing Date) (collectively, the "Brashear Escrow Shares"), without any act of any stockholder, will be registered in the name of Bruce Brashear, Esquire, the Lorilei Declarants' legal counsel, or such other person or legal entity as may otherwise be selected by the Parties prior to the Closing as escrow agent (the "Brashear Escrow Agent"), and will be deposited with a financial institution acceptable to AmeriNet and the Agent [as defined in Section 7.2(H) below)], such deposit to constitute an escrow fund (the "Brashear Escrow Fund") to be governed by the terms set forth herein and at AmeriNet's sole cost and expense. (2) (a) The portion of AmeriNet's common stock in the Brashear Escrow Fund contributed on behalf of each stockholder of Lorilei is listed opposite such stockholders' name on Exhibit 7.2. (b) The Brashear Escrow Fund will be held and distributed in the manner and for the purposes set forth in Section 1.2(A)(2)(a). (3) The Brashear Escrow Shares will constitute AmeriNet's exclusive monetary remedy for damages resulting as a result of the contingencies involved; provided, however, that nothing herein will limit any noncontractual remedy for fraud or relief in the form of remedies other than recovery of monetary damages. (C) Protection of Escrow Shares. The Escrow Agents will hold and safeguard the Escrow Shares during the Escrow Terms, will treat the Escrow Shares as a trust fund in accordance with the terms of this Agreement and not as the property of the Parties and will hold and dispose of the Escrow Shares only in accordance with the terms hereof. Page 81 (D) Distributions; Voting. (1) (a) Any shares of AmeriNet's common stock or other equity securities issued or distributed by AmeriNet, including shares issued upon a stock split or any stock dividend or distribution ("New Shares") in respect of AmeriNet's common stock in the Escrow Funds which have not been released from the Escrow Funds will be added to the Escrow Funds and become a part thereof. (b) New Shares issued in respect of AmeriNet's common stock which have been released from the Escrow Funds will not be added to the Escrow Funds, but will be distributed to the holders thereof. (c) When and if cash dividends on AmeriNet's common stock in the Escrow Funds will be declared and paid, they will be added to the Escrow Funds and become a part thereof. (2) Each stockholder of Lorilei will have voting rights with respect to the shares of AmeriNet's common stock contributed to the Escrow Funds on behalf of such stockholder (and on any voting securities added to the Escrow Funds in respect of such shares of AmeriNet's common stock) so long as such shares of AmeriNet's common stock or other voting securities are held in the Escrow Funds. (E) Claims Upon Escrow Funds. (1) Subject to the objection procedure established below, the Undisclosed Liabilities Escrow Agent will deliver to AmeriNet out of the Undisclosed Liabilities Escrow Fund, as promptly as practicable, shares of AmeriNet's common stock or other assets held in the Undisclosed Liabilities Escrow Fund in an amount equal to the funds required to recover the monetary damages resulting from such Undisclosed Liabilities, provided that (a) A written claim of loss has been provided by AmeriNet to the Undisclosed Liabilities Escrow Agent at any time on or before the last day of the Undisclosed Liabilities Escrow Period in the form of a certificate signed by any officer of AmeriNet (an "Officer's Certificate"), with a copy to Lorilei: 1. Stating that AmeriNet has paid or properly accrued or reasonably anticipates that it will have to pay or accrue as a result of such Undisclosed Liabilities, and 2. Specifying in reasonable detail the individual items of included in the amount so stated, the date each such item was paid or properly accrued, or the basis for such anticipated liability, and the nature of the misrepresentation, breach of warranty or claim to which such item is related. (b) For the purposes of determining the number of shares of AmeriNet's common stock to be delivered to AmeriNet out of the Undisclosed Liabilities Escrow Fund pursuant to Section 7.2(E)(1), the shares of AmeriNet's common stock will be valued at the average closing transaction price therefor during the preceding ten trading days, as reported on the highest rated securities market or securities exchange on which AmeriNet's common stock is actually traded. (2) (a) Shares will be delivered from the Brashear Escrow in the manner and at the times specified in Section 1.2(A)(2)(a), subject to the provisions set forth in Section 7.2(E)(2)(c), within thirty days after presentation to the Brashear Escrow Agent of written evidence that the event requiring distribution has Page 82 occurred and indicating the number of shares or cash to be distributed and the basis for such calculation (the "Delivery Date" and the "Brashear Distribution Notice," respectively). (b) Within three business days after a Brashear Distribution Notice is received by the Brashear Escrow Agent, the Brashear Escrow Agent shall forward a copy thereof to the other potential claimant with a written notice advising such other claimant that unless written objections to such distribution specifying the basis for such objections are provided to the Brashear Escrow Agent on or before the Delivery Date (the "Notice of Objections"), distribution as requested will be made. (c) In the event a Notice of Objection is provided, the Brashear Escrow Agent will refrain from making the requested distribution and will provide the Parties with written notice that unless the Parties mutually agree to a distribution or initiate action pursuant to the g eneral dispute resolution procedures of this Agreement within ten business days, the Brashear Escrow Agent will initiate an action in the nature of an interpleader in the Circuit Court sitting in and for Alachua County, Florida and will deposit the shares or funds in controversy in the registry of such court, whereupon the Parties will be required to determine ownership thereof, with all expenses of litigation for the Parties and the Brashear Escrow Agent to be charged and awarded by such court to against the non-prevailing Party or Parties. (d) If an action pursuant to the general dispute resolution procedures of this Agreement is initiated within ten business days, the Brashear Escrow Agent will continue to hold the shares or funds in controversy during the pendency of such proceeding and will thereafter distribute them in accordance with the final award therein. (F) Objections to Undisclosed Liabilities Escrow Claims. (1) At the time of delivery of any Officer's Certificate to the Undisclosed Liabilities Escrow Agent, a duplicate copy of such certificate will be delivered to the Agent [as defined in Section 7.2(H)] and for a period of thirty (30) days after such delivery, the Undisclosed Liabilities Escrow Agent will make no delivery to AmeriNet of shares of AmeriNet's common stock, pursuant to Section 7.2(E)(1) hereof unless the Undisclosed Liabilities Escrow Agent will have received written authorization from the Agent to make such delivery. (2) After the expiration of such thirty (30) day period, the Undisclosed Liabilities Escrow Agent will make delivery of the shares of AmeriNet's common stock or other property in the Undisclosed Liabilities Escrow Fund in accordance with Section 7.2(F) hereof, provided that no such payment or delivery may be made if the Agent will object in a written statement to the claim made in the Officer's Certificate, and such statement will have been delivered to the Undisclosed Liabilities Escrow Agent prior to the expiration of such thirty day period. (G) Resolution of Undisclosed Liabilities Escrow Conflicts; Arbitration. (1) (a) In case the Agent will so object in writing to any claim or claims made in any Officer's Certificate, the Agent and AmeriNet will attempt in good faith to agree upon the rights of the respective Parties with respect to each of such claims. (b) If the Agent and AmeriNet should so agree, a memorandum setting forth such agreement will be prepared and signed by both Parties and will be furnished to the Undisclosed Liabilities Escrow Agent. Page 83 (c) The Undisclosed Liabilities Escrow Agent will be entitled to rely on any such memorandum and distribute shares of AmeriNet's common stock or other property from the Undisclosed Liabilities Escrow Fund in accordance with the terms thereof. (2) (a) If no such agreement can be reached after good faith negotiation, either AmeriNet or the Agent may demand arbitration of the matter unless the amount of the damage or loss is at issue in pending litigation with a third party, in which event arbitration will not be commenced until such amount is ascertained or both Parties agree to arbitration; and in either such event the matter will be settled by arbitration conducted by three arbitrators. (b) AmeriNet and the Agent will each select one arbitrator, and the two arbitrators so selected will select a third arbitrator. (c) The arbitrators will set a limited time period and establish procedures designed to reduce the cost and time for discovery while allowing the Parties an opportunity, adequate in the sole judgment of the arbitrators, to discover relevant information from the opposing Parties about the subject matter of the dispute. (d) The arbitrators will rule upon motions to compel or limit discovery and will have the authority to impose sanctions, including attorneys fees and costs, to the extent as a court of competent law or equity, should the arbitrators determine that discovery was sought without substantial justification or that discovery was refused or objected to without substantial justification. (e) The decision of a majority of the three arbitrators as to the validity and amount of any claim in such Officer's Certificate will be binding and conclusive upon the Parties to this Agreement, and notwithstanding anything in Section 7.2(E)(1) hereof, the Undisclosed Liabilities Escrow Agent will be entitled to act in accordance with such decision and make or withhold payments out of the Undisclosed Liabilities Escrow Fund in accordance therewith. (f) Such decision will be written and will be supported by written findings of fact and conclusions which will set forth the award, judgment, decree or order awarded by the arbitrators. (3) (a) (i) Judgment upon any award rendered by the arbitrators may be entered in any court having jurisdiction. (ii) Any such arbitration will be held in Broward County, Florida, under the rules then in effect of the American Arbitration Association to the extent such rules are not inconsistent with this Section 7.2(G). (b) For purposes of this Section 7.2(G), in any arbitration hereunder in which any claim or the amount thereof stated in the Officer's Certificate is at issue, AmeriNet will be deemed to be the Non-Prevailing Party in the event that the arbitrators award AmeriNet less than the sum of 50% of the disputed amount plus any amounts not in dispute; otherwise, the Former Lorilei Stockholders as represented by the Agent will be deemed to be the Non-Prevailing Party. (c) The Non-Prevailing Party to an arbitration will pay its own expenses, the fees of each arbitrator, the administrative fee of the American Arbitration Association, and the expenses, including without limitation, reasonable attorneys' fees and costs, incurred by the other party to the arbitration. Page 84 (H) Agent of the Stockholders: Power of Attorney. (1) (a) (i) Gerald R. Cunningham is hereby irrevocably appointed as the agent and attorney-in-fact (the "Agent") for each stockholder of Lorilei, for and on behalf of the Former Lorilei Stockholders, to give and receive notices and communications, to authorize delivery to AmeriNet of AmeriNet's common stock or other property from the Escrow Funds in satisfaction of claims by AmeriNet, to object to such deliveries, to agree to, negotiate, enter into settlements and compromises of, and demand arbitration and comply with orders of courts and awards of arbitrators with respect to such claims, and to take all actions necessary or appropriate in the judgment of Agent for the accomplishment of the foregoing. (ii) Such agency may be changed by the Former Lorilei Stockholders from time to time upon not less than thirty (30) days prior written notice to AmeriNet; provided that the Agent may not be removed unless holders of a two-thirds interest of the common stock comprising the subject Escrow Fund agree to such removal and to the identity of the substituted agent. (iii) No bond will be required of the Agent, and the Agent will not receive compensation for his or her services. (iv) Notices or communications to or from the Agent will constitute notice to or from each of the Former Lorilei Stockholders. (b) The Agent will be entitled to submit a claim and receive reimbursement from the Escrow Funds for all reasonable, documented out-of-pocket expenses incurred by the Agent as a result of his acting as the Agent; provided, however, that such right to reimbursement will be subordinate to AmeriNet's claims on the Escrow Funds, if any, and will be paid only after all such claims have been satisfied. (c) Any such reimbursement will be paid in shares of AmeriNet's common stock out of the Escrow Fund. (d) For purposes of such reimbursement of the Agent only, such shares will be valued at the average of the closing prices of AmeriNet's common stock for the ten trading days ending on the day prior to the date the Undisclosed Liabilities Escrow Agent pays such reimbursement amount. (2) (a) The Agent will not be liable for any act done or omitted hereunder as Agent while acting in good faith and in the exercise of reasonable judgment. (b) The Former Lorilei Stockholders on whose behalf shares of AmeriNet's common stock were contributed to the subject Escrow Fund will severally indemnify the Agent and hold the Agent harmless against any loss, liability or expense incurred without negligence or bad faith on the part of the Agent and arising out of or in connection with the acceptance or administration of the Agent's duties hereunder, including the reasonable fees and expenses of any legal counsel retained by the Agent. Page 85 (I) Actions of the Agent. (1) A decision, act, consent or instruction of the Agent will constitute a decision of all the stockholders for whom shares of AmeriNet's common stock otherwise issuable to them are deposited in the Escrow Funds and will be final, binding and conclusive upon each of such stockholders, and the Escrow Agents and AmeriNet may rely upon any such decision, act, consent or instruction of the Agent as being the decision, act, consent or instruction of every such stockholder. (2) The Escrow Agents and AmeriNet are hereby relieved from any liability to any person for any acts done by them in accordance with such decision, act, consent or instruction of the Agent. (J) Third-Party Claims. (1) In the event AmeriNet becomes aware of a third-party claim which AmeriNet believes may result in a demand against the Undisclosed Liabilities Escrow Fund, AmeriNet will notify the Agent of such claim, and the Agent and the Former Lorilei Stockholders will be entitled, at their expense, to participate in any defense of such claim. (2) AmeriNet will have the right in its sole discretion to settle any such claim; provided, however, that except with the consent of the Agent, no settlement of any such claim with third-party claimants will alone be determinative of the validity of any claim against the Undisclosed Liabilities Escrow Fund. (3) In the event that the Agent has consented to any such settlement, the Agent will have no power or authority to object under any provision of this Article VII to the amount of any claim by AmeriNet against the Undisclosed Liabilities Escrow Fund with respect to such settlement. (K) Escrow Agents' Duties. (1) (a) The Escrow Agents will be obligated only for the performance of such duties as are specifically set forth herein, and as set forth in any additional written escrow instructions which the Escrow Agents may receive after the date of this Agreement which are signed by an officer of AmeriNet and the Agent, and may rely and will be protected in relying or refraining from acting on any instrument reasonably believed to be genuine and to have been signed or presented by the proper party or Parties. (b) The Escrow Agents will not be liable for any act done or omitted hereunder as Escrow Agents while acting in good faith and in the exercise of reasonable judgment, and any act done or omitted pursuant to the advice of counsel will be conclusive evidence of such good faith. (2) (a) The Escrow Agents are hereby expressly authorized to disregard any and all warnings given by any of the Parties or by any other person, excepting only orders or process of courts of law, and is hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. (b) In case the Escrow Agents obey or comply with any order, judgment or decree of any court, the Escrow Agents will not be liable to any of the Parties or to any other person by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction. Page 86 (3) The Escrow Agents will not be liable in any respect on account of the identity, authority or rights of the Parties executing or delivering or purporting to execute or deliver this Agreement or any documents or papers deposited or called for hereunder. (4) The Escrow Agents will not be liable for the expiration of any rights under any statute of limitations with respect to this Agreement or any documents deposited with the Escrow Agents. (5) The Escrow Agents may resign at any time upon giving at least thirty (30) days written notice to AmeriNet and the Agent to this Agreement; provided, however, that no such resignation will become effective until the appointment of a successor escrow agent which will be accomplished as follows: (a) AmeriNet and the Agent will use their best efforts to mutually agree upon a successor agent within thirty (30) days after receiving such notice. (b) If the Parties fail to agree upon a successor escrow agent within such time, AmeriNet will have the right to appoint a successor escrow agent authorized to do business in Florida. (c) The successor escrow agent selected in the preceding manner will execute and deliver an instrument accepting such appointment and it will thereupon be deemed the subject Escrow Agent hereunder and it will without further acts be vested with all the estates, properties, rights, powers, and duties of the predecessor Escrow Agent as if originally named as Escrow Agent. (d) Thereafter, the predecessor Escrow Agent will be discharged for any further duties and liabilities under this Agreement. Article VIII Termination, Amendment And Waiver 8.1 Termination. This Agreement may be terminated and the Reorganization abandoned at any time prior to the Closing Date, as follows: (A) By mutual consent of Lorilei and AmeriNet. (B) By AmeriNet if it is not in material breach of its obligations under this Agreement and there has been a material breach of any representation, warranty, covenant or agreement contained in this Agreement on the part of Lorilei and such breach has not been cured within fifteen days after notice to Lorilei. (C) By Lorilei if it is not in material breach of its respective obligations under this Agreement and there has been a material breach of any representation, warranty, covenant or agreement contained in this Agreement on the part of AmeriNet and such breach has not been cured within 15 days after notice to AmeriNet; (D) By any Party if: (1) The Reorganization has not occurred by May 31, 2000; (2) There will be a final nonappealable order of a federal or state court in effect preventing consummation of the Reorganization; Page 87 (3) There will be any action taken, or any statute, rule, regulation or order enacted, promulgated or issued or deemed applicable to the Reorganization by any Governmental Entity which would make consummation of the Reorganization illegal; or (4) There will be any action taken, or any statute, rule, regulation or order enacted, promulgated or issued or deemed applicable to the Reorganization by any Governmental Entity, which would: (a) Prohibit AmeriNet's or Lorilei's ownership or operation of all or a material portion of the business of Lorilei, or compel AmeriNet or Lorilei to dispose of or hold separate all or a material portion of the business or assets of Lorilei or AmeriNet as a result of the Reorganization; or (b) Render AmeriNet or Lorilei unable to consummate the Reorganization, except for any waiting period provisions. (E) Where action is taken to terminate this Agreement pursuant to this Section 8.1, it will be sufficient for such action to be authorized by the board of directors (as applicable) of the Party taking such action. 8.2 Effect of Termination. In the event of termination of this Agreement as provided in Section 8.1, this Agreement will forthwith become void and there will be no liability or obligation on the part of AmeriNet or Lorilei or their respective officers, directors or stockholders, except if such termination results from the breach by a Party of any of its representations, warranties, covenants or agreements set forth in this Agreement (it being understood that termination of this Agreement because of failure of Lorilei to satisfy the condition set forth in Section 6.3(A) as a result of the occurrence of a Post-Execution Event will not be deemed to be a termination resulting from such a breach of representation or warranty.) 8.3 Amendment. (A) This Agreement may be amended by the Parties at any time before or after approval of matters presented in connection with the Closing by the stockholders of those Parties required by applicable law to so approve but, after any such stockholder approval, no amendment will be made which by law requires the further approval of stockholders of a party without obtaining such further approval. (B) This Agreement may not be amended except by an instrument in writing signed on behalf of each of the Parties. 8.4 Extension & Waiver. (A) At any time prior to the Closing any Party may, to the extent legally allowed: (1) Extend the time for the performance of any of the obligations or other acts of the other Parties; (2) Waive any inaccuracies in the representations and warranties made to such party contained herein or in any document delivered pursuant hereto; or (3) Waive compliance with any of the agreements or conditions for the benefit of such Party contained herein. (B) Any agreement on the part of a Party to any such extension or waiver will be valid only if set forth in an instrument in writing signed on behalf of such Party. Page 88 Article IX General Provisions 9.1 Interpretation. (A) 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. (B) The words "include," "includes" and "including" when used herein will be deemed in each case to be followed by the words "without limitation." (C) The table of contents and headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement. (D) The captions in this Agreement are for convenience and reference only and in no way define, describe, extend or limit the scope of this Agreement or the intent of any provisions hereof. (E) All pronouns and any variations thereof 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. (F) The Parties agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document. 9.2 Notice. (A) All notices, demands or other communications given hereunder will be in writing and will be deemed to have been duly given on the first business day after mailing by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows: (1) To AmeriNet: AmeriNet Group.com, Inc. 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 michael@amerinetgroup.com; with a copy to George Franjola, Esquire; General Counsel AmeriNet Group.com, Inc. 1941 Southeast 51st Terrace; Ocala, Florida 34471 Telephone (352) 694-9182, Fax (352) 694-1325; and, e-mail, tyclegal@atlantic.net. (2) To Lorilei: Lorilei Communications, Inc. Post Office Box 770787; Ocala, Florida 34477 7325 Southwest 32nd Street; Ocala, Florida 34474 Attention: Gerald R. Cunningham, President Telephone (352) 861-1350; Fax (352) 861-1339; e-mail thefirm@callthefirm.com; with a copy to Page 89 Bruce Brashear, Esquire Brashear & Associates 920 Northwest 8th Avenue, Suite A; Gainesville, Florida 32601 Telephone (352) 336-0800; Fax (352) 336-0505; and, e-mail bbrashear@nflalaw.com; (3) To Mr. Cunningham: Gerald R. Cunningham 18498 Northwest 24th Avenue; Citra, Florida 32113 Telephone (352) 595-3834; Fax (352) 595-0807; e-mail leighc@callthefirm.com; (4) To Mrs. Cunningham Leigh A. Cunningham 18498 Northwest 24th Avenue; Citra, Florida 32113 Telephone (352) 595-3834; Fax (352) 595-0807; e-mail leighc@callthefirm.com; (5) To the Undisclosed Liabilities Escrow Agent: 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 carrington@flinet.com; (6) To the Brashear Escrow Agent: Bruce Brashear, Esquire Brashear & Associates 920 Northwest 8th Avenue, Suite A; Gainesville, Florida 32601 Telephone (352) 336-0800; Fax (352) 336-0505; and, e-mail bbrashear@nflalaw.com or such other address or to such other person as any Party will designate to the other for such purpose in the manner hereinafter set forth. (B) At the request of any Party, notice will also be provided by overnight delivery, facsimile transmission or e-mail, provided that a transmission receipt is retained. (C) (1) The Parties acknowledge that Yankees serves as a strategic consultant to AmeriNet and has acted as scrivener for the Parties in this transaction but that Yankees is neither a law firm nor an agency subject to any professional regulation or oversight. (2) Because of the inherent conflict of interests involved, Yankees has advised all of the Parties to retain independent legal and accounting counsel to review this Agreement and its exhibits and incorporated materials on their behalf. (3) The decision by any Party not to use the services of legal counsel in conjunction with this transaction will be solely at their own risk, each Part acknowledging that applicable rules of the Florida Bar prevent AmeriNet's general counsel, who has reviewed, approved and caused modifications on behalf of AmeriNet, from representing anyone other than AmeriNet in this transaction. Page 90 9.3 Merger of All Prior Agreements Herein. (A) This instrument, together with the instruments referred to herein, contains all of the understandings and agreements of the Parties with respect to the subject matter discussed herein. (B) All prior agreements whether written or oral are merged herein and will be of no force or effect. 9.4 Survival. The several representations, warranties and covenants of the Parties contained herein will survive the execution hereof and the Closing and will be effective regardless of any investigation that may have been made or may be made by or on behalf of any Party. 9.5 Severability. If any provision or any portion of any provision of this Agreement, other than one of the conditions precedent or subsequent, or the application of such provision or any portion thereof to any person or circumstance will 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, will not be affected thereby. 9.6 Governing Law. This Agreement will be construed in accordance with the substantive and procedural laws of the State of Delaware (other than those regulating Taxation and choice of law). 9.7 Indemnification. (A) Each Party hereby irrevocably agrees to indemnify and hold the other Parties harmless from any and all liabilities and damages (including legal or other expenses incidental thereto), contingent, current, or inchoate to which they or any one of them may become subject as a direct, indirect or incidental consequence of any action by the indemnifying Party or as a consequence of the failure of the indemnifying Party to act, whether pursuant to requirements of this Agreement or otherwise. (B) In the event it becomes necessary to enforce this indemnity through an attorney, with or without litigation, the successful Party will be entitled to recover from the indemnifying Party, all costs incurred including reasonable attorneys' fees throughout any negotiations, trials or appeals, whether or not any suit is instituted. 9.8 Dispute Resolution. (A) In any action between the Parties to enforce any of the terms of this Agreement or any other matter arising from this Agreement any proceedings pertaining directly or indirectly to the rights or obligations of the Parties hereunder 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, alternative dispute resolution proceedings, trials and appeals, whether or not any formal proceedings are initiated. (B) Except for the arbitration procedures outlined in paragraphs 7.2(G)(2) and 7.2(G)(3) which will govern any arbitration proceeding described therein, in the event of any dispute arising under this Agreement, or the negotiation thereof or inducements to enter into the Agreement, the dispute will, at the request of any Party, be exclusively resolved through the following procedures: Page 91 (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 Lorilei. (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 Lorilei. (3) (a) Expenses of mediation will be borne equally by the Parties, if successful. (b) Expenses, including reasonable attorneys' fees, 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. 9.9 Benefit of Agreement. The terms and provisions of this Agreement will be binding upon and inure to the benefit of the Parties, their successors, assigns, personal representatives, estate, heirs and legatees but are not intended to confer upon any other person any rights or remedies hereunder. 9.10 Further Assurances. The Parties agree to do, execute, acknowledge and deliver or cause to be done, executed, acknowledged or delivered and to perform all such acts and deliver all such deeds, assignments, transfers, conveyances, powers of attorney, assurances, stock certificates and other documents, as may, from time to time, be required herein to effect the intent and purpose of this Agreement. 9.11 Counterparts. (A) This Agreement may be executed in any number of counterparts. (B) All executed counterparts will constitute one Agreement notwithstanding that all signatories are not signatories to the original or the same counterpart. (C) Execution by exchange of facsimile transmission will be deemed legally sufficient to bind the signatory; however, the Parties will, for aesthetic purposes, prepare a fully executed original version of this Agreement which will be the document filed with the Commission. 9.12 License. (A) This form of agreement is the property of Yankees and has been customized for this transaction with the consent of Yankees by George Franjola, Esquire, AmeriNet's general counsel. (B) The use of this form of agreement by the Parties is authorized hereby solely for purposes of this transaction. Page 92 (C) The use of this form of agreement or of any derivation thereof without Yankees' prior written permission is prohibited. In Witness Whereof, AmeriNet, Lorilei, the Former Lorilei Stockholders and the Escrow Agents (with respect to the Escrow Agents, as to matters set forth in Section 1.2(A)(2)(a) and Article VII only) have caused this Agreement to be executed by themselves or their duly authorized respective officers, all as of the last date set forth below: Signed, sealed and delivered In Our Presence: AmeriNet Group.com, Inc. _________________________________ (A Delaware corporation) _________________________________ By: /s/ Michael H. Jordan _____________________________ Michael H. Jordan, President Dated: May 11, 2000 Attest: /s/ Vanessa H. Lindsey _____________________________ Vanessa H. Lindsey, Secretary State of Florida } County of Marion } ss.: (Corporate Seal) On this 11th day of May, 2000, before me, a notary public in and for the county and state aforesaid, personally appeared Michael H. Jordan and Vanessa H. Lindsey, to me known, and known to me to be the president and secretary of AmeriNet Group.com, Inc., the above-described corporation, and to me known to be the persons who executed the foregoing instrument, and acknowledged the execution thereof to be their free act and deed, and the free act and deed of AmeriNet Group.com, Inc., for the uses and purposes therein mentioned. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate first above written. My commission expires the ___day of ______________, ____. {Seal} /s/ Leslie Quinn ----------------------------- Notary Public Lorilei Communications, Inc. _________________________________ (a Florida corporation) _________________________________ By: /s/ Gerald R. Cunningham _____________________________ Gerald R. Cunningham, President Dated: May 11, 2000 Attest: /s/ Leigh A. Cunningham _____________________________ Leigh A. Cunningham, Secretary State of Florida } County of Marion } ss.: (Corporate Seal) On this 11th day of May, 2000, before me, a notary public in and for the county and state aforesaid, personally appeared Gerald R. Cunningham and Leigh A. Cunningham, to me known, and known to me to be the president and secretary of Lorilei Communications, Inc., the above-described corporation, and to me known to be the persons who executed the foregoing instrument, and acknowledged the execution thereof to be their free act and deed, and the free act and deed of Lorilei Communications, Inc., for the uses and purposes therein mentioned. Page 93 IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate first above written. My commission expires the ___day of _______________, ____. (Seal) /s/ Leslie Quinn ----------------------------- Notary Public Former Lorilei Stockholders - --------------------------------- /s/ Gerald R. Cunningham - --------------------------------- ----------------------------- Gerald R. Cunningham Dated: May 11, 2000 - --------------------------------- /s/ Leigh A. Cunningham - --------------------------------- ----------------------------- Leigh A. Cunningham Dated: May 11, 2000 State of Florida } County of Marion } ss.: On this 11th day of May, 2000, before me, a notary public in and for the county and state aforesaid, personally appeared Gerald R. Cunningham and Leigh A. Cunningham, to me known, and known to me to be the former stockholders of Lorilei Communications, Inc., the above-described corporation, and to me known to be the persons who executed the foregoing instrument, and acknowledged the execution thereof to be their free act and deed, for the uses and purposes therein mentioned. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate first above written. My commission expires the ___day of _______________, ____. (Seal) /s/ Leslie Quinn ----------------------------- Notary Public Page 94 The Escrow Agents Executing this Agreement solely with reference to the provisions specifically pertaining to the performance of their duties as Escrow Agents: The Yankee Companies, Inc. _________________________________ (a Florida corporation) _________________________________ By: /s/ William A. Calvo, III ____________________________ William A. Calvo, III, Vice President Dated: May 11, 2000 Attest: Vanessa H. Lindsey ____________________________ Vanessa H. Lindsey, Secretary State of Florida } County of Marion } ss.: (Corporate Seal) On this 11th day of May, 2000, before me, a notary public in and for the county and state aforesaid, personally appeared William A. Calvo, III and Vanessa H. Lindsey, to me known, and known to me to be the vice president and secretary of the Yankee Companies, Inc., the above-described corporation, and to me known to be the persons who executed the foregoing instrument and acknowledged the execution thereof to be their free act and deed, and the free act and deed of the Yankee Companies, Inc., as the Undisclosed Liabilities Escrow Agent, the uses and purposes therein mentioned. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate first above written. My commission expires the ___day of _______________, ____. (Seal) /s/ Leslie Quinn ----------------------------- Notary Public Brashear & Associates - --------------------------------- _________________________________ By: /s/ Bruce Brashear ____________________________ Bruce Brashear, Esquire, Principal Dated: May 11, 2000 State of Florida } County of Marion } ss.: On this 11th day of May, 2000, before me, a notary public in and for the county and state aforesaid, personally appeared Bruce Brashear, Esquire, the duly authorized principal of Brashear & Associates, a Florida law firm, to me known, and known to me to be person described as the Brashear Escrow Agent in the foregoing instrument and to me known to be the person who executed the foregoing instrument, and acknowledged the execution thereof to be the free act and deed of Brashear & Associates, for the uses and purposes therein mentioned. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate first above written. My commission expires the ___day of _______________, ____. (Seal) /s/ Leslie Quinn ------------------------ Notary Public Page 95 Schedule 1.4 can be found as Exhibit 3.5 and 3.6 to this 8-K. Schedules to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 1.4 CONSTITUENT DOCUMENTS 1. Amended Articles of Incorporation 2. Amended Bylaws I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham __________________________________ Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham __________________________________ Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 1.7(C) FINAL STOCKHOLDER DATA No. Date Name No. Shares 01 7/1/94 Gerald Cunningham and 100 Leigh Cunningham, Ten. by Ent. 02 Void 03 5/16/98 John B. La Torraca Trans. to Cert. 04, 05 04 12/29/99 Arlene Butters Trans. from Cert. 03, Trans. to Cert. 06 05 12/29/99 Gerald Cunningham and Leigh 5.5 Cunningham, Ten. by Ent. Trans. from Cert. 03 06 12/29/99 Gerald Cunningham and Leigh 5.5 Cunningham, Ten. by Ent. Trans. from Cert. 04 Total Shares Outstanding to date: 111 In accordance with Article IV of the Articles of Incorporation, Lorilei Communications, Inc. is authorized to issue 7,500 shares of ONE DOLLAR ($1.00) par value common stock, which shall be designated "Common Shares". I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham __________________________________ Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham __________________________________ Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 96 Schedules to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 2 - EXCEPTIONS TO LORILEI'S REPRESENTATION & WARRANTS The consent letter from Small Business Loan Source that is attached to Schedule 5.7 is hereby disclosed as an exception. To the knowledge of Lorilei's officers, there is no destruction, damage, or loss to any assets in accordance with paragraph 2.7(C). The past due account receivable for CareerTV.com in the amount of $132,543.30 is a not collectible debt. This amount will be written off to bad debt prior to the closing of this transaction. The past due account receivable for Citrus Hills Marketing in the amount of $1,388.60 is not collectible debt. This amount will be written off to bad debt prior to the closing of this transaction. Currently, not on the books of Lorilei is a debt in the amount of $21,420.00 to HGTV. The reason why this debt is not on the books is because we are disputing the validity of the spots aired on behalf of our client. Trade industry reports made allegations that HGTV covered network spots on the local system level. In other words, HGTV apparently inserted national spots in the local break slots that they say our client's spot ran. To date, they have not provided us any proof that our client's spots were run properly. I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham __________________________________ Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham __________________________________ Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 97 March 16, 2000 Ms. Bonnie L. Krabbenhoft Credit Manager HGTV P O Box 50970 Knoxville, TN 37950 Re: Quiltingly Yours Dear Ms. Krabbenhoft: I am in receipt of your letter dated February 25, 2000. Army Court-faxed this letter to me on 3/15/00. Your break down of the aired information does not satisfy our needs. We still have no proof from HGTV or the cable systems that they did not insert a national spot in the local break slot that you say Quiltingly Yours ran. We have no affidavit supporting this information and that is the proof that we need before any type of payment is made. Keep in mind that this issue would of never been brought up if no allegations were made against HGTV for inserting national spots in local breaks. I look forward to hearing from you in the near future. Sincerely, /s/ Mary A. Lee Business Manager Home & Garden Television Network P O. Box 80970 Knoxville, Tennessee 37950 February 25, 2000 Mary A. Lee, Business Manager Firm Multimedia P, 0. Box 770787 Ocala, FL 34477-0%87 re: Quiltingly Yours Dear Ms. Lee: Attached you will find a breakdown of all spots aired by your company compared to actual times that local inserts were placed. As you will note, all times from your three invoices fell outside of the local insert breaks and were never in question. If you have any questions regarding this analysis, please call me at 423-470-3946. Sincerely Bonnie L. Krabbenho Credit Manager attachment cc- Steve Gigliotti, Sr. VP, Ad Sales Elaine McCall, Director of Revenue Page 98 November 16, 1999 Mr. Steve Newman Senior Vice President, Ad Sales HG TV P U Box X0970 Knoxville, TN 379>0 Dear Mr. Newman: Thank you for your response to our correspondence regarding discrepancies in scheduling our client's spots on HGTV. While we appreciate your review of the times our spots aired, the information supplied in and of itself is no proof that the spots actually aired on all your affiliate cable systems. In order to resolve this matter you need to furnish us with a breakdown of when the network takes national breaks, and when it takes affiliate breaks. With this information sue can then at lest make some determination of whether or not an adjustment to our invoice is warranted. Sincerely, /s/ Mary A. Lee Business Manager HGTV HOME BURDEN TELEVISION November 3, 1999 Ms. Mary A. Lee Business Manager The Firm Multimedia P. 0. Box 770787 Ocala, FL 34477 Dear Ms. Lee: Thank you for your letter of October 26. Although many of the allegations in the article were unfounded, the audit firrn of Deloitte & Touche has reviewed our accounting procedure. In some cases, it has been ascertained that national spots ran in local breaks and, in all cases, we are contacting those clients and offering makegoods to reconcile the discrepancies. While I can certainly appreciate your concern; I have reviewed your account and find that no part of your advertising schedule fell into the local avails. I have enclosed a spot placement report to verify your commercial placement. I trust the enclosed is proof of the validity of your advertising schedule, Please don't hesitate to call if you have questions. Warm regards, Steve Newman Senior Vice President, Ad Sales SN:ht Enc. Mail: PO Box 50970 o Knoxville TN 17950 o Ship: 9701 Madison Avenue, Knoxville TN 37932 o (423) 691.2700 o Fax (423) 690-6595 Page 99 October 26, 1999 Home & Garden Television Network P O. Box 80970 Knoxville, Tennessee 37950 Attention: Accounts Receivable Manager CERTIFIED MAIL Re: Account 100654 Dear HGTV We are deeply concerned regarding recent trade industry reports with allegations that your network covered network spots on the local system level. The most recent report in Electronic Media verifies that your company is readying itself for make-goods or refunds. As our buy was for the full network, we are concerned that ours is one of the accounts affected by policy. We cannot in good conscience process your invoices further until this dispute is resolved. Please provide us with a proposal to adjust our outstanding balance, or with clear and convincing proof that our spots cleared at the local cable system level. Sincerely, /s/ Mary A. Lee Business Manager Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 2.5(A) FINANCIAL STATEMENTS 1. Balance Sheet and Profit and Loss as of May 10, 2000 2. Balance Sheet and Profit and Loss quarter ending March 31, 2000 3. Balance Sheet and Profit and Loss year ending December 31, 1999 I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 100 5/12/00 The Firm Multimedia Profit and Loss January 1 through May 10, 2000 Jan 1 - May 10, '00 Ordinary Income/Expense Inc Income 4500 - Fee Income 4500-02 - Retainer 20,000.00 4500-03 - Video Production 68,517.41 4500-04 - Graphics 4500-20 - Printing 7,223.41 4500-21 - Layout & Design 13,346.00 4500-23 - General Graphics 10,302.00 Total 4500-04 - Graphics 30,871.41 4500-09 - CD-Rom Authoring 12,995.00 4500-10 - Web Design 2,260.00 4500-12 - Still Photography 800.00 4500-13 - Audio Production 436.00 4500-14 - Pre-Press 629.00 4500-16 - Website Maintenance 5,100.00 4500-17 - Website Hosting 455.00 4500-18 - Client Promotions 5,590.00 4500-19 - Shipping Revenue 6,719.03 4500-05 - Commercial Leased Access 228,226.00 4500-25 - Spot Airtime 146,226.90 4500 - Fee Income - Other 38,796.50 Total 4500 - Fee Income 567,622.25 4530 - Reimbursed Expenses 15.86 Total Income 567,638.11 Cost of Goods Sold 6230 - Commercial Leased Access 6230-31 - Rockford Press 19,265.56 6230-30 - Harry Browne CLA 5,818.96 6230-29 - Snappy Lock 2,858.54 6230-27 - Ocala News Tonight 16,119.05 6230-26 - CareerTV.Com 16,275.95 6230-23 - Fairbanks Construction 433.73 6230-14 - Pennbrooke Fariways (618.72) 6230-19 - Class 1 772.90 6230 - Commercial Leased Access - Other (120.21) Total 6230 - Commercial Leased Access 60,805.76 6231 - Spot Airtime 60,633.37 6237 - Airtime-Program 1,870.00 6232 - Client Promotions 16,598.37 6233 - Internet Fees 656.16 6234 - Outdoor Advertising 22,414.50 6260 - Graphics 6260-03 - Printing 19,355.02 6260-05 - Supplies 56.92 6260-06 - Service Bureau 6260.07 - Film Output 180.00 Total 6260-06 - Service Bureau 180.00 6260-07 - Shipping Costs 1,443.04 6260-08 - Pre-Press Supplies 1,169.01 Total 6260 - Graphics 22,203.99 6265 - Production 6265-01 - Tapes 2,502.76 6265-02 - Production Equipment 1,271.72 6265-04 - Talent Fees 275.00 6265-05 - Staging & Props 2.96 6265-07 - Shipping Costs 3,057.80 6265-08 - VHS Sleeves 1,522.50 6265-09 - Tape Duplication 19,667.06 6265 - Production - Other 21.19 Total 6265 - Production 28,320.99 Page 101 05/12/00 The Firm Multimedia Profit and Loss January 1 through May 10, 2000 Jan 1 - May 10,2000 Total COGS 213,503.14 Gross Profit 354,134.97 Expense 4540 - Sales Tax 358.14 6105 - Advertising 6105-02 - Personnel Advertising 2,981.67 6105-03 - Telephone Book Advertising 337.50 6105-04 - Press Release (50.00) 6105-06 - Print Advertising 938.00 Total 6105 - Advertising 4,207.17 6115 - Automobile Expense 6115-01 - Fuel 6,327.40 6115-02 - Auto Maintanence 279.64 6115-05 - Auto -Volvo Lease 1,268.82 Total 6115 - Automobile Expense 7,875.86 6125 - Bank Service Charges 120.87 6140 - Communications 6140-01 - Internet fees 2,446.31 Total 6140 - Communications 2,446.31 6150 - Company Fees 6150-01 - Non Compete Fees 90.00 6150-04 - Other Fees 692.75 6150-05 - NDC Payment System Fees 366.84 Total 6150 - Company Fees 1,149.59 6165 - Dues and Subscriptions 892.72 6170 - Employee Moving Expenses 500.00 6175 - Equipment Rental 503.50 6185 - Insurance 6185-01 - Auto Insurance 2,991.70 6185-02 - Building/Property Insurance 1,703.50 6185-04 - Work Comp 950.40 6185-05 - Life Insurance 446.60 Total 6185 - Insurance 6,092.20 6205 - Interest Expense 6205-01 - Finance Charge Late charges 3,991.38 6205-01 - Finance Charge - Other 2,228.69 Total 6205-01 - Finance Charge 6,220.07 6205-02 - Loan Int.-Capital Leases 7,454.40 6205-03 - Mortgage - Interest 8,994.06 6205 - Interest Expense - Other 3,697.81 Total 6205 - Interest Expense 26,366.34 6220 - Janitorial / Maintenance 6220-02 - Supplies 57.06 6220-03 - Sanitation 556.80 6220-04 - Pest Control 106.00 Total 6220 - Janitorial / Maintenance 719.86 6235 - Licenses and Permits 45.10 6306 - Office Rent 6306-01 - Jacksonville Rent 418.00 Total 6306 - Office Rent 418.00 6255 - Postage and Delivery 6255-01 - Postage (USPS) 713.81 6255-02 - Shipping (Unishippers) 2,567.74 6255-03 - Shipping (UPS) 976.84 6255-04 - Shipping (Airborne) 114.00 Total 6255 - Postage and Delivery 4,372.39 Page 102 The Firm Multimedia 5/12/00 Profit and Loss January 1 through May 10, 2000 Jan 1 - May 10, '00 6275 - Professional Fees 6275-01 - Accounting 1,987.00 6275-03 - Legal Fees 1,291.39 6275-05 - Personnel 337.61 Total 6275 - Professional Fees 3,616.00 6305 - Repairs and Maintenance 6305-01 - Building Repairs 114.55 6305-02 - Computer Repairs 256.00 6305-03 - Equipment Repairs 1,044.11 6305 - Repairs and Maintenance - Other 60.26 Total 6305 - Repairs and Maintenance 1,474.92 6345 - Telephone 6345-02 - Cellular Telephones 1,505.33 6345-03 - Local Telephone Service 2,545.39 6345-04 - Long Distance 3,048.86 6345-05 - Paging 457.43 Total 6345 - Telephone 7,557.01 6355 - Travel 6355-05 - Meals 177.83 6355-06 - Tolls & Parking 92.35 6355 - Travel - Other 428.65 Total 6355 - Travel 698.83 6395 - Utilities 6395-01 - Electric 1,660.27 Total 6395 - Utilities 1,660.27 6540 - Miscellaneous 675.34 6550 - Office Supplies 6550-01 - Printing 1,213.13 6550-02 - Grocery 562.33 6550-04 - Video Production Supplies 354.08 6550-05 - Graphic Supplies 423.55 6550-06 - Film Processing 58.14 6550-07 - Audio Production Supplies 14.82 6550 - Office Supplies - Other 2,198.41 Total 6550 - Office Supplies 4,824.46 6560 - Payroll Expenses 6560-01 - Medical Insurance 7,468.66 6560-02 - FUTA 949.76 6560-03 - SUTA 784.93 6560-04 - Officer's Salaries 23,833.36 6560-05 - Salaries & Wages 128,850.90 6560-06 - Commission Wages 14,345.60 6560-07 - Federal Payroll Taxes-Company 12,837.68 6560 - Payroll Expenses - Other 782.85 Total 6560 - Payroll Expenses 189,853.74 6610 - Sales Expenses 6610-01 - Misc. Expenses 3.00 6610-03 - Sales Incentives 486.04 6610-04 - Direct Mail 661.98 Total 6610 - Sales Expenses 1,151.02 6640 - Taxes 6640-01 - Federal 112.00 6640-02 - Intangible / Tangible 229.00 6640-03 - Leases - Personal Property 917.42 6640-04 - Real Estate Taxes 4,640.46 6640-06 - State 455.29 6640-06 - Personal Property 5,631.74 Total 6640 - Taxes 11,985.91 7006 - Bad Debt 7006-01 - Adjust Client Acct. 1,942.79 7006 - Bad Debt - Other 134,409.77 Total 7006 - Bad Debt 136,352.56 Total Expense 415,918.11 Net Ordinary Income (61,783.14) Net Income (61,783.14) Page 103 The Firm Multimedia 05/12/00 Balance Sheet As of May 10, 2000 May 10, '00 ASSETS Current Assets Checking/Savings 1015 - Amsouth - Operating Account 2,767.36 1030 - Petty Cash 49.11 Total Checking/Savings 2,816.47 Accounts Receivable 1200 - Accounts Receivable 211,663.27 Total Accounts Receivable 211,663.27 Other Current Assets 1475 - Electric Deposit 400.00 Total Other Current Assets 400.00 Total Current Assets 214,879.74 Fixed Assets 1575 - A/A - Organizational Cost (585.00) 1570 - Organizational Costs 585.00 1590 - Building - 7325 SW 32nd St 1590-01 - Sign 1,560.00 1590-02 - Studio Drape 2,989.20 1590-03 - Canopies 2,400.00 1590-04 - Land 25,000.00 1590 - Building - 7325 SW 32nd St - Other 214,964.60 Total 1590 - Building - 7325 SW 32nd St 246,913.80 1600 - Office Furniture 1600-01 - Cost 30,324.10 1600-02 - Office Furniture -Staples 7,874.46 1600 - Office Furniture - Other 890.44 Total 1600 - Office Furniture 39,089.00 1700 - Equipment 1700-01 - Computer Equipment 78,054.79 1700-02 - Production Equipment 254,159.85 1700-03 - Office Equipment 24,084.20 1700-04 - Trade Show Booth 5,011.65 1700 - Equipment - Other 2,352.60 Total 1700 - Equipment 363,663.09 1710 - Automobiles 65,611.63 1800 - LESS -Accumulated Depreciation (324,616.00) Total Fixed Assets 390,661.52 TOTAL ASSETS 605,541.26 LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable 2000 - Accounts Payable 204,489.03 Total Accounts Payable 204,489.03 Other Current Liabilities 2100 - Payroll Liabilities 5,003.31 2200 - Sales Tax Payable (1,535.25) 2250 - Working Capital Loan -Amsouth 30,975.77 2251 - Mountaineer Loan 19,795.08 2252 - Volvo Loan 24,852.13 2275 - Loan from Shareholders 45,301.28 2280 - Loan from Shareholder- JLT 49,785.01 Total Other Current Liabilities 174,177.33 Total Current Liabilities 378,666.36 Page 104 The Firm Multimedia 05/12/00 Balance Sheet As of May 10, 2000 May 10, '00 Long Term Liabilities Leases 2486 - Preferred Capital Corporation 14,265.53 2450 - Freedom Capital 4,961.35 2300 - Associates Leasing Inc. 1,720.02 2320 - Colonial Pacific Leasing #2 11,816.65 2380 - Credential Leasing Corporation 7,122.46 2385 - The Manifest Group-Interactive 1,782.40 2419 - FINOVA - Imagesetter 14,319.17 2420 - ORIX - Scanner 6,384.94 2421 - ORIX - Voice M/Comp. 5,765.68 2422 - Colonial Pacific-Production Equ 5,939.16 2423 - Colonial Pacific, Inc./Off. Equ 3,440.14 2440 - Colonial Pacific/Harbour Capita 1,257.76 Total Leases 78,775.26 2395 - Chrysler Financial - Caravan 11,605.93 2400 - Small Business Loan Source 189,115.52 Total Long Term Liabilities 279,496.71 Total Liabilities 658,163.07 Equity 3100 - Common Stock 111.00 3900 - Retained Earnings 9,050.33 Net Income (61,783.14) Total Equity (52,621.81) TOTAL LIABILITIES & EQUITY 605,541.26 Page 105 The Firm Multimedia 05/12/00 Profit and Loss January through March 2000 Jan - Mar '00 Ordinary Income/Expense Income 4500 - Fee Income 4600-02 - Retainer 11,100.00 4500-03 - Video Production 51,378.00 4600-04 - Graphics 4500-20 - Printing 6,028.41 4500-21- Layout & Design 10,366.00 4500-23 - General Graphics 10,190.00 Total 4600-04 - Graphics 26,584.41 4500-09 - CD-Rom Authoring 12,995.00 4600-10 - Web Design 2,260.00 4600-13 - Audio Production 436.00 4600-16 - Website Maintenance 4,620.00 4500-17 - Website Hosting 120.00 4500-18 - Client Promotions 5,590.00 4600-19 - Shipping Revenue 5,562.82 4600-06 - Commercial Leased Access 167,444.00 4600-26 - Spot Airtime 96,202.75 4500 - Fee Income - Other 34,649.29 Total 4600 - Fee Income 418,942.27 4530 - Reimbursed Expenses 3.32 Total Income 418,945.59 Cost of Goods Sold 6230 - Commercial Leased Access 6230-31 - Rockford Press 19,265.56 6230-30 - Harry Browne CLA 2,583.20 6230-29 - Snappy Lock 2,858.54 6230-27 - Ocala News Tonight 10,446.50 6230-26 - CareerTV.Com 16,275.95 6230-23 - Fairbanks Construction 433.73 6230-14 - Pennbrooke Fariways (618.72) 6230-19 - Class 1 772.90 6230 - Commercial Leased Access -Other (120.21) Total 6230 - Commercial Leased Access 51,897.45 6231 - Spot Airtime 33,111.54 6237 - Airtime-Program 1,870.00 6232 - Client Promotions 16,598.37 6233 - Internet Fees 376.16 6234 - Outdoor Advertising 19,800.75 6260 - Graphics 6260-03 - Printing 10,120.02 6260-06 - Supplies 56.92 6260-06 - Service Bureau 6260.07 - Film Output 180.00 Total 6260-06 - Service Bureau 180.00 6260-07 - Shipping Costs 276.72 Total 6260 - Graphics 10,633.66 6266 - Production 6266-01 - Tapes 1,729.96 6266-02 - Production Equipment 1,059.95 6266-04 - Talent Fees 150.00 6266-06 - Staging & Props 2.96 6265-07 - Shipping Costs 2,541.68 6265-08 - VHS Sleeves 1,522.50 6266-09 - Tape Duplication 8,747.44 6266 - Production - Other 21.19 Total 6265 - Production 15,775.68 Total COGS 150,063.61 Page 106 The Firm Multimedia 05/12/00 Profit and Loss January through March 2000 Jan - Mar '00 Gross Profit 268,881.98 Expense 4540 - Sales Tax 648.24 6105 - Advertising 6105-02 - Personnel Advertising 354.31 6105-03 - Telephone Book Advertising 234.75 6105-04 - Press Release (50.00) 6106-06 - Print Advertising 688.00 Total 6105 - Advertising 1,227.06 6115 - Automobile Expense 6115-01 - Fuel 4,486.51 6115-02 - Auto Maintanence 244.64 6115-05 - Auto - Volvo Lease 1,268.82 Total 6115 - Automobile Expense 5,999.97 6125 - Bank Service Charges 110.87 6140 - Communications 6140-01 - Internet fees 1,397.95 Total 6140 - Communications 1,397.95 6150 - Company Fees 6150-01 - Non Compete Fees 60.00 6150-04 - Other Fees 534.00 6150-05 - NDC Payment System Fees 286.84 Total 6150 - Company Fees 880.84 6165 - Dues and Subscriptions 455.17 6170 - Employee Moving Expenses 500.00 6175 - Equipment Rental 302.10 6185-Insurance 6185-01 - Auto Insurance 1,080.50 6185-02 - Building/Property Insurance 1,210.50 6185-04 - Work Comp 692.80 6185-05 - Life Insurance 338.10 Total 6185 - Insurance 3,321.90 6205 - Interest Expense 6205-01 - Finance Charge Late charges 3,041.22 6205-01 - Finance Charge - Other 1,229.27 Total 6205-01 - Finance Charge 4,270.49 6205-02 - Loan Int.-Capital Leases 6,099.22 6205-03 - Mortgage - Interest 7,131.19 6205 - Interest Expense - Other 2,564.44 Total 6205 - Interest Expense 20,065.34 6220 - Janitorial / Maintenance 6220-02 - Supplies 41.72 6220-03 - Sanitation 281.00 6220-04 - Pest Control 106.00 Total 6220 - Janitorial / Maintenance 428.72 6235 - Licenses and Permits 45.10 6306 - Office Rent 6306-01 - Jacksonville Rent 418.00 Total 6306 - Office Rent 418.00 6255 - Postage and Delivery 6255-01 - Postage (USPS) 516.82 6255-02 - Shipping (Unishippers) 2,459.83 6255-03 - Shipping (UPS) 284.04 6255-04 - Shipping (Airborne) 114.00 Total 6255 - Postage and Delivery 3,374.69 Page 107 The Firm Multimedia 05/12/00 Profit and Loss January through March 2000 Jan - Mar '00 6275 - Professional Fees 6275-01 - Accounting 137.00 6275-03 - Legal Fees 869.50 Total 6275 - Professional Fees 1,006.50 6305 - Repairs and Maintenance 6305-01 - Building Repairs 114.55 6305-02 - Computer Repairs 256.00 6305-03 - Equipment Repairs 916.91 6305 o Repairs and Maintenance - Other 60.26 Total 6305 - Repairs and Maintenance 1,347.72 6345 - Telephone 6345-02 - Cellular Telephones 980.78 6345-03 - Local Telephone Service 1,646.00 6345-04 - Long Distance 1,792.83 6345-05 - Paging 350.09 Total 6345 - Telephone 4,769.70 6355 - Travel 6355-05 - Meals 163.14 6355-06 - Tolls & Parking 92.35 Total 6355 - Travel 255.49 6395 - Utilities 6395-01 - Electric 1,198.86 Total 6395 - Utilities 1,198.86 6540 . Miscellaneous 664.90 6550 - Office Supplies 6550-01 - Printing 693.17 6550-02 - Grocery 363.18 6550-04 - Video Production Supplies 302.49 6550-05 - Graphic Supplies 361.42 6550-06 - Film Processing 58.14 6550-07 - Audio Production Supplies 14.82 6550 - Office Supplies - Other 1,739.88 Total 6550 - Office Supplies 3,533.10 6560 . Payroll Expenses 6560-01 - Medical Insurance 4,358.56 6560-02 - FUTA 691.16 6560-03 - SUTA 591.11 6560-04 - Officer's Salaries 14,895.85 6560-05 - Salaries & Wages 80,808.51 6560-06 - Commission Wages 7,628.78 6560-07 - Federal Payroll Taxes-Company 7,941.57 6560 - Payroll Expenses - Other 477.85 Total 6560 - Payroll Expenses 117,393.39 6610 - Sales Expenses 6610-01 - Misc. Expenses 3.00 6610-03 - Sales Incentives 477.03 6610-04 - Direct Mail 661.98 Total 6610 - Sales Expenses 1,142.01 6640 - Taxes 6640-01 - Federal 112.00 6640-02 - Intangible / Tangible 229.00 6640-03 - Leases - Personal Property 854.53 6640-04 - Real Estate Taxes 4,640.46 6640-05 - State 284.35 6640-06 - Personal Property 5,631.74 Total 6640 - Taxes 11,752.08 7005 - Bad Debt 7005-01 - Adjust Client Acct. 779.20 7005 - Bad Debt - Other 477.87 Total 7005 - Bad Debt 1,257.07 Total Expense 183,496.77 Net Ordinary Income 85,385.21 Net Income 85,385.21 Page 108 The Firm Multimedia 05/12/00 Balance Sheet As of March 31, 2000 Mar 31, '00 ASSETS Current Assets Checking/Savings 1015 - Amsouth - Operating Account 13,657.99 1030 - Petty Cash 2.35 Total Checking/Savings 13,660.34 Accounts Receivable 1200 - Accounts Receivable 307,530.88 Total Accounts Receivable 307,530.88 Other Current Assets 1475 - Electric Deposit 400.00 Total Other Current Assets 400.00 Total Current Assets 321,591.22 Fixed Assets 1575 - A/A - Organizational Cost (585.00) 1570 - Organizational Costs 585.00 1590 - Building - 7325 SW 32nd St 1590-01 - Sign 1,560.00 1590-02 - Studio Drape 2,989.20 1590-03 - Canopies 2,400.00 1590-04 - Land 25,000.00 1590 - Building - 7325 SW 32nd St - Other 214,964.60 Total 1590 - Building - 7325 SW 32nd St 246,913.80 1600 - Office Furniture 1600-01 - Cost 30,324.10 1600-02 - Office Furniture -Staples 7,874.46 1600 - Office Furniture - Other 890.44 Total 1600 - Office Furniture 39,089.00 1700 - Equipment 1700-01 - Computer Equipment 78,054.79 1700-02 - Production Equipment 254,159.85 1700-03 - Office Equipment 24,084.20 1700-04 - Trade Show Booth 5,011.65 1700 - Equipment - Other 2,352.60 Total 1700 - Equipment 363,663.09 1710 - Automobiles 65,611.63 1800 - LESS - Accumulated Depreciation (324,616.00) Total Fixed Assets 390,661.52 TOTAL ASSETS 712,252.74 LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable 2000 - Accounts Payable 153,621.61 Total Accounts Payable 153,621.61 Other Current Liabilities 2100 - Payroll Liabilities 5,789.76 2200 - Sales Tax Payable (1,340.27) 2250 - Working Capital Loan -Amsouth 32,654.85 2251 - Mountaineer Loan 20,091.20 2252 - Volvo Loan 25,213.67 2275 - Loan from Shareholders 45,301.28 2280 - Loan from Shareholder- JLT 49,785.01 Total Other Current Liabilities 177,495.50 Total Current Liabilities 331,117.11 Page 109 The Firm Multimedia 05/12/00 Balance Sheet As of March 31, 2000 Mar 31, '00 Long Term Liabilities Leases 2486 - Preferred Capital Corporation 14,492.80 2450 - Freedom Capital 5,213.78 2300 - Associates Leasing Inc. 2,377.54 2320 - Colonial Pacific Leasing #2 12,346.41 2380 - Credential Leasing Corporation 7,370.18 2385 - The Manifest Group-Interactive 1,959.87 2419 - FINOVA - Imagesetter 14,644.85 2420 - ORIX - Scanner 6,801.54 2421 - ORIX - Voice M/Comp. 5,894.23 2422 - Colonial Pacific-Production Equ 6,507.39 2423 - Colonial Pacific, Inc./Off. Equ 3,586.48 2440 - Colonial Pacific/Harbour Capita 1,370.39 Total Leases 82,565.46 2395 - Chrysler Financial -Caravan 12,141.98 2400 - Small Business Loan Source 189,277.65 Total Long Term Liabilities 283,985.09 Total Liabilities 615,102.20 Equity 3100 - Common Stock 111.00 3900 - Retained Earnings 11,654.33 Net Income 85,385.21 Total Equity 97,150.54 TOTAL LIABILITIES & EQUITY 712,252.74 Page 110 The Firm Multimedia 05/21/00 Profit and Loss January through December 1999 Jan - Dec '99 Ordinary Income/Expense Income 4500 - Fee Income 4500-01 - Commission Income 5,341.63 4500-02 - Retainer 34,580.00 4500-03 - Video Production 267,212.12 4500-04 - Graphics 4500-15 - CD Laser Art 350.00 4500-20 - Printing 84,166.59 4500-21 - Layout 8 Design 123,831.32 4500-22 - 3D Animation 11,461.68 4500-23 - General Graphics 5,873.25 Total 4500-04 - Graphics 225,682.84 4500-06 - Fee Income - Other (54.11) 4500-07 - Public Relations 4,910.00 4500-09 - CD-Rom Authoring 4,999.00 4500-10 - Web Design 11,735.00 4500-13 - Audio Production 23,943.64 4500-14 - Pre-Press 1,621.00 4500-16 - Website Maintenance 4,971.00 4500-17 - Website Hosting 5,093.00 4500-18 - Client Promotions 10,850.00 4500-19 - Shipping Revenue 15,029.06 4500-05 - Commercial Leased Access 276,334.00 4500-25 - Spot Airtime 165,787.00 4600 - Fee Income - Other 35,216.04 Total 4600 - Fee Income 1,093,251.22 5010 - Program Airtime 8,489.00 4530 - Reimbursed Expenses 588.89 Total Income 1,102,329.11 Cost of Goods Sold 6230 - Commercial Leased Access 6230-26 - CareerTV.Com 152.50 6230-25 - WSA Marketing 575.65 6230-23 - Fairbanks Construction 1,035.10 6230-01 - The Firm Multimedia 307.00 6230-14 - Pennbrooke Fariways 24,047.45 6230-15 - Strawn Chevrolet 982.40 6230-16 - Leary Management 3,708.86 6230-18 - Quiltingly Yours 13,179.28 6230-19 - Class 1 1,820.28 6230-21 - Citrus Hills Marketing 2,971.50 6230 - Commercial Leased Access - Other (37.50) Total 6230 - Commercial Leased Access 48,742.52 6231 - Spot Airtime 42,676.08 6237 - Airtime-Program 3,655.00 6232 - Client Promotions 29,204.84 6233 - Internet Fees 1,712.23 6234 - Outdoor Advertising 61,000.25 6260 - Graphics 6260-01 - Graphics Equipment 313.99 6260-02 - Photos 275.59 6260-03 - Printing 69,972.48 6260-05 - Supplies 441.36 6260-06 - Service Bureau 0.00 6260-07 - Shipping Costs 4,672.35 Total 6260 - Graphics 75,675.77 6265 - Production 6265-01 - Tapes 4,695.44 6265-02 - Production Equipment 616.28 6265-04 - Talent Fees 4,320.00 6265-05 - Staging & Props 968.54 Page 111 The Firm Multimedia 05/21/00 Profit and Loss January through December 1999 Jan - Dec '99 6266-07 - Shipping Costs 13,695.54 6265-08 - VHS Sleeves 503.44 6265-09 - Tape Duplication 32,500.58 6265 - Production - Other 62.54 Total 6265 - Production 57,362.36 Total COGS 320,029.05 Gross Profit 782,300.06 Expense 6156 - Amortization Expense 58.00 4640 - Sales Tax 169.38 6106 - Advertising 6105-02 - Personnel Advertising 4,166.80 6105-03 - Telephone Book Advertising 3,250.09 6105-04 - Press Release 50.00 6105-06 - Promotion Advertising 5,970.02 6106-06 - Print Advertising 2,408.00 6106-09 - Firm Misc. Advertising 428.06 6106 - Advertising - Other 296.00 Total 6105 - Advertising 16,568.97 6115 - Automobile Expense 6116-01 - Fuel 12,027.35 6115-02 - Auto Maintanence 3,171.09 6115-03 - Vehicle Registration 78.20 6115-04 - Mercury Mountaineer Lease 1,347.52 6116-05 - Auto -Volvo Lease 2,834.76 6115 - Automobile Expense - Other 170.66 Total 6115 o Automobile Expense 19,629.58 6126 - Bank Service Charges 378.11 6140 - Communications 6140-01 - Internet fees 4,203.38 Total 6140 - Communications 4,203.38 6160 - Company Fees 6150-01 - Non Compete Fees 160.00 6150-02 - Documentation Fees 553.65 6160-04 - Other Fees 1,150.25 6150-06 - NDC Payment System Fees 513.77 6150 - Company Fees - Other 180.00 Total 6150 - Company Fees 2,557.67 6160 - Education 81.05 6161 - Conventions 750.00 6166 - Dues and Subscriptions 949.50 6170 - Employee Moving Expenses 6170-01 - Moving Van Rental 1,531.00 6170-02 - Fuel 407.27 6170-03 - Lodging 135.57 Total 6170 - Employee Moving Expenses 2,073.84 6176 - Equipment Rental 3,502.77 6185-Insurance 6186-01 - Auto Insurance 2,184.92 6186-02 - Building/Property Insurane 1,383.94 6185-03 - Media Liability Ins. 5,605.13 6185-04 - Work Comp 3,460.60 6185-05 - Life Insurance 2,009.09 6185 - Insurance - Other (7,910.93) Total 6185 - Insurance 6,732.75 6205 - Interest Expense 6205-01 - Finance Charge Late charges 4,778.62 Page 112 The Firm Multimedia 05/21/00 Profit and Loss January through December 1999 Jan - Dec '99 6205-01 - Finance Charge - Other 5,550.72 Total 6205-01 - Finance Charge 10,329.34 6205-02 - Loan Int.-Capital Leases 14,054.89 6205-03 - Mortgage - Interest 18,713.31 6205-04 - Loan Interest-John B. LaTorraca 200.00 6205 - Interest Expense - Other 5,171.75 Total 6205 - Interest Expense 48,469.29 6220 - Janitorial / Maintenance 6220-02 - Supplies 494.71 6220-03 - Sanitation 818.00 6220-04 - Pest Control 421.90 6220 - Janitorial I Maintenance - Other 25.39 Total 6220 - Janitorial / Maintenance 1,760.00 6235 - Licenses and Permits 481.05 6306 - Office Rent 6306-01 - Jacksonville Rent 1,063.88 Total 6306 - Office Rent 1,063.88 6255 - Postage and Delivery 6255-01 - Postage (USPS) 3,072.43 6255-02 - Shipping (Unishippers) 4,652.07 6255-04 - Shipping (Airborne) 52.00 6255-06 - Shipping - FedEx 89.07 6255 - Postage and Delivery - Other 25.00 Total 6255 - Postage and Delivery 7,890.57 6275 - Professional Fees 6275-01 - Accounting 6,992.16 6275-03 - Legal Fees 2,966.23 6275-04 - Talent 109.50 6275-05 - Personnel 3,427.78 6275-06 - Collection Agent Fees 299.71 Total 6275 - Professional Fees 13,795.38 6305 - Repairs and Maintenance 6305-01 - Building Repairs 1,916.33 6305-02 - Computer Repairs 5,426.15 6305-03 - Equipment Repairs 3,819.70 6305 - Repairs and Maintenance - Other 266.04 Total 6305 - Repairs and Maintenance 11,428.22 6345 - Telephone 6345-02 - Cellular Telephones 2,338.29 6345-03 - Local Telephone Service 5,349.09 6345-04 - Long Distance 8,655.76 6345-05 - Paging 791.59 6345 - Telephone - Other 374.78 Total 6345 - Telephone 17,509.51 6355 - Travel 6355-01 - Airline Travel 2,557.50 6355-02 - Car Rental 69.32 6355-03 - Entertainment 840.25 6355-04 - Lodging 2,951.99 6355-05 - Meals 4,445.18 6355-06 - Tolls & Parking 621.16 6355 - Travel - Other 206.50 Total 6355 - Travel 11,691.90 6395 - Utilities 6395-01 - Electric 4,586.91 Total 6395 - Utilities 4,586.91 6540 - Miscellaneous 2,689.75 Page 113 The Firm Multimedia 5/12/00 Profit and Loss January through December 1999 Jan - Dec '99 6660 - Office Supplies 6550-01 - Printing 3,529.71 6550-02 - Grocery (9.73) 6660-03 - Refrigerator 0.00 6650-06 - Film Processing 111.68 6650-07 - Audio Production Supplies 538.55 6650-08 - Graphics Equipment 223.83 6650-09 - Interactive Supplies 396.94 6650 - Office Supplies - Other 5,820.82 Total 6660 - Office Supplies 10,611.80 6660-06 - Graphic Supplies 6660.01 - Pre-Press Supplies 4,365.59 6550-06 - Graphic Supplies - Other 3,553.04 Total 6660-06 - Graphic Supplies 7,918.63 6660-04 - Video Production Supplies 6660.02 - Tapes 2,143.04 6660-04 - Video Production Supplies - Other 1,814.53 Total 6660-04 - Video Production Supplies 3,957.57 6660 - Payroll Expenses 6660-01 - Medical Insurance 8,261.91 6660-02 - FUTA 1,206.85 6660-03 - SUTA 660.14 6660-04 - Officer's Salaries 68,520.91 6660-06 - Salaries & Wages 294,521.19 6660-06 - Commission Wages 34,075.96 6660-07 - Federal Payroll Taxes-Company 30,543.82 6660 - Payroll Expenses - Other 2,147.17 Total 6660 - Payroll Expenses 439,937.95 6680 - Refunds -Client 2,945.33 6610 - Sales Expenses 6610-01 - Misc. Expenses 528.59 6610-02 - Trade Shows 3,013.63 6610-03 - Sales Incentives 968.56 6610-06 - Lead Referral Source 1,290.16 Total 6610 - Sales Expenses 5,800.94 6640 - Taxes 6640-01 - Federal (2,413.76) 6640-02 - Intangible / Tangible 377.48 6640-03 - Leases - Personal Property 1,564.85 6640-06 - State 1,651.86 Total 6640 - Taxes 1,180.43 7006 - Bad Debt 7006-01 - Adjust Client Acct. 8,827.93 7006 - Bad Debt - Other 11,364.27 Total 7006 - Bad Debt 20,192.20 Total Expense 671,566.31 Net Ordinary Income 110,733.75 Other Income/Expense Other Income 7016 - Interest Income 11.67 Total Other Income 11.67 Other Expense 6166 - Depreciation Expense 86,319.00 Total Other Expense 86,319.00 Net Other Income (86,307.33) Net Income 24,426.42 The Firm Multimedia 05/21/00 Balance Sheet As of December 31, 1999 Dec 31, '99 ASSETS Current Assets Checking/Savings 1015 - Amsouth - Operating Account 989.63 1030 - Petty Cash 27.59 Total Checking/Savings 1,017.22 Accounts Receivable 1200 - Accounts Receivable 187,932.67 Total Accounts Receivable 187,932.67 Other Current Assets 1475 - Electric Deposit 400.00 Total Other Current Assets 400.00 Total Current Assets 189,349.89 Fixed Assets 1575 - A/A - Organizational Cost (585.00) 1570 - Organizational Costs 585.00 1590 - Building - 7325 SW 32nd St 1590-01 - Sign 1,560.00 1590-02 - Studio Drape 2,989.20 1590-03 - Canopies 2,400.00 1590-04 - Land 25,000.00 1590 - Building - 7325 SW 32nd St - Other 214,964.60 Total 1590 - Building - 7325 SW 32nd St 246,913.80 1600 - Office Furniture 1600-01 - Cost 30,324.10 1600-02 - Office Furniture - Staples 4,949.46 1600 - Office Furniture - Other 890.44 Total 1600 - Office Furniture 36,164.00 1700 - Equipment 1700-01 - Computer Equipment 78,054.79 1700-02 - Production Equipment 246,931.90 1700-03 - Office Equipment 24,084.20 1700-04 - Trade Show Booth 5,011.65 1700 - Equipment - Other 332.60 Total 1700 - Equipment 354,415.14 1710 - Automobiles 40,038.44 1800 - LESS - Accumulated Depreciation (324,616.00) Total Fixed Assets 352,915.38 TOTAL ASSETS 542,265.27 LIABILITIES 8 EQUITY Liabilities Current Liabilities Accounts Payable 2000 - Accounts Payable 91,263.61 Total Accounts Payable 91,263.61 Other Current Liabilities 2100 - Payroll Liabilities 4,494.78 2200 - Sales Tax Payable (1,454.06) 2250 - Working Capital Loan - Amsouth 33,704.66 2251 - Mountaineer Loan 20,964.97 2275 - Loan from Shareholders 33,062.28 2280 - Loan from Shareholder- JLT 49,785.01 Total Other Current Liabilities 140,557.64 Total Current Liabilities 231,821.25 Long Term Liabilities Page 115 The Firm Multimedia 05/21/00 Balance Sheet As of December 31, 1999 Dec 31, '99 Leases 2486 - Preferred Capital Corporation 15,069.55 2450 - Freedom Capital 6,166.03 2300 - Associates Leasing Inc. 3,332.54 2320 - Colonial Pacific Leasing #2 14,384.28 2350 - The Manifest Group 1,626.37 2380 - Credential Leasing Corporation 8,097.50 2385 - The Manifest Group-Interactive 2,471.06 2419 - FINOVA - Imagesetter 16,230.73 2420 - ORIX - Scanner 7,995.37 2421 - ORIX - Voice M/Comp. 6,273.56 2422 - Colonial Pacific-Production Equ 8,115.40 2423 - Colonial Pacific, Inc./Off. Equ 4,419.75 2440 - Colonial Pacific/Harbour Capita 2,099.45 Total Leases 96,281.59 2395 - Chrysler Financial - Caravan 12,669.64 2400 - Small Business Loan Source 189,727.46 Total Long Term Liabilities 298,678.69 Total Liabilities 530,499.94 Equity 3100 - Common Stock 111.00 3150 - Add'I Paid in Capital 60,400.00 3900 - Retained Earnings (73,172.09) Net Income 24,426.42 Total Equity 11,765.33 TOTAL LIABILITIES & EQUITY 542,265.27 Page 116 Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 2.10(A)(1) REAL PROPERTY 1. Commercial lease dated September 1, 1999 between Corporate Investment International, Inc. and The Firm. Property located at 1999 West Colonial Drive, Suite 205, Orlando, Florida. Lease term is for one year expiring August 31, 2000. Rent is $371.00 per month and is a trade-out for production. 2. Mortgage with Small Business Loan Source for property at 7325 SW 32nd Street, Ocala, Florida 34474. Loan amount $194,000.00. Fluctuating interest rate, currently at 11.75%. Mortgage payment is $2,025.00 per month. The current balance is $189,277.65. Supporting documents to follow are: a. Settlement Statement b. Notice of Commencement c. Note with Exhibit A d. Agreement Regarding Closing of Loan with Exhibit A e. Financing Statement with Schedule f. Security Agreement - Commercial g. Affidavit of No Adverse Change h. Borrowing Affidavit i. Guaranty j. Acknowledgements k. Certificate of the Secretary of Lorilei l. Notice of Entire Agreement m. Authorization and Loan Agreement n. Compensation Agreement o. Environment Certificate p. Borrowing Certificate q. Letter to Publicize r. Acknowledgement Insurance and Financials s. Certification as to Child Support t. Affidavit Regarding Business Permits u. Financial Agreement v. Assignment of Life Insurance Policy w. Curington Contracting, Inc. Construction Agreement I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 117 Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 2.10(C) EQUIPMENT Attached to this schedule is a complete equipment inventory list. Any item without a * is owned outright by Lorilei Communications, Inc. Equipment Inventory Reception Office Computer AST Adventure 686 16mb Ram Monitor AstVision 4 Keyboard Ast Typewriter Display 900 Dictionary Postage Meter Neopost Model 9512 Scale Pelouze PS2R1-P Facsimile Canon CFX-L4000 Plain Paper Reception Desk 4 Guest Chairs w/ 2 Tables Kitchen Refrigerator Table w/ 4 Chairs Framed Art Work Coke Machine Microwave Coffee Pot Business Office Computer 24X Max Pentium 32mb Ram Monitor AstVision 7L Keyboard Windows Printer Cannon LBP 460 Shredder Fellowes Powershred P540 Calculator Casio HR 150LB 2 Guest Chairs 1 Corner Plant Sales Department Computer Packard Bell Legend Supreme Monitor Samsung Keyboard Packard Bell Scanner Microtek Scanmaker 11SP Misc. Polaroid Sprint Scan 35 Lap Top 3 Toshiba SAT 2515CDS P266MMX 4.3G 32MB Computer Networkcard for all notebooks Projector Panasonic LCD Projector* Model PT-L5 Serial Number 7-91871-11035-5 Value $2,695.00 Leasing Co. Freedom Capital 11 Merrill Drive Hampton, NH 03842 Framed Art Work Page 118 Project Coordinator's Office Computer Authentic AMD 32mb Ram Monitor Max Tech Keyboard Windows Facsimile Canon B640 Plain Paper Fax Sharp UX-1000 Plain Paper Fax Media Buyer Office Computer Pentium 32mb Monitor Max Tech Keyboard Windows Conference Room Television Magnavox VCR Sharp Conference Table 6 Chairs Framed Art Work Leigh's Office Computer Ast Advantage Adventure 824 Pentium 16mb Monitor Samsung Keyboard Ast Printer HP DeskJet 600 Printer HP DeskJet 612C Lap Top Vaio PCG-F340 Sony Lap Top* Leasing Co. *Preferred Lease P.O. Box 41598 Philadelphia, PA 19101-1598 Lease #716-0388449-001 2 Guest Chairs 1 Corner Plant JVC Radio/CD Framed Art Work Gerry's Office Computer Compaq Pentium 64mb Monitor Compaq Presairo Keyboard Compaq Printer Canon BJC-4300 Color BubbleJet Shredder Fellowes Powershred P540 File Cabinet 4 Drawer Vertical File Cabinet 2 Drawer Vertical File Cabinet Globe Hutch 2 Guest Chairs 1 Corner Plant JVC Radio/CD Page 119 Graphics Department Computer Mac G3* Power PC 8100 Power Computing 132 PowerMac G3 350MT*** PowerMac G3 400 MT*** Keyboard Power Computing Apple * Apple 2 Power Mac Keyboards*** Monitor OptiQuest V773* Maglnnovatinos (2) .26MM 66HZ Monitor*** Printer Lexmark Optra R Epson Stylus 600 Color** Drives External Zip Drive (3) LaCie HD Smart Storage Solutions External HD External Jaz Drive AVA 2906-SCSI Card*** CD-Rewritable Drive*** Misc. Dynatek CE Burner Scanner Astra Color Scanner Leasing Co. *Bank Vest Capital Corp. AKA ORIX and FINOVA 200 Nickerson Road Marlboror, MA 01752 (800)532-7317 Lease #047011-001 Lease #047011-002 Lease #047011-003 **Colonial Pacific Leasing P.O. Box 2090 Portland, Oregon 97208-2090 (800)444-1738 Lease #108025002 Lease #108025003 Lease #108025004 ***Freedom Capital 30423 Canwood Street, Suite 207 Agoura Hills, CA 91301 (818)735-0439 PP Tax Paid over 12 months Clipper CD Photo Library Medium Format Still Camera w/ lenses Still Photo Lights and Stands Light Box Page 120 Pre Press Office Computer Mac G3* Keyboard Apple* Monitor Spectrum 7GLR* Printer 3M Rainbow* Agfa 9800* Misc. Agfa Rapidline 43 Film Developer* Leasing Co. *Bank Vest Capital Corp. AKA ORIX and FINOVA 200 Nickerson Road Marlboror, MA 01752 (800)532-7317 Lease #047011-001 Lease #047011-002 Lease #047011-003 PP Tax Paid over 12 months General Office Area Printer HP LaserJet 4 Copier Minolta EP 4233 Binder GBC Image Maker 1000 Animation/Website Artist's Office Computer Power Mac 6500* Power Mac G3 Hard Drive 6-GIG External* Monitor Nokia 17"* Optiquest 17" Keyboard Apple* Apple Scanner UMAX Astra 610 S Flatbed* Screen DT-S101S Drum CD Writer Yamaha CRV4260* Camera Olympus D-500L Digital Leasing Co. *The Manifest Group 100 East Saratoga Marshall, MN 56258-1714 Lease #556150 Lease #624826 PP Tax Paid over 12 months Page 121 Production - Master Control Office 1. IBM PC 386 2. Sony Monitor 3. Generic Keyboard 4. HP DeskJet 500C 5. Compuvideo/Wave Form Monitor 6. Panasonic 13" Monitors (5) 7. Panasonic 21" Monitors (2) 8. Sony Speakers (2) 9. Amiga 4000 Computer with Video Toaster System 10. Amiga Keyboard 11. Mackie CR1604-VLZ Audio Mixing Board 12. Sony FXE-100 Video Editing/Switcher System 13. Intercom System 14. Radio Shack Amplifier 15. LabTech LCS-150 Computer Speakers (2) 16. UVW 1800 Sony Beta Cam Deck (2)** 17. Sony VO-9800 3 1/4 Umatic SP 18. Video Patch Bay 19. Tascam Patch Audio Bay 20. Alesis 3630 Compressor 21. Pioneer PD103 CD Player 22. Tascam DA-20 Digital Audio Tape Players 23. JVC RX 212 AM-FM Receiver 24. Sony EVO-9850 HI 8 Video Deck*** 25. Panasonic RCUWV-RC36 Remote Control Unit 26. NADY Receiver - 4 Channel 27. Video Tek VDA-16 Black Burst Generator*** 28. Zip Drive 100 29. Kinyo Beta Tape Rewinder 30. Horita CSG-50 Bars/Tone Generator 31. Serial Port Switch Box 32. Sony EVO-9850 3/4 Tape Deck **** 33. Sony CMA**** 34. Quasar VHQ 830 VCR 35. Production Desk with Shelves Leasing Co. **Colonial Pacific Leasing P.O. Box 2090 Portland, Oregon 97208-2090 (800)444-1738 Lease #108025002 Lease #108025003 Lease #108025004 ***Associates Leasing Inc. P.O. Box 6229 Carol Stream, IL 60197-6229 Page 122 (800)525-3054 Lease #0006581-000 ****The Manifiest Group 100 East Saratoga Marshall, MN 56258-1714 (507)532-9558 Lease #556150 Lease #624826 PP Tax Paid over 12 months Production - Back Office in Master Control 1. Power Mac 7200/75 2. Apple Keyboard 3. NEC Multi Scan Monitor 4. Microtech Scan Maker 2 HR 5. Sony CDP-XE 500 CD Player 6. Power Mac 7200/75 7. Interex Keyboard 8. Portrait Pivet 1700 Monitor 9. 2 Workstation Desks Production - Edit Room - Station 1 1. Sony 21" TV 2. Media 100 System - Power Mac 8100/80 with Apple Keyboard and Supermatch 17" Monitor* 3. Seagate 2047M Drive (1)* 4. Seagate 8669M Drive (2)* 5. Micropolis 8681M Drive (1) 6. Media 100 Digital Video Editor** Leasing Co. *Bank Vest Capital Corp. AKA ORIX and FINOVA 200 Nickerson Road Marlboror, MA 01752 (800)532-7317 Lease #047011-001 Lease #047011-002 Lease #047011-003 **Colonial Pacific Leasing P.O. Box 2090 Portland, Oregon 97208-2090 (800)444-1738 Lease #108025002 Lease #108025003 Lease #108025004 PP Tax Paid over 12 months Page 123 Production - Edit Room - Station 2 1. *PCI System Media 100 Nubus $8999.95 *Purchased by Media 100 *Power Mac G3/G4 DIMM PC $379.00 *Remus Lite Disk Array Software $129.00 *Adobe After Effects Production Bundle $1,399.00 *18.2 GB Barracuda $505.00 *Adobe Photoshop Software $589.00 *Data Silo DS 100 $429.00 *Data Silo Cable Kit $149.00 *Tech Tools Pro Software $89.00 *Power Domain SCSI $349.00 *17" E773 Monitor $299.01 Leasing Co. Preferred Capital Corporation P.O. Box 41598 Philadelphia, PA 19101-1598 Lease #716-0388449-001 2. Micro Tek 2 HR Scanner 3. Sony Speakers (2) 4. Samsung TV/VCR 13" Combo 5. Panasonic 13" Monitor 6. LabTech CS-900 Computer Speakers (2) 7. APC-UPS 450 Battery Back Up 8. Panasonic PV-S 4480 Super VHS Deck 9. GE VG4056 VCRS (2) 10. GE SV4053 VCRS (2) 11. Symphonic 6480 VCRS (2) 12. 16 Port Video Patch Bay (2) 13. Neutrik Audio Patch Bay 14. Technics SLPG350 CD Player 15. Tascam DA20 Digital Audio Tape 16. JVC RX - 212 FM/AM Receiver 17. Sony UVW 1800 Beta SP Deck 18. Mackie 1202-VLZ Mixing Board 19. Panasonic WVF 300 Camera* Leasing Co. *Colonial Pacific Leasing P.O. Box 2090 Portland, Oregon 97208-2090 (800)444-1738 Lease #108025002 Lease #108025003 Lease #108025004 PP Tax Paid over 12 months Page 124 Studio 1. Sears TV 2. Rid Lowcost Teleprompter System (2) 1* 3. Panasonic 300 CLE WFV 300 Video Cameras (2) 4. ITE Pedastals (2) 1 5. HI 8 Video Camera (2) 6. Bogen Tripod (3) 1 *** 7. Anton Battery Charger*** 8. Sony UVW 100 w/ Lens *** 9. Sony PVM 8020 AC/DC Monitor $712.00*** 10. Sony PVM 8042 Color Monitor*** 11. Sony UVW 100 Camera w/ Lens **** 12. Sony BC 1WD Charger w/ Batteries 13. K-3 Camera 16MM 14. Sony 8800 3/4 VTR 15. Metal Desk 16. 2 Lowell Lighting Kits 17. 10 Wireless Mikes 18. 1 Studio Light Grid 19. Studio Lights and Stands 20. Metal Storage Reels 21. Sets, Background and Bluescreen 22. Misc. Set and Building Tools Leasing Co. *Bank Vest Capital Corp. AKA ORIX and FINOVA 200 Nickerson Road Marlboror, MA 01752 (800)532-7317 Lease #047011-001 Lease #047011-002 Lease #047011-003 ***Colonial Pacific Leasing P.O. Box 2090 Portland, Oregon 97208-2090 (800)444-1738 Lease #108025002 Lease #108025003 Lease #108025004 **** The Manifiest Group 100 East Saratoga Marshall, MN 56258-1714 (507)532-9558 Lease #556150 Lease #624826 PP Tax Paid over 12 months Page 125 Office Furniture 1. 8 Leather Chairs 2. 3 Desks 3. 2 Returns 4. 3 Hutch 5. 1 Storage Unit 6. 8 Steno Chairs 7. 1 Work Center 8. 7 4 PC Work Centers 9. 2 2 Drawer File Cabinet Audio Studio 1. Roland DM-800 Workstation 2. Roland 6-800 Synthesizser 3. Samsung 13" TV 4. Technics CD Player SL-P1200 5. Tascam 32 Reel to Reel Tape Deck 6. Sony A-6 Digitial Tape Deck 7. Neutek Patch Bay 8. 2 Rolls Mike Compressor Leg HRIIC 9. Behringer Composer Compressor MDX 2100 10. ART Dual Compressor 11. JVC R-K22 Tuner/Amplifier 12. Fischer CRW683 Dual Cassette Deck 13. TM Century Music Library 14. Realistic Eraser 15. 2 AK6 D3800 Mikes 16. CD Stand 17. Copy Holder 18. 