<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30,
1999
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _____________
to _____________
Commission file number: 1-14128
STERLING VISION, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
New York 11-3096941
- ------------------------ ---------------------------------
(State of Incorporation) (IRS Employer Identification No.)
1500 Hempstead Turnpike
East Meadow, New York 11554
------------------------------------------------------------
(Address of Principal Executive Offices, including Zip Code)
(516) 390-2100
----------------------------------------------------
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
There were 15,179,130 shares outstanding of the Registrant's Common Stock,
par value $.01 per share, as of November 19, 1999.
<PAGE>
Item 1. Financial Statements
STERLING VISION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,595 $ 828
Accounts receivable - net of allowance for
doubtful accounts of $2,145 and $2,060, respectively 2,460 2,257
Other receivables 1,363 1,121
Franchise and other notes receivable 2,791 3,077
Inventories 1,945 2,268
Due from related parties 93 125
Prepaid expenses and other current assets 639 395
-------- --------
Total Current Assets 10,886 10,071
Property and equipment - net of accumulated depreciation 6,457 8,104
Franchise and other notes receivable - net of allowance
for doubtful accounts of $400 and $450, respectively 9,855 11,359
Excess of cost over fair value of assets acquired 4,109 3,735
Restricted cash 124 624
Other assets 636 601
-------- --------
Total Assets $ 32,067 $ 34,494
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 4,261 $ 4,130
Accounts payable and accrued liabilities 7,260 7,099
Accrual for store closings and lease termination costs 495 1,254
Franchise related obligations 941 939
-------- --------
Total Current Liabilities 12,957 13,422
Long-term debt 4,252 7,422
Deferred franchise income 73 90
Excess of fair value of assets acquired over cost 752 1,013
Minority interest 110 --
Commitments and contingencies (Note 5)
Shareholders' Equity:
Senior Convertible Preferred Stock, $.01 par value per
share; authorized 5,000,000 shares; 29 and 35
shares issued and outstanding, respectively 3,277 4,025
Common stock, $.01 par value per share; authorized 28,000,000
shares; 15,179,130 and 14,920,351 issued and outstanding,
respectively 152 149
Additional paid-in capital 47,521 46,036
(Deficit) (37,027) (37,663)
-------- --------
Total Shareholders' Equity 13,923 12,547
-------- --------
Total Liabilities and Shareholders' Equity $ 32,067 $ 34,494
======== ========
</TABLE>
See accompanying notes to Consolidated Financial Statements.
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<PAGE>
STERLING VISION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Systemwide sales $ 37,026 $ 38,036 $ 110,713 $ 114,364
======== ======== ========= =========
Revenues:
Net sales $ 5,689 $ 6,139 $ 17,921 $ 17,438
Franchise royalties 2,415 2,281 6,985 6,967
Net gains and fees from the conveyance of
Company-owned store assets to franchisees 68 -- 632 167
Other income 368 520 1,241 1,746
-------- -------- --------- ---------
Total Revenues 8,540 8,940 26,779 26,318
-------- -------- --------- ---------
Costs and Expenses:
Cost of sales 1,497 1,509 5,045 4,539
Selling expenses 3,434 4,141 10,905 11,916
General and administrative expenses 2,962 3,954 8,626 12,699
Loss from managed stores 158 271 410 331
Provision for store closings (Note 9) -- 2,500 -- 2,500
Interest expense 267 331 811 1,248
Amortization of debt discount -- -- -- 1,110
-------- -------- --------- ---------
Total Costs and Expenses 8,318 12,706 25,797 34,343
-------- -------- --------- ---------
Income (Loss) before extraordinary item and
provision for income taxes 222 (3,766) 982 (8,025)
Extraordinary item - loss from early retirement
of debt -- -- -- (805)
-------- -------- --------- ---------
Income (Loss) before provision for income taxes and
minority interest 222 (3,766) 982 (8,830)
Provision for income taxes -- -- -- --
Minority interest 110 -- 110 --
-------- -------- --------- ---------
Net income (loss) $ 112 $ (3,766) $ 872 $ (8,830)
======== ======== ========= =========
Per share information (Note 4):
Net income (loss) per share:
Basic $ .01 $ (.26) $ .04 $ (.61)
-------- -------- --------- ---------
Diluted $ (.08) $ (.26) $ (.05) $ (.61)
-------- -------- --------- ---------
Shares used in computing net income
(loss) per share:
Basic 15,174 14,844 15,118 14,536
-------- -------- --------- ---------
Diluted 16,281 14,844 16,248 14,536
======== ======== ========= =========
</TABLE>
See accompanying notes to Consolidated Financial Statements.
-3-
<PAGE>
STERLING VISION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 872 $(8,830)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Minority interest 110 --
Depreciation and amortization 1,904 1,866
Amortization of debt discount -- 1,915
Allowance for doubtful accounts 573 3,653
Provision for store closings -- 2,500
Net gain from the conveyance of Company-owned store
assets to franchisees (391) (102)
Accrued interest 65 54
Accretion of fair value of assets acquired over cost (262) (262)
Issuance of non-employee stock options -- 227
Changes in assets and liabilities:
Accounts receivable (1,740) (2,463)
Inventories 323 38
Prepaid expenses and other current assets (211) 119
Other assets (52) (70)
Accounts payable and accrued liabilities 1,405 (449)
Franchise related obligations 73 153
Deferred franchise income (87) (21)
Accrual for store closings and lease termination costs (759) 65
------- -------
Net cash provided by (used in) operating activities 1,823 (1,607)
------- -------
Cash flows from investing activities:
Acquisition net of cash acquired -- (1,598)
Franchise notes receivable issued (1,553) (698)
Proceeds from repayment of franchise notes receivable 3,393 2,082
Purchase of property and equipment (1,148) (957)
Conveyance of property and equipment 1,236 213
------- -------
Net cash provided by (used in) investing activities $ 1,928 $ (958)
======= =======
</TABLE>
See accompanying notes to Consolidated Financial Statements.
-4-
<PAGE>
STERLING VISION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS -- Cont'd.
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
1999 1998
-------- --------
<S> <C> <C>
Cash flows from financing activities:
Payment of Price Protection Guarantee $ (386) $ --
Repayment of borrowings under STI Loan Agreement (1,825) (2,041)
Repayment of other debt (1,214) (1,174)
Sale of common stock and other capital contributions -- 2,714
Issuance of 1998 Debentures -- 3,500
Borrowings under additional loan agreements 441 --
------- -------
Net cash (used in) provided by financing activities (2,984) 2,999
------- -------
Net increase in cash and cash equivalents 767 434
Cash and cash equivalents - beginning of period 828 334
------- -------
Cash and cash equivalents - end of period $ 1,595 $ 768
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 172 $ 250
======= =======
Acquisition, net of cash acquired:
Working capital, other than cash $ -- $ (314)
Property and equipment -- 160
Other assets -- 31
Excess of cost over fair value of assets acquired -- 1,721
------- -------
Acquisition, net of cash acquired $ -- $ 1,598
======= =======
</TABLE>
See accompanying notes to Consolidated Financial Statements.
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<PAGE>
STERLING VISION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(Unaudited)
(In Thousands, Except Number of Shares)
<TABLE>
<CAPTION>
Senior Convertible Additional Total
Preferred Stock Common Stock Paid-In Shareholders'
Shares Amount Shares Amount Capital (Deficit) Equity
------ ------ ------ ------ ------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - December 31, 1998 35 $ 4,025 14,920,351 $149 $ 46,036 $(37,663) $ 12,547
Issuance of common shares upon
conversion of Senior Convertible
Preferred Stock (6) (748) 175,000 2 899 (153) --
Stock dividend on Senior Convertible
Preferred Stock -- -- 22,506 -- 83 (83) --
Reduction related to Price Protection
Guarantee -- -- -- -- (99) -- (99)
Issuance of common shares to
franchisees -- -- 667 -- -- -- --
Net income -- -- -- -- -- 468 468
--- ------- ---------- ---- -------- -------- --------
Balance - March 31, 1999 29 $ 3,277 15,118,524 $151 $ 46,919 $(37,431) $ 12,916
=== ======= ========== ==== ======== ======== ========
Reduction related to Price Protection
Guarantee -- -- -- -- (73) -- (73)
Net income -- -- -- -- -- 292 292
--- ------- ---------- ---- -------- -------- --------
Balance - June 30, 1999 29 $ 3,277 15,118,524 $151 $ 46,846 $(37,139) $ 13,135
=== ======= ========== ==== ======== ======== ========
Reduction related to Price Protection
Guarantee -- -- -- -- (214) -- (214)
Issuance of common shares to vendors -- -- 60,606 1 249 -- 250
Acquisition of RBG Consulting, Ltd. -- -- -- -- 640 -- 640
Net income -- -- -- -- -- 112 112
--- ------- ---------- ---- -------- -------- --------
Balance - September 30, 1999 29 $ 3,277 15,179,130 $152 $ 47,521 $(37,027) $ 13,923
=== ======= ========== ==== ======== ======== ========
</TABLE>
See accompanying notes to Consolidated Financial Statements.
