REVISION DATE: NOV 13 98
THIS DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE 901(D) OF REGULATION S-T
U.S. SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549
Amended Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(g) of
The Securities Exchange Act of 1934
BRIDGE TECHNOLOGY, INC.
(Name of Small Business Issuer in its Charter) July 31, 1998
NEVADA 59-3065437
(State or other Jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
12601 Monarch, Garden Grove, CALIFORNIA 92601
Address of principal executive offices) (Zip code)
Issuer's telephone number: 714-891-6508
Issuer's facsimile number: 714-890-8590
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
(Title of Class)
Common Stock
Exhibit B-index Appears at Page
<PAGE>
TABLE OF CONTENTS PAGE
Item 1. Description of Business 3
Item 2. Management's Discussion and Analysis or Plan of Operation. 6
Item 3. Description of Property. 18
Item 4. Security ownership of Certain Beneficial Owners and
Management. 18
Item 5. Directors, Executive officers, Promoters and Control Persons.19
Item 6. Executive Compensation. 23
Item 7. Certain Relationships and Related Transactions. 23
Item 8. Legal Proceedings. 23
Item 9. Market for Common Equity and Related Stockholder Matters. 24
Item 10. Recent Sale of Unregistered Securities. 25
Item 11. Description of Securities. 26
Item 12. Indemnification of Directors and Officers. 27
Item 13. Financial Statements. 28
Item 14. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure. 30
Item 15. Financial Statements and Exhibits. 33
<PAGE>
ITEM 1. Description of Business.
The Company is in the business of manufacturing, buying, assembling,
testing, packaging, marketing and selling computer peripherals related
products and computer system enhancements products. The Company
established operating divisions and subsidiaries under several separate
business names. Each of these operating entities is focused on a specific
product and sales channel.
Through in-house development, joint ventures, licensing and
acquisition of leading edge technologies and companies, the Company will
endeavor to deploy such new and leading edge technologies to create
products desired by Personal Computer OEMs, Value Added Resellers and
System Integrators. The Company will sell these products both directly as
well as through selected Distributors and Manufacturer's Representative
organizations. The Company currently employs 7 professionals and 3
administrative personnel domestically, and 3 professional and 1
administrative person overseas.
BRIDGE R&D, INC.
The Company, through its subsidiary, Bridge R&D, Inc. (hereinafter
referred to as BRD), has established 4 divisions: Newcorp Technology (USA)
division, DataStor division, ADTX division and EEMB Batteries division.
These divisions will utilize the experience of existing and newly hired
professionals in the distribution channels to distribute its innovative
products. The Company will continue to expand the number of OEM customers
and Systems Integrators to rapidly increase unit sales. The Company will
also introduce additional new products to increase its sales revenues
through the existing distribution channels.
NEWCORP TECHNOLOGY(USA)
Newcorp Technology (USA) division of BRD plans to capitalize on
several new products it intends to introduce in the near future. These
products integrate several upcoming PC and energy related technologies to
create an innovative solution for mobile computer users. Newcorp is
actively pursuing the acquisition and licensing of new technologies from
several major high technology companies, principally in Japan and USA. The
mission of Newcorp is to innovate by identifying, evaluating and selecting
technologies that provide new products with substantial added value. The
division plans to develop, license or acquire products that it is able to
sell through its existing sales channels. Newcorp is also in discussions
with several companies offering products that complement and/or enhance
the company's core products. The Company plans to invest in several such
products and/or technologies, both hardware and software. The Company
commenced discussions with several potential licensing or acquisition
candidates in hopes to negotiate firm contracts.
Since the Company executed non-disclosure agreements with several
major high technology companies, it is not permitted to disclose the
nature of these new technologies and products for potential licensing
until respective license agreements are in fact signed. However, there can
be no assurance that any additional licensing agreements or technology
acquisitions will be completed by the Company.
DATASTOR
DataStor division identifies, designs, manufactures, assembles, tests
and distributes metal and plastic enclosures, brackets and enhancement
kits for a variety of computer platforms. Some are produced under specific
contracts by several manufacturers. DataStor business unit also sells
external peripheral kits consisting of enclosures and power supplies,
mounting brackets for various peripheral devices, and complete kits for
integration of various peripherals into PC systems. DataStor supplies over
60 different mass storage products, including enclosures for 1 to 7
drives, drive mounting brackets, and fixed and removable mounting bracket
kits. DataStor business unit also procures, markets, sells and supports a
family of medium size RAID-ready enclosures and subsystems through
selected distribution channels.
DataStor customers include INGRAM Micro, NECX, Tech Data and other
National and International distributors who further sell to the second
tier distributors and Systems Integrators. Other customers are Master
Resellers who sell to second and third-tier OEMs, Value Added Resellers
and System Integrators. DataStor is dedicated to maintaining its market
position as an industry leader in making cutting edge technology available
to customers. DataStor dedicates its staff compliment toward constantly
researching and developing new product lines and solutions. Part of the
profits expected to be generated by DataStor and Newcorp divisions will be
used to expand DataStor product line. Additionally, part of the DataStor
profits will fund R&D projects in the Newcorp Technology Japan.
ADTX USA
The Company established the ADTX USA division under the leadership of
Mr. Bill Long, Senior Engineer. The Company established a close
relationship with Advanced Technology and Systems Co., Ltd. (hereinafter
referred to as "ADTX"), which allows the Company to organize and manage
the ADTX operations on a contractual basis, initially in North America,
South America and Europe. ADTX manages the RAID business including
procurement, marketing, sales and support for a family of high performance
RAID systems. These RAID systems are designed and manufactured by ADTX
Japan, an IBM Japan Joint Venture company. ADTX Japan cooperates with the
Company to establish ADTX USA. ADTX USA division has commenced delivering
evaluation orders for these unique systems in July 1998. ADTX USA is
executing its marketing and promotional plan that combines advertising,
trade shows and media articles to generate customer demand for these
highly technical products. The Company also started selling ADTX RAID
systems to international customers, targeting first European System
Integrators and Vars. The Company believes that Mr. Long's unique
experience in this market will allow the ADTX division to position itself
for growth at a rapid pace. Mr. Long signed a five-year employment
contract with Bridge R&D, Inc.
RAID is an abbreviation for "Redundant Array of Independent Drives".
The latest forecast of RAID market by a market research firm, Datatrend,
projects the worldwide RAID market to reach $13 billion in 1998 and grow
20% annually. Compared to current data backup methods which use a
separate magnetic tape drive, the RAID subsystem replaces a single hard
disk drive inside the computer with a redundant array of hard disk drives.
The data is stored on such RAID system in a manner that distributes and
duplicates such data across several disk drives in a pre-determined
pattern. Depending on the application, appropriate pattern can be
selected by the user to provide faster data access and also simultaneously
allow uninterrupted operation and continued data access in case of a
defective or faulty disk drive. Compared to a hard disk drive, the
magnetic tape drive and magnetic tape provide only a sequential storage
media that does not provide data redundancy, only data backup and
recovery. In case of a single hard disk drive failure, the computer is not
usable until the user either replaces the failed disk drive and reloads
the operating system and the data from the last tape backup, or until the
crashed disk is repaired, reformatted and the operating system application
programs and the data are reloaded. This usually means that certain amount
of data is lost and has to be re-entered again. This process costs both
time and money, and the delay in computer availability usually creates
further losses. Additionally, while the old data is being reconstructed,
the newly incoming data cannot be entered and processed, which causes an
increase in data entry backlog and usually brings additional errors and
problems. Tape data transfer is also comparatively slow, and the tape
drive is an additional peripheral to maintain that requires additional
Interrupt Level and Device Address inside the computer, additional
controller card and software, all of which mean added overhead and costs.
The Company believes that decreasing disk drive costs per Gigabyte of
capacity and disk controller costs are ushering in better and more cost
effective solutions using RAID which in turn will increase RAID acceptance
and market share. Accelerating this is the higher cost of downtime and
recovery from hard disk crash. These factors make a customer's decision
to buy RAID ever easier to justify.
ADTX RAID systems use SCSI and SCSI-2 ultra-wide and fast interface,
and their performance is on the leading edge of current technology. ADTX
plans to introduce LVD-2 and Fibre-Channel models in the future. Due to
superior data transfer rate for large sequential data blocks offered by
ADTX "G" series and "R" series RAID systems, ADTX USA marketing and sales
efforts are focused on Digital Video applications, and applications
requiring transfers of large blocks of data. ADTX currently provides
leading price/performance in this market segment.
ADTX USA sells the RAID systems fully configured through selected
Distributors, Value Added Resellers and System Integrators. ADTX USA is
also offering these systems to selected private label OEM customers. ADTX
USA commenced shipping all five RAID system models in September 1998.
RAID systems business is very competitive, and ADTX USA positions its
products as high performance products, and prices most models to compete
not on price, but rather on price/performance basis. ADTX USA does not
depend on any single major customer, and no customer comprises more than
5% of ADTX USA sales. ADTX USA is in a process of developing several
patentable and copyrightable products. ADTX USA dedicated approximately
10% of its available time to new products development. However, there can
be no assurance that any of these products will generate any significant
sales or profits for ADTX USA. ADTX USA intends to file several patents
and copyrights to protect the results of its intellectual property
developments.
Other than normal regulatory agency approvals such as UL, CSA, FCC,
CE, etc., ADTX USA products do not require any specific government
approvals, nor are these products regulated by any governmental
regulations. Furthermore, ADTX Japan secures all the required products
safety and radiation compliance approvals prior to ADTX USA selling any
such products. ADTX products are not subject to any environmental laws,
and ADTX products are not creating any pollution or have any other
negative impact on the environment.
NEWCORP TECHNOLOGY LIMITED (JAPAN)
The Company acquired Newcorp Technology Japan, Ltd., a Tokyo, Japan
based R&D and technology sales company. The Company plans to capitalize on
Newcorp Technology Japan relationships to procure unique new technologies
and contacts, through which the Company expects to generate additional
sales and profits in computer enhancements and communications related
business. Newcorp Technology Japan is actively pursuing the acquisition
and licensing of new hardware and software technologies from several high
technology R&D companies worldwide.
EEMB BATTERIES
The Company signed a three year exclusive sales agreement with EEMB
China, and immediately established the EEMB Batteries (USA) division with
an objective of procuring, marketing and selling a family of batteries and
battery packs, principally to US based OEMs. EEMB Batteries also plans to
sell batteries and battery packs to private label customers and to major
NoteBook enhancement resellers. The Company believes that with the
continued proliferation of portable devices, wireless devices, wireless
remote controllers and other wireless appliances, the market demand for
quality batteries will grow at an increasingly rapid pace. Newcorp
Technology Japan expects to acquire licenses for certain proposed battery
management related technologies, which the Company expects to exploit and
generate sales for the current line of its EEMB batteries and battery
packs. In addition the Company expects to develop and patent new battery
techniques to meet Newcorp Technology Japan's developing technologies.
NOTEBOOK ENHANCEMENTS
The Company management also has Board approval to invest $40,000 in
ITS, a California company that specializes in the design, development,
marketing and sales on Notebook Hard disk enclosures (caddies). The
Company sells these NoteBook hard disk enclosures to ITS, who resells them
to OEM and VAR customers. The Company will place a candidate on ITS Board
of Directors concurrent with this investment.
Competition.
The manufacture and distribution of computer peripheral equipment is
intensely competitive. The Company competes with numerous other
companies, including several major manufacturers and distributors. Some
of the Company's competitors have greater financial and other resources
than the Company. Consequently, such entities may begin to develop,
manufacture, market and distribute systems, which are substantially
similar or superior to the Company's products. There is no assurance that
the Company will be able to continue to develop and sell products that
have competitive advantage in the market.
Item 2. Management's Discussion and Analysis or Plan of Operation
INTRODUCTION
The discussion and analysis below, and through this Form 10-SB
Registration Statement, contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. Actual results could differ
materially from those projected or suggested in the forward-looking
statements as a result of, among other factors, the factors set forth
under the caption "Cautionary Statement" and Risk Factors below:
The following discussion and analysis should be read in conjunction
with the Financial Statements and notes thereof appear elsewhere in this
report.
The Company first organized as LAAND CORPORATION under the laws of
the State of Nevada on April 15, 1969 to acquire and develop land in the
State of Nevada. On November 12, 1990 the Company merged with LAND
ACQUISITION AND NEVADA DEVELOPMENT CORPORATION, a subsidiary of the
Company organized under the laws of Nevada on November 7, 1990 and the
original LAAND CORPORATION was dissolved.
The Company amended and restated the Articles of Incorporation on
December 15, 1994 following the cancellation of the February 1991 merger
with Falcon Aviation Inc. wherein Falcon Aviation Inc. relinquished any
claim it may have to the former Land Acquisition and Nevada Development
Corporation.
From inception the Company was unsuccessful it its real estate
business, accumulating losses in excess of $280,000, and the Company
operations ceased in 1972. Prior management kept the Company inactive.
Although it pursued acquisition candidates from time to time no companies
were acquired primarily due to the ultimate unavailability of audited
financial statements from the acquisition candidate.
In March 1997 Cayman Computer Alliance Corporation (CCAC) purchased
control of the Company from prior management in a private transaction
The shareholders, at the Company's annual meeting on April 16, 1997,
approved a Common Stock reverse stock split of one share for two shares.
The Company issued one new share for two original shares of the Company's
common stock; authorized Preferred Stock, stipulating that Directors of
the Company were to fix the terms, and authorizing the change of the
Company's name to Bridge Technology, Inc. The Articles of Incorporation
were amended and restated in August 1997 to reflect these amendments.
On April 21, 1997 the Company sold 500 shares of 6% Convertible
Accumulative and Redeemable Preferred Stock, $1.00 stated value, totaling
$50,000 to five "accredited investors" as defined in Rule 501(a) under the
Securities Act. No underwriter was employed in connection with such
issuances and no underwriting discounts or commissions were paid in
connection with such issuance. The issuance of Preferred Stock to such
five holders of the Company's outstanding Preferred Stock was exempt from
the registration requirements of the Securities Act of 1933 as amended
(the "Securities Act") pursuant to Section 3 (a)(9) and/or 4(2) thereof.
In September 1998 the five holders converted their Preferred Shares into
the Common Stock of the Company.
From April 21, 1997 to December 31, 1997 the Company sold, in a
private placement, 3,250,000 shares of common stock for $1,625,000 to
sixteen "accredited investors" as defined in Rule 501(a) under the
Securities Act. No underwriter was employed in connection with such
issuance and no underwriting discount or commissions were paid in
connections with such issuance. The issuance of Common Stock to such 16
holders of the Company's outstanding Common Stock was exempt from the
registration requirements of the "Securities Act" pursuant to Section
3(a)(9) and/or 4(2) thereof.
In August 1998 the Company sold for cash 50,000 shares of its common
stock to a prospective employee and member of senior management, Bill Long
an "accredited investor" for $25,000. This issuance was exempt from the
registration requirements of the Securities Act of 1933, as amended
pursuant to Section 3 (a)(9) and/or 4(2) thereof.
In June 1997, the Company acquired the name and assets of DataStor
from Allied Web, Inc., a Company controlled by John J. Harwer, together
with the services of John J. Harwer who is experienced in the management
of worldwide technical operations in the computer enhancements and
computer peripherals industry. The purchase price of $191,640. was
considered fair and equitable although the Company did not seek a
valuation opinion from an independent source. Also in June 1997 the
Company incorporated BRIDGE R & D, Inc., as it's wholly-owned subsidiary
for the purpose of organizing several operating divisions under a separate
entity. BRIDGE R & D's goal is to select, develop, market and sell
computer peripheral products, computer component products and computer
enhancement products.
On September 1, 1997 the Company acquired all of the outstanding
shares of NEWCORP TECHNOLOGY LIMITED, a Tokyo, Japan based Research and
Development Corporation organized under the laws of Japan. The purchase
price paid was $100,000 payable by the issuance of 100,000 shares of
BRIDGE TECHNOLOGY, Inc. common stock
On January 30, 1998 the Company acquired 150,000 shares of PTI
Enclosures, Inc. ("PTI") at $1.00 per share and totaling $150,000. PTI is
a privately held California company specializing in the design,
development, production and sales of mass storage peripheral enclosures
and power supplies to major OEM customers. The Company has solicited the
remaining shareholders to acquire up to an additional 80% of PTI in an
exchange of shares valued at $1.00 each. Approximately 79% of the shares
of PTI have been placed with the escrow agent with closing set for
December 31, 1998.
The Company will continue to aggressively pursue additional key
strategic investments, licensing and acquisitions in computer and
electronics related field with an emphasis on components, computer
enhancement and peripheral enhancement products.
Results of Operations for Fiscal Years ended 12/31/1996 and 1997
Net Sales increased 100% from $2,200,000 in fiscal 1996 to $4,400,000
in fiscal 1997. Products and services mix for the fiscal year 1997 has
changed substantially in comparison to prior year billings principally due
to the development of new core business by the Company in United States
and Japan
Gross Profit increased 124% from $280,635 in fiscal 1996 to $627,398
in fiscal 1997 principally as a result of augmented sales volume. Gross
profit as a percentage of net sales increased from 12.7% to 14% mainly due
to the sales of certain popular computer accessories which carry higher
profit margins.
Selling and Administrative expenses increased 137% from $330,000 in
fiscal 1996 to $760,000 in fiscal 1997 and increased as percentage of
sales from 14.5% to 17%. The increase in SG&A expenses is principally
attributed to the substantial increase in business from 1996 to 1997, and
the related indirect expenses required to support the sales volume
increase, principally indirect salaries and marketing expenses.
Net loss increase 237% from $46,868 in fiscal 1996 to $158,022 in
fiscal 1997. Net losses from 1996 and 1997 are essentially attributed to
various startup costs associated with the substantial increase in business
sales such as the setup of the organization and sundry related expenses to
enable the Company to expand rapidly in the near future.
Effects of Inflation.
The Company believes that inflation has not had a material effect on
its' net sales and results of operations.
Results of Operations Six Months Ended June 30, 1998 as Compared to the
Six Months Ended June 30, 1997.
Net sales of $1,812,000 million for the six months ended June 30,
1998 decreased by $173,511 (8.7%) over net sales of $1,985,511 for the six
months ended June 30, 1997 period. This decrease was due to the combined
effects, from an decrease in sales volume in hard disks and from continued
competitive pricing policies.
Gross profit for the six months ended June 30, 1998 was $211,519, a
31.7% increase, when compared to $160,551 for the six months ended June
30, 1997 reflecting a growth in sales volume in terms of units. Gross
profit as a percentage of net sales increased from 8.1% for the six months
ended June 30, 1997 to 11.7% for the six months ended June 30, 1998.
Selling, general and administrative expenses increased by $227,331 to
$511,694 in the six months ended June 30, 1998 compared to $284,669 for
the six months ended June 30, 1997. As a percentage of revenue, SG&A
expenses increased from 14.3% in the six months ended June 30, 1997 to
28.2% in the six months ended June 30, 1998. The difference is due to
primarily higher sales volume in the six months ended June 30, 1998
associated with higher selling expense and to a $34,000 increase in
consulting fees, a $24,000 increase in depreciation expense, and an
increase in marketing, travel and other expenses.
Loss from operations increased from $124,118 in the six months ended
June 30, 1997 to $300,175 in the six months ended June 30, 1998,
principally reflecting higher selling, general and administrative expenses
in the six months ended June 30, 1998. Operating loss as a percentage of
net sales increased from 6.3% in six months ended June 30, 1997 to 16.6%
in the six months ended June 30, 1998.
Other expenses increased by $96,837 to $19,102 in the six months
ended June 30, 1998 when compared to other income of $115,939 for the six
months ended June 30, 1997. The difference was due to the other income of
$124,306 that was no longer in existence in the six months ended June 30,
1998.
Net loss increased to $319,277, or $0.14 per share for the six months
ended June 30, 1998 compared to $8,179, or $0.01 per six months ended June
30, 1997.
Liquidity and Capital Resources
Since current management acquired control of the Company in early
1997, the Company has financed its operations with internal generated cash
and with the private placement of its securities totaling in excess of
$1,600,000 to a limited number of accredited investors with knowledge of
the Company's operations and plans to expand. The private placement
commenced in June 1997 and was completed on or about June 30, 1998.
The Company's capital requirements have been and will continue to be
significant and its cash requirements have been sufficient to cover its
cash flow from operations. At June 30, 1998, the Company had a working
capital surplus of $903,786 and cash and cash equivalents of $118,683
compared to a working capital surplus of $1,196,757 and cash and cash
equivalents of $55,032 at June 30, 1997. Since inception, the Company has
satisfied its working capital requirements through revenues generated from
operations, the issuance of equity and debt securities, and loans.
Net cash used in operating activities in the six months ended June
30, 1998 was $599,081, as compared to $304,176 in the six months ended
June 30, 1997 the difference is mainly due to net loss and increase in
inventory, decrease in accounts payable and accrued liabilities, and
changes in other operating activities.
Net cash used in investing activities in the six months ended June
30, 1998 was $173,823 for the purchase of fixed assets and the purchase of
PTI stock, as compared to $89,739 for the purchase of fixed assets in six
months ended June 30, 1997.
Net cash provided by financing activities in the six months ended
June 30, 1998 was $875,691 as compared to $281,613 in the six months ended
June 30, 1997. This reflects the issuance of stock in private placements.
The Company believes that it can fund the growth of its core business
with internally generated cash flow in addition to its substantial cash
reserves from the private sale of its common stock.
Effects of Fluctuation in Foreign Exchange Rates
The Company continues to buy products and services from foreign
suppliers. The Company contracts for such products and services in U.S.
dollars, thus eliminating the possible effect of currency fluctuations.
The Company's wholly owned subsidiary, Newcorp Technology (Japan), was
subject to such currency fluctuations and subsequently suffered losses due
mainly to the decline of Japanese yen from 106 Yen/dollar to present rate
of 138.29 Yen/dollar. In May, 1998, Newcorp Japan changed its sales
contracts with its OEM customers from Japanese Yen to U.S. dollars in
order to eliminate future material effect of currency fluctuations on its
net sales and results of operations.
FLUCTUATIONS IN QUARTERLY RESULTS
Quarterly results may be adversely affected in the future by a
variety of factors, including the possible costs of obtaining capital, the
delay in moving to leased facilities presently under construction, as well
as the release of new products and promotions taking place within the
quarter. The Company plans to fund research and development and to
increase working capital requirements for the new products. To the extent
that such expenses proceed, or are not subsequently followed by, increased
revenues, the Company's business, operating results and financial
condition will be adversely affected.
YEAR 2000 ISSUE
Many computer systems experience problems handling dates beyond the
year 1999. Therefore, some computer hardware and software will need to be
modified prior to the year 2000 in order to remain functional. The
Company is assessing both the internal readiness of its computer systems
and compliance of its computer products and software sold to customer's
for handling the year 2000. The Company expects to implement successfully
the systems programming changes necessary to address year 2000 issues, and
does not believe that the cost of such actions will have a material effect
on the Company's results of operations or financial condition. There can
be no assurance; however, that there will not be a delay in, or increased
costs associated with the implementation of such changes, and the
inability to implement such changes could have an adverse effect on future
results of operations.
CAUTIONARY STATEMENTS AND RISK FACTORS
Limited Operating History; History of Losses and Accumulated
Deficits. While the Company has been in existence since 1969, its
operations between 1975 and 1997 were limited to the exploration of
acquisition opportunities. Bridge Technology Inc. and its subsidiary
Bridge R & D Inc. have only been in operation since June 1, 1997. For the
period from June 1, 1997 to December 31, 1997 the Company incurred a net
loss of $8,929 and the six months ended June 30, 1998 the Company had a
net loss of $320,777. At June 30, 1998, the Company's accumulated deficit
was $909.927. The ability of the Company to obtain and sustain
profitability will depend, in part, upon the successful marketing of
existing products and the successful and timely introduction of new
products. There can be no assurance that the Company will be able to
generate and sustain net sales or profitability in the future.
Importance of New Product Development to Growth.
The Company's ability to develop and successfully introduce new
products will be a significant factor in the Company's ability to grow and
remain competitive. Development of new product lines is risk intensive.
New product development often requires long-term forecasting of market
trends, the development and implementation of new designs, compliance with
extensive governmental regulatory requirements and a substantial capital
commitment. There are a number of manufacturing and design risks inherent
in engineering high cost custom built prototypes upon which development
and contracting decisions are often made, into commercial products able to
be manufactured in large quantities at acceptable cost. Also, the
computer peripheral industry is characterized by rapid technological
change. As technological changes occur in the marketplace, the Company
may have to modify its products in order to keep pace with these changes
and developments. The introduction of products embodying new
technologies, or the emergence of new industry standards, may render
existing products, or products under development, obsolete or
unmarketable. Any failure by the Company to anticipate or respond in a
cost-effective and timely manner, to government requirements, market
trends' or customer requirements, or any significant delays in product
development or introduction, could have a material adverse effect on the
Company's business, operating results and financial condition.
Need For Additional Financing.
Based on its current operating plan, the Company anticipates further
capital will be required during the next twelve months to satisfy the
Company's expected increased working capital and research and development
requirements for its planned new products. The Company is currently
exploring alternative to fulfill these requirements. No assurance can be
given that additional financing will be available when needed or that, if
available, it will be on terms favorable to the Company or its
stockholders. If needed funds are not available, the Company may be
required to curtail its operations, which could have a material adverse
effect on the Company's business, operating results and financial
condition. If additional funds are raised through the issuance of equity
securities, additional dilution to stockholders may occur.
Expansion through Undetermined Acquisitions and Joint Ventures.
The Company intends to expand its product lines and domestic and
international markets, in part, through acquisitions. The Company's
ability to expand successfully through acquisitions will depend upon the
availability of suitable acquisition candidates at prices acceptable to
the Company, the Company's ability to consummate such transactions and the
availability of financing on terms acceptable to the Company. There can
be no assurance that the Company will be successful in completing
acquisitions. Such transactions involve numerous risks, including
possible adverse short-term effects on the Company's operating results or
the market price of the Common Stock. These acquisitions and joint
ventures may not be subject to approval or review by the Company's
stockholders. The Company does not expect that it will obtain an
appraisal by any independent appraisers with respect to any such
acquisition. Certain of the Company's future acquisitions may also give
rise to an obligation by the Company to make contingent payments or to
satisfy certain repurchase obligations, which payments could have an
adverse financial effect on the Company. In addition, integrating
acquired businesses may result in a loss of customers or product lines of
the acquired businesses and also requires significant management attention
and may place significant demands on the Company's operations, information
systems and financial resources. The failure effectively to integrate
acquired businesses with the Company's operations could adversely affect
the Company. In addition, the Company competes for acquisition
opportunities with companies which have significantly greater financial
and management resources than those of the Company. There can be no
assurance that suitable acquisition opportunities will be identified, that
any such transactions can be consummated, or that, if acquired, such new
businesses can be integrated successfully and profitably into the
Company's operations. Moreover, there can be no assurance that the
Company's historic rate of growth will continue, that the Company will
continue to successfully expand, or that growth or expansion will result
in profitability.
Rapid Expansion of the Company's Business.
From inception (June 1, 1997) through June 30, 1998, the Company has
experienced rapid growth in revenues and geographic scope of operations.
Any future growth may place a significant strain on management and on the
Company's financial resources and information processing systems. The
failure to recruit additional staff and key personnel, to have sufficient
financial resources, to maintain or upgrade these financial reporting
systems, or to respond effectively to difficulties encountered ruing
expansion could have a material adverse effect on the Company's business,
operating results and financial condition.
Reliance on International Sales and Distributors and General Risks of
International Operations.
For the six-month period ended June 30, 1998, international sales
have accounted for approximately 57% of the Company's net sales, and the
Company expects that international sales may increase as a percentage of
sales in the future. Consequently, the Company is subject to the risks of
conducting business internationally, including unexpected changes in, or
impositions of, legislative or regulatory requirements; fluctuations in
the US dollar which could materially adversely affect US dollar revenues;
tariffs and other barriers and restrictions; potentially adverse taxes;
and the burdens of complying with a variety of international laws and
communications standards. The Company's international sales involve
potentially longer payment cycles and the Company may experience greater
difficulty collecting accounts receivable. The Company currently depends
on third party distributors for substantially all of its international
sales. At June 30, 1998, the Company's international receivables
accounted for 19% of the Company's accounts receivable, and international
sales were approximately $1,050,743 or 58%, of the Company's total sales
for the six-month period ended June 30, 1998. Certain of the company's
third party distributors may also act as resellers for competitors of the
Company and could devote greater effort and resources to marketing
competitive products. The loss of or other significant reduction in sales
to, certain of these third party distributors could have a material
adverse effect on the Company's business and results of operations. The
Company is also subject to general geopolitical risks, such as political
and economic instability and changes in diplomatic and trade
relationships, especially Japan and China, in connection with its
international operations. There can be no assurance that these risks of
conducting business internationally will not have a material adverse
effect on the Company's business. Further any failure by the Company to
predict or plan for changes in the international arena could have a
material adverse effect on the Company's business, operating results and
financial condition.
Dependence on Key Personnel.
The Company's future performance will depend significantly upon its
management, including Co-Chairman of the Board Tetsuji Aoyagi, Co-Chairman
of the Board and Chief Executive Office, John J. Harwer, President James
Djen, Director of Engineering, ADTX Senior Engineer Bill Long, and certain
other key employees of the Company. The loss of service of one or more of
these persons could have a material adverse effect on the Company's
business and operations. The Company has entered into Employment
Agreements with John J. Harwer and Bill Long, the Company's Director of
Engineering and ADTX Senior Engineer pursuant to which they each have
agreed to render services to the Company for a period of five years. The
Company does not maintain any insurance on the lives of its senior
management. In addition, the Company's success will be dependent upon its
ability to recruit and retain qualified personnel. Any failure by the
Company to retain and attract key personnel could have a material adverse
effect on the Company's business, operating results, and financial
condition.
Limited Proprietary Protection.
The Company's success and ability to compete is dependent in part
upon its proprietary technology. The Company's proprietary technology is
not protected by any patents. Consequently, the Company relies primarily
on trademark, trade secret and copyright laws to protect its technology.
Also, the Company has implemented a policy that most senior and technical
employees and third-party developers sign nondisclosure agreements.
However, there can be no assurance that such precautions will provide
meaningful protection from competition or that competitors will not be
able to develop similar or superior technology independently. Also, the
Company has no license agreements with the end users of its products, so
it may be possible for unauthorized third parties to copy the Company's
products or to reverse engineer or otherwise obtain and use information
that the Company regards as proprietary. If litigation is necessary in
the future, to enforce the Company's intellectual property rights, to
protect the Company's trade secrets or to determine the validity and scope
of the proprietary rights of others, such litigation could result in
substantial costs and diversion of resources and could have a material
adverse effect on the Company's business, operating results and financial
condition. Ultimately, the Company may be unable, for financial or other
reasons, to enforce its rights under intellectual property laws. In
addition, the laws of certain countries in which the Company's products
are or may be distributed may not protect the Company's products and
intellectual property rights to the same extent as the laws of the United
States.
The Company believes that its products do not infringe upon any valid
existing proprietary rights of third parties. Although the Company has
received no communication from third parties alleging the infringement of
proprietary rights of such parties, there can be no assurance that third
parties will not assert infringement claims in the future. Any such third
party claims, whether or not meritorious, could result in costly
litigation or require the Company to enter into royalty or licensing
agreements. There can be no assurance that the Company would prevail in
any such litigation or that any such licenses would be available on
acceptable terms, if at all. If the Company were found to have infringed
upon the proprietary rights of third parties, it could be required to pay
damages, cease sales of the infringing products and redesign or
discontinue such products, any of which alternatives, individually or
collectively could have a material adverse effect on the Company's
business, operating results and financial condition.
Limitation of Liability and Indemnification.
The Company's Amended and Restated Certificate of Incorporation
limits, to the maximum extent permitted by the Nevada General Corporation
Law ("Nevada Law), the personal liability of directors for monetary
damages for breach of their fiduciary duties as a director, and provides
that the Company shall indemnify its officers and directors and may
indemnify its employees and other agents to the fullest extent permitted
by law. The Company has entered into indemnification agreements with its
directors and executive officers which may require the Company, among
other things, to indemnify such directors or executive officers against
liabilities that arise by reason of their status or service as directors
or officers (other than liabilities arising from willful misconduct of a
culpable nature) and to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified. The
Company has not purchased director's and officer's liability insurance.
