<PAGE> 1
As filed with the Securities and Exchange Commission on June 24, 1998
Securities Act File No. 333-_____; Exchange Act File No. 0-13280
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
PCC GROUP, INC.
(Exact name of registrant as specified in its charter)
California 95-3815164
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
163 University Parkway
Pomona, California 91768
(909) 869-6133
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Jack Wen
Chief Executive Officer
PCC Group, Inc.
163 University Parkway
Pomona, California 91768
(909) 869-6133
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With copy to:
Gary L. Blum
Law Offices of Gary L. Blum
3278 Wilshire Blvd., #603
Los Angeles, California 90010
(213) 381-7450
Approximate date of commencement of proposed sale to public:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please 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. [ ]
<PAGE> 2
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================
Proposed Proposed
Title of Each Class of Amount To Be Maximum Offering Maximum Aggregate Amount of
Securities To Be Registered Registered Price Per Unit Offering Price Registration Fee
- ----------------------------- ------------ ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Common Stock ($.01 par value) 25,000 $5.875(2) $146,900 $43.34
Common Stock ($.01 par value) 25,000(1) $2.50(3) $62,500 $18.44
Common Stock ($.01 par value) 75,000(1) $2.75(3) $206,250 $60.84
Common Stock ($.01 par value) 50,000(1) $3.50(3) $175,000 $51.63
Common Stock ($.01 par value) 100,000(1) $4.50(3) $450,000 $132.75
Common Stock ($.01 par value) 50,000(1) $5.00(3) $250,000 $73.75
Total 325,000 $1,290,000 $380.75
=================================================================================================================
</TABLE>
(1) Represents shares issuable upon the exercise of outstanding stock
purchase warrants. Pursuant to Rule 416, there are also being registered
such indeterminate number of additional shares of Common Stock as may
become issuable pursuant to anti-dilution provisions of the warrants.
(2) Estimated solely for the purpose of determining the amount of the
registration fee and, pursuant to Rule 457(c), based upon the average of
the high and low sale prices of the Common Stock as reported in the
consolidated reporting system on June 19, 1998.
(3) The registration fee for shares of Common Stock issuable upon exercise
of outstanding warrants was calculated using the prices at which such
warrants may be exercised.
--------------------
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 this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE> 3
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED JUNE __, 1998
PROSPECTUS
325,000 SHARES
PCC GROUP, INC.
Common Stock
($.01 PAR VALUE)
This Prospectus relates to an aggregate of 325,000 shares (the "Shares")
of common stock, $.01 par value (the "Common Stock"), of PCC Group, Inc. ("PCCG"
or the "Company") which may be offered and sold from time to time by a
shareholder of the Company (the "Selling Shareholder"). See "Selling
Shareholder". Of the Shares, 25,000 are currently outstanding and up to 300,000
can be acquired by the Selling Shareholder by exercising outstanding options
granted in connection with that certain Exclusive Financial Advisor/Investment
Banker Agreement entered into by the Company and the Selling Shareholder on
March 10, 1998. See "The Exclusive Financial Advisor/Investment Banker
Agreement".
The Shares may be offered for sale by the Selling Shareholder from time
to time in the Nasdaq SmallCap Market, in privately negotiated transactions, or
otherwise at market prices prevailing at the time of sale or at negotiated
prices. The Shares may be sold by the Selling Shareholder directly or through
brokers. The Selling Shareholder will receive all of the net proceeds from the
sale of the Shares and will pay all selling commissions, if any, applicable to
the sale of the Shares. The Company is responsible for payment of all other
expenses incident to the offer and sale of the Shares. See "Selling Shareholder"
and "Plan of Distribution".
On June 22, 1998, the closing sales price of the Common Stock, which is
quoted on the Nasdaq SmallCap Market under the symbol "PCCG", was $6.25 per
share.
The Selling Shareholder and any broker that participates in the resale
of the Shares may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), and any commissions,
discounts or concessions received by them and any profit on the resale of the
Shares made by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED BY INVESTORS
IN EVALUATING AN INVESTMENT IN THE SHARES OFFERED HEREBY, SEE "RISK FACTORS" ON
PAGE 3.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is June __, 1998.
<PAGE> 4
AVAILABLE INFORMATION
PCCG is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices at Seven World Trade Center, 13th Floor, New York, New York
10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained at prescribed
rates. The Commission maintains a World Wide Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of the site is
http://www.sec.gov. The Common Stock is traded on the Nasdaq SmallCap Market and
the reports, proxy statements and other information concerning the Company can
be inspected and copied at the offices of the Nasdaq SmallCap Market, Nasdaq
Operations, 1735 K Street, N.W., Washington, D.C. 20006, on which the Common
Stock of the Company is quoted.
The Company has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as the
"Shelf Registration Statement") under the Securities Act with respect to the
offering of the Common Stock made hereby. This Prospectus does not contain all
of the information set forth in the Shelf Registration Statement, certain parts
of which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock, reference is hereby made to the Shelf Registration Statement. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Shelf Registration Statement, each such statement being qualified
in all respects by such reference. A copy of the Shelf Registration Statement
may be inspected without charge at the offices of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and copies of all or any part thereof may
be obtained from the Public Reference Section of the Commission upon the payment
of the fees prescribed by the Commission. In addition, copies of the Shelf
Registration Statement may be obtained from the Commission's World Wide Web site
at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission under
the Exchange Act (Commission File No. 0-13280) are incorporated by reference in
this Prospectus:
1. Annual Report on Form 10-K for the fiscal year ended September
30, 1997.
2. Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 1997.
3. Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1998.
4. The description of capital stock contained in Registration
Statement filed on Form 8-A, dated March 12, 1985.
All documents filed by PCCG pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of the filing of this Shelf
Registration Statement of which this Prospectus forms a part and prior to the
end of offering shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the dates of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
This prospectus incorporates by reference documents which are not
presented herein or delivered herewith. These documents (without exhibits,
unless such exhibits are specifically incorporated by reference) are available
without charge upon request. Requests for documents should be directed to PCC
Group, Inc., 163 University Parkway, Pomona, California 91768, Attention:
Director, Investor Relations, (Telephone: (909) 869-6133).
1.
