<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
Date of Report (date of earliest event reported): October 22, 1999
VERIDA INTERNET CORP.
(Exact name of registrant as specified in its charter)
Nevada 0-25757 98-0164651
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
50 California Street, Suite 1500
San Francisco, California 94111
(Address of Principal Executive
Offices, including Zip Code)
(415) 464-8600
(Registrant's Telephone Number,
including Area Code)
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
On October 22, 1999, the Board of Directors of Verida Internet Corp. (the
"Company") approved a Merger Agreement (the "Merger Agreement") dated as of
October 21, 1999 that the Company entered into with Verida Acquisition Corp.
("VAC"), Triad Creative, Inc. ("Triad") and Michael Hinshaw ("Hinshaw"),
pursuant to which Triad will be merged into VAC. The resulting corporation,
which will be renamed Triad Creative, Inc., will be a wholly-owned subsidiary of
the Company.
Triad (www.triadinc.com), which was founded in 1982, provides positioning,
branding and integrated marketing services to high-technology and financial
services companies including CBS MarketWatch, PointConnect, Bank of America and
Imperial Bank through a unique combination of concept-driven design and results-
oriented strategic marketing.
Hinshaw owns all of the issued and outstanding shares of Triad. Hinshaw is the
President, Chief Executive Officer and a director of the Company. Triad's value
has been independently established between $1.7 and $2.1 million. The
consideration payable by the Company to effect the transaction will be 150,000
of its shares plus $750,000 in cash payable over six months. The Company's
shares have been valued at $7.00 per share for purposes of this transaction,
based on the recent closing of a $1.25 million private placement at $7.00 per
unit, with each unit consisting of one share of common stock and one warrant to
purchase an additional share of common stock for $10.00 within three years. The
$750,000 of cash payments will be made from the proceeds of the $1.25 million
private placement.
If the fair market value of Triad declines prior to the closing of the
transaction, the purchase price is subject to downward adjustment, with an
option for the Company to cancel the transaction if Triad's fair market value is
less than $1.275 million.
The description of the transaction set forth above is qualified by reference to
the Merger Agreement, which is filed as Exhibit 2.1 to this current report on
Form 8-K and is hereby incorporated by reference as though set forth here in its
entirety.
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Item 7(c). Exhibits.
List of Exhibits
<TABLE>
<CAPTION>
<C> <S> <C>
Exhibit No. Exhibit Description Page No.
- ----------------- ------------------------------------------------------------------------------ -------------
2.1 Merger Agreement dated as of October 21, 1999, by and among Verida Internet
Corp., Verida Acquisition Corp., Triad Creative, Inc. and Michael Hinshaw
3.1* Initial Articles of Incorporation, as filed November 1, 1996
3.2* Bylaws
3.3* Articles of Amendment to the Articles of Incorporation, as filed on
November 8, 1996
3.4* Articles of Amendment to the Articles of Incorporation, as filed on March
11, 1999
</TABLE>
<TABLE>
<S> <C>
* Incorporated by reference from the Company's registration statement on Form 10-SB filed with the
Securities and Exchange Commission on April 12, 1999.
</TABLE>
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VERIDA INTERNET CORP.
November 8, 1999 /s/ Michael C. Hinshaw
---------------- ----------------------
(Date) Michael C. Hinshaw
President and Chief Executive Officer
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
<C> <S> <C>
Exhibit No. Exhibit Description Page No.
- ----------------- ------------------------------------------------------------------------------ -------------
2.1 Merger Agreement dated as of October 21, 1999, by and among Verida Internet
Corp., Verida Acquisition Corp., Triad Creative, Inc. and Michael Hinshaw
3.1* Initial Articles of Incorporation, as filed November 1, 1996
3.2* Bylaws
3.3* Articles of Amendment to the Articles of Incorporation, as filed on
November 8, 1996
3.4* Articles of Amendment to the Articles of Incorporation, as filed on March
11, 1999
</TABLE>
<TABLE>
<S> <C>
* Incorporated by reference from the Company's registration statement on Form 10-SB filed with the
Securities and Exchange Commission on April 12, 1999.
</TABLE>
<PAGE>
Exhibit 2.1
MERGER AGREEMENT
----------------
THIS MERGER AGREEMENT ("Agreement") is made and entered into as of this
21st day of October, 1999, by and among VERIDA INTERNET CORP., a Nevada
corporation (hereinafter "Verida"), VERIDA ACQUISITION CORP., a California
corporation (hereinafter "Verida Acquisition"): TRIAD CREATIVE, INC., a
California corporation ("Triad"), and MICHAEL HINSHAW, a married person on
behalf of himself and his marital community (hereinafter "Hinshaw").
RECITALS
--------
Hinshaw owns all of the issued and outstanding shares of Triad, and desires
to merge his business with that of Verida Acquisition by exchanging all such
shares for voting shares of Verida and cash in a transaction qualifying as a
statutory merger. Verida owns all of the issued and outstanding shares of
Verida Acquisition, and desires to merge Triad into Verida Aquisition, Verida's
newly formed wholly-owned subsidiary, in a transaction qualifying as a statutory
merger.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the mutual covenants, representations,
and warranties herein contained, the parties agree as follows:
1. Statutory Merger; Exchange Price.
(a) Verida Acquisition hereby agrees to and shall merge with Triad, and
Triad, as the disappearing corporation, hereby agrees to and shall merge with
and into Verida Acquisition, at the exchange rate hereinafter set forth in this
Section 1, and pursuant to the terms and conditions hereinafter provided.
(b) Upon the effective date of the merger ("Closing date"), Hinshaw shall
exchange Thirty-eight Thousand Seven Hundred (38,700) shares of the common stock
(no par value) of Triad, which constitutes ONE HUNDRED PERCENT (100%) of the
outstanding stock of all classes of stock issued by Triad (the "Shares").
Subject to the terms and conditions set forth in this Agreement, Hinshaw will,
on Closing date, assign, transfer, convey, and deliver the Shares to Verida,
free and clear of any claims, liens, encumbrances, or restrictions whatsoever.
(c) In reliance on the covenants, representations, and warranties of
Hinshaw contained herein and subject to the terms and conditions hereof,
including, without limitation, the adjustment to the purchase price to be made
pursuant to Section 2 hereof, at closing the Shares will be converted into One
Hundred Fifty Thousand (150,000) shares of common stock (par value $.001) of
Verida (the "Verida Stock"), subject to the restrictions on transferability set
forth herein, and cash of Seven Hundred Fifty Thousand Dollars ($750,000),
which shall be paid or credited as follows:
(i) Hinshaw acknowledges receipt from Verida Acqusition of $150,000 as
a deposit which is not refundable but which will be credited against the
amount to be paid upon closing as provided above.
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(ii) The amount of $150,000 cash will be paid to Hinshaw at Closing.
(iii) The amount of $200,000 will be paid to Hinshaw on November 15,
1999.
(iv) The amount of $250,000 will be paid to Hinshaw on December 31,
1999.
Verida Acquisition may prepay any or all of such amounts due after
Closing at any time. The Verida stock is restricted stock and may not be
sold, assigned, transferred, or conveyed until the first anniversary of the
Closing date. On that date, and on each of the next four anniversaries of
the Closing date, twenty percent (20%) of the Verida stock will be released
from that restriction and may be sold, assigned, transferred, or conveyed
by Hinshaw; provided that, in addition to any resale restrictions set forth
in Rule 144 promulgated under the Securities Act of 1933 (the "Act"), in
no event may more than ten percent (10%) of the released stock be sold per
month in each of the twenty-four (24) months beginning with the first
anniversary of the Closing date.
