AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON APRIL 24, 1997.
REGISTRATION NO. 333-23077
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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UNITREND, INC.
(Exact name of registrant as specified in its charter)
OHIO 8731-0203 34-1829299
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification
incorporation or Classification Code Number)
organization) Number)
4730 W. BANCROFT ROAD, STE. 15
TOLEDO, OHIO 43615
(419) 536-2090
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
CONRAD A. H. JELINGER
4730 W. BANCROFT ROAD, STE. 15
TOLEDO, OHIO 43615
(419) 536-2090
(Name, address, including zip code, and telephone number,
including area code,
of agent for service)
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COPIES TO:
Douglas E. Stallings, Esq. Carlos M. Herrera, Esq.
Unitrend, Inc., General Counsel Brinks, Hofer, Gilson & Lione
4730 W. Bancroft Road, Ste. 15 1130 Edison Plaza
Toledo, OH 43615 Toledo, OH 43604
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS PROMPTLY AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT
BECOMES EFFECTIVE.
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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, as amended, check the
following box. / /
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, 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. / /
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CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE AGGREGATE OFFERING REGISTRATION FEE
REGISTERED PRICE (1)
Common Stock, no
par value per share $3,000,000.00 $909.09
(1) Estimated solely for the purpose of calculating the
registration fee in accordance with Rule 457(o) under the
Securities Act of 1933.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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UNITREND, INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
FORM S-1 ITEM NUMBER AND CAPTION IN PROSPECTUS
- -----------------------------------------------------------------
1. Forepart of the Forepart of the Registration
Registration Statement and Statement and Outside Front
Outside Front Cover Page Cover Page of Prospectus
of Prospectus
2. Inside Front and Inside Front and Outside
Outside Back Cover Pages Back Cover Pages of Prospectus
of Prospectus
3. Summary Information, Prspectus Summary; Risk Factors;
Risk Factors; Ratio of Not Applicable
Earnings to Fixed Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Outside Front Cover Page of
Offering Price Prospectus
6. Dilution Dilution
7. Plan of Distribution Outside Front Cover Page of
Prospectus
8. Description of Description of Captial Stock;
Securities to be Shares Eligible for Future
Registered Sale; Dilution; Dividend Policy
9. Interest of Named Experts; Legal Matters
Experts and Counsel
10. Information with
Respect to the Registrant
(1) Description of Prospectus Summary; Management's
Business Discussion and Analysis of
Financial Condition and Results
of Operations; Business; Certain
Transactions; Financial Statements
(2) Description of Business - Facilities
Property
(3) Legal Proceedings Business - Legal Proceedings
(4) Common Stock Price Risk Factors; Dividend Policy
Range and Dividends
(5) Financial Statements Financial Statements
(6) Selected Financial Prospectus Summary -- Summary
Data Financial Data; Selected
Financial Data
(7) Supplementary Not Applicable
Financial Information
(8) Management's Management's Discussion and
Discussion and Analysis of Financial Condition
Analysis of Financial and Results of Operations
Condition and Results
of Operations
(9) Changes in and Not Applicable
Disagreements with
Accountants on
Accounting and
Financial Disclosure
(10) Directors and Management - Executive Officers
Executive Officers and Directors
(11) Executive Management - Executive Compensation
Compensation
(12) Security Not Applicable
Ownership of Certain
Beneficial Owners and
Management
(13) Certain Management; Certain Transactions
Relationships and
Transactions
12. Disclosure of Not Applicable
Commission Position on
Indemnification for
Securities Act Liabilities
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 APRIL 24, 1997
300,000 Shares
[LOGO]
Common Stock
(NO PAR VALUE)
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OF THE SHARES OF COMMON STOCK ("COMMON STOCK")
OFFERED HEREBY (THE OFFERING"), 300,000 SHARES ARE
BEING SOLD BY UNITREND, INC. ("UNITREND" OR THE
"COMPANY"). PRIOR TO THIS OFFERING, THERE HAS BEEN
NO PUBLIC MARKET FOR THE COMMON STOCK. THAT THE
INITIAL PUBLIC OFFERING PRICE WILL BE $10.00 PER
SHARE, WHICH HAS BEEN ARBITRARILY ESTABLISHED AND HAS
NO DIRECT RELATIONSHIP TO SUBJECTIVE STANDARDS OF
WORTH. APPLICATION HAS BEEN UNDERTAKEN TO LIST THE
COMMON STOCK ON THE NASDAQ NATIONAL MARKET, UNDER THE
SYMBOL "UTRN."
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FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN
INVESTMENT IN THE COMMON STOCK, SEE "RISK
FACTORS" FOUND HEREIN.
- -------------
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 APRIL 24, 1997
[GRAPHIC]
VersaCase TM is a trademark of the Company for which
registration has been applied. All other trademarks or trade
names referred to in this Prospectus are the property of their
respective owners.
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DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH
PERSONS PARTICIPATING IN THE DISTRIBUTION MAY ENGAGE IN
TRANSACTIONS FOR THEIR OWN ACCOUNT OR FOR THE ACCOUNTS OF
OTHERS IN THE COMMON STOCK OF THE COMPANY PURSUANT TO
EXEMPTIONS FROM RULES 10B-6, 10B-7, AND 10B-8 UNDER THE
SECURITIES EXCHANGE ACT OF 1934.
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND
SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED
INFORMATION, INCLUDING "RISK FACTORS" AND THE FINANCIAL
STATEMENTS AND THE NOTES THERETO, APPEARING ELSEWHERE IN THIS
PROSPECTUS. THIS PROSPECTUS CONTAINS CERTAIN STATEMENTS OF A
FORWARD-LOOKING NATURE RELATING TO FUTURE EVENTS OR THE FUTURE
FINANCIAL PERFORMANCE OF THE COMPANY. PROSPECTIVE INVESTORS ARE
CAUTIONED THAT SUCH STATEMENTS ARE ONLY PREDICTIONS AND THAT
ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY. PROSPECTIVE
INVESTORS SHOULD SPECIFICALLY CONSIDER THE VARIOUS FACTORS
IDENTIFIED IN THIS PROSPECTUS, INCLUDING THE MATTERS SET FORTH
UNDER THE CAPTION "RISK FACTORS," WHICH COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH
FORWARD-LOOKING STATEMENTS.
THE COMPANY
Unitrend is a developing corporation which will utilize
technology invented by Mr. Conrad A. H. Jelinger of Toledo,
Ohio. The Company has access and control of the technology
through an exclusive license from a corporation known as Server
Systems Technology, Inc. (hereinafter "SSTI"). SSTI holds the
technology and patent application(s) via an assignment from Mr.
Jelinger.
Mr. Jelinger has designed a computer case which allows a
computer user or technician simple access to the internal
components of a centralized processing unit. The product,
known as VersaCase TM, incorporates a drawer design into a
computer case, thereby providing easy access to the internals
of a computer. VersaCase TM allows computer hardware to be
installed, replaced or removed in a drawer-like system thereby
making access to a computer's internal hardware as easy and
versatile as pulling the VersaCase TM front panel out like a
drawer. VersaCase TM is an open platform, open architecture
computer chassis designed with bayonet sliders. With VersaCase
TM all the hardware of a computer become modular. As a
consequence, all major components of a currently designed
desktop computer become easily accessible, removable,
upgradable and/or repairable.
Unitrend, Inc., was founded for the purpose of designing,
developing, manufacturing and selling the VersaCase TM and
related components. Mr. Jelinger is the principal shareholder
of the Company and is the founding shareholder of SSTI. Mr.
Jelinger controls the Company, and has concentrated virtually
all of its resources on designing and developing VersaCase TM.
Several prototype design of the VersaCase TM have been
completed; however, no sales have yet resulted from the
development of the product.
The intent of the Company is to sell VersaCase TM to
Original Equipment Manufactures (OEM) as well as to Value Added
Re-sellers (VAR) and end users.
It is anticipated by the Company that the proprietary
technology used in the design and manufacturing of VersaCase TM
may also be licensed to other manufacturers. Although patents
applications have been filed, there is no assurance that the
designs or technology, used in VersaCase TM will be so unique
as to warrant patent protection by the U. S. Patent and
Trademark Office. Should the design and technology of VersaCase
TM not be patented, and should VersaCase TM become commercially
successful, there is little or no protection for the Company
from others who wish to "copy cat" the design and technology.
The Company was incorporated in Ohio on April 11, 1996,
under the name VersaCase , Inc., and changed its name to
Unitrend, Inc. on May 15, 1996. Unless the context otherwise
requires, as used in this Prospectus the words "Company" and
"Unitrend" refer to the Company under its present and former
names. The Company's principal executive offices are located at
4730 W. Bancroft Rd., Suites 14 and 15, Toledo, Ohio 43615; its
telephone and facsimile numbers are 419 536-2090 and 419 536-
0087, respectively; its e-mail address is
administrator@unitrend.net, and its web site address is
http://www.unitrend.net.
INDUSTRY OVERVIEW
Three major trends are creating an increasing demand for
technology such as VersaCase TM.
Open Architecture
Two recent occurrences have significantly affected the
direction of the computer enclosure industry. In December 1995,
Intel, the world's largest manufacturer of microprocessors
announced it would introduce, in early 1996, the new ATX logic
board platform. A smaller, more efficient system board for the
PC industry, ATX has huge implication on hardware design teams.
At about the same time, Apple Computers announced that it
would, for the first time in its history, allow outside
licensing of its operating system. Clone manufacturers of Apple
have since announced they will build this new class of
computers to meet the Intel ATX design parameters. We believe
this will mean approximately 90% of all desktop computers
produced will be capable of using VersaCase TM technology.
Explosive Growth
Both the United States and worldwide desktop markets grew
by more than 20% in 1995. It has been estimated that worldwide
growth has been in excess of 15% in 1996. It has also been
estimated that desktop sales will continue to grow in excess of
10% per year through the year 2000. This type of growth would
result in more than 60 millions units being sold worldwide in
1997 and more than 80 million units being sold in 2000.
The Need to Upgrade
Significant software upgrades, such as Microsoft's
introduction of Windows 95, are requiring end-users to upgrade
their current system's memory and in many cases CD ROM
capabilities. The increased use of the Internet has led to
increased need for a modem, or for the desire to upgrade the
modem. Assuming the computer industry continues to grow at its
projected rate, the industry will continue to desire the
ability to upgrade their machines more quickly. With the
introduction of VersaCase TM we believe the Company is well
positioned to take advantage of these opportunities.
BACKGROUND AND STRATEGY
The Company is involved in the design and development of a
computer enclosure, or case. The unique characteristic of the
case is that it allows the end user to easily design, modify
and/or update the computer hardware contained in a computer
case. The product, known as VersaCase TM, is an enclosure which
incorporates ready access to an open architecture computer
chassis. This computer chassis integrates side sliders, similar
to a file drawer which literally creates an "electronics in a
drawer" concept. In addition to designing and developing the
drawer chassis for the computer in a drawer, the Company is
also designing and developing components to take full advantage
of this open architecture. The Company is currently developing
components for various sized drives, as well as a component
power supply.
The Company hopes to incorporate the following enhancing
characteristics into the VersaCase TM: VersaCase TM
compatibility to stackable, rack mounted or inverted
installation; docking holes to allow easy threading of docking
pins for connection of two or more VersaCase TM; design for
allowing VersaCase TM to be mounted as a typical desk drawer in
a typical office environment; design with "dog ears" to provide
mounting within a standard 19" rack mount; a cable transom
designed to prevent cables from becoming entangled within the
environment used by the VersaCase TM; a control panel or face
panel providing component installation for various disk drives
including up to five (5) 3.5" drives with three (3) 5.25"
drives, or up to fifteen (15) 3.5" drives, or up to six (6)
5.25" drives, in conjunction with a CD drive or any combination
thereof; a standard control panel which will monitor internal
processor fans and provide an input/output port for easy data
transfer form another medium or lap-top computer.
Further engineering may be required to perfect all of the
characteristics of the VersaCase TM described above. It is
anticipated by the Company that all designing and engineering
of the first VersaCase TM product after this time will be to
enhance or build custom designs.
The Company anticipates developing additional accessories
which will further enhance the proposed design of VersaCase TM.
It is the intent of the Company to continue to be an innovator
by developing similar products which will enable a computer
user to save time and money upgrading and repairing his/her
computer. The Company's primary objective is to become the
standard in the computer enclosure market.
The Key Elements Strategy for Growth.
Increase Domestic Sales
The Company will seek to increase sales of the VersaCase
TM and its components by recruiting additional internal sales
staff and representatives to broaden its customer base. In
addition, the Company plans to enter the substantial domestic
market for computer peripherals through its direct sales
network and by developing strategic OEM partnering
relationships with computer manufacturers. It is estimated
that these maneuvers will enable the Company to obtain an early
market leadership position in the distribution of VersaCase TM
and any competing products, should they be developed.
Penetrate International Markets
The Company believes that significant demand exists
outside the United States for products like the VersaCase TM
and related peripherals. The Company intends to design and
develop versions of the VersaCase TM and related peripherals
for those markets.
Maintain Technology Leadership
While the Company believes that its current product offers
performance above that of competitive offerings, due to the
fact that no known competitive products are yet in existence,
the Company intends to continue to devote a significant portion
of its budget to research and development and rapidly
commercialize additional products. In addition, the Company
believes that it will benefit from the ability to license or
acquire additional technologies to broaden its product line
through acquisitions of non-core technology.
Marketing and Distribution
The Company has not gone to the production phase of the
VersaCase TM product; therefore, no marketing or distribution
has yet been required. The Company has however invested
significant analysis into the marketing and distribution of its
proposed new product.
Due to the fact that no product is similar to VersaCase
TM, no model competitor has been identified for the Company.
The Company has formulated the following plan for marketing and
distribution of its product. The plan for marketing and
distributing the VersaCase TM is subject to change based upon
the commercial success of VersaCase TM, the capacity of the
Company to manufacture a sufficient volume of the VersaCase TM,
and the input of proposed licensing Agreements with OEMs and
other factors.
The Company proposes to set up a multi-channel
distribution network which will include OEMs and existing
distributors which will incorporate VersaCase TM into their own
product line and services. This strategy will allow the Company
to leverage the marketing and distribution resources of its
customer/distributors which are strategically focused on
offering value-added products and services to the computer
industry. This strategy will also provide VersaCase TM with
credibility, exposure and stability in the marketplace.
The Company proposes to set up its own distribution to
handle the initial orders derived from direct marketing
campaigns, beta sites, and various media advertising, primarily
through magazine medium, trade shows, referrals and catalog
sales. Marketing related to these activities would target
medium to large value added re-sellers (VARs) who create their
own computer systems. The Company's beta sites and prototypes
will be issued to companies who have expressed interest in
VersaCase TM.
The Company will also attempt to penetrate the office
furniture manufacturing industry to perfect the computer in a
drawer concept.
The Company will also use the Internet to supplement all
marketing strategies. The above marketing and distribution
proposals are subject to change at the time the product(s) of
the Company are readied for the open market.
Competition
The Company will compete in the computer enclosure market.
The computer enclosure market is intensely competitive. Within
the enclosure market the Company will encounter competition
primarily from large domestic enclosure manufacturers such as
Berno, Inc., California P.C. Products, and CVC, Inc. To the
knowledge of the Company, no competing company offers an
enclosure similar to VersaCase TM.
The Company will also encounter strong competition from
international computer enclosure companies who sell to world
wide OEMs and distributors. These international companies also
set up their own distributor network in international markets,
including the United States. The international market is
extremely competitive due primarily to aggressive pricing.
Examples of these companies include Chung Long Metal Co., Ltd.,
Karrie Ind., MacCase Ind. Corp., Leadertech Systems, Everfit
Computer Supply, Evergreat Group, Licom and Orevox.
The Company will compete by demonstrating the value of the
features and benefits of VersaCase TM. There can be no
assurance that the Company will be able to compete effectively
in this marketplace. The cost of goods sold and actual pricing
for the product has not been established by the Company,
therefore it is not now possible to determine whether the
Company can effectively compete with other enclosure
manufactures on price alone. An inability of the Company to
compete with other enclosure manufacturers would adversely
affect the Company's business, financial condition and results
of operations.
Proprietary Rights
The Company's success and ability to compete is dependent
in part upon its proprietary technology and technology licensed
from SSTI. While the Company relies on trademark, trade secret
and potential patent enforcement to protect its technology and
Licensed technology, the Company believes that factors such as
the technological and creative skills of its personnel, new
product developments, frequent product enhancements, name
recognition and reliable product maintenance are also essential
to establishing and maintaining a technology leadership
position. The Company has an exclusive license with SSTI
covering SSTI's currently pending patent application. There
can be no assurance that the patent application(s) will result
in patents being issued or that others will not develop
technologies that are similar or superior to the Company's
technology or its Licensed technology. The Company generally
enters into confidentiality or License Agreements with its
employees, consultants and vendors, and generally control
access to and distribution of designs, documentation and other
proprietary information. Despite these precautions, it may also
be possible for a third party to copy or otherwise obtain and
use the Company's products or Licensed technology without
authorization, or to develop similar technology independently.
Despite the Company's efforts to protect its proprietary
rights, unauthorized parties may attempt to copy aspects of the
Company's products or to obtain and use information that the
Company regards as proprietary. Policing the unauthorized use
of the Company's products is difficult. There can be no
assurance that the steps taken by the Company will prevent
misappropriation of the Licensed technology or that such
Agreements will be enforceable. In addition, litigation may be
necessary in the future to enforce the Company's intellectual
property rights, to protect the Company's trade secrets, to
determine the validity and scope of the proprietary rights of
others, or to defend against claims of infringement or
invalidity. Such litigation could result in substantial costs
and diversion of resources and could have a material adverse
effect on the Company's business, operating results or
financial condition.
Employees
As of February 28, 1997, the Company has eight (8) full-
time employees and one (1) part-time employee. The Company
plans to add additional personnel in the areas of sales,
production, research and development, and finance and
administration as additional financing or other working capital
arrangements are made. No employee is covered by a collective
bargaining Agreement and management considers its relations
with employees to be good.
Properties
The Company leases approximately 2,400 square feet of
office and engineering space in Toledo, Ohio, with rent payable
in the amount of $13,200.00 per year.. The Company has no
interests in real property, and sub-leases space to SSTI and a
separate and unaffiliated software technology company.
[CAPTION]
THE OFFERING
Common Stock Offered by the Company 300,000 shares
Total 300,000 shares
Common Stock to be outstanding after the
Offering 300,000 shares (1)(2)
Proposed Nasdaq National Market Symbol "UTRN"
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(1) Excludes 250,000 shares of Common Stock issuable upon the
exercise of outstanding stock options allotted prior to the
date hereof.
(2) Excludes shares of common stock previously issued as part of
a private placement distribution plan.
SUMMARY FINANCIAL DATA
SIX MONTHS YEAR ENDED DECEMBER 31, 1996 (UNAUDITED)
STATEMENTS OF OPERATIONS DATA:
Sales $--
Gross profit --
Operating expenses (179,061)
Net interest expense --
Net income (loss) $(178,456)
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Net income (loss) per share $(.04)
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Weighted average shares
outstanding --
AS OF DECEMBER 31, 1996
(UNAUDITED)
BALANCE SHEET DATA ACTUAL
Working capital $(170,718)
Total assets 308,420
Total debt 32,130
Shareholder's equity --
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RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS,
THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN
EVALUATING THE COMPANY AND ITS BUSINESS BEFORE PURCHASING
SHARES OF THE COMMON STOCK OFFERED HEREBY. THIS PROSPECTUS
CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND
UNCERTAINTIES, MANY OF WHICH ARE BEYOND THE CONTROL OF THE
COMPANY AND REPRESENT CONTINGENCIES THAT CANNOT BE RELIABLY
ESTIMATED. THE COMPANY'S ACTUAL RESULTS MAY DIFFER
SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING
STATEMENTS. INVESTMENT IN THE COMMON SHARES IS SUITABLE ONLY
FOR PERSONS WHO HAVE NO NEED FOR LIQUIDITY IN THEIR INVESTMENTS
AND WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. AMONG
OTHER ASPECTS OF THIS OFFERING, POTENTIAL INVESTORS SHOULD
CONSIDER CAREFULLY THE FOLLOWING FACTORS, WHICH DISCUSSION IS
MEANT TO BE A SUMMARY OF SOME, BUT NOT ALL, OF THE RISK FACTORS
INVOLVED IN A PURCHASE OF THE COMMON SHARES.