<PAGE> 5
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This Prospectus contains forward-looking statements within the meaning
of the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995 that involve risks and uncertainties, including, without limitation,
risks with respect to the Company's liquidity and capital resources,
distribution of the Company's products, markets for the Company's products, and
the Company's investments in the Peoples Republic of China. The Company's actual
results could differ materially from those discussed in these forward-looking
statements. Factors that could cause or contribute to such differences include,
but are not limited to, the rapidly changing demand for computer products and
technologies, the uncertainty of market acceptance of the Company's products,
the risks relating to conducting business with foreign customers, the
competitive market for the Company's products, and those other factors discussed
elsewhere in this Prospectus and any document incorporated herein by reference.
THE COMPANY
PCCG is a manufacturer and wholesale distributor of microprocessor-based
personal computer components and systems. The Company's customers consist of
approximately 250 value-added resellers, system integrators and dealers located
in the United States. The Company also owns the rights to a proprietary
pyrolysis technology for recycling scrap tires into carbon black, fuel oil,
steel and methane gas, and has invested in two scrap tire recycling plants
located in the Peoples Republic of China. The recycling plants have not yet
commenced operations.
PCCG was incorporated under the laws of the State of California on
February 28, 1983. The Company's principal executive offices are located at 163
University Parkway, Pomona, California 91768 and its telephone number is (909)
869-6133.
THE EXCLUSIVE FINANCIAL ADVISOR/INVESTMENT BANKER AGREEMENT
On March 10, 1998, PCCG entered into an Exclusive Financial
Advisor/Investment Banker Agreement (the "Advisor Agreement") with RichMark
Capital Corporation (the "Selling Shareholder"). Pursuant to the Advisor
Agreement, PCCG issued to the Selling Shareholder 25,000 shares of Common Stock
and warrants to purchase a total of 300,000 additional shares of Common Stock.
The foregoing issuance of stock and warrants was effected without registration
pursuant to the exemption provided by Section 4(2) of the Securities Act. The
warrants to purchase 300,000 Shares are exercisable by the Selling Shareholder
at the following prices and under the following circumstances: warrants to
purchase 25,000 Shares are immediately exercisable at a price of $2.50 per
share; warrants to purchase 75,000 Shares are immediately exercisable at a price
of $2.75 per share; warrants to purchase 50,000 Shares at a price of $3.50 per
share will become exercisable if and when the Company receives funding under a
new secured line of credit or other financing facility; warrants to purchase
100,000 Shares at a price of $4.50 will become exercisable if and when the
Common Stock is listed and eligible for trading on the Philadelphia Stock
Exchange or other stock exchange; and warrants to purchase 50,000 Shares at a
price of $5.00 per share will become exercisable after the Common Stock the
tenth consecutive trading day in which (i) the reported closing price of the
Common Stock is greater than $7.00 per share and (ii) the volume of shares of
Common Stock traded on such consecutive days exceeds 7,000 shares. Each of the
foregoing warrants expires on the later of 30 calendar days after the date of
this Prospectus or the date on which the condition to that warrant's
exercisability, if any, is met. The last reported sales price on the date the
warrants were issued was $2.75 per share.
In connection with entering into the Advisor Agreement PCCG agreed to
file a registration statement covering the Shares. The Shelf Registration
Statement of which this Prospectus is a part constitutes such required
registration statement.
2.
<PAGE> 6
RISK FACTORS
The securities offered hereby are speculative in nature, involve a high
degree of risk, and should not be purchased by an investor who cannot afford the
loss of his entire investment. Prior to making an investment decision with
respect to the securities offered hereby, prospective investors should carefully
consider, along with the other matters discussed in this Prospectus, the
following risk factors.
Factors Affecting Future Operating Results and Financial Condition. The
Company's future operating results and financial condition are dependent upon
the Company's ability to successfully distribute the products that meet dynamic
customer demand. Inherent in this process are a number of factors that the
Company must successfully manage in order to achieve favorable future operating
results and a favorable financial condition. Potential risks and uncertainties
that could affect the Company's future operating results and financial condition
include, without limitation, continued competitive pressures in the marketplace
and the effect of any reaction by the Company to such competitive pressures. See
"Risk Factors - Competition," below. Other factors that could adversely affect
the Company's future operating results and financial condition include pricing
actions by the Company; the Company's ability to supply products in certain
categories; the Company's ability to supply products free of latent defects or
other faults; the Company's ability to successfully purchase its products and
control its expenditures; the ability of the Company to avoid inventory losses,
and the Company's ability to attract, motivate and retain employees.
Industry Trends. The Company believes that the rate of growth in overall
worldwide personal computer unit sales has declined and may remain below prior
years' growth rates for the foreseeable future. This decline in the rate of
growth could decrease the demand for products distributed by the Company, could
further increase the competitive nature of the environment in which the Company
operates, could negatively affect the Company's unit shipments of computer
products and, accordingly, could adversely affect the Company's results of
operations and financial condition.
Rapid Technological Change; Inventory Risk. Due to the highly volatile
nature of the personal computer industry, the Company frequently is required to
distribute new products and product enhancements. The success of new product
introductions is dependent on a number of factors, including market acceptance
of the product, the Company's ability to effectively management of inventory
levels in line with anticipated product demand, the availability of products in
appropriate quantities to meet anticipated demand, and the risk that new
products may have quality or other defects in the early stages of introduction.
Accordingly, the Company cannot determine the ultimate effect that new products
will have on its sales or results of operations.
The Company acquires inventory in advance of product shipments.
Accordingly, because the markets for the Company's products are volatile and
subject to rapid technological and price changes, there is n risk that the
Company will forecast incorrectly and stock excessive or insufficient inventory
of particular products. The Company's business is subject to the risk that the
value of its inventory will be adversely affected by price reductions by
manufacturers or by technological changes affecting the usefulness or
desirability or its product inventory. There can be no assurance that the
Company will be able to manage successfully its existing and future inventories.
In its financial statements, the Company provides reserves against any
inventories of products that have become obsolete or are in excess of
anticipated demand, accrues for any cancellation fees of orders for inventories
that have been cancelled, and accrues for the estimated costs to correct any
product quality problems. Although the Company believes its inventory and
related reserves are adequate, no assurance can be given that the Company will
not incur additional inventory and related charges. Significant declines in
inventory value in excess of established inventory reserves or dramatic changes
in prevailing technology have had, and may again in the future have a material
adverse effect on the Company's business, financial condition and results of
operations.