(d) Upon the effective date of the merger, the articles of incorporation
of Verida Acquisition shall be amended to change the name of the surviving
corporation from Verida Acquisition Corp. to Triad Creative, Inc.
(e) Upon the completion of the exchange and the receipt of all of the
Shares by Verida and the filing of all necessary documents with the State of
California to effect the statutory merger, in which Triad shall be the
disappearing corporation and Verida Acquisition shall be the surviving
corporation, the Shares shall be canceled.
2. Exchange Price Adjustment.
(a) Hinshaw shall immediately notify Verida in writing if there is any
material, adverse change in Triad's business operations, assets, liabilities,
prospects, or financial condition. Should there be any such material adverse
change, upon Verida's written request the fair market value of Triad shall be
determined by agreement of the parties or, if an agreement cannot be reached,
by an independent accountant chosen by mutual agreement of the parties. If the
parties cannot agree on the accountant, each party shall choose an independent
accountant, and the two selected accountants shall select a third accountant.
The accountant or three accountants, as the case may be, shall determine the
value of Triad and, if appropriate, the amount of the reduced purchase price (as
provided for below) by majority vote within thirty (30) days after selection of
the first or third accountant, as the case may be. The Closing date shall be
postponed if necessary until that decision is made.
(b) If the fair market value of Triad at the Closing date is less than
$1,700,000 as a result of any such change described in subparagraph (a), the
following shall apply:
(i) If the fair market value of Triad is between $1,700,000 and
$1,275,000, the exchange price shall be reduced appropriately to reflect
the decrease in the value of Triad in the manner provided for above;
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<PAGE>
(ii) If the fair market value of Triad is less than $1,275,000,
Verida may, at its option, by written notice to Hinshaw, cancel this
Agreement.
(c) Any reduction of the exchange price shall be accomplished by mutual
agreement of Verida and Hinshaw as to whether the amount of cash, shares of
Verida stock, or both is to be reduced at Closing; provided, however, the
parties agree that Verida stock shall be used as the medium of exchange to
acquire no less than one-half of the issued and outstanding Shares. If the
parties cannot agree the matter shall be determined by the procedure set forth
in Section 2(a).
3. Employment of Hinshaw.
Hinshaw's agreement to become an employee of Verida effective October 1,
1999, is a material consideration to Verida for its entering into this
Agreement. Verida and Hinshaw shall negotiate in good faith the terms and
conditions of an employment agreement between Verida and Hinshaw to be executed
before or at Closing. That agreement will include provisions which, among
others, preclude Hinshaw from voluntarily leaving the employ of Verida to enter
into competition with Verida's business, so as to protect Verida's interests in
its employees, customers, and substantially functional online markets that
Verida has established.
4. Closing Date and Documents.
(a) This transaction shall be closed on October 21, 1999, or such later
or earlier date as the parties mutually agree, at such time and place as the
parties agree (the "Closing").
(b) At the time of Closing, Hinshaw shall deliver or cause Triad to
deliver to Verida the following:
(i) Triad's Minute Books, containing the Articles, Bylaws, Consent
Resolutions, and minutes of all meetings of shareholders and directors to
date, its stock certificate books, and corporate seal.
(ii) Resignations of the present officers and directors of Triad.
(iii) Written agreements, employment contracts, and leases to which
Triad is a party, all of which are listed on Schedule l attached hereto and
incorporated by this reference as if fully set forth herein.
(iv) The certificates representing the Shares, duly endorsed in
blank or by assignment separate from certificate.
(v) A certificate of the Secretary of State, State of California,
certifying the good standing of Triad on a date as close to the Closing
date as it reasonably may be obtained.
(vi) An Estoppel Certificate and consent from each of the
landlord(s) of the real property lease(s) described in Section 5(p) hereof,
acknowledging that each such lease is in good standing, that Triad has
3
<PAGE>
satisfied to date all of its obligations under the lease, and that the
landlord consents to this transaction, if required under the lease.
(vii) Such other documents and instruments, including all necessary
and appropriate third party consents as may be required for the
transactions set forth herein, as Verida may reasonably request.
(viii) A counterpart of the employment agreement referred to in
Section 3 above, duly executed by Hinshaw.
(ix) Originals of resolutions of the Board of Directors and
Shareholders of Triad approving the merger transaction.
(c) At the Closing, Verida shall deliver or cause Verida Acquisition to
deliver to Hinshaw the following items:
(i) The sum of ONE HUNDRED FIFTY THOUSAND UNITED STATES DOLLARS
(US$150,000).
(ii) A certificate representing the Verida stock.
(iii) A counterpart of the employment agreement referred to in
Section 3 above, executed by Verida.
(iv) Such other documents and instruments as Hinshaw reasonably may
request.
(v) Originals of resolutions of the Board of Directors and
Shareholders of Verida Acquisition and of the Board of Directors of
Verida approving the merger transaction.
(d) Termination in Event of No Closing. If the Closing shall not have
occurred on or before October 22, 1999, any party may elect to terminate this
Agreement, provided such electing party has not, by breaching this Agreement,
wrongfully caused the nonoccurrence of the Closing. In the event of such a
termination, the parties shall be released from all liabilities under this
Agreement. If a party has wrongfully caused the nonoccurrence of the Closing,
the other parties may exercise whatever legal and/or and equitable remedies it
may choose.
5. Representations and Warranties of Hinshaw.
Hinshaw represents and warrants to Verida as follows:
(a) That Triad is a stock corporation, organized pursuant to the laws of
the State of California, is a validly existing corporation in good standing, is
not licensed or qualified to do business as a foreign corporation in any other
state or foreign country, has no subsidiaries, and there has been no change in
the articles, bylaws, or other governing documents of Triad from August 30,
1999, through the date of this Agreement.
(b) That Triad does not own, and has not previously owned, the capital
stock of, or any other proprietary interest in, any other corporation,
partnership, or other business entity, and there are no other corporations,
partnerships, or
4
<PAGE>
other business entities that control, are controlled by, or are under common
control with Triad.
(c) That Triad has an authorized capitalization of One Million (1,000,000)
no par shares, all of which are common stock; that Thirty Eight Thousand Seven
Hundred (38,700) shares of Triad's common stock are issued and outstanding and
are fully paid and not assessable; that there are no outstanding subscriptions
to purchase, options, contracts, calls, commitments, or demands of any character
in relation to any shares of Triad.
(d) That Hinshaw is the lawful owner and holder of such Thirty Eight
Thousand Seven Hundred (38,700) shares of capital stock of Triad; that Hinshaw
has full power and right to enter into this Merger Agreement and to exchange the
Shares free of any liens, encumbrances, claims, or agreements; and that at the
time of delivery of the Shares to Verida, they will be free of any claim, lien,
or encumbrance, so as to allow good title to vest in Verida. This merger will
not constitute a breach of any agreement to which Hinshaw is a party; and this
agreement, upon execution and delivery, shall constitute a valid and binding
obligation of Hinshaw and Triad, enforceable against them in accordance with its
terms.
(e) That to the best of Hinshaw's knowledge, all necessary licenses and
permits for the business operation of Triad are valid and will remain in force,
and there are no proceedings or actions pending to limit or impair any of
Triad's rights, powers, or privileges, or to dissolve Triad.