1. As of the date hereof, there is no public market for
the Shares and there can be no assurance that a public
market subsequently will develop, notwithstanding the
desires of the Company. The Shares issued in the
Offering shall bear restrictions upon transferability
which will restrict the ability of an Investor to shift
his investment in the Shares to an alternative
investment in the future. The initial Offering price of
$10.00 per Share has been established arbitrarily, and
has no direct relationship to earnings, fair market
value or other subjective standards of worth.
2. The Shares offered hereby will not have preemptive
rights to acquire other or additional Shares which
might, from time to time, be issued by the Company. The
lack of such right could cause a dilution in the
ownership percentage of any of the Investors in the
event of a subsequent issuance of Common Shares.
3. It is not anticipated that the Company can or will
declare or pay cash dividends in the foreseeable future
on Common Shares.
Limited Operating History
The Company was founded in April 1996. Accordingly, the
Company has only a limited operating history upon which an
evaluation of the Company and its prospects can be based. the
Company's prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies
in their early stage of development, particularly companies in
new and rapidly evolving markets. To address these risks, the
Company must among other things, respond to competitive
developments, continue to attract, retain and motivate
qualified persons, and continue to develop its products and
services. There can be no assurance that the Company will be
successful in addressing such risks. The Company has incurred
net losses since inception and expects to continue to operate
at a loss for the foreseeable future. There can be no assurance
that the Company will achieve or sustain profitability.
New Product, New Uncertain Market
The market for the VersaCase TM is significant; however,
to the best knowledge and belief of the Company after extensive
research, there appears to be no product similar to the
VersaCase TM currently available in the market. At this time
the Company is solely dependent upon the commercial success of
the VersaCase TM. The Company is solely dependent upon the
earnings generated from the sale or licensing of VersaCase TM.
There can be no assurance that the sale of VersaCase TM will
result in net positive earnings to the Company. The
manufacturing costs, cost of distribution, and other related
costs to the production of VersaCase TM have not been
established. Additionally, the market price for VersaCase TM
has not been established.
Protection of Proprietary Assets
The design of the VersaCase TM is a trade secret, which
the Company seeks to protect. Although the Company is not the
owner of the proprietary technology, it has substantially
assisted in the preparation of patent applications. The patent
applications for VersaCase TM were filed on April 26, 1996,
with the U.S. Patent and Trademark Office. The preparation and
filing of the patent applications does not ensure that the
technology of the Company is patented, or that it will be
protected from infringement. The Company is not currently aware
of a competitive product in the marketplace. However, there can
be no assurance that the patents for which the Company has
applied will be issued or that steps taken by the Company to
protect its intellectual property will be adequate to prevent
misappropriation of its technology or that the Company's
competitors will not independently develop technologies that
are substantially equivalent or superior to the Company's
technology. In the event that protective measures are not
successful, the Company's business, operating results and
financial condition could be materially and adversely affected.
In addition, the Company's growth strategy includes a plan to
enter the international market, and the laws of some foreign
countries do not protect the Company's proprietary rights to
the same extent as do the laws of the United States.
The Company is also subject to the risk of adverse claims
and litigation alleging infringement of intellectual property
rights of others. Given that patent applications in the United
States are not publicly disclosed until the patent issues,
applications may have been filed which, if issued as patents,
could relate to the Company's products. The Company is subject
to the risk of claims and litigation alleging infringement of
the intellectual property rights of others. Although the
Company believes that its technology does not infringe on the
proprietary rights of others and has not received any notice of
claimed infringements, there can be no assurance that third
parties will not assert infringement claims against the Company
in the future based on patents or trade secrets or that such
claims will not be successful. The Company could incur
substantial costs in defending itself and its customers against
any such claims, regardless of the merits of such claims.
Parties making such claims may be able to obtain injunctive or
other equitable relief which could effectively block the
Company's ability to sell its products in the United States and
abroad, and could result in an award of substantial damages. In
the event of a successful claim of infringement, the Company,
its customers and end-users may be required to obtain one or
more licenses from third parties. There can be no assurance
that the Company or its customers could obtain necessary
licenses from third parties at a reasonable cost or at all. The
defense of any lawsuit could result in time-consuming and
expensive litigation, damages, license fees, royalty payments
and restrictions on the Company's ability to sell its products,
any of which could have a material adverse effect on the
Company's business, financial condition and results of
operations
Competition
The market for the computer hardware industry is intensely
competitive, rapidly evolving and subject to rapid technological
change. Due to this rapidly changing environment, the utility of
VersaCase TM may become enhanced, thereby attracting additional
competition to its industry segment. Such competition could
materially and adversely affect the Company's business,
operating results or financial condition. Such a rapidly
changing environment could also affect the utility of the
VersaCase TM in the market.
Market
Since the market for VersaCase TM is new and evolving, it
is difficult to predict the future growth rate, if any, and size
of this market. There can be no assurance that the market for
VersaCase TM will develop, that the Company's product will be
adopted or that individual owners of personal computers, in home
or in business, or manufacturers of personal computers or of
furniture and fixtures accommodating personal computers will use
VersaCase TM. The Company presently does not have any contract
with the United States Government, or any branch of thereof, for
the sale of its product although negotiations to that extent are
in progress.
Product Development and Product Offering
The Company currently is developing one product for resale
and/or licensing. The future revenues of the Company will be
based solely on one product. Accordingly, broad acceptance of
the Company's VersaCase TM and the development of supporting
products and services to VersaCase TM is critical to the
Company's future success. There can be no assurance that the
products now under development or to be developed will be
commercially successful or accepted in the marketplace. Non-
acceptance of the Company's products could have a significantly
negative impact on the earnings of the Company.
VersaCase TM is designed around certain standards of the
computer industry; for example, ATX boards, standard eight (8)
slot architecture, standard on/off controls, current power
supply and current hard drive accessories. The Company's product
will therefore be dependent upon the industry continuing with
existing standards, or the Company's products adapting to new
standards. The Company is not aware of any proposed changes in
the industry standards which would affect the use and utility of
VersaCase TM. There is no assurance that existing standards to
which VersaCase TM is designed will continue in a consistent
manner in the future. The amendment of such design standards and
the inability of the Company to adapt VersaCase TM to the new
standards could materially adversely affect the operating
results and financial condition of the Company.
Dependence on Key Personnel
The Company's performance is substantially dependent on
the performance of its executive officers and key employees,
most of whom have worked together for only a short period of
time. Given the Company's early stage of development, the
Company is dependent on its ability to retain and motivate high
quality personnel, especially its management and highly skilled
development team. The Company presently does not have "key
person" life insurance policies on any of its employees. The
loss of the services of any of its executive officers or other
key employees could have a material adverse effect on the
business, operating results or financial condition of the
Company.
The Company's future success also depends on its
continuing ability to identify, hire, train and retain other
highly qualified technical and managerial personnel. Competition
for such personnel is intense, and there can be no assurance
that the Company will be able to attract, assimilate or retain
other highly qualified technical and managerial personnel in the
future. The inability to attract and retain the necessary
technical and managerial personnel could have a material adverse
effect upon the Company's business, operating results or
financial condition.
Concentration of Stock Ownership
Upon completion of this Offering, the present directors,
executive officers and their respective affiliates will
beneficially own approximately 88% of the outstanding Common
Stock of the Company. As a result, these stockholders will be
able to exercise significant influence over all matters
requiring stockholder approval, including the election of
directors and approval of significant corporate transactions.
Such concentration of ownership may also have the effect of
delaying or preventing a change in control of the Company. The
Common Shareholders will own 12% of the outstanding Shares of
the Company upon the completion of the Offering.
Rapid Technological Change; Dependence on New Product
Introductions
The market for the Company's product(s) is expected to be
characterized by frequent new product introductions, rapidly
changing technology and continued emergence of new industry
standards, any of which could adversely affect sales of the
Company's products or render the Company's existing products
obsolete. The Company's success will depend upon its ability to
develop and introduce, in a timely fashion, new products and
enhancements to its existing products that meet changing
customer requirements and emerging industry standards. The
development of new, technologically advanced products and the
enhancement of existing products is a complex and uncertain
process requiring high levels of innovation, as well as the
accurate anticipation of technological developments and market
trends. There can be no assurance that the Company will be able
to identify, develop, manufacture, market or support new or
enhanced products successfully or on a timely basis, that new
products of the Company will gain market acceptance or that the
Company will be able to respond effectively to product
announcements by competitors, technology changes or emerging
industry standards. In addition, the Company has experienced
delays in the introduction of new products and product
enhancements. Furthermore, from time to time, the Company may
announce new products or product enhancements, capabilities or
technologies that have the potential to replace or shorten the
life cycle of the Company's existing product offerings and that
may cause customers to defer purchasing existing products of
the Company.
Substantial Increase in Manufacturing Operations; Dependence on
Contract Manufacturing and Limited Source Suppliers
The Company is in the process of substantially increasing
its flow of materials, contract manufacturing capacity and
internal test and quality functions to respond to anticipated
customer demand for its products and to reduce its order lead
times. Any inability to increase product flow would limit the
Company's revenue, could adversely affect the Company's
competitive position and could result in cancellation of
orders. The Company's operational strategy relies on
outsourcing of manufacturing. Certain key components used in
the manufacture of the Company's products are currently
available only from limited sources, consequently, the Company
may seek to secure additional sources of supply, including
additional contract manufacturers.
The Company may in the future experience problems with its
various component suppliers, such as inferior quality,
insufficient quantities and late delivery. There can be no
assurance that such problems will not generate material
liabilities for the Company or adversely impact the Company's
relations with its customers in the future. In addition, the
Company may in the future experience pricing pressure from its
contract manufacturers. There can be no assurance that the
Company will manage its contract manufacturers effectively or
that these manufacturers will meet the Company's future
requirements for timely delivery of products of sufficient
quality and quantity. The Company intends to introduce certain
new products and product enhancements in 1997 and 1998, which
will require that the Company rapidly achieve volume production
by coordinating its efforts with those of its suppliers and
contract manufacturers. The inability of the Company's contract
manufacturers to provide adequate supplies of high-quality
products or the loss of any of the Company's contract
manufacturers could cause a delay in the Company's ability to
fulfill orders while the Company identifies a replacement
manufacturer and could have a material adverse effect upon the
Company's business, operating results and financial condition.
Management of Growth
The Company has significantly expanded its operations since its
inception, and the success of the Company is dependent upon
its continued expansion, particularly in hiring additional
technical and customer support personnel, developing its sales
and marketing network and expanding its manufacturing capacity.
There may be only a limited number of persons with the
requisite skills to serve in these positions and it may become
increasingly difficult for the Company to hire such personnel.
Future expansion by the Company may also significantly strain
the Company's management, marketing, manufacturing, financial
and other resources. In addition, the Company's future results
of operations are dependent upon the continued expansion of the
network of representatives to market the Company's products
domestically and abroad. There can be no assurance that the
Company's systems, procedures, controls and existing space will
be adequate to support the Company's future operations. Failure
to manage the Company's growth properly could have a material
adverse effect on the Company's business, financial condition
and operating results.
Risks Associated with Potential Acquisitions
The Company may in the future undertake acquisitions that
could present challenges to the Company's management, such as
integrating and incorporating new operations, product lines,
technologies and personnel. If the Company's management is
unable to manage these challenges, the Company's business,
financial condition or results of operations could be
materially and adversely affected. Any acquisition, depending
on its size, could result in the use of a significant portion
of the Company's available cash, or if such acquisition is made
utilizing the Company's securities, could result in significant
dilution to the Company's stockholders. Acquisitions involve a
number of special risks including possible adverse short-term
effects on the Company's operating results, the realization of
acquired intangible assets and the loss of key employees of the
acquired companies. The Company does not have pending any
negotiations or agreements with respect to any such
acquisition.
Risk of Product Defects
Products as complex as those offered by the Company at
times contain undetected errors when first introduced or as new
versions are released, despite extensive testing by the
Company. The Company expects that such errors will be found
from time to time in new or enhanced products after
commencement of commercial shipments. The occurrence of such
errors could result in the delay or loss of market acceptance
of the Company's products, the impairment of development
efforts and the loss of credibility with its customers, any of
which could have a material adverse effect on the Company's
business, operating results and financial condition.
Anticipated Fluctuations in Operating Results
It is anticipated that as the Company matures, the
Company's sales and operating results may fluctuate from
quarter to quarter and from year to year due to a combination
of factors, many of which are outside the control of the
Company, including (i) the timing and amount of significant
orders from the Company's customers, (ii) the ability to obtain
sufficient supplies of sole or limited source components for
the Company's products, (iii) the ability to attain and
maintain production volumes and quality levels for its
products, (iv) the mix of distribution channels and products,
(v) new product introductions by the Company's competitors,
(vi) the Company's success in developing, introducing and
shipping product enhancements and new products, (vii) pricing
actions by the Company or its competitors, (viii) changes in
material costs and (ix) general economic conditions. To achieve
its revenue objectives, the Company expects that it will have
to obtain orders during a quarter for shipment in that quarter.
As a result of all of the foregoing, there can be no assurance
that the Company will be able to achieve or sustain
profitability on a quarterly or annual basis.
No Prior Market for Common Stock; Possible Volatility of Stock
Price
Prior to the Offering, there has been no public market for
the Common Stock of the Company, and there can be no assurance
that an active public market will develop or be sustained after
the Offering. The initial public offering price has been
determined by the Company based on several factors and may not
be indicative of the market price of the Common Stock after the
Offering. The market price of the shares of Common Stock is
likely to be highly volatile and may be significantly affected
by factors such as actual or anticipated fluctuations in the
Company's operating results, announcement of technological
innovations or new results by securities analysts, developments
with respect to patents or proprietary rights, general market
conditions and other factors. In addition, the stock market
has from time to time experienced significant price and
volume fluctuations that have particularly affected the market
prices for the common stocks of technology companies. These
broad market fluctuations may adversely effect the market price
of the Company's Common Stock.
Dilution
The initial public offering price of the Common Stock
offered hereby is substantially higher than the net tangible
book value per share of the Common Stock. Therefore, purchasers
of Common Stock offered hereby will incur an immediate and
substantial dilution, and may incur additional dilution upon
the exercise of outstanding stock options.
USE OF PROCEEDS
The Company intends to use the net proceeds of the
Offering for: (i) investing in manufacturing, sales, and
advertising of VersaCase TM; (ii) other appropriate investments
that will benefit the Company in a positive manner; and (iii)
expenses incident to the commencement of business.
Organizational and Offering Expenses*:
Costs of the offering 909
Salaries for officers/employees 96,656
Rent 6,517
Utilities 2,295
Travel expenses 1,120
Promotional expenses 493
Supplies 4,964
Printing 578
Consulting fees 5,000
Legal fees 5,951
Accounting fees 1,978
* These fees will be incurred whether or not the Company is successful.
DIVIDEND POLICY
The Company has not declared or paid dividends on its
Common Stock since the inception of the Company. The Company
currently intends to retain any earnings for use in developing
and growing its business and does not anticipate paying any
cash dividends on its Common Stock in the foreseeable future.
CAPITALIZATION
The following table sets forth the capitalization of the
Company as of December 31, 1996. This table should be read in
conjunction with the unaudited Financial Statements appearing
elsewhere in this Prospectus.
Debt
Notes Payable $ 8,000
Advances from Related Parties $ --
Total Debt $ 8,000
Stockholders' Equity
Common shares, "No" par value,
5,000,000 shares authorized,
# shares issued or outstanding
Additional Paid-In Capital $ --
Accumulated Deficit $ --
Total Stockholders' Equity $ 288,935
Total Capitalization $ --
SELECTED FINANCIAL DATA (UNAUDITED)
The following selected financial data for the period from
inception, April 11, 1996, through December 31, 1996, are
derived from the financial records of the Company will be
audited by Royal Barber and Company, independent certified
public accountants. The selected financial data for the six
months ended June 30, 1996 are derived from unaudited financial
statements prepared by the Company. The unaudited financial
statements include all adjustments, consisting of normal
recurring accruals, which the Company considers necessary for a
fair presentation of the financial position and the results of
operations for these periods. Operating results for the six
months ended December 31, 1996 are not necessarily indicative
of the results that may be expected for the entire year ending
June 30, 1997. The selected financial data should be read in
conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the
Financial Statements of the Company and Notes thereto included
elsewhere in this Prospectus.
Selected Consolidated Financial Data)
Consolidated Statement of Operations Data
Revenues --
Cost of Revenues --
Gross Profit --
Operating Expenses $ 179,061
Interest Income (Expense), Net
Loss Before Income Taxes $ (178,456 )
Income Taxes
Net Loss $ (178,456 )
Net Loss Per Common Share $ (.04)
Weighted Average Common
Shares Outstanding
Consolidated Balance Sheet Data
Cash and Cash Equivalents $ 89,806
Working Capital $ 170,718
Total Assets $ 323,763
Advances from Related Parties $ --
Shareholders' Note Payable $ 8,000
Total Shareholders' Equity $ 288,935
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING SHOULD BE READ IN CONJUNCTION WITH THE
FINANCIAL STATEMENTS OF THE COMPANY AND THE NOTES THERETO, AND
OTHER FINANCIAL INFORMATION INCLUDED ELSEWHERE IN THIS
PROSPECTUS. THIS PROSPECTUS CONTAINS CERTAIN STATEMENTS
REGARDING FUTURE TRENDS WHICH ARE SUBJECT TO VARIOUS RISKS AND
UNCERTAINTIES. SUCH TRENDS, AND THEIR ANTICIPATED IMPACT UPON
THE COMPANY, COULD DIFFER MATERIALLY FROM THOSE PRESENTED IN
THIS PROSPECTUS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN
"RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.
Overview
The Company intends to manufacture and sell the VersaCase
TM computer case and has other products in design and
development. These products and planned products are based on
the Company's core software, firmware and hardware technology.
The Company was founded by Mr. Conrad A.H. Jelinger, who
individually and with the help of SSTI developed this
technology over a ten year period. The Company has received
many inquiries regarding VersaCase TM and its related products,
but to date has not entered into long term agreements or
blanket purchase orders for the sale of VersaCase TM or the
VersaCase TM family of products..
The Company will allocate all of its fixed production
costs to the cost of goods sold of those products shipped
during a given period. Accordingly, gross profit may fluctuate
significantly from period to period as a result of the change
in overall sales volumes. Gross profit may be affected in the
future by the introduction of new products which generate
differing gross margins and the sales mix during a given
period. In addition, the Company plans to pursue OEM
relationships with respect to the sale of VersaCase TM and its
related products, including those in development. The Company
has not negotiated any such arrangements, but anticipates that
its pricing to OEM partners would be less than with respect to
direct sales resulting in lower gross margins in connection
with these arrangements. However, sales and marketing expenses
are generally lower in the case of sales to OEM partners.
The Company believes that its operating expenses will
continue to increase as a result of a variety of factors
including: (i) increased research and development expenses
associated with the completion of the products in development
and the continued enhancement of existing products; and (ii)
increased selling, general and administrative expenses
associated with continued expansion of sales and marketing
capabilities, product advertising and promotion. The Company
charges research and development costs to expense when
incurred.
RESULTS OF OPERATIONS
FROM INCEPTION TO December 31, 1996
SALES. Sales have not yet begun.
COST OF GOODS SOLD. Not applicable.
Operating Expenses
Due to the fact that the Company is still in the first
year of operations, a baseline for operating expenses has not
been established. For the time in question, operating expenses
amounted to $179,061, primarily from research and development
and general and administrative expenses.
