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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington , D.C. 20549
FORM 10-SB
General Form for Registration of Securities of Small Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
SolutionNet International, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Minnesota 95-4749095
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(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
4344 Promenade Way, Suite 102P, Marina del Rey, CA 90292
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(Address of principal executive offices, including zip code)
(310) 823-8088
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(Registrant's telephone number)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered: each class it to be registered:
(N/A) (N/A)
Securities to be registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on which
to be so registered: each class is to be registered:
Common Stock (N/A)
par value $0.001
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TABLE OF CONTENTS
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Item 1. Business......................................................................... 3
Item 2. Financial Information ........................................................... 15
Management Discussion and Analysis of Financial Condition and Results of
Operations ...................................................................... 15
Item 3. Description of Property.......................................................... 16
Item 4. Security Ownership of Certain Beneficial Owners and Management................... 17
Item 5. Directors and Executive Officers................................................. 18
Item 6. Executive Compensation........................................................... 19
Item 7. Certain Relationships and Related Transactions................................... 20
Item 8. Legal Proceedings................................................................ 21
Item 9. Market for Common Equity and Related Stockholder Matters......................... 21
Item 10. Recent Sales of Unregistered Securities.......................................... 22
Item 11. Description of Registrant's Securities to be Registered.......................... 22
Item 12. Indemnification of Directors and Officers........................................ 24
Item 13. Financial Statements and Supplementary Data...................................... 24
Item 14. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure ........................................................ 24
Item 15. Financial Statements and Exhibits................................................ 25
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ITEM 1 - BUSINESS
This Registration Statement on Form 10 includes forward-looking statements
within the meaning of the Securities Exchange Act of 1934 (the "Exchange Act").
These statements are based on management's current beliefs and assumptions about
the Registrant and the industry in which the Registrant competes in, and on
information currently available to management. Forward-looking statements
include, but are not limited to, the information concerning possible or assumed
future results of operations of the Registrant set forth under the headings
"Management's Discussion" and "Business." Forward-looking statements also
include statements in which words such as "expect," "anticipate," "intend,"
"plan," "believe," "estimate," "consider," or similar expressions are used.
Forward-looking statements are not guarantees of future performance. They
involve risks, uncertainties and assumptions. The Registrant's future results
and shareholder values may differ materially from those expressed or implied in
these forward-looking statements. Readers are cautioned not to put undue
reliance on any forward-looking statements. In addition, the Registrant does not
undertake to update forward-looking statements after the effectiveness of this
Registration Statement, even if new information, future events or other
circumstances have made them incorrect or misleading.
History of the Company
SolutionNet International, Inc. ("SolutionNet" or the "Company") is a
holding company, dedicated to the development and marketing of proprietary,
multi-application Internet Gateway Information Technology (IT) solutions. The
Company also operates as a full-service consulting and programming house
providing end-user Internet technologies, ERT solutions, Y2K conversion
solutions, multimedia applications, technology and systems integration, offshore
resources and consultant training. SolutionNet and all of its operating
subsidiaries, are internationally renowned for their high quality IT solutions,
focusing on the integration of the Internet with the banking, medical, finance
and telecommunications industries.
The Company was originally incorporated under the laws of the State of
Iowa on August 1, 1984, under the name of Grason Industries, Inc. On April 28,
1994, Grason Industries, Inc. changed its name to ETG International,
Inc.("ETGI"). On October 11, 1994, ETGI changed its corporate domicile from Iowa
to Minnesota. On March 22, 1999, ETGI changed its corporate name to SolutionNet,
International, Inc.
From April 27, 1994 to April 6, 1999, the Company's common stock was
traded on the NASD OTC Bulletin Board under the symbol "ETGI." The Company's
common stock began trading on the NASD OTC Bulletin Board under the symbol
"SLNN" on April 6, 1999 and currently trades under the same name.
Share Exchange Agreement
By an agreement dated April 2, 1999, and a supplemental agreement dated
April 6, 1999, the Company entered into an agreement for the exchange of common
stock (the "share-exchange agreement") with Densmore Group Limited ("Densmore
Group"). Densmore Group owned a majority controlling interest in all of the
issued and outstanding shares of SolutionNet Inc., which in turn, held all of
the issued and outstanding shares of SR Singapore, Pte., Ltd. ("SR Singapore").
As part of the share-exchange agreement, an intermediate holding company was
incorporated on April 14, 1999. SolutionNet Inc. was incorporated under the laws
of the British Virgin Islands for the purpose of holding all of the Company's
global marketing subsidiaries and for managing the international sales of
Company's products and services outside North America.
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Pursuant to the share-exchange agreement, the Company acquired 100% of the
issued and outstanding stock of SolutionNet Inc. (and thereby SR Singapore) in
exchange for 10,500,000 shares, $0.001 par value, of the Company's common stock.
SR Singapore is a private limited corporation that was incorporated on January
25, 1994 under the laws of the Republic of Singapore. SR Singapore was
incorporated for the purpose of providing independent consulting services
offering numerous Information Technology solutions. Although inactive during
1994, SR Singapore became an active operational organization during the first
fiscal quarter of 1995. Currently, SR Singapore, through SolutionNet Inc. is a
wholly owned operating subsidiary of the Company.
Immediately prior to the share-exchange agreement, the Company had
7,000,003 shares issued and outstanding. After a 10-to-1 and a 4-to-1 reverse
stock split, the Company had a total of 175,000 shares that were issued and
outstanding. As part of the share exchange agreement of April 2, 1999, the
Company issued 10,500,000 shares of common stock to shareholders of SolutionNet
Inc. in exchange for 100% of SolutionNet Inc.'s common stock. Currently, the
Company has a total of 12,177,509 shares of common stock that are issued and
outstanding.
Bankruptcies
On April 4, 1995, Electronic Technology, Inc., ("Subsidiary") a subsidiary
of ETG International, Inc. (ETGI) filed for Chapter 11 in the United States
Bankruptcy Court in the District of Minnesota. On January 31, 1996, the
Subsidiary converted its Chapter 11 case to a Chapter 7. In March 1999, the
Chapter 7 trustee submitted his final report and claims for the parties'
accountants and attorneys filed final payments. The Chapter 7 trustee confirmed
that a final distribution to the claimants would take place within 30 days and
that the Chapter 7 case would be officially closed within approximately six
months from the date of this filing.
NARRATIVE DESCRIPTION OF BUSINESS
Business of Company
The Company, including all of its subsidiaries, SolutionNet Inc. and
conducts its operations as a Internet software development company, specializing
in the design, implementation, integration, and management of state-of-the-art
Internet/Intranet Solutions ("IT") and other network related activities.
Initially started with a main focus on providing valued-added Internet
Technology services, SolutionNet has now grown and is active in many diverse
areas of Internet Technology, serving clients in many countries around the
world. The Company has just recently launched its first proprietary software
called E-Net-Electronic Banking, which provides fully integrated Internet based
transactions and banking technology use in some of the top world banks.
Industry Overview and Market
People and business are increasingly relying on the Internet to access and
share information as well as to purchase and sell products and services.
International Data Corporation has estimated that by the end of 1998, more than
142 million people would be using the Internet to communicate, participate in
discussion forums and to obtain information about goods and services. IDC has
projected that the number of users will grow to approximately 502 million people
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by the end of the year 2003. A rapidly growing number of businesses are using
the Internet to market and sell their products and to streamline their business
operations. The substantial growth of the Internet has created tremendous market
opportunities for companies connecting buyers and sellers and for companies that
are creating system applications for traditional businesses that want to engage
in e-commerce.
Historically, e-commerce has occurred through electronic data interchange
over proprietary networks. Such networks are costly and available only to a
limited number of participants. The Internet provides an "open platform" with
common communication protocols to build efficient, cost-effective networks that
facilitate e-commerce. As Internet-based network reliability, speed and security
have improver in recent years and as more businesses have connected to the
Internet, traditional businesses are beginning to use the Internet to conduct
e-commerce and exchange information with customers, suppliers and distributors.
Consumers and businesses alike can expect continued growth in the Web-services
market. International Data Corporation has estimated that the global market for
Internet services has grown approximately 71%, with revenues of $7.8 billion for
the year 1998. Moreover, corporate investment in Web-enabling technology will
continue to grow both in the United States and abroad. A recent analysis from
International Data Corporation estimates domestic spending to be approximately
$174 billion, expected to reach $305 billion in the year 1999. By the year 2003,
it is estimated that companies will spend approximately $1.5 trillion worldwide.
Principal products and services
The Company's products include E-Net, an internet banking solution, EMI, a
medical records management solution, the Intelligent Data Mapper tool (IDM) and
e-business kits, a Web-based business-to-business and business-to-consumer
e-commerce solution. The company also operates as a full-service consulting and
programming house providing end-user Internet technologies, ERP solutions, Y2K
Conversion solutions, Multimedia applications, technology and systems
integration, offshore resources and consultant training. These services are
offered directly to the company's customers. There is no requirement that the
governments of either the United States or of Singapore approve this company's
products and services.
Marketing and Distribution
The Company uses a variety of marketing programs designed to stimulate
demand for its products and services and to support their direct and indirect
sales channels. The company focuses direct marketing efforts on decision makers
in large organizations. The goal is to identify potential buyers of the
company's proprietary enterprise software solutions and services and create
awareness of the company, brand, and product offerings (including clients,
servers, applications, and services). The company maintains an ongoing dialogue
with its existing customers to ensure customer satisfaction, request references,
and make follow-on sales.
The Company makes many of its products available for evaluation through
its website at www.solutionnet.net. Certain customer information is collected
electronically through an automated registration process, creating the basis for
ongoing marketing of upgrades, new products, add-on products, and merchandise.
The company currently retains the services of its own in-house marketing
department in marketing its products in Singapore. Elsewhere, the company
handles the marketing and selling of its products through a network of
resellers: India- Tata Infosys, Kashyap Radiants and Linkquest, Ltd.; Pakistan,
Bangladesh, the Middle East, including Suadi Arabia- Kashyap Radiants and
Linkquest, Ltd; the U.K. and Europe; the U.S. and North America. The reresellers
work on a commission-only basis with a minimum commitment to turnover and to a
fixed geographical location.
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The company believes it is important to have an international presence and
intends to continue to conduct business in markets around the world through a
combination of subsidiaries and distributors. The company conducts business
internationally through a variety of distribution and service partners. In
addition, the company continually seeks to increase it corporate profile by
participating in exhibitions, trade fairs and other industry-related activities
on a local, regional and global scale. These marketing activities serve to
increase the visibility of both the company and its proprietary product line.
The company currently maintains strategic technology and marketing
relationships with three globally recognized IT companies including Oracle
Corporation, Sun Microsystems and the Algorithm Research unit of Cylink
Corporation. In retaining such strategic relations with globally recognized
industry leaders, the company serves a complementary role rather than a
competitive role.
Dependence on Major Customers
The company has a large client base from which it derives its business and
revenues. Currently, the company does not have a single customer that accounts
for more than 10% of its annual revenues.
Competition
The company develops, markets, and sells proprietary Web-based e-commerce
infrastructure and e-commerce application software products and services. For
both types of software and related services, the company believes the principal
competitive factors are core technology, breadth of product features, product
quality, marketing and distribution resources, pricing, and customer service and
support. The company believes it competes well with respect to many of these
factors.
The company holds cutting edge technology it believes is superior to its
competitors, and has established the necessary infrastructure to launch
successfully on the global markets. With proprietary products like E-Net
Internet banking solution, EMI Electronic Medi Info medical records management
software, Intelligent Data Mapper (IDM) data mapping interface technology, and
E-Business Kits business-to-business and business-to-consumer e-commerce
solution, the company believes it has built a solid foundation upon which to
grow and expand the size and scope of its business. The company believes it has
a staff and management team committed to the long-term success of the company as
evidenced by its ability to attract and retain highly skilled and respected
employees creating one of the lowest employee turnover ratios in the industry.
The company also believes the creation and implementation of an Employee Stock
Option Program (ESOP) will further spur employee loyalty, motivation and
participation.
Selling products like its Web-based e-commerce infrastructure and
application products requires a significant amount of customer service and
support. The company feels that its overall lack of corporate branding and
relatively short operating history presents a significant challenge when facing
many of the company's current and potential competitors who have longer
operating histories, larger overall installed customer bases, related products
that inter-operate with e-commerce infrastructure and application software
products, more employees, greater brand recognition, and greater financial,
technical, marketing, public relations, and distribution resources than the
company does. Competition could result in price reductions for company products
and services, loss of market share, or other material adverse effects on the
company's finances or business prospects. Additionally, the product lead time
for the marketing of the company's E-Net Internet banking and EMI Electronic
Medi Info solutions can be quite lengthy requiring continuous and highly-focused
marketing and sales of up to nine months with a prospective customer, and hence,
could hinder the company's ability in selling and implementing its related
services and products in a concise timetable.
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The market for software and services for intranets, extranets, and the
Internet is relatively new, intensely competitive, and subject to rapid
technological change. The company expects competition to continue and increase
in the future. Such competition could impair the Company's finances or business
prospects.
Competition in the e-commerce application market is also intense. The
company offers a family of Web-based products and services that facilitate the
creation and maintenance of Web sites for online commerce. Companies currently
offering products that compete with the company's family of products include
International Business Machines (IBM), General Electric Information Systems,
Microsoft, enterprise resource planning vendors (such as PeopleSoft, Inc. and
SAP), Open Market, Inc., Ariba Technologies, CommerceOne, Sterling Commerce,
Inc., BroadVision, Inc., and a wide variety of smaller competitors.
Companies offering e-commerce application software that can be bundled
with operating systems or other software or hardware are particularly formidable
in this market. In particular, IBM is investing heavily in marketing, research,
and development for e-commerce applications. IBM has a large customer base using
legacy systems and will likely be willing to provide e-commerce application
software to large customers at nearly no charge as a way to win hardware and
services business. Unlike IBM and other banking software sellers, the company
does not have entire product lines to build virtual integrated marketing.
Competition in this market could impair the company's finances and business
prospects.
There is also no guarantee that the market will accept Web-based
e-commerce solutions over PC-based solutions as an industry standard. For
example, with E-Net Internet banking, the company offers a Web-based portal
solution connecting customers and banks real-time back end. The possible
reluctance of banks to integrate their existing real-time back-end accounting
information architecture with any other system, thereby increasing product lead
time could hinder the company's ability to market and sell its particular
product line. Additionally, any changes in central banking regulations in
Singapore, the U.S. and abroad could also create delays in the decision-making
process of prospective customers, thereby possibly adversely affecting the
company's ability to market and sell its particular product line.
Companies offering server and client products that are or can be bundled
with operating systems or other software or hardware are particularly formidable
competition in the market for server software. For example, Microsoft's server
products operate on its Windows NT server operating system ("Windows NT" or
"NT"), Oracle's server products operate with its large installed base of
database software, Sun's server products operate on its Solaris server operating
system, and BEA's server products operate with its installed base of software
that monitors transaction processing. IBM has a large customer base using legacy
systems and is, in many cases, willing to provide server software to large
customers at nearly no charge as a way to win hardware and services business.
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In recognition of this competitive environment, the company is in the
process of implementing a global strategy to increase the presence and brand
recognition of not only its product line, but also the company itself.
The company believes it is important to have an international presence and
intends to continue to conduct business in markets around the world through a
combination of subsidiaries and distributors. The company conducts business
internationally through a variety of distribution and service partners. In
addition, the company continually seeks to increase its corporate profile by
participating in exhibitions, trade fairs and other industry-related activities
on a local, regional and global scale. These marketing activities serve to
increase the visibility of both the Company and its proprietary product line.
Additionally, the company understands and has begun implementing the
dynamic processes involved in switching to a product-based operating entity from
a service-based company. The company is also actively engaged in using its
relationships with companies such as Oracle Corporation and Sun Microsystems in
increasing its global marketing reach.
Research and Development
The company continues to place an emphasis on the capitalization of its
research and development efforts in continually improving its existing product
line while simultaneously focusing on the creation of new technologies and
applications. Additionally, the company fastidiously implements a cost/benefit
analytical model with budgetary controls and tight development schedules to
ensure optimal time/cost-based development cycles. The following is an estimate
of the amount spent during each of the last two fiscal years on research and
development activities:
Year Amount (SGD/Singapore dollars)*
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1998 612,000 SGD
1999 741,000 SGD
*$1.00 USD (US Dollars) = $1.70 SGD (Singapore dollars) as of 9/1999.
Fluctuations in Quarterly Results
As a result of its relatively limited operating history, the company does
not have relevant historical financial data for a significant number of periods
on which to base planned operating expenses. Accordingly, the company's expense
levels, which are to a large extent fixed, are based in part on expectations as
to future revenues. In addition, the company typically operates with a minimal
backlog of product orders. Therefore, the company's quarterly sales and
operating results generally depend on the volume, timing, and fulfillment of
orders received within the quarter, which are difficult to forecast. For the
Enterprise business segment, the company typically recognizes the majority of
its revenues toward the end of each quarter. Accordingly, it may not be able to
adjust spending in a timely manner to compensate for any unexpected revenue
shortfall. Any significant shortfall of demand for the company's products and
services in relation to its expectations would immediately impair its finances
and business prospects. Moreover, the company may increase its operating
expenses to exploit a market opportunity for its products and services, fund
greater levels of research and development, increase its sales and marketing
operations, develop new distribution channels, improve its operational and
financial systems, and broaden its customer support capabilities. To the extent
that such expenses precede or are not subsequently followed by increased
revenues, the company's finances and business prospects will be impaired.
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The company expects to experience fluctuations in operating results that
may be caused by a variety of factors, including:
- - Varying demand for company products and services;
- - Increasing complexity of products with higher prices and longer sales
cycles;
- - The timing of the introduction or enhancement of company products and
services or those of its competitors;
- - Market acceptance of new products and services;
- - The timing and size of individual license transactions (particularly to
enterprise customers who may attempt to delay closing transactions until
the end of a fiscal quarter as a negotiating tactic);
- - Company price changes or those of its competitors;
- - The timing, size, and number of Website transactions;
- - Seasonal trends in Internet usage and advertising placements;
- - The amount and timing of capital expenditures and other costs relating to
the expansion of the company's operations;
- - The mix of distribution channels through which products are sold;
- - The mix of products and services sold;
- - The mix of international and North American revenues;
- - Litigation-related costs; and
- - General economic conditions.
Quarterly operating results may fluctuate due to the timing of revenue from
large sales of enterprise software products, including E-Net Internet banking,
EMI Medi Info, Intelligent Data Mapper and E-Business Kits family of products.
While the company intends to pursue multiple sales opportunities with respect to
these enterprise products, the loss or deferral of one or more significant sales
could impair the company's finances or business prospects.
In addition, as a strategic response to changes in the competitive
environment, the company may from time to time make certain pricing or marketing
decisions or enter into business combinations that could impair its finances or
business prospects. As a result, the company believes that period-to-period
comparisons of our results of operations are not necessarily meaningful and may
not predict future performance.
Proprietary Rights
The company's success and ability to compete partly depends on its
technology, including primarily its internally developed technology and, in the
future, technology that the company might license from third parties. Others may
develop technologies that are similar or superior to the company's, which could
impair its ability to compete.
For the technology the company develops internally, it relies on the
technological and creative skills of its employees. To establish and maintain a
technology leadership position, new product developments, frequent product
enhancements, name recognition, and reliable product maintenance are essential.
If the company were unable to develop new technology and deliver new products
and enhancements, its finances and business prospects would be impaired.
In the future, the company may also rely on technology licensed from third
parties, including software integrated with internally developed software and
used in its products to perform key functions. If implemented as a component of
the company's business, these third-party technology licenses may not continue
to be available to the company on commercially reasonable terms. The loss of any
technology licenses could delay or reduce product shipments until equivalent
technology could be identified, licensed, and integrated. Any such delays or
reductions in product shipments could impair the company's finances and business
prospects.
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To protect its technology, the company relies on patent, trademark, trade
secret, and copyright law and generally enters into confidentiality or license
agreements with its employees, consultants, and vendors. The company generally
controls access to and distribution of its software, documentation, and other
proprietary information. Despite these precautions, it may be possible for
unauthorized third parties to copy or otherwise obtain and use the company's
products, technology, or proprietary information. In addition, effective patent,
trademark, trade secret, and copyright protection may be unavailable or limited
in certain foreign countries. The company is currently in the process of filing
patent and trademark applications for company products and services in the
United States and Singapore.
To license its products, the company relies in part on "shrink wrap"
licenses that are not signed by the end-user and, therefore, may be
unenforceable under the laws of certain jurisdictions. Policing unauthorized use
of company products is difficult and the steps taken may not prevent the
misappropriation of company technology. In addition, litigation may be necessary
in the future to enforce the company's intellectual property rights, to defend
the validity of its patents, to protect its trade secrets, or to determine the
validity and scope of the proprietary rights of others. Such misappropriation or
litigation could result in substantial costs and diversion of resources and the
potential loss of intellectual property rights, which could impair the company's
finances or business prospects.
Although not currently engaged in any form of litigation proceedings, in
the future, the company may receive notice of claims of infringement of other
parties' proprietary rights. Such claims may involve internally developed
technology or technology and enhancements that the company may license from
third parties. Moreover, although the company sometimes will be indemnified by
third parties against claims that licensed third-party technology infringes the
proprietary rights of others, indemnity may be limited, unavailable, or, where
the third party lacks sufficient assets or insurance, ineffectual. Any such
claims could require the company to spend time and money defending against them,
and, if they were decided adversely to the company, could cause the company to
pay damages, to be subject to injunctions, or to halt distribution of its
products while the company re-engineers them or seeks licenses to necessary
technology (which might not be available on reasonable terms). Moreover, the
company could also be subject to claims for indemnification resulting from
infringement claims made against company customers, which could increase defense
costs and potential damages. The company does not currently have liability
insurance to protect against the risk that its technology or licensed
third-party technology infringes the proprietary rights of others. Any of these
factors could impair company finances or business prospects.
Government Regulation and Legal Uncertainties
The Company is not currently subject to direct government regulation in
either Singapore, the British Virgin Islands or the U.S. other than the laws and
the regulations that generally apply to publicly owned companies and to
businesses generally. Few laws or regulations specifically apply to access to or
commerce on the Internet. However, due to the increasing popularity and use of
the Internet, it is likely that a number of laws and regulations may be adopted
with respect to the Internet, covering certain content (such as pornography and
gaming) and issues such as user privacy and expression, pricing of products and
services, e-commerce liability, taxation, advertising, intellectual property
rights, information security, and the convergence of traditional communication
services with Internet communications. Other countries and various political
organizations are likely to favor more and different regulation than what has
been proposed in the U.S., thus further increasing the complexity of regulation.
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The adoption of such laws or regulations, possibly including the taxation
of Internet services and transactions, may decrease the growth of intranets,
extranets, and the Internet, which could in turn decrease the demand for the
company's products, increase the cost of doing business, or otherwise impair the
company's finances and business prospects. In addition, it is not clear how
existing laws governing issues such as property ownership, copyrights and other
intellectual property issues, taxation, libel, and personal privacy apply to the
Internet. The vast majority of such laws was adopted prior to the advent of the
Internet and related technologies and, as a result, do not contemplate or
address the unique issues of the Internet and related technologies. Changes to
such laws intended to address these issues, including some recently proposed
changes, could create uncertainty in the marketplace that could reduce demand
for the company's products, increase the cost of doing business, including as a
result of costs of litigation or increased product development costs, or
otherwise impair the company's finances or business prospects.
The encryption technology contained in the company's products is subject
to U.S. import/export controls. Such import/export controls, either in their
current form or as may be subsequently revised, may limit the company's ability
to distribute certain encrypted products on a global basis. While the company
takes precautions against unlawful importation and exportation, such importation
and exportation may inadvertently occur from time to time, subjecting the
company to potential liability and adverse consequences. In addition, future
legislation or regulation may further limit levels of encryption or
authentication technology that can be included in the company's products. For
example, recent proposals at the federal level call for domestic controls on
encryption products and related services. Such new regulation would alter the
design, production, distribution, and use of the company's products, and could
reduce demand for the company's products as well as general demand for Internet
software and for electronic commerce products and services. In addition, foreign
governments have import and domestic use laws and regulations already in place
that may restrict the type of encryption software that is permitted for
distribution in their countries. As a consequence of such export, import, and
use controls, the company must develop and market both domestic and
international versions of its products that contain encryption software, with
the version for import/export into the U.S. market having a stronger level of
encryption than the version for export to international markets. Along with the
additional costs associated with the duplication of effort and expense in
research, development, manufacturing, and distribution of different versions of
products, the company may lose sales from customers who wish to have the same
level of encryption security throughout their organization. The company may also
encounter difficulties competing with non-U.S. producers of strong encryption
products, who may both import and export their products into and out of the
United States and sell products overseas.
Additionally, some countries have enacted import laws requiring the
alteration of the company's products in order for the government of such
countries to maintain a level of control over the content of products entering
such countries. In addition to the costs the company incurs in complying with
varying international regulations, alteration of its products may cause such
products to perform at a level below their intended level and thereby subject
the company to potential liability and other adverse consequences. Any such
export restrictions, import restrictions, legislation, regulation, or unlawful
exportation or importation could impair the company's finances or business
prospects.
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Dependence on Key Personnel
The company's performance depends substantially on the performance of its
executive officers and key employees. Given the company's relatively early stage
of development, the company depends on the ability to retain and motivate highly
qualified personnel, especially the management and highly skilled development
teams. The company does not have "key person" life insurance policies on any of
its employees. The loss of the services of any of its executive officers or
other key employees could impair the company's finances or business prospects.
The company's future success also depends on its continuing ability to
identify, hire, train, and retain other highly qualified technical and
managerial personnel, especially software developers. Competition for such
personnel is intense, and the company may not be able to attract, assimilate, or
retain other highly qualified technical and managerial personnel in the future.
The inability to attract and retain the necessary technical and managerial
personnel could impair the company's finances or business prospects.
Risks Associated with International Operations
Within the company's Enterprise software operating segment, the company is
currently incurring, and expects to continue to incur, costs in developing,
marketing, and distributing a variety of localized versions of our products. If
international revenues are not adequate to offset the expense of maintaining
foreign operations and the costs of localizing our products, the company's
finances and business prospects could be impaired. For example, in the ten
months ended October 31, 1998, the company experienced a decline in
international revenue growth rates in part due to the economic crisis in the
Asia/Pacific region. The company may not be able to successfully market, sell,
and deliver its products in foreign markets. In addition to the uncertainty as
to the company's ability to maintain and generate new revenues from its foreign
operations and expand its international presence, there are certain risks
inherent in doing business on an international level, such as unexpected changes
in regulatory requirements, export and import restrictions, export and import
controls relating to encryption technology, tariffs and other trade barriers,
difficulties in staffing and managing foreign operations, longer payment cycles,
problems in collecting accounts receivable, political instability, fluctuations
in currency exchange rates, software piracy, seasonal reductions in business
activity during the summer months in Europe and elsewhere, and potentially
adverse tax consequences, which could adversely impact the success of the
company's international operations. One or more of such factors may impair the
company's future international operations and its overall finances and business
prospects.
Compliance with Environmental Laws
Since the company is a software development and distribution company with
an emphasis on Internet applications, the company does not come under any
environmental regulations.
Year 2000 Compliance
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 are not Year 2000 compliant may not be able
to distinguish whether "00" means 1900 or 2000, which may result in failures or
the creation of erroneous results.
The company has developed a phased Year 2000 readiness plan for the
current versions of our products. The plan includes development of corporate
awareness, assessment, implementation (including remediation, upgrading, and
replacement of certain product versions), validation testing, and contingency
planning. The company continues to respond to customer concerns about prior
versions of our products on a case-by-case basis.
12
<PAGE>
The company has largely completed all phases of our plan, except for
contingency planning, with respect to the current versions of all of our
products. The company has made Year 2000 readiness disclosures stating that the
current versions of all of the products that the company currently ships are
"Year 2000 Compliant," as defined below, when configured and used in accordance
with the related documentation, and provided that the underlying operating
system of the host machine and any other software used with or in the host
machine or the company's products are also Year 2000 Compliant. These
disclosures note that, in some cases, the company's products require a patch
that the company provides with the product in order to be Year 2000 Compliant.
The company, its customers, and vendors continue to test our software for
compliance and may find additional errors or defects associated with Year 2000
date functions.
The company has defined "Year 2000 Compliant" to mean that the product
will accurately receive, process, and provide date data from, into, and between
the twentieth and twenty-first centuries, including the years 1999 and 2000, and
make leap year calculations, provided that all other products (whether hardware,
software, or firmware) used in or in combination with the product properly
exchange data with it. The company has not tested its products on all platforms
or all versions of operating systems that the company currently supports and has
advised its customers to verify that their platforms and operating systems
support the transition to the year 2000.
The company has not specifically tested software obtained from third
parties (licensed software, shareware, and freeware) that is incorporated into
its products, but the company is seeking assurances from its vendors that
licensed software is Year 2000 Compliant. Despite the company's testing, testing
by the company's current and potential customers, and whatever assurances the
company may receive from developers of products incorporated into our products,
the company's products may contain undetected errors or defects associated with
Year 2000 date functions. Current versions of Netscape ECXpert, Netscape
BuyerXpert, Netscape SellerXpert, and Netscape MerchantXpert include third-party
Java components that may not be Year 2000 Compliant in all respects. Netscape
provides no warranty to the company's customers with respect to the Year 2000
compliance of third-party components embedded in the company's software. Also,
certain prior versions of the company's products are not fully Year 2000
Compliant, and the company is working to address these issues. Known or unknown
errors or defects in the company's products could result in delay or loss of
revenue, diversion of development resources, damage to the company's reputation,
or increased service and warranty costs, any of which could impair the company's
finances or business prospects. Some commentators have predicted significant
litigation regarding Year 2000 compliance issues, and we are aware of such
lawsuits against other software vendors. Because of the unprecedented nature of
such litigation, it is uncertain whether or to what extent the company may be
affected by it.
The company's internal systems include both our information technology
("IT") and non-IT systems. The company has completed a baseline assessment of
our material internal IT systems (including both the company's own software
products and third-party software and hardware technology) and the company's
non-IT systems (such as the company's security system, building equipment, and
embedded microcontrollers) and is beginning implementation (including
remediation, upgrading, and replacement). The company has retained an outside
contractor to provide assistance with validation testing and contingency
planning. The company expects to complete all project phases by August 31, 1999.
13
<PAGE>
To the extent that the company is not able to test the technology provided by
third-party vendors, it is seeking assurances from such vendors that their
systems are Year 2000 compliant. The worst-case scenario would involve the
unavailability of the company's major internal systems to its employees and the
unavailability of Netcenter to its users. In the event of this worst case
scenario, the company may incur expenses to repair its systems, face
interruptions in the work of its employees, lose advertising revenue, not be
able to deliver minimum guaranteed levels of traffic, not be able to deliver
downloads of our browser product, and suffer damage to its reputation. The
company estimates total costs for all internal systems project phases to be
approximately $8 million, with approximately $5 million of this representing the
company's internal cost of the work its own employees have done on this project.
Costs to be capitalized in connection with purchased computer hardware are
expected to approximate $1.5 million, with the remaining costs to be expensed
when incurred. In addition to the specific problems and costs we've described,
the company may experience material unanticipated problems and costs caused by
undetected errors or defects in the technology used in our internal IT and
non-IT systems.
The company does not currently have any information concerning the Year
2000 compliance status of its customers. As is the case with other similarly
situated software companies, if the company's current or future customers fail
to achieve Year 2000 compliance or if they divert technology expenditures
(especially technology expenditures that were reserved for enterprise software)
to address Year 2000 compliance problems, the company's own finances or business
prospects could be impaired.
The company has funded our Year 2000 plan from operating cash flows. The
company estimates that costs incurred through October 31, 1998 in connection
with Year 2000 compliance projects have not been material. The company will
incur additional amounts related to the Year 2000 plan for administrative
personnel to manage the project, outside contractor assistance, technical
support for its products, product engineering and customer satisfaction. The
company may experience material problems and costs with Year 2000 compliance
that could impair the company's finances and business prospects.
The company has not yet fully developed a comprehensive contingency plan
to address situations that may result if it will not be able to achieve Year
2000 readiness of its critical operations. The cost of developing and
implementing such a plan may itself be material. Finally, the company is also
subject to external forces that might generally affect industry and commerce,
such as utility or transportation company Year 2000 compliance failures and
related service interruptions.
Current Number of Employees
At October 15, 1999, the Company had 75 full time employees.
Reports to Security Holders
The Company has voluntarily elected to file this Form 10-SB registration
statement in order to become a reporting company under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Following the effective date of
this registration statement, we will be required to comply with the reporting
requirements of the Exchange Act. We will file annual, quarterly and other
reports with the Securities and Exchange Commission. The Company intends to
furnish holders of its common stock annual reports containing audited financial
statements.
14
<PAGE>
The public may read and copy any materials this Company has filed with
the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The public may obtain information on the operation of
the Public Reference Room by contacting the SEC at 1-800-SEC-0330.
Alternatively, the public may obtain information on the Company by accessing the
Company's website at www.SolutionNet.net
ITEM 2 - FINANCIAL INFORMATION
Selected Financial Information
The following table contains selected financial data of the Company and is
qualified by the more detailed financial statements and the notes thereto
provided in this Registration Statement. The financial data as of and for the
period ended June 30, 1999, have been derived from the Company's financial
statements, which statements were audited by Mr. Clyde Bailey, Certified, Public
Accountant.
Selected Financial Data June 30, 1999
- ------------------------------------------------
Total Revenues $ 987,946
Net Income $ 95,078
Total Assets $ 12,754,710
Total Liabilities $ 1,166,490
Total Stockholders' Equity $ 11,588,220
- ------------------------------------------------
Management's Discussion and Analysis of Financial Conditions and Results of
Operations
After SolutionNet's business combination with SR Singapore, as previously
discussed, the Company implemented SR Singapore's products and operations into
its current business plan to develop and market proprietary, multi-application
Internet Gateway Information Technology (IT) solutions and to become one of the
premier web applications solutions provided in the world. Therefore, this
discussion and analysis will focus on the Company's current business plan and
operations.
Liquidity
On April 6, 1999, the Company raised approximately $980,000 through the
sale of 1,500,000 shares of its common stock at a price of $.66 per share.
The Company also plans to raise approximately $5,000,000 through a private
placement offering. The Company plans to use these funds in its expansion
efforts of marketing and sales organization and development activities on a
global level.
15
<PAGE>
The Company believes that its existing capital resources together with
ongoing fund raising efforts will be sufficient to meet its operating expenses
and capital requirements. However, the Company's long-term capital requirements
will depend upon many factors, including but not limited to, the rate of market
acceptance of the Company's web applications solutions, the Company's ability to
develop, maintain, and expand its customer base, the level of resources required
to expand the Company's marketing and sales organization, information systems
and development activities and other factors, some of which are beyond the
Company's control. Furthermore, any additional equity financing could be
dilutive to our then-exiting shareholders and any debt financing could involve
restrictive covenants with respect to future capital raising activities and
other financial and operation matters.
Capital Expenditures
Capital expenditures for the remainder of the fiscal year consist
primarily of opening up business offices in London, England and San Jose,
California and costs associated with ongoing expansion efforts of marketing and
sales of the Company's products and services on a global level.
Results of Operations
For the period ending June 30, 1999, the Company reported net earnings of
$95,078 or $0.027 earnings per share and total revenues of $987,946. This
reflects financial data covering a 3-month period, from the April 2, 1999
business combination of the companies and up to and including June 30th 1999
(the Company's fiscal year end).
SR Singapore reported revenues of 3,535,017 SGD ($2,091,107
USD) for fiscal year 1999, an increase of 39% over fiscal year 1998 revenues of
2,547,654 SGD ($1,507,041 USD). The company also reported net earnings of
549,577 Singapore Dollars SGD ($323,280.50 USD) or $0.03 USD Earnings Per
Share), for the period ended June 30, 1999, a 1,084% increase over fiscal year
1998 results of 50,736 USD (all conversion rates based upon on 1USD = 1.70 SGD).
SR Singapore management attributes the sharp rise in revenues and net income to
the increased global demand for the company's software and web-based internet
products. Moreover, as research and development costs decrease for the company's
internet-based products, the company foresees exponential increases in revenues
over the next four year.
As people and businesses are increasingly relying on the Internet to
access and share information and to purchase and sell products and services, the
Company believes that its business model of developing and marketing IT
solutions will enable it to become a leading provider of web based applications
solutions around the world. For example, the Company's marketing efforts which
are designed to increase awareness and generate leads for the Company's products
and services, will increase the visibility of the Company and its proprietary
product line. International Data Corporation estimated that in 1998, the global
market for Internet services reached $7.8 billion in revenues, a 71% increase in
growth from the year before.
ITEM 3 - DESCRIPTION OF PROPERTY
Location of Principal Properties
The Company is using a part of the office space that is currently being
leased by Sara Hallitex Corporation ("Sara Hallitex"), located at 4344 Promenade
Way, Suite 102P, Marina del Rey, CA 90292. The Company is paying $2,000 per
month to Sara Hallitex for the use of said office space. Sara Hallitex is
currently leasing two suites from Marina City Club Towers for a total monthly
rental rate of $5,750. Each suite is approximately 1,500 square feet.
16
<PAGE>
SR Singapore is currently leasing 4,186 square feet of office space in
Singapore, located at No. 1 Shenton Way, number 22-06/09, Singapore 068803. The
current monthly rental rate is $14,651 (Singapore dollars). The lease expires in
August 2002.
Investment Policies
The Registrant does not have a policy of acquiring assets primarily for
possible capital gain or for income. Moreover, the Registrant does not have a
policy of making investments in real estate, real estate mortgages, and does not
have securities of or interests in persons primarily engaged in real estate
activities.
Description of Real Estate and Operating Data
The Registrant does not own any real estate properties and has no
agreements to acquire any such properties at this time.
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT
The following table sets certain information with respect to the number of
shares of Common Stock of the Company beneficially owned by (i) each officer and
director of the Company; (ii) each person known to beneficially own more than 5%
of the Company's Common Stock; and (iii) all directors and executive officers as
a group. The Company has no other class of stock outstanding. The table sets
forth the information based on 12,177,509 shares issued and outstanding as of
June 30,1999.
<TABLE>
<CAPTION>
Name and Address of Number of Percent of all shares
Beneficial Owner and Management Shares of Common Stock
<S> <C> <C>
Densmore Group, LTD 7,750,000(1) 63.64%
S1 Anson Road 10 55/57
Anson Center
Singapore, 079904
Sara Hallitex Corporation 1,730,000 14.21%
4344 Promenade Way, Suite102P
Marina del Rey, CA 90292
Garrett K. Krause 541,000(2) 4%
Vice-President and Director
</TABLE>
(1) Suresh Venkatachari is the beneficial owner of 7,100,000 of the 7,750,000
total shares owned by Densmore Group, LTD.
(2) Amount represents a portion of the 920,000 shares of common stock which was
distributed as a dividend to the shareholders of Sara Hallitex Corporation.
The dividends were issued to Garrett K. Krause controlled entities.
17
<PAGE>
The Company believes that the beneficial owners of securities listed
above, based on information furnished by such owners, have sole investment and
voting power with respect to such shares. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission and
generally includes voting or investment power with respect to securities. None
of the foregoing has any right to acquire other or additional shares of the
Company. Moreover, there is no existing arrangement that may result in a change
of control of the Company.
ITEM 5 - DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names and ages of the executive
officers and directors of the Company and its subsidiaries, the principal
offices and positions held by each person and the date such person became an
executive officer or a director. The executive officers are elected annually by
the Board of Directors and serve at the discretion of the Board of Directors.
