<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 17, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
BRIGHT-TECHNOLOGIES.COM, INC.
(Name of small business issuer in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3661 16-1567610
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>
7325 OSWEGO ROAD LIVERPOOL, NEW YORK 13090
(315) 652-0006
(Address and telephone number of principal executive office and principal place
of business or intended principal place of business)
JOSEPH C. PASSALAQUA
CHIEF EXECUTIVE OFFICER
BRIGHT-TECHNOLOGIES.COM, INC.
7325 OSWEGO ROAD
LIVERPOOL, NEW YORK 13090
(315) 652-0006
(Name, address and telephone number of agent for service)
--------------------------
COPY TO:
LAWRENCE B. MANDALA, ESQ.
JOEL HELD, ESQ.
ARTER & HADDEN LLP
1717 MAIN STREET, SUITE 4100
DALLAS, TEXAS 75201
(214) 761-2100
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
--------------------------
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
Registration Statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF DOLLAR AMOUNT OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED UNIT PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.001 par value............... $9,000,000 $5.00 $9,000,000 $2,502
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED MAY 17, 1999
PROSPECTUS
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
BRIGHT-TECHNOLOGIES.COM, INC.
7325 OSWEGO ROAD
LIVERPOOL, NEW YORK 13090
(315) 652-0006
------------------
<TABLE>
<CAPTION>
- -----------------------
MAXIMUM OFFERING: 1,800,000 Shares
of Common Stock
<C> <S> <C>
$9,000,000 Total Proceeds
- - 900,000 Underwriting Commissions
- ---------
$8,100,000 Proceeds, before expenses, to
- ---------
- ---------
bright-technologies.com
MINIMUM OFFERING: 1,000,000 Shares
of Common Stock
$5,000,000 Total Proceeds
- - 500,000 Underwriting Commissions
- ---------
$4,500,000 Proceeds, before expenses, to
- ---------
- ---------
bright-technologies.com
PRICE PER SHARE: $5.00
UNDERWRITING COMMISSIONS: 10%
UNDERWRITER'S EXPENSE ALLOWANCE: 1%
-----------------------
</TABLE>
We have developed wireless telephones to provide business and residential
telephone service principally to areas of the world that cannot support wireline
telephones. Our products include an advanced, prepaid wireless local loop and a
wireless payphone. We are developing software that will permit our customers to
manage our products from remote locations over the internet or a direct
connection.
This is our initial public offering. There is currently no public market for our
shares. Our underwriter is offering 1,800,000 shares of our common stock on a
"best efforts minimum/ maximum" basis. The underwriter must sell a minimum of
1,000,000 shares in order for this offering to be completed. The underwriter is
required to use its best efforts to sell the shares. If we do not sell at least
1,000,000 shares within 180 days after commencement of this offering, the
offering will terminate and all money paid for shares will be returned to the
purchasers. Even if we sell the minimum number of shares, we may not sell the
maximum number of shares. All shares sold will be held in escrow with Firstar
Bank of Minnesota, N.A., St. Paul, MN until at least 1,000,000 shares have been
sold.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK AND OF IMMEDIATE SUBSTANTIAL
DILUTION. YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF
YOUR INVESTMENT. SEE "RISK FACTORS" BEGINNING ON PAGE 4 AND "DILUTION" ON PAGE
12.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------------
ROCKCREST SECURITIES L.L.C.
MAY 17, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Prospectus Summary......................................................................................... 1
Risk Factors............................................................................................... 4
Forward-Looking Statements................................................................................. 10
Use of Proceeds............................................................................................ 11
Dilution................................................................................................... 12
Capitalization............................................................................................. 13
Selected Financial Data.................................................................................... 14
Dividend Policy............................................................................................ 15
Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 15
Our Business............................................................................................... 19
Our Management............................................................................................. 26
Certain Transactions with Management....................................................................... 29
Principal Stockholders..................................................................................... 30
Description of Securities.................................................................................. 31
Shares Eligible For Future Sale............................................................................ 33
Underwriting............................................................................................... 34
Legal Matters.............................................................................................. 35
Experts.................................................................................................... 35
Additional Information..................................................................................... 36
Index to Financial Statements.............................................................................. F-1
</TABLE>
------------------------
IMPORTANT INFORMATION
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO
BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK.
UNTIL , 1999 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THESE SHARES OF COMMON STOCK MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS AN UNDERWRITER AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
------------------------
"Bright Star," "Brightlink," "Chameleon," "Tech 3" and "Wireless Network
Manager" are trademarks of Bright Technologies, Inc. This prospectus also
contains the trademarks and service marks of other companies that are the
property of their respective owners.
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SOME INFORMATION FROM THIS PROSPECTUS. IT IS NOT
COMPLETE AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU.
YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE RISK FACTORS AND
THE FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS, BEFORE MAKING AN
INVESTMENT DECISION.
THE COMPANY
bright-technologies.com, inc. designs, develops, manufactures and markets
advanced wireless telephones and products for use in traditional wireline
telephones. Our objective is to become a leading provider of prepaid, wireless
telephones. Our wireless products include:
- prepaid wireless local loop telephones intended for residential and
business use, and
- wireless payphones intended for public use.
Our wireless telephones can accept a variety of prepayment methods,
including prepaid debit cards and credit cards. The telephones also can
self-diagnose and report malfunctions to the telecommunications service
provider's host computer. We are developing software that will enable the
service provider to monitor and manage its telephones from a remote location
through the internet or a direct connection.
We developed and intend to market these products for use principally in
areas of the world that lack the capital and infrastructure to fully support
traditional wireline telecommunications. In emerging markets, wireless systems
are often preferable to traditional wireline systems because they may be
deployed more rapidly and at lower cost. Prepaid telephone services are
beneficial in many of these markets, where credit evaluation mechanisms, banking
systems and postal systems are inadequate to provide reliable means for billing,
payment and extension of credit. We expect our key markets to include Mexico,
Central and South America, the Caribbean, Eastern Europe, Africa and Asia. We
recently signed letters of intent to form joint ventures to deploy 24,000 of our
prepaid wireless payphones in the Philippines, Ukraine and Slovakia.
Our wireline products include the Bright Star coinline board, a motherboard
that we presently market in the United States. Telephones using this product
share many features of our wireless products, including the ability to change
rates, update active area codes, download operating records and remotely
diagnose and repair common malfunctions or direct a technician to the site.
We are a Delaware corporation formed in April 1999 to acquire Bright
Technologies, Inc., a Georgia corporation formed in 1994 by our principal
stockholder. References to us in this prospectus concerning matters prior to
April 1999 refer to Bright Technologies, Inc., which is now our wholly-owned
subsidiary. Our principal address is 7325 Oswego Road, Liverpool, New York
13090, and our telephone number is (315) 652-0006.
1
<PAGE>
THE OFFERING
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<CAPTION>
Common Stock Offered................ 1,000,000 shares (minimum)
1,800,000 shares (maximum)
<S> <C>
Offering Price...................... $5.00 per share
Common Stock Outstanding Prior to
the Offering...................... 6,000,000 shares
Common Stock to be Outstanding After
the Offering...................... 7,000,000 shares (minimum)
7,800,000 shares (maximum)
Use of Proceeds (see page 11)....... We intend to use the net proceeds from this offering
for repayment of certain outstanding obligations,
including (if the maximum number of shares offered by
this prospectus are sold) certain related party
obligations; sales and marketing; research and
development; working capital and general corporate
purposes.
Risk Factors (see page 4)........... This investment involves a high degree of risk. You
should purchase shares only if you can afford a
complete loss of your investment.
Proposed NASDAQ SmallCap Market or
OTC Bulletin Board Symbols........ "BRTK;" "WILL;" "WPCS;" "TDMA;" "PPWT;" "WFON;"
"PPWP"
</TABLE>
SUMMARY FINANCIAL DATA
You should read the following summary financial data together with the
section of this prospectus entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the financial statements of
Bright Technologies, Inc. and notes thereto included elsewhere in this
prospectus. The "as adjusted" balance sheet data reflects the application of
proceeds from the sale of a minimum of 1,000,000 shares of common stock and a
maximum of 1,800,000 shares of common stock offered by this prospectus at an
offering price of $5.00 per share, after deducting estimated underwriting
commissions equal to 10% of the offering proceeds, the underwriter's
non-accountable expense allowance equal to 1% of the offering proceeds, and
estimated offering expenses of $275,000. See "Use of Proceeds" and
"Capitalization."
Net loss per share in the following table is based upon weighted average
common shares outstanding of 6,000,000, and has been restated to reflect the
initial issuance of common stock of bright-technologies.com, inc. on April 23,
1999 in exchange for all outstanding shares of Bright Technologies, Inc.
2
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS FOR THE PERIOD
YEAR ENDED ENDED FROM INCEPTION
DECEMBER 31, MARCH 31, (DECEMBER 29, 1994)
---------------------------- ------------------------ THROUGH
1997 1998 1998 1999 MARCH 31, 1999
------------- ------------- ----------- ----------- -------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Statement Of Operations Data:
Total revenue....................... $ 114,040 $ 87,304 $ -- $ 30,625 $ 1,023,323
Total expenses...................... 1,522,183 1,196,653 292,247 186,034 8,522,336
------------- ------------- ----------- ----------- -------------------
Net loss............................ $ (1,408,143) $ (1,109,349) $ (292,247) $ (155,409) $ (7,499,013)
------------- ------------- ----------- ----------- -------------------
------------- ------------- ----------- ----------- -------------------
Net loss per share.................. $ (0.23) $ (0.18) $ (0.05) $ (0.03)
------------- ------------- ----------- -----------
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</TABLE>
<TABLE>
<CAPTION>
AS ADJUSTED
--------------------------
<S> <C> <C> <C>
MINIMUM MAXIMUM
OFFERING OFFERING
------------ ------------
ACTUAL
MARCH 31, 1999
--------------
(UNAUDITED)
Balance Sheet Data:
Total Assets......................................................... $ 495,458 $ 3,224,372 $ 6,284,372
Total Liabilities.................................................... $ 3,100,506 $ 1,654,420 $ 1,154,420
Total Stockholders' (Deficiency) Equity.............................. $ (2,605,048) $ 1,569,952 $ 5,129,952
</TABLE>
3
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND ALL OTHER
INFORMATION IN THIS PROSPECTUS BEFORE PURCHASING OUR COMMON STOCK. THIS
INVESTMENT INVOLVES A HIGH DEGREE OF RISK. ANY OF THE FOLLOWING RISKS COULD
MATERIALLY ADVERSELY EFFECT OUR BUSINESS, OPERATING RESULTS OR FINANCIAL
CONDITION AND COULD RESULT IN A COMPLETE LOSS OF YOUR INVESTMENT.
WE ARE A DEVELOPMENT STAGE COMPANY WITH A LIMITED OPERATING HISTORY.
bright-technologies.com, inc. is a newly formed company. It was formed in
April 1999 to acquire Bright Technologies, Inc., which commenced operations in
December 1994 and is currently in the development stage. Since December 1994, we
have been engaged principally in acquiring and completing the development of our
technology, testing our technology and developing a plan of operation. We have a
limited operating history that you can use to evaluate our prospects. Our
prospects must, therefore, be considered in light of the risks, uncertainties,
expenses, delays, and difficulties usually associated with a new business.
BECAUSE WE HAVE A HISTORY OF LOSSES SINCE OUR INCEPTION AND EXPECT TO INCUR
FURTHER LOSSES, WE MAY BE UNABLE TO CONTINUE AS A GOING CONCERN.
Since inception, we have incurred significant losses from operations, and
accumulated a deficit of $7,499,013 through March 31, 1999. We expect to
continue to incur substantial losses in future periods. Our independent
accountants have included an explanatory paragraph in their report on our
financial statements stating that our financial statements have been prepared
assuming that we will continue as a going concern, but that substantial doubt
exists as to our ability to do so because of these recurring losses from
operations and our working capital deficiency.
WE WILL NEED ADDITIONAL CAPITAL FINANCING IN THE FUTURE.
We anticipate that the net proceeds of the minimum number of shares offered
in this offering, together with our projected cash flow from operations, will be
sufficient to fund our operations and capital requirements for the twelve months
immediately following this offering. Thereafter, implementation of our business
plan will require funds not currently available to us. We may be required to
seek additional financing sooner than currently anticipated, however, to fund
more rapid expansion, respond to competitive pressures, develop new or enhanced
products, or take advantage of unanticipated acquisition opportunities. We
cannot be certain we will be able to find such additional financing on
reasonable terms, or at all. If we are unable to obtain additional financing
when needed, we may not be able to expand, respond to competitive pressures,
develop or enhance our products or take advantage of unanticipated acquisition
opportunities. We could also be forced to curtail our existing activities or
cease operations.
WE NEED THE PROCEEDS OF THIS OFFERING TO SATISFY CERTAIN PREEXISTING
OBLIGATIONS.
At December 31, 1998, we were in default on the payment of a note to
Tee-Comm Electronics, Inc. in the approximate amount of $1,346,000 in principal
and interest. The note is secured by a lien on substantially all of our assets.
On January 14, 1999, we entered into an agreement with Ernst & Young Inc. in its
capacity as court-appointed receiver and manager for Tee-Comm. We granted the
Tee-Comm receiver a first priority security interest in our technology and a
three year option to acquire 5% of our common stock on a fully diluted basis on
terms at least as favorable as the terms we make available to any other party,
including any insider, underwriter, agent or advisor. We intend to use
approximately $1,382,000 of the net proceeds of this offering to repay the note
to the Tee-Comm receiver, upon which the receiver will release its lien on our
technology and other assets. In addition, upon consummation of this offering, a
promissory note in the amount of $63,937 in favor of Triangle Plastics, Inc.
will become
4
<PAGE>
due and payable. We intend to repay this note from the proceeds of this
offering. An aggregate of $1,446,086 in proceeds from this offering will
therefore not be available to us to apply to working capital needs or future
growth.
In addition, if the maximum offering amount is achieved, we intend to use
$500,000 of the proceeds to repay part of a $665,000 loan from our principal
stockholder.
OUR SUCCESS DEPENDS ON MARKET ACCEPTANCE OF OUR PRODUCTS THAT WE HAVE NOT AS YET
OBTAINED.
We began marketing our wireless products in 1998 and to date we have made
few sales. We have derived the majority of our revenues from two or three
customers and from sales of products other than our wireless local loop and
wireless payphones. Except for our letters of intent regarding deployment of our
products in the Philippines, Ukraine and Slovakia, which may or may not result
in binding contracts for the purchase, use or distribution of our products, we
have not obtained any commitments from customers to purchase, use or distribute
our core products. While we are currently in negotiations with several entities
in Central and South America, we cannot assure you that any of these
negotiations will result in binding commitments or sales. We cannot be certain
we will be successful in our targeted markets.
WE ARE SIGNIFICANTLY DEPENDENT ON OUR LICENSING AGREEMENT WITH MOTOROLA.
We have signed a one year, renewable licensing agreement with Motorola
allowing us to make, have made, use and sell technology that contains
transceivers supplied by Motorola. The territory of the licensing agreement is
presently limited to the United States, Canada and Latin America. We will be
unable to sell our products in other markets unless Motorola expands the
territory of the licensing agreement. Management anticipates, but cannot
guarantee, that it will be able to negotiate licensing agreements to use
Motorola transceivers in its products in other markets. Our products work only
with Motorola transceivers and would require significant modifications if we
were unable to use Motorola's transceivers. If Motorola cannot or will not
supply us with transceivers or fails to renew or terminates the licensing
agreement, we would have to spend considerable time and resources to redesign
our products. These increased costs and diversion of resources would adversely
affect our business and could force us to curtail or cease operations.
WE WILL BE SUBJECT TO CERTAIN RISKS OF INTERNATIONAL OPERATIONS.
We intend to conduct a significant part of our business outside the United
States, where we believe there is an opportunity to market and sell our wireless
local loop and prepaid wireless payphones. An investment in our common stock
therefore will be subject to risks generally associated with conducting business
in foreign countries, such as:
- foreign laws and regulations that may be materially different from those
of the United States;
- changes in applicable laws and regulations;
- labor and political unrest;
- foreign currency fluctuation;
- changes in foreign economic and political conditions;
- export and import restrictions;
- tariffs, customs, duties and other trade barriers;
- difficulties in staffing and managing foreign operations;
- longer payment cycles;
5
<PAGE>
- difficulties in collecting accounts receivable and enforcing agreements;
- nationalization or expropriation; and
- repatriation of income or capital.
In addition, in the event of a dispute, we may be subject to the exclusive
jurisdiction of foreign courts and agencies, or may not be successful in
obtaining jurisdiction over foreign persons in state or federal courts in the
United States. We also may be hindered or prevented from enforcing our rights
against foreign governments and their instrumentalities because of the doctrine
of sovereign immunity. In many international markets it may be difficult for us
to establish a strong customer base because of longstanding relationships
between our potential customers and their local providers.
WE WILL NEED NEW STAFF OR OUTSIDE HELP WITH SALES AND MARKETING.
Our current staff has limited sales and marketing experience. We will need
to hire additional staff and may also have to rely on outside sources to perform
marketing functions for us. We have limited experience in international sales,
yet our current business plan depends, in large part, on selling our products
abroad. Our senior management speaks only English. We will need to identify,
attract, hire, train and retain other sales and marketing personnel to be
successful. We cannot assure you that we will be able to successfully identify,
attract, hire and retain additional personnel in a timely and effective manner.
We may not be successful in either hiring employees with domestic or
international sales experience or in conducting international marketing with our
current staff.
WE MAY NOT BE ABLE TO OBTAIN NECESSARY FOREIGN GOVERNMENT APPROVALS.
The construction, operation, sale and interconnection arrangements of
wireless telecommunications systems and the grant, maintenance and renewal of
applicable licenses in each of the countries outside the United States where we
intend to do business are regulated by governmental authorities in such
countries. There is a risk that the government or regulatory body of any given
nation may not approve our products for use or distribution in that nation.
Further, even if such approvals are obtained, changes in the regulatory
environment in these countries could affect our alliances with local providers,
pricing and other material components of our operations.
OUR EXECUTIVE OFFICERS ARE ALSO OFFICERS OR EMPLOYEES OF OTHER COMPANIES.
Joseph C. Passalaqua, our Chief Executive Officer, Chairman of the Board and
principal stockholder, and Carl E.M. Worboys, our Vice President, Secretary and
a director, are officers or employees of other telecommunications companies
owned by Mr. Passalaqua. These companies are Datone Communications, Inc., a pay
phone company; Metrotel, Inc., a national pre-paid calling card and vending
company; and American Telecommunications Enterprises, Inc., a domestic long
distance carrier. Lilly Beter, our Chief Financial Officer and Treasurer and a
director, is the President of Lilly Beter Capital Group, Ltd., a financial
advisory firm. Although Mr. Passalaqua, Mr. Worboys and Ms. Beter will devote
such business time as they deem necessary to the business of the company, they
will continue to be active participants in these other business operations and
will not be devoting their full business time to the company.
WE MAY FACE STRONG COMPETITION AND TECHNOLOGICAL OBSOLESCENCE.
Some of our competitors and potential competitors possess substantially
greater financial, marketing, personnel, and other resources than we have. We
compete with numerous companies with well-established reputations in the
cellular industry, such as Nokia Corporation, Motorola, Inc. and Qualcomm
Incorporated. Although we believe we will be able to compete based on the
special features of our products, our products incorporate new concepts and may
not be successful even if they are
6
<PAGE>
superior to those of our competitors. In addition, certain new companies may be
developing products of which we may be unaware that are functionally similar or
superior to the products we have developed and may render our products obsolete
or less marketable. The market for our products is marked by rapid technological
change, frequent new product introductions and technology enhancements,
uncertain product life cycles, changes in client demands and evolving industry
standards. We cannot be certain that we will successfully develop and market new
products, new product enhancements or new products compliant with present or
emerging telecommunications standards. New products based on new technologies or
new industry standards can render existing products obsolete and unmarketable.
To succeed, we will need to enhance our current products and develop new
products on a timely basis to keep pace with developments related to
telecommunications technology. New products and product enhancements can require
long development and testing periods. Any delays in developing and releasing
enhanced or new products could have a material adverse effect on our business,
operating results and financial condition.
WE MAY BE UNABLE TO ADEQUATELY PROTECT OUR PROPRIETARY RIGHTS OR MAY BE SUED BY
THIRD PARTIES FOR INFRINGEMENT OF THEIR PROPRIETARY RIGHTS.
Our success depends significantly on our ability to protect our proprietary
rights to the technologies used in our products. If we are not adequately
protected, our competitors could use the intellectual property that we have
developed to enhance their products and services, which could harm our business.
Currently, we have been granted two United States ornamental patents on our case
designs. We have patents pending on our core technology in the United States and
several foreign jurisdictions; however, these patents have not been granted and
we cannot assure you that they will be. We rely on patent protection, as well as
a combination of copyright and trademark laws, trade secrets, confidentiality
provisions and other contractual provisions, to protect our proprietary rights,
but these legal means afford only limited protection. Despite any measures taken
to protect our intellectual property, unauthorized parties may attempt to copy
aspects of our products or to obtain and use information that we regard as
proprietary. In addition, the laws of some foreign countries may not protect our
proprietary rights as fully as do the laws of the United States. If we litigated
to enforce our rights, it would be expensive, divert management resources and
may not be adequate to protect our intellectual property rights.
The telecommunications industry is characterized by the existence of a large
number of patents and frequent litigation based on allegations of trade secret,
copyright or patent infringement. We may inadvertently infringe a patent of
which we are unaware. In addition, because patent applications can take many
years to issue, there may be a patent application now pending of which we are
unaware that will cause us to be infringing when it is issued in the future.
Although we are not currently involved in any intellectual property litigation,
we may be a party to litigation in the future to protect our intellectual
property or as a result of our alleged infringement of another's intellectual
property, forcing us to do one or more of the following:
- Cease selling, incorporating or using products or services that
incorporate the challenged intellectual property;
- Obtain from the holder of the infringed intellectual property right a
license to sell or use the relevant technology, which license may not be
available on reasonable terms; or
- Redesign those products or services that incorporate such technology.
A successful claim of infringement against us, and our failure to license
the same or similar technology, would adversely effect our business.
Infringement claims, with or without merit, would be expensive to litigate or
settle, and would divert management resources.
7
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EVEN AFTER THE OFFERING, MANAGEMENT WILL MAINTAIN THE MAJORITY OF VOTES.
After the successful closing of this offering, our directors and executive
officers will beneficially own, in the aggregate, no less than approximately 85%
of the outstanding shares of common stock if the minimum number of shares are
sold in the offering, or no less than approximately 78% of the outstanding
shares of common stock if the maximum number of shares are sold in the offering.
Accordingly, these people, acting together, will possess the majority of the
stockholder votes, and will be in a position to control our affairs. If you
purchase shares in this offering, you will be a minority stockholder and,
although entitled to vote on matters submitted for a vote of the stockholders,
you will not be able to control the outcome of such a vote.
OUR SUCCESS WILL BE DEPENDENT ON MANAGEMENT AND KEY PERSONNEL.
We believe our success will be significantly dependent on the personal
efforts of Mr. Joseph C. Passalaqua with whom we have entered into an employment
agreement. The loss of his services could hurt our business and prospects. Our
success will also be dependent upon our ability to attract and retain qualified
managerial, technical, and marketing personnel with experience in business
activities similar to our own. Competition for qualified personnel is intense
and we cannot be certain that we will be able to hire or to retain additional
personnel.
PROVISIONS OF OUR CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE LAW COULD
DETER TAKEOVER ATTEMPTS.
Our Certificate of Incorporation and Bylaws provide that the Board will be
classified into three classes of directors, with each class serving a staggered
three-year term. This provision could make it more difficult for stockholders to
effect certain corporate actions that might facilitate a proposed acquisition of
our company.
Our Certificate of Incorporation also authorizes our Board of Directors to
issue up to 5,000,000 shares of preferred stock. The Board may establish and
issue preferred stock in one or more series out of these authorized but unissued
shares of preferred stock, without further approval of the stockholders and may
fix the dividend rights and terms, conversion rights, voting rights, redemption
rights and terms, liquidation preferences, and any other rights, preferences,
privileges and restrictions applicable to each new series of preferred stock.
The issuance of a new series of preferred stock could, among other results,
adversely affect the voting power of the holders of common stock, including your
voting power should you choose to invest. Under certain circumstances, the
issuance of preferred stock could make it more difficult for a third party to
gain control of us, prevent or substantially delay such a change of control,
discourage bids for the common stock at a premium, or otherwise adversely affect
the market price of the common stock.
These and other provisions of our Certificate of Incorporation and Bylaws
discussed in this prospectus under the heading "Description of Securities" could
have the effect of delaying or preventing a change of control even where such
change of control would be advantageous to you. We are subject to provisions of
Delaware law that restrict certain business combinations with interested
stockholders, which may have the effect of inhibiting a non-negotiated merger or
other business combination.
IF YOU PURCHASE OUR SHARES, YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION.
If you invest in this offering, you will incur immediate and substantial
dilution of $4.80 per share (96%) if the minimum number of shares offered by
this prospectus is sold, or $4.37 per share (87%), if the maximum number of
shares offered by this prospectus is sold. This dilution represents the
difference between our adjusted net tangible book value per share after this
offering and the initial public offering price of $5.00 per share.
8
<PAGE>
THERE IS NO PRIOR PUBLIC MARKET FOR OUR STOCK.
Prior to this offering, there has been no public market for our securities.
Although we intend to file an application to list our stock on the NASDAQ
SmallCap Market, we will not satisfy the criteria for such listing unless
substantially all of the shares offered by this prospectus are sold. Even if the
maximum number of shares offered is sold, however, there can be no assurance
that our common stock will be approved for listing. Although we anticipate that
upon completion of this offering, our common stock will be eligible for
inclusion on the OTC Bulletin Board, we cannot be certain that the common stock
will be listed on the OTC Bulletin Board. Consequently, we cannot be certain
that a regular trading market for our common stock, other than the pink sheets,
will develop after this offering is completed. If a trading market does in fact
develop for our common stock, we cannot be certain that it will be sustained. If
for any reason our common stock is not listed on the NASDAQ SmallCap Market or
the OTC Bulletin Board, or a public trading market does not develop, you may
have difficulty in selling your securities should you desire to do so.
OUR DETERMINATION OF THE PUBLIC OFFERING PRICE WAS NOT BASED ON A MARKET PRICE.
Because there has been no prior public trading market for our common stock,
the initial public offering price of the common stock has been determined by
negotiations between ourselves and the underwriter and is not necessarily
related to our asset value, net worth or other criteria of value. The factors
considered in determining the offering price include an evaluation by management
of the history of and prospects for the industry in which we compete and our
earnings prospects. Factors such as our financial results, announcements of
developments related to our business, and the introduction of products and
product enhancements by ourselves or our competitors may have a significant
impact on the market price of our securities.
THE UNDERWRITER HAS LIMITED EXPERIENCE UNDERWRITING INITIAL PUBLIC OFFERINGS.
Our underwriter has only underwritten a few initial public offerings of
securities. The underwriter's lack of experience may have a negative impact on
the liquidity and price of our securities following the completion of this
offering.
THIS OFFERING IS REGISTERED IN A LIMITED NUMBER OF STATES.
The underwriter will register this offering in a limited number of states,
which will make it difficult or impossible for you to resell our common stock in
certain states in which the offering is not registered.
WE MAY OFFER ADDITIONAL EQUITY SECURITIES OR INCUR SUBSTANTIAL INDEBTEDNESS TO
FINANCE FUTURE ACTIVITIES.
To the extent we finance our future operations through additional equity
securities, any such issuance may involve substantial dilution to our
then-existing stockholders. To the extent we incur indebtedness or issue debt
securities, we will be subject to all of the risks associated with incurring
substantial indebtedness, including the risk that interest rates may fluctuate
and cash flow may be insufficient to pay principal and interest on any such
indebtedness. We hope to raise up to $35 million in proceeds from a public
offering of debt securities, which we intend to initiate as soon as practicable
following the consummation of this offering.
WE MUST DEPEND ON OUTSIDE MANUFACTURING SOURCES.
We will contract with others to manufacture our telephone units and other
products. This may lead to delayed or reduced product shipments and may
adversely effect our customer relationships. In particular, in instances where a
nation imposes high import tariffs, we intend to have the units
9
<PAGE>
manufactured within the nation's borders, which could expose us to a high risk
of quality failures and untimely delivery resulting in a high cost of
manufacture for us.
OUR OPERATING RESULTS MAY FLUCTUATE AS A RESULT OF OUR INDETERMINATE SALES
CYCLE.
Our sales cycle is expected to commence at the time a wireless provider
demonstrates an interest in purchasing wireless local loop and/or wireless
payphones from us and to end upon the installation of the equipment for the
provider. The time required will therefore vary by customer and could extend for
periods up to three to six months or more, depending upon, among other things,
the time required by the purchaser to complete a pilot test of our products, to
make a determination regarding an acquisition thereof and to negotiate payment
terms with us. As a result of this fluctuation in the length of our sales cycle,
our operating results could vary from period to period.
IF WE BECOME SUBJECT TO SEC REGULATIONS RELATING TO LOW-PRICED STOCKS, THE
MARKET FOR OUR COMMON STOCK COULD BE ADVERSELY EFFECTED.
The Securities and Exchange Commission has adopted regulations concerning
low-priced (or "penny") stocks. The regulations generally define "penny stock"
to be any equity security that has a market price (as defined) less than $5.00
per share or an exercise price less than $5.00 per share, subject to certain
exceptions. If our shares become offered at a market price less than $5.00 per
share, and do not qualify for any exemption from the penny stock regulations,
our shares may become subject to these additional penny stock regulations. These
regulations impose additional sales practice requirements on broker-dealers who
sell penny stock to persons other than established customers and accredited
investors.
The additional burdens imposed upon broker-dealers by these penny stock
requirements may discourage broker-dealers from effecting transactions in the
common stock, which could severely limit the market liquidity of our common
stock and your ability as purchasers to sell our common stock in the secondary
market. In addition, it is unlikely that any bank or financial institution will
accept such penny stock as collateral, which could have an adverse effect in
developing or sustaining any market for our common stock.
WE HAVE NEVER PAID DIVIDENDS AND HAVE NO CURRENT PLANS TO PAY DIVIDENDS.
We have never paid any cash or other dividends on our common stock. For the
foreseeable future, the Board intends to retain future earnings, if any, to
finance our business operations and does not anticipate paying any cash
dividends on the common stock.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. You can identify these statements by the use of forward-looking
words such as "may," "will," "expect," "anticipate," "estimate," "continue," or
other similar words. You should read statements that contain these words
carefully because they discuss our future expectations, contain projections of
our future results of operations or financial condition or state other
"forward-looking" information. We believe that it is important to communicate
our future expectations to our investors. However, there may be events in the
future that we are not able to accurately predict or control. The factors listed
above in the section captioned "Risk Factors," as well as any cautionary
language in this prospectus, provide examples of risks, uncertainties and events
that may cause our actual results to differ materially from the expectations we
describe in our forward-looking statements. Before you invest in our common
stock, you should be aware that the occurrence of the events described in these
risk factors and elsewhere in this prospectus could have a material adverse
effect on our business, operating results and financial condition.
10
<PAGE>
USE OF PROCEEDS
We estimate that our net proceeds from the sale of the common stock will be
approximately $4,175,000 if the minimum number of shares offered (1,000,000)
(the "Minimum Offering") is sold and $7,735,000 if the maximum number of shares
offered (1,800,000) (the "Maximum Offering") is sold, after deducting estimated
offering expenses of $275,000, underwriting commissions equal to 10% of the
offering proceeds and the underwriter's non-accountable expense allowance equal
to 1% of the offering proceeds. The primary purposes of this offering are as
follows:
- to repay certain outstanding indebtedness, including, if the Maximum
Offering is sold, certain related party indebtedness;
- to increase our equity capital;
- to create a public market for our common stock; and
- to facilitate our future access to public capital markets.
We intend to use the net proceeds from this offering as follows:
<TABLE>
<CAPTION>
APPLICATION OF APPLICATION OF
NET PROCEEDS FROM NET PROCEEDS FROM
MINIMUM OFFERING MAXIMUM OFFERING
------------------------- -------------------------
<S> <C> <C> <C> <C>
AMOUNT PERCENT AMOUNT PERCENT
------------ ----------- ------------ -----------
Repayment of certain indebtedness, including, if the Maximum
Offering is sold, certain related party indebtedness............. $ 1,446,086 34.6% $ 1,946,086 25.2%
Sales and marketing................................................ 600,000 14.4 1,200,000 15.5
Research and development........................................... 400,000 9.6 700,000 9.0
Working capital and general corporate purposes..................... 1,728,914 41.4 3,888,914 50.3
------------ ----- ------------ -----
Total.............................................................. $ 4,175,000 100.0% $ 7,735,000 100.0%
------------ ----- ------------ -----
------------ ----- ------------ -----
</TABLE>
If the Minimum Offering is sold, we intend to retire our indebtedness to
Ernst & Young Inc. in its capacity as court-appointed receiver and manager for
Tee-Comm Electronics, Inc. (the "Tee-Comm Receiver"). We also intend to repay a
promissory note issued to Triangle Plastics, Inc. Our current payments of
principal and interest on the Tee-Comm note went into arrears in April, 1997,
and we are incurring additional interest as well as late charges of 2% of the
balance due monthly. The Triangle Plastics promissory note matures upon
consummation of this offering and bears interest at 2% above the prime rate as
published each month in the WALL STREET JOURNAL per year. At March 31, 1999, the
amount due to the Tee-Comm Receiver was $1,382,149 and the amount outstanding
under the Triangle Plastics promissory note was $63,937.
If the Maximum Offering is sold, we will also repay $500,000 of principal on
a $664,987 promissory note issued to Joseph C. Passalaqua on February 1, 1999.
This note memorializes advances by Mr. Passalaqua to us used for working capital
during 1998, bears interest at 10% per year, and is due and payable on demand.
Mr. Passalaqua is our Chief Executive Officer, Chairman of the Board and
principal stockholder.
The table above represents our best estimate of the allocation of the net
proceeds of the offering, based upon the current status of our operations, our
current plans and current economic conditions. The amount and timing of
expenditures will vary depending upon a number of factors, including progress of
our operations, technical advances, terms of collaborative arrangements and
changes in competitive conditions. We reserve the right to change the amount of
the net proceeds that will be used for any purpose to the extent that management
determines that a change is advisable. Accordingly, management will have broad
discretion regarding the application of the net proceeds of the offering.
Pending application of the net proceeds of the offering, we intend to invest
the net proceeds in short-term, interest bearing investments, such as bank
certificates of deposit, United States government obligations and money market
instruments.
11
<PAGE>
DILUTION
Our deficit in net tangible book value at March 31, 1999 was approximately
$2,803,000, or $0.47 per share of common stock. Deficit in net tangible book
value per share represents the amount of our total tangible assets less total
liabilities, divided by the total number of shares of common stock outstanding.
Dilution per share represents the difference between the offering price of $5.00
per share and the net tangible book value per share of common stock, as
adjusted, immediately after this offering.
After giving effect to the sale of the Minimum Offering and after deducting
estimated underwriting commissions, the underwriter's non-accountable expense
allowance and estimated offering expenses, our pro forma net tangible book value
at March 31, 1999 would have been $1,372,000, or $0.20 per share. This
represents an immediate increase in pro forma net tangible book value of $0.67
per share to existing stockholders and an immediate dilution of $4.80 per share,
or approximately 96% of the offering price, to investors purchasing shares of
common stock in the Minimum Offering.
After giving effect to the sale of the Maximum Offering and after deducting
estimated underwriting commissions, the underwriter's non-accountable expense
allowance and estimated offering expenses, our pro forma net tangible book value
at March 31, 1999 would have been $4,932,000, or $0.63 per share. This
represents an immediate increase in pro forma net tangible book value of $1.10
per share to existing stockholders and an immediate dilution of $4.37 per share,
or approximately 87% of the offering price, to investors purchasing shares of
common stock in the Maximum Offering.
The following tables illustrate this per share dilution at March 31, 1999:
MINIMUM OFFERING
<TABLE>
<S> <C> <C>
Initial public offering price................................................. $ 5.00
Net tangible book value (deficit) before the Minimum Offering............... $ (.47)
Increase attributable to new investors...................................... .67
---------
Adjusted pro forma net tangible book value after the Minimum Offering......... .20
---------
Dilution per share to new investors........................................... $ 4.80
---------
---------
</TABLE>
MAXIMUM OFFERING
<TABLE>
<S> <C> <C>
Initial public offering price................................................. $ 5.00
Net tangible book value (deficit) before the Maximum Offering............... $ (.47)
Increase attributable to new investors...................................... 1.10
---------
Adjusted pro forma net tangible book value per share after the Maximum
Offering.................................................................... .63
---------
Dilution per share to new investors........................................... $ 4.37
---------
---------
</TABLE>
The following tables summarize on a pro forma basis at March 31, 1999, the
number of shares of common stock purchased from us, the total consideration paid
to us and the average price per share paid to us by existing stockholders and by
investors purchasing shares of common stock in the Minimum Offering and the
Maximum Offering, before deducting estimated underwriting commissions, the
underwriter's non-accountable expense allowance and estimated offering expenses:
12
<PAGE>
MINIMUM OFFERING
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------------- ------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ----------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
Existing stockholders................................ 6,000,000 85.7% $ 4,893,965 49.5% $ 0.82
New investors........................................ 1,000,000 14.3 5,000,000 50.5 5.00
---------- ----- ------------ -----
Total................................................ 7,000,000 100.0% $ 9,893,965 100.0%
---------- ----- ------------ -----
---------- ----- ------------ -----
</TABLE>
MAXIMUM OFFERING
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------------- -------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Existing stockholders............................... 6,000,000 76.9% $ 4,893,965 35.2% $ 0.82
New investors....................................... 1,800,000 23.1 9,000,000 64.8 5.00
---------- ----- ------------- -----
Total............................................... 7,800,000 100.0% $ 13,893,965 100.0%
---------- ----- ------------- -----
---------- ----- ------------- -----
</TABLE>
CAPITALIZATION
The following table sets forth our capitalization at March 31, 1999 and as
adjusted to give effect to the sale of the Minimum Offering and the Maximum
Offering, after deducting estimated underwriting commissions, the underwriter's
non-accountable expense allowance, and estimated offering expenses, and the
application of the estimated net proceeds of the offering to repay certain
outstanding indebtedness as described under "Use of Proceeds." Shares of common
stock outstanding have been restated to reflect the initial issuance of the
common stock of bright-technologies.com, inc. on April 23, 1999 in exchange for
all outstanding shares of Bright Technologies, Inc. Shares of common stock
outstanding exclude shares of common stock issuable upon the exercise of an
option held by the Tee-Comm Receiver to purchase up to five percent of the
common stock on a fully diluted basis on terms at least as favorable as the
terms we make available to any other party, including any insider, underwriter,
agent or advisor. This table should be read in conjunction with the financial
statements of Bright Technologies, Inc. and notes thereto appearing elsewhere in
this prospectus.
<TABLE>
<CAPTION>
AS ADJUSTED
----------------------------
MINIMUM MAXIMUM
OFFERING OFFERING
ACTUAL ------------- -------------
MARCH 31, 1999
--------------
(UNAUDITED)
<S> <C> <C> <C>
Notes payable and related unpaid interest.......................... $ 1,446,086 $ -- $ --
-------------- ------------- -------------
Stockholder loans payable.......................................... 690,151 690,151 190,151
-------------- ------------- -------------
Stockholders' Equity (Deficit)
Preferred stock, $.01 par value (no shares authorized, issued or
outstanding at March 31, 1999)................................. -- -- --
Common stock, $.01 par value (30,000,000 shares authorized,
6,000,000 shares issued and outstanding at March 31, 1999;
7,000,000 shares issued and outstanding as adjusted for the
Minimum Offering; 7,800,000 shares issued and outstanding as
adjusted for the Maximum Offering)............................. 6,000 7,000 7,800
Additional paid-in capital....................................... 4,887,965 9,061,965 12,621,165
Accumulated deficit during the development stage................. (7,499,013) (7,499,013) (7,499,013)
-------------- ------------- -------------
Total stockholders' equity (deficit)............................... (2,605,048) 1,569,952 5,129,952
-------------- ------------- -------------
Total capitalization............................................... $ (468,811) $ 2,260,103 $ 5,320,103
-------------- ------------- -------------
-------------- ------------- -------------
</TABLE>
13
<PAGE>
SELECTED FINANCIAL DATA
The following table presents selected financial data for Bright
Technologies, Inc. The historical selected financial data at December 31, 1998
and March 31, 1999, for the years ended December 31, 1997 and 1998, for the
three months ended March 31, 1998 and 1999, and for the period from inception
(December 29, 1994) to March 31, 1999, are derived from and should be read in
conjunction with the financial statements of Bright Technologies, Inc. included
elsewhere in this prospectus. The selected financial data for the three months
ended March 31, 1998 and 1999, and for the period from inception (December 29,
1994) to March 31, 1999 are unaudited but, in the opinion of our management,
reflect all adjustments that are necessary for a fair presentation of the
results of operations for the interim period presented. Results of operations
for the three months ended March 31, 1998 and 1999 are not necessarily
indicative of the results for the entire year. Our independent accountants have
included an explanatory paragraph in their report on the audited financial
statements stating that our financial statements have been prepared assuming
that we will continue as a going concern and that we have suffered recurring
losses from operations and have a working capital deficiency which causes
substantial doubt about our ability to do so. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
The information presented below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements of Bright Technologies, Inc. and accompanying notes
appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED THREE MONTHS ENDED FROM INCEPTION
DECEMBER 31, MARCH 31, (DECEMBER 29, 1994)
---------------------------- ------------------------ THROUGH
1997 1998 1998 1999 MARCH 31, 1999
------------- ------------- ----------- ----------- -------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Statement Of Operations Data:
Product Sales....................... $ 114,040 $ 87,304 $ -- $ 30,625 $ 1,023,323
------------- ------------- ----------- ----------- -------------------
Costs and Expenses:
Costs of product sales............ 340,382 103,812 -- 15,625 1,192,958
Research and development.......... 374,780 271,518 80,758 34,245 2,601,495
General and administrative........ 678,803 578,094 179,751 79,906 3,264,519
Provision for facility closing.... -- 81,928 -- -- 81,928
Loss on acquired technology and
assets.......................... -- -- -- -- 862,368
Interest expense.................. 128,218 161,301 31,738 56,258 519,068
------------- ------------- ----------- ----------- -------------------
Total costs and expenses............ 1,522,183 1,196,653 292,247 186,034 8,522,336
------------- ------------- ----------- ----------- -------------------
Net loss............................ $ (1,408,143) $ (1,109,349) $ (292,247) $ (155,409) $ (7,499,013)
------------- ------------- ----------- ----------- -------------------
------------- ------------- ----------- ----------- -------------------
Net loss per share(1)............... $ (0.23) $ (0.18) $ (0.05) $ (0.03)
------------- ------------- ----------- -----------
------------- ------------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------- MARCH 31, 1999
--------------
(UNAUDITED)
<S> <C> <C>
Balance Sheet Data:
Total Assets.................................................................. $ 460,409 $ 495,458
Total Liabilities............................................................. $ 2,910,048 $ 3,100,506
Total Stockholders' (Deficiency) Equity....................................... $ (2,449,639) $ (2,605,048)
</TABLE>
- ------------------------
(1) Based upon weighted average common shares outstanding of 6,000,000. Restated
to reflect the initial issuance of common stock of bright-technologies.com,
inc. on April 23, 1999 in exchange for all outstanding shares of Bright
Technologies, Inc.
14
<PAGE>
DIVIDEND POLICY
We have not declared or paid any cash dividends on our capital stock and do
not anticipate paying any cash dividends on our capital stock in the foreseeable
future. Payment of dividends on the common stock is within the discretion of our
Board of Directors. The Board currently intends to retain future earnings, if
any, to finance our business operations and fund the development and growth of
our business. The declaration of dividends in the future will depend upon our
earnings, capital requirements, financial condition, and other factors deemed
relevant by the Board.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results
of operations should be read in conjunction with our financial statements and
the notes to the financial statements and the other financial information
included elsewhere in this registration statement. In addition to historical
information, this Management's Discussion and Analysis of Financial Condition
and Results of Operations and other parts of this prospectus contain
forward-looking information that involves risks and uncertainties. Our actual
results could differ materially from those anticipated by forward-looking
information as a result of certain factors, including but not limited to those
set forth under "Risk Factors" and elsewhere in this prospectus.
PLAN OF OPERATION
bright-technologies.com, inc. was organized in 1999 to acquire Bright
Technologies, Inc., which was organized and commenced operations in December
1994. References to us concerning matters prior to April 1999 refer to Bright
Technologies, Inc., which is now our wholly-owned subsidiary. Both of these
companies are sometimes referred to as "the Company" in the following
discussion. We are a development-stage telecommunications company formed to
develop and commercialize fixed wireless and wireline telephones and components,
including related management software. Until recently, our efforts have been
principally devoted to research and development activities and organizational
efforts, including acquiring certain in-process research and development,
recruiting research and management personnel and raising capital.
Our management believes that our wireless telephone products are presently
ready for commercialization and marketing. To that end, we have decided to
devote our business activities and resources principally to the marketing and
sale of our wireless telephone products. We have initiated a marketing and sales
program for our wireless products and have held discussions with a number of
potential users of our products, with a view towards execution of licensing
and/or joint venture marketing and sales agreements. Our initial marketing
efforts include countries in Latin America, Eastern Europe, Africa and the
Pacific Rim, which lack the wireline infrastructure to provide sufficient
telephone service to their populations.
On May 10, 1999, we signed a letter of intent regarding the formation of a
joint venture to deploy and operate 10,000 of our wireless pay telephones in the
Philippines over a five-year period. On May 12, 1999, we signed a letter of
intent regarding the formation of a joint venture to deploy and operate 4,000 of
our wireless pay telephones in Slovakia over a five-year period. On May 13,
1999, we signed a letter of intent regarding the formation of a joint venture to
deploy and operate 10,000 of our wireless pay telephones in Ukraine over a
five-year period. Each of these letters of intent requires the completion of a
definitive joint venture agreement, which will be subject to numerous
conditions, including the receipt of any governmental or third party approvals
that may be required in order for our products to be deployed in the target
market. Such joint ventures, if concluded, are not likely to commence until at
least the first quarter of the year 2000.
15
<PAGE>
We have not been profitable since inception and expect to incur substantial
operating losses over the next twelve months. For the period from inception
(December 29, 1994) to March 31, 1999, we incurred a cumulative net loss of
approximately $7,499,000 and expect that we will generate losses in the future.
Our plan of operation for the twelve months following the completion of this
offering will consist of activities aimed at:
- Negotiating and signing definitive joint venture agreements for the
deployment over the next five years of 10,000 of our prepaid wireless pay
telephones in the Philippines, 4,000 of our prepaid wireless pay
telephones in Slovakia and 10,000 of our prepaid wireless pay telephones
in Ukraine.
- Establishing strategic partnerships for the marketing, sales,
manufacturing and operation of its prepaid wireless pay telephones in
Latin America and Eastern Europe. To date, we have initiated discussions
with various telecommunication providers in Guatemala, El Salvador,
Honduras, Bolivia, Colombia and Paraguay.
- Completing the development of our internet management software for our
wireless telephone products.
- Designing and tooling a case for our new prepaid wireless local loop
telephones for use by residential and small business customers.
- Designing a case for the new Chameleon pay telephone, a lightweight
wireless multi-payment pay telephone for use in secured, high traffic
locations such as airports, bus terminals and train stations.
- Recruiting of management personnel to oversee and establish joint
ventures.
RESULTS OF OPERATIONS
GENERAL. In light of our limited operating history and insignificant total
net revenues to date, we believe that period-to-period comparisons of our
revenues and operating results, including our gross profit and operating
expenses as a percentage of total net revenues, are not necessarily meaningful
and should not be relied upon as indications of future performance.
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997
NET REVENUES. Our net revenues for the years ended December 31, 1998 and
1997 were $87,000 and $114,000, respectively. The net revenues were the result
of sales of our wireline telephone products. During 1998, $24,500 of such net
revenues were derived from a company controlled by our principal stockholder.
COST OF PRODUCT SALES. Cost of product sales consists primarily of the cost
of materials, purchased component parts, labor and an inventory valuation
allowance. Cost of product sales decreased from $340,000 for the year ended
December 31, 1997 to $114,000 for the year ended December 31, 1998. This
decrease in cost of product sales was principally the result of an inventory
writedown of $110,000 in the 1997 cost of product sales.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
consist primarily of expenditures related to technology and software development
expenses, reduced by software development costs capitalized during the year.
Research and development expenses decreased to $272,000 for the year ended
December 31, 1998 from $375,000 for the year ended December 31, 1997. This
decrease was principally attributable to the capitalization of software
development costs totalling $122,000 during the year ended December 31, 1998.
16
<PAGE>
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
consist primarily of salaries, taxes and benefits and related costs for general
corporate functions, including accounting, facilities, legal, depreciation,
amortization and an accrual for executive compensation. General and
administrative expenses decreased from $679,000 for the year ended December 31,
1997 to $578,000 for the year ended December 31, 1998. This decrease was
primarily attributable to the closing of a facility in Georgia during 1998. We
expect that we will incur additional general and administrative expenses as
we continue to hire personnel and incur expenses related to the growth of our
business and our operation as a public company.
INTEREST EXPENSE. Interest expense increased from $128,000 for the year
ended December 31, 1997 to $161,000 for the year ended December 31, 1998 as a
result of increased debt due to our principal stockholder and the conversion of
a vendor's trade debt to a promissory note of $64,000.
NET LOSS. For the year ended December 31, 1998, our net loss was
$1,109,000, or $0.18 per share of common stock, as compared to $1,408,000, or
$0.23 per share of common stock, for the year ended December 31, 1997. The
decrease in our net loss over these periods was attributable principally to
decreased operating expenses.
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1999 TO THREE MONTHS ENDED MARCH 31,
1998
NET REVENUES. Our net revenues for the three months ended March 31, 1999
and 1998 were $31,000 and $-0-, respectively. The net revenues for 1999 were the
result of sales of our wireline telephone products to a company controlled by
our principal stockholder.
COST OF PRODUCT SALES. Cost of product sales for the three months ended
March 31, 1999 and 1998 were $16,000 and $-0-, respectively.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
decreased to $34,000 for the three months ended March 31, 1999 from $81,000 for
the three months ended March 31, 1998. This decrease was attributable to the
completion in mid-1998 of the research and development on certain hardware for
our existing products and the postponement of further costs until the completion
of this offering.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
decreased to $80,000 for the three months ended March 31, 1999 from $180,000 for
the three months ended March 31, 1998. This decrease was primarily attributable
to the closing of a facility in Georgia during 1998. We expect that we will
incur additional general and administrative expenses as we continue to hire
personnel and incur expenses related to the growth of our business and our
operation as a public company.
INTEREST EXPENSE. Interest expense increased from $32,000 for the three
months ended March 31, 1998 to $56,000 for the three months ended March 31,
1999, primarily due to increased debt due to our principal stockholder.
NET LOSS. For the three months ended March 31, 1999, our net loss was
$155,000, or $0.03 per share of common stock, as compared to $292,000, or $0.05
per share of common stock, for the three months ended March 31, 1998. The
decrease in our net loss over these periods was attributable principally to
decreased operating expenses.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, we have financed our operations primarily through capital
contributions of $4,894,000 and loans from our principal stockholder of $690,000
through March 31, 1999.
At December 31, 1998, we had a stockholders' deficiency of $2,450,000, a
working capital deficiency of $2,786,000 and an accumulated deficit since
inception of $7,344,000. At March 31, 1999,
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we had a stockholders' deficiency of $2,605,000, a working capital deficiency of
$2,996,000 and an accumulated deficit since inception of $7,499,000. The report
of our independent certified public accountants contains an explanatory
paragraph that expresses substantial doubt as to our ability to continue as a
going concern absent additional financing.
Net cash used in operating activities decreased to $468,000 for the year
ended December 31, 1998 from $976,000 for the year ended December 31, 1997,
resulting primarily from decreased net losses. Net cash used in operating
activities decreased to $24,000 for the three months ended March 31, 1999 from
$199,000 for the three months ended March 31, 1998, resulting primarily from
decreased net losses.
Cash flows used in investing activities increased from $87,000 for the year
ended December 31, 1997 to $127,000 for the year ended December 31, 1998,
primarily resulting from an increase in software development costs. Cash flows
used in investing activities decreased to zero for the three months ended March
31, 1999 from $48,000 for the three months ended March 31, 1998, primarily as a
result of the reduction of capitalized software costs.
Net cash provided by financing activities decreased to $595,000 for 1998
from $1,062,000 for 1997. The decrease was due primarily to a reduction in
proceeds from stockholder capital contributions. Net cash provided by financing
activities decreased to $24,000 for the three months ended March 31, 1999 from
$253,000 for the three months ended March 31, 1998, due primarily to reduced
proceeds from stockholder loans.
Our capital requirements depend on numerous factors, including market
acceptance of our products, the amount of resources we devote to investments in
our products, the resources we devote to marketing and selling our products and
other factors. It is the intention of management to evaluate possible
investments in joint ventures, new products and technologies, and to expand our
sales and marketing programs. We currently anticipate that the net proceeds of
the Minimum Offering will be sufficient to meet our anticipated needs for
working capital and capital expenditures for the next 12 months. Cash
requirements may vary and are difficult to predict due to the nature of the
developing markets we target.
We are in default under a promissory note totalling approximately
$1,400,000, inclusive of unpaid interest, at March 31, 1999. The note was issued
in connection with the acquisition of certain assets from Tee-Comm Teleservices,
Inc. in February of 1995, and is secured by substantially all of our assets,
including all of our current intellectual property. We intend to use
approximately $1,400,000 of the net proceeds of this offering to repay such note
and related unpaid interest (see Notes 8 and 14 to the accompanying financial
statements). In addition, we are committed to pay an aggregate of $250,000 per
year pursuant to employment agreements with our chief executive officer and vice
president.
If the net proceeds of the offering, together with our internally generated
cash flow, are not sufficient to satisfy our financing needs, we will be
required to seek additional funding through bank borrowings, additional public
or private sales of our securities, including equity securities, or through
other arrangements. We currently have no credit facility or other committed
sources of capital; however, we intend to seek a credit facility after the
completion of the offering. There can be no assurance that additional funds, if
required, will be available to us.
RECENTLY ISSUED ACCOUNTING STANDARDS
Effective January 1, 1998, we adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting comprehensive income,
defined as all changes in equity from non-owner sources. Adoption of SFAS No.
130 did not have a material effect on our financial position or results of
operations.
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Effective January 1, 1998, we adopted the provisions of SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information." SFAS No.
131 establishes standards for the way public enterprises report information
about operating segments in annual financial statements and requires those
enterprises to report selected information about operating segments in interim
financial reports issued to stockholders. Adoption of SFAS No. 131 did not have
a material effect on our financial position or results of operations.
Effective January 1, 1998, we adopted SFAS No. 132, "Employers' Disclosures
About Pensions and Postretirement Benefits," which standardizes the disclosure
requirements for pensions and other postretirement benefits. SFAS No. 132
addresses disclosure only. It does not address liability measurement or expense
recognition. There was no effect on our financial position or results of
operations as a result of adopting SFAS No. 132.
Effective January 1, 1998, we adopted American Institute of Certified Public
Accountants Statement of Position 97-2, "Software Revenue Recognition" ("SOP
97-2"). SOP 97-2 generally requires revenue earned on software arrangements
involving multiple elements, such as software products, upgrades, enhancements,
post-contract customer support, installation and training to be allocated to
each element based on the relative fair values of the elements. The adoption of
SOP 97-2 did not have a material effect on our financial position or results of
operations.
In March 1998, the American Institute of Certified Public Accountants issued
SOP 98-1, "Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use," which revises the accounting for software development costs
and will require the capitalization of certain costs. The adoption of SOP 98-1
did not have an effect on our financial position or results of operations.
IMPACT OF THE YEAR 2000 ISSUE
The "Year 2000 Issue" refers generally to the problems that some software
may have in determining the correct century for the year. For example, software
with date-sensitive functions that is not Year 2000 compliant may not be able to
distinguish whether "00" means 1900 or 2000. This may result in software
failures or the creation of erroneous results.
We have conducted an examination of our products and critical internal
systems and believe that our products and critical internal systems are
currently Year 2000 compliant. We have not incurred significant costs to date
relating to the Year 2000 Issue and do not believe that we will incur
significant costs for these purposes in the foreseeable future. We are presently
assessing the Year 2000 readiness of our significant suppliers to determine the
extent to which we would be vulnerable if those third parties fail to remedy the
Year 2000 Issue. Where we determine that critical suppliers will not be ready
for the Year 2000, we will take appropriate actions.
With respect to our customers, we currently have no material systems that
interface directly with customers and do not currently have any information
concerning the Year 2000 compliance status of our customers. Our customers
beyond December 31, 1999 will likely be new customers due to the developmental
stage of our business. In addition, because we intend to operate in many
different countries, some of which may not be addressing the Year 2000 Issue as
aggressively as the United States, there can be no assurances that future
customers will be Year 2000 compliant. Moreover, because markets for our
products are dependent on third parties, such as wireless local loop network
providers, management cannot fully assess the impact that the Year 2000 Issue
will have on future sales. We have not yet developed a contingency plan to
address situations that may result if we are unable to achieve Year 2000
readiness of our critical operations.
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OUR BUSINESS
OVERVIEW
bright-technologies.com, inc. was organized in 1999 to acquire Bright
Technologies, Inc., a corporation formed in 1994 by our principal stockholder.
References to us in this prospectus concerning matters prior to April 1999 refer
to Bright Technologies, Inc., which is now our wholly-owned subsidiary. We are a
development stage company that designs, develops, manufactures and markets
advanced wireless telephones and products for use in traditional wireline
telephones.
Our wireless products include prepaid wireless local loop telephones
intended for residential and business use, and wireless payphones intended for
public use. Our products are intended to be compatible across the entire
spectrum of current wireless transmission standards. A key feature of our
product is the wide variety of pre-payment methods the phones can be configured
to accept. We are currently developing software to enable the service provider
to monitor and manage its telephones from a remote location through the internet
or a direct connection.
We developed and intend to market these products for use principally in
areas that lack the capital and infrastructure to fully support typical wireline
telecommunications services. In emerging markets, wireless systems are often
preferable to traditional wireline systems because they may be deployed more
rapidly and at lower cost. Prepaid telephone services are beneficial in many of
these markets, where credit evaluation mechanisms, banking systems and postal
systems are inadequate to provide reliable means for billing, payment and
extension of credit. We expect our key markets to include Mexico, Central and
South America, the Caribbean, Eastern Europe, Africa and Asia. We recently
signed letters of intent to form joint ventures to deploy 24,000 of our prepaid
wireless payphones in the Philippines, Ukraine and Slovakia.
Our wireline products include the Bright Star coinline board, a motherboard
that we presently market in the United States.
ACQUISITIONS
In February 1995, we purchased certain assets of Tee-Comm Teleservices,
Inc., a Delaware corporation and a wholly owned subsidiary of Tee-Comm
Electronics, Limited, a Canadian corporation based in Milton, Ontario. These
assets included two generations of wireline phone motherboards that we used in
the development of our Bright Star wireline payphone motherboard.
In February 1996, we purchased certain assets of Telenet Services
International, Inc., a Cayman Islands corporation. The purchased assets included
a line powered board that was under development and the technology that forms
the basis for our Wireless Network Manager software. We finished the development
of this board and named it the Bright Star coinline board.
OUR INDUSTRY
Telecommunications is an essential infrastructure for the economic
development of any country. As a result, the global demand for
telecommunications products is continuously expanding. While telecommunications
infrastructure is a critical element of economic growth, most developing nations
have telephone systems that are inadequate to sustain essential services. In
particular, developing countries lacking wireline infrastructure and capital to
support necessary growth are seeking basic communications solutions that are
cost effective and can be deployed rapidly to support aggressive economic
development programs. In less developed countries, wireless services have become
an alternative to fixed wireless services.
Due to lower costs per access line and faster deployment speeds than
traditional wireline networks, we expect fixed wireless products to play an
increasingly significant role in the deployment of basic
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phone service. Where wireline telephone networks are nonexistent or substandard,
wireless telephone networks can provide primary service for voice, data and
facsimile transmissions. Additionally, where wireline telephone networks already
exist, wireless networks can offer an adjunct, as well as alternative method of
communicating.
We expect the use of fixed wireless telecommunications systems for basic
phone service to expand because these systems are less expensive and can be
installed more easily and quickly. The increased adoption of such systems has
also been fueled by:
- increased acceptance of mobile wireless communication by service providers
and customers;
- accelerating trends toward privatization of telecommunications service in
areas where government sponsored wireline systems have proved costly and
inefficient;
- development, adoption and integration of digital wireless transmission
standards that enhance quality and system features, while lowering
subscriber costs; and
- PCS licensing and legislation in the U.S., which has raised domestic
awareness of the benefits and features of wireless communications.
OUR PRODUCTS
DEVELOPED PRODUCTS--WIRELESS
We have developed a variety of fixed wireless telecommunication products,
all of which incorporate our Tech 3 digital motherboard. This motherboard makes
our phones compatible with a variety of wireless transmission formats and allows
them to accept multiple forms of payment. Using the Tech 3 board, we have
developed an array of fully integrated fixed wireless telecommunications
products for business, residential, and public use that offer most of the
features of traditional wireline phones, while permitting access to wireless
networks.
We have developed three general types of wireless phones: fixed wireless
public payphones, Chameleon wireless payphones, and wireless local loop
telephones.
- Fixed wireless public payphones are programmable stand alone phones in
metal cases intended for placement and use in public places such as
outdoors, airport terminals, shopping centers and train stations. These
phones accept prepaid debit cards.
- Chameleon wireless payphones are programmable, stand alone phones offering
the same features and services of our fixed wireless public payphones. In
addition to prepaid debit cards, Chameleon wireless payphones accept
credit cards as payment. Chameleon wireless payphones are available in
various high-impact plastic casings, provide flexible designs and are
intended for use indoors, in places such as airports and bus stations.
- Wireless local loop phones are programmable, stand alone phones that offer
the features and services of our fixed wireless public payphones and
Chameleon wireless payphones, but are smaller and more efficient. This
makes them suitable for use as the primary telephone service in residences
and businesses. We have reduced equipment costs and believe that our
product is more efficient than existing products because it integrates the
components into a single wireless local loop unit.