Substantial Competition. The market that the Company operates in is
highly competitive and is characterized by aggressive pricing practices,
downward pressure on gross margins, frequent introduction of new products, short
product life cycles, continual improvement in product price/performance
characteristics, price sensitivity on the part of consumers, and a large number
of competitors. Competition is based primarily on product availability, price,
credit availability, speed of delivery, and breadth and depth of product lines
and services. The Company's results of operations and
3.
<PAGE> 7
financial condition have been, and in the future may continue to be, adversely
affected by industry-wide pricing pressures and downward pressures on gross
margins. Many of the Company's competitors have greater financial, marketing,
manufacturing, and technological resources, broader product lines and larger
customer bases than those of the Company. There can be no assurance that the
Company will be able to compete successfully in this environment. If the Company
fails to compte effectively, the Company's business, financial condition and
results of operations will be adversely affected.
Low Profit Margins. As a result of price competition, the Company has
low gross profit and operating margins. These low margins magnify the impact on
operating results of variations in net sales and operating costs. The Company's
goal is to partially offset the effects of its low margins by increasing its net
sales, availing itself of large volume purchase discounts, and reducing selling,
general and administrative expenses as a percentage of net sales. No assurance
can be given that the Company will be able to avail itself of large volume
discounts or otherwise increase its margins.
Chinese Recycling Plants; International Business. The Company has
invested in two joint ventures in the Peoples Republic of China and has provided
a significant amount of capital and assets to the joint ventures. The other
parties to the joint ventures are Chinese entities. The Company's operations and
assets in China are subject to numerous and significant political, economic,
legal, and other uncertainties. Changes in policies by the Chinese government
resulting in changes in laws or regulations, restrictions on imports and sources
of supply of tires, currency devaluations, or the expropriation of private
enterprise could materially adversely affect the Company's investments in China.
The United States and China have recently experienced turbulent political
relations that have affected the trading privileges available to U.S.
enterprises. All of these factors, plus the risks ordinarily associated with
foreign operations, have made the Company's investment in China extremely
speculative. In addition to the risks associated with attempting to establish
and operate two plants in China, the Company has also experienced numerous
difficulties in perfecting the technology that will be used to operate the
recycling plants to be operated by the joint ventures. To date, neither of the
plants owned by the two joint ventures has commenced operations and no assurance
can be given that the plants will ever commence operations. If the joint
ventures do not open for operations the Company's entire investment in the two
joint ventures will be lost, which would materially and adversely affect the
Company's earnings and financial condition. No assurance can be given that the
two joint ventures will commence operations in the near future, or at all.
Dependence on Third-Party Suppliers. Although certain components
essential to the Company's business are generally available from multiple
sources, certain products are currently obtained by the Company from single
sources. If the supply of single-source products to the Company were to be
delayed or curtailed, the Company's ability to distribute the product in desired
quantities and in a timely manner could be adversely affected. The Company's
business and financial performance could also be adversely affected, depending
on the time required to obtain sufficient quantities from the original source,
or to identify and obtain sufficient quantities from an alternate source, if
any.
Marketing and Distribution. A number of uncertainties may affect the
marketing and distribution of the Company's products. Currently, the Company's
primary means of distribution is through third-party computer resellers. Such
resellers include value added resellers, system integrator, and dealers. The
Company's business and financial results could be adversely affected if the
financial condition of these resellers weakened or if resellers within consumer
channels were to decide not to continue to distribute the Company's products.
Dependence on Key Personnel. The Company's success depends to a
significant extent upon the continued service of its key marketing, sales, and
executive personnel, and on its ability to continue to attract, retain and
motivate qualified personnel. The competition for such employees is intense, and
the loss of the services of one or more of these key personnel could adversely
affect the Company. There can be no assurance that the Company will not
experience difficulty in attracting, retaining and motivating the personnel
needed to implement the Company's strategic plan. The Company does not maintain
key man life insurance on any of its key executives.
Possible Volatility of Stock Price. The market price of the Company's
Common Stock has been, and may continue to be, highly volatile. Factors such as
new product announcements by the Company or its competitors, quarterly
fluctuations in the operating results of the Company, its competitors and other
technology companies, and general conditions in the computer market may have a
significant impact on the market price of the Common Stock. In
4.
<PAGE> 8
particular, if the Company were to report operating results or product
development progress that did not meet the expectations of research analysts,
the market price of the Common Stock could be materially adversely affected. In
addition, from time to time the stock market has experienced extreme price and
volume fluctuations, which have particularly affected the market prices for many
high technology companies and which have often been unrelated to the operating
performance of specific companies.
Impediments to Changes in Control. Inasmuch as the Company's chairman,
Jack Wen, and members of his family own or control a majority of the Company's
outstanding Common Stock, this may make more difficult or discourage takeovers
of the Company, including those in which holders of the Company's Common Stock
might receive a substantial premium for some or all of their shares, and could
potentially depress the market price of shares of Common Stock. In addition, the
ability of the Board of Directors to issue shares of preferred stock or rights
to purchase preferred stock and to fix the voting, redemption, conversion and
other rights thereof without shareholder approval could also hinder any proposed
tender offer, merger or other attempt to gain control of the Company.
Other Factors. The majority of the Company's sales activities, its
corporate headquarters, and other critical business operations, including
certain major vendors, are located near major seismic faults. The Company's
operating results and financial condition could be materially adversely affected
in the event of a major earthquake.
Production and marketing of products in certain states and countries may
subject the Company to environmental and other regulations which include, in
some instances, the requirement that the Company provide consumers with the
ability to return to the Company product at the end of its useful life, and
leave responsibility for environmentally safe disposal or recycling with the
Company. It is unclear what effect such regulation will have on the Company's
future operating results and financial condition.
USE OF PROCEEDS
The Selling Shareholder will receive all of the net proceeds from the
offering of the Shares hereby. Accordingly, the Company will not receive any
proceeds from the sale of the Shares. However, the Company will receive a total
of $1,143,750 if all of the warrants currently owned by the Selling Shareholder
are exercised. The Company intends to use any cash proceeds that it may receive
from the exercise of such warrants for working capital purposes.
