<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON , 1996
REGISTRATION NO. 333-
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
VISTA LASER CENTERS OF THE PACIFIC, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
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<S> <C> <C>
NEVADA 8093 68-0379927
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
14895 E. 14TH STREET, SUITE 400
SAN LEANDRO, CA 94578
(510) 297-5050
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
------------------------
14895 E. 14TH STREET, SUITE 400
SAN LEANDRO, CA 94578
(ADDRESS OF PRINCIPAL PLACE OF BUSINESS OR INTENDED PLACE OF BUSINESS)
------------------------
DR. J. ROBERT GRIFFIN, CHAIRMAN
14895 E. 14TH STREET, SUITE 400
SAN LEANDRO, CA 94578
(510) 297-5050
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
WITH COPIES TO:
MICHAEL K. HAIR, ESQ. GARRY S. O'RAFFERTY, ESQ.
7407 E. IRONWOOD CT. TITUS, BRUECKNER & BERRY, P.C.
SCOTTSDALE, AZ 85258 7373 N. SCOTTSDALE ROAD, SUITE B-252
SCOTTSDALE, ARIZONA 85253
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
as soon as practicable after this Registration Statement shall become effective.
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, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, 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. / /
------------------------
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT (1) PRICE (1) FEE
- ------------------------------------------------------------------------------------------------------------------------------
Unit, Consisting of Two Shares of Common Stock, $.01
Par Value, and One Class C Warrant(2)................ 690,000 units $10.10 $6,969,000 $2,403.10
Common Stock, $.01 Par Value(2)........................ 1,380,000 shares -- -- --
Class C Warrants(2).................................... 690,000 warrants -- -- --
Common Stock, $.01 Par Value, Underlying Class C
Warrants............................................. 690,000 shares $6.00 $4,140,000 $1,427.59
Series A Preferred Stock, $.01 Par Value............... 237,500 shares $4.00(3) $950,000 327.59
Common Stock, $.01 Par Value(4)........................ 237,500 shares $5.00 $1,187,500 409.48
Underwriters' Warrants................................. 60,000 warrants $0.001 $60 .02
Common Stock Issuable upon exercise of Underwriters'
Warrants(5).......................................... 120,000 shares $6.06 $727,200 $250.76
Class C Warrants upon exercise of Underwriters'
Warrants(5).......................................... 60,000 warrants -- -- --
Common Stock Issuable upon exercise of Underwriters'
Class C Warrants(5).................................. 60,000 shares $6.00 $360,000 $124.14
--------------------- ------------ ---------------- ---------------
TOTAL.............................................. $4,942.68
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 and based upon the proposed maximum offering price.
(2) Includes 90,000 Units and 180,000 shares subject to the Underwriters'
over-allotment option. See "Underwriting."
(3) $4.00 price is based upon conversion price of principal of Promissory Note
into Series A Preferred Stock.
(4) Includes shares registered for the account of selling stockholders and
issuable upon conversion of Series A Preferred Stock by selling
stockholders. See "Principal and Selling Stockholders".
(5) Pursuant to Rule 416, there are also being registered hereunder such
additional securities as may be issued upon exercise of the Underwriters'
Warrants.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
VISTA LASER CENTERS OF THE PACIFIC, INC.
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
FORM SB-2 ITEM NUMBER AND CAPTION LOCATION OR HEADING IN PROSPECTUS
---------------------------------------- -----------------------------------------------
<C> <S> <C>
1. Front of Registration Statement and
Outside Front Cover Page of
Prospectus............................ Outside Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus................... Inside Front Cover Page; Outside Back Cover
Page
3. Summary Information and Risk Factors.... Prospectus Summary; Risk Factors
4. Use of Proceeds......................... Prospectus Summary; Use of Proceeds
5. Determination of Offering Price......... Risk Factors; Underwriting
6. Dilution................................ (Not Applicable)
7. Selling Security Holders................ Principal and Selling Stockholders
8. Plan of Distribution.................... Outside Front Cover Page; Underwriting
9. Legal Proceedings....................... (Not Applicable)
10. Directors, Executive Officers, Promoters
and Control Persons................... Management; Certain Transactions; Principal and
Selling Stockholders
11. Security Ownership of Certain Beneficial
Owners and Management................. Management; Certain Transactions; Principal and
Selling Stockholders
12. Description of Securities............... Outside Front Cover Page; Prospectus Summary;
Description of Securities; Federal Income Tax
Considerations; Underwriting
13. Interests of Named Experts and
Counsel............................... (Not Applicable)
14. Disclosure of Commission Position on on
Indemnification for Securities Act
Liabilities........................... (Not Applicable)
15. Organization Within Last Five Years..... Business; Certain Transactions
16. Description of Company.................. Prospectus Summary; Risk Factors; Business; Use
of Proceeds; Capitalization; Selected Financial
Data; Management Discussion and Analysis and
Plan of Operation; Certain Transactions;
Dividend Policy; Financial Statements
17. Management Discussion and Analysis or
Plan of Operation..................... Management Discussion and Analysis and Plan of
Operation
18. Description of Property................. Business
19. Certain Relationships and Related
Parties............................... Management; Certain Transactions
20. Market for Common Equity and Related
Stockholder Matters................... (Not Applicable)
21. Executive Compensation.................. Management
22. Financial Statements.................... Summary Financial Data; Financial Statements
23. Changes In and Disagreements with
Accountants on Accounting and
Financial Disclosure.................. (Not Applicable)
</TABLE>
<PAGE> 3
EXPLANATORY NOTE
This registration statement contains two forms of prospectuses; one to be
used in connection with a firm commitment underwriting of up to 690,000 Units
including an over-allotment option (the "Firm Commitment Prospectus") and one to
be used in a concurrent offering of up to 237,500 shares of Common Stock for the
account of 25 selling stockholders (the "Selling Stockholders Prospectus"). The
Firm Commitment Prospectus and the Selling Stockholders Prospectus are identical
except for alternative pages appearing after the end of the Firm Commitment
Prospectus. Each of the pages for the Selling Stockholder Prospectus included
herein is labeled "Alternative Page".
<PAGE> 4
SUBJECT TO COMPLETION, DATED SEPTEMBER , 1996
PROSPECTUS
VISTA LASER CENTERS OF THE PACIFIC, INC.
600,000 UNITS
Vista Laser Centers Of The Pacific, Inc., a Nevada corporation (the
"Company"), is offering 600,000 Units, at a price of $10.10 per Unit. Each Unit
(the "Units") consists of two shares of the Company's Common Stock, $.01 par
value (the "Common Stock") and one Class C Warrant (the "Warrants"). Each
Warrant entitles the holder to purchase one share of Common Stock at a price of
$6.00 at any time until the fifth anniversary of the date of this Prospectus.
The Common Stock and the Warrants included in the Units shall be separately
transferable immediately after the date of this Prospectus. The Warrants are
redeemable by the Company at $.25 per Warrant upon 30 days' notice after the
market price of the Common Stock equals or exceeds $8.00 for 10 consecutive
trading days. See "Description of Securities".
This Prospectus also covers 237,500 shares of Common Stock to be offered
for the account of 25 shareholders (the "Selling Shareholders"). The Company
will not receive any proceeds from the offering of securities by the Selling
Stockholders. See "Risk Factors", "Principal and Selling Stockholders",
"Underwriting" and "Plan of Distribution by Selling Stockholders."
Prior to this offering, there has been no public market for any securities
of the Company and there can be no assurance that an active public market will
develop or, if developed, that it will be sustained. The initial offering price
of the Units was determined by negotiations between the Company and Dickinson &
Co. (the "Representative"), as representative of the several underwriters, and
does not necessarily relate to the Company's book value or other established
criteria of value. See "Underwriting". The Company intends to apply for its
Units, Common Stock and Warrants to be listed on the Boston Stock Exchange and
quoted in the NASDAQ system. Even if approved for listing, the Company will be
required to maintain certain minimum criteria to maintain such listing, as to
which there can be no assurance.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD NOT BE PURCHASED
BY ANY PERSON WHO CANNOT AFFORD RISK OF LOSS OF THE INVESTMENT. SEE
"RISK FACTORS" ON PAGE 9.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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<S> <C> <C> <C>
UNDERWRITING
PRICE TO DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS(1) COMPANY(2)
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Per Unit.......................... $10.10 $1.01 $9.09
Total(3).......................... $6,060,000 $606,000 $5,454,000
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) In addition, the Company has agreed to pay to the Representative a 3%
nonaccountable expense allowance and to sell to the Representative warrants
("Underwriters' Warrants") exercisable at $12.12 per Unit to purchase 60,000
Units. The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
See "Underwriting."
(2) Before deducting expenses of the offering, including the nonaccountable
expense allowance in the amount of $181,800 ($209,070 if the Underwriters'
over-allotment option is exercised in full), payable by the Company
estimated at $356,800.
(3) The Company has granted the Underwriters an option exercisable within 45
days after the date of this Prospectus, to purchase up to 90,000 additional
Units for the purpose of covering over-allotments, if any. If the
Underwriters exercise such option in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Company will be
$6,969,000, $696,900 and $6,272,100, respectively. See "Underwriting."
The Units offered hereby are offered by the several Underwriters subject to
prior sale, when, as and if delivered to and accepted by them, including the
right of the Underwriters to withdraw, cancel or reject orders in whole or in
part and subject to certain other conditions. It is expected that the delivery
of certificates representing the Units will be made against payment on or about
, 1996 at the offices of the Representative.
DICKINSON & CO.
The date of this Prospectus is , 1996.
<PAGE> 5
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission
("Commission") a Registration Statement on Form SB-2 under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the securities covered
by this Prospectus. For the purposes hereof, the term "Registration Statement"
means the original Registration Statement and any and all amendments thereto,
including the schedules and exhibits to such original Registration Statement or
any such amendment. This Prospectus, which forms a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement, to which reference is hereby made. Each statement made in this
Prospectus concerning a document filed as an exhibit to the Registration
Statement is qualified in its entirety by reference to such exhibit for a
complete statement of its provisions.
Any interested party may inspect the Registration Statement, without
charge, at the public reference facilities of the Commission at its principal
office at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, and at its regional offices in Chicago (Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661) and in New York (Seven World Trade
Center, Suite 1300, New York, New York 10048). Any interested party may obtain
copies of all or any portion of the Registration Statement at prescribed rates
from the Public Reference Section of the Commission at its principal office at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549.
The Company intends to furnish its stockholders each year with annual
reports containing audited financial statements and a report thereon expressed
by independent public accountants and such other reports as the Company deems
appropriate or as may be required by law.
2
<PAGE> 6
GLOSSARY
As used in this Prospectus, the following terms have the following meanings
unless the context clearly indicates otherwise.
ablation: the removal of corneal tissue by ultraviolet light generated by a
laser.
alternative refractive care: the treatment of refractive disorders other
than through the use of traditional means such as eyeglasses and contact lenses.
astigmatism: a common refractive disorder in which images transmitted
through the cornea fail to focus at any one point on the retina, resulting in
blurred vision.
bilateral surgery: surgery upon both eyes of the patient at the same time.
cornea: the transparent front portion of the eye through which images are
transmitted and which is the principal focusing component of the eye.
corneal pathologies: diseases, injuries and conditions of the cornea
resulting in impaired vision, discomfort or blindness.
diopter: a unit of measurement of the refractive power of the eye; a
negative value indicates nearsightedness and a positive value indicates
farsightedness.
epithelium: a layer of cells comprising the outer surface of the cornea.
excimer laser: an ophthalmic laser surgical system which delivers pulses of
ultraviolet laser light to an eye for the purpose of correcting nearsightedness,
farsightedness, astigmatism and other ophthalmic disorders.
FDA: the United States Food and Drug Administration.
glaucoma: a disease of the eye characterized by a sustained elevation of
intraocular pressure.
holmium laser: an ophthalmic laser surgical system which delivers high
intensity pulses of infrared light to an eye for the purpose of treating the
symptoms of glaucoma and, in certain circumstances, correcting farsightedness
and astigmatism.
hyperopia: a common refractive disorder, also known as farsightedness, in
which images transmitted through the cornea focus behind the retina, resulting
in blurred vision.
laser assisted in situ keratomileusis ("LASIK"): a refractive procedure
performed with an excimer laser system to treat extreme cases of myopia
(nearsightedness).
laser sclerostomy ("LS"): a surgical procedure performed with a holmium
laser to treat symptoms of glaucoma by making an opening in the front chamber of
the eye.
laser thermal keratectomy ("LTK"): a refractive procedure performed with a
holmium laser to treat hyperopia (farsightedness) and astigmatism in which
peripheral corneal tissue is thermally shrunk, causing the central portion of
the cornea to steepen.
micron: a unit of length equal to one-thousandth of a millimeter.
myopia: a common refractive disorder, also known as nearsightedness, in
which images transmitted through the cornea focus in front of the retina,
resulting in blurred vision.
photorefractive keratectomy ("PRK"): an outpatient surgical procedure
performed with an excimer laser system for the purpose of correcting myopia
(nearsightedness), hyperopia (farsightedness) and astigmatism, whereby submicron
layers of tissue are ablated from the surface of the cornea in a predetermined
pattern to reshape the cornea.
phototherapeutic keratectomy (PTK): an outpatient surgical procedure
performed with an excimer laser system to alleviate symptoms of certain corneal
pathologies by ablating submicron layers of tissue in order to remove diseased,
scarred or sight-inhibiting tissue.
3
<PAGE> 7
premarket approval ("PMA"): a determination by the FDA, based on an
application supported by data (including preclinical trial results), that a
medical device is safe and efficacious and can be commercially marketed in the
United States.
radial keratotomy ("RK"): a manual surgical procedure to treat
nearsightedness, whereby incisions are made in the cornea to cause it to
flatten.
refractive care: the treatment of refractive disorders, through the use of
traditional means such as eyeglasses and contact lenses, or through the use of
alternative means, such as photorefractive keratectomy.
refractive disorder: the inability of the eye to properly focus images on
the retina; the most common refractive disorders are nearsightedness,
farsightedness and astigmatism.
retina: the lining of the insider of the eye that receives images entering
the eye and transmits them to the brain.
4
<PAGE> 8
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements (including the notes thereto) appearing elsewhere in this Prospectus.
Each prospective investor is urged to read this Prospectus in its entirety. An
investment in the securities offered hereby involves a high degree of risk and
the securities should not be purchased except by those able to afford the loss
of their investment. See "Risk Factors."
Unless otherwise indicated, all per share data and information in this
Prospectus relating to the number of Units assumes that the Underwriters'
over-allotment option to purchase an additional 90,000 Units is not exercised
and that the Underwriters' Warrants to purchase 60,000 Units are not exercised.
THE COMPANY
Vista Laser Centers Of The Pacific, Inc. (the "Company") was organized on
January 30, 1996 to acquire advanced laser medical equipment and manage and
administer laser vision correction ("LVC") support services ("LVC Services") in
California and northern Nevada under contracts with independent ophthalmologists
("MDs"). LVC procedures are useful in correcting the vast majority of
nearsighted (myopia) refractive disorders as an alternative to eyeglasses,
contact lenses or surgical procedures requiring corneal incisions such as radial
keratotomy ("RK").
During the first half of 1996, the Company's activities consisted of market
research, entering into agreements with experienced LVC eye care professionals,
raising initial capital and acquiring equipment and use of facilities to provide
support services to vision care professionals. LVC Services have been offered by
the Company since June 1996 in San Jose and San Leandro, California, since July
1996 in Sacramento and since August 1996 in Petaluma, California. As of August
31, 1996 physicians using the Company's equipment and support services have
performed 390 LVC procedures, which increased in number from 61 procedures
during June 1996 to 179 procedures during August 1996.
Based upon a Arthur D. Little, Inc. published report of the occurrence of
nearsightedness in the general population, the Company estimates that the
potential market for the Company's LVC Services to correct myopia alone in
northern California is approximately 1.8 million people and is approximately 8.0
million people in the entire state of California. This Arthur D. Little report
also provides information that LVC surgeries will likely comprise an annual
market of greater than $100 Million in the state of California by the year 2000,
with over 100,000 procedures performed annually. Arthur D. Little estimates that
LVC surgery will become the most commonly performed ophthalmic procedure and one
of the highest volume procedures of any type performed by surgeons in the United
States. The Company intends to apply the majority of the proceeds of this
offering to expand its operations throughout California and northern Nevada. See
"Business."
The Company believes a key part of its business strategy is to offer
professionals the benefit of training, consulting and advisory services in a
variety of LVC treatments, procedures and post-operative care. The past
refractive surgery experience of seven MDs who are shareholders of the Company,
including three Directors of the Company, includes over 12,000 refractive
surgical procedures. A fourth Company Director has performed over 9,000 LVC
procedures and more than 14,000 refractive procedures and has copyrighted his
own advanced LVC treatment nomogram. Therefore, the Company believes it has
accumulated a sufficient number of experienced refractive professionals to
provide training, consulting and advisory assistance to MDs who execute services
agreements with the Company in the future. See "Management."
The Company's revenues are derived from payments by health care
professionals for their use of LVC equipment and LVC Services, and additional
revenues are obtained from the Company's patient marketing program. Under
nonexclusive service agreements with independent MDs, the Company earns fees for
LVC Services at the time of use by health care professionals. The Company's
current policy is to charge a flat fee of $500 per procedure, plus an amount
(generally $250) required as a per procedure royalty payment to the equipment
manufacturer, for its LVC procedures. The gross procedure fee charged to the
patient is established by the physician, except that the Company's consent is
required for a gross procedure fee of less
5
<PAGE> 9
than $1,950 per eye. The Company's LVC Services payment normally is received
when the professional collects the gross procedure fee from the patient. See
"Business."
As an additional revenue source, the Company has entered into agreements to
conduct an extensive patient marketing program for 12 MDs in northern
California. These agreements provide for a marketing fee, currently ranging from
$420 to $510 per procedure, payable by the MD from his or her gross procedure
fee. The Company expects to conduct a similar patient marketing program in
southern California. See "Business."
There can be no assurance that LVC Services and patient marketing fees
currently charged to MDs by the Company will be maintained for the long term or
that MDs will continue to require the Company's LVC Services or patient
marketing program. Professionals that do contract with the Company cannot
legally be required to use the Company's services exclusively for their LVC
practices. See "Business."
Advanced equipment acquired by the Company include excimer lasers for
photorefractive keratectomy ("PRK") procedures approved for use in the United
States in October 1995. Besides treatment for slight and moderate myopia, LVC
procedures may also be used under certain circumstances to treat astigmatism and
more extreme cases of myopia. LVC procedures performed with excimer and holmium
laser systems are administered on an outpatient basis by the physician who
determines the recommended procedure for each patient. These procedures
typically require from 15 to 30 minutes for the actual procedure in addition to
preoperative diagnosis and subsequent postoperative care. See "Business."
Vista Technologies Inc. ("Vista Technologies"), a founder and the principal
shareholder of the Company, currently operates five LVC surgical centers in
Europe and to date has sponsored the formation of the Company and five other
entities in North America which will provide LVC Services under the "Vista Laser
Centers" service mark. Under a Consulting Services Agreement, Vista Technologies
has agreed to provide certain consulting services relating to LVC Services to
the Company for a fee equal to 5% of the Company's gross revenues, effective
upon completion of this Offering. In the future Vista Technologies intends to
sponsor additional LVC Service companies which will use the Vista Laser Centers
service mark in other North American geographic markets. Investors in this
Offering will not acquire an interest in Vista Technologies or in other
companies sponsored by Vista Technologies. See "Certain Transactions."
The Company has entered into agreements with three physician groups
affiliated with the Company to acquire certain equipment and office subleases
relating to its existing operations. Pursuant to these three agreements the
Company has paid a total of $187,000 for tenant improvements to office space to
two affiliated physician groups and will pay an additional $607,105 for laser
equipment and medical supplies from the proceeds of this Offering to a third
affiliated physician group. The Company has also assumed long-term excimer laser
payment obligations for a total of $1,273,000. For more details of these
transactions, see "Certain Transactions -- Acquisition Agreements With
Directors."
The Company's headquarters are located at 14895 E. 14th Street, Suite 400,
San Leandro, California 94578, telephone number (510) 297-5050. See "Business",
"Use of Proceeds", "Management", "Management Discussion and Analysis and Plan of
Operation", and "Certain Transactions."
6
<PAGE> 10
THE OFFERING
Securities Offered: 600,000 Units, each consisting of two shares of
Common Stock and one Class C Warrant; each Warrant
entitles the holder to purchase one share of Common
Stock.
Common Stock Outstanding
Prior to the Offering: 887,500 shares
Securities Outstanding
After the Offering:(1) 600,000 Units; 2,087,500 shares of Common Stock,
including 1,200,000 in the Units; 95,000 Class A
Warrants; 450,000 Class B Warrants; 600,000 Class C
Warrants, including 600,000 in the Units.
Use of Proceeds: Proceeds will be applied to equipment purchases,
marketing the Company's LVC Services, expansion and
related working capital requirements. $607,100 of
the proceeds of this Offering will be used to
purchase an excimer laser and certain medical
supplies at fair value from an affiliate of a
Director. During the first year following Offering
the Company will pay: (i) approximately $291,600
upon laser lease and commitments the Company
assumed from two other Directors; (ii)
approximately $90,000 in sublease payments to these
three Directors; and (iii) a total of $230,000 for
the annual salaries of the Company's Chairman and
its President ($345,000 if the maximum annual
bonuses are paid to these officers). See "Use of
Proceeds", "Management Discussion and Analysis and
Plan of Operation", "Business" and "Certain
Transactions".
Risk Factors: The securities offered hereby are speculative,
involve a high degree of risk, and should not be
purchased by investors who cannot afford the loss
of their investment. Investors should review and
carefully consider the information set forth under
"Risk Factors" and "Dilution".
Boston Stock Exchange
Symbol: Common Stock: II PAC
NASDAQ Small-Cap Market
Symbol: Common Stock: II PAC
- ---------------
(1) Does not include the Underwriter's over-allotment option, shares of Common
Stock reserved for issuance upon exercise of the Underwriter's Warrants, or
shares reserved for issuance upon exercise of outstanding Class A Warrants,
Class B Warrants and stock options or the Class C Warrants to be issued in
this Offering. See "Description of Securities," "Principal and Selling
Stockholders," and "Underwriting".
7
<PAGE> 11
SUMMARY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION
(JANUARY 30, 1996) THROUGH
MAY 31, 1996
--------------------------
<S> <C>
STATEMENTS OF OPERATIONS DATA:
Net (loss) adjusted for dividends in arrears........... $(97,951)
Net (loss) per common and common equivalent share...... $ (.14)
Weighted average common and common equivalent shares
outstanding.......................................... 717,482
Dividends in arrears................................... $ 10,762
</TABLE>
<TABLE>
<CAPTION>
MAY 31,1996
--------------
ACTUAL AS ADJUSTED(1)
---------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Current assets.................................... $ 946,587 $6,163,832
Total assets...................................... $2,786,898 $9,270,248
Stockholders' equity.............................. $ 591,554 $7,539,054(2)
</TABLE>
- ---------------
(1) Gives effect to the sale of 600,000 Units offered hereby, the exercise of
the outstanding Class A and B Warrants (but not the Class C Warrants), the
exercise of the outstanding stock options granted under the Company's stock
option plan, the receipt of the stock and warrant subscription receivable,
and the anticipated application of estimated net proceeds therefrom (after
the deduction of underwriting discounts and commissions and estimated
expenses to be incurred by the Company in connection with this offering),
including cash outlays for equipment purchases and leasehold improvements
totaling approximately $607,100 and three capitalized laser leases and/or
loans. See "Use of Proceeds", "Management Discussion and Analysis and Plan
of Operation", "Certain Transactions", "Description of Securities" and
"Underwriting".
(2) Assumes all 25 of the Company's Note holders convert their Notes into an
aggregate of 237,500 shares of Common Stock.
8
<PAGE> 12
RISK FACTORS
An investment in the securities offered hereby involves a high degree of
risk and should not be purchased by persons who cannot afford the loss of their
entire investment. The following factors, in addition to those discussed
elsewhere in this Prospectus, should be considered carefully in connection with
an investment in the securities of the Company offered hereby.
LIMITED OPERATING HISTORY. The Company was organized on January 30, 1996
to acquire advance laser medical equipment and manage laser vision correction
("LVC") support services ("LVC Services") in northern California and northern
Nevada ("Northern California"). During the first half of 1996, the Company's
activities consisted of market research, entering into agreements with
experienced LVC eye care professionals, raising initial capital and acquiring
equipment and use of facilities to provide support services to vision care
professionals. Actual operation commenced in June 1996, and the Company
currently offers LVC Services at locations in San Jose, San Leandro, Sacramento
and Petaluma, California. Accordingly, the Company has not generated any
revenues and has no operating history from which to forecast its future business
and operations. As of May 31, 1996 the Company had an accumulated deficit of
$97,951.
The Company will be subject to numerous risks incident to the creation of
new businesses with a limited history of operations. Prospective investors
should consider the frequency with which newly developed businesses encounter
unforeseen expenses, difficulties, complications and delays, and other factors
such as the possibility of competition with larger companies. As examples, the
Company may experience unanticipated delays in the development of its LVC
Services, there can be no prediction as to the amount of revenues it will
generate and whether such revenues will be sufficient to provide positive cash
flows, and it may be difficult or impossible to obtain additional financing if
required for the Company's business. There can be no assurance that the Company
will be profitable. See "Business", "Use of Proceeds", "Management Discussion
and Analysis and Plan of Operation", and "Certain Transactions".
GOING CONCERN QUALIFICATION IN AUDITOR'S REPORT. The report of the
Company's independent certified public accountants contains an explanatory
paragraph as to the Company's ability to continue as a going concern. The
accountants raise substantial doubt as to the Company's ability to continue as a
going concern because the Company is dependent upon raising additional financing
through this Offering to meet its obligations and commitments. See the Financial
Statements contained elsewhere in this Prospectus.
DEPENDENCE ON MEDICAL PROFESSIONALS. Applicable laws in the United States
prevent a corporation (other than a professional medical corporation) from
providing medical and health care services to patients. The Company conducts its
business by offering LVC equipment for use by licensed professionals and
providing billing, accounting, administrative, marketing and management services
to independent health care professionals who provide refractive eye care. The
Company's ability to realize revenues from independent professionals, therefore,
is significantly dependent upon its ability to continue to attract the use of
its equipment and LVC Services by MDs and on the performance of those
professionals. There can be no assurance that professionals will continue to
require and contract for either the Company's LVC Services or the Company's
patient marketing program, and even those professionals that do contract with
the Company cannot be required to use the Company's services for their LVC
practice on an exclusive or any other basis. See "Business."
NO ASSURANCE OF MARKET ACCEPTANCE. The Company's business of offering LVC
Services to support advanced laser procedures, involves recently developed
technology and procedures and is a field subject to technological innovation and
governmental regulation. There can be no assurance that health care
professionals will continue to require and contract for the Company's LVC
Services. The Company believes that its profitability and continued growth will
depend on broad market acceptance of LVC procedures in the United States by
health care professionals in the ophthalmic community and the general public.
Market acceptance of new methodology requires substantial time and effort and is
subject to various risks. The acceptance of LVC care may be adversely affected
by its cost, concerns relating to safety and efficacy, general resistance to
surgery, the effectiveness of alternative methods of correcting refractive
vision disorders, the lack of long-term follow-up data, the possibility of
unknown side effects and the lack of third-party reimbursement for the
procedures. Many consumers may choose not to have LVC due to the availability of
conventional nonsurgical
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and manually surgical methods of vision correction. Any future reported adverse
effects or other unfavorable publicity involving patient outcomes from LVC could
also adversely affect the Company's proposed business. Market acceptance could
also be affected by the ability of the Company's consultants and other
participants in the LVC market to train a broad population of MDs in LVC
procedures. There can be no assurance there will be significant public
acceptance of LVC technologies, and demand for the Company's equipment and LVC
Services would be adversely affected if broad market acceptance of such
procedures is not attained.
COMPETITION. The refractive eye care business generally, and the market
for corrective LVC procedures for which the Company intends to provide equipment
and support services, are characterized by intense competition and technological
innovation. Many of the companies engaged in these businesses have substantially
greater financial resources, personnel, marketing experience and other
capabilities than are currently available to the Company or will be available to
the Company upon the completion of this offering. With recent PMA approval of
PRK laser equipment systems by the FDA in October 1995 and March 1996, the
Company believes that competition for PRK service facilities will rapidly
intensify. In addition, there are manual surgical alternatives to LVC procedures
for vision correction, such as radial keratotomy ("RK"), that are generally less
expensive than LVC procedures; notwithstanding certain limitations, manual
refractive surgical procedures as well as eyeglasses and contact lenses are
expected to remain competitive in the market for refractive eye care due to cost
considerations. See "Business -- Competition".
DEPENDENCE ON MANAGEMENT. The success of the Company will be substantially
dependent on the services of its officers, directors and professional
consultants who have experience in the refractive eye care business and,
specifically, the management of surgical outpatient facilities. The Company is
dependent in particular upon the services of Dr. J. Robert Griffin, its
Chairman, who has prior experience in managing a high volume ophthalmology
outpatient clinic specializing in refractive surgery. The Company's operations
therefore will be dependent upon a limited number of key employees and
consultants. Loss of the services of these or other key personnel could have a
material adverse effect upon the Company. The Company does not maintain key man
insurance on the lives of its executive officers and key professional
consultants, although it may elect to apply for such insurance after this
offering has been completed. See "Business -- Employees" and "Management".
PROCEEDS BENEFITING OFFICER, DIRECTORS AND AFFILIATES. A portion of net
proceeds from this Offering by the Company will be used immediately to pay
$607,105 to acquire at fair value a laser and other medical equipment from Laser
Vision Consultants, an affiliate of Dr. Mark Mandell, a Company Director. During
the first twelve months after completion of this Offering, the Company will also
pay approximately $290,000 of long term equipment lease and loan obligations as
to two VISX lasers acquired from two other physician groups affiliated with the
Company for the San Jose and Sacramento LVC centers, and approximately $90,000
under office sublease arrangements with three physician groups affiliated with
the Company for premises in San Jose, San Leandro and Sacramento. The equipment
lease and loan obligations assumed by the Company bear interest at the average
annual rate of approximately 11% through their five-year terms. In addition, the
Company will pay a maximum of $345,000 per year (including bonus payments of
$115,000) in salaries for the services of the Company's Chairman and President.
To the extent the Company uses proceeds of this Offering instead of revenues
from operations to make these affiliated payments, these affiliates will
directly benefit from Offering proceeds. See "Use of Proceeds," "Management
Discussion and Analysis and Plan of Operation," "Management," and "Certain
Transactions."
POSSIBLE NEED FOR ADDITIONAL FINANCING. Due to the risks associated with
its business and limited operating history, the Company may require additional
financing at a future date to expand its business operations. In addition to
proceeds of this offering, the Company plans to rely upon equipment leasing or
other forms of installment purchase obligations to finance a part of its
equipment requirements. No assurance can be given that additional financing
would be available on reasonable terms or on any terms. See "Use of Proceeds",
"Management Discussion and Analysis and Plan of Operation" and "Business".
CONFLICTS OF INTEREST WITH AFFILIATES AND POSSIBLE COMPETITION WITH VISTA
TECHNOLOGIES AFFILIATES. The Company has entered into agreements to acquire or
assume the obligations for three excimer lasers and office sublease arrangements
with three physician groups which are affiliated with three Company Directors.
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<PAGE> 14
Pursuant to these agreements the Company has paid these affiliated groups
approximately $187,000, will pay $607,105 upon the completion of this Offering,
and has assumed long-term laser obligations for a total of $1,273,000. For more
information concerning these transactions, see "Certain
Transactions -- Acquisitions Agreements with Directors."
Vista Technologies, a founder and the principal stockholder of the Company,
has sponsored the formation of five other entities, and may sponsor additional
entities in the future, to provide LVC Services under the "Vista Laser Centers"
service mark in various geographic areas of North America outside California and
northern Nevada. Although such other enterprises sponsored by Vista Technologies
will not operate from locations in California and northern Nevada, such other
entities nevertheless may compete with the LVC Services to be offered by the
Company. See "Certain Transactions."
It is also anticipated that one or more of the health care professionals
serving as part-time consultants to, or directors of, the Company will be
solicited to act as consultants to, or directors and/or officers in, one or more
of these other enterprises. Dr. Johnson and Mr. Schultz, two Directors of the
Company, also are each directors and officers of Vista Technologies and are also
directors and/or officers for other companies offering LVC Services in other
regions of North America organized by Vista Technologies. In addition, persons
serving as part-time consultants to, or Directors of, the Company who agree to
serve as consultants, directors and/or officers for such other enterprises may
have a conflict of interest in that their time and resources may be devoted to
activities other than the business of the Company or because the compensation
payable to them from, or equity interests in, other business activities may be
greater than their compensation from and equity interests in the Company. See
"Management" and "Certain Transactions."
On April 23, 1996, the Company issues 500,000 shares of its Series B
Preferred Stock to Vista Technologies in exchange for 500,000 shares of Vista
Technologies common stock. Based upon an independent third party valuation of
the Company's Series B Preferred Stock as of April 23, 1996, the Company has
recorded a cost for this investment as of that date of $487,855. In August,
1996, Vista Technologies converted all 500,000 of these shares of Series B
Preferred Stock into 500,000 shares of Company Common Stock. In view of Vista
Technologies' status as a founder of the Company and its representation on the
Company's Board of Directors, such transaction should not be considered as
having been negotiated at arms-length. See "Certain Transactions -- Issuance of
Securities."
The Company has granted Vista Technologies' Board of Directors an
irrevocable proxy to vote the 500,000 Vista Technologies shares owned by the
Company for a term of five years in exchange for Vista Technologies granting to
the Company's Board of Directors an irrevocable proxy to vote all of the
Company's shares owned by Vista Technologies for a term of five years. See
"Certain Transactions -- Issuance of Securities."
During the term of the Company's consulting agreement with Vista
Technologies, Vista Technologies shall have the right to nominate two
candidates, acceptable to the Company, to the Company's Board of Directors, Dr.
Johnson and Mr. Schultz, two of the Company's Directors, are directors and
officers of Vista Technologies. See "Management."
The Company may enter into other related party transactions in the future.
All such transactions in the past have been approved or ratified by all of the
Company's directors and in the future will be approved by not less than a
majority of the directors who do not have an interest in the proposed
transaction. However, these transactions involve inherent conflicts of interest
between the interests of the Company and the interest of such stockholders or
other related parties. See "Certain Transactions".
IMMEDIATE AND SUBSTANTIAL DILUTION TO NEW INVESTORS. Purchasers of
securities offered hereunder will experience immediate and substantial dilution
of the net tangible book value of Common Shares. The immediate dilution to new
investors in this offering, assuming the exercise of outstanding Class A
Warrants and Class B Warrants and outstanding stock options but no exercise of
the Class C Warrants, would be equal to $2.70 per share as of May 31, 1996. See
"Dilution," "Capitalization" and "Description of Securities."
LIABILITY FOR PERSONAL INJURY AND INADEQUACY OF INSURANCE. Use of the
Company's equipment and facilities for LVC eye care may give rise to claims
against the Company by persons alleging injury as a result
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<PAGE> 15
of the procedures performed. The Company will endeavor, whenever possible, to
seek recovery from manufacturers of refractive laser systems for claims based on
alleged defects in the laser systems utilized by the Company. There can be no
assurance that such manufacturers will carry liability insurance adequate to
protect against such claims or that the Company would prevail if it were
required to assert such claims. The Company believes that health care providers
using the Company's equipment to perform refractive or other procedures will be
covered by medical malpractice or liability insurance and the Company to
requires that professionals contracting for the Company's LVC Services maintain
such insurance. The Company also has purchased liability insurance covering
these risks for its own account. However, there can be no assurance that the
Company would be successful in seeking recovery from third parties or that the
amount recovered would be adequate to cover all claims. To the extent the
Company becomes exposed to liability claims, if any, the Company may be
adversely affected. See "Business."
RISKS OF FAILURE TO COMPLY WITH OR CHANGE IN GOVERNMENTAL REGULATION. The
Company and its operations will be subject to extensive regulation in the United
States at the federal, state and local level, affecting the health care industry
and the delivery of health care. These regulations include laws and regulations
prohibiting the practice of medicine and optometry by persons not licensed to
practice medicine or optometry, prohibiting the unlawful rebate or unlawful
division of fees and limiting the manner in which prospective patients may be
solicited. Other regulatory requirements, such as regulations concerning the use
of excimer laser systems, will also apply to the Company's business and plan of
operation. In addition, there can be no assurance that future changes in laws
and regulations or the interpretation thereof will not adversely affect the
Company's operations. See "Business -- Governmental Regulation."
ABSENCE OF GOVERNMENTAL APPROVAL IN THE UNITED STATES FOR CERTAIN USES OF
LVC EQUIPMENT. The Company has acquired equipment that has recently received
pre-market approval from the U.S. Food and Drug Administration ("FDA") for
commercial use of PRK procedures applicable to the vast majority of myopia
cases. This equipment has the capability to perform other LVC procedures, such
as astigmatic correction, correction of high myopia and LASIK, but has not
received FDA pre-market approval nor has the FDA established standards for
clinical testing of equipment for many of these other LVC procedures. The FDA
advised U.S. eye care professionals in May 1996 that physician decisions to
conduct LASIK procedures and bilateral surgery are considered the practice of
medicine; although the FDA noted that LASIK and bilateral surgery are outside
the scope of current FDA approved labeling for excimer lasers. However, the FDA
cautioned that it expects health care practitioners and others will advertise
the use of FDA approved lasers in the U.S. only within the scope of their
current FDA approved use. See "Business."
RISK OF FAILURE TO COMPLY WITH SAFE HARBORS AS TO MEDICAL SERVICES FRAUD
AND ABUSE LEGISLATION. Certain states have adopted medical services fraud and
abuse statutes, commonly referred to as anti-kickback or anti-referral
legislation, that incorporate or are similar to federal Medicare/Medicaid
legislation that prohibits certain activities intended to kickback, bribe or
rebate fees received for referring an individual to a person for medical
treatment. Although existing legislation does not cover the Company's activities
since its physician clients will not be seeking Medicare, Medicaid or other
governmental reimbursement for LVC procedures, there can be no assurance that
federal, or state regulatory programs will not in the future place impediments
upon the Company's plan of operation. Nevertheless, the Company's compensation
arrangements with professionals are intended to comply with applicable antifraud
and abuse legislation in applicable areas of the United States and the Company
believes that it has adopted a strategy that will enable it to provide LVC
Services in compliance with applicable regulatory requirements. Safe harbor
regulations for activities otherwise subject to the U.S. Medicare/Medicaid fraud
and abuse statutes require, among other conditions, that no more than 40% of the
entity may be controlled by investors who are in a position to control the flow
of business to the entity and no more than 40% of the entity's business can be
derived from investors. The Company does not believe that more than 40% of the
Company's capital stock will be held by persons in a position to refer business
to the Company after this Offering. The application and interpretation of state
laws and safe harbor exemptions may involve significant uncertainty. The Company
believes that its planned operations are designed to comply with applicable
state regulations. NEVERTHELESS, POTENTIAL INVESTORS CONCERNED WITH SAFE HARBOR
REGULATIONS SHOULD SEEK ADVICE FROM INDEPENDENT COUNSEL CONCERNING THESE MATTERS
BEFORE INVESTING. See "Business -- Governmental Regulation".
