UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 24, 2001
The Cyber Group Network Corporation
(Exact name of Registrant as specified in charter)
Nevada 0-28153 33-0901534
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification)
720 E. Carnegie Drive, Suite 200, San Bernardino, CA 92408
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (909) 890-9769
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) On July 9, 2001, The registrant entered into a Stock Purchase Agreement
to purchase 100% ownership of WMD Holdings Group, Inc., a California corporation
doing business as Creative Advertising and Marketing ("WMD"). WMD is an
advertising and marketing firm, which handles advertising accounts for companies
in the Inland Empire region of Southern California. Assets held by WMD include
a recording studio, along with office and recording equipment. The purchase
price for 100% of the issued and outstanding stock of WMD is 162,500,000 shares
of common stock of the registrant. Of those shares, 62,500,000 shall be held in
escrow for one (1) year from the date of the Stock Purchase Agreement, and the
balance shall be issued out on a monthly basis over a 12-month period based on
stock price. The shares of WMD acquired by the registrant were acquired from
Warren Scheibe, Michael Donlon, Francis Donlon, and Jeffrey Scheibe. Warren
Scheibe is a holder of record of 660,000 shares of the registrant. None of the
other shareholders of WMD are affiliated in any way with the registrant.
(b) The assets of WMD were used to promote its advertising and marketing
business. The registrant intends on continuing the same uses of the assets
obtained in this transaction.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Stock Purchase Agreement
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 24, 2001
The Cyber Group Network Corporation
By:
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Gregory Evans, Chief Executive Officer
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (together with the schedules attached hereto,
this "Agreement") dated as of July 9, 2001, by and among The Cyber Group Network
Corporation, a Nevada corporation ("Buyer"), on the one hand, and WMD Holding
Group, Inc., a California corporation d/b/a Creative Advertising & Marketing
(the "Company") and each of the shareholders of the Company whose names are set
forth on the signature pages hereto (each, a "Shareholder," and, together, the
"Shareholders"), on the other hand:
W I T N E S S E T H:
WHEREAS, Buyer desires to purchase from the Shareholders and the
Shareholders desire to sell to Buyer, all of the issued and outstanding shares
(the "Shares") of capital stock of the Company, in exchange for shares of
Buyer's common stock; and
WHEREAS, the parties desire to enter into this Agreement to set forth their
mutual agreements concerning the above matter;
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereto, and of good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, it is mutually agreed by and among the parties
hereto as follows:
ARTICLE 1.
SALE AND TRANSFER OF SHARES; CLOSING
1.1. Sale of Shares. Subject to the terms and conditions of this
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Agreement, and in reliance upon the representations, warranties, covenants and
agreements contained herein, at the closing of the transactions contemplated
hereby (the "Closing"), the Shareholders will sell, convey, assign and transfer
the Shares to Buyer, and Buyer will purchase the Shares from the Shareholders.
The Shares shall be free and clear of any claims or Encumbrances (as defined in
Section 2.6).
1.2. Consideration. In consideration of the sale, transfer and assignment
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to Buyer of the Shares, at the Closing Buyer shall deliver to the Shareholders:
(a) duly executed certificates representing an aggregate of
100,000,000 shares of the common stock of Buyer (the "Non-Escrow Shares") as set
forth on the attached Schedule 1.2 (a); and
(b) duly executed certificates representing an aggregate of 62,500,000
shares of the common stock of Buyer (the "Escrow Shares" and together with the
Non-Escrow Shares, the "Buyer Shares"), to be held and disposed of by Thomas C.
Cook and Associates, as escrow agent (the "Escrow Agent"), as provided in the
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Escrow Agreement, as set forth on the attached Schedule 1.2 (b). The aggregate
consideration set forth in paragraphs (a) and (b) above is referred to herein as
the "Purchase Price."
1.3. The Closing. The Closing will take place at the offices of The
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Buyer at 10:00 a.m. (local time) on the date hereof.
1.4. Closing Obligations. At the Closing:
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(a) The Shareholders will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), with signatures guaranteed by a
commercial bank or by a member firm of the New York Stock Exchange, for transfer
to Buyer;
(ii) a registration rights agreement in the form of Exhibit A,
executed by each of the Shareholders (the "Registration Rights Agreement").
(b) Buyer will deliver to the Shareholders:
(i) certificates representing the Non-Escrow Shares;
(ii) the Registration Rights Agreement, executed by Buyer; and
(c) Buyer and the Shareholders will enter into an escrow agreement in
the form of Exhibit B (the "Escrow Agreement") with the Escrow Agent and Buyer
shall deliver certificates representing the Escrow Shares to the Escrow Agent.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS
To induce Buyer to execute, deliver and perform this Agreement, and in
acknowledgement of Buyer's reliance on the following representations and
warranties, the Company and the Shareholders hereby jointly and severally
represent and warrant to Buyer as follows as of the date hereof:
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2.1. Organization; Capitalization. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the state of
California, with the power and authority to conduct its business as it is now
being conducted and to own and lease its properties and assets. Each
Shareholder's state of residence is as set forth on Schedule 2.1. The
authorized capital stock of the Company consists of 1,000 shares of common
stock, of which only the shares owned by the Shareholders are issued and
outstanding. The Shareholders are the legal and beneficial owners and holders
of the Shares, free and clear of all Encumbrances. No legend or other reference
to any purported Encumbrances appears upon any certificate representing equity
securities of the Company. There are no other shares of capital stock of the
Company issued or outstanding. The Company's outstanding common stock has been
duly and validly issued and is fully paid and nonassessable. There are not
outstanding any warrants, options or other rights to acquire any of the
Company's capital stock. The Company's assets do not include any capital stock
of, or any other equity interest in, or securities convertible into or
exchangeable for any capital stock or other equity interest in, any person, or
any direct or indirect equity or ownership interest in any other business.
2.2. Power and Authority. The Company and the Shareholders have the
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power and authority to execute, deliver, and perform this Agreement and the
other agreements and instruments to be executed and delivered by them in
connection with the transactions contemplated hereby, and the Company and the
Shareholders have taken all necessary action to authorize the execution and
delivery of this Agreement and such other agreements and instruments and the
consummation of the transactions contemplated hereby. This Agreement is, and
the other agreements and instruments to be executed and delivered by the
Shareholders and/or the Company in connection with the transactions contemplated
hereby, when such other agreements and instruments are executed and delivered,
shall be, the valid and legally binding obligations of the Shareholders and/or
the Company, as the case may be, enforceable against the Shareholders and/or the
Company in accordance with their respective terms.
2.3. No Conflict. Neither the execution and delivery of this Agreement
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and the other agreements and instruments to be executed and delivered in
connection with the transactions contemplated hereby, nor the consummation of
the transactions contemplated hereby, will violate or conflict with: (a) any
foreign, Federal, state, or local law, regulation, ordinance, zoning
requirement, governmental restriction, order, judgment or decree applicable to
the Shareholders and/or the Company; (b) any provision of any charter, bylaw or
other governing or organizational instrument or agreement of the Company; or (c)
any mortgage, indenture, license, instrument, trust, contract, agreement, or
other commitment or arrangement to which the Shareholders and/or the Company are
parties or by which the Shareholders and/or the Company are bound.
2.4. Required Government Consents, Filings, etc. No approval,
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authorization, certification, consent, variance, permission, license, or permit
to or from, or notice, filing, or recording to or with, foreign, Federal, state,
or local governmental authorities is necessary for: (a) the execution and
delivery of this Agreement and the other agreements and instruments to be
executed and delivered by the Shareholders and/or the Company in connection with
the transactions contemplated hereby, or the consummation by the Shareholders
and/or the Company of the transactions contemplated hereby; or (b) the ownership
by Buyer of the Shares.
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2.5. Other Required Consents, Filings, etc. No approval,
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authorization, consent, permission, or waiver to or from, or notice, filing, or
recording to or with, any person is necessary for: (a) the execution and
delivery of this Agreement and the other agreements and instruments to be
executed and delivered in connection with the transactions contemplated hereby
by the Shareholders and/or the Company, or the consummation by the Shareholders
and/or the Company of the transactions contemplated hereby; or (b) the ownership
by Buyer of the Shares.
2.6. Title to Assets. The Company has good and marketable title to all
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of its assets, free and clear of any claims or Encumbrances. "Encumbrance"
means any mortgage, charge (whether fixed or floating), security interest,
pledge, right of first refusal, lien (including any unpaid vendor's lien),
option, hypothecation, title retention or conditional sale agreement, lease,
option, restriction as to transfer or possession, or subordination to any right
of any other person.
2.7. Financial Statements. The Company and the Shareholders have
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provided the following financial statements (the "Financial Statements") with
respect to the Company from Arrowhead Credit Union. The Financial Statements
are true and correct in every material respect and properly reflect all assets
and liabilities of the Company as then in existence. The Financial Statements
fairly present the results of operations and the financial position of the
Company as of the dates thereof and the periods then ended.
2.8. Condition and Sufficiency of Assets. The equipment contained in
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the Company's assets is structurally sound, in good operating condition and
repair, and adequate for the uses to which it is being put, and none of such
equipment is in need of maintenance or repairs, except for ordinary, routine
maintenance and repairs that are not material in nature or cost. The Company's
assets are sufficient for the continued conduct of the Company's business after
the Closing in the same manner as conducted prior to the Closing. The Company's
assets are the only assets owned directly or indirectly by the Shareholders or
any of their affiliates, which are used in or relate to the conduct of the
Company's business.
2.9. Real Property. Schedule 2.9 sets forth a complete and accurate
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list of all real property, leaseholds or other interests thereon owned by the
Company (the "Real Property"). The Real Property includes all interests,
whether freehold or leasehold, in real estate, buildings and improvements
thereon, and easements, rights of way and other rights appurtenant thereto, held
by the Company or otherwise used in its business. The Company has good and
marketable title to all of the Real Property, free and clear of any claims or
Encumbrances.
2.10. Tangible Personal Property. Schedule 2.10 sets forth a complete
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and accurate list of all (a) inventory, (b) equipment and machinery, (c) office
furniture, fixtures, computers and other office equipment and supplies, and (d)
all other tangible personal property, used in the conduct of the Company's
business as now conducted. Except as stated on Schedule 2.10, no tangible
personal property used by the Company in connection with its business is held
under any lease, security agreement, conditional sales contract or other title
retention or security arrangement, or is located elsewhere than at the Company's
offices at 21900 Barton Road, #110, Grand Terrance, California.
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2.11. Accounts Receivable. The Company's accounts receivable (all of
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which are listed on Schedule 2.11) represent valid obligations arising from
sales actually made or services actually performed in the ordinary course of
business. The Company's accounts receivable are current and collectible, net of
the respective reserves shown on Schedule 2.11, which reserves are adequate and
calculated consistent with past practice. Subject to such reserves, each of the
accounts receivable will be collected in full, without any set-off, within 90
days after the day on which it first becomes due and payable. There is no
contest, claim or right of set-off under any agreement with any obligor of an
account receivable relating to the amount or validity of such account
receivable.
2.12. Insurance.
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(a) Schedule 2.12 sets forth (i) a true and complete list and
description of all insurance policies, other insurance arrangements and other
contracts or arrangements for the transfer or sharing of insurance risks by the
Company in force on the date hereof, together with a statement of the aggregate
amount of claims paid out, and claims pending, under each such insurance policy
or other arrangement through the date hereof; and (ii) a description of such
risks which the Company, or its officers, have designated as being self-insured.