All three products can seamlessly send and receive voice and data signals
over mobile wireless networks, which are often more reliable than traditional
wireline networks. Our products use solar and battery power sources, which also
increases reliability. They are designed to support many payment devices,
allowing network operators to offer service to customers who would otherwise
have no means to pay for it. In addition, our elimination of the necessity for
coin payment reduces the maintenance costs associated with coin collection and
with tampering and theft-related vandalism.
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Our Tech 3 motherboard integrates our phones directly with the wireless
transceiver to create a wireless payphone or wireless local loop phone. The Tech
3 motherboard employs a digitally sensitized voice and can be programmed to use
virtually any language. Unlike many competing products, the Tech 3 motherboard
is fully deployable across an entire spectrum of transmission standards. This
will allow us to develop phones that are compatible with most worldwide
standards of wireless communications, including analog, cellular, digital,
enhanced specialized mobile radio (ESMR) and satellite.
The Tech 3 board can support a variety of phone card readers. Currently, a
single board can support up to four types of readers. We have developed our own
multiple format card reader, which provides payment flexibility to the telephone
customer and provides the system operator with the assurance of full payment for
the use of our phones.
We have also developed two types of prepaid phone cards to work with the
Tech 3 motherboard-- a standard 30 mil chip card and a 9 mil magnetic card. For
the 30 mil chip card, the reader and the telephone are low-cost; however, the
card, even in large quantities, is more expensive. In the 9 mil magnetic card,
the encryption can be on a paper card and the cost of cards is inexpensive, but
the reader is more expensive. In either case, because of the higher cost to
refill a card, the consumer must purchase a new card when the old one has no
value remaining.
We are currently developing our Wireless Network Management software, which
is intended to permit our phones to be remotely programmed, monitored and
repaired from a central location without relying on any network operating
center. The software is intended to allow a service provider's host computer to
manage our phones and enable the phones to self-diagnose and report their own
malfunctions to the service provider, either through direct wireless connections
or through the internet.
DEVELOPED PRODUCTS--WIRELINE
We have developed the Bright Star coinline board for use with wireline
payphones. It is designed to detect software configuration problems, memory
buffering problems or other malfunctions, and to attempt to repair them. For
instance, if a coin jam is detected in the hopper of the payphone, the Bright
Star coinline board will notify a central office to send a signal to the phone
as many as twenty times in an attempt to collect that coin. If the coin jam is
not remedied, the board will dial the host computer and inform the host of the
jam. In the event that the host cannot repair the malfunction, it will notify a
maintenance technician. The Bright Star coinline board also makes it unnecessary
for customers to download rates into a phone. The board signals the local
telephone company and receives the proper rates. Our Brightlink software allows
our customers to manage their Bright Star coinline board payphones. This
software allows the customer to see how much cash is in the coin boxes, prints
trouble reports, notifies them of malfunctions and provides other management
functions.
PRODUCTS UNDER DEVELOPMENT
We are developing Wireless Network Manager ("WNM") software for use with all
of our wireless phones. This software will allow the operator to program,
monitor, diagnose, and repair a phone from a host computer. This feature will
reduce the cost of operating the phones. The software will remotely diagnose and
repair memory or configuration problems with a phone, reducing downtime and
increasing revenue. This software will be available to our customers in three
different versions:
- Wireless Network Manager/ST (Standard);
- Wireless Network Manager/IP (Internet Protocol); or
- Wireless Network Manager/XP (Extended Internet Protocol).
The WNM Standard program is intended for the customer whose management
system is physically located within the same dialing area as its phones.
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The WNM Internet Protocol program is intended for the customer whose
management system is physically located outside the local dialing area of its
phones, and even outside the country where the phones are in service. The
customer's remote subsystem will actively dial into a local internet service
provider to exchange data and software with the host computer via an internet
FTP server that is under the customer's control. The remote subsystem, housed in
a reasonably secure and air conditioned room in the country where the phones are
located, will require little, if any, intervention, and will be capable of being
contacted directly via modem if necessary. This program will significantly
reduce the customer's cost of maintaining its telephones, because no domestic or
international long distance calls will be necessary.
The WNM Extended Internet Protocol is intended for the customer with
numerous phones in various countries around the world. It will enable the actual
telephones to contact the host computer directly through the internet using a
proprietary UDP (User Datagram Protocol) transport dialog. The program will
contact the cellular switch in the country in which the customer's phones are
located to access these phones. This program gives the customer direct control
of its phones through the internet.
We understand that we must continually research and develop new products in
the quickly developing world of telecommunications. We expect to complete our
development of an interface for the new transceivers that use the latest TDMA
(Time Division Multiple Access) and CDMA (Code Division Multiple Access) PCS
(Personal Communication Services) protocols shortly. We also intend to begin
developing an interface for GSM (Global Satellite Mobility), a European
standard, and for Motorola's new iridium transceivers.
During fiscal 1998, we incurred approximately $271,518 in research and
development costs toward the design and development of our products, excluding
capitalized software development costs. Research and development costs were
$374,780 in fiscal 1997, excluding capitalized software development costs.
OUR MARKETS AND MARKETING PLAN
Our potential customers include both wireless service providers and global
wireless infrastructure manufacturers. We plan to market our products on a
direct and joint venture basis to local wireless providers in developing
countries. We will market our products directly to infrastructure providers and
to wireless operators. We plan to advertise both in print media and at trade
shows.
We are currently targeting specific countries where unique factors suggest
that telecommunications growth may be faster than expected. This could be due to
the elimination of monopolies and state-run wireless service providers via
privatization, due to political encouragement of telecommunications services via
a reduction in tariffs, or other factors.
In countries where the telecommunications infrastructure is privatizing, we
intend to own and operate public payphone systems, either directly or through
joint ventures. In countries where the telecommunications industry is government
controlled, we intend to enter into joint ventures with the wireless providers
and/or the postal, telephone and telegraph companies that control a country's
wireless industry, to provide public payphone systems. We may also sell or lease
our telephones to third parties.
We also plan to place our products, through leases, licensing agreements
and/or joint ventures, in resort areas where public telephones do not exist. One
of our strategies is to concentrate on those areas that would produce high
income in high traffic locations such as airports, resorts and bus stations.
In addition to the Philippines, Ukraine and Slovakia, our immediate target
areas include Madagascar, Guatemala, Belize, El Salvador, Honduras, Costa Rica
and Mexico. We hope to negotiate contracts and to deploy our wireless local loop
telephones and wireless payphones into these areas beginning in the first half
of the year 2000.
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We intend to perform all of our product sales outside the United States
through a foreign sales corporation to be organized by us as a wholly-owned
subsidiary. A foreign sales corporation is a tax incentive for promoting the
export of U.S.-manufactured products. Under current law, a percentage of income
received by a foreign sales corporation is exempt from U.S. tax.
OUR COMPETITION
Our competitors in the telecommunications industry consist of major domestic
and international telecommunications equipment companies, many of which have
substantially greater financial, technical, marketing, sales, manufacturing,
distribution and other resources than our own, and include well regarded
companies such as Motorola, Ericsson, Nokia and Qualcomm. In addition, we face
competition from smaller companies, both foreign and domestic, which are
currently either manufacturing wireless payphones for deployment abroad or
providing fixed wireless telephone services through networks established by them
in emerging markets outside the United States, similar to our target markets. We
believe we will be able to compete with these companies because:
- Our products are configured to work with most major telecommunications
standards throughout the world while many of our competitors' products are
compatible with only a few such standards.
- Our products provide advantages not otherwise available, most notably the
opportunity to provide prepaid telephone services in developing areas
where the lack of creditworthiness may discourage the provision of such
services.
- Our larger competitors are engaged in broader lines of business, while
developing and marketing our products is our only focus, and thus all our
revenues can and will be used to establish ourselves and increase our
market share in our target countries.
In addition to equipment companies and wireless service providers, we may
compete in our target countries with established telephone companies, some of
which may have long-standing relationships with their customers and
significantly greater name recognition than we will have. We believe, however,
that because most such companies rely on their established hardwire networks,
which are costly to expand, difficult to maintain and have technological
limitations, and because we will compete with those entities on the basis of
quality, price and reliability, we believe we will have a competitive advantage
over those entities.
We also face competition from new technologies that are currently under
development that may result in new competitors entering the market with products
that may make ours obsolete. We cannot entirely predict the competitive impact
of these new technologies and competitors.
MANUFACTURING
We intend to retain ownership of the tooling and plastic moldings of the
telephone units; however, we intend to outsource the manufacture of the units.
We also plan to outsource the building and assembly of our circuit boards. We
project we may have to perform assembly and final testing on the payphones, but
we expect to outsource the assembly and final testing of the wireless local loop
phones.
Our principal supplier of transceivers is Motorola. Our other principal
supplier is Advanced Manufacturing, Tampa, Florida, which manufactures our
wireline phone circuit boards.
INTELLECTUAL PROPERTY
We have applied for three patents. The patent application for our core
technology is pending issue in the United States, Europe, Mexico, Japan, China,
Brazil and Taiwan. We also have obtained design patents in the United States for
the Chameleon phone and the case for the wireless local loop phone.
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Our success and ability to compete is dependent on our ability to develop
and maintain the proprietary aspects of our technology and operate without
infringing on the proprietary rights of others. We rely on a combination of
patent, trademark, trade secrets, and copyright law and contractual restrictions
to protect the proprietary aspects of our technology. These legal protections
afford only limited protection for our technology.
Despite our efforts to protect our proprietary rights, unauthorized parties
may attempt to copy aspects of our products or to obtain and use information
that we regard as proprietary. Litigation may be necessary in the future to
enforce our intellectual property rights, to protect our trade secrets, to
determine the validity and scope of the proprietary rights of others or to
defend against claims of infringement or invalidity. However, the laws of many
countries do not protect our proprietary rights to as great an extent as do the
laws of the United States. Any such resulting litigation could result in
substantial costs and diversion of resources and could have a material adverse
effect on our business, operating results and financial condition. There can be
no assurance that our means of protecting our proprietary rights will be
adequate or that our competitors will not independently develop similar
technology. Any failure by us to meaningfully protect our property could have a
material adverse effect on our business, operating results and financial
conditions.
To date, we have not been notified that our products infringe the
proprietary rights of third parties, but there can be no assurance that third
parties will not claim infringement with respect to our current or future
products. Any such claims, with or without merit, could be time-consuming to
defend, result in costly litigation, divert management's attention and
resources, cause product shipment delays or require us to enter into royalty or
licensing agreements. Such royalty or licensing agreements, if required, may not
be available on terms acceptable to us or at all. A successful claim of product
infringement against us and our failure or inability to license the infringed
technology or develop or license technology with comparable functionality could
have a material adverse effect on our business, financial condition and
operating results. See "Risk Factors--We may be unable to adequately protect our
proprietary rights or may be sued by third parties for infringement of their
proprietary rights."
GOVERNMENT REGULATION
Parts 15 and 68 of rules promulgated by the Federal Communications
Commission (the "FCC") govern the technical requirements that payphone and other
telephone products must meet to qualify for FCC registration and interconnection
to the telephone network in the United States. The Motorola transceivers used in
our products are FCC registered.
Our products may require testing and approval by various regulatory bodies
in the countries in which we will sell our products and in most instances, these
approvals will have to be obtained before the importation of the products by
customers.
The construction, operation, sale and interconnection arrangements of
wireless telecommunications systems and the grant, maintenance and renewal of
applicable licenses in countries outside the United States are generally
extensively regulated by governmental authorities in such countries. Depending
on our manner of doing business in each country, we may become directly subject
to such regulations or local service providers with whom we have relationships
may be so subject. In some cases, the regulatory authorities also operate or
control the operations of the telephone companies that may be our competitors.
The amount or type of such regulation will vary, from country to country and
could include price controls, service requirements and limitations on who may
hold wireless network rights.
OUR FACILITIES
We lease approximately 1,200 square feet of space in Liverpool, New York
where we have our principal executive office. We lease our Liverpool office from
the wife of our Chief Executive Officer, Chairman of the Board and principal
stockholder under a three-year lease which commenced on
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May 1, 1999. We also lease approximately 2,500 square feet of space in Tampa,
Florida that we use for an engineering and sales office under a lease that
expires in October 1999. We believe our properties are generally in good
condition and suitable to carry on our business. We also believe that, if
required, suitable alternative or additional space will be available to us on
commercially reasonable terms.
OUR EMPLOYEES
We currently have three (3) full-time employees. None of our employees are
represented by a labor union. We believe we have a good relationship with our
employees.
LEGAL PROCEEDINGS
Bright Technologies, Inc. is named as a defendant in an action filed by
Tidel Engineering, Inc. in February 1998 in the 191st Judicial District Court of
Dallas County, Texas. Tidel Engineering, Inc. has claimed that Bright
Technologies, Inc. and the other named defendants are liable for debt of First
Express Financial Group, Inc. ("First Express") incurred by First Express in its
purchase of automated teller machines and related products and services from
Tidel Engineering, Inc. The other named defendants include our Chief Executive
Officer, Chairman of the Board and principal stockholder, Joseph C. Passalaqua,
and companies controlled by him. Tidel Engineering, Inc. alleges that it relied
upon the financial stability of the defendants as a whole in its decision to
supply the automated teller machines and related products and services to First
Express and, therefore, the defendants, including Bright Technologies, Inc.,
should be held liable for First Express' debt as if each of them personally had
incurred the debt. Tidel Engineering, Inc. has alleged damages in the amount of
$1.29 million. Bright Technologies, Inc. has denied liability and is vigorously
contesting this matter.
OUR MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table contains information regarding our directors and
executive officers at May 17, 1999.
<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD
- ------------------------------ --- -----------------------------------------------------------------
<S> <C> <C>
Joseph C. Passalaqua.......... 50 Chief Executive Officer and Chairman of the Board
Carl E. M. Worboys............ 55 Vice President, Secretary and Director
Lilly Beter................... 64 Chief Financial Officer and Treasurer and Director
John J. Andre................. 47 Director
Terry L. Colbert.............. 45 Director
Lewis A. McGuinness........... 51 Director
William T. Muth............... 44 Director
Joseph J. Passalaqua.......... 25 Director
</TABLE>
Joseph C. Passalaqua has served as Chief Executive Officer and Chairman of
the Board of bright-technologies.com, inc. since its inception in April 1999.
Mr. Passalaqua has also served as Chief Executive Officer of Bright
Technologies, Inc. since its inception in 1994. Since 1996, Mr. Passalaqua has
served as the President of Metrotel, Inc., a prepaid calling card company. Since
1992, Mr. Passalaqua has also served as Chief Executive Officer and President of
American Telecommunications Enterprises, Inc., a domestic long distance carrier.
Since 1997, Mr. Passalaqua has also served as President of Datone
Communications, Inc., a pay phone company. In 1989, Mr. Passalaqua was one of
the founding members of the North East Dealers of Pay Phones Association. In
1995, the North East Dealers of Pay Phones Association merged with the Empire
State Pay Phone Association. From 1995 through 1997, Mr. Passalaqua served as a
board member of the Empire State Pay Phone Association. Mr. Passalaqua is the
father of Joseph J. Passalaqua.
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Carl E. M. Worboys has served as Vice President, Secretary and a director of
bright-technologies.com, inc. since its inception in April 1999. Mr. Worboys has
also served as in-house counsel of Bright Technologies, Inc. since its inception
in 1995. Since 1995, Mr. Worboys has also served as in-house counsel of American
Telecommunications Enterprises, Inc., a domestic long distance carrier. From
1983 to 1994, Mr. Worboys practiced law with Bogard & Associates, P.C.
Lilly Beter has served as Chief Financial Officer and Treasurer and a
director of bright-technologies.com, inc. since its inception in April 1999. She
is President of Lilly Beter Capital Group, Ltd., a financial advisory firm, with
offices in Washington, D.C., Minneapolis, Minnesota, Century City, California
and Boca Raton, Florida. Since December 1997, Ms. Beter has served as Secretary
and a director of American Card Technology, Inc., a developer of smart card
systems and related software. She is also a director of Zeros USA, Inc., a
licensor and supplier of waste processing equipment. She is a member of the
American League of Lobbyists and the American Arbitration Association.
John J. Andre has served as a director of bright-technologies.com, inc.
since its inception in April 1999. Since 1974, Mr. Andre has served as a credit
analyst/supervisor of customer service, United States sales manager, field
administration manager, account executive and senior account manager of
Motorola, Inc. Mr. Andre has 24 years of experience in the telecommunications
industry.
Joseph J. Passalaqua has served as a director of bright-technologies.com,
inc. since its inception in April 1999. Since 1996, Mr. Passalaqua has served as
a technical support employee for Datone Communications, Inc., a pay phone
company. He also has performed technical support services as an independent
contractor for Metrotel, Inc., a national pre-paid calling card and vending
company, since 1996. In 1995, Mr. Passalaqua was employed as technical support
and clerical staff by American Telecommunications Enterprises, Inc., a domestic
long distance carrier. Mr. Passalaqua was employed by Qual-Ex, a film developing
company, for several months during 1994. Mr. Passalaqua is the son of Joseph C.
Passalaqua.
Lewis A. McGuinness has served as a director of bright-technologies.com,
inc. since its inception in April 1999. Since 1995, Mr. McGuinness has served as
a director of Cointel Leasing, Inc., a pay telephone company.
Terry L. Colbert has served as a director of bright-technologies.com, inc.
since its inception in April 1999. Since 1995, Mr. Colbert has served as
President of Consutel, Inc., a telecommunications consulting firm. From 1987 to
1995, Mr. Colbert served as Chairman of the Board, Chief Executive Officer and
President of Communications Central, Inc., a public pay telephone company. Mr.
Colbert has 20 years of experience in the telecommunications industry.
William T. Muth has served as a director of bright-technologies.com, inc.
since its inception in April 1999. Since 1994, Mr. Muth has served as managing
director of Summit Resources, a mergers and acquisitions and management
consulting firm.
BOARD OF DIRECTORS; ELECTION OF OFFICERS
We have a classified Board of Directors currently comprised of eight
members, with directors serving staggered three-year terms. Commencing with the
2000 Annual Meeting of Stockholders, one class of directors will be elected each
year for a three-year term. Messrs. Colbert, Muth and Joseph J. Passalaqua are
members of Class I, the term of which expires at the 2000 Annual Meeting of
Stockholders; Ms. Beter and Messrs. McGuinness and Worboys are members of Class
II, the term of which expires at the 2001 Annual Meeting of Stockholders; and
Messrs. Andre and Joseph C. Passalaqua are members of Class III, the term of
which expires at the 2002 Annual Meeting of Stockholders.
All directors hold office until their successors are duly elected and
qualified. Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of a majority of the remaining
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directors though less than a quorum, except that any vacancy on the Board of
Directors resulting from the removal of a director by the stockholders may be
filled only by the stockholders entitled to vote at an annual or special meeting
called for that purpose. A director elected to fill a vacancy is elected for the
unexpired term of his predecessor in office. Any directorship to be filled by
reason of an increase in the number of directors may be filled by election at an
annual meeting or at a special meeting of the stockholders entitled to vote
called for that purpose. Our Board of Directors will at all times contain at
least two members who are not employees or executive officers of us or of Bright
Technologies, Inc.
Executive officers of the Company are elected by the Board of Directors at
its annual meeting and hold office until the next annual meeting of the Board of
Directors or until their respective successors are duly elected and have
qualified.
DIRECTOR COMPENSATION
Directors currently do not receive compensation to serve as directors or
committee members, but will be reimbursed for their reasonable expenses in
connection with their attendance at meetings of the Board of Directors. In the
future, we may compensate our directors with cash, or by granting to them shares
of stock or stock options.
KEY MAN INSURANCE
Following the closing of this offering, we intend to purchase a key man life
insurance policy on Mr. Joseph C. Passalaqua in the amount of $2,000,000.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors currently has three standing committees: the
Executive Committee, the Audit Committee and the Compensation Committee. The
Executive Committee exercises the powers of the Board of Directors during the
intervals between meetings of the Board of Directors, unless special directions
have been given by the Board of Directors. The Executive Committee is comprised
of Ms. Beter and Messrs. Worboys and Joseph C. Passalaqua. The Audit Committee
meets periodically with representatives of our independent public accountants to
review the general scope of audit coverage, our accounting practices and
procedures, and our system of internal accounting controls. The Audit Committee
is comprised of Ms. Beter and Messrs. Muth and Joseph C. Passalaqua. The
Compensation Committee recommends to the Board of Directors the annual salaries
for management and administers and grants awards under our 1999 Non-Employee
Director Stock Option Plan and 1999 Stock Option Plan. The Compensation
Committee is comprised of Messrs. McGuinness, Andre and Joseph J. Passalaqua.
STOCK OPTION PLANS
Effective April 23, 1999, we adopted a 1999 Stock Option Plan and a 1999
Non-Employee Director Stock Option Plan. Our 1999 Stock Option Plan permits us
to issue up to 450,000 options to purchase our common stock to employees,
officers, directors, consultants and advisors of us and our affiliates at an
exercise price equal to no less than the fair market value of our common stock
as of the date of grant. Our 1999 Non-Employee Director Stock Option Plan
permits us to issue up to 50,000 options to purchase shares of our common stock
to our directors who are not employed by us or by our subsidiaries, at an option
price per share equal to the fair market value of our common stock as of the
date of grant. Each of these plans will be administered by the Compensation
Committee.
EXECUTIVE COMPENSATION
We have not paid compensation to our executive officers to date. Wages for
Joseph C. Passalaqua, our Chief Executive Officer, have been accrued since
January 1, 1996, and will be paid at a time
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<PAGE>
determined by agreement between Mr. Passalaqua and the Board of Directors. The
following table sets forth the total compensation accrued during 1998, 1997 and
1996 for Mr. Passalaqua, our only executive officer whose accrued compensation
from us during any such period exceeded $100,000 per year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- ------------------------------------------------------------ --------- ---------- ----------- -----------------
<S> <C> <C> <C> <C>
Joseph C. Passalaqua, Chief Executive Officer
and President............................................. 1998 $ 150,000 $ -- $ --
1997 $ 150,000 -- --
1996 $ 150,000 -- --
</TABLE>
EMPLOYMENT AGREEMENTS
On May 1, 1999, we entered into an employment agreement with Joseph C.
Passalaqua to serve as our Chief Executive Officer. The term of the employment
agreement is five years and will commence upon completion of this offering.
Under the terms of his employment agreement, Mr. Passalaqua will receive an
annual base salary of $250,000. Mr. Passalaqua has elected to defer $100,000 of
his annual base salary until we complete a secondary financing of at least
$5,000,000. At the discretion of the Board of Directors, Mr. Passalaqua also is
eligible to receive bonuses, grants of stock, stock options, warrants and/or
stock appreciation rights under any bonus or benefit plan established by the
Board of Directors.
Either party may terminate the employment agreement upon 90 days written
notice to the other party. If we terminate Mr. Passalaqua's employment without
cause, however, he will be entitled to a payment equal to the sum of:
- the greater of one year of his current annual base salary or the total
base salary that would be payable for the balance of the term of the
employment agreement;
- a pro rata portion of any incentive bonus to which he would otherwise be
entitled for the year of his termination, if the calculation of such
incentive bonus for the year through his termination, if annualized, would
have resulted in an incentive bonus for the year;
- any accrued salary that has not previously been paid; and
- any expense reimbursement due and owing to him at the time of his
termination.
On April 23, 1999 we entered into an employment agreement with Carl Worboys
to serve as our Vice President. The term of Mr. Worboys' agreement is five years
and will commence upon the completion of this offering. Mr. Worboys will receive
$150,000 in annual base salary, of which he has elected to defer the payment of
$50,000 per year until we complete a secondary financing of at least $5,000,000.
At the discretion of the Board of Directors, Mr. Worboys also is eligible to
receive bonuses, grants of stock, stock options, warrants and/or stock
appreciation rights under any bonus or benefit plan established by the Board.
The termination provisions of Mr. Worboys' agreement are the same as those
described for Mr. Passalaqua above.
CERTAIN TRANSACTIONS WITH MANAGEMENT
Beginning in January 1996, Joseph C. Passalaqua agreed to defer payment of
his salary as our Chief Executive Officer. At March 31, 1999, we had accrued
$487,000 in salary for Mr. Passalaqua, which will be paid to him at a future
date to be determined by agreement between Mr. Passalaqua and the Board of
Directors.
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On February 1, 1999, we signed a Promissory Note in favor of Joseph C.
Passalaqua, our Chief Executive Officer, Chairman of the Board and principal
stockholder, in the amount of $664,987. This Promissory Note memorializes
advances by Mr. Passalaqua to us used for working capital in 1998, is payable on
demand, bears interest at 10% per year and is unsecured. If the Maximum Offering
is sold, we intend to repay $500,000 of the principal amount of this Promissory
Note to Mr. Passalaqua.
On May 1, 1999, we entered into a three year lease with Mary A. Passalaqua
for our corporate headquarters located at 7325 Oswego Road in Liverpool, New
York. Rental payments under the lease are $900 per month. Ms. Passalaqua is the
wife of our Chief Executive Officer, Chairman of the Board and principal
stockholder.
Effective May 14, 1999, we entered into a two year agreement with Lilly
Beter Capital Group, Ltd. ("LBCG"), a financial advisory firm owned and operated
by Lilly Beter, our Chief Financial Officer and Treasurer and a member of the
Board of Directors. Under this agreement, LBCG has provided us with financial
advisory services regarding this offering and agreed to provide financial
advisory services to us in connection with a possible future debt offering in
which we would attempt to raise up to an additional $35 million through the
issuance of either high-yield bonds or Eurodollar funding. LBCG will not receive
any compensation in connection with this offering. LBCG has agreed to advance us
up to $675,000 in connection with this offering and the proposed debt offering.
We will repay these advances with interest at a rate of 10% per year, but are
only required to do so out of the proceeds of the debt offering. The agreement
also provides that LBCG may designate one person to serve on our Board of
Directors. Lilly Beter, the President of LBCG, was elected to our Board as
LBCG's designee. Until May 14, 2004, LBCG has a right of first refusal to assist
us in connection with future efforts to raise capital in excess of $5 million.
We believe that the terms of the transactions described above were no less
favorable to us than could have been obtained from unaffiliated third parties.
PRINCIPAL STOCKHOLDERS
The following table gives you information, at May 17, 1999, regarding the
beneficial ownership of our common stock by each of our directors and executive
officers, each executive officer named in the Summary Compensation Table, each
person who beneficially owns more than 5% of our common stock, and all of our
directors and executive officers as a group. Except as otherwise noted, the
stockholders listed possess sole voting and investment power, subject to
applicable community property laws.
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES OWNED BENEFICIALLY
---------------------------------------------
NUMBER OF AFTER THE AFTER THE
SHARES OWNED PRIOR TO MINIMUM MAXIMUM
NAME AND ADDRESS(1) OF BENEFICIAL OWNER BENEFICIALLY THE OFFERING OFFERING(2) OFFERING(2)
- -------------------------------------------------- ------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
John J. Andre, Jr................................. -- -- -- --
Lilly Beter....................................... -- -- -- --
Terry L. Colbert.................................. -- -- -- --
Lewis A. McGuinness............................... -- -- -- --
William T. Muth................................... -- -- -- --
Joseph C. Passalaqua.............................. 5,760,000 96% 82.3% 73.8%
Joseph J. Passalaqua.............................. 240,000 4 3.4 3.1
Carl E. M. Worboys................................ -- -- -- --
All directors and executive officers as a
group (9 people)................................ 6,000,000 100% 85.7% 76.9%
</TABLE>
- ------------------------
(1) Unless otherwise indicated, the address for each of the persons named is c/o
bright-technologies.com, inc., 7325 Oswego Road, Liverpool, New York 13090.
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(2) Assumes none of the named individuals purchase shares in this offering.
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 30,000,000 shares of common stock,
par value $.001 per share, and 5,000,000 shares of preferred stock, par value
$.01 per share. If the Minimum Offering is completed, we will have 7,000,000
shares of common stock, and no shares of preferred stock, issued and
outstanding. If the Maximum Offering is completed, we will have 7,800,000 shares
of common stock, and no shares of preferred stock, issued and outstanding.
COMMON STOCK
The holders of common stock are entitled to one vote per share on all
matters voted on by the stockholders, including the election of directors.
Except as otherwise required by law or provided in any resolution adopted by the
Board of Directors with respect to any series of preferred stock, the holders of
common stock exclusively possess all voting power. The holders of common stock
are entitled to such dividends as may be declared from time to time by the Board
of Directors from funds available for distribution to such holders. No holder of
common stock has any preemptive right to subscribe to any kind or class of our
securities or any cumulative voting rights. The shares of common stock to be
issued and sold in this offering will be duly authorized, validly issued, fully
paid and nonassessable.
PREFERRED STOCK
We are authorized to issue 5,000,000 shares of preferred stock. The Board of
Directors has the authority to issue the preferred stock in one or more series
and to determine the powers, preferences and rights and the qualifications,
limitations or restrictions granted to or imposed upon any wholly unissued
series of undesignated preferred stock and to fix the number of shares
constituting any series and the designation of such series, without any further
vote or action by the stockholders. The issuance of preferred stock may have the
effect of delaying, deferring or preventing a change in control of the Company
without further action by the stockholders and may adversely affect the voting
and other rights of the holders of common stock. At present, we have no plans to
issue any shares of preferred stock.
ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW AND CERTAIN PROVISIONS OF OUR
CERTIFICATE OF INCORPORATION AND BYLAWS
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law ("DGCL"). In general, the statute prohibits a publicly held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date that the
person became an interested stockholder unless
- the business combination or the transaction by which such stockholder
became an "interested stockholder" was approved by the Board of Directors
prior to such time;
- upon consummation of the transaction that resulted in the stockholder
becoming an "interested stockholder," the "interested stockholder" owned
at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced (excluding for purposes of determining the
number of shares outstanding those shares owned by (a) persons who are
directors and also officers and (b) certain employee stock ownership
plans); or
- on or subsequent to such time the "business combination" is approved by
the Board of Directors and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the "interested
stockholder."
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A "business combination" includes mergers, asset sales and other
transactions resulting in financial benefit to a stockholder. In general, an
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years did own) 15% or more of a corporation's
outstanding voting stock. The statute could prohibit or delay mergers or other
takeover or change in control attempts involving the Company and, accordingly,
may discourage attempts to acquire the Company.
In addition, certain provisions of our Certificate of Incorporation and
Bylaws summarized in the following paragraphs may be deemed to have an
anti-takeover effect and may delay, defer or prevent an attempt to obtain
control of the Company by means of a proxy contest, tender offer, merger or
other transaction that a stockholder might consider in his or her best interest,
including those attempts that might result in a premium over the market price
for the shares held by stockholders.
CLASSIFIED BOARD OF DIRECTORS. Our Certificate of Incorporation provides
for the Board of Directors to be divided into three classes of directors serving
three year staggered terms. As a result, approximately one-third of the Board of
Directors will be elected each year. Moreover, under the DGCL, in the case of a
corporation having a classified board, stockholders may remove a director only
for cause. This provision, when coupled with the provision of the Bylaws
authorizing the Board of Directors to fill vacant directorships, may preclude a
stockholder from removing incumbent directors without cause and simultaneously
gaining control of the Board of Directors by filling such vacancies with his,
her or its own nominees.
SPECIAL MEETINGS OF STOCKHOLDERS. Our Bylaws provide that special meetings
of our stockholders may be called only by the Board of Directors, or the
Executive Committee of the Board of Directors, if any, or the Chief Executive
Officer. This provision will make it more difficult for stockholders to take
actions opposed by the Board of Directors.
STOCKHOLDER ACTION BY WRITTEN CONSENT. Our Certificate of Incorporation
provides that no action required or permitted to be taken at any annual or
special meeting of our stockholders may be taken without a meeting, and the
power of our stockholders to consent in writing, without a meeting, to the
taking of any action is specifically denied. This provision requires that all
stockholder action take place at a meeting of stockholders.
ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. The Bylaws provide that stockholders seeking to bring business
before an annual meeting of the stockholders, or to nominate candidates for
election as directors at an annual or special meeting of the stockholders, must
provide timely notice thereof in writing. To be timely, a stockholder's notice
must be delivered or mailed and received at our principal executive offices no
later than 90 days prior to the meeting. In the event, however, that less than
100 days notice or prior public disclosure of the date of the meeting is given
and made to the stockholders, notice by the stockholder must be received no
later than the close of business on the tenth day following the earlier of the
day on which such notice of the date of the meeting was mailed or such public
disclosure was made in order to be timely. The Bylaws specify certain
requirements for a stockholder's notice to be in proper form. These provisions
may preclude some stockholders from bringing matters before the stockholders at
an annual or special meeting or from making nominations for directors at an
annual or special meeting.
We believe the foregoing provisions are necessary to attract and retain
qualified persons as directors and officers.
TRANSFER AGENT AND REGISTRAR
We have appointed Bank of New York as the transfer agent and registrar for
our common stock.
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common
stock. We cannot provide any assurances that a significant public market for the
common stock will develop or be sustained after this offering. Future sales of
substantial amounts of our common stock in the public market, or the possibility
of such sales occurring, could adversely affect prevailing market prices for our
common stock or our future ability to raise capital through an offering of
equity securities.
Upon completion of the Minimum Offering and Maximum Offering, respectively,
we will have outstanding 7,000,000 and 7,800,000 shares of our common stock. Of
these shares, the shares to be sold in this offering (1,000,000 in the case of
the Minimum Offering and 1,800,000 in the case of the Maximum Offering) will be
freely tradable in the public market without restriction under the Securities
Act of 1933, as amended (the "Securities Act"), except for any of such shares
that are purchased by our "affiliates," as that term is defined in Rule 144
under the Securities Act.
The remaining 6,000,000 shares outstanding upon completion of this offering
are "restricted securities" as that term is defined under Rule 144. We issued
and sold these restricted securities in private transactions in reliance on
exemptions from registration under the Securities Act. Generally, restricted
securities may be sold in the public market only if they are registered or if
the requirements of Rule 144, as summarized below, are satisfied.
Pursuant to certain "lock-up" agreements with Rockcrest Securities L.L.C.
(the "Underwriter"), all our executive officers, directors and stockholders
owning more than 5% of our common stock, who collectively hold all of these
6,000,000 restricted securities, have agreed not to offer, sell, contract to
sell, grant any option to purchase or otherwise dispose of any such shares for a
period of 180 days from the date of this prospectus. We also have entered into
an agreement with the underwriter that we will not offer, sell or otherwise
dispose of common stock for a period of 180 days from the date of this
prospectus. However, the underwriter may in its sole discretion, at any time
without notice, release all or any portion of the shares subject to lock-up
agreements.
When the lock-up agreements expire, small numbers of the 6,000,000
restricted securities, all of which are held by our affiliates, will be eligible
for immediate sale, subject to the volume, manner of sale and other limitations
under Rule 144.
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person (or persons whose shares of common stock
are aggregated) who has beneficially owned restricted securities for at least
one year would be entitled to sell, within any three-month period, a number of
shares that does not exceed the greater of
- 1% of the then-outstanding shares of common stock or
- the average weekly reported trading volume of the common stock during the
four calendar weeks preceding the sale.
Sales under Rule 144 are also subject to certain manner of sale and notice
requirements and to the availability of current public information about us.
Under Rule 144(k), a person who is not deemed to have been our affiliate at any
time during the 90 days preceding a sale and who has beneficially owned the
shares proposed to be sold for at least two years is entitled to sell such
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
We intend to file, after the effective date of this offering, a registration
statement on Form S-8 to register approximately 500,000 shares of common stock
reserved for issuance under the 1999 Stock Option Plan and 1999 Non-employee
Director Stock Option Plan. This registration statement will become effective
automatically upon filing. Shares issued under the foregoing stock option plans,
after
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<PAGE>
the filing of a registration statement on Form S-8, may be sold in the open
market, subject, in the case of certain holders, to the above-referenced Rule
144 limitations applicable to affiliates.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (including
any amendments thereto) between us and the Underwriter, the form of which is
filed as an exhibit to the registration statement of which this prospectus forms
a part, the Underwriter has agreed to use its best efforts to sell, as our
agent, a minimum of 1,000,000 shares, and a maximum of 1,800,000 shares, of our
common stock. The Underwriter is not obligated to purchase any of the shares.
All funds received by the underwriter for purchase of the shares will be
deposited with Firstar Bank of Minnesota, N.A., St. Paul, MN as escrow agent.
The shares will only be sold fully paid. If the minimum 1,000,000 shares are not
sold within one hundred eighty (180) days from the commencement of this
offering, this offering will automatically terminate and all of the funds in
escrow will be refunded to the subscribers in full. Stock certificates will be
issued to purchasers only if the proceeds from the sale of at least 1,000,000
shares are released to us. Until such time as the funds have been released from
escrow and the certificates delivered to the purchasers thereof, the purchasers
will be deemed subscribers only and not stockholders.
Following the sale of at least 1,000,000 shares, we may close on the sale of
such shares ("Initial Closing") and continue offering the balance of the shares
through the end of the offering period. We and the Underwriter will agree upon
the times and places to close on the sale of any additional shares at the end of
the offering period or earlier if all the shares are sold or if it is determined
by us and the Underwriter that no additional shares will be sold. Prior to the
Initial Closing, the escrow agent will confirm that 1,000,000 shares have been
sold, and cash or cleared funds have been received in full payment for the
purchase of the shares, before releasing the funds for such shares from escrow.
The Underwriter is to receive a cash commission of 10% of the price of the
shares sold ($0.50 per share) payable at the Initial Closing, and at each
subsequent closing, if any. The Underwriter may authorize selected securities
brokers to offer the shares for sale and allow a concession (out of its
underwriting compensation) to them. The sum of such concessions together with
the commission the Underwriter receives shall not exceed the 10% commission.
Upon the sale of the minimum number of shares offered hereby and the Initial
Closing of this offering, we have agreed to issue to the Underwriter warrants
("Underwriter's Warrants") to purchase 100,000 shares of common stock. The
Underwriter's Warrants are exercisable at a price of $6.00 per share commencing
twelve (12) months from the date of this prospectus and for a period of four
years thereafter. Each of the Underwriter's Warrants represents the right to
purchase one share of common stock. The Underwriter's Warrants may not be sold,
assigned, transferred, pledged, hypothecated or delivered except to officers or
partners of the Underwriter, or selected dealers and their officers and/or
partners, for a period of twelve (12) months from the date of this prospectus.
We have agreed to pay to the Underwriter a non-accountable expense allowance
equal to one percent (1%) of the total proceeds of the offering, $25,000 of
which has been paid to date.
In the Underwriting Agreement, we have agreed that we will not, for 180 days
from the date of this prospectus, directly or indirectly offer, sell, contract
to sell or otherwise dispose of any shares of our equity securities, any
securities convertible or exchangeable for our equity securities or any other
rights to acquire such equity securities without the Underwriter's prior written
consent, other than shares sold by the Underwriter or selected dealers pursuant
to the Underwriting Agreement, and grants by us of stock options to employees or
non-employee directors. Our executive officers, directors, and certain
beneficial owners of more than five percent of our common stock have agreed, for
180 days from the date of this prospectus, not to directly or indirectly offer,
sell, contract to sell or otherwise dispose of any shares of our equity
securities, any securities convertible or exchangeable for our equity securities
or any other rights to acquire such equity securities without the prior written
consent of the Underwriter.
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<PAGE>
Prior to the offering made hereby, there has been no public market for our
common stock. Accordingly, the initial public offering price has been determined
by negotiation between ourselves and the underwriter and is not necessarily
related to our asset value, net worth, or other criteria of value. The factors
considered in determining the offering price included an evaluation by
management of the history of and prospects for the industry in which we compete
and our prospects for earnings. Factors such as our financial results,
announcements of developments related to our business, and the introduction of
products and product enhancements by us or our competitors may have a
significant impact on the market price of our securities.
A regular trading market for our common stock may not develop after this
offering and, if developed, it may not be sustained. The market price for our
securities following this offering may be highly volatile, as has been the case
with the securities of other small capitalization companies.
The Underwriter has participated as an underwriter in only two public
offerings of securities prior to this offering. In addition, the Underwriter is
a relatively small firm and we have been advised that the Underwriter does not
intend to make a market in the shares following this offering.
The Underwriter expects to register this offering in a limited number of
states, which may make it difficult or impossible for you to resell your shares
of our common stock in certain states in which this offering is not registered.
The Company and the Underwriter have agreed to indemnify, or to contribute
to payments made by, each other against certain civil liabilities, including
certain civil liabilities under the Securities Act. Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors,
officers or persons controlling us pursuant to the foregoing provisions, we have
been informed that in the opinion of the Securities and Exchange Commission (the
"Commission") such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
In connection with the offering, the Underwriter and its affiliates may
engage in transactions effected in accordance with Rule 104 of the Commission's
Regulation M that are intended to stabilize, maintain or otherwise affect the
market price of the common stock. Such transactions may include stabilizing
transactions in which it bids for, and purchases, common stock at a level above
that which might otherwise prevail in the open market for the purpose of
preventing or retarding a decline in the market price of the common stock. The
Underwriter also may reclaim any selling concessions allowed to a dealer if the
Underwriter repurchases common stock distributed by that dealer. Any of the
foregoing transactions may result in the maintenance of a price for the common
stock at a level above that which might otherwise prevail in the open market.
Neither the Company nor the Underwriter makes any representation or prediction
as to the direction or magnitude of any effect that the transactions described
above may have on the price of the common stock. The Underwriter is not required
to engage in any of the foregoing transactions and, if commenced, such
transactions may be discontinued at any time without notice.
LEGAL MATTERS
The validity of the common stock offered hereby has been passed upon for us
by Arter & Hadden LLP, Dallas, Texas.
EXPERTS
The financial statements of Bright Technologies, Inc. at December 31, 1998
and for the years ended December 31, 1997 and 1998 have been audited by Tabb,
Conigliaro & McGann, P.C., independent public accountants, as indicated in their
report with respect thereto, and have been included herein in reliance upon the
authority of said firm as experts in auditing and accounting.
35
<PAGE>
ADDITIONAL INFORMATION
We have filed with the Commission a registration statement on Form SB-2
under the Securities Act with respect to the securities offered hereby.
This prospectus does not contain all of the information set forth in the
registration statement and the exhibits and schedules to the registration
statement. For further information with respect to bright-technologies.com, inc.
and the common stock, you should read the registration statement and the
exhibits and schedules filed as a part of the registration statement.
Statements contained in this prospectus concerning the contents of any
contract or other document are not necessarily complete. If a contract or
document has been filed as an exhibit to the registration statement, we refer
you to the copy of the contract or document that has been filed. Each statement
in this prospectus relating to a contract or document filed as an exhibit is
qualified in all respects by the filed exhibit.
You may inspect a copy of the registration statement and its exhibits and
schedules without charge at the Commission's principal office in Washington,
D.C. You may obtain copies of such materials at prescribed rates from the Public
Reference Section of the Commission at the Commission's principal office, 450
Fifth Street, N.W., Washington, D.C. 20549, or at the following regional offices
of the Commission:
<TABLE>
<S> <C>
7 World Trade Center, Suite 1300 Citicorp Center
500 West Madison Street, Suite 1400
Chicago, Illinois 60661
New York, New York 10048
</TABLE>
The Commission also maintains a Web site at http://www.sec.gov that contains
reports, proxy and information statements, and other information regarding
registrants that file electronically with the Commission.
We intend to provide our stockholders with annual reports containing
consolidated financial statements audited by an independent public accounting
firm and quarterly reports containing unaudited consolidated financial data for
the first three quarters of each year.
36
<PAGE>
INDEX TO FINANCIAL STATEMENTS
OF
BRIGHT TECHNOLOGIES, INC.
<TABLE>
<CAPTION>
PAGE NOS.
-------------
<S> <C>
REPORT OF INDEPENDENT ACCOUNTANTS.................................................................. F-2
BALANCE SHEETS..................................................................................... F-3
At December 31, 1998 (Audited)
At March 31, 1999 (Unaudited)
STATEMENTS OF OPERATIONS........................................................................... F-4
For the Years Ended December 31, 1997 and 1998 (Audited)
For the Three Months Ended March 31, 1998 and 1999 (Unaudited)
For the Period from Inception (December 29, 1994)
through March 31, 1999 (Unaudited)
STATEMENTS OF STOCKHOLDERS' DEFICIENCY............................................................. F-5
For the Years Ended December 31, 1997 and 1998 (Audited)
For the Period from Inception (December 29, 1994)
through March 31, 1999 (Unaudited)
STATEMENTS OF CASH FLOWS........................................................................... F-6
For the Years Ended December 31, 1997 and 1998 (Audited)
For the Three Months Ended March 31, 1998 and 1999 (Unaudited)
For the Period from Inception (December 29, 1994)
through March 31, 1999 (Unaudited)
NOTES TO FINANCIAL STATEMENTS...................................................................... F-7 to F-19
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Stockholders
Bright Technologies, Inc.
We have audited the accompanying balance sheet of Bright Technologies, Inc.
(the "Company") (a development stage company) at December 31, 1998 and the
related statements of operations, stockholders' deficiency and cash flows for
the years ended December 31, 1997 and 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these 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 audits 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 financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bright Technologies, Inc. at
December 31, 1998, and the results of its operations, stockholders' deficiency
and its cash flows for the years ended December 31, 1997 and 1998, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has sustained recurring losses and negative
cash flows from operations, has deficits in working capital and stockholders'
equity and expects to incur future losses. These factors raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
TABB, CONIGLIARO & McGANN, P.C.
New York, New York
March 12, 1999
(Except as to Note 14, which is as of April 30, 1999)
F-2
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
(NOTE 1)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1999
------------- -------------
<S> <C> <C>
(UNAUDITED)
Current Assets:
Inventories....................................................................... $ 81,205 $ 65,580
Prepaid expenses and other current assets......................................... 18,028 18,028
------------- -------------
Total Current Assets.......................................................... 99,233 83,608
Property and equipment, net......................................................... 93,306 85,590
Software development costs, net..................................................... 133,654 119,639
Covenant-not-to-compete, net........................................................ 19,909 18,378
Patent costs, net................................................................... 61,067 60,003
Deferred offering costs............................................................. 50,000 125,000
Security deposits................................................................... 3,240 3,240
------------- -------------
Total Assets.................................................................. $ 460,409 $ 495,458
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Bank overdraft.................................................................... $ 5,111 $ 8,169
Accounts payable.................................................................. 203,324 191,596
Accrued expenses.................................................................. 826,103 1,004,287
Notes payable..................................................................... 1,166,837 1,166,837
Shareholder loans payable......................................................... 664,987 690,151
Current portion--capitalized lease obligations.................................... 18,389 19,011
------------- -------------
Total Current Liabilities..................................................... 2,884,751 3,080,051
Capitalized lease obligations....................................................... 25,297 20,455
------------- -------------
Total Liabilities............................................................. 2,910,048 3,100,506
------------- -------------
Commitments, Contingencies and Other Matters
(Notes 1, 8, 9, 10, 11, 12, 13 and 14)
Stockholders' Deficiency:
Preferred stock--$.01 par value; 5,000,000 shares authorized; -0- shares issued
and outstanding................................................................. -- --
Common Stock--$.001 par value; 30,000,000 shares authorized; 6,000,000 shares
issued and outstanding.......................................................... 6,000 6,000
Additional paid-in capital........................................................ 4,887,965 4,887,965
Deficit accumulated during development stage...................................... (7,343,604) (7,499,013)
------------- -------------
Total Stockholders' Deficiency................................................ (2,449,639) (2,605,048)
------------- -------------
Total Liabilities and Stockholders' Deficiency...................................... $ 460,409 $ 495,458
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEARS FOR THE THREE MONTHS FROM INCEPTION
ENDED DECEMBER 31, ENDED MARCH 31, (DECEMBER 29, 1994)
---------------------------- ---------------------------- THROUGH,
1997 1998 1998 1999 MARCH 31, 1999
------------- ------------- ------------- ------------- -------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Product Sales.................... $ 114,040 $ 87,304 $ -- $ 30,625 $ 1,023,323
------------- ------------- ------------- ------------- -------------------
Costs and Expenses:
Costs of product sales......... 340,382 103,812 -- 15,625 1,192,958
Research and development....... 374,780 271,518 80,758 34,245 2,601,495
General and administrative..... 678,803 578,094 179,751 79,906 3,264,519
Provision for facility
closing...................... -- 81,928 -- -- 81,928
Loss on acquired technology and
assets....................... -- -- -- -- 862,368
Interest expense............... 128,218 161,301 31,738 56,258 519,068
------------- ------------- ------------- ------------- -------------------
Total Costs and Expenses..... 1,522,183 1,196,653 292,247 186,034 8,522,336
------------- ------------- ------------- ------------- -------------------
Net Loss......................... $ (1,408,143) $ (1,109,349) $ (292,247) $ (155,409) $ (7,499,013)
------------- ------------- ------------- ------------- -------------------
------------- ------------- ------------- ------------- -------------------
Basic and Diluted Loss Per Share
(Note 2)........................ $ (0.23) $ (0.18) $ (0.05) $ (.03)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted Average Common Shares
Used in Basic
and Diluted Loss Per Share
(Note 2)........................ 6,000,000 6,000,000 6,000,000 6,000,000
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING
--------------------- PAID-IN DEVELOPMENT
SHARES(1) AMOUNT CAPITAL STAGE TOTAL
---------- --------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Common stock issued, December 29, 1994, no
par.......................................... 6,000,000 $ 6,000 $ -- $ -- $ 6,000
---------- --------- ------------ ------------- -------------
Balance--December 31, 1994..................... 6,000,000 6,000 -- -- 6,000
Capital contributed............................ -- -- 910,098 -- 910,098
Net loss for 1995.............................. -- -- -- (1,789,198) (1,789,198)
---------- --------- ------------ ------------- -------------
Balance--December 31, 1995..................... 6,000,000 6,000 910,098 (1,789,198) (873,100)
Capital contributed............................ -- -- 2,763,855 -- 2,763,855
Net loss for 1996.............................. -- -- -- (3,036,914) (3,036,914)
---------- --------- ------------ ------------- -------------
Balance--December 31, 1996..................... 6,000,000 6,000 3,673,953 (4,826,112) (1,146,159)
Capital contributed............................ -- -- 1,214,012 -- 1,214,012
Net loss for 1997.............................. -- -- -- (1,408,143) (1,408,143)
---------- --------- ------------ ------------- -------------
Balance--December 31, 1997..................... 6,000,000 6,000 4,887,965 (6,234,255) (1,340,290)
Net loss for 1998.............................. -- -- -- (1,109,349) (1,109,349)
---------- --------- ------------ ------------- -------------
Balance--December 31, 1998..................... 6,000,000 $ 6,000 $ 4,887,965 $ (7,343,604) $ (2,449,639)
Net loss for three months ended March 31,
1999......................................... -- -- -- (155,409) (155,409)
---------- --------- ------------ ------------- -------------
Balance--March 31, 1999 (Unaudited)............ 6,000,000 $ 6,000 $ 4,887,965 $ (7,499,013) $ (2,605,048)
---------- --------- ------------ ------------- -------------
---------- --------- ------------ ------------- -------------
</TABLE>
- ------------------------
(1) Share amounts have been restated to reflect the exchange of common stock
pursuant to the reorganization completed in April of 1999.
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE PERIOD
FOR THE YEARS FROM INCEPTION
ENDED DECEMBER 31, ENDED MARCH 31, (DECEMBER 29, 1994)
---------------------- -------------------- THROUGH
1997 1998 1998 1999 MARCH 31, 1999
---------- ---------- --------- --------- -------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss....................................... $(1,408,143) $(1,109,349) $(292,247) $(155,409) $(7,499,013)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation................................. 69,486 57,636 13,951 7,716 239,865
Amortization................................. 12,781 46,422 3,000 16,610 86,116
Provision for loss on facility closing....... -- 81,928 -- -- 81,928
Provision for loss on acquired assets........ -- -- -- -- 862,368
Acquired in-process research and
development................................ -- -- -- -- 60,000
Amortization of capitalized consulting
agreement.................................. 57,778 -- -- -- 130,000
Cash provided by (used in) the change in assets
and liabilities:
Decrease (increase) in inventories........... 183,728 31,227 (14,315) 15,625 192,227
Increase in other current assets............. (8,486) (3,028) -- -- (18,028)
Increase in security deposits................ -- -- -- -- (3,240)
(Decrease) increase in accounts payable...... (60,284) 79,266 3,734 (11,728) 255,533
Increase in accrued expenses................. 176,832 348,272 86,929 103,184 903,287
---------- ---------- --------- --------- -------------------
NET CASH USED IN OPERATING ACTIVITIES............ (976,308) (467,626) (198,948) (24,002) (4,708,957)
---------- ---------- --------- --------- -------------------
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property and equipment............. -- -- -- -- (154,424)
Expenditures for software development costs.... (45,880) (122,295) (48,098) -- (168,175)
Expenditures for patent costs.................. (41,346) (4,741) -- -- (64,120)
Expenditures under Telenet agreements.......... -- -- -- -- (250,000)
---------- ---------- --------- --------- -------------------
NET CASH USED IN INVESTING ACTIVITIES............ (87,226) (127,036) (48,098) -- (636,719)
---------- ---------- --------- --------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Expenditures for offering costs................ -- (50,000) -- -- (50,000)
(Decrease) increase in bank overdraft.......... (104,947) (5,274) (10,395) 3,058 8,169
Payments on secured promissory note............ (33,500) -- -- -- (163,500)
Payments on capitalized lease obligation....... (13,838) (15,051) (2,755) (4,220) (33,109)
Proceeds from shareholder loans................ -- 664,987 266,309 25,164 690,151
Proceeds from shareholder capital
contributions................................ 1,214,012 -- -- -- 4,893,965
---------- ---------- --------- --------- -------------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES..................................... 1,061,727 594,662 253,169 24,002 5,345,676
---------- ---------- --------- --------- -------------------
(DECREASE) INCREASE IN CASH...................... 1,807 -- -- -- --
---------- ---------- --------- --------- -------------------
CASH--BEGINNING OF PERIOD........................ 1,807 -- -- -- --
---------- ---------- --------- --------- -------------------
CASH--END OF PERIOD.............................. $ -- $ -- $ 6,123 $ -- $ --
---------- ---------- --------- --------- -------------------
---------- ---------- --------- --------- -------------------
SUPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest..................................... $ 29,364 $ 10,320 $ 1,407 $ 4,466 $ 218,353
---------- ---------- --------- --------- -------------------
---------- ---------- --------- --------- -------------------
SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Purchase of equipment through issuance of
capitalized lease obligations................ $ 72,574 $ -- $ -- $ -- $ 72,574
---------- ---------- --------- --------- -------------------
---------- ---------- --------- --------- -------------------
Accounts payable converted into a promissory
note payable................................. $ -- $ 63,937 $ -- $ -- $ 63,937
---------- ---------- --------- --------- -------------------
---------- ---------- --------- --------- -------------------
Acquisition of assets through issuance of
secured promissory note...................... $ -- $ -- $ -- $ -- $ 1,266,400
---------- ---------- --------- --------- -------------------
---------- ---------- --------- --------- -------------------
Offering costs accrued......................... $ -- $ -- $ -- $ 75,000 $ 75,000
---------- ---------- --------- --------- -------------------
---------- ---------- --------- --------- -------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 1--BUSINESS AND CONTINUED OPERATIONS
Bright Technologies, Inc. (the "Company") was incorporated under the laws of
the State of Georgia on December 29, 1994. The Company is a development stage
telecommunications company formed to develop and commercialize fixed wireless
telephones and wireline payphones and payphone components, including related
management software. Since inception, the Company has devoted substantially all
of its efforts towards research and development activities, acquisition of
certain in-process research and development, recruiting its research and
management personnel, securing agreements for various wireless transmission
standards and raising capital.
The Company has not yet generated any significant revenue from any of its
products and has not yet achieved profitable operations or positive cash flow
from operations. There is no assurance that profitable operations, if ever
achieved, could be sustained on a continuing basis. In addition, development
activities and the commercialization of the telephone products will require
significant additional financing. The Company's deficit accumulated during the
development stage aggregated $7,344,000 through December 31, 1998 and $7,499,000
through March 31, 1999, and the Company expects to incur substantial losses in
future periods. Further, the Company's future operations are dependent on the
success of the Company's development and commercialization efforts and market
acceptance of the Company's products.
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. However, as shown in the accompanying financial
statements, the Company has incurred losses from operations from inception. As
of December 31, 1998, the Company had a stockholders' deficiency of $2,450,000,
a working capital deficiency of $2,786,000 and an accumulated deficit since
inception of $7,344,000. The Company is also in default on a significant loan
agreement, which totals approximately $1,346,000 in principal and interest as of
December 31, 1998, and is in arrears with substantially all of its other
payables and accrued liabilities. No assurances can be given that any of the
Company's telephone products can be manufactured on a large scale basis or at a
feasible cost. Further, no assurance can be given that any of the Company's
telephone products will receive market acceptance. These factors raise
substantial doubt about the Company's ability to continue as a ongoing concern.
Since inception, the Company has financed its operations from proceeds of
capital contributions totalling $4,894,000 from its principal shareholder and
from loans from its principal shareholder totalling $690,000 through March 31,
1999. The Company is exploring additional sources of working capital, including
private borrowings, an Initial Public Offering ("IPO") of its securities, joint
ventures and licensing of technologies. The Company's ability to continue as a
going-concern is dependent upon the financing efforts being successful. There
can be no assurance, however, that the Company will be successful in obtaining
financing at the level needed for the long-term development and
commercialization of its planned products or on terms acceptable to the Company.
These financial statements do not include any adjustments relating to the
recoverability of recorded asset amounts that might be necessary as a result of
the above uncertainty.
F-7
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UNAUDITED INTERIM INFORMATION
The information presented as of March 31, 1999 and for the three-month
periods ended March 31, 1998 and 1999 and for the period from inception
(December 29, 1994) through March 31, 1999 has not been audited. In the opinion
of management, the unaudited interim financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the information set forth therein. The results of operations for
the three months ended March 31, 1999 are not necessarily indicative of the
results for the year ending December 31, 1999.
USE OF ESTIMATES
The preparation of financial statements in conformity with 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. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash and cash equivalents, accounts and other receivables, bank overdraft,
accounts payable, accrued expenses and long-term debt, including the current
portion, are reflected in the accompanying balance sheet at amounts considered
by management to reasonably approximate fair value.
CONCENTRATION OF CREDIT RISK
Financial instruments, which potentially subject the Company to
concentrations of credit risks, are principally trade accounts receivable. The
Company maintains an allowance for uncollectible accounts receivable and
generally does not require collateral. At December 31, 1998 and at March 31,
1999, no allowance for uncollectible accounts was deemed necessary by
management.
CASH AND CASH EQUIVALENTS
The Company considers all short-term highly liquid investments with a
maturity of three months or less when purchased to be cash or cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost (determined on a first-in,
first-out basis) or market.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is calculated using
an accelerated method over the estimated useful lives (5-7 years) of the related
assets. Maintenance and repair expenses are charged to operations as incurred.
F-8
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CAPITALIZED SOFTWARE DEVELOPMENT COSTS
Certain software development costs incurred subsequent to the establishment
of the software's technological feasibility and completion of the research and
development on the product hardware in which it is to be used, are required to
be capitalized. Capitalization ceases when the product is available for general
release to customers, at which time amortization of capitalized costs begins.
Amortization is calculated on the straight-line basis over 3 years.
The carrying value of a software and development asset is regularly reviewed
by the Company, and a loss is recognized when the net realizable value falls
below the unamortized cost.
COVENANT NOT-TO-COMPETE
The covenant not-to-compete consists of an agreed upon amount stated in the
purchase contract in connection with the purchase of certain technology from
Telenet (Note 3). The covenant not-to-compete is stated at cost, less
accumulated amortization of $40,091 at December 31, 1998 and $41,623 at March
31, 1999, and is being amortized using a double declining method over 6 1/2
years, the lesser of the contractual term or the economic life of the acquired
technology.
Amortization expense for the years ended December 31, 1997 and 1998 amounted
to $12,781 and $8,848, respectively, and for the three months ended March 31,
1998 and 1999 amounted to $3,000 and $1,532, respectively.
PATENT COSTS
Patent costs are stated at cost, less accumulated amortization of $3,053 at
December 31, 1998 and $4,117 at March 31, 1999. Patent costs are being amortized
on a straight-line basis over 14 years.
Amortization expense for the years ended December 31, 1997 and 1998 amounted
to $-0- and $3,053, respectively, and for the three months ended March 31, 1998
and 1999 amounted to $-0- and $1,064, respectively.
DEFERRED OFFERING COSTS
Deferred offering costs relate to costs incurred with respect to a proposed
IPO discussed in Notes 13 and 14 to the accompanying financial statements. In
the event the proposed IPO is not consummated, the deferred offering costs will
be expensed.
INCOME TAXES
The Company, with the consent of its principal shareholder, elected under
the Internal Revenue Code to be taxed as an "S" corporation. In lieu of
corporation income taxes, the shareholders of an "S" corporation are taxed on
their proportionate share of the Company's taxable income or loss. Accordingly,
no provision or liability for federal and state taxes is included in the
financial statements for the years ended December 31, 1997 and 1998 and for the
three months ended March 31, 1998 and 1999.
F-9
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
There are no proforma income taxes presented for any of the periods
presented in the accompanying financial statements, as the Company incurred
losses for both book and tax purposes.
Commencing with the effective date of an IPO of its securities, the
Company's "S" election would then be terminated. Accordingly, the Company would
then provide for federal and state income taxes and provide for deferred tax
assets and liabilities measured by using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates would be recognized in income in the period that includes
the enactment date. A valuation allowance would be provided if it is more likely
than not that some or all of the deferred tax asset will not be realized.
REVENUE RECOGNITION
Revenue from product sales are recognized upon the shipment of the product.
Revenue from any company owned and operated telephones will be recognized upon
the completion of the service.
RESEARCH AND DEVELOPMENT
Research and development expenditures are charged to expense as incurred,
unless they are reimbursed under specific contracts.
STOCK-BASED COMPENSATION
As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation," the
Company accounts for its stock-based compensation arrangements pursuant to APB
Opinion No. 25, "Accounting for Stock Issued to Employees." In accordance with
the provisions of SFAS No. 123, the Company discloses the proforma effects of
accounting for these arrangements using the minimum value method to determine
fair value.