2 Rolls Headphone Amps 19. Koss Pro 4 AA Headphones 20. Roland Boss U7-1 - Voice Transformer* 21. Music Software Systems 22. Music Bakery Discs 23. Midiator Leasing Co. *Bank Vest Capital Corp. AKA ORIX and FINOVA 200 Nickerson Road Marlboror, MA 01752 (800)532-7317 Lease #047011-001 Lease #047011-002 Lease #047011-003 PP Tax Paid over 12 months Page 126 Phone System 1. Samsung Digital Telephone System* Leasing Co. *Creditial Leasing Corp. 1501 Corporate Drive Suite 280 Boynton Beach, FL 33426-6654 (800)688-3088 Lease #0354401 PP Tax Paid over 12 months Voice Mail System 1. Minitel 128 Voice Mail System* Leasing Co. *Bank Vest Capital Corp. AKA ORIX 200 Nickerson Road Marlboror, MA 01752 (800)532-7317 Lease #047011-001 Lease #047011-002 Lease #047011-003 PP Tax Paid over 12 months Ocala News Tonight 1. (3) Leightronics Event Controller/Switcher $2,833.40 Purchased from Markertek and by Credit Card 2. 4 Sony VP 9000 S/N 2 Sony 7600 Umatic S/N Purchased from Hi-Tech Enterprises $3,845.58 3. 4 Secretarial Chairs & One Lap Top Table $200.00 Purchased from Staples 5. Media 100 System Nubus Component Suite Deal w/ Mac 8100/80 AV 6. Sony VO 5800 VCR $600.00 Audio Visual Consultants - Paid MC 7. Police Scanner $300. 8. 31 avalier mikes $350.00 9. 3 corded mikes $225.00 10. Assorted cables and wires $200.00 I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 127 Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 2.11 INTELLECTUAL PROPERTY 1. Attached is a schedule of Trademarks and Copyrights. Lorilei Communications, Inc. Trademarks and Copyrights Mark Serial # Date In Force Abandoned - ---- -------- ---- ------------- --------- THE FIRM MULTIMEDIA 75/335702 8/13/98 X WE CREATE DEMAND 75/335756 9/1/98 X CREDIT NOW 75/364030 7/1/98 X CREDIT NOW 75/364030 3/2/99 X SELL-O-VISION 75/109714 5/24/96 X Copyrights - ------------ CREDIT NOW PA 860-881 7/15/97 COOL IDEAS PA 860-887 7/15/97 * The owner of each trademark and copyright is Lorilei Communications, Inc. with and address at 7325 SW 32nd Street, Ocala, Florida 34474 I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 128 Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 2.12 CONTRACTS, AGREEMENTS & COMMITMENTS 2.12 (A) 1. Amsouth Bank - Line of Credit. Balance is around $32,650.00. Monthly payments are around $1,000.00 per month. Account opened 12/97. This account is a line of credit therefore, there is no termination. Copies of the application have been requested to Amsouth. 2. Amsouth Bank - Auto Loan on Ford Mountaineer. Balance is $20,091.20. Monthly payments are $463.55. Execution of this loan is 9/30/99 and the end of the loan is 9/30/04. 3. Bank of America - Auto Loan on Volvo. Balance is $25,213.67. Monthly payments are $503.37. Execution of this loan is 3/10/00 and the end of the loan is 3/10/05. 4. Chrysler Financial Group - Auto Loan on Dodge Caravan. Balance is $12,141.98. Monthly payments are $363.08. Execution of this loan is 5/29/98 and the end of the loan is 6/13/03. 5. Promissory Note to John and Marcia LaTorraca Trust for $46,143.00. Principal balance is $46,143.00 with interest accruing at 8.5% per annum since 12/31/98. In 1999, two interest payments of $200.00 ($400.00 total) were made. As of 4/26/00 the balance of note, principal plus interest is $50,922.91. The principal amount was used for working capital. Execution of this Promissory Note is 12/31/98 and there is not termination date. 6. Leigh and Gerry Cunningham, the officers/shareholders, have loaned the company $45,301.28. This money has been loaned over the course of years in business. This money was used for working capital. The beginning date of the officers/shareholders loaning money to the company was 10/29/98. The termination date is unknown. Attached are supporting documents for the above referenced. The following is a list of equipment leases. These leases are attached to this schedule. Each lease provides term, amount per month and equipment description. 1. The Associates - Monthly Payment $357.52, Balance $3,018.31 2. Colonial Pacific Leasing #108025002 - Monthly Payment $768.35, Balance $12,867.92 3. Colonial Pacific Leasing #108025003 - Monthly Payment $378.20, Balance $6,507.39 4. Colonial Pacific Leasing #108025004 - Monthly Payment $200.67, Balance $3,730.63 5. Colonial Pacific Leasing #108025005 - Monthly Payment $148.40, Balance $1,589.09 6. Credential Leasing - Monthly Payment $347.43, Balance $7,615.24 7. FINOVA Financial - Monthly Payment $483.15, Balance $16,230.73 8. Freedom Capital - Monthly Payment $442.03, Balance $5,460.33 9 The Manifest Group AKA Flex Lease #556150 - Monthly Payment $595.95, Balance $1,626.37 10. The Manifest Group AKA Flex Lease #624826 - Monthly Payment $212.80, Balance $1,782.40 11. ORIX Credit Alliance #02324-7 - Monthly Payment $574.78, Balance $6,801.54 12. ORIX Credit Alliance #02325-4 - Monthly Payment $188.27, Balance $5,894.23 13. Preferred Lease - Monthly Payment $506.36, Balance $15,149.17 2.12 (B) Under this section only the following items apply: #4 - Refer to Exhibit 5.12 for a copy of New Position Offer for Sheryl Wolf. #12 - Refer to Schedule 2.10(A)(1) for mortgage information I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 129 Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 2.14 GOVERNMENTAL AUTHORIZATION 1. Fictitious Name Registration - Ocala News Tonight, Ocala, Marion County, FL 2. Fictitious Name Registration - The Firm Multimedia, Ocala, Marion County, FL 3. State of Florida, Marion County Drinking Water System Operating Permit 4. Marion County Occupational License 1999-2000 5. Florida Department of Revenue Certificate of Registration to Collect Sales and Use Taxes for State of Florida Attached are supporting documents to the above referenced. Note: The fictitious name registration for "THE FIRM" has expired and Lorilei will not be renewing. I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 2.15 LITIGATION We agree to all statements as detailed in Schedule 2.15, in the above mentioned document entitled "Litigation," with the following exceptions: 2.15 (D): Lorilei may file a collection suit against CareerTV.com in the amount of $132,543.30 plus interest and late fees for failure to fulfill it's contractual obligation. Attached is a copy of the contract with CareerTV.com and a copy of a standard channel lease agreement with one of the cable systems. I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 130 Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 2.20 LIST OF EMPLOYEES Attached to this schedule is a list of all employees, current salaries, vacation, personal time, and comp time accruals. Prior to the date of closing this transaction, comp time accruals will no longer be allowed. Comp time that has been previously accrued has to be used within 6 months from the date of accrual. Otherwise, comp time is forfeited. Lorilei Communications, Inc. d/b/a The Firm Multimedia d/b/a Ocala News Tonight Employee Information May 15, 2000 Employee Salary Vacation Personal Comp Time Time Hours Time Hours Hours 1. Bryan Allen $13,800.00 0 0 0 2. Richard Andrews $17,400.00 0 40 0 3. Kim Avery $21,900.00 40 37 4. Melissa Barfield $12.50/hour 0 0 0 5. Bountham Chanthalansy $22,400.00 0 31 0 6. Gerry Cunningham $60,000.00 0 0 0 7. Leigh Cunningham $60,000.00 0 0 0 8. Stacey Dolezal $30,000.00 0 40 0 9. William Fraker $9.00/hour 0 0 0 10. Patricia Gale $24,000.00 0 40 0 11. Jeanne Harding $6.50/hour 0 0 0 12. Leslie Kinney $22,800.00 40 31.50 17 13. Mary Lee $31,200.00 6.50 0 0 14. Dustin McCollum $25,200.00 0 24 15. Nadyne McDonald $14,400.00 0 40 0 16. John Miller $10,800.00 0 0 0 17. Debbie Tilton $7.33/hour 0 0 0 18. Penny Tomberlin $18,180.00 32 45.50 0 19. Brian Trahan $35,100.00 0 13.75 0 20. Lawrence Uelmen $25,000.00 0 0 0 21. Kim Ullery $17,520.00 0 40 0 22. Sheryl Wolf $21,000.00 13 0 0 I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 131 Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 2.21 INSURANCE 1. Workers Comp Insurance - Hanover Insurance 2. Auto Insurance - Hanover Insurance 3. Commercial General Liability Insurance - Hanover Insurance 4. Professional Liability Insurance - Scottsdale Insurance Company 5. Health Insurance - HealthPlan Southeast 6. Schedule of Life Insurance for Officers 7. Westfield Life Insurance - For Officers Only 8. Lincoln Benefit Life Insurance - For Officers Only 9. Midland National Life Insurance - For Officers Only 10. First Penn Pacific Life Insurance - For Officers Only 11. Copies of letters to First Penn Pacific, Midland National, Westfield Life, requesting additional policy information. Note: We are in the process of formulating an errors and omissions policy on Ocala News Tonight. Attached are supporting documents to the above referenced. I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 2.27 EMPLOYEE BENEFIT PLANS 1. Currently, there are no employee benefit plans in place. 2. Lorilei Communications, Inc. pays $85.00 per month towards the employee's health insurance premium. Lorilei pays entire premium for officers of the company. I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 132 Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 2.28 DISTRIBUTION AGREEMENTS We agree to all statements as detailed in Schedule 2.28, in the above mentioned document entitled "Distribution Agreements," with the following exception: 2.28A We have posted blocks of commercial leased access airtime for sale through Ad Outlet.com, a broker in the advertising space, time and banner sales business. Ad Outlet marks up our gross sale price to compensate itself with a sales commission. Potential sales generated by Ad Outlet are subject to Lorilei's final approval. No sales have been generated under this plan thus far. There is no contract between Lorilei Communications, Inc. and AdOutlet.com. I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 4.1 EXCEPTIONS TO PROHIBITED PRE CLOSING ACTIONS We agree to all statements as detailed in Schedule 4.1, in the above mentioned document entitled "Conduct of Business of Lorilei," without exception. I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 133 Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 5.7 CONSENTS The current mortgage holder on the building and real estate at 7325 Southwest 32nd Street, Ocala, Florida 34774 is Small Business Loan Source (SBLS) located at 5333 Westheimer, Suite 840, Houston, Texas 77056. This is an SBA guaranteed type 7a loan. Exhibit A of the mortgage stipulates that if the property or a beneficial interest in the property is transfered without Mortgagee's prior written consent, the mortgage may then be accelerated. A copy of the Mortgagee's written consent is attached. Other Notices The mortgage specifies that 3 weeks prior notice of prepayment is required, otherwise Mortgagor will be required to pay 3 weeks interest on the unpaid prinicpal as of the date of prepayment. A commercial security agreement exists as part of the mortgage and is attached. Under part F "other provisions" of the SBA Authorization and Loan agreement, item #7 limits annual expenditures for acquisition of fixed assets to $10,000, however part 6 of the borrowing certificate sets this amount at $25,000 without Lender's prior approval, approval of which will not be unreasonably withheld. Although the deed restrictions (attached) Airport Industrial Park call for underground utilities, the developer has given us a verbal "no action" inasmuch as the general contractor neglected to run underground electrical service from the street to the building. The Airport Industrial Park is in the process of being annexed into the City of Ocala from Marion County and will soon have city water service. Lorilei has received notice (attached) that an assessment of approximately $536.00 impact fee and a meter installation charge based on the meter size for connecting to the service, plus construction costs of running the line for the connection at $8.50 per front foot on the road. Some of this cost may be mitigated by lower fire insurance premiums due to the proximity of a working fire hydrant. I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 5.8 AFFILIATES Gerald R. Cunningham Leigh A. Cunningham I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 134 Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 5.12 LIST AND SUMMARY OF EMPLOYEE AGREEMENTS 1. List of Employees can be found in Schedule 2.20 2. Non Compete Agreements 3. Talent Releases 4. New Position Offer for Sheryl Wolf 5. Employment Agreement for Gerald R. Cunningham 6. Employment Agreement for Leigh A. Cunningham I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 5.13-1 PROJECTIONS 1. Attached to this schedule is the projection for years ending 2000 to 2001. Lorilei Communications, Inc FY ending 6/30/2001 July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June Total Income Commission 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000 ONT Ad sales 18,000 18,000 22,000 24,000 30,000 27,000 24,000 24,000 28,000 30,000 33,000 30,000 308,000 Retainer 5,000 5,000 5,000 5,000 5,000 5,000 6,000 6,000 6,000 6,500 6,500 6,500 67,500 Video Production 35,000 35,000 30,000 34,000 32,000 60,000 32,000 30,000 40,000 40,000 45,000 40,000 453,000 Graphics 30,000 30,000 30,000 30,000 35,000 35,000 35,000 30,000 30,000 30,000 40,000 40,000 395,000 Pre-press 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Airtime 75,000 75,000 75,000 50,000 50,000 50,000 40,000 40,000 60,000 65,000 75,000 65,000 720,000 Brokered Spot airtime 10,000 20,000 20,000 10,000 7,000 20,000 7,500 5,000 12,000 40,000 40,000 50,000 241,500 Fees-Misc 2,500 2,500 2,500 6,000 6,000 6,000 10,000 6,000 6,000 8,000 6,000 22,000 83,500 Web Design 3,000 3,500 4,000 4,000 4,000 4,000 6,000 4,000 4,000 4,000 4,000 5,000 49,500 Still Photography 800 800 800 800 800 800 800 800 800 800 800 800 9,600 CD-Rom 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 10,000 65,000 Audio Production 1,000 1,000 1,000 7,500 4,000 6,500 10,000 6,000 5,000 5,000 5,000 5,000 57,000 Public Relations 2,000 2,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 34,000 Client Promotions 5,000 5,000 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 35,000 Web Maintenance 1,300 1,300 1,500 1,500 1,500 1,500 1,500 2,000 2,000 2,500 2,500 3,450 22,550 Shipping Revenue 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000 Total Income 198,600 209,100 207,300188,300 190,800231,300 188,300169,300 209,300247,300 273,300288,250 2,601,150 Cost of Goods Sold Spot Airtime 6,600 13,200 13,200 6,600 4,620 13,200 4,950 3,300 7,920 26,400 26,400 33,000 159,390 CLA 33,750 33,750 33,750 22,500 22,500 22,500 18,000 18,000 27,000 29,250 33,750 29,250 324,000 Program Airtime 1,500 1,500 1,500 1,000 1,000 1,000 800 800 1,200 1,300 1,500 1,300 14,400 ONT CLA 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 54,000 Total 46,350 52,950 52,950 34,600 32,620 41,200 28,250 26,600 40,620 61,450 66,150 68,050 551,790 Page 135 Client Promotions 1,750 1,750 875 875 875 875 875 875 875 875 875 875 12,250 Internet Fees 429 429 495 495 495 495 495 660 660 825 825 1,139 7,442 Total 2,179 2,179 1,370 1,370 1,370 1,370 1,370 1,535 1,535 1,700 1,700 2,014 19,692 Graphics Photos 150 150 150 150 150 150 150 150 150 150 150 150 1,800 Printing 15,000 15,000 15,000 15,000 17,500 17,500 17,500 15,000 15,000 15,000 20,000 20,000 197,500 Pre-press supplies 250 250 250 250 250 250 250 250 250 250 250 250 3,000 Misc Supplies 0 0 225 0 0 225 0 0 225 0 0 225 900 Total 15,400 15,400 15,625 15,400 17,900 18,125 17,900 15,400 15,625 15,400 20,400 20,625 203,200 Video Production Tapes 1,000 1,750 1,500 1,700 1,600 3,000 1,600 1,500 2,000 2,000 2,250 2,000 21,900 Software/equipment 500 500 0 0 0 0 0 0 0 140 0 427 1,567 Printing 3,000 0 0 0 0 0 0 0 0 0 0 0 3,000 Talent Fees 700 700 600 680 640 1,200 640 600 800 800 900 800 9,060 Staging & Props 350 350 300 340 320 600 320 300 400 400 450 400 4,530 Rentals 350 350 300 340 320 600 320 300 400 400 450 400 4,530 Shipping 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 21,600 Tape Duplication 3,850 3,850 3,300 3,740 3,520 6,600 3,520 3,300 4,400 4,400 4,950 4,400 49,830 Total 11,550 9,300 7,800 8,600 8,200 13,800 8,200 7,800 9,800 9,940 10,800 10,227 116,017 Total COGS 75,479 79,829 77,745 59,970 60,090 74,495 55,720 51,335 67,580 88,490 99,050 100,916 890,699 Gross Profit 123,121 129,271 129,555128,330 130,710156,805 132,580117,965 141,720158,810 174,250187,335 1,710,452 Firm Expenses Advertising Prod/Office personnel 750 750 750 750 750 750 750 750 750 750 750 750 9,000 CD Dup/Printing 0 2,400 0 0 2,500 0 0 0 2,000 0 0 0 6,900 Yellow Pages 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Print 600 600 600 600 600 600 600 600 600 600 600 600 7,200 Misc. Firm Advertising 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Total Advertising 1,950 4,350 1,950 1,950 4,450 1,950 1,950 1,950 3,950 1,950 1,950 1,950 30,300 Automobile Maintenance 450 450 450 450 450 450 450 450 450 450 450 450 5,400 Caravan payment 364 364 364 364 364 364 364 364 364 364 364 363 4,367 New ONT vehicles 400 400 400 400 400 400 400 400 400 400 400 400 4,800 Mercury 464 464 464 464 464 464 464 464 464 464 464 464 5,568 Volvo 504 504 504 504 504 504 504 504 504 504 504 504 6,048 Fuel 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000 Vehicle Registration 0 0 200 0 79 0 0 0 0 0 0 0 279 Total Automobile 3,682 3,682 3,882 3,682 3,761 3,682 3,682 3,682 3,682 3,682 3,682 3,681 44,462 Bank Charges 35 35 35 35 35 35 35 35 35 35 35 35 420 Contributions 0 1,000 0 0 0 0 0 0 0 0 0 0 1,000 Company Fees Copyright/Trademark 245 0 0 0 0 0 0 0 0 0 0 0 245 Internet Fees 375 375 425 425 425 425 550 550 550 550 550 550 5,750 Dues and Subscriptions 366 365 252 153 45 63 110 0 0 95 0 0 1,449 Education 183 0 0 0 0 82 0 0 0 0 100 0 365 Equipment Rental 101 101 1,200 101 757 1,695 575 101 0 101 101 101 4,934 NDC Payment Systems 150 308 458 Misc. Fees 0 0 544 0 963 0 0 85 215 167 599 0 2,573 Total Company Fees 1,420 841 2,421 679 2,190 2,265 1,235 736 765 913 1,350 959 15,774 Insurance Auto 450 450 450 450 450 450 450 450 450 450 450 450 5,400 Building/Property 275 275 275 275 275 275 275 275 275 275 275 275 3,300 Health 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Media Liability 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Addlt Liability 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Life Insurance 175 175 175 175 175 175 175 175 175 175 175 175 2,100 Worker's Comp 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Total Insurance 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 32,400 Page 136 Interest Late charges 300 300 150 150 150 150 150 150 150 150 150 150 2,100 Finance Charges 450 450 450 450 450 450 450 450 450 450 450 450 5,400 Loan Int-Capital leases 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,162 Mortgage Interest 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 21,600 Other interest 200 122 0 121 235 115 0 113 111 182 107 564 1,870 Lines of credit 200 0 266 0 0 253 265 437 0 309 300 250 2,280 Total Interest 4,950 4,672 4,666 4,521 4,635 4,768 4,665 4,950 4,511 4,891 4,807 5,214 57,250 Janitorial/Maintenance Pest Control 50 0 50 0 50 0 50 0 50 0 172 0 422 Cleaning/Supplies 156 109 227 114 179 62 256 194 67 21 238 150 1,773 Sanitation 0 0 0 0 189 44 44 44 44 44 44 44 497 Total Janitorial/Maintenance 206 109 277 114 418 106 350 238 161 65 454 194 2,692 Licenses and Permits 0 0 0 0 150 0 0 11 0 191 0 60 412 Leases Audio Visual 379 450 277 280 284 288 291 295 299 303 307 311 3,764 Computer Equip 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 14,400 Phone System 328 328 328 328 328 328 328 328 328 328 328 328 3,936 Production Equip 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 42,000 Total Leases 5,407 5,478 5,305 5,308 5,312 5,316 5,319 5,323 5,327 5,331 5,335 5,339 64,100 Lines of Credit AmSouth 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 13,200 Total-Lines of credit 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 13,200 Office Space Mortgage principal 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Jax Office rent 209 209 209 209 209 209 209 209 209 209 209 209 2,508 Orl Office rent 400 400 400 400 400 400 400 400 400 400 400 400 4,800 Total Office Mort/Rent 809 809 809 809 809 809 809 809 809 809 809 809 9,708 Non-COGS Supplies Office Supplies 695 800 400 700 650 350 400 300 600 800 650 550 6,895 Graphics software/equipment 700 200 200 200 200 200 200 200 200 200 200 200 2,900 Video software/equipment 1,250 1,250 500 500 500 500 500 500 500 500 500 500 7,500 Interactive software/equipment 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Printing 942 0 86 628 34 46 34 95 754 218 201 532 3,570 Grocery 25 25 25 25 25 25 25 25 25 25 25 25 300 Video Production Supplies 300 300 400 400 500 400 400 400 400 400 400 400 4,700 Graphic Supplies 595 0 400 72 392 100 373 0 130 0 0 30 2,092 Film Processing 58 0 0 0 0 0 0 0 0 28 15 0 101 Pre-Press Supplies 100 100 100 100 100 100 100 100 100 100 100 100 1,200 Audio Supplies 0 0 108 352 0 0 83 0 0 0 0 543 Total Office supplies 4,865 2,875 2,419 3,177 2,601 1,921 2,232 1,903 2,909 2,471 2,291 2,537 32,201 Payroll Officers 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000 Staff 32,000 32,000 34,000 35,000 35,000 36,000 38,000 38,000 38,000 38,000 38,000 38,000 432,000 FUTA/SUTA 320 320 340 350 350 360 380 380 380 380 380 380 4,320 Commissions 9,930 10,455 10,365 9,415 9,540 11,565 9,415 8,465 10,465 12,365 13,665 14,413 130,058 Federal/Fica Tax 7,980 7,980 8,360 8,550 8,550 8,740 9,120 9,120 9,120 9,120 9,120 9,120 104,880 Staff incentives 100 100 100 100 100 100 100 100 100 100 100 100 1,200 Total Payroll 60,330 60,855 63,165 63,415 63,540 66,765 67,015 66,065 68,065 69,965 71,265 72,013 792,458 Page 137 Postage and Delivery USPS 325 325 325 325 325 325 325 325 325 325 325 325 3,900 Unishippers 470 470 470 470 470 470 470 470 470 470 470 470 5,640 Other 25 25 25 25 25 25 25 25 25 25 25 25 300 Total Postage & Delivery 820 820 820 820 820 820 820 820 820 820 820 820 9,840 Professional Fees Accountant 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Consulting 150 150 150 150 150 150 150 150 150 150 150 150 1,800 Legal 400 400 400 400 400 400 400 400 400 400 400 400 4,800 Collection Agent 993 1,046 1,037 942 954 1,157 942 847 1,047 1,237 1,367 1,441 13,006 Personnel 0 0 0 1,000 0 0 1,000 0 0 1,000 0 0 3,000 Total Professional Fees 2,543 2,596 2,587 3,492 2,504 2,707 3,492 2,397 2,597 3,787 2,917 2,991 34,606 Repairs and Maintenance Computer repairs 250 500 250 500 250 500 250 500 250 500 250 500 4,500 Equipment repairs 450 450 1,500 450 450 450 450 450 450 450 450 450 6,450 Building repairs 150 150 150 150 150 150 150 150 150 150 150 150 1,800 Total Repairs & Maintenance 850 1,100 1,900 1,100 850 1,100 850 1,100 850 1,100 850 1,100 12,750 Sales Expenses Sales Recruitment 500 500 500 500 500 500 500 500 500 500 500 500 6,000 Direct Mailers 400 400 400 400 400 400 400 400 400 400 400 400 4,800 Sales contest/bonus 100 100 100 100 100 100 100 100 100 100 100 100 1,200 Misc. Sales Expenses 100 100 100 100 100 100 100 100 100 100 100 100 1,200 Total Sales Expenses 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 13,200 Taxes Personal property Firm 0 0 0 0 0 0 0 0 5,000 0 0 0 5,000 Real Estate 0 0 0 0 0 0 0 5,000 0 0 0 0 5,000 Sales Tax - Firm 205 286 465 493 366 314 333 200 0 1,190 438 200 4,490 Intangible/Tangible 0 0 98 280 0 0 0 0 0 0 0 0 378 Personal property Leases 41 351 41 233 41 41 312 41 41 41 292 184 1,659 State 0 0 0 0 0 110 0 106 138 126 0 90 570 Total tax 246 637 604 1,006 407 465 645 5,347 5,179 1,357 730 474 17,097 Telephone Cellular 400 400 400 400 400 400 400 400 400 400 400 400 4,800 Local service 350 350 350 350 350 350 350 350 350 350 350 350 4,200 Long Distance 650 650 650 650 650 650 650 650 650 650 650 650 7,800 Paging 75 75 75 75 75 75 75 75 75 75 75 75 900 Other 25 25 25 25 25 25 25 25 25 25 25 25 300 Total Telephone 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000 Travel Car Rental 55 55 55 55 55 55 55 55 55 55 55 55 660 Airfare 250 250 250 250 250 250 250 250 250 250 250 250 3,000 Entertainment 120 120 120 120 120 120 120 120 120 120 120 120 1,440 Travel other 120 120 120 120 120 120 120 120 120 120 120 120 1,440 Lodging 225 225 225 225 225 225 225 225 225 225 225 225 2,700 Meals 225 225 225 225 225 225 225 225 225 225 225 225 2,700 Tolls/Parking 50 50 50 50 50 50 50 50 50 50 50 50 600 Total Travel 1,045 1,045 1,045 1,045 1,045 1,045 1,045 1,045 1,045 1,045 1,045 1,045 12,540 Utilities Electric 500 500 500 475 475 400 400 350 350 375 375 400 5,100 Total Utilities 500 500 500 475 475 400 400 350 350 375 375 400 5,100 Miscellaneous Non compete fees 40 10 20 10 0 10 0 30 10 10 10 30 180 Misc. Expenses 0 0 0 79 329 368 127 150 0 60 0 0 1,113 Total Miscellaneous 40 10 20 89 329 378 127 180 10 70 10 30 1,293 Bad Debt 3,575 3,764 3,731 3,389 3,434 4,163 3,389 3,047 3,767 4,451 4,919 5,189 46,821 Gross Profit 123,121 129,271 129,555128,330 130,710156,805 132,580117,965 141,720158,810 174,250187,335 1,710,452 Total Expenses 99,673 101,577 102,536101,506 104,165105,095 104,460106,388 111,232109,708 110,044111,239 1,267,623 Pre-tax Profit* 23,448 27,694 27,019 26,824 26,545 51,710 28,120 11,577 30,488 49,102 64,206 76,095 442,829 EBITDA 500,277 GPM 66% *Does not include depreciation Certain expense items covered under use of investment proceeds are not included Page 138 Lorilei Communications, Inc. FY ending June 30, 2002 July Aug Sep Oct Nov Dec Jan Feb Mar April May June Total Income Commission 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 72,000 ONT Ad sales 25,000 25,000 30,000 32,000 36,000 34,000 34,000 34,000 38,000 38,000 40,000 40,000 406,000 North County Ad sales 15,000 25,000 25,000 30,000 30,000 35,000 30,000 28,000 35,000 40,000 45,000 45,000 383,000 Retainer 5,000 5,500 5,500 6,000 6,000 6,000 6,500 6,500 7,500 7,500 7,500 7,500 77,000 Video Production 40,000 40,000 45,000 50,000 55,000 60,000 45,000 50,000 55,000 50,000 65,000 60,000 615,000 Graphics 40,000 40,000 40,000 40,000 40,000 45,000 45,000 45,000 45,000 40,000 45,000 50,000 515,000 Pre-press 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000 Airtime 60,000 60,000 65,000 65,000 70,000 60,000 65,000 55,000 70,000 70,000 75,000 70,000 785,000 Brokered Spot airtime 25,000 25,000 30,000 25,000 30,000 30,000 25,000 20,000 30,000 35,000 40,000 40,000 355,000 Fees-Misc 2,250 2,250 2,250 3,000 3,000 8,500 10,000 8,500 9,000 10,000 10,000 10,000 78,750 Web Design 6,500 6,500 6,500 6,500 10,000 6,500 6,500 7,000 10,000 7,000 7,000 8,000 88,000 Still Photography 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 14,400 CD-Rom 12,000 12,000 6,500 8,000 10,000 8,000 7,000 7,000 8,000 10,000 10,000 10,000 108,500 Audio Production 2,000 2,000 2,000 4,000 6,000 7,000 6,000 7,000 7,000 7,500 8,000 8,000 66,500 Public Relations 3,500 3,500 3,500 3,500 4,500 3,500 3,500 3,500 4,000 4,000 4,000 5,000 46,000 Client Promotions 2,500 5,000 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 42,500 Web Maintenance 3,800 3,500 3,500 3,500 4,500 4,500 4,500 5,000 5,000 5,000 5,000 5,500 53,300 Shipping Revenue 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000 Interest Income 150 150 150 150 150 150 150 150 150 150 150 150 1,800 Total Income 254,400 267,100 280,100291,850 320,350323,350 303,350291,850 338,850339,350 376,850374,350 3,761,750 Cost of Goods Sold Spot Airtime 16,500 16,500 19,800 16,500 19,800 19,800 16,500 13,200 19,800 23,100 26,400 26,400 234,300 CLA 27,000 27,000 29,250 29,250 31,500 27,000 29,250 24,750 31,500 31,500 33,750 31,500 353,250 Program Airtime 1,200 1,200 1,300 1,300 1,400 1,200 1,300 1,100 1,400 1,400 1,500 1,400 15,700 ONT CLA 5,200 5,200 5,200 5,200 5,200 5,200 5,200 5,200 5,200 5,200 5,200 5,200 62,400 North County CLA 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 78,000 Total 56,400 56,400 62,050 58,750 64,400 59,700 58,750 50,750 64,400 67,700 73,350 71,000 743,650 Client Promotions 875 1,750 1,225 1,225 1,225 1,225 1,225 1,225 1,225 1,225 1,225 1,225 14,875 Internet Fees 1,254 1,155 1,155 1,155 1,485 1,485 1,485 1,650 1,650 1,650 1,650 1,815 17,589 Total 2,129 2,905 2,380 2,380 2,710 2,710 2,710 2,875 2,875 2,875 2,875 3,040 32,464 Graphics Photos 150 150 150 150 150 150 150 150 150 150 150 150 1,800 Printing 20,000 20,000 20,000 20,000 20,000 22,500 22,500 22,500 22,500 20,000 22,500 25,000 257,500 Pre-press supplies 375 375 375 375 375 375 375 375 375 375 375 375 4,500 Misc Supplies 0 0 355 0 0 355 0 0 355 0 0 355 1,420 Misc. Shipping 500 500 500 500 500 500 500 500 500 500 500 500 6,000 Total 21,025 21,025 21,380 21,025 21,025 23,880 23,525 23,525 23,880 21,025 23,525 26,380 271,220 Video Production Tapes 2,500 2,500 3,000 3,500 3,000 3,500 2,250 2,500 3,000 3,000 3,250 3,000 35,000 Software/equipment 1,000 500 1,000 500 0 0 0 0 0 140 0 500 3,640 Printing 3,000 0 0 0 0 0 0 0 0 0 0 0 3,000 Talent Fees 750 1,000 1,200 1,200 1,200 1,200 1,200 1,800 1,200 1,200 1,800 1,200 14,950 Staging & Props 500 600 800 1,000 800 1,200 900 1,200 1,000 1,000 1,500 1,200 11,700 Rentals 400 400 450 500 550 600 450 500 550 500 650 600 6,150 Shipping 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 32,400 Tape Duplication 4,400 4,400 4,950 5,500 6,050 6,600 4,950 5,500 6,050 5,500 7,150 6,600 67,650 Total 15,250 12,100 14,100 14,900 14,300 15,800 12,450 14,200 14,500 14,040 17,050 15,800 174,490 Total COGS 94,804 92,430 99,910 97,055 102,435102,090 97,435 91,350 105,655105,640 116,800116,220 1,221,824 Gross Profit 159,596 174,670 180,190194,795 217,915221,260 205,915200,500 233,195233,710 260,050258,130 2,539,926 Firm Expenses Advertising Page 139 Ocala News Tonight 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000 Prod/Office personnel 750 750 750 750 750 750 750 750 750 750 750 750 9,000 CD Dup/Printing 0 3,000 0 0 3,000 0 0 3,000 0 0 3,000 0 12,000 Yellow Pages 450 450 450 450 450 450 450 450 450 450 450 450 5,400 Promotions 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Print 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000 Direct - Infomercials 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000 Misc. Firm Advertising 500 500 500 500 500 500 500 500 500 500 500 500 6,000 Total Advertising 9,500 12,500 9,500 9,500 12,500 9,500 9,500 12,500 9,500 9,500 12,500 9,500 126,000 Automobile Maintenance 600 600 600 600 600 600 600 600 600 600 600 600 7,200 Caravan payment 364 364 364 364 364 364 364 364 364 364 364 364 4,368 New ONT vehicles 400 400 400 400 400 400 400 400 400 400 400 400 4,800 Mercury 464 464 464 464 464 464 464 464 464 464 464 464 5,568 Volvo 504 504 504 504 504 504 504 504 504 504 504 504 6,048 Fuel 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 21,000 Vehicle Registration 0 0 200 0 79 0 0 0 0 0 0 0 279 Total Automobile 4,082 4,082 4,282 4,082 4,161 4,082 4,082 4,082 4,082 4,082 4,082 4,082 49,263 Bank Charges 40 40 40 40 40 40 40 40 40 40 40 40 480 Contributions 0 0 0 0 0 0 0 0 0 0 0 0 0 Company Fees Copyright/Trademark 245 0 0 0 0 0 0 0 0 0 0 0 245 Internet Fees 900 900 900 900 900 900 900 900 900 900 900 900 10,800 Dues and Subscriptions 366 365 252 153 45 63 110 0 0 95 0 0 1,449 Education 200 0 0 300 0 300 0 300 0 300 100 300 1,800 Equipment Rental 101 101 1,200 101 757 1,695 575 101 0 101 101 101 4,934 Employee Moving Expenses 500 500 0 500 0 500 0 0 500 0 500 500 3,500 NDC Payment Systems 150 100 100 100 100 100 308 958 Misc. Fees 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Total Company Fees 2,762 2,166 2,752 2,254 2,102 3,758 1,985 1,601 1,800 1,696 2,001 2,409 27,286 Insurance Auto 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Building/Property 425 425 425 425 425 425 425 425 425 425 425 425 5,100 Health 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000 Media Liability 700 700 700 700 700 700 700 700 700 700 700 700 8,400 Addlt Liability 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Life Insurance 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Worker's Comp 400 400 400 400 400 400 400 400 400 400 400 400 4,800 Total Insurance 5,125 5,125 5,125 5,125 5,125 5,125 5,125 5,125 5,125 5,125 5,125 5,125 61,500 Interest Late charges 50 50 50 50 50 50 50 50 50 50 50 50 600 Finance Charges 450 450 450 450 450 450 450 450 450 450 450 450 5,400 Loan Int-Capital leases 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 24,162 Mortgage Interest 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 21,600 Other interest 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Lines of credit 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Total Interest 4,900 4,900 4,900 4,900 4,900 4,900 4,900 4,900 4,900 4,900 4,900 4,900 58,800 Janitorial/Maintenance Pest Control 50 0 50 0 50 0 50 0 50 0 172 0 422 Cleaning/Supplies 156 109 227 114 179 62 256 194 67 21 238 150 1,773 Sanatation 44 44 44 44 44 44 44 44 44 44 44 44 528 Total Janitorial/Maintenance 250 153 321 158 273 106 350 238 161 65 454 194 2,723 Licenses and Permits 150 0 0 0 150 0 0 11 0 191 0 60 562 Page 140 Leases Audio Visual 379 450 277 280 284 288 291 295 299 303 307 311 3,764 Computer Equip 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 14,400 Phone System 328 328 328 328 328 328 1,500 0 0 0 0 0 3,468 Production Equip 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000 Total Leases 6,907 6,978 6,805 6,808 6,812 6,816 7,991 6,495 6,499 6,503 6,507 6,511 81,632 Lines of Credit AmSouth 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 13,200 Total-Lines of credit 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 13,200 Office Space Mortgage principal 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Jax Office rent 209 209 209 209 209 209 209 209 209 209 209 209 2,508 Orl Office rent 400 400 400 400 400 400 400 400 400 400 400 400 4,800 Tampa Office rent 400 400 400 400 400 400 400 400 400 400 400 400 4,800 S. Florida Office rent 500 500 500 500 500 500 500 500 500 500 500 500 6,000 Total Office Mort/Rent 1,709 1,709 1,709 1,709 1,709 1,709 1,709 1,709 1,709 1,709 1,709 1,709 20,508 Non-COGS Supplies Office Supplies 695 800 400 700 650 350 400 300 600 800 650 550 6,895 Graphics software/equipment 700 200 200 200 200 200 200 200 200 200 200 200 2,900 Video software/equipment 1,250 1,250 500 500 500 500 500 500 500 500 500 500 7,500 Interactive software/equipment 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Printing 942 0 86 628 34 46 34 95 754 218 201 532 3,570 LAN Equip 100 100 100 100 100 100 100 100 100 100 100 100 1,200 Acct Software 0 0 1,000 0 0 0 0 0 0 0 0 0 1,000 Grocery 25 25 25 25 25 25 25 25 25 25 25 25 300 Video Production Supplies 500 500 500 500 500 400 500 400 500 400 500 500 5,700 Graphic Supplies 600 0 650 72 600 100 600 0 600 0 600 600 4,422 Film Processing 95 95 0 95 0 95 0 0 95 0 95 570 Pre-Press Supplies 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Audio Supplies 50 50 50 50 50 50 50 50 50 50 50 50 600 Total Office supplies 5,457 3,425 4,106 3,275 3,254 2,271 3,004 2,170 3,829 2,888 3,326 3,652 40,657 Payroll Officers 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000 Staff 42,000 42,000 42,000 42,000 42,000 42,000 44,000 44,000 44,000 44,000 44,000 46,000 518,000 FUTA/SUTA 420 420 420 420 420 420 440 440 440 440 440 460 5,180 Commissions 15,264 16,026 16,806 17,511 19,221 19,401 18,201 17,511 20,331 20,361 22,611 22,461 225,705 Federal/Fica Tax 9,880 9,880 9,880 9,880 9,880 9,880 10,260 10,260 10,260 10,260 10,260 10,640 121,220 Staff incentives 500 500 500 500 500 500 500 500 500 500 500 500 6,000 Total Payroll 78,064 78,826 79,606 80,311 82,021 82,201 83,401 82,711 85,531 85,561 87,811 90,061 996,105 Postage and Delivery USPS 350 350 350 350 350 350 350 350 350 350 350 350 4,200 Unishippers 550 550 550 550 550 550 550 550 550 550 550 550 6,600 Other 50 50 50 50 50 50 50 50 50 50 50 50 600 Total Postage & Delivery 950 950 950 950 950 950 950 950 950 950 950 950 11,400 Professional Fees Accountant 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Consulting 400 400 400 400 400 400 400 400 400 400 400 400 4,800 Legal 550 550 550 550 550 550 550 550 550 550 550 550 6,600 Collection Agent 1,272 1,336 1,401 1,459 1,602 1,617 1,517 1,459 1,694 1,697 1,884 1,872 18,809 Personnel 0 0 0 1,000 0 0 1,000 0 0 1,000 0 0 3,000 Total Professional Fees 3,222 3,286 3,351 4,409 3,552 3,567 4,467 3,409 3,644 4,647 3,834 3,822 45,209 Repairs and Maintenance Computer repairs 250 500 250 500 250 500 250 500 250 500 250 500 4,500 Equipment repairs 450 450 1,500 450 450 450 450 450 450 450 450 450 6,450 Building repairs 200 150 200 150 200 150 300 150 300 150 300 150 2,400 Total Repairs & Maintenance 900 1,100 1,950 1,100 900 1,100 1,000 1,100 1,000 1,100 1,000 1,100 13,350 Sales Expenses Sales Recruitment 600 600 600 600 600 600 600 600 600 600 600 600 7,200 Direct Mailers 650 650 650 650 650 650 650 650 650 650 650 650 7,800 Sales contest/bonus 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Misc. Sales Expenses 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Total Sales Expenses 1,650 1,650 1,650 1,650 1,650 1,650 1,650 1,650 1,650 1,650 1,650 1,650 19,800 Page 141 Taxes Personal property Firm 0 0 0 0 0 0 0 0 6,000 0 0 0 6,000 Real Estate 0 0 0 0 0 0 0 0 0 6,000 0 0 6,000 Sales Tax - Firm 530 530 530 530 530 530 530 530 530 530 530 530 6,360 Intangible/Tangible 0 0 98 280 0 0 0 0 0 0 0 0 378 Personal property Leases 41 351 41 233 41 41 312 41 41 41 292 184 1,659 State 0 500 0 0 0 110 0 106 138 126 0 90 1,070 Total tax 571 1,381 669 1,043 571 681 842 677 6,709 6,697 822 804 21,467 Telephone Cellular 550 550 550 550 550 550 550 550 550 550 550 550 6,600 Local service 500 500 500 500 500 500 500 500 500 500 500 500 6,000 Long Distance 800 800 800 800 800 800 800 800 800 800 800 800 9,600 Paging 85 85 85 85 85 85 85 85 85 85 85 85 1,020 Other 50 50 50 50 50 50 50 50 50 50 50 50 600 Total Telephone 1,985 1,985 1,985 1,985 1,985 1,985 1,985 1,985 1,985 1,985 1,985 1,985 23,820 Travel Car Rental 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Airfare 500 500 700 700 700 500 500 500 500 500 500 500 6,600 Entertainment 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Travel other 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Lodging 500 500 500 500 500 500 500 500 500 500 500 500 6,000 Meals 350 350 350 350 350 350 350 350 350 350 350 350 4,200 Tolls/Parking 100 100 100 100 100 100 100 100 100 100 100 100 1,200 Total Travel 2,350 2,350 2,550 2,550 2,550 2,350 2,350 2,350 2,350 2,350 2,350 2,350 28,800 Utilities Electric 600 600 600 600 600 600 600 600 600 600 600 600 7,200 Total Utilities 600 600 600 600 600 600 600 600 600 600 600 600 7,200 Miscellaneous Non compete fees 30 30 30 30 30 30 30 30 30 30 30 30 360 Misc. Expenses 150 150 150 150 400 400 150 150 150 150 150 150 2,300 Total Miscellaneous 180 180 180 180 430 430 180 180 180 180 180 180 2,660 Bad Debt 4,579 4,808 5,042 5,253 5,766 5,820 5,460 5,253 6,099 6,108 6,783 6,738 67,712 Gross Profit 159,596 174,670 180,190194,795 217,915221,260 205,915200,500 233,195233,710 260,050258,130 2,539,926 Total Expenses 137,033 139,293 139,172138,983 143,101140,741 142,671140,837 149,444149,627 149,710149,522 1,720,133 Pre-tax Profit* 22,563 35,377 41,018 55,812 74,814 80,519 63,244 59,663 83,751 84,083 110,340108,608 819,793 EBITDA 900,060 *Does not include depreciation GPM 68% Certain expense items covered under use of investment proceeds are not included NPM 22% Page 142 Lorilei Communications, Inc. FY ending June 30, 2003 July Aug Sep Oct Nov Dec Jan Feb Mar April May June Total Income Commission 7,000 7,000 7,000 7,000 7,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 91,000 ONT Ad sales 40,000 40,000 45,000 40,000 50,000 45,000 45,000 40,000 45,000 50,000 55,000 50,000 545,000 North County Ad sales 40,000 40,000 45,000 40,000 50,000 45,000 45,000 40,000 45,000 50,000 60,000 50,000 550,000 Inland Empire Ad sales 10,000 15,000 20,000 20,000 25,000 25,000 30,000 30,000 35,000 40,000 45,000 45,000 340,000 Retainer 8,000 8,000 8,000 8,000 8,000 8,000 10,000 10,000 10,000 10,000 10,000 10,000 108,000 Video Production 60,000 60,000 70,000 70,000 65,000 60,000 65,000 55,000 65,000 65,000 80,000 65,000 780,000 Graphics 45,000 45,000 45,000 45,000 50,000 45,000 45,000 45,000 45,000 45,000 45,000 45,000 545,000 Pre-press 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000 Airtime 75,000 75,000 80,000 85,000 85,000 80,000 80,000 70,000 90,000 85,000 95,000 95,000 995,000 Brokered Spot airtime 40,000 40,000 40,000 45,000 50,000 50,000 50,000 40,000 45,000 45,000 45,000 40,000 530,000 Fees-Misc 10,000 10,000 15,000 10,000 10,000 10,000 10,000 8,000 9,000 10,000 12,000 10,000 124,000 Web Design 8,000 8,000 10,000 8,000 10,000 8,000 8,000 7,000 10,000 8,000 12,000 8,000 105,000 Still Photography 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 14,400 CD-Rom 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000 Audio Production 4,000 4,000 7,000 5,000 8,000 5,000 6,000 4,000 5,000 5,000 8,000 6,000 67,000 Public Relations 5,000 5,000 6,000 5,000 5,000 4,500 5,000 4,500 5,000 5,000 6,000 5,000 61,000 Client Promotions 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 48,000 Web Maintenance 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 66,000 Shipping Revenue 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 48,000 Interest Income 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Total Income 378,500 383,500 424,500414,500 449,500420,000 433,500388,000 443,500452,500 507,500463,500 5,159,000 Cost of Goods Sold Spot Airtime 26,400 26,400 26,400 29,700 33,000 33,000 33,000 26,400 29,700 29,700 29,700 26,400 349,800 CLA 33,750 33,750 36,000 38,250 38,250 36,000 36,000 31,500 40,500 38,250 42,750 42,750 447,750 Program Airtime 1,500 1,500 1,600 1,700 1,700 1,600 1,600 1,400 1,800 1,700 1,900 1,900 19,900 ONT CLA 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 54,000 North County CLA 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 78,000 Inland Empire CLA 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 6,500 78,000 Total 79,150 79,150 81,500 87,150 90,450 88,100 88,100 76,800 89,500 87,150 91,850 88,550 1,027,450 Client Promotions 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 16,800 Internet Fees 1,815 1,815 1,815 1,815 1,815 1,815 1,815 1,815 1,815 1,815 1,815 1,815 21,780 Total 3,215 3,215 3,215 3,215 3,215 3,215 3,215 3,215 3,215 3,215 3,215 3,215 38,580 Graphics Photos 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Printing 