(f) That Triad is the sole and absolute owner of the assets described on
its balance sheet of June 30, 1999, which is a part of the financial statements
of Triad of June 30, 1999, attached hereto as a part of Schedule 1 and
incorporated by this reference as if fully set forth herein (the "Balance
Sheet"); that the Balance Sheet is a true, accurate, and complete statement of
the financial condition of Triad and its assets and liabilities as of such date;
that to the best of Hinshaw's knowledge, as of the Closing date there have been
no material, adverse changes, financial or otherwise, in the business
operations, assets, prospects, and financial condition of Triad since the date
of the Balance Sheet, Triad having conducted its business in the ordinary course
since that date to preserve intact its business, properties, and goodwill; and
that no action has been taken since that date to impair or reduce the net worth
of Triad as shown on the Balance Sheet. "Material, adverse change," as used in
this Section 5(f), shall mean a reduction of more than $100,000 in the fair
market value of Triad. The occurrence of any such material, adverse change as
described herein shall not prevent Closing, however, except as provided in
Section 2 above, notwithstanding any language herein to the contrary.
(g) That Triad owns all of its assets subject only to such liens or
encumbrances set forth in the Balance Sheet, and all operating assets are in
good operating condition and repair.
(h) That there are no actions, suits, investigations, or proceedings at
law or equity pending against Triad or its assets or business, or against
Hinshaw which could affect the consummation of this transaction or encumber the
Shares. Hinshaw does not know, nor does he have any basis to know, of any suits
or proceedings against Triad or Hinshaw; and that there are no unsatisfied
judgments existing, whether filed or not, against Triad, or against Hinshaw
5
<PAGE>
which could affect the consummation of this transaction or encumber the Shares.
There are no actions or proceedings pending or proposed in which Triad is a
plaintiff or petitioner.
(i) That since June 30, 1999, there have been no distributions of any
properties of Triad, nor any declaration of a dividend on Triad's stock, nor has
Triad entered into any contract which obligates it for matters other than supply
purchase commitments made in the ordinary course of business; that all material
agreements to which Triad is subject, whether written or oral, are set forth in
Schedule 1; that executory purchase commitments of Triad have been made in the
ordinary course of business and are not in excess of Triad's ordinary usual
business requirements, and do not call for the payment of any premiums or price
in excess of the current market value at the time such purchases were made; and
that Triad has not defaulted under any contract or commitment under which it is
a party or by which it is bound.
(j) That Triad has no employment contracts or collective bargaining
agreements, whether or not legally binding, nor does Triad or Hinshaw have any
knowledge of any union organizing activities among or with respect to the
employees of Triad. That Triad has no bonus, deferred compensation, profit-
sharing, pension, or retirement plans, whether or not legally binding, except as
disclosed to Verida.
(k) That to the best of Hinshaw's knowledge, as of the date of Closing,
except as reflected in the Balance Sheet or in financial statements and notes
thereto dated June 30, 1999, which are attached hereto as a part of Schedule l,
there are no liabilities or debts, contingent or otherwise, existing against
Triad for any cause whatsoever other than those arising in the ordinary and
regular course of Triad's business from the date thereof to the Closing date, or
in accordance with the terms of this Agreement; nor, to the knowledge of
Hinshaw, is there any basis for the assertion of any liabilities against Triad,
other than those expressed herein, arising from or out of any transaction
entered into prior to this Agreement.
(l) That to the best of Hinshaw's knowledge, Triad has performed all of
its obligations which were required to be performed by it up to the Closing date
by the terms of any agreement, contract, or commitment, and that no material
obligations are expected to have been paid prior to their normal maturity and in
due course.
(m) That to the best of Hinshaw's knowledge, all of Triad's accounts
receivable, as set forth on the Balance Sheet, and as of the Closing date, are
valid and existing as of such dates, and are collectable in accordance with the
terms extended by Triad. To the best of Hinshaw's knowledge, except as
otherwise set in Schedule 2 attached hereto and incorporated herein by this
reference (which Schedule 2 sets forth exceptions and qualifications, if any, to
Hinshaw's representations and warranties set forth in this Section 5,
inclusive), no valid defense or right of setoffs exists to Triad's right to
collect such accounts receivable in the full amount shown on such books of
account.
(n) That all of the physical assets of Triad are, and will continue to be
up to the date of Closing, insured against loss by fire and extended coverage
from risks insured against under Triad's existing fire and extended coverage
insurance policies for at least the cost of such assets.
6
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(o) That Triad has filed all federal, state, and local tax returns
required by law to be filed by it, and that all taxes, penalties, and interest
due to such tax authorities for all periods covered by such returns have been
paid in full; that adequate cash reserves have been established upon the Balance
Sheet, and that the Balance Sheet will reflect adequate cash reserves, covering
all federal, state, and local taxes with respect to the operations of Triad up
to and including the Closing date.
(p) That Triad presently leases real property from The Finnila Family
Trust under and pursuant to a lease dated March 14, 1994 (hereinafter referred
to as the "Lease"). A true and correct copy of the Lease has been provided to
Verida. The Lease is now in full force and effect and all amounts payable
thereunder have been paid. To the best of Hinshaw's knowledge, all uses of such
leased property and any property owned by Triad conform, in all material
respects, to all applicable building and zoning ordinances, laws, and
regulations.
(q) That Triad has received no notice that Triad is in breach or default
under the Lease. Hinshaw has complied with the notice and consent requirements
of paragraph XIV of the Lease, in accordance with the provisions of paragraph XX
thereof, and represents and warrants that the landlord, after reasonable notice,
has not objected to the assignment resulting from this transaction.
(r) That Schedule 1 sets forth the name of each bank in or with which
----------
Triad has an account, loan, credit line, or safe deposit box, and the names of
all persons presently authorized to draw thereon or having access thereto, and
the names of all persons, if any, now holding powers of attorney from Triad and
a summary statement of the terms thereof.
(s) That Schedule 3 contains a complete and accurate list of the names and
----------
current salary or pay rates of all persons presently employed by Triad.
(t) That pending the Closing of this transaction, Hinshaw will use and
exert his best efforts to retain Triad as a functioning, going concern.
(u) That no representation or warranty by Hinshaw or Triad contained in
this Agreement, and no statement contained in any instrument furnished or to be
furnished by Hinshaw or Triad pursuant to this Agreement or in connection with
the transactions contemplated hereby, contains or will contain any untrue
statement of fact, or knowingly omits or will omit to state a fact necessary in
order to make the statements contained herein and therein not misleading.
Without limiting the generality of the foregoing, there is no fact known to
Hinshaw or any officer, director, or employee of Triad who has any
responsibility for the management of its assets, properties, or rights which has
not been disclosed to Verida and which materially, adversely affects the value
of such assets, properties, or rights.
6. Representations and Warranties of Verida.
Verida represents and warrants to Hinshaw as follows:
(a) Verida is a corporation duly organized and existing and in good
standing under the laws of Nevada.
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(b) Verida has the corporate authority to acquire the Shares from Hinshaw,
and Verida's Board of Directors has approved, authorized, and directed the
execution and delivery of this Agreement.
(c) Verida Acquisition is a corporation duly organized and existing and in
good standing under the laws of California.
(d) Verida Acquisition has the corporate authority to enter into the
merger agreement, and Verida Acquisition's Board of Directors and shareholders
have approved, authorized, and directed the execution and delivery of this
Agreement.