The directors serve one-year terms and until their successors are elected.
<TABLE>
<CAPTION>
TABLE
Directors and Executive Officers
--------------------------------
Name Age Position(s) Held Since
---- --- ----------- ----------
<S> <C> <C>
Suresh Venkatachari 32 Chairman of the Board, March 1999
Director, President, and
Chief Executive Officer
Sampath Seshadri 45 Vice President and Director April 1999
Garrett K. Krause 32 Vice-President and Director March 1999
</TABLE>
SURESH VENKATACHARI has served as the Chairman of the Board, Director,
President, and Chief Executive Officer of the Company since March 1999. Mr.
Suresh is also the founder, Director and Chief Executive Officer of SR
Singapore, Pte., Ltd. Mr. Suresh obtained his bachelor's degree in Electronics
and Instrumentation. Mr. Suresh is also the Chief Executive Officer and Director
of SR Singapore. Mr. Suresh began his career in the IT industry amassing
practical experience in a variety of industrial sectors becoming proficient in
IT languages, systems and databases. In 1994, Mr. Suresh founded SR Singapore,
an independent consulting services company offering numerous IT solutions, all
based on his personal strengths in industry-specific knowledge, creativity and
flexibility. Under Mr. Suresh's leadership, SR Singapore has enjoyed rapid
growth and expansion worldwide with its leading-edge product line, world-class
engineering staff and commitment to total quality management. Mr. Suresh's work
experience has taken him to projects in India, Singapore, the U.S., U.K., Hong
Kong and numerous other countries around the world. He has over ten years of
experience in the areas of consulting, development, implementation and
maintenance of Electronic Banking solutions, Internet Gateway applications and
corporate IT management, working for such globally leaders as Deutsche Bank,
Singapore Airlines and Systime.
18
<PAGE>
SAMPATH SESHADRI has served as the Vice President and Director of the
Company since April 1999. Mr. Seshadri is responsible for developing e-commerce
business and marketing SR Singapore products in North America. Mr. Seshadri is
also the President and Chief Executive Officer of VED Software Services, a
company operating in Michigan. VED Software Services specializes in contract
programming and is aimed at serving major banking and car companies based in
North America. Mr. Seshadri has more than 15 years of experience in software
development, marketing and managing.
GARRETT K. KRAUSE has served as the Vice-President and Director of the
Company since March 1999. Mr. Krause studied finance at the University of
Calgary, Canada. He began his business career in 1986 by developing a Point of
Sale/Inventory Control Software company. Within two years and after reaching
sales in excess of $3 million U.S., he sold the company to a large competitor.
Mr. Krause has an extensive background in the investment banking industry:
specializing in taking small emerging-growth companies public, mergers and
acquisitions, in addition to corporate mergers and joint ventures. Over the
years, Mr. Krause has honed his entrepreneurial skills with brokers and
investors alike, making him both an able, no-nonsense negotiator and an
approachable leader. His successful ten-year track record in the mergers and
acquisitions, developmental and managerial support arenas of public and private
companies provides the Company with an invaluable asset as the it forges ahead
towards the 21st Century and is set on becoming a leader in the field of
Internet software development.
Family Relationships
With the exception of Mr. Seshadri being married to Mr. Venkatachari's
sister, there are no other family relationships between any of the directors and
executive officers of the Company and any person beneficially owning or
controlling more than 5% of its outstanding shares.
Legal Proceedings
To the knowledge of the Company, no present or former director, executive
officer or person nominated to become a director or executive of the Company has
ever:
(1) filed a bankruptcy petition by or against any business of which such person
was a general partner or executive officer at the time of the bankruptcy or
within two years prior to that time;
(2) had any conviction in a criminal proceeding or is being subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3) been subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, or any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending, or otherwise limiting his
involvement in any type of business, securities or banking activities; or
(4) been found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Future Trading Commission to have violated a federal
or state securities or commodities law, and the judgment has not been reversed,
suspended or vacated.
ITEM 6 - EXECUTIVE COMPENSATION
Summary Compensation Table
The Summary Compensation Table lists certain compensation information for
services rendered by executive officers while serving in all capacities for the
period ended June 30, 1999. Other than as set forth herein, no executive
officer's salary and bonus exceeded $100,000 in any of the applicable years. All
listed executive officers have not received any stock options or similar
incentive plans.
19
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Name and Year Salary Bonus Other Restricted Securities LTIP All
Principal Annual Stock Underlying Payouts Other
Position Com- Awards Options ($) Com-
pensation ($) SARs(#) pensation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Suresh 1999 $100,000 - - - - - -
Venkatachari
Chairman of the Board,
Director, President, and
Chief Executive Officer
Sampath Seshadri 1999 $50,000 - - - - - -
Vice-President
Director
Garrett K. Krause 1999 $50,000 - - - - - -
Vice-President
Director
</TABLE>
Compensation of Directors
Directors are receiving no compensation for their services in those
capacities.
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
With the exception of the following, there are no other relationships or
related transactions between the Company and any promoters:
(1) Sara Hallitex Corporation ("Sara Hallitex") holds an approximate 15% equity
interest in the Company (1,730,000 shares) and 1,000,000 warrants, exercisable @
$5.00 per warrant. Sara Hallitex is a publicly traded company (OTC BB "SHAL").
(2) Garrett K. Krause, the Vice-President and Director of SolutionNet is also
the President and Chief Executive Officer of Sara Hallitex. Moreover, Mr. Krause
is a shareholder of Sara Hallitex and is the beneficial owner either directly or
through the following entities
a. Garrett Krause Trust 1,500,000 shares
b. Krause Family Trust 250,000 shares
d. Garrett K. Krause 160,000 shares
e. WorldVest Holding Corporation 3,500,000 shares
----------------
5,410,000 shares
20
<PAGE>
ITEM 8 - LEGAL PROCEEDINGS
The Company may from time to time be involved in various claims, lawsuits,
and disputes with third parties, or actions incidental to the operation of its
business. Currently, there is no litigation pending or threatened by or against
the Company.
ITEM 9 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The following table sets forth the high and low bid prices for shares of
the Company Common Stock for the periods noted, as reported by the National
Daily Quotation Service and the NASD Bulletin Board. Quotations reflect
inter-dealer prices, without retail mark-up, markdown or commission and may not
represent actual transactions. The Company's Common Stock was traded under the
symbol "ETGI" from April 27, 1994 until April 6, 1999. Beginning on April 6,
1999, the Company's Common Stock has been traded under the symbol "SLNN."
Calendar Quarter Ending Closing Bid Closing Ask
- ----------------------- ----------- -----------
September 30, 1997 n/a n/a
December 31, 1997 n/a n/a
March 31, 1998 n/a n/a
June 30, 1998 n/a n/a
September 30, 1998 n/a n/a
December 31, 1998 0.0625 0.4688
March 31, 1999 0.2000 0.3500
June 30, 1999 12 12.375
- ----------------------------------------------------------------
(1) Data for periods of September 30, 1997 through March 31, 1999 reflects per
share prices of ETGI common stock prior to Company's name change (ETG
International, Inc. to SolutionNet, International, Inc.), prior to Company's
change of its symbol (ETGI to SLNN) and prior to Company's business combination
with SR Singapore and subsequent to the 10-1 and 4-1 reverse stock splits.
(2) n/a = information not available; for periods ending September 30, 1997,
December 31, 1997, March 31, 1998, June 30, 1998, and September 30, 1998, there
is no available record of closing bid and ask prices due to very marginal
trading of the stock, as reported in NASD report.
Pursuant to NASD Eligibility Rule 6530 (the "Rule") issued on January 4,
1999, issuers who do not make current filings pursuant to Sections 13 and 15(d)
of the Securities Act of 1934 are ineligible for listing on the NASDAQ
Over-the-Counter Bulletin Board ("OTCBB"). Pursuant to the Rule, issuers who are
not current with such filing are subject to having the quotation of their
securities removed from the OTCBB pursuant to a phase-in schedule depending on
each issuer's trading symbol as reported on January 4, 1999. Such issuers may
21
<PAGE>
thereafter quote their Common Stock on the National Quotation Bureaus "Pink
Sheets" (the "Pink Sheets"). As previously discussed, the Company's trading
symbol on January 4, 1999 was "ETGI". Therefore, pursuant to the phase-in
schedule, the Company is subject to having the quotation of its securities
removed from the OTCBB on November 17, 1999, until the Company becomes compliant
with the Rule. One month prior to having the quotation of their securities
removed from the OTCBB, non-complying issuers will have their trading symbol
appended with an "E".
The Company is not currently in compliance with the Rule, and in the past,
has not made filings pursuant to Sections 13 and 15(d) of the Securities Act of
1934. The Company has filed this Registration Statement on Form 10 in order to
become a "reporting" company and therefore comply with the Rule. However, the
Company will remain subject to having quotation of its securities removed from
the OTCBB on November 12, 1999, and trading of its securities thereafter on the
Pink Sheets, until such time as the Securities and Exchange Commission (the
"SEC") has reviewed the Company's Form 10 and has stated that it has no further
comments. Should the SEC fail to clear all comments prior to November 12, 1999,
quotation of the Company's securities will be removed from the OTCBB and
thereafter traded on the Pink Sheets until such time as the SEC clears this
Registration Statement.
Once the Company has complied with the Rule, it will be once again become
eligible for listing on the OTCBB and will seek to be reinstated on the OTCBB or
other appropriate exchange.
Number of Shareholders
The number of holders of record of the Common Stock of the Company as of
June 30, 1999 was 119.
Dividend Policy
To date, the Company has declared no cash dividends on its
Common Stock, and does not expect to pay cash dividends in the foreseeable
future. There are no restrictions that limit the ability to pay dividends on
this common stock and there are no such restrictions anticipated in the future.
ITEM 10 - RECENT SALES OF UNREGISTERED SECURITIES
On April 2, 1999, the Company issued an aggregate of 1,502,500 shares of
common stock, par value $0.001, at an offering price of $0.66, to five
"accredited" investors, pursuant to Rule 504 of Regulation D promulgated under
the Securities Act of 1933, resulting in net proceeds to the Company in the
amount of approximately $980,000. 2,500 shares of the total 1,502,500 were
issued for legal services.
ITEM 11 - DESCRIPTION OF SECURITIES
Common Stock
The Company' s Articles of Incorporation authorize the issuance of
20,000,000 shares of Common Stock, $0.001 par value per shares, of which
12,177,509 were outstanding as of June 30, 1999. Holders of shares of Common
Stock are entitled to one vote and each fractional share of Common Stock is
22
<PAGE>
entitled to a corresponding fractional vote on each matter submitted to a vote
of shareholders. Holders of Common Stock have no cumulative voting rights.
Holders of shares of Common Stock are entitled to share ratably in dividends, if
any, as may be declared, from time to time by the Board of Directors, in its
discretion, from funds legally available therefore. To the extent that
additional shares of the Company's Common Stock are issued, the relative
interests of the existing stockholders may be diluted. Holders of common stock
do not have any preemptive or preferential rights to acquire any shares or
securities of the Company, including shares or securities held in the treasury
of the Company.
In the event of a liquidation, dissolution, or winding up of the Company,
the holders of shares of Common Stock are entitled to share pro rata all assets
remaining after payment in full of all liabilities. Holders of Common Stock have
no preemptive rights or purchase the Company's common stock. There are no
conversion rights or redemption or sinking fund provisions with respect to the
common stock. All of the outstanding shares of Common Stock are fully paid and
non-assessable.
Preferred Stock
The Company's Articles of Incorporation authorizes the issuance of
5,000,000 of Preferred Stock, $0.001 par value. As of June 30, 1999 there were
no issued and outstanding shares of Preferred Stock. The Company's Board of
Directors has authority, without action by the shareholders, to issue all or any
portion of the authorized but unissued preferred stock in one or more series and
to determine the voting rights, preferences as to dividends and liquidation,
conversion rights, and other rights of such series.
Dividends in cash, property or shares shall be paid upon the Preferred
Stock for any year on a cumulative or noncumulative basis as determined by a
resolution of the Board of Directors prior to the issuance of such Preferred
Stock, to the extent earned surplus for each such year is available, in an
amount as determined by resolution by the Board of Directors prior to the
issuance of such Preferred Stock.
No other dividend shall be paid on the Preferred Stock.
The Preferred Stock may be redeemed in whole or in part as determined by
a resolution of the Board of Directors prior to the issuance of such Preferred
Stock, upon prior notice to the holders of record of the Preferred Stock,
published, mailed and given in such manner and form and on such terms and
conditions as may be prescribed by the Bylaws or by resolution of the Board of
Directors, by payment in cash or Common Stock for each share of the Preferred
Stock to be redeemed, as determined by resolution of the Board of Directors
prior to the issuance of such Preferred Stock. Common Stock used to redeem
Preferred Stock shall be valued as determined by a resolution of the Board of
Directors prior to the issuance of such Preferred Stock. Any rights to or
arising from fractional shares shall be treated as rights to or arising from one
share. No such purchase or retirement shall be made if the capital of the
Company would be impaired thereby.
Holders of shares of Preferred Stock may be granted the right to convert
such Preferred Stock to Common Stock of the Company on such terms as may be
determined by the Board of Directors prior to the issuance of such Preferred
Stock.
The Registrant does not have any debt securities and the Registrant does
not anticipate or intend to register any other securities at this time.
23
<PAGE>
Transfer Agent
The transfer agent is Corporate Stock Transfer, 3200 Cherry Creek Drive
South, Suite 430, Denver, Colorado, 80209, Telephone (303) 282-4800.
Shares Eligible for Resale
Of the presently outstanding shares of Common Stock (12,177,509 as of
September 22, 1999), 10,500,000 are "restricted securities" as that term is
defined under the Securities Act (the "Act") of 1933. Said shares may be resold
pursuant to the provisions of Rule 144 under the Act or other exemptions, as
described below.
In general, under Rule 144, a person (or persons whose shares are
aggregated) who has beneficially owned restricted securities of the Company for
at least one year, including any person who may be deemed to be an "affiliate"
of the Company (as the term "affiliate" is defined under the Act), is entitled
to sell, within any three-month period, a number of shares that does not exceed
the greater of (i) the average weekly trading volumes in the Company's Common
Stock during the four calendar weeks preceding such sale or (ii) 1 % of the
shares of Common Stock then outstanding. A person who is not deemed to be an
"affiliate" of the Company and who has held restricted shares for at least two
years, would be entitled to sell such shares without regard to the resale
limitations of Rule 144.
ITEM 12 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation Laws of the State of Minnesota and the Company's Bylaws
provide for indemnification of the Company's Officers and Directors for
liabilities and expenses that they may incur in such capacities. In general,
Directors and Officers are indemnified with respect to actions taken in good
faith in a manner reasonably believed to be in, or not opposed to, the best
interests of the Company, and with respect to any criminal action or proceeding,
actions that the indemnitee had no reasonable cause to believe were unlawful.
ITEM 13 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the Consolidated Financial Statements, together with
the notes thereto and the reports thereon appearing on pages F-1 through F-5 of
this Form 10.
ITEM 14 - CHANGES IN ACCOUNTANTS
SolutionNet International, Inc. has utilized the firm Stirtz, Bernards,
Boyden, Surdel & Larter, Certified Public Accountants & Management Consultants
as its principal accountants to audit the Company's financial statements.
Subsequent to the business combination between the Company and SR Singapore on
April 2, 1999, the Company employed Mr. Clyde Bailey, Certified Public
Accountant, who has been responsible for auditing the financial statements of
Sara Hallitex Corporation since 1996. Mr. Bailey conducted the audits for the
Company's fiscal year ended June 30, 1999. The Company intends to continue using
the services of Mr. Bailey in the future in conducting the audits of its
financial statements.
SR Singapore has utilized the services of the Singapore firm Wee Koon San
& Company as its Certified Public Accountants since 1994 and intends to use the
firm's services in the future.
24
<PAGE>
There have been no disagreements between any of the above-mentioned
accountants of the type required to be reported under item 14 since the date of
their engagement.
ITEM 15 - FINANCIAL STATEMENTS AND EXHIBITS
a) INDEX TO FINANCIAL STATEMENTS
Audited Financial Statements for SolutionNet International, Inc. for
the last 3 fiscal years............................................... F-1 - F-5
Audited Financial Statements for SR Singapore, Pte., Ltd.for the
the last 3 fiscal years............................................... F-6 - F-9
b) INDEX TO EXHIBITS
EXHIBIT NUMBER
2.1 Share-Exchange Agreement dated April 2, 1999
2.2 Supplemental Agreement dated April 6, 1999
3.1 Articles of Incorporation, filed with the Minnesota Secretary of State on
August 25, 1994
3.2 Amended Articles of Incorporation, filed with the Minnesota Secretary of
State on March 22, 1999
3.3 Bylaws of SolutionNet International, Inc.
10.1 Lease agreement by and between SR Singapore, Pte., Ltd. and CLD Land Pte.
Ltd., relating to property located at No.1 Shenton Way, #22-06/09,
Singapore 068803.
10.2 Lease agreement by and between Sara Hallitex Corporation and Marina City
Club Towers, relating to property located at 4344 Promenade Way, Suite
102P, Marina del Rey, CA 90292.
10.3 Executive management agreement by and between SolutionNet International,
Inc. and Sara Hallitex Corporation, relating to the use of office space of
property located at No. 1 Shenton Way, #22-06/09, Singapore 068803.
10.4 Executive employment agreement by and between SolutionNet International,
Inc. and Suresh Venkatachari dated March 1, 1999.
10.5 Executive employment agreement by and between SolutionNet International,
Inc. and Garrett K. Krause, dated March 1, 1999.
10.6 Executive employment agreement by and between SolutionNet International,
Inc. and Sampath Seshadri, dated April 1, 1999.
11.1 Statement regarding computation of Per-Share Earnings
21.1 Subsidiaries of Registrant
27.1 Financial Data Schedule
25
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
SOLUTIONNET, INTERNATIONAL, INC.
Date: October 15, 1999 By: /s/ Suresh Venkatachari
--------------------------------
Suresh Venkatachari, President
26
<PAGE>
CLYDE BAILEY P.C.
- --------------------------------------------------------------------------------
Certified Public Accountants
10924 Vance Jackson #404
San Antonio, Texas 78230
(210) 699-1287(ofc.)
(888) 699-1287 (210) 691-2911 (fax)
Member:
American Institute of CPA's
Texas Society of CPA's
Report of Independent Certified Public Accountant
To the Board of Directors and Shareholders
SolutionNet International Inc.
We have audited the accompanying consolidated balance sheets of SolutionNet
International Inc. and subsidiaries (Company) as of June 30 1999 and 1998 and
the related consolidated statements of operations, changes in stockholders'
equity, and cash flows for the periods ended June 30, 1999, 1998, and 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statements based on
our audit. The financial statements of the Company's subsidiary, as of June 30,
1999, were audited by other auditors whose report dated September 3, 1999
expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Company and
subsidiaries as of June 30, 1999, and the consolidated results of their
operations and their cash flows for the periods presented in conformity with
generally accepted accounting principles.
/s/ Clyde Bailey
Clyde Bailey
Certified Public Accountant
October 12, 1999
<PAGE>
<TABLE>
F-1
SOLUTIONNET INTERNATIONAL INC.
BALANCE SHEETS
<CAPTION>
As of June 30
------------------------------------------
1999 1998
---------------- ----------------
<S> <C> <C>
A S S E T S
Current Assets:
Cash in Bank $ 214,341 $ -
Accounts Receivable 1,176,664
Notes Receivable 490,000 -
---------------- ----------------
Total Current Assets 1,881,005 -
Fixed Assets
Fixed Assets 87,054
Less: Accumulated Depreciation (67,898)
----------------
Total Fixed Assets 19,156
Other Assets
Deferred Tax Credit -
Research & Development, net 404,254
Technology 8,850,295
Goodwill 1,500,000
Organization Expenses 100,000
---------------- ----------------
Total Other Assets 10,854,549
Total Assets 12,754,710 -
================ ================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
L I A B I L I T I E S
<S> <C> <C>
Current Liabilities
Accounts Payable 415,604 -
Accrued Expenses 575,381
Accrued Federal Income Tax Payable 33,329
Accrued Taxes 142,176 7,458
---------------- ----------------
Total Current Liabilities 1,166,490 7,458
STOCKHOLDERS' EQUITY
Preferred Stock, .001 par value, 5,000,000 shares - -
authorized with no shares issues and outstanding
Common Stock, .001 par value, 20,000,000 shares 12,178 555
authorized with 12,177,509 shares issued and
outstanding
Additional paid in capital 13,827,111 2,338,134
Retained Earnings (2,251,069) (2,346,147)
---------------- ----------------
Total Stockholders' Equity 11,588,220 (7,458)
Total Liabilities and Stockholders' Equity $ 12,754,710 $ -
================ ================
</TABLE>
<PAGE>
F-2
<TABLE>
SOLUTIONNET INTERNATIONAL INC.
STATEMENT OF STOCKHOLDERS' EQUITY
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares $0.001 Par Value Capital Deficit Total
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance July 1, 1996 4,412,003 $ 4,412 $ 2,305,777 $ (2,350,968) $ (40,779)
Net Income (Loss) (3,855) (3,855)
---------------------------------------------------------------------------------------
Balance, June 30, 1997 4,412,003 4,412 2,305,777 (2,354,823) (44,634)
Sale of Stock 1,140,000 1,140 27,360 - 28,500
Reverse Stock Split (10 to 1) (4,996,803) (4,997) 4,997
Net Income (Loss) 8,676 8,676
---------------------------------------------------------------------------------------
Balance, June 30, 1998 555,200 555 2,338,134 (2,346,147) (7,458)
Stock Issued 144,800 146 20,454 20,600
Reverse Stock Split (4 to 1) (524,991) (525) 525 0
Stock Issue 1,502,500 1,503 978,498 980,000
Stock Merger - April 2, 1999 10,500,000 10,500 10,489,500 10,500,000
Net Income (Loss) 95,078 95,078
---------------------------------------------------------------------------------------
Balance June 30, 1999 12,177,509 12,178 13,827,111 ($2,251,069) 11,588,220
=======================================================================================
</TABLE>
<PAGE>
<TABLE>
F-3
SOLUTIONNET INTERNATIONAL INC.
STATEMENT OF OPERATIONS
<CAPTION>
For the Years Ended June 30
-----------------------------------------------------------------
1999 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Revenues:
- ---------
Revenues $ 987,946 $ - $ -
--------------- --------------- ---------------
Total Revenues 987,946 - -
Cost of Revenues:
- -----------------
Cost of Revenues 17,781
Wages 258,849
Other Cost of Revenues 5,616
---------------
Total Cost of Revenues 282,246
Gross Profit 705,700
General & Administrative Expenses:
Consulting Expenses 359,339 - -
Amortization Expense 32,483
Salaries 44,830
Management Expenses 30,000 - -
Legal & Professional Expenses 28,587 6,393
Other Expenses 82,054 (15,069) 3,855
--------------- --------------- ---------------
Total Expenses 577,293 (8,676) 3,855
--------------- --------------- ---------------
Net Income (Loss) Before Tax 128,407 8,676 (3,855)
Income Tax Benefit (Expense) (33,329) - -
--------------- --------------- ---------------
Net Income (Loss) $ 95,078 $ 8,676 $ (3,855)
=============== =============== ===============
Net Loss per share $0.027 $0.016 ($0.007)
Weighted Average Number of
Shares Outstanding 3,558,049 555,200 555,200
(Retroactively Restated)
</TABLE>
<PAGE>
F-4
<TABLE>
SOLUTIONNET INTERNATIONAL INC.
<CAPTION>
For the Years Ended June 30
---------------------------------------------
1999 1998 1997
-------------- ------------ -----------
<S> <C> <C> <C>
Cash Flows from Operating Activities
- ------------------------------------
Net Income per Income Statement $ 95,078 $ 8,676 $ (3,855)
Adjustments:
------------
Amortization of R & D Expenses 32,483 - -
Organization Expense (100,000) - -
Loan Receivable (490,000) - -
Goodwill (1,500,000)
Research & Development (436,737)
Technology (8,850,295)
Accrued Expenses 575,381
Accrued Taxes 134,718
Accounts Payable 415,604 (37,176) 3,771
Accrued Federal Income Tax Payable 33,329 - -
Accounts Receivable (1,176,664) - -
-------------- ------------ -----------
Net Cash (used for) Operating Activities (11,267,103) (28,500) (84)
-------------- ------------ -----------
Cash Flows from Investing Activities
- ------------------------------------
Fixed Assets (19,156) - -
-------------- ------------ -----------
Net Cash (used for) provided by Investing Activities (19,156) - -
-------------- ------------ -----------
Cash Flows from Financing Activities
- ------------------------------------
Stock Issued 11,500,600 28,500 -
Note Payable - - -
-------------- ------------ -----------
Total from Financing Activities 11,500,600 28,500 -
-------------- ------------ -----------
Increase in Cash 214,341 (974) (84)
Cash Balance, Begin of Year - 974 1,058
-------------- ------------ -----------
Cash Balance, End of Year $ 214,341 $ - $ 974
============== ============ ===========
Supplement Disclosure:
Cash paid during year for:
Interest - - -
Income Taxes - - -
</TABLE>
<PAGE>
F-5
SolutionNet International, Inc.
And Subsidiary
Notes to Financial Statements
1. STOCKHOLDERS' EQUITY
Common Stock
The Company's Articles of Incorporation authorize the issuance of
20,000,000 shares of Common Stock, $0.001 par value per shares, of which
12,177,509 were outstanding as of June 30, 1999. Holders of shares of Common
Stock are entitled to one vote and each fractional share of Common Stock is
entitled to a corresponding fractional vote on each matter submitted to a vote
of shareholders. Holders of Common Stock have no cumulative voting rights.
Holders of shares of Common Stock are entitled to share ratably in dividends, if
any, as may be declared, from time to time by the Board of Directors, in its
discretion, from funds legally available therefore. To the extent that
additional shares of the Company's Common Stock are issued, the relative
interests of the existing stockholders may be diluted. Holders of common stock
do not have any preemptive or preferential rights to acquire any shares or
securities of the Company, including shares or securities held in the treasury
of the Company.
Immediately prior to the share-exchange agreement, the Company had
7,000,003 shares issued and outstanding. After a 10-to-1 and a 4-to-1 reverse
stock split, the Company had a total of 175,000 shares that were issued and
outstanding. As part of the share exchange agreement of April 2, 1999, the
Company issued 10,500,000 shares of common stock to shareholders of SR Singapore
in exchange for 100% of SR Singapore's common stock. Currently, the Company has
a total of 12,177,509 shares of common stock that are issued and outstanding
On April 2, 1999, the Company issued an aggregate of 1,502,500 shares of
common stock, par value $0.001, at an offering price of $0.66, to five
"accredited" investors, pursuant to Rule 504 of Regulation D promulgated under
the Securities Act of 1933, resulting in net proceeds to the Company in the
amount of approximately $980,000. 2,500 shares of the total 1,502,500 were
issued for legal services.
On April 6, 1999, the Company raised approximately $980,000 through the
sale of 1,500,000 shares of it's common stock at a price of $.66 per share.
Preferred Stock
The Company's Articles of Incorporation authorizes the issuance of
5,000,000 of Preferred Stock, $0.001 par value. As of June 30, 1999 there were
no issued and outstanding shares of Preferred Stock. The Company's Board of
Directors has authority, without action by the shareholders, to issue all or any
portion of the authorized but unissued preferred stock in one or more series and
to determine the voting rights, preferences as to dividends and liquidation,
conversion rights, and other rights of such series.
Dividends in cash, property or shares shall be paid upon the Preferred
Stock for any year on a cumulative or noncumulative basis as determined by a
resolution of the Board of Directors prior to the issuance of such Preferred
Stock, to the extent earned surplus for each such year is available, in an
amount as determined by resolution by the Board of Directors prior to the
issuance of such Preferred Stock. No other dividend shall be paid on the
Preferred Stock.
<PAGE>
Holders of shares of Preferred Stock may be granted the right to convert
such Preferred Stock to Common Stock of the Company on such terms as may be
determined by the Board of Directors prior to the issuance of such Preferred
Stock.
The Company does not have any debt securities and the Registrant does not
anticipate or intend to register any other securities at this time.
2. STOCK BASED COMPENSATION
At June 30, 1999, the Company did not have any stock based compensation
plans in effect. In the event that the Company does adopt a stock based
compensation plan they will use FASB Statement 123, Accounting for Stock-Based
Compensation, which requires the company to provide pro forma information
regarding net income per share as if compensation cost for the Company's options
had been determined in accordance with the fair value based method prescribed in
FASB Statement 123. The Company will estimate the fair value of each stock
option at the grant date by using the Black-Scholes option-pricing model
There is also no stock option outstanding at the present time.
3. INCOME TAXES
The components of the provision for income taxes are as follows:
Year ended June 30, 1999 1998
- --------------------------------------------------------------------------------
Current:
Federal $ 33,329 $ -0-
State -0- -0-
- --------------------------------------------------------------------------------
$ 33,329 $ -0-
- --------------------------------------------------------------------------------
Such income taxes are included in the accompanying consolidated financial
statements as follows:
- --------------------------------------------------------------------------------
Income from operations $ 33,329 $ -0-
Extraordinary Items --- ---
- --------------------------------------------------------------------------------
$ 33,329 $ -0-
- --------------------------------------------------------------------------------
The above provision has been calculated based on Federal and State
statutory rates.
4. RELATED PARTY TRANSACTIONS
There were no major related party transactions during the periods
presented.
5. NOTE PAYABLE AND FINANCING TRANSACTIONS
There are no long-term debt for the period ended June 30, 1999 or 1998. The
only long-term debt is loans and advances from officers and directors of the
Company. The Company's intent is fund future growth and research and development
through issuance of equity funding.
<PAGE>
6. EARNINGS PER SHARE
The following reconciles the components of the earnings per share (EPS)
computation:
<TABLE>
<CAPTION>
June 30 1999 1998
Earning per common Income Shares Per-Share Income Shares Per-Share
Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Income $ 95,078 3,558,049 $.027 $ 8,676 555,200 $ .016
Effect of Dilative
Securities: Stock
options
==============================================================================================================
Income from $ 95,078 3,558,049 $.027 $ 8,676 555,200 $ .016
continuing operations
available to common
shareholders plus
assumed conversions
==============================================================================================================
</TABLE>
The number of shares are a weighted-average number of shares outstanding of
the periods presents.
7. SUBSEQUENT EVENTS
No other material subsequent events have occurred that warrants disclosure
since the balance sheet date.
<PAGE>
SolutionNet International, Inc.
And Subsidiary
Summary of Accounting Policies
NATURE OF BUSINESS
The Company was originally incorporated under the laws of the State of Iowa
on August 1, 1984, under the name of Grason Industries, Inc. On April 28, 1994,
Grason Industries, Inc. changed its name to ETG International, Inc.("Company or
ETGI"). On October 11, 1994, ETGI changed its corporate domicile from Iowa to
Minnesota. On March 22, 1999, ETGI changed its corporate name to SolutionNet,
International, Inc. The Company has been primarily inactive for the past several
years. The Company has 20, 000,000 in authorized common stock with a par value
of $.001 and as of June 30, 1999 a total of 12,177,509 shares were issued and
outstanding. The Company also has authorized preferred stock of 5,000,000 with a
par value of $.001. As of June 30, 1999 there were no shares of preferred stock
outstanding.
PRINCIPLES OF CONSOLIDATION
The Company's financial statements include the effect of the merger
agreement signed on April 2, 1999 between the Company and SR Singapore. The
Company acquired 100% of the outstanding stock of SolutionNet, Inc. (a British
Virgin Islands corporation), which held 100% of SR Singapore, Pte., Ltd., a
Singapore corporation, in exchange for 10,500,000 shares of the Company's stock.
Investments in which the Company does not have a majority voting or
financial controlling interest are accounted for under the equity method of
accounting unless its ownership constitutes less than a 20% interest in such
entity for which such investment would then be included in the consolidated
financial statements on the cost method. All significant inter-company
transactions and balances have been eliminated in consolidation.
MARKETABLE SECURITIES
In accordance with Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," (SFAS 115),
the Company classifies its investment portfolio according to the provisions of
SFAS 115 as either held to maturity, trading, or available for sale. At June 30,
1999, the Company classified its investment portfolio as available for sale and
held to maturity. Securities available for sale are carried at fair value with
unrealized gains and losses included in stockholders' equity.
Gain or losses from the sale or redemption of the investments are
determined using the specific identification method.
INCOME TAXES
The Company accounts for income taxes pursuant to the provisions of the
Financial Accounting Standards Board Statement No. 109, "Accounting for Income
Taxes", which requires an asset and liability approach to calculating deferred
income taxes. The asset and liability approach requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences of
temporary differences between the carrying amounts and the tax basis of assets
and liabilities.
<PAGE>
EARNINGS PER COMMON SHARE
The Company has adopted Financial Accounting Standards (SFAS) No. 128,
"Earnings Per Share," which simplifies the computation of earnings per share
requiring the restatement of all prior periods.
Basic earnings per share are computed on the basis of the weighted average
number of common shares outstanding during each year.
Diluted earnings per share are computed on the basis of the weighted
average number of common shares and dilutive securities outstanding. Dilutive
securities having an anti-dilutive effect on diluted earnings per share are
excluded from the calculation.
UNINSURED CASH BALANCES
The Company maintains its cash balances at several financial institutions.
Accounts at the institutions are secured by the Federal Deposit Insurance
Corporation up to $100,000. Periodically, balances may exceed this amount. The
Company's cash position is held by its operating subsidiary, SR Singapore, with
holds its cash balances in a Singapore bank. At June 30, 1999, uninsured
balances aggregated $214,341.
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 on 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.
YEAR 2000 CONCERNS
The Company has addressed the concerns of potential year 2000 computing
problems, both internally and with external parties and believes that
significant additional costs will not be incurred because of this circumstance.
The Company has performed an evaluation of its computer hardware and software
and has determined that recent enhancements and upgrades have brought it's
systems significantly into compliance with the year 2000 phenomenon and that
existing support agreements are adequate to cope with any remaining issues.
Based upon equipment evaluations and analysis by consulting parties, management
does not believe that significant operational equipment modifications are
necessary.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of financial instruments including marketable
securities, notes and loans receivables, accounts payable and notes payable
approximate their fair values at June 30, 1999.
LONG-LIVED ASSETS
Statement of Financial Accounting Standards No. 121 "Accounting for
Impairment of Long-Lived Assets to be Disposed of " requires, among other
things, impairment loss of assets to be held and gains or losses from assets
that are expected to be disposed of be included as a component of income from
continuing operations before taxes on income.
<PAGE>
STOCK BASED COMPENSATION
Statement of Financial Accounting Standards No. 123, "Accounting for Stock
Based Compensation" SFAS No. 123 established a fair value method for accounting
for stock-based compensation plans either through recognition or disclosure. The
Company did not adopt the fair value based method but instead discloses the
effects of the calculation required by the statement.
FOREIGN CURRENCY
Assets and liabilities of the Company's foreign subsidiary are translated
at year-end exchange rates, and revenue and expenses are translated at average
exchange rates prevailing during the year. Translation adjustments are recorded
as a separate component of stockholders' equity.
COMPREHENSIVE INCOME
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
No.130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements.
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION
Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures
about Segments of an Enterprise and Related Information, supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise." SFAS 131
establishes standards for the way that public companies report information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial statements
issued to the public. It also establishes standards for disclosures regarding
products and services, geographic areas and major customers. SFAS 131 defines
operating segments as components of a company about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance.
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, "Accounting and Derivative Instruments and Hedging Activities" The
statement establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. The statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. The FASB has delayed the effective date of
this statement by one year with the issuance of SFAS No. 137. The standard is
now effective for fiscal years beginning after June 15, 2000. The Company is in
now in the process of evaluating this statement and whether it will have any
effect on its financial statements.
<PAGE>
ACQUISITIONS
By an agreement dated April 2, 1999, and a supplemental agreement dated
April 6, 1999, the Company entered into an agreement with Densmore Group Limited
("Densmore Group") for the exchange of common stock (the "share-exchange
agreement").
Densmore Group owned a majority controlling interest in all of the issued
and outstanding shares of SolutionNet Inc., which in turn, held all of the
issued and outstanding shares of SR Singapore, Pte., Ltd. ("SR Singapore"). As
part of the share-exchange agreement, an intermediate holding company was
incorporated on April 14, 1999. SolutionNet Inc. was incorporated under the laws
of the British Virgin Islands for the purpose of becoming the holding company
for the Company's operating subsidiaries. The company is also responsible for
managing the international sales of Company's products and services outside
North America.
Pursuant to the share-exchange agreement, the Company acquired 100% of the
issued and outstanding stock of SolutionNet Inc.(and thereby SR Singapore) in
exchange for 10,500,000 shares, $0.001 par value, of the Company's common stock.
SR Singapore is a private limited corporation that was incorporated on January
25, 1994 under the laws of the Republic of Singapore. SR Singapore was
incorporated for the purpose of providing independent consulting services
offering numerous Information Technology solutions. Although inactive during
1994, SR Singapore became an active operational organization during the first
fiscal quarter of 1995. Currently, SR Singapore is the wholly owned operating
subsidiary of the Company.
The results on the `Statement Of Operations' for the year ended June 30,
1999 includes only the result of operations after the consolidation as of April
2, 1999 and runs to June 30, 1999. The consolidated `Statement Of Operations'
does not include any pre-April 2, 1999 operating activity for SR Singapore,
Pte., Ltd.("SR Singapore").
Immediately prior to the share-exchange agreement, the Company had
7,000,003 shares issued and outstanding. After a 10-to-1 and a 4-to-1 reverse
stock split, the Company had a total of 175,000 shares that were issued and
outstanding. As part of the share exchange agreement of April 2, 1999, the
Company issued 10,500,000 shares of common stock to shareholders of SolutionNet,
Inc. in exchange for 100% of SolutionNet, Inc. common stock.
The purchase price and related acquisition costs exceeded the fair values
assigned to assets by $1,500,000. This amount has been recorded as goodwill and
will be amortized over 15 years. Details of the transaction are as follows:
Accounts Receivable 761,399
Fixed Assets 19,155
Technology 8,850,295
Goodwill 1,500,000
Debts ( 630,849)
-----------
Total 10,500,000
===========
FISCAL YEAR END
The Board of Directors elected to change the fiscal year-end to June 30.
Previously, the Company has reported its financial results on September 30. The
Company's subsidiary, SR Singapore reported its financial results on March 31.
These financial statements have been restated to reflect the new fiscal
year-end.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior year's financial
statements in order to conform to the current presentation.
<PAGE>
Audited Financial Statements for SR Singapore, Pte., Ltd. for period ended
June 30th 1999, December 31st, 1998, March 31st, 1998, and March 31st 1997.
F-6
AUDITED FINANCIAL STATEMENTS
AND OTHER FINANCIAL INFORMATION
SR SINGAPORE PTE LTD
30TH JUNE 1999
<PAGE>
AUDITED FINANCIAL STATEMENTS
AND OTHER FINANCIAL INFORMATION
SR SINGAPORE PTE LTD
30TH JUNE 1999
C O N T E N T S
PAGE
--------
Report of the directors 1
Statement by directors 6
Report of the auditors to the members 7
Profit and loss account 8
Balance Sheet 9
Notes on the accounts 10
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
REPORT OF THE DIRECTORS
The directors present their report to the members together with the audited
accounts of the company for the financial period from 1st January 1999 to 30th
June 1999.