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<PAGE> 16
POSSIBLE FUTURE CONCERNS AS TO SAFETY AND EFFICACY OF LVC
TREATMENT. Concerns with respect to the safety and efficacy of recently
developed refractive laser procedures such as PRK, LASIK and LTK include
predictability and stability of results and potential complications or side
effects, such as postoperative pain, corneal haze during healing, decreased
contrast sensitivity, unintended undercorrection or overcorrection, refractive
corneal scars or reversion or regression of effect. There can be no assurance
that additional complications will not be identified in the future that may
materially and adversely affect the safety and efficacy of these LVC procedures
for performing refractive surgery, and which would negatively affect market
acceptance of such procedures and/or lead to product liability or other claims
against the Company. See "Business."
RELIANCE ON SUPPLIERS OF LASER EQUIPMENT. The Company is not involved in
the research, development or manufacture of laser equipment and will be
dependent upon unrelated third-party manufacturers or distributors for supply
and service of LVC equipment required for its Services. The Company believes
there are four companies in the U.S. that have conducted or are conducting
clinical trials with excimer lasers for refractive eye surgery. The Company
believes two of those companies, Summit and VISX, account for approximately 70%
of the excimer lasers for refractive surgery that have been installed to date
mostly in various countries outside of the U.S. At present, at least one of
these suppliers has indicated it plans to enter the market for providing excimer
laser service facilities and may compete with the Company, either directly or
indirectly. Such suppliers are also expected to seek license, royalty or other
fees for the purchase of excimer laser systems that could place the Company at a
competitive disadvantage. If the Company is unable to obtain agreements on
acceptable terms for the supply and/or service of laser systems, the Company
could incur delays and its planned business operations may be adversely
affected. The Company has not yet obtained commitments to acquire equipment for
additional locations proposed in addition to its first four sites in northern
California, and the Company's ability to offer LVC Services at one or more
additional locations and the timing thereof will be dependent upon the
availability of equipment from suppliers and the availability, if any, of
financing programs to acquire equipment on a lease or installment purchase
basis. See "Use of Proceeds" and "Business."
RISK OF FUTURE TECHNOLOGICAL CHANGE. Development of LVC procedures has
undergone and is expected to continue to experience technological change. There
can be no assurance that future technological innovations and developments will
not render the Company's equipment uneconomical or obsolete or that the Company
will not be adversely affected by competition or future technological
developments. See "Business -- Competition".
NO THIRD-PARTY REIMBURSEMENT. At present, third party insurance
reimbursement through health insurance or other third-party reimbursement
programs generally is not available for LVC refractive surgical procedures. The
Company does not anticipate that third-party reimbursement for LVC procedures
will be available in the foreseeable future, and this factor may restrict the
market for LVC Services.
LACK OF A PUBLIC MARKET AND ARBITRARY DETERMINATION OF OFFERING
PRICE. Prior to this offering by the Company, there has been no public market
for the securities of the Company, and there can be no assurance that a public
market will develop following this offering or, if developed, that a public
market will be sustained. The offering price of the Units offered by the Company
was arbitrarily determined by negotiation between the Company and the
Underwriters without regard to generally recognized criteria of value such as
historical earnings, assets, working capital, book value, financial condition or
an active public market for the Common Stock. Such offering price was determined
in part upon the Company's and the Underwriters' perception as to the price that
purchasers of the Units would be willing to pay considering the nature of the
Company. Accordingly, the offering price should not be considered an indication
of the actual value of the Company or its securities. See "Underwriting."
DILUTIVE EFFECT OF WARRANTS AND OPTIONS. For the life of the Underwriter's
Warrants, outstanding Class A, B and C Warrants and any options granted under
the Company's Stock Option Plan, the holders are given, at nominal cost, the
opportunity to profit from a rise in the market price for the Common Stock of
the Company without assuming the risk of ownership, with a resulting dilution in
the interest of other security holders. As long as the warrants and options
remain unexercised, the terms under which the Company could
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<PAGE> 17
obtain additional capital may be adversely affected. Moreover, the holders of
the warrants and options might be expected to exercise them at a time when the
Company would, in all likelihood, be able to obtain needed capital by a new
offering of its securities on terms more favorable than those provided by the
warrants and options. See "Management -- Stock Option Plan", "Description of
Securities" and "Underwriting".
UNDETERMINED EFFECT OF ADDITIONAL ISSUED COMMON STOCK AND BLANK CHECK
PREFERRED STOCK. The Company's articles of incorporation authorize up to
20,000,000 shares of Common Stock and up to 5,000,000 shares of "blank check"
Preferred Stock with such rights, preferences, privileges and limitations as may
be determined from time to time by the Board of Directors of the Company. The
Board of Directors has the power without prior stockholder approval to issue
additional shares of previously authorized and unissued Common Stock and one or
more series of Preferred Stock with such rates of dividends, redemption
provisions, liquidation preferences, voting rights, conversion privileges and
any other characteristics as the Board may deem necessary. This power includes
the right to issue Preferred Stock following completion of this Offering with
rights to receive dividends, liquidating distributions and other benefits which
may be superior to the rights of Common Stockholders. If any subsequent issuance
of Preferred Stock is approved, such blank check Preferred Stock could adversely
affect the holders of outstanding Common Stock. In addition, the authority to
issue additional shares of Common Stock and blank check Preferred Stock could
discourage, delay or prevent a takeover of the Company. The Company currently
has no intention to issue any shares of Preferred or Common Stock upon the
completion of this offering. However, even the existence of authorized and
unissued Common Stock and Preferred Stock with the potential of discouraging or
preventing a takeover of the Company could have a depressive effect on the
market price for the Company's securities. See "Description of Securities".
SUBSTANTIAL MANAGEMENT DISCRETION AS TO APPLICATION OF OFFERING
PROCEEDS. Depending upon various factors, such as the amount of laser equipment
financing available to the Company for acquiring or leasing new laser equipment,
the Company's management will have substantial discretion in the application of
the proceeds of this Offering. As a result the actual amount expended to finance
any category of expense may be increased or decreased by the Company's Board of
Directors, at its discretion, if reapportionment or redirection of funds is
deemed to be in the best interests of the Company. See "Use Of Proceeds",
"Business" and "Management's Discussion and Analysis and Plan of Operation".
POSSIBLE ADVERSE EFFECT ON MARKET PRICE OF FUTURE SALES OF COMMON
STOCK. 650,000 shares of outstanding Common Stock and up to 670,000 shares of
Common Stock issuable upon exercise of Class A and B Warrants and stock options
outstanding prior to this offering will be "restricted securities" as that term
is defined in Rule 144 under the Securities Act, and under certain circumstances
may be sold without registration pursuant to that Rule. In addition to the
securities offered by the Company hereby, this Prospectus also covers the sale
of up to 237,500 shares of the Company's Common Stock issuable upon conversion
of its outstanding Promissory Notes, for the account of the Selling
Stockholders. The Company is unable to predict the effect that sales made under
Rule 144, or otherwise, will have on the then prevailing market price of the
Company's securities. Any substantial sale of restricted securities pursuant to
Rule 144 or other sales of shares covered by this Prospectus may have an adverse
effect on the market price of the Company's securities. See "Principal and
Selling Stockholders", "Shares Eligible for Future Sale" and "Underwriting".
UNDERWRITERS' INFLUENCE ON THE MARKET. A significant number of the Units
to be sold in this offering may be sold to customers of the Underwriters. Such
customers subsequently may engage in transactions for the sale or purchase of
the Company's securities through or with the Underwriters. Although the
Underwriters have no legal obligation to do so, an Underwriter from time to time
may become a market maker or otherwise effect transactions in the Company's
securities. Should an Underwriter participate as a market maker, it may become a
dominating influence in the market for the Company's securities. Therefore, the
price and liquidity for the Company's securities may be significantly affected
by the degree, if any, of an Underwriter's participation in the market. Such
market making activities, if commenced, may be discontinued at any time or from
time to time by that Underwriter. See "Underwriting."
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MAINTENANCE REQUIREMENTS; POSSIBLE DELISTING OF SECURITIES FROM NASDAQ
SYSTEM; RISKS OF LOW-PRICED STOCKS. In 1993, the Securities and Exchange
Commission ("SEC") approved rules imposing more stringent criteria for the
listing of securities on NASDAQ, including new standards for maintenance of such
listing. If the Company is unable to satisfy these maintenance criteria in the
future, its securities will be subject to being delisted, and trading, if any,
would thereafter be conducted on the Boston Stock Exchange or in the
over-the-counter market in the so-called "pink sheets" or the "Electronic
Bulletin Board" of the National Association of Securities Dealers, Inc.
("NASD"). As a consequence of such delisting, an investor could find it more
difficult to dispose of, or to obtain accurate quotations as to the price of,
the Company's securities.
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure relating to the market for "penny stocks" as defined. SEC
regulations generally define a penny stock to be any equity security that has a
market price of less than $5.00 per share, subject to certain exceptions. Such
exceptions include any equity security listed on NASDAQ and any equity security
issued by an issuer that has (i) net tangible assets of at least $2,000,000, if
such issuer has been in continuous operation for three (3) years; (ii) net
tangible assets of at least $5,000,000 if such issuer has been in continuous
operation for less than three (3) years; or (iii) average annual revenue of at
least $6,000,000 if such issuer has been in continuous operation for less than
three years. Unless an exception is available, the regulations require the
delivery, prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock market and the risks associated therewith.
In addition, if the Company's securities are not quoted on NASDAQ or the
Company does not have $2,000,000 in net tangible assets, trading in the Common
Stock would be covered by Rule 15c2-6 promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") for non-NASDAQ and non-exchange
listed securities. Under such rule, broker/dealers who recommend such securities
to persons other than established customers and accredited investors must make a
special written suitability determination for the purchaser and receive each
purchaser's written agreement to a transaction prior to sale. Securities also
are exempt from this rule if the market price is at least $5.00 per share.
As of the date of this Prospectus, it is expected that the Company's Common
Stock will be outside the definitional scope of penny stock, as it has an
initial public offering price of at least $5.00 per share. In the event the
Common Stock were subsequently to become characterized as a penny stock, the
market liquidity for the Company's securities could be severely affected. In
such an event, the regulation of penny stocks could limit the ability of
broker/dealers to sell the Company's securities in the secondary market.
VOLATILITY OF SECURITIES PRICES. The market for equity securities,
particularly for securities of companies engaged in providing LVC equipment
and/or services, has been volatile. The price of the Company's securities in the
future may be subject to wide fluctuations in response to quarterly variations
in operating results, news, trading volume, general market trends and other
factors beyond the control of the Company.
NO DIVIDENDS ON COMMON STOCK. The Company has not paid any cash dividends
on its Common Stock and does not expect to do so in the foreseeable future. See
"Dividend Policy."
DILUTION
This discussion and the table below assumes (i) the sale of all Units
offered by the Company hereunder (but does not assume exercise of the
Underwriter's over-allotment option or the exercise of the Class C Warrants or
the Underwriter's Warrants) and (ii) the conversion of the currently outstanding
Notes into 237,500 shares of Common Stock, (iii) the exercise at $4.00 per share
of 95,000 outstanding Class A Warrants, $1.00 per share of 450,000 outstanding
Class B Warrants, and the receipt of proceeds therefrom, and (iv) the exercise
at $2.75 per share of 125,000 outstanding options granted under the Company's
stock option plan. Based on these assumptions, the 1,557,500 shares of Common
Stock that would be outstanding prior to this offering and the 1,200,000 shares
of Common Stock in the Units offered hereby are referred to below as "common and
common equivalent shares".
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As of May 31, 1996, the Company had a net tangible book value of $506,554.
Assuming the exercise of outstanding Class A Warrants, Class B Warrants, and
stock options for $1,173,750 in proceeds, the receipt of $15,200 subscriptions
receivable paid in June 1996 and conversion of currently outstanding Notes, the
Company's pro forma net tangible book value at May 31, 1996 would have been
$1,695,504, or $1.08 per common and common equivalent share based on a total of
1,557,500 shares. Net tangible book value per common and common equivalent share
represents the amount of the Company's tangible assets, less the amount of its
liabilities, divided by the number of shares of common and common equivalent
shares outstanding. Assuming the sale of 1,200,000 Shares offered by the Company
hereunder at the offering price of $10.10 per Unit, the Company's receipt of net
proceeds therefrom, the pro forma net tangible book value of the Company as so
adjusted at May 31, 1996 would be $6,513,904, or $2.35 per common and common
equivalent share, representing an immediate increase in net tangible book value
of $1.27 per common and common equivalent share to present holders of the
Company's capital stock and an immediate dilution of $2.70 per common and common
equivalent share to new investors.
The following table illustrates such per share dilution:
<TABLE>
<S> <C> <C>
Offering Price per common and common equivalent share................ $5.05
Actual Net tangible book value per common and common equivalent
share at May 31, 1996........................................... $0.56
Receipt of subscriptions receivable as of May 31, 1996............. $ .02
Increase per share attributable to conversion of outstanding Notes
and exercise of Class A Warrants, Class B Warrants, and stock
options outstanding at May 31, 1996................................ $ .50
Subtotal: Proforma net tangible book value per common and common
equivalent share at May 31, 1996................................... $1.08
Increase per share attributable to 1,200,000 additional common
equivalent shares represented by sale of Common Shares by the
Company............................................................ $1.27
-----
Pro forma net tangible book value per common and common equivalent
share.............................................................. 2.35
-----
Dilution per common and common equivalent share to new investors
purchasing Common Shares(1)........................................ $2.70
=====
</TABLE>
- ---------------
(1) "Dilution" means the difference between the offering price per share and the
pro forma net tangible book value per common and common equivalent share
after giving effect to the assumed sale of all 1,200,000 Common Stock
shares offered by the Company. The increase in the net tangible book value
of common and common equivalent share held by present stockholders would be
solely attributable to the cash paid by new investors upon their purchase
of the Units offered by the Company.
Based on the above assumptions, the following table summarizes the number
of common and common equivalent share purchased from the Company, the total
consideration and the average price per share to the
16
<PAGE> 20
Company by existing stockholders and to be paid by purchasers in this offering
(assuming in each case the full conversion of all outstanding shares of
Preferred Stock into Common Stock):
<TABLE>
<CAPTION>
COMMON & COMMON
EQUIVALENT SHARES TOTAL
PURCHASED CASH CONSIDERATION PAID
---------------------- -------------------------- AVERAGE PRICE
NUMBER % OF TOTAL AMOUNT % OF TOTAL PER SHARE
--------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Existing Stockholders...... 1,557,500 56.5% $2,806,705(a) 31.7% $1.80
New Investors.............. 1,200,000 43.5% $6,060,000 68.3% $5.05
--------- ----- --------- -----
Total............ 2,757,500 100.0% $8,866,705 100.0%
========= ===== ========= =====
</TABLE>
- ---------------
(a) Assumes $1,632,855 for outstanding securities, of which $1,145,000 has been
paid in cash and $487,855 has been recorded as the value of the Company's
investment in 500,000 common shares of Vista Technologies, plus $1,173,850
from the assumed exercise of outstanding Class A Warrants, Class B Warrants
and stock options. (See "Certain Transactions.")
USE OF PROCEEDS
The net proceeds to the Company from the sale of 600,000 Units offered
hereby will be approximately $5,272,200 ($6,063,030) if the Underwriters'
over-allotment option is exercised in full) after deducting the underwriting
discounts and the Underwriters' non-accountable expense allowance, but before
other offering expenses payable by the Company estimated at approximately
$175,000. The Company intends to use the net proceeds to purchase additional
laser vision correction equipment, office furnishings, leasehold improvements
and to support working capital requirements for operating and administering LVC
services and its patient referral marketing program.
Management currently estimates that the net proceeds of this offering will
be applied generally as follows during the nine months following this offering:
<TABLE>
<S> <C>
Estimated expenses of the Offering....................................... $ 175,000
Payment to Laser Vision Consultants...................................... 607,105(1)
Northern California expenses (including advertising)..................... 1,325,000(2)
Southern California expenses (including advertising)..................... 925,000(3)
Administrative expenses and working capital.............................. 2,240,095(4)
----------
Total Estimated Net Offering Proceeds.......................... $5,272,200
==========
</TABLE>
- ---------------
(1) Laser Vision Consultants is affiliated with Dr. Mark R. Mandel, a Company
Director. See "Certain Transactions -- Acquisition Agreements with
Directors."
(2) This number represents an annual advertising budget to generate patient
referrals in Northern California estimated at $1,125,000 and an estimated
$200,000 for the leasehold improvements and furnishings of two additional
LVC service centers in Northern California, assuming that the Company is
able to obtain 100% financing of an excimer laser for each location, of
which there is no assurance. See "Business" and "Management Discussion and
Analysis and Plan of Operation."
(3) This number represents an advertising budget to generate patient referrals
in Southern California estimated at $525,000 and an estimated $400,000 for
the leasehold improvements and furnishings of four additional LVC service
centers in Southern California, assuming that the Company is able to obtain
100% financing of an excimer laser for each location, of which there is no
assurance. See "Business" and "Management Discussion and Analysis and Plan
of Operation."
(4) This number includes: $218,700 of assumed laser purchase obligations and
laser lease from G&R and ELA, two entities affiliated with Dr. Griffin, the
Company's Chairman, and Dr. Gary Kawesch, a Company Director; $67,500 of
space sublease payments to G&R, Laser Vision Consultants and RKLE; and
$90,000 and $82,500 of compensation to Dr. Griffin's affiliate and David P.
Bates, the Company's
17
<PAGE> 21
President. See "Certain Transactions -- Acquisition Agreements With Directors"
and "Management -- Executive Compensation." This number also includes
approximately $1,780,000 to be spent in the nine months following the Offering
for unaffiliated employee wages, medical supplies and utilities at all ten
contemplated LVC service centers and laser lease payments and space rental
for the seven contemplated unaffiliated LVC service centers, assuming that
the Company is able to obtain 100% financing of an excimer laser for each
unaffiliated location, of which there is no assurance. This number assumes
that none of the Company's Note holders elect to receive the repayment of
their Notes from the Offering proceeds. See "Business" and "Management
Discussion and Analysis and Plan of Operations."
The allocation of the net proceeds of this offering set forth above
represents the Company's best estimates based upon its present plans and certain
assumptions regarding estimated costs and the Company's future revenues and
expenses. The actual amount expended to finance any category of expense may be
increased or decreased by the Company's Board of Directors, at its discretion,
if a reapportionment or redirection of funds is deemed to be in the best
interests of the Company. Any proceeds not applied to a purpose described above
will be added to the Company's working capital and used for general corporate
purposes.
The Company does not plan to pay dividends on its Common Stock (see
"Dividend Policy").
Pending the application of proceeds from this offering, the net proceeds of
this offering will be temporarily invested in interest-bearing savings accounts,
bank certificates of deposit, money market accounts, government obligations or
other forms of liquid short-term interest-bearing investments.
CAPITALIZATION
The following table sets forth the capitalization of the Company at May 31,
1996, and as adjusted to give effect to the sale by the Company of the Common
Shares offered hereby, and the application of the net proceeds as described
under "Use of Proceeds" and "Certain Transactions". This information should be
read in conjunction with the Company's consolidated financial statements and the
notes thereto and "Management's Discussion and Analysis and Plan of Operations"
presented elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MAY 31, 1996
-----------------------------
ACTUAL AS ADJUSTED(1)
---------- --------------
<S> <C> <C>
Long-term obligations............................................. $ 470,439 $ 1,287,239(2)
Stockholders' equity:
Preferred stock, par value $0.01:
Authorized -- 5,000,000 shares;
237,500 shares designated 10% Series A
Cumulative Convertible Preferred;
Issued and outstanding shares -- 100,000 actual and 0 pro
forma....................................................... 1,000 --(3)
500,000 shares designated 5% Series B Cumulative Convertible
Preferred;
Issued and outstanding shares -- 500,000 actual and 0 pro
forma....................................................... 5,000 --
Common stock, par value $0.01:
Authorized -- 20,000,000 shares;
Issued and outstanding shares -- 50,000 actual and 2,757,500
pro forma................................................... 500 27,575(4)
Additional paid-in capital...................................... 676,355 7,609,430
Subscription receivable......................................... (15,200) --
Warrants........................................................ 21,850 --
Accumulated (deficit)........................................... (97,951) (97,951)
---------- -----------
Total stockholders' equity...................................... 591,554 $ 7,539,054
---------- -----------
Total capitalization.................................... $2,786,898 $ 9,270,248
========== ===========
</TABLE>
18
<PAGE> 22
- ---------------
(1) Assumes sale of 600,000 Units offered hereunder by the Company at $10.10 per
Unit, the exercise of the outstanding Class A and B Warrants (but not the
Class C Warrants), the exercise of the outstanding stock options granted
under the Company's stock option plan, the receipt of the outstanding stock
subscription receivable, and the anticipated application of estimated net
proceeds therefrom (after the deduction of underwriting discounts and
commissions and estimated expenses to be incurred by the Company in
connection with this offering).
(2) Represents the long-term portion of two loans in an aggregate of $1,021,000
for lasers purchased from G&R and ordered from the manufacturer and a
capitalized laser lease of $470,439 assumed from RKLE. See "Certain
Transactions -- Acquisition Agreements With Directors."
(3) The 100,000 shares of Series A Preferred Stock outstanding were converted
into 100,000 shares of Common Stock on August 1, 1996 by Vista
Technologies.
(4) Assumes all 25 Note holders convert their Notes into an aggregate of 237,500
shares of Common Stock.
19
<PAGE> 23
SELECTED FINANCIAL DATA
The following table presents selected financial data with respect to the
Company as of and for the period January 30, 1996 (date of inception) through
May 31, 1996. The selected financial data as of the end of May 31, 1996 has been
derived from the financial statements of the Company audited by KPMG Peat
Marwick LLP. The information set forth below should be read in conjunction with
"Management Discussion and Analysis and Plan of Operation", the financial
statements and related notes thereto and independent auditors' report appearing
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION
(JANUARY 30, 1996) THROUGH
MAY 31, 1996
--------------------------
<S> <C>
SELECTED STATEMENT OF OPERATIONS DATA:
Net (loss) adjusted for dividends in arrears........... $(97,951)
Net (loss) per common and common equivalent share.... $ (.14)
Weighted average common and common equivalent shares
outstanding....................................... 717,482
Dividends in arrears................................. $ 10,762
</TABLE>
<TABLE>
<CAPTION>
, 1996
-----------------------------
ACTUAL AS ADJUSTED(1)
---------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Current assets.................................... $ 946,587 $6,163,832
Total assets...................................... $2,786,898 $9,270,248
Stockholders' equity.............................. $ 591,554 $7,539,054(2)
</TABLE>
- ---------------
(1) Gives effect to the sale of 600,000 Units offered hereby, the exercise of
the outstanding Class A and B Warrants (but not the Class C Warrants), the
exercise of the outstanding stock options granted under the Company's stock
option plan, the receipt of the outstanding stock subscription receivable,
and the anticipated application of estimated net proceeds therefrom (after
the deduction of underwriting discounts and commissions and estimated
expenses to be incurred by the Company in connection with this offering).
See "Use of Proceeds", "Management Discussion and Analysis and Plan of
Operation", "Certain Transactions", "Description of Securities" and
"Underwriting".
(2) Assumes all 25 of the Company's Note holders convert their Notes into an
aggregate of 237,500 shares of Common Stock.
The Company has not paid any dividends since its inception; preferred
dividends in arrears total $2,340 for the Series A Preferred stock and $8,422
for the Series B Preferred stock at May 31, 1996, all of which were
automatically waived upon conversion to Common Stock shares on August 1, 1996.
20
<PAGE> 24
MANAGEMENT DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
Prior Financing Activities
The Company has received cash proceeds from the sale of securities in the
amount of $1,129,800 during the period from inception on January 30, 1996
through May 31, 1996. An additional $15,200 in subscription receivables were
collected after May 1996. Actual business operations commenced in June 1996
after the Company developed a plan of operation, negotiated agreements to
acquire equipment and facilities and raised capital to fund initial development
and business activities and expenses of this public offering. Accordingly, the
Company has not generated significant revenues and has only a limited operating
history from which to forecast its future business and operations.
Of the $1,145,000 cash investments received to date, $100,000 was paid by
Refractive Services-800, Inc. at the Company's inception in January 1996 in
exchange for 100,000 shares of Series A Preferred Stock; $950,000 was obtained
in April and May 1996 from various private placement investors for the issuance
of 12% convertible promissory notes (the "Notes") and Class A Warrants; and
$95,000 was received from May to June, 1996 for the sale of Common Stock and
Class B Warrants to certain physicians. Cash funds raised by the Company were
intended for, and have been allocated by the Company to, payment of costs and
expenses for the organization of the Company, deposits required for the
acquisition of four excimer lasers and other related LVC assets, opening four
LVC Services centers to date, certain deferred costs of this initial public
offering and other working capital requirements including salaries of newly
hired employees.
Each holder of the $950,000 in Notes issued by the Company have the option
at the completion of this Offering of either: (i) receiving payment in cash of
the unpaid principal and accrued interest on their Note; or (ii) converting the
entire unpaid principal of their Note into shares of the Company's Series A
Preferred stock at a conversion price of $4.00 per share, (iii) converting the
entire unpaid principal of their Note into shares of Company's Common Stock at a
conversion price of $4.00 per share. All information in this Prospectus is based
upon the assumption that all Note holders have elected the third of these
options.
The organization of the Company was sponsored and promoted by Vista
Technologies as a founder. The Company's Board of Directors believed the
experience of Vista Technologies in management of PRK businesses in Europe and
the services Vista Technologies proposes to make available under its ten-year
Consulting Services Agreement with the Company (see "Certain Transactions") will
be of valuable assistance to the Company's planned operations. On April 23,
1996, the Company issued 500,000 shares of its Series B Preferred Stock to Vista
Technologies in exchange for 500,000 shares of Vista Technologies common stock.
Vista Technologies proposed that its initial investment in the Company would be
in the form of 500,000 shares of Vista Technologies common stock in order to
conserve the cash resources of Vista Technologies. In view of Vista
Technologies' status as a founder of the Company and its representation on the
Company's Board of Directors, such transaction should not be considered as
having been negotiated at arms-length. Based upon an independent third party
valuation of the Company's Series B Preferred Stock as of April 23, 1996, the
Company has recorded a cost for its investment in 500,000 shares of Vista
Technologies common stock as of that date of $487,855. Public market bid
quotations for Vista Technologies' common stock since April 1996 have ranged
from approximately $2.00 to $4.50 per share of Vista Technologies common stock
and the last bid price quoted as of August 8, 1996 was $2.88 per share. 380,000
of the Company's 500,000 Vista Technologies common shares have been pledged as
collateral to secure the obligations of the Company under its Notes.
Shares of Vista Technologies common stock have not been registered for sale
under applicable securities laws and were acquired by the Company for
investment, which will enable the Company to have an indirect economic interest
in other LVC activities in which Vista Technologies has an interest. Subject to
the ability of the Company under Rule 144 of the Securities Act of 1933 to sell
shares of Vista Technologies common stock upon satisfaction of holding period
requirements under that rule (see "Shares Eligible for Future Sale"), management
of the Company reserves the right to sell shares of Vista Technologies from time
to time if required for the Company's working capital purposes or if management
believes the then market price of Vista Technologies common stock is attractive
in light of market conditions, the status of Vista Technologies' operations and
other relevant factors. There can be no assurance of the sale prices the Company
will be able to
21
<PAGE> 25
obtain should it elect to sell all or part of its investment in Vista
Technologies in the future. For financial reporting purposes, the Company has
recorded its investment in Vista Technologies common stock as a long-term asset
carried at cost and will periodically review the related market value of such
shares to determine whether the carrying value represented by historical cost
has become permanently impaired. At May 31, 1996, the quoted market value for
Vista Technologies common stock exceeded the carrying value of Vista
Technologies shares owned by the Company.
The interest in the Company's 100,000 Series A Preferred shares originally
acquired by Refractive Services-800, Inc. was purchased by Vista Technologies in
July 1996. In August 1996, Vista Technologies converted all 100,000 shares of
Series A Preferred and all 500,000 shares of Series B Preferred previously
issued by the Company into a total of 600,000 shares of Common Stock in
accordance with the terms of such preferred shares. As a result of that
conversion, all accrued dividends on previously issued preferred shares were
automatically waived.
Plan Of Operation
The Company's plan of operation for the next twelve months is to support
the working capital requirements of its four previously established LVC Services
centers, to open two additional sites offering LVC Services in Northern
California, and to implement a comprehensive marketing and advertising program
currently budgeted at approximately $1,500,000 and designed to generate
additional referral and LVC Services revenues in Northern California. If
suitable equipment financing can be obtained, as to which there are no
assurances, the Company also plans within one year after completion of this
offering to establish up to four new centers for LVC Services in Southern
California supported by a marketing and advertising program currently budgeted
at approximately $1,125,000.
The Company will initially apply $607,100 of the proceeds from this
Offering to discharge the purchase price obligation for a Summit excimer laser
and other assets purchased in May 1996 from Laser Vision Consultants LLC, an
affiliate of Dr. Mark R. Mandel, a Director of the Company. During the first
twelve months after completion of this Offering, the Company will also pay
equipment lease and loan obligations as to two VISX excimer lasers acquired from
other physician groups affiliated with the Company for the San Jose and
Sacramento centers of approximately $290,000 and office sublease rentals of
approximately $90,000 under sublease arrangements with physician groups
affiliated with the Company for premises at San Jose, San Leandro and
Sacramento. Equipment lease and loan obligations so assumed by the Company bear
interest at the average annual rate of approximately 11% through the five year
term of such equipment obligations. See "Certain Transactions -- Acquisition
Agreements With Directors."
Management anticipates that start-up costs, excluding the cost of
equipment, for six additional sites to be established in California will range
from $75,000 to $125,000 per location, depending upon the amount of tenant
improvements required. The Company expects most of its equipment requirements
for those locations will be financed by equipment lease or installment purchase
obligations; however, no such financing commitments have been obtained at
present.
Expansion into Southern California, if any, may be accomplished by one or
more techniques, such as purchasing lasers and related equipment from physicians
with existing LVC Services facilities, purchasing or leasing lasers from
equipment manufacturers or third-party leasing institutions and establishing new
LVC Services centers without pre-existing relationships with MDs, forming joint
ventures with existing LVC Services centers, or a combination of the above. The
Company will not commence an evaluation of possible expansion into Southern
California until arrangements have been made to develop two additional centers
in Northern California and management has had an opportunity to reassess cash
flow projections and working capital requirements for its Northern California
centers as well as the advisability of and remaining capital resources available
for further expansion. In selecting locations for additional sites, management
will take into account the availability of equipment from equipment suppliers,
the availability of long-term equipment financing, and relevant market factors
such as the location of competitive facilities and regional demographics.
The Company's cost structure for the first twelve months after the Offering
will be dominated by advertising expenses (estimated at approximately $2,625,000
for both Northern California and Southern California) and laser equipment
expenses (estimated at approximately $1,320,000 annually for 10 lasers). All
other fixed operating expenses for the Company can be kept to a minimum, because
of the experience of
22
<PAGE> 26
Company management in operating other high volume refractive surgery practices.
The Company anticipates, without assurance, that its monthly patient marketing
fees will approximately equal its monthly advertising expenses within the first
year after this Offering, and thereafter patient marketing fees will exceed
advertising expenses. The Company presently estimates, without assurance, each
LVC Services center will have a fixed cost breakeven point of between 32 to 40
procedures per month, excluding all patient marketing revenues and corporate
administrative costs, and the Company's LVC Services centers will average about
100 procedures per month within one year after this Offering. Based upon Company
management's prior experience with high volume refractive surgery practices, the
Company presently estimates, without assurance, that after the Company's patient
marketing fees equal its advertising expenses, the Company's pre-tax net income
margin will equal 14% to 18% of its total revenues. Based upon this information,
the Company believes it will be profitable within the first year after this
Offering. Of course, there is no assurance when, if ever, the Company will be
profitable. See "Management."
Although there can be no assurances, the Company's management believes that
the net proceeds of this Offering and cash generated from internal operations
will be adequate to finance all working capital, equipment obligations and
planned marketing and advertising for ten centers in California during the first
year after completion of this Offering.
Liquidity and Capital Resources
As of May 31, 1996, the Company had $946,587 and $(778,318) in cash and
working capital, respectively. Upon completion of this Offering, the Company's
cash and working capital position will increase, net of estimated offering
expenses and payment of $607,105 to discharge purchase price obligations for a
Summit excimer laser acquired from an affiliate in May 1996, to approximately
$6,163,000 and $(5,367,000), respectively.
The Company's principal capital requirements include working capital for
management and administration, deposits to finance the acquisition of additional
LVC equipment and for start-up of additional centers discussed above, and
discretionary amounts for marketing and advertising support. Subject to the
availability of adequate capital, expenditures for additional excimer laser
equipment may be significant during the foreseeable future to support the
Company's program of expanding the number of its LVC Services centers. The
Company plans to seek additional capital through the use of equipment lease or
loan financing to finance the Company's expansion plans. No commitments for
additional equipment financing have been obtained by the Company and there is no
assurance that it will be able to obtain any such commitments.
The current cost of an excimer laser ranges from approximately $475,000 to
$525,000, plus sales tax. For laser equipment purchased from VISX or Summit, the
manufacturer generally requires an additional royalty equal to $250 per
procedure to be paid to Pillar Point Partners, a partnership between VISX and
Summit that holds certain patent rights with respect to their excimer laser
technology. The purchase price typically includes a one or two year warranty.
The Company has completed the negotiation of two loans with Commercial Bank
of San Francisco ("Commercial Bank") to finance the payment of $1,021,000 in
final manufacturer payments for a VISX laser acquired from Griffin & Reed Eye
Care, Inc. in May 1996 and a VISX laser purchased from the equipment
manufacturer in July 1996. These loans bear interest at 0.5% over Commercial
Bank's prime rate and are presently guaranteed by six physicians, two of whom
are Directors of the Company, Drs. Griffin and Mandel, and David P. Bates III,
the Company's President. Each loan is secured by one of the financed lasers. The
first loan closed on August 8, 1996 and the second loan closed on September 12,
1996. See "Certain Transactions -- Acquisition Agreements With Directors." The
Company's long-term assets include 500,000 restricted shares of Vista
Technologies common stock which have not been registered for resale under the
Securities Act of 1933. See "Prior Financing Activities" above.
The report of the Company's independent certified public accountants
contains an explanatory paragraph as to the Company's ability to continue as a
going concern. The accountants have raised substantial doubt as to the Company's
ability to continue as a going concern because the Company is dependent upon
raising additional financing through this Offering or a second private offering
to meet its obligations and commitments. See the Financial Statements elsewhere
in this Prospectus.
See "Use of Proceeds", "Business" and "Certain Transactions."
23
<PAGE> 27
BUSINESS
GENERAL
Vista Laser Centers of the Pacific, Inc. (the "Company") was organized on
January 30, 1996 to acquire advanced laser medical equipment and manage and
administer laser vision correction ("LVC") support services ("LVC Services") in
California and northern Nevada under contracts with independent ophthalmologists
("MDs"). During the first half of 1996, the Company's activities consisted of
market research, entering into agreements with experienced LVC eye care
professionals, raising initial capital and acquiring equipment and use of
facilities to provide support services to vision care professionals. Actual
operations commenced in June 1996, and the Company currently offers LVC Services
at four locations in San Jose, San Leandro, Sacramento and Petaluma, California.
As of August 31, 1996 physicians using the Company's equipment and support
services have performed 390 LVC procedures, which increased in number from 61
procedures during June 1996 to 179 procedures during August 1996. LVC support
services offered by the Company include, among others, access to the Company's
equipment, supplies and support personnel; administration of accounting,
billing, collection and other information processing functions; and training and
education in advanced LVC procedures. The Company intends to apply a portion of
the proceeds of this offering to expand its operations throughout California and
into northern Nevada.
Advanced equipment acquired by the Company include excimer lasers for
photorefractive keratectomy ("PRK") procedures recently approved for use in the
United States. LVC procedures are useful in correcting the vast majority of
nearsighted (myopia), refractive disorders as an alternative to eyeglasses,
contact lens or surgical incision procedures such as radial keratotomy ("RK").
LVC procedures may also be used under certain circumstances to treat astigmatism
and more extreme cases of myopia. LVC procedures performed with excimer and
holmium laser systems are administered on an outpatient basis by the independent
physician who determines the recommended procedure for each patient. These
procedures typically require from 15 to 30 minutes for the actual procedure in
addition to preoperative diagnosis and subsequent postoperative care.
SOURCES OF REVENUES AND SERVICE AGREEMENT WITH PROFESSIONALS
The Company's revenues are derived from payments by health care
professionals for their use of LVC equipment and LVC Services, and additional
revenues are obtained from the Company's patient marketing program. Under
nonexclusive service agreements with independent MDs, the Company's current
policy is to charge a flat fee of $500 per laser procedure for its LVC Services,
plus an amount (generally $250) required as a royalty payment to the laser
equipment manufacturer. The gross procedure fee charged to the patient is
established by the physician, except that the Company's consent is currently
required for a gross procedures fee of less than $1,950 per eye. The Company's
LVC Services payment normally is received when the professional collects the
gross procedure fee from the patient. As an additional revenue source, the
Company has entered into agreements to conduct an extensive marketing program
for certain MDs in Northern California. These agreements provide for a marketing
fee, currently ranging from $420 to $510 per procedure, payable by the MD from
his or her gross procedure fee. There can be no assurance that LVC Services and
marketing fees charged to MDs will be maintained at these price levels for the
long term or that MDs will continue to require and contract for the Company's
LVC Services or marketing program. Thus far, the Company has contracted to
provide marketing for 12 MDs in Northern California, including Drs. Griffin,
Mandel, and Kawesch, three of the Company's Directors. Professionals that do
contract with the Company cannot legally be required to use exclusively the
Company's services for their LVC practice.
MARKET POTENTIAL FOR THE COMPANY'S LVC SERVICES
It is estimated that more than 100 million people in the U.S., and a much
larger number worldwide, use eyeglasses or contact lenses to correct common
vision disorders, with over 60 million of these individuals suffering from
nearsightedness (myopia). Based upon a Arthur D. Little, Inc. published report
of the occurrence of nearsightedness in the general population, the Company
estimates that the potential market for the Company's LVC Services to correct
myopia alone in Northern California is approximately 1.8 million people and is
approximately 8.0 million people in the entire state of California. This Arthur
D. Little report
24
<PAGE> 28
also provides information that LVC surgeries will likely comprise an annual
market of greater than $100 Million in the state of California by the year 2000,
with over 100,000 procedures performed annually. Arthur D. Little estimates that
LVC surgery will become the most commonly performed ophthalmic procedure and one
of the highest volume procedures of any type performed by surgeons in the United
States. Arthur D. Little also estimates that within the first five years after
FDA approval of PRK, 5.0 million PRK procedures will be performed in the United
States. Excimer laser procedures can also treat people who are farsighted or
astigmatic, and the Company believes that its potential market in California
will increase significantly at such time as future technology and the regulatory
processes permit these additional patients to be effectively served.
BACKGROUND -- VISION DISORDERS
The human eye is a complex organ that functions much like a camera, with a
lens in front and a light sensitive screen, the retina, in the rear. Images
enter the human eye through the cornea, a transparent domed window at the front
of the eye. In a properly functioning eye, the cornea bends (refracts) incoming
images, causing the images to focus on the retina. The inability of the cornea
to properly refract incoming images results in blurred vision and is called a
refractive disorder.
Myopia (nearsightedness), hyperopia (farsightedness) and astigmatism are
three of the most common refractive disorders. In a nearsighted (or myopic) eye,
images are focused in front of the retina. In a farsighted (or hyperopic) eye,
images are focused behind the retina. In an astigmatic eye, images are not
focused at any one single point. Conventional methods of correcting refractive
disorders are by prescription of eyeglasses and contact lenses. Over the last 15
years, refractive vision disorders have also been treated by several surgical
techniques, such as radial keratotomy in which small incisions approximately 400
to 450 microns deep in a radial configuration are made around the periphery of
the cornea.