Liquidity and Capital Resources
Operating expenses during the development stage have been
primarily financed with the incurrence of trade payables
nonregistered security sales.
The Company requires substantial working capital to fund
its business, particularly to finance inventories and accounts
receivable and for capital expenditures. The Company's future
capital requirements will depend on many factors, including the
rate of revenue growth, the timing and extent of spending to
support product development efforts and expansion of sales and
marketing, the timing of introductions of new products and
enhancements to existing products, and market acceptance of the
Company's products. There can be no assurance that additional
equity or debt financing, if required, will be available on
acceptable terms or at all.
Management estimates that capital expenditures will be
approximately $4,200,000 in 1997 and $15,300,000 in 1998, and
that these amounts will primarily be used for the purchase of
equipment related to product development and automation of
production operations, the purchase of tooling for plastic
injection production molds for VersaCase TM production,
furniture, fixtures and equipment in connection with leasing
additional space for the Company's operations and for salaries
and wages for existing and projected additional employees.
The Company believes that the net proceeds of the Offering
and anticipated cash flow from operations will be sufficient to
fund the Company's working capital and capital expenditure
requirements at budgeted levels for the next 12 months.
BUSINESS
Unitrend is an Ohio-based corporation gearing up to
produce high quality computer ergonomic enclosures for a
national market. With the development of smaller and more
powerful computing devices, the Company believes that there is
an overall trend to view the personal computer as the new
"Mainframe" of the future. The Company believes it is in a
position to capitalize on this trend in the growing computer
market by introducing new technology in its initial product
known as "VersaCase TM." The Company believes that with the
introduction of VersaCase TM it will be positioned in the
national market to provide the highest quality user-friendly-
and-accessible retail/commercial/industrial/military PC-based
computer enclosures available. The Company believes that the
U.S.-made VersaCase TM technology will set the specifications
against which all computer enclosures and enclosure systems
will be compared.
Industry Development
Over the past several years, personal computers have
evolved to meet the ever-growing demands of a large variety of
users for increasingly complex and power-hungry applications.
At the same time, the introduction of a plethora of new
personal computer hardware technology and devices has
reinforced the importance of the computer to society. Unitrend
intends to capitalize on this growing market with the
introduction of the VersaCase TM.
Today computer companies are busy battling each other in
price wars and for market place dominance. At this stage in the
maturation of the computer market, older technology becomes
obsolete with the introduction of new technology, causing end
users to face substantial losses if they choose to upgrade
their computer systems. The use of total modularization in this
market has been totally ignored. Consequently there has yet to
emerge a market leader in this segment of the industry. In
light of these factors and the development of the VersaCase TM
technology, Unitrend believes it is in a position to become the
hardware modularization market leader.
Unitrend will focus on the manufacturing and selling of
computer hardware - specifically, Enclosure Technology. The
need for improvement in this area became apparent to Unitrend's
founder, Mr. Conrad A.H. Jelinger, after many years of
listening to complaints regarding the archaic use of technology
when applied to the assembly of desktop and mini-tower
computers. Time and time again, repair after repair, upgrade
after upgrade, computer users caused Mr. Jelinger to realize
that there exists a total lack of enclosure ergonomics and
modular efficiency in computer hardware. Most personal
computers built today are poorly designed and are not user
friendly. Today's computers are characterized by poor
ventilation, awkward controls, little (if any) configuration
flexibility, lack of upgrade potential, and little ease of
maintenance. For example, a simple RAM upgrade can take as long
as an hour using the current assembly techniques of some
models. The average time for a trained technician to simply
change an expansion card is approximately 20 minutes, if
everything goes well. This amount of time may seem relatively
trivial, but analyzing the same task in the context of a 200
machine upgrade allows one to understand the amount of time
involved for a "relatively trivial" service project. It could
conceivably take more than 66 man-hours to accomplish the above
mentioned task. At an average of $90.00 per man hour, the cost
of a simple upgrade could become a $5,940.00 investment in
labor alone. The cost could go higher if some of the logic
boards do not accept the new cards, or if jumpers need to be
reset to accommodate newer technology. This could result in at
least a 15% increase in budgeted labor expenses for the cost of
new cards, and the initializations of the system. Conceivably
the conversion project with a loss of 20 minutes of paid wages
per person would be an additional $1,667.00. Depending on the
type of business, the calculated lost revenues due to down time
could be prohibitive. Should a company attempt to convert their
machines after hours, it would pay 10%-15% premium for after
hours labor.
In today's competitive marketplace business leaders are
reluctant to condone significant cost overruns such as those
described above. Rapidly improving (and ever changing) computer
hardware means that anyone who owns a computer - not just large
companies - needs to upgrade and maintain their equipment. Most
individuals and small companies will not pay for the cost of
hiring a professional to make the necessary changes.
The Unitrend Solution
Unitrend has developed or is developing a series of
products which are designed to standardize and modularize
personal computer hardware peripherals. The Company views its
position in the national market as a provider of the highest
quality retail/commercial/industrial/military user-accessible
and friendly personal computer-based computer enclosures and
hardware technology available anywhere. Unitrend believes its
made-in-the-U.S.A., VersaCase TM technology will set the new
standards to which all computer enclosures and enclosure
systems will adhere. Initially, Unitrend intends to manufacture
one basic model of ergonomic enclosures. VersaCase TM is not a
converted desktop computer enclosure, instead it is the most
reliable, "Hot Fix - Plug and Play" computer enclosure system
designed for everyday use. All machines are built to strict
quality ISO/QS 9000 and military specifications regardless of
their intended use. The only differences between the commercial
and military models are the metal alloys required on some
military models. VersaCase TM is designed to meet and/or exceed
the demands of "Windows 95" plug and play technology when
upgrading hardware with its efficient modular construction.
Unitrend separates itself from other companies now
offering computer enclosures by focusing on ergonomic design
technology and component modularization. VersaCase TM is
convertible technology, thus it may be used as a single unit,
multiple stack, desk drawer mounting system, and/or rack-mount
configurations, as a workstation, file server, disk array,
jukebox, or a combination of applications. It can be sold to
OEMs, VARs, Retailers, the Military, Industrial Complexes,
Commercial Enterprises, Academic Institutes, or by Mail Order.
By marketing VersaCase TM Unitrend brings new technology
to the market which, for the first time, gives the "End-User"
the ability to easily maintain and upgrade his or her system
while providing unsurpassed configuration modes and arrays. In
the above example with VersaCase TM technology, the average
time to complete the same task would amount to approximately 5
minutes or less per machine. Using the data from the same
example, a company would pay approximately $1,500.00 in labor
costs. That translates to a savings of $4,440.00. In addition,
consider the improvement in lost productivity due to a 4 to 15
fold shorter downtime. VersaCase TM simplifies changes, making
companies and individuals more productive. In many situations,
maintenance, repairs, and testing can all be accomplished with
the power on. VersaCase TM allows companies to literally stack
their machines eight units high without worry about enclosure
collapse due to unit weight. Users may easily and inexpensively
move to a Rack Mount environment without having to change
and/or upgrade enclosure technologies.
COMPANY STRATEGY
In particular, the key elements of the Company's strategy for
growth include:
Increase Domestic Sales
The Company will seek to increase sales of the VersaCase
TM and its components by recruiting additional internal sales
staff and representatives to broaden its customer base and
obtain repeat orders. In addition, the Company plans to enter
the substantial domestic market for computer peripherals
through its direct sales network and by developing strategic
OEM partnering relationships with computer manufacturers. It
is estimated that these maneuvers will enable the Company to
obtain an early market leadership position in the distribution
of VersaCase TM and any competing products, should they be
developed.
Penetrate International Markets
The Company believes that significant demand exists
outside the United States for products like the VersaCase TM
and related peripherals. The Company intends to design and
develop versions of the VersaCase TM and related peripherals
for those markets.
Maintain Technology Leadership
While the Company believes that its current product offers
performance above that of competitive offerings, due to the
fact that no known competitive products are yet in existence,
the Company intends to continue to devote a significant portion
of its budget to research and development and rapidly
commercialize additional products. In addition, the Company
believes that it will benefit from the ability to license or
acquire additional technologies to broaden its product line
through acquisitions of non-core technology.
Additionally, the Company proposes to set up a multi-
channel distribution network which will include OEMs and
existing distributors which will incorporate VersaCase TM into
their own product line and services. This strategy will allow
the Company to leverage the marketing and distribution
resources of its customers/distributors which are strategically
focused on Offering value-added products and services to the
computer industry. This strategy will also provide VersaCase TM
with credibility, exposure and stability in the marketplace.
The Company proposes to set up its own distribution to
handle the initial orders derived from direct marketing
campaigns, beta sites, various media advertising, primarily
magazine medium, trade shows, referrals and catalog sales.
Marketing related to these activities would target medium to
large value added re-sellers (VARs) who create their own
computer systems. The Company's beta sites and prototypes will
be issued to companies who have expressed interest in VersaCase
TM.
The Company will also attempt to penetrate the office
furniture manufacturing industry to perfect the computer in a
drawer concept.
COMPANY HISTORY
"Unitrend", as it is known today, informally commenced
operations in December 1987 and has evolved from a local
computer service and repair center. In the past ten years, the
business has matured into an assembler and servicer of high
quality PC-based servers and work stations. Eventually
realizing the lack of standards in hardware and software
integration, the Company began engineering systems for those
clients who grew beyond the need of a single PC work station.
Unable to find technical support to maintain business with
manufacturers, the Company began to assemble our own desk top
computers. Furthermore, by writing a "knowledge-base" software
program, the business was able to respond quickly and
efficiently when problems did arise. It is the accumulation of
this knowledge-base data and careful market research that has
brought on significant changes in computer-servicing business
strategy. The key change was a decision to limit the variety of
component manufacturers. Unlike competitors, Unitrend decided
to search out the most reliable equipment available. It was
quality and durability in life cycles that set the Company
apart from other local vendors. Also, by limiting selection to
the "best in the business", the Company's service people became
extremely proficient at in-field servicing, minimizing downtime
for clients.
Unitrend has acquired an exclusive license to market and
further develop the VersaCase TM technology through a license
agreement with its sister corporation, Server Systems
Technology, Inc. (hereinafter "SSTI"). Pursuant to the license
agreement, Unitrend has an exclusive license to the tangible
and intangible assets of SSTI. The Company intends to
eventually purchase the assets of SSTI, thereby eliminating a
significant liability of SSTI which could include potential
encumbrances on the prosecution of any patents SSTI has applied
for, or is in the process of applying for. Under the license
agreement, the Company, is currently obligated to pay to SSTI a
royalty of 5% of the gross sales of the Company which directly
results from the assets of SSTI the purchase of SSTI assets
will eliminate such cash outflow.
The Company is an Ohio "for profit" Corporation and was
originally incorporated under the name VersaCase, Inc. on April
11, 1996. The Company changed its name to Unitrend, Inc. on May
15, 1996. The Company's main office is located at 4730 W.
Bancroft Rd. Ste. 15, Toledo, Ohio 43615.
Company Product
The product, known as VersaCase TM , is an open platform,
open architecture computer chassis designed with bayonet
sliders. With VersaCase TM, the entire hardware of a personal
computer becomes modular, which means that all major computer
components become easily accessible, removable, upgraded and/or
repairable. The VersaCase TM design employs the following
characteristics (as an industry standard or by accessories made
available by resellers): Quick mount technology; Low RPM, high
volume fans for pressurized cooling; CabletyTM ribbon
suspension guides; Humidity and temperature sensing circuits,
Auto shut-off at 118o F; Internal vibration and shock isolation
system; Air filtration grid; Total modular component assembly;
300 watt dual filtered, auto-switching power supplies; 15 drive
bays (maximum when using 3.5" drives); Ergonomic control panel;
Convertible mount systems (single, stack, drawer, and rack);
Docking and mounting security holes; Access and security
features; Total open architecture topology used throughout
system; System activity LED display array; Total steel
construction with 300psi external load factor; low EMI, RFI
emissions; Pending FCC approved; Made and Assembled in the U.
S. A.
CUSTOMERS
As of January 1, 1997, the Company has not sold any of the
VersaCase TM family of products to any customers.
SALES, MARKETING & CUSTOMER SUPPORT
Sales
The Company will initially focus its sales and marketing
efforts of the VersaCase TM family of products to the general
public by and through contracts with OEMs, VARs, Retailers, and
by Mail Order. The Company will also engage in direct sales to
the Military, Industrial Complexes, Commercial Enterprises,
Academic Institutes through an internal sales force. The
Company intends to continue to augment its internal sales
organization to develop and association, which will manage a
domestic network of independent representatives. The Company's
internal sales force will include managers based at the
Company's principal executive offices and regional sales staff.
In order to execute a seamless and cohesive sales effort
through these channels, the internal sales staff will be
compensated based upon the productivity of the representative
firms in their respective territories. The primary roles of the
Company's internal sales force will be (i) to ensure that
customers and potential customers in each territory are being
regularly contacted, (ii) to provide support to independent
representatives and determine that their sales quotas are met,
(iii) to differentiate the features and capabilities of the
Company's products from competitive offerings, (iv) to assist
customers with the implementation of the Company's products and
(v) to serve as a direct link to assure quality and timely
customer support. In addition, the Company believes that its
investment in its internal sales staff will help to enable the
Company to monitor changing customer requirements, as well as
the development of industry standards. The Company also plans
to initiate an OEM partnering program for future products in
development.
Marketing
The Company will seek to build awareness of its products
through a variety of marketing channels and methodologies. The
Company intends to participate in numerous industry trade shows
and conferences each year, publishing technical articles in the
trade press and engaging in a series of direct mail campaigning
to targeted potential customers. The Company also plans to
initiate advertising and promotion of its products in select
print media following the Offering and the furtherance of
various patent issues. The Company also intends to establish a
direct telemarketing staff to provide direct access to product
users. This group will also be responsible for the
identification of opportunities for the Company's internal
sales staff and independent representatives.
Customer Support
The Company is dedicated to providing comprehensive
customer support. All service, repair and technical support of
the Company's products will be performed in-house utilizing
sub-assemblies and components obtained from the Company's
regular sources of supply. The Company's technical support
engineers will be experts in the hardware and software
associated with the Company's products. The Company will offer
technical support to its customers during regular business
hours, Eastern Standard Time 5 days a week, and for an as-yet
undetermined number of hours during the weekend via a toll-free
hotline and through paging systems for special contracts. The
Company will offer a 90-day limited warranty on all components
of its products.
Product Development
The Company has in development a family of Products
relating to and enhancing the original VersaCase TM ergonomic
enclosure. See "Company History - Company Product." The
Company believes that its future success depends on its ability
to maintain technological leadership through enhancements of
its existing products and developments of new applications and
products that meet a wide range of customer needs.
Accordingly, the Company intends to continue to make
substantial investments in the development of new technologies,
the commercialization of new products building on the Company's
existing technological asset base and the enhancement and
development of additional applications for existing products.
The Company has organized its product development efforts to
focus on the further development of hardware and firmware
technologies. The Company's product development efforts are
devoted toward incorporating emerging, higher value components
into the Company's products to provide platforms for additional
applications and enhanced capacity, speed and ease of use.
Additionally, the Company is working toward further reducing
the size and weight of the Company's products and developing
enhancements to streamline production. The Company intends to
increase the size of its technical staff by adding
microelectronic and hardware engineers with particular
understanding of the required military, industrial, and
academic specifications associated with VersaCase TM products
used in those environments.
Production
The Company's operational strategy relies on outsourcing
of manufacturing to reduce fixed costs and to provide
flexibility in meeting market demand. The Company will engage
in extensive and ongoing assessment of outsource manufacturers
to assure the quality of material and final assembly. In
connection with its outsourcing strategy, the Company may seek
to secure additional sources of supply, including additional
contract subassembly and component manufacturers. In the
future, the Company could experience, problems with its
contract manufacturers, such as quality, quantity and on-time
delivery. In addition, the Company may in the future
experience pricing pressure from its contract manufacturers.
The Company will use a rolling six-month forecast based on
anticipated product orders to determine its general materials
and component requirements. Lead times for materials and
components ordered by the Company vary significantly, and
depend on factors such as the specific supplier, purchase terms
and demand for a component at a given time. Currently, the
Company acquires materials and orders certain standard
subassemblies based on the Company's forecast. Upon receipt of
firm orders from customers, the Company will assemble fully-
configured systems and subject them to a number of tests before
shipment. If orders do not match forecasts, the Company may
have excess or inadequate inventory of certain materials and
components. The Company's financial and management information
systems assist management in the timely procurement of
materials and services.
Although the Company generally uses standard parts and
components for its products whenever available, several key
components used in the manufacture of the VersaCase TM family
of products are currently purchased only from single or limited
sources. At present, the Company's single-sourced components
are primarily those which are manufactured according the
pending patent application(s). The Company generally does not
have long-term agreements with any of these single or limited
sources of supply. Any interruption in the supply of any of
these components, or the inability of the Company to procure
these components from alternate sources at acceptable prices
and within a reasonable time, could have a material adverse
effect upon the Company's business, operating results and
financial condition. Qualifying additional suppliers is time
consuming and expensive and the likelihood of errors is greater
with new suppliers. See "Risk Factors -- Substantial Increase
in Manufacturing Operations; Dependence Upon Contract
Manufacturing and Limited Source Suppliers."
Competition
The market in which the VersaCase TM and certain of its
family of products exists receives competition from overseas
computer case manufacturers. The Company believes that the
principal competitive factors in its market are expertise and
familiarity with the needs and specifications of military,
industrial and academies computer users, product features,
reliability, price, timeliness of new product introductions,
timely adoption of emerging industry standards, service,
support, size, name recognition and installed base. The
Company believes that it will be generally competitive with
respect to most of these factors.
The Company believes that there are currently no
competitors that provide an integrated comprehensive solution
to the ergonomic computer case situation. The Company believes
that there are less than 20 current competitors that offers
products which could potentially compete with the VersaCase TM
or will compete with the VersaCase TM family of products being
developed by the Company. Such competitors and certain
prospective competitors have significantly longer operating
histories, larger customer bases, greater name recognition and
technical, financial, manufacturing and marketing resources
than the Company. In addition, a number of these competitors
have long established relationships with the Company's
customers and potential customers. The Company believes it is
likely that competitors will enter the market for most if not
all of the products which the Company will offer. See "Risk
Factors -- Competition."
Intellectual Property
The Company relies on a combination of technological
leadership, trade secret, copyright and trademark protection
and non-disclosure agreements to protect its core technology.
Although the Company has pursued and intends to continue to
pursue patent protection of inventions that it considers
important, the Company believes its success will be largely
dependent on its reputation for technology, product innovation,
affordability, marketing ability and response to customers'
needs. As of the date of this Prospectus, the Company has an
interest in pending U.S. patent applications covering certain
aspects of its technology. There can be no assurance that the
Company or its sister corporation SSTI will be granted any
patents or that, if any patents are granted, they will provide
the Company with significant protection or will not be
challenged.
The Company believes that the rapid rate of technological
change and the relatively long development cycle for personal
computer cases are also significant factors in the protection
of the involved intellectual property. The Company's VersaCase
TM family of products incorporate a unique system
architectures that have been developed based on a broad
understanding of available power supplies, motherboards, disk
drives, and other computer peripherals. As part of its
confidentiality procedures, the Company generally enters into
non-disclosure agreements with its employees and suppliers,
and limits access to and distribution of its proprietary
information. Despite these precautions, it may be possible for
a third party to copy or otherwise obtain and use the Company's
technology without authorization. Accordingly, there can be no
assurance that the Company will be successful in protecting its
intellectual property or that the Company's rights will
preclude competitors from developing products or technology
equivalent or superior to that of the Company.