SELLING SHAREHOLDER
The following table sets forth certain information, with respect to the
beneficial ownership of the Common Stock by the Selling Shareholder as of June
1, 1998, as reported to the Company by the Selling Shareholder, the number of
Shares being offered by the Selling Shareholder and the amount and percentage of
the Common Stock to be owned beneficially by the Selling Shareholder following
this offering, assuming all Shares offered hereby are sold.
<TABLE>
<CAPTION>
Shares of Common Stock Shares of Common Stock
Beneficially Owned Number of Beneficially Owned
Prior to the Offering Shares of After the Offering
Name of ------------------------- Common ------------------------
Selling Shareholder Number Percentage(1) Stock Offered Number Percentage(1)
------------------- ------ ------------- ------------- ------ -------------
<S> <C> <C> <C> <C> <C>
Richmark Capital Corporation 325,000 12.27% 325,000 0 0
</TABLE>
- --------------------
(1) Based on the number of shares of Common Stock outstanding on June 19, 1998.
Neither the Selling Shareholder nor any of its affiliates holds, and
during the last two years has held, any position, office or material
relationship with the Company or any affiliate of the Company.
5.
<PAGE> 9
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time to purchasers
directly by the Selling Shareholder. Alternatively, the Selling Shareholder may
from time to time offer the Shares in ordinary brokerage transactions or to or
through broker/dealers who may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholder or the purchasers of the
Shares for whom they may act as agents. The Selling Shareholder and any
broker/dealers that participate in the distribution of the Shares may be deemed
to be "underwriters" within the meaning of the Securities Act and any profit on
the sale of the Shares by them and any discounts, commissions, concessions or
other compensation received by any such broker/dealer may be deemed to be
underwriting discounts and commissions under the Securities Act.
The sale of the Shares by the Selling Shareholder may be effected from
time to time in the over-the-counter market, in the Nasdaq SmallCap Market, in
privately negotiated transactions or otherwise at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices.
All expenses of the registration of the Shares will be paid by the
Company; provided, however, that the Selling Shareholder will pay all discounts
and selling commissions, if any.
From time to time this Prospectus will be supplemented and amended as
required by the Securities Act. During any time when a supplement or amendment
is so required, the Selling Shareholder will be required to cease sales until
the Prospectus has been supplemented or amended. There can be no assurance that
the Selling Shareholder will sell any or all of the Shares offered hereby.
LEGAL MATTERS
The validity of the Shares being offered hereby will be passed upon for
the Company by the Law Offices of Gary L. Blum, Los Angeles, California. Such
counsel owns 1,700 shares of Common Stock.
EXPERTS
The consolidated financial statements of PCC Group, Inc. included in PCC
Group, Inc.'s Annual Report (Form 10-K) for the year ended September 30, 1997,
have been audited by BDO Seidman, LLP, independent certified public accountants,
as set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements have been incorporated herein
by reference in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
6.
<PAGE> 10
================================================================================
No dealer, salesman or other person has been authorized to give any information
or to make any representations, other than those contained in this Prospectus,
in connection with the offer made by this Prospectus, and, if given or made,
such information or representations must not be relied upon as having been
authorized by the Company. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create an implication that there
has been no change in the affairs of the Company since the date hereof. This
Prospectus does not constitute an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not authorized to do so or to
anyone to whom it is unlawful to make such offer or solicitation in such
jurisdiction.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information.........................................................1
Incorporation of Certain Documents by Reference...............................1
The Company...................................................................2
The Exclusive Financial Advisor/Investment Banker Agreement...................2
Risk Factors..................................................................3
Use of Proceeds...............................................................5
Selling Shareholder...........................................................5
Plan of Distribution..........................................................6
Legal Matters.................................................................6
Experts.......................................................................6
</TABLE>
325,000 Shares
PCC GROUP, INC.
Common Stock
($0.01 par value)
------------
PROSPECTUS
------------
__________, 1998
================================================================================
7.
<PAGE> 11
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF REGISTRATION AND DISTRIBUTION.
The following table sets forth the estimated expenses of the Registrant
in connection with the offering described in this Registration Statement.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee... $ 380.75
Nasdaq listing fees...................................
Accountants' fees and expenses........................ 2,000.00
Legal fees and expenses............................... $5,000.00
Miscellaneous......................................... 2,000.00
Total........................................... $9,380.75
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Restated Articles of Incorporation, as amended
("Articles"), provide that, pursuant to the California Corporations Code, the
liability of the directors of the Registrant for monetary damages shall be
eliminated to the fullest extent permissible under California law. This is
intended to eliminate the personal liability of a director for monetary damages
in an action brought by, or in the right of, the Registrant for breach of a
director's duties to the Registrant or its shareholders. This provision in the
Articles does not eliminate the directors' fiduciary duty and does not apply for
certain liabilities: (i) for acts or omissions that involve intentional
misconduct or a knowing and culpable violation of law; (ii) for acts or
omissions that a director believes to be contrary to the best interest of the
Registrant or its shareholders or that involve the absence of good faith on the
part of the director; (iii) for any transaction from which a director derived an
improper personal benefit; (iv) for acts or omissions that show a reckless
disregard for the director's duty to the Registrant or its shareholders in
circumstances in which the director was aware, or should have been aware, in the
ordinary course of performing a director's duties, of a risk of serious injury
to the Registrant or its shareholders; (v) for acts or omissions that constitute
an unexcused pattern of inattention that amounts to an abdication of the
director's duty to the Registrant or its shareholders; (vi) with respect to
certain transactions or the approval of transactions in which a director has a
material financial interest; and (vii) expressly imposed by statute for approval
of certain improper distributions to shareholders or certain loans or
guarantees. This provision also does not limit or eliminate the rights of the
Registrant or any shareholder to seek non-monetary relief such as an injunction
or rescission in the event of a breach of a director's duty of care. The
Registrant's Bylaws require the Registrant to indemnify its officers and
directors under certain circumstances. Among other things, the Bylaws require
the Registrant to indemnify directors and officers against certain liabilities
that may arise by reason of their status or service as directors and officers
and allows the Registrant to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified.