Corneal pathologies, which include certain diseases, injuries and
conditions of the cornea, also can result in impaired vision, discomfort or
blindness. Such pathologies include corneal opacities, irregular corneal
surfaces and abnormal tissue growths on the cornea. Another pathological
condition of the eye is glaucoma, a disease characterized by a sustained
elevation of intraocular pressure which, if untreated, may result in blindness.
LASER VISION CORRECTION ("LVC") SYSTEMS
To assist health care professionals in delivering refractive care to
persons with vision disorders, the Company intends to take advantage of
continuous technological advances developed in recent years in the field of
ophthalmic laser systems.
LASER TECHNOLOGY OVERVIEW
Lasers have been used routinely for a variety of medical purposes since the
1960s. Lasers emit photons of light into a highly intense beam of energy that is
delivered to targeted tissue by means of optical mirrors or fiber optics. The
degree of absorption by the tissue varies with the choice of wavelength and is
an important variable in the application of laser technology in treating various
tissues. Surgical lasers emit light in a continuous stream or in a series of
very short duration "pulses", thus interacting with tissue through heat or shock
waves. Several factors, including the wavelength of the laser and the frequency
and duration of the exposure or pulse, determine the amount of energy which
interacts with the targeted tissue and, thus, the amount of damage to the
tissue.
Laser technology has been accepted in the ophthalmic community for the
treatment of certain eye disorders. In general, ophthalmic lasers are used to
coagulate, cut or ablate (remove) targeted tissue. As examples, the argon laser
is used for treatment of leaking blood vessels on the retina and retinal
detachments. Nd:YAG (Neodymium: Yttrium Aluminum Garnet) pulsed lasers are used
to clear clouded posterior capsules and, to a lesser extent, for relief of
elevated pressure in the eye.
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EXCIMER LVC SYSTEMS
More recently developed excimer (argon fluoride) lasers are incorporated in
a fully integrated ophthalmic surgical laser workstation for use by
ophthalmologists to perform procedures to treat refractive and other ophthalmic
disorders. The excimer laser system delivers pulses of ultraviolet laser light
to an eye to ablate submicron layers of tissue from the surface of the cornea in
a computer-assisted, predetermined pattern to reshape the cornea. Most of the
laser light generated by the excimer system is absorbed by the removed corneal
tissue during a procedure. As a result, the laser light does not penetrate
interior portions of the eye and does not create substantial amounts of heat in
the surrounding tissue. These attributes make the excimer laser system well
suited to corneal surgery.
PRK Photorefractive keratectomy ("PRK") is procedure performed with a
excimer laser system to treat primarily nearsightedness, and also farsightedness
and astigmatism. When performing PRK with the excimer laser, the ophthalmologist
determines the exact correction required (which is measured by the same type of
examination used to prescribe eyeglasses or contact lenses) and programs the
correction into the system's computer. The ophthalmologist removes the thin
surface layer of the cornea (the epithelium) and positions the patient for the
laser procedure. The average PRK procedure consists of approximately 150 laser
pulses, each of which lasts several billionths of a second over a period ranging
for 15 to 40 seconds. Cumulative exposure to the laser light is less than one
second. The entire procedure, including patient preparation and postoperative
dressing, generally lasts no more than thirty minutes. The goal of PRK is to
eliminate or to reduce a person's reliance on corrective eyewear.
Following the PRK procedure, the ophthalmologist may prescribe topical
pharmaceuticals to promote corneal healing and to alleviate discomfort. A series
of patient follow up visits is scheduled with the MD or an OD to monitor the
corneal healing process, to verify that there are no complications and to test
the correction achieved by the PRK procedure. Patients undergoing PRK generally
experience discomfort for approximately 24 hours, and blurred vision for
approximately 48 to 72 hours after the procedure. Although most patients
experience improvement in uncorrected vision within a few days of the procedure,
it generally takes from two to six months for the correction to stabilize and
for the full benefit of the procedure to be realized. An individual typically
has one eye treated in a session, with the second eye treated three to six
months thereafter.
Although a patient usually experiences a substantial improvement in clarity
of vision within a few days following the PRK procedure, it generally takes from
two to six months for the full benefit of the procedure to occur. The PRK
procedure is used today primarily to correct the vision of patients with myopia
(or nearsightedness) ranging from -1.5 to up to -7.00 diopters, although the PRK
procedure has also been performed in foreign countries on higher diopter
nearsighted and, occasionally, farsighted and astigmatic patients. Approximately
90% of all myopic patients are nearsighted up to -6.00 diopters and use of the
PRK procedure to correct the vision of nearsighted patients of up to -6.00
diopters therefore has received the greatest degree of testing. Prior to PMA
approval of Summit's excimer laser system in the U.S. at the end of October
1995, PRK procedures to correct myopia have been performed in approximately 35
countries outside the U.S., including Canada, the United Kingdom, Italy and
Sweden.
LASIK Laser assisted in situ keratomileusis ("LASIK") is a procedure
performed with an excimer laser system to treat myopia. LASIK, although a more
unusual and delicate surgical procedure than PRK, offers advantages in that the
epithelium is not touched by the laser and therefore promotes quicker healing
and less discomfort for the patient. Glare and central islands are practically
nonexistent after LASIK since ablation occurs in the stroma layer (under the
epithelium); by the creation of a corneal flap, subsequent retouches are
facilitated with minimal recovery time. To date, the FDA has not established
standards for clinical testing of LASIK systems; Summit, however, has reported
it is engaged in FDA clinical trials seeking approval to sell its excimer system
to perform LASIK. In May 1996 the FDA and the Federal Trade Commission (the
"FTC") jointly acknowledged that physician discussions with patients and
physician decisions to conduct LASIK procedures are considered the practice of
medicine; although the FDA noted that LASIK and bilateral surgery are outside
the scope of current FDA approved labeling for excimer lasers. The FDA and FTC
also stated that they expected laser equipment manufacturers and health care
practitioners to
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advertise the use of FDA approved lasers only within the scope of their
currently FDA approved use, i.e., for PRK and PTK.
PTK Phototherapeutic keratectomy ("PTK") is a procedure performed with the
excimer system to treat corneal pathologies. In this procedure, submicron layers
of tissue are ablated from the surface of the cornea in order to remove
diseased, scarred or sight-inhibiting tissue. The goal of PTK is not necessarily
to cure the corneal pathology, but rather to alleviate the symptoms associated
with the pathology. The FDA in February 1995 granted PMA to an excimer laser
system developed by Summit Technology Inc. to perform PTK procedures and on
October 2, 1995, the FDA granted PMA to two excimer laser systems manufactured
by VISX Incorporated for PTK procedures, the VISX 20/20B and "Star" excimer
lasers.
OTHER Excimer lasers may also be used to treat glaucoma. The procedure
pursuant to which glaucoma is treated is known as Partial Excimer Trabeculectomy
("PET"). The PET procedure involves the use of the excimer laser to create a
penetrating filter through the scleral tissue (the tough, fibrous tissue
covering all of the eye except the cornea), which causes the permeation of
fluids from within the eye, thus reducing pressure levels. The Company believes
that one laser manufacturer has received an Investigational Device Exemption to
conduct clinical trials for the PET procedure.
HOLMIUM LVC SYSTEMS
LTK Another recently developed LVC technology is the holmium laser system.
The holmium system delivers high intensity pulses of infrared light to an eye by
means of a fiber optic cable and a single-use, hand-held probe that directly
contacts the eye at the exact spots chosen by the ophthalmologist. The Company
is aware of two manufacturers that have developed holmium laser systems. The
Company believes that both of those companies are in the process of conducting
clinical trials for the FDA to establish the safety and efficacy of the holmium
laser to perform laser thermal keratoplasty ("LTK"), a refractive procedure
performed to treat farsightedness and astigmatism in which peripheral corneal
tissue is thermally shrunk, causing the central portion of the cornea to
steepen. Summit has reported it is engaged in FDA clinical trials seeking
approval to sell its holmium system to perform laser thermal keratoplasty
("LTK"), and refractive procedure performed to treat farsightedness and
astigmatism in which peripheral corneal tissue is thermally shrunk, causing the
central portion of cornea to steepen.
LS Laser Sclerostomy ("LS") is a surgical procedure performed with the
holmium system to treat the symptoms of glaucoma by making an opening in the
front chamber of the eye. Summit Technology, Inc. has received FDA premarket
clearance to sell its holmium system in the U.S. for treatment of glaucoma.
OTHER LVC SYSTEMS. The Company is aware of three companies that have
reportedly developed solid state lasers, ophthalmic laser surgical systems that
apply a beam of high intensity light to remove tissue from the inside, as
opposed to the surface of, the cornea. These solid state lasers are designed to
ablate tissue inside the cornea without violating the cornea's surface by
computer guiding the laser beam to the inner corneal tissue and vaporizing the
targeted tissue.
COMPANY STRATEGY
PRESENT OPERATIONS
LVC Services have been offered by the Company since June 1996 in San Jose
and San Leandro, California, since July 1996 in Sacramento and since August 1996
in Petaluma, California. As of August 31, 1996, physicians using the Company's
equipment and support services have performed 390 LVC procedures, which have
increased from 61 procedures in June to 179 procedures in August 1996. The
Company has entered into agreements with certain physician groups affiliated
with the Company to acquire certain equipment and office subleases relating to
its existing operations. These agreements with affiliated physicians include:
(i) agreements with Griffin & Reed Eye Care, Inc. for a sublease of facilities
and the payment in May and June 1996 of $106,500 plus assumption of a $515,000
equipment obligation to the manufacturer for the Company's Sacramento center;
(ii) agreements with Eye Laser Associates, LLC and RK and Laser Eye Institute of
California for a sublease of facilities and payments of an aggregate of $80,500
plus assumption of a
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$768,000 equipment lease for the Company's San Jose center; and (iii) an
agreement with Laser Vision Consultants, LLC in May 1996 to enter into a
sublease arrangement and to pay, upon completion of this offering, $607,105 for
equipment relating to the Company's San Leandro center. Dr. J. Robert Griffin, a
physician associated with Griffin & Reed Eye Care, Inc., is a director, Chairman
of the Board and a shareholder of the Company; and Dr. Gary M. Kawesch, a
physician associated with Eye Laser Associates, LLC and RK and Laser Eye
Institute of California, and Dr. Mark R. Mandel, a physician associated with
Laser Vision Consultants, LLC, are each a Director and shareholder of the
Company. For additional information concerning transactions between the Company
and these affiliates, see "Certain Transactions -- Acquisition Agreements with
Directors." The Company acquired its fourth laser from an equipment manufacturer
and entered into lease arrangements for Petaluma, California with a third party.
EXPANSION INTO SOUTHERN CALIFORNIA
Within the next year the Company plans to select approximately four
strategically located sites in southern California to be equipped with
state-of-the art laser equipment systems permitted for commercial use, as well
as accommodating diagnostic, preoperative and postoperative facilities. The
Company will own and maintain the LVC equipment at each site, and will offer MDs
and ODs billing, accounting, administrative, and management services, as well as
access to a trained support staff and necessary LVC equipment and supplies, so
that health care professionals may concentrate their efforts on patient care.
The Company will also offer its extensive marketing program for LVC Services in
its southern California markets. The Company believes that physician groups and
individual practices typically lack the capital to acquire LVC equipment and
market their LVC Services effectively over a large metropolitan area.
The location and equipment selected for additional LVC Service centers in
southern California will be determined in the future with reference to the
proximity of the site to another Company LVC Services center and other relevant
factors such as potential competition and market demographics. Each location
administered by the Company will be fully equipped to offer high quality service
for LVC procedures to primarily correct myopia, as well as astigmatism. The
Company's facilities will be designed for high quality performance of
laser-based vision correction, training and education of medical professionals,
and to conduct both professional and patient seminars. The Company's management
has not yet commenced its analysis of the competitive market for LVC Services in
southern California, which contains two primary markets, the Los Angeles and San
Diego areas. Expansion into these areas, if any, may be accomplished by
purchasing lasers and leasing facilities from MDs with existing laser correction
centers, purchasing the lasers from the manufacturers and establishing a LVC
Services center without any pre-existing MD LVC practice, or a combination of
both. The Company will not commence its expansion analysis of the southern
California market until after this Offering is completed.
MARKETING STRATEGY
The Company's long-term business strategy is to pursue a leadership
position in the potential market for LVC Services directed to refractive care in
California and northern Nevada. However, there can be no assurance the Company
will be successful in achieving this goal or that it will attain profitable
operations. The Company has developed a marketing strategy to educate potential
patients as to PRK and contact as many potential patients as possible to refer
to MDs. The Company's marketing programs utilize newspaper, radio, television,
magazine and other media advertising utilizing volume discounts. The Company's
marketing staff utilize direct mail promotions and telemarketing to contact and
follow-up on potential LVC patients. The Company has prepared brochures
describing PRK for distribution by MDs and ODs, and video cassettes discussing
PRK procedures with professional health care provider and patient testimonials
for broadcast in northern California. The Company has purchased the rights to
the telephone number "1-800-921-2020" from an affiliate of Dr. Griffin. The
Company is staffing this toll-free number 24 hours a day with operators trained
to answer most questions about PRK. These operators attempt to schedule callers
for seminars or consultations with MDs throughout Northern California. These
same operators are used to contact and follow-up on other potential patient
leads generated by the Company. From the Company's extensive marketing program,
the Company generates patient leads which it refers to MDs who have executed
professional services
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agreements with the Company. The Company's marketing program complies with
ethical guidelines of the American Academy of Ophthalmology, the Federal Trade
Commission, and other applicable laws and regulations.
RELATIONSHIPS AND AGREEMENTS WITH HEALTH CARE PROFESSIONALS
Dr. J. Robert Griffin, Chairman of the Board and Chief Executive Officer,
is a director and stockholder of the Company (see "Management" and "Certain
Transactions"). He will continue his efforts in PRK procedures and to manage the
Company's program for training MDs and ODs in the use and performance of LVC
procedures and in recommending standards to establish a program of credentialing
and training MDs and ODs in various aspects relating to LVC procedures and
patient treatment. Dr. Griffin will receive separate compensation from his
patients for his rendering medical services to patients on the same basis as
other MDs using the Company's facilities to render medical service. On May 9,
1996 the Company executed a Consulting Agreement with Griffin & Reed, a
professional corporation of which Dr. Griffin is a principal shareholder
("G&R"), for it to make Dr. Griffin available to establish the ethical standards
and the procedures for the LVC Services and care at the Company's facilities, to
periodically conduct training and educational seminars sponsored by the Company,
and to serve as an Executive Committee member of the Company's Medical Advisory
Board. Compensation paid to Dr. Griffin's affiliate under this consulting
agreement was a $30,000 initial payment on May 1, 1996 and $10,000 each
subsequent month thereafter through January 31, 1997. G&R shall also be entitled
to receive an annual bonus of up to 50% of its annual compensation ($60,000) if
100% of certain performance goals for the Company are achieved. The year-end
bonus will be based upon achieving specific goals established by the Company's
Board of Directors.
The Company intends to appoint a Medical Advisory Board of MDs and ODs,
including, among others, members of the local medical community, to make
recommendations concerning facilities and equipment, technological advances, and
medical, professional and ethical practices and standards at its LVC Service
locations and to monitor such practices. The Company's Medical Advisory Board is
expected to consist of up to approximately 20 MDs and up to approximately 40
ODs. An Executive Committee of the Medical Advisory Board will consist of
approximately five MDs and approximately five ODs who meet credential
requirements established by the Executive Committee. The Executive Committee
will establish credential requirements for MD and OD members of the Medical
Advisory Board, administer the Medical Advisory Board and provide consulting
services to the Company relating to its business, equipment and service
standards. The initial members of the Medical Advisory Board will be appointed
by Dr. Griffin, the Company's Chairman. Medical Advisory Board members will be
compensated for their services in accordance with policies to be established
from time to time by the Company's Board of Directors. Such policies have yet to
be determined and are expected to be dependent in part upon the level of future
revenues available to the Company, its profitability and cash requirements for
working capital, preferred stock dividend payments and expansion. The Company
believes that both regional support of its LVC Services and its ability to
attract use of its LVC equipment and services will be enhanced by the
establishment of its Medical Advisory Board, and also as a result of the
reputation, experience and skills of MDs and ODs acting as consultants to the
Company. The Company plans to offer selected MDs and ODs the opportunity to
receive stock options granted under the Company's Stock Option Plan at exercise
prices equal to fair market value of its Common Stock on the date of grant to
provide MDs and ODs with an equity incentive in the Company's operations. The
Company's management believes that this program will encourage MDs and ODs to
take an active role in advising the Company and in recommending consideration of
its LVC Services to other MDs and ODs that are interested in evaluating
available options when prescribing LVC treatment for their patients.
The Company does not plan to directly employ any MDs or ODs. The Company
has successfully solicited and will solicit additional MDs to enter into service
agreements with the Company. The terms of service agreements with professionals
may vary, depending upon the extent of LVC Services and equipment provided by
the Company, skills and experience of the particular professional, negotiated
terms in individual instances, and market conditions. The Company's current
policy is to charge a flat $500 fee, plus the manufacturer's royalty (currently
$250) for its LVC Services to the professional. The Company believes that two
important factors relating to the utilization of its LVC Services and equipment
by MDs will be the number and quality of
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physicians providing patient care at Company locations and the quality of its
equipment and facilities. Other factors expected to impact utilization of its
LVC Services include public acceptance of LVC procedures, competition,
demographic factors in its targeted market areas, and the Company's patient
referral program.
As an additional revenue source, the Company has entered into agreements to
conduct an extensive patient marketing program for certain MDs in Northern
California. The Company is paid a marketing fee, in addition to the LVC Services
fee, by such MDs from the gross procedure fee charged to such referred patients.
These agreements provide for a marketing fee, currently ranging from $420 to
$510 per referred procedure; however, there can be no assurance that such
referral fee levels can be maintained for the long term. The Company has
implemented a comprehensive consumer marketing program to explain and promote
LVC generally to the public, as well as sponsoring training seminars and
educational programs to produce patient referrals for MDs. Thus far, the Company
has contracted to provide a patient referral program for 12 MDs in Northern
California, including Drs. Griffin, Mandel and Kawesch, three of the Company's
Directors. There can be no assurance that MDs in Northern California or southern
California will continue to require the Company's LVC Services or marketing
services.
AGREEMENT WITH VISTA TECHNOLOGIES
The Company has entered into an agreement for consulting services to be
provided by Vista Technologies Inc. ("Vista Technologies"). Vista Technologies
is a founder and principal stockholder of the Company. Vista Technologies
currently operates five PRK surgical centers in Europe. Under the Consulting
Services Agreement, Vista Technologies will provide consulting services to the
Company relating to LVC developments in Europe, location of additional sites for
Company equipment, financing, accounting, laser equipment acquisition, legal
requirements, advances for certain Offering expenses and investor relations. In
exchange for such services, Vista Technologies will receive 5% of the Company's
gross revenues. In the event any of such revenues are attributable to a
subsidiary of the Company that is not wholly-owned by the Company, Vista
Technologies' 5% will be reduced in proportion to the Company's percentage
ownership in the subsidiary, but to not less than 2 1/2% of such revenues.
Rights to the service mark "Vista Laser Centers" are owned by Vista Technologies
and have been licensed to the Company for exclusive use in Northern California
for the term of the Consulting Services Agreement. The Company has the option of
acquiring southern California as additional territory by opening four (4) LVC
Services Centers in southern California by the later of one year after the
completion of this Offering or February 16, 1998; with Vista Technologies
consenting to the material details of each of such proposed LVC Services Centers
prior to such opening, provided that such consent shall not be unreasonably
withheld. During the term of this agreement Vista Technologies has the right to
nominate two candidates, acceptable to the Company, to the Company's Board of
Directors. See "Management" and "Certain Transactions".
The Company is not involved in the research, development or manufacture of
refractive laser systems, and will be dependent on unrelated manufacturers for
its supply of refractive lasers. The Company believes that there are four U.S.
companies that have conducted or are conducting clinical trials with excimer
lasers for refractive surgery: Summit Technology, Inc, VISX Incorporated, Chiron
Corp. ("Chiron") and LaserSight Incorporated ("LaserSight"). As described below,
Summit and VISX have recently received PMA approval to commercially sell excimer
lasers for PRK procedures in the United States.
FDA REGULATORY APPROVAL PROCESS IN THE UNITED STATES
BACKGROUND AS TO THE PMA PROCESS
Excimer laser systems and related disposables are regulated as medical
devices by the United States Food and Drug Administration ("FDA") and require
premarket clearance or premarket approval (referred to as a "PMA") by the FDA
prior to commercial sale and use in the U.S. Medical devices in the U.S. are
classified into one of three classes on the basis of the controls deemed
necessary by the FDA to reasonably ensure safety and effectiveness. Class I
devices are subject to general controls such as labeling, premarket notification
to the FDA and adherence to good manufacturing practices; Class II devices are
subject to general and special controls such as performance standards,
postmarket surveillance, patient registries and FDA guidelines. Class
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III devices generally are those which must receive PMA by the FDA to ensure
their safety and effectiveness and include, among other devices, new devices
which have been found not to be "substantially equivalent" to existing legally
marketed devices.
A PMA application must be filed if a proposed device is not substantially
equivalent to an existing legally marketed Class I or Class II device, or if it
is a Class III device for which the FDA has called for PMAs. A PMA application
must be supported by valid scientific evidence which typically includes
extensive preclinical and clinical trial data to demonstrate the safety and
effectiveness of the device. Upon receipt of a PMA application, the FDA makes a
threshold determination as to whether the application is sufficiently complete
to permit a substantive review. If the FDA determines that the PMA application
is sufficiently complete to permit a substantive review, the FDA will accept the
application for filing. FDA review of a PMA generally takes one to two years
from the date the PMA is accepted for filing, but may take significantly longer.
The review time is often significantly extended by the FDA asking for more
information, including additional clinical trials for clarification of
information provided in the submission. There are devices for which FDA approval
has been sought which have never been approved for marketing in the U.S. The FDA
may approve a device for some procedures but not others, or for certain classes
of patients and not others. Modifications to a device that is an approved PMA
also may require approval by the FDA of PMA supplements or new PMAs.
PMA STATUS OF LVC SYSTEMS AND PROCEDURES
In October 1995, Summit received PMA from the FDA for use of Summit's
excimer laser system to treat low and moderate nearsightedness using PRK. The
Company has been advised that this PMA specifies a six millimeter ablation zone
for myopic corrections between -1.5 and -7.0 diopters. Summit has further
indicated that its PMA requires the initiation of postmarket studies and
surveillance. Data generated by the post-market studies will be reviewed by the
FDA in determining whether future restrictions on device labeling or use are
warranted.
On March 28, 1996 VISX announced it had received PMA from the FDA for use
of VISX's excimer laser system to treat low and moderate nearsightedness using
PRK. The Company has been advised that this PMA specified a six millimeter
ablation zone for myopic corrections up to -6.0 diopters.
The Company believes that the FDA has not published guidelines for clinical
trials of excimer laser systems to perform procedures other than PRK and PTK,
and both Summit and VISX have indicated they are working with the FDA to design
appropriate trials for such procedures on a case by case basis. Because the FDA
has not published guidelines with respect to clinical trials for other LVC
procedures, it is not known whether or to what extent the FDA may require
further clinical trials of LASIK and other advanced LVC procedures with respect
to the sale of lasers for such uses. However, in May 1996 the FDA and the
Federal Trade Commission (the "FTC") jointly acknowledged that physician
discussions with patients and physician decisions to conduct LASIK procedures
and bilateral surgery are considered the practice of medicine; although the FDA
noted that LASIK and bilateral surgery are outside the scope of current FDA
approved labeling for excimer lasers. The joint FDA and FTC pronouncement
advised that it would not be acceptable to advertise the FDA approved lasers for
LASIK and other non-FDA approved procedures.
Two of the Company's Directors (Drs. Mandel and Kawesch) and other MDs with
which the Company has a current relationship use the Company's lasers to perform
LASIK and bilateral procedures. The Company requires that any physician
performing LASIK or bilateral procedures demonstrate proof of appropriate
professional liability insurance for those procedures. The Company does not and
will not advertise the use of its lasers for any procedures other than those
presently, or in the future, approved by the FDA.
SAFETY AND EFFICACY
The first PRK procedure for the treatment of nearsightedness using an
excimer laser system was performed in 1989, and the first PTK procedure for the
treatment of a corneal pathology using an excimer system was performed in 1988.
A large majority of PRK and PTK procedures to date have been performed only
since 1990. Concerns with respect to the safety and efficacy of the excimer
laser system to perform procedures include predictability and stability of
results and potential complications, such as modest decreases
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in best corrected vision and side effects from PRK, PTK, LASIK and LTK. Other
possible effects include postoperative pain; corneal haze during healing (an
increase in the light scattering properties of the cornea); glare/halos
(undesirable visual sensations produced by bright lights); decrease in contrast
sensitivity (diminished vision in low light); temporary increases in intraocular
pressure in reaction to post procedure medication; modest fluctuations in
astigmatism and modest decreases in best corrected vision (i.e., with
eyeglasses); unintended over or under corrections; instability, reversal or
regression of effect; corneal scars (blemishing marks left on the cornea);
corneal ulcers (inflammatory lesions resulting in loss of corneal tissue); and
corneal healing disorders (compromised or weakened immune system or connective
tissue disease which causes poor healing).
Summit has reported that two year follow-up data accumulated by Summit
during its Phase III PRK clinical trials indicate all of the individuals
undergoing PRK experienced an improvement in visual acuity without corrective
eyewear. Prior to PRK, 95% of the eyes in this group were 20/200 or worse. Of
the eyes treated, approximately 91% improved to 20/40 or better, the legal
requirement to obtain a driver's license in most states without corrective
eyewear, while the remaining 9% experienced improved vision without corrective
eyewear, but still required corrective eyewear to achieve 20/40 vision or
better. Summit is not affiliated with the Company.
In addition, it was reported in 1991 by the Steering Committee of the
Summit International Laser User Group (composed of academies and ophthalmic
physicians from approximately 27 countries) that, based on procedures performed
on over 6,150 nearsighted eyes of up to -6.00 diopters, the PRK procedure was
found to be safe and effective, with more than 90% of treated eyes being within
1.00 diopter of 20/20 vision in the first year following the procedure. PRK to
correct nearsightedness is currently being performed in at least 35 countries
outside the U.S.
GOVERNMENTAL REGULATION
The Company and its operations will be subject to extensive rules and
regulations in the United States at the federal, state and local level,
affecting the health care industry and the delivery of health care. These
regulations in the United States include laws and regulations prohibiting the
practice of medicine and optometry by persons not licensed to practice medicine
or optometry, prohibiting the unlawful rebate or unlawful division of fees and
limiting the manner in which prospective patients may be solicited. Other
regulatory requirements, such as regulations concerning the use of excimer laser
systems, may also apply to the Company's business and plan of operation.
The Company believes its plan of operation will not violate regulatory on
prohibitions against the corporate practice of medicine. None of the Company's
employees will provide medical diagnosis, advice or treatment. All professional
services rendered to patients, and use of the Company's equipment to perform LVC
procedures, will be provided and performed only by health care professionals who
have entered into LVC service agreements with the Company. Such service
agreements will be nonexclusive, leaving the professional free to recommend and
use equipment and services available from other sources. Gross procedure fees
will be determined exclusively by the professional and such fees will be billed
for the account of the professional. Fees earned by the Company for use of its
equipment and support services will be paid only by the professional; to the
extent such fees are based upon a negotiated percentage of the gross procedure
fee, the Company believes that such fees will represent no more than the fair
market value of the Company's LVC Services. The Company will neither pay nor
receive fees attributable to the referral of patients by one professional to
another professional, and it will not receive or pay rebates or other
compensation based upon such referrals.
Numerous state laws and regulations presently affect the manner in which
the Company may establish or administer the use of its equipment and other LVC
Services, which vary significantly from state to state in the U.S. In some
instances these laws and regulations are ambiguous, and sometimes regulators
fail to provide adequate guidelines. The Company believes that it has adopted a
strategy that will enable it to offer and administer its LVC Services in
compliance with all applicable regulatory requirements. However, federal and
state regulatory attention may continue to be directed to the practice of
medicine, and any changes in applicable law or regulations, or in governmental
agency and judicial interpretations of such laws and
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regulations, could cause one of the Company's strategies now in compliance with
applicable laws to cease to comply. Additionally, while U.S. laws and
regulations do not now clearly affect the Company's planned LVC Services, there
can be no assurance that the regulatory scheme will not in the future place
impediments upon the Company's plan of operation.
Current state regulatory requirements and restrictions that relate to
corporate entities such as the Company involved in the ownership and operation
of healthcare facilities include prohibitions against: the corporate practice of
medicine except by an entity owned by healthcare professionals and/or wherein
the professionals exercise control over medical judgments; patient referrals by
healthcare professionals (including ophthalmologists and optometrists) to a
facility owned or compensated by such referring professional (either generally,
or sometimes by defining such payments as "kick backs"); and "fee splitting"
between healthcare professionals and corporate entities. Other laws in the
United States specifically regulate the nature and compensation provisions of
employment or management relationships that healthcare professionals may have
with a corporate-owned facility, affect the form of business entity to be
utilized, limit payments either to the entity or to healthcare professionals to
the "fair market value" of their contributions, or affect the manner of
marketing the service performed at the healthcare facility. Additional
regulations in some states and provinces also now affect, or in the future may
affect, the administration and use of LVC Services, including requirements for
certificates of need and/or other licensing and registration of medical
equipment.
The Company believes that it has developed strategies for use in northern
California and northern Nevada to offer and administer its LVC Services in
compliance with applicable law. There can be no assurance that future changes in
laws and regulations will not adversely affect the Company's operations.
The use of excimer lasers and other medical equipment is also subject to
numerous government laws and regulations relating to such matters as safe
working conditions, environmental protection, fire hazard control and disposal
of potentially hazardous substances. There can be no assurance that the Company
will not be required to incur significant costs to comply with such laws and
regulations in the future.
ANTI-KICKBACK STATUTES
Certain states in the United States have adopted medical services fraud and
abuse statutes that incorporate by reference U.S. federal antifraud and abuse
legislation. Although existing federal legislation does not cover the Company's
activities since its physician clients will not be seeking Medicare or Medicaid
reimbursement for LVC procedures, such legislation is briefly discussed below to
illustrate the potential reach of applicable state regulation. In 1977, Congress
adopted the Medicare and Medicaid Antifraud and Abuse Amendments of 1977, which
prohibit certain activities and which impose a criminal penalty on anyone who
"knowingly and willfully solicits or receives any remuneration (including any
kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash
or in kind in return for referring an individual to a person for the purpose of
arranging for the furnishing of any item or service for which payment may be
made in whole or in part under" the Medicare or Medicaid programs. This
provision is commonly referred to as the anti-kickback or anti-referral
provision. This anti-referral provision is extremely broad and, in several court
cases, its scope has been upheld. State statutes incorporating this provision
may provide separate criminal penalties, can apply regardless of whether third
party reimbursement is sought, and are enforceable at the discretion of the
enacting state rather than the federal Office of the Inspector General ("OIG")
or the applicable U.S. District Attorney.
Regulations establishing safe harbors for certain activities which would
otherwise be subject to the Medicare/Medicaid fraud and abuse statute (the "Safe
Harbor Regulations") have been promulgated by the OIG. Because many state
anti-referral laws have been interpreted by reference to corresponding federal
statutes and regulations, the Company has reviewed its expected activities in
light of the federal Safe Harbor Regulations. The Safe Harbor that most closely
covers investment in the Company is known as the Small Investment Safe Harbor.
In order to qualify for this exception to the fraud and abuse prohibitions, the
following conditions must be met:
1. No more than 40% of the entity may be controlled by investors who are in a
position to control the flow of business to the entity.
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2. No more than 40% of the entity's business can come from investors.
3. The terms on which the investment interest is offered, such as the price and
quantity of shares, must be the same for an investor who is in a position to
generate business for the entity and one who is not.
4. The terms of the investment interest must not be related to the previous or
expected volume of referrals generated by an investor.
5. An investor cannot be required to make referrals to the entity as a condition
for remaining an investor.
6. The way the services are marketed and furnished cannot favor investors.
7. The entity must not loan funds to or guarantee a loan for an investor who is
in a position to generate business for the entity if any part of the loan is
used to obtain the investment interest.
8. The amount of dividends must be directly related to the capital contributed.
The Company does not believe that more than 40% of the Company's stock
initially will be held by persons in a position to refer business to the
Company. However, in view of the Company's plan to grant additional stock
options or warrants exercisable at fair market value of the date of grant to
health care professionals, it is possible that persons in a position to refer
business to the Company could acquire more than 40% of the Company's stock at a
future date. In such event, it is possible that regulatory authorities could
interpret the referral structure expected to be utilized by the Company as
resulting in a more than 40% of the Company's business coming from investors in
a position to generate business.
The Safe Harbor Regulations are extremely narrow in scope. Because of the
broad scope of the Medicare/Medicaid fraud and abuse statute and the narrow
scope of the Safe Harbor Regulations, many transactions involving physicians
will not fall within the Safe Harbor Regulations. Similarly, the Company's
activities are not expected to fall squarely within any of the existing Safe
Harbors. However, in the preamble to the Safe Harbor Regulations, the OIG noted
that activities which do not satisfy the Safe Harbor provisions are not
necessarily subject to prosecution. Failure to qualify for Safe Harbor
protection does not deem a payment arrangement per se illegal; instead, the
arrangement could be subject to increased scrutiny. The degree of risk of
prosecution for any activity which does not comply with the Safe Harbor
Regulations or with applicable state law will depend on an evaluation of the
many factors related to the specific business arrangement. Such decisions will
be within the prosecutorial discretion of the applicable state attorney.
POTENTIAL INVESTORS CONCERNED WITH THE SAFE HARBOR REGULATIONS SHOULD SEEK
ADVICE FROM INDEPENDENT COUNSEL CONCERNING THESE MATTERS BEFORE INVESTING.
INSURANCE AND INDEMNIFICATION
Use of laser systems by health care professionals using the Company's laser
equipment and other LVC Services may give rise to claims against the Company by
persons alleging injury. The Company currently has malpractice insurance with
limits of $1,000,000 per claim and $3,000,000 in the aggregate. The Company
believes that claims alleging defects in the laser systems will be covered by
the manufacturer's warranties and the manufacturer's product liability
insurance, and that the Company could take advantage of such insurance by adding
such suppliers to potential lawsuits against the Company. There can be no
assurance that the Company's laser suppliers will carry product liability
insurance or that any such insurance will be adequate to protect the Company.
The Company requires that MDs who perform laser procedures by use of the
Company's LVC equipment maintain their own professional liability insurance.
There can be no assurance that the insurance or indemnification provided by
health care providers will be adequate to cover claims asserted against the
Company, in which event the Company's business may be materially adversely
affected.
The Company also has a general commercial liability insurance with limits
of $1,000,000 per claim and $3,000,000 in aggregate.
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PROPRIETARY RIGHTS
The Company has no licenses, patents, registered trademarks or registered
copyrights except for rights to the service mark "Vista Laser Centers", which
are owned by Vista Technologies and have been licensed to the Company for its
exclusive use in Northern California for the term of Vista Technologies'
ten-year Consulting Services Agreement with the Company and any extensions to
that agreement.
COMPETITION
The vision care industry is extremely competitive and includes numerous
companies that are substantially larger than the Company and have greater
financial, marketing and technical resources. Competitive factors which may
affect market acceptance or revenues include regulatory requirements,
performance, pricing, convenience and ease of use, success relative to
alternative treatments and patient and general market acceptance.
The Company's LVC Services compete with other surgical and non surgical
forms of treatments for refractive disorders, including eyeglasses, contact
lenses, manual refractive surgery (such as RK), corneal transplants and possibly
new technologies under development. Eyeglass and contact lens use is expected to
continue to be the most popular methods of treating refractive vision disorders
for the foreseeable future due to low immediate cost and the avoidance of
surgery. Notwithstanding certain limitations and possible disadvantages, RK
surgical procedures are generally less expensive than LVC procedures and may
remain competitive as an alternative to eyeglasses and contact lenses as a
result of cost considerations. The Company also competes with other businesses
formed since October, 1995 offering LVC facilities and support services in the
U.S. These businesses are pursuing a variety of strategies such as marketing
directly to consumers through optical chains or affiliating their LVC services
with hospitals and physician group practices. The Company is also likely to
compete with hospitals, hospital affiliated group entities, group practices and
private ophthalmologists that may elect to purchase refractive laser systems.
Manufacturers of excimer lasers may be primary competitors, either directly
through marketing subsidiaries or indirectly through strategic partnerships with
third parties. Summit is reportedly engaged in developing a network of
refractive laser surgery clinics through a marketing subsidiary named Refractive
Centers International, Inc. Other companies that have announced an intent to
compete in the U.S. market for laser vision correction include, among others,
Laser Vision Centers, Inc., the Beacon Eye Institute Inc. (a subsidiary of
Hawker-Siddley Canada Inc.), Vision International, Inc., LaserSight Centers,
Inc. and Sight Resource Corporation. Laser Vision Centers, Inc. operates PRK
clinics in Canada and Europe, has reported alliances with certain hospitals, and
has announced a franchising plan. Vision International operates PRK clinics in
Mexico, Finland and Argentina. LaserSight Centers, Inc. has announced it has
entered into service contracts with ophthalmologists to provide refractive laser
service. Other companies currently offering PRK services in Europe and other
foreign countries could also elect to entry the U.S. market.
EMPLOYEES
The Company currently employs eight people: Dr. Griffin (through the
Consulting Agreement with G&R), Mr. David Bates, its Marketing Director, an
accountant, a secretary and three telemarketing personnel. See "Management." The
Company presently has made contractual arrangements to "rent" any required
technical and administrative personnel from the medical practices of the
Company's affiliates located at or near the Company's LVC services centers. The
Company estimates that less than one-half of these employee's time will be
charged to the Company. See "Certain Transactions -- Acquisition Agreements With
Directors." At the completion of this offering, the Company intends to hire the
additional marketing personnel it believes will be required for the Company's
marketing activities. See "Use of Proceeds". The success of the Company's future
operations depends in large part on the Company's ability to recruit, train and
retain qualified marketing personnel. There can be no assurance, however, that
the Company will be successful in retaining or recruiting such key personnel.
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LITIGATION
The Company is not a party to any litigation.
PROPERTIES
The Company has entered into five leases or subleases of space. The Company
does not own any real estate. In May 1996 the Company entered into an agreement
to sublease 620 square feet of space to be used as a LVC Services center at 651
Fulton Avenue, Sacramento, California at a full-service monthly rate of $1.83
per square foot, the same rate paid by G&R, an affiliate of Dr. Griffin, the
Company's Chairman. This sublease is presently on a month-to-month basis, but a
long-term sublease at the same rate will be executed upon the completion of this
Offering. In May 1996 the Company entered into an agreement to sublease 480
square feet of space to be used as an LVC Services center at 14th Street in San
Leandro, California at a monthly rent of $650 (plus reimbursement of other
tenant costs) from Laser Vision Consultants, LLV, an affiliate of Dr. Mandel, a
Company Director. This sublease is currently on a month-to-month basis, but a
longterm sublease at the same rate will be executed when this Offering is
completed. In May 1996 the Company entered into an agreement to sublease 4,330
square feet of space to be used as a LVC Services center on Winchester Boulevard
in San Jose, California from RKLE, an affiliate of Dr. Kawesch, a Company
Director, at a monthly rate of $1.25 per square foot plus the square footage
allocation of the landlord's taxes, insurance and utilities, the same rate as
paid by RKLE. This sublease is presently on a month-to-month basis, but a
long-term lease at the same rate will be executed upon the completion of this
Offering. (See "Certain Transactions -- Acquisition Agreements With Directors.")