(e) This agreement will not constitute a breach of any agreement to which
Verida or Verida Acquisition is a party; and this agreement, upon execution and
delivery, shall constitute a valid and binding obligation of Verida and Verida
Acquisition, enforceable against them in accordance with its terms.
(f) No representation or warranty by Verida or Verida Acquisition
contained in this Agreement, and no statement contained in any instrument
furnished or to be furnished by Verida or Verida Acquisition pursuant to this
Agreement or in connection with the transactions contemplated by the Agreement,
contains or will contain any untrue statement of fact, or knowingly omits or
will omit to state any fact necessary in order to make the statements contained
herein and therein not misleading.
7. Interim Conduct of Business.
Pending the Closing date, Hinshaw further agrees that:
(a) Hinshaw shall cause Triad's business to be conducted only in the
ordinary course.
(b) Hinshaw shall not cause or permit any changes to be made in the
organization, Articles of Incorporation, or Bylaws of Triad.
(c) Hinshaw will not cause or permit anything to be done which will change
Triad's status as a corporation in good standing under the laws of the State of
California.
(d) Hinshaw will not cause or permit Triad to (i) issue or sell additional
shares of its capital stock, (ii) redeem, purchase, or acquire any shares of its
capital stock, or (iii) authorize or enter into any options, contracts, or
agreements with respect to such stock.
(e) Hinshaw will use commercially reasonable efforts not to cause or
permit any changes in the affairs or condition (financial or otherwise), assets,
or liabilities of Triad other than changes in the ordinary course of business,
none of which, individually or in the aggregate, will constitute a material,
adverse change with respect to Triad, as defined in Section 5(f).
(f) Hinshaw will not cause or permit Triad to enter into or waive any
contracts except those entered into or waived in the ordinary course of
business.
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(g) Hinshaw will not cause or permit Triad to pay or declare any dividend
or distribution in respect of Triad's capital stock.
(h) Other than in the ordinary course of business, Hinshaw will not cause
or permit Triad to increase the compensation, benefits, or payments to be paid
or accrued to any employee, shareholder, director, or officer of Triad, nor will
Hinshaw permit Triad to make additional contributions pursuant to any Triad
deferred compensation or profit sharing plan.
(i) Hinshaw will use his best efforts to preserve intact the business,
properties, and goodwill of Triad.
8. Pre-Closing Obligations.
Hinshaw covenants and agrees to cause or permit the following to occur from
the date of this Agreement to the Closing:
(a) Hinshaw shall provide, and shall cause Triad to provide, to Verida and
its attorneys, accountants, and other authorized representatives full and
complete access, during regular business hours, to the books, records,
personnel, and properties of Triad in order that Verida may have a full
opportunity to make such investigation as it may desire of the business and
affairs of Triad, provided such investigation shall not unreasonably interfere
with the business of Triad. The foregoing shall include, but is not limited to,
taking such actions and providing such assistance as is necessary for Verida's
independent certified public accountants to examine the books and records of
Triad.
(b) No change shall be made in the banking arrangements of Triad.
(c) Hinshaw will use his best efforts, and will cause Triad to use its
best efforts, to duly comply with all laws, regulations, and ordinances
applicable to it, and will comply with all orders, injunctions, and decrees
applicable to it and to the conduct of its business.
(d) Hinshaw will do all things necessary that all of his representations
and warranties contained in this Agreement are true at the Closing as if
repeated at and as of such time, and that no breach or default occurs with
respect to any of his covenants, representations, or warranties.
9. Conditions Precedent to Obligations of Verida and Verida Acquisition.
The obligations of Verida and Verida Acquisition to close this transaction
are subject, at their option, to the fulfillment prior to or at the Closing, of
each of the following conditions, any one or more of which may be waived by
Verida and Verida Acquisition:
(a) All representations, covenants, and warranties of Hinshaw contained in
this Agreement and in any written statement, including financial statements,
certificates, schedules, exhibits, or other documents delivered by Hinshaw or
his agents pursuant to or in connection with this transaction shall be true and
correct at the Closing as if made at and as of Closing.
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(b) Hinshaw shall have performed and complied with all covenants,
agreements, and conditions required by this Agreement to be performed or
complied with by Hinshaw prior to or at the Closing.
(c) All actions, proceedings, consents, instruments, and documents
required to carry out this Agreement and the transaction herein contemplated, or
incidental to such transaction, shall have been approved by counsel for Verida,
which approval shall not be unreasonably withheld.
(d) All third party consents required to carry out this Agreement and the
transaction herein contemplated, or incidental to such transaction, shall have
been received and approved by counsel for Verida as to form and substance, which
approval shall not be unreasonably withheld.
(e) No material litigation or proceeding is threatened or pending against
Triad or Hinshaw.
10. Conditions Precedent to Obligations of Hinshaw and Triad.
The obligations of Hinshaw and Triad to close this transaction are subject,
at their option, to the fulfillment prior to or at the Closing, of each of the
following conditions, any one or more of which may be waived by Hinshaw and
Triad:
(a) All representations, covenants, and warranties of Verida and Verida
Acquisition contained in this Agreement and in any written statement delivered
by Verida, Verida Acquisition, or their agents pursuant to or in connection with
the transaction herein contemplated shall be true and correct at the Closing as
if made at and as of Closing.
(b) Verida shall have performed and complied with all covenants,
agreements, and conditions required by this Agreement to be performed or
complied with by Verida prior to or at the Closing.
(c) All actions, proceedings, consents, instruments, and documents
required to carry out this Agreement and the transaction herein contemplated, or
incidental to such transaction, shall have been approved by counsel for Hinshaw,
which approval shall not be unreasonably withheld.
11. Books and Records.
At Closing, Hinshaw shall turn over to Verida all of Triad's books and
records required in the conduct of its business which Hinshaw, or his
representatives, shall at that time hold or control, including, without
limitation, general ledgers and journals, minute books, stock certificate books,
and customer lists. Hinshaw and his representatives, however, shall be given
reasonable and timely access to all books and records of Triad for the purpose
of preparing tax returns or for the audit or examination thereof, or for the
purpose of the defense of any debt, claim, or liability which has been tendered
by Verida or Verida Acquisition to Hinshaw pursuant to Section 12(b).
12. Indemnity, Defense of Claims, and Price Adjustments.
10
<PAGE>
(a) Hinshaw agrees to indemnify, defend, and hold Triad, its successors
and assigns (which shall hereafter in this paragraph include without limitation,
the successors and assigns of Triad's stock and/or assets in the event of a
merger or a voluntary dissolution or liquidation of Triad), Verida, and Verida
Acquisition, and each of them, harmless from and against all damages, costs, and
expenses sustained by reason of a breach of any of the covenants,
representations, and warranties of the Hinshaw hereunder, as well as from and
against all debts, claims, and liabilities of Triad which may have arisen, or
which may arise because of or as a result of any fact, event, or transaction
existing or occurring on or before the date of Closing, regardless of when the
cause of action may be deemed to arise, except for (i) any such debt, claim, or
liability as may be included as a liability of Triad on its financial statements
dated June 30, 1999, (ii) current liabilities incurred in the normal and
ordinary course of business between the date thereof and the date of Closing;
and (iii) matters disclosed by Hinshaw to Verida in this Agreement, the
Schedules hereto, or otherwise in writing). The foregoing indemnity shall
include any and all costs, expenses (including attorneys' and accounting fees),
and damages arising out of any claim, action, suit, or proceeding (collectively,
the "Claims") concerning any such breach of any of the covenants,
representations, and warranties of Hinshaw hereunder, or concerning any such
debt, claim, or liability, whether such action for such breach, debt, action,
suit, or proceeding shall be reduced to final judgment or shall be settled prior
thereto, and shall include the costs of enforcing this indemnity. The foregoing
hold harmless and indemnity agreement of Hinshaw shall include any claim against
or liability of Triad for taxes, including, without limitation, federal income
taxes, and any liability for penalty or interest thereon resulting from facts,
events, or transactions existing or occurring on or before the date of Closing,
whether or not presently known or disclosed to Verida. The foregoing hold
harmless and indemnity agreement shall not apply to any claims, debts, damages,
expenses, suits, or proceedings to the extent resulting from Verida's negligent
or intentional misconduct.