Nevada Law provides that a corporation may indemnify a director, officer,
employee or agent made, or threatened to be, a party to an action by
reason of the fact that he was a director, officer, employee or agent of
the corporation or was serving at the request of the corporation against
expenses actually and reasonably incurred in connection with such action
if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interest of the corporation, and, with respect
of any criminal action or proceeding, if he had no reasonable cause to
believe his conduct was unlawful. Nevada Law does not permit a
corporation to eliminate a director's duty of care, and the provisions of
the Company's Amended and Restated Certificate of Incorporation have no
effect on the availability of equitable remedies, such as injunction or
rescission, for a director's breach of the duty of care.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE
SECURITIES ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS
CONTROLLING THE COMPANY PURSUANT TO THE FOREGOING PROVISION, OR OTHERWISE,
THE COMPANY HAS BEEN INFORMED THAT IN THE OPINION OF THE SECURITIES AND
EXCHANGE COMMISSION SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS
EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
Product Liability.
Although the Company has not experienced any product liability claims
to date, the sale and support of products by the Company may entail the
risk of such claims, and there can be no assurance that the Company will
not be subject to such claims in the future. A successful product
liability claim or claim arising as a result of use of the Company's
products brought against the Company, or negative publicity attendant to
any such claim, could have a material adverse effect upon the Company's
business, operating results and financial condition. The Company intends
to procure product liability insurance with coverage limits of $1,000,000
per occurrence and $1,000,000 per year. While the Company believes that
these amounts are sufficient, there can be no assurance that amounts are
adequate insurance coverage, there can be no assurance that the amount of
insurance will be adequate to satisfy claims made against the Company in
the future, or that the Company will be able to obtain insurance in the
future at satisfactory rates or in adequate amounts.
Safe Harbor Statement.
Statements which are not historical facts, including statements about
the Company's confidence and strategies and its expectations about new and
existing products, technologies and opportunities, market and industry
segment growth, demand and acceptance of new and existing products are
forward looking statements that involve risks and uncertainties. These
include, but are not limited to, product demand and market acceptance
risks, the impact of competitive products and pricing; the results of
financing efforts; the loss of any significant customers of any business;
the effect of the Company's accounting policies; the effects of economic
conditions and trade, legal, social, and economic risks, such as import,
licensing, and, trade restrictions; the results of the Company's business
plan and the impact on the Company of its relationship with its lenders.
Several of the matters discussed in this document contain forward-
looking statements that involve risks and uncertainties. Factors
associated with the forward-looking statements, which could cause actual
results to differ materially from those projected or forecast in the
statements, appear below. In addition to other information contained in
this document, readers should carefully consider the following cautionary
statements and risks factors.
Statements of Financial Accounting Standards No. 125 "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities (SFAS No. 125) issued by the Financial Accounting Standards
Board (FASB) is effective for transfers and servicing of financial assets
and extinguishments of liabilities occurring after December 31, 1996, and
is to be applied prospectively. Earlier or retroactive application is not
permitted. The new standards provide accounting and reporting standards
for transfer and servicing of financial assets and extinguishments of
liabilities. The Company does not expect adoption to have a material
effect on its financial position or results of operation.
Statement of Financial Accounting Standards No. 128, (SFAS No. 128),
"earnings Per Share", issued by the Financial Accounting Standards Board
(FASB) is effective for financial statements issued for the period ending
after December 315, 1997, including interim periods. The SAFS 128 requires
restatement of all periods EPS data presented. The new standard also
requires a reconciliation of the numerator and denominator of the basic
EPS computation to the numerator and denominator of the diluted EPS
computation. The Company has not determined the effect of its EPS
calculation from the adoption of this statement.
Statement of Financial Accounting Standards No. 129 (SFAS No. 129),
"Disclosure of Information about Capital Structure", issued by the
Financial Accounting Standards Board (FASB) is effective for financial
statements issued ending after December 15, 1997. The new standard
reinstates various securities disclosure requirements previously in effect
under Accounting Principles Board Opinion No. 15, which has been
superseded by SFAS No. 129. The Company does not expect adoption of SFAS
No. 129 to have any material effect, if any on its financial position of
operations.
Statement of Financial Accounting Standards No. 130 (SFAS No. 130),
"Reporting Comprehensive Income", issued by the Financial Accounting
Standards Board (FASB) is effective for financial statements issued ending
after December 15, 1997. Earlier application is permitted. SFAS No. 130
establishes certain standards for reporting of comprehensive income and
its components in a full set of general-purpose financial statements. The
Company has not determined the effect on its financial position or results
of operations, if any, from the adoption of this statement.
Statement of Financial Accounting Standards No. 131 (SFAS No. 131),
"Disclosure about Segments of an Enterprise and Related Information",
issued by the Financial Accounting Standards Board (FASB) is effective for
financial statements with fiscal year beginning after December 15, 1997.
The new standard requires that public business enterprises report certain
financial information about operating segments of interim periods issued
to shareholders. It also requires that public business enterprise report
certain information about their products and services, the geographic
areas in which they operate and their major customers. The Company has
not determined the effect on its financial position or results of
operations, if any, from the adoption of this statement.
Speculative Nature of Company's Proposed Plan.
The success of the Company's proposed plan of operation will depend
to a great extent on it management with limited financial resources.
Present funding is expected to be sufficient to sustain the Company's
present operation through June 1999. If profitable business is not
developed quickly, the Company will need outside financing to continue its
operations. There is no assurance that outside financing will be available
to the Company, and if such financing were available that the terms of
such proposed financing would be acceptable to the Company.
Lack of Market Research or Marketing Organization.
The Company has determined on its own that a market demand exists for
the Company's contemplated business. The Company does not have a separate
marketing organization. Present management will market the Company's
products and services on a division basis as they are developed. Even if
demand identified for computer peripheral concepts to be developed by the
Company, there is no assurance the Company will be successful in business.
Lack of Diversification. The Company's proposed operations, even if
successful, will in all likelihood be limited in nature until the Company
obtains additional financing expected to be required in calendar year
2000. The Company's inability to diversify its activities into a number of
areas may subject the Company to economic fluctuations within a particular
specific field, and therefore increase the risks associated with the
Company's operations.
Regulation.
Although the Company will be subject to regulation under the
Securities Exchange Act of 1934, management believes the Company will not
be subject to regulation under the Investment Company Act of 1940, insofar
as the Company will not be engaged in the business of investing or trading
in securities. In the event the Company engages in business combinations
which result in the Company holding passive investment interests in a
number of entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be
required to register as an investment company and could be expected to
incur significant registration and compliance costs. The Company has
obtained no formal determination from the Securities and Exchange
Commission as to the status of the Company under the Investment Company
Act of 1940 and, consequently, any violation of such Act would subject the
Company to material adverse consequences.
Lack of Control by Management.
Management of the Company, except for John J. Harwer, Co-Chairman &
Chief Executive Officer and Bill Long Director of Engineering and General
Manager of the ADTX USA division consists of employees "At will".
Therefore, if the Company is not successful, management may be replaced by
the shareholders. Removal of one or more present officers and directors
of the Company and a corresponding reduction in, or elimination of, their
participation in the future affairs of the Company, would have a negative
effect on the business prospects of the Company.
Item 3. Description of Property.
The Company has minimal properties and at this time has no agreements
to acquire any properties. The Company's corporate offices, and the
offices of its subsidiary Bridge R&D, Inc., are located in sublet
facilities at 12601 Monarch Street, Garden Grove, CA. 92841. The Company
is expecting to move into 10,000 square feet of office and warehouse space
to house its corporate and operating divisions at 12601 Monarch Street,
Garden Grove, CA. 92641.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The table below lists the beneficial ownership of the Company's
voting securities by each person known by the Company to be the beneficial
owner of more than 5% of such securities, as well as the securities of the
Company beneficially owned by all directors and officers of the Company.
Unless otherwise indicated, the shareholders listed possess sole voting
and investment power with respect to the shares shown.
Name and Address of Preferred Common %
Title of Class
Beneficial Owner Shares Shares Ownership
- - -----------------------------------------------------------------------
James Djen
12601 Monarch Street 100,000 2.5 Common
Garden Grove, CA 92705
John T. Gauthier (1)
10532 Walker St. #B 0 0 Common
Cypress, CA 90630
John J. Harwer (1)
12601 Monarch Street 700,000 14.6 Common
Garden Grove, CA 92841
Tetsuji Aoyagi (1)
2-12-38, Aobadai, Aoba-Ku 200,000 4.9 Common
Yokohama-Shi, Kanagawa-Ken, Japan
Robert Walling, Esq.
3 Park Plaza, Ste. 1735 0 0 Common
Irvine, CA 92714
Hideki Watanabe (1)
4-14-2 Nagatsuda, Midori-Ku 200,000 4.9 Common
Yokohama-Shi, Kanagawa-Ken, Japan
Cayman Computer
Alliance Corporation
4 Park Plaza 16th Fl. 413,206 10.1 Common
Irvine, CA 92623
COMMON
All Officers & 1,200,000 25.53 Common
Directors as a Group (2)
(1) Officer and/or Director of the Company.
(2) The balance of the Company's outstanding Common Shares are held by
more than 1700 persons.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and officers of the Company are as follows:
Name Age Position
John J. Harwer 51 CEO & Co-Chairman of the Board
Tetsuji Aoyagi 45 Co-Chairman of the Board
James Djen 44 President and Director
John T. Gauthier 70 CFO & Director
Robert Walling, Esq. 53 Director
Hideki Watanabe 48 Director
The above listed directors will serve until the next annual meeting of the
shareholders or until their death, resignation, retirement, removal, or
disqualification, or until their successors have been duly elected and
qualified. Vacancies in the existing Board of Directors are filled by
majority vote of the remaining Directors. Officers of the Company serve
at the will of the Board of Directors. There is no family relationship
between executive Officers and Directors of the Company.
RESUMES:
James Djen is President and a Director of the Company since November
2, 1998. From January 1994 to date he is the President and Chairman of
the Board of PTI Enclosures, Inc. a computer peripheral manufacturing
company that the Company owns a 10% interest and is in the process of
attempting to acquire additional shares up to 80%. From June 1985 to 1994
he was a Director and Executive Vice President of CMS Enhancement, a New
York, Stock Exchange firm. Mr. Djen was granted a Bachelor of Science
Degree in Electrical Engineering from National Taiwan University in 1977;
a Master of Science Degree in Electrical Engineering from Connecticut's
Bridgeport University in 1978 and a Master of Science Degree in Electrical
Engineering in 1981 from California State University. Mr. Djen will
devote full time to the Company.
John J. Harwer is Chief Executive Officer of the Company since June
1997 and Co-Chairman of the Board of Directors since April 1998. From
January 1996 to May 1997, Mr. Harwer owned and managed a computer
distribution company, Allied Web Inc. with $35 million in 1996 annual
sales. From May 1994 to April 1996, he was a majority owner of SimmSun,
Inc. a supplier of computer memory and components to the various domestic
and international companies. From January 1990 to May 1994, he was Vice
President of Operations and New Product Development for CMS Enhancements,
a $200 million NYSE computer peripheral company. From 1971 through 1989,
he held senior engineering, marketing and management positions with
several companies in the computer industry including Hewlett-Packard,
Raytheon, Gerber Scientific, PICKER NUCLEAR, GENRAD, Calcomp, etc.. Mr.
Harwer also served as technology consultant to Burroughs (UNISYS), SHARP
USA, GRAPHTEC, HOUSTON INSTRUMENTS, AMTEC and others. He received his
master of Computer Science degree from Charles University, Prague,
Czechoslovakia in 1971. He took graduate studies in Communications at
Northeastern University, Boston, Massachusetts, in addition to two years
of legal training focused on Contracts and Intellectual Property. Later
while working full time he studied law at night with focus on Contracts
and Intellectual Property. He also took advanced studies in Fault Tolerant
Computing and Data Security at UCLA. He also attended MBA courses at
graduate night school of Business at Cal State Fullerton. He has conducted
and participated in numerous management and technology seminars and
conferences. Mr. Harwer devotes full time to the operations of the
Company.
Tetsuji Aoyagi is the Co-Chairman of the Board of Directors of the
Company since April 1998. He is also the President, Chief Executive
Officer and Director of Digital Stream Corporation, a Tokyo, Japan based
R&D company. Mr. Aoyagi has over 17 years experience in Research and
Development of high technology products, especially in the field of
Optical Media Storage and Human Interface field. From 1980 until 1984 he
worked at Thompson Research and Development Corporation, where he was
responsible for all the consumer product developments as a special
Scientific Adviser to the President. In 1985 he founded MOST Corporation
in Los Angeles, California, where he was responsible for 3.5 inch Magneto-
optical disc drive. Mr. Aoyagi became the General Manager and was
responsible for marketing of this Magneto-Optical drive to OEM accounts
until 1987. In1987 he founded Digital Stream Corporation in Yokohama,
Japan where he is responsible for corporate management. Mr. Aoyagi also
served as the Chairman of the Board of Data Stream cooperation, a Joint
Venture organized by the Singapore Government and Creative Technology. Mr.
Aoyagi received his M.Sc. Degree in Optics in 1974 from the State
University of Pennsylvania at Edinboro. Mr. Aoyagi devotes as much time as
possible concurrent with his other responsibilities.
John T. Gauthier is the Chief Financial Officer and Director of the
Company, and he was the Chairman of the Board of Directors from March 1997
until April 1998. He is also the Secretary-Treasurer, Chief Financial
Officer and Director of the Exell Corporation since June 1995. Since 1984
he is the President of Cottesloe Capital Corporation, a due diligence
consulting firm to small businesses. He was Chairman of the Board and
Executive Vice President of Americare International Inc., a small
capitalization public company in the medical field, from January 1990 to
December 1993. Mr. Gauthier was President and Chairman of the Board of
Bond Street Capital Corporation, a small New York-based investment banking
firm, from September 1986 to October 1988. For twelve years Mr. Gauthier
was President and Chairman of the Board of Datronic Engineers Inc., a
small capitalization public company engaged in the design, furnishing and
installation of long range telecommunications systems internationally. For
six years he was Director of Finance and Administration for Northrop
Corporation's subsidiary: Page Communications Engineers, a leading
international telecommunications company. He was a former management
consultant to the Executive Director of the International Monetary Fund of
the World Bank. He was also a Founder and Director of the Free State Bank
and Trust Company in Potomac, Maryland. Mr. Gauthier received a Bachelor
of Science Degree in Finance from Fordham University in 1953 and completed
the MBA program at the Graduate School of Business, George Washington
University in 1957. Mr. Gauthier also completed two years of legal
training at the Georgetown University Law Center in 1959. Mr. Gauthier
devotes as much time as is necessary as the CFO of the Company.
Robert Walling, Esq., is a Director since March 1997. From 1973 until
1975 he was with the legal department of Bank of America, San Francisco,
California. From 1988 until he was a partner at Friedman, Peterson,
Walling & Lau, a Law practice devoted to mortgage banking, real estate,
corporate and tax law. From 1995 Mr. Walling has been in private practice
in Newport Beach, California specializing in mortgage banking, real
estate, corporate law and tax law. Mr. Walling received LLM degree in
taxation from New York University of Law. He also received Juris Doctor
degree from University of California, Hastings College of Law, and
Bachelor of Arts from University of California. Mr. Walling is a Judge Pro
Tem at Harbor Municipal court.Mr. Walling will devote as much time to the
company as may reasonably be required.
Hideki Watanabe is a Director of the Company since April 1998. Mr.
Watanabe is also the current President of NEWCORP TECHNOLOGY LIMITED, a
Tokyo, Japan based electronics technology R&D and sales company that was
acquired by Bridge in September 1997. He graduated from Nihon Physical
Education College in 1972. From 1972 until 1982 he worked for Wakou-Shoji.
From 1983 until 1984 he was the President of Seiei Corporation. In 1995 he
co-founded and became the President of Newcorp Technology Limited, where
he is responsible for international sales and marketing of high technology
products for the company. Mr. Watanabe devotes full time to the Company's
operations in Japan.
Karen Chiu is the designated Controller of the Company, effective
January 1, 1999. Ms. Chiu is the Controller of PTI Enclosures, Inc. since
1994. She acquired her Bachelor of Business Administration Degree from
Providence College in Taiwan in 1975 and her Master of Business
Administration from the University of Missouri in 1978. Ms. Chiu is
expected to devote full time to the Company.
Richard Fox is General Manager of PTI Enclosures, Inc. since 1990.
Mr. Fox worked in various executive capacities over the past ten years,
from President of Sigma Sales 1980 to 1990 and General Manager and Vice
President of operations for Plessey Peripheral Systems 1980 to 1985. Mr.
Fox was awarded a Bachelor's Degree in Electrical Engineering from Utah
State University in 1969 and a Masters Degree in Business Administration
from Iowa University in 1972. Mr. Fox is expected to devote full time to
PTI's operations.
Conflicts of Interest.
Certain members of the Company's management are associated with other
firms involved in a range of business activities. Consequently, there are
potential inherent conflicts of interest in their acting as Officers and
Directors of the Company. Insofar as these officers and directors are
engaged in other business activities, management anticipates they will
devote less than full time to the Company's affairs. The officers and
directors of the Company are now and may in the future become
shareholders, Officers or Directors of other companies that may be formed
for the purpose of engaging in business activities similar to those
conducted by the Company. Accordingly, additional direct conflicts of
interest may arise in the future with respect to such individuals acting
on behalf of the Company or other entities. Moreover, additional
conflicts of interest may arise with respect to opportunities which come
to the attention of such individuals in the performance of their duties or
otherwise. The Company does currently have a right of first refusal
pertaining to opportunities that come to management's attention insofar as
such opportunities may relate to the Company' s proposed business
operations.
The Officers and Directors are, so long as they are Officers or
Directors of the Company, subject to the restriction that all
opportunities contemplated by the Company's plan of operation which come
to their attention, either in the performance of their duties or in any
other manner, will be considered opportunities of, and be made available
to the Company and the companies that they are affiliated with on an equal
basis. A breach of this requirement will be a breach of the fiduciary
duties of the Officer or Director. If the Company or the companies in
which the Officers and Directors are affiliated with both desire to take
advantage of an opportunity, then said Officers and Directors would
abstain from negotiating and voting upon the opportunity. However, all
directors may still individually take advantage of opportunities if the
Company should decline to do so. Except as set forth above, the Company
has not adopted any other conflict of interest policy with respect to such
transactions. Investment Company Act of 1940 Although the Company will be
subject to regulation under the Securities Act of 1934 and the Securities
Exchange Act of 1934, management believes the Company will not be subject
to regulation under the Investment Company Act of 1940 insofar as the
Company will not be engaged in the business of investing or trading in
securities in the event the Company engages in business combinations which
result in the Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the Investment
Company Act of 1940. In such event, the Company would be required to
register as an investment company and could be expected to incur
significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission as to the
status of the Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act would subject the Company to
material adverse consequences. The Company's Board of Directors
unanimously approved a resolution stating that it is the Company's desire
to be exempt from the Investment Company Act of 1940 via Regulation 3a-2
thereto.
Item 6. Executive Compensation.
The Company has entered into a five-year employment contract with
John J. Harwer effective June 1, 1997 as its CEO at an
annual salary of $200,000, with Mr. Harwer having the election to take up
to 50% of his salary in Common Stock of the Company at fair market value
at the time of the election. To date no compensation has been taken in
common stock. Should Mr. Harwer ever make this election additional
compensation will be recorded for the difference between fair value and
book value of stock issued under salary. In 1997 Mr. Harwer received
$56,000.03 representing less than 31% of his remuneration per employment
contract. Mr. Harwer agreed to waive the balance due including unpaid
fringe benefits for the year 1997. No other officers or Directors receive
any compensation for their respective services rendered to the Company,
and none have received such compensation in the past.
No retirement, pension, profit sharing or insurance programs or other
similar programs have been adopted by the Company for the benefit of its
employees, except for the Company's Incentive Stock Option Plan.
Item 7. Certain Relationships and Related Transactions.
There have been no other related party transactions, or any other
transactions or relationships required to be disclosed pursuant to Item
404 of Regulation except as disclosed in the Notes to the financial
statements.
Item 8. Legal Proceedings.
There is no litigation pending or threatened by or against the
Company.
Item 9. Market Price for Common Equity and Related Stockholder Matters.
There is no trading market for the Company's Common Stock at present
and there has been no trading market for at least the past 10 years.
Management has not undertaken any discussions, preliminary or otherwise,
with any prospective market maker concerning the participation of such
market maker in the market for the Company's securities except that the
Company has recently received tentative approval for the stock symbol BRDG
from the OTC Bulletin Board. Management does not intend to initiate any
such discussions until such time as the Company has become a fully
reporting company, on a voluntary basis, with the SEC and has filed all
the Financial Statements and disclosure documents. There is no assurance
that a trading market will ever develop or, if such a market does in fact
develop, that it will continue.
a. Market Price. The Company's Common Stock is not quoted at the
present time. Effective August 11, 1993 the Securities and Exchange
Commission adopted Rule 15g-9, which established the definition of a
"penny stock", for purposes relevant to the Company, as any equity
security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt,
the rules require: (i) that a broker or dealer approve a person's account
for transactions in penny stocks; and (ii) the broker or dealer receive
from the investor a written agreement to the transaction, setting forth
the identity and quantity of the penny stock to be purchased. In order to
approve a person's account for transactions in penny stocks, the broker or
dealer must (i) obtain financial information and investment experience and
objectives of the person; and (ii) make a reasonable determination that
the transactions in penny stocks are suitable for that person and that
person has sufficient knowledge and experience in financial matters to be
capable of evaluating the risks of transactions in penny stocks. The
broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating to the
penny stock market, which, in highlight form, (i) sets forth the basis on
which the broker or dealer made the suitability determination; and (ii)
that the broker or dealer received a signed, written agreement from the
investor prior to the transaction.
Disclosure also has to be made about the risks of investing in penny
stock in both public offering and in secondary trading, and about
commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and the rights and
remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing
recent price information for the penny stock held in the account and
information on the limited market in penny stocks.
The Company eventually expects to qualify for listing on the NASDAQ
National Market System upon completion of its operation for the fiscal
year ending December 31, 1999. In the interim, and after the Company has
become a reporting company with the SEC, the Company expects to be listed
on the OTC Bulletin Board, the electronic inter-dealer quotation system
operated by the NASD for securities not quoted on NASDAQ under the symbol
BRDG. Management's plans are to develop the Company to a level which will
allow the Company's securities to be traded within the aforesaid
limitations. However, there can be no assurances that the Company will
ever qualify its securities for listing on NASDAQ or some national
exchange, or be able to maintain the maintenance criteria necessary to
insure continued listing. The failure of the Company to qualify its
securities or to meet the relevant maintenance criteria after such
qualification in the future, may result in the discontinuance of the
inclusion of the Company's securities on a National Exchange. In such
events, trading, if any, of the Company's securities may then continue in
the non-NASDAQ Over-the- Counter (OTC) Bulletin Board. As a result a
shareholder may find it more difficult to dispose of, or to obtain
accurate quotations as to the market value, of the Company's securities.
b. Shareholders. There are more than 1,700 shareholders of record of
the Company's Common Stock.
c. Dividends. The Company has not paid any dividends to date on the
Common Stock and has no plans to do so in the immediate future.
Item 10. Recent Sales of Unregistered Securities.
The Company sold 500 shares of Preferred Stock to five accredited
investors for $100.00 cash per share
in April, 1997 which were ultimately converted into 100,000 shares of
common stock of the Company in September 1998. In addition the Company
sold 3,250,000 shares of its Common Stock in a Private Placement for cash
to the following 17 "accredited investors" for $0.50 per share for a
total of $1,625,000. No underwriters were used in the Private Placement
and no commissions were paid, either directly or indirectly to anyone, and
no discounts were given to any investor.
COMMON STOCK
DATE: NAME: SHARES: PRICE/SHARE: TOTAL:
06/30/1997 Harwer, John J. 100,000 $0.50 $50,000
09/23/1997 Harwer, John J. 300,000 0.50 150,000
12/31/1997 Harwer, John J. 300,000 0.50 150,000
06/30/1997 Cheng, Edwin 150,000 0.50 75,000
09/23/1997 Liu Han Hsing 60,000 0.50 30,000
09/23/1997 Hiroshi Watanabe 60,000 0.50 30,000
07/18/1997 Golden Excel 200,000 0.50 100,000
12/31/1997 Perimeter Holding Ltd 200,000 0.50 100,000
12/31/1997 Liu Han Huei 50,000 0.50 25,000
12/31/1997 Fan Hung Ta 130,000 0.50 65,000
12/31/1997 Djen, James 300,000 0.50 150,000
12/31/1997 DoTop Lo 50,000 0.50 25,000
12/31/1997 Cayman Computer Corp. 400,000 0.50 200,000
12/31/1997 Winston Gu 70,000 0.50 35,000
12/31/1997 Chin Lan Lee 30,000 0.50 15,000
12/31/1997 Watanabe, Hideki 150,000 0.50 75,000
12/31/1997 Watanabe, Hiroshi 150,000 0.50 75,000
12/31/1997 Aoyagi, Tetsuji 300,000 0.50 150,000
12/31/1997 Gheude, Michel 200,000 0.50 100,000
TOTAL SHARES SUBSCRIBED: 3,250,000 0.50 $1,625,000
NOTE: As of November 13, 1998 all subscriptions have been paid in cash.
In addition in connection with the acquisition of NEWCORP TECHNOLOGY LTD.,
the Company issued 100,000 shares of restricted common stock to the
following individuals: Hideki Watanabe 50,000 shares, Hiroshi Watanabe
50,000 shares. The Company also issued 50,000 shares of its common stock
to Bill Long for $25,000 cash in connection with his employment as Senior
Engineer of the ADTX division of the Company. Some of the shares of
Common Stock of the Company previously issued during the period from 1969
through December 31, 1970 have been issued for investment purposes in a
"private transaction" and are "restricted" shares as defined in Rule 144
under the Securities Act of 1934, as amended (the "Act"). These shares may
not be offered for public sale except under Rule 144, or otherwise,
pursuant to the Act. As of the date of this report and except for recent
sales of securities, all of the restricted shares issued and outstanding
of the Company's Common Stock are eligible for sale under Rule 144 or Rule
145 promulgated under the Securities Act of 1934, as amended, subject to
certain limitations included in the said Rules.
In general, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period, under certain
circumstances, may sell within any three-month period a number of shares
which does not exceed the greater of one percent of the then outstanding
Common Stock or the average weekly trading volume during the four calendar
weeks prior to such sale. Rule 145 also permits, under certain
circumstances, the sale of shares without any quantity limitation by a
person who has satisfied a three-year holding period and who is not, and
has not been for the preceding three months, an affiliate of the Company.
Any sales made under Rule 144 or Rule 145 could have a depressive effect
on any market of the Company's shares that may develop.
Item 11. Description of Securities.
The Company is authorized to issue 10, 000, 000 shares of Common
Stock, par value $0.01 per share and 500 shares of Preferred Stock, stated
value $1.00 per share and hereby registers 756,240 shares of Common Stock
previously issued by the Company and the underlying 100,000 shares of
Common Stock issued in the conversion of the Preferred Stock. In March
1997, the Company's Board of Directors authorized a reverse split of the
Company's issued and outstanding common stock, whereby one share of Common
Stock was issued for every two shares of Common Stock issued and
outstanding. See enclosed "Financial Statements." Thereafter in April
1997, the Company sold 500 shares of Preferred Stock at $1.00 stated value
per share for $50,000 to five "accredited investors", the Preferred Shares
were converted into 100,000 shares of common stock in September 1998. Each
share of Preferred Stock is convertible into 200 shares of Common Stock.
The Preferred Stock accrues a 6% dividend per annum on a quarterly basis.
The Company's presently 4,256,420 shares of Common Stock issued and
outstanding are held by approximately 1700 of record.
Common Stock.
All shares of Common Stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share in all matters
to be voted upon by shareholders. The shares of Common Stock have no
preemptive, subscription, conversion or redemption rights and may be
issued only as fully paid and non-assessable shares. Cumulative voting in
the election of directors is not permitted, which means that the holders
of a majority of the issued and outstanding shares of Common Stock
represented at any meeting at which a quorum is present will be able to
elect the entire Board of Directors if they so choose and, in such event,
the holders of the remaining shares of Common Stock will not be able to
elect any Directors. In the event of liquidation of the Company, each
shareholder is entitled to receive a proportionate share of the Company's
assets available for distribution to shareholders after the payment of
liabilities and after distribution in full of preferential amounts, if
any. All shares of the Company's Common Stock issued and outstanding are
fully-paid and non-assessable. Holders of the Common Stock are entitled
to a pro-rata share in dividends and distributions with respect to the
Common Stock, as may be declared by the Board of Directors out of funds
legally available therefor.
Preferred Shares.
Shares of Preferred Stock may be issued from time to time in one or
more Series as may be determined by the Board of Directors. The voting
powers and preferences, the relative rights of each such Series and the
qualifications, limitations and restrictions thereof shall be established
by the Board of Directors, except that no holder of Preferred Stock shall
have preemptive rights. At present the Company has 500 preferred shares
authorized and none outstanding.
Warrants.
The Company has authorized the issuance of up to 1,000,000 Warrants
to purchase the common stock of the Company. These Warrants may be issued
from time to time in one or more classes and at various redeemable prices
as may be determined by the Board of Directors.
Item 12. Indemnification of Directors and Officers.
Article 9 of the Articles of incorporation of the Company, as
amended, sets forth certain indemnification rights. The Articles of
incorporation of the Company provide that the Company shall possess and
may exercise all powers of indemnification of officers, directors,
employees, agents and other persons and all powers and authority
incidental thereto. The Company's Board of Directors is authorized and
empowered to exercise all of the Company's powers of indemnification
without shareholder action. The assets of the Company could be used or
attached to satisfy any such liabilities subject to such indemnification.
See: "Cautionary Statements and Risk Factors".
Item 13. Financial Statements
<PAGE>
Bridge Technology, Inc. and Subsidiaries
-----------------------
Report on Audited Consolidated Financial Statements
For the Years Ended December 31, 1996 and 1997
-----------------------
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Index to Consolidated Financial Statements
<TABLE>
<S> <C>
Report of Independent Certified Public Accountants F-2
Consolidated Financial Statements
Balance Sheets F-3
Statements of Operations F-4
Statements of Shareholders' Equity F-5
Statements of Cash Flows F-6
Summary of Accounting Policies F-7
Notes to Financial Statements F-11
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Shareholders of
Bridge Technology, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Bridge
Technology, Inc. (a Nevada corporation) and subsidiaries as of December
31, 1997, and the related consolidated statements of operations,
shareholders' equity and cash flows for the year ended December 31, 1997.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Bridge
Technology, Inc. and subsidiaries as of December 31, 1997 and the results
of their operations and their cash flows for the year ended December 31,
1997 in conformity with generally accepted accounting principles.
BDO Seidman, LLP
Los Angeles, California
June 15, 1998
F-2
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, 1997
- - --------------------------------------------------------------------------
<S> <C>
ASSETS
Current assets:
Cash $ 55,032
Accounts receivable (Note 6) 1,614,622
Subscription receivable (Note 7) 1,150,000
Other receivables (Note 6) 96,941
Inventory 98,717
Other current assets 21,085
- - -------------------------------------------------------------------------
Total current assets 3,036,397
- - -------------------------------------------------------------------------
Property and equipment, net (Note 1) 94,085
Trademark, net of amortization of $4,550 3,800
Insurance receivable 21,903
Deferred income tax 54,580
Other assets 24,900
- - --------------------------------------------------------------------------
Total assets $ 3,235,665
=========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable (Note 6) $ 1,506,014
Notes payable (Note 4) --
Accrued liabilities 16,857
Loans payable (Notes 3 and 6) 302,115
Other liabilities (including $2,176 income tax payable) 14,654
- - -------------------------------------------------------------------------
Total current liabilities 1,839,640
- - -------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (Notes 5 and 10)
SHAREHOLDERS' EQUITY (Notes 6 and 7):
Convertible, cumulative and redeemable preferred stock, $1 stated
value per share, 500 shares authorized and outstanding,
redeemable at $50,000 50,000
Common stock; par value $0.01 per share, authorized 10,000,000
shares, 856,240 shares outstanding at December 31, 1996,
1,606,240 shares outstanding at December 31, 1997 16,062
Additional paid-in capital 742,560
Stock subscribed 1,150,000
Accumulated deficit (559,154)
Translation adjustment (3,443)
- - -------------------------------------------------------------------------
Total shareholders' equity 1,396,025
- - -------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 3,235,665
=========================================================================
</TABLE>
See accompanying summary of accounting policies and
notes to consolidated financial statements.