(b) The Company has policies of insurance of the type and in amounts
customarily carried by persons conducting businesses or owning assets similar to
those of the Company. All such policies are in full force and effect, all
premiums due thereon have been paid and the Company is otherwise in compliance
in all respects with the terms and provisions of such policies. Furthermore,
(i) the Company has not received any notice of cancellation or
non-renewal of any such policy or arrangement nor is the termination of any such
policy or arrangement threatened;
(ii) there is no claim pending under any such policy or
arrangement as to which coverage has been questioned, denied or disputed by the
underwriter(s) of such policy or arrangement;
(iii) the Company has not received any notice from any of its
insurance carriers that any insurance premiums will be increased in the future
or that any insurance coverage presently provided for will not be available to
the Company in the future on substantially the same terms as now in effect; and
(iv) none of such policies or arrangements provides for any
retrospective premium adjustment, experienced-based liability or loss sharing
arrangement.
2.13. Intellectual Property.
----------------------
(a) The Company owns or has the valid right to use all of the
Intellectual Property used in its business as currently conducted or as
presently contemplated to be conducted, all of which is listed on Schedule 2.13.
The term "Intellectual Property" includes all patents and patent applications,
trademarks, service marks, and trademark or service mark registrations and
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applications, trade names, logos, designs, domain names, web sites, slogans and
general intangibles of like nature, together with all goodwill relating to the
foregoing, copyrights, copyright registrations, renewals and applications,
Software (as defined in Schedule 2.13(h)), databases, technology, trade secrets
and other confidential information, know-how, proprietary processes, formulae,
algorithms, models and methodologies, drawings, specifications, plans,
proposals, financing and marketing plans, advertiser, customer and supplier
lists and all other information relating to advertisers, customers and suppliers
(whether or not reduced to writing), licenses, agreements and all other
proprietary rights, which relate to the Company's business;
(b) The Intellectual Property owned or used by the Company is free and
clear of all claims or Encumbrances, except as specifically identified in
Schedule 2.13(b). The Company is listed in the appropriate foreign, United
States, or state agency as the sole owner of record for each application and
registration listed in Schedule 2.13. The Company is the registered owner of the
domain name "www.camagency.com," and has a currently valid registration of such
domain name with Network Solutions, Inc. or InterNIC ("NSI"). The registration
and renewal fees charged by NSI for such domain name are paid at least through
April 2002.
(c) The registrations listed on Schedule 2.13 are valid and
subsisting, in full force and effect, and have not been cancelled, expired, or
abandoned. There is no pending or threatened opposition, interference or
cancellation proceeding before any court or registration authority in any
jurisdiction against such registrations or against any Intellectual Property
licensed to the Company pursuant to the License Agreements (as defined in the
next paragraph).
(d) Schedule 2.13(d) sets forth a complete and accurate list of all
agreements pertaining to the use of, or granting any right to use or practice
any rights under, any Intellectual Property, whether the Company is the licensee
or licensor thereunder, and whether written or oral, express or implied, any
written settlements or consents relating to any Intellectual Property and
covenants not to sue (collectively, the "License Agreements"), indicating for
each the title, the parties, date executed, and the Intellectual Property
covered thereby. Except as set forth in Schedule 2.13(d), there are no
settlements, consents, judgments, or orders or other agreements which restrict
any of the Company's rights to use any Intellectual Property or which permit
third parties to use any Intellectual Property which would otherwise infringe
any of the Company's Intellectual Property.
(e) The Company takes and has taken reasonable measures to protect the
confidentiality of its trade secrets, know-how or other confidential information
material to its business as currently operated or planned to be operated
(together, "Trade Secrets"). No Trade Secret has been disclosed or authorized to
be disclosed to any third party, including any employee, agent, contractor or
other person, other than pursuant to a written non-disclosure agreement that
adequately protects the Company's proprietary interests in and to such Trade
Secrets. To the best of the Company's and the Shareholders' knowledge, no party
to any non-disclosure agreement relating to any Trade Secrets is in breach
thereof.
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(f) The conduct of the Company's business as currently conducted or
planned to be conducted does not infringe upon (either directly or indirectly)
any Intellectual Property owned or controlled by any third party. There are no
claims or suits pending or threatened, and neither the Company nor the
Shareholders have received any notice of a third party claim or suit (i)
alleging that any of the Company's activities or the conduct of its business has
infringed upon or constitutes the unauthorized use of the Intellectual Property
rights of any third party, or (ii) challenging the ownership, use, validity or
enforceability of any Intellectual Property.
(g) To the best of the Company's and Shareholders' knowledge, no third
party is misappropriating, infringing, diluting, or violating any Intellectual
Property owned by or licensed to the Company, and no such claims are pending
against a third party by the Company.
(h) Schedule 2.13(h) lists all material computer programs and computer
databases, other than off-the-shelf applications, which are owned, licensed,
leased or otherwise used by the Company, including any Software, other than
off-the-shelf applications, currently or previously, or contemplated to be,
licensed, sublicensed or sold to or by the Company, and identifies which is
owned, licensed, leased, or otherwise used, as the case may be. "Software" means
any and all (i) computer programs, including any and all software
implementations of algorithms, models and methodologies, whether in source code
or object code, (ii) computer databases and computer compilations, including any
and all data and collections of data, whether machine readable or otherwise,
(iii) descriptions, flow-charts and other work product used to design, plan,
organize and develop any of the foregoing, (iv) the Company's domain name and
the technology supporting and content contained on the respective Internet
site(s), and (v) all documentation, including user manuals and training
materials, relating to any of the foregoing.
(i) Each item of Software listed in Schedule 2.13(h) is either (i)
owned by the Company, (ii) currently in the public domain or otherwise available
to the Company without the license, lease or consent of any third party, or
(iii) used under rights granted to the Company pursuant to a written agreement,
license or lease from a third party, which written agreement, license or lease
is listed in Schedule 2.13(i). The Company's use of the Software set forth in
Schedule 2.13(h) does not violate the rights of any third party. With respect to
the Software set forth in Schedule 2.13(h) which the Company purports to own,
such Software was either developed by (x) employees of the Company within the
scope of their employment; or (y) independent contractors who have assigned
their rights to the Company pursuant to written agreements.
2.14. Compliance with Rules; Environmental Matters.
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(a) Except as disclosed on Schedule 2.14, the Company and the
Shareholders at all times have been and are currently in compliance with all
Rules applicable to the Company and/or its business. "Rule," means any law,
statute, rule, regulation, order, court decision, judgment or decree of any
foreign, Federal, state, territorial, provincial or municipal authority. Without
limiting the generality of the foregoing, the Company and/or the Shareholders
(i) have not received notice or otherwise learned of any claim, demand, action,
event, condition, report or investigation indicating or concerning any potential
or actual liability arising from or in connection with (A) any noncompliance
with or violation of the requirements of any applicable foreign, Federal, state
or local environmental or health and safety statutes and regulations; or (B) the
release or threatened release of any toxic or hazardous waste, substance or
constituent, or other substance into the environment; (ii) do not have any
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threatened or actual liability in connection with the release or threatened
release of any toxic or hazardous waste, substance or constituent, or other
substance into the environment; (iii) have not received notice or otherwise
learned of any foreign, Federal, state or local investigation evaluating whether
any remedial action is needed to respond to a release or threatened release of
any toxic or hazardous waste, substance or constituent or other substance into
the environment for which the Shareholders, the Company and/or Buyer may be
liable; (iv) have not received notice that the Company is or may be liable to
any person under the Comprehensive Environmental Response, Compensation, and
Liability Act, as amended, 42 U.S.C. Section 9601 et seq. or any analogous state
or foreign law; and (v) have not received notice or otherwise know of any
change, whether or not yet effective, or impending change, in any Rule which
might reasonably result in any of the foregoing in the foreseeable future.
(b) The Company and the Shareholders are in full compliance with, and
have obtained all Permits and other authorizations relating to the Company,
which are required by any Rule, including, the environmental safety laws, which
has been enacted to the date of this Agreement. All such Permits held by the
Company and/or the Shareholders are listed on Schedule 2.14. No governmental
proceeding is pending or threatened to cancel, amend, modify or fail to renew
any such Permit. "Permit" includes any approval, authorization, concession,
grant, certificate of convenience and necessity, qualification, consent,
franchise, license, security clearance, easement, order or other permit issued
or granted by any governmental entity.
(c) The Company is in material compliance with the financial
responsibility requirements of Federal, state and foreign environmental laws, if
applicable, including those contained in 40 C.F.R., Parts 264 and 265, Subps. H,
and any state or foreign law equivalent, and those promulgated pursuant to 42
U.S.C. 699lb(c)(6) and any state or foreign law equivalent.
(d) The Company and/or the Shareholders have not filed any notice
under any Rule or requirement of a court or other governmental entity (i)
indicating past or present treatment, storage or disposal by the Company or on
properties currently or previously owned, leased or directly or indirectly used
by the Company of a "hazardous waste," as that term is defined under 40 C.F.R.
Part 261 or any state or foreign equivalent; or (ii) reporting a release by the
Company or on such properties of any toxic or hazardous waste, substance or
constituent or other substance into the environment.
(e) The Company and the Shareholders have complied with all
requirements of the Occupational Safety and Health Act and state and foreign law
equivalents, and regulations promulgated under such legislation, and with all
orders, judgments, and decrees of any tribunal pursuant to such legislation
applicable to the Company.
(f) The Company and/or the Shareholders are not currently in violation
of any environmental or safety laws nor have the Company and/or the Shareholders
received any notice of any current non-compliance therewith. There is no civil,
criminal or administrative action, suit, demand, claim, hearing, notice,
investigation or proceeding pending or threatened against the Company and/or the
Shareholders relating in any way to environmental and safety laws. No
Environmental Protection Agency lien has been placed on any property of the
Company as a result of any violation of the environmental and safety laws.
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(g) None of the Company's assets contains asbestos-containing
material. No property of the Company contains any polychlorinated biphenyl
dielectric fluid, radon, urea-formaldehyde or polyurethane foam insulation or is
contaminated with any hazardous or toxic substance, hazardous constituent, oil
or pollutant or other hazardous material regardless of whether its presence
originated prior to ownership or operation by the Company or was caused wholly
or partially by outside sources such as migration from another property or a
spill by a carrier, supplier, customer or tenant.
(h) The Company and/or the Shareholders have not incurred any
liability, existing or inchoate, for any releases or off-site disposal of any
hazardous material, hazardous waste, substances or constituents or of oil or
pollutants and the Company and/or the Shareholders have not received any notice
that the Company and/or the Shareholders have been or may be named as a party
potentially responsible for any such release or off-site disposal.
(i) The Company and the Shareholders are in compliance with all
occupational; safety and health standards required by the environmental and
safety laws and have not received notice of any work-related chronic illness or
injury among the Company's employees.
(j) No hazardous materials or waste generated by the Company must be
disposed of via a licensed waste hauler.
(k) To the best of the Company's and the Shareholders' knowledge, none
of the products, raw materials, components, intermediates, by-products or other
substances used by the Company is the subject of any study, investigation or
proceeding conducted or sponsored by any governmental entity under the
environmental and safety laws.
(l) None of the business or operations of the Company is located or
performed in any tidal or freshwater wetlands area as defined in any of the
environmental and safety laws.
2.15. Tax Matters.
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(a) The Company and the Shareholders have filed or caused to be filed
all tax returns required to be filed pertaining to the Company. All such tax
returns were correct and complete in all respects. All taxes owed by the Company
and/or the Shareholders pertaining to the Company, its business or its assets
(whether or not shown on any tax return) have been paid. The Company and/or the
Shareholders are not beneficiaries of any extension of time within which to file
any tax return. No claim has ever been made by an authority in a jurisdiction
where the Company and/or the Shareholders do not file tax returns that the
Company and/or the Shareholders are or may be subject to taxation by that
jurisdiction. There are no claims or Encumbrances on any of the Company's assets
that arose in connection with any failure (or alleged failure) to pay any tax.
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(b) The Company has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, or third party.
(c) The Company and the Shareholders do not expect any authority to
assess any additional taxes for any period for which tax returns have been
filed. There is no dispute or claim concerning any tax liability of the Company
either (A) claimed or raised by any authority in writing or (B) as to which the
Company and/or the Shareholders (or employees responsible for tax matters) have
knowledge. The Company and/or the Shareholders have delivered to Buyer correct
and complete copies of all tax returns, examination reports, and statements of
deficiencies assessed against or agreed to by the Company for all tax years from
the Company's inception to the date hereof.
(d) The Company and/or the Shareholders have not waived any statute of
limitations in respect of taxes or agreed to any extension of time with respect
to a tax assessment or deficiency relating to the Company.
2.16. Contracts.
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(a) Schedule 2.16 set forth a list of all contracts, commitments,
agreements, promises, leases, arrangements, understandings and licenses (whether
written or oral, express or implied) to which the Company is a party (the
"Contracts"). Each of the Contracts is in full force and effect and enforceable
in accordance with its terms. Except as set forth in Schedule 2.16(a), there
exists no event of default or occurrence, condition or act on the part of the
Company and/or the Shareholders or, to the best knowledge of the Company and the
Shareholders, on the part of any other party to any Contract, which constitutes
or would constitute (with or without notice or lapse of time or both) a breach
of or default under any of the Contracts, or cause or permit acceleration of any
obligation of the Company or any other party. There are no renegotiations of,
attempts to renegotiate, or outstanding rights to renegotiate any amounts paid
or payable to the Company under any Contract with any person having the
contractual or statutory right to demand or require such renegotiation and no
such person has made written demand for such renegotiation.
(b) Except as set forth in Schedule 2.16(b), no consent of any other
party to any Contract is required in order for any Contract to remain in full
force and effect following the consummation of the transactions contemplated by
this Agreement.
(c) The Company and/or the Shareholders are not a party to any
agreement that limits the freedom of the Company and/or the Shareholders to
compete in any line of business in which the Company currently operates or with
any person.
2.17. Employee Matters.
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(a) Schedule 2.17(a) sets forth (i) a list of all individuals employed
by the Company and all independent contractors, consultants and agents employed
by or retained by the Company; and (ii) all agreements (written or oral, express
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or implied) concerning any current or former employee, officer, director or
consultant of the Company. Except as set forth on Schedule 2.17(a), all of the
Company's employees are "at-will" employees and may be terminated by the Company
at any time without liability to the Company.
(b) Schedule 2.17(b) accurately lists all bonus, deferred
compensation, pension, retirement, profit-sharing, deferred profit-sharing,
thrift, savings, employee stock ownership, stock bonus, stock purchase,
restricted stock and stock option plans, all employment or severance agreements
(written or oral, express or implied), other material employee benefit plans and
applicable "change of control" or similar provisions in any plans, agreements
and arrangements that cover current employees of the Company (the "Compensation
and Benefit Plans"). The Compensation and Benefit Plans and all other benefit
plans, agreements and arrangements (whether funded or unfunded, foreign or
domestic, registered or unregistered) covering current employees of the Company
(collectively, "Employees"), including "employee benefit plans" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1976
("ERISA"), are disclosed on Schedule 2.17(b). True and complete copies of all
Compensation and Benefit Plans and such other benefit plans, agreements and
arrangements, including any trust instruments and insurance contracts, if any,
forming a part of such plans, contracts and arrangements, and all amendments
thereto, all funding or actuarial reports or valuations and all summary plan
descriptions required by ERISA concerning the Compensation and Benefit Plans
that affect the Employees or their dependents, have been made available to
Buyer. Buyer has been given a statement of the employer and employee
contribution rates to all of the Compensation and Benefit Plans. The documents
relating to the Compensation and Benefit Plans that have been disclosed to Buyer
contain full particulars of all of the benefits provided by, and the terms of,
the Compensation and Benefit Plans.
(c) All employee benefit plans, other than "multi-employer plans"
within the meaning of Section 3(37) or 4001(a)(3) of ERISA, covering Employees
(the "Plans"), to the extent subject to ERISA, are in substantial compliance
with ERISA. There is no pending or threatened Litigation (as defined in Section
2.19) relating to the Plans. The Company has not engaged in a transaction with
respect to any Plan that, assuming the taxable period of such transaction
expired as of the date hereof, could subject the Company to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) or ERISA in an
amount, which would be material.
(d) No liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by the Company or an affiliate with respect to any
ongoing, frozen or terminated "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by the Company or
an affiliate, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). The Company has not incurred and does not expect to
incur any withdrawal liability with respect to a multi-employer plan under
Subtitle E of Title IV of ERISA (regardless of whether based on contributions of
an ERISA Affiliate).
(e) All contributions required to be made under the terms of any
Compensation and Benefit Plan have been timely made. Neither any Plan nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
11
Code or Section 302 of ERISA and no ERISA Affiliate has an outstanding funding
waiver. The Company has not provided, nor is it required to provide, security to
any Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code.
(f) No collective bargaining (or similar) agreement covers any
Employee, and no union organizing effort has been initiated or is in prospect
relative to any part of the Company's business. Except as disclosed on Schedule
2.17(f), since the Company's inception: (i) no attempt to organize any group or
all of the persons employed by the Company has been made; (ii) there currently
is not, and there has not been, any labor strike, dispute, lockout, slowdown or
stoppage against the Company, and none of the foregoing in the past was or is
threatened; (iii) the Company is in compliance in all material respects with all
laws respecting employment and employment practices, terms and conditions of
employment and wages and hours pertaining to persons currently or formerly
employed by the Company, including applicable requirements of the Immigration
and Nationality Act of 1952, as amended by the Immigration Reform and Control
Act of 1986, and regulations promulgated thereunder; (iv) no unfair labor
practice charge, complaint or lawsuit involving the Company or persons currently
or formerly employed by the Company is pending or threatened to be filed; (v) no
charge, complaint or grievance relating to persons currently or formerly
employed by the Company is pending before the U.S. Equal Employment Opportunity
Commission or any other foreign, Federal, state or local government entity or
threatened before any such entity; and (vi) no agreement would restrict Buyer
from relocating, closing or terminating any operations or facilities of the
Company, or terminating Employees or reducing the workforce of the Company.
2.18. Advertisers, Suppliers and Customers. Schedule 2.18 sets forth a
------------------------------------
list of all of the Company's advertisers, suppliers and customers during the
period from inception to the date of this Agreement. There has not been any
material adverse change in the relations of the Company, or any controversies,
with any such advertiser, supplier or customer, and the Shareholders and/or the
Company have not received notice, nor do the Shareholders and/or the Company
have reason to believe, that any such advertiser, supplier or customer is
contemplating terminating or materially reducing its relationship with the
Company, including as a result of the consummation of the transactions
contemplated hereby.
2.19. Litigation. Except as disclosed on Schedule 2.19, there is no
----------
legal, administrative or other action, claim, proceeding or governmental
investigation, domestic or foreign ("Litigation"), pending or threatened against
the Company and/or the Shareholders relating to the Company, its business or its
assets, or that challenges or reviews the execution, delivery or performance of
this Agreement by the Company and/or the Shareholders or of the consummation of
the transactions contemplated hereby, or that seeks to enjoin or obtain damages
in respect of the consummation of any of the transactions contemplated hereby.
The Company and/or the Shareholders are not parties to, and are not bound by,
any order or any ruling or award of any other person that has resulted in or
could reasonably be expected to result in, individually or in the aggregate, a
material adverse effect on the Company or which could reasonably be expected to
materially adversely affect the consummation of the transactions contemplated
hereby.
12
2.20. Conduct of Business.
---------------------
(a) Ordinary Course of Business: No Removal or Disposal of Assets.
-------------------------------------------------------------
Since its inception, the Company has operated its business in the ordinary
course, and has not removed or disposed of any assets except in the ordinary
course.
(b) No Material Adverse Change. Since the Company's inception,
-----------------------------
there has been no material adverse change in the Company's assets or in the
financial condition, operations, or prospects of its business.
(c) Absence of Particular Events. Since its inception, the Company
----------------------------
has not: (i) suffered any damage or destruction adversely affecting its business
or involving any of the assets used in its business; (ii) incurred any liability
or obligation other than in the ordinary course; (iii) made any change or
alteration in the manner of keeping the books, accounts or records of its
business or in the accounting practices therein reflected; (iv) paid, loaned, or
advanced any monetary amount or other asset to, or sold, transferred, or leased
any asset to, any employee except for normal compensation involving salary and
benefits; (v) received any notice of or become aware of any loss of any one or
more advertisers, customers, representing 3% or more of the annualized revenue
of its business for the period from inception to the date hereof; (vi) entered
into or engaged in any transaction in respect of its business other than on
commercially reasonable terms determined on the basis of the facts existing at
the time such transaction was entered into or engaged in; or (vii) agreed to
take or allow any of the foregoing actions described in this Section 2.20(c).
(d) Absence of Joint Ventures, etc. The Company is not, and has
------------------------------
never been, a party to any joint venture or other similar agreement or
arrangement.
2.21. Broker's or Finder's Fees. The Company and/or the Shareholders
---------------------------
have not authorized any person to act as broker or finder or in any other
similar capacity in connection with the transactions contemplated by this
Agreement.
2.22. No Undisclosed Liabilities. The Company and/or the Shareholders
---------------------------
have no liabilities, indebtedness or other obligations of any nature relating to
the Company (whether known or unknown and whether absolute, accrued, contingent,
or otherwise), including any obligations relating to unfulfilled contracts of
the Company.
2.23. Unregistered Stock. Each of the Shareholders understands and
-------------------
acknowledges that (i) the Buyer Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act") and are therefore
restricted securities; (ii) the Buyer Shares may not be sold or transferred
unless they are registered under the Securities Act or an exemption from such
registration is available; and (iii) a legend to that effect will be placed on
the certificates representing the Buyer Shares.
2.24. Investor Representations. Each of the Shareholders warrants and
-------------------------
represents that (i) he or she is an accredited investor as defined in Regulation
D under the Securities Act; (ii) he or she is acquiring the Buyer Shares for his
or her own account for investment and not with a view to the distribution
13
thereof except in compliance with the Securities Act or an exemption available
thereunder; and (iii) he or she has been granted the opportunity to investigate
the business and affairs of Buyer and to ask questions of its officers and
employees, and has availed himself or herself of such opportunity.
2.25. Disclosure. No representation, warranty, or statement made by
----------
the Company and/or the Shareholders in this Agreement or in any document or
certificate furnished or to be furnished to Buyer pursuant to this Agreement
contains or will contain any untrue statement or omits or will omit to state any
fact necessary to make the statements contained herein or therein not
misleading. The Company and the Shareholders have disclosed to Buyer all facts
known or reasonably available to the Company and/or the Shareholders that are
material to the financial condition, operation, or prospects of the Company, its
business and/or its assets.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF BUYER
To induce the Company and the Shareholders to execute, deliver and perform
this Agreement, and in acknowledgement of the Company's and the Shareholders'
reliance on the following representations and warranties, Buyer hereby
represents and warrants to the Company and the Shareholders as follows as of the
date hereof:
3.1. Organization. Buyer is a corporation duly incorporated, validly
------------
existing and in good standing under the laws of the State of Nevada with the
power and authority to conduct its business as it is now being conducted and to
own and lease its properties and assets.
3.2. Power and Authority. Buyer has the power and authority to
---------------------
execute, deliver, and perform this Agreement and the other agreements and
instruments to be executed and delivered by it in connection with the
transactions contemplated hereby, and Buyer has taken all necessary action to
authorize the execution and delivery of this Agreement and such other agreements
and instruments and the consummation of the transactions contemplated hereby.
This Agreement is, and, when such other agreements and instruments are executed
and delivered, the other agreements and instruments to be executed and delivered
by Buyer in connection with the transactions contemplated hereby shall be, the
valid and legally binding obligations of Buyer, enforceable in accordance with
their respective terms.
3.3. Broker's or Finder's Fees. Buyer has not authorized any person to
-------------------------
act as broker, finder, or in any other similar capacity in connection with the
transactions contemplated by this Agreement.
3.4. No Conflict. Neither the execution and delivery by Buyer of this
------------
Agreement and of the other agreements and instruments to be executed and
delivered by Buyer in connection with the transactions contemplated hereby, nor
the consummation by Buyer of the transactions contemplated hereby, will violate
or conflict with: (a) any foreign, Federal, state, or local law, regulation,
ordinance, governmental restriction, order, judgment or decree applicable to
Buyer; or (b) any provision of any charter, bylaw, or other governing or
organizational instrument of Buyer.
14
3.5. Validity of Issuance. The Buyer Shares, when issued in accordance
--------------------
with the terms hereof, will be duly and validly issued, fully paid and
nonassessable.
ARTICLE 4.
COVENANTS OF THE SHAREHOLDERS AND BUYER FOLLOWING CLOSING
4.1. Cooperation. The Shareholders and Buyer shall cooperate fully
-----------
with each other and their respective employees, legal counsel, accountants and
other representatives and advisers in connection with the steps required to be
taken as part of their respective obligations under this Agreement; and each of
them shall, at any time and from time to time after the Closing, upon the
request of the other, do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, receipts, acknowledgments, acceptances and assurances as
may be reasonably required (without incurring unreimbursed expense) to satisfy
and perform the obligations of such party hereunder, and to allow the Company to
operate its business after the Closing in the manner in which it was operated
before the Closing. In this regard, without limiting the generality of the
foregoing, the Shareholders shall make such introductions to advertisers,
licensors, suppliers and other persons with which the Company has relations as
are reasonably requested by Buyer, and shall otherwise cooperate with Buyer, in
order to preserve intact such relationships following the Closing.
4.2. No Public Announcements. Without the prior written consent of
-------------------------
Buyer, the Shareholders shall not make any press release or other public
disclosure, or make any statement to any other person with regard to the
transactions contemplated by this Agreement.
4.3. Non-Competition, Non-Solicitation Covenants, etc.
----------------------------------------------------
(a) Each Shareholder hereby agrees that for a period commencing on the
date hereof and ending on the three year anniversary of the date hereof (the
"Restricted Period"), except as required by such Shareholder's employment with
the Company or Buyer following the Closing (to the extent that such Shareholder
is employed by the Company or Buyer following the Closing), he or she shall not,
directly or indirectly, as agent, consultant, stockholder, partner or in any
other capacity, own, operate, manage, control, engage in, invest in or
participate in any manner in, act as a consultant or advisor to, render services
for (alone or in association with any person, firm, corporation or entity), or
otherwise assist any person or entity that engages in or owns, invests in,
operates, manages or controls, any venture or enterprise that directly or
indirectly competes with or engages in the Company's business in any county or
counties, city or cities, or part thereof, provided, however , that nothing
-------- -------
contained herein shall be construed to prevent such Shareholder from investing
in the stock of any competing corporation listed on a national securities
exchange or traded in the over-the-counter market, but only if he or she is not
involved in the business of said corporation and if he or she and his or her
affiliates collectively do not own more than an aggregate of 5% of the stock of
such corporation.
15
(b) Without limiting the generality of the provisions of Section
4.4(a) above, each Shareholder hereby agrees that during the Restricted Period,
he or she will not interfere with or disrupt or attempt to disrupt the business
relationship with advertisers, suppliers or customers or hire or solicit to hire
any of the employees of the Company or any of its affiliates to leave the
employment of the Company or any of its affiliates.
(c) Each Shareholder agrees that the covenants set forth in this
Section 4.4 are reasonable and necessary for the protection of Buyer.
Furthermore, each Shareholder specifically agrees that the worldwide restriction
on engaging in the Company's business, which is set, forth in this Section 4.4
is reasonable and necessary for the protection of Buyer.
4.4. Further Assurances. Subject to the terms and conditions of this
-------------------
Agreement, each party agrees to use all of its reasonable efforts to take, or
cause to be taken, all actions and to do or cause to be done, all things
necessary and proper or advisable to consummate and make effective the
transactions contemplated by this Agreement (including the execution and
delivery of such further instruments and documents as the other party may
reasonably request).
4.5. Nondisclosure of Proprietary Data. The Shareholders shall hold in
---------------------------------
a fiduciary capacity for the benefit of Buyer all secret or confidential
information, knowledge or data relating to the Company and/or Buyer or any of
their affiliated companies, and their respective businesses, which shall not be
or become public knowledge. The Shareholders shall not, without the prior
written consent of Buyer, or as may otherwise be required by law or legal
process, communicate or divulge any such information, knowledge or data to
anyone other than the Company and/or Buyer and those designated by Buyer in
writing. Furthermore, upon demand by Buyer, the Shareholders will promptly
deliver to Buyer all books, memoranda, records and written data of every kind
relating to the business and affairs of the Company and/or Buyer that may then
be in the Shareholders' personal possession.
4.6. Funds Received After Closing. Any and all funds received by the
------------------------------
Shareholders after the Closing in respect of the Company shall be promptly
remitted to Buyer upon receipt.
ARTICLE 5.
SURVIVAL; INDEMNITY; ESCROW
5.1. Survival of Representations, Warranties, etc. The
------------------------------------------------
representations, warranties and covenants given by the Shareholders to Buyer or
by Buyer to the Shareholders in this Agreement shall survive for a period of 36
months following the Closing.
5.2. Indemnification by the Shareholders. The Shareholders shall
--------------------------------------
jointly and severally indemnify, defend, and hold harmless Buyer, and Buyer's
representatives, stockholders, controlling persons and affiliates, at, and at
any time after, the Closing, from and against any and all demands, claims,
actions, or causes of action, assessments, losses, damages (including incidental
and consequential damages), liabilities, costs, and expenses, including
reasonable fees and expenses of counsel, other expenses of investigation,
handling, and Litigation (as defined in Section 2.19), and settlement amounts,
together with interest and penalties (collectively, a "Loss" or "Losses"),
asserted against, resulting to, imposed upon, or incurred by Buyer, directly or
indirectly, by reason of, resulting from, or arising in connection with, any of
the following:
16
(a) Breach. Any breach of any representation, warranty, or
------
agreement of the Shareholders and/or the Company contained in or made pursuant
to this Agreement, including the agreements and other instruments contemplated
hereby;
(b) Brokerage or Finder's Fees. Any claim by any person for
-----------------------------
brokerage or finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by any such person with the
Company and/or the Shareholders in connection with this Agreement or any of the
transactions contemplated hereby; and
(c) Incidental Matters. To the extent not covered by the
-------------------
foregoing, any and all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs, and expenses, including
reasonable fees and expenses of counsel, other expenses of investigation,
handling, and Litigation and settlement amounts, together with interest and
penalties, incident to the foregoing.
The remedies provided in this Section 5.2 will not be exclusive of or limit any
other remedies that may be available to Buyer.
5.3. Indemnification by Buyer. Buyer shall indemnify, defend, and hold
------------------------
harmless the Shareholders at, and at any time after, the Closing, from and
against any and all Losses asserted against, resulting to, imposed upon, or
incurred by the Shareholders, to the extent arising from any of the following:
(a) Breach. Any breach of any representation, warranty, or
------
agreement of Buyer contained in or made pursuant to this Agreement, including
the agreements and other instruments contemplated hereby; and
(b) Incidental Matters. To the extent not covered by the
-------------------
foregoing, any and all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs, and expenses, including
reasonable fees and expenses of counsel, other expenses of investigation,
handling, and Litigation, and settlement amounts, together with interest and
penalties, incident to the foregoing.
The remedies provided in this Section 5.3 will not be exclusive of or limit any
other remedies that may be available to the Shareholders.
5.4. Procedures; Third Party Claims, etc.
----------------------------------------
(a) A person entitled to make a claim of indemnification hereunder
shall be referred to as an "Indemnified Party." A person obligated for
indemnification hereunder shall be referred to as an "Indemnifying Party." The
Indemnifying Party shall be entitled to defend any claim, action, suit or
proceeding made by any third party against an Indemnified Party; provided,
--------
however, that the Indemnified Party shall be entitled to participate in such
- -------
defense with counsel of its choice and at its own expense and, if (i) the
Indemnifying Party is also a party to such claim, action, suit or proceeding and
17
the Indemnified Party determines in good faith that joint representation would
be inappropriate, (ii) the Indemnifying Party does not provide a competent and
vigorous defense, or (iii) the Indemnifying Party agrees, then the Indemnified
Party's participation shall be at the expense of the Indemnifying Party. The
Indemnified Party shall provide such cooperation and access to its books,
records and properties as the Indemnifying Party shall reasonably request with
respect to such matter; and the parties shall cooperate with each other in order
to ensure the proper and adequate defense thereof. An Indemnified Party shall
not settle any claim subject to indemnification hereunder without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.
(b) With regard to claims of third parties for which indemnification
is payable hereunder, such indemnification shall be paid by the Indemnifying
Party upon the earliest to occur of: (i) the entry of a judgment against the
Indemnified Party; (ii) the settlement of the claim; (iii) with respect to
indemnities for tax liabilities, upon the issuance of any final resolution by a
taxation authority; or (iv) with respect to claims before any administrative or
regulatory authority, when the Loss is finally determined and not subject to
further review or appeal; provided, however, that the Indemnifying Party shall
-------- -------
pay on the Indemnified Party's demand any cost or expense reasonably incurred by
the Indemnified Party in defending or otherwise dealing with such claim, and
provided, further, that nothing in this paragraph shall limit Buyer's rights
- -------- -------
with respect to the Escrow Shares, as provided in Section 5.5 below and/or the
Escrow Agreement.
(c) To seek indemnification hereunder, an Indemnified Party shall
notify the other party hereto of any claim for indemnification, specifying in
reasonable detail the nature of the Loss and the amount or an estimate of the
amount thereof. Neither the giving of such notice nor the failure to give such
notice shall constitute an election of remedies or limit an Indemnified Party in
any manner in the enforcement of any other remedies that may be available to it,
including the right to proceed against an Indemnifying Party or give notice of a
claim under the Escrow Agreement.
5.5. Notice of Claim Under Escrow Agreement. Upon notice to the
-------------------------------------------
Shareholders specifying the basis for such action, Buyer may give notice of a
claim under the Escrow Agreement. Neither the giving of such notice nor the
failure to give such notice shall constitute an election of remedies or limit
Buyer in any manner in the enforcement of any other remedies that may be
available to it, including Buyer's right to otherwise seek indemnification from
the Shareholders or proceed against the Shareholders.
ARTICLE 6.
MISCELLANEOUS
6.1. Entire Agreement. This Agreement, and the other certificates,
-----------------
agreements, and other instruments to be executed and delivered by the parties in
connection with the transactions contemplated hereby, constitute the sole
understanding of the parties with respect to the subject matter hereof.
18
6.2. Parties Bound by Agreement; Successors and Assigns. The terms,
-----------------------------------------------------
conditions, and obligations of this Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and assigns.
6.3. Amendments and Waivers. No modification, termination, extension,
-----------------------
renewal or waiver of any provision of this Agreement shall be binding upon a
party unless made in writing and signed by such party. A waiver on one occasion
shall not be construed as a waiver of any right on any future occasion. No
delay or omission by a party in exercising any of its rights hereunder shall
operate as a waiver of such rights.
6.4. Severability. If for any reason any term or provision of this
------------
Agreement is held to be invalid or unenforceable, all other valid terms and
provisions hereof shall remain in full force and effect, and all of the terms
and provisions of this Agreement shall be deemed to be severable in nature. If
for any reason any term or provision containing a restriction set forth herein
is held to cover an area or to be for a length of time which is unreasonable, or
in any other way is construed to be too broad or to any extent invalid, such
term or provision shall not be determined to be null, void and of no effect, but
to the extent the same is or would be valid or enforceable under applicable law,
any court of competent jurisdiction shall construe and interpret or reform this
Agreement to provide for a restriction having the maximum enforceable area, time
period and other provisions (not greater than those contained herein) as shall
be valid and enforceable under applicable law.
6.5. Attorney's Fees. Should any party hereto retain counsel for the
----------------
purpose of enforcing, or preventing the breach of, any provision hereof
including the institution of any action or proceeding, whether by arbitration,
judicial or quasi-judicial action or otherwise, to enforce any provision hereof
or for damages for any alleged breach of any provision hereof, or for a
declaration of such party's rights or obligations hereunder, then, whether such
matter is settled by negotiation, or by arbitration or judicial determination,
the prevailing party shall be entitled to be reimbursed by the losing party for
all costs and expenses incurred thereby, including reasonable attorneys' fees
for the services rendered to such prevailing party.
6.6. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
6.7. Headings. The headings of the Sections and paragraphs of this
--------
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
6.8. Expenses. Except as specifically provided herein, each of the
--------
Shareholders and Buyer shall pay all of his/her/its own costs and expenses
incurred by him/her/it or on his/her/its behalf in connection with this
Agreement and the transactions contemplated hereby, including fees and expenses
of its own financial consultants, accountants, and counsel.
6.9. Notices. All notices, requests, demands, claims, and other
-------
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given: when received, if
19
personally delivered; when transmitted, if transmitted by telecopy, electronic
or digital transmission method; five business days after such notice, request,
demand claim or other communication is sent, if sent by registered or certified
mail, return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
if to the Shareholders to:
21900 Barton Road #110
Grand Terrace, CA 92313
Fax: (909) 422-1998
if to the Company to:
21900 Barton Road #110
Grand Terrace, CA 92313
Fax: (909) 422-1998
if to the Buyer to:
The Cyber Group Network
720 E. Carnegie Dr Suite 200
San Bernardino, CA 92408
Fax: (909) 890-5849
with a copy to:
Thomas C. Cook and Associates
4955 S. Durango Suite 214
Las Vegas NV, 89113
Fax: (702) 952-8521
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means, but no such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it actually is received
by the intended recipient. Any party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other parties notice in the manner herein set forth.
6.10. Governing Law. This Agreement shall be construed in accordance
--------------
with and governed by the laws of the State of California without giving effect
to the principles of choice of law thereof.
20
6.11. Arbitration. Any dispute arising under or in connection with any
-----------
matter related to this Agreement or any related agreement shall be resolved
exclusively by arbitration. The arbitration shall be in conformity with and
subject to the applicable rules and procedures of the American Arbitration
Association or, at the election of the demanding party, any other form of
"alternative dispute resolution" procedure generally recognized in the State of
California; e.g., a reference pursuant to California Code of Civil Procedure
("Code") Section 638 and/or reliance upon Section 1280 et. seq. of the Code.
--------
Any arbitration shall incorporate Section 1283.05 of the Code with respect to
discovery matters. All parties agree to be (1) subject to the jurisdiction and
venue of the arbitration in the County of Los Angeles, State of California, (2)
bound by the decision of the arbitrator as the final decision with respect to
the dispute and (3) subject to the jurisdiction of the Superior Court of the
State of California for the purpose of confirmation and enforcement of any
award.
6.12. Waiver of Certain Damages. Except as prohibited by law, each
----------------------------
party hereby waives any right it may have to claim or recover any special,
exemplary, punitive or consequential damages other than, or in addition to,
actual damages in connection with any dispute arising under or in connection
with any matter related to this Agreement or any related agreement.
6.13. References, etc.
-----------------
(a) Whenever reference is made in this Agreement to any Article,
Section, paragraph, Schedule or Exhibit, such reference shall be deemed to apply
to the specified Article, Section or paragraph of this Agreement or the
specified Schedule or Exhibit attached to this Agreement.
(b) The word "including" when used herein is not intended to be
exclusive and means "including, without limitation."
6.14. No Strict Construction. The language used in this Agreement will
-----------------------
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
person.
[Signature page follows.]
21
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first indicated above.
THE CYBER GROUP NETWORK CORPORATION
By:
----------------------------------
Name: Gregory D. Evans
Title: CEO
WMD HOLDING GROUP, INC.
By:
----------------------------------
Name: Michael Donlon
Title: President/Owner
SHAREHOLDERS:
-------------------------------------
Warren E. Scheibe
-------------------------------------
Michael J. Donlon
-------------------------------------
Francis A. Donlon
-------------------------------------
Jeffery W. Scheibe
22
SCHEDULE 1.2
SCHEDULE 1.2A
Regarding the fist half of the purchase price, the total dollar amount price
guaranteed at one million two hundred and fifty thousand. The stock for this
portion of the total purchase price is to be issued at a 30-day average trading
price of .015. The issuance price may fluctuate due to the price guarantee. A
registration statement must be filed within 15 day after the close of the
acquisition. Thomas Cook and Associates will file the registration statement for
a cost of $10,000.00. The cost of the filing will be split in half between both
parties. The total amount of share to be registered will be 100,000,000 this
leaving 20 million share to adjust for the price guarantee. This stock will be
issued on monthly bases over a 12-month period. The These shares will be issued
to the following shareholders of WMD Holdings Group;
Warren E. Scheibe; 21900 Barton Road #110 Grand Terrace CA 92324
Michael J. Donlon; 21900 Barton Road #110 Grand Terrace CA 92324
Francis A. Donlon; 21900 Barton Road #110 Grand Terrace CA 92324
Jeffery W. Scheibe; 21900 Barton Road #110 Grand Terrace CA 92324
SCHEDULE 1.2B
The balance of the purchase price represented by 62,500,000 shares of common
stock to be held in the Client Trust account of Thomas C. Cook and Associates in
accordance with the Escrow Agreement. The stock will be issued to Thomas C. Cook
Client Trust Account and will be held for a period of one year. During this
period the Sellers will hold the proxy to vote the shares. If any litigation or
wrongful acts not disclosed prior to the close of escrow arise, the cost of
damages accrued will be deducted from the common stock held in escrow. After
this one-year period the common stock will be divided among the shareholders of
WMD Holdings Group. The shares will be divided among the following shareholders;
Warren E. Scheibe; 21900 Barton Road #110 Grand Terrace CA 92324
Michael J. Donlon; 21900 Barton Road #110 Grand Terrace CA 92324
Francis A. Donlon; 21900 Barton Road #110 Grand Terrace CA 92324
Jeffery W. Scheibe; 21900 Barton Road #110 Grand Terrace CA 92324
SCHEDULE 2.1
Organization: Capitalization
Shareholders and Officers List of WMD Holdings Group
Name Position Shares Held Address
1 Michael Donlon President & Director 600 21900 Barton Road #110 Grand Terrace CA 92324
2 Warren Scheibe Director & Investor 200 21900 Barton Road #110 Grand Terrace CA 92324
3 Francis Donlon Investor 200 2l900 Barton Road #110 Grand Terrace CA 92324
4 Jeffery Scheibe Investor 200 2l900 Barton Road #110 Grand Terrace CA 92324
-------
1000
Schedule 2.9
Real Property
TERRACE VILLAGE PLAZA
OFFICE LEASE AGREEMENT
This Office Lease Agreement dated this 26th day of December 2000, is made
by and between Robert Keeney and Renald Anelle (collectively "Lessor") and
CREATIVE ADVERTISING & MARKETING, LLC (collectively "Lessee") with reference to
the following:
ARTICLE I - BASIC LEASE PROVISIONS
1.1 Premises. 21900 Barton Rd. Grand Terrace, CA 92313
L2 Building. Suite 110, Building A
1.3 Term. TWO YEARS commencing February 1, 2001, to January 31, 2003
(ending date) with Two - One Year options.
1.4 Base Rent $2,100.00 per month, in advance, and may be subject to yearly
increases based on the CPI.
1.5 Security deposit of $600.00 received on 2/11/99. Balance of $1,500.00
shall be due on execution of this lessee. Rec'd 12/27/00
References in Article 1, herein, are for convenience. Each Basic Lease
Provision shall be construed to incorporate all of the terms and conditions
provided hereinafter relating thereto. In the event of any conflict between any
Basic lease Provision end the balance of this Agreement, the latter shall
control.
ARTICLE 2 - PREMISES, PARKING AND COMMON AREA
2.1. Premises. The Premises, consisting of approximately 2500 square
feet are a portion of the Building identified in Section 1.2, herein. The
Premises, the Building, the Common Areas, as hereinafter defined, and the real
property upon which the same are located, along with all other buildings and
improvements thereon, are sometimes hereinafter collectively referred to as the
'Building Complex'. Subject to the terms and conditions hereinafter set forth,
Lessor hereby leases to Lessee and Lessee hereby leases from Lessor, the
Premises, including rights to Common Areas as hereinafter specified.
2.2 Common Areas. The term 'Common Areas' is defined as all areas and
facilities outside the Premises and within the exterior boundary line of the
Building Complex that are provided by Lessor for the general non-exclusive use
of Lessor, Lessee, and of the other lessee of the Building
Complex and their respective employees, Suppliers, shippers, customers and
invitees, Including without limitation, corridors, public restrooms, parking
areas, loading and unloading areas, trash areas, roadways, sidewalks, driveways,
landscaped areas and decorative walls.
ARTICLE 3- TERM
3,1 Term. The Initial Term and Commencement Date of this Agreement
shall be specified In Section 1.3, herein.
3.2 Notification of Termination of Occupancy shall be given In writing
by Lessee to Lessor Sixty (60) days in advance of said date.
Ariticle 4 - RENT
4.1 Base Rent Subject to adjustment as provided in Section 4.2 herein, and
except as may be otherwise expressly provided In this Agreement, Lessee shall
pay to Lessor the Base Rent for the Premises as set forth in Section 1.4 herein.
Base Rent shall be payable In lawful money of the United States to Lessor at the
address stated herein or to Such other persons or at such other places as Lessor
may designate upon Notice to Lessee. Checks shall be made out to KEENEY, KEENEY,
& ANELLE or KK & A.
4.2 Rent increase. The monthly Base Rent shall be adjusted by the Increase,
if any, In the Consumer Price index of the Bureau of Labor and Statistics of the
Department of Labor for- all Urban Consumers, (1982=100), All. Items, For the
city nearest the location of the Building, herein referred to as CPI."
Adjustments to the monthly adjustment shall be multiplied by a fraction the
numerator of which shall be the CPI for the calendar month during which the
Initial Term commences The sum so calculated shall constitute the new monthly
Base Rent hereunder until the next successive annual period subject to
adjustment, but, in no event, shall any adjustment exceed five percent (5%) of
the base rent for the month Immediately preceding the date of each Base Rent
adjustment nor shall the Base Rent be decreased below $2100.00 per month In the
event the compilation and/or publication of the CPI shall be transferred to any
Other governmental department or shall be discontinued then the index most
neatly the same as the CFI shall be used to make such calculations. In the event
that Lessor and Lessee cannot agree on such alternative Index, then the matter
shall be submitted fur decision to the American Arbitration Association in the
County In which the Premises are located in accordance with the then rules of
said association and the decision of the arbitrators Shall be binding upon the
parties, notwithstanding one party falling to appear after Notice of the
proceeding. The Lessor and Lessee shell pay the cost of said Arbitration
equally.
ARTICLE 5 - USE
5.1 Lessor warrants to Lessee that the Premises, In the state existing on
the Commencement Date, does not violate any covenant or restriction of record,
or any applicable building code, regulation or ordinance then In effect. In the
event It is determined that this war-runty has bean violated, then it shall be
the obligation of Lessor. after receipt of Notice from Lessee setting forth with
specificity the nature of the violation, to promptly, at Lessor sole cost,
rectify such violation.
5.2 Lessee shall comply with all applicable statutes and ordinances
relating to the Premises and the occupation and use by Lessee of the Premises.
Lessee shall conduct Its business in a lawful manner end shall net use or permit
the use of the Premises or the Common Areas In any manner that will tend to
create waste or a nuisance or shall tend to disturb other occupants of the
Building Complex.
5.3 Condition of Premises. Lessor shall deliver the Premises to Lessee In a
clean condition on the Commencement Date and Lessor warrants to Lessee that the
plumbing, electrical, lighting, air conditioning, and heating systems serving
the Premises shall be In good operating condition, in the event it is determined
that this warranty has been violated, It shall be the obligation of Lessor after
receipt of Notice from Lessee setting forth with specificity the nature of the
violation, to promptly, at Lessor sole cost, rectify such violation.
ARTICLE 6 - MAINTENANCE, REPAIRS, ALTERATIONS, AND COMMON AREA SERVICES
6.1 Lessor Obligations. Lessor shall keep the Building Complex,
including without limitation, exterior walls, foundation, roof, and Common
Areas, in good condition and repair. Lessor shall not be obligated to paint,
repair or replace wall coverings, or to repair or replace any Improvements of
Lessee which are a pert of the Premises, Lessor Shall pay for maintenance of air
conditioning and heating equipment. Lessor agrees to the construction of the
following Improvements:
Removal and replacement of wails for the Equipment room and
reception; New paint and carper throughout; install window
coverings in kitchen and, Replace or paint all stained or broken
ceiling tiles.
6.2 Lessee Obligations.
(A) Notwithstanding Lessor obligation to keep the Premises in good
condition and repair, Lessee shall be responsible for payment of the cost
thereof to Lessor as additional rent fur that portion of the cost of any
maintenance and repair of the Premises, or any equipment that serves only Lessee
or the Premises, to the extent such cost 15 attributable to Lessee use and to
causes beyond normal wear and tear.
(B) On the last day of the Term hereof, or any Renewal Term, as hereinafter
defined, Lessee Shall surrender the Premises to Lessor in the same condition as
received, ordinary wear and tear excepted, clean and free of debris.
6.3 Alterations and Additions.
(A) Lessee shall not. without Lessor prior written consent make any
permanent alteration or improvement the expiration of the Term or any Renewal
Term, Lessor may require the removal of any or au of said alterations,
improvements or additions, and the restoration of the Premises to Its prior
condition, at Lessee expense.
ARTICLE 7- INSURANCE
7.1 Liability Insurance- Lessee. Lessee shall, at Lessee expense, obtain
and keep in farce during the term of this Agreement, a policy of Comprehensive
General Liability Insurance; which policy shall provide coverage in an amount of
no less than $500,000 per occurrence and shall name Lessor as an additional
Insured.
7.2 Liability Insurance- Lessor, Lessor shall, at Lessor expense obtain
and keep in force during the Term of this Agreement a policy of Combined Single
Limit Bodily Injury and Broad Form Property Damage Insurance, insuring Lessor
against liability arising out of the ownership, use occupancy or maintenance of
the Building Complex in an amount not less than $500,000 00 per-occurrence.
7.3 Property Insurance- Lessor. Lessor shall obtain and keep in force
during the term of this Agreement a policy or policies of insurance covering
loss or damage to the Building Complex improvements, but not Lessee personal
property, fixtures, equipment or tenant Improvement,, In the amount of the full
replacement cost thereof, as the same may exist from time to time, providing
protection against all perils Included within the classification of fire,
extended coverage, vandalism, malicious mischief, and such other perils as
Lessor deems advisable or as may be required by a lender having a lien an the
building Complex.
7.4 waiver of Subrogation. Lessee and Lessor each hereby release and
relieve the other, and waive their entire right of recovery against the other
for direct or consequential loss or damage arising out of or incident to the
perils Covered by property Insurance carried by such party, whether due to the
negligence of Lessor or Lessee or their agents, employees, contractors, and/or
invitees. If necessary, all property Insurance policies required under this
Agreement shall be endorsed to so provide.
ARTICLE 8 - TAXES
8.1 Real Property Taxes. Lessor shall pay the real property tax, as
defined herein, applicable to the Building Complex. The term Real
Property Tax" shall Include any form of real estate, tax Or
assessment, general, special, ordinary or extraordinary, and any
license fee, commercial rental tax, improvement bond or bonds, levy or
tax (or other than Inheritance, personal income or estate taxes)
Imposed on the Building Complex or any portion thereof by any
authority having the direct or Indirect power to tax.
8.2 Personal Property Taxes. Lessee shell pay prior to delinquency all
taxes assessed against any levied upon trade fixtures, furnishings,
equipment and all ether personal property of Lessee contained on the
Premises, If any or Lessee personal property shall be assessed with
Lessor real property, Lessee shall pay to Lessor the taxes
attributable to Lessee within ten (10) business days after receipt of
a written statement setting forth the taxes applicable to Lessee
personal property.
ARTICLE 9- UTILITIES
Utilities Provided by Lessor. Lessor shall provide and pay for the following
utilities and services at the Premises: gas, electrical, trash disposal, sewer
water, janitorial and maintenance of common areas. Lessee shall limit
Consumption whenever possible.
ARTICLE 10 - ASSIGNMENT AND SUBLETTING
10.1 Lessor Consent Required. Lessee shall not voluntarily or by operation
of law assign, transfer, mortgage, sublet or otherwise transfer or encumber all
or any part of Lessee interest in the Premises, without Lessor prior written
Consent which Consent Lessor shall not unreasonably withhold.
10.2 Lessee Affiliate. Notwithstanding the provisions of Section 11.1
herein, Lessee may assign controls, is controlled by, or is under Common control
with Lessee, or to any corporation resulting from the merger or consolidation
with Lessee, or to ally person or entity which acquired all the assets of Lessee
as a going concern of the business that is being conducted on the Premises, all
of which are referred to as "Lessee Affiliate" provided that before such
assignment shall be effective, (A) Said assignee shall assume, in full, the
obligation of Lessee under this Agreement and (8) Lessor shall be given Notice
of such assignment and assumption.
ARTICLE ii 'DEFAULT; LATE CHARGE
(A) Default. If any installment of the total amount of ease Rent
covenanted and agreed to be Paid shall be due and unpaid for a period of eight
(8) days after Notice from Lessor to Lessee of default in payment of such
installment, or If default should be made in any of the other Covenants or
agreements on the part of Lessee to be kept or performed hereunder, and such
default continues for a period of' (30) days after Notice from Lessor to Lessor
of the same, Lessor at any time after the expiration of three (3) business days
after such Notice of Default in any rental installment or the expiration of
thirty (30) days after such Notice In the case of any other default and without
further demand or notice to Lessee, may declare this Agreement terminated and
may reenter and take possession of tile Premises and remove all persons there
from. If Lessee should abandon tip' Premises or any part thereof during the
continuance of the Term or any Renewal Term, Lessor without notice and In their
own names may relet the Premises or any portion thereof on such terms and for
such rent as Lessor may deem reasonably expedient. and proper and such letting
shall not operate as a waiver of any right against Lessee, which Lessor would
otherwise have to hold Lessee responsible for rental and other provisions and
agreements reserved herein, and ri case the Premises Or any part thereof shall
be aforesaid, Lessor snail receive the rent therefore from the person or
persons to whom the same shall be so relet and, after paying expenses ' such
relleting and Collection, apply what remains of the amount received by Lessor on
the account of the Base Rent due from the Lessee hereunder.
(B) Late Charges. If any installment of Base Rent shall not be received by
Lessor within eight (8) days after such amount shall be due, then
without any requirement for Notice to Lessee, Lessee shall pay to
Lessor a late charge equal to five percent (5%) of such overdue
amount.
ARTICLE 12- MISCELLANEOUS
12.1 Incorporation of prior Agreements; Amendments. This Agreement
contains cii agreements of the parties with respect to any matter mentioned
herein. No prior or contemporaneous agreement or understanding pertaining to any
such matter shall be effective. This Agreement may be modified in writing only,
signed by the Interested parties at the time of the modification.
12.2 Notices. Any notice required or permitted to be given under this
Agreement Shall be in writing and delivered personally or by certified or by
registered mall, postage prepaid. return receipt requested and addressed as
follows, and shall be deemed to have been given upon the date or personal
delivery or the date indicated upon the return receipt:
If to Lessor: 12139 Mt. Vernon Avenue Suite 200
Grand Terrace, CA 9231i
If to Lessee; To the Premises
12.3 Binding Effect. This Agreement shall be binding and Inure to the
benefit of the parties, their respective Successor-S1 heirs, administrators and
assigns.
12.4 Attorney Fees. If either party brings an action to enforce the
terms hereof or declare rights hereunder, the prevailing party in any such
action, trial or appeal thereon, shall be entitled to reasonable attorney fees
to be paid by the losing party as fixed by the Court in the same or a separate
suit, and whether Or not Such action is pursued to decision or judgment.
12.5 Signs. Lessee shall not place any sign upon the premises or the
Building Complex without Lessor prior written consent and city planning
approval.
12.6 Quiet Possession. Upon Lessee paying the rent For the Premises and
observing and performing all of have quiet possession of the Premises for the
entire Term hereof and any renewal thereto. The Individuals executing this
Agreement on behalf of Lessor represent and warrant to Lessee that they are
Rally authorized and legally capable of executing this Agreement on behalf of
LessOr end that such execution Is binding upon all parties holding an ownership
Interest In the Building Complex.
12.7 Multiple Parties. If more that on e person or entity is named as
either Lessor or Lessee herein, the obligations of the Lessor or Lessee herein
shall be the Joint and several responsibility of all persons or entities named
herein as such Lessor or Lessee, respectively.
IN WITNESS WHEREOF, the parties execute this Agreement as of the date
indicated next to their respective signatures.
LESSOR
Dated: December 27, 2000
--
/S/ Candee Keeney
-------------------
Candee Keeney
LESSEE: Creative Advertising Marketing, LLC
/S/ Michael Donion
--------------------
Michael Donion
/S/ Warren Scheibe
--------------------
Warren Scheibe
Dated: December 27, 2000
--
SCHEDULE 2.10
TANGIBLE PROPERTY
CAM INVENTORY
WORK
STATIONS
QTY ITEM DESCRIPTION SERIAL NUMBER
1 MONITOR MAO XJ700e MH6619001493 $ 380.00
1 MONITOR KDS RADIUS FLAT SCREEN $ 650.00
1 MONITOR VI WSONIC E790B 308002800740 $ 46250,
1 MONITOR VIEWSONIC E7908 308002800426 $ 482.50
1 MONITOR SONY TRINITRON 2103837 $ 1132.00
1 MONITOR KDS VISUAL SENSATION 1292086126 $ 360.00
1 MONITOR VISTA POINT 8GMLCOOI 3204 $ 360.00
1 MONITOR DAEWOO 0013400510 $ 360.00
1 MONITOR DAEWOO 0013400237 $ 360.00
1 MONITOR 302025200 $ 360.00
1 MONITOR 22" VIEW SONIC OV00940461 $ 450.00
1 MONITOR 1182081831 $ 36000
1 MONITOR KDS I 9838AA1 6004738 $ 360.00
1 MONITOR KDS I 9A08AA37040095 $ 36000
1 MONITOR 446TA0325220 $ 360.00
$ 6,757.00
11 TOWERS CPU PENTIUM III 800 N/A $12 500.00
1 MOUSE LOGITECH L2A91307634 $ 2000
1 MOUSE A4 TECH N/A $ 20.00
1 MOUSE CORDLESS LOGITECH LBZ03758657 $ 43.00
1 MOUSE MS TRACKBALL 0648692-00000 $ 60.09
1 MOUSE TWIN DOLPHIN 368 $ 20.00
1 MOUSE LOGITECH N/A $ 20.00
1 MOUSE LOGITECH N/A $ 2000
1 MOUSE MICROSOFT 6345756 $ 20.00
1 MOUSE TWIN DOLPHIN 220 $ 20.00
1 MOUSE ARTIS NA $ 20.00
1 MOUSE TWIN DOLPHIN 227 $ 2000
1 MOUSE LOGITECH L8Z8466631 6 $ 2000
1 MOUSE MICROSOFT 52195-576-8745533 $ 20.00
1 MOUSE 83618 OEM $ 20.00
$ 343.00
1 KEYBOARD 9907049151 $ 15.00
1 KEYBOARD 11572831 $ 15.00
1 KEYBOARD KEYTRONIC J004300879 $ 26.00
1 KEYBOARD 99245877 $ 15.00
1 KEYBOARD 0906009690 $ 15.00
1 KEYBOARD 991930335 $ 15.00
1 KEY8OARD 99187348 $ 15.00
1 KEYBOARD 29971 $ 15.00
1 KEYBOARD 9007068335 $ 15.00
1 KEYBOARD 816862 $ 15.00
1 KEYBOARD MICROLAB MODEL K806 $ 16.00
1 KEYBOARD HEWLETT PACKARD US40207040 $ 15.00
1 KEYBOARD 9905047933 $ 15.00
$ 205.00
3 SPEAKERS POLAR BEAR MULTI MEDIA 3 SPKR SET $ 135.00
1 SPEAKERS ROLAND MICROMONITOR2SPKRSET 8017717 $ 180.00
1 SPEAKERS ADVENT/SUBWOOFER/ AMP 2 SPKR SET 2299910559 $ 90.00
3 SPEAKERS STANDARD COMFWTER SPEAKERS 2 N/A $ 90.00
1 SPEAKERS MICROLAB SUBWOOFER 3 SPKR SET C3195295 $ 45.00
1 SPEAKERS MICROLABSUBWOOFERSSPKRSET 3195745 $ 45.00
1 SPEAKERS PRO 288 3 SPKR SET N/A $ 30.00
$ 615.00
1 PHONE PANASONIC KX-T7020 0JC1E393911 $ 140.00
1 PHONE PANASONIC KX-T7020 4H1D029174 $ 140.00
1 PHONE PANASONIC KX-T7020 0JC1E393832 $ 140.00
1 PHONE PANASONIC KX-T7020 01AIE389933 $ 140.00
1 PHONE PANASONIC KX-T7020 OEAIE38I 076 $ 140.00
1 PHONE PANASONIC KX-T7020 0HAIE388520 $ 140.00
1 PHONE PANASONIC KX-T7020 OJC1E393831 $ 140.00
1 PHONE PANASONIC KX-T7020 O1AIE389935 $ 140.00
1 PHONE PANASONIC KX-T7020 OEA1E381066 $ 140.00
1 PHONE PANASONIC KX-T7020 O1A1E389934 $ 140.00
1 PHONE PANASONIC KX-T7020 OJCIE393834 $ 140.00
1 PHONE PANASONIC KX-T7020 OJC1E393910 $ 140.00
1 PHONE PANASONIC KX-T7020 OE0IF147536 $ 140.00
1 PANASONIC SWITCHBOARD 9KB1B005355 $ 186.00
$ 2,005.00
1 PRINTER OKIDATA MICROLINE 320 TURBO 002B2645708 $ 300.00
1 PRINTER EPSON STYLUS COLOR 777 IN BOX C383001 $ 100.00
1 PRINTER EPSON FX 880 ALLYI 27586 $ 250.00
1 PRINTER HP LAZER JET 5000 USBI 010009 $ 800.00
1 PRINTER EPSON STYLUS PHOTO 1270 B8UK033846 $ 400.00
1 PRINTER EPSON STYLUS PHOTO EX ASD0058637 $ 400.00
1 PRINTER SONY DIGITAL PHOTO PRINTER 103638 $ 300.00
1 $ 2,350.00
1 FACSIMILE BROTHER MFC 4350 FAX MACHINE U56360E89892484 $ 200.00
1 SCANNER EPSON PERFECTION 636 U SCANNER BDGX043696 $ 200.00
1 COPIER CANON PC 785 COPIER ZT 01978 $ 700.00
$ 1,100,00
1 PRINTER VERIFONE 250 RECEIPT PRINTER $ 135.00
1 CC MACH. VERIFONE TRANZ 330 CREDIT CARD $ 135.00
1 BATTERY NP-lB 12V BATTERY PACK 2298483 $ 59.99
2 RECEIVER WIRELESS VIDEO RECEIVERS $ 265.00
1 SERVER ETHER FAST 3-PORT PRINT SERVER 891164004279 $ 150.00
1 CHARGER JL-2 PLUS QUICK CHARGER SNT-20877 $ 68.97
1 SWITCH KMS PORT SWITCH $ 59.99
1 ZIP ZIP DRIVE $ 75.00
1 LABEL . BROTHER LABEL MAKER MOJ577206 $ 40.00
15 STRIPS SURGE PROTECTOR POWER STRIPS $ l49.2
1 POWER POWER CENTER $ 74.00
1 CALCULATOR SHARP EL-11970 ADDING MACHINE 38085265 $ 75.00
1 $ 1,275.20
15 TRASH MEDIUM SIZE TRASH CANS $ 75.00
4 TRASH TALL TRASH CANS $ 60.00
10 STAPLER STANDARD STAPLERS $ 55.00
8 TAPE SCOTCH TAPE DISPENSERS $ 20.00
10 SCISSORS SCISSORS $ 45.00
4 VARIOUS DESKTOP PROTECTORS $ 200.00
3 FILES DESKTOP HORIZONTAL FILE SETS $ 25,00
3 FILES WALL MOUNTED VERTICAL FILES $ 15.00
$ 515.00
AUDIO
STUOIO
1 MIC AKG C2000B MICROPHONE $ 21 5.00
1 MIC OKTAVA MK3I9 MICROPHONE 1239 $ 215.00
1 MIC MARSHALL MXL200I MICROPHONE $ 215.00
1 MIC 2X SURE 8M57 MICROPHONE $ 21500
1 MIC 2XAUDIX D2 $ 172.00
1 MIC IAUDIX Dl $ 241 .00
QTY ITEM DESCRIPTION SERIAL NUMBER
1 MIC AUDIX D4 $ 241.00
1 MIC 2X AUDIX ADX-51 $ 241.00
1 MIC ROLAND MA88K $ 74.42
1 MIXER RAMSA DA7 DIGITAL MIXER 9870045 $ 3,977.50
2 CARD RAMSA DA7 IN/OUT CARD $ 515.99
1 STAND MIXER STAND $ 107.50
1 PRE-AMP PRESONUS M80 (8 CHANNELS) $ 1,966.00
1 CONTROL CM AUTOMATION MOTORMIX SURFACE E14677 $ 970.00
1 KEYBOARD ROLAND XV88 Z024717 $ 2,079.99
1 SRX PIANO EXPANSION CARD $ 32,500
1 SRX DRUM EXPANSION CARD $ 325.00
1 AMP LINE 6 PODPRO GUITAR AMP PDP 1A5045003241 $ 591.25
1 AMP LINE 6 POD-PRO GUITAR AMP PDP 1A5045003166 $ 591.25
1 AMP LINE 6 BASS-POD-PRO AMP BPP 1A5046000636 $ 591.25
1 EMAGIC UNITOR 8 MKII MIDI INTERFACE $ 483.75
1 TASCAM CD-RW700 101224 $ 591.25
1 TASCAM 2O2MKII TAPEDECK 370271 $ 418.00
1 SPEAKER MACKIE HR824 SPEAKER (21) AG56206 $ 349.40
1 SPEAKER MACKIE HR824 SPEAKER (21) AG56220 $ 349.40
1 HDPHONES SENNHEISER EH 2200 HDPH $ 65.00
6 HDPHONES AKG K240M HEADPHONES $ 430.00
2 AMP ROLLS HEADPHONE AMPS $ 300.99
4 NEUTRICK 48 POINT PATCHBAYS $ 239.96
18 SPACES OF RACKFILLERS $ 44.40
1 STAND EXTREME 400 KEYBOARD STAND $ 43.00
1 STAND ULTIMATE KEYBOARD STAND $ 45.00
1 STAND OUIK LOK KEYBOARD STAND $ 102.22
1 STAND MUSIC STAND $ 32.25
2 STAND GUITAR STANDS $ 29.96
4 STAND BOOM MIC STANDS $ 85.95
2 STAND KICK MIC STANDS $ 45.00
2 STAND STRAIGHT MIC STANDS $ 50.00
3 STAND TRI-POD MIC STANDS $ 64.50
1 STAND DESK BOOM STAND $ 13.00
1 FATAR CMK49 CONTROL-KEYBOARD 9415046 $ 85.00
1 LAMP WALL MOUNTED ROUND LAMP $ 55.00
4 HANGER PATCH CABLE HANGERS (BLUE) $ 10.00
1 RACK 4 SPACE STUDIO RACK $ 65.00
2 RACK 14 SPACE RACKS $ 161.25
1 PLASTIC ORGANIZER $ 22.00
3 FILTER POP FILTERS $ 48.40
37 FLAT PIECES AURALEX ACOUSTIC FOAM $ 669.25
7 AURALEX FOAMTEK ADHESIVE $ 108.50
13 TRAPS AURALEX BASS TRAPS $ 235.10
3 CUSTOM-MADE MOVEABLE BAFFLES $ 450.00
3 POWER CORD EXTENSIONS $ 22.11
3 BEHRINGER ULTRA DI BOXES $ 209.97
1 FOLDER CD FOLDER FOR 200 CD $ 29.98
1 ROUTER NETWORK ROUTER $ 200.00
3 NUENDO AUDIO INTRF $ 5,159.97
1 CARD AUDIOPHILE REC CARD $ 161.25
$25,332.98
1 CUSTOM BUILT COMPUTER CONAINING $ 2 500.00
PENTIUM III 800MHZ W/SCUZZY DRIVES INCLUDED
3 CABLE LIVEWIRE 10' PATCH CABLE $30.00
2 CABLE LIVEW1RE 20' PATCH CABLE $ 25.00
11 CABLE LIVE WI RE 20' PATCH CABLE $ 142.89
I CABLE LIVEWIRE 5FT MIC CABLE $ 11.00
2 CABLE MONSTER IM PATCH CABLE $ 35.90
5 CABLE MONSTER 4M PATCH CABLE $ 170.75
13 CABLE B.L.U.E. MIC CABLES $ 489.87
30 CABLE V PATCH CABLES $ 850.00
16 CABLE 2' PATCH CABLES $ 5j 5.83
3 CABLE STEREO HEADPHONE EXTENSION CABLE $ ~:I 5.00
1 CABLE MONSTER AESIEBIJ CABLE $ 30.00
46 CABLE MONSTER XLR-1/4" BALANCED CABLES $ 850.00
12 CABLE PROCO XLR-1 (4" BALANCED CABLES $ 203.88
8 CABLE MONSTER 1(4" = 1(4" BALANCED CABLES $ 135.60
8 CABLE HOSA LIGHTPIPE CABLES $ 79.46
4 CABLE S/PDIF CABLES $ 171.96
12 CABLE MIDI CABLES 6" - 10 $ 150.00
3 CABLE MONSTER 12 FT INSTRUMENT CABLES $ 53.85
4 CABLE MONSTER 21 FT INSTRUMENT CABLES $ 91.00
12 CABLE HOSA STEREO CABLES $ 107.88
1 AUDIO NUENDO PACKAGE GUITAR CTR CHK#6458 $ 65.OO
$23,814.87
Video 5 LIGHTS PORTABLE WORK LIGHTS $ 268.75
Studio I STAND PORTABLE WORK LIGHT STAND $ 45.00
1 TRIPOD 316 VIDEO TRIPOD $ 775.00
I RECORDER SONY DVCAM VIDEO RECORDER 100418 $ 4,920.00
1 BATTERY JVC BATTERY $ 172.00
I BOARD SONY SDI INTERFACE I/O BOARD SON-
I VCR IJVC VHS VIDEO CASSE1TE RECORDER 165E0335 $ 390.23
I CONVERTER IFAST SILVER CONVERTER INCLUDED
I POWER IFURMAN RP-8D POWER CONDITIONER R0010574 $ 130.00
I CAMERA JVC DV CAMCORDER 12556245 $ 4,77L-
1 LENS FUJINON ZOOM LENS $ 1025.00
I CAMERA DIGITAL CAMERA $ 700.00
1 CAMERA DIGITAL CAMERA $ 300.00
I__ I CPU FAST SILVER TOWER 00021-016-
I TV BROKSONIC TV/VCR 05541011 7675A $ 161.24
$38 6~9.47
FUNRNITURE 1 DESK WORKSTATION WITH LEFT RETURN $ 377.00
1 DESK MAHOGANY EXECUTIVE $ 1 ,37500
1 DESK OAK EXECUTIVE $ 550.0O
1 DESK OAK WITH RIGHT RETURN $ 550.00
2 DESK L SHAPED WORKSTATIONS $ 450.00
2 DESK MAHOGANY FINISH 4 DRAWER $ 350.00
2 DESK METAL 2-DRAWER $ 150.00
1 DESK OAK NO DRAWER $ 100.00
1 DESK OAK WITH LEFT RETURN $ 550.00
1 DESK WORKSTATION W/ RACKS, 2 BRIDGES $ 4 130.68
$ $,862.B8
7 CHAIR BLACK LEATHER EXECUTIVE $ 1,135.00
3 CHAIR RED LEATHER EXECUTIVE $ 605.00
2 CHAIR HIGH BACK EXECUTIVE $ 195.00
3 CHAIR OFFICE SWIVEL BLACK $ 165.00
7 CHAIR DIRECTOR-STYLE BLACK $ 189.00
4 CHAIR META/CUSHION STACKABLE $ 85.00
4 CHAIR WOOD/CUSHION LOUNGE 5.00
5 CHAIR WOOD SWIVEL ROLLER $ 85.00
2 CHAIR METAL/SWIVELROLLER DESK $ 55.00
$ 2,599.00
1 CREDENZA MAHOGANY CEDENZA $ 1,375.00
1 BOOKCASE MAHOGANY HORIZONTAL BOOKCASE $ 1,375.00
I BOOKCASE MAHOGANY LATERAL W/ GLASS DOORS $ 1,375.00
2 BOOKCASE OAK GLASS DOORS $ 325.00
1 BOOKSHELF OAK $ 150.00
1 BOOKSHELF BLACK $ 100.00
1 TABLE 6' ROUND GLASS 0.00
1 TABLE 4' ROUND KITCHEN $ 35.00
1 TABLE OVAL END TABLE $ 65.00
1 TABLE GLASS END TABLE $ 11 5.00
1 MAT OAK FLOOR MAT $ 9900
1 CABINET OAK 4 DRAWER FILE CABINET 200.00
4 CABINET 3-DRAWER HORIZONTAL FILE CABINETS $ 425.00
1 SHELF PLASTIC STORAGE SHELF $ 55.00
2 SAFE SENTRY VI 20 SAFE included
$ 5,754.00
DECOR 18 POSTER FRAMED MOTIVATIONAL POSTERS $ 303.70
1 PICTURE WOOD FRAMED/MATTED MOTIVATIONAL $ 285.00
2 TREES FAKE TREES $ 120.00
2 LAMPS FLOOR LAMPS $ 55.00
2 BOARDS 3'X4' DRY ERASE BOARDS $ 65.00
1 BOARD PORTABLE DRY ERASE BOARD $ 50.00
$ 78.70
SOFTWARE 2 DISC QUICKBOOKS 2001 + MANUAL $ 386.14
1 DISC SOUND CLIPS $ 99.00
1 DISC ADOBE PAGEMAKER 6.5 + MANUAL $ 215.00
1 DISC OUTLOOK 98 $ 99.00
1 DISC SYMANTEC SUITCASE 3.0 $ 99.00
1 DISC ADOBE ACROBAT 4.O+ MANUAL $ 215.00
1 DISC COREL DRAW 8 - MANUAL $ 215.00
2 DISC QUARK XPRESS + MANUAL $ 215.00
1 DISC ADOBE ILLUSTRATOR 8.0 + MANUAL $ 215.00
1 DISC ADOBE PHOTOSHOP 5.0 + MANUAL $ 215.00
1 DISC MACROMEDIA FIREWORKS 2 4 MANUAL $ 215.00
1 DISC MACROMEDIA DREAMWEAVER 2 $ 218.00
1 DISC MACROMEDIA FLASH 4 + MANUAL $ 215.00
1 DISC MICROSOFT FRONT PAGE + MANUAL $ 99.00
1 DISC CLICK ART FONTS $ 99.00
1 DISC POWERPOINT 2000 + MANUAL $ 99.00
$2,915.14
APPLIANCES 1 FRIDGE SANYO SMALL REFRIGERATOR $ 200.00
1 MAKER MR. COFFEE MAKER 10 CUP $ 50.00
1 MAKER BUNN COFFEE MAKER UPR0217491 $ 250.00
1 MICROWAVE MAGIC CHEF MICROWAVE 1007990 $ 75.00
$ 575.00
SUPPLIES 2 PAPER REAMS BRILLIANT WHITE PAPER $ 12.00
12 PAPER REAMS COPY PAPER $ 65.00
1 PAPER REAM 8 1/2X14 PAPER $ 10.00
1 PAPER REAM 11X17 PAPER $ 7.50
60 ENVELOPE 10X13 ENVELOPES $ 10.00
150 ENVELOPE 12X15 112 ENVELOPES $ 25.00
450 ENVELOPE PLAIN LETTER ENVELOPES $ 10.00
4500 ENVELOPE 9X12 MANILA ENVELOPES $ 100.00
450 ENVELOPE CAM LETTER ENVELOPES $ 20.00
500 ENVELOPE CHECK ENVELOPES $ 66.00
750 FORM CONTINUOUS FEED CHECKS
250 FORM CONTINUOUS FEED STATEMENTS $ 60.00
126 FOLDER MANILA FILE FOLDERS $ 15.00
1900 LABELS SHEETS BLANK MAILING LABELS $ 200.00
$ 749.50
10000 POSTCARD CAM STUDIOS POSTCARD MAILERS $ 350.00
4500 MAILERS CAM 81/2 XII MAILERS $2,150.00
$2,500.00
100 CD WRITEABLE CDS $ 44.00
50 CASES BLACK CD CASES $ 10.00
50 CASES WHITE CD CASES $ 10.00
25 CASES JEWEL CASES $ 4.50
$ 68.50
2 POTS COFFEE POTS $ 6.50
1 CLEAN DUSTPAN $ 5.00
1 CLEAN DIRT DEVIL VACUUM $ 50.00
1 CLEAN MOP $ 14.99
1 CLEAN BROOM $ 9.99
5 CLEAN BOTTLES VARIOUS CLEANING AGENTS $ 20.00
600 CUPS STYROFOAM COFFEE CUPS $ 25.00
1 BULBS 3PAK MR 18 HALOGEN BULBS $ 15.00
1 DATA SWITCH $ 99.99
2 PUNCH 2-HOLE PUNCH $ 35.00
1 PUNCH 1- HOLE PUNCH $ 5.00
1 PUNCH 3-HOLE PUNCH $ 20.09
1 PUNCH IBICO SPIRAL PUNCH LD18267 $ 50.00
2 STANDS COMPUTER SWIVELS $ 20 00
50 TIES CABLE TIES $ 10.00
6 PENS BOXES VARIOUS INK PENS $ 2500
3 PENS FILTERS $ 5.00
1300 CLIPS JUMBO PAPERCLIPS $ 15.00
1 CALCULATOR CASIO MS-8OTE CALCULATOR $ 7.95
1 SCREWS BOX OF SCREWS $ 5.00
2 TAPE ROLLS SCOTCH TAPE $ 9.00
12 PADS POST-IT PADS $ 8.50
1 GLUE BOTTLE ELMER'S GLUE $ 2.60
1 GE ANSWERING MACHINE $ 25.00
1 CASE SOFT LEATHER BRIEFCASE $ 115.00
1 CASE BRIEFCASE CC MACHINE $ 50.00
2 CASE 18"X24" PORTFOLIO CASES $ 90.00
1 CASE LEATHER PORTFOLIO CASE $ 99.99
1 DOLLY DOLLY $ 60.00
$ 904.41
IMPROVEMENTS 1 SHELF BUILT-IN BOOK SHELF $ 1 .275.00
1 DESK RECEPTION COUNTER AND DESK $ 2,525.00
LOGO DOOR/WALL LOGO $ 475.00
1 ETHERNET LINK $ 171.97
PHONE PHONE SYSTEM $ 4,100.00
1 DSL DSL INSTALLATION $ 650.00
1 FRAME DOOR FRAME $ 260.00
SOUND BOOTH $ 9,650.00
$ 19,096.97
GRAND TOTAL $160,136.42
SCHEDULE 2.11
ACCOUNTS RECEIVABLE
Creative Advertising Marketing
A/R Aging Summary
As of June 30, 2001
Current 1-30 31-60 61-90 >90 TOTAL
--------- ------ ----- ------ ---- ---------
B&G Auto Sales 175.00 0.00 0.00 0.00 0.00 175.00
California. Auto Specialist 3,951.00 0.00 0.00 0.00 0.00 3,951.00
Carriage Used Cars 1,060.00 0.00 0.00 0.00 0.00 1,060.00
Cyber Group Network 10,778.00 0.00 0.00 0.00 0.00 10,778.00
Don's Auto Center 15,414.00 0.00 0.00 0.00 0.00 15,414.00
Executive Image Auto Group 945.00 0.00 0.00 0.00 0.00 945.00
Maple Ridge 2,000.00 0.00 0.00 0.00 0.00 2,000.00
Oliden and Associates 0.00 0.00 0.00 421.20 0.00 0.00
Racetown Motors 2,752.00 0.00 0.00 0.00 0.00 2,762.00
S. B. Mitsubishi 3,510.00 0.00 0.00 0.00 0.00 3,510.00
Strategic 0.00 0.00 0.00 150.65 0.00 0.00
Tsika Ministries 0.00 325.00 0.00 0.00 0.00 0.00
Valley Auto Center 22,164.00 0.00 0.00 0.00 0.00 22,164.00
--------- ------ ----- ------ ---- ---------
TOTAL 62,749.00 325.00 0.00 572.05 0.00 63,646.05
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