SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM SB-2REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
LVPS MicroFacility, Inc.
(Name Of Small Business Issuer In Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
3841
(Primary Standard Industrial Classification Code Number)
33-0845992
(I.R.S. Employer Identification No.)
7755 Center Avenue, 11th Floor, Huntington Beach, CA 92647 (714) 372-2251
(Address and Telephone Number of Principal Executive Offices)
7755 Center Avenue, 11th Floor, Huntington Beach, CA 92647
(Address of Principal Place of Business or Intended Principal Place of Business)
Richard O. Weed
4695 MacArthur Court, Suite 530, Newport Beach, CA 92660 (949) 475-9086
(Name, Address, and Telephone Number of Agent for Service)
Approximate Date of Commencement of Proposed Sale to the Public: as soon as
possible after this registration statement becomes effective
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. ___
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ___
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ___
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. ___
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title Of Each Proposed Proposed
Class Of Maximum Maximum
Securities Amount Offering Aggregate Amount Of
To Be To Be Price Offering Registration
Registered Registered Per Unit Price Fee
- ------------------------- ----------------------- ----------------------- ---------------------- -----------------------
<S> <C> <C> <C> <C>
$.001 par value Common 625,000 $8.00 $5,000,000 $1,390
Stock
- ------------------------- ----------------------- ----------------------- ---------------------- -----------------------
</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 statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PART I
INFORMATION REQUIRED IN PROSPECTUS
Item 1. Front of Registration Statement and Outside Front Cover of Prospectus.
The Registrant may amend this registration statement. A registration statement
relating to these securities has been filed with the Securities and Exchange
Commission. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not soliciting an offer to
buy these securities in any state where the offer or sale is not permitted.
PROSPECTUS
LVPS MicroFacility, Inc., a Delaware corporation
625,000 shares of $.001 par value common stock of LVPS MicroFacility, Inc. at a
price of $8.00 per share. The Offering is for $5,000,000.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus relates to the public offering, which is not being underwritten,
of up to 625,000 shares of the Company's common stock. The offering price of the
shares ($8.00 per share) has been determined solely by the Company and not as
the result of arm's-length negotiations. The Maximum Offering is 625,000 shares
($5,000,000). The Minimum Offering is 287,500 shares ($2,300,000). The Minimum
Investment is 2,500 shares ($20,000).
The Offering will terminate nine months after the effective date of this
registration statement.
You should carefully consider the risk factors beginning on page 6 of this
prospectus before purchasing any of the common stock offered by this prospectus.
Selling Commissions of up to 10% may be paid to broker dealers that are members
of the National Association of Securities Dealers, Inc. ("Broker Dealers") who
may agree to sell the shares on a "best efforts" basis.
<TABLE>
<CAPTION>
====================== ===================== ============================ ============================
Shares Sold (3) Offering Price (1) Broker Dealer Fees & Proceeds to Company (2)
Commission (4)
====================== ===================== ============================ ============================
<S> <C> <C> <C>
Per Share $8.00 $.80 $7.20
Minimum Shares
287,000 $2,300,000 $230,000 $2,070,000
Maximum Shares
625,000 $5,000,000 $500,000 $4,500,000
</TABLE>
(1) The Offering Price of the shares has been determined by the Company
and not as the result of arm's-length negotiations. (2) Before
deducting expenses of the Offering. (3) The Maximum Offering is 625,000
shares ($5,000,000). The Minimum Offering is 287,500 shares
($2,300,000). In the event the 287,500 shares have not been sold within
nine months after the effective date of this registration statement,
this Offering will terminate. (4) Selling Commissions of up to 10% will
be paid to broker dealers that are members of the National Association
of Securities Dealers, Inc. ("Broker Dealers") who may agree to sell
the shares on a "best efforts" basis. See "Use of Proceeds".
The date of this prospectus is September 23, 1999.
3
<PAGE>
Item 2. Inside Front and Outside Back Cover Pages of Prospectus.
Table of Contents
Item 3. Summary Information and Risk Factors ..............................
Item 4. Use of Proceeds....................................................
Item 5. Determination of Offering Price....................................
Item 6. Dilution...........................................................
Item 7. Selling Security Holders...........................................
Item 8. Plan of Distribution...............................................
Item 9. Legal Proceedings..................................................
Item 10. Directors, Executive Officers, Promoters and Control Persons......
Item 11. Security Ownership of Certain Beneficial Owners and Management....
Item 12. Description of Securities.........................................
Item 13. Interest of Named Experts and Counsel.............................
Item 14. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities .......................................
Item 15. Organization Within Last Five Years...............................
Item 16. Description of Business...........................................
Item 17. Management's Discussion and Analysis or Plan of Operation.........
Item 18. Description of Property...........................................
Item 19. Certain Relationships and Related Transactions....................
Item 20. Market for Common Equity and Related Stockholder Matters..........
Item 21. Executive Compensation............................................
Item 22. Financial Statements..............................................
Item 23. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure .........................................
4
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including notes thereto, appearing
elsewhere in this Prospectus. Each prospective purchaser of the Company's
securities is urged to read this Prospectus in its entirety.
THE COMPANY
LVPS MicroFacility, Inc. (the "Company") was incorporated in the State of
Delaware on December 16, 1998. The Company was formed to be a manufacturer of
manufacturing facilities for the production of Large Volume Parenteral
Solutions. The LVPS MicroFacility is a unique, complete, patents pending,
turn-key, state-of-the-art modular micro-manufacturing facility that will
produce intravenous ("IV") solutions from local water sources; blows, fills, and
seals the plastic container; and autoclaves the finished product for quality
assurance testing, quarantined storage, and distribution. The LVPS MicroFacility
plants are commissioned to US FDA and host country standards.
In addition to the notices contained in the forepart to this Prospectus,
prospective investors should carefully consider that the Company was recently
formed and has no ongoing operations.
The Company's executive office is at 7755 Center Avenue, 11th Floor, Huntington
Beach, CA 92647. The telephone number is (714) 372-2251.
THE OFFERING
Offering Size ................Maximum: 625,000 Shares ($5,000,000)
Minimum: 287,500 Shares ($2,300,000)
Description of Shares.........Shares of Common Stock, $.001 par value
Offering Price................$8.00 per Share, $20,000 Minimum investment
Common Stock
Currently Outstanding.........625,000 Shares
Common Stock Minimum Maximum
Outstanding After Offering....912,500 1,250,000
Risk Factors..................Investment in the Shares offered hereby involves
a high degree of risk. See "Risk Factors".
Use of Proceeds...............The net proceeds to be received by the Company
from the sale of the Shares offered hereby will be
used to commence operations. See "Use of
Proceeds".
Subscription Procedure........To subscribe to the Shares offered hereby,
prospective investors are to deliver (1) a
completed and duly executed copy of the
Subscription Agreement and (2) immediately
available funds in the amount of $8.00 per Share
subscribed for.
5
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RISK FACTORS
An investment in the Shares offered hereby involves a high degree of risk.
Prospective investors should carefully consider, among other things, the
following factors concerning the business of the Company and the Offering, and
should consult independent advisors as to the technical, tax, business and legal
considerations regarding an investment in the shares.
START-UP STAGE COMPANY
The Company was established in December 1998 and has no operating history and no
revenues and is subject to all of the risks inherent in a business in the
start-up phase. The Company has financed its activities to date through a
private placement of its equity securities and the Company is dependent on the
proceeds from this Offering to fund its operations.
IMPACT OF GOVERNMENT REGULATION The Company's industry is subject to extensive
federal, state, local and applicable foreign laws and regulations. The
successful manufacture of the Company's MicroFacility will require applicable
government permits, authorizations and approvals ("permits"), the nature of
which may vary from jurisdiction to jurisdiction, and continuing compliance with
required packaging, labeling, handling, treatment, disposal and documentation
procedures and notice and reporting obligations. The Company believes that it
can obtain all government permits required to operate its business due to its
regulatory personnel expertise and that it is in compliance in all material
respects with all applicable laws and regulations. The applicable laws and
regulations change with some frequency. The amendment of existing laws or
regulations or the adoption of new laws or regulations could require the Company
to obtain new government permits or to modify its planned methods of operation
in order to comply with these changes. There can be no assurance that the
Company will be able to obtain any such new permits or that the cost of
compliance with any such changes would not have a material adverse effect on the
Company's business, financial condition and results of operations.
The MicroFacility produced by the Company requires permits that could be
difficult and time-consuming to obtain and, if and when issued, may be subject
to conditions or restrictions which may limit the Company's ability to operate
efficiently in the applicable jurisdiction. The Company's withdrawal from
certification could have a material adverse effect on the Company's business. It
is the intention of the Company to first obtain the necessary permits in areas
of the world where the Company is likely to encounter the least amount of
difficulty in the approval process.
The failure of the Company's MicroFacility to operate in compliance with the
requirements and limitations of any permit, or with the laws and regulations
pursuant to which the permit was issued, could jeopardize the permit. Routine
compliance inspections by the issuing regulatory agency, as well as complaints
filed or anonymously sponsored by the Company's competitors or others alleging
that the Company is not operating in compliance with a particular permit, could
result in administrative proceedings to modify, suspend or revoke the permit.
Any such modification, suspension or revocation could have a material adverse
effect on the Company's business, financial condition and results of operations.
Some permits have to be renewed periodically, and there can be no assurance that
any existing or future permit which is required to be renewed will be renewed by
the issuing regulatory agency. The failure to obtain any such renewal could have
a material adverse effect on the Company's business, financial condition and
results of operations.
Like any technology, the Company's MicroFacility may be subject to certain
technological limitations. Although the Company has never been denied regulatory
approval because of any technological limitation on its MicroFacility, there can
be no assurance that specific limitations will not be identified by a regulatory
agency as a sufficient reason to withhold a necessary permit in a particular
jurisdiction or used by competitors to encourage customers or potential
customers to engage their services rather than those of the Company. There can
be no assurance that any such actions would not have a material adverse effect
on the Company's business, financial condition and results of operations.
POTENTIAL INABILITY TO FUND FUTURE CAPITAL REQUIREMENTS The Company's growth may
require substantial expenditures. Any additional equity financing may be
dilutive to the Company's existing stockholders, and any debt financing, if
available, may involve restrictive covenants which limit the Company's
operations. The Company's failure to raise capital if and when needed could
delay or suspend the Company's strategy and result in a material modification of
the Company's business strategy. The Company's inability to fund its capital
requirements could have a material adverse effect on the Company's business,
financial condition and results of operations.
6
<PAGE>
LIMITED PRODUCT LINE The Company will derive its business and revenues from the
sale of its MicroFacility. To achieve market acceptance and penetration, the
Company must continually enhance and improve its products and services, as well
as increase its marketing and sales efforts to effectively compete and increase
customers' awareness of the Company's products and services. The Company is
aggressively continuing research and development for expanded products to
present to the market. However, there can be no assurance that the Company's
expanded marketing and sales efforts and increased expenditures will result in
successful commercialization and increased market penetration of the Company's
products and services.
TECHNOLOGICAL FACTORS There can be no guarantee that the Company's products will
prove to be sufficiently reliable in widespread commercial use. It is common for
manufacturing facilities as complex and sophisticated as that incorporated in
the Company's MicroFacility to experience problems during and subsequent to
commercial introduction. There can be no guarantee that the Company will
identify such errors in existing or future products, or if the Company
identifies the errors, will correct the errors. Any such errors could delay
commercial introduction of new products and require modifications in already
installed products. Remedying such errors may be costly and time consuming.
Delays in remedying any such errors could materially adversely affect the
Company's competitive position with respect to existing or new technologies and
products offered by its competitors. Further, the Company remains subject to all
of the risks inherent in new product development, including unanticipated
technical or other development problems, which could result in material delays
in product commercialization or significantly increased costs.
ABILITY TO MANAGE GROWTH The Company will expand its operations rapidly, which
may create significant demands on the Company's administrative, operational,
developmental and financial personnel and other resources. Additional expansion
by the Company may further strain the Company's management, financial personnel
and other resources. There can be no guarantee that the Company's systems,
procedures, controls and existing space will be adequate to support expansion of
the Company's operations. The Company's future operating results will depend,
among other things, on its ability to manage changing business conditions and to
continue to improve its operational, financial control and reporting systems.
If the Company's management is unable to manage growth effectively, its
business, financial condition and results of operations could be materially
adversely affected. The Company's ability to manage growth depends in part upon
the Company's ability to attract, train and retain a sufficient number of
qualified personnel or independent contractors. A heightened turnover rate among
the Company's employees would increase the Company's recruiting and training
costs, and if the Company were unable to recruit and retain a sufficient number
of employees or independent contractors, it could be forced to limit its growth
or possibly curtail its operations. However, the Company has in place a seasoned
management team in the sales and marketing, manufacturing, and regulatory areas.
LIMITED CUSTOMER BASE The Company's potential customer base is relatively
limited due to the significant cost of the Company's MicroFacility. There can be
no guarantee that any future customers will maintain business relationships with
the Company. Revenues attributable to a relatively small number of customers are
likely in the foreseeable future to represent a significant percentage, in any
given period, of its total revenues. The loss of one or more major customers
could have a materially adverse effect on the Company's business, financial
condition and results of operations.
COMPETITION The market for the Company's product is not well developed. However,
a number of large well capitalized companies currently offer intravenous
solutions for sale. The Company hopes to sell its MicroFacility to operators who
will in turn compete successfully against these large companies. The Company has
been unable to identify the likely response of these large companies to its
business plan. An increase in competition could result in price reductions and
loss of market share and could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company believes that the principal competitive factors facing the Company
are the existing methods of manufacturing intravenous solutions in large volume
rotary filling plants. While no one competes directly with the Company in the
manufacture of manufacturing facilities for intravenous solutions, the exact
competitive response of the large pharmaceutical companies is uncertain. Many of
the Company's potential competitors have significantly greater financial,
marketing, technical and other competitive resources, as well as greater name
recognition, than the Company. As a result, the Company's competitors may be
able to adapt more quickly to new or emerging technologies and changes in
customer requirements or may be able to devote greater resources to the
promotion and sale of their products and services. There can be no guarantee
that the Company will be able to compete successfully with its competitors.
7
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DEPENDENCE ON THIRD-PARTY VENDORS The Company will depend on third-party vendors
for hardware, services, component parts, manufacturing, systems integration,
quality assurance, administrative, consulting and engineering services, which
are incorporated in the MicroFacility. While available from multiple sources,
the Company will be dependent upon outside vendors for certain items which are
available from a limited number of sources. Although the Company believes that
there are currently available substitute sources for all such equipment and
services, the Company could be required to redesign its product to accommodate
substitutes therefor. Any inability or delay in establishing necessary
procurement arrangements or successfully modifying products could have a
material adverse effect on the Company's business, financial condition and
results of operations.
PROPRIETARY RIGHTS The Company currently has exclusive licenses from
DenexCorp(TM)/LVPS MicroFacility for the design and specifications of its
MicroFacility. The Company's success will depend in part on its ability to
protect its technology, processes, trade secrets and other proprietary rights
from unauthorized disclosure and use and to operate without infringing on the
proprietary rights of third parties. The Company's strategy is to protect its
technology and other proprietary rights through patents, copyrights, trademarks,
nondisclosure agreements, license agreements, and other forms of protection.
There can be no guarantee, however, that any pending or future patent
application of the Company or its licensors will result in issuance of a patent,
that the scope of protection of any patent of the Company or its licensors will
be held valid if subsequently challenged, or that third parties will not claim
rights in or ownership of the products and other proprietary rights held by the
Company or its licensors. In addition, the laws of certain foreign countries do
not protect the Company's intellectual property rights to the same extent as the
laws of the United States.
Litigation or regulatory proceedings which could result in substantial cost and
uncertainty to the Company, may also be necessary to enforce patent or other
proprietary rights of the Company or to determine the scope and validity of a
third party's proprietary rights. Although the Company believes that its
technology has been independently developed and that its products do not
infringe patents known to be valid or violate other proprietary rights of third
parties, it is possible that such infringement of existing or future patents or
violation of proprietary rights may occur. There can be no guarantee that third
parties will not assert infringement claims in the future with respect to the
Company's current or future products or that any such claims will not result in
litigation or regulatory proceedings or require the Company to modify its
products or enter into licensing arrangements, regardless of the merits of such
claims. No assurance can be given that any necessary licenses can be obtained in
a timely manner, upon commercially reasonable terms, or at all, and no assurance
can be given that third parties will not assert infringement claims with respect
to any current licensing arrangements. The Company's failure to successfully
enforce its proprietary rights or defend against infringement claims brought by
third parties could have a material adverse effect upon the Company. In
addition, there can be no assurance that the Company will have the resources
necessary to successfully defend an infringement claim brought by a third party.
DEPENDENCE ON KEY PERSONNEL The Company is dependent upon a limited number of
key management, technical and sales personnel. The Company's future success will
depend, in part, upon its ability to attract and retain highly qualified
personnel. The Company faces competition for such personnel from other companies
and organizations, and there can be no assurance that the Company will be
successful in hiring or retaining qualified personnel. The Company's loss of key
personnel, especially if the loss is without advance notice, or the Company's
inability to hire or retain key personnel, could have a material adverse effect
on the Company's business, financial condition and results of operations. The
Company has written employment agreements with its executive officers, Ron
Patterson and Ross Boling providing for specific terms of employment, but other
key personnel could leave the Company's employ with little or no prior notice.
The Company does not carry any key man life insurance.
CONTINUED CONTROL BY CURRENT OFFICERS, DIRECTORS AND AFFILIATED ENTITIES
Following completion of this Offering, the Company's current executive officers,
directors and entities affiliated with them will beneficially own, in the
aggregate, approximately 49% of the Company's outstanding Common Stock. If they
were to act together, these stockholders may be able to control substantially
all matters requiring approval by the Company's stockholders, including the
election of directors and the approval of mergers or other business combination
transactions. This concentration of ownership could prevent a change in control
of the Company.
NO PUBLIC MARKET There is no public market for the Shares and it is unlikely
that any market will develop prior to the second anniversary of the Company's
operations following this offering, if then. The offering price for the Shares
was determined by management and not as the result of arms-length negotiations.
IMMEDIATE AND SUBSTANTIAL DILUTION The offering price is substantially higher
than the net tangible book value per share of common stock. New investors
purchasing Shares in this Offering accordingly will incur immediate dilution of
$4.00 per share.
8
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ABSENCE OF DIVIDENDS The Company has never paid any cash dividends on its Common
Stock and does not anticipate paying cash dividends within the next two years.
DILUTION Dilution is the reduction in the value of a purchaser's investment in
common stock measured by the difference between the purchase price per share and
the net tangible book value per share of the common stock after the purchase.
The net tangible book value per share of the common stock represents the net
tangible book value of the Company divided by the number of shares of common
stock outstanding. The net tangible book value of the Company represents its
total assets less its total liabilities and intangible assets (consisting
primarily of goodwill).
Note: In addition to the above risks, businesses are often subject to risks not
foreseen or fully appreciated by management. In reviewing this Prospectus
potential investors should keep in mind other possible risks that could be
important.