F-3
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Year ended 12/31/1996 12/31/1997
- - --------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Net sales (Notes 6 and 8) $ 2,213,330 $ 4,414,001
Cost of sales 1,932,695 3,786,603
- - -------------------------------------------------------------------------
Gross profit 280,635 627,398
Selling, general and administrative expense 322,763 764,120
- - -------------------------------------------------------------------------
Loss from operations (42,128) (136,722)
Other income (expense):
Interest (expense) income, net (5,333) (10,943)
Other income (expense) 1,269 (36,635)
- - -------------------------------------------------------------------------
Loss before income taxes (46,192) (184,300)
Income taxes provision (Note 2) 644 (27,778)
- - -------------------------------------------------------------------------
Net loss (46,836) (156,522)
Dividends applicable to preferred stock -- (1,500)
- - -------------------------------------------------------------------------
Net loss applicable to common shares $ (46,836) $ (158,022)
=========================================================================
Weighted average number of common stock outstanding 856,240 1,160,624
=========================================================================
Basic earnings per share $ (0.05) $ (0.14)
=========================================================================
</TABLE>
See accompanying summary of accounting policies and
notes to consolidated financial statements.
F-4
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Consolidated Statements of Shareholders' Equity
For the Years Ended December 31, 1995, 1996, and 1997
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional
--------------- ----------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
- - -------------------------------------------------------------------------
- - -
<S> <C> <C> <C> <C> <C> <C>
Balance, Jan. 1, 1996 -- $ -- 856,240 $8,562 $375,060 $(354,298)
(unaudited)
Translation adjustment -- -- -- -- -- --
(unaudited)
Net loss (unaudited) -- -- -- -- -- (46,836)
- - -------------------------------------------------------------------------
Balance 12/31/1996 -- -- 856,240 8,562 375,060 (401,132)
Issuance of preferred
stock on April 1, 1997 500 50,000 -- -- -- --
(Note 7)
Issuance of common stock
(Note 7) -- -- 750,000 7,500 367,500 --
Stock subscribed -- -- -- -- -- --
Net loss -- -- -- -- -- (156,522)
Dividends paid -- -- -- -- -- (1,500)
Translation adjustment -- -- -- -- -- --
- - ----------------------------------------------------------------------
BALANCE 12/31/1997 500 $50,000 1,606,240 $16,062 $742,560 $(559,154)
</TABLE>
<TABLE>
<CAPTION>
Stock Translation
Subscription Adjustment Total
- - -----------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE 1/1/1996 $ -- $ (1,102) $ 28,222
(unaudited)
Translation adjustment -- (5,830) (5,830)
(unaudited)
Net loss (unaudited) -- -- (46,836)
- - -----------------------------------------------------------------------
BALANCE 122/31/1996 -- (6,934) (24,444)
Issuance of preferred
stock on April 1, 1997 -- -- 50,000
(Note 7)
Issuance of common stock
(Note 7) -- -- 375,000
Stock subscribed 1,150,000 -- 1,150,000
Net loss -- -- (156,522)
Dividends paid -- -- (1,500)
Translation adjustment -- 3,491 3,491
- - -----------------------------------------------------------------------
BALANCE 12/31/1997 $ 1,150,000 (3,443) $ 1,396,025
</TABLE>
See accompanying summary of accounting policies and notes to
consolidated financial statements.
F-5
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Increase (Decrease ) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Year end 12/31/ 1996 1997
- - -----------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (46,836) $(158,022)
Adjustments to reconcile net loss
to net cash provided by
(used in) operating activities:
Depreciation and amortization 5,055 41,972
Provision for doubtful accounts (1,195) 1,645
Loss on disposal of fixed assets 423 --
Increase (decrease) from changes in operating
assets and liabilities:
Trade receivables (393,519) (946,555)
Inventory -- (98,717)
Other receivables (39,414) (54,936)
Prepaid and other assets (2,571) (18,304)
Other assets -- (101,383)
Accounts payable and accrued liabilities 576,289 825,169
Other liabilities 586 3,770
- - -----------------------------------------------------------------------
Net cash provided by
(used in) operating activities 98,818 (505,361)
- - -----------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property,
plant and equipment (40,279) (92,993)
Intangible assets -- (7,800)
Proceeds from sale of property,
plant and equipment 487 --
- - -----------------------------------------------------------------------
Net cash used in investing activities (39,792) (100,793)
- - -----------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on loans payable 165,500 479,476
Payments on loans payable -- (380,793)
Payments on notes payable
and related interest -- (52,227)
Net proceeds from issuance
of preferred stock -- 50,000
Net proceeds from issuance
of common stock -- 375,000
- - -----------------------------------------------------------------------
Net cash provided by
financing activities 165,500 471,546
- - -----------------------------------------------------------------------
EFFECT OF EXCHANGE RATE
CHANGES ON CASH (24,348) (35,519)
- - -----------------------------------------------------------------------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 200,178 (170,217)
CASH AND CASH EQUIVALENTS,
beginning of year 25,071 225,249
- - -----------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
end of year $ 225,249 $ 55,032
=======================================================================
CASH PAID DURING THE YEAR FOR
Interest 1,781 33,051
Income taxes $ 663 $ 570
=======================================================================
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
F-6
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Increase (Decrease ) in Cash and Cash Equivalents
In November 1997, the Company issued 100,000 shares of common stock to
acquire 100% ownership of Newcorp Technology Limited located in Japan.
See accompanying summary of accounting policies and
notes to consolidated financial statements.
F-7
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Summary of Accounting Policies
BASIS OF PRESENTATION
Bridge Technology, Inc. (formerly "Land Acquisition and Nevada Development
Corporation (the "Company") was organized under the laws of the State of
Nevada on April 15, 1969 to conduct real estate business. The Company was
unsuccessful in its real estate business accumulating losses in excess of
$280,000 and operations ceased in 1972 and prior management kept the
Company inactive.
During April 1997, Cayman Computer Alliance Corporation purchased control
of the Company from prior management in a private transaction. After this
transaction, the name of Land Acquisition and Nevada Development
Corporation was changed into Bridge Technology, Inc. At present, the
Company is located in California and is primarily engaged in development
and distribution of various hardware, software, and peripheral products
used in computer systems and sales to value added resellers and system
integrators.
On November 1, 1997, the Company exchanged 100,000 shares of its common
stock for 100% of issued and outstanding common shares of Newcorp
Technology Limited, a research and development corporation organized under
the laws of Japan. This transaction was accounted for as a pooling of
interest transaction.
As of December 31, 1997 the Company has two wholly-owned subsidiaries. The
domestic one was formed in April 1997 and commenced operation on June 1,
1997 with the name of Bridge R&D, Inc. The other is Newcorp Technology
Limited, which started operation in Japan on January 19, 1995.
UNAUDITED INFORMATION
The information for the year ended December 31, 1996 is unaudited.
BASIS OF ACCOUNTING
The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America
which include the accounts of the Company and its subsidiaries. All
significant inter-company accounts and transactions have been eliminated
in consolidation. The consolidated financial statements are presented in
U.S. dollars.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
ACCOUNTS RECEIVABLE AND CONCENTRATION OF CREDIT RISK
During the normal course of business, the Company extends unsecured credit
to its customers who are located in various geographical areas. Typically
credit terms require payment made by thirtieth day following the sale. The
Company evaluates and monitors the creditworthiness of each customer on a
case-by-case basis. The Company provides an allowance for doubtful
accounts based on its continuing evaluation of its customers' credit risk.
The Company does not require collateral from its customers. The Company
maintains its cash accounts at credit worthy financial institutions.
F-8
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Summary of Accounting Policies
INVENTORIES
Inventories consist principally of microcomputer component parts and are
stated at the lower of cost (first-in, first-out) or market.
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS
The financial position and results of operations of the Company's foreign
subsidiary are determined using local currency as the functional currency.
Assets and liabilities of the subsidiary are translated at the prevailing
exchange rate in effect at each year end. Contributed capital accounts are
translated using the historical rate of exchange when capital is injected.
Income statement accounts are translated at the average rate of exchange
during the year. Translation adjustments arising from the use of different
exchange rates from period to period are included in the cumulative
translation adjustment account in shareholders' equity. Gains and losses
resulting from foreign currency transactions are included in operations.
The exchange rates as of December 31, 1996 and 1997 are $1 = 116.07 yen
and 132.40 yen, respectively. The average rate of exchange during 1996 and
1997 are $1 = 108.7611 yen and 121.6015 yen, respectively.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation and
amortization are computed primarily utilizing the straight-line method
over the estimated useful lives of the assets as follows:
<TABLE>
<CAPTION>
Estimated Useful
Life (in Years)
----------------
<S> <C>
Computer equipment 7
Furniture, fixtures and equipment 7
Vehicles 5
</TABLE>
Maintenance, repairs and minor renewals are charged directly to expense as
incurred. Additions and betterment to property and equipment are
capitalized. When assets are disposed of, the related cost and accumulated
depreciation thereon are removed from the accounts and any resulting gain
or loss is included in the income statements.
REVENUE RECOGNITION
The Company recognizes revenue when the risk of loss for the product sold
passes to the customer and any right of return can be quantified, which is
generally when goods are shipped.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash, trade accounts receivable, notes receivable,
trade accounts payable and accrued payable are reasonable estimates of
their fair value because of the short maturity of these items. The
carrying amounts of the Company's credit facilities approximate fair value
because the interest rates on these instruments are subject to change with
market interest rate.
F-9
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Summary of Accounting Policies
USE OF ESTIMATES
The preparation of financial statements in conformity with US generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Among the more significant estimates included
in these financial statements are the estimated allowance for doubtful
accounts receivable and the deferred income tax asset allowance. Actual
results could differ from those estimates.
INCOME TAXES
The Company accounts for income taxes using the liability method, which
requires an entity to recognize deferred tax liabilities and assets.
Deferred income taxes are recognized based on the differences between the
tax bases of assets and liabilities and their reported amounts in the
financial statements which will result in taxable or deductible amounts in
future years. Further, the effects of enacted tax laws or rate changes are
included as part of deferred tax expenses or benefits in the period that
covers the enactment date. A valuation allowance is recognized if it is
more likely than not that some portion, or all of, a deferred tax asset
will not be realized.
EARNINGS PER SHARE
In 1997, Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (SFAS No.
128). SFAS No. 128 replaced the calculation of primary and fully diluted
earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any diluted
effects of options, warrants, and convertible securities. Diluted earnings
per share is very similar to the previously reported fully diluted
earnings per share. All earnings per share amounts for all periods have
been presented and, where applicable, restated to confirm to the
requirements of SFAS No. 128.
NEW ACCOUNTING PRONOUNCEMENTS NOT ADOPTED YET
In June 1997, Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
(SFAS No. 130), which establishes standards for reporting and display of
comprehensive income, its components and accumulated balances.
Comprehensive income is defined to include all changes in equity except
those resulting from investments by owners and distributions to owners.
Among other disclosures, SFAS No. 130 requires that all items that are
required to be recognized under current accounting standards as components
of comprehensive income be reported in a financial statements that is
displayed with the same prominence as other financial statements.
Statement of Financial Accounting Standards No. 131, "Disclosure about
Segments of an Enterprise and Related Information" (SFAS No. 131)
supersedes SFAS No. 14, "Financial Reporting for Segments of a Business
Enterprise," establishes standards for the way that public enterprises
report information about operating segments in interim financial
statements issued to the public. It also establishes standards for
disclosures regarding products and services, geographic areas and major
customers. (SFAS No. 131 defines operating segments as components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how
to allocate resources and in assessing performance.
F-10
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Summary of Accounting Policies
Both of these new standards are effective for financial statements for
periods beginning after December 15, 1997 and require comparative
information for earlier years to be restated. Due to the recent issuance
of these standards, management has been unable to fully evaluate the
impact, if any, they may have on future financial statement disclosures.
F-11
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 1. PROPERTY, PLANT AND EQUIPMENT
Property, Plant and Equipment consists of:
<TABLE>
<CAPTION>
December 31, 1997
- - -----------------------------------------------------------------------
<S> <C>
Furniture, fixtures and equipment $ 44,380
Vehicles 34,856
Computer equipment 53,909
- - -----------------------------------------------------------------------
Subtotal 133,145
Accumulated depreciation and amortization (39,060)
- - -----------------------------------------------------------------------
Property, plant and equipment, net $ 94,085
=======================================================================
</TABLE>
NOTE 2. INCOME TAXES
The provision for taxes on income is as follows:
<TABLE>
<CAPTION>
December 31, 1996 1997
- - -----------------------------------------------------------------------
<S> <C> <C>
Current
Federal $ -- $ --
State 1,600
Japan 644 576
- - -----------------------------------------------------------------------
Total current 644 2,176
- - -----------------------------------------------------------------------
Deferred
Federal -- --
State -- --
Japan -- (29,954)
- - -----------------------------------------------------------------------
Total deferred -- (29,954)
- - -----------------------------------------------------------------------
Total $ 644 $(27,778)
=======================================================================
</TABLE>
F-12
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Net deferred tax assets consist of the following and the Company has
provided for U.S. tax purposes valuation allowances to offset the benefit
of any net operating loss carry-forwards or deductible temporary
differences.
<TABLE>
<CAPTION>
December 31, 1997
- - ------------------------------------------------------------------------
<S> <C>
Domestic (U.S.)
Deferred tax assets:
Net operating loss carry-forwards $ 9,405
- - ------------------------------------------------------------------------
Total deferred tax assets 9,405
Valuation allowance (9,405)
- - ------------------------------------------------------------------------
Net deferred tax assets --
Foreign (Japan)
Deferred tax assets:
Net operating loss carry-forward 49,480
Accrued liabilities 5,100
- - ------------------------------------------------------------------------
Net deferred tax assets $ 54,580
========================================================================
</TABLE>
A 100% valuation allowance was provided at December 31, 1997 for the U.S.
company, since the Company cannot determine at this time, with reasonable
certainty, that the net deferred tax assets will be realized. No valuation
allowance was provided at December 31, 1997 for the foreign (Japan)
deferred tax assets.
At December 31, 1997, the Company has available net operating loss
carryforwards of approximately $62,700 for U.S. income tax purposes which
expire in varying amounts through 2012. Section 382 of the 1986 Internal
Revenue code imposes limitations on the use of net operating losses
following certain changes in ownership. Such a change occurred during
April 1997. The annual limitation imposed by Section 382 is approximately
zero. The net operating losses affected by Section 382 is approximately
$3,600 of the $62,700 available net operating losses. The remaining
$59,100 of net operating loss carryforwards are not affected by this
limitation.
NOTE 3. BANK LOANS
Bank loans consist of short-term borrowings occurred in Japan. As of
December 31, 1997 and 1996, the average interest rates are 1.86% and
1.875% per annum, respectively. Short-term bank borrowings as of December
31, 1997 were guaranteed by the Chief Executive Officer of Newcorp
Technology Limited, a Japanese wholly-owned subsidiary of the Company.
F-13
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 4. NOTES PAYABLE
In the fall of 1990, the Company issued a total of $30,000 demand notes
with interest at 12% per annum to four individual shareholders in order to
finance legal, consulting and accounting expenses in connection with a
merger that occurred in 1990. As of December 31, 1996, the total
accumulated unpaid interest expenses amounted to $22,227. These notes and
related interest were paid using the proceeds received by the Company from
new issuance of preferred stock and common stock during the year ended
December 31, 1997.
NOTE 5. COMMITMENTS AND CONTINGENCIES
COMMITMENTS
The Company shares office space with a related party on a monthly basis.
The U.S. based wholly-owned subsidiary leases the office building from an
independent party on a monthly basis. The Company does not plan to renew
its lease.
Future minimum rental payments are as follows:
<TABLE>
<CAPTION>
Year ending December 31, Amount
- - -----------------------------------------------------------------------
<S> <C>
1998 $ 35,273
1999 9,063
- - -----------------------------------------------------------------------
$ 44,337
=======================================================================
</TABLE>
Total rental expense for each year ended December 31, 1996 and 1997, was
$15,469 (unaudited) and $29,777, respectively.
The Company entered into a five-year employee contract with an officer of
the Company and its U.S. based subsidiary. The annual base salary started
at $200,000 commencing June 1, 1997 and shall increase by 10% of the
amount paid in the prior year on each anniversary thereafter. The officer
has the right of receiving up to fifty percent of his base salary on an
annual basis in the form of common stock of the Company at fair market
value. The employment contract is automatically renewable after the five-
year period is ended for unlimited additional terms of three years each.
However, in 1997 the officer decided to waive his compensation by 50%.
NOTE 6. RELATED-PARTY TRANSACTIONS
In the ordinary course of business, the Company engaged in transactions
with Allied Web, Inc. The President of the Company and major shareholder
is also the owner and President of Allied Web, Inc. Sales to and purchases
from Allied Web, Inc. for the year ended December 31, 1997 amounted to
$1,068,628 and $1,061,373 respectively. The Company also has a receivable
in the amount of $35,000 due from Allied Web, Inc. for advances to its
President.
F-14
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The Company purchased certain operating assets (principally computer
equipment, furniture and fixture, vehicles, and inventory) from a related
party in June, 1997. The purchase was recorded by using net book value of
$191,640.
Included in the accompanying consolidated cash flow statements are
repayment of $52,227 to related parties for notes payable and
corresponding accumulated interest during year ended December 31, 1997. On
November 13, 1996, the Company's foreign subsidiary borrowed $165,500 from
one of its directors at an interest rate of 4% per annum. The loan was
completely repaid on June 20, 1997.
The Company entered into a consulting services agreement on a month to
month basis, effective July 1, 1997 with Cottlesloe Capital Corporation
for $3,000 per month. John T. Gauthier, the Company's treasurer and CFO,
is a principal of Cottlesloe Capital Corporation.
In the ordinary course of business, the Company's wholly-owned foreign
subsidiary engaged in transactions with Digital Stream Corporation ("DSC")
and Seiei Limited ("SL"). The Company's foreign subsidiary has a director
and/or major shareholder in both DSC and SL. DSC leases office space to
the Company's foreign subsidiary and is entrusted with the Company's
foreign subsidiary's administrative affairs until December, 1996.
<TABLE>
<CAPTION>
Year ending December 31, 1996 1997
- - ------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Seiei Limited ("SL):
Sales $ 18,941 $ --
Digital Stream Corporation ("DSC"):
Purchases $475,814 $ 6,168
Rent 15,469 9,377
Administration fee 16,550 --
========================================================================
</TABLE>
NOTE 7. SHAREHOLDERS' EQUITY
In April, 1997 the Company issued 500 shares of preferred stock which has
a stated value of $1 per share, for net proceeds of $50,000. Among these
500 shares of preferred stock, 150 shares were issued to an officer. The
preferred stock is convertible at 1 share of preferred stock to 200 shares
of common stock, with quarterly dividend accumulated at 6% per annum, and
redeemable at the Company's option for $100 per share at any time after
December 31, 1998.
In April, 1997 the Company affected a two for one reverse stock split.
Consequently, 1,512,368 shares of common stock outstanding were exchanged
for 756,420 shares of common stock. The weighted average number of common
shares outstanding and earnings per share for the years ended December 31,
1996 and 1997 have been retroactively restated.
In June 1997, the Company issued 750,000 shares of common stock for $.50
per share. Among the 750,000 shares of common stock issued, 400,000 shares
were issued to an officer.
F-15
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
In November, 1997, the Company issued 100,000 shares of common stock to
acquire 100% of Newcorp Technology Limited, a research and development
corporation organized under the laws of Japan. The transaction was
accounted for as a pooling of interest transaction, therefore, the
statement of operation for the years ended December 31, 1996 and 1997 have
been retroactively restated to include all activities of Newcorp
Technology Limited. The results of operation of the Companies before the
acquisition took place are as follows:
<TABLE>
<CAPTION>
Net
Income
Revenue (Loss)
- - -----------------------------------------------------------------------
<S> <C> <C>
BRIDGE TECHNOLOGY, INC.
December 31, 1996 $ -- $ (3,600)
January 1 to October 31, 1997 1,258,162 (27,405)
NEWCORP TECHNOLOGY, LTD
December 31, 1996 (unaudited) 2,213,330 (43,236)
January 1 to October 31, 1997 2,289,531 (31,401)
=======================================================================
</TABLE>
On December 31, 1997, the Company received fifteen subscriptions of common
stock for a total of 2,500,000 shares for $.50 per share. Among the
2,500,000 shares of common stock subscribed 300,000 shares were subscribed
for by an officer. Subsequent to December 31, 1997, the Company received
$1,150,000 of the subscription receivable and issued 2,300,000 shares of
common stock subscribed.
NOTE 8. MAJOR CUSTOMER
The Company had one customer which accounted for 13% of the Company's non-
related party sales for the year ended December 31, 1997.
NOTE 9. STOCK OPTION BONUS PLAN
In April, 1997 the Company established an incentive stock option plan to
grant a total of one million shares of common stock to designated
employees and executive officers of the Company. The exercise price of the
option shall not be less than the fair market price of the Company's
common stock at the date the option was granted. Other detailed terms of
the option plan are subject to the further decisions of the Board of
Directors of the Company. No options have been granted to date.
NOTE 10. SUBSEQUENT EVENTS
On January 30, 1998, the Company acquired 150,000 shares of PTI
Enclosures, Inc. (PTI) at $1 per share and totaling $150,000. PTI is a
privately held California company specializing in the design, development,
production, and sales of mass storage peripheral enclosure and power
supplies to major OEM customers.
On April 15, 1998, the Company issued 5,000 shares of common stock for the
acquisition of the name CD Systems from a unrelated third party.
F-16
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
As of May 7, 1998, the Company plans on moving its facility to a new
location with the intention of signing a new lease. The move is expected
to be in August of 1998. Terms of the new lease are not determined yet.
On July 8, 1998 the Board of Directors has approved in principal a
proposal for a top management Bonus Plan (the Plan) payable in common
stock warrants. The Board plans to direct the issue of the annual bonus
warrants based on a minimum yearly increase of 100% in the Company's
annual sales and net earnings, with the number and actual price of the
warrants to be fixed on the date of actual warrant awarded. The Board
recommended that 500,000 warrants be set aside for this Bonus Plan and
that the Plan be presented to the shareholders for ratification and
approval at the next shareholders meeting.
<TABLE>
<S> <C> <C>
December 31, June 30,
1997 1998
(Audited) (Unaudited)
Assets:
Current assets:
Cash $ 55,032 $ 132,041
Accounts receivable 1,614,622 1,656,672
Subscription receivable 1,150,000 500,000
Other receivables 96,941 56,880
Inventory 98,717 286,753
Other current assets 21,085 97,451
Total current assets 3,036,397 2,729,797
Property and equipment, net 94,085 108,007
Trademark, net of amortization
of $4,550 and $7,800 3,800 550
Insurance receivable 21,903 --
Deferred income tax 54,580 --
Investment in PTI -- 150,000
Other assets 24,900 31,000
Total assets $3,235,665 $3,019,354
Liabilities and Shareholders Equity
Current liabilities:
Accounts payable $ 1,506,014 $ 1,369,337
Accrued liabilities 16,857 9,012
Loans payable 302,115 271,169
Dividends payable -- 2,250
Other liabilities 14,654 76,493
Total current liabilities 1,839,640 1,728,261
Loans payable, less current maturities -- 144,624
Commitments and Contingencies
Shareholders equity
Convertible, cumulative and redeemable
preferred stock, $1 stated value per share,
500 shares authorized and outstanding,
redeemable at $50,000 50,000 50,000
Common stock; par value $0.01 per share,
authorized 10,000,000 shares, 1,606,240
shares outstanding at December 31, 1997,
3,106,240 shares outstanding at June 30, 1998 16,062 31,062
Additional paid-in capital 742,560 1,477,560
Stock subscribed 1,150,000 500,000
Accumulated deficit (559,154) (880,681)
Translation adjustment (3,443) (31,472)
Total shareholders equity 1,396,025 1,146,469
Total liabilities and shareholder equity $3,235,665 $3,019,354
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Six Months
Ended June Ended June
30, 1997 30, 1998
(Unaudited) (Unaudited)
Net sales $1,985,511 $1,811,608
Cost of sales 1,824,960 1,600,089
Gross profit 160,551 211,519
Selling, general and administrative expense 284,669 511,694
Loss from operations (124,118) (300,175)
Other income (expense):
Interest (expense) income, net (8,367) (13,730)
Other income (expense) 124,306 (5,372)
Loss before income taxes (8,179) (319,277)
Income taxes provision - -
Net loss (8,179) (319,277)
Dividends applicable to preferred stock (750) (2,250)
Net loss applicable to common shares $(8,929) $(321,527)
Weighted average number of
common stock Outstanding 865,812 2,356,440
Loss per share $(0.01) $(0.14)
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Six Months
Ended June Ended June
30, 1997 30, 1998
(Unaudited) (Unaudited)
Cash flows from operating activities
Net loss $(8,929) $(321,527)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 10,038 11,652
Provision for doubtful accounts 1,222 --
Increase (decrease) from changes in operating
Assets and liabilities:
Trade receivables 115,049 (41,941)
Inventory (67,540) (188,036)
Other receivables (29,102) 40,061
Prepaid and other assets (4,251) (76,366)
Other assets -- 70,383
Accounts payable and accrued liabilities (326,520) (144,522)
Other liabilities 5,857 64,089
Net cash provided by (used in)
operating activities (304,176) (586,207)
Cash flows from investing activities
Purchase of property, plant and equipment (81,931) (23,324)
Investment in PTI (7,808) (150,000)
Net cash used in investing activities (89,739) (173,324)
Cash flows from financing activities
Borrowings on loans payable 136,613 144,624
Payments on loans payable -- (30,946)
Payments on notes payable and related interest (30,000) --
Net proceeds from issuance of preferred stock 50,000 --
Net proceeds from issuance of common stock 125,000 750,000
Net cash provided by financing activities 281,613 863,678
Effect of exchange rate changes on cash (1,347) (28,138)
Net increase (decrease) in cash
and cash Equivalents (113,649) 77,009
Cash and cash equivalents, beginning of year 225,249 55,032
Cash and cash equivalents, end of year $111,600 $132,041
Supplemental information:
Cash paid during the year for:
Interest $ 8,367 $ 13,730
Income taxes -- --
</TABLE>
<PAGE>
Supplemental disclosure of non-cash activities:
The company recorded subscription receivable of $500,000 and stock
subscribed of $500,000 as of June 30, 1998. See accompanying summary of
accounting policies and notes to consolidated financial statements.
Organization and Business
Bridge Technology, Inc. (the Company) was organized under the laws of the
State of Nevada on April 15, 1969. The Company is located in California
and is primarily engaged in development and distribution of various
hardware, software, and peripheral products used in computer systems and
sales to value added resellers and system integrators. The Company has
two wholly owned subsidiaries. The domestic one was formed in April 1997
and commenced operation on June 1, 1997 with the name of Bridge R&D, Inc.
The other is Newcorp Technology Limited, which started operation in Japan
on January 19, 1995.
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for fair presentation have been included. Operating
results for the six months period ended June 30, 1998 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's
annual report on Form 10-KSB for the year ended December 31, 1997.
Note 2. Income Taxes
As of December 31, 1997, for federal income tax purposes, the Company had
approximately $63,000 in net operating loss carry-forwards expiring
through
2001. The annual utilization of the operating loss carry-forward may be
significantly limited due to the adverse resolution, if any, with respect
to the loss carryover provisions of Internal Revenue Code Section 382 in
connection with certain stock issuances by the Company.
Note 3. - Shareholders Equity
On December 31, 1997, the Company completed fifteen subscriptions of
common stock for a total of 2,500,000 shares for $.50 per share. Among
the 2,500,000 shares of common stock subscribed, 300,000 shares were
subscribed for by an officer. During the first six months of 1998, the
Company issued 1,500,000 shares of common stock out of the above 2,500,000
shares subscribed.
Note 4. Subsequent Events
On July 8, 1998 the Board of Directors has approved in principal a
proposal for a top management Bonus Plan (the Plan) payable in common
stock warrants. The Board plans to direct the issue of the annual bonus
warrants based on a minimum yearly increase of 100% in the Company's
annual sales and net earnings, with the number and actual price of the
warrants to be fixed on the date of actual warrant awarded. The Board
recommended that 500,000 warrants be set aside for this Bonus Plan and
that the Plan be presented to the shareholders for ratification and
approval at the next shareholders meeting.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Except for historical information contained herein, the matters set forth
in this report are forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Act of 1995.
These forward-looking statements are subject to risks and uncertainties
that may cause actual results to differ materially. The Company disclaims
any obligations to update these forward-looking statements.
Six Months Ended June 30, 1998 as Compared to the Six Months Ended June
30, 1997
Net sales of $1,812,000 for the six months ended June 30, 1998 decreased
by $173,511 (8.7%) over net sales of $1,985,511 for the six months ended
June 30, 1997. This decrease was due to the combined effects from changes
in sales volume of CD-ROM drives and hard disk drives, and from continued
competitive pricing policies.
Gross profit for the six months ended June 300, 1998 was $211,519, a 31.7%
increase, compared to $160,551 for the six months ended June 30, 1997.
This increase reflected a growth in sales of units with relative higher
margin. Gross profit as a percentage of net sales increased from 8.1% for
the six months ended June 30, 1997 to 11.7% for the six months ended June
30, 1998.
Selling, general and administrative expenses increased by $227,331 to
$511,694 in the six months ended June 30, 1998 compared to $284,669 for
the six months ended June 30, 1997. As a percentage of revenue, SG&A
expenses increased from 14.3% in the six months ended June 30, 1997 to
28.2% in the six months ended June 30, 1998. The difference is due to
increase in selling expense, a $34,000 increase in consulting fees, a
$24,000 increase in depreciation expense, and an increase in marketing,
travel and other expenses.
Loss from operations increased from $124,118 in the six months ended June
30, 1997 to $300,175 in the six months ended June 30, 1998, principally
reflecting higher selling, general and administrative expenses in the six
months ended June 30, 1998. Operating loss as a percentage of net sales
increased from 6.3% in six months ended June 30, 1997 to 16.6% in the six
months ended June 30, 1998.
Other expenses increased by $96,837 to $19,102 in the six months ended
June 30, 1998 when compared to other income of $115,939 for the six months
ended June 30, 1997. The difference was due to the other income of
$124,306 that was no longer in existence in the six months ended June 30,
1998.
Net loss increased to $321,527, or $0.14 per share for the six months
ended June 30, 1998 compared to $8,929, or $0.01 per share for the six
months ended June 30, 1997.
Liquidity and Capital Resources
Since current management acquired control of the Company in early 1997,
the Company has financed its operations with internally generated cash and
with the private placement of its securities totaling in excess of
$1,600,000 to a limited number of accredited investors with knowledge of
the Company's operations and plans to expand. The private placement
commenced in June 1997 and was completed on or about June 30, 1998.
The Company's capital requirements have been and will continue to be
significant and its cash requirements have been sufficient to cover its
cash flow from operations. At June 30, 1998, the Company had a working
capital surplus of $1,001,536 and cash and cash equivalents of $132,041
compared to a working capital surplus of $1,196,757 and cash and cash
equivalents of $55,032 at June 30, 1997. Since restarting operation, the
Company has satisfied its working capital requirements through the
issuance of equity and obtaining necessary bank loans.
Net cash used in operating activities in the six months ended June 30,
1998 was $586,207 compared to $304,176 in the six months ended June 30,
1997. The difference was mainly due to net loss and cash used to purchase
inventory, repayments in accounts payable and accrued liabilities, and
changes in other operating activities.
Net cash used in investing activities in the six months ended June 30,
1998 was $173,324 for the purchase of fixed assets and the purchase of
common stock in PTI Enclosures, Inc. compared to $89,739 for the purchase
of fixed assets in six months ended June 30, 1997.
Net cash provided by financing activities in the six months ended June 30,
1998 was $863,678 compared to $281,613 in the six months ended June 30,
1997. This reflects the issuance of common stock in private placements and
obtaining necessary bank loans in the Company's overseas subsidiary.
The Company believes that it can fund the growth of its core business with
internally generated cash flow in addition to its substantial cash
reserves from the private sale of its common stock.
Effects of Inflation
The Company believes that inflation has not had a material effect on its
net sales and results of operations.
Effects of Fluctuation in Foreign Exchange Rates
The Company continues to buy products and services from foreign suppliers.
The Company contracts for such products and services in U.S. dollars, thus
eliminating the possible effect of currency fluctuations. The Company's
wholly-owned subsidiary, Newcorp Technology (Japan), was subject to such
currency fluctuations and subsequently suffered losses due mainly to the
decline of Japanese yen from 106 Yen/dollar to the high of 140 Yen per
dollar, and the present rate of 138.29 Yen/dollar. In May, 1998, Newcorp
Japan changed its sales contracts with its OEM customers from Japanese Yen
to U.S. dollars in order to eliminate future material effect of currency
fluctuations on its net sales and results of operations.