-6-
<PAGE>
STERLING VISION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1
The accompanying Consolidated Financial Statements of Sterling Vision,
Inc. (the "Registrant") and subsidiaries (collectively, the "Company") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and in accordance with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statement presentation. In the opinion of management, all
adjustments for a fair statement of the results of operations and financial
position for the interim periods presented have been included. All such
adjustments are of a normal recurring nature. This financial information should
be read in conjunction with the Consolidated Financial Statements and Notes
thereto included in the Registrant's Annual Report on Form 10-K for the Year
Ended December 31, 1998. There have been no changes in significant accounting
policies since December 31, 1998.
NOTE 2 - 1998 Debentures/Convertible Preferred Stock
In February 1998, the Company entered into Convertible Debentures and
Warrants Subscription Agreements with certain investors in connection with the
private placement of units consisting of an aggregate of $3,500,000 principal
amount of convertible debentures due February 1999 (collectively, the "1998
Debentures") and an aggregate of 700,000 warrants (collectively, the "1998
Warrants"). The 1998 Warrants initially entitled the holders thereof to purchase
up to 700,000 shares of the Company's Common Stock at a price of $5.00 per share
through the year 2001.
Subsequent to the date of the Company's issuance and sale of the 1998
Debentures and 1998 Warrants, the Company and the holders thereof (collectively,
the "Original Holders") determined that the issuance and sale of the 1998
Debentures and 1998 Warrants should be rescinded based upon a certain mutual
mistake of the Company and the Original Holders. Accordingly, on April 14, 1998,
the Company and the Original Holders entered into an Exchange Agreement,
effective as of February 17, 1998, whereby the 1998 Debentures were rescinded
and declared null and void from inception, and were exchanged for $3,500,000
stated value ($4,025,000 fair value) of a series of the Company's Preferred
Stock, par value $.01 per share (the "Senior Convertible Preferred Stock"), and
the 1998 Warrants were exchanged for new warrants (the "New Warrants") entitling
the Original Holders to purchase, until February 17, 2001, to the extent the
Company did not redeem the Senior Convertible Preferred Stock on February 17,
1999, up to 700,000 shares of Common Stock at a price of $5.00 per share.
The Senior Convertible Preferred Stock originally required the Company to
pay quarterly dividends (in cash or Common Stock) calculated at a rate of 10%
per annum, commencing May 17, 1998. Additionally, the Company, from and after
February 17, 1999, was required to redeem (in cash or Common Stock) all of the
Senior Convertible Preferred Stock at 105% of the then outstanding stated value,
based on a conversion price of $5.00; and in the event the Company did not so
redeem such Senior Convertible Preferred Stock on February 17, 1999, the Company
would thereafter be required to pay dividends thereon, calculated at the rate of
24% per annum. Finally, the Senior Convertible Preferred Stock contained a
price-protection guarantee provision, whereby the Company, under certain
circumstances, would be required to pay to the holders, the difference between
the $5.00 conversion price and the selling price (net of commissions) of any
such shares sold by the holders (the "Price Protection Guaranty").
As a result of the foregoing, the Company recorded amortization of debt
discount of $1,073,000 in the first quarter of 1998. This amount represented the
intrinsic value of the beneficial conversion feature, which was inherent in the
conversion terms of the 1998 Debentures (approximately $963,000), and $110,000
of amortization related to the fair value of the 1998 Warrants, issued in
connection with the 1998 Debentures. The remaining portion of the discount,
attributable to the 1998 Warrants, would have been amortized over the life of
the 1998 Debentures; however, due to the
-7-
<PAGE>
issuance of the Senior Convertible Preferred Stock and the resulting
extinguishment of such 1998 Debentures, that portion of the discount,
$(805,000), was recorded as loss from early extinguishment of debt on the
Consolidated Statements of Operations in 1998.
On August 18, 1998 and November 19, 1998, the Company issued 19,550 and
27,944 registered shares of its Common Stock, respectively, in payment of the
required dividends on the Senior Convertible Preferred Stock.
On January 4, 1999, the Company and the holders of the Senior Convertible
Preferred Stock entered into an Amendment Agreement to reduce the conversion
price, from $5.00 to $4.00, of all shares of Senior Convertible Preferred Stock
converted into Common Stock on or prior to February 10, 1999, and to eliminate
the Price Protection Guaranty provision contained in the original agreement.
On March 4, 1999, effective as of February 11, 1999, the Company and each
of the then, four remaining holders of the Senior Convertible Preferred Stock
entered into another amendment to the original agreement, whereby the conversion
price of all outstanding shares of Senior Convertible Preferred Stock was
reduced from $5.00 to $3.00, and the date by which the Company was required to
redeem all outstanding Senior Convertible Preferred Stock was extended from
February 17, 1999 to February 17, 2000. Additionally, the requirement for the
Company to pay dividends on the Senior Convertible Preferred Stock from and
after February 17, 1999 was eliminated and the exercise price of the outstanding
new Warrants was reduced from $5.00 to $4.00.
On January 13, 1999 and March 26, 1999, certain holders of the Company's
Senior Convertible Preferred Stock exercised their right to convert an aggregate
of $650,000 stated value of Senior Convertible Preferred Stock, into an
aggregate of 175,000 registered shares of the Company's Common Stock.
NOTE 3 - Singer Transaction
On April 1, 1997, the Company acquired all of the issued and outstanding
shares of the capital stock of Singer Specs, Inc., a Delaware corporation, and
certain of its wholly-owned subsidiaries (collectively, "Singer") pursuant to
the terms of a certain Agreement and Plan of Reorganization dated February 19,
1997 (the "Singer Agreement"), between the Company and the owners (collectively,
the "Shareholders") of all of the capital stock of Singer; and, in April 1998,
Singer Specs, Inc. was merged with and into the Registrant. As of the date of
such acquisition, Singer was the operator of 4 retail optical stores, each of
which were simultaneously franchised to corporations owned by the Shareholders,
the franchisor of an additional 27 retail optical stores, located in the States
of Pennsylvania, Delaware, New Jersey, Virginia and the U.S. Virgin Islands, and
the owner of a commercial building located in Philadelphia, Pennsylvania, which
was sold by the Company in December 1998.
The Singer Agreement provided for the Shareholders to convey all of their
capital stock to the Company in exchange for shares of the Company's Common
Stock. In addition, the Shareholders pledged all their shares of the Company's
Common Stock to secure their obligations under the Singer Agreement, with
certain restrictions as to when the Shareholders could sell certain portions of
their Common Stock.
The Singer Agreement also required that the Company, under certain
circumstances, pay to the Shareholders the difference between the market price
of the Company's Common Stock as of April 1, 1997 (the "Guaranteed Price") and
the selling price (net of 50% of commissions) of any such shares of Common Stock
subsequently sold by the Shareholders.
On July 31, 1998, the Company and the Shareholders entered into a
Settlement Agreement, whereby the Company released to the Shareholders' all of
the remaining shares of Common Stock originally pledged to the Company.
Additionally, the parties agreed to reduce the Guaranteed Price from $8.05 to
$6.60, the Shareholders agreed to pay to the Company the first $300,000 of net
proceeds realized by them in connection with their future sale of the Company's
Common Stock above the Guaranteed Price, and the Company agreed to accelerate
the time periods within which the
-8-
<PAGE>
Shareholders could sell their remaining shares of Common Stock.
During 1998, the Company, pursuant to the Settlement Agreement, paid the
Shareholders approximately $285,000 in connection with their sale of
approximately 80,000 of the Common Stock of the Company below the Guaranteed
Price.
For the nine months ended September 30, 1999, the Company paid the
Shareholders approximately $386,000, in connection with their sale of
approximately 126,000 shares of the Company's Common Stock below the Guaranteed
Price. As of September 30, 1999, there were no more such shares outstanding.
-9-
<PAGE>
NOTE 4 - Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income available to common shareholders:
Net income (loss) $ 112,000 $(3,766,000) $ 872,000 $ (8,830,000)
Dividends on Senior Convertible
Preferred Stock -- (87,000) (83,000) (87,000)
Effect of the induced conversion of Senior
Convertible Preferred Stock -- * (153,000) *
------------ ----------- ------------ ------------
Income available to common shareholders
basic earnings (loss) per share 112,000 (3,853,000) 636,000 (8,917,000)
Effect of dilutive securities:
Dividends on Senior Convertible -- * 83,000 *
Preferred Stock
Effect of the assumed conversion of
Senior Convertible Preferred Stock (1,402,000) * (1,568,000) *
------------ ----------- ------------ ------------
Income available to common shareholders -
diluted (loss) per share $ (1,290,000) $(3,853,000) $ (849,000) $ (8,917,000)
============ =========== ============ ============
Weighted average shares outstanding:
Weighted average shares outstanding -
basic earnings (loss) per share 15,174,000 14,844,000 15,118,000 14,536,000
Effect of dilutive securities:
Options and warrants 157,000 * 180,000 *
Effect of assumed conversion of Senior
Convertible Preferred Stock 950,000 * 950,000 *
------------ ----------- ------------ ------------
Dilutive potential common shares 1,107,000 -- 1,130,000 --
Weighted average shares outstanding -
diluted (loss) per share 16,281,000 14,844,000 16,248,000 14,536,000
============ =========== ============ ============
Basic earnings (loss) per share $ .01 $ (.26) $ .04 $ (.61)
============ =========== ============ ============
Diluted (loss) per share $ (.08) $ (.26) $ (.05) $ (.61)
============ =========== ============ ============
</TABLE>
* In 1998, the impact of the inclusion of convertible securities would have been
antidilutive.