22,500 22,500 22,500 22,500 25,000 22,500 22,500 22,500 22,500 22,500 22,500 22,500 272,500 Pre-press supplies 425 425 425 425 425 425 425 425 425 425 425 425 5,100 Misc Supplies 0 0 500 0 0 500 0 0 500 0 0 500 2,000 Misc. Shipping 600 600 600 600 600 600 600 600 600 600 600 600 7,200 Total 23,725 23,725 24,225 23,725 26,225 24,225 23,725 23,725 24,225 23,725 23,725 24,225 289,200 Video Production Tapes 2,500 2,500 3,000 3,500 3,000 3,500 3,250 2,750 3,000 3,000 4,000 3,250 37,250 Software/equipment 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Printing 3,000 0 0 0 0 0 3,000 0 0 0 0 0 6,000 Talent Fees 750 1,000 1,200 1,200 1,200 1,200 1,200 1,800 1,200 1,200 1,800 1,300 15,050 Staging & Props 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000 Rentals 750 750 750 750 750 750 750 750 750 750 750 750 9,000 Shipping 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 43,200 Tape Duplication 6,600 6,600 7,700 7,700 7,150 6,600 7,150 6,050 7,150 7,150 8,800 7,150 85,800 Total 19,700 16,950 18,750 19,250 18,200 18,150 21,450 17,450 18,200 18,200 21,450 18,550 226,300 Total COGS 125,790 123,040 127,690133,340 138,090133,690 136,490121,190 135,140132,290 140,240134,540 1,581,530 Gross Profit 252,710 260,460 296,810281,160 311,410286,310 297,010266,810 308,360320,210 367,260328,960 3,577,470 Firm Expenses Advertising Ocala News Tonight 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000 North County News Tonight 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 42,000 Prod/Office personnel 750 750 750 750 750 750 750 750 750 750 750 750 9,000 CD Dup/Printing 0 3,000 0 0 3,000 0 0 3,000 0 0 3,000 0 12,000 Yellow Pages 650 650 650 650 650 650 650 650 650 650 650 650 7,800 Promotions 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Print 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 48,000 Direct - Infomercials 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000 Misc. Firm Advertising 750 750 750 750 750 750 750 750 750 750 750 750 9,000 Total Advertising 17,450 20,450 17,450 17,450 20,450 17,450 17,450 20,450 17,450 17,450 20,450 17,450 221,400 Page 143 Automobile Maintenance 600 600 600 600 600 600 600 600 600 600 600 600 7,200 Caravan payment 364 364 364 364 364 364 364 364 364 364 364 364 4,368 ONT vehicles 400 400 400 400 400 400 400 400 400 400 400 400 4,800 North County news vehicles 400 400 400 400 400 400 400 400 400 400 400 400 4,800 Mercury 464 464 464 464 464 464 464 464 464 464 464 464 5,568 Volvo 504 504 504 504 504 504 504 504 504 504 504 504 6,048 Fuel 2,600 2,600 2,600 2,600 2,600 2,600 2,600 2,600 2,600 2,600 2,600 2,600 31,200 Vehicle Registration 300 0 300 0 300 0 0 0 0 0 0 0 900 Total Automobile 5,632 5,332 5,632 5,332 5,632 5,332 5,332 5,332 5,332 5,332 5,332 5,332 64,884 Bank Charges 60 60 60 60 60 60 60 60 60 60 60 40 700 Contributions 0 0 0 1,000 0 0 0 0 0 0 0 0 1,000 Company Fees Copyright/Trademark 245 0 0 0 0 245 0 0 0 0 0 0 490 Internet Fees 950 950 950 950 950 950 950 950 950 950 950 950 11,400 Dues and Subscriptions 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Education 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Equipment Rental 101 101 1,200 101 757 1,695 575 101 101 101 101 101 5,035 Employee Moving Expenses 500 500 0 500 0 500 0 0 500 0 500 500 3,500 NDC Payment Systems 150 100 100 100 100 100 308 958 Misc. Fees 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Total Company Fees 2,746 2,351 3,050 2,351 2,607 4,190 2,425 1,851 2,451 1,851 2,451 2,659 30,983 Insurance Auto 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 19,200 Building/Property 600 600 600 600 600 600 600 600 600 600 600 600 7,200 Health 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000 Media Liability 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Addlt Liability 500 500 500 500 500 500 500 500 500 500 500 500 6,000 Life Insurance 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Worker's Comp 700 700 700 700 700 700 700 700 700 700 700 700 8,400 Total Insurance 7,700 7,700 7,700 7,700 7,700 7,700 7,700 7,700 7,700 7,700 7,700 7,700 92,400 Interest Late charges 50 50 50 50 50 50 50 50 50 50 50 50 600 Finance Charges 450 450 450 450 450 450 450 450 450 450 450 450 5,400 Loan Int-Capital leases 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 24,162 Mortgage Interest 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 21,600 Other interest 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Lines of credit 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Total Interest 5,100 5,100 5,100 5,100 5,100 5,100 5,100 5,100 5,100 5,100 5,100 5,100 61,200 Janitorial/Maintenance Pest Control 50 0 50 0 50 0 50 0 50 0 172 0 422 Cleaning/Supplies 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Sanatation 88 88 88 88 88 88 88 88 88 88 88 88 1,056 Total Janitorial/Maintenance 338 288 338 288 338 288 338 288 338 288 460 288 3,878 Licenses and Permits 150 0 0 0 150 0 0 11 0 191 0 60 562 Leases Audio Visual 500 500 500 500 500 500 500 500 500 500 500 500 6,000 Computer Equip 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 21,600 Phone System 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Production Equip 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 72,000 Total Leases 8,600 8,600 8,600 8,600 8,600 8,600 8,600 8,600 8,600 8,600 8,600 8,600 103,200 Lines of Credit AmSouth 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 13,200 Total-Lines of credit 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 13,200 Office Space Mortgage principal 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Jax Office rent 400 400 400 400 400 400 400 400 400 400 400 400 4,800 Orl Office rent 600 600 600 600 600 600 600 600 600 600 600 600 7,200 Tampa Office rent 400 400 400 400 400 400 400 400 400 400 400 400 4,800 S. Florida Office rent 750 750 750 750 750 750 750 750 750 750 750 750 9,000 North County Studio/office 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000 Total Office Mort/Rent 5,350 2,350 2,350 2,350 2,350 2,350 2,350 2,350 2,350 2,350 2,350 2,350 64,200 Page 145 Non-COGS Supplies Office Supplies 695 800 400 700 650 350 400 300 600 800 650 550 6,895 Graphics software/equipment 700 200 200 200 200 200 200 200 200 200 200 200 2,900 Video software/equipment 1,250 1,250 500 500 500 500 500 500 500 500 500 500 7,500 Interactive software/equipment 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Printing 942 0 86 628 34 46 34 95 754 218 201 532 3,570 LAN Equip 100 100 100 100 100 100 100 100 100 100 100 100 1,200 Acct Software 0 0 1,000 0 0 0 0 0 0 0 0 0 1,000 Grocery 25 25 25 25 25 25 25 25 25 25 25 25 300 Video Production Supplies 500 500 500 500 500 500 500 500 500 500 500 500 6,000 Graphic Supplies 600 0 650 72 600 100 600 0 600 0 600 600 4,422 Film Processing 95 95 0 95 0 95 0 0 95 0 95 570 Pre-Press Supplies 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Audio Supplies 50 50 50 50 50 50 50 50 50 50 50 50 600 Total Office supplies 5,457 3,425 4,106 3,275 3,254 2,371 3,004 2,270 3,829 2,988 3,326 3,652 40,957 Payroll Officers 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000 Staff 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 624,000 FUTA/SUTA 520 520 520 520 520 520 520 520 520 520 520 520 6,240 Commissions 22,710 23,010 25,470 24,870 26,970 25,200 26,010 23,280 26,610 27,150 30,450 27,810 309,540 Federal/Fica Tax 11,780 11,780 11,780 11,780 11,780 11,780 11,780 11,780 11,780 11,780 11,780 11,780 141,360 Staff incentives 500 500 500 500 500 500 500 500 500 500 500 500 6,000 Total Payroll 97,510 97,810 100,270 99,670 101,770100,000 100,810 98,080 101,410101,950 105,250102,610 1,207,140 Postage and Delivery USPS 350 350 350 350 350 350 350 350 350 350 350 350 4,200 Unishippers 550 550 550 550 550 550 550 550 550 550 550 550 6,600 Other 50 50 50 50 50 50 50 50 50 50 50 50 600 Total Postage & Delivery 950 950 950 950 950 950 950 950 950 950 950 950 11,400 Professional Fees Accountant 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Consulting 400 400 400 400 400 400 400 400 400 400 400 400 4,800 Legal 550 550 550 550 550 550 550 550 550 550 550 550 6,600 Collection Agent 1,893 1,918 2,123 2,073 2,248 2,100 2,168 1,940 2,218 2,263 2,538 2,318 25,795 Personnel 0 0 0 1,000 0 0 1,000 0 0 1,000 0 0 3,000 Total Professional Fees 3,843 3,868 4,073 5,023 4,198 4,050 5,118 3,890 4,168 5,213 4,488 4,268 52,195 Repairs and Maintenance Computer repairs 250 500 250 500 250 500 250 500 250 500 250 500 4,500 Equipment repairs 450 450 1,500 450 450 450 450 450 450 450 450 450 6,450 Building repairs 200 150 200 150 200 150 300 150 300 150 300 150 2,400 Total Repairs & Maintenance 900 1,100 1,950 1,100 900 1,100 1,000 1,100 1,000 1,100 1,000 1,100 13,350 Sales Expenses Sales Recruitment 600 600 600 600 600 600 600 600 600 600 600 600 7,200 Direct Mailers 650 650 650 650 650 650 650 650 650 650 650 650 7,800 Sales contest/bonus 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Misc. Sales Expenses 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Total Sales Expenses 1,650 1,650 1,650 1,650 1,650 1,650 1,650 1,650 1,650 1,650 1,650 1,650 19,800 Taxes Personal property Firm 0 0 0 0 0 0 0 0 6,000 0 0 0 6,000 Real Estate 0 0 0 0 0 0 0 0 0 6,000 0 0 6,000 Sales Tax - Firm 600 600 600 600 600 600 600 600 600 600 600 600 7,200 Intangible/Tangible 0 0 98 280 0 0 0 0 0 0 0 0 378 Personal property Leases 200 200 200 200 200 200 200 200 200 200 200 200 2,400 State 0 500 0 0 0 110 0 106 138 126 0 90 1,070 Total tax 800 1,300 898 1,080 800 910 800 906 6,938 6,926 800 890 23,048 Page 146 Telephone Cellular 550 550 550 550 550 550 550 550 550 550 550 550 6,600 Local service 750 750 750 750 750 750 750 750 750 750 750 750 9,000 Long Distance 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Paging 125 125 125 125 125 125 125 125 125 125 125 125 1,500 Other 50 50 50 50 50 50 50 50 50 50 50 50 600 Total Telephone 2,475 2,475 2,475 2,475 2,475 2,475 2,475 2,475 2,475 2,475 2,475 2,475 29,700 Travel Car Rental 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Airfare 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Entertainment 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Travel other 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Lodging 500 500 500 500 500 500 500 500 500 500 500 500 6,000 Meals 350 350 350 350 350 350 350 350 350 350 350 350 4,200 Tolls/Parking 100 100 100 100 100 100 100 100 100 100 100 100 1,200 Total Travel 2,850 2,850 2,850 2,850 2,850 2,850 2,850 2,850 2,850 2,850 2,850 2,850 34,200 Utilities Electric 600 800 800 800 800 800 800 800 800 800 800 800 9,400 Total Utilities 600 800 800 800 800 800 800 800 800 800 800 800 9,400 Miscellaneous Non compete fees 30 30 30 30 30 30 30 30 30 30 30 30 360 Misc. Expenses 150 150 150 150 400 400 150 150 150 150 150 150 2,300 Total Miscellaneous 180 180 180 180 430 430 180 180 180 180 180 180 2,660 Bad Debt 6,813 6,903 7,641 7,461 8,091 7,560 7,803 6,984 7,983 8,145 9,135 8,343 92,862 Gross Profit 252,710 260,460 296,810281,160 311,410286,310 297,010266,810 308,360320,210 367,260328,960 3,577,470 Total Expenses 178,254 176,642 179,223177,845 182,255177,316 177,895174,977 184,714185,249 186,507180,447 2,161,319 Pre-tax Profit* 74,457 83,819 117,588103,316 129,156108,994 119,116 91,833 123,647134,962 180,754148,514 1,416,151 EBITDA 1,500,399 *Does not include depreciation GPM 69% Certain expense items covered under use of investment proceeds are not included NPM 27% I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 147 Schedule to Reorganization Agreement by and among Amerinet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation SCHEDULE 5.13-2 USE OF PROCEEDS Attached are the Use of Proceeds Use of Proceeds Set forth below is Lorilei's anticipated use of the cash available to Lorilei after deduction of estimated remaining offering expenses of $12,500. Pursuant to the Reorganization Agreement. Lorilei would receive $487,500 of net proceeds from this reorganization after deduction of the expenses of the reorganization. The net proceeds of this offering will be used: To pay existing accounts receivable and personal property and real estate taxes.; To repair existing equipment and purchase new equipment To employ additional support staff To pay advertising and marketing costs, and to provide working capital. The amounts and timing of expenditures for each purpose is subject to the broad discretion of the management and will depend on factors such as the amount of net proceeds available to Lorilei and the effects of competition, many of which are beyond Lonlei's control. Accounts Payable and Taxes $198,854.00 Equipment 8,000.00 Salaries 30,646.00 Advertising/Marketing 100,000.00 Working Capital 150.000.00 Total $487,500.00 The initial $100,000 payment made to Lorilei will be used to pay approximately $42,000 of the accounts payable and taxes with the balance being use to pay equipment, salaries and working capital. The remaining four (4) payments of $100,000 w-ill be applied pro rata among the balance of the accounts receivable, advertising/marketing and working capital. I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 148 Exhibit to Reorganization Agreement by and among AmeriNet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation EXHIBIT 2.25 REGULATION SB DISCLOSURE DOCUMENT Attached to this exhibit is the supporting document for the above referenced. Exhibit 2.25 Regulation SB Disclosure Documents Item 101. Description of Business Lorilei Communications, Inc., a Florida corporation ("Lorilei"), was organized in July of 1994 by Gerald R. Cunningham, its current president, and Leigh A. Cunningham, its current secretary/treasurer. Lorilei is the successor to a Florida general partnership doing business as "The Firm." Lorilei is a full-service advertising/marketing company under the trade name "The Firm Multimedia". Lorilei offers an array of advertising and marketing services including in-house production of video, audio, internet authoring, interactive CD-Rom, graphics, and pre-press. We believe our pricing market is companies wishing to enter the direct response and e-commerce markets, rather than traditional "image" advertisers. Lorilei was formed to provide advertising services to regional and local advertisers, as well as marketers who needed an incremental program. We believe that Lorilei's ability to provide production services in-house as a result of new lower cost technology provides it with competitive advantages in speed, quality and price over larger advertising agencies and marketing companies which subcontract most of their production. As a result of seeking solutions for direct response clients and in order to further enhance its capabilities, Lorilei has used commercial leased access (CLA) to cable systems and has been instrumental in the formulation of FCC rules regulating CLA. Through CLA, Lorilei has the capacity to offer clients cable access for 1/2 hour or longer television programming on a full-time or part-time basis, including cable access in prime-time. Through a proprietary database developed over a four-year period, Lorilei has the ability to place television programs on virtually any cable television system in the United States. Under FCC rules, the cost of CLA access is only the minimal fees determined by the FCC's "implicit fee" formula, plus any actual costs of tape playback or satellite reception. Therefore, Lorilei believes it is positioned as a resource for direct response airtime placement as rates which are regulated by the Federal government, and as a result, are significantly lower than the rates charged by broadcast television. In January, 2000 Lorilei started a venture under the trade name "Ocala News Tonight" (ONT). ONT is a half-hour advertiser-supported television news program featuring local news, weather and sports cablecast at 6:30 PM and again at 10:30 PM to approximately 73,000 cable households in the Marion County, Florida area. This geographic area is part of the Orlando, FL television ADI, however the area receives very little local television news coverage from the distant Orlando television outlets. ONT is the prototype of a concept Lorilei intends to replicate in other market areas with similar characteristics across the nation. Utilizing efficiencies in desktop video, and new technological innovations in "prosumer" cameras, this concept allows television news to be produced at a much lower cost than was previously possible, allowing for profitability on a community basis. Lorilei maintains web sites under each of its trade names. The Firm Multimedia web site features video/audio clips demonstrating our work, as well as examples of graphic design and links to authored web sites. Our web site is a major source of client lead generation for the company. Ocala news tonight also has a website used primarily as an interactive focal point for the viewing audience. It includes content updated on a daily basis with highlights from the newscast, as well as viewer opinion polls. Advertising is accepted at the ONT website. Lorilei currently employs approximately 22 persons and anticipates adding up to ten additional staff in the near term, primarily in sales, marketing and support functions. Lorilei leases field sales offices in Jacksonville and Orlando, Florida, and intends to open additional offices in the Tampa Bay and Boca Raton, Florida areas within the year 2000. Currently Lorilei does not have any material portion of its assets, operations or customers located outside of the United States. Substantially all of Lorilei's revenues are from customers within the United States, where all of Lorilei's services are provided. Page 149 Industry Overview Domestic advertising expenditures were estimated at $308.9 Billion in 1999. Of this sum, 57.1% or $176.5 Billion is devoted to some form of direct marketing, up 7.2% over 1998. The market for direct marketing overall is highly fragmented across direct mail and telephone marketing which account for about half of the total, however direct response television (DRTV), a $20.4 Billion market, is a much less fragmented segment and is growing at a faster pace than directmarketing overall. DRTV expenditures increased by 58% in the period 1994-1999 versus overall direct marketing which increased by 46%. DRTV predates the Internet in empowering the consumer with the ability to purchase direct. With $1.5 trillion in goods and services expected to be sold over the Internet by 2003 (Bear Stearns E-volve report) DRTV is a natural means of not only converting television viewers into website browsers, but adding the capacity to demonstrate features and abilities of the website. The same Bear Stearns report estimates spending on Internet infrastructure tools to expand to over $4 billion by 2003, up from $600 million in 1999. One of the key issues is the pressure from companies and consumers for increased bandwidth. As general bandwidth to access the Internet expands, video via Internet, with utilization of interactive application software already available, becomes more and more viable. Strategic Plans Operating Strategy Lorilei's mission for The Firm Multimedia is to provide high-quality content that creates demand for client's products and services; to offer candid, solid consultative advice that results in increase sales; to provide avenues of exposure such as CLA that are effective and that are not easily duplicated by potential competitors; to embrace and anticipate opportunities made possible byemerging technology and to rapidly focus on ways and means for our clients to benefit. Lorilei's mission for Ocala news tonight is to present content that is focused on local news, weather, and sports in a style which both appeals to and reflects the community, thus making ONT a staple choice in our viewing area and providing results and value for our advertisers. By accomplishing these goals with ONT we will be able to replicate our format and business approach in our planned expansion markets. Lorilei has formulated a strategy to meet these goals with the businesses we have built under both of the above trade names, resulting in profitability and dividends for our shareholders. Lorilei's management believes that: Increased sales volume will result in economies of scale which will enhance The Firm Multimedia and Ocala news tonight's profitability. We intend to aggressively recruit professional inside and outside salespeople and launch an intensive advertising and marketing campaign for both trade names. A wealth of potential business exists in B2B website promotion. We're finding many relatively large companies with websites but without an Internet strategy. These companies will eventually be compelled to rely on companies such as The Firm Multimedia for assistance or go out of business. Our advantage is we can develop the strategy, the message, and provide the media. Brick and mortar retailers will be forced to seek non-traditional revenue streams in order to compete with e-retailers. One of the best ways to accomplish this is through establishing a strong e-commerce website and supporting it with DRTV; resulting in telephone orders as well as orders from the website. Comprehensive Brand Strategy For The Firm Multimedia, we will launch a multi-pronged advertising/marketing campaign utilizing: - -National DRTV print and directory ads - -Regional business publication print ads - -Keyword-driven Internet banner ads - -Business to business ("B2B") direct mail - -B2B telemarketing Our goal is to develop top of mind awareness for The Firm Multimedia as a company and to develop a lead generation system for our inside and outside salespeople. For Ocala news tonight, (and as a prototype for expansion markets) we will launch an advertising/marketing campaign consisting of: - -100 showing of metro area poster outdoor over a 3 month period - -High frequency cable spot on the systems we service - -New creative for our existing bartered radio campaign - -Vinyl signs on ONT vehicles - -Direct mail revenue-generating promotion campaign with a four-color prize mailer (we intend to include Vista and Trilogy in this promotion) - -B2B direct mailer announcing the campaign as a lead generation source for our outside salespeople. - -On-going revenue-generating co-promotions featuring ONT personalities on-location at client locations. Page 150 Growth Strategy Lorilei's plan for growth is multifaceted. The company intends to grow through recruiting additional professional salespeople in the specialized market segments the company intends to service, and to open additional sales offices in geographically targeted areas. The company also intends to establish additional news operations similar in structure to Ocala News Tonight, in areas of the U.S. which demonstrate an abundant advertiser base, community identity, and that are either under-served by broadcast television news due to the large size of the television ADI, due to geographic boundaries or terrain which segment the market, or in some cases, markets with a substantial Spanish-speaking population which is not served by Spanish Language television news. Lorilei also intends to grow by acquisition of companies we feel are synergistic with its operations. Investment in Technology Lorilei has made an investment in emerging technology through its history as a company and has, as an example, made the transition to digital, non linear video editing versus the older tape-based linear tape editing. We expect to invest in high definition video equipment as distribution facilities and HDTV sets-in-use increases to critical mass. We intend to position ourselves as the company offering advanced solutions to the latest Internet applications, including Internet broadcasting. We also intend to produce content for the Internet which may be offered to other Internet broadcasters for a fee. Economies of Scale and Best Practices Lorilei's management believes that it will achieve significant economies of scale as gross sales levels increase. This is possible through performing most of the work at the Ocala headquarters due to lower cost of living, beneficial quality of life, and resultant moderate salaries, plus productivity gains made possible through benchmarking employee compensation to productivity, revenue management processes, increased vertical integration resulting maximizing customer revenues by extending projects through multiple content platforms (i.e. graphics clients become video clients), etc. Expansion Through Acquisitions Beginning in 2001, Lorilei will seek to acquire marketing and advertising companies in order to gain market share, increase overall sales volume, geographic reach and add complimentary services (i.e. direct response fulfillment). These acquisitions could also include companies which have developed a specific product or service which management feels has considerable profit potential utilizing our marketing methods and capabilities. Company Services Lorilei currently offers its services primarily in the United States. The Firm Multimedia clients may be located in any geographic area with the transaction facilitated by Internet, fax, courier, or in some cases in-person sales calls to the client location. In some cases the client travels to Lorilei's offices. Our plan is to continue to extend our physical presence by adding additional sales offices, first in Florida, then regionally and nationally. Ocala news tonight clients are primarily located in Marion County, Florida. As additional news markets are added the clients for each news operation will also primarily be located in the community of service. Sales facilities for The Firm Multimedia will be co-located with each news facility, including field content acquisition support personnel where practical. Raw content will be shipped or transmitted to the Ocala production facility for post-production. E-Commerce Lorilei provides clients with a turn-key e-commerce approach by both authoring the website and providing marketing and advertising services to drive traffic. The company provides clients with consultative advice across a wide range of issues including domain names and registration, input on competitive content items such as pricing, placement, inventory, target marketing, and demographic, qualitative and perceptual customer research. The company utilizes the latest state of the art software including "Flash" "Shockwave" and Quicktime video to author client websites with rich content. Each website is custom-authored according to the client's specifications and may include specialized applications such as database access. Lorilei believes rich content websites, including sites featuring video and audio, will become a critical component in commercial website development as competition on the Internet continues to drive more complex websites. The company envisions becoming a leader in the e-commerce web development business. DRTV The company offers a comprehensive solution for direct response television marketers including concept, scripting, infomercial and spot production, media planning and placement, as well as an array of direct response-related graphics services. The fact that Lorilei offers a wide breadth of services, with in-house facilities and staff, sets it apart in the DRTV industry and is a significant competitive advantage for those clients seeking a turn-key solution. Most of the company's past and current clientele is direct, rather than agency business. The company intends to continue on this course. 151 Lorilei has contacts at major cable networks and broadcast stations, and has the ability to buy airtime competitively on a supply and demand basis. Most half-hour infomercial time is limited to non-productive spot revenue time for the broadcaster or cablecaster. Typically these blocks of time are not productive for spot revenue due to a low level of households using television (i.e. overnights, early mornings). Lorilei's ability to purchase half-hour airtime in prime-time viewing hours through channel leasing, on a market-targetable basis gives it a primary niche in the DRTV business. This is a highly profitable business due to government regulation keeping the price fixed according to an FCC formula, rather than floating with supply and demand. Our goal is to increase awareness of our offerings in this segment at the agency and buying-service level and to increase business with the DRTV trade, as well as from direct to client business. Channel Leasing Lorilei has pioneered the use of channel leasing options mandated by cable deregulation and through petitions filed with the Federal Communications Commission has played a major role in shaping the rules under which this capacity is available (see "Lorilei" at fcc.gov). The company has developed a proprietary database of cable systems, enabling it to make channel leasing a viable option for its clients with the ability to accurately quote rates, household counts, and in some cases channel position in the individual system lineup, all in a format which meets the criteria of the client. No other company that we are aware of has the ability at this time. Lorilei intends to continue development of the database to increase both the quantity and quality of the available information. Channel leasing is available on both part-time and full-time levels up to the set-aside capacity of the cable system. Up to the present time Lorilei has focused on part-time channel leasing, however management feels the timing is right to begin marketing a full-time channel leasing service to larger advertisers and marketers. Under the rules, a cable operator must open a channel for use with as little as an eight-hour daily commitment for a one-year period. With the advent of the Internet, large companies are beginning to alter their strategies as they relate to reaching prospects and converting them into customers. The Internet offers an interactive 24/7 portal to connect the prospect or customer directly to the company, however it is somewhat limited in content due to bandwidth limitations. Lorilei management feels there are companies that are searching for a competitive edge in reaching the consumer on a long-form basis in persuasive ways the Internet cannot yet offer. Channel leasing is an option most large companies are not aware of, therefore Lorilei intends to focus a portion of its marketing effort to increase awareness and market channel leasing as a tool for these companies. This effort could have a substantial impact on the projected revenues for the company as landing even one full-time channel leasing client in a moderate number of markets would easily quadruple or quintuple current projections for both gross revenue and net profit. Governmental Regulation Lorilei's success is dependent in part on the existence of federal regulations which require cable operations to lease cable access at low rates pursuant to FCC rules promulgated under the 1992 Cable Act. A change in the Cable Act or the regulations promulgated thereunder could significantly impair our ability to successfully compete against larger advertising companies. The statutory framework for commercial leased access was established by the 1984 Act and amended by the 1992 Cable Act. The 1984 Cable Act established leased access to assure access to the channel capacity of cable systems by parties unaffiliated with the cable operator who want to distribute video programming free of the editorial control of the cable operator. Channel set-aside requirements were established in proportion to a system's total activated channel capacity, in order to "assure that the widest possible diversity of information sources are made available to the public from cable systems in a manner consistent with the growth and development of cable systems." A cable system operator was permitted to use any unused leased access channel capacity for its own purposes, until such time as a written agreement for a leased channel use was obtained. Each system operator subject to this requirement was to establish the "price, terms, and conditions of such use which are at least sufficient to assure that such use will not adversely affect the operation, financial condition, or market development of the cable system." The only exception to the leased commercial access channel set-aside under the 1984 Cable Act that up to 33 percent of a system's designated leased commercial access channel capacity may be used for qualified minority or educational programming from sources that may or may not be affiliated with the cable operator. The qualified minority or educational source may be affiliated with the operator. The 1992 Cable Act amendments broadened the statutory purpose to include "the promotion of competition in the delivery of diverse sources of video programming," and the Commission was provided with expanded authority: (1) to determine the maximum reasonable rates that a cable operator may establish for leased access use, including the rate charged for the billing of subscribers and for the collection of revenue from subscribers by the cable operator for such use; (2) to establish reasonable terms and conditions for leased access, including those for billing and collection; and (3) to establish procedures for the expedited resolution of leased access disputes. The legislative history of the 1992 amendments expresses concern that some cable operators may have established unreasonable terms or may have had financial incentives to refuse to lease channel capacity to potential leased access users based on anti-competitive motives, especially if the operator had a financial interest in the programming services it carried. 152 Any person aggrieved by the failure or the refusal of a cable operator to make commercial channel capacity available or to charge rates as required by Commission rules may file a petition for relief with the Commission within 60 days of the alleged violation. In order to enforce its rights under the 1992 Act, we have filed a number of such petitions with varied results. In order to merit relief, the petition must show by clear and convincing evidence that the operator violated the leased access statutory or regulatory provisions or otherwise acted unreasonably or in bad faith. Relief may be in the form of refunds, injunctive relief or forfeitures. The Commission encourages parties to use alternative dispute resolution procedures such as settlement negotiation, conciliation, facilitation, mediation, fact finding, mini-trials and arbitration. The 1992 Cable Act provides for both judicial and Commission review of leased commercial access disputes Ocala News Tonight This trade name is a program concept whereby the company produces a nightly advertiser-supported news program dedicated to a targeted geographic area, similar to the familiar news/weather/sports format utilized by most local broadcast television stations. The prototype program is produced six days per week and airs twice nightly, at 6:30 PM and 10:30 PM seven days per week. The company chose Ocala/Marion County, Florida as the prototype for the concept due to the fact that the area met certain criteria and that production operations were already established at The Firm Multimedia. The criteria utilized to determine whether an area is viable includes but is not limited to, market composition, market geography, market identity, presence of local television news coverage, available advertising revenues (estimated as a percentage of total retail sales), and cable television penetration. In Ocala news tonight's case, the Ocala/Marion County area met the guidelines management has developed. While the area is part of the Orlando television market it receives very little local news coverage from the Orlando stations, and minimal coverage from Gainesville stations located 35 miles away. Due to its distance from Orlando and Gainesville, and with the Gainesville market's strong identity with the University of Florida, it is highly unlikely any television station from either area would make a concentrated effort to compete with the program. The area has a local identity apart from either Orlando or Gainesville, sufficient retail sales exists to provide a local advertiser base, and cable television penetration meets the company's minimums. Economies realized through new technology including desktop video and high quality prosumer cameras have lowered the cost of production to a level making the concept feasible. Fewer crew members are required for production, and inexpensive prosumer cameras offer acceptable quality for news gathering. Lorilei's experience in channel leasing is utilized in order to acquire prime airing times on cable television. In ONT's situation, a network of four cable systems are utilized to reach over 73,000 households in the area. Management has identified two expansion markets for the concept and expects to launch the first additional operation in July, 2001, with the second additional operation coming online in July, 2002. These cost of launching these additional operations may be funded from Lorilei cash flow or from additional capital investment. Beginning in July, 2003, Lorilei intends to launch two additional operations per year for the next three years. Sales and Marketing Lorilei has used a combination of inside and outside sales representatives in the past for The Firm Multimedia and intends to expand the use of inside sales representatives in two areas (1) to support outside sales with appointment setting, and (2) to sell DRTV to dot com and e-commerce companies and the DRTV trade.The company also intends to expand its field sales offices to include locations in South Florida, Tampa Bay, and Atlanta in the near term. Field sales offices will also be co-located with additional ONT-type news operations. In the past, The Firm Multimedia has employed generalist-type sales professionals, expending considerable time in training the person to represent the company across its many services. Management feels this approach needs specificity, therefore it anticipates altering the approach to employ sales professionals proficient in four major specialty areas: Print graphics, DRTV/Video, Internet/e-commerce, Agency services. Under this plan, the company will generate specific leads in under one of its specialty areas and utilizing a consultative selling approach will identify other specialty areas where it might be of service, bringing in that particular salesperson at the appropriate time. Management believes the result will be less time in training and higher sales revenues. The company utilizes a mix of marketing tools, including an infomercial produced to generate business to business leads, as well as direct mail, telemarketing, trade and business publication print, Internet advertising, as well as trade show displays. Ocala news tonight utilizes outside sales representatives who call on local business. Direct mail and on-air ad solicitation, as well as telemarketing by the outside reps is utilized to generate leads. 153 Competition The advertising industry is highly fragmented with low barriers to entry to establish an advertising agency. Advertising production is also competitive, however capital investment is still a barrier to entry. Lorilei competes with other advertising agencies, television and radio stations, other direct response television companies, and directly with cable television providers and television broadcast in advertising sales for Ocala news tonight. Lorilei competes for customers based on service, price, quality, specialized in-depth knowledge, and creativity. Most DRTV competitors are located in Western U.S. states, making West coast-based business a challenging. Employees As of April 1, 2000, Lorilei had 20 full time employees and 3 part-time employees. Lorilei requires that all full-time employees sign a non-competition and confidentiality agreement as a condition of employment. No employee contracts currently exist and all employment is at will. No employees are currently represented by an labor unions. Lorilei believes its relations with employees to be good, however additional employees will need to be recruited to meet its growth projections. Management believes that required personnel can be recruited on acceptable terms. Item 102. Properties Lorilei's principle place of business is located at 7325 Southwest 32nd Street, Ocala, Florida, 34474. This is an industrial park type setting where the other businesses are warehouse or light manufacturing businesses. The building is approximately 5,000 square feet in total space, with 3,500 square feet devoted to office/production space and 1,500 square feet devoted to studio space. All space is air-conditioned and heated. The property is encumbered by a first mortgage in the original principal amount of $194,000.00 in favor of Small Business Loan Source. The loan bears interest at the rate of 11.75% per annum and is payable over a term of 25 years. The property is in the opinion of Lorilei's management adequately covered by insurance. Management believes the current facility to be adequate for anticipated growth through the 2003 fiscal year. Management cannot, however, guarantee that the square footage will be sufficient for all production operations. Additional construction or additional leased space could be required, either of which could result in additional unanticipated expense. As part of expansion, additional sales offices in targeted major cities are contemplated. Rental costs of this additional space are expected to be minimal "office suite" type space and will expand with sales volume. However, if sales volume becomes substantial in a given metropolitan area it could result in the requirement of considerably more square footage in leased office space than has been projected. Item 103. Legal Proceedings Lorilei is not a party to any pending legal proceedings. However, Lorilei presently owes real and personal property taxes to the state of Florida in the amount of $10,272.20. Lorilei has also declined to pay $21,420.00 to Home and Garden Television (HGTV) pending confirmation of sums due. Item 201. Market for Common Equity and Related Stockholder Matters No market exists for Lorilei's common stock. There are two holders of the common stock. Lorilei has not paid dividends during 1998, 1999 or 2000. Item 202. Description of Securities Lorilei's Articles of Incorporation, as amended, authorize it to issue 2,000 shares of common stock, $0.01 par value per share and 1,000,000 shares of preferred stock, par value $.01. As of the date of this reorganization agreement, 111 shares of the common stock were outstanding and no Preferred Shares were outstanding. This description of the capital stock of Lorilei is qualified by and subject to the Florida Business Corporation Act and Lorilei's Articles of Incorporation and By-laws, copies of which Articles and By-laws have been provided as exhibits hereto and to which reference is made for the provisions thereof which are summarized below. Common Stock The holders of common stock are entitled to one vote per share on all matters to be voted upon by the shareholders and have no cumulative voting rights. Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available therefor. In the event of liquidation, dissolution, or winding up of Lorilei, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities. The common stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and nonassessable, and the shares of common stock offered hereby will also be fully paid and nonassessable. The Articles also recognize the obligation of the Corporation's stockholder AmeriNet Group.com, Inc. to elect members to the Corporation's Board of Directors in the manner reflected in the Reorganization Agreement between Lorilei and AmeriNet. 154 Undesignated Preferred Stock The authorized but unissued preferred stock (1,000,000 shares) may be issued in series, and shares of each series will have such rights and preferences as are fixed by the Board of Directors in the resolutions authorizing the issuance of that particular series. In designating any series of preferred stock, the Board of Directors may, without further action by the holders of common stock: - -fix the number of shares constituting that series, and -fix the dividend - -rights, dividend rates, conversion rights, voting rights (which may be greater or lesser than the voting rights of the common stock), and -fix the rights and terms of redemption (including any sinking fund provisions), and the liquidation preferences of the series of Undesignated Preferred Stock. The holders of any series of preferred stock, when and if issued, are expected to have priority claims to dividends and to any distribution upon liquidation of Lorilei, and they may have other preferences over the holders of the common stock. The Board of Directors may issue series of preferred stock without action by the shareholders of Lorilei. Accordingly, the issuance of preferred stock may adversely affect the rights of the holders of the common stock. In addition, the issuance of preferred stock may be used as an anti-takeover device without further action on the part of the shareholders. Issuance of preferred stock may dilute the voting power of holders of common stock One example of this dilution would be the issuance of preferred stock with super-voting rights. The issuance of preferred stock may render more difficult the removal of current management, even if such removal may be in the shareholders' best interest. Lorilei has no current plans to issue any additional preferred stock. Lorilei has issued one promissory note for $46,143.00 to John B. LaTorraca which bears interest at the rate of 8.5% per annum for which a total of $51,084.16 is presently owed. Item 303. Management's Discussion and Analysis or Plan of Operation General We provide businesses with advertising and marketing services. Our services include creative production and placement in both new and old media. We believe that our ability to place half-hour infomercials on cable television in prime-time through commercial leased access will enable us to offer direct response television services to a majority of companies striving to drive e-commerce business. In 1998, Direct Response Magazine reported that $844 million ($844M) was spent on television infomercials which contributed to generating over $759 billion ($759B) in consumer spending. By way of comparison, industry authority International Data Corporation (IDC) estimates that consumers will purchase only $16 billion ($16B) in goods from the Internet in 2000. The e-commerce market is projected to hit $3.2 Trillion ($3.2T) by 2004 in North America (Forrester Research). Revenues We classify revenues into the following major categories: Commission/retainer, Video production, Graphics, Web, and Commercial Leased Access/Spot Airtime. The following discussion does not include revenues for a new 2000 category, News. Revenue Drivers The principal factors that propel our revenues are detailed below. Commission/retainer: Income from traditional commissioned ad agency time and space business as well as ad agency monthly retainers, promotions and public relations. Video production: Includes income from both video and audio projects, including brokered duplication. Graphics: Income from all graphics projects including traditional layout and design, brokered printing, pre-press as well as new media-related projects such as animation. Web: Includes income from web design, maintenance, hosting, and interactive projects. Commercial Leased Access/Spot and program airtime: Income from brokered time sales (as contrasted with traditional ad agency 15% commission on time/space purchases). News will generate revenues from advertising sales beginning in 2000 and will increase as new market operations are incrementally rolled out. The initial operation is based at our Ocala, Florida headquarters. We expect Commission/retainer income to decrease as business looks for a broader solution to advertising and marketing challenges. Our goal is to replace this income with project income in the other revenue driver categories. Video production will increase due to our expanding direct response television business and increased demand fueled by web-based video applications. Graphics income will vary by the client mix of the company during a given fiscal period with printing as the major variable.Print-intensive clients can have a large impact on this revenue driver. Our goal is to seek this type of client and enhance their usage of print with electronic media opportunities while servicing their core advertising media. 155 Web-based revenue will increase dramatically as we increase our Internet hosting capacity and implement new business plans for the Internet, including development of a 15C2-11 website, as well as webcasting capacity. Commercial Leased Access/spot and program airtime revenues will dramatically increase in the coming years as more business discovers direct response television and as the trend toward tightening of Infomercial availabilities increases. For example, Turner Broadcasting recently ceased making half-hour timeslots available. Cost of Goods and Services Costs are classified with the revenue stream to which they are related. The major factors (exclusive of labor) associated with our costs are listed below: - -Printing costs associated with graphic print jobs - -Capitalized media - -Commercial Leased access and brokered spot airtime - -Videotape and videotape duplication - -Shipping costs Results of Operations Revenues from our business categories are as follows: Year Ended December 31, 1999 Compared to Year Ended December 31, 1998 Revenue Total revenues increased $109,468, or 11% to $1,102,329 for the year ended December 31, 1999 from $992,861 for the year ended December 31, 1998. This increase was attributable to the growth of Commercial leased access and spot/program airtime sales. Commission/retainer revenue decreased by $185,794 or 67.1% to $90,897 for the year ended December 31, 1999 from $276,691 for the year ended December 31, 1998. This is due mainly to client churn, however management believes this follows the trend in the advertising industry. Middle market companies are now turning away from traditional ad agencies toward project-based companies such as ours. Video production revenue increased by $29,616 or 11.3% to $291,156 for the year ended December 31, 1999 from $261,540 for the year ended December 31, 1998. This increase is due in part to an on-going agreement with Advent Product development for spot production. Graphics revenue decreased by $105,599 or 31.7% for the year ended December 31, 1999 from $332,903 for the year ended December 31, 1998. This decrease is partially due to client churn and partially due to a decrease in brokered printing projects. This is a revenue category that is especially sensitive to our client mix and will vary accordingly. Web revenues increased by $10,055 or 60% for the year ended December 31, 1999 from $16,743 for the year ended December 31, 1998. This is due to increase demand for web design, hosting, maintenance and interactive services. Management expects this trend to continue into the foresable future. Commercial leased access/spot and program airtime increased by $404,614 or 879% to $450,610 in the year ended December 31, 1999 from $45,996 in the year ended December 31, 1998. This increase is due to increased demand for prime-time infomercial airings and in part due to capitalized Television and Radio spot media. Management expects this category to continue to increase substantially in 2000. Cost of Goods and Services Costs of goods and services increased by $77,574 or 32% to $320,029 for the year ended December 31, 1999, from $242,455 for the year ended December 31, 1998. As a percentage of revenues, cost of goods and services for the year ended December 31, 1999 was 29%, compared with 24% for the year ended December 31, 1998. The increase was due to an increase in capitalized agency billings resulting from a shift in our agency client mix. Payroll Expense Payroll expense, including officer's salaries, increased by $28,136 or 6.8% to $439,938 for the year ended December 31, 1999 from $411,802 for the year ended December 31, 1998. As a percentage of revenues, payroll expense declined from 41% in the year ended December 31, 1998 to 39.9% for the year ended December 31, 1999. While overall payroll expense is expected to increase in 2000 due to new hires in sales and for the news operation, management believes payroll will remain close to 1999 levels as a percentage of revenues. Depreciation Expense Depreciation expense increased by $14,979 or 21% to $86,319 for the year ended December 31, 1999 from $71,340 for the year ended December 31, 1998. This is due to new equipment going into service in 1999. 156 Item 304. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure During Lorilei's two most recent fiscal years and during the year 2000, no principal independent accountant or accountant for a significant subsidiary of Lorilei on whom the principal accountant expressed reliance in its report has resigned , declined to stand for reelection, or was dismissed. Lorilei's financial statements during this period were not audited. Item 306. Audit Committee Report This item is not applicable inasmuch as no audit report has been received and an audit committee has not been appointed. Item 310. Financial Statements Financial statements will be supplied following closing as required by Form 8-K. Item 401. Directors, Executive Officers, Promoters and Control Persons (a) Officers Gerald R. Cunningham, age 48, has served as president, chief executive officer and a member of the board of directors of Lorilei since its incorporation in July of 1994, and as a partner in its predecessor, a Florida general partnership operating under the fictitious name "The Firm," organized by Mr. Cunningham and his wife during 1993. In 1991 Mr. Cunningham obtained a bachelor of science degree in business administration from Pacific Western University located in Los Angeles, California. In 1968 he received a third class radiotelephone operator's permit from the United States Federal Communications Commission and began an on-air radio broadcasting career with major market stations through 1982, when he entered radio advertising sales and sales management, specializing in improving sales at newly established stations or stations whose sales had declined. Mr. Cunningham is not currently a director in any other company. Leigh A. Cunningham, age 32, is Vice president, Secretary, and has been a member of the board of directors of Lorilei since its incorporation in July of 1994, and was a partner in its predecessor, a Florida general partnership operating under the fictitious name "The Firm," organized by Ms. Cunningham and her husband during 1993. Ms. Cunningham attended San Diego State University, San Diego, California during 1986 and became a marketing coordinator for Pacific Southwest Airlines' Executive Flyer Club in 1987. In 1988 Ms. Cunningham began a career in radio broadcasting as a traffic manager, later moving into sales and sales management. She was first elected Vice president, Secretary/Treasurer on July 1, 1994. Mr. Cunningham is not currently a director in any other company. (b) Significant Employees Mary Lee, age 32, has served as business manager of Lorilei since October , 1998. From April, 1994 to September 1998 she was Office Manager with Simmons, Hart and Sheehe, an Ocala, Florida law firm. Brian Trahan, age 37, has served as production manager since December, 1998. From July, 1998 to December 1998 he was employed by Zebra Publishing, Gainesville, Florida, as Production manager. From June 1995 to July 1997 Brian was Creative Director for Belk's Florida and the South Georgia group office, and from March 1994 to June 1995 Brian was Graphics coordinator at Bear Archery. (c) Family relationships Gerald and Leigh Cunningham are husband and wife. (d) Not applicable. None of the following events have occurred with regard to the directors, executive officers, promoters or control persons of Lorilei during the last five years: 1. Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; 2. Any conviction in a criminal proceeding or being subject to a pendingcriminal proceeding (excluding traffic violations and other minor offenses); 3. Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and 4. Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. 157 Item 402 Executive Compensation Lorilei's Articles of Incorporation, as amended, authorize it to issue 2,000 shares of common stock, $0.01 par value per share and 1,000,000 shares of preferred stock, par value $.01. As of the date of this prospectus, 111 shares of the common stock were outstanding and no Preferred Shares were outstanding. This description of the capital stock of Lorilei is qualified by and subject to the Florida Business Corporation Act and Lorilei's Articles of Incorporation and By-laws, copies of which Articles and By-laws have been provided as exhibits hereto and to which reference is made for the provisions thereof which are summarized below. Common Stock The holders of common stock are entitled to one vote per share on all matters to be voted upon by the shareholders and have no cumulative voting rights. Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available therefor. In the event of liquidation, dissolution, or winding up of Lorilei, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities. The common stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and nonassessable, and the shares of common stock offered hereby will also be fully paid and nonassessable. The Articles also recognize the obligation of the Corporation's stockholder AmeriNet Group.com, Inc. to elect members to the Corporation's Board of Directors in the manner reflected in the Reorganization Agreement between Lorilei and AmeriNet. Undesignated Preferred Stock The authorized but unissued preferred stock (1,000,000 shares) may be issued in series, and shares of each series will have such rights and preferences as are fixed by the Board of Directors in the resolutions authorizing the issuance of that particular series. In designating any series of preferred stock, the Board of Directors may, without further action by the holders of common stock: - -fix the number of shares constituting that series, and -fix the dividend rights, dividend rates, conversion rights, voting rights (which may be greater or lesser than the voting rights of the common stock), and -fix the rights and terms of redemption (including any sinking fund provisions), and the liquidation preferences of the series of Undesignated Preferred Stock. The holders of any series of preferred stock, when and if issued, are expected to have priority claims to dividends and to any distribution upon liquidation of Lorilei, and they may have other preferences over the holders of the common stock. The Board of Directors may issue series of preferred stock without action by the shareholders of Lorilei. Accordingly, the issuance of preferred stock may adversely affect the rights of the holders of the common stock. In addition, the issuance of preferred stock may be used as an anti-takeover device without further action on the part of the shareholders. Issuance of preferred stock may dilute the voting power of holders of common stock One example of this dilution would be the issuance of preferred stock with super-voting rights. The issuance of preferred stock may render more difficult the removal of current management, even if such removal may be in the shareholders' best interest. Lorilei has no current plans to issue any additional preferred stock. Item 403 Security Ownership of Certain Beneficial Owners and Management Prior to May 11, 2000, none of the officers , directors or key employees of Lorilei worked purusant to written employment agreements. During the previous three fiscal years, the officers and directors of Lorilei have received the following compensation: 158 SUMMARY COMPENSATION TABLE ========================================================================================================== Name and principal Year position (a) (b) Annual compensation Long-term compensation ========================================================================================================== ========================================================================================================== All other ther annual compen- Salary Bonus ompensation sation ($) ($) O ($) ($) c (c) (d) (e) Awards Payouts (i) ========================================================================================================== ========================================================================================================== Securities under- Restricted lying stock options/ LTIP award(s) SARs payouts ($) (#) ($) ========================================================================================================== ========================================================================================================== G. Cunningham 1999 37375 15000 NA NA NA NA ========================================================================================================== ========================================================================================================== L. Cunningham 1999 31146 15000 NA NA NA NA ========================================================================================================== ========================================================================================================== G. Cunningham 1998 38625 12000 ========================================================================================================== ========================================================================================================== L. Cunningham 1998 32188 12000 ========================================================================================================== ========================================================================================================== G. Cunningham 1997 38475 8000 ========================================================================================================== ========================================================================================================== L. Cunningham 1997 30663 8000 ========================================================================================================== No dividends have been paid to any shareholder since inception. Since December 31, 1999, Gerald Cunningham has received total cash compensation or $13,383.72 and Leigh Cunningham has received total cash compensation of $10,764.18. No long term compensation was awarded to either during that period. Since the inception of Lorilei a total of $57,677.72 loans has been repaid to Mr. And Ms. Cunningham. Lorilei provides child care for the children of Mr. And Ms. Cunningham. Item 403 Security Ownership of Certain Beneficial Owners and Management The following tables set forth certain information regarding the beneficial ownership of Lorilei's common stock as of May 3, 2000, for each person (or group or affiliated persons) known to Lorilei to be the - -beneficial owners of more than 5% of its common stock, - -each director of Lorilei, - -each of Lorilei's executive officers, and - -all of the directors and officers as a group. 159 Common Stock Owned by Principal Shareholders, Officers and Directors of Lorilei Common Shares Common Shares Beneficially Owned Prior Beneficially Owned After to Reorganization Reorganization Shareholder Name, Corporate Office, and Address Number Percent Percent ============================================================================================= Gerald Cunningham. 111* 100% 0% Director, Chairman of the Board, President, Chief Executive Officer 7325 S.W. 32nd Street Ocala, Florida 34474 Leigh Cunningham . 111** 100% 0% Director, Vice-President Secretary 7325 S.W. 32nd Street Ocala, Florida 34474 All Directors as a Group. 111 100% 0% 1) Owned as tenants by the entireties with Leigh Cunningham 2) Owned as tenants by the entireties with Gerald Cunningham Item 404. Certain Relationships and Related Transactions Lorilei provides child care for Mr. and Ms. Cunningham. Item 405. Compliance with Section 16(a) of the Exchange Act Lorilei does not have a class of equity securities registered pursuant to the Exchange Act.. Item 503. Summary Information and Risk Factors (a) Summary Lorilei Communications, Inc. operates under two trade names, The Firm Multimedia, a full-service advertising agency, and Ocala News Tonight, a nightly half-hour newscast. Lorilei was founded in 1993 and incorporated as a Florida subchapter S corporation in July, 1994. Gross sales in 1999 surpassed $1.5 million, with 1999 billings of approximately $1.1 million and EBITDA of approximately $162,000. The company projects substantial sales increases, with an adjusted to AmeriNet fiscal year billing target of $2.5 million and an EBITDA target of $500,000 for the fiscal year ending June 30, 2001. The company projects billings to exceed $5 million with EBITDA of $1.5 million in the fiscal year ending June 30, 2003. The Firm Multimedia is an advertising agency, which offers business services including: - -full advertising agency services including consulting on marketing and advertising issues - -graphic layout, design, and printing - -video and audio production - -media planning and placement - -internet web design and web site promotion - -interactive CD-rom design - -long and short-form direct response television production - -long and short-form direct response placement - -placement of long-form television programming under commercial leased access FCC rules Lorilei management believes it can accomplish its goals through expanding its marketing and advertising efforts, establishing a solid sales organization with regional sales offices in major Florida and Southeastern U.S. cities, through development of its commercial leased access abilities, and through acquisitions of synergistic companies. Commercial leased access (CLA) is a segment of communications law mandated by Congress in cable television deregulation. Enforced by the Federal Communications Commission (FCC) rules, CLA affords programmers not affiliated with the cable operator the opportunity of purchasing minimum half-hour time increments in substantially better time periods than offered through traditional commercial venues. The amount paid by the programmer is also regulated by the FCC, making CLA a unique entity. Lorilei intends to continue and expand its proprietary database of cable systems nationwide, enabling the company to easily offer CLA as a alternate for direct response television (DRTV) marketers, as well as other types of programming. 160 One example of other types of television programming that can be established under CLA is Ocala News Tonight (ONT). ONT debuted in January 2000 and is produced by The Firm Multimedia with its own news staff and producers. ONT is a traditional news, weather, and sports half-hour newscast available to approximately 73,000 television households targeting Marion County, Florida. This advertiser-supported program fills a local news niche left open by Orlando, Florida broadcasters. These broadcasters cover a very wide geographic area and are unable to devote either airtime or personnel to cover their service area market by market. Viewers of ONT receive information not available elsewhere, including the local newspaper. The company expects to use ONT as a prototype for additional news operations in additional markets. The Firm Multimedia will co-locate a sales office with the ONT-type operation in each market. (b) Address and telephone number Lorilei Communications, Inc. (352) 861-1350 P.O. Box 770787 fax (352) 861-1339 Ocala, Florida 34477 General email: thefirm@callthefirm.com Officer email: gerry@callthefirm.com (Courier only) 7325 S.W. 32nd St. Ocala, Florida 34474 http://www.callthefirm.com http://www.ocalanewstonight.com (c) Risk Factors The statements contained in this Report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including without limitation statements regarding Lorilei's expectations, beliefs, intentions or strategies regarding the future. All forward-looking statements included in this document are based on information available to Lorilei on the date hereof, and Lorilei assumes no obligation to update any such forward-looking statements. The forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, experience and the performance or achievements of Lorilei to be materially different from those anticipated, expressed or implied by the forward-looking statements. In evaluating Lorilei's business, the following factors, in addition to the Risk Factors set forth below and other information set forth herein, should be carefully considered: successful deployment and integration of systems; factors affecting internal growth and management of growth; success of marketing, integration and operational initiatives, including Internet marketing initiatives; dependence on technology; labor and technology costs; cost and availability of advertising and promotional efforts; success of the acquisition strategy and availability of acquisition financing; success in entering new segments of the advertising industry and new geographic areas; dependence on commercial leased access rules; risks associated with the advertising industry generally; seasonal and quarterly fluctuations; competition; and general economic conditions. In addition, Lorilei's operating strategy and growth strategy involve a number of risks and challenges, and there can be no assurance that these risks and other factors will not have a material adverse effect on Lorilei. Management of Growth; Factors Affecting Internal Growth. Lorilei expects to grow internally, through increase in number of sales offices, news operations, and national sales. Lorilei expects to spend significant time and effort exploring this endeavor. There can be no assurance that Lorilei's systems; procedures or controls will be adequate to support Lorilei's operations as they expand. Any future growth also will impose significant added responsibilities on members of senior management, including the need to identify, recruit and integrate new senior level managers and executives. There can be no assurance that such additional management will be identified or retained by Lorilei. To the extent that Lorilei is unable to manage its growth efficiently and effectively, or is unable to attract and retain qualified management, Lorilei's business, financial condition and results of operations could be materially adversely affected. While Lorilei has experienced revenue and earnings growth thus far in its' history, there can be no assurance that Lorilei will continue to experience internal growth comparable to these levels, if at all. Factors affecting the ability of Lorilei to continue to experience internal growth included, but are not limited to, business acceptance of Lorilei's services, the ability to sell advertising time to support its' news operations, the ability to recruit and retain qualified sales personnel and continued access to capital. Risks related to Lorilei's acquisition strategy. Acquisitions involve a number of special risks, including possible adverse effects on Lorilei's operating results, diversion of management's attention, failure to retain key personnel, risks associated with unanticipated events or liabilities and amortization of acquired intangible assets, some or all of which could have a material adverse effect on Lorilei's business, financial condition, and results of operations. Customer dissatisfaction or performance problems at a single acquired company could also have an adverse effect on the reputation of Lorilei. Further, there can be no assurance that businesses acquired will achieve anticipated revenues and earnings. In addition, to the extent that Lorilei intends to increase its revenues, expand the markets it serves and increase its service offerings through the acquisition of additional companies, there can be no assurance that Lorilei will be able to identify, acquire, or profitably manage additional businesses or successfully integrate acquired businesses into Lorilei without substantial costs, delays or other operational or financial problems. Increased competition for acquisition candidates may also develop, in which event there may be fewer acquisition opportunities available to Lorilei, as well as higher acquisition prices. As of the date of this report, Lorilei is not party to a binding agreement with respect to any acquisition. Risks Related to Acquisition Financing and Possible Need for Additional Capital Lorilei plans to finance future acquisitions by using shares of the Registrant's common stock ("AmeriNet Stock") for all of the consideration to be paid. In some cases, however it is probable that Lorilei would be required to make cash investments in the acquired businesses, as AmeriNet is making in Lorilei. Lorilei would be charged against earnings for any AmeriNet Stock used to effect acquisitions, consequently, it must take care to assure that the benefits of the acquisitions exceed the costs of the AmeriNet Stock used as consideration and the cash investment required, if any. In the event that the AmeriNet Stock does not maintain a sufficient market value, or potential acquisition candidates are otherwise unwilling to accept AmeriNet Stock as consideration for the sale of their businesses, Lorilei may be required to utilize more of its cash resources, if available, in order to maintain its acquisition program. If Lorilei has insufficient cash resources, its growth could be limited unless it is able to obtain additional capital through debt or equity financing. There can be no assurance that AmeriNet will make required capital available or that other financing will be available on terms Lorilei deems acceptable. If Lorilei is unable to obtain financing sufficient for all of its desired acquisitions, it may be unable to fully implement its acquisition strategy. In addition, to maintain historical levels of growth, Lorilei may need to seek additional funding. Adequate funds for these purposes may not be available when needed or may not be available on terms acceptable to Lorilei. If funding is insufficient, Lorilei may be required to delay, reduce the scope of or eliminate some or all of its expansion programs. Dependence Upon Technology Lorilei's business is currently dependent upon computer-based technology in order to produce the majority of its services. Because technological change has 161 been extremely dynamic, technological obsolescence has become an increasingly important decision when making capital expenditures. No assurances can be provided that the state of the arts systems utilized by Lorilei will remain state of the art for a period sufficient to amortize their expenditure. Lorilei's strategy is to incrementally add equipment piece by piece to its operations as prices for new technology decrease and as production demand increases, so as to consistently add new, better, faster computers, cameras, scanners, etc. to its available equipment inventory. There can be no assurance, however, that new advances in technology will not hasten the obsolescence of Lorilei's equipment, resulting in additional necessary capital expense which could be substantial. In this event Lorilei's management envisions the utilization of leases, financing, or an additional capital investment in order to satisfy these requirements. Additional equipment expense of approximately $200,000 will also be necessary to establish anticipated news operations in each additional market. Risks Associated with the Advertising Industry; General Economic Conditions Lorilei's results of operations are dependent upon factors generally affecting the advertising industry. Lorilei's revenues and earnings are especially sensitive to events that affects businesses plans to expand into new markets, develop marketing plans for new products or services, or seek new streams or revenue. A number of factors could result in the overall decline in demand for advertising including a decline in general economic conditions, extreme weather conditions, armed hostilities, or excessive inflation. These type of events could have a material adverse effect on Lorilei's business, financial condition and results of operations. Reliance on Key Personnel. Lorilei's operations are dependent on the efforts, experience and relationships of Gerald R. Cunningham, Leigh A. Cunningham and Lorilei's other essential staff. Furthermore, Lorilei will likely be dependent on the senior management of any businesses acquired in the future. If any of these individuals become unable to continue in their role Lorilei's business or prospects could be adversely affected. Although Lorilei has entered into an employment agreement with each of Lorilei's executive officers, there can be no assurance that such individuals will continue in their present capacity for any particular period of time. Reliance on FCC Rules. Lorilei utilizes FCC rules mandated by Section 612 of the Communications Act in order to gain access to cable systems. If these rules are repealed or modified by Congress, or in the event the FCC drastically alters its rules on leased access, these events could have a material adverse effect on Lorilei's business, financial condition and results of operations. Control of Existing Management Pursuant to the terms of the reorganization agreement between Lorilei and the Registrant, Lorilei's current management will have the right to elect a majority of the members of its board of directors for the foreseeable future, unless Lorilei fails to attain at least 70% of its EBITDA projections. Such requirement may prevent or delay AmeriNet from taking actions to correct problems with Lorilei's management and such inability may materially impair Lorilei's operations. Item 504. Use of Proceeds Set forth below is Lorilei's anticipated use of the cash available to Lorilei after deduction of estimated remaining offering expenses of $12,500. Pursuant to the Reorganization Agreement, Lorilei would receive $487,500 of net proceeds from this reorganization after deduction of the expenses of the reorganization. The net proceeds of this offering will be used: To pay existing accounts receivable and personal property and real estate taxes.; To repair existing equipment and purchase new equipment To employ additional support staff To pay advertising and marketing costs, and To provide working capital. The amounts and timing of expenditures for each purpose is subject to the broad discretion of the management and will depend on factors such as the amount of net proceeds available to Lorilei and the effects of competition, many of which are beyond Lorilei's control. Accounts Payable and Taxes $198,854.00 Equipment 8,000.00 Salaries 30,646.00 Advertising/Marketing 100,000.00 Working Capital 150,000.00 Total $487,500.00 The initial $100,000 payment made to Lorilei will be used to pay approximately $42,000 of the accounts payable and taxes with the balance being use to pay equipment, salaries and working capital. The remaining four (4) payments of $100,000 will be applied pro rata among the balance of the accounts receivable, advertising/marketing and working capital. 162 Item 505. Determination of Offering Price The reorganization price for Lorilei's common shares was established through arms-length negotiations between AmeriNet and Lorilei, taking into account the market value of similar publicly held companies and the effect of the increased resources available to Lorilei following the reorganization. Item 507. Selling Security Shareholders This information is combined with disclosure in response to Item 403. Item 508. Plan of Distribution No securities are being offered (except to the two existing shareholders of Lorilei) in connection with the Reorganization. Item 509. Interest of Named Experts and Counsel No experts or counsel have been hired on a contingent basis or will receive a direct or indirect interest in Lorilei or was a promoter, underwriter, voting trustee, director, officer or employee of Lorilei. Item 510. Disclosure of Commission Position on Indemnification for Securities Act Liabilities The right of the shareholders to sue any director for misconduct in conducting the affairs of Lorilei is limited by its Articles of Incorporation which limit Director's liability to the extent allowed by law.d Section 607.0850 FLA. STAT. (1999), permits indemnification against expenses actually and reasonably incurred by a director, officer, employee or agent to the extent that such person has been successful in the defense of a matter eligible for indemnification under the statute. Under certain circumstances, expenses may be paid by a corporation in advance, subject to repayment, unless the defendant ultimately is determined to be ineligible for indemnification. In addition, the statute permits a corporation to indemnify directors and officers against certain liabilities and to purchase and maintain director and officer liability and reimbursement insurance against liabilities, whether or not the corporation would have the power of indemnification against such liabilities. Insofar as indemnification for liabilities arising under the Securities Act of 1933, may be permitted to directors, officers or persons controlling Lorilei pursuant to the foregoing provisions, Lorilei has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in such Act and is therefore unenforceable. Item 511. Other Expenses of Issuance and Distribution Lorilei has estimated the legal, accounting and filing fees associated with the Reorganization to be approximately $12,500. Item 601. Exhibits (1) Underwriting agreement (2) Plan of acquisition, reorganization, arrangement, liquidation, or succession (3) (i)Articles of Incorporation 3.1 Articles of Incorporation 3.2 Articles of Amendment Dated May 11, 2000 and Restated Articles. (ii) By-laws 3.3 By-Laws (4) Instruments defining the rights of holders, incl. Indentures (5) Opinion re: legality 5.1 Opinion of Brashear & Associates, P.L. dated May 11, 2000. 5.2 Opinion of George Franjola dated May 11, 2000. (8) Opinion re: tax matters (9) Voting trust agreement (10) Material contracts 10.1 Mortgage and Promissory Note dated September 18, 1996 to Small Business Loan Source. 10.2 Employment Agreement with Gerald Cunningham dated May 11, 2000. 10.3 Employment Agreement with Leigh Cunningham dated May 11, 2000. (11) Statement re: computation of per share earnings (13) Annual or quarterly reports, Form 10-Q (15) Letter on unaudited interim financial information (16) Letter on changes in certifying accountant (18) Letter on change in accounting principles (21) Subsidiaries of the registrant (22) Published report regarding matters submitted to vote (23) Consents of experts and counsel (24) Power of attorney (25) Statement of eligibility of trustee (26) Invitations for competitive bids (27) Financial Data Schedule (99) Additional Exhibits Item 701. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities Eleven shares were sold On May 16, 1998 Lorilei sold 11 shares to John B. LaTorraca for $25,000. The issuance of the shares was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933. 