The computer hardware industry is characterized by the
existence of a large number of patents and frequent litigation
based on allegations of patent infringement. Although the
Company is not aware of any infringement or claimed
infringement by its products or technology of the proprietary
rights of others, there can be no assurance that third parties
will not assert infringement claims against the Company in the
future or that any such assertions will not result in costly
litigation or require the Company to obtain a license to
intellectual property rights of such parties. There can be no
assurance that any such licenses would be available on terms
acceptable to the Company, if at all. Furthermore, litigation
could result in substantial cost to and diversion of efforts by
the Company regardless of outcome. Any infringement claims or
litigation against the Company could materially and adversely
affect the Company's business, results of operations and
financial condition. In addition, the Company's growth strategy
includes a plan to enter the international market and the laws
of some foreign countries do not protect the Company's
proprietary rights regarding the products to the same extent as
do the laws of the United States. See "Risk Factors -
Protection of Proprietary Assets."
Facilities
The Company occupies approximately 2,400 square feet of
office and engineering space in Toledo, Ohio, with rent payable
in the amount of $13,200.00 per year. The Company has no
interests in real property, and sub-leases space to Server
Systems Technology, Inc. (SSTI) and a separate and unaffiliated
software technology company.
Regulation
The Company's products must meet industry standards and
receive certification for use in certain military applications.
In the United States, the Company's products must comply with
various regulations promulgated by the FCC and Underwriters
Laboratories. Internationally, the Company's products must
comply with standards established by the regulatory
authorities in various countries. In addition, certain
products must be certified to be commercially viable.
Although the Company's products have not been denied any
regulatory approvals or certifications to date, any future
inability to obtain on a timely basis or retain domestic or
foreign regulatory approvals or certifications or to comply
with existing or evolving industry standards could have a
material adverse effect on the Company's business, operating
results and financial condition.
Litigation
The Company was formed by Conrad Jelinger who is also a
principal shareholder of Server Systems Technology, Inc.
(SSTI). Pursuant to the terms of a certain License Agreement,
the Company has acquired use of all of the tangible and
intangible assets of SSTI pursuant to the terms of a License
Agreement with SSTI. Potential claims may exist against SSTI,
although no lawsuit is pending as of the date of this filing.
Additionally, the Company has previously sold unregistered
stock in various states as part of a limited offering. General
counsel for the corporation has recently discovered that the
necessary Blue Sky forms in certain states may not have been
properly filed and, as a result, a certain number of those
previously sold shares will need to be rescinded, or given the
opportunity to rescind. This offering includes a number of
shares that have been set aside to replace any non-Blue-Sky-
compliant shares, should those limited offering investors
determine they still desire to keep their investment in the
Company. As a consequence of this situation it is anticipated
a number of those non-compliant shares will be traded with the
registered shares associated with this offering.
The Company is unaware of any other material pending or
potential legal or administrative proceedings now pending or
contemplated against the Company.
Certain legal matters with respect to the legality of the
issuance of the shares of Common Stock offered hereby will be
passed upon for review to General Counsel, Douglas E. Stallings,
Esq.
Employees
The Company employs a full-time staff of eight (8), and a
part-time staff of one (1), which currently comprise the
Company's technical personnel, engineers, internal sales staff
and administrative personnel. The Company has agreements with
all employees covering assignment of inventions and patents to
the Company, confidentiality and non-competition after leaving
the Company, as well as a comprehensive security agreement. A
copy of those typical agreements is attached hereto. The
Company believes that its relationship with its employees is
good.
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information
concerning the executive officers and directors of the Company:
NAME AGE POSITION
Conrad A.H. Jelinger 44 Chairman of the Board, Chief
Executive Officer
Robert A. Kahn 22 Director
Peter J. Barney 26 Director
Conrad A.H. Jelinger incorporated the Company in April
1996 and has served as its Chief Executive Officer and Chairman
of the Board since inception.
Board of Directors
The Board of Directors of the Company currently consists
of three members. Upon consummation of the Offering, the Board
will consist of five members (at least two of whom will not be
employees of, or otherwise affiliated with, the Company) and
will be classified into three classes. One class of directors
will be elected each year, and the members of such class will
hold office for a three-year term or until their successors are
duly elected and qualified. The Board of Directors of the
Company will establish committees, including compensation and
audit committees, each of which will report to the Board of
Directors.
Executive officers are appointed by, and serve at, the
discretion of the Board of Directors. There are no family
relationships among any of the directors or executive officers
of the Company.
Compensation of Directors
During 1996, directors did not receive compensation for
serving as members of the Board of Directors. The Company does
not anticipate compensating directors of the Company who are
not officers or employees of the Company in the near future.
However, directors are reimbursed for travel and other expenses
relating to attendance at meetings of the Board of Directors or
committees.
Option Plan
The Company's 1997 Stock Option Plan (the "Option Plan")
becomes effective on the date this offering takes affect. The
purpose of the Option Plan is to attract and retain qualified
personnel, to provide additional incentives to employees,
officers and consultants of the Company and to promote the
success of the Company's business. A reserve of 250,000 shares
of the Company's Common Stock has been established for issuance
under the Option Plan. The Option Plan is administered by the
Board of Directors who may delegate the administration of the
plan to a Committee of the Board. The Board now has, and such
committee would have, complete discretion to determine which
eligible individuals are to receive option grants, the number
of shares subject to each such grant, the status of any granted
option as either an incentive stock option or a non-statutory
option, the vesting schedule to be in effect for the option
grant and the maximum term for which any granted option is to
remain outstanding.
Each option granted under the Option Plan has a maximum
term of three years, subject to earlier termination following
the optionee's cessation of service with the Company. Options
granted under the Option Plan may be exercised only for fully
vested shares. The exercise price of incentive stock options
and non-statutory stock option granted under the Option Plan
must be at least 100%, of the fair market value of the stock
subject to the option on the date of grant (or 110% with
respect to holders of more than 10% of the voting power of the
Company's outstanding stock). The Board or, when appointed,
such committee, has the authority to determine the fair market
value of the stock. The purchase price is payable immediately
upon the exercise of the option. Such payment may be made in
cash, in outstanding shares of Common Stock held by the
participant, through a promissory note payable in installments
over a period of years or any combination of the foregoing.
The Board of Directors may amend or modify the Option Plan
at any time, provided that no such amendment or modification
may adversely affect the rights and obligations of the
participants with respect to their outstanding options or
vested shares without their consent. In addition, no amendment
of the Option Plan may, without the approval of the Company's
stockholders (i) modify the class of individuals eligible for
participation, (ii) increase the number of shares available for
issuance, except in the event of certain changes to the
Company's capital structure, or (iii) extend the term of the
Option Plan.
As of the date of this Prospectus, the Company had
outstanding options under the Option Plan for an aggregate of
250,000 shares of Common Stock.
CERTAIN TRANSACTIONS
Loan to SSTI
From April 1996 to August 1996, the Company loaned Server
Systems Technology, Inc. (SSTI) approximately $50,000.00 to
enable SSTI to continue operating through the end of its R & D
cycle. The loan to SSTI is due on August 30, 1997. Interest
is payable at the rate of 10% per annum and the original
principal amount of the loan remains outstanding as of the date
of this Prospectus.
Loans Guaranteed by Founder
Mr. Jelinger has personally guaranteed most of the
Company's indebtedness incurred since its inception. Most of
the Company's outstanding indebtedness is expected to be
converted into stock upon the occurrence of the Offering.
Loan To Founder
As of December 31, 1996, the Company has loaned Mr.
Jelinger, the Company's the Board and Chief Executive Officer,
$113,931 which he applied toward the procurement of
technology. The loan to Mr. Jelinger is due on December 31,
1997. Interest is payable at the rate of 7% per annum. The
original principal amount of the loan remains outstanding as of
the date of this Prospectus.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of
5,000,000 shares of Common Stock, no par value. The following
statements are brief summaries of certain provisions relating
to the Company's capital stock contained in its Articles of
Incorporation (the "Articles") and Code of Regulations and the
laws of Ohio.
Common Stock
The Company's authorized Common Stock consists of
5,000,000 shares, no par value, of which 3,500,000 shares are
issued and outstanding as of the date of this Prospectus. The
issued and outstanding shares of Common Stock are fully paid
and non-assessable. Holders of the Company's Common Stock are
entitled to one vote for each share held of record on all
matters submitted to a vote of the stockholders. As of December
31, 1996, there are 232 holders of record of the Company's
Common Stock. Each share of the Company's Common Stock is
entitled to equal dividend rights and to equal rights in
the assets of the Company available for distribution to
holders of Common Stock upon liquidation. The Company's
Articles do not provide for preemptive rights of the holders
of its Common Stock.
The Certificate further provides that stockholder action
must be taken at a meeting of stockholders and may not be
effected by any consent in writing unless approved by a vote
of two-thirds of the Continuing Directors. Special meetings of
stockholders may be called only by the President or by a
majority of the Board of Directors. If a stockholder
wishes to propose an agenda item for consideration, he must
give a brief description of each item and notice to the
Company not less than 120 nor more than 180 days prior
to the meeting. Stockholders will need to present their
proposals or director nominations in advance of the time
they receive notice of the meeting since the Company's
Bylaws provide that notice of a stockholders' meeting must
be given not less than ten or more than 60 days prior to the
meeting date.
The Certificate generally provides further that the
foregoing provisions of the Certificate and Bylaws may be
amended or repealed by the stockholders only with the
affirmative vote of at least 70% of the shares entitled
to vote generally in the election of directors voting together
as a single class unless two-thirds of the Continuing
Directors approve the changes in which event a majority vote
would be sufficient. These provisions exceed the usual
majority vote requirement of Delaware law and are intended to
prevent the holders of less than 70% of the voting power from
circumventing the foregoing terms by amending the Certificate
or Bylaws. These provisions, however, enable the holders of
more than 30% of the voting power to prevent amendments to the
Certificate or Bylaws even if they are approved by the holders
of a majority of the voting power.
The effect of such provisions of the Company's Certificate
and Bylaws may be to make more difficult the accomplishment
of a merger or other takeover or change in control of the
Company. To the extent that these provisions have this effect,
removal of the Company's incumbent Board of Directors and
management may be rendered more difficult. Furthermore,
these provisions may make it more difficult for stockholders
to participate in a tender or exchange offer for Common
Stock and in so doing may diminish the market value of Common
Stock. The Company is not aware of any proposed takeover
attempt or any proposed attempt to acquire a large block of
Common Stock.
Share Allotment
The following table represents the total allocation of all
shares of the Company as of the date of this prospectus. All
shares below the double line reflect the current placement of
shares issued and outstanding.
Authorized Shares 5,000,000
Issued Shares 3,500,000
========================================================
Current Directors* 2,754,800
Private Placement 300,000
Treasury Stock 200,000
Options (Employee) 80,000
Options (Private) 145,200
Options (Future) 20,000
* Including executive officers and their respective
affiliates
PERSONAL LIABILITY OF DIRECTORS
Ohio law authorizes a Ohio corporation to or limit the
personal liability of a director to the corporation and its
stockholders for monetary damages for breach of certain
fiduciary duties as a director. The Company believes that
such a provision is beneficial in attracting and retaining
qualified directors, and accordingly the Code of
Regulations includes a provision which allows for the
indemnification of persons in certain situations who were or
are a party or are threatened to be made a party to any
threatened, pending or completed action, suit or proceeding
whether civil, criminal, administrative or investigative, for
any breach of fiduciary duty as a director, except as provided
under Ohio law. Pursuant to the Code of Regulations, directors
of the Company are not insulated from liability for breach of
their duty of loyalty (requiring that, in making a business
decision, directors act in good faith and in the honest
belief that the action was taken in the best interest of
the corporation. The foregoing provisions of the Code of
Regulations may reduce the likelihood of success of derivative
litigation against directors for breaches of their
fiduciary duties, even though such an action, if
successful, might otherwise have benefited the Company and
its stockholders. Furthermore, the Company intends to
enter into indemnity agreements with present and future
officers and directors for the indemnification of and the
advancing of expenses to such persons to the full extent
permitted by law.
Shares Eligible For Future Sale
Prior to the Offering, there has not been any public
market for securities of the Company. No prediction can be made
as to the effect, if any, that market sales of shares or the
availability of shares for sale will have on the market price
prevailing from time to time. Nevertheless, sales of
substantial amounts of Common Stock in the public market
could adversely affect the prevailing market price.
Upon completion of the Offering, the Company will
have outstanding 3,500,000 shares of Common Stock (based upon
shares outstanding as of December 31, 1996 and assuming the
anticipated exercise of options to purchase shares of Common
Stock prior to the Offering). Of these shares, the 300,000
shares sold in the Offering will be freely tradable without
restriction or further registration under the Securities
Act of 1933, as amended (the "Securities Act"), except
that shares owned by "affiliates" of the Company, as that
term is defined in Rule 144 under the Securities Act
("Affiliates"), may generally only be sold in compliance with
applicable provisions of Rule 144.
In general, under Rule 144, a person (or persons
whose shares are aggregated), including an Affiliate, who
has beneficially owned Restricted Shares for at least two
years (including the holding period of certain prior owners),
will be entitled to sell in "restricted brokers'
transactions" or to market makers, within any three-month
period commencing 90 days after the Company becomes subject
to the reporting requirements of Section 13 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), a number of Restricted Shares that does not exceed
the greater of (i) 1% of the then outstanding shares of
Common Stock or (ii) the average weekly trading volume in
the Common Stock during the four calendar weeks immediately
preceding such sale, subject, generally, to the filing of a
Form 144 with respect to such sales and certain other
limitations and restrictions. In addition, a person (or
person whose shares are aggregated), who is not deemed to have
been an Affiliate at any time during the 90 days immediately
preceding the sale and who has beneficially owned the
Restricted Shares proposed to be sold for at least three years,
is entitled to sell such shares under Rule 144(k) without
regard to the limitations described above. Further, Rule
144A under the Act permits the immediate sale of restricted
shares to certain qualified institutional buyers without
regard to the volume restrictions described above.
In general, under Rule 701 of the Securities Act, any
employee, consultant or advisor of the Company who purchased
shares from the Company in connection with a compensatory
stock or option plan or other written compensatory agreement is
entitled to resell such shares without having to comply
with the public information, holding period, volume limitation
or notice provisions of Rule 144 and Affiliates are entitled
to sell their Rule 701 shares without having to comply with
holding-period restrictions under Rule 144, in each case
commencing 90 days after the Company becomes subject to
the reporting requirements of Section 13 of the Exchange Act.
Rule 701 is available for stockholders of the Company as to
all shares issued pursuant to exercises of options granted
prior to the Offering.
As of the date hereof, the Company has authorized an
aggregate of up to 250,000 shares of Common Stock for
issuance pursuant to its Option Plan. As of the date hereof,
options to purchase no shares have been granted pursuant to
the Option Plan. After the effective date of the applicable
registration statement, shares of Common Stock issued
under the Option Plan will be immediately available for
sale in the public market, subject in certain cases to the
lock-up restrictions described above and subject, in the case
of sales by Affiliates, to certain limitations and restrictions
under Rule 144.
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the Common Stock in Canada is
being made only on a private placement basis exempt from the
requirement that the Company prepare and file a prospectus with
the securities regulatory authorities in each province where
trades of Common Stock are effected. Accordingly, any resale of
the Common Stock in Canada must be made in accordance with
applicable securities laws which will vary depending on the
relevant jurisdiction, and which may require resales to be made
in accordance with available statutory exemptions or pursuant
to a discretionary exemption granted by the applicable
Canadian securities regulatory authority. Purchasers are
advised to seek legal advice prior to any resale of the
Common Stock.
Representations Of Purchasers
Each purchaser of Common Stock in Canada who
receives a purchase confirmation will be deemed to
represent to the Company, the Selling Stockholders and
the dealer from whom such purchase confirmation is received
that (i) such purchaser is entitled under applicable
provincial securities laws to purchase such Common Stock
without the benefit of a prospectus qualified under such
securities laws, (ii) where required by law, that such
purchaser is purchasing as principal and not as agent, and
(iii) such purchaser has reviewed the text above under "Resale
Restrictions."
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign
issuer and Ontario purchasers will not receive the
contractual right of action prescribed by section 32 of
the Regulation under the SECURITIES ACT (Ontario). As a
result, Ontario purchasers must rely on other remedies that may
be available, including common law rights of action for
damages or rescission or rights of action under the civil
liability provisions of the U.S. federal securities laws.
All of the issuer's directors and officers as well as
the experts named herein may be located outside of Canada and,
as a result, it may not be possible for Ontario purchasers to
effect service of process within Canada upon the issuer or
such persons. All or a substantial portion of the assets of the
issuer and such persons and the Selling Stockholders may be
located outside of Canada and, as a result, it may not be
possible to satisfy a judgment against the issuer or such
persons and the Selling Stockholders in Canada or to enforce
a judgment obtained in Canadian courts against the issuer or
such persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Common Stock to whom the SECURITIES ACT
(British Columbia) applies is advised that such purchaser
is required to file with the British Columbia Securities
Commission a report within ten days of the sale of any
Common Stock acquired by such purchaser pursuant to the
Offering. Such report must be in the form attached to British
Columbia Securities Commission Blanket Order BOR #95/17, a copy
of which may be obtained from the Company. Only one such
report must be filed in respect of Common Stock acquired on the
same date and under the same prospectus exemption.
LEGAL MATTERS
The validity of Common Stock offered hereby will be
passed upon for the Company by the Company's General Counsel,
Douglas E. Stallings, Esq.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form
S-1 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act with
respect to the shares of Common Stock offered by this
Prospectus. This Prospectus, which constitutes part of the
Registration Statement, does not contain all of the
information set forth in the Registration Statement and the
exhibits and schedules thereto, certain parts of which have
been omitted as permitted by the rules and regulations of
the Commission. For further information with respect to
the Company and the shares of Common Stock offered hereby,
reference is hereby made to the Registration Statement
including the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any
contract, agreement or any other document referred to herein
are not necessarily complete and, where such contract,
agreement or other document is an exhibit to the
Registration Statement, reference is made to such exhibit for
a complete description of the matter involved, and each
such statement is qualified in all respects by the provisions
of such exhibit. Copies of the Registration Statement,
including the exhibits and schedules thereto, may be inspected
without charge at the public reference facilities maintained by
the Securities and Exchange Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 or obtained
from the Commission upon payment of fees prescribed by the
Commission. The Registration Statement may also be obtained
through the Commission's Internet address at "http://
www.sec.gov."
The Company intends to furnish its stockholders
with annual reports containing audited financial statements
and a report thereon by its independent public accountants and
with quarterly reports for the first three quarters of each
fiscal year containing unaudited interim financial information.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following are the expenses of issuance and distribution
of the common stock registered hereunder on form S-1. All
amounts except the registration fee are estimated.
Registration Fee 909.09
NASDAQ Registration Fee *
Blue Sky Fees and Expenses *
Legal Fees and Expenses *
Accounting Fees and Expenses *
Printing and Engraving Expenses *
Fees to Registrar and Transfer Agent *
Total *
* To be supplied by amendment
Item 14. Indemnification of Directors and Officers
Ohio law authorizes a Ohio corporation to or limit the personal
liability of a director to the corporation and its stockholders
for monetary damages for breach of certain fiduciary duties as a
director. The Company believes that such a provision is
beneficial in attracting and retaining qualified directors, and
accordingly the Code of Regulations includes a provision which
allows for the indemnification of persons in certain situations
who were or are a party or are threatened to be made a party to
any threatened, pending or completed action, suit or proceeding
whether civil, criminal, administrative or investigative, for any
breach of fiduciary duty as a director, except as provided under
Ohio law. Pursuant to the Code of Regulations, directors of the
Company are not insulated from liability for breach of their duty
of loyalty (requiring that, in making a business decision,
directors act in good faith and in the honest belief that the
action was taken in the best interest of the corporation. The
foregoing provisions of the Code of Regulations may reduce the
likelihood of success of derivative litigation against directors
for breaches of their fiduciary duties, even though such an
action, if successful, might otherwise have benefited the Company
and its stockholders. Furthermore, the Company intends to enter
into indemnity agreements with present and future officers and
directors for the indemnification of and the advancing of expenses
to such persons to the full extent permitted by law.