Year 2000 Effect
The Company's accounting software currently does not utilize a four digit
year field, however, the Company has been assured by the manufacturer of
its accounting software that all necessary modifications for the year 2000
have been or will be made and tested timely.
Bridge Technology, Inc. and Subsidiaries
Consolidated Balance Sheets
F-2
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Consolidated Statements of Operations
Bridge Technology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
F-6
<PAGE>
Bridge Technology, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Item 14. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
The Company has engaged BDO Seidman, LLP, an international accounting
and consulting firm, for its current audit and there are no disagreements
with the findings of said accounting firm. The Company's previous
accountants were engaged for the year ended December 31, 1990, the date of
its reporting last audited statements and there were no disagreements
with the findings.
Item 15. Financial Statements and Exhibits
BRIDGE TECHNOLOGY, INC.
FORM 10-SB
SEC FILE NO. 0-24767
INDEX OF EXHIBITS
_____________________________________________________________
- - - Exhibit 3 (i) Articles of Incorporation
- - - Exhibit 3 (ii) By-laws
- - - Exhibit 4 Determination of Shareholder Preferences
- - - Exhibit 10 Material Contracts
A) Purchase of Assets of Allied Web Agreement
B) John Harwer Employment Agreement
C) EEMB China Agreement
D) Newcorp Japan Stock Exchange Agreement (Hard Copy only)
- - - Exhibit 21 Subsidiaries of the Registrant
- - - Exhibit 27 Financial Data Schedules
- - - Exhibit 99 Additional contracts
- Incentive Stock Option Plan
EXHIBIT 3 (I) ARTICLES OF INCORPORATION
AMENDED AND RESTATED ARTICLES OF INCORP0RATION OF BRIDGE TECHNOLOGY, INC.
The Articles of Incorporation of Bridge Technology, Inc., formerly
known as Land Acquisition and Nevada Development Corporation, are amended
and restated as follows:
FIRST. NAME OF CORPORATION. The name of the Corporation is changed
from
LAND ACQUISITION AND NEVADA DEVELOPMENT
CORPORATION
to
BRIDGE TECHNOLOGY, INC.
SECOND. RESIDENT AGENT. The designated agent of the Corporation
upon whom process against it may be served is Louis Popp, whose street
address is the registered office of the Corporation located at 2004
Weslund Drive, Las Vegas, Nevada 89102.
THIRD. SHARES. The Corporation is authorized to issue two classes
of shares, designated respectively as "Common Stock" and "Preferred Stock"
in the following amounts:
Common Stock: Ten million (10,000,000) shares, $0.01 par value per
share
Preferred Stock: Five hundred (500) shares, $1.00 par value per
share
The Board of Directors ("Board") may divide the Preferred Stock into
any number of series. The Board shall fix the designation and number of
shares of each such series. The Board may determine and alter the rights,
preferences, privileges and restrictions granted to and imposed upon any
wholly unissued series of the Preferred Stock. The Board (within the
limits and restrictions of any resolution adopted by it, originally fixing
the number of shares of any series) may increase or decrease the number of
shares of any such series after the issue of shares of that series, but
not below the number of then outstanding shares of such series.
FOURTH. NO PREEMPTIVE RIGHTS. No holder of any of the shares of any
class of the Corporation shall be entitled, as of right, to subscribe for,
purchase, or otherwise acquire any shares of any class of the Corporation
which the Corporation proposes to grant for the purchase of shares of any
class of the Corporation or for the purchase of any shares, bonds,
securities or obligations of the Corporation which are convertible into or
exchangeable for or which carry any rights to subscribe for, purchase, or
otherwise acquire shares of any class of the Corporation; and any and all
of such shares, bonds, securities or obligations of the Corporation,
whether now or hereafter authorized or created, may be issued or may be
reissued or transferred if the same have been reacquired and have treasury
status and any all of such rights and options may be granted by the Board
of Directors to such persons, firms, corporations and associations, and
for such lawful considerations and on such terms as the Board of Directors
in its discretion may determine, without first offering the same, or any
thereof, to any said holder. Without limiting the generality of the
foregoing stated denial of any preemptive rights, no holder of shares of
any class of the Corporation shall have any preemptive rights.
FIFTH. GOVERNING BOARD. The members of the governing Board shall be
styled as Directors of the Corporation and the Board shall consist of
three (3) members, and the first Board after the filing of these Amended
and Restated Articles shall be comprised of the following individuals:
John Harwer
1815 East Carnegie Avenue
Santa Ana, California 92705
John T. Gauthier
10532 Walker Street, Suite B Cypress, California 90630
Woody Wu
10532 Walker Street, Suite B Cypress, California 90630
SIXTH. PURPOSE. The purpose or purposes for which the Corporation is
organized are as follows, to wit:
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Business
Corporation Law, provided that the Corporation is not formed to engage in
any act or activity which requires the consent or approval of any state
official, department, board, agency or other body.
For the accomplishment of the aforesaid purposes, and in furtherance
thereof, the Corporation shall have and may exercise all of the powers
conferred by the Business Corporation Law upon corporations formed
thereunder in accordance with the provisions of any other statute of the
State of Nevada.
SEVENTH. DURATION. The Corporation is to have perpetual existence.
EIGHTH. LIMITED LIABILITY. No Director or Officer of the Corporation
is to be personally liable to the Corporation or its stockholders for
damages for breach of fiduciary duty as a Director or Officer; provided,
however, no Director or Officer is to be eliminated from or limited from
liability for:
A. Acts of omissions which involve intentional misconduct, fraud or a
knowing violation of law; or
B. The payment of Dividends in violation of Nevada Revised Statutes
78.300.
NINTH. INDEMNIFICATION. The Corporation is authorized to indemnify
the directors and officers of the Corporation to the fullest extent
permissible under Nevada law.
IN WITNESS WHEREOF, this certificate has been subscribed this 21st day of
April, 1997, by the undersigned who affirms that the statements made
herein are true under the penalties of perjury.
John T. Gauthier -------------------------------
John T. Gauthier, President
}
STATE OF CALIFORNIA }
COUNTY OF ORANGE }
__________________________
On August 12, 1997______ before |CYNTHIA PRESSEL |
me, Cynthia Pressel______________, |Commission #1103464 |
personally appeared John T. Gauthier___ |Notary Public - California|
personally known to me (or proved to me on |Orange County |
the basis of satisfactory evidence) to be the |My Comm. Expires |
person whose name is subscribed to the |Dec. 3, 2000______________|
within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signatures on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Signature Cynthia Pressel_____________
TENTH. CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT.
I, Louis Popp, hereby accept appointment as Resident Agent for the
above named corporation.
Date: ________________ _____________________
Louis Popp
THIS FORM SHOULD ACCOMPANY AMENDED AND/OR RESTATED ARTICLES OF
INCORPORATION FOR A NEVADA CORPORATION
1. Name of corporation: LAND ACQUISTION AND NEVADA DEVELOPMENT CORP.
2. Date of adoption of Amended and/or Restated Articles: April 21, 1997
3. If the articles were amended, please indicate what changes have been
made:
___________________________________________________
(a) Was there a name change? Yes (x) No ( ).
If yes, what is the new name?
BRIDGE TECHNOLOGY, INC.___________________________
(b) Did you change your resident agent? Yes (x) No ( ).
If yes, please indicate new address:
______________________________________________________
(c) Did you change the purposes? Yes ( ) No (x).
Did you add Banking? ( ), Gaming? ( ), Insurance? ( ),
None of these? ( ).
(d) Did you change the capital stock? Yes (x) No ( ).
If yes, what is the new capital stock?
Added: Preferred Stock, 500 shares authorized ($1.00 par
value)
(e) Did you change the director? Yes (x) No ( ).
If yes, indicate the change:
Added: John T. Gauthier, Woody Wu and John Harwer____________
Deleted: Louis Popp, Peter Riccio and Theda Catania___________
(f) Did you add the directors liability provision? Yes ( ) No
(x).
(g) Did you change the period of existence? Yes ( ) No (x).
If yes, what is the new existence?
_________________________________________________________________________
(h) If none of the above apply, and you have amended or modified
the articles, how did you change your articles?
_________________________________________________________________________
|CYNTHIA PRESSEL |
|Commission # 1103464 | John T. Gauthier, President
|Notary Public - California | ----------------------------
|Orange County | Name and Title of Officer
|My Comm. Expires Dec. 3, 2000|
April 21, 1997 ----------------------------
Date
STATE OF CALIFORNIA___________
COUNTY OF ORANGE_____________ On August 12, 1997________________
personally appeared
before me, a Notary Public, John T. Gauthier, who acknowledged that he
executed the
above document.
Cynthia Pressel
--------------------------Notary Public
ARTICLES OF INCORPORATION OF LAND ACQUISITION AND NEVADA DEVELOPMENT
CORPORATION
The undersigned, being a natural person at least eighteen years of
age, desiring to form a business corporation pursuant to the Business
Corporation Law of the State of Nevada, does hereby certify and set forth
as follows:
FIRST: The name of the Corporation is:
LAND ACQUISITION AND NEVADA DEVELOPMENT CORPORATION
SECOND: The purpose or purposes for which the Corporation is
organized are as follows, to wit:
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Business
Corporation Law, provided that the Corporation is not formed to engage in
any act or activity which requires the consent or approval of any state
official, department, board, agency or other body.
For the accomplishment of the aforesaid purposes, and in furtherance
thereof, the Corporation shall have and may exercise all of the powers
conferred by the Business Corporation Law upon corporations formed
thereunder in accordance with the provisions of any other statute of the
State of Nevada.
Furthermore, the Corporation was originally incorporated in June 1969
and is now being reorganized following the cancellation of the February
1991 merger with Falcon Aviation, Inc. wherein Falcon Aviation, Inc.
relinquished any claim it may have to the former Land Acquisition and
Nevada Development Corporation.
THIRD: The office of the Corporation is to be located in the County
of Clark, State of Nevada.
FOURTH: The aggregate number of shares which the Corporation shall
have the authority to issue is ten million (10,000,000) shares, $0.01 par
value per share.
FIFTH: No holder of any of the shares of any class of the Corporation
shall be entitled, as of right, to subscribe for, purchase, or otherwise
acquire any shares of any class of the Corporation which the Corporation
proposes to grant for the purchase of shares of any class of the
Corporation or for the purchase of any shares, bonds, Securities or
obligations of the Corporation which are convertible into or
exchangeable for or which carry any rights to subscribe for, purchase, or
otherwise acquire shares of any class of the Corporation; and any and all
of such shares, bonds, securities or obligations of the Corporation,
whether now or hereafter authorized or created, may be issued or may
reissued or transferred if the same have been reacquired and have treasury
status and any and all of such rights and options may be granted by the
Board of Directors to such persons firms, corporations and associations,
and for such lawful considerations and on such terms as the Board of
Directors in its discretion may determine, without first offering the
same, or any thereof, to any said holder. Without limiting the generality
of the forgoing stated denial of any and all preemptive rights no holder
of shares of any class of the Corporation shall have any preemptive
rights.
SIXTH: The members of the governing Board must be styled as Directors
of the Corporation and the first Board of Directors are to be three in
number, and are as follow:
Louis Popp
2004 Westlund Drive
Las Vegas, Nevada 89102
Peter Riccio
% Towne Pharmacy
2 Washington Avenue
Dunellen, NJ 08812-1252
Theda Catania
231 174th Street
North Palm Beach, FL 33160
SEVENTH: The Capital Stock subscribed to and paid in at par value is
not subject to assessment to pay debts of the Corporation.
EIGHTH: The Corporation is to have perpetual existence.
NINTH: No Director of Officer of the Corporation is to be personally
liable to the Corporation or its stockholders for damages for breach of
fiduciary duty as a Director of Officer. However, no Director or Officer
is to be eliminated from or limited from liability for:
A. act or omissions which involve intentional misconduct, fraud or a
knowing violation of law, or
B. the payment of Dividends in violation of Nevada Revised Statutes
78.300.
TENTH: The Secretary of State is designated as agent of the
Corporation upon whom process against it may be served. The post office
address to which the Secretary of State shall mail a copy of any process
against the Corporation served upon him is:
c/o Louis Popp; 2004 Westlund Drive; Las Vegas, Nevada 89102.
ELEVENTH: The name and address of the incorporation is:
Louis Popp
2004 Westlund Drive
Las Vegas, Nevada 89102
IN WITNESS WHEREOF, this certificate has been subscribed this 6th day
December, 1994, by the undersigned who affirms that the statements made
herein are true under the penalties of perjury.
Louis Popp Linda Sue Rungan
- - ------------------- Notary Public
Louis Popp Maricopa County, AZ
2004 Westlund Drive Dec. 6, 1994
Las Vegas, Nevada 89102
My Commission Expires April 28, 1995
LAND ACQUISITION & NEVADA DEVELOPMENT CORPORATION
CERTIFICATE OF GOOD STANDING FOR 1997
STATE OF NEVADA - SECRETARY OF STATE File # 19315-94
LAND ACQUISITION AND NEVADA DEVELOPMENT CORP.
DEC 96-97
The Secretary of State of Nevada does hereby certify that the above
corporation after having paid the annual fee of $85.00 for filing in this
office a list of its officers and directors and designation of resident
agent for the above filing period, together with penalty in the sum of and
having also filed the aforesaid list as required by Nevada Revised
Statutes Section 78.150-78.165 and 80.110-80.140, is hereby authorized to
transact and conduct business within this state for the aforesaid period.
THIS CERTIFICATE BECOMES A Dean Heller
RECEIPT UPON BEING VALIDATED -----------------------
BY THE OFFICE OF SECRETARY OF DEAN HELLER
STATE Secretary of State
ARTICLES OF INCORPORATION OF LAND ACQUISITION AND NEVADA DEVELOPMENT
CORPORATION
The undersigned, being a natural person at least eighteen years of
age, desiring to form a business corporation pursuant to the Business
Corporation Law of the State of Nevada, does hereby certify and set forth
as follows:
FIRST: The name of the Corporation is: LAND ACQUISITION AND NEVADA
DEVELOPMENT CORPORATION
SECOND: The purpose or purposes for which the Corporation is
organized are as follows, to wit:
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Business
Corporation Law, provided that the Corporation is not formed to engage in
any act or activity which requires the consent or approval of any state
official, department, board, agency or other body.
For the accomplishment of the aforesaid purposes, and in furtherance
thereof, the Corporation shall have and may exercise all of the powers
conferred by the Business Corporation Law upon corporations formed
thereunder, in accordance with the provisions of any other statute of the
State of Nevada.
THIRD: The office of the Corporation is to be located in the County
of Clark, State of Nevada. 2004 Westlund Drive, Las Vegas, Nevada 89102.
FOURTH: The aggregate number of shares which the Corporation shall
have the authority to issue is ten million (10,000,000) shares, $0.01 par
value per share.
FIFTH: No holder of any of the shares of any class of the Corporation
shall be entitled, as of right, to subscribe for, purchase, or otherwise
acquire any shares of any class of the Corporation which the Corporation
proposes to grant for the purchase of shares of any class of the
Corporation or for the purchase of any shares, bonds, securities or
obligations of the Corporation which are convertible into or
exchangeable for or which carry any rights to subscribe for, purchase, or
otherwise acquire shares of any class of the Corporation; and any and all
of such shares, bonds, securities or obligations of the Corporation,
whether now or hereafter authorized or created, may be issued or may
reissued or transferred if the same have been reacquired and have treasury
status and any and all of such rights and options may be granted by the
Board of Directors to such persons firms, corporations and associations,
and for such lawful considerations and on such terms as the Board of
Directors in its discretion may Determine, without first offering the
same, or any thereof, to any said holder. Without limiting the generality
of the forgoing stated denial of any and all preemptive rights no holder
of shares of any class of the Corporation shall have any preemptive
rights.
SIXTH: The members of the governing Board must be styled as Directors
of the Corporation and the first Board of Directors are to be three in
number, and are as follow:
Louis Popp
2004 Westlund Drive
Las Vegas, Nevada 89102
Peter Riccio
% Towne Pharmacy
2 Washington Avenue
Dunellen, New Jersey 08812
Theda Catania
C.V. Sheffield K253
West Palm Beach, FL 33417
SEVENTH: The Capital Stock subscribed to and paid in at par value is
not subject
to assessment to pay debts of the Corporation.
EIGHTH: The Corporation is to have perpetual existence.
NINTH: No Director of Officer of the Corporation is to be personally
liable to the Corporation or its stockholders for damages for breach of
fiduciary duty as a Director of Officer. However, no Director or Officer
is to be eliminated from or limited from liability for:
A. act or omissions which involve intentional misconduct, fraud or a
knowing violation of law, or
B. the payment of Dividends in violation of Nevada Revised Statutes
78.300.
TENTH: The Secretary of State is designated as agent of the
Corporation upon whom process against it may be served. The post office
address to which the Secretary of State shall mail a copy of any process
against the Corporation served upon him is:
c/o Louis Popp; 2004 Westlund Drive; Las Vegas, Nevada 89102.
IN WITNESS WHEREOF, this certificate has been subscribed this 17th
day October, 1990, by the undersigned who affirms that the statements made
herein are true under the penalties of perjury.
Louis Popp Carol Lynne Carlos ---------------------------
Notary Public
Louis Popp Maricopa County, AZ
2004 Westlund Drive Oct. 17, 1990
Las Vegas, Nevada 89102 My Comm. Expires
Feb. 26, 1994
STATE OF NEVADA SECRETARY OF STATE
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT BY RESIDENT AGENT IN THE MATTER
OF Land Acquisition and Nevada Development Corporation (Name of
Corporation)
I, Louis Popp (Name of Resident Agent), with address at Street 2004
Westlund Drive , Town of Las Vegas - 89102 , County of Clark , State of
Nevada, hereby accept the appointment as Resident Agent of the above-
entitled corporation in accordance with NRS 78.090.
FURTHERMORE, that the principal office in this state is located at
Street 2004 Westlund Drive, Town of Las Vegas, County of Clark, State of
Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of
October, 1990.
Carol Lynne Carlos Louis Popp
Notary Public ---------------------------
Maricopa County, AZ Resident Agent
Oct. 17, 1990
My Comm. Expires Feb. 26, 1994
====================================================
NRS 78.090 Except during any period of vacancy described in NRS
78.097, every corporation shall have a resident agent, who may be either a
natural person or a corporation, resident or located in this state, in
charge of its principal office. The resident agent may be any bank or
banking corporation, or other corporation, located and doing business in
this state .... The certificate of acceptance must be filed at the time
of the initial filing of the corporate papers.
SIXTY DAY LIST OF OFFICERS, DIRECTORS AND AGENT OF
LAND ACQUISITION AND NEVADA DEVELOPMENT CORP.
FILE # 10127-90 FOR THE FILING PERIOD 11-90 TO 11-91
The Corporation's duly appointed Resident Agent in charge of said
principal office in the State of Nevada upon whom process can be served
is:
____________________________________________________________
| |
| LOUIS POPP Resident Agency & Principal |
| 2004 WESTLUND DRIVE Place of Business - Do not |
| LAS VEGAS, NV 89102 change information in this |
| area before reading #5 below. |
|___________________________________________________________|
________________________________
| |
| FOR OFFICE USE ONLY |
| FILED (DATE) NOV 16, 1990 |
| 90-91 PAID $50.00 |
|________________________________|
We want to help you get your business with our office completed in the
fastest, most efficient manner. TO AVOID DELAYS, RETURNS AND LATE
CHARGES, PLEASE BE SURE YOU HAVE:
1. Names and mailing addresses for all officers and directors. A
President, Secretary & Treasurer must be named.
2. An officer's signature at the bottom of this form.
3. Returned ALL COPIES of this form with the $50.00 filing fee. A $15.00
penalty must be added if this form isn't filed within 60 days from the
date of incorporation.
4. Make your check payable to the Secretary of State. If you need a
receipt, enclose a self-addressed, stamped envelope.
5. If you have changed the resident agent or principal place of business,
please contact our office for the proper forms to make the change before
filing this 60-day list.
FILING FEE: $50 LATE PENALTY: $15
THIS FORM MUST BE FILED 60 DAYS FROM THE DATE OF INCORPORATION
__________________________________________________________________________
| NAME: Louis Popp TITLE(S): President
| P.O. BOX: 2004 Westlund Dr. ST. ADDRESS: CITY: Las Vegas
| ST: NV ZIP: 89102 |
|_________________________________________________________________________
| NAME: Peter Riccio TITLE(S): Secretary
| P.O. BOX: 2 Washington ST. ADDRESS: CITY: Dunnellen ST: NJ
ZIP: 08812
|_________________________________________________________________________
__________________________________________________________________________
| NAME: Peter Riccio TITLE(S): Treasurer
| P.O. BOX: 2 Washington ST. ADDRESS: CITY: Dunnellen ST: NJ
ZIP: 08812
|
|_________________________________________________________________________
__________________________________________________________________________
| NAME: Louis Popp TITLE(S): Director
| P.O. BOX: 2004 Westlund Dr. ST. ADDRESS: CITY: Las Vegas ST: NV
ZIP: 89102
|
|_________________________________________________________________________
__________________________________________________________________________
| NAME: Peter Riccio TITLE(S): Director
| P.O. BOX: 2 Washington ST. ADDRESS: CITY: Dunnellen ST: NJ
ZIP: 08812
|
|_________________________________________________________________________
| NAME: Theda Catania TITLE(S): Director
| P.O. BOX: C.V. Sheffield K253 ST. ADDRESS: CITY: W. Palm Beach ST: FL
ZIP: 33417
|_________________________________________________________________________
|
Louis Popp President/Director 11/13/90
- - ------------------------ ------------------------------
Signature of officer Title(s) Date
ARTICLES OF INCORPORATION OF BRIDGE R&D, INC.
FIRST: The name of the corporation is:
Bridge R&D, Inc.
SECOND: The purpose of this corporation is to engage in any lawful
act or activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the trust
company business, or the practice of a profession permitted to be
incorporated by the California Corporation
Code.
THIRD: The name and address in this state of this corporation's
initial agent for service of process is:
Mr. John Harwer
10532 Walker Street, Suite B
Cypress, California 90630
FOURTH: This corporation is authorized to issue only one class of
shares, and the total authorized number of such shares which may be issued
is one million (1,000,000) shares.
FIFTH: The liability of the directors of the corporation for
monetary damages shall be eliminated to the fullest extent permissible
under California law.
SIXTH: The corporation is authorized to indemnify the directors and
officers of the corporation to the fullest extent permissible under
California law.
Andrew Leitch
Date: June 25, 1997 ----------------------------
Andrew V. Leitch, Esq.
Incorporator
EXHIBIT 3 (ii)
BYLAWS FOR THE REGULATION, EXCEPT AS OTHERWISE PROVIDED BY STATUTE OR ITS
ARTICLES OF INCORPORATION, OF BRIDGE TECHNOLOGY, INC.(a Nevada
corporation)
TABLE OF CONTENTS
ARTICLE I 1. Offices.
1.1. Principal Executive Office.
1.2. Other Offices.
ARTICLE II 2. Meeting of shareholders.
2.1. Place of Meetings.
2.2. Annual Meeting.
2.3. Special Meetings.
2.4. Quorum.
2.5. Adjourned Meeting and Notice Thereof.
2.6. Voting.
2.7. Validation of Defectively Called Noticed Meetings.
2.8. Action Without Meeting.
2.9. Proxies.
2.10.Inspectors of Election.
ARTICLE III 3. Directors.
3.1. Powers.
3.2. Number and Qualification of Directors.
3.3. Election and Term of Office.
3.4. Resignation and Removal of Directors.
3.5. Vacancies.
3.6. Place of Meeting.
3.7. Regular Meetings.
3.8. Other Regular Meetings.
3.9. Special Meetings.
3.10.Action Without Meeting.
3.11.Action at a Meeting: Quorum and Required Vote.
3.12.Validation of Defectively Called or Noticed Meetings.
3.13.Adjournment.
3.14.Notice of Adjournment.
3.15.Fees and Compensation.
ARTICLE IV 4. Indemnification of Directors, Officers, Employees and Other
Agents.
4.1. Indemnification - Third Party Proceedings.
4.2. Indemnification - Proceedings by or in the Right of the Corporation.
4.3. Successful Defense on Merits.
4.4. Certain Terms Defined.
4.5. Advancement of Expenses.
4.6. Notice of Claim.
4.7. Enforcement Rights.
4.8. Assumption of Defense.
4.9. Approval of Expenses.
4.10.Subrogation.
4.11.Exceptions.
a) Excluded Acts.
b) Claims Initiated by Indemnitee.
c) Lack of Good Faith.
d) Insured Claims.
e) Claims Under Section 16(b).
4.12.Partial Indemnification.
4.13.Coverage.
4.14.Non-Exclusivity.
4.15.Severability.
4.16.Mutual Acknowledgment.
4.17.Officer and Director Liability Insurance.
4.18.Notice to Insurance.
4.19.Attorneys' Fees.
4.20.Notice.
ARTICLE V 5. Officers.
5.1. Officers.
5.2. Election.
5.3. Subordinate Officers, Etc.
5.4. Removal and Resignation.
5.5. Vacancies.
5.6. Chairman of the Board.
5.7. President.
5.8. Vice-Presidents.
5.9. Secretary.
5.10.Chief Financial Officer.
ARTICLE VI 6.Miscellaneous.
6.1. Record Date.
6.2. Inspection of Corporate Records.
6.3. Checks, Drafts, Etc. Annual and Other Reports.
6.5. Contracts, Etc., How Executed.
6.6. Certificate for Shares.
6.7. Representation of Shares of Other Corporations.
6.8. Inspection of Bylaws.
6.9. Seal.
6.10.Construction and Definitions.
ARTICLE VII 7.Amendments.
7.1. Power of Shareholders.
7.2 Power of Directors.
CERTIFICATE OF SECRETARY
BYLAWS FOR THE REGULATION, EXCEPT AS OTHERWISE PROVIDED BY
STATUTE OR ITS ARTICLES OF INCORPORATION, OF
BRIDGE TECHNOLOGY, INC. (a Nevada corporation)
ARTICLE I
1. Offices.
1.1. Registered Office. The registered office of BRIDGE TECHNOLOGY, Inc.
(the "Corporation") is hereby fixed and located at: 2004 Westland Drive,
Santa Ana, California 92705 (the "Principal Executive Office"). The Board
of Directors ("Board") is hereby granted full power and authority to
change said Principal Executive office from one location to another. Any
such change shall be noted on the Bylaws by the Secretary, opposite this
section, or this section may be amended to state the new location.
1.2. Other Offices. Other business offices may at any time be established
by the Board or by the President at any place or places where the
Corporation is qualified to do business.
ARTICLE II
2. Meetings of Shareholders.
2.1. Place of Meetings. All annual or other meetings of shareholders
shall be held at the Principal Executive office of the Corporation, or at
any other place within or without the State of California which may be
designated either by the Board or by the written consent of all persons
entitled to vote thereat and not present at the meeting, given either
before or after the meeting and filed with the Secretary of the
Corporation.
2.2. Annual Meeting. The annual meetings of shareholders shall be held on
the first (1st) day of June of each year, at 9:00 a.m., or at such other
date and time as shall be designated from time to time by the Board or by
the shareholders in accordance with these bylaws; provided, however, that
should said day fall upon a legal holiday, then any such annual meeting of
shareholders shall be held at the same time and place on the next full
business day. At such meetings, directors shall be elected, reports of
the affairs of the Corporation shall be considered, and any other business
may be transacted which is within the powers of the shareholders.
Written notice of each annual meeting shall be given to each shareholder
entitled to vote, either personally or by first-class mail or other means
of written communication, charges prepaid, addressed to such shareholder
at his address appearing on the books of the Corporation or given by him
to the Corporation for the purpose of notice. If any notice or report
addressed to the shareholder at the address of such shareholder appearing
on the books of the Corporation is returned to the Corporation by the
United States Postal Service marked to indicate that the United States
Postal Service is unable to deliver the notice or report to the
shareholder at such address, all future notices or reports shall be deemed
to have been duly given without further mailing if the same shall be
available for the shareholder upon written demand of the shareholder at
the Principal Executive office of the Corporation for a period of one year
from the date of the giving of the notice or report to all other
shareholders. If a shareholder gives no address, notice shall be deemed
to have been given him if sent by mail or other means of written
communication addressed to the place where the Principal Executive Office
of the Corporation is situated, or if published at least once in a
newspaper of general circulation in the county in which said Principal
Executive Office is located.
All such notices shall be given to each shareholder entitled thereto not
less than ten (10) days nor more than sixty (60) days before each annual
meeting. Any such notice shall be deemed to have been given at the time
when delivered personally or deposited in the mail or sent by other means
of written communication. An affidavit of mailing of any such notice in
accordance with the foregoing provisions, executed by the Secretary,
Assistant Secretary or any transfer agent of the Corporation shall be
prima facie evidence of the giving of the notice.
Such notice shall specify:
(1) the place, the date, and the hour of such meeting;
(2) those matters which the Board, at the time of the mailing of the
notice, intends to present for action by the shareholders;
(3) if directors are to be elected, the names of nominees intended at
the time of the notice to be presented by the Board for election;
(4) the general nature of a proposal, if any, to take action with respect
to approval of, (i) a contract or other transaction with an interested
director, (ii) amendment of the Articles of Incorporation, (iii) a
reorganization of the Corporation as defined in Section 181 of the
California Corporations Code, (iv) voluntary dissolution of the
Corporation, or (v) a distribution in dissolution other than in accordance
with the rights of outstanding preferred shares, if any; and
(5) such other matters, if any, as may be expressly required by statute.
2.3. Special Meetings. Special meetings of the shareholders, for the
purpose of taking any action permitted by the shareholders under the
General Corporation Law and the Articles of Incorporation of this
Corporation, may be called at any time by the Chairman of the Board or the
President, or by the Board, or by one or more shareholders holding not
less than ten percent (10%) of the votes at the meeting. Upon request in
writing that a special meeting of shareholders be called for any proper
purpose, directed to the Chairman of the Board, President, Vice-President
or Secretary by any person (other than the Board) entitled to call a
special meeting of shareholders, the officer forthwith shall cause notice
to be given to shareholders entitled to vote that a meeting will be held
at a time requested by the person or persons calling the meeting, not less
than ten (10) nor more than sixty (60) days after receipt of the request.
Except in special cases where other express provision is made by statute,
notice of such special meetings shall be given in the same manner as for
annual meetings of shareholders. In addition to the matters required by
items (a) and, if applicable, (c) of Section 2.2, notice of any special
meeting shall specify the general nature of the business to be transacted,
and no other business may be transacted at such meeting.
2.4. Quorum. The presence in person or by proxy of the persons entitled
to vote a majority of the voting shares at any meeting shall constitute a
quorum for the transaction of business. The shareholders present at a
duly called or held meeting at which a quorum is present may continue to
do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
2.5. Adjourned Meeting and Notice Thereof. Any shareholders' meeting,
annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares, the holders of
which are either present in person or represented by proxy, but in the
absence of a quorum no other business may be transacted at such meeting,
except as provided in Section 2.4.
2.6. Voting. At all meetings of shareholders, every shareholder entitled
to vote shall have the right to vote in person or by proxy the number of
shares standing in the name of such shareholder on the stock records of
the Corporation on the record date for such meeting. Shares held by an
administrator, executor, guardian, conservator, custodian, trustee,
receiver, pledgee, minor, corporation or fiduciary or held by this
Corporation or a subsidiary of this Corporation in a fiduciary capacity or
by two or more persons shall be voted in the manner set forth in Sections
702, 703 and 704 of the California Corporations Code. Shares of this
Corporation owned by this Corporation or a subsidiary (except shares held
in a fiduciary capacity) shall not be entitled to vote. Unless a record
date for voting purposes be fixed as provided in Section 6.1 of these
Bylaws then only persons in whose names shares entitled to vote stand on
the stock records of the Corporation at the close of business on the
business day next preceding the day on which notice of the meeting is
given or if such notice is waived, at the close of business on the
business day next preceding the day on which the meeting of shareholders
is held, shall be entitled to vote at such meeting, and such day shall be
the record date for such meeting. Such vote may be viva voce or by
ballot; provided, however, that all elections for directors must be by
ballot upon demand made by a shareholder at any election and before the
voting begins. Except with respect to election of directors as provided
below, the affirmative vote on any matter by a majority of the shares
represented and voting at a duly held meeting at which a quorum is present
(which shares voting affirmatively also constitute at least a majority of
the required quorum) shall be the act of the shareholders, unless the vote
of a greater number or voting by classes is required by the California
Corporations Code or the Articles of Incorporation. Subject to the
requirements of the next sentence, every shareholder entitled to vote at
any election for directors shall have the right to cumulate his votes and
give one candidate a number of votes equal to the number of directors to
be elected multiplied by the number of votes to which his shares are
entitled, or to distribute his votes on the same principle among as many
candidates as he shall think fit. No shareholder shall be entitled to
cumulative votes unless the name of the candidate or candidates for whom
such votes would be cast has been placed in nomination prior to the voting
and any shareholder has given notice at the meeting prior to the voting,
of such shareholder's intention to cumulate his votes. The candidates
receiving the highest number of affirmative votes of shares entitled to be
voted for them, up to the number of directors to be elected, shall be
elected; votes against the candidate and votes withheld shall have no
effect.
