August 14, 1997
Mr. Anthony G. Barone, Esq.
Securities Exchange Commission
Mail Stop 7 - 8
450 Fifth Street, N. W.
Washington, D. C. 20549
Reference: Response to Letter of Comments of June 30, 1997
Immecor Corporation
Registration Statement on Form SB-2
Filed May 23, 1997
File Number 333-6966
Dear Mr. Barone:
Thank you for your comments of June 30, 1997 on the above referenced
filing.
As per your request, this cover letter keys the Registrant's responses to
the comments expressed in the above referenced letter of comments and also
provides any supplemental information requested by your staff.
This cover letter is accompanied by three copies of our amended filing with
all blank spaces completed and all changes underlined and marked with with the
item numbers used in your comment letter to indicate the Registrant's responses
to your staff's comments. At the same the Registrant will submit the amended
filing via Edgar with the underlining removed but with special Edgar indicators
to mark all paragraphs and/or sections that differ from the original filing.
General Response to Comment #1:
Immecor Corporation confirms that it is not and will not circulate a
preliminary prospectus or red herring.
PART I Cover Page Response to Comment #2:
Immecor Corporation applied to the Pacific Stock Exchange on July 14, 1997
for listing of its securities. The Pacific Stock Exchange has confirmed the
eligibility of the Company's securities, pending the number of shares sold
within twelve months after the effective date of the Registrant's filing.
Response to Comment #3:
Since there is no minimum there should be no reason for officers, directors
or beneficial stockholders to purchase shares in this offering in order for the
Company to reach such minimum. The registrant cannot prevent anybody from
purchasing its stock at the offering price. However, if there are other legal
considerations the registrant is not aware of, please re-address this issue in
future comments.
Response to Comment #4:
We reconciled the information in "Footnote #1" with the information in
"Plan of Distribution". The executive officers who will be selling the Company's
securities are identified in "Plan of Distribution". The analysis as to why
these executive officers will be able to comply with Rule 3a4 of the Security
Exchange Act of 1934 has been provided in "Plan of Distribution".
Reference Data
Response to Comment #5:
This section has been changed as per your request.
Risk Factors
Response to Comment #6:
The existing risk factors have been enhanced as per your request. No
changes were made with regards your comment "limited experience of management in
this type of business". The current management team of the Company has a
combined experience in this type of business of approximately 90 years. The
individual profiles of the Company's management team have been enhanced to
reflect such fact. See also response to comment #33.
The following additional risk factors were added as per your request: i)
Dependence upon offering proceeds; ii) Cummulative voting for directors; and
(iii) The current Board of Directors has the ability to issue "blank check"
preferred stock.
Response to Comment #7:
A new risk factor was added per your request "Penney Stock Regulations"
describing the penney stock regulations.
Response to Comment #8:
The risk factor " Loss of key personnel could interrupt progress" was
enhanced as per your request. Additional information was also provided in
"Management - Employment Agreements".
Use of Proceeds, Capitalization, and Dilution
Response to Comment #9:
These tables and disclosures have been revised to comply with your
requests.
Management's Discussion & Analysis
Response to Comment #10:
The text in the appropriate paragraph was revised to clarify the content
and the costs associated with purchased service contracts are very immaterial.
Response to Comment #11:
The text in the appropriate paragraph was revised to clarify the content
and enhanced to comply with your request.
Response to Comment #12:
The text in the appropriate paragraph was revised to clarify the content
and to comply with your request.
Liquidity and Capital Resources
Response to Comments #13, 14, 15, 16, and 17:
The text in the appropriate paragraphs were revised to clarify their
contents and to comply with your requests.
Business
Response to Comment #18:
The paragraph containing computer terms such as Gate Array, photomask
defect inspection, etc. was removed from this section. It would take pages and
pages of writing to explain the meaning of these terms to computer iliterates.
Business (Continued)
Response to Comment #19:
A new section "Company History" was added to comply with your request.
Responses to Comments #20, 21, 22, 23, 24, 25, 26, 27, and 28:
The appropriate paragraphs were clarified and enhanced; a new paragraph
:Sales Force" was added to comply with your requests.
Legal Proceedings and Litigation
Responses to Comments #29 and 30:
This section has been enhanced as per your request and Note 6 has been
revised in the Financial Statements included in the Prospectus.
Qualified Small Business Stock
Responses to Comments #31 and 32:
This section has been clarified as per your request.
Executive Officers, Significant Employees and Directors
Responses to Comments #33 and 34:
This section has been enhanced as per your request.
Employment Agreements
Responses to Comments #8 and 35:
This section has been clarified as per your request.
Description of Common Stock
Response to Comment #36:
The Company's restated Certificate of Incorporation provides for the
issuance of 20,000,000 shares of Preferred Stock, no-par value. The issuance of
preferred stock could delay, defer or prevent a change in control of the Company
as disclosed in "Description of Preferred Stock."
Response to Comment #37:
There are no anti-takeover provisions in the California law that would
delay, defer or prevent a change in control of the Company.
Description of Preferred Stock
Response to Comment #38:
This section has been clarified as per your request.
Shares Eligible for Future Resale
Responses to Comments #39 and 40:
This section has been clarified as per your request.
Plan of Distribution
Response to Comment #41:
The Company will electronically deliver the prospectus via e-mail if
requested by an interested party and only to such states where the Company has
received permission to sell its securities. The Company's prospectus will not be
posted on its website. This section has been clarified as per your request.
Plan of Distribution (Continued)
Response to Comment #42:
The Company will not post the prospectus on its web site in order to
prevent hampering with the information in the propectus by others. The Company
will however after effectiveness display the appropriate "tombstone ad" on its
website.
Response to Comment #43:
This section was clarified as per your request.
Response to Comment #44:
No dealer agreements will be utilized in connection with the offering and
sale of the securities.
Additional Information
Responses to Comments #45 and 46:
This section has been clarified and enhanced as per your request.
PART II
Recent Sale of Unregistered Securities
Response to Comment #47:
Paragraph (c) was updated as per your request.
Response to Comment #48:
All of the outstanding shares of the Company's stock were sold in offerings
made solely within the State of California pursuant to the excemption from
registration under the Securities Act of 1933 provided in X3(a)(11) thereof;
therefore, no Forms D were ever filed with respect to said transactions.
Exhibits
Response to Comment # 49:
The Financial Data Schedule required with the electronic Edgar filing will
be included in said filing.
Undertakings
Response to Comment #50:
The typographical error has been corrected.
Accounting Comments
Response to Comment #51:
Page F-6 of the financial statements has been updated as per your request.
Response to Comment #52:
Offering costs have been capitalized as a deferred cost on the balance
sheets in the SB-2 and will only be reflected as a reduction of equity when the
offering is completed and the proceeds are received. Per our review of SAB Topic
5:A. it states that "Specific incremental costs directly attributable to a
proposed or actual offering of securities may properly deferred and charged
against gross proceeds of the offering." All offering costs capitalized relate
to this specific offering and the offering has not been aborted. If the offering
is aborted, it would then be proper to expense the offering costs.
Response to Comment #53:
The financial statements were updated to June 30, 1997.
General (Continued)
General
Response to Comment #54:
A current and dated, signed accountants' consent has been provided in this
amendment as per your request.
Response to Comment #55:
No forward-looking statements were included in the registrants initial
filing and none will be provided in this or any future amendment.
Closing, I thank you again for your comments, which, I hope, have been
answered to your satisfaction. I am looking forward to your next set of
comments.
As per your request, I am sending three hard copies of the amended filing
to you. All changes were underlined and the appropriate comment numbers were
placed into the right margin of the document. The electronic filing will have
the underlinings and the comment numbers removed and each paragraph containing
changes or corrections will be enclosed by the special characters specified in
the Edgar documentation.
Sincerely,
/s/
Heinot H. Hintereder
President & CEO
Immecor Corporation
<PAGE>
As filed with the Securities and Exchange Commission on August 14, 1997
Registration No. 333-06966
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Amendment #1 to FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
IMMECOR CORPORATION
(Name of small business issuer in its charter)
California 1115 68-0324628
(State or jurisdiction of
incorporation or (Primary Standard Industrial (I.R.S. Employer
organization) Classification Code Number) Identification No.)
100 Professional Center Drive
Rohnert Park, California 94928-2137
(707) 585-3036
(Address and telephone number of principal executive offices and principal
place of business)
Heinot H. Hintereder, President & Chief Executive Officer
Immecor Corporation
100 Professional Center Drive
Rohnert Park, California 94928-2137
(707) 585-3036
(Name, address and telephone number of agent for service)
Copies to:
Kenneth M. Christison, ESQ
601 Glenwood Avenue
Mill Valley, CA 94941
Approximate date of commencement of proposed
sale to the public: As soon as practicable after the
effective date of this Registration Statement.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of each Proposed maximum Proposed maximum Amount of
class of securities Amount to be offering price aggregate offering registration fee
to be registered registered per share price
<S> <C> <C> <C> <C>
Common Stock, without par value 750,000 $5.25 $3,937,500 $1,478
</TABLE>
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may determine.
If any of the securities on this form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box: /x/
<PAGE>
IMMECOR CORPORATION
Cross-reference Sheet Showing Location in Prospectus:
PART I - INFORMATION REQUIRED IN PROSPECTUS
Form SB-2 Item Number and Caption Caption in Prospectus
1. Front of Registration Statement
Outside Front Cover of Prospectus ......Outside Front Cover of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus ................Inside Front Cover Page of Prospectus
3. Summary Information and Risk Factors ..... Prospectus Summary; Risk Factors
4. Use of Proceeds .......................................... Use of Proceeds
5. Determination of Offering Price ........
Plan of Distribution - Determination of Offering Price
6. Dilution ..................................................... Dilution
7. Selling Security Holders ............................. Not Applicable
8. Plan of Distribution ..................................Plan of Distribution
9. Legal Proceedings ............................
Business - Legal Proceedings & Litigation
10. Directors, Executive Officers, Promoters
and Control Persons ................................ Management
11. Security Ownership of Certain Beneficial
Owners and Management ....................... Principal Shareowners
12. Description of Securities ......................Description of Common Stock
13. Interest of Named Experts and Counsel ..... Not Applicable
14. Disclosure of Commission Position on
Indemnification for Securities Act .......
Management - Indemnification of Officers and
Directors
15. Organization within Last Five Years .......... Not Applicable
16. Description of Business ..................Prospectus Summary; Risk Factors;
Selected Financial Data; Business;
Certain Transactions
17. Management's Discussion and Analysis
or Plan of Operation ..........Management's Discussion and Analysis of
Financial Condition and Results of Operations
18. Description of Property ...................Business - Properties/Facilities
19. Certain Relationships and Related
Transactions ..........................Certain Transactions
20. Market for Common Equity and
Related Stockholder Matters ..........Risk Factors; Dividend Policy;
Description of Common Stock; Shares Eligible
for Future Resale
21. Executive Compensation ............................Executive Compensation
22. Financial Statements .......................Index to Financial Statements
23. Changes In and Disagreements With
Accountants on Accounting and
Financial Disclosure ................................ Not Applicable
<PAGE>
IMMECOR CORPORATION 750,000 SHARES COMMON STOCK All of the 750,000 shares
of common stock are being sold directly by IMMECOR Corporation ("Immecor" or the
"Company"). Prior to this offering, there has been no public market for the
Company's common stock; therefore, the public offering price has been determined
by the Company. The Pacific Stock Exchange has confirmed the eligibility of the
shares for listing, pending the number of shares sold within twelve months
azfter the effective date of this Prospectus, and the receipt of the required
documentation. If less than the required number of shares is sold, an order
matching service will be established for persons wishing to buy or sell shares.
See "Plan of Distribution."
This offering is being made directly by the Company for not more than
750,000 shares (the "maximum" amount). There is no minimum number of shares to
be sold in this offering and all funds received will go immediately to the
Company. See "Use of Proceeds." This offering will be terminated upon the
earlier of: the sale of the maximum amount, twelve months after the date of this
Prospectus or the date on which the Company decides to close the offering. A
minimum purchase of 100 shares is required. The Company reserves the right to
reject any Share Purchase Agreement in full or in part. See "Plan of
Distribution."
The common stock offered hereby involves a high degree of risk. See "Risk
Factors."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions (1) Company (2)
<S> <C> <C>
Per Share $5.25 None $5.25
Total Maximum (750,000 shares) $3,937,500 None $3,937,500
</TABLE>
(1) The shares are being sold directly by the Company through its executive
officers, who will be registered as sales representatives, where required, and
who will not receive any commission. See "Plan of Distribution".
(2) Before deducting estimated expenses of $195,000 payable by the Company,
including registration fees, escrow agent fees, costs of printing, copying and
postage and other offering costs, in addition to legal and ac- counting fees.
The date of this Prospectus is August 14, 1997
<PAGE>
No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus, and, if given or made, such information and representations
must not be relied upon as having been authorized by the Company. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any of the securities offered hereby to any person in any jurisdiction in
which such offer or solicitation is unlawful. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information contained herein is correct as of any date
subsequent to the date hereof.
This Prospectus is available in an electronic format, upon appropriate
request from a resident of those states in which this offering may lawfully be
made. The Company will transmit promptly, without charge, a paper copy of this
Prospectus to any such resident upon receipt of a request.
TABLE OF CONTENTS
Page
Reference Data .............................. 02
Prospectus Summary .......................... 03
Risk Factors ................................ 05
Use of Proceeds ............................. 08
Dividend Policy ............................ 08
Capitalization .............................. 09
Dilution .................................... 10
Management's Discussion & Analysis of
Financial Condition & Results of Operations .. 11
Business ..................................... 14
Management .................................. 18
Executive Compensation ...................... 19
Principal Shareowners ....................... 20
Certain Transactions ........................ 20
Description of Common Stock ................. 20
Shares Eligible for Future Resale ........... 21
Plan of Distribution ........................ 21
Legal Matters ............................... 21
Experts ...................................... 21
Additional Information ....................... 22
Index to Financial Statements ............... F1
Until November 13, 1997 (90 days after the date of this Prospectus) all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
REFERENCE DATA
As a result of this Offering, the Company will become subject to the
informational filing requirements of the Securities Exchange Act of 1934, (the
"Exchange Act") for at least one fiscal year and as of the end of the fiscal
year may be required to register under the Exchange Act and continue to file
required annual and quarterly reports.
The Company intends to furnish its shareholders with annual reports
containing financial statements audited by an independent public accounting firm
after the end of its fiscal year. The Company's fiscal year ends on December 31.
The Company will send shareholders quarterly reports with unaudited financial
information for the first three quarters of each fiscal year.
The Company was incorporated in the State of California on January 14,
1994. The Company's corporate offices are located at 100 Professional Center
Drive, Rohnert Park, California 94928. The Company's telephone number is (707)
585-3036. The Company's facsimile number is (707) 585-6838. The Company's email
address is [email protected], and the Company's world wide web home page is
http//www.immecor.com.
- 2 -
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety and should be read
in conjunction with the more detailed information and financial statements,
including the notes thereto, appearing elsewhere in this Prospectus. Unless
otherwise indicated, the information in this Prospectus gives retroactive effect
to a one for five reverse stock split of the Company's outstanding common stock
prior to this offering. See "Shares Eligible for Future Resale."
The Company
Immecor Corporation ("Immecor") designs, assembles, and markets
high-quality fault-tolerant specialty computers used in automated wafer defect
inspection systems for the semiconductor industry, high performance file servers
and workstations for networks, intra and internet file servers, and personal
computers, all based on Intel Pentium Pro (P6) processors and configured to meet
customer specifications. Immecor uses single, dual, and quad versions of the
processor, all of which are Microsoft Windows NT, Novell, Banyan, and Token Ring
compatible. Immecor also markets other brand-name personal computers and
accessories. The Company also provides related services to its customers,
including integration and staging services, configuration control, upgrading
existing systems and warranty support. The Company markets its products through
its own sales staff to large corporations, small businesses, local state and
federal agencies and individual end-users. See "Business" and "Products".
The Company objective is to become a recognized leader in the specialty
computer for the computer aided manufacture and defect review station market
place within the semiconductor industry.
Immecor Corporation is located in Rohnert Park, California. Rohnert
Park is located in Sonoma County, approximately 50 miles north of San Francisco.
Proposed Development
The Company's development goals for 1997-1998 are to (i) further
capitalize the Company through this offering, (ii) obtain strategic partners,
(iii) lower production costs through vendor and strategic partner relationships
and increased sales volume, (iv) increase distribution of personal computers
through companies that already have computer distribution channels to chain
stores and large government and corporate end users and (v) continue to build
the Company's management team.
The Offering
Common Stock Offered by the Company ... 750,000 shares (Maximum)
Common Stock Outstanding Prior to the Offering .... 2,421,000 shares 1
Use of Proceeds ................................. Proceeds from the
sale of the
shares will be used to fund
expansion and marketing, and
general working capital.
Note 1: There will be 1,921,000 shares outstanding in the event the Company's
action for rescission of the issuance of 500,000 shares related to a previous
reorganization agreement is successful. See "Legal Proceedings and Litigation".
- 3 -
<PAGE>
Summary Financial Data
The summary financial data for the years ended December 31, 1995, and
1996 have been derived from the Financial Statements and Notes to Financial
Statements, audited by L. V. Dorn II, independent auditor, whose report thereon
is also included. The summary financial data for the six months ended June 30,
1996 and 1997 have been derived from unaudited interim financial statements of
the Company contained elsewhere herein and reflect, in Management's opinion, all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the results of operations for these periods. Results of
operations for any interim period are not necessarily indicative of results to
be expected for the full fiscal year. The selected financial data should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Financial Statements and Notes thereto
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Years ended Six Months ended
December 31, June 30,
-1995- -1996- -1996- -1997-
(unaudited)
Statements of Income Data:
<S> <C> <C> <C> <C>
Revenue .......................................................... $2,010,094 $3,591,382 $1,960,141 $2,355,774
Cost of goods sold ................................................ 1,763,856 3,137,320 1,687,828 1,797,837
Gross profit (loss) ...................................... 246,238 454,062 272,313 557,937
Operating costs and expenses:
Selling, general and administrative expenses 318,510 435,253 211,576 303,447
Depreciation 4,017 9,408 3,207 6,636
Insurance proceeds - (65,244) (65,244) -
Total operating costs and expenses 322,527 379,417 149,539 310,083
Operating income(loss) .................................. (76,289) 74,645 122,774 247,854
Other income:
Interest income ......................................... 78 722 423 2,295
Interest expense ........................................ (770) (3,786) (2,163) -
Income (loss) before for taxes .......................... (76,981) 71,581 121,034 250,149
Income taxes ..................................................... (16,100) 18,800 38,200 92,300
Net income (loss) ...................................... $ (60,881) $ 52,781 $ 82,834 $ 157,849
</TABLE>
<TABLE>
<CAPTION>
December 31, June 30,
1996 1997
(unaudited)
Balance Sheet Data:
<S> <C> <C>
Working capital ............................................... $ 210,580 $ 342,203
Total assets .................................................. 647,802 998,657
Long term obligations ......................................... 0 0
Stockholders' equity .......................................... 268,788 426,627
</TABLE>
- 4 -
<PAGE>
RISK FACTORS
An investment in the shares being offered by this Prospectus involves a
high degree of risk and should only be made by persons who can afford to risk
their entire investment. Prospective investors should consider carefully the
following risk factors, in addition to other information concerning the Company
and its business contained in this Prospectus, before purchasing shares.
The Company has a limited operating history.
At the effective date of this offering, the Company had an operating
history of approximately three years and nine months. During such period, the
Company has experienced sustained growth in its business but there is no
assurance that such growth will continue. If the Company's growth is sustained,
additional technical support and assistance facilities will be needed.
The share offering price was set by the Company.
Prior to this self-underwritten offering, there has not been any public
market for the Company's common stock; therefore, the initial offering price for
the shares was determined by the Company. Among factors considered in
determining the public offering price were the Company's results of operations,
its current financial condition and dependence upon the offering proceeds, its
future prospects, the state of the markets for its products, the experience of
management, the state of the economy in general and the demand for similar
securities considered comparable to the shares offered by the Company. See "Plan
of Distribution - Determination of Offering Price."
Dependence upon offering proceeds.
The Company will depend upon proceeds of the offering to expand it's
business and marketing activities and for general working capital purposes.
Because the offering is self-underwritten, there is no assurance that any or all
of the shares offered will be sold.
Investors will experience immediate dilution of book value per share.
Purchasers of shares in this offering will realize immediate
substantial dilution per share in the net tangible book value from the initial
public offering price. See "Dilution."
A public trading market for the shares may not develop.
The Company does not currently meet the requirements for listing on an
organized stock exchange or quotation of over-the-counter market maker trades on
the NASDAQ market. After completion of this offering, the Company intends to
apply for a listing on a United States regional exchange, if the Company meets
certain numerical listing requirements. However, there can be no assurance that
the Company will be listed or that a public market will develop or be sustained.
If it does not, the Company has been advised that a registered securities
broker-dealer would provide an order matching service for persons wishing to buy
or sell shares, upon completion of this offering. However, there is currently no
agreement between the Company and a registered securities broker-dealer.
The share price may vary after this offering.
The price of the shares, after the completion of this offering, may
vary due to general economic conditions and forecasts, the general business
condition of the Company, the release of the Company's financial reports and
sales of shares outstanding prior to this offering.
Sales of existing shares could adversely affect the market price.
Sales of shares outstanding prior to this offering may adversely affect
the market price of the shares after this offering. All of the shares of common
stock outstanding prior to this offering are "restricted securities" and
therefore may not be sold in a public distribution except in compliance with the
registration requirements of the Federal Securities Act of 1933 (the "Securities
Act") or an applicable exemption under the Securities Act, including an
exemption pursuant to Rule 144 of the General Rules and Regulations under the
Securities Act. After completion of this offering, up to one percent of the
outstanding shares would be eligible for sale within any three-months period.
See "Shares Eligible for Future Resale".
Penny Stock Regulation.
If the Company's Common Stock falls below the price of $5.00 per share,
trading in the stock would be covered by Rule 15g-9 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Under such
rule, broker-dealers recommending such securities to persons other than
established customers and accredited investors must make a special written
suitability determination for the purchaser and receive the purchaser's written
agreement to a transaction
- 5 -
<PAGE>
prior to sale. Unless an exception is available, the regulations require the
delivery, prior to any transaction involving penny stock, of a disclosure
schedule explaining the penny stock market and the risks associated with it.
If the Company's common stock were to become subject to the regulations
applicable to penny stocks, the market liquidity for the common stock would be
severely affected, limiting the ability of broker-dealers to sell the common
stock in the secondary market. There is no assurance that trading in the common
stock will not be subject to these or other regulations that would adversely
affect the market for such securities.
No minimum amount set for this offering.
Because there is no required minimum amount of shares to be sold in
this offering, all proceeds received will go directly to the Company, to be used
as described in "Use of Proceeds". If only a minimum amount were sold, the
result could be that all the proceeds were used to pay expenses of this
offering.
No dividends are intended.
It is the Company's intention to retain any earnings for use in its
business and pay no dividends on its common stock. See "Dividend Policy".
Voting control will remain with current management.
Immediately prior to this offering, the Company's management
beneficially owned 66.08% of the Company's common stock. After the completion of
this offering, if the maximum is sold, management will own 50.46% and will
effectively be able to control the Company. See "Principal Shareholders."
Cumulative voting for directors.
With limited exceptions not presently applicable to the Company, P708
of the California Corporation Code provides that every shareholder may cumulate
the shareholder's votes at any election of directors and give one candidate a
number of votes equal to the number of directors to be elected multiplied by the
number of votes to which the shareholder's shares are normally entitled, or may
distribute the shareholder's votes on the same principle among as many
candidates as the shareholder thinks fit. The most immediate effect of this
provision is to enable one or more minority shareholders to cumulate their votes
in order to obtain representation on the board of directors.
The current Board of Directors has the ability to issue "blank check" preferred
stock.
The Company's Certificate of Incorporation authorizes the issuance of
20,000,000 shares of "blank check" Preferred Stock with such designations,
rights and preferences as may be determined from time to time by its Board of
Directors. Accordingly, the Company's Board of Directors is empowered, without
further approval, to issue Preferred Stock with dividend, liquidation,
conversion, voting or other rights that could adversely affect the voting power
or other rights of the holders of the Common Stock. The Company has no current
plans to issue any shares of Preferred Stock; however, in the event of issuance,
the Preferred Stock could used, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the Company. See
"Description of Securities".
Loss of key personnel could interrupt progress.
The Company's business depends to a large extent on the services of
Jason C. Lai (Vice President, Sales and Marketing) and Nhon K. Tran (Vice
President, Engineering). Both are principal stockholders and helped develop the
Company to its present position. Further progress is dependent upon their
continued commitment. The Company maintains a one million dollar key-person life
insurance policy on Nhon K. Tran and an employment contract with Jason C. Lai
that either party may renew or cancel as circumstances may require at the end of
each anniversary date (see "Management - Employment Agreements".
Present customer base consists of major customers only.
The Company's present business is based on a small number of relatively
large transactions. The majority of the Company's total sales in 1995, 1996, and
during the first six months of 1997 were made to large corporate customers, one
of which integrates the Company's core product into its own. These sales are not
subject to long term contracts, but rather depend upon the quality of the
Company's products and ability (i) to comply with these customer's technical
specifications and (ii) to provide the funds necessary to finance the purchase
of the materials needed for the assembly of the product and to extend credit
terms of 30 to 60 days net. In the recent past the Company has had difficulty in
attracting new corporate customers because of capital requirements and
limitations in its cash flow. For sales to new customers the Company currently
requires cash on delivery or substantial down payments at order time, a tactic
that benefits the Company's cash flow requirements but prevents the Company from
expanding its business and increasing sales volume and profits. Despite these
problems, the Company is
- 6 -
<PAGE>
currently expanding its customer base to lessen the effect of having a
small number of major customers only, the loss of anyone of which would
adversely affect the Company's business (see "Management Discussion and Analysis
of Financial Condition and Results of Operations" and "Financial Statements -
Note 7").
Fluctuations in cost of computer components.