In June 1996 the Company entered into a lease for 1,225 square feet of space on
14th Street in San Leandro, California at a monthly rate of $1,000 from a
third-party. This lease has a term of one year, with a one-year option. This
space serves as the Company's headquarters. In July 1996 the Company entered
into a lease of a 488 square foot three-room space to be used as a LVC Services
Center on Lynch Creek Way in Petaluma, California at a monthly rent from a third
party as $1.65 per square foot, but rent to be paid for two of the three rooms
only for the time used by the Company and/or the MDs' patients. This lease has a
one-year term and may be terminated upon 60 days notice.
The Company believes its current facilities are adequate to conduct its
administration and to operate four LVC Services centers. As the Company expands
its operations through additional LVC Services centers, it will be leasing
additional space throughout California and northern Nevada.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Company's directors and executive officers are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITIONS
--------------------------------------- --- ------------------------------------
<S> <C> <C>
J. Robert Griffin, M.D. 58 Chairman of the Board; Director
Mark R. Mandel, M.D. 43 Director
Donald G. Johnson, M.D. 56 Director
Gary M. Kawesch, M.D. 33 Director
Thomas A. Schultz 45 Director; Secretary
David P. Bates III 45 President; Treasurer
</TABLE>
The following summarizes the principal employment history and relevant
professional experience of the Company's directors and executive officers:
DR. J. ROBERT GRIFFIN, M.D., has been Chairman and a Director of the
Company since February 5, 1996. He has practiced ophthalmology actively in
Sacramento, California since 1974. He is a fellow of the American Academy of
Ophthalmology. He attended Stanford University and Stanford University School of
Medicine, receiving his M.D. in 1966. He served a medical internship at Stanford
University Affiliated Hospitals and a four year residency in ophthalmology at
the Jules Stein Eye Institute, University of California, Los Angeles, completing
his formal training in ophthalmology in 1974. Dr. Griffin is a past-president of
the Alta California Ophthalmological Society and served for 15 years on the
clinical faculty of the University of California, Davis, Department of
Ophthalmology. During the last two years, he has participated in the care of
more than 1,500 LVC procedures and presented results of his refractive surgery
experience at national meetings of the International Society of Refractive
Surgery, the American Society of Cataract and Refractive Surgery, and the
Pacific Coast Refractive Symposium. He has published 11 articles in
peer-reviewed medical journals.
DR. MARK R. MANDEL, M.D., became a Director of the Company on April 23,
1996. He graduated with honors from Oxford University, England, receiving his
bachelors and masters degrees. He earned his medical degree from the University
of California, Los Angeles, School of Medicine. His ophthalmology residency was
performed at Pacific Presbyterian Hospital in San Francisco, followed by one
year of subspecialty fellowship in corneal transplant surgery at the University
of Iowa. Dr. Mandel has practiced in Hayward, California with the Optima
Opthalmic Medical Associates since 1984. He is past president of the East Bay
Ophthalmological Society. Dr. Mandel teaches and lectures throughout the United
States and abroad to ophthalmologists. He has directed an instructional video on
cornea transplant surgery, distributed to eye surgeons by the American Academy
of Ophthalmology. He teaches at both the University of California, Berkeley, and
University of San Francisco, as well as the California Pacific Medical Center.
DR. DONALD G. JOHNSON, was elected to the Company's Board of Directors on
February 5, 1996. Dr. Johnson has served as Chairman of the Board and a director
of Vista Technologies Inc., a publicly-traded company, since February 16, 1996.
He was elected a director of Vista Laser Centers of Michigan, Inc., a company
with the same business plan as the Company and affiliated with Vista
Technologies ("Vista-Michigan"). Vista Michigan filed a registration statement
for the public sale of its Series A Preferred Stock on January 22, 1996. Dr.
Johnson is also Chairman of the Board of Vista Laser Centers of the Northwest, a
Vista Technologies sponsored company which is planning to conduct a public
offering of its securities in the near future. Dr. Johnson received his M.D.
degree from the University of Western Ontario, served his internship at Toronto
Western Hospital, his general surgery residency at Shaughnessy Hospital,
Vancouver, British Columbia, and his ophthalmology residency at the University
of British Columbia. His post graduate accomplishments include certifications in
the United States for radial keratotomy (1984), epikeratophakia (1986), advanced
corneal transplantation (1987), small incision cataract and advanced
phacoemulsification (1990) and excimer laser PRK and PTK (1990) and
certification in Germany for non freeze B.S.K. method of lamellar keratoplasty
(1988). Dr. Johnson has practiced in New Westminster, British Columbia
continuously since 1969, first participating in a group practice for general
ophthalmology from 1969 to 1981, then as a solo practitioner from 1981 to 1985.
He established the London Place Eye Centre in New Westminster as an outpatient
medical and surgical eye center in November 1985 where he still practices.
London Place Eye
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Centre was the first non-hospital surgical center to be certified in British
Columbia in 1989. He has published 16 articles and conducted 11 clinical
investigation studies in the field of ophthalmology, including clinical
investigations of the VISX 20/20 and Nidek EC-5000 excimer lasers and the
Sunrise holmium laser. Dr. Johnson has appeared as a guest speaker on radio and
television and at hospitals and professional conventions, including
presentations at seminars, most of which have occurred since 1991 on subjects
relating to excimer lasers. Dr. Johnson has been affiliated with St. Mary's
Hospital, Royal Columbian Hospital and Surrey Memorial Hospital since 1969 and
Whitehorse General Hospital since 1970. He is a member or fellow of various
professional societies, associations and special committees including, among
others, the College of Physicians and Surgeons (Canada), the Canadian
Ophthalmological Society, the American Academy of Ophthalmology and the
International Society of Refractive Keratoplasty.
GARY M. KAWESCH, M.D., became a Director of the Company on April 23, 1996.
He is the Medical Director of the RK and Laser Eye Institute of California. He
is a specialist in refractive surgery and has performed more than 6,000
refractive procedures over the past five years. Dr. Kawesch has performed
research on the excimer laser at the University of California, Los Angeles
(UCLA), Medical Center, and was selected to be a FDA clinical investigator for
the Laser Sight excimer laser in Northern California. Dr. Kawesch completed his
undergraduate studies at Yale University in 1984, then went on to medical school
at UCLA where he graduated with honors in 1988. He performed his internship at
the University of Southern California's Huntington Memorial Hospital in
Pasadena, and completed residency training in ophthalmology at the Jules Stein
Eye Institute at UCLA in 1992. Dr. Kawesch is board certified and is a Fellow of
the American Academy of Ophthalmology. He regularly contributes to Ocular
Surgery News, an international publication read by eye surgeons. Dr. Kawesch has
practiced with the RK and Laser Eye Institute of California in Santa Clara,
California since 1992.
THOMAS A. SCHULTZ has been a Director of the Company since January 30,
1996, and Secretary since April 23, 1996. Mr. Schultz was a director and
employee of Crystallume, Inc., from 1986 to January 16, 1996 where he was
Chairman of the Board and Chief Executive Officer from April 15, 1993 until
October 15, 1995. Crystallume produces diamond film for electronic and
industrial applications, and it completed a public stock offering in May, 1995.
From 1983 to 1986 Mr. Schultz served as Corporate Vice President of Dole Food
Co. (formerly Castle and Cooke, Inc.), a consumer foods company. From 1979 to
1983 he was a staff member and partner of Booz, Allen & Hamilton, an
international business consulting firm. Mr. Schultz was appointed to serve on
the Board of Directors of Synergistic Holdings Corp. (formerly Dickinson Holding
Corp.), the parent of Dickinson & Co., the Representative of the Underwriters in
December, 1995. Mr. Schultz received a B.S. in Operations Research from John
Hopkins University in 1972 and an M.B.A. from Harvard Company School in 1975. On
February 15, 1996 Mr. Schultz became President and a director of Vista
Technologies, Inc.
DAVID P. BATES III became the President, Chief Operating Officer and
Treasurer of the Company on April 23, 1996. Mr. Bates has over twenty-five years
of experience in healthcare services operations. Mr. Bates received his bachelor
of science degree in Healthcare Administration from Southern Illinois University
in 1978. He received a master of science degree in Healthcare Administration
from the University of Northern Colorado in 1980. Mr. Bates enlisted in the
United States Navy in 1970, and was commissioned in the Navy Medical Service
Corps in 1981. He retired from the Navy in 1992 at the rank of Lieutenant
Commander. Since 1992, Mr. Bates has served as the Executive Director of the
Turner Eye Institute, holding management responsibility for this multiple site
practice located in San Leandro, California. Concurrently, Mr. Bates served as
the Executive Director of a single-specialty managed care organization, Eye Care
Providers of California, as well as the chief executive officer of Laser Vision
Consultants, LLC, an organization developed in partnership between the Turner
Eye Institute and Optima Ophthalmic Medical Associates.
Messrs. Johnson and Schultz were nominated to the Company's Board by Vista
Technologies pursuant to the Company's agreement with Vista Technologies. See
"Certain Transactions."
There is no family relationship between any of the Company's directors and
executive officers. All directors hold office until the next annual meeting of
stockholders and until their successors are elected and qualify. Officers serve
at the discretion of the Board of Directors. There are no other arrangements or
understandings between any director and any other person pursuant to which any
person was elected or nominated as a director. At present there are no
committees of the Board of Directors.
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The Company has agreed, for a period of five years from the date of this
Prospectus, if so requested by the Representative of the Underwriters, to
nominate and use its best efforts to appoint a designee of the Representative as
a non-voting advisor to the Company's Board of Directors. See "Underwriting."
The compensation arrangements of all officers are subject to review and
adjustment from time to time by the Board of Directors. The Company entered into
a consulting agreement with Dr. Griffin and into an employment agreement with
Mr. Bates as described below under "Executive Compensation". Directors currently
do not receive remuneration for their services as directors, but may be
reimbursed for expenses such as their cost of travel to Board meetings. The
Company's Bylaws permit compensation of directors, and the Company reserves the
right to change its policies as to director compensation from time to time based
upon factors such as the Company's performance and the amount of time required
for participation by individual directors.
While not an officer or Director of the Company, the following individual
will be an employee of the Company. Joy Elhard, age 40, is the Director for
Marketing for the Company. Ms. Elhard's background includes research product
development, marketing design implementation, staff training, telemarketing
coordination, and sales. Since 1994, she was partner in the Charles Group,
Medical Marketing Corporation, based in Lake Tahoe, Nevada. In this position,
she worked as strategic planner and marketing consultant for approximately 30
ophthalmology practices located throughout the United States.
EXECUTIVE COMPENSATION
On May 1, 1996 the Company executed a Consulting Agreement with Griffin &
Reed, a professional corporation of which Dr. Griffin is a principal shareholder
("G&R"), for it to make Dr. Griffin available to establish the ethical standards
and the procedures for the LVC Services and care at the Company's facilities, to
periodically conduct training and educational seminars sponsored by the Company,
and to serve as an Executive Committee member of the Company's Medical Advisory
Board. Compensation paid to Dr. Griffin's affiliate under this consulting
agreement was a $30,000 initial payment on May 1, 1996 and $10,000 each
subsequent month thereafter through January 31, 1997. G&R shall also be entitled
to receive an annual bonus of up to 50% of its annual compensation ($60,000) if
100% of certain performance goals for the Company are achieved. The year-end
bonus will be based upon achieving specific goals established by the Company's
Board of Directors. Dr. Griffin has been granted a five-year option upon 50,000
shares of the Company's Common Stock at an exercise price of $2.75 per share.
Dr. Griffin's option agreement prohibits him from exercising this option for
more than 36,000 shares in any single calendar year. See "1996 Stock Option
Plan" below.
On May 1, 1996 the Company executed an employment agreement (the
"Employment Agreement") with David Bates, the Company's President. Pursuant to
the Employment Agreement, Mr. Bates will receive an annual salary of $110,000,
payable monthly, and an annual bonus of up to $55,000 if 100% of certain
performance goals for the Company are achieved. The year-end bonus will be based
upon achieving specific goals established by the Company's Board of Directors.
This Employment Agreement terminates on May 1, 1998. Mr. Bates has also been
granted a five-year option upon 50,000 shares of the Company's Common Stock at
an exercise price of $2.75 per share. Mr. Bates' option agreement prohibits him
from exercising this option for more than 36,000 shares in any single calendar
year. See "1996 Stock Option Plan" below.
1996 STOCK OPTION PLAN
On February 5, 1996, the Board of Directors and stockholders of the Company
adopted a 1996 Stock Option Plan (the "Option Plan"). The Option Plan is
structured to allow the Board of Directors and a future Stock Option Committee
of the Board discretion in creating equity incentives to management, key
employees and professional consultants for the purpose of assisting the Company
in motivating and retaining appropriate talent. The Option Plan covers up to a
maximum of 500,000 shares of the Company's Common Stock. To date the Company has
only granted four options under the Option Plan. On May 1, 1996 the Company
granted an option for 50,000 shares to each of J. Robert Griffin, the Company's
Chairman, and David P. Bates III, provided that no more than 36,000 shares may
be purchased under these options in any one calendar year. Also on May 1, 1996
the Company granted an option for 15,000 shares to Joy Elhard, the Company's
Director
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<PAGE> 43
of Marketing, and an option for 10,000 shares to another Company employee. The
exercise price for all of these options granted on May 1, 1996 is $2.75 per
share. As of the date of this Prospectus, no options had been exercised under
the Option Plan.
The Option Plan provides for the granting of stock options which, at the
discretion of the Board or its Stock Option Committee, may be either "incentive
stock options" within the meaning of Section 422A of the U.S. Internal Revenue
Code or non-qualified stock options which do not qualify as incentive stock
options. The Option Plan provides that both incentive stock options and
non-qualified options under the Option Plan must be granted at an option price
which is not less than the fair market value of the Common Stock on the date of
grant. With respect to any participant who owns stock possessing more than 10%
of the voting rights of the Company's outstanding capital stock, the exercise
price of any incentive stock option under the Option Plan to such a participant
must be not less than 110% of fair market value on the date of grant. Options
under the Option Plan may be granted to officers, directors, key employees of,
and professional consultants to, the Company and its subsidiaries. Under the
terms of the Option Plan, the aggregate fair market value (determined at the
time an option is granted, which will normally be equal to the option exercise
price per share) of Common Stock exercisable under an incentive stock option for
the first time in any calendar year may not exceed $100,000.
Under the Option Plan, the number of shares available for options and
subject to option, and the option exercise price of outstanding options, is to
be adjusted upward or downward, as the case may be, in the event of any stock
dividend, recapitalization, merger, consolidation, split up or similar
transaction affecting shares of the Company's Common Stock. If any option
granted under the Option Plan terminates or expires without having been
exercised in full, the shares not purchased under such option will again be
available for purposes of the Option Plan.
The Option Plan will be administered by a Stock Option Committee (the
"Committee") of two or more members of the Board of Directors of the Company
composed of only "disinterested directors" of the Company as defined in Rule
16-3(c)(2) promulgated under the Securities Exchange Act of 1934 ("Exchange
Act"). Disinterested directors are persons who have not, during their period of
service on the Committee and during the period of 12 months prior to service on
the Committee, received an option to acquire or purchase equity securities of
the Company or any of its affiliates under the Option Plan or under any other
stock option or stock incentive plan of the Company and its affiliates except
for participation in a plan expressly permitted under the provisions of
subsection (i) of Rule 16-3(c)(2) under the Exchange Act. The Committee will
determine the persons to receive options under the Option Plan in the future,
the terms of options granted, including the exercise price, the number of shares
subject to the option and the terms and conditions of exercise.
The maximum term for each option under the Option Plan is ten years. No
option granted may be transferred by the optionee other than by will, the laws
of descent and distribution, or by a qualified domestic relations order, and
each option is exercisable during the lifetime of the optionee only by such
optionee. Options under the Option Plan are exercisable in whole or in part at
such times after the date of grant as set forth in an option agreement as
determined by the Committee or the Board of Directors. Each option granted will
be for a term, and exercisable only in accordance with, option agreements
approved by the Board or the Committee. The Board intends to establish a policy
under the Option Plan of limiting the term of stock options to a period of no
more than five years from the date of grant. Although the Board of Directors
reserves the right to establish other terms and conditions as to any option
granted under the Option Plan, it is currently anticipated that the Board of
Directors and the Committee will continue to follow this policy as to options
granted under the Option Plan. Terms relating to the exercisability of an option
under the Option Plan may be determined upon an individual basis by the
Committee at the time of grant.
In the event of termination of employment or other termination of the
optionee's relationship with the Company, the optionee's option will terminate
and may be exercised during a three month period after termination to the extent
the option was exercisable on the date of termination. In the event such
termination was caused by death or permanent disability, however, the period of
exercisability is extended under the Option Plan to one year after the date of
termination, but in no event after the date the option would have
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expired in the absence of termination. No shares acquired on exercise of an
option granted under the Option Plan may be sold or otherwise disposed of by an
optionee until the expiration of at least six months following the date on which
the option was originally granted by the Company.
The Option Plan contains provisions which authorize the Committee, in the
event of a sale or merger of all or substantially all of the Company's assets,
or a merger or consolidation in which the Company is not the surviving
corporation, to take certain action in its discretion. In the event of such a
transaction the Committee may accelerate the exercisability of any option to
permit its exercise in full during such period as the Committee may prescribe
following the public announcement of a sale of assets or merger, and may elect
to earlier grant that right at the time an individual option is granted. The
Committee may also require an optionee in the event of such a transaction to
surrender an option in return for a substitute option issued by a surviving
corporation which is determined by the Committee to have a value substantially
equal to the value of the surrendered option.
Shares of Common Stock acquired upon exercise of options under the Option
Plan will be paid for in cash or, in the sole discretion of the Committee,
through the delivery of shares of the Company's Common Stock with a market value
equal to the option exercise price. The ability to pay the option price in
shares would, if permitted by the Committee, enable an optionee to engage in a
series of successive stock for stock exercises of an option (sometimes referred
to as "pyramiding") and thereby fully exercise an option with little or no cash
investment by the optionee. The Board of Directors has not established any
policy as to whether it will permit exercises of options through payment with
shares.
The Board of Directors may amend the Option Plan without the approval of
stockholders, except that stockholder approval will be required for any
amendment which would (i) increase the total number of shares optionable under
the Option Plan, or (ii) reduce the option price of options granted under the
Option Plan below 100% of fair market value of the stock on the day the option
is granted, or (iii) change the class of persons eligible to participate in the
Option Plan, or (iv) extend the period during which options may be granted or
exercised. Adjustments in the total number of shares optionable under the Option
Plan and adjustments of the option price may be made, however, without
stockholder approval pursuant to the adjustment provisions mentioned above for
any stock dividend, recapitalization, merger, consolidation, split up or similar
transaction affecting shares of the Company's Common Stock.
OTHER
The Company currently has no pension, retirement, annuity, savings or
similar benefit plan which provides compensation to its executive officers or
directors. Upon the completion of this offering, the Company anticipates it will
obtain a group health insurance plan in which all of its employees will be
eligible to participate.
CERTAIN TRANSACTIONS
ISSUANCE OF SECURITIES
The Company was organized on January 30, 1996. On February 5, 1996, the
Company agreed to sell Refractive Services-800, Inc. 100,000 shares of the
Company's Series A Preferred stock, for $100,000 or a price equal to $1.00 per
share. In order to limit cash dividends on its investment to a 10% return per
annum, Refractive Services-800, Inc. agreed that dividends on shares of Series A
Preferred stock purchased by it would be limited to $0.10 per share annually
until such time as those shares were resold by Refractive Services-800, Inc. to
an unaffiliated third party. In the opinion of the Board of Directors, taking
into consideration the fact that the Company had no assets or business prior to
this investment, the fair market value of 100,000 shares of Series A Preferred
stock purchased by Refractive Services-800, Inc. was equal to its purchase price
of $100,000. Vista Technologies has executed an agreement effective July 18,
1996 with Refractive Services-800, Inc. to acquire the Company's 100,000 shares
of Series A Preferred Stock, as well as capital stock of other regional LVC
Services companies affiliated with Vista Technologies, in exchange for 520,000
shares of Vista Technologies common stock. On August 1, 1996 Vista Technologies
converted these
41
<PAGE> 45
100,000 shares of Series A Preferred Stock into 100,000 shares of Company Common
Stock in accordance with the conversion terms of the Series A Preferred Stock
and all accrued dividends on these Series A Preferred shares were automatically
waived upon the conversion.
On April 23, 1996, the Company completed its negotiations and agreed to
issue 500,000 restricted shares of its Series B Preferred stock (see
"Description of Securities -- Series B Preferred Stock") to Vista Technologies
Inc. in exchange for 500,000 restricted shares of common stock in Vista
Technologies. In view of Vista Technologies' status as a founder of the Company
and its representation on the Company's Board of Directors, this stock
transaction between the Company and Vista Technologies should not be considered
as having been negotiated at arms-length. Based upon a subsequent independent
third party valuation of the Company's Series B Preferred stock as of April 23,
1996, the Company has recorded a cost for its investment in 500,000 restricted
shares of Vista Technologies common stock as of that date of $487,855. The
Company will carry these restricted shares of Vista Technologies common stock as
long-term assets valued at cost, which is based upon an independent third party
valuation, until such time as the trading restriction expires. At May 31, 1996,
the Vista Technologies common stock was trading at a value which exceeded the
carrying value of these shares. The Company will periodically review the related
market value to determine whether the carrying value represented by historical
cost has become permanently impaired. See "Management Discussion and Analysis
and Plan of Operation." Public market quotations for Vista Technologies common
stock became available in March 1996 following Vista Technologies' filings of
previously delinquent reports with the Commission, and such quotations to date
in 1996 have ranged from approximately $2.00 to $4.00 per share of Vista
Technologies common stock. On August 1, 1996 Vista Technologies converted these
500,000 shares of Series B Preferred Stock into 500,000 shares of Company Common
Stock and all accrued dividends on these Series B Preferred shares were
automatically waived upon the conversion.
On April 23, 1996 the Company and Vista Technologies executed irrevocable
proxies to each other for a term of five years. These proxy agreements grant to
the Board of Directors of each company the right to vote that company's
securities owned by the other company on any matter on which the first company's
shareholders have a right to vote. Therefore, until April 23, 2001 the Company's
Board of Directors shall have the right to vote the 600,000 Common Stock shares
owned by Vista Technologies in any Company shareholder vote; and likewise, the
Board of Directors of Vista Technologies shall have the right to vote the
500,000 shares of Vista Technologies' common stock. Each proxy agreement will
expire with respect to any shares that are sold to a third party.
On February 5, 1996 the Company's Board of Directors reserved 50,000 shares
of Common Stock at a purchase price of $1.00 per share and 450,000 Class B
Warrants with an exercise price of $1.00 per share and a purchase price of $.10
per warrant for future issuance to the Company's officers and Directors and
other ophthalmologists in the northern California area. On April 23, 1996 the
Company's Board of Directors approved the issuance of the following number of
Common Stock shares and Class B Warrants to the following company officers and
Directors for the indicated total purchase price: Dr. Griffin -- 15,000 shares
of Common Stock and 135,000 Class B Warrants for $28,500; Dr. Kawesch -- 8,000
shares and 72,000 Class B Warrants for $15,200; Dr. Mandel -- 1,440 shares and
12,960 Class B Warrants for $2,736; and Mr. Bates - 3,360 shares and 30,240
Class B Warrants for $6,384. On April 23, 1996, Dr. D. Brent Reed was issued
15,000 shares of Common Stock and 135,000 Class B Warrants for a purchase price
of $28,500. On that same date, the Company approved the issuance of an
additional 7,200 shares of Common Stock and 64,800 Class B Warrants to three
other eye surgeons for a total of $13,680. Each Class B warrant represents the
right to purchase one share of the Company's Common Stock at an exercise price
of $1.00 per share until the Class B warrants expire on: (i) the fourth
anniversary of the date of this Prospectus; or (ii) in the event this Offering
is not completed by December 31, 1996, December 31, 2000. See "Description of
Securities -- Common Stock Purchase Warrants". In the opinion of the Company's
Board of Directors, the fair market value of the Company's Common Stock and
Class B Warrants on the dates of these transactions was equal to the purchase
price paid of $1.00 per share of Common Stock and $.10 per warrant.
On April 24, 1996 Dr. Robert Griffin, the Company's Chairman and a
Director, purchased $100,000 of the Company Notes as Trustee of the Griffin &
Reed Eye Care, Inc. profit sharing plan. These Notes have been converted into
25,000 Series A Preferred shares and are being registered for sale with the
other 212,500
42
<PAGE> 46
Series A Preferred shares owned by the other Selling Stockholders. Dr. Griffin,
as Trustee, will receive a cash payment for the 12% annual interest due on the
Notes through the date of payment, as will all of the other Selling
Stockholders. See "Principal and Selling Stockholder."
ACQUISITION AGREEMENTS WITH DIRECTORS
On May 9, 1996 the Company entered into an agreement to acquire an excimer
laser, and certain medical examination equipment for a total purchase price of
$607,105 from Laser Vision Consultants, LLC, a California limited liability
company of which Dr. Mark R. Mandel, the Company's Director, is a member and
manager ("Laser Vision Consultants"). The $607,105 will be paid out of the
proceeds of this Offering. The excimer laser is a Summit laser purchased by
Laser Vision Consultants in December 1995 for which the Company will be paying
$482,105, which is deemed to be the fair market value of the laser on May 9,
1996. The Company will be paying Laser Vision Consultants $25,000 for medical
examination equipment in the Laser Vision Consultants office in San Leandro,
California. Laser Vision Consultants has been operating a laser vision
correction center in San Leandro since January, 1996 in affiliation with two
doctor groups. See "Financial Statements." All revenues generated and expenses
incurred after June 1, 1996 at the San Leandro laser center will be reported by
the Company. Until the Offering is closed and the Summit laser purchased, the
Company will lease the laser from Laser Vision Consultants for a monthly rent of
$11,015.43. The Company shall also sublease approximately 480 square feet of
space at a monthly rent of $650 plus reimbursement of other tenant costs. The
landlord of this space is not affiliated with the Company. The Company will also
reimburse the landlord of this space for its costs incurred for one employee
which the Company will rent for such hours as the Company deems prudent to the
efficient operation of the facility. The Company has committed to refer all
potential patient leads in Alameda, Contra Costa and Stanislaus Counties,
California and within a 20 mile radius of Sonora, California to Laser Vision
Consultants.
On May 9, 1996 the Company entered into an agreement to acquire an excimer
laser, certain tenant improvements, furniture and other assets for a total
purchase price of approximately $101,500 from Griffin and Reed Eye Care, Inc., a
professional medical corporation of which the Company's Chairman and a Director,
J. Robert Griffin, is a principal shareholder, office and director ("G&R"). This
purchase price was paid by the Company in May and June 1996. The laser is a VISX
Star excimer laser that G&R acquired in March 1996. The Company paid G&R $52,500
which was its down payment to the manufacturer. Final payment is not due to the
manufacturer until September 1996 and the Company has agreed to assume the
$516,000 final payment to the manufacturer. G&R had negotiated a bank loan for
this final payment, but the Company has secured a more favorable loan commitment
from Commercial Bank of San Francisco ("Commercial Bank"). See below and
"Management Discussion and Analysis and Plan of Operation.". In May, 1996 G&R
was paid approximately $37,000 by the Company as a reimbursement of its costs
for tenant improvements to the laser center in Sacramento, California. G&R was
also paid approximately $9,000 by the Company in May 1996 as reimbursement of
its costs in furnishing the laser center. In June 1996 the Company paid G&R
$5,000 for its rights to the telephone number "1-800-921-2020" and $3,000 for
its Internet Website "www.nearsighted.com." The Company also paid G&R $5,789 in
July 1996 as reimbursement of its costs for various medical supplies and "Pillar
Point" laser cards at the laser center on July 1, 1996. On July 1, 1996 the
Company commenced subleasing 620 square feet of office space at 651 Fulton
Avenue, Sacramento, California at a full-service monthly rate of $1.83 per
square foot, the same rate as paid by G&R. This building is owned by 651 Fulton
Avenue Partnership, a California general partnership, of which Dr. Griffin, the
Company's Chairman, owns 80%. Also on July 1, 1996 the Company commenced renting
such employees from G&R as required by the Company for the efficient operation
of this laser center. The Company reimburses G&R monthly for all of its related
costs and expenses of the employees for the time used by the Company. All
potential patient leads in the Sacramento and Stockton, California areas
generated by the Company's advertising are referred to G&R.
On May 30, 1996 the Company entered into an agreement to acquire an excimer
laser from Eye Laser Associates, LLC, a limited liability company of which Dr.
Gary M. Kawesch, a Company Director, is the Managing Member ("ELA"), and certain
legal documents and rights to modify an "infomercial" for a total purchase price
of $80,500 from RK and Laser Eye Institute of California, a professional
corporation of which
43
<PAGE> 47
Dr. Kawesch, is a principal shareholder, officer and director ("RKLE"). $60,500
of this purchase price was paid to these affiliates of Dr. Kawesch in May 1996
and the remaining $20,000 was paid in July 1996. This laser is a VISX Star
excimer laser that ELA acquired in March 1996 but did not put into service. ELA
had executed a lease for total payments of $768,000 on the laser with Hillside
Financial Group ("Hillside"). The Company has agreed to assume or re-finance
this lease with Hillside upon which no payments are due until September 1996.
This lease requires the Company to pay $12,800 per month for 60 months
commencing in September 1996.
On June 1, 1996 the Company commenced subleasing approximately 4,330 square
feet of space on Winchester Boulevard in San Jose from RKLE at a rate of $1.25
per square foot plus the square footage allocation of the landlord's taxes,
insurance and utilities, the same rate as paid by RKLE. This building is owned
by an unaffiliated party. Also on June 1, 1996 the Company commenced renting
such employees from RKLE as required by the Company for the efficient operation
of this laser center. The Company reimburses RKLE monthly for all of its related
costs and expenses of the employees for the time used by Company. All potential
patient leads in Santa Clara County, California and San Mateo County, south of
Foster City, California generated by the Company's advertising are referred to
RKLE. In this agreement with ELA and RKLE the Company has agreed to nominate Dr.
Kawesch to the Company's Board of Directors in the future. Further, the Company
has agreed to vote all proxies its receives (including the proxy for Vista
Technologies' 600,000 Common Stock shares) in favor of Dr. Kawesch's election to
the Board and against the removal of Dr. Kawesch as a Director, in the event of
such a shareholder proposal.
The Company's loans for two recent laser acquisitions for $1,021,000 with
Commercial Bank bear interest at 0.5% above the bank's prime rate and are
guaranteed by six MDs, two of which are Drs. Griffin and Mandel, two of the
Company's Directors, and Mr. Bates, the Company's President. See "Management
Discussion and Analysis and Plan of Operation."
AGREEMENTS WITH AFFILIATES AND RELATED PARTIES
CONSULTING SERVICES AGREEMENT WITH VISTA TECHNOLOGIES
Vista Technologies and the Company entered into a Consulting Services
Agreement dated as of August 16, 1996. Under the Consulting Services Agreement,
Vista Technologies will provide consulting services to the Company relating to
LVC developments in Europe and Canada, location of additional sites for LVC
Centers, laser equipment acquisition and financing, and advances of certain
Offering expenses. In exchange for such services, Vista Technologies will
receive 5% of the Company's gross revenues. In the event any of such revenues
are attributable to a subsidiary of the Company that is not wholly-owned by the
Company, Vista Technologies' 5% will be reduced in proportion to the Company's
percentage ownership in the subsidiary, but to not less than 2 1/2% of such
revenues. The Consulting Services Agreement is for a term of ten years from the
date of this Prospectus, and is automatically renewed thereafter for periods of
five years unless either party provides six months' prior notice of an intent
not to extend the term. During the term of this agreement, Vista Technologies
may nominate two candidates, who are acceptable to the Company, to the Company's
Board of Directors. Mr. Schultz and Dr. Johnson are presently the individuals
nominated by Vista Technologies. Rights to the service mark "Vista Laser
Centers" are owned by Vista Technologies and have been licensed to the Company
for the northern California and northern Nevada territory during the term of
this Agreement for no additional consideration. The Company has to option to add
the southern California territory to the area covered by this license by opening
four LVC Services centers in southern California by the later of one year after
the completion of this Offering or February 16, 1998. As a condition to that
expansion of the service mark license, Vista Technologies has the right to
consent to material terms of agreements of expansion into southern California,
which consent may not be unreasonably withheld. The southern California
territory is defined as all of California south of San Luis Obispo.
Vista Technologies is primarily engaged in providing excimer laser
equipment for PRK and other LVC procedures and related support services at Vista
Vision(TM) outpatient LVC surgical centers in Europe. Vista Technologies
commenced business operations in March 1994 and operates three PRK centers in
Italy though
44
<PAGE> 48
a majority-owned subsidiary named Vista Vision SpA and two PRK centers in Sweden
through a wholly-owned subsidiary named Vista Vision Scandinavia AB.
FUTURE TRANSACTIONS
Any future transactions between the Company and any of its directors,
officers, principal stockholders or other affiliates will be on terms not less
favorable to the Company as could be obtained from independent parties and will
be approved by not less than a majority of the directors who do not have an
interest in the proposed transaction.
45
<PAGE> 49
PRINCIPAL AND SELLING STOCKHOLDERS
PRINCIPAL STOCKHOLDERS
The following table sets forth information (except as otherwise indicated
by footnote) as to shares of the Company's Common Stock owned at the date of
this Prospectus, based upon the assumption that all Note holders have elected to
convert their Notes into an aggregate of 237,500 Common Stock shares, by (i)
each person known by management to beneficially own more than 5% of the
Company's outstanding Common Stock, (ii) each of the Company's officers and
Directors, and (iii) all executive officers and Directors as a group:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(2)
-----------------------
COMMON % OF
NAME OR GROUP(1) STOCK CLASS(2)
- ----------------------------------------------------------------------- --------- --------
<S> <C> <C>
DIRECTORS:
J. Robert Griffin, M.D.(3)............................................. 235,000 21.7%
Gary M. Kawesch(4)..................................................... 80,000 8.3%
Mark R. Mandel(5)...................................................... 14,400 1.6%
Donald G. Johnson(6)................................................... 600,000* 67.6%
Thomas A. Schultz(6)................................................... 600,000* 67.6%
OFFICERS:
David P. Bates(7)...................................................... 83,600 8.6%
All executive officers and directors As a group [six in number](8)..... 1,013,000 81.2%
OTHER 5% STOCKHOLDERS:
Vista Technologies Inc.(9)............................................. 600,000* 67.6%
Dr. D. Brent Reed, M.D.(10)............................................ 150,000 14.7%
</TABLE>
- ---------------
* These securities are deemed to be beneficially owned by more than one
person.
(1) The persons named in the table have sole voting and investment power with
respect to all shares shown to be beneficially owned by them, subject to
community property laws where applicable and the information contained in
the footnotes to this table.
(2) Includes securities beneficially owned plus, where applicable, Common Stock
issuable upon exercise of outstanding Class A and B Warrants and stock
options held only by the person or group indicated that are fully
exercisable or exercisable within 60 days after the date of this
Prospectus.
(3) Includes 40,000 Common Stock shares presently owned, 145,000 shares which
may be purchased upon the exercise of 10,000 Class A and 135,000 Class B
Warrants owned, and 50,000 shares which may be purchased under a stock
option. The Common Stock percentage shown is based upon the assumption that
no other Class A Warrants, Class B Warrants or stock options are exercised.
On the basis of 887,500 Common Stock shares presently outstanding, Dr.
Griffin's 40,000 Common Stock shares represent 4.5% of such outstanding
securities.
(4) Includes 8,000 shares of Common Stock presently owned and 72,000 shares
which may be purchased upon exercise of 72,000 Class B Warrants. The
percentage shown is based upon an assumption that no Class A Warrants,
other Class B Warrants or stock options are exercised. On the basis of
887,500 Common Stock shares presently outstanding, Dr. Kawesch's 8,000
shares represent 0.9% of such outstanding securities.
(5) Includes 1,440 Common Stock shares presently owned and 12,960 shares which
may be purchased upon the exercise of 12,960 Class B Warrants. The
percentage shown is based upon an assumption that no Class A Warrants,
other Class B Warrants or stock options are exercised. On the basis of
887,500 Common Stock shares presently outstanding, Dr. Mandel's 1,440
shares represent 0.2% of such outstanding securities.
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<PAGE> 50
(6) Dr. Johnson and Mr. Schultz are each officers and directors of Vista
Technologies Inc., and, therefore, are each deemed to own the 600,000
Common Stock owned by Vista Technologies Inc. These individuals do not own
any Company shares as individuals.
(7) Includes 3,360 Common Stock shares, 30,240 shares which may be purchased
upon the exercise of Class B Warrants and 50,000 shares of Common Stock
which may be purchased under a stock option plan. The percentage shown is
based upon the assumption that no Class A Warrants, other Class B Warrants,
or stock options are exercised. On the basis of 887,500 Common Stock shares
presently outstanding, Mr. Bates 3,360 Common Stock shares represent 0.4%
of such outstanding securities.
(8) See foot notes 3, 4, 5 and 7 above. These 1,013,000 shares include 52,800
presently owned Common Stock shares, 260,200 shares which may be purchased
upon the exercise of Class A and B Warrants owned, 100,000 shares which may
be purchased under two stock options and the 600,000 shares owned by Vista
Technologies Inc. The Common Stock percentage shown is based upon an
assumption that no other Class A, Class B Warrants or stock options are
exercised. On the basis of 887,500 Common Stock shares presently
outstanding, these 4 officers and Directors' 52,800 Common Stock shares
represent 5.9% of such outstanding securities.
(9) Includes the 600,000 Common Stock shares from the conversion of the 100,000
Series A Preferred Stock shares and 500,000 Series B Preferred Stock shares
owned by Vista Technologies on August 1, 1996. The business address for
Vista Technologies is 167 S. San Antonio Road, No. 9, Los Altos, CA 94022.
(10) Includes 15,000 Common Stock shares presently owned and 135,000 shares
which may be purchased upon the exercise of 135,000 Class B Warrants. The
Common Stock percentage shown is based upon the assumption that no Class A
Warrants, other Class B Warrants or stock options are exercised. On the
basis of 887,500 Common Stock shares presently outstanding, Dr. Reed's
15,000 shares represent 1.7% of such outstanding securities.
After giving effect to the sale of 600,000 Units offered hereby (and
assuming the Underwriters' over-allotment option to purchase an additional
90,000 Units is not exercised, the Underwriters' Warrants to purchase 60,000
Units are not exercised and none of the 600,000 Class C Warrants included in the
600,000 Units are exercised), the following table shows the number of shares,
voting power and percentage of each person and group shown in the foregoing
table as adjusted for this Offering:
<TABLE>
<CAPTION>
VOTING POWER SHARES BENEFICIALLY OWNED, AS
ADJUSTED(A)
---------------------------------------------------
COMMON % OF
NAME OR GROUP VOTES(B) % STOCK CLASS(B)
- ---------------------------------------------- --------- ---- --------- --------
<S> <C> <C> <C> <C>
DIRECTORS:
J. Robert Griffin, M.D.(c).................... 835,000 36.6% 235,000 10.3%
Gary M. Kawesch(d)............................ 680,000 31.5% 80,000 3.7%
Mark R. Mandel(e)............................. 614,400 29.3% 14,400 0.7%
Donald G. Johnson(f).......................... 600,000* 28.7% 600,000 28.7%
Thomas A. Schultz(f).......................... 600,000* 28.7% 600,000 28.7%
OFFICERS:
David P. Bates(g)............................. 83,600 3.9% 83,600 3.9%
All executive officers and directors as a
group [seven in number](h).................. 1,013,000 41.4% 1,013,000 41.4%
OTHER 5% STOCKHOLDERS:
Vista Technologies Inc.(i).................... 600,000* 0.0% 600,000* 28.7%
D. Brent Reed(j).............................. 150,000 6.7% 150,000 6.7%
</TABLE>
- ---------------
* These securities are deemed to be beneficially owned by more than one
person.