Section 317 of the California Corporations Code ("Section 317") provides
that a California corporation may 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 proceeding, whether civil, criminal, administrative or investigative (other
than action by or in the right of the corporation) by reason of the fact that he
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 or enterprise, against expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with such action or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interest of
the corporation, and, with respect to any criminal action or proceeding, had no
cause to believe his conduct was unlawful.
8.
<PAGE> 12
Section 317 also provides that a California corporation may 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 such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted under similar standards, except that no
indemnification may be made in respect to any claim, issue or matter as to which
such persons shall have been adjudged to be liable to the corporation unless and
only to the extent that the court in which such action or suit was brought shall
determine that despite the adjudication of liability, such person is fairly and
reasonably entitled to be indemnified for such expenses which the court shall
deem proper.
Section 317 provides further that to the extent a director or officer of
a California corporation has been successful in the defense of any action, suit
or proceeding referred to in the previous paragraphs or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith; that
indemnification authorized by Section 317 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of a director or
officer of the corporation against any liability asserted against him or
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 liabilities under Section 317.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4.1 Exclusive Financial Advisor/Investment Banker Agreement, between PCC
Group, Inc. and Richmark Capital Corporation, dated as of March 10, 1998
4.2 Form of Common Stock Purchase Warrant issued to the Selling Shareholder
5.1 Opinion of Law Offices Of Gary L. Blum
23.1 Consent of BDO Seidman, LLP
23.2 Consent of Counsel (contained in Exhibit 5.1 hereto).
24.1 Power of Attorney (contained on Page II-5).
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in
9.
<PAGE> 13
volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement.
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference into the registration
statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that such a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in Act and will be
governed by the final adjudication of such issue.
10.
<PAGE> 14
SIGNATURES
Pursuant to 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 S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Pomona, State of California, on the 18th day of June
1998.
PCC GROUP, INC.
BY /s/ JACK WEN
-------------------------------------
Jack Wen, Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Jack Wen and Gary L. Blum, his or her
true and lawful attorney-in-fact and agent, with full power of each to act
alone, with full powers of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, with full power of each to act alone,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully for all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ JACK WEN Chairman of the Board and Chief June 18, 1998
- -------------------------------- Executive Officer (Principal
Jack Wen Executive Officer)
/s/ JACK WEN Acting Chief Financial Officer June 18, 1998
- -------------------------------- (Principal Accounting and
Jack Wen Financial Officer)
/s/ GARY L. BLUM Director June 19, 1998
- --------------------------------
Gary L. Blum
/s/ GEORGE RODDA, JR. Director June 19, 1998
- --------------------------------
George Rodda, Jr.
</TABLE>
11.
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
------ ----------- ----
<S> <C> <C>
4.1 Exclusive Financial Advisor/Investment Banker
Agreement, between PCC Group, Inc. and Richmark
Capital Corporation, dated as of March 10, 1998
4.2 Form of Common Stock Purchase Warrant issued to the
Selling Shareholder
5.1 Opinion of Law Offices Of Gary L. Blum
23.1 Consent of BDO Seidman, LLP
23.2 Consent of Counsel (contained in Exhibit 5.1 hereto).
24.1 Power of Attorney (contained on Page II-5).
</TABLE>
<PAGE> 1
Exhibit 4.1
EXCLUSIVE FINANCIAL ADVISOR/INVESTMENT BANKER AGREEMENT
This Exclusive Financial Advisor/Investment Banker Agreement
("Agreement") confirms the understanding between PCC Group, Inc. (which together
with its subsidiaries and affiliates is referred to herein as the "Company") and
RichMark Capital Corporation ("RMC"), pursuant to which the Company has retained
RMC, on terms and subject to the conditions set forth herein, to act as its
exclusive financial advisor and investment banker.
1. RETAINER. The Company hereby retains RMC, and RMC agrees to act, as the
Company's exclusive financial advisor and investment banker during the Term (as
defined below). RMC agrees to advise and assist the Company with (i) general
strategic planning and corporate finance matters, (ii) assist in obtaining a
$15,000,000.00 secured line of credit or other financing facility, (iii)
effecting acquisition transactions, which may include identifying and evaluating
acquisition opportunities and participating in the negotiations with potential
candidates ("Acquisition Candidates") on behalf of the Company, (iv) issuing or
selling of debt and/or equity securities of the Company (collectively, the
"Securities") through a private placement (the "Private Placement"), (v)
introduce the Company to an Investor Relations Company which will assist in
developing a marketing plan, a broker lead generation program, issue press
releases, handle investor inquiries, sponsor broker teleconferences, and road
shows, (vi) advise the Company regarding positioning itself within the financial
community, (vii) introduce and foster relations with Broker-Dealers within our
network who will provide additional financial and market support, (viii)
providing an analyst to write a research report which will generate additional
interest in the brokerage community.
As used in this letter the term "acquisition transactions" means (a) any merger,
consolidation, reorganization or other business combination pursuant to which
the business of any acquisition candidate is combined with that of the Company
or a subsidiary of the Company; or, (b) the acquisition, directly or indirectly,
by the Company of all or part of the capital stock, or all or part of the
assets, of the acquisition candidate by way of tender or exchange offer,
negotiated purchase or otherwise but excludes an approximately $300,000,000
annual computer sales acquisition candidate with which Company has been
negotiating as delineated on Exhibit "A".
2. COMPENSATION. In payment for services to be rendered hereunder by RMC,
the Company to pay RMC as follows:
A. The Company shall pay to RMC a monthly retainer of $5,000, commencing
upon the date of execution of this Agreement and on the same date of each month
thereafter (the "Monthly Retainer"). In addition, upon execution of this
Agreement, the Company agrees to issue RMC or its designees shares or options to
purchase shares of the Company's common stock as delineated on Exhibit "A".
1
<PAGE> 2
B. If during the Term or within one year thereafter, (a) any acquisition
transaction is consummated with an Acquisition Candidate (excepting COMTRADE,
that one candidate identified on Exhibit A), (i) which RMC identified, (ii) as
to which RMC advised the Company or (iii) with which the Company or RMC has
discussions regarding an Acquisition transaction during the Term hereunder or
(b) the Company enters into a definitive agreement with any such Acquisition
Candidate which subsequently results in an acquisition transaction, the Company
agrees to pay RMC a transaction fee based on the Lehman Formula (i.e. 5% of the
first $1 million; 4% of the second million; 3% of the next $1 million; 2% of the
next $1 million; and 1% of the remainder) as applied to the aggregate purchase
price of such acquisition transaction, payable in cash or in kind upon the
closing of such acquisition transaction. In the event that payment of part of
the net purchase price is deferred, the Company will pay RMC the fee allocable
to the deferred portion when such payment is made in cash or stock.