(b) Verida or Verida Acquisition shall make a timely tender to Hinshaw of
the defense of any debt, claim, or liability covered by the foregoing indemnity
and hold harmless agreement. Such tender shall be made by written notice to
Hinshaw and shall give Hinshaw thirty (30) days within which, by written notice
to Verida, to accept such tender. If Hinshaw assumes the defense of any such
debt, claim, or liability, Verida and Verida Acquisition shall not make any
payment thereupon without prior written instructions from Hinshaw.
Notwithstanding the foregoing, Verida or Verida Acquisition, as the case may be,
may, pending Hinshaw's decision to defend, cause its attorneys, after
consultation with Hinshaw's attorneys, if the same is practical, to file notices
of appearances or otherwise respond to any proceedings, if the same shall be
necessary or advisable to preserve or protect the position of Triad, its
successors and assigns, Verida, or Verida Acquisition. If Hinshaw fails or
refuses to accept such tender, Verida or Verida Acquisition may, in its sole and
absolute discretion, defend against the claim, debt, or liability, or settle or
pay the same in such a manner as it deems prudent; and the costs and expenses of
such defense or settlement (including, without limitation, attorneys' and
accounting fees) shall be deducted from any sums owing from Verida to Hinshaw
and, if such sums exceed amounts then owing from Verida to Hinshaw, the excess
shall be immediately due and payable from Hinshaw to Verida. If Hinshaw accepts
such tender of defense, his defense of such debt, claim, or liability shall be
at Hinshaw's sole cost and expense, and Hinshaw agrees to keep Verida currently
informed as to the progress of their defense of all such debts, claims, or
liabilities.
11
<PAGE>
(c) Hinshaw's representations and warranties set forth in Section 5,
inclusive, and the indemnification of Verida and Verida Acquisition set forth in
Paragraph 12(a) above, shall automatically expire and terminate six (6) months
after the Closing date. Hinshaw's representations and warranties set forth in
Section 17 shall automatically expire and terminate twelve (12) months after the
Closing date.
(d) Verida agrees to indemnify and hold harmless Hinshaw against any
liability, including costs and attorneys' fees, resulting from (i) any breach of
Triad's lease occurring on or after the Closing date, and (ii) any other Claims
arising from and after the Closing date.
13. Further Assurances.
On and after the Closing date, upon the reasonable request of Verida,
Hinshaw shall do all such further acts and execute, acknowledge, and deliver all
such further instruments and documents as may be necessary or desirable to
convey and transfer to, and vest in, Verida and protect Verida's right, title,
and interest in and to, and enjoyment of, the Shares, and as may otherwise be
appropriate to carry out the transactions for which provision is made in this
Agreement.
14. Fees.
The parties agree that they will each pay the respective legal or
accounting fees they incur as a result of this sale and purchase transaction.
15. Renewal of Covenants.
The covenants, representations, and warranties made herein by Hinshaw shall
be deemed to have been made again, and shall be true and correct at the time of
Closing, except those covenants, representations, and warranties which by their
terms are limited to some specific date.
16. Survival of Representations, Warranties, Indemnities, and Guarantees.
The parties' representations, warranties, indemnities, and guarantees shall
survive the Closing of this transaction, the delivery of all required
instruments hereunder, and any investigations made by Hinshaw or Verida, subject
to Paragraph 12(c) above.
17. Covenants, Representations, and Warranties Concerning Verida Stock.
Hinshaw makes the following covenants, representations, and warranties, and
acknowledges the following concerning the Verida stock:
(a) Hinshaw acknowledges and understands that Verida has not registered
and has no obligation to register the Verida stock pursuant to the Act and other
applicable federal securities laws and regulations of the United States or any
state or province (together, the "Securities Laws"), unless it elects to file a
registration statement to register other securities under the Securities Laws,
in which case it will include the Securities in its registration statement.
Hinshaw further acknowledges that, under the Securities Laws, he may not resell
the
12
<PAGE>
Verida stock for one year after its issuance, and thereafter subject to resale
restrictions contained herein and under Rule 144 promulgated under the Act.
(b) Hinshaw recognizes that the acquisition of the Verida stock involves a
high degree of risk and is suitable only for persons of adequate financial means
who have no need for liquidity in this investment in that (i) Hinshaw may not be
able to liquidate its investment in the event of an emergency; (ii)
transferability is extremely limited; and (iii) Hinshaw could sustain a complete
loss of the value of the Verida stock.
(c) Hinshaw represents that (i) he is competent to understand and does
understand the nature of the acquisition of the Verida stock; and (ii) it is
able to bear the economic risk of this acquisition of the Verida stock.
(d) Hinshaw represents that he is an "accredited investor" as such term is
defined in Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended, and acknowledges that he has significant prior investment
experience, including investment in non-listed and non-registered securities,
and that he recognizes the highly speculative nature of this acquisition.
(e) Hinshaw hereby represents that he has been furnished by Verida with
all information regarding Verida which he had requested or desired to know; that
all other documents which could be reasonably provided have been made available
for his inspection and review; and that he has been afforded the opportunity to
ask questions of and receive answers from duly authorized officers or other
representatives of Verida concerning Verida and the Verida stock.
(f) Hinshaw hereby acknowledges that this conveyance of the Verida stock
has not been reviewed by the United States Securities and Exchange Commission
(the "SEC") because of Verida's representations that this is a non-public
offering of the Verida stock pursuant to Section 4(2) of the Act and Rule 506 of
Regulation D promulgated thereunder and under any other applicable Securities
Laws. Hinshaw represents that the Verida stock is being acquired for his own
account, for investment and not for distribution or resale to others. Hinshaw
agrees that he will not sell, transfer, or otherwise dispose of the Verida stock
unless it is registered under the Act or unless an exemption from such
registration is available.
(g) Hinshaw agrees that Verida may, if it desires, permit the transfer of
Verida stock by Hinshaw out of his name only when his request for transfer is
accompanied by an opinion of counsel reasonably satisfactory to Verida that the
proposed sale, transfer, or disposition does not result in a violation of the
Securities Laws. Hinshaw agrees to hold Verida and its directors, officers, and
controlling persons and their respective heirs, representatives, successors, and
assigns harmless and to indemnify them against all liabilities, costs, and
expenses incurred by them as a result of any sale, transfer, or other
disposition of the Verida stock by Hinshaw in violation of any Securities Laws
or any misrepresentation herein.
(h) Hinshaw consents to the placement of a legend on the certificates
evidencing the Verida stock stating that it has not been registered under the
Act and setting forth or referring to the restrictions on the sale, transfer, or
other disposition thereof. Hinshaw is aware that Verida will make a notation in
its appropriate records with respect to the restrictions on the sale, transfer,
or other
13
<PAGE>
disposition of Verida stock.