163 Item 702. Indemnification of Directors and Officers. The right of the shareholders to sue any director for misconduct in conducting the affairs of Lorilei is limited by its Articles of Incorporation which limit Director's liability to the extent allowed by law. Section 607.0850 FLA. STAT. (1999), permits indemnification against expenses actually and reasonably incurred by a director, officer, employee or agent to the extent that such person has been successful in the defense of a matter eligible for indemnification under the statute. Under certain circumstances, expenses may be paid by a corporation in advance, subject to repayment, unless the defendant ultimately is determined to beineligible for indemnification. In addition, the statute permits a corporation to indemnify directors and officers against certain liabilities and to purchase and maintain director and officer liability and reimbursement insurance against liabilities, whether or not the corporation would have the power of indemnification against such liabilities. I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 164 Exhibit to Reorganization Agreement by and among AmeriNet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation EXHIBIT 3.4 AMERINET DRAFT ANNUAL REPORT Attached to this exhibit is the supporting document for the above referenced. The AmeriNet Annual Report will be filed with the Commission as soon as it is completed. I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Exhibit to Reorganization Agreement by and among AmeriNet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation EXHIBIT 5.8 AFFILIATE AGREEMENTS Attached to this exhibit is the supporting document for the above referenced for: 1. Gerald R. Cunningham 2. Leigh A. Cunningham I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 165 Affiliate Agreement This Affiliate Agreement (this "Agreement") is made and entered into by and between Lorilei Communications, Inc., Inc., a Florida corporation ("Lorilei"), AmeriNet Group.com, Inc., a publicly held Delaware corporation with a class of securities registered under Section 12(g) of the Securities Act of 1934, as amended ("AmeriNet" and the "Exchange Act," respectively), and person identified in the signature page of this Agreement as the Affiliate (the "Affiliate"). Preamble: WHEREAS, concurrently with the execution of this Agreement, Lorilei and AmeriNet have entered into a Reorganization Agreement dated May 11, 2000, (the "Reorganization Agreement") which contemplates that Lorilei will become a wholly owned subsidiary of AmeriNet and all outstanding capital stock of Lorilei will be converted into AmeriNet common stock (the "Merger"); and WHEREAS, the Affiliate is either an officer or director of Lorilei or is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of such quantity of common stock in Lorieli as requires that the Affiliate to be deemed an "affiliate" of Lorilei (within the meaning of Rule 405 promulgated by the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), as a result of which the Affiliate will be subject to restrictions on disposition of the shares of AmeriNet's common stock received as a result of the Reorganization; and WHEREAS, the determination of the accounting and tax treatment of the Reorganization will depend, in part, upon the accuracy of certain of the representations and warranties made by the Affiliate in this Agreement, as well as upon the Affiliate's compliance with certain of the agreements set forth herein; and WHEREAS, Affiliate and AmeriNet further desire to provide for an arrangement under which Affiliate will grant to AmeriNet an irrevocable proxy to vote all of the Affiliate's shares of Lorilei's common stock in favor of the Reorganization at a special meeting of the stockholders of Lorilei to be held for the purpose of voting on the Reorganization. NOW, THEREFORE, the Parties agree as follows: Page 166 Article I Agreement to Retain Shares. 1.1 Transfer and Encumbrance. (A) As used herein, the term "Determination Date" shall mean the earlier of: (1) The date AmeriNet shall have publicly released a report including the combined financial results of AmeriNet and Lorilei for a period of at least thirty (30) days of combined operations of AmeriNet and Lorilei; or (2) The date the Reorganization Agreement shall be terminated pursuant to Article VIII thereof. (B) The Affiliate agrees not to transfer, sell, exchange, pledge or otherwise dispose of or encumber the Affiliates Lorilei common stock or the shares of AmeriNet common stock received in exchange therefor as a result of the Reorganization (collectively or generically hereinafter referred to as the "Shares") or any New Shares (as defined in Section 1.2) acquired or to make any offer or agreement relating thereto: (1) At any time prior to the Determination Date; (2) Except in full compliance with the requirements of Rule 144 promulgated by the Commission under authority granted by the Securities Act; (3) Except in full compliance with the requirements of Sections 13 and 16 of the Exchange Act, including requirements pertaining to timely filing of Commission Forms 3, 4 and 5 or Schedule 13-D; and (4) In full compliance with the procedures established by AmeriNet (including requirements imposed upon its transfer agent) to assure compliance with the foregoing. 1.2 New Shares. The Affiliate agrees that any shares of capital stock of Lorilei or AmeriNet that Affiliate purchases or with respect to which Affiliate otherwise acquires beneficial ownership after the date of this Agreement ("New Shares") shall be subject to the terms and conditions of this Agreement to the same extent as if they constituted Shares. Page 167 Article II Agreement to Vote Shares. 2.1 Voting At every meeting of the stockholders of Lorilei called with respect to any of the following, and at every adjournment thereof, and on every action or approval by written consent of the stockholders of Lorilei with respect to any of the following, the Affiliate shall vote the Shares and any New Shares, including, with respect to stock options held by Affiliate, only those stock options immediately exercisable: (A) In favor of approval of the Reorganization Agreement and any matter that could reasonably be expected to facilitate the Reorganization; and (B) Against approval of any proposal made in opposition to or competition with consummation of the Reorganization and against any merger, consolidation, sale of assets, reorganization or recapitalization, with any party other than AmeriNet and its affiliates and against any liquidation or winding up of Lorilei (each of the foregoing is hereinafter referred to as an "Opposing Proposal"). 2.2 Actions In amplification of the obligations assumed by this Agreement, the Affiliate agrees not to take any actions contrary to Lorilei's obligations under the Reorganization Agreement or the Affiliate's obligations under this Agreement. Article III Irrevocable Proxy. Concurrently with the execution of this Agreement, the Affiliate agrees to deliver to AmeriNet a proxy in the form attached hereto as Exhibit A (the "Proxy"), which shall be irrevocable to the extent permissible under Florida law, with the total number of Shares beneficially owned (as such term is defined in Rule 13d-3 under the Exchange Act) by the Affiliate set forth therein. Article IV Tax Treatment. The Affiliate understands and agrees that it is intended that the Reorganization will be treated as a "reorganization" within the meaning of Code Section 368(a)(1)(B) for federal income tax purposes. Page 168 Article V Reliance Upon Representations, Warranties and Covenants. (A) The Affiliate has been informed that the treatment of the Reorganization for federal income tax purposes requires that a sufficient number of former stockholders of Lorilei maintain a meaningful continuing equity ownership interest in AmeriNet after the Reorganization. (B) The Affiliate understands that the representations, warranties and covenants of the Affiliate set forth herein will be relied upon by AmeriNet, Lorilei and their respective legal counsel and accounting firms. Article VI Representations, Warranties and Covenants of Affiliate. The Affiliate represents, warrants and covenants to AmeriNet as follows: 6.1 Power and Authority. The Affiliate has full power and authority to execute this Agreement, to make the representations, warranties and covenants herein contained and to perform Affiliate's obligations hereunder. 6.2 Shares Owned. Set forth following the Affiliate's signature below is the number of Shares owned by the Affiliate, including all Shares as to which the Affiliate has sole or shared voting or investment power and all rights, options and warrants to acquire Shares owned or held by the Affiliate. 6.3 Restrictions on Transfer. The Affiliate will not sell, transfer, exchange, pledge or otherwise dispose of, or make any offer or agreement relating to any of the foregoing with respect to, any shares of common stock of AmeriNet (the "AmeriNet Common Stock") that the Affiliate may acquire in connection with the Merger, or any securities that may be paid as a dividend or otherwise distributed thereon or with respect thereto or issued or delivered in exchange or substitution therefor (all such shares and other securities of AmeriNet are sometimes collectively referred to as "Restricted Securities"), or any option, right or other interest with respect to any Restricted Securities, unless: (A) Such transaction is permitted pursuant to Rule 145(c) and 145(d) under the Securities Act; (B) (1) Legal counsel representing the Affiliate (which legal counsel is reasonably satisfactory to AmeriNet), shall have advised AmeriNet in a written opinion letter satisfactory to AmeriNet and AmeriNet's legal counsel, and upon which AmeriNet and its legal counsel may rely, that no registration under the Securities Act would be required in connection with the proposed sale, transfer or other disposition and that all requirements under the Exchange Act, including Sections 13 and 16 thereof have been complied with; or Page 169 (2) A registration statement under the Securities Act covering AmeriNet's Stock proposed to be sold, transferred or otherwise disposed of, describing the manner and terms of the proposed sale, transfer or other disposition, and containing a current prospectus, shall have been filed with the Securities and Exchange Commission (the "Commission") and made effective under the Securities Act; or (3) An authorized representative of the Commission shall have rendered Lorilei written advice to the Affiliate (sought by Affiliate or Affiliate's legal counsel, with a copy thereof and all other related communications delivered to AmeriNet) to the effect that the Commission would take no action, or that the staff of the Commission would not recommend that the Commission take any action, with respect to the proposed disposition if consummated. 6.4 No Present Plan of Disposition. (A) The Affiliate has, and as of the Effective Time (as defined in the Reorganization Agreement) will have, no present plan or intention (a "Plan") to sell, transfer, exchange, pledge or otherwise dispose of, including by means of a distribution by a partnership to its partners, or a corporation to its stockholders, or any other transaction which results in a reduction in the risk of ownership (any of the foregoing being hereinafter referred to generically as a "Sale") of any of the shares of AmeriNet common stock that the Affiliate may acquire in connection with the Merger, or any securities that may be paid as a dividend or otherwise distributed thereon with respect thereto or issued or delivered in exchange or substitution therefor, which, when taking into account those Lorilei stockholders who dissent from the Merger, will reduce the Lorilei stockholders' ownership of AmeriNet Stock, in the aggregate, to less than fifty (50%) of the number of shares of AmeriNet Common Stock issued in the Merger. (B) (1) The Affiliate is not aware of, or participating in, any Plan on the part of Lorilei stockholders to engage in Sales of the shares of AmeriNet Stock to be issued in the Reorganization. (2) For purposes Section 6.4(B)(1), Shares with respect to which a pre-Reorganization Sale occurs in a Related Transaction (as defined below), shall be considered to be Shares that are exchanged for AmeriNet Stock in the Merger and then disposed of pursuant to a Plan. (3) A Sale of AmeriNet Stock shall be considered to have occurred pursuant to a Plan if, among other things, such Sale occurs in a Related Transaction. (4) For purposes of this Section 6.4, a "Related Transaction" shall mean a transaction that is in contemplation of, or related or pursuant to, the reorganization or the Reorganization Agreements. Page 170 (C) If any of the Affiliate's representations in this Section 6.4 cease to be true at any time prior to the Effective Time, the Affiliate will deliver to each of Lorilei and AmeriNet, prior to the Effective Time, a written statement to that effect, signed by the Affiliate. 6.5 Consultation with Counsel. (A) The Affiliate has carefully read this Agreement and discussed its requirements and other applicable limitations upon the sale, transfer or other disposition of AmeriNet Shares to be acquired by Affiliate in the Reorganization, to the extent the Affiliate felt necessary, with legal counsel for the Affiliate. (B) The Affiliate has carefully read the Reorganization Agreement and discussed its requirements and its impacts upon Affiliate's ability to sell, transfer, encumber, pledge or otherwise dispose of the AmeriNet Shares to be acquired by Affiliate in the Reorganization, to the extent Affiliate felt necessary, with legal counsel for Affiliate. 6.6 Ownership of Shares. The Affiliate is the record owner of the Shares shown on the signature page hereto, which at the date hereof and at all times up until the Determination Date will be free and clear of any liens, claims, options, charges or other encumbrances; does not beneficially own any shares of capital stock of Lorilei other than such Shares; and, has full power and authority to make, enter into and carry out the terms of this Agreement and the Proxy. 6.7 No Proxy Solicitations. The Affiliate will not, and will not permit any entity under Affiliate's control to: (A) Solicit proxies or become a "participant" in a "solicitation" (as such terms are defined in Regulation 14A under the Exchange Act) with respect to an Opposing Proposal or otherwise encourage or assist any party in taking or planning any action that would compete with, restrain or otherwise serve to interfere with or inhibit the timely consummation of the Merger in accordance with the terms of the Merger Agreement; (B) Initiate a stockholders' vote or action by consent of Lorilei stockholders with respect to an Opposing Proposal; or (C) Become a member of a "group" [as such term is used in Section 13(d) of the Exchange Act] with respect to any voting securities of Lorilei with respect to an Opposing Proposal. Page 171 Article VII No Limitation on Discretion as Director. This Agreement is intended solely to apply to the exercise by the Affiliate in his individual capacity of rights attaching to ownership of the Shares, and nothing herein shall be deemed to apply to, or to limit in any manner the discretion of the Affiliate with respect to, any action which may be taken or omitted by him acting in his fiduciary capacity as a director of Lorilei. Article VIII Rules 144 and 145. From and after the Effective Time and for so long as is necessary in order to permit the Affiliate to sell AmeriNet's Stock held by Affiliate pursuant to Rule 145 and, to the extent applicable, Rule 144 under the Securities Act, AmeriNet will use its reasonable efforts to file on a timely basis all reports required to be filed by it pursuant to Sections 13 or 15(d) of the Exchange Act referred to in paragraph (c)(1) of Rule 144 under the Securities Act, in order to permit the Affiliate to sell AmeriNet's Stock held by it pursuant to the terms and conditions of Rule 145 and the applicable provisions of Rule 144. Article IX Limited Resales. The Affiliate understands that, in addition to the restrictions imposed under Section 6 of this Agreement, the provisions of Rule 145 limit Affiliate's public resales of Restricted Securities, in the manner set forth in subsections (a), (b) and (c) below: 9.1 Rule 145(d)(1). (A) Unless and until the restriction "Cut-off" provisions of Rule 145(d)(2) or Rule 145(d)(3) set forth below become available, public resales of Restricted Securities may only be made by the Affiliate in compliance with the requirements of Rule 145(d)(1). (B) Rule 145(d)(1) permits such resales only: (1) While AmeriNet meets the public information requirements of Rule 144(c); (iii) in brokers' transactions or in transactions with a market maker; and (2) Where the aggregate number of Restricted Securities sold at any time together with all sales of restricted AmeriNet Stock sold for Affiliate's account during the preceding three-month period does not exceed the greater of (a) One percent (1%) of AmeriNet's Common Stock outstanding; or (b) The average weekly volume of trading in AmeriNet Common Stock on all national securities exchanges, or reported through the automated quotation system of a registered securities association, during the four calendar weeks preceding the date of receipt of the order to execute the sale. Page 172 9.2 Rule 145(d)(2). The Affiliate may make unrestricted sales of Restricted Securities pursuant to Rule 145(d)(2) if: (A) The Affiliate has beneficially owned (within the meaning of Rule 144(d) under the Securities Act) the Restricted Securities for at least one year after the Effective Time of the Merger; (B) The Affiliate is not an affiliate of AmeriNet; and (C) AmeriNet meets the public information requirements of Rule 144(c). 9.3 Rule 145(d)(3). The Affiliate may make unrestricted sales of Restricted Securities pursuant to Rule 145(d)(3) if the Affiliate has beneficially owned (within the meaning of Rule 144(d) under the Securities Act) the Restricted Securities for at least two years and is not, and has not been for the three months preceding the date of sale, an affiliate of AmeriNet. 9.4 Acknowledgment. AmeriNet acknowledges that the provisions of Section 6.3 of this Agreement will be satisfied as to any sale by the holder of the Restricted Securities pursuant to Rule 145(d), by a broker's letter and a letter from the undersigned with respect to that sale stating that each of the above-described requirements of Rule 145(d)(1) has been met or is inapplicable by virtue of Rule 145(d)(2) or Rule 145(d)(3); provided, however, that AmeriNet has no reasonable basis to believe that such sales were not made in compliance with such provisions of Rule 145(d). Article X Legends. (A) The Affiliate also understands and agrees that stop transfer instructions will be given to AmeriNet's transfer agent with respect to certificates evidencing the Restricted Securities and that there will be placed on the certificates evidencing the Restricted Securities legends stating in substance: Page 173 "The shares represented by this certificate were issued pursuant to a business combination which was structured to comply with the tax free reorganization provisions of Section 368(a) of the Internal revenue Code of 1986, as amended (the "Code") and was not registered under the Securities Act of 1933, as amended (the "Securities Act") in reliance on applicable exemptions therefrom and from comparable provisions of the securities laws of the recipients state of domicile, and may not be sold, nor may the owner thereof reduce his or her risks relative thereto in any way, until such time as AmeriNet Group.com, Inc. ("AmeriNet"), has published the financial results covering at least thirty (30) days of combined operations after the effective date of the merger through which the business combination was effected. In addition, the shares represented by this certificate may not be sold, transferred or otherwise disposed of except or unless (1) covered by an effective registration statement under the Securities Act, (2) in accordance with Commission Rule 145(d) (in the case of shares issued to an individual who is not an affiliate of AmeriNet) or Commission Rule 144 (in the case of shares issued to an individual who is an affiliate of AmeriNet) of the rules and regulations of such act, or (3) in accordance with a legal opinion satisfactory to counsel for AmeriNet that such sale or transfer is otherwise exempt from the registration requirements of such act." (B) (1) Upon the request of the Affiliate, AmeriNet shall cause the certificates resenting the Restricted Securities to be reissued free of any legend relating to restrictions on transfer by virtue of ASR 130 and 135 as soon as practicable after the requirements of ASR 130 and 135 have been met. (2) In addition, if the provisions of Rules 144 and 145 are amended to eliminate restrictions applicable to the Restricted Securities received by Affiliate pursuant to the Merger, or at the expiration of the restrictive period set forth in Rule 145(d), or upon registration of my such shares, AmeriNet, upon the request of Affiliate, will cause the certificates representing the Restricted Securities to be reissued free of any legend relating to the restrictions set forth in Rules 144 and 145(d). Article XI Miscellaneous Provisions. 11.1 Further Assurances. The Parties agree to do, execute, acknowledge and deliver or cause to be done, executed, acknowledged or delivered and to perform all such acts and deliver all such deeds, assignments, transfers, conveyances, powers of attorney, assurances, stock certificates and other documents, as may, from time to time, be required herein to effect the intent and purpose of this Agreement. 11.2 Consent and Waiver. The Affiliate hereby gives any consents or waivers that are reasonably required for the consummation of the Merger under the terms of any agreements to which Affiliate is a party or pursuant to any rights Affiliate may have. Page 174 11.3 Binding Agreement. This Agreement will inure to the benefit of and be binding upon and enforceable against the Parties and their successors and assigns, including administrators, executors, representatives, heirs, legatees and devisees of the Affiliate and any pledgee holding Restricted Securities as collateral. 11.4 Waiver. No waiver by any party hereto of any condition or of any breach of any provision of this Agreement shall be effective unless in writing and signed by each party hereto. 11.5 Governing Law. This Agreement shall be governed by and construed, interpreted and enforced in accordance with the laws of the State of Delaware, except for any choice of law provisions that would result in the application of the law of another jurisdiction, and except for laws involving the fiduciary obligations of Lorilei's officers and directors, which shall be governed under Florida law. 11.6 Third Party Reliance. Legal counsel to and accountants for the Parties shall be entitled to rely upon this Agreement. 11.7 Amendments and Modification. This Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement executed by the Parties. 11.8 Specific Performance: Injunctive Relief. The Parties acknowledge that AmeriNet will be irreparably harmed and that there will be no adequate remedy at law for a violation of any of the covenants or agreement of Affiliate set forth herein; therefore, it is agreed that, in addition to any other remedies that may be available to AmeriNet upon any such violation, AmeriNet shall have the right to enforce such covenants and agreements by specific performance, injunctive relief or by any other means available to AmeriNet at law or in equity. 11.9 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and sufficient if delivered in person, by cable, telegram or telex, or sent by mail (registered or certified mail, postage prepaid, return receipt requested) or overnight courier (prepaid) to the respective Parties as follows: Page 175 (1) To the Affiliate: At the contact information provided to the registrar of Lorilei's shares of common stock and, after the Reorganization, at the contact information provided to and maintained by AmeriNet's transfer agent. (2) To AmeriNet: AmeriNet Group.com, Inc. 2500 North Military Trail, Suite 225; Boca Raton, Florida 33487 Attention: Michael Harris Jordan, President Telephone (561) 998-3435, Fax (561) 998-3425; and, e-mail webmaster@amerinetgroup.com; with a copy to George Franjola, General Counsel AmeriNet Group.com, Inc. 1941 Southeast 51st Terrace; Ocala, Florida 34471 Telephone (352) 694-9182, Fax (352) 694-1325; and, e-mail, tyclegal@atlantic.net (3) To Lorilei: Lorilei Communications, Inc. 7325 Southwest 32nd Street, Ocala, Fl 34474 Attention: Gerald R. Cunningham, President Telephone (352) 861-1350, Fax (352) 861-1339; and, e-mail, thefirm@callthe firm.com; with copy to Bruce Brashear, Esquire 920 Northwest 8th Avenue, Suite A; Gainesville, FL 32601 Telephone (352) 336-0800, Fax (352) 336-0505; and, e-mail, bbrashear@nflalaw.com (4) To Yankees: The Yankee Companies, Inc. 2500 North Military Trail, Suite 225; Boca Raton, Florida 33487 Attention: Leonard Miles Tucker, President Telephone (561) 998-2025, Fax (561) 998-3425; and, e-mail carrington@flinet.com; or such other address or to such other person as any Party shall designate to the other for such purpose in the manner hereinafter set forth, except that notices of change of address shall only be effective upon receipt. 11.10 Interpretation. (A) When a reference is made in this Agreement to Schedules or Exhibits, such reference shall be to a Schedule or Exhibit to this Agreement unless otherwise indicated. Page 176 (B) The words "include," "includes" and "including" when used herein shall be deemed in each case to be followed by the words "without limitation." (C) The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. (D) The captions in this Agreement are for convenience and reference only and in no way define, describe, extend or limit the scope of this Agreement or the intent of any provisions hereof. (E) All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the Party or Parties, or their personal representatives, successors and assigns may require. (F) The Parties agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document. 11.11 Merger of All Prior Agreements Herein. (A) This instrument, together with the instruments referred to herein, contains all of the understandings and agreements of the Parties with respect to the subject matter discussed herein. (B) All prior agreements whether written or oral are merged herein and shall be of no force or effect. 11.12 Survival. The several representations, warranties and covenants of the Parties contained herein shall survive the execution hereof and the Closing hereon and shall be effective regardless of any investigation that may have been made or may be made by or on behalf of any Party. 11.13 Severability. If any provision or any portion of any provision of this Agreement, other than one of the conditions precedent or subsequent, or the application of such provision or any portion thereof to any person or circumstance shall be held invalid or unenforceable, the remaining portions of such provision and the remaining provisions of this Agreement or the application of such provision or portion of such provision as is held invalid or unenforceable to persons or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby. Page 177 11.14 Indemnification. (A) Each Party hereby irrevocably agrees to indemnify and hold the other Parties harmless from any and all liabilities and damages (including legal or other expenses incidental thereto), contingent, current, or inchoate to which they or any one of them may become subject as a direct, indirect or incidental consequence of any action by the indemnifying Party or as a consequence of the failure of the indemnifying Party to act, whether pursuant to requirements of this Agreement or otherwise. (B) In the event it becomes necessary to enforce this indemnity through an attorney, with or without litigation, the successful Party shall be entitled to recover from the indemnifying Party, all costs incurred including reasonable attorneys' fees throughout any negotiations, trials or appeals, whether or not any suit is instituted. 11.15 Dispute Resolution. (A) In any action between the Parties to enforce any of the terms of this Agreement or any other matter arising from this Agreement any proceedings pertaining directly or indirectly to the rights or obligations of the Parties hereunder shall, to the extent legally permitted, be held in Broward County, Florida, and the prevailing Party shall be entitled to recover its costs and expenses, including reasonable attorneys' fees up to and including all negotiations, trials and appeals, whether or not any formal proceedings are initiated. (B) Except for the arbitration procedures outlined in paragraphs 7.2(G)(2) and 7.2(G)(3) which shall govern any arbitration proceeding described therein, in the event of any dispute arising under this Agreement, or the negotiation thereof or inducements to enter into the Agreement, the dispute shall, at the request of any Party, be exclusively resolved through the following procedures: (1) (a) First, the issue shall be submitted to mediation before a mediation service in Broward County, Florida to be selected by lot from six alternatives to be provided, two by the Affiliate, two by AmeriNet and two by Lorilei. (b) The mediation efforts shall be concluded within ten business days after their initiation unless the Parties unanimously agree to an extended mediation period; (2) In the event that mediation does not lead to a resolution of the dispute then at the request of any Party, the Parties shall submit the dispute to binding arbitration before an arbitration service located in Broward County, Florida to be selected by lot, from six alternatives to be provided, two by the Affiliate, two by AmeriNet and two by Lorilei. (3) (a) Expenses of mediation shall be borne equally by the Parties, if successful. (b) Expenses of mediation, if unsuccessful and of arbitration shall be borne by the Party or Parties against whom the arbitration decision is rendered. Page 178 (c) If the terms of the arbitral award do not establish a prevailing Party, then the expenses of unsuccessful mediation and arbitration shall be borne equally by the Parties involved. 11.16 Benefit of Agreement. The terms and provisions of this Agreement shall be binding upon and inure to the benefit of the Parties, their successors, assigns, personal representatives, estate, heirs and legatees but are not intended to confer upon any other person any rights or remedies hereunder. 11.17 Counterparts. (A) This Agreement may be executed in any number of counterparts. (B) All executed counterparts shall constitute one Agreement notwithstanding that all signatories are not signatories to the original or the same counterpart. (C) Execution by exchange of facsimile transmission shall be deemed legally sufficient to bind the signatory; however, the Parties shall, for aesthetic purposes, prepare a fully executed original version of this Agreement which shall be the document filed with the Commission. 11.18 License. (A) This form of agreement is the property of Yankees and has been customized for this transaction with the consent of Yankees by George Franjola, Esquire. (B) The use of this form of agreement by the Parties is authorized hereby solely for purposes of this transaction. (C) The use of this form of agreement or of any derivation thereof without Yankees' prior written permission is prohibited. 11.19 Information Concerning the Affiliate's Share Ownership. (A) Shares beneficially owned: (1) 111 shares of Lorilei Common Stock; and (2) 0 shares of Lorilei Common Stock subject to options, warrants or other rights. Page 179 Execution Pages In Witness Whereof, the Affiliate, AmeriNet, and Lorilei have caused this Agreement to be executed by themselves or their duly authorized respective officers, all as of the last date set forth below: Signed, sealed and delivered In Our Presence: The Affiliate - ---------------------------- /s/ Gerald R. Cunningham /s/ Leigh A. Cunningham - ---------------------------- ------------------------ Signature Dated: May 11, 2000 ------------------------ Print name AmeriNet Group.com, Inc. - ---------------------------- ____________________________ By: /s/ Michael H. Jordan ________________________ Michael H. Jordan, President (Corporate Seal) Attest: /s/ Vanessa H. Lindsey ________________________ Vanessa H. Lindsey, Secretary Dated: May 11, 2000 Lorilei Communications, Inc. - ---------------------------- ____________________________ By: /s/ Gerald R. Cunningham ______________________________ Gerald R. Cunningham, President (Corporate Seal) Attest: /s/ Leigh A. Cunningham ______________________________ Leigh A. Cunningham, Secretary Dated: May 11, 2000 Page 180 Exhibit "A" Irrevocable Proxy The undersigned stockholder of Lorilei International, Inc., a Florida corporation ("Lorilei"), hereby irrevocably to the extent provided by Florida law) appoints the directors on the Board of Directors of AmeriNet, Group.com, Inc., a Delaware corporation ("AmeriNet"), and each of them, as the sole and exclusive attorneys and proxies of the undersigned, with full power of substitution and resubstitution, to the full extent of the undersigned's rights with respect to the shares of capital stock of Lorilei beneficially owned by the undersigned, which shares are listed on the final page of this Proxy (the "Shares"), and any and all other shares or securities issued or issuable in respect thereof on or after the date hereof, until such time as that certain Reorganization dated February 28, 2000"), among AmeriNet, and Lorilei, shall be terminated in accordance with its terms or the Reorganization Agreement is effective. Terms: 1. Upon the execution hereof, all prior proxies given by the undersigned with respect to the Shares and any and all other shares or securities issued or issuable in respect thereof on or after the date hereof are hereby revoked and no subsequent proxies will be given. 2. This proxy is irrevocable (to the extent provided by Florida law), is granted pursuant to the Affiliate Agreement dated as of May 11, 2000, between AmeriNet, Lorilei, and the undersigned stockholder, (the "Affiliate Agreement"), and is granted in consideration of AmeriNet entering into the Reorganization Agreement. 3. The attorneys and proxies named above will be empowered at any time prior to termination of the Reorganization Agreement in accordance with Article VIII thereof to exercise all voting and other rights (including, without limitation, the power to execute and deliver written consents with respect to the Shares) of the undersigned at every annual, special or adjourned meeting of Lorilei's stockholders, and in every written consent in lieu of such a meeting, or otherwise, in favor of approval of the Reorganization Agreement and any matter that could reasonably be expected to facilitate the Reorganization, and against any proposal made in opposition to or competition with the consummation of the Reorganization and against any merger, consolidation, sale of assets, reorganization or recapitalization of Lorilei with any party other than AmeriNet and its affiliates and against any liquidation or winding up of Lorilei. 4. The attorneys and proxies named above may only exercise this proxy to vote the Shares subject hereto at any time prior to termination of the Reorganization Agreement in accordance with Article VIII thereof at every annual, special or adjourned meeting of the stockholders of Lorilei and in every written consent in lieu of such meeting, in favor of approval of the Reorganization Agreement and any matter that could reasonably be expected to facilitate the Reorganization, and against any merger, consolidation, sale of assets, reorganization or recapitalization of Lorilei with any party other than AmeriNet and its affiliates, and against any liquidation or winding up of Lorilei, and may not exercise this proxy on any other matter. Page 181 5. The undersigned stockholder may vote the Shares on all other matters. 6. Any obligation of the undersigned hereunder shall be binding upon the successors and assigns of the undersigned. 7. This proxy is irrevocable and coupled with an interest. 8. Stockholder Data: A. Full name: Gerald R. Cunningham Leigh A. Cunningham _________________ _______________ _____________ First Middle Last B. Tax identification number: Social Security number is not listed due to privacy issues. C. Domicile Address: 18498 NW 24th Ave. Citra, FL 32113 D. Telephone, fax and e-mail: (352) 595-3834 (352) 595-0807 gerry@callthefirm.com E. Shares Information: (1) Number of Lorilei Shares owned or controlled as to voting matters: 11 Signed, sealed and delivered In Our Presence: Stockholder: - ---------------------------- /s/ Gerald R. Cunningham /s/ Leigh A. Cunningham ____________________________ By: _________________________ Dated: May 11, 2000 Page 182 Exhibit to Reorganization Agreement by and among AmeriNet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation EXHIBIT 5.12 COPIES OF CONTRACTS, AGREEMENTS & COMMITMENTS Attached to this exhibit are the supporting document for the above referenced for. 1. Non Compete Agreements 2. Talent Releases 3. New Position Offer for Sheryl Wolf 4. Employment Agreement for Gerald R. Cunningham 5. Employment Agreement for Leigh A. Cunningham I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 183 NON-COMPETITION COVENANT THIS AGREEMENT, dated this day of day of , 2000 by and between Lorilei Communications, Inc. d/b/a THE FIRM MULTIMEDIA d/b/a OCALA NEWS TONIGHT (hereinafter referred to as "Employer") and (hereinafter referred to as "Employee"). WITNESSETH: WHEREAS, Employer desires to employ Employee; and WHEREAS, Employee has agreed to be employed by Employer. NOW, THEREFORE, in consideration of the employment by the Employer, and the sum of $10, the Employee agrees to the following conditions: 1. DURING TERM OF AGREEMENT. Employee shall not conduct or operate, directly or indirectly, or be employed by or be associated in any way with any advertising, marketing, public relations, video production, or business other than that of the Employer, furnish any information as to Employer's methods of operation, trade practices, procedures, training, advertising, publicity or promotional ideas, or any other information relative to the Employer's business. Employee shall comply with the terms, conditions and procedures of employment as determined by the Employer, and shall abide by all governmental laws or regulations governing the Employer's business. 2. UPON TERMINATION. Employee consents and agrees that his employment is terminable with or without cause and notice by Employer. Employee agrees that upon termination Employee shall return to Employer all customer advertising lists, equipment, tapes, manuals, materials and property belonging to Employer which is in the Employee's possession. Employee also agrees not to divulge any information regarding the Employer's use and trade practices, methods of procedure, training, advertising, publicity or promotional ideas, or any other information relative to the Employer's business. 