The Company purchases the various components used in the assembly of
its computers from domestic and foreign manufacturers and distributors. Supply
and prices can be affected by multiple factors, such as under- or over- supply,
or the introduction of new technology, making components and inventories based
on older technologies obsolete. The Company's management practices
"just-in-time" inventory controls and believes that it will be able to assess
and to react to price fluctuation indicators based upon its past experience in
this market.
Uncertain market.
Although the Company believes that the products and services which it
has developed and which it is currently developing will be commercially
marketable, there can be no assurance that such products and services will be
commercially accepted by those companies and individuals which the Company
believes presently constitute the market. The Company intends to develop new
computer products for semiconductor manufacturing processes and the emerging
wireless communications technology and to seek new markets for such products in
addition to the existing markets, but there can be no assurance that such
developmental and marketing efforts will be successful.
Competition consists of large business entities.
The Company conducts in-depth research on the potential market for the
products it develops, prior to actual production and sales by introducing pilots
to existing customers; however, there can be no assurance that any of the
Company's products will be able to compete on a technological or cost basis with
other similar products which may be available before or after the time the
Company's products are introduced into the market. Large business entities with
greater financial strength and greater technical production capacity than the
Company are proactive competitors in the computer products field and especially
in the semiconductor wafer fabrication and the emerging wireless communications
technology segments of the overall market. These business entities may develop
systems and/or products which are competitive with, or superior to, the
Company's products, or which can be marketed more effectively.
Planned management of growth may create risk.
The Company plans and will make acquisitions of other companies in the
future and may use a portion of the net proceeds received by the Company from
this Offering to pay for legal and accounting expenses associated with due
diligence to do so. Significant uncertainties accompany any acquisition plans.
The actual acquisition of another company and its integration, include, without
limitation, the possibility of understated incurred, but not yet reported, costs
and contingent liabilities. Due to such uncertainties, any acquisition could
have an adverse effect on the Company. Also, as the so-called "Information Super
Highway" develops over the next few years, so will competition for acquisitions
of emerging promising high-technology companies intensify. There can be no
assurance that the Company will be successful in completing acquisitions in the
future. The Company's future results will be affected by its ability to acquire
technology companies with new products or significant annual sales volumes
complementing the Company's business strategy, and by its ability to manage its
anticipated growth.
Additional capital may not be available for the Company to carry out its plans.
The proceeds of this offering are intended to achieve certain
objectives. See "Use of Proceeds." More capital may be required for those
purposes than the Company will have. See "Capitalization." Changes in the
Company's objectives, to take advantage of opportunities or to meet competitive
challenges, may require additional capital. Raising additional funds through
issuance of equity securities will result in dilution to existing shareholders.
Debt financing would require interest expense and principal repayments, reducing
the Company's net cash flow and earnings potential. If required funding cannot
be secured, the Company may be forced to limit growth. See "Business Strategy,"
"Capitalization" and "Management's Discussion and Analysis of Financial
Conditions and Results of Operations - Liquidity and Capital Resources."
- 7 -
<PAGE>
USE OF PROCEEDS
The Company has no minimum amount of shares to be sold in this
offering. The net proceeds available to the Company from the sale of the shares
in this offering are estimated to be approximately $1,117,500 if 250,000 shares
are sold, $2,430,000 if 500,000 shares are sold and $3,742,500 if 750,000 shares
are sold.
The Company expects to use the net proceeds for the purposes outlined
below. If the Company raises less than the maximum amount of this offering, it
intends to prioritize expenditures as follows: first use funds from the offering
for working capital and corporate needs, second increase sales and assembly
capacity, third improve existing products and develop new products and fourth
pursue strategic acquisitions to enhance the Company's position in its industry.
<TABLE>
<CAPTION>
250,000 500,000 750,000
Shares Shares Shares
<S> <C> <C> <C> <C> <C> <C>
1. Increase of assembly capacity $ 200,000 17.9% $ 300,000 12.3% $ 500,000 13.4%
2. Increase demonstration equipment
and wholesale inventory 300,000 26.8% 600,000 24.7% 900,000 24.0%
3. New product development 200,000 17.9% 250,000 10.3% 500,000 13.4%
4. Working Capital
and General Corporate Purposes 417,500 37.4% 1,280,000 52.7% 1,842,500 49.2%
------- ---- --------- ---- --------- ----
Total net proceeds $ 1,117,500 100.0% $ 2,430,000 100.0% $ 3,742,500 100.0%
------------ ----- ----------- ----- ----------- -----
</TABLE>
None of the net proceeds of this offering will be used to pay existing
debt as the Company is virtually debt-free.
Management does not anticipate changes in the proposed allocation of
estimated net proceeds of this offering but reserves the right to make changes,
if management believes those changes are in the best interests of the
Company.
DIVIDEND POLICY
The Company has not declared or paid dividends since its inception,
presently intends to retain any earnings to facilitate growth and does not
anticipate paying cash dividends in the foreseeable future. The Company's future
lending agreements may also prohibit the payment of dividends.
- 8 -
<PAGE>
CAPITALIZATION
The following table sets forth the actual capitalization of the Company
on June 30, 1997 and also an adjusted capitalization of the Company as of June
30, 1997, to reflect sale of 250,000 shares, 500,000 shares, and the maximum
750,000 shares offered hereby at the public offering price of $5.25 per share
and the application of the estimated net proceeds. The Company has no minimum
amount of shares to be sold in this offering:
<TABLE>
<CAPTION>
June 30, 1997 As Adjusted June 30, 1997
250,000 500,000 750,000
Actual Shares Sold Shares Sold Shares Sold
Short-term debt:
<S> <C> <C> <C> <C>
Notes payable: 7,303 7,303 7,303 7,303
----- ----- ----- -----
Total short-term debt: 7,303 7,303 7,303 7,303
----- ----- ----- -----
Long-term debt:
Total long-term debt, less current maturities: - - - -
Shareholders' equity:
Common Stock, no par value,
50,000,000 shares authorized
2,421,000, 2,671,000, 2,921,000, and 3,171,000
shares outstanding, respectively: 320,500 1,438,000 2,750,500 4,063,000
Preferred Stock, no par value,
20,000,000 shares authorized
none outstanding - - - -
Retained earnings (deficit): 106,127 106,127 106,127 106,127
------- ------- ------- -------
Total shareholders' equity: 426,627 1,544,127 2,856,627 4,169,127
------- --------- --------- ---------
Total capitalization $433,930 $1,551,430 $2,863,930 $4,176,430
-------- ---------- ---------- ----------
<FN>
Note 1: There will be 1,921,000 shares outstanding as of June 30, 1997 in the event the Company's action for rescission of the
issuance of 500,000 shares related to a previous reorganization agreement is successful. See "Legal Proceedings and
Litigation".
</FN>
</TABLE>
- 9 -
<PAGE>
DILUTION
On June 30, 1997 the Company had a net tangible book value of $383,522,
or $0.16 per share. The Net tangible book value per share is equal to the
Company's total tangible assets, less its total liabilities and divided by its
total number of shares of common stock outstanding. After giving effect to the
sale of shares being offered, at the public offering price of $5.25 per share,
and the application of the estimated net proceeds, the pro forma net tangible
book value of the Company as of June 30, 1997, would have been $4,169,127 or
$1.31 per share if 750,000 shares (maximum) were sold, $2,856,627 or $0.98 per
share if 500,000 shares were sold and $1,544,127 or $0.58 per share if $250,000
shares were sold. The following table illustrates the per share dilution in net
tangible book value per share to new investors:
<TABLE>
<CAPTION>
250,000 500,000 750,000
Shares Shares Shares
<S> <C> <C> <C>
Public Offering price per share $5.25 $5.25 $5.25
Net tangible book value per share
on June 30, 1997 $0.16 $0.16 $0.16
Increase in net tangible book value per share
attributable to new investors $0.42 $0.82 $1.15
Pro forma net tangible book value per share
as of June 30, 1997, after this offering $0.58 $0.98 $1.31
Net tangible book value dilution per share
to new investors $4.67 $4.27 $3.94
</TABLE>
The following table sets forth on a pro forma basis as of June 30, 1997
the difference between existing shareowners and new investors purchasing shares
in this offering, with respect to the number of shares purchased, the total
consideration paid and the average price paid per share, at the maximum of
750,000 shares, at 500,000 shares and at 250,000 shares:
<TABLE>
<CAPTION>
Average
Price
Shares Purchased Total Consideration Per
Number Percent Amount Percent Share
250,000 Shares Sold
<S> <C> <C> <C> <C> <C>
Existing Shareholders 2,421,000 90.64% $ 320,500 19.63% $0.13
New Investors 250,000 9.36 1,312,500 80.37 5.25
Total 2,671,000 100.00% $ 1,633,000 100.00%
500,000 Shares Sold
Existing Shareholders 2,421,000 82.88% $ 320,500 10.88% $ 0.13
New Investors 500,000 17.12 2,625,000 89.12 5.25
Total 2,921,000 100.00% $ 2,945,500 100.00%
750,000 Shares Sold
Existing Shareholders 2,421,000 76.35% $ 320,500 7.53% $ 0.13
New Investors 750,000 23.65 3,937,500 92.47 5.25
Total 3,171,000 100.00% $ 4,258,000 100.00%
</TABLE>
NOTE: The information and calculations disclosed regarding dilution do
not consider the changes that would result subject to the outcome of a pending
law suit. See "Legal Proceedings and Litigation".
- 10 -
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following should be read in conjunction with the Financial
Statements and Notes thereto, "Capitalization" and "Selected Financial Data"
appearing elsewhere in this Prospectus. Operating Data presented in this
discussion are unaudited.
Overview The Company designs and assembles highly specialized computer
systems used in semiconductor manufacturing processes in addition to personal
computers customized to specifications by business and individual users. The
necessary components are purchased from domestic and foreign manufacturers and
distributors. The Company markets the finished product through its own sales
force. The sales force is divided into Corporate and Retail.
Corporate solicits requests for proposals from manufacturers in need of
specialty computers for various computer aided manufacturing processes in
quantity, installs the prototypes at the customers site for various customer
related evaluation processes that include hardware components and operating and
application software changes until the computer system conforms to the customers
specifications and expectations so that letters of compliance from the various
domestic and international safety standard agencies can be obtained, if the
computer becomes part of a product to be sold outside the United States. This
process may consume several weeks and even months. During the process the
personnel involved becomes a team and develops understanding about the technical
problems encountered, and when the process is completed the customer's
satisfaction is guaranteed and the Company's profit margin is not diminished by
excessive after sale service calls and employee technical expertise is enhanced.
These sales are made on a credit basis with net 15, 30, 45, and 60 day terms,
depending upon the size of the sale, past payment experience, and other Company
credit policy criteria.
Retail advertises various personal computer systems in local newspapers
and displays these computer systems in the Company's showroom, where customers
can test the various systems and can decide upon the features they want. These
sales are made on a 25% down payment policy with the remainder due before
delivery. Currently assembly, 72-hour burn-in and testing consumes approximately
four days with delivery occurring on the fifth day. Delivery and installation of
the personal computer at the end users site is free of charge within a 25 mile
radius of the Company's facilities. Outside this radius a $25.00 delivery and
installation charge is billed.
Net sales are net of product returns. When a product built to customer
specifications is returned, the Company charges a 15% restocking fee. The
Company grants all its customers a thirty (30) day money back guarantee on all
computer systems that do not perform to customer specifications.
All personal computers carry a one year free labor warranty covered by
the Company, and a one to three year limited warranty on hardware components
covered by the respective manufacturers, with free on-site service during the
first thirty days following purchase. In conjunction with personal computer
sales, the Company sells one, two, and three year service contracts providing
depot or on-site maintenance. The Company earns a modest commission by selling
these service contracts for a major service provider. In addition, the Company
provides regular computer upgrade services to individuals and businesses at its
maintenance facility. Corporate customers may employ Company technicians on a
temporary basis.
The Company's cost of sales consists of the purchase price of the
various computer components going into the product, production labor and related
production overhead expenses, and after sale service calls. The Company intends
to negotiate component purchasing contracts directly with manufacturers rather
than with vendors as soon as large scale assembly becomes possible in order to
take advantage of manufacturers discounts. The Company has no contractual
relationship with any of its vendors.
The Company's growth strategy is to increase net sales by augmenting
its marketing and sales force, by increased advertising in technical
publications specific to the Company's specialty computers, and by increasing
distribution of personal computers through retail and wholesale organizations.
The Company will make the development of specialty computers for computer aided
manufacturing (CAM) and automated defect classification (ADC) for the
semiconductor industry its core business. The Company plans to acquire
technology companies with new products under development or with significant
annual sales volumes complementing the Company's business strategy.
- 11 -
<PAGE>
Financial Condition and Results of Operations:
The following table sets forth, as a percentage of net sales, certain
items included in the Company's Statements of Income and Retained Earnings (see
Financial Statements and Notes thereto elsewhere in this Prospectus) for the
periods indicated:
<TABLE>
<CAPTION>
Years Ended Six Months Ended
December 31, June 30,
-1995- -1996- -1996- -1997-
Statements of Income Data:
<S> <C> <C> <C> <C>
Net sales 100.00% 100.00% 100.00% 100.00%
Cost of sales ......................... 87.75 87.36 86.11 76.32
Gross profit ............................ 12.25 12.64 13.89 23.68
Depreciation and amortization ........... 0.20 0.26 0.16 0.28
Selling, general and administrative expenses 15.85 12.12 10.79 12.88
Flood insurance proceeds ................. 0.00 (1.82) (3.33) 0.00
Total operating costs and expenses ...... 16.05 10.56 7.63 13.16
Operating income (loss) ................. (3.80) 2.08 6.26 10.52
Interest income (loss) .................... 0.00 0.02 0.02 0.10
Interest expense......................... (0.04) (0.11) (0.11) (0.00)
Income (loss) before income taxes........ (3.83) 1.99 6.17 10.62
Income Tax ............................. (0.80) 0.52 1.94 3.92
Net income (loss) ........... (3.03) 1.47 4.23 6.70
</TABLE>
Year Ended December 31, 1996 Compared to the Year Ended December 31, 1995
Net sales. Net Sales increased by $1,581,288 or 78.67% from $2,010,094
in 1995 to $3,591,382 in 1996. Sales to major customers who accounted for over
10% of the Company's sales in 1995 decreased from $1,473,097 in 1995 to
$1,413,168 in 1996.
Gross profit. Gross Profit increased, as a percentage of net sales,
from 12.25% in 1995 to 12.64% in 1996, in a market characterized by heavy price
competition. Downward pressure on component prices also contributed to this
improvement.
Selling, general and administrative expenses. Selling, general and
administrative expenses decreased significantly as a percentage of net sales
from 15.85% in 1995 to 12.12% in 1996. This decrease in expenses as a percentage
of net sales was primarily due to increased sales volume and improvements in
operating efficiency.
Flood insurance proceeds. Flood insurance proceeds of $65,244 in 1996
is fully described in Note 8 of the Financial Statements included elsewhere in
this Prospectus.
Six Months Ended June 30, 1996 Compared to the Six Months Ended June 30, 1997
Net sales. Net Sales increased by $395,633 or 20.18% from $1,960,141
for the six months ended June 30, 1996 (the "1996 period") to $2,355,774 for the
six months ended June 30, 1997 (the "1997 period"). The net sales increase
resulted primarily from increased demand from major customers responsible for
the majority of the Company's sales for each period and fluctuations from period
to period are primarily influenced by this constraint (see Note 7 to Financial
Statements). Sales to these corporate customers for high-end specialty computers
have continued to increase steadily since the Company has been able to meet
strict shipping deadlines and to maintain high quality control standards. Firm
orders on the books of the Company for the remainder of 1997 indicate that this
trend will continue. Nevertheless, the loss of any one of these major customers
would have a material adverse effect on the Company's financial position and
results of operations.
Gross profit. As a percentage of net sales, gross profit increased from
13.89% in the 1996 period to 23.68% in the 1997 period because of higher gross
profit margins realized for high-end customized specialty computers.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased as a percentage of net sales from 10.79% in
the 1996 period to 12.88% in the 1997 period. The increase in expenses as a
percentage of net sales was primarily due to hiring of additional employees,
increased compensation levels for employees and higher occupancy cost offset by
increased sales volume.
- 12 -
<PAGE>
Liquidity and Capital Resources
On June 30, 1997 and December 31, 1996, the Company had a working
capital of $342,203 and $210,580, respectively. The increase in working capital
was primarily due to improved profitability offset by offering costs and
repayments of notes and shareholder advances.
The Company had net cash provided by operating activities of $5,235 in
1996 and net cash used by operating activities of $225,034 in 1995. Net cash
provided by operating activities was $117,253 in the six months ended June 30,
1997, and net cash used by operating activities of $189 for the same period of
1996. The increase in net cash provided by operating activities from 1995 to
1996 consisting primarily of a net income of $52,781 in 1996 versus a net loss
of $60,881 in 1995, and no additional provisions for losses or accounts
receivable in 1996 and decrease in deferred taxes in 1996 compared with 1995.
The increase in net cash provided by operating activities for the six months
ended June 30, 1997 compared with the six months ended June 30, 1996 consisted
primarily of increased profitability and higher accounts payable in 1997, offset
by additional offering costs in 1997.
The Company had net cash provided by financing activities of $64,688 in
1996 compared to $167,491 in 1995. This decrease was primarily due to the
collection in 1995 of promissory notes in the amount of $170,000 on sale of
common stock purchased by two related parties in December of 1994 which did not
reoccur in 1996, which was partially offset by additions to notes payable and
shareholder advances in 1996 less offering costs which occurred in 1996. Net
cash used by financing activities was $69,034 for the six months ended June 30,
1997, compared to net cash provided by financing activities of $30,522 for the
six months ended June 30, 1996. The primary reason for the change was increases
in notes payable and shareholder advances in 1996 compared with significant
repayments of notes payable and shareholder advances in 1997. In addition,
additional offering costs were paid during the six months ended June 30, 1997
and not during the six months ended June 30, 1996.
The Company's primary capital needs are to fund anticipated working
capital and general corporate purposes to further its growth strategy, which
includes increasing its net sales, increasing its marketing and sales force,
increasing distribution channels, introducing new products and the continuing
improvement of existing product lines.
The Company believes that the net proceeds from this offering, which in
the worst scenario might be zero because the offering is self-underwritten,
together with the Company's $250,000 line of credit, the terms of which are
described in Note 4 of the Financial Statements elsewhere in this Prospectus,
the approximately $250,000 credit extended to the Company by its vendors, and
the funds that may be generated from operations, will be sufficient to fund the
Company's anticipated working capital and general corporate purposes
requirements of approximately $417,500 for a 12 month period (see "Use of
Proceeds").
Federal and state net operating losses carryforward
The Company has available for carryforward for federal income tax
purposes of approximately $63,900 at December 31, 1996 and approximately $44,900
for state income tax purposes. These carryforwards expire as described in Note 9
to Financial Statements included elsewhere in this Prospectus..
Recent Accounting Pronouncements
During October of 1995, the Financial Accounting Standards Board issued
Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"),
which established a fair value-based method of accounting for stock-based
compensation plans. The Company currently has no stock-based compensation plans
but plans to adopt SFAS No. 123 in the future.
Inflation
The Company practices just-in-time inventory purchases to prevent
losses from industry-wide component price reductions. As such the Company does
not foresee any material inflationary trends for its components.
- 13 -
<PAGE>
BUSINESS
Company History
The Company was founded and incorporated on July 9, 1993 under the laws
of the State of Delaware. The original purpose of the Company was to develop a
business entity which would comprise the full spectrum of computerized
technologies and assorted services. The original founders' strategy was to
acquire and to consolidate a number of established computer related businesses
in order to reach a combined substantial annual sales volume and to use expected
profits to develop marketable products. In December of 1993 the original
founders decided to simplify their business plan, to retain the Company's
original name and to incorporate a new Company in the State of California on
January 14, 1994. Through a tax free exchange of common stock the two companies
were merged immediately thereafter.
In order to expand its expertise and business operations into the
computer networking area, on March 1, 1994, the Company entered into a Plan of
Reorganization and Merger (the "Merger Agreement") with Advanced Network
Communications, Inc. ("ANC"), a company which claimed to have extensive
experience, expertise, ongoing business, and good will in computer networking.
Pursuant to the Merger Agreement, the Company issued a total of 500,000 shares
of its common stock (as adjusted) in equal amounts to James Chu ("Chu"), Fred
Pao ("Pao"), and Grace Lee ("Lee") in exchange for all of the issued and
outstanding shares of capital stock of ANC. The Company subsequently learned
that a number of the material representations on which it relied in executing
the Merger Agreement were false and that other material facts about ANC were not
disclosed prior to the consummation of the Merger Agreement. The Company also
learned that Chu, Pao, and Lee conspired to obtain and use positions as officers
and directors of the Company for their own benefit and to the detriment of the
Company, including the making of unauthorized payments of Company funds to Lee,
Pao, and other individuals and companies (see also "Legal Proceedings and
Litigation").
In order to grow more rapidly the Company attempted additional
acquisitions of two medium sized computer retailers. Due diligence revealed
unacceptable debt ratios and negotiations were halted.
Industry Background
During the last decade, the PC industry has grown rapidly as increased
functionality combined with lower pricing have made personal computers valuable
and affordable tools for business and personal use. Recent advances in the
technology, including the development of high-speed read-write CD-ROM drives,
high-speed data transmission hardware, multimedia, graphics and animation, have
increased the potential market dramatically. This trend has been further
augmented by the introduction of faster microprocessors and the introduction of
high performance chipsets with higher clock speeds such as the Power PC
architecture, new caching techniques and low power consumption features. While
the corporate market has become somewhat saturated with workstations for word
processing, data lookup and data formatting, new major opportunities present
themselves, from work-at-home to inverse multiplexing, from videoconferencing
and audio broadcasting to remote disaster recovery and worldwide networking,
with some of these features and activities beginning to be integrated into the
Internet, with wireless communications technologies, and with many associated
opportunity niches ready to go mainstream.
Specialty computers that must meet sophisticated user written software
and advanced technologies requirements are beginning to play a larger role in
these developing business services markets. Another major market segment is
developing on the Internet and in home/education systems. This market segment
offers major opportunity now with new software releases and new hardware
(particularly multimedia packages and CD-ROM technology) and is no longer
limited to the computer-adept buyer, but is being driven by the emergence of a
younger generation of computer-literate juveniles and young adults.
In addition, many older machines are no longer adequate to deal with
state-of-the-art software, and many existing computer owners will be upgrading
their equipment over the next few years. As much as 40 to 50% of 1997 sales and
sales over the next five years will be replacements of existing equipment. A
very high number of the currently installed computer user base consists of older
486 and lower version PC's.
Industry Growth Pattern Observations
There are three different growth patterns employed by the Company's
competitors, which are followed by most computer manufacturing and computer
sales organizations. Each has its own set of risks and rewards:
The Innovator Model: This model requires significant capital and strong
commitment to R&D and innovation, and can only be followed by the largest
players. Several large manufacturers follow this pattern. Retooling of large
centralized assembly plants with complementing parts inventories and staffing
retraining requirements, together with significant capital outlay are associated
with this model whenever existing technology changes. These models are also
technology bound, are
- 14 -
<PAGE>
marketed at runs of 100,000 or more copies at predetermined profit
margins that require hardware components to be manufactured inexpensively and en
masse for that model alone, making integration of new technologies that come
along nearly impossible or very expensive.
The Customer Access Model: This model requires focus on the ability to
aggregate and configure computer products to meet specific but average needs.
Midsize computer manufacturers follow this pattern, either by association with
larger manufacturers and assemblers or by maintaining their own sizable
facilities with challenges similar to the Innovator Model, with the exception
that integration of later technologies is possible giving these models a longer
life span.
The Technology Manager Model: This model targets customer areas where
higher margin specialty software and advanced technologies meet specific
application requirements. The assembly of these models require up-to-date
knowledge of the customer's technological needs and matching expertise of the
supplier in the selection of technology and software available or forthcoming,
an approach that represents high-risk proprietary resources and financial in-
vestments up-front by the partners to such projects but also a high-return
pattern if large volume sales, between 50 and 500 copies, materialize.
Market Observations
The Innovator Model is always exclusively marketed in large quantities
to small and large businesses with low computing power workstations for word
processing, data lookup and data formatting via office product chains and other
distributors "moving boxes" without providing satisfactory after-sale customer
services. This model is also sold to individual end users with no need for
special usage computing power and who are able to depreciate cost in a very
short time. This model is relatively high priced ranging from $2,000 to $3,000
because of certain featured innovations, and at the end of its cycle is sold at
discounted prices while the newer model becomes available.
The Customer Access Model is marketed to end users with specific but
average needs. Almost all independent computer equipment dealers who assemble
their own customized computers or who have them build by small computer assembly
houses sell this model for business and home use. Integration of later
technologies, so called "upgrades" is possible giving dealers repeat sales not
only for hardware components but also for software upgrades and troubleshooting
services. This model is more realistically priced ranging between $999 to $2,500
(depending upon configuration) because it must compete in the market with the
Innovator model and because it must afford upgradeability and hold its value
longer. In most cases, after-sale customer services are adequate.
The Technology Manager Model is marketed to users with specific needs
in all areas of scientific research and in specific areas, e. g., architecture,
construction, materials design, product development and computer aided
manufacturing. This market requires financial commitment to superior up-front
customer service including on-site technical support and the provision of
equipment for evaluation and demonstration purposes. Once the quality of the
product has been proven and satisfactory customer relationship has been
established, this market is highly profitable if the quality of the product is
maintained even though newer technologies might have to be integrated at a later
time. Depending upon configuration, this models price ranges from $10,000 to
$35,000 and up.
Company Strategy
The Company's strategic plan encompasses three areas of endeavor: 1)
design and develop products for emerging technology improvements in the
integrated circuit manufacturing process, 2) increase retail sales of high-end
computers and at the same time begin entry into the wholesale market, and 3)
make acquisitions of technology companies that fit or complement the Company's
own corporate profile and efforts to enter the fibre optics and wireless
communications market segments.
Retail and Wholesale Market
The Company has chosen the Customer Access Model for its retail and
wholesale business strategy. The Company is totally committed to customer
satisfaction and currently provides this model at a high value, low cost, almost
commodity like prices, with the largest degree of current and future technical
customizing possible to the consumer. Only nationally known brand name
components are used in its assembly. Assembly line improvements and the increase
in working capital accomplished with this offering will result in even higher
quality and lower prices with better profit margins for both retail and
wholesale operations. The Company currently assembles this model at its own
facilities and as sales volume increases will assemble at small independently
owned companies capable of following the Company's requirements as to
technological advances and price changes rapidly at competitive cost and
acceptable profit margins to the Company. These companies would be required to
be responsible for their own risk management and product development and could
become candidates for acquisition if they complement the Company's business
plans.
- 15 -
<PAGE>
Corporate Market
The Company has chosen the Technology Manager Model for its corporate
customers that utilize the model in various configurations for their computer
aided manufacturing efforts. The most promising opportunity for the Company is
its recent break-in into computer aided manufacture of automatic reticle,
photomask defect inspection, wafer level defect inspection, line width and
registration systems with customer proprietary software integrated to a level
that supports wafer yield management. To truly manage yield, the collected data
must be stored, analyzed, interpreted, and then shared among the fab areas it
affects. Currently the Company's machines utilized in this process are
pre-assembled at the Company's facilities, installed and tested at the customers
site. In the future many of the necessary pretests will be accomplished at the
Company's facilities when the planned mini-environment designed to provide
adequate conditions for highly sensitive photo-optical and mechanical equipment
has been completed. Company management understands that the number one industry
requirement namely that computer suppliers provide cost effective products that
are based on extendible technology. Cost of ownership and the ability to satisfy
customer delivery requirements are critical ingredients in the selection process
for advanced computer equipment. It is the intention of the Company to make this
business area its core business, to train its essential employees in all facets
of the involved mechanical engineering and associated software development tasks
and to make every effort to broaden its presence and to increase sales
substantially in this market by participating in the long-term challenge for
semiconductor manufacturers towards transition from 8-inch wafers and 0.5 micron
to 12-inch wafers and "sub 0.2-micron" line geometrics.
Sales Force
The Company's retail sales force consists of three full-time salaried
employees who utilize printed advertisements in local newspapers, radio
announcement by local radio stations, television advertisements in specific
areas, a showroom at the Company's headquarters, and various brochures,
pamphlets and other printed materials. Depending upon the funds raised with this
offering, the Company will augment its retail sales force accordingly.
The Company's corporate sales force consists of two full-time salaried
employees who make contact with potential corporate customers. Upon contact the
sales staff is supported by one or two technical employees and if necessary by
the Company's CFO if financial arrangements need to be negotiated. Depending
upon the funds raised with this offering, the Company will augment its corporate
sales force accordingly.
Products
The Company purchases from various sources computer components which
are protected by various basic patents owned by others and which are produced by
licensed domestic and foreign manufacturers under their own trademarks in the
United States or abroad. The Company does not own any patents or trademarks that
protect such components and the cost for research and development of these
components are born by the patent holders and the various manufacturers. The
Company at this time is not involved in R&D for new components. The cost of
design and development of various computer configurations the Company uses in
its marketing efforts are minimal and have no material impact upon the cost of
doing business.
The Company uses these components to design and assemble Pentium based
personal computers configured for use by individuals, high-end personal
computers configured for use by small business, medium and large network servers
with associated workstations for general networks, and specialty computers
designed and configured to customer specifications at negotiated prices
depending upon configurations.
The Company also sells computer components, computers, file servers,
printers and scanners assembled by Compaq, Digital Equipment, Epson, Hewlett
Packard, IBM, MicroSoft, NEC, Novell, Toshiba, 3COM, and others. The names of
the companies listed are also trademarks.
The markets for the Company are individuals, small, medium and large
merchants, local government agencies, school districts, colleges and
universities, and large corporations.
Computer Associated Business Services
The Company will continue to extend efforts in the area of wireless
data communications services in the northern part of California. This effort
will consist mostly of information gathering of what is being done in this
market to enhance the Company's expertise in this area and to position it for
the future alignment with or the acquisition of a wireless services provider
with a plant and customer base. The cost for this effort is included in the
amount allocated for New Product Development and is estimated to be minimal and
will be funded with income from operations or from the proceeds of this offering
if sufficient funds are raised. If insufficient funds are raised the Company
will abandon this venture.
- 16 -
<PAGE>
Research and Products under Development
The market serviced by the Company is characterized by rapid
technological change. Accordingly, the Company's product and process development
programs are devoted to the development of new computer configurations,
including new generations of products for existing markets, enhancements and
extensions of existing products engineering for specific customers. The Company
believes that its future success will depend, in part, upon its ability to
successfully introduce and market new and enhanced products and processes which
satisfy a broad range of customer needs and achieve market acceptance.
Future Acquisitions
The Company's basic acquisition strategy is to first concentrate on
small companies involved in distribution, and then to complement its operations
by acquisitions through the entire spectrum of small companies involved in
computer related services, i.e., motherboard assembly, parts construction,
software development, maintenance services, environmental services, and in
research and development of new computer products. In this respect, the Company
has entered into preliminary discussions with Advanced Vision Technologies, Inc.
("AVT"), a California corporation, organized to develop, produce, and market
vision technology hardware and software for multimedia computers capable of
converging with common television sets and also capable of providing
high-resolution video conferencing via the Internet. While no formal agreement
has been consummated, in the event results of the Company's evaluation of the
performance of ATV's products are satisfactory, the Company and ATV intend to
negotiate mutually agreeable terms and conditions for the Company's acquisition
of AVT.
Competition
There are many company's with unlimited financial resources designing,
manufacturing, assembling, distributing and selling personal and specialty
computers with large research and development budgets and for the Company to
successfully compete in the market it has chosen it must constantly provide
lower pricing for high-end computer configurations and faster service response
times than available from competitors.
Company Location and Facilities
The Company's corporate headquarters are located at 100~105
Professional Center Drive, Western Business Park, Rohnert Park, California,
where the Company maintains 6,000 square feet of office, showroom and assembly
space. The Company intends to expand into 4,000 additional square feet of
available space in the same building to accommodate a second assembly area for
increased production, a research and testing facility for the Company's fibre
optic and wireless data transmission switching development efforts, and if
sufficient funds are raised, the Company plans to replace the recently
established mini environment with a clean-room designed to provide adequate
conditions for highly sensitive equipment as per industry standards. The cost
for the expansion plans are included in the cost indicated for "Increase of
Assembly Capacity" and New "Product Development" in "Use of Proceeds".
Employees
As of June 30, 1997 the Company had 11 full time and 4 part time
employees. The Company hires temporary employees for nontechnical projects.
Legal Proceedings and Litigation
After execution of the Merger Agreement with ANC described in
"Business", above, the Company learned that a number of the material
representations made by ANC in order to induce the Company to enter into that
agreement were false; the Company further learned that Chu, Pao, and Lee had
conspired to use and had used their positions as officers and directors of the
Company to make unauthorized payments of Company funds to Lee, Pao, and another
individual and to take other actions for their own benefit which were
detrimental to the best interests of the Company. As a result, on September 11,
1996, the Company filed a lawsuit in the Superior Court of California, Santa
Clara County, Case Number CV760682, against Chu, Pao, and Lee seeking rescission
of the issuance of 500,000 shares of the Company's common stock, return of
Company funds in the approximate amount of $98,000, recovery of punitive damages
in the amount of $250,000, and for other appropriate relief.
While the Company intends to vigorously pursue its claim against Chu,
Pao, and Lee, it is unlikely that the action will come to trial before mid-1998
and there can be no assurance as to the outcome of the litigation.
Although the Company is the Plaintiff and does not incur the risk of an
adverse judgment, the litigation costs of the action are material to any
individual interim period or fiscal year and will be material to the outstanding
share balance. The Company's counsel has estimated the litigation cost to be
less than $10,000 but there is no assurance as to what the real cost could
amount to. See also "Note 6 of Financial Statements".
- 17 -
<PAGE>
Qualified Small Business Stock
IRS Code Section 1202(a) in the 1993 Federal Tax Law (the "Omnibus
Budget Reconciliation Act of 1933") which became effective in August 1993,
provides as follows:
A none corporate taxpayer can exclude 50% of any gain from the sale or
exchange of qualified small business stock held for more than five years. Gain
eligible for the 50% exclusion may not exceed the greater of $10,000,000 or 10
times the taxpayer's basis in the stock. The remaining gain is capital gain,
taxed at the maximum rate.
The stock must have been issued after August 10, 1993, and acquired by
the taxpayer at its original issue (directly or through an underwriter) in
exchange for money or property, or as compensation for services provided to the
corporation.
A "qualified small business" is a domestic C corporation with aggregate
gross assets that do not exceed $50,000,000 as of the date of Issuance. All
corporations that are members of the same parent-subsidiary controlled group are
treated as one corporation in determining whether the small business
requirements have been met.
At least 80 percent, by value, of the corporation's assets must be used
in the active conduct of one or more qualified trades or businesses. The
performance of services in the fields of law, engineering, architecture, etc.,
is not qualified trade or business, nor are the hospitality, farming, insurance,
financing or mineral extraction industries. However, a Specialized Small
Business Investment Company, licensed under section 301(d) of the Small Business
Investment Act of 1958, will meet the active business test.
The Internal Revenue Service has not yet issued Regulations or other
interpretations of this law, and it is uncertain how this new tax provision will
apply to the Company and to investors in its common stock, and because
qualifying for the benefits of the tax provision will depend in part on future
events about which the Company can provide no assurances, the Company makes no
representations as to the availability of the benefits of this provision to
prospective purchasers of its common stock. The Company intends to submit
reports to the Internal Revenue Service and to the Company's shareholders as may
be required under the law for use of this exclusion.
Potential investors are advised to consult their own tax counsel for
further details.
MANAGEMENT
Executive Officers, Significant Employees and Directors
The executive officers, significant employees and directors of the
Company are as follows:
Name Age Position
Heinot H. Hintereder 66 President & CEO, Director
Jason C. Lai 30 Vice President, Sales & Marketing,
Director
Keith W. Racuya 52 Secretary, Director
Richard C. Thiede 60 Treasurer, Director
Nhon K. Tran 34 Vice President, Engineering,
Director
Heinot H. Hintereder is cofounder of the Company. Was the Founder and
served as President and CEO of Immecor Corporation of Delaware until its
acquisition by the Company. Served 5 years as Manager of the Financial &
Corporate Support Unit, Fireman's Fund Insurance Companies until retirement in
1992. For 25 years held various other managerial and supervisory positions at
Firemans Fund. President, Founder, and CEO of Biblionics Corporation, a software
development company. Founder, Partner, and General Manager of W. Koehler K.G., a
German trading company. In all, Mr. Hintereder has 35 years experience in large
business systems design, selection of computer equipment and system
configuration. Mr. Hintereder was educated in Germany and holds the German
equivalent of a Masters degree in Business Administration.
Jason C. Lai is cofounder of the Company. Served as Vice President
Sales & Marketing of Immecor Corporation of Delaware until its acquisition by
the Company in 1994. Before joining the Company Mr. Lai served 3 years as Sales
and Marketing Executive for Comrex Systemation from 1991 to 1993. Before 1991
Mr. Lai was an independent distributor for Apple computers. Mr. Lai has 10 years
experience in the computer business.
- 18 -
<PAGE>
Keith W. Racuya is a local businessman for the last 4 years. Mr. Racuya
previously served as large scale computer equipment planner for Fireman's Fund
Insurance Companies until retirement in 1994 after 30 years of service, all in
computer related capacities.
Richard C. Thiede served as executive in the Systems Department of
Firemans Fund Insurance Companies where he was responsible for the development
and implementation of several large corporate computer systems. He also served
as Director of M.I.S. Administration for the same company from which he retired
in 1991 after 25 years of service. Mr. Thiede was director of finance and
administration for the Sea Ranch Association for 4 years and in 1995 became an
independent computer consultant. Mr. Thiede combines 30 years of experience in
the field of computer system design and computer financing. Mr. Thiede holds a
B.S. degree in Finance from Lehigh University.
Nhon K. Tran is a major investor in the Company. He has 9 years of
computer related expertise is in the field of computer driven robotic motion
control products. Mr. Tran served five years as Associate Engineer for new
product development for Parker Hannifin Corporation. Mr. Tran received part of
his education in Vietnam.
Executive Compensation
The following table sets forth, for the twelve-month period ending
December 31, 1996, certain compensation paid by the Company, including salary,
bonuses and certain other compensation, to its executive officers.
<TABLE>
<CAPTION>
Summary Twelve Months Ending December 31, 1996 Compensation Table:
Compensation All Other
Name and Principal Position Salary Bonus Compensation
<S> <C> <C> <C>
Heinot H. Hintereder, Chief Executive Officer $ 34,834.00 $ - 0 - $ - 0 -
Jason C. Lai, Vice President, Sales & Marketing $ 46,620.00 $ 65,000 $ - 0 -
Nhon K. Tran, Vice President, Engineering $ 43,020.00 $ - 0 - $ - 0 -
</TABLE>
Employment Agreements
On April 16, 1997, the Company entered into a one (1) year employment
agreement with Jason C. Lai ("Lai") the Company's Vice President of sales and
marketing. The agreement is renewable for successive one year terms with the
consent of both parties. The Company may terminate the agreement for cause at
any time and Lai may terminate the agreement at any time by giving written
notice to the Company. For a period of one year after its expiration or its
termination by the Company for cause, the agreement prohibits Lai from selling
any products then being marketed by the Company to its three major customers.
As consideration for performance of specified duties, the Company will
pay Lai a base annual salary of $100,000 and, in months in which gross sales
exceed $250,000, a monthly cash bonus ranging from 0.5% to 1.5% of the Company's
gross sales.
There are no other employment agreements between the Company and any of
its employees.
Number of Directors, Term of Office and Compensation
All Directors hold office until the next annual meeting of shareholders
of the Company or until their successors have been elected and qualified.
Unsalaried board members receive $100 for their service on the Board and for
expenses they incur to attend meetings.
Indemnification of Officers and Directors
The Company's By-Laws provide that the liability of the directors for
monetary damages shall be limited to the fullest extent permissible under
California law. Insofar as indemnification for liabilities arising under the
federal securities laws may be permitted to directors, officers controlling
persons of the Company pursuant to that provision, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
- 19 -
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's Common Stock immediately
prior to this offering, and as adjusted to reflect the sales of the shares
offered hereby, for (i) each director and executive officers of the Company,
(ii) each shareholder known by the Company to own beneficially 5% or more of the
outstanding shares of its common stock and (iii) all directors and officers as a
group for each class of capital stock of the Company.
<TABLE>
<CAPTION>
Directors Shares Percentage of Common Shares Outstanding
Officers Beneficially Before Offering Maximum Sold
and 5% Shareowners Owned ( 2,421,000 shares) ( 3,171,000 shares)
<S> <C> <C> <C>
Jason C. Lai 337,500 13.94 10.64
Heinot H. Hintereder 887,300 36.65 27.99
Nhon K. Tran 375,000 15.49 11.83
Officers & Directors as a Group 1,599,800 66.08 50.46
James Chu * 166,666 6.88 5.26
Fred Pao * 166,667 6.88 5.26
Grace Lee * 166,667 6.88 5.26
Other Stockholders 321,200 13.28 10.12
<FN>
* The issuance of these shares may be rescinded subject to the outcome
of a pending law suit. See "Legal Proceedings and Litigation".
</FN>
</TABLE>
CERTAIN TRANSACTIONS
Since its inception, from time to time, certain executive officers,
directors and shareholders have provided short-term funds to the Company in
order to finance medium to large purchases of computer components. All of these
funds have been repaid by the Company with the exception of one demand note in
the amount of $7,303. See "Notes to Financial Statements".
DESCRIPTION OF COMMON STOCK
The Company's authorized capital stock consists of 50,000,000 shares of
Common Stock, no-par value. Immediately prior to this offering, there were
2,421,000 shares of Common Stock outstanding and held by 33 shareholders. Owners
of Common Stock are entitled to one vote per share in all matters to be voted on
by shareholders, except that, upon giving the legally required notice,
shareholders may cumulate their votes in the election of directors. Subject to
the rights of holders of outstanding shares of Preferred Stock, if any, the
holders of Common Stock are entitled to receive dividends when, as and if
declared by the Board of Directors out of funds legally available therefor. In
the event of liquidation, dissolution or winding up of the Company, the Common
Stock shareholders are entitled to share ratably in all assets remaining which
are available for distribution to them after payment of all liabilities and
after provision has been made for each class of stock, if any, having preference
over the Common Stock. Common Stock shareholders, as such, have no conversion,
preemptive or other subscription rights, and there are no redemption provisions
applicable to the Common Stock. All of the outstanding shares of Common Stock
are, and the shares of Common Stock offered by this Prospectus, when issued for
the consideration set forth in this Prospectus, will be fully paid and
nonassessable.
Registration Rights
There are no agreements between current shareholders and the Company
with respect to registration of Company shares under the Securities Act.
Transfer Agent and Registrar
The Company has appointed US Stock Transfer Company as its transfer
agent and registrar for the Company's Common Stock.
DESCRIPTION OF PREFERRED STOCK
The Company's Restated Certificate of Incorporation provides for the
issuance of 20,000,000 shares of Preferred Stock, no-par value. No preferred
shares are presently outstanding and the Company has no plans, arrangement,
commitments or understandings to issue any preferred stock.
- 20 -
<PAGE>
The Board of Directors has the authority to issue up to 20,000,000
shares of Preferred Stock in one or more series and to fix the rights,
preferences, privileges, qualifications, limitations and restrictions thereof,
including dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption, redemption prices, liquidation preferences and the number
of shares constituting any series or the designation of such series, without any
further vote or action by the shareholders. The issuance of Preferred Stock may
have the effect of delaying or preventing a change in control of the Company
without further action by the shareholders. The issuance of Preferred Stock with
voting and conversion rights may adversely affect the voting power of the
holders of Common Stock, including the loss of voting control to others. Because
the terms of the Preferred Stock may be fixed by the Board of Directors without
Stockholder action, Preferred Stock could be issued quickly with terms
calculated to defeat a proposed takeover of the Company, or to make the removal
of current or future management of the Company more difficult. The Management of
the Company is not aware of any threatened transaction to obtain control of the
Company.
SHARES ELIGIBLE FOR FUTURE RESALE
Upon completion of this offering, the Company will have 3,171,000
shares of common stock outstanding if the maximum amount is sold. The shares
sold in this offering will be freely tradeable without restriction or further
registration under the Securities Act unless purchased by "affiliates" of the
Company, as that term is defined in Rule 144 under the Securities Act ("Rule
144") described below. Sales of outstanding shares to residents of certain
states or jurisdictions may only be effected pursuant to a registration in or
applicable exemption from the registration provision of the securities laws of
such states or jurisdictions.
The outstanding shares of common stock, which are held of record by
shareholders prior to this offering are "restricted securities" and may not be
sold in a public distribution except in compliance with the registration
requirements of the Securities Act or an applicable exemption under the
Securities Act, including an exemption pursuant to Rule 144 which, effective
April 30, 1997, permits the resale of limited amounts of these restricted
securities after a one-year holding period and Rule 144(k) provides that persons
who are not deemed to be "affiliate" and who have beneficially owned shares for
at least two years are entitled to sell their shares at any time under Rule 144
without regard to the limitations described above. Sales of substantial amounts
of shares in the public market could adversely affect the prevailing market
prices and could impair the Company's future ability to raise capital through an
offering of its equity securities. There are 33 holders of record of shares of
the Company's common stock.
The Company's common stock is not listed or quoted on any organized
exchange or other trading market, nor has the Company applied for a formal
listing or quotation. There can be no assurances that a market will develop or
be sustained. The post-offering fair value of the Company's common stock,
whether or not any secondary trading market develops, is variable and may be
impacted by the business and financial condition of the Company, as well as
factors beyond the Company's control. The price may also vary due to economic
conditions and forecasts and general conditions in the computer industry.
PLAN OF DISTRIBUTION
The Company proposes to offer and sell the shares directly to members
of the public residing in selected states. Announcements of this offering, in
the form prescribed by Rule 134 of the Securities Act, will be communicated to
selected persons. A copy of this Prospectus will be delivered to those who
request it, together with the Share Purchasing Agreement. All shares will be
sold at the public offering price of $5.25 per share and a minimum purchase of
100 shares is required. The Company reserves the right to reject any
subscription or share purchase agreement in full or in part.
The Company will effect offers and sales of shares through printed
copies of this Prospectus delivered by mail and upon request electronically by
e-mail. Any voice or other communications will be conducted through its
executive officers. Under Rule 3a4-1 of the Exchange Act, none of these
employees of the Company will be deemed a "broker", as defined in the Exchange
Act, solely by reason of participation in this offering, because (i) none is
subject to any of the statutory disqualifications set forth in Section 3(a)(39)
of the Exchange Act; (ii) in connection with the sale of the shares hereby
offered, none will receive, directly or indirectly, any commissions or other
remuneration based either directly or indirectly on transactions in securities;
(iii) none is an associated person (partner, officer, director or employee) of a
broker or dealer; and (iv) each meets all of the following conditions: (a)
primarily perform substantial duties for the issuer otherwise than in connection
with transactions in securities; (b) was not a broker or dealer, or as an
associated person of a broker or dealer, within the preceding 12 months; and (c)
will not participate in selling an offering of securities for any issuer more
than once every 12 months. The Company has no plans, proposals, arrangements or
understandings with any potential sales agent with respect to participating in
the distribution of the Company's securities. The Company's registration
statement will be amended to identify the persons involved if any such
participation develops in the future.
- 21 -
<PAGE>
Prior to this offering there has been no market for the common stock of
the Company, and there can be no assurances that a market will develop or be
sustained. Accordingly, the public offering price has been determined by the
Company's Board of Directors. Among factors considered in determining the public
offering price were the Company's results of operation, the Company's current
financial condition, its future prospects, the state of the markets for its
products, the experience of management and the economics of the industry segment
in general.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be
passed upon by Kenneth M. Christison, Attorney at Law, 601 Glenwood Avenue, Mill
Valley, California 94941.
EXPERTS
The Financial Statements of the Company as of and for the years ending
December 31, 1995, and December 31, 1996 have been included herein and in the
Registration Statement in reliance on the report of L. V. Dorn II, independent
certified public accountant, appearing elsewhere herein, and upon the authority
of said firm as an expert in accounting and auditing.
ADDITIONAL INFORMATION
A Registration Statement on Form SB-2, including amendments thereto,
relating to the shares offered hereby has been filed with the Securities and
Exchange Commission, Office of Small Business Policy, Washington, D.C.. This
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. For further information with
respect to the Company and the shares offered hereby, reference is made to such
Registration Statement, exhibits and schedules. The Registration Statement may
be viewed at the Security Exchange Commission's website at www.sec.gov via Edgar
on-line. A copy of the Registration Statement may also be inspected by anyone
without charge at the Commission's principal office located at 450 Fifth Street,
N.W., Washington, D.C. 20549, the Northeast Regional Office located at 7 World
Trade Center, 13th Floor, New York, New York, 10048, and the Midwest Regional
Office located at Northwest Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661-2511 and copies of all or any part thereof may be obtained from
the Public Reference Branch of the Commission upon the payment of certain fees
prescribed by the Commission.
- 22 -
IMMECOR CORPORATION
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Accountant F-2
Financial Statements
Balance Sheets F-3
Statements of Income F-4
Statements of Cash Flows F-5
Statements of Shareholders' Equity F-6
Notes to Financial Statements F-7 to F-12
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANT
Immecor Corporation
Rohnert Park, California
I have audited the accompanying balance sheets of Immecor Corporation
(the Company) as of December 31, 1995 and 1996, and the related statements of
income, cash flows and shareholders' equity for the years then ended. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements present fairly, in all material
respects, the financial position of Immecor Corporation as of December 31, 1995
and 1996, and the results of its operations and its cash flows for the years
ended December 31, 1995 and 1996, in conformity with generally accepted
accounting principles.
I have also reviewed the accompanying balance sheet of Immecor
Corporation as of June 30, 1997 and the related statements of income, cash
flows, and shareholders' equity for the six months ended June 30, 1996 and 1997
in accordance with Statement on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants. All
information included in these financial statements is the representation of
management of Immecor Corporation.
A review consists principally of inquires of organization personnel and
analytical procedures applied to financial data. It is substantially less in
scope than an audit in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. According, I do not express such an opinion.
Based upon my review, I am not aware of any material modifications that
should be made to the accompanying financial statements as of June 30, 1997 and
for the six months ended June 30, 1996 and 1997 in order for them to be in
conformity with generally accepted accounting principles.
L.V. Dorn II
Certified Public Accountant
Fort Bragg, California
July 29, 1997
F-2
<PAGE>
Immecor Corporation
Balance Sheets
ASSETS
<TABLE>
<CAPTION>
December 31 June 30, 1997
1995 1996 (unaudited)
Current assets:
<S> <C> <C> <C>
Cash $ 6,358 $ 54,677 $ 96,891
Accounts receivable (net of allowance for doubtful
accounts of $ 10,000, $ 10,000 and $ 20,000) 311,981 380,357 577,790
Inventories (Note 2) 142,667 129,421 228,607
Notes receivable 4,500 5,765 5,385
Income taxes receivable 4,266 - -
Prepaid expenses and other current assets 3,050 4,550 3,050
Deferred income taxes 32,834 14,834 2,500
------ ------ -----
Total current assets 505,656 589,604 914,223
Equipment and
improvements, net (Note 3) 32,525 41,960 41,329
Offering costs - 16,238 43,105
------ ------
Total assets $ 538,181 $ 647,802 $ 998,657
LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable (Note 4) $ - $ 29,606 $ 7,303
Accounts payable 296,448 254,374 412,734
Accrued liabilities 11,943 30,671 31,112
Advances from shareholders (Note 5) 10,259 61,579 41,715
Customer deposits 3,534 2,794 -
Income taxes - - 79,166
------
Total current liabilities 322,184 379,024 572,030
Commitments and Contingencies (Note 6)
Shareholders' equity:
Common stock, no par value, 50,000,000 shares authorized;
2,421,000 shares issued and outstanding 320,500 320,500 320,500
Preferred stock, no par value, 20,000,000 shares authorized;
no shares issued and outstanding - - -
Retained earnings (deficit) ( 104,503) (51,722) 106,127
Total shareholders' equity 215,997 268,778 426,627
Total liabilities and shareholders' equity $ 538,181 $ 647,802 $ 998,657
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE>
Immecor Corporation
Statements of Income
<TABLE>
<CAPTION>
Year ended Six months ended
December 31, June 30,
1995 1996 1996 1997
(unaudited)
<S> <C> <C> <C> <C>
Net sales (Note 7) $ 2,010,094 $ 3,591,382 $ 1,960,141 $ 2,355,774
Cost of sales 1,763,856 3,137,320 1,687,828 1,797,837
--------- --------- --------- ---------
Gross profit 246,238 454,062 272,313 557,937
Operating costs and expenses:
Selling, general and
administrative expenses 318,510 435,253 211,576 303,447
Depreciation 4,017 9,408 3,207 6,636
Flood insurance proceeds (Note 8) - (65,244) (65,244) -
------- -------
Total operating costs and expenses 322,527 379,417 149,539 310,083
------- ------- ------- -------
Operating income (loss) (76,289) 74,645 122,774 247,854
Interest income 78 722 423 2,295
Interest expense (770) (3,786) (2,163) -
---- ------ ------
Income (loss) before income taxes (76,981) 71,581 121,034 250,149
Income taxes (Note 9) (16,100) 18,800 38,200 92,300
------- ------ ------ ------
Net income (loss) $ (60,881) $ 52,781 $ 82,834 $ 157,849
-------------- ------------- ---------- -----------
Net income (loss) per share $ (.025) $ .022 $ .034 $ .065
--------------- ------------- ---------- -----------
Weighted average shares outstanding 2,421,000 2,421,000 2,421,000 2,421,000
--------- --------- --------- ---------
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE>
Immecor Corporation
Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended Six months ended
December 31, June 30,
1995 1996 1996 1997
(unaudited)
Operating Activities:
<S> <C> <C> <C> <C>
Net income (loss) $ (60,881) $ 52,781 $ 82,834 $ 157,849
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 4,017 9,408 3,207 6,636
Provision for losses on accounts receivable (46,000) - - 10,000
Deferred income taxes (12,634) 18,000 32,834 12,334
Gain on disposal of equipment - 2,761 1,314 -
Changes in:
Accounts and notes receivable (182,486) (69,641) 38,063 (207,053)
Inventories (98,279) 13,246 5,487 (99,186)
Income taxes (11,373) 4,266 8,832 79,166
Prepaid expenses and all other 4,914 (1,500) (10,000) 1,500
Accounts payable 204,101 (42,074) (177,998) 158,360
Accrued liabilities and customer deposits (26,413) 17,988 15,238 (2,353)
------- ------ ------ ------
Net cash (used) provided by operating activities (225,034) 5,235 (189) 117,253
-------- ----- ---- -------
Investing Activities:
Purchase of equipment (19,342) (21,604) (7,100) (6,005)
Other - - - -
Net cash used by investing activities (19,342) (21,604) (7,100) (6,005)
------- ------- ------ ------
Financing Activities:
Collection of notes receivable arising from
sale of common stock 170,000 - - -
Additions to notes payable - 29,606 15,000 -
Offering costs - (16,238) - (26,867)
Principal payments on notes payable - - - (22,303)
Shareholder advances (2,559) 51,320 15,522 (19,864)
Net cash (used) provided by financing activities 167,441 64,688 30,522 (69,034)
Increase (decrease) in cash (76,935) 48,319 23,233 42,214
Cash balance, beginning of period 83,293 6,358 6,358 54,677
------ ----- ----- ------
Cash balance, end of period $ 6,358 $ 54,677 $ 29,951 $ 96,891
------------ ------------- ----------- -----------
Supplemental Disclosure of Cash flow Information:
Cash paid during the year for:
Interest $ 770 $ 2,086 $ 1,387 $ -
------------ -------------- ----------- ---------
Income taxes $ 7,907 $ 800 $ 800 $ 800
------------ -------------- ----------- -----------
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE>
Immecor Corporation
Statements of Shareholders' Equity
<TABLE>
<CAPTION>
Number of Retained
Outstanding Common Earnings
Shares Stock (Deficit) Total
<S> <C> <C> <C> <C>
Balance, December 31, 1994 2,421,000 $ 150,500 $ (43,622) $ 106,878
Year ended December 31, 1995:
Collection of note receivable arising from
sale of common stock 170,000 - 170,000
Net loss - (60,881) (60,881)
------- -------
Balance, December 31, 1995 2,421,000 320,500 (104,503) 215,997
Year ended December 31, 1996:
Net income - 52,781 52,781
------ ------
Balance, December 31, 1996 2,421,000 320,500 (51,722) 268,778
Six months ended June 30, 1997(unaudited):
Net income - 157,849 157,849
------- -------
Balance, June 30, 1997(unaudited) 2,421,000 $ 320,500 $ 106,127 $ 426,627
--------- ------------ ----------- -----------
</TABLE>
See accompanying notes to financial statements
F-6
<PAGE>
Immecor Corporation
Notes to Financial Statements
Years ended December 31, 1995 and 1996
Six months ended June 30, 1996 and 1997(unaudited)
Note 1: Summary of Significant Accounting Policies
Basis of presentation
Immecor Corporation has prepared the financial statements on an accrual
basis of accounting and in accordance with generally accepted accounting
principles. The financial statements and notes thereto are the responsibility of
the Company's management. During 1996 and 1997 the Company had a division which
operated under the name of Computer 2000 and its results of operations for 1996
and 1997(unaudited) and financial position as of December 31, 1996 and June 30,
1997(unaudited) are included in the accompanying financial statements.
Description of business
The company designs and assembles specialized computer systems used in
semiconductor manufacturing processes in addition to personal computers
customized to specifications by business and individual users. The necessary
components are purchased from domestic and foreign manufacturers and
distributors. The Company markets the finished product through its own sales
force.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market.
Equipment and improvements
Equipment and improvements are carried at cost less accumulated
depreciation. Depreciation is provided on the straight-line method over
estimated useful lives generally ranging from five to seven years.
Expenditures for major renewals that extend useful lives of equipment and
improvements are capitalized. Expenditures for maintenance and repairs are
charged to expense as incurred.
For income tax purposes, depreciation is computed using the accelerated
depreciation methods.
Advertising
The Company expenses costs of advertising the first time the advertising
takes place.
F-7
<PAGE>
Immecor Corporation
Notes to Financial Statements
Years ended December 31, 1995 and 1996
Six months ended June 30, 1996 and 1997(unaudited)
Note 1: Summary of Significant Accounting Policies (Continued)
Income taxes
The Company has adopted Statement of Financial Accounting Standards No.
109, Accounting for Income Taxes. Accordingly, the Company computes income taxes
using the asset and liability method, under which deferred income taxes are
provided for temporary differences between the financial basis and the tax basis
of the company's assets and liabilities.
Earnings per share
Earnings per share amounts are based on the weighted average number of
common stock shares outstanding during the periods adjusted retroactively to
reflect a one for five reverse stock split approved by the Company's
shareholders on May 14, 1997. There were no common stock equivalents to be
considered.
Note 2: Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996 1997
(unaudited)
<S> <C> <C> <C>
Purchased parts $ 111,247 $ 104,124 $ 170,332
Finished systems 31,420 25,297 58,275
------ ------ ------
$ 142,667 $ 129,421 $ 228,607
----------- ---------- -----------
</TABLE>
Note 3: Equipment and Improvements
Equipment and improvements consist of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996 1997
(unaudited)
<S> <C> <C> <C>
Equipment and furniture $ 39,060 $ 49,497 $ 55,502
Transportation equipment 4,330 12,243 12,243
----- ------ ------
43,390 61,740 67,745
Less accumulated depreciation 10,865 19,780 26,416
------ ------ ------
$ 32,525 $ 41,960 $ 41,329
-------- --------- ----------
</TABLE>
F-8
<PAGE>
Immecor Corporation
Notes to Financial Statements
Years ended December 31, 1995 and 1996
Six months ended June 30, 1996 and 1997(unaudited)
Note 4: Notes Payable
Notes payable consist of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996 1997
(unaudited)
Note payable to Jerry Liu with interest at
<S> <C> <C> <C>
12% due in January 1997 $ - $ 15,000 $ -
Note payable to Thu Tran with interest at
18% due on demand - 14,606 7,303
-- ------ -----
$ - $ 29,606 $ 7,303
------ ----------- -----------
</TABLE>
The Company received approval on July 9, 1997 for a $ 250,000 line of
credit to finance short-term working capital needs. The line of credit bears
interest at 4.0% over prime rate with a maturity date of May 31, 1998. Advances
under the line of credit can not exceed 80% of eligible accounts receivable and
is secured by a security interest in all accounts receivable, inventory and
equipment. The line of credit is also personally guaranteed by the Company'
major shareholder.
Note 5: Advances from Shareholders
The Company receives advances from some of the corporate officers who are
also major shareholders to meet working capital requirements. These advances are
generally repaid within 30 to 60 days.
Note 6: Commitments and Contingencies
Long-Term Lease
The Company leases its corporate headquarters under a non-cancelable
operating lease which expires in February 1998. The Company is also obligated to
pay the lessor its pro-rata share of utilities for the building on a monthly
basis.
Minimum future rental payments under the lease agreement as of December 31,
1996 are as follows:
1997 $ 50,367
1998 8,726
-----
$ 59,093
F-9
<PAGE>
Immecor Corporation
Notes to Financial Statements
Years ended December 31, 1995 and 1996
Six months ended June 30, 1996 and 1997(unaudited)
Note 6: Commitments and Contingencies (Continued)
Long-Term Lease (Continued)
Rental expense under the above lease was $ 26,921 in 1995 and $ 37,983 in
1996 and $ 16,930 and $ 25,244 for the six months ended June 30, 1996 and 1997,
respectively(unaudited).
Litigation
The Company filed a lawsuit in 1996 against three former shareholders who
were formerly officers and directors of the Company seeking recession of the
issuance of 500,000 shares of the Company's common stock in the acquisition of
Advanced Network Communication, Inc. in 1994.
In addition, the Company is seeking the return of funds it believes were
embezzled and taken through fraud during 1994 by the three defendants. The
Company and its legal counsel are rigorously pressing this litigation but the
case has not been set for trial. It is unlikely that the trial will commence
before the spring of 1998 and there is no assurance of the outcome of the
litigation. All legal expenses relating to this case have not been significant
to date and have been expensed as incurred on the accompanying financial
statements.
Note 7: Sales to Major Customers
A material part of the Company's business is dependent upon sales to major
customers, the loss of which would have a material adverse effect on the
Company
's financial position and results of operations. Three customers
individually accounted for over 10% of the Company's 1995 sales.
Sales to these three customers aggregated over 73% of total sales in 1995.
Two customers individually accounted for over 10% of the Company's 1996 sales.
Sales to these two customers aggregated over 38% of total sales in 1996.
Two customers individually accounted for over 10% of the Company's sales
during the three months ended June 30, 1996(unaudited). Sales to these two
customers aggregated over 35% of total sales during the six months ended June
30, 1996(unaudited). One customer accounted for over 10% of the Company's sales
during the six months ended June 30, 1997(unaudited). Sales to this customer
aggregated over 65% of total sales during the six months ended June 30,
1997(unaudited). The Company is attempting to expand its customer base to lessen
the effect of having major customers.
F-10
<PAGE>
Immecor Corporation
Notes to Financial Statements
Years ended December 31, 1995 and 1996
Six months ended June 30, 1996 and 1997(unaudited)
Note 8: Insurance Proceeds
On February 4, 1996, the Company incurred major rain damage to its
corporate offices and production facilities due to leaks in the roof which
caused an interruption of its operations. The loss was covered by insurance as
follows:
Inventory replacement $ 77,392
Business interruption 38,821
Equipment replacement 6,550
Miscellaneous cost reimbursement 24,383
------
147,146
Less deductible 250
Proceeds from insurance company 146,896
Amounts allocated to inventory, equipment and
repairs 81,652
------
Insurance proceeds per statement of income $ 65,244
-----------
Note 9: Income Taxes
A reconciliation of the statutory federal income tax rate with the
Company's effective tax rate is as follows for the periods ended:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996 1996 1997
(unaudited)
Statutory rate for income from
<S> <C> <C> <C> <C>
$ 100,000 to $ 335,000 (39.0) % 39.0 % 39.0 % 39.0 %
Reductions due to income
under $ 100,000 20.3 (20.7) (12.8) (7.2)
State income taxes, net of
federal income tax benefit (7.5) 7.7 5.8 5.7
Non-deductible costs 1.0 1.0 .2 .1
Other 4.3 (.7) (.6) (.7)
--- --- --- ---
Effective tax rate (20.9) % 26.3 % 31.6 % 36.9 %
----- ---- ---- ----
</TABLE>
F-11
<PAGE>
Immecor Corporation
Notes to Financial Statements
Years ended December 31, 1995 and 1996
Six months ended June 30, 1996 and 1997(unaudited)
Note 9: Income Taxes (Continued)
The provision (credit) for income taxes
consists of the following for
the periods ended:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996 1996 1997
(unaudited)
Currently payable (receivable):
<S> <C> <C> <C> <C>
Federal $ ( 4,266) $ - $ - $ 59,887
State 800 800 5,366 20,079
Deferred liability (benefit) (12,634) 18,000 32,834 12,334
------- ------ ------ ------
$ (16,100) $ 18,800 $ 38,200 $ 92,300
---------- ------------ --------- -----------
</TABLE>
Deferred income taxes (benefits) reflect the tax effect of temporary
differences between the amounts of assets and liabilities for financial
reporting and amounts as measured for tax purposes. The tax effect of temporary
differences and carryforwards that cause significant portions of deferred tax
assets and liabilities are as follows for the periods ended:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996 1996 1997
(unaudited)
<S> <C> <C> <C> <C>
Depreciation $ 77 $ ( 255) $ (140) $ (200)
Inventory and accounts
receivable allowances (12,591) 18,375 33,074 (4,120)
Tax loss carryforward - - - 16,504
Other, net (120) (120) (100) 150
$ (12,634) $ 18,000 $ 32,834 $ 12,334
</TABLE>
The Company has net operating losses for income purposes which can be used
to offset future taxable income. Federal losses total approximately $ 63,900 at
December 31, 1996 and expire $ 17,200 in 2010 and $ 46,700 in 2011. State losses
total approximately $ 44,900 at December 31, 1996 and expire $ 21,700 in 2000
and $ 23,200 in 2001.
F-12
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Section xx of Article of the Registrant's By-laws provides that it may
indemnify any director, officer, agent or employee as to those liabilities and
on those terms and conditions as are specified in Section 317 of the California
Corporations Code. In any event, the Registrant shall have the right to purchase
and maintain insurance on behalf of any such persons whether or not the
Registrant would have the power to indemnify such persons against the liability
insured against.
Insofar as indemnification for liabilities arising under the Securities
Act, indemnification may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing section. The Registrant has
been informed that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
Item 25. Other Expenses of Issuance and Distribution
Expenses of the Registrant in connection with the issuance and
sitribution of the securities being registered are estimated as follows,
assuming the Maximum offering amount is sold:
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee .................... $ 1,478
Blue sky filing fees ............................................. 5,500
Accountant's fees and expenses .................................... 30,000
Legal fees and expenses ...................................... 42,375
Printing ..................................................... 50,000
Marketing expenses ............................................ 25,000
Postage ...................................................... 16,000
Transfer Agent's fees .......................................... 5,000
Miscellaneous ..................................................... 19,647
Total .........................................................$ 195,000
</TABLE>
The Registrant will bear all expenses shown above.
Item 26. Recent Sales of Unregistered Securities
(a) The following information is given for all securities that Immecor
Corporation (the "Company") sold within the past three years without registering
the securities under the Securities Act.
Date Title Amount
(1) 1/14/94 Common Stock 1,000,000
(2) 2/1/94 Common Stock 500,000
(3) 3/1/94 Common Stock 500,000
(4) 12/31/94 Common Stock 421,000
(b) No underwriters were used in connection with any of the issuances of
shares.
The class of persons to whom the Company issued shares was those
persons known to the
(1) Founders
(2) Founders
(3) Directors, Business associates
(4) Employees, Directors, private investors
(c) No underwriters were used in connection with any of the issuances of
shares or options so there were no underwriting discounts or commissions. The
transactions and the types and amounts of consideration received by the Company
were:
(1) $25,000
(2) $25,000
(3) ANC common stock valued at $60,000.
See "Legal Proceedings and Litigation."
(4) $210,500
(d) Total amounts are well within the $1,000,000 limit of Rule 504.
<PAGE>
Item 27. Exhibits
The exhibits listed below are filed as part of this Registration
Statement pursuant to item 601 of Regulation S-B.
Exhibit
Number Description
Articles of Incorporation
Amendment to Articles of Incorporation filed March 7,
1994
By-laws
Financial Data Schedule
Form of Common Stock Certificate
Opinion and consent of counsel with respect to the
legality of the shares being registered
Employment contract with Jason C. Lai
Lease of Registrants facilities and Amendments to
Lease Agreement
Consent of L. V. Dorn II, Certified Public Accountant
Consent of Kenneth M. Christison, Attorney at Law
(Reference is made to Exhibit 5)
Power of Attorney
Share Purchase Agreement
<PAGE>
Item 28. Undertakings
(a) The Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by section 10(a)(3)
of the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information in the Registration
Statement; and
(iii) Include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act treat each
post-effective amendment as a new Registration Statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering. (e) Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1993, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2, and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of Rohnert
Park, State of California, on May 5, 1997.
By ___/s/__________________________ By __/s/____________________________
Heinot H. Hintereder, President & CEO Keith W. Racuya, Scretary
Each person whose signature appears below appoints Heinot H.
Hintereder, Jason C. Lai, Keith W. Racuya, Richard C. Thiede and Nhon K. Tran or
any of them, his or her attorney-in-fact, with full power of substitution and
resubstitution, to sign any and all amendments (including post-efective
amendments) to this Registration Statement on Form SB-2 of Immecor Corporation,
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that said attorney-in-fact and agent or his or her
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
Signatures Title Date
/s/ President & Chief Executive Officer May 5, 1997
Heinot H. Hintereder
/s/ Vice President, Sales & Marketing May 5, 1997
Jason C. Lai Director
/s/ Secretary and Director May 5, 1997
Keith W. Racuya
/s/ Treasurer and Director May 5, 1997
Richard C. Thiede
/s/ Vice President, Engineering May 5, 1997
Nhon K. Tran Director
<PAGE>
EXHIBIT INDEX
Item 27. Exhibits
The exhibits listed below are filed as part of this Registration
Statement pursuant to item 601 of Regulation S-B.
Page Exhibit
Number Number Description
Articles of Incorporation
Amendment to Articles of Incorporation filed March 7,
1994
By-laws
Financial Data Schedule
Form of Common Stock Certificate
Opinion and consent of counsel with respect to the
legality of the shares being registered
Employment contract with Jason C. Lai
Lease of Registrants facilities
Consent of L. V. Dorn II, Certified Public Accountant
Consent of Kenneth M. Christison, Attorney at Law
(Reference is made to Exhibit 5)
Power of Attorney
Share Purchase Agreement
<PAGE>
State of California
Office of the Secretary of State
Corporation Division 1832187
I, March Fong Eu, Secretary of State of the State of California, hereby certify:
That the annexed transcript has been compared with the corporate record on file
in this office, of which it purports to be a copy, and that same is full, true
and correct. In witness whereof, I execute this certificate and affix the Great
Seal of the State of California this January 21, 1994. March Fong Eu, Secretary
of State
The Great Seal of the State of California
<PAGE>
Articles of Incorporation
of
Immecor Corporation 1832187
Endorsed
Filed
In the office of the Secretary of State of the State of
California January 14, 1994
/s/
March Fong Eu, Secretary of State
Name
One: The name of this corporation is
IMMECOR CORPORATION
Purpose
Two: The purpose of the corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of California other than the banking business, the trust company
business, or the practice of a profession permitted to be incorporated by the
California Corporations Code.
Agent for Service:
Three: The name and address in the State of California of the corporation's
agent for service of process are:
Kenneth M. Christison
164 Almonte Boulevard
Mill Valley, California 94941
Authorized Shares
Four: The total number of shares which the corporation is authorized to issue is
50,000,000, all of the same class, designated "Common Stock".
Kenneth M. Christison
The undersigned declares that he has executed these Articles of Incorporation
and that this instrument is his act and deed.
Kenneth M. Christison
<PAGE>
CERTIFICATE OF AMENDMENT
OF ARTICLES OF INCORPORATION OF
IMMECOR CORPORATION
Heinot H. Hintereder and Daniel Schoep certify that:
1. They are the President and Secretary, respectively, of Immecor Corporation, a
California corporation.
2. The following amendment to the articles of incorporation of the corporation
has been duly approved by the board of directors of the corporation:
Artivle Four of the articles of incorporation is amended to read in its
entirety as follows:
Four: (a) The corporation is authorized to issue two classes of shares
to be designated respectively "Common" and "Preferred" shares which may be
issued in one or more series, the rights, preferences, and designations of which
series may be fixed by resolution of the Board of Directors. The number of
authorized Common shares is 50,000,000 and the number of authorized Preferred
shares is 20,000,000. On amendment of this Article Four to read as set forth
above, each oustanding share of capital stock is reclassified and changed into
one Common share.
(b) The Preferred shares may be issued in one or more series
and the Board of Directors shall have the authority to fix, by resolution, the
rights, preferences, and designations of the various series. 3. The amendment
was duly approved by the required vote of shareholders in accordance with |902
of the California Corporation Code. The total number of outstanding shares to
vote with respect to the amendment was 10,000,000, the favorable vote of a
majority of such shares is required to approve the amendment, and the number of
such shares voting in favor of the amendment equaled or exceeded the required
vote. 4. The amendment shall become effective on the date of the filing of this
certificate of amendment with the Office of the Secretary of State.
Heinot H. Hintereder, President
Daniel Schoep, Secretary
BY-LAWS
OF
IMMECOR CORPORATION
ARTICLE I
Offices
Section 1. Principal Office.
The principal executive office in the State of California for the
transaction of the business of the corporation (called the principal office) is
fixed and located at:
100 Professional Center Drive
Rohnert Park, CA 94928
The Board of Directors shall have the authority from time to time to
change the principal office from one location to another within the State as it
deems appropriate.
Section 2. Other Offices.
One or more branches or other subordinate offices may at any time be
fixed and located by the Board of Directors at such place or places within or
without the State of California as it deems appropriate.
ARTICLE II
Meetings of Shareholders
Section 3. Place of Meetings.
Meetings of the shareholders shall be held at any place within or
outside the State of California that may be designated either by the Board of
Directors in accordance with these By-Laws, or by the written consent of all
persons entitled to vote at the meeting, given either before, during or after
the meeting and filed with the Secretary of the corporation. If no such
designation is made, the meetings shall be held at the principal office of the
corporation designated in Section 1 of these By-Laws.
Section 4. Annual Meetings.
The annual meeting of the shareholders shall be held on the second
Thursday in March each year, if not a legal holiday, and if a legal holiday,
then on the next succeeding business day, at the hour of 10:00 A.M., at which
time the shareholders shall elect a Board of Directors, consider reports of the
affairs of the corporation, and transact such other business as may properly be
brought before the meeting.
If the annual meeting of shareholders shall not be held on the date
above specified, the Board of Directors shall cause such a meeting to be held as
soon thereafter as convenient, and any business transacted or election held at
such meeting shall be as valid as if transacted or held at an annual meeting on
the date above specified.
Section 5. Special Meetings.
Special meetings of the shareholders, for any purpose or purposes
whatsoever, may be called at any time by the Board of Directors, Chairman of the
Board, the President, or by holders of shares entitled to cast not less than 10
percent of the votes at the meeting.
Section 6. Notice of Shareholders' Meetings.
Whenever shareholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given not less than 10 (or, if
sent by third class mail, 30) or more than 60 days before the date of the
meeting to each shareholder entitled to vote at the meeting. Such notice shall
state the place, date and hour of the meeting and (1) in the case of a special
meeting, the general nature of the business to be transacted, and no other
business may be transacted, or (2) in the case of the annual meeting, those
matters which the Board, at the time of the mailing of the notice, intends to
present for action by the shareholders, but subject to the provisions of Section
601(f) of the Corporations Code, any proper matter may be presented at the
meeting for such action. The notice of any meeting at which directors are to be
elected shall include the names of nominees intended at the time of the notice
to be presented by management for election.
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Notice of shareholders' meeting shall be given either personally or by
first class mail or other means of written communication, addressed to the
shareholder at the address of such shareholder appearing on the books of the
corporation or given by the shareholder to the corporation for the purpose of
notice; or if no such address appears or is given, at the place where the
principal office of the corporation is located. The notice shall be deemed to
have been given at the time when delivered personally or deposited in the mail
or sent by other means of written communication.
If any notice addressed to the shareholder at the address of such
shareholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the shareholder
at such address, all future notices shall be deemed to have been duly given
without further mailing if the same shall be available for the shareholder upon
written demand of the shareholder at the principal office of the corporation for
a period of one year from the date of the giving of the notice to all other
shareholders.
Upon request in writing to the Chairman of the Board, President, Vice
President or Secretary by any person entitled to call a special meeting of
shareholders, the officer forthwith shall cause notice to be given to
shareholders entitled to vote that a meeting will be held at a time requested by
the person or persons calling the meeting, not less than 35 nor more than 60
days after the receipt of the request.
Section 7. Quorum.
The presence at any meeting, in person or by proxy, of the persons
entitled to vote a majority of the voting shares of the corporation shall
constitute a quorum for the transaction of business. Shareholders present at a
valid meeting at which a quorum is initially present may continue to do business
until adjournment notwithstanding the withdrawal of enough shareholders to leave
less than a quorum, if any action taken (other than adjournment) is approved by
persons voting more than 25 percent of the voting shares.
Section 8. Adjourned Meeting.
Any annual or special shareholders' meeting may be adjourned from time
to time, even though a quorum is not present, by vote of the holders of a
majority of the voting shares present at the meeting either in person or by
proxy, provided that in the absence of a quorum, no other business may be
transacted at the meeting except as provided in Section 7.
Notice need not be given of the adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting, any business may be transacted which might have been
transacted at the original meeting. If the adjournment is for more than 45 days
or if after the adjournment, a notice of the adjourned meeting shall be given to
each shareholder of record entitled to vote at the meeting.
Section 9. Waiver of Consent by Shareholders.
The transactions of any meeting of shareholders, however called and
noticed, and wherever held, are as valid as though had a meeting been duly held
after regular call and notice, if a quorum is present either in person or by
proxy, and if, either before, during, or after the meeting, each of the persons
entitled to vote, not present in person or by proxy, signs a written waiver of
notice or a consent to the holding of a meeting or an approval of the minutes
thereof. All such waivers, consents and approvals shall be filed with the
corporate records or made a part of the minutes of the meeting. Attendance of a
person at a meeting shall constitute a waiver of notice of and presence at such
meeting, except when the person objects, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened and except that attendance at such a meeting is not a waiver of any
right to object to the consideration of matters required by Section 6 of these
By-Laws or Section 601(f) of the Corporations Code to be included in the notice
but not so included, if such objection is expressly made at the meeting. Neither
the business to be transacted at nor the purpose of any regular or special
meeting of shareholders need be specified in any written waiver of notice,
consent to the holding of the meeting or approval of the minutes thereof, except
as provided in Section 601(f) of the Corporations Code.
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Section 10. Action Without Meeting.
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding shares having not less than a minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted, except that
unanimous written consent shall be required for election of directors to
non-vacant positions.
Unless the consents of all shareholders entitled to vote have been
solicited or received in writing, notice shall be given to non-consenting
shareholders to the extent required by the Corporations Code.
Any shareholder giving a written consent, or the shareholder's proxy
holder, or a transferee of the shares or a personal representative or proxy
holder of the shareholder, may revoke the consent by a writing received by the
corporation prior to the time that written consents of the number of shares
required to authorize the proposed action have been filed with the Secretary of
the corporation, but may not do so thereafter. Such revocation is effective upon
its receipt by the Secretary of the corporation.
Section 11. Voting Rights; Cumulative Voting.
Only persons in whose names shares entitled to vote stand on the stock
records of the corporation at the close of business on the record date fixed by
the Board of Directors as provided in Section 40 for the determination of
shareholders of record shall be entitled to notice of and to vote at such
meeting of shareholders. If no record date is fixed, the record date for
determining shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the business day next
preceding the day on which notice is given or, if notice is waived, at the close
of business on the business day next preceding the day on which the meeting is
held; the record date for determining shareholders entitled to give consent to
corporate action by the Board has been taken, shall be the day on which the
first written consent is given; and the record date for determining shareholders
for any other purpose shall be at the close of business on the day on which the
Board adopts the resolution relating thereto, or the 60th day prior to the date
of such other action, whichever is later.
Except as provided in the next following sentence and except as may be
otherwise provided in the Articles of Incorporation, each shareholder entitled
to vote shall be entitled to one vote for each share held on each matter
submitted to a vote of shareholders. In the election of directors, each such
shareholder complying with the following paragraph may cumulate such
shareholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of votes to which the
shareholder's shares are normally entitled, or distribute the shareholder's
votes on the same principle among as many candidates as the shareholder thinks
fit.
No shareholder shall be entitled to cumulate votes in favor of any
candidate or candidates unless the name(s) of such candidate(s) has(have) been
placed in nomination prior to the voting and the shareholder has given notice at
the meeting prior to the voting, of the shareholder's intention to cumulate the
shareholder's votes. If any one shareholder has given such notice, such fact
shall be announced to all shareholders and proxies present, who may then
cumulate their votes for candidates in nomination.
In any election of directors, the candidates receiving the highest
number of votes of the shares entitled to be voted for them, up to the number of
directors to be elected by such shares, shall be deemed elected.
Voting may be by voice or ballot, provided that, upon the demand of any
shareholder made at the meeting and before the voting begins, any election of
directors must be by ballot.
Section 12. Proxies.
Every person entitled to vote shares may authorize another person or
persons to act by proxy with respect to such shares. All proxies must be in
writing and must be signed by the shareholder confirming the proxy or his
attorney-in-fact. No proxy shall be valid after the expiration of 11 months from
the date thereof, unless otherwise provided in the proxy. Every proxy continues
in full force and effect until revoked by the person executing it prior to the
vote pursuant thereto, except as otherwise provided in Section 705 of the
Corporations Code. Such revocation may be effected by a writing delivered to the
corporation stating that the proxy is revoked or by a subsequent proxy
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executed by the person executing the prior proxy and presented to the meeting,
or, as to any meeting, by attendance at such meeting and voting in person by the
person executing the proxy. The dates contained on the forms of proxy
presumptively determine the order of execution, regardless of the postmark dates
on the envelopes in which they are mailed.
Section 13. Inspectors of Election.
In advance of any meeting of shareholders the Board may appoint
inspectors of election to act at the meeting and any adjournment thereof. If
inspectors of election are not so appointed, or if any persons so appointed fail
to appear or refuse to act, the chairman of any meeting of shareholders may, and
on the request of any shareholder or a shareholder's proxy shall, appoint
inspectors of election (or persons to replace those who so fail or refuse) at
the meeting. The number of inspectors shall be either one or three. If appointed
at a meeting on the request of one or more shareholders or proxies, the majority
of shares represented in person or by proxy shall determine whether one or three
inspectors are to be appointed. If there are three inspectors of election, the
decision, act, or certificate of a majority is effective in all respects as the
decision, act, or certificate of all.
The inspectors of elections shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, and the authenticity, validity, and effect of
proxies, receive votes, ballots or consents, hear and determine all challenges
and questions in any way arising in connection with the right to vote, count and
tabulate all votes or consents, determine when the polls shall close, determine
the result thereof, and take such actions as may be proper to conduct the
election or vote with fairness to all shareholders.
ARTICLE III
Directors; Management
Section 14. Powers.
Subject to any provisions of the Articles of Incorporation, By-Laws,
and of law limiting the powers of the Board of Directors or reserving powers to
the shareholders, the Board of Directors shall, directly or by delegation,
manage the business and affairs of the corporation and exercise all corporate
powers permitted by law.
Section 15. Number and Qualification of Directors.
The authorized number of directors shall be not less than Five (5) nor
more than thirteen (13) unless and until changed by an amendment to this Section
15 adopted by the shareholders pursuant to Section 49. The exact number of
directors within said range shall be fixed by an amendment to this Section 15
adopted by the Board of Directors; and unless and until so amended, the exact
number of directors is hereby fixed at five (5). A reduction in the authorized
number of directors shall not remove any director prior to the expiration of
such director's term of office. Directors need not be shareholders of the
corporation.
Section 16. Election and Term of Office.
The directors shall be elected annually by the shareholders at the
annual meeting of the shareholders; provided, that if for any reason, said
annual meeting or an adjournment thereof is not held or the directors are not
elected at such meeting, then the directors may be elected at any special
meeting of the shareholders called and held for that purpose. The term of office
of the directors shall, except as provided in Section 17, begin immediately
after their election and shall continue until their respective successors are
elected and qualified; except as otherwise provided herein, such term shall be
for a period of no less than one year.
Section 17. Removal of Directors.
Unless otherwise specifically provided herein, a director may be
removed from office:
(a) by the Board of Directors if he is declared of unsound mind by
the order of court or convicted of a felony;
(b) without cause by a vote of shareholders holding a majority of the
outstanding shares entitled to vote at an election of directors; howver, unless
the entire Board is removed, an individual director shall not be removed if the
votes cast against removal, or not consenting in writing to such removal,
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would be sufficient to elect such director if voted
cumulatively with all authorized shares voting, or, if such action is taken by
written consent, all shares entitled to vote were voted, and the entire num- ber
of directors authorized at the time of the director's most recent election were
then being elected; or
(c) by the Superior Court of the county in which the principal office
is located, at the suit of shareholders holding at least ten percent (10%) of
the number of outstanding shares of any class, in case of any fraudulent or
dishonest act or gross abuse of authority or discretion with reference to the
corpo- ration.
(d) By the Chairperson of the Board if the director remains
absent from three (3) consecutive board meetings.
No reduction of the authorized number of directors shall have the
effect of removing any director before his term of office expires.
Section 18. Vacancies.
A vacancy or vacancies on the Board of Directors shall exist on the
death, resignation, or removal of any director, or if the authorized number of
directors is increased or the shareholders fail to elect the full authorized
number of directors.
Except for a vacancy created by the removal of a director, vacancies on
the Board of Directors may be filled by a majority of the remaining directors,
although less than a quorum, or by a sole remaining director, and each director
elected in this manner shall hold office until a successor is elected at an
annual or special shareholders' meeting.
The shareholders may elect a director at any time to fill any vacancy
not filled by the directors. Any such election by written consent requires the
consent of a majority of the outstanding shares entitled to vote, except for a
vote to fill a vacancy created by removal, which requires the unanimous consent
of the outstanding shares entitled to vote.
Any director may resign, effective as of the date of notice to the
Chairman of the Board, the President, the Secretary, or the Board of Directors
of the corporation.
If such notice is not in writing, it shall be effective on the date
given only if confirmed by a writing received within a reasonable time of such
non-written notice.
Section 19. Place of Meetings.
Regular and special meetings of the Board of Directors shall be held
at any place within or outside the State of California that is designated by
resolution of the Board or, either before or after the meeting, consented to in
writing by a majority of the Board members. If the place of a regular or special
meeting is not fixed by resolution or written consents of the Board, it shall be
held at the corporation's principal office.
Section 20. Annual Meetings.
Immediately following each annual shareholders' meeting, the Board of
Directors shall hold an annual meeting to organize, elect officers, and transact
other business. Notice of this meeting shall not be required.
Section 21. Other Regular Meetings.
Other regular meetings of the Board of Directors shall be held on the
second Tuesday in November of each year, at the hour of 10:00 A.M., provided,
however, if this day falls on a legal holiday, the meeting shall be held at the
same time on the next succeeding day that is a full business day. Notice of
these regular meetings shall not be required.
Section 22. Special Meetings.
Special meetings of the Board of Directors for any purpose may be
called at any time by the Chairman of the Board, or the President, or any Vice
President, or the Secretary, or any two directors.
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Special meetings of the Board shall be held upon four days' notice by
mail or by 48 hours' notice delivered personally or by telephone or telegraph.
If notice is by telephone, it shall be complete when the person calling the
meeting believes in good faith that the notified person has heard and
acknowledged the notice. If the notice is by mail or telegraph, it shall be
complete when deposited in the United States mail or delivered to the telegraph
office at the place where the corporation's principal office is located, charges
prepaid, and addressed to the notified person at such person's address as it
appears on the corporate records or, if it is not on these records or is not
readily ascertainable, at the place where the regular Board meeting is held.
Section 23. Quorum.
A majority of the authorized number of directors, but in no event less
than three (3), shall constitute a quorum for the transaction of busines;
except, however, to adjourn a meeting at which a quorum is present, the vote of
a majority of the directors present shall be regarded as the act of the Board of
Directors, unless the vote of a greater number is required by law, the Articles
of Incorporation, or these By-Laws.
A meeting at which a quorum is initially present may continue to
transact business, notwithstanding the withdrawal of directors, if any action
taken is approved by a majority of the required quorum for such meeting.
Section 24. Contents of Notice and Waiver of Notice.
Neither the business to be transacted at, nor the purpose of, any
regular or special Board meeting need be specified in the notice or waiver of
notice of the meeting. Notice of a meeting need not be given to any director who
signs a waiver of notice or a consent to holding the meeting, or an approval of
the minutes thereof, either before or after the meeting, or who attends the
meeting without protesting the lack of notice to said director, either prior
thereto or at its commencement. All such waivers, consents, and approvals shall
be filed with the corporate records or made a part of the minutes of the
meeting.
Section 25. Adjournment.
A majority of the directors present, whether or not a quorum is
present, may adjourn any meeting to another time and place.
Section 26. Notice and Adjournment.
Notice of the time and place of holding an adjourned meeting need not
be given to absent directors if the time and place are fixed at the meeting
being adjourned, except that if the meeting is adjourned for more than 24 hours,
such notice shall be given prior to the adjourned meeting, to the directors who
were not present at the time of the adjournment.
Section 27. Telephone Participation.
Members of the Board may participate in a meeting through use of
conference telephone or similar communications equipment, so long as all members
participating in such meetings can hear one another. Such participation
constitutes presence in person at such meeting.
Section 28. Action without Meeting.
The Board of Directors may take any action without a meeting that may
be required or permitted to be taken by the Board at a meeting, if all members
of the Board, individually or collectively, consent in writing to the action.
The written consent or consents shall be filed in the minutes of the proceedings
of the Board. Such action by written consent shall have the same effect as an
unanimous vote of directors.
Section 29. Fees and Compensation.
Directors and members of committees shall receive neither compensation
for their services nor reimbursement for their expenses, unless such payments
are fixed by resolution of the Board.
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ARTICLE IV
Officers
Section 30. Officers.
The officers of the corporation shall be a President/ Chief Executive
Officer, a Chief Operating Officer, a Secretary, and a Treasurer. The
corporation may also have, at the discretion of the Board of Directors, a
Chairman of the Board, one or more Vice Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers, and any other officer who may be
appointed under Section 32 of these By-Laws. Any two or more offices, except
those of President/CEO and Secretary, may be held by the same person.
Section 31. Election.
The officers of the corporation, except those appointed under Section
32 of these By-Laws, shall be chosen annually by the Board of Directors, and
shall serve at the pleasure of the Board of Directors, subject to any rights
conferred under a contract of employment. No such contract shall bind the
corporation unless approved in advance by the Board of Directors.
Section 32. Subordinate officers.
The Board of Directors may appoint, and may authorize the President/CEO
to appoint, any other officers that the business of the corporation may require,
each of whom shall hold office for the period, have the authority, and perform
the duties specified in the By-Laws or by the Board of Directors.
Section 33. Removal and Resignation.
Any officer may be removed with or without cause, either by the Board
of Directors at any regular or special meeting or, except for an officer chosen
by the Board, by any officer on whom the power of removal may be conferred by
the Board.
Any officer may resign at any time by giving written notice to the
Board of Directors, the President/CEO or the Secretary of the Corporation. An
officer's resignation shall take effect when it is received or at any later time
specified in the resignation. Unless the resignation specifies otherwise, its
acceptance by the corporation shall not be necessary to make it effective. This
paragraph shall not operate to diminish the rights of the corporation under any
contract of employment.
Section 34. Vacancies.
A vacancy in any office because of death, resignation, removal,
disqualification, or any other cause shall be filled in the manner prescribed in
the By-Laws for regular appointments to the office.
Section 35. Chairman of the Board.
The Board of Directors may, in its discretion, elect a Chairman of the
Board who shall preside at all meetings of the directors and shareholders at
which he is present and shall exercise and perform any other powers and duties
assigned to him by the Board or prescribed by the By-Laws.
Section 36. President/Chief Executive Officer.
Subject to any supervisory powers that may be given by the Board of
Directors or the By-Laws to the Chairman of the Board, the President/Chief
Executive Officer shall be the corporation's chief executive officer and shall,
subject to the control of the Board of Directors, have general supervision,
direction, and control over the corporation's business and officers. He shall
preside as chairman at all meetings of the shareholders and directors not
presided over by the Chairman of the Board. He shall be ex officio member of all
standing committees, shall have the general powers and duties of management
usually vested in a corporation's president; shall have any other powers and
duties that are prescribed by the Board of Directors or the By-Laws; and shall
be primarily responsible for carrying out all orders and resolutions of the
Board of Directors.
Section 36. President/Chief Executive Officer.
Subject to any supervisory powers that may be given by the Board of
Directors or the By-Laws to the Chair-
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man of the Board, the President/Chief Executive Officer shall be the
corporation's chief executive officer and shall, subject to the control of the
Board of Directors, have general supervision, direction, and control over the
corporation's business and officers. He shall preside as chairman at all
meetings of the shareholders and directors not presided over by the Chairman of
the Board. He shall be ex officio member of all standing committees, shall have
the general powers and duties of management usually vested in a corporation's
president; shall have any other powers and duties that are prescribed by the
Board of Directors or the By-Laws; and shall be primarily responsible for
carrying out all orders and resolutions of the Board of Directors.
Section 37. Chief Operating Officer.
The Chief Operating Officer shall, subject to the control of the
President/Chief Executive officer, have responsibility for the specific
supervision, direction, and over the day to day activities of the corporation's
officers and employees. He shall have any other powers and duties that are
prescribed by the Board of Directors, the By-Laws, or the President/Chief
Executive Officer.
Section 38. Vice Presidents.
If the President/CEO is absent or is unable or refuses to act, the Vice
Presidents in order of their rank as fixed by the Board of Directors or, if not
ranked, the Vice President 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/CEO. Each Vice
President shall have any other powers and perform any other duties that are
prescribed for him by the Board of Directors or the By-Laws.
Section 39. Secretary.
The Secretary shall keep or cause to be kept, and be available at the
principal office and any other place that the Board of Directors specifies, a
book of minutes of all directors' and shareholders' meetings. The minutes of
each meeting shall state the time and place that it was held; whether it was
authorized; the notice given; the names of those present or represented at
shareholders' meetings; and the proceedings of the meetings. A similar minute
book shall be kept for any committees, if required by the Board.
The Secretary shall keep, or cause to be kept, at the principal office
or at the office of the corporation's transfer agent, a share register, or
duplicate share register, showing the shareholders' names and addresses, the
number and classes of sharesheld by each, the number and date of each
certificate issued for these shares, and the number and date of cancellation of
each certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all
directors' and shareholders' meetings required to be given under these By-Laws
or by law, shall keep the corporate seal in safe custody, and shall have any
other powers and perform any other duties that are prescribed by the Board of
Directors or the By-Laws.
Section 40. Treasurer.
The Treasurer shall be the corporation's chief financial officer and
shall keep and maintain, or cause to be kept and maintained, adequate and
correct accounts of the corporation's properties and business transactions,
including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital, retained earnings, and shares. The books of the account shall
at all reasonable times be open to inspection by any director.
The Treasurer shall deposit all money and other valuables in the name
and to the credit of the corporation with the depositories designated by the
Board of Directors. He shall disburse the corporation's funds as ordered by the
Board of Directors; shall render to the President and directors, whenever they
request it, an account of all his transactions as Treasurer and of the
corporation's financial condition; and shall have any other powers and perform
any other duties that are prescribed by the Board of Directors or By-Laws.
If required by the Board of Directors, the Treasurer shall give the
corporation a bond in the amount and with the surety or sureties specified by
the Board for faithful performance of the duties of his office and for
restoration to the corporation of all its books, papers, vouchers, money, and
other property of every kind in his possession or under his control on his
death, resignation, retirement, or removal from office.
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ARTICLE V
General Corporate Matters
Section 41. Record Date and Closing of Stockbooks.
The Board of Directors may fix a time in the future as a record date
for determining shareholders entitled to notice of and to vote at any
shareholders' meeting; to receive any dividend, distribution, or allotment of
rights; or to exercise rights in respect of any other lawful action, including
change, conversion, or exchange of shares. The record date shall not, however,
be more than sixty (60) nor less than ten (10) days prior to the date of such
meeting nor more than sixty (60) days prior to any other action. If a record
date is fixed for a particular meeting or event, only shareholders of record on
that date are entitled to notice and to vote and to receive the dividend,
distribution, or allotment of rights or to exercise the rights, as the case may
be, notwithstanding any transfer of any share on the books of the corporation
after the record date.
A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting
unless the Board fixes a new record date for the adjourned meeting, but the
Board shall fix a new record date if the meeting is adjourned for more than 45
days.
Section 42. Corporate Books and Inspection by Shareholders and Directors.
Books and records of account and minutes of the proceedings of the
shareholders, Board, and committees of the Board, shall be kept available for
inspection at the principal office. A record of the shareholders and the number
and class of shares held by each, shall be kept available for inspection at the
principal office or at the office of the corporation's transfer agent or
registrar.
A shareholder or shareholders holding at least five percent (5%) in
the aggregate of the outstanding voting shares of the corporation shall have an
absolute right to do either or both of the following: (1) inspect and copy the
record of shareholders' names and addresses and shareholdings during usual
business hours upon five business days' prior written demand upon the
corporation, or (2) obtain from the transfer agent for the corporation, upon
five business days' prior written demand and upon the tender of its usual
charges for such a list (the amount of which charges shall be stated to the
shareholder by the transfer agent upon request), a list of the shareholders,
names and addresses, who are entitled to vote for the election of directors, and
their shareholdings, as of the most recent record date for which it has been
compiled or as of a date specified by the shareholder subsequent to the date of
demand. The record of shareholders shall also be open to inspection and copying
by any shareholder or holder of a voting trust certificate at any time during
usual business hours upon written demand on the corporation, for a purpose
reasonably related to such holder's interest as a shareholder or holder of a
voting trust certificate. Inspection and copying may be made in person or by
agent or attorney.
Every director shall have the absolute right at any reasonable time to
inspect and copy all books, records and documents of every kinds and to inspect
the physical properties of the corporation and its subsidiary corporations,
domestic or foreign. Such inspection by a director may be in person or by agent
or attorney and includes the right to copy and make extracts.
Section 43. Checks, Drafts, Evidences of Indebtedness.
All checks, drafts, or other orders for payment of money, notes, and
all mortgages, or other evidences of indebtedness, issued in the name of or
payable to the corporation, and all assignments and endorsements of the
foregoing, shall be signed or endorsed by the person or persons and in the
manner specified by the Board of Directors.
Section 44. Corporate Contracts and Instruments; How Executed.
Except as otherwise provided in the By-Laws, officers, agents, or
employees must be authorized by the Board of Directors to enter into any
contract or execute any instrument in the corporation's name and on its behalf.
This authority may be general or confined to specific instances.
Section 45. Stock Certificates.
One or more certificates for shares of the corporation's capital stock
shall be issued to each shareholder for
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any of his shares that are fully paid up. The corporate seal or its facsimile
may be fixed on certificates. All certificates shall be signed by the Chairman
of the Board, President/CEO, or a Vice President and the Secretary, Treasurer,
or an Assistant Secretary. Any or all of the signatures on the certificate may
be facsimile signatures.
Section 46. Lost Certificates.
No new share certificate that replaces an old one shall be issued
unless the old one is surrendered and cancelled at the same time; provided,
however, that if any share certificate is lost, stolen, mutilated, or destroyed,
the Board of Directors may authorize issuance of a new certificate replacing the
old one on any terms and conditions, including a reasonable arrangement for
indemnification of the corporation, that the Board may specify.
Section 47. Reports to Shareholders.
The requirement for the annual report to shareholders referred to in
Section 1501(a) of the California Corporations Code is hereby expressly waived
so long as there are less than 100 holders of record of the corporation's
shares. The Board of Directors shall cause to be sent to the shareholders such
annual or other periodic reports as they consider appropriate or as otherwise
required by law. In the event the corporation has 100 or more holders of its
shares, an annual report complying with Section 1501(a) and, when applicable,
Section 1501(b) of the Corporations Code shall be sent to the shareholders not
later than 120 days after the close of the fiscal year and at least fifteen (15)
days prior to the annual meeting of shareholders to be held during the next
fiscal year.
If no annual report for the last fiscal year has been sent to
shareholders, the corporation shall, upon the written request of any shareholder
made more than 120 days after the close of such fiscal year, deliver or mail to
the person making the request within 30 days thereafter the financial statements
referred to in Section 1501(a) for such year.
A shareholder or shareholders holding at least five percent (5%) of
the outstanding shares of any class of a corporation may make a written request
to the corporation for an income statement of the corporation for the
three-month sixmonth, or nine-month period of the current fiscal year ended more
than 30 days prior to the date of the request and a balance sheet of the
corporation as of the end of such period and, in addition, if no annual report
for the last fiscal year has been sent to shareholders, the statements referred
to in Section 1501(a) of the Corporations Code for the last fiscal year. The
statement shall be delivered or mailed to the shareholder making the request
within 30 days thereafter. A copy of the statements shall be kept on file in the
principal office of the corporation for twelve (12) months and they shall be
exhibited at all reasonable times to any shareholder demanding an examination of
them or a copy shall be mailed to such shareholder. The income statements and
balance sheets referred to shall be accompanied by the report thereon, if any,
of any independent accountants engaged by the corporation or the certificate of
an authorized officer of the corporation that such financial statements were
prepared without audit from the books and records of the corporation.
Section 48. Indemnity of Officers and Directors.
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any proceeding (other than an action by or in
the right of the corporation to procure a judgment in its favor) by reason of
the fact that such person is or was an agent of the corporation, against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding, if such person acted in
good faith and in a manner such person reasonably believed to be in the best
interest of the corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of such person was unlawful. The
termination of any proceeding by judgment, order, settlement, conviction or upon
a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which the
person reasonably believed to be in the best interest of the corporation or that
the person had reasonable cause to believe that the person's conduct was
unlawful.
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action by
or in the right of the corporation to procure a judgment in its favor by reason
of the fact that such person is or was an agent of the corporation, against
expenses actually and reasonably incurred by such person in connection with the
defense or settlement of such action if such person acted in good faith, in a
manner such person believed to be in the best interests of the corporation and
with such care including reasonable
-10-
<PAGE>
inquiry, as an ordinarily prudent person in a like position would use under
similar circumstances; except that no indemnification shall be made:
(1) In respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation during the performance
of such person's duty to the corporation, unless and only to the extent that the
court in which such proceeding is or was pending shall determine upon
application that, in view of all the circumstances of the case, such person is
fairly and reason- ably entitled to indemnity for the expenses such court shall
determine;
(2) Of amounts paid in settling or otherwise disposing of a threatened
or pending action, with or without court approval; or
(3) Of expenses incurred in defending a threatened or pending action
which is settled or otherwise disposed of without court approval.
Any indemnification under this Section 47 shall be made by the
corporation only if authorized in the specific case, upon a determination that
indemnification of the agent is proper in the circumstances because the agent
has met the applicable standard of conduct by:
(1) A majority vote of a quorum consisting of directors who are
not parties to such proceeding; or
(2) Approval of the shareholders by the affirmative vote of a majority
of the shares entitled to vote represented at a duly held meeting at which a
quorum is present or by the written consent of shareholders as provided in
Section 10, with the shares owned by the person to be indemnified not being
entitled to vote thereon.
Upon written request of an agent seeking indemnification under this
Section, the Board by majority vote shall promptly make a determination in good
faith as to whether the applicable standard of conduct has been met. If a
positive determination is made, indemnification shall be authorized forthwith if
the directors approving the determination include a majority of a quorum of
directors not parties to the proceeding, otherwise the question of authorization
by the shareholders shall be put to a shareholder vote no later than the date of
the next annual meeting and said question shall be included in any management
proxy solicitation for or prior to said meeting. Expenses incurred in defending
any proceeding shall be advanced by the corporation prior to the final
disposition of such proceeding upon receipt of an undertaking by or on behalf of
the agent to repay such amount unless it shall be determined ultimately that the
agent is entitled to be indemnified as authorized in this Section.
For the purposes of this Section, "agent" means any person who is or
was a director, officer, employee or other agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent, of another foreign or domestic corporation, partnership, joint
venture, trust or other enterprise, or was a director, officer, employee or
agent of a foreign or domestic corporation which was predecessor corporation of
the corporation or of another enterprise at the request of such predecessor
corporation; "proceeding" means any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative; and
"expenses" includes without limitation attorneys' fees and any expenses of
establishing a right to indemnification.
ARTICLE VI
Amendments
Section 49. Amendment by Shareholders.
By-Laws may be adopted, amended or repealed by the affirmative vote or
written consent of a majority of the outstanding shares entitled to vote;
provided, however, that an amendment to Section 15 reducing the number of
directors on a fixed-number board or the minimum number of directors on a
variable-number board to a number less than five cannot be adopted if the votes
cast against its adoption at a meeting or the shares not consenting, in the case
of action by written consent, are equal to more than 16-2/3 percent of the
outstanding shares entitled to vote.
-11-
<PAGE>
Section 50. Amendment by Directors.
Subject to the right of shareholders under the preceding Section 49,
By-Laws, may be adopted, amended, or repealed by the Board of Directors, except
that only the shareholders can adopt a by-law or amendment thereto which
specifies or changes the number of directors on a fixed-number Board, or the
minimum or maximum number of directors on a variable-number Board, or which
changes from a fixed-number Board to a variable-number Board or vice versa.
ARTICLE VII
Committees of the Board
Section 51. Committees of the Board.
The Board of Directors may, by resolution adopted by a majority of the
authorized number of directors, designate one or more committees, each
consisting of two or more directors, to serve at the pleasure of the Board and
with such authority and organization as the Board may from time to time
determine. The Board may designate one or more directors as alternate members of
any committee, who may replace any absent member at any meeting of the
committee. The appointment of members or alternate members of a committee
requires the vote of a majority of the authorized number of directors. Any such
committee requires the vote of a majority of the authorized number of directors,
and any such committee, to the extent provided in the resolution of the Board,
shall have all the authority of the Board, except with respect to:
(1) The approval of any action for which shareholder approval is
also required.
(2) The filling of vacancies on the Board or in any committee.
(3) The fixing of compensation of the directors for serving on the
Board or on any committee.
(4) The amendment or repeal of By-Laws or the adoption of By-Laws.
(5) The amendment or repeal of any resolution of the Board which
by its express terms is not so amendable or repealable.
(6) A distribution to the shareholders of the corporation as defined in
Section 166 of the Corporations Code, except at a rate or in a periodic amount
or within a price range determined by the Board.
(7) The appointment of other committees of the Board or the
members thereof.
The Board shall designate a chairman for each committee who shall have
the sole power to call any committee meeting other than a meeting set by the
Board. Except as otherwise established by the Board, Article III of these
By-Laws shall apply to committees of the Board and action by such committees.
January 14, 1996 /s/
Kenneth Y. Wong, Secretary
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0001039962
<NAME> IMMECOR CORPORATION
<MULTIPLIER> 1
<CURRENCY> 1
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-1-1997 JAN-1-1997
<PERIOD-END> DEC-31-1996 JUN-30-1997
<EXCHANGE-RATE> 1 1
<CASH> 54677 96891
<SECURITIES> 0 0
<RECEIVABLES> 390357 597790
<ALLOWANCES> 10000 20000
<INVENTORY> 129421 228607
<CURRENT-ASSETS> 589604 914223
<PP&E> 61740 67745
<DEPRECIATION> 19780 26416
<TOTAL-ASSETS> 647802 998657
<CURRENT-LIABILITIES> 379029 572030
<BONDS> 0 0
0 0
0 0
<COMMON> 320500 320500
<OTHER-SE> (51722) 106127
<TOTAL-LIABILITY-AND-EQUITY> 647802 998657
<SALES> 3591382 2355774
<TOTAL-REVENUES> 3591382 2355774
<CGS> 3137320 1797837
<TOTAL-COSTS> 3561961 2097920
<OTHER-EXPENSES> (65244) 0
<LOSS-PROVISION> 0 10000
<INTEREST-EXPENSE> 3786 0
<INCOME-PRETAX> 71581 250149
<INCOME-TAX> 18800 92300
<INCOME-CONTINUING> 52781 157849
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 52781 157849
<EPS-PRIMARY> .022 .065
<EPS-DILUTED> .022 .065
</TABLE>
Number Shares
Immecor Corporation
Incorporated under the laws of the State of California Authorized Capital Stock
50,000,000 Shares without par value
This certifies that ___ is the owner of --- Shares of the Capital Stock of
Immecor Corporation
full paid and non-assessable, transferable only on the books of the Corporation
in person or by Attorney, upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by itys duly authorized officers, and its Corporate Seal to be hereto
affixed this --- day of --- A.D. 19--
Secretary President
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED OR QUALIFIED UNDER ANY STATE SECURITIES
LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, OR
THE HOLDER RECEIVES AN OPINION OF COUNSEL, FOR THE HOLDER OF THE SECURITIES
SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXCEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION REQUIREMENTS UNDER STATE LAW."
The following abbreviations,when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
UNIF GIFT MIN ACT-- ..............................(Custodian)
.............................(Minor)
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship
under Uniform Gifts to Minors Act
..........................................(State).
and not as tenants in common
COM PROP -- as community property
Additional abbreviations may also be used though not
in the above list.
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
For Value Received, _____ hereby sell, assign and transfer unto
Please insert Social Security or other Identifying Number of Assignee
- ----------------------------------------------------------------------
Please Print or Typewrite Name and Address of Assignee
- ----------------------------------------------------------------------
_________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint
- ----------------------------------------------------------------------
to transfer the said Shares on the books of the within named Corporation with
full power
of substitution in the premises.
Dated ______________ 19_____ Signed __________________________
In presence of _______________________
KENNETH M. CHRISTISON
ATTORNEY AT LAW
601 GLENWOOD AVENUE
MILL VALLEY, CA 94941
May 5, 1997
BOARD OF DIRECTORS
IMMECOR CORPORATION
100 Professional Center Drive
Rohnert Park, CA 94928-2137
Reference: Corporate Records of Immecor Corporation, a
California Corporation
Dear Directors:
You have requested my opinion as to the legality of the securities
being registered by Immecor Corporation (the Company) under the Securities
Act of 1933, as amended (the Act), by filing a registration statement on
Form SB-2, relating to the offering of up to 750,000 shares of its common
stock (the Shares), as described in the registration statement.
Attached to your request for my opinion are the Company's filed
Articles of Incorporation, approved By-laws, signed resolutions of the
Board of Directors of the Company concerning the offering, the registration
statement, and such other corporate documents as I consider necessary or
appropriate to the rendering of this opinion. I have reviewed and
considered all of these documents.
Upon the basis of such examination, it is my opinion that, when the
registration becomes effective under the Act, and when the Shares are duly
issued and delivered to the purchasers against payments of the
consideration therefor, the Shares will, upon sale and transfer, be legally
issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion as an exhibit to the
offering statement.
Sincerely,
KENNETH M. CHRISTISON, Esq.
Voice: 415-389-0661 Fax: 415-389-6960
CONSENT OF INDEPENDENT ACCOUNTANT
I hereby consent to the reference to me under the captions "Financial
Statements" and "Experts" in the Prospectus constituting part of the
Registration Statement on Form SB-2 of Immecor Corporation of my report dated
May 14, 1997.
L.V. Dorn II
Certified Public Accountant
Fort Bragg, California
May 15, 1997
EMPLOYMENT AGREEMENT FOR JASON C. LAI
This Employment Agreement (the "Agreement") is made as of April 16, 1997, by and
between Immecor Corporation, a California corporation, located at 100-105
Professional Center Drive, Rohnert Park, California 94928, hereinafter referred
to as "Immecor" or the "Employer", and Jason C. Lai, whose address is 5625
Mireille Drive, San Hose, California 95118, hereinafter referred to as "Lai" or
the "Employee".
In consideration of the mutual promises made herein, Immecor and Lai agree as
follows:
ARTICLE 1. TERM OF EMPLOYMENT
Section 1.01. Specified Term. The Immecor hereby employs Lai and Lai hereby
accepts employment with Immecor for a period of one (1) year, beginning on April
16, 1997.
Section 1.02. Earlier Termination. This Agreement may be terminated earlier only
as hereinafter provided.
ARTICLE 2. DUTIES AND OBLIGATIONS OF EMPLOYEE.
Section 2.01. Title and Description of Duties. Lai shall serve as Vice President
of Sales and Marketing of Immecor Corporation. In that capacity, Lai shall do
and perform all services, acts, or things necessary or advisable to fulfill the
duties of that position. Lai shall ay all times be subject to the direction of
the President, and to the policies established by the Board of Directors of
Immecor. The duties of Lai may be modified from time to time by the mutual
consent of Immecor and Lai without resulting in a rescission of this Agreement.
The mutual written consent of Immecor and Lai shall constitute execution of that
modification.
Section 2.02. Trade Secrets.
(a) The parties acknowledge and agree that during the terms of this
Agreement and in the course of the discharge of his duties hereunder, Lai shall
have access to and become acquainted with information concerning the operation
of Immecor, including without limitation, financial, personnel, sales, planning,
and other information that is owned by Immecor and regularly used in the
operation of Immecor's business and that this information constitutes Immecor's
trade secrets.
(b) Lai agrees that he shall not disclose any such trade secrets,
directly or indirectly, to any other person or use them in any way, except as is
required in the course of his employment with Immecor.
(c) Lai further agrees that all files, records, documents, equipment,
and similar items relating to Immecor's business, whether prepared by lai or
others, are and shall remain exclusively the property of Immecor and that they
shall be removed from the premises of Immecor only with the express prior
consent of Immecor.
(d) However, in the event that Immecor breaches any of its agreements
or contracts with Lai, including any of the provisions of this Agreement, Lai's
obligations under this Section shall terminate and he shall not be restricted in
his use or disclosure of any information or knowledge that Immecor may consider
or claim to be a trade secret.
1
<PAGE>
ARTICLE 3. OBLIGATIONS OF EMPLOYER.
Section 3.01. General Description. Immecor shall provide Lai with the
compensation, incentives, benefits, and business expense reimbursement specified
elsewhere in this Agreement.
Section 3.02. Office and Staff. Immecor shall provide Lai with office equipment,
supplies, and other facilities and services suitable to Lai's position and
adequate for the performance of his duties.
Section 3.03. Indemnification of Losses of Employee. Immecor shall indemnify Lai
for all losses sustained by Lai in direct consequence of the performance or
discharge of his duties on Immecor's behalf.
ARTICLE 4. OBLIGATIONS OF EMPLOYER.
Section 4.01. Initial Bonus. Upon execution of this Agreement, Immecor shall pay
to Lai the sum of Three Thousand Dollars ($3,000.00) as a signing bonus which
shall be paid in addition to all other compensation described in this Agreement.
Section 4.02. Annual Salary. As compensation for the services to be rendered by
Lai hereunder, Immecor shall pay Lai an annual base salary in the amount of One
Hundred Thousand Dollars ($100,000.00). Such salary shall be payable in equal
semi-monthly installments of Four Thousand One Hundred Sixty-six Dollars
($4,166.67) on the fifteenth (15th) and final days of each month during the
period of employment, prorated for any partial employment period.
Section 4.03. Salary Continuation during Disability. If Lai becomes physically
disabled so that he is unable to perform the duties prescribed herein, Immecor
agrees to pay Lai fifty percent (50%) of Lai's annual salary, payable in the
same manner as provided for the payment of salary herein, for the remainder of
the employment term provided herein.
Section 4.04. Tax Withholding. Immecor shall have the right to deduct or
withhold from the compensation due to Lai hereunder any and all sums required
for federal income and Social Security taxes and all state or local taxes now
applicable or that may be enacted and become applicable in the future.
ARTICLE 4. EMPLOYEE BONUS.
Section 5.01. Cash Bonus Based on Sales.
(a) In any month in which the total gross sales of Immecor, as defined
below, exceed Two Hundred Fifty Thousand Dollars ($250,000.00) but are less than
Three Hundred Fifty Thousand Dollars ($350,000.00), Lai shall receive a cash
bonus equal to one-half percent (0.5%) of total gross sales.
(b) In any month in which the total gross sales of Immecor, as defined
below, exceed Three Hundred Fifty Thousand Dollars ($350,000.00) but are less
than Four Hundred Fifty Thousand Dollars ($450,000.000), Lai shall receive a
cash bonus equal to one percent (1.0%) of total gross sales.
2
<PAGE>
(b) In any month in which the total gross sales of Immecor, as defined below,
exceed Three Hundred Fifty Thousand Dollars ($350,000.00) but are less than Four
Hundred Fifty Thousand Dollars ($450,000.000), Lai shall receive a cash bonus
equal to one percent (1.0%) of total gross sales.
(c) In any month in which the total gross sales of Immecor, as defined
below, exceed Four Hundred Fifty Thousand Dollars ($450,000.00), Lai shall
receive a cash bonus equal to one and one half percent (1.5%) of total gross
sales.
Section 5.02. Payment of Cash Bonus. This bonus shall be earned based on sales
made each month by Immecor and shall be paid to Lai within fifteen (15) days
after full payment has been received by Immecor for sales to which the bonus
applies, and shall be in addition to any other compensation to which he is
entitled hereunder.
Section 5.03. Determination of Gross Sales. For the purposes of this Article,
the total gross sales of Immecor shall be determined on a calendar monthly
basis, and shall include for each month all sales booked by Immecor in the
calendar month on a regular and consistent basis, without setoff and whether or
not actual payment has been received for such sales. For the purpose of this
bonus, each calendar month shall be treated as a separate month, and the bonus
determined for any one calendar month shall not be affected by the determination
of any bonus payable in any other month.
ARTICLE 6. EMPLOYEE BENEFITS.
Section 6.01. Annual Vacation. Lai shall be entitled to three weeks vacation
time each year with full pay. Lai may be absent from his employment for vacation
at such times as Immecor and Lai shall mutually agree from time to time. If Lai
is unable for any reason to take the total amount of authorized vacation time
during any year, at Lai's election he may either accrue that time and add it to
vacation time for any following year or he may receive a cash payment in an
amount equal to the amount of annual salary attributable to that unused
vacation.
Section 6.02. Illness. Lai shall be entitled to fifteen (15) days per year as
sick leave with full pay. Sick leave may be accumulated without limit as to the
number of days, but any unused sick leave shall not be paid to Lai upon
termination of employment.
Section 6.03. Group Life Insurance. Immecor agrees to include Lai under
Immecor's group term life insurance coverage in an amount commensurate with the
coverage provided to other employees in Lai's annual salary range if Lai is
medically acceptable as determined by the insurance carrier.
Section 6.04. Group Medical Insurance. Immecor agrees to include Lai under
Immecor's group medical insurance coverage.
Section 6.05. Other Benefits. Immecor agrees to provide to Lai the same or
substantially similar employee benefits that are from time to time provided to
the other employees of Immecor.
3
<PAGE>
ARTICLE 7. BUSINESS EXPENSES
Section 7.01. Business Expense. Immecor shall promptly reimburse Lai for all
reasonable business expenses incurred by Lai in promoting the business of
Immecor, including expenditures for entertainment, gifts, and travel upon
approval by Immecor.
Section 7.02. No Repayment by Employee of Disallowed Business Expenses. In the
event that any expenses paid for Lai or any reimbursement of expenses paid to
Lai shall, on audit or other examination of Immecor's income tax returns, be
determined not to be allowable deductions from Immecor's gross income, Lai shall
not be required to repay to Immecor any amount of such disallowed expenses
provided they have been approved by Immecor.
ARTICLE 8. TERMINATION OF EMPLOYMENT
Section 8.01. Termination by Employer Only For Cause. Immecor shall have the
right to terminate this Agreement for cause only if Lai (i) wilfully breaches or
habitually neglects the duties which he is required to perform under the terms
of this Agreement, or (ii) commits acts of fraud, gross misrepresentations, or
other acts of moral turpitude which prevent the performance of his duties
hereunder.
Section 8.02. Termination by Employee. Lai may terminate this Agreement and all
of his obligations hereunder at any time upon written notice to Immecor.
Section 8.03. Termination Upon Death of Employee. This Agreement shall be
terminated upon the death of Lai.
Section 8.04. Effect of Merger, Transfer of Assets, or Dissolution. This
Agreement shall not be terminated by any voluntary or involuntary dissolution of
Immecor resulting from either a merger or consolidation in which Immecor is not
the consolidated or surviving corporation, or a transfer of all or substantially
all of the assets of Immecor.
Section 8.05. Effect on Compensation. In the event that this Agreement is
terminated prior to the completion of the term of employment specified herein,
Lai shall be entitled to the compensation earned by and vested in him prior to
the date of termination as provided for in this Agreement, computed pro rate up
to and including that date.
ARTICLE 9. COVENANT NOT TO COMPETE ON TERMINATION
Section 9.01. Covenant Not To Compete. Except as provided in Section 9.04 , upon
the expiration of the term of this Agreement, or upon termination of this
Agreement for cause by Immecor and for one (1) year after such termination, Lai
agrees not to sell any products (which at the time of termination are then being
marketed by Immecor) to the following three customers of Immecor: KLA
Instruments, Advanced Fibre Communications, and Compumotor.
Section 9.021. Deferred Compensation For Covenant. As compensation for this
covenant, un-
4
<PAGE>
less Lai is terminated for cause, Immecor shall pay to Lai the sum of One
Hundred Thousand Dollars ($100,000.00), payable in monthly installments of Eight
Thousand Three Hundred Thirty-three and 33/100 Dollars ($8,333,33) on the first
day of each month after termination of employment.
Section 9.03. Breach Of This Article by Either Party. In the event that Lai
breaches the covenant under this Article, or Immecor fails to make any payment
of deferred compensation under this Article, then the sole remedy of either
party for such breach shall be the complete release of any further obligations
of both parties under this Article. That is, if Lai breaches the covenant
hereunder, Immecor's sole remedy shall be to cease making additional installment
payments of deferred compensation (but Immecor shall not be entitled to any
reimbursement of such payments made prior to the breach); and if Immecor
breaches the agreement to make deferred compensation payments, then Lai's sole
remedy shall be his complete release from the covenant and his release from any
restrictions under Section 2.02 above.
Section 9.04. Voluntary Termination. In the event that Lai voluntarily
terminates this Agreement, without cause, prior to the end of the initial
employment term, then Lai agrees that the Covenant Not to Compete under Section
9.01 above shall apply but only until the end of the initial employment term
under Section 1.01 above and only with respect to the following three customers
of Immecor: KLA Instruments, Advanced Fibre Communications, and Compumotor. In
that event, Immecor shall not be obligated to pay any deferred compensation to
Lai under Section 9.02 above and except to the three above named companies, Lai
shall be released from any restrictions under Section 2.02 above.
ARTICLE 10. GENERAL PROVISIONS
Section 10.01. Notices. Any notices to be given by either party to the other
shall be in writing and may be transmitted either by personal delivery or by
mail, registered or certified, postage prepaid with return receipt requested.
Mailed notices shall be addressed to the parties at the addresses appearing in
the introductory paragraph of this Agreement, but each party may change this
address by written notice in accordance with this section. Notices delivered
personally shall be deemed communicated as of the date of actual receipt; mailed
notices shall be deemed communicated as of two (2) days after the date of
mailing.
Section 10.02. Attorneys' Fees and Costs. If any proceedings or legal action is
brought to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to actual attorneys' fees, costs, and necessary
disbursements in addition to any other relief to which that party may be
entitled. This provision shall be construed as applicable to the entire
contract.
Section 10.03. Modifications. Any modification of this Agreement will be
effective only if it is in writing signed by the party to be charged.
Section 10.04. Effect of Waiver. The failure of either party to insist on strict
compliance with any of the terms, covenants, or conditions of this Agreement by
the other party shall not be deemed a waiver of that term, covenant, or
condition, nor shall any waiver or relinquishment of any right or
5
<PAGE>
power at any one time or times be deemed a waiver or relinquishment of that
right or power for all or any other times.
Section 10.05. Partial Invalidity. If any provision in this Agreement is held by
a court or competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
Section 10.06. Law Governing Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of California. Venue for any
action brought with respect to this Agreement or for any other purposes
hereunder shall be Santa Clara County.
Section 10.07. Sums Due Deceased Employee. If Lai dies prior to the expiration
of the term of his employment, any sums that may be due to him from Immecor
under this Agreement as of the date of death shall be paid to Lai's executors,
administrators, heirs, personal representatives, successors, and assigns.
EMPLOYER
Immecor Corporation
a California corporation
100-105 Professional Center Drive,
Rohnert Park, California 94928
/s/
By: Heinot H. Hintereder, President
EMPLOYEE
/s/
Jason C. Lai
6
WESTERN BUSINESS PARK
STANDARD OFFICE LEASE - MODIFIED GROSS1. Parties. This Lease, dated, for
reference purposes only, December 13, 1994, is made by and between WESTERN
BUSINESS PARK ASSOCIATES (herein called "Lessor") and Immecor Corporation
(herein called "Lessee").
2. Premises. Lessor hereby leases to Lessee and Lessee leases from Lessor
for the term, at the rental, and upon all of the conditions set forth herein,
that certain real property situated in the County of Sonoma, State of
California, commonly known as 100 Professional Center Dr., Ste 105 Rohnert Park,
California and described as Office suite of approximately 2691 Sg. Ft.. Said
real property including the land and all improvements therein, is herein called
"the Premises".
3. Term.
3.1 Term. The term of this Lease shall be for 3 Years commencing on
February 1, 1995 and ending on January 31, 1998 unless sooner terminated
pursuant to any provision hereof.
3.2 Delay in Possession. Notwithstanding said commencement date, if
for any reason Lessor cannot deliver possession of the Premises to Lessee on
said date, Lessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease or the obligations of Lessee hereunder
or extend the term hereof but in such case, Lessee shall not be obligated to pay
rent until possession of the Premises is tendered to Lessee; provided, however,
that if Lessor shall not have delivered possession of the Premises within sixty
(60) days from said commencement date, Lessee may, at Lessee's option, by notice
in writing to Lessor within ten (10) days thereafter, cancel this Lease, in
which event the parties shall be discharged from all obligations hereunder;
provided further, however, that if such written notice of Lessee is not received
by Lessor within said ten (10) day period, Lessee's right to cancel this Lease
hereunder shall terminate and be of no further force or effect.
3.3 Early Possession. If Lessee occupies the Premises prior to said
commencement date, such occupancy shall be subject to all provisions hereof,
such occupancy shall not advance the termination date, and Lessee shall pay rent
for such period at the initial monthly rates set forth below. Lessee to occupy
space as of 12/15/94 for purposes of work on Tenant Improvements. Rent to begin
as 4. Rent. specified in ~4.
4.1 Base Rent. Lessee shall pay to Lessor as rent for the Premises,
monthly payments of $See Addendum, in advance, on the 1st day of each month of
the term hereof. Lessee shall pay Lessor upon the execution hereof $1883.70 as
rent for the period February 1, 1995 thru February 28, 1995.
Rent for any period during the term hereof which is for less than one month
shall be a pro rata portion of the monthly installment. Rent shall be payable in
lawful money of the United States to Lessor at the address stated herein or to
such other persons or at such other
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<PAGE>
places as Lessor may designate in writing.
4.2 Escalation of Base Rent. The base annual rent and the monthly installments
to be paid hereunder shall be adjusted upward during any lease term, with a
minimum annual increase of 4.0%'and a maximum annual increase of 7.0%, by a
percentage equal to the percentage increase' if any, in the Consumer Price Index
for the San Francisco Oakland metropolitan Area, All Items, 1967 Base = 100,
(CPI) issued by the Bureau of Labor Statistics. the base CPI figure for
computing any such increase (in excess of the 4.0% minimum increase) shall be
the figure published in the Current Labor statistic section of the Monthly Labor
Review for the quarter year in which the payment of the base rental commenced
hereunder. The escalator CPI figure shall be the last figure so published prior
to the lapse of twelve (12) months of the lease term. Any increase in the base
rental found to be due because of such increase shall apply to the ensuing
months of the lease term subject to like adjustment at twelve (12) month
intervals thereafter.
If publication of the CPI shall be discontinued, the parties hereto
shall substitute any official index published by the U.S. Bureau of Labor
Statistics, or successor or similar government agency, as may then be in
existence and shall be most nearly equivalent thereto. If the parties shall be
unable to agree upon a successor index, the parties shall refer the choice of a
successor index to arbitration in accordance with the rules of the American
Arbitration Association then in effect.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof
$3,932.15 as security for Lessee's faithful performance of Lessee's obligations
hereunder. If Lessee fails to pay rent or other charges due hereunder, or
otherwise defaults with respect to any provision of this Lease, Lessor may use,
apply or retain all or any portion of said deposit for the payment of any rent
or other charge in default or for the payment of any other sum to which Lessor
may become obligated by reason of Lessee's default, or to compensate Lessor for
any loss or damage which Lessor may suffer thereby. If Lessor so uses or applies
all or any portion of said deposit, Lessee shall within ten (10) days after
written demand therefor deposit cash with Lessor in an amount sufficient to
restore said deposit to the full amount hereinabove stated and Lessee's failure
to do so shall be a material breach of this Lease. Lessor shall not be required
to keep said deposit separate from its general accounts. If Lessee performs all
of Lessee's obligations hereunder, said deposit, or so much thereof as has not
theretofore been applied by Lessor, shall be returned, without payment of
interest or other increment for its use, to Lessee (or, at Lessor's option, to
the last assignee if any, of Lessee's interest hereunder) at the expiration of
the term hereof and after Lessee has vacated the Premises. No trust relationship
is created herein between Lessor and Lessee with respect to said Security
Deposit.
6. Use.
6.1 Use. The Premises shall be used and occupied only for
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General Office Use, Computer Sales, Furniture Sale or any other use which is
reasonably comparable and for no other purpose. 6.2 Compliance with Law.
(a) Lessor warrants to Lessee that the Premises, in its state
existing on the date that the Lease term commences, but without regard to the
use for which Lessee will use the Premises, does not violate any covenants or
restrictions of record, or any applicable building code, regulation or ordinance
in effect on such Lease term commencement date. In the event it is determined
that this warranty has been violated, then it shall be the obligation of the
Lessor, after written notice from Lessee, to promptly, at Lessor's sole cost and
expense, rectify any such violation. In the event Lessee does not give to Lessor
written notice of the violation of this warranty within six months from the date
that the Lease term commences, the correction of same shall be the obligation of
the Lessee at Lessee's sole cost. The warranty contained in this paragraph
6.2(a) shall be of no force or effect if, prior to the date of this Lease,
Lessee was the owner or occupant of the premises, and, in such event, Lessee
shall correct any such violation at Lessee's sole cost.
(b) Except as provided in paragraph 6.2(a) Lessee shall, at
Lessee's expense comply promptly with all applicable statutes, ordinances rules,
regulations, orders, covenants and restrictions of record, and requirements in
effect during the term or any part of the term hereof regulating the use by
Lessee of the Premises, Lessee shall not use nor permit the use of the Premises
in any manner that will tend to create waste or a nuisance or, if there shall be
more than one tenant in the building containing the Premises, shall tend to
disturb such other tenants. 6.3 Condition of Premises.
(a) Lessor shall deliver the Premises to Lessee clean and free of
debris on Lease commencement date (unless Lessee is already in possession) and
Lessor further warrants to Lessee that the plumbing, lighting, air conditioning,
heating, and loading doors in the Premises shall be in good operating condition
on the Lease commencement date. In the event that it is determined that this
warranty has been violated, then it shall be the obligation of Lessor, after
receipt of written notice from Lessee setting forth with specificity the nature
of the violation, to promptly, at Lessor's sole cost, rectify such violation.
Lessee's failure to give such written notice to Lessor within thirty (30) days
after the Lease commencement date shall cause the conclusive presumption that
Lessor has complied with all of Lessor's obligations hereunder. The warranty
contained in this paragraph 6.3(a) shall be of no force or effect if prior to
the date of this Lease, Lessee was the owner or occupant of the Premises.
(b) Except as otherwise provided in this Lease, Lessee hereby
accepts the Premises in their condition existing as of the Lease commencement
date or the date that Lessee takes possession of the Premises, whichever is
earlier, subject to all applicable zoning, municipal, county and state laws,
ordinances and regulations governing and regulating the use of the Premises, and
any covenants or restrictions of record and accepts this Lease subject thereto
and to all matters disclosed thereby and by any exhibits attached hereto. Lessee
acknowledges that neither Lessor nor Lessor's agent has made any
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representation or warranty as to the present or future suitability of the
Premises for the conduct of Lessee's business.
7. Maintenance, Repairs and Alterations.
7.1 Lessor's Obligations. Subject to the provisions of Paragraphs 6,
7.2, and 9 and except for damage caused by any negligent or intentional act or
omission of Lessee, Lessee's agents, employees, or invitees in which event
Lessee shall repair the damage, Lessor, at Lessor's expense shall keep in good
order, condition and repair all exterior surfaces of the Premises, all Lessor
installed plumbing, heating, air conditioning, ventilating, electrical and
lighting equipment within the Premises, and all landscaping, driveways, parking
lots, fences, and non-Lessee specific signing located in the Premises. Lessor
shall not however be obligated to paint such exterior, nor shall Lessor be
required to maintain the interior surface of exterior walls, windows, doors or
plate glass. Lessor shall have no obligation to make repairs under this
Paragraph 7.1 until a reasonable time after receipt of written notice of the
need for such repairs. Lessee expressly waives the benefits of any statute now
or hereafter in effect which would otherwise afford Lessee the right to make
repairs at Lessor's expense or to terminate this Lease because of Lessor's
failure to keep the Premises in good order, condition and repair.
7.2 Lessee's Obligations.
(a) Subject to the provisions of Paragraphs 6, 7.1 and 9, Lessee,
at Lessee's expense, shall keep in good order, condition and repair the interior
surfaces of the demised premises, including, without limiting the generality of
the foregoing, all interior walls, ceilings, floor coverings, fixtures, windows,
doors, plate glass, and skylights, located within the Premises, and shall
surrender same at the expiration of the term hereof in as good condition as
received, normal wear and tear excepted. However, Lessee shall not have the
responsibility to replace any exterior building glass unless the breaking
thereof is due to an action of the Lessee, Lessee's employees, invitees, and/or
customers.
(b) If Lessee fails to perform Lessee's obligations under this
Paragraph 7.2 or under any other paragraph of this Lease, Lessor may at Lessor's
option enter upon the Premises after 10 days' prior written notice to Lessee
(except in the case of emergency, in which case no notice shall be required),
perform such obligations on Lessee's behalf and put the Premises in good order,
condition and repair, and the cost thereof together with interest thereon at the
maximum rate then allowable by law shall be due and payable as additional rent
to Lessor together with Lessee's next rental installment.
(c) On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same condition
as received, ordinary wear and tear excepted, clean and free of debris. Lessee
shall repair any damage to the Premises occasioned by the installation or
removal of its trade fixtures, furnishings and equipment. Notwithstanding
anything to the contrary otherwise stated in this Lease, Lessee shall leave the
air lines, power panels, electrical distribution systems, lighting fixtures,
space heaters, air conditioning, and plumbing on the premises in good
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<PAGE>
operating condition.7.3 Alterations and Additions.(a) Lessee shall not, without
Lessor's prior written consent make any alterations, improvements, additions, or
utility installations in, on or about the Premises, except for nonstructural
alterations not exceeding $2,500 in cumulative costs during the term of this
Lease. In any event, whether or not in excess of $2,500 in cumulative cost,
Lessee shall make no change or alteration to the exterior of the Premises nor
the exterior of the building(s) on the Premises without Lessor's prior written
consent. As used in this Paragraph 7.3 the term "Utility installation" shall
mean carpeting, window coverings, air lines, power panels, electrical
distribution systems, lighting fixtures, space heaters, air conditioning,
plumbing, and fencing. Lessor may require that Lessee remove any or all of said
alterations, improvements, additions or utility installations at the expiration
of the term, and restore the Premises to their prior condition. Lessor may
require Lessee to provide Lessor, at Lessee's sole cost and expense, a lien and
completion bond in an amount equal to one and one-half times the estimated cost
of such improvements, to insure Lessor against any liability for mechanic's and
materialmen's liens and to insure completion of the work. Should Lessee make any
alterations, improvements, additions or Utility Installations without the prior
approval of Lessor, Lessor may require that Lessee remove any or all of the
same.
(b) Any alterations, improvements, additions or Utility
Installations in, or about the Premises that Lessee shall desire to make and
which requires the consent of the Lessor shall be presented to Lessor in written
form, with proposed detailed plans. If Lessor shall give its consent, the
consent shall be deemed conditioned upon Lessee acquiring a permit to do so from
appropriate governmental agencies, the furnishing of a copy thereof to Lessor
prior to the commencement of the work and the compliance by Lessee of all
conditions of said permit in a prompt and expeditious manner.
(c) Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at, or for use in
the Premises, which claims are or may be secured by any mechanics' or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in the Premises, and Lessor shall have the right to post notices of
non-responsibility in or on the Premises as provided by law. If Lessee shall, in
good faith, contest the validity of any such lien, claim or demand, then Lessee
shall, at its sole expense defend itself and Lessor against the same and shall
pay and satisfy any such adverse judgment that may be rendered thereon before
the enforcement thereof against the Lessor or the Premises, upon the condition
that if Lessor shall require, Lessee shall furnish to Lessor a surety bond
satisfactory to Lessor in an amount equal to such contested lien claim or demand
indemnifying Lessor against liability for the same and holding the Premises free
from the effect of such lien or claim. In addition, Lessor may require Lessee to
pay Lessor's attorneys fees and costs in participating in such action if Lessor
shall decide it is to its best interest to do so.
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<PAGE>
(d) Unless Lessor requires their removal, as set forth in Paragraph 7.3(a), all
alterations, improvements, additions and Utility Installations (whether or not
such Utility Installations constitute trade fixtures of Lessee), which may be
made on the Premises, shall become the property of Lessor and remain upon and be
surrendered with the Premises at the expiration of the term. Notwithstanding the
provisions of this Paragraph 7.3(d), Lessee's machinery and equipment, other
than that which is affixed to the Premises so that it cannot be removed without
material damage to the Premises, shall remain the property of Lessee and may be
removed by Lessee subject to the provisions of Paragraph 7.2(c).
8. Insurance; Indemnity.
8.1 Liability Insurance - Lessee. Lessee shall, at Lessee's expense,
obtain and keep in force during the term of this Lease a policy of Combined
Single Limit Bodily Injury and Property Damage Insurance insuring Lessee and
Lessor against any liability arising out of the use, occupancy or maintenance of
the Premises and any other areas appurtenant thereto. Such insurance shall be in
an amount not less than $500,000 per occurrence. The policy shall insure
performance by Lessee of the indemnity provisions of this Paragraph 8. The
limits of said insurance shall not, however, limit the liability of Lessee
hereunder.
8.2 Liability Insurance - Lessor. Lessor shall obtain and keep in
force during the term of this Lease a policy of Combined Single Limit Bodily
Injury and Property Damage Insurance, insuring Lessor but not Lessee, against
any liability arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto in an amount not less than $5oo,ooo
per occurrence.
8.3 Property Insurance. Lessor shall obtain and keep in force during
the term of this Lease a policy or policies of insurance covering loss or damage
to the Premises, but not Lessee's fixtures, equipment or tenant improvements in
an amount not to exceed the full replacement value thereof, as the same may
exist from time to time, providing protection against all perils included within
the classification of fire, extended coverage, vandalism, malicious mischief,
flood (in the event same is required by a lender having a lien on the Premises)
special extended perils ("all risk", as such term is used in the insurance
industry) but not plate glass insurance. In addition, the Lessor shall obtain
and keep in force, during the term of this Lease, a policy of rental value
insurance covering a period of one year, with loss payable to Lessor, which
insurance shall also cover all real estate taxes and insurance costs for said
period. 8.4 Payment of Premium Increase.
(a) Lessee shall pay to Lessor, during the term hereof, in
addition to the rent, the amount, of any increase in premiums for the insurance
required under Paragraphs 8.2 and 8.3 over and above such premiums paid during
the Base Period, as hereinafter defined, whether such premium increase shall be
the result, of the nature of Lessee's occupancy, any act or omission of Lessee,
requirements of the holder of a mortgage or deed of trust covering the Premises,
increased valuation of the Premises, or general rate increases. In the event
that the Premises have been occupied previously, the words "Base Period"
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<PAGE>
shall mean the last twelve months of the prior occupancy. In the event that the
Premises have never been previously occupied, the premiums during the "Base
Period" shall be deemed to be the lowest premiums reasonably obtainable for said
insurance assuming the most nominal use of the Premises. Provided, however, in
lieu of the Base Period, the parties may insert a dollar amount at the end of
this sentence which figure shall be considered as the insurance premium for the
Base Period: $$2947. In no event, however, shall Lessee be responsible for any
portion of the premium cost attributable to liability insurance coverage in
excess of $1,000,000 procured under paragraph 8.2.
(b) Lessee shall pay any such premium increases to Lessor within
30 days after receipt by Lessee of a copy of the premium statement or further
satisfactory evidence of the amount due. If the insurance policies maintained
hereunder cover other improvements in addition to the Premises, Lessor shall
also deliver to Lessee a statement of the amount of such increase attributable
to the Premises and showing in reasonable detail, the manner in which such
amount was computed. If the term of this Lease shall not expire concurrently
with the expiration of the period covered by such insurance, Lessee's liability
for premium increases shall be prorated on an annual basis.
(c) If the Premises are part of a larger building, then Lessee
shall not be responsible for paying any increase in the property insurance
premium caused by the acts or omissions of any other tenant of the building of
which the Premises are a part.
8.5 Insurance Policies. Insurance required hereunder shall be in
companies holding a "General Policyholders Rating" of at least B plus, or such
other rating as may be required by a lender having a lien on the Premises, as
set forth in the most current issue of "Best's Insurance Guide". Lessee shall
deliver to Lessor copies of policies of liability insurance required under
Paragraph 8.1 or certificates evidencing the existence and amounts of such
insurance. No such policy shall be cancellable or subject to reduction of
coverage or other modification except after thirty (30) days prior written
notice to Lessor. Lessee shall, at least thirty (30) days prior to the
expiration of such policies, furnish Lessor with renewals or "binders" thereof,
or Lessor may order such insurance and charge the cost thereof to Lessee, which
amount shall be payable by Lessee upon demand. Lessee shall not do or permit to
be done anything which shall invalidate the insurance policies referred to in
Paragraph 8.3.
8.6 Waiver of Subrogation. Lessee and Lessor each hereby release and
relieve the other, and waive their entire right of recovery against the other
for loss or damage arising out of or incident to the perils insured against
under paragraph 8.3, which perils occur in, on or about the Premises, whether
due to the negligence of Lessor or Lessee or their agents, employees,
contractors and/or invitees. Lessee and Lessor shall, upon obtaining the
policies of insurance required hereunder, give notice to the insurance carrier
or carriers that the foregoing mutual waiver of subrogation is contained in this
Lease.
8.7 Indemnity. Lessee shall indemnify and hold harmless Lessor from and
against any and all claims arising from Lessee's use of the Premises, or from
the conduct of Lessee's business or from any
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<PAGE>
activity, work or things done, permitted or suffered by Lessee in or about the
Premises or elsewhere and shall further indemnify and hold harmless Lessor from
and against any and all claims arising from any breach or default in the
performance of any obligation on Lessee's part to be performed under the terms
of this Lease, arising from any negligence of the Lessee, or any of Lessee's
agents, contractors, or employees, and from and against all costs, attorney's
fees, expenses and liabilities incurred in the defense of any such claim or any
action or proceeding brought thereon; and in case any action or proceeding be
brought against Lessor by reason of any such consideration to Lessor, hereby
assumes all risk of damage to property or injury to persons, in, upon or about
the Premises arising from any cause and Lessee hereby waives all claims in
respect thereof against Lessor.
8.8 Exemption of Lessor from Liability. Lessee hereby agrees that
Lessor shall not be liable for injury to Lessee's business or any loss of income
therefrom or for damage to the goods, wares, merchandise or other property of
Lessee, Lessee's employees, invitees, customers, or any other person in or about
the Premises, nor shall Lessor be liable for injury to the person of Lessee,
Lessee's employees, agents or contractors, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, or from
the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether the said damage or injury results from conditions arising upon
the Premises or upon other portions of the building of which the Premises are a
part, or from other sources or places and regardless of whether the cause of
such damage or injury or the means of repairing the same is inaccessible to
Lessee. Lessor shall not be liable for any damages arising from any act or
neglect of any other tenant, if any, of the building in which the Premises are
located.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall herein mean damage or
destruction to the Premises to the extent that the cost of repair is less than
50% of the fair market value of the Premises immediately prior to such damage or
destruction. "Premises Building Partial Damage" shall herein mean damage or
destruction to the building of which the Premises are a part to the extent that
the cost of repair, is less than 50% of the fair market value of such building
as a whole immediately prior to such damage or destruction.
(b) "Premises Total Destruction" shall herein mean damage or
destruction to the Premises to the extent that the cost of repair is 50% or more
of the fair market value of the Premises immediately prior to such damage or
destruction. "Premises Building Total Destruction" shall herein mean damage or
destruction to the building of which the Premises are a part to the extent that
the cost of repair is SO% or more of the fair market value of such building as a
whole immediately prior to such damage or destruction.
(c) "Insured Loss" shall herein mean damage or destruction which
was caused by an event required to be covered by the insurance described in
paragraph 8.
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<PAGE>
9.2 Partial Damage - Insured Loss. Subject to the provisions of paragraphs 9.4,
9.5 and 9.6, if at anytime during the term of this Lease there is damage which
is an Insured Loss and which falls into the classification of Premises Partial
Damage or Premises Building Partial Damage, then Lessor shall, at Lessor's sole
cost, repair such damage, but not Lessee's fixtures, equipment or tenant
improvements, as soon as reasonably possible and this Lease shall continue in
full force and effect.
9.3 Partial Damage - Uninsured Loss. Subject to the provisions of
Paragraphs 9.4, 9.5 and 9.6, if at any time during the term of this Lease there
is damage which is not an Insured Loss and which falls within the classification
of Premises Partial Damage or Premises Building Partial Damage, unless caused by
a negligent or willful act of Lessee (in which event Lessee shall make the
repairs at Lessee's expense), Lessor may at Lessor's option either (i) repair
such damage as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) give written notice
to Lessee within thirty (30) days after the date of the occurrence of such
damage of Lessor's intention to cancel and terminate this Lease, as of the date
of the occurrence of such damage. In the event Lessor elects to give such notice
of Lessor's intention to cancel and terminate this Lease, Lessee shall have the
right within ten (10) days after the receipt of such notice to give written
notice to Lessor of Lessee's intention to repair such damage at Lessee's
expense, without reimbursement from Lessor, in which event this Lease shall
continue in full force and effect, and Lessee shall proceed to make such repairs
as soon as reasonably possible. If Lessee does not give such notice within such
10-day period this Lease shall be cancelled and terminated as of the date of the
occurrence of such damage.
9.4 Total Destruction. If at any time during the term of this Lease
there is damage, whether or not an Insured Loss, (including destruction required
by any authorized public authority), which falls into the classification of
Premises Total Destruction or Premises Building Total Destruction, this Lease
shall automatically terminate as of the date of such total destruction. 9.5
Damage Near End of Term.
(a) If at any time during the last six months of the term of this
Lease there is damage, whether or not an Insured Loss, which falls within the
classification of Premises Partial Damage, Lessor may at Lessor's option cancel
and terminate this Lease as of the date of occurrence of such damage by giving
written notice to Lessee of Lessor's election to do so within 30 days after the
date of occurrence of such damage.
(b) Notwithstanding paragraph 9.5(a), in the event that Lessee has
an option to extend or renew this Lease, and the time within which said option
may be exercised has not yet expired, Lessee shall exercise such option, if it
is to be exercised at all, no later than 20 days after the occurrence of an
Insured Loss falling within the classification of Premises Partial Damage during
the last six months of the term of this Lease. If Lessee duly exercises such
option during said 20 day period, Lessor shall, at Lessor's expense, repair such
damage as soon as reasonably possible and this Lease shall
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<PAGE>
continue in full force and effect. If Lessee fails to exercise such option
during said 20 day period, then Lessor may at Lessor's option terminate and
cancel this Lease as of the expiration of said 20 day period by giving written
notice to Lessee of Lessor's election to do so within 10 days after the
expiration of said 20 day period, notwithstanding any term or provision in the
grant of option to the contrary. 9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described in paragraphs 9.2 or 9.3, and
Lessor or Lessee repairs or restores the Premises pursuant to the provisions of
this Paragraph 9, the rent payable hereunder for the period during which such
damage, repair or restoration continues shall be abated in proportion to the
degree to which Lessee's use of the Premises is impaired. Except for abatement
of rent, if any, Lessee shall have no claim against Lessor for any damage
suffered by reason of any such damage, destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence such repair or
restoration within 90 days after such obligations shall accrue, Lessee may at
Lessee's option cancel and terminate this Lease by giving Lessor written notice
of Lessee's election to do so at any time prior to the commencement of such
repair or restoration. In such event this Lease shall terminate as of the date
of such notice.
9.7 Termination - Advance Payments. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor. Lessor shall, in
addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.
9.8 Waiver. Lessor and Lessee waive the provisions of any statutes
which relate to termination of leases when leased property is destroyed and
agree that such event shall be governed by the terms of this Lease.
10. Real Property Taxes.
10.1 Payment of Tax Increase. Lessor shall pay the real property tax,
as defined in paragraph 10.3, applicable to the Premises; provided, however,
that Lessee shall pay, in addition to rent, the amount, if any, by which real
property taxes applicable to the Premises increase over the fiscal real estate
tax year 9~/95. Such payment shall be made by Lessee within thirty (30) days
after receipt of Lessor's written statement setting forth the amount of such
increase and the computation thereof. If the term of this Lease shall not expire
concurrently with the expiration of the tax fiscal year, Lessee's liability for
increased taxes for the last partial lease year shall be prorated on an annual
basis.
10.2 Additional Improvements. Notwithstanding paragraph 10.1 hereof, Lessee
shall pay to Lessor upon demand therefor the entirety of any increase in real
property tax if assessed solely by reason of additional improvements placed upon
the Premises by Lessee or at Lessee's request. 10.3 Definition of "Real Property
Tax". As used herein, the
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term "real property tax" shall include any form of real estate tax or
assessment, general, special, ordinary or extraordinary, and any license fee,
commercial rental tax, improvement bond or bonds, levy or tax (other than
inheritance, personal income or estate taxes) imposed on the Premises by any
authority having the direct or indirect power to tax, including any city, state
or federal government, or any school, agricultural, sanitary, fire, street,
drainage or other improvement district thereof, as against any legal or
equitable interest of Lessor in the Premises or in the real property of which
the Premises are a part, as against Lessor's right to rent or other income
therefrom, and as against Lessor's business of leasing the Premises. The term
"real property tax" shall also include any tax, fee, levy, assessment or charge
(i) in substitution of, partially or totally, any tax, fee, levy, assessment or
charge hereinabove included within the definition of "real property tax," or
(ii) the nature of which was hereinbefore included within the definition of
"real property tax," or (iii) which is for a service or right not charged prior
to June 1, 1978, or, if previously charged, has been increased since June 1,
1978, or (iv) which is imposed as a result of a transfer, either partial or
total, of Lessor's interest in the Premises or which is added to a tax or charge
hereinbefore included within the definition of real property tax by reason of
such transfer, or (v) which is imposed by reason of this transaction, any
modifications or changes hereto, or any transfers hereof.
10.4 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the real property taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Lessor from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Lessor's reasonable determination thereof, in good faith,
shall be conclusive. 10.5 Personal Property Taxes.
(a) Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause said trade fixtures, furnishings, equipment and all
other personal property to be assessed and billed separately from the real
property of Lessor.
(b) If any of Lessee's said personal property shall be assessed
with Lessor's real property, Lessee shall pay Lessor the taxes attributable to
Lessee within 10 days after receipt of a written statement setting forth the
taxes applicable to Lessee's property. 11. Utilities. Lessor shall pay for all
water and trash removal supplied to the Premises, together with any taxes
thereon. Lessee shall pay, in addition to the rent described herein, its
proportional share of the gas, heat, light, and power utilities supplied to the
premises, together with any taxes thereon. Terms of payment shall be as
described in paragraph 10.1 above.
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
Lessee shall not voluntarily
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or by operation of law assign, transfer, mortgage, sublet, or otherwise transfer
or encumber all or any part of Lessee's interest in this Lease or in the
Premises, without Lessor's prior written consent, which Lessor shall not
unreasonably withhold. Lessor shall respond to Lessee's request for consent
hereunder in a timely manner and any attempted assignment, transfer, mortgage,
encumbrance or subletting without such consent shall be void, and shall
constitute a breach of this Lease.
12.2 Lessee Affiliate. Notwithstanding the provisions of paragraph
12.1 hereof, Lessee may assign or sublet the Premises, or any portion thereof,
without Lessor's consent, to any corporation which controls, is controlled by or
is under common control with Lessee, or to any corporation resulting from the
merger or consolidation with Lessee, or to any person or entity which acquires
all the assets of Lessee as a going concern of the business that is being
conducted on the Premises, provided that said assignee assumes, in full, the
obligations of Lessee under this Lease. Any such assignment shall not, in any
way, affect or limit the liability of Lessee under the terms of this Lease even
if after such assignment or subletting the terms of this Lease are materially
changed or altered without the consent of Lessee, the consent of whom shall not
be necessary.
12.3 No Release of Lessee. Regardless of Lessor's consent, no
subletting or assignment shall release Lessee of Lessee's obligation or alter
the primary liability of Lessee to pay the rent and to perform all other
obligations to be performed by Lessee hereunder. The acceptance of rent by
Lessor from any other person shall not be deemed to be a waiver by Lessor of any
provision hereof. Consent to one assignment or subletting shall not be deemed
consent to any subsequent assignment or subletting. In the event of default by
any assignee of Lessee or any successor of Lessee, in the performance of any of
the terms hereof, Lessor may proceed directly against Lessee without the
necessity of exhausting remedies against said assignee. Lessor may consent to
subsequent assignments or subletting of this Lease or amendments or
modifications to this Lease with assignees of Lessee, without notifying Lessee,
or any successor of Lessee, and without obtaining its or their consent thereto
and such action shall not relieve Lessee of liability under this Lease.
12.4 Attorney's Fees. In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting or if
Lessee shall request the consent of Lessor for any act Lessee proposes to do
then Lessee shall pay Lessor's reasonable attorneys fees incurred in connection
therewith, such attorneys fees not to exceed $350.00 for each such request.