LOSS PER SHARE
Basic earnings per share ("Basic EPS") is computed by dividing net loss
available to common stockholders by the weighted average number of common shares
outstanding during the period. Diluted earnings per share ("Diluted EPS") gives
effect to all dilutive potential common shares outstanding during a period. In
computing Diluted EPS, the treasury stock method is used in determining the
number of shares assumed to be purchased from the conversion of common stock
equivalents. Securities that could potentially dilute Basic EPS in the future,
that were not included in the computation of Diluted EPS because to do so would
have been anti-dilutive for the periods presented, consist of warrants discussed
in Note 14, which are issuable upon the completion of an IPO and options
discussed in Note 14, which were granted in January of 1999.
IMPAIRMENT OF LONG-LIVED ASSETS
During 1995, the Company adopted the Statement of Financial Accounting
Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be
F-10
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Disposed of." Under the provisions of this statement, the Company has evaluated
its long-lived assets for financial impairment, and will continue to evaluate
them as events or changes in circumstances indicate that the carrying amount of
such assets may not be fully recoverable.
The Company evaluates the recoverability of long-lived assets by measuring
the carrying amount of the assets against the estimated undiscounted future cash
flows associated with them. At the time such evaluations indicate that the
future undiscounted cash flows of certain long-lived assets are not sufficient
to recover the carrying value of such assets, the assets are adjusted to their
fair values. Based on these evaluations, there were no adjustments to the
carrying value of long-lived assets in 1997, 1998 and for the three months ended
March 31, 1999. In December 1995, the Company recorded a charge of $862,368
related to assets acquired from Tee-Comm (Note 3).
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
Effective January 1, 1998, the Company adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for
reporting comprehensive income, defined as all changes in equity from non-owner
sources. Adoption of SFAS No. 130 did not have a material effect on the
Company's financial position or results of operations.
Effective January 1, 1998, the Company adopted the provisions of SFAS No.
131, "Disclosures About Segments of an Enterprise and Related Information." SFAS
No. 131 establishes standards for the way public enterprises report information
about operating segments in annual financial statements and requires those
enterprises to report selected information about operating segments in interim
financial reports issued to stockholders. Adoption of SFAS No. 131 did not have
a material effect on the Company's financial position or results of operations.
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 132, "Employers' Disclosures About Pensions and
Postretirement Benefits," which standardizes the disclosure requirements for
pensions and other postretirement benefits. SFAS No. 132 addresses disclosure
only. It does not address liability measurement or expense recognition. There
was no effect on financial position or net income as a result of adopting SFAS
No. 132.
Effective January 1, 1998, the Company adopted American Institute of
Certified Public Accountants Statement of Position 97-2, "Software Revenue
Recognition" ("SOP 97-2"). SOP 97-2 generally requires revenue earned on
software arrangements involving multiple elements, such as software products,
upgrades, enhancements, post-contract customer support, installation and
training to be allocated to each element based on the relative fair values of
the elements. The adoption of SOP 97-2 did not have an effect on the Company's
financial position or results of operations.
In March 1998, the American Institute of Certified Public Accountants issued
SOP 98-1, "Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use," which revises the accounting for software development costs
and will require the capitalization of certain costs. The adoption of SOP 98-1
did not have an effect on the Company's financial position or results of
operations.
F-11
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 3--ACQUIRED TECHNOLOGY
On February 13, 1995, the Company executed an agreement to purchase for
$1,266,400 certain assets of Tee-Comm, which was paid by the issuance of a
secured promissory note discussed in Note 8. The assets that were acquired
included general production equipment, inventory and technology for wireline
telephone computer boards. The acquisition agreement allocated the purchase
price of $1,266,400 to the assets as follows: (i) $466,400 to inventory; (ii)
$150,000 to equipment; (iii) $650,000 to technology or goodwill. Due to
circumstances regarding a potential infringement of a third party patent, which
had, as of December 1995, approximately three years remaining, the Company
ceased production of the Tee-Comm telephone computer boards and recorded an
$862,368 charge to operations during 1995 reflecting the writedown of such
assets.
On February 20, 1996, the Company purchased the technology product known as
the Suntel line powered smartboard from Telenet. The purchased technology
included in-process research and development of a wireline computer board for
payphones. The February 20, 1996 agreement provided for a $250,000 payment at
closing, which was allocated as follows: (i) $60,000 to a 6 1/2-year covenant-
not-to-compete; (ii) $130,000 to an eighteen-month consulting arrangement
between the Company and an individual, who controlled Telenet, to further
develop the technology and product line; and (iii) $60,000 to the acquired
in-process research and development, which was charged to research and
development expense during 1996.
NOTE 4--INVENTORIES
Inventories, net of writedowns, consist of the following components:
<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------- AT MARCH 31,
1997 1998 1999
---------- --------- ------------
<S> <C> <C> <C>
Raw materials........................................... $ 87,431 $ 53,578 $ 45,829
Work-in process......................................... 25,001 27,627 19,751
---------- --------- ------------
$ 112,432 $ 81,205 $ 65,580
---------- --------- ------------
---------- --------- ------------
</TABLE>
Inventories at December 31, 1998 and March 31, 1999 are net of a valuation
allowance of $583,000.
NOTE 5--PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consists of the following:
<TABLE>
<CAPTION>
AT DECEMBER 31, AT MARCH 31,
1998 1999
--------------- ------------
<S> <C> <C>
Machinery and equipment....................................... $ 161,267 $ 161,267
Furniture and fixtures........................................ 72,505 72,505
--------------- ------------
233,772 233,772
Less: Accumulated depreciation................................ 140,466 148,182
--------------- ------------
$ 93,306 $ 85,590
--------------- ------------
--------------- ------------
</TABLE>
F-12
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 5--PROPERTY AND EQUIPMENT, NET (CONTINUED)
Depreciation expense for the years ended December 31, 1997 and 1998 and the
three months ended March 31, 1998 and 1999 amounted to $69,486 and $57,636 and
$13,951 and $7,716, respectively.
NOTE 6--CAPITALIZED SOFTWARE DEVELOPMENT COSTS, NET
Activity for the year ended December 31, 1998 and the three months ended
March 31, 1999 consists of the following:
<TABLE>
<CAPTION>
FOR YEAR ENDED FOR THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
1998 1999
-------------- -----------------
<S> <C> <C>
Balance--Beginning of Year................................. $ 45,880 $ 133,654
Capitalized costs for period............................... 122,295 --
Amortization charged for period............................ (34,521) (14,015)
-------------- --------
Balance--End of period..................................... $ 133,654 $ 119,639
-------------- --------
-------------- --------
</TABLE>
NOTE 7--ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
AT DECEMBER 31,
1998 AT MARCH 31, 1999
--------------- -----------------
<S> <C> <C>
Officer's salary.......................................... $ 450,000 $ 487,500
Interest.................................................. 248,923 300,716
Professional fees......................................... 100,000 112,500
Offering costs............................................ -- 75,000
Other..................................................... 27,180 28,571
--------------- -----------------
$ 826,103 $ 1,004,287
--------------- -----------------
--------------- -----------------
</TABLE>
NOTE 8--NOTES PAYABLE
Notes payable consist of the following:
<TABLE>
<CAPTION>
AT DECEMBER 31, AT MARCH 31,
1998 1999
--------------- ------------
<S> <C> <C>
Secured promissory note issued in connection with Tee-Comm
acquisition................................................. $ 1,102,900 $1,102,900
Vendor promissory note........................................ 63,937 63,937
--------------- ------------
$ 1,166,837 $1,166,837
--------------- ------------
--------------- ------------
</TABLE>
F-13
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 8--NOTES PAYABLE (CONTINUED)
SECURED PROMISSORY NOTE PAYABLE
As discussed in Note 2, on February 13, 1995, the Company issued a secured
promissory note for $1,266,400 to purchase certain assets of Tee-Comm. Under the
secured promissory note agreement, the Company is required to make monthly
payments of interest only from March 1, 1995 through December 1, 1995;
thereafter, the Company is required to make monthly payments of principal and
interest. Interest is calculated at prime and is adjusted every 18 months. The
agreement provided for payments of principal to commence on December 1, 1995
through February 1, 1997 at $10,000 per month; thereafter, principal monthly
payments are to be adjusted every 18 months with the first two adjustments
amounting to $13,500 and $22,950, respectively, and the remaining five payments
through June 30, 2002 at $92,060 per month. The note is collateralized by the
Company's assets and is personally guaranteed by the Company's principal
shareholder.
Commencing in April of 1997, the Company failed to make the required
payments under this note agreement and remained in default as of December 31,
1998. Accordingly, the Company has classified the note as current liability at
December 31, 1998.
In January of 1999, the Company and the secured party signed an agreement to
restructure the debt (see Note 14).
For the years ending December 31, 1997 and 1998 and the three months ended
March 31, 1998 and 1999, the Company recorded interest expense related to this
secured promissory note of $122,174 and $144,069, and $30,324 and $36,326,
respectively. As of December 31, 1998 and March 31, 1999, accrued interest
payable amounted to $242,923 and $279,249, respectively. Interest expense for
1997, 1998 and for the three months ended March 31, 1999 was calculated using
the default rate of interest of prime, plus 3%.
VENDOR PROMISSORY NOTE PAYABLE
During September 1998, the Company agreed to convert a vendor's outstanding
balance of $63,937 into an unsecured promissory note, which bears an interest
rate of prime, plus 2%. Interest accruals on said note are retroactive to
January 1, 1998. The Company is required to make level installment payments of
principal and interest of $500 on the first and fifteenth of each month,
commencing October 1, 1998. The note and accrued interest are payable at the
earlier of: (i) a successful IPO, or (ii) change of control of the Company, or
change of control, or sale of the principal shareholder's affiliated companies.
Interest expense for the year ended December 31, 1998 and the three months
ended March 31, 1999 amounted to $6,500 and $1,085, respectively.
NOTE 9--CAPITALIZED LEASE OBLIGATIONS
During January and May 1997, the Company entered into two agreements to
lease equipment. The transactions have been accounted for as capitalized leases
in accordance with the provisions of the Financial Accounting Standards Board,
Statement No. 13. The lease obligations have an effective per
F-14
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 9--CAPITALIZED LEASE OBLIGATIONS (CONTINUED)
annum interest rate ranging between 13.3% and 14.9% and require 46 and 48
monthly payments, respectively, of interest and principal amounting to $1,882.
Each lease contains an option to purchase the equipment at the end of the lease
term for $1.
Principal payments required to be made on the above obligations are
summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- -----------------------------------------------------------------------------------
<S> <C>
1999............................................................................... $ 18,389
2000............................................................................... 17,531
2001............................................................................... 7,766
---------
$ 43,686
---------
---------
</TABLE>
Interest expense related to the capitalized lease obligations for the years
ended December 31, 1997 and 1998 and the three months ended March 31, 1998 and
1999 amounted to $6,044 and $6,820 and $1,407 and $1,610, respectively.
NOTE 10--SHAREHOLDER CAPITAL CONTRIBUTIONS AND LOANS
For the period from inception (December 29, 1994) through December 31, 1998,
the Company's principal shareholder contributed capital to the Company of
approximately $4,893,965. In addition, during 1998 and for the three months
ended March 31, 1999, the principal shareholder loaned the Company approximately
$664,987 and $25,164, respectively. The shareholder loans are payable on demand,
bear interest at 10% per annum and are unsecured. Interest expense accrued on
such debt during 1998 and for the three months ended March 31, 1999 amounted to
$3,000 and $16,382, respectively.
NOTE 11--COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
OPERATING LEASES
At December 31, 1998, the Company had obligations under various long-term
operating leases for office space and equipment. The leases provide for minimum
monthly payments aggregating approximately $2,176 and expire at various dates
through 1999.
Rent expenses for all operating leases for the years ended December 31, 1997
and 1998 and the three months ended March 31, 1998 and 1999 amounted to $90,524
and $72,326 and $20,399 and $6,018, respectively.
EMPLOYMENT AGREEMENT
The Company has accrued salary payable to the Company's principal
shareholder in the amount of $150,000 per year for 1996, 1997 and 1998 and
$37,500 for the three months ended March 31, 1999. As of December 31, 1998 and
March 31, 1999, the accrued salary payable to the principal shareholder totaled
$450,000 and $487,500, respectively.
F-15
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 11--COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (CONTINUED)
LOSS ON FACILITY CLOSING
During December 1998, the Company consolidated its manufacturing and
warehousing operations, which resulted in the Company closing a facility in
Atlanta, Georgia. Facility closing costs recorded during 1998 amounted to
$81,928, inclusive of a provision of $26,000 for estimated future costs.
LITIGATION
TIDEL ENGINEERING, INC. ("TIDEL") VS. FIRST EXPRESS FINANCIAL GROUP, INC.,
("FIRST EXPRESS"), MULTICARD PAYMENT SYSTEMS, INC., AMERICAN TELECOMMUNICATIONS
ENTERPRISES, INC., ET AL. This action was filed by Tidel during February 1998 in
the 191st Judicial District Court of Dallas County, Texas. The plaintiff claims
that the Company is liable for debts of First Express that were incurred in the
purchase of automated teller machines. The allegation is that the Company is the
alter ego of First Express and is liable as if it had purchased the machines and
executed the documents. First Express is a business entity that is wholly-owned
by the Company's principal shareholder. On February 9, 1998, Tidel quantified
their claim for damages, which amounted to $1.29 million. Management believes
this action has no merit.
PROPOSED INTERNATIONAL OPERATIONS
The Company's strategic business plan includes marketing its wireless
telephone products initially to developing countries in Latin America, Eastern
Europe and the Pacific Rim, which lack the wireline infrastructure to provide
sufficient telephone service to their populations. These countries have
experienced volatile and frequent unfavorable economic, political and social
conditions.
In view of the foregoing, the Company's intended business, earnings, asset
values and prospects may be materially and adversely affected by developments
with respect to inflation, interest rates, currency fluctuations, government
policies, price and wage controls, exchange control regulations, taxation,
expropriation, social instability, and other political, economic or diplomatic
developments in or effecting such developing countries. The Company has no
control over such conditions and developments, and can provide no assurance that
such conditions and developments will not adversely affect the Company's
operations.
CONCENTRATION OF CREDIT RISK
For the years ended December 31, 1997 and 1998, approximately 63% and 31%,
respectively, of net sales were derived from two unrelated customers, and one
company controlled by the principal shareholder, respectively. At December 31,
1998, no receivables were due from the above customers.
For the three months ended March 31, 1998 and 1999, approximately -0-% and
100% respectively, of net sales were derived from one company controlled by the
principal shareholder. At March 31, 1999, no receivables were due from the above
customer.
F-16
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 12--RELATED PARTY TRANSACTIONS
For the years ended December 31, 1997 and 1998 and the three months ended
March 31, 1998 and 1999, the Company sold approximately $-0- and $24,500 and
$-0- and $30,625, respectively, of pay telephone products to a company
controlled by the Company's principal shareholder.
NOTE 13--PROPOSED PUBLIC OFFERING
In September of 1998, the Company decided to raise capital through the sale
of its securities pursuant to an IPO. Through December 31, 1998, costs related
to this proposed offering aggregated $50,000, which have been deferred (see Note
14).
NOTE 14--SUBSEQUENT EVENTS
SECURED PROMISSORY NOTE PAYABLE
As discussed in Note 8, the Company is indebted to Tee-Comm under a secured
promissory note with principal of $1,102,900 outstanding as of December 31,
1998.
On January 14, 1999, the Company and the principal shareholder entered into
an agreement with the Tee-Comm Bankruptcy Receiver, the representative of the
secured party (the "Receiver"), which restructured the debt under the following
terms:
(a) Company granted the Receiver: (i) a first priority security interest
in the technology developed by the Company on or before January 27, 1999;
and (ii) stock options to acquire 5% on a fully diluted basis of the equity
of the Company at a price at least as favorable as that made available to
any party, including insiders, underwriters, agents or advisors. The stock
options are exercisable commencing with the completion of the IPO and
terminate 3 years thereafter. The stock options are deemed to be fully
vested and, accordingly, the stock options will not terminate upon
satisfaction of the Tee-Comm note payable. The Company has assigned no value
to these stock options.
(b) The principal shareholder of the Company is required to deliver to
the Receiver: (i) a recordable mortgage of $300,000 on commercial property
owned by the principal stockholder; (ii) 50% of the shares of American
Telecommunications Enterprises, Inc., a company controlled by the
shareholder; and (iii) a $300,000 payment sixty days from the date of the
agreement.
(c) Upon payment of the $300,000 by the shareholder, the Receiver will
release: (i) the mortgage on the commercial property; and (ii) the personal
guarantee made by the shareholder on the Tee-Comm secured promissory note
dated February 13, 1995.
(d) Upon full payment of the remaining balance, the Receiver will
release the shareholder's stock in American Telecommunications Enterprises,
Inc. and the lien on the Company's technology.
F-17
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 14--SUBSEQUENT EVENTS (CONTINUED)
LICENSE AGREEMENT
In March of 1999, the Company entered into a license agreement with
Motorola, Inc. ("Motorola"). The license agreement grants the Company a
non-exclusive, non-assignable, non-transferable, royalty-free license to
incorporate a Motorola Patent and Proprietary Information in the Company's
wireless telephones, which include cellular transceivers sourced from Motorola.
The licensed territories consist of the United States, Canada and Latin America.
The term of the agreement is for one year and automatically renews for one-year
terms, unless terminated by either party.
REORGANIZATION
On April 23, 1999, the shareholders of Bright Technologies, Inc. ("Bright
Georgia") formed a new corporation in the state of Delaware named
bright-technologies.com, inc. ("Bright Delaware"). On April 23, 1999, the
shareholders of Bright Georgia exchanged all of their common shares of Bright
Georgia for 6,000,000 shares of Bright Delaware's common stock. As a result of
this reorganization, Bright Delaware became the parent corporation with its only
asset as of such date consisting of 100% of the common stock of Bright Georgia.
All common shares, stock options, warrants and related per-share data reflected
in the accompanying financial statement and notes thereto have been adjusted to
give effect to this reorganization.
PROPOSED PUBLIC OFFERING
In April of 1999, bright-technologies.com, inc. entered into an agreement
with an underwriter (the "Underwriter"), whereby the Underwriter has agreed, on
a best-efforts basis, to sell shares of bright-technologies.com, inc.'s common
stock in an IPO. Through December 31, 1998, costs related to this proposed
offering aggregate $50,000, which have been deferred.
bright-technologies.com, inc. agreed to issue to the Underwriter on the
closing date of the IPO warrants to purchase 100,000 shares of
bright-technologies.com, inc.'s common stock at a price per share of $6.00. The
warrants shall be exercisable for a four-year period commencing one year after
the effective date of the IPO.
In May 1999, the Company entered into a two-year agreement with a financial
advisory firm owned and operated by an individual who, in April of 1999, became
the Company's Chief Financial Officer and Treasurer and a member of the Board of
Directors (the "Advisor"). Under this Agreement, the Advisor is to provide
financial advisory services in connection with a proposed future debt offering
following the completion of an IPO. The Advisor has agreed to advance the
Company up to $675,000 in connection with the proposed IPO and the proposed debt
offering. Any advances under this agreement, together with interest at the rate
of 10% per annum, are repayable out of the proceeds of the debt offering. The
Advisor has a right of first refusal to assist the Company in connection with
future efforts to raise capital in excess of $5 million.
F-18
<PAGE>
BRIGHT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED WITH RESPECT TO MARCH 31, 1999 AND
THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999)
NOTE 14--SUBSEQUENT EVENTS (CONTINUED)
STOCK OPTIONS
During April of 1999, the Board of Directors and stockholders of the Company
approved the 1999 Stock Option Plan (the "Plan"), which provides for the
granting of up to 450,000 shares of common stock, pursuant to which officers,
employees, directors and consultants are eligible to receive incentive and/or
nonqualified stock options. Options granted under the Plan are exercisable for a
period of up to 10 years from date of grant at an exercise price which is not
less than the fair value on date of grant, except that the exercise period of
incentive stock options granted to a stockholder owning more than 10% of the
outstanding capital stock may not exceed five years and their exercise price may
not be less than 110% of the fair value of the common stock at date of grant.
The Plan provides for the options to include vesting provisions. The Company
also adopted the 1999 Non-employee Director Stock Option Plan for the
non-employee directors pursuant to which 50,000 shares of common stock may be
granted. Through April 30, 1999, no options under either of these plans have
been granted.
LEASE AGREEMENT
On May 1, 1999, bright-technologies.com, inc. entered into a three-year
lease for the office space for its executive headquarters in Liverpool, New
York. The property is owned by the wife of the principal shareholder of the
Company. The lease provides for monthly payments of $900 commencing May 1, 1999.
EMPLOYMENT AGREEMENTS
In April of 1999, bright-technologies.com, inc. entered into an employment
agreement with its principal shareholder, which commences upon the closing of an
IPO and continues for 5 years thereafter. The employment agreement provides for,
among other things, a base salary of $250,000 per year, of which $100,000 is
deferred until the Company completes a secondary financing of at least
$5,000,000.
In April of 1999, bright-technologies.com, inc. entered into an employment
agreement with an individual who will serve as bright-technologies.com, inc.'s
Vice President, which commences upon the closing of an IPO and continues for 5
years thereafter. The employment agreement provides for, among other things, a
base salary of $150,000 per year, of which $50,000 is deferred until the Company
completes a secondary financing of at least $5,000,000.
F-19
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BRIGHT-TECHNOLOGIES.COM, INC.
MINIMUM OFFERING:
1,000,000 SHARES OF COMMON STOCK
MAXIMUM OFFERING:
1,800,000 SHARES OF COMMON STOCK
--------------------------------------------
PROSPECTUS
------------------------------------
ROCKCREST SECURITIES L.L.C.
May 17, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VII of the Registrant's Certificate of Incorporation provides that
the Company shall indemnify its directors and officers to the fullest extent
permitted by the Delaware General Corporation Law ("DGCL").
Section 145 of the DGCL permits a corporation, under specified
circumstances, to indemnify its directors, officers, employees or agents against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlements actually and reasonably incurred by them in connection with any
action, suit or proceeding brought by third parties by reason of the fact that
they were or are directors, officers, employees or agents of the corporation, if
such directors, officers, employees or agents acted in good faith and in a
manner that they reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful. In a
derivative action (I.E. one by or in right of the corporation), indemnification
may be made only for expenses actually and reasonably incurred by directors,
officers, employees or agents in connection with the defense or settlement of an
action or suit, and only with respect to a matter as to which they shall have
acted in good faith and in a manner they reasonably believed to be in or not
opposed to the best interests of the corporation, except that no indemnification
shall be made if such persons shall have been adjudged liable to the
corporation, unless and only to the extent that the court in which the action or
suit was brought shall determine upon application that the defendant directors,
officers, employees or agents are fairly and reasonably entitled to indemnify
for such expenses, despite such adjudication or liability.
Section 102(b)(7) of the DGCL permits a corporation organized under Delaware
law to eliminate or limit the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director subject to certain limitations. Article IX of the
Registrant's Certificate of Incorporation includes the following provision:
A director of this corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv)
for any transaction from which the director derived any improper personal
benefit. If the DGCL is hereafter amended to authorize corporate action
further eliminating or limiting the personal liability of directors, then
the liability of a director of the corporation shall be eliminated or
limited to the fullest extent permitted by the DGCL, as so amended.
The Registrant may purchase and maintain insurance on behalf of any person
who is or was a director, officer, fiduciary or agent of the Registrant against
any liability asserted against and incurred by such person in any such capacity
or arising out of such person's position, whether or not the Registrant would
have the power to indemnify against such liability under the provisions of the
Certificate of Incorporation or the Bylaws of the Registrant.
The Underwriting Agreement, which is filed herewith, contains provisions by
which the Underwriter agrees to indemnify the Registrant, each person who
controls the Registrant within the meaning of Section 15 of the Securities Act
of 1933, each director of the Registrant, and each officer of the Registrant
with respect to certain civil liabilities, including liabilities under the
Securities Act, liabilities arising from breaches of representations and
warranties contained in the Underwriting Agreement, and liabilities arising from
violations of law, rule or regulation in the offer or sale of the shares offered
in the Registration Statement.
II-1
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemization of all expenses (subject to future
contingencies) incurred or to be incurred by the Registrant in connection with
the issuance and distribution of the securities being offered, other than
underwriting commissions and the underwriter's non-accountable expense
allowance:
<TABLE>
<S> <C>
SEC registration fee.............................................. $ 2,502
NASD filing fee................................................... 1,400
NASDAQ SmallCap Market listing fee................................ 10,000
Transfer agent fee................................................ 5,000*
Escrow agent fee.................................................. 5,000*
Printing and engraving............................................ 75,000*
Accounting fees and expenses...................................... 50,000*
Legal fees and expenses........................................... 100,000*
Blue sky fees and expenses........................................ 20,000*
Miscellaneous..................................................... 6,098*
---------
Total............................................................. $ 275,000*
---------
---------
</TABLE>
- ------------------------
* Estimated
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Upon formation of the Registrant, 5,760,000 shares of common stock were
issued to Joseph C. Passalaqua in exchange for 96 shares of common stock of
Bright Technologies, Inc., a Georgia corporation, and 240,000 shares of common
stock were issued to Joseph J. Passalaqua in exchange for four shares of common
stock of Bright Technologies, Inc., a Georgia corporation. These transactions
were deemed to be exempt from registration under Section 4(2) of the Securities
Act of 1933 as transactions by an issuer not involving a public offering.
ITEM 27. EXHIBITS.
The exhibits listed below are filed as part of this Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
1.1 Underwriting Agreement
1.2 First Amendment to Underwriting Agreement
3.1 Certificate of Incorporation
3.2 Bylaws
4.1 Specimen Certificate for Common Stock of the registrant*
5.1 Opinion of Arter & Hadden LLP*
10.1 Agreement among Joseph C. Passalaqua, Bright Technologies, Inc. and Ernst & Young Inc., in its
capacity as Court-Appointed Receiver and Manager for Tee-Comm Electronics, Inc., dated January 14,
1999
10.2 Letter Agreement among Joseph C. Passalaqua, Bright Technologies, Inc. and Ernst & Young Inc., in its
capacity as Court-Appointed Receiver and Manager for Tee-Comm Electronics, Inc., dated March 9,
1999
10.3 Secured Promissory Note between Bright Technologies, Inc. and Tee-Comm Teleservices, Inc., dated
February 1995
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.4 Security Agreement between Bright Technologies, Inc. and Tee-Comm Teleservices, Inc., dated February
13, 1995
10.5 Licensing Agreement between Motorola, Inc. and Bright Technologies, Inc., dated March 12, 1999*
10.6 Employment Agreement between Joseph C. Passalaqua and the registrant, dated April 23, 1999
10.7 Employment Agreement between Carl E. M. Worboys and the registrant, dated April 23, 1999
10.8 Lease Agreement between Mary Passalaqua and the registrant, dated May 1, 1999
10.9 Lease Agreement among Bright Technologies, Inc. and Raymond J. and Jean A. Prossen, dated August 30,
1996
10.10 Promissory Note between Bright Technologies, Inc. and Triangle Plastics, Inc., dated ,
1999*
10.11 Escrow Agreement between the registrant and Firstar Bank of Minnesota, N.A., dated , 1999*
10.12 1999 Stock Option Plan
10.13 1999 Non-Employee Director Stock Option Plan
10.14 Form of Non-Qualified Stock Option Agreement under the registrant's 1999 Stock Option Plan
10.15 Form of Incentive Stock Option Agreement under the registrant's 1999 Stock Option Plan
10.16 Form of Non-Qualified Stock Option Agreement under the registrant's 1999 Non-Employee Director Stock
Option Plan
10.17 Financial Advisory Services Agreement between the registrant and Lilly Beter Capital Group, Ltd.,
dated May 14, 1999*
21.1 Subsidiaries of the registrant
23.1 Consent of Arter & Hadden LLP (included in Exhibit 5.1)*
23.2 Consent of Tabb, Conigliaro & McGann, P.C.
24.1 Powers of Attorney (contained on page S-1)
27.1 Financial Data Schedule
</TABLE>
- ------------------------
* To be filed by amendment.
ITEM 28. UNDERTAKINGS.
1. The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreement certificates
in such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.
2. Insofar as indemnification for liabilities arising out of the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the registrant pursuant to the registrant's Certificate of
Incorporation or otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission (the "Commission") such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action,
II-3
<PAGE>
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
3. The undersigned registrant hereby undertakes that:
(a) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as a part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(b) For purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Liverpool, State of New York, on May 12, 1999.
<TABLE>
<S> <C> <C>
BRIGHT-TECHNOLOGIES.COM, INC.
By: /s/ JOSEPH C. PASSALAQUA
-----------------------------------------
Joseph C. Passalaqua
CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and directors
of bright-technologies.com, inc., a Delaware corporation, which is filing a
Registration Statement on Form SB-2 with the Securities and Exchange Commission,
Washington, D.C. 20549 under the provisions of the Securities Act of 1933, as
amended (the "Securities Act"), hereby constitute and appoint Joseph C.
Passalaqua and Carl E. M. Worboys, or either of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign such Registration Statement and any or all amendments,
including post-effective amendments, to the Registration Statement, including a
Prospectus or an amended Prospectus therein and in any registration statement
for the same offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act and all other documents in connection therewith
to be filed with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and to each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully and to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact as agents or any of them, or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Chief Executive Officer,
/s/ JOSEPH C. PASSALAQUA Chairman of the Board
- ------------------------------ and Director (Principal May 12, 1999
Joseph C. Passalaqua Executive Officer)
Chief Financial Officer
/s/ LILLY BETER and Treasurer (Principal
- ------------------------------ Financial Officer and May 12, 1999
Lilly Beter Accounting Officer) and
Director
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ JOHN J. ANDRE, JR.
- ------------------------------ Director May 12, 1999
John J. Andre, Jr.
/s/ TERRY L. COLBERT
- ------------------------------ Director May 13, 1999
Terry L. Colbert
/s/ LEWIS A. MCGUINNESS
- ------------------------------ Director May 12, 1999
Lewis A. McGuinness
- ------------------------------ Director
William T. Muth
/s/ JOSEPH J. PASSALAQUA
- ------------------------------ Director May 12, 1999
Joseph J. Passalaqua
/s/ CARL E. M. WORBOYS
- ------------------------------ Director May 12, 1999
Carl E. M. Worboys
</TABLE>
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE
EXHIBIT NO. DESCRIPTION OF EXHIBIT NUMBER
- ------------- ------------------------------------------------------------------------------------------- -----------
<C> <S> <C>
1.1 Underwriting Agreement
1.2 First Amendment to Underwriting Agreement
3.1 Certificate of Incorporation
3.2 Bylaws
4.1 Specimen Certificate for Common Stock of the registrant*
5.1 Opinion of Arter & Hadden LLP*
10.1 Agreement among Joseph C. Passalaqua, Bright Technologies, Inc. and Ernst & Young Inc., in
its capacity as Court-Appointed Receiver and Manager for Tee-Comm Electronics, Inc.,
dated January 14, 1999
10.2 Letter Agreement among Joseph C. Passalaqua, Bright Technologies, Inc. and Ernst & Young
Inc., in its capacity as Court-Appointed Receiver and Manager for Tee-Comm Electronics,
Inc., dated March 9, 1999
10.3 Secured Promissory Note between Bright Technologies, Inc. and Tee-Comm Teleservices, Inc.,
dated February 1995
10.4 Security Agreement between Bright Technologies, Inc. and Tee-Comm Teleservices, Inc., dated
February 13, 1995
10.5 Licensing Agreement between Motorola, Inc. and Bright Technologies, Inc., dated March 12,
1999*
10.6 Employment Agreement between Joseph C. Passalaqua and the registrant, dated April 23, 1999
10.7 Employment Agreement between Carl E. M. Worboys and the registrant, dated April 23, 1999
10.8 Lease Agreement between Mary Passalaqua and the registrant, dated May 1, 1999
10.9 Lease Agreement among Bright Technologies, Inc. and Raymond J. and Jean A. Prossen, dated
August 30, 1996
10.10 Promissory Note between Bright Technologies, Inc. and Triangle Plastics, Inc., dated
, 1999*
10.11 Escrow Agreement between the registrant and Firstar Bank of Minnesota, N.A., dated ,
1999*
10.12 1999 Stock Option Plan
10.13 1999 Non-Employee Director Stock Option Plan
10.14 Form of Non-Qualified Stock Option Agreement under the registrant's 1999 Stock Option Plan
10.15 Form of Incentive Stock Option Agreement under the registrant's 1999 Stock Option Plan
10.16 Form of Non-Qualified Stock Option Agreement under the registrant's 1999 Non-Employee
Director Stock Option Plan
10.17 Financial Advisory Services Agreement between the registrant and Lilly Beter Capital Group,
Ltd., dated May 14, 1999*
21.1 Subsidiaries of the registrant
23.1 Consent of Arter & Hadden LLP (included in Exhibit 5.1)*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
EXHIBIT NO. DESCRIPTION OF EXHIBIT NUMBER
- ------------- ------------------------------------------------------------------------------------------- -----------
<C> <S> <C>
23.2 Consent of Tabb, Conigliaro & McGann, P.C.
24.1 Powers of Attorney (contained on page S-1)
27.1 Financial Data Schedule
</TABLE>
- ------------------------
* To be filed by amendment.
<PAGE>
Exhibit 1.1
1,000,000 to 1,600,000 Shares of Common Stock
bright-technologies.com, inc.
UNDERWRITING AGREEMENT
April 30, 1999
ROCKCREST SECURITIES L.L.C.
3811 Turtle Creek Boulevard, Suite 520
Dallas, Texas 75219
Ladies and Gentlemen:
bright-technologies.com, inc., a Delaware corporation (the "Company"), has
an authorized capitalization of 30,000,000 shares of common stock, par value
$0.001 per share (the "Common Stock") and 5,000,000 shares of preferred stock,
par value $0.01 per share (the "Preferred Stock"), of which 6,000,000 shares of
Common Stock and no shares of Preferred Stock are currently issued and
outstanding. This Agreement contemplates that Rockcrest Securities L.L.C.
(sometimes referred to herein as the "Underwriter"), pursuant to the terms of
this Agreement, will us its best efforts to sell, for the account of the
Company, a minimum of 1,000,000, and a maximum of 1,600,000, shares of Common
Stock at a price of $5.00 per share. The term "Shares", as used herein, includes
as many of the shares of Common Stock as are issued and sold pursuant to the
terms hereof, unless the context indicates otherwise.
The Company hereby confirms as follows its agreement with you in
connection with the proposed offer and sale of the Shares:
1. Representations and Warranties.
(a) The Company represents and warrants to, and agrees with, the
Underwriter, that each of the following representations and warranties will be
true and correct in all material respects on the Effective Date (as defined
herein), and on each date of delivery of and payment for Shares hereunder (each
such date, a "Closing Date" and, collectively, the "Closing Dates").
(i) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form SB-2 for
the registration of the Shares under the Securities Act of 1933, as amended (the
"1933 Act"), including the related prospectus subject to completion, and one or
more amendments to such registration statement as may be necessary to permit
such registration statement to become effective, in each case in conformity in
all material respects with the requirements of the 1933 Act and the rules and
regulations promulgated thereunder (the "1933 Act Regulations"). Copies of such
registration statement, including any amendments thereto, each Preliminary
Prospectus (as defined herein) contained therein and the exhibits, financial
statements and schedules to such registration statement, as finally amended and
revised, have heretofore been delivered by the Company to the
1
<PAGE>
Underwriter. As used in this Agreement, the term "Registration Statement" means
such registration statement, as amended at the time when it was or is declared
effective under the 1933 Act, including (1) all financial schedules and exhibits
thereto, and (2) any information omitted therefrom pursuant to Rule 430A of the
1933 Act Regulations ("Rule 430A") and included in the Prospectus (as defined
herein); the term "Preliminary Prospectus" means each prospectus subject to
completion filed with such registration statement or any amendment thereto; and
the term "Prospectus" means the prospectus first filed with the Commission
pursuant to Rule 424(b)(1) or (4) of the 1933 Act Regulations or, if no
prospectus is required to be filed pursuant to Rule 424(b)(1) or (4), the
prospectus included in the Registration Statement, in each case including the
financial schedules thereto. The date on which the Registration Statement
becomes effective is hereinafter referred to as the "Effective Date."
(ii) No order preventing or suspending the use of any Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) has been issued by the Commission, nor has the Commission, to the
knowledge of the Company, threatened to issue such an order or instituted
proceedings for that purpose. Each Preliminary Prospectus, at the time of filing
thereof, (A) complied in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations, and (B) did not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that this
representation and warranty does not apply to statements or omissions made in
reliance upon and in conformity with information furnished in writing to the
Company by the Underwriter expressly for inclusion in the Registration
Statement, the Preliminary Prospectus or the Prospectus (the "Underwriter's
Information").
(iii) At the Effective Date and at all times subsequent thereto, up
to and including each Closing Date, the Registration Statement and any
post-effective amendment thereto (A) complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations, and
(B) did not and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that this representation and warranty does
not apply to the Underwriter's Information.
(iv) At the Effective Date and at all times when the Prospectus is
required to be delivered in connection with offers and sales of Shares,
including, without limitation, each Closing Date, the Prospectus, as amended or
supplemented, (A) complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations, and (B) did not and
will not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty does not
apply to the Underwriter's Information.
(v) The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware, with full power and authority
to own, lease and operate
2
<PAGE>
its properties and conduct its business as described in and contemplated by the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and as currently being
conducted. The Company has the power and authority to issue and sell the Shares,
to enter into and perform its obligations under this Agreement and to consummate
the transactions herein contemplated. The Company is duly qualified to transact
business and in good standing in each jurisdiction in which the conduct of its
business or the ownership of its properties requires such qualification, except
to the extent that the failure to be so qualified or be in good standing would
not have a material adverse effect on the financial condition, stockholders
equity or results of operations of the Company or the Subsidiary (as defined
herein) taken as a whole ("Material Adverse Effect").
(vi) The Company's only subsidiary is Bright Technologies, Inc., a
Georgia corporation (the "Subsidiary"). The Company does not own or control,
directly or indirectly, more than 5% of any class of equity security of any
corporation, association or other entity other than the Subsidiary. The
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia. The Subsidiary has full
corporate and other power and authority to own, lease and operate its properties
and to conduct its business as described in and contemplated by the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) and as currently being conducted.
(vii) The Subsidiary is duly qualified to transact business as a
foreign corporation and is in good standing in each other jurisdiction in which
it owns or leases property or conducts its business so as to require such
qualification, except where the failure to so qualify would not have a Material
Adverse Effect. All of the issued and outstanding shares of capital stock of the
Subsidiary (A) have been duly authorized and are validly issued, (B) are fully
paid and nonassessable, and (C) except as disclosed in the Prospectus (or if the
Prospectus is not in existence, the most recent Preliminary Prospectus), are
owned by the Company, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, restriction upon voting or transfer, preemptive rights, claim
or equity.
(viii) The capital stock of the Company will, on the Effective Date,
conform to the description thereof contained in the Prospectus (or if the
Prospectus is not in existence, the most recent Preliminary Prospectus) in all
material respects. The outstanding shares of capital stock and equity securities
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable, and no such shares were issued in violation of the preemptive
or similar rights of any security holder of the Company. No person has any
preemptive or similar right to purchase any shares of capital stock or equity
securities of the Company.
(ix) The Company has all requisite power and authority to issue,
sell and deliver the Shares in accordance with and upon the terms and conditions
set forth in this Agreement, the Registration Statement and the Prospectus (or
if the Prospectus is not in existence, the most recent Preliminary Prospectus).
All corporate action required to be taken by the Company for the authorization,
issuance, sale and delivery of the Shares in accordance with such terms and
conditions has been validly and sufficiently taken. The Shares, when delivered
in
3
<PAGE>
accordance with this Agreement, will be duly and validly issued and outstanding
and will be fully paid and nonassessable, will not be issued in violation of or
subject to any preemptive or similar rights, and will conform in all material
respects to the description thereof in the Registration Statement and the
Prospectus (or if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(x) The execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus (or if the Prospectus is not in
existence, the most recent Preliminary Prospectus), do not and will not conflict
with, result in the creation or imposition of any material lien, claim, charge,
encumbrance or restriction upon any property or assets of the Company or the
Subsidiary or the Shares pursuant to, constitute a breach or violation of, or
constitute a default under, with or without notice or lapse of time or both, the
certificate or articles of incorporation or by-laws of the Company or the
Subsidiary, any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease, Permit or any other agreement or instrument to which the
Company or the Subsidiary is a party or by which either of them or any of their
respective properties may be bound or any order, decree, judgment, rule or
regulation of any court, arbitrator, government, or governmental agency or
instrumentality, domestic or foreign, having jurisdiction over the Company or
the Subsidiary or any of their respective properties, which conflict, creation,
imposition, breach, violation or default would, either singly or in the
aggregate, have a Material Adverse Effect. No authorization, approval, consent
or order of or filing, registration or qualification with, any person
(including, without limitation, any court, governmental body or authority) is
required in connection with the transactions contemplated by this Agreement,
except for the registration of the Shares under the 1933 Act and such as may be
required under state securities laws or Interpretations or Rules of the National
Association of Securities Dealers, Inc. ("NASD") in connection with the
distribution of the Shares by the Underwriter.
(xi) The Company has all requisite corporate power and authority to
enter into this Agreement, and this Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes the legal,
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be limited by
general principles of equity and by bankruptcy or other laws relating to or
affecting creditors' rights generally and except as any indemnification or
contribution provisions thereof may be limited under applicable securities laws.
(xii) The Company and the Subsidiary have good and marketable title
in fee simple to all real property and good title to all personal property owned
by them and material to their business, in each case free and clear of all
security interests, liens, mortgages, pledges, encumbrances, restrictions,
claims, equities and other defects except such as are referred to in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) or such as do not materially affect the value of such
property in the aggregate and do not materially interfere with the use made or
proposed to be made of such property; and all of the leases under which the
Company or the Subsidiary hold real or personal property are valid, existing and
enforceable leases and in full force and effect with such exceptions as are not
material and do not
4
<PAGE>
materially interfere with the use made or proposed to be made of such real or
personal property by the Company, and neither the Company nor the Subsidiary is
in default in any material respect of any of the terms or provisions of any
material leases.
(xiii) Tabb, Conigliaro & McGann, P.C., who have certified certain
of the financial statements of the Company and the Subsidiary, including the
notes thereto, included in the Registration Statement and Prospectus, are
independent public accountants with respect to the Company and the Subsidiary as
required by the 1933 Act and the 1933 Act Regulations.
(xiv) The financial statements, including the notes thereto,
included in the Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) with respect to the
Company and the Subsidiary, comply in all material respects with the 1933 Act
and the 1933 Act Regulations and present fairly the financial position of the
entities covered thereby as of the dates indicated and the results of
operations, cash flows and changes in shareholders' equity of the entities
covered thereby for the periods specified, and have been prepared in conformity
with generally accepted accounting principles. The selected and summary
financial data concerning the Company and the Subsidiary included in the
Registration Statement and the Prospectus (or such Preliminary Prospectus)
comply in all material respects with the 1933 Act and the 1933 Act Regulations,
present fairly the information set forth therein, and have been compiled on a
basis consistent with that of the financial statements of the Company and the
Subsidiary in the Registration Statement and the Prospectus (or such Preliminary
Prospectus). The other financial, statistical and numerical information included
in the Registration Statement and the Prospectus (or such Preliminary
Prospectus) complies in all material respects with the 1933 Act and the 1933 Act
Regulations, presents fairly the information shown therein, and to the extent
applicable has been compiled on a basis consistent with the financial statements
of the Company and the Subsidiary included in the Registration Statement and the
Prospectus (or such Preliminary Prospectus).
(xv) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), except as otherwise stated
therein:
(A) neither the Company nor the Subsidiary has sustained any
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, except for such loss or
interference or labor dispute or court or governmental action, order or decree
as would not have a Material Adverse Effect;
(B) there has not been any material adverse change in the
Company and Subsidiary taken as a whole, or any development which is reasonably
likely to have a Material Adverse Effect;
(C) neither the Company nor the Subsidiary has incurred any
liabilities or obligations, direct or contingent, or entered into any material
transactions, other than
5
<PAGE>
in the ordinary course of business, which is material to the Company and
Subsidiary taken as a whole; and
(D) the Company has not declared or paid any dividend or
distribution on its capital stock.
(xvi) Except as set forth in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), no charge, investigation, action, suit or proceeding is
pending or, to the knowledge of the Company, threatened, against or affecting
the Company or the Subsidiary or any of their respective properties before or by
any court or any regulatory, administrative or governmental official,
commission, board, agency or other authority or body, or any arbitrator, wherein
an unfavorable decision, ruling or finding would reasonably be expected to have
a material adverse effect on the consummation of this Agreement or the
transactions contemplated herein or the Company and Subsidiary taken as a whole
or which is required to be disclosed in the Registration Statement or the
Prospectus and is not so disclosed.
(xvii) There are no contracts or other documents required to be
filed as exhibits to the Registration Statement by the 1933 Act or the 1933 Act
Regulations which have not been filed as exhibits or incorporated by reference
into the Registration Statement, or that are required to be summarized in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) that are not so summarized.
(xviii) The Company and the Subsidiary have prepared and filed all
necessary federal and state tax returns which are required to be filed by them
and have paid all taxes shown as due thereon and have paid all other taxes and
assessments to the extent that the same shall have become due, except such as
are being contested in good faith or where the failure to so prepare and file
would not have a Material Adverse Effect. The Company has no knowledge of any
tax deficiency which has been or might be assessed against the Company or the
Subsidiary which, if the subject of an unfavorable decision, ruling or finding,
would have a Material Adverse Effect.
(xix) Each of the material contracts, agreements and instruments
described or referred to in the Registration Statement or the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus), and
each contract, agreement and instrument filed as an exhibit to the Registration
Statement, is in full force and effect and is the legal, valid and binding
agreement of the Company or the Subsidiary, enforceable in accordance with its
terms, except (A) to the extent set forth in the Prospectus (or such Preliminary
Prospectus, (B) as the enforcement thereof may be limited by general principles
of equity and by bankruptcy or other laws relating to or affecting creditors'
rights generally, (C) to the extent such unenforceability would not have a
Material Adverse Effect or (D) with respect to any indemnification or
contribution provision thereof, as may be limited by applicable securities laws.
Except as disclosed in the Prospectus (or such Preliminary Prospectus), to the
knowledge of the Company, no other party to any such agreement is (with or
without notice or lapse of time or both) in breach or default in any material
respect thereunder.
6
<PAGE>
(xx) The Company is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended (the "Investment Company
Act").
(b) The Underwriter represents and warrants to, and agrees with, the
Company, that each of the following representations and warranties are true and
correct on the date hereof, and will be true and correct in all material
respects on the Effective Date and on each Closing Date:
(i) The Underwriter is registered as a broker-dealer with the
Commission, is registered, to the extent registration is required, with the
appropriate governmental agency in each state in which it will offer or sell the
Shares, is a member of the National Association of Securities Dealers, Inc.
("NASD"), and will use its best efforts to maintain such registrations,
qualifications and memberships throughout the term of the offering of Shares
contemplated hereby.
(ii) No action or proceeding is pending or, to the knowledge of the
Underwriter threatened, against the Underwriter or any of its officers,
directors, principals or controlling persons concerning the Underwriter's
activities as a broker or dealer.
(iii) The Underwriter will offer the Shares only in those states and
in the quantities that are identified in a Blue Sky Memorandum from the
Company's counsel to the Underwriter that the offering of the Shares has been
qualified for sale under the applicable state statutes and regulations;
provided, however, that the Underwriter may offer the Shares in other states if
(i) the transaction is exempt from the registration requirements in such states,
(ii) the Company's counsel has received notice ten (10) days prior to the first
proposed offer in such states, and (iii) the Company's counsel does not object
within said 10-day period.
(iv) The Underwriter, in connection with the offer and sale of the
Shares and in the performance of its duties and obligations under this
Agreement, agrees to use its best efforts to comply with all applicable federal
laws, the laws of the states or other jurisdictions in which the Shares are
offered and sold, and the applicable rules and regulations of the NASD.
(v) The Underwriter is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Texas.
(vi) The Underwriter has all requisite power and authority to enter
into this Agreement, and this Agreement has been duly and validly authorized,
executed and delivered by the Underwriter and constitutes the legal, valid and
binding agreement of the Underwriter, enforceable against the Underwriter in
accordance with its terms, except as the enforcement thereof may be limited by
general principles of equity and by bankruptcy or other laws relating to or
affecting creditors' rights generally and except as any indemnification or
contribution provisions thereof may be limited under applicable securities laws.
(vii) The execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated by this Agreement, the
Registration Statement
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and the Prospectus (or if the Prospectus is not in existence, the most recent
Preliminary Prospectus), do not and will not conflict with, result in the
creation or imposition of any material lien, claim, charge, encumbrance or
restriction upon any property or assets of the Underwriter pursuant to,
constitute a breach or violation of, or constitute a default under, with or
without notice or lapse of time or both, the articles of organization or
regulations of the Underwriter, any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease, permit or any other agreement or
instrument to which the Underwriter is a party or by which it or any of its
properties may be bound or any order, decree, judgment, rule or regulation of
any court, arbitrator, government, or governmental agency or instrumentality,
domestic or foreign, having jurisdiction over the Underwriter or any of its
properties, which conflict, creation, imposition, breach, violation or default
would, either singly or in the aggregate, have a material adverse effect on the
Underwriter's financial condition, equity or results of operations.
2. Sale and Delivery of the Shares.
(a) From the date of this Agreement until the close of business 180 days
after the Effective Date (or such other offering period as is set forth in the
Prospectus) (the "Offering Period"), the Company hereby appoints the Underwriter
as its exclusive agent to sell the Shares for the Company's account at a
purchase price of $5.00 per Share. The Underwriter accepts such appointment and
agrees to use its best efforts to sell the Shares, in accordance with and
subject to the terms and conditions of this Agreement. The Company acknowledges
that the Underwriter is not obligated to purchase any or all of the Shares on a
firm commitment basis.
(b) The Underwriter shall deposit all funds received by it from the sale
of the Shares in an escrow account with an escrow agent selected by the Company,
by 12:00 noon of the next business day in compliance with NASD Notice to Members
84-7, dated January 30, 1984, and shall instruct any co-underwriters or selected
dealers to do likewise. Such deposits shall continue to be made until either (i)
such funds are turned over to the Company for the Shares or (ii) such funds are
returned directly to the persons who subscribe for the Shares, without interest
thereon or deduction therefrom; all in accordance with the terms of an escrow
agreement to be entered into prior to the Effective Date.
(c) On or before the fifth business day following the Company's and the
Underwriter's receipt of notification from the escrow agent that it has received
cash or cleared funds for 1,000,000 Shares during the Offering Period, the
initial closing on the sale of such Shares shall occur at a time and place
agreed upon by the Company and the Underwriter, provided that the other
conditions to Closing set forth in Section 7 hereof have been satisfied. The
date of such closing is referred to herein as the "Initial Closing Date" and
such closing is referred to as the "Initial Closing." At the Initial Closing,
the Company will deliver to the Underwriter the certificates for the Shares (in
such denominations and in such names as the Underwriter shall request upon at
least 48 hours prior written notice) against payment to the Company by the
escrow agent, on behalf of the purchasers of such Shares (by wire transfer or
other immediately available funds acceptable to the Company), of the public
offering price of such Shares, less the Underwriter's selling commission equal
to ten percent (10%) of the public
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<PAGE>
offering price of such Shares. Such commission shall be paid to the Underwriter
by the escrow agent at the Initial Closing.
(d) Following the Initial Closing, the Company and the Underwriter shall
mutually agree upon the time and place for additional closings on Shares sold
during the balance of the Offering Period and shall instruct the escrow agent,
in writing signed by both the Company and the Underwriter, to make payment for
any Shares as to which a closing shall occur to the Company, less the 10%
selling commission payable to the Underwriter for such Shares, against delivery
to the Underwriter by the Company of certificates for the Shares sold at such
closing. Such commission shall be paid to the Underwriter by the escrow agent at
such closing.
(e) In offering the Shares for sale the Underwriter is acting solely as
agent for the Company. Any such offer shall be made upon the terms and subject
to the conditions set forth in the Registration Statement and Prospectus.
Neither the Underwriter nor any person acting on its behalf, including any
co-underwriter or selected dealer, shall have any authority to give any
information or make any representations in connection with any offer or sale of
the Shares other than as contained in the Prospectus or as is otherwise
expressly authorized in writing by the Company. The Underwriter shall have the
right to engage the services of co-underwriters with regard to the offering
contemplated hereby pursuant to separate written agreement in a form approved by
the Company. Such separate agreement shall provide in part that (i) the
Underwriter shall act as managing underwriter hereunder, (ii) the rights of the
co-underwriters shall not exceed the rights of the managing underwriter, (iii)
the liabilities of the co-underwriters shall not be less than the liabilities of
the managing underwriter, (iv) the managing underwriter shall have the right to
allot any portion of the Underwriter's compensation to the co-underwriters and
(v) the managing underwriter shall have the right to reject orders from such
co-underwriters, in whole or in part, for any of the Shares to be offered in
contemplation of this Agreement. The Underwriter also may engage registered
dealers selected by it to solicit sales of Shares pursuant to a Selected Dealer
Agreement, substantially in the form attached hereto as Exhibit A, and pursuant
to which it may allow such concession (out of its underwriting commission) as it
may determine within the limits set forth in the Registration Statement and
Prospectus.
3. Certain Covenants of the Company. The Company covenants with the Underwriter
as follows:
(a) The Company shall use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
possible. If the Registration Statement becomes effective pursuant to Rule 430A
and information has been omitted therefrom in reliance on Rule 430A, then the
Company will prepare and file in accordance with Rule 430A and Rule 424(b)
copies of the Prospectus or, if required by Rule 430A, a post-effective
amendment to the Registration Statement (including the Prospectus) containing
all information so omitted.
(b) The Company shall notify the Underwriter immediately, and confirm such
notice in writing:
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<PAGE>
(i) when the Registration Statement, or any post-effective amendment
to the Registration Statement, has become effective, or when the Prospectus or
any supplement to the Prospectus or any amended Prospectus has been filed;
(ii) of the receipt of any comments or requests from the Commission
relating to the Registration Statement or the Prospectus;
(iii) of any request of the Commission to amend or supplement the
Registration Statement, any Preliminary Prospectus or the Prospectus or for
additional information; and
(iv) of the issuance by the Commission or any state or other
regulatory body of any stop order or other order suspending the effectiveness of
the Registration Statement, preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, or suspending the qualification of any of the
Shares for offering or sale in any jurisdiction or the institution or threat of
institution of any proceedings for any of such purposes. The Company shall use
its best efforts to prevent the issuance of any such stop order or of any other
such order and, if any such order is issued, to cause such order to be withdrawn
or lifted as soon as possible.
(c) The Company shall furnish to the Underwriter, from time to time
without charge, as soon as available, as many copies as the Underwriter may
reasonably request of (i) the registration statement as originally filed and of
all amendments thereto including exhibits, whether filed before or after the
Registration Statement becomes effective, (ii) all exhibits and documents
incorporated therein or filed therewith, (iii) all consents and certificates of
experts in executed form, (iv) each Preliminary Prospectus and all amendments
and supplements thereto, and (v) the Prospectus, and all amendments and
supplements thereto.
(d) During the time when a prospectus is required to be delivered under
the 1933 Act, the Company shall comply to the best of its ability with the 1933
Act and the 1933 Act Regulations and the Securities Exchange Act of 1934, as
amended (the "1934 Act") and the rules and regulations of the Commission
thereunder (the "1934 Act Regulations") so as to permit the completion of the
distribution of the Shares as contemplated herein and in the Prospectus. The
Company shall not file any amendment to the registration statement as originally
filed or to the Registration Statement and shall not file any amendment thereto
or make any amendment or supplement to any Preliminary Prospectus or to the
Prospectus of which the Underwriter shall not previously have been advised in
writing and provided a copy a reasonable time prior to the proposed filings
thereof or to which the Underwriter or counsel for the Underwriter shall object.
If it is necessary, in the Company's reasonable opinion or in the reasonable
opinion of the Company's counsel, to amend or supplement the Registration
Statement or the Prospectus in connection with the distribution of the Shares,
the Company shall forthwith amend or supplement the Registration Statement or
the Prospectus, as the case may be, by preparing and filing with the Commission
(provided the Underwriter or counsel for the Underwriter does not reasonably
object), and furnishing to the Underwriter, such number of copies as the
Underwriter may reasonably request of an amendment or amendments of, or a
supplement or supplements to, the Registration Statement or the Prospectus, as
the case may be (in form and substance
10
<PAGE>
reasonably satisfactory to the Underwriter and counsel for the Underwriter). If
any event shall occur as a result of which it is necessary to amend or
supplement the Prospectus to correct an untrue statement of a material fact or
to include a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or if for any
reason it is necessary at any time to amend or supplement the Prospectus to
comply with the 1933 Act and the 1933 Act Regulations, the Company shall,
subject to the second sentence of this subsection (d), forthwith amend or
supplement the Prospectus by preparing and filing with the Commission, and
furnishing to the Underwriter, such number of copies as the Underwriter may
reasonably request of an amendment or amendments of, or a supplement or
supplements to, the Prospectus (in form and substance reasonably satisfactory to
the Underwriter and counsel for the Underwriter) so that, as so amended or
supplemented, the Prospectus shall not contain an untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(e) The Company shall cooperate with the Underwriter in order to qualify
the Shares for offering and sale under the securities or blue sky laws of such
jurisdictions within the United States of America as the Underwriter may
reasonably request and shall continue such qualifications in effect so long as
may be advisable for distribution of the Shares; provided, however, that the
Company shall not be required to qualify to do business as a foreign corporation
or file a general consent to service of process in any jurisdiction in
connection with the foregoing. The Company shall file such statements and
reports as may be required by the laws of each jurisdiction in which the Shares
have been qualified as above. The Company will notify the Underwriter
immediately of, and confirm in writing, the suspension of qualification of the
Shares or threat thereof in any jurisdiction.
(f) The Company shall make generally available to its security holders in
the manner contemplated by Rule 158 of the 1933 Act Regulations and furnish to
the Underwriter as soon as practicable, but in any event not later than 16
months after the Effective Date, a consolidated earnings statement of the
Company conforming with the requirements of Section 11(a) of the 1933 Act and
Rule 158.
(g) The Company shall use the proceeds from the sale of the Shares to be
sold hereunder substantially in the manner specified in the Prospectus under the
caption "Use of Proceeds."
(h) For five years from the Effective Date, the Company shall furnish to
the Underwriter copies of all reports and communications (financial or
otherwise) furnished by the Company to the holders of the Shares as a class,
copies of all reports and financial statements filed with or furnished to the
Commission (other than portions for which confidential treatment has been
obtained from the Commission) or with any other national securities exchange or
self-regulatory organization, and such other documents, reports and information
concerning the business and financial condition of the Company as the
Underwriter may reasonably request, other than such documents, reports and
information which the Company has the legal obligation not to reveal to the
Underwriter.
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<PAGE>
(i) For a period of 180 days from the Effective Date, the Company shall
not, without the Underwriter's prior written consent, directly or indirectly
offer, sell, contract to sell or otherwise dispose of any shares of the
Company's equity securities, any securities convertible or exchangeable for such
equity securities or any other rights to acquire such equity securities, other
than (A) Shares sold by the Underwriter or Selected Dealers pursuant to this
Agreement, and (B) grants by the Company of stock options to employees or
non-employee directors. The Company will cause each of its executive officers
and directors, and beneficial owners of more than five percent of the Common
Stock to deliver to the Underwriter on or before the date of this Agreement, an
agreement satisfactory in form and substance to the Underwriter whereby each
such person agrees, for a period of 180 days from the Effective Date, not to,
directly or indirectly, offer, sell, contract to sell or otherwise dispose of
any shares of the Company's equity securities, any securities convertible or
exchangeable for the Company's equity securities or any other rights to acquire
such equity securities without the prior written consent of the Underwriter.
(j) The Company will prepare and file with the Commission a report on Form
SR in accordance with the 1933 Act Regulations and will supply copies of the
Form SR, and any amendments or supplements thereto, to the Underwriter within
five days of its filing with the Commission.
(k) Within 30 days following the Closing Date, the Company will, if
necessary, register its Common Stock under section 12(g) of the 1934 Act and the
1934 Act Regulations; will use its best efforts to cause the registration
statement to become effective; and will supply copies of the Form 8-A, and any
amendments or supplements thereto, to the Underwriter within five days of its
filling with the Commission.
(l) As soon as is practicable after its securities become eligible
therefor, the Company will apply for listing in Moody's Over-the-Counter Manual
and Standard & Poors' Standard Corporation Records.
(m) Subject to the sale of the Shares, the Company shall appoint a
transfer agent reasonably satisfactory to the Underwriter.
5. Payment of Expenses. (a) Whether or not this Agreement is terminated or the
sale of the Shares is consummated, the Company covenants and agrees that it will
pay or cause to be paid (directly or by reimbursement) all costs and expenses
incident to the performance of the obligations of the Company under this
Agreement, including without limitation:
(i) the preparation, printing, filing, delivery and shipping of the
initial registration statement, the Preliminary Prospectus or Prospectuses, the
Registration Statement and the Prospectus and any amendments or supplements
thereto, and the printing, delivery and shipping of this Agreement, any other
underwriting documents, and the certificates for the Shares;
(ii) all fees, expenses and disbursements of counsel and accountants for
the Company;
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<PAGE>
(iii) all fees and expenses incurred in connection with the qualification
of the Shares under the securities or blue sky laws of such jurisdictions as the
Underwriter may request, including all filing fees in connection therewith;
(iv) all fees and expenses incurred in connection with filings made with
the NASD;
(v) the cost of furnishing to the Underwriter copies of the initial
registration statement, any Preliminary Prospectus, the Registration Statement
and the Prospectus and all amendments or supplements thereto;
(vi) the costs and charges of any transfer agent or registrar and the fees
and disbursements of counsel to any transfer agent or registrar;
(vii) all costs and expenses (including stock transfer taxes) incurred in
connection with the printing, issuance and delivery of the Shares; and
(viii) all other costs and expenses incident to the performance of the
obligations of the Company hereunder that are not otherwise specifically
provided for in this Section 5; provided, however, that the Underwriter shall
pay its own costs and expenses, including without limitation (A) the costs and
expenses of its counsel, (B) the expenses of advertising any offering of the
Shares made by the Underwriter, and (C) stabilization costs, if any.
(b) The Company has paid to the Underwriter, and the Underwriter
acknowledges that it has received, $25,000 in cash as an accountable advance
against its out-of-pocket costs and expenses relating to this offering. The
Company shall have no liability to the Underwriter for the Underwriter's costs
and expenses in excess of such advance. The Underwriter agrees that such advance
shall not be used to cover Underwriter's general overhead, salaries, supplies or
similar expenses of Underwriter incurred in the normal conduct of its business.
