As filed with the Securities and Exchange Commission on October _ , 2002
File No. 000-27727
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CYBER GROUP NETWORK CORPORATION
-------------------------------
(Exact name of registrant as specified in its charter)
Nevada 33-0901534
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(State of Incorporation) (I.R.S. Employer ID No.)
Stock Incentive Plan #2
-----------------------------
(Full title of the Plans)
Pacific Corporate Services, 5844 South Pecos Road, Las Vegas, NV 89120
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(Name and Address of Agent for Service)
(702) 450-3700
(Telephone number including area code, of agent for service)
1
CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF SECURITIES AMOUNT OF OFFERING AGGREGATE AMOUNT
SECURITIES TO BE REGISTERED SHARES TO BE PRICE PER OFFERING OF REG.
REGISTERED SHARE PRICE FEE2
------------ ----------- ---------- --------
0.001par value Common 40,000,000 $ 0.0012(1) $48,000.00 $ 4.42
Stock
Totals 40,000,000 $ 0.0012 $48,000.00 $ 4.42
Total No. of pages: 33.
(1) Estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457(c) under the Securities Act
of 1933 as amended. The calculation of the registration fee is
based upon a per share price of $.0012 which was the average of
the high ($0.0014) and low ($.001) sales prices of the
Registrant's common stock on November 8, 2002 as reported on the
Over-the-Counter Electronic Bulletin Board.
2
PROSPECTUS
CYBER GROUP NETWORK CORPORATION
P.O. BOX 11403
SAN BERNARDINO, CA 92423
(909) 890-5849
(40,000,000 SHARES OF COMMON STOCK)
This Prospectus relates to the offer and sale by CYBER GROUP NETWORK
CORPORATION, ("CGPN"), a Nevada corporation ("the Company") of shares of its
$0.001 par value common stock (the "Common Stock) pursuant to its STOCK
INCENTIVE PLAN #2 where by certain individuals receive stock options to
stimulate their involvement and continued involvement in the Company. The
Company is registering hereunder and then issuing upon receipt of adequate
consideration therefor to the Employee, Officer, Director or Consultant
40,000,000 shares of the Common Stock in consideration for services rendered
and/or to be rendered and payments made under the STOCK INCENTIVE PLAN #2.
The Common Stock is not subject to any restriction on transferability.
Recipients of shares other than persons who are affiliates of the Company within
the meaning of the Securities Act of 1933 (the Act) may sell all or part of the
shares in any way permitted by law including sales in the over-the-counter
market at prices prevailing at the time of such sale. Shares registered
hereunder are being sold to both affiliates and non-affiliates of the Company.
An affiliate is, summarily, any director, executive officer or controlling
shareholder of the Company. The affiliates of the Company may become subject to
Section 16(b) of the Securities Exchange Act of 1934 as amended (the Exchange
Act) which would limit their discretion in transferring the shares acquired in
the Company. If the individual who is not now an affiliate becomes an affiliate
of the Company in the future; he would then be subject to Section I(b) of the
Exchange Act (See General Information --- Restrictions on Resale).
The Common Stock is Listed on the OTC bulletin board under the symbol CGPN.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is November 8, 2002
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This Prospectus is not part of any Registration Statement which was filed
and been effective under the Securities Act of 1933 as amended (the Securities
Act) and does not contain all of the information set forth in the Registration
Statement, certain portions of which have seen offered pursuant to the rules and
regulations promulgated by the U.S. Securities and Exchange Commission (The
Commission) under the Securities Act. The statements in this Prospectus as to
the contents of any contracts or other documents filed as an exhibit to either
the Registration Statement or other filings of the Company with the Commission
are qualified in their entirety by the reference thereto.
A copy of any document or part thereof incorporated by reference in this
Prospectus but not delivered herewith will be furnished without charge upon
written or oral request. Requests should be addressed to: CYBER GROUP NETWORK
CORPORATION, P.O. BOX 11403, SAN BERNARDINO, CA 92423, telephone (909) 890-9769.
The Company is subject to the reporting requirements of the Exchange Act
and in accordance therewith files reports and other information with the
Commission. These reports as well as the proxy statements, information
statements and other information filed by the Company under the Exchange Act may
be reviewed and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street N.C. Washington D.C. 20549. Copies my be
obtained at the prescribed rates. In addition the Common Stock is quoted on the
a automated quotation system maintained by the National Association of
Securities Dealers, Inc. (NASD). Thus copies of these reports, proxy
statements, information statements and other information may also be examined at
the offices of the NASD at 1735 K Street N.C. Washington DC 20549.
No person has been authorized to give any information or to make any
representation, other than those contained in this Prospectus, and if given or
made, such other information or representation must not be relied upon as having
been authorized by the Company. This Prospectus does not constitute an offer or
a solicitation by anyone in any state in which such is not authorized or in
which the person making such is not qualified or to any one to whom it is
unlawful to make an offer or solicitation
Neither the delivery of this Prospectus nor any sale made hereunder shall
under any circumstances create any implication that there has not been a change
in the affairs of the Company since the date hereof.
4
TABLE OF CONTENTS
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS 7
ITEM 1. PLAN lNFORMATION 7
GENERAL lNFORMATION 7
The Company 7
Purpose 7
Common Stock 7
The Consultant 7
No Restrictions on Transfer 7
Tax Treatment to the Consultant 7
Tax Treatment to the Company 8
Restrictions on Resales 8
DOCUMENTS INCORPORATED BY REFERENCE & ADDITIONAL INFORMATION 8
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
Legal Opinion and Experts 9
Indemnification of Officers and Directors 9
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT 9
ITEM 3. lNCORPORATION OF DOCUMENTS BY REFERENCE 9
ITEM 4. DESCRIPTION OF SECURITIES 9
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL 10
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS 10
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED 13
ITEM 8. EXHIBITS 14
ITEM 9. UNDERTAKINGS 14
EXHIBIT INDEX 17
5
PART 1
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION
GENERAL INFORMATION
THE COMPANY
The Company has its principal offices at P.O. BOX 11403, SAN BERNARDINO, CA
92423, telephone (909) 890-9769.
PURPOSES
The Common Stock will be issued by the Company pursuant to its STOCK
INCENTIVE PLAN #2 which has been approved by the Board of Directors of the
Company (the "Board of Directors"). The STOCK INCENTIVE PLAN #2 is hoped to
provide a method whereby the Company's current employees and officers and non
employee directors and consultants may be stimulated and allow the Company to
secure and retain highly qualified employees, officers, directors and non
employee directors and consultants, thereby advancing the interests of the
Company, and all of its shareholders. A copy of the STOCK INCENTIVE PLAN #2
has been filed as an exhibit to this Registration Statement.
COMMON STOCK
The Board has authorized the issuance of up to 40,000,000 shares of the
Common stock pursuant to the Company's STOCK INCENTIVE PLAN #2 upon
effectiveness of this registration Statement.
THE COMPANY STOCK INCENTIVE PLAN
The Company has established a STOCK INCENTIVE PLAN #2 which awards stock
options in an effort to further compensate its existing employees and officers
and non employee directors and consultants, secure their continued employment,
and attract highly qualified employee's and consultants as they are needed.
NO RESTRICTIONS ON TRANSFER
Upon the exercise of an option, that individual will become the record and
beneficial owners of the shares of Common Stock upon issuance and delivery and
are entitled to all of the rights of ownership, including the right to vote any
shares awarded and to receive ordinary cash dividends on the Common Stock.