2.7. Validation of Defectively Called Noticed Meetings. The proceedings
and transactions of any meeting of shareholders, either annual or special,
however called and noticed and wherever held, shall be as valid as though
had at a meeting duly held after regular call and notice, if a quorum be
present either in person or by proxy, and if, either before or after the
meeting, each of the persons entitled to vote, not present in person or by
proxy, signs a written waiver of notice or a consent to the holding of
such meeting, or an approval of the minutes thereof. Attendance of a
person at a meeting shall constitute a waiver of notice of and presence at
such meeting, except when the person objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not
lawfully called or convened and except that attendance at a meeting is not
a waiver of any right to object to the consideration of matters required
by law or these Bylaws to be included in the notice but not so included,
if such objection is expressly made at the meeting, provided, however,
that any person making such objection at the beginning of the meeting or
to the consideration of matters required to be but not included in the
notice may orally withdraw such objection at the meeting or thereafter
waive such objection by signing a written waiver thereof or a consent to
the holding of the meeting or the meetings. Neither the business to be
transacted at nor the purpose of any annual or special meeting of
shareholders need be specified in any written waiver of notice, consent to
the holding of the meeting or approval of the minutes thereof except that
the general nature of the proposals specified in subsection (d) of Section
2.2 shall be so stated. All such waivers, consents or approvals shall be
filed with the corporate records or made a part of the minutes of the
meeting.
2.8. Action Without Meeting. Directors may be elected without a meeting
by consent in writing, setting forth the action so taken, signed by all of
the persons who would be entitled to vote for the election of directors,
provided that, without notice except as hereinafter set forth, a director
may be elected at any time to fill a vacancy, other than to fill a vacancy
created by removal, not filled by the directors by the written consent of
persons holding a majority of the outstanding shares entitled to vote for
the election of directors.
Any other action which, under any provision of the California Corporations
Code, may be taken at a meeting of the shareholders, may be taken without
a meeting, and without notice except as hereinafter set forth, if a
consent in writing, setting forth the action so taken, is signed by the
holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and
voted. Unless the consents of all shareholders entitled to vote have been
solicited in writing,
(1) Notice of any proposed shareholder approval of, (i) a contract or
other transaction with an interested director, (ii) indemnification of an
agent of the Corporation as authorized by Section 3.16 of these Bylaws,
(iii) a reorganization of the Corporation as defined in Section 181 of the
California Corporations Code, or (iv) a distribution in dissolution other
than in accordance with the rights of outstanding preferred shares, if
any, without a meeting by less than unanimous written consent, shall be
given at least ten (10) days before the consummation of the action
authorized by such approval; and
(2) Prompt notice shall be given of the taking of any other corporate
action approved by shareholders without a meeting by less than unanimous
written consent, to those shareholders entitled to vote who have not
consented in writing. Such notices shall be given in the manner and shall
be deemed to have been given as provided in Section 2.2 of these Bylaws.
Unless, as provided in Section 6.1 of these Bylaws, the Board has fixed a
record date for the determination of shareholders entitled to notice of
and to give such written consent, the record date for such determination
shall be the day on which the first written consent is given. All such
written consents shall be filed with the Secretary of the Corporation.
Any shareholder given a written consent, or the shareholder's proxy
holders, or a transferee of the shares of a personal representative of the
shareholder or their respective proxy holders, may revoke the consent by a
writing received by the Corporation prior to the time that written
consents of the number of shares required to authorize the proposed action
have been filed with the Secretary of the Corporation, but may not do so
thereafter. Such revocation is effective upon its receipt by the
Secretary of the Corporation.
2.9. Proxies. Every person entitled to vote or execute consents shall
have the right to do so either in person or by one or more agents
authorized by a written proxy executed by such person or the duly
authorized agent of such person and filed with the Secretary of the
Corporation, or the persons appointed as inspectors of election or such
other persons as may be designated by the Board or the President to
receive proxies; provided that no such proxy shall be valid after the
expiration of eleven (11) months from the date of its execution, unless
the person executing it specifies therein the length of time for which
such proxy is to continue in force. Every proxy duly executing continues
in full force and effect until revoked by the person executing it prior to
the vote pursuant thereto. Except as otherwise provided by law, such
revocation may be effected as to any meeting by attendance at such meeting
and voting in person by the person executing the proxy or by a writing
stating that the proxy is revoked or by a proxy bearing a later date
executed by the person executing the prior proxy and presented to the
meeting or filed with the Secretary of the Corporation or the persons
appointed as inspectors of election or such other persons as may be
designated by the Board or the President to receive proxies.
2.10. Inspectors of Election. In advance of any meeting of shareholders,
the Board may appoint any persons other than nominees for office as
inspectors of election to act at such meeting or any adjournment thereof.
If inspectors of election are not so appointed, the Chairman of any such
meeting may, and on the request of any shareholder or his proxy shall,
make such appointment at the meeting. The number of inspectors shall be
either one (1) or three (3). If appointed at a meeting on the request of
one or more shareholders or proxies, the majority of shares represented in
person or by proxy shall determine whether one (1) or three (3) inspectors
are to be appointed. In case any person appointed as inspector fails to
appear or fails or refuses to act, the vacancy may, and on the request of
any shareholder or a shareholder's proxy shall, be filled by appointment
by the Board in advance of the meeting, or at the meeting by the chairman
of the meeting.
The duties of such inspectors shall be as prescribed by Section 707 of the
California Corporations Code and shall include: determining the number of
shares outstanding and the voting power of each, the shares represented at
the meeting, the existence of a quorum, the authenticity, validity and
effect of proxies; receiving votes, ballots or consents; hearing and
determining all challenges and questions in any way arising in connection
with the right to vote; counting and tabulating all votes or consents;
determining when the polls shall close; determining the result; and such
acts as may be proper to conduct the election or vote with fairness to all
shareholders. In the determination of the validity and effect of proxies,
the dates contained in the forms of proxy shall presumptively determine
the order of execution of the proxies, regardless of the postmark dates on
the envelopes in which they are mailed. The inspectors of election shall
perform their duties impartially, in good faith, to the best of their
ability and as expeditiously as is practical. If there are three
inspectors of election, the decision, act or certificate of a majority is
effective in all respects as the decision, act or certificate of all. Any
report or certificate made by the inspectors of election is prima facie
evidence of the facts stated therein.
ARTICLE III
3. Directors.
3.1. Powers. Subject to the limitations of the Articles of Incorporation
and of the California Corporations Code as to action to be authorized or
approved by the shareholders, and subject to the duties of directors as
prescribed by the Bylaws, all corporate powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation
shall be managed by, the Board. Without prejudice to such general powers,
but subject to the same limitations, it is hereby expressly declared that
the directors shall have the following powers:
(1) To select and remove all the officers, agents and employees of the
Corporation, prescribe such powers and duties for them as may not be
inconsistent with law, with the Articles of Incorporation or the Bylaws,
fix their compensation and require from them security for faithful
service.
(2) To conduct, manage and control the affairs and business of the
Corporation, and to make such rules and regulations therefor not
inconsistent with law, or with the Articles of Incorporation or the
Bylaws, as they may deem best.
(3) To change the Principal Executive office and principal office for the
transaction of the business of the Corporation from one location to
another as provided in Section 1.1 hereof; to fix and locate from time to
time one or more subsidiary offices of the Corporation within or without
the State of California, as provided in Section 1.2 hereof; to designate
any place within or without the State of California for the holding of any
shareholders' meeting or meetings; and to adopt, make and use a corporate
seal, and to prescribe the forms of certificates of stock, and to alter
the form of such seal and of such certificates from time to time, as in
their judgment they may deem best, provided such seal and such
certificates shall at all times comply with the provisions of law.
(4) To authorize the issue of shares of stock of the Corporation from time
to time, upon such terms as may be lawful.
(5) To borrow money and incur indebtedness for the purposes of the
Corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust,
mortgages/pledges, hypothecations or other evidences of debt and
securities therefor.
(6) By resolution adopted by a majority of the authorized number of
directors, to designate an executive and other committees, each consisting
of two or more directors, to serve at the pleasure of the Board and to
prescribe the manner in which proceedings of such committee shall be
conducted. Unless the Board shall otherwise prescribe the manner of
proceedings of any such committee, meetings of such committee may be
regularly scheduled in advance and may be called at any time by any two
members thereof; otherwise, the provisions of these Bylaws with respect to
notice and conduct of meetings of the Board shall govern. The appointment
of members or alternate members of a committee requires the vote of a
majority of the authorized number of directors. Any such committee, to
the extent provided in a resolution of the Board, shall have all of the
authority of the Board, except with respect to:
(1) the approval of any action for which the California Corporations Code
or the Articles of Incorporation also require shareholder approval;
(2) the filling of vacancies on the Board or in any committee;
(3) the fixing of compensation of the directors for serving on the Board
or on any committee;
(4) the adoption, amendment or repeal of Bylaws;
(5) the amendment or repeal of any resolution of the Board;
(6) any distribution to the shareholders, except at a rate or in a
periodic amount or within a price range determined by the Board; and
(7) the appointment of other committees of the Board or the members
thereof.
The Board may prescribe appropriate rules, not inconsistent with these
Bylaws, by which proceedings of any such committee shall be conducted.
The provisions of these Bylaws relating to the calling of meetings of the
Board, notice of meetings of the Board and waiver of such notice,
adjournments of meetings of the Board, written consents to Board meetings
and approval of minutes, action by the Board by consent in writing without
a meeting, the place of holding such meetings, meetings by conference
telephone or similar communications equipment, the quorum for such
meetings, the vote required at such meetings and the withdrawal of
directors after commencement of a meeting shall apply to committees of the
Board and action by such committees. In addition, any member of the
committee designated by the Board as the chairman or as secretary of the
committee or any two members of a committee may call meetings of the
committee. Regular meetings of any committee may be held without notice
if the time and place of such meetings are fixed by the Board or the
committee.
3.2. Number and Qualification of Directors. The number of directors of the
Corporation shall be not less than three (3) nor more than seven (7);
provided, however that so long as the Corporation has only one
shareholder, the number may be one (1). The indefinite number of directors
may be changed, or a definite number may be fixed without provision for an
indefinite number, by a duly adopted amendment to the Articles of
Incorporation or by an amendment to these Bylaws duly adopted by the vote
or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that an amendment reducing the fixed
number or the minimum number of directors to a number less than five (5)
cannot be adopted if the votes cast against its adoption at a meeting, or
the shares not consenting in the case of an action by written consent, are
equal to more than sixteen and two-thirds percent (16_) of the outstanding
shares entitled to vote thereon. No amendment may change the stated
maximum number of authorized directors to a number greater than two (2)
times the stated minimum number of directors minus one (1).
No reduction of the authorized number of directors shall have the effect
of removing any director before that director's term of office expires.
Subject to the foregoing provisions for changing the number of directors,
the number of directors of this Corporation has been fixed at three (3).
3.3. Election and Term of Office. The directors shall be elected at each
annual meeting of shareholders but, if any such annual meeting is not held
or the directors are not elected thereat, the directors may be elected at
any special meeting of shareholders held for that purpose. All directors
shall hold office until their respective successors are elected, subject
to the General Corporation Law and the provisions of these Bylaws with
respect to vacancies on the Board.
3.4. Resignation and Removal of Directors. Any director may resign
effective upon giving written notice to the Chairman of the Board, the
President, the Secretary or the Board of the Corporation, unless the
notice specifies a later time for the effectiveness of such resignation,
in which case such resignation shall be effective at the time specified.
Unless such resignation specifies otherwise, its acceptance by the
Corporation shall not be necessary to make it effective. The Board may
declare vacant the office of a director who has been declared of unsound
mind by an order of court or convicted of a felony. Any or all of the
directors may be removed without cause if such removal is approved by the
affirmative vote of a majority of the outstanding shares entitled to vote
provided that no directors may be removed (unless the entire Board is
removed) when the votes cast against removal (or, if such action is taken
by written consent, the shares held by persons not consenting in writing
to such removal) would be sufficient to elect such director if voted
cumulatively at an election at which the same total number of votes were
cast (or, if such action is taken by written consent, all shares entitled
to vote were voted) and the entire number of directors authorized at the
time of the directors' most recent election were then being elected. No
reduction of the authorized number of directors shall have the effect of
removing any director before his term of office expires.
3.5. Vacancies. A vacancy in the Board shall be deemed to exist in case
of the death, resignation or removal of any director, if a director has
been declared of unsound mind by order of court or convicted of a felony,
if the authorized number of directors be increased, or if the shareholders
fail, at any annual or special meeting of shareholders at which any
director or directors are elected, to elect the full authorized number of
directors to be voted for at that meeting. Vacancies in the Board, except
for a vacancy created by the removal of a director, may be filled by a
majority of the remaining directors, though less than a quorum, or by a
sole remaining director, and each director so elected shall hold office
until his successor is elected at an annual or a special meeting of the
shareholders. A vacancy in the Board created by the removal of a director
may only be filled by the vote of a majority of the shares entitled to
vote represented and voting at a duly held meeting at which a quorum is
present (which shares voting affirmatively also constitute at least a
majority of the required quorum), or by the written consent of the holders
of a majority of the outstanding shares. The shareholders may elect a
director or directors at any time to fill any vacancy or vacancies not
filled by the directors. Any such election by written consent other than
to fill a vacancy created by removal shall require the consent of holders
of a majority of the outstanding shares entitled to vote.
3.6. Place of Meeting. Regular meetings of the Board shall be held at any
place within or without the State which has been designated in the notice
or written waiver of notice of the meeting, or, if not stated in the
notice or waiver of notice or if there is no notice, designated by
resolution of the Board or, either before or after the meeting, consented
to in writing by all members of the Board who were not present at the
meeting. In the absence of such designation, regular meetings shall be
held at the Principal Executive Office of the Corporation. Special
meetings of the Board may be held either at a place so designated or at
the Principal Executive office.
3.7. Regular Meetings. Immediately following each annual meeting of
shareholders the Board shall hold a regular meeting at the place of said
annual meeting or at such other place as shall be fixed by the Board, for
the purpose of organization, election of officers, and the transaction of
other business. Call and notice of such meetings are hereby dispensed
with.
3.8. Other Regular Meetings. There shall be no other regular meetings of
the Board.
3.9. Special Meetings. Special meetings of the Board for any purpose or
purposes shall be called at any time by the Chairman of the Board, the
President, the Secretary or by any two directors.
Written notice of the time and place of special meetings shall be
delivered personally to each director or communicated to each director by
telephone, or by telegraph or mail, charges prepaid, addressed to him at
his address as it is shown upon the records of the Corporation or, if it
is not so shown on such records or is not readily ascertainable, at the
place at which the meetings of the directors are regularly held. In case
such notice is mailed, it shall be deposited in the United States mail in
the place in which the Principal Executive Office of the Corporation is
located at least five (5) days prior to the time of the holding of the
meeting. In case such notice is delivered personally or by telephone or
telegraph, as above provided, it shall be so delivered at least forty-
eight (48) hours prior to the time of the holding of the meeting. Such
mailing, telegraphing or delivery, personally or by telephone, as above
provided, shall be due, legal and personal notice to such director. Any
notice shall state the date, place and hour of the meeting and the general
nature of the business to be transacted, and no other business may be
transacted at the meeting.
3.10. Action Without Meeting. Any action by the Board may be taken
without a meeting if all members of the Board shall individually or
collectively consent in writing to such action. Such written consent or
consents shall be filed with the minutes of the proceedings of the Board
and shall have the same force and effect as a unanimous vote of such
directors.
3.11. Action at a Meeting: Quorum and Required Vote. Presence of a
majority of the authorized number of directors at a meeting of the Board
constitutes a quorum for the transaction of business, except as
hereinafter provided. Members of the Board may participate in a meeting
through use of conference telephone or similar communications equipment,
so long as all members participating in such meeting can hear one another.
Participation in a meeting as permitted in the preceding sentence
constitutes presence in person at such meeting. Every act or decision
done or made by a majority of the directors present at a meeting duly held
at which a quorum is present shall be regarded as the act of the Board,
unless a greater number, or the same number after disqualifying one or
more directors from voting, is required by law, by the Articles of
Incorporation, or by these Bylaws. A meeting at which a quorum is
initially present may continue to transact business notwithstanding the
withdrawal of director, provided that any action taken is approved by at
least a majority of the required quorum for such meeting.
3.12. Validation of Defectively Called or Noticed Meetings. The
transactions of any meeting of the Board, however called and noticed or
wherever held, shall be as valid as though had at a meeting duly held
after regular call and notice, if a quorum is present and if, either
before or after the meeting, each of the directors not present or who,
though present, has prior to the meeting or at its commencement, protested
the lack of proper notice to him, signs a written waiver of notice or a
consent to holding such meeting or an approval of the minutes thereof.
All such waivers, consents or approvals shall be filed with the corporate
records or made a part of the minutes of the meeting.
3.13. Adjournment. A quorum of the directors may adjourn any directors'
meeting to meet again at a stated day and hour; provided, however, that in
the absence of a quorum a majority of the directors present at any
directors, meeting, either regular or special, may adjourn from time to
time until the time fixed for the next regular meeting of the Board.
3.14. Notice of Adjournment. If the meeting is adjourned for more than
twenty-four (24) hours, notice of any adjournment to another time or place
shall be given prior to the time of the adjourned meeting to the directors
who were not present at the time of adjournment. Otherwise, notice of the
time and place of holding an adjourned meeting need not be given to absent
directors if the time and place be fixed at the meeting adjourned.
3.15. Fees and Compensation. Directors and members of the committees
shall receive compensation for their services as directors or members of
committees or reimbursement for their expenses incurred as directors or
members of committees as these payments are fixed by resolution of the
Board. Directors and members of committees may receive compensation and
reimbursement for their expenses incurred as officers, agents or employees
of
or for other services performed for the Corporation as approved by the
President without authorization, approval or ratification by the Board.
ARTICLE IV
4. Indemnification of Directors, Officers, Employees and Other Agents.
4.1. Indemnification - Third Party Proceedings. The corporation shall
indemnify any person (the "Indemnitee") who is or was a party, or is or
was threatened to be made a party to any proceeding (other than an action
by or in the right of the corporation to procure a judgment in its favor)
by reason of the fact that Indemnitee is or was a director or officer of
the corporation, or any subsidiary of the corporation, and the corporation
may indemnify a person who is or was a party or is threatened to be made a
party to any proceeding (other than an action by or in the right of the
corporation to procure a judgment in its favor) by reason of the fact that
such person is or was an employee or other agent of the corporation (the
"Indemnitee Agent") by reason of any action or inaction on the part of
Indemnitee or Indemnitee Agent while an officer, director or agent or by
reason of the fact that
Indemnitee or Indemnitee Agent 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 subject to Section 4.19, attorneys, fees and
any expenses of establishing a right to indemnification pursuant to this
Article IV, or under California law), judgments, fines, settlements (if
such settlement is approved in advance by the corporation, which approval
shall not be unreasonable withheld) and other amounts actually and
reasonably incurred by Indemnitee or Indemnitee Agent in connection with
such proceeding if Indemnitee or Indemnitee Agent acted in good faith and
in a manner Indemnitee or Indemnitee Agent reasonably believed to be in or
not opposed to the best interests of the corporation and, in the case of a
criminal proceeding, if Indemnitee or Indemnitee Agent had no reasonable
cause to believe Indemnitee's or Indemnitee Agent's conduct was unlawful.
The termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contenders or its equivalent shall not,
of itself, create a presumption that Indemnitee or Indemnitee Agent did
not act in good faith and in a manner which Indemnitee or Indemnitee Agent
reasonably believed to be in or not opposed to the best interests of the
corporation, or with respect to any criminal proceedings, would not create
a presumption that Indemnitee or Indemnitee Agent had reasonable cause to
believe that Indemnitee's or Indemnitee Agent's conduct was unlawful.
4.2. Indemnification - Proceedings by or in the Right of the Corporation.
The corporation shall indemnify Indemnitee and may indemnify Indemnitee
Agent if Indemnitee, or Indemnitee Agent, as the case may be, was or is a
party or is threatened to be made a party to any threatened, pending or
completed action by or in the right of the corporation or any subsidiary
of the corporation to procure a judgment in its favor by reason of the
fact that Indemnitee or Indemnitee Agent is or was a director, officer,
employee or other agent of the corporation, or any subsidiary of the
corporation, by reason of any action or inaction on the part of Indemnitee
or Indemnitee Agent while an officer, director or agent or by reason of
the fact that Indemnitee or Indemnitee Agent 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 subject to Section 4.19,
attorneys, fees and any expenses of establishing a right to
indemnification pursuant to this Article IV or under California law) and,
to the fullest extent permitted by law, amounts paid in settlement, in
each case to the extent actually and reasonably incurred by Indemnitee or
Indemnitee Agent in connection with the defense or settlement of the
proceeding if Indemnitee or Indemnitee Agent acted in good faith and in a
manner Indemnitee or Indemnitee Agent believed to be in or not opposed to
the best interests of the corporation and its shareholders, except that no
indemnification shall be made with respect to any claim, issue or matter
to which Indemnitee (or Indemnitee Agent) shall have been adjudged to have
been liable to the corporation in the performance of Indemnitee's or
Indemnitee Agent's duty to the corporation and its shareholders, unless
and only to the extent that the court in which such proceeding is or was
pending shall determine upon application that, in view of all the
circumstances of the case, Indemnitee (or Indemnitee Agent) is fairly and
reasonably entitled to indemnity for expenses and then only to the extent
that the court shall determine.
4.3. Successful Defense on Merits. To the extent that Indemnitee (or
Indemnitee Agent) without limitation has been successful on the merits in
defense of any proceeding referred to in Sections 4.1 or 4.2 or in defense
of any claim, issue or matter therein, the corporation shall indemnify
Indemnitee (or Indemnitee Agent) against expenses (including attorneys,
fees) actually and reasonably incurred by Indemnitee or (Indemnitee Agent)
in connection therewith.
4.4. Certain Terms Defined. For purposes of this Article IV, references
to "other enterprises" shall include employee benefit plans, references to
"fines" shall include any excise taxes assessed on Indemnitee or
Indemnitee Agent with respect to an employee benefit plan, and references
to "proceeding" shall include any threatened, pending or completed action
or proceeding, whether civil, criminal, administrative or investigative.
References to "corporation" include all constituent corporations absorbed
in a consolidation or merger as well as the resulting or surviving
corporation, so that any person who is or was a director, officer,
employee, or other agent of such a constituent corporation or who, being
or having been such a director, officer, employee or other agent of
another corporation, partnership, joint venture, trust or other enterprise
shall stand in the same position under the provisions of this Article IV
with respect to the resulting or surviving corporation as such person
would if he or she had served the resulting or surviving corporation in
the same capacity.
4.5. Advancement of Expenses. The corporation shall advance all expenses
incurred by Indemnitee and may advance all or any expenses incurred by
Indemnitee Agent in connection with the investigation, defense, settlement
(excluding amounts actually paid in settlement of any action, suit or
proceeding) or appeal of any civil or criminal action, suit or proceeding
referenced in Sections 4.1 or 4.2. Indemnitee or Indemnitee Agent hereby
undertakes to repay such amounts advanced only if, and to the extent that,
it shall be determined ultimately that Indemnitee or Indemnitee Agent is
not entitled to be indemnified by the corporation as authorized hereby.
The advances to be made hereunder shall be paid by the corporation (i) to
Indemnitee within twenty (20) days following delivery of a written request
therefor by Indemnitee to the corporation; and (ii) to Indemnitee Agent
within twenty (20) days following the later of a written
request therefor by Indemnitee Agent to the corporation and determination
by the corporation to advance expenses to Indemnitee Agent pursuant to the
corporation's discretionary authority hereunder.
4.6. Notice of Claim. Indemnitee shall, as a condition precedent to his
or her right to be indemnified under this Article IV, and Indemnitee Agent
shall, as a condition precedent to his or her ability to be indemnified
under this Article IV, give the corporation notice in writing as soon as
practicable of any claim made against Indemnitee or Indemnitee Agent, as
the case may be, for which indemnification will or could be sought under
this Article IV. Notice to the corporation shall be directed to the
secretary of the corporation at the principal executive office of the
corporation (or such other address as the corporation shall designate in
writing to Indemnitee) . In addition, Indemnitee or Indemnitee Agent shall
give the corporation such information and cooperation as it may reasonably
require and as shall be within Indemnitee's or Indemnitee Agent's power.
4.7. Enforcement Rights. Any indemnification provided for in Sections
4.1, 4.2 or 4.3 shall be made no later than sixty (60 days after receipt
of the written request of Indemnitee. If a claim or request under this
Article IV, under any statute, or under any provision of the corporation's
articles of incorporation providing for indemnification is not paid by the
corporation, or on its behalf, within sixty (60) days after written
request for payment thereof has been received by the corporation,
Indemnitee may, but need not, at any time thereafter bring suit against
the corporation to recover the unpaid amount of the claim or request, and
subject to Section 4.19, Indemnitee shall also be entitled to be paid for
the expenses (including attorneys' fees) of bringing such action. It shall
be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in connection with any action, suit or
proceeding in advance of its final disposition) that Indemnitee has not
met the standards of conduct which make it permissible under applicable
law for the corporation to indemnify Indemnitee for the amount claimed,
but the burden of proving such defense shall be on the corporation, and
Indemnitee shall be entitled to receive interim payments of expenses
pursuant to Section 4.5, unless and until such defense may be finally
adjudicated by court order or judgment for which no further right of
appeal exists. The parties hereto intend that if the corporation contests
Indemnitee's right to indemnification, the question of Indemnitee's right
to indemnification shall be a decision for the court, and no presumption
regarding whether the applicable standard has been met will arise based on
any determination or lack of determination of such by the corporation
(including its Board or any subgroup thereof, independent legal counsel or
its shareholders). The Board may, in its discretion, provide by
resolution for similar or identical enforcement rights for any Indemnitee
Agent.
4.8. Assumption of Defense. In the event the corporation shall be
obligated to pay the expenses of any proceeding against the Indemnitee (or
Indemnitee Agent), the corporation, if appropriate, shall be entitled to
assume the defense of such proceeding with counsel approved by Indemnitee
(or Indemnitee Agent), which approval shall not be unreasonably withheld,
upon the delivery to Indemnitee (or Indemnitee Agent) of written notice of
its election so to do. After delivery of such notice, approval of such
counsel by Indemnitee (or Indemnitee Agent) and the retention of such
counsel by the corporation, the corporation will not be liable to
Indemnitee (or Indemnitee Agent) under this Article IV for any fees of
counsel subsequently incurred by Indemnitee (or Indemnitee Agent) with
respect to the same proceeding, unless (i) the- employment of counsel by
Indemnitee (or Indemnitee Agent) is authorized by the corporation, (ii)
Indemnitee (or Indemnitee Agent) shall have reasonably concluded that
there may be conflict of interest of such counsel retained by the
corporation between the corporation and Indemnitee (or Indemnitee Agent)
in the conduct of such defense, or (iii) the corporation ceases or
terminates the employment of such counsel with respect to the defense of
such proceeding, in any of which events then the fees and expenses of
Indemnitee's (or Indemnitee Agent's) counsel shall be at the expense of
the corporation. At all times, Indemnitee (or Indemnitee Agent) shall
have the right to employ other counsel in any such proceeding at
Indemnitee's (or Indemnitee Agent's) expense.
4.9. Approval of Expenses. No expenses for which indemnity shall be
sought under this Article IV, other than those in respect of judgments and
verdicts actually rendered, shall be incurred without the prior consent of
the corporation, which consent shall not be unreasonably withheld.
4.10. Subrogation. In the event of payment under this Article IV, the
corporation shall be subrogated to the extent of such payment to all of
the rights of recovery of the Indemnitee (or Indemnitee Agent) , who shall
do all things that may be necessary to secure such rights, including the
execution of such documents necessary to enable the corporation
effectively to bring suit to enforce such rights.
4.11. Exceptions. Notwithstanding any other provision herein to the
contrary, the corporation shall not be obligated pursuant to this Article
IV:
(1) Excluded Acts. To indemnify Indemnitee (i) as to circumstances in
which indemnity is expressly prohibited pursuant to California law, or
(ii) for any acts or omissions or transactions from which a director may
not be relieved of liability pursuant to California law; or
(2) Claims Initiated by Indemnitee. To indemnify or advance expenses to
Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect
to proceedings brought to establish or enforce a right to indemnification
under this Article IV, or any other statute or law or as otherwise
required under the California Corporations Code, but such indemnification
or advancement of expenses may be provided by the corporation in specific
cases if the Board has approved the initiation or bringing of such suit;
or
(3) Lack of Good Faith. To indemnify Indemnitee for any expenses incurred
by the Indemnitee with respect to any proceedings instituted by Indemnitee
to enforce or interpret this Article IV, if a court of competent
jurisdiction determines that such proceeding was not made in good faith or
was frivolous; or
(4) Insured Claims. To indemnify Indemnitee for expenses or liabilities
of any type whatsoever (including, but not limited to, judgments, fines,
ERISA excise taxes or penalties, and amounts paid in settlement) which
have been paid directly to Indemnitee by an insurance carrier under a
policy of officers, and directors' liability insurance maintained by the
corporation; or
(5) Claims Under Section 16(b). To indemnify Indemnitee for expenses and
the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of
1934, as amended, or any similar successor statute.
4.12. Partial Indemnification. If Indemnitee is entitled under any
provision of this Article IV to indemnification by the corporation for
some or a portion of the expenses, judgments, fines or penalties actually
or reasonably incurred by the Indemnitee in the investigation, defense,
appeal or settlement of any civil or criminal action, suit or proceeding,
but not, however, for the total amount thereof ' the corporation shall
nevertheless indemnify Indemnitee for the portion of such expenses,
judgments, fines or penalties to which Indemnitee is entitled.
4.13. Coverage. This Article IV shall, to the extent permitted by law,
apply to acts or omissions of (i) Indemnitee which occurred prior to the
adoption of this Article IV if Indemnitee was a director or officer of the
corporation or was serving at the request of the corporation as a director
or officer of another corporation, partnership, joint venture, trust or
other enterprise, at the time such act or omission occurred; and (ii)
Indemnitee Agent which occurred prior to the adoption of this Article IV
if Indemnitee Agent was an employee or other agent of the corporation or
was serving at the request of the corporation as an employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
at the time such act or omission occurred. All rights to indemnification
under this Article IV shall be deemed to be provided by a contract between
the corporation and the Indemnitee in which the corporation hereby agrees
to indemnify Indemnitee to the fullest extent permitted by law,
notwithstanding that such indemnification is not specifically authorized
by the corporation's articles of incorporation, these bylaws or by
statute. Any repeal or modification of these bylaws, the California
Corporations Code or any other applicable law shall not affect any rights
or obligations then existing under this Article IV. The provisions of
this Article IV shall continue as the Indemnitee and Indemnitee Agent for
any action taken or not taken while serving in an indemnified capacity
even though the Indemnitee or Indemnitee Agent may have ceased to serve in
such capacity at the time of any action, suit or other covered proceeding.
This Article IV shall be binding upon the corporation and its successors
and assigns and shall inure to the benefit of Indemnitee and Indemnitee
Agent and Indemnitee's and Indemnitee Agent's estate, heirs, legal
representatives and assigns.
4.14. Non-Exclusivity. Nothing herein shall be deemed to diminish or
otherwise restrict any rights to which Indemnitee or Indemnitee Agent may
be entitled under the corporation's article of incorporation, these
bylaws, any agreement, any vote of shareholders or disinterested
directors, or under the laws of the State of California.
4.15. Severability. Nothing in this Article IV is intended to require or
shall be construed as requiring the corporation to do or fail to do any
act in violation of applicable law. If this Article IV or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the corporation shall nevertheless indemnify Indemnitee
or Indemnitee Agent to the fullest extent permitted by any applicable
portion of this Article IV that shall not have been invalidated.