Item 15. Recent Sales of Unregistered Securities
Excluding stock sold to present directors, executive officers and
their respective affiliates the registrant has issued and sold
securities totaling 117,042 shares within the past year. All
offers and sales were made to offerees without any advertisement
or general solicitation and without the involvement of an
underwriter or selling agent. All of the transactions were
negotiated at arm's length. Each of the investors did and was
able to do his/her own due diligence, and each made appropriate
representations of investment intent. All of the issued shares
of Common Stock were sold with the understanding that they are
subject to restrictions prohibiting transfer therof unless in
compliance with applicable securities laws.
It has recently come to the attention of the Corporation's General
Counsel that some of these shares may have been sold without
appropriate Blue Sky Filings in certain states. After diligent
research General Counsel believes that those shareholders who have
received the shares which were not in compliance with applicable
Blue Sky Laws may be entitled to a recission. It is the intent of
the Corporation to rectify this situation by offering a recission
or by allowing noncompliant Blue Sky Law Securities to be
exchanged for a portion of the registered securities associated
with this offering.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits:
[TITLE]
EXHIBIT NUMBER: EXHIBIT:
1.01 Amended Articles Of
Incorporation Of Registrant
2.01 Code of Regulations Of
Registrant
3.01 Typical Employment Agreement
Used By Registrant With Typical
Employees
4.01 Typical Trade Secrets Agreement
of Registrant
5.01 Typical Non-Compete Agreement
of Registrant
6.01 Typical Nondisclosure Agreement
of Registrant
(b) Financial Statement Schedules
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) That for purposes of determining any liability under
the Securities Act, the information omitted from the form of
prospectus filed as part of the registration statement in
reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall
be deemed to be part of the registration statement as of the
time it was declared effective.
(2) That for the purposes of determining any liability
under the Securities Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To provide to the shareholders at the closing of this
offering certificates or other such evidence of stock
ownership in such denominations and registered in such names
as required by law.
(4) That insofar as indemnification for liabilities arising
under the Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the
provisions described in Item 14 hereof, 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 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 of whether
such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Toledo, State of Ohio, on April 24,
1997.
UNITREND, INC.
By: /s/ CONRAD A. H. JELINGER
- ------------------------------------
Conrad A. H. Jelinger
Chief Executive Officer, Chairman of the Board of Directors
and President
POWER OF ATTORNEY
Unitrend, Inc., an Ohio corporation, and each person whose
signature appears below, constitutes and appoints Conrad A. H.
Jelinger, as, such person's true and lawful attorney-in-fact,
with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign
this Registration Statement, any subsequent related registration
statement filed pursuant to Rule 462(b) promulgated under the
Securities Act of 1933, and any and all amendments to such
registration statements and other documents in connection
therewith, and to file the same, and all exhibits thereto and
other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact, full
power and authority to do and perform each and every act and
thing necessary or desirable to be done in and about the
premises, as fully to all intents and purposes as he might or
could do in person, thereby ratifying and confirming all that
said attorney-in-fact, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by
the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ CONRAD A. H. JELINGER Chief Executive April 24, 1997
- --------------------------- Officer, Chairman
Conrad A. H. Jelinger of the Board of
Directors and
President
/s/ DOUGLAS E. STALLINGS General Counsel April 24, 1997
- --------------------------
Douglas E. Stallings
Exhibit 1.01 Amended Articles of Incorporation of Registrant
ARTICLES OF INCORPORATON
OF UNITREND, INC.
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
UNITREND, INC.
ARTICLE I
The name of said corporation shall be Unitrend, Inc.
ARTICLE II
The place in the State of Ohio where its principal office
is to be located is 4730 W. Bancroft Street, Toledo, Ohio,
Lucas County, 43615.
ARTICLE III
The purpose for which it is formed is:
To engage in any lawful act or activity for which
corporations may be formed under Sections 1701.01 to 1701.98
inclusive, of the Ohio Revised Code.
ARTICLE IV
The total number of Shares of all classes of stock which
the Corporation shall have the authority to issue is Five
Million (5,000,000) Shares issuable in series, consisting of
Five Million (5,000,000) Shares of Common Stock with no par
value.
Shares of all classes of stock, authorized and
outstanding, shall be subject to redemption by the Corporation.
Such Shares are redeemable, in whole, at one time, or in part
from time to time, at the option of the Corporation and on
terms and conditions acceptable to the Board of Directors,
through majority vote of the entire Board of Directors and
acceptable to such effected shareholder(s). The Corporation,
through action of its Board of Directors, shall in its sole
discretion, have the right to redeem part of the outstanding
Shares; such part redemption need not be on a pro-rata or lot
basis. Shares redeemed by the Corporation shall be held as
treasury stock.
ARTICLE V
The Board of Directors is hereby authorized to fix and
determine and to vary the amount of working capital of the
Corporation, to determine whether any, and if any, what part of
its surplus, however, created or arising, shall be used or
disposed of or declared in dividends or paid to shareholders,
and without action by the shareholders, to use and apply such
surplus, or any part thereof, at any time or from time to time,
in the purchase or acquisition of Shares of any class, voting
trust certificates for Shares, bonds, debentures, notes, scrip,
warrants, obligations, evidences of indebtedness of the
Corporation or other securities of the Corporation, to such
extent or amount and in such manner and upon such terms as the
Board of Directors shall deem expedient.
ARTICLE VI
Every statue of the State of Ohio hereafter enacted,
whereby the rights or privileges of shareholders of a
corporation organized under the General Corporation Act of said
State are increased, diminished, or in any way affected, or
whereby effect is given to any action authorized, ratified or
approved by less than all the shareholders of any such
corporation, shall apply to this corporation and shall be
binding upon every shareholder thereof to the same extent as if
such statue has been in force at the date of the filing of
these Amended and Restated Articles of Incorporation.
ARTICLE VII
No holder of Shares of the Corporation shall have any
preemptive right to subscribe for or to purchase any Shares of
the Corporation now or hereafter authorized.
ARTICLE VIII
A director of this Corporation shall not be disqualified
by his office from dealing or contracting with the Corporation
as a vendor, purchaser, employee, agent, or otherwise; nor
shall any transaction or contract or act of this Corporation be
void or voidable or in any way affected or invalidated by
reason of the fact that any director or any firm of which any
director is a member or any corporation of which any director
is a shareholder or director is in any way interested in such
transaction or contract or at, provided the fact that such
director or such firm or such Corporation so interested shall
be disclosed or shall be known to the Board of Directors or
such members thereof as shall be present at any meeting of the
Board of Directors at which action upon any such contract or
transaction or act shall be taken; nor shall any such director
be accountable or responsible to the Corporation for or in
respect to any such transaction or contract or act of this
Corporation or for gains or profits realized by him by reason
or the fact that he or any firm of which he is a member or any
corporation of which he is a shareholder or director is
interested in such transaction or contract or act; and any such
director may be counted in determining the existence of a
quorum at any meeting of the Board of Directors of the
Corporation which shall authorize or take action in respect to
any such contract or transaction or transactions or act, and
may vote thereat to authorize, ratify or approve any such
contract or transaction or act with like force and effect as if
he or any firm of which he is a member or any corporation of
which he is a shareholder or director were not interested in
such transaction or contract or act.
ARTICLE IX
Unless otherwise provided herein, any amendments to these
Amended and Restated Articles of Incorporation may be made from
time to time, by the affirmative vote of the holders of at
least two thirds (2/3) of the outstanding voting stock of the
Corporation.
Exhibit 2.01 Code of Regulations Of Registrant
CODE OF REGULATIONS
OF
UNITREND, INC.
TABLE OF CONTENTS
PAGE
ARTICLE I. OFFICES 4
ARTICLE II. SHAREHOLDERS 4
Section 2.01. Annual Meeting 4
Section 2.02. Special Meetings 4
Section 2.03. Place of Meeting 4
Section 2.04. Notice of Meeting 4
Section 2.05. Meetings, How Convened 5
Section 2.06. Closing Transfer Books; Record Date 5
Section 2.07. Share Ledger 5
Section 2.08. Quorum 5
Section 2.09. Proxies 6
Section 2.10. Voting of Shares 6
Section 2.11. Voting of Shares by Certain Holders 6
Section 2.12. Shareholder Action Without a Meeting 6
Section 2.13. Shareholders' Right to Examine Books
and Records 7
ARTICLE III. BOARD OF DIRECTORS 7
Section 3.01. General Powers 7
Section 3.02. Number, Term and Qualifications 7
Section 3.03. Regular Meetings 7
Section 3.04. Special Meetings 7
Section 3.05. Notice 7
Section 3.06. Quorum; Participation by Telephone 8
Section 3.07. Manner of Acting 8
Section 3.08. Action Without a Meeting 8
Section 3.09. Resignations 8
Section 3.10. Removal by Shareholders 8
Section 3.11. Removal by Board of Directors 9
Section 3.12. Vacancies 9
Section 3.13. Compensation 9
Section 3.14. Presumption of Assent 9
Section 3.15. Committees 9
ARTICLE IV. OFFICERS 9
Section 4.01. Number 9
Section 4.02. Election and Term of Office 9
Section 4.03. Removal 10
Section 4.04. Resignations 10
Section 4.05. Vacancies 10
Section 4.06. President 10
Section 4.07. Vice-President(s) 10
Section 4.08. Secretary 11
Section 4.09. Treasurer 11
Section 4.10. Salaries 11
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS 11
Section 5.01. Contracts 11
Section 5.02. Loans 11
Section 5.03. Checks, Drafts, etc. 11
Section 5.04. Deposits 12
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER 12
Section 6.01. Certificates for Shares 12
Section 6.02. Transfer of Shares 12
ARTICLE VII. FISCAL YEAR 12
ARTICLE VIII. DIVIDENDS 12
ARTICLE IX. FINANCIAL INTEREST OF CORPORATE OFFICERS;
EFFECT ON CONTRACTS 13
ARTICLE X. INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS 13
Section 10.01. General Action 13
Section 10.02. Action by Corporation 14
Section 10.03. Success on Merits 14
Section 10.04. Determination to Indemnify 14
Section 10.05. Time of Payment 14
Section 10.06. Non-Exclusive Right 15
Section 10.07. Insurance 15
Section 10.08. Definition Of Corporation 15
Section 10.09. Other Definitions 15
ARTICLEXI. CORPORATE SEAL 15
ARTICLE XII. WAIVER OF NOTICE 16
ARTICLE XIII. AMENDMENTS 16
</TABLE
CODE OF REGULATIONS
OF
UNITREND, INC.
ARTICLE I. OFFICES
The principal office of the Corporation in the State of
Ohio shall be located at 4730 W. Bancroft St., Suite 15,
Toledo, Lucas County, Ohio. The Corporation may have such
other office(s), as the Board of Directors may designate or
as the business of the Corporation may require from time to
time.
ARTICLE II. SHAREHOLDERS
Section 2.01. Annual Meeting. The annual meeting of
the shareholders shall be held at such place and on such date
as the Board of Directors may determine, for the transaction
of such business as may come before the meeting. If the day
fixed for the annual meeting shall be a legal holiday in the
State of Ohio, such meeting shall be held on the next
succeeding business day. If the election of directors shall
not be held on the day designated herein for any annual
meeting of the shareholders, or at any adjournment thereof;
the Board of Directors shall cause the election to be held at
a special meeting of the shareholders as soon thereafter as
conveniently may be arranged.
Section 2.02. Special Meetings. A special meeting of
the shareholders, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the
President, by the Board of Directors, or by the holders of
not less than one-fourth of all the outstanding shares of the
Corporation entitled to vote at such meeting.
Section 2.03. Place of Meeting. The Board of Directors
may designate any place, within the State of Ohio, as the
place of meeting for any annual meeting of the shareholders
or for any special meeting of the shareholders called by the
Board of Directors. A waiver of notice signed by all
shareholders entitled to vote at the meeting may designate
any place, within the State of Ohio, as the place for the
holding of such meeting. If no designation is made, the
place of meeting shall be the registered office of the
Corporation in the State of Ohio.
Section 2.04. Notice of Meeting. Written notice
stating the place, day and hour of the meeting and, in case
of a special meeting, the purpose or purposes for which the
meeting is called, shall, unless otherwise allowed or
prescribed by statute, be delivered not less than five (5)
nor more than fifty (50) days before the date of the meeting,
either personally or by mail, by or at the direction of the
President, or the Secretary, or the persons calling the
meeting, to each shareholder of record entitled to vote at
such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed
to the shareholder at his or her address as it appears on the
records of the Corporation, with postage thereon prepaid.
Section 2.05. Meetings, How Convened. Every meeting,
for whatever purpose, of the shareholders of the Corporation
shall be convened by its President, Secretary or other
officer, or any of the persons calling the meeting by notice
given as herein provided.
Section 2.06. Closing Transfer Books; Record Date. The
Board of Directors shall have power to close the transfer
books of the Corporation for a period not exceeding fifty
days preceding the date of any meeting of shareholders, or
the date of payment of any dividend, or the date for the
allotment of rights, or the date when any change or
conversion or exchange of shares shall go into effect;
provided, however, that in lieu of closing the stock transfer
books the Board of Directors may fix in advance a date, not
exceeding fifty days preceding the date of any meeting of
shareholders, or the date for the payment of any dividend, or
the date for the allotment of rights, or the date when any
change or conversion or exchange of shares shall go into
effect, as a record date for the determination of the
shareholders entitled to notice of; and to vote at, the
meeting and any adjournment thereof; or to receive payment of
the dividend, or to the allotment of rights, or to exercise
the rights in respect of the change, conversion or exchange
of shares. In such case, only the shareholders who are
shareholders of record on the date of closing the transfer
books, or on the record date so fixed, shall be entitled to
notice of; and to vote at, the meeting and any adjournment
thereof; or to receive payment of the dividend, or to receive
the allotment of rights, or to exercise the rights, as the
case may be, notwithstanding any transfer of any shares on
the books of the Corporation after the date of closing of the
transfer books or the record date fixed as aforesaid. If the
Board of Directors does not close the transfer books or set a
record date, only the shareholders who are shareholders of
record at the close of business on the twentieth day
preceding the date of the meeting shall be entitled to notice
of; and to vote at, the meeting, and any adjournment of the
meeting; except that, if prior to the meeting written waivers
of notice of the meeting are signed and delivered to the
Corporation by all of the shareholders of record at the time
the meeting is convened, only the shareholders who are
shareholders of record at the time the meeting is convened
shall be entitled to vote at the meeting, and any adjournment
of the meeting.
Section 2.07. Share Ledger. The original share ledger
or transfer books, or a duplicate thereof kept in the State
of Ohio, shall be prima facie evidence as to who are the
shareholders entitled to vote at any meeting of the
shareholders.
Section 2.08. Quorum. A majority of the outstanding
shares of the Corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at any meeting
of shareholders. If less than a quorum is present, those
present may adjourn the meeting until a specified date, not
longer than ninety days after such adjournment, and no notice
need be given of such adjournment to shareholders not present
at the meeting. Every decision of a majority of such quorum
shall be valid as a corporate act unless a different vote is
required by law, the Articles of Incorporation or the Code of
Regulations of the Corporation.
Section 2.09. Proxies. At all meetings of
shareholders, a shareholder may vote in person or by proxy
executed in writing by the shareholder or by the
shareholder's duly authorized attorney in fact. Such proxy
shall be filed with the Secretary of the Corporation before
or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless
otherwise provided in the proxy. A duly executed proxy shall
be irrevocable only if it states that it is irrevocable and
if; and only so long as, it is coupled with an interest
sufficient in law to support an irrevocable power of
attorney. The interest with which it is coupled need not be
an interest in the shares themselves. If any instrument of
proxy designates two or more persons to act as proxy, in the
absence of any provisions in the proxy to the contrary, the
persons designated may represent and vote the shares in
accordance with the vote or consent of the majority of the
persons named as proxies. If only one such proxy is present,
the proxy may vote all of the shares, and all the shares
standing in the name of the principal or principals for whom
such proxy acts shall be deemed represented for the purpose
of obtaining a quorum. The foregoing provisions shall apply
to the voting of shares by proxies for any two or more
personal representatives, trustees or other fiduciaries,
unless an instrument or order of court appointing them
directs otherwise.
Section 2.10. Voting of Shares. Each outstanding share
entitled to vote shall be entitled to one vote upon each
matter submitted to a vote at a meeting of the shareholders.
Section 2.11. Voting of Shares by Certain Holders.
Shares standing in the name of another corporation may be
voted by such officer, agent or proxy as the Code of
Regulations of such corporation may prescribe, or, in the
absence of such provision, as the Board of Directors of such
corporation may determine.
Shares standing in the name of a deceased person may be
voted by his or her personal representative, either in person
or by proxy. Shares standing in the name of a conservator or
trustee may be voted in person or by proxy, but no
conservator or trustee shall be entitled, as a fiduciary to
vote shares held by him or her without a transfer of such
shares into his or her name.
Shares standing in the name of a receiver may be voted
by such receiver, and shares held by or under the control of
a receiver may be voted by such receiver without the transfer
thereof into his or her name if authority to do so is
contained in an appropriate order of the court by which such
receiver was appointed.
Neither shares of its own stock held by the Corporation,
nor those held by another corporation if a majority of the
shares entitled to vote for the election of directors of such
other corporation are owned beneficially and of record (and
not in trust) by this Corporation, shall be voted at any
meeting or counted in determining the total number of
outstanding shares at any given time.
Section 2.12. Shareholder Action Without a Meeting.
Any action required to be taken at a meeting of the
shareholders, or any action which may be taken at a meeting
of the shareholders, may be taken without a meeting if
consents in writing, setting forth the action so taken, shall
be signed by all of the shareholders entitled to vote with
respect to the subject matter thereof. Such consents shall
have the same force and effect as a unanimous vote of the
shareholders at a meeting duly held. The Secretary of the
Corporation shall file such consents with the minutes of the
meetings of the shareholders.
Section 2.13. Shareholders' Right to Examine Books and
Records. This Corporation shall keep correct and complete
books and records of account, including the amount of its
assets and liabilities, minutes of the proceedings of its
shareholders and Board of Directors, and the names and places
of residence of its officers; and it shall keep at its
registered office or principal place of business in this
state, or at the office of its transfer agent in this state,
if any, books and records in which shall be recorded the
number of shares subscribed, the names of the owners of the
shares, the numbers owned by them respectively, the amount of
shares paid, and by whom, and the transfer of such shares
with the date of transfer. Each shareholder may, during
normal business hours, have access to the books of the
Corporation, to examine the same. The Board of Directors may,
from time to time, further prescribe regulations with respect
to any such examination.
ARTICLE III. BOARD OF DIRECTORS
Section 3.01. General Powers. The property and
business of the Corporation shall be controlled and managed
by its Board of Directors.
Section 3.02. Number, Term and Qualifications. The
number of directors of the Corporation shall be set by the
Board of Directors but shall not be less than three (3) nor
more than twelve (12). Each director shall hold office until
his or her successor shall have been elected and qualified.
Section 3.03. Regular Meetings. A regular meeting of
the Board of Directors shall be held without other notice
than this Code of Regulation immediately after, and at the
same place as, the annual meeting of shareholders. The Board
of Directors may provide, by resolution, the time and place,
within the State of Ohio, for the holding of additional
regular meetings without other notice than such resolution.
Section 3.04. Special Meetings. A special meeting of
the Board of Directors may be called by, or at the request
of; the President or any director. The person or persons
authorized to call such special meeting of the Board of
Directors may fix any place, within the State of Ohio, as the
place for holding such special meeting.
Section 3.05. Notice. Notice of any special meeting
shall be delivered at least five (5) days prior thereto by
written notice delivered personally or left at or mailed to
each director at his or her business or residence address, or
by telegram. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, so
addressed, with postage thereon prepaid. If notice be given
by telegram, such notice shall be deemed to be delivered when
the text of the telegram is delivered to the telegraph
company. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of
objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of; any regular
or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
Section 3.06. Quorum; Participation by Telephone. A
majority of the full Board of Directors shall constitute a
quorum for the transaction of business, but if less than a
majority are present at a meeting, a majority of the
directors present may adjourn the meeting from time to time
without further notice. Members of the Board of Directors
may participate in a meeting of the Board of Directors,
whether regular or special, by means of conference telephone
or similar communications equipment whereby all persons
participating in the meeting can hear each other, and
participation in a meeting in this manner shall constitute
presence in person at the meeting.
Section 3.07. Manner of Acting. The act of a majority
of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors, unless
the act of a different number is required by statute, the
Articles of Incorporation or these Code of Regulations.
Section 3.08. Action Without a Meeting. Any action
that may be taken at a meeting of the Board of Directors or
of a committee of directors may be taken without a meeting if
consents in writing, setting forth the action so taken, are
signed by all of the members of the Board of Directors or of
the committee, as the case may be. Such written consents
shall be filed by the Secretary with the minutes of the
proceedings of the Board of Directors or of the committee, as
the case may be, and shall have the same force and effect as
a unanimous vote at a meeting duly held.
Section 3.09. Resignations. Any director may resign at
any time by delivering written notice to the Board of
Directors, the President or the Secretary of the Corporation.
Any written notice delivered in person to the President or
the Secretary shall be effective upon delivery, unless
otherwise provided therein. Written notice may be delivered
by certified or registered mail, with postage thereon prepaid
and a return receipt requested. Such resignation shall take
effect on the date of the receipt of such notice which date
of receipt shall be deemed to be the date indicated upon the
registered or certified mail return receipt, or at any later
time specified therein. Unless otherwise specified,
acceptance of such resignation shall not be necessary to make
it effective.
Section 3.10. Removal by Shareholders. Any director or
directors may be removed, with or without cause, at a meeting
of the shareholders called expressly for that purpose. The
entire Board of Directors may be removed by a vote of the
holders of a majority of shares then entitled to vote at an
election of directors. If less than the entire board is to
be removed, no one of the directors may be removed if the
votes cast against the directors removal would be sufficient
to elect the director if then cumulatively voted at an
election of the entire Board of Directors; or, if there be
classes of directors, at an election of the class of
directors of which the director is a part.
Section 3.11. Removal by Board of Directors. Any
director may be removed for cause by action of a majority of
the entire Board of Directors if the director to be removed
shall, at the time of removal, fail to meet the Corporation's
qualifications for election as a director as set forth in its
Articles of Incorporation or in these Code of Regulations, or
if the director shall be in breach of any agreement between
such director and the Corporation relating to such director's
services as a director or employee of the Corporation. Notice
of the proposed removal shall be given to all directors of
the Corporation prior to action thereon.
Section 3.12. Vacancies. In case of the death,
incapacity or resignation of one or more of the directors, or
in the case of a newly created directorship resulting from
any increase in the number of directors to constitute the
Board of Directors, a majority of the directors then in
office, although less than a quorum, or the sole remaining
director may fill the vacancy or vacancies until the next
election of directors by the shareholders.
Section 3.13. Compensation. By resolution of the Board
of Directors, each director may be paid his or her expenses,
if any, of attendance at each meeting of the Board of
Directors, and may be paid a stated salary as director or a
fixed sum for attendance at each meeting of the Board of
Directors or both. No such payment shall preclude any
director from serving the Corporation in any other capacity
and receiving compensation therefor.
Section 3.14. Presumption of Assent. A director of the
Corporation who is present at a meeting of the Board of
Directors at which action on any matter is taken shall be
presumed to have assented to the action taken unless the
director dissents or abstains at such meeting, and the fact
of such dissent or abstention (a) is entered in the minutes
of the meeting, or (b) shall be filed by the director in
writing with the person acting as secretary of the meeting
before the adjournment thereof; or (c) shall have been
recorded by the director and forwarded by registered
mail to the Secretary of the Corporation promptly after the
adjournment of the meeting.
Section 3.15. Committees. The Board of Directors, by
resolution adopted by a majority of the board, may designate
two or more directors to constitute (a) an executive
committee, which committee shall have and exercise all of the
authority of the Board of Directors in the management of the
Corporation, or (b) any other committee which shall have the
name, purpose, power and authority delegated to it by such
resolution.
ARTICLE IV. OFFICERS
Section 4.01. Number. The officers of the Corporation
shall be the President, one or more Vice-Presidents (the
number thereof to be determined by the Board of Directors), a
Secretary, and a Treasurer, each of whom shall be elected by
the Board of Directors. Such other officers and assistant
officers as may be deemed necessary may be elected or
appointed by the Board of Directors. Any two or more offices
may be held by the same person.
Section 4.02. Election and Term of Office. The
officers of the Corporation to be elected by the Board of
Directors shall be elected annually by the Board of Directors
at the first meeting of the Board of Directors held after the
first annual meeting of the shareholders. If the election of
officers shall not be held at such meeting, such election
shall be held as soon thereafter as conveniently may be
arranged. Each officer shall hold office until his or her
successor shall have been duly elected and shall have
qualified or until his or her death or until he or she shall
resign or shall have been removed in the manner hereinafter
provided.
Section 4.03. Removal. Any officer, agent, or other
employee elected or appointed by the Board of Directors may
be removed by the Board of Directors, with or without cause,
whenever in its judgment the best interests of the
Corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or
agent shall not of itself create contract rights.
Section 4.04. Resignations. Any officer may resign at
any time by giving written notice to the Board of Directors,
the President or the Secretary of the Corporation. Any
written notice delivered in person to the President or the
Secretary shall be effective upon delivery unless otherwise
provided therein. Written notice may be delivered by
certified or registered mail, with postage thereon prepaid
and a return receipt requested. Such resignation shall take
effect on the date of the receipt of such notice which date
of receipt shall be deemed to be the date indicated upon the
registered or certified mail return receipt, or at any later
time specified therein. Unless otherwise specified herein,
the acceptance of such resignation shall not be necessary to
make it effective.
Section 4.05. Vacancies. A vacancy in any office
because of death, incapacity, resignation, removal,
disqualification or otherwise, may be filled by the Board of
Directors for the unexpired portion of the term.
Section 4.06. President. The President shall be the
principal officer of the Corporation and shall in general
supervise and control all of the business and affairs of the
Corporation. The President may sign, with the Secretary or
any other proper officer of the Corporation thereunto
authorized by the Board of Directors, certificates for shares
of the Corporation, any deeds, mortgages, bonds, contracts,
or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing
and execution thereof shall be expressly delegated by the
Board of Directors or by these Code of Regulations to some
other officer or agent of the Corporation, or shall be
required by law to be otherwise signed or executed. The
President may vote in person or by proxy shares in other
corporations standing in the name of this Corporation. The
President shall in general perform all duties incident to the
office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 4.07. Vice-President(s). In the absence of the
President, whether due to resignation, incapacity or any
other cause, or in the event of the President's death,
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 at the time of their
election, 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-President shall exercise such powers only so long as
the President remains absent or incapacitated, or until the
Board of Directors elects a new President. Any Vice-
President may sign, with the Secretary, an Assistant
Secretary, Treasurer or an Assistant Treasurer, certificates
for shares of the Corporation; and shall perform such other
duties as from time to time may be assigned to him or her by
the President or by the Board of Directors.
Section 4.08. Secretary. The Secretary shall (a) keep
the minutes of the proceedings of the shareholders and of the
Board of Directors in one or more books provided for that
purpose; (b) see that all notices are duly given in
accordance with the provisions of these Code of Regulations
or as required by law; (c) be custodian of the corporate
records and of the seal of the Corporation and see that the
seal of the Corporation is affixed to all documents, the
execution of which on behalf of the Corporation under its
seal is duly authorized; (d) keep a register of the post
office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) sign with the
President, or a Vice-President, certificates for shares of
the Corporation, the issuance of which shall have been
authorized by resolution of the Board of Directors; (f) have
general charge of the stock transfer books of the
Corporation; and (g) in general perform all duties incident
to the office of Secretary and such other duties as from time
to time may be assigned to the Secretary by the President or
by the Board of Directors.
Section 4.09. Treasurer. The Treasurer shall: (a) have
charge and custody of and be responsible for all funds and
securities of the Corporation; (b) receive and give receipts
for moneys due and payable to the Corporation from any source
whatsoever, and deposit all such moneys in the name of the
Corporation in such banks, trust companies or other
depositories as shall be selected in accordance with the
provisions of Article V of these Code of Regulations; and (c)
in general perform all of the duties incident to the office
of Treasurer and such other duties as from time to time may
be assigned to the Treasurer by the President or by the Board
of Directors.
Section 4.10. Salaries. The salaries of the officers
shall be fixed from time to time by the Board of Directors
and no officer shall be prevented from receiving such salary
by reason of the fact that the officer is also a director of
the Corporation and participated in determining and voting
upon the salary.
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 5.01. Contracts. The Board of Directors may
authorize any officer or officers, agent or agents, to enter
into any contract or execute and deliver any instrument in
the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
Section 5.02. Loans. No loans shall be contracted on
behalf of the Corporation and no evidences of indebtedness
shall be issued in its name unless authorized by a resolution
of the Board of Directors. Such authority may be general or
confined to specific instances.
Section 5.03. Checks, Drafts, etc. All checks, drafts
or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the
Corporation, shall be signed by such officer or officers,
agent or agents of the Corporation and in such manner as
shall from time to time be determined by resolution of the
Board of Directors.
Section 5.04. Deposits. All funds of the Corporation
not otherwise employed shall be deposited from time to time
to the credit of the Corporation in such banks, trust
companies or other depositories as the Board of Directors may
select.
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 6.01. Certificates for Shares. Certificates
representing shares of the Corporation shall be in such form
as shall be determined by the Board of Directors.
The shares of the Corporation shall be represented by
certificates signed by the President or a Vice President, and
by the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer of the Corporation and sealed with
the seal of the Corporation. Such seal may be facsimile,
engraved or printed. If such certificate is countersigned by
a transfer agent or registrar other than the Corporation or
its employee, any other signature on the certificate may be
facsimile, engraved or printed. All certificates for shares
shall be consecutively numbered or otherwise identified. The
name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the
Corporation. All certificates surrendered to the Corporation
for transfer shall be canceled, and no new certificate shall
be issued until the former certificate for a like number of
shares shall have been surrendered and canceled, except that
in case of a lost, destroyed or mutilated certificate, a new
one may be issued therefor upon such terms as the Board of
Directors may prescribe.
Section 6.02. Transfer of Shares. Transfer of shares
of the Corporation shall be made only on the stock transfer
books of the Corporation by the holder of record thereof or
by his or her legal representative, or by his or her attorney
thereunto authorized by power of attorney duly executed and
filed with the Secretary of the Corporation, and on surrender
for cancellation of the certificate for such shares. The
person in whose name shares stand on the books of the
Corporation shall be deemed by the Corporation to be the
owner thereof for all purposes.
ARTICLE VII. FISCAL YEAR
The fiscal year of the Corporation shall begin on the
first day of January and end on the thirty-first day of
December in each year, or such other fiscal year as fixed
from time to time by the Board of Directors.
ARTICLE VIII. DIVIDENDS
The Board of Directors may, from time to time, declare
and the Corporation may pay dividends on its outstanding
shares in the manner, and upon the terms and conditions
provided by law and the Articles of Incorporation of the
Corporation.
ARTICLE IX. FINANCIAL INTEREST OF CORPORATE OFFICERS;
EFFECT ON CONTRACTS
No contract or transaction between the Corporation and
one or more of its directors or officers, or between the
Corporation and any other corporation, partnership,
association, or other organization in which one or more of
its directors of officers are directors or officers, or have
a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is
present at or participates in the meeting of the Board or
committee thereof which authorizes the contract or
transaction, or solely because his, her or their votes are
counted for such purpose, if:
(1) The material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed
or are known to the Board of Directors or committee and the
Board of Directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or
(2) The material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed
or are known to the shareholders entitled to vote thereon and
the contract or transaction is specifically approved in good
faith by vote of the shareholders; or
(3) The contract or transaction is fair as to the
Corporation as of the time it is authorized or approved by
the Board of Directors, a committee thereof; or the
shareholders.
Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the
Board of Directors or a committee which authorizes the
contract or transactions.
ARTICLE X. INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS
Section 10.01. General Action. This Corporation shall
indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal,
administrative or investigative, other than an action by or
in the right of this Corporation, by reason of the fact that
he or she is or was a director, officer, employee or agent of
this Corporation, or is or was serving at the request of this
Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorney's
fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection
with such action, suit, or proceeding if he or she acted in
good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action, suit,
or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendre or its equivalent, shall not,
of itself; create a presumption that the person did not act
in good faith and in a manner which he or she 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 his or her
conduct was unlawful.
Section 10.02. Action by Corporation. This Corporation
shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of this
Corporation to procure a judgment in its favor by reason of
the fact that he or she is or was a director, officer,
employee or agent of this Corporation, or is or was serving
at the request of this 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 him or her in connection with the defense or settlement of
the action or suit if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed
to the best interests of the Corporation; 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 for negligence or is conduct in the performance of
his or her duty to the Corporation unless and only to the
extent that the court in which the action or suit was brought
determines upon application that, despite the adjudication of
liability and in view of all the circumstances of the case,
the person is fairly and reasonably entitled to
indemnification for such expenses which the court shall deem
proper.
Section 10.03. Success on Merits. To the extent that a
director, officer, employee or agent of this Corporation has
been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 10.01 and
10.02 of this Article X, or in defense of any claim, issue or
matter therein, he or she shall be indemnified against
expenses, including attorneys fees, actually and reasonably
incurred by him or her in connection with the action, suit,
or proceeding.
Section 10.04. Determination to Indemnify. Any
indemnification under Sections 10.01 and 10.02 of this
Article X, unless ordered by a court, shall be made by this
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 he
or she has met the applicable standard of conduct set forth
in this Article X. The determination shall be made by the
Board of Directors by a majority vote of a quorum consisting
of directors who were not parties to the section, suit or
proceeding, or if such a quorum is not obtainable, or even if
obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or by the
stockholders.
Section 10.05. Time of Payment. Expenses incurred in
defending a civil or criminal action, suit or proceeding
shall be paid by this Corporation in advance of the final
disposition of the action, suit, or proceeding as authorized
by the Board of Directors in the specific case upon receipt
of an undertaking by or on behalf of the director, officer,
employee or agent to repay such amount unless it shall
ultimately be determined that he or she is entitled to be
indemnified by this Corporation as authorized in this Article
X.
Section 10.06. Non-Exclusive Right. This Article is
intended to provide for indemnification to the fullest extent
permitted by law, as in effect on the date hereof or as
hereafter adopted or amended. The indemnification provided
by this Article shall not be deemed exclusive of any other
rights to which those seeking indemnification may be entitled
under any other Code of Regulation, agreement, vote of
shareholders or disinterested directors or otherwise, both as
to action in his or her official capacity and as to action in
another capacity while holding such office, and shall
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.
Section 10.07. Insurance. This Corporation may
purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee or agent of this
Corporation, or is or was serving at the request of this
Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him
or her and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not this
Corporation would have the power to indemnify' him or her
against such liability under the provisions of this Article
X.
Section 10.08. Definition of Corporation. For the
purpose of this Article X, references to "this Corporation"
include all constituent corporations absorbed in a
consolidation or merger as well as the resulting or surviving
corporation so that any person who is or was a director,
officer, employee or agent of such a constituent corporation
or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise shall stand in the same position under the
provisions of this section with respect to the resulting or
surviving corporation as he or she would if he or she had
served the resulting or surviving corporation in the same
capacity.
Section 10.09. Other Definitions. For the purposes of
this Article X, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to
an 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 or she
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 interest
of the Corporation" as referred to in this Article.
ARTICLE XI. CORPORATE SEAL
The Board of Directors may provide a corporate seal in
the form of a circle with the name of the Corporation
inscribed thereon.
ARTICLE XII. WAIVER OF NOTICE
Whenever any notice is required to be given to any
shareholder or director of the Corporation under the
provisions of these Code of Regulations or of the Articles of
Incorporation or of The Ohio General Corporation Law, a
waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of
such notice.
ARTICLE XIII. AMENDMENTS
These Code of Regulations may be altered, amended or
repealed and new Code of Regulations adopted by action of a
majority of the directors at any regular or special meeting
of the directors.
Adopted July 2,1996
__________________________________
Conrad A. H. Jelinger
CEO/Director
__________________________________
Witness (Notary)
Exhibit 3.01 Typical Employment Agreement Used By Registrant
EMPLOYMENT AGREEMENT
This Employment Agreement (hereafter referred to as the
"Agreement") is effective as of
____________________________________ between Unitrend, Inc.
an Ohio corporation (hereafter referred to as "the Company"),
and __________________________________ (hereafter referred
to as the "Employee").
RECITALS
The Company desires to employ Employee and Employee
desires to accept such employment in accordance with the
terms and conditions set forth below.
AGREEMENTS
In consideration of the mutual covenants contained
herein, and for other good and valuable consideration,
receipt of which is acknowledged by the parties, the Company
and Employee agree as follows:
1. TERM OF EMPLOYMENT: This Agreement shall be in
effect from the date specified above, until it is terminated,
which may be done by either party at any time, on 14 days
written notice to the other party. The Company employs
Employee and Employee accepts employment with the Company for
an undefined period of time, the Employee being known as an
"at-will employee." This Agreement shall in no terms
guarantee future employment with the Company. Employee
acknowledges that he or she is an at-will employee, and
consequently subject to dismissal or discipline without
cause, at the discretion of the Company. Employee
understands that no representative of the Company, other than
the President and/or Chief Executive Officer, has authority
to change the terms of this at-will employment relationship
and that any such change will occur only in a subsequent
written employment contract. During Employee's employment
and for an additional three year period Employee will be
bound by the confidentiality provisions found in Paragraph 10
of this employment Agreement. Employee expressly
acknowledges his/her status as an at-will employee according
to the conditions contained in this Paragraph 1 by initialing
the box to the right.
2. NATURE OF EMPLOYMENT:
A. The Company does hire and employ Employee
as a(n) _______________________________, and Employee does
accept and agree to such hiring and employment. Subject to
the supervision and pursuant to the orders, advice, and
directions of the President and/or Chief Executive Officer of
the Company or immediate supervisor of the Employee, Employee
shall ______________________________________________________
_____________________________________________________________
_____________________________________________________________
____ as part of Employee's duties and obligations of the
above-named position, and shall perform such other duties as
are customarily performed by one holding such position in
other similar businesses or enterprises as that engaged in by
the Company, and shall also additionally render such other
and unrelated services and duties as may be assigned to
Employee from time to time by the President and/or Chief
Executive Officer of the Company.
B. MANNER OF PERFORMANCE OF EMPLOYEE'S DUTIES:
Employee agrees to perform, at all times faithfully,
industriously, and to the best of his/her ability,
experience, and talent, all of the duties that may be
required of and from him/her pursuant to the express and
implicit terms of this Agreement, to the reasonable
satisfaction of the Company. Such duties shall be rendered
at 4730 W. Bancroft, Ste. 15, Toledo, Ohio and at such other
place or places as the Company shall in good faith require or
as the interests, needs, business, and opportunities of the
Company require or make advisable.
C. PAYMENT AND REIMBURSEMENT: The Company shall
pay Employee and Employee agrees to accept from the Company,
in full payment for Employee's services under this Agreement,
compensation at the rate of _______________ dollars per
year, payable weekly during the time this Agreement shall be
in force. In addition, the Company agrees that it will
reimburse Employee for any and all necessary, customary, and
usual expenses incurred by him/her while traveling for and on
behalf of the Company pursuant to the Company's directions.
3. UNIQUE SERVICES: Employee hereby acknowledges and
agrees that the services to be performed under the terms of
this Agreement are of a special, unique, unusual,
extraordinary, and intellectual character that gives them a
peculiar value, the loss of which cannot be reasonably or
adequately compensated in damages in any action at law.
Employee, therefore, expressly agrees that the Company, in
addition to any rights or remedies that the Company might
possess, shall be entitled to injunctive and other equitable
relief to prevent or remedy a breach of this Agreement by
Employee.
4. INDEMNIFICATION: The Company shall defend Employee
against all claims made against Employee, and it shall
indemnify Employee for all losses sustained by Employee, in
direct consequence of the discharge of Employee's duties on
the Company's behalf, including any claim brought against, or
any loss sustained by, Employee in his or her role as an
Employee of the Company; provided, that Employee promptly
notifies the Company in writing of any such claim, gives the
Company full authority for the conduct of such defense and
participates in and aides the Company's counsel by giving
whatever time, information, expertise, and assistance is
reasonably requested for such defense. Employee agrees to
indemnify and hold the Company and its shareholders,
harmless, individually and collectively, from and against any
liabilities, claims, costs, or expenses (including
shareholders) as result of actions by Employee in excess of
his or her authority as set forth herein.
5. EMPLOYEE BENEFITS:
A. VACATION TIME AND SICK LEAVE: Employee shall
be entitled to five (5) days of vacation without loss of
compensation after serving for six (6) months with the
Company. After serving for one (1) year with the Company the
Employee shall be entitled to a second five (5) days of
vacation without loss of compensation. After serving for
eighteen (18) months with the Company the Employee shall be
entitled to a third five (5) days of vacation without loss of
compensation. Upon serving for two (2) years with the
Company and in each successive calendar year after Employee's
two (2) year service date, Employee shall be entitled to
fifteen (15) days of vacation without loss of compensation.
Employee shall be entitled to qualify for one (1) day of sick
leave without loss of compensation for each month served with
the Company, up to a maximum of ten (10) days per calendar
year. The length of time served shall begin on the effective
date of employment as set forth below. In the event that
Employee takes vacation time or sick leave in excess of the
maximum numbers set forth in this paragraph, the President
and/or Chief Executive Officer shall determine whether or not
Employee shall receive compensation for such excess days. In
the event that Employee does not for any reason take the
total amount of vacation time or sick time authorized during
any year, he or she shall be deemed to have waived any
entitlement to vacation time and sick leave for that year.
These sick days and vacation days may not be accumulated, nor
may they be sold back to the Company at the end of any year,
or upon termination of employment.
B. EDUCATIONAL EXPENSES: According to the Grade
Based Reimbursement Schedule found below Employee shall be
entitled to reimbursement for certain educational expenses
incurred for Job-Related Schooling for which Employee has not
otherwise been compensated. "Job-Related Schooling" is
defined as those classes and/or courses that are taken to
further Employee's ability to fulfill his/her duties as
described in Paragraph 2.A. of this Agreement, or as
specifically approved in writing by both the President and
Chief Executive Officer of the Company.
Grade-Based Reimbursement Schedule
Grade Received Tuition Books
Reimbursement Reimbursement
A 100% 100%
B 75% 75%
C 50% 50%
D and below none none
C. ADDITIONAL BENEFITS: Employee shall be
entitled to all other employment benefits made available to
other Employees of the Company, commensurate with the
Employee's position and title at the Company and the
Employee's work location. Such benefits shall include the
health insurance made available to Employees, disability
insurance made available to Employees, life insurance,
pension and retirement plans as are adopted from time to time
by the Company.
6. TERMINATION OF THE AGREEMENT: The Employee may be
terminated for any or no reason including but not limited to
cause (including deliberate attempts to injure the Company,
neglecting material duties, committing fraudulent or
dishonest actions, or alcohol or illegal drug use while on
Company time). The 14 day notice provision contained in
Paragraph 1 of this Agreement does not apply to terminations
for cause. Termination for cause shall result in the
Employee's forfeiture of any bonuses, salaries, benefits, or
entitlements other than those required by law or specifically
provided under the terms of an applicable planned document.
Payment of any further bonuses or other salaries claimed by
Employee will be in the sole and absolute discretion of the
Company and Employee shall have no entitlement thereto.
Termination of this Agreement by any means will cause
Employee to forfeit any unpurchased stock options offered to
Employee by the Company, unless otherwise provided in the
terms of the applicable options offer(s).
7. DISCONTINUANCE OF BUSINESS AS TERMINATION OF
EMPLOYMENT:
Notwithstanding anything in this Agreement to the contrary,
in the event that the Company shall discontinue operating its
business at 4730 W. Bancroft, Ste. 15, Toledo, Ohio, then
this Agreement will terminate as of the last day of the month
in which the Company ceases operations at that location with
the same force and effect as if that day were originally set
forth as the termination date of this Agreement. The 14 day
notice provision contained in Paragraph 1 of this Agreement
does not apply to terminations as a result of the Company's
discontinuance of business.
8. OPTION TO TERMINATION CONTRACT FOR PERMANENT
DISABILITY OF EMPLOYEE: Notwithstanding anything in this
Agreement to the contrary, the Company has the option to
terminate this Agreement in the event that during its term
Employee shall become Permanently Disabled as defined below.
Such option shall be exercised by the Company giving notice
to Employee by registered mail, addressed to Employee's last
known residence, or at such other address as Employee shall
designate in writing, of its intention to terminate this
Agreement on the fourteenth day after such notice is mailed,
not including the date of mailing. On the giving of such
notice this Agreement comes to an end with the same force and
effect as if that day were originally set forth as the
termination date. For the purposes of this Agreement,
Employee shall be deemed to have become "Permanently
Disabled" if, during any consecutive 12 month period, because
of ill health, physical or mental disability, or for other
causes beyond his/her control, he/she shall have been
continuously unable or unwilling or have failed to perform
his/her duties under this contract for _______________
consecutive days, or if, during any consecutive 12 month
period, he/she shall have been unable or unwilling or have
failed to perform his/her duties for a total period of
________ days.
9. COMMITMENTS BINDING ON THE COMPANY ONLY ON WRITTEN
CONSENT: Anything contained in this Agreement to the
contrary notwithstanding, it is understood and agreed that
Employee shall not have the right to make any contracts or
commitments for or on behalf of the Company without the
written consent of the Company.
10. CONFIDENTIAL INFORMATION: Employee recognizes and
acknowledges that in the course of his/her employment
hereunder, and during prior period of employment with the
Company (if any), he/she has occupied and will continue to
occupy a position of trust and confidence. As a consequence,
it will be necessary for Employee to acquire information
which could include for example, information in whole or in
part concerning the Company's sales, sales volume, sales
methods, sales proposals, identity of customers and
prospective customers, amount or kind of customer's purchases
from the Company, the Company's sources of supply, the
Company's computer programs, system documentation, special
hardware, products hardware, related software development,
the Company's manuals, trade secrets, formulae, processes,
methods, machines, compositions, ideas, development concepts,
data and know-how, improvements, inventions or other
confidential or proprietary information belonging to the
Company or relating to the Company's affairs, the Company's
manner of operation and/or its plans and strategies, pricing
policies, and all papers, resumes and records (including
computer records) of documents containing information not
disclosed by the Company that was learned by Employee in the
course of his/her employment with the Company (collectively
referred to herein as "Confidential Information"). Employee
recognizes and acknowledges that Confidential Information is
the Property of the Company, and that such information is
specialized, unique in nature and of great value to the
Company and that such information gives the Company a
competitive advantage. Employee further recognizes and
acknowledges that Employee's use, misappropriation or
disclosure of the Confidential Information would constitute a
breach of trust and could cause irreparable injury to the
Company. Additionally, Employee recognizes and acknowledges
that it is essential to the protection to the Company's
goodwill and to the maintenance of the Company's competitive
position and that the Confidential Information be kept
secret. Consequently, Employee specifically agrees that
Employee will not, except as may be required to perform
his/her duties hereunder or as required by applicable law,
without limitation and time until such information shall have
become public other than by Employee's unauthorized
disclosure, disclose the Confidential Information to others,
or use the Confidential Information, whether directly or
indirectly to the Employee's own advantage or the advantage
of others.
11. RETURN OF MATERIAL UPON TERMINATION: Employee
agrees to deliver or return to the Company at the Company's
request at any time or upon the termination of his or her
employment or as soon thereafter as possible, all
equipment/devices loaned to Employee, all documents, computer
tapes and disks, records, lists, data, drawings, prints,
notes and written information (and all copies thereof)
furnished by the Company or prepared by the Employee during
the term of his or her employment with the Company, or
concerning the Company or the Company's customers, potential
customers, suppliers and contractors, or constituting
Confidential Information.
12. NOTICES: Any notices to be given hereunder by
either party to the other shall be in writing and may be
transmitted by personal delivery or by certified mail, return
receipt requested. Mailed notices shall be addressed to the
parties as follows:
If notice is to the Company, to:
Unitrend, Inc.
Attn.: Chief Executive Officer
4730 W. Bancroft, Ste.15
Toledo, Oh. 43615
Copy:
Unitrend, Inc. Corporate Counsel
4730 W. Bancroft, Ste.15
Toledo, Oh 43615
If notice is to Employee to:
______________________________(name)
______________________________(address)
______________________________(address)
Either party may change its address by written notice in
accordance with this section. Notices delivered personally
shall be deemed communicated as of the dates of actual
receipt; mailed notices shall be deemed communicated as of
forty-eight hours after the date of mailing.
13. ATTORNEY'S FEES AND COSTS: If either party fails
to perform its respective obligations under this Agreement,
and the other party is thereby required to incur attorney's
fees or other fees or costs, including but not limited to the
costs of arbitration, the party so incurring such fees and
costs shall be entitled to the payment of those fees and
costs by the breaching party.
14. ENTIRE AGREEMENT: This Agreement supersedes any
and all other agreements, either oral or in writing, between
the parties hereto with respect to the employment of Employee
by the Company and contains all of the covenants and
agreements between the parties with respect to that
employment in any manner whatsoever. Each party to this
Agreement acknowledges that no representations, inducements,
promises, or agreements either oral or written have been made
by any party, or anyone acting on behalf of any party, which
are not embodied herein, and that no other agreement,
statement, or promise not contained in this agreement shall
be valid or binding on either party.
15. MODIFICATIONS: Any modifications of this Agreement
shall be effective only if it is in writing and signed by
both parties.
16. EFFECT OF WAIVER: The failure of either party to
insist on strict compliance with any of the terms, covenants,
or conditions of this Agreement by the other party shall not
be deemed a waiver of that term, covenant, or condition, nor
shall any waiver or relinquishment of any right or power at
any one time or times be deemed a waiver or relinquishment of
that right or power for all or any other times.
17. PARTIAL INVALIDITY: If any provision of this
Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions
shall nevertheless continue in full force without being
impaired or invalidated in any way unless such partial
invalidity materially affects the intent of the parties.
18. GOVERNING LAW: This Agreement shall be governed
and construed in accordance with the laws of the State of
Ohio.
19. ASSIGNABILITY: The rights and duties of either
party hereunder shall not be assignable by either party
except if this Agreement and all rights and obligations
hereunder may be assigned by the Company to, and be assumed
by, any corporation or other business entity which succeeds
to all or substantially all of the assets and business of the
Company through merger, consolidation, acquisition of assets,
or other corporate reorganization.
20. SURVIVAL: The covenants, agreements,
representations, and warranties contained in or made pursuant
to this Agreement shall survive Employee's termination of
employment irrespective of any investigation made by or on
behalf of any party.
21. ADVICE OF COUNSEL: Employee understands the nature
of and the burdens imposed by the restrictive covenants
contained in this Agreement. Employee has independently
consulted with his/her counsel, or has had ample opportunity
to consult with legal counsel of his/her choice, and after
such consultation or opportunity for consultation represents
and agrees that such covenanted are reasonable, enforceable,
and proper in duration, scope, and effect.
22. HEADINGS: The captions in this Agreement are for
the convenience of the parties, and have no force or effect.
23. RESTRICTIVE COVENANTS: Employee represents and
warrants that his/her experience and capabilities are such
that the restrictive covenants set forth herein will not
prevent him/her from earning his/her livelihood and that
Employee will be fully able to earn an adequate livelihood
for himself/herself and his/her dependents if any of such
provisions should be specifically enforced against Employee.
IN WITNESS WHEREOF, the parties have executed this
Agreement effective as of this day and year first above
written.
Unitrend, Inc.,
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
Employee: ________________________________
Printed name: ____________________________
Address: _________________________________
Effective date: __________________________
Signing date: ____________________________
ATTESTATION BY EMPLOYEE
I, __________________________________, do hereby attest and
certify that I have read the above Agreement and that I have
been advised that due to the nature of the above Agreement, I
should seek legal counsel prior to executing such Agreement.
I have (have not) sought such legal counsel and understand
that the above Agreement restricts my rights and activities
with regard to my future work and/or employment possibilities
and that the Agreement contains various duties and
obligations of mine with regard to Unitrend, Inc.
Signed:____________________________________
Dated: ______________________
Exhibit 4.01 Typical Trade Secrets Agreement of Registrant
TRADE SECRETS AGREEMENT
This Trade Secrets Agreement (hereafter referred to as
the "Agreement") is effective as of
____________________________________ between Unitrend, Inc.
an Ohio corporation (hereafter referred to as "the Company"),
and ________________________________________ (hereafter
referred to as "Employee").
RECITALS
The Company desires to enter into the following
Agreement with Employee and Employee desires to enter into
the Following Agreement in accordance with the terms and
conditions set forth below.
AGREEMENTS
In consideration of the mutual covenants contained
herein, and for other good and valuable consideration,
receipt of which is acknowledged by the parties, the Company
and Employee agree as follows:
1. ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS:
A. DEFINITION OF "INVENTIONS": As used herein the
term "Inventions" shall mean all inventions, discoveries,
improvements, formulas, trade secrets, techniques, methods,
data and know-how, programs, systems, specifications,
documentation, algorithms, flow charts, logic diagrams,
source codes, processes, and other information, including
works-in-progress, whether or not the subject of patent,
trademark, copyright, trade secrets, or masked work
protection, and whether or not reduced to practice by
Employee, either alone or jointly with others, during the
period of employment with the Company and for one year
following the termination of Employee's employment with the
Company which (i) relate to the actual or anticipated
business, activities, research, or investigations of the
Company, or (ii) result from or are suggested by work
performed by Employee for the Company (whether or not made or
conceived during normal working hours or on the premises of
the Company), or (iii) which result, to any extent, from the
use of the Company's premises or property.
B. WORK FOR HIRE: Employee expressly acknowledges
all copyrightable aspects of the Inventions are to be
considered "works made for hire" within the meeting of the
Copyright Act of 1976, as amended (the "Act"), and that the
Company is to be "Author" within the meaning of such Act for
all purposes. All such copyrightable works, as well as all
copies of such works and whatever medium fixed or embodied,
shall be owned exclusively by the Company as its creation.
Employee hereby expressly disclaims any and all interests in
any of such copyrightable works and waives any right of droit
morale or similar rights.
C. ASSIGNMENT: Employee acknowledges and agrees
that all Inventions constitute trade secrets of the Company
or the member of the Company, as applicable and shall be the
sole property of the Company, as applicable or any other
entity designated by the Company. In the event that title to
any or all the Inventions or any part or element thereof may
not by operation of law vest in the Company, as applicable,
or such Inventions may be found as a matter of law not to be
"works made for hire" within the meaning of the Act, Employee
hereby conveys and irrevocably assigns to the Company, as
applicable, without further consideration, all his or her
right, title, and interest, throughout the universe and in
perpetuity, in all Inventions and all copies of them, in
whatever medium fixed or embodied, and in all written
records, graphics, diagrams, notes, or reports relating
thereto in Employee's possession or under his or her control,
including, with respect to any of the foregoing copyright,
patent, trademark, trade secrets, masked work, and any all
other proprietary rights therein, the right to modify and
create derivative works, the right to invoke the benefit of
any priority under any international convention and all
rights to register and renew same.
D. PROPRIETARY NOTICES; NO FILINGS; WAIVER OR
MORAL RIGHTS: Employee acknowledges that all Inventions
shall, at the sole option of the Company, bear the Company's
patent, copyright, trademark, trade secret, and masked work
notices. Employee agrees not to file any patent, copyright,
or trademark applications relating to any Invention, except
with prior written consent of an authorized representative of
the Company. Employee hereby expressly disclaims any and all
interest in any Inventions and waives any right of droit
morale or similar rights, such as rights of integrity or the
right to be attributed as the creator of the Invention.
E. FURTHER ASSURANCES: Employee agrees to promptly
assist the Company, or any party designated by the Company,
at the Company's request, whether before or after the
termination of employment, however such termination may
occur, in perfecting, registering, maintaining and enforcing,
in any jurisdiction, the Company's rights in the Inventions
by performing all acts and executing all documents and
instruments deemed necessary or convenient by the Company,
including by way of illustration and not limitation: (i)
executing assignments, applications, and other documents and
instruments in connection with obtaining patents, copyrights,
trademarks, masked works, or other proprietary protections
for the Inventions; and confirming the assignment to the
Company of all right, title, and interest in the Inventions
or otherwise establishing the Company's exclusive ownership
rights therein; (ii) cooperating in the prosecution of
patent, copyright, trademark, and masked work applications,
as well as in the enforcement of the Company's rights in the
Inventions, including, but not limited to testifying in court
or before any patent, copyright, trademark, or masked work
registry office, or any other administrative body. Employee
will be reimbursed for all out-of-pocket costs incurred in
connection with the foregoing if such assistance is requested
by the Company after the termination of employment. In
addition, to the extent that after the termination of
employment for whatever reason Employee's technical expertise
shall be required in connection with the fulfillment of the
aforementioned obligations, the Company will compensate
Employee at a reasonable rate for the time actually spent by
Employee at the Company's request for rendering such
assistance.
F. POWER OF ATTORNEY: Employee hereby irrevocably
appoints the Company to be his or her attorney in fact and
thereby expressly authorizes the Company in his or her name
and on his or her behalf to execute any document, undertake
any action and generally to use his or her name for the
purpose of giving to the Company the full benefit of the
assignment provisions set forth above.
G. CONSENT TO USE OF NAME: The company reserves
the right (but shall not have the obligation) to publicize
Employee's name and background in connection with the
marketing of Inventions or the enforcement of the Company's
rights therein. Employee is responsible for supplying to the
Company his or her resume or curriculum vitae for such
purposes. Employee agrees that the Company shall have the
sole control over the type style, type size, or the placement
of his or her name on any materials, and over the final
content of any biography used in set material.
H. DISCLOSURE OF INVENTIONS: Employee will make
full and prompt disclosure to the Company of all Inventions
subject to assignment to the Company pursuant to Paragraph
1.C. of this Agreement and all information relating thereto
in Employee's possession or under his or her control as to
possible applications and use thereof.
I. NO VIOLATION OF THIRD PARTY RIGHTS: Employee
represents, warrants and covenants that he or she (i) will
not in the course of employment, infringe upon or violate any
proprietary rights of any third parties (including, without
limitations, any third party confidential relationships,
patents, copyrights, masked works, trade secrets, or other
proprietary rights); (ii) is not a party to any conflicting
agreements with third parties which will prevent him or her
from fulfilling these terms of employment and the obligations
of this Agreement; (iii) does not have in his or her
possession any confidential or proprietary information or
documents belonging to others and will not disclose to the
Company, use or induce the Company to use, any confidential
or proprietary information or documents of others; (iv)
agrees to respect any and all valid obligations which he or
she may now have to prior employers or to others related to
confidential information, Inventions, or discoveries which
are the property of those prior employers or others as the
case may be. Employee has supplied or shall promptly supply
to the Company a copy of each written agreement to which
Employee is subject (other than any agreement to which the
Company is a party) which includes any obligation of
confidentiality, assignment of Inventions, or non-
competition. Employee agrees to indemnify and save harmless
the Company from any loss, claim, damage, costs, or expenses
of any kind (including without limitation, reasonable
attorney's fees) to which the Company may be subjected by
virtue of a breach by Employee of the foregoing
representations, warranties and covenants.