Upon completion of the offering contemplated hereby, whether or not Shares are
sold, or prior termination of this Agreement for any reason, the Underwriter
shall account to the Company for its expenditures of the advance, and to refund
to the Company any portion of such advance not actually expended by Underwriter
in connection with the transactions contemplated hereby.
6. Warrants. On the Initial Closing Date, the Company shall issue to the
Underwriter warrants pursuant to a Warrant Agreement substantially in the form
attached hereto as Exhibit B, which shall entitle the warrant holder to purchase
100,000 shares of Common Stock at a purchase price per share equal to $6.00. The
warrants shall be exercisable as provided in the Warrant Agreement for a period
of four years, commencing one year after the Effective Date. Until one year
after the Effective Date, the warrants may be transferred, sold or assigned only
to officers or partners of the Underwriter and other members of the selling
group.
7. Conditions of the Underwriter's Obligations. The obligations of the
Underwriter under this Agreement are subject, in the Underwriter's reasonable
discretion, to the accuracy of and compliance with the representations and
warranties and agreements of the Company herein as of the Effective Date and as
of the Closing Dates, to the accuracy of the written statements of
13
<PAGE>
the Company made pursuant to the provisions hereof, to the performance by the
Company of its covenants and obligations hereunder and to the following
additional conditions:
(a) On or prior to each Closing Date, no stop order suspending the
effectiveness of the Registration Statement or any amendment or supplement
thereto shall have been issued under the 1933 Act or any applicable state
securities laws and no proceedings for that purpose shall have been instituted
or shall be pending, or, to the knowledge of the Company or the Underwriter,
shall be contemplated by the Commission or any state authority. Any request on
the part of the Commission or any state authority for additional information (to
be included in the Registration Statement or Prospectus or otherwise) shall have
been disclosed to the Underwriter and complied with to the satisfaction of the
Underwriter and to the satisfaction of counsel for the Underwriter.
(b) The Underwriter shall not have advised the Company in writing at or
before any Closing Date that the Registration Statement or any post-effective
amendment thereto, or the Prospectus or any amendment or supplement thereto,
contains an untrue statement of a fact which, in the Underwriter's opinion, is
material or omits to state a fact which, in the Underwriter's opinion, is
material and is required to be stated therein or is necessary to make statements
therein (in the case of the Prospectus or any amendment or supplement thereto,
in light of the circumstances under which they were made) not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement and the Shares, and the
authorization and form of the Registration Statement and Prospectus, other than
financial statements and other financial data, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall be
satisfactory in all material respects to the Underwriter, and the Company and
the Subsidiary shall have furnished to the Underwriter all documents and
information relating thereto that they may reasonably request to enable them to
pass upon such matters.
(d) Arter & Hadden LLP, counsel to the Company, shall have furnished to
the Underwriter its signed opinion, dated the Initial Closing Date, in form and
substance reasonably satisfactory to the Underwriter as to the matters set forth
in Exhibit C hereto.
(e) On or prior to the Initial Closing Date, the Underwriter shall have
received from Tabb, Conigliaro & McGann, P.C. letters, dated the date of this
Agreement and the Initial Closing Date, respectively, in form and substance
satisfactory to the Underwriter, confirming that they are independent public
accountants with respect to the Company and the Subsidiary within the meaning of
the 1933 Act and the 1933 Act Regulations, and stating in effect that:
(i) In their opinion, the financial statements of the Company and
Subsidiary audited by them and included in the Registration Statement comply as
to form in all material respects with the applicable accounting requirements of
the 1933 Act and the 1933 Act Regulations.
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(ii) On the basis of the procedures specified by the American
Institute of Certified Public Accountants as described in SAS No. 71, "Interim
Financial Information," inquiries of officials of the Company or Subsidiary
responsible for financial and accounting matters, and such other inquiries and
procedures as may be specified in such letter, which procedures do not
constitute an audit in accordance with U.S. generally accepted auditing
standards, nothing came to their attention that caused them to believe that, if
applicable, the unaudited interim financial statements of the Company or the
Subsidiary, as the case may be, included in the Registration Statement do not
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act and 1933 Act Regulations or are not in conformity
with U.S. generally accepted accounting principles applied on a basis
substantially consistent, except as noted in the Registration Statement, with
the basis for the audited financial statements of the Company or Subsidiary, as
the case may be, included in the Registration Statement.
(iii) On the basis of limited procedures, not constituting an audit
in accordance with U.S. generally accepted auditing standards, consisting of a
reading of the unaudited interim financial statements and other information
referred to below, a reading of the latest available unaudited financial
statements of the Company and the Subsidiary, inspection of the minute books of
the Company and the Subsidiary since the date of the latest audited financial
statements of the Company and the Subsidiary included in the Registration
Statement, inquiries of officials of the Company and the Subsidiary responsible
for financial and accounting matters, and such other inquiries and procedures as
may be specified in such letter, nothing came to their attention that caused
them to believe that, as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the capital stock of the
Company, or any payment or declaration of any dividend or other distribution on
such capital stock, in each case as compared with amounts shown in the latest
unaudited interim statement of financial condition of the Company included in
the Registration Statement, except for changes, increases or decreases which the
Registration Statement specifically discloses have occurred or may occur or
which are described in such letter.
(f) At each Closing Date, the Underwriter shall have received certificates
of the chief executive officer and the chief financial and accounting officer of
the Company, which certificates shall be deemed to be made on behalf of the
Company, dated as of such Closing Date, evidencing satisfaction of the
conditions of Section 7(a) and stating that (i) the representations and
warranties of the Company set forth in Section 2(a) hereof are accurate as of
the Closing Date, and that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
such Closing Date, (ii) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been any
material adverse change in the condition (financial or otherwise), earnings,
affairs, business, prospects or results of operations of the Company and the
Subsidiary on a consolidated basis, (iii) since such dates there has not been
any material transaction entered into by the Company or the Subsidiary other
than transactions in the ordinary course of business, (iv) they have carefully
examined the Registration Statement and the Prospectus as amended or
supplemented and nothing has come to their attention that would lead them to
believe that either the Registration Statement or the Prospectus, or any
amendment or
15
<PAGE>
supplement thereto as of their respective effective or issue dates, contained,
and the Prospectus as amended or supplemented at such Closing Date, contains any
untrue statement of a material fact, or omits to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and
(v) covering such other matters as the Underwriter may reasonably request. The
officers' certificate of the Company shall further state that no stop order
affecting the Registration Statement is in effect or, to their knowledge,
threatened.
(g) The NASD, upon review of the terms of the public offering of the
Shares, shall not have objected to the Underwriter's participation in such
offering.
(h) The Underwriter shall have received on or before the Effective Date,
the agreements of the executive officers, directors and five percent
shareholders of the Company described in Section 4(i) hereof.
(i) Prior to the Initial Closing Date and each additional Closing Date,
the Company shall have furnished to the Underwriter all such other documents,
certificates and opinions as they have reasonably requested.
All opinions, certificates, letters and other documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Underwriter. The Company shall furnish the
Underwriter with conformed copies of such opinions, certificates, letters and
other documents as the Underwriter shall reasonably request.
If any of the conditions referred to in this Section 7 shall not have been
fulfilled when and as required by this Agreement, this Agreement may be
terminated by the Underwriter on notice to the Company at, or at any time
before, any Closing Date. Any such termination shall be without liability of the
Underwriter to the Company.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the Underwriter, and
each person, if any, who controls the Underwriter within the meaning of the 1933
Act, against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and reasonable attorney fees and
expenses), joint or several, arising out of or based (i) upon any untrue
statement or alleged untrue statement of a material fact made by the Company
contained in the registration statement as originally filed or the Registration
Statement, any Preliminary Prospectus or the Prospectus, or in any amendment or
supplement thereto, (ii) upon any blue sky application or other document
executed by the Company specifically for that purpose or based upon written
information furnished by the Company filed in any state or other jurisdiction in
order to qualify any of the Shares under the securities laws thereof (any such
application, document or information being hereinafter referred to as a "Blue
Sky Application"), (iii) any omission or alleged omission to state a material
fact in the registration statement as originally filed or the Registration
Statement, the Preliminary Prospectus or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application required to be stated therein
16
<PAGE>
or necessary to make the statements therein in light of the circumstances under
which they were made not misleading, or (iv) the enforcement of this
indemnification provision or the contribution provisions of Section 8(d); and
shall reimburse each such indemnified party for any reasonable legal or other
expenses as incurred, but in no event less frequently than 30 days after each
invoice is submitted, incurred by them in connection with investigating or
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action, notwithstanding the possibility
that payments for such expenses might later be held to be improper, in which
case such payments shall be promptly refunded; provided, however, that the
Company shall not be liable in any such case to the extent, but only to the
extent, that any such losses, claims, damages, liabilities and expenses arise
out of or are based upon any untrue statement or omission or allegation thereof
that has been made therein or omitted therefrom in reliance upon and in
conformity with the Underwriter's Information; provided, that the
indemnification contained in this paragraph with respect to any Preliminary
Prospectus shall not inure to the benefit of the Underwriter (or of any person
controlling the Underwriter) to the extent any such losses, claims, damages,
liabilities or expenses directly results from the fact that the Underwriter sold
Shares to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the Prospectus (as amended or
supplemented if any amendments or supplements thereto shall have been furnished
to the Underwriter consistent with the provisions hereof), and if such loss,
claim, damage, liability or expense would not have arisen but for the failure to
give or send such person such document. The foregoing indemnity agreement is in
addition to any liability the Company may otherwise have to any such indemnified
party.
(b) The Underwriter agrees to indemnify and hold harmless the Company,
each of its directors, each of its officers and each person, if any, who
controls the Company within the meaning of the 1933 Act: (i) to the same extent
as required by the foregoing indemnity from the Company to the Underwriter, but
only with respect to the Underwriter's Information or information related to the
Underwriter furnished in writing to the Company through the Underwriter by or on
its behalf expressly for use in a Blue Sky Application, and (ii) against any and
all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation and reasonable attorney fees and expenses), joint or
several, arising out of or based upon the breach (or alleged breach) by the
Underwriter of its representations and warranties in this Agreement, or the
violation (or alleged violation) by the Underwriter of any state or federal law,
rule or regulation in the offer or sale of the Shares as contemplated hereby;
provided, however, that such violation is not based upon any violation of such
law, rule or regulation by the party claiming indemnification. The foregoing
indemnity agreement is in addition to any liability which the Underwriter may
otherwise have to any such indemnified party.
(c) If any action or claim shall be brought or asserted against any
indemnified party or any person controlling an indemnified party in respect of
which indemnity may be sought from the indemnifying party, such indemnified
party or controlling person shall promptly notify the indemnifying party in
writing, and the indemnifying party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all expenses; provided, however, that the failure so to notify
the indemnifying party shall not relieve it from any liability which it may have
to an indemnified party otherwise than
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under such paragraph, and further, shall only relieve it from liability under
such paragraph to the extent materially prejudiced thereby. Any indemnified
party or any such controlling person shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party or such controlling person unless (i) the employment thereof has been
specifically authorized by the indemnifying party in writing, (ii) the
indemnifying party has failed to assume the defense or to employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both such indemnified
party or such controlling person and the indemnifying party and such indemnified
party or such controlling person shall have been advised by such counsel that
there may be one or more legal defenses available to it that are different from
or in addition to those available to the indemnifying party (in which case, if
such indemnified party or controlling person notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action on behalf of such indemnified party or such
controlling person) it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time and for all
such indemnified parties and controlling persons, which firm shall be designated
in writing by the indemnified party and shall be reasonably satisfactory to the
indemnifying party. Each indemnified party and each controlling person, as a
condition of such indemnity, shall use reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. The indemnifying
party shall not be liable for any settlement of any such action effected without
its written consent, but if there be a final judgment for the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party and any such controlling person from and against any loss,
claim, damage, liability or expense by reason of such settlement or judgment. An
indemnifying party shall not, without the prior written consent of each
indemnified party, settle, compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of which
indemnity may be sought hereunder (whether or not such indemnified party or any
person who controls such indemnified party within the meaning of the 1933 Act is
a party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes a release of each such indemnified party
reasonably satisfactory to each such indemnified party and each such controlling
person from all liability arising out of such claim, action, suit or proceeding
or unless the indemnifying party shall confirm in a written agreement with each
indemnified party, that notwithstanding any federal, state or common law, such
settlement, compromise or consent shall not alter the right of any indemnified
party or controlling person to indemnification or contribution as provided in
this Agreement.
(d) If the indemnification provided for in this Section 8 is unavailable
or insufficient to hold harmless an indemnified party under paragraphs (a), (b)
or (c) hereof in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in
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such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriter on the other from the offering
of the Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriter on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The benefits received by the Underwriter on the one
hand and the Company on the other shall be deemed to be allocated pro rata on
the basis of the total underwriting discounts, commissions and compensation
received by the Underwriter relative to the total net proceeds from the offering
of the Shares (before deducting expenses) received by the Company, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company on the one hand and of the Underwriter on the other shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Underwriter and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
Company and the Underwriter agree that it would not be just and equitable if
contribution pursuant to this paragraph (d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages, liabilities and
expenses referred to in the first sentence of this paragraph (d) shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this paragraph (d), the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by the Underwriter and distributed to the public were
offered to the public exceeds the amount of any damages that the Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each person who controls
the Underwriter within the meaning of the 1933 Act shall have the same rights to
contribution as the Underwriter, and each person who controls the Company within
the meaning of the 1933 Act, each officer of the Company and each director of
the Company shall have the same rights to contribution as the Company subject in
each case to the preceding paragraph. The obligations of the Company under this
paragraph (d) shall be in addition to any liability which the Company may
otherwise have and the obligations of the Underwriter under this paragraph (d)
shall be in addition to any liability that the Underwriter may otherwise have.
(e) The indemnity and contribution agreements contained in this Section 8
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of the Underwriter or any person
controlling the Underwriter or by or on behalf of the Company, or such
directors, trustees or officers (or any person controlling the Company), (ii)
acceptance of any Shares and payment therefor hereunder and (iii) any
termination of this Agreement. A
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successor of the Underwriter or of the Company, such directors, trustees or
officers (or of any person controlling the Underwriter or the Company) shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 8.
9. Termination. The Underwriter shall have the right to terminate this Agreement
at any time at or prior to any Closing Date, without liability on the part of
the Underwriter to the Company, if:
(a) The Company shall have failed, refused, or been unable to perform any
agreement on its part to be performed under this Agreement, or any of the
conditions referred to in Section 7 shall not have been fulfilled, when and as
required by this Agreement;
(b) The Company or the Subsidiary shall have sustained any material loss
or interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree which in the judgment of the Underwriter
materially impairs the investment quality of the Shares;
(c) There has been since the respective dates as of which information is
given in the Registration Statement or the Prospectus, any materially adverse
change in, or any development which is reasonably likely to have a Material
Adverse Effect on the Company and the Subsidiary taken as a whole;
(d) There has occurred any outbreak of hostilities or other calamity or
crisis or material change in general economic, political or financial
conditions, or internal conditions, the effect of which on the financial markets
of the United States is such as to make it, in the Underwriter's reasonable
judgment, impracticable to market the Shares or enforce contracts for the sale
of the Shares;
(e) Trading generally on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq Stock Market's National Market shall have been suspended,
or minimum or maximum prices for trading shall have been fixed, or maximum
ranges for prices for securities shall have been required, by any of said
exchanges or market system or by the Commission or any other governmental
authority;
(f) A banking moratorium shall have been declared by any federal or state
authorities; or
(g) Any action shall have been taken by any government in respect of its
monetary affairs which, in the Underwriter's reasonable judgment, has a material
adverse effect on the United States securities markets.
If this Agreement shall be terminated pursuant to this Section 9, the
Company shall not then be under any liability to the Underwriter except as
provided in Sections 5 and 8 hereof.
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10. Certain Definitions. The following terms shall have the following meanings:
(a) "Business day." Means any day on which the New York Stock Exchange,
Inc. is open for trading.
(b) "Knowledge." Whenever a phrase herein is qualified by "the knowledge
of the Company," or a similar phrase, it is intended to refer to the actual
knowledge, after reasonable inquiry, of the directors and executive officers of
the Company.
(c) "Threatened." Any matter or thing will be deemed to have been
"threatened" when used herein with respect to any party if that party has
received notice, in writing, from the person whom the threat is attributable, or
such person's agent, which makes specific reference to and clearly identifies
the matter or thing being threatened.
11. Effective Date of Agreement. This Agreement shall become effective on the
Effective Date at the time the Commission declares the Registration Statement
effective. The Company shall immediately notify the Underwriter when the
Registration Statement becomes effective. Until such time as this Agreement
shall have become effective, it may be terminated by the Company, by notifying
the Underwriter, or by the Underwriter, by notifying the Company, except that
the provisions of Sections 5 and 8 shall at all times be effective.
12. Representations, Warranties and Agreements to Survive Delivery. The
representations, warranties, indemnities, agreements and other statements of the
Company and its officers set forth in or made pursuant to this Agreement and the
agreements of the Underwriter contained in Section 8 hereof shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Company or controlling persons of the Company, or by or on
behalf of the Underwriter or controlling persons of the Underwriter or any
termination or cancellation of this Agreement and shall survive delivery of and
payment for the Shares.
13. Amendments; Entire Agreement. No alteration or amendment to this Agreement
shall be binding or effective unless the same is set forth in a writing signed
by a duly authorized representative of each party. This Agreement embodies the
entire agreement and understanding of the parties with respect to the subject
matter hereof, and supersedes any and all prior agreements, arrangements and
understandings relating thereto.
14. Notices. Except as otherwise provided in this Agreement, all notices and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand, mailed by registered or certified mail,
return receipt requested, or transmitted by any standard form of
telecommunication and confirmed. Notices to the Company shall be sent to 7325
Oswego Road, Liverpool, New York 13090, Attention: Joseph C. Passalaqua, Chief
Executive Officer (with a copy to Arter & Hadden LLP, 1717 Main Street, Suite
4100, Dallas, Texas 75201, Attention: Joel Held); and notices to the Underwriter
shall be sent to 3811 Turtle Creek Blvd., Suite 520, Dallas, Texas 75219,
Attention: James S. Harris. Any such notices and other communications shall take
effect at the time of receipt thereof (except in the case of any
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<PAGE>
such notice or other communication given via standard from of telecommunication
and confirmed wherein it shall take effect at the time of confirmation thereof).
15. Binding Effect; Assignment. This Agreement is made solely for the benefit of
the Underwriter and the Company and, to the extent expressed, directors and
officers of the Company, any person controlling the Company or the Underwriter,
and their respective successors and assigns. No other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser, in its status as such purchaser, of
the Shares. This Agreement may not be assigned by either party without the
express written consent of the other party.
16. Arbitration. The parties hereto agree that any claim, controversy, dispute
or disagreement (a "Dispute") between the parties arising out of or relating to
this Agreement shall be submitted for arbitration in Dallas, Texas before an
arbitrator agreed upon by the parties. If the parties fail to agree upon an
arbitrator, each party shall select one arbitrator, and the two arbitrators so
selected shall select a third arbitrator who is experienced in the subject
matter of such Dispute. The arbitrator agreed upon by the parties or so selected
shall have sole and complete jurisdiction over the arbitration, which shall be
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. The decision of the arbitrator shall be reduced to
writing and shall be binding on the parties, and judgment upon the award
rendered by the arbitrator may be entered and execution had in any court of
competent jurisdiction, or application may be made to such court for a judicial
acceptance of the award and an order of enforcement. The charges and expenses of
the arbitrator shall be shared equally by the parties to the arbitration.
17. Governing Law. This Agreement shall be governed by the laws of the State of
Texas, without giving effect to the choice of law or conflicts of law principles
thereof.
18. Facsimile Execution and Counterparts. This Agreement may be executed by
facsimile and in one or more counterparts, and when a counterpart has been
executed by each party hereto all such counterparts taken together shall
constitute one and the same Agreement.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
shall become a binding agreement between the Company and you in accordance with
its terms.
Very truly yours,
bright-technologies.com, inc.
By:/S/ Joseph C. Passalaqua
------------------------------
Print Name: Joseph C. Passalaqua
Its: Chief Executive Officer
CONFIRMED AND ACCEPTED,
as of April 30, 1999.
ROCKCREST SECURITIES L.L.C.
By:/S/ James S. Harris
-------------------------------
Print Name: James S. Harris
Its: President
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<PAGE>
EXHIBIT A
[ROCKCREST SECURITIES L.L.C. LETTERHEAD]
May __, 1999
Selected Dealer Agreement
Re: Best Efforts Offering of a minimum of 1,000,000, and a maximum of
1,800,000, Shares of Common Stock of bright-technologies.com, inc.
(the "Offering")
Ladies and Gentlemen:
We have entered into an Underwriting Agreement (the "Underwriting
Agreement") with bright-technologies.com, inc., a Delaware corporation
("Bright"), under which we have agreed to use our best efforts to sell a minimum
of 1,000,000, and a maximum of 1,800,000, shares (the "Shares") of common stock
of Bright at an offering price of $5.00 per Share, all as described in Bright's
Prospectus, dated May __, 1999 (the "Prospectus"), a copy of which has
previously been furnished to you.
In connection with the performance of our obligations under the
Underwriting Agreement, we are authorized to engage you as a selected dealer for
the offer and sale of Shares, and to pay you all or a portion of our commissions
and fees for Shares sold by you, all as is more fully set forth herein. In
further consideration of your participation in the offering and sale of the
Shares, and as an inducement to you to become a selected dealer, Bright, by its
execution of this Agreement, agrees to extend to you certain of the benefits
provided to us in the Underwriting Agreement, and to indemnify you against
certain civil liabilities under the Securities Act of 1933, as amended (the
"Securities Act"). Unless the context otherwise requires, all of the capitalized
terms used herein shall have the meaning given to such terms in the Underwriting
Agreement. You are hereby invited to become a selected dealer and, as such, to
use your best efforts to procure purchasers of Shares in accordance with the
terms and provisions of this Agreement.
1. Representations and Warranties of Bright.
All of the representations and warranties contained in Section 1(a) of the
Underwriting Agreement are incorporated herein by this reference and given to
you by Bright as though fully set forth herein.
2. Offering and Sale of Shares.
(a) On the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set forth, we hereby
appoint you as a selected dealer during the Offering Period to offer to
potential investors in Bright in
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accordance with the terms of the Prospectus up to _______ Shares, and you agree
to use your best efforts as selected dealer, promptly following the date of this
Agreement (the "Effective Date"), to offer and sell such number of Shares to
potential investors at the price and in accordance with the terms stated in the
Prospectus. Notwithstanding anything to the contrary herein, you acknowledge
that we may, in our discretion, provide written notice (a "Notice") to you
reducing the number of Shares you may offer for sale hereunder at any time after
____________ __, 1999; provided, however, that we shall not reduce such number
of Shares below the number of Shares for which you have received subscriptions
from subscribers (the "Subscriptions") prior to your receipt of our Notice.
(b) All sales of Shares will be conditioned upon acceptance by Bright from
each subscriber for Shares of a subscription agreement, duly executed by each
such subscriber and accompanied by payment of the purchase price for the Shares
subscribed for by each such subscriber (the "Subscription Documents"). Bright
shall have the right, in its sole discretion, to reject the Subscription of any
potential purchaser of Shares.
(c) The offering of Shares by you will be made to potential investors
solely in the states in which you are registered to sell and listed in Exhibit A
to this Agreement. You acknowledge that, as of the date hereof, the Shares have
been registered for sale in the states listed on Exhibit B hereto only, and that
you will not offer for sale or sell Shares in any other state without the prior
written consent of Rockcrest Securities L.L.C.
(d) The Shares will be offered and sold by you only to persons who warrant
or represent that they or their beneficiaries meet the financial suitability
requirements as set forth in the Prospectus and such other conditions as may be
required by the states in which the Shares are offered or sold.
(e) Subject to the terms and conditions herein set forth, we agree that we
shall pay to you commissions equal to ___% of the Subscriptions of subscribers
whose Subscriptions were obtained by you in your capacity as selected dealer
pursuant to this Agreement, such commissions to be paid on the date commissions
are paid to us pursuant to the Underwriting Agreement.
(f) Notwithstanding the provisions of Sections 2(e) of this Agreement, you
understand and agree that no commissions, fees or other compensation shall be
payable to us or to you if Bright has not received and accepted Subscriptions
aggregating at least $5,000,000 within 180 days from the commencement of this
Offering (the "Offering Termination Date").
3. Subscription Payments.
(a) Payments received by us or you for Subscriptions shall be made payable
to "FIRSTAR BANK of Minnesota, N.A., Trust Division, Escrow Agent."
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(b) You shall transfer all such funds to us by noon of the next business
day after their receipt by you so that we may transfer them to FIRSTAR BANK of
Minnesota N.A., Trust Division (the "Escrow Agent") by noon of the next business
day after their receipt by us for deposit in escrow in accordance with the
Prospectus. In the event that sale of at least 1,000,000 shares offered in this
Offering (the "Minimum Offering") is not achieved on or before the Offering
Termination Date, all funds held in the escrow account established with the
Escrow Agent (the "Escrow Account") shall, within 10 days after the Offering
Termination Date, be returned directly to the respective subscribers, together
with any interest earned thereon. In the event the Minimum Offering is achieved
on or before the Offering Termination Date, all funds held in the Escrow Account
attributable to subscribers whose Subscriptions are rejected by Bright, together
with any interest earned thereon, as well as any interest earned on the funds of
subscribers whose Subscriptions are accepted by Bright, shall, within 10 days
after the Offering Termination Date, be returned or disbursed, as the case may
be, to such subscribers.
4. Suitability.
(a) As a selected dealer, you are aware of the suitability standards that
an offeree must meet and represent. As such, you will make reasonable inquiry to
assure that there is compliance with such standards.
(b) In recommending the purchase of Shares in Bright, you shall:
(1) Have reasonable grounds to believe, on the basis of information
obtained from the offeree concerning his investment objectives, other
investments, financial situation and needs, and any other information
known by you or any associated person, that:
(i) the offeree is or will be in a financial position
appropriate to enable him to realize to a significant extent the
benefits described in the Prospectus;
(ii) the offeree has a fair market net worth sufficient to
sustain the risks inherent in an investment in Shares, including
loss of investment and lack of liquidity; and
(iii) the purchase of Shares is otherwise suitable for the
offeree.
(2) Maintain in your file documents disclosing the basis upon which
the determination of suitability was reached as to each offeree.
(c) Notwithstanding the provisions of subsection (b) above, you shall not
execute any transaction of Shares in any discretionary account without prior
written approval of the transaction by the offeree.
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(d) Prior to executing a purchase transaction of Shares, you shall inform
the offeree of all pertinent facts relating to the liquidity and marketability
of the Shares and the other risks of the Offering disclosed in the Prospectus.
5. Disclosure.
(a) Prior to participating in the offering, you shall have reasonable
grounds to believe, based on information made available to you by Bright through
a prospectus or other materials, that all material facts are adequately and
accurately disclosed and provide a basis for evaluating the Offering.
(b) In determining the adequacy of disclosed facts pursuant to subsection
(a) hereof, you shall obtain information on material facts relating at a minimum
to the following, if relevant in view of the nature of the Offering:
(1) items of compensation;
(2) physical properties;
(3) tax aspects;
(4) financial stability and experience of Bright;
(5) conflicts of interest and risk factors; and
(6) appraisals and other pertinent reports.
(c) For the purpose of subsections (a) or (b) hereof, you may rely upon
the results of an inquiry conducted by another NASD member or members, provided
that:
(1) the member or persons associated with a member has reasonable
grounds to believe that such inquiry was conducted with due care;
(2) the results of the inquiry were provided to you with the consent
of the member or members conducting or directing the inquiry; and
(3) no member that participated in the inquiry is a sponsor of the
Offering or an affiliate of such sponsor.
6. Covenants and Undertakings of the Selected Dealer.
(a) You agree to comply with all of the covenants applicable to us in the
Underwriting Agreement.
(b) You expressly represent and undertake that you will fully comply with
Sections 8, 24, 25 and 36 of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc.
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<PAGE>
7. Closing Conditions.
Your obligation to deliver Subscription Documents to Bright for acceptance
by it is subject to the satisfaction on or before each of the Closing Dates of
the conditions set forth in Section 7 of the Underwriting Agreement. If any
condition to your obligations hereunder shall not have been fulfilled when it is
required by this Agreement to be fulfilled, you may waive any such condition
which has not been fulfilled, extend the time for its fulfillment or terminate
this Agreement. In the event that you elect to terminate this Agreement, all
Subscription Documents, Subscription funds held, checks and other documents and
instruments delivered to you for the purchase of the Shares shall be returned to
the subscribers, together with their pro rata share of any interest earned on
Subscription funds, accompanied by a notice from you of the cancellation and
termination of the offering of the Shares.
8. Indemnification.
(a) Subject to the conditions set forth below, Bright and Rockcrest
Securities L.L.C. agree to indemnify and hold harmless you, each of your
officers, directors and employees and each person, if any, who controls you
within the meaning of Section 15 of the Securities Act, against any and all
loss, liability, claim, damage and expense whatsoever (including but not limited
to any and all expenses whatsoever reasonably incurred in investigating,
preparing for, defending against or settling any litigation, commenced or
threatened, or any claim whatsoever) arising out of or based upon:
(1) any alleged untrue statement of a material fact contained in the
Prospectus as from time to time amended or supplemented or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, unless such
statement or omission was made in reliance upon and in conformity with
written information furnished to Bright with respect to you, by you or on
your behalf expressly for use in the Prospectus or any amendment or
supplement thereof; and
(2) the failure or alleged failure of Rockcrest Securities L.L.C. or
Bright to comply with requirements of federal and state securities law.
If any action is brought against you or any such officer, director,
employee or controlling person in respect of which indemnity may be sought
against Bright pursuant to the foregoing paragraph, you or such officer,
director, employee or controlling person shall promptly notify Bright in writing
of the institution of such action and Bright shall assume the defense of such
action, including the employment of counsel (reasonably satisfactory to you or
such officer, director, employee or controlling person) and payment of expenses.
You or any such officer, director, employee or controlling person shall have the
right to employ personal counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of you or such officer, director, employee
or controlling
5
<PAGE>
person unless the employment of such counsel shall have been authorized in
writing on behalf of Bright in connection with the defense of such action or
Bright shall not have employed such counsel to have charge of the defense of
such action or such indemnified party or parties shall have reasonably concluded
that there may be defenses available to it or them which are different from or
additional to those available to Bright (in which case Bright shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events the reasonable fees and expenses of not more
than one additional counsel for you and such officers, directors, employees and
controlling person (which firm shall be designated in writing by you) shall be
borne by Bright. Anything in this paragraph to the contrary notwithstanding,
Bright shall not be liable for any settlement of any such claim or action
effected without its written consent, which shall not be withheld unreasonably.
The indemnity agreement contained in this Section 8(a) and the warranties and
representations contained in this Agreement shall remain in full force and
effect regardless of any investigation made by or on behalf of you or any such
officer, director, employee or controlling person, and shall survive any
termination of this Agreement. You agree promptly to notify Bright of the
assertion of any claim or of the commencement of any litigation or proceedings
against you or Bright in connection with the issuance and sale of the Shares or
in connection with the Prospectus.
(b) You agree to indemnify and hold harmless Rockcrest Securities L.L.C.,
Bright, and each of the officers, directors and employees of Rockcrest
Securities L.L.C. and Bright, and each other person, if any, who controls
Rockcrest Securities L.L.C. or Bright within the meaning of Section 15 of the
Securities Act to the same extent as the foregoing indemnity from Bright to you
but only with respect to:
(1) the statements or omissions, if any, made in the Prospectus or
any amendment or supplement thereof in reliance upon, and in conformity
with, written information furnished with respect to you, by you or on your
behalf expressly for use in such Prospectus or any amendment or supplement
thereof; and
(2) the failure or alleged failure of you to comply with the
requirements of federal or state securities law.
In case any action shall be commenced based on such Prospectus or amendment or
supplement thereof and in respect of which indemnity may be sought against you,
you shall have the rights and duties given to Bright and each other person so
indemnified shall have the rights and duties given to you by the provisions of
the second paragraph of Section 8(a) above. The indemnity agreements contained
in this Section 8(b) shall remain in full force and effect regardless of any
investigation made by or on behalf of any person indemnified herein, and shall
survive any termination of this Agreement. Bright agrees promptly to notify you
of the assertion of any claim, or of the commencement of any litigation or
proceeding against Bright or any officer or director of Bright or any person who
controls Bright within the meaning of Section 15 of the Securities Act, in
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connection with the issuance and sale of the Shares or in connection with the
Prospectus.
9. Representations and Agreement to Survive.
Except as the context otherwise requires, all representations, warranties
and agreements contained in this Agreement shall remain operative and in full
force and effect and shall survive each Closing Date.
10. Effective Date, Term and Termination of This Agreement.
(a) This Agreement shall become effective on the Effective Date. You or
Bright may elect to prevent this Agreement from becoming effective without
liability of any party to any other party, except as provided in subsection (c)
of this Section 10, by giving notice of such election to the other parties
hereto before the time this Agreement otherwise would become effective.
(b) You shall have the right to terminate this Agreement at any time
during the Offering Period if any representations or warranties hereunder shall
be found to have been incorrect or misleading or Bright shall fail, refuse or be
unable to perform any of its agreements hereunder or to fulfill any condition of
your obligations hereunder of if the Prospectus shall have been amended or
supplemented despite your objection to such amendment or supplement; or
(1) if all trading on the New York Stock Exchange or the American
Stock Exchange (in this Section collectively called "Exchange") shall have
been suspended, or minimum or maximum prices for trading generally shall
have been required on the Exchange by the Exchange or by order of the
Securities and Exchange Commission or any other governmental authority
having jurisdiction; or
(2) if the United States shall have become involved in a war or
major hostilities; or
(3) if a banking moratorium has been declared by a state or Federal
authority; or
(4) if Bright or its properties shall have sustained a material or
substantial loss by fire, flood, accident, earthquake or other calamity or
malicious act which, whether or not said loss shall have been insured,
will in your opinion make it inadvisable to proceed with the offering and
sale of the Shares; or if there shall have been such change in the
condition or prospects of Bright or in the levels of the prime interest
rate or long-term mortgage rate or in the condition of securities markets
generally as in your judgment would make it inadvisable to proceed with
the offering and sale of the Shares.
7
<PAGE>
(c) If for any reason this Agreement shall not become effective or the
offering hereunder is terminated, Bright shall not have any liability to you
except for such liabilities, if any, as may exist or thereafter arise under
Section 8 hereof.
11. Notices.
(a) All communications hereunder, except as herein otherwise specifically
provided, shall be in writing and if sent to you shall be mailed, delivered or
telegraphed and confirmed to you at the address on the signature page of this
Agreement; if sent to us or Bright shall be mailed, delivered or telegraphed and
confirmed to us at our address on page 1 hereof and to Bright at 7325 Oswego
Road, Liverpool, New York 13090, Attention: Joseph C. Passalaqua, Chief
Executive Officer (with a copy to Arter & Hadden LLP, 1717 Main Street, Ste.
4100, Dallas, Texas 75201, Attention: Joel Held).
(b) Notice shall be deemed to be given by you to us or Bright, or by us or
Bright to you as of the third business day after the same is mailed, delivered
or telegraphed as provided in Section 11 (a) above.
12. Parties.
This Agreement shall inure solely to the benefit of and shall be binding
upon you, us and, to the extent provided herein, Bright and the respective
successors and assigns of such parties. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person or entity, other
than the parties hereto and their respective successors and assigns, and their
respective controlling persons, officers, directors and employees, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained; this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of the
parties hereto and their respective successors and assigns and said controlling
persons and said officers, directors and employees, and for the benefit of no
other person or entity. No purchaser of any of the Shares from you or us shall
be construed a successor or assign by reason merely of such purchase.
13. Construction.
This Agreement shall be construed in accordance with the laws of the State
of Texas.
14. Counterparts.
This Agreement may be executed in multiple counterparts, each of which is
considered an original and shall be binding upon the party executing the same,
but all of such counterparts shall constitute the same agreement.
If the foregoing correctly sets forth the understanding between us, please
so
8
<PAGE>
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement between us.
Very truly yours,
ROCKCREST SECURITIES L.L.C.
By:
---------------------------------
James S. Harris, President
Accepted as of the date first above written.
Name:____________________________
By:______________________________
Title:___________________________
Address:_________________________
_________________________________
_________________________________
Bright hereby agrees to be bound by the terms and provisions contained in
this Agreement which are applicable to it including the indemnification
provisions of Section 8.
bright-technologies.com, inc.
By:______________________________
Name:
Title:
9
<PAGE>
EXHIBIT B
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT AS
OTHERWISE SET FORTH HEREIN, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE
SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF REGISTRATION UNDER SUCH ACT OR AN OPINION OF COUNSEL THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT. ANY SUCH SALE, ASSIGNMENT OR
TRANSFER MUST ALSO COMPLY WITH APPLICABLE STATE SECURITIES LAWS.
COMMON STOCK PURCHASE WARRANT
RIGHT TO PURCHASE 100,000 SHARES OF
COMMON STOCK, PAR VALUE $.001 PER SHARE
THIS CERTIFIES THAT, for value received, ROCKCREST SECURITIES L.L.C. or
its registered assigns, is entitled to purchase from bright-technologies.com,
inc., a Delaware corporation (the "Company"), at any time or from time to time
during the period specified in Paragraph 2 hereof, one hundred thousand
(100,000) fully paid and nonassessable shares of the Company's common stock, par
value $.001 per share (the "Common Stock"), at an exercise price equal to $6.00
per share (the "Exercise Price"). The term "Warrant Shares," as used herein,
refers to the shares of Common Stock purchasable hereunder. The Warrant Shares
and the Exercise Price are subject to adjustment as provided in Paragraph 4
hereof.
This Warrant is subject to the following terms, provisions, and
conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for Shares. Subject to
the provisions hereof, this Warrant may be exercised by the holder hereof,
and/or any permitted transferee specified in Section 7 below, in whole, but not
in part, by the surrender of this Warrant together with a completed exercise
agreement in the form attached hereto (the "Exercise Agreement"), to the Company
during normal business hours on any business day at the Company's principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), and upon payment of the Exercise
Price. At the option of the holder of this Warrant, the Exercise Price may be
paid to the Company in cash, by certified or official bank check or by wire
transfer for the account of the Company. The Warrant Shares so purchased shall
be deemed to be issued to the holder hereof or such holder's designee, as the
record owner of such shares, as of the close of business on the date on which
this Warrant shall have been surrendered, the completed Exercise Agreement shall
have been delivered, and payment shall have been made for such shares as set
forth above. Certificates for the Warrant Shares so purchased shall be delivered
to the holder hereof within a reasonable time, not to
COMMON STOCK PURCHASE WARRANT - Page 1
<PAGE>
exceed three (3) business days after this Warrant shall have been so exercised.
The certificates so delivered shall be in such denominations as may be requested
by the holder hereof and shall be registered in the name of such holder or such
other name as shall be designated by such holder.
2. Period of Exercise. This Warrant may be exercised, at the option of the
holder, in whole, but not in part, during an exercise period commencing one year
after the date on which the registration statement on Form SB-2 for registration
of the Company's Common Stock becomes effective (the "Registration Statement
Effective Date") pursuant to the Securities Act of 1933, as amended (the "1933
Act"), and ending at 5:00 p.m., Central time, four years after the Registration
Statement Effective Date (the "Exercise Period").
3. Certain Agreements of the Company. The Company hereby covenants and
agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon issuance
in accordance with the terms of this Warrant, be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof.
(b) Reservation of Shares. During the Exercise Period, the Company
shall at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of
Common Stock to provide for the exercise of this Warrant.
(c) Successors and Assigns. This Warrant will be binding upon any
entity succeeding to the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets.
4. Antidilution Provisions. During the Exercise Period, the Exercise
Price and the number of Warrant Shares shall be subject to adjustment from
time to time as provided in this Paragraph 4. In the event that any
adjustment of the Exercise Price as required herein results in a fraction
of a cent, such Exercise Price shall be rounded up to the nearest cent.
(a) Subdivision or Combination of Common Stock. If the Company at
any time subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) any shares of Common Stock
into a greater number of shares, then, after the date of record for
effecting such subdivision, the Exercise Price in effect immediately prior
to such subdivision will be proportionately reduced. If the Company at any
time combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) any shares of Common Stock into a smaller
number of shares, then, after the date of record for effecting such
combination, the Exercise Price in effect immediately prior to such
combination will be proportionately increased.
COMMON STOCK PURCHASE WARRANT - Page 2
<PAGE>
(b) Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Paragraph 4, the number
of shares of Common Stock issuable upon exercise of this Warrant shall be
adjusted by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common
Stock issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise
Price.
(c) Consolidation, Merger or Sale. In case of any consolidation of
the Company with, or merger of the Company into any other entity, or in
case of any sale or conveyance of all or substantially all of the assets
of the Company other than in connection with a plan of complete
liquidation of the Company, then as a condition of such consolidation,
merger or sale or conveyance, adequate provision will be made whereby the
holder of this Warrant will have the right to acquire and receive upon
exercise of this Warrant in lieu of the shares of Common Stock immediately
theretofore acquirable upon the exercise of this Warrant, such shares of
stock, securities or assets as may be issued or payable with respect to or
in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon exercise of this Warrant had
such consolidation, merger or sale or conveyance taken place. In any such
case, the Company will make appropriate provision to insure that the
provisions of this Paragraph 4 will thereafter be applicable as nearly as
may be in relation to any shares of stock or securities thereafter
deliverable upon the exercise of this Warrant.
(d) Notice of Adjustment. Upon the occurrence of any event which
requires any adjustment of the Exercise Price, then, and in each such
case, the Company shall give notice thereof to the holder of this Warrant,
which notice shall state the Exercise Price resulting from such adjustment
and the increase or decrease in the number of Warrant Shares purchasable
at such price upon exercise, setting forth in reasonable detail the method
of calculation and the facts upon which such calculation is based. Such
calculation shall be certified by independent public accountants then
engaged by the Company.
(e) Minimum Adjustment of Exercise Price. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise
Price in effect at the time such adjustment is otherwise required to be
made, but any such lesser adjustment shall be carried forward and shall be
made at the time and together with the next subsequent adjustment which,
together with any adjustments so carried forward, shall amount to not less
than 1% of such Exercise Price.
(f) No Fractional Shares. No fractional shares of Common Stock are
to be issued upon the exercise of this Warrant, but the Company shall pay
a cash adjustment in respect of any fractional shares which would
otherwise be issuable in an amount equal to
COMMON STOCK PURCHASE WARRANT - Page 3
<PAGE>
the same fraction of the Market Price (as defined herein) of a share of
Common Stock on the date of such exercise.
(g) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon the Common
Stock payable in shares of stock of any class or make any other
distribution (including dividends or distributions payable in cash
out of retained earnings) to the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to the
holders of the Common Stock any additional shares of stock of any
class or other rights;
(iii) there shall be any capital reorganization of the
Company, or reclassification of the Common Stock, or consolidation
or merger of the Company with or into, or sale of all or
substantially all its assets to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a record
shall be taken for determining the holders of Common Stock entitled to receive
any such dividend, distribution, or subscription rights or for determining the
legal holders of Common Stock entitled to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable
approximation thereof by the Company) when the same shall take place. Such
notice shall also specify the date on which the holders of Common Stock shall be
entitled to receive such dividend, distribution, or subscription rights or to
exchange their Common Stock for stock or other securities or property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, or winding-up, as the case may be. Such notice
shall be given at least 30 days prior to the record date or the date on which
the Company's books are closed in respect thereto. Failure to give any such
notice or any defect therein shall not affect the validity of the proceedings
referred to in clauses (i), (ii), (iii) and (iv) above.
(h) Certain Events. If any event occurs of the type contemplated by
the adjustment provisions of this Paragraph 4, but not expressly provided
for by such provisions, the Company will give notice of such event as
provided in Paragraph 4(d) hereof, and the Company's Board of Directors
will make an appropriate adjustment in the Exercise Price and the number
of shares of Common Stock acquirable upon exercise of this Warrant so that
the rights of the holder shall be neither enhanced nor diminished by such
event.
COMMON STOCK PURCHASE WARRANT - Page 4
<PAGE>
(i) Certain Definitions:
(i) "Market Price" as of any date, means (x) the average of
the last reported sale prices on the principal trading market for
the Common Stock for the five (5) trading days immediately preceding
the date of any such determination, or (y) if market value cannot be
calculated as of such date on the foregoing basis, Market Price
shall be the fair market value as reasonably determined in good
faith by the Board of Directors of the Company. The manner of
determining the Market Price of the Common Stock set forth in the
foregoing definition shall apply with respect to any other security
in respect of which a determination as to market value must be made
hereunder.
(ii) "Common Stock" for the purposes of this Paragraph 4,
includes the Common Stock, par value $.001 per share, or shares
resulting from any subdivision or combination of such Common Stock,
or in the case of any reorganization, reclassification,
consolidation, or sale of the character referred to in Paragraph
4(c) hereof, the stock or other securities or property provided for
in such Paragraph.
5. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.
6. No Rights or Liabilities as a Shareholder. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
7. Transfer and Replacement of Warrant.
(a) Restriction on Transfer. Until one year after the Registration
Statement Effective Date, this Warrant and the rights granted to the
holder hereof are transferable only to officers or partners of Rockcrest
Securities L.L.C. and other members of the selling group, in whole or in
part, upon surrender of this Warrant, together with a properly executed
assignment in the form attached hereto, at the office of the Company
referred to in Paragraph 7(d) below, provided, however, that any transfer
or assignment shall be subject to the conditions set forth in Paragraph
7(e). Until due presentment for registration of transfer on the books of
the Company, the Company may treat the
COMMON STOCK PURCHASE WARRANT - Page 5
<PAGE>
registered holder hereof as the owner and holder hereof for all purposes,
and the Company shall not be affected by any notice to the contrary.
(b) Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation
of this Warrant and, in the case of any such loss, theft, or destruction,
upon delivery of an indemnity agreement reasonably satisfactory in form
and amount to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense,
will execute and deliver, in lieu thereof, a new warrant of like tenor.
(c) Cancellation; Payment of Expenses. Upon the surrender of this
Warrant in connection with any transfer or replacement as provided in this
Paragraph 7, this Warrant shall be promptly cancelled by the Company. The
Company shall pay all taxes (other than securities transfer taxes) and all
other expenses (other than legal expenses, if any, incurred by the holder)
in connection with the preparation, execution, and delivery of Warrants
pursuant to this Paragraph 7.
(d) Register. The Company shall maintain, at its principal executive
offices (or such other office of the Company as it may designate by notice
to the holder hereof), a register for this Warrant, in which the Company
shall record the name and address of the person in whose name this Warrant
has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
(e) Exercise or Transfer Without Registration. If, at the time of
the surrender of this Warrant in connection with any exercise, transfer,
or exchange of this Warrant, this Warrant (or in the case of any exercise,
the Warrant Shares issuable hereunder) shall not be registered under the
1933 Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such exercise, transfer,
or exchange (i) that the holder or transferee of this Warrant, as the case
may be, furnish to the Company a written opinion of counsel, which opinion
and counsel are reasonably acceptable to the Company, to the effect that
such exercise, transfer or exchange may be made without registration under
said Act and under applicable state securities or blue sky laws, and (ii)
that the holder or transferee execute and deliver to the Company an
investment letter in form and substance acceptable to the Company. The
first holder of this Warrant, by taking and holding the same, represents
to the Company that such holder is acquiring this Warrant for investment
and not with a view to the distribution thereof.
8. No Registration Rights. The holder of this Warrant understands that
neither this Warrant nor the Warrant Shares have been registered under the 1933
Act or the securities laws of any state, and cannot be sold unless they are
subsequently registered under the 1933 Act and any applicable state securities
laws or an exemption from registration is available. Further, the holder
COMMON STOCK PURCHASE WARRANT - Page 6
<PAGE>
of this Warrant understands that only the Company can take action so as to
register the Warrant or Warrant Shares on behalf of the Company and the Company
is under no obligation to do so.
9. Notices. All notices, requests and other communications required or
permitted to be given or delivered hereunder to the holder of this Warrant shall
be in writing, and shall be personally delivered, or shall be sent by certified
or registered mail or by recognized overnight mail courier, postage prepaid and
addressed to such holder at the address shown for such holder on the books of
the Company, or at such other address as shall have been furnished to the
Company by notice from such holder. All notices, requests, and other
communications required or permitted to be given or delivered hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed to the office of the Company at 7325 Oswego Road,
Liverpool, New York 13090, Attention: Chief Executive Officer, or at such other
address as shall have been furnished to the holder of this Warrant by notice
from the Company. Any such notice, request or other communication may be sent by
facsimile, but shall in such case be subsequently confirmed by a writing
personally delivered or sent by certified or registered mail or by recognized
overnight mail courier as provided above. All notices, requests and other
communications shall be deemed to have been given either at the time of the
receipt thereof by the person entitled to receive such notice at the address of
such person for purposes of this Paragraph 9 or, if mailed by registered or
certified mail or with a recognized overnight mail courier upon deposit with the
United States Post Office or such overnight mail courier, if postage is prepaid
and the mailing is properly addressed, as the case may be.
10. Governing Law. THIS WARRANT SHALL BE GOVERNED AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT
REGARD TO THE BODY OF LAW CONTROLLING CONFLICTS OF LAW.
11. Miscellaneous.
(a) Amendments. This Warrant and any provision hereof may only be
amended by an instrument signed by the Company and the holder hereof.
(b) Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for purposes of reference only,
and shall not affect the meaning or construction of any of the provisions
hereof.
COMMON STOCK PURCHASE WARRANT - Page 7
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
bright-technologies.com, inc.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Dated as of May __, 1999
COMMON STOCK PURCHASE WARRANT - Page 8
<PAGE>
FORM OF EXERCISE AGREEMENT
Dated: ___________
TO: bright-technologies.com, inc.
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase _____ shares of Common Stock covered by such
Warrant, and makes payment herewith of $_________ in full therefor at the price
per share provided by such Warrant in cash or by certified or official bank
check in the amount of $_______. Please issue a certificate or certificates for
such shares of Common Stock in the name of and pay any cash for any fractional
share to:
Name:_______________________________________
Signature:__________________________________
Address:____________________________________
____________________________________
Note: The above signature should correspond
exactly with the name on the face of
the within Warrant.
COMMON STOCK PURCHASE WARRANT - Page 9
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
all the rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth hereinbelow, to:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
and hereby irrevocably constitutes and appoints _____________________________ as
agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Dated:_______________________
In the presence of:
_____________________________
Name:_______________________________________
Signature:__________________________________
Address:____________________________________
____________________________________
Note: The above signature should correspond
exactly with the name on the face of
the within Warrant.
COMMON STOCK PURCHASE WARRANT - Page 10
<PAGE>
EXHIBIT C
ARTER & HADDEN LLP OPINION MATTERS
(i) The Company has been duly incorporated under the laws of the State of
Delaware, and is validly existing and in good standing under the laws of the
State of Delaware. The Subsidiary is duly incorporated, validly existing and in
good standing under the laws of the State of Georgia. Each of the Company and
the Subsidiary has full corporate power and authority to own or lease its
properties and to conduct its business as such business is described in the
Prospectus.
(ii) The capital stock of the Company conforms to the description thereof
contained in the Prospectus in all material respects. To counsel's knowledge,
the capital stock of the Company authorized and issued as of ___________, 1999
is as set forth under the caption "Capitalization" in the Prospectus, has been
duly authorized and validly issued, and is fully paid and nonassessable.
(iii) The issuance, sale and delivery of the Shares in accordance with the
terms and conditions of this Agreement have been duly authorized by all
necessary actions of the Company. All of the Shares have been duly and validly
authorized and, when delivered in accordance with this Agreement, will be duly
and validly issued, fully paid and nonassessable, and will conform to the
description thereof in the Registration Statement and the Prospectus in all
material respects. There are no preemptive or other rights to subscribe for or
to purchase, any shares of capital stock or equity securities of the Company
pursuant to the certificate of incorporation or by-laws of the Company.
(iv) The Company has all requisite corporate power to enter into and
perform its obligations under this Agreement, and this Agreement has been duly
and validly authorized, executed and delivered by the Company and constitutes
the legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except as the enforcement hereof or thereof may be
limited by general principles of equity and by bankruptcy or other laws relating
to or affecting creditors' rights generally, and except as the indemnification
and contribution provisions hereof may be limited under applicable laws and
certain remedies may not be available in the case of a non-material breach.
(v) To counsel's knowledge, the Company is not in breach or violation of,
or default under, with or without notice or lapse of time or both, its
certificate of incorporation or by-laws. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated by this
Agreement do not and will not conflict with, result in the creation or
imposition of any material lien, claim, charge, encumbrance or restriction upon
any property or assets of the Company pursuant to, or constitute a material
breach or violation of, or constitute a material default under, with or without
notice or lapse of time or both, any of the terms, provisions or conditions of
the certificate of incorporation or by-laws of the Company, or to counsel's
knowledge, any material contract, indenture, mortgage, deed of trust, loan or
credit
i
<PAGE>
agreement, note, lease, franchise, license or any other agreement or instrument
to which the Company or the Subsidiary is a party or by which any of them or any
of their respective properties may be bound or any order, decree, judgment,
franchise, license, permit, rule or regulation of any court, arbitrator,
government, or governmental agency or instrumentality, domestic or foreign,
known to such counsel having jurisdiction over the Company or the Subsidiary or
any of their respective properties which, in each case, is material to the
Company and the Subsidiary on a consolidated basis.
(vi) Except as set forth in the Registration Statement and the Prospectus,
to such counsel's knowledge, (a) no action, suit or proceeding at law or in
equity is pending or threatened in writing to which the Company or the
Subsidiary is or may be a party, and (b) no action, suit or proceeding is
pending or threatened in writing against or affecting the Company or the
Subsidiary or any of their properties, before or by any court or governmental
official, commission, board or other administrative agency, authority or body,
or any arbitrator, wherein an unfavorable decision, ruling or finding would
reasonably be expected to have a material adverse effect on the consummation of
this Agreement or the issuance and sale of the Shares as contemplated herein or
a Material Adverse Effect or which is required to be disclosed in the
Registration Statement or the Prospectus and is not so disclosed.
(vii) No authorization, approval, consent or order of or filing,
registration or qualification with, any person (including, without limitation,
any court, governmental body or authority) is required in connection with the
transactions contemplated by this Agreement, the Registration Statement and the
Prospectus, except such as have been obtained under the 1933 Act and except such
as may be required under state securities laws or Interpretations or Rules of
the NASD in connection with the purchase and distribution of the Shares by the
Underwriter.
(viii) The Registration Statement and the Prospectus and any amendments or
supplements thereto and any documents incorporated therein by reference (other
than the financial statements or other financial data included therein or
omitted therefrom and Underwriter's Information, as to which such counsel need
express no opinion) comply as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations as of their respective
dates of effectiveness.
(ix) To counsel's knowledge, there are no contracts, agreements, leases or
other documents of a character required to be disclosed in the Registration
Statement or Prospectus or to be filed as exhibits to the Registration Statement
that are not so disclosed or filed.
(x) Such counsel has been advised by the staff of the Commission that the
Registration Statement has become effective under the 1933 Act; any required
filing of the Prospectus pursuant to Rule 424(b) has been made within the time
period required by Rule 424(b); and to counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for a stop order are pending or threatened by the Commission.
ii
<PAGE>
In giving the above opinion, such counsel may state (1) that, insofar as
such opinion involves factual matters, it has relied upon certificates of
officers of the Company and the Subsidiary, (2) that its opinion is limited to
matters governed by the federal laws of the United States of America, the
General Corporation Law of the State of Delaware, and the laws of the State of
Texas and (3) that it has, to the extent it deems proper, relied upon written
statements or certificates of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company and the Subsidiary.
Such counsel shall also confirm that, in connection with the preparation
of the Registration Statement and Prospectus, such counsel has participated in
conferences with certain officers and representatives of the Company and with
their independent public accountants and with the Underwriter and counsel for
the Underwriter, at which conferences such counsel made inquiries of such
officers, representatives and accountants and discussed the contents of the
Registration Statement and Prospectus (without taking further action to verify
independently the statements made in the Registration Statement and the
Prospectus, and without assuming responsibility for the accuracy or completeness
of such statements, except to the extent expressly provided above) and such
counsel has no reason to believe (A) that the Registration Statement or any
amendment thereto (except for the financial statements, notes thereto and the
related schedules and other financial, accounting and statistical data included
therein or omitted therefrom or the Underwriter's Information, as to which such
counsel need express no opinion), at the time the Registration Statement or any
such amendment became effective, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or (B) that the Prospectus or any
amendment or supplement thereto (except for the financial statements, the notes
thereto and the related schedules and other financial, accounting and
statistical data included therein or omitted therefrom or the Underwriter's
Information, as to which such counsel need express no opinion), at the time the
Registration Statement became effective (or, if the term "Prospectus" refers to
the prospectus first filed pursuant to Rule 424(b) of the 1933 Act Regulations,
at the time the Prospectus was issued) and, at the time any such amended or
supplemented Prospectus was issued, contained or contains any untrue statement
of a material fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made.
iii
<PAGE>
Exhibit 1.2
FIRST AMENDMENT TO UNDERWRITING AGREEMENT
THIS FIRST AMENDMENT TO UNDERWRITING AGREEMENT (the "Amendment") dated as
of May 4, 1999, is entered into by bright-technologies.com, inc., a Delaware
corporation (the "Company") and ROCKCREST SECURITIES L.L.C., a Texas limited
liability company (the "Underwriter").
R E C I T A L S:
1. The Company and the Underwriter have entered into an Underwriting
Agreement dated April 30, 1999 (the "Underwriting Agreement").
2. The Company and the Underwriter now desire to amend the Underwriting
Agreement and confirm the continued legality, validity and binding effect of the
Underwriting Agreement, as amended by this Amendment.
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
Amendments
The Underwriting Agreement is amended as follows:
(a) Introduction. Effective as of the date hereof, the
Introduction of the Underwriting Agreement is amended to read in its
entirety as follows:
"bright-technologies.com, inc., a Delaware corporation (the
"Company"), has an authorized capitalization of 30,000,000 shares of
common stock, par value $0.001 per share (the "Common Stock") and
5,000,000 shares of preferred stock, par value $0.01 per share (the
"Preferred Stock"), of which 6,000,000 shares of Common Stock and no
shares of Preferred Stock are currently issued and outstanding. This
Agreement contemplates that Rockcrest Securities L.L.C. (sometimes
referred to herein as the "Underwriter"), pursuant to the terms of
this Agreement, will us its best efforts to sell, for the account of
the Company, a minimum of 1,000,000, and a maximum of 1,800,000,
shares of Common Stock at a price of $5.00 per share. The term
"Shares", as used herein, includes as many of the shares of Common
Stock as are issued and sold pursuant to the terms hereof, unless the
context indicates otherwise.
- --------------------------------------------------------------------------------
First Amendment to Underwriting Agreement - Page 1
<PAGE>
The Company hereby confirms as follows its agreement with you in
connection with the proposed offer and sale of the Shares:"
(b) Section 2(b)(ii). Effective as of the date hereof, Section
2(b)(ii) of the Underwriting Agreement is amended to read in its
entirety as follows:
"such funds are returned directly to the persons who subscribe
for the Shares, with interest thereon; all in accordance with the
terms of an escrow agreement to be entered into prior to the Effective
Date."
(c) Section 2(c). Effective as of the date hereof, Section 2(c)
of the Underwriting Agreement is amended to read in its entirety as
follows:
"On or before the fifth business day following the Company's and
the Underwriter's receipt of notification from the escrow agent that
it has received cash or cleared funds for 1,000,000 Shares during the
Offering Period, the initial closing on the sale of such Shares shall
occur at a time and place agreed upon by the Company and the
Underwriter, provided that the other conditions to Closing set forth
in Section 7 hereof have been satisfied. The date of such closing is
referred to herein as the "Initial Closing Date" and such closing is
referred to as the "Initial Closing." At the Initial Closing, the
Company will deliver to the Underwriter the certificates for the
Shares (in such denominations and in such names as the Underwriter
shall request upon at least 48 hours prior written notice) against
payment to the Company by the escrow agent, on behalf of the
purchasers of such Shares (by wire transfer or other immediately
available funds acceptable to the Company), of the public offering
price of such Shares, less (i) the Underwriter's selling commission
equal to ten percent (10%) of the public offering price of such Shares
and (ii) the difference between the Expense Allowance (as hereinafter
defined) minus the Advance (as hereinafter defined) (such difference
is referred to hereinafter as the "Net Expense Allowance"). Such
commission and Net Expense Allowance shall be paid to the Underwriter
by the escrow agent at the Initial Closing.
(d) Section 2(d). Effective as of the date hereof, Section 2(d)
of the Underwriting Agreement is amended to read in its entirety as
follows:
"Following the Initial Closing, the Company and the Underwriter
shall mutually agree upon the time and place for additional closings
on Shares sold during the balance of the Offering Period and shall
instruct the escrow agent, in writing signed by both the Company and
the Underwriter, to make payment for any Shares as to which a closing
shall occur to the Company, less the 10% selling commission payable to
the Underwriter for such Shares and the Net Expense
- --------------------------------------------------------------------------------
First Amendment to Underwriting Agreement - Page 2
<PAGE>
Allowance against delivery to the Underwriter by the Company of
certificates for the Shares sold at such closing. Such commission and Net
Expense Allowance shall be paid to the Underwriter by the escrow agent at
such closing."
(e) Section 5(b). Effective as of the date hereof, Section 5(b)
of the Underwriting Agreement is amended to read in its entirety as
follows:
"The Company shall pay to the Underwriter a nonaccountable
expense allowance equal to one percent (1%) of the total proceeds of
the offering (the "Expense Allowance") of which $25,000 in cash (the
"Advance") has been paid prior to the execution of this Agreement;
provided, however, that in the event the sale of the Shares is not
consummated or this Agreement is terminated for any reason, the
Company's liability to the Underwriter for the Expense Allowance shall
not exceed such Advance. The Underwriter agrees that the Advance
shall not be used to cover Underwriter's general overhead, salaries,
supplies or similar expenses of Underwriter incurred in the normal
conduct of its business. Notwithstanding the foregoing, upon
completion of the offering contemplated hereby, whether or not Shares
are sold, or prior termination of this Agreement for any reason, the
Underwriter shall account to the Company for its expenditures of the
Advance and refund to the Company any portion of such Advance not
actually expended by Underwriter in connection with the transactions
contemplated hereby."