4.16. Mutual Acknowledgment. Both the corporation and Indemnitee
acknowledge that in certain instances, federal law or applicable public
policy may prohibit the corporation from indemnifying its directors and
officers under this Article IV or otherwise. Indemnitee understands and
acknowledges that the corporation has undertaken or may be required in the
future to undertake with the Securities and Exchange Commission to submit
the question of indemnification to a court in certain circumstances for a
determination of the corporation's right under public policy to indemnify
Indemnitee.
4.17. Officer and Director Liability Insurance. The corporation shall,
from time to time, make the good faith determination whether or not it is
practicable for the corporation to obtain and maintain a policy or
policies of insurance with reputable insurance companies providing the
officers and directors of the corporation with coverage for losses from
wrongful acts, or to ensure the corporation's performance of its
indemnification obligations under this Article IV. Among other
considerations, the corporation will weigh the costs of obtaining such
insurance coverage against the protection afforded by such coverage.
Notwithstanding the foregoing, the corporation shall have no obligation to
obtain or maintain such insurance if the corporation determines in good
faith that such insurance is not reasonably available, if the premium
costs for such insurance are disproportionate to the amount of coverage
provided, if the coverage provided by such insurance is limited by
exclusions so as to provide an insufficient benefit, or if Indemnitee is
covered by similar insurance maintained by a subsidiary or parent of the
corporation.
4.18. Notice to Insurance. If, at the time of the receipt of a notice of
a claim pursuant to Section 4.6, the corporation has director and officer
liability insurance in effect, the corporation shall give prompt notice of
the commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The corporation shall
thereafter take all necessary or desirable action to cause such insurers
to pay, on behalf of the Indemnitee, all amounts payable as a result of
such proceeding in accordance with the terms of such policies.
4.19. Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Article IV to enforce or interpret any of the terms
hereof, Indemnitee shall be entitled to be paid all court costs and
expenses, including reasonable attorneys' fees, incurred by Indemnitee
with respect to such action, unless as a part of such action, the court of
competent jurisdiction determines that the action was not instituted in
good faith or was frivolous. In the event of an action instituted by or
in the name of the corporation under this Article IV, or to enforce or
interpret any of the terms of this Article IV, Indemnitee shall be
entitled to be paid all court costs and expenses, including attorneys'
fees, incurred by Indemnitee in defense of such action (including with
respect to Indemnitee's counterclaims and cross-claims made in such
action) , unless as a part of such action the court determines that
Indemnitee's defenses to such action were not made in good faith or were
frivolous. The Board may, in its discretion, provide by resolution for
payment of such attorneys' fees to any Indemnitee Agent.
4.20. Notice. All notices, requests, demands and other communications
under this Article IV shall be in writing and shall be deemed duly given
(i) if delivered by hand and receipted for by the addressee, on the date
of such receipt, or (ii) if mailed by domestic certified or registered
mail with postage prepaid, on the third (3rd) business day after the date
postmarked.
ARTICLE V
5. Officers.
5.1. Officers. The officers of the Corporation shall be a President, a
Secretary and a Chief Financial Officer. The Corporation may also have,
at the discretion of the Board, one or more additional Vice-Presidents,
one or more assistant secretaries, one or more assistant financial
officers, and such other officers as may be appointed in accordance with
the provisions of
Section 5.3.. Any one person may hold two or more offices.
5.2. Election. The officers of the Corporation, except such officers as
may be appointed in accordance with the provisions of Section 5.3 or
Section 5.5, shall be chosen annually by the Board, and each shall hold
his office until he shall resign or shall be removed or otherwise
disqualified to serve, or his successor shall be elected and qualified.
5.3. Subordinate Officers, Etc. The Board may appoint, and may empower
the President to appoint, such other officers as the business of the
Corporation may require, each of whom shall hold office, for such period,
have such authority and perform such duties as are provided in the Bylaws
or as the Board may from time to time determine.
5.4. Removal and Resignation. Any officer may be removed, either with or
without cause, by the Board, at any regular or special meeting thereof,
or, except in case of an officer chosen by the Board, by any officer upon
whom such power of removal may be conferred by the Board (subject, in each
case, to the rights, if any, of an officer under any contract of
employment). Any officer may resign at any time by giving written notice
to the Board or to the President, or the Secretary of the Corporation,
without prejudice, however, to the rights, if any, of the Corporation
under any contract to which such officer is a party. Any such resignation
shall take effect at the date of the receipt of such notice or at any
later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it
effective.
5.5. Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled in the manner
prescribed in the Bylaws for regular appointments to such office.
5.6. Chairman of the Board. The Board may, in its discretion, elect a
Chairman of the Board, who, unless otherwise determined by the Board,
shall, if present, preside at all meetings of the Board and exercise and
perform such other powers and duties as may be from time to time assigned
to him by the Board or prescribed by the Bylaws.
5.7. President. Subject to the supervisory powers, if any, as may be
given by the Board to the Chairman of the Board, if there be such an
officer, the President shall be the Chief Executive Officer of the
Corporation and shall, subject to the control of the Board, have general
supervision, direction and control of the business of the Corporation. He
shall preside at all meetings of the shareholders and, in the absence of
the Chairman of the Board, or if there be none, at all meetings of the
Board. He shall be ex-officio a member of all the standing committees,
including the executive committee, if any, and shall have the general
powers, and duties of management usually vested in the office of president
of a corporation, and shall have such other powers and duties as may be
prescribed by the Board or the Bylaws.
5.8. Vice-Presidents. In the absence or disability of the President, the
Vice-Presidents in order of their rank as fixed by the Board or, if not
ranked, the Vice-President designated by the Board, or if there has been
no such designation, the VicePresident designated by the President, shall
perform all the duties of the President, and when so acting shall have all
the powers of, and subject to all the restrictions upon, the President.
The VicePresidents shall have such other powers and perform such other
duties as from time to time may be prescribed for them respectively by the
Board or the Bylaws or the President.
5.9. Secretary. The Secretary shall record or cause to be recorded, and
shall keep or cause to be kept, at the Principal Executive office and such
other place as the Board may order, a book of minutes of actions taken at
all meetings of directors and shareholders, with the time and place of
holding, whether regular or special, and, if special, how authorized, the
notice thereof given, the names of those present at directors' meetings,
the number of shares present or represented at shareholders' meetings, and
the proceedings thereof. The Secretary shall keep, or cause to be kept, at
the Principal Executive Office or at the office of the Corporation's
transfer agent, a share register, or a duplicate share register, showing
the names of the shareholders and their addresses, the number and classes
of shares held by each, the number and date of certificates issued for the
same, and the number and date of cancellation of every certificate
surrendered for cancellation. The Secretary shall give, or cause, to be
given, notice of all the meetings of the shareholders and of the Board
required by the Bylaws or by law to be given, and he shall keep the seal
of the Corporation in safe custody, and shall have such other powers and
perform such other duties as may be prescribed by the Board or by the
Bylaws. If the Secretary refuses or fails to give notice of any meeting
lawfully called, any other officer of the Corporation may give notice of
such meeting.
The Assistant Secretary, or if there be more than one, any Assistant
Secretary, may perform any or all of the duties and exercise any or all of
the powers of the Secretary unless prohibited from doing so by the Board,
the President or the Secretary, and shall have such other powers and
perform any others duties as are prescribed for him by the Board, the
President, or the Secretary.
5.10. Chief Financial Officer. The Chief Financial officer of the
Corporation shall keep and maintain, or cause to be kept and maintained,
adequate and correct accounts of the properties and business transactions
of the Corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and shares. Any
surplus, including earned surplus, paid-in surplus and surplus arising
from a reduction of stated capital, shall be classified according to
source and shown in a separate account. The books of account shall at all
reasonable times be open to inspection by any director. The Chief
Financial officer shall deposit all moneys and other valuables in the name
and to the credit of the Corporation with such depositories as may be
designated by the Board. He shall disburse the funds of the Corporation
as may be ordered by the Board, shall render to the President and
directors, whenever they request it, an account of all of his transactions
as Chief Financial Officer and of the financial condition of the
Corporation, and shall have such other powers and perform such other
duties as may be prescribed by the Board or the Bylaws.
The Assistant Financial Officer, or if there be more than one, any
Assistant Financial Officer, may perform any or all of the duties and
exercise any or all of the powers of the Chief Financial Officer unless
prohibited from doing so by the Board, the President or the Chief
Financial Officer, and shall have such other powers and perform such other
duties as are prescribed for him by the Board, the President or the Chief
Financial Officer.
ARTICLE VI
6. Miscellaneous.
6.1. Record Date. The Board may fix a time in the future as a record date
for the determination of the shareholders entitled to notice of and to
vote at any meeting of shareholders or entitled to give consent to
corporate action in writing without a meeting, to receive any report, to
receive any dividend or distribution, or any allotment of rights, or to
exercise rights in respect to any change, conversion, exchange of shares
or any other lawful action. The record date so fixed shall be not more
than sixty (60) days nor less than ten (10) days prior to the date of any
meeting, nor more than sixty (60) days prior to any other event for the
purposes of which it is fixed. When a record date is so fixed, only
shareholders of record at the close of business on that date are entitled
to notice of and to vote at any such meeting, to give consent without a
meeting, to receive any report, to receive a dividend, distribution, or
allotment of rights, or to exercise the rights, as the case may be,
notwithstanding any transfer of any shares on the books of the Corporation
after the record date, except as otherwise provided in the Articles of
Incorporation or Bylaws.
6.2. Inspection of Corporate Records. The accounting books and records,
the record of shareholders, and minutes of proceedings of the shareholders
and the Board and committees of the Board of this Corporation and any
subsidiary of this Corporation shall be open to inspection upon the
written demand on the Corporation of any shareholder (or holder of a
voting trust certificate) holding at least 5% in the aggregate of
outstanding voting shares at any reasonable time during usual business
hours, for a purpose reasonably related to such holder's interests as a
shareholder or as the holder of such voting trust certificate. Such
inspection by a shareholder (or holder of a voting trust certificate) may
be made in person or by agent or attorney, and the right of inspection
includes the right to copy and make extracts.
A shareholder or shareholders holding at least five percent (5%) in the
aggregate of the outstanding voting shares of the Corporation or who hold
at least one percent (1%) of such voting shares and have filed a Schedule
14B with the United States Securities and Exchange Commission relating to
the election of directors of the Corporation shall have (in person, or by
agent or attorney) the right to inspect and copy the record of
shareholders, names and addresses and shareholdings during usual business
hours upon five (5) business days prior written demand upon the
Corporation and to obtain from the transfer agent for the Corporation,
upon written demand and upon the tender of its usual charges, a list of
the shareholders, names and addresses, who are entitled to vote for the
election of directors, and their shareholdings, as of the most recent
record date for which it has been compiled or as of a date specified by
the shareholder subsequent to the date of demand. The list shall be made
available on or before the later of five (5) business days after the
demand is received or the date specified therein as the date as of which
the list is to be compiled. Every director shall have the absolute right
at any reasonable time to inspect and copy all books, records and
documents of every kind and to inspect the physical properties of the
Corporation. Such inspection by a director may be made in person or by
agent or attorney and the right of inspection includes the right to copy
and make extracts.
6.3. Checks, Drafts, Etc. All checks, drafts or other orders for payment
of money, notes or other evidences of indebtedness, issued in the name of
or payable to the Corporation, shall be signed or endorsed by such person
or persons and in such manner as, from time to time, shall be determined
by the resolution of the Board. The Board may authorize one or more
officers of the Corporation to designate the person or persons authorized
to sign such documents and the manner in which such documents shall be
signed.
6.4. Annual and Other Reports. The requirement of Section 1501(a) of the
California Corporations Code, that the Board of the Corporation shall
cause an annual report to be sent to the shareholders is hereby expressly
waived. If no annual report for the last fiscal year has been sent to
shareholders, the Corporation shall, upon the written request of a
shareholder made more than one hundred twenty (120) days after the close
of such fiscal year, deliver or mail to the person making the request
within thirty (30) days thereafter a balance sheet as of the end of the
last fiscal year and an income statement and statement of changes in
financial position for such fiscal year, accompanied by any report thereon
of independent accountants or, if there is no such report, the certificate
of an authorized officer of the Corporation that such statements were
prepared without audit from the books and records of the Corporation.
A shareholder or shareholders holding at least five percent (5%) of the
outstanding shares of any class of the Corporation may make a written
request to the Corporation for an income statement of the Corporation for
the three-month, six-month or nine-month period of the current fiscal year
ended more than thirty (30) days prior to the date of the request and a
balance sheet of the Corporation as of the end of such period and, in
addition, if no annual report for the last fiscal year has been sent to
shareholders and one is required pursuant to this section, the annual
report for the last fiscal year. The Corporation shall use its best
efforts to deliver or mail the statements to the person making the request
within thirty (30) days thereafter. A copy of any such statements shall
be kept on file in the Principal Executive Office of the Corporation for
twelve (12) months and they shall be exhibited at all reasonable times to
any shareholder demanding an examination of them or a copy shall be mailed
to such shareholder.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report thereon, if any, of any
independent accountants engaged by the Corporation or the certificate of
an authorized officer of the Corporation that such financial statements
were prepared without audit from the books and records of the Corporation.
Unless otherwise determined by the Board or the Chief Financial officer,
the Chief Financial Officer and any assistant financial officer are each
authorized officers of the Corporation to execute the certificate that the
annual report and quarterly income statements and balance sheets referred
to in this section were prepared without audit from the books and records
of the Corporation.
Any report sent to the shareholders shall be given personally or by first-
class mail or other means of written communication, charges prepaid,
addressed to such shareholder at the address of such shareholder appearing
on the books of the Corporation or given by such shareholder to the
Corporation for the purpose of notice or set forth in the written request
of the shareholder as provided in this section. If any report addressed
to the shareholder at the address of such shareholder appearing on the
books of the Corporation is returned to the Corporation by the United
States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the report to the shareholder at such
address, all future reports shall be deemed to have been duly given
without further mailing if the same shall be available for the shareholder
upon written demand of the shareholder at the Principal Executive Office
of the Corporation for a period of one (1) year from the date of the
giving of the report to all other shareholders. If no address appears on
the books of the Corporation or is given by the shareholder to the
Corporation for the purpose of notice or is set forth in the written
request of the shareholder as provided in this section, such report shall
be deemed to have been given to such shareholder if sent by mail or other
means of written communication addressed to the place where the Principal
Executive office of the Corporation is located, or if published at least
once in a newspaper of general circulation in the county in which the
Principal Executive Office is located. Any such report shall be deemed to
have been given at the time when delivered personally or deposited in the
mail or sent by other means of written communication. An affidavit of
mailing of any such report in accordance with the foregoing provisions,
executed by the Secretary, Assistant Secretary or any transfer agent of
the Corporation shall be prima facie evidence of the giving of the report.
6.5. Contracts, Etc., How Executed. The Board, except as in these Bylaws
otherwise provided, may authorize any officer or officers, agent or
agents, to enter into any contract or execute any instrument in the name
of and on behalf of the Corporation, and such authority may be general or
confined to specific instances; and, unless so authorized by the Board, no
officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to
render it liable for any purpose or to any amount.
6.6. Certificate for Shares. Every holder of shares in the Corporation
shall be entitled to have a certificate signed in the name of the
Corporation by the Chairman or Vice-Chairman of the Board or the President
or a Vice-President and by the Chief Financial Officer or an assistant
financial officer or the Secretary or any Assistant Secretary, certifying
the number of shares and the class or series of shares owned by the
shareholder. Any of the signatures on the certificate may be facsimile,
provided that in such event at least one signature, including that of
either officer or the Corporation's registrar or transfer agent, if any,
shall be manually signed (wet signature). In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be issued by
the Corporation with the same effect as if such person were an officer,
transfer agent or registrar at the date of issue. Any such certificate
shall also contain such legend or other statement as may be required by
Section 418 of the California Corporations Code, the Corporate Securities
Law of 1968, the federal securities laws, and any agreement between the
Corporation and the issuee thereof, and may contain such legend or other
statement as may be required by any other applicable law or regulation or
agreement. Certificates for shares may be issued prior to full payment
under such restrictions and for such purposes as the Board or the Bylaws
may provide; provided; however, that any such certificate so issued prior
to full payment shall state on the face thereof the amount remaining
unpaid and the terms of payment thereof. No new certificate for shares
shall be issued in lieu of an old certificate unless the latter is
surrendered and canceled at the same time; provided, however, that a new
certificate will be issued without the surrender and cancellation of the
old certificate if (1) the old certificate is lost, apparently destroyed
or wrongfully taken; (2) the request for the issuance of the new
certificate is made within a reasonable time after the owner of the old
certificate has notice of its loss, destruction, or theft; (3) the request
for the issuance of a new certificate is made prior to the receipt of
notice by the Corporation that the old certificate has been acquired by a
bona fide purchaser; (4) the owner of the old certificate files a
sufficient indemnity bond with or provides other adequate security to the
Corporation, and (5) the owner satisfies any other reasonable requirements
imposed by the Corporation. In the event of the issuance of a new
certificate, the rights and liabilities of the Corporation, and of the
holders of the old and new certificates, shall be governed by the
provisions of Sections 8104 and 8405 of the California Commercial Code.
6.7. Representation of Shares of Other Corporations. Unless the Board
shall otherwise determine, the Chairman of the Board, the President or the
Secretary or any Assistant Secretary of this Corporation are authorized to
vote, represent and exercise on behalf of this Corporation all rights
incident to any and all shares of any other corporation or corporations
standing in the name of this Corporation. The authority herein granted to
said officers to vote or represent on behalf of this Corporation any and
all shares held by this Corporation in any other corporation or
corporations may be exercised either by such officers in person or by any
other person authorized so to do by proxy or power of attorney duly
executed by said officers.
6.8. Inspection of Bylaws. The Corporation shall keep in its Principal
Executive Office in California, or if its Principal Executive Office is
not in California, then at its principal business office in California (or
otherwise provide upon written request of any shareholder) the original or
a copy of the Bylaws as amended or otherwise altered to date, certified by
the Secretary, which shall be open to inspection by the shareholders
at all reasonable times during office hours.
6.9. Seal. The Corporation shall have a common seal, and shall have
inscribed thereon the name of the Corporation, the date of its
incorporation, and the words "INCORPORATED" and "CALIFORNIA."
6.10. Construction and Definitions. Unless the context otherwise
requires, the general provisions, rules of construction and definitions
contained in the California Corporations Code shall govern the
construction of these Bylaws. Without limiting the generality of the
foregoing, the masculine gender includes the feminine and neuter, the
singular number includes the plural and the plural number includes the
singular, and the term "person" includes a corporation as well as a
natural person.
ARTICLE VII
7. Amendments.
7.1. Power of Shareholders. New Bylaws may be adopted or these Bylaws may
be amended or repealed by the affirmative vote of a majority of the
outstanding shares entitled to vote, or by the written assent of
shareholders entitled to vote such shares, except as otherwise provided by
law or by the Articles of Incorporation. 7.2. Power of Directors. Subject
to the right of shareholders as provided in Section 7.1 to adopt, amend or
repeal bylaws, bylaws may be adopted, amended or repealed by the Board
provided, however, that the Board may adopt a bylaw or amendment thereof
changing the authorized number of directors only for the purpose of fixing
the exact number of directors within the limits specified in the Articles
of Incorporation or in Section 3.2 of these Bylaws.
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1.That I am the duly elected and acting Secretary of BRIDGE TECHNOLOGY,
Inc., a California corporation; and
2.That the foregoing Bylaws constitute the Bylaws of said Corporation as
duly adopted by action of the Board of the Corporation duly taken on
August 1, 1997.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of the Corporation this 1st day of August, 1997.
__________________________________________
Anita Wu
EXHIBIT 4 - DETERMINATION OF PREFERENCES
CERTIFICATE OF DETERMINATION OF PREFERENCES OF BRIDGE TECHNOLOGY, INC.
John T. Gauthier and Anita Wu hereby certify that:
1. They are the duly elected and acting Chairman of the Board and
Assistant Secretary, respectively, of Bridge Technology, Inc., a Nevada
corporation (the "Corporation").
2. Pursuant to authority given by the Corporation's Articles of
Incorporation, the Board of Directors of the Corporation at a meeting of
the Board of Directors at which a quorum was present, held on April 21,
1997 in Cypress, California, has adopted the following resolution:
WHEREAS, Article IV of the Articles of Incorporation of the Corporation
authorizes on class of shares designated preferred shares, comprising 500
shares issuable from time to time (the "Preferred Stock") , and one class
of shares designated common shares, comprising 10,000,000 shares issuable
from time to time (the "Common Stock"); and
WHEREAS, the Board of Directors of the Corporation is authorized to fix or
alter the rights, preferences, privileges, and restrictions granted to or
imposed upon the Preferred Stock until such time as any or all those
shares have been issued, including but not limited to the dividend rights,
dividend rate, conversion rights, and voting right; and
WHEREAS, the Corporation has not heretofore issued any of such Preferred
Stock and it is the desire of the Board of Directors of the Corporation,
pursuant to itsi authority as aforesaid, to fix the rights, preferences,
restrictions and other matters relating to the Preferred Stock and the
number of shares of Preferred Stock;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does
hereby provide for the issuance of a series of preferred shares of the
Corporation consisting of 500 shares of $1.00 stated value per share,
designated as "Preferred Stock" and does hereby fix the rights,
privileges, restrictions and other matters relating to the Preferred Stock
as follows:
1. Dividend Rights.
The holders of the Preferred Stock shall be entitled to receive dividends
at the rate of Six Dollars ($6.00) per share per year, payable in cash
semi-annually. Dividends on the Preferred Stock shall be payable out of
any funds legally available therefore, prior and in preference to any
dividend payment with respect to Common Stock. Dividends on the Preferred
Stock shall be cumulative, so that if dividends required to be paid on
such stock for any quarter or quarters shall not have been paid, the
amount of the deficiency shall be paid in full, without interest, together
with any dividends due for the current quarter, before any distribution of
any kind shall be paid to the holders of the Common Stock.
2. Voting Rights.
Except as otherwise required by law or provided herein, the Common Stock
shall have exclusive voting rights and powers, including the exclusive
right to notice shareholders' meetings. If dividend payments on the
Preferred Stock are in default for six or more consecutive quarterly
periods, the Preferred Stock (1) must be given notice of shareholders'
meetings; and (2) immediately may elect, as a class, the largest number of
directors constituting a minority of the Board of Directors. In such
event, the Common Stock will retain only the right to elect, as a class,
the remaining directors. These voting rights will continue until all
dividends accrued on the Preferred Stock have been paid. At such time,
the rights of the Preferred Stock to vote in the election of directors
shall cease and exclusive voting rights (including the right to notice of
shareholders, meetings) shall revert to the Common Stock. However, if
further defaults in the payment of dividends on the Preferred Stock shall
occur, the voting rights granted to the Preferred Stock under this
provision shall be renewed. If the Preferred Stock acquires voting rights
under this provison, a special meeting of the shareholders for the
election of directors may be called by any officer or director of the
Corporation, in accordance with the bylaws. In addition, such a meeting
must be called immediately by the Secretary upon written request of the
record holders of at least 25% of the outstanding Preferred Stock. For
this purpose, any officer or holder of Preferred Stock shall be granted
access on demand to the Corporation's stock records and, shareholder
lists.
At any such special meeting (or at any annual meeting held while the
Preferred Stock has the voting power to elect directors) the holders of a
majority of the then outstanding shares of Preferred Stock, present in
person or by proxy, shall constitute a quorum for the election of
directors. The terms of office of all directors of the Corporation at the
time of such meeting shall immediately terminate upon the election by the
Preferred Stock at such meeting of the number of directors it is entitled
to elect under this provision. If the Common Stock fails to elect the
number of directors to which it is entitled, additional directors may be
appointed by the directors elected by the Preferred Stock. The directors
elected or appointed by the Preferred Stock, together with the directors
elected at such meeting by the Common Stock, if any, shall constitute the
duly elected Board of Directors of the Corporation. When the Preferred
Stock is no longer entitled to voting rights under this provision, the
terms of office of all directors shall immediately terminate upon the
election of their successors by the Common Stock.
3. Liquidation Preference.
In the event of the liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the holders of the Preferred
Stock will be entitled to receive out of the assets of the Corporation,
prior and in preference to any distribution of the assets or surplus funds
of the Corporation to the holders of the Common Stock by reason of their
ownership thereof, the amount of One Hundred Dollars ($100.00) per share
as appropriately adjusted for stock splits, stock dividends,
recapitalizations and similar events) for each share of Preferred Stock
then held by them, plus all accrued and unpaid cumulative dividends with
respect thereto, and will not be entitled to receive any portion of the
remaining assets of the Corporation. If upon the occurrence of such event
the assets and funds thus distributed among the holders of the Preferred
Stock are insufficient to permit the payment to such holders of the whole
preferential amount, then the entire assets and funds of the Corporation
legally available for distribution to the holders of the Preferred Stock
and the Common Stock will be distributed ratably among the holders of the
Preferred Stock, and the holders of the Common Stock shall receive
nothing. After payment has been made to the holders of the Preferred
Stock of the full amounts to which they are entitled as aforesaid, any
remaining assets will be distributed ratably to the holders of the
Corporation's Common Stock. The holders of the Preferred Stock shall not
be entitled to participate in dividends or distributions upon liquidation
or dissolution of the Corporation, other than their priority dividends and
priority liquidation distribution as provided herein.
4. Conversion.
The holders of the Preferred Stock shall not be entitled to convert their
shares to shares of Common Stock except as follows:
(a) Right to Convert. Each share of Preferred Stock may at the option
of the holder of record be converted into such number of shares of Common
Stock as is determined under the Conversion Ratio (as defined below).
(b) Timing of Conversions. The Preferred Stock may be converted any
time after six months from the original date of Preferred Stock purchase.
(c) Conversion Ratio. Each share of Preferred Stock may be converted
into two hundred (200) shares of Common Stock, adjusted as follows:
(i) Fractional Shares Upon Conversion. No fractional shares of
Common Stock will be issued upon conversion of Preferred Stock and any
fractional shares which otherwise result from conversion by a holder of
all his shares of Preferred Stock (taken together as a group) will be
redeemed by payment in cash of an amount equal to such fraction by the
then effective market price per share of Common Stock as promptly as funds
legally are available therefore.
(ii) Adjustment for Combination or Consolidations of Common Stock.
In the event the Corporation at any time or from time to time after the
effective date of the initial sale of the Preferred Stock (hereafter
referred to as the "Original Issue Date") effects a subdivision or
combination of its outstanding Common Stock into a greater or lesser
number of shares without a proportionate and corresponding subdivision or
combination of its outstanding Pref erred Stock, then the existing
conversion ratio for the Preferred Stock will be increased or decreased
proportionately.
(iii) Adjustments for Dividends, Distributions and Common Stock
Equivalents. In the event the Corporation at any time or from time to
time after the Original Issue Date makes or issues a dividend payable in
Common Stock to holders of record of its Common Stock, or fixes a record
date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in additional shares of Common
Stock or other securities or rights ("Common Stock Equivalents"),
convertible into or entitling the holder thereof to receive additional
shares of Common Stock without payment of any consideration by such holder
for Common Stock Equivalents or the additional shares of Common Stock,
then and in such event, for the purpose of protecting the holders of
Preferred Stock from any dilution in connection therewith, the maximum
number of shares (as set forth in the instrument relating thereto without
regard to any provisions contained therein for a subsequent adjustment of
such number) of Common Stock issuable in payment of such dividends or
distribution or upon conversion or exercise of such Common Stock
Equivalents will be deemed to be issued and outstanding as of the time of
such issuance or, in the event such a record date has been fixed, as of
the close of business on such a record date. In each such event the then
existing conversion ratio for the Preferred Stock will be increased as of
the time of such issuance or, in the event such a record date has been
fixed, as of the close of business on such record date, by multiplying the
conversion ration for the Preferred Stock by a fraction, the numerator of
which will be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of Common Stock
issuable in payment of such dividend or Distribution or upon conversion or
exercise of such Common Stock Equivalents, and the denominator of which
will be the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on
such record date; provided, however, if such record date has been fixed
and such dividend is not fully paid or if such distribution is not made on
the date fixed therefore, the conversion ratio for the Preferred Stock
will be recomputed accordingly as of the close of business on such record
date and thereafter the conversion ratio for the Preferred Stock will be
adjusted pursuant to this paragraph 4 (c) (iii) as of the date of actual
payment of such dividends or distributions.
(d) Mechanics of Conversion. Before any holder of
Preferred Stock will be entitled to convert the same into shares of Common
Stock, he will surrender the certificate of certificates therefore, duly
endorsed, at the office of the Corporation or of any transfer agent for
the Preferred Stock, and he will give written notice to the Corporation
stating the name or names in which he wishes the certificate or
certificates for shares of Common Stock to be issued. The Corporation, as
soon as practicable thereafter, will issue and deliver at such office to
such holder of Preferred Stock or to his nominee or nominees, as
certificate or certificates for the number of shares of Common Stock to
which he will be entitled as aforesaid. Such conversion will be deemed to
have been made immediately prior to the close of business on the date of
the Conversion Event, and the person or persons entitled to receive the
shares of Common Stock issuable upon conversion will be treated for all
practical purposes as the record holder or holders of such shares of
Common Stock.
(e) No Impairment. The Corporation, whether by amendment of its
Articles of Incorporation, or through any reorganization, transfer of
assets, merger, dissolution, issue or sale of securities or any other
voluntary action, will not avoid or seek to avoid the observance or
performance of any of the terms to be observed hereunder by the
Corporation, but at all times in good faith will assist in the carry.Lng
out of all such action as may be necessary or appropriate in order to
protect the conversion rights of the holders of the Preferred Stock
against impairment.
(f) Reservation of Stock Issuable Upon Conversion. The
Corporation at all times will observe and keep available out of its
authorized but unissued shares of Common Stock solely for the purposes of
effecting the conversion of the shares of the Preferred Stock such number
of its shares of Common Stock as from time to time will be sufficient to
effect the conversion of all the then outstanding shares of the Preferred
Stock; and if at any time the number of authorized but unissued shares of
Common Stock is not sufficient to effect the conversion of all the then
outstanding shares of the Preferred Stock, in addition to such other
remedies as may be available to the holders of Preferred Stock for such
failure, the Corporation will take such actions as, in the opinion of its
counsel, may be necessary to increase its authorized but unissued shares
of Common Stock, to such number of shares as will be sufficient for such
purposes.
5. Covenants.
In addition to any other rights by law, so long as any Preferred Stock is
outstanding, the Corporation, without first obtaining the affirmative vote
or written consent of the holders of not less than a majority of such
outstanding shares of Preferred Stock, will not:
(a) Amend or repeal any provision of, or add any provision to, the
Corporation's Articles of Incorporation or Bylaws or this certificate of
determination or preferences if such action would increase the number of
directors or adversely would alter or change the preferences, rights,
privileges or power of, or the restrictions, provided for the benefit of
any Preferred Stock, or increase or decrease the number of shares of
Preferred Stock authorized hereby;
(b) Authorize or issue shares of any class or series or Stock (other than
the Preferred Stock expressly authorized herein) having any preference or
priority as to dividends, assets, or other right superior to or on a
parity with any such preference or priority of the Preferred Stock, or
authorize or issue shares of stock of any class or any bonds, debentures,
notes or other obligations convertible into or exchangeable for, or having
option rights to purchase, any shares of stock of the Corporation having
any preference or priority as to dividends, assets, or other rights,
superior to or on a parity with any such preference or priority of the
Preferred Stock; or
(c) Reclassify any class or series of any Common Stock or any other
shares of stock hereafter created junior to the Preferred Stock into
shares having any preference or priorities to dividends, assets, or
other rights superior to or on a parity with any such preference or
priority of the Preferred Stock.
RESOLVED FURTHER, that the Chairman of the Board and the Secretary of the
Corporation hereby are authorized and directed to prepare, execute,
verify, file and record a certificate of determination or preferences in
accordance with the foregoing resolutions and the provisions of Nevada
law. The authorized number of shares of Preferred Stock is 500 none of
which has been issued.
Date: April 21, 1997
_______________________
John T. Gauthier, Chairman
_______________________
Anita Wu, Assistant Secretary
EXHIBIT 10 A) REVIEWED 11/13/1998
AGREEMENT OF PURCHASE AND SALE OF ASSETS
THIS AGREEMENT OF PURCHASE AND SALE OF ASSETS ("Agreement") is
entered into this lst day of June, 1997 by and between ALLIED WEB, INC., a
California corporation ("SELLER") and BRIDGE R&D,INC., a California
corporation ("BUYER"), with reference to the following facts:
RECITALS
A. SELLER is the owner of those certain assets ("Assets') set forth on
Exhibit "A", attached hereto and incorporated herein by this reference.