3. AFTER TERMINATION OF AGREEMENT. The employee acknowledges the name "THE FIRM MULTIMEDIA", the business reputation associated with it, the methods and technique employed by employer, the training instruction to be provided under the agreement, the knowledge of the services and methods of employer, and the opportunities, associations, and experiences established and acquired by the employee under the agreement and as an employee of the employer are of considerable value. For a period of six (6) months following the termination of this agreement, employee shall not perform in any capacity the same or similar function or job which was performed for employer in a 75 mile radius of employer's business location in Ocala, Florida, nor shall employee engage in work on any project or contract for the purpose of business solicitation any client in any market currently doing business with THE FIRM Multimedia. This covenant not to compete is limited to the advertising, marketing, video production (including television and cable broadcasting) and public relations industries. MISCELLANEOUS PROVISIONS. A. The parties hereto recognize there is no adequate remedy at law if the employee accepts other employment in violation of this agreement. The employee, therefore, consents the employer shall be entitled to injunctive relief in any court of competent jurisdiction if the employee violates the non-compete or non-disclosure covenants in this agreement. B. All the terms, conditions, and provisions of this agreement, including the restrictive covenant, have been fully explained to employee, who fully understands and agrees to them as evidenced by the execution of his signature below. C. The venue for any litigation to enforce the terms of employment of this agreement, shall be Marion County, Florida. D. In the event of litigation to enforce this agreement, the prevailing party shall be entitled to an award of attorneys fees and costs from the non-prevailing party. E. This agreement may only be modified by writing signed by both parties. No oral representations have been made by either party which would conflict with this agreement. EMPLOYER: GERALD CUNNINGHAM, PRESIDENT Lorilei Communications, Inc. d/b/a THE FIRM MULTIMEDIA d/b/a OCALA NEWS TONIGHT WITNESS: EMPLOYEE: Page 184 Talent Release Date: _____________________ Production: ________________________________________________ I do hereby give, grant, assign, transfer, release and set over, forever, to you, your successors and assigns. a) All rights of every kind and character whatsoever in and to all work and results thereof I have created and done for you in the production of the above subjects, including all literary, dramatic, dramatic-musical and motion picture creations, ideas, compositions, arrangements, drawings, paintings and devices (whether copyrightable or otherwise); b) All works, acts, plays, poses, translations, gags, continuities, synopses, scenarios or appearances I have heretofore done or given to you concerning the above production; c) The right to use all or any part of the foregoing as, if and in the manner you desire, as well as all copies, versions, reproductions, duplications, recordings, interpretations and prints of the same, including (but not limited to) the right to reproduce in any manner whatsoever any recordings made by you of my voice and any musical, instrumental or other sound or sound effects produced by me. d) Without limiting the foregoing and in addition thereto, I hereby further grant to you, your successors and assigns, the right to use my name and/or photograph, still or moving, in any manner you desire and/or the right to reproduce and record my voice and other sound effects made by me and I hereby consent to the use of my name and/or said photographs, likeness and reproduction thereof and/or the recordations and reproductions of my voice and other sound effects in portraits, pictures, photographs, motion pictures, on television and by any other means, method and device now or hereafter known, discovered or invented and without limiting the generality of the foregoing, to record, amplify and reproduce my voice and/or musical, instrumental or other sound effects made by me, completely or in part, for any advertising, publication, promotion or any commercial or informative purpose whatsoever. I further grant to you the right to substitute a double in my place to simulate my voice. I hereby represent that I am over the age of twenty-one years and attest that all statements made by me are true and correct. Signed:__________________________________________________________ Print Name and Address:_________________________________________________________ _____________________________________________________________ _____________________________________________________________ Witness:_________________________________________________________ Print Name:___________________________________________________________ Lorilei Communications, Inc. d/b/a The Firm Multimedia d/b/a Ocala News Tonight Employee Executed Agreements Employee Non-Compete Talent Release 1. Bryan Allen X X 2. Richard Andrews X X 3. Kim Avery X 4. Melissa Barfield X X 5. Bountham Chanthalansy X 6. ***Gerry Cunningham 7. ***Leigh Cunningham 8. Stacey Dolezal X X 9. William Fraker X X 10. Patricia Gale X X 11. **Jeanne Harding 12. Leslie Kinney X X 13. Mary Lee X X 14. Dustin McCollum X 15. Nadyne McDonald X X 16. John Miller X X 17. *Debbie Tilton 18. Penny Tomberlin X X 19. Brian Trahan X X 20. Lawrence Uelmen X 21. Kim Ullery X X 22. Sheryl Wolf X X Note: An X indicates that the agreement is executed by the employee. * Debbie Tilton is a child care provider to the son of officers. She works from her home. ** Jeanne Harding is a child care provider to son of officers. She works from her home. She also cleans the office on Sundays. *** Leigh and Gerry Cunningham are officers and shareholders of the company. 185 February 16, 2000 To: Sheryl Wolf Fr: Leigh Cunningham Re: New position offer Position: General Sales Manager--Ocala News Tonight Sheryl: We are pleased you have chosen to accept the position of General Sales Manager for Ocala News Tonight, effective February 16, 2000. Below is an outline of what the position entails and your compensation plan. Market Trading Area: Central Florida to include Marion County, Citrus County, Lake County, Sumter County, Hernando County, Pasco County, etc. Position/Duties: General Sales Manager Responsible for recruiting, hiring, training and managing all sales reps as well as personal sales. Responsible for achieving station sales goals and personal sales goals as outlined in Projected Sales, Y2K. As part of this agreement, you will be required to sign and honor a 6 month "non-compete" agreement. Office Goals by aver: 1 st quarter, 2000 (January-March): $ 80,000 2nd quarter, 2000 (April-June): $ 90,000 3rd quarter, 2000 (July-September): $ 90,000 4th quarter, 2000 (October-December: $ 120,000 Total sales goal, Year 2000: $380,000 Sales Duties Prospecting for new business, including telemarketing and appointment setting, need analysis, creating and presenting proposals, negotiating deals, closing sales, servicing accounts, and communicating with project coordinator and production staff in Ocala. Attending sales meeting in Ocala office. Assisting with collections for all accounts. 186 Management duties: Recruit, hire, train, and manage sales people. Includes reporting progress to corporate on a weekly basis, reaching sales goals, creating packages, negotiating promotional and trade relationships, assisting sales people on four legged calls, setting individual goals and monitoring sales process. We will provide you an office in Ocala and all required support staff. The way I would like to structure additional sales people is as follows: Once you are covering your monthly draw (which would require a monthly base of $12,000 in sales). I would like you to add a sales person. When they cover their draw, add another, and so on until you feel you have a good team to cover the market. Each rep you hire would work directly for you. Compensation Plan $21,000 annual base draw against commission 15% commission on gross profit of personal collected sales (above draw amount) 2% override on all monthly collections up to $30,000 for Ocala News Tonight sales reps based on gross profit (excluding your personal account collections). 4% override on all monthly collections over $30,000 for Ocala News Tonight based on gross profit (excluding your personal account collections). Bonus program: 1 st quarter, 2000: Collected quarterly sales exceeding $ 96,000: $1000 bonus Collected quarterly sales exceeding $108,000: $1500 bonus 2nd quarter, 2000: Collected quarterly sales exceeding $108,000: $1000 bonus Collected quarterly sales exceeding $120,000: $1500 bonus 3rd quarter, 2000: Collected quarterly sales exceeding $108,000: $1000 bonus Collected quarterly sales exceeding $120,000: $1500 bonus 4th quarter, 2000: Collected quarterly sales exceeding $144,000: $1000 bonus Collected quarterly sales exceeding $156,000: $1500 bonus Incentive Program If you achieve your office's quarterly goal for two quarters in a row, you will be provided a company car (not to exceed a monthly payment of $400.). However, if you fail to reach your quarterly goal two quarters in a row, the monthly payment amount of the car (not to exceed $400. per month) will be deducted from your compensation until such time as you achieve quarterly goals for two consecutive quarters. 187 Gas card ($200.00 per month allowance) Cell phone ($75.00 monthly allowance) Notebook computer for presentations Reasonable reimbursed expenses (receipt must be provided to business office) Up to $85.00 per month paid toward health insurance One week paid vacation after one year Two weeks paid vacation after three years (and each year thereafter) Five paid personal/sick days per year /s/ Sheryl Wolf /s/ Leigh Cunningham: Date: 2/18/00 Page 188 Executive's Employment Agreement THIS EXECUTIVE'S EMPLOYMENT AGREEMENT (the "Agreement") is entered into by and among Gerald R. Cunningham, an individual residing in the State of Florida (the "Executive"); Lorilei Communications, Inc., a Florida corporation ("Lorilei"; Lorilei and the Executive being sometimes hereinafter collectively to as the "Parties" or generically as a "Party". Preamble: WHEREAS, Lorilei's board of directors is of the opinion that in conjunction with effectuation of Lorilei's future plans it must memorialize, confirm and assure itself of the continuing the services of the Executive, who currently serves as a member of Lorilei's board of directors and as its president and chief executive officer; and WHEREAS, the Executive is thoroughly knowledgeable with all aspects of Lorilei's operations and plans; and WHEREAS, the Executive is agreeable to serving as a member of Lorilei's board of directors and as its president and chief executive officer, on the terms and conditions hereinafter set forth: NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements hereby exchanged, as well as of the sum of Ten ($10.00) Dollars and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows: Witnesseth: Article One Term, Renewals, Earlier Termination 1.1 Term. Subject to the provisions set forth herein, the term of the Executive's employment hereunder shall be deemed to commence on the date of this Agreement's execution by all of the Parties and shall continue until June 30, 2001. 1.2 Renewals. (a) This Agreement shall be renewed automatically, after expiration of the original term, on a continuing annual basis, unless the Party wishing not to renew this Agreement provides the other Party with written notice of its election not to renew ("Termination Election Notice") on or before the 30th day prior to termination of the then current term. (b) Notwithstanding the foregoing, the Executive may not elect not to renew this Agreement until after June 30, 2005, unless Lorilei has defaulted in its obligations under this Agreement or termination is called for pursuant to other specific provisions hereof. Page 189 1.3 Earlier Termination. (a) For Cause: Lorilei shall have the right to terminate this Agreement prior to the expiration of its Term or of any renewals thereof, subject to the provisions of Sections 1.4 and 1.5, for the following reasons: (1) Lorilei may terminate the Executive's employment under this Agreement at any time for cause. (2) Such termination shall be evidenced by written notice thereof to the Executive, which notice shall specify the cause for termination. (3) For purposes hereof, the term "cause" shall mean: (A) The inability of the Executive, through sickness or other incapacity, to discharge his duties under this Agreement for 30 or more consecutive days or for a total of 60 or more days in a period of twelve consecutive months; (B) The failure of the Executive to follow the directions of Lorilei's board of directors; (C) Dishonesty; theft; or conviction of a crime involving moral turpitude; (D) Material default in the performance of the Executive's obligations, services or duties required under this Agreement (other than due to illness) or material breach of any provision of this Agreement, which default or breach has continued for ten days after written notice of such default or breach. (b) Deterioration or Discontinuance of Business: (1) In the event that Lorilei experiences material business reversals or fails to meet the operational criteria reflected in its projections or business plans, then, subject to the provisions of Section 1.4, at the option of Lorilei, this Agreement shall terminate as of a date selected by Lorilei with the same force and effect as if such date was the date originally set as the termination date hereof. (2) In the event that Lorilei discontinues operating its business, this Agreement shall terminate as of the last day of the month on which it ceases operation with the same force and effect as if such last day of the month were originally set as the termination date hereof; provided, however, that a reorganization of Lorilei shall not be deemed a termination of its business. (c) Death: This Agreement shall terminate immediately on the death of the Executive; however, all accrued compensation at such time shall be promptly paid to the Executive's estate. (d) Material Default by Lorilei: In the event of a material default by Lorilei in its obligations to the Executive pursuant to this Agreement that is not attributable to the actions or inaction of the Executive, then, the Executive shall provide Lorilei and its principal stockholder of such default, in writing, specifying the nature of the default and the curative action required, and if such default is not cured within thirty days afer Lorilei's principal stockholder receives the subject notice, then, during the ensuing ten day period, the Executive may terminate this Agreement; provided, however, that if the Executive does not terminate this Agreement, the default will be deemed waived. Page 190 1.4 Severance Payments and Alternatives to Termination In the event this Agreement is terminated by Lorilei for reasons other than for cause as described in Section 1.3(b) above, the Executive shall be entitled to either thirty days prior written notice or to a severance payment in a sum equal to the salary that would have been paid had 30 days prior written notice been provided; provided, however, that in lieu of termination, Lorilei may offer to continue this Agreement under modified compensation arrangements, if such arrangements are reflected in the written notice and accepted by the Executive prior to the end of the 30 day notice period. 1.5 Final Settlement. Upon termination of this Agreement and payment of all amounts due to the Executive hereunder, the Executive or his representative shall execute and deliver to the terminating entity on a form prepared by Lorilei, a receipt for such sums and a release of all claims, except such claims as may have been submitted pursuant to the terms of this Agreement and which remain unpaid, and, shall forthwith tender to Lorilei all records, manuals and written procedures, as may be desired by it for the continued conduct of its business. Article Two Scope of Employment 2.1 Retention. Lorilei hereby hires the Executive and the Executive hereby accepts such employment, in accordance with the terms, provisions and conditions of this Agreement. 2.2 General Description of Duties. (a) The Executive shall be employed as the president and chief executive officer of Lorilei and perform the duties generally associated with the position of president and chief executive officer thereof. (b) Without limiting the generality of the foregoing, the Executive shall have exclusive control of all aspects of Lorilei's day to day operations, subject only to compliance with the directions of Lorilei's stockholder, its board of directors, applicable laws and fiduciary obligations. (c) The Executive covenants to perform the employment duties called for hereby in good faith, devoting substantially all business time, energies and abilities to the proper and efficient management of the business of Lorilei. 2.3 Status. (a) Throughout the term of this Agreement, the Executive shall serve as a member of the board of directors of Lorilei and as its president and chief executive officer. (b) In the event that the Executive is not elected to such positions, then, at the option of the Executive, this Agreement may be deemed terminated effective as of the earliest time that it can be reasonably determined that such election will not take place, provided that written notice of such election is provided to Lorilei within 30 days after it failed to elect the Executive to the required office. Page 191 2.4 Exclusivity. All of the Executive's business time shall be devoted exclusively to the affairs of Lorilei. Article Three Compensation 3.1 Compensation. As consideration for the Executive's services to Lorilei the Executive shall be entitled to: (a) (1) An annual salary in the aggregate gross sum of $60,000 (the "Base Salary"); plus (2) An annual bonus equal to 2.5 of Lorilei's net pre tax profits, payable within 30 days after an annual audit of Lorilei (or of Lorilei's parent corporation) is completed, permitting determination thereof (the "Annual Bonus"). (b) Incentive stock options complying with the requirements of Section 422 of the Internal Revenue Code of 1986, as amended, or successor provisions thereto (the "Options"), permitting the Executive to purchase up to 167,689 of the 335,378 shares of the common stock of AmeriNet Group.com, Inc., a publicly held Delaware corporation with a class of securities registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which holds of all of Lorilei's capital stock and other securities ("AmeriNet"), that AmeriNet reserved for issuance to Lorilei employees in conjunction with the Reorganization Agreement pursuant to which AmeriNet acquired all of Lorilei's securities (the "Executive's Option Shares"), on the following terms and subject to the following conditions: (1) The Executive's rights to the Options will vest on an annual basis, subject to Lorilei's having complied with its obligations under the Reorganization Agreement, the Executive having complied with his obligations under this Agreements and Lorilei's having attained the following EBITDA: (a) If Lorilei attains EBITDA of at least $500,000 during the period starting on July 1, 2000 and ending on June 30, 2001, then the first 33,988 shares of AmeriNet's common stock reserved for issuance in the event of exercise of the subject incentive stock options will vest; (b) If Lorilei attains EBITDA of at least $1,400,000 during the period starting on July 1, 2000 and ending on June 30, 2002, then all rights to 89,885 (including the 33,988 shares vested, if any, on June 30, 2001) of the shares of AmeriNet's Common stock reserved for issuance in the event of exercise of the subject incentive stock options will vest; and (c) If Lorilei attains EBITDA of at least $2,900,000 during the period starting on July 1, 2000 and ending on June 30, 2003, then all rights to all of the 167,689 shares (including the shares vested, if any, on June 30, 2001 and June 30, 2002) of AmeriNet's Common stock reserved for issuance in the event of exercise of the subject incentive stock options will vest. Page 192 (2) All rights to the incentive stock options that have not vested as of July 1, 2003 will expire on such date, and no further rights of any kind thereto or to the underlying shares of AmeriNet's common stock reserved for such purpose will exist thereafter, the reservation therefor terminating on such date. (3) The vested Options will be exercisable during the three fiscal year period after they vest at a price of $1.3125 per share, provided that as required by Code Section 422, all rights to or under the Options will expire within 90 days after termination of the Executive's employment by Lorilei. (4) All other terms pertaining to the Options are hereby incorporated by reference from those contained in AmeriNet's Non-Qualified Stock Option & Stock Incentive Plan, Effective as of January 1 , 2000 filed by AmeriNet with the United States Securities and Exchange Commission (the "Commission"), a copy of which is annexed hereto and made a part hereof as exhibit 3.1(B)(2), except to the extent that they would be inconsistent with the specific terms in this Section 3.1 unless such inconsistency is required by the provisions of Code Section 422. 3.2 Benefits. During the term of this Agreement, the Executive shall also be entitled to the following benefits: (a) Two weeks paid vacation per year. (b) Automobile, insurance and child care benefits not to exceed $12,000 per fiscal year; and (c) All other benefits of employment generally available to all of Lorilei's employees, provided that such benefits have been approved by Lorilei's stockholders and are not duplicative of those otherwise reflected in this Agreement. 3.3 Indemnification. Lorilei will defend, indemnify and hold the Executive harmless from all liabilities, suits, judgments, fines, penalties or disabilities, including expenses associated directly, therewith (e.g. legal fees, court costs, investigative costs, witness fees, etc.) resulting from any reasonable actions taken by him in good faith on behalf of Lorilei, its affiliates or for other persons or entities at the request of the board of directors of Lorilei, to the fullest extent legally permitted, and in conjunction therewith, shall assure that all required expenditures are made in a manner making it unnecessary for the Executive to incur any out of pocket expenses; provided, however, that the Executive permits the majority stockholders of Lorilei to select and supervise all personnel involved in such defense and that the Executive waive any conflicts of interest that such personnel may have as a result of also representing Lorilei, its stockholders or other personnel and agrees to hold them harmless from any matters involving such representation, except such as involve fraud or bad faith. Page 193 Article Four Special Covenants 4.1 Confidentiality, Non-Circumvention and Non-Competition. During the term of this Agreement, all renewals thereof and for a period of two years after its termination, the Executive hereby irrevocably agrees to be bound by the following restrictions, which constitute a material inducement for Lorilei's entry into this Agreement and for AmeriNet's agreement to provide shares of its common stock as the securities underlying the Options: (a) Because the Executive will be developing for Lorilei, making use of, acquiring and/or adding to, confidential information of special and unique nature and value relating to such matters as Lorilei's trade secrets, systems, procedures, manuals, confidential reports, personnel resources, strategic and tactical plans, advisors, clients, investors and funders; as material inducement to the entry into this Agreement by Lorilei, the Executive hereby covenants and agrees not to personally use, divulge or disclose, for any purpose whatsoever, directly or indirectly, any of such confidential information during the term of this Agreement, any renewals thereof, and for a period of two years after its termination. (b) The Executive hereby covenants and agrees to be bound as a fiduciary of Lorilei, as if the Executive were a partner in a partnership bound by the partnership opportunities doctrine, as such concept has been judicially and legislatively developed in the State of Florida, and consequently, without the prior written consent of Lorilei, on a specific, case by case basis, the Executive shall not, among other things, directly or indirectly: (1) Engage in any activities, whether or not for profit, competitive with Lorilei's business. (2) Solicit or accept any person providing services to Lorilei, whether as an employee, consultant or independent contractor, for employment or provision of services. (3) Induce any client or customer of Lorilei to cease doing business with Lorilei or to engage in business with any person engaged in business activities that compete with Lorilei's business. (4) Divert any business opportunity within the general scope of Lorilei's business and business capacity, to any other person or entity. 4.2 Special Remedies. In view of the irreparable harm and damage which would undoubtedly occur to Lorilei as a result of a breach by the Executive of the covenants or agreements contained in this Article Four, and in view of the lack of an adequate remedy at law to protect Lorilei's interests, the Executive hereby covenants and agrees that Lorilei shall have the following additional rights and remedies in the event of a breach hereof: (a) In addition to and not in limitation of any other rights, remedies or damages available to Lorilei, whether at law or in equity, it shall be entitled to a permanent injunction in order to prevent or to restrain any such breach by the Executive, or by the Executive's partners, agents, representatives, servants, employers, employees, affiliates and/or any and all persons directly or indirectly acting for or with him and the Executive hereby consents to the issuance of such a permanent injunction; and Page 194 (b) Because it is impossible to ascertain or estimate the entire or exact cost, damage or injury which Lorilei may sustain prior to the effective enforcement of such injunction, the Executive hereby covenants and agrees to pay over to Lorilei, in the event he violates the covenants and agreements contained in Section 4.2 hereof, the greater of: (1) Any payment or compensation of any kind received by the Executive or by persons affiliated with or acting for or with the Executive, because of such violation before the issuance of such injunction, or (2) The sum of One Thousand ($1,000.00) Dollars per violation, which sum shall be liquidated damages, and not a penalty, for the injuries suffered by Lorilei as a result of such violation, the Parties hereto agreeing that such liquidated damages are not intended as the exclusive remedy available to Lorilei for any breach of the covenants and agreements contained in this Article Four, prior to the issuance of such injunction, the Parties recognizing that the only adequate remedy to protect Lorilei from the injury caused by such breaches would be injunctive relief. 4.3 Cumulative Remedies. The Executive hereby irrevocably agrees that the remedies described in Section 4.2 shall be in addition to, and not in limitation of, any of the rights or remedies to which Lorilei is or may be entitled to, whether at law or in equity, under or pursuant to this Agreement. 4.4 Acknowledgment of Reasonableness. (a) The Executive hereby represents, warrants and acknowledges that having carefully read and considered the provisions of this Article Four, the restrictions set forth herein are fair and reasonable and are reasonably required for the protection of the interests of Lorilei, its officers, directors and other employees; consequently, in the event that any of the above-described restrictions shall be held unenforceable by any court of competent jurisdiction, the Executive hereby covenants, agrees and directs such court to substitute a reasonable judicially enforceable limitation in place of any limitation deemed unenforceable and, the Executive hereby covenants and agrees that if so modified, the covenants contained in this Article Four shall be as fully enforceable as if they had been set forth herein directly by the Parties. (b) In determining the nature of this limitation, the Executive hereby acknowledges, covenants and agrees that it is the intent of the Parties that a court adjudicating a dispute arising hereunder recognize that the Parties desire that these covenants not to circumvent, disclose or compete be imposed and maintained to the greatest extent possible. 4.5 Unauthorized Acts. The Executive hereby covenants and agrees not do any act or incur any obligation on behalf of Lorilei except as authorized by its board of directors or by its stockholders pursuant to duly adopted stockholder action or reasonably inferred therefrom. Page 195 Article Five Miscellaneous 5.1 Notices. (a) (1) All notices, demands or other communications hereunder shall be in writing, and unless otherwise provided, shall be deemed to have been duly given on the first business day after mailing by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: To the Executive: Gerald R. Cunningham 18498 Northwest 24th Avenue; Citra, Florida 32113 Telephone (352) 595-3834; Fax (352) 595-0807; e-mail leighc@callthefirm.com; To Lorilei: Lorilei Communications, Inc. Post Office Box 77078; Ocala, Florida 34477 Attention: Gerald R. Cunningham, President Telephone (352) 861-1350; Fax (352) 861-1339; e-mail thefirm@callthefirm.com; with a copy to Bruce Brashear, Esquire 920 Northwest 8th Avenue, Suite A; Gainesville, Florida 32601 Telephone (352) 336-0800; Fax (352) 336-0505; and,e-mail bbrashear@nflalaw.com; In each case with copies to 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 www.michael@amerinetgroup.com; and George Franjola, Esquire; General Counsel AmeriNet Group.com, Inc. 1941 Southeast 51st Terrace; Ocala, Florida 34471 Telephone (352) 694-9182, Fax (352) 694-1325; and, e-mail, tyclegal@atlantic.net. (2) Copies of notices will also be provided to such other address or to such other person as any Party shall designate to the other for such purpose in the manner hereinafter set forth. (b) (1) The Parties acknowledge that The Yankee Companies, Inc., a Florida corporation ("Yankees") has acted as scrivener for the Parties in this transaction and that Yankees is neither a law firm nor an agency subject to any professional regulation or oversight. (2) Yankees has advised all of the Parties to retain independent legal and accounting counsel to review this Agreement on their behalf since it cannot provide any Party with legal advice. (3) This Agreement shall not be interpreted more or less strictly against any Party based on its authorship. Page 196 5.2 Amendment. (a) No modification, waiver, amendment, discharge or change of this Agreement shall be valid unless the same is in writing and signed by the Party against which the enforcement of said modification, waiver, amendment, discharge or change is sought. (b) This Agreement may not be modified without the consent of a majority in interest of Lorilei's AmeriNet's stockholders. 5.3 Merger. (a) This instrument contains all of the understandings and agreements of the Parties with respect to the subject matter discussed herein. (b) All prior agreements whether written or oral, are merged herein and shall be of no force or effect. 5.4 Survival. The several representations, warranties and covenants of the Parties contained herein shall survive the execution hereof and shall be effective regardless of any investigation that may have been made or may be made by or on behalf of any Party. 5.5 Severability. If any provision or any portion of any provision of this Agreement, or the application of such provision or any portion thereof to any person or circumstance shall be held invalid or unenforceable, the remaining portions of such provision and the remaining provisions of this Agreement or the application of such provision or portion of such provision as is held invalid or unenforceable to persons or circumstances other than those to which it is held invalid or unenforceable, shall not be effected thereby. 5.6 Governing Law and Venue. This Agreement shall be construed in accordance with the laws of the State of Florida but any proceeding arising between the Parties in any matter pertaining or related to this Agreement shall, to the extent permitted by law, be held in Broward County, Florida. 5.7 Litigation. (a) In any action between the Parties to enforce any of the terms of this Agreement or any other matter arising from this Agreement, the prevailing Party shall be entitled to recover its costs and expenses, including reasonable attorneys' fees up to and including all negotiations, trials and appeals, whether or not litigation is initiated. (b) In the event of any dispute arising under this Agreement, or the negotiation thereof or inducements to enter into the Agreement, the dispute shall, at the request of any Party, be exclusively resolved through the following procedures: (1) (A) First, the issue shall be submitted to mediation before a mediation service in Broward County, Florida, to be selected by lot from six alternatives to be provided, two by Lorilei's majority stockholder, two by Lorilei and two by the Executive. Page 197 (B) The mediation efforts shall be concluded within ten business days after their in itiation unless the Parties unanimously agree to an extended mediation period; (2) In the event that mediation does not lead to a resolution of the dispute then at the request of any Party, the Parties shall submit the dispute to binding arbitration before an arbitration service located in Broward County, Florida to be selected by lot, from six alternatives to be provided,, two by Lorilei's majority stockholder, two by Lorilei and two by the Executive. (3) (A) Expenses of mediation shall be borne by Lorilei, if successful. (B) Expenses of mediation, if unsuccessful and of arbitration shall be borne by the Party or Parties against whom the arbitration decision is rendered. (C) If the terms of the arbitral award do not establish a prevailing Party, then the expenses of unsuccessful mediation and arbitration shall be borne equally by the Parties. 5.8 Benefit of Agreement. (a) This Agreement may not be assigned by the Executive without the prior written consent of Lorilei. (b) Subject to the restrictions on transferability and assignment contained herein, the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the Parties, their successors, assigns, personal representative, estate, heirs and legatees. 5.9 Captions. The captions in this Agreement are for convenience and reference only and in no way define, describe, extend or limit the scope of this Agreement or the intent of any provisions hereof. 5.10 Number and Gender. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the Party or Parties, or their personal representatives, successors and assigns may require. 5.11 Further Assurances. The Parties hereby agree to do, execute, acknowledge and deliver or cause to be done, executed or acknowledged or delivered and to perform all such acts and deliver all such deeds, assignments, transfers, conveyances, powers of attorney, assurances, recipes, records and other documents, as may, from time to time, be required herein to effect the intent and purposes of this Agreement. 5.12 Status. Nothing in this Agreement shall be construed or shall constitute a partnership, joint venture, agency, or lessor-lessee relationship; but, rather, the relationship established hereby is that of employer-employee in Lorilei. Page 198 5.13 Counterparts. (a) This Agreement may be executed in any number of counterparts. (b) Execution by exchange of facsimile transmission shall be deemed legally sufficient to bind the signatory; however, the Parties shall, for aesthetic purposes, prepare a fully executed original version of this Agreement, which shall be the document filed with the Securities and Exchange Commission. 5.14 License. (a) This Agreement is the property of Yankees and the use hereof by the Parties is authorized hereby solely for purposes of this transaction. (b) The use of this form of agreement or of any derivation thereof without Yankees' prior written permission is prohibited. In Witness Whereof, the Parties have executed this Agreement, effective as of the last date set forth below. Signed, Sealed & Delivered In Our Presence The Executive - -------------------------- /s/ Gerald R. Cunningham - -------------------------- -------------------------- Gerald R. Cunningham Dated: May 11, 2000 Lorilei Communications, Inc. a Florida corporation. - -------------------------- __________________________ By: /s/ Gerald R. Cunningham ___________________________ Gerald R. Cunningham, President (CORPORATE SEAL) Attest: /s/ Leigh A. Cunningham __________________________ Leigh A. Cunningham, Vice President & Secretary Dated: May 11, 2000 Page 199 Executive's Employment Agreement THIS EXECUTIVE'S EMPLOYMENT AGREEMENT (the "Agreement") is entered into by and among Leigh A. Cunningham, an individual residing in the State of Florida (the "Executive"); Lorilei Communications, Inc., a Florida corporation ("Lorilei"; Lorilei and the Executive being sometimes hereinafter collectively to as the "Parties" or generically as a "Party". Preamble: WHEREAS, Lorilei's board of directors is of the opinion that in conjunction with effectuation of Lorilei's future plans it must memorialize, confirm and assure itself of the continuing the services of the Executive, who currently serves as a member of Lorilei's board of directors and as its president and chief executive officer; and WHEREAS, the Executive is thoroughly knowledgeable with all aspects of Lorilei's operations and plans; and WHEREAS, the Executive is agreeable to serving as a member of Lorilei's board of directors and as its president and chief executive officer, on the terms and conditions hereinafter set forth: NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements hereby exchanged, as well as of the sum of Ten ($10.00) Dollars and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows: Witnesseth: Article One Term, Renewals, Earlier Termination 1.1 Term. Subject to the provisions set forth herein, the term of the Executive's employment hereunder shall be deemed to commence on the date of this Agreement's execution by all of the Parties and shall continue until June 30, 2001. 1.2 Renewals. (a) This Agreement shall be renewed automatically, after expiration of the original term, on a continuing annual basis, unless the Party wishing not to renew this Agreement provides the other Party with written notice of its election not to renew ("Termination Election Notice") on or before the 30th day prior to termination of the then current term. (b) Notwithstanding the foregoing, the Executive may not elect not to renew this Agreement until after June 30, 2005, unless Lorilei has defaulted in its obligations under this Agreement or termination is called for pursuant to other specific provisions hereof. Page 200 1.3 Earlier Termination. (a) For Cause: Lorilei shall have the right to terminate this Agreement prior to the expiration of its Term or of any renewals thereof, subject to the provisions of Sections 1.4 and 1.5, for the following reasons: (1) Lorilei may terminate the Executive's employment under this Agreement at any time for cause. (2) Such termination shall be evidenced by written notice thereof to the Executive, which notice shall specify the cause for termination. (3) For purposes hereof, the term "cause" shall mean: (A) The inability of the Executive, through sickness or other incapacity, to discharge his duties under this Agreement for 30 or more consecutive days or for a total of 60 or more days in a period of twelve consecutive months; (B) The failure of the Executive to follow the directions of Lorilei's board of directors; (C) Dishonesty; theft; or conviction of a crime involving moral turpitude; (D) Material default in the performance of the Executive's obligations, services or duties required under this Agreement (other than due to illness) or material breach of any provision of this Agreement, which default or breach has continued for ten days after written notice of such default or breach. (b) Deterioration or Discontinuance of Business: (1) In the event that Lorilei experiences material business reversals or fails to meet the operational criteria reflected in its projections or business plans, then, subject to the provisions of Section 1.4, at the option of Lorilei, this Agreement shall terminate as of a date selected by Lorilei with the same force and effect as if such date was the date originally set as the termination date hereof. (2) In the event that Lorilei discontinues operating its business, this Agreement shall terminate as of the last day of the month on which it ceases operation with the same force and effect as if such last day of the month were originally set as the termination date hereof; provided, however, that a reorganization of Lorilei shall not be deemed a termination of its business. (c) Death: This Agreement shall terminate immediately on the death of the Executive; however, all accrued compensation at such time shall be promptly paid to the Executive's estate. (d) Material Default by Lorilei: In the event of a material default by Lorilei in its obligations to the Executive pursuant to this Agreement that is not attributable to the actions or inaction of the Executive, then, the Executive shall provide Lorilei and its principal stockholder of such default, in writing, specifying the nature of the default and the curative action required, and if such default is not cured within thirty days afer Lorilei's principal stockholder receives the subject notice, then, during the ensuing ten day period, the Executive may terminate this Agreement; provided, however, that if the Executive does not terminate this Agreement, the default will be deemed waived. Page 201 1.4 Severance Payments and Alternatives to Termination In the event this Agreement is terminated by Lorilei for reasons other than for cause as described in Section 1.3(b) above, the Executive shall be entitled to either thirty days prior written notice or to a severance payment in a sum equal to the salary that would have been paid had 30 days prior written notice been provided; provided, however, that in lieu of termination, Lorilei may offer to continue this Agreement under modified compensation arrangements, if such arrangements are reflected in the written notice and accepted by the Executive prior to the end of the 30 day notice period. 1.5 Final Settlement. Upon termination of this Agreement and payment of all amounts due to the Executive hereunder, the Executive or his representative shall execute and deliver to the terminating entity on a form prepared by Lorilei, a receipt for such sums and a release of all claims, except such claims as may have been submitted pursuant to the terms of this Agreement and which remain unpaid, and, shall forthwith tender to Lorilei all records, manuals and written procedures, as may be desired by it for the continued conduct of its business. Article Two Scope of Employment 2.1 Retention. Lorilei hereby hires the Executive and the Executive hereby accepts such employment, in accordance with the terms, provisions and conditions of this Agreement. 2.2 General Description of Duties. (a) The Executive shall be employed as the president and chief executive officer of Lorilei and perform the duties generally associated with the position of president and chief executive officer thereof. (b) Without limiting the generality of the foregoing, the Executive shall have exclusive control of all aspects of Lorilei's day to day operations, subject only to compliance with the directions of Lorilei's stockholder, its board of directors, applicable laws and fiduciary obligations. (c) The Executive covenants to perform the employment duties called for hereby in good faith, devoting substantially all business time, energies and abilities to the proper and efficient management of the business of Lorilei. 