(a) As adjusted for the sale of 1,200,000 shares of Common Stock offered
hereby.
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<PAGE> 51
(b) Includes securities beneficially owned plus, where applicable, Common Stock
issuable upon exercise of outstanding Class A and B Warrants and stock
options held only by the person or group indicated that are fully
exercisable or exercisable within 60 days after the date of this
Prospectus.
(c) The number and percentage of voting shares includes 600,000 shares of
Common Stock owned by Vista Technologies Inc. which has granted to the
Company's Board of Directors, of which Dr. Griffin is one, the power to
vote these shares. It also includes the Common Stock shares shown in the
table and described in footnote (3) on page 46. The percentage of voting
shares and percentage of Common Stock is based upon the assumption that no
other Class A or Class B Warrants or stock options are exercised. Without
voting the Vista Technologies Common Stock, Dr. Griffin would be attributed
235,000 votes, or 10.3% of the then outstanding 2,282,500 voting shares.
Without converting his Note and exercising his Class A and B Warrants and
stock option and without voting the Vista Technologies Common Stock, Dr.
Griffin would own and vote a total of 40,000 shares, or 1.9%, of the
2,087,500 Common Stock shares outstanding after this Offering.
(d) The number and percentage of voting shares includes 600,000 shares of
Common Stock owned by Vista Technologies which has granted to the Company's
Board of Directors, of which Dr. Kawesch is one, power to vote these
shares. It also includes the Common Stock shares shown in the table and
described in footnote (4) on page 46. The percentage of voting shares and
percentage of Common Stock is based upon the assumption that no other Class
A or Class B Warrants or stock options are exercised. Without voting the
Vista Technologies Common Stock, Dr. Kawesch would be attributed 80,000
votes or 3.7% of the then outstanding 2,159,500 voting shares. Without
exercising his Class B Warrants and without voting the Vista Technologies
Common Stock, Dr. Kawesch would own and vote a total of 8,000 shares, or
0.4%, of the 2,087,500 Common Stock shares outstanding after this Offering.
(e) The number and percentage of voting shares includes 600,000 shares of
Common Stock owned by Vista Technologies Inc. which has granted to the
Company's Board of Directors, of which Dr. Mandel is one, the power to vote
these shares. It also includes the Common Stock shares shown in the table
and described in footnote (5) on page 46. The percentage of voting shares
and percentage of Common Stock is based on the assumption that no other
Class A or Class B Warrants or stock options are exercised. Without voting
the Vista Technologies Common Stock, Dr. Mandel would be attributed 14,400
votes, or 0.7% of the then outstanding 2,100,460 voting shares. Without
exercising his Class B Warrants and without voting the Vista Technologies
Common Stock, Dr. Mandel would own and vote a total of 1,440 shares, or
0.1%, of the 2,087,500 Common Stock shares outstanding after this Offering.
(f) The number and percentage of voting shares includes 600,000 shares of
Common Stock owned by Vista Technologies, Inc. which has granted to the
Company's Board of Directors, of which Messrs. Johnson and Schultz are
members. Without voting the Vista Technologies Common Stock, these
Directors would vote no shares since they own no Company Common Stock
shares.
(g) The number and percentage of voting shares includes the Common Stock shares
shown in the table on page 46 and described in footnote 7 on page 47. The
percentage of voting shares and percentage of Common Stock is based upon
the assumption that no other Class A or Class B Warrants or stock options
are exercised. Without exercising his Class B Warrants or his stock option,
Mr. Bates would own and vote a total of 3,360 shares, or 0.2%, of the
2,087,500 Common Stock shares outstanding after this Offering.
(h) The number and percentage of voting shares includes the Common Stock shares
shown in the table on page 46 and described in footnote 8 on page 47. See
footnotes (c), (d), (e), (f) and (g) above. The percentage of voting shares
and percentage of Common Stock is based upon the assumption that no other
Class A or Class B Warrants or stock options are exercised. Without
exercising their Class A or Class B Warrants, but voting Vista
Technologies' 600,000 Common Stock, the officers and Directors of the
Company would vote 627,800, or 30.1%, of the 2,087,500 Common Stock shares
outstanding after this Offering.
(i) The voting rights to its 600,000 Common Stock has been granted to the
Company's Board of Directors.
(j) The number and percentage of voting shares includes the Common Stock
shares shown in the table on page 46 and described in footnote 10 on page
47. The percentage of voting shares and percentage of
48
<PAGE> 52
Common Stock is based upon the assumption that no other Class A or Class B
Warrants or stock options are exercised. Without exercising his Class B
Warrants, Dr. Reed would own and vote a total of 15,000 shares, or 0.7%,
of the 2,087,500 Common Stock shares outstanding after this Offering.
SELLING STOCKHOLDERS
The registration statement of which this Prospectus is a part also covers
the resale of 237,500 outstanding shares of Common Stock assumed to be issued
upon conversion of Company Notes and then to be offered from time to time for
the accounts of 25 owners of the Company Notes (the "Selling Stockholders"). The
Company will not receive any proceeds from the offering of Common Stock by these
stockholders. See "Plan of Distribution by Selling Stockholders." The following
table sets forth certain information with respect to the beneficial ownership of
securities to be offered hereby by these stockholders one year after the date of
this Prospectus.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF COMMON STOCK
-----------------------------------------------------
PRIOR TO SALE AFTER SALE (1)
------------------------ ------------------------
NUMBER OF PERCENT OF NUMBER OF PERCENT OF
NAME AND ADDRESS SHARES CLASS(2) SHARES CLASS
- ------------------------------------------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Bradley J. Sadler................................ 25,000 1.2% -0- -0-
J. Robert Griffin, Trustee (3)................... 25,000 1.2% -0- -0-
A.L. Del Petre................................... 12,500 0.6% -0- -0-
Lilly Lee........................................ 12,500 0.6% -0- -0-
Kenneth V. Miselis............................... 12,500 0.6% -0- -0-
Michael Favero................................... 12,500 0.6% -0- -0-
Robert J. Harding Profit Share Trust............. 12,500 0.6% -0- -0-
Beatrice Sandler, Trustee........................ 12,500 0.6% -0- -0-
Medical Vision Technology Pension Fund........... 12,500 0.6% -0- -0-
Bradley and Holly Wojcik......................... 6,250 0.3% -0- -0-
Joseph E. Angelo, Trustee........................ 6,250 0.3% -0- -0-
C.E. Neff, Jr.................................... 6,250 0.3% -0- -0-
Wayne & Barbara Koerner.......................... 6,250 0.3% -0- -0-
K.J. and E. Townsend, Trustees................... 6,250 0.3% -0- -0-
Scott Lee........................................ 6,250 0.3% -0- -0-
Carter Nice...................................... 6,250 0.3% -0- -0-
Jill G. Kennedy.................................. 6,250 0.3% -0- -0-
Panda Investments, LLC........................... 6,250 0.3% -0- -0-
Frank Moorman.................................... 6,250 0.3% -0- -0-
Henry Stuit...................................... 6,250 0.3% -0- -0-
Peterson Family Revocable Trust.................. 6,250 0.3% -0- -0-
Richard Kesterke................................. 6,250 0.3% -0- -0-
James Smith...................................... 6,250 0.3% -0- -0-
Stephen Wilmarth, Beneficiary.................... 6,250 0.3% -0- -0-
Stephen Wilmarth................................. 6,250 0.3% -0- -0-
------- ----- --- ---
Total....................................... 237,500 11.4% -0- -0-
</TABLE>
- ---------------
(1) Assumes all shares offered by these stockholders are sold.
(2) Percentage after giving effect to the sale of Common Shares offered by the
Company.
(3) Dr. Griffin, the Company's Chairman, is trustee for Griffin & Reed Eye Care
Pension Trust, which acquired the Company Promissory Notes.
49
<PAGE> 53
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 20,000,000 shares
of Common Stock, par value $0.01 per share, and 5,000,000 shares of Preferred
Stock, par value $0.01 per share. As of the date of this Prospectus, there were
887,500 shares of Common Stock issued and outstanding assuming all Note holders
convert their Notes into an aggregate of 237,500 shares of Common Stock.
COMMON STOCK
The Company is authorized to issue 20,000,000 shares of Common Stock, par
value $.01 per share, of which 887,500 shares were issued and outstanding at the
date of this Prospectus. Holders of Common Stock are entitled to one vote for
each share held on each matter to be acted upon by stockholders of the Company.
Stockholders do not have preemptive rights or the right to cumulate votes for
the election of directors. Shares are not subject to redemption nor to any
liability for further calls. All shares of Common Stock issued and outstanding
are validly issued, fully paid and non-assessable. Subject to provisions
relating to Preferred Stock discussed below, holders of Common Stock are
entitled to receive such dividends, if any, as may be declared by the Board of
Directors in its discretion out of funds legally available for that purpose, and
to participate pro rata in any distribution of the Company's assets upon
liquidation or dissolution.
In the event of liquidation or dissolution of the Company, all assets
available for distribution after satisfaction of all debts and other liabilities
and after payment or provision for the liquidation preference of Preferred Stock
are distributable among the holders of the Common Stock.
The Transfer Agent for the Company's Common Stock and Class C Warrants will
be American Stock Transfer & Trust Company, 40 Wall Street, 46th Floor, New
York, New York 10005.
COMMON STOCK PURCHASE WARRANTS
Class A. The Company at present has reserved for issuance up to 95,000
shares of Common Stock for issuance in the event of the exercise of up to 95,000
Class A Warrants issued in the Company's private placement in April and May
1996. Class A Warrants are exercisable at $4.00 per share until the Class A
Warrants expire on March 31, 1999 (or earlier in the event of a sale of the
Company's business or merger into another corporate entity). Class A Warrants
are not subject to redemption by the Company. The holders of the Company's Class
A Warrants do not have any of the rights or privileges of stockholders of the
Company, such as voting rights or the right to receive dividends, prior to
exercise of the warrants. The exercise price of the Class A Warrants and the
number of Class A Warrants are subject to automatic proportionate adjustment in
the event of any stock dividend, stock split or other recapitalization affecting
the outstanding Common Stock.
Investors in this Offering should note that for the term of the Class A
Warrants, the holder or holders thereof are given the opportunity to profit from
a rise in the market price of the Common Stock subject to the class A Warrants
with a resulting dilution in the interests of other stockholders. At any time
when the holders of the Class A Warrants might be expected to exercise the same,
the Company would in all likelihood be able to obtain additional equity capital
on terms more favorable than those provided in the Class A Warrants.
Class B. The Company at present has issued 450,000 shares of Common Stock
for issuance in the event of the exercise of up to 450,000 outstanding Class B
Common Stock Purchase Warrants (the "Class B Warrants").
Class B Warrants are exercisable at $1.00 per share until the Class B
warrants expire on: (i) the fourth anniversary of this Prospectus; or (ii)
December 31, 2000, in the event this Offering is not completed by December 31,
1996. Class B Warrants are not subject to redemption by the Company. The holders
of the Class B Warrants do not have any of the rights or privileges of
stockholders of the Company, such as voting rights or the right to receive
dividends, prior to exercise of the Class B Warrants. The exercise price of the
Class B Warrants and the number of Class B Warrants are subject to automatic
proportionate adjustment in the event of any stock dividend, stock split or
other recapitalization affecting the outstanding Common Stock.
50
<PAGE> 54
Investors in this Offering should note that for the term of the Class B
Warrants, the holder or holders thereof are given, at nominal cost, the
opportunity to profit from a rise in the market price of the Common Stock
subject to the Class B Warrants with a resulting dilution in the interests of
other stockholders. At any time when the holders of the Class B Warrants might
be expected to exercise the same, the Company would in all likelihood be able to
obtain additional equity capital on terms more favorable than those provided in
the Class B Warrants. See "Certain Transactions".
Class C. The Units issued in connection with this Offering include up to
750,000 Class C Warrants (including 90,000 Class C Warrants that may be issued
upon exercise of the Underwriters' over-allotment option and 60,000 Class C
Warrants which may be issued upon exercise of the Underwriters' Warrants). The
Company has reserved an equivalent number of shares of Common Stock for issuance
upon exercise of such Class C Warrants. Each Class C Warrant will entitle the
holder to purchase one share of Common Stock at a price of $6.00 per share
immediately after the date of this Prospectus. The Class C Warrants are
redeemable by the Company, at $.25 per Warrant, upon 30 days' notice after the
market price of the Common Stock equals or exceeds $8.00 for 10 consecutive
trading days. In the event the Company gives notice of its intention to redeem,
a holder would be forced either to exercise his Warrant within 30 days of the
notice of redemption or accept the redemption price.
The Class C Warrants will be issued in registered form under a Warrant
Agreement between the Company and American Stock Transfer and Trust Company, as
a warrant agent (the "Warrant Agent"). The shares of Common Stock underlying the
Class C Warrants, when issued upon exercise of a Class C Warrant, will be fully
paid and nonassessable, and the Company will pay any transfer tax incurred as a
result of the issuance of Common Stock to the holder upon its exercise.
The Class C Warrants contain provisions that protect the holders against
dilution by adjustment of the exercise price in certain events, such as stock
dividends and distributions, stock splits, recapitalization, mergers or
consolidations and certain issuances below the current market value of the
Common Stock. The Company is not required to issue fractional shares upon the
exercise of a Class C Warrant. The holder of a Class C Warrant will not possess
any rights as a stockholder of the Company until such holder exercises the Class
C Warrant. A copy of the form of Warrant Agreement is filed as an exhibit to the
Registration Statement of which the Prospectus is a part.
PREFERRED STOCK
The Company is authorized to issue 5,000,000 shares of preferred stock, par
value $.01 per share (the "Preferred Stock"). Under the Company's articles of
incorporation, the Company's Board of Directors is authorized, without further
stockholder action, to issue Preferred Stock in one or more series and to fix
the number of shares and the rights, preferences and limitations of each series.
Among the specific matters that may be determined by the Board of Directors are
the dividend rate, the redemption price, if any, conversion rights, if any, the
amount payable in the event of any voluntary liquidation or dissolution of the
Company and voting rights, if any.
No dividends or payments in liquidation may be made with respect to Common
Stock unless all accumulated dividends on the Preferred Stock of all series have
been paid in full and, in the event of liquidation, unless the liquidation
preference of all series of Preferred Stock has been satisfied. In case stated
dividends and amounts payable on liquidation on Preferred Stock of all series
are not payable in full, shares of all series of Preferred Stock are entitled to
share ratably in the payment of dividends and in any distribution of assets
otherwise than by way of dividends
Series A Preferred Stock
The Company has designated 350,000 shares of Preferred Stock as "10% Series
A Cumulative Convertible Preferred Stock" (herein called the "Series A
Preferred"). Of such shares, 100,000 were issued and sold to Refractive
Services-800 Inc. in February 1996 for $100,000 in cash. These 100,000 shares of
Series A Preferred Stock were acquired by Vista Technologies in July 1996 and
were converted to 100,000 Common Stock shares on August 1, 1996 (see "Principal
and Selling Stockholders").
51
<PAGE> 55
Series A Preferred are entitled to cumulative dividends at the rate of
$0.50 per share per annum, payable annually on each anniversary of the effective
date of this Prospectus. As of May 31, 1996, accrued and unpaid dividends on
Series A Preferred shares issued prior to this offering were $2,340, but these
dividends have been forfeited by Vista Technologies.
Series B Preferred Stock
The Company has designated 500,000 shares of Preferred Stock as "5% Series
B Cumulative Convertible Preferred Stock" (herein called the "Series B
Preferred"), all of which are issued and outstanding as of May 31, 1996, but all
of which was converted to 500,000 shares of Common Stock on August 1, 1996. The
Company does not presently anticipate issuing any additional Series B Preferred
Stock in the future.
CERTAIN CHARTER AND BYLAW PROVISIONS AND OTHER INDEMNIFICATION ARRANGEMENTS
Possible Additional Issuances of Common and/or Preferred Stock Without
Stockholder Action. The flexibility to issue additional shares of Common Stock
and/or shares of Preferred Stock in one or more series as permitted by the
Company's articles of incorporation (the "Charter") can enhance the Board of
Directors' bargaining capability on behalf of the Company's stockholders in a
takeover situation and could, under some circumstances, be used to render more
difficult or discourage a merger, tender offer or proxy contest, the assumption
of control by a holder of a large block of the Company's securities, or the
removal of incumbent management, even if such a transaction were favored by the
holders of the requisite number of shares. Under these circumstances, the
existence of a significant number of authorized and unissued Common shares
and/or one or more series of Preferred Stock may have the effect of limiting
stockholder participation in these types of transactions. The Company is not
aware of any present efforts to gain control of the Company or to organize a
proxy contest.
Number of Directors; Removal; Filling Vacancies. The By-Laws provide that
the Board will consist between three and not more than fifteen directors, with
the exact number to be fixed from time to time by resolution adopted by the
Board. The Board of Directors at the present time has fixed the number of
directors at five (see "Certain Transactions"). Subject to the rights, if any,
of the holders of any series of Preferred Stock then outstanding, the By-Laws
authorize the Board to fill vacant directorships, including newly created
directorships. Accordingly, these provisions could prevent a stockholder from
obtaining majority representation on the Board by permitting the Board to
enlarge the Board and fill the new directorships with its own nominees. Each
director so elected by the Board or by stockholders hold office until the next
election of directors and until his successor is elected and qualified.
Limitation of Liability and Indemnification. Under the Nevada General
Corporation Law, a corporation may adopt a provision in its articles of
incorporation eliminating, with certain exceptions, the personal liability of a
director to the corporation or its shareholders for monetary damages for breach
of the director's fiduciary duty as a director. The Company's Charter eliminates
the liability of directors to the fullest extent permissible under Nevada law.
Under Nevada law, however, the Company is not allowed to eliminate or limit
director monetary liability for: (a) breaches of the director's duty of loyalty
to the corporation or its stockholders; (b) acts or omissions not in good faith
or involving intentional misconduct or a knowing violation of law; (c) unlawful
dividends, stock repurchases or redemptions; or (d) transactions from which the
director received an improper personal benefit.
Under the Nevada General Corporation Law, a corporation may not indemnify
any director, officer, employee or agent made or threatened to be made party to
any threatened, pending, or completed proceeding unless such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal proceedings, had no reasonable cause to believe that his or her conduct
was unlawful.
52
<PAGE> 56
FEDERAL INCOME TAX CONSIDERATIONS
The following discussion sets forth certain federal income tax
consequences, under current law, relating to the purchase and ownership of the
Units, Common Stock and Warrants. The Company has not requested and does not
intend to request a ruling from the Internal Revenue Service or a tax opinion
from its counsel on any tax aspect of this offering. This tax discussion does
not purport to be a complete analysis or list of all potential federal income
tax consequences of the purchase, ownership and sale of the Units, Common Stock,
or Warrants. The discussion does not address the tax treatment for certain
unique taxpayers, such as insurance companies, tax exempt organizations,
financial institutions, and dealers in securities which may be subject to
special rules not discussed herein. This discussion presents no analysis of the
tax attributes of the Company either before or after the offering of the Units.
PROSPECTIVE PURCHASERS OF THE UNITS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND SALE OF
SUCH SECURITIES AND THE APPLICABILITY OF FEDERAL, STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS.
An investor must allocate the cost of the Units between its two elements:
(a) two (2) shares of Common Stock, and (b) one (1) Class C Warrant, each Class
C Warrant with the right to purchase one share of Common Stock, in accordance
with their relative fair market values at the time of issuance. The portion of
the cost of the Units allocated to each element will constitute the investor's
initial federal income tax basis for that element.
No gain or loss will be recognized by a holder of a Warrant in the holder's
purchase of Common Stock for cash upon exercise of the Warrant. The adjusted tax
basis of the Common Stock so acquired will be equal to the tax basis of the
Warrant plus the exercise price. The holding period of the Common Stock acquired
upon the exercise of the Warrant will begin on the date the Warrant is exercised
and the Common Stock is purchased.
The sale of a share of Common Stock or the sale of a Warrant will result in
the recognition of gain or loss to the holder in an amount equal to the
difference between the amount realized (generally the cash and the fair market
value of any other property received) and the holder's adjusted tax basis for
the property sold. The sale of Common Stock will result in capital gain or loss,
provided the Common Stock is a capital asset in the hands of the holder. The
sale of a Warrant (other than a sale to the Company) will also result in capital
gain or loss, provided the Warrant is a capital asset in the hands of the holder
and the Common Stock underlying the Warrant would be a capital asset to the
holder if acquired by the holder. Such capital gain or loss will be long-term
capital gain or loss if the Common Stock or Warrant being sold or exchanged has
been held for more than one year at the time of such sale or exchange.
If the repurchase of a Warrant by the Company is treated as a sale or
exchange of a capital asset, any gain or loss recognized on the transaction will
be a capital gain or loss and will be long-term capital gain or loss if the
holding period of the Warrant exceeds one year at the time of repurchase.
However, it is unclear whether the repurchase of a Warrant by the Company will
be treated as the sale or exchange of a capital asset, and if such repurchase is
not treated as the sale or exchange of a capital asset, the holder of a Warrant
could potentially recognize ordinary income on such repurchase because of a
constructive distribution recharacterization.
Long-term capital gains of individuals, trusts and estates are currently
taxed at a maximum rate of 28%, while ordinary income is currently taxed at a
maximum rate of 39.6%. A provision in the Omnibus Budget Reconciliation Act of
1993 in certain circumstances allows certain noncorporate taxpayers to exclude
from income one-half of the gain (up to certain limits) from the sale or
exchange of "qualified small business stock" held for more than five years. In
addition, 25% of such gain (up to certain limits) is excluded for alternative
minimum tax purposes. In order for stock to be "qualified small business stock,"
the issuer of the stock must meet certain requirements, some of which apply to
the period after the stock is issued. Consequently, it is unclear whether the
Common Stock or Common Stock acquired upon exercise of a Warrant will qualify as
"qualified small business stock."
53
<PAGE> 57
Under Section 305 of the Internal Revenue Code of 1986, as amended (the
"Code"), certain actual or constructive distributions of stock (including
warrants to purchase stock) with respect to such stock (or warrants) may be
taxable to the stockholders (or warrantholders) of the Company. Adjustments in
the exercise price of the Warrants, or the number of shares purchasable upon
exercise of the Warrants, in each case made pursuant to the anti-dilution
provisions of the Warrants, among other things, may result in a distribution
which is taxable as a dividend to the holders of Warrants. Distributions may be
taxed as ordinary dividend income, return of capital, or gain from the sale or
exchange of stock, depending on the earnings and profits of the Company and the
tax basis of each of its stockholders or Warrant holders.
A Warrant that expires unexercised will be deemed to have been sold or
exchanged for no consideration on the expiration date. Any loss to the holder of
an expired Warrant will be a capital loss if the Warrant was held as a capital
asset and if the Common Stock underlying the Warrant would have been a capital
asset had such Warrant been exercised. Any capital loss will be long-term if the
holding period of the Warrant exceeds one year when it expires. The use of
capital losses to offset ordinary income is strictly limited for noncorporate
stockholders and prohibited for corporate stockholders.
SHARES ELIGIBLE FOR FUTURE SALE
Upon the completion of this offering, the Company will have outstanding
2,087,500 shares of Common Stock, 237,500 shares of Common Stock to be issued
upon conversion of the outstanding Notes, 95,000 Class A Warrants (exercisable
at $4.00 per share into 95,000 shares of Common Stock) and 450,000 Class B
Warrants (exercisable at $1.00 per share into 450,000 shares of Common Stock).
Of these shares, the 1,200,000 Common Shares offered hereby (1,380,000 shares if
the Underwriter's over-allotment option is exercised in full) will be freely
tradeable without restriction or further registration under the Securities Act
of 1933 (the "Securities Act"), except for any shares purchased by an
"affiliate" of the Company (in general, a person who has a control relationship
with the Company) which would be subject to the resale limitations of Rule 144
under the Securities Act other than holding period limitations. 237,500 shares
of Common Stock issuable upon conversion of the Company's outstanding Notes will
be registered.
650,000 shares of Common Stock, and up to 545,000 shares of Common Stock
issuable upon exercise of Class A and B Warrants and the 125,000 shares issuable
upon the exercise of outstanding stock options are deemed to be "restricted
securities" as that term is defined under Rule 144 promulgated under the
Securities Act, in that such shares were issued and sold by the Company in
private transactions not involving a public offering. Under Rule 144 as
currently in effect, none of such shares will become eligible for sale prior to
February 5, 1998, unless registered for sale. As discussed below, there are
certain amendments that may be proposed to Rule 144 which, if adopted, may
enable a portion of such shares to become eligible for sale before January 30,
1997.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or other persons whose shares are required to be aggregated), who
has owned restricted shares of the Company's Common Stock beneficially for at
least two years is entitled to sell, within any three-month period, a number of
shares of Common Stock that does not exceed the greater of 1% of the total
number of outstanding shares of the same class or, if the shares are quoted on
the NASDAQ system, the average weekly trading volume during the four calendar
weeks preceding the sale. A person who has not been an affiliate of the Company
for at least the three months immediately preceding the sale and who has
beneficially owned shares for at least three years is entitled to sell such
shares under Rule 144 without regard to any of the limitations described above.
The Securities and Exchange Commission has recently proposed for comment the
possibility of amendments to Rule 144 that would reduce the two and three year
periods referenced above to one and two years, respectively.
Sales under Rule 144 are also subject to certain manner of sale provisions,
notice requirements and the availability of current public information about the
Company. A person who has not been an affiliate of the Company at any time
during the three months preceding a sale, and who has beneficially owned his
Common Stock for at least three years, would be entitled to sell such Common
Stock under Rule 144(k) without regard to the other requirements of Rule 144.
54
<PAGE> 58
All of the Company's officers, directors and existing stockholders have
agreed not to sell or otherwise dispose of any of their shares of Common Stock
for a period of 12 months from the date of this Prospectus without the prior
written consent of the Underwriter.
Prior to this offering, there has been no market for the Common Stock. No
predictions can be made of the effect, if any, that sales of Common Stock under
Rule 144, or the availability of such shares for sale, will have on the market
price for the securities of the Company prevailing from time to time.
Nevertheless, the possibility that substantial amounts of Common Stock may be
sold in the public market may adversely affect prevailing market prices for the
Company's securities and could impair the Company's ability to raise additional
capital through the sale of its equity securities.
55
<PAGE> 59
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, through their Representative, Dickinson & Co. (the
"Representative") have severally agreed to purchase from the Company the
following respective number of Units at the initial public offering price, less
the underwriting discounts and commissions, set forth on the cover page of this
Prospectus.
<TABLE>
<CAPTION>
NUMBER OF UNITS
UNDERWRITER TO BE PURCHASED
--------------------------------------------------------------- ---------------
<S> <C>
Dickinson & Co.................................................
-------
Total................................................ 600,000
=======
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all Common Shares offered hereby.
The Company has been advised by the Representative that the Underwriters
propose to offer the Units directly to the public at the public offering price
set forth on the cover page of this Prospectus. The Underwriters may allow to
certain securities dealers who are members of the National Association of
Securities Dealers, Inc. ("NASD") a concession, not in excess of $ per
Unit of Common Stock, of which not in excess of $ per Unit may be
reallowed to other securities dealers who are members of the NASD. After the
initial public offering, the public offering price, concession and reallowance
may be changed by the Representative.
The Company has granted to the Underwriters an option, exercisable within
45 days from the date of this Prospectus, to purchase from the Company up to
90,000 additional Units at the public offering price set forth on the cover page
of this Prospectus, less the underwriting discounts and commissions. The
Underwriters may exercise this option in whole or, from time to time, in part,
solely for the purpose of covering over-allotments, if any, made in connection
with the sale of the Units offered hereby. The Company will be obligated,
pursuant to the over-allotment option, to sell shares to the Underwriters to the
extent such over-allotment option is exercised.
The Company has agreed to pay the Underwriters a nonaccountable expense
allowance of 3% of the gross proceeds of this offering. The Company has also
agreed to pay all expenses in connection with qualifying the Units offered
hereby for sale under the laws of such states as the Underwriters may designate,
including expenses of counsel retained for such purpose by the Underwriter.
The Company has agreed to sell to the Underwriter, for an aggregate of
$60.00, warrants (the "Underwriter's Warrants") to purchase up to 60,000 Units
at an exercise price of $12.12 per Unit. The Underwriters' Warrants may not be
sold, transferred, assigned or hypothecated during the first year following
issuance of the Underwriters' Warrants except to the officers of the
Representative and to members of the selling group and their officers, and will
be exercisable for a four-year period commencing one year after the date of this
Prospectus (the "Warrant Exercise Term"). During the Warrant Exercise Term, the
holders of the Underwriters' Warrants are given, at nominal cost, the
opportunity to profit from a rise in the market price of the Company's Common
Stock. To the extent that the Underwriters' Warrants are exercised, dilution to
the interests of the Company's stockholders may occur. Further, the terms upon
which the Company will be able to obtain additional equity capital while the
Underwriters' Warrants are outstanding may be adversely affected since the
holders of the Underwriters' Warrants can be expected to exercise them at a time
when the Company would, in all likelihood, be able to obtain any needed capital
on terms more favorable to the Company than those provided in the Underwriters'
Warrants. Any profit realized by the Representative on the
56
<PAGE> 60
sale of the Underwriters' Warrants or the underlying securities may be deemed
additional underwriting compensation. Subject to certain limitations and
exclusions, the Company has agreed to register the Underwriters' Warrants and
the underlying securities under the Securities Act on one occasion during the
Warrant Exercise Term and to include such Underwriters' Warrants and the
underlying securities in any appropriate registration statement that is filed by
the Company during the seven years following the date of this Prospectus.
The Company has agreed, for a period of five years from the date of this
Prospectus, if so requested by the Representative, to nominate and use its best
efforts to appoint a designee of the Representative as a non-voting advisor to
the Company's Board of Directors. Each person so designated may be a director,
officer, partner, employee or affiliate of the Representative. Such person will
receive reimbursement of actual expenses and no other compensation.
The Representative does not intend to participate in sales of Common Stock
which may be offered by the Selling Stockholders under the registration
statement of which this Prospectus is a part.
The Underwriting Agreement requires other commitments on the part of the
Company during the five years following the date of the Prospectus, including
(i) providing the Representative on an annual basis with internal forecasts of
projected results of operations for the following two years, (ii) providing the
Representative with quarterly statements setting forth the Company's results of
operations and financial position as regularly prepared by management, (iii) a
requirement that the Company will cause its independent public accountants to
review the Company's interim financial statements for each of the first three
fiscal quarters in each fiscal year prior to announcement of quarterly financial
information, (iv) a requirement that KPMG Peat Marwick LLP or another nationally
recognized accounting firm reasonably acceptable to the Representative be
retained as the Company's independent public accountants, and (v) a requirement
that American Stock Transfer & Trust Company will be retained as the transfer
agent for the Common Stock unless otherwise agreed to by the Representative.
The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act, and to contribute
to payments that the Underwriters may be required to make in respect thereof.
The Underwriters have agreed they will not confirm sales of the shares
offered hereby to any account over which the Underwriters exercise discretionary
authority.
Prior to this offering, there has been no public trading market for the
Company's securities. Consequently, the initial public offering price of the
Units has been determined by negotiations between the Company and the
Underwriters. Among the factors considered in determining the offering price and
conversion prices were the Company's limited history of operations, financial
condition and prospects, market prices of similar securities of comparable
publicly-traded companies, certain financial and operating information of
companies engaged in activities similar to those of the Company and the general
condition of the securities market.
PLAN OF DISTRIBUTION OF SELLING STOCKHOLDERS
The 237,500 shares of Common Stock to be issued upon conversion of the
outstanding Notes may be offered by the Selling Stockholders from time to time
directly by the Selling Stockholders or their transferrees. Alternatively, the
Selling Stockholders may from time to time offer such securities through
underwriters, dealers or agents. The distribution of securities by the Selling
Stockholders may be effected in one or more transactions that may take place on
the over-the-counter market or on any exchange on which such securities may be
listed, including ordinary broker's transactions, privately-negotiated
transactions or through sales to one or more broker-dealers for resale of such
shares as principals, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
57
<PAGE> 61
Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the Selling Stockholders in connection with such
sales of securities; however, such fees or commissions shall not exceed 10% of
the sales price. The Selling Stockholders and intermediaries through whom such
securities are sold may be deemed "underwriters" within the meaning of the
Securities Act with respect to the securities offered, and any profits realized
or commissions received may be deemed underwriting compensation.
The Company has agreed to indemnify the Selling Stockholders against
certain civil liabilities, including liabilities under the Securities Act, and
to contribute to payments that the Selling Stockholders may be required to make
in respect thereof.
DIVIDEND POLICY
No cash dividends have been declared or paid by the Company to date. The
Company intends to employ all available funds for development of its business
and accordingly, does not intend to pay cash dividends on its Common Stock in
the foreseeable future. The Board of Directors of the Company will review its
Common Stock dividend policy from time to time to determine the desirability and
feasibility of paying dividends after giving consideration to the Company's
earnings, financial condition, capital requirements, dividend obligations on
Preferred Stock, if any, and such other factors as the Board of Directors deems
relevant.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by the law firm of Michael K. Hair, P.C., Scottsdale, Arizona. Certain
legal matters will be passed upon for the Underwriter by Titus, Brueckner &
Berry, P.C., Scottsdale, Arizona.
EXPERTS
The financial statements of Vista Laser Centers Of The Pacific, Inc. (a
development stage enterprise) as of May 31, 1996 and for the period from January
30, 1996 (date of inception) through May 31, 1996 have been included in this
Prospectus and Registration Statement in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.
58
<PAGE> 62
VISTA LASER CENTERS OF THE PACIFIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
FINANCIAL STATEMENTS
PERIOD JANUARY 30, 1996 (DATE OF INCEPTION)
TO MAY 31, 1996
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
Independent Auditors' Report........................................................ F-1
Financial Statements:
Balance Sheet -- May 31, 1996..................................................... F-2
Statement of Operations -- Period January 30, 1996 (Date of Inception) to May 31,
1996........................................................................... F-3
Statement of Changes in Stockholders' Equity Period January 30, 1996 (Date of
Inception) to May 31, 1996..................................................... F-4
Statement of Cash Flows -- Period January 30, 1996 (Date of Inception) to May 31,
1996........................................................................... F-5
Notes to Financial Statements..................................................... F-6
</TABLE>
<PAGE> 63
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Vista Laser Centers of The Pacific, Inc.:
We have audited the accompanying balance sheet of Vista Laser Centers of
The Pacific, Inc. (a development stage enterprise) as of May 31, 1996, and the
related statements of operations, changes in stockholders' equity and cash flows
for the period January 30, 1996 (date of inception) to May 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Vista Laser Centers of The
Pacific, Inc. (a development stage enterprise) as of May 31, 1996, and the
results of its operations and its cash flows for the period from January 30,
1996 (date of inception) to May 31, 1996 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in note 1 to the
financial statements, the Company is currently a development stage enterprise
and dependent on raising additional financing through a public offering or
private placement to meet its obligations and commitments. This dependency
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
KPMG Peat Marwick LLP
Short Hills, New Jersey
August 1, 1996
F-1
<PAGE> 64
VISTA LASER CENTERS OF THE PACIFIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
MAY 31, 1996
<TABLE>
<S> <C>
ASSETS
Current assets -- cash........................................................... $ 946,587
----------
Investment in Vista Technologies (note 3)........................................ 487,855
Property and equipment (note 4).................................................. 1,212,956
Deferred costs................................................................... 85,000
Other assets..................................................................... 54,500
----------
Total assets........................................................... $2,786,898
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable (note 8)...................................................... 577,500
Accrued liabilities............................................................ 164,694
Convertible notes payable (note 5)............................................. 928,150
Short-term capital lease obligation (note 6)................................... 54,561
----------
Total current liabilities.............................................. 1,724,905
----------
Capital lease obligation, less current portion (note 6).......................... 470,439
----------
Total liabilities...................................................... 2,195,344
----------
Stockholders' equity:
Preferred stock, $.01 par value. Authorized 5,000,000 shares:
10% Series A cumulative convertible -- designated 1,600,000 shares; issued
and outstanding 100,000 shares ($500,000 liquidation value) (note 7)....... 1,000
5% Series B cumulative convertible -- designated, issued and outstanding
500,000 shares ($1,000,000 liquidation value) (notes 3 and 7).............. 5,000
Common stock, $.01 par value. Authorized 20,000,000 shares; issued and
outstanding 50,000 shares (note 7).......................................... 500
Additional paid-in capital..................................................... 676,355
Stock subscription receivable (note 7)......................................... (15,200)
Warrants (note 5).............................................................. 21,850
Deficit accumulated during the development stage............................... (97,951)
----------
Total stockholders' equity............................................. 591,554
Commitments and contingencies (notes 6, 8 and 11)................................
----------
Total liabilities and stockholders' equity............................. $2,786,898
==========
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE> 65
VISTA LASER CENTERS OF THE PACIFIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
PERIOD JANUARY 30, 1996 (DATE OF INCEPTION) TO MAY 31, 1996
<TABLE>
<S> <C>
Interest income................................................................... $ 823
Operating expenses -- general and administrative.................................. 75,137
--------
Loss from operations.................................................... (74,314)
Interest expense on convertible notes payable..................................... 12,875
Provision for income taxes........................................................ --
--------
Net loss before dividends in arrears.................................... (87,189)
--------
Dividends in arrears:
Series A preferred stock (note 7 and 8)......................................... (2,340)
Series B preferred stock (note 7 and 8)......................................... (8,422)
--------
(10,762)
--------
Net loss................................................................ $(97,951)
--------
Net loss per share...................................................... $ (.14)
========
Weighted average shares used in computing net loss per share (note 2)............. 717,482
========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 66
VISTA LASER CENTERS OF THE PACIFIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD JANUARY 30, 1996 (DATE OF INCEPTION) TO MAY 31, 1996
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
PREFERRED STOCK COMMON STOCK ADDITIONAL STOCK DURING THE
---------------- --------------- PAID-IN SUBSCRIPTION DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE WARRANTS STAGE TOTAL
------- ------ ------ ------ ---------- ------------ -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 30, 1996... -- $ -- -- $ -- -- -- -- -- --
Issue of 10% Series A
cumulative convertible
preferred stock............. 100,000 1,000 -- -- 99,000 -- -- -- 100,000
Issue of 5% Series B
cumulative convertible
preferred stock in exchange
for Vista common stock (note
7).......................... 500,000 5,000 -- 482,855 -- -- -- 487,855
Issue of common stock (note
7).......................... -- -- 50,000 500 94,500 (15,200) -- -- 79,800
Issue of warrants............. -- -- -- -- -- -- 21,850 -- 21,850
Net loss...................... -- -- -- -- -- -- -- (97,951) (97,951)
------- ------ ------ ---- ------- ------- ------ ------- -------
Balance at May 31, 1996....... 600,000 $6,000 50,000 $500 676,355 (15,200) 21,850 (97,951) 591,554
======= ====== ====== ==== ======= ======= ====== ======= =======
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 67
VISTA LASER CENTERS OF THE PACIFIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
PERIOD JANUARY 30, 1996 (DATE OF INCEPTION) TO MAY 31, 1996
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss...................................................................... $ (97,951)
Adjustments to reconcile net loss to net cash provided by operating
activities -- increase (decrease) in cash due to changes in:
Accounts payable........................................................... 217,194
Deferred offering costs.................................................... (85,000)
Other assets............................................................... (2,000)
-----------
Net cash provided by operating activities............................. 32,243
-----------
Cash flows from investing activities -- property and equipment.................. (215,456)
-----------
Cash flows from financing activities:
Proceeds from issuance of Series A preferred stock............................ 100,000
Proceeds from issuance of common stock and stock subscriptions................ 79,800
Proceeds from convertible debt................................................ 950,000
-----------
Net cash provided by financing activities............................. 1,129,800
-----------
Net increase in cash.................................................. 946,587
Cash at beginning of period..................................................... --
-----------
Cash at end of period........................................................... $ 946,587
===========
</TABLE>
Supplemental disclosures of noncash financing and investing information -- on
April 23, 1996, the Company issued 500,000 shares of its 5% Series B preferred
stock to Vista Technologies, Inc. (Vista) in exchange for 500,000 shares of
common stock in Vista.