-10-
<PAGE>
NOTE 5 - Commitments and Contingencies
The Company is, from time to time, a party to litigation arising in the
ordinary course of business. In the opinion of management, there are no
significant claims outstanding that are likely to have a material, adverse
effect upon the consolidated financial statements of the Company.
The Company leases locations for the majority of both its Company-owned
and franchised stores. The Company holds the master lease on substantially all
franchised locations and, as part of the franchise agreement, sublets the
related premises to the franchisee. Most master leases require the payment of
additional rent in the form of common area maintenance charges, real estate
taxes and other items, as well as percentage rent based upon the store in
question exceeding certain established sales volumes. As required by Statement
of Financial Accounting Standards ("SFAS") No. 13 "Accounting for Leases," the
Company amortizes its rent expense on a straight-line basis over the respective
lives of the related leases.
As of September 30, 1999, the Company's subsidiary Insight Laser
Centers, Inc. held leases for six excimer lasers and ancillary equipment
expiring through 2004. The assets and liabilities under capital leases are
recorded at the lower of the present value of the minimum lease payments or the
fair value of the assets.
NOTE 6 - Company-Managed Stores
In the fourth quarter of 1998, the Company, as required, adopted the
provisions of Emerging Issues Task Force Issue 97-2 ("EITF 97-2"), "Application
of FASB Statement No. 94 and APB Opinion No. 16 to Physician Practice Management
Entities and Certain Other Entities with Contractual Management Arrangements."
In connection with the adoption of EITF 97-2, the Company, as required,
deconsolidated the results of operations pertaining to those franchised stores
being operated by the Company under management agreements. In connection with
the adoption of EITF 97-2, the Company restated its Quarterly Report on Form
10-Q/A for the Nine Months Ended September 30, 1998.
For the three months ended September 30, 1999 and 1998, net sales
generated from the operation of Company-managed stores were $425,000 and
$1,110,000, respectively, and total costs and expenses were $583,000 and
$1,381,000, respectively. For the nine months ended September 30, 1999 and 1998,
net sales generated from the operation of Company-managed stores were $1,297,000
and $3,487,000, respectively, and total costs and expenses were $1,707,000 and
$3,818,000, respectively. The net operations of the Company's operation of such
Company-managed franchised stores is classified as a loss from managed stores in
the accompanying Consolidated Statements of Operations.
For the three months and nine months ended September 30, 1999 and 1998,
the Company managed a total of 5 and 12 franchised locations, respectively,
under management agreements. The agreements generally provide for the Company's
management of the operations of each location, with all operating decisions
being made primarily by the Company. The Company owns the inventory at each
location and is generally responsible for the collection of all revenues and the
payment of all expenses.
NOTE 7 - Segment Information
In the fourth quarter of 1998, the Company adopted SFAS No. 131,
"Disclosure About Segments of an Enterprise and Related Information." SFAS No.
131 established annual and interim reporting standards for an enterprise's
operating segments and related disclosures about its products, services,
geographic areas and major customers.
For the nine months ended September 30, 1999 and 1998, the Company's
operations were classified in three principal industry segments:
RETAIL OPTICAL: The retail optical segment, whereby the Company owns
and operates, as well as franchises,
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<PAGE>
a chain of retail optical stores which offer eyecare products such as
prescription and non-prescription eyeglasses, eyeglass frames, ophthalmic
lenses, contact lenses, sunglasses and a broad range of ancillary items.
INSIGHT LASER: The Insight Laser segment, whereby the Company owns and
operates a laser surgery center and provides access, for a fee, to affiliated
ophthalmologists who utilize such center, as well as the Company's other excimer
lasers in offering laser vision correction services.
AMBULATORY SURGERY: The Ambulatory Surgery segment, whereby the Company
renders consulting and administrative services to the licensee of a full-service
ambulatory surgery center located in Garden City, New York.
Summarized financial information concerning the industry segments and
geographic areas in which the Company operated for each of the nine months ended
September 30, 1999 and 1998, is shown in the following tables (in thousands):
OPERATIONS BY INDUSTRY SEGMENT
<TABLE>
<CAPTION>
Retail Insight Ambulatory
Optical Laser Surgery Total
<S> <C> <C> <C> <C>
1999
Revenues from sales $13,703 $3,621 $597 $17,921
Franchise-related and other 8,858 -- -- 8,858
------- ------ ---- -------
Total revenues 22,561 3,621 597 26,779
Operating profit 375 1,502 199 2,076
Capital expenditures 1,148 -- -- 1,148
Depreciation and amortization 1,272 603 89 1,964
1998
Revenues from sales $15,792 $1,266 $380 $17,438
Franchise-related and other 8,880 -- -- 8,880
------- ------ ---- -------
Total revenues 24,672 1,266 380 26,318
Operating profit 726 117 140 983
Capital expenditures 772 1 184 957
Depreciation and amortization 1,117 700 49 1,866
</TABLE>
There were no intersegment sales for either of the nine months ended
September 30, 1999 or 1998. No single customer represented more than 10% of
consolidated sales for either of the nine months ended September 30, 1999 or
1998.
NOTE 8 - Acquisition
On July 1, 1999, the Company acquired all of the issued and outstanding
capital stock of RBG Consulting, Ltd. in exchange for a one-third interest in
the Company's subsidiary, Insight Laser Centers, Inc. which one-third was
estimated to be valued at $640,000. The total cost over the fair value of the
assets acquired was $640,000, which represented goodwill. The acquisition will
be accounted for under the purchase method of accounting.
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<PAGE>
NOTE 9 - Provision for Store Closings
In 1998, the Company identified certain long-lived assets, principally
those contained in certain of its Company-owned stores, where there had been, or
there was expected to be, a change in circumstances which would affect the
recoverability of all or a portion of the depreciated cost of such long-lived
assets. The Company anticipated the closure of certain of its Company-owned
stores and/or the sale, to Franchisees, of the assets contained therein. As a
result, the Company recorded a provision for store closings of $2,500,000. In
1999, no such provision was deemed necessary.
NOTE 10 - Reclassifications
Certain reclassifications have been made to prior year's financial
statements to conform with the current year presentation.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
For the Three and Nine Months Ended September 30, 1999 compared to September 30,
1998
Systemwide sales, which represent combined retail sales generated by
Company-owned stores, as well as revenues generated: (i) by VisionCare of
California ("VCC"), a specialized health care maintenance organization licensed
by the California Department of Corporations; (ii) the Company's rendering of
consulting and administrative services to the licensee of an ambulatory surgery
center; and (iii) from the operation of Insight Laser Center, Inc. ("Insight")
decreased by approximately $1,010,000, or 2.7%, to $37,026,000 for the three
months ended September 30, 1999, as compared to $38,036,000 for the comparable
period in 1998, and decreased by approximately $3,651,000, or 3.2%, to
$110,713,000 for the nine months ended September 30, 1999, as compared to
$114,364,000 for the comparable period in 1998. These decreases were principally
due to a decrease in comparable unit sales, as described below, and a lower
number of stores in operation for both the three and nine month periods ended
September 30, 1999, as compared to the comparable periods in 1998, offset, in
part, by an increase in the revenues generated from the operations of Insight of
$972,000, or 225%, to $1,404,000 for the three months ended September 30, 1999,
as compared to $432,000 for the comparable period in 1998, and an increase in
the revenues generated from the operations of Insight of $2,355,000, or 186%, to
$3,621,000 for the nine months ended September 30, 1999, as compared to
$1,266,000 for the comparable period in 1998. As of September 30, 1999, there
were 275 Sterling Stores in operation, consisting of 46 Company-owned stores
(including 7 Company-owned stores being managed by franchisees) and 229
franchised stores (including 5 franchised stores being managed by the Company on
behalf of franchisees), as compared to 296 Sterling Stores in operation as of
September 30, 1998, consisting of 48 Company-owned stores (including 6
Company-owned stores being managed by franchisees) and 248 franchised stores
(including 12 stores being managed by the Company on behalf of franchisees).
These stores operate under various trade names including Sterling Optical, Site
for Sore Eyes, IPCO Optical, Benson Optical, Superior Optical, Southern Optical,
Nevada Optical, Duling Optical, Monfried Optical, Kindy Optical and Singer
Specs. On a same store basis (for stores that operated as either a Company-owned
or franchised store during the entirety of both of the three months ended
September 30, 1999 and 1998), systemwide comparative sales decreased by
$612,000, or 2.0%, to $30,593,000 for the three months ended September 30, 1999,
as compared to $31,205,000 for the comparable period in 1998, and decreased by
$1,333,000, or 1.5%, to $90,419,000 for the nine months ended September 30,
1999, as compared to $91,752,000 for the comparable period in 1998. There were
217 stores that operated as either a Company-owned, a Company-managed or
franchised store during the entirety of both the three and nine months ended
September 30, 1999 and 1998.
Franchise royalties increased by $134,000, or 5.9%, to $2,415,000 for the
three months ended September 30, 1999, as compared to $2,281,000 for the
comparable period in 1998. Franchise royalties increased by $18,000, or .3%, to
$6,985,000 for the nine months ended September 30, 1999, as compared to
$6,967,000 for the comparable period in 1998.
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Net gains and fees from the conveyance of Company-owned store assets to
franchisees increased by $68,000, or 100%, to $68,000 for the three months ended
September 30, 1999, as compared to $0 for the comparable period in 1998. This
increase was principally due to renewal fees and the fees related to the
transfer of ownership from one franchisee to another. Net gains on fees from the
conveyance of Company-owned store assets to franchisees increased by $465,000,
or 278%, to $632,000 for the nine months ended September 30, 1999, as compared
to $167,000 for the comparable period in 1998. This increase was principally due
to the conveyance of the assets of 5 Company-owned stores to franchisees during
the nine months ended September 30, 1999, as compared to 3 Company-owned stores
to franchisees during the comparable period in 1998.
Other income (primarily interest on franchise notes) decreased by
approximately $152,000, or 29.2%, to $368,000 for the three months ended
September 30, 1999, as compared to $520,000 for the comparable period in 1998,
and decreased by approximately $505,000, or 28.9%, to $1,241,000 for the nine
months ended September 30, 1999, as compared to $1,746,000 for the comparable
period in 1998. These decreases were principally due to certain franchisees
voluntarily prepaying their notes prior to the scheduled maturity dates thereof.
The Company's gross profit margin decreased by 1.7%, to 73.7% for the
three months ended September 30, 1999, as compared to 75.4% for the comparable
period in 1998, and decreased by 2.1%, to 71.9% for the nine months ended
September 30, 1999, as compared to 74.0% for the comparable period in 1998. This
decrease resulted primarily from the continuation of promotional programs,
instituted in 1999, in response to certain promotional incentives offered by
certain major competitors of the Company. To match such incentives, the Company
offered similar types of promotional programs to its customers, which resulted
in lower gross profit margins. In the future, the Company's gross profit margin
may fluctuate depending upon the extent and timing of changes in the product mix
in Company-owned stores, competition and promotional incentives.
Selling expenses decreased to $3,434,000, or 60.4% of net sales, for the
three months ended September 30, 1999, as compared to $4,141,000, or 67.5% of
net sales, for the comparable period in 1998. Selling expenses decreased to
$10,905,000, or 60.9% of net sales, for the nine months ended September 30,
1999, as compared to $11,916,000, or 68.3% of net sales, for the comparable
period in 1998. These percentage decreases were principally due to lower payroll
costs at the store level for the three and nine month periods ended September
30, 1999, as compared to the comparable period in 1998.
General and administrative expenses (including depreciation) decreased by
$992,000, or 25.1%, to $2,962,000 for the three months ended September 30, 1999,
as compared to $3,954,000 for the comparable period in 1998. This decrease
resulted principally from a decrease of $400,000 in the Company's provision for
doubtful accounts, a $227,000 decrease in fees paid to certain consultants to
the Company, and a decrease of $110,000 in costs attributable to warrant
conversions. General and administrative expenses decreased by $4,073,000, or
32.1%, to $8,626,000 for the nine months ended September 30, 1999, as compared
to $12,699,000 for the comparable period in 1998. This decrease was principally
due to a decrease of $2,300,000 in the Company's provision for doubtful
accounts, a decrease of $421,000 in costs attributable to warrant conversions, a
decrease of $227,000 in fees paid to certain consultants to the Company, a
decrease of approximately $175,000 in writeoffs of debt issuance costs, a
decrease of approximately $200,000 in general and administrative salaries and
related costs, and a decrease in non-recurring professional fees of
approximately $200,000.
Interest expense decreased by $64,000, or 19.3%, to $267,000 for the three
months ended September 30, 1999, as compared to $331,000 for the comparable
period in 1998. Interest expense decreased by $437,000, or 35.0%, to $811,000
for the nine months ended September 30, 1999, as compared to $1,248,000 for the
comparable period in 1998. These decreases resulted from a decrease in long-term
debt for the three and nine months ended September 30, 1999, as compared to the
comparable periods in 1998, and from a decrease of debt issuance costs of
$155,000 for the nine months ended September 30, 1999.
The Company's net income increased by $3,878,000, or 103%, to $112,000 for
the three months ended September
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<PAGE>
30, 1999, as compared to a loss of $(3,766,000) for the comparable period in
1998. This increase was principally due to a decrease of $2,500,000 in the
provision for store closings, a decrease in the provision for doubtful accounts
of $400,000 and approximately $227,000 in lower fees paid to certain consultants
to the Company. The Company's net income increased by $9,702,000, or 110%, to
$872,000 for the nine months ended September 30, 1999, as compared to a loss of
$(8,830,000) for the comparable period in 1998. This increase was principally
due to a decrease of $2,500,000 in the provision for store closings, a decrease
of $1,110,000 in amortization of debt discount costs, a decrease of
approximately $80,000 in the provision for doubtful accounts, a decrease of
$805,000 resulting from the early retirement of debt, a decrease of $421,000 in
costs attributable to warrant conversions, lower payroll costs at the store
level, and a decrease in the loss related to the operations of Insight.
Liquidity and Capital Resources
For the nine months ended September 30, 1999, cash flows provided by
operating activities were $1,823,000, as compared to cash flows used in
operating activities of $(1,607,000) for the comparable period in 1998. This
increase was principally due to the increase in Net Income to $872,000 for the
nine months ended September 30, 1999, as compared to a loss of $(8,830,000).
For the nine months ended September 30, 1999, cash flows provided by
investing activities were $1,928,000, as compared to cash flows used in
investing activities of $(958,000) for the comparable period in 1998. This
increase was principally due to an increase in proceeds from repayment of
franchise notes to $3,393,000 and an increase in the conveyance of property and
equipment to $1,236,000 for the nine months ended September 30, 1999, as
compared to $2,082,000 and $213,000, respectively for the comparable period in
1998.
For the nine months ended September 30, 1999, cash flows used in financing
activities were $(2,984,000), as compared to cash flows provided in financing
activity of $2,999,000 for the comparable period in 1998. The decrease of
$5,983,000 in cash flows used in financing activities was principally due to the
1998 financial statements reflecting the sale of Common Stock and other capital
contributions of $2,714,000 and the issuance of the 1998 Debentures for gross
proceeds of $3,500,000.
The Company believes that, in the furtherance of its business strategies,
the Company's future capital requirements will include renovating and/or
remodeling Company-owned stores, acquiring retail optical stores, subject to the
availability of qualified opportunities, and the continued upgrading of the
Company's management information systems. Additionally, the Company is likely to
continue to provide purchase money financing in connection with its sale of
Company-owned store assets to franchisees, which is likely to defer the receipt
of cash relating to the sales of such assets.
The Company believes that it will continue to improve cash flows during
1999, based on the following factors, among others: (i) the sale of certain poor
performing Company-owned stores; (ii) improvement in store profitability through
increased monitoring of store-by-store operations and actual results as compared
to expected results; and (iii) the continued increase in the operations and cash
flows generated from the Company's Insight Laser subsidiary.
As of December 31, 1998, the Company was not in compliance with the
financial covenants of its loan agreement with STI Credit Corporation ("STI")
although STI, on April 13, 1999: (i) waived all such defaults through December
31, 1999; (ii) agreed to the elimination of all prepayment penalties contained
in the Loan Agreement; and (iii) agreed to apply the balance of the Additional
Funds being held by STI for disbursement to the Company ($500,000 plus accrued
interest) to the balance of the loan, all in exchange for the Company's payment,
to STI, of a fee of $150,000, which fee was charged against the Additional Funds
to be credited to the balance of the loan. There can be no assurance that the
Company would be able to obtain such a waiver in future periods, should such
financial covenants not be met by the Company. However, in the event of STI's
acceleration of such loan, the Company believes that it could meet its needs
through additional borrowings, the sale of its franchise notes receivable and/or
additional sales of equity, although there can be no assurance that the Company
would be successful in obtaining such additional borrowings,
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selling any of its franchise notes receivable and/or selling additional equity,
or on what terms said transactions could be effected.
The Company believes, based on its current projections, that its liquid
assets presently on hand, together with cash generated from operations, should
be sufficient for its presently contemplated operations. However, there can be
no assurance that the Company will be able to generate positive cash flows and,
if it does, that such cash flows will be sufficient to adequately fund its
ongoing operations and future plans. If the Company cannot generate sufficient
cash flows from operations, it may be required to seek alternative debt and/or
equity financing. However, there can be no assurance that such debt and/or
equity financing will be available to the Company when necessary, or on terms
that will be attractive to the Company.
Impact of the Year 2000 Issue
The Year 2000 issue is the result of potential problems with computer
systems and/or any equipment with computer chips that use dates, where the date
has been stored as just two digits (e.g. 97 for 1997). On January 1, 2000, any
clock or date recording mechanism (including date sensitive software) which uses
only two digits to represent the year, may recognize a date using 00 as the year
1900, rather than the year 2000. This could result in a system failure or
miscalculations, thus causing a disruption of operations. As a result, systems
may be unable to accurately process certain date-based information.
The Company has reviewed the Year 2000 issue with its management
information systems providers and consultants. The Company believes that the
Year 2000 issue will not have a material impact on the operations of the Company
since its computer programs were written utilizing four digits to define the
applicable year. However, the Company cannot determine, as of the date hereof,
the impact of the Year 2000 issue on any of its vendors and/or franchisees,
which might materially impact the operations of the Company.
Forward Looking Statements
All statements contained herein (other than historical facts) are based
upon current expectations. These statements are forward looking in nature and
involve a number of risks and uncertainties. Actual results may differ
materially from anticipated results or other expectations expressed in the
Company's forward looking statements. Generally, the words "anticipate,"
"believe," "estimate," "expects," and similar expressions as they relate to the
Company and/or its management, are intended to identify forward looking
statements.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings. Not applicable.
Item 2. Changes in Securities. Not applicable.
Item 3. Defaults Upon Senior Securities. Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders. Not applicable.
Item 5. Other Information. Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits
--------
EXHIBIT INDEX
-------------
Exhibit Number
27. Financial Data Schedule.
10.87 Employment Agreement, dated as of August 20, 1999, between
Insight Laser Center, Inc. and Robert Greenberg.
10.88 Employment Agreement, dated as of August 20,1999, between
Insight Laser Centers, Inc. and Kim Greenberg.
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<PAGE>
B. Reports on Form 8-K
1. On August 20, 1999, the Registrant filed a Report on Form 8-K with
respect to a series of transactions between Insight Laser Centers,
Inc., and RBG Consulting, Ltd. and its principal shareholders.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned hereunto duly authorized.
STERLING VISION, INC.
(Registrant)
BY: /s/ Robert Cohen
-----------------------------
Robert Cohen
Chairman of the Board
BY: /s/William J. Young
-----------------------------
William J. Young
Chief Financial Officer/Treasurer
Dated: November 22, 1999
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EXHIBIT 10.87
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, entered into on the 20th day of
August, 1999, effective as of the 1st day of June, 1999, is by and between
Insight Laser Centers, Inc., a New York corporation having an office at 1500
Hempstead Turnpike, East Meadow, New York 11554 (the "Company"), and Robert
Greenberg, an individual residing at 58 Starling Court, Roslyn, New York (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to obtain the services of
the Employee, on its own behalf and on behalf of all existing and future
affiliated entities (as said term, "affiliate", is defined in Regulation 12(b)
under the Securities Exchange At of 1934, as amended) specifically excepting,
however, Sterling Vision, Inc., and the Employee desires to be employed by the
Company upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual agreements
and understandings set forth herein, and for the other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Company and the Employee hereby agree as follows:
1. Term of Employment.
The Company hereby employs the Employee to render services to
the Company in the positions and with the duties and responsibilities described
in Section 3 hereof commencing as of June 1, 1999 (the "Effective Date") and
continuing thereafter for a period of five (5) years, unless earlier terminated
in accordance with the provisions of Section 5 hereof. For purposes of this
Agreement, the "Term of Employment" shall be the five (5) year period commencing
on the Effective Date, subject to earlier termination pursuant to Section 5
hereof.
2. Voting by Board of Directors.
It is expressly understood and agreed that in the event any action
and/or decision, required and/or permitted to be taken and/or made (or not taken
and/or made) by the Company under this Agreement (i.e. in connection with the
Employee's employment by the Company) requires the prior approval of the
Company's Board of Directors (the "Board") such approval shall require the vote
of a majority of the members of such Board (at a meeting at which a
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quorum is present or, if telephonic, participates) without the Employee voting
thereon.
3. Position, Duties, Responsibilities.
(a) Position. The Employee hereby accepts such employment and agrees to
serve as the President and Chief Executive Officer of the Company, as well as in
such additional, executive officer position(s) as the Board may, from time to
time, reasonably designate. The Employee shall devote his best efforts and his
full business time and attention to the performance of the services customarily
incidental to such offices. The Employee, in his capacity as the President and
CEO of the Company, shall: (i) have the right to participate in the selection of
any new and/or additional senior executive officers of the Company; and (ii) be
responsible for the normal, day-to-day operations thereof, it being understood
that the approval of the Company's Board shall be required prior to the
Employee, on behalf of the Company, undertaking and/or entering into any
extraordinary and/or non-recurring, material transactions.
(b) Other Activities. Except upon the prior written
consent of the Board, the Employee, during the Term of Employment, will not: (i)
accept any other employment; provided, however, that until March 30, 2000, the
Employee may render consulting services, on a part-time basis, to Eye-City.com
(f/k/a Ergovision, Inc.); or (ii) engage, directly or indirectly, in any other
business activity (whether or not pursued for pecuniary advantage) that is or
may be competitive with, or that might place him in a competing position to that
of, the Company including, but not limited to, serving on the board of directors
of any other corporation engaged in a business that is competitive to the
business of the Company and/or any of its affiliates, it being understood that
Employee may: (i) serve on up to three (3) boards of directors of other,
non-competitive corporations; and (ii) own up to five (5%) percent of the equity
interests in any publically traded company.
4. Salary; Benefits; Expenses.
(a) Salary. In consideration of the services to be rendered hereunder,
the Employee, during the Term of Employment, shall be paid a salary computed at
the rate of One Hundred Thousand ($100,000) Dollars per annum, payable in equal,
semi-monthly installments.
(b) Benefits and Other Arrangements. In addition to the compensation
set forth in Subsection 4(a) hereof: (i) the Company shall, within ten (10) days
after the expiration of each month during the Term of Employment, reimburse the
Employee for a portion of his automobile expenses, in the amount of Five Hundred
($500) Dollars per month; and (ii) the Employee shall be entitled to participate
in any plan, arrangement or policy of the Company providing for medical benefits
and/or sick leave on substantially the same terms as are generally then made
available to other employees of the Company.
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(c) Vacation. The Employee shall be entitled to a three (3) week, paid
vacation during each year of the Term of Employment, such vacation to be subject
to the Company's general policies, as the same may be amended from time to time;
provided, however, that if the Employee, due to his work load, is restricted
from taking said vacation (or any portion thereof) during any year of the Term
of Employment, said unused vacation days shall carry over to the ensuing year.
(d) Expenses: The Employee shall be entitled to reimbursement for all
ordinary and necessary business expenses hereafter incurred in the performance
of his duties hereunder (including, but not limited to, gas consumed in the
Employee's business use of his automobile, the use of a digital, cellular
telephone and a home fax machine), in each case subject to the Company's receipt
of adequate substantiation and/or documentation thereof.
(e) Office: The Employee shall be afforded the use of an office (and,
to the extent required, reasonable secretarial assistance) at the Company's
laser surgery center to be located at 430 West Broadway, New York, New York;
provided, however, that, from time to time, the Company shall use reasonable
efforts to afford the Employee with the use of an office and part-time
secretarial assistance at the Company's principal executive offices presently
located in East Meadow, New York.
(f) Surrender/Cancellation of Employee Stock Options. By his execution
hereof, the Employee agrees to his surrender of, and cancellation, by Sterling
Vision, Inc. ("SVI"), an aggregate of seventy thousand (70,000) of the employee
stock options previously granted to (and vested in) the Employee pursuant to
that certain Non-Qualified Stock Option Agreement, dated December 15, 1995,
between SVI and the Employee, the balance of such options previously issued to,
and vested in, the Employee not otherwise being affected thereby.
5. Termination.
(a) The employment of the Employee hereunder may be terminated by the
Company on not less than thirty (30) days' prior written notice to the Employee
in the event that the Employee is determined to be permanently disabled. As used
in this Section, the Employee shall be deemed to be "permanently disabled" if
the Employee has been substantially unable to discharge his duties and
obligations hereunder, by reason of illness, accident or disability, for a
period of one hundred twenty (120) or more consecutive days. In the event the
employment of the Employee is terminated because of a permanent disability, the
Employee shall receive (net of all benefits available to the Employee under any
Company provided policy of disability insurance available to him) compensation
until the earlier of the date which is three (3) months after the date on which
the Employee first became disabled and the date on which the Term of Employment
shall expire pursuant to Section 1 hereof, payable at the rate and on the terms
provided
3
<PAGE>
hereby as if he had not been terminated.
(b) The employment of the Employee hereunder may be terminated by the
Company for cause, at any time during the Term of Employment, upon written
notice from the Company documenting that, in the opinion of the Board, the
Employee shall have: (i) wilfully refused or failed, after twenty (20) days'
prior written notice to him that such refusal or failure would constitute a
default hereunder, to perform his duties hereunder, other than any such failure
resulting from the Employee's incapacity due to illness or injury; (ii) been
guilty of a material or willful breach of any of the material terms or
provisions of this Agreement or any other material legal obligation to the
Company; (iii) demonstrated gross negligence or willful misconduct, in any
material respect, in the execution of his assigned duties; or (iv) been
convicted of a felony or other serious crime; provided, however, that in the
event th Employee shall dispute the basis (bases) upon which such decision was
made by the Board, the Employee shall have the right, within such twenty (20)
day period, to call a special meeting of the Board at which the Employee will be
permitted to dispute such action taken by the Board; and, in the event the
Board, at such special meeting, shall confirm the action previously taken by it,
the Employee shall have an additional period of ten (10) days (from and after
the date of said special meeting, if any), within which to cure the default(s)
which were the basis (bases) of such Board action.
(c) The employment of the Employee hereunder shall automatically be
deemed terminated on the date of the Employee's death.
(d) If the Employee's employment is terminated pursuant to Subsections
5(b) or (c) above, the Employee shall be entitled to, and the Company's
obligation shall be limited to, the payment of the compensation accrued under
Subsections 4(a), (b) and (c) hereof (together with all amounts then payable
pursuant to Subsection 4(d) hereof) to the date of such termination or, in the
case of a termination under Subsection 5(a) hereof, to the date specified
therein.
6. Confidentiality.
(a) The Employee shall not, during the Term of Employment or at any
time thereafter, use (other than in the performance of his duties to the
Company) or disclose to any person, firm or corporation (except as may be
required by law or with the prior written approval of the Board) any information
concerning the business, inventions, discoveries, clients, affairs or other
trade secrets of the Company that he may have acquired in the course of, or as
an incident to, his employment by the Company (including his employment, by SVI,
prior to the date hereof).
(b) The obligations of confidentiality and non-use set forth in
Subsection 6(a) above shall not apply to information: (i) which is or becomes
published in any written document or otherwise is or becomes a part of the
public domain without breach of the aforementioned obligations by the Employee;
(ii) which the Employee
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<PAGE>
can establish was already in his possession and not subject to a secrecy
obligation at the time he encountered such information in the course of, or as
an incident to, his employment by the Company or SVI, as the case may be; or
(iii) which is required to be disclosed by the Employee pursuant to an order of
a court of competent jurisdiction.
(c) As a material inducement for the Company to enter into this
Agreement, and expressly in partial exchange for the performance of the
Company's obligations under this Agreement, the Employee hereby covenants and
agrees that during the Term of Employment and for a period of one (1) year
thereafter, he will not, either on his own account, or directly or indirectly in
conjunction with or on behalf of any person, firm or company:
(i) Solicit or employ, or attempt to solicit or employ, any person who
is then or has, within the six (6) month period prior thereto, been an officer,
director or employee of the Company or any of its affiliates, whether or not
such a person would commit a breach of his or his contract of employment, if
any, by reason of leaving the service of the Company or any of its affiliates;
or
(ii) Solicit the business of any person, firm or company which is then,
or has been, at any time during the preceding six (6) month period prior to such
solicitation, a customer, client, contractor, supplier or agent of the Company
or of any of its affiliates.
(d) As a further material inducement for the Company to enter into this
Agreement, and expressly in partial exchange therefor, the Employee hereby
covenants and agrees that in the event the employment of the Employee hereunder
is terminated "for cause", or in the event the Employee leaves the employ of the
Company in breach of his obligations hereunder, the Employee, for a period of
one (1) year thereafter, shall not carry on or be engaged, concerned or
interested in, or devote any material time to the affairs of, any trade or
business competing with the then trade or business of the Company and which is
then located within the City of New York, Nassau County or Westchester County
and/or within a twenty-five (25) mile radius of any laser surgery center then
owned and/or being operated by the Company.
(e) It is expressly understood and agreed that nothing herein contained
shall bar the Company's right to obtain preliminary injunctive relief against
any threatened conduct that is and/or would likely to be, in violation of the
Employee's obligations hereunder, under customary equity rules, including
applicable rules for obtaining restraining orders and preliminary injunctions.
The Employee agrees that the Company may have such injunctive relief, without
bond, but upon due notice, in addition to such further and other relief as may
be available, at equity or law.
7. Notices.
Any notice, request, claim, demand or other communication hereunder to
any party shall be effective upon receipt (or refusal
5
<PAGE>
of receipt) and shall be in writing and delivered personally or sent by telex,
telecopy, or certified or registered mail, return receipt requested, postage
prepaid, as follows:
(i) If to the Company, addressed to its principal executive offices to
the attention of its General Counsel, with a copy to be simultaneously delivered
to the Chairman of the Board; or
(ii) If to the Employee, to him at the address set forth above, with a
copy to be simultaneously delivered c/o Insight Laser Centers, 430 West
Broadway, New York, New York 10022; or
(iii) at any such other address as either party shall have specified by
written notice given to the other as herein provided.
8. Entire Agreement.
The terms of this Agreement are intended by the parties to be the final
expression of their agreement with respect to the employment of the Employee by
the Company and may not be contradicted by evidence of any prior or
contemporaneous agreement. The parties further intend that this Agreement shall
constitute the complete and exclusive statement of its terms and that no
extrinsic evidence, whatsoever, may be introduced in any judicial,
administrative or other legal proceeding involving this Agreement.
9. Amendments; Waivers.
Except as otherwise set forth herein, this Agreement may not be
modified, amended or terminated except by an instrument, in writing, signed by
the Employee and by the Chairman of the Company's Board. By an instrument in
writing similarly executed, either party may waive compliance by the other party
with any provision of this Agreement that such other party was or is obligated
to comply with or perform; provided, however, that such waiver shall not operate
as a waiver of, or estoppel with respect to, any other or subsequent failure. No
failure to exercise, and no delay in exercising, any right, remedy or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy or power hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy or power provided
for herein, or by law, or in equity.
10. Severability; Enforcement.
If any provision of this Agreement, or the application thereof to any
person, place or circumstance, shall be held by a court of competent
jurisdiction to be invalid, unenforceable or void, the remainder of this
Agreement and such provisions as applied to other persons, places and
circumstances, shall remain in full force and effect.
11. Assignability.
(a) In the event that the Company shall merge or
6
<PAGE>
consolidate with any other corporation, partnership or business entity, or all
or substantially all the Company's business or assets shall be transferred, in
any manner, to any other corporation, partnership or business entity, such
successor shall thereupon succeed to, and be subject to, all rights, interests,
duties and obligations of, and shall thereafter be deemed for all purposes
hereof to be, the Company hereunder.
(b) This Agreement is personal in nature, and none of the parties
hereto shall, without the prior written consent of the other, assign or transfer
this Agreement or any of its or his rights or obligations hereunder, except by
operation or law or pursuant to the terms of this Section 11.
(c) Nothing expressed or implied herein is intended or shall be
construed to confer upon, or give to any person, other than the parties hereto,
any right, remedy or claim under, or by reason of, this Agreement, or of any
term, covenant or condition hereof.
12. Restrictive Covenants:
To the extent that a restrictive covenant contained herein may, at any
time, be more restrictive than permitted under the laws of any jurisdiction
where this Agreement may be subject to review and interpretation, the terms of
such restrictive covenant shall be those allowed by law and the covenant shall
be deemed to have been revised accordingly.
13. Governing Law.
The validity, interpretation, enforceability and performance of this
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York.
14. Employee's Representation and Acknowledgment.
The Employee hereby represents that he is free to enter into this
Agreement and is not under any contractual restraint which could prohibit him
from satisfactorily performing his duties to the Company hereunder. The Employee
also acknowledges: (i) that he has consulted with or has had the opportunity to
consult with independent counsel of his own choice concerning this Agreement and
has been advised to do so by the Company; and (ii) that he has read and
understands this Agreement, is fully aware of its legal effects and has entered
into it freely, based upon his own judgment.
15. Arbitration.
Any claim, controversy or dispute between the Employee and the Company,
or any employee, director or member of the Company, involving, related to and/or
arising from the construction or application of any of the terms, provisions or
conditions of this Agreement or otherwise arising out of, or related to, this
Agreement, shall be determined by arbitration in accordance with the then
current commercial arbitration rules of the American
7
<PAGE>
Arbitration Association, and judgment on the award rendered by the arbitrator
may be entered by any court having jurisdiction thereof. The location of the
arbitration shall be Nassau County, New York.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
INSIGHT LASER CENTERS, INC.
By: /s/ Robert Cohen
---------------------
Title: Robert Cohen
Chairman of the Board
EMPLOYEE
/s/ Robert Greenberg
-----------------------
Robert Greenberg
58 Starling Court
Roslyn, New York 11576
8
<PAGE>
EXHIBIT 10.88
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, entered into on the 20th day
of August, 1999, effective as of the 1st day of June, 1999, is by and between
Insight Laser Centers, Inc., a New York corporation having an office at 1500
Hempstead Turnpike, East Meadow, New York 11554 (the "Company"), and Kim
Greenberg, an individual residing at 58 Starling Court, Roslyn, New York (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to obtain the services of
the Employee, on its own behalf and on behalf of all existing and future
affiliated entities (as said term "affiliate" is defined in Regulation 12(b)
under the Securities Exchange Act of 1934, as amended) specifically excepting,
however, Sterling Vision, Inc., and the Employee desires to be employed by the
Company upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual agreements
and understandings set forth herein, and for the other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Company and the Employee hereby agree as follows:
1. Term of Employment.
The Company hereby employs the Employee to render
services to the Company in the position and with the duties and responsibilities
described in Section 3 hereof commencing as of June 1, 1999 (the "Effective
Date") and continuing thereafter for a period of five (5) years, unless earlier
terminated in accordance with the provisions of Section 5 hereof. For purposes
of this Agreement, the "Term of Employment" shall be the five (5) year period
commencing on the Effective Date, subject to earlier termination pursuant to
Section 5 hereof.
2. Voting by Board of Directors.
It is expressly understood and agreed that in the event any action
and/or decision, required and/or permitted to be taken and/or made (or not taken
and/or made) by the Company under this Agreement (i.e. in connection with the
Employee's employment by the Company) requires the prior approval of the
Company's Board of Directors (the "Board") such approval shall require the vote
of a majority of the members of such Board (at a meeting at which a quorum is
present or, if telephonic, participates) without the
1
<PAGE>
Employee voting thereon.
3. Position, Duties, Responsibilities.
(a) Position. The Employee hereby accepts such employment and agrees to
serve as the Executive Vice President of the Company and the Administrator of
the Company's laser surgery center located at 725 Fifth Avenue, New York, New
York (or any other laser surgery center from time to time operated by the
Company and located in New York City; hereinafter referred to as the "Center"),
as well as in such additional, executive officer position(s) as the Board may,
from time to time, reasonably designate. The Employee shall devote her best
efforts and her full business time and attention to the performance of the
services customarily incidental to such offices. The Company, through its Board,
shall retain control over the means and methods by which the Employee shall
perform the above services and of the place(s) (within New York City) at which
such services are to be rendered. With respect to the foregoing, it is expressly
understood and agreed that the Employee shall not be required to relocate her
personal residence to outside of Nassau County, New York.
(b) Other Activities. Except upon the prior written consent of the
Board, the Employee, during the Term of Employment, will not: (i) accept any
other employment; (ii) serve on the board of directors of any other corporation
and/or on the board of managers of any other limited liability company (except
that she may serve, in any capacity, with any civic, educational or charitable
organization or governmental entity or trade association); or (iii) except as
otherwise expressly permitted by the terms hereof, engage, directly or
indirectly, in any other business activity (whether or not pursued for pecuniary
advantage) that is or may be competitive with, or that might place her in a
competing position to that of, the Company, it being understood that the
Employee may own up to five (5%) percent of the equity interests in any
publically traded company.
4. Salary; Benefits; Expenses.
(a) Salary. In consideration of the services to be rendered hereunder,
the Employee, during the initial twenty-four (24) months of the Term of
Employment, shall be paid a salary computed at the rate of One Hundred Thousand
($100,000) Dollars per annum, which amount shall increase by the sum of Ten
Thousand ($10,000.00) Dollars per annum commencing July 1, 2001, in each case
payable in equal, semi-monthly installments.
(b) Benefits and Other Arrangements. In addition to the compensation
set forth in Subsection 4(a) hereof: (i) the Company shall, within ten (10) days
after the expiration of each month during the Term of Employment, reimburse the
Employee the sum of $500 per month in reimbursement of her cellular telephone
bills and
2
<PAGE>
costs in commuting from her home to the Center; and (ii) the Employee shall be
entitled to participate in any plan, arrangement or policy of the Company
providing for medical benefits and/or sick leave on substantially the same terms
as are generally then made available to other employees of the Company.
(c) Additional Compensation. (i) In addition to the salary set forth in
Subsection 4(a) hereof, the Company, during the Term of Employment, shall pay to
the Employee, within two (2) weeks after the expiration of each month, an amount
equal to the product obtained by multiplying the sum of $25.00 by the number of
laser surgery procedures, in excess of seventy(70) per month, actually
performed, at the Center, on the Summit Technology excimer laser installed
therein (specifically excluding, however, those procedures for which no payment
is received by the Company).
(ii) In addition to the salary set forth in Subsection 4(a) hereof and
the additional compensation set forth in Subsection 4(c)(i) hereof, the
Employee, during the Term of Employment, shall be permitted to collect, from
each doctor performing laser surgery procedures at the Center, a fee for her
special assistance in aiding said doctor(s) with his/her marketing of said
procedures; provided, however, that: (i) in no event shall the Employee utilize
the services of any other employee (of the Company) in connection therewith;
(ii) in no event shall such additional fee reduce the amounts otherwise
generally charged to the doctors performing a similar number of procedures, per
month, at the Center; (iii) in no event shall the Employee solicit or demand
such fee as a condition to such doctor performing laser surgery at the Center;
and (iv) the Employee, within ten (10) days after the expiration of each
quarterly period during the Term of Employment, shall deliver to the Company's
Chief Financial Officer a certificate setting forth, with respect to each such
fee received by the Employee during the prior quarterly period, the name of the
doctor, the number of procedures performed during the month in question (at the
Center) by said doctor, the fee charged by the Company, per procedure, to said
doctor, and the fee paid to the Employee by such doctor.
(iii) In addition to the salary set forth in Subsection 4(a) hereof and
the additional compensation set forth in Subsections 4(c)(i) and (ii) hereof,
the Employee, during the Term of Employment, shall be paid a training fee in an
amount equal to $200 per physician trained, with the Employee's assistance, at
the Center, provided the Company is paid, by each such physician, the sum of
$850 for such training.
(d) Vacation. The Employee shall be entitled to a three (3) week, paid
vacation during each year of the Term of Employment, such vacation to be subject
to the Company's general policies, as the same may be amended from time to time;
provided, however, that if the Employee, due to her work load, is restricted
from taking said vacation (or any portion thereof) during any year of the Term
of Employment, said unused vacation days shall carry over to the
3
<PAGE>
ensuing year.
(e) Expenses: The Employee shall be entitled to reimbursement for all
ordinary and necessary business expenses incurred in the performance of her
duties hereunder, in each case subject to the Company's receipt of adequate
substantiation and/or documentation thereof.
(f) Annual Convention: The Employee and her spouse and five (5)
children shall be permitted, at the expense of the Company, to attend all annual
conventions conducted by the Company's principal shareholder, Sterling Vision,
Inc. ("SVI"), in each case on the same terms and conditions as those generally
afforded the executive officers of SVI (other than its President and Chairman),
it being understood that the Company, at its option, shall have the right to pay
to the Employee, in lieu of her bringing her children to any such convention,
the estimated costs and expenses, to the Company, in having such children attend
the same.
(g) Employee Stock Options. Simultaneously upon the execution hereof,
SVI, as a shareholder of the Company, shall grant to the Employee options to
purchase an aggregate of Seventy Thousand (70,000) shares of the Company's
Common Stock, which options shall be deemed to have vested immediately and shall
have a term of ten (10) years, fifty (50%) percent of which shall provide for an
exercise price of $3.75 per share, and the balance of which shall provide for an
exercise price equal to $5.00 per share.
5. Termination.
(a) The employment of the Employee hereunder may be terminated by the
Company on not less than thirty (30) days' prior written notice to the Employee
in the event that the Employee is determined to be permanently disabled. As used
in this Section, the Employee shall be deemed to be "permanently disabled" if
the Employee has been substantially unable to discharge her duties and
obligations hereunder, by reason of illness, accident or disability, for a
period of one hundred twenty (120) or more consecutive days. In the event the
employment of the Employee is terminated because of a permanent disability, the
Employee shall receive (net of all benefits available to the Employee under any
Company provided policy of disability insurance available to her) compensation
until the earlier of the date which is three (3) months after the date on which
the Employee first became disabled and the date on which the Term of Employment
shall expire pursuant to Section 1 hereof, payable at the rate and on the terms
provided hereby as if she had not been terminated.
(b) The employment of the Employee hereunder may be terminated by the
Company for cause, at any time during the Term of Employment, upon written
notice from the Company documenting that, in the opinion of the Board, the
Employee shall have: (i) wilfully refused or failed, after twenty (20) days'
prior written notice to
4
<PAGE>
her that such refusal or failure would constitute a default hereunder, to
perform her duties hereunder, other than any such failure resulting from the
Employee's incapacity due to illness or injury; (ii) been guilty of a material
or willful breach of any of the material terms or provisions of this Agreement
or any other material legal obligation to the Company; (iii) demonstrated gross
negligence or willful misconduct, in any material respect, in the execution of
her assigned duties; or (iv) been convicted of a felony or other serious crime;
provided, however, that in the event the Employee shall dispute the basis
(bases) upon which such decision was made by the Board, the Employee shall have
the right, within such twenty (20) day period, to call a special meeting of the
Board at which the Employee will be permitted to dispute such action taken by
the Board; and, in the event the Board, at such special meeting, shall confirm
the action previously taken by it, the Employee shall have an additional period
of ten (10) days (from and after the date of said special meeting, if any),
within which to cure the default(s) which were the basis (bases) of such Board
action.
(c) The employment of the Employee hereunder shall automatically be
deemed terminated on the date of the Employee's death.
(d) If the Employee's employment is terminated pursuant to Subsections
5(b) or (c) above, the Employee shall be entitled to, and the Company's
obligation shall be limited to, the payment of the compensation accrued under
Subsections 4(a),(b), (c) and (d) hereof (together with all amounts then payable
pursuant to Subsection 4(e) hereof) to the date of such termination or, in the
case of a termination under Subsection 5(a) hereof, to the date specified
therein.
6. Confidentiality.
(a) The Employee shall not, during the Term of Employment or at any
time thereafter, use (other than in the performance of her duties to the
Company) or disclose to any person, firm or corporation (except as may be
required by law or with the prior written approval of the Board) any information
concerning the business, inventions, discoveries, clients, affairs or other
trade secrets of the Company that she may have acquired in the course of, or as
an incident to, her employment by the Company (including her employment, by the
Company and/or any of its affiliates, prior to the date hereof).
(b) The obligations of confidentiality and non-use set forth in
Subsection (a) above shall not apply to information: (i) which is or becomes
published in any written document or otherwise is or becomes a part of the
public domain without breach of the aforementioned obligations by the Employee;
(ii) which the Employee can establish was already in her possession and not
subject to a secrecy obligation at the time she encountered such information in
the course of, or as an incident to, her employment by the Company and/or any of
its affiliates; or (iii) which is required to be
5
<PAGE>
disclosed by the Employee pursuant to an order of a court of competent
jurisdiction.
(c) As a material inducement for the Company to enter into this
Agreement, and expressly in partial exchange for the performance of the
Company's obligations under this Agreement, the Employee hereby covenants and
agrees that during the Term of Employment and for a period of one (1) year
thereafter, she will not, either on her own account, or directly or indirectly
in conjunction with or on behalf of any person, firm or company:
(i) Solicit or employ, or attempt to solicit or employ, any person who
is then or has, within the six (6) month period prior thereto, been an officer,
director or employee of the Company or any of its affiliates, whether or not
such a person would commit a breach of his or her contract of employment, if
any, by reason of leaving the service of the Company or any of its affiliates;
or
(ii) Solicit the business of any person, firm or company which is then,
or has been, at any time during the preceding six (6) month period prior to such
solicitation, a customer, client, contractor, supplier or agent of the Company
or of any of its affiliates.
(d) As a further material inducement for the Company to enter into this
Agreement, and expressly in partial exchange therefor, the Employee hereby
covenants and agrees that in the event the employment of the Employee hereunder
is terminated "for cause", or in the event the Employee leaves the employ of the
Company in breach of her obligations hereunder, the Employee, for a period of
one (1) year thereafter, shall not carry on or be engaged, concerned or
interested in, or devote any material time to the affairs of, any trade or
business competing with the then trade or business of the Company and which is
then located within the City of New York, Nassau County or Westchester County
and/or within a twenty-five (25) mile radius of any laser surgery center then
owned and/or being operated by the Company.
(e) It is expressly understood and agree that nothing herein contained
shall bar the Company's right to obtain preliminary injunctive relief against
any threatened conduct that is and/or would likely to be, in violation of the
Employee's obligations hereunder, under customary equity rules, including
applicable rules for obtaining restraining orders and preliminary injunctions.
The Employee agrees that the Company may have such injunctive relief, without
bond, but upon due notice, in addition to such further and other relief as may
be available, at equity or law.
7. Notices.
Any notice, request, claim, demand or other communication hereunder to
any party shall be effective upon receipt (or refusal of receipt) and shall be
in writing and delivered personally or sent by telex, telecopy, or certified or
registered mail, return
6
<PAGE>
receipt requested, postage prepaid, as follows:
(i) If to the Company, addressed to its principal executive offices to
the attention of its General Counsel, with a copy to be simultaneously delivered
to the Chairman of the Board;
(ii) If to the Employee, to her at the address set forth above, with a
copy to be simultaneously delivered c/o Insight Laser Centers, 725 Fifth Avenue,
New York, New York 10022; or
(iii) at any such other address as either party shall have specified by
written notice given to the other as herein provided.
8. Entire Agreement.
The terms of this Agreement are intended by the parties to be the final
expression of their agreement with respect to the employment of the Employee by
the Company and may not be contradicted by evidence of any prior or
contemporaneous agreement. The parties further intend that this Agreement shall
constitute the complete and exclusive statement of its terms and that no
extrinsic evidence, whatsoever, may be introduced in any judicial,
administrative or other legal proceeding involving this Agreement.
9. Amendments; Waivers.
Except as otherwise set forth herein, this Agreement may not be
modified, amended or terminated except by an instrument, in writing, signed by
the Employee and by the Chairman of the Company's Board. By an instrument in
writing similarly executed, either party may waive compliance by the other party
with any provision of this Agreement that such other party was or is obligated
to comply with or perform; provided, however, that such waiver shall not operate
as a waiver of, or estoppel with respect to, any other or subsequent failure. No
failure to exercise, and no delay in exercising, any right, remedy or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy or power hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy or power provided
for herein, or by law, or in equity.
10. Severability; Enforcement.
If any provision of this Agreement, or the application thereof to any
person, place or circumstance, shall be held by a court of competent
jurisdiction to be invalid, unenforceable or void, the remainder of this
Agreement and such provisions as applied to other persons, places and
circumstances, shall remain in full force and effect.
11. Assignability.
(a) In the event that the Company shall merge or consolidate with any
other corporation, partnership or business
7
<PAGE>
entity, or all or substantially all the Company's business or assets shall be
transferred, in any manner, to any other corporation, partnership or business
entity, such successor shall thereupon succeed to, and be subject to, all
rights, interests, duties and obligations of, and shall thereafter be deemed for
all purposes hereof to be, the Company hereunder.
(b) This Agreement is personal in nature, and none of the parties
hereto shall, without the prior written consent of the other, assign or transfer
this Agreement or any of its or her rights or obligations hereunder, except by
operation or law or pursuant to the terms of this Section 11.
(c) Nothing expressed or implied herein is intended or shall be
construed to confer upon, or give to any person, other than the parties hereto,
any right, remedy or claim under, or by reason of, this Agreement, or of any
term, covenant or condition hereof.
12. Restrictive Covenants:
To the extent that a restrictive covenant contained herein may, at any
time, be more restrictive than permitted under the laws of any jurisdiction
where this Agreement may be subject to review and interpretation, the terms of
such restrictive covenant shall be those allowed by law and the covenant shall
be deemed to have been revised accordingly.
13. Governing Law.
The validity, interpretation, enforceability and performance of this
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York.
14. Employee's Representation and Acknowledgment.
The Employee hereby represents that she is free to enter into this
Agreement and is not under any contractual restraint which could prohibit her
from satisfactorily performing her duties to the Company hereunder. The Employee
also acknowledges: (i) that she has consulted with or has had the opportunity to
consult with independent counsel of her own choice concerning this Agreement and
has been advised to do so by the Company; and (ii) that she has read and
understands this Agreement, is fully aware of its legal effects and has entered
into it freely, based upon her own judgment.
15. Arbitration.
Any claim, controversy or dispute between the Employee and the Company,
or any employee, director or member of the Company, involving, related to and/or
arising from the construction or application of any of the terms, provisions or
conditions of this Agreement or otherwise arising out of, or related to, this
Agreement, shall be determined by arbitration in accordance with
8
<PAGE>
the then current commercial arbitration rules of the American Arbitration
Association, and judgment on the award rendered by the arbitrator may be entered
by any court having jurisdiction thereof. The location of the arbitration shall
be Nassau County, New York.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
INSIGHT LASER CENTERS, INC.
By: /s/ Robert Cohen
---------------------------
Title: Robert Cohen
Chairman of the Board
EMPLOYEE
/s/ Kim Greenberg
--------------------------------
Kim Greenberg
58 Starling Court
Roslyn, New York 11576
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED CONDENSED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. Dollar
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1.000
<CASH> 1,595
<SECURITIES> 0
<RECEIVABLES> 21,046<F2>
<ALLOWANCES> 2,545
<INVENTORY> 1,945
<CURRENT-ASSETS> 10,886
<PP&E> 12,733
<DEPRECIATION> 6,275
<TOTAL-ASSETS> 32,067
<CURRENT-LIABILITIES> 12,957
<BONDS> 0
0
3,277
<COMMON> 152
<OTHER-SE> 10,646
<TOTAL-LIABILITY-AND-EQUITY> 32,067
<SALES> 17,921
<TOTAL-REVENUES> 26,779
<CGS> 5,045
<TOTAL-COSTS> 25,797
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 574
<INTEREST-EXPENSE> 811
<INCOME-PRETAX> 872
<INCOME-TAX> 0
<INCOME-CONTINUING> 872
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 872
<EPS-BASIC> .04
<EPS-DILUTED> (.05)
<FN>
<F1>
Amounts inapplicable or not disclosed as a separate line on the Statement of
Financial Position or Statement of Operations are reported as -0- herein.
<F2>
* Notes and accounts receivable are reported net of allowances for doubtful
accounts on the Statement of Financial Position.
</FN>
</TABLE>