ARTICLE II.
Ratifications
The terms and provisions of the Underwriting Agreement, as modified by this
Amendment, are hereby ratified and confirmed and shall continue in full force
and effect. The parties hereto acknowledge and agree that the Underwriting
Agreement, as amended hereby, is and shall remain in full force and effect and
is and shall continue to be the legal, valid and binding obligation of each of
them, as applicable, enforceable against each of them in accordance with their
respective terms.
ARTICLE III.
Miscellaneous
Section 3.1. References to Underwriting Agreement. The Underwriting
Agreement and any and all other agreements, documents or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Underwriting Agreement, as amended hereby, is hereby amended so
that any reference therein to the Underwriting Agreement shall mean a reference
to the Underwriting Agreement, as amended hereby.
- --------------------------------------------------------------------------------
First Amendment to Underwriting Agreement - Page 3
<PAGE>
Section 3.2. Further Assurances. Each of the parties agrees that at any
time and from time to time, upon the written request of the other party, it will
execute and deliver such further documents and do such further acts and things
as the other party may reasonably request in order to fully effect the purposes
of this Amendment.
Section 3.3. Severability. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 3.4. Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
SECTION 3.5. ENTIRE AGREEMENT. THE UNDERWRITING AGREEMENT, AS AMENDED
HEREBY, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 3.6. Headings. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
EXECUTED as of the date first written above.
bright-technologies.com, inc.
By:/S/ Joseph C. Passalaqua
-----------------------------------------------
Name: Joseph C. Passalaqua
Title: Chief Executive Officer
ROCKCREST SECURITIES L.L.C.
By:/S/ James S. Harris
-----------------------------------------------
Name: James S. Harris
Title: President
- --------------------------------------------------------------------------------
First Amendment to Underwriting Agreement - Page 4
<PAGE>
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
bright-technologies.com, inc.
ARTICLE I
The name of this corporation is bright-technologies.com, inc.
ARTICLE II
The address of the registered office of this corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington and the County of New Castle. The name of its registered agent at
such address is The Corporation Trust Company.
ARTICLE III
The nature of the business or purposes of this corporation to be conducted
or promoted is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of the State of Delaware (the
"DGCL").
ARTICLE IV
The aggregate number of shares of all classes of stock which the
corporation shall have authority to issue is Thirty Five Million (35,000,000)
shares, consisting of (A) Thirty Million (30,000,000) shares of common stock,
par value $0.001 per share (the "Common Stock"), and (B) Five Million
(5,000,000) shares of preferred stock, par value $0.01 per share (the "Preferred
Stock").
The designations, powers, preferences and relative, participating,
optional and other special rights, and the qualifications, limitations and
restrictions thereof with respect to the Common Stock and the Preferred Stock
are as follows:
(A) Common Stock.
Each holder of the Common Stock of the corporation shall be entitled
to one vote for every share of Common Stock outstanding in his name on the
books of the corporation. Except for and subject to those rights expressly
granted to the holders of the Preferred Stock or except as may be provided
by the laws of the State of Delaware, the holders of Common Stock shall
have exclusively all other rights of stockholders including, without
limitation (i) the right to receive dividends, when and as declared by
- --------------------------------------------------------------------------------
CERTIFICATE OF INCORPORATION - Page 1
<PAGE>
the Board of Directors out of assets legally available therefor, and (ii)
in the event of any distribution of assets upon liquidation, dissolution
or winding up of the corporation or otherwise, the right to receive
ratably and equally with all holders of all Common Stock all the assets
and funds of the corporation remaining after the payment to the holders of
the Preferred Stock of the specific amounts that they are entitled to
receive upon such liquidation, dissolution or winding up of the
corporation, if any.
(B) Preferred Stock.
Preferred Stock may be issued from time to time in one or more
series, each of such series to have such terms as stated in the resolution
or resolutions providing for the establishment of such series adopted by
the Board of Directors of the corporation as hereinafter provided. Except
as otherwise expressly stated in the resolution or resolutions providing
for the establishment of a series of Preferred Stock, any shares of
Preferred Stock that may be redeemed, purchased or acquired by the
corporation may be reissued except as otherwise expressly provided by law.
Different series of Preferred Stock shall not be construed to constitute
different classes of stock for the purpose of voting by classes unless
expressly provided in the resolution or resolutions providing for the
establishment thereof. The Board of Directors of the corporation is hereby
expressly authorized to issue, from time to time, shares of Preferred
Stock in one or more series, and, in connection with the establishment of
any such series by resolution or resolutions, to determine and fix the
number of shares constituting that series and the distinctive designation
of that series and to determine and fix such voting powers, full or
limited, or no voting powers, and such other designations, powers,
preferences and relative, participating, optional and other special
rights, and the qualifications, limitations and restrictions thereof,
including, without limitation, dividend rights, conversion rights,
redemption privileges and liquidation preferences, as shall be stated in
such resolution or resolutions, all to the fullest extent permitted by the
DGCL. Without limiting the generality of the foregoing, the resolution or
resolutions providing for the establishment of any series of Preferred
Stock may, to the extent permitted by law, provide that such series shall
be superior to, rank equally with or be junior to the Preferred Stock of
any other series. Except as otherwise expressly provided in the resolution
or resolutions providing for the establishment of any series of Preferred
Stock, no vote of the holders of shares of Preferred Stock or Common Stock
shall be a prerequisite to the issuance of any shares of any series of the
Preferred Stock authorized by and complying with the conditions of this
Certificate of Incorporation.
ARTICLE V
The name and mailing address of the incorporator of the corporation is
Joel Held, 1717 Main Street, Suite 4100, Dallas, Texas 75201.
- --------------------------------------------------------------------------------
CERTIFICATE OF INCORPORATION - Page 2
<PAGE>
ARTICLE VI
The members of the Board of Directors shall be classified, with respect to
the time for which they severally hold office, into three (3) classes, as nearly
equal in number as possible, one class to hold office initially for a term
expiring on the date of the Annual Meeting of Stockholders next following the
end of fiscal year 1999, another to hold office initially for a term expiring on
the date of the Annual Meeting of Stockholders next following the end of fiscal
year 2000, and another to hold office initially for a term expiring on the date
of the Annual Meeting of Stockholders next following the end of fiscal year
2001, with the members of each new class to hold office until their successors
have been duly elected and have qualified. At each Annual Meeting of the
Stockholders of the corporation following the end of fiscal year 1999, the
successors to the class of directors whose term expires at that meeting shall be
elected to hold office for a term expiring at the Annual Meeting of Stockholders
to be held in the third year following the year of their election. Election of
directors need not be by written ballot unless the Bylaws of the corporation
shall so provide. The number of initial members of the Board of Directors shall
be eight (8), and such number thereafter shall be determined in the manner
specified in the Bylaws of the Corporation.
ARTICLE VII
The corporation shall, to the fullest extent permitted by Section 145 of
the DGCL, as the Section may be amended and supplemented from time to time,
indemnify any director or officer of the corporation (and any director, trustee
or officer of any corporation, business trust or other entity to whose business
the corporation shall have succeeded) which it shall have power to indemnify
under that Section against any expenses, liabilities or other matter referred to
in or covered by that Section. The indemnification provided for in this Article
VII, (A) shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any Bylaw, agreement or vote of stockholders
or disinterested directors or otherwise, both as to action in their official
capacities and as to action in another capacity while holding such office, (B)
shall continue as to a person who has ceased to be a director or officer and (C)
shall inure to the benefit of the heirs, executors and administrators of such
person. To assure indemnification under this Article of all such persons who are
determined by the corporation or otherwise to have been "Fiduciaries" of any
employee benefit plan of the corporation that may exist from time to time and
that is governed by the Act of Congress entitled "Employee Retirement Income
Security Act of 1974," as amended from time to time, such Section 145 shall, for
the purposes of this Article, be interpreted as follows: an "other enterprise"
shall be deemed to include such an employee benefit plan; the corporation shall
be deemed to have requested a person to serve an employee benefit plan when the
performance by such person of his duties to the corporation also imposes duties
on, or otherwise involves services by, such person to the plan or participants
or beneficiaries of the plan; excise taxes assessed on a person with respect to
any employee benefit plan pursuant to such Act of Congress shall be deemed
"fines;" and action taken or omitted by a person with respect to an employee
benefit plan in the performance of such person's duties for a
- --------------------------------------------------------------------------------
CERTIFICATE OF INCORPORATION - Page 3
<PAGE>
purpose reasonably believed by such person to be in the best interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
that is not opposed to the best interests of the corporation.
ARTICLE VIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws of the Corporation may provide. The books of the
corporation may be kept (subject to any provision contained in the DGCL) outside
the State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the Bylaws of the corporation.
ARTICLE IX
A director of this corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (A) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (B) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (C) under Section 174 of the DGCL, or (D) for any transaction
from which the director derived any improper personal benefit. If the DGCL is
hereafter amended to authorize corporate action further eliminating or limiting
the personal liability of directors, then the liability of a director of the
corporation shall be eliminated or limited to the fullest extent permitted by
the DGCL, as so amended. Any repeal or modification of the foregoing provisions
of this Article IX by the stockholders of the corporation shall not adversely
affect any right or protection of a director of the corporation existing at the
time of such repeal or modification.
ARTICLE X
Whenever a compromise or arrangement is proposed between this corporation
and its creditors or any class of them and/or between this corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation under
the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting
of the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be summoned in such
manner as said court directs. If a majority in number representing three-fourths
in value of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of this corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of this corporation as a
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court to
which the said
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CERTIFICATE OF INCORPORATION - Page 4
<PAGE>
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of this
corporation as the case may be, and also on this corporation.
ARTICLE XI
No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a meeting,
to the taking of any action is specifically denied.
ARTICLE XII
Except as provided herein, the corporation reserves the right to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation. Notwithstanding the foregoing and anything contained in this
Certificate of Incorporation to the contrary, the affirmative vote of at least
66 2/3% of the outstanding shares of the Common Stock of the corporation shall
be required to amend or repeal Articles VI, VII, IX, XI or XII of this
Certificate of Incorporation or to adopt any provision inconsistent therewith.
Further, the affirmative vote of at least 66 2/3% of the outstanding shares of
the Common Stock of the corporation shall be required to amend or repeal the
Bylaws of the corporation, if the stockholders of the corporation are required
by the DGCL, the Certificate of Incorporation or the Bylaws to vote thereon.
IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of April,
1999, and affirm the statements contained therein as true under penalties of
perjury.
/S/ Joel Held
----------------------------
Joel Held, Incorporator
- --------------------------------------------------------------------------------
CERTIFICATE OF INCORPORATION - Page 5
<PAGE>
Exhibit 3.2
================================================================================
BYLAWS
OF
bright-technologies.com, inc.
(A Delaware corporation)
================================================================================
<PAGE>
BYLAWS
of
bright-technologies.com, inc.
(a Delaware corporation)
ARTICLE I
Offices
SECTION 1.1. The registered office of the Corporation shall be in the City
of Wilmington, County of New Castle, State of Delaware.
SECTION 1.2. The Corporation may also have offices at such other places
both within and without the State of Delaware as the Board of Directors may from
time to time determine or the business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
SECTION 2.1. Annual Meetings. The annual meeting of the stockholders for
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held at such place within or without
the State of Delaware, and on such date and at such hour of the day as the Board
of Directors shall determine.
SECTION 2.2. Special Meetings. Special meetings of the stockholders for
any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by order of the Chief Executive
Officer, and shall be called by the Chief Executive Officer or Secretary at the
request in writing of a majority of the Board of Directors or the whole
Executive Committee. Special meetings of the stockholders of the Corporation may
not be called by any other person or persons. Special meetings of the
stockholders shall be held at such place within or without the State of
Delaware, on such date, and at such time as may be designated by the person or
persons calling the meeting.
SECTION 2.3. Notice of Meetings. Written notice of every meeting of
stockholders, stating the time, place and purposes thereof, shall be given
personally or by mail at least ten (10), but not more than sixty (60), days
(except as otherwise provided by law) before the date of such meeting to each
person who appears on the stock transfer books of the Corporation as a
stockholder and who is entitled to vote at such meeting. If such notice is
mailed, it shall be directed to such stockholder at his or her address as it
appears on the stock transfer books of the Corporation.
- --------------------------------------------------------------------------------
BYLAWS - Page 1
<PAGE>
SECTION 2.4. Quorum. At any meeting of the stockholders the holders of a
majority of the shares of the Corporation entitled to vote at such meeting,
present in person or represented by proxy, shall constitute a quorum for all
purposes, except where otherwise provided by law or in the Certificate of
Incorporation. A quorum, once established, shall not be broken by the withdrawal
of enough votes to leave less than a quorum and the votes present may continue
to transact business until adjournment, provided that any action (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
SECTION 2.5. Adjournments. If at any meeting of stockholders a quorum
shall fail to attend in person or by proxy, the holders of a majority of the
shares present in person or by proxy and entitled to vote at such meeting may
adjourn the meeting from time to time until a quorum shall attend, and thereupon
any business may be transacted which might have been transacted at the meeting
as originally called. Notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken; provided, however, that if the adjournment is for more than thirty (30)
days or if after the adjournment a new record date is fixed, notice of the
adjourned date shall be given.
SECTION 2.6. Organization; Meeting Rules. The Chairman of the Board, if
one is elected, and in his or her absence the Chief Executive Officer, and in
their absence the Vice President, shall call meetings of the stockholders to
order and shall act as chairman thereof. The Secretary or an Assistant Secretary
of the Corporation shall act as secretary at all meetings of the stockholders
when present, and, in the absence of both, the presiding officer may appoint any
person to act as secretary. The chairman of any meeting of stockholders shall
determine the order of business and the rules and procedure at the meeting,
including such regulation of the manner of voting and the conduct of discussion
as he or she may deem appropriate in his or her discretion.
SECTION 2.7. Voting. At each meeting of the stockholders, each holder of
the shares of Common Stock shall be entitled to one vote on such matter for each
such share and may exercise such voting right either in person or by proxy
appointed by an instrument in writing subscribed by such stockholder or his or
her duly authorized attorney. No such proxy shall be voted or acted upon after
eleven (11) months from its date unless the proxy provides for a longer period.
Voting need not be by ballot. All elections of directors shall be decided by a
plurality vote and all questions decided and actions authorized by a majority
vote, except as otherwise required by law or the Certificate of Incorporation.
SECTION 2.8. Inspectors. At any meeting of stockholders, inspectors of
election may be appointed by the presiding officer of the meeting for the
purpose of opening and closing the polls, receiving and taking charge of the
proxies, and receiving and counting the ballots or the vote of stockholders
otherwise given. The inspectors shall be appointed by the presiding officer of
the meeting, shall be sworn to faithfully perform their duties, and shall in
writing certify to the returns. No candidate for election as director shall be
appointed or act as inspector.
SECTION 2.9. Stockholder List. At least ten (10) days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares
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BYLAWS - Page 2
<PAGE>
registered in the name of such stockholder, shall be prepared and held open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours for said ten (10) days either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the meeting during
the whole time thereof, and may be inspected by any stockholder who is present.
SECTION 2.10. Business to be Transacted at Meetings. At a meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before a special meeting,
business must be specified in the notice of the meeting (or any supplement
thereto). To be properly brought before an annual meeting, business must be (a)
specified in the notice of the meeting (or any supplement thereto) given by or
at the direction of the Board of Directors, (b) otherwise properly brought
before the meeting by or at the direction of the Board of Directors or (c)
otherwise properly brought before the meeting by a stockholder. For business to
be properly brought before an annual meeting by a stockholder, the stockholder
must, in addition to any requirements imposed by federal securities law or other
laws, have given timely notice thereof in writing to the secretary of the
Corporation. To be timely for an annual meeting, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation no later than ninety (90) days prior to the scheduled meeting,
regardless of any postponements, deferrals or adjournments of that meeting to a
later date; provided, however, if less than one hundred (100) days notice or
prior public disclosure of the date of the scheduled meeting is given, notice by
the stockholders must be so delivered or received not later than the close of
business on the tenth (10th) day following the earlier of the day on which such
notice of the date of the scheduled annual meeting was mailed or the day on
which public disclosure was made. A stockholder's notice to the secretary with
regard to an annual meeting shall set forth as to each matter that the
stockholder proposes to bring before the meeting, (i) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the annual meeting, (ii) the name and address, as they appear
on the Corporation's books, of the stockholders supporting such proposal, (iii)
the class and number of shares of the Corporation that are beneficially owned by
the supporting stockholders on the date of the presenting stockholders' notice
and (iv) any material interest of the presenting or supporting stockholders in
such business. The chairman of the meeting may refuse to bring before a meeting
any business not properly brought before the meeting in compliance with this
section.
ARTICLE III
Directors
SECTION 3.1. Functions and Number. The property, business and affairs of
the Corporation shall be managed and controlled by a Board of Directors, who
need not be stockholders, citizens of the United States or residents of the
State of Delaware. The number of members which shall constitute the Board of
Directors shall be determined from time to time by resolution of the Board of
Directors, but no decrease in the Board of Directors shall have the effect of
shortening the term of an incumbent director. Upon approval of these Bylaws, the
Board of Directors shall consist of eight (8) members, such number to constitute
the whole
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Board. The use of the phrase "whole Board" herein refers to the total
number of directors which the Corporation would have if there were no vacancies.
Except as otherwise provided by law or in these Bylaws or in the Certificate of
Incorporation, the directors shall be elected by the stockholders entitled to
vote at the annual meeting of stockholders of the Corporation. Subject to
applicable law, to the Certificate of Incorporation and to the other provisions
of these Bylaws, each director shall hold office until his or her term of office
expires and until his or her successor shall have been duly elected and
qualified. The directors shall be classified, with respect to the time for which
they severally hold office, into three (3) classes, as nearly equal in number as
possible, hereby designated as Class I, Class II and Class III. The initial term
of office of the Class I, Class II and Class III directors shall expire on the
date of the next succeeding annual meeting of stockholders following the end of
fiscal year 1999, the second succeeding annual meeting of stockholders and the
third succeeding annual meeting of stockholders, respectively. At each annual
meeting of stockholders after the end of fiscal year 1999, the successors to the
class of directors whose term expires at that meeting shall be elected to hold
office for a term expiring at the annual meeting of stockholders to be held in
the third year following the year of their election.
SECTION 3.2. Removal. Any director may be removed by the affirmative vote
of the holders of a majority of the then outstanding shares of Common Stock only
for cause.
SECTION 3.3. Vacancies. Unless otherwise provided in the Certificate of
Incorporation or in these Bylaws, vacancies among the directors, whether caused
by resignation, death, disqualification, removal, an increase in the authorized
number of directors or otherwise, may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining director.
Vacancies that occur on the Board of Directors during the year may be filled by
the Board of Directors as hereinabove provided for the unexpired term of the
vacating directors.
SECTION 3.4. Place of Meeting. The directors may (a) hold their meetings,
(b) have one or more offices and (c) keep the books of the Corporation (except
as otherwise may at any time be provided by law) at such place or places within
or without the State of Delaware as the Board may from time to time determine.
SECTION 3.5. Annual Meeting. The newly elected Board may meet for the
purpose of organization, the election of officers and the transaction of other
business, at such time and place within or without the State of Delaware as
shall be fixed as provided in Section 3.7 of this Article for special meetings
of the Board of Directors.
SECTION 3.6. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such time and place within or without the State of Delaware as
the Board of Directors shall from time to time by resolution determine and no
notice of such regular meetings shall be required.
SECTION 3.7. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by the direction of the Chief Executive Officer or
of one-third of the directors then in office. The Secretary or some other
officer or director of the Corporation
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shall give notice to each director of the time and place of each special meeting
by mailing the same at least three (3) days before the meeting or by telexing,
telegraphing or telephoning the same not later than the day before the meeting,
at the residence address of each director or at his or her usual place of
business. Special meetings of the Board shall be held at such place within or
without the State of Delaware as shall be specified in the call for the meeting.
Unless expressly required by statute, by the Certificate of Incorporation or by
the Bylaws, neither the business to be transacted at, nor the purpose of, any
special meeting of the Board of Directors need be specified in the notice of a
meeting.
SECTION 3.8. Quorum. Except as otherwise provided by law or in the
Certificate of Incorporation, a majority of the directors in office shall
constitute a quorum for the transaction of business. A majority of those present
at the time and place of any regular or special meeting, if less than a quorum
be present, may adjourn from time to time without notice, until a quorum be had.
The act of a majority of directors present at any meeting at which there is a
quorum shall be the act of the Board of Directors, except as may be otherwise
provided by law or in the Certificate of Incorporation.
SECTION 3.9. Compensation. The Board of Directors shall have the authority
to fix by resolution the compensation of directors.
SECTION 3.10. Organization. At all meetings of the Board of Directors, the
Chairman of the Board, or in his or her absence, the Chief Executive Officer if
he or she is a member of the Board, or in his or her absence the Vice President
if he or she is a member of the Board, or in their absence, a chairman chosen by
the directors, shall preside. The Secretary or an Assistant Secretary of the
Corporation shall act as secretary at all meetings of the Board of Directors
when present, and, in the absence of both, the presiding officer may appoint any
person to act as secretary.
SECTION 3.11. Telephone Meetings. Any member of the Board of Directors may
participate in any meeting of such Board by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in any meeting pursuant to
this provision shall constitute presence in person at such meeting.
SECTION 3.12. Informal Action. Any action required or permitted to be
taken at any meeting of the Board of Directors, or any committee thereof, may be
taken without a meeting if all the members of the Board consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board.
SECTION 3.13. Nomination of Director Candidates. Subject to the rights of
the holders of Preferred Stock or any other class of capital stock of the
Corporation (other than Common Stock) or any series of any of the foregoing that
has been outstanding, nominations for the election of directors may be made by
the Board of Directors, by any duly appointed committee thereof or by any
stockholder entitled to vote for the election of directors. Any stockholder
entitled to vote for the election of directors at any meeting may nominate
persons for election as directors only if written notice of such stockholder's
intent to make such nomination
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is given, either by personal delivery or by United States Mail, postage prepaid,
to the Secretary of the Corporation not later than ninety (90) days prior to the
scheduled meeting, regardless of any postponements, deferrals or adjournments of
that meeting to a later date; provided, however, if less than one hundred (100)
days notice or prior public disclosure of the date of the scheduled meeting is
given, notice by the stockholders must be so delivered or received not later
than the close of business on the tenth (10th) day following the earlier of the
day on which such notice of the date of the scheduled annual meeting was mailed
or the day on which public disclosure was made. Each such notice shall set
forth: (a) the name, age, business address and residence address of the person
or persons intended to be nominated; (b) a representation that the stockholder
is a holder of record of stock of the Corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as would have
been required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission had such requirements been
applicable and each nominee been nominated, or intended to be nominated, by the
Board of Directors; and (e) the consent of each nominee to serve as a director
of the Corporation if so elected. The Chairman of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with this
section.
ARTICLE IV
Committees
SECTION 4.1. Executive Committee. The Board of Directors, by a resolution
passed by a vote of a majority of the whole Board, may appoint an Executive
Committee of one or more directors, which to the extent permitted by law and in
said resolution shall, during the intervals between the meetings of the Board of
Directors, in all cases where special directions shall not have been given by
the Board, have and exercise the powers of the Board of Directors, including
those powers enumerated in these Bylaws which are not specifically reserved to
the Board of Directors, in the management of the property, business and affairs
of the Corporation; provided, however, that the Executive Committee shall not
have any power or authority to amend the Certificate of Incorporation, to adopt
any agreement of merger or consolidation, to recommend to the stockholders the
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, to recommend to the stockholders a dissolution of the
Corporation or a revocation of dissolution, to amend the Bylaws of the
Corporation, to declare a dividend or to authorize the issuance of stock. The
Executive Committee shall have power to authorize the seal of the Corporation to
be affixed to all papers which may require it. The Board of Directors shall
appoint the Chairman of the Executive Committee. The members of the Executive
Committee shall receive such compensation and fees as from time to time may be
fixed by the Board of Directors.
SECTION 4.2. Alternates and Vacancies. The Board of Directors may
designate one or more directors as alternate members of the Executive Committee
who may replace any absent or disqualified member at any meeting of the
Executive Committee. In the absence or
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disqualification of a member of the Executive Committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he, she or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member. All other vacancies in the Executive Committee shall be
filled by the Board of Directors in the same manner as original appointments to
such Committee.
SECTION 4.3. Committees to Report to Board. The Executive Committee shall
keep regular minutes of its proceedings and all action by the Executive
Committee shall be reported to the Board of Directors at its meeting next
succeeding such action.
SECTION 4.4. Procedure. The Executive Committee shall fix its own rules of
procedure, and shall meet where and as provided by such rules or by resolution
of the Board of Directors. The presence of a majority of the then appointed
number of each committee created pursuant to this Article IV shall constitute a
quorum and in every case an affirmative vote by a majority of the members of the
committee present and not disqualified from voting shall be the act of the
committee.
SECTION 4.5. Other Committees. From time to time the Board of Directors by
a resolution adopted by a majority of the whole Board may appoint any other
committee or committees for any purpose or purposes, to the extent lawful, which
shall have such powers as shall be determined and specified by the Board of
Directors in the resolution of appointment.
SECTION 4.6. Termination of Committee Membership. In the event any person
shall cease to be a director of the Corporation, such person shall
simultaneously therewith cease to be a member of any committee appointed by the
Board of Directors, or any subcommittee thereof.
ARTICLE V
Officers
SECTION 5.1. Executive Officers. The executive officers of the Corporation
may consist of a Chairman of the Board, a Chief Executive Officer, one or more
Vice Presidents, a Chief Financial Officer and a Treasurer and a Secretary, all
of whom shall be elected annually by the Board of Directors. Unless otherwise
provided in the resolution of election, each officer shall hold office until the
next annual election of directors and until his or her successor shall have been
qualified. Any two of such offices may be held by the same person.
SECTION 5.2. Subordinate Officers. The Board of Directors may appoint one
or more Assistant Secretaries, one or more Assistant Treasurers and such other
subordinate officers and agents as it may deem necessary or advisable, for such
term as the Board of Directors shall fix in such appointment, who shall have
such authority and perform such duties as may from time to time be prescribed by
the Board.
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SECTION 5.3. Compensation. The Board of Directors or a committee thereof
shall have the power to fix the compensation of all officers, agents and
employees of the Corporation, which power may be delegated as the Board of
Directors or such committee shall determine.
SECTION 5.4. Removal. All officers, agents and employees of the
Corporation shall be subject to removal, with or without cause, at any time by
affirmative vote of the majority of the whole Board of Directors whenever, in
the judgment of the Board of Directors, the best interests of the Corporation
will be served thereby. The power to remove agents and employees, other than
officers or agents elected or appointed by the Board of Directors, may be
delegated as the Board of Directors shall determine.
SECTION 5.5. Chairman of the Board. If a Chairman of the Board is elected,
he shall be chosen from among the members of the Board of Directors and shall
preside at all meetings of the directors and the stockholders of the
Corporation. The Chairman of the Board shall, in general, have supervisory power
over the Chief Executive Officer and all other officers of the Corporation.
SECTION 5.6. The Chief Executive Officer. The Chief Executive Officer
shall be the chief operating officer of the Corporation and shall have the
general powers and duties of supervision and management of the Corporation, and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. The Chief Executive Officer shall also perform such other duties as
may from time to time be assigned to him by the Board of Directors.
SECTION 5.7. Vice Presidents. Each Vice President shall perform such
duties and shall have such authority as from time to time may be assigned to him
or her by the Board of Directors or the Chief Executive Officer.
SECTION 5.8. The Chief Financial Officer and Treasurer. The Chief
Financial Officer and Treasurer shall have the general care and custody of all
the funds and securities of the Corporation which may come into his or her hands
and shall deposit the same to the credit of the Corporation in such bank or
banks or depositaries as from time to time may be designated by the Board of
Directors or by an officer or officers authorized by the Board of Directors to
make such designation, and the Chief Financial Officer and Treasurer shall pay
out and dispose of the same under the direction of the Board of Directors. He or
she shall have general charge of all securities of the Corporation and shall in
general perform all duties incident to the position of Chief Financial Officer
and Treasurer.
SECTION 5.9. The Secretary. The Secretary shall keep the minutes of all
proceedings of the Board of Directors and the minutes of all meetings of the
stockholders and also, unless otherwise directed by such committee, the minutes
of each standing committee, in books provided for that purpose, of which he or
she shall be the custodian; he or she shall attend to the giving and serving of
all notices for the Corporation; he or she shall have charge of the seal of the
Corporation, of the stock certificate books and such other books and papers as
the Board of Directors may direct; and he or she shall in general perform all
the duties incident to the office of Secretary and such other duties as may be
assigned to him or her by the Board of Directors.
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SECTION 5.10. Vacancies. All vacancies among the officers for any cause
shall be filled only by the Board of Directors.
SECTION 5.11. Bonding. The Board of Directors shall have power to require
any officer or employee of the Corporation to give bond for the faithful
discharge of his or her duties in such form and with such surety or sureties as
the Board of Directors may deem advisable.
ARTICLE VI
Stock
SECTION 6.1. Form and Execution of Certificates. The shares of stock of
the Corporation shall be represented by certificates in such form as shall be
approved by the Board of Directors; provided that the Board of Directors of the
Corporation may provide by resolution that some or all of any or all classes or
series of its stock (other than the Common stock of the Corporation) shall be
uncertificated shares. Any such resolution shall not apply to shares represented
by a certificate until such certificate is surrendered to the Corporation; and,
notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock represented by certificates and every holder of
uncertificated shares shall be entitled to a certificate or certificates
representing his or her shares upon delivery of a written request therefor to
the Secretary of the Corporation. The certificates shall be signed by the Chief
Executive Officer or the Vice President and the Treasurer or the Secretary or an
Assistant Treasurer or Assistant Secretary, except that where any such
certificates shall be countersigned by a transfer agent and by a registrar, the
signatures of any of the officers above specified, and the seal of the
Corporation upon such certificates, may be facsimiles, engraved or printed. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon such 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 he or she were such
officer, transfer agent or registrar at the date of its issue.
SECTION 6.2. Regulations. The Board of Directors may make such rules and
regulations consistent with any governing statute as it may deem expedient
concerning the issue, transfer and registration of certificates of stock and
concerning certificates of stock issued, transferred or registered in lieu or
replacement of any lost, stolen, destroyed or mutilated certificates of stock.
SECTION 6.3. Fixing of Record Date. For the purpose of determining the
stockholders entitled to notice of, and to vote at, any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or for the purpose of determining stockholders entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a date as the record date for any such
determination of stockholders, and all persons who are stockholders of record on
the date so fixed, and no others, shall be entitled to notice of, and to vote
at, such meeting or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or to receive payment of any dividend or
other distribution or
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allotment of any rights, or to exercise any rights in respect of any change,
conversion or exchange of stock or to take any other lawful action, as the case
may be. Such record date shall not be more than sixty (60) days nor less than
ten (10) days before the date of any such meeting, nor more than sixty (60) days
prior to any other action, provided that any record date established by the
Board of Directors may not precede the date of the resolution establishing the
record date. The record date for determining stockholders entitled to consent to
corporate actions in writing shall not be more than ten (10) days after the date
upon which the resolution fixing the record date was adopted. If no record date
is established prior to an action undertaken by consent, the record date shall
be, if no action of the Board of Directors is required, the first date on which
a signed written consent setting forth the action taken is delivered to the
corporation. If action by the Board of Directors is required, the record date
shall be the close of business on the day the board adopts the resolution taking
the prior action.
Section 6.4. Transfer Agent and Registrar. The Board of Directors may
appoint a transfer agent or transfer agents and a registrar or registrars for
any or all classes of the capital stock of the Corporation, and may require
stock certificates of any or all classes to bear the signature of either or
both.
ARTICLE VII
Seal
SECTION 7.1. Seal. The seal of the Corporation shall be circular in form
and contain the name of the Corporation, the year of its organization, and the
words "CORPORATE SEAL, DELAWARE," which seal shall be in charge of the Secretary
to be used as directed by the Board of Directors.
ARTICLE VIII
Fiscal Year
SECTION 8.1. Fiscal Year. The fiscal year of the Corporation shall be the
calendar year unless otherwise fixed by resolution of the Board of Directors.
ARTICLE IX
Waiver of Notice
SECTION 9.1. Waiver of Notice. Any person may waive any notice required to
be given by law, in the Certificate of Incorporation or under these Bylaws by
attendance in person, or by proxy if a stockholder, at any meeting, except when
such person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened, or by a writing signed by the person or
persons entitled to said notice, whether before or after the time stated in said
notice, which waiver shall be deemed equivalent to such notice. Neither the
business to be transacted at,
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nor the purpose of, any regular or special meeting of the stockholders,
directors, or members of a committee appointed by the Board of Directors need be
specified in any written waiver of notice.
ARTICLE X
Checks, Notes, Drafts, Contracts, Voting of Securities, Etc.
SECTION 10.1. Checks, Notes, Drafts, Etc. All checks, notes, drafts or
other orders for the payment of money of the Corporation shall be signed,
endorsed or accepted in the name of the Corporation by such officer, officers,
person or persons as from time to time may be designated by the Board of
Directors or by an officer or officers authorized by the Board of Directors to
make such designation.
SECTION 10.2. Execution of Contracts, Deeds, Etc. The Board of Directors
may authorize any officer or officers, agent or agents, in the name and on
behalf of the Corporation, to enter into or execute and deliver any and all
deeds, bonds, mortgages, contracts and other obligations or instruments, and
such authority may be general or confined to specific instances.
SECTION 10.3. Provision Regarding Conflicts of Interests. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association, or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely because his, her
or their votes are counted for such purpose, if:
(a) The material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the Board
of Directors or the committee, and the Board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or
(b) The material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the Corporation as of
the time it is authorized, approved or ratified by the Board of Directors,
a committee thereof, or the stockholders.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
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SECTION 10.4. Voting of Securities Owned by the Corporation. Subject
always to the specific directions of the Board of Directors, any share or shares
of stock or other securities issued by any other corporation and owned or
controlled by the Corporation may be voted, whether by written consent as set
forth hereinbelow or at any meeting of such other corporation, by the Chief
Executive Officer of the Corporation, or in the absence of the Chief Executive
Officer, by any Vice President of the Corporation who may be present at such
meeting or available to sign such written consent. Whenever in the judgment of
the Chief Executive Officer, or in his or her absence, of any Vice President, it
shall be desirable for the Corporation to execute a proxy or give a consent with
respect to any share or shares of stock or other securities issued by any other
corporation and owned by the Corporation, such proxy or consent shall be
executed in the name of the Corporation by the Chief Executive Officer or one of
the Vice Presidents of the Corporation without necessity of any authorization by
the Board of Directors. Any person or persons so designated as the proxy or
proxies of the Corporation shall have full right, power and authority to vote
the share or shares of stock or other securities issued by such other
corporation and owned by the Corporation.
ARTICLE XI
Indemnification and Insurance
SECTION 11.1. Third-Party Actions. The Corporation shall indemnify and
hold harmless any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed proceeding (other than an action
by or in the right of the Corporation) by reason of the fact that he or she is
or was a director or officer of the Corporation, against expenses (including
reasonable attorneys' fees), judgments, fines, liabilities, losses and amounts
paid in settlement actually and reasonably incurred by him or her in connection
with such proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Corporation and, with respect to any criminal proceeding, had no reasonable
cause to believe his or her conduct was unlawful. The termination of any
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interest of the Corporation, and,
with respect to any criminal proceeding, had reasonable cause to believe that
his or her conduct was unlawful.
SECTION 11.2. Derivative Actions. The Corporation shall indemnify and hold
harmless any person who was or is a party or is threatened to be made a party to
any threatened, pending or completed proceeding by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he or
she is or was a director or officer of the Corporation, against expenses
(including reasonable attorneys' fees) actually and reasonably incurred by him
or her in connection with the defense or settlement of such proceeding if he or
she acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the court in which such proceeding was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the
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case, such person is fairly and reasonably entitled to indemnity for such
expenses that the court shall deem proper.
SECTION 11.3. Right to Indemnification of Expenses. To the extent that a
director or officer of the Corporation has been successful on the merits or
otherwise in defense of any proceeding referred to in Sections 11.1 and 11.2 or
in defense of any claim, issue or matter therein, he or she shall be indemnified
against expenses (including reasonable attorneys' fees) actually and reasonably
incurred by him or her in connection therewith.
SECTION 11.4 Determination of Indemnification. Any indemnification under
Sections 11.1 and 11.2 (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because he or she has met the applicable standards of conduct set forth in
Sections 11.1 and 11.2. Such determination shall be made (A) by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, (B) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion or (C) by the
stockholders.
SECTION 11.5 Expenses of Contested Indemnification Claims. If a claim
under Section 11.1 or 11.2 is not paid in full by the Corporation within thirty
(30) days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall also be entitled to be paid the expenses of prosecuting such
claim.
SECTION 11.6 Advancement of Expenses. Expenses (including reasonable
attorneys' fees) incurred by a director or officer in defending any proceeding
or prosecuting a claim under Section 11.5 shall be paid by the Corporation in
advance of the final disposition of such proceeding or suit upon receipt of a
written affirmation by the director or officer of his or her good faith belief
that he or she has met the standard of conduct necessary for indemnification and
a written undertaking by or on behalf of the director or officer to repay such
amount if it shall ultimately be determined that he or she is not entitled to be
indemnified by the Corporation as authorized in this Article.
SECTION 11.7 Indemnification Not Exclusive. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under the Certificate
of Incorporation, any other bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office.
SECTION 11.8 Survival of Indemnification and Advancement of Expenses. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and administrators of such person.
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SECTION 11.9 Employees, Agents and Others. The Corporation may, to the
fullest extent of the provisions of this Article with respect to directors and
officers and to the extent authorized from time to time by the Board of
Directors, grant rights of indemnification and advancement of expenses to any
employee or agent of the Corporation or any other person who 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.
SECTION 11.10 Contract Right. Each of the rights of indemnification and
advancement of expenses provided by, or granted pursuant to, this Article shall
be a contract right and any repeal or amendment of the provisions of this
Article shall not adversely affect any such right of any person existing at the
time of such repeal or amendment with respect to any act or omission occurring
prior to the time of such repeal or amendment, and further, shall not apply to
any proceeding, irrespective of when the proceeding is initiated, arising from
the service of such person prior to such repeal or amendment.
SECTION 11.11 Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the Corporation would
have the power to indemnify him or her against such liability under the
provisions of this Article.
SECTION 11.12 Certain References Under Article XI. For purposes of this
Article, the following references shall have the following meanings:
(A) "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger that, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise shall stand in the same position under the provisions
of this Article with respect to the resulting or surviving corporation as he or
she would have with respect to such constituent corporation if its separate
existence had continued;
(B) "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan;
(C) a person who acted in good faith and in a manner he or she
reasonably believed to be in the best interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation;"
(D) "other enterprises" shall include employee benefit plans;
- --------------------------------------------------------------------------------
BYLAWS - Page 14
<PAGE>
(E) "proceeding" shall include any pending or completed action, suit
or proceeding, whether formal or informal or civil, criminal, administrative,
arbitrative or investigative, any appeal in such an action, suit or proceeding,
and any inquiry or investigation that could lead to such an action, suit or
proceeding;
(F) "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation that
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries.
- --------------------------------------------------------------------------------
BYLAWS - Page 15
<PAGE>
Exhibit 10.1
AGREEMENT
AMONG
JOSEPH C. PASSALAQUA,
BRIGHT TECHNOLOGIES, INC.
AND
ERNST & YOUNG INC., IN ITS
CAPACITY AS COURT-APPOINTED
RECEIVER AND MANAGER FOR
TEE-COMM ELECTRONICS, INC.
DATED AS OF JANUARY 14, 1999
<PAGE>
AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into this 14th day of Janaury,
1999, by and among Joseph C. Passalaqua ("Passalaqua"), Ernst & Young Inc.,
in its capacity as court-appointed Receiver and Manager for Tee-Comm
Electronics, Inc. (the "Receiver") and Bright Technologies, Inc. (the
"Company").
WHEREAS, on February 13, 1995, the Company acquired substantially all of the
assets of Tee-Comm Teleservices, Inc. ("Teleservices"), a Georgia Corporation
engaged in the business of manufacturing, selling, leasing and repairing pay
telephones, pursuant to an Asset Purchase Agreement, dated February 13, 1995;
and
WHEREAS, as consideration for the assets of Teleservices, Inc., which
consisted of inventory, equipment and goodwill, the Company duly executed and
delivered the Secured Note and a Security Agreement, dated February 13, 1995
(the "Security Agreement") granting Teleservices a security interest in all
inventory, furniture, fixtures, furnishings, leases, accounts, contract
rights, licenses, supplies, machinery, equipment, goods, tangible and
intangible personal property of every kind and nature (including additions,
replacements, accessions and proceeds) now and hereafter owned and acquired;
and
WHEREAS, as additional assurance of payment, Passalaqua executed a Guaranty
dated February 13, 1995 (the "Guaranty") in favor of Teleservices
guaranteeing payment in full of the Secured Note; and
WHEREAS, on or about February 14, 1995, Teleservices assigned all of its
rights and interests in the Secured Note, the Security Agreement, and the
Guaranty to Tee-Comm Inc., and the Company and Passalaqua consented to such
assignment; and
WHEREAS, the Company has failed to make all of the scheduled payments of
principal and interest in respect of the Secured Note due, without
acceleration, on the 13th of each of the months since April, 1997, and owes
in excess of $200,000 in past due interest to date, in addition to other sums
due and owing under the Secured Note including, without limitation, interest
on interest, late charges, and fees and expenses, all in addition to the
entire outstanding principal balance of the Secured Note; and
WHEREAS, the Company has no defenses, counterclaims, crossclaims or offsets
to the Receiver's claims in respect of the Secured Note and, accordingly, has
executed a valid and enforceable affidavit of confession of judgment dated
July 16, 1998 (the "Company Affidavit"); and
WHEREAS, Passalaqua has no defenses, counterclaims or offsets to the
Receiver's claims in respect of the Guaranty and, accordingly, has executed a
valid and enforceable affidavit of confession of judgment dated November 2,
1998 (the "Passalaqua Affidavit" and, together with the Company Affidavit,
the "Affidavits"); and
<PAGE>
WHEREAS, pursuant to the Guaranty and the Affidavit, Passalaqua is indebted
to the Receiver in an amount substantially in excess of $1.2 million plus
continuing accruals of interest, costs and expenses; and
WHEREAS, Passalaqua and the Company each represent for itself that, at this
time, it does not have the financial wherewithal to pay the full amount owing
but proposes providing the Receiver with certain consideration as set forth
below; and
WHEREAS, the parties desire to settle their interests as set forth below.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Passalaqua shall pay the Receiver, within 60 days from the date of this
Agreement, $300,000.00 in immediately available U.S. funds.
2. Contemporaneous with execution of this Agreement, Passalaqua will deliver
a recordable mortgage (the "Mortgage") of the property located at 7323
and 7325 Oswego Road, Liverpool, New York (the "Premises") in favor of the
Receiver in the amount of $300,000.00. The Mortgage shall be released
contemporaneous with timely receipt by the Receiver of the $300,000.00
payment required pursuant to paragraph 1 hereof.
3. Prior to or contemporaneous with execution of this Agreement, Passalaqua
will deliver evidence satisfactory to the Receiver of the release of the
mortgage of the Premises recorded in favor of Citibank (N.Y.S.) and of any
other encumbrances on the premises other than the Mortgage.
4. The Receiver will bear the cost of recordation of the Mortgage.
5. Passalaqua and the Company will each provide the Receiver with a letter,
on a monthly basis, advising of any changes to the information contained
in the Affidavits.
6. Passalaqua and the Company warrant and represent, as of the date of this
Agreement, and covenant that there will continue to be, no debts of claims
of the Company that are PARI PASSU or senior to the claims of the Receiver.
7. The Company hereby grants the Receiver a valid, first priority security
interest in the technology of the Company and, on or before January 27,
1999, shall deliver to the Receiver such items as the Receiver shall
request to enable the Receiver to perfect such security interest.
<PAGE>
8. There will be a monthly meeting or call between Passalaqua and the
Receiver to review the status of the transactions described in that
certain Firm Commitment Agreement executed by Lilly Beter Capital Group,
Ltd. on September 8, 1998 and by the Company on September 25, 1998 and of
any transactions related thereto (collectively, the "Lilly Beter
Transactions").
9. The Company hereby grants to the Receiver, and Passalaqua and the
Company hereby covenant that, in connection with any equity issuance by
(a) the Company or (b) the Lilly Beter Transactions, the Receiver will
be granted an option commencing on the date of the first public offering
and terminating at the expiration of three (3) years to acquire 5%, on
a fully diluted basis, of the equity of the Company, such option to be
on terms at least as favorable as any terms made available to any other
party including any insider, underwriter, agent or advisor, which the
parties understand to be no more than a ?% discount. The option is and
will vest immediately and the option and the covenants set forth in this
paragraph will not be discharged by any repayment, including, without
limitation, payment in full of the amounts owing by the Company or
Passalaqua to the Receiver.
10. Passalaqua hereby pledges to the Receiver 50% of his shares in American
Telecommunications Enterprise, Inc. ("American") as additional
security for his obligations to the Receiver, such shares being delivered
to the Receiver contemporaneous with execution hereof. The pledged
shares will not be released until payment in full of the obligations
owing by the Company to the Receiver.
11. On the earlier of (a) the 91st day following perfection of the grant of
the Mortgage, (b) the foreclosure of the Mortgage, and (c) timely receipt
by the Receiver of the $300,000.00 payment required pursuant to paragraph
1 hereof, the Receiver will (i) release the Guarantee and (ii) return to
Passalaqua the Passalaqua Affidavit.
12. Upon release and return of each of the items referenced in the
immediately prior paragraph, Passalaqua and the Receiver will exchange
mutual general releases, provided that the release shall not alter, in
any manner, Passalaqua's obligation to continue to use his best efforts
to cause the Company to meet all of its obligations under the Secured
Note, related documentation and this Agreement, and provided further
that Passalaqua's obligations and pledge pursuant to paragraph 10 hereof
shall not be released.
13. Nothing in this Agreement, the performance of the acts contemplated
herein or otherwise will alter the existing obligations of the Company to
the Receiver except to the extent that the Company has obligated itself
to perform in accordance with the terms hereof.
-3-
<PAGE>
14. Nothing in this Agreement alters the rights and entitlements of the
Receiver to take action in connection with the outstanding defaults of
the Company or of Passalaqua, including, without limitation, the right
to file either or both of the Affidavits, subject only to (a) the
agreement of the Receiver to forbear from filing the Passalaqua
Affidavit until the earlier of (i) any default by Passalaqua or the
Company hereunder and (ii) 90 days from the date hereof and (b) the
obligations of the Receiver under paragraphs 11 and 12 hereof.
15. Passalaqua and the Company hereby agree to take all such further actions
and provide all such further documents as may be reasonably required by
the Receiver to effectuate the provisions of this Agreement.
16. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND
PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE COURT OR ANY FEDERAL COURT SITTING IN
THE STATE OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND EACH IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF SAID COURTS.
17. Any notice demand, or delivery authorized by this Agreement shall be
sufficiently given or made if sent by registered or certified mail, or
by recognized overnight courier service, postage prepaid, addressed to
the intended recipient at the address specified below its name on the
signature page hereof or such other address as shall have been furnished
in writing in accordance with this provision to the party giving or
making such notice, demand or delivery.
18. This Agreement shall be binding upon and inure to the benefit of each of
the parties hereto and each of their respective successors and assigns.
Nothing in this Agreement is intended or shall be construed to confer
upon any other person, any right, remedy or claim under or by reason of
this Agreement or any part hereof.
19. This Agreement may be executed in any number of counterparts and each
such counterpart shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same
instrument.
-4-
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed, as of the date and year first written above.
/s/ JOSEPH C. PASSALAQUA
----------------------------------------
JOSEPH C. PASSALAQUA
106 Glenwood Ave
Liverpool, NY 13090
BRIGHT TECHNOLOGIES, INC.
By: /s/ JOSEPH C. PASSALAQUA
----------------------------------------
Its: President
7323 Oswego Rd.
Liverpool, NY 13090
ERNST & YOUNG, INC., IN ITS CAPACITY AS
COURT-APPOINTED RECEIVER AND MANAGER
FOR TEE-COMM ELECTRONICS, INC.
By: /s/ STUART CLINTON
----------------------------------------
Its: Sr. Vice President
Ernst & Young Tower
P.O. Box 251
222 Bay Street, 21st Floor
Toronto-Dominion Centre
Toronto, Ontario M5K 1J7
Canada
-5-
<PAGE>
Exhibit 10.2
[LETTERHEAD]
VIA FAX
March 9, 1999
PRIVATE AND CONFIDENTIAL
Bright Technologies, Inc.
7323 Oswego Road
Liverpool, NY
Attention: Mr. Joseph Passalaqua
Dear Joe:
Re: TEE-COMM ELECTRONICS INC. - AMENDMENT TO AGREEMENT
Further to our recent telephone discussions, this letter confirms that
paragraph 11 of the Agreement dated as of January 14, 1999 among Joseph
Passalaqua, Bright Technologies Inc. and Ernst & Young Inc. in its capacity
as court-appointed receiver and manager for Tee-Comm Electronics Inc. (the
"Agreement") is hereby amended to read as follows:
"On the later of the 91st day following perfection of the grant of the
mortgage and (a) the foreclosure of the mortgage or (b) timely receipt by the
Receiver of the $300,000 payment required pursuant to paragraph 1 hereof, the
Receiver will (i) release the guarantee and (ii) return to Passalaqua the
Passalaqua Affidavit."
The remainder of the Agreement is unchanged. Please confirm your agreement
with this amendment by signing a copy of this letter in the space provided
below and returning that copy to the undersigned.
Yours very truly,
ERNST & YOUNG INC.
Court-appointed Receiver and Manager
of Tee-Comm Electronics Inc
Per:
/s/ Stuart Clinton
J.S. Clinton
Senior Vice President
(416) 943-3042
cc Carl Worboys
Fred Hodara
<PAGE>
-2-
[LETTERHEAD]
We hereby agree with the foregoing
/s/ Joseph Passalaqua /s/ Joseph Passalaqua, President
- ------------------------------------ ---------------------------------
Mr. Joseph Passalaqua Bright Technologies Inc.
<PAGE>
Exhibit 10.3
SECURED PROMISSORY NOTE
$1,266,400 ATLANTA, GEORGIA February __, 1995
FOR VALUE RECEIVED, after date and in the manner herein set forth, the
undersigned, BRIGHT TECHNOLOGIES, INC., a Georgia corporation (hereinafter
referred to as "Maker") promises to pay to the order of TEE-COMM
TELESERVICES, INC., a Georgia corporation, its successors and assigns
(hereinafter referred to as "Holder") the principal sum of One Million Two
Hundred Sixty-six Thousand Four Hundred Dollars ($1,266,400) payable with
interest, and without offset or deduction in lawful money of the United
States of America which shall at the time of payment be legal tender in
payment of all debts and dues public and private, as follows:
1. PAYMENTS
1.1. AMORTIZATION SCHEDULE. Monthly payments of interest only
shall be made to the Holder on March 1, 1995 and on the first day of the
succeeding eight months. Beginning December 1, 1995 regular monthly payments
of principal and accrued interest shall be made to Holder. All payments
hereunder shall be made in accordance with the attached amortization
schedule, which the Holder acknowledges will be amended with the interest
rate adjustments.
1.2 INTEREST. The outstanding principal balance shall bear
interest in an amount equal to the Prime Rate as set forth in The Wall Street
Journal. The interest shall be adjusted every 18 months, based upon the
Prime Rate in effect on the first day of each calendar quarter.
1.3 MATURITY DATE. The entire unpaid principal balance and
all accrued interest shall be due and payable on or before June 30, 2000
(hereinafter referred to as the "Maturity Date").
1.4 PLACE AND PAYMENT. Payments hereunder shall be made to
the Holder at 775 Main Street East, Milton, Ontario, Canada L9T3Z3, or at
such other place as Holder may designate in writing from time to time.
1.5 LATE CHARGE. If any installment provided for herein is
not received by Holder within ten (10) days after due, Maker shall pay Holder
a late charge equal to two percent (2%) of the amount due and Holder shall
not be obligated to accept any past due payment not accompanied by said
amount.
1.6 In the event a court of competent jurisdiction enjoins or
restrains Maker from using the assets transferred to Maker pursuant to the
Asset Purchase Agreement of even date herewith, Maker may suspend payments
hereunder proportionately with the amount of assets which are restrained or
deemed unusable, and interest shall not accrue hereunder on the suspended
portion, until such restraint is terminated. This section and section 1.7
following will be effective only in the event that a court of competent
jurisdiction determines that Holder has violated the Final Judgment on
Consent between Holder and Rates Technology Inc.
<PAGE>
1.7 In the event such court permanently enjoins or restrains
Maker from using said assets or a portion thereof, payment of the principal
balance and accrued interest shall be reduced pro rata in accordance with the
purchase price set forth in the Asset Purchase Agreement.
2. ATTORNEY'S FEES. Maker promises to pay (in addition to the above
principal and interest) all costs of collection, including reasonable
attorney's fees, if this Note is collected by or through an attorney at law.
3. PREPAYMENT. This Note may be prepaid in whole or in part at any
time without penalty or premium.
4. DEFAULT. If default occurs in any of the payments required
hereunder, or should Maker become insolvent or commit any act of bankruptcy
or make an assignment for the benefit of creditors or authorize the filing or
file a voluntary petition in bankruptcy or should a receiver of any of its
property be appointed or should involuntary bankruptcy proceedings be filed
or threatened against Maker, then, in any such event, at the option of the
Holder hereof, at any time thereafter, without notice or demand, the unpaid
principal balance of this Note and all accrued interest shall at once become
due and payable and shall bear interest at the Default Rate (as hereinafter
defined) from the date of such default or event. Failure to exercise any of
said options shall not constitute a waiver on the part of Holder hereof of
the right to exercise the same at any other time. The Default Rate shall be
the Prime Rate as set forth in The Wall Street Journal plus three percent
(3%) per annum.
5. WAIVER. Maker, for itself, its successors and assigns, hereby
expressly waives presentment for payment, demand, notice of demand, notice of
dishonor, protest, notice of protest, diligence in collection and all other
notices or demands whatsoever with respect to this Note or the enforcement
hereof except as expressly provided for herein, and hereby consents to any
and all indulgences granted by Holder, or any substitution, exchange or
release of collateral permitted by Holder, all without in any way modifying,
altering, releasing, affecting or limiting the validity of the indebtedness
evidenced hereby or impairing any of Holder's rights following a default
hereunder. No failure to accelerate the debt evidenced hereby by reason of
default from time to time shall be construed (i) as a novation of this Note
or as a reinstatement of the indebtedness evidenced hereby or as a waiver of
such right of acceleration or of the right of Holder thereafter to insist
upon strict compliance with the terms of this Note, or (ii) to prevent the
exercise of such right of acceleration or any other right granted hereunder
or by the laws of the United States or any state thereof; and Maker hereby
expressly waives the benefit of any statute or rule of law or of equity now
provided, or which may hereafter be provided, which would produce a result
contradictory to or in conflict with the foregoing. No extension of the time
for payment of this Note or any installment due hereunder, made by agreement
with any person now or hereafter liable for the payment of this Note, shall
operate to release, discharge, modify, change or affect the original
liability of Maker under this Note, either in whole or in part, unless Holder
agrees otherwise in writing. This Note may not be changed orally, but only
by an agreement in writing signed by the party against whom enforcement of
any waiver, change, modification or discharge is sought.
6. EXEMPTIONS. Maker hereby waives and renounces for itself and its
successors and assigns, all rights to the benefits of any statute of
limitations and any moratorium, reinstatement, marshaling, forbearance,
valuation, stay, extension, redemption, appraisement, exemption or homestead
now provided, or which may hereafter be provided by the Constitution or laws
of the
<PAGE>
United States of America or of any state thereof to and in all its property,
real and personal, against the enforcement and collection of the obligations
evidenced by this Note. Maker hereby transfers, conveys and assigns to the
Holder a sufficient amount of such homestead or exemption as may be set apart
in bankruptcy, to pay this Note in full, with all costs of collection, and
does hereby direct any trustee in bankruptcy having possession of such
homestead or exemption to deliver to the Holder a sufficient amount of
property or money set apart as exempt to pay the indebtedness evidenced
hereby, or any renewal hereof, and does hereby irrevocably appoint the Holder
and the attorney-in-fact for the maker to claim any and all homestead
exemptions allowed by law.
7. GOVERNING LAW. This Note is intended to constitute a contract
under and shall be construed, interpreted and enforced in accordance with the
laws of the State of Georgia and all applicable federal laws and regulations.
8. LIMIT OF VALIDITY. If fulfillment of any provision of this Note
shall involve transcending the limit of validity presented prescribed by any
applicable usury statute or any other applicable law, then IPSO FACTO, the
obligation to be fulfilled shall be reduced to the limit of such validity, so
that in no event shall any exaction be possible under this Note that is in
excess of the now current limit of such validity, but such obligations shall
be fulfilled to the limit of such validity.
9. TIME OF ESSENCE. Time is of the essence of this Note.
10. INUREMENT. This Note shall bind and inure to the benefit of Maker
and Holder and their respective heirs, executors, successors, assigns and
legal representatives, whether by voluntary action or by operation of law.
11. CAPTIONS. The captions of the paragraphs of this Note are for
convenience only and are not intended to be nor shall be construed as being
a part hereof and shall not limit, expand or otherwise affect any of the
terms hereof.
12. SECURED BY SECURITY AGREEMENT. This Promissory Note is secured by a
Security Agreement between the parties dated February __, 1995, and is issued
pursuant to an Asset Purchase Agreement dated February __, 1995 whereby Maker
has acquired certain assets from Holder.
SIGNED, SEALED AND DELIVERED by Maker the day and year first above set
forth.
MAKER:
BRIGHT TECHNOLOGIES, INC.
ATTEST:
BY: (illegible) BY: /s/ JOSEPH C. PASSALAQUA (SEAL)
---------------------- ----------------------------------
JOSEPH C. PASSALAQUA
C.E.O
<PAGE>
<TABLE>
<CAPTION>
Teleservices Amortization Table 2/2/95
Interest Rate 8.00%
Pre-payment of interest $60,000.00
Pd Payment Principal Interest Balance
<S> <C> <C> <C> <C>
1 8,442.67 1,266,400.00
2 8,442.67 1,266,400.00
3 8,442.67 1,266,400.00
4 8,442.67 1,266,400.00
5 8,442.67 1,266,400.00
6 8,442.67 1,266,400.00
7 8,442.67 1,266,400.00
8 7,541.33 8,442.67 1,266,400.00
9 8,442.67 8,442.67 1,266,400.00
10 18,442.67 10,000.00 8,442.67 1,256,400.00
11 18,376.00 10,000.00 8,376.00 1,246,400.00
12 18,309.33 10,000.00 8,309.33 1,236,400.00
13 18,242.67 10,000.00 8,242.67 1,226,400.00
14 18,176.00 10,000.00 8,176.00 1,216,400.00
15 18,109.33 10,000.00 8,109.33 1,206,400.00
16 18,042.67 10,000.00 8,042.67 1,196,400.00
17 17,976.00 10,000.00 7,976.00 1,186,400.00
18 17,909.33 10,000.00 7,909.33 1,176,400.00
19 17,842.67 10,000.00 7,842.67 1,166,400.00
20 17,776.00 10,000.00 7,776.00 1,156,400.00
21 17,709.33 10,000.00 7,709.33 1,146,400.00
22 17,642.67 10,000.00 7,642.67 1,136,400.00
23 17,576.00 10,000.00 7,576.00 1,126,400.00
24 17,509.33 10,000.00 7,509.33 1,116,400.00
25 20,942.67 13,500.00 7,442.67 1,102,900.00
26 20,852.67 13,500.00 7,352.67 1,089,400.00
27 20,762.67 13,500.00 7,262.67 1,075,900.00
28 20,672.67 13,500.00 7,172.67 1,062,400.00
29 20,582.67 13,500.00 7,082.67 1,048,900.00
30 20,492.67 13,500.00 6,992.67 1,035,400.00
31 20,402.67 13,500.00 6,902.67 1,021,900.00
32 20,312.67 13,500.00 6,812.67 1,008,400.00
33 20,222.67 13,500.00 6,722.67 994,900.00
34 20,132.67 13,500.00 6,632.67 981,400.00
35 20,042.67 13,500.00 6,542.67 967,900.00
36 19,952.67 13,500.00 6,452.67 954,400.00
37 19,862.67 13,500.00 6,362.67 940,900.00
38 19,772.67 13,500.00 6,272.67 927,400.00
</TABLE>
Page 1
<PAGE>
Exhibit 10.4
SECURITY AGREEMENT
BRIGHT TECHNOLOGIES, INC., a Georgia corporation (hereinafter referred
to as "Debtor") for valuable consideration, receipt of which is hereby
acknowledged, does hereby agree with TEE-COMM TELESERVICES, INC., a Georgia
corporation (hereinafter referred to as "Secured Party") as follows:
W I T N E S S E T H:
In order to secure the payment of any and all indebtedness of Debtor to
Secured Party (whether currently existing or arising in the future),
including a Promissory Note of even date herewith and a contractual obligation
for the purchase price of certain assets in the amount of $1,266,400 (the
"Obligation"), Debtor hereby grants to Secured Party a security interest in
all inventory, furniture, fixtures, furnishings, leases, accounts, contract
rights, licenses, supplies, machinery, equipment, goods, tangible and
intangible personal property of every kind and nature (including additions,
replacements, accessions and proceeds) now and hereafter owned and acquired,
which are used in connection with the operation of its pay telephone
business, said property referred to as the "Collateral".
Debtor hereby convenants and agrees:
(1) To pay any and all indebtedness owed Secured Party, including the
Obligation, when due;
(2) To keep the Collateral in good condition and repair;
(3) To pay all taxes due or to become due on the Collateral;
(4) To make the Collateral available to Secured Party for inspection,
at such time during normal working hours as Secured Party reasonably desires;
(5) To maintain at Debtor's expense hazard, fire, liability and other
casualty insurance and any other insurance as required to fully secure the
obligation to the Secured Party, and duly assign and deliver same to Secured
Party, and Secured Party shall be named as an additional insured and provided
with a Certificate of Coverage;
(6) To keep said Collateral at its present location unless written
notice is given to Secured Party indicating the new location of said
Collateral;
(7) To keep the Collateral free of all liens, levies and security
interests of any kind or nature except as hereafter consented to by Secured
Party;
<PAGE>
(8) Not to sell, transfer or otherwise dispose of Collateral except
with the written consent of Secured Party, other than in the ordinary course
of business. Said consent shall not be unreasonably withheld by Secured
Party.