J. OBLIGATIONS UPON TERMINATION: In the event of
the termination of his or her employment for whatever reason,
Employee will promptly (i) deliver to the Company all
his or her physical property, (including but not limited to
disks, documents, notes, printouts, and all copies thereof)
and other materials in Employee's possession or under
Employee's control pertaining to business of the Company,
including but not limited to, those embodying or relating to
the Inventions and the confidential information as outlined
above; (ii) deliver to the Company's Legal Counsel or other
person designated by the Company all notebooks and other data
relating to research or experiments or other work conducted
by Employee in the scope of employment or any Inventions
made, created, conceived, authored, or reduced to practice by
Employee, either alone or jointly with others; and (iii)
make full disclosure relating to any Inventions. If Employee
would like to keep certain property such as material relating
to professional societies or other non-confidential material
upon the termination of employment with the Company, he/she
agrees to discuss such issues with the Company. Where such a
request does not put the Company at risk or is not
confidential information of the Company, the Company will
customarily grant the request. Upon termination of
employment with the Company, Employee's obligations under
this section shall survive and the Employee shall, if
requested by the Company, reaffirm Employee's recognition of
the importance of maintaining the confidentiality of the
Company's confidential information and reaffirm all of the
Employee's obligations set forth in this section.
2. NOTICES: Any notices to be given hereunder by either
party to the other shall be in writing and may be transmitted
by personal delivery or by certified mail, return receipt
requested. Mailed notices shall be addressed to the parties
as follows:
If notice is to the Company, to:
Unitrend, Inc.
Attn.: Chief Executive Officer
4730 W. Bancroft, Ste.15
Toledo, Oh. 43615
Copy:
Unitrend, Inc. Corporate Counsel
4730 W. Bancroft, Ste.15
Toledo, Oh 43615
If notice is to Employee to:
______________________________(name)
______________________________(address)
______________________________(address)
Either party may change its address by written notice in
accordance with this section. Notices delivered personally
shall be deemed communicated as of the dates of actual
receipt; mailed notices shall be deemed communicated as of
forty-eight hours after the date of mailing.
3. ATTORNEY'S FEES AND COSTS: If either party fails to
perform its respective obligations under this Agreement, and
the other party is thereby required to incur attorney's fees
or other fees or costs, including but not limited to the
costs of arbitration, the party so incurring such fees and
costs shall be entitled to the payment of those fees and
costs by the breaching party.
4. ENTIRE AGREEMENT: This Agreement supersedes any and
all other trade secrets agreements, either oral or in
writing, between the Employee and the Company and contains
all of the covenants and agreements between the parties with
respect to trade secrets and Inventions in any manner
whatsoever. Each party to this Agreement acknowledges that
no representations, inducements, promises, or agreements
either oral or written have been made by any party, or anyone
acting on behalf of any party, which are not embodied herein,
and that no other agreement, statement, or promise as
pertaining to trade secrets or Inventions not contained in
this Agreement shall be valid or binding on either party.
5. MODIFICATIONS: Any modifications of this Agreement
shall be effective only if they are in writing and signed by
both parties.
6. EFFECT OF WAIVER: The failure of either party to
insist on strict compliance with any of the terms, covenants,
or conditions of this Agreement by the other party shall not
be deemed a waiver of that term, covenant, or condition, nor
shall any waiver or relinquishment of any right or power at
any one time or times be deemed a waiver or relinquishment of
that right or power for all or any other times.
7. PARTIAL INVALIDITY: If any provision of this
Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions
shall nevertheless continue in full force without being
impaired or invalidated in any way unless such partial
invalidity materially affects the intent of the parties.
8. GOVERNING LAW: This Agreement shall be governed and
construed in accordance with the laws of the State of Ohio.
9. ASSIGNABILITY: The rights and duties of either party
hereunder shall not be assignable by either party except if
this Agreement and all rights and obligations hereunder may
be assigned by the Company to, and be assumed by, any
corporations or other business entity which succeeds to all
or substantially all of the assets and business of the
Company through merger, consolidation, acquisition of assets,
or other corporate reorganization.
10. SURVIVAL: The covenants, agreements,
representations, and warranties contained in or made pursuant
to this Agreement shall survive Employee's termination of
employment irrespective of any investigation made by or on
behalf of any party.
11. TOLLING PERIOD: The restrictive periods described
herein shall not run during the time in which the Employee is
in violation of this Agreement.
12. ADVICE OF COUNSEL: Employee understands the nature
of and the burdens imposed by the restrictive covenants
contained in this Agreement. Employee has independently
consulted with his/her counsel, or has had ample opportunity
to consult with legal counsel of his/her choice, and after
such consultation or opportunity for consultation represents
and agrees that such covenants are reasonable, enforceable,
and proper in duration, scope, and effect.
13. HEADINGS: The captions in this Agreement are for the
convenience of the parties, and have no force or effect.
14. NO DEFENSE: A claim by Employee against the Company
shall not constitute a defense to the Company's enforcement
of the restrictions contained in this Agreement.
15. RESTRICTIVE COVENANTS: Employee represents and
warrants that his/her experience and capabilities are such
that the restrictive covenants set forth herein will not
prevent him/her from earning his/her livelihood and that
Employee will be fully able to earn an adequate livelihood
for himself/herself and his/her dependents if any of such
provisions should be specifically enforced against Employee.
IN WITNESS WHEREOF, the parties have executed this
Agreement effective as of this day and year first above
written.
Unitrend, Inc.,
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
Employee: ________________________________
Printed name: ____________________________
Address: _________________________________
Effective date: __________________________
Signing date: ____________________________
ATTESTATION BY EMPLOYEE
I, _________________________________, do hereby attest and
certify that I have read the above Agreement and that I have
been advised that due to the nature of the above Agreement, I
should seek legal counsel prior to executing such Agreement.
I have (have not) sought such legal counsel and understand
that the above Agreement restricts my rights and activities
with regard to my future work and/or employment possibilities
and that the Agreement contains various duties and
obligations of mine with regard to Unitrend, Inc.
Signed: __________________________________
Dated: __________________________________
Exhibit 5.01 Typical Non-Compete Agreement of Registrant
NON-COMPETE AGREEMENT
This Non-Compete Agreement (hereafter referred to as the
"Agreement") is effective as of
____________________________________ between Unitrend, Inc.
an Ohio corporation (hereafter referred to as "the Company"),
and __________________________________ (hereafter referred
to as the "Employee").
RECITALS
The Company desires to enter into the following
Agreement with Employee and Employee desires to enter into
the following Agreement in accordance with the terms and
conditions set forth below.
AGREEMENTS
In consideration of the mutual covenants contained
herein, and for other good and valuable consideration,
receipt of which is acknowledged by the parties, the Company
and Employee agree as follows:
1. NON-COMPETITION: By signing this Agreement Employee
agrees that:
A. DEFINED TERMS: The principal business of the
Company is the development, design and marketing of hardware
and software for the computer industry, particularly for
computer enclosures and related accessories, including but
not limited to office furniture. The region serviced by the
Company is a geographic area that will include the United
States of America and the European and Asian continents
(hereafter referred to as the "Region"). Employee
acknowledges that Employee's employment with the Company will
bring Employee into close contact with the members and other
customers of the Company and with the trade secrets and other
confidential affairs of the Company. Employee has not
previously been employed in the computer industry and will
derive substantial information concerning the computer
industry, key customers, technology and opportunities or
related businesses as a result of his or her employment by
the Company and at the expense of the Company. The Company
has a significant interest in protecting its proprietary
interests in and goodwill associated with the foregoing. The
term "Restrictive Period" means the period of three (3) years
following the termination of Employee's employment with the
Company (whether for cause, or upon any or no reason).
B. PERIOD OF EMPLOYMENT: During the term of
Employee's employment hereunder, Employee shall not directly
or indirectly, either as an employee, employer, consultant,
agent, principal, partner, stock holder, corporate officer,
director, or any other individual representative capacity,
engage or participate in or acquire, hold, or retain any
interest in any business which is competitive with the
business of the Company (as defined above) in any location,
or its shareholders or any business selling or doing business
with the Company, unless such participation or interest is
fully disclosed to the Company and approved by a majority of
the Company's Board of Directors. Notwithstanding the
foregoing, Employee may acquire, hold or retain equity
ownership of any publicly held Company, provided that such
equity ownership does not exceed five percent (5%) of the
issued and outstanding shares of the voting stock for such
Company.
C. RESTRICTIVE PERIOD: During the Restrictive
Period, unless the Company and Employee shall otherwise agree
in writing, Employee shall not: (i) compete directly with
the Company in the Region; (ii) enter into the employ of or
render any services to, as an independent contractor or
otherwise, any person or entity engaged in the business (or
any aspect thereof) in competition with the Company in the
Region; (iii) become interested, as an individual, partner,
co-venturer, shareholder, officer, director, employee,
principal, agent, trustee, or in any other relationship or
capacity, in any person or entity engaged in the business (or
any aspect thereof) in competition with the Company in the
Region; or (iv) on his or her own behalf or on behalf of or
as an employee or agent of any other person or business,
contact or approach any person or business wherever located
with a view to selling or assisting others to sell products
or services substantially competing with the business of the
Company.
D. ENFORCEABILITY: If any portion of Paragraph 1
of this Agreement is held to be illegal, unenforceable, void,
or voidable, the remainder shall remain in full force and
effect and such portion shall be deemed altered and amended
to the minimum extents necessary to bring it within the legal
requirements of enforceability.
2. UNIQUE SERVICES: Employee hereby acknowledges and
agrees that the services to be performed under the terms of
this Agreement are of a special, unique, unusual,
extraordinary, and intellectual character that gives them a
peculiar value, the loss of which cannot be reasonably or
adequately compensated in damages in any action at law.
Employee, therefore, expressly agrees that the Company, in
addition to any rights or remedies that the Company might
possess, shall be entitled to injunctive and other equitable
relief to prevent or remedy a breach of this Agreement by
Employee.
3. LIQUIDATED DAMAGES UPON VIOLATION: Employee agrees
that, in the event of violation by Employee of this
Agreement, Employee will pay as liquidated damages to the
Company the sum of __________ dollars per day, for each day
or part thereof that Employee continues to break the
Agreement. It is recognized and agreed that damages in such
event are difficult to ascertain, though great and
irreparable, and that this Agreement with respect to
liquidated damages shall in no event prevent the Company from
obtaining injunctive relief as specified in Paragraph 2 of
this Agreement.
4. NOTICES: Any notices to be given hereunder by
either party to the other shall be in writing and may be
transmitted by personal delivery or by certified mail, return
receipt requested. Mailed notices shall be addressed to the
parties as follows:
If notice is to the Company, to:
Unitrend, Inc.
Attn.: Chief Executive Officer
4730 W. Bancroft, Ste.15
Toledo, Oh. 43615
Copy:
Unitrend, Inc. Corporate Counsel
4730 W. Bancroft, Ste.15
Toledo, Oh 43615
If notice is to Employee to:
______________________________(name)
______________________________(address)
______________________________(address)
Either party may change its address by written notice in
accordance with this section. Notices delivered personally
shall be deemed communicated as of the dates of actual
receipt; mailed notices shall be deemed communicated as of
forty-eight hours after the date of mailing.
5. ATTORNEY'S FEES AND COSTS: If either party fails to
perform its respective obligations under this Agreement, and
the other party is thereby required to incur attorney's fees
or other fees or costs, including but not limited to the
costs of arbitration, the party so incurring such fees and
costs shall be entitled to the payment of those fees and
costs by the breaching party.
6. ENTIRE AGREEMENT: This Agreement supersedes any and
all other agreements against competition, either oral or in
writing, between the Employee and the Company and contains
all of the covenants and agreements between the parties with
respect to that noncompetition in any manner whatsoever.
Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements either
oral or written have been made by any party, or anyone acting
on behalf of any party, which are not embodied herein, and
that no other agreement, statement, or promise regarding non-
competition or against competition not contained in this
Agreement shall be valid or binding on either party.
7. MODIFICATIONS: Any modifications of this Agreement
shall be effective only if it is in writing and signed by
both parties, unless such modifications are imposed by a
court of competent jurisdiction in relation to a dispute
between the Company and the Employee, as provided-for in
Paragraph 1.D. of this Agreement.
8. EFFECT OF WAIVER: The failure of either party to
insist on strict compliance with any of the terms, covenants,
or conditions of this Agreement by the other party shall not
be deemed a waiver of that term, covenant, or condition, nor
shall any waiver or relinquishment of any right or power at
any one time or times be deemed a waiver or relinquishment of
that right or power for all or any other times.
9. PARTIAL INVALIDITY: If any provision of this
Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions
shall nevertheless continue in full force without being
impaired or invalidated in any way unless such partial
invalidity materially affects the intent of the parties.
10. GOVERNING LAW: This Agreement shall be governed
and construed in accordance with the laws of the State of
Ohio.
11. ASSIGNABILITY: The rights and duties of either
party hereunder shall not be assignable by either party
except if this Agreement and all rights and obligations
hereunder may be assigned by the Company to, and be assumed
by, any corporation or other business entity which succeeds
to all or substantially all of the assets and business of the
Company through merger, consolidation, acquisition of assets,
or other corporate reorganization.
12. SURVIVAL: The covenants, agreements,
representations, and warranties contained in or made pursuant
to this Agreement shall survive Employee's termination of
employment irrespective of any investigation made by or on
behalf of any party.
13. TOLLING PERIOD: The Restrictive Period described
in Paragraphs 1.A. and 1.C. of this Agreement shall not run
during the time in which the Employee is in violation of this
Agreement.
14. ADVICE OF COUNSEL: Employee understands the nature
of and the burdens imposed by the restrictive covenants
contained in this Agreement. Employee has independently
consulted with his/her counsel, or has had ample opportunity
to consult with legal counsel of his/her choice, and after
such consultation or opportunity for consultation represents
and agrees that such covenants are reasonable, enforceable,
and proper in duration, scope, and effect.
15. HEADINGS: The captions in this Agreement are for
the convenience of the parties, and have no force or effect
16. NO DEFENSE: A claim by Employee against the
Company shall not constitute a defense to the Company's
enforcement of the restrictions contained in this Agreement.
17. ANTI-SOLICITATION: Employee agrees that in
addition to any other limitation, for a period of three (3)
years after the termination of his/her employment with the
Company, except a termination caused by the Company in
violation of the terms of the Employment Agreement, and
unless otherwise specified, he/she will not, on behalf o
himself/herself or on behalf of any other person, firm,
corporation, business or entity, call on any of the customers
or employees of the Company, or any of its affiliates,
subsidiaries or trade partners for the purpose of soliciting
any of the entities described above into joining with the
Employee or another, transacting business with the Employee
or another for any service or product that competes with the
principal business of the Company, as defined above.
Further, Employee agrees that he/she will in no way, directly
or indirectly, for himself/herself, or on behalf of any other
person, firm, corporation, business or entity solicit, divert
or take away customers and/or employees of the Company, its
affiliates, subsidiaries, or trade partners.
18. ADMISSIONS OF EMPLOYEE: By initialing the
box to the right and by signing this Agreement,
Employee expressly recognizes and acknowledges:
A. ADMISSION OF NEED: The Company has great need
in protecting its proprietary interests in and goodwill
associated with the business of the Company, as defined
above; and
B. ADMISSION OF REASONABLENESS: The definitions
and restrictive provisions contained herein, and particularly
those found in Paragraph 1 of this Agreement are reasonable
and acceptable to the Employee, including those provisions
relating to time and geographic restrictions.
19. RESTRICTIVE COVENANTS: Employee represents and
warrants that his/her experience and capabilities are such
that the restrictive covenants set forth herein will not
prevent him/her from earning his/her livelihood and that
Employee will be fully able to earn an adequate livelihood
for himself/herself and his/her dependents if any of such
provisions should be specifically enforced against Employee.
IN WITNESS WHEREOF, the parties have executed this
Agreement effective as of this day and year first above
written.
Unitrend, Inc.,
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
Employee: ________________________________
Printed name: ____________________________
Address: _________________________________
Effective date: __________________________
Signing date: ____________________________
ATTESTATION BY EMPLOYEE
I, __________________________________, do hereby attest and
certify that I have read the above Agreement and that I have
been advised that due to the nature of the above Agreement, I
should seek legal counsel prior to executing such Agreement.
I have (have not) sought such legal counsel and understand
that the above Agreement restricts my rights and activities
with regard to my future work and/or employment possibilities
and that the Agreement contains various duties and
obligations of mine with regard to Unitrend, Inc.
Signed:_______________________________
Dated: _________________
Exhibit 6.01 Typical Nondisclosure Agreement of Registrant
INVESTOR'S AND/OR TRADE PARTNER'S
CONFIDENTIAL NON-DISCLOSURE AGREEMENT
THIS AGREEMENT made this ______day of ________________1997 by
and between Unitrend, Inc., located at 4730 W. Bancroft St.,
Suite 15 Toledo, Ohio 43615 (hereinafter referred to as
"The Company") and _________________________ (hereinafter
referred to as the "Individual").
WHEREAS Unitrend, Inc. has certain confidential and
proprietary technical information (hereinafter referred to as
the "Confidential Information") relating to a slidable
personal computer enclosure/mount and,
WHEREAS the Individual is interested in examining the
Confidential Information in order to determine the
desirability of acquiring an interest in The Company and/or
rights in and to the Confidential Information possibly
including certain patent rights associated with the
Confidential Information;
NOW THEREFORE, in consideration of these premises and mutual
covenants herein contained, the parties mutually agree as
follows:
1. The Company will disclose to the Individual the
Confidential Information, solely for the purpose of, and in
sufficient detail, to enable the Individual to evaluate such
disclosure to determine the desirability of negotiating a
formal agreement to acquire an interest on The Company and/or
rights to use the Confidential Information.
2. The Individual agrees to accept the disclosure of
the Confidential Information, and to maintain the
Confidential Information secret and confidential. The
Individual will not disclose or reveal the Confidential
Information to anyone except consultants (including immediate
family members for natural-persons) and for artificial
persons, consultants and employees of its parent, subsidiary
or affiliated companies who have a need to know the
information in connection with the Individual's evaluation
and who are required to keep the proprietary information of
the Individual, provided that such consultants and employees
are advised by the Individual of the confidential nature of
the Confidential Information and that the information shall
be treated accordingly.
3. It is hereby acknowledged by The Company that the
Individual shall incur no liability merely for examining and
considering the Confidential Information in order to
determine the desirability of acquiring an interest in The
Company and/or rights in the Confidential Information
therein. However, the Individual agrees that the
Confidential Information will not otherwise be used unless
and until a further signed agreement is first made providing
the terms and conditions under which rights are to be
acquired by the Individual.
4. The obligations of the Individual under paragraphs 2
and 3 above extend for a period of three (3) years from the date
first written above, but shall not extend to any part of said
confidential information:
(a) that was previously known to the Individual or was
in the public domain publicly known or readily
available to the trade or public prior to the date
first set forth above; or
(b)that is now or hereafter becomes known or available
to the Individual from a source which may disclose the
information free of any obligation to The Company; or,
(c) that becomes part of the public domain not due to
any unauthorized act or omission of the Individual; or,
(d) that the Individual derives independently of such
disclosure.
5. The Company agrees that any liability on the part of
the Individual for unauthorized use of such Confidential
Information after said three (3) year period of confidentiality
ends shall be based solely upon a claim of patent infringement of
any patent granted to or applied for by The Company or a
successor or assign and containing valid claims that are
infringed by the Individual's use of such Confidential
Information.
6. The Company hereby expressly warrants that it is the
owner of and/or has the full right and full right and authority
to disclose the Confidential Information to the Individual.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
Unitrend, Inc.,
By: ______________________________________
Print
__________________________________________
Signature
Title: ___________________________________
Company: _________________________________
Date: ____________________________________
__________________________________________
Witness
Date: ____________________________________