(i) Hinshaw acknowledges and agrees that Verida is relying on Hinshaw's
representations contained in this Agreement in conveying the Verida stock to
him.
(j) Hinshaw represents and warrants that all representations made by
Hinshaw hereunder are true and correct in all material respects as of the date
of execution hereof, and will be true and correct on the Closing date, and
Hinshaw further agrees that until the Closing date he shall inform the Verida
immediately of any changes in any of the representations provided by Hinshaw
hereunder.
(k) Hinshaw acknowledges that the Verida stock has not been approved or
disapproved by the U.S. Securities Exchange Commission or by any state or
province securities commission or other regulatory authority, nor have any of
the foregoing authorities passed upon or endorsed the merits of the conveyance
of the Verida stock to Hinshaw or the accuracy or adequacy of any of the
documents concerning the Verida stock provided to Hinshaw. Any representation
to the contrary is unlawful.
18. Miscellaneous Provisions.
(a) Notices. Any notice required or desired to be served, given, or
delivered hereunder shall be in writing, and shall be deemed to have been
validly served, given or delivered (i) if mailed by certified mail, three (3)
days after deposit in the United States mails, with proper postage prepaid, (ii)
when sent by telecopy or similar facsimile transmission, upon receipt of
confirmation or answerback (provided that a confirmation copy shall be sent by
first class mail, postage prepaid), (iii) one (1) business day after deposit
with a reputable overnight courier with all charges prepaid, or (iv) when
delivered, if hand-delivered by messenger, all of which shall be properly
addressed to the party to be notified and sent to the address or number
indicated as follows:
Hinshaw: Michael C. Hinshaw
-------
------------------------------
------------------------------
------------------------------
with copy to: ------------------------------
------------------------------
------------------------------
Triad: c/o Michael C. Hinshaw
-----
------------------------------
------------------------------
------------------------------
with copy to: ------------------------------
------------------------------
------------------------------
Verida: Verida Internet Corp.
------ Attention: Corporate Secretary
50 California Street, Suite 1500
14
<PAGE>
San Francisco, CA 94111
with copy to: Verida Internet Corp.
Attention: Peter Rantucci
1090 West Pender Street, Suite 200
Vancouver, B.C. V6E 2N7
Verida Acquisition: c/o Verida Internet Corp.
------------------ Attention: Corporate Secretary
50 California Street, Suite 1500
San Francisco, CA 94111
with copy to: Verida Internet Corp.
Attention: Peter Rantucci
1090 West Pender Street, Suite 200
Vancouver, B.C. V6E 2N7
or such other addresses as any party shall designate in accordance with the
provisions of this paragraph.
(b) Waiver and Modification. The failure of any party at any time or
times to require strict performance of any provision hereof shall not in any
manner affect the right of such party at a later time to enforce the same. No
waiver by any party of the breach of any term or covenant contained in this
Agreement shall be deemed to be a release or affect any liability resulting from
such breach. No waiver of any nature, whether by conduct, course of dealing, or
otherwise, in any one or more instances shall be deemed to be or construed as a
continuing waiver of any such condition or breach or as a waiver of any other
condition or of any other breach of any other term or covenant of this
Agreement.
(c) Successors in Interest. This Agreement shall be binding upon and
inure to the benefit of the successors, heirs, assigns, and personal
representatives of the parties. No party may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
parties.
(d) Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter hereof. There are
no representations, warranties, understandings, or agreements other than those
expressly set forth herein. Time is expressly declared to be of the essence of
this Agreement.
(e) Exhibits. Exhibits and schedules annexed to this Agreement and the
documents and instruments to be delivered at or prior to the Closing are
expressly made a part of this Agreement as fully as though completely set forth
in it. All references to this Agreement either in the Agreement itself or in
any of such writings shall be deemed to refer to and include this Agreement and
all such writings. Any breach of or default under any provision of any such
writings shall, for all purposes, constitute a breach or default under this
Agreement and all other such writings.
(f) Execution in Counterparts. This Agreement may be executed separately
or independently in any number of counterparts, each and all of which together
shall be deemed to have been executed simultaneously and for all purposes to be
one agreement.
15
<PAGE>
(g) Captions. The respective captions of the sections and paragraphs
hereof are inserted for convenience of reference only and shall not be deemed to
modify or other wise affect in any respect any of the provisions hereof.
(h) Attorneys' Fees. In the event that any party retains an attorney to
enforce any of the provisions hereof, the substantially successful party shall
be entitled to reasonable attorneys' fees from the other party, including fees
incurred in both trial or appellate courts, or fees incurred without suit, and
all court and accounting costs.
DATED as of the date set forth above.
HINSHAW: VERIDA:
- -------- -------
/s/ MICHAEL C. HINSHAW VERIDA INTERNET CORP.,
- ---------------------- A Nevada corporation
MICHAEL C. HINSHAW
By: /s/ Bernhard Zinkhofer
---------------------------
Its: Director
--------
By: /s/ Peter Rantucci
---------------------------
Its: Director
--------
TRIAD: VERIDA ACQUISITION CORP.:
- ------ -------------------------
TRIAD CREATIVE, INC. VERIDA ACQUISITION CORP.
A California corporation A California corporation
By: /s/ MICHAEL C. HINSHAW By: /s/ Michael C. Hinshaw
- -------------------------- ---------------------------
MICHAEL C. HINSHAW ___________________________
Its: President Its: Director
- -------------- -------------
16
<PAGE>
Triad, Inc.
Schedule One, As of June 30, 1999
I Financial Statements
IA Financial Statements as of June 30, 1999
<TABLE>
<CAPTION>
Balance Sheet
<S> <C>
Cash: Westamerica Checking $ 5,372.54
Cash: Westamerica Imprest Chckg 1,467.70
Schwab One Investment Account 41,781.11
Cash: Petty 521.11
Accounts Receivable 112,068.09
Loan Receivable: S-H-M Hinshaw 63,408.41
Note Receivable: AOG Resourcenet 37,931.81
Deposits 3,322.00
Estimated Tax 5,205.41
Equipment/Auto 15,800.00
Equipment/Furniture 166,510.02
Accum: Deprec: Equip/Furniture (152,429.43)
Leasehold Improvements 15,271.87
Accum: Deprec: LseHold Improv (1,047.00)
Organization Costs 2,856.16
Accum. Amort: Org. Costs (2,605.00)
------------------
Total Assets $315,434.80
Accounts Payable 12,751.29
Sales Tax Payable 812.67
Note Payable - Carol Hoover 3,750.00
Credit Line: WestAmerica Bank 50,000.00
Credit Cards Payable 7,490.95
Trinity Lease: Computer 7,893.09
Trinity Lease: Phone System 2,813.83
-------------------
Total Liabilities 85,511.83
Common Stock 9,675.00
Retained Earnings 102,629.54
Year to Date Net Income 117,618.43
-------------------
Total Equity 229,922.97
</TABLE>
Total Liabilities and Equity 315,434.80
Schedule 1, Page 1
17
<PAGE>
Triad, Inc.