(9) Not to borrow additional funds which may be secured by a lien on
the Collateral without the written consent of Secured Party.
(10) To execute and deliver to Secured Party a new UCC-1 Financing
Statement ready for filing in the appropriate jurisdiction for each new pay
phone which it installs subsequent to the date of this Agreement.
Debtor represents and warrants, and so long as any sum due to Secured
Party under the terms and conditions of the Obligation or this Agreement
remains unpaid shall be deemed continuously to represent and warrant, as
follows: (a) Debtor is the sole owner of all the Collateral free and clear
of all security interests and other encumbrances except the security interest
granted to Secured Party hereunder; (b) the Collateral is used or bought for
its primary and intended purpose of operation of that certain business known
as BRIGHT TECHNOLOGIES, INC., sometimes doing business as "TEE-COMM
TELESERVICES" located in Norcross, Georgia.
Debtor hereby designates and appoints Secured Party the attorney-in-fact
for Debtor for and on behalf of Debtor and at Debtor's expense, to procure
insurance on said Collateral, pay taxes thereon and otherwise comply with the
terms and provisions imposed upon Debtor, if Debtor fails to do so after 10
days written notice; however, nothing herein shall be construed as placing a
duty upon Secured Party to perform such duties or obligations, and any sum so
paid shall become an indebtedness of Debtor to Secured Party and shall draw
interest from the time of said payment at the rate of fifteen percent (15%)
per annum, and any such sum so paid by Secured Party shall be secured by the
Collateral provided for in this Agreement.
Upon default under the Obligation or this Agreement, Secured Party may
take possession of the Collateral and use same in any lawful manner not
inconsistent with this Agreement or with any policy of insurance on the
Collateral.
Time is of the essence of this Agreement. Debtor agrees that if it
should default in the payment of the indebtedness recited above or in any
installment due or to become due thereon, or upon any other indebtedness
which is secured by the Collateral or if it should fail to comply with any
condition, convenant or agreement above set forth or if it should become
insolvent; or if Debtor should suspend business; make an assignment for the
benefit of creditors; apply for an extension from creditors; commit any act
of bankruptcy or insolvency; or a petition in bankruptcy or for
reorganization under the Bankruptcy Act be filed by or against Debtor; or if
Debtor shall seek relief under any federal or state insolvency statute; or if
Debtor transfers or disposes of the Collateral or any part hereof or further
encumbers same or should the Collateral be damaged or destroyed, or should
Secured Party reasonably deem itself insecure, then in any such event the
indebtedness owed Secured Party by Debtor at the option of Secured Party,
upon 10 days written notice to Debtor, an
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<PAGE>
the opportunity to cure such default, shall become immediately due and
payable and Secured Party may exercise from time to time any rights and
remedies available to it under applicable law.
Debtor agrees, in case of default, to assemble the Collateral at its own
expense, at a location convenient to Secured Party. Debtor agrees to pay all
costs of collection to Secured Party, including reasonable attorney's fees and
expenses, expenses of any repairs to the Collateral or any real estate or
other property to which the Collateral may be affixed or be a part.
In the event of default, Secured Party or its assigns may pursue the
following remedies: enter and take possession of the Collateral wherever
found; operate and use the Collateral as its own business; collect payments
of Collateral from the Secured Party's customers; without notice, sell the
Collateral wherever found; without notice, sell the Collateral at public or
private sale, acting as agent for Debtor with power to buy at said sale in
its own name; apply all proceeds from the Collateral first to costs of
collection, retaking, storage, preparation and sale, including attorney's
fees and legal expenses, if due, and any balance of such proceeds may be
applied by Secured Party toward the payment of any indebtedness of Debtor to
Secured Party in such order of application as Secured Party may elect, and
finally to Debtor. The rights and remedies herein granted Secured Party are
in addition to those granted by law, including all rights, privileges and
remedies under the Georgia Uniform Commercial Code.
If any notification of intended disposition of any of the Collateral is
required by law, such notification, if given by mail, shall be deemed
reasonably and properly given if mailed at least ten (10) days before such
disposition, postage prepaid, addressed to the Debtor, at the address of the
Debtor appearing on the records of Secured Party. Debtor agrees that Secured
Party shall have the right to assign the security interest evidenced by this
Agreement. Any extension of the time for payment of any indebtedness owed by
Debtor to Secured Party, or the acceptance of only a partial payment of such
indebtedness, or the failure of the Secured Party to enforce the strict
performance on the part of Debtor of any covenant, promises or condition
herein contained or contained in any other document evidencing an
indebtedness owing Secured Party by Debtor, shall not operate a waiver of the
right of the Secured Party thereafter to require that the terms hereof or the
terms of such other documents be strictly performed according to the tenor
thereof. No party to this Agreement shall be discharged from liability to the
Secured Party by reason of the Secured Party extending time for payment of any
indebtedness of Debtor to Secured Party, or by a reason of the Secured
Party's waiver or modification of any terms of any such indebtedness, or of
any terms of this Security Agreement.
This Agreement has been delivered in the State of Georgia and shall be
construed in accordance with the laws of that State. Wherever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
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<PAGE>
The rights and remedies herein conferred upon the Secured Party shall be
cumulative and not alternative and shall be in addition to and not in
substitution of the rights and remedies conferred by the Uniform Commercial
Code of the State of Georgia. All rights of the Secured Party hereunder shall
inure to the benefit of its successors and assigns; and all obligations of
the Debtor shall bind its directors, agents, officers, successors and assigns.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
on the 13th day of February, 1995.
DEBTOR:
BRIGHT TECHNOLOGIES, INC.
By: /s/ Joseph C. Passalaqua
----------------------------------
Joseph C. Passalaqua, C.E.O.
ATTEST:
By: /s/ illegible
------------------------
SECURED PARTY
TEE-COMM TELESERVICES, INC.
By: /s/ Reginald J. Tiessen
----------------------------------
Reginald J. Tiessen, Controller
ATTEST:
By: /s/ Jim Wilkinson
------------------------
Jim Wilkinson, Secretary
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<PAGE>
Exhibit 10.6
EMPLOYMENT AGREEMENT
Employment Agreement made as of the 23rd day of April, 1999 by and between
bright-technologies.com,inc. (the "Company"), a Delaware corporation, and Joseph
C. Passalaqua, of Liverpool, New York (the "Employee").
WITNESETH:
WHEREAS, Employee is employed by the Company as its Chief Executive
Officer, and as a condition of closing on an initial public offering of the
Company's common stock (the "IPO Closing") through Rockcrest Securities
L.L.C. ("Rockcrest"), Rockcrest, Employee and the Company have required that
this Employment Agreement be entered into to be effective on the IPO Closing.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
set forth below, the parties hereby agree as follows:
1. EMPLOYMENT
1.1 Position and Duties. The Company shall employ Employee to serve in
and to have the authority and responsibilities for the positions of
Chief Executive Officer, and to perform such other duties as relate
to such positions or for such other position and duties as the Board
of Directors of the Company (the "Board") in its discretion may from
time to time determine and assign him. The Board will have the
authority to determine the means and manner by which Employee is to
perform his duties.
1.2 Exclusiveness. The Employee shall devote substantially all of his
business time, attention and energies to the business of the Company
and the performance of his responsibilities and duties and shall
carry out such responsibilities and duties diligently and to the
best of his abilities. The Employee recognizes that the Company is
entering into this Agreement because of the Employee's expertise,
skills and talents and his agreement to devote all of such
expertise, skills and talents to the tasks assigned him pursuant to
this Agreement. The Employee agrees that he shall not engage in any
other business activities of any kind which would give rise to a
conflict of interest for the Employee with respect to his duties and
obligations to the Company.
1.3 Compliance with Policies and Laws. Employee will at all times comply
with all applicable policies, standards and regulations of the
Company as may be established from time to time and will comply with
all applicable laws and regulations.
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1.4 Personal Service. Employee's personal performance of his duties is
the essence of this Agreement. Employee's rights and obligations
under this Agreement are not assignable by Employee.
2. COMPENSATION
2.1 Base Salary. For all services to be rendered by Employee in any
capacity hereunder, including services as an officer, director,
member of any committee or any other duties assigned to him by the
directors or officers of the Company, the Company agrees to pay
Employee an initial base salary of Two Hundred Fifty Thousand and
00/100 Dollars ($250,000.00) per year payable in equal bi-weekly
installments in arrears. Employee's Base Salary may be adjusted
upward at the sole discretion of the Company during the term of this
Agreement. Employee has elected to defer the payment of One Hundred
Thousand and 00/100 Dollars ($100,000.00) of base salary until the
Company completes a secondary financing of at least Five Million
Dollars 5,000,000.00).
2.2 Incentive Bonus. Employee shall be entitled to participate in the
Company's Key Officer Incentive Bonus Plan if and when established
by the Board. This plan shall be established or changed as the
circumstances warrant by the Board and the amount which shall be
paid to Employee as well as when such payment will be made will
likewise be established by the Board.
2.3 Other Bonuses or Incentive Compensation. Employee may also receive
such other bonuses, grants of stock, stock options, warrants or
stock appreciation rights as may determined by the Board, in its
sole discretion.
2.4 Other Benefits. Employee shall be entitled to such fringe benefits,
including, but not limited to: vacation, sick leave, participation
in medical, disability, dental and life insurance plans and pension
or profit-sharing plans, as are customarily provided to the senior
executives of the Company as determined by the Board of Directors of
the Company and as provided by the terms of the applicable benefit
plans.
2.5 Reimbursement of Expenses. The Company shall reimburse travel,
entertainment and other expenses incurred by Employee in connection
with the performance of his duties in accordance with such policies
as may be adopted from time to time by the Company.
3. TERM OF THE AGREEMENT
Employee's employment under this Agreement will commence upon the IPO
Closing and continue, subject to early termination as provided in Paragraph 4
below, for a term of five (5) years.
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4. EARLY TERMINATION; SEVERANCE
4.1 Employee's employment under this Agreement may or will, as
appropriate, be terminated prior to the expiration of the term set
forth above in Paragraph 3 in the following circumstances:
a. Disability: If Employee is disabled and fails to perform
his duties hereunder on account of illness or other
incapacity which prevents Employee from performing his
duties for a continuous period of three hundred sixty
five days, the Company thereafter may, upon ten days
written notice, terminate Employee's employment under
this Agreement.
b. Death. In the event of the death of Employee, this
Agreement will terminate immediately.
c. By the Company for Cause. The Company may terminate
Employee's employment under this Agreement for Cause.
For purposes of this subparagraph, the Company will have
"Cause" to terminate this Agreement upon (I) the willful
and continued failure by Employee to substantially
perform his duties hereunder (other than such failure
resulting from Employee's incapacity due to physical or
mental illness), after a written demand for substantial
performance is delivered by the Company that
specifically identifies the manner in which the Company
believes the Employee has not substantially performed
his duties, or (ii) the willful engaging by the Employee
in misconduct which is materially injurious to the
Company, monetarily or otherwise, (iii) the willful
violation by Employee of the provisions of this
Agreement, (iv) a material breach of any fiduciary duty
owed by Employee to the Company or its relationships
with employees, suppliers, customers or others with whom
the Company does business or (v) the habitual or
repeated misuse of alcohol or controlled substances. For
purposes of the subparagraph, no act, or failure to act,
on Employee's part shall be considered "willful" unless
done, or omitted to be done, by him not in good faith or
without reasonable belief that his action or omission
was in the best interest of the Company. Notwithstanding
the foregoing, Employee will not be deemed to have been
terminated for Cause without reasonable notice to
Employee setting forth the reasons for the Company's
intention to terminate for Cause, an opportunity for
Employee to be heard before the Board, and thereafter, a
determination that in the good faith opinion of the
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<PAGE>
Board, "Cause" exists within the meanings set forth in
clause (I), (ii), (iii), (iv) or (v) of this
subparagraph.
d. By Company Without Cause. The Company may terminate
Employee's employment under this Agreement unilaterally
at any time for any reason or for no reason by giving
Employee ninety (90) days advance notice of the
intention to terminate. Employee may at the sole
discretion of the Company, be relieved of his duties
during such ninety (90) day period, although Employee
must be paid during this period.
e. By Employee. Employee may terminate his employment under
this Agreement at any time upon ninety (90) days written
notice to the Company. Employee may, at the sole
discretion of the Company, be relieved of his duties
during such ninety day period, but continue to be paid
during such period.
4.2 In the event of termination of Employee's employment prior to the
end of the Term, Employee shall be entitled to a lump sum severance
payment payable on the date of termination as follows:
a. In the event the Employee's is terminated due to
Employee's death or disability, the Employee or
Employee's estate shall be entitled to a payment equal
to the sum of (i) twelve months of the then current base
salary (including accrued portions) , (ii) any accrued
salary which has not been paid , and (iii) any expense
reimbursement due and owing to him at the time of such
termination.
b. In the event the Employee's employment is terminated by
the Company without Cause as defined above, or Employee
terminates his employment for good reason (as hereafter
defined), the Employee shall be entitled to a payment
equal to the sum of (i) the greater of one year of then
current base annual salary, or the total base salary
which would be payable for the balance of the Term, and
(ii) a pro-rata portion of what the Incentive Bonus for
the then current year would be if the calculation for
the year through such date of termination annualized out
for the year would have resulted in an Incentive Bonus
for the year, and (iii) any accrued salary which has not
been paid, and (iv) any expense reimbursement due and
owing to him at the time of such termination.
c. In the event that Employee's employment is terminated by
the Company for Cause or is terminated by Employee
voluntarily prior to the end of the Term other that for
Good Reason, Employee shall not be entitled to any
severance payment.
4.3 For purposes hereof:
"Good Reason: is defined to mean (i) the Board substantially
diminishing Employee's responsibilities and activities to a degree which
is not commensurate with the position held by Employee: or (ii) the Board
taking action in material
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<PAGE>
breach of this Agreement; or (iii) requiring the Employee to relocate to
anywhere other than the metropolitan Syracuse area; or (iv) the voluntary
resignation of Employee at any time within sixty days after a Change in
Control (as hereinafter defined)
"Change in Control: shall mean any transaction or series of
transactions (including, without limitation, a tender offer, merger or
consolidation) the result of which is that any "person" or "group" (within
the meaning of Section 13 (d) and 14 (d)(2) of the Securities Exchange Act
of 1934, as amended). Other than Joseph C. Passalaqua, or trusts for the
benefit of any of the foregoing or their respective families, and any
"person" or "group" solicited by any of such persons: (I) becomes the
beneficial owner of more than 50 percent of the total aggregate voting
power of all classes of the voting stock of the Company and/or warrants or
options to acquire such voting stock, calculated on a fully diluted basis;
or (ii) acquires all or substantially all of the assets of the Company.
5. COVENANT NOT TO COMPETE; CONFIDENTIALITY
5.1 Non-competition.
a. Employee acknowledges and understands that the Business
(as defined below) in which the Company is engaged can
be and will be effectively and efficiently conducted
anywhere in the world and the Company's business is
international in scope (as opposed to national and
regional). Therefore, as a material consideration of the
Company's entering into this Agreement, Employee agrees
that during the Term and for a period of one year
following termination of Employee's employment under
this Agreement for any reason whatsoever, in the entire
world, directly or indirectly, Employee shall not, in
any location whatsoever, (i) own (as a proprietor,
partner, stockholder, or otherwise) an interest in or
(ii) participate (as an officer, director, or in any
capacity) in the management, operation or control of, or
(iii) perform services as or act in the capacity of an
employee, independent contractor, consultant or agent of
any enterprise, which competes, or intends to compete
with the Company's Business (the "Non-Compete Covenant")
except with prior written consent of the Board, which
consent may be withheld or granted in the Board's sole
and absolute discretion. The Company's "Business" as
that term is used in this Paragraph 5.1 means the
development, manufacture, marketing, selling or
distribution of wireless phones or wireless phone
related systems.
b. Notwithstanding the foregoing, in the event that
Employee's employment is terminated due to expiration of
the Term without early termination under Section 4, and
Employee's employment is not otherwise renewed, Employee
shall not be bound to the Non-Compete Covenant unless
the Company makes the following election. The
5
<PAGE>
Company shall have the option to bind Employee to the
Non-Compete Covenant for one year after the termination
of his employment due to expiration of the Term by
electing to do so and agreeing to pay to Employee the
Non-Compete Consideration (as hereinafter defined) in
equal monthly installments over the one year period. To
make such election, the Company shall give the Employee
notice of such election (which shall include an
agreement to pay the Non-Compete Consideration) by no
later that the Election Date (as hereinafter defined).
Failure to give such notice by the Election Date shall
be deemed an election by the Company not to bind
Employee to the Non-Compete Covenant for the one year
period following the expiration of the Term. In the
event that the Company shall default on its payment of
any installment of the Non-Compete Consideration,
Employee shall be relieved from the Non-Compete
Covenant, in addition to any other rights and remedies
which Employee may have. For purposes hereof; the
"Non-Compete Consideration" is the amount equal to the
current base annual salary being paid to Employee on the
day prior to the date of expiration of the Term, and the
"Election Date" is the date which is three (3) months
prior to the date on which the Term expires.
5.2 Covenant Not to Promote Termination of Relationships. As a material
consideration for the Company's entering into this Agreement,
Employee covenants and agrees that for a period of two years
commencing on the termination of Employee's employment with the
Company, Employee shall not persuade or entice, or attempt to
persuade or entice any customer or client of the Company to
terminate its business or contractual relationship with the Company,
or refrain from establishing any such relationship with the Company.
5.3 Inducement of Breach. Employee shall promptly notify the Company if
any person, firm, partnership, limited liability company,
association, corporation or other entity attempts to induce Employee
to breach any of the terms or provisions of this Agreement.
5.4 Confidentially. Employee acknowledges and agrees that all product or
service information, marketing information, lists or identities of
the Company's customers, pricing and cost information, financial
information, technical data, technical know-how, and other
information and data related to the Company's business
("Confidential Information") are valuable assets of the Company
except for Confidential Information which is a matter of public
record through no action or fault of the Employee. Employee shall
not, during the Term or after termination of Employee's employment
hereunder for any reason whatsoever, use, divulge, disclose, or
communicate any Confidential Information to any entity, except with
the prior consent of the Board of Directors of the Company, which
consent may be withheld or granted in the Board" sole and absolute
discretion.
5.5 Return of Documents. Employee acknowledges and agrees that all
originals and copies of records, reports, documents, lists,
memoranda, notes and other
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<PAGE>
documentation related to the business of the Company or containing
any Confidential Information shall be the sole and exclusive
property of the Company and shall be returned to the Company by
Employee upon termination of Employee's employment hereunder for any
reason whatsoever, or upon the written request of the Company at any
time.
5.6 No Solicitation. As a material consideration of the Company's
entering into this agreement, Employee covenants and agrees that
during the Term and for a period of two years after the termination
of Employee's employment hereunder for any reason whatsoever,
neither Employee, nor any person or entity controlled by Employee
(including without limitation, members of Employee's family), shall
directly or indirectly; (i) solicit for employment any person
employed by, or serving as a consultant to, the Company or the
Company's affiliates, successors or assigns or (ii) solicit or aid
in the solicitation of persons or business entities with whom the
Company has done business or with whom the Company has attempted to
do business.
5.7 Equitable Relief; Other Remedies. Employee acknowledge and agrees
that it would be difficult to measure damage to the Company from any
breach by Employee of any matter described in this Section 5 of this
Agreement and that monetary damages would be an inadequate remedy
for any such breach. Accordingly, Employee agrees that if Employee
shall directly or indirectly breach or take steps preliminary to
breaching any of the provisions of this Section 5 of this Agreement,
the Company shall be entitled , in addition to all other remedies it
may have at law or in equity, to an injunction or other appropriate
orders or equitable relief to restrain any such breach, without
showing or proving any actual damaged sustained by the Company.
Employee further agrees that, for any period during which breach of
any provision of this Agreement has not been enjoined, the Company
shall be entitled, upon proof of same, to actual and consequential
damages caused by such breach, including, but not limited to loss of
business relationships, loss of goodwill and loss of prospective
business and advantage.
5.8 No Release. Employee agrees that the termination of this Agreement
shall not release Employee from any of Employee's obligations under
this Section 5, all of which survive such termination.
6. INDEMIFICATION
To the fullest extent permitted under the law, the Company will defend,
advance funds, indemnify and hold Employee harmless with respect to any expenses
incurred, claims against and other liabilities arising in connection with any
actual or threatened action, suit or proceeding, whether civil, criminal,
administrative, investigative or otherwise (including any suit proceeding by or
in the right of the Company) to which Employee is made a party, is threatened to
be made a party or is an actual or potential witness by reason of the fact that
Employee is an officer, employee, director or agent of the Company, or at the
request of the Company, an officer, employee, director or agent of any other
entity unless, in
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connection with such action, suit or proceeding or in connection with the claims
made therein, Employee has engaged in acts of bad faith, willful misconduct,
gross negligence or reckless disregard of his duties to the Company or the best
interests of the Company.
7. GENERAL PROVISIONS
7.1 Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the employment of
Employee by the Company and supersedes all prior and contemporaneous
agreements between them with respect to such subject matter.
7.2 Modification. This Agreement may not be changed, modified, released,
discharged, abandoned, or otherwise amended, in whole or in part,
except by an instrument in writing, signed by an employee and an
authorized officer of the Company.
7.3 Waiver. Failure of any party at any time to require performance of
any provision of this Agreement shall not limit such party's right
to enforce such provision, nor shall any waiver of any breach of
this Agreement constitute a waiver of such provision itself. No
attempted or purposed waiver of any provision of this Agreement
shall be effective unless set forth in writing and signed by the
party to be bound.
7.4 Severability. The agreements and covenants contained in this
Agreement are severable, and in the event any of the agreements and
covenants contained in this Agreement should be held to be invalid
by an arbitrator or by any court or tribunal of competent
jurisdiction, this agreement shall be interpreted as if such valid
agreements and covenants were not contained herein; provided
however, that if any legal proceeding or arbitrator or a court shall
hold unenforceable the covenants contained in Section 5 above by
reason of their geographic extent or duration or otherwise, any such
covenant shall be reduced in scope to the extent requires by law and
enforced in its reduced form.
7.5 Governing Law. This Agreement will be governed by and constructed in
accordance with the laws of the State of New York in the County of
Onondaga.
7.6 Controversies or Disputes. Any controversy, claim, or dispute
arising under or relating to this Agreement, or that arises out of
or that is based upon the employment relationship (including any
wage claim, any claim for wrongful termination, or any claim based
upon any statue, regulation, or law including those concerning
employment discrimination, sexual harassment, civil rights, age or
disabilities), including tort claims (except a tort that is a "
compensable injury" under workers' compensation law), or a dispute
between the parties that arose or arises before, during or after
employment, other than any matter as to which a party seeks
injunctive relief, shall be resolved by a single, neutral arbitrator
in an arbitration conducted in New York in accordance with
8
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the then current rules of commercial arbitration of the American
Arbitration Association. Employee and the Company agree that neither
party is entitled to recover punitive damages. The decision or award
rendered by the arbitrator shall be final, nonappealable and binding
upon the parties, and judgment may be entered upon it in accordance
with applicable law in a court of competent jurisdiction. The
arbitrator shall be an attorney with at least ten years of
experience in employment law. Arbitration in accordance with this
paragraph is the sole and exclusive method, means and procedure to
resolve any and all claims or disputes other than those seeking
exclusively injunction relief. Employee and the Company hereby
irrevocably waive any and all rights to resolve disputes in a manner
contrary to the provisions of this paragraph. Any and all attempts
to circumvent the terms in this paragraph shall be null and void and
of no force and effect whatsoever.
8. NOTICES
Any notice given pursuant this Agreement shall be in writing and shall be
deemed given on the earlier of the date the notice is (I) personally delivered
to the party to be notified, (ii) mailed, postage prepaid, certified with return
receipt requested, addressed as follows, or to such other address as a party may
from time to time designate by notice to the other party, or (iii) delivered at
the party's address via courier service.
To the Company: bright-technologies,com,inc.
7325 Oswego Road
Liverpool, NY 13090
Attention: Chief Executive Officer
To the Employee: Joseph C. Passalaqua
106 Glenwood Drive, South
Liverpool, NY 13090
bright-technologies.com,inc.
By: /s/ Joseph C. Passalaqua
-----------------------------
Its Chief Executive Officer
Duly Authorized
Employee
/s/ Joseph C. Passalaqua
---------------------------------
Joseph C. Passalaqua
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Exhibit 10.7
EMPLOYMENT AGREEMENT
Employment Agreement made as of the 23rd day of April, 1999 by and between
bright-technologies.com,inc. (the "Company"), a Delaware corporation, and Carl
Worboys, of Liverpool, New York (the "Employee").
WITNESETH:
WHEREAS, Employee is employed by the Company as its Vice President , and
as a condition of closing on an initial public offering of the Company's common
stock (the "IPO Closing") through Rockcrest Securities L.L.C. ("Rockcrest"),
Rockcrest, Employee and the Company have required that this Employment Agreement
be entered into to be effective on the IPO Closing.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
set forth below, the parties hereby agree as follows:
1. EMPLOYMENT
1.1 Position and Duties. The Company shall employ Employee to serve in
and to have the authority and responsibilities for the positions of
Vice President and to perform such other duties as relate to such
positions or for such other position and duties as the Board of
Directors of the Company (the "Board") in its discretion may from
time to time determine and assign him. The Board will have the
authority to determine the means and manner by which Employee is to
perform his duties.
1.2 Exclusiveness. The Employee shall devote substantially all of his
business time, attention and energies to the business of the Company
and the performance of his responsibilities and duties and shall
carry out such responsibilities and duties diligently and to the
best of his abilities. The Employee recognizes that the Company is
entering into this Agreement because of the Employee's expertise,
skills and talents and his agreement to devote all of such
expertise, skills and talents to the tasks assigned him pursuant to
this Agreement. The Employee agrees that he shall not engage in any
other business activities of any kind which would give rise to a
conflict of interest for the Employee with respect to his duties and
obligations to the Company.
1.3 Compliance with Policies and Laws. Employee will at all times comply
with all applicable policies, standards and regulations of the
Company as may be established from time to time and will comply with
all applicable laws and regulations.
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1.4 Personal Service. Employee's personal performance of his duties is
the essence of this Agreement. Employee's rights and obligations
under this Agreement are not assignable by Employee.
2. COMPENSATION
2.1 Base Salary. For all services to be rendered by Employee in any
capacity hereunder, including services as an officer, director,
member of any committee or any other duties assigned to him by the
directors or officers of the Company, the Company agrees to pay
Employee an initial base salary of One Hundred Fifty Thousand and
00/100 Dollars ($150,000.00) per year payable in equal bi-weekly
installments in arrears. Employee's Base Salary may be adjusted
upward at the sole discretion of the Company during the term of this
Agreement. Employee has elected to defer the payment of Fifty
Thousand and 00/100 Dollars ($50,000.00) of base salary until the
Company completes a secondary financing of at least Five Million
Dollars (5,000,000.00).
2.2 Incentive Bonus. Employee shall be entitled to participate in the
Company's Key Officer Incentive Bonus Plan if and when established
by the Board. This plan shall be established or changed as the
circumstances warrant by the Board and the amount which shall be
paid to Employee as well as when such payment will be made will
likewise be established by the Board.
2.3 Other Bonuses or Incentive Compensation. Employee may also receive
such other bonuses, grants of stock, stock options, warrants or
stock appreciation rights as may determined by the Board, in its
sole discretion.
2.4 Other Benefits. Employee shall be entitled to such fringe benefits,
including, but not limited to: vacation, sick leave, participation
in medical, disability, dental and life insurance plans and pension
or profit-sharing plans, as are customarily provided to the senior
executives of the Company as determined by the Board of Directors of
the Company and as provided by the terms of the applicable benefit
plans.
2.5 Reimbursement of Expenses. The Company shall reimburse travel,
entertainment and other expenses incurred by Employee in connection
with the performance of his duties in accordance with such policies
as may be adopted from time to time by the Company.
3. TERM OF THE AGREEMENT
Employee's employment under this Agreement will commence upon the IPO
Closing and continue, subject to early termination as provided in Paragraph 4
below, for a term of five (5) years.
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4. EARLY TERMINATION; SEVERANCE
4.1 Employee's employment under this Agreement may or will, as
appropriate, be terminated prior to the expiration of the term set
forth above in Paragraph 3 in the following circumstances:
a. Disability: If Employee is disabled and fails to perform
his duties hereunder on account of illness or other
incapacity which prevents Employee from performing his
duties for a continuous period of three hundred sixty
five days, the Company thereafter may, upon ten days
written notice, terminate Employee's employment under
this Agreement.
b. Death. In the event of the death of Employee, this
Agreement will terminate immediately.
c. By the Company for Cause. The Company may terminate
Employee's employment under this Agreement for Cause.
For purposes of this subparagraph, the Company will have
"Cause" to terminate this Agreement upon (I) the willful
and continued failure by Employee to substantially
perform his duties hereunder (other than such failure
resulting from Employee's incapacity due to physical or
mental illness), after a written demand for substantial
performance is delivered by the Company that
specifically identifies the manner in which the Company
believes the Employee has not substantially performed
his duties, or (ii) the willful engaging by the Employee
in misconduct which is materially injurious to the
Company, monetarily or otherwise, (iii) the willful
violation by Employee of the provisions of this
Agreement, (iv) a material breach of any fiduciary duty
owed by Employee to the Company or its relationships
with employees, suppliers, customers or others with whom
the Company does business or (v) the habitual or
repeated misuse of alcohol or controlled substances. For
purposes of the subparagraph, no act, or failure to act,
on Employee's part shall be considered "willful" unless
done, or omitted to be done, by him not in good faith or
without reasonable belief that his action or omission
was in the best interest of the Company. Notwithstanding
the foregoing, Employee will not be deemed to have been
terminated for Cause without reasonable notice to
Employee setting forth the reasons for the Company's
intention to terminate for Cause, an opportunity for
Employee to be heard before the Board, and thereafter, a
determination that in the good faith opinion of the
Board, "Cause" exists within the meanings set forth in
clause (I), (ii), (iii), (iv) or (v) of this
subparagraph.
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d. By Company Without Cause. The Company may terminate
Employee's employment under this Agreement unilaterally
at any time for any reason or for no reason by giving
Employee ninety (90) days advance notice of the
intention to terminate. Employee may at the sole
discretion of the Company, be relieved of his duties
during such ninety (90) day period, although Employee
must be paid during this period.
e. By Employee. Employee may terminate his employment under
this Agreement at any time upon ninety (90) days written
notice to the Company. Employee may, at the sole
discretion of the Company, be relieved of his duties
during such ninety day period, but continue to be paid
during such period.
4.2 In the event of termination of Employee's employment prior to the
end of the Term, Employee shall be entitled to a lump sum severance
payment payable on the date of termination as follows:
a. In the event the Employee's is terminated due to
Employee's death or disability, the Employee or
Employee's estate shall be entitled to a payment equal
to the sum of (i) twelve months of the then current base
salary (including accrued portions) , (ii) any accrued
salary which has not been paid , and (iii) any expense
reimbursement due and owing to him at the time of such
termination.
b. In the event the Employee's employment is terminated by
the Company without Cause as defined above, or Employee
terminates his employment for good reason (as hereafter
defined), the Employee shall be entitled to a payment
equal to the sum of (i) the greater of one year of then
current base annual salary, or the total base salary
which would be payable for the balance of the Term, and
(ii) a pro-rata portion of what the Incentive Bonus for
the then current year would be if the calculation for
the year through such date of termination annualized out
for the year would have resulted in an Incentive Bonus
for the year, and (iii) any accrued salary which has not
been paid, and (iv) any expense reimbursement due and
owing to him at the time of such termination.
c. In the event that Employee's employment is terminated by
the Company for Cause or is terminated by Employee
voluntarily prior to the end of the Term other that for
Good Reason, Employee shall not be entitled to any
severance payment.
4.3 For purposes hereof:
"Good Reason: is defined to mean (i) the Board substantially
diminishing Employee's responsibilities and activities to a degree which
is not commensurate with the position held by Employee: or (ii) the Board
taking action in material breach of this Agreement; or (iii) requiring the
Employee to relocate to anywhere other than the metropolitan Syracuse
area; or (iv) the voluntary resignation of
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Employee at any time within sixty days after a Change in Control (as
hereinafter defined)
"Change in Control: shall mean any transaction or series of
transactions (including, without limitation, a tender offer, merger or
consolidation) the result of which is that any "person" or "group" (within
the meaning of Section 13 (d) and 14 (d)(2) of the Securities Exchange Act
of 1934, as amended). Other than Joseph C. Passalaqua, or trusts for the
benefit of any of the foregoing or their respective families, and any
"person" or "group" solicited by any of such persons: (I) becomes the
beneficial owner of more than 50 percent of the total aggregate voting
power of all classes of the voting stock of the Company and/or warrants or
options to acquire such voting stock, calculated on a fully diluted basis;
or (ii) acquires all or substantially all of the assets of the Company.
5. COVENANT NOT TO COMPETE; CONFIDENTIALITY
5.1 Non-competition.
a. Employee acknowledges and understands that the Business
(as defined below) in which the Company is engaged can
be and will be effectively and efficiently conducted
anywhere in the world and the Company's business is
international in scope (as opposed to national and
regional). Therefore, as a material consideration of the
Company's entering into this Agreement, Employee agrees
that during the Term and for a period of one year
following termination of Employee's employment under
this Agreement for any reason whatsoever, in the entire
world, directly or indirectly, Employee shall not, in
any location whatsoever, (i) own (as a proprietor,
partner, stockholder, or otherwise) an interest in or
(ii) participate (as an officer, director, or in any
capacity) in the management, operation or control of, or
(iii) perform services as or act in the capacity of an
employee, independent contractor, consultant or agent of
any enterprise, which competes, or intends to compete
with the Company's Business (the "Non-Compete Covenant")
except with prior written consent of the Board, which
consent may be withheld or granted in the Board's sole
and absolute discretion. The Company's "Business" as
that term is used in this Paragraph 5.1 means the
development, manufacture, marketing, selling or
distribution of wireless phones or wireless phone
related systems.
b. Notwithstanding the foregoing, in the event that
Employee's employment is terminated due to expiration of
the Term without early termination under Section 4, and
Employee's employment is not otherwise renewed, Employee
shall not be bound to the Non-Compete Covenant unless
the Company makes the following election. The Company
shall have the option to bind Employee to the
Non-Compete Covenant for one year after the termination
of his employment due to expiration of the Term by
electing to do so and agreeing to pay to
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<PAGE>
Employee the Non-Compete Consideration (as hereinafter
defined) in equal monthly installments over the one year
period. To make such election, the Company shall give
the Employee notice of such election (which shall
include an agreement to pay the Non-Compete
Consideration) by no later that the Election Date (as
hereinafter defined). Failure to give such notice by the
Election Date shall be deemed an election by the Company
not to bind Employee to the Non-Compete Covenant for the
one year period following the expiration of the Term. In
the event that the Company shall default on its payment
of any installment of the Non-Compete Consideration,
Employee shall be relieved from the Non-Compete
Covenant, in addition to any other rights and remedies
which Employee may have. For purposes hereof; the
"Non-Compete Consideration" is the amount equal to the
current base annual salary being paid to Employee on the
day prior to the date of expiration of the Term, and the
"Election Date" is the date which is three (3) months
prior to the date on which the Term expires.
5.2 Covenant Not to Promote Termination of Relationships. As a material
consideration for the Company's entering into this Agreement,
Employee covenants and agrees that for a period of two years
commencing on the termination of Employee's employment with the
Company, Employee shall not persuade or entice, or attempt to
persuade or entice any customer or client of the Company to
terminate its business or contractual relationship with the Company,
or refrain from establishing any such relationship with the Company.
5.3 Inducement of Breach. Employee shall promptly notify the Company if
any person, firm, partnership, limited liability company,
association, corporation or other entity attempts to induce Employee
to breach any of the terms or provisions of this Agreement.
5.4 Confidentially. Employee acknowledges and agrees that all product or
service information, marketing information, lists or identities of
the Company's customers, pricing and cost information, financial
information, technical data, technical know-how, and other
information and data related to the Company's business
("Confidential Information") are valuable assets of the Company
except for Confidential Information which is a matter of public
record through no action or fault of the Employee. Employee shall
not, during the Term or after termination of Employee's employment
hereunder for any reason whatsoever, use, divulge, disclose, or
communicate any Confidential Information to any entity, except with
the prior consent of the Board of Directors of the Company, which
consent may be withheld or granted in the Board" sole and absolute
discretion.
5.5 Return of Documents. Employee acknowledges and agrees that all
originals and copies of records, reports, documents, lists,
memoranda, notes and other documentation related to the business of
the Company or containing any Confidential Information shall be the
sole and exclusive property of the Company and shall be returned to
the Company by Employee upon
6
<PAGE>
termination of Employee's employment hereunder for any reason
whatsoever, or upon the written request of the Company at any time.
5.6 No Solicitation. As a material consideration of the Company's
entering into this agreement, Employee covenants and agrees that
during the Term and for a period of two years after the termination
of Employee's employment hereunder for any reason whatsoever,
neither Employee, nor any person or entity controlled by Employee
(including without limitation, members of Employee's family), shall
directly or indirectly; (i) solicit for employment any person
employed by, or serving as a consultant to, the Company or the
Company's affiliates, successors or assigns or (ii) solicit or aid
in the solicitation of persons or business entities with whom the
Company has done business or with whom the Company has attempted to
do business.
5.7 Equitable Relief; Other Remedies. Employee acknowledge and agrees
that it would be difficult to measure damage to the Company from any
breach by Employee of any matter described in this Section 5 of this
Agreement and that monetary damages would be an inadequate remedy
for any such breach. Accordingly, Employee agrees that if Employee
shall directly or indirectly breach or take steps preliminary to
breaching any of the provisions of this Section 5 of this Agreement,
the Company shall be entitled , in addition to all other remedies it
may have at law or in equity, to an injunction or other appropriate
orders or equitable relief to restrain any such breach, without
showing or proving any actual damaged sustained by the Company.
Employee further agrees that, for any period during which breach of
any provision of this Agreement has not been enjoined, the Company
shall be entitled, upon proof of same, to actual and consequential
damages caused by such breach, including, but not limited to loss of
business relationships, loss of goodwill and loss of prospective
business and advantage.
5.8 No Release. Employee agrees that the termination of this Agreement
shall not release Employee from any of Employee's obligations under
this Section 5, all of which survive such termination.
6. INDEMIFICATION
To the fullest extent permitted under the law, the Company will defend,
advance funds, indemnify and hold Employee harmless with respect to any expenses
incurred, claims against and other liabilities arising in connection with any
actual or threatened action, suit or proceeding, whether civil, criminal,
administrative, investigative or otherwise (including any suit proceeding by or
in the right of the Company) to which Employee is made a party, is threatened to
be made a party or is an actual or potential witness by reason of the fact that
Employee is an officer, employee, director or agent of the Company, or at the
request of the Company, an officer, employee, director or agent of any other
entity unless, in connection with such action, suit or proceeding or in
connection with the claims made therein, Employee has engaged in acts of bad
faith, willful misconduct, gross negligence or reckless disregard of his duties
to the Company or the best interests of the Company.
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<PAGE>
7. GENERAL PROVISIONS
7.1 Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the employment of
Employee by the Company and supersedes all prior and contemporaneous
agreements between them with respect to such subject matter.
7.2 Modification. This Agreement may not be changed, modified, released,
discharged, abandoned, or otherwise amended, in whole or in part,
except by an instrument in writing, signed by an employee and an
authorized officer of the Company.
7.3 Waiver. Failure of any party at any time to require performance of
any provision of this Agreement shall not limit such party's right
to enforce such provision, nor shall any waiver of any breach of
this Agreement constitute a waiver of such provision itself. No
attempted or purposed waiver of any provision of this Agreement
shall be effective unless set forth in writing and signed by the
party to be bound.
7.4 Severability. The agreements and covenants contained in this
Agreement are severable, and in the event any of the agreements and
covenants contained in this Agreement should be held to be invalid
by an arbitrator or by any court or tribunal of competent
jurisdiction, this agreement shall be interpreted as if such valid
agreements and covenants were not contained herein; provided
however, that if any legal proceeding or arbitrator or a court shall
hold unenforceable the covenants contained in Section 5 above by
reason of their geographic extent or duration or otherwise, any such
covenant shall be reduced in scope to the extent requires by law and
enforced in its reduced form.
7.5 Governing Law. This Agreement will be governed by and constructed in
accordance with the laws of the State of New York in the County of
Onondaga.
7.6 Controversies or Disputes. Any controversy, claim, or dispute
arising under or relating to this Agreement, or that arises out of
or that is based upon the employment relationship (including any
wage claim, any claim for wrongful termination, or any claim based
upon any statue, regulation, or law including those concerning
employment discrimination, sexual harassment, civil rights, age or
disabilities), including tort claims (except a tort that is a "
compensable injury" under workers' compensation law), or a dispute
between the parties that arose or arises before, during or after
employment, other than any matter as to which a party seeks
injunctive relief, shall be resolved by a single, neutral arbitrator
in an arbitration conducted in New York in accordance with the then
current rules of commercial arbitration of the American Arbitration
Association. Employee and the Company agree that neither party is
entitled to recover punitive damages. The decision or award rendered
by the arbitrator
8
<PAGE>
shall be final, nonappealable and binding upon the parties, and
judgment may be entered upon it in accordance with applicable law in
a court of competent jurisdiction. The arbitrator shall be an
attorney with at least ten years of experience in employment law.
Arbitration in accordance with this paragraph is the sole and
exclusive method, means and procedure to resolve any and all claims
or disputes other than those seeking exclusively injunction relief.
Employee and the Company hereby irrevocably waive any and all rights
to resolve disputes in a manner contrary to the provisions of this
paragraph. Any and all attempts to circumvent the terms in this
paragraph shall be null and void and of no force and effect
whatsoever.
8. NOTICES
Any notice given pursuant this Agreement shall be in writing and shall be
deemed given on the earlier of the date the notice is (I) personally delivered
to the party to be notified, (ii) mailed, postage prepaid, certified with return
receipt requested, addressed as follows, or to such other address as a party may
from time to time designate by notice to the other party, or (iii) delivered at
the party's address via courier service.
To the Company: bright-technologies,com,inc.
7325 Oswego Road
Liverpool, NY 13090
Attention: Chief Executive Officer
To the Employee: Carl E. Worboys
8199 Penelope Lane
Liverpool, NY 13090
bright-technologies.com,inc.
By: /s/ Joseph C. Passalaqua
-------------------------
Its Chief Executive Officer
Duly Authorized
Employee
/s/ Carl E. Worboys
----------------------------
Carl E. Worboys
9
<PAGE>
Exhibit 10.8
COMMERCIAL LEASE
THIS LEASE is made on the 1 day of May, 1999.
The Landlord hereby agrees to lease to the Tenant, and the Tenant hereby
agrees to hire and take from the Landlord, the Leased Premises described
below pursuant to the terms and conditions specified herein:
LANDLORD: MARY PASSALAQUA TENANT(S): bright technologies.com inc
----------------------- ----------------------------
Address: 106 GLENWOOD DR Address: 7325 OSWEGO RD
----------------------- ----------------------------
LIVERPOOL, NY 13090 LIVERPOOL, NY 13090
----------------------- ----------------------------
1. LEASED PREMISES. The Leased Premises are those premises described as:
Commercial Office Space
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2. TERM. The term of the Lease shall be for a period of 3 year(s)
commencing on the 1 day of May, 1999
ending on the _____ day of ______________, 19__ unless sooner terminated as
hereinafter provided. If Tenant remains in possession of the Leased Premises
with the written consent of the Landlord after the lease expiration date
stated above, this Lease will be converted to a month-to-month Lease and each
party shall have the right to terminate the Lease by giving at least one
month's prior written notice to the other party.
3. RENT. The Tenant agrees to pay the ANNUAL RENT of Ten Thousand Eight
Hundred Dollars ($10,800.00) payable in equal installments $900 in advance
on the first day of each and every calendar month during the full term of
this Lease.
4. RENT ADJUSTMENT. If in any tax year commencing with the fiscal year
1999, the real estate taxes on the land and buildings, of which the Leased
Premises are a part, are in excess of the amount of the real estate taxes
thereon for the fiscal year (hereinafter called the "Base Year"). Tenant
will pay to Landlord as additional rent hereunder, when and as designated by
notice in writing, by Landlord 21% per cent of such excess that may occur in
each year of the term of this Lease or any extension or renewal thereof and
proportionately for any part of a fiscal year.
5. SECURITY DEPOSIT. The sum of NONE Dollars ($-0-) is deposited by the
Tenant with the Landlord as security for the faithful performance of all the
covenants and conditions of the lease by the said Tenant. If the Tenant
faithfully performs all the covenants and conditions on his part to be
performed, then the sum deposited shall be returned to the Tenant.
6. DELIVERY OF POSSESSION. If for any reason the Landlord cannot deliver
possession of the leased property to the Tenant when the lease term
commences, this Lease shall not be void or voidable, nor shall the Landlord
be liable to the Tenant for any loss or damage resulting therefrom. However,
there shall be an abatement of rent for the period between the commencement
of the lease term and the time when the Landlord delivers possession.
7. USE OF LEASED PREMISES. The Leased Premises may be used only for the
following purpose(s):
Office Space
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
8. UTILITIES. Except as specified below, the Tenant shall be responsible
for all utilities and services that are furnished to the Leased Premises.
The Tenant shall be responsible for 21% of the utilities of 7325 Oswego Rd,
- -------------------------------------------------------------------------------
Liverpool NY
- -------------------------------------------------------------------------------
9. CONDITION OF LEASED PREMISE; MAINTENANCE AND REPAIR. The Tenant
acknowledges that the Leased Premises are in good order and repair. The
Tenant agrees to take good care of and maintain the Leased Premises in good
condition throughout the term of the Lease.
The Tenant, at his expense, shall make all necessary repairs and replacements
to the Leased Premises, including the repair and replacement of pipes,
electrical wiring, heating and plumbing systems, fixtures and all other
systems and appliances and their appurtenances. The quality and class of all
repairs and replacements shall be equal to or greater than the original
worth. If Tenant defaults in making such repairs or replacements, Landlord
may make them for Tenant's account, and such expenses will be considered
additional rent.
10. COMPLIANCE WITH LAWS AND REGULATIONS. Tenant, at its expense, shall
promptly comply with all federal, state, and municipal laws, orders, and
regulations, and with all lawful directives of public officers, which impose
any duty upon it or Landlord with respect to the Leased Premises. The Tenant
at its expense, shall obtain all required licenses or permits for the conduct
of its business within the terms of this lease, or for making of repairs,
alterations, improvements, or additions. Landlord, when necessary, will join
with the Tenant in applying for all such permits or licenses.
11. ALTERATIONS AND IMPROVEMENTS. Tenant shall not make any alterations,
additions, or improvements to, or install any fixtures on, the Leased
Premises without Landlord's prior written consent. If such consent is given,
all alterations, additions, and improvements made, and fixtures installed by
Tenant shall become Landlord's property at the end of the Lease/term.
Landlord may, however, require Tenant to remove such fixtures, at Tenant's
expense, at the end of the Lease Term.
<PAGE>
12. ASSIGNMENT/SUBLETTING RESTRICTIONS. Tenant may not assign this
agreement or sublet the Leased Premises without the prior written consent of
the Landlord. Any assignment, sublease or other purported license to use the
Leased Premises by Tenant without the Landlord's consent shall be void and
shall (at Landlord's option) terminate this Lease.
13. INSURANCE.
(i) BY LANDLORD. Landlord shall at all times during the term of this
Lease, at its expense, insure and keep in effect on the building in which the
Leased Premises are located fire insurance with extended coverage. The Tenant
shall not permit any use of the Leased Premises which will make voidable any
insurance on the property of which the Leased Premises are a part, or on the
contents of said property or which shall be contrary to any law or
regulation from time to time established by the applicable fire insurance
rating association. Tenant shall on demand reimburse the Landlord, and all
other tenants, the full amount of any increase in insurance premiums caused
by the Tenant's use of the premises.
(ii) BY TENANT. Tenant shall, at its expense, during the term hereof,
maintain and deliver to Landlord public liability and property damage and
plate glass insurance policies with resepect to the Leased Premises. Such
policies shall name the Landlord and Tenant as insureds, and have limits of
at least $1 million for injury or death to any one person and $1 million for
any one accident, and $100,000 with respect to damage to property and with
full coverage for plate glass. Such policies shall be in whatever form and
with such insurance companies as are reasonable satisfactory to Landlord,
shall name the Landlord as additional insured, and shall provide for at least
ten days' prior notice to Landlord of cancellation.
14. INDEMNIFICATION OF LANDLORD. Tenant shall defend, indemnify, and hold
Landlord harmless from and against any claim, loss, expense or damage to any
person or property in or upon the Leased Premises, arising out of Tenant's
use or occupancy of the Leased Premises, or arising out of any act or neglect
of Tenant or its servants, employees, agents, or invitees.
15. CONDEMNATION. If all or any part of the Leased Premises is taken by
eminent domain, this lease shall expire on the date of such taking, and the
rent shall be apportioned as of that date. No part of any award shall belong
to Tenant.
16. DESTRUCTION OF PREMISES. If the building in which the Leased Premises is
located is damaged by fire or other casualty, without Tenant's fault, and the
damage is so extensive as to effectively constitute a total destruction of
the property or building, this Lease shall terminate and the rent shall be
apportioned to the time of the damage. In all other cases of damage without
Tenant's fault, Landlord shall repair the damage with reasonable dispatch, and
if the damage has rendered the Leased Premises wholly or partially
untenantable, the rent shall be apportioned until the damage is repaired. In
determining what constitutes reasonable dispatch, consideration shall be
given to delays caused by strikes, adjustment of insurance, and other causes
beyond the Landlord's control.
17. LANDLORD'S RIGHTS UPON DEFAULT. In the event of any breach of this lease
by the Tenant, which shall not have been cured within TEN (10) DAYS, then the
Landlord, besides other rights or remedies it may have, shall have the
immediate right of reentry and may remove all persons and property from the
Leased premises; such property may be removed and stored in a public
warehouse or elsewhare at the cost of, and for the account of, the Tenant. If
the Landlord elects to reenter as herein provided, or should it take
possession pursuant to any notice provided for by law, it may either
terminate this Lease or may, from time to time, without terminating this
lease, relet the Leased Premises or any part thereof, for such term or terms
and at such rental or rentals and upon such other terms and conditions as the
Landlord in Landlord's own discretion may deem advisable. Should rentals
received from such reletting during any month be less than that agreed to be
paid during the month by the Tenant hereunder, the Tenant shall pay such
deficiency to the Landlord monthly. The Tenant shall also pay to the
Landlord, as soon as ascertained, the cost and expenses incurred by the
Landlord, including reasonable attorneys fees, relating to such reletting.
18. QUIET ENJOYMENT. The Landlord agrees that if the Tenant shall pay rent
as aforesaid and perform the covenants and agreements herein contained on its
part to be performed, the Tenant shall peaceably hold and enjoy the said
rented premises without hindrance or interruption by the Landlord or by any
other person or persons acting under or through the Landlord.
19. LANDLORD'S RIGHT TO ENTER. Landlord may, at reasonable times, enter the
Leased Premises to inspect it, to make repairs or alterations, and to show it
to potential buyers, lenders or tenants.
20. SURRENDER UPON TERMINATION. At the end of the lease term the Tenant shall
surrender the leased property in as good condition as it was in at the
beginning of the term, reasonable use and wear excepted.
21. SUBORDINATION. This lease, and the Tenant's leasehold interest, is and
shall be subordinate, subject and inferior to any and all liens and
encumbrances now and thereafter placed on the Leased Premises by Landlord,
any and all extensions of such liens and encumbrances and all advances paid
under such liens and encumbrances.
22. ADDITIONAL PROVISIONS: N/A
23. MICELLANEOUS TERMS.
(i) NOTICES. Any notice, statement, demand or other communication by one
party to the other, shall be given by personal delivery or by mailing the same,
postage prepaid, addressed to the Tenant at the premises, or to the Landlord
at the address set forth above.
(ii) SEVERABILITY. If any clause or provision herein shall be adjudged
invalid or unenforceable by a court of competent jurisdiction or by operation
of any applicable law, it shall not affect the validity of any other clause or
provision, which shall remain in full force and effect.
(iii) WAIVER. The failure of either party to enforce any of the provisions
of this lease shall not be considered a waiver of that provision or the right
of the party to thereafter enforce the provision.
(iv) COMPLETE AGREEMENT. This Lease constitutes the entire understanding of
the parties with respect to the subject matter hereof and may not be modified
except by an instrument in writing and signed by the parties.
(v) SUCCESSORS. This Lease is binding on all parties who lawfully succeed
to the rights or take the place of the Landlord or Tenant.
24. [FOR LEASED PREMISES IN FLORIDA ONLY]: RADON GAS: Radon is a naturally
occurring radioactive gas that, when it has accumulated in a building in
sufficient quantities, may present health risks to persons who are exposed to
it over time. Levels of radon that exceed federal and state guidelines have
been found in buildings in Florida. Additional information regarding radon
and radon testing may be obtained from your county public health unit.
IN WITNESS WHEREOF the parties have set their hands and seals on this 1 day
of May 1999.
/s/ Mary Passalaqua /s/ Joseph C. Passalaqua CEO
- ------------------------------ --------------------------------
Landlord or Landlord's Authorized Agent Tenant
for bright-technologies. com. inc
---------------------------------
Tenant
Read the instructions and other important information on the package. When
using this form you will be acting as your own attorney since Rediform, its
advisors and retailers do not render legal advice or service. Rediform, its
advisors and retailers assume no liability for loss or damage resulting from
the use of this form.
<PAGE>
Exhibit 10.9
LEASE AGREEMENT
THIS LEASE, is executed at Hillsborough County, Florida this thirteenth day
of August 1996, by and between Raymond J. and Jean A. Prossen (the
"Landlord") and Don Nelson, C.E.O. of Bright Technologies, Inc. (the
"Tenant").
1. DESCRIPTION OF PREMISES
1.01 Landlord hereby leases to Tenant and Tenant leases from
Landlord on the terms, convenants and conditions set forth herein, those
premises shown on Exhibit "A" attached hereto, (the "Leased Premises"),
located in the building, the location of which is indicated on Exhibit "A"
attached hereto (the "Building"). The Leased Premises are located at: 6604
Harney Road, Suite E, Tampa, Florida.
2. TERM
2.01 The term of this Lease shall commence on October 1, 1996, (the
"Commencement Date") and shall end at midnight on the date which is three (3)
full years from the Commencement Date or, if the Commencement Date is not the
first day of a calendar month, from the first day of the calendar month next
succeeding the Commencement Date. As used herein the term "Lease Year" shall
mean each year of the term commencing on the Commencement Date and ending at
the expiration of twelve calendar months thereafter.
3. RENT
During the full term of this Lease, Tenant shall pay Landlord at its
place of business set forth herein or at such place as Landlord may
designate, without notice, demand, reduction, setoff or any defense, a total
rental (the "Annual Rent") consisting of the sum total of the following:
3.01 MINIMUM ANNUAL RENT
Tenant shall pay a minimum annual rent (the "Minimum Annual Rent") of
Nineteen Thousand Four Hundred Forty Dollars and No/100 ($19,440.00). The
foregoing shall be payable in equal monthly installments of One Thousand Six
Hundred Twenty Dollars and No/100 ($1,620.00) plus applicable taxes in
advance on or before the first day of each month. If the Commencement Date
is a date other than the first day of a calendar month, the first monthly
installment of Minimum Annual Rental shall be prorated daily from such date
to the first day of the next calendar month and payable in advance.
4. SALES TAX
4.01 Tenant agrees to pay Landlord any sales or use tax or excise
tax imposed or levied against the rent of any other charge or payment
required hereunder to be made by virtue of the renting of the premises which
has been imposed or levied by any governmental body having jurisdiction
thereof. The current State of Florida sales tax is six and one-half percent
(6.5%).
5. SECURITY DEPOSIT
5.01 Tenant has this day deposited with Landlord the sum of Three
Thousand Two Hundred Forty Dollars and No/100 ($3,240.00) as security deposit
for the full and faithful performance by Tenant of all the terms, convenants
and conditions of this Lease upon Tenant's part to be performed, which said
sum shall be returned to Tenant after the time fixed as the expiration of the
term herein, provided Tenant has fully and faithfully carried out all of said
terms, covenants and conditions of Tenant's part to be performed. In the
event of a bonafide sale, subject to this Lease, Landlord shall have the
right to transfer the security to the buyer for the benefit of Tenant and
Landlord shall be thereupon automatically released by Tenant from all
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LEASE AGREEMENT-Raymond J. & Jean A. Prossen and Bright Technologies,Inc.
liability for the return of such security deposit, and Tenant agrees to look
solely to the new Landlord for the return of the said security deposit, and
it is agreed that this shall apply to every transfer or assignment made of
the security deposit to a new Landlord.
6. PARKING AND COMMON AREAS
6.01 Tenant shall be entitled to park in common with other tenants
of Landlord. Tenant agrees not to overburden the parking facilities and
agrees to cooperate with Landlord and other tenants in the use of parking
facilities. Landlord reserves the right in its absolute discretion to
allocate parking spaces among the tenants in the building.
"Parking" as used herein means the use by Tenant's employees, its
visitors, invitees, and customers for the parking of motor vehicles with the
use of and/or visits to the Leased Premises. (There will be no assigned
parking unless elected by the Landlord in specific instances). Tenant agrees
and covenants to park all trucks, trailers or other commercial vehicles in
the parking spaces at the rear of the buildings or where otherwise assigned
by the Landlord.
6.02 No vehicle may be repaired or serviced in the parking area.
This includes any motorized vehicle, equipment or machinery and steam
cleaning, lubrication, sand blasting, painting or other such maintenance is
specifically prohibited in the parking areas, roadways or service area. Any
vehicle abandoned or disabled or in a state of non-operation or disrepair is
prohibited from the property and will be considered as trespassing on same.
Tenant hereby agrees to enforce said restrictions against Tenant's own
vehicles and equipment and vehicles and equipment known to be owned by its
employees, invitees and agents. Should the Landlord in its sole discretion
determine that a violation of this provision has occurred, the offending
vehicle, equipment, trailer or machinery shall be deemed abandoned and may be
removed by Landlord from the property at the sole cost of Tenant. Should the
Landlord be required to pay any towing, removal or storage charges, such
charges shall be for the account of Tenant and Tenant shall, upon demand, pay
said charges to Landlord within three (3) days of demand. Landlord shall not
be responsible for theft, collision, vandalism, fire, acts of God or any
other cause of casualty to vehicles, equipment, trailers or machinery parked
or stored on the Property. In addition, Landlord shall not be responsible
for the loss or damage caused to the illegally parked or stored items while
under tow or while in storage.
7. DELAY IN DELIVERY OF POSSESSION
7.01 If Landlord, for any reason or cause beyond its reasonable
control, cannot deliver possession of the Leased Premises to Tenant at the
commencement of the term of this Lease, this Lease shall not be void or
voidable, nor shall Landlord be liable to Tenant for any loss or damage
resulting therefrom, but in that event there shall be a proportionate
reduction of rent covering the period between the commencement of the term
and the time when Landlord can deliver possession. The term of this Lease
shall be extended by such delay. Tenant and Landlord shall execute a Lease
modification agreement to alter the effective date of the Lease.
7.02 Landlord will permit Tenant access to the premises for
installing equipment and furnishings in the Premises prior to the term when
it can be done without material interference with remaining work in
compliance with Landlord's builders risk insurance policy and provided Tenant
cooperates with Landlord and its contractors.
8. USE OF PREMISES
8.01 The Leased Premises may be used and occupied only for
Office/Warehouse and for no other purposes, without Landlord's prior written
consent. Tenant shall promptly comply with all laws, ordinances, orders and
regulations affecting the Leased Premises and their cleanliness, safety,
occupation and use. Tenant shall not do or permit anything to be done in or
about the Leased Premises, or bring or keep anything in the Leased Premises
that will in any way increase the fire and extended coverage insurance upon
the building. Tenant will not perform any act or carry on any practices that
may injure the Building or be a nuisance or menace to tenants of adjoining
premises. Tenants shall not cause, maintain or permit any outside storage on
or about the Leased Premises, including pallets or other refuse. The rear
access areas of the Tenant's suite must remain clean and unobstructed.
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LEASE AGREEMENT - Raymond J. & Jean A. Prossen and Bright Technologies, Inc.
9. UTILITIES
9.01 Tenant shall pay directly to the supplier, all charges for all
utilities, including but not limited to electric services. The cost for said
electric service shall be separately metered to the Leased Premises at
Tenant's expense and in Tenant's own name. Landlord shall not be liable for
Tenant for any compensation, damages, or be required to reduce Tenant's rent
by reason of any loss or damages caused to Tenant arising from power failures
or service failures of other utilities.
If Tenant uses the water for other than restroom or drinking
purposes, the water charge may, at the option of Landlord, be increased
accordingly at any time during the term of the Lease. Such a surcharge, if
any, shall be paid to Landlord by Tenant as additional rent.
Should Tenant's trash volume or frequency be of such size as to
create additional cost for pickup, additional container size, more frequency
of pickup or special handling, Landlord, at its option, may impose a trash
charge on the Tenant.
Should Landlord charge Tenant for additional water, sewer or trash
service, Tenant shall remit the amounts so charged to Landlord within ten
(10) days after receipt of an invoice.
9.02 Tenant shall pay for all telephone, or for such other services
provided in or upon the Lease Premises as Tenant shall elect to contract for.
10. ACCEPTANCE OF PREMISES
10.01 By execution hereunder and occupancy, should the Leased
Premises be already complete and improved, Tenant acknowledges that it has
examined the Leased Premises and accepted them "as is" and as being in the
condition and improved as called for by this Lease.
11. ALTERATIONS, MECHANICS' LIENS
11.01 Alterations may not be made to the Leased Premises without
the prior written consent of Landlord and any alterations of the Leased
Premises excepting movable furniture, equipment and trade fixtures shall, at
Landlord's option, become part of the realty and belong to Landlord. This
provision also applies to all draperies, special wall coverings or floor
coverings as well as additional electrical fixtures or circuits.