6
TAX TREATMENT TO THE INDIVIDUAL WHO EXERCISES THE OPTION
The individuals receiving shares of common stock pursuant to the exercises
of an option or options at an exercise price below the fair market value of the
shares on the date of exercise, the difference between the exercise price and
the fair market value of the stock on the date of exercise may be deemed
ordinary income for federal income tax purposes. The recipient is urged to
consult his tax advisor on this matter. Further, if any recipient is an
"affiliate", Section 16(b) of the Exchange Act is applicable and will affect the
issue of taxation.
TAX TREATMENT TO THE COMPANY
The amount of income recognized by any recipient hereunder in accordance
with the foregoing discussion may be an expense deductible by the Company for
federal income tax purposes of the taxable year of the Company during which the
recipient recognizes income.
RESTRICTIONS OF RESALES
In the event that an affiliate of the Company acquires shares of Common
Stock hereunder, the affiliate will be subject to Section 16(b) of the Exchange
Act. Further, in the event that any affiliate acquiring shares hereunder has
sold or sells any shares of Common Stock in the six months preceding or
following the receipt of shares hereunder, any so called "profit", as computed
under Section 16(b) of the Exchange Act, would be required to be disgorged from
the recipient to the Company. Services rendered have been recognized as valid
consideration for the "purchase" of shares in connection with the "profit"
computation under Section 16(b) of the exchange Act. The Company has agreed
that for the purpose of any "profit" computation under 16(b) the price paid for
the common stock issued to affiliates is equal to the value of services
rendered. Shares of common Stock acquired hereunder by persons other than
affiliates are not subject to Section 16(b) of the Exchange Act.
DOCUMENTS INCORPORATED BY REFERENCE AND ADDITIONAL INFORMATION
The Company hereby incorporates by reference (i) its annual report of Form
10-KSB for the year ended December 31, 2001, filed pursuant to Section 13 of the
Exchange Act, (ii) any and all Forms 10-Q (10-QSB) filed under the Securities or
Exchange Act subsequent to any filed form 10-K (or 10-KSB), as well as all other
reports filed under Section 13 of the Exchange Act, and (iii) its annual report,
if any, to shareholders delivered pursuant to Rule 14a-3 of the Exchange Act.
In addition, all further documents filed by the Company pursuant to Section 13,
14, or 15(d) of the Exchange Act prior to the termination of this offering are
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing. All documents which when together, constitute
this Prospectus, will be sent or given to participants by the Registrant as
specified by Rule 428(b)(1) of the Securities Act.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
A copy of any document or part hereof incorporated by reference in this
Registration Statement but not delivered with this Prospectus or any document
required to be delivered pursuant to Rule 428(b) under the Securities Act will
be furnished without charge upon written or oral request. Requests should be
addressed to: CYBER GROUP NETWORK CORPORATION, P.O. BOX 11403, SAN BERNARDINO,
CA 92423 telephone (909) 890-9769.
7
LEGAL OPINIONS AND EXPERTS
Warren J. Soloski has rendered an opinion on the validity of the securities
being registered. Mr. Soloski is not an "affiliate" of the Company and does not
have any interest in the registrant.
The financial statements of CYBER GROUP NETWORK CORPORATION, incorporated
by reference in the Company's Annual Report (Form 10-KSB) for the period ended
December 31, 2001, dated March 26, 2002, have been audited by Moore Stephens
Wurth Frazer and Torbett, LLP, Certified Public Accountants, independent
auditors, as set forth in their report incorporated herein by reference and are
incorporated herein in reliance upon such report given upon the authority of the
firm as experts in auditing and accounting.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Insofar as indemnification of liabilities arising under the Securities Act
may be permitted to directors, officers, or persons controlling the company, the
company has been informed that in the opinion of the commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Registrant hereby states that (i) all documents set forth in (a) through
(c), below, are incorporated by reference in this registration statement, and
(ii) all documents subsequently filed by registrant pursuant to Section 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this registration
statement and to be a part hereof from the date of filing of such documents.
(a) Registrant's latest Annual Report, whether filed pursuant to
Section 13(a) or 15(d) of the Exchange Act;
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year covered by the
annual report referred to in (a), above; and
(c) The latest prospectus filed pursuant to Rule 424(b) under the
Securities Act.
ITEM 4. DESCRIPTION OF SECURITIES
No description of the class of securities (i.e., the $0.001 par value
Common Stock ) is required under this item because the common Stock is
registered under Section 12 of the Exchange Act.
8
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Mr. Soloski, whose firm is rendering the legal opinion for this
registration, will benefit from the registration of shares under the terms of
the Stock Incentive Plan #2
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
LIMITATION OF LIABILITY.
The articles of incorporation of the Registrant provide the following with
respect to liability:
"A director or officer of the corporation shall not be personally liable to
this corporation or its stockholders for damages for breach of fiduciary duty as
a director or officer, but this Article shall not eliminate or limit the
liability of a director or officer for (i) acts or omissions which involve
intentional misconduct or a knowing violation of the law or (ii) the unlawful
payment of dividends. Any repeal or modification of this Article by stockholders
of the corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director or officer of the corporation
for acts or omissions prior to such repeal or modification."
INDEMNIFICATION.
(a) ARTICLES OF INCORPORATION.
The articles of incorporation of the Registrant provide the following with
respect to indemnification:
"Every person who was or is a party to, or is threatened to be made a party
to, or is involved in any such action, suit or proceeding, whether civil,
criminal, administrative or investigative, by the reason of the fact that he or
she, or a person with whom he or she is a legal representative, is or was a
director of the corporation, or who is serving at the request of the corporation
as a director or officer of another corporation, or is a representative in a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless to the fullest extent legally permissible under the laws of the
State of Nevada from time to time against all expenses, liability and loss
(including attorneys' fees, judgments, fines, and amounts paid or to be paid in
a settlement) reasonably incurred or suffered by him or her in connection
therewith. This right of indemnification extends to legal counsel who renders an
opinion concerning the Company's Registration Statement on Form S-8 in
connection with the issuance of shares of Common Stock under the Employee Stock
Incentive Plan. Such right of indemnification shall be a contract right which
may be enforced in any manner desired by such person. The expenses of officers
and directors incurred in defending a civil suit or proceeding must be paid by
the corporation as incurred and in advance of the final disposition of the
action, suit, or proceeding, under receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he or she is not entitled to be indemnified
by the corporation. Such right of indemnification shall not be exclusive of any
other right of such directors, officers or representatives may have or hereafter
acquire, and, without limiting the generality of such statement, they shall be
entitled to their respective rights of indemnification under any bylaw,
agreement, vote of stockholders, provision of law, or otherwise, as well as
their rights under this article. Without limiting the application of the
foregoing, the Board of Directors may adopt Bylaws from time to time without
respect to indemnification, to provide to all times the fullest indemnification
9
permitted by the laws of the State of Nevada, and may cause the corporation to
purchase or maintain insurance on behalf of any person who is or was a director
or officer."
(b) BYLAWS.
The bylaws of the Registrant provide the following with respect to
indemnification:
"The Corporation shall indemnify its directors, officers and employees as
follows:
Every director, officer, or employee of the Corporation shall be
indemnified by the Corporation against all expenses and liabilities, including
counsel fees, reasonably incurred by or imposed upon him/her in connection with
any proceeding to which he/she may be made a party, or in which he/she may
become involved, by reason of being or having been a director, officer, employee
or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of the Corporation,
partnership, joint venture. trust or enterprise, or any settlement thereof,
whether or not he/she is a director, officer, employee or agent at the time such
expenses are incurred, except in such cases wherein the director, officer,
employee or agent is adjudged guilty of willful misfeasance or malfeasance in
the performance of his/her duties; provided that in the event of a settlement
the indemnification herein shall apply only when the Board of Directors approves
such settlement and reimbursement as being for the best interests of the
Corporation. The Corporation shall provide to any person who is or was a
director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of the
corporation, partnership, joint venture, trust or enterprise, the indemnity
against expenses of a suit, litigation or other proceedings which is
specifically permissible under applicable law.
The Board of Directors may, in its discretion, direct the purchase of
liability insurance by way of implementing the provisions of this Article."(c)
NEVADA REVISED STATUTES. A. NRS 78.7502 DISCRETIONARY AND MANDATORY
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS: GENERAL
PROVISIONS.
1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
10
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation. Indemnification may not be made for
any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense of
any claim, issue or matter therein, the corporation shall indemnify him against
expenses, including attorneys' fees, actually and reasonably incurred by him in
connection with the defense.
B. NRS 78.751 AUTHORIZATION REQUIRED FOR DISCRETIONARY INDEMNIFICATION;
ADVANCEMENT OF EXPENSES; LIMITATION ON INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES.
1. Any discretionary indemnification under NRS 78.7502 unless ordered by a
court or advanced pursuant to subsection 2, may be made by the corporation only
as authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances. The
determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting of
directors who were not parties to the action, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were not
parties to the action, suit or proceeding so orders, by independent legal
counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the action,
suit or proceeding cannot be obtained, by independent legal counsel in a written
opinion.
2. The articles of incorporation, the bylaws or an agreement made by the
corporation may provide that the expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
3. The indemnification and advancement of expenses authorized in NRS
78.7502 or ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the articles of
incorporation or any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, for either an action in his official capacity or an
action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to or for the advancement of
expenses made pursuant to subsection 2, may not be made to or on behalf of any
director or officer if a final adjudication establishes that his acts or
omissions involved intentional misconduct, fraud or a knowing violation of the
law and was material to the cause of action.
11
(b) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
C. NRS 78.752 INSURANCE AND OTHER FINANCIAL ARRANGEMENTS AGAINST LIABILITY
OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.
1. A corporation may purchase and maintain insurance or make other
financial arrangements on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise for any
liability asserted against him and liability and expenses incurred by him in his
capacity as a director, officer, employee or agent, or arising out of his status
as such, whether or not the corporation has the authority to indemnify him
against such liability and expenses.
2. The other financial arrangements made by the corporation pursuant to
subsection 1 may include the following:
(a) The creation of a trust fund.
(b) The establishment of a program of self-insurance.
(c) The securing of its obligation of indemnification by granting a
security interest or other lien on any assets of the corporation.
(d) The establishment of a letter of credit, guaranty or surety. No
financial arrangement made pursuant to this subsection may provide protection
for a person adjudged by a court of competent jurisdiction, after exhaustion of
all appeals therefrom, to be liable for intentional misconduct, fraud or a
knowing violation of law, except with respect to the advancement of expenses or
indemnification ordered by a court.
3. Any insurance or other financial arrangement made on behalf of a person
pursuant to this section may be provided by the corporation or any other person
approved by the board of directors, even if all or part of the other person's
stock or other securities is owned by the corporation.
4. In the absence of fraud:
(a) The decision of the board of directors as to the propriety of the terms
and conditions of any insurance or other financial arrangement made pursuant to
this section and the choice of the person to provide the insurance or other
financial arrangement is conclusive; and
(b) The insurance or other financial arrangement:
(1) Is not void or voidable; and
(2) Does not subject any director approving it to personal liability
for his action, even if a director approving the insurance or other financial
arrangement is a beneficiary of the insurance or other financial arrangement.
5. A corporation or its subsidiary which provides self-insurance for itself
or for another affiliated corporation pursuant to this section is not subject to
the provisions of Title 57 of NRS
6. The Registrant, with approval of the Registrant's Board of Directors,
has obtained directors' and officers' liability insurance.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
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ITEM 8. EXHIBITS
(a) The following exhibits are filed as part of this S-8 registration
statement pursuant to Item 601 of Regulation S-B and are specifically
incorporated herein by this reference:
EXHIBIT NO. TITLE
- ----------- -----
4. Not Applicable
5. Opinion of Warren J. Soloski regarding the legality of the
securities registered.
10. Stock Incentive Plan.
15. Not Required
23.1 Consent of Warren J. Soloski, special counsel to registrant,
to the use of his opinion with respect to the legality of
the securities being registered hereby and to the references
to him in the Prospectus filed as a part hereof.
23.2 Consent of Moore Stephens Wurth Frazer and Torbett, LLP
Certified Public Accountants.
27. Not Required
28. Not Required
29. Not Required
ITEM 9. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of registrant
pursuant to the foregoing provisions, or otherwise, registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. If a claim for indemnification against such
liabilities (other than the payment by registrant of expenses incurred or paid
by a director, officer or controlling person of registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered,
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.
13
Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represents a fundamental
change in the information set forth in the registration
statement; and
(iii) include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
provided, however, paragraphs (i) and (ii) shall not apply if the
information required to be included in a post-effective amendment by
those paragraphs is incorporated by reference from periodic reports
filed by the registrant small business issuer under the Exchange Act.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment to the registration
statement shall be deemed to be a new registration statement relating
to the securities offered therein and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual
report to security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements of
Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934;
and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to
deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide
such interim financial information.
Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of registrant's annual
report pursuant to Section 13(a) of the Securities Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
Securities at that time shall be deemed to be the initial bona fide offering
thereof.
14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized in the City of San Bernardino, California on the 8th day of November,
2002.
CYBER GROUP NETWORK CORPORATION
(Registrant)
By: /s/ Richard Serrano
Richard Serrano, President
Pursuant to the requirements of the 1933 Act, this registration statement
or amendment has been signed by the following persons in the capacities and on
the dates indicated:
Signatures Title Date
/s/ Richard Serrano President November 8, 2002
Richard Serrano Director
/s/ Scott Cramer CEO, Director November 8, 2002
Scott Cramer Secretary
/s/ Thomas Hobson Chairman of the Board November 8, 2002
Thomas Hobson Director
/s/ Hector Berrellez Director November 8, 2002
Hector Berrellez
15
FORM S-8 REGISTRATION STATEMENT
EXHIBIT INDEX
The following Exhibits are filed as part of this registration statement
pursuant to Item 601 of Regulation S-B and are specifically incorporated herein
by this reference:
Exhibit Number
In Registration
Statement Descriptions Numbered Page
- --------------------------------------------------------------------------------
5. Opinion of Counsel 18
10. STOCK INCENTIVE PLAN #2 20
23.1 Consent of Warren J. Soloski 32
23.2 Consent of Moore Stephens Wurth Frazer and Torbett LLP,
Certified Public Accountants 33
16
Richard Serrano, President
CYBER GROUP NETWORK CORPORATION
P.O. BOX 11403.
SAN BERNARDINO, CA 92423
Re: Legal Opinion for S-8 Registration Statement
Dear Mr. Serrano:
At your request, I have examined the form of Registration Statement which
CYBER GROUP NETWORK CORPORATION (the "Company") is filing with the Securities
and Exchange Commission, on Form S-8 (the "Registration Statement"), in
connection with the registration under the Securities Act of 1933, as amended,
of 40,000,000 shares of your Common Stock (the "Stock") issuable pursuant to
satisfaction of conditions set forth in the STOCK INCENTIVE PLAN #2 of the
Company (the "Stock Incentive Plan").
In rendering the following opinion, I have examined and relied only upon
the documents, and certificates of officers and directors of the Company as are
specifically described below. In my examination, I have assumed the genuineness
of all signatures, the authenticity, accuracy and completeness of the documents
submitted to me as originals, and the conformity with the original documents of
all documents submitted to me as copies. My examination was limited to the
following documents and no others:
1. Certificate of Incorporation of the Company, as amended to date;
2. Bylaws of the Company, as amended to date;
3. Resolutions adopted by the Board of Directors of the Company
authorizing entry into a Stock Incentive Plan;
4. The Registration Statement;
5. The Stock Incentive Plan which the shares are being registered in the
Registration Statement.
I have not undertaken, nor do I intend to undertake, any independent
investigation beyond such documents and records, or to verify the adequacy or
accuracy of such documents and records. Based upon the foregoing, it is my
opinion that: (i) the Stock to be issued under the agreements, subject to
effectiveness of the Registration Statement and compliance with applicable blue
17
sky laws, and pursuant to the Stock Incentive Plan in accordance with the Stock
Incentive Plan as contemplated, when issued, will be duly and validly
authorized, fully paid and non-assessable; and (ii) no consent, approval, order
or authorization of any regulatory board, agency, or instrumentality having
jurisdiction over the Company or its properties (other than registration under
the Act or qualification under state securities or Blue Sky laws or clearance
from the NASD) is required for the valid authorization, issuance and delivery of
the Stock, or, if required, it has been obtained and is in full force and
effect.
I express no opinion as to compliance with the securities or "blue sky"
laws of any state in which the stock delivered pursuant to the Stock Incentive
Plan is proposed to be offered and sold or as to the effect, if any, which
non-compliance with such laws might have on the validity of issuance of the
stock.
I consent to the filing of this opinion as an exhibit to any filing made
with the Securities and Exchange Commission or under any state or other
jurisdiction's securities act for the purposes of registering, qualifying or
establishing eligibility for an exemption from registration or qualification of
the stock issued as described in the Registration Statement in connection with
the offering described therein. Other than as provided in the preceding
sentence, this opinion (i) is addressed solely to you, (ii) may not be relied
upon by any other party, (iii) covers only matters of federal law and nothing in
this opinion shall be deemed to imply any opinion related to the laws of any
other jurisdiction, (iv) may not be quoted or reproduced or delivered by you to
any Other person, and (v) may not be relied upon for any other purpose
whatsoever. Nothing in this opinion shall be deemed to relate to or constitute
an opinion concerning any matters not specifically set forth above.
By giving you this opinion and consent, I do not admit that I am an expert
with respect to any part of the Registration Statement within the meaning of the
term "expert" as used in Section 11 of the Securities Act of 1993, as amended,
or the Rules and Regulations of the Securities and Exchange Commission
promulgated thereunder.
The information set forth herein is as of the date of this letter. I
disclaim any undertaking to advise you of changes which may be brought to my
attention after the effective date of the Registration Statement.
Very truly yours,
/s/ Warren J. Soloski
Warren J. Soloski
18
STOCK INCENTIVE PLAN #2
CYBER GROUP NETWORK CORPORATION STOCK INCENTIVE PLAN #2
1. GENERAL PROVISIONS
1.1 PURPOSE.
-------
The STOCK INCENTIVE PLAN #2 (the "Plan") is intended to allow
designated officers and employees (all of whom are sometimes collectively
referred to herein as "Employees") and certain Non-Employee Attorneys and
Consultants (all of whom are sometimes collectively referred to as "Selected
Persons") of CYBER GROUP NETWORK CORPORATION ("CGPN") and its Subsidiaries which
it may have from time to time (CGPN and such Subsidiaries are referred to herein
as the "Company") to receive certain options ("Stock Options") to purchase CGPN
common stock, $0.001 par value ("Common Stock"), and to receive grants of Common
Stock subject to certain restrictions ("Awards"). As used in this Plan, the term
"Subsidiary" shall mean each corporation which is a "subsidiary corporation" of
CGPN within the meaning of Section 424(f) of the Internal Revenue Code of 1986,
as amended (the "Code"). The main purpose of this Plan is to provide Employees
and Selected Persons with equity-based compensation incentives to make
significant and extraordinary contributions to the long-term performance and
growth of the Company, and to attract and retain Employees and Selected Persons
of exceptional ability. The Plan is expanded to include employee Directors of
the Company for granting said employee Directors the right to receive the same
salary paid to non-employee Directors in the form of Company stock.
1.2 ADMINISTRATION.
--------------
1.2.1 The Plan shall be administered by the Compensation
Committee (the "Committee") of, or appointed by, the Board of Directors of CGPN
(the "Board"). The Plan will be administered by a combination of two or more
officers and/or directors of the Company, including individuals who are both
officers and directors of the Company. Each member of the Committee shall be a
"disinterested person" as that term is defined in Rule 16b-3 promulgated by the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"), but no action of the Committee shall
be invalid if this requirement is not met. The Committee shall select one of its
members as Chairman and shall act by vote of a majority of a quorum, or by
unanimous written consent. A majority of its members shall constitute a quorum.
The Committee shall be governed by the provisions of CGPN By-Laws and of Nevada
law applicable to the Board, except as otherwise provided herein or determined
by the Board.
1.2.2 The Committee shall have full and complete authority,
in its discretion, but subject to the express provisions of the Plan to approve
the Employees and Selected Persons nominated by the management of the Company to
be granted Awards or Stock Options; to determine the number of Awards or Stock
Options to be granted to an Employee or Selected Person; to determine the time
or times at which Awards or Stock Options shall be granted; to establish the
terms and conditions upon which Awards or Stock Options may be exercised; to
19
remove or adjust any restrictions and conditions upon Awards or Stock Options;
to specify, at the time of grant, provisions relating to exercisability of Stock
Options and to accelerate or otherwise modify the exercisability of any Stock
Options; and to adopt such rules and regulations and to make all other
determinations deemed necessary or desirable for the administration of the Plan.
All interpretations and constructions of the Plan by the Committee, and all of
its actions hereunder, shall be binding and conclusive on all persons for all
purposes.
1.2.3 The Company hereby agrees to indemnify and hold
harmless each Committee member and each employee of the Company, and the estate
and heirs of such Committee member or employee, against all claims, liabilities,
expenses, penalties, damages or other pecuniary losses, including legal fees,
which such Committee member or employee, his or her estate or heirs may suffer
as a result of his or her responsibilities, obligations or duties in connection
with the Plan, to the extent that insurance, if any, does not cover the payment
of such items. No member of the Committee or the Board shall be liable for any
action or determination made in good faith with respect to the Plan or any Award
or Stock Option granted pursuant to the Plan.
1.3 ELIGIBILITY AND PARTICIPATION.
-----------------------------
Employees eligible under the Plan shall be approved by the
Committee from those Employees and officers and Selected Persons who, in the
opinion of the management of the Company, are in positions which enable them to
make significant and extraordinary contributions to the long-term performance
and growth of the Company. In selecting Employees and officers and Selected
Persons to whom Stock Options or Awards may be granted, consideration shall be
given to factors such as employment position, duties and responsibilities,
ability, productivity, length of service, morale, interest in the Company and
recommendations of supervisors. No member of the Committee shall be eligible to
participate under the Plan or under any other Company plan if such participation
would contravene the standard of paragraph 1.2.1 above relating to
"disinterested persons."
1.4 SHARES SUBJECT TO THE PLAN.
--------------------------
The maximum number of shares of Common Stock that may be issued
pursuant to the Plan shall be 40,000,000, subject to adjustment pursuant to the
provisions of paragraph 4.1. If shares of Common Stock awarded or issued under
the Plan are reacquired by the Company due to a forfeiture or for any other
reason, such shares shall be cancelled and thereafter shall again be available
for purposes of the Plan. If a Stock Option expires, terminates or is cancelled
for any reason without having been exercised in full, the shares of Common Stock
not purchased thereunder shall again be available for purposes of the Plan.
2. PROVISIONS RELATING TO STOCK OPTIONS
2.1 GRANTS OF STOCK OPTIONS.
-----------------------
The Committee may grant Stock Options in such amounts, at such times,
and to such Employees and Selected Persons nominated by the management of the
Company as the Committee, in its discretion, may determine. Stock Options
granted under the Plan shall constitute "incentive stock options" within the
20
meaning of Section 422 of the Code, if so designated by the Committee on the
date of grant. The Committee shall also have the discretion to grant Stock
Options which do not constitute incentive stock options, and any such Stock
Options shall be designated non-statutory stock options by the Committee on the
date of grant. The aggregate fair market value (determined as of the time an
incentive stock option is granted) of the Common Stock with respect to which
incentive stock options are exercisable for the first time by any Employee or
Selected Person during any one calendar year (under all plans of the Company and
any parent or Subsidiary of the Company) may not exceed the maximum amount
permitted under Section 422 of the Code (currently $100,000.00). Non-statutory
stock options shall not be subject to the limitations relating to incentive
stock options contained in the preceding sentence. Each Stock Option shall be
evidenced by a written agreement (the "Option Agreement") in a form approved by
the Committee, which shall be executed on behalf of the Company and by the
Employee or Selected Person to whom the Stock Option is granted, and which shall
be subject to the terms and conditions of this Plan. In the discretion of the
Committee, Stock Options may include provisions (which need not be uniform),
authorized by the Committee in its discretion, that accelerate an Employee's
rights to exercise Stock Options following a "Change in Control," upon
termination of such Employee employment by the Company without "Cause" or by the
Employee for "Good Reason," as such terms are defined in paragraph 3.1 hereof.
The holder of a Stock Option shall not be entitled to the privileges of stock
ownership as to any shares of Common Stock not actually issued to such holder.
2.2 PURCHASE PRICE.
--------------
The purchase price (the "Exercise Price") of shares of Common Stock
subject to each Stock Option ("Option Shares") shall equal the fair market value
("Fair Market Value") of such shares on the date of grant of such Stock Option.
Notwithstanding the foregoing, the Exercise Price of Option Shares subject to an
incentive stock option granted to an Employee or Selected Person who at the time
of grant owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or of any parent or Subsidiary shall be
at least equal to 110% of the Fair Market Value of such shares on the date of
grant of such Stock Option. The Fair Market Value of a share of Common Stock on
any date shall be equal to the closing price (or if no closing price is
reported, the average of the last bid and asked prices) of the Common Stock for
the last preceding day on which CGPN's shares were traded, and the method for
determining the closing price shall be determined by the Committee.
2.3 OPTION PERIOD.
-------------
The Stock Option period (the "Term") shall commence on the date of
grant of the Stock Option and shall be ten years or such shorter period as is
determined by the Committee. Notwithstanding the foregoing, the Term of an
incentive stock option granted to an Employee or Selected Person who at the time
of grant owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or of any parent or Subsidiary shall not
exceed five years. Each Stock Option shall provide that it is exercisable over
its term in such periodic installments as the Committee in its sole discretion
may determine. Such provisions need not be uniform. Notwithstanding the
foregoing, but subject to the provisions of paragraphs 1.2.2 and 2.1, Stock
Options granted to Employees and Selected Persons who are subject to the
reporting requirements of Section 16(a) of the Exchange Act ("Section 16
Reporting Persons") shall not be exercisable until at least six months and one
day from the date the Stock Option is granted unless the Committee adjusts the
waiting period as they deem appropriate. The adjustment of the waiting period is
to give the Company an ability to attract and retain qualified individuals
21
2.4 EXERCISE OF OPTIONS.
-------------------
2.4.1 Each Stock Option may be exercised in whole or in part
(but not as to fractional shares) by delivering it for surrender or endorsement
to the Company, attention of the Corporate Secretary, at the principal office of
the Company, together with payment of the Exercise Price and an executed Notice
and Agreement of Exercise in the form prescribed by paragraph 2.4.2. Payment may
be made (i) in cash, (ii) by cashier's or certified check, (iii) by surrender of
previously owned shares of the Company's Common Stock valued pursuant to
paragraph 2.2 (if the Committee authorizes payment in stock in its discretion),
(iv) by withholding from the Option Shares which would otherwise be issuable
upon the exercise of the Stock Option that number of Option Shares having an
aggregate fair market value (determined in the manner prescribed by paragraph
2.2) as of the date of the exercise of the Stock Option equal to the exercise
price of the Stock Option, if such withholding is authorized by the Committee in
its discretion, or (v) in the discretion of the Committee, by the delivery to
the Company of the optionee's promissory note secured by the Option Shares,
bearing interest at a rate sufficient to prevent the imputation of interest
under Sections 483 or 1274 of the Code, and having such other terms and
conditions as may be satisfactory to the Committee.
2.4.2 Exercise of each Stock Option is conditioned upon the
agreement of the Employee or Selected Person to the terms and conditions of this
Plan and of such Stock Option as evidenced by the Employee's or Selected
Person's execution and delivery of a Notice and Agreement of Exercise in a form
to be determined by the Committee in its discretion. Such Notice and Agreement
of Exercise shall set forth the agreement of the Employee or Selected Person
that: (a) no Option Shares will be sold or otherwise distributed in violation of
the Securities Act of 1933 (the "Securities Act") or any other applicable
federal or state securities laws, (b) each Option Share certificate may be
imprinted with legends reflecting any applicable federal and state securities
law restrictions and conditions, (c) the Company may comply with said securities
law restrictions and issue "stop transfer" instructions to its Transfer Agent
and Registrar without liability, (d) if the Employee or Selected Person is a
Section 16 Reporting Person, said person will furnish to the Company a copy of
each Form 4 or Form 5 filed by said Employee or Selected Person and will timely
file all reports required under federal securities laws, and (e) the Employee or
Selected Person will report all sales of Option Shares to the Company in writing
on a form prescribed by the Company.
2.4.3 No Stock Option shall be exercisable unless and until
any applicable registration or qualification requirements of federal and state
securities laws, and all other legal requirements, have been fully complied
with. The Company will use reasonable efforts to maintain the effectiveness of a
Registration Statement under the Securities Act for the issuance of Stock
Options and shares acquired thereunder, but there may be times when no such
Registration Statement will be currently effective. The exercise of Stock
Options may be temporarily suspended without liability to the Company during
times when no such Registration Statement is currently effective, or during
times when, in the reasonable opinion of the Committee, such suspension is
necessary to preclude violation of any requirements of applicable law or
regulatory bodies having jurisdiction over the Company. If any Stock Option
would expire for any reason except the end of its term during such a suspension,
then if exercise of such Stock Option is duly tendered before its expiration,
such Stock Option shall be exercisable and exercised (unless the attempted
exercise is withdrawn) as of the first day after the end of such suspension. The
Company shall have no obligation to file any Registration Statement covering
resales of Option Shares.
22
2.5 CONTINUOUS EMPLOYMENT.
---------------------
Except as provided in paragraph 2.7 below, an Employee may not
exercise a Stock Option unless from the date of grant to the date of exercise
such Employee remains continuously in the employ of the Company. For purposes of
this paragraph 2.5, the period of continuous employment of an Employee with the
Company shall be deemed to include (without extending the term of the Stock
Option) any period during which such Employee is on leave of absence with the
consent of the Company, provided that such leave of absence shall not exceed
three months and that such Employee returns to the employ of the Company at the
expiration of such leave of absence. If such Employee fails to return to the
employ of the Company at the expiration of such leave of absence, such
Employee's employment with the Company shall be deemed terminated as of the date
such leave of absence commenced. The continuous employment of an Employee with
the Company shall also be deemed to include any period during which such
Employee is a member of the Armed Forces of the United States, provided that
such Employee returns to the employ of the Company within 90 days (or such
longer period as may be prescribed by law) from the date such Employee first
becomes entitled to discharge. If an Employee does not return to the employ of
the Company within 90 days (or such longer period as may be prescribed by law)
from the date such Employee first becomes entitled to discharge, such Employee's
employment with the Company shall be deemed to have terminated as of the date
such Employee's military service ended.
2.6 RESTRICTIONS ON TRANSFER.
------------------------
Each Stock Option granted under this Plan shall be transferable
only by will or the laws of descent and distribution. No interest of any
Employee or Selected Person under the Plan shall be subject to attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other legal
or equitable process. Each Stock Option granted under this Plan shall be
exercisable during an Employee's or Selected Person's lifetime only by such
Employee or Selected Person or by such Employee's or Selected Persons legal
representative.
2.7 TERMINATION OF EMPLOYMENT.
-------------------------
2.7.1 Upon an Employee's or Selected Persons Retirement,
Disability or death, (a) all Stock Options to the extent then presently
exercisable shall remain in full force and effect and may be exercised pursuant
to the provisions thereof, including expiration at the end of the fixed term
thereof, and (b) unless otherwise provided by the Committee, all Stock Options
to the extent not then presently exercisable by such Employee or Selected Person
shall terminate as of the date of such termination of employment and shall not
be exercisable thereafter.
2.7.2 Upon the termination of the employment of an Employee
or Selected Person with the Company for any reason other than the reasons set
forth in paragraph 2.7.1 hereof, (a) all Stock Options to the extent then
23
presently exercisable by such Employee or Selected Person shall remain
exercisable only for a period of 90 days after the date of such termination of
employment (except that the 90-day period shall be extended to 12 months if the
Employee or Selected Person shall die during such 90-day period), and may be
exercised pursuant to the provisions thereof, including expiration at the end of
the fixed term thereof, and (b) unless otherwise provided by the Committee, all
Stock Options to the extent not then presently exercisable by such Employee or
Selected Person shall terminate as of the date of such termination of employment
and shall not be exercisable thereafter.
2.7.3 For purposes of this Plan:
(a) "Retirement" shall mean an Employee's or
Selected Person's retirement from the employ of the Company on or after the date
on which such Employee or Selected Person attains the age of sixty-five (65)
years; and
(b) "Disability" shall mean total and permanent
incapacity of an Employee or Selected Person, due to physical impairment or
legally established mental incompetence, to perform the usual duties of such
Employee's or Selected Person's employment with the Company, which disability
shall be determined: (i) on medical evidence by a licensed physician designated
by the Committee, or (ii) on evidence that the Employee or Selected Person has
become entitled to receive primary benefits as a disabled employee under the
Social Security Act in effect on the date of such disability.
3. PROVISIONS RELATING TO AWARDS
3.1 GRANT OF AWARDS.
---------------
Subject to the provisions of the Plan, the Committee shall have
full and complete authority, in its discretion, but subject to the express
provisions of this Plan, to (i) grant Awards pursuant to the Plan, (ii)
determine the number of shares of Common Stock subject to each Award ("Award
Shares"), (iii) determine the terms and conditions (which need not be identical)
of each Award, including the consideration (if any) to be paid by the Employee
or Selected Person for such Common Stock, which may, in the Committee's
discretion, consist of the delivery of the Employee's or Selected Person's
promissory note meeting the requirements of paragraph 2.4.1, (iv) establish and
modify performance criteria for Awards, and (v) make all of the determinations
necessary or advisable with respect to Awards under the Plan. Each award under
the Plan shall consist of a grant of shares of Common Stock subject to a
restriction period (after which the restrictions shall lapse), which shall be a
period commencing on the date the award is granted and ending on such date as
the Committee shall determine (the "Restriction Period"). The Committee may
provide for the lapse of restrictions in installments, for acceleration of the
lapse of restrictions upon the satisfaction of such performance or other
criteria or upon the occurrence of such events as the Committee shall determine,
and for the early expiration of the Restriction Period upon an Employee's or
Selected Person's death, Disability or Retirement as defined in paragraph 2.7.3,
or, following a Change of Control, upon termination of an Employee's or Selected
Person's employment by the Company without "Cause" or by the Employee or
Selected Person for "Good Reason," as those terms are defined herein. For
purposes of this Plan:
24
"CHANGE OF CONTROL" shall be deemed to occur (a) on the date the
Company first has actual knowledge that any person (as such term is used in
Sections 13(d) and 14(d) (2) of the Exchange Act) has become the beneficial
owner (as defined in Rule 13(d)-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 40% or more of the
combined voting power of the Company's then outstanding securities, or (b) on
the date the shareholders of the Company approve (i) a merger of the Company
with or into any other corporation in which the Company is not the surviving
corporation or in which the Company survives as a subsidiary of another
corporation, (ii) a consolidation of the Company with any other corporation, or
(iii) the sale or disposition of all or substantially all of the Company's
assets or a plan of complete liquidation.
"CAUSE," when used with reference to termination of the
employment of an Employee or Selected Person by the Company for "Cause," shall
mean:
(a) the individual's continuing wilful and material breach of
his or her duties to the Company after he or she receives a demand from the
Chief Executive of the Company or any other officer specifying the manner in
which he or she has wilfully and materially breached such duties, other than any
such failure resulting from Disability of the individual or his or her
resignation for "Good Reason," as defined herein; or
(b) the conviction of a felony; or
(c) the commission of fraud in the course of his or her
employment with the Company, such as embezzlement or
other material and intentional violation of law against
the Company; or
(d) the gross misconduct causing material harm to the
Company.
"GOOD REASON" shall mean any one or more of the following,
occurring following or in connection with a Change of Control and within 90 days
prior to the Employee's or Selected Persons resignation, unless the Employee or
Selected Person shall have consented thereto in writing:
(a) the assignment to the Employee of duties inconsistent
with his or her executive status prior to the Change of Control or a substantive
change in the officer or officers to whom he or she reports from the officer or
officers to whom he or she reported immediately prior to the Change of Control;
or
(b) the elimination or reassignment of a majority of the
duties and responsibilities that were assigned to the Employee or Selected
Person immediately prior to the Change of Control; or
(c) a reduction by the Company in the Employee's annual base
salary as in effect immediately prior to the Change of Control; or
(d) the Company's requiring the Employee or Selected Person
to be based anywhere outside a 35-mile radius from his or her place of
employment immediately prior to the Change of Control, except for required
travel on the Company's business to an extent substantially consistent with the
25
Employee's or Selected Persons business travel obligations immediately prior to
the Change of Control; or
(e) the failure of the Company to grant the Employee a
performance bonus reasonably equivalent to the same percentage of salary the
Employee normally received prior to the Change of Control, given comparable
performance by the Company and the Employee; or
(f) the failure of the Company to obtain a satisfactory
Assumption Agreement (as defined in paragraph 4.12 of the Plan) from a
successor, or the failure of such successor to perform such Assumption
Agreement.
3.2 INCENTIVE AGREEMENTS.
--------------------
Each Award granted under the Plan shall be evidenced by a written
agreement (an "Incentive Agreement") in a form approved by the Committee and
executed by the Company and the Employee or Selected Person to whom the Award is
granted. Each Incentive Agreement shall be subject to the terms and conditions
of the Plan and other such terms and conditions as the Committee may specify.
3.3 WAIVER OF RESTRICTIONS.
----------------------
The Committee may modify or amend any Award under the Plan or waive
any restrictions or conditions applicable to such Awards; provided, however,
that the Committee may not undertake any such modifications, amendments or
waivers if the effect thereof materially increases the benefits to any Employee
or Selected Person, or adversely affects the rights of any Employee or Selected
Person without his or her consent.
3.4 TERMS AND CONDITIONS OF AWARDS.
------------------------------
3.4.1 Upon receipt of an Award of shares of Common Stock
under the Plan, even during the Restriction Period, an Employee or Selected
Person shall be the holder of record of the shares and shall have all the rights
of a shareholder with respect to such shares, subject to the terms and
conditions of the Plan and the Award.
3.4.2 Except as otherwise provided in this paragraph 3.4, no
shares of Common Stock received pursuant to the Plan shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period applicable to such shares. Any purported disposition of such
Common Stock in violation of this paragraph 3.4.2 shall be null and void.
3.4.3 If an Employee's or Selected Persons employment with
the Company terminates prior to the expiration of the Restriction Period for an
Award, subject to any provisions of the Award with respect to the Employee's or
Selected Persons death, Disability or Retirement, or Change of Control, all
shares of Common Stock subject to the Award shall be immediately forfeited by
the Employee or Selected Person and reacquired by the Company, and the Employee
or Selected Person shall have no further rights with respect to the Award. In
the discretion of the Committee, an Incentive Agreement may provide that, upon
the forfeiture by an Employee or Selected Person of Award Shares, the Company
shall repay to the Employee or Selected Person the consideration (if any) which
the Employee or Selected Person paid for the Award Shares on the grant of the
Award. In the discretion of the Committee, an Incentive Agreement may also
26
provide that such repayment shall include an interest factor on such
consideration from the date of the grant of the Award to the date of such
repayment.
3.4.4 The Committee may require under such terms and
conditions as it deems appropriate or desirable that (i) the certificates for
Common Stock delivered under the Plan are to be held in custody by the Company
or a person or institution designated by the Company until the Restriction
Period expires, (ii) such certificates shall bear a legend referring to the
restrictions on the Common Stock pursuant to the Plan, and (iii) the Employee or
Selected Person shall have delivered to the Company a stock power endorsed in
blank relating to the Common Stock.
4. MISCELLANEOUS PROVISIONS
4.1 ADJUSTMENTS UPON CHANGE IN CAPITALIZATION.
-----------------------------------------
4.1.1 The number and class of shares subject to each
outstanding Stock Option, the Exercise Price thereof (but not the total price),
the maximum number of Stock Options that may be granted under the Plan, the
minimum number of shares as to which a Stock Option may be exercised at any one
time, and the number and class of shares subject to each outstanding Award,
shall be proportionately adjusted in the event of any increase or decrease in
the number of the issued shares of Common Stock which results from a split-up or
consolidation of shares, payment of a stock dividend or dividends exceeding a
total of 5% for which the record dates occur in any one fiscal year, a
recapitalization (other than the conversion of convertible securities according
to their terms), a combination of shares or other like capital adjustment, so
that (i) upon exercise of the Stock Option, the Employee or Selected Person
shall receive the number and class of shares such Employee or Selected Person
would have received had such Employee or Selected Person been the holder of the
number of shares of Common Stock for which the Stock Option is being exercised
upon the date of such change or increase or decrease in the number of issued
shares of the Company, and (ii) upon the lapse of restrictions of the Award
Shares, the Employee or Selected Person shall receive the number and class of
shares such Employee or Selected Person would have received if the restrictions
on the Award Shares had lapsed on the date of such change or increase or
decrease in the number of issued shares of the Company. Notwithstanding the
above, the Committee may in its discretion, not subject the employee's stock
options and/or awards to any decreases in the in the number of shares issued
resulting from stock splits, dividends, recapitalization and/or any other
actions of the Company that reduce the number of shares outstanding. In the
event of adjustments that increase the number of shares outstanding, the
employee's stock options and/or awards will be proportionately adjusted.
4.1.2 Upon a reorganization, merger or consolidation of the
Company with one or more corporations as a result of which CGPN is not the
surviving corporation or in which CGPN survives as a wholly-owned subsidiary of
another corporation, or upon a sale of all or substantially all of the property
of the Company to another corporation, or any dividend or distribution to
shareholders of more than 10% of the Company's assets, adequate adjustment or
other provisions shall be made by the Company or other party to such transaction
so that there shall remain and/or be substituted for the Option Shares and Award
Shares provided for herein, the shares, securities or assets which would have
been issuable or payable in respect of or in exchange for such Option Shares and
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Award Shares then remaining, as if the Employee or Selected Person had been the
owner of such shares as of the applicable date. Any securities so substituted
shall be subject to similar successive adjustments. The Committee may in its
discretion, not subject the number of shares allocated to the Plan to any
changes in the number of shares issued resulting from stock splits, dividends,
recapitalization and/or any other action of the Company that affect the number
of shares outstanding.
4.2 WITHHOLDING TAXES.
-----------------
The Company shall have the right at the time of exercise of any
Stock Option, the grant of an Award, or the lapse of restrictions on Award
Shares, to make adequate provision for any federal, state, local or foreign
taxes which it believes are or may be required by law to be withheld with
respect to such exercise ("Tax Liability"), to ensure the payment of any such
Tax Liability. The Company may provide for the payment of any Tax Liability by
any of the following means or a combination of such means, as determined by the
Committee in its sole and absolute discretion in the particular case: (i) by
requiring the Employee or Selected Person to tender a cash payment to the
Company, (ii) by withholding from the Employee's salary or Selected Person's
payment, (iii) by withholding from the Option Shares which would otherwise be
issuable upon exercise of the Stock Option, or from the Award Shares on their
grant or date of lapse of restrictions, that number of Option Shares or Award
Shares having an aggregate fair market value (determined in the manner
prescribed by paragraph 2.2) as of the date the withholding tax obligation
arises in an amount which is equal to the Employee's or Selected Person's Tax
Liability or (iv) by any other method deemed appropriate by the Committee.
Satisfaction of the Tax Liability of a Section 16 Reporting Person may be made
by the method of payment specified in clause (iii) above only if the following
two conditions are satisfied:
(a) the withholding of Option Shares or Award Shares and the
exercise of the related Stock Option occur at least six months and one day
following the date of grant of such Stock Option or Award; and
(b) the withholding of Option Shares or Award Shares is made
either (i) pursuant to an irrevocable election ("Withholding Election") made by
such Employee or Selected Person at least six months in advance of the
withholding of Options Shares or Award Shares, or (ii) on a day within a ten-day
"window period" beginning on the third business day following the date of
release of the Company's quarterly or annual summary statement of sales and
earnings.
Anything herein to the contrary notwithstanding, a Withholding Election may be
disapproved by the Committee at any time.
4.3 RELATIONSHIP TO OTHER EMPLOYEE BENEFIT PLANS.
--------------------------------------------
Stock Options and Awards granted hereunder shall not be deemed to
be salary or other compensation to any Employee or Selected Person for purposes
of any pension, thrift, profit-sharing, stock purchase or any other employee
benefit plan now maintained or hereafter adopted by the Company.
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4.4 AMENDMENTS AND TERMINATION.
--------------------------
The Board of Directors may at any time suspend, amend or
terminate this Plan. No amendment or modification of this Plan may be adopted,
except subject to stockholder approval, which would: (a) materially increase the
benefits accruing to Employees or Selected Persons and officers under this Plan,
(b) materially increase the number of securities which may be issued under this
Plan (except for adjustments pursuant to paragraph 4.1 hereof), or (c)
materially modify the requirements as to eligibility for participation in the
Plan.
4.5 SUCCESSORS IN INTEREST.
----------------------
The provisions of this Plan and the actions of the Committee
shall be binding upon all heirs, successors and assigns of the Company and of
Employees, Selected Persons and officers.
4.6 OTHER DOCUMENTS.
---------------
All documents prepared, executed or delivered in connection with
this Plan (including, without limitation, Option Agreements and Incentive
Agreements) shall be, in substance and form, as established and modified by the
Committee; provided, however, that all such documents shall be subject in every
respect to the provisions of this Plan, and in the event of any conflict between
the terms of any such document and this Plan, the provisions of this Plan shall
prevail.
4.7 NO OBLIGATION TO CONTINUE EMPLOYMENT.
------------------------------------
This Plan and grants hereunder shall not impose any obligation on
the Company to continue to employ any Employee or Selected Person. Moreover, no
provision of this Plan or any document executed or delivered pursuant to this
Plan shall be deemed modified in any way by any employment contract between an
Employee (or other employee) or Selected Person and the Company.
4.8 MISCONDUCT OF AN EMPLOYEE.
-------------------------
Notwithstanding any other provision of this Plan, if an Employee
or Selected Person commits fraud or dishonesty toward the Company or wrongfully
uses or discloses any trade secret, confidential data or other information
proprietary to the Company, or intentionally takes any other action materially
inimical to the best interests of the Company, as determined by the Committee,
in its sole and absolute discretion, such individual shall forfeit all rights
and benefits under this Plan.
4.9 TERM OF PLAN.
------------
This Plan was adopted by the Board effective November 8, 2002.
No Stock Options or Awards may be granted under this Plan after October 15,
2012.
4.10 GOVERNING LAW.
-------------
This Plan shall be construed in accordance with, and governed by,
the laws of the State of Nevada.
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4.11 SHAREHOLDER APPROVAL.
--------------------
No Stock Option shall be exercisable, or Award granted, unless
and until the Shareholders of the Company have approved this Plan and all other
legal requirements have been fully complied with. Approval may be by Consent of
Shareholders without meeting.
4.12 ASSUMPTION AGREEMENTS.
---------------------
The Company will require each successor, (direct or indirect,
whether by purchase, merger, consolidation or otherwise), to all or
substantially all of the business or assets of the Company, prior to the
consummation of each such transaction, to assume and agree to perform the terms
and provisions remaining to be performed by the Company under each Incentive
Agreement and Stock Option and to preserve the benefits to the Employees and
officers and non employee directors thereunder. Such assumption and agreement
shall be set forth in a written agreement in form and substance satisfactory to
the Committee (an "Assumption Agreement"), and shall include such adjustments,
if any, in the application of the provisions of the Incentive Agreements and
Stock Options and such additional provisions, if any, as the Committee shall
require and approve, in order to preserve such benefits to the Employees,
Selected Persons and officers. Without limiting the generality of the foregoing,
the Committee may require an Assumption Agreement to include satisfactory
undertakings by a successor:
(a) to provide liquidity to the Employees and Selected
Persons at the end of the Restriction Period applicable to Common Stock awarded
to them under the Plan, or on the exercise of Stock Options;
(b) if the succession occurs before the expiration of any
period specified in the Incentive Agreements for satisfaction of
performance criteria applicable to the Common Stock awarded thereunder, to
refrain from interfering with the Company's ability to satisfy such performance
criteria or to agree to modify such performance criteria and/or waive any
criteria that cannot be satisfied as a result of the succession;
(c) to require any future successor to enter into an
Assumption Agreement; and
(d) to take or refrain from taking such other actions as the
Committee may require and approve, in its discretion.
The Committee referred to in this paragraph 4.12 is the Committee appointed by a
Board of Directors in office prior to the succession then under consideration.
4.13 COMPLIANCE WITH RULE 16B-3.
--------------------------
Transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3. To the extent that any provision of the
Plan or action by the Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee.
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IN WITNESS WHEREOF, this Plan has been executed effective as of the 16th
day of October, 2002.
CYBER GROUP NETWORK CORPORATION
By:
---------------------------
Richard Serrano, President
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WARREN J. SOLOSKI Letterhead
CONSENT OF COUNSEL
I consent to the filing of this opinion as an exhibit to any filing made
with the Securities and Exchange Commission or under any state or other
jurisdiction's securities act for the purposes of registering, qualifying or
establishing eligibility for an exemption from registration or qualification of
the stock issued as described in the Registration Statement in connection with
the offering described therein.
/s/ Warren J. Soloski
Warren J. Soloski
Special Counsel to CYBER GROUP NETWORK CORPORATION
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Moore Stephens Wurth Frazer and Torbett, LLP
CERTIFIED PUBLIC ACCOUNTANTS Letterhead
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
on Form S-8 of CYBER GROUP NETWORK CORPORATION (to be filed on or about November
8, 2002) of our report dated March 26, 2002 appearing in CYBER GROUP NETWORK
CORPORATION'S Form 10-KSB for the year ended December 31, 2001.
Walnut, California
November 8, 2002
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