Schedule One, As of June 30, 1999
IA Financial Statements Continued
Income Statement As of 6/30/99
<TABLE>
<CAPTION>
Month of
Income June-99 Year to Date
<S> <C> <C>
Copywriting $ 19,112.14 $ 75,440.76
Internet/New Media 6,193.75 28,496.88
Photography/Illustration 2,210.00 27,074.00
Postage 1,200.00 1,200.00
Printing, Prepress 5,242.50 16,181.00
Professional Fees 64,589.78 522,058.60
Reimbursements 29,464.31
Service Bureau 1,159.10 10,831.39
Travel Expense Reimbursement 722.00 722.00
Shipping Delivery 1,256.25 3,908.29
-------------------------
Total Income 101,685.52 715,377.23
Job Costs
Copywriting 2,020.00 26,549.14
Delivery 1,156.08 4,818.90
Desin Services 7,755.00 32,234.00
Fulfillment, Lettershop 4,113.52
Internet, New Media 2,775.00
Media Purchase 10,242.00
Miscellaneous Costs 6,632,89
Photography Illustration 910.00 12,412.45
Postage 607.00 2,004.00
Printing, Prepress 20,567.05
Production Services 47.50 609.00
Proofreading/Editing 402.50 1,610.00
Service Bureau 1,238.92 4,481.36
Travel Transportation (Billable) 624.97 8,103.85
Other Costs: Commissions 2,806.25
-------------------------
Total Job Costs 14,761.97 139,959.41
Gross Profit 86,923.55 575,417.82
Expenses
Auto Fuel and Oil 179.18 917.90
Bank Charges 29.00
Payroll Fees/401k Fees 167.90 1,210.08
Continuing Education 570.00 3,913.75
Dues/Association 55.00 2,076.75
</TABLE>
Schedule 1, Page 2
18
<PAGE>
Triad, Inc.
Schedule One, As of June 30, 1999
Income Statement Cont'd As of 6/30/99
<TABLE>
<CAPTION>
Month of
Expenses Cont'd June-99 Year to Date
<S> <C> <C>
Employee Recruitment 45.00 2,150.73
Gifts 123.34 148.34
Insurance: Employee Health 2,894.40 16,830.65
Insurance: General Business -- (590.00)
Insurance: Workers Comp -- 3,588.87
Interest/Finance Charges 69.66 831.87
Interest/Credit Line 354.93 3,450.31
Interest/Trinity Leases 90.65 854.64
Prof. Fees Temp Help 1,302.90
Prof. Fees Legal/Accounting 3,177.60
Prof. Fees Other 186.00
Marketing 2,853.61 27,370.61
Meetings/Entertainment 1,016.21 4,031.83
Meals: Travel 181.04
Postage Office 200.00 1,725.60
Repairs Maintenance Auto 180.00 524.00
Rent Premises 1,972.00 11,771.33
Repairs & Maintenance Computers 700.00 5,557.33
Repairs & Maintenance Equipment 180.00 1,630.00
Repairs & Maintenance Premises 200.00 1,835.20
Salary Administration 8,456.63 54,730.66
Salary Shareholder 10,750.00 64,500.00
Salary Job Cost 30,707.00 165,705.28
Shipping/Messenger 127.72 1,031.92
EE Retirement Plan Contributions 1,177.09 7,002.83
Subscriptions Books (94.05) 1,563.31
Employee Commissions 250.00 7,637,58
Supplies Art/Design 382.30
Supplies Computers 1,074.54 8,606.17
Supplies Office 1,359.57 11,861.14
Taxes: Payroll 3,847.90 27,083.62
Taxes 940.00
Taxes: Business/Property 291.59 291.59
Taxes: Capital Lease 58.17 413.72
Travel Except Meals 352.99
Travel Expense 30.72 1,931.57
Utility: Gas/Electric 621.89 3,526.57
Utility: Internet Access 149.00 1,674.64
Utility: Phone/Cellular 1,392.40 8,623.26
------------------------------
Total Expenses 72,052.05 460,565.48
</TABLE>
Schedule 1, Page 3
19
<PAGE>
Triad, Inc.
Schedule One, As of June 30, 1999
Income Statement Cont'd As of 6/30/99
<TABLE>
<CAPTION>
Month of
Other Income June-99 Year to Date
<S> <C> <C>
Rent Income (235.00) (2,220.00)
Investment Interest Earned (146.32) (546.09)
Total Other Income (381.32) (2,766.09)
Net Income (Loss) 15,252.82 117,618.43
</TABLE>
IB Financial Statements Year End December 31, 1998
<TABLE>
<CAPTION>
Balance Sheet
<S> <C> <C>
Cash: Westamerica Checking $ 157.40
Cash: Westamerica Imprest Chckg 159.33
Schwab One Investment Account 7,243.43
Cash: Petty 4.15
Accounts Receivable 208,212.11
Loan Receivable: S-H-M Hinshaw 10,903.87
Note Receivable: AOG Resourcenet 37,931.81
Deposits 3,322.00
Estimated Tax 3,600.00
Equipment/Auto 15,800.00
Equipment/Furniture 222,405.69
Accum: Deprec: Equip/Furniture (152,429.43)
Leasehold Improvements 15,171.87
Accum: Deprec: LseHold Improv (1,047.00)
Organization Costs 2,856.16
Accum. Amort: Org. Costs (2,605.00)
------------------
Total Assets $371.686.39
Accounts Payable 37,541.88
Sales Tax Payable 6,972.29
Note Payable - Carol Hoover 11,250.00
Credit Line: WestAmerica Bank 100,000.00
Credit Cards Payable 11,233.91
Trinity Lease: Computer 10,735.47
Trinity Lease: Phone System 4,012.08
-------------------
Total Liabilities 181,745.63
Common Stock 9,675.00
Retained Earnings 16,535.30
Year to Date Net Income 163,730.46
-------------------
Total Equity 189,940.76
Total Liabilities and Equity 371,686.39
</TABLE>
Schedule 1, Page 4
20
<PAGE>
Triad, Inc.
Schedule One, As of June 30, 1999
IB Financial Statements Continued
Income Statement As of 12/31/98
<TABLE>
<CAPTION>
Month of
Income December-98 Year to Date
<S> <C> <C>
Copywriting $18,920.00 $113,293.13
Fulfillment/Lettershop $13,443.04
Internet/New Media (2,085.00) 46,785.10
Photography/Illustration (2,250.00) 48,605.92
Postage -- 435.00
Printing, Prepress -- 64,937.22
Professional Fees 80,636.25 951,963.88
Reimbursements 8,370.00 31,299.93
Service Bureau 706.00 25,092.56
Travel Expense Reimbursement -- 6,581.93
Shopping Delivery 141.27 9,717.83
--------------------------
Total Income 104,438.52 1,314,155.54
Job Costs
Copywriting 8,710.00 44,856.25
Delivery (2,280.47) 8,998.98
Design Services 400.00 37,084.30
Project Management 4,529.50
Fulfillment, Lettershop (1,086.95) 10,480.31
Internet, New Media 1,370.00 10,554.73
Media Purchase -- 39,260.80
Miscellaneous Costs 683.52 15,444.89
Photography Illustration 1,517.25 49,822.85
Postage 510.48 852.23
Printing, Prepress -- 51,750.72
Production Services -- 17,541.96
Proofreading/Editing 577.50 3,380.00
Service Bureau 1,650.50 16,547.65
Travel Transportation (Billable) 1,419.53 18,326.81
Other Costs: Commissions -- 9,492.61
---------------------------
Total Job Costs 13,471.36 338,924.59
Gross Profit 86,923.55 575,417.82
</TABLE>
Schedule 1, Page 5
21
<PAGE>
Triad, Inc.
Schedule One, As of June 30, 1999
<TABLE>
<CAPTION>
Expenses
<S> <C> <C>
Auto Fuel and Oil 253.44 2,083.55
Bank Charges 374.11
Continuing Education 1,356.00 7,106.26
Contributions: Charity 120.00 2,340.00
Dues/Associations 325.00 4,602.78
Employee Recruitment 151.40 7,978.79
Equipment Rental 547.59
Gifts 964.54 1,406.64
Insurance: Employee Health 2,180.75 22,648.30
Insurance: Employee Disability (305.28)
Insurance: General Business 432.50 2,429.16
Insurance: Life 1,039.26
Insurance: Workers Comp 3,843.46
Interest/Finance Charges 50.61 1,501.92
Interest/Credit Line 3,401.92
Interest/Trinity Leases 133.76 1,780.67
Prof. Fees Temp Help
Prof. Fees Legal/Accounting 2,520.00 30,780.52
Prof Fees Other 4,596.13 12,449.70
Marketing 3,263.29 61,631.08
Meetings/Entertainment 1,892.81 9,426.37
Meals: Travel 95.45 560.17
Postage Office 366.45 1,329.69
Repairs Maintenance Auto 433.28 4,526.77
Rent Premises 1,972.00 23,475.00
Repairs & Maintenance Computers 700.00 9,589.00
Repairs & Maintenance Equipment 60.00 866.29
Repairs & Maintenance Premises 484.00 3,092.45
Salary Administration 14,976.08 85,011.15
Salary Shareholder 34,750.00 138,500.00
Salary Job Cost 33,044.50 264,495.00
Shipping/Messenger 205.20 4,241.91
EE Retirement Plan Contributions
Subscriptions Books 211.48 3,055.99
Employee Commissions
Supplies Art/Design 171.95 3,811.90
Supplies Computers 1,368.90 2,634.47
Supplies Office 1,818.59 17,122.57
Taxes: Payroll 4,929.60 37,719.94
Taxes
Taxes: Business/Property 1,940.83
Taxes: Capital Lease 58.17 682.21
Travel Except Meals 6,560.03
Travel Expense 1,087.67 3,838.15
Utility: Gas/Electric 406.95 5,690.96
Utility: Internet Access 848.06 12,133.17
Utility: Phone/Cellular 908.17 12,001.20
------------------------
Total Expenses 117,136.73 819,925.65
</TABLE>
Schedule 1, Page 6
22
<PAGE>
Triad, Inc.
Schedule One, As of June 30, 1999
Other Income
Interest Income (3.73)
Rent Income (640.00) (8,088.00)
Investment Interest Earned (72.42) (333.43)
-----------------------------
Total Other Income (712.42) (8,425.16)
II Triad Material Agreements/Commitments
Agreements: Clients
Client Contract Amnt Billed to Date Remaining
First Hand Funds 10,700.00 7,225.00 3,475.00
CBS MarketWatch 32,965.00 32,215.00 750.00
Imperial Bank 249,040.00 157,747.00 91,293.00
Lamberson Koster 24,500.00 15,458.00 9,042.00
PointConnect 64,899.50 60,849.50 4,050.00
SME Corporation 33,750.00 27,437.00 6,313.00
Silton Bookman Systems 6,432.50 5,329.50 1,103.00
Verida Internet Corp. 129,875.00 65,395.00 64,480.00
World Oil Enterprises 161,200.00 150,468.00 10,732.00
- --------------------------------------------------------------------------------
713,362.00 522,124.00 191,238.00
Notes: Based on total per Client
Agreements: Leases
Entity - Item Contract Amnt Paid to Date Remaining
Trinity Capital Equipment Lease 19,000.00 11,106.91 7,893.09
Finnella Family Trust - Office
Lease 2,536.00
Notes: Office Lease term 2 years, commenced at
shown rate as of 4/15/99. Copy of lease attached.
Schedule 1, Page 7
23
<PAGE>
Triad, Inc.
Schedule One, As of June 30, 1999
III Triad Financial Institution Information
<TABLE>
<CAPTION>
Balance as of
Entity - Item 6/30/99 Authorized Signers
<S> <C> <C>
Westamerica Bank - Main Checking 5,372.54 Michael Hinshaw
Account Cameron Hinshaw
Jarrett Gamache Limited
</TABLE>
Notes: Mr. Gamache can only get information, and
make payments towards Credit Line.
<TABLE>
<S> <C> <C> <C>
Westamerica Bank - Imprest Chkg 1,487.70 Denise della Santina Primary
Jarrett Gamache Primary
Lee Bickley Secondary
Michael Hinshaw Sole Depositor
</TABLE>
Notes: All checks from this account require two
signatures. Ms. Della Santina and Mr. Gamache must be one.
As sole depositor, only Mr. Hinshaw can deposit funds into account.
<TABLE>
<S> <C> <C> <C>
Westamerica Bank - Credit Line 50,000.00 Michael Hinshaw
Jarrett Gamache Limited
</TABLE>
Notes: Mr. Gamache may only get information. Also see notes under Main Checking.
<TABLE>
<S> <C> <C> <C>
Charles Schwab - SchwabOne Acct 41,781.11 Michael Hinshaw
Jarrett Gamache Limited Power of
Attorney.
</TABLE>
Notes: Mr. Gamache's Limited Power of Attorney extends
only to transfers within Schwab. Cannot withdraw funds.
Prepared by:
/s/ Jarrett A. Gamache 10/1/99
- ----------------------------------------------- -----------------
Jarrett A. Gamache Date
Finance Administration Manager Triad, Inc.
Schedule 1, Page 8
24
<PAGE>
Triad, Inc.
Schedule Two, As of June 30, 1999
I Exceptions and Qualifications to Seller's Representations and Warranties
Buyer has no Exceptions to the Qualifications, Representations and Warranties
set forth in Section 5 of the Sale Agreement
Prepared by:
/s/ Jarrett A. Gamache 10/1/99
- ------------------------------------------ -------
Jarrett A. Gamache Date
Finance Administration Manager Triad, Inc.
25
<PAGE>
Triad, Inc.
Schedule Three, As of June 30, 1999
I Employee and Salary Listing
Full Time Employees
<TABLE>
<CAPTION>
Employee Yearly Salary
<S> <C>
Michael Hinshaw $129,000.00
Leila M. Bickley $54,000.00
Thomas P. Cote $18,000.00
Michael Dambrowski 52,500.00
Denise della Santina 52,000.00
Myrna Faulds 42,000.00
Jarrett Gamache 39,600.00
Lannette D. Ingels 29,000.00
Diana Kollanyi 58,000.00
Helder J. Sebastiao 60,000.00
Jill A. Spicer 50,000.00
- ------------------------------------
Total $584,100.00
</TABLE>
Part Time Employees
<TABLE>
<CAPTION>
Employee Hourly Salary
<S> <C> <C>
Christine Cote 8.50 Summer Help
</TABLE>
Notes: These figures do not include the following: Bonuses, Employee Retirement
Contributions (401K), or Shareholder Distributions. The above mentioned events
may occur at indiscriminant times during year.
Thomas P. Cote's salary does not include commissions.
Prepared by:
/s/ Jarrett A. Gamache 10/1/99
- ------------------------------------------ -------
Jarrett A. Gamache Date
Finance Administration Manager Triad, Inc.
26