11.02 Should Tenant desire to alter the Leased Premises and
Landlord approves and consents in writing to such alterations, at Landlord's
option, Tenant shall permit Landlord to make said alterations and amortize
the total cost of same as additional rental for the balance of the Lease term
or any extension thereof if applicable and mutually agreeable. Should
Landlord elect to not provide said alterations, Tenant shall only contract
for the alterations with a contractor approved by Landlord and all said
alterations shall be subject to Landlord's approval and written consent
relative to design, location, materials and workmanship.
11.03 Notwithstanding anything in paragraph 11.02 above, Tenant
may, upon written consent of Landlord, install trade fixtures (except trade
fixtures or other trade equipment which would effectively convert service
area as shown in Exhibit "A" attached hereto to additional office area),
machinery or other trade equipment in conformance with the ordinances of the
applicable city and county, and the same may be removed upon the termination
of this Lease provided Tenant shall not be in default under any of the terms
and conditions of this Lease, and the Leased Premises are not damaged by such
removal. Tenant shall return the Leased Premises on the termination of this
Lease in the same condition as when rented to Tenant, reasonable wear and tear
excepted. Tenant shall keep the Leased Premises, the Building, and property
in which the Leased Premises are situated free from any liens arising out of
any work performed for, materials furnished to, or obligations incurred by
Tenant. All such work, provided for above, shall be done at such times and
in such manner as Landlord may from time to time designate.
All fixtures, improvements, alterations and additions which may be
made or installed by either Landlord or Tenant in or about the Leased
Premises which are in any manner attached to the floors, walls or ceilings,
except trade fixtures, shall belong to and be the property of Landlord and
shall remain on the Leased Premises during the term of this Lease and at the
expiration or termination hereof, except for such property, if any which the
Landlord may designate in writing that Tenant either shall or may remove.
Tenant agrees to repair all damage to the Leased
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LEASE AGREEMENT - Raymond J. & Jean A. Prossen and Bright Technologies, Inc.
Premises caused by any such removal (including removal of trade fixtures) and
to restore the Leased Premises to the condition in which they were prior to
the removal of said articles. Any such property so designated by Landlord to
be removed, which shall be left in or upon the Leased Premises, shall be
deemed to have been abandoned by tenant and may be retained or disposed of by
Landlord at Tenant's expense, as Landlord shall desire.
12. WASTE AND QUIET CONDUCT
12.01 Tenant shall not commit or suffer any waste upon the Leased
Premises, or cause any nuisance, or perform any act to do anything which may
disturb the quiet enjoyment of any other Tenant in the building.
12.02 Tenants, their employees and agents, shall maintain order in
the building and shall not make or permit any improper noise in the building
or interfere in any way with other tenants or those having business with
them. No room shall be occupied or used as a sleeping or living quarters at
any time.
Tenant shall not (without the Landlord's written consent) put up or
operate any electric heating device, steam engine, boiler or machinery upon
the premises, or carry on any mechanical business thereon, or use or allow to
be used upon the Leased Premises oil, burning fluids, gasoline, or kerosene
for heating, warming, or lighting. No article deemed hazardous on account of
fire and no explosives shall be brought into said premises. No offensive
gases or liquids will be permitted. Tenant shall keep the premises equipped
with all safety appliances required by law or ordinance or any other
regulation of public authority and shall comply with all reasonable rules and
regulations hereafter made by Landlord of which Tenant has been given notice.
13. FIRE INSURANCE HAZARDS
13.01 No use shall be made or permitted to be made of the Leased
Premises, no acts done, which will increase the existing premium rate upon
insurance on the Building or cause the cancellation of any insurance policy
covering the Building, or any part thereof, nor shall Tenant sell, or permit
to be kept, used or sold, in or about the Leased Premises, any article which
may be prohibited by the Standard form of fire insurance policies. Tenant
shall, at its sole cost and expense, comply with any and all requirements,
pertaining to the Leased Premises, or any insurance organization or company,
necessary for the maintenance of reasonable fire and public liability
insurance, covering the Leased Premises, Building and appurtenances. Tenant
agrees to pay to Landlord as additional rent, any increase in premiums other
than for standard coverages for insurance policies caused by Tenant's use of
Leased Premises.
14. TAXES
14.01 Tenant shall pay taxes or assessments of any nature imposed
or assessed upon its trade fixtures, equipment, machinery, inventory,
merchandise or other personal property located on the Premises and owned by
or in the custody of Tenant as promptly as all such taxes or assessments may
become due and payable without any delinquency. Landlord shall pay all ad
valorem property taxes which are now or hereafter assessed upon the Building
and Premises, except as otherwise expressly provided in this lease.
15. LIABILITY INSURANCE
15.01 Tenant, at its own expense, shall provide and keep in force
with companies acceptable to Landlord public liability insurance for the
benefit of Landlord and Tenant jointly against liability for bodily injury
and property damage in the amount of not less than One Million Dollars
($1,000,000) in respect to injuries to or death of more than one person in
any one occurrence, and in the amount of not less than Five Hundred Thousand
Dollars ($500,000.00) per occurrence in respect to damage to property, such
limits to be for any greater amounts as may be reasonable indicated in
circumstances from time to time existing. Tenant shall furnish Landlord with
a certificate of such policy within 30 days after the occupancy date of this
Lease and whenever required shall satisfy Landlord that such policy is in
full force and effect. Such policy shall name Landlord as an additional
insured. The policy shall further provide that it shall not be canceled or
altered without thirty (30) days prior written notice to Landlord.
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LEASE AGREEMENT - Raymond J. & Jean A. Prossen and Bright Technologies, Inc.
16. INDEMNIFICATION BY TENANT
16.01 Tenant shall indemnify and hold harmless Landlord against and
from any and all claims arising from Tenant's use of Leased Premises or the
conduct of its business or from any activity, work, or thing done, permitted
or suffered by the Tenant in or about the Leased Premises, and shall further
indemnify and hold harmless Landlord against and from any and all claims
arising from any act, neglect, fault or omission of the Tenant, or of its
agents or employees, and from and against all costs, attorney's fees, expense
and liabilities incurred in or about such a claim, and in case any action or
proceeding be brought against the Landlord in reason of any such claim,
Tenant, upon notice from Landlord in writing, shall defend the same at
Tenant's expense by utilization of attorneys reasonable satisfactory to
Landlord. The obligations of Tenant under this section arising by reason of
any occurrence taking place during the term of this Lease shall survive any
termination of this Lease.
17. REPAIRS
17.01 Tenant is responsible, at its expense, to keep and maintain the
interior of the Leased Premises in a clean and sanitary condition. Repair and
maintenance to the Premises including replacement of bulbs, lamps and
ballasts, shall be by Tenant at Tenant's expense. Landlord will maintain the
exterior of the building within which the Premises are located, including
walls, the roof, and all common areas.
17.02 Tenant shall not injure, overload or deface the building. No
connection shall be made to electric wires or electric fixtures without
consent of the Landlord. The water closets and all other water apparatus
shall be used soley for the purposes intended, and no sweepings, rubbish,
sanitary napkin, or other obstructing substances shall be thrown therein. The
cost of repair resulting from a violation of this subparagraph, shall be at
the expense of the Tenant.
17.03 Not more than two keys for each unit will be furnished without
charge; the charge for additional keys shall be Five Dollars ($5.00) each. No
additional locks or latches shall be put upon any door without written consent
of Landlord. Tenant, at termination of the Lease of the Premises, shall return
to Landlord all keys to doors in the Building.
17.04 Tenant shall be responsible for preventive and routine
maintenance (except that covered under any warranty) of the heating,
ventilating, and air conditioning system. Maintenance made under this
paragraph shall be made at Tenant's expense. Said mechanical units require
periodic filter change and routine service and adjustments at least two to
three times annually.
18. AUCTIONS, SIGNS, ADVERTISING
18.01 Tenant shall not conduct or permit to be conducted any sale by
auction on the Leased Premises. Landlord shall have the right to control
landscaping and approve the placing of signs and the size and quality of the
same. Tenant shall place no exterior signs on the Leased Premises without
the prior written consent of Landlord. Any signs not conforming with this
Lease may be immediately removed by Landlord. Tenant shall order the exterior
building sign identifying its occupancy on a timely basis from the approved
sign firm as authorized by Landlord and cause it to be installed no later
than 30 days after occupancy of the Leased Premises.
18.02 In order to provide architectural control of the Building,
Tenant may install only such exterior signs, marquees, billboards, outside
lighting fixtures and/or other decorations on the Premises as shall have the
prior written approval of Landlord. The care and maintenance of all such
approved signs shall be the sole responsibility of Tenant. Landlord shall
have the right to remove any such sign or other decoration and shall fully
restore the Premises at the cost and expense of Tenant if any such exterior
work is done without Landlord's prior written approval. Tenant shall not
permit, allow, or cause to be used in, on or about the Premises any sound
production devices, mechanical or moving display devices, brights lights or
other advertising media, the effect of which would be visible or audible from
the exterior of the Premises.
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LEASE AGREEMENT - Raymond J. & Jean A. Prossen and Bright Technologies, Inc.
19. ENTRY BY LANDLORD
19.01 Tenant shall permit Landlord and Landlord's agent to enter the
Leased Premises at all reasonable times for the purpose of inspecting the
same or for the purpose of maintaining the Building, or for the purpose of
making repairs, alterations, or additions to any portion of the Building,
including the erection and maintenance of such scaffolding, canopies, fences,
and props as may be required, or repairs or for the purpose of showing the
premises to prospective tenants during the last 6 months of this Lease
without any liability to Tenant for any loss of occupation or quiet enjoyment
of the Leased Premises thereby occasioned; Landlord shall at all times have
and retain a key with which to unlock all of the doors in, upon and about the
Leased Premises, excluding Tenants vaults and safes.
20. ABANDONMENT
20.01 Tenant shall not vacate nor abandon the Leased Premises at any
time during the term of this Lease, nor permit the Leased Premises to remain
unoccupied for a period longer than thirty (30) consecutive days during the
term of this Lease; and if Tenant shall abandon, vacate or surrender the
Leased Premises; or be dispossessed by process of law, or otherwise, any
personal property belonging to Tenant and left on the Leased Premises shall,
at the option of the Landlord, be deemed abandoned, and available to Landlord
to use or sell to offset rental amount due and payable. Should the premises
be vacated or abandoned, Landlord shall have the right to enter the Leased
Premises at any time.
21. DESTRUCTION
21.01 In the event of (A) a partial destruction of the Leased Premises
or the Building during the Lease term which requires repairs to either the
Leased Premises or the Building or (B) the Leased Premises or the Building
being declared unsafe or unfit for occupancy by any authorized public
authority for any reason other than Tenant's act, use or occupation which
declaration requires repairs to either the Leased Premises or the Building,
Landlord shall forthwith make repairs, provided repairs can be made within
one-hundred and twenty (120) days under the laws and regulations of
authorized public authorities, but partial destruction (including any
destruction necessary in order to make repairs required by any declaration)
shall in no way annul or void this Lease, except that Tenant shall be
entitled to proportionate reduction of rent while such repairs are being made.
The proportionate reduction is to be based upon the extent to which the
making of repairs shall interfere with the business carried on by Tenant in
the Lease Premises. If repairs cannot be made within one hundred twenty (120)
days, Landlord may, at its option, make such repairs within a reasonable
time, this Lease continuing in full force and effect and the rent to be
proportionately abated, as is this paragraph provided. In the event that
Landlord does not so elect to make repairs which cannot be made within one
hundred twenty (120) days, or repairs cannot be made under current laws and
regulations, this Lease may be terminated at the option of either party. A
total destruction (including any destruction required by any authorized
public authority) of either the Leased Premises or the building shall
terminate this Lease. In the event of any dispute between Landlord and Tenant
relative to the provisions of this paragraph, they may each select an
arbitrator, the two arbitrators so selected shall select a third arbitrator
and the three arbitrators so selected shall hear and determine the
controversy and their decision theron shall be final and binding on both
Landlord and Tenant who shall bear the cost of such arbitration equally
between them. Landlord shall not be required to repair any property installed
in the Leased Premises by Tenant. Tenant waives any right under applicable
laws inconsistent with the terms of this paragraph and in the event of a
destruction agrees to accept any offer by Landlord to provide Tenant with
comparable space within the project in which the Premises are located on the
same terms as in this Lease contained.
Notwithstanding anything to the contrary herein provided, in the
event a mortgagee requires the insurance proceeds be applied to such
indebtedness, the Landlord shall have the right to terminate this Lease by
delivering written notice of termination to Tenant, whereupon, all rights and
obligations hereunder shall cease and terminate.
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LEASE AGREEMENT-Raymond J. & Jean A. Prossen and Bright Technologies, Inc.
22. ASSIGNMENT AND SUBLETTING
22.01 Without Landlord's consent, Tenant shall not assign, mortgage,
or hypothecate this Lease, or any interest in this Lease, or permit the use
of the Leased premises by any person or persons other than Tenant, or sublet
the Leased Premises, or any part of the Leased Premises. Any transfer of
this Lease from Tenant by merger, consolidation or liquidation shall
constitute an assignment for purposes of this Lease. Any attempted
assignment or subletting without Landlord's consent shall void and shall at
the option of the Landlord terminate this Lease. Consent by Landlord to any
assignment or subletting shall not release Tenant from its primary liability
under the Lease, and Landlord's consent to one assignment, subletting or
occupation or use by other parties shall not be deemed a consent to other
subleases or assignments or occupation or use by other parties.
23. TRANSFER OF LANDLORD INTEREST
23.01 If Landlord shall sell, assign or transfer all or any part of its
interest in the Premises or in this Lease to successor in interest which
expressly assumes the obligations of Landlord hereunder, then Landlord shall
thereupon be released and discharged from all covenants and obligations
hereunder, and Tenant shall look solely to such successor in interest for
performance of all of Landlord's obligations. Tenant's obligations under
this Lease shall in no manner be affected by Landlord's assignment hereunder,
and Tenant shall thereafter attorn and look solely to such successor in
interest as the Landlord hereunder.
24. INSOLVENCY OF TENANT
24.01 Either (A) the appointment of a receiver to take possession of
all or substantially all of the assets of Tenant, or (B) a general assignment
by Tenant for the benefit of creditors, or (C) any action taken or suffered
by Tenant under any insolvency or bankruptcy act shall, if any such
appointment, assignments or action continues for a period of thirty (30)
days, constitute a breach of this Lease by Tenant and Landlord may at its
election without notice, terminate this Lease and in that event be entitled
to immediate possession of the Leased Premises and damages as provided herein.
25. EVENTS OF DEFAULT
25.01 Should Tenant fail to comply with any terms provision or
convenant of this Lease (other than the following in paragraph 26.01 and
26.02), and shall not cure such failure within twenty (20) days, after
written notice (notice by registered mail deemed to be constructive notice)
thereof to Tenant, said event shall be deemed to be events of default by
Tenant under this Lease.
25.02 The filing of a petition by or against Tenant for adjudication
as a bankrupt under the Bankruptcy Code as now or hereafter amended or
supplemented or for reorganization within the meaning of the Bankruptcy Code,
or the filing of any petition by or against the Tenant under any future
bankruptcy act for the same or similar relief; the dissolution or the
commencement of any action or proceeding of dissolution or liquidation of the
Tenant, whether instituted by or against the Tenant, or for the appointment
of a receiver or trustee of the property of the Tenant; the taking possession
of the property of the Tenant by any governmental office or agency pursuant
to statutory authority for the dissolution or liquidation of the Tenant; the
making by the Tenant of an assignment for the benefit of creditors. A
default in the payment of the rent reserved in the Lease or any part thereof,
for a period of five (5) days shall be an event of default.
26. LANDLORD'S RIGHTS AFTER DEFAULT
26.01 In the event of a default by Tenant, Landlord, in addition to
any other rights or remedies that it may have by virtue of law, shall have
the right to either terminate this Lease or from time to time, without
terminating this Lease relet the Premises or any part thereof for the account
and in the name of Tenant or otherwise, for any such terms and conditions as
Landlord in its sole discretion may deem advisable with the right to make
alterations and repairs to the Leased Premises. Tenant shall pay to
Landlord, as soon as ascertained, the costs and expenses incurred by Landlord
in such reletting and in making such alterations and repairs. Rentals
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LEASE AGREEMENT - Raymond J. & Jean A. Prossen and Bright Technologies, Inc.
received by Landlord from such reletting shall be applied: first, to the
payment of any indebtedness, other than rent, due hereunder from Tenant to
Landlord; second, to the payment of the cost of any alterations and repairs to
the Leased Premises necessary to return the Leased Premises to good
condition, normal wear and tear excepted, for uses permitted by this Lease
and the cost of storing any Tenant's property left on the Leased Premises at
the time of reletting; third, to the payment of rent due and unpaid hereunder
and the residence, if any, at the end of the term of this Lease shall be paid
to Tenant. Should such rentals received from time to time from such
reletting during any month be less than that agreed to be paid during that
month by Tenant hereunder, Tenant shall pay such deficiency to Landlord on a
monthly basis.
26.02 No such reletting of the Leased Premises by Landlord shall be
construed as an election on its part to terminate this Lease unless a notice
of such intention be given to Tenant or unless the termination thereof be
decreed by a court of competent jurisdiction. Notwithstanding any such
reletting without termination, Landlord may at any time thereafter elect to
terminate this Lease for such previous breach provided it has not been cured.
Should Landlord at any time terminate this Lease for any breach, in addition
to any other remedy it may have, it may recover from Tenant all damages it
may incur by reason of such breach, including the cost of recovering the
Leased Premises and including (1) all amounts that would have fallen due as
rent between the time of termination of this Lease and the time of the
judgment, or other award, less the avails of all relettings and attornments,
plus interest on the balance at the rate of eighteen percent (18%) per year;
(1) Landlord may, at its option, declare the entire amount of the rent which
would be due and payable during the remainder of the term of this Lease to be
due and payable immediately, in which event, Tenant agrees to pay the same
upon demand, together with all rents theretofore due to Landlord provided,
however, that such payments shall not constitute a penalty or forfeiture or
liquidated damages unless elected as same by Landlord. Upon making such
payment, Tenant shall receive rentals from other tenants on account of their
leasing said Premises during the remaining term of this Lease; provided,
however, that the monies to which the Tenant shall become so entitled shall
in no event exceed the entire amount payable by Tenant to Landlord as set
forth above.
27. SURRENDER OF LEASE NOT MERGER
27.01 The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof, shall not work a merger, and shall, at the
option of Landlord terminate all or any existing subleases, and/or sub
tenancies, or may, at the option of Landlord, operate as an assignment to it
of any or all of such subleases or sub tenancies.
28. ATTORNEY'S FEES/COLLECTION CHARGES
28.01 In the event of any legal action or proceeding between the
parties hereto, reasonable attorney's fees and expenses of the prevailing
party in any such action or proceeding may be added to the judgment therein.
Should Landlord be named as a defendant in any suit brought against Tenant in
connection with or arising out of Tenant's occupancy, hereunder, Tenant shall
pay to Landlord its cost and expenses incurred in such suit, including a
reasonable attorney's fee.
29. CONDEMNATION
29.01 If any part of the Leased Premises shall be taken or condemned
for public or quasi-public use, and a part thereof remains which is
susceptible of occupation hereunder, this Lease shall, as to the part so
taken, terminate as of the date title shall vest in the condemner, and the
rent payable hereunder shall be adjusted so that the Tenant shall be required
to pay for the remainder of the term only such portion of such rent as the
number of square feet in the part remaining after condemnation bears to the
number of square feet in the entire Leased Premises at the date of
condemnation; but in such event Landlord shall have the option to terminate
this Lease as of the date when title to the part so condemned vests in the
condemner. If all the Leased Premises, or such part thereof be taken or
condemned so that there does not remain a portion susceptible for occupation
hereunder, this Lease shall thereupon terminate.
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LEASE AGREEMENT - Raymond J. & Jean A. Prossen and Bright Technologies, Inc.
Page 9
30. NOTICE
30.01 All notices, statements, demands, requests, consents,
approvals, authorizations, offers, agreements, appointments, or designations
under this Lease by either party to the other shall be in writing and shall
be sufficiently given and served upon the other party, if sent by certified
mail, return receipt requested, postage prepaid, and addressed as follows:
Raymond J. Prossen Don Nelson, C.E.O.
6604 Harney Rd., Suite K Bright Technologies, Inc.
Tampa, FL 33610 1856 Corporate Drive, Suite #150
Norcross, GA 30093
31. WAIVER
31.01 The waiver by Landlord of any breach of any term, covenant,
or condition herein contained shall not be deemed to be a waiver of such
term, covenant, or condition or any subsequent breach of the same or any
other term, covenant, or condition herein contained. The subsequent
acceptance of rent hereunder by Landlord shall not be deemed to be waiver of
any preceding breach by Tenant of any term, covenant, or condition of this
Lease, other than the failure of Tenant to pay the particular rental so
accepted, regardless of Landlord's knowledge of such preceding breach at the
time of acceptance of such rent.
32. EFFECT OF HOLDING OVER
32.01 If Tenant should remain in possession of the Leased Premises
after the expiration of the Lease term and without executing a new Lease, then
such holding over shall be construed as a tenancy from month-to-month,
subject to all the conditions provisions, and obligations of this Lease
insofar as the same are applicable to a month-to-month tenancy.
33. SUBORDINATION
33.01 This Lease shall be subordinate to any ground lease, mortgage,
or any other hypothecation for security now or hereafter placed upon the real
property of which the Premises are a part and to any and all advances made on
the security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. Notwithstanding such subordination,
Tenant's right to quiet possession of the Premises shall not be disturbed if
Tenant is not in default and so long as Tenant shall pay the rent and observe
and perform all of the provisions of this Lease, unless this Lease is
otherwise terminated pursuant to its terms. This subordination, attornment
and non-disturbance provision is to be effective and self-operative without
the execution of any further instrument on the part of the parties hereto,
immediately upon the mortgagee or other successor to Landlord's estate
succeeding to the interest of the Landlord in the Lease Premises.
34. ESTOPPEL CERTIFICATES
34.01 Within 10 days after a request by Landlord, Tenant shall
deliver a written estoppel certificate, in form supplied by or acceptable to
Landlord certifying any facts that are then true with respect to the Lease,
including without limitation that this Lease is in full force and effect,
that no default exists on the part of Landlord or Tenant, that Tenant is in
possession, that Tenant has commenced the payment of rent, and that there are
no defenses or offsets claimed by Tenant with respect to payment of rental
under this Lease. Likewise, within 10 days after a request by Tenant,
Landlord shall deliver to Tenant a similar estoppel certificate covering such
matters as are reasonable requested by Tenant.
35. MISCELLANEOUS PROVISIONS
35.01 Whenever the singular number is used in this Lease and when
required by the contest, the same shall include the plural, and the masculine
gender shall include the feminine and neuter genders, and word "person" shall
include corporation, firm or association. If there be
<PAGE>
LEASE AGREEMENT - Raymond J. & Jean A. Prossen and Bright Technologies, Inc.
Page 10
more than one Tenant, the obligations imposed upon the Tenant under this
Lease shall be joint and several.
35.02 The headings or titles to paragraphs of this Lease are not a
part of this Lease and shall have no effect upon the construction or
interpretation of any part of this Lease.
35.03 This instrument contains all of the agreements and conditions
made between the parties of this Lease and may not be modified orally or in
any other manner than by agreement in writing signed by all parties to this
Lease.
35.04 Time is of the essence of each term and provision of this
Lease.
35.05 Except as otherwise expressly stated, each payment required
to be made by Tenant shall be in addition to and not in substitution for other
payments to be made by Tenant.
35.06 Subject to Paragraph 22, the terms and provisions of this
Lease shall be binding upon and inure to the benefits of the heirs,
executors, administrators, successors, and assigns of Landlord and Tenant.
35.07 This Agreement, its application, enforcement and jurisdiction
shall be construed under the laws applicable in the State of Florida,
including any Tenant whose principal place of business is outside of the U.S.A.
36. DEPOSIT AGREEMENT
36.01 Landlord and Tenant hereby agree that Landlord shall be
entitled to immediately endorse and cash Tenant's good faith rent and
security deposit check(s) accompanying this Lease.
It is further agreed and understood that such action shall not
guarantee acceptance this Lease by Landlord but in the event Landlord does
not accept this Lease the deposit shall be refunded in full to Tenant. This
Lease shall be effective only after Landlord has fully executed this Lease
Agreement.
37. MORTGAGE PROTECTION
37.01 In the event of any default on the part of the Landlord,
Tenant shall give notice by registered or certified mail to any Mortgagee
holding a mortgage upon the Premises whose address has been furnished to
Tenant, and Tenant shall offer such Mortgagee a reasonable opportunity to cure
the default, including sufficient time for the Mortgagee to obtain possession
of the Premises by judicial foreclosure, if such should prove necessary to
effect a cure.
37.02 Landlord and Tenant mutually agree that should any Mortgagee
of the Premises require any change in this Lease which change shall not
materially affect the rights or obligations of Landlord or Tenant under this
Lease, they will corporate with each other in good faith to make the language
of this Lease acceptable to such Mortgagee. Tenant shall execute any
subordination, non-disturbance and attornment agreements as may be reasonable
required by any such Mortgagee.
38. AUTHORIZED LEASE EXECUTION
38.01 Each individual executing this Lease as a director, officer
or agent of a corporation and warrants that he is duly authorized to execute
and deliver this Lease on behalf of such corporation in accordance with the
represents duly adopted resolution of the Board of Directors of said
corporation in accordance with its terms.
Each individual executing this Lease on behalf of a partnership
warrants that he is a General Partner therein and is duly authorized to
execute and deliver this Lease on behalf of said partnership.
38.02 Landlord reserves the right to make and enforce such other
reasonable rules and regulations as, in its judgment, may be deemed necessary
or advisable from time to time to
<PAGE>
Page 11
LEASE AGREEMENT-Raymond J. & Jean A. Prossen and Bright Technologies, Inc.
promote safety, care and cleanliness of the premises and for the preservation
of good order thereon.
39. ADDITIONAL CONSTRUCTION
39.01 Landlord hereby reserves the right at any time from time to
time to make alterations or additions to, and to build additional stores on,
the building of which the Leased Premises are part, and to build adjoining
the same. Landlord also reserves the right to construct other buildings or to
add to other buildings or to change the configuration and location of
landscaping, parking or other improvements and to permit others to do so.
40. TOXIC OR HAZARDOUS SUBSTANCES
40.01 Tenant represents, warrants and covenants that Tenant will not
bring onto or use Hazardous Materials (as defined below) on, from or
affecting the Premises in any manner which violates federal, state or local
laws, ordinances, rules, regulations or policies governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials.
40.02 Tenant shall keep the Premises, or cause the Premises to be
kept, free of Hazardous Materials.
40.03 Without limitation to the foregoing, Tenant shall neither
cause nor permit:
a. the Premises to be used to generate, manufacture, refine,
transport, treat, store, handle, dispose, transfer, produce or process
Hazardous Materials, except in compliance with all applicable federal,
state and local laws or regulations; or
b. a release of Hazardous Materials onto the Premises or any
other property as a result of any intentional or unintentional act or
omission on the part of Tenant.
40.04 Tenant shall comply with all applicable federal, state and
local laws, ordinances, rules and regulations related to Hazardous Materials,
whenever and by whomever enacted or made effective. Tenant shall obtain and
comply with all approvals, registrations or permits required under such laws,
ordinances, rules and regulations.
40.05 Tenant shall conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions on, from or
affecting the Premises in accordance with a. all applicable federal, state
and local laws, ordinances, rules, regulations and policies; and b. the
orders and directives of all federal, state and local government authorities.
40.06 Tenant shall defend, indemnify and hold harmless Landlord, and
Landlord's employees, agents, officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs or
expenses of any kind or nature, known or unknown, contingent or otherwise
(including without limitation, accountants' and attorneys' fees at both the
trial and appellate levels, consultant fees, investigation and laboratory
fees, court costs and litigation expenses), arising out of, or in any way
related to:
a. the presence, disposal, release or threatened release of
any Hazardous Materials which are on, from or affecting the soil,
surface waters, subsurface ground waters, water vegetation, buildings,
personal property, persons, animals or otherwise;
b. any personal injury, including wrongful death, or damage
to property, real or personal, arising out of or related to such
Hazardous Materials;
c. any lawsuit brought, threatened or settled or governmental
order related to such Hazardous Materials; and/or;
<PAGE>
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LEASE AGREEMENT-Raymond J. & Jean A. Prossen and Bright Technologies, Inc.
d. any violation of laws, orders, regulations, requirements
or demands of governmental authorities or of any policies or
requirements of Lender which are based upon or in any way related
to such Hazardous Materials.
40.07 In the event that the Lease is terminated or otherwise expires
according to its terms, Tenant shall deliver the Premises to Landlord free of
any and all Hazardous Materials so that the condition of the Premises shall
conform with all applicable federal, state and local laws, ordinances, rules
and regulations affecting the Property.
40.08 The term "Hazardous Materials" includes, without limitation,
asbestos, urea, formaldehyde, the group of organic compounds known as
polychlorinated biphenyl, or any flammable explosives, radioactive materials,
hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials defined: (e) in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601
et seq.); (f) the Hazardous Materials Transportation Act, as amended (49
U.S.C. Section 1801 et seq.); (g) the Resource Conversation and Recovery Act
of 1978, as amended (42 U.S.C. Section 6901 et seq.); (h) the regulations
adopted and publications promulgated pursuant to the foregoing; and (i) any
other federal, state or local environmental law, ordinance, rule or
regulation.
40.09 The provisions of this paragraph shall be in addition to any
and all other obligations and liabilities Tenant may have to Landlord at
common law and shall survive the termination of the Lease.
40.10 For purposes of this Section 43, "Tenant" shall include,
without limitation, any and all subtenants, assignees, licensees, invitees
and guests of Tenant.
40.11 Failure to comply with the provisions of this Section 40 shall
constitute a Default under the Lease.
41. SPECIAL PROVISIONS
41.01 An annual rental increase of two and one-half percent (2.5%)
will be assessed starting on the first day of the anniversary date of the
second full year term of this Lease and every year thereafter until the last
day of this lease term.
41.02 Before the beginning of each lease year during the Term,
beginning on the first anniversary of the Commencement Date and on each
succeeding annual anniversary of the Commencement Date thereafter during the
Term, Landlord shall furnish Tenant with Landlord's estimate of the Real
Estate Taxes for the following lease year. By the first day of each month
during such lease year, Tenant shall pay 1/12th of its Proportionate Share of
the estimated increases, if any, in Real Estate Taxes for such lease year.
41.03 Any other present or future taxes or governmental charges that
are imposed upon Landlord, or assessed against the Building or the land upon
which the Building is situated; including, but not limited to, any tax levied
on or measured by the rents payable by tenants of the Building which is in
the nature of, or in substitution for, real estate taxes. Any inheritance,
estate, gift, franchise, corporation, income, or net profits tax which may be
assessed against Landlord and/or the Building shall be excluded.
41.04 In the event any installment of Rent due hereunder is not paid
within five (5) calendar days after it is due, then Tenant shall also pay to
Landlord as Additional Rent a late payment fee equal to five percent (5%) of
such delinquent Rent for each and every month or part thereof that such Rent
remains unpaid.
<PAGE>
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LEASE AGREEMENT-Raymond J. & Jean A. Prossen and Bright Technologies, Inc.
IN WITNESS WHEREOF, the parties hereto have affixed their hand and seals, or
when appropriate have caused this instrument to be executed by duly
authorized officers with the appropriate seal of the organization, the day
and year first above written.
As to Landlord, signed, sealed and delivered:
/s/ Raymond J. Prossen Aug. 30, 1996
- --------------------------------------- ------------------------------
Raymond J. Prossen Date
The foregoing instrument was acknowledged before me this 30th day of
August, 1996, by Raymond J. Prossen who are personally known to me.
/s/ Kim Solosky [SEAL] Kim Solosky
- ---------------------------- My Commission #CC427000 Expires
Kim Solosky, Notary Public December 18, 1998
State of Florida [Illegible]
My Commission Expires:
As to Tenant, Don Nelson of Bright Technologies, Inc., signed, sealed and
delivered:
/s/ Don Nelson Aug. 30, 1996
- ---------------------------- ------------------------------
Don Nelson, C.E.O. Date
Bright Technologies, Inc.
The foregoing instrument was acknowledged before me this 30th day of
August 1996, by Don Nelson who is personally known to me or who produced
_____________________________ as identification.
/s/ Kim Solosky [SEAL] Kim Solosky
- ---------------------------- My Commission [Illegible] Expires
Notary Public December [Illegible]
State of Florida [Illegible]
My Commission Expires:
<PAGE>
Exhibit 10.12
bright-technologies.com, inc.
1999 STOCK OPTION PLAN
Adopted Effective April 23, 1999
<PAGE>
TABLE OF CONTENTS
ARTICLE I PURPOSE OF PLAN..............................................1
ARTICLE II EFFECTIVE DATE AND TERM OF PLAN.............................1
2.1 TERM OF PLAN.......................................................1
2.2 EFFECT ON STOCK OPTIONS............................................1
2.3 SHAREHOLDER APPROVAL...............................................1
ARTICLE III SHARES SUBJECT TO PLAN.....................................1
3.1 NUMBER OF SHARES...................................................1
3.2 SOURCE OF SHARES...................................................1
3.3 AVAILABILITY OF UNUSED SHARES......................................2
3.4 ADJUSTMENT PROVISIONS..............................................2
3.5 RESERVATION OF SHARES..............................................2
ARTICLE IV ADMINISTRATION OF PLAN......................................3
4.1 ADMINISTERING BODY.................................................3
4.2 AUTHORITY OF ADMINISTERING BODY....................................3
4.3 NO LIABILITY.......................................................4
4.4 AMENDMENTS.........................................................4
4.5 OTHER COMPENSATION PLANS...........................................5
4.6 PLAN BINDING ON SUCCESSORS.........................................5
4.7 REFERENCES TO SUCCESSOR STATUTES, REGULATIONS AND RULES............5
4.8 ISSUANCES FOR COMPENSATION PURPOSES ONLY...........................5
4.9 INVALID PROVISIONS.................................................5
4.10 GOVERNING LAW.....................................................6
ARTICLE V GENERAL AWARD PROVISIONS.....................................6
5.1 PARTICIPATION IN THE PLAN..........................................6
5.2 STOCK OPTION DOCUMENTS.............................................6
5.3 EXERCISE OF STOCK OPTIONS..........................................6
5.4 PAYMENT FOR STOCK OPTIONS..........................................7
5.5 NO EMPLOYMENT RIGHTS...............................................7
5.6 RESTRICTIONS UNDER APPLICABLE LAWS AND REGULATIONS.................8
5.7 ADDITIONAL CONDITIONS..............................................9
5.8 NO PRIVILEGES OF STOCK OWNERSHIP...................................9
5.9 NONASSIGNABILITY...................................................9
5.10 INFORMATION TO OPTIONEES.........................................10
5.11 WITHHOLDING TAXES................................................10
5.12 LEGENDS ON STOCK OPTIONS AND STOCK CERTIFICATES..................10
5.13 EFFECT OF TERMINATION OF EMPLOYMENT ON STOCK OPTIONS.............11
5.14 LIMITS ON STOCK OPTIONS TO CERTAIN ELIGIBLE PERSONS..............11
ARTICLE VI STOCK OPTIONS..............................................12
6.1 NATURE OF STOCK OPTIONS...........................................12
6.2 OPTION EXERCISE PRICE.............................................12
6.3 OPTION PERIOD AND VESTING.........................................12
6.4 SPECIAL PROVISIONS REGARDING INCENTIVE STOCK OPTIONS..............12
ARTICLE VII REORGANIZATIONS...........................................13
7.1 CORPORATE TRANSACTIONS NOT INVOLVING A CHANGE IN CONTROL..........13
7.2 CORPORATE TRANSACTIONS INVOLVING A CHANGE IN CONTROL..............13
ARTICLE VIII DEFINITIONS..............................................14
i
<PAGE>
bright technologies.com, inc.
1999 STOCK OPTION PLAN
-------------------------------------------------------
ARTICLE I
PURPOSE OF PLAN
The Company has adopted this Plan to promote the interests of the Company
and its shareholders by using investment interests in the Company to attract,
retain and motivate its management and other persons, to encourage and reward
their contributions to the performance of the Company and to align their
interests with the interests of the Company's shareholders. Capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in Article
VIII.
ARTICLE II
EFFECTIVE DATE AND TERM OF PLAN
2.1 Term of Plan. This Plan became effective as of the Effective Date and
shall continue in effect until the Expiration Date, at which time this Plan
shall automatically terminate.
2.2 Effect on Stock Options. Stock Options may be granted during the Plan
Term, but no Stock Options may be granted after the Plan Term. Notwithstanding
the foregoing, each Stock Option properly granted under this Plan during the
Plan Term shall remain in effect after termination of this Plan until such Stock
Option has been exercised, terminated or expired in accordance with its terms
and the terms of this Plan.
2.3 Shareholder Approval. This Plan shall be approved by the Company's
shareholders within 12 months after the Effective Date. The effectiveness of any
Stock Options granted prior to such shareholder approval shall be subject to
such shareholder approval.
ARTICLE III
SHARES SUBJECT TO PLAN
3.1 Number of Shares. The maximum number of shares of Common Stock that
may be issued pursuant to Stock Options granted under this Plan shall be
200,000, subject to adjustment as set forth in Section 3.4.
3.2 Source of Shares. The Common Stock to be issued under this Plan will
be made available, at the discretion of the Board, either from authorized but
unissued shares of Common Stock or from previously issued shares of Common Stock
reacquired by the Company, including without limitation shares purchased on the
open market.
<PAGE>
3.3 Availability of Unused Shares. Shares of Common Stock subject to
unexercised portions of any Stock Option granted under this Plan that expire,
terminate or are canceled, and shares of Common Stock issued pursuant to Stock
Options under this Plan that are reacquired by the Company pursuant to the terms
of the Stock Options under which such shares were issued, will again become
available for the grant of further Stock Options under this Plan.
3.4 Adjustment Provisions.
(a) If (i) the outstanding shares of Common Stock of the Company are
increased, decreased or exchanged for a different number or kind of shares or
other securities, or if additional shares or new or different shares or other
securities are distributed in respect of such shares of Common Stock (or any
stock or securities received with respect to such Common Stock), through merger,
consolidation, sale or exchange of all or substantially all of the assets of the
Company, reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split, spin-off or other distribution with respect to
such shares of Common Stock (or any stock or securities received with respect to
such Common Stock), or (ii) the value of the outstanding shares of Common Stock
of the Company is reduced by reason of an extraordinary cash dividend, an
appropriate and proportionate adjustment may be made in (1) the maximum number
and kind of shares subject to this Plan as provided in Section 3.1, (2) the
number and kind of shares or other securities subject to then outstanding Stock
Options and/or (3) the price for each share or other unit of any other
securities subject to then outstanding Stock Options.
(b) No fractional interests will be issued under this Plan resulting from
any adjustments.
(c) To the extent any adjustments relate to stock or securities of the
Company, such adjustments shall be made by the Administering Body, whose
determination in that respect shall be final, binding and conclusive.
(d) The grant of Stock Options pursuant to this Plan shall not affect in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
(e) No adjustment to the terms of an Incentive Stock Option shall be made
unless such adjustment either (i) would not cause such Option to lose its status
as an Incentive Stock Option or (ii) is agreed to in writing by the
Administering Body and the Recipient.
3.5 Reservation of Shares. The Company will at all times reserve and keep
available such number of shares of Common Stock as shall equal at least the
number of shares of Common Stock subject to then outstanding Stock Options
issuable in shares of Common Stock under this Plan.
2
<PAGE>
ARTICLE IV
ADMINISTRATION OF PLAN
4.1 Administering Body.
(a) Subject to the provisions of Section 4.1(b)(ii), this Plan shall be
administered by the Board or by the Stock Option Plan Committee of the Board
appointed pursuant to Section 4.1(b).
(b) (i) The Board in its sole discretion may from time to time appoint a
Stock Option Plan Committee of not less than two Board members to administer
this Plan and, subject to applicable law, to exercise all of the powers,
authority and discretion of the Board under this Plan. The Board may from time
to time increase or decrease (but not below two) the number of members of the
Stock Option Plan Committee, remove from membership on the Stock Option Plan
Committee all or any portion of its members, and/or appoint such person or
persons as it desires to fill any vacancy existing on the Stock Option Plan
Committee, whether caused by removal, resignation or otherwise. The Board may
disband the Stock Option Plan Committee at any time and revest in the Board the
administration of this Plan.
(ii) Notwithstanding the foregoing provisions of this Section 4.1(b)
to the contrary, so long as the Company remains an Exchange Act Registered
Company, (1) the Board shall appoint the Stock Option Plan Committee, (2) this
Plan shall be administered by the Stock Option Plan Committee and (3) each
member of the Stock Option Plan Committee shall be a Non-employee Director, and,
in addition, if Stock Options are to be made to persons subject to Section
162(m) of the IRC and such Stock Options are intended to constitute
Performance-Based Compensation, then each member of the Stock Option Plan
Committee shall, in addition to being a Non-employee Director, be an Outside
Director.
(iii) The Stock Option Plan Committee shall report to the Board the
names of Eligible Persons granted Stock Options, the number of shares of Common
Stock covered by each Stock Option and the terms and conditions of each such
Stock Option.
4.2 Authority of Administering Body
(a) Subject to the express provisions of this Plan, the Administering Body
shall have the power to interpret and construe this Plan and any Stock Option
Documents or other documents defining the rights and obligations of the Company
and Optionees hereunder and thereunder, to determine all questions arising
hereunder and thereunder, to adopt and amend such rules and regulations for the
administration hereof and thereof as it may deem desirable, and otherwise to
carry out the terms of this Plan and such Stock Option Documents and other
documents. The interpretation and construction by the Administering Body of any
provisions of this Plan or of any Stock Option shall be conclusive and binding.
Any action taken by, or inaction of, the Administering Body relating to this
Plan or any Stock Options shall be within the absolute discretion of the
Administering Body and shall be conclusive and binding upon all persons. Subject
only to compliance with the express provisions hereof, the Administering Body
may act in its absolute discretion in matters related to this Plan and any and
all Stock Options.
3
<PAGE>
(b) Subject to the express provisions of this Plan, the Administering Body
may from time to time in its discretion select the Eligible Persons to whom, and
the time or times at which, Stock Options shall be granted, the nature of each
Stock Option, the number of shares of Common Stock that make up or underlie each
Stock Option, the period for the exercise of each Stock Option, and such other
terms and conditions applicable to each individual Stock Option as the
Administering Body shall determine. The Administering Body may grant at any time
new Stock Options to an Eligible Person who has previously received Stock
Options whether such prior Stock Options are still outstanding, have previously
been exercised as a whole or in part, or are canceled in connection with the
issuance of new Stock Options. The Administering Body may grant Stock Options
singly, in combination or in tandem with other Stock Options, as it determines
in its discretion. Any and all terms and conditions of the Stock Options,
including exercise price, may be established by the Administering Body without
regard to existing Stock Options.
(c) Any action of the Administering Body with respect to the
administration of this Plan shall be taken pursuant to a majority vote of the
authorized number of members of the Administering Body or by the unanimous
written consent of its members; provided, however, that (i) if the Administering
Body is the Stock Option Plan Committee and consists of two members, then
actions of the Administering Body must be unanimous and (ii) if the
Administering Body is the Board, actions taken at a meeting of the Board shall
be valid if approved by directors constituting a majority of the required quorum
for such meeting.
4.3 No Liability. No member of the Board or the Stock Option Plan
Committee or any designee thereof will be liable for any action or inaction with
respect to this Plan or any Stock Option or any transaction arising under this
Plan or any Stock Option, except in circumstances constituting bad faith of such
member.
4.4 Amendments.
(a) The Administering Body may, insofar as permitted by applicable law,
rule or regulation, from time to time suspend or discontinue this Plan or revise
or amend it in any respect whatsoever, and this Plan as so revised or amended
will govern all Stock Options hereunder, including those granted before such
revision or amendment; provided, however, that no such revision or amendment
shall alter, impair or diminish any rights or obligations under any Stock Option
previously granted under this Plan, without the written consent of the Optionee.
Without limiting the generality of the foregoing, the Administering Body is
authorized to amend this Plan to comply with or take advantage of amendments to
applicable laws, rules or regulations, including amendments to the Securities
Act, Exchange Act or the IRC or any rules or regulations promulgated thereunder.
No shareholder approval of any amendment or revision shall be required unless
(i) such approval is required by applicable law, rule or regulation or (ii) an
amendment or revision to this Plan would materially increase the number of
shares subject to this Plan (as adjusted under Section 3.4), materially modify
the requirements as to eligibility for participation in this Plan, extend the
final date upon which Stock Options may be granted under this Plan, or otherwise
materially increase the benefits accruing to Recipients in a manner not
specifically contemplated herein, or affect this Plan's compliance with Rule
16b-3 or applicable provisions of or regulations under the IRC, and shareholder
approval of the amendment or
4
<PAGE>
revision is required to comply with Rule 16b-3 or applicable provisions of or
rules under the IRC.
(b) The Administering Body may, with the written consent of an Optionee,
make such modifications in the terms and conditions of a Stock Option as it
deems advisable. Without limiting the generality of the foregoing, the
Administering Body may, in its discretion with the written consent of Optionee,
at any time and from time to time after the grant of any Stock Option accelerate
or extend the vesting or exercise period of any Stock Option as a whole or in
part, and adjust or reduce the exercise price of Stock Options held by such
Optionee by cancellation of such Stock Options and granting of Stock Options at
lower or exercise prices or by modification, extension or renewal of such Stock
Options. In the case of Incentive Stock Options, Recipients acknowledge that
extensions of the exercise period may result in the loss of the favorable tax
treatment afforded incentive stock options under Section 422 of the IRC.
(c) Except as otherwise provided in this Plan or in the applicable Stock
Option Document, no amendment, revision, suspension or termination of this Plan
will, without the written consent of the Optionee, alter, terminate, impair or
adversely affect any right or obligation under any Stock Option previously
granted under this Plan.
4.5 Other Compensation Plans. The adoption of this Plan shall not affect
any other stock option, incentive or other compensation plans in effect for the
Company, and this Plan shall not preclude the Company from establishing any
other forms of incentive or other compensation for employees, directors,
advisors or consultants of the Company, whether or not approved by shareholders.
4.6 Plan Binding on Successors. This Plan shall be binding upon the
successors and assigns of the Company.
4.7 References to Successor Statutes, Regulations and Rules. Any reference
in this Plan to a particular statute, regulation or rule shall also refer to any
successor provision of such statute, regulation or rule.
4.8 Issuances for Compensation Purposes Only. This Plan constitutes an
"employee benefit plan" as defined in Rule 405 promulgated under the Securities
Act. Stock Options to eligible employees or directors shall be granted for any
lawful consideration, including compensation for services rendered, promissory
notes or otherwise. Stock Options to consultants and advisors shall be granted
only in exchange for bona fide services rendered by such consultants or advisors
and such services must not be in connection with the offer and sale of
securities in a capital-raising transaction.
4.9 Invalid Provisions. In the event that any provision of this Plan is
found to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any other
provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though the
invalid and unenforceable provision were not contained herein.
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4.10 Governing Law. This Agreement shall be governed by and interpreted in
accordance with the internal laws of the State of Delaware, without giving
effect to the principles of the conflicts of laws thereof.
ARTICLE V
GENERAL AWARD PROVISIONS
5.1 Participation in the Plan.
(a) A person shall be eligible to receive grants of Stock Options under
this Plan if, at the time of the grant of the Stock Option, such person is an
Eligible Person.
(b) Incentive Stock Options may be granted only to Eligible Persons
meeting the employment requirements of Section 422 of the IRC.
(c) Notwithstanding anything to the contrary herein, the Administering
Body may, in order to fulfill the purposes of this Plan, modify grants of Stock
Options to Recipients who are foreign nationals or employed outside of the
United States to recognize differences in applicable law, tax policy or local
custom.
5.2 Stock Option Documents.
(a) Each Stock Option granted under this Plan shall be evidenced by an
agreement duly executed on behalf of the Company and by the Recipient or, in the
Stock Option Plan Committee's discretion, a confirming memorandum issued by the
Company to the Recipient, setting forth such terms and conditions applicable to
the Stock Option as the Stock Option Plan Committee may in its discretion
determine. Stock Option Documents may but need not be identical and shall comply
with and be subject to the terms and conditions of this Plan, a copy of which
shall be provided to each Recipient and incorporated by reference into each
Stock Option Document. Any Stock Option Document may contain such other terms,
provisions and conditions not inconsistent with this Plan as may be determined
by the Stock Option Plan Committee.
(b) In case of any conflict between this Plan and any Stock Option
Document, this Plan shall control.
5.3 Exercise of Stock Options. No Stock Option shall be exercisable except
in respect of whole shares, and fractional share interests shall be disregarded.
Not less than 100 shares of Common Stock (or such other amount as is set forth
in the applicable Stock Option Documents) may be purchased at one time and Stock
Options must be exercised in multiples of 100 unless the number purchased is the
total number at the time available for purchase under the terms of the Stock
Option. A Stock Option shall be deemed to be exercised when the Secretary or
other designated official of the Company receives written notice of such
exercise from the Optionee, together with payment of the exercise price made in
accordance with Section 5.4 and any amounts required under Section 5.11.
Notwithstanding any other provision of this Plan, the Administering Body may
impose, by rule and/or in Stock Option Documents, such conditions upon the
exercise of Stock Options (including without limitation conditions limiting the
time of
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exercise to specified periods) as may be required to satisfy applicable
regulatory requirements, including without limitation Rule 16b-3 and Rule 10b-5
under the Exchange Act, and any amounts required under Section 5.12 or other
applicable section of or regulation under the IRC.
5.4 Payment For Stock Options.
(a) The exercise price or other payment for a Stock Option shall be
payable upon the exercise of a Stock Option pursuant to a Stock Option granted
hereunder by delivery of legal tender of the United States or payment of such
other consideration as the Administering Body may from time to time deem
acceptable in any particular instance.
(b) The Company may assist any person to whom Stock Options are granted
hereunder (including without limitation any officer or director of the Company)
in the payment of the exercise price or other amounts payable in connection with
the receipt or exercise of that Stock Option, by lending such amounts to such
person on such terms and at such rates of interest and upon such security (if
any) as shall be approved by the Administering Body.
(c) In the discretion of the Administering Body, Stock Options may be
exercised by matured capital stock of the Company (i.e., owned longer than six
months) delivered in transfer to the Company by or on behalf of the person
exercising the Stock Option and duly endorsed in blank or accompanied by stock
powers duly endorsed in blank, with signatures guaranteed in accordance with the
Exchange Act if required by the Administering Body (valued at Fair Market Value
as of the exercise date); or such other consideration as the Administering Body
may from time to time in the exercise of its discretion deem acceptable in any
particular instance; provided, however, that the Administering Body may, in the
exercise of its discretion, (i) allow exercise of Stock Options in a
broker-assisted or similar transaction in which the exercise price is not
received by the Company until promptly after exercise, and/or (ii) allow the
Company to loan the exercise price to the Optionee, if the exercise will be
followed by a prompt sale of some or all of the underlying shares and a portion
of the sale proceeds is dedicated to full payment of the exercise price and
amounts required pursuant to Section 5.11.
5.5 No Employment Rights. Nothing contained in this Plan (or in Stock
Option Documents or in any other documents related to this Plan or to Stock
Options granted hereunder) shall confer upon any Eligible Person or Recipient
any right to continue in the employ of the Company or any Affiliated Entity or
constitute any contract or agreement of employment or engagement, or interfere
in any way with the right of the Company or any Affiliated Entity to reduce such
person's compensation or other benefits or to terminate the employment or
engagement of such Eligible Person or Recipient, with or without cause. Except
as expressly provided in this Plan or in any statement evidencing the grant of
Stock Options pursuant to this Plan, the Company shall have the right to deal
with each Recipient in the same manner as if this Plan and any such statement
evidencing the grant of Stock Options pursuant to this Plan did not exist,
including without limitation with respect to all matters related to the hiring,
discharge, compensation and conditions of the employment or engagement of the
Recipient. Any questions as to whether and when there has been a termination of
a Recipient's employment or engagement, the reason (if any) for such
termination, and/or the consequences thereof under the terms of this Plan or any
statement evidencing the grant of Stock Options pursuant to this Plan
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shall be determined by the Administering Body and the Administering Body's
determination thereof shall be final and binding.
5.6 Restrictions Under Applicable Laws and Regulations.
(a) All Stock Options granted under this Plan shall be subject to the
requirement that, if at any time the Company shall determine, in its discretion,
that the listing, registration or qualification of the shares subject to Stock
Options granted under this Plan upon any securities exchange or under any
federal, state or foreign law, or the consent or approval of any government
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Stock Options or the issuance, if any, or purchase of
shares in connection therewith, such Stock Options may not be exercised as a
whole or in part unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Company. During the term of this Plan, the Company will
use its reasonable efforts to seek to obtain from the appropriate regulatory
agencies any requisite qualifications, consents, approvals or authorizations in
order to issue and sell such number of shares of its Common Stock as shall be
sufficient to satisfy the requirements of this Plan. The inability of the
Company to obtain from any such regulatory agency having jurisdiction thereof
the qualifications, consents, approvals or authorizations deemed by the Company
to be necessary for the lawful issuance and sale of any shares of its Common
Stock hereunder shall relieve the Company of any liability in respect of the
nonissuance or sale of such stock as to which such requisite authorization shall
not have been obtained.
(b) The Company shall be under no obligation to register or qualify the
issuance of Stock Options or underlying shares under the Securities Act or
applicable state securities laws. Unless the issuance of Stock Options and
underlying shares have been registered under the Securities Act and qualified or
registered under applicable state securities laws, the Company shall be under no
obligation to issue any Stock Options or underlying shares of Common Stock
covered by any Stock Options unless the Stock Options and underlying shares may
be issued pursuant to applicable exemptions from such registration or
qualification requirements. In connection with any such exempt issuance, the
Administering Body may require the Optionee to provide a written representation
and undertaking to the Company, satisfactory in form and scope to the Company
and upon which the Company may reasonably rely, that such Optionee is acquiring
such Stock Options and underlying shares for such Optionee's own account as an
investment and not with a view to, or for sale in connection with, the
distribution of any such shares of stock, and that such person will make no
transfer of the same except in compliance with any rules and regulations in
force at the time of such transfer under the Securities Act and other applicable
law, and that if shares of stock are issued without such registration, a legend
to this effect (together with any other legends deemed appropriate by the
Administering Body) may be endorsed upon the securities so issued. The Company
may also order its transfer agent to stop transfers of such shares. The
Administering Body may also require the Optionee to provide the Company such
information and other documents as the Administering Body may request in order
to satisfy the Administering Body as to the investment sophistication and
experience of the Optionee and as to any other conditions for compliance with
any such exemptions from registration or qualification.
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5.7 Additional Conditions. Any Stock Option may also be subject to such
other provisions (whether or not applicable to any other Stock Option or
Optionee) as the Administering Body determines appropriate including without
limitation provisions to assist the Optionee in financing the purchase of Common
Stock through the exercise of Stock Options, provisions for the forfeiture of or
restrictions on resale or other disposition of shares of Common Stock acquired
under any form of benefit, provisions giving the Company the right to repurchase
shares of Common Stock acquired under any form of benefit in the event the
Optionee elects to dispose of such shares, and provisions to comply with federal
and state securities laws and federal and state income tax withholding
requirements.
5.8 No Privileges of Stock Ownership. Except as otherwise set forth
herein, an Optionee shall have no rights as a shareholder with respect to any
shares issuable or issued in connection with the Stock Option until the date of
the receipt by the Company of all amounts payable in connection with exercise of
the Stock Option and performance by the Optionee of all obligations thereunder.
Status as an Eligible Person shall not be construed as a commitment that any
Stock Option will be granted under this Plan to an Eligible Person or to
Eligible Persons generally. No person shall have any right, title or interest in
any fund or in any specific asset (including shares of capital stock) of the
Company by reason of any Stock Option granted hereunder. Neither this Plan (or
any documents related hereto) nor any action taken pursuant hereto (or thereto)
shall be construed to create a trust of any kind or a fiduciary relationship
between the Company and any Person. To the extent that any Person acquires a
right to receive Stock Options hereunder, such right shall be no greater than
the right of any unsecured general creditor of the Company.
5.9 Nonassignability. No Stock Option granted under this Plan shall be
assignable or transferable except (a) by will or by the laws of descent and
distribution, or (b) subject to the final sentence of this Section 5.9, upon
dissolution of marriage pursuant to a qualified domestic relations order or, in
the discretion of the Administering Body and under circumstances that would not
adversely affect the interests of the Company, pursuant to a nominal transfer
that does not result in a change in beneficial ownership; provided, however,
that the Administering Body may in the applicable Stock Option Document
evidencing Stock Options granted hereunder or at any time thereafter provide
that Stock Options granted hereunder may be transferred without consideration by
the Recipient, subject to such rules as the Administering Body may adopt to
preserve the purposes of the Plan, to one or more Permitted Transferees;
provided further, that the Recipient gives the Administering Body advance
written notice describing the terms and conditions of the proposed transfer and
the Administering Body notifies the Recipient in writing that such transfer
would comply with the requirements of the Plan and any applicable Stock Option
Document. The terms of any Stock Option transferred to Permitted Transferees in
accordance with the immediately preceding sentence shall apply to the Permitted
Transferee, except that (a) Permitted Transferees shall not be entitled to
transfer any Stock Options, other than by will or the laws of descent and
distribution; and (b) Permitted Transferees shall not be entitled to exercise
any transferred Stock Options unless there shall be in effect a registration
statement on an appropriate form covering the shares of Common Stock to be
acquired pursuant to the exercise of such Stock Option if the Administering Body
determines that such a registration statement is necessary or appropriate.
During the lifetime of an Optionee, Stock
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Options shall be exercisable only by the Optionee or such person's guardian or
legal representative.
Notwithstanding the foregoing, (a) no Stock Option owned by an Optionee
subject to Section 16 of the Exchange Act may be assigned or transferred in any
manner inconsistent with Rule 16b-3, and (b) Incentive Stock Options (or other
Stock Options subject to transfer restrictions under the IRC) may not be
assigned or transferred in violation of Section 422(b)(5) of the IRC (or any
comparable or successor provision) or the regulations thereunder, and nothing
herein is intended to allow such assignment or transfer.
5.10 Information to Optionees.
(a) The Administering Body in its sole discretion shall determine what, if
any, financial and other information shall be provided to Optionees and when
such financial and other information shall be provided after giving
consideration to applicable federal and state laws, rules and regulations,
including without limitation applicable federal and state securities laws, rules
and regulations.
(b) The furnishing of financial and other information that is confidential
to the Company shall be subject to the Optionee's agreement that the Optionee
shall maintain the confidentiality of such financial and other information,
shall not disclose such information to third parties, and shall not use the
information for any purpose other than evaluating an investment in the Company's
securities under this Plan. The Administering Body may impose other restrictions
on the access to and use of such confidential information and may require an
Optionee to acknowledge the Optionee's obligations under this Section 5.10(b)
(which acknowledgment shall not be a condition to the Optionee's obligations
under this Section 5.10(b)).
5.11 Withholding Taxes. Whenever the granting, vesting or exercise of any
Stock Option granted under this Plan, or the transfer of any shares issued upon
exercise of any Stock Option, gives rise to tax or tax withholding liabilities
or obligations, the Administering Body shall have the right to require the
Optionee to remit to the Company an amount sufficient to satisfy any federal,
state and local withholding tax requirements prior to issuance of such shares.
The Administering Body may, in the exercise of its discretion, allow
satisfaction of tax withholding requirements by accepting delivery of stock of
the Company (or by withholding a portion of the stock otherwise issuable in
connection with Stock Options).
5.12 Legends on Stock Options and Stock Certificates. Each Stock Option
Document and each certificate representing shares acquired upon exercise of
Stock Options shall be endorsed with all legends, if any, required by applicable
federal and state securities and other laws to be placed on the Stock Option
Document and/or the certificate. The determination of which legends, if any,
shall be placed upon Stock Option Documents or the certificates shall be made by
the Administering Body in its sole discretion and such decision shall be final
and binding.
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5.13 Effect of Termination of Employment on Stock Options.
(a) Termination for Just Cause. Subject to Section 5.13(c), and except as
otherwise provided in a written agreement between the Company and the Optionee
which may be entered into at any time before or after termination of employment
of the Recipient, in the event of a Just Cause Dismissal of a Recipient, all of
the Optionee's unexercised Stock Options, whether or not vested, shall expire
and become unexercisable as of the date of such Just Cause Dismissal.
(b) Termination Other than for Just Cause Dismissal. Subject to Section
5.13(c) and except as otherwise provided in a written agreement between the
Company and the Optionee, which may be entered into at any time before or after
termination of employment, in the event of a Recipient's termination of
employment for:
(i) any reason other than for Just Cause Dismissal, death, Permanent
Disability or normal retirement, the Optionee's Stock Options, whether or not
vested, shall expire and become unexercisable as of the earlier of (A) the date
such Stock Options would expire in accordance with their terms had the Recipient
remained employed and (B) 30 days after the date of employment termination.
(ii) death, Permanent Disability or normal retirement, the
Optionee's unexercised Stock Options shall, whether or not vested, expire and
become unexercisable as of the earlier of (A) the date such Stock Options would
expire in accordance with their terms had the Recipient remained employed and
(B) six months after the date of employment termination.
(c) Alteration of Vesting and Exercise Periods. Notwithstanding anything
to the contrary in Section 5.13(a) or Section 5.13(b), the Administering Body
may in its discretion designate shorter or longer periods to exercise Stock
Options following a Recipient's termination of employment; provided, however,
that any shorter periods determined by the Administering Body shall be effective
only if provided for in the instrument that evidences the grant to the Optionee
of such Stock Options or if such shorter period is agreed to in writing by the
Optionee. Notwithstanding anything to the contrary herein, Stock Options shall
be exercisable by a an Optionee following such Optionee's termination of
employment only to the extent that installments thereof had become exercisable
on or prior to the date of such termination; and provided, further, that the
Administering Body may, in its discretion, elect to accelerate the vesting of
all or any portion of any Stock Options that had not become exercisable on or
prior to the date of such termination.
(d) Leave of Absence. In the case of any employee on an approved leave of
absence, the Administering Body may make such provision respecting continuance
of Stock Options as the Administering Body in its discretion deems appropriate,
except that in no event shall a Stock Option be exercisable after the date such
Stock Option would expire in accordance with its terms had the Recipient
remained continuously employed.
5.14 Limits on Stock Options to Certain Eligible Persons. Notwithstanding
any other provision of this Plan, in order for the compensation attributable to
Stock Options hereunder to qualify as Performance-Based Compensation, no one
Eligible Person shall be
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granted any Stock Options with respect to more than [50,000] shares of Common
Stock in any one calendar year. The limitation set forth in this Section 5.14
shall be subject to adjustment as provided in Section 3.4 or under Article VII,
but only to the extent such adjustment would not affect the status of
compensation attributable to Stock Options hereunder as Performance-Based
Compensation.
ARTICLE VI
STOCK OPTIONS
6.1 Nature of Stock Options. Stock Options may be Incentive Stock Options
or Non-qualified Stock Options.
6.2 Option Exercise Price. The exercise price for each Stock Option shall
be determined by the Administering Body as of the date such Stock Option is
granted. The exercise price shall be no less than the Fair Market Value of the
Common Stock subject to the Option. The Administering Body may, with the consent
of the Optionee and subject to compliance with statutory or administrative
requirements applicable to Incentive Stock Options, amend the terms of any Stock
Option to provide that the exercise price of the shares remaining subject to the
Stock Option shall be reestablished at a price not less than 100% of the Fair
Market Value of the Common Stock on the effective date of the amendment. No
modification of any other term or provision of any Stock Option that is amended
in accordance with the foregoing shall be required, although the Administering
Body may, in its discretion, make such further modifications of any such Stock
Option as are not inconsistent with this Plan.
6.3 Option Period and Vesting. Stock Options granted hereunder shall vest
and may be exercised as determined by the Administering Body, except that
exercise of such Stock Options after termination of the Recipient's employment
shall be subject to Section 5.13. Each Stock Option granted hereunder and all
rights or obligations thereunder shall expire on such date as shall be
determined by the Administering Body, but not later than 10 years after the date
the Stock Option is granted and shall be subject to earlier termination as
provided herein or in the Stock Option Document. The Administering Body may, in
its discretion at any time and from time to time after the grant of a Stock
Option, accelerate vesting of such Option as a whole or in part by increasing
the number of shares then purchasable, provided that the total number of shares
subject to such Stock Option may not be increased. Except as otherwise provided
herein, a Stock Option shall become exercisable, as a whole or in part, on the
date or dates specified by the Administering Body and thereafter shall remain
exercisable until the expiration or earlier termination of the Stock Option.
6.4 Special Provisions Regarding Incentive Stock Options.
(a) Notwithstanding anything in this Article VI to the contrary, the
exercise price and vesting period of any Stock Option intended to qualify as an
Incentive Stock Option shall comply with the provisions of Section 422 of the
IRC and the regulations thereunder. As of the Effective Date, such provisions
require, among other matters, that (i) the exercise price must not be less than
the Fair Market Value of the underlying stock as of the date the Incentive Stock
Option is granted, and not less than 110% of the Fair Market Value as of such
date in the case of
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a grant to a Significant Shareholder; and (ii) that the Incentive Stock Option
not be exercisable after the expiration of five years from the date of grant in
the case of an Incentive Stock Option granted to a Significant Shareholder.
(b) The aggregate Fair Market Value (determined as of the respective
date or dates of grant) of the Common Stock for which one or more Options
granted to any Recipient under this Plan (or any other option plan of the
Company or any of its subsidiaries or affiliates) may for the first time become
exercisable as Incentive Stock Options under the federal tax laws during any one
calendar year shall not exceed $100,000.
(c) Any Options granted as Incentive Stock Options pursuant to this
Plan that for any reason fail or cease to qualify as such shall be treated as
Non-qualified Stock Options.
ARTICLE VII
REORGANIZATIONS
7.1 Corporate Transactions Not Involving a Change in Control. If the
Company shall consummate any Reorganization not involving a Change in Control in
which holders of shares of Common Stock are entitled to receive in respect of
such shares any securities, cash or other consideration (including without
limitation a different number of shares of Common Stock), each Stock Option
outstanding under this Plan shall thereafter be exercisable, in accordance with
this Plan, only for the kind and amount of securities, cash and/or other
consideration receivable upon such Reorganization by a holder of the same number
of shares of Common Stock as are subject to that Stock Option immediately prior
to such Reorganization, and any adjustments will be made to the terms of the
Stock Option in the sole discretion of the Administering Body as it may deem
appropriate to give effect to the Reorganization.
7.2 Corporate Transactions Involving a Change in Control. As of the
effective time and date of any Change in Control, this Plan and any then
outstanding Stock Options (whether or not vested) shall automatically terminate
unless (a) provision is made in writing in connection with such transaction for
the continuance of this Plan and for the assumption of such Stock Options, or
for the substitution for such Stock Options of new awards covering the
securities of a successor entity or an affiliate thereof, with appropriate
adjustments as to the number and kind of securities and exercise prices, in
which event this Plan and such outstanding Stock Options shall continue or be
replaced, as the case may be, in the manner and under the terms so provided; or
(b) the Board otherwise has provided or shall provide in writing for such
adjustments as it deems appropriate in the terms and conditions of the
then-outstanding Stock Options (whether or not vested), including without
limitation (i) accelerating the vesting of outstanding Stock Options and/or (ii)
providing for the cancellation of Stock Options and their automatic conversion
into the right to receive the securities, cash and/or other consideration that a
holder of the shares underlying such Stock Options would have been entitled to
receive upon consummation of such Change in Control had such shares been issued
and outstanding immediately prior to the effective date and time of the Change
in Control (net of the appropriate option exercise prices). If, pursuant to the
foregoing provisions of this Section 7.2, this Plan and the Stock Options shall
terminate by reason of the occurrence of a Change in Control without provision
for any of the actions described in clause (a) or (b) hereof, then any Optionee
holding
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outstanding Stock Options shall have the right, at such time immediately prior
to the consummation of the Change in Control as the Board shall designate, to
exercise the Optionee's Stock Options to the full extent not theretofore
exercised, including any installments which have not yet become vested.
ARTICLE VIII
DEFINITIONS
Capitalized terms used in this Plan and not otherwise defined shall have
the meanings set forth below:
"Administering Body" shall mean the Board as long as no Stock Option Plan
Committee has been appointed and is in effect and shall mean the Stock Option
Plan Committee as long as the Stock Option Plan Committee is appointed and in
effect.
"Affiliated Entity" means any Parent Corporation or Subsidiary
Corporation.
"Board" means the Board of Directors of the Company.
"Change in Control" means the following and shall be deemed to occur if
any of the following events occur:
(a) Any Person becomes after the Effective Date the beneficial owner
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or
more of either the then outstanding shares of Common Stock or the combined
voting power of the Company's then outstanding securities entitled to vote
generally in the election of directors; or
(b) Individuals who, as of the effective date hereof, constitute the Board
of Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors of the Company,
provided that any individual who becomes a director after the effective date
hereof whose election, or nomination for election by the Company's shareholders,
is approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered to be a member of the Incumbent Board
unless that individual was nominated or elected by any Person having the power
to exercise, through beneficial ownership, voting agreement and/or proxy, 20% or
more of either the outstanding shares of Common Stock or the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally in the election of directors, in which case that individual shall not
be considered to be a member of the Incumbent Board unless such individual's
election or nomination for election by the Company's shareholders is approved by
a vote of at least two-thirds of the directors then comprising the Incumbent
Board; or
(c) Consummation by the Company of the sale or other disposition by the
Company of all or substantially all of the Company's assets or a reorganization
or merger or consolidation of the Company with any other person, entity or
corporation, other than
(i) a reorganization or merger or consolidation that would result in
the voting securities of the Company outstanding immediately prior thereto
(or, in the case of a
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reorganization or merger or consolidation that is preceded or accomplished
by an acquisition or series of related acquisitions by any Person, by
tender or exchange offer or otherwise, of voting securities representing
5% or more of the combined voting power of all securities of the Company,
immediately prior to such acquisition or the first acquisition in such
series of acquisitions) continuing to represent, either by remaining
outstanding or by being converted into voting securities of another
entity, more than fifty percent (50%) of the combined voting power of the
voting securities of the Company or such other entity outstanding
immediately after such reorganization or merger or consolidation (or
series of related transactions involving such a reorganization or merger
or consolidation), or
(ii) a reorganization or merger or consolidation effected to
implement a recapitalization or reincorporation of the Company (or similar
transaction) that does not result in a material change in beneficial
ownership of the voting securities of the Company or its successor; or
(d) Approval by the shareholders of the Company or any order by a court of
competent jurisdiction of a plan of liquidation of the Company.
Notwithstanding the foregoing, a Change in Control of the type described
in paragraph (b), (c) or (d) shall be deemed to be completed on the date it
occurs, and a Change in Control of the type described in paragraph (a) shall be
deemed to be completed as of the date the entity or group attaining 30% or
greater ownership has elected its representatives to the Company's Board of
Directors and/or caused its nominees to become officers of the Company with the
authority to terminate or alter the terms of employee's employment.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, par value $0.001 per
share, as constituted on the Effective Date of this Plan, and as thereafter
adjusted as a result of any one or more events requiring adjustment of
outstanding Stock Options under Section 3.4 above.
"Company" means bright-technologies.com, inc., a Delaware corporation.
"Effective Date" means April 23, 1999, which is the date this Plan was
adopted by the Board.
"Eligible Person" shall include directors (other than non-employee
directors of the Company), officers, employees, consultants and advisors of the
Company or of any Affiliated Entity.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Act Registered Company" means that the Company has any class of
any equity security registered pursuant to Section 12 of the Exchange Act.
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"Expiration Date" means the tenth anniversary of the Effective Date.
"Fair Market Value" of a share of the Company's capital stock as of a
particular date shall be: (a) if the stock is listed on an established stock
exchange or exchanges (including for this purpose, the Nasdaq National Market),
the average of the highest and lowest sale prices of the stock quoted for such
date as reported in the Transactions Index of each such exchange, as published
in The Wall Street Journal and determined by the Administering Body, or, if no
sale price was quoted in any such Index for such date, then as of the next
preceding date on which such a sale price was quoted; or (b) if the stock is not
then listed on an exchange or the Nasdaq National Market, the average of the
closing bid and asked prices per share for the stock in the over-the-counter
market as quoted on The Nasdaq Small Cap Market on such date (in the case of (a)
or (b), subject to adjustment as and if necessary and appropriate to set an
exercise price not less than 100% of the Fair Market Value of the stock on the
date an option is granted); or (c) if the stock is not then listed on an
exchange or quoted in the over-the-counter market, an amount determined in good
faith by the Administering Body; provided, however, that (i) when appropriate,
the Administering Body, in determining Fair Market Value of capital stock of the
Company, may take into account such other factors as it may deem appropriate
under the circumstances and (ii) if the stock is traded on the Nasdaq Small Cap
Market and both sales prices and bid and asked prices are quoted or available,
the Administering Body may elect to determine Fair Market Value under either
clause (i) or (ii) above. Notwithstanding the foregoing, the Fair Market Value
of capital stock for purposes of grants of Incentive Stock Options shall be
determined in compliance with applicable provisions of the IRC.
"Immediate Family" means the Recipient's spouse, children or grandchildren
(including adopted and stepchildren and grandchildren).
"Incentive Stock Option" means a Stock Option that qualifies as an
incentive stock option under Section 422 of the IRC, or any successor statute
thereto.
"IRC" means the Internal Revenue Code of 1986, as amended.
"Just Cause Dismissal" shall mean a termination of a Recipient's
employment for any of the following reasons: (a) the Recipient violates any
reasonable rule or regulation of the Board, the Company's Chief Executive
Officer or the Recipient's superiors that results in damage to the Company or
which, after written notice to do so, the Recipient fails to correct within a
reasonable time; (b) any willful misconduct or gross negligence by the Recipient
in the responsibilities assigned to the Recipient; (c) any willful failure to
perform the Recipient's job as required to meet Company objectives; (d) any
wrongful conduct of a Recipient which has an adverse impact on the Company or
which constitutes a misappropriation of Company assets; (e) the Recipient's
performing services for any other person or entity that competes with the
Company while the Recipient is employed by the Company, without the written
approval of the Chief Executive Officer of the Company; or (f) any other conduct
that the Administering Body determines constitutes Just Cause for Dismissal;
provided, however, that if a Recipient is party to an employment agreement with
the Company providing for just cause dismissal (or some comparable notion) of
Recipient from Recipient's employment with the Company, "Just Cause
16
<PAGE>
Dismissal" for purposes of this Plan shall have the same meaning as ascribed
thereto or to such comparable notion in such employment agreement.
"Non-employee Director" means any director of the Company who qualifies as
a "non-employee director" within the meaning of Rule 16b-3.
"Non-qualified Stock Option" means a Stock Option that is not an Incentive
Stock Option.
"Optionee" means a Recipient or the Recipient's successor in interest.
"Outside Director" means an "outside director" as defined in the
regulations adopted under Section 162(m) of the IRC.
"Parent Corporation" means any Parent Corporation as defined in Section
424(e) of the IRC.
"Performance-Based Compensation" means performance-based compensation as
described in Section 162(m) of the IRC. If the amount of compensation an
Eligible Person will receive under any Stock Option is not based solely on an
increase in the value of Common Stock after the date of grant or award, the
Stock Option Plan Committee, in order to qualify Stock Options as
performance-based compensation under Section 162(m) of the IRC, can condition
the grant, award, vesting or exercisability of such Stock Options on the
attainment of a preestablished, objective performance goal For this purpose, a
preestablished, objective performance goal may include one or more of the
following performance criteria: (a) book value; (b) earnings per share
(including earnings before interest, taxes and amortization); (c) return on
equity; (d) total shareholder return; (e) return on capital; (f) return on
assets or net assets; (g) income or net income; (h) attainment of stated goals
related to the Company's capitalization, costs, financial condition or results
of operations; and (i) any other similar performance criteria.
"Person" means any person, entity or group, within the meaning of Section
13(d) or 14(d) of the Exchange Act, but excluding (a) the Company and its
subsidiaries, (b) any employee stock ownership or other employee benefit plan
maintained by the Company that is qualified under ERISA and (c) an underwriter
or underwriting syndicate that has acquired the Company's securities solely in
connection with a public offering thereof.
"Permanent Disability" shall mean that the Recipient becomes physically or
mentally incapacitated or disabled so that the Recipient is unable to perform
substantially the same services as the Recipient performed prior to incurring
such incapacity or disability (the Company, at its option and expense, being
entitled to retain a physician to confirm the existence of such incapacity or
disability, and the determination of such physician to be binding upon the
Company and the Recipient), and such incapacity or disability continues for a
period of three consecutive months or six months in any 12-month period or such
other period(s) as may be determined by the Stock Option Plan Committee with
respect to any Stock Option, provided that for purposes of determining the
period during which an Incentive Stock Option may be exercised
17
<PAGE>
pursuant to Section 5.13(b)(ii) hereof, Permanent Disability shall mean
"permanent and total disability" as defined in Section 22(e) of the IRC.
"Permitted Transferee" means (a) the Recipient's Immediate Family; (b) a
trust solely for the benefit of the Recipient and/or his or her Immediate
Family; or (c) a partnership or limited liability company the partners or
shareholders of which are limited to the Recipient and his or her Immediate
Family.
"Plan" means this 1999 Stock Option Plan of the Company.
"Plan Term" means the period during which this Plan remains in effect
(commencing on the Effective Date and ending on the Expiration Date).
"Recipient" means a person who has received Stock Options under this Plan.
"Reorganization" means any merger, consolidation or other reorganization.
"Rule 16b-3" means Rule 16b-3 under the Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Shareholder" is an individual who, at the time a Stock Option
is granted to such individual under this Plan, owns more than 10% of the
combined voting power of all classes of stock of the Company or of any Parent
Corporation or Subsidiary Corporation (after application of the attribution
rules set forth in Section 424(d) of the IRC).
"Stock Option" means a right to purchase stock of the Company granted
under Article VI of this Plan to an Eligible Person.
"Stock Option Document" means the agreement or confirming memorandum
setting forth the terms and conditions of Stock Options.
"Stock Option Plan Committee" means the committee appointed by the Board
to administer this Plan pursuant to Section 4.1. Such Stock Option Plan
Committee may be a Compensation Committee appointed by the Board and charged
with administration of matters in addition to this Plan.
"Subsidiary Corporation" means any Subsidiary Corporation as defined in
Section 425(f) of the IRC.
18
<PAGE>
Exhibit 10.13
1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN OF
bright-technologies.com, inc.
1. Purpose. The purpose of this Plan is to advance the interests of
bright-technologies.com, inc., a Delaware corporation (the "Company"), by
providing an additional incentive to attract and retain qualified and competent
directors, upon whose efforts and judgment the success of the Company is largely
dependent, through the encouragement of stock ownership in the Company by such
persons.
2. Definitions. As used herein, the following terms shall have the meaning
indicated:
(a) "Board" shall mean the Board of Directors of
bright-technologies.com, inc.
(b) "Committee" shall mean the committee, if any, appointed by the
Board pursuant to Section 12 hereof.
(c) "Common Stock" shall mean the common stock, par value one tenth
of one cent ($0.001) of the Company.
(d) "Date of Grant" shall mean the date on which an Option is
granted to an Eligible Person pursuant to this Plan.
(e) "Director" shall mean a member of the Board.
(f) "Eligible Person(s)" shall mean those persons who are Directors
of the Company and who are not employees of the Company or a Subsidiary.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(h) "Fair Market Value" of a Share on any date means the closing
price on the business day immediately preceding such date. For this
purpose, the closing price of a Share on any business day shall be (i) if
the Common Stock is listed or admitted for trading on any United States
national securities exchange, the last reported sale price of the Common
Stock on such exchange, as reported in any newspaper of general
circulation, (ii) if actual transactions in the Common Stock are included
in the Nasdaq National Market or are reported on a consolidated
transaction reporting system, the closing sales price of the Common Stock
on such system, (iii) if the Common Stock is otherwise quoted on the
Nasdaq system, or any similar system of automated dissemination of
quotations of securities prices in common use, the mean between the
closing high bid and low asked quotations for such day of the Common Stock
on such system, (iv) if none of clause (i), (ii) or (iii) is applicable,
the mean between the high bid and low asked quotations for the Common
Stock as reported by the National Daily Quotation Service if at least two
securities dealers have inserted both bid and asked
<PAGE>
quotations for the Common Stock on at least five (5) of the ten (10)
preceding days and (v) if none of clause (i), (ii), (iii) or (iv) is
applicable, the price determined by the Board in the exercise of its good
faith discretion.
(i) "Internal Revenue Code" or "Code" shall mean the Internal
Revenue Code of 1986, as it now exists or may be amended from time to
time.
(j) "Non-Employee Director" shall have the meaning set forth in Rule
16b-3 of the Exchange Act or any successor provision thereof.
(k) "Nonqualified Stock Option" shall mean an option that is not an
incentive stock option as defined in Section 422 of the Internal Revenue
Code.
(l) "Option" (when capitalized) shall mean any option granted under
Section 4 of this Plan.
(m) "Optionee" shall mean a person to whom an Option is granted
under this Plan or any successor to the rights of such person under this
Plan by reason of the death of such person.
(n) "Plan" shall mean this 1999 Non-Employee Director Stock Option
Plan of bright-technologies.com, inc.
(o) "Share(s)" shall mean a share or shares of the Common Stock.
(p) "Subsidiary" shall mean any corporation or other entity, whether
domestic or foreign, in which the Company has or obtains, directly or
indirectly, a proprietary interest of more than fifty percent (50%) by
reason of stock ownership or otherwise.
Other terms shall have the meanings set forth elsewhere herein.
3. Shares and Options.
(a) The maximum number of Shares to be issued pursuant to Options
under this Plan, shall be Fifty Thousand (50,000) Shares. Shares issued
pursuant to Options granted under this Plan may be issued from Shares held
in the Company's treasury or from authorized and unissued Shares. If any
Option granted under this Plan shall terminate, expire, or be canceled or
surrendered as to any Shares, new Options may thereafter be granted
covering such Shares.
(b) Each Option granted hereunder shall be evidenced by an option
agreement (an "Option Agreement") and shall contain such terms as are not
inconsistent with this Plan or any applicable law. Any person who files
with the Committee, in a form satisfactory to the Committee, a written
waiver of eligibility to receive any Option under this Plan shall not be
eligible to receive any Option under this Plan for the duration of such
waiver. Any Option granted hereunder shall be a Nonqualified Stock Option.
2.
<PAGE>
(c) Neither the Plan nor any Option granted under the Plan shall
confer upon any person any right to continue to serve as a Director.
4. Discretionary Grants of Options.
(a) At any time and from time to time during the term of this Plan
and subject to the provisions herein, Options may be granted by the
Committee to any Eligible Person for such number of Shares as the
Committee in its discretion shall deem to be in the best interest of the
Company and which will serve to further the purposes of the Plan. Upon the
grant of an Option, the Company shall promptly deliver to such Eligible
Person an Option Agreement. Options granted pursuant to this Section 4(a)
shall vest according to the vesting schedule provided in the Option
Agreement and shall be exercisable for the term provided in the Option
Agreement. In the event no term is provided in the Option Agreement, such
term shall be ten (10) years.
(b) The Options granted to Directors pursuant to Section 4(a) herein
shall be in addition to any other benefits with respect to the Director's
position with the Company or its Subsidiaries.
5. Option Price. The option price per Share of any Option granted pursuant
to this Plan shall be one hundred percent (100%) of the Fair Market Value per
Share on the Date of Grant.
6. Exercise of Options. Options may be exercised at any time after the
date on which the Options, or any portion thereof, are vested until the Option
expires pursuant to Section 7; provided, however, that at least six months must
elapse from the date of the acquisition of the Option to the date of disposition
of the Option (other than upon exercise or conversion) or the underlying Shares.
An Option shall be deemed exercised when (i) the Company has received written
notice of such exercise in accordance with the terms of the Option Agreement,
(ii) full payment of the aggregate option price of the Shares as to which the
Option is exercised has been made and (iii) arrangements that are satisfactory
to the Committee in its sole discretion have been made for the Optionee's
payment to the Company of the amount, if any, that the Committee determines to
be necessary for the Company to withhold in accordance with applicable federal
or state income tax withholding requirements. Pursuant to procedures approved by
the Committee, tax withholding requirements, at the option of an Optionee, may
be met by withholding Shares otherwise deliverable to the Optionee upon the
exercise of an Option. Unless further limited by the Committee in any Option
Agreement, the Option price of any Shares purchased shall be paid solely in
cash, by certified or cashier's check, by money order, with Shares (but with
Shares that have been owned by the Optionee for at least six months and only if
permitted by the Option Agreement or otherwise permitted by the Committee in its
sole discretion at the time of exercise) or by a combination of the above;
provided, however, that the Committee in its sole discretion may accept a
personal check in full or partial payment of any Shares. If the exercise price
is paid in whole or in part with Shares, the value of the Shares surrendered
shall be their Fair Market Value on the date the Shares are received by the
Company.
3.
<PAGE>
An Option shall not at any time be exercisable with respect to less than 100
Shares unless the remaining Shares covered by the Option are less than 100
Shares.
7. Termination of Option Period. The unexercised portion of an Option
shall automatically and without notice terminate and become null and void at the
time of the earliest to occur of the following:
(a) sixty (60) days after the date that an Optionee ceases to be a
Director regardless of the reason therefor other than as a result of such
termination by death of the Optionee;
(b) one (1) year after the date that an Optionee ceases to be a
Director by reason of death of the Optionee or six (6) months after the
Optionee shall die if that shall occur during the sixty-day period
described in Subsection 7(a) herein; or
(c) the expiration date of the term of such Option.
8. Adjustment of Provisions.
(a) If at any time while this Plan is in effect or unexercised
Options are outstanding, (1) there shall be any increase or decrease in
the number of issued and outstanding Shares through the declaration of a
stock dividend, stock split, combination of shares or through any
recapitalization resulting in a stock split-up, spin-off, combination or
exchange of Shares or (2) the value of the outstanding shares of Common
Stock of the Company is reduced by reason of an extraordinary cash
dividend, then and in each such event:
(i) appropriate adjustment shall be made in the maximum number
of Shares then subject to being optioned under this Plan, so that
the same proportion of the Company's issued and outstanding Shares
shall continue to be subject to being so optioned; and
(ii) appropriate adjustment shall be made in the number of
Shares and the exercise price per Share thereof then subject to any
outstanding Option, so that the same proportion of the Company's
issued and outstanding Shares shall remain subject to purchase at
the same aggregate exercise price.
(b) Except as otherwise expressly provided herein, the issuance by
the Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in
connection with a direct sale or upon the exercise of rights or warrants
to subscribe therefor, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to,
the number of or exercise price of Shares then subject to outstanding
Options granted under this Plan.
4.
<PAGE>
(c) Without limiting the generality of the foregoing, the existence
of outstanding Options granted under this Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate
(i) any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business; (ii) any
merger or consolidation of the Company; (iii) any issue by the Company of
debt securities, or preferred or preference stock that would rank above
the Shares subject to outstanding Options; (iv) the dissolution or
liquidation of the Company; (v) any sale, transfer or assignment of all or
any part of the assets or business of the Company; or (vi) any other
corporate act or proceeding, whether of a similar character or otherwise.
9. Reorganizations.
(a) Notwithstanding anything contained in this Plan or any Option
Agreement to the contrary, in the event of a Change of Control, as defined
below, all or any of the following may, in the sole discretion of the
Committee, occur with respect to any and all Options outstanding as of
such Change of Control:
(i) automatic acceleration of the vesting of such Options so
that such Options may be immediately exercised in full on or before
the relevant date fixed in the Option Agreement;
(ii) upon exercise of an Option during the 60-day period from
and after the date of a Change of Control, the Optionee exercising
the Option may in lieu of the receipt of Shares upon the exercise of
the Option, elect by written notice to the Company to receive an
amount in cash equal to the excess of the aggregate Value (as
defined below) of the Shares covered by the Option or portion
thereof surrendered determined on the date the Option is exercised,
over the aggregate exercise price of the Option (such excess is
referred to herein as the "Aggregate Spread"); provided, however,
and notwithstanding any other provision of this Plan, if the end of
such 60-day period from and after the date of a Change of Control is
within six months of the Date of Grant, such Option shall be
canceled in exchange for a cash payment to the Optionee equal to the
Aggregate Spread on the day which is six months and one day after
the Date of Grant of such Option. As used in this Section 9(a), the
term "Value" means the higher of (i) the highest Fair Market Value
during the 60-day period from and after the date of a Change of
Control and (ii) if the Change of Control is the result of a
transaction or series of transactions described in paragraphs (i) or
(iii) of the definition of Change of Control, the highest price per
share of the Common Stock paid in such transaction or series of
transactions (which in the case of paragraph (i) shall be the
highest price per Share as reflected in a Schedule 13D filed by the
person having made the acquisition);
(iii) if an Optionee ceases to be a Director regardless of the
reason therefor other than death following a Change of Control, any
Option held by such
5.
<PAGE>
Optionee may be exercised by such Optionee until the earlier of
sixty (60) days after the Optionee ceases to be a Director or the
expiration date of such Option;
(iv) all Options become non-cancelable;
(v) if the Option shall remain exercisable after any such
Change of Control, from and after such Change of Control, any such
Option shall be exercisable only for the kind and amount of
securities and/or other property, or the cash equivalent thereof,
receivable as a result of such Change of Control by the holder of a
number of shares of stock for which such Option could have been
exercised immediately prior to such Change of Control.
(b) "Change of Control" of the Company shall be deemed to have
occurred upon the happening of any of the following events:
(i) the acquisition, other than from the Company, by any
individual, entity or group (within the meaning of Section 13(d)(3)
of the Exchange Act) of beneficial ownership of thirty percent (30%)
or more of either the then outstanding shares of Common Stock of the
Company or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election
of directors;
(ii) individuals who, as of April 23, 1999, constitute the
Board as of the date thereof (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided that
any individual becoming a Director subsequent to such date whose
election, or nomination for election by the Company's stockholders,
was approved by a vote of at least a majority of the Directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
is in connection with an actual or threatened election contest
relating to the election of the Directors (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act);
(iii) approval by the stockholders of the Company of a
reorganization, merger or consolidation of the Company, in each
case, with respect to which the individuals and entities who were
the respective beneficial owners of the Common Stock and voting
securities of the Company immediately prior to such reorganization,
merger or consolidation do not, following such reorganization,
merger or consolidation, beneficially own, directly or indirectly,
more than sixty percent (60%) of, respectively, the then outstanding
shares of Common Stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the Company resulting
from such reorganization, merger or consolidation;
6.
<PAGE>
(iv) consummation by the Company of the sale or other
disposition by the Company of all or substantially all of the
Company's assets; or
(v) approval by the stockholders of the Company or any order
by a court of competent jurisdiction of a plan of liquidation of the
Company.
(c) If the Company shall consummate any merger, consolidation or
other reorganization not involving a Change of Control (a
"Reorganization") in which holders of shares of Common Stock are entitled
to receive in respect of such shares any securities, cash or other
consideration (including, without limitation, a different number of shares
of Common Stock), each Option outstanding under this Plan shall thereafter
be exercisable, in accordance with this Plan, only for the kind and amount
of securities, cash and/or other consideration receivable upon such
Reorganization by a holder of the same number of shares of Common Stock as
are subject to that Option immediately prior to such Reorganization, and
any adjustments will be made to the terms of the Option in the sole
discretion of the Committee as it may deem appropriate to give effect to
the Reorganization.
10. Transferability of Options. Each Option Agreement shall provide that
such Option shall not be transferable by the Optionee otherwise than by will or
the laws of descent and distribution or pursuant to a qualified domestic
relations order and that so long as an Optionee lives, only such Optionee or his
or her guardian or legal representative shall have the right to exercise the
related Option.
11. Issuance of Shares. No person shall be, or have any of the rights or
privileges of, a stockholder of the Company with respect to any of the Shares
subject to an Option unless and until certificates representing such Shares
shall have been issued and delivered to such person. As a condition of any
transfer of the certificate for Shares, the Committee may obtain such agreements
or undertakings, if any, as it may deem necessary or advisable to assure
compliance with any provision of this Plan, any Option Agreement or any law or
regulation, including, but not limited to, the following:
(i) A representation, warranty or agreement by the Optionee to
the Company, at the time any Option is exercised, that he or she is
acquiring the Shares to be issued to him or her for investment and
not with a view to, or for sale in connection with, the distribution
of any such Shares; and
(ii) A representation, warranty or agreement to be bound by
any legends that are, in the opinion of the Committee, necessary or
appropriate to comply with the provisions of any securities law
deemed by the Committee to be applicable to the issuance of the
Shares and are endorsed upon the Share certificates.
Share certificates issued to an Optionee who is a party to any stockholder
agreement or a similar agreement shall bear the legends contained in such
agreements.
7.
<PAGE>
12. Administration of the Plan.
(a) This Plan shall be administered by a stock option committee (the
"Committee") consisting of not fewer than two (2) Non-Employee Directors;
provided, however, that if no Committee is appointed, the full Board shall
administer this Plan and in such case all references to the Committee
shall be deemed to be references to the Board. The Committee shall have
all of the powers of the Board with respect to this Plan. Any member of
the Committee may be removed at any time, with or without cause, by
resolution of the Board, and any vacancy occurring in the membership of
the Committee may be filled by appointment by the Board.
(b) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of this Plan. The Committee may
at any time terminate this Plan or make such modification or amendment
thereof as it deems advisable. Termination or any modification or
amendment of this Plan shall not, without consent of the Optionee, affect
his rights under an Option previously granted to him. The determinations
and the interpretation and construction of any provision of this Plan by
the Committee shall be final and conclusive.
(c) Any and all decisions or determinations of the Committee shall
be made either (i) by a majority vote of the members of the Committee at a
meeting or (ii) without a meeting by the written approval of all of the
members of the Committee.
13. Interpretation.
(a) If any provision of this Plan is held invalid for any reason,
such holding shall not affect the remaining provisions hereof, but instead
this Plan shall be construed and enforced as if such provision had never
been included in this Plan.
(b) THIS PLAN SHALL BE GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE
OF DELAWARE, WITHOUT REFERENCE TO DELAWARE CONFLICT OF LAW PROVISIONS.
(c) Headings contained in this Plan are for convenience only and
shall in no manner be construed as part of this Plan.
(d) Any reference to the masculine, feminine or neuter gender shall
be a reference to such other gender as is appropriate.
14. Section 83(b) Election. If as a result of exercising an Option an
Optionee receives Shares that are subject to a "substantial risk of forfeiture"
and are not "transferable" as those terms are defined for purposes of Section
83(a) of the Code, then such Optionee may elect under Section 83(b) of the Code
to include in his gross income, for his taxable year in which the Shares are
transferred to such Optionee, the excess of the Fair Market Value of such Shares
at the time of transfer (determined without regard to any restriction other than
one which by its terms will never lapse), over the amount paid for the Shares.
If the Optionee makes the Section 83(b)
8.
<PAGE>
election described above, the Optionee shall (i) make such election in a manner
that is satisfactory to the Committee, (ii) provide the Company with a copy of
such election, (iii) agree to promptly notify the Company if any Internal
Revenue Service or state tax agent, on audit or otherwise, questions the
validity or correctness of such election or of the amount of income reportable
on account of such election, and (iv) agree to such withholding as the Committee
may reasonably require in its sole and absolute discretion.
15. Effective Date and Termination Date. The effective date of this Plan
is April 23, 1999 and the effective date of any amendment to this Plan is the
date on which the Board adopted such amendment; provided, however, if this Plan
is not approved by the stockholders of the Company within twelve (12) months
after the effective date, then, in such event, this Plan and all Options granted
pursuant to this Plan shall be null and void. This Plan shall terminate on April
23, 2009, and any Option outstanding on such date will remain outstanding until
it has either expired or has been exercised.
9.
<PAGE>
Exhibit 10.14
NONQUALIFIED STOCK OPTION AGREEMENT
pursuant to the
bright-technologies.com, inc. 1999 STOCK OPTION PLAN
This NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made and entered
into by and between bright-technologies.com, inc., a Delaware Corporation (the
"Company"), and ___________________________ (the "Optionee"), effective as of
_______, 1999 (the "Date of Grant").
1. Grant of Option. The Company hereby grants to the Optionee and the
Optionee hereby accepts, subject to the terms and conditions hereof, a
nonqualified stock option (the "Option") to purchase up to _______ shares of
Company's Common Stock at the Exercise Price per share set forth in Section 4
below. The Option is not intended to qualify as an Incentive Stock Option, as
such term is defined in Section 422 of the Internal Revenue Code of 1986, as
amended.
2. Governing Plan. This Option is granted pursuant to the Company's 1999
Stock Option Plan (the "Plan"), a copy of which is attached hereto. Capitalized
terms used but not otherwise defined herein have the meanings as set forth in
the Plan. The Optionee agrees to be bound by the terms and conditions of the
Plan, which are incorporated herein by reference and which control in case of
any conflict with this Agreement.
3. Expiration of the Option. The Option (to the extent not earlier
exercised or terminated due to cessation of the Optionee's employment or
otherwise in accordance with the Plan) will expire at the end of business on
_______, 200_, ___ (__) years from the Date of Grant of the option. The Option
may terminate sooner under certain circumstances, including, without limitation,
termination of the Optionee's employment, as set forth in Section 5.13 (death,
normal retirement, Permanent Disability and termination for other reasons) of
the Plan. The Option may not be exercised after its expiration or termination.
4. Exercise Price. The "Option Price" of the Option is $_____ per share of
Common Stock. The Exercise Price is subject to adjustment as set forth in
Section 6.2 of the Plan.
5. Vesting. On each Measurement Date set forth in Column 1 below, the
Option shall vest and become exercisable for the corresponding number of shares
of Common Stock set forth in Column 2 below if the Optionee's employment has not
terminated. The "Vested Portion" of the Option as of any particular date shall
be the cumulative total of all shares for which the Option has become
exercisable as of that date.
- -------------------------------------------------
Column 1 Column 2
Shares Vesting on
Measurement Date Measurement Date
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
Notwithstanding the foregoing, in the event the Optionee's employment with
the Company and/or any Parent Corporation or Subsidiary Corporation is
terminated within _______ (___) year(s) after a "Change in Control" then,
immediately prior to the effective date of such termination, all Options or
converted rights which have not expired, shall become fully vested and
exercisable (if not already
1
<PAGE>
vested and exercisable) by Optionee for a period of three (3) months thereafter.
In addition, upon a Change in Control, pursuant to Section 7.2 of the Plan, this
Option shall be canceled and automatically converted into the right to receive,
and thereafter shall be exercisable for, in accordance with the Plan and this
Agreement, the securities, cash and/or other consideration that a holder of the
shares underlying the Options would have been entitled to receive upon
consummation of a Change in Control had such shares been issued and outstanding
immediately prior to the effective date and time of the Change in Control (net
of appropriate exercise prices).
6. Exercise of the Option. The Vested Portion (as herein defined) of the
Option may be exercised, to the extent not previously exercised, in whole or in
part, at any time or from time to time prior to the expiration or termination of
the Option, except that no Option shall be exercisable except in respect to
whole shares, and not less than one hundred (100) shares may be purchased at one
time unless the number purchased is the total number at the time available for
purchase under the terms of the Option. Exercise shall be accomplished by
providing the Company with written notice in the form of Exhibit I hereto, which
notice shall be irrevocable when delivered and effective upon payment in full of
the Option Price in accordance with Section 5.4 of the Plan and any amounts
required in accordance with Section 5.11 of the Plan for withholding taxes, and
the satisfaction of all other conditions to exercise imposed under the Plan.
7. Payment of Option Price. Upon any exercise of the Option, the exercise
price for the number of shares for which the Option is then being exercised and
the amount of any federal, state and local withholding shall be paid in full to
the Company in cash or with shares of Common Stock that have been owned for at
least six months, or a combination thereof, or in such other form as the
Administering Body deems acceptable at the time of exercise.
8. Nontransferability of Option. The Option shall not be assignable or
transferable by the Optionee, other than in accordance with Section 5.9 of the
Plan or by will or the laws of descent and distribution (or as otherwise
permitted by the Administering Body in its sole discretion), and shall be
exercisable during the Optionee's lifetime only by him or her or by his or her
legal representative(s) or guardian(s).
9. Administration. The Plan and this Agreement shall be administered and
may be definitively interpreted by the Administering Body, and the Optionee
agrees to accept and abide by the decisions of such Administering Body
concerning administration and interpretation of the Plan and this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed on behalf of the
Company by its duly authorized officer, and by the Optionee in acceptance of the
above-mentioned Option, subject to the terms and conditions of the Plan and of
this Agreement, all as of the day and year first above written.
bright-technologies.com, inc.
-----------------------------------
By:
OPTIONEE
-----------------------------------
2
<PAGE>
Exhibit I
NOTICE OF EXERCISE
under
NONQUALIFIED STOCK OPTION AGREEMENT
pursuant to the
bright-technologies.com, inc. 1999 STOCK OPTION PLAN
To: bright-technologies.com, inc. (the "Company")
From: _____________________________________________
Date: _____________________________________________
Pursuant to the bright-technologies.com, inc. 1999 Stock Option Plan (the
"Plan") and the Nonqualified Stock Option Agreement (the "Agreement") between
the Company and myself effective ______________________, I,
____________________, hereby exercise my Option as follows:
- --------------------------------------------------------------------------------
Number of shares of Common Stock I wish to purchase under
the Option
- --------------------------------------------------------------------------------
Exercise Price per share $
- --------------------------------------------------------------------------------
Total Exercise Price $
- --------------------------------------------------------------------------------
"Vested Portion" of Option (see definition in
Section 5 of the Agreement)
- --------------------------------------------------------------------------------
Number of shares I have previously purchased by
exercising the Option
- --------------------------------------------------------------------------------
Expiration Date of the Option
- --------------------------------------------------------------------------------
I hereby represent, warrant, and covenant to the Company that:
a. I am acquiring the Common Stock for my own account, for investment, and
not for distribution or resale, and I will make no transfer of such Common Stock
except in compliance with applicable federal and state securities laws and in
accordance with the provisions of the Plan.
b. I can bear the economic risk of the investment in the Common Stock
resulting from this exercise of the Option, including a total loss of my
investment.
c. I am experienced in business and financial matters and am capable of
(i) evaluating the merits and risks of an investment in the Company Stock; (ii)
making an informed investment decision regarding exercise of the Option; and
(iii) protecting my interests in connection therewith.
I acknowledge that I must pay the exercise price in full and make
appropriate arrangements for the payment of all federal, state and local tax
withholdings due with respect to the Option exercised herein, before the stock
certificate evidencing the shares of Common Stock resulting from this exercise
of the Option will be issued to me.
Attached in full payment of the exercise price for the Option exercised
herein is ( ) a check made payable to the Company in the amount of
$___________________ and/or ( ) a stock certificate for _______ shares of Common
Stock that have been owned for at least six months with a duly completed stock
power attached.
<PAGE>
Exhibit 10.15
INCENTIVE STOCK OPTION AGREEMENT
pursuant to the
bright-technologies.com, inc. 1999 STOCK OPTION PLAN
This INCENTIVE STOCK OPTION AGREEMENT (the "Agreement") is made and entered into
by and between bright-technologies.com, inc., a Delaware Corporation (the
"Company"), and ______________________ (the "Optionee"), effective as of
____________, 1999 (the "Date of Grant").
1. Grant of Option. The Company hereby grants to the Optionee and the
Optionee hereby accepts, subject to the terms and conditions hereof, an
incentive stock option (the "Option") to purchase up to _______ shares of
Company's Common Stock at the Exercise Price per share set forth in Section 4
below. The Option is intended to qualify as an Incentive Stock Option, as such
term is defined in Section 422 of the Internal Revenue Code of 1986, as amended.
2. Governing Plan. This Option is granted pursuant to the Company's 1999
Stock Option Plan (the "Plan"), a copy of which is attached hereto. Capitalized
terms used but not otherwise defined herein have the meanings as set forth in
the Plan. The Optionee agrees to be bound by the terms and conditions of the
Plan, which are incorporated herein by reference and which control in case of
any conflict with this Agreement.
3. Expiration of the Option. The Option (to the extent not earlier
exercised or terminated due to cessation of the Optionee's employment or
otherwise in accordance with the Plan) will expire at the end of business on
_______, 200_, ___ (__) years from the Date of Grant of the option. The Option
may terminate sooner under certain circumstances, including, without limitation,
termination of the Optionee's employment, as set forth in Section 5.13 (death,
normal retirement, Permanent Disability and termination for other reasons) of
the Plan. The Option may not be exercised after its expiration or termination.
4. Exercise Price. The "Option Price" of the Option is $_____ per share of
Common Stock. The Exercise Price is subject to adjustment as set forth in
Section 6.2 of the Plan.
5. Vesting. On each Measurement Date set forth in Column 1 below, the
Option shall vest and become exercisable for the corresponding number of shares
of Common Stock set forth in Column 2 below if the Optionee's employment has not
terminated. The "Vested Portion" of the Option as of any particular date shall
be the cumulative total of all shares for which the Option has become
exercisable as of that date.
- -------------------------------------------------
Column 1 Column 2
Shares Vesting on
Measurement Date Measurement Date
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
- -------------------------------------------------
Notwithstanding the foregoing, in the event the Optionee's employment with
the Company and/or any Parent Corporation or Subsidiary Corporation is
terminated within _______ (___) year(s) after a "Change in Control" then,
immediately prior to the effective date of such termination, all Options or
converted rights which have not expired, shall become fully vested and
exercisable (if not already
3
<PAGE>
vested and exercisable) by Optionee for a period of three (3) months thereafter.
In addition, upon a Change in Control, pursuant to Section 7.2 of the Plan, this
Option shall be canceled and automatically converted into the right to receive,
and thereafter shall be exercisable for, in accordance with the Plan and this
Agreement, the securities, cash and/or other consideration that a holder of the
shares underlying the Options would have been entitled to receive upon
consummation of a Change in Control had such shares been issued and outstanding
immediately prior to the effective date and time of the Change in Control (net
of appropriate exercise prices).
6. Exercise of the Option. The Vested Portion (as herein defined) of the
Option may be exercised, to the extent not previously exercised, in whole or in
part, at any time or from time to time prior to the expiration or termination of
the Option, except that no Option shall be exercisable except in respect to
whole shares, and not less than one hundred (100) shares may be purchased at one
time unless the number purchased is the total number at the time available for
purchase under the terms of the Option. Exercise shall be accomplished by
providing the Company with written notice in the form of Exhibit I hereto, which
notice shall be irrevocable when delivered and effective upon payment in full of
the Option Price in accordance with Section 5.4 of the Plan and any amounts
required in accordance with Section 5.11 of the Plan for withholding taxes, and
the satisfaction of all other conditions to exercise imposed under the Plan.
7. Payment of Option Price. Upon any exercise of the Option, the exercise
price for the number of shares for which the Option is then being exercised and
the amount of any federal, state and local withholding shall be paid in full to
the Company in cash or with shares of Common Stock that have been owned for at
least six months, or a combination thereof.
8. Nontransferability of Option. The Option shall not be assignable or
transferable by the Optionee, other than in accordance with Section 5.9 of the
Plan or by will or the laws of descent and distribution (or as otherwise
permitted by the Administering Body in its sole discretion), and shall be
exercisable during the Optionee's lifetime only by him or her or by his or her
legal representative(s) or guardian(s).
9. Administration. The Plan and this Agreement shall be administered and
may be definitively interpreted by the Administering Body, and the Optionee
agrees to accept and abide by the decisions of such Administering Body
concerning administration and interpretation of the Plan and this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed on behalf of the
Company by its duly authorized officer, and by the Optionee in acceptance of the
above-mentioned Option, subject to the terms and conditions of the Plan and of
this Agreement, all as of the day and year first above written.
bright-technologies.com, inc.
-----------------------------------
By:
OPTIONEE
-----------------------------------
4
<PAGE>
Exhibit I
NOTICE OF EXERCISE
under
INCENTIVE STOCK OPTION AGREEMENT
pursuant to the
bright-technologies.com, inc. 1999 STOCK OPTION PLAN
To: bright-technologies.com, inc. (the "Company")
From: _____________________________________________
Date: _____________________________________________
Pursuant to the bright-technologies.com, inc. 1999 Stock Option Plan (the
"Plan") and the Incentive Stock Option Agreement (the "Agreement") between the
Company and myself effective ______________________, I,
________________________, hereby exercise my Option as follows:
- --------------------------------------------------------------------------------
Number of shares of Common Stock I wish to purchase under
the Option
- --------------------------------------------------------------------------------
Exercise Price per share $
- --------------------------------------------------------------------------------
Total Exercise Price $
- --------------------------------------------------------------------------------
"Vested Portion" of Option (see definition in
Section 5 of the Agreement)
- --------------------------------------------------------------------------------
Number of shares I have previously purchased by
exercising the Option
- --------------------------------------------------------------------------------
Expiration Date of the Option
- --------------------------------------------------------------------------------
I hereby represent, warrant, and covenant to the Company that:
a. I am acquiring the Common Stock for my own account, for investment, and
not for distribution or resale, and I will make no transfer of such Common Stock
except in compliance with applicable federal and state securities laws and in
accordance with the provisions of the Plan.
b. I can bear the economic risk of the investment in the Common Stock
resulting from this exercise of the Option, including a total loss of my
investment.
c. I am experienced in business and financial matters and am capable of
(i) evaluating the merits and risks of an investment in the Company Stock; (ii)
making an informed investment decision regarding exercise of the Option; and
(iii) protecting my interests in connection therewith.
I acknowledge that I must pay the exercise price in full and make
appropriate arrangements for the payment of all federal, state and local tax
withholdings due with respect to the Option exercised herein, before the stock
certificate evidencing the shares of Common Stock resulting from this exercise
of the Option will be issued to me.
Attached in full payment of the exercise price for the Option exercised
herein is ( ) a check made payable to the Company in the amount of
$___________________ and/or ( ) a stock certificate for _______ shares of Common
Stock that have been owned for at least six months with a duly completed stock
power attached.
<PAGE>
Exhibit 10.16
NONQUALIFIED STOCK OPTION AGREEMENT
pursuant to the
bright-technologies.com, inc. 1999 NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT ("Agreement") entered into this ____
day of ___________, 1999, between bright-technologies.com, inc., a Delaware
corporation (the _______"Company"), and ________________________________, a
member of the Board of Directors of the Company (the "Optionee"), effective as
of _________, 1999 (the "Date of Grant").
1. Grant of Option. The Company, acting through its Compensation Committee
(the "Committee"), grants to the Optionee and the Optionee hereby accepts,
subject to the terms and conditions hereof, effective as of the date set forth
above, a nonqualified stock option (the "Option") to purchase up to an aggregate
of ____________ shares of Company's Common Stock, at the price of $____ per
share (the "Option Price") determined in accordance with Section 5 of the Plan.
2. Governing Plan. This Option is granted pursuant to the Company's 1999
Non-employee Director Stock Option Plan (the "Plan"). Capitalized terms used but
not otherwise defined herein have the meanings as set forth in the Plan. The
Optionee agrees to be bound by the terms and conditions of the Plan, which are
incorporated herein by reference and which control in case of any conflict with
this Agreement. A copy of the Plan as in effect on the date hereof has been
provided to the Optionee, and the Optionee by executing this Agreement hereby
acknowledges receipt thereof.
3. Term. The Option shall expire at the end of business on ___________,
200_, _____ (____) years from the Date of Grant of the Option. The Option may
terminate sooner under certain circumstances, including, without limitation,
termination of Optionee's term as a Director, as set forth in Section 7 (death
and termination for other reasons) of the Plan.
4. Vesting; Change of Control; Restrictions on Exercise.
(a) Subject to the provisions of Sections 5 and 8 hereof, and unless
accelerated, as set forth in the Plan or as provided herein, the Option granted
hereunder shall vest and become exercisable for the number of shares set forth
opposite the dates noted below (the "Option Vesting Schedule").
Cumulative
Date(s) Number of Vested Shares
------- -----------------------
<PAGE>
(b) Notwithstanding the provisions of Paragraph 4(a) above, upon a Change
in Control:
(i) the Option shall become fully vested and shall become
immediately exercisable with respect to all shares subject to the Option;
(ii) upon exercise of the Option during the 60-day period from and
after the date of a Change of Control, the Optionee may in lieu of the
receipt of Common Stock upon the exercise of the Option, elect by written
notice to the Company to receive an amount in cash equal to the excess of
the aggregate Value (as defined below) of the shares of Common Stock
covered by the Option or portion thereof surrendered determined on the
date the Option is exercised, over the aggregate exercise price of the
Option (such excess is referred to herein as the "Aggregate Spread");
provided, however, if the end of such 60-day period from and after the
date of a Change of Control is within six months of the date of grant of
the Option, the Option shall be cancelled in exchange for a cash payment
to the Optionee equal to the Aggregate Spread on the day which is six
months and one day after the date of grant of the Option. As used in this
Section 3(b)(ii), the term "Value" means the higher of (1) the highest
Fair Market Value during the 60-day period from and after the date of a
Change of Control and (2) if the Change of Control is the result of a
transaction or series of transactions described in paragraphs (i) or (iii)
of the definition of Change of Control, the highest price per share of the
Common Stock paid in such transaction or series of transactions (which in
the case of paragraph (i) shall be the highest price per share of the
Common Stock as reflected in a Schedule 13D filed by the person having
made the acquisition).
(iii) if the Optionee ceases to be a Director regardless of the
reason therefor other than death following a Change of Control, the Option
may be exercised by the Optionee until the earlier of sixty (60) days
after the Optionee ceases to be a Director or the expiration date of the
Option;
(iv) the Option becomes non-cancelable; and
(v) if the Option shall remain exercisable after any such Change of
Control, from and after such Change of Control, the Option shall be
exercisable only for the kind and amount of securities and/or other
property, or the cash equivalent thereof, receivable as a result of such
Change of Control by the holder of a number of shares of stock for which
the Option could have been exercised immediately prior to such Change of
Control.
(c) If the Company shall consummate any merger, consolidation or other
reorganization not involving a Change of Control (a "Reorganization") in which
holders of shares of Common Stock are entitled to receive in respect of such
shares any securities, cash or other consideration (including, without
limitation, a different number of shares of Common Stock), the Option shall
thereafter be exercisable, in accordance with the Plan and this Agreement, only
for the kind and
2
<PAGE>
amount of securities, cash and/or other consideration receivable upon such
Reorganization by a holder of the same number of shares of Common Stock as are
subject to the Option immediately prior to such Reorganization, and any
adjustments will be made to the terms of the Option in the sole discretion of
the Committee as it may deem appropriate to give effect to the Reorganization.
(d) Subject to the provisions of Sections 5 and 8 hereof, shares as to
which the Option becomes exercisable pursuant to the foregoing provisions may be
purchased at any time thereafter prior to the expiration or termination of the
Option.
5. Procedure for Exercise.
(a) Subject to the requirements of Section 8 hereof, the Option may be
exercised, from time to time, in whole or in part (but for the purchase of a
whole number of shares only), by delivery of a written notice (the "Notice")
from the Optionee to the Secretary of the Company, which Notice shall:
(i) state that the Optionee elects to exercise the Option;
(ii) state the number of shares with respect to which the Option is
being exercised (the "Optioned Shares");
(iii) state the date upon which the Optionee desires to consummate
the purchase of the Optioned Shares (which date must be prior to the
termination of such Option and no later than thirty (30) days after the
date of receipt of such Notice);
(iv) include any representations of the Optionee required under
Section 8(c); and
(v) if the Option shall be exercised pursuant to Section 9 by any
person other than the Optionee, include evidence to the satisfaction of
the Committee of the right of such person to exercise the Option.
(b) Payment of the Option Price for the Optioned Shares shall be made in
U.S. dollars by personal check, bank draft or money order payable to the order
of the Company or by wire transfer.
(c) The Company shall issue a stock certificate in the name of the
Optionee (or such other person exercising the Option in accordance with the
provisions of Section 9) for the Optioned Shares as soon as practicable after
receipt of the Notice and payment of the aggregate Option Price for such shares.
6. No Rights as a Stockholder. The Optionee shall have no rights as a
stockholder of the Company with respect to any Optioned Shares until the date
the Optionee or his nominee (which, for purposes of this Agreement, shall
include any third party agent selected by the Committee to hold such Option
Shares on behalf of the Optionee), guardian or legal representative is the
holder of record of such Optioned Shares.
3
<PAGE>
7. Adjustments.
(a) If at any time while the Option is outstanding, (1) there shall be any
increase or decrease in the number of issued and outstanding shares of Common
Stock through the declaration of a stock dividend, stock split, combination of
shares or through any recapitalization resulting in a stock split-up, spin-off,
combination or exchange of shares of Common Stock or (2) the value of the
outstanding shares of Common Stock is reduced by reason of an extraordinary cash
dividend, then and in each such event appropriate adjustment shall be made in
the number of shares and the exercise price per share covered by the Option, so
that the same proportion of the Company's issued and outstanding shares of
Common Stock shall remain subject to purchase at the same aggregate exercise
price.
(b) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with a direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number of or exercise price of shares of Common
Stock covered by the Option.
(c) Without limiting the generality of the foregoing, the existence of the
Option shall not affect in any manner the right or power of the Company to make,
authorize or consummate (i) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business; (ii) any merger or consolidation of the Company; (iii) any issue by
the Company of debt securities, or preferred or preference stock that would rank
above the shares of Common Stock covered by the Option; (iv) the dissolution or
liquidation of the Company; (v) any sale, transfer or assignment of all or any
part of the assets or business of the Company; or (vi) any other corporate act
or proceeding, whether of a similar character or otherwise.
8. Additional Provisions Related to Exercise.
(a) The Option shall be exercisable only in accordance with this
Agreement, including the provisions regarding the period when the Option may be
exercised and the number of shares of Common Stock that may be acquired upon
exercise.
(b) The Option may not be exercised as to less than one hundred (100)
shares of Common Stock at any one time unless less than one hundred (100) shares
of Common Stock remain to be purchased upon the exercise of the Option.
(c) To exercise the Option, the Optionee shall follow the provisions of
Section 5 hereof. Upon the exercise of the Option at a time when there is not in
effect a registration statement under the Securities Act of 1933, as amended
(the "Securities Act") relating to the shares of Common Stock issuable upon
exercise of the Option, the Committee in its discretion
4
<PAGE>
may, as a condition to the exercise of the Option, require the Optionee (i) to
represent in writing that the shares of Common Stock received upon exercise of
the Option are being acquired for investment and not with a view to distribution
and (ii) to make such other representations and warranties as are deemed
appropriate by counsel to the Company. No Option may be exercised and no shares
of Common Stock shall be issued and delivered upon the exercise of the Option
unless and until the Company and/or the Optionee shall have complied with all
applicable federal or state registration, listing and/or qualification
requirements and all other requirements of law or of any regulatory agencies
having jurisdiction.
(d) Stock certificates representing shares of Common Stock acquired upon
the exercise of the Option that have not been registered under the Securities
Act shall, if required by the Committee, bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED."
The exercise of each Option and the issuance of shares in connection
with the exercise of an Option shall, in all cases, be subject to each of the
following conditions: (i) the declaration of effectiveness by the Securities and
Exchange Commission ("SEC") of a registration statement relating to a primary
offering of the Common Stock, filed by the Company with the SEC under the
Securities Act, (ii) the satisfaction of withholding tax or other withholding
liabilities, (iii) the listing, registration or qualification of any
to-be-issued shares upon any securities exchange, any NASDAQ or other trading or
quotation system or under any federal or state law, (iv) the consent or approval
of any regulatory body, (v) the execution of a lock-up agreement with one or
more prospective underwriters, or (vi) the execution of a buy-sell or
shareholders agreement with other shareholders of the Company. The Committee
shall in its sole discretion determine whether one or more of these conditions
is necessary or desirable to be satisfied in connection with the exercise of an
Option and prior to the delivery or purchase of shares pursuant to the exercise
of an Option. The exercise of an Option shall not be effective unless and until
such condition(s) shall have been satisfied or the Committee shall have waived
such conditions, in its sole discretion.
9. Restriction on Transfer. The Option shall not be assignable or
transferrable by Optionee except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order, and may be
exercised during the lifetime of the Optionee only by the Optionee or the
Optionee's guardian(s) or legal representative(s).
5
<PAGE>
10. Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if (i) personally
delivered, (ii) sent by nationally-recognized overnight courier or (iii) sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Optionee, to the address set forth on the signature page
hereto; and
if to the Company, to:
bright-technologies.com, inc.
7325 Oswego Road
Liverpool, New York 13090
Attention: Secretary
with a copy to:
Arter & Hadden LLP
1717 Main Street, Suite 4100
Dallas, Texas 75205
Attention: Lawrence B. Mandala, Esq.
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
communication shall be deemed to have been given (i) when delivered, if
personally delivered, (ii) on the first Business Day (as hereinafter defined)
after dispatch, if sent by nationally-recognized overnight courier and (iii) on
the third Business Day following the date on which the piece of mail containing
such communication is posted, if sent by mail. As used herein, "Business Day"
means a day that is not a Saturday, Sunday or a day on which banking
institutions in the city to which the notice or communication is to be sent are
not required to be open.
11. Administration. The Plan and this Agreement shall be administered and
may be definitively interpreted by the Committee, which administration,
interpretation and modification, however, shall not affect Optionee's rights
under this Agreement. Optionee agrees to accept and abide by the decisions of
the Committee concerning administration and interpretation of the Plan and this
Agreement.
12. No Waiver. No waiver of any breach or condition of this Agreement
shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of like or different nature.
13. Optionee Undertaking. The Optionee hereby agrees to take whatever
additional actions and execute whatever additional documents the Company or its
counsel may in their reasonable judgment deem necessary or advisable in order to
carry out or effect one or more of the obligations or restrictions imposed on
the Optionee pursuant to the express provisions of this Agreement.
6
<PAGE>
14. Modification of Rights. The rights of the Optionee are subject to
modification and termination in certain events as provided in this Agreement and
the Plan.
15. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to contracts made
and to be wholly performed therein.
16. 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 shall constitute one and the same instrument.
17. Entire Agreement. This Agreement and the Plan constitute the entire
agreement between the parties with respect to the subject matter hereof, and
supersede all previously written or oral negotiations, commitments,
representations and agreements with respect thereto.
bright-technologies.com, inc.
By:________________________________
Name:______________________________
Title:_____________________________
OPTIONEE:
___________________________________
Name:______________________________
Address: _________________________
_________________________
_________________________
7
<PAGE>
Ladies/Gentlemen:
I hereby exercise my Stock Option to purchase _________ shares of Common Stock
of bright-technologies.com, inc. at the option price of $____ per share as
provided in the Nonqualified Stock Option Agreement dated the ___ day of
_______________.
I acknowledge that I previously received a copy of the 1999 Non-Employee
Director Plan of bright-technologies.com, inc. and executed a Nonqualified Stock
Option Agreement, and I have carefully reviewed both documents.
I have considered the federal tax implications of my option. I hereby tender my
personal check, bank draft or money order payable to bright-technologies.com,
inc. in the amount of $____________ or, I have wire transferred $_______________
to bright-technologies.com, inc. which transfer shall be subject to the
confirmation of receipt of funds by the Company.
_____________________
Optionee
_____________________
Date
<PAGE>
Exhibit 21.1
SUBSIDIARIES OF THE REGISTRANT
1. Bright Technologies, Inc.
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of bright-technologies.com,
inc. on Form SB-2 of our report dated March 12, 1999 appearing in the
Registration Statement.
We also consent to the reference to us under the headings "Selected Financial
Data" and "Experts" in such Registration Statement.
TABB, CONIGLIARO & McGANN, P.C.
New York, New York
May 17, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BRIGHT
TECHNOLOGIES, INC. BALANCE SHEETS AS OF DECEMBER 31, 1998 AND MARCH 31, 1999
AND STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998 AND FOR THE
THREE MONTHS ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-START> JAN-01-1998 JAN-01-1999
<PERIOD-END> DEC-31-1998 MAR-31-1999
<CASH> 0 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 81 66
<CURRENT-ASSETS> 99 84
<PP&E> 234 234
<DEPRECIATION> 141 149
<TOTAL-ASSETS> 460 495
<CURRENT-LIABILITIES> 2,885 3,080
<BONDS> 25 20
0 0
0 0
<COMMON> 6 6
<OTHER-SE> (2,456) (2,611)
<TOTAL-LIABILITY-AND-EQUITY> 460 495
<SALES> 87 31
<TOTAL-REVENUES> 87 31
<CGS> 104 16
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 272 34
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 161 56
<INCOME-PRETAX> (1,109) (155)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,109) (155)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 0 (155)
<EPS-PRIMARY> (0.18) (0.03)
<EPS-DILUTED> (0.18) (0.03)
</TABLE>