9
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Item 4. Use of Proceeds.
<TABLE>
<CAPTION>
USE OF PROCEEDS
The following table sets forth the use of the proceeds from this offering:
If Minimum Sold If Maximum Sold
Amount % Amount %
- ---------------------------- --------------- ---- --------------- ----
<S> <C> <C> <C> <C>
Total Proceeds $2,300,000 100% $5,000,000 100%
Less: Offering Expenses, $230,000 10% $500,000 10%
Commissions and Finders Fees
Legal & Accounting $23,000 1% $50,000 1%
Copying & Printing $4,000 .2% $8,000 .2%
Net Proceeds from Offering $2,043,000 89% $4,442,000 89%
Use of Net Proceeds $2,043,000 100% $4,442,000 100%
Equipment $1,412,257 69% $2,384,667 54%
Services $498,175 24% $1,248,175 28%
Operating Expenses & $132,568 7% $809,158 18%
Working Capital
</TABLE>
Item 5. Determination of Offering Price.
The Offering Price of the shares ($8.00 per share) has been determined by the
Company and not as the result of arm's-length negotiations. There is no
established public market for the shares. The Company set the price of the
shares to value the Company before financing at $5,000,000 and after full
financing through this offering at $10,000,000.
Item 6. Dilution.
The Company's existing officers, directors, promoters, and affiliated persons
obtained their 612,500 shares for cash consideration of $612 or $.001 per share.
As a comparison, investors in this offering will pay $8.00 per share. Therefore,
investors will suffer an immediate dilution of $4.00 per share. The net tangible
book value per share before this distribution is $0.00. After this distribution,
net tangible book value will be $4.00 per share. As such, there will be a $4.00
per share increase in net tangible book value per share attributable to the cash
payments made by purchasers of the shares being offered. The purchasers will
absorb an immediate dilution of $4.00 per share in net tangible book value from
the public offering price. The following table illustrates this per share
dilution.
Offering price to new investors ...........................................$8.00
Net tangible book value before the offering..................$0.00
Increase in tangible book attributable to this offering......$4.00
Pro forma net tangible book value after the offering ......................$4.00
Dilution of net tangible book value to new investors ......................$4.00
Item 7. Selling Security Holders.
None.
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Item 8. Plan of Distribution.
The Company is offering a minimum of 287,500 and a maximum of 625,000 Shares at
the purchase price of $8.00 per Share on a "best efforts all or none basis" as
to the first 287,500 Shares and on a "best efforts" basis with regard to the
remaining 337,500 Shares. If the minimum number of Shares is not sold during the
offering period, the proceeds received will be promptly returned to the
investors without interest. The Company may allocate among or reject any offers
to purchase in whole or in part. Moreover, the Company's directors, officers,
and principals of the Company's counsel may purchase Shares on the same terms
and conditions as all other investors; provided, however, that any such Shares
so purchased (a) will not be included in calculating the minimum number of
Shares to be sold and will (b) will be acquired for investment and not with an
intention to resell such Shares shortly thereafter.
Item 9. Legal Proceedings.
The Company is not involved in any legal proceedings.
Item 10. Directors, Executive Officers, Promoters and Control Persons.
<TABLE>
<CAPTION>
Identification of Directors and Executive Officers
Name Age Position held with the Term of office as a director Dates of service
Registrant
- --------------------------- ------- ---------------------------- ----------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Ronald Patterson 55 Chairman, President & One year December 16, 1998 to
CEO/Director present
Ross Boling 52 Chief Operating One year December 16, 1998 to
Officer/Secretary/Director present
</TABLE>
Previous business experience:
Ronald R. Patterson. Mr. Patterson has senior level experience in manufacturing,
research and development, distribution in Marketing/Sales in the Medical Field
and the Franchising Industry. Experience and expertise in the development and
implementation of strategic marketing plans 'include marketing/sales strategies
programs, product presentation/persuasion, trend analysis, competitive and
product positioning, highly competitive team player. Unprecedented growth 'in
sales, strong organizational skills, enjoy challenging situations on a
consistent basis, Extensive International Manufacturing Sales tactical
Marketing, and plan implementation create maximum market impact expertise.
Author of "Success and Wealth for the Entrepreneur." Published in 1992.
Innovative design development of several patents which are currently pending.
Professional Experience: Ron Patterson founded DenexCorp(TM)/LVPS MicroFacility
to bring new and innovative state-of-the-art medical products to the
international community with a totally integrated, turn-key,
micro-manufacturing; plant that produces I V solutions for parenteral
requirements. Negotiated and closed several multi- million $ transactions. Based
on his 25 years in the medical industry, Ron realized that the medical industry
was in drastic and dramatic change. DenexCorp is structured to lead this change
'in offering new technology to the domestic and international community with
special emphasis on new and emerging nations. The Company has been involved in
research, international development, and patents application. Complete
development of FDA approval process. The MicroFacility plant stands head and
shoulders above industry standards for pharmaceutical manufacturers specializing
in emerging Nations.
Partner/COO, General Clinical Plastics Corporation. Became founding partner in
one of the largest medical plastics manufacturers in the U.S. until its sale to
Premium Plastics. As a start-up medical injection molding facility with a
demonstrated strong marketing and development strategy, the company swiftly
became the premier medical injection molding facility on the West Coast. Upon
the sale of the company, a few years later, formed an import/ export company
specializing in manufacturing and packaging sterile surgical gloves and
non-sterile examination gloves. Health Care Equipment Services procured and
distributed medical equipment to primary markets in Mexico and Central and South
America. While Medexco was responsible for acquisition, sales, and distribution
of broad-based specialty product lines. Built distribution network for
specialized medical equipment and specialty disposable items serving hospitals,
physicians, and clinics.
Principal, Medical Manufacturers Marketing Company (MMMC). Following a major
restructuring at Cenco, became a Principal in Medical Manufacturers Marketing
Company(MMMC), Established 'independent rep group with a maj or distribution
network extending throughout western U.S. and Hawaii. Promoted various products
nationwide and successfully introduced and test marketed various surgical
products and equipment in the U.S. Developing and implementing superior sales
strategies, the company became one of the largest independent manufacturer's
representative organizations in the country specializing in new and innovative
medical products that did not have effective distribution patterns. Consistently
exceeded the most ambitious sales quotas.
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Division Manager, Western Divisions, Cenco Medical Health Supply Corporation.
The youngest Division Manager in the history of the company, responsible for
hospital planning, engineering, distribution, labor arbitration, implementation
of corporate procedures, sales forecasting, product marketing, national and
regional group contracting, data processing systems, and employee relations.
Awarded major multimillion dollar group purchasing contract.
Other responsibilities, manage operations of (HP&E) Hospital Planning &
Equipment of major West Coast Hospitals. Architecture and construction company,
building turnkey hospitals and professional medical Multi-story buildings.
Hospital Administration Resident: Antelope Valley Regional Hospital.
Responsibilities were administrative and support systems of hospital operations
and hospital expansion projects. Accomplishments included development and
implementation of perpetual inventory control system, establishment of
purchasing department and procurement systems, capital equipment budgeting
systems, innovated a data processing program to establish usage levels and
reorder points. Developed orders catalog system for individual floors as an aid
for establishing purchasing priorities. Improved the systems and productivity in
all departments as well as expanding and enhancing their services.
Author and Educator. In demand for detailed knowledge, not only of medicine and
health care, but also of the fundamental areas of business law/administration,
economics, labor arbitration, implementation of corporate procedures, sales
forecasting, product marketing, national and regional group contracting, tax and
corporate law, estate planning, franchising, sales and marketing strategy, and
personal motivation and presentation techniques. In conjunction with two
companies, PDS, Inc. and SMI, Inc., involved in helping business persons achieve
greater results through the writing of educational materials and as a seminar
leader. Sales and Marketing of professional development programs and conducted
professional speaking engagements and seminars for some at the largest corporate
and professional organizations in the United States. In 1992, wrote a book that
functions essentially as a handbook for the entrepreneur, dealing with all
aspects of business law and application.
Education: Bachelor of Science, Business Administration Public Health-University
of Southern California
Military United States Army Green Beret-Honorable Discharge Special Forces
Medic-Fort Bragg, North Carolina/Republic of Vietnam Awards: Bronze Star, Purple
Heart, and Combat Medical Badge Associations/Achievements
IFA International Franchise Assn. - Health Industry Rep Assn.
Health Industry Manufacturers Assn. - Medical Marketing Assn.: Orange
County Regulatory Affairs Association: &Medical Device Manufacturers
Association.
Published Author of Success and Wealth for the Entrepreneur, 1992
Inventor, Innovative design development of several patents currently pending
Ross Boling. Professional Experience: A co-founder of DenexCorp(TM)/LVPS
MicroFacility, Ross Boling has over 15 years of International Development
Experience in several industries. His background in sales, marketing, and
finance gives further leadership in the world wide development of
state-of-the-art medical micro-manufacturing facilites.
Owner/Principal, The Boling Group. A marketing consulting firm specializing in
hospitality, health, telecommunications, and transportation industries, advised
major investment group on the proposed take-over of a long distance reseller;
developed marketing/advertising strategies for Greyhound Rural Connection
transportation service; awarded $700,000 contract to implement the State of
Michigan's Rural Transit service marketing program.
Vice President/COO, Pool/Sarraille Advertising, Inc. Managed Dallas branch of
Los Angeles-based firm generating billing in excess of $4 million. Launched
International expansion of Brock Residence Inn Hotel system creating
marketing/advertising plan, franchise fullfillment brochures, investment film.
Managed agency account team, led new business activites, coordinated Franchise
Collateral Fullfillment program.
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<PAGE>
Vice President/Director of Sales and Marketing, Hawthorn Suites Hotel Group.
Administered all system sales, marketing, public relations, and market research.
Participated in franchise sales activities and development; created national
brand identification of new all-suite hotel chain exceeding sales target of $3
million the first year; trained and motivated sales force for over 25 hotel
properties.
Partner, Zipkes Boling Advertising. Founded a full service advertising agency
specializing in hospitality and high-technology clients. Managed the account
service and public relations departments generating in excess of $2 million in
gross revenue. Created national advertising campaign for Lincoln Hotel Corp.
internationally that increased occupancy 30%, daily room rate by 20%, and
overall revenue by $1.4 million in the first year.
Territory Sales Manager for North Texas, Chesebrough-Ponds, Inc. Account
responsibility for major teaching hospitals and distributors.
Education: BA Communications-University of Texas
Achievements: Director, Dallas Advertising League/AAF Guest Lecturer, Cornell
University Hotel School; Loyola Marymount University Business School Recipient,
American Hotel Sales and Marketing Association Gold Achievement Award
Identification of Significant Employees
Name Age
- --------------------------- -------
Jon Gow 50
Douglas Platt 51
Steven Smith 43
Todd Marrs 50
Bill Hatton 45
Damon Jones 34
Previous business experience:
Jon W. Gow. Mr. Gow graduated with a Bachelors of Science degree in Chemistry
from the California University at Pomona (California Polytechnics University).
Mr. Gow manages as president and owner, Pacific Environmental Technologies, Inc.
(PETI). an international cleanroom design build and manufacturing company formed
in 1989. With over 20 years in the critical environment industry, Mr. Gow has
gained extensive experience in most aspects of cleanrooms facility design and
construction including air-conditioning (HVAC) systems, facility layout, process
layout, and commissioning with an emphasis on turnkey projects and project
management. Other areas of his expertise are controls design for temperature and
humidity; start up and balancing of HVAC systems; and innovative design
solutions that offer cost benefit results to the client. PETI provides: clean
room facility design, engineering, consulting, project management, installation
and construction services and commissioning/certification services for a broad
spectrum of industries. These include: aerospace, electronics, bio medical
device manufacturing, pharmaceutical, optical storage and others. Within the
company, Mr. Gow is actively involved in the engineering and design of the
facilities under contract as well as sales and marketing.
Mr. Gow has been involved in process systems and critical manufacturing
environments for over 20 years. His initial exposure to critical environment
processes and cleanrooms came in the micro electronics industry as a process
engineer where his chemistry background provided the basic knowledge and
analytical skills required in the semiconductor wafer processing industry. It
was during this period that he gained valuable knowledge and experience in
project management and engineering support for a new wafer fab facility. Mr.
Gow, after leaving the micro electronics industry, joined a Southern California
cleanroom manufacturing and contracting company, B.A.C.. For the next 10 years
Mr. Gow provided technical experience in HVAC design, clean room design, project
management, sales and marketing in the international and domestic markets for
critical manufacturing environments that utilize cleanrooms. As the result of an
acquisition, the company ultimately became known as Liebert Cleanroom Systems
Divisions (LCRS). Mr. Gow was promoted to Vice President of Sales and Marketing
for LCRS where he was involved in a number of overseas projects of modular
design for the micro electronics industries that were performed on a turnkey
basis. Project sizes ranged from $1 million - $ 3.4 million. Prior to the
promotion Mr. Gow worked extensively in all aspects of the projects including
project management, estimating, design and commissioning of projects which
include domestic projects in the U.S. as well as overseas projects in Taiwan, S.
Korea and the Middle East.
13
<PAGE>
In 1989, after leaving LCRS, Mr. Gow formed Pacific Environmental Technologies,
Inc. (PETI) to continue providing clean room facility design build manufacturing
services for the micro electronics and aerospace companies, and has in the past
5 years been providing the same services to the bio medical device manufacturing
and pharmaceutical industry. PETI under Mr. Gow's leadership has designed and
constructed 5 facilities internationally and for over 100 companies in the U.S.
Douglas B. Platt. Mr. Platt graduated with a Bachelors of Science degree in
Psychology in a Pre Medical program in Tennessee. Additionally he earned his
Certificate of Pharmacy at Fort Sam Houston. Texas Medical School and a
Certificate of Biocontainment Technology at John Hopkins University, Maryland.
Mr. Platt has gained extensive experience in most aspects of pharmaceutical and
biotechnology operations such as biocontainment. sterile processing with
emphasis on aseptic manufacturing, filtration. sterilization. GMP compliance.
validation and the use of isolation and mobile technologies in aseptic
processing. Other areas of his expertise are facility design and planing,
process flow, WFI/Ultrapure water systems and equipment selection, evaluation
and qualifications. Mr. Platt manages as principal and senior technical advisor
an international engineering consulting firm formed in 1988 that provides a
network of professional associates to provide services 'in the areas of- product
engineering, process design and problem solving, assistance in process
development through validation and license. Mr. Platt is actively involved with
the Parenteral Drug Association, Filtration Society, Society of Pharmaceutical
Engineers. the Institute of Environmental Sciences, and the Water Quality
Association.
For over 7 years Mr. Platt provided supervision and project management
throughout Alpha Therapeutics LVP/SVP manufacturing facility in Southern
California. Some of his duties were development with engineering and quality
assurance of the design, construction, and validation for a new $6 million
sterile filling and filtration facility, which resulted in increased
productivity by approximately $20 million and doubled the capacity of the
filling operation on a daily basis.
He designed and developed the first formal certified and GMP compliant custodial
program plant wide for Alpha Therapeutics. Working with the Sterile Services
Department he recommended. designed and implemented a CIP(clean in
place)/SIP(Stearn in place) process tank system which reduced the turn around
time of production equipment and eliminated the purchase of additional tankage
at a cost savings of $250.000.
In conjunction with engineering and the Sterile Filling Department he
implemented a bottom-up fill system which reduced filling residuals by a quarter
million dollars a year.
For a period of 3 years he developed. wrote and performed validation studies for
license qualifications on a new ultrafiltration system for final albumin
processing including raw materials through equipment preparation to equipment
sterilization through aseptic filling in a new expanded filling suite. He also
acted as liaison between manufacturing and engineering in the commissioning of
the new facility.
Mr. Platt staffed and launched the Biomedical Department of Scientific Air
Systems located in Chino, California. He provided management and leadership for
turn-key design/build capabilities in the pharmaceutical. and biotech
industries. His duties included sales engineering providing international
clients with conceptual design engineering, equipment selection, costing, and
contract negotiations.
Working closely with staff at CDC, FDA, and WHO Mr. Platt designed a turn-key
BSL3&4 facility with full complement of isolators. research equipment and safety
controls for an international company. The facility included a unique hazardous
waste neutralization system
Working with Gelman Sciences, Mr. Platt provided product management and sales
engineering expertise, writing, implementing and directing the field efforts of
a validation in plant program affecting over $30 million in filtration products.
He also, through his own initiative, was successful in negotiating Gelman as one
of the two providers of filtration products to a $500 million global ophthalmic
manufacturing company with facilities in 5 countries resulting in annual sales
over $1 million.
For more than 7 years Mr. Platt has been consulting through East-West Tech. He
has provided expertise in most countries in the pacific rim and for more than 30
individual companies in the U.S.
Currently, in addition to managing EWT, Mr. Platt is involved with expanding the
capabilities of EWT and locating the best technical and experienced talent
possible to augment his already highly professional and successful staff. He is
also performing process development studies, and holding seminars on all aspects
of the FDA regulations (including the new GMPs) and ISO 9000/EN29000 strategies
and implementation.
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<PAGE>
Steven L. Smith. Mr. Smith has over 15 years of management experience in the
pharmaceutical industry. He has expertise in medical products. process
development, capital and expense planning, market research; plastic materials
and processing, all methods of sterilization. processing equipment, and
automation. Currently, Mr. Smith is overseeing cost effective drug delivery and
IV container systems for McGaw, Inc. He has worked closely with other
departments to revamp McGaw's entire process and product development program. He
has interfaced with world renowned pharmaceutical and biotech companies in the
exploration and development of mutual beneficial joint development projects. His
achievements include the development and successful introduction of the patented
Excel(TM)IV system and the development of the Duplex(TM) advanced drug delivery
system. He was the originator and the product champion behind both of these
projects. He is actively a member of ISPE. ASHP, and PDA.
For over 3 years Mr. Smith managed the sterilization area of process research
and development for McGaw Labs. He provided leadership and technical assistance
to engineers and technicians within the group. He was responsible for
sterilization methods and process development from beginning product/process
compatibility studies through large scale production implementation. He designed
an innovative method of steam sterilization for an extremely delicate product
using a unique partial immersion sterilization fixture.
Mr. Smith also initiated a program to evaluate the feasibility of converting the
sterilization of McGaw's IV set line over to irradiation from ETO and developed
a high voltage leak detection system for liquid filled plastic containers. He
evaluated new process instrumentation, pressure transducers, thermocouples,
analogue and digital data and data conditioners.
In addition, Mr. Smith was a Corporate Technical Consultant for American
Hospital Supply Corporation (Pacific International Division) providing technical
and manufacturing support. He increased the output, efficiency, and quality of
medical products produced and developed at various locations. He developed new
product technologies specifically designed to address the needs of each market.
This included a B/F/S irrigation and IV container system and the use of RO to
produce WFI.
Presently Mr. Smith is providing leadership to a professional team of
development engineers and engineering technicians at McGaw Inc., (Division of
the IVAX Corp.). He is working together with other professionals with the goal
of bringing to market. customer preferred pre-filled drug delivery products and
devices. He is responsible for management and fostering an atmosphere of
creativity and technical excellence.