For purpose of this letter, the term "net purchase price" means an amount equal
to any consideration paid less the sum of any debt assumed the aggregate fair
market value at the time of closing of any securities issued, and any cash
consideration paid in connection with an acquisition transaction.
C. If during the Term or within one year thereafter, (a) the Company is
involved with any merger, consolidation, reorganization or other business
combination pursuant to which the Company is combined with that of another
business (the "Purchaser"), (b) more than 50% of the capital stock, or all or a
substantial portion of the assets of the Company are acquired, directly or
indirectly, by a Purchaser by way of tender or exchange offers, negotiated
purchase or otherwise or (c) the Company entered into a definitive agreement
that subsequently results in an acquisition transaction with a Purchaser (i)
which RMC identified, (ii) as to which RMC advised the Company or (iii) with
which the Company or RMC had discussions regarding a transaction during the Term
hereunder, the Company agrees to pay RMC a transaction fee based on the Lehman
Formula as applied to the net purchase price of such Acquisition transaction,
payable in cash or stock upon the closing of such transaction.
D. Upon the funding of a secured line of credit or other financing
facility, the Company agrees to pay a fee equal to Two Percent (2%) of the
initial $ 5 million and; 1% of the remainder that may be borrowed under any line
of credit facility obtained by RichMark for the maximum amount of the
transaction.
E. Upon completion of any Private Placement, the Company agrees to (a)
pay RMC a fee based on the formula as follows:
(a) 3% non-accountable expense allowance (with expenses enumerated).
(b) 2% dealer reallowance (to be shared with other members of the "Selling
Group").
(c) 10% sales concession or commission (to be paid as brokers' gross
commission).
(d) Other fees and terms will be negotiated according to a written "term
sheet".
2
<PAGE> 3
3. OTHER AGREEMENTS.
A. TERM. The term of this Agreement will run until the first anniversary
of the date of this Agreement (the "Term"); provided that RMC or the Company may
terminate this Agreement at any time upon 30 days' written notice.
Notwithstanding the expiration or termination of this letter agreement, the
provisions of this Section 3 and certain provisions of Section 2 hereof shall
survive the termination of such engagement.
B. FEES AND EXPENSES. The Company shall reimburse RMC upon demand and
pre-approval by Company and delivery of appropriate auditable documentation for
all such reasonable fees and other reasonable out-of-pocket expenses incurred by
it or any of its respective affiliates in connection with, or arising out of,
its services to be rendered hereunder.
C. AFFILIATE SERVICES. In connection with the services to be provided
hereunder, RMC may employ the services of its affiliates. RMC may share with any
of its affiliates and such affiliates may share with RMC any non-public
information related to the Company or any matters contemplated hereby. The term
"affiliate" as used herein shall have the meaning ascribed to such term in the
rules and regulations promulgated under the Securities Exchange Act of 1934, as
amended.
D. USE OF NAME. The Company agrees that any references to RMC or its
affiliates made in connection with services provided or to be provided under
this Agreement are subject to RMC's prior approval.
E. NO RIGHTS IN SHAREHOLDERS, ETC. The Company recognizes, acknowledges
and agrees that RMC has been retained only by the Company, and that the
Company's engagement of RMC is not deemed to be on behalf of and is not intended
to confer rights upon any shareholder, owner or partner of the Company or any
other person not a party hereto as against RMC or its affiliates or their
respective directors, Officers, agents, employees or representatives. Unless
otherwise expressly agreed, no one other than the Company is authorized to rely
upon the Company's engagement of RMC or any statements, advice, opinions or
conducted by RMC.
F. INFORMATION. The Company agrees to furnish RMC with such information
as RMC reasonably requests in connection with its engagement hereunder. The
Company represents and warrants that any such information provided by the
Company, including, without limitation, any information included in any
information or disclosure memorandum or similar document, will not contain any
untrue statement of a material fact or fail to state a material fact necessary
in order to make the statements herein not misleading in light of the
circumstances under which such statements are made. The Company agrees to advise
RMC during the term of this Agreement of all developments materially affecting
the Company or any of the information provided by the Company pursuant to this
paragraph to any prospective purchaser of Securities in connection with the
services to be provided by RMC hereunder. In addition, any representations and
3
<PAGE> 4
warranties made by the Company or any other party in connection with the
issuance of any Securities shall expressly provide that RMC may rely upon such
opinions.
The Company will make available to RMC certain information, which is
either non-public, confidential or proprietary in nature concerning the Company.
RMC agrees to keep all such information confidential and not disclose such
information to any third party (other than its directors, officers, agents and
employees) or use it in any way that is detrimental to the Company. RMC shall
have no such due, however, with respect to information which (a) is or becomes
generally available to the public, or, (b) was available to RMC on a
non-confidential basis prior to disclosure by the Company. RMC will inform its
directors, officers, agents and employees of the confidential nature of the
information.
G. INDEMNIFICATION. The Company agrees to indemnify RMC and its
affiliates and their respective directors, officers, agents, employees, and
controlling persons (each such person being an "Indemnified Party") from and
against any and all losses, claims, damages and liabilities to which such
Indemnified Party may become subject under any applicable federal or state law,
or otherwise, related to or arising out of any action contemplated by the
engagement of RMC pursuant to, or the performance by RMC of services under, this
letter and it will reimburse any Indemnified Party for all expenses (including
counsel fees and expenses) as they are incurred in connection with the
investigation of, preparation for or defense of any pending or threatened claim
or any action or proceeding arising therefore, whether or not such Indemnified
Party is a party. The Company will not be liable under the foregoing if
indemnification provision to the extent that any loss, claim, damage, liability
or expense is found in a final judgement by a court to have resulted primarily
from RMC's bad faith, gross negligence or active malfeasance or from the general
rise and fall of the stock market involving Company's shares.