13. Defaults; Remedies.
13.1 Defaults. The occurrence of any one or more of the following
events shall constitute a material default and breach of this Lease by Lessee:
(a) The vacating or abandonment of the Premises By Lessee.
(b) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due, where such
failure shall continue for a period of three days after written notice thereof
from Lessor to Lessee. In the event that
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Lessor serves Lessee with a Notice to Pay Rent or Quit pursuant to applicable
Unlawful Detainer statutes such Notice to Pay Rent or Quit shall also constitute
the notice required by this subparagraph.
(c) The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed by
Lessee, other than described in paragraph (b) above, where such failure shall
continue for a period of 30 days after written notice thereof from Lessor to
Lessee; provided, however, that if the nature of Lessee's default is such that
more than 30 days are reasonably required for its cure, then Lessee shall not be
deemed to be in default if Lessee commenced such cure within said 30-day period
and thereafter diligently prosecutes such cure to completion.
(d) (i) The making by Lessee of any general arrangement or
assignment for the benefit of creditors; (ii) Lessee becomes a "debtor" as
defined in 11 U.S.C. Paragraph 101 or any successor statute thereto (unless, in
the case of a petition filed against Lessee, the same is dismissed within 60
days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee within 30
days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease, where such seizure is not discharged within 30 days.
Provided, however, in the event that any provision of this paragraph 13.1(d) is
contrary to any applicable law, such provision shall be of no force or effect.
(e) The discovery by Lessor that any financial statement given to
Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any successor
in interest of Lessee or any guarantor of Lessee's obligation hereunder, and any
of them, was materially false.
13.2 Remedies. In the event of any such material default or breach by
Lessee, Lessor may at any time thereafter, with or without notice or demand and
without limiting Lessor in the exercise of any right or remedy which Lessor may
have by reason of such default or breach:
(a) 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 of the Premises to Lessor. In such event Lessor
shall be entitled to recover from Lessee all damages incurred by Lessor by
reason of Lessee's default including, but not limited to, the cost of recovering
possession of the Premises; expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorney's fees, and any
real estate commission actually paid; the worth at the time of award by the
court having jurisdiction thereof of the amount by which the unpaid rent for the
balance of the term after the time of such award exceeds the amount of such
rental loss for the same period that Lessee proves could be reasonably avoided;
that portion of the leasing commission paid by Lessor pursuant to Paragraph 15
applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this Lease
shall continue in effect whether or not Lessee shall have abandoned the
Premises. In such event Lessor shall be entitled to
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enforce all of Lessor rights and remedies under this Lease, including the right
to recover the rent as it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located. Unpaid installments of rent and other unpaid monetary obligations of
Lessee under the terms of this Lease shall bear interest from the date due at
the maximum rate then allowable by law.
13.3 Default by Lessor. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time, but in
no event later than thirty (30) days after written notice by Lessee to Lessor
and to the holder of any first mortgage or deed of trust the Premises whose name
and address shall have theretofore been furnished to Lessee in writing,
specifying wherein Lessor has failed to perform such obligation; provided,
however, that if the nature of Lessor's obligation is such that more than thirty
(30) days are required for performance then Lessor shall not be in default if
Lessor commences performance within such 30-day period and thereafter diligently
prosecutes the same to completion.
13.4 Late Charges. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed on
Lessor by the terms of any mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or any other sum due from Lessee shall
not be received by Lessor or Lessor's designee within ten (10) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to 6% of such overdue amount. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of late payment by Lessee.
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 the other rights and remedies granted hereunder. In the event
that a late charge is payable hereunder, whether or not collected, for three (3)
consecutive installments of rent, then rent shall automatically become due and
payable quarterly in advance, rather than monthly, notwithstanding paragraph 4
or any other provision of this Lease to the contrary.
13.5 Impounds. In the event that a late charge is payable hereunder,
whether or not collected, for three (3) installments of rent or any other
monetary obligation of Lessee under the terms of this Lease, Lessee shall pay to
Lessor, if Lessor shall so request, in addition to any other payments required
under this Lease, a monthly advance installment, payable at the same time as the
monthly rent, as estimated by Lessor, for real property tax and insurance
expenses on the Premises which are payable by Lessee under the terms of this
Lease. Such fund shall be established to insure payment when due, before
delinquency, of any or all such real property taxes and insurance premiums. If
the amounts paid to Lessor by Lessee under the provisions of this paragraph are
insufficient to discharge the
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obligations of Lessee to pay such real property taxes and insurance premiums as
the same become due, Lessee shall pay to Lessor, upon Lessor's demand, such
additional sums necessary to pay such obligations. All moneys paid to Lessor
under this paragraph may be intermingled with other moneys of Lessor and shall
not bear interest. In the event of a default in the obligations of Lessee to
perform under this Lease, then any balance remaining from funds paid to Lessor
under the provisions of this paragraph may, at the option of Lessor, be applied
to the payment of any monetary default of Lessee in lieu of being applied to the
payment of real property tax and insurance premiums.
14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain, or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than 10% of the floor area of the
building on the Premises, or more than 25% of the land area of the Premises
which is not occupied by any building, is taken by condemnation, Lessee may, at
Lessee's option, to be exercised in writing only within ten (10) days after
Lessor shall have given Lessee written notice of such taking (or in the absence
of such notice, within ten (10) days after the condemning authority shall have
taken possession) terminate this Lease as of the date the condemning authority
takes such possession. If Lessee does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in full force and effect as to the
portion of the Premises remaining, except that the rent shall be reduced in the
proportion that the floor area of the building taken bears to the total floor
area of the building situated on the Premises. No reduction of rent shall occur
if the only area taken is that which does not have a building located thereon.
Any award for the taking of all or any part of the Premises under the power of
eminent domain or any payment made under threat of the exercise of such power
shall be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that Lessee shall be entitled
to any award for loss of or damage to Lessee's trade fixtures and removable
personal property. In the event that this Lease is not terminated by reason of
such condemnation, Lessor shall to the extent of severance damages received by
Lessor in connection with such condemnation, repair any damage to the Premises
caused by such condemnation except to the extent that Lessee has been reimbursed
therefor by the condemning authority. Lessee shall pay any amount in excess of
such severance damages required to complete such repair.
15. Broker's Fee.
(a) Upon execution of this Lease by both parties, Lessor shall pay
to Sommers, Oates and Associates, licensed real estate broker(s), a fee as set
forth in a separate agreement between Lessor and said broker(s), or in the event
there is no separate agreement between Lessor and said broker(s), the sum of $
$2760.00, for brokerage
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services rendered by said broker(s) to Lessor in this transaction.
(b) Lessor further agrees that if Lessee exercises any Option as
defined in paragraph 39.1 of this Lease, which is granted to Lessee under this
Lease, or any subsequently granted option which is substantially similar to an
Option granted to Lessee under this Lease, or if Lessee acquires any rights to
the Premises or other premises described in this Lease which are substantially
similar to what Lessee would have acquired had an Option herein granted to
Lessee been exercised, or if Lessee remains in possession of the Premises after
the expiration of the term of this Lease after having failed to exercise an
Option, or if said broker(s) are the procuring cause of any other lease or sale
entered into between the parties pertaining to the Premises and/or any adjacent
property in which Lessor has an interest, then as to any of said transactions,
Lessor shall pay said broker(s) a fee in accordance with the schedule of Lessor
in effect at the time of execution of this Lease, or in accordance with any
separate agreement between Lessor and said broker.
(c) Lessor agrees to pay said fee not only on behalf of Lessor but
also on behalf of any person, corporation, association, or other entity having
an ownership interest in said real property or any part thereof, when such fee
is due hereunder. Any transferee of Lessor's interest in this Lease, whether
such transfer is by agreement or by operation of law, shall be deemed to have
assumed Lessor's obligation under this Paragraph 15. Said broker shall be a
third party beneficiary of the provisions of this Paragraph 15.
16. Estoppel Certificate.
(a) Lessee shall at any time upon not less than ten (10) days'
prior written notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and the
date to which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to Lessee's knowledge, any uncured defaults on
the part of Lessor hereunder, or specifying such defaults if any are claimed.
Any such statement may be conclusively relied upon by any prospective purchaser
or encumbrancer of the Premises.
(b) At Lessor's option, Lessee's failure to deliver such statement
within such time shall be a material breach of this Lease or shall be conclusive
upon Lessee (i) that this Lease is in full force and effect, without
modification except as may be represented by Lessor, (ii) that there are no
uncured defaults in Lessor's performance, and (iii) that not more than one
month's rent has been paid in advance or such failure may be considered by
Lessor as a default by Lessee under this Lease.
(c) If Lessor desires to finance, refinance, or sell the Premises,
or any part thereof, Lessee hereby agrees to deliver to any lender or purchaser
designated by Lessor such financial statements of Lessee as may be reasonably
required by such lender or purchaser. Such statements shall include the past
three years' financial statements of Lessee. All such financial statements shall
be received by Lessor and such lender or purchaser in confidence and shall be
used
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only for the purposes herein set forth.17. Lessor's Liability. The term "Lessor"
as used herein shall mean only the owner or owners at the time in question of
the fee title or a lessee's interest in a ground lease of the Premises, and
except as expressly provided in Paragraph 15, in the event of any transfer of
such title or interest, Lessor herein named (and in case of any subsequent
transfers then the grantor) shall be relieved from and after the date of such
transfer of all liability as respects Lessor's obligations thereafter to be
performed, provided that any funds in the hands of Lessor or the then grantor at
the time of such transfer, in which Lessee has an interest, shall be delivered
to the grantee. The obligations contained in this Lease to be performed by
Lessor shall, subject as aforesaid, be binding on Lessor's successors and
assigns, only during their respective periods of ownership.
18. Severability. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
19. Interest on Past-due Obligations. Except as expressly herein provided, any
amount due to Lessor not paid when due shall bear interest at the maximum rate
then allowable by law from the date due. Payment of such interest shall not
excuse or cure any default by Lessee under this Lease, provided, however, that
interest shall not be payable on late charges incurred by Lessee nor on any
amounts upon which late charges are paid by Lessee.
20. Time of Essence. Time is of the essence.
21. Additional Rent. Any monetary obligations of Lessee to Lessor under the
terms of this Lease shall be deemed to be rent.
22. Incorporation of Prior Agreements; Amendments. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No prior
agreement or understanding pertaining to any such matter shall be effective.
This Lease may be modified in writing only, signed by the parties in interest at
the time of the modification. Except as otherwise stated in this Lease, Lessee
hereby acknowledges that neither the real estate broker listed in Paragraph 15
hereof nor any cooperating broker on this transaction nor the Lessor or any
employees or agents of any of said persons has made any oral or written
warranties or representations to Lessee relative to the condition or use by
Lessee of said Premises and Lessee acknowledges that Lessee assumes all
responsibility regarding the Occupational Safety Health Act, the legal use and
adaptability of the Premises and the compliance thereof with all applicable laws
and regulations in effect during the term of this Lease except as otherwise
specifically stated in this Lease.
23. Notices. Any notice required or permitted to be given hereunder shall
be in writing and may be given by personal delivery or by certified mail. and if
given Personally or by mail, shall be deemed.
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sufficiently given if addressed to Lessee or to Lessor at the address noted
below the signature of the respective parties, as the case may be. Either party
may by notice to the other specify a different address for notice purposes
except that upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for notice purposes. A copy of all notices required
or permitted to be given to Lessor hereunder shall be concurrently transmitted
to such party or parties at such addresses as Lessor may from time to time
hereafter designate by notice to Lessee.
24. Waivers. No waiver by Lessor or any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to, or approval of any act,
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by Lessee of any provision
hereof, other than the failure of Lessee to pay the particular rent so accepted,
regardless of Lessor's knowledge of such preceding breach at the time of
acceptance of such rent.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a "short form" memorandum of this
Lease for recording purposes.
26. Holding Over. If Lessee, with Lessor's consent, remains in possession of the
Premises or any part thereof after the expiration of the term hereof, such
occupancy shall be a tenancy from month to month upon all the provisions of this
Lease pertaining to the obligations of Lessee, but all options and rights of
first refusal, if any, granted under the terms of this Lease shall be deemed
terminated and be of no further effect during said month to month tenancy.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. Covenants and Conditions. Each provision of this Lease performable by
Lessee shall be deemed both a covenant and a condition.
29. Binding Effect; Choice of Law. Subject to any provisions hereof restricting
assignment or subletting by Lessee and subject to the provisions of Paragraph
17, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State of
California.
30. Subordination.
(a) This Lease, at Lessor's option, shall be subordinate to any
ground lease, mortgage, deed of trust, or any other hypothecation or security
now or hereafter placed upon the real property of which the Premises are a part
and to any and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.
Notwithstanding such
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subordination, Lessee's right to quiet possession of the Premises shall not be
disturbed if Lessee is not in default and so long as Lessee shall pay the rent
and observe and perform all of the provisions of this Lease, unless this Lease
is otherwise terminated pursuant to its terms. If any mortgagee, trustee or
ground lessor shall elect to have this Lease prior to the lien of its mortgage,
deed of trust or ground lease, and shall give written notice thereof to Lessee,
this Lease shall be deemed prior to such mortgage, deed of trust, or ground
lease, whether this Lease is dated prior or subsequent to the date of said
mortgage, deed of trust or ground lease or the date of recording thereof.
(b) Lessee agrees to execute any documents required to effectuate
an attornment, a subordination or to make this Lease prior to the lien of any
mortgage, deed of trust or ground lease, as the case may be. Lessee's failure to
execute such documents within 10 days after written demand shall constitute a
material default by Lessee hereunder, or, at Lessor's option, Lessor shall
execute such documents on behalf of Lessee as Lessee's attorney-in-fact. Lessee
does hereby make, constitute and irrevocably appoint Lessor as Lessee's
attorney-in-fact and in Lessee's name, place and stead, to execute such
documents in accordance with this paragraph 30(b).
31. Attorney's Fees. If either party or the broker named herein brings an action
to enforce the terms hereof or declare rights hereunder, the prevailing party in
any such action, on trial or appeal, shall be entitled to his reasonable
attorney's fees to be paid by the losing party as fixed by the court. The
provisions of this paragraph shall inure to the benefit of the broker named
herein who seeks to enforce a right hereunder.
32. Lessor's Access. Lessor and Lessor's agents shall have the right to enter
the Premises at reasonable times for the purpose of inspecting the same, showing
the same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
building of which they are a part as Lessor may deem necessary or desirable.
Lessor may at any time place on or about the Premises any ordinary "For Sale"
signs and Lessor may at any time during the last 120 days of the term hereof
place on or about the Premises any ordinary "For Lease" signs, all without
rebate of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. Signs. Lessee shall not place any sign upon the Premises without
Lessor's prior written consent except that Lessee shall have the right, without
the prior permission of Lessor to place ordinary and usual for rent or sublet
signs thereon. Lessor shall allow Lessee one identification sign for Lessee's
business upon Lessee's door or
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an adjacent wall or window panel, with the letters of said sign to be of the
same size and general type style as used for other Lessees in the Premises.
Further, Lessor shall provide a directory listing for Lessee in the building
directory if said building directory exists.
35. Merger. The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessor
of any or all of such subtenancies.
36. Consents. Except for paragraph 33 hereof, wherever in this Lease the consent
of one party is required to an act of the other party, such consent shall not be
unreasonably withheld.
37. Guarantor. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease. 38. Quiet
Possession. Upon Lessee paying the rent for the Premises and observing and
performing all of the covenants, conditions and provisions on Lessee's part to
be observed and performed hereunder, Lessee shall have quiet possession of the
Premises for the entire term hereof subject to all of the provisions of this
Lease. The individuals executing this Lease on behalf of Lessor represent and
warrant to Lessee that they are fully authorized and legally capable of
executing this Lease on behalf of Lessor and that such execution is binding upon
all parties holding an ownership interest in the Premises.
39. Options.
39.1 Definition. As used in this paragraph the word "Options" has the
following meaning: (1) the right or option to extend the term of this Lease or
to renew this Lease; (2) the option or right of first refusal to lease the
Premises or the right of first offer to lease the Premises.
39.2 Options Personal. Each Option granted to Lessee in this Lease is
personal to Lessee and may not be exercised or be assigned, voluntarily or
involuntarily, by or to any person or entity other than Lessee, provided,
however, the Option may be exercised by or assigned to any Lessee Affiliate as
defined in paragraph 12.2 of this Lease. The Options herein granted to Lessee
are not assignable separate and apart from this Lease.
39.3 Multiple Options. In the event that Lessee has any multiple
options to extend or renew this Lease a later option cannot be exercised unless
the prior option to extend or renew this Lease has been so exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary, (i) during
the time commencing from the date Lessor gives to Lessee a notice of default
pursuant to paragraph 13.1 (b) or 13.1(c)and continuing
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until the default alleged in said notice of default is cured, or (ii) during the
period of time commencing on the day after a monetary obligation to Lessor is
due from Lessee and unpaid (without any necessity for notice thereof to Lessee)
continuing until the obligation is paid. or (iii) at any time after an event or
default described in paragraphs 13.1(a), 13.1(d), or 13.1(e) (without any
necessity of Lessor to give notice of such default to Lessee), or (iv) in the
event that Lessor has given to Lessee three or more notices of default under
paragraph 13.1(b), where a late charge becomes payable under paragraph 13.4 for
each of such defaults, or paragraph 13.1(c), whether or not the defaults are
cured, during the 12 month period prior to the time that Lessee intends to
exercise the subject Option.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of paragraph 39.4(a)
(c) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
for a period of 30 days after such obligation becomes due (without any necessity
of Lessor to give notice thereof to Lessee), or (ii) Lessee fails to commence to
cure a default specified in paragraph 13.1(c) within 30 days after the date that
Lessor gives notice to Lessee of such default and/or Lessee fails thereafter to
diligently prosecute said cure to completion, or (iii) Lessee commits a default
described in paragraph 13.1(a), 13.1(d) or 13.1(e) (without any necessity of
Lessor to give notice of such default to Lessee), or (iv) Lessor gives to Lessee
three or more notices of default under paragraph 13.1 (b), where a late charge
becomes payable under paragraph 13.4 for each such default, or paragraph 13.1
(c), whether or not the defaults are cured.
39.5 Option To Renew. Upon the expiration of the initial lease term,
Lessee shall have the option to renew this lease for 0 additional period(s) of 0
months each upon the same terms and conditions herein set forth at a rental
mutually agreeable to Lessor and Lessee, subject to the following limitations on
increases in the monthly rental. The base monthly rental for each option period
shall not exceed () percent of the monthly rental for the final month of the
previous lease term. Said option shall be exercised by delivery of a written
election at least one hundred twenty (120) days prior to the expiration of the
then current lease term, and shall terminate if no agreement on rental for the
extended term is reached within sixty (60) days after such election is
delivered.
40. Multiple Tenant Building. In the event that the Premises are part of a
larger building or group of buildings then Lessee agrees that it will abide by,
keep and observe all reasonable rules and regulations which Lessor may make from
time to time for the management, safety, care, and cleanliness of the building
and grounds, the parking of vehicles and the preservation of good order therein
as well as for the convenience of other occupants and tenants of the building.
The violations of any such rules and regulations shall be deemed a material
breach of this lease by Lessee.
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41. Security Measures. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of Lessee, its agents and
invitees from acts of third parties.
42. Easements. Lessor reserves to itself the right, from time to time, to grant
such easements, rights and dedications that Lessor deems necessary or desirable,
and to cause the recordation of Parcel Maps and restrictions, so long as such
easements, rights, dedications, Maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee shall sign any of the
aforementioned documents upon request of Lessor and failure to do so shall
constitute a material breach of this Lease.
43. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the provisions
hereof, the party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment, and there shall survive the right on the part
of said party to institute suit for recovery of such sum. If it shall be
adjudged that there was no legal obligation on the part of said party to pay
such sum or any part thereof, said party shall be entitled to recover such sum
or so much thereof as it was not legally required to pay under the provisions of
this Lease.
44. Authority. If Lessee is a corporation, trust, or general or limited
partnership, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and deliver
this Lease on behalf of said entity. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after execution of this
Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.
45. Conflict. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions.
46. Addendum. Attached hereto is an addendum or addenda containing
paragraphs A through A which constitutes a part of this Lease.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
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<PAGE>
IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR
ATTORNEY FOR HIS APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER OR ITS
AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING THERETO; THE PARTIES
SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND
TAX CONSEQUENCES OF THIS LEASE.
The Parties hereto have executed this Lease at the Place on the dates specified
immediately adjacent to their respective signatures.
Executed at Rohnert Park, California on_______________________
By: Western Business Park Associates
100 Professional Center Drive, Suite 100
Rohnert Park California 94928
By_______________________________
Executed at ______________________
On________________________________
By________________________________
Address___________________________
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<PAGE>
ADDENDUM A
RENTAL PAYMENT SCHEDULE SUITE 105-100 PROFESSIONAL CENTER DRIVE, ROHNERT PARK
PERIOD OF TIME RENT DUE PER MONTH1st 6 months $1883.70
2nd 6 months 2152.80 3rd 6 months 2421.90
4th 6 months 2691.00
5th 6 months 2960.10
6th 6 months 3229.20
DATE________________
IMMECOR INC. BY:
DATE________________
WESTERN BUSINESS PARK ASSOC. BY:
LEASE MODIFICATION
The office lease dated December 13, 1994, by and between WESTERN BUSINESS PARK
ASSOCIATES, Lessor, and IMMECOR CORPORATION, Lessee, is hereby modified as
follows:
1. Effective with the rent due June 1, 1995, the leased area is
increased by the area of those offices identified as Suites 105-A and 105-C, and
the base monthly rent shall be $2,173.15.
2. Effective with the rent due August 1, 1995, the leased area is
increased by the area of that office identified as Suite 105-D, and the base
monthly rent shall be increased to $2,738.35. This base monthly rent includes
the $.10 per square foot increase (effective on each six month anniversary) on
the original 2,691 square feet as provided for in the original lease.
All other terms and conditions of the original lease shall remain in force.
Dated _____________
Western Business Park Associates
By: ________________
General Partner
Dated: ___________ IMMECOR CORPORATION
By:__________________
<PAGE>
LEASE MODIFICATION
The office lease dated December 13, 1994, by and between WESTERN BUSINESS PARK
ASSOCIATES, Lessor, and IMMECOR CORPORATION, Lessee, is hereby modified as
follows:
1. Effective with the rent due February 1, 1996, the leased area is increased by
the area of that office identified as Suite 105-B, being 371 sq. ft. more or
less. The monthly rent for this additional area shall be calculated at $ .70 per
sq. ft.
2. Also effective with the rent due February, the total monthly rent
due shall be increased to $ 3349. This includes the $ .10 per square foot
increase effective on each six months anniversary as provided for in the
original lease.
All other terms and conditions of the original lease shall remain in force.
Dated: _________________
Western Business Park Associates
By:________________
General Partner
Dated:__________________
IMMECOR CORRORATION
By:___________________
<PAGE>
LEASE MODIFICATION
The office lease dated December 13, 1994, by and between WESTERN BUSINESS PARK
ASSOCIATES, Lessor, and IMMECOR CORPORATION, Lessee, is hereby modified as
follows:
1. Effective with the rent due August 1, 1996, the total monthly rent
due shall be increased by $351 from $ 3349 to $3,700. This represents the $ .10
per square foot increase effective on each six months anniversary as provided
for in the original lease.
All other terms and conditions of the original lease shall remain in force.
Dated: _________________
Western Business Park Associates
By:________________
General Partner
Dated:__________________
IMMECOR CORRORATION
By:___________________
<PAGE>
WESTERN BUSINESS PARK ASSOCIATES
100 Professional Center Drive, Suite 100
Rohnert Park, California 94928
707 585-3131
LEASE MODIFICATION
The office lease dated December 13, 1994, by and between WESTERN BUSINESS PARK
ASSOCIATES, Lessor, and IMMECOR CORPORATION, Lessee, is hereby modified as
follows:
1. Effective with the rent due April 1, 1997, the leased area is increased by
the area of that of office identified as Suite 104, and the monthly rent is
increased by $ 663.00.
All other terms and conditions of the original lease shall remain in force.
Dated: _________________
Western Business Park Associates
By:________________
General Partner
Dated:__________________
IMMECOR CORRORATION
By:___________________
IMMECOR SHARE PURCHASE AGREEMENT
California Residents: If your purchase is for more than $2,500
you will need to sign the representation at the bottom of this
Share Purchase Agreement!
o: Immecor Corporation
100~105 Professional Center Drive
Rohnert Park, CA 94928
(707) 585-3036
I have received and had an opportunity to read the Prospectus by which
the shares are offered. I represent that I am purchasing for investment.
Signature: ___________________________________________________________
Date: _____________
Enclosed is payment for ____________ shares (minimum 100) at $5.25 per
share, totaling $ _____________
Register the shares in the following name(s) and amount(s):
Name(s): ____________________________________________
Number of shares: ________________
As (check one): / / Individual / / Joint Tenants / / Trust
/ / Tenants in Common / / Corporation
/ / Other ___________________
For the person(s) who will be registered shareowner(s):
Mailing Address: _____________________________________________________________
City, State & Zip Code: ________________________________________________________
Telephone Numbers: Business: ( )____________________
Home: ( )______________________
Social Security or Taxpayer ID Number: _________________________________________
(Please attach any special mailing instructions
other than those shown above.)
No Share Purchase Agreement Is Effective
Until Acceptance (You will be mailed a signed and numbered
copy of this agreement to retain for your records.)
Share Purchase Agreement accepted by Immecor Corporation:
- ----------------------------------------- ----------------------------
Heinot H. Hintereder, President & CEO Date
[If your purchase is for more than $2,500:] I (we) have at least the following
minimum income and net worth (You may include income and net worth for both
spouses. "Net worth" includes individual retirement plans and other assets,
valued at not more than fair market value, and excludes home, home furnishings
and automobiles): A minimum net worth of at least $75,000 and minimum gross
income of $50,000 during the current tax year; or, in the alternative, a minimum
net worth of $150,000. In either case, the amount of this investment does not
exceed 10 percent of my (our) net worth.
- ----------------------------------------- ----------------------------
Signature Date