Todd P. Mairs. Mr. Mairs has over twelve years of experience in consulting to
commercial nuclear plant owners. the Electric Power Research Institute URI and
the Department of Energy (DOE) in the application of risk management methodology
and reliability engineering to improve facility capacity, production throughput.
and maintenance cost structure. He is actively involved in the design of
maintenance cost/performance strategies and the development of Life-cycle
Maintenance Cost Management process. Mr. Mairs is currently implementing
Life-cycle Maintenance cost Management at Calvert Cliffs Nuclear Power Plant,
Cooper Nuclear Station, and Boston Edison fossil generating stations to
integrate risk, reliability, maintenance, and cost engineering techniques into
an asset and resource management strategy. Additionally, Mr. Mairs is consulting
with several EPRI member utilities on the implementation of Life-cycle
maintenance Cost Management, including on-site assessment. strategic program
development. and long term installation of key processes. These projects involve
redesigning critical maintenance processes. equipment performance improvement
programs. inventory management strategies. and activitybased cost accounting
procedures.
Over the past 2 years. Mr. Mairs has developed a risk and performance-based
process for reducing operating costs by reengineering the development, planning,
scheduling, and conduct of maintenance activities and inventory management for
industrial facilities. The goal of the Lifecycle Maintenance Cost Management
(LCM2) process is to achieve significant and sustained O&M cost reduction and
capacity improvement throughout the operating cycle of a plant without
sacrificing safety. This cost-benefit decision methodology for conducting
maintenance activities during all modes of operation (e.g., generation,
production. or manufacturing), requires explicit consideration of financial,
operational, and safety risks.
Mr. Mairs; is the principal architect for Electric Power Research Institute's
(EPRI's) methodology for managing risk associated with conducting maintenance
during all modes of operation (a key element of the LCM2 process, as it applies
to reengineering of the maintenance Rule Projects. INPO, BWROG, and NEI on the
methodology for implementing an online maintenance program. Recently he has
participated on industry-wide efforts to benchmark organizations on their
implementation of various maintenance programs.
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<PAGE>
Currently, Mr. Mairs is implementing the LCM2 strategy at Calvert Cliffs Nuclear
Power Plant and Cooper Nuclear Station. Additionally, he has consulted with
ComEd. Southern California Edison. Niagara Mohawk Power Corporation, PSE&G. and
Duquesne Light in developing maintenance policy, process, and procedures that
assure safe plant operation and equipment reliability, and achieve greater
efficiencies in cost performance. In addition. this methodology is being applied
at other facilities, including a polyester and pharmaceutical manufacturing
facilities, and a uranium enrichment chemical processing plant.
Mr. Mairs has over 10 years of experience in the field of probabilistic risk
assessment, severe accident analysis, emergency procedure examination, and
severe accident management. Mr. Mairs has been a project manager and principal
investigator of several major probabilistic risk assessments. He has also been
the lead analyst on several PRA application programs for the development of
safety assurance criteria for advanced fight water reactor designs, development
of PRAs to support safety analysis reports for advanced fuel reprocessing
facilities, and management of high-cost and potentially hazardous industrial
generation and production plants.
In addition, Mr. Mairs has developed many risk management programs at various
utilities to incorporate risk assessment and reliability engineering techniques
to improve the organization of the operations, engineering, and maintenance
departments in reducing O&M costs and extending operational capacity. Currently,
Mr. Mairs is performing risk assessments for reactor plant operations during
refueling and shutdown conditions. Specifically, he has been a principal analyst
in developing the technology to assess risk during the many plant configurations
necessary to conduct a maintenance outage safely and efficiently. The emphasis
of these projects is to provide a model for evaluating the conduct of tasks in
the most optimum schedule.
Mr. Mairs continues to consult with EPRI on similar projects involving the
application of risk management strategies for optimizing the maintenance
business function. These assignments include the development of critical
maintenance processes, equipment performance improvement programs, inventory
management strategies, and activity-based cost accounting procedures. In
addition, Mr. Mairs provides consulting to numerous utility members in
benchmarking industry "best practices," which involves functional process
assessment, technology transfer, and business case development.
Mr. Mairs has conducted training courses to the nuclear power industry in the
area of PRA technology (including Human Reliability Analysis and assessment of
external events), and its application in managing the cost-effectiveness of
facility operations and maintenance.
William Hatton. Mr. Hatton graduated from the University of California, Los
Angeles with a degree in Psychobiology. He has over 20 years combined experience
working in manufacturing, quality research and development, and regulatory
affairs. Mr. Hatton is responsible for the coordination of the commissioning and
validation efforts. He has supervised qualifications and validation for several
multi-million dollar construction projects. He also has hands on experience
working within Manufacturing, Metrology, Quality Control, Quality Assurance. R &
D. and Regulatory Affairs groups. He is a member of the Regulatory Affairs
Professional Society
At R.J.M. Laboratories, Mr. Hatton was employed as a chemist performing bench
top to pilot plant scale up-custom synthesis in stereospecific organometallic
hydride reduction.
At Richard's Surgical Manufacturing company he was employed as a Quality
Engineer and was responsible for monitoring plant GMP compliance and in-house
training programs. He performed vendor audits, wrote inspection procedures,
reviewed drawings prior to release, reviewed rejects for defect analysis, made
scrap or rework decisions., wrote engineering change requests.
At Westech Gear, Mr. Hatton had the position of Senior Quality Assurance
Analyst. Mr. Hatton performed pre-award surveys for multi-million dollar
contracts (Air Force Nuclear Vault, Navy submarine elastomeric coupling). He
evaluated calibration systems to Mil-STD-45662A, and audited vendor's quality
systems (MIL-45208A and Mil-Q-9858AO).
At International Medication Systems, Ltd. (Drug and Medical Device
Manufacturer), Mr. Hatton had positions of Metrology Supervisor and later
Validation Project Leader. Mr. Hatton implemented a cost effective calibration
program reviewed by the FDA and generated standard cost estimates for
departmental budgets and supported installation qualification for a facility
upgrade. He also initiated a gamm sterilization dosimetric release program and
executed protocols for steam sterilization of parenteral. solutions and dry heat
depyrogenation of equipment and components.
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<PAGE>
At Walnut Pharmaceuticals, Inc. (An Opthalmic Pharmaceutical Manufacturer) Mr.
Hatton was Quality Assurance/Validations Manager. Responses to and correction of
GMP deficiencies of FDA 483 observations.
Mr. Hatton was a Technical Affairs Coordinator for R&D at Akorn, Inc. (Generic
Drug Manufacturer). He supervised the construction of Laboratory facilities to
support stability studies used in drug applications and supervised physical,
chemical. and biological testing submitted in support of drug applications. He
also wrote component and raw material specifications and container closure
section of drug applications. Mr. Hatton was also responsible for obtaining
documents necessary to support drug applications and maintain an effective
quality system He also installed and validated Sci-Tek stability system software
and trained others in its use. In addition Mr. Hatton designed packaging and
labeling for prescription and OTC drugs. Wrote packaging and labeling sections
for drug applications.
At Spektra Management Consultants & Biosearch, Mr. Hatton audited QC lab for GNT
compliance at a company operating under a FDA consent decree. made
recommendations for laboratory renovation and provided cost estimation. Reviewed
validation of analytical methods. Wrote SOP's for control and use of laboratory
notebooks and the proper disposition of out-of-specification laboratory results,
and raw material assays. Mr. Hatton also wrote a Quality Assurance Manual for a
medical device manufacturer.
At Skyland Scientific Services Mr. Hatton was a Technical Manager assisting in
the development of validation master plans of new pharmaceutical manufacturing
facilities. He wrote protocols. made cost estimates and supervised the on-site
execution of the validation effort.
At Volt Technical Services, Mr. Hatton is contracted to provide services as a
Senior Validations Engineer reviewing validation packages in preparation for NDA
pre-approval inspection for one of their clients and has worked in commissioning
of new pharmaceutical manufacturing facilities, writing validation protocols,
operation and preventive maintenance SOP's for critical systems.
As a consultant for East-West Technic Group, Mr. Hatton is currently performing
project management, cost estimations and qualifications/validations for a wide
range of pharmaceutical and medical device companies. He has written and
executed a variety of validation protocols for most biomedical process
operations.
Damon P. Jones. Mr. Jones has a degree in Microbiology and over 13 years
experience in the medical device manufacturing industry as a manager/supervisor.
He is also a Certified Quality Engineer (CQE). He received the U.S. Patent
application and Medtronic recognition award for Automated System and Process for
Sterilizing and Preserving a Product in an Aseptic Environment in April of 1994.
Mr. Jones is currently Manager of Product Development Projects for Medtronic
Heart Valve, Inc. He is responsible for coordination and implementation of
quality assurance systems, quality assurance laboratories (Microbiology and
Chemistry) and control and improvement of surface modification processes. Mr.
Jones has introduced and sustained compliance programs for international and
domestic regulations (FDA, MDD, ISO, CEN). He is currently a member of the
American Society for Quality Control and Chairman of the United States technical
advisory group (ISO sub-TAG) to ISO TC 19 81WG 10 and Delgate to ISOTC 198.
For over 4 years Mr. Jones was a Senior Microbiologist for Medtronic, Inc.;
Heart Valve Division. He conducted sterilization validations for liquid
chemical, ethylene oxide, steam and irradiation sterilization's. He also planned
and coordinated environmental monitoring programs. bioburden monitoring
programs, water system monitoring and maintenance programs. He was responsible
for all microbiology quality assurance activities.
He also supervised the Heart Valve Division at Medtronic. His responsibilities
included supervision of all validation, inspection, test, and regulatory
activities related to Microbiology and Chemistry. He also managed the laboratory
personnel and coordinated biocompatibility, sterilization and microbiological
quality control for new product development activities.
In addition, Mr. Jones was a manager of Quality Engineering for several years at
Medtronic. He coordinated and implemented quality assurance systems, receiving
inspection activities and quality engineering. He also managed selected projects
for product development within design control procedures and Product Development
Protocols and directed the activities and development of Quality Engineers,
Quality Assurance Technicians and Receiving Inspectors.
Presently, Mr. Jones manages and coordinates the development of implantable
cardiovascular devices. Activities include identifying, organizing and leading
individuals for cross functional project teams. His product development project
scope includes identifying and cultivating product concepts. developing concepts
into viable product offerings, and obtaining United States and International
market approvals and release.
17
<PAGE>
<TABLE>
<CAPTION>
Item 11. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------- ------------------------------------- ---------------------- --------------------
Title of Class Name and Address of Beneficial Owner Amount and Nature of
Beneficial Owner Percent of Class
- ------------------------------- ------------------------------------- ---------------------- --------------------
<S> <C> <C> <C>
Shares of Common Stock, $.001 DenexCorp 612,500 98%
par value
- ------------------------------- ------------------------------------- ---------------------- --------------------
</TABLE>
The Company, at present, is 98% owned by DenexCorp(TM)/LVPS MicroFacility, a
Nevada corporation ("DenexCorp"). As such, DenexCorp is an affiliate of the
Company. Upon completion of this offering, DenexCorp will own 49% of the
Company. Ron Patterson and Ross Boling, who are officers and directors of the
Company, are also the officers and directors of DenexCorp and control 100% of
the common stock of DenexCorp. Following completion of this Offering, the
Company's current executive officers, directors and entities affiliated with
them will beneficially own, in the aggregate, approximately 49% of the Company's
outstanding Common Stock.
Item 12. Description of Securities.
The Company is authorized to issue Twenty Million (20,000,000) shares of $.001
par value common stock and One Million (1,000,000) shares of $.001 par value
preferred stock. Prior to this Offering there are 625,000 shares of common stock
issued and outstanding.
There are no shares of preferred stock outstanding at the present time.
The Company's board of directors has the power by resolution only and without
further action or approval, to cause the Company to issue one or more classes or
one or more series of preferred stock within any class thereof and which classes
or series may have such voting powers, full or limited, or no voting powers, and
such designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, as
shall be stated and expressed in the resolution or resolutions adopted by the
board of directors, and to fix the number of shares constituting any classes or
series and to increase or decrease the number of shares of any such class or
series.
Item 13. Interest of Named Experts and Counsel.
Certain legal matters, including the validity of the securities being issued,
will be passed upon by Richard O. Weed, counsel to the Company, who at present
owns 2% of the Company, and upon completion of this offering, will own 1% of the
Company. In addition, Mr.
Weed will receive 1% contingent compensation from the proceeds of the offering.
Item 14. Disclosure of Commission Position on Indemnification for Securities Act
Liabilities.
Under Delaware law, a corporation may indemnify its officers, directors,
employees, and agents under certain circumstances, including indemnification of
such persons against liability under the Securities Act of 1933.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
Item 15. Organization Within Last Five Years.
Transactions with promoters
The Company, at present, is 98% owned by DenexCorp(TM)/LVPS MicroFacility, a
Nevada corporation ("DenexCorp"). As such, DenexCorp is an affiliate of the
Company. Upon completion of this offering, DenexCorp will own 49% of the
Company. DenexCorp has taken steps to protect the design of the MicroFacility,
under the Unites States of America and International Patent laws, as "Patent
Pending", titled "Modular Pharmaceutical Solution Manufacturing", preliminary
class 604. All rights to the patent, including any modifications, and the
trademark LVPS/MicroFacility(TM) belong to DenexCorp. The Company has been
18
<PAGE>
granted the exclusive use of the patent and trademark subject to the terms of a
Licensing Agreement between DenexCorp and the Company. The terms of the
Licensing Agreement provide for a royalty of two percent (2%) of the gross
selling price on each MicroFacility sold by the Company during the term of the
license. The License Agreement was not the subject of an arms length
negotiation. As such, a portion of the revenue from the sale of each
MicroFacility will be paid to DenexCorp.
Item 16. Description of Business.
LVPS MicroFacility, Inc. (the "Company") was incorporated in the State of
Delaware on December 16, 1998. The Company was formed to be a manufacturer of
manufacturing facilities for the production of Large Volume Parenteral
Solutions. The Company has developed a turnkey plant (the "LVPS MicroFacility")
for the manufacture of intravenous solutions. The LVPS MicroFacility is a
complete, patents pending, turn-key, modular micro-manufacturing facility that
produces intravenous ("IV") solutions from local water sources; blows, fills,
and seals the plastic container; and autoclaves the finished product for quality
assurance testing, quarantined storage, and distribution. The MicroFacility
plants are commissioned to US FDA and Host Country standards.
The Company seeks to finance its start-up activities through this Offering. Once
financed, the Company's cash flow is expected to provide for future expansion.
The world market for intravenous solutions exceeds $18 billion. In the United
States, the intravenous user rate is 4 units per capita. Outside the U.S., the
user rate is 2.5 units per capita, but climbing. Accessibility limits the user
rate. The Company's LVPS MicroFacility will reduce the accessibility constraint.
On average, hospitals, group purchasing organizations, and home infusion
agencies pay $1.18 (non-contract) and $.81 (contract) per unit for intravenous
solutions. The Company's LVPS MicroFacility can achieve direct production costs
of $0.4777 per unit, which is 45-65% lower than current market prices.
Accordingly, there is a market opportunity to build and deliver LVPS
MicroFacilities to customers who, in turn, profitably deliver intravenous
solutions to the local market.
Purified water is the primary ingredient in all intravenous solutions.
Accordingly, transportation costs significantly affect gross margins. At
present, intravenous solutions are produced in large volume rotary filling
plants (i.e. the "Coca Cola style bottling plant) that require a hundred million
dollar investment and 500,000 square feet of space. Other entrepreneurs have
unsuccessfully attacked the market with a collection of disparate pieces of
costly equipment, which, in the end, could not be validated or certified to US
FDA standards.
Under the current business model, the Company's LVPS MicroFacility, which is
constructed in a modular enclosure, will be fabricated, assembled, validated,
tested, and certified to meet US FDA standards before the main components are
disassembled and shipped to the customer for reassembly and recertification. The
Company's LVPS MicroFacility incorporates a class 100 clean room and
single-operation blow-fill machine to produce economically competitive
intravenous solutions for regional distribution in countries, such as Russia,
Ukraine, Belarus, Baltic States, India, China, Czech Republic, Slovak Republic,
Indonesia, Israel, Saudi Arabia, Pakistan, and Sweden. The Company's 4,000,000
unit/year LVPS MicroFacility sells for $5.5 million and the 8,000,000 unit/year
LVPS Micro Facility is priced at $9.4 million, both have gross profit margins of
24%.
Conceptual Drawing of LVPS MicroFacility No. 1.
[GRAPHIC OMITTED]
LVPS MicroFacility Plant Overview
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<PAGE>
The Product
The LVPS MicroFacility was especially created to provide medically developing
countries with the indigenous capacity to produce the basic components for their
own quality medical care as well as high-value pharmaceutical products for
export. Using time and field-tested technology from several global industries,
the LVPS MicroFacility can produce virtually any intravenous solution product in
aseptically-filled and terminally-sterilized medical grade plastic containers.
Considering the current changes in health care and emphasis on cost savings
worldwide, the introduction of regional/local production of intravenous
solutions through the LVPS MicroFacility will revolutionize solutions
manufacturing and distribution for the estimated $18 billion world market. With
its design incorporating a unique, free-standing class 100 clean room and single
operation blow-fill-seal machine, the LVPS MicroFacility exceeds both US and
World quality standards (including ISO 9002 and European Union criteria) by
factors up to 3,000% while producing one 500ml unit of intravenous solution for
US$0.4777 (weighted market average production cost for the 8 most common
solutions/US rate labor) 45% to 65% lower than current market pricing.
Realizing that the experience of many countries has been that the arrival of
equipment alone does not produce a quality product, the Company has committed
itself to provide all customers with four critical ingredients for successful
and profitable manufacturing operation:
1. Precise documentation and procedures of Manufacturing Methodology.
2. Known and reliable equipment, Life Cycle System maintenance planning and
performance strategy including comprehensive system monitoring and
tracking.
3. Properly trained personnel and continuous Quality Assurance Validation.
4. Quality Raw Materials for Manufacture.
20
<PAGE>
All architectural, planning and design, manufacturing, fabrication, and US FDA
(cGMP) compliance and production and validation of the LVPS MicroFacility takes
place within a thirty minute drive of the Company's corporate headquarters in
Huntington Beach, California. All manufacturing and intraveneous solution end
product are of United States Pharmacopoeia (USP)/NF (National Formulation)
quality, current Good Manufacturing Practices in compliance with US FDA
regulations 21 CFR Part 211 and USP No. XXIII. The LVPS MicroFacility can be
operated according to ISO 9002 certification plan and European Union (EU) CE
Mark quality standards. Under the Company's plan of operation, the primary
fabrication/manufacturing facility is Pacific Environmental Technologies, Inc.,
Yorba Linda, California. The Company has entered into a Joint Venture Agreement
with this company for the purpose of assuring quality of work and for cost
containment of the project manufacturing and fabrication portion of the work
involved in developing, building, and installing the LVPS MicroFacility and
future product lines.