H. MISCELLANEOUS. This Agreement may be executed in two more
counterparts, all of which together shall be considered a single instrument. The
Company confirms that it will rely on its own counsel, accountants and other
similar expert advisors for legal accounting, tax and other similar expert
advice. This Agreement constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes all other prior agreements
and understandings, both understandings, both written and oral, between the
parties hereto with respect to the subject matter hereof and cannot be amended
or otherwise modified except in writing executed by the parties hereto. The
provisions hereof shall inure to the benefit of and be binding upon the
successors and assignees of the Company and RMC. RMC may transfer or assign, in
whole or from time to time in part, to one or more of its affiliates, its rights
and obligations hereunder, but no such transfer or assignment will relieve RMC
of its obligations hereunder without the Company's prior written consent. This
letter is not intended to be and should not be construed as a written consent.
This letter is not intended to be and should not be construed as a commitment
with respect to the underwriting or private placement of any
4
<PAGE> 5
securities by RMC, and shall give rise to no obligation or liability on RMC's
part in connection therewith.
I. NOTICES. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and shall be mailed or delivered or faxed (a) if
to the Company, to PCC Group, Inc. at 163 University Parkway, Pomona, CA 91768,
Attention: President Jack Wen; and, (b) if to RMC, at the offices of RichMark
Capital Corporation, 2133 Stone Moss Lane, Grapevine, TX 76051, Attention: D.
Mark White.
J. DISCLOSURE. By the Company's acceptance and receipt of a counterpart
of this letter executed on behalf of RMC, the Company agrees that, this letter
and its contents shall be treated by the Company as confidential and (except as
required by law), this letter shall not be disclosed by the Company except in
furtherance of, and to other proposed participants in, the transactions
contemplated by this letter and, in any event, neither this letter nor the
engagement of RMC by the Company shall be disclosed publicly (unless required by
law) without the prior written consent of RMC except following such approval.
K. CONSTRUCTION. This Agreement shall be governed by and construed in
accordance with the laws of the state of California, without regard to the
conflicts of law provisions thereof. The Company hereby submits to the
non-exclusive jurisdiction of the federal and California courts in connection
with any dispute related to this agreement or any of the matters contemplated
hereby.
L. HEADINGS. The section headings in this Agreement have been inserted
as a matter of convenience of reference and are not part of this Agreement.
IN WITNESS WHEREOF, Company and RMC have set their hand the date below
written.
DATED: March 6, 1998
PCC GROUP, INC.
By _____________________________
JACK WEN, PRESIDENT
By: ____________________________
GARY BLUM, SECRETARY
5
<PAGE> 6
RICHMARK CAPITAL CORPORATION
By: ____________________________
RICHARD J. MONELLO, PRESIDENT
By: ____________________________
David F. Firestone, Managing Director of Investment Banking
6
<PAGE> 7
Exhibit "A" to Agreement
1. RMC shall be granted 25,000 shares upon execution with an option to
purchase Company's unrestricted common stock as follows:
a. 100,000 shares, 25,000 shares at $2.50 and 75,000 shares at
$2.75 upon execution of this agreement.
b. 50,000 shares at $3.50 upon funding of a secured line of
credit or other financing facility.
c. 100,000 shares at $4.50 when Company is listed on the
Philadelphia or other exchange.
d. 50,000 shares at $5.00 when Company's common stock trades at
$5.50 per share for 10 consecutive days in which it trades more than 7,000
shares daily.
2. Lockup and Restricted Shares. Company's Officers', Insiders',
Affiliates' and Directors' shall be locked up and restricted in terms of
quantity sold and Company shall have each individual sign a "Lockup Agreement".
Only in the event of a personal or medical emergency shall these shares be sold.
Notwithstanding anything herein to the contrary, this lockup agreement shall
expire when Company's common shares trade at $10.00 for 10 consecutive trading
days; or, if that does not occur, 25% of the shares initially subject to the
lockup agreement, shall be released from the lockup agreement every 6 months,
beginning 6 months after the execution of this Agreement. Nothing herein shall
obviate the need for shareholders to comply with Rule 144 or any other
applicable state or federal regulations.
3. Company shall provide weekly DTC reports to RMC.
4. Upon execution of this Agreement, Company will provide RMC its
shareholder's list and quarterly changes thereafter.
5. As set forth in paragraph 1, merger negotiations with COMTRADE, a
privately held Computer company with approximately $300,000,000 in current sales
are excluded from this Agreement, with the exception of any increased Credit
line required for the transaction to be compensated as set forth in paragraph 2.
D of this Agreement.
PCC GROUP, INC.
7
<PAGE> 8
By __________________________________
JACK WEN, PRESIDENT
By: _________________________________
GARY BLUM, SECRETARY
RICHMARK CAPITAL CORPORATION
By: _________________________________
RICHARD J. MONELLO, PRESIDENT
8
<PAGE> 1
Exhibit 4.2
THESE SECURITIES AND THE SECURITIES ISSUABLE UPON THEIR EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED UNLESS
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER IS
EXEMPT FROM SUCH REGISTRATION.
PCC GROUP, INC.
COMMON STOCK PURCHASE WARRANT
1. Issuance. For value received, the receipt of which is hereby
acknowledged by PCC Group, Inc., a California corporation (the "Company"),
RichMark Capital Corporation, or registered assigns (the "Holder"), is hereby
granted the right to purchase, at any time during the Exercisability Period (as
defined below), _________________ fully paid and nonassessable shares of the
Company's Common Stock, $0.01 par value (the "Common Stock") at the exercise
price of $____ per share (the "Exercise Price"), subject to further adjustments
as set forth in Section 6 hereof.
2. Exercise of Warrants. This Warrant is exercisable in whole or in
part at the Exercise Price per share of Common Stock payable hereunder, payable
in cash or by certified or official bank check. Upon surrender of this Warrant
with the annexed Notice of Exercise Form duly executed, together with payment of
the Exercise Price for the shares of Common Stock purchased, the Holder shall be
entitled to receive a certificate or certificates for the shares of Common Stock
so purchased.
3. Reservation of Shares. The Company hereby agrees that at all
times during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant such number of shares of its Common Stock as shall be
required for issuance upon exercise of this Warrant (the "Warrant Shares").
4. Mutilation or Loss of Warrant. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder of the Company, either at law or in
equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.
6. Protection Against Dilution.
6.1 Adjustments for Stock Splits, Stock Dividends Etc. If the
number of outstanding shares of Common Stock of the Company are increased or
decreased by a stock split, reverse stock split, stock dividend, stock
combination, recapitalization or the like, the Exercise Price and the number of
shares purchasable pursuant to this Warrant shall be adjusted proportionately so
that the ratio of (i) the aggregate number of shares purchasable by exercise of
this Warrant to (ii) the total number of shares outstanding immediately
following such stock split, reverse stock split, stock dividend, stock
combination, recapitalization or the like shall remain unchanged, and the
aggregate purchase price of shares issuable pursuant to this Warrant shall
remain unchanged.
1.
<PAGE> 2
6.2 Adjustments for Reorganization, Mergers, Consolidations or
Sales of Assets. If at any time there is a capital reorganization of the Common
Stock (other than a recapitalization, combination, or the like provided for
elsewhere in this Section 6) or merger or consolidation of the Company with or
into another corporation, or the sale of all or substantially all of the
Company's properties and assets to any other person, then, as a part of such
reorganization, merger, consolidation or sale, provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this Warrant
(and only to the extent this Warrant is exercised), the number of shares of
stock or other securities or property of the Company, or of the successor
corporation resulting from such merger or consolidation or sale, to which a
holder of Common Stock, or other securities, deliverable upon the exercise of
this Warrant would otherwise have been entitled on such capital reorganization,
merger, consolidation or sale. In any such case, appropriate adjustments shall
be made in the application of the provisions of this Section 6 (including
adjustment of the Exercise Price then in effect and number of Warrant Shares
purchasable upon exercise of this Warrant) which shall be applicable after such
events.
7. Transfer to Comply with the Securities Act. This Warrant has not
been registered under the Securities Act of 1933, as amended, (the "Act") and
has been issued to the Holder for investment and not with a view to the
distribution of either the Warrant or the Warrant Shares. Neither this Warrant
nor any of the Warrant Shares or any other security issued or upon exercise of
this Warrant may be sold, transferred, pledged or hypothecated in the absence of
an effective registration statement under the Act relating to such security or
an opinion of counsel satisfactory to the Company that registration is not
required under the Act. Each certificate for the Warrant, the Warrant Shares and
any other security issued or issuable upon exercise of this Warrant shall
contain a legend in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
8. Registration. The Company hereby agrees to prepare and file on or
before June 30, 1998, a Registration Statement (on Form S-3 or such other form
as the Company shall determine) with the Securities and Exchange Commission
("SEC") to register, under Act, the resale of the Warrant Shares, and the
Company shall use its best efforts to cause such Registration Statement to
become effective. The Company shall maintain the effectiveness thereof until all
shares registered thereunder have been disposed of or are freely tradeable under
Rule 144(k) under the Act.
9. Exercisability Period. The term "Exercisability Period" shall
refer to the period commencing on __________________________(the "Commencement
Date") and continuing until 30 calendar days after the later of (i) the date
that the Registration Statement referred to in Section 8 above is declared
effective by the SEC or (ii) Commencement Date.
10. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage pre-paid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission,
or, if mailed, two days after the date of deposit in the United States mails, as
follows:
(i) if to the Company, to:
PCC Group, Inc.
163 University Parkway,
Pomona, CA 91768
Attention: President Jack Wen
2.
<PAGE> 3
(ii) if to the Holder, to:
RichMark Capital Corporation
2133 Stone Moss Lane,
Grapevine, TX 76051
Attention: D. Mark White
Any party may designate another address or person for receipt of notices
hereunder by notice given to the other parties in accordance with this Section.
11. Supplements and Amendments; Whole Agreement. This Warrant may be
amended or supplemented only by an instrument in writing signed by the parties
hereto. This Warrant contains the full understanding of the parties hereto with
respect to the subject matter hereof, and there are no representations,
warranties, agreements or understandings other than expressly contained herein.
12. Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of California and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.
13. Counterparts. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
12. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
March 6, 1998.
PCC Group, Inc.
By:____________________________________
____________________________________
Its____________________________________
Attest:
____________________________________
3.
<PAGE> 4
NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant dated as of _______________________________ to
purchase _____________ shares of the Common Stock, $0.01 par value, of PCC
Group, Inc., and tenders herewith payment in accordance with Section 2 of said
Common Stock Purchase Warrant.
Please deliver the stock certificate to:
____________________________________
____________________________________
____________________________________
Dated:_______________________________
By:__________________________________
[ ] CASH: $___________
4.
<PAGE> 1
Exhibit 5.1
[Law Offices of Gary L. Blum Letterhead]
June 23, 1998
PCC Group, Inc.
1633 University Avenue
Pomona, California 91768
Registration Statement on Form S-3
----------------------------------
Dear Sirs:
As counsel for PCC Group, Inc., a California corporation (the
"Company"), we are rendering this opinion in connection with the registration by
the Company the above-referenced Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933, as amended, of up to
325,000 shares of the Company's Common Stock, $0.01 par value per share (the
"Shares"), to be offered for resale for the account of a selling stockholder of
the Company.
In acting as such counsel, we have examined and relied upon the
Registration Statement and the originals, or copies certified or otherwise
identified to our satisfaction, of such corporate records of the Company and
other documents and certificates of fact as we have deemed necessary or
advisable as a basis for the opinions hereinafter expressed. In our examination,
we have assumed the authenticity of all documents submitted to us as originals,
the genuineness of all signatures thereon, the legal capacity of natural persons
executing such documents and the conformity to original documents of all
documents submitted to us as copies. We express no opinion with respect to any
matters which may be, or purport to be, governed by the laws of any state or
other jurisdiction or country other than the State of California and any federal
law of the United States of America.
Based upon the foregoing, and subject to the assumptions and limitations
set forth herein, we are of the opinion that the Shares have been duly
authorized and are, or when issued will be, validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the prospectuses forming a part of the Registration Statement.
Very truly yours,
/s/ Law Offices of Gary L. Blum
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
PCC Group, Inc.
Pomona, California
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement on Form S-3 of our report
dated December 5, 1997, relating to the audit of the consolidated financial
statements of PCC Group, Inc., appearing in the Company's Annual Report on Form
10-K for the year ended September 30, 1997.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO SEIDMAN, LLP
Los Angeles, California
June 22, 1998