B. BUYER desires to purchase the Assets from SELLER, and SELLER desires to
sell the Assets to BUYER.
NOW, THEREFORE, in consideration of the above-recited facts, for other
good and valuable consideration and the mutual promises, covenants,
representations, warranties, agreements, indemnities and provisions
contained herein, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 SALE. SELLER agrees to sell and BUYER agrees to buy SELLER's interests
in the Assets.
1.2 PURCHASE PRICE. The purchase price for the Assets("Purchase
Price")shall be One Hundred & Ninety One Thousand Six Hundred and. Forty
Dollars ($191,640,00), payable in cash or cash equivalent at the
"Closing," as hereinafter defined.
ARTICLE 2
CLOSING
2.1 CLOSING DATE. The closing ("Closing") shall take place at 10:00 a.m.
on June 19, 1997 (the "Closing Date") at such place as the parties agree.
2.2 DELIVERIES BY SELLER. At the Close of Escrow, SELLER shall deliver to
BUYER a Bill of Sale for the SELLER's interest in all of the Assets,
substantially in the form attached hereto as Exhibit "B" and incorporated
herein by this reference.
2.3 DELIVERIES BY BUYER. At the Close of Escrow, BUYER shall deliver to
SELLER the following:
(a) The Purchase Price in cash or cash equivalent; and
(b) All other documents required to consummate the transactions
contemplated herein.
ARTICLE 3
REPRESENTATIONS AND WARRENTIES OF SELLER
SELLER hereby represents and warrants to BUYER as follows:
3.1 ORGANIZATION AND RELATED MATTERS. SELLER is a California corporation,
duly organized, validly existing and in good standing under the laws of
the State of California. SELLER has the corporate power and authority to
carry on the business as now being conducted, and the corporate power and
authority to execute and deliver this Agreement and consummate the
transactions contemplated hereby and has taken all actions necessary to
secure all approvals required in connection therewith.
3.2 AUTHORITY. SELLER has fall power and the capacity and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, SELLER, enforceable
in accordance with its terms; and no further action, approvals or consents
are necessary on the part of the SELLER; nor is it necessary for SELLER to
obtain any actions, approvals or consents from any third persons,
governmental or other, to make this Agreement valid and binding upon and
enforceable against SELLER in accordance with its terms, or to enable
SELLER to perform this Agreement and the transactions contemplated hereby.
3.3 TITLE AND QUIET ENJOYMENT. SELLER has good and marketable title to
all of the Assets. All the Assets are free and clear of restrictions on
or conditions to transfer or assignment, and are free and clear of all
defects of title, mortgages, liens, pledges, leases, charges,
encumbrances, equities, claims, conditional sale contracts, easements,
rights of way, security interests, covenants, conditions, or restrictions.
3.4 DISCLOSURE. There is no fact known to SELLER which has not been
disclosed to BUYER in writing with respect to the business, assets,
liabilities, financial condition or performance of SELLER, which could
reasonably be anticipated to have a material adverse affect upon the
existing or expected financial condition, operations, sales, gross
margins, operating results, assets, customer relations, employee relations
or business prospects of SELLER.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
BUYER represents and warrants to the SELLER as follows:
4.1 ORGANIZATION AND RELATED MATTERS. BUYER is a California corporation,
duty organized, validly existing and in good standing under the laws of
the State of California. BUYER has the corporate power and authority to
carry on the business as now being conducted, and the corporate power and
authority to execute and deliver this Agreement and consummate the
transactions contemplated hereby and has taken all actions necessary to
secure all approvals required in connection therewith.
4.2 DUE AUTHORIZATION. The execution and delivery of this Agreement and
the consummation of the transactions required of BUYER under this
Agreement have been duly authorized by BUYER; no further authorization on
the part of BUYER is necessary therefor, and this Agreement represents a
valid agreement of BUYER which is binding on and enforceable against BUYER
in accordance with its terms.
ARTICLE 5
OBLIGATIONS PENDING AND FOLLOWING THE CLOSING
5.1 CONSENTS/LITIGATION. Each party shall use its best efforts: (a) to
obtain or cause to be obtained at the earliest practicable date and prior
to the Closing Date all consents, approvals, permits and licenses
necessary to permit such party to consummate the transactions contemplated
hereby which can reasonably be obtained by the Closing Date; and (b) to
resist and obtain the dismissal of any litigation, investigation or other
proceeding which questions the validity or legality or seeks to hinder or
prevent the consummation of the transactions contemplated hereby.
5.2 NOTICE OF BREACH. Each party to this Agreement will immediately give
written notice to the other parties of the occurrence of any event, or the
failure of any event to occur, that results in a breach by it of any
representation or warranty or a failure by it to comply with or fulfill
any covenant, condition or agreement contained herein.
5.3 OTHER OFFERS. SELLER shall not solicit, consider, entertain, accept
or take any other affirmative or favorable action with respect to any
offer or proposal involving:
(a) a sale of any of the Assets;(b) any merger, consolidation or other
reorganization of SELLER with or into any other entity; or (c) any other
transaction which would prevent or hinder the consummation of the
transactions contemplated herein.
5.4 FURTHER ASSURANCES. Each party hereto shall execute and deliver such
instruments and take such other actions as the other party or parties, as
the case may be, may reasonably require in order to carry out the intent
of this Agreement.
5.5 BEST EFFORTS. BUYER and SELLER will use their best efforts to perform
or cause to be satisfied each covenant or condition contained herein to be
performed or satisfied by it.
ARTICLE 6
NATURE AND SURVIVAL OF COVENANTS, REPRESENTATION AND WARRANTIES
All of the covenants, representations and warranties set forth in this
Agreement or in any exhibits, schedules or documents, certificates or
other instruments delivered pursuant hereto shall, unless waived in
writing by the party or parties for whose benefit such covenant,
representation or warranty was made, remain in full force and effect
regardless of any investigation, verification or approval by any party
hereto or by anyone on behalf of any party hereto, and all such covenants,
representations and warranties shall survive the Closing.
ARTICLE 7
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
The obligations of BUYER to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, at or before the
Closing, of each of the following conditions, each of which shall be
deemed independent, waivable and waivable in writing in whole or in part
at the option of the BUYER.
7.1 ACCURACY OF REPRESENTATINS AND WARRANTIES.
All representations and warranties made by SELLER, whether contained
herein or in the schedules or the exhibits hereto, or in any certificates
or other documents or instruments delivered by SELLER to BUYER pursuant
hereto or in connection with the transactions contemplated hereby, shall
be true and accurate in all material respects as of the date when made and
on and as of the Closing Date as though made at that time.
7.2 PERFORMANCE. SELLER shall, in all material respects, have performed,
satisfied and complied with all covenants, agreements, obligations and
conditions and all actions required by this Agreement to be performed
taken or complied with by any or all of them, on or before the Closing
Date.
7.3 RECEIPT OF DOCUMENTS. At the Closing, BUYER shall have received an
executed Bill of Sale from SELLER in the form attached hereto as Exhibit
"B."
7.4 CONSENTS. All necessary consents and approvals from any persons,
governmental or other, required to be obtained by the BUYER or SELLER to
consummation of the transactions contemplated by this Agreement, or
otherwise pertaining to the matters covered by it shall have been
obtained.
ARTICLE 8
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligations of the SELLER to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction, as of or before
the Closing, of each of the following conditions, each of which shall be
deemed independent severable and waivable in writing in whole or in part
by SELLER:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and Warranties
antics of BUYER contained herein shall be true and accurate in all
material respects as of the date when made and at and as of the Closing
Date as though such representations arid warranties were also made at and
as of the Closing Date.
8.2 PERFORMANCE. BUYER shall have performed, satisfied and complied with,
in all material respects, all agreements, obligations and conditions
required by this Agreement to be performed or complied with by it on prior
to the Closing.
ARTICLE 9
SELLER'S INDEMNIFICATION
9.1 INDEMNIFICATION. SELLER agrees to indemnify and hold BUYER harmless
from and against any and all damages, liabilities, losses, costs and
expenses, including attorneys' fees ("Damages") sustained by BUYER as a
result of or arising out of: (a) a breach of any representation or
warranty by SELLER in this Agreement, or a breach or default in the
performance of any of the covenants of SELLER in this Agreement; or
(b) any pending or threatened claims or litigation. For purposes of this
Section, any damages, liabilities, losses, costs and expenses, including
attorneys' fees, sustained by SELLER after the Closing Date with respect
to (a) or (b) above shall be deemed to be sustained by BUYER.
9.2 INDEMNIFICATION PROCEDURE. With respect to claims or actions by third
parties, SELLER agrees that it shall be liable to reimburse BUYER on
demand and on proof for any Damages suffered by BUYER, based upon the
judgment of any court of competent jurisdiction or pursuant to a bona fide
compromise or settlement of claims, demands, or actions, in respect of any
Damages to which the foregoing indemnities relate. SELLER agrees that it
shall be jointly and severally liable under the foregoing indemnity as
soon as the amount of such Damages has reasonably been determined.
ARTICLE 10
EXPENSES AND BROKER'S FEES
10.1 EXPENSES. Except for expenses which are the subject of
indemnification pursuant to Article 10, above, each of the parties shall
pay all costs and expenses incurred or to be incurred by it in negotiating
and preparing this Agreement and in closing and carrying out the
transactions contemplated by this Agreement.
10.2 BROKER'S FEES. SELLER and BUYER each agree to indemnify and hold
harmless the other against any loss, liability, damage, cost, claim or
expense incurred by reason of any brokerage, commission or finder's fee
alleged to be payable because of any act, omission or statement of the
indemnifying party.
ARTICLE 11
NOTICES AND DELIVERIES
All notices, requests, demands or other communications hereunder shall be
in writing and shall be deemed to have been duly given, and all deliveries
shall be deemed to have been duly made, if delivered in person or mailed,
certified, return receipt requested, postage prepaid:
If to SELLER: Allied Web, Inc.
1796l Skypark Circle, #G
Irvine, California 92714
With a copy to: Keith Rosenbaum, Esq.
Rosenbaum & Deihl
8001 Irvine Center Drive, Suite 1500 Irvine, California 92718
If to BUYER: Bridge R&D, Inc.
10532 Walker Street, Suite 3
Cypress, California 90630
With a copy to: Jackson, DeMarco & Peckenpaugh
4 Park Plaza, 16th Floor
Irvine, California 92623
Attention: Roger Alan Grad
Any party hereto may from time to time, by written notice to the other
parties, designate a different address, which shall be substituted for the
one specified above for such party. If any notice or other document is
sent by certified mail, return receipt requested, postage prepaid as
aforementioned, the same shall be deemed served or delivered seventy-
two(72) hours after mailing thereof.
ARTICLE 12
MISCELLANEOUS
12.1 COSTS AND ATTORNEY'S FEES.
(a) In any action, arbitration proceeding or other litigation
("Litigation") between the par-ties to declare the rights granted in this
agreement or to enforce the provisions of this agreement, the party
prevailing in the Litigation, whether at trial or on appeal, shall be
entitled to its costs and expenses of suit, including, without limitation,
a reasonable sum as and for attorneys' fees incurred in such Litigation.
The term "prevailing party" as used in this paragraph shall not be limited
to a prevailing plaintiff, but shall also include, without limitation, any
party who is made a defendant in Litigation in which damages or other
relief or both may be sought against such party and a final 'judgment on
dismissal or decree is entered in such Litigation in favor of such party
defendant.
(b) Attorneys' fees incurred in enforcing any 'judgment rendered in
connection with the interpretation or enforcement of this agreement
("Judgment") are recoverable by the party in whose favor such Judgment is
rendered, as a separate item of damages. The provisions of this paragraph
are severable from the other provisions of this agreement and shall
survive any such Judgment, and the provisions of this paragraph shall not
be deemed merged into any such Judgment.
12.2 PARTIES IN INTEREST. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason
of this Agreement on any person other than the parties to it, nor is
anything in this Agreement intended to relieve or discharge the obligation
or liability of any third person to any party to this Agreement, nor shall
any provision give any third persons any right of subrogation or action
over against any party to Counterparts Agreement.
12.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all
which together shall be deemed to be one and the same instrument. However,
this Agreement shall be ineffective for any purposes whatsoever unless and
until executed by all parties hereto.
12.4 ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
12.5 ENTIRE AGREEMENT. This Agreement, including the exhibits and other
documents referred to herein which form a part hereof, embodies the entire
agreement and understanding of the parties hereto in respect to the
subject matter contained herein. There are no restrictions, promises,
warranties, covenants, or undertakings, other than those expressly set
forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such
subject matter.
12.6 HEADINGS. The subject headings of the paragraphs and subparagraphs
of this Agreement are included for purposes of convenience only and shall
not affect the construction or interpretation of an of its provisions.
12.7 PRONOUNS AND ARTICLES. All pronouns and articles and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identification of the person or persons, firm or
firms, corporation or corporations, partnership or partnerships may
require.
12.8 MODIFICATION. This Agreement shall not be amended or modified except
by a writing signed by all of the parties hereto.
12.9 GOVERNING LAW. This Agreement shall be governed by and construed
under the internal laws of the State of California.
12.10 EXECUTION OF ADDITIONAL DOCUMENTS.
BUYER and SELLER each agree to execute and deliver such additional
documents as may be reasonably required to effectuate the transactions
contemplated by this Agreement, including, without limitation, the
execution of a Fictitious Business Name Statement and such other documents
as may be required to transfer the right to use the name "DataStor" to
BUYER.
IN WITNESS WHEREOF, the parties to this Agreement have duly Executed it on
the day and year first above written.
"BUYER"
BRIDGE R&D, INC.
a California corporation
By: John Harwer ----------------------
John Harwer, President
"SELLER"
ALLIED WEB, INC.
a California corporation
By : Denise Lafone -------------------------
Its: Financial Controller -------------------------
EXHIBIT A-1
BRIDGE R&D
FIXED ASSETS
See paper submission and original Form-10 submission for detailed Table.
<PAGE>
EXHIBIT 10 B) John Harwer Employment Agreement
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is dated as of June 1, 1997,
between Bridge Technology, Inc., a Nevada corporation (the "Company"), and
John J. Harwer (the Executive").
WITNESSETH:
WHEREAS, Company is in the business of acquiring and managing
technology companies.
WHEREAS, Executive has experience which qualifies him to perform the
services which Company requires, and is not restricted under any
agreements, written or oral, from rendering the services to and for the
benefit of Company as contemplated by this Agreement.
WHEREAS, Company and Executive (collectively, the "Parties") desire
by this Agreement to provide the terms and conditions of the employment
and the benefits to be provided by Company to Executive.
WHEREAS, the Company determined that the Executive is a valued
employee of the Company and wishes to ensure his continued employment with
the Company and document the terms of the Executive's employment by the
Company.
WHEREAS, the Company also has determined that it is in the best
interests of the Company and its shareholders to reinforce and encourage
the continued attention and dedication of certain key members of the
Company's management, including the Executive, to their assigned duties
without distraction by uncertain circumstances arising from the
possibility of a change in control of the Company.
WHEREAS, the Company also has determined that it is in the best
interest of the Company and its shareholders to minimize the personal
considerations of certain key members of management in their evaluation of
any potential change in control of the Company.
WHEREAS, the Company has determined that the loss of the Executive's
services would have a detrimental effect on the implementation of a change
in control of the Company (in the event the Company determines to effect
such a change in control of the Company).
NOW THEREFORE, for and in consideration of the mutual promises,
covenants and agreements contained herein, the parties hereto agree as
follows:
ARTICLE I
EMPLOYMENT
1.1 Employment. The Company employs the Executive and the Executive hereby
accepts employment as the Chief Executive Officer of the Company upon the
terms and conditions hereinafter set forth.
1.2 Term. The employment of the Executive by the Company under the terms
and conditions of this Agreement will commence on the date hereof and
continue for a period of five (5) years ("Employment Term"). Commencing on
the date of execution of this contract the Employment Term shall be
extended on a daily basis such that the remaining term shall at all times
be five (5) full years.
1.3 Executive Duties. As the Company's Chief Executive Officer, the
Executive shall perform such duties as are requested by and shall report
directly to the Company's Board of Directors. The Executive agrees to
devote his full business time (with allowances for vacations and sick
leave) and attention and best efforts to the affairs of the Company and
its subsidiaries and affiliates during the Employment Term.
ARTICLE II
COMPENSATION AND BENEFITS
2.1 Annual Salary. During the Employment Term, Company shall pay to
Executive a base salary of not less than Two Hundred Thousand Dollars
($200,000.00) per annum during the first year of this Agreement and shall
increase by ten percent (10%) of the amount paid in the prior year on each
anniversary date thereafter. This base salary ("Base Salary") shall be
deemed to accrue from day to day but it shall be payable in substantially
equal semi-monthly installments in accordance with regular payroll
practices adopted by BRIDGE from time to time. The Company will review
annually and may, in the discretion of the Board of Directors, increase
such base salary in light of the Executive's performance, inflation in
cost of living or other factors. The Company also shall pay to the
Executive an annual incentive compensation bonus to be calculated and paid
as set forth in Exhibit A. For purposes of this Agreement, the Executive's
annual base salary and annual incentive compensation bonus collectively
shall be referred to herein as his "Annual Salary".
2.2 Common Stock in Lieu of Salary. Executive will have the right of
receiving each year up to fifty percent (50%) of his total annual
compensation in the form of Company's common stock at a fair market price.
The fair market price shall be the price of common stock on the first day
of the last month of each calendar quarter, and Executive shall have the
right to purchase such stock on that date of each calendar quarter for
that quarter.
2.3 Benefits. In addition to compensation Executive shall be eligible for
participation in and covered by any and all such performance, bonus,
profit sharing, incentive, stock option, stock warrants and other
compensation plans and such medical, dental, disability, life, and other
insurance plans and such other benefits generally available to other
employees of the Company in similar employment positions, on the same
terms as such employees, subject to meeting applicable eligibility
requirements (collectively referred to herein as the "Company Benefit
Plans"). Specifically Company shall also furnish the following benefits to
Executive:
(a) Fringe Benefits. Executive and his wife and dependents shall receive
health insurance, including both medical and dental coverage ("Health
Insurance") from Company in amounts to be determined by the Board.
Executive shall have the option, however, of receiving, in lieu of the
Health Insurance, an amount of cash ("Alternative Health Insurance
Compensation") or stock at fair market price equal to Company's cost of
providing the Health Insurance. Executive shall also be entitled to
receive any other fringe benefits which are customarily afforded to other
employees of BRIDGE, including, but not limited to, the right to
participate in any tax-qualified pension or profit-sharing plan which may
be adopted and/or maintained by Company; provided, however, Company is
under no obligation to adopt or maintain any such pension or profit
sharing plans or other fringe benefits, now or at any time in the future.
(b) Stock Options. Company hereby grants to Executive an option ("Stock
Option") to purchase: (a) up to One Hundred Thousand (100,000.00) shares
of Company common stock ("BT Stock") and (b) up to that number of shares
of BT Stock equal to the Alternative Health Insurance Compensation, if
any, divided by one-half, all at an exercise price of fifty cents ($.50)
per share, which is the current fair market value of the BT Stock. The
Stock Option shall terminate one (1) year after the termination of
Executive's employment under this Agreement. Executive must represent that
he is acquiring the BT Stock for investment purposes. Company agrees to
take all steps necessary to assure that the issuance of the BT Stock upon
the exercise of the Stock Option shall be treated as a transaction exempt
from the registration requirements under applicable federal and state
securities laws. In order to effectuate this Stock Option exercise,
Executive must deliver a written notice to Company of his intention to
exercise the Stock Option ten (10) days prior to such exercise accompanied
by full payment of the Stock Option exercise price. The instruments
evidencing the BT Stock shall carry a restrictive legend indicating that
the BT Stock has not been registered under applicable federal and state
securities laws and must not be transferred without compliance with said
registration requirements or utilization of an available exemption or
exemptions therefrom.
2.4 Vacation and Holidays. The Executive shall be entitled to an annual
vacation leave of one (1) week for each four months worked at full pay or
such greater vacation benefits as may be provided for by the Company's
vacation policies applicable to senior executives of the Company. Any
unused vacation time may be accumulated and carried over from one year to
the next; provided, however, if any vacation time would otherwise be
carried over for a second year, the Executive may, at his option, elect
not to have such vacation time carried over but may instead request the
Company to compensate the Executive for such vacation time by paying the
Executive for such time at the Executive's then current base salary rate.
Executive shall be entitled to receive payment in lieu of any unused
vacation time. All vacation time must be taken at times convenient to
Company, and must be taken in increments of no more than five (5) business
days at any one (1) time unless prior approval is granted by the Board.
Except to the extent that accumulated vacation time is paid off by the
Company as described above, none of the accumulated vacation time will be
lost for any reason. Executive shall be entitled to such holidays as are
established by the Company for all employees. Up to 50% of accumulated
vacation pay may be received in the form of Company's common stock at a
fair market price. The fair market price shall be the price of common
stock on the first day of the last month of each calendar quarter, and
Executive shall have the right to purchase such stock on that date of each
calendar quarter for that quarter.
2.5 Automobile Allowance. The Company shall provide the Executive with a
representative automobile and pay all expenses to operate such company
automobile, or an automobile allowance in the amount of Eight Hundred
Dollars ($800) per month as reimbursement to the Executive of costs and
expenses incurred by the Executive for the purchase or lease and
maintenance and operation of an automobile for use by the Executive in the
performance of the Executive's duties hereunder. Such automobile allowance
shall be paid in substantially equal semi-monthly installments.
Alternately Company may lease a vehicle for Executive's use in performance
of his duties up to a total of $800.00 per month.
2.6 Reimbursement of Expenses. The Executive shall be entitled to receive
prompt reimbursement of all reasonable expenses incurred by the Executive
in performance of his duties hereunder, including without limitation all
expenses of subscriptions to trade magazines and other periodicals,
travel, entertainment and living expenses while away from home on business
at the request of, or in the service of, the Company, provided that such
expenses are incurred and accounted for in accordance with the policies
and procedures established by the Company. All requests for reimbursement
shall be accompanied by the supporting documentation as required by the
accounting firm from time to time. Reimbursement will be made within
fifteen (15) days of receipt of properly submitted expense form.
2.7 Benefits Payable with Disability. If Executive suffers a "Continuing
Disability," as defined in Article IV below, Company shall continue to pay
his Base Salary for up to a maximum of one hundred eighty (180) days;
provided that this amount shall be reduced by the amount of any disability
insurance payments received by Executive.
2.8. Life Insurance and Tax preparation. The Company shall maintain for
the Executive during the term of this Agreement a life insurance policy of
not less than One Million Dollars ($1,000,000). In addition, the Company
shall provide to the Executive a One Thousand Dollar ($1,000) annual tax
preparation allowance.
ARTICLE III
CONFIDENTIALITY AND NONDISCLOSURE
3.1 Confidentiality. During Executive's employment by the Company or
thereafter at anytime, Executive will not disclose, directly or
indirectly, to any person or entity or use for Executive's own benefit any
trade secrets or confidential information relating to the Company's
business, operations, marketing data, business plans, strategies,
employees, negotiations and contracts with other companies, or any other
subject matter pertaining to the business of the Company or any of its
clients, customers, consultants, or licensees, known, learned, or acquired
by Executive during the period of Executive's employment by the Company
(collectively "Confidential Information"), except as may be necessary in
the ordinary course of performing Executive's particular duties as
anemployee of the Company.
3.2 Proprietary Information. Executive will promptly disclose and assign
to Company all ideas, processes, inventions and improvements coming within
the scope of Company's business, conceived by him alone or with others
during the term of his employment, and Executive will assist the Company
in the development of such proprietary information. All such ideas,
processes, inventions and improvements shall be the sole and exclusive
property of the Company. In the event any such idea, process, invention
or improvement shall be deemed by Company or Executive to be patentable,
Executive shall assist Company in obtaining a patent or patents thereon,
and he shall execute all documents and do all other things necessary or
proper to obtain letters patent and to assign to and vest Company with
full title thereto.
3.3 Return of Confidential Material. Executive shall promptly deliver to
the Company on termination of Executive's employment with the Company,
whether or not for Cause and whatever the reason, or at any time the
Company may so request, all memoranda, notes, records, reports, manuals,
drawings, blueprints, Confidential Information and any other documents of
a confidential nature belonging to the Company, including all copies of
such materials which Executive may then possess or have under Executive's
control. Upon termination of Executive's employment by the Company,
executive shall not take any document, data, or other material of any
nature containing or pertaining to the proprietary information of the
Company.
3.4 Prohibition on Solicitation of Customers. During the term of
Executive's employment with the Company, and for a period of one (1) year
thereafter, Executive shall not, directly or indirectly, either for
Executive or for any other person or entity, solicit any person or entity
to terminate such person's or entity's contractual and/or business
relationship with the Company, nor shall Executive interfere with or
disrupt or attempt to interfere with or disrupt any such relationship.
None of the foregoing shall be deemed a waiver of any and all rights and
remedies the Company may have under applicable law.
3.5 Prohibition on Solicitation of Employees, Agents or Independent
Contractors After Termination. During the term of Executive's employment
with the Company and for a period of one (1) year following the
termination of Executive's employment with the Company, Executive will not
solicit any of the employees, agents, or independent contractors of the
Company to leave the employ of the Company for a competitive company or
business. However, Executive may solicit any employee, agent or
independent contractor who voluntarily terminates his or her employment
with the Company after a period of ninety (90) days have elapsed since
thetermination date of such employee, agent or independent contractor.
None of the foregoing shall be deemed a waiver of any and all rights and
remedies the Company may have under applicable law.
3.6 Right to Injunctive and Equitable Relief. Executive's obligations not
to disclose or use Confidential Information and to refrain from the
solicitations described in this Article III are of a special and unique
character which gives them a peculiar value. The Company cannot be
reasonably or adequately compensated for damages in an action at law in
the event Executive breaches such obligations. Therefore, Executive
expressly agrees that the Company shall be entitled to injunctive and
other equitable relief without bond or other security in the event of such
breach in addition to any other rights or remedies which the Company may
possess or be entitled to pursue. Furthermore, the obligations of
Executive and the rights and remedies of the Company under this Article
III are cumulative and in addition to, and not in lieu of, any
obligations, rights, or remedies created by applicable law relating to
misappropriation or theft of trade secrets or Confidential Information.
3.7 Survival of Obligations. Executive agrees that the terms of this
Article III shall survive the term of this Agreement and the termination
of Executive's employment by the Company.
ARTICLE IV
TERMINATION
4.1 Definitions. For purposes of this Article IV, the following
definitions shall be applicable to the terms set forth below:
a) Cause. "Cause" shall mean only the following: (i) the Executive's
death or Disability; (ii) the willful and continued failure by the
Executive to substantially perform his duties hereunder (other than such
failure resulting from the Executive's incapacity due to physical or
mental illness) after two consecutive demands for substantial performance
are delivered by the Company within a 90 day period. The demands
must specifically identify the manner in which the Company believes the
Executive has not substantially performed his or her duties; (iii)
conviction of a felony under the laws of the State of California; or (iv)
habitual drunkenness or illegal drug use by Executive. For purposes of
this Agreement, no act, or failure to act, on the Executive's part shall
be considered "willful" unless done, or omitted to be done, by the
Executive in bad faith and without a reasonable belief that such action or
omission by the Executive was in the best interest of the Company.
Notwithstanding anything to the contrary in the foregoing, no termination
or other action shall be considered to be for Cause under this Agreement
unless (x) the Executive first shall have received at least two
consecutive written notices within 90 day period setting forth the reasons
for the Company's intention to terminate or take other action and shall
have been provided an opportunity to appear twice, accompanied by counsel,
and be heard before the Board of Directors; (y) after such appearances
before the Board, the Board of Directors shall have duly adopted by
unanimous vote of the Directors of the Company then in office, and
shall have provided to the Executive a certified resolution finding that
in the good faith opinion of such Directors the Executive was guilty of
conduct constituting Cause, as set forth above, and specifying the
particulars thereof in detail; and (z) the Executive shall have failed to
cure or remedy the event constituting Cause within 30 days after the
Executive's receipt of such certified resolution from the Board of
Directors.
b) Continuing Disability. A determination of Disability shall be
subject to the certification of a qualified medical doctor agreed to by
the Company and the Executive or, in the event of the Executive's
incapacity to designate a doctor, the Executive's legal representative. In
the absence of agreement between the Company and the Executive, each party
shall nominate a qualified medical doctor and the two doctors so nominated
shall select a third doctor, who shall make the determination as to
Disability. For the purposes of this Agreement, the term "Continuing
Disability" shall mean generally that Executive has suffered an accident
or illness resulting in a physical or mental disease, impairment,
incapacity or other condition as a result of which the Executive becomes
unable to continue to properly perform all of his duties hereunder,
(reasonable absences because of sickness for up to three (3) consecutive
months are excepted), and that this condition can be expected to continue
(or has continued) for a period of more than one hundred eighty (180) days
in any period of twenty four (24) consecutive months.
c) Good Reason. "Good Reason" shall mean each of the following: (i)
the failure of the Company to vest the Executive, without the Executive's
consent, with the powers and authority of the Executive's office or
position of employment as contemplated herein, or
any removal of the Executive from or failure to re-elect the Executive,
without the Executive's consent, to a position of employment consistent
with the position and status of Executive as set forth herein; (ii) a
failure by the Company to pay Executive's salary as contemplated herein
(iii) a failure by the Company to promptly reimburse Executive as herein
stipulated (iv) a reduction by the Company, without the Executive's
consent, in the Executive's annual base salary as it may exist from time
to time; (v) a failure by the Company, without the Executive's consent, to
continue any Company Benefit Plans in which the Executive presently is
entitled to participate, as the same may be modified from time to time;
(vi)a failure, without the Executive's consent, by the Company to continue
the Executive as a participant in any Company Benefit Plans on at least
the same basis as he presently participates in such plans; (vii) the
requirement by the Company, without Executive's consent, that the
Executive be based anywhere other than within thirty (30) miles of the
Executive's present office location, except for required travel on the
Company's business to an extent substantially consistent with the
Executive's present business travel obligations; (viii) a failure by the
Company to comply with any material provisions of this Agreement which has
not been cured within thirty (30) days after notice of such noncompliance
has been given by the Executive to the Company, or if such failure is not
capable of being cured in such time, a cure shall not have been diligently
initiated by the Company within such thirty-day period; or (ix) a failure
by the Company to obtain from any successor, before the succession takes
place, an agreement to assume and perform this Agreement; provided,
however, that any of the foregoing actions shall not be considered to be
Good Reason if such action is undertaken by the Company for Cause.
4.2 Continuing Disability. Company shall have the option of terminating
this Agreement on the date that Executive suffers a Continuing Disability
(as defined below). If the Board determines that Executive suffers from a
Continuing Disability, it shall give Executive written notice of this
determination, and the notice shall specify the Termination Date. The
determination that Executive has become disabled (and, if so, whether the
disability is continuing) shall be made by: (i) the unanimous agreement
of a majority of the Board of Directors and Executive (or the personal
representative of Executive); or, if they do not agree, then by (ii) the
disability insurance carrier, if any disability insurance is in effect for
Executive; or, if no insurance is in effect, then by (iii) a physician
mutually selected by the Board and Executive (or the personal
representative of Executive); or if they do not agree, then by (iv) at
least two (2) out of three (3) physicians, one of whom shall be selected
by the Board, the second of whom shall be selected by Executive (or the
personal representative of Executive), and a third physician, who shall be
selected by the first two.
4.3 Termination by Executive. Executive may terminate this Agreement by
delivering a written notice to Company at least hundred and twenty (120)
days in advance of the Original Expiration Date or the Renewal Date, as
the case may be. Company may terminate this Agreement for the reasons as
set forth in this Section IV. In each case, Executive's last day of
employment shall be the "Termination Date."
4.4 Termination by Company. Executive's employment hereunder may be
terminated by the Company immediately for Cause. Subject to the other
provisions contained in this Agreement, the Company may terminate this
Agreement for any reason other than Cause upon hundred and twenty (120)
days' written notice to Executive. The effective date of termination
("Effective Date") shall be considered to be hundred and twenty (120) days
subsequent to the receipt of a written notice of termination by Executive;
however, the Company may elect for Executive leave the Company
immediately.
4.5 Compensation Upon Termination. If Company terminates Executive's
employment for any reason other than for cause as defined above, then
Company shall pay Executive as per Article I Paragraph 1.2 and continue to
provide the health insurance set forth in Section 2.3 (a) herein. All
stock options granted, both exercised and not exercised prior to
termination, shall be deemed vested upon termination. Company shall be
responsible for the cost of any registration of stock or removal of
restrictions on all stock owned by Executive.
4.6 Severance Benefits Received Upon Termination. If (a) (i) at any time
the Executive's employment is terminated by the Company for Cause, or (ii)
at any time the Executive's employment is terminated by the Executive
without Good Reason, the Company shall pay the Executive his base salary
through the end of the 120 day Notice period during which such termination
occurs (or at the Executive's election, the rate in effect on the first
day of the month preceding the month in which the date of termination
occurs) plus payment for any accrued vacation and other benefits.
Thereafter the Company shall have no further obligations under this
Agreement to the Executive or his or her dependents, beneficiaries or
estate; provided, however, that the Company will continue to honor any
obligations that may have been accrued under then existing Company Benefit
Plans or any other agreements or arrangements applicable to the Executive.
(b) If (i) at any time the Executive's employment is terminated by the
Company without Cause, or (ii) at any time the Executive's employment is
terminated by the Executive for Good Reason, then the Company shall:
(1) pay to the Executive within three business days following the date
of termination his monthly base salary in effect on the date of the
termination through the end of the month during which such termination
occurs, plus all payments for any vacation earned but not taken, plus all
accrued benefits; and
2) pay to the Executive as severance pay in a lump sum, in cash, within
five business days following the date of termination, an amount equal to
(i) the Executive's monthly base salary in effect on the date of
termination, multiplied by (ii) fifty-nine (59) months; provided, however,
that if the lump sum severance payment under this Section 4.5(b)(2),
either alone or together with other payments which the Executive has the
right to receive from the Company, would constitute an "excess parachute
payment" (as defined in Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code")), such lump sum severance payment shall be paid
over three months so no portion of the lump sum severance payment under
this Article III will be subject to the excise tax imposed by Section 4999
of the Code. The determination of any reduction in the lump sum severance
payment under this Section 4.5(b)(2) pursuant to the foregoing proviso
shall be made by independent auditors in good faith and such determination
shall be conclusive and binding on the Executive and the Company;
(3) pay to the Executive a sum equal to (i) one-month of the
Executive's annual compensation bonus for the entirety of the year in
which the termination occurs, multiplied by (ii) the number of months or
portion thereof the Executive was employed by the Company during the year
in which the termination occurs. The Company shall make such incentive
compensation bonus payment to the Executive concurrently with its payment
of bonuses to other executives of the Company; and
(4) maintain at the Company's expense, in full force and effect, for
the Executive's continued benefit until the earlier of (i) two years after
the date of termination or (ii) the Executive's commencement of full time
employment with a new employer, all automobile, automobile insurance, life
insurance, medical, health and accident, and disability plans, stock
options, stock bonuses and programs or arrangements in which the Executive
was entitled to participate immediately prior to the date of termination,
provided that the Executive's continued participation is possible under
the general terms and provisions of such plans and programs. In the event
that the Executive's participation in any such plan or program is barred,
the Company shall arrange to provide the Executive with benefits
substantially similar to those which the Executive was entitled to receive
under such plans or programs. Subsequent health insurance benefits will be
in accordance with COBRA.
4.7 No Obligation to Mitigate Damages; No Effect on Other Contractual
Rights.
(a) The Executive shall not be required to mitigate damages or the amount
of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for
under this Agreement be reduced by any compensation earned by the
Executive as the result of employment by another employer after the date
of termination, or otherwise (except as provided in Section 4.5(b)(3)).(b)
The provisions of this Agreement, and any payment or benefit provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue
solely as a result of the passage of time, under any Company Benefit Plan,
employment agreement or other contract, plan or arrangement.
4.8 Death. This Agreement shall automatically terminate for cause on the
date that Executive dies.
ARTICLE V
ASSUMPTION OF OBLIGATIONS BY SUCCESSOR TO COMPANY
5.1 Assumption of Obligations. The Company will require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree
to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession or
assignment had taken place. Any failure of the Company to obtain such
agreement prior to the effectiveness of any such succession or assignment
shall constitute a material breach of this Agreement. As used in this
Agreement, "Company" shall mean the Company as herein before defined and
any successor or assign to its business and/or assets as aforesaid which
executes and delivers the agreement provided or in this Article V or which
otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law. If at any time during the term of this Agreement the
Executive is employed by any corporation a majority of the voting
securities of which is then owned by the Company, "Company" as used in
this Agreement shall in addition include such employer. In such event, the
Company agrees that it shall pay or shall cause such employer to pay any
amounts owed to the Executive pursuant to this Agreement.
5.2 Beneficial Interests. This Agreement shall inure to the benefit of and
be enforceable by the Executive's personal and legal
representatives,executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts are still payable to him or her hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such designee, to the Executive's estate.
ARTICLE VI
GENERAL PROVISIONS
6.1 Notice. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, as
follows:
If to the Company:
Bridge Technology, Inc.
1815 East Carnegie
Santa Ana, CA. 92705
Attn: John Gauthier, Secretary
If to the Executive:
John J. Harwer
59 Sillero
Rancho Santa Margarita
CA. 92688
or such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
6.2 No Waivers. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time.
6.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
6.4 Severability or Partial Invalidity. The invalidity or unenforceability
of any provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
6.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
6.6 Legal Fees and Expenses. Should any party institute any action or
proceeding to enforce this Agreement or any provision hereof, or for
damages by reason of any alleged breach of this Agreement or of any
provision hereof, or for a declaration of rights hereunder, the prevailing
party in any such action or proceeding shall be entitled to receive from
the other party all costs and expenses, including reasonable attorneys'
fees, incurred by the prevailing party in connection with such action or
proceeding.
6.7 Entire Agreement. This Agreement constitutes the entire agreement of
the parties and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings, and negotiations between
the parties with respect to the subject matter hereof. This Agreement is
intended by the parties as the final expression of their agreement with
respect to such terms as are included in this Agreement and may not be
contradicted by evidence of any prior or contemporaneous agreement. The
parties further intend that this Agreement constitutes the complete and
exclusive statement of its terms and that no extrinsic evidence may be
introduced in any judicial proceeding involving this Agreement.
6.8 Assignment. Subject to the provisions of Article V hereof, this
Agreement and the rights, duties, and obligations hereunder may not
assigned or delegated by any party without the prior written consent of
the other party. Notwithstanding the foregoing provisions of this Section
6.8, the Company may assign or delegate its rights, duties, and
obligations hereunder to any person or entity which succeeds to all or
substantially all of the business of the Company through merger,
consolidation, reorganization, or other business combination or by
acquisition of all or substantially all of the assets of the Company;
provided that such person assumes the Company's obligations under this
Agreement in accordance with Section 5.1..
6.9 Arbitration. Any controversy, dispute, claim or other matter in
question arising out of or relating to this Agreement shall be settled, at
the request of either party, by binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association
("AAA"), and judgement upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof, subject to the following
terms, conditions and exceptions:
(a) Notice of the demand for arbitration shall be filed in writing with
the other party and with the AAA. There shall be a panel of three (3)
arbitrators whose selection shall be made in accordance with the
procedures then existing for the selection of such arbitrators by the AAA.
(b) Reasonable discovery shall be allowed in arbitration.
(c) The costs and fees of the arbitration shall be allocated by the
arbitrators.
(Signature Page to the Employment Agreement)
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
JOHN J. HARWER
"HARWER"
BRIDGE TECHNOLOGY, INC.,
A Nevada corporation
By: John T. Gauthier
Its: President, CEO & Chairman "BRIDGE TECHNOLOGY"
BRIDGE TECHNOLOGY
BRIDGE R&D
A California corporation
By: John T. Gauthier
Its: CFO & Director
"BRIDGE R&D"
EXHIBIT 21 - SUBSIDIARIES OF THE REGISTRANT
SUBSIDIARIES OF THE REGISTRANT
1) BRIDGE R&D, Inc.
a California Corporation
Wholly owned subsidiary of Bridge Technology, Inc.
Address:
1815 East Carnegie Avenue
Santa Ana, California 92705
Officers:
John J. Harwer, President John T. Gauthier, Treasurer Denise Lafone,
Secretary
Directors:
John J. Harwer
John T. Gauthier
Woody C. G. Wu
Federal ID # 33-0762071
Incorporated in California June 26, 1997.
2) NEWCORP TECHNOLOGY, LTD., Tokyo, Japan,
a Japan Corporation
Wholly owned subsidiary of Bridge Technology, Inc.
EXHIBIT 99 REWIEVED 11/13/1998
1995 STOCK OPTION PLAN
1. PURPOSE.
The purpose of this Plan is to promote the success of the Corporation by
providing additional means to attract, motivate and retain key personnel,
consultants, advisors and knowledgeable directors through the grant of
Options that provide added long term incentives for high levels of
performance and for significant efforts to improve the financial
performance of the Corporation.
2. DEFINITIONS.
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean a committee, if any, appointed by the Board in
accordance with Section 4 of this Plan.
(d) "Common Stock" shall mean the Common Stock, par value $0.001 share, of
the Corporation.
(e) "Corporation" shall mean Bridge Technology, Inc., a Nevada
corporation.
(f) "Disability" shall mean the condition of an Employee who is, in the
judgment of the Board or the Committee, unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not
less than twelve months.
(g) "Effective Date" shall have the meaning given such term in Section 3
hereof.
(h) "Employee" shall mean an individual who is employed (within the
meaning of Code Section 3401(c) and the regulations thereunder) by the
Corporation or a Subsidiary.
(i) "Event" shall mean any of the following:
(1) approval by the shareholders of the Corporation of an agreement to
merge or consolidate, or otherwise reorganize, with or into one or more
entities other than Subsidiaries, as a result of which less than 50% of
the outstanding voting securities of the surviving or resulting entity
are, or are to be, owned by former shareholders of the Corporation;
(2) approval by the shareholders of the Corporation of the sale of all or
substantially all of the Corporation's business assets to a person or
entity which is not a Subsidiary; or
(3) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, but excluding (x) any person described in and satisfying the
conditions of Rule 13d-1(b)(1) thereunder and (y)any person having
beneficial ownership of more than 5% of the outstanding voting power at
the time of adoption of this Plan) becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing more than 50% of
the combined voting power of the Corporation's then outstanding securities
entitled to then vote generally in the election of directors of the
Corporation.
(j) "Exchange Act" shall mean the Securities and Exchange Act of 1934, as
amended.
(k) "Exercise Price" shall mean the price per Share of Common Stock,
determined by the Board or the Committee, at which an Option may be
exercised.
(l) "Fair Market value" shall mean the value of one Share of Common Stock,
determined as follows:
(1) If the Shares are traded on an exchange, the price at which Shares
traded at the close of business on the date of valuation;
(2) If the Shares are traded over-the-counter on the NASDAQ System, the
closing price if one is available, or the mean between the bid and asked
prices on said System at the close of business on the date of valuation;
and
(3) If neither (1) nor (2) applies, the fair market value as determined by
the Board or the Committee in good faith. Such determination shall be
conclusive and binding on all persons.
(m) "Incentive Stock Option" shall mean an option described in Section
422(b) of the Code.
(n) "Nonstatutory Stock Option" shall mean an option not described in
Section 422(b), 423(b) or 424(b) of the Code.
(o) "Option" shall mean an option to purchase Common Stock under this
Plan. An Option shall be designated by the Committee as a Nonstatutory
Stock Option or an Incentive Stock Option.
(p) "Optionee" shall mean an employee or another person who has received
an Option.
(q) "Plan" shall mean the Bridge Technology, Inc. 1997 Stock Option Plan,
as it may be amended from time to time.
(r) "Purchase Price" shall mean the Exercise Price multiplied by the
number of Shares with respect to which an Option is exercised.
(s) "Retirement" shall mean the voluntary termination of employment by an
Employee upon the attainment of age sixty-five and the completion of not
less than twenty years of service with the Corporation or a Subsidiary.
(t) "Share" shall mean one share of Common Stock, adjusted in accordance
with Section 10 of this Plan (if applicable).
(u) "Subsidiary" shall mean any corporation at least fifty percent of the
total combined voting power of which is owned by the Corporation or by
another Subsidiary.
3. EFFECTIVE DATE.
This Plan was adopted by the Board and approved by the Corporation's
shareholders as of April 21, 1997, which is the effective date of this
Plan (the "Effective Date").
4. ADMINISTRATION.
This Plan shall be administered by the Board, or by a committee appointed
by the Board which shall consist of not less than two members (either
entity acting in such capacity being hereafter referred to as the
"Committee"). The Board shall appoint one of the members of the Committee,
if there be one, as Chairman of the Committee. The Committee shall hold
meetings at such times and places as it may determine. Acts of a majority
of the Committee at which a quorum is present, or acts reduced to or
approved in writing by a majority of the members of the Committee, shall
be the valid acts of the Committee. The Committee shall from time to time
at its discretion select the Plan participants, the number of Shares to be
granted to each Optionee (no more than 120,000 options may be granted
hereunder to any person during any twelve month period) and designate such
Options as Incentive Stock Options or Non-statutory Stock Options, except
that no Incentive Stock Option may be granted to a non-Employee director
or a non-Employee consultant. A member of the Committee shall in no event
participate in any determination relating to Options held by or to be
granted to such Committee member. The interpretation and construction by
the Committee of any provision of this Plan or of any Option granted
hereunder shall be final. No member of the Committee shall be liable for
any action or determination made in good faith with respect to this Plan
or any Option Granted hereunder.
5. PARTICIPATION.
(a) Eligibility. The Optionees shall be such persons as the Committee may
select from among the following classes of persons, subject to the terms
and conditions of (b) below:
(1) Employees of the Corporation or of a Subsidiary (who may be officers,
whether or not they are directors);
(2) Directors of the Corporation or of a Subsidiary; and
(3) Consultants, vendors, customers and others expected to provide
significant services to the Corporation or a Subsidiary. Solely for
purposes of this Plan, an Optionee who is a director or a consultant,
vendor, customer or other provider of significant services to the
Corporation or a Subsidiary shall be deemed to be an Employee, and service
as a director, consultant, vendor, customer or other provider of
significant services to the Corporation or a Subsidiary shall, solely for
purposes of this Plan, be deemed to be employment, except that no
Incentive Stock Option may be granted to a non-Employee director or non-
Employee consultant, vendor, customer or other provider of significant
services to the Corporation or a Subsidiary.
(b) Ten-Percent Shareholders. An Employee who owns more than ten percent
of the total combined voting power of all classes of outstanding stock of
the Corporation, its parent or any of its Subsidiaries shall not be
eligible to receive an Incentive Stock Option unless (i) the Exercise
Price of the Shares subject to such Option is at least 110% of the Fair
Market value of such Shares on the date of grant and (ii) such Option by
its terms is not exercisable after the expiration of five years from the
date of grant.
(c) Stock Ownership. For purposes of (b) above, in determining stock
ownership, an Employee shall be considered as owning the stock owned,
directly or indirectly, by or for his brothers, sisters, spouses,
ancestors and lineal descendants. Stock owned, directly or indirectly, by
or for a corporation, partnership, estate or trust shall be considered as
being owned proportionately by or for its shareholders, partners or
beneficiaries. Stock with respect to which such Employee holds an Option
shall not be counted.
(d) Outstanding Stock. For purposes of (b) above, "outstanding stock"
shall include all stock actually issued and outstanding immediately after
the grant of the Option to the Optionee. "Outstanding stock" shall not
include shares authorized for issue under outstanding Options held by the
Optionee or by any other person.
6. STOCK.
The stock subject to Options granted under this Plan shall be Shares of
the Corporation's authorized but unissued or reacquired Common Stock. The
aggregate number of Shares which may be issued upon exercise of Options
under this Plan shall not exceed 500,000 shares. The number of Shares
subject to Options outstanding at any time shall not exceed the number of
Shares remaining available for issuance under this Plan. If any
outstanding Option for any reason expires or is terminated, the Shares
allocable to the unexercised portion of such Option may again be made
subject to any Option. The limitations established by this Section 6 shall
be subject to adjustment in the manner provided in Section 10 hereof upon
the occurrence of an event specified therein.
7. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreements. Options shall be evidenced by written stock
option agreements in such form as the Committee shall from time to
time determine. Such agreements shall comply with and be subject to
the terms and conditions set forth below.
(b) Number of Shares. Each Option shall state the number of Shares to
which it pertains and shall provide for the adjustment thereof in
accordance with the provisions of
Section 10 hereof.
(c) Exercise Price. Each Option shall state the Exercise Price. The
Exercise Price in the case of any Incentive Stock Option shall not be less
than the Fair Market Value on the date of grant and, in the case of any
Incentive Stock Option granted to an Optionee described in Section 5(b)
hereof, shall not be less than 110% of the Fair Market Value
on the date of grant. The Exercise Price in the case of any Non-statutory
Stock Option shall not be less than 90% of the Fair Market Value on the
date of grant.
(d) Medium and Time of Payment. The Purchase Price shall be payable in
full in United States dollars upon the exercise of the Option; provided,
however, that if the applicable Option Agreement so provides the Purchase
Price may be paid (i) by the surrender of Shares in good form for
transfer, owned by the person exercising the Option and having a Fair
Market Value on the date of exercise equal to the Purchase Price, or
in any combination of cash and Shares, as long as the sum of the cash so
paid and the Fair Market Value of the Shares so surrendered equal the
Purchase Price, (ii) by cancellation of indebtedness owed by the
Corporation to the Optionee, (iii) with a full recourse promissory note
executed by the Optionee or (iv) any combination of the foregoing. The
interest rate and other terms and conditions of such note shall be
determined by the Committee. The Committee may, if it desires, require
that the Optionee pledge his or her Shares to the Corporation for the
purpose of securing the payment of such note and require that the stock
certificate(s) representing such Shares shall not be released to the
Optionee until such note has been paid in full. If the Corporation
determines that it is required to withhold state or federal income tax as
a result of the exercise of an Option, as a condition to the exercise
thereof, an Employee may be required to make arrangements satisfactory to
the Corporation to enable it to satisfy such withholding requirements.
(e) Term and Non-transferability of Options. Each Option shall state the
time or times, and the conditions upon which, all or part thereof becomes
exercisable. No Option shall be exercisable after the expiration of ten
years from the date it was granted, and no Incentive Stock Option granted
to an Optionee described in Section 5(b) hereof shall be exercisable after
the expiration of five years from the date it was granted. During the
lifetime of the Optionee, the Option shall be exercisable only by the
Optionee and shall not be assignable or transferable. In the event of the
Optionee's death, the Option shall not be transferable by the Optionee
other than by will or the laws of descent and distribution.
(f) Termination of Employment, Except by Death, Disability or Retirement.
If an Optionee ceases to be an Employee for any reason other than his or
her death, Disability or Retirement, such Optionee shall have the right,
subject to the restrictions of (e) above, to exercise the Option at any
time within ninety days after termination of employment, but only to the
extent that, at the date of termination of employment, the Optionee's
right to exercise such Option had vested pursuant to the terms of the
applicable option agreement and had not previously been exercised;
provided, however, that if the Optionee was terminated for cause (as
defined in the applicable option agreement) any Option not exercised in
full prior to such termination shall be canceled. For this purpose, the
employment relationship shall be treated as continuing intact while the
Optionee is on military leave, sick leave or other bona fide leave of
absence (to be determined in the sole discretion of the Committee). The
foregoing notwithstanding, (i) in the case of an Incentive Stock Option,
employment shall not be deemed to continue beyond ninety days after the
Optionee's reemployment rights are guaranteed by statute or by contract,
and (ii) in the case of a Nonstatutory Stock Option, the Committee may
extend or otherwise modify the period of time specified herein
during which the Option may be exercised following termination of
Optionee's employment.
(g) Death of Optionee. If an Optionee dies while an Employee, or after
ceasing to be an Employee but during the period while he or she could have
exercised the Option under this Section 7, and has not fully exercised the
Option, then the Option may be exercised in full, subject to the
restrictions of (e) above, at any time within three months after the
Optionee's death, by the executors or administrators of his or her estate
or by any person or persons who have acquired the Option directly from the
Optionee by bequest or inheritance, but only to the extent that, at the
date of death, the Optionee's right to exercise such Option had accrued
and had not been forfeited pursuant to the terms of the applicable Option
Agreement and had not previously been exercised. The foregoing
notwithstanding, in the case of a Nonstatutory Stock Option, the Committee
may extend or otherwise modify the period of time specified herein during
which the Option may be exercised following termination of Optionee's
employment, or amend an Incentive Stock Option to convert it into a
Nonstatutory Stock Option with an extended term.
(h) Disability of Optionee. If an Optionee ceases to be an Employee by
reason of Disability, such Optionee shall have the right, subject to the
restrictions of (e) above, to exercise the Option at any time within three
months after termination of employment, but only to the extent that, at
the date of termination of employment, the Optionee's right to exercise
such Option had accrued pursuant to the terms of the applicable option
agreement and had not previously been exercised. The foregoing
notwithstanding, in the case of a Nonstatutory Stock Option, the Committee
may extend or otherwise modify the period of time specified herein during
which the Option may be exercised following termination of Optionee's
employment, or amend an Incentive Stock Option to convert it into a
Nonstatutory Stock Option with an extended term.
(i) Retirement of Optionee. If an Optionee ceases to be an Employee by
reason of Retirement, such Optionee shall have the right, subject to the
restrictions of (e) above, to exercise the Option at any time within
twelve months after termination of employment, but only to the extent
that, at the date of termination of employment, the Optionee's right to
exercise such Option had accrued pursuant to the terms of the applicable
option agreement and had not previously been exercised. The foregoing
notwithstanding, in the case of a Non-statutory Stock Option, the
Committee may extend or otherwise modify the period of time specified
herein during which the Option may be exercised following termination of
Optionee's employment, or amend an Incentive Stock Option to convert it
into a Non-statutory Stock Option with an extended term.
(j) Rights as a Shareholder. An Optionee, or a transferee of an Optionee,
shall have no rights as a shareholder with respect to any Shares covered
by his or her Option until the date of the issuance of a stock certificate
for such Shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date s prior to the
date such stock certificate is issued, except as provided in Section 10
hereof.
(k) Modification, Extension and Renewal of Option. Within the limitations
of this Plan, the Committee may modify, extend, renew or re-price
outstanding Options or accept the cancellation of outstanding Options (to
the extent not previously exercised) for the granting of new Options with,
if desired, lower exercise prices, in substitution therefor. The foregoing
notwithstanding, no modification of an Option shall, without the consent
of the Optionee, alter or impair any rights or obligations under any
Option previously granted.
(l) Other Provisions. The stock option agreements authorized under this
Plan may contain such other provisions not inconsistent with the terms of
this Plan (including, without limitation, restrictions upon the exercise
of the Option) as the Committee deems advisable.
8. LIMITATION ON VALUE OF EXERCISABLE SHARES.
In the case of Incentive Stock Options granted hereunder, the aggregate
Fair Market Value (determined as of the date of the grant thereof) of the
Shares with respect to which Incentive Stock Options become exercisable by
any employee of the Corporation for the first time during any calendar
year (under this Plan and all other plans maintained by the Corporation,
its parent or its Subsidiaries) shall not exceed $250,000.
9. TERM OF PLAN.
Options may be granted pursuant to this Plan until the expiration of ten
years from the effective date of this Plan.
10. RECAPITALIZATIONS. Subject to any required action by shareholders, the
number of Shares covered by this Plan as provided in Section 6 hereof, the
number of Shares covered by each outstanding Option and the Exercise Price
thereof shall be proportionately adjusted for any increase or decrease in
the number of issued Shares resulting from a subdivision or consolidation
of Shares or the payment of a stock dividend (but only of Common Stock) or
any other increase or decrease in the number of issued Shares effected
without receipt of consideration by the Corporation. Subject to any
required action by shareholders, if the Corporation is the surviving
corporation in any merger or consolidation, each outstanding Option shall
apply to the securities to which a holder of the number of Shares subject
to the Option would have been entitled in the merger or consolidation. To
the extent that the foregoing adjustments relate to securities of the
Corporation, such adjustments shall be made by the Committee, whose
determination shall be conclusive and binding on all persons. Except as
expressly provided in this Section 10, the Optionee shall have no rights
by reason of subdivision or consolidation of shares of stock of any class,
the payment of any stock dividend or any other increase or decrease in the
number of shares of stock of any class or by reason of any dissolution,
liquidation, merger or consolidation or spin-off of assets or stock of
another corporation, and any issue by the Corporation of shares of stock
of any class, or securities convertible into shares of stock of any class,
shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or Exercise Price of Shares subject to an Option.
The grant of an Option pursuant to this Plan shall not affect in any way
the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes to its capital or business
structure, to merge or consolidate or to dissolve, liquidate, sell or
transfer all or any part of its business assets.
11. SECURITIES LAW REQUIREMENTS.
(a) Legality of Issuance. The issuance of any Shares upon the exercise of
any Option and the grant of any Option shall be contingent upon the
following:
(1) the Corporation and the Optionee shall have taken all actions
required to register the Shares under the Securities Act of 1933, as
amended (the "Act"), and to qualify the Option and the Shares under any
and all applicable state securities or "blue sky" laws or regulations, or
to perfect an exemption from the respective registration and qualification
requirements thereof;
(2) any applicable listing requirement of any stock exchange on which
the Common Stock is listed shall have been satisfied; and
(3) any other applicable provision of state or federal law shall have
been satisfied.
(b) Restrictions on Transfer. Regardless of whether the offering and sale
of Shares under this Plan has been registered under the Act or has been
registered or qualified under the securities laws of any state, the
Corporation may impose restrictions on the sale, pledge or other transfer
of such Shares (including the placement of appropriate legends on stock
certificates) if, in the judgment of the Corporation and its counsel,
such restrictions are necessary or desirable in order to achieve
compliance with the provisions of the Act, the securities laws of any
state or any other law. In the event that the sale of Shares under this
Plan is not registered under the Act but an exemption s available which
requires an investment representation or other representation, each
Optionee shall be required to represent that such Shares are being
acquired for investment, and not with a view to the sale or distribution
thereof, and to make such other representations as are deemed necessary or
appropriate by the Corporation and its counsel. Any determination by the
Corporation and its counsel in connection with any of the matters set
forth in this Section 11 shall be conclusive and binding on all persons.
Stock certificates evidencing Shares acquired under this Plan pursuant to
an unregistered transaction shall bear the following restrictive legend
and such other restrictive legends as are required or deemed advisable
under the provisions of any applicable law.
"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). ANY TRANSFER OF SUCH
SECURITIES WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT
IS IN EFFECT AS TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR THE
ISSUER SUCH REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO
COMPLY WITH THE ACT."
(c) Registration or Qualification of Securities. The Corporation may, but
shall not be obligated to register or qualify the issuance of Options
and/or the sale of Shares under the Act or any other applicable law. The
Corporation shall not be obligated to take any Affirmative action in order
to cause the issuance of Options or the sale of Shares under this Plan to
comply with any law.
(d) Exchange of Certificates. If, in the opinion of the Corporation and
its counsel, any legend placed on a stock certificate representing shares
sold under this Plan is no longer required, the holder of such certificate
shall be entitled to exchange such certificate for a certificate
representing the same number of Shares but lacking such legend.
12. AMENDMENT OF THIS PLAN.
The Board may from time to time, with respect to any Shares at the time
not subject to Options, suspend or discontinue this Plan or revise or
amend it in any respect whatsoever except that, without the approval of
the Corporation's shareholders, no such revision or amendment shall:
(a) Increase the number of Shares subject to this Plan;
(b) Change the designation in Section 5 hereof with respect to the classes
of persons eligible to receive Options;
(c) Amend this Section 12 to defeat its purpose.
13. ACCELERATION OF OPTIONS.
Unless prior to an Event the Board determines that, upon its occurrence,
there shall be no acceleration of Options or determines those selected
Options which shall be accelerated and the extent to which they shall be
accelerated, upon the occurrence of an Event each Option shall become
immediately exercisable to the full extent theretofore not exercisable;
subject, however, to compliance with applicable regulatory requirements,
including, without limitation, Rule 16b- 3 promulgated by the Commission
pursuant to the Exchange Act and Section 422 of the Code. For purposes of
this section only, the Board shall mean the Board as constituted
immediately prior to the Event.
14. EXECUTION.
To record the adoption of this Plan in the form set forth above by the
Board as of the Effective Date, the Corporation has caused this Plan to be
executed in the name and on behalf of the Corporation where provided below
by an officer of the Corporation thereunto duly authorized.
BRIDGE TECHNOLOGY, INC.,
a Nevada corporation
By: John T. Gauthier
Its:Chief Financial Officer
EXHIBIT 10 C) REVIEWED 11/13/1998
BINDING LETTER OF INTENT OF A
REPRESENTATIVE AGREEMENT
This Representative Agreement sets forth a proposal from Bridge
Technology, Inc., a Nevada corporation ("BTI"), with a principal office at
1815 East Carnegie, Santa Ana, CA. 92705, USA, Tel: (714) 891-6508, Fax:
(714) 891-8590, to represent EEMB Corporation, with principal offices at
Rm. 3208 Electronic Technology Building, ShenZhen (zipcode 518031),
People's Republic of China, ("EEMB"), Tel: 86-755-3782555, Fax: 86-755-
3780990. BTI and EEMB may hereinafter be referred to as the "Parties."
The terms and conditions of the proposal are described herein below.
Whereas, EEMB desires to sell its products in USA and Europe
markets, and
Whereas, EEMB desires to establish a strategic relationship with
Bridge in order to grow its business as fast as possible, and
Whereas, EEMB and Bridge desire to join their efforts to promote
fast expansion of EEMB business.
Now therefore, in consideration of mutual covenants and promises
herein, the parties hereto agree as follows:
1. Exclusive Representation. EEMB hereby appoints Bridge as the exclusive
representative and grants it the right to exclusively register and use the
name "EEMB USA", register such business name as necessary, set up a Web
site and commence sales and marketing of EEMB products as defined by EEMB
from time to time in Exhibit "A". Revenue forecast: EEMB USA shall use its
best efforts to reach the following revenues: Calendar year 1999 target is
$500,000 in revenues, calendar year 2000 target is $1,000,000 and
calendar year 1991 is $2,000,000. Bridge and EEMB agree to operate EEMB
USA for a period of three years. This Agreement will be automatically
extended for additional three years, unless it is cancelled by either
party by a written notice at least 180 days before the expiration date of
this contract. This Agreement will be automatically cancelled if target
revenues are not achieved as specified. Exclusivity. EEMB shall assure
that EEMB products will not be sold in USA by anyone else except EEMB USA,
and that EEMB USA shall have the exclusive rights to sell EEMB products in
USA, and on a case-by-case basis in European markets.
2. Investment by Bridge. Bridge shall invest the funds necessary to
establish an operating entity using the name "EEMB USA", register such
business name as necessary, set up a Web site and commence sales and
marketing of EEMB products. EEMB USA will provide business plan by
12/8/1998.
3. Investment by EEMB. EEMB shall participate in the funding of this
operation by sharing Trade Show expenses of EEMB USA. During the first
year EEMB has the option to invest in EEMB USA and purchase certain
percentage of EEMB USA to be defined by. Stock Conversion rights: If
during third year of operation of EEMB USA EEMB invests in EEMB USA as
proposed, then EEMB shall have the right to convert their ownership in
EEMB USA to shares of Bridge at the Fair Market Value at the time of
conversion. FMV shall be determined by an independent accounting firm, or
it shall be agreed upon by both EEMB and Bridge.
4. Customer leads and files. EEMB shall provide all prospective USA
customer leads to EEMB USA. EEMB USA shall use its best efforts to develop
EEMB business by selling EEMB products. EEMB and Bridge have the right to
review EEMB USA results to assure proper operation of EEMB USA.
5. Credit facility. EEMB USA shall open a 120-day L/C for any purchase
over $100,000. For direct customers EEMB USA shall arrange for such
customer to issue an L/C directly to EEMB on a case-by-case basis. For
direct sales and shipments to customers such as Radio Shack and other
large customers, the commission paid to EEMB USA will be determined on a
case-by-case basis.
6. Confidentiality. Both parties agree to treat all information obtained
in this representation is confidential and shall not be disclosed to
anyone except their legal or financial consultants.
If this proposal is acceptable, please sign and return a copy of
this BLOI to our office on or before 5:00 p.m. on August 24, 1998.
Very truly yours,
John Harwer, CEO
Bridge
Raymond Wang, General Manager
EEMB USA
CONFIRMATION AND ACCEPTANCE
I, acting as the President of EEMB China, have read the terms and
conditions contained in this Exclusive Representation Agreement and, on
behalf of EEMB China and Marco Chen, I hereby agree to and accept such
terms and conditions on this 24th day of August, 1998.
EEMB, a China Corporation
By: Marco Chen, President
_________________
August 24, 1998