DIRECTORS
The directors in office at the date of this report are:
Venkatachari Suresh
PRINCIPAL ACTIVITIES
The principal activities of the company are to carry on the businesses in
maintenance and development of computer hardware and software and to act as
consultants and advisers in the information technology industries.
On April 2, 1999 SR Singapore entered into a share-exchange agreement with
SolutionNet International, Inc. wherein SolutionNet International, Inc. acquired
100% of the total shares outstanding of SR Singapore.
ACQUISITION AND DISPOSAL OF SUBSIDIARIES
There were no acquisition and disposal of subsidiaries during the financial
period.
RESULTS FOR THE FINANCIAL PERIOD
$
Net profit for the period after taxation 325,473
Revenue reserve brought forward 130,087
---------------
Revenue reserve carried forward 455,560
===============
TRANSFER TO/(FROM) RESERVES OR PROVISIONS
There were no material transfers to or from reserves or provisions other than
normal amounts set aside for depreciation of fixed assets and provision for
current income tax as disclosed in the accounts.
ISSUE OF SHARES AND DEBENTURES
During the financial period, the company did not issue any shares or debentures.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES OR DEBENTURES
Neither at the end of nor at any time during the financial period was the
company a party to any arrangement whose object is to enable the directors of
the company to acquire benefits by means of the acquisitions of shares or
debentures of the company or any other body corporate.
DIRECTORS' INTEREST IN SHARES OR DEBENTURES
The Directors holding office at the end of the financial period and their
interests in the share capital of the company as recroded in the register of
directors' shareholdings were as follows:
Name of directors At beginning At end
In which interests of period of period
are held (ordinary shares of $1 each)
Venkatachari Suresh 99,000 *100,000
Vijaya Lachimi d/oS Govindsamy 1,000 -
* By virtue of Section 7 of the Companies Act, Mr. Venkatachari Suresh is deemed
to have an interest of 100,000 shares of the company.
DIVIDENDS
No dividends has been paid or declared or recommended since the end of the
previous financial period.
BAD AND DOUBTFUL DEBTS
Before the profit and loss account and the balance sheet were made out, the
directors took reasonable steps to ascertain that proper action had been taken
in relation to the writing off of bad debts and have satisfied themselves that
there were no known bad debts and that no provision for doubtful debts was
necessary.
At the date of this report, the directors are not aware of any circumstances
which would render it necessary to write off any debts or to make a provision
for doubtful debts in respect of these accounts.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
CURRENT ASSETS
Before the profit and loss account and the balance sheet were made out, the
directors took reasonable steps to ascertain that current assets which were
unlikely to realise in the ordinary course of business their book values have
been written down to their estimated realisable values or that adequate
provisions have been made for the diminution in value of such current assets.
At the date of this report, the directors are not aware of any circumstances
which would render the values attributable to current assets in the
accounts misleading.
CHARGES AND CONTINGENT LIABILITIES
Since the end of the financial period:
(a) no charge on the assets of the company has arisen which secures the
liability of any other person, and
(b) no contingent liability of the company has arisen.
ABILITY TO MEET OBLIGATIONS
No contingent or other liability has become enforceable or is likely to become
enforceable within the period of twelve months after the end of the financial
period which, in the opinion of the directors, will or may substantially affect
the ability of the company to meet its obligations as and when they fall due.
OTHER CIRCUMSTANCES AFFECTING ACCOUNTS
As at the date of this report, the directors are not aware of any circumstances
not otherwise dealt with in this report or accounts which would render any
amount stated in the accounts misleading.
UNUSUAL ITEMS
In the opinion of the directors the results of the operations of the company
have not been substantially affected by any item, transaction or event of a
material and unusual nature during the financial period.
UNUSUAL ITEMS AFTER PERIOD END DATE
In the opinion of the directors, no item, transaction or event of a material and
unusual nature has arisen in the interval between the end of the financial
period and the date of this report which would affect substantially the results
of the operations of the company for the financial period in which this report
is made.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
DIRECTORS' CONTRACTUAL BENEFITS
Since the end of the previous financial period, no director has received or
become entitled to receive a benefit by reason of a contract made by the company
or a related corporation with the director or with a firm of which he is a
member, or with a company in which he has a substantial financial interest.
OPTIONS GRANTED
No option to take up unissued share of the company was granted during the
financial period.
OPTIONS EXERCISED
During the financial period, no shares were issued by virtue of the exercise of
an option to take up unissued shares.
OPTION OUTSTANDING
There were no unissued shares of the company under option as at the end of the
financial period.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
AUDITORS
Wee Koon San & Co have expressed their willingness to accept reappointment as
auditors.
ON BEHALF OF THE DIRECTORS,
/s/ Venkatachari Suresh
---------------------------
VENKATACHARI SURESH
DIRECTOR
SINGAPORE,
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
STATEMENT BY DIRECTORS
In the opinion of the directors, the accompanying profit and loss account and
balance sheet together with the notes thereon are drawn up so as to give a true
and fair view of the state of affairs of the company for the financial period
from 1st January 1999 to 30th June 1999 and of the results of the business of
the company for the financial period then ended and, at the date of this
statement, there are reasonable grounds to believe that the company will be able
to pay its debts as and when they fall due.
ON BEHALF OF THE DIRECTORS,
/s/ Venkatachari Suresh
---------------------------
VENKATACHARI SURESH
DIRECTOR
SINGAPORE,
<PAGE>
REPORT OF THE AUDITORS TO THE MEMBERS OF
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
We have audited the accompanying financial statements of SR SINGAPORE PTE LTD
for the financial period from 1st January 1999 to 30th June 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statement based on
our audit.
We conducted our audit in accordance with Singapore Standards on Auditing. Those
Standards require that we plan to perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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 audit provides a reasonable basis for our opinion.
In our opinion,
(a) the financial statements are properly drawn up in accordance with the
provisions of the Companies Act and Statements of Accounting Standard
and so as to give a true and fair view of:
i) the state of affairs of the company for the financial period
from 1st January 1999 to 30th June 1999 and of the results and
cash flows of the company for the financial period then ended
on that date; and
ii) the other matters required by section 201 of the Act to be
dealt with in the accounts;
(b) accounting and other records, and the registers required by the Act to
be kept by the company have been properly kept in accordance with the
provisions of the Act.
WEE KOON SAN & CO
CERTIFIED PUBLIC ACCOUNTANTS, SINGAPORE
SINGAPORE,
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
PROFIT AND LOSS ACCOUNT FOR THE PERIOD FROM 1ST JANUARY 1999 TO 30TH JUNE 1999
<TABLE>
<CAPTION>
01/01/99 01/04/98
TO TO
NOTE 30/06/99 31/12/98
$ $
<S> <C> <C> <C>
TURNOVER 2,250,189 1,935,500
============== ==============
Operating profit for the period 549,577 37,597
After charging :-
Amortisation of research and development 110,442 -
Auditors' remuneration 2,000 2,800
Depreciation of fixed assets 1.2 & 4 19,280 26,569
Director's fee - 80,000
Directors' remuneration 57,600 82,080
============== ==============
Less : Taxation 1.5 & 9 (224,104) (13,071)
-------------- --------------
Net profit for the period after taxation 325,473 24,526
Revenue reserve brought forward 130,087 105,561
-------------- --------------
Revenue reserve carried forward 455,560 130,087
============== ==============
</TABLE>
The notes on pages 10 to 13 form an integral part of the accounts.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
BALANCE SHEET AS AT 30TH JUNE 1999
<TABLE>
<CAPTION>
30TH 31ST
JUNE DECEMBER
NOTE 1999 1998
$ $
<S> <C> <C> <C>
CAPITAL EMPLOYED
Share capital 4 100,000 100,000
Revenue reserve 455,560 130,087
-------------- --------------
555,560 230,087
============== ==============
EMPLOYMENT OF CAPITAL
FIXED ASSETS 5 32,563 31,570
RESEARCH AND DEVELOPMENT COST 6 687,233 583,760
CURRENT ASSET
Stocks - 3,732
Trade debtors 1,454,116 325,113
Other debtors, deposits and prepayments 121,213 25,915
Cash and bank balances 364,379 -
-------------- --------------
1,939,708 354,760
-------------- --------------
LESS : CURRENT LIABILITIES
Trade creditor 34,097 23,842
Other creditor and accruals 302,937 207,753
Amount owing to Holding company 6 1,027,500 -
Amounts owing to directors 7 278,920 438,014
Amount owing to a related company 8 218,790 39,790
Bank overdraft (unsecured) - 1,604
Provision for taxation 11 241,700 29,000
-------------- --------------
2,103,944 740,003
NET CURRENT (LIABILITIES) (164,236) (385,243)
-------------- --------------
555,560 230,087
============== ==============
</TABLE>
The notes on pages 10 to 13 form an integral part of the accounts.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
NOTES ON THE ACCOUNTS
30TH JUNE 1999
These notes form an integral part of and should be read in conjunction with the
accompanying accounts :-
1. GENERAL
1.1 Change of Shareholders
On 24th May 1999, the entire shareholding of the company was
transferred to Solutionnet, Inc, a company incorporated in the
British Virgin Islands. Solutionnet, Inc, hence becomes the
holding company of the company with effect from this date.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of Accounting
The accounts of the company expressed in Singapore dollars are
prepared in accordance with the historical cost convention.
2.2 Depreciation
Depreciation is calculated on a straight line method to write
off the cost of fixed assets over their estimated useful lives
as follows:-
No. of years
Furniture and fittings 5
Computer 3
Office equipment 3
Renovation 3
2.3 Amortisation of Research and Development Costs
The research and development is stated at cost and is
amortised over a period of 3 years upon launching of the
project.
2.4 Income Tax
The tax expense is determined on the basis of tax effect
accounting, using the liability method and it is applied to all
significant timing differences. Deferred tax benefits are not
recognised unless there is reasonable expectation of their
realisation.
3. PRINCIPAL ACTIVITIES AND TURNOVER
The principal activities of the company are to carry on the businesses
in maintenance and development of computer hardware and software and to
act as consultants and advisers in the information technology
industries.
Turnover represents invoiced services rendered to customers.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
4. SHARE CAPITAL
<TABLE>
<CAPTION>
01/01/99 01/04/98
TO TO
30/06/99 31/12/98
$ $
<S> <C> <C>
Ordinary shares of $1.00 each
Authorised : 1,000,000 shares 1,000,000 1,000,000
============== ==============
Issued and fully paid : 100,000 shares 100,000 100,000
============== ==============
</TABLE>
5. FIXED ASSETS
<TABLE>
<CAPTION>
Depreciation
Accumulated Net Book charged for
1999 Cost Depreciation Value the period
$ $ $ $
<S> <C> <C> <C> <C>
Furniture and fittings 26,034 13,920 12,114 2,265
Office equipment 19,822 11,554 8,268 1,936
Computer 94,400 89,309 5,091 14,434
Renovation 7,735 645 7,090 645
-------------- -------------- -------------- --------------
147,991 115,428 32,563 19,280
============== ============== ============== ==============
Depreciation
Accumulated Net Book charged for
1998 Cost Depreciation Value the period
$ $ $ $
Furniture and fittings 23,104 11,654 11,450 3,179
Office equipment 10,213 9,618 595 1,739
Computer 94,400 74,875 19,525 21,651
-------------- -------------- -------------- --------------
127,717 96,147 31,570 26,569
============== ============== ============== ==============
</TABLE>
6. RESEARCH AND DEVLOPMENT
This comprise of the research and development cost for net banking and
electronic medi infor, which consist of cost of materials, wages and
production overheads.
7. AMOUNT OWING TO HOLDING COMPANY
The amount owing to holding company is interest-free, unsecured and has
no fixed term of repayment.
8. AMOUNTS OWING TO DIRECTORS
The amounts owing to directors are interest-free, unsecured and have no
fixed term of repayment.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
9. AMOUNT OWING TO A RELATED COMPANY
The amount owing to a related company is interest-free, unsecured and
has no fixed term of repayment.
10. RELATED PARTY TRANSACTIONS
Significant related party transactions entered with company in
which certain directors of the company have substantial financial
interest were as follows:
<TABLE>
<CAPTION>
01/01/99 01/04/98
To To
30/06/99 31/12/98
$ $
<S> <C> <C>
IT consultancy fees services paid 185,000 -
============== ==============
</TABLE>
11. TAXATION
<TABLE>
<CAPTION>
01/01/99 01/04/98
To To
30/06/99 31/12/98
$ $
<S> <C> <C>
Tax charged for the period 212,700 9,000
Under provision of income tax in respect of previous year 11,404 4,071
-------------- --------------
224,104 13,071
============== ==============
The income tax expense derived from the amount of income tax expense
determined by applying the Singapore tax rate of 26% to profit before
income tax as a result of the following timing differences :-
01/01/99 01/04/98
To To
30/06/99 31/12/98
$ $
Income tax expense at statutory rate 142,890 20,580
Non-allowable items 73,213 7,141
Other items (3,403) (18,721)
Underprovision in respect of previous year 11,404 4,071
============== ==============
224,104 13,071
============== ==============
</TABLE>
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
12. OPERATING LEASE COMMITMENT
Rental and lease commitment for all operating leases for the period
amounted to $50,011 (1998 : $56,668).
As at the balance sheet, the company is committed to making the
following payment in respect of operating leases within a term of more
than one year.
<TABLE>
<CAPTION>
01/01/99 01/04/98
to To
30/06/99 31/12/98
$ $
<S> <C> <C>
Within 1 year 175,812 22,374
Within 2 to 3 year 351,624 -
============== ==============
</TABLE>
13. COMPARATIVE FIGURES
Certain comparative figures have been reclassified to conform with
current period's presentation.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
TRADING AND PROFIT AND LOSS ACCOUNT FOR THE PERIOD FROM 1ST JANUARY 1999 TO
30TH JUNE 1999
<TABLE>
<CAPTION>
01/01/99 01/04/98
TO TO
30/06/99 31/12/98
$ $
<S> <C> <C>
TURNOVER 2,250,189 1,935,500
LESS : COST OF SALES
Opening stocks 3,732 -
Purchases 69,970 339,930
Commission 5,017 200
Consultancy fee 185,000 -
Implementation expenses 150,000 -
Insurance 5,719 -
Staff accommodation - 10,973
Wages 791,225 795,561
-------------- --------------
1,210,663 1,146,664
Less : Closing stocks - 3,732
-------------- --------------
395,844 1,142,932
-------------- --------------
GROSS PROFIT 1,039,526 792,568
LESS : EXPENDITURE (as per schedule) (489,949) (754,971)
-------------- --------------
OPERATING PROFIT FOR THE PERIOD 549,577 37,597
============== ==============
</TABLE>
This schedule does not form part of the audited statutory accounts.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
<TABLE>
<CAPTION>
01/01/99 01/04/98
TO TO
30/06/99 31/12/98
$ $
<S> <C> <C>
EXPENDITURE
Advertisement 8,975 8,148
Amortisation of research and development 110,442 -
Auditors' remuneration 2,000 2,800
Bank charges and interest 470 151
Depreciation of fixed assets 19,280 26,569
Directors' fees - 80,000
Directors' remuneration 57,600 82,080
Entertainment and refreshment 789 6,380
Exhibition 21,828 -
General expenses 6,266 3,484
Insurance - 17,706
Leasing charges for computers 2,845 -
Legal and professional fee 1,940 9,955
Office repairs and maintenance 1,716 2,068
Printing, postages and stationery 3,742 5,799
Rental of office 50,011 58,467
Research and development written off - 36,995
Salaries and CPF 157,612 355,159
Secretarial fee 643 -
Staff welfare 1,386 -
Subscriptions 410 2,625
Telephone 18,398 3,883
Transport 9,604 19,016
Travelling 12,686 31,276
Water and electricity 1,306 2,410
-------------- --------------
489,949 754,971
============== ==============
</TABLE>
This schedule does not form part of the audited statutory accounts.
<PAGE>
F-7
AUDITED FINANCIAL STATEMENTS
AND OTHER FINANCIAL INFORMATION
SR SINGAPORE PTE LTD
31ST DECEMBER 1998
<PAGE>
AUDITED FINANCIAL STATEMENTS
AND OTHER FINANCIAL INFORMATION
SR SINGAPORE PTE LTD
31ST DECEMBER 1998
C O N T E N T S
PAGE
--------
Report of the directors 1
Statement by directors 6
Report of the auditors to the members 7
Profit and loss account 8
Balance Sheet 9
Notes on the accounts 10
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
REPORT OF THE DIRECTORS
The directors present their report to the members together with the audited
accounts of the company for the financial period from 1st April 1998 to 31st
December 1998.
DIRECTORS
The directors in office at the date of this report are:
Vijaya Lachimi d/o S Govindasamy
Venkatachari Suresh
PRINCIPAL ACTIVITIES
The principal activities of the company are to carry on the businesses in
maintenance and development of computer hardware and software and to act as
consultants and advisers in the information technology industries.
There have been no significant changes in the nature of these activities during
the financial period.
ACQUISITION AND DISPOSAL OF SUBSIDIARIES
There were no acquisition and disposal of subsidiaries during the financial
period.
RESULTS FOR THE FINANCIAL PERIOD
$
Net profit for the period after taxation 24,526
Revenue reserve brought forward 105,561
--------------
Revenue reserve carried forward 130,087
==============
TRANSFER TO/(FROM) RESERVES OR PROVISIONS
There were no material transfers to or from reserves or provisions other than
normal amounts set aside for depreciation of fixed assets and provision for
current income tax as disclosed in the accounts.
ISSUE OF SHARES AND DEBENTURES
During the financial period, the company did not issue any shares or debentures.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES OR DEBENTURES
Neither at the end of nor at any time during the financial period was the
company a party to any arrangement whose object is to enable the directors of
the company to acquire benefits by means of the acquisitions of shares or
debentures of the company or any other body corporate.
DIRECTORS' INTEREST IN SHARES OR DEBENTURES
The directors holding office at the end of the financial period and their
interests in the share capital of the company as recorded in the register of
directors' shareholdings were as follows:-
Name of directors
in which interest At beginning At end
are held of period of period
- --------------------- ------------ ------------
(Ordinary shares of $1 each)
Venkatachjari Suresh 60,000 99,000
Vijaya Lachimi d/o S Govindasamy 20,000 1,000
Saraspadi d/o Tangaveloo 20,000 -
Ms Sarasapadi d/o Tangaveloo, who was appointed to the Board on 25th January
1994, resigned on 1st April 1998.
DIVIDENDS
No dividends has been paid or declared or recommended since the end of the
previous financial year.
BAD AND DOUBTFUL DEBTS
Before the profit and loss account and the balance sheet were made out, the
directors took reasonable steps to ascertain that proper action had been taken
in relation to the writing off of bad debts and have satisfied themselves that
there were no known bad debts and that no provision for doubtful debts was
necessary.
At the date of this report, the directors are not aware of any circumstances
which would render it necessary to write off any debts or to make a provision
for doubtful debts, in respect of these accounts.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
CURRENT ASSETS
Before the profit and loss account and the balance sheet were made out, the
directors took reasonable steps to ascertain that current assets which were
unlikely to realise in the ordinary course of business their book values have
been written down to their estimated realisable values or that adequate
provisions have been made for the diminution in value of such current assets.
At the date of this report, the directors are not aware of any circumstances
which would render the values attributable to current assets in the accounts
misleading.
CHARGES AND CONTINGENT LIABILITIES
Since the end of the financial period:
(a) no charge on the assets of the company has arisen which secures the
liability of any other person, and
(b) no contingent liability of the company has arisen.
ABILITY TO MEET OBLIGATIONS
No contingent or other liability has become enforceable or is likely to become
enforceable within the period of twelve months after the end of the financial
period which, in the opinion of the directors, will or may substantially affect
the ability of the company to meet its obligations as and when they fall due.
OTHER CIRCUMSTANCES AFFECTING ACCOUNTS
As at the date of this report, the directors are not aware of any circumstances
not otherwise dealt with in this report or accounts which would render any
amount stated in the accounts misleading.
UNUSUAL ITEMS
In the opinion of the directors, the results of the operations of the company
have not been substantially affected by any item, transaction or event of a
material and unusual nature during the financial period.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
UNUSUAL ITEMS AFTER PERIOD END DATE
In the opinion of the directors, no item, transaction or event of a material and
unusual nature has arisen in the interval between the end of the financial
period and the date of this report which would affect substantially the results
of the operations of the company for the financial period in which this report
is made.
DIRECTORS' CONTRACTUAL BENEFITS
Since the end of the previous financial year, no director has received or become
entitled to receive a benefit by reason of a contract made by the company or a
related corporation with the director or with a firm of which he is a member, or
with a company in which he has a substantial financial interest.
OPTIONS GRANTED
No option to take up unissued share of the company was granted during the
financial period.
OPTIONS EXERCISED
During the financial period, no shares were issued by virtue of the exercise of
an option to take up unissued shares.
OPTION OUTSTANDING
There were no unissued shares of the company under option as at the end of the
financial period.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
AUDITORS
Wee Koon San & Co have expressed their willingness to accept reappointment as
auditors.
ON BEHALF OF THE DIRECTORS,
/s/ Vijaya Lachimi
---------------------------
VIJAYA LACHIMI D/O
S GOVINDASAMY
DIRECTOR
/s/ Venkatachari Suresh
---------------------------
VENKATACHARI SURESH
DIRECTOR
SINGAPORE,
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
STATEMENT BY DIRECTORS
In the opinion of the directors, the accompanying profit and loss account and
balance sheet together with the notes thereon are drawn up so as to give a true
and fair view of the state of affairs of the company for the financial period
from 1st April 1998 to 31st December 1998 and of the results of the business of
the company for the financial period then ended and, at the date of this
statement, there are reasonable grounds to believe that the company will be able
to pay its debts as and when they fall due.
ON BEHALF OF THE DIRECTORS,
/s/ Vijaya Lachimi
---------------------------
VIJAYA LACHIMI D/O
S GOVINDASAMY
DIRECTOR
/s/ Venkatachari Suresh
---------------------------
VENKATACHARI SURESH
DIRECTOR
SINGAPORE,
<PAGE>
REPORT OF THE AUDITORS TO THE MEMBERS OF
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
We have audited the accompanying financial statements of SR SINGAPORE PTE LTD
for the financial period from 1st April 1998 to 31st December 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 audit.
We conducted our audit in accordance with Singapore Standards on Auditing. Those
Standards require that we plan to perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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 audit provides a reasonable basis for our opinion.
In our opinion,
(a) the financial statements are properly drawn up in accordance with the
provisions of the Companies Act and Statements of Accounting Standard
and so as to give a true and fair view of :
i) the state of affairs of the company for the financial period
from 1st April 1998 to 31st December 1998 and of the results
of the company for the financial period then ended on that
date; and
ii) the other matters required by section 201 of the Act to be
dealt with in the accounts;
(b) the accounting and other records, and the registers required by the Act
to be kept by the company have been properly kept in accordance with
the provisions of the Act.
/s/ Wee Koon San & Co
WEE KOON SAN & CO
CERTIFIED PUBLIC ACCOUNTANTS, SINGAPORE
SINGAPORE,
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
PROFIT AND LOSS ACCOUNT FOR THE PERIOD FROM 1ST APRIL 1998 TO 31ST DECEMBER 1998
<TABLE>
<CAPTION>
01/04/98 01/04/97
TO TO
NOTE 31/12/98 31/03/98
$ $
<S> <C> <C> <C>
TURNOVER 1,935,500 2,536,650
============== ==============
Operating profit for the period/year 37,597 50,938
After charging :-
Auditors' remuneration 2,800 2,500
Depreciation of fixed assets 1.2 & 4 26,569 32,859
Director's fee 80,000 20,000
Directors' remuneration 82,080 84,590
============== ==============
Less : Taxation 1.5 & 10 (13,071) (25,500)
-------------- --------------
Net profit for the period/year after taxation 24,526 25,438
Revenue reserve brought forward 105,561 80,123
-------------- --------------
Revenue reserve carried forward 130,087 105,561
============== ==============
</TABLE>
The notes from pages 10 to 13 form an integral part of the accounts.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
BALANCE SHEET AS AT 31ST DECEMBER 1998
<TABLE>
<CAPTION>
01/04/98 01/04/97
TO TO
NOTE 31/12/98 31/03/98
$ $
<S> <C> <C> <C>
CAPITAL EMPLOYED
Share capital 3 100,000 100,000
Revenue reserve 130,087 105,561
-------------- --------------
230,087 205,561
============== ==============
EMPLOYMENT OF CAPITAL
FIXED ASSETS 4 31,570 37,474
RESEARCH AND DEVELOPMENT COST 5 583,760 -
CURRENT ASSETS
Stocks 3,732 -
Trade debtors 325,113 406,088
Other debtors, deposits and prepayments 25,915 29,386
Cash balances - 1,085
-------------- --------------
354,760 436,559
-------------- --------------
LESS : CURRENT LIABILITIES
Trade creditor 23,842 12,002
Other creditor and accruals 207,753 106,774
Amounts owing to directors 6 438,014 112,032
Amount owing to a related company 7 39,790 -
Bank overdraft (unsecured) 9 1,604 17,664
Provision for taxation 10 29,000 20,000
-------------- --------------
740,003 268,472
NET CURRENT (LIABILITIES)/ASSETS (385,243) 168,087
-------------- --------------
230,087 205,561
============== ==============
</TABLE>
The notes from pages 10 to 13 form an integral part of the accounts.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
NOTES ON THE ACCOUNTS
31ST DECEMBER 1998
These notes form an integral part of and should be read in conjunction with the
accompanying accounts :-
1. SIGNIFICANT ACCOUNTING POLICIES
1.1 Basis of Accounting
The accounts expressed in Singapore dollars are prepared in
accordance with the historical cost convention.
1.2 Depreciation
Depreciation is calculated on a straight line method to write
off the cost of the fixed assets over their estimated useful
lives. The estimated useful lives have been taken as follows:-
No. of years
Furniture and fittings 5
Computer 3
Office equipment 3
1.3 Amortisation of research and development costs
The research and development is stated at cost and is
amortised over a period of 3 years upon launching of project.
1.4 Stocks
Stocks are stated at lower of cost (first-in first-out method)
and net realisable value. In estimating the net realisable
value, due allowance was made for costs of realisation and age
or marketability of items.
1.5 Income Tax
The tax expense is determined on the basis of tax effect
accounting using the liability method and is applied to all
significant timing differences. Deferred tax benefits are not
recognised unless there is reasonable expectation of their
realisation.
2. PRINCIPAL ACTIVITIES AND TURNOVER
The principal activities of the company are to carry on the businesses
in maintenance and development of computer hardware and software and to
act s consultants and advisers in the information technology
industries.
Turnover represents invoiced services rendered to customers.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
3. SHARE CAPITAL
<TABLE>
<CAPTION>
01/04/98 01/04/97
TO TO
31/12/98 31/03/98
$ $
<S> <C> <C>
Ordinary shares of $1.00 each
Authorised : 1,000,000 shares 1,000,000 1,000,000
============== ==============
Issued and fully paid : 100,000 shares 100,000 100,000
============== ==============
</TABLE>
4. FIXED ASSETS
<TABLE>
<CAPTION>
Depreciation
Accumulated Net Book charged for
1998 Cost depreciation Value the period
$ $ $ $
<S> <C> <C> <C> <C>
Furniture and fittings 23,104 11,654 11,450 3,179
Office equipment 10,213 9,618 595 1,739
Computer 94,400 74,875 19,525 21,651
-------------- -------------- -------------- --------------
127,717 96,147 31,570 26,569
============== ============== ============== ==============
Depreciation
Accumulated Net Book charged for
1997 Cost depreciation Value the year
$ $ $ $
Furniture and fittings 75,649 53,223 22,426 25,216
Office equipment 10,213 7,879 2,334 3,405
Computer 21,190 8,476 12,714 4,238
-------------- -------------- -------------- --------------
107,052 69,578 37,474 32,859
============== ============== ============== ==============
</TABLE>
5. RESEARCH AND DEVELOPMENT
This comprise of the research and development cost for net banking and
electronic medi infor, which consist of cost of materials, wages and
production overhead.
6. AMOUNTS OWING TO DIRECTORS
The amounts owing to directors are unsecured, interest-free and have no
fixed term of repayment.
7. AMOUNT OWING TO A RELATED COMPANY
The amount owing to a related company is unsecured, interest-free and
has no fixed term of repayment.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
8. RELATED PARTY TRANSACTIONS
Significant related party transactions entered with company is which
certain directors of the company have substantial financial interest
were as follows :-
<TABLE>
<CAPTION>
01/04/98 01/04/97
to to
31/12/98 31/03/98
$ $
<S> <C> <C>
IT Consultancy fees services 39,790 -
============== ==============
</TABLE>
9. BANK OVERDRAFT (UNSECURED)
The bank overdraft is due to unpresented cheques as at the financial
period end.
10. TAXATION
<TABLE>
<CAPTION>
01/04/98 01/04/97
to to
31/12/98 31/03/98
$ $
<S> <C> <C>
Tax charged for the period/year 9,000 20,000
Underprovision in respect if previous year 4,071 5,500
-------------- --------------
13,071 25,500
============== ==============
</TABLE>
The income tax expense derived from the amount of income tax expense
determined by applying the Singapore tax rate of 26% to profit before
income tax as a result of the following timing differences :-
<TABLE>
<CAPTION>
01/04/98 01/04/97
to to
31/12/98 31/03/98
$ $
<S> <C> <C>
Income tax expense at statutory rate 20,580 13,244
Non-allowable items 7,141 8,718
Other items (14,650) 3,538
-------------- --------------
13,071 25,500
============== ==============
</TABLE>
11. OPERATING LEASE COMMITMENT
Rental and lease commitment for all operation leases for the period
amounted to $58,467 (1998 : $56,668).
As at the balance sheet, the company is committed to making the
following payment in respect of operating leases within a term of more
than one year.
<TABLE>
<CAPTION>
01/04/98 01/04/97
to to
31/12/98 31/03/98
$ $
<S> <C> <C>
Within 1 year 22,374 67,993
============== ==============
</TABLE>
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
12. COMPARATIVE FIGURES
Certain comparative figures have been reclassified to conform with the
current period's presentation.
13. CHANGE OF FINANCIAL YEAR END
The company changed its financial year end from 31st March 1998 to 31st
December 1998. The accounts of the financial period covered a period of
9 months from 1st April 1998 to 31st December 1998.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
TRADING AND PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED FROM 1ST APRIL 1998 TO
31ST DECEMBER 1998
<TABLE>
<CAPTION>
01/04/98 01/04/97
TO TO
31/12/98 31/03/98
$ $
<S> <C> <C>
TURNOVER 1,935,500 2,536,650
LESS : COST OF SALES
Purchases 339,930 411,659
Commission 200 2,766
Insurance - 5,980
Staff accommodation 10,973 31,817
Wages 795,561 1,169,701
-------------- --------------
1,146,664 1,621,923
Less : Closing stocks 3,732 -
-------------- --------------
1,142,932 1,621,923
-------------- --------------
GROSS PROFIT 792,568 914,727
Add : Other income - 52,880
-------------- --------------
792,568 967,607
LESS : EXPENDITURE (as per schedule) 754,971 916,669
-------------- --------------
OPERATING PROFIT FOR THE PERIOD/YEAR 37,597 50,938
============== ==============
</TABLE>
This schedule does not form part of the audited statutory accounts.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
<TABLE>
<CAPTION>
01/04/98 01/04/97
TO TO
31/12/98 31/03/98
$ $
<S> <C> <C>
EXPENDITURE
Advertisement 8,148 11,509
Auditors' remuneration 2,800 2,500
Bank charges and interest 151 822
Delivery and distribution - 3,283
Depreciation of fixed assets 26,569 32,859
Directors' fees 80,000 20,000
Directors' remuneration 82,080 84,590
Donation - 501
Entertainment and refreshment 6,380 9,551
Exhibition - 5,160
General expenses 3,484 6,462
Insurance 17,706 15,506
Internet charges - 2,420
Legal and professional fee 9,955 11,437
Office repairs and maintenance 2,068 2,980
Printing, postages and stationery 5,799 9,707
Rental of office 58,467 56,668
Research and development written off 36,995 354,972
Salaries and CPF 355,159 232,549
Secretarial fee - 600
Subscriptions 2,625 700
Telephone 3,883 13,516
Transport 19,016 7,712
Travelling 31,276 28,790
Water and electricity 2,410 1,875
-------------- --------------
754,971 916,669
============== ==============
</TABLE>
This schedule does not form part of the audited statutory accounts.
<PAGE>
F-8
AUDITED FINANCIAL STATEMENTS
AND OTHER FINANCIAL INFORMATION
SR SINGAPORE PTE LTD
31ST MARCH 1998
<PAGE>
AUDITED FINANCIAL STATEMENTS
AND OTHER FINANCIAL INFORMATION
SR SINGAPORE PTE LTD
31ST MARCH 1998
C O N T E N T S
PAGE
--------
Report of the directors 1
Statement by directors 6
Report of the auditors to the members 7
Profit and loss account 8
Balance Sheet 9
Notes on the accounts 10
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
REPORT OF THE DIRECTORS
The directors present their report to the members together with the audited
accounts of the company for the financial period ended 31st March 1998.
DIRECTORS
The directors in office at the date of this report are:
Vijaya Lachimi d/o S Govindsamy
Venkatachari Suresh
PRINCIPAL ACTIVITIES
The principal activities of the company are to carry on the businesses in
maintenance and development of computer hardware and software and to act as
consultants and advisers in the information technology industries.
There have been no significant changes in the nature of these activities during
the financial period.
ACQUISITION AND DISPOSAL OF SUBSIDIARIES
There were no acquisition and disposal of subsidiaries during the financial
period.
RESULTS FOR THE FINANCIAL PERIOD
$
Net profit for the period after taxation 25,438
Revenue reserve brought forward 80,123
---------------
Revenue reserve carried forward 105,561
===============
TRANSFER TO/(FROM) RESERVES OR PROVISIONS
There were no material transfers to or from reserves or provisions other than
normal amounts set aside for depreciation of fixed assets and provision for
current income tax as disclosed in the accounts.
ISSUE OF SHARES AND DEBENTURES
During the financial period, the company did not issue any shares or debentures.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES OR DEBENTURES
Neither at the end of nor at any time during the financial period was the
company a party to any arrangement whose object is to enable the directors of
the company to acquire benefits by means of the acquisitions of shares or
debentures of the company or any other body corporate.
DIRECTORS' INTEREST IN SHARES OR DEBENTURES
The directors holding office at the end of the financial period and their
interests in the share capital of the company as recorded in the register of
directors' shareholdings were as follows :-
Name of directors
in which interest At beginning At end
are held of period of period
- --------------------- ------------ ------------
(Ordinary shares of $1 each)
Venkatachari Suresh 60,000 60,000
Vijaya Lachimi d/o S Govindsamy 20,000 20,000
Saraspadi D/o Tangaveloo 20,000 20,000
Ms. Saraspadi D/o Tangaveloo, who was appointed to the Board on the 25th of
January 1994, resigned on 1st April, 1998.
DIVIDENDS
No dividends has been paid or declared or recommended since the end of the
previous financial period.
BAD AND DOUBTFUL DEBTS
Before the profit and loss account and the balance sheet were made out, the
directors took reasonable steps to ascertain that proper action had been taken
in relation to the writing off of bad debts and have satisfied themselves that
there were no known bad debts and that no provision for doubtful debts was
necessary.
At the date of this report, the directors are not aware of any circumstances
which would render it necessary to write off any debts or to make a provision
for doubtful debts in respect of these accounts.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
CURRENT ASSETS
Before the profit and loss account and the balance sheet were made out, the
directors took reasonable steps to ascertain that current assets which were
unlikely to realise in the ordinary course of business their book values have
been written down to their estimated realisable values or that adequate
provisions have been made for the diminution in value of such current assets.
At the date of this report, the directors are not aware of any circumstances
which would render the values attributable to current assets in the accounts
misleading.
CHARGES AND CONTINGENT LIABILITIES
Since the end of the financial period:
(a) no charge on the assets of the company has arisen which secures the
liability of any other person, and
(b) no contingent liability of the company has arisen.
ABILITY TO MEET OBLIGATIONS
No contingent or other liability has become enforceable or is likely to become
enforceable within the period of twelve months after the end of the financial
period which, in the opinion of the directors, will or may substantially affect
the ability of the company to meet its obligations as and when they fall due.
OTHER CIRCUMSTANCES AFFECTING ACCOUNTS
As at the date of this report, the directors are not aware of any circumstances
not otherwise dealt with in this report or accounts which would render any
amount stated in the accounts misleading.
UNUSUAL ITEMS
In the opinion of the directors the results of the operations of the company
have not been substantially affected by any item, transaction or event of a
material and unusual nature during the financial period.
UNUSUAL ITEMS AFTER PERIOD END DATE
In the opinion of the directors, no item, transaction or event of a material and
unusual nature has arisen in the interval between the end of the financial
period and the date of this report which would affect substantially the results
of the operations of the company for the financial period in which this report
is made.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
DIRECTORS' CONTRACTUAL BENEFITS
Since the end of the previous financial period, no director has received or
become entitled to receive a benefit by reason of a contract made by the company
or a related corporation with the director or with a firm of which he is a
member, or with a company in which he has a substantial financial interest.
OPTIONS GRANTED
No option to take up unissued share of the company was granted during the
financial period.
OPTIONS EXERCISED
During the financial period, no shares were issued by virtue of the exercise of
an option to take up unissued shares.
OPTION OUTSTANDING
There were no unissued shares of the company under option as at the end of the
financial period.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
AUDITORS
Wee Koon San & Co have expressed their willingness to accept reappointment as
auditors.
ON BEHALF OF THE DIRECTORS,
/s/ Vijaya Lachimi
---------------------------
VIJAYA LACHIMI D/O
S GOVINDASAMY
DIRECTOR
/s/ Venkatachari Suresh
---------------------------
VENKATACHARI SURESH
DIRECTOR
SINGAPORE,
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
STATEMENT BY DIRECTORS
In the opinion of the directors, the accompanying profit and loss account and
balance sheet together with the notes thereon are drawn up so as to give a true
and fair view of the state of affairs of the company as of 31st of March 1998
and of the results of the business of the company for the financial period then
ended and, at the date of this statement, there are reasonable grounds to
believe that the company will be able to pay its debts as and when they fall
due.
ON BEHALF OF THE DIRECTORS,
/s/ Vijaya Lachimi
---------------------------
VIJAYA LACHIMI D/O
S GOVINDASAMY
DIRECTOR
/s/ Venkatachari Suresh
---------------------------
VENKATACHARI SURESH
DIRECTOR
SINGAPORE,
<PAGE>
REPORT OF THE AUDITORS TO THE MEMBERS OF
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
We have audited the accompanying financial statements of SR SINGAPORE PTE LTD as
of 31st of March 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statement based on our audit.
We conducted our audit in accordance with Singapore Standards on Auditing. Those
Standards require that we plan to perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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 audit provides a reasonable basis for our opinion.
In our opinion,
(b) the financial statements are properly drawn up in accordance with the
provisions of the Companies Act and Statements of Accounting Standard
and so as to give a true and fair view of:
i) the state of affairs of the company for the financial period
as of 31st of March 1998 and of the results and cash flows of
the company for the financial period then ended on that date;
and
ii) the other matters required by section 201 of the Act to be
dealt with in the accounts;
(b) accounting and other records, and the registers required by the Act to
be kept by the company have been properly kept in accordance with the
provisions of the Act.
WEE KOON SAN & CO
CERTIFIED PUBLIC ACCOUNTANTS, SINGAPORE
SINGAPORE,
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST OF MARCH 1998
<TABLE>
<CAPTION>
NOTE 1998 1997
$ $
<S> <C> <C> <C>
TURNOVER 2,536,650 1,222,950
============== ==============
Operating profit for the period 50,938 106,560
After charging :-
Auditors' remuneration 2,500 2,000
Depreciation of fixed assets 1.2 & 4 32,859 31,774
Director's fee 20,000 20,000
Directors' remuneration 84,590 -
Preliminary expenses written off - 2,200
Preoperating expenses written off - 6,368
============== ==============
Add : Taxation 1.3 & 7 25,500 12,700
-------------- --------------
Net profit for the year after taxation 25,438 93,860
Revenue reserve/ accumulated (losses) brought
forward 80,123 (13,737)
-------------- --------------
Revenue reserve carried forward 105,561 80,123
============== ==============
</TABLE>
The notes on pages 10 to 12 form an integral part of the accounts.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
BALANCE SHEET AS OF 31ST OF MARCH 1998
<TABLE>
<CAPTION>
NOTE 1998 1997
$ $
<S> <C> <C> <C>
CAPITAL EMPLOYED
Share capital 3 100,000 100,000
Revenue reserve 105,561 80,123
-------------- --------------
205,561 180,123
============== ==============
EMPLOYMENT OF CAPITAL
FIXED ASSETS 4 37,474 67,079
CURRENT ASSET
Trade debtors 406,088 284,045
Other debtors, deposits and prepayments 29,386 36,789
Cash balances 1,085 30,666
-------------- --------------
436,559 351,500
LESS : CURRENT LIABILITIES
Trade creditor 12,002 13,431
Other creditor and accruals 106,774 135,563
Amounts owing to directors 5 112,032 76,762
Bank overdraft (unsecured) 6 17,664 -
Provision for taxation 7 20,000 12,700
-------------- --------------
268,472 238,456
-------------- --------------
NET CURRENT ASSETS 168,087 113,044
-------------- --------------
205,561 180,123
============== ==============
</TABLE>
The notes on pages 10 to 12 form an integral part of the accounts.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
NOTES ON THE ACCOUNTS
31ST MARCH 1998
These notes form an integral part of and should be read in conjunction with the
accompanying accounts :-
1. SIGNIFICANT ACCOUNTING POLICIES
1.1 Basis of Accounting
The accounts expressed in Singapore dollars are prepared in
accordance with the historical cost convention.
1.2 Depreciation
Depreciation is calculated on a straight line method to write
off the cost of the fixed assets over their estimated useful
lives. The estimated useful lives have been taken as follows:
No. of years
Furniture and fittings 5
Computer 3
Office Equipment 3
1.3 Income Tax
The tax expense is determined on the basis of tax effect
accounting, using the liability method and it is applied to
all significant timing differences. Deferred tax benefits are
not recognized unless there is reasonable expectation of their
realization.
2. PRINCIPAL ACTIVITIES AND TURNOVER
The principal activities of the company are to carry on the businesses
in maintenance and development of computer hardware and software and to
act as consultants and advisers in the information technology
industries.
Turnover represents invoiced services rendered to customers.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
3. SHARE CAPITAL
<TABLE>
<CAPTION>
1998 1997
$ $
<S> <C> <C>
Ordinary shares of $1.00 each
Authorized : 1,000,000 shares 1,000,000 1,000,000
============== ==============
Issued and fully paid : 100,000 shares 100,000 100,000
============== ==============
</TABLE>
4. FIXED ASSETS
<TABLE>
<CAPTION>
Depreciation
Accumulated Net Book charged for
1998 Cost Depreciation Value the period
$ $ $ $
<S> <C> <C> <C> <C>
Furniture and fittings 75,649 53,223 22,426 25,216
Office equipment 10,213 7,879 2,334 3,405
Computer 21,190 8,476 12,714 4,238
-------------- -------------- -------------- --------------
107,052 69,578 37,474 32,859
============== ============== ============== ==============
Depreciation
Accumulated Net Book charged for
1997 Cost Depreciation Value the period
$ $ $ $
Furniture and fittings 21,190 4,238 16,952 4,238
Office equipment 6,959 4,475 2,485 2,320
Computer 75,649 28,007 47,642 25,216
-------------- -------------- -------------- --------------
103,798 36,720 67,079 31,774
============== ============== ============== ==============
</TABLE>
5. AMOUNTS OWING TO DIRECTORS
The amounts owing to directors are interest-free, unsecured and have no
fixed term of repayment.
6. BANK OVERDRAFT (UNSECURED)
The bank overdraft is due to unpresented cheques as of the financial
year end.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
7. TAXATION
<TABLE>
<CAPTION>
1998 1997
$ $
<S> <C> <C>
Tax charged for the year 20,000 12,700
Under provision in respect of previous year 5,500 -
-------------- --------------
25,500 12,700
============== ==============
</TABLE>
The income tax expense derived from the amount of income tax expense
determined by applying the Singapore tax rate of 26% to profit before
income tax as a result of the following timing differences :-
<TABLE>
<CAPTION>
1998 1997
$ $
<S> <C> <C>
Income tax expense at statutory rate 13,244 27,706
Non-allowable items 8,718 9,380
Other items 3,538 (24,386)
============== ==============
25,500 12,700
============== ==============
</TABLE>
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
8. OPERATING LEASE COMMITMENT
Rental and lease commitment for all operating leases for the year
amounted to $56,668 (1997 : $66,339).
As at the balance sheet, the company is committed to making the
following payment in respect of operating leases within a term of more
than one year.
<TABLE>
<CAPTION>
1998 1997
$ $
<S> <C> <C>
Within 1 year 67,993 53,139
Within 2 to 3 year - 117,197
============== ==============
67,993 170,336
</TABLE>
9. RESEARCH AND DEVELOPMENT
During the financial year, the research and development stated at cost
of $354,972 for the development of net banking and electronic medi
infor was written off in the year in which it is incurred.
10. COMPARATIVE FIGURES
Certain comparative figures have been reclassified to conform with
current year's presentation.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
TRADING AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 1998
<TABLE>
<CAPTION>
1998 1997
$ $
<S> <C> <C>
TURNOVER 2,536,650 1,222,950
LESS : COST OF SALES
Purchases 411,659 126,640
Commission 2,766 2,753
Insurance 5,980 6,117
Staff accommodation 31,817 5,579
Wages 1,169,701 688,772
-------------- --------------
1,621,923 829,861
GROSS PROFIT 914,727 393,089
Add: Other Income 52,880 13,580
967,607 406,669
LESS : EXPENDITURE (as per schedule) 916,669 300,109
-------------- --------------
OPERATING PROFIT FOR YEAR/ PERIOD 50,938 106,560
============== ==============
</TABLE>
This schedule does not form part of the audited statutory accounts.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
<TABLE>
<CAPTION>
1998 1997
$ $
<S> <C> <C>
LESS: EXPENSES
Advertisement 11,509 4,589
Auditors' remuneration 2,500 2,000
Bank charges and interest 822 1,300
CPF 38,758 19,140
Delivery and Distribution 3,283 -
Depreciation of fixed assets 32,859 31,774
Directors' fees 20,000 20,000
Directors' remuneration 84,590 -
Donation 501 -
Entertainment and refreshment 9,551 4,992
Exhibition 5,160 -
General expenses 6,462 7,276
Insurance 15,506 -
Internet charges 2,420 -
Legal and professional fee 11,437 2,204
Office repairs and maintenance 2,980 823
Preliminary expenses written off - 2,200
Printing, postages and stationery 9,707 6,487
Rental 56,668 66,339
Research and development 354,972 -
Salaries 193.791 95,878
Secretarial fees 600 100
Subscriptions 700 -
Telephone 13,516 9,757
Transport 7,712 5,086
Travelling 28,790 7,637
Water and electricity 1,875 1,245
-------------- --------------
916,669 300,109
============== ==============
</TABLE>
This schedule does not form part of the audited statutory accounts.
<PAGE>
F-9
AUDITED FINANCIAL STATEMENTS
AND OTHER FINANCIAL INFORMATION
SR SINGAPORE PTE LTD
31ST MARCH 1997
<PAGE>
AUDITED FINANCIAL STATEMENTS
AND OTHER FINANCIAL INFORMATION
SR SINGAPORE PTE LTD
31ST MARCH 1997
C O N T E N T S
PAGE
--------
Report of the directors 1
Statement by directors 6
Report of the auditors to the members 7
Profit and loss account 8
Balance Sheet 9
Notes on the accounts 10
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
REPORT OF THE DIRECTORS
The directors present their report to the members together with the audited
accounts of the company for the financial year ended 31st March 1997.
DIRECTORS
The directors in office at the date of this report are:
Vijaya Lachimi d/o S Govindasamy
Venkatachari Suresh
PRINCIPAL ACTIVITIES
The principal activities of the company are to carry on the businesses in
maintenance and development of computer hardware and software and to act as
consultants and advisers in the information technology industries.
There have been no significant changes in the nature of these activities during
the financial period.
ACQUISITION AND DISPOSAL OF SUBSIDIARIES
There were no acquisition and disposal of subsidiaries during the financial
period.
RESULTS FOR THE FINANCIAL PERIOD
$
Net profit for the period after taxation 93,860
Accumulated (losses) brought forward (13,737)
--------------
Revenue reserve carried forward 80,123
==============
TRANSFER TO/(FROM) RESERVES OR PROVISIONS
There were no material transfers to or from reserves or provisions other than
normal amounts set aside for depreciation of fixed assets and provision for
current income tax as disclosed in the accounts.
ISSUE OF SHARES AND DEBENTURES
<PAGE>
During the financial year, the company increase its authorized share capital
from 100,000 shares of S$1.00 each to 1,000,000 shares of S$1.00 each by the
creation of 900,000 new ordinary shares of S$1.00 each.
On 30th April 1996, the issued share capital was increased by 50,000 ordinary
shares of S$1.00 each fully paid for cash at par to provide additional working
capital.
During the financial period, the company did not issue any shares or debentures.
ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES OR
DEBENTURES
Neither at the end of nor at any time during the financial period was the
company a party to any arrangement whose object is to enable the directors of
the company to acquire benefits by means of the acquisitions of shares or
debentures of the company or any other body corporate.
DIRECTORS' INTEREST IN SHARES OR DEBENTURES
The directors holding office at the end of the financial period and their
interests in the share capital of the company as recorded in the register of
directors' shareholdings were as follows:-
Name of directors
in which interest At beginning At end
are held of period of period
- --------------------- ------------ ------------
(Ordinary shares of $1 each)
Venkatachjari Suresh - 60,000
Vijaya Lachimi d/o S Govindasamy 25,000 20,000
Saraspadi d/o Tangaveloo 25,000 20,000
Mr Venkatachari Suresh was appointed to the Board on 30th April 1997.
DIVIDENDS
No dividends has been paid or declared or recommended since the end of the
previous financial year.
BAD AND DOUBTFUL DEBTS
Before the profit and loss account and the balance sheet were made out, the
directors took reasonable steps to ascertain that proper action had been taken
in relation to the writing off of bad debts and have satisfied themselves that
there were no known bad debts and that no provision for doubtful debts was
necessary.
At the date of this report, the directors are not aware of any circumstances
which would render it necessary to write off any debts or to make a provision
for doubtful debts, in respect of these accounts.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
CURRENT ASSETS
Before the profit and loss account and the balance sheet were made out, the
directors took reasonable steps to ascertain that current assets which were
unlikely to realise in the ordinary course of business their book values have
been written down to their estimated realisable values or that adequate
provisions have been made for the diminution in value of such current assets.
At the date of this report, the directors are not aware of any circumstances
which would render the values attributable to current assets in the accounts
misleading.
SUBSEQUENT EVENTS
Since the end of the financial period:
(a) no charge on the assets of the company has arisen which secures the
liability of any other person, and
(b) no contingent liability of the company has arisen.
CONTINGENT OF OTHER LIABILITY
No contingent or other liability has become enforceable or is likely to become
enforceable within the period of twelve months after the end of the financial
period which, in the opinion of the directors, will or may substantially affect
the ability of the company to meet its obligations as and when they fall due.
OTHER CIRCUMSTANCES AFFECTING ACCOUNTS
As at the date of this report, the directors are not aware of any circumstances
not otherwise dealt with in this report or accounts which would render any
amount stated in the accounts misleading.
MATERIAL AND UNUSUAL ITEMS DURING THE FINANCIAL YEAR
In the opinion of the directors, the results of the operations of the company
have not been substantially affected by any item, transaction or event of a
material and unusual nature during the financial period.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
MATERIAL AND UNUSUAL ITEMS SINCE THE END OF THE FINANCIAL YEAR
In the opinion of the directors, no item, transaction or event of a material and
unusual nature has arisen in the interval between the end of the financial
period and the date of this report which would affect substantially the results
of the operations of the company for the financial period in which this report
is made.
DIRECTORS' CONTRACTUAL BENEFITS
Since the end of the previous financial year, no director has received or become
entitled to receive a benefit by reason of a contract made by the company or a
related corporation with the director or with a firm of which he is a member, or
with a company in which he has a substantial financial interest.
OPTIONS GRANTED
No option to take up unissued share of the company was granted during the
financial period.
OPTIONS EXERCISED
During the financial period, no shares were issued by virtue of the exercise of
an option to take up unissued shares.
OPTION OUTSTANDING
There were no unissued shares of the company under option as at the end of the
financial period.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
AUDITORS
Wee Koon San & Co have expressed their willingness to accept reappointment as
auditors.
ON BEHALF OF THE DIRECTORS,
/s/ Vijaya Lachimi
---------------------------
VIJAYA LACHIMI D/O
S GOVINDASAMY
DIRECTOR
/s/ Venkatachari Suresh
---------------------------
VENKATACHARI SURESH
DIRECTOR
SINGAPORE,
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
STATEMENT BY DIRECTORS
In the opinion of the directors, the accompanying profit and loss account and
balance sheet together with the notes thereon are drawn up so as to give a true
and fair view of the state of affairs of the company for the financial period
from 1st April 1998 to 31st December 1998 and of the results of the business of
the company for the financial period then ended and, at the date of this
statement, there are reasonable grounds to believe that the company will be able
to pay its debts as and when they fall due.
ON BEHALF OF THE DIRECTORS,
/s/ Vijaya Lachimi
---------------------------
VIJAYA LACHIMI D/O
S GOVINDASAMY
DIRECTOR
/s/ Venkatachari Suresh
---------------------------
VENKATACHARI SURESH
DIRECTOR
SINGAPORE,
<PAGE>
REPORT OF THE AUDITORS TO THE MEMBERS OF
SR SINGAPORE PTE LTD (INCORPORATED IN SINGAPORE)
We have audited the accounts set out on pages 8 to 12 in accordance with
Singapore Standards on Auditing and Statements of Auditing Practice and,
accordingly, included such test of the accounting records and such other audit
procedures as we considered appropriate in the circumstances.
In our opinion,
(a) the financial statements are properly drawn up in accordance with the
provisions of the Companies Act and Statements of Accounting Standard
and so as to give a true and fair view of :
i) the state of affairs of the company as at 31st March 1997 and
of the results of the company for the financial period then
ended on that date; and
ii) the other matters required by section 201 of the Act to be
dealt with in the accounts;
(b) the accounting and other records, and the registers required by the Act
to be kept by the company have been properly kept in accordance with
the provisions of the Act.
WEE KOON SAN & CO
CERTIFIED PUBLIC ACCOUNTANTS, SINGAPORE
SINGAPORE,
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 1997
<TABLE>
<CAPTION>
01/04/97 01/04/96
TO TO
NOTE 31/12/97 31/03/97
$ $
============== ==============
<S> <C> <C> <C>
Operating profit for the period/year 106,560 (13,737)
After charging :-
Auditors' remuneration 2,000 1,200
Depreciation of fixed assets 1.2 & 4 31,774 3,510
Director's fee 20,000 -
Preoperating expenses written off 8,568
============== ==============
Less : Taxation 1.3 & 6 12,700 -
-------------- --------------
Net profit/ (loss) for the year after taxation 93,860 (13,737)
Accumulated ( losses) brought forward (13,737) -
-------------- --------------
Revenue reserve carried forward 80,123 (13,737)
============== ==============
</TABLE>
The notes from pages 10 to 12 form an integral part of the accounts.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
BALANCE SHEET AS AT 31ST MARCH 1997
<TABLE>
<CAPTION>
01/04/97 01/04/96
TO TO
NOTE 31/12/97 31/03/97
$ $
<S> <C> <C> <C>
CAPITAL EMPLOYED
Share capital 3 100,000 50,000
Revenue reserve 80,123 (13,737)
-------------- --------------
180,123 36,263
============== ==============
EMPLOYMENT OF CAPITAL
FIXED ASSETS 4 67,079 5,583
CURRENT ASSETS
Trade debtors 284,045 30,395
Other debtors, deposits and prepayments 36,789 15,998
Cash balances 30,666 5,660
-------------- --------------
351,500 52,052
-------------- --------------
LESS : CURRENT LIABILITIES
Trade creditors 13,431 -
Other creditor and accruals 135,563 1,200
Amounts owing to directors 5 76,762 28,740
Provision for taxation 6 12,700 -
-------------- --------------
238,456 29,940
NET CURRENT (LIABILITIES)/ASSETS 113,044 22,112
Preliminary and pre-operating expenses - 8,568
-------------- --------------
180,123 36,263
============== ==============
</TABLE>
The notes from pages 10 to 12 form an integral part of the accounts.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
NOTES ON THE ACCOUNTS
31ST MARCH 1997
These notes form an integral part of and should be read in conjunction with the
accompanying accounts :-
1. SIGNIFICANT ACCOUNTING POLICIES
1.1 Basis of Accounting
The accounts expressed in Singapore dollars are prepared in
accordance with the historical cost convention.
1.2 Depreciation
Depreciation is calculated on a straight line method to write
off the cost of the fixed assets over their estimated useful
lives. The estimated useful lives have been taken as
follows:-
No. of years
Furniture and fittings 5
Computer 3
Office equipment 3
1.3 Amotisation of research and development costs
The research and development is stated at cost and is
amortised over a period of 3 years upon launching of project.
2. PRINCIPAL ACTIVITIES AND TURNOVER
The principal activities of the company are to carry on the businesses
in maintenance and development of computer hardware and software and to
act s consultants and advisers in the information technology
industries.
Turnover represents invoiced services rendered to customers.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
<TABLE>
<CAPTION>
3. SHARE CAPITAL
01/04/97 01/04/96
TO TO
31/12/97 31/03/97
$ $
<S> <C> <C>
Ordinary shares of $1.00 each
Authorised : 1,000,000 shares 1,000,000 100,000
================== =============
Issued and fully paid : 100,000 shares 100,000 50,000
================== =============
(1996: 50,000 shares)
</TABLE>
During the financial year, the company issued its authorized share capital from
100,000 shares to 1,000,000 shares by the creation of 900,000 new ordinary
shares of S$1.00 each.
On 12th April 1996, the issued share capital was increased by 50,000 ordinary
shares of S$1.00 each at par for cash to provide additional working capital.
<TABLE>
<CAPTION>
4. FIXED ASSETS
Depreciation
Accumulated Net Book charged for
1997 Cost depreciation Value the period
S$ S$ S$ S$
<S> <C> <C> <C> <C>
21,190 4,238 16,952 4,238
Office equipment 6,959 4,475 2,485 2,320
Computer 75,649 28,007 47,642 25,216
---------------------------------------------------------------------------
103,798 36,720 67,079 31,774
===========================================================================
</TABLE>
<TABLE>
<CAPTION>
Depreciation
Accumulated Net Book charged for
1996 Cost depreciation Value the year
S$ S$ S$ S$
<S> <C> <C> <C> <C>
Office equipment 4,076 2,155 1,921 1,359
Computer 6,453 2,791 3,662 2,151
---------------------------------------------------------------------------
10,529 4,946 5,583 3,510
===========================================================================
</TABLE>
5. AMOUNTS OWING TO DIRECTORS
The amounts owing to directors are unsecured, interest-free and have no
fixed term of repayment.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
6. TAXATION
1997
S$
Current income tax 12,700
The income tax expense derived from the amount of income tax expense
determined by applying the Singapore tax rate of 26% to profit before
income tax as a result of the following timing differences :-
1997
S$
Income tax expense of statutory rate 27,706
Non-allowable items 9,380
Other items (24,386)
--------
12,700
7. OPERATING LEASE COMMITMENT
Rental and lease commitment for all operation leases for the period
amounted to S$66,339 (1995 : S$15,912).
As at the balance sheet, the company is committed to making the
following payment in respect of operating leases within a term of more
than one year.
1997 1996
S$ S$
Within 1 year 53,139 15,912
Within 2 to 3 years 117,197 28,964
170,336 44,876
=========== ===========
8. COMPARATIVE FIGURES
Certain comparative figures have been reclassified to conform with the
current period's resentation.
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
TRADING AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 1997
01/04/97 01/04/96
TO TO
31/12/97 31/03/97
S$ S$
TURNOVER 1,222,950 51,992
LESS : COST OF SALES
Purchases 126,640 -
Commission 2,753 -
Insurance 6,117 -
Staff accommodation 5,579 -
Wages 688,772 36,739
------------- -------------
829,861 36,739
------------- -------------
GROSS PROFIT 393,089 15,253
Add : Other income 13,580 11,832
------------- -------------
406,669 27,085
<PAGE>
SR SINGAPORE PTE LTD
(INCORPORATED IN SINGAPORE)
<TABLE>
<CAPTION>
01/04/97 01/04/96
TO TO
31/12/97 31/03/97
$ $
EXPENDITURE
<S> <C> <C>
Advertisement 4,589 4,315
Auditors' remuneration 2,000 1,200
Bank charges and interest 1,300 -
CPF 19,140 -
Depreciation of fixed assets 31,774 3,510
Directors'fees 20,000 -
Entertainment and refreshment 4,992 267
General expenses 7,276 2,700
Insurance 4,914 453
Interview charges - 1,209
Legal and professional fee 2,204 -
Office repairs and maintenance 823 1,700
Printing, postages and stationery 6,487 -
Preliminary expenses written off 2,200 2,503
Preoperating expenses written off 6,368 -
Rental of office 66,339 15,912
Repairs and maintenance - 126
Salaries 95,878 -
Secretarial fee 100 600
Telephone 9,757 1,445
Transport 5,086 624
Travelling 7,637 3,874
Water and electricity 1,245 384
------------- --------------
300,109 40,822
============= ==============
NET PROFIT/(LOSS) FOR THE YEAR 106,560 (13,737)
</TABLE>
This schedule does not form part of the audited statutory accounts.
EX-2.1
Agreement For The
Exchange Of Common Stock
Dated April 2, 1999
Between
SolutionNet International, Inc.
And
SR Singapore, Pte., Ltd
THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT"), NOR REGISTERED UNDER ANY
STATE SECURITIES LAW. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933
ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY.
AGREEMENT FOR THE EXCHANGE OF COMMON STOCK
AGREEMENT made this 2nd day of April, 1999 by and between SOLUTIONNET
INTERNATIONAL, INC., a Minnesota corporation (hereinafter, called "ISSUER") and
DENSMORE GROUP LIMITED (hereinafter, called "SHAREHOLDER"), which SHAREHOLDER
own all of the issued and outstanding shares of SR SINGAPORE PTE, LTD, a
Singapore corporation (hereinafter, called "SR SINGAPORE").
In consideration of the mutual promises, covenants, and representations
contained herein, and other good and valuable consideration,
THE PARTIES HERETO AGREE AS FOLLOWS:
1. EXCHANGE OF SECURITIES. Subject to the terms and conditions of this
Agreement, the ISSUER agrees to issue to the SHAREHOLDERS, 10,500,000
shares of common stock of the ISSUER, $0.001 par value (hereinafter, called
the "SHARES"), in exchange for 100% of the issued and outstanding shares of
SR SINGAPORE, such that SR SINGAPORE shall become a wholly owned subsidiary
of the ISSUER.
2. REPRESENTATIONS AND WARRANTIES. ISSUER represents and warrants to
SHAREHOLDERS and SR SINGAPORE the following:
i ORGANIZATION. ISSUER is a corporation duly organized, validly
existing, and in good standing under the laws of Minnesota, and has
all the necessary corporate powers to own properties and carry on a
business, and is duly qualified to do business and is in good standing
in Minnesota. All actions taken by the incorporators, directors and
shareholders of the ISSUER have been valid and in accordance with the
laws of the State of Minnesota.
ii CAPITAL. The authorized capital stock of the ISSUER is 20,000,000
shares of common stock, $0.01 par value, of which 174,999 are issued
and outstanding after the four to one stock split. All outstanding
shares are fully paid and non-assessable, free of liens, encumbrances,
options, restrictions, and legal or equitable rights of others not a
party to this Agreement. At closing, there will be no outstanding
subscriptions, options, rights, warrants, convertible securities, or
other agreements or commitments obligating ISSUER to issue or to
transfer from the treasury any additional shares of its capital stock.
None of the outstanding shares of the ISSUER are subject to any stock
restriction agreements. All of the shareholders of the ISSUER have
valid title to such shares and acquired their shares in a lawful
transaction and in accordance with the laws of the State of Minnesota.
<PAGE>
iii. FINANCIAL STATEMENT. Exhibit B to this Agreement includes the balance
sheet of the ISSUER as of December 31, 1998, for the period then
ended. The balance sheet has been prepared in accordance with
generally accepted accounting principles consistently followed by the
ISSUER throughout the period indicated, and fairly present the
financial position of the ISSUER as of the date of the balance sheet,
and the results of its operations for the period indicated.
iv. ABSENCE OF CHANGE. Since the date of the balance sheet, there has not
been any change in the financial condition or operations of the
ISSUER, except changes in the ordinary course of business, which
changes have not, in the aggregate, been materially adverse.
v LIABILITIES. ISSUER does not have any debt, liability, or obligation
of any nature, whether accrued, absolute, contingent, or otherwise,
and whether due or to become due, that is not reflected on the
ISSUER'S financial statement. ISSUER is not aware of any pending,
threatened or asserted claims, lawsuits or contingencies involving the
ISSUER or its common stock. There is no dispute of any kind between
the ISSUER and any third party, and no such dispute will exist at the
closing of this Agreement. At the closing, ISSUER will be free from
any and all liabilities, liens, claims and/or commitments.
vi ABILITY TO CARRY OUT OBLIGATION. ISSUER has the right, power, and
authority to enter into and perform its obligations under this
Agreement. The execution and delivery of this Agreement by ISSUER and
the performance by ISSUER of its obligations hereunder will not cause,
constitute, or conflict with or result in (a) any breach or violation
or the provisions of, or constitute a default under any license,
indenture, mortgage, charter, instrument, articles of incorporation,
bylaw, or other agreement or instrument to which the ISSUER or its
shareholders are a party, or by which they may be bound, nor will any
consents or authorizations of any party other than those hereto be
required, (b) any event that would cause the ISSUER to be liable to
any party, or (c) any event that would result in the creation or
imposition or any lien, charge or encumbrance on any assets of the
ISSUER or upon the securities of the ISSUER to be acquired by the
SHAREHOLDERS.
vii. FULL DISCLOSURE. None of the representations and warranties made by
the ISSUER, or any certificate or memorandum furnished or to be
furnished by the ISSUER, contains or will contain any untrue
statement of a material fact, or omit any material fact the omission
of which would be misleading.
viii.CONTRACTS AND LEASES. ISSUER is not currently carrying on any
business and is not a party to any contract, agreement, or lease. No
person holds a power of attorney from ISSUER.
ix. COMPLIANCE WITH THE LAWS. ISSUER has complied with, and is not in
violation of any federal, state or local statue, law, and/or
regulation pertaining to ISSUER. ISSUER has complied with all federal,
and state securities laws in connection with the issuance, sale and
distribution of its securities.
<PAGE>
X. LITIGATION. ISSUER is not (and has not been) a party to any suit,
action, arbitration, or legal, administrative, or other proceeding, or
pending governmental investigation. To the best of the knowledge of
the ISSUER, there is no basis for any such action or proceeding and no
such action or proceeding is threatened against the ISSUER and ISSUER
is not subject to or in default with respect to any order, writ,
injunction, or decree of any federal, state, local, or foreign court,
department, agency, or instrumentality.
xi. CONDUCT OF BUSINESS. Prior to the closing, the ISSUER shall conduct
business in the normal course, and shall not (a) sell, pledge, or
assign any assets, (b) amend its article of incorporation or By-laws,
(c) declare dividends, redeem or sell stock or other securities, (d)
incur any liabilities, (e) acquire or dispose of any assets, enter
into any contract, guarantee obligations of any third party, or (f)
enter into any other transaction.
xii. CORPORATE DOCUMENTS. Copies of each of the following documents, which
are true, complete and correct in all material respects, will be
attached hereto and made an integral part hereof to this Agreement:
(1) Articles of Incorporation;
(2) By-laws;
(3) Minutes of Shareholders Meetings;
(4) Minutes of Directors Meetings;
(5) List of Officers and Directors;
(6) Balance Sheet as described in Section 2(iii); and
(7) Stock register and stock records of the ISSUER and a current,
accurate list of the ISSUER's shareholders.
xiii.DOCUMENTS. All minutes, consents or other documents pertaining to the
ISSUER to be delivered at the closing shall be valid and in accordance
with the laws of the State of Minnesota.
xiv TITLE. The Shares to be issued to the SHAREHOLDERS will be, at the
closing, free and clear of all liens, security interests, pledges,
charges, claims, encumbrances and restrictions of any kind. None of
such Shares are or will be subject to any voting trust or agreement.
No person holds or has any right to receive any proxy or similar
instrument with respect to such shares, except as provided for in this
Agreement, the ISSUER is not a party to any agreement which offers or
grants to any person the right to purchase or acquire any of the
securities to be issued to the SHAREHOLDERS. 'Mere is no applicable
local, state or federal law, rule or regulation, or decree which
would, as a result of the issuance of the Shares to SHAREHOLDERS,
impair, restrict, or delay SHAREHOLDERS' voting rights with respect to
the Shares.
xv. LOCK-UP. ISSUER will cause, to the extent requested by any
underwriter, broker-dealer, market maker, or the like, of securities
of ISSUER, the shareholders of ISSUER to agree not to sell or
otherwise transfer or dispose of any or all of the shares of ISSUER
presently outstanding, during any period of time as so requested. In
order to enforce the foregoing covenant, ISSUER agrees to impose
stop-transfer instructions as to such stock.
3. SHAREHOLDERS AND SR SINGAPORE REPRESENT AND WARRANT TO THE ISSUER THE
FOLLOWING:
i. ORGANIZATION. SR SINGAPORE is a corporation, duly organized, validly
existing, and in good standing under the laws of the Country of
Singapore, and has all the necessary corporate powers to own
properties and carry on a business, and is duly qualified to do
business and is in good standing in the Country of Singapore. All
actions taken by the incorporators, directors and shareholders of the
SR SINGAPORE have been valid and in accordance with the laws of the
Country of Singapore.
<PAGE>
ii. SHAREHOLDERS AND ISSUED STOCK. Exhibit A attached hereto and made an
integral part hereof, sets forth the names and shareholdings of 100% of
the SHAREHOLDERS. In addition to the shareholdings so listed, SR
SINGAPORE has commitments to issue additional shares in future as
follows:
a. To Densmore Corporation, or its successors, shares in an amount
based on increases in net income of the business acquired by SR
SINGAPORE over the next three (3) years.
iii. COUNSEL. SHAREHOLDERS and SR SINGAPORE represent and warrant prior to
the Closing, that they are represented by independent counsel or have
had the opportunity to retain independent counsel to represent them in
this transaction.
4. INVESTMENT INTENT. SHAREHOLDERS agree that the Shares being issued pursuant
to this Agreement may be sold, pledged, assigned, hypothecated or otherwise
transferred, with or without consideration (hereinafter called a
"Transfer"), only pursuant to an effective registration statement under the
1933 Act, or pursuant to an exemption from registration under the 1933 Act,
the availability of which is to be established to the satisfaction of the
ISSUER. SHAREHOLDERS agree prior to any Transfer, to give written notice to
the ISSUER expressing SHAREHOLDER's desire to effect such Transfer and
describing the proposed Transfer.
5. CLOSING. The closing of this transaction shall take place at the offices of
Sara Hallitex Corporation 4344 Promenade Way. Suite 102P, Marina del Rey,
CA. 90292, upon receipt or exchange, as the case may be of the items
referenced in Section 6, below. Unless the closing of this transaction
takes place on or before March 8, 1999, then either party may terminate
this Agreement.
6. DOCUMENTATION TO BE DELIVERED AT CLOSING.
i. BY THE ISSUER
(1) Board of Directors Minutes authorizing the issuance of a
certificate or certificates for 10,500,000 Shares, registered in
the names of the SHAREHOLDERS, equal to their pro-rata holdings
in SR SINGAPORE.
(2) The resignation of all officers of ISSUER.
(3) A Board of Directors resolution appointing such person as
SHAREHOLDERS designate as a director(s) of ISSUER.
(4) The resignation of all directors of ISSUER, except that of
SHAREHOLDER's designee(s), dated subsequent to the resolution
described in 3, above and Mr. Garrett K. Krause who will remain
current President and CEO of the company
(5) Balance sheet of ISSUER, dated September 30, 1998 for the period
then ended.
(6) All the business and corporate records of ISSUER, including but
not limited to, correspondence files, bank statements,
checkbooks, savings account books, minutes of shareholder and
directors meetings, financial statements, shareholder listings,
stock transfer records, agreements and contracts.
(7) Such other minutes of ISSUER's shareholders or directors as may
reasonably be required by SHAREHOLDERS.
ii. BY SHAREHOLDERS AND SR SINGAPORE:
<PAGE>
(1) Delivery to the ISSUER, or to its Transfer Agent, of the
certificates representing 100% of the issued and outstanding
stock of SR SINGAPORE.
(2) Consents signed by a majority of SHAREHOLDERS of SR SINGAPORE
consenting to the terms of this Agreement.
7. REMEDIES.
i. ARBITRATION. Any controversy or claim arising out of, or relating to,
this Agreement, or the making, performance, or interpretation thereof,
shall be settled by arbitration in Los Angeles County, California in
accordance with the Rules of the American Arbitration Association then
existing, and judgment on the arbitration award may be entered in any
court having jurisdiction over the subject matter of the controversy.
8. MISCELLANEOUS.
i. CAPTIONS AND HEADINGS. The Article and paragraph headings throughout
this Agreement are for convenience and reference only, and shall in no
way be deemed to define, limit, or add to the meaning of any provision
of this Agreement.
ii. No ORAL CHANGE. The Agreement and any provision hereof, may not be
waived, changes, modified, or discharged orally, but only by agreement
in writing signed by the party against whom enforcement of any waiver,
change, modification, or discharge is sought.
iii.NON WAIVER. Except as otherwise expressly provided herein, no waiver of
any covenant, condition, or provision of this Agreement shall be deemed
to have been made unless expressly in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party
to insist in any one or more cases upon the performance of any of the
provisions, covenants, or conditions of this Agreement or to exercise
any option herein contained shall not be construed as a waiver or
relinquishment for the future of any such provisions, covenants, or
conditions, (ii) the acceptance of performance of anything required by
this Agreement to be performed with knowledge of the breach or failure
of a covenant, condition or provision hereof shall not be deemed a
waiver of such breach or failure, and (iii) no waiver by any party of
one breach by another party shall be construed as a waiver with respect
to any other or subsequent breach.
iv. TIME OF ESSENCE. Time is of the essence of the Agreement and of each
and every provision hereof.
V. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings.
vi. COUNTERPARTS. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed as original, but all
of which together shall constitute one and the same instrument.
vii.NOTICES. All notices, requests, demands, and other communications under
this Agreement shall be in writing and shall be deemed to have been
duly given on the date of service if served personally on the party to
whom the notice is to be given, or the third day after mailing if
mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid, and properly address, and by
fax, as follows:
<PAGE>
SR SINGAPORE : ISSUER:
-------------- -------
SR Singapore Pte, Ltd SOLUTIONNETINTERNATIONAL, INC.
51 Anson Road, #10 55/57 4344 Promenade Way, 102P
Singapore 079904 Marina del Rey, CA 90292
IN WITNESS WHEREOF, the undersigned has executed this Agreement this 28th day of
March, 1999.
SR SINGAPORE Pte, Ltd. SOLUTIONNET INTERNATIONAL, INC.
- ---------------------------------- ----------------------------------
Suresh Venkatachari, as per the Garrett K. Krause, as per the
approval ofthe board of directors approval of the board of directors
and shareholders and shareholders
EX-2.2
Supplemental Agreement
For The
Exchange Of Common Stock
Dated April 6, 1999
Between
SolutionNet International, Inc.
And
SR Singapore, Pte., Ltd
THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT"), NOR REGISTERED UNDER ANY
STATE SECURITIES LAW. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933
ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY.
SUPPLEMENTAL AGREEMENT FOR THE EXCHANGE OF COMMON STOCK
A SUPPLEMENTAL AGREEMENT made this 6th day of April, 1999 by and between
SOLUTIONNET INTERNATIONAL, INC., a Minnesota corporation (hereinafter, called
"ISSUER") and DENSMORE GROUP LIMITED (hereinafter, called "SHAREHOLDER"), which
SHAREHOLDER own all of the issued and outstanding shares of SR SINGAPORE PTE,
LTD, a Singapore corporation (hereinafter, called "SR SINGAPORE").
WHEREAS by an Agreement for the Exchange of Common Stock between the Issuer and
the Shareholder (hereinafter called the "Principal Agreement") the respective
parties have agreed to exchange the common stock of the Issuer for all the
issued and outstanding shares of SR Singapore.
AND WEHREAS by the Article 8(ii) of the Principal Agreement, the Principal
Agreement may be amended by agreement in writing between the parties.
THE PARTIES HERETO AGREE AS FOLLOWS:
1. Whenever reference is made in the Principal Agreement to "SR
SINGAPORE" such reference shall be construed to include a reference to
an intermediate holding corporation of SR SINGAPORE such intermediate
holding corporation being a corporation whose assets comprise of all
the issued and outstanding shares of SR SINGAPORE.
2. For the purpose of clarity only for the closing pursuant to Article
6(ii) of the Principal Agreement the same may be performed the
SHAREHOLDER by delivery of
a. All issued and outstanding shares of such intermediate holding
corporation together with the duly completed and executed
transfers in favor of the ISSUER;
b. All the corporate records of such intermediate holding
corporation; and
c. All the issued and outstanding shares of SR SINGAPORE all such
shares being registered in the name of such intermediate holding
corporation.
<PAGE>
3. This Supplemental Agreement shall be deemed to come into effect on April 6,
1999.
IN WITNESS WHEREOF, the each of the undersigned has executed this Agreement:
DENSMORE GROUP LIMITED SOLUTIONNET INTERNATIONAL, INC.
- -------------------------------- ----------------------------------------
Mr. V. Suresh as per approval of Garrett K. Krause as per the approval of
the board of directors and the board of directors and shareholders
shareholders
EX-3.1
Articles of Incorporation
Of
ETG International, Inc.
Know all men by these presents: That the undersigned incorporator being a
natural person of the age of eighteen years or more and desiring to form a
for-profit business corporation under Chapter 302A of the Minnesota Business
Corporation Act, does hereby adopt, sign, verify and deliver to the Secretary of
State of the State of Minnesota, these Articles of Incorporation:
ARTICLE 1
---------
NAME
----
The name of the Corporation shall be: ETG International, Inc.
ARTICLE 2
---------
CAPITAL STOCK
-------------
The aggregate number of shares which this Corporation shall have authority
to issue is Twenty Million (20,000,000) shares of $0.001 par value each, which
shares shall be designated "Common Stock" and Five Million (5,000,000) share of
$0.001 par value each, which shares shall be designated "Preferred Stock" and
which may be issued in one or more series at the discretion of the Board of
Directors. In establishing a series of Preferred Stock, the Board of Directors
shall give to it a distinctive designation so as to distinguish it from the
shares of all other series and classes, shall fix the number of shares in such
series, and the preferences, rights and restrictions thereof. All shares of any
one series shall be alike in every particular except as otherwise provided by
these Articles of Incorporation or the Minnesota Business Corporation Act.
1. DIVIDENDS. Dividends in cash, property or shares shall be paid upon the
Preferred Stock for any year on a cumulative or noncumulative basis as
determined by a resolution of the Board of Directors prior to the issuance of
such Preferred Stock, to the extent earned surplus for each such year is
available, in an amount as determined by a resolution of the Board of Directors.
Such Preferred Stock dividends shall be paid pro rata to holders of Preferred
Stock in any amount not less than nor more than the rate as determined by a
resolution of the Board of Directors prior to the issuance of such Preferred
Stock. No other dividend shall be paid on the Preferred Stock.
Dividends in cash, property or shares of the Corporation may be paid upon
the Common Stock, as and when declared by the Board of Directors, out of funds
of the Corporation to the extent and in the manner permitted by law, except that
no Common Stock dividend shall be paid for any year unless the holders of
Preferred Stock, if any, shall receive the maximum allowable Preferred Stock
dividend for such year.
<PAGE>
2. DISTRIBUTION IN LIQUIDATION. Upon any liquidation, dissolution or
winding up of the Corporation, and after paying or adequately providing for the
payment of all its obligations, the remainder of the assets of the Corporation
shall be distributed, either in cash or in kind, first pro rata to the holders
of the Preferred Stock until an amount to be determined by a resolution of the
Board of Directors prior to the issuance of such Preferred Stock, has been
distributed per share, and, then, the remainder pro rata to the holders of the
Common Stock.
3. REDEMPTION. The Preferred Stock may be redeemed in whole or in part as
determined by a resolution of the Board of Directors prior to the issuance of
such Preferred Stock, upon prior notice to the holders of record of the
Preferred Stock, published, mailed and given in such manner and form and on such
other terms and conditions as may be prescribed by the Bylaws or by resolution
of the Board of Directors, by payment in cash or Common Stock for each share of
the Preferred Stock to be redeemed, as determined by a resolution of the Board
of Directors prior to the issuance of such Preferred Stock. Common Stock used to
redeem Preferred Stock shall be valued as determined by a resolution of the
Board of Directors prior to the issuance of such Preferred Stock. Any rights to
or arising from fractional shares shall be treated as rights to or arising from
one share. No such purchase or retirement shall be made if the capital of the
Corporation would be impaired thereby.
If less than all of the outstanding shares are to be redeemed, such
redemption may be made by lot or pro rata as may be prescribed by resolution of
the Board of Directors; provided, however, that the Board of Directors may
alternatively invite from shareholders offers to the Corporation of Preferred
Stock at less than an amount to be determined by a resolution of the Board of
Directors prior to the issuance of such Preferred Stock, and when such offers
are invited, the Board of Directors shall then be required to buy at the lowest
price or prices offered, up to the amount to be purchased.
From and after the date fixed in any such notice as the date of redemption
(unless default shall be made by the Corporation in the payment of the
redemption price), all dividends on the Preferred Stock thereby called for
redemption shall cease to accrue and all rights of the holders thereof as
stockholders of the Corporation, except the right to receive the redemption
price, shall cease and terminate.
4. VOTING RIGHTS: CUMULATIVE VOTING. Each outstanding share of Common
Stock shall be entitled to one vote and each fractional share of Common Stock
shall be entitled to a corresponding fractional vote on each matter submitted to
a vote of shareholders. A majority of the shares of Common Stock entitled to
vote, represented in person or by proxy, shall constitute a quorum at a meeting
of shareholders. Except as otherwise provided by these Articles of Incorporation
or the Minnesota Business Corporation Act, if a quorum is present, the
affirmative vote of a majority of the shares represented at the meeting and
entitled to vote on the subject matter shall be the act of the shareholders.
Cumulative voting shall not be allowed in the election of directors of this
Corporation.
Shares of Preferred Stock shall only be entitled to such vote as is
determined by the Board of Directors prior to the issuance of such stock, except
as required by law, in which case each share of Preferred Stock shall be
entitled to one vote.
<PAGE>
5. DENIAL OF PREEMPTIVE RIGHTS. No holder of any shares of the Corporation
whether now or hereafter authorized, shall have any preemptive or preferential
right to acquire any shares or securities of the Corporation, including shares
or securities held in the treasury of the Corporation.
6. CONVERSION RIGHTS. Holders of shares of Preferred Stock may be granted
the right to convert such Preferred Stock to Common Stock of the Corporation on
such terms as may be determined by the Board of Directors prior to the issuance
of such Preferred Stock.
ARTICLE 3
---------
REGISTERED OFFICE
-----------------
The address of the initial registered office of the Corporation is 9333
Penn Avenue South, Bloomington, Minnesota 55431-2320. The registered office may
be changed in the manner permitted by law.
ARTICLE 4
---------
BOARD OF DIRECTORS
------------------
The number of directors of the Corporation shall be fixed by the Bylaws of
the Corporation. The initial board of directors of the Corporation shall consist
of four (4) directors. The names and addresses of the persons who shall serve as
directors until the first annual meeting of shareholders and until their
successors are elected and shall qualify is as follows:
NAME ADDRESS
---- -------
Robert Reddall 9333 Penn Avenue South
Bloomington, MN 55431-2320
Daniel J. Rogers 9333 Penn Avenue South
Bloomington, MN 55431-2320
Thomas C. Saylor 9333 Penn Avenue South
Bloomington, MN 55431-2320
Dennis D. Postma 20355 Harrow Avenue North
Forest Lake, MN 55025
ARTICLE 5
---------
LIMITATION OF LIABILITY OF DIRECTORS TO CORPORATIONS AND SHAREHOLDERS
---------------------------------------------------------------------
No director shall be liable to the Corporation or any shareholder for
monetary damages for breach of fiduciary duty as a director, except:
<PAGE>
(a) for any breach of the director's duty of loyalty to the Corporation or
its shareholders;
(b) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
(c) under Section 302A559 or 80A.23 of the Minnesota Business Corporation
Act;
(d) for any transaction from which the director derived an improper
personal benefit; or
(e) for any act or omission occurring prior to the date when the provision
in the Articles of Incorporation eliminating or limiting liability
becomes effective.
ARTICLE 6
---------
INCORPORATOR
------------
The name and address of the Incorporator is as follows:
NAME ADDRESS
---- -------
Daniel J. Rogers 9333 Penn Avenue South
Bloomington, MN 55431-2320
In witness whereof, I, the undersigned incorporator certify that I am
authorized to execute these Articles of Incorporation and that the information
in these Articles of Incorporation is true and correct. I also understand that
if any of this information is intentionally or knowingly misstated that criminal
penalties will apply as if I had signed these Articles of Incorporation under
oath.
By: /s/ Daniel J. Rogers
------------------------
Daniel J. Rogers
Incorporator
EX-3.2
[Filed Mar 22 1999
Minnesota Secretary of State]
Articles of Amendment
Of the
Articles of Incorporation
Of
ETG International, Inc.
The undersigned Minnesota Corporation, for the purpose of amending its
Articles of Incorporation pursuant to Chapter 302A or 317A of the Minnesota
Business Corporation Act, does hereby adopt the following amendments:
1. The undersigned hereby certify that on the 18th of March 1999, a
special meeting of the Board of Directors was duly held and convened
at which there was a present a quorum of the Board of Directors
acting throughout all proceedings, and at which time the following
resolution was duly adopted by the Board of Directors.
Article 1. The new name of the Corporation is:
"SolutionNet International, Inc."
Article 2. The new board of directors is as follows:
NAME ADDRESS
---- -------
Garrett K. Krause P.O. Box 7006
Beverly Hills, CA 90212
Dan Curran 4344 Promenade Way, #102P
Marina del Rey, CA 90292
This amendment has been approved pursuant to Minnesota Satiates chapter
302A or 317A. I certify that I am authorized to executive this amendment and I
further certify that I understand that by signing this amendment, I am subject
to penalties of perjury as set forth in section 609.48 as if I had signed this
amendment under oath.
By: /s/ Garrett K. Krause
--------------------------
Garrett K. Krause
President
EX-3.3
Bylaws
of
SolutionNet International, Inc.
ARTICLE I
- ---------
OFFICES
- -------
1.1 BUSINESS OFFICE. The principal office and place of business of the
corporation shall be 4344 Promenade Way Suite 102P Marina Del Rey, CA. 90292.
Other offices and places of business may be established from time to time by
resolution of the Board of Directors or as the business of the corporation may
require.
1.2 REGISTERED OFFICE. The registered office of the corporation, may require by
the Minnesota Business Corporation Act to be maintained in the State of
Minnesota, may be, but need not be identical with the principal office in the
State of Minnesota, and the Board of Directors may change the address of the
registered office from time to time.
ARTICLE II
- ----------
SHARES AND TRANSFER THEREOF
- ---------------------------
2.1 REGULATION. The Board of Directors may make such rules and regulations as
they deem appropriate concerning the issuance, transfer and registration of
certificates f0or shares of the corporation, including the appointment of
transfer agents and registrars.
2.2 CERTIFICATES FOR SHARES. Certificates representing shares of the corporation
shall be respectfully numbered serially for each class of shares thereof, as
they are issued, shall be impressed with the corporate seal or a facsimile
thereof, and shall be signed by the Chairman or Vice Chairman of the Board of
Directors or by the President or a Vice President and by the Treasurer or an
Assistant Treasurer or by the Secretary or an Assistant Secretary; provided that
any or all of the signatures may be facsimiles if the certificate is
countersigned by a transfer agent, or registered by a registrar, other than the
corporation itself or its employee.. Each certificate shall state the name of
the corporation, the fact that the corporation is organized or incorporated
under the Laws of the state of Minnesota, the name of the person to whom issued.
The date of issue, the class (or series of any class) the number of shares
represented thereby and the par value of the shares represented thereby or a
statement that such shares are without par value. A statement of the
designations, preferences, qualifications, limitations, restrictions and special
or relative rights of the shares of each class shall be set forth in full or
summarized on the face or back of the certificates which the corporation shall
issue, or in lieu thereof, the certificate may set forth that such a statement
or summary will be furnished to any shareholder upon request without charge.
Each certificate shall be otherwise in such form as may be prescribed by the
Board of Directors and as shall conform to the rules of any stock exchange on
which the shares may be listed. The corporation shall not issue certificates
representing fractional shares and shall not be obligated to make any transfers
creating a fractional interest in a share of stock. The corporation may issue
scrip in lieu of any fractional shares, such scrip to have terms and conditions
specified by the Board of Directors.
2.3 CANCELLATIONS OF CERTIFICATES. All Certificates surrender to the corporation
for transfer shall be cancelled and no new certificates shall be issued in lieu
thereof until the former certificate for a like number of shares shall have been
surrendered and cancelled, except as herein provided with respect to lost,
stolen or destroyed certificates.
<PAGE>
2.4 LOST STOLEN OR DESTROYED CERTIFICATES. Any shareholder claiming that his
certificate for shares is lost, stolen or destroyed may make an affidavit or
affirmation of the fact and lodge the same with the Secretary of the
corporation, accompanied by a signed application for a new certificate.
Thereupon, and upon the giving of a satisfactory bond of indemnity to the
corporation not exceeding an amount double the value of the shares as
represented by such certificate (the necessity for such bond and the amount
required to be determined by the President and Treasurer of the corporation), a
new certificate may be issued of the `same tenor and representing the same
Number, class and series of shares as were represented by the certificate
alleged to be lost, stolen or destroyed.
2.5 TRANSFER OF SHARES. Subject to the terms of any shareholder agreement
relating to the transfer of shares or other transfer restrictions contained in
the Articles of Incorporation or authorized therein, shares of the corporation
shall be transferable on the books of the corporation by the holder thereof in
person or by his duly authorized attorney, upon the surrender and cancellation
of a certificate for a like number of shares. Upon presentation and surrender of
a certificate for shares properly endorsed and payment of all taxes therefore,
the transferee shall be entitled to a new certificate in lieu thereof. As
against the corporation a transfer of shares can be made only on the books of
the corporation and in the manner hereinabove provided, and the corporation
shall be entitled to treat the holder of record of any share as the owner
thereof and shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person, whether or not it shall
have express or other notice thereof, save as expressly provided by the statutes
of the State of Minnesota.
2.6 TRANSFER AGENT. Unless otherwise specified by the Board of Directors by
resolution, the Secretary of the corporation shall act as transfer agent of the
certificates representing the shares of stock of the corporation. He shall
maintain a stock transfer book, the stubs in which shall set forth among other
things, the names and addresses of the holders of all issued shares of the
corporation, the number of shares held by each, the certificate numbers
representing such shares, the date of issue of the certificates representing
such shares, and whether or not such shares originate from original issue or
from transfer. Subject to section 3.7, the names and addresses of the
shareholders as they appear on the stubs of the stock transfer book shall be
conclusive evidence as to who are the shareholders of record and as such
entitled to receive notice of the meetings of shareholders to vote at such
meetings; to examine the list of the shareholders entitled to vote at meetings;
to receive dividends; and to own, enjoy and exercise any other property or
rights deriving from such shares against the corporation. Each shareholder shall
be responsible for notifying the Secretary in writing of any change in his name
or address and failure so to do will receive the corporation its directors,
officers and agents, from liability for failure to direct notices or other
documents, or pay over or transfer dividends or other property rights, to a name
or address other than the name and address appearing on the stub of the stock
transfer book.
<PAGE>
2.7 CLOSE OF TRANSFER BOOK AND RECORD DATE. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders, or
any adjournment thereof, or to receive payment of any dividend, or in order to
make a determination of shareholders for any other purpose, the Board of
Directors may provide that the stock transfer books shall be closed for stated
period, but not to exceed, in any cas4e fifty days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of, or to vote at a meeting of shareholders, such books shall be closed for at
least ten day immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to not be
more than fifty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If the stock transfer books are
shareholders entitled receive payment of a dividend, the date on which notice of
the meeting is mailed or the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
ARTICLE III
- -----------
SHAREHOLDER AND MEETINGS THEREOF
- --------------------------------
3.1 SHAREHOLDERS OF RECORD Only shareholders of record on the books of the
corporation shall be entitled to be treated by the corporation as holders in
fact of the shares standing in their respective names, and the corporation shall
not be bound to recognize any equitable or other claim to, or interest in, any
shares on the part of any other person, firm or corporation, whether or not it
shall have express or other notice thereof, except as expressly provided by the
laws of Minnesota.
3.2 MEETINGS of shareholders shall be held at the principal office of the
corporation or at such other place as specified from time to time by the Board
of Directors. If the Board of Directors shall specify another location such
change in location shall be recorded on the notice calling such meeting.
3.3 REGULAR MEETINGS In the absence of a resolution of the Board of Directors
providing otherwise regular meetings of shareholders of the corporation for the
election of directors, and for the transaction of such other business as may
properly come before such meetings, shall be held at such time as may be
determined by Board of Directors by resolution in conformance by Minnesota Law.
If the election of Directors shall not be held on the day so designated for Any
regular meeting of the shareholders, the Board of Directors shall cause the
election to be held at a special meeting of the shareholders as soon thereafter
as may be convenient.
3.4 SPECIAL MEETINGS Special Meetings of shareholders for any purpose or
purposes, unless otherwise prescribed by statute, may be called by the Chief
Executive Officer, The chief Financial Officer, two or more Directors, Legal
Counsel of the corporation as last designated by resolution of the Board of
Directors or the holders of not less than 10 percent of all the shares entitled
to vote at the meeting, except that a special meeting for the purpose of
considering any action to directly or indirectly facilitate or effect a business
combination, including any action to change or otherwise affect the composition
of the Board of Directors for that purpose, may be called by the holders of 25
percent or more of the voting power of all shares entitled to vote.
3.5 NOTICE Written notice stating the place, day and hour of the meeting and, in
case of a special meeting the purpose or purposes for which the meeting is
called, shall be delivered unless otherwise prescribed by statute not less than
ten days nor more than sixty days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the Secretary or
the officer or person calling the meeting to each shareholder of record entitled
to vote at such meeting; except that, if the authorized shares are to be
increased, at least thirty days notice shall be given, and if the sale of all or
<PAGE>
substantially all of the corporations assets is to be voted on upon, at least
twenty days notice shall be given. Any shareholder may waive notice of any
meeting. Notice to shareholders of record, if mailed, shall be deemed given as
to any shareholder of record, when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid, but if three successive
letters mailed to the last known address of any shareholder of record are
returned as undeliverable, no further notices to such shareholder shall be
necessary, until another address for such shareholder is made known to the
corporation.
3.6 MEETING ALL SHAREHOLDERS; If all the shareholders shall meet at any time and
place, either within or without the State of Minnesota, and consent to the
holding of a meeting at such time and place, such meeting shall be valid without
call or notice, and at such meeting any corporate action may be taken
3.7 VOTING RECORD; The officer or agent having charge of the stock transfer
books for shares of the corporation shall make, at least ten days before such
meeting of shareholders, a complete record of the shareholders entitled to vote
at each meeting of shareholders or any adjournment thereof, arranged in
alphabetical order, with the address and the number of shares held by each. The
record for a period of ten days prior to such meeting shall be kept on file
either 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, whether within or without the State of Minnesota, and
shall be subject to inspection by any shareholder for any purpose germane to the
meeting at any time during usual business hours. Such record shall be produced
and kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholder for any purpose germane to the meeting during the
whole time of the meeting for the purposes therein. The original stock transfer
books shall be in the prima facie evidence as to who are the shareholders
entitled to examine the record or transfer the books or to vote at any, meeting
of shareholders.
3.8 QUORUM; A majority of the outstanding shares of the corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum at any
meeting of shareholders, except as otherwise provided by the Minnesota Business
Corporation Act and the Articles of Incorporation. In the absence of a Quorum at
any such meeting, a majority of the shares so represented may adjourn the
meeting from time to time for a period not to exceed sixty days without further
notice. At such adjourned meeting at which a quorum shall be represented any
business may be transacted which might have been transacted at the meeting As
originally noticed. The shareholders present at a duly organized meeting may
continue to transact business until adjournment, not withstanding the withdrawal
of enough shareholders to leave less than a quorum.
3.9 MANNER OF ACTING; If a quorum is present , the affirmative vote of the
majority of the shares represented At the meeting at entitled to vote on the
subject matter shall be the act of the shareholders , unless the vote of a
greater portion or number or voting by classes is otherwise required by statute
or by Articles of Incorporation or these Bylaws.
3.10 VOTING ON SHARES; Unless otherwise provided by these Bylaws or the Articles
of Incorporation, each outstanding share entitled to vote shall be entitled to
one vote upon each matter submitted to a vote at a meeting of shareholders, and
each fractional share shall be entitled to a corresponding vote on each such
matter.
<PAGE>
3.12 VOTING OF SHARES BY CERTAIN HOLDERS; Shares standing in the name of another
corporation may be voted by such officer, agent or proxy as the Bylaws of such
corporation may prescribe or in the absence of such provision as the Board of
Directors of such other corporation may determine. Shares standing in the name
of a deceased person, a minor ward or an incompetent person may be voted by his
administrator, executor, court appointed guardian or conservator either in
person or by proxy without a transfer of such shares into the name of such
administrator, executor, court appointed guardian or conservator, Shares
standing in the name of a trustee may be voted by him, either in person or by
proxy, but no trustee shall be entitled to vote shares held by him without a
transfer of such shares into his name shares standing in the name of a receiver
and shares held by or under the control of a receiver may be voted on by such
receiver without the transfer thereof into his name if authority so to do be
contained in an appropriate order of the court by which such receiver was
appointed. A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither shares of its own stock belonging to this corporation, nor shares of its
own stock held by in a fiduciary capacity, nor shares of its own stock held by
another corporation. If the corporation holds the majority of shares entitled to
vote for the election of directors of such corporation may be voted directly or
indirectly at any meeting and shall not be counted in determining the total
number of outstanding shares at any given time. Redeemable shares which have
been called for redemption shall not be entitled to vote on any matter and shall
not be deemed outstanding shares on and after the date on which written notice
of redemption has been mailed to shareholders and sum sufficient to redeem such
shares has been irrevocably deposited or set aside to pay the redemption price
to the holders of the shares upon surrender of certificates therefore.
3.13 INFORMAL ACTION BY SHAREHOLDERS; Any action required or permitted to be
taken at a meeting of the shareholders may be taken without a meeting if a
consent in writing setting forth the action so taken, shall be signed by all the
shareholders entitled to vote with respect to the subject matter thereof.
3.14 VOTING BY BALLET; Voting on any question or in any election may be by voice
unless the presiding officer shall order or any shareholder demand that voting
be by ballot.
3.15 CUMULATIVE VOTING; No shareholder shall be permitted to cumulate his votes
by giving one candidate as many votes as the number of such directors multiplied
by the number of his shares shall equal, or by distributing such votes on the
same principal among any number candidates.
ARTICLE IV
- ----------
DIRECTORS POWERS AND MEETINGS
- -----------------------------
4.1 BOARD OF DIRECTORS; The business and affairs of the corporation shall be
managed by the Board of Directors, of which there shall be no less than three
(3) nor more than five (5) directors. Directors need not be shareholders of the
corporation or residents of the State of Minnesota and who shall be elected at a
regular meeting of shareholders or some adjournment thereof. Directors shall
hold office until the next regular meeting of shareholders and until their
successors shall have been elected and shall qualify.
4.2 REGULAR MEETINGS ; A regular annual meeting of the Board of Directors shall
be held at the same place as, and immediately after, a regular meeting of
shareholders at which directors are elected, and no notice shall be required in
connection therewith. The annual meeting of the Board of Directors shall be for
the purpose of electing officers and the transaction of such other business as
may come before the meeting. The Board of Directors may provide, by resolution,
the time and place, either within or without the State of Minnesota, for the
hold of additional regular meetings without other notice than such resolution.
<PAGE>
4.3 SPECIAL MEETING; Special meetings of the Board of Directors may be called by
or at the request of the President or any two Directors. The person or persons
authorized to call special meetings of the Board of Director may fix any place,
either within or without the State of Minnesota, as the place for holding any
special meeting of the Board of Directors called by them.
4.4 NOTICE; Written notice of any special meeting of Directors shall be given as
follows:
a) mail to each Director at his business address at least three days
prior to the meeting or
b) by personal delivery or telegram at least twenty four hours prior to
the meeting to the business address of each Director, or in the event such
notice is given on a Saturday, Sunday, or holiday, to the residence
address of each Director. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, so addressed, with
postage thereon pre-paid . If notice be given by telegram such notice
shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Any Director may waive notice of any meeting. The
attendance of a Director at any meeting shall constitute a waiver of
notice of such meeting, except where a Director attends a meeting for the
express purpose of objecting to the transaction of any business because
the meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
Board of Directors need be specified in the notice of waiver of notice of
such meeting.
4.5 PARTICIPATION BY ELECTRONIC MEANS; Except as may be otherwise provided by
the Articles of Incorporation or Bylaws, members of the Board of Directors or
any committee designated by such board may participate in a meeting of the Board
or committee by means of conference telephone or similar communication equipment
by which all persons participating in the meeting can hear each other at the
same time. Such participation shall constitute presence in person at the
meeting.
4.6 QUORUM AND MANOR OF ACTING; A quorum of all meetings of the Board of
Directors shall consist of a majority of the number of Directors then holding
office, but a smaller number may adjourn from time to time without further
notice, until a quorum is secured. The Board of Directors shall take action by
the affirmative vote of the greater of (a) a majority of the Directors present
at a meeting at which a quorum is present or (b) a majority of the minimum
proportion of number of Directors that would constitute a quorum for the
transaction of business at such meeting.
4.7 ORGANIZATION; The Board of Directors shall elect a chairman to preside at
each meeting of the Board of Directors. The Board of Directors shall elect a
secretary to record the discussions and resolutions of each meeting.
4.8 PRESUMPTION OF ASSENT; A Director of the Corporation who is present at a
meeting of the Board of Directors at which action on any corporate matter is
taken shall be presumed to have assented to the action take unless the Director
(a) objects at the beginning of the meeting to the transaction of business
because the meeting is not lawfully called or convened and does not participate
thereafter in the meeting in which case the Director shall not be considered to
be present at the meeting for any purpose, (b) votes against the action at the
meeting, or (c) is prohibited by Section 302A.255 of the Minnesota Business
Corporation Act from voting on the action. Such right to dissent shall not apply
to a Director who voted in favor of such action.
<PAGE>
4.9 INFORMAL ACTION BY DIRECTORS; Any action required or permitted to be taken
by the Board of Directors, or a committee thereof, at a meeting may be taken
without a meeting if a consent in writing setting forth the action so taken,
shall be signed by all the Directors or all the committee members entitled to
vote with respect to the subject matter.
4.10 VACANCIES; Any vacancy occurring in the Board of Directors may be filled by
the affirmative vote of a majority of the remaining Directors though less than a
quorum of the Board of Directors. A Director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor, and shall hold such office
until his successor is duly elected and shall qualify. Any Directorship to be
filled by reason of an increase in the number of Directors shall be filled by
the affirmative vote of a majority of the Directors then in office or by an
election at an annual meeting or at a special meeting of shareholders called for
that purpose. A Director chosen to fill a position resulting from an increase in
the number of Directors shall hold office only until the next election of
Directors by the shareholders.
4.11 COMPENSATION: By resolution by the Board of Directors and irrespective of
any personal interest any of the members, each Director may be paid his
expenses, if any, of attendance at each meeting of the Board of Directors, and
may be paid a stated salary as Director or a fixed sum for attendance at each
meeting of the Board of Directors or both. No such payment shall preclude any
Director from serving the Corporation in any other capacity and receiving
compensation therefore.
4.12 REMOVAL OF DIRECTORS: Any Director or Directors of the Corporation may be
removed at any time, with or without cause, in the manner provided in the
Minnesota Business Corporation Act.
4.13 RESIGNATION: A Director of the Corporation may resign at anytime by giving
written notice to the Board of Directors, President or Secretary of the
corporation. The resignation shall take effect upon the date of receipt of such
notice, or at any later period of time specified therein. The acceptance of such
resignation shall not be necessary to make it affective, unless the resignation
requires it be affective as such.
4.14 GENERAL POWERS: The business and affairs of the corporation shall be
managed by the Board of Directors which may exercise all such powers for the
corporation and do all such lawful acts and things as are not by statute or by
the Articles of Corporation or by these Bylaws directed or required to be
exercised of done by the shareholders. The Directors shall pass upon any and all
bills or claims of officers for salaries or other compensation and, if deemed
advisable, shall contract with officers, employees, directors, attorneys,
accountants, and other persons to render services to the corporation.
ARTICLE V.
- ----------
OFFICERS
- --------
5.1 TERMS AND COMPENSATION: The elective officers of the corporation shall
consist of at least a President, Secretary, and a Treasurer, each of whom shall
be eighteen years or older and who shall be elected by the Board of Directors at
its annual meeting. Unless removed in accordance with procedures established by
law and these Bylaws, the said officers shall serve until the next succeeding
annual meeting of the Board of Directors and until they're respective successors
are elected and shall qualify. The same person may hold any number of offices at
the same time. The Board may elect or appoint such other officers and agents as
it may deem advisable who shall hold office during the pleasure of the Board.
<PAGE>
5.2 POWERS: The officers of the corporation shall exercise and perform the
respective powers, duties and function as are stated below, and as may be
assigned to them by the Board of Directors.
a) The Chairman of the Board, if one shall be elected, shall preside over
all meetings of the Board of Directors and of the shareholders and shall
have such other duties as may be assigned to him from time to time by the
Board of Directors. In recognition of notable and distinguished services
to the corporation, the Board of Directors may designate one of its
members as honorary chairman, who shall have such duties as the board
may, from time to time, assign to him by appropriate resolution,
excluding, however, any authority or duty vested by law or these Bylaws
in any other officer.
b) The responsibility of having general charge of the business, affairs and
property of the corporation and control over its several officer, agents
and employees and the responsibility for general and active management of
the corporation and the responsibility for seeing all orders and
resolutions of the Board of Directors are carried into effect may be
divided by the Board of Directors between the President and the Chief
Executive Officer in such manner as they may choose to establish by
resolution, subject, however, to the control of the Board of Directors.
In the absence of any such stated division, the President is to
responsible for day to day management and for all on officer employees,
while the Chief Executive Officer is to be responsible for all else. In
the absence of a Chairman of the Board , the President shall preside at
all meetings of the shareholders and Board of Directors , and in general
shall perform all duties incident to the office of the President and such
other duties as from time to time may be assigned to him by the Board of
Directors. The President may delegate any of his responsibilities to any
Vice President , with the approval of the Chief Executive Officer.
c) The President shall execute all deeds, conveyances, deeds of trust, bonds
and other contracts requiring a seal, under thee seal of the corporation,
except where required or permitted by law to be otherwise signed and
executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors or the President to some
officer or age4nt of the corporation.
d) Either the Chairman of the Board or the President, may be named the Chief
Executive Officer of the corporation; in the absence of designation by
the Board of Directors or an employment agreement designating an
individual as the Chief Executive Officer , the President shall be the
Chief Executive Officer.
e) In the absence or disability of the President , the Vice President or
Vice-President's if any in order of their ranks as fixed by the Board of
Directors , and if not ranked, the Vice Presidents in the order
designated by the Board of Directors shall perform all the duties of the
President, and when so acting shall have all the powers of, and be
subject to all the restrictions on the President . Each Voce President
shall have such other powers and perform such other duties as may from
time to time be assigned to him by the President or the Board of
Directors.
<PAGE>
f) The Secretary shall keep accurate minutes of all meetings of the
shareholders and the Board of Directors unless the Board of Directors/
elects a different Secretary of such meetings. He shall keep, or cause to
be kept a record of the shareholders of the corporation and shall be
responsible for the giving of notice of meetings of the shareholders of
the Board of Directors.
The Secretary shall be custodian of the records and of the seal of the
corporation and shall a attest the affixing of the seal of the
corporation when so authorized. The Secretary or assistant Secretary
shall sign all stock certificates, as described in Section 2.2 hereof.
The Secretary shall perform all duties commonly incident to his office
and such other duties as may from time to time be assigned to him by the
President or the Board of Directors.
f) An Assistant Secretary may, at the request of the Secretary, or in the
absence or disability of the Secretary, perform all of the duties of the
Secretary. He shall perform such other duties as may be assigned to him
by the President or by the Secretary.
j) The Treasurer Subject to the order of the Board of Directors, shall be
the Chief Financial Officer of the corporation and shall have the care
and custody of the money, funds, valuable papers and documents of the
corporation. He shall keep accurate books of accounts of the
corporation's transactions, which shall be the property of the
corporation, and shall render financial reports and statements of
conditions of the corporation when so requested by the Board of Directors
or President. The Treasurer shall perform all duties commonly incident to
his office and such other duties as may from time to time to be assigned
to him by the President for the Board of Directors. In the absence or
disability of the President and Vice President or Vice President's, the
Treasurer shall perform the duties of the President.
k) An Assistant Treasurer may, at the request of the Treasurer, or in the
absence or disability of the Treasurer, perform all of the duties of the
Treasurer. He shall perform such other duties as may be assigned to him
by the President or by the Treasurer.
5.3 COMPENSATION: All officers of the corporation may receive salaries or other
compensation if so ordered and fixed by the Board of Directors. The Board of
Directors shall have authority to fix salaries in advance for stated periods or
render the same retroactive as the Board may deem it advisable.
5.4 DELEGATION OF DUTIES: In the event of absent or inability of any officer to
act, The Board of Directors may delegate the powers or duties of such officer to
any other officer, Director or person whom it may select.
5.5 BONDS: If the Board of Directors by resolution shall so require, any officer
or agent of the corporation shall give bond to the corporation in such amount
and with such surety as the Board of Directors may deem sufficient, conditioned
upon the faithful performance of their respective duties and offices.
5.6 REMOVAL: Any officer or agent may be removed by the Board of Directors or by
the Executive Committee, If any, whenever in its judgment the best interest of
the corporation will be served thereby, but such removal shall be without
prejudice to the contract rights if any , of the person so removed. Election or
appointment of an officer or an agent shall not, of itself, create contract
rights.
<PAGE>
ARTICLE VI
- ----------
INDEMNIFICATION
- ---------------
6.1 MANDATORY INDEMNIFICATION: Subject to the provisions of subsection 6.1(d)
herein, the corporation shall indemnify a person made or threatened to be
made a party to a proceeding by reason of the former or present official
capacity of the person against judgments, penalties, fines, including,
without limitation, excise taxes assessed against the person with respect
to an employee benefit plan, settlements and reasonable expenses,
including attorneys fee's and disbursement, incurred by the person in
connection with the proceeding, if, with respect to the acts or
admissions of the person complained of in the proceeding, the Person:
a) has not been indemnified by another organization or employee
benefit plan for the same judgments, penalties, fines, including,
without limitation, excise taxes assessed against the person with
respect to an employee benefit plan, settlements and reasonable
expenses, including attorney's fees and disbursements incurred by
the person in connection with proceeding with respect to the same
acts or admissions:
b) Acted in good faith;
c) received no improper personal benefit and section 302A.255 of the
Minnesota Business Corporation Act, if applicable, has been
satisfied;
d) In the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful; and
e) In the case of acts or omissions occurring in the official
capacity described in the subsections 6.3 A or B herein below,
reasonably believed that the conduct was in the best interest of
the corporation, or in the case of acts or omissions occurring in
the official capacity described in subsection 6.3c Herein below,
reasonably believed that the conduct was not opposed to the best
interest of the corporation. If the persons acts or omissions
complained of in the proceeding relate to condition as a director,
Officer, Trustee, Employee, or Agent of an employee Benefit Plan,
the conduct is not considered to be opposed to the best interest
of the corporation if the person responsibly believed that the
conduct was in the best interest of the participants or
beneficiaries of the employee benefit plan.The termination of the
proceeding by judgment , order, settlement, conviction or upon a
plea of nolo contendere or its equivalent does not, of itself,
establish that person did not meet the criteria set forth herein.
6.2 ADVANCES; If a person is made or threatened to be made a party to a
proceeding, the person is entitles, upon written request to the corporation, to
payment or reimbursement by the corporation of reasonable expenses, including
attorney's fees and disbursements, incurred by the person in advance of the
final deposition of the proceeding (a) upon receipt by the corporation of a
written affirmation by the person of a good faith belief that the criteria for
indemnification set forth in section 6.1 have been satisfied and a written
undertaking by the person to repay all amounts so paid or reimbursed by the
corporation, if it is ultimately determined that the criteria for
indemnification have not been satisfied, and (b) after making a determination of
the facts then known to those making the determination would not preclude
indemnification under this Article VI. The written undertaking required by
subsection 6.2 (a) herein is an unlimited general obligation of the person
making it, but need not be secured and shall be accepted without reference to
financial ability to make the repayment.
<PAGE>
6.3 OFFICIAL CAPACITY: "Official Capacity" means (a) with respect to a director,
the position of director in the corporation, (b) with respect to a person other
than a director, the elective or appointed officer or position held by an
officer, member of the committee of the board, or the employment relationship
undertaken by an employee of the corporation, and (c) with respect to a
director, officer, or employee of the corporation, who, while a director,
officer of the corporation, is or was serving at the request of the corporation
or whose duties in that position involve or involved service as a director,
officer, partner, trustee, employee or agent of another organization or employee
benefit plan, the position of that person as a director, officer, partner,
trustee, employee or agent, as the case may be, of the other organization or
employee benefit plan.
ARTICLE VII
- -----------
FINANCE
- -------
7.1 RESERVE FUNDS: The Board of Directors in its uncontrolled discretion, may
set aside from time to time out of the net profits or earned surplus of the
corporation, such sum or sums as it deems expedient as a reserve fund to meet
contingencies, for equalizing dividends, for maintaining any property of the
corporation, and for any other purpose.
7.2 BANKING: the monies of the corporation shall be deposited in the name of
the corporation in such bank or banks or trust company or trust companies, as
the Board of Directors shall designate and may be drawn out only on checks
signed in the name of the corporation by such person or persons as the Board of
Directors, by appropriate resolution, may direct. Notes and commercial paper
when authorized by the Board shall be signed in the name of the corporation by
such officer or officers or agent or agents, as shall there unto be authorized
from time to time.
ARTICLE VIII
- ------------
DIVIDENDS
- ---------
Subject to the provisions of the Articles of Incorporation and the laws of the
State of Minnesota The Board of Directors may declare dividends whenever, and in
such amounts, as in the Boards opinion the condition of the affairs of the
corporation shall render such advisable.
ARTICLE IX
- ----------
CONTRACTS, LOANS & CHECKS
- -------------------------
9.1 EXECUTION OF CONTRACTS; except as otherwise provided by statute or by these
Bylaws, the Board of Directors may authorize any officer or agent of the
corporation to enter into any contract, or execute and deliver any instrument in
the name of, and on behalf of the corporation. Such authority may he general or
confined to specific instances and, unless so authorized, no officer, agent or
employee shall have any power to bind corporation for any purpose, except as may
be necessary to enable the corporation to carry on its normal and ordinary
course of business.
9.2 LOANS; No loans shall be contracted on behalf of the corporation and no
negotiable paper shall be issued in its name unless authorized by the Board of
Directors. When so authorized, any officer or agent of the corporation may
effect loans and advances at any time for the corporation from any bank, trust
company or institution, firm, corporation or individual. An Agent so authorized
may make and deliver promissory notes or other evidence of indebtedness of the
corporation and main mortgage, pledge, hypothecate or transfer any real or
personal property held by the corporation as security for the payment of such
loans. Such authority in the Board of Directors discretion, may be general or
confined to specific instances.
<PAGE>
9.3 CHECKS; checks, notes, drafts and demands for money or other evidence of
indebtedness issued in the name of the corporation shall be signed by such
person or persons as designated by the Board of Directors and in the manner the
Board of Directors prescribes.
9.4 DEPOSITS all funds of the corporation not otherwise employed shall be
deposited from time to time to the credit of the corporation in such banks,
trust companies or other depositories as the Board of Directors may select.
ARTICLE X
- ---------
FISCAL YEAR
- -----------
The fiscal year of the corporation shall be the year adopted by resolution of
the Board of Directors.
ARTICLE XI
- ----------
CORPORATE SEAL
- --------------
The Board of Directors shall provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the corporation and the State
of Incorporation and the words "Corporate Seal"
ARTICLE XII
- -----------
AMENDMENTS
- ----------
These Bylaws may be altered amended or appealed and new Bylaws may be adopted by
a majority of the Directors present at any meeting of the Board of Directors of
the corporations at which a Quorum is present these Bylaws may also be altered,
amended or repealed by the shareholders of the corporate in conformance with the
Minnesota Business Corporation Act.
ARTICLE XIII
- ------------
EXECUTIVE COMMITTEE
- -------------------
13.1 APPOINTMENT: the Board of Directors by resolution adopted by a majority of
the full Board may designate two or more of its members to constitute an
executive committee. the designation of such committee and the delegation
thereto of authority shall not operate to relieve the Board of Directors, or any
member thereof, of any responsibility imposed by law.
13.2 AUTHORITY: The executive committee, when the Board of Directors is not in
session shall have and may exercise all of the authority of the Board of
Directors except to the extent, if any, that such authority shall be limited by
the resolution appointing the executive committee and except also the fact that
the executive committee shall not have the authority of the Board of Directors
in reference to amending the Articles of Corporation, adopting a plan of merger
or a consolidation, recommending to the shareholders the sale, lease or other
disposition of all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the corporation or a
revocation thereof, and amending the Bylaws of the corporation.\
13.3 TENURE AND QUALIFICATIONS: Each member of the executive committee shall
hold office until the next regular annual meeting of the Board of Directors
following his designation.
<PAGE>
13.4 MEETINGS: Regular meetings of the executive committee may be held without
notice at such time and places as the executive committee may fix from time to
time by resolution. Special meetings of the executive committee may be called by
any member thereof upon not less than one days notice stating the place, date
and hour of the meeting, which notice may be written or oral, and if mailed,
shall be deemed to be delivered when deposited in the United States mail
addressed to the member of the executive committee at his business address. Any
member of the executive committee may waive notice of any meeting and no notice
of any meeting need be given to any member thereof who attends in person. The
notice of a meeting of the executive committee need not state the business
purposed to be transacted at the meeting.
13.5 QUORUM: A majority of the members of the executive committee shall
constitute a quorum for the transaction of business at any meeting thereof, and
action of the executive committee must be authorized by the affirmative vote of
the majority of the members present at the meeting at which a quorum is present.
13.6 INFORMAL ACTION BY EXECUTIVE COMMITTEE: Any action required or permitted to
be taken by the executive committee at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the members of the committee entitled to vote with respect to the subject
matter thereof.
13.7: VACANCIES: Any vacancy in the executive committee may be filled by a
resolution adopted by a majority of the full Board of Directors.
13.8: RESIGNATIONS AND REMOVAL: Any member of the executive committee may be
removed at anytime with or without cause by resolution adopted by the majority
of the full Board of Directors. Any member of the executive committee may resign
from the executive committee at any time by giving written notice to the
President or Secretary of the corporation, and unless otherwise specified
therein, the acceptance of such resignation shall be necessary to make it
affective.
13.9 PROCEDURE: The executive committee shall elect a presiding officer from its
members and fix its own rules of procedure which shall not be inconsistent with
these Bylaws. It shall keep regular meetings of its proceedings and report the
same to the Board of Directors for its information and the meeting thereof held
next after the proceedings shall have been taken.
Certificate
I hereby certify that the foregoing Bylaws constitute the Bylaws of SolutionNet
International,Inc. adopted by the Board of Directors of the corporation as of
the _____day of ______19__
--------------------------------
Secretary
EX-10.1
Tenancy Agreement
Between
CDL Land Pte. Ltd. (Landlord)
And
SR Singapore Pte. Ltd. (Tenant)
SR Singapore Pte Ltd
51 Anson Road
#10-55 Anson Centre
Singapore 079904
Dear Sirs,
1 SHENTON WAY #22-06/09
1. We refer to the Tenancy Agreement dated 29 day of July 1999
between CDL Land Pte Ltd (the Landlord) and SR Singapore Pte Ltd
(the Tenant).
2. We hereby confirm that the Landlord has agreed as an indulgence to
the Tenant to grant to Tenant a rent-free period of their months
in the months of August 2001 and August 2002.
Except for the above, all other terms and conditions as contained in the said
Tenancy Agreement shall remain unchanged.
Dated this 29 day of July 1999.
Yours faithfully
CDL LAND PTE LTD
CHIA NGIANG HONG
Group General Manager
- --------------------------------------------------------------------------------
ACCEPTANCE
I/We ____________________________for and on behalf of SR Singapore Pte Ltd
hereby confirm our unconditional acceptance of the aforesaid variation to the
Tenancy Agreement.
<PAGE>
SR Singapore Pte Ltd
No 1 Shenton Way #22-06/09
Singapore 068803
Dear Sirs
LEASE AGREEMENT
NO. 1 SHENTON WAY # 22-06/09
We enclose herewith original copy of the Lease Agreement duly stamped and dated
together with side letter duly dated for your retention.
Kindly acknowledge receipt by signing and returning to the duplicate copy of
this letter as soon as possible.
Yours faithfully,
CDL LAND PTE LTD
JEAN KOH
For Group General Manager
Enc.
<PAGE>
THIS TENANCY AGREEMENT is made the 29 day of July One Thousand Nine
Hundred and Ninety (1999) between CDL LAND PTE LTD, a company incorporated in
Singapore and having its office at No. 36 Robinson Road, #20-01 City House,
Singapore 068877 (hereinafter called "the Landlord" which expression shall where
the context so admits include the person, company or body for the; time being
entitled to the reversion immediately expectant on the term hereby created) of
the one part And SR SINGAPORE PTE LTD, a company incorporated in Singapore and
having its registered office at 51 Anson Road #10-55 Anson Center Singapore
079904------------------------------(hereinafter called "the tenant" which
expression shall where the context so admits include its successors and
permitted assigns) of the other part.
WITNESSETH as follows:
1. In consideration of the rents, service charges, and Tenant's covenants
hereinafter reserved and contained, the Landlord HEREBY LETS unto the Tenant ALL
that the premises more particularly described in the Schedule hereto)
hereinafter referred to as "the Demised Premises") being part of the building
known as "No. 1 Shenton Way, situated at No. 1 Shenton Way, Singapore 068803"
(hereinafter referred to as "the Building") TOGETHER WITH (but to the exclusion
of all other liberties, easements, rights or advantages):
(a) The right for the Tenant and others duly authorized by the Tenant
but Only so far as necessary and as the Landlord can lawfully
grant the same of ingress to and egress from the Demised Premises
in over and along with all of the usual entrances, landings,
passenger lifts and passageways leading thereto in common with the
Landlord and all others so authorized by the Landlord and all
other persons entitled thereto;
(b) the right for the Tenant and others duly authorized by the Tenant
to the user of such toilet facilities in the Building as shall be
designated from time to time in writing by the Landlord but such
user shall be in common with the Landlord and all other so
authorized by the Landlord and all other persons so entitled
thereto;
(c) the right for the Tenant and all others authorized by the Tenant
to the use and benefit of the air-conditioning system installed in
the Building in common and with the Landlord and all others so
authorized by the Landlord and all other persons entitled thereto;
EXCEPTING AND RESERVING unto the Landlord the free and uninterrupted use of all
water and other pipes, electric, telephone and other wires, conduits, flues and
drains in through or under the Demised Premises TO HOLD the Demised Premises
unto the Tenant for the term of Three (3) years from the 1st day of September
1999 (hereinafter referred to as the "said term") YIELDING AND PAYING THEREFOR
unto the Landlord during the said term: -
1.1 the monthly rent of Dollars Ten Thousand Four Hundred Sixty-Five
Only ($10,465.00) ----------------------------------------------
(hereinafter referred to as "the monthly rent")
1.2 the monthly service charge of Dollars Four Thousand One Hundred
Service Eighty-Six Only ($4,186.00)----------------------------
(hereinafter referred to as "the monthly service charge")
<PAGE>
The said monthly rent and monthly service charge in respect of the Demised
Premises are payable in advance clear of all deductions on the first day of each
and every month the first payment or apportioned payments thereof to be made on
the 1st day of September 1999 and each subsequent payment to be made on the
first day of every succeeding month.
All payments due and payable by the Tenant under this Agreement (including but
not limited to rent and service charge payments) shall be deducted by the
Landlord or its duly authorized agents, from the Tenant's giro account. The
Tenant shall open the said giro account, prior to the execution of the Lease
Agreement. The Tenant shall take all necessary steps to ensure at all times that
the said giro account is fully maintained throughout the period of the Lease
Term and undertakes to ensure that the said giro account shall have sufficient
funds to facilitate the said deduction by the Landlord or its duly authorized
agents. The Tenant shall further undertake to sign any documents to facilitate
the opening and/or maintenance of the said giro account.
2. The service charge shall be calculated at the rate of 1.00 per square foot
($10.764 per sq. m.) per month on the area of the Demised Premises let to the
Tenant during the term hereby created and shall be subject to the following
provisions:
2.1 The Landlord shall be entitled at any time and from time to time to
increase the service charge by written notice in that behalf subject to the
provisions hereinafter contained.
2.2 If there is any increase in the Outgoings of the Building, the Tenant
shall be liable to pay an additional service charge in each and every month
representing the apportioned extra cost as is attributable to the Demised
Premises. For the purpose of ascertaining the additional service charge payable.
All increases in the Outgoings of the Building shall be apportioned in the
Proportion by which the floor area of the Demised Premises bears to the total
area of the rent able floor space in the Building including any floor Space
occupied by the Landlord and a statement (hereinafter called "the Said
Certificate") by the Landlord certifying the amount of the increase in Outgoings
of the Building on a per square foot basis (or its metric equivalent). And the
effective date of such increase (accompanied by a certificate from a Firm of
auditors appointed by the Landlord verifying the said Certificate) shall be
accepted by the Tenant as conclusive and binding of the matters so certified.
The said Certificate shall be in the form annexed to this Agreement as the
Landlord may from time to time prescribe Annexed 1 or such other form as. The
increase in service charge shall be chargeable and payable with effect from the
date specified in the said Certificate as the effective date of the increase in
Outgoings of the Building. If there shall be any additional service charge
payable from a date prior to the issuance of the said Certificate the aggregate
amount of such additional service charge shall be payable by the Tenant
forthwith upon the issuance of the said Certificate shall be added to the
prevailing service charge and such aggregate sum shall be and remain the service
charge until further increased by the Landlord under this Clause 2.
2.3 The term "Outgoings of the Building" where used in this Agreement
Outgoings shall mean the total sum of all outgoings, costs and expenses of the
Landlord assessed or assessable, charged or chargeable, paid or payable or
otherwise incurred in respect of the Building (including in such term for the
purposes of this Clause the curtilage of the Bu9ilding and all levels thereof
including, but without limiting the generality of the foregoing, those levels
below ground level whether used for the parking of motor vehicles or otherwise)
and in the control, management, maintenance of the Building and in particular
but without limiting the generality of the foregoing shall include:
<PAGE>
2.3.1 All charges for and costs in relation to the supply of water and
removal of all sewage waste and other garbage from the Building
and the land on which the Building is erected;
2.3.2 All amount payable in respect of insurances relating to the
Building and the equipment and appliances therein including
without limiting the generality of the foregoing fire and public
liability insurance, theft/burglary insurance of Landlord's
property in the Building, and Workmen's Compensation/Common Law
Liability insurance for the personnel mentioned in Clause 2.3.4
hereof;
2.3.3 All costs in relation to management, control and administration of
the Building including the employment of security staff and
attendants and the management fee payable from time to time by the
Landlord to its management agents (if any) of the Building;
2.3.4 The cost of uniforms, salaries, wages, bonuses, allowances and
other emoluments, remuneration and benefits of all personnel
(whether employed by the Landlord or its management agents)
engaged in the operation and maintenance of the Building as well
as payroll tax and Central Provident Fund and other statutory
contributions or charges in respect thereof;
2.3.5 The cost of operating and maintaining the Building and supplying
all services from time to time provided by the Landlord for
tenants and occupiers of the Building including without limiting
the generality of the foregoing repairs and replacements,
repainting and redecoration of the Building and the maintenance,
repair and renovation of all lifts, air-conditioning plant,
sanitary, plumbing and drainage equipment, fire-fighting equipment
and other plant and equipment, fire-fighting equipment and other
plant and equipment required in connection with any of such
services;
2.3.6 All charges (including surcharges and taxes thereon) for lighting,
power, air-conditioning and ventilation incurred in connection
with the Building including without limiting the generality of the
foregoing the entrances, landings, lifts, lobbies, corridors,
passages, car parks, stairways and water-closest and any other
common areas and the landscaping thereof;
2.3.7 The cost of the cleaning of the exterior of the Building
(including all windows) and the common areas of the Building
including without limiting the generality of the foregoing the
entrances, landings, lifts, lobbies, corridors, passages, car
parks, stairways and water-closets and any other common areas and
the landscaping thereof;
2.3.8 The expenses of the Landlord in supplying paper, soap and other
toilet requisites in the water closets.
2.3.9 A monthly contribution towards a sinking fund for the following
items:
<PAGE>
(a) lifts;
(b) fire fighting systems;
(c) sanitary, plumbing and drainage equipment;
(d) transformer, switchboard and generator;
(e) air-conditioning and mechanical ventilation the amount of
such contribution to be determined by a professionally
qualified appraiser.
3. The Tenant hereby covenants with the Landlord as follows:
3.3.1 One or before the execution of this Tenancy Agreement,
there shall be paid by the Tenant to the Landlord a sum
equal to the rent and service Charge in respect of the
Demised Premises for a three (3) month period in cash by
way of a deposit and such deposit shall be held by the
Landlord to secure the due performance and observance by
the Tenant of all and singular the several covenants
conditions stipulations and agreements on the part of the
Tenant contained herein and if the Tenant shall fail to
perform and observe any of the said covenants stipulations
and agreements then such part of the Tenant shall fail to
perform and observe any of the said covenants and
stipulations and agreements then such part of the said
deposit as shall be necessary to remedy such failure to
perform and observe shall be forfeited by the Landlord and
applied thereto (without prejudice to the Landlord's right
of action against the Tenant to the extent that the said
deposit shall be insufficient for the purpose) but the
Tenant shall not be entitled to deduct or set-off from any
rental or service charge payments due hereunder all or any
part of the deposit PROVIDED ALWAYS that if the Tenant
shall duly perform and observe all of the said covenants,
conditions, stipulations and agreements as aforesaid from
the data hereof up to and including the date of expiration
of the term to be created the Landlord shall within one (1)
month after such expiration repay the said deposit to the
Tenant free of interest and less any amounts forfeited as
aforesaid. In the event that the service charge set out
herein is increased from time to time in the manner
provided in Clause 2 hereof the said deposit shall likewise
be increased accordingly and the difference paid by the
Tenant to the Landlord within seven (7) days after the date
of the Landlord's written demand in that behalf further
deposit the amount so forfeited.
3.3.2 To pay the said monthly rent and the said service charge
hereby Rent reserved on the days and in the manner
aforesaid without any deduction, withholding, set off or
demand whatsoever and so that there shall be no abatement
of rent or serve charge by reason of any claim by the
Tenant against the Landlord whether for non-performance or
breach of the Landlord's obligation hereunder or otherwise.
3.3.2.1 The rent, service charge and other sums payable by
the Tenant under this Lease (hereinafter
collectively called "the Agreed Sum") shall, as
between the Landlord and the Tenant, be exclusive of
any applicable goods and services tax, imposition,
duty and levy whatsoever (hereinafter collectively
called "the Agreed Sum") shall, as between the
Landlord and the Tenant, be exclusive of any
applicable goods and services tax, imposition, duty
and levy whatsoever (hereinafter collectively called
"Taxes") which may from time to time be imposed or
charged before, on or after the commencement of this
Lease (including any subsequent revisions thereto)
by any government, quasi-government, statutory,
regulatory, revenue or tax authority (hereinafter
called "the Authorities") on or calculated by
reference to the amount of the Agreed Sum (or
<PAGE>
any part thereof) and the Tenant shall pay all such
Taxes or reimburse the Landlord for the payment of
such Taxes, as the case may be, in such manner and
within such period as to comply or enable the
Landlord to comply with any applicable orders or
directives of the Authorities and the relevant laws
and regulations.
If the Landlord or the Tenant (or any person on
their behalf) is required by law to make any
deduction or withholding or to make any payment, on
account of such Taxes, from or calculated by
reference to the Agreed Sum (or any part thereof):
(a) The Tenant shall pay, without requiring any
notice from the Landlord all such Taxes for
its own Account (if the liability to pay is
imposed on the Tenant), or on behalf of and
in the name of the Landlord to collect and to
account for such Taxes, the Tenant shall pay
such Taxes to the Landlord (which shall be in
addition to the Tenant's liability to pay the
Agreed Sum) on receipt of written notice from
the Landlord; and
(b) the sum payable by the Tenant in respect of
which the relevant deduction, withholding or
payment is required on account of such Taxes,
shall be increased to the extent necessary to
ensure that after the making of the aforesaid
deduction, withholding or payment, the
Landlord or any person or persons to whom
such sum is to be paid, receives on the due
date and retains (free from any liability in
respect of any such deduction, withholding or
Taxes) a net sum equal to what would have
been received and retained had no such
deduction, withholding or payment been
required or made. In addition and without
prejudice to any rights, powers, or remedies
of the Landlord, if the Tenant fails or
delays in the payment and discharge of any
such Taxes and the Landlord shall have duly
paid such Taxes, then the Tenant shall pay
interest thereon to the Landlord at the rate
of twelve per cent (12%) per annum from the
date of payment by the Landlord of such Taxes
up to and including the date of receipt by
the Landlord from the Tenant of payment of
such Taxes.
3.3.2.2. The rights of the Landlord under this clause shall
be in addition and without prejudice to any other
rights or powers of the Landlord under any
applicable order or directive of the Authorities of
any relevant law or regulation, to recover from the
Tenant the amount of such Taxes which may be or is
to be paid or borne by the Landlord.
3.3.2.3. The Tenant shall indemnify and hold harmless the
Landlord from any losses, damages, claims, demands,
proceedings, actions, costs, expenses, interests and
penalties suffered or incurred by the Landlord
arising from any claim, demand, proceeding or action
that may be made or instituted by the Authorities in
respect of such Taxes resulting from any failure or
delay in the part of the Tenant in the payment and
discharge of such Taxes.
<PAGE>
3.3.3 The Landlord shall pay the first assessment in respect of
the Building. The Tenant shall pay for any increase
(whether levied during or after the tenancy period) of
property tax or other imposition of a like nature by
whatever name called whether by way of an increase in the
rate of tax or imposition or an increase in the annual
value and shall pay any new imposition (including surcharge
on property tax) by whatever name called which may
hereafter be levied on or in respect of the Demised
Premises relating to the tenancy period or any party
thereof. In the event of the Demised Premises not being
separately assessed but the Building being assessed as a
whole then, for the purpose of ascertaining the additional
or other amount payable by the Tenant under this Clause,
any such increase in property tax or outgoing shall be
apportioned and the Tenant shall pay such proportion
thereof as the floor area of the Demised Premises bears to
the total area of rent able floor space in the Building
including any floor space occupied by the Landlord Provided
that the obligations of the Tenant under this sub-clause
shall not be extinguished by the determination of this
tenancy whether by the efflux ion of time or otherwise
until the said obligations hall have been fulfilled by the
Tenant.
3.3.4 To pay all charges including any taxes now or in the future
imposed in respect of water, Electricity, and any other
services supplied and metered separately to the Demised
Premises which shall be consumed by the Tenant and charged
by the Power Supply Ltd or other appropriate authority, and
in the event of such water, electricity and other services
not being supplied and metered separately to the Demised
Premises to pay to the Landlord a proportionate part of the
cost thereof, such cost to be calculated by the Landlord
and notified to the Tenant by a statement in writing. In
the event of the Power Supply Ltd or other equivalent
authority responsible for the supply of electricity, water
and any other services supplied and used in the Building
increasing the charges therefore, the Tenant shall pay to
the Landlord a proportionate part of the increased cost
thereof, such cost to be calculated by the Landlord and
notified to the Tenant by a statement in writing which
statement shall be accepted by the Tenant as conclusive and
binding of the matters therein.
3.4 To install at its own cost and expense all telephones and
teleprinters as the Tenant may require in such manner that the
wires shall not run across the floor or ceiling or along the walls
of the Demised Premises so as to be visible in the Demised
Premises but shall be concealed and if running along the floor
shall be concealed in the respective ducts in the under floor
trucking provided by the Landlord for the purpose and all such
works shall be carried out by workmen of or engaged by the
Singapore Telecommunications Limited or such other appropriate
authority, or in the absence of such workmen, by a contractor
nominated by the Landlord.
3.5 That before the Tenant applies to the Singapore Telecommunications
Limited or other appropriate authority for the installation of
telephones and/or teleprinters it shall submit for the approval of
the Landlord or its engineer a plan showing where the telephones
and/or successors are required by the Tenant other than those
already provided by the Landlord, the Landlord shall install such
under floor trucking and/or accessories are required by the Tenant
other those already provided by the Landlord, the Landlord shall
install such under floor trunking and/or accessories and the
Tenant shall bear the cost of such installation and that no wires
shall be installed within the duct intended for the carriage of
telephone wires other than those installed by the said Singapore
Telecommunications Limited or other appropriate authority.
3.6 The Tenant shall carry out at its own expense the following works
<PAGE>
3.6.1 Portioning within the Demised Premises.
3.6.2 All mechanical and electrical engineering works including:-
(a) Installation of all necessary electrical wiring,
Conduits, etc. for additional power points, light
Fittings and all other ceiling fixtures and fittings
Etc., apart from those originally supplied and
installed by the Landlord.
(b) All alteration works relating to the existing
ceiling fixtures and fittings for lighting,
air-conditioning and fire protection devices etc.,
originally supplied and installed by the Landlord.
(c) All mechanical works of any kind whatsoever
including installation of water and other pipes,
apparatus, fittings, fixtures and (where water is to
be supplied to the Demised Premises) all necessary
plumbing.
3.6.3 Provision of other approved floor and/or wall covering or
finishes of whatever kind within the Demised Premises.
3.6.4 Provisions of window curtains or blinds, if required, of
the type, quality and co lour to be approved by the
Landlord for purposes of maintaining uniformity to the
window facade of the Building.
3.7 To use for carrying out the works mentioned in Clause 3.7 hereof
(hereinafter called "the said works") materials of such standard
as to type, quality, co lour and size as the Landlord, its
architect engineer or consultant shall approve and cause the said
works to be carried out in the Demised Premises in accordance with
plans and specifications that shall have received the prior
written approval of the Landlord, its architect engineer or
consultant and the relevant governmental and/or statutory
authorities. The said works shall only be effected: -
3.7.1 In the case of any mechanical, electrical, plumbing or
air-conditioning works or installations, including
installation of wiring, conduits, ducts, vents, pipes,
appliances, apparatus, fixtures and fittings, by a
nominated contractor of the Landlord appointed by the
Tenant;
3.7.2 In all other cases by a contractor appointed by the Tenant
and approved by the Landlord, and in accordance with
approved plans and specifications and under the supervision
of an architect or engineer appointed by the Landlord and
the completion thereof shall be subject to approval by the
Landlord, its architect engineer or consultant and the
Tenant shall not make any additions, alterations or
renovations to the said works after completion thereof
except with the prior approval in writing of the Landlord,
such approval not to be unreasonably withheld. The fees of
any architect, engineer or other consultant employed by the
Landlord for the purpose of considering, approving and
supervising the plans, specifications, materials and all
works carried out by the Tenant and all other costs,
charges and expenses incurred by the Landlord in connection
therewith shall be borne by the Tenant and paid by the
<PAGE>
Tenant to the Landlord on demand. No delay in carrying out
and completing all or any of the said works (including
installation of the telephones and teleprinters) in or at
the Demised Premises, whether caused by any governmental
and/or statutory authorities or otherwise, shall be a
ground for postponing the commencement of the term of the
said Agreement or relieve in any way the Tenant from the
performance and observance of the covenants, conditions,
stipulations or agreements herein contained and on its part
to be performed and observed.
3.8 Not to make or permit to be made any alterations in or additions
to the Demised Premises or any part thereof or the Landlord's
fixture, fittings and decorations therein and in particular not to
make or permit to be made any such alterations or additions that
will prevent the full and unrestricted use and benefit of the
air-conditioning system to portions of the Building adjoining the
Demised Premises without having first obtained the written license
and consent of the Landlord, such consent not to be unreasonably
withheld, and in the event of such license and consent being given
to carry out at the Tenant's own expense such alterations or
additions with such materials and in such manner and at such time
as shall be designated by the Landlord and upon the determination
of the term hereby created if requested by the Landlord the Tenant
shall remove all such alterations in or additions to the Demised
Premises whether constructed by the Tenant or by any previous
tenants so as to restore the Demised Premises to their original
state and condition at the expense of the Tenant.
3.9 To keep the interior of the Demised Premises including the
flooring and interior plaster or other surface material or
rendering on walls and ceilings and the Landlord's fixtures
therein including doors, windows, glass, locks, fastenings,
electric wires and installations and fittings for light and power
in a clean and good state of tenantable repair and condition (fair
wear and tear excepted) and to make good to the satisfaction of
the Landlord any damage to the same howsoever caused.
3.10 Not to employ or continue to employ in or about the Demised
Premises any cleaners other than the cleaning contractor or
contractors authorized by the Landlord to carry out the cleaning
work in the Building. Any cleaners so employed by the Tenant for
the purpose of cleaning the Demised Premises shall be at the sole
expense and responsibility of the Tenant and the Landlord shall
not be liable or responsible in any way for their acts or
omissions.
3.11 Not to allow the person or persons for the time being having the
contract for the cleaning of the Building and his or their
servants, workmen, employees, agents, contractors and
sub-contractors, free ingress and egress to the Demised Premises
for the purpose of cleaning the exterior of the windows thereof
during the business hours.
3.12 Without prejudice to the provisions of Clause 3.10 hereof,
forthwith to give notice to the Landlord or its building
supervisor of any damage that may occur to the Demised Premises
and of any accident to or defects in the water pipes, electrical
wiring, air-conditioning ducts or any other fittings, fixtures or
other facility provided by the Landlord.
<PAGE>
3.13 To permit the Landlord and its duly authorized agents with or
without workmen and others and with or without appliances at all
times (by prior appointment except in case of emergency or in case
the Tenant cannot be contacted) to enter upon the Demised Premises
to examine the state and condition thereof and to do such works
and things as may be required for any repairs, alterations or
improvements to the Demised Premises or any other part or parts of
the Building and forthwith to repair, mend and make good in a
proper and workmanlike manner any defects for which the Tenant is
liable and of which written notice shall be given to the Tenant or
left on the Demised Premises and to pay the Landlord's reasonable
costs of the examination or otherwise in respect of the
preparation of any such notice, and if the Tenant shall not within
fourteen (14) days after the date of such notice proceed
diligently with the execution of such repairs of works, then the
Landlord may enter upon the Demised Premises and execute such
repairs or works and the cost thereof (which shall include the
cost of the Landlord's representatives in supervising such repairs
or works at the rate of $50/- per man/hour or the prevailing
market rate, whichever shall be the higher) shall be a debt due
from the Tenant to the Landlord and recoverable forthwith as such.
3.14 At all times to use and occupy the Demised Premises strictly as
and for an office in connection with the business of the Tenant
and not to leave the Demised Premises vacant and/or unoccupied for
any period exceeding seven (7) days and to keep all doors and
other means of access to the Demised Premises securely fastened
when the Demised Premises are left unoccupied.
3.15 Not to store or bring jupon the Demised Premises or any part
thereof arms, ammunition or unlawful goods, gun-powders,
saltpeter, chemicals, petrol, kerosene, gas or any goods or things
which in the opinion of the Landlord are of an obnoxious,
dangerous or hazardous nature or any explosive or combustible
substance and not to place or leave in the entrance of stairways,
passages or corridors, lobbies or other common parts of the
Building ant boxes or rubbish or otherwise encumber the same
PROVIDED ALWAYS that if combustible or inflammable materials are
stored in the Demised Premises or any part thereof with the
consent in writing of the Landlord any increase in the premises
for fire or other insurance as may have been taken out by the
Landlord shall be borne by the Tenant.
3.16 Not to use the Demised Premises or any part thereof for any
unlawful or immoral purpose and not to do or permit to be done any
act or thing which may be or become a nuisance to or give cause
for reasonable complaint from the occupants of adjoining premises
or of other parts of the Building or of other buildings adjoining
the building.
3.17 Not without the prior written consent of the Landlord to permit
the vendors of food or drink or the servants or agents of such
vendors to bring to or onto the Demised Premises or any part
thereof or onto the Building or any part thereof food or drink for
consumption by the occupiers or others in the Demised Premises
save and except in the case of the contractor appointed by the
Landlord to provide a food and drink service for the occupiers of
the Building.
3.18 Not to use the Demised Premises or any part thereof or permit the
same to be used as a laboratory or as a workshop or for the
cooking or the preparation of storage of food nor to permit or
suffer anyone to sleep or reside therein, and to ensure that all
doors of the Demised Premises are securely fastened and locked at
all times when the Demised Premises are not occupied or remain
unattended.
<PAGE>
3.19 Not to permit or cause to be permitted the placing or parking of
bicycles, motor cycles or scooters, trolleys and other wheeled
vehicles and/or the stocking or storage or littering of goods or
things in the common parts of the building, the corridors,
passageways, pavements and the car-parking areas and to keep all
such internal and external parts of the Building clear and free of
all obstruction at all times.
3.20 Not to permit or cause to be permitted the placing or parking of
bicycles, motor cycles or scooters, trolleys and other wheeled
vehicles and/or the stocking or storage or littering of goods or
things in the common parts of the Building, the corridors,
passageways, pavements and the car-parking areas and to keep all
such internal and external parts of the Building clear and free of
all obstruction at all times.
3.21 Not to permit or carry on any auction sale upon the Demised
Premises of any part of the Building.
3.22 Not to place or take into the passenger lifts any baggage,
furniture, parcels, sacks, gags, heavy articles or other goods or
other merchandise without the prior approval of the Landlord save
only such light articles as brief-cases, attache cases and
handbags.
3.23 Not to bring or allow to be brought onto the Demised Premises or
any parts of the Building used in common with the Landlord and
other tenants any machines or machinery save and except
typewriters and such other auxiliary office equipment as are
required for the purposes of the Tenant's office and not at any
time too load or permit or suffer to be loaded on any part of the
floors of the Building or the Demised Premises to a weight greater
than fifty (50) pounds per square foot and shall when required by
the Landlord distribute the load on any part of the floor of the
Demised Premises in accordance with the directions and
requirements of the Landlord and in the interpretation and
application of the provisions of this Clause relating to loading
the decision of the Surveyor, Architect or Engineer of the
Landlord shall be final and binding upon the Tenant.
3.24 Not to affix, paint, or otherwise exhibit or permit to be affixed,
painted or otherwise exhibited to or upon any part or on the
exterior of the Demised Premises or on the windows or doors
thereof or in or about any part of the building without the prior
written consent of the Landlord any signboard, announcement,
placard, poster, advertisement, nameplate, flag, flagstaff, or
other notices whatsoever save and except the Tenant's nameplate or
signboard of a size form and character as hall be approved in
writing by the Landlord, such consent not to be unreasonably
withheld. The costs for making such nameplate or signboard shall
be borne by the Tenant and placed at a spot to be indicated to the
Landlord.
3.25 To keep the windows of the Demised Premises closed at all times
and not to erect or install any sign, device, furnishing, ornament
or object which is visible from the street or from any other
building and which, in the opinion of the Landlord, is incongruous
or unsightly or may detract from the general appearance of the
Building.
3.26 To install and maintain at its own cost and expense for the
windows of the Demised Premises curtains (if any) of the type,
quality and co lour approved by the Landlord.
<PAGE>
3.27 To ensure that the decor and design of the exterior of the Demised
Premises are in accordance with plans and specifications
previously submitted to and approved by the Landlord, and not to
make any changes to such external parts without the prior written
consent of the Landlord. Any unauthorized changes shall be removed
by the Tenant forthwith on demand and if not so removed may be
removed by the Landlord and the cost of such removal and of making
good the Demised Premises as a consequence of such removal shall
be borne and paid by the tenant.
3.28 Not to assign underlet or otherwise part with the actual or legal
possession or the use of the Demised Premises or any part thereof
for any term whatsoever (whether by way of sub-letting, licensing,
lending, sharing, or any other means) whereby any person or
persons not a party to this Agreement shall obtain the use of
possession of the Demised Premises or any part thereof
irrespective of whether any rental or other consideration is given
for such use or possession.
3.29 Not to do or permit or suffer to be done anything whereby the
policy or policies of insurance on the Building against loss or
damage by fire or other risks on the Building for the time being
subsisting may become void or void able or whereby the rate of
premium hereof may be increased and to make good all damage
suffered by the landlord by way of increased premiums and all
expenses incurred by the Landlord in or about any renewal of such
policy or policies rendered necessary by a breach or
non-observance of this covenant.
3.30 To indemnify and keep indemnify the landlord from and against:
3.30.1 All claims, demands, writs, summonses, actions, suits,
proceedings, judgment, orders, decrees, damages, costs,
loses and expenses of any nature whatsoever which the
Landlord may suffer or incur in connection with loss of
life, personal injury and/or damage to property arising
from or out of any occurrence in, upon or at the Demised
Premises or the use of the Demised Premises or any part
thereof by the Tenant or by any of the Tenant's employees,
independent contractors, agents, invitees or licensees:
3.30.2 All loss and damage to the Demised premises, the building
and to all property therein caused directly or indirectly
by the tenant or the tenant's employees, independent
contractors, agents, invitees or licensees and in
particular but without limiting the generality of the
foregoing caused directly or indirectly by the use or
misuse, waste or abuse of water, or electricity or faulty
fittings or fixtures of the tenant.
3.31 At the times during the said term and during the said term and
during any period of holding over to keep current:
3.31.1. public liability insurance policy (which shall be taken
out for an amount deemed appropriate by the Tenant and with
an insurance company by the Landlord) in respect of the
Demised Premises;
3.31.2 an insurance policy, which shall be taken out for an amount
and with an insurance company as aforesaid on internal
partitions and all goods belonging to or held in, trust by
the Tenant in the Demised Premises against loss or damaged
by fire:
<PAGE>
3.31.3 and to produce to the Landlord on demand the policies
referred to above as well as the receipts for payment of
premium in respect thereof and at all times during the said
term hereby created to comply with promptly and at the
Tenant's expense all such requirements as may be imposed on
the occupier of the Demised Premises by any statute now or
hereafter in force and any orders, rules, regulations,
requirements and notices hereunder.
3.31.4 Should the tenant receive any notice from Government or any
statutory, public or municipal authority with respect to
the Demised Premises to give notice thereof forthwith in
writing to the Landlord.
3.31.5 to observe and perform and to cause all its employees,
independent contractors, agents, invitees and licensees to
observe and perform all the rules and regulations made by
the Landlord from time to time under clause 5. 5.5 hereof
provided always that the Landlord shall not be liable to
the Tenant in any way for violation of the rules and
regulations by any persons including other tenants of the
building or the employees, independent contactors, agents,
visitors, invitees or licensee thereof.
3.31.6 At the expiration or sooner determination by the landlord
of the term hereby created (unless renewed in terms of
clause 5.11 hereof) to yield up the demised premises with
the fixtures thereto (other than such Tenant's trade
fixtures as shall belong to the Tenant), unless required by
the landlord to be removed, in good and tenantable repair
and condition (fair wear and tear excepted) to the Landlord
together with the keys (whether supplied by the landlord or
otherwise) to the demised premises and all doors therein,
and if so required by the landlord, to remove all
letterings, internal partitions, fixtures and installations
of the tenant or any part thereof, as are specified by the
landlord, from the demised premises and to reinstate all
air-conditioning installations or other electrical
installations to their original state to the satisfaction
of the landlord, its architect, engineer or consultant.
Such removal and/or reinstatement shall be carried out:
(a) In the case of any m mechanical, electrical,
plumbing or air-conditioning works or installations
(as described in clause 3.8.1 hereof), by a
nominated contractor of the landlord appointed by
the tenant;
(b) and in all other cases, by a contractor appointed by
the tenant and approved by the landlord; under the
supervision of the landlord's architect, engineer or
consultant and the tenant shall pay for all fees and
expenses of such architect, engineer or consultant.
All damage done to the Demised Premises by such
removal shall be made good by the tenant on or prior
to the expiration of the term hereby created and if
the tenant shall fail to do so the landlord may make
good all such damage. The tenant shall pay all costs
incurred by the landlord in such removal or disposal
or in making good such damage to the landlord within
seven (7) days of the landlord notifying the tenant
of the amount thereof.
<PAGE>
3.32 If the tenant purports to yield up the demised premises without
fulfilling its obligations as contained in clause 3.35.1, the
landlord shall be entitled to insist on its full compliance or may
reinstate the demised premises to its original state of the
tenant's costs, but nothing herein contained shall mean that it is
obligatory on the landlord to reinstate of the demised premises as
aforesaid, the obligation to do so always being on the tenant at
its expense. Upon the expiration or sooner determination of this
lease, if the Tenant purports to vacate or yield up the demised
premises without reinstating the same, the landlord shall be
entitled to recover from the tenant for such period until the
tenant has reinstated the demised premises to the landlord's
satisfaction or if the landlord exercises the option to reinstate
the demised premises, such rents and other amounts which the
landlord w2ould have entitled to receive from the tenant had the
period for the reinstatement effected by the tenant or landlord
(as the case may be) been added to the term of this lease hereby
created (hereinafter called "default rent"). The landlord shall be
entitled to deduct the cost of reinstatement and the default rent
from the rent deposit without prejudice to the landlord's rights
to recover from the tenant the shortfall in respect thereof.
3.33.1 The landlord's rights to recover the cost of reinstatement
and the default rent as provided in clause (2) shall not in
any way prejudice, impair or affect any other remedies to
which the landlord may be entitled against the tenant for
any loss or damage incurred by the landlord as a result of
the tenant's failure to yield up the demised premises duly
reinstated to its original condition on the date of
expiration or sooner determination of this lease.
3.34 To decorate the demised premises to the satisfaction of the
landlord's architect, engineer or consultant for the time being
immediately prior to the expiration or sooner determination by the
landlord of the term hereby created, and if the tenant shall fail
to redecorate the demised premises as aforesaid the landlord may
decorate the demised premises and recover from the tenant had the
period within such redecoration is effected by the landlord been
added to the term of this agreement provided that in the event the
period of redecoration and the period reinstatement as provided in
clause (2) hereof shall coincide, the landlord shall be entitled
to receive rents and such other amounts until the reinstatement or
redecoration has been completed, whichever is the later. For the
purposes hereof the term "redecorate" shall include the washing of
the whole of the interior of the demised premises, the painting
with two coats of oil paint or emulsion paint or other appropriate
treatment of all the internal parts of the demised premises
previously so treated respectively, and also the replacing of all
ceiling and floor tiles which is the opinion of the landlord's
architect, engineer or consultant for the time being are worn out
or damaged and in need of replacement. Provided always that in the
event the term hereby granted shall be renewed pursuant to clause
5.11 hereof, the tenant shall not be obliged to redecorate the
demised premises until prior to the expiration of the renewed
term.
<PAGE>
3.35 To pay all legal fees (including the landlord's solicitors'
charges on a solicitor and client basis), stamp duty and all other
disbursements and out-of-pocket expenses incurred in the
preparation and completion of this Agreement, and in connection
with any surrender or other termination thereof otherwise than by
defluxion of time or with any claim or legal proceedings which may
be brought by the landlord against the tenant in connection with
or arising out of this agreement.
3.36 The tenant hereby agrees that the landlord or the landlord's agent
shall be entitled to bring prospective purchasers of the demised
premises to view the same by prior appointment. The tenant further
agrees that in the event the landlord sells the demised premises
the landlord shall be entitled to transfer the deposit paid by the
tenant to the purchaser of the demised premises and jupon the
transfer of the deposit, the tenant shall have no further claims
whatsoever against the landlord in respect of the same and the
landlord's obligation to repay the same to the tenant shall be
deemed to be discharged.
4. The landlord hereby covenants with the tenant as follows (but subject
always to the provisions of classes 5.10 hereof):
4.1 To keep the roof and the main drains and pipes all external walls
and all common parts of the building including entrances, car
parks, staircases, pavements, landings, corridors, and passages,
lavatories and all sewers, soil, pipes, sanitary apparatus, pipes,
wires, and cables and supply lines and all apparatus equipment
plant and machinery serving the passenger lifts and air
conditioning system in good and tenantable condition and repair
(fair wear and tear and damage by fire excepted) including the
repairing and decorating of the Building, or any part thereof at
such times and in such manner as the Landlord shall in its
absolute discretion consider such to be necessary.
4.2 To provide:
4.2.1 Air conditioning services during the hours of 8:30 am to
5:00pm on weekdays and 8:30am to 1:00pm on Saturdays
(Sundays and Gazette Public Holidays excepted) PROVIDED
ALWAYS that such services may at the request of the Tenant
be extended by the Landlord (but without any obligation to
do so) beyond the hours hereinbefore defined and in such an
event the Tenant shall bear and pay to the Landlord on
demand the additional costs and expenses to be determined
by the Landlord for such extension;
4.2.2 Lift services, available for use by the Tenant and the
Tenant's employees an visitors, between the hours of 8:00
am to 6:00 pm on weekdays and 8:00am to 3:00 on Saturdays
(Sundays and Gazette Public Holidays excepted) PROVIDED
ALWAYS that at all other times the Landlord will endeavor
to keep one or more lifts in operation but nothing
contained herein shall impose on the Landlord any
obligation to do so;
4.2.3 Electricity for the lighting of the passages, corridors,
staircases, water-closets and other common part of the
Building;
4.2.4 Water for the common water closets and toilet facilities in
the building.
<PAGE>
4.3 To employ a watchman or watchmen for the protection at night of
the Building and the premises therein (but not so as to render the
Landlord liable for any loss sustained by the Tenant through the
neglect, default, negligence or misconduct of such watchman or
watchmen).
4.4 Subject to Clause 3.3 hereof to pay all present and future rates,
taxes, assessments and outgoings imposed upon part thereof save
and except such as are herein agreed to be paid by the Tenant.
4.5 To insure and keep insured the Building (excluding fittings and
fixtures installed by the Tenant) against damage by fire and such
other risks as the Landlord may deem fit.
4.6 That the Tenant paying the rent and service charge hereby reserved
and performing and observing the several covenants herein
contained and on its part to be performed and observed shall
peaceably hold and enjoy the Demised Premises without any
interruption from the Landlord or any person rightfully claiming
under or in trust for it.
5. PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLRARED as follows:
5.1 If the rent and/or service charge or any other sums payable under
this Agreement (or any part of such rent service charge or sums
shall at any time be unpaid for twenty-one days after the same
shall have become due (whether formally demanded or not) or if any
covenant on the Tenant's part herein contained shall not be
performed or observed or if the Tenant (being a company) shall go
into liquidation whether voluntarily (save for the purpose of
amalgamation or re-construction) or compulsory or a receiver shall
be appointed of any part of its undertaking, property or assets,
or (being an individual) shall have a receiving order or an
adjudicating order made against him or if the Tenant shall make
any arrangement with its creditors for settlement of its debts by
composition or otherwise or if any execution of attachment shall
be levied upon or issued against any of the property or assets of
the Tenant and shall not be paid off or discharged within five (5)
days thereof, than and in any of the said cases it shall be lawful
for the Landlord at any time thereafter to re-enter upon the
Demised Premises or any part thereof in the name of the whole and
thereupon the term hereby created shall forthwith and absolutely
cease and determine but without prejudice to the right of action
of the Landlord in respect of any arrears of rent and/or service
charge or other sums due or of any antecedent breach of the
Tenants' covenant herein contained. The Landlord shall not be a
liable or responsible for any loss or of damage to the Tenant's
fixture furnishings equipment or other belonging whatsoever caused
by or arising from the Landlords' re-enter of the Demised Premises
and its possession thereof after such re-entry.
5.2 In addition and without prejudice to any other right, power or
remedy of the Landlord if the rent and/or service charge hereby
reserved or any other sums payable under this Agreement (or any
part of such rent service charge or sums) shall at any time remain
unpaid for fourteen (14) days after the same shall have become due
(whether any formal or legal demand therefore shall have been made
or not) then the Tenant shall pay to the Landlord interest thereon
at the rate of twelve per cent (12%) per annum. The Landlord shall
be entitled to recover such interest from the Tenant as if such
interest were rent in arrears.
<PAGE>
5.3 The Landlord shall in all cases have the power to prescribe the
weight and proper position of all iron or steel safes and other
heavy machinery and equipment, articles or goods whatsoever in the
Demised Premises and any or all damage caused to the Building or
any part thereof by the Tenant or anyone on its behalf by taking
in or moving out any safe, items of machinery and equipment,
furniture, goods or other articles or during the time such are in
the Building shall be made good by the Tenant or if the Landlord
at the sole expense of the Tenant. The Tenant shall compensate the
Landlord for any such damage suffered by the Landlord.
5.4 The Landlord shall so far as practicable keep the main doors of
the Building open so as to provide the Tenant's employees and
visitors uninterrupted access subject always to the closure of the
main doors of the Building at such times as the Landlord in its
own discretion shall think fit as may be promulgated in the rules
and regulations in respect of the maintenance and administration
of the Building more particularly referred to in Clause 5.5
hereunder.
5.5 The Landlord shall have the right at any time and from time to
time to make, add to, amend, cancel or suspend such rules and
regulations in respect of the Building as in the judgment of the
Landlord may from time to time be required for the management,
safety, care or cleanliness of the Building or for the
preservation of good order therein or for the convenience of the
Tenants and all such rules and regulations shall bind the Tenant
upon and from the date on which notice in writing thereof is given
to it by the Landlord. If there shall be any inconsistency between
the provisions of this Agreement and the provisions of such rules
and regulations then the provisions of this Agreement shall
prevail.
5.6 That if the Demised Premises or any part thereof shall be damaged
or destroyed by fire, so as to render the Demised Premises unfit
for occupation and use (except where such damage or destruction
has been caused by the act or default of the Tenant, its servants,
independent contractors, agents, visitors, invitees, or licensees)
the rent and service charge herby covenanted to be paid or a fair
and just proportion thereof according to the nature and extent of
the damage sustained shall be suspended until the Demised Premises
shall again be rendered fit for occupation and use, and any
dispute concerning this Clause shall be determined by a single
arbitrator to be appointed by the President for the time being of
the Singapore Institute of Surveyors and Valuers in accordance
with the Arbitration Act (Cap.16) or any statutory modification or
re-enactment thereof for the time being in force, PROVIDED ALWAYS
that the Landlord may in its absolute discretion decide that the
Demised Premises are so badly damaged that it will demolish and/or
rebuild the Demised Premises instead of repairing the same and in
any such event the Landlord may within ninety (90) days after such
damage has been sustained give notice to the Tenant in writing of
its decision and thereupon this Agreement shall terminate and the
Tenant shall )if still in occupation ) vacate the Demised Premises
without compensation from the Landlord
<PAGE>
5.7 No condoning, excusing or overlooking by the Landlord of any
default, breach or non observance, or non-performance by the
Tenant at any time or times of any of the Tenant's obligations
herein contained shall operate as a waiver of the Landlord's
rights hereunder in respect of any continuing, or subsequent,
default, breach or non-observance, or so as to defeat or affect in
any way the rights of the Landlord herein in respect of any such
continuing or subsequent default breach or non-observance or
nonperformance and no waiver by the Landlord shall be inferred
from or implied by anything done or admitted by the Landlord
unless expressed in writing and singed by the Landlord. Any
consent given by the Landlord shall operate as a consent only for
the particular matter to which it relates and shall in no way
operate as a waiver or release of any provisions hereof, nor shall
it be construed as dispensing with the necessity of obtaining the
specific written consent of the Landlord in future, unless
expressly so extended.
5.8 The Landlord shall not be liable or in any way responsible to the
Tenant or to any of the Tenant's employee, independent
contractors, agents, invitees or licensees or to any other person
for any injury, loss or damage which may be suffered or sustained
to any property or by any person in the Building or on the land on
which the Building is erected howsoever occurring.
5.9 Any notice or other documents or writing required to be served,
delivered or given under this Agreement by one party to the other
party shall be in writing and shall be sufficiently served if sent
by registered post to the last known address of the other party.
Any notice shall be deemed to be received by the other party
within twenty four (24) hours of posting.
5.10 Notwithstanding anything herein contained, the Landlord shall not
be liable to the Tenant nor shall the Tenant have any claim
against the Landlord in respect of
5.10.1 Any failure or inability of or delay by the Landlord in
fulfilling any of its obligations under this Agreement or
any interruption in any of the services hereinbefore
mentioned by reason of necessary repair or maintenance of
any installations or apparatus or damage thereto or
destruction thereof or by reason of any circumstances
beyond the Landlord's control (including but not limited to
fire, flood, escape of water, riot, civil commotion,
curfew, emergency, shortage of manpower, fuel, materials,
electricity, or water, labor disputes). Without prejudice
to the generality of the foregoing, the Landlord may reduce
or curtail the nature and extent of the services
hereinbefore mentioned in compliance with any enactment
regulation decree or administrative direction from any
governmental department or authority or statutory board;
5.10.2 Any act, omission, default, misconduct or negligence of any
porter, attendant or other servant or employee, independent
contractor or agent of the Landlord in or about the
performance or purported performance of any duty relating
to the provision of the said services or any of them;
5.10.3 Any damage, injury or loss arisen out of the leakage of the
piping, wiring, and sprinkler system in eh Building and/or
the structure of the building or from whatsoever cause.
<PAGE>
5.11 The Landlord shall at the written request of the Tenant made not
less than six (6) months and not more than seven (7) months before
the expiration of the term herby created and provided the Tenant
shall have strictly and faithfully performed and observed all and
singular the several stipulations herein contained and on its part
to be performed and observed up to the termination of the
Agreement hereby created, the Landlord shall at the Tenant's
expense grant to the Tenant a further tenancy of the Demised
Premises for a period of Three (3) years at a rental or rentals
and upon terms and conditions to be agreed.
5.12 In the event of the Tenant failing to exercise its option or the
parties failing to agree upon the terms of the new tenancy as
aforesaid the Landlord shall be entitled to exhibit outside the
Demised Premises or on the doors thereof a notice stating the that
Demised Premises are to be vacant and for letting and the Tenant
shall permit all prospective tenants of the Demised Premises
accompanied by a representative of the Landlord free ingress to
and egress from the Demised Premises for the purpose of viewing
the Demised Premises.
5.13 The Landlord shall not be bound by any oral representations or
promises with respect to the Building and its appurtenances or in
respect of the Demised Premises, except as expressly set forth in
this Agreement with the object and intention that that while of
the agreement between the Landlord and the Tenant shall be set
forth herein, and shall in no way be modified any oral discussions
which may have preceded the signing of this Agreement. The
Landlord does not expressly or impliedly warrant that the Demised
Premises are now or will remain suitable or adequate for all or
any of the purposes of the Tenant and all warranties (if any) as
to suitability and adequateness of the Demised Premises implied by
law are hereby expressly negative.
5.14 The area of the Demised Premises as stated in Schedule hereto is
only an estimate and there shall be no adjustment in the rent
and/or service charge if upon the measurement the actual area
shall differ from the stated area.
5.15 Notwithstanding anything hereinbefore contained, the obligations
of the Tenant under this Agreement shall survive the determination
of this Agreement whether by the efflux ion of time or otherwise
to the extent that the Tenant prior to such determination shall
not have fulfilled such obligations.
5.16 In the interpretation of this Agreement, except to the extent that
such interpretation shall be excluded by or be repugnant to the
context when used herein:
5.16.1 "the Landlord" shall include the successors and assigns of
"CDL LAND PTE LTD";
5.16.2 "the Tenant" shall include, if the Tenant is an individual,
his personal representative, and permitted assigns, or if
the Tenant is a company, its permitted assigns and
successors in title;
5.16.3 "person" shall be deemed to include a corporation;
<PAGE>
5.16.4 words importing the singular or plural number shall be
deemed to include the plural or singular number
respectively and words importing the masculine gender only
shall include the feminine or nature gender and vice versa
as the case may require; and
5.16.5 where two or more persons are include din the term" the
Tenant" all covenants, agreements, terms, conditions and
restrictions shall be binding on them jointly and each of
them severally and shall also be binding on their personal
representatives and permitted assigns respectively jointly
and severally.
IN WITNESS WHEREOF the parties hereto have executed this Agreement the day and
year first above written.
THE SCHEDULE ABOVE REFERRED TO
ALL that the premises on the 22th story of the Building known as No.1 Shenton
Way, situated at NO. 1 Shenton Way, Singapore 068803, numbered or to be numbered
Units #22-06/09 and containing an area of 4,186 square feet which said premises
are for purposes of identification only more particularly described and edged
red on the plan annexed hereto.
SIGNED BY
For and on behalf of the LANDLORD
In the presence of
Jean Koh
Assistant Manager
/s/: SIGNED BY
For and on behalf of the TENANT
EX-10.2
Standard Lease Agreement
Between
Marina City Club Towers (Landlord)
And
Sara Hallitex Corporation (Tenant)
THIS LEASE is executed at Marina del Rey, California, this 18th day of August
1998, by and between M.C.C. L.P. as "Lessor" and Sara Hallitex Corporation as
"Lessee".
1. DESCRIPTION OF PREMISES
Lessor leases to Lessee and Lessee leases from Lessor, upon the covenants
and conditions set forth in this lease agreement, premises known as Apartment
102P of the building located at 4344 Promenade Way, Marina del Rey, California
(the "Premises"). Said building is part of the apartment complex known as the
Marina City Club Towers.
2. TERM
Except as otherwise provided in this Section, the term of this lease shall
commence on September 1, 1998 (the "Anticipated Lease Commencement Date"), or
upon occupancy of the Premises by Lessee, whichever is sooner, and shall expire
on August 31, 1999. If Lessor for any reason whatsoever cannot deliver
possession of the Premises to Lessee by the Anticipated Lease Commencement Date,
neither Lessor nor its employees or agents shall be liable for any damages
caused Lessee thereby. If Lessor's inability to deliver possession of the
Premises to Lessee is caused by Lessee, the lease term and Lessee's obligation
to pay rent shall nevertheless commence on the Anticipated Lease Commencement
Date. If Lessor's inability to deliver possession of the Premises is not caused
by Lessee, the lease term and Lessee's obligation to pay rent shall not commence
until ten (10) days after Lessor has given Lessee notice that the Premises are
ready for delivery to Lessee or upon occupancy of the Premises by Lessee,
whichever is sooner, and the lease term shall be extended by the number of days
elapsed between the Anticipated Lease Commencement Date and the expiration of
said ten-day period or the date of occupancy by Lessee; whichever is sooner;
provided, however, that if Lessor is unable to deliver possession of the
Premises within thirty (30) days after the Anticipated Lease Commencement Date
through no fault of Lessee, Lessee shall have the right to cancel this lease by
giving Lessor written notice to that effect at any time prior to the time Lessor
gives Lessee notice that the Premises are ready for Lessee's possession. If
Lessee so cancels, Lessor shall promptly refund to Lessee, without interests,
any rental and security deposit previously paid by Lessee, and neither party
shall have any further rights against, or obligations or liabilities to, the
other party under or pursuant to this lease or by reason of its cancellation.
3. RENT
Lessee agrees to pay monthly installments of rent in the amount of Two
Thousand, Seven Hundred and Fifty Dollars ($2,750), payable in advance in lawful
money of the United States on the first day of each calendar month during the
term of this lease, with no prior notice or demand and free of all claims or set
offs against Lessor; provided, however that if the term commences on other than
the first calendar day of the month, the rent for that month and for any
fractional part of the month at the end of the term shall be a proportionate
part of the monthly rent then in effect. The sum of $2,750 dollars shall be paid
to Lessor upon execution of this lease by Lessee, of which $2,750 dollars shall
be applied to rent for the September 1998 first month of the term. Lessee hereby
acknowledges that the late payment by Lessee to Lessor of rent will cause Lessor
to incur costs not contemplated by this lease, the exact amount of which will be
impracticable or extremely difficult to ascertain. Such costs include, without
limitation, processing and accounting charges and administrative expenses.
Accordingly, if any installment of rent is not received by Lessor in full within
five (5) days after its due date, Lessee shall pay to Lessor a late charge equal
<PAGE>
to six percent (6%) of such overdue amount or five dollars ($5) whichever is
greater. Lessee and Lessor hereby agree that such late charge represents a fair
and reasonable estimate of the cost Lessor will incur by reason of late payment
by Lessee and that the late charge is in addition to and not in lieu of any
interest charges Lessor may be entitled to under this lease or at law.
Acceptance of such late charge by Lessor shall in no event constitute a waiver
of Lessee's default with respect to such overdue amount, nor prevent Lessor from
exercising any of its other rights and remedies under this lease or at law.
4. SECURITY DEPOSIT
In addition to the sums set forth in Section 3 above, Lessee shall
deposit with Lessor upon the execution of this lease by Lessee the sum of
$2,750, to be held by Lessor, without interest, as a security deposit. Lessor
may claim of (withhold from) the security deposit such amounts as are reasonably
necessary to remedy Lessee's defaults in the payment of rent, to repair damages
to the Prices caused by Lessee, exclusive of ordinary wear and tear, or to clean
the Premises, if necessary, upon termination of Lessee's tenancy. If during the
lease term, all or any portion of the security deposit is claimed by Lessor to
remedy Lessee's defaults in the payment of rent or to repair damages, Lessee,
immediately upon Lessor's written notice, shall pay to Lessor an amount
sufficient to restore the security deposit to the sum set forth above and
Lessee's failure to do so within five (5) days thereafter shall constitute a
material breach of this lease. The security deposit, less any portion thereof
claimed by Lessor pursuant to this Section, shall be returned to Lessee within
fourteen (14) days after expiration or termination of Lessee's tenancy, provided
that Lessee has vacated the Premises, and Lessor will furnish to Lessee an
itemized written statement of the basis for, and the amount of, any security
received and the disposition of such security and shall return any remaining
portion of such security to Lessee.
5. HOLDING OVER
If Lessee remains in possession of the Premises after the expiration of
the term hereof with the consent of the Lessor, such holding over shall not
operate as a renewal of this lease but shall create a month-to-month tenancy,
terminable by either party upon thirty (30) days, written notice to the other,
on the same terms and conditions as contained herein, except that the monthly
rental for each month shall be Lessor's list rate in effect for the Premises as
of the first calendar day of said month.
6. RESTRICTIONS ON USE OF PROPERTY
Lessee hereby agrees: (a) to use the Premises as a private residence
only and not to conduct any business or commercial enterprise of any kind
therein or therefrom; (b) that only Lessee and Lessee's immediate family may
reside in the Premises, provided, however, that not more than the number of
persons hereinafter specified may reside therein; (c) if Lessee permits
temporary guests to occupy the Premises from time to time, (i) the total number
of person occupying or using the Premises at any one time shall not exceed the
number of persons hereafter specified, (ii) Lessee will notify Lessor of any
guests permitted to occupy the Premises in Lessee's absence, and (iii) any
conduct by a guest of Lessee which constitutes a breach or violation of the
terms of this lease shall be deemed to be a breach by Lessee of this lease; (d)
not to engage in or permit any act or neglect that would increase the cost of
insurance of the Premises or the complex in which the Premises are located; (e)
not to permit more than a total of two people to reside in the Premises at any
time if it is a one bedroom apartment, or four people if it is a two bedroom
apartment, or six people if it is a three bedroom apartment or penthouse, and
none of whom may be a sublessee, assignee, or renter (except Lessee). RULES AND
REGULATIONS GOVERNING TENANCY IN THE MARINA CITY CLUB TOWERS (the "Rules and
<PAGE>
Regulations") are attached hereto and made a part hereof. Lessee agrees to
comply with the Rules and Regulations, as they may from time to time be amended
or promulgated by Lessor, and any violation thereof shall constitute a material
breach of this lease. Nothing contained herein shall be deemed to impose any
liability upon Lessor for any violation of the Rules and Regulations, or breach
of any covenant or condition of any lease, by any tenant or occupant of the
Marina City Club Towers complex.
7. NOTICE OF MOVE-IN DATE; MOVE-OUT
Lessee shall comply with Lessor's move0in and move-out policy as in
effect at the time of move. Lessor reserves the right from time to time to
change its move-in and move-out policy. Lessor's present move-in and move-out
policy prohibits moves on Saturdays, Sundays, or holidays or at times other than
between the hours of 8:00am and 6:30pm, and requires advance notice and
arrangements fro a specific move-in and move-out date. Lessee shall assume full
responsibility for any damage to property or persons caused by Lessee or
Lessee's agents during the move-in or move-out process.
8. CARE OF PREMISES; LIABILITY; LIMITATION OF LIABILITY
(a) By taking possession of or occupying the Premises, Lessee
acknowledges that Lessee has carefully examined the Premises and the
fixtures and equipment contained herein and that same are in good
order and repair, except only to the extent that Lessor otherwise
agrees in writing. Except as provided by law, Lessee (i) shall
maintain the Premises and the fixtures and equipment in good
condition and repair at Lessee's expense, and upon expiration or
termination of this lease shall surrender the Premises and fixtures
and equipment in clean condition and in as good condition as
reasonable and careful use will permit; (ii) shall not alter,
remodel or redecorate the Premises without the prior written consent
of Lessor and any required consent of the Department of Beaches and
Harbors and the California Coastal Zone Conservation Commission, and
without first obtaining all other approvals and permits required by
any governmental agency, including the County Department of Building
and Safety. Any such approved work must be performed by a California
licensed contractor and must comply with all applicable laws, rules
and regulations. Lessee shall notify Lessor prior to commencing any
such approved work, shall indemnify and hold harmless Lessor from
and against all liens for labor and materials and against any damage
to property or persons caused by or resulting in any way from such
work.
(b) Lessee shall not commit or suffer any waste to be committed on the
Premises. Prior to the expiration or termination of this lease,
Lessee, unless Lessor otherwise agrees in writing, shall remove at
Lessee's expense all wall, floor or ceiling covering installed by or
for the account of Lessee, and Lessee shall pay for any damage to
the walls, floors, ceiling or other portions of the Premises caused
thereby.
(c) Lessor shall not be liable for any loss of or damage to any property
of Lessee or of Lessee's family members, guests, invitees, servants
or agents caused by (i) the malfunctioning, nonfunctioning, or
leaking of any plumbing, air conditioning, heating, gas, water,
steam, electrical or other system, piping, equipment or fixtures
located in the Premises or the building in which the Premises are
located; or (ii) water or moisture coming through the roof,
ceilings, floors, walls, windows, doors, skylights, or otherwise -
unless such loss or damage is caused by Lessor's willful injury or
sole gross or active negligence or breach of any duty imposed by
law.
(d) Lessor shall have no liability whatsoever to Lessee , or Lessee's
family members, guests, invitees, servants or agents for any loss,
damage or injury (including death) to their person or property
caused by theft, vandalism or other acts or neglect of third
persons, including without limitation, co-tenants or other occupants
of the Marina City Club Towers complex or the building in which the
Premises are located, unless Lessor is made responsible therefore by
specific provisions of the law.
<PAGE>
(e) As part of the consideration to Lessor for entering into this lease
and establishing the amount of the monthly rental to be paid by
Lessee, Lessee agrees that the Lessor's ability shall be limited as
set forth in this Section 8 and that Lessee shall assume or look to
such insurance as Lessee may wish to carry for, any such loss,
damage or injury (including death); provided, however, that nothing
herein contained is intended to create any third party beneficiary
right.
9. INDEMNIFICATION OF LESSOR BY LESSEE
Lessee shall indemnify and hold Lessor harmless from and against all
claims, costs, expenses (including reasonable attorney's fees), actions and
liabilities for personal injury to, or death of, any person or persons,
including, without limitation, Lessee or Lessee's family members, and damage to
or loss or destruction of property belonging to Lessee or any other person or
entity, including that belonging to or under the care, custody or control of
Lessor, caused by or resulting in any way from the acts or omissions of Lessee
or Lessee's family members, guests, invitees, servants or agents. The provisions
of this Section 9 does not waive any duty of Lessor to prevent personal injury,
death or property damage where the duty is imposed by law.
10. SUBLETTING AND ASSIGNMENT
Lessee shall not sublet the Premises or any part thereof or assign
Lessee's interest under this Lease whether such assignment be in whole or in
part or voluntarily or by operation of law. Any such subletting or assignment
shall be void and shall constitute a material breach and default under this
lease. Lessee hereby specifically acknowledges notice of Lessor's policy against
subletting or assignment. The acceptance of rent by Lessor from any person shall
not constitute and shall not be deemed to constitute a waiver by Lessor of the
provisions of this Section or of any other provision of this lease, not shall it
give any such person, other than Lessee, the right to possession or occupancy of
the Premises. Lessor shall have the right to assign, hypothecate or otherwise
dispose of all or any part of its rights and interests in, to and under this
lease to any person, firm, corporation or other entity.
11. UTILITIES AND SERVICE
Lessor shall provide Lessee with reasonable quantities of running
water at Lessor's expense. Electricity, telephone service and other utilities
are the responsibility of and shall be provided and paid for by the Lessee. Any
interruption or curtailment in any utility service, or in any services furnished
by Lessor, shall not entitle Lessee to any claim against Lessor, or to any
reduction in rent or delay in the payment thereof, nor shall the same constitute
a constructive or partial eviction, unless, with respect to services furnished
by Lessor, Lessor shall fail to take reasonable measures to restore such
service. Lessee acknowledges that it is Lessee's responsibility to have the
electric meter connected for the Premises prior to Lessee's move-in, and, in
addition it is Lessee's responsibility to have any phones installed.
Arrangements for cable for cable TV hookup and service, if desired by Lessee, as
well as billing and payment therefore, shall be handled by Lessee directly with
the cable TV company, Lessor shall have no liability whatsoever to Lessee with
respect to the cable TV service.
12. PARKING PRIVILEGES
Lessor, at no additional charge to Lessee, hereby grants to Lessee a
license during the term of this lease to park a motor vehicle within the parking
space or spaces designated by Lessor. Lessor reserves the right to change the
location of such space(s) from time to time, but will not do so arbitrarily. Not
more than one vehicle shall be parked in any space, the space(s) shall be used
solely for the parking of motor vehicles and shall not be for repairing
vehicles, no recreational vehicle may be parked therein and excessive grease/oil
drippings must be cleaned up immediately at Lessee's expense or the vehicle must
be parked off premises. Lessor's determination as to whether a vehicle is a
recreational-type shall be final. Lessee shall not sublet, assign, rent or make
<PAGE>
any charge to others for any parking space designated for Lessee's use. Lessee
and Lessee's family members, guests, invitees, servants and agents assume the
risk of damage or loss of any motor vehicle (or portion thereof of anything
therein or thereon) parked by them within said space(s) or parked elsewhere on
Lessor's property either with or without Lessor's approval. Lessee and Lessee's
family members, guests, invitees, servants and agents shall be liable for all
towing and other related expenses in the event any such person uses parking
space(s) or areas other than those designated by Lessor. The number of parking
spaces assigned to Lessee is________________(____________).
13. LESSOR RIGHT OF ENTRY
Lessor and its agents and employees may enter the Premises in case of
emergencies; to make necessary or agreed repairs, decorations, alterations or
improvements or supply necessary or agreed services; to exhibit the Premises to
prospective or actual tenants, purchasers, mortgagers, workman or contractors;
when Lessee has abandoned or surrendered the Premises; or pursuant to a court
order. Except in case of an emergency, when Lessee has abandoned or surrendered
the Premises, or if it is impractical to do so, Lessor shall give Lessee
reasonable notice of Lessor's intent to enter and, except in case of emergency
or when Lessee has abandoned or surrendered the Premises, will enter only during
normal business hours unless Lessee otherwise consents at the time of entry.
Twenty-Four hours shall be presumed to be reasonable notice in absence of
evidence to the contrary. Lessee shall not change locks on the entry door to the
Premises or add additional locks without the prior written approval of Lessor
and if such approval is granted, Lessee shall provide Lessor with keys, at
Lessee's expense, to open such new or additional locks.
14. DAMAGE OR DESTRUCTION OF PREMISES
If the Premises are destroyed or rendered unlivable by fire or other
casualty not caused by the negligent or willful act or omission of Lessee, or
Lessee's family members, guests, invitees, servants or agents, this lease shall
terminate effective as of the date of such casualties except for the purpose of
enforcing the rights that then may have accrued hereunder. If only a part of the
Premises is destroyed or rendered unlivable by fire or other casualty not caused
by the negligent or willful act or omission of Lessee, or Lessee's fami8ly
members, guests, invitees, servants or agents, and the remainder of the Premises
are tenantable, Lessor shall with reasonable dispatch proceed to repair such
damage or destruction, and this lease shall remain in full force and effect;
provided, however, that rent attributable to the period of repair shall be
abated in the proportion which the damaged or destroyed part bears to the whole
of the Premises. Lessee shall not be entitled to any other compensation by
reason of such damage or destruction or the repairs required thereby.
15. EMINENT DOMAIN
If the Premises shall be taken by eminent domain, this lease shall
terminate effective as of the date possession of the Premises is taken by the
condemning authority and the rent shall be a portion as of said date. No portion
of any judgment or award rendered in any eminent domain proceedings shall belong
to Lessee.
16. DEFAULT
The occurrence of either or both of the following events shall constitute
a default and breach by Lessee hereunder;
(a) the failure by Lessee to make any payment of rent or any other
payment required to made by Lessee hereunder, has in when due, where
such failure shall continue for a period of (3) days after writt4en
notice thereof from Lessor to Lessee; or
(b) The failure by Lessee to observe or perform covenant, agreement or
obligation of this lease, express or implied, to be observed or
performed by Lessee, other than as described in sub paragraph (a)
above.
<PAGE>
17. REMEDIES
In the event of any such default or breach of Lessee, Lessor may at any
time thereafter, in addition to pursing any other remedy now or hereafter
available to Lessor under the laws or judicial decisions: Terminate Lessee's
right to possession of the Premises by any lawful means, in which case this
lease shall terminate and Lessee shall immediately surrender possession to the
Lessor. In such event, Lessor shall be entitled to recover from Lessee all
damages accrued by Lessor by reason of Lessee default including, but not limited
to the cost of recovering possession of the Premises, expenses of reletting, any
real estate commissions actually paid, and, in accordance with section 1951.2 of
the California Civil Code, the worth at the time of award of : (I) the unpaid
rent which had been earned at the time oft termination, (II) Then amount by
which the unpaid rent which would have been earned after termination until the
time e of award exceeds the amount of such rental loss that Lessee proves could
have been reasonably avoided, and (III) the amount by which the unpaid rent for
the balance of the term after the time of award exceeds the amount of such
rental loss that Lessee proves could be reasonably avoided together with any
other amount necessary to compensate Lessor for all the detriment approximately
caused by Lessee's failure to perform Lessee's obligation to be hereunder or
which in the ordinary course of things would be likely to be therefrom.
18. INTEREST CHARGES
Any amount due from Lessee pursuant to this lease which is not paid when
due shall bear interest at the rate of ten percent (10%) per annum from the date
due until paid in full. Payment of, or the right of Lessor to collect such
interest shall not excuse or cure any default by Lessee hereunder.
19. EXPENSE OF LITIGATION
If either party incurs any expense, including reasonable attorneys' fees,
in connection with any action or proceeding instituted by either party by reason
of any default or alleged default of the other party hereunder, the party
prevailing in such action or proceeding shall be entitled to recover its
reasonable expenses and attorneys' fees from the other party in an amount
determined by the court, whether or not such action goes to final judgment. In
the event of settlement or final judgment in which neither party is awarded all
of the relief prayed for, the prevailing party as determined by the court shall
be entitled to recover from the other party reasonable expenses and attorneys'
fees in the amount determined by the court.
20. SUBORDINATION
This lease, at Lessor's option, shall be subordinate to any ground lease,
facilities lease. mortgage, deed of trust, or any other hypothecation for
security now or hereafter placed upon the real property of which the Premises
are apart. Lessee shall execute any documents required to effectuate such
subordination and a failure to do so within (10) days after written demand shall
thereby make, constitute, an irrevocably appoint Lessor as Lessee's
attorney-in-fact and in Lessee's place and stead, to do so.
21. NOTICES
Any notice required or permitted hereunder shall be in writing and may be
served personally or by mail. If served by mail it shall be addressed, if
directed to Lessor, to Lessor at:
________________________________________________________________________________
________________________________________________________
(Attention: Leasing Department) or such other address as Lessor may from time to
time designate in writing to Lessee; or, if directed to Lessee, to Lessee at the
Premises, except that notice is given by Lessor pursuant to Section 2 hereof
shall be sent to Lessee either at Lessee's residential or business address as
shown on Lessee's lease application. Any notice given by mail shall be deemed
effective forty-eight (48) hours after deposit in the United States mail
registered or certified, postage pre-paid and addressed as specified above.
<PAGE>
23. MISCELLANEOUS
(a) Lessor's consent to or approval of any act of Lessee requiring
Lessor'[s consent or approval shall not be deemed to render
unnecessary the obtaining of Lessor's consent to or approval of any
subsequent act by Lessee, whether or not similar to the act so
consented to or approved. The waiver by Lessor of any breach of any
term covenant, or condition of this lease shall not be deemed to be
a waiver of such term, covenant or condition or any subsequent
breach of the same term or any other term, covenant or condition of
this lease. The subsequent acceptance of rent by Lessor shall not be
deemed to be a waiver of any preceding default or breach by Lessee
under any term, covenant, or condition of this lease other than the
failure of Lessee to pay the particular rental so accepted,
regardless of Lessor's knowledge of such proceeding default or
breach at the time of acceptance of such rent.
(b) The provisions of this lease shall be deemed independent and
severable, and the invalidity or partial invalidity or
enforceability of any provision, clause, sentence, or phrase hereof
shall not affect the validity of remaining provisions.
(c) Time is of the essence of this lease.
(d) Each provision of this lease to be performed by Lessee shall be
deemed both a covenant and a condition.
(e) Each and all of the terms, covenants and agreements contained herein
shall be binding upon and shall inure to the benefit of the
respective heirs, executors, administrators and successors of each
of the parties hereto and the assignees of Lessor. If there be more
than one Lessee hereunder, the obligations of each shall be joint
and several.
(f) This lease, together with any Riders attached hereto and bearing
even date herewith and signed by Lessee and Lessor, constitutes the
entire agreement between the parties with respect to the subject t
matter hereof. Lessee has not relied on any statement or
representation of Lessor, its agents, officers, or employees, except
as herein specifically contained. This agreement may not be modified
except by aw written instrument duly executed by the parties hereto
or by their authorized agents or officers.
(g) The Premises are part of certain property that is leased from the
county of Los Angeles (the " County Lease"), and the within Standard
Apartment Lease Agreement, although not specifically so designated
herein is a sublease under the County Lease. Lessor is the managing
agent for the Lessee under the County Lease of the premises and the
property of which it forms apart. The County has approved a plan
pursuant to which specific residential units including the Premises
may be subleased for periods in excess of one year. However, the
County Lease requires that any such sublease (including the within
Standard Apartment Lease Agreement if it is for a term in excess of
one year) shall specifically provide that the County shall have the
absolute power as its sole election to cancel such sublease at any
time. Therefore, The County shall have the absolute power at its
sole election to cancel the within Standard Apartment Lease
Agreement at any time if it is for a term in excess of one year.
Neither the Lessee under the County Lease nor Lessor, nor their
respective successors, assignees, officers, directors or employees
shall have any responsibility or liability whatsoever to Lessee for
any loss, costs, expenses or damages which are incurred or sustained
by Lessee as a result or consequence of any such cancellation by the
County.
(h) This lease may be executed in several original counterparts, all of
which shall be deemed to be one original, including any riders
attached thereto.
<PAGE>
Lessee's attention is directed to Section 5 of this lease for provisions
relating to the terms and conditions, including rent, hat will be applicable in
the event Lessee remains in possession of the Premises after the expiation of
the term hereof with Lessor's consent.
Lessor: Lessee:
By:/s/ MCC L.P. By:/s/ Sara Hallitex Corporation
Sara Hallitex Corporation
Rent Checks to:
5757 Wilshire Blvd. Suite 5
Los Angeles, CA 90036
EX-10.3
Executive Mangement Agreement
Between
SolutionNet International, Inc.
And
Sara Hallitex Corporation
This Executive Mangement Agreement ("Agreement") is executed at Marina del Rey,
California, this 1st of April 1999, by and between SolutionNet International,
Inc. ("SolutionNet") and Sara Hallitex Corporation ("Sara Hallitex").
Terms and Conditions
1. Sara Hallitex is currently subject to a Standard Lease Agreement with Marina
City Club Towers relating to the property located at 4344 Promenade Way, Suite
102P, Marina del Rey, California, 90292.
2. Sara Hallitex agrees that SolutionNet shall be permitted to use a portion of
the premises located at 4344 Promenade Way, Suite 102P, Marina Del Rey,
California for the following business purposes:
(i) administrative and secretarial services, accounting and legal
services, public relations, and web-site hosting.
3. SolutionNet agrees to make monthly installments in the amount of Two Thousand
and 00/100 Dollars ( $2,000.00), payable in advance on the first day of each
calendar month.
4. The term of this Agreement shall commence on April 1st, 1999 and shall
continue for an indefinite amount of time, on a month-to-month basis.
By: /s/ By: /s/
Sara Hallitex Corporation SolutionNet International, Inc.
EX-10.4
SolutionNet International, Inc.
Executive Employment Agreement
This Executive Employment Agreement ("the Agreement") is made and entered into
this 1st day of March 1999, by and between Suresh Venkatachari (hereinafter
referred to as "Employee"), and SolutionNet International, Inc., a Minnesota
corporation, (hereinafter referred to as "Company") with reference to the
following facts and objectives:
Recitals
A. Employee has been providing services as the Chief Executive Officer and
Director and related activities as an Employee of the Company.
B. Company is a corporation organized and in good standing under the laws of the
State Minnesota and desires to employ Employee under the terms and conditions of
this Agreement.
Now, therefore, in reliance on the foregoing Recitals, and in consideration of
the mutual promises and covenants contained herein, Company and Employee hereby
agree as follows:
1. Employment. During the term hereof, Company hereby employs Employee and
Employee hereby accepts and agrees to furnish Company with all the Employee's
skills and abilities under the designation as Chairman of the Board, President,
and Chief Executive Officer of the Company.
2. Duties. During the term of the Agreement, Employee shall devote all of
Employee's services, best efforts, and all reasonable work time (excluding
vacation and personal time) toward his employment with the Company, to further
Company's interests and to perform diligently and in good faith such duties as
are or may be, from time to time, required by Company in connection with his
employment hereunder. The Employee shall, at all times, comply with the policies
and procedures promulgated by the Company. The making of passive and personal
investments and conducting private business affairs not inconsistent with the
Agreement by the Employee shall not be prohibited under this Agreement.
3. Company's Authority. Employee shall perform in proper form orders,
directions, and policies by the Company to the Employee periodically not
inconsistent with the provisions of this Agreement. Employee agrees to accept
the decisions of the Company in the establishment and amendment of working
facilities, conditions, not otherwise agreed upon herein.
4. Term. The term of this Agreement shall begin on March 1, 1999 (the "Effective
Date") and shall be for a period of five (5) years, with automatic renewal terms
of equal length subject to the Company's prior written notification of 30 days
before the expiration of the original term of its decision not to renew this
Agreement, beginning on the Effective Date of this Agreement.
5. Compensation.
(a) Base Salary. In consideration of the faithful performance of the
above duties and responsibilities to and on behalf of the Company, the Company
agrees to pay the Employee during the period of Employee's employment with
Company a base annual salary of $100,000 (the "Base Salary"). The Base Salary
shall be due and payable semi-monthly or on a more frequent basis and reviewed
<PAGE>
at the Employee's anniversary date by the Board of Directors of Company;
provided, however, that such Base Salary shall in any event be increased as of
_________ of each calendar year at a rate greater than the percentage increase
in the National Consumer Price Index, as reported by the United States
Department of Labor for the immediately preceding calendar year, or as otherwise
determined by the Board of Directors (or Compensation Committee, if any) of the
Company.
(b) Bonus. As further compensation, the Company may pay Employee such
bonus or bonuses and stock options as may, from time to time, be awarded or
granted to the Employee by the Company exercising its sole and absolute
discretion.
(c) Employment Taxes. Unless otherwise provided by law, all
compensation paid to the Employee shall be subject to the customary withholding
tax, other employment taxes and withholding amounts as required with respect to
compensation paid by the Company to the Employee.
6. Health Insurance. The Company shall provide, at its expense, complete family
health insurance coverage for the Employee and his family. The Employee will be
eligible to participate in any other benefit program or plan offered to
similarly situated employees, subject to any limitations or restrictions
associated with said program or plan (such as waiting periods, vesting
schedules, and pre-existing condition limitations).
7. Business Expense. Business Expense of the Employee incurred in the
performance of his duties, including the costs of attending meetings, promotion,
and entertainment expenses shall be borne by the Company and reimbursable to
Employee upon presentation of appropriate documentation by the Employee to the
Company and compliance with Company's established practices and procedures.
8. Other Company Benefits. Employee shall be entitled to participate in all
employee benefit programs made available to Company's executives or salaried
employees generally, as such programs may be offered from time to time.
9. Absences. The Employee shall be entitled to 2 weeks away from work for paid
vacation. Company may, from time to time, allow Employee additional time away
from employment in the Company's sole discretion. The parties acknowledge that
such exercise of discretion in one event shall not create a right to also be
permitted reasonable numbers of days away from work for sick days or leaves of
absences.
10. Death of Disability. Except as otherwise provided in this paragraph 10, in
the event of Employee's death or "Disability" (as hereinafter defined) occurring
during the term of this Agreement, Employee or his estate, as the case may be,
shall be entitled to: (i) that portion of any unpaid salary together with the
benefits accrued and earned by Employee hereunder up to and including the last
day of the month in which the death or disability occurs, as the case may be,
(ii) any death or disability-related benefits pursuant to the insurance program
set forth above and any employee benefit plan to which Employee or his
beneficiary may be entitled hereunder; (iii) any unpaid Bonus Amount earned by
the Employee for the prior fiscal year of the Company and approved by Company if
such approval is required hereunder shall be prorated based upon the length of
Employee's service during the applicable year over 365 days; and (iv) a payment
equal to one year's Base Salary then in effect for Employee if the remaining
term of this Agreement is less than one year, or, if more than one year remains
under the Agreement, the Estate may elect to continue to receive the payments
due under the Agreement specified as salary. A "Disability" shall be deemed to
have occurred if Employee shall have been unable to discharge his normal duties
and job description under this Agreement for a period of ninety (90) days in the
aggregate during any consecutive four (4) month period, his employment shall
thereupon terminate at the end of the calendar month in which such period ends.
<PAGE>
11. Termination. Employee's employment with the Company shall be terminated if
any of the following occur:
(a) At the expiration of the term of this Agreement if Company gives
written notice of its intention not to renew this Agreement one hundred eighty
(180) days prior to the expiration of the term;
(a) On the death of the Employee;
(b) Whenever the Employee shall fail to cure or rectify a material
breach of any of the terms, covenants and conditions of this Agreement within
thirty (30) days after Employee receives written notice from the Company to cure
such default (except when terminated for those causes that allow immediate
termination as described in Section 12(b));
(c) For "Cause" as defined in Paragraph 14 below; or
(d) Upon the Disability of the Employee as set forth in Paragraph 12
above.
12. Definition of "Cause"
(a) For purposes of this Agreement, the term "Cause" shall
include:
(i) incompetence, failure, inability, or refusal to
perform assigned duties;
(ii) gross negligence, willful misconduct or breach of
fiduciary duty;
(iii) being under the influence of, or use, sale,
distribution, or possession of unauthorized or
illegal drugs or intoxicating beverages while on duty
or on the Company's or a subsidiary's premises;
(iv) willful destruction or defacement of Company's or a
subsidiary's, a customer's, or an employee's
property;
(v) unauthorized disclosure of confidential information;
and
(vi) continued and unexplained absences from work.
(b) For the purposes of this Agreement, Employee shall be
immediately terminated without notice for the following
Causes:
(i) unauthorized entry into Company's secured non-public
areas;
(ii) falsifying or altering the Company's or subsidiary's
records;
(iii) theft, embezzlement, fraud or forgery
<PAGE>
(iv) any act which results or was intended to result in
significant gain or personal enrichment to the
Employee at the Company's expense.
13. Confidential and Secret Information/Company Property. Employee acknowledges
that he will have access to items used in the Company's business which the
Company deems to be secret, confidential, unique and valuable; were developed by
Company at a great cost and over a long period of time; and that disclosure of
any of these items to anyone other than Company's officers, directors, agents or
authorized employees will cause Company irreparable injury. Employee agrees that
upon termination of this Agreement, he will return any and all documentary
information or written documents to Company. Such items and information shall be
held in strict confidence by the Employee and shall not be revealed to any third
party unless otherwise required by law. All other material and property that may
be furnished to employee during the course of his employment with the Company
such as customer lists, customer tracking, automobiles, books and records shall
be and remain the Company's property and shall be returned to the Company at any
time upon demand.
14. Severance Pay. In the event Company terminates Employee's employment
hereunder, Company shall pay to Employee a sum equivalent to the balance of the
salary due to be paid under this Agreement or 300% of the Base Salary (excluding
bonuses and other compensation), whichever is greater.
15. Change of Control. Immediately upon a Change of Control, if Executive's
employment with the Company is terminated within twenty-four (24) months
following such Change of Control, either without cause or pursuant to this
Agreement, in addition to any other compensation or benefits payable pursuant to
this Agreement, Executive shall be entitled to: Payment in cash equal to four
times his Base Salary, plus immediate vesting of 100% of all Employee's stock;
stock options or other awards to the Executive under any of the Company's
incentive plans. The Executive's rights upon a Change of Control to benefit
under programs, plans and policies of the Company shall be determined according
to the terms and provisions of such programs, plans and policies.
16. Arbitration. Any and all disputes, controversies or claims arising under or
in conjunction with this Agreement other than the right to injunctive relief as
set forth in Paragraph 12 above, including without limitation, the general
validity or enforceability of this Agreement, shall be governed by the laws of
the State of California, without giving effect to its conflict of law provisions
and shall be submitted to binding arbitration rules of the American Arbitration
Association conducted in Los Angeles County, California. All expenses of any
arbitration shall be borne equally by the parties. The award to the arbitrator,
including any award of attorney's fees, shall be final and enforceable in the
courts of California. All costs of enforcing a judgment following the
arbitration are to be borne by the losing party. In reaching his or her
decision, the arbitrator shall have no authority to change or modify any
provision of this Agreement. Each party shall have the right to discovery in
accordance with the California Rules of Civil Procedure.
17. Modification. This Agreement shall not be modified, amended, supplemented,
or extended except by written consent executed by both the Company and Employee,
except as expressly provided herein to the contrary.
18. Assignment. Neither the Employee nor the Company shall voluntarily
subcontract or assign any of their respective rights, duties, or obligations
hereunder without first obtaining the other party's written consent.
<PAGE>
19. Notice. Except as expressly provided to the contrary herein, any notices or
other communications required, permitted, or made necessary by the terms of this
Agreement may be given to the respective representatives of the Company and the
employee designated herein by written communication. Written notices shall be
personally delivered to the Company's representatives or the Employee as
appropriate or sent by the United States registered or certified mail, postage
prepaid, return receipt requested, addressed to the Company to its principal
corporate office and to the Employee at the Employee's residential address.
Notices sent by mail shall be deemed made, delivered, and received on the date
of the United States' postmark thereon. Upon receipt of notice Employee shall
have thirty (30) days to cure or rectify all items described in the Notice.
Federal Express and similar services shall be considered personal service or
delivery. Personal delivery of written notice hereunder may also be given by
facsimile or other electronic transmission (provided that the sender of a
telephone facsimile or other electronic transmission has received a facsimile
confirmation report showing the number to which the facsimile was transmitted).
Either party may change its address for notice by giving notice of such change
to the other party in the manner specified in this section.
20. No Waiver. No waiver of any breach or default in any of the terms and
provisions of this Agreement shall be deemed to constitute or be construed as a
waiver of the subsequent breach of default of the same, similar, or dissimilar
nature.
21. Choice of Law and Invalidity. The validity, construction, performance and
effect of this Agreement shall be governed by the laws of the State of
California. In case any one or more of the provisions contained herein shall for
any reason be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other
provisions of this Agreement, but this Agreement shall be construed as if such
invalid, illegal, or unenforceable provisions contained herein shall, for any
reason, be held to be excessively broad to time, duration, geographical scope,
activity or subject, said provision shall be construed by limiting and reducing
it so as to be enforceable to the extent compatible with the then applicable
law, it being the intent of the parties hereto to give the maximum permitted
effect to the restrictions set forth herein.
22. Interpretation. If necessary to give effect to the terms and provisions
hereof, the masculine, feminine, and neuter gender in the singular and plural
number shall each be deemed to include the other whenever the context to
indicates. To the unenforceable, it is agreed that the essential terms of this
Agreement shall be and remain enforceable against the parties.
23. Headings. Headings to this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define or
limit the scope, extent, or intent of this Agreement or any provision hereof.
24. Counterparts. This Agreement may be executed in any number of counterparts,
any of which may be constituted in the agreement between the parties hereto.
25. Time. Time is of the essence for all obligations contemplated in this
Agreement.
26. Entire Agreement. This Agreement, and any schedules and exhibits attached
thereto contain and set forth the entire Agreement between the parties with
respect to the subject matter hereof. All prior negotiations and agreements
between the parties with respect to the scope of this Agreement are mutually
rescinded, replaced, and superseded hereby.
<PAGE>
27. Authority. The Company warrants and represents that it is a corporation
organized and existing under the laws of the State of Minnesota, that the
undersigned is authorized to execute this Agreement on behalf of the Company;
that the employment of the Employee under the terms of this Agreement has been
duly authorized by the Company.
28. Inurement. Each covenant and condition in this Agreement shall be binding
on, and shall inure solely to the benefit of the parties to it, their respective
heirs, legal representatives, successors, and assigns.
32. Presumption. This Agreement or any section of this Agreement shall not be
construed against any party due to the fact that the Agreement or any section of
it was drafted by said party.
In Witness Whereof, the parties to this Employment Agreement have duly executed
it on the day and year first above written.
Employee: Company:
/s/Suresh Venkatachari
- ----------------------
Suresh Venkatachari
SolutionNet International, Inc.,
a Minnesota Corporation
EX-10.5
SolutionNet International, Inc.
Executive Employment Agreement
This Executive Employment Agreement ("the Agreement") is made and entered into
this 1st day of March 1999, by and between Garrett K. Krause (hereinafter
referred to as "Employee"), and SolutionNet International, Inc., a Minnesota
corporation, (hereinafter referred to as "Company") with reference to the
following facts and objectives:
Recitals
A. Employee has been providing services as the Director of the Board and
Vice-President and related activities as an Employee of the Company.
B. Company is a corporation organized and in good standing under the laws of the
State Minnesota and desires to employ Employee under the terms and conditions of
this Agreement.
Now, therefore, in reliance on the foregoing Recitals, and in consideration of
the mutual promises and covenants contained herein, Company and Employee hereby
agree as follows:
1. Employment. During the term hereof, Company hereby employs Employee and
Employee hereby accepts and agrees to furnish Company with all the Employee's
skills and abilities under the designation as Chairman of the Board, President,
and Chief Executive Officer of the Company.
2. Duties. During the term of the Agreement, Employee shall devote all of
Employee's services, best efforts, and all reasonable work time (excluding
vacation and personal time) toward his employment with the Company, to further
Company's interests and to perform diligently and in good faith such duties as
are or may be, from time to time, required by Company in connection with his
employment hereunder. The Employee shall, at all times, comply with the policies
and procedures promulgated by the Company. The making of passive and personal
investments and conducting private business affairs not inconsistent with the
Agreement by the Employee shall not be prohibited under this Agreement.
3. Company's Authority. Employee shall perform in proper form orders,
directions, and policies by the Company to the Employee periodically not
inconsistent with the provisions of this Agreement. Employee agrees to accept
the decisions of the Company in the establishment and amendment of working
facilities, conditions, not otherwise agreed upon herein.
4. Term. The term of this Agreement shall begin on March 1, 1999 (the "Effective
Date") and shall be for a period of five (5) years, with automatic renewal terms
of equal length subject to the Company's prior written notification of 30 days
before the expiration of the original term of its decision not to renew this
Agreement, beginning on the Effective Date of this Agreement.
5. Compensation.
(a) Base Salary. In consideration of the faithful performance of the
above duties and responsibilities to and on behalf of the Company, the Company
agrees to pay the Employee during the period of Employee's employment with
Company a base annual salary of $ 50,000, (the "Base Salary"). The Base Salary
shall be due and payable semi-monthly or on a more frequent basis and reviewed
at the Employee's anniversary date by the Board of Directors of Company;
<PAGE>
provided, however, that such Base Salary shall in any event be increased as of
________ of each calendar year at a rate greater than the percentage increase in
the National Consumer Price Index, as reported by the United States Department
of Labor for the immediately preceding calendar year, or as otherwise determined
by the Board of Directors (or Compensation Committee, if any) of the Company.
(b) Bonus. As further compensation, the Company may pay Employee such
bonus or bonuses and stock options as may, from time to time, be awarded or
granted to the Employee by the Company exercising its sole and absolute
discretion.
(c) Employment Taxes. Unless otherwise provided by law, all
compensation paid to the Employee shall be subject to the customary withholding
tax, other employment taxes and withholding amounts as required with respect to
compensation paid by the Company to the Employee.
6. Health Insurance. The Company shall provide, at its expense, complete family
health insurance coverage for the Employee and his family. The Employee will be
eligible to participate in any other benefit program or plan offered to
similarly situated employees, subject to any limitations or restrictions
associated with said program or plan (such as waiting periods, vesting
schedules, and pre-existing condition limitations).
7. Business Expense. Business Expense of the Employee incurred in the
performance of his duties, including the costs of attending meetings, promotion,
and entertainment expenses shall be borne by the Company and reimbursable to
Employee upon presentation of appropriate documentation by the Employee to the
Company and compliance with Company's established practices and procedures.
8. Other Company Benefits. Employee shall be entitled to participate in all
employee benefit programs made available to Company's executives or salaried
employees generally, as such programs may be offered from time to time.
9. Absences. The Employee shall be entitled to 2 weeks away from work for paid
vacation. Company may, from time to time, allow Employee additional time away
from employment in the Company's sole discretion. The parties acknowledge that
such exercise of discretion in one event shall not create a right to also be
permitted reasonable numbers of days away from work for sick days or leaves of
absences.
10. Death of Disability. Except as otherwise provided in this paragraph 10, in
the event of Employee's death or "Disability" (as hereinafter defined) occurring
during the term of this Agreement, Employee or his estate, as the case may be,
shall be entitled to: (i) that portion of any unpaid salary together with the
benefits accrued and earned by Employee hereunder up to and including the last
day of the month in which the death or disability occurs, as the case may be,
(ii) any death or disability-related benefits pursuant to the insurance program
set forth above and any employee benefit plan to which Employee or his
beneficiary may be entitled hereunder; (iii) any unpaid Bonus Amount earned by
the Employee for the prior fiscal year of the Company and approved by Company if
such approval is required hereunder shall be prorated based upon the length of
Employee's service during the applicable year over 365 days; and (iv) a payment
equal to one year's Base Salary then in effect for Employee if the remaining
term of this Agreement is less than one year, or, if more than one year remains
under the Agreement, the Estate may elect to continue to receive the payments
due under the Agreement specified as salary. A "Disability" shall be deemed to
have occurred if Employee shall have been unable to discharge his normal duties
and job description under this Agreement for a period of ninety (90) days in the
aggregate during any consecutive four (4) month period, his employment shall
thereupon terminate at the end of the calendar month in which such period ends.
<PAGE>
11. Termination. Employee's employment with the Company shall be terminated if
any of the following occur:
(a) At the expiration of the term of this Agreement if Company gives
written notice of its intention not to renew this Agreement one hundred eighty
(180) days prior to the expiration of the term;
(e) On the death of the Employee;
(f) Whenever the Employee shall fail to cure or rectify a material
breach of any of the terms, covenants and conditions of this Agreement within
thirty (30) days after Employee receives written notice from the Company to cure
such default (except when terminated for those causes that allow immediate
termination as described in Section 12(b));
(g) For "Cause" as defined in Paragraph 14 below; or
(h) Upon the Disability of the Employee as set forth in Paragraph 12
above.
12. Definition of "Cause"
(c) For purposes of this Agreement, the term "Cause" shall
include:
(i) incompetence, failure, inability, or refusal to
perform assigned duties;
(ii) gross negligence, willful misconduct or breach of
fiduciary duty;
(iii) being under the influence of, or use, sale,
distribution, or possession of unauthorized or
illegal drugs or intoxicating beverages while on duty
or on the Company's or a subsidiary's premises;
(iv) willful destruction or defacement of Company's or a
subsidiary's, a customer's, or an employee's
property;
(v) unauthorized disclosure of confidential information;
and
(vi) continued and unexplained absences from work.
(d) For the purposes of this Agreement, Employee shall be
immediately terminated without notice for the following
Causes:
(v) unauthorized entry into Company's secured non-public
areas;
(vi) falsifying or altering the Company's or subsidiary's
records;
(vii) theft, embezzlement, fraud or forgery
(viii) any act which results or was intended to result in
significant gain or personal enrichment to the
Employee at the Company's expense.
<PAGE>
13. Confidential and Secret Information/Company Property. Employee acknowledges
that he will have access to items used in the Company's business which the
Company deems to be secret, confidential, unique and valuable; were developed by
Company at a great cost and over a long period of time; and that disclosure of
any of these items to anyone other than Company's officers, directors, agents or
authorized employees will cause Company irreparable injury. Employee agrees that
upon termination of this Agreement, he will return any and all documentary
information or written documents to Company. Such items and information shall be
held in strict confidence by the Employee and shall not be revealed to any third
party unless otherwise required by law. All other material and property that may
be furnished to employee during the course of his employment with the Company
such as customer lists, customer tracking, automobiles, books and records shall
be and remain the Company's property and shall be returned to the Company at any
time upon demand.
14. Severance Pay. In the event Company terminates Employee's employment
hereunder, Company shall pay to Employee a sum equivalent to the balance of the
salary due to be paid under this Agreement or 300% of the Base Salary (excluding
bonuses and other compensation), whichever is greater.
15. Change of Control. Immediately upon a Change of Control, if Executive's
employment with the Company is terminated within twenty-four (24) months
following such Change of Control, either without cause or pursuant to this
Agreement, in addition to any other compensation or benefits payable pursuant to
this Agreement, Executive shall be entitled to: Payment in cash equal to four
times his Base Salary, plus immediate vesting of 100% of all Employee's stock;
stock options or other awards to the Executive under any of the Company's
incentive plans. The Executive's rights upon a Change of Control to benefit
under programs, plans and policies of the Company shall be determined according
to the terms and provisions of such programs, plans and policies.
16. Arbitration. Any and all disputes, controversies or claims arising under or
in conjunction with this Agreement other than the right to injunctive relief as
set forth in Paragraph 12 above, including without limitation, the general
validity or enforceability of this Agreement, shall be governed by the laws of
the State of California, without giving effect to its conflict of law provisions
and shall be submitted to binding arbitration rules of the American Arbitration
Association conducted in Los Angeles County, California. All expenses of any
arbitration shall be borne equally by the parties. The award to the arbitrator,
including any award of attorney's fees, shall be final and enforceable in the
courts of California. All costs of enforcing a judgment following the
arbitration are to be borne by the losing party. In reaching his or her
decision, the arbitrator shall have no authority to change or modify any
provision of this Agreement. Each party shall have the right to discovery in
accordance with the California Rules of Civil Procedure.
17. Modification. This Agreement shall not be modified, amended, supplemented,
or extended except by written consent executed by both the Company and Employee,
except as expressly provided herein to the contrary.
18. Assignment. Neither the Employee nor the Company shall voluntarily
subcontract or assign any of their respective rights, duties, or obligations
hereunder without first obtaining the other party's written consent.
<PAGE>
19. Notice. Except as expressly provided to the contrary herein, any notices or
other communications required, permitted, or made necessary by the terms of this
Agreement may be given to the respective representatives of the Company and the
employee designated herein by written communication. Written notices shall be
personally delivered to the Company's representatives or the Employee as
appropriate or sent by the United States registered or certified mail, postage
prepaid, return receipt requested, addressed to the Company to its principal
corporate office and to the Employee at the Employee's residential address.
Notices sent by mail shall be deemed made, delivered, and received on the date
of the United States' postmark thereon. Upon receipt of notice Employee shall
have thirty (30) days to cure or rectify all items described in the Notice.
Federal Express and similar services shall be considered personal service or
delivery. Personal delivery of written notice hereunder may also be given by
facsimile or other electronic transmission (provided that the sender of a
telephone facsimile or other electronic transmission has received a facsimile
confirmation report showing the number to which the facsimile was transmitted).
Either party may change its address for notice by giving notice of such change
to the other party in the manner specified in this section.
20. No Waiver. No waiver of any breach or default in any of the terms and
provisions of this Agreement shall be deemed to constitute or be construed as a
waiver of the subsequent breach of default of the same, similar, or dissimilar
nature.
21. Choice of Law and Invalidity. The validity, construction, performance and
effect of this Agreement shall be governed by the laws of the State of
California. In case any one or more of the provisions contained herein shall for
any reason be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other
provisions of this Agreement, but this Agreement shall be construed as if such
invalid, illegal, or unenforceable provisions contained herein shall, for any
reason, be held to be excessively broad to time, duration, geographical scope,
activity or subject, said provision shall be construed by limiting and reducing
it so as to be enforceable to the extent compatible with the then applicable
law, it being the intent of the parties hereto to give the maximum permitted
effect to the restrictions set forth herein.
22. Interpretation. If necessary to give effect to the terms and provisions
hereof, the masculine, feminine, and neuter gender in the singular and plural
number shall each be deemed to include the other whenever the context to
indicates. To the unenforceable, it is agreed that the essential terms of this
Agreement shall be and remain enforceable against the parties.
23. Headings. Headings to this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define or
limit the scope, extent, or intent of this Agreement or any provision hereof.
24. Counterparts. This Agreement may be executed in any number of counterparts,
any of which may be constituted in the agreement between the parties hereto.
25. Time. Time is of the essence for all obligations contemplated in this
Agreement.
26. Entire Agreement. This Agreement, and any schedules and exhibits attached
thereto contain and set forth the entire Agreement between the parties with
respect to the subject matter hereof. All prior negotiations and agreements
between the parties with respect to the scope of this Agreement are mutually
rescinded, replaced, and superseded hereby.
<PAGE>
27. Authority. The Company warrants and represents that it is a corporation
organized and existing under the laws of the State of Minnesota, that the
undersigned is authorized to execute this Agreement on behalf of the Company;
that the employment of the Employee under the terms of this Agreement has been
duly authorized by the Company.
28. Inurement. Each covenant and condition in this Agreement shall be binding
on, and shall inure solely to the benefit of the parties to it, their respective
heirs, legal representatives, successors, and assigns.
32. Presumption. This Agreement or any section of this Agreement shall not be
construed against any party due to the fact that the Agreement or any section of
it was drafted by said party.
In Witness Whereof, the parties to this Employment Agreement have duly executed
it on the day and year first above written.
Employee: Company:
/s/ Garrett K. Krause
- ---------------------
Garrett K. Krause
SolutionNet International, Inc.,
a Minnesota Corporation
EX-10.6
SolutionNet International, Inc.
Executive Employment Agreement
This Executive Employment Agreement ("the Agreement") is made and entered into
this 1st day of April 1999, by and between Sampath Seshadri (hereinafter
referred to as "Employee"), and SolutionNet International, Inc., a Minnesota
corporation, (hereinafter referred to as "Company") with reference to the
following facts and objectives:
Recitals
A. Employee has been providing services as the Director of the Board and
Vice-President and related activities as an Employee of the Company.
B. Company is a corporation organized and in good standing under the laws of the
State Minnesota and desires to employ Employee under the terms and conditions of
this Agreement.
Now, therefore, in reliance on the foregoing Recitals, and in consideration of
the mutual promises and covenants contained herein, Company and Employee hereby
agree as follows:
1. Employment. During the term hereof, Company hereby employs Employee and
Employee hereby accepts and agrees to furnish Company with all the Employee's
skills and abilities under the designation as Chairman of the Board, President,
and Chief Executive Officer of the Company.
2. Duties. During the term of the Agreement, Employee shall devote all of
Employee's services, best efforts, and all reasonable work time (excluding
vacation and personal time) toward his employment with the Company, to further
Company's interests and to perform diligently and in good faith such duties as
are or may be, from time to time, required by Company in connection with his
employment hereunder. The Employee shall, at all times, comply with the policies
and procedures promulgated by the Company. The making of passive and personal
investments and conducting private business affairs not inconsistent with the
Agreement by the Employee shall not be prohibited under this Agreement.
3. Company's Authority. Employee shall perform in proper form orders,
directions, and policies by the Company to the Employee periodically not
inconsistent with the provisions of this Agreement. Employee agrees to accept
the decisions of the Company in the establishment and amendment of working
facilities, conditions, not otherwise agreed upon herein.
4. Term. The term of this Agreement shall begin on April 1, 1999 (the "Effective
Date") and shall be for a period of five (5) years, with automatic renewal terms
of equal length subject to the Company's prior written notification of 30 days
before the expiration of the original term of its decision not to renew this
Agreement, beginning on the Effective Date of this Agreement.
<PAGE>
5. Compensation.
(a) Base Salary. In consideration of the faithful performance of the
above duties and responsibilities to and on behalf of the Company, the Company
agrees to pay the Employee during the period of Employee's employment with
Company a base annual salary of $50,000, (the "Base Salary The Base Salary
shall be due and payable semi-monthly or on a more frequent basis and reviewed
at the Employee's anniversary date by the Board of Directors of Company;
provided, however, that such Base Salary shall in any event be increased as of
_______ of each calendar year at a rate greater than the percentage increase in
the National Consumer Price Index, as reported by the United States Department
of Labor for the immediately preceding calendar year, or as otherwise determined
by the Board of Directors (or Compensation Committee, if any) of the Company.
(b) Bonus. As further compensation, the Company may pay Employee such
bonus or bonuses and stock options as may, from time to time, be awarded or
granted to the Employee by the Company exercising its sole and absolute
discretion.
(c) Employment Taxes. Unless otherwise provided by law, all
compensation paid to the Employee shall be subject to the customary withholding
tax, other employment taxes and withholding amounts as required with respect to
compensation paid by the Company to the Employee.
6. Health Insurance. The Company shall provide, at its expense, complete family
health insurance coverage for the Employee and his family. The Employee will be
eligible to participate in any other benefit program or plan offered to
similarly situated employees, subject to any limitations or restrictions
associated with said program or plan (such as waiting periods, vesting
schedules, and pre-existing condition limitations).
7. Business Expense. Business Expense of the Employee incurred in the
performance of his duties, including the costs of attending meetings, promotion,
and entertainment expenses shall be borne by the Company and reimbursable to
Employee upon presentation of appropriate documentation by the Employee to the
Company and compliance with Company's established practices and procedures.
8. Other Company Benefits. Employee shall be entitled to participate in all
employee benefit programs made available to Company's executives or salaried
employees generally, as such programs may be offered from time to time.
9. Absences. The Employee shall be entitled to 2 weeks away from work for paid
vacation. Company may, from time to time, allow Employee additional time away
from employment in the Company's sole discretion. The parties acknowledge that
such exercise of discretion in one event shall not create a right to also be
permitted reasonable numbers of days away from work for sick days or leaves of
absences.
10. Death of Disability. Except as otherwise provided in this paragraph 10, in
the event of Employee's death or "Disability" (as hereinafter defined) occurring
during the term of this Agreement, Employee or his estate, as the case may be,
shall be entitled to: (i) that portion of any unpaid salary together with the
benefits accrued and earned by Employee hereunder up to and including the last
day of the month in which the death or disability occurs, as the case may be,
(ii) any death or disability-related benefits pursuant to the insurance program
set forth above and any employee benefit plan to which Employee or his
beneficiary may be entitled hereunder; (iii) any unpaid Bonus Amount earned by
<PAGE>
the Employee for the prior fiscal year of the Company and approved by Company if
such approval is required hereunder shall be prorated based upon the length of
Employee's service during the applicable year over 365 days; and (iv) a payment
equal to one year's Base Salary then in effect for Employee if the remaining
term of this Agreement is less than one year, or, if more than one year remains
under the Agreement, the Estate may elect to continue to receive the payments
due under the Agreement specified as salary. A "Disability" shall be deemed to
have occurred if Employee shall have been unable to discharge his normal duties
and job description under this Agreement for a period of ninety (90) days in the
aggregate during any consecutive four (4) month period, his employment shall
thereupon terminate at the end of the calendar month in which such period ends.
11. Termination. Employee's employment with the Company shall be terminated if
any of the following occur:
(a) At the expiration of the term of this Agreement if Company gives
written notice of its intention not to renew this Agreement one hundred eighty
(180) days prior to the expiration of the term;
(i) On the death of the Employee;
(j) Whenever the Employee shall fail to cure or rectify a material
breach of any of the terms, covenants and conditions of this Agreement within
thirty (30) days after Employee receives written notice from the Company to cure
such default (except when terminated for those causes that allow immediate
termination as described in Section 12(b));
(k) For "Cause" as defined in Paragraph 14 below; or
(l) Upon the Disability of the Employee as set forth in Paragraph 12
above.
12. Definition of "Cause"
(e) For purposes of this Agreement, the term "Cause" shall
include:
(i) incompetence, failure, inability, or refusal to
perform assigned duties;
(ii) gross negligence, willful misconduct or breach of
fiduciary duty;
(iii) being under the influence of, or use, sale,
distribution, or possession of unauthorized or
illegal drugs or intoxicating beverages while on duty
or on the Company's or a subsidiary's premises;
(iv) willful destruction or defacement of Company's or a
subsidiary's, a customer's, or an employee's
property;
(v) unauthorized disclosure of confidential information;
and
(vi) continued and unexplained absences from work.
(f) For the purposes of this Agreement, Employee shall be
immediately terminated without notice for the following
Causes:
(ix) unauthorized entry into Company's secured non-public
areas;
<PAGE>
(x) falsifying or altering the Company's or subsidiary's
records;
(xi) theft, embezzlement, fraud or forgery
(xii) any act which results or was intended to result in
significant gain or personal enrichment to the
Employee at the Company's expense.
13. Confidential and Secret Information/Company Property. Employee acknowledges
that he will have access to items used in the Company's business which the
Company deems to be secret, confidential, unique and valuable; were developed by
Company at a great cost and over a long period of time; and that disclosure of
any of these items to anyone other than Company's officers, directors, agents or
authorized employees will cause Company irreparable injury. Employee agrees that
upon termination of this Agreement, he will return any and all documentary
information or written documents to Company. Such items and information shall be
held in strict confidence by the Employee and shall not be revealed to any third
party unless otherwise required by law. All other material and property that may
be furnished to employee during the course of his employment with the Company
such as customer lists, customer tracking, automobiles, books and records shall
be and remain the Company's property and shall be returned to the Company at any
time upon demand.
14. Severance Pay. In the event Company terminates Employee's employment
hereunder, Company shall pay to Employee a sum equivalent to the balance of the
salary due to be paid under this Agreement or 300% of the Base Salary (excluding
bonuses and other compensation), whichever is greater.
15. Change of Control. Immediately upon a Change of Control, if Executive's
employment with the Company is terminated within twenty-four (24) months
following such Change of Control, either without cause or pursuant to this
Agreement, in addition to any other compensation or benefits payable pursuant to
this Agreement, Executive shall be entitled to: Payment in cash equal to four
times his Base Salary, plus immediate vesting of 100% of all Employee's stock;
stock options or other awards to the Executive under any of the Company's
incentive plans. The Executive's rights upon a Change of Control to benefit
under programs, plans and policies of the Company shall be determined according
to the terms and provisions of such programs, plans and policies.
16. Arbitration. Any and all disputes, controversies or claims arising under or
in conjunction with this Agreement other than the right to injunctive relief as
set forth in Paragraph 12 above, including without limitation, the general
validity or enforceability of this Agreement, shall be governed by the laws of
the State of California, without giving effect to its conflict of law provisions
and shall be submitted to binding arbitration rules of the American Arbitration
Association conducted in Los Angeles County, California. All expenses of any
arbitration shall be borne equally by the parties. The award to the arbitrator,
including any award of attorney's fees, shall be final and enforceable in the
courts of California. All costs of enforcing a judgment following the
arbitration are to be borne by the losing party. In reaching his or her
decision, the arbitrator shall have no authority to change or modify any
provision of this Agreement. Each party shall have the right to discovery in
accordance with the California Rules of Civil Procedure.
17. Modification. This Agreement shall not be modified, amended, supplemented,
or extended except by written consent executed by both the Company and Employee,
except as expressly provided herein to the contrary.
<PAGE>
18. Assignment. Neither the Employee nor the Company shall voluntarily
subcontract or assign any of their respective rights, duties, or obligations
hereunder without first obtaining the other party's written consent.
19. Notice. Except as expressly provided to the contrary herein, any notices or
other communications required, permitted, or made necessary by the terms of this
Agreement may be given to the respective representatives of the Company and the
employee designated herein by written communication. Written notices shall be
personally delivered to the Company's representatives or the Employee as
appropriate or sent by the United States registered or certified mail, postage
prepaid, return receipt requested, addressed to the Company to its principal
corporate office and to the Employee at the Employee's residential address.
Notices sent by mail shall be deemed made, delivered, and received on the date
of the United States' postmark thereon. Upon receipt of notice Employee shall
have thirty (30) days to cure or rectify all items described in the Notice.
Federal Express and similar services shall be considered personal service or
delivery. Personal delivery of written notice hereunder may also be given by
facsimile or other electronic transmission (provided that the sender of a
telephone facsimile or other electronic transmission has received a facsimile
confirmation report showing the number to which the facsimile was transmitted).
Either party may change its address for notice by giving notice of such change
to the other party in the manner specified in this section.
20. No Waiver. No waiver of any breach or default in any of the terms and
provisions of this Agreement shall be deemed to constitute or be construed as a
waiver of the subsequent breach of default of the same, similar, or dissimilar
nature.
21. Choice of Law and Invalidity. The validity, construction, performance and
effect of this Agreement shall be governed by the laws of the State of
California. In case any one or more of the provisions contained herein shall for
any reason be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other
provisions of this Agreement, but this Agreement shall be construed as if such
invalid, illegal, or unenforceable provisions contained herein shall, for any
reason, be held to be excessively broad to time, duration, geographical scope,
activity or subject, said provision shall be construed by limiting and reducing
it so as to be enforceable to the extent compatible with the then applicable
law, it being the intent of the parties hereto to give the maximum permitted
effect to the restrictions set forth herein.
22. Interpretation. If necessary to give effect to the terms and provisions
hereof, the masculine, feminine, and neuter gender in the singular and plural
number shall each be deemed to include the other whenever the context to
indicates. To the unenforceable, it is agreed that the essential terms of this
Agreement shall be and remain enforceable against the parties.
23. Headings. Headings to this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define or
limit the scope, extent, or intent of this Agreement or any provision hereof.
24. Counterparts. This Agreement may be executed in any number of counterparts,
any of which may be constituted in the agreement between the parties hereto.
25. Time. Time is of the essence for all obligations contemplated in this
Agreement.
<PAGE>
26. Entire Agreement. This Agreement, and any schedules and exhibits attached
thereto contain and set forth the entire Agreement between the parties with
respect to the subject matter hereof. All prior negotiations and agreements
between the parties with respect to the scope of this Agreement are mutually
rescinded, replaced, and superseded hereby.
27. Authority. The Company warrants and represents that it is a corporation
organized and existing under the laws of the State of Minnesota, that the
undersigned is authorized to execute this Agreement on behalf of the Company;
that the employment of the Employee under the terms of this Agreement has been
duly authorized by the Company.
28. Inurement. Each covenant and condition in this Agreement shall be binding
on, and shall inure solely to the benefit of the parties to it, their respective
heirs, legal representatives, successors, and assigns.
32. Presumption. This Agreement or any section of this Agreement shall not be
construed against any party due to the fact that the Agreement or any section of
it was drafted by said party.
In Witness Whereof, the parties to this Employment Agreement have duly executed
it on the day and year first above written.
Employee: Company:
/s/ Sampath Seshadri
- --------------------
Sampath Seshadri
SolutionNet International, Inc.,
a Minnesota Corporation
EX-11.1
Statement Regarding Computation of Per Share Earnings
For the period ended June 30, 1999, the Company reported net earnings of
$95,078 and $0.027 earnings per share.
EX-21.1
Subsidiaries of Registrant
The Company currently has two (2) subsidiaries: SR Singapore, Pte. Ltd.
is the Company's wholly-owned and operating subsidiary. SR Singapore was
incorporated on January 25, 1994, under the laws of the Republic of Singapore
and is currently conducting its operations under the name SR Singapore, Pte.
Ltd. SR Singapore maintains its executive office at No. 1 Shenton Way, number
22-06/09, Singapore 068803.
The Company's other subsidiary is SolutionNet Inc. SolutionNet Inc. was
incorporated on April 14, 1999 under the laws of the British Virgin Islands.
SolutionNet Inc. is a holding company that was incorporated for the purpose of
holding operating subsidiaries of the Company. SolutionNet Inc. is responsible
for managing the international sales of the Company's products and services
outside North America. SolutionNet Inc.'s registered address is at P.O. Box 957,
Offshore Incorporations Centre, Road Town, British Virgin Islands.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
accompanying financial statements of SolutionNet International, Inc. for the
period ended June 30, 1999 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 214,341
<SECURITIES> 0
<RECEIVABLES> 1,176,664
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,881,005
<PP&E> 87,054
<DEPRECIATION> 67,898
<TOTAL-ASSETS> 12,754,710
<CURRENT-LIABILITIES> 1,166,490
<BONDS> 0
0
0
<COMMON> 12,178
<OTHER-SE> 11,576,042
<TOTAL-LIABILITY-AND-EQUITY> 12,754,710
<SALES> 987,946
<TOTAL-REVENUES> 987,946
<CGS> 282,246
<TOTAL-COSTS> 859,539
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 128,407
<INCOME-TAX> 33,329
<INCOME-CONTINUING> 95,078
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 99,078
<EPS-BASIC> 0.027
<EPS-DILUTED> 0.027
</TABLE>