Sales and Marketing Activities
The Company's marketing and sales efforts are in the following countries:
Russia, Ukraine, Belarus, Baltic States, India, China, Czech Republic, Slovak
Republic, Indonesia, Israel, Jordan, Saudi Arabia, Pakistan, and Sweden. The
challenge in the majority of these countries is obtaining acceptable financing
for the Company's LVPS MicroFacility. The Company has from the outset been
actively involved in securing project financing for its potential customers.
Most of the Company's clients are seeking United States lending institution
financing, the approval process from start to finish with the US Export Import
Bank (Ex-Im Bank) can range from six months to one year for final approval and
funding. Loans for LVPS MicroFacility plants are in process with Sanwa Bank,
Bank of America International Trade Bank, Bank of New York, Princeton
Econometrics, and Venture Capital Resources.
The LVPS MicroFacility will be available in two production sizes: a
three-module, 4 million unit/year facility and a six-module, 8 million unit/year
facility. The selling price of the LVPS MicroFacility is US$5.5 million for the
4MM/year plant and US$9.4 million for the 8MM/year plant. The 8MM/year LVPS
MicroFacility has the added advantage of incorporating completely independent
systems providing total production redundancy virtually eliminating downtime due
to testing, maintenance/repairs, or product line changes. The Company's sales
and marketing activities are implemented worldwide by independent, commissioned
Legal Authorized Agents responsible for generating sales inquires, providing
support services such as translation, and facilitating the client through the
sales process. In most cases the Legal Authorized Agent either lives in the
client country or by heritage is fluent in the language and customs of the
country. Performance is periodically reviewed and the Agent's contract renewed
predicated upon their productivity and reliability within their specified
territory.
Competitive Analysis:
Initially, the LVPS MicroFacility may not encounter direct competition in terms
of price and delivery of a comparable intravenous solution manufacturing
facility for several years. Although the technology behind the Company's LVPS
MicroFacility is known by the major intravenous solution manufacturers, there
has been no financial incentive to expand their manufacturing operations. Under
the Company's analysis, the research and development and retooling costs
required to change production modes are prohibitive. Although unit product
pricing has generally been held to the rate of inflation over the last few
years, the introduction of the LVPS MicroFacility plant with its 45% to 65%
reduction in production cost will change the complexion of the marketplace, thus
fueling possible widespread changes in the traditional production and
distribution methods.
The LVPS MicroFacility a patents pending product in the marketplace that is
innovative, expandable, and the leading edge in micro-manufacturing intravenous
solution technology specializing in the science and practice of pharmaceutical
manufacturing of dosage-form medications. The competitive set consists of two
primary intravenous solution plant configurations:
I. The Large Volume Rotary Filling Plant which represents the traditional way of
producing intravenous solutions (the "Coca Cola Bottling Plant"), requiring
hundreds of millions of dollars in investment and, in the case of United States
intravenous solution plants, as much as 500,000 square feet or more of space;
totally inappropriate for the emerging nations market. As water is the primary
ingredient in all intravenous solutions, the cost of transportation becomes
significant. Compare this to a LVPS MicroFacility investment of US$5.5 million
and approximately 15,000 sq. feet of production and warehousing space.
2. Packagers and/or distributors of various major pieces of equipment that
hopefully mesh together to manufacture basic intravenous solutions not in a
modular enclosure micro-manufacturing facility design and do not use a
blow-fill-self seal machine. These plants may be priced lower than the LVPS
MicroFacility, but cannot be validated and certified to US FDA standards.
21
<PAGE>
In at least one verifiable instance, this type of plant was built and unable to
meet the host country start-up standards. For the last two years the plant has
stood idle. According to the Health Ministry of the country in question none of
the criteria's for pharmaceutical manufacturing will be approved. Again
reinforcing Company's insistence that all of the LVPS MicroFacilities will be US
FDA and host country validated and compliance, meeting or exceeding all
pharmaceutical manufacturing criteria.
Market Viability: A full 20% of all pharmaceutical costs are accounted for by
intravenous solutions. According to a Market Intelligence Research Corporation
(MIRC) study, this portion amounted to a total worldwide expenditure of $2.7
billion in 1990. But the study also estimated that by 1997, total IV solution
expenditures will have increased to $18.6 billion.
Domestic Markets: IV solutions are used at the rate of 4 units per inpatient day
in the typical U.S. hospital. The number of inpatient days served annually in a
given hospital is calculated by multiplying the licensed bed count by the
occupancy rate by 365 days. Annual intravenous solution consumption can then be
calculated as in the following example:
1,OOO beds x 80% occupancy rate x 365 days x 4 units/day= 1,168,000 units/yr
Alternatively, annual consumption can be calculated at the rate of 3.33 units
for each person in the total U.S. population. Best estimates put total U.S.
consumption at over 1 billion units per year.
The MIRC estimates the U.S. hospital intravenous market at $1.2 billion with an
annual growth rate of around 6% expected throughout the decade. But as more and
more care is being diverted or transitioned to home health care and alternate
health care treatment settings, larger and faster-growing markets have emerged
in these fields. In another study, Biomedical Business International projected
that home infusion revenues would increase almost 26% annually.
Market Comparison Chart.
[OBJECT OMITTED]
World Markets: Although the U.S. market, currently almost 70% of the total world
market, presents a tremendous opportunity for the LVPS MicroFacility concept,
markets in third world and emerging nations are actually growling even faster.
This faster growth is due to the building of better and higher-quality health
care institutions and other health care infrastructures in areas once deemed to
be dormant.
World market growth is driven by population increase and constant up-scaling and
sophistication of health care delivery. As part of this up-scaling, intravenous
infusion therapy is becoming increasingly important in overall health care
treatment regimens as new developments in antibiotics and other medicants used
in areas such as chemotherapy, burn centers, and renal/peritoneal dialysis
centers favor intravenous use and application.
22
<PAGE>
Cost Containment Trends: Finally, new pressures are being applied worldwide and
especially in the U.S. to curtail spiraling health care costs. The introduction
of new cost effective/high quality methods of production and delivery of health
care products and services are being universally hailed as much for their PR
value as for their actual impact on the industry.
Global Revenue Forecast Chart.
[OBJECT OMITTED]
Risk capital is needed to build LVPS MicroFacility No. 1.
The Company will voluntarily send an annual report, including audited financial
statements, to its security holders.
The Company will file annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission (SEC). The
public may read and copy any materials we file with the SEC at the SEC's Public
Reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC. The address of that web site is
http://www.sec.gov.
Item 17. Management's Discussion and Analysis or Plan of Operation.
The Company was formed on December 16, 1998, at which time the Company entered
into a license agreement with DenexCorp. for the rights to further develop, and
ultimately manufacture and market the MicroFacility. Expenditures made by
DenexCorp to develop the MicroFacility prior to December 16, 1998 were expensed
as research and development as incurred. The MicroFacility has no revenues.
Management believes that the license does not constitute a trade or business as
defined under Rules and Regulation of Securities and Exchange Commission.
Accordingly, the accompanying financial statements include the accounts of LVPS
MicroFacility since inception; such financial statements do not include any of
the accounts of DenexCorp related to the MicroFacility.
During the period from inception through June 30, 1999, the Company has been
substantially inactive. In accordance with the Rules and Regulations of the
Securities and Exchange Commission, the Company is required to reflect in the
financial statements the value of services and costs incurred by DenexCorp on
behalf of the Company. In management's opinion, such costs are not material.
23
<PAGE>
In connection with the value ascribed to the license agreement obtained through
the issuance of 612,500 shares of common stock, management recorded the
transaction based on the carry-over basis of accounting of DenexCorp. Since
DenexCorp expenses research and development costs as incurred, the Company
recorded the value of such license agreement at a nominal value. In connection
with the 12,500 shares of common stock issued for legal services, the Company
valued such shares based on the services rendered, since the value of such
services were more readily determinable. The value of such services was $6,250
and was charged to operations.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. In the course of its development, the
Company will continue to incur additional losses during its development of a
production prototype of the MicroFacility. As a result, the Company will require
approximately $4.1 million to complete the development of its production
prototype; the prototype completion is expected within 12 months from the
completion of its offering. The Company will require additional funds for its
operational activities and sales efforts. All these activities will be funded
through this Offering. There is no assurance that such funds will be available
on acceptable terms or available at all. These factors raise substantial doubt
about the Company's ability to continue as a going concern. The accompanying
financial statements do not include any adjustments that might result from the
outcome of this uncertainty. Upon the completion of this Offering, the Company
does not anticipate the need for additional financing in the next 12 months.
Item 18. Description of Property.
At present, the Company uses office space without cost in Huntington Beach,
California leased by DenexCorp(TM)/LVPS MicroFacility, an affiliate.
Item 19. Certain Relationships and Related Transactions.
See Item 15.
Item 20. Market for Common Equity and Related Stockholder Matters.
The Company is authorized to issue Twenty Million (20,000,000) shares of $.001
par value common stock and One Million (1,000,000) shares of $.001 par value
preferred stock. Prior to this Offering there are 625,000 shares of common stock
issued and outstanding.
There are no shares of preferred stock outstanding at the present time.
Item 21. Executive Compensation.
The following table sets forth the annual cash compensation proposed to be paid
by the Company to the Officers and Directors of the Company for their services,
subject to funding.
Name Title Compensation
- ------------- ----------------------- ------------
Ron Patterson President/CEO $180,000
Ross Boling Chief Operating Officer $120,000
Directors are expected to serve without compensation for the next 12 months.
24
<PAGE>
Item 22. Financial Statements.
The Company's financial statements are attached hereto as pages f-1 through
F-11. The following table sets forth the anticipated revenue and gross profit
from the sale of MicroFacility No. 1. The proceeds from the sale of
MicroFacility No. 1 and the anticipated profit will provide the necessary
working capital to manufacture additional units. Management predicts an
improvement in the gross profit margin on the sale of additional units based
upon economies of scale and the learning curve. The cost savings on subsequent
units will come from reduced regulatory affairs, validation, and ANDA expenses.
<TABLE>
<CAPTION>
ProForma Gross Profit Calculation for MicroFacility No. 1
<S> <C> <C>
Revenue $5,500,000
Less:
Royalty to DenexCorp(TM)/LVPS MicroFacility $ 110,000
Cost of Goods Sold (Detail)
Pure water/Pre-Treatment System $25,164
Multi Effect Still $164,700
Pure Steam Generator $76,100
Process Tanks $50,000
Vortex Mixers $50,000
Blow Fill Seal $972,420
Sterilyzer $360,515
Labeling Machine $40,000
Lab Equipment $133,600
Hopper Feeder $18,000
MicroFacility Modules (Bare Shells) $110,000
Process Piping, Pumps & Appertenances $384,598
Electrical $77,975
Heating Ventilating & Air Conditioning Equip. $89,700
Mechanical HVAC Piping $34,800
Ductwork Systems $18,700
Interior Finishing Works $21,500
Central Control/Monitoring System $90,000
Project Management $30,000
Commissioning $38,500
Detailed Manufacturing Engineering $97,000
Regulatory Affairs, Validation, ANDA $750,000
Sales Commission $440,000 $4,073,272
Gross Profit $1,316,728
===================
</TABLE>
Item 23. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
None.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Under Delaware law, a corporation may indemnify its officers, directors,
employees, and agents under certain circumstances, including indemnification of
such persons against liability under the Securities Act of 1933. A true and
correct copy of Section 145 of the Delaware General Corporation Law which
addresses indemnification of officers, directors, employees and agents is
attached hereto as Exhibit 99.1
In addition, Section 102(b)(7) of the Delaware General Corporation Law and the
Company's Certificate of Incorporation provide that a director of this
corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
25
<PAGE>
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) for
paying a dividend or approving a stock repurchase in violation of Section 174 of
the Delaware General Corporation Law; or (iv) for any transaction from which the
director derived an improper personal benefit.
The Company's Certificate of Incorporation and Bylaws contain provisions that no
director of the Company shall be liable to the Company for monetary damages for
breach of fiduciary duty as a director involving any act or omission of such
director other than (i) for breach of director's duty of loyalty to the Company
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) in respect
of certain unlawful dividend payments or stock redemptions or repurchases, or
(iv) for any transaction from which the director derived an improper personal
benefit.
The effect of these provisions may be to eliminate the rights of the Company and
its stockholders (through stockholders' derivative suits on behalf of the
Company) to recover monetary damages against a director for breach of fiduciary
duty as a director (including breaches resulting from negligent or grossly
negligent behavior) except in the situations described in clauses (i) - (iv) of
the preceding sentence.
Item 25. Other Expenses of Issuance and Distribution.
The following sets forth the expenses in connection with the issuance and
distribution of the Securities being registered, other than underwriting
discounts and commissions. We shall bear all such expenses. All amounts set
forth below are estimates, other than the SEC registration fee.
SEC Registration Fee $1,390.00
Accounting Fees and Expenses $15,000.00
Miscellaneous $10,000.00
----------
TOTAL $26,390.00
Item 26. Recent Sales of Unregistered Securities.
In December 1998, the Company issued 612,500 shares to DenexCorp/LVPS
MicroFacility for the rights to develop and market the MicroFacility at an
assigned value of $612. Further, the Company issued 12,500 shares to its legal
counsel for services rendered valued at $6,250 or $.50 per share. Both
transactions were exempt from registration under the Securities Act of 1933, as
amended.
Item 27. Exhibits.
The following is a list of exhibits required by Item 601 of Regulation S-B that
are filed or incorporated by reference. The exhibits that are incorporated by
reference from the Company's prior SEC filings are noted on the exhibit index.
The other exhibits are attached hereto and being filed with the SEC as part of
this registration statement.
Exhibit
Number Description of Exhibits
- ------- ---------------------------------------------------------------
3.1 Articles of incorporation of LVPS MicroFacility, Inc.
3.2 By-laws of LVPS MicroFacility, Inc.
4.1 Form of Common Stock Certificate
5 Opinion re: legality
10.1 License Agreement
10.2 Employment Agreement with Ron Patterson
10.3 Employment Agreement with Ross Boling
23.1 Consent of Independent Auditors
23.2 Consent of counsel
26
<PAGE>
27 Financial data schedule
99 Additional Exhibits [8 Del. Code Ann.ss.145 Indemnification of
officers, directors, employees and agents].
Item 28. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The Company hereby undertakes to:
(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 any 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.
27
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the city of
Huntington Beach, state of California, on September 23, 1999.
LVPS MicroFacility, Inc.
By: /s/ Ron Patterson
---------------------------------
Name: Ron Patterson
Title: Chief Executive
Officer
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.
/s/ Ron Patterson Director, Chief Executive Officer September 23, 1999
- -------------------
Ron Patterson
/s/ Ross Boling Director, Chief Operating Officer, September 23, 1999
- ------------------- Secretary
Ross Boling
28
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report .........................................F-2
Financial Statements:
Balance Sheet as of June 30, 1999................................F-3
Statement of Operations for the period from inception
(December 16, 1998) to June 30, 1999 ............................F-4
Statement of Stockholders' Deficit for the period from
inception (December 16, 1998) to June 30, 1999 .................F-5
Statement of Cash Flows for the period from inception
(December 16, 1998) to June 30, 1999 ............................F-6
Notes to Financial Statements....................................F-7
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors LVPS MicroFacility, Inc.
We have audited the accompanying balance sheet of LVPS MicroFacility, Inc. (the
"Company") as of June 30, 1999, and the related statements of operations,
stockholders' deficit and cash flows for the period from inception (December 16,
1998) through June 30, 1999. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of LVPS MicroFacility, Inc. as of
June 30, 1999, and the results of its operations and its cash flows for the
period from inception (December 16, 1998) through June 30, 1999 are in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As further discussed in Note 2 to the
financial statements, the Company is in the development stage, has no revenues
from operations and is seeking significant capital to develop a prototype of its
MicroFacility. These conditions, among others, raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regards
to these matters are also described in Note 2. The accompanying financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
McKennon, Wilson & Morgan LLP
Irvine, California
September 9, 1999
F-2
<PAGE>
<TABLE>
<CAPTION>
LVPS MICROFACILITY, INC.
(A Development-Stage Company)
BALANCE SHEET
June 30, 1999
<S> <C>
ASSETS
Current assets - Cash $ 2,000
-----------------
Total assets $ 2,000
=================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities-
Accounts payable $ 5,000
Note payable to DenexCorp 3,125
-----------------
Total current liabilities 8,125
Stockholders' deficit:
Preferred stock, par value $.001; 1,000,000 shares authorized,
none issued and outstanding -
Common stock, par value $.001; 20,000,000 shares authorized,
625,000 shares issued and 625
Additional paid-in capital 6,237
Deficit accumulated during the development stage (12,987)
Total stockholders' deficit (6,125)
Total liabilities and stockholders' deficit $ 2,000
=================
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
LVPS MICROFACILITY, INC.
(A Development-Stage Company)
STATEMENT OF OPERATIONS
For the Period from Inception (December 16, 1998)
Through June 30, 1999
<S> <C>
Revenues $ -
------------------
General and administrative expenses 12,987
Loss from operations (12,987)
Provision for taxes -
Net loss $ (12,987)
==================
Basic and dilutive net loss per common share $ (0.02)
==================
Weighted average number of shares outstanding 625,000
==================
See accompanying notes to financial statements
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LVPS MICROFACILITY, INC.
(A Development-Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIT
For the Period from Inception (December 16, 1998)
Through June 30, 1999
Deficit
Accumulated
Preferred Common Additional During the
Stock Stock Paid-in Development Stockholders'
--------------------------- ---------------------------
Shares Amount Shares Amount Capital Stage Deficit
------------- ------------- ------------- ------------- ------------ ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Inception, December 16, 1998 - $ - - $ - $ - $ - $ -
Common stock issued for license
rights - - 612,500 612 - - 612
Common stock issued for
services rendered - - 12,500 13 6,237 - 6,250
Net loss - - - - - (12,987) (12,987)
------------- ------------- ------------- ------------- ------------ ---------------- ----------------
------------- ------------- ------------- ------------- ------------ ---------------- ----------------
Balances, June 30, 1999 - $ - 625,000 $ 625 $ 6,237 $ (12,987) $ (6,125)
============= ============= ============= ============= ============ ================ ================
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net loss $ (12,987)
Adjustments to reconcile net loss to net cash
used in operating activities:
Issuance of common stock for License Agreement and
legal services 6,862
Changes in operating assets and liabilities-
Accounts payable 5,000
Net cash used in operating activities (1,125)
------------------
Cash flows from investing activities -
Issuance of note payable to DenexCorp 3,125
-----------------
Net change in cash 2,000
Cash at beginning of period -
Cash at end of period $ 2,000
=================
</TABLE>
Supplemental disclosures of cash flow information-
No income tax or interest was paid in 1999
Supplemental non-cash financing and investing activities:
During the fiscal 1999, the Company issued 612,500 shares of its common stock
to acquire the License Agreement valued at $612 and issued 12,500 shares of
its common stock valued at $6,250 for legal services.
See accompanying notes to financial statements
F-6
<PAGE>
NOTE 1 - ORGANIZATION AND HISTORY
Organization and Nature of Operations
LVPS MicroFacility, Inc. (the "Company") was incorporated in the state of
Delaware on December 16, 1998 (date of inception). The Company was formed to be
a manufacturer of clean room facilities for the production of large volume
parenteral solutions. The Company's primary product is the MicroFacility, a
modular micro-manufacturing facility that will produce intravenous solutions
from local water sources; blows, fills, and seals the plastic container; and
autoclaves the finished product for quality assurance testing, quarantined
storage, and distribution. The MicroFacility plants are commissioned to United
States Food and Drug Administration and host country standards. The Company is
in the development stage with no operating revenues since its inception.
DenexCorpTM/LVPS MicroFacility ("DenexCorp"), a Nevada Corporation, owns 98% of
the Company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Basis of Presentation
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. In the course of its development, the
Company will continue to incur additional losses during its development of a
production prototype of the MicroFacility. As a result, the Company will require
approximately $4.1 million to complete the development of its production
prototype; the prototype is expected to be completed within 12 months from the
completion of its offering. The Company will require additional funds for its
operational activities and sales efforts. Management is seeking private or
public equity financings and future collaborative arrangements with third
parties to meet its cash needs. There is no assurance that such additional funds
will be available on acceptable terms or available at all. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
The accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Fiscal Year End
The Company has elected a June 30 year end for financial and income tax
reporting purposes.
Risks, Uncertainties and Concentrations
The Company's industry is subject to federal, state, local and applicable
foreign laws and regulations. The successful manufacturing of the Company's
MicroFacility will require that certain permits be obtained. There is no
assurance that the Company will obtain these permits. The Company is also
subject to compliance inspections from certain regulatory agencies, which may
revoke or suspend the permits for any non-compliance to stated regulations.
F-7
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, (Continued)
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Significant estimates that will be made in the future by management include,
among others, provisions for losses on accounts and contracts receivable,
provisions for slow moving and obsolete inventories and warranty obligations, as
well as valuations of the Company's common stock. Actual results could
materially differ from those that will be estimated.
Fair Value of Financial Instruments
At June 30, 1999, the Company has few assets and only limited liabilities
constituting accounts payable that would be considered financial instruments.
The carrying amounts of cash and accounts payable are representative of fair
value. In the future, the Company could have financial instruments whereby the
fair value of the financial instruments is different than that recorded on a
historical basis.
Property and Equipment
Property and equipment will be recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the related assets.
Maintenance and repairs will be charged to expense as incurred. Significant
renewals and betterments will be capitalized. At the time of retirement or other
disposition of property and equipment, the cost and accumulated depreciation
will be removed from the accounts and any resulting gain or loss will be
reflected in operations. At June 30, 1999, the Company had no property and
equipment.
The Company will assess the recoverability of property and equipment by
determining whether the depreciation and amortization of these assets over their
remaining life can be recovered through projected undiscounted future cash
flows. The amount of property and equipment impairment, if any, will be measured
based on fair value and is charged to operations in the period in which such
impairment is determined by management.
Deferred Offering Costs
The Company will defer costs incurred in connection with its offering of common
stock. In the event the offering of its common stock is unsuccessful, the
Company will charge such costs to operations.
F-8
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, (Continued)
Revenue Recognition
The Company intends to enter into contacts to construct its MicroFacilities.
Revenues will be recognized on a percentage of completion basis, using actual
labor hours or labor costs incurred to the total estimated labor houirs or
costs. In the event a contract results in a loss, the loss will be recorded at
the time the loss is known. The Company will record revenues related to its
technical and support services over the period the services are provided.
Research and Development Expenses
Research and development costs will be expensed as incurred.
Allocation of Common Expenses
Since inception, the Company has had no operations. DenexCorp provides
management expertise and office space; however, these expenses are immaterial
due to minimal use of such resources since inception. No allocations have been
made through the date of these financial statements.
Loss Per Share
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share" ("EPS"). SFAS No. 128 requires dual presentation of basic EPS and diluted
EPS on the face of all income statements issued after December 15, 1997 for all
entities with complex capital structures. Basic EPS is computed as net income
divided by the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur from common
shares issuable through stock options, warrants and other convertible
securities. Common stock equivalents, which relate to shares issuable upon the
exercise of common stock purchase warrants and options, are not included in the
per share calculation for the period as their effect are antidilutive. During
the period, no common stock equivalents were outstanding.
Income Taxes
The Company accounts for income taxes under SFAS No. 109, "Accounting for Income
Taxes." Under SFAS 109, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. A valuation
allowance is provided for significant deferred tax assets when it is more likely
than not that such assets will not be recovered through future operations.
F-9
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, (Continued)
Stock-based Compensation
During 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation," which defines a fair value based method of accounting for
stock-based compensation. However, SFAS No. 123 allows an entity to continue to
measure compensation cost related to stock and stock options issued to employees
using the intrinsic method of accounting prescribed by Accounting Principles
Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees."
Entities electing to remain with the accounting method of APB 25 must make pro
forma disclosures of net income and earnings per share, as if the fair value
method of accounting defined in SFAS No. 123 had been applied. The Company
issued no warrants or options during the period.
Comprehensive Income
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income."
This statement establishes standards for reporting the components of
comprehensive income and requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
included in a financial statement that is displayed with the same prominence as
other financial statements. Comprehensive income includes net income, as well as
certain non-shareholder items that are reported directly within a separate
component of stockholders' equity and bypass net income. The Company has adopted
the provisions of this statement during the period, with no impact on the
accompanying financial statements.
Disclosures about Segments of an Enterprise and Related Information
The Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information" in fiscal year 1999. SFAS No. 131 establishes standards
for reporting information about operating segments and related disclosures about
products, geographic information and major customers.
NOTE 3 - STOCKHOLDERS' DEFICIENCY
During the period, the Company issued 612,500 shares of common stock to
DenexCorp for the rights to develop and market the MicroFacility. Under
generally accepted accounting principles, transfers of assets between companies
under common control must be reflected at their historical costs in a manner
similar to a pooling of interests. The value assigned to these rights was $612
based on the legal par value of the common stock. As discussed in Note 2,
research and development costs are expensed as incurred, and accordingly, no
asset for such license is reflected in the accompanying balance sheet.
During the period, the Company issued 12,500 shares of common stock valued by
the Board of Directors based on the value of the legal services received, or
$0.50 per share.
F-10
<PAGE>
NOTE 4 - INCOME TAXES
The Company's net deferred tax asset of approximately $5,000 at June 30, 1999
consists of federal net operating loss carryforwards amounting to approximately
$12,600. At June 30, 1999, the Company provided a valuation allowance for these
net operating loss carryforwards totaling approximately $5,000. The difference
between the tax benefit of approximately $4,300 using the lower federal income
tax rate of 34% is the result of a full valuation allowance of the Company's
deferred tax asset.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
License Agreement
During the period, the Company entered into a license agreement (the "License
Agreement") with DenexCorp for the rights to develop the MicroFacility product.
Pursuant to the License Agreement, the Company will pay a 2% royalty fee for
each MicroFacilty sold within the term of the License Agreement. The royalty fee
will be based on the gross sales price of each MicroFacility sold by the Company
during the term of the License Agreement. No royalties were paid during the
period. The License Agreement expires on December 16, 2008.
Employment Agreements
On June 30, 1999, the Company entered into three-year employment contracts with
each of its two officers. The agreements require salaries to by paid, beginning
the date the Company completes an initial public offering ("IPO"), the aggregate
amount totaling $300,000 annually through June 30, 2002. No amounts will be
earned prior to the completion of an IPO.
NOTE 6 - RELATED PARTY TRANSACTIONS
DenexCorp has taken steps to protect the design of the MicroFacility, under the
United States of America and International Patent laws, as "Patent Pending,"
titled "Modular Pharmaceutical Solution Manufacturing," preliminary class 604.
All rights to the patent, including any modifications, and the trademark
LVPS/MicroFacilityTM belong to DenexCorp. The Company has been granted the
exclusive use of the patent and trademark subject to the terms of a License
Agreement between DenexCorp and the Company (Note 5).
On June 30, 1999, the Company issued a note payable totaling $3,125 to
DenexCorp., interest at 10% per annum, due on demand. Subsequent to June 30,
1999, DenexCorp. advanced an additional $9,000 for operating expenses of the
Company.
See Note 5 for discussion of employment contracts.
F-11
<PAGE>
EXHIBIT INDEX
3.1 Articles of incorporation of LVPS MicroFacility, Inc.
3.2 By-laws of LVPS MicroFacility, Inc.
4.1 Form of Common Stock Certificate
5 Opinion re: legality
10.1 License Agreement
10.3 Employment Agreement with Ron Patterson
10.3 Employment Agreement with Ross Boling
23.1 Consent of Independent Auditors
23.2 Consent of counsel
27 Financial data schedule
99 Additional Exhibits [8 Del. Code Ann.ss.145 Indemnification of
officers, directors, employees and agents].
40
3.1 Articles of incorporation of LVPS MicroFacility, Inc.
CERTIFICATE OF INCORPORATION
OF
LVPS MICROFACILITY, INC.
l. The name of the corporation is LVPS MicroFacility, Inc.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted
is: to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is: Twenty-One Million (21,000,000) of which stock Twenty
Million (20,000,000) shares of the par value of $.001 each shall be common stock
and of which One Million (1,000,000) shares of the par value of $.001 each shall
be preferred stock. Further, the board of directors of this corporation, by
resolution only and without further action or approval, may cause the
corporation to issue one or more classes or one or more series of preferred
stock within any class thereof and which classes or series may have such voting
powers, full or limited, or no voting powers, and such designations, preferences
and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions adopted by the board of directors,
and to fix the number of shares constituting any classes or series and to
increase or decrease the number of shares of any such class or series.
5. The name and mailing address of each incorporator is as follows:
NAME MAILING ADDRESS
Richard O. Weed 4695 MacArthur Court, Suite 530
Newport Beach, CA 92660
The name and mailing address of each person who is to serve as a
director until the first annual meeting of the stockholders or until a successor
is elected and qualified, is as follows:
NAME MAILING ADDRESS
Ron Patterson 7755 Center Avenue, 11th Floor
Huntington Beach, CA 92647
6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation.
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To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
To designate one or more committees, each committee to consist of one
or more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. The by-laws may provide
that in the absence or disqualification of a member of a committee, the member
or members present at any meeting and not disqualified from voting, whether or
not such member or members constitute a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in the place of any such
absent or disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors, or in the by-laws of the corporation,
shall have and may exercise all the powers and authority of the board of
directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to the following matters: (i) approving or adopting, or recommending to the
stockholders, any action or matter expressly required by the Delaware General
Corporation Law to be submitted to stockholders for approval or (ii) adopting,
amending or repealing any by-law of the corporation.
When and as authorized by the stockholders in accordance with law, to
sell, lease or exchange all or substantially all of the property and assets of
the corporation, including its good will and its corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of money or property including shares of stock in, and/or other
securities of, any other corporation or corporations, as its board of directors
shall deem expedient and for the best interests of the corporation.
8. Elections of directors need not be by written ballot unless the
by-laws of the corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation.
Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
9. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
10. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit.
42
<PAGE>
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, does make this Certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 16th day of December, 1998.
/s/ Richard O. Weed
--------------------------------------
Richard O. Weed
43
3.2 By-laws of LVPS MicroFacility, Inc.
LVPS MICROFACILITY, INC.
* * * * *
B Y - L A W S
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section l. All meetings of the stockholders for the election of
directors shall be held at such place as may be fixed from time to time by the
board of directors, or at such other place either within or without the State of
Delaware as shall be designated from time to time by the board of directors and
stated in the notice of the meeting. Meetings of stockholders for any other
purpose may be held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year
1999, shall be held on the Fifteenth day of September, if not a legal holiday,
and if a legal holiday, then on the next secular day following, at 10:00 AM, or
at such other date and time as shall be designated from time to time by the
board of directors and stated in the notice of the meeting, at which they shall
elect by a plurality vote a board of directors, and transact such other business
as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than 15 nor more than 60 days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
44
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Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than 15 nor more than 60 days before the date of
the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be five directors. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 2 of this Article,
and each director elected shall hold office until his successor is elected and
qualified. Directors need not be stockholders.
45
<PAGE>
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. The business of the corporation shall be managed by or under
the direction of its board of directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the certificate of incorporation or by these by-laws directed or required to
be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.
Section 7. Special meetings of the board may be called by the president
on 5 days' notice to each director, either personally or by mail or by facsimile
communication; special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of two directors unless
the board consists of only one director; in which case special meetings shall be
called by the president or secretary in like manner and on like notice on the
written request of the sole director.
Section 8. At all meetings of the board, a majority of directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
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<PAGE>
COMMITTEES OF DIRECTORS
Section 11. The board of directors may designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee.
In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to the following matters: (i) approving or adopting, or
recommending to the stockholders, any action or matter expressly required by the
General Corporation Law of Delaware to be submitted to stockholders for approval
or (ii) adopting, amending or repealing any by-law of the corporation. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or by law, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
47
<PAGE>
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by facsimile telecommunication.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board
of directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of his
inability or refusal to act, the vice-president (or in the event there be more
than one vice-president, the vice-presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
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Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by a
certificate or shall be uncertificated. Certificates shall be signed by, or in
the name of the corporation by, the chairman or vice-chairman of the board of
directors, or the president or a vice-president, and by the treasurer or an
assistant treasurer, or the secretary or an assistant secretary of the
corporation.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Within a reasonable time after the issuance or transfer of
uncertificated stock, the corporation shall send to the registered owner thereof
a written notice containing the information required to be set forth or stated
on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General
Corporation Law of Delaware or a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, designations,
preferences and relative participating, optional or other special rights of each
class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
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Section 2. Any of or all the signatures on a certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates or uncertificated shares to be issued in place of any certificate
or certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates or uncertificated
shares, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal representative, to advertise
the same in such manner as it shall require and/or to give the corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Upon receipt of proper transfer instructions from the registered owner of
uncertificated shares such uncertificated shares shall be cancelled and issuance
of new equivalent uncertificated shares or certificated shares shall be made to
the person entitled thereto and the transaction shall be recorded upon the books
of the corporation.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting: provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
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ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the certificate of incorporation, if any, may be declared
by the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
CHECKS
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
Section 7. The corporation shall indemnify its officers, directors,
employees and agents to the extent permitted by the General Corporation Law of
Delaware.
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ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the stockholders or by the board of directors, when
such power is conferred upon the board of directors by the certificate of
incorporation at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal by-laws is conferred upon the board of directors by the
certificate of incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal by-laws.
52
4.1 Form of Common Stock Certificate
NUMBER SHARES
____________ _____________
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
LVPS MicroFacility, Inc.
Authorized to Issue 21,000,000 Shares
20,000,000 SHARES COMMON STOCK 1,000,000 SHARES PREFERRED STOCK
$.001. PAR VALUE EACH $.001 PAR VALUE EACH
THIS CERTIFIES THAT____________________________________________ is the owner of
_________________________________________________ fully paid and non-assessable
shares of the Common Stock of LVPS MicroFacility, Inc.
transferable only on the books of the Corporation by the holder hereof in person
or by its duly authorized Attorney upon surrender of the Certificate properly
endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation this _____ day of _______ A.D. ______
- -------------------------- --------------------------
SECRETARY PRESIDENT
53
5 Opinion re: legality
WEED & Co. L.P.
4695 MacArthur Court, Suite 530
Newport Beach, California 92660
Telephone (949) 475-9086
Facsimile (949) 475-9087
September 23, 1999
Board of Directors
LVPS MicroFacility, Inc.
7755 Center Avenue, 11th Floor
Huntington Beach, California 92647
RE: Opinion of Counsel
Greetings:
I have acted as counsel to LVPS MicroFacility, Inc. (the "Company") in
connection with the registration under the Securities Act of 1933, as amended
(the "Act"), of an aggregate of 625,000 shares (the "Shares") of the Company's
common stock, par value $.001 per share (the "Common Stock"), to be sold by the
Company upon the terms and subject to the conditions set forth in the Company's
registration statement on Form SB-2 (the "Registration Statement").
In connection therewith, I have examined copies of the Company's
Certificate of Incorporation, Bylaws, the corporate proceedings with respect to
the offering of shares, and such other documents and instruments as I have
deemed necessary or appropriate for the expression of the opinions contacted
herein. In such examination, I have assumed the genuineness of all signatures,
the authenticity and completeness of all documents submitted to us as originals,
the conformity to the original documents of all documents submitted to us as
copies and the correctness of all statements of fact contained in such
documents.
Based on the foregoing, and having regard for such legal considerations
as I have deemed relevant, I am of the opinion that the Shares to be sold by the
Company by means of the Registration Statement, when sold in accordance with the
terms and conditions set forth in the Registration Statement, will be duly and
validly issued, fully paid and non-assessable.
This opinion is for the benefit of the Company and this opinion may not
be relied upon in any manner whatsoever by any other person or entity.
Very truly yours,
/s/ Richard O. Weed
- ------------------------
Richard O. Weed
54
10.1 License Agreement
EXCLUSIVE LICENSE AGREEMENT
This EXCLUSIVE LICENSE AGREEMENT ("Agreement") is made this 30th day of
December 1998 between DenexCorp/LVPS MicroFacility, a Nevada Corporation
("LICENSOR"), and LVPS MicroFacility, Inc., a Delaware corporation ("LICENSEE").
WHEREAS, LICENSOR has conducted extensive market feasibility studies,
spent significant resources on the concept, design, patent, and trademark
relating to Modular Pharmaceutical Solution Manufacturing for the production of
Large Volume Parenteral Solutions; and
WHEREAS, LICENSEE desires to obtain the exclusive use of the patent and
trademark relating to Modular Pharmaceutical Solution Manufacturing from
LICENSOR; and
WHEREAS, LICENSOR is willing to enter into an exclusive licensing
agreement with LICENSEE, subject to the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the recital set forth above and other good
and valuable consideration, the receipt and sufficiency of which is acknowledge,
the parties agree as follows.
1. Term.
The term of this Agreement shall be ten (10) years.
2. Exclusivity.
During the term of this Agreement, so long as LICENSEE pays the
royalties set forth below, LICENSEE shall have the exclusive use of any and all
patents and trademarks of LICENSOR relating to Modular Pharmaceutical Solution
Manufacturing (the "Intellectual Property").
3. Payments.
a. Royalty. During the term of this Agreement, LICENSEE shall pay to
LICENSOR as a royalty (the "Royalty") an amount equal to two percent (2%) of the
gross selling price on each MicroFacility sold during the term of this
Agreement.
4. Manner of Payment.
a. Payment. Not later than the tenth (10th) day after the end of each
and every quarter, beginning with June 30, 1999, LICENSEE shall pay and deliver
to LICENSOR the Royalty.
b. Prompt Delivery. LICENSEE acknowledges and agrees that the timely
delivery of the payments required by Section 4a and the Quarterly Reports and
Sales Reports required by Section 5 hereof are essential to this Agreement.
Interest shall accrue on all past due payments hereunder from their respective
due dates until paid at the rate of one percent (1%) per month, or if such rate
exceeds the maximum rate allowed by law, at the maximum rate allowed by law, and
shall be payable on demand.
5. Reports, Record Keeping And Audits.
a. Maintenance of Records. LICENSEE shall keep books of account and
records in accordance with generally accepted accounting principles,
consistently applied, covering all sales relating to this Agreement and the
license hereby granted. Such records shall be maintained for at least two (2)
years after the quarter to which such records relate.
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b. Quarterly Reports. Every Royalty payment pursuant to Section 4a
shall be accompanied by a written report (individually, the "Quarterly Report"
and collectively, the "Quarterly Reports").
c. Sales Reports. In addition, LICENSEE shall provide LICENSOR with
monthly sales recap reports and seasonal sales projections as developed and
revised (collectively, the "Sales Reports"); provided, however, that all such
Sales Reports shall be in the form and format used by LICENSEE in the ordinary
course of business.
d. Audit. LICENSOR and its duly authorized representatives shall have
the right upon reasonable notice and at all reasonable hours during normal
business days to examine and copy such books of account and records and all
other documents and materials in the possession or under the control of LICENSEE
with respect to the subject matter and the terms of this Agreement, the cost of
which shall be borne by LICENSOR. LICENSOR shall not conduct an audit more than
once with respect to any calendar year, and in no event shall such audit be
during LICENSEE'S fourth fiscal quarter. If the audit discloses that the Royalty
payments actually due exceed the Royalty payments paid, LICENSEE shall pay the
unpaid Royalty and interest on such unpaid Royalty payments computed from the
date such Royalty payments were due, accrued at the rate of one percent (1%) per
month, or if such rate exceeds the maximum rate allowed by law, at such maximum
legal rate. If the audit discloses that the Royalty payments made by LICENSEE
exceed the Royalty payments due, LICENSOR shall reimburse LICENSEE in the amount
the overpaid Royalty and interest on such overpayment, computed from the date
such Royalty payments were made, accrued at the rate of one percent (1%) per
month. In addition, if the audit discloses that the Royalty payments actually
due exceed the Royalty payments paid by an amount greater than five percent (5%)
of the Royalty payments paid, the cost of the audit performed by LICENSOR shall
be paid by LICENSEE.
e. Financial Statements. If, at any time during the term, LICENSEE is
not a company required to provide public financial information pursuant to the
Securities and Exchange Commission reporting requirements, LICENSEE shall, upon
reasonable request of LICENSOR, and from time to time thereafter, provide
LICENSOR with interim and audited annual financial statements.
6. Protection of Intellectual Property
a. Acknowledgments and Agreements of LICENSEE. As a material inducement
to LICENSOR to enter into this Agreement, and as a material part of the
consideration to LICENSOR hereunder, LICENSEE hereby acknowledges and agrees
that:
(i) (a) LICENSOR owns the Intellectual Property in various
countries worldwide, and all rights, registrations,
applications and filings with respect to such Intellectual
Property, and all renewals and extensions of any such
registrations, applications and filings, (b) LICENSOR has the
right to license the Intellectual Property, and (c) LICENSEE
is acquiring hereby only the right to use the Intellectual
Property for the purpose stated in and pursuant to the terms
and conditions of the Agreement.
(ii) (a) Great value is placed on the Intellectual Property,
and the goodwill associated therewith, (b) the Intellectual
Property and all rights therein and goodwill pertaining
thereto belong exclusively to LICENSOR, and (c) all authorized
use of the Intellectual Property by LICENSEE shall inure to
the benefit of LICENSOR.
(iii) The conditions, terms, restrictions, covenants and
limitations of this Agreement are necessary, equitable,
reasonable and essential to assure the consuming public that
all goods sold under the Intellectual Property are of the same
consistently high quality as sold by LICENSOR and by others
who are licensed to design, manufacture and/or sell any
products by, under or with the Intellectual Property, if any.
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b. Protection of Rights.
(i) Restriction on Use. LICENSEE shall not use or permit the
use of the Intellectual Property for any purpose or use other
than the uses licensed under this Agreement.
(ii) General. LICENSEE shall cooperate fully and in good faith
with LICENSOR for the purpose of securing and preserving
LICENSOR's (or any grantee of LICENSOR's) rights in and to the
Intellectual Property.
7. Defaults And Remedies.
a. Defaults by LICENSEE. The occurrence of any one or more of the
following shall constitute a default by LICENSEE under this Agreement:
(i) LICENSEE shall fail to make any payment, submit any
Quarterly Report or provide any financial information required
under this Agreement when due, and such failure continues for
more than thirty (30) days after written notice thereof,
unless such failure cannot be cured within such thirty (30)
day period and LICENSEE shall have commenced to cure the
failure and proceeds diligently thereafter to cure such
failure.
(ii) LICENSEE uses the Intellectual Property in any manner
likely to endanger the validity of the Intellectual Property
or to damage or impair the reputation or value of the
Intellectual Property, and such action continues for more than
thirty (30) days after written notice thereof, unless the
action cannot be cured within such thirty (30) day period and
LICENSEE shall have commenced to cure the action and proceeds
diligently thereafter to cure such action.
(iii) The failure of LICENSEE to perform any of its other
material obligations under this Agreement and such failure
continues for more than thirty (30) days after written notice
thereof, unless the failure cannot be cured within such thirty
(30) day period and LICENSEE shall have commenced to cure the
failure and proceeds diligently thereafter to cure such
failure.
b. Default by LICENSOR. If LICENSOR fails to perform any of its
material obligations under this Agreement and such failure continues for more
than thirty (30) days after the written notice thereof, such failure shall
constitute a failure by LICENSOR under this Agreement, unless the failure cannot
be cured within such thirty (30) day-period and LICENSOR shall have commenced to
cure such failure and proceeds diligently thereafter to cure such failure.
c. Remedies.
(i) If LICENSEE has not cured any such breach or
non-performance in accordance with Section 7a above, in
addition to all other rights and remedies available to
LICENSOR, whether pursuant to the terms of this Agreement at
law in equity or otherwise, LICENSOR shall have the right to
terminate this Agreement without further notice to LICENSEE.
(ii) If LICENSOR has not cured any such breach or
non-performance in accordance with Section 7b above, in
addition to all of the other rights and remedies available to
LICENSEE, whether pursuant to the terms of this Agreement at
law, in equity or otherwise, LICENSEE shall have the right to
terminate this Agreement without further notice to LICENSOR.
d. Effect of Expiration or Termination. Except as specifically provided
herein to the contrary, upon expiration or termination of this Agreement, the
rights and licenses granted herein shall terminate and LICENSEE shall have no
further right to use the Intellectual Property. Upon the request of LICENSOR,
LICENSEE shall immediately execute without further consideration such
assignments and other instruments which may be required to be recorded to effect
the termination of the licenses and rights granted herein (and the assignments
of LICENSEE's rights to LICENSOR). Within twenty (20) days of the expiration or
termination of this Agreement, LICENSEE shall deliver to LICENSOR all unpaid
Royalties together with a final Quarterly Report covering all sales from the end
of the period covered by the preceding Quarterly Report through the date of
expiration or termination of this Agreement.
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8. Warranties.
a. LICENSOR warrants and represents that LICENSOR (i) is free to enter
into this Agreement, (ii) has the full power, right and authority to make the
grant of rights to LICENSEE as provided hereunder and that the exercise by
LICENSEE of such rights, as authorized hereunder, shall not violate the rights
of any third party, and (iii) is not subject to any obligation which will or
might hinder or prevent the full completion and performance by LICENSOR of any
of the covenants and the conditions to be kept and performed by LICENSOR
hereunder.
b. LICENSEE hereby represents and warrants that LICENSEE (i) is free to
enter into this Agreement, (ii) is not subject to any obligation which will or
might hinder or prevent the full completion and performance by LICENSEE of any
of the covenants and conditions to be kept and performed by LICENSEE hereunder,
and (iii) will ensure that all uses of the Intellectual Property comply with the
terms of this Agreement.
9. General Provisions.
a. Entire Agreement. This Agreement sets forth the entire agreement
between the Parties with respect to the subject matter hereof, and all prior
negotiations, discussions, commitments and/or understandings relating thereto,
if any, are merged herein. This Agreement shall supersede any and all other
agreements between the Parties and may be modified only by a written agreement
signed by duly authorized of each of the Parties. No representations, oral or
otherwise expressed or implied, other than those specifically contained in this
Agreement have been made by any party hereto. No other agreements not referred
to or specifically contained herein, oral or otherwise, shall be deemed to exist
or to bind any of the Parties hereto.
b. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the successors and permitted assigns of the
Parties.
c. Choice of Law. The validity, construction and enforcement of this
Agreement shall be governed by the laws of the State of California without
regard to its choice of law principles.
d. Dispute Resolution. Any claim or controversy arising out of or
relating to this Agreement, or any breach thereof wherein only damages are
sought, shall be settled by the appointment of a retired judge of the Superior
or Appellate Courts of California who shall act pursuant to Section 638.1 of the
California Code of Civil Procedure "to try any and all of the issues in an
action or proceeding, whether of fact or of law, and to report a state of
decision thereon". The Parties stipulate to the use of the referenced procedure
and agree that the Superior Court of Orange County of the State of California
may issue such orders as are necessary to implement the Parties intent that any
such claim or controversy shall be resolved through the use of the referenced
procedure. The decision reached by the referee shall be entered as a judgment of
the Superior Court appointing the referee and such decisions shall be fully
appealable. All fees and expenses of the referee shall be initially borne on a
pro rata basis by the Parties, but shall be recoverable by the prevailing party.
Additionally, the prevailing party shall be entitled to recover, as an element
of such party's cost of suit, and not as damages, all reasonable costs and
expenses incurred or sustained by such prevailing party in connection with such
actions including without limitation, legal fees and costs.
e. No Waiver. No waiver by either party, whether express or implied, of
any provision of this Agreement or of any breach or default of any party, shall
constitute a continuing waiver of such provision or any other provisions of this
Agreement, and no such waiver by any party shall prevent such party from acting
upon the same or any subsequent breach or default of the other party of the same
or any other provision of this Agreement.
f. Disclaimer of Agency. Nothing in this Agreement shall create a
partnership or joint venture or establish the relationship of principal and
agent or any other relationship of a similar nature between the parties hereto,
and neither LICENSEE nor LICENSOR shall have the power to obligate or bind the
other in any manner whatsoever.
g. Construction. This Agreement shall be interpreted to provide
LICENSOR with the maximum control of the Intellectual Property and the use
thereof.
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h. Licensor Approvals. Any approval required from LICENSOR under this
Agreement shall be effective and binding against LICENSOR only if it is in
writing. Any approval required hereunder must be obtained by LICENSEE prior to
LICENSEE taking any action which requires such approval.
i. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
j. Authority. Each individual signing on behalf of a party hereto
represents and warrants that he or she is authorized to execute this Agreement
on behalf of such party.
k. Termination on Insolvency of LICENSEE. LICENSOR may terminate this
Agreement if a petition for relief under applicable bankruptcy law is filed by
or against LICENSEE, and is not dismissed within sixty (60) days of such filing,
if LICENSEE makes any assignment for the benefit of its creditors, or if a
receiver is appointed for LICENSEE for all or substantially are of its business
interests. The license and rights granted hereunder are personal to LICENSEE. No
assignee for the benefit of creditors, receiver, debtor in possession, trustee
in bankruptcy, sheriff or any other officer of court charged with taking over
custody of LICENSEE's assets or business shall have any right to continue
performance to exploit or in any way use the Intellectual Property if this
Agreement is terminated, except as may be required by law.
l. Termination on Insolvency of LICENSOR. LICENSEE may terminate this
Agreement, if a petition for relief under applicable bankruptcy law is filed by
or against LICENSOR, and is not dismissed within sixty (60) days of such filing,
if LICENSOR makes any assignment for the benefit of its creditors, or if a
receiver is appointed for LICENSOR for all or substantially all of its business
interests. In the event of such termination, LICENSEE shall have the right to
continue thereafter to import and/or sell any and all Merchandise which LICENSEE
has purchased, produced or committed to purchase prior to the date of
termination.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date set
forth above.
DenexCorp/LVPS MicroFacility
By: /s/ Ronald R. Patterson
---------------------------------
Name: Ronald R. Patterson
Title: Chief Executive Officer
LVPS MicroFacility, Inc.
By: /s/ Ross T. Boling
---------------------------------
Name: Ross T. Boling
Title: Chief Operating Officer
59
10.4 Employment Agreement with Ron Patterson
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 30th
day of June, 1999, to be effective as of the date services were first rendered,
by LVPS MicroFacility, Inc. (the "Company") and Ronald R. Patterson (the
"Executive").
WHEREAS, the Company desires to retain the services of the Executive as
President and Chief Executive Officer of the Company and the Executive desires
to render such services on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the receipt and sufficiency of which is hereby acknowledged, the parties
agree as follows:
1. Employment Term. The Company employs the Executive and the Executive accepts
employment by the Company, upon the terms and subject to the conditions set
forth in this Agreement, until June 30, 2002; provided, however, that such
employment may be sooner terminated pursuant to the terms of this Agreement.
2. Management of the Company. The Executive shall devote the Executive's time,
best efforts, attention and skill to, and shall perform faithfully, loyally and
efficiently the Executive's duties as President and Chief Executive Officer of
the Company. Further, the Executive will punctually and faithfully perform and
observe any and all rules and regulations which the Company may now or shall
hereafter reasonably establish governing the Executive's conduct and the conduct
of the Company's business which are consistent with this Agreement.
3. Compensation; Benefits. In consideration of the services rendered to the
Company by the Executive, the Company shall pay the Executive a salary at the
annual rate of $ 180,000.00 (the "Salary"). The Salary shall be payable in
accordance with the normal payroll practices of the Company then in effect. The
Salary, and all other forms of compensation paid to the Executive hereunder,
shall be subject to all applicable taxes required to be withheld by the Company
pursuant to federal, state or local law. The Executive shall be solely
responsible for income taxes imposed on the Executive by reasons of any cash or
non-cash compensation and benefits provided by this Agreement. Payment of
Executive's Compensation and Benefits shall commence with subscription of the
Company's Initial Public Offering.
In addition to the Salary, during the Employment Term, the Executive
shall be entitled to: (i) all legal and religious holidays, and two (2) weeks
paid vacation per annum. The Executive shall arrange for vacations in advance at
such time or times as shall be mutually agreeable to the Executive and the
Company's Board of Directors. The Executive may not receive pay in lieu of
vacation; (ii) participate in all employee benefit plans and/or arrangements
adopted by the Company relating to pensions, hospital, medical, dental,
disability and life insurance, deferred salary and savings plans, and other
similar employee benefit plans or arrangements to the extent that the Executive
meets the eligibility requirements for any such plan as in effect from time to
time; (iii) payment by the Company directly, or reimbursement by the Company
for, reasonable and customary business and out-of-pocket expenses incurred by
the Executive in connection with the performance by the Executive of the
Executive's duties under this Agreement in accordance with the Company's
policies and practices for reimbursement of such expenses, as in effect from
time to time, including, without limitation, reasonable and necessary travel,
lodging, entertainment and meals incurred by the Executive in furtherance of the
Company's business and at the Company's request. The Company may, at its option,
elect to provide Executive with a Company automobile or automobile allowance at
a future date during the term of this Agreement.
In addition to the payment of Salary, the Company hereby grants to the
Executive, non-qualified stock options (collectively, the "Stock Options") in
accordance with the Company's Executive Stock Option Plan once said Executive
Stock Option Plan is approved by the Company's Board of Directors. The Stock
Options are non-transferable, vest immediately in Executive, and expire at the
close of business on June 30, 2002.
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4. Termination of Employment. The Executive's employment hereunder shall
terminate upon the earliest to occur of any the following events, on the dates
and at the times specified below:
(i) the close of business on June 30, 2002 (the "Expiration Date");
(ii) the close of business on the date of the Executive's death
("Death");
(iii) the close of business on the Termination Date (as defined below)
specified in the Notice of Termination (as defined below) which the Company
shall have delivered to the Executive due to the Executive's Disability.
"Disability" shall mean if (i) the Executive is absent from work for 30 calendar
days in any twelve-month period by reason of illness or incapacity whether
physical or otherwise) or (ii) the Company reasonably determines that the
Executive is unable to perform his duties, services and responsibilities by
reason of illness or incapacity (whether physical or otherwise) for a total of
30 calendar days in any twelve-month period during the Employment Term. The
Executive agrees, in the event of any dispute under this Section, and after
receipt by the Executive of such Notice of Termination from the Company, to
submit to a physical examination by a licensed physician selected by the
Company. The Executive may seek a second opinion from a licensed physician
acceptable to the Company. If the results of the first examination and the
second examination are different, a licensed physician selected by the
physicians who have performed the first and second examinations shall perform a
third physical examination of the Executive, the result of which shall be
determinative for purposes of this Section;
(iv) the close of business on the Termination Date specified in the
Notice of Termination which the Executive shall have delivered to the Company to
terminate his employment ("Voluntary Termination");
(v) the close of business on the Termination Date specified in the
Notice of Termination which the Company shall have delivered to the Executive to
terminate the Executive's employment for Cause. "Cause" as used herein means
termination based on (i) the Executive's material breach of this Agreement, (ii)
conviction of the Executive for (a) any crime constituting a felony in the
jurisdiction in which committed, (b) any crime involving moral turpitude whether
or not a felony), or (c) any other criminal act against the Company involving
dishonesty or willful misconduct intended to injure the Company (whether or not
a felony), (iii) substance abuse by the Executive, (iv) the failure or refusal
of the Executive to follow one or more lawful and proper directives of the Board
of Directors delivered to the Executive in writing, or (v) willful malfeasance
or gross misconduct by the Executive which discredits or damages the Company.
Any purported termination by the Company or the Executive (other than
by reason of Death or on the Expiration Date) shall be communicated by written
Notice of Termination to the other. As used herein, the term "Notice of
Termination" shall mean a notice which indicates the specific termination
provision in this Agreement relied upon and sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated. After receipt of a
Notice of Termination, the Executive shall continue to be available to the
Company on a part-time basis at reasonable and customary hourly rates to assist
in the necessary transition.
As used herein, the term "Termination Date" shall mean, (i) in the case
of Death, the date of the Executive's death, (ii) in the case of expiration of
the term hereof, the Expiration Date, or (iii) in all other cases, the date
specified in the Notice of Termination.
5. Employee Covenants.
Trade Secrets and Proprietary Information. The Executive agrees and
understands that due to the Executive's position with the Company, the Executive
will be exposed to, and has received and will receive, confidential and
proprietary information of the Company or relating to the Company's business or
affairs collectively, the "Trade Secrets"), including but not limited to
technical information, product information and formulae, processes, business and
marketing plans, strategies, customer information, other information concerning
the Company's products, promotions, development, financing, expansion plans,
business policies and practices and other forms of information considered by the
Company to be proprietary and confidential and in the nature of trade secrets.
Trade Secrets shall not include any such information which (A) was known to the
Executive prior to his employment by the Company or (B) was or becomes generally
available to the public other than as a result of a disclosure by the Executive
in violation of the provisions of this Section. Except to the extent that the
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proper performance of the Executive's duties, services and responsibilities
hereunder may require disclosure, the Executive agrees that during the
Employment Term and at all times thereafter the Executive will keep such Trade
Secrets confidential and will not disclose such information, either directly or
indirectly, to any third person or entity without the prior written consent of
the Company. This confidentiality covenant has no temporal, geographical or
territorial restriction. On the Termination Date unless the Executive remains as
an employee of the Company thereafter in which case, on the date which the
Executive is no longer an employee of the Company), the Executive will promptly
supply to the Company all property, keys, notes, memoranda, writings, lists,
files, reports, customer lists, correspondence, tapes, disks, cards, surveys,
maps, logs, machines, technical data, formulae or any other tangible product or
document which has been produced by, received by or otherwise submitted to and
retained by the Executive in the course of his employment with the Company. Any
material breach of the terms of this paragraph shall be considered Cause.
As Exhibit A to this Employment Agreement is the LVPS MicroFacility,
Inc. Non-Disclosure & Trade Secret Agreement, executed on June 30, 1999 and is
the operative document with respect to the Trade Secrets and Proprietary
Information section of Executive's Employment Agreement with the Company.
Prohibited and Competitive Activities. The Executive and the Company
recognize that due to the nature of the Executive's engagement hereunder and the
relationship of the Executive to the Company, the Executive has had and will
have access to, has had and will acquire, and has assisted and may continue to
assist in, developing confidential and proprietary information relating to the
business and operations of the Company and its affiliates, including, without
limitation, Trade Secrets. The Executive acknowledges that such information has
been and will be of central importance to the business of the Company and its
affiliates and that disclosure of it to, or its use by, others (including,
without limitation, the Executive (other than with respect to the Company's
business and affairs)) could cause substantial loss to the Company.
The Executive and the Company also recognize that an important part of
the Executive's duties will be to develop good will for the Company and its
affiliates through the Executive's personal contact with Clients (as defined
below), employees, and others having business relationships with the Company,
and that there is a danger that this good will, a proprietary asset of the
Company, may follow the Executive if and when the Executive's relationship with
the Company is terminated. The Executive accordingly agrees as follows:
(i) Prohibited Activities. The Executive agrees that the Executive will
not at any time during the Employment Term: (A) (other than in the course of the
Executive's employment) disclose or furnish to any other person or, directly or
indirectly, use for the Executive's own account or the account of any other
person, any Trade Secrets, no matter from where or in what manner he may have
acquired such Trade Secrets, and the Executive shall retain all such Trade
Secrets in trust for the benefit of the Company, its affiliates and the
successors and assigns of any of them, (B) directly or through one or more
intermediaries, solicit for employment or recommend to any subsequent employer
of the Executive the solicitation for employment of, any person who, at the time
of such solicitation, is employed by the Company or any affiliate, (C) directly
or indirectly, whether for the Executive's own account or for the account of any
other person, solicit, divert, or endeavor to entice away from the Company or
any entity controlled by the Company, or otherwise engage in any activity
intended to terminate, disrupt, or interfere with, the Company's or any of its
affiliates' relationships with, Clients, or otherwise adversely affect the
Company's or any of its affiliates' relationships with Clients or other business
relationships of the Company or any affiliate thereof, or (D) publish or make
any statement critical of the Company or any shareholder or affiliate of the
Company or in any way adversely affect or otherwise malign the business or
reputation of any of the foregoing persons (any activity described in clause
(A), (B), (C) or (D) of this Section being referred to as a Prohibited
Activity"); provided, however, that if in the written opinion of Counsel, the
Executive is legally compelled to disclose Trade Secrets to any tribunal or else
stand liable for contempt or suffer other similar censure or penalty, then the
disclosure to such tribunal of only those Trade Secrets which such counsel
advises in writing are legally required to be disclosed shall not constitute a
Prohibited Activity provided that the Executive shall give the Company as much
advance notice of such disclosure as is reasonably practicable. As used herein,
the term "Clients" shall mean those persons who, at any time during the
Executive's course of employment with the Company (including, without
limitation, prior to the date of this Agreement) are or were clients or
customers of the Company or any affiliate thereof or any predecessor of any of
the foregoing.
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(ii) Non-Competition. By and in consideration of the Company's entering
into this Agreement, the Executive agrees that the Executive will not, during
the Employment Term and for a period of eighteen months thereafter, engage in
any Competitive Activity. The term "Competitive Activity" means engaging in any
of the following activities: (A) serving as a director of any Competitor (as
defined below), (B) directly or indirectly through one or more intermediaries,
either (X) controlling any Competitor or (Y) owning any equity or debt interests
in any Competitor (other than equity or debt interests which are publicly traded
and, at the time of any acquisition thereof by the Executive, do not in the
aggregate exceed 5% of the particular class of interests of such Competitor then
outstanding) (it being understood that, if interests in any Competitor are owned
by an investment vehicle or other entity in which the Executive owns an equity
interest, a portion of the interests in such Competitor owned by such entity
shall be attributed to the Executive, such portion determined by applying the
percentage of the equity interest in such entity owned by the Executive to the
interests in such Competitor owned by such entity), (C) employment by (including
serving as an officer, director or partner of), providing consulting services to
(including, without limitation, as an independent contractor), or managing or
operating the business or affairs of, any Competitor or (D) participating in the
ownership, management, operation or control of or being connected in any manner
with any Competitor. The term "Competitor" as used herein (i) during the
Employment Term, means any person (other than the Company, or any of its
respective affiliates) that competes, either directly or indirectly with any of
the business conducted by the Company or any affiliate.
Remedies. The Executive agrees that any breach of the terms of this
Section would result in irreparable injury and damage to the Company for which
the Company would have no adequate remedy at law. The Executive therefore agrees
that in the event of said breach or any threat of breach, the Company shall be
entitled to an immediate injunction and restraining order to prevent such breach
and/or threatened breach and/or continued breach by the Executive and/or any and
all persons and/or entities acting for and/or with the Executive, without having
to prove damages. The terms of this paragraph shall not prevent the Company from
pursuing any other available remedies to which the Company may be entitled at
law or in equity for any breach or threatened breach hereof, including but not
limited to the recovery of damages from the Executive. the provisions of this
Section 8 shall survive any termination of this Agreement. The existence of any
claim or cause of action by the Executive against the Company, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of the covenants and agreements of this Section.
Proprietary Information and Inventions. The Executive agrees that any
and all inventions, discoveries, improvements, processes, formulae, business
application software, patents, copyrights and trademarks made, developed,
discovered or acquired by him prior to and during the Employment Term, solely or
jointly with others or otherwise, which relate to the business of the Company,
and all knowledge possessed by the Executive relating thereto collectively, the
"Inventions"), shall be fully and promptly disclosed to the Board of Directors
and to such person or persons as the Board of Directors shall direct and the
Executive irrevocably assigns to the Company all of the Executive's right, title
and interest in and to all Inventions of the Company and all such Inventions
shall be the sole and absolute property of the Company and the Company shall be
the sole and absolute owner thereof. The Executive agrees that he will at all
times keep all Inventions secret from everyone except the Company and such
persons as the Board of Directors may from time to time direct. The Executive
shall, as requested by the Company at any time and from time to time, whether
prior to or after the expiration of the Employment Term, execute and deliver to
the Company any instruments deemed necessary by the Company to effect disclosure
and assignment of the Inventions to the Company or its designees and any patent
applications (United States or foreign) and renewals with respect thereto,
including any other instruments deemed necessary by the Company for the
prosecution of patent applications, the acquisition of letters patent and/or the
acquisition of patents or copyrights in any and all countries and to vest title
thereto in the Company or its nominee.
6. Representations and Warranties of the Executive. The Executive represents and
warrants to the Company that:
(i) The Executive's employment by the Company as contemplated will not
conflict with, and will not be constrained by, any prior or current employment,
consulting agreement or relationship, whether written or oral; and
(ii) The Executive does not possess confidential information arising
out of any employment, consulting agreement or relationship with any person or
entity other than the Company which could be utilized in connection with the
Executive's employment by the Company.
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7. Binding Effect or Assignment. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective heirs, executors,
representatives, states, successors and assigns, including any successor or
assign to all or substantially all of the business and/or assets of the Company,
whether direct or indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise; provided, however, that the Executive, or any beneficiary
or legal representative of the Executive, shall not assign all or any portion of
the Executive's rights or obligations under this Agreement without the prior
written consent of the Company.
8. Notices. All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered, mailed or transmitted, and shall be effective upon receipt.
9. Amendment and Modification. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by each of the Executive and the Company. No such waiver
or discharge by either party hereto at any time or any waiver or discharge of
any breach by the other party hereto of, or compliance with, any condition or
provision of this agreement to be performed by such other party, shall be deemed
a waiver or discharge of similar or dissimilar provisions or conditions, or a
waiver or discharge of any breach of any provisions, at the same or at any prior
or subsequent time.
10. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of Delaware without giving effect to the
conflict of law principles of that state.
11. Severability. In the event that any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
portion of this Agreement, and this Agreement shall be construed as if such
provision had never been contained herein.
12. Withholding Taxes. Notwithstanding anything contained herein to the
contrary, all payments required to be made hereunder by the Company to the
Executive, or his estate or beneficiaries, shall be subject to the withholding
of such amounts as the Company may reasonably determine it should withhold
pursuant to any applicable federal, state or local law or regulation.
13. Arbitration of Disputes. The parties hereto mutually consent to the
resolution by arbitration of all claims and controversies arising out of or
relating to this Agreement.
14. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
15. Entire Agreement. This Agreement constitutes the entire agreement between
the parties and supersedes any and all prior agreements, written or oral,
understandings and arrangements, either oral or written, between the parties
with respect to the subject matter, and shall, as of the date hereof, constitute
the only employment agreement between the parties.
16. Further Assurances. Each party shall do and perform, or cause to be done and
performed, all further acts and things and shall execute and deliver all other
agreements, certificates, instruments, and documents as any other party
reasonably may request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions
contemplated.
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17. Construction. The headings in this Agreement are for reference purposes only
and shall not limit or otherwise affect the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first above written.
"Company"
By: __________________
Name: Ross T. Boling
Title: Chief Operating Officer
"Executive"
By: ___________________
Ronald R. Patterson
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Exhibit "A"
LVPS MicroFacility, Inc.
NON-DISCLOSURE & TRADE SECRET AGREEMENT
AGREEMENT, entered into as of this 30th day of June, 1999 between LVPS
MicroFacility, Inc., located at 7755 Center Avenue, Suite 1100, Huntington
Beach, California 92647 USA, and Ronald R. Patterson (Hereinafter referred to as
the "Recipient"), located at 7071 415 Warner Avenue, Huntington Beach,
California 92647.
WHEREAS, LVPS MicroFacility, Inc. is the manufacturer of a complete, Turnkey,
state-of-the-art Micro-manufacturing plant that produces Large Volume Parenteral
solutions (LPV's); as well as other products and services both available and in
various development stages; the undersigned Recipient acknowledges that LVPS
MicroFacility, Inc. has certain trade secrets, consisting of devices, formulas,
secret inventions (patents pending), processes, etc, and as consideration for
disclosure of and presentation of same to undersigned, undersigned hereby agrees
not to disclose any of the aforesaid trade secrets directly or indirectly, or
use any of them in any way whatsoever unless by written consent of LVPS
MicroFacility, Inc. All files, records, documents, drawings, equipment,
specifications, information and special items relating to the trade secrets
coming into the possession of or disclosed to undersigned shall remain the
exclusive property of LVPS MicroFacility, Inc. The undersigned further agrees to
take all reasonable steps to preserve and protect such trade secrets. The
undersigned signs below under the penalty of perjury, that the contents herein
are understood and will be followed willfully in all manners pertaining to any
functions of LVPS MicroFacility, Inc. which LVPS MicroFacility, Inc. deems
confidential (hereinafter referred to as the "Information"); and
WHEREAS, the Recipient is in the business of using such information for
it's projects and wishes to review the information:
and
WHEREAS, LVPS MicroFacility, Inc. wishes to disclose this information
to the Recipient and their employees; will not cause the circumvention of the
relationship between LVPS MicroFacility, Inc. or any of its affiliates or
vendors (herein known as LVPS MicroFacility, Inc. participants without the prior
written consent of LVPS MicroFacility, Inc.).
WHEREAS, The Recipient is willing not to disclose this information, as
provided in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter set forth and other valuable
considerations, the parties hereto agree as follows:
1. Disclosure LVPS MicroFacility, Inc. shall disclose to the
Recipient the information which concerns business plan and
manufacturing technology.
2. Purpose Recipient agrees that this disclosure is only for the
purpose of the Recipients evaluation to determine its interest in
the confidential exploitation of the information.
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3. Limitation on use Recipient agrees not to manufacture, se, deal
in, or otherwise use or appropriate the disclosed information in
any way whatsoever, including but not limited to adaptation,
imitation, redesign, or modification. Nothing contained in this
agreement shall be deemed to give Recipient any rights whatsoever
in and to the information.
4. Confidentiality Recipient understands and agrees that the
unauthorized disclosure of the information by the Recipient to
others would irreparably damage LVPS MicroFacility, Inc. As
consideration and in return for the disclosure of this
information, the recipient shall keep secret and hold in
confidence all such information and treat the information as if it
were the Recipient's own proprietary property by no disclosing to
any such person or entity.
5. Good Faith Negotiations If, on the basis of the evaluation of the
information, Recipient wishes to pursue the exploitation thereof,
Recipient agrees to enter into good faith negotiations to arrive
at a mutually satisfactory agreement for this purpose. Until and
unless such an agreement is entered into, the Non-Disclosure
Agreement shall remain in force.
6. Miscellany This Agreement shall be binding upon and shall inure to
the benefit of the parties and their respective legal
representatives, successors, and assigns. Should any controversy
arise by virtue of the Trade Secret Confidentiality Non-disclosure
Agreement or any breach thereof, the party prevailing in such
controversy shall be entitled to costs and attorneys' fees in
addition to all other remedies and awards.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first
set forth above.
LVPS MicroFacility, Inc. Recipient
By: __________________________ By: __________________________
Ross T. Boling, Name: Ronald R. Patterson
Chief Operating Officer Title: Executive
LVPS MicroFacility, Inc.
7755 Center Ave., Suite 1100
Huntington Beach, CA 92647
(714) 372-2251
Witness Name: _________________ Witness Name: ___________________
Witness Signature: _________________ Witness Signature: ___________________
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10.3 Employment Agreement with Ross Boling
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 30th
day of June, 1999, to be effective as of the date services were first rendered,
by LVPS MicroFacility, Inc. (the "Company") and Ross T. Boling (the
"Executive").
WHEREAS, the Company desires to retain the services of the Executive as
Chief Operating Officer of the Company and the Executive desires to render such
services on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the receipt and sufficiency of which is hereby acknowledged, the parties
agree as follows:
1. Employment Term. The Company employs the Executive and the Executive accepts
employment by the Company, upon the terms and subject to the conditions set
forth in this Agreement, until June 30, 2002; provided, however, that such
employment may be sooner terminated pursuant to the terms of this Agreement.
2. Management of the Company. The Executive shall devote the Executive's time,
best efforts, attention and skill to, and shall perform faithfully, loyally and
efficiently the Executive's duties as Chief Operating Officer of the Company.
Further, the Executive will punctually and faithfully perform and observe any
and all rules and regulations which the Company may now or shall hereafter
reasonably establish governing the Executive's conduct and the conduct of the
Company's business which are consistent with this Agreement.
3. Compensation; Benefits. In consideration of the services rendered to the
Company by the Executive, the Company shall pay the Executive a salary at the
annual rate of $ 120,000.00 (the "Salary"). The Salary shall be payable in
accordance with the normal payroll practices of the Company then in effect. The
Salary, and all other forms of compensation paid to the Executive hereunder,
shall be subject to all applicable taxes required to be withheld by the Company
pursuant to federal, state or local law. The Executive shall be solely
responsible for income taxes imposed on the Executive by reasons of any cash or
non-cash compensation and benefits provided by this Agreement. Payment of
Executive's Compensation and Benefits shall commence with subscription of the
Company's Initial Public Offering.
In addition to the Salary, during the Employment Term, the Executive
shall be entitled to: (i) all legal and religious holidays, and two (2) weeks
paid vacation per annum. The Executive shall arrange for vacations in advance at
such time or times as shall be mutually agreeable to the Executive and the
Company's Board of Directors. The Executive may not receive pay in lieu of
vacation; (ii) participate in all employee benefit plans and/or arrangements
adopted by the Company relating to pensions, hospital, medical, dental,
disability and life insurance, deferred salary and savings plans, and other
similar employee benefit plans or arrangements to the extent that the Executive
meets the eligibility requirements for any such plan as in effect from time to
time; (iii) payment by the Company directly, or reimbursement by the Company
for, reasonable and customary business and out-of-pocket expenses incurred by
the Executive in connection with the performance by the Executive of the
Executive's duties under this Agreement in accordance with the Company's
policies and practices for reimbursement of such expenses, as in effect from
time to time, including, without limitation, reasonable and necessary travel,
lodging, entertainment and meals incurred by the Executive in furtherance of the
Company's business and at the Company's request. The Company may, at its option,
elect to provide Executive with a Company automobile or automobile allowance at
a future date.
In addition to the payment of Salary, the Company hereby grants to the
Executive, non-qualified stock options (collectively, the "Stock Options") in
accordance with the Company's Executive Stock Option Plan once said Executive
Stock Option Plan is approved by the Company's Board of Directors. The Stock
Options are non-transferable, vest immediately in Executive, and expire at the
close of business on June 30, 2002.
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4. Termination of Employment. The Executive's employment hereunder shall
terminate upon the earliest to occur of any the following events, on the dates
and at the times specified below:
(i) the close of business on June 30, 2002 (the "Expiration Date");
(ii) the close of business on the date of the Executive's death
("Death");
(iii) the close of business on the Termination Date (as defined below)
specified in the Notice of Termination (as defined below) which the Company
shall have delivered to the Executive due to the Executive's Disability.
"Disability" shall mean if (i) the Executive is absent from work for 30 calendar
days in any twelve-month period by reason of illness or incapacity whether
physical or otherwise) or (ii) the Company reasonably determines that the
Executive is unable to perform his duties, services and responsibilities by
reason of illness or incapacity (whether physical or otherwise) for a total of
30 calendar days in any twelve-month period during the Employment Term. The
Executive agrees, in the event of any dispute under this Section, and after
receipt by the Executive of such Notice of Termination from the Company, to
submit to a physical examination by a licensed physician selected by the
Company. The Executive may seek a second opinion from a licensed physician
acceptable to the Company. If the results of the first examination and the
second examination are different, a licensed physician selected by the
physicians who have performed the first and second examinations shall perform a
third physical examination of the Executive, the result of which shall be
determinative for purposes of this Section;
(iv) the close of business on the Termination Date specified in the
Notice of Termination which the Executive shall have delivered to the Company to
terminate his employment ("Voluntary Termination");
(v) the close of business on the Termination Date specified in the
Notice of Termination which the Company shall have delivered to the Executive to
terminate the Executive's employment for Cause. "Cause" as used herein means
termination based on (i) the Executive's material breach of this Agreement, (ii)
conviction of the Executive for (a) any crime constituting a felony in the
jurisdiction in which committed, (b) any crime involving moral turpitude whether
or not a felony), or (c) any other criminal act against the Company involving
dishonesty or willful misconduct intended to injure the Company (whether or not
a felony), (iii) substance abuse by the Executive, (iv) the failure or refusal
of the Executive to follow one or more lawful and proper directives of the Board
of Directors delivered to the Executive in writing, or (v) willful malfeasance
or gross misconduct by the Executive which discredits or damages the Company.
Any purported termination by the Company or the Executive (other than
by reason of Death or on the Expiration Date) shall be communicated by written
Notice of Termination to the other. As used herein, the term "Notice of
Termination" shall mean a notice which indicates the specific termination
provision in this Agreement relied upon and sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated. After receipt of a
Notice of Termination, the Executive shall continue to be available to the
Company on a part-time basis at reasonable and customary hourly rates to assist
in the necessary transition.
As used herein, the term "Termination Date" shall mean, (i) in the case
of Death, the date of the Executive's death, (ii) in the case of expiration of
the term hereof, the Expiration Date, or (iii) in all other cases, the date
specified in the Notice of Termination.
5. Employee Covenants.
Trade Secrets and Proprietary Information. The Executive agrees and
understands that due to the Executive's position with the Company, the Executive
will be exposed to, and has received and will receive, confidential and
proprietary information of the Company or relating to the Company's business or
affairs collectively, the "Trade Secrets"), including but not limited to
technical information, product information and formulae, processes, business and
marketing plans, strategies, customer information, other information concerning
the Company's products, promotions, development, financing, expansion plans,
business policies and practices and other forms of information considered by the
Company to be proprietary and confidential and in the nature of trade secrets.
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Trade Secrets shall not include any such information which (A) was known to the
Executive prior to his employment by the Company or (B) was or becomes generally
available to the public other than as a result of a disclosure by the Executive
in violation of the provisions of this Section. Except to the extent that the
proper performance of the Executive's duties, services and responsibilities
hereunder may require disclosure, the Executive agrees that during the
Employment Term and at all times thereafter the Executive will keep such Trade
Secrets confidential and will not disclose such information, either directly or
indirectly, to any third person or entity without the prior written consent of
the Company. This confidentiality covenant has no temporal, geographical or
territorial restriction. On the Termination Date unless the Executive remains as
an employee of the Company thereafter in which case, on the date which the
Executive is no longer an employee of the Company), the Executive will promptly
supply to the Company all property, keys, notes, memoranda, writings, lists,
files, reports, customer lists, correspondence, tapes, disks, cards, surveys,
maps, logs, machines, technical data, formulae or any other tangible product or
document which has been produced by, received by or otherwise submitted to and
retained by the Executive in the course of his employment with the Company. Any
material breach of the terms of this paragraph shall be considered Cause.
As Exhibit A to this Employment Agreement is the LVPS MicroFacility,
Inc. Non-Disclosure & Trade Secret Agreement, executed on June 30, 1999 and is
the operative document with respect to the Trade Secrets and Proprietary
Information section of Executive's Employment Agreement with the Company.
Prohibited and Competitive Activities. The Executive and the Company
recognize that due to the nature of the Executive's engagement hereunder and the
relationship of the Executive to the Company, the Executive has had and will
have access to, has had and will acquire, and has assisted and may continue to
assist in, developing confidential and proprietary information relating to the
business and operations of the Company and its affiliates, including, without
limitation, Trade Secrets. The Executive acknowledges that such information has
been and will be of central importance to the business of the Company and its
affiliates and that disclosure of it to, or its use by, others (including,
without limitation, the Executive (other than with respect to the Company's
business and affairs)) could cause substantial loss to the Company.
The Executive and the Company also recognize that an important part of
the Executive's duties will be to develop good will for the Company and its
affiliates through the Executive's personal contact with Clients (as defined
below), employees, and others having business relationships with the Company,
and that there is a danger that this good will, a proprietary asset of the
Company, may follow the Executive if and when the Executive's relationship with
the Company is terminated. The Executive accordingly agrees as follows:
(i) Prohibited Activities. The Executive agrees that the Executive will
not at any time during the Employment Term: (A) (other than in the course of the
Executive's employment) disclose or furnish to any other person or, directly or
indirectly, use for the Executive's own account or the account of any other
person, any Trade Secrets, no matter from where or in what manner he may have
acquired such Trade Secrets, and the Executive shall retain all such Trade
Secrets in trust for the benefit of the Company, its affiliates and the
successors and assigns of any of them, (B) directly or through one or more
intermediaries, solicit for employment or recommend to any subsequent employer
of the Executive the solicitation for employment of, any person who, at the time
of such solicitation, is employed by the Company or any affiliate, (C) directly
or indirectly, whether for the Executive's own account or for the account of any
other person, solicit, divert, or endeavor to entice away from the Company or
any entity controlled by the Company, or otherwise engage in any activity
intended to terminate, disrupt, or interfere with, the Company's or any of its
affiliates' relationships with, Clients, or otherwise adversely affect the
Company's or any of its affiliates' relationships with Clients or other business
relationships of the Company or any affiliate thereof, or (D) publish or make
any statement critical of the Company or any shareholder or affiliate of the
Company or in any way adversely affect or otherwise malign the business or
reputation of any of the foregoing persons (any activity described in clause
(A), (B), (C) or (D) of this Section being referred to as a Prohibited
Activity"); provided, however, that if in the written opinion of Counsel, the
Executive is legally compelled to disclose Trade Secrets to any tribunal or else
stand liable for contempt or suffer other similar censure or penalty, then the
disclosure to such tribunal of only those Trade Secrets which such counsel
advises in writing are legally required to be disclosed shall not constitute a
Prohibited Activity provided that the Executive shall give the Company as much
advance notice of such disclosure as is reasonably practicable. As used herein,
the term "Clients" shall mean those persons who, at any time during the
Executive's course of employment with the Company (including, without
limitation, prior to the date of this Agreement) are or were clients or
customers of the Company or any affiliate thereof or any predecessor of any of
the foregoing.
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<PAGE>
(ii) Non-Competition. By and in consideration of the Company's entering
into this Agreement, the Executive agrees that the Executive will not, during
the Employment Term and for a period of eighteen months thereafter, engage in
any Competitive Activity. The term "Competitive Activity" means engaging in any
of the following activities: (A) serving as a director of any Competitor (as
defined below), (B) directly or indirectly through one or more intermediaries,
either (X) controlling any Competitor or (Y) owning any equity or debt interests
in any Competitor (other than equity or debt interests which are publicly traded
and, at the time of any acquisition thereof by the Executive, do not in the
aggregate exceed 5% of the particular class of interests of such Competitor then
outstanding) (it being understood that, if interests in any Competitor are owned
by an investment vehicle or other entity in which the Executive owns an equity
interest, a portion of the interests in such Competitor owned by such entity
shall be attributed to the Executive, such portion determined by applying the
percentage of the equity interest in such entity owned by the Executive to the
interests in such Competitor owned by such entity), (C) employment by (including
serving as an officer, director or partner of), providing consulting services to
(including, without limitation, as an independent contractor), or managing or
operating the business or affairs of, any Competitor or (D) participating in the
ownership, management, operation or control of or being connected in any manner
with any Competitor. The term "Competitor" as used herein (i) during the
Employment Term, means any person (other than the Company, or any of its
respective affiliates) that competes, either directly or indirectly with any of
the business conducted by the Company or any affiliate.
Remedies. The Executive agrees that any breach of the terms of this
Section would result in irreparable injury and damage to the Company for which
the Company would have no adequate remedy at law. The Executive therefore agrees
that in the event of said breach or any threat of breach, the Company shall be
entitled to an immediate injunction and restraining order to prevent such breach
and/or threatened breach and/or continued breach by the Executive and/or any and
all persons and/or entities acting for and/or with the Executive, without having
to prove damages. The terms of this paragraph shall not prevent the Company from
pursuing any other available remedies to which the Company may be entitled at
law or in equity for any breach or threatened breach hereof, including but not
limited to the recovery of damages from the Executive. the provisions of this
Section 8 shall survive any termination of this Agreement. The existence of any
claim or cause of action by the Executive against the Company, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of the covenants and agreements of this Section.
Proprietary Information and Inventions. The Executive agrees that any
and all inventions, discoveries, improvements, processes, formulae, business
application software, patents, copyrights and trademarks made, developed,
discovered or acquired by him prior to and during the Employment Term, solely or
jointly with others or otherwise, which relate to the business of the Company,
and all knowledge possessed by the Executive relating thereto collectively, the
"Inventions"), shall be fully and promptly disclosed to the Board of Directors
and to such person or persons as the Board of Directors shall direct and the
Executive irrevocably assigns to the Company all of the Executive's right, title
and interest in and to all Inventions of the Company and all such Inventions
shall be the sole and absolute property of the Company and the Company shall be
the sole and absolute owner thereof. The Executive agrees that he will at all
times keep all Inventions secret from everyone except the Company and such
persons as the Board of Directors may from time to time direct. The Executive
shall, as requested by the Company at any time and from time to time, whether
prior to or after the expiration of the Employment Term, execute and deliver to
the Company any instruments deemed necessary by the Company to effect disclosure
and assignment of the Inventions to the Company or its designees and any patent
applications (United States or foreign) and renewals with respect thereto,
including any other instruments deemed necessary by the Company for the
prosecution of patent applications, the acquisition of letters patent and/or the
acquisition of patents or copyrights in any and all countries and to vest title
thereto in the Company or its nominee.
6. Representations and Warranties of the Executive. The Executive represents and
warrants to the Company that:
(i) The Executive's employment by the Company as contemplated will not
conflict with, and will not be constrained by, any prior or current employment,
consulting agreement or relationship, whether written or oral; and
(ii) The Executive does not possess confidential information arising
out of any employment, consulting agreement or relationship with any person or
entity other than the Company which could be utilized in connection with the
Executive's employment by the Company.
71
<PAGE>
7. Binding Effect or Assignment. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective heirs, executors,
representatives, states, successors and assigns, including any successor or
assign to all or substantially all of the business and/or assets of the Company,
whether direct or indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise; provided, however, that the Executive, or any beneficiary
or legal representative of the Executive, shall not assign all or any portion of
the Executive's rights or obligations under this Agreement without the prior
written consent of the Company.
8. Notices. All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered, mailed or transmitted, and shall be effective upon receipt.
9. Amendment and Modification. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by each of the Executive and the Company. No such waiver
or discharge by either party hereto at any time or any waiver or discharge of
any breach by the other party hereto of, or compliance with, any condition or
provision of this agreement to be performed by such other party, shall be deemed
a waiver or discharge of similar or dissimilar provisions or conditions, or a
waiver or discharge of any breach of any provisions, at the same or at any prior
or subsequent time.
10. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of Delaware without giving effect to the
conflict of law principles of that state.
11. Severability. In the event that any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
portion of this Agreement, and this Agreement shall be construed as if such
provision had never been contained herein.
12. Withholding Taxes. Notwithstanding anything contained herein to the
contrary, all payments required to be made hereunder by the Company to the
Executive, or his estate or beneficiaries, shall be subject to the withholding
of such amounts as the Company may reasonably determine it should withhold
pursuant to any applicable federal, state or local law or regulation.
13. Arbitration of Disputes. The parties hereto mutually consent to the
resolution by arbitration of all claims and controversies arising out of or
relating to this Agreement.
14. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
15. Entire Agreement. This Agreement constitutes the entire agreement between
the parties and supersedes any and all prior agreements, written or oral,
understandings and arrangements, either oral or written, between the parties
with respect to the subject matter, and shall, as of the date hereof, constitute
the only employment agreement between the parties.
16. Further Assurances. Each party shall do and perform, or cause to be done and
performed, all further acts and things and shall execute and deliver all other
agreements, certificates, instruments, and documents as any other party
reasonably may request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions
contemplated.
72
<PAGE>
17. Construction. The headings in this Agreement are for reference purposes only
and shall not limit or otherwise affect the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first above written.
"Company"
By: _____________________________________________
Name: Ronald R. Patterson
Title: President & Chief Executive Officer
"Executive"
By: _____________________________________________
Ross T. Boling
73
<PAGE>
Exhibit "A"
LVPS MicroFacility, Inc.
NON-DISCLOSURE & TRADE SECRET AGREEMENT
AGREEMENT, entered into as of this 30th day of June, 1999 between LVPS
MicroFacility, Inc., located at 7755 Center Avenue, Suite 1100, Huntington
Beach, California 92647 USA, and Ross T. Boling (Hereinafter referred to as the
"Recipient"), located at 28671 Deepcreek, Mission Viejo, California 92692.
WHEREAS, LVPS MicroFacility, Inc. is the manufacturer of a complete, Turnkey,
state-of-the-art Micro-manufacturing plant that produces Large Volume Parenteral
solutions (LPV's); as well as other products and services both available and in
various development stages; the undersigned Recipient acknowledges that LVPS
MicroFacility, Inc. has certain trade secrets, consisting of devices, formulas,
secret inventions (patents pending), processes, etc, and as consideration for
disclosure of and presentation of same to undersigned, undersigned hereby agrees
not to disclose any of the aforesaid trade secrets directly or indirectly, or
use any of them in any way whatsoever unless by written consent of LVPS
MicroFacility, Inc. All files, records, documents, drawings, equipment,
specifications, information and special items relating to the trade secrets
coming into the possession of or disclosed to undersigned shall remain the
exclusive property of LVPS MicroFacility, Inc. The undersigned further agrees to
take all reasonable steps to preserve and protect such trade secrets. The
undersigned signs below under the penalty of perjury, that the contents herein
are understood and will be followed willfully in all manners pertaining to any
functions of LVPS MicroFacility, Inc. which LVPS MicroFacility, Inc. deems
confidential (hereinafter referred to as the "Information"); and
WHEREAS, the Recipient is in the business of using such information for
it's projects and wishes to review the information:
and
WHEREAS, LVPS MicroFacility, Inc. wishes to disclose this information
to the Recipient and their employees; will not cause the circumvention of the
relationship between LVPS MicroFacility, Inc. or any of its affiliates or
vendors (herein known as LVPS MicroFacility, Inc. participants without the prior
written consent of LVPS MicroFacility, Inc.).
WHEREAS, The Recipient is willing not to disclose this information, as
provided in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter set forth and other valuable
considerations, the parties hereto agree as follows:
7. Disclosure LVPS MicroFacility, Inc. shall disclose to the
Recipient the information which concerns business plan and
manufacturing technology.
8. Purpose Recipient agrees that this disclosure is only for the
purpose of the Recipients evaluation to determine its interest in
the confidential exploitation of the information.
74
<PAGE>
9. Limitation on use Recipient agrees not to manufacture, se, deal
in, or otherwise use or appropriate the disclosed information in
any way whatsoever, including but not limited to adaptation,
imitation, redesign, or modification. Nothing contained in this
agreement shall be deemed to give Recipient any rights whatsoever
in and to the information.
10. Confidentiality Recipient understands and agrees that the
unauthorized disclosure of the information by the Recipient to
others would irreparably damage LVPS MicroFacility, Inc. As
consideration and in return for the disclosure of this
information, the recipient shall keep secret and hold in
confidence all such information and treat the information as if it
were the Recipient's own proprietary property by no disclosing to
any such person or entity.
11. Good Faith Negotiations If, on the basis of the evaluation of the
information, Recipient wishes to pursue the exploitation thereof,
Recipient agrees to enter into good faith negotiations to arrive
at a mutually satisfactory agreement for this purpose. Until and
unless such an agreement is entered into, the Non-Disclosure
Agreement shall remain in force.
12. Miscellany This Agreement shall be binding upon and shall inure to
the benefit of the parties and their respective legal
representatives, successors, and assigns. Should any controversy
arise by virtue of the Trade Secret Confidentiality Non-disclosure
Agreement or any breach thereof, the party prevailing in such
controversy shall be entitled to costs and attorneys' fees in
addition to all other remedies and awards.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first
set forth above.
LVPS MicroFacility, Inc. Recipient
By: ____________________________ By: ____________________________
Ron Patterson, President/CEO Name: Ross T. Boling
Title: Executive
LVPS MicroFacility, Inc.
7755 Center Ave., Suite 1100
Huntington Beach, CA 92647
(714) 372-2251
Witness Name: ____________________ Witness Name: ______________
Witness Signature: ____________________ Witness Signature: ______________
75
23.1 Consent of Independent Auditors
Consent of Independent Accountants
We hereby consent to the use in this Registration Statement on Form SB-2 of our
report dated September 9, 1999, relating to the financial statements of LVPS
MicroFacility, Inc. which appears in such Registration Statement.
/s/ McKennon Wilson & Morgan LLP
- ---------------------------------
McKennon Wilson & Morgan LLP
76
23.2 Consent of counsel
WEED & Co. L.P.
4695 MacArthur Court, Suite 530
Newport Beach, California 92660
Telephone (949) 475-9086
Facsimile (949) 475-9087
September 23, 1999
Board of Directors
LVPS MicroFacility, Inc.
7755 Center Avenue, 11th Floor
Huntington Beach, California 92647
RE: Consent
Greetings:
I hereby consent to the use of my opinion, dated September 23, 1999, in
connection with the registration under the Securities Act of 1933, as amended
(the "Act"), of an aggregate of 625,000 shares (the "Shares") of the Company's
common stock, par value $.001 per share (the "Common Stock"), to be sold by the
Company upon the terms and subject to the conditions set forth in the Company's
registration statement on Form SB-2, (the "Registration Statement"), as an
exhibit to the Registration Statement and to the use of my name under the
caption "Experts" in the Prospectus included as part of the Registration
Statement.
Very truly yours,
/s/ Richard O. Weed
- --------------------
Richard O. Weed
77
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,000
<CURRENT-LIABILITIES> 8,125
<BONDS> 0
0
0
<COMMON> 6,862
<OTHER-SE> (12,987)
<TOTAL-LIABILITY-AND-EQUITY> 2,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,897
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,987)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
Exhibit 99.1 8 Del. Code Ann. ss.145
DELAWARE CODE
TITLE 8. CORPORATIONS
CHAPTER 1. GENERAL CORPORATION LAW
SUBCHAPTER IV. DIRECTORS AND OFFICERS
ss. 145. Indemnification of officers, directors, employees and agents;
insurance.
(a) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful. The termination of any action, suit or 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 or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that the
person's conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because the person has
met the applicable standard of conduct set forth in subsections (a) and (b) of
this section. Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the board of directors deems appropriate.
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<PAGE>
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
80