2.3 Status. (a) Throughout the term of this Agreement, the Executive shall serve as a member of the board of directors of Lorilei and as its president and chief executive officer. (b) In the event that the Executive is not elected to such positions, then, at the option of the Executive, this Agreement may be deemed terminated effective as of the earliest time that it can be reasonably determined that such election will not take place, provided that written notice of such election is provided to Lorilei within 30 days after it failed to elect the Executive to the required office. Page 202 2.4 Exclusivity. All of the Executive's business time shall be devoted exclusively to the affairs of Lorilei. Article Three Compensation 3.1 Compensation. As consideration for the Executive's services to Lorilei the Executive shall be entitled to: (a) (1) An annual salary in the aggregate gross sum of $60,000 (the "Base Salary"); plus (2) An annual bonus equal to 2.5 of Lorilei's net pre tax profits, payable within 30 days after an annual audit of Lorilei (or of Lorilei's parent corporation) is completed, permitting determination thereof (the "Annual Bonus"). (b) Incentive stock options complying with the requirements of Section 422 of the Internal Revenue Code of 1986, as amended, or successor provisions thereto (the "Options"), permitting the Executive to purchase up to 167,689 of the 335,378 shares of the common stock of AmeriNet Group.com, Inc., a publicly held Delaware corporation with a class of securities registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which holds of all of Lorilei's capital stock and other securities ("AmeriNet"), that AmeriNet reserved for issuance to Lorilei employees in conjunction with the Reorganization Agreement pursuant to which AmeriNet acquired all of Lorilei's securities (the "Executive's Option Shares"), on the following terms and subject to the following conditions: (1) The Executive's rights to the Options will vest on an annual basis, subject to Lorilei's having complied with its obligations under the Reorganization Agreement, the Executive having complied with his obligations under this Agreements and Lorilei's having attained the following EBITDA: (a) If Lorilei attains EBITDA of at least $500,000 during the period starting on July 1, 2000 and ending on June 30, 2001, then the first 33,988 shares of AmeriNet's common stock reserved for issuance in the event of exercise of the subject incentive stock options will vest; (b) If Lorilei attains EBITDA of at least $1,400,000 during the period starting on July 1, 2000 and ending on June 30, 2002, then all rights to 89,885 (including the 33,988 shares vested, if any, on June 30, 2001) of the shares of AmeriNet's Common stock reserved for issuance in the event of exercise of the subject incentive stock options will vest; and (c) If Lorilei attains EBITDA of at least $2,900,000 during the period starting on July 1, 2000 and ending on June 30, 2003, then all rights to all of the 167,689 shares (including the shares vested, if any, on June 30, 2001 and June 30, 2002) of AmeriNet's Common stock reserved for issuance in the event of exercise of the subject incentive stock options will vest. Page 203 (2) All rights to the incentive stock options that have not vested as of July 1, 2003 will expire on such date, and no further rights of any kind thereto or to the underlying shares of AmeriNet's common stock reserved for such purpose will exist thereafter, the reservation therefor terminating on such date. (3) The vested Options will be exercisable during the three fiscal year period after they vest at a price of $1.3125 per share, provided that as required by Code Section 422, all rights to or under the Options will expire within 90 days after termination of the Executive's employment by Lorilei. (4) All other terms pertaining to the Options are hereby incorporated by reference from those contained in AmeriNet's Non-Qualified Stock Option & Stock Incentive Plan, Effective as of January 1 , 2000 filed by AmeriNet with the United States Securities and Exchange Commission (the "Commission"), a copy of which is annexed hereto and made a part hereof as exhibit 3.1(B)(2), except to the extent that they would be inconsistent with the specific terms in this Section 3.1 unless such inconsistency is required by the provisions of Code Section 422. 3.2 Benefits. During the term of this Agreement, the Executive shall also be entitled to the following benefits: (a) Two weeks paid vacation per year. (b) Automobile, insurance and child care benefits not to exceed $12,000 per fiscal year; and (c) All other benefits of employment generally available to all of Lorilei's employees, provided that such benefits have been approved by Lorilei's stockholders and are not duplicative of those otherwise reflected in this Agreement. 3.3 Indemnification. Lorilei will defend, indemnify and hold the Executive harmless from all liabilities, suits, judgments, fines, penalties or disabilities, including expenses associated directly, therewith (e.g. legal fees, court costs, investigative costs, witness fees, etc.) resulting from any reasonable actions taken by him in good faith on behalf of Lorilei, its affiliates or for other persons or entities at the request of the board of directors of Lorilei, to the fullest extent legally permitted, and in conjunction therewith, shall assure that all required expenditures are made in a manner making it unnecessary for the Executive to incur any out of pocket expenses; provided, however, that the Executive permits the majority stockholders of Lorilei to select and supervise all personnel involved in such defense and that the Executive waive any conflicts of interest that such personnel may have as a result of also representing Lorilei, its stockholders or other personnel and agrees to hold them harmless from any matters involving such representation, except such as involve fraud or bad faith. Page 204 Article Four Special Covenants 4.1 Confidentiality, Non-Circumvention and Non-Competition. During the term of this Agreement, all renewals thereof and for a period of two years after its termination, the Executive hereby irrevocably agrees to be bound by the following restrictions, which constitute a material inducement for Lorilei's entry into this Agreement and for AmeriNet's agreement to provide shares of its common stock as the securities underlying the Options: (a) Because the Executive will be developing for Lorilei, making use of, acquiring and/or adding to, confidential information of special and unique nature and value relating to such matters as Lorilei's trade secrets, systems, procedures, manuals, confidential reports, personnel resources, strategic and tactical plans, advisors, clients, investors and funders; as material inducement to the entry into this Agreement by Lorilei, the Executive hereby covenants and agrees not to personally use, divulge or disclose, for any purpose whatsoever, directly or indirectly, any of such confidential information during the term of this Agreement, any renewals thereof, and for a period of two years after its termination. (b) The Executive hereby covenants and agrees to be bound as a fiduciary of Lorilei, as if the Executive were a partner in a partnership bound by the partnership opportunities doctrine, as such concept has been judicially and legislatively developed in the State of Florida, and consequently, without the prior written consent of Lorilei, on a specific, case by case basis, the Executive shall not, among other things, directly or indirectly: (1) Engage in any activities, whether or not for profit, competitive with Lorilei's business. (2) Solicit or accept any person providing services to Lorilei, whether as an employee, consultant or independent contractor, for employment or provision of services. (3) Induce any client or customer of Lorilei to cease doing business with Lorilei or to engage in business with any person engaged in business activities that compete with Lorilei's business. (4) Divert any business opportunity within the general scope of Lorilei's business and business capacity, to any other person or entity. 4.2 Special Remedies. In view of the irreparable harm and damage which would undoubtedly occur to Lorilei as a result of a breach by the Executive of the covenants or agreements contained in this Article Four, and in view of the lack of an adequate remedy at law to protect Lorilei's interests, the Executive hereby covenants and agrees that Lorilei shall have the following additional rights and remedies in the event of a breach hereof: (a) In addition to and not in limitation of any other rights, remedies or damages available to Lorilei, whether at law or in equity, it shall be entitled to a permanent injunction in order to prevent or to restrain any such breach by the Executive, or by the Executive's partners, agents, representatives, servants, employers, employees, affiliates and/or any and all persons directly or indirectly acting for or with him and the Executive hereby consents to the issuance of such a permanent injunction; and Page 205 (b) Because it is impossible to ascertain or estimate the entire or exact cost, damage or injury which Lorilei may sustain prior to the effective enforcement of such injunction, the Executive hereby covenants and agrees to pay over to Lorilei, in the event he violates the covenants and agreements contained in Section 4.2 hereof, the greater of: (1) Any payment or compensation of any kind received by the Executive or by persons affiliated with or acting for or with the Executive, because of such violation before the issuance of such injunction, or (2) The sum of One Thousand ($1,000.00) Dollars per violation, which sum shall be liquidated damages, and not a penalty, for the injuries suffered by Lorilei as a result of such violation, the Parties hereto agreeing that such liquidated damages are not intended as the exclusive remedy available to Lorilei for any breach of the covenants and agreements contained in this Article Four, prior to the issuance of such injunction, the Parties recognizing that the only adequate remedy to protect Lorilei from the injury caused by such breaches would be injunctive relief. 4.3 Cumulative Remedies. The Executive hereby irrevocably agrees that the remedies described in Section 4.2 shall be in addition to, and not in limitation of, any of the rights or remedies to which Lorilei is or may be entitled to, whether at law or in equity, under or pursuant to this Agreement. 4.4 Acknowledgment of Reasonableness. (a) The Executive hereby represents, warrants and acknowledges that having carefully read and considered the provisions of this Article Four, the restrictions set forth herein are fair and reasonable and are reasonably required for the protection of the interests of Lorilei, its officers, directors and other employees; consequently, in the event that any of the above-described restrictions shall be held unenforceable by any court of competent jurisdiction, the Executive hereby covenants, agrees and directs such court to substitute a reasonable judicially enforceable limitation in place of any limitation deemed unenforceable and, the Executive hereby covenants and agrees that if so modified, the covenants contained in this Article Four shall be as fully enforceable as if they had been set forth herein directly by the Parties. (b) In determining the nature of this limitation, the Executive hereby acknowledges, covenants and agrees that it is the intent of the Parties that a court adjudicating a dispute arising hereunder recognize that the Parties desire that these covenants not to circumvent, disclose or compete be imposed and maintained to the greatest extent possible. 4.5 Unauthorized Acts. The Executive hereby covenants and agrees not do any act or incur any obligation on behalf of Lorilei except as authorized by its board of directors or by its stockholders pursuant to duly adopted stockholder action or reasonably inferred therefrom. Page 206 Article Five Miscellaneous 5.1 Notices. (a) (1) All notices, demands or other communications hereunder shall be in writing, and unless otherwise provided, shall be deemed to have been duly given on the first business day after mailing by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: To the Executive: Leigh A.Cunningham 18498 Northwest 24th Avenue; Citra, Florida 32113 Telephone (352) 595-3834; Fax (352) 595-0807; e-mail leighc@callthefirm.com; To Lorilei: Lorilei Communications, Inc. Post Office Box 77078; Ocala, Florida 34477 Attention: Gerald R. Cunningham, President Telephone (352) 861-1350; Fax (352) 861-1339; e-mail thefirm@callthefirm.com; with a copy to Bruce Brashear, Esquire 920 Northwest 8th Avenue, Suite A; Gainesville, Florida 32601 Telephone (352) 336-0800; Fax (352) 336-0505; and,e-mail bbrashear@nflalaw.com; In each case with copies to 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 www.michael@amerinetgroup.com; and George Franjola, Esquire; General Counsel AmeriNet Group.com, Inc. 1941 Southeast 51st Terrace; Ocala, Florida 34471 Telephone (352) 694-9182, Fax (352) 694-1325; and, e-mail, tyclegal@atlantic.net. (2) Copies of notices will also be provided to such other address or to such other person as any Party shall designate to the other for such purpose in the manner hereinafter set forth. (b) (1) The Parties acknowledge that The Yankee Companies, Inc., a Florida corporation ("Yankees") has acted as scrivener for the Parties in this transaction and that Yankees is neither a law firm nor an agency subject to any professional regulation or oversight. (2) Yankees has advised all of the Parties to retain independent legal and accounting counsel to review this Agreement on their behalf since it cannot provide any Party with legal advice. (3) This Agreement shall not be interpreted more or less strictly against any Party based on its authorship. Page 207 5.2 Amendment. (a) No modification, waiver, amendment, discharge or change of this Agreement shall be valid unless the same is in writing and signed by the Party against which the enforcement of said modification, waiver, amendment, discharge or change is sought. (b) This Agreement may not be modified without the consent of a majority in interest of Lorilei's AmeriNet's stockholders. 5.3 Merger. (a) This instrument contains all of the understandings and agreements of the Parties with respect to the subject matter discussed herein. (b) All prior agreements whether written or oral, are merged herein and shall be of no force or effect. 5.4 Survival. The several representations, warranties and covenants of the Parties contained herein shall survive the execution hereof and shall be effective regardless of any investigation that may have been made or may be made by or on behalf of any Party. 5.5 Severability. If any provision or any portion of any provision of this Agreement, or the application of such provision or any portion thereof to any person or circumstance shall be held invalid or unenforceable, the remaining portions of such provision and the remaining provisions of this Agreement or the application of such provision or portion of such provision as is held invalid or unenforceable to persons or circumstances other than those to which it is held invalid or unenforceable, shall not be effected thereby. 5.6 Governing Law and Venue. This Agreement shall be construed in accordance with the laws of the State of Florida but any proceeding arising between the Parties in any matter pertaining or related to this Agreement shall, to the extent permitted by law, be held in Broward County, Florida. 5.7 Litigation. (a) In any action between the Parties to enforce any of the terms of this Agreement or any other matter arising from this Agreement, the prevailing Party shall be entitled to recover its costs and expenses, including reasonable attorneys' fees up to and including all negotiations, trials and appeals, whether or not litigation is initiated. (b) In the event of any dispute arising under this Agreement, or the negotiation thereof or inducements to enter into the Agreement, the dispute shall, at the request of any Party, be exclusively resolved through the following procedures: (1) (A) First, the issue shall be submitted to mediation before a mediation service in Broward County, Florida, to be selected by lot from six alternatives to be provided, two by Lorilei's majority stockholder, two by Lorilei and two by the Executive. Page 208 (B) The mediation efforts shall be concluded within ten business days after their in itiation unless the Parties unanimously agree to an extended mediation period; (2) In the event that mediation does not lead to a resolution of the dispute then at the request of any Party, the Parties shall submit the dispute to binding arbitration before an arbitration service located in Broward County, Florida to be selected by lot, from six alternatives to be provided,, two by Lorilei's majority stockholder, two by Lorilei and two by the Executive. (3) (A) Expenses of mediation shall be borne by Lorilei, if successful. (B) Expenses of mediation, if unsuccessful and of arbitration shall be borne by the Party or Parties against whom the arbitration decision is rendered. (C) If the terms of the arbitral award do not establish a prevailing Party, then the expenses of unsuccessful mediation and arbitration shall be borne equally by the Parties. 5.8 Benefit of Agreement. (a) This Agreement may not be assigned by the Executive without the prior written consent of Lorilei. (b) Subject to the restrictions on transferability and assignment contained herein, the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the Parties, their successors, assigns, personal representative, estate, heirs and legatees. 5.9 Captions. The captions in this Agreement are for convenience and reference only and in no way define, describe, extend or limit the scope of this Agreement or the intent of any provisions hereof. 5.10 Number and Gender. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the Party or Parties, or their personal representatives, successors and assigns may require. 5.11 Further Assurances. The Parties hereby agree to do, execute, acknowledge and deliver or cause to be done, executed or acknowledged or delivered and to perform all such acts and deliver all such deeds, assignments, transfers, conveyances, powers of attorney, assurances, recipes, records and other documents, as may, from time to time, be required herein to effect the intent and purposes of this Agreement. 5.12 Status. Nothing in this Agreement shall be construed or shall constitute a partnership, joint venture, agency, or lessor-lessee relationship; but, rather, the relationship established hereby is that of employer-employee in Lorilei. Page 209 5.13 Counterparts. (a) This Agreement may be executed in any number of counterparts. (b) Execution by exchange of facsimile transmission shall be deemed legally sufficient to bind the signatory; however, the Parties shall, for aesthetic purposes, prepare a fully executed original version of this Agreement, which shall be the document filed with the Securities and Exchange Commission. 5.14 License. (a) This Agreement is the property of Yankees and the use hereof by the Parties is authorized hereby solely for purposes of this transaction. (b) The use of this form of agreement or of any derivation thereof without Yankees' prior written permission is prohibited. In Witness Whereof, the Parties have executed this Agreement, effective as of the last date set forth below. Signed, Sealed & Delivered In Our Presence The Executive - -------------------------- /s/ Leigh A.Cunningham - -------------------------- -------------------------- Leigh A. Cunningham Dated: May 11, 2000 Lorilei Communications, Inc. a Florida corporation. - -------------------------- __________________________ By: /s/ Gerald R. Cunningham ___________________________ Gerald R. Cunningham, President (CORPORATE SEAL) Attest: /s/ Leigh A. Cunningham __________________________ Leigh A. Cunningham, Vice President & Secretary Dated: May 11, 2000 Page 210 Exhibit to Reorganization Agreement by and among AmeriNet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation EXHIBIT 6.2(D) AMERINET'S LEGAL OPINION AmeriNet Group.com, Inc. A publicly held Delaware corporation Michael Harris Jordan 1941 Southeast 51st Terrace President & Chief Executive Officer Ocala, Florida 34471 Telephone (352) 694-6714 David K. Cantley Fax (352) 694-9178 Vice President, Treasurer e-mail, grichard@atlantic.net & Chief Financial Officer Crystal Corporate Center Vanessa H. Lindsey 2500 North Military Trail, Suite 225-C Secretary Boca Raton, Florida 33431 Telephone (561) 998-3435 George Franjola, Esquire Fax (561) 998-4635 General Counsel e-mail info@amerinetgroup.com Respond to Boca Raton address Michael Harris Jordan G. Richard Chamberlin Anthony Q. Joffe Saul B. Lipson Edward C. Dmytryk Teri Nadler J. Bruce Gleason Michael A. Caputa Carol A. Berardi Dennis A. Berardi Vanessa H. Lindsey Scott B. Ugell ------ Board of Directors Wriwebs.com, Inc. 245 North Ocean Boulevard, Suite 201; Deerfield Beach, Florida 33441 Telephone (954) 360-0636; Fax (954) 943-4046 Web site and e-mail www.wriwebs.com --------------- Trilogy International, Inc. 526 Southeast Dixie Highway; Stuart, Florida 34494 Telephone (561) 781-7278; Fax (561) 781-7282 Web site and e-mail www.trilogyonline.com; ---------------------- Vista Vacations International, Inc. 5653 Northwest 29th Street; Margate, Florida 33063 Telephone (954) 975-0898; Fax (954) 975-8447 Web site and e-mail www.vista_vacations.com ----------------------- Operating Subsidiaries May 11, 2000 Mr. Gerald R. Cunningham, President Lorilei Communications, Inc. 7325 S.W. 32nd Street Ocala, Fl. 34474 Re: Legal Opinion of Counsel Regarding Proposed Reorganization Between AmeriNet Group, Inc,, a publicly held Delaware corporation with a class of securities registered under Section 12(g) of the Securities ("AmeriNet") and Lorilei Communications, Inc., a privately held Florida corporation ("Lorilei") Dear Mr. Cunningham: This opinion is given pursuant to Section 6.2(D) of the Reorganization Agreement between AmeriNet and Lorilei. The proposed reorganization, as reflected in the terms of the Agreement, contemplates that Lorilei will exchange all its common stock, its only authorized securities, for shares of AmeriNet common stock, its only class of voting stock. This opinion will address the stock being issued to Lorilei and the applicability of federal and state securities laws to the issuance of such stock. It will not address the tax consequences, under either federal or state law arising from the proposed reorganization. This opinion has been prepared and is to be construed in accordance with the Report on Standards for Florida Opinions dated April 8, 1991, as amended and supplemented, issued by the Business Law Section of the Florida Bar, 46 The Business Lawyer, No. 4, hereby incorporated by reference into this opinion; and, is predicated on: 1. The actual information contained in the Reorganization Agreement, including its exhibits and schedules, in which a draft form of this opinion is included as an exhibit. Page 211 2. My examination of the originals and copies of corporate instruments, certificates, resolutions of the board of directors and other documents of AmeriNet. 3. My communications with Michael Jordan, President of AmeriNet. 4. My communications with Bruce Brashear, Esquire, attorney for Lorilei. 5. My current legal understanding of the Delaware General Corporations Law the Florida Securities and Investor Protection Act, and the Securities Act of 1933, as amended (the "1933 Act"). The undefined terms of art used in this opinion which are characterized by consistent use of initial capitals are defined in the Reorganization Agreement and such definitions are incorporated by reference herein. Factual premises In forming my opinions, I have relied on all factual information contained in the Reorganization Agreement and the Exhibits and Schedules attached to it, and I have assumed the genuineness and accuracy of the information contained and summarized therein. Likewise, I have relied on the following facts as conveyed to me by Michael Jordan: 1. The AmeriNet shares being issued to the Lorilei shareholders have not been registered. 2. There have been sales of AmeriNet stock to less than 10 non-accredited investors during the last year. 3. AmeriNet did not advertise or engage in any form of solicitation concerning the subject transaction. 4. This transaction is not a scheme or device to avoid registration of the stock. 5. A standard restrictive legend will be placed upon the shares issued to the Lorilei shareholders and the transfer agent will be given stop transfer instructions. In addition to the foregoing, I have relied on a representation by Bruce Brashear, Esquire, the attorney for Lorilei, that you and your wife, Leigh, the sole Lorilei shareholders, are not "accredited investors" within the meaning of federal securities laws and regulations. Discussion The capital stock The Delaware General Corporations Law addresses the issuance of capital stock in Section 152, Issuance of stock, lawful consideration; fully paid stock, which states, in relevant part, as follows: The consideration ..... for subscriptions to, or the purchase of, the capital stock to be issued by a corporation shall be paid in such form and in such manner as the board of directors shall determine.In the absence of fraud in the transaction, the judgment of the directors as to the value of such consideration shall be conclusive. The capital stock so issued shall be deemed to be fully paid and nonassessable stock, if (1) The entire amount of such consideration has been received by the corporation in the form of cash, services rendered, personal property, real property, leases of real property or a combination thereof........... The consideration supporting this transaction is stated in Section 1.2 of the Reorganization Agreement: Page 212 ...[A]ll of the Lorilei Shareholders will exchange all of their Lorilei securities being an aggregate of 111 shares of common stock, $0.01 par value (the remaining 1,889 shares being unreserved treasury shares or unauthorized but heretofore unissued shares of common stock), for up to 1,145,037 shares of AmeriNet's common stock, as called for by this Agreement. The resolution adopted by the AmeriNet board of directors approved the terms of the Reorganization Agreement, including the foregoing Section 1.2. Furthermore, Section 3.2 (C) of the Reorganization Agreement provides that: Subject to the Lorilei Declarants' compliance with their obligations under this Agreement, the shares of AmeriNet's common stock to be issued pursuant to the Reorganization will be duly authorized, validly issued , fully paid and nonassessable. As such, the shares of stock to be issued to the Lorilei shareholdersif issued in compliance with the requirements of the Reorganization Agreement, will be fully paid and nonassessable capital stock of AmeriNet. The securities laws: The 1933 Act Section 4(2) of the Securities Act provides as follows: .... The provisions of section 5 shall not apply to .... transactions by an issuer not involving any public offering. Section 4(2) provides a private offering exemption from registration and prospectus requirements, applying to transactions by an issuer that do not involve any public offering. The exemption was enacted to permit an issuer to make a specific or isolated sale of its securities to particular persons without incurring the expense of registration, and is used in a wide variety of transactions, including here, the acquisition of a closely held corporation where all of the consideration is securities of the acquiring corporation . Whether the transaction is one not involving any public offering is essentially a question of fact and necessitates a consideration of all the surrounding circumstances, including such factors as the relationship between the offerees and the issuer, as well as the nature, scope, size, type and manner of the offering. An important factor to be considered is whether the securities offered have come to rest in the hands of the initially informed group or whether the purchasers are merely conduits for a wider distribution. It is essential that the issuer of the securities take precautions to assure that the purchasers do not acquire the securities with a view to distribution. In this transaction, the share certificates being issued to the Lorilei shareholders will bear a restrictive legend indicating that the shares have not been registered under the 1933 Act and may be offered and sold only if registered pursuant to the provisions of that Act or if an exemption from registration is available. Furthermore, AmeriNet will issue stop- transfer instructions to prevent the transfer of the securities unless registered or unless an exemption exists. Except to the extent that objective standards for claiming the private offering exemption are now provided under current Regulation D, Section 4(2) of the 1933 Act has been delineated through administrative and judicial interpretations. Factors considered in determining whether a transaction involved a "public offering" were first discussed in detail in Release No. 33-285 (1935), which held that all surrounding circumstances had to be considered. Noting that an offering of securities to an "insubstantial number" of persons had previously been described as not involving a public offering, and that though under ordinary circumstances, an offering to not more than 25 persons presumably did not involve a public offering, the question was never determined exclusively by the Page 213 number of offerees. Factors discussed in Release No. 33-285 included the number of offerees and their relationship to each other and to the issuer, the number of units offered, the size of the offering and the manner of the offering. In addition to the four factors above, subsequent intrepretations emphasized the importance of information available to make informed decisions, even where the investors were financially sophisticated. Cases have held that the private offering exemption afforded by Section 4(2) only applies if the offerees are given access to the kind of information that registration would disclose. In this transaction, the Lorilei shareholders have represented that they have had access to all of AmeriNet's periodic filings with the SEC, as well as other information made available directly byofficers of AmeriNet and its current subsidiaries. Florida Law A safe harbor for compliance with the requirements of Section 517.061(11)(a)3, Florida Statutes, is established by Florida Rule 3E-500.005. Among other things, it provides the following guidelines: The determination as to whether sales of securities are part of a larger offering [(i.e., are deemed to be integrated)] depends on the particular facts and circumstances. In determining whether sales should be regarded as part of a larger offering and thus should be integrated, the facts described in Rule 3E-500.01 should be considered. The requirements of Sections 517.061(11)(a)3, Florida Statutes, that each purchaser or his representative be provided with or given reasonable access to full and fair disclosure of all material information is deemed to be satisfied if, a) all material books and records of the issuer; b) all material contracts and documents relating to the proposed transaction; and c) an opportunity to question the appropriate executive officers or partners are provided to each investor. In addition, in the case of an issuer that is subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the provisions of paragraph (5)(b) of the rule are deemed satisfied by providing the following: (a) The information contained in the annual report required to be... any reports or documents required to be filed by the issuer pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, since the filing of such annual report or registration statement; and, (b) A brief description of the securities being offered, the use of the proceeds from the offering, and any material changes in the issuer's affairs which are not disclosed in the documents furnished. Opinion On the basis of the foregoing discussion, I am of the opinion that the shares of stock being issued to the Lorilei shareholders are fully paid and non-assessable. This opinion is limited by the facts cited above, and is for use by the Parties solely in conjunction with closing contemplated by the Reorganization Agreement. No other person is entitled to rely upon this opinion. Very Truly Yours, AmeriNet Group.com, Inc. /s/ George Franjola George Franjola, Esquire General Counsel Page 214 EXHIBIT 6.3(E) LORILEI LEGAL OPINION Brashear & Associates, P.L. 926 N.W. 13th Street Gainesville, Florida 32601 May 11, 2000 Board of Directors AmeriNet Group, Inc. Crystal Corporate Center; 2500 North Military Trail, Suite 225 Boca Raton, Florida 33431 Dear Ladies and Gentlemen: We have acted as special counsel to Lorilei Communications, Inc., a Florida corporation (the "Company"), in connection with reorganization contemplated by that certain Reorganization Agreement, between AmeriNet Group, Inc. (AmeriNet) and the Company dated May 11, 2000 (the "Agreement") pursuant to which the outstanding shares of the Company have been transferred to AmeriNet in exchange for ), for up to 1,145,037 Aminet common shares.. All capitalized terms used herein and not otherwise defined shall have the respective meanings given to those terms in the Reorganization Agreement. This opinion is being furnished to you pursuant to Section 6.2(E) of the Reorganization Agreement. In connection with this opinion, we have examined a copy of the Reorganization Agreement, the Company's Certificate of Incorporation, as amended to date, its By-laws, as amended to date, and such other certificates, agreements and other documents as we have deemed necessary as a basis for the opinions hereinafter expressed. As to certain matters of fact, we have relied upon a certificate of officers of the Company. In our examination of the aforesaid documents, we have assumed, without independent investigation, the genuineness of all signatures, the legal capacity of all individuals who have executed any documents, the authenticity of all documents submitted to us as originals, the conformity to the original documents of all documents submitted to us as certified, photostatic, reproduced or conformed copies of validly existing agreements or other documents and the authenticity of all such documents. In rendering the opinions expressed below, we have assumed that: (i) the parties to each document related to or necessary to the transaction ("Transaction Documents") other than the Company have the power, corporate or other, to enter into and perform all actions thereunder; (ii) that each such party other than the Company has duly authorized by all requisite action, corporate or other, the execution and delivery of such Transaction Document; (iii) that such Transaction Document has been duly executed and delivered by such party; (iv) and that each Transaction Document constitutes the legal, valid and binding agreement of each of the parties to such Transaction Document other than the Company, enforceable against such parties in accordance with its terms; (v) the representations and warranties made in the Reorganization Agreement by you are true and correct; (vi) any wire transfers, drafts or checks tendered by you will be honored; (vii) there are no facts or circumstances relating to you that might prevent you from enforcing any of the rights to which our opinion relates; and (viii) there are no extrinsic agreements or understandings among the parties to the Transaction Documents that would modify or interpret the terms of the Transaction Documents or the respective rights or obligations of the parties thereunder. The qualification of a statement or opinion herein by the phrase "known to us," or "to our knowledge," or any similar phrase means the actual knowledge of the attorneys of this Firm with primary responsibility for the preparation, review and negotiation of the Transaction Documents. We have not undertaken or conducted any independent factual investigation to determine the accuracy of statements or opinions herein qualified as described in the preceding sentence, and any limited inquiry undertaken by us during the preparation of this opinion letter should not be regarded as such an investigation; no inference as to our knowledge of any matters bearing on the accuracy of any such statement or opinion should be drawn from the fact of our representation of the Company. This opinion relates solely to the laws of the State of Florida, the General Corporation Law of the State of Florida and the federal securities laws, and we express no opinion with respect to the effect or application of any other laws. We express no opinion whatsoever as to the compliance or noncompliance by the Company or any person involved in the subject transactions with the antifraud or information delivery provisions of state and federal laws, rules and regulations concerning the offer, sale or issuance of securities. Based upon our examination of and reliance upon the foregoing and subject to the limitations, exceptions, qualifications and assumptions set forth herein, we are of the opinion that as of the date hereof: 1. The Company is a corporation validly existing and in good standing under the laws of the State of Florida, with the requisite corporate power and authority to own its properties and to conduct its business as presently conducted. 2. The Company has the requisite corporate power and authority to execute, deliver and perform its obligations under the Transactions Documents. The execution, delivery and performance of the Transaction Documents have been duly authorized by all necessary corporate action of the Company and the Transaction Documents have been duly executed and delivered by the Company. Each Transaction Document constitutes a legally valid and binding obligation of the Company, enforceable against the Company according to its terms, except as (i) such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors' rights and remedies, (ii) rights of acceleration and the availability of equitable remedies may be limited by equitable principles of general applicability and (iii) rights to indemnification and contribution under the Investor's Rights Agreement may be limited by public policy. The Certificate of Designation has been duly executed and filed with the Florida Secretary of State. 3. The 111 shares of the Company"s common stock have been validly issued, fully paid and are nonassessable. 4. The Company's Board of Directors has adopted a resolution adopting the Reorganization Agreement. 5. Based in part upon the representations made by you in the Reorganization Agreement, the exchange of shares contemplated by the Reorganization Agreement is exempt from the registration requirements under Section 5 of the Securities Act of 1933, as amended and the registration requirements of Chapter 517, Florida Statutes. 6. The execution and delivery of the Transaction Documents does not (i) violate any provision of any law, rule or regulation believed by us to be generally applicable to transactions of the type contemplated by the Transaction Documents or (ii) violate any provision of the Company's Certificate of Incorporation or Bylaws. 7. The execution, delivery and performance of the obligations of the Company under the Transaction Documents do not require any consent, approval, permit, order or authorization of, or any qualification, registration, designation, declaration or filing with, any federal or state governmental authority on the part of the Company. 8. To our knowledge, there is no action, suit, proceeding or investigation pending or threatened against the Company before any court or governmental agency (i) that questions the validity of the Transaction Documents or the right of the Company to enter into the Transaction Documents or (ii) that, if determined adversely, would be likely to result in a material adverse change in the financial condition or business of the Company. The opinions expressed herein have been rendered solely for your benefit in connection with the transactions contemplated by the Reorganization Agreement and may not be relied upon by you in any other manner or by any other person or entity in any manner or for any purpose, and may not be communicated or published by you to any other person or entity for any purpose without our prior written approval in each instance. We do not assume any continuing obligation or responsibility to advise you of any changes in law, or any change of circumstances of which we become aware, which may affect any of the opinions contained herein or to update, revise or supplement any such opinion herein for any reason whatsoever. Very truly yours, Brashear & Associates, P.L. /s/ Bruce Brashear --------------------- Bruce Brashear Page 215 Exhibit to Reorganization Agreement by and among AmeriNet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation EXHIBIT 6.3(K) CONFIDENTIALITY AGREEMENTS Copies of Non Compete Agreements are attached to Exhibit 5.12 I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Exhibit to Reorganization Agreement by and among AmeriNet Group.com, Inc., a Delaware Corporation and Lorilei Communications, Inc., a Florida Corporation EXHIBIT 7.2 ESCROW ALLOCATION The portion of AmeriNet's common stock in the Undisclosed Liabilities Escrow Fund contributed on behalf of each stockholder of Lorilei is listed opposite such stockholders name below: Undisclosed Liabilities Stock Escrow Stockholder Allocation Gerald R. Cunningham 57,252 Shares Leigh A. Cunningham 57,252 Shares I attest the information contained herein is true and accurate to the best of my knowledge /s/ Gerald R. Cunningham - ---------------------------------- Gerald R. Cunningham, President Lorilei Communications, Inc. /s/ Leigh A. Cunningham - ---------------------------------- Leigh A. Cunningham, Vice President Sales Lorilei Communications, Inc. Page 216