On May 30, 1996 the Company acquired laser equipment and assumed a related
capital lease obligation in the amount of $525,000.
On May 1, 1996, the Company entered into an agreement to acquire a laser and
certain medical equipment and has assumed the related liability for the laser to
the laser's manufacturer in the amount of $525,000.
See accompanying notes to financial statements.
F-5
<PAGE> 68
VISTA LASER CENTERS OF THE PACIFIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Description of Business
Vista Laser Centers of The Pacific, Inc. (the Company) is a development
stage enterprise organized on January 30, 1996 to establish, manage and
administer laser vision correction (LVC) support services (LVC Services) and
related LVC equipment. The Company's fiscal year end is March 31, 1996. The
Company is considering a proposed initial public offering of its 10% cumulative
convertible preferred stock (proposed offering) (see note 13).
The planned centers will employ advanced laser technology, which has been
commercially available for several years for use in foreign countries, including
Canada. In late 1995, the U.S. Food and Drug Administration granted approval to
Summit Technology Inc. (Summit) for commercial use in the United States of
Summit's excimer laser systems for photorefractive keratectomy (PRK) treatment
of myopia (nearsightedness) and in March 1996 to VISX Incorporated (VISX) for
similar PRK equipment.
The Company has entered into three purchase agreements to acquire laser
equipment, acquire certain other assets, and sublease office space for its
initial sites. The Company's initial sites will be located in San Leandro,
Sacramento, and San Jose, California. Of these three sites, only the San Leandro
site has existing operations (see notes 8 and 15). Additionally, the Company has
entered into a lease agreement in Petaluma, California for its fourth site.
The Company's activities to date have consisted primarily of market
research, seeking affiliations with experienced LVC eye care professionals,
negotiating to acquire equipment necessary to establish LVC Services sites, and
negotiating agreements to provide management services to eye care professionals.
(b) Income Taxes
Effective January 30, 1996, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
109). Under the asset and liability method of SFAS 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under SFAS 109,
the effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
(c) Revenue Recognition
The Company plans to enter into a support services agreement with
independent ophthalmologists and optometrists (MDs). Support services offered by
the Company are expected to include use of medical equipment, accounting and
other administrative services. The Company is also expected to provide billing
and collection services on behalf of MDs. In each instance there will be a
licensed MD who will perform actual LVC procedures as part of an individual
practice and in whose name patients will be billed. It is anticipated that the
Company will earn revenue by charging a flat fee of $750 (of which $250
represents a per usage fee due to the manufacturer (see note 11)) to the MD per
procedure for LVC services. In addition to the LVC service fee, the Company may
also charge a patient marketing and administration fee to the MD of between $420
and $510 per referred procedure.
F-6
<PAGE> 69
VISTA LASER CENTERS OF THE PACIFIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c) Revenue Recognition (Continued)
The Company will recognize revenue under the support service agreement when
it has substantially completed its related obligations.
(d) Marketable Equity Securities
Effective January 30, 1996, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" (SFAS 115). Under SFAS 115, the Company's marketable equity
securities will be classified as available-for-sale securities and will be
carried at fair market value. Unrealized gains and losses will be reflected as a
separate component of stockholders' equity, net of income taxes. As discussed in
note 3, the Company's investment in Vista Technologies was accounted for at
original cost.
(e) Financial Instruments
Effective January 30, 1996, the Company adopted Statement of Financial
Accounting Standards No. 107, "Disclosures about Fair Value of Financial
Instruments" (SFAS 107). SFAS 107 defines fair value of a financial instrument
as the amount at which the instrument could be exchanged in a current
transaction between willing parties.
Fair value of financial instruments approximates their carrying value in
the financial statements, except for investments for which fair value
information is provided (see note 3).
(f) Liquidity and Going Concern
The Company is a development stage enterprise and, accordingly, has not
earned revenue to date. As discussed in note 8, the Company has entered into
lease commitments. As discussed in note 11, the Company's Board of Directors
authorized the filing of a registration statement with the Securities and
Exchange Commission for the sale of common stock. Management believes that the
proceeds received from such offering will be sufficient to allow the Company to
operate and meet its current obligations and commitments, although there are no
assurances that this offering will take place. The financial statements do not
include any adjustments relating to the recoverability and classification of
reported net asset amounts or the amounts of liabilities that might result from
the outcome of the uncertainty.
(g) Fixed Assets
Fixed assets are recorded at acquisition cost. The Company provides
depreciation and amortization using the straight-line method over their
estimated useful lives. Leasehold improvements are amortized over the shorter of
the useful lives of the assets or the lease term.
(h) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
F-7
<PAGE> 70
VISTA LASER CENTERS OF THE PACIFIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) Use of Estimates (Continued)
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of expenses during the
reporting period. Actual results could differ from those estimates.
(2) NET LOSS PER SHARE
Net loss per common and common equivalent share is computed based upon the
weighted average number of shares of common stock outstanding during the period.
Also, pursuant to the requirements of the Securities and Exchange Commission,
all stock, warrants and options issued within the 12 months immediately
preceding the initial filing of the registration statement for the Company's
proposed offering at a price below the anticipated offering price, totaling
337,500 shares of Series A preferred stock (assumes conversion of debt), 500,000
shares of Series B preferred stock, 50,000 shares of common stock, 545,000
common stock purchase warrants and 125,000 options to purchase common stock,
have been included in the calculation of primary loss per share for all periods
presented utilizing the treasury stock method. The net loss per share
calculation assumes the conversion of all Series A cumulative convertible
preferred stock and Series B cumulative convertible preferred stock into 837,500
shares of common stock.
(3) INVESTMENT IN VISTA TECHNOLOGY
Investment securities at May 31, 1996 consist of equity securities in Vista
Technologies Inc. (Vista), an operator of five outpatient PRK surgical clinics
in Europe and a founder of the Company (see note 7). Such equity securities were
issued by Vista in a Regulation D transaction. Rules under the Securities Act of
1993 (the 1933 Act) impose limitations on resale of securities acquired in
Regulation D transactions. Securities issued in a Regulation D transaction are
also considered to be restricted securities as defined by the 1933 Act.
Management has determined that Vista has not filed a registration statement
registering these securities under the 1933 Act and, accordingly, has classified
the securities as restricted and recorded them at cost as determined by an
independent third party valuation. At May 31, 1996, the Vista common stock was
trading at an amount which exceeded the carrying value of these shares. The
Company will periodically review the related market value to determine whether
the carrying value represented by historical cost has become impaired.
(4) PROPERTY AND EQUIPMENT
At May 31, 1996, property and equipment consists of the following:
<TABLE>
<S> <C>
Equipment........................................................ $ 637,843
Equipment under capital lease arrangements....................... 525,000
Leasehold improvements........................................... 37,230
Furniture and fixtures........................................... 12,883
----------
Total property and equipment........................... $1,212,956
==========
</TABLE>
(5) CONVERTIBLE NOTES PAYABLE
In May of 1996, the Company completed a private placement sale in an
aggregate amount of $950,000 in principal 12% secured convertible promissory
notes (the Notes) with attached Class A common stock purchase warrants (Class A
Warrants). The Notes and Class A Warrants were offered in units at $25,000 per
F-8
<PAGE> 71
VISTA LASER CENTERS OF THE PACIFIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(5) CONVERTIBLE NOTES PAYABLE (CONTINUED)
unit, with each unit consisting of $25,000 in principal amount of Notes plus
2,500 Class A Warrants. The Notes are convertible into 237,500 shares of the
Company's 10% Series A convertible preferred stock (Series A) (a four-to-one
exchange ratio) upon completion of the proposed offering. In the event the
proposed offering has not been completed on December 31, 1996, the holder of
each Note will have the option of either (a) converting each $25,000 in unpaid
principal of the Notes into 10,000 shares of restricted Vista common stock or
(b) converting each $25,000 in unpaid principal amount of the Notes into 12,500
shares of the Company's Series A. The Class A Warrants, based upon an
independent third party valuation, have been determined to have a fair value of
$21,850 and are exercisable into 237,500 common shares. The accompanying balance
sheet reflects a discount to the fair value of the 12% convertible promissory
notes equal to the fair value of the Class A Warrants with a corresponding
credit recorded in stockholders' equity. This discount will be amortized into
interest expense using the effective interest method over the life of the
outstanding warrant. At May 31, 1996, the Company has accrued interest expense
of $12,875 relating to the Notes.
(6) CAPITAL LEASE OBLIGATIONS
The Company entered into a capital lease obligation for the purchase of
laser equipment. Future minimum lease payments under capital lease arrangements
as of May 31, 1996 are as follows:
<TABLE>
<S> <C>
Period ending May 31:
1997............................................................ $115,000
1998............................................................ 153,500
1999............................................................ 153,500
2000............................................................ 153,500
2001............................................................ 153,500
Thereafter...................................................... 39,000
--------
Total minimum lease payment............................. 768,000
Less amount representing interest (16%)........................... 243,000
--------
Present value of minimum lease payments................. 525,000
Less current installments of obligations under capital lease...... 54,561
--------
Obligations under capital leases excluding current
installments.......................................... $470,439
========
</TABLE>
(7) STOCKHOLDERS' EQUITY
On April 23, 1996, the Company issued 500,000 shares of its 5% Series B
cumulative convertible preferred stock (Series B) to Vista, a founder of the
Company, in exchange for 500,000 shares of Vista common stock. The holder of
Series B is entitled to cumulative dividends at a rate of $.125 per share per
annum. The dividend is payable in cash, additional shares of Series B and/or
shares of common stock at the discretion of the Company's Board of Directors.
The Series B may be converted into common stock at a ratio of one-to-one by the
Series B holder anytime prior to the designated date for redemption. The Series
B may be redeemed by the Company, in part or in whole anytime after the first
anniversary of the date of the proposed offering, at a price of $5.00 per share,
as long as there remain no issued and outstanding Series A shares. The
liquidation preference of Series B is $2.50 per share. The Series B had a cost
value of $487,855 on May 31, 1996. The Company and Vista are restricted from
selling in the public market the stock each owns in the other for at least a
two-year period (see note 3).
F-9
<PAGE> 72
VISTA LASER CENTERS OF THE PACIFIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(7) STOCKHOLDERS' EQUITY (CONTINUED)
On April 23, 1996, the Company and Vista executed irrevocable proxies to
each other for a term of five years. These proxy agreements grant to the Board
of Directors of each company the right to vote that company's securities owned
by the other company on any matter on which the first company's shareholders
have a right to vote. Therefore, until April 23, 2001, the Company's Board of
Directors shall have the right to vote the 500,000 Series B preferred shares
owned by Vista in any shareholder vote of the Company; likewise, the Board of
Directors of Vista shall have the right to vote the 500,000 shares of Vista
common stock.
In May 1996, the Company issued and sold 50,000 shares of its common stock,
with 450,000 attached Class B common stock purchase warrants (Class B Warrants)
to four surgeons who will be performing medical procedures and to four directors
and officers of the Company. The total proceeds to be received by the Company
for the sale of common stock and Class B Warrants is $95,000. The Class B
Warrants are exchangeable into 450,000 shares of common stock (a one-to-one
exchange ratio) and are exercisable through the fourth anniversary of the
proposed offering. In June 1996, the Company received $15,200 in payment of the
subscription price for common stock and Class B Warrants.
On May 23, 1996, Refractive Services 800, Inc. (RS 800) paid the Company
$100,000 for the purchase of 100,000 shares of Series A, or a price equal to
$1.00 per share. The holder of the Series A is entitled to cumulative dividends
at the rate of $.50 per share per annum, although RS 800 has agreed to limit its
dividend to $.10 per share per annum until such time as its shares are resold to
an unaffiliated company. The Series A are convertible into common stock at a
ratio of one-to-one at the discretion of the holder prior to redemption of such
shares. The Company may redeem the Series A, in part or in whole, from time to
time at a price of $7.50 per share. The conversion feature of the Company's
Series A preferred shares requires that the Series A preferred stockholder
forfeit his rights to any and all unpaid dividends accrued through the date of
conversion. However, if the Company were to redeem outstanding Series A
preferred shares, all accumulated dividends must be paid through the date of
redemption; all accumulated dividends must be paid on the Company's Series B
shares before Series A shares can be redeemed. The liquidation preference of the
Series A is $5.00 per share. These Series A shares were subsequently purchased
by Vista in July 1996. Vista has agreed to limit its dividends to $.10 per share
per annum until such time as its shares are resold to an unaffiliated company.
(8) RELATED-PARTY TRANSACTIONS
Vista and the Company entered into a consulting services agreement (the
Vista Agreement) dated as of April 23, 1996. Under this agreement, Vista will
render advice and assistance to the Company in the areas of marketing, financial
planning, compliance with applicable regulations in relation to the operation of
surgical centers and relationships with health care professionals, and
compliance in periodic filings with the Securities and Exchange Commission.
Under the terms of this agreement, Vista is entitled to receive monthly
consulting fees equal to 5% of the Company's gross revenues. The term of the
Vista Agreement is for ten years from the effective date of the proposed
offering and is automatically renewed thereafter for successive five-year terms
unless either party provides six months' prior notice of an intent not to extend
the term.
On May 1, 1996, the Company executed a consulting agreement (Consulting
Agreement) with Dr. Griffin's affiliate. Under that agreement, Dr. Griffin will
act as a professional consultant to the Company concerning the establishment of
ethical standards and procedures for LVC Services; will periodically conduct
training and education seminars; and will agree to serve as an Executive
Committee member of the Company's Medical Advisory Board. Dr. Griffin's
affiliate is entitled to receive $30,000 upon the execution of this agreement.
In connection with the professional services, Dr. Griffin's affiliate will
receive cash compensation in the amount of $120,000 per year, plus a year-end
bonus of up to 50% of the base compensation (up to a maximum of $60,000). The
year-end bonus will be based upon achieving specific goals
F-10
<PAGE> 73
VISTA LASER CENTERS OF THE PACIFIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(8) RELATED-PARTY TRANSACTIONS (CONTINUED)
established by the Company's Board of Directors. The Company granted Dr. Griffin
an option to purchase 50,000 shares of common stock at $2.75 a share. The option
was fully vested at the date of grant and is exercisable through April 30, 2001.
Dr. Griffin's stock option agreement prohibits him from exercising options for
more than 36,000 shares in any single calendar year. The Consulting Agreement
with Dr. Griffin's affiliate is from May 1, 1996 through two years from the
effective date of the proposed offering and will be renewed thereafter on a
year-to-year basis unless either party has provided the other with at least
three months' notice not to renew the agreement.
On May 1, 1996, the Company executed an employment agreement (the
Employment Agreement) with David Bates III, the Company's President. Pursuant to
the Employment Agreement, Mr. Bates will receive an annual salary of $110,000,
payable monthly, and an annual bonus of up to $55,000 if 100% of certain
performance goals for the Company are achieved. These performance goals will be
determined by the Company's Board of Directors. The Employment Agreement
terminates on May 1, 1998. The Company granted Mr. Bates an option to purchase
50,000 shares of common stock at $2.75 per share. The option was fully vested at
the date of grant and is exercisable through April 30, 2001. Mr. Bates' option
agreement prohibits him from exercising options for more than 36,000 shares in a
single calendar year.
On May 9, 1996, the Company entered into an agreement to acquire an excimer
laser and certain medical examination equipment for a total purchase price of
$607,105 from Laser Vision Consultants, LLC (Laser Vision Consultants), a
California limited liability company of which Dr. Mark R. Mandel, a Company
Director, is a member and manager. The $607,105 will be paid out of the proceeds
of the proposed offering. Until such time as the proposed offering is completed,
the Company is renting the excimer laser for approximately $11,000 per month.
The excimer laser is a Summit laser purchased by Laser Vision Consultants in
December 1995 for which the Company will be paying $482,105, which is deemed to
be the fair market value of the laser on May 9, 1996. The Company will be paying
Laser Vision Consultants $25,000 for medical examination equipment in the Laser
Vision Consultants office in San Leandro, California. Laser Vision Consultants
has been operating an LVC center in San Leandro since January 1996 (see note
15). Additionally, on June 1, 1996 the Company entered into a sublease agreement
for monthly rental payments of $650 plus reimbursement of other tenant costs.
On May 9, 1996, the Company entered into an agreement to acquire an excimer
laser, certain tenant improvements, furniture and other assets from Griffin and
Reed Eye Care, Inc. (G&R). G&R is a professional medical corporation of which
the Company's Chairman and Director, J. Robert Griffin, is a principal
shareholder, officer and director. The laser is a VISX Star excimer laser that
G&R ordered from the manufacturer in March 1996 but did not put into service.
The Company has assumed the liability related to the VISX laser purchase. This
liability in the amount of $505,000 is due to the manufacturer in September 1996
and has been classified as accounts payable in the accompanying balance sheet.
Additionally, the Company agreed to pay G&R for G&R's initial down payment
toward the laser and certain other equipment and property totaling $107,500.
$55,000 of such amount was paid during May and the remaining $52,500 is included
in accounts payable in the accompanying balance sheet.
On May 30, 1996, the Company entered into an agreement to acquire an
excimer laser, certain legal documents and rights to modify an infomercial from
Eye Laser Associates, LLC (ELA) and RK and Laser Eye Institute of California
(RKLE), a professional corporation of which Dr. Kawesch, a Director of the
Company, is a principal shareholder, officer and director. ELA had executed a
lease on the laser with Hillside Financial Group (Hillside). The Company has
assumed the related capital lease obligation with Hillside. Additionally, they
agreed to pay RKLE for RKLE's initial down payment towards the laser and certain
other
F-11
<PAGE> 74
VISTA LASER CENTERS OF THE PACIFIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(8) RELATED-PARTY TRANSACTIONS (CONTINUED)
equipment and property totaling $80,500. $28,000 of such amount was paid in May
1996 with the remaining $52,500 included in accounts payable in the accompanying
balance sheet.
On August 1, 1996, Vista converted its 100,000 shares of Series A and its
500,000 shares of Series B into 600,000 shares of the Company's common stock.
Additionally, accrued dividends in arrears which existed on the Series A and
Series B of $2,340 and $8,422, respectively, were waived upon conversion to
common stock.
(9) DEFERRED OFFERING COSTS
Costs associated with the Company's proposed offering of common stock are
deferred and will be recorded as a reduction of the proceeds received upon
consummation of the proposed offering (see note 13). Deferred offering costs
will be expensed if and when it becomes evident that the proposed initial public
offering will not be completed.
(10) INCOME TAXES
The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets as May 31, 1996 are presented below:
<TABLE>
<S> <C>
Deferred tax assets -- deferred start-up costs..................... $39,200
-------
Total gross deferred tax assets.......................... 39,200
Less valuation allowance........................................... 39,200
-------
Net deferred tax assets.................................. $ --
=======
</TABLE>
(11) COMMITMENTS AND CONTINGENCIES
On May 27, 1996 the Company placed a purchase order for a VISX excimer
laser with the manufacturer. At such time the Company made a 10% down payment of
$52,500 to the manufacturer which is included in property and equipment in the
accompanying balance sheet.
The Company has entered into an agreement with Vista, its founder. Vista
currently operates five outpatient PRK surgical clinics in Europe (three in
Italy and two in Sweden). Vista will provide management and technical consulting
services to the Company, including a review of operating strategies and manuals,
personnel and professional training, advertising and promotion information and
technical assistance and advice. In exchange for such services, Vista will
receive 5% of the Company's gross revenues (see note 7).
The Company has received an approved loan commitment of $1,050,000 with a
commercial lending institution. The loan will be utilized to finance the
purchase of laser equipment for the Company's various LVC sites (see note 8 for
related-party transactions describing the amounts due on the purchase of this
laser equipment). The loan terms include an interest rate of prime plus 1/2%
and the loan will be payable in 60 monthly installments. This loan is personally
guaranteed by six MDs, two of which are Drs. Griffin and Mandel, two of the
Company's Directors, and Mr. Bates, the Company's President and secured by the
related equipment. The loan commitment contains a prepayment penalty should any
portion of the loan be repaid within the first two years.
The Company will owe the manufacturer of laser equipment (VISX or Summit) a
pillar point fee in the amount of $250 each time the laser is used. This fee is
included in the flat fee of $750 share for the MDs as noted in note 1(c).
F-12
<PAGE> 75
VISTA LASER CENTERS OF THE PACIFIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(12) STOCK OPTION PLANS
On February 5, 1996, the Board of Directors and stockholders of the Company
adopted the 1996 Stock Option Plan (the Option Plan). The Option Plan is
structured to allow the Board of Directors and a future Stock Option Committee
of the Board discretion in creating equity incentives to management, key
employees and professional consultants for the purpose of assisting the Company
in motivating and retaining appropriate talent. The Option Plan covers up to a
maximum of 500,000 shares of the Company's common stock.
The Option Plan provides for the granting of stock options which, at the
discretion of the Board of Directors or its Stock Option Committee, may be
either incentive stock options within the meaning of Section 422 of the U.S.
Internal Revenue Code or nonqualified stock options which do not qualify as
incentive stock options. The Option Plan provides that both incentive stock
options and nonqualified options under the Option Plan must be granted at an
option price which is not less than the fair market value of the common stock on
the date of grant. With respect to any participant who owns stock possessing
more than 10% of the voting rights of the Company's outstanding capital stock,
the exercise price of any incentive stock option under the Option Plan to such a
participant must be not less than 110% of fair market value on the date of
grant. Options under the Option Plan may be granted to officers, directors, and
key employees of and professional consultants to the Company and its
subsidiaries. Under the terms of the Option Plan, the aggregate fair market
value (determined at the time an option is granted, which will normally be equal
to the option exercise price per share) of common stock exercisable under an
incentive stock option for the first time in any calendar year may not exceed
$100,000.
Under the Option Plan, the number of shares available for options and
subject to option, as well as the option exercise price of outstanding options,
is to be adjusted upward or downward, as the case may be, in the event of any
stock dividend, recapitalization, merger, consolidation, split-up or similar
transaction affecting shares of the Company's common stock. If any option
granted under the Option Plan terminates or expires without having been
exercised in full, the shares not purchased under such option will again be
available for purposes of the Option Plan.
<TABLE>
<CAPTION>
EXERCISE
FIXED OPTIONS SHARES PRICE
- ------------------------------------------------------------------------ -------- --------
<S> <C> <C>
Granted................................................................. $125,000 $ 2.75
Exercised............................................................... -- --
Forfeited............................................................... -- --
-------- -----
Outstanding at May 31, 1996............................................. $125,000 $ 2.75
======== =====
Options exercisable at May 31, 1996..................................... $ 97,000
========
Weighted -- average fair value of options granted during the year....... $(.35)
-----
-----
</TABLE>
The options granted were fully vested at the grant date and have a term of
five years. The fair value of each option grant is estimated based on the
Black-Scholes options pricing model.
The Company applies Accounting Principles Board Opinion No. 25 (APB 25) and
related interpretations in accounting for its plan. Accordingly, no compensation
cost has been recognized for its stock option plan. Had compensation cost for
the Company's stock option plan been determined consistent with Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123), the
F-13
<PAGE> 76
VISTA LASER CENTERS OF THE PACIFIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(12) STOCK OPTION PLANS (CONTINUED)
Company's net loss and loss per share at May 31, 1996 would have been increased
to the pro forma accounts indicated below:
<TABLE>
<S> <C>
Net loss:
As reported..................................................... $ 97,951
========
Pro forma....................................................... $141,701
========
Loss per share:
As reported..................................................... $(.36)
-----
-----
Pro forma....................................................... $(.52)
-----
-----
</TABLE>
(13) INITIAL PUBLIC OFFERING
On July 10, 1996, the Board of Directors of the Company authorized the
filing of a registration statement with the Securities and Exchange Commission
for the sale of shares of common stock.
(14) NEW ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued SFAS 123.
SFAS 123 establishes financial accounting and reporting standards for
stock-based employee compensation plans. Those plans include all arrangements by
which employees receive shares of stock or other equity instruments of the
employer or the employer incurs liabilities to employees in amounts based on the
price of the employer's stock. Examples are: stock purchase plans, stock
options, restricted stock and stock appreciation rights. SFAS 123 also applies
to transactions in which an entity issues its equity instruments to acquire
goods or services from nonemployees.
SFAS 123 is effective for fiscal years that begin after December 15, 1995.
This statement adopts a fair-value-based method of accounting for employee stock
option plans or similar stock-based compensation plans. Under the
fair-value-based method, compensation cost is measured at the grant date based
on the fair value of the award and is recognized over the service or vesting
period. The statement does allow entities to continue to measure compensation
using the intrinsic-value-based method of APB 25 provided that pro forma
disclosures of net income and earnings per share are made as if the
fair-value-based method of accounting had been applied. The Company has
determined it will continue to follow APB 25 and disclose the pro forma effect
of the fair-value-based method on net income and earnings per share (see note
12).
(15) ACQUISITION
On May 9, 1996, the Company entered into a purchase agreement to acquire a
laser and certain medical examination equipment of Laser Vision Consultants in
San Leandro, California, for approximately $607,000. The purchase price will be
paid out of the proceeds of the proposed offering. The acquisition will be
accounted for utilizing the purchase accounting method in fiscal 1997.
F-14
<PAGE> 77
VISTA LASER CENTERS OF THE PACIFIC, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(15) ACQUISITION (CONTINUED)
The following unaudited pro forma condensed combined balance sheet reflects
the transaction as if it had occurred on May 31, 1996.
<TABLE>
<CAPTION>
VISTA LASER
LASER VISION
CENTERS CONSULT- ADJUSTMENTS
OF THE ANTS, --------------------- PRO FORMA
PACIFIC LLC(A) DR. CR. TOTAL
---------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash, accounts receivable, pre-paid
expenses, other assets............. $1,086,087 $ 92,168 $ -- $607,105(b) $ 478,982
92,168(c)
Property, plant and equipment, net... 1,212,956 493,312 -- -- 1,706,268
Investment in Vista.................. 487,855 -- -- -- 487,855
Goodwill............................. -- -- 113,793 -- 113,793
---------- ------- ------- ------- ---------
Total assets.................... $2,786,898 $585,480 $113,793 $699,273 $2,786,898
========== ======= ======= ======= =========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable, accrued
liabilities and current portion
of long-term debt............... 796,755 249,066 249,066(c) -- 796,755
Convertible Debt................... 928,150 410,817 410,817(c) -- 928,150
Long-term debt..................... 470,439 -- -- -- 470,439
---------- ------- ------- ------- ---------
Total liabilities............... 2,195,344 659,883 659,883 -- 2,195,344
---------- ------- ------- ------- ---------
Stockholders' equity:
Preferred stock.................... 6,000 -- -- -- 6,000
Common stock....................... 500 -- -- -- 500
Additional paid-in capital......... 676,355 -- -- -- 676,355
Stock subscription receivable...... (15,200) -- -- -- (15,200)
Warrants........................... 21,850 -- -- -- 21,850
Accumulated deficit................ (97,951) (74,403) -- 74,403(c) (97,951)
---------- ------- ------- ------- ---------
Total stockholders' equity...... 591,554 (74,403) -- 74,403 591,554
---------- ------- ------- ------- ---------
Total liabilities and
stockholders' equity.......... $2,786,898 $585,480 $659,883 $ 74,403 $2,786,898
========== ======= ======= ======= =========
</TABLE>
- ---------------
(a) Laser Vision Consultants audited financial results are as of March 31, 1996.
(b) Purchase price of laser and medical equipment.
(c) Not included in the proposed transaction
F-15
<PAGE> 78
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY, BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY OFFER, SOLICITATION OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THE PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Additional Information................
Glossary..............................
Prospectus Summary....................
Risk Factors..........................
Dilution..............................
Use of Proceeds.......................
Capitalization........................
Selected Financial Data...............
Management Discussion and Analysis and
Plan of Operation...................
The Company...........................
Management............................
Certain Transactions..................
Principal and Selling Stockholders....
Description of Securities.............
Federal Income Tax Considerations.....
Shares Eligible for Future Sale.......
Underwriting..........................
Dividend Policy.......................
Legal Matters.........................
Experts...............................
Index to Financial Statements.........
</TABLE>
UNTIL , 1996, ALL DEALERS EFFECTING TRANSACTIONS IN THE
SECURITIES OF THE COMPANY, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION,
MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN
ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
VISTA LASER CENTERS
OF THE PACIFIC, INC.
600,000 UNITS
--------------------
PROSPECTUS
--------------------
DICKINSON & CO.
, 1996
------------------------------------------------------
------------------------------------------------------
<PAGE> 79
[ALTERNATIVE COVER PAGE FOR SELLING STOCKHOLDER PROSPECTUS]
SUBJECT TO COMPLETION, DATED SEPTEMBER , 1996
PROSPECTUS
VISTA LASER CENTERS OF PACIFIC, INC.
237,500 SHARES OF COMMON STOCK
237,500 shares of Common Stock, par value $.01 per share are ("Common
Shares") of Vista Laser Centers Of The Pacific, Inc., a Nevada corporation (the
"Company"), offered hereby. This Prospectus covers 237,500 shares of the
Company's common stock, par value $.01 per share ("Common Stock") issuable upon
conversion of outstanding Promissory Notes, to be offered from time to time
hereafter for the account of 25 selling stockholders (the "Selling
Stockholders"). The Company will not receive any proceeds from the offering by
the Selling Stockholders.
The Common Shares offered by this Prospectus may be sold from time to time
by the Selling Stockholders, or by their transferees. No underwriting
arrangements have been entered into by the Selling Stockholders. The
distribution of Common Stock by the Selling Stockholders may be effected in one
or more transactions that may take place on the over-the-counter market or on
any exchange on which such securities may be listed, including ordinary broker's
transactions, privately-negotiated transactions or through sales to one or more
dealers for resale of such shares as principals, at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices. Usual and customer or specifically negotiated brokerage fees
or commissions may be paid by the Selling Stockholders in connection with such
sales; however, such fees or commissions will not exceed 10% of the sales price.
The Selling Stockholders and intermediaries through whom such securities are
sold may be deemed "underwriters" within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), with respect to the securities offered,
and any profits realized or commissions received may be deemed underwriting
compensation. The Company has agreed to indemnify the Selling Stockholders
against certain liabilities, including liabilities under the Securities Act. See
"Plan of Distribution by Selling Stockholder".
On the date of this Prospectus, an additional 600,000 Units, with each Unit
comprised of two shares of Common Stock and one Class C Warrant (without giving
effect to an over-allotment option granted to the Underwriters of such offering)
were offered pursuant to another prospectus in a firm commitment underwriting at
a price of $10.10 per Unit. The Company will receive approximately $5,454,000 in
net proceeds from the underwritten public offering (assuming no exercise of the
Underwriters' over-allotment option) and before payment of expenses of that
offering estimated at $175,000 plus a nonaccountable expense allowance in the
amount of $181,800 ($209,070 if the Underwriters' over-allotment option is
exercised) payable to the Representative of the Underwriters.
(continued on following page)
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD NOT BE
PURCHASED BY ANY PERSON WHO CANNOT AFFORD RISK OF LOSS OF
THE INVESTMENT. SEE "RISK FACTORS" AT PAGES 9 TO
15 OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE 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 , 1996
<PAGE> 80
[ALTERNATE PAGE 2 FOR SELLING STOCKHOLDER PROSPECTUS]
CONTINUED FROM COVER PAGE
Prior to the date of this Prospectus, there has been no public market for
the securities of the Company and there can be no assurance that any active
public market will be sustained. The initial offering price of the Units for the
underwritten public offering was determined by negotiations between the Company
and Dickinson & Co. (the "Representative"), as representative of the several
Underwriters of that offering, and does not necessarily relate to the Company's
book value or other established criteria of value. See "Underwriting". The
Company intends to apply for the Units, Common Stock and Class C Warrants for
listing on the Nasdaq Small Cap Market and on the Boston Stock Exchange.
Sales of such securities by the Selling Stockholders, or the potential of
such sales, may have an adverse effect on the market price of the securities
offered hereby. See "Risk Factors", "Principal and Selling Stockholders",
"Underwriting" and "Plan of Distribution by Selling Stockholders".
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission
("Commission") a Registration Statement on Form SB-2 under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the securities covered
by this Prospectus. For the purposes hereof, the term "Registration Statement"
means the original Registration Statement and any and all amendments thereto,
including the schedules and exhibits to such original Registration Statement or
any such amendment. This Prospectus, which forms a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement, to which reference is hereby made. Each statement made in this
Prospectus concerning a document filed as an exhibit to the registration
Statement is qualified in its entirety by reference to such exhibit for a
complete statement of its provisions.
Any interested party may inspect the Registration Statement, without
charge, at the public reference facilities of the Commission at its principal
office at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, and at its regional offices in Chicago (Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661) and in New York (Seven World Trade
Center, Suite 1300, New York, New York 10048). Any interested party may obtain
copies of all or any portion of the Registration Statement at prescribed rates
from the Public Reference Section of the Commission at its principal office at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549.
- --------------------------------------------------------------------------------
The Company intends to furnish its stockholders each year with annual
reports containing audited financial statements and a report thereon expressed
by independent public accountants and such other reports as the Company deems
appropriate or as may be required by law.
<PAGE> 81
[ALTERNATE PAGE 5 FOR SELLING STOCKHOLDER PROSPECTUS]
THE OFFERING
Securities Offered: 237,500 shares of the Common Stock are being
offered from time to time hereafter pursuant to
this Prospectus for the account of 25 Selling
Stockholders and 600,000 Units have been offered
under a separate prospectus in a firm commitment
underwriting at a price of $10.10 per Unit. See
"Description of Securities", "Underwriting" and
"Plan of Distribution by the Selling
Stockholders".
Securities to be
outstanding after this
offering(1) 600,000 Units; 2,087,500 shares of Common Stock,
including 1,200,000 in the outstanding Units;
95,000 Class A Warrants; 450,000 Class B
Warrants; and 600,000 Class C Warrants in the
outstanding Units.
- ---------------
(1) Does not include the Underwriter's over-allotment option, shares of
Common Stock reserved for issuance upon exercise of the Underwriter's Warrants,
or shares reserved for issuance upon exercise of outstanding Class A and B
Warrants and stock options. See "Management -- 1996 Stock Option Plan",
"Description of Securities" and "Underwriting".
<PAGE> 82
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY, BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY OFFER, SOLICITATION OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THE PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Additional Information................
Glossary..............................
Prospectus Summary....................
Risk Factors..........................
Dilution..............................
Use of Proceeds.......................
Capitalization........................
Selected Financial Data...............
Management Discussion and Analysis and
Plan of Operation...................
The Company...........................
Management............................
Certain Transactions..................
Principal and Selling Stockholders....
Description of Securities.............
Federal Income Tax Considerations.....
Shares Eligible for Future Sale.......
Underwriting..........................
Dividend Policy.......................
Legal Matters.........................
Experts...............................
Index to Financial Statements.........
</TABLE>
UNTIL , 1996, ALL DEALERS EFFECTING TRANSACTIONS IN THE
SECURITIES OF THE COMPANY, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION,
MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN
ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
VISTA LASER CENTERS
OF THE PACIFIC, INC.
237,500 COMMON SHARES
--------------------
PROSPECTUS
--------------------
DICKINSON & CO.
, 1996
------------------------------------------------------
------------------------------------------------------
<PAGE> 83
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Articles SEVENTH and EIGHTH of the Registrant's
articles of incorporation, which provide as follows:
"SEVENTH: The personal liability of the directors of the corporation
is hereby eliminated to the fullest extent permitted by the General
Corporation Law of the State of Nevada, as the same may be amended and
supplemented.
"EIGHTH: The corporation shall, to the fullest extent permitted by the
General Corporation Law of the State of Nevada, as the same may be amended
and supplemented. indemnify any and all persons whom it shall have power to
indemnify under said Law from and against any and all of the expenses,
liabilities, or other matters referred to in or covered by said Law, and
the indemnification provided for herein shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under any
Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, 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."
Reference is made to Article VI of the Registrant's bylaws dealing with
indemnification of directors and officers, which provide as follows:
"ARTICLE VI -- INDEMNIFICATION
"Section 1. DEFINITIONS. For the purposes of this Article, "agent"
means any person who is or was a director, officer, employee or other agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent or another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise, or was
a director, officer, employee or agent of a foreign or domestic corporation
which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation; "proceeding"
means any threatened, pending or completed action or proceeding, whether
civil, criminal, administrative or investigative; and "expenses" includes
without limitation attorneys' fees and any expenses of establishing a right
to indemnification under Sections 4 or 5(c) of this Article.
"Section 2. INDEMNIFICATION IN ACTIONS BY THIRD PARTIES. The
corporation shall have power to indemnify any person who was or is a party
or is threatened to be made a party to any proceeding (other than an action
by or in the right of the corporation to procure a judgment in its favor)
by reason of the fact that such person is or was an agent of the
corporation, against expenses, judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with such proceeding
if such person acted in good faith and in a manner such persons reasonably
believed to be in the best interests of the corporation and, in the case of
a criminal proceeding, had no reasonable cause to believe the conduct of
such person was unlawful. The termination of any proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed
to be in the best interests of the corporation or that the person had
reasonable cause to believe that the person's conduct was unlawful.
"Section 3. INDEMNIFICATION IN ACTIONS BY OR IN THE RIGHT OF THE
CORPORATION. The corporation shall have the power to indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that
such person is or was an agent of the corporation, against expenses
actually and reasonably incurred by such person in connection with the
II-1
<PAGE> 84
defense or settlement of such action if such person acted in good faith, in
a manner such person believed to be in the best interests of the
corporation and with such care, including reasonable inquiry, as an
ordinarily prudent person in a like position would use under similar
circumstances.
"Section 4. INDEMNIFICATION AGAINST EXPENSES. To the extent that an
agent of the corporation has been successful on the merits in defense of
any proceeding referred to in Sections 2 or 3 of this Article or in defense
of any claim, issue or matter therein, and as otherwise provided by
authorization of the Board of Directors or stockholders of this
corporation, the agent shall be indemnified against expenses actually and
reasonably incurred by the agent in connection therewith.
"Section 5. REQUIRED DETERMINATIONS. Any indemnification under this
Article shall be made by the corporation only if authorized in the specific
case, upon a determination that indemnification of the agent is proper in
the circumstances because the agent has met the applicable standard of
conduct set forth in Sections 2 or 3 of this Article, by:
"(a) A majority vote of a quorum consisting of directors who are not
parties to such proceeding; or
"(b) Approval of the stockholders, with the shares owned by the person
to be indemnified not being entitled to vote thereon; or
"(c) The court in which such proceeding is or was pending upon
application made by the corporation or the agent or the attorney or other
person rendering services in connection with the defense, whether or not
such application by the agent, attorney or other person is opposed by the
corporation.
"Section 6. ADVANCE OF EXPENSES. Expenses incurred in defending any
proceeding may be advanced by the corporation prior to the final
disposition of such proceeding upon receipt of an undertaking by or on
behalf of the agent to repay such amount unless it shall be determined
ultimately that the agent is entitled to be indemnified as authorized in
this Article.
"Section 7. OTHER INDEMNIFICATION. No provision made by the
corporation to indemnify it or its subsidiary's directors or officers for
the defense of any proceeding, whether contained in the Articles, By-laws,
a resolution of stockholders or directors, an agreement or otherwise, shall
be valid unless consistent with this Article and approved by a majority of
the Directors; provided, however, that any such agreement approved by a
majority of the shares of capital stock voted at any meeting called to
consider the same or by written consent of a majority of the shares
entitled to vote for the election of directors shall supersede the
provision of this Article to the extent of any inconsistencies. Nothing
contained in this Article shall affect any right to indemnification to
which persons other than such directors and officers may be entitled by
contract or otherwise.
"Section 8. FORMS OF INDEMNIFICATION NOT PERMITTED. No
indemnification or advance shall be made under this Article, except as
provided in Sections 4 or 5(c), in any circumstances where it appears:
"(a) That it would be inconsistent with a provision of the Articles,
these By-laws, a resolution of the stockholders or an agreement in effect
at the time of the accrual of the alleged cause of action asserted in the
proceeding in which the expenses were incurred or other amounts were paid,
which prohibits or otherwise limits indemnifications; or
"(b) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
"Section 9. INSURANCE. The corporation shall have power to purchase
and maintain insurance on behalf of any agent of the corporation against
any liability asserted against or incurred by the agent in such capacity or
arising out of the agent's status as such whether or not the corporation
would have the power to indemnify the agent against such liability under
the provisions of this Article.
"Section 10. NONAPPLICABILITY TO FIDUCIARIES OF EMPLOYEE BENEFIT
PLANS. This Article does not apply to any proceeding against any trustee,
investment manager or other fiduciary of an employee benefit plan in such
person's capacity as such, even though such person may also be an
II-2
<PAGE> 85
agent of the corporation as defined in Section 1 of this Article. The
corporation shall have power to indemnify such trustee, investment manager
or other fiduciary to the extent permitted by applicable law."
Reference is also made to Sections 78.751 and 78.752 of the Nevada General
Corporation Law which provides for indemnification of directors and officers.
"78.751. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
ADVANCEMENT OF EXPENSES.
"1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the action, suit
or proceeding if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, has no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action or proceeding,
he had reasonable cause to believe that his conduct was unlawful.
"2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys' fees actually
and reasonably incurred by him in connection with the defense or settlement
of the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or matter
as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to
the corporation or for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the action or suit
was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person
is fairly and reasonably entitled to indemnity for such expenses as the
court deems proper.
"3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections 1 and 2, or in
defense of any claim, issue or matter therein, he must be indemnified by
the corporation against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense.
"4. Any indemnification under subsections 1 and 2, unless ordered by a
court or advanced pursuant to subsection 5, must be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in
the circumstances. The determination must be made: (a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting of
directors who were not parties to the act, suit or proceeding; (c) If a
majority vote of a quorum consisting of directors who were not parties to
the act, suit or proceeding so orders, by independent legal counsel in a
written opinion; or (d) If a quorum consisting of directors who were not
parties to the act, suit or proceeding cannot be obtained, by independent
legal counsel in a written opinion.
"5. The certificate or articles of incorporation, the bylaws or an
agreement made by the corporation may provide that the expenses of officers
and directors incurred in defending a civil or criminal action,
II-3
<PAGE> 86
suit or proceeding must be paid by the corporation as they are incurred and
in advance of the final disposition of the action, suit or proceeding, upon
receipt of an undertaking by or on behalf of the director or officer to
repay the amount if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the corporation.
The provisions of this subsection do not affect any rights to advancement
of expenses to which corporate personnel other than directors or officers
may be entitled under any contract or otherwise by law.
"6. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the
certificate or articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an action
in his official capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court pursuant to
subsection 2 or for the advancement of expenses made pursuant to subsection
5, may not be made to or on behalf of any director or officer if a final
adjudication establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action.
(b) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
"78.752. INSURANCE AND OTHER FINANCIAL ARRANGEMENTS AGAINST LIABILITY OF
DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.
"1. A corporation may purchase and maintain insurance or make other
financial arrangements on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
for any liability asserted against him and liability and expenses incurred
by him in his capacity as a director, officer, employee or agent, or
arising out of his status as such, whether or not the corporation has the
authority to indemnify him against such liability and expenses.
"2. The other financial arrangements made by the corporation pursuant
to subsection 1 may include the following:
(a) The creation of a trust fund.
(b) The establishment of a program of self-insurance.
(c) The securing of its obligation of indemnification by granting a
security interest or other lien on any assets of the corporation.
(d) The establishment of a letter of credit, guaranty or surety. No
financial arrangement made pursuant to this subsection may provide
protection for a person adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be
liable for intentional misconduct, fraud or a knowing violation of
law, except with respect to the advancement of expenses or
indemnification ordered by a court.
"3. Any insurance or other financial arrangement made on behalf of a
person pursuant to this section may be provided by the corporation or any
other person approved by the board of directors, even if all or part of the
other person's stock or other securities is owned by the corporation.
"4. In the absence of fraud:
(a) The decision of the board of directors as to the propriety of the
terms and conditions of any insurance or other financial arrangement made
pursuant to this section and the choice of the person to provide the
insurance or other financial arrangement is conclusive; and
II-4
<PAGE> 87
(b) The insurance or other financial arrangement:
(1) Is not void or voidable; and
(2) Does not subject any director approving it to personal liability for
his action, even if a director approving the insurance or other
financial arrangement is a beneficiary of the insurance or other
financial arrangement.
"5. A corporation or its subsidiary which provides self-insurance for
itself or for another affiliated corporation pursuant to this section is
not subject to the provisions of Title 57 of Nevada Revised Statutes."
Reference is also made to Indemnification Agreements between the Registrant
and each of its directors and officers obligating the Registrant to indemnify
directors and officers to the maximum extent permitted by the laws of the State
of Nevada, copies of which have been filed as Exhibits 10.13.1 through 10.13.5
inclusive to this Registration Statement.
The Registrant's Board of Directors has authorized the Registrant to apply
for an errors and omissions liability insurance policy covering acts and
omissions of its officers and directors as soon as practicable after the filing
of this Registration Statement.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses of this offering will be paid by the Registrant and are
estimated as follows:
<TABLE>
<S> <C>
Filing fees to Securities and Exchange Commission......................... $ 3,475
Filing fees to National Association of Securities Dealers, Inc............ 1,838
Printing Expenses......................................................... 50,000*
Legal Fees and Expenses................................................... 50,000*
Accounting Fees........................................................... 55,000*
Blue Sky Filing Fees and Legal Expenses................................... 10,000*
Transfer Agent and Registrar Fees and Expenses............................ 5,000*
Miscellaneous............................................................. 4,687*
--------
Total........................................................... $175,000*
========
</TABLE>
- ---------------
* Estimated amount -- subject to revision by amendment.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
During the last three years, the Registrant has sold the following
securities which were not registered at the time of sale under the Securities
Act of 1933, as amended (the "Securities Act"):
1. On February 5, 1996, the Registrant agreed to sell sold 100,000 shares
of its 10% Series A Cumulative Convertible Preferred Stock to Refractive
Services-800, Inc.. for a consideration of $100,000 in cash. This transaction
was completed in February, 1996.
2. On April 23, 1996, the Registrant sold 500,000 restricted shares of its
5% Series B Cumulative Convertible Preferred Stock to Vista Technologies Inc. in
exchange for a consideration consisting of 500,000 restricted shares of common
stock in Vista Technologies Inc.
3. On April 23, 1996 the Registrant offered to sell 50,000 shares of its
Common Stock to 8 individuals, including 4 officers and directors of the
Registrant, at a cash price of $1.00 per share ($50,000 total). The Registrant
has also offered to issue 450,000 Class B common stock purchase warrants stock
to these same 8 individuals at a price of $.10 per warrant. Each Class B warrant
represents the right to purchase one share of the Registrant's Common Stock at
an exercise price of $1.00 per share until the Class B warrants expire on the
earlier of: (i) the fourth anniversary of the effective date of this
Registration Statement; or (ii) December 31, 1997, in the event this Offering is
not completed by December 31, 2000.
II-5
<PAGE> 88
4. In April and May, 1996 the Registrant sold promissory notes in the
principal amount of $950,000 to 25 individuals. The Registrant also issued
95,000 of its Class A Warrants to these same 25 individuals.
Reference is made to "Management" and "Certain Transactions" in the
Prospectus. No underwriter was involved in the issuance or sale of the
above-referenced securities and no discounts or commission were paid. None of
the securities described in this Item 26 were registered under the Securities
Act at the time of original issuance in reliance upon the exemption from
registration in Section 4(2) of the Securities Act for transactions not
involving a public offering. All of the certificates evidencing the securities
described in this paragraph 26 were imprinted at the time of original issuance
with a restrictive legend indicating that they have not been registered under
the Securities Act and that resales thereof are restricted to comply with the
Securities Act.
ITEM 27. EXHIBITS.
X Indicates exhibits filed herewith.
(M) Denotes management contract or compensation plan or arrangement.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -------------------------------------------------------------------------------
<C> <S> <C>
X 1.1 Form of Underwriting Agreement between the Registrant and Dickinson & Co.
X 3.1 Articles of Incorporation of the Registrant filed with the Secretary of State
of Nevada on January 30, 1996.
X 3.2 Certificate of Designation of 10% Series A Cumulative Convertible Preferred
Stock of the Registrant filed with the Secretary of State of Nevada on
September 23, 1996.
X 3.3 Certificate of Designation of 5% Series B Cumulative Convertible Preferred
Stock of the Registrant filed with the Secretary of State of Nevada on
September 23, 1996.
X 3.4 By-Laws of the Registrant.
X 4.1 Specimen certificate representing Registrant's common stock.
(4 ).2 Specimen certificate representing Registrant's Series A Cumulative Convertible
Preferred Stock (to be filed by amendment).
X 4.3 Specimen agreement representing Registrant's Class A Common Stock Purchase
Warrant.
(4 ).4 Specimen agreement representing Registrant's Class B Common Stock Purchase
Warrant.
(4 ).5 Specimen agreement representing Registrant's Class C Common Stock Purchase
Warrant.
(4 ).6 Common Stock Warrant Agreement between Registrant and American Stock Transfer &
Trust Company.
5.1 Opinion of counsel (to be filed by amendment).
X(M) 10.1 1996 Stock Option Plan of the Registrant
X(M) 10.2 License Agreement dated as of February 5, 1996 between the Registrant and
Refractive Services 800 Corp. for optional use of 800 and 900 telephone
numbers.
X(M) 10.3 Consulting Services Agreement dated as of August 16, 1996 between the
Registrant and Vista Technologies Inc.
X(M) 10.4 Stock Exchange Agreement dated April 23, 1996 between Registrant and Vista
Technologies Inc.
X(M) 10.5 Irrevocable Proxy and Voting Agreement dated April 23, 1996 between Registrant
and Vista Technologies Inc. regarding Vista Technologies' stock.
X(M) 10.6 Irrevocable Proxy and Voting Agreement dated April 23, 1996 between Registrant
and Vista Technologies Inc. regarding Registrant's stock.
X(M) 10.7 Class B Common Stock Purchase Warrant covering 135,000 shares reserved for
issuance by the Registrant to Dr. Griffin.
X(M) 10.8 Class B Common Stock Purchase Warrant covering 72,000 shares reserved for
issuance by the Registrant to Dr. Kawesch.
</TABLE>
II-6
<PAGE> 89
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -------------------------------------------------------------------------------
<C> <S> <C>
X(M) 10.9 Class B Common Stock Purchase Warrant covering 30,240 shares reserved for
issuance by the Registrant to Mr. Bates.
X(M) 10.10 Class B Common Stock Purchase Warrant covering 12,960 shares reserved for
issuance by the Registrant to Dr. Mandel.
X(M) 10.11 Agreement between Registrant and Laser Vision Consultants, LLC, dated May 9,
1996 for purchase of assets.
X(M) 10.12 Agreement between Registrant and Griffin and Reed Eye Care, Inc. dated May 9,
1996 for purchase of assets and July 10, 1996 Amendment.
X(M) 10.13 Agreement between Registrant and Eye Laser Associates, LLC, and RK and Laser
Eye Institute of California dated May 30, 1996 for purchase of assets.
X(M) 10.14 Employment Agreement, dated May 1, 1996 between Registrant and Mr. David Bates.
X(M) 10.15 Consulting Agreement dated as of May 1, 1996 between the Registrant and Griffin
and Reed Eye Care, Inc.
X(M) 10.16 Laser lease between Eye Laser Associates, LLC and Hillside Financial Group.
X(M) 10.17 Commercial Bank of San Francisco loan commitment letter to Registrant.
X 10.18 Form of Service Agreement (with patient referral addendum) between Registrant
and physicians.
X(M) 10.19 Real estate lease of Laser Vision Consultants, a portion of which will be
subleased by Registrant for space in San Leandro, California.
(M) (1 )0.20 Real estate sublease between Registrant and Griffin & Reed Eye Care, Inc. for
space in Sacramento, California.
(M) (1 )0.21 Real estate lease of RK and Laser Eye Institute of California which will be
subleased by Registrant, for space in San Jose, California (to be filed by
amendment).
X 10.22 Real estate lease between Registrant and Bayfair Building for headquarters
space in San Leandro, California.
X 10.23 Real estate lease between Registrant and North Bay Eye Associates, Inc. for
space in Petaluma, California.
X 23.1 Consent of KPMG Peat Marwick LLP, independent public accountants.
X 24.1 Power of Attorney.
</TABLE>
ITEM 28. UNDERTAKINGS.
Undertaking for Rule 415 Offering: The undersigned small business issuer hereby
undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act").
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement; and notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospects filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) Include any additional or changed material information on the
plan of distribution.
II-7
<PAGE> 90
(2) For determining liability under the Securities Act, to treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
Undertaking for equity offering of nonreporting small business issuer.
The undersigned small business issuer hereby undertakes that it will
provide to the underwriter at the closing specified in the underwriting
agreement certificates in such denominations and registered in such names as
required by the underwriter to permit prompt delivery to each purchaser.
Undertaking for request for acceleration of effective date.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-8
<PAGE> 91
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Registration
Statement or Amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Leandro, State of California on
the day of September, 1996.
VISTA LASER CENTERS OF THE PACIFIC,
INC.
Registrant
By:
--------------------------------------
J. Robert Griffin
Chairman
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement or Amendment was signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE AND CAPACITY DATE
- ----------------------------------- ------------------------------- ---------------------
<C> <S> <C>
Chairman; Director September , 1996
- ----------------------------------- (Principal Executive Officer)
J. Robert Griffin
Director September , 1996
- -----------------------------------
Mark R. Mandel
Director September , 1996
- -----------------------------------
Donald G. Johnson
Director September , 1996
- -----------------------------------
Gary M. Kawesch
Director September , 1996
- -----------------------------------
Thomas A. Schultz
President and Treasurer September , 1996
- ----------------------------------- (Principal Financial Officer
David P. Bates and Principal Accounting
Officer)
</TABLE>
II-9
<PAGE> 1
EXHIBIT 1.1
600,000 Units
VISTA LASER CENTERS OF THE PACIFIC, INC.
Each Unit Consisting of Two Shares of Common Stock and
One Common Stock Purchase Warrant
UNDERWRITING AGREEMENT
September ____, 1996
Dickinson & Co.
As Representative (the "Representative")
of the Several Underwriters Named in Schedule I
c/o Dickinson & Co.
110 Wall Street
23rd Floor
New York, NY 10005
Dear Sirs:
Vista Laser Centers of the Pacific, Inc., a Nevada corporation (the
"Company"), proposes to sell an aggregate of 600,000 units (the "Firm Units") to
the several underwriters named in Schedule I (the "Underwriters") on the terms
and conditions set forth herein, each consisting of two shares of the Company's
Common Stock, par value $.01 (the "Common Stock") and one five-year Class C
Warrant (a "Warrant") to purchase one share of Common Stock at any time within
five years (the "Units") after the Effective Date, as defined herein, on the
terms set forth in the Registration Statement, as defined herein. The Company
also agrees to sell to the Underwriters up to 90,000 Units for the purpose of
covering over-allotments (the "Additional Units") if and as requested by the
Underwriters pursuant to Section 2 hereof. The Firm Units and the Additional
Units are collectively referred to herein as the "Securities."
1. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form SB-2 (File No. 333-___) (including the
preliminary prospectus therein) relating to the Securities (the "Registration
Statement"). As used in
<PAGE> 2
this Agreement, the term "Registration Statement" means the Registration
Statement as amended when declared effective by the Commission, including
financial statements, exhibits and the information, if any, deemed to be a part
of the registration statement pursuant to Rule 430A under the Act, and the term
"Prospectus" means the prospectus in the form first filed with the Commission
pursuant to Rule 424(b) under the Act; provided, however, that until such filing
(if any) the term "Prospectus" shall mean the prospectus included in the
Registration Statement; and provided further, that if no prospectus is filed on
behalf of the Company pursuant to Rule 424(b) or if any other Prospectus is used
to confirm sales of Securities prior to the Closing Date (as hereinafter
defined), the term "Prospectus" shall mean any prospectus used to confirm sales
of Securities prior to the Closing Date.
2. Agreements to Sell and Purchase. On the basis of the representations
and warranties contained in this Agreement, and subject to its terms and
conditions, the Company agrees to issue and sell the Firm Units to the several
Underwriters and each Underwriter agrees, severally and not jointly, to purchase
from the Company at a price of $9.09 per Firm Unit (the " Unit Purchase Price")
the number of Firm Units set forth opposite the name of such Underwriter in
Schedule I.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell to the several Underwriters, as determined by the Representative, and
the Underwriters shall have the right to purchase, severally and not jointly, an
aggregate of up to 90,000 Additional Units from the Company at the Unit Purchase
Price. Additional Units may be purchased in the manner provided in Section 4
solely for the purpose of covering over-allotments made in connection with the
offering of the Firm Units.
The Company will not, directly or indirectly, offer, sell, contract to
offer or sell, make subject to any purchase option or otherwise dispose of any
securities of the Company or any securities convertible into or exchangeable for
Common Stock, except to the Underwriters pursuant to this Agreement, for a
period of 120 days after the commencement of the public offering of the
Securities by the Underwriters without the prior written consent of the
Representative. The Company further agrees to not grant any stock options,
rights or warrants during this 120-day period. Notwithstanding the foregoing,
during such period the Company may (i) grant stock options pursuant to the
Company's existing stock options plans, (ii) issue Common Stock upon the
exercise of any option or warrant or the conversion of any security outstanding
on the date hereof and (iii) issue Common Stock upon the exercise of any Warrant
issued pursuant to the Registration Statement.
The Company has caused each of its directors, officers and holders of
2% or more of any of its outstanding classes of capital stock (the "Principal
Stockholders") to agree to not directly or indirectly, offer, sell, contract to
offer or sell, make subject to any purchase option or otherwise dispose of any
securities of the Company or any securities convertible into or exchangeable for
securities of the Company for a period of not less than twelve (12) months
following the Effective Date (as defined herein) without the prior written
consent of the Representative.
3. Terms of Public Offering. The Company is advised by you and
acknowledges that the Underwriters propose (i) to make a public offering of
their respective portions of the Securities
<PAGE> 3
as soon after the Effective Date of the Registration Statement and the
determination of the public offering price as in your judgment is advisable and
(ii) initially to offer the Securities at the public offering price upon the
terms set forth in the Prospectus.
4. Delivery and Payment. The Firm Units will be delivered by or on
behalf of the Company to you for the accounts of the several Underwriters to the
Representative's agent in New York, New York, against payment of the purchase
price therefor by bank wire or by check or checks, in United States dollars and
in next day funds, payable to the order of the Company at the offices of
Dickinson & Co., 110 Wall Street, 23rd Floor, New York, NY 10005, at 9:30 a.m.
EST, ________________, 1996 (which date shall not be more than ten (10) business
days after the Effective Date) or at such other place or time as you and the
Company may determine, such time being herein referred to as the "Closing Date."
It is understood that you, acting individually and not in a
representative capacity, may (but shall not be obligated to) make payment to the
Company on behalf of any other Underwriter for the Securities to be purchased by
such Underwriter. Any such payment by you shall not relieve any such Underwriter
of any of its obligations hereunder.
Delivery to the Underwriters of and payment for any Additional Units
purchased by the Underwriters shall be made in the same place and manner as for
delivery and payment of the Firm Units, at 9:30 a.m. EST, on such date or dates
(individually an "Option Closing Date" and collectively the "Option Closing
Dates"), which may be the same as the Closing Date, but shall in no event be
earlier than the Closing Date nor later than ten (10) business days after the
giving of written notice from you to the Company of your determination to
purchase specified amounts of Additional Units. Any such notice may be given at
any time within thirty (30) days after the Effective Date.
Certificates for the Firm Units and any Additional Units shall be
registered in such names and issued in such denominations as you shall request
in writing not later than two full business days prior to the Closing Date or
any applicable Option Closing Date. Such certificates shall be made available to
you for inspection not later than 9:30 a.m., EST, on the business day next
preceding the Closing Date or applicable Option Closing Date. Certificates in
definitive form evidencing the Firm Units and Additional Units shall be
delivered to you on the Closing Date or applicable Option Closing Date with any
transfer taxes thereon duly paid by the Company, for the respective accounts of
the several Underwriters.
5. Agreements of the Company. The Company agrees with you as follows:
(a) To cause the Registration Statement to be declared
effective by the Commission at the earliest possible date (the "Effective
Date").
(b) The Company will advise you promptly and, if requested by
you, will confirm such advice in writing (i) when the Registration Statement has
become effective (if such Registration Statement has not become effective prior
to the execution of this Agreement), if and when any Prospectus is mailed (or
otherwise transmitted) for filing pursuant to Rule 424 under the Act, and
<PAGE> 4
when any post-effective amendment to the Registration Statement becomes
effective, (ii) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or for
additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of the
suspension of qualification of the Securities for offer or sale in any
jurisdiction, or the initiation of any proceeding for such purposes and (iv) of
the happening of any event during the period referred to in Section 5(e) below
that makes any statement made in the Registration Statement or the Prospectus
untrue or that requires the making of any additions to or changes in the
Registration Statement or the Prospectus in order to make the statements therein
not misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company will
make every reasonable effort to obtain the withdrawal or lifting of such order
at the earliest possible time.
(c) The Company will furnish to you one signed copy of the
Registration Statement as first filed with the Commission and of each amendment
to it, including all exhibits, and will furnish to you or to each Underwriter
designated by you such number of conformed copies of the registration statement
as so filed and of each amendment to it, without exhibits, as you may reasonably
request.
(d) The Company will not file any amendment or supplement to
the Registration Statement, whether before or after the time when it becomes
effective, or make any amendment, supplement or change to the Prospectus of
which you shall not previously have been advised or to which you shall
reasonably object.
(e) From time to time during such period as in the opinion of
counsel for the Underwriters a prospectus is required by law to be delivered in
connection with sales by an Underwriter or a dealer, the Company will furnish to
each Underwriter and dealer as many copies of the Prospectus (and of any
amendment or supplement to it) as such Underwriter or dealer may reasonably
request.
(f) If during the period specified in Section 5(e) any event
shall occur as a result of which, in the opinion of counsel for the Underwriters
or in the judgment of the Company, it becomes necessary to amend or supplement
the Prospectus in order to make the statements therein, in light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if it is necessary to amend or supplement the Prospectus to comply with any
law, the Company forthwith will prepare and file with the Commission an
appropriate amendment or supplement to the Prospectus so that the statements in
the Prospectus as so amended or supplemented will not, in light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with law, and will furnish to each Underwriter and to such dealers
as you shall specify such number of copies thereof as such Underwriter or
dealers may reasonably request.
(g) Prior to any public offering of the Securities, the
Company will cooperate with you and counsel for the Underwriters in connection
with the registration or qualification of the Securities for offer and sale by
the several Underwriters and by dealers under the securities or Blue Sky laws of
such jurisdictions as you may reasonably request, will continue such
qualification in effect so long as reasonably required for distribution of the
Securities and will file such consents to
<PAGE> 5
service of process or other documents as may be necessary in order to effect
such registration or qualification; provided, however, that the Company shall
not be required to register or qualify as a foreign corporation or to take any
action which would subject it to the service of process in suits, other than as
to matters and transactions relating to the offer and sale of the Securities, in
any jurisdiction where it is not now so subject.
(h) At or prior to the Effective Date, the Company will
register the Securities with the Securities and Exchange Commission under the
provisions of Section 12(g) of the Securities Exchange Act of 1934 and will
maintain such registration in effect for a period of five (5) years from the
Effective Date.
(i) The Company will make generally available to its
securities holders, as soon as reasonably practicable, an earnings statement
covering a period of at least 12 months after the Effective Date (but in no
event commencing later than 90 days after such date) which shall satisfy the
provisions of Section 11(a) of the Act as defined in Rule 158 thereunder, and
will advise you in writing when such statement has been so made available.
(j) During the period of five (5) years after the Effective
Date, the Company will deliver to the Representatives: (i) copies of such
financial statements and annual, periodic, special or other reports filed or
required to be filed with the Commission, at the time of filing with the
Commission; (ii) copies of all other statements, documents or other information
that the Company shall mail or otherwise make available to any class of its
security holders; and (iii) from time to time such other information concerning
the Company as you may reasonably request; provided, however, that the Company
shall have no obligation to disclose material, nonpublic information.
(k) The Company will pay all costs, expenses, fees and taxes
incident to (i) the preparation, printing, filing and distribution under the Act
of the Registration Statement (including financial statements, schedules and
exhibits), each preliminary prospectus and all amendments and supplements to any
of them prior to or during the period specified in Section 5(e), but not
exceeding nine months after the Effective Date, (ii) the printing and delivery
of the Prospectus and all amendments or supplements to it during the period
specified in Section 5(e), but not exceeding nine months after the Effective
Date, (iii) the printing and delivery of this Agreement, the Preliminary and any
Supplemental Blue Sky Memoranda and all other agreements, memoranda,
correspondence and other documents printed and delivered in connection with the
offering of the Securities, (iv) the registration or qualification of the
Securities for offer and sale under the securities or Blue Sky laws of the
several states (including the reasonable fees and disbursements of counsel for
the Underwriters relating to such registration or qualification), (v) fees
relating to filings and clearance with the National Association of Securities
Dealers, Inc. (the "NASD") in connection with the offering, (vi) the listing of
the Securities on the Boston Stock Exchange ("BSE") and the National Association
of Securities Dealers Automated Quotation system ("NASDAQ"), (vii) furnishing
such copies of the Registration Statement, any preliminary prospectus, the
Prospectus and all amendments and supplements thereto as may be requested for
use in connection with the offer or sale of the Securities by the Underwriters
or by dealers to whom Securities may be sold, (viii) the fees, expenses,
disbursements and costs of Company's counsel, accountants, transfer agent and
other retained professionals, if any, (ix) the performance by the Company of
its obligations under this Agreement,
<PAGE> 6
and (x) the costs of prospectus memorabilia and of placing any "tombstone"
advertisement in such publications as the Company and the Representative shall
determine. The provisions of this Section 5(k) are intended to relieve the
Underwriters from the payment of the costs and expenses that the Company hereby
agrees to pay and shall not affect any agreement that the Company may make, or
may have made, for the sharing of any such costs and expenses.
(l) In addition to the expenses described in Section 5(k), the
Company shall pay the Representative as a nonaccountable reimbursement for the
expenses incurred by the Representative in connection with the offering (a) at
the Closing on the Closing Date, three percent (3%) of the gross proceeds (based
on the public offering price) of the Securities sold in the offering on such
Closing Date, less the greater of (i) any amounts previously paid to the
Representative as an accountable expense or (ii) $25,000, as a nonaccountable
reimbursement for the expenses incurred by the Representative in connection with
the offering, and (b) at the Closing on any Option Closing Date, three percent
(3%) of the gross proceeds (based on the public offering price) of the
Securities sold in the offering on such Option Closing Date less any amounts
previously paid to the Representative as an accountable expense and not deducted
from the nonaccountable reimbursement paid under subpart (a) above.
If the sale of the Securities provided for herein is not consummated by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed, or because any other
condition of the Underwriter's obligations hereunder is not fulfilled, the
Company will reimburse the Representative for all out-of-pocket disbursements
(including fees and disbursements of counsel) incurred by the Representative up
to $75,000 (less amounts previously paid as a nonaccountable reimbursement
pursuant to the immediately preceding paragraph) in connection with the
investigation, preparation to market and marketing of the Securities or in
contemplation of performing such obligations hereunder, except as otherwise
agreed by the Company in writing, but the Company shall not be liable to any of
the several Underwriters for damages on account of loss of anticipated profits
from the sale by them of the Securities.
(m) The Company will do and perform all things required or
necessary to be done and performed under this Agreement by the Company prior to
the Closing Date or any Option Closing Date and to satisfy all conditions
precedent to the delivery of the Securities.
(n) The Company will cause the Securities to be listed on the
BSE and the NASDAQ.
(o) The Company will comply fully and in a timely manner with
the applicable provisions of Rule 424 and Rule 430A under the Act.
(p) The Company will apply the net proceeds of the sale of the
Securities sold by it in accordance with the statements under the caption "USE
OF PROCEEDS" in the Prospectus. Prior to the application of such net proceeds,
the Company will invest or reinvest such proceeds only in Eligible Investments.
For the purposes of this Agreement, "Eligible Investments" shall mean the
following investments so long as they have maturities of one year or less: (i)
obligations issued or
<PAGE> 7
guaranteed by the United States or by any person controlled or supervised by or
acting as an instrumentality of the United Stated pursuant to authority granted
by Congress; (ii) obligations issued or guaranteed by any state or political
subdivision thereof rated either Aa or higher, or MIG 1 or higher, by Moody's
Investors Service, Inc. or AA or higher, or an equivalent, by Standard & Poor's
Corporation, both of New York, New York, or their successors; (iii) commercial
or finance paper which is rated either Prime-1 or higher or an equivalent by
Moody's Investors Services, Inc. or A-1 or higher or an equivalent by Standard &
Poor's Corporation, both of New York, New York, or their successors; and (iv)
certificates of deposit or time deposits of banks or trust companies, organized
under the laws of the United States, and which the Representative first approves
in writing, which approval shall not be unreasonably withheld; provided,
further, the Representative's consent to the deposit of proceeds initially with
______________, is hereby given and confirmed.
(q) The Company shall use its best efforts to cause its
officers, directors and beneficial owners of ten percent (10%) or more of any of
its registered securities to deliver a copy of any of the Commission Forms 3, 4
or 5 filed with the Commission to the Representative and the Company shall
deliver copies of all such Forms received by it to the Representative promptly
following receipt thereof. In addition, the Company agrees to promptly deliver
to the Representative copies of any Commission Schedules 13D or 13G received by
the Company, directly or indirectly, which relate to any of the Company's
securities.
(r) The Company will maintain sufficient authorized but
unissued shares of Common Stock to cover exercise of all Underwriters' Warrants,
as defined herein. The Company will maintain sufficient authorized but unissued
Common Stock to cover the exercise of all Underwriters' Underlying Securities,
as defined herein.
(s) Prior to the Closing Date, the Company will cause to be
released in full any and all liens encumbering the assets of the Company or any
of its subsidiaries which have been pledged for the purpose of securing personal
obligations of any shareholder, director or officer of the Company to any
lender.
6. Representations and Warranties of the Company. The term "Company" as
used in this Section 6 shall include Vista Laser Centers of the Pacific, Inc.
and any and all of its subsidiaries existing as of the Closing Date or any
Option Closing Date. The Company represents and warrants to each Underwriter
that:
(a) The Commission has not issued any order preventing or
suspending the use of any preliminary Prospectus with respect to the Securities.
The preliminary Prospectus dated September __, 1996, as amended, contained all
statements required to be stated therein in accordance with the Act, conformed
in all material respects with the requirements of the Act and did not include
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading. At the time of
effectiveness of the Registration Statement and at all times subsequent thereto
up to the Closing Date or any Option Closing Date, the Registration Statement
and the Prospectus and any amendments and supplements thereto have complied and
will comply in all material respects with the provisions of the Act. The
Registration Statement and the Prospectus and any supplements or amendments
thereto do not, and at the Closing Date and any
<PAGE> 8
Option Closing Date will not, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, except that the representations and
warranties contained in this sentence shall not apply to statements or omissions
in the Registration Statement or Prospectus (or any supplement or amendment to
them) based upon information furnished to the Company by or on behalf of such
Underwriter contained in the last paragraph on the cover page of the Prospectus,
the first paragraph of text on the inside front cover of the Prospectus
concerning stabilization and over-allotment by the Underwriters, and the section
captioned "Underwriting," concerning the terms of the offering by the
Underwriters. Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied or will
comply when so filed in all material respects with the requirements of the
Exchange Act and the applicable rules and regulations of the Commission
thereunder and did not include any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein not
misleading.
(b) The accountants who certified the consolidated financial
statements included in the Registration Statement are independent certified
public accountants within the meaning of the Act.
(c) The consolidated financial statements included in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto) present fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the results of its
operations and changes in its financial position for the periods specified. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout such periods. The
supporting schedules included in the Registration Statement present fairly the
information required to be stated therein. No other financial statements or
schedules are required to be included in the Registration Statement or the
Prospectus.
(d) The Company (i) keeps and will continue to keep books,
records and accounts that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the Company and (ii)
maintains and will continue to maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are executed
in accordance with management's general or specific authorization, (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (C) access to assets is permitted only in
accordance with management's general or specific authorization and (D) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Neither the Company nor any of its subsidiaries, nor any employee
or agent of the Company or any of its subsidiaries, has made, directly or
indirectly, any payment of funds of the Company or any subsidiary or received or
retained funds in violation of any law, rule or regulation.
(e) Since the dates as of which information is given in the
Registration Statement, except as otherwise stated or contemplated therein: (i)
there has been no material adverse change in the condition, financial or
otherwise, of the Company and its subsidiaries taken as a
<PAGE> 9
whole, or in the earnings, business affairs or business prospects of the Company
and its subsidiaries taken as a whole, whether or not arising in the ordinary
course of business; (ii) there have been no material transactions entered into
by the Company or any of its subsidiaries other than transactions in the
ordinary course of business; (iii) neither the Company nor any of its
subsidiaries has incurred any material obligation, contingent or otherwise; (iv)
there has been no change in the capital stock or debt of the Company or any of
its subsidiaries, and (v) there has been no dividend or distribution of any kind
declared, paid or made by the Company on its capital stock.
(f) The Company and each of its subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has the power and authority and holds all
licenses necessary or required to carry on its business and to own or lease and
operate its properties as described in the Registration Statement, and is duly
qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification. All of the
outstanding capital stock of each subsidiary of the Company has been duly
authorized and validly issued and is fully paid and nonassessable and is owned
by the Company free of any restriction on transfer, lien, encumbrance, security
interest or claim whatsoever. Except as set forth in the Registration Statement,
the Company does not own, and at the Closing Date will not own, directly or
indirectly, any share of stock or any other security of any corporation or have
any equity interest in any firm, partnership, joint venture, association or
other entity. Except as set forth on Schedule II hereto, there is no outstanding
right, warrant or option to acquire, or instrument convertible into or
exchangeable for, any capital stock or other equity interest in the Company or
any of its subsidiaries.
(g) All the outstanding shares of all the Company's
outstanding classes of capital stock are duly authorized and have been validly
issued and are fully paid, nonassessable and free of pre-emptive rights. All
outstanding shares of all classes of capital stock of the Company and all
rights, warrants or options to acquire, and all instruments convertible or
exchangeable for, shares of Common Stock of the Company have been issued in
accordance with applicable Federal and state securities laws. The Securities to
be sold by the Company are duly authorized and, when delivered to the
Underwriters against payment therefor as provided by this Agreement, will have
been validly issued and will be fully paid, nonassessable and free of preemptive
or similar rights.
(h) The authorized capital stock of the Company, including the
Common Stock, conforms to the description thereof in the Registration Statement
and the Prospectus. All outstanding Securities will be listed on the BSE and the
NASDAQ, subject only to official notice of issuance. The certificates for the
Securities are in valid and proper legal form. Except as set forth on Schedule
III, no holder of securities of the Company has any right to require the Company
to register shares of any class of capital stock or other securities.
(i) Neither the Company nor any of its subsidiaries is in
violation of any term or provision of its charter or bylaws or in default in the
performance or observance of any material obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any indenture or other instrument or agreement to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
or any property of the
<PAGE> 10
Company or any of its subsidiaries is bound.
(j) This Agreement has been duly authorized, executed and
delivered by the Company. The Company has full power and authority to enter into
and perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement, the compliance by the Company with all provisions
hereof and the consummation of the transactions contemplated hereby will not
conflict with or result in a breach of any of the terms or provisions of, or a
default under, the charter or by laws of the Company or any of its subsidiaries
or any agreement, indenture or other instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
or any property of the Company or any of its subsidiaries is bound, or violate
or conflict with any law, regulation or ruling or any order, judgment or decree
applicable to the Company or any of its subsidiaries or to any property of the
Company or any of its subsidiaries. No consent, approval, authorization or order
of any court or any governmental agency or body is required for the consummation
by the Company of the transactions contemplated hereby, except such as have been
obtained or may be required under the Act or under state securities or Blue Sky
Laws.
(k) Except as disclosed in the Prospectus, there is no
material action, suit or proceeding pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of its
subsidiaries is the subject, and no such action, suit or proceeding is
threatened or, to the best of the Company's knowledge, contemplated. No labor
disturbance by the employees of the Company or any of its subsidiaries exists or
is imminent that might be expected to materially and adversely affect the
earnings, business affairs or business prospects of the Company and its
subsidiaries taken as a whole, and the Company is not aware of any existing or
imminent labor disturbances by the employees of any of its principal suppliers
or customers that might be expected to result in any material adverse change in
the earnings, business affairs or business prospects of the Company and its
subsidiaries.
(l) Except as otherwise set forth in the Registration
Statement, the Company and each of its subsidiaries have good and marketable
title, free and clear of all liens, claims and encumbrances, except liens for
taxes not yet due and payable, to all property and assets that are described in
the Registration Statement as being owned by the Company and its subsidiaries,
subject only to such exceptions as in the aggregate are not material and do not
adversely affect the earnings, business affairs or business prospects of the
Company and its subsidiaries. All material leases to which the Company or any of
its subsidiaries is a party are valid and binding and no default has occurred
thereunder, and the Company and its subsidiaries enjoy peaceful and undisturbed
possession under all such leases.
(m) Neither the Company nor any of its subsidiaries is in
violation of any law, ordinance, governmental rule or regulation or court decree
to which it may be subject, or has failed to obtain and maintain in full force
and effect any license, permit, certificate or other governmental authorization
necessary to the ownership of any property of the Company or any of its
subsidiaries, or to the conduct of the business of the Company or any of its
subsidiaries, except for any such violation or failure that would not have had a
material adverse effect on the financial condition, earnings, business affairs
or business prospects of the Company.
<PAGE> 11
(n) There are no contracts or other documents that are
required to be filed as exhibits to or described in the Registration Statement
which have not been so filed or described. Each contract so described has been
duly and validly executed and delivered and is in full force and effect in
accordance with its terms.
(o) Except as set forth in the Registration Statement and
Prospectus, neither the Company nor any of its subsidiaries has violated any
environmental, safety or similar law applicable to its business, nor any
federal, provincial, state or local U.S. or Canadian law relating to
discrimination in the hiring, promotion or pay of employees, employment
conditions, working hours, employee benefits, nor any provisions of the Employee
Retirement Income Security Act or the rules and regulations promulgated
thereunder, except for any such violation that would not have had a material
adverse effect on the financial condition, earnings, business affairs or
business prospects of the Company.
(p) To the knowledge of the Company and its directors and
officers, the real property owned, leased or otherwise utilized by the Company
and its subsidiaries in connection with the operation of their businesses,
including without limitation any subsurface soils and ground water is free of
contamination from any substance or material presently known to be toxic or
hazardous, including without limitation any radioactive substance, methane,
volatile hydrocarbons, industrial solvents or any other material or substance
which based on present knowledge could now or at any time in the future cause a
material detriment to or materially impair the beneficial use thereof by the
Company or such subsidiary or constitute or cause a significant health, safety
or other environmental hazard to occupants or users thereof; such real property
does not contain any underground storage or treatment tanks, active or abandoned
water, gas or oil wells, or any other underground improvements or structures,
other than the foundations, footings or other supports for the improvements
located thereon.
(q) The Company and each of its subsidiaries maintains
reasonably adequate insurance for the conduct of their respective businesses and
the value of their respective properties. All such insurance is issued and in
force on the date hereof. The Company engaged or consulted with an appropriately
qualified insurance and risk management professional who has evaluated the
probability of occurrence and estimated severity of the casualty, liability,
property damage and similar risks encountered in the business of the Company and
its subsidiaries and advised the Company that it is adequately insured against
material losses.
(r) The Company and each of its subsidiaries have such
permits, licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own, lease and operate their
respective properties and to conduct their businesses in the manner described in
the Prospectus, subject to such qualifications as may be set forth in the
Prospectus. The Company and each of its subsidiaries have fulfilled and
performed all of their material obligations with respect to such permits, and no
event has occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material impairment of
the rights of the holder of any such permit, subject in each case to such
qualification as may be set forth in the Prospectus. Except as described in the
Prospectus, such permits contain no restrictions that are materially burdensome
to the Company or any of its subsidiaries.
<PAGE> 12
(s) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(t) All tax returns required to be filed by the Company and
each of its subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
due or claimed to be due from such entities have been paid, other than those
being contested in good faith and for which adequate reserves have been provided
or those currently payable without penalty or interest.
(u) Vista Laser Centers of the Pacific, Inc. is classified as
a "C" corporation with the Internal Revenue Service. The Company and its
subsidiaries are subject to direct taxation of their earnings (subject to group
or consolidated tax reporting) and the shareholders thereof are not subject to
taxation on the undistributed earnings of the Company or its subsidiaries.
(v) The Company's Board of Directors consists of those persons
listed in the Prospectus. Except as disclosed in the Prospectus, none of such
persons is employed by the Company nor is any of them affiliated with the
Company, except for service on its Board of Directors.
(w) Except as provided for herein, no broker's or finder's
fees or commissions are due and payable by the Company, and none will be paid by
it.
(x) The Company is eligible to use Form SB-2 for the
registration of the Securities.
(y) Neither the Company nor, to its knowledge after due and
diligent inquiry, any person other than any Underwriter, has made any
representation, promise or warranty, whether verbal or in writing, to anyone,
whether an existing shareholder or not, that any of the Securities will be
reserved for or directed to them during the proposed public offering.
(z) Except as set forth in the Prospectus, the Company has not
established, contributed to or maintained any "employee benefit plan" as defined
in the Employment Retirement Income Security Act or in the Internal Revenue Code
of 1986, as amended.
(aa) Neither the Company nor, to its knowledge, any of its
officers, directors or affiliates has taken, directly or indirectly, any action
designed to cause or result in, or which has constituted the stabilization or
manipulation of the price of the outstanding Preferred Stock or any other
outstanding securities of the Company to facilitate the sale or resale of the
Securities in the offering.
7. Sale Restrictions and Lockup Agreements.
The Company agrees to not permit or cause any of the shares of
any of its outstanding classes of capital stock (or securities which can be
converted, exchanged or exercised
<PAGE> 13
for any such stock) owned by any Principal Stockholders to be offered, sold or
disposed of, directly or indirectly, in any manner whatsoever (including
pursuant to Rule 144 under the Act) for a period of not less than twelve (12)
months following the Effective Date without obtaining the prior written approval
of the Representative. The Company shall cause the Principal Stockholders to
execute an agreement (the "Lockup Agreement") with the Underwriters regarding
such restrictions in form and substance satisfactory to the Representative and
its counsel.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), from and against any and all losses,
claims, damages, liabilities, judgments and expenses (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any preliminary
prospectus or the Prospectus or in any amendment or supplement thereto, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities,
judgments or expenses are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information furnished to the
Company by or on behalf of such Underwriter contained in the last paragraph on
the cover page of the Prospectus, the first paragraph of text on page 2 of the
Prospectus, concerning stabilization and over-allotment by the Underwriters, and
the section captioned "Underwriting," concerning the terms of the offering by
the Underwriters.
(b) In case any action shall be brought against any
Underwriter or any person controlling such Underwriter, based upon any
preliminary Prospectus, the Registration Statement or the Prospectus or any
amendment or supplement thereto and with respect to which indemnity may be
sought against the Company, such Underwriter shall promptly notify the Company
in writing and the Company shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses. Any Underwriter or
any such controlling person shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the employment of such counsel has been
specifically authorized in writing by the Company, (ii) the Company has failed
to assume the defense and employ counsel or (iii) the named parties to any such
action (including any impleaded parties) include both such Underwriter or such
controlling person and the Company and such Underwriter or such controlling
person shall have been advised by counsel that there may be one or more legal
defenses available to it that are different from or additional to those
available to the Company (in which case the Company shall not have the right to
assume the defense of such action on behalf of such Underwriter or such
controlling person, it being understood, however, that the Company shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all such Underwriters and controlling
<PAGE> 14
persons, which firm shall be designated in writing by the Representative, and
that all such fees and expense shall be reimbursed as they are incurred). The
Company shall not be liable for any settlement of any such action effected
without their written consent, but if settled with the written consent of the
Company, the Company agrees that each person so consenting shall indemnify and
hold harmless any Underwriter and any such controlling person from and against
any loss or liability by reason of such settlement. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for reasonable fees and
expenses of counsel is contemplated by the second sentence of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than ten business days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could
have been a party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, any person controlling the Company to the same
extent as the foregoing indemnity from the Company to each Underwriter but only
with reference to information furnished by or on behalf of such Underwriter
contained in the last paragraph of the cover page of the Prospectus, the last
paragraph of text on the inside front cover of the Prospectus concerning
stabilization and over-allotment by the Underwriters, and the section captioned
"Underwriting," concerning the terms of the offering by the Underwriters. In
case any action shall be brought against the Company, any of its directors, any
such officer, any such controlling person based on the Registration Statement,
the Prospectus or any preliminary Prospectus and in respect of which indemnity
may be sought against any Underwriter, such Underwriter shall have the rights
and duties given to the Company (except that if the Company shall have assumed
the defense thereof such Underwriter shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Underwriter),
and the Company, its directors, any such officers, and any such controlling
person shall have the rights and duties given to such Underwriter by Section
8(b) hereof.
(d) If the indemnification provided for in this Section 8 is
unavailable to the Underwriters or the Company, as the case may be, in respect
of any losses, claims, damages, liabilities, judgments or expenses referred to
therein, then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities, judgments and expenses
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other hand
from the offering of the Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Underwriters on the other hand in connection with
<PAGE> 15
the statements of omissions that resulted in such losses, claims, damages,
liabilities, judgments or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus and in the notes thereto. The relative fault
of the Company on the one hand and of the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Underwriters, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities, judgments or expenses referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 8 are several in proportion to the respective
underwriting commitment of each Underwriter and not joint.
The indemnity and contribution agreements contained in this
Section 8 and the representations and warranties of the Company in this
Agreement shall remain operative and in full force and effect regardless of any
termination of this Agreement or any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter.
9. Conditions to Underwriters' Obligations. The several obligations of
the Underwriters to purchase the Firm Units under this Agreement are subject to
the satisfaction of each of the following conditions:
(a) All of the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing Date and
any Option Closing Date with the same force and effect as if made on and as of
the Closing Date and any Option Closing Date.
(b) The Registration Statement shall have become effective not
later than 5:00 p.m. EST, on the date of this Agreement or at such later date
and time as you may approve in
<PAGE> 16
writing and no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been commenced or shall be pending before or contemplated by the Commission, and
any request for additional information on the part of the Commission shall have
been fulfilled.
(c) Since the date of the latest balance sheet included in the
Registration Statement and in the Prospectus: (i) there shall not have occurred
any material adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries,
whether or not arising in the ordinary course of business; (ii) there shall not
have been any change in the capital stock or increase in the long-term debt of
the Company or any of its subsidiaries from that set forth in the Registration
Statement and the Prospectus; and (iii) the Company and its subsidiaries shall
have no liability or obligation, direct or contingent, that is material to the
Company and its subsidiaries taken as a whole, other than those reflected in the
Registration Statement and the Prospectus.
(d) You shall have received on the Closing Date a certificate
dated the Closing Date signed by the principal executive officer and the
principal financial or accounting officer of the Company confirming the matters
set forth in Section 9(c) and to the effect that (i) no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceeding for that purpose is pending before or, to the knowledge of such
signers, contemplated by the commission; (ii) the Company has performed all
agreements and satisfied all conditions on its part to be performed or satisfied
under this Agreement at or prior to the Closing Date; (iii) the representations
and warranties of the Company herein contained are true and correct to the same
extent as if made on and as of the Closing Date; (iv) there is no litigation or
governmental proceeding pending or threatened against the Company or any of its
subsidiaries or any property of the Company or any of its subsidiaries that is
required to be disclosed in the Registration Statement and the Prospectus and is
not so disclosed; and (v) there is no failure by the Company or any of its
subsidiaries to comply with any applicable Federal, state or other law or
regulation relating to the conduct of the business of the Company and its
subsidiaries that may have a material adverse effect on the condition, financial
or otherwise, or on the earnings, business affairs or business prospects of the
Company and its subsidiaries, taken as a whole, other than as set forth in the
Registration Statement and the Prospectus.
(e) You shall have received on the Closing Date or on any
Option Closing Date an opinion (satisfactory to you and counsel for the
Underwriters), dated the Closing Date or Option Closing Date, as applicable, of
Law Office of Michael K. Hair, counsel for the Company, to the effect that:
(i) the Company and each of its subsidiaries is a
corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to
carry on its business and to own, lease and operate its
properties as described in the Registration Statement and the
Prospectus;
<PAGE> 17
(ii) the Company and each of its subsidiaries is duly
qualified and in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property
requires such qualification, except where the failure so to
qualify would not have a material adverse effect on the
earnings, business affairs or business prospects of the
Company and its subsidiaries, taken as a whole;
(iii) (A) the Company has the corporate power and
authority to enter into and perform this Agreement and to
issue, sell and deliver the Securities; and (B) this Agreement
has been duly and validly authorized, executed and delivered
by the Company;
(iv) (A) the authorized and issued capital stock of
the Company is correctly set forth in the Registration
Statement and Prospectus under the caption "Capitalization,"
and (B) the Securities to be sold by the Company hereunder
have been duly authorized and, when issued and delivered and
paid for hereunder, will be validly issued, fully paid and
nonassessable and free of pre-emptive or similar rights;
(v) all of the issued and outstanding shares of
capital stock of each subsidiary of the Company have been duly
authorized and validly issued, are fully paid and
nonassessable and, to such counsel's knowledge, are owned (or
will be owned on the Closing Date) by the Company free and
clear of any mortgage, pledge, lien, encumbrance, claim or
equity; there is no outstanding right, warrant or option to
acquire, or instrument convertible into or exchangeable for,
any shares of capital stock or other equity interest in any
subsidiary;
(vi) the description of the Securities contained or
to be contained in the Company's Registration Statement on
Form 8-A under the caption "Description of Registrant's
Securities to be Registered," is true and correct in all
material respects and fairly presents the information called
for with respect to the Securities, and the statements in the
Registration Statement and the Prospectus under the captions
"The Company," "Risk Factors," "Proposed Business", "Federal
Income Tax Considerations", and "Shares Eligible for Future
Sale", insofar as such statements constitute a summary of the
statutes, rules, regulations, documents or proceedings
referred to therein, are true and correct in all material
respects and fairly present the information called for by the
Act with respect thereto;
(vii) the Registration Statement has become effective
under the Act, the Company has complied in a timely manner
with the applicable provisions of Rule 424 and Rule 430A under
the Act, and no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for
that purpose is pending before or, to the knowledge of such
counsel, contemplated by the Commission;
(viii) such counsel does not know of any legal or
governmental proceeding
<PAGE> 18
pending or threatened to which the Company or any of its
subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is subject that is required
to be described in the Registration Statement or Prospectus
and is not so described;
(ix) such counsel does not know of any contract or
other document that is required to be described in the
Registration Statement or Prospectus or is required to be
filed as an exhibit to the Registration Statement that is not
described or filed as required; the descriptions thereof or
references thereto in the Registration Statement and
Prospectus are accurate in all material respects; and to such
counsel's knowledge, each such contract or other document is
in full force and effect in accordance with its terms;
(x) neither the Company nor any of its subsidiaries
is in violation of its charter or bylaws, and neither the
Company nor any of its subsidiaries, to the knowledge of such
counsel, is in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note
or any other evidence of indebtedness or in any material
indenture or other agreement to which the Company or any of
its subsidiaries is a party or by which the Company or any of
its subsidiaries or any property of the Company or any of its
subsidiaries is bound;
(xi) the Company and each of its subsidiaries has
such permits, licenses, franchises and authorizations of
governmental or regulatory authorities ("permits") as are
necessary to own, lease and operate its respective properties
and to conduct its business in the manner described in the
Prospectus, subject to such qualifications as may be set forth
in the Prospectus; to the best of such counsel's knowledge,
after due inquiry, the Company and each of its subsidiaries
has fulfilled and performed all of its material obligations
with respect to such permits and no event has occurred which
allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such
permit, subject in each case to such qualification as may be
set forth in the Prospectus; and, except as described in the
Prospectus, such permits contain no restrictions that are
materially burdensome to the Company or any of its
subsidiaries;
(xii) the execution, delivery and performance of this
Agreement and the consummation of the transactions
contemplated hereby will not conflict with or constitute a
breach of any of the terms or provisions of, or a default
under, the charter or bylaws of the Company or any of its
subsidiaries or any agreement, indenture or other instrument
to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries or any
property of the Company or any of its subsidiaries is bound,
or (assuming compliance with all applicable state securities
and Blue Sky laws) violate or conflict with any laws,
administrative regulations or rulings or orders, judgments or
decrees applicable to the Company or any of its subsidiaries
or to any property of the Company or any of its subsidiaries;
<PAGE> 19
(xiii) except for the order of the Commission (which
has been obtained) declaring the Registration Statement
effective and except for permits and similar authorizations
required under the securities or Blue Sky laws of certain
jurisdictions, no consent, approval, authorization or other
order of any court or regulatory body, administrative agency
or other governmental body is required for the consummation of
the transactions contemplated by this Agreement; and no
consents or waivers from the holders of the Company's capital
stock or debt securities are required in connection with the
consummation of the transactions contemplated hereby;
(xiv) to such counsel's knowledge, after due inquiry,
neither the Company nor any of its subsidiaries has violated
any environmental, safety or similar law applicable to its
business, nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees
nor any applicable federal or state wages and hours laws, nor
any provisions of the Employee Retirement Income Security Act
or the rules and regulations promulgated thereunder, which in
each case might result in any material adverse change in the
business, prospects, financial condition or results of
operations of the Company and its subsidiaries taken as a
whole;
(xv) to such counsel's knowledge, after due inquiry,
all material leases to which the Company or any of its
subsidiaries is a party are valid and binding and no default
has occurred or is continuing thereunder, which might result
in any material adverse change in the business, prospects,
financial condition or results of operations of the Company
and its subsidiaries taken as a whole;
(xvi) the Company is not an "investment company" or a
company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(xvii) except as set forth on Schedule III, to such
counsel's knowledge, after due inquiry, no holder of any
security of the Company has any right to require registration
of any outstanding class of capital stock or any other
security of the Company;
(xviii) each document, if any, filed pursuant to the
Exchange Act and incorporated by reference in the Registration
Statement and the Prospectus (except for financial statements
and schedules as to which such counsel need not express any
opinion) complied in all material respects with the
requirements of the Exchange Act and the applicable rules and
regulations of the Commission thereunder;
(xix) the Company is classified as a "C" corporation
with the Internal Revenue Service. The Securities constitute
an equity interest in the Company, and not indebtedness of the
Company, for federal income tax purposes under Section 385 of
the Internal Revenue Code of 1986, as amended.
(xx) The certificates evidencing the Securities to be
delivered hereunder are
<PAGE> 20
in due and proper form under Nevada law and the Securities
conform in all material respects to the description thereof
contained in the Prospectus.
(xxi) the Underwriters' Warrants, as hereafter
defined, have been duly authorized, executed, delivered, and
validly issued by the Company; the Underwriters' Underlying
Securities, as hereafter defined, to be issued on exercise of
the Underwriters' Warrants, and Common Stock to be issued on
the exercise of the Underwriters' Underlying Securities, will
be duly authorized, validly issued, fully paid, nonassessable,
and free of preemptive rights; the holders thereof will not be
subject to personal liability by reason of being such holders;
no governmental or regulatory approvals are required in
connection with the execution and delivery of the
Underwriters' Warrants, the issuance of the Underwriters'
Underlying Securities upon exercise thereof and issuance of
Common Stock on the exercise of Underwriters' Underlying
Securities (other than such approval as may be required by the
NASD); and the execution, delivery, and exercise of the
Underwriters' Warrants and conversion of Underwriters'
Underlying Securities will not conflict with or constitute a
breach of any of the terms or provisions of, or a default
under, the Articles of Incorporation or bylaws of the Company
or any agreement, indenture, other instrument, order, or
decree to which the Company is a party or by which it is
bound, or any law or regulation applicable to the Company;
(xxii) no transfer or other taxes are required to be
paid under Nevada law in connection with the sale and delivery
of the Securities and Underwriters' Warrants to the
Underwriters hereunder.
(xxiii) the Company has sufficient authorized but
unissued shares of Common Stock to cover exercise of any and
all Underwriters' Warrants; the Company has sufficient
authorized but unissued shares of Common Stock to cover the
exercise of any and all Underwriters' Underlying Securities.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, counsel for
the Underwriters, representatives of the independent public accountants for the
Company and you at which the contents of the Registration Statement and
Prospectus and related matters were discussed and, although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and Prospectus, on the basis of the foregoing, no facts have come to
the attention of such counsel that lead them to believe that the Registration
Statement or the Prospectus contain an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (it being understood that such
counsel need express no comment with respect to the financial statements,
schedules and other financial and statistical data included in the Registration
Statement or Prospectus).
In giving such opinion such counsel may rely as to matters of fact, to
the extent proper, on certificates of responsible officers of the Company. To
the extent such opinion involves matters
<PAGE> 21
governed by the laws of jurisdictions other than the United States, such counsel
may rely on the opinions of local counsel satisfactory to the Underwriters. Such
opinion shall be to such further effect with respect to other legal matters
relating to this Agreement and the sale of the Securities hereunder as you
reasonably may request.
(f) You shall have received from Titus, Brueckner & Berry,
P.C., counsel for the Representative, such opinion or opinions, dated as of the
Closing Date, with respect to the incorporation of the Company, the validity of
the Firm Units being sold on such Closing Date, the Registration Statement, the
Prospectus and other related matters as you reasonably may request, and such
counsel shall have received such papers and information as they reasonably
request to enable them to pass upon such matters. In rendering its opinion, such
counsel shall be entitled to rely upon the opinion of the Company's counsel
delivered pursuant to Section 9(e) above and upon certificates of the Company's
officers executed in support thereof.
(g) At the time of execution of this Agreement and on each
Closing Date or Option Closing Date, you shall have received a letter, addressed
to you, from KPMG Peat Marwick LLP, independent accountants, confirming that
they are independent certified public accountants within the meaning of the
Securities Act and the applicable Rules and Regulations, and stating, as of the
date of such letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given or incorporated in the Registration Statement and
Prospectus, as of a date not more than five days prior to the date of such
letter) the conclusions and findings of such firm with respect to the financial
information contained in the Registration Statement and prospectus, and other
matters covered by its letter delivered to you concurrently with the execution
of this Agreement, and confirming the conclusions and findings set forth in such
prior letter.
(h) The Company shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein contained
and required to be performed or complied with by the Company at or prior to the
Closing Date.
(i) The Securities shall have been approved for listing upon
notice of issuance by the BSE and the NASDAQ. The several obligations of the
Underwriters to purchase any Additional Units hereunder are subject to
satisfaction on and as of any Option Closing Date of the conditions set forth in
Section 9 (a) through (i) above, except that the opinion called for in Section 9
(e) and the letter referred to in Section 9 (g) shall be revised to reflect the
sale of the Additional Units.
10. Post-Effective Agreements and Covenants of the Company. The Company
agrees and covenants to act or cause others to act as described below following
the Effective Date:
(a) For a period of five (5) years from the Effective Date,
the Company shall cause the appointment of a non-voting advisor, designated by
the Representative, to its Board of Directors. Such designee shall attend
meetings of the Board and shall be entitled to receive reimbursement for all
reasonable costs incurred in attending such meetings, including, but not
<PAGE> 22
limited to, food, lodging and transportation.
To the extent permitted by law, the Company agrees to
indemnify the Underwriters and their designee against any and all claims arising
out of the designee's service as a non-voting advisor to the Board of Directors.
In the event the Company maintains a liability insurance policy affording
coverage for the acts of its officers and directors, it shall use its best
efforts to include each of the Underwriters and their designee as insureds under
such policy.
If the Representative does not exercise its option to
designate an advisor to the Company's Board of Directors, the Representative
shall nonetheless have the right to send a representative (who need not be the
same individual from meeting to meeting) to observe each meeting of the Board of
Directors. The Company agrees to give the Representative notice of each such
meeting and to provide the Representative with an agenda and minutes of the
meeting no later than the time it gives such notice and provides such items to
the directors.
(b) The Company shall retain American Stock Transfer & Trust
Company, as transfer agent, unless otherwise agreed to by Representative, for
the Securities for a period of five (5) years following the Effective Date. In
addition, for a period of five (5) years following the Effective Date, at the
request of the Representative, the Company shall cause such transfer agent to
provide the Representative on a monthly basis with copies of the Company's stock
transfer sheets and, when requested by the Representative, a current list of the
Company's securities holders, including a list of the beneficial owners of
securities held by a depository trust company, and other nominees.
(c) For a period of five (5) years from the Effective Date,
the Company shall provide to the Representative on a timely basis quarterly
statements setting forth such information regarding the Company's results of
operations and financial position (including balance sheets, profit and loss
statements, and cash flow statements) as is regularly prepared by management of
the Company.
(d) For a period of five (5) years from the Effective Date,
the Company shall continue to retain the accountants retained in accordance with
Section 9(g) hereof (or another nationally recognized accounting firm reasonably
acceptable to the Representative).
(e) For a period of five (5) years from the Effective Date,
the Company, at its expense, shall cause its regularly engaged independent
certified public accountants to review (but not audit) the Company's financial
statements for each of the first three (3) fiscal quarters prior to the
announcement of quarterly financial information, the filing of the Company's
Form 10-Q quarterly report and the filing of quarterly financial information to
stockholders.
(f) For a period of five (5) years from the Effective Date,
the Company shall provide the Representative, on a not less than annual basis,
with internal forecasts setting forth projected results of operations for each
quarterly and annual period in the two fiscal years following the respective
dates of such forecasts. Such forecasts shall be provided to the Representative
more frequently than annually if prepared more frequently by management. Revised
forecasts shall be
<PAGE> 23
prepared and provided to the Representative when required to reflect more
current information, revised assumptions or actual results that differ
materially from those set forth in the forecasts.
(g) The Company shall use its best efforts to cause the
Securities to be designated for quotation on the BSE and the NASDAQ and maintain
such listing for as long as the Securities are qualified for inclusion in the
BSE and the NASDAQ.
(h) Until such time as the Securities or the Common Stock are
listed for trading on the New York Stock Exchange, the American Stock Exchange
or NASDAQ-NMS, the Company shall cause its legal counsel to provide the
Representative with a list, to be updated at least annually, of those states in
which non-issuer transactions in the Securities or Common Stock are exempt from
registration under the Blue Sky laws of the several states.
(i) The Company will use the proceeds of the offering only as
set forth in the Registration Statement.
11. Underwriters' Warrants.
(a) In order to induce the Underwriters to enter into this
Agreement, the Company, for consideration of $0.001 per warrant, shall execute
and deliver to the Representative 60,000 five-year warrants (the "Underwriters'
Warrants") to purchase 60,000 Units at an exercise price per Underwriters'
Warrant equal to 120% of the public offering price of the Firm Units. Execution
and delivery of the Underwriters' Warrants shall be made to the Representative
at the Closing on the Closing Date. The Underwriters' Warrants shall be
registered in the name of any underwriter or any officer thereof or any member
of the selling group as specified by the Representative in writing to the
Company at least two days before the Closing Date. The cost of original issue
tax stamps, if any, in connection with the execution and delivery of the
Underwriters' Warrants shall be borne by the Company.
(b) The term "Underwriters' Underlying Securities" shall
include all Common Stock and Common Stock purchase warrants to be issued upon
the exercise of Underwriters' Warrants. The Underwriters' Warrants shall not be
redeemable by the Company and shall provide for adjustments in the number of
shares of Underwriters' Underlying Securities into which such warrants may be
exercised and to the exercise price thereof in order to prevent dilution in
the event of subsequent splits, consolidations, mergers or other actions
affecting the Common Stock. The Company shall reserve and at all times have
available a sufficient number of shares of its Common Stock to be issued upon
the exercise of the Underwriters' Warrants or upon the exercise of the
Underwriters' Underlying Securities. The Company shall not call for redemption
or redeem any of the Underwriters' Underlying Securities prior to commencement
of the Warrant Exercise Term, as defined herein, and then only upon such terms
and provisions for notice as are applicable to redemption of the Securities sold
in the offering.
(c) The Company and the Representative agree that the
Representative may designate that the Underwriters' Warrants be issued in
varying amounts directly to itself, other underwriters, their respective
officers or to members of the selling group. However, such
<PAGE> 24
designation will only be made by the Representative if it determines and
substantiates to the Company that such issuance will not violate the applicable
rules of the NASD. The Representative and the Company agree that any transfers
of the Underwriters' Warrants will only be made if they do not violate the
registration provisions of the Act.
(d) The Underwriters' Warrants may not be exercised or
transferred (except as set forth in section (c) above) during the 12-month
period following the Effective Date. Thereafter, until the fifth anniversary of
the Effective Date (the "Warrant Exercise Term"), the Underwriters' Warrants
shall be exercisable at the exercise price set forth in Section 11(a) in
accordance with the terms of the Underwriters' Warrants. If any of the
Underwriters' Warrants are not exercised by 5:00 p.m. EST on the fifth
anniversary of the Effective Date, all such Underwriters' Warrants remaining
unexercised shall expire.
(e) At any time during the Warrant Exercise Term, the
Representative or the holders of a majority of the Underwriters' Warrants,
acting together, shall have the right to demand on one occasion that the Company
(and the Company shall) prepare and file one Post- Effective Amendment to the
Registration Statement or prepare and file a new registration statement, if then
required under the Act, registering or qualifying for distribution to the public
the Underwriters' Warrants, Underwriters' Underlying Securities and Common Stock
issued or issuable upon exercise thereof. The Company shall bear all expenses
incurred in preparation and filing of any Post-Effective Amendment to the
Registration Statement or new registration statement to be filed pursuant to
this Section 11(e) including, without limitation, attorneys' fees, accounting
and auditing fees, and printing and mailing expenses. The Company shall cause
any such filing to remain effective for not less than ninety (90) days.
(f) If at any time before the seventh anniversary of the
Effective Date, the Company shall prepare and file one or more Post-Effective
Amendments to the Registration Statement (which for purposes of this Section 11
shall include filings on Form 1-A under the 1934 Act) or any new registration
statement under the Act, in connection with any actual or planned distribution
of equity or debt securities of the Company (including "shelf registrations"
pursuant to Rule 415 of the Act), or in connection with actual or planned
distributions of equity or debt securities previously issued by the Company to
be sold by holders thereof, the Company shall include or cause to be included
therein for registration or qualification for distribution the Underwriters'
Warrants, all issued and unissued Underwriters' Underlying Securities and all
Common Stock issued or issuable upon exercise thereof.
(g) Not less than thirty (30) days prior to the earlier of the
proposed or actual filing date of any Post-Effective Amendment to the
Registration Statement or any new registration statement as to which holders of
Underwriters' Warrants, Underwriters' Underlying Securities or Common Stock
issued upon conversion thereof have piggyback registration rights pursuant to
Section 11(f), the Company shall give written notice of such filing to each
holder thereof. The Company's obligation to provide such written notice shall
continue until the later of (i) registration of all Underwriters' Warrants,
Underwriters' Underlying Securities and Common Stock issued or issuable upon
exercise thereof, or (ii) the seventh anniversary of the Effective Date. Within
not more than twenty (20) days following receipt of any such notice from the
Company, holders of
<PAGE> 25
Underwriters' Warrants and Underwriters' Underlying Securities shall give
written notice to the Company of the quantity and description of securities that
such holder wishes to be registered or qualified for distribution under the
proposed Post-Effective Amendment to the Registration Statement or new
registration statement. The Company shall bear all expenses and fees incurred in
connection with the preparation and filing of any Post-Effective Amendment to
the Registration Statement or any new registration statement. The Company shall
cause any such filing to remain effective for not less than ninety (90) days.
12. Effective Date of Agreement and Termination. If the Registration
Statement has not been declared effective prior to the date of this Agreement,
this Agreement shall become effective at such time, after notification of the
effectiveness of the Registration Statement has been released by the Commission,
as you and the Company shall agree upon the public offering price and the Unit
Purchase Price. If the public offering price and the Unit Purchase Price shall
not have been determined prior to 6:00 P.M. New York time, on the seventh full
business day after the Registration Statement shall have become effective, this
Agreement shall thereupon terminate without liability on the part of the
Underwriters or the Company, except as set forth herein. If the Registration
Statement has been declared effective prior to the date of this Agreement, this
Agreement shall become effective upon execution and delivery by you and the
Company.
This Agreement may be terminated at any time prior to the Closing Date
by you by written notice to the Company if any of the following has occurred or
in your opinion is likely to occur:
(a) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, any adverse change or
development involving a prospective adverse change in or affecting particularly
the condition, financial or otherwise, of the Company or any of its
subsidiaries, or the earnings, business affairs or business prospects of the
Company or any of its subsidiaries taken as a whole, whether or not arising in
the ordinary course of business, as would, in your judgment, make the offering
or delivery of the Securities impracticable;
(b) any outbreak of hostilities or other national or
international calamity or crisis, if the effect of such outbreak, calamity or
crisis on the financial markets of the United States or elsewhere would, in your
judgment, make the offering or delivery of the Securities impracticable;
(c) suspension of trading in securities on any United States
stock exchange or system or limitation on prices (other than limitations on
hours or numbers of days of trading) for securities on any such exchange or
system;
(d) the enactment, publication, decree or other promulgation
of any Federal or state statute, regulation, rule or order of any court or other
governmental authority that in your opinion materially and adversely affects, or
will materially and adversely affect, the business or operations of the Company
or any of its subsidiaries;
(e) declaration of a banking moratorium by either federal,
provincial, state or local U.S. or Canadian authorities; or
<PAGE> 26
(f) the taking of any action by any federal, provincial, state
or local U.S. or Canadian government or agency in respect of its monetary or
fiscal affairs that in your opinion has a material adverse effect on the
financial or securities markets in the United States or upon the Company's
ability to utilize the offering proceeds in the manner described in the
Registration Statement.
If on the Closing Date or on any Option Closing Date, any one or more
of the Underwriters shall fail or refuse to purchase the Firm Units or
Additional Units which it or they have agreed to purchase hereunder on such
date, and the aggregate number of Firm Units or Additional Units which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
is not more than one-tenth of the total number of Units to be purchased on such
date, each non-defaulting Underwriter shall be obligated severally, in the
proportion which the number of Firm Units set forth opposite its name in
Schedule I bears to the total Firm Units that all the non-defaulting
Underwriters have agreed to purchase, or in such other proportion as you may
specify, to purchase the Firm Units or Additional Units that such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided that in no event shall the number of Firm Units or Additional
Units which any Underwriter has agreed to purchase pursuant to Section 2 hereof
be increased pursuant to this Section 12 by an amount in excess of one-ninth of
such number of Firm Units or Additional Units, as the case may be, without the
written consent of such Underwriter.
If on the Closing Date or on any Option Closing Date, any Underwriter
or Underwriters shall fail or refuse to purchase Firm Units or Additional Units
and the aggregate number Firm Units or Additional Units with respect to which
such default occurs is more than one-tenth of the aggregate number of Units to
be purchased on such date, and arrangements satisfactory to you and the Company
for purchase of such Units are not made within 48 hours after such default, this
Agreement will terminate without liability on the part of any nondefaulting
Underwriter or the Company. In any such case that does not result in termination
of this Agreement, either you or the Company shall have the right to postpone
the Closing Date or any Option Closing Date but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. Any action taken under this section shall not relieve any defaulting
Underwriter from liability in respect of any default of any such Underwriter
under this Agreement.
13. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company, c/o Law Office
of Michael K. Hair, 7407 E. Ironwood Ct., Scottsdale, AZ 85258, Attention:
Michael K. Hair, and (b) if to any Underwriter or to you, c/o Dickinson & Co. at
110 Wall Street, 23rd Floor, New York, NY 10005, Attention: T. Marshall
Swartwood or in any case to such other address as the person to be notified may
have requested in writing.
The respective indemnities, contribution agreements, representations,
agreements, covenants, warranties and other statements of the Company, its
officers and directors, and the several Underwriters set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
and will survive delivery of and payment for the Securities, regardless of (i)
any investigation, or statement as to the results thereof, made by or on behalf
of any Underwriter or by or on behalf of the Company, its officers or directors,
any controlling person of the Company, (ii)
<PAGE> 27
acceptance of the Securities and payment for them hereunder and (iii)
termination of this Agreement.
If this Agreement shall be terminated by the Underwriters because of
any failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, or if for any reason any of the
conditions to this Agreement have not been fulfilled, the Company will reimburse
the several Underwriters for all out-of-pocket expenses (including the fees and
expenses of counsel) reasonably incurred by them in connection with this
Agreement and the transactions contemplated hereby.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other persons shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Securities from any of the several Underwriters merely because of
such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
VISTA LASER CENTERS OF THE PACIFIC,INC.
By:__________________________________________
David P. Bates III, President
Confirmed in New York, New York
on the date first above written,
on behalf of themselves and the
other several Underwriters named
in Schedule I.
DICKINSON & CO.
By:___________________________________
T. Marshall Swartwood
<PAGE> 28
SCHEDULE I
<TABLE>
<CAPTION>
Firm Units
Underwriters To Be Purchased
---------------
<S> <C>
Dickinson & Co ................................................
Total ......................................................... 600,000
</TABLE>
<PAGE> 29
SCHEDULE II
Rights, Warrants and Options to Acquire Securities
1.
2.
Convertible Instruments
A.
B.
<PAGE> 30
SCHEDULE III
Registration Rights
<PAGE> 1
IN WITNESS WHEREOF, we have executed this instrument as of the dates
set forth below.
_____________________________________
David P. Bates III, President
_____________________________________
Thomas A. Schultz, Secretary
State of_________________________)
)ss.:
County of________________________________)
On ________________________________________, 1996, personally appeared
before me, a Notary Public, David P. Bates III, who acknowledged that he
executed the above instrument.
(Notary Stamp or Seal) _____________________________________
Signature of Notary
State of_________________________)
)ss.:
County of________________________________)
On ________________________________________, 1996, personally appeared
before me, a Notary Public, Thomas A. Schultz, who acknowledged that he executed
the above instrument.
(Notary Stamp or Seal) _____________________________________
Signature of Notary
11
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF DESIGNATION
ESTABLISHING THE RIGHTS AND PREFERENCES OF
10% SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
VISTA LASER CENTERS OF THE PACIFIC, INC.
A NEVADA CORPORATION
We, the undersigned, J. ROBERT GRIFFIN and THOMAS A. SCHULTZ, do hereby
certify:
(1) We are the Chairman and Secretary, respectively, of VISTA LASER
CENTERS OF THE PACIFIC, INC., a Nevada corporation (the "Corporation").
(2) Pursuant to the authority granted under the Corporation's Articles
of Incorporation, the Board of Directors of said Corporation, by unanimous
consent in writing effective as of February 5, 1996, as amended on July 10 and
August 16, 1996, has duly adopted the following recitals and resolutions:
"WHEREAS, this Corporation is authorized by its Articles of
Incorporation to issue 5,000,000 shares of preferred stock, par value
$0.01 per share (the "Preferred Stock"); and
"WHEREAS, this Corporation has not previously designated any
series of its Preferred Stock; and
"WHEREAS, the Board of Directors of this Corporation is
authorized, as to the Preferred Stock, within the limitations and
restrictions stated in the Articles of Incorporation, to fix by
resolution or resolutions the designation of each series of Preferred
Stock and the powers, preferences and relative participating, optional or
other special rights and qualifications, limitations or restrictions
thereof, including, without limitation, such provisions as may be desired
concerning dividends, redemption, voting, dissolution or the distribution
of assets, conversion or exchange, and such other subjects or matters as
may be fixed by resolution or resolutions of the Board of Directors; and
"WHEREAS, the Board of Directors of this Corporation desires,
pursuant to its authority granted under the Articles of Incorporation, to
determine and fix the rights, preferences, privileges and restrictions
relating to a first series of said Preferred Stock,
1
<PAGE> 2
and to fix the number of shares constituting and the designation of such
series;
"NOW, THEREFORE, BE IT RESOLVED, that there is hereby
authorized a series of Preferred Stock on the terms and with the
provisions herein set forth:
SECTION 1. DESIGNATION, NUMBER AND RESTRICTIONS ON ISSUANCE.
The designation of the series of Preferred Stock authorized by these
resolutions shall be "10% Series A Cumulative Convertible Preferred
Stock" (the "Series A Preferred Stock"). The authorized number of shares
constituting the Series A Preferred Stock shall be Three Hundred Fifty
Thousand (350,000) shares. The Board of Directors is further authorized,
within the limitations and restrictions set forth in the Articles of
Incorporation or stated in any resolution or resolutions of the Board of
Directors, to increase or decrease (but not below the number of shares of
such series then outstanding) the number of shares of Series A Preferred
Stock subsequent to the issuance of shares of such series. In case the
number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior
to the adoption of these or any subsequent resolutions originally fixing
the number of shares of such series.
SECTION 2. CONVERSION RIGHTS.
2.1. As used herein, the term "Common Stock" shall mean and
include the Corporation's Common Stock, $.01 par value, as constituted on
February 5, 1996, and as the same shall be constituted thereafter
including adjustments required for any capital reorganization or
reclassification thereof subsequent to February 5, 1996. At any time
hereafter and up to the close of business on the second business day
immediately preceding a date fixed for redemption of Series A Preferred
Stock in accordance with Section 7 below, at the election of the
respective holders of Series A Preferred Stock and subject to the terms
and conditions set forth herein, issued and outstanding shares of the
Series A Preferred Stock may be converted into fully paid and
nonassessable shares of Common Stock of the Corporation at the conversion
ratio of One (1) share of Common Stock for each share of Series A
Preferred Stock, subject to adjustment from time to time as provided in
Section 2.4 below (herein called the "Conversion Ratio").
2.2. In order to exercise the conversion privilege, a holder
of outstanding shares of Series A Preferred Stock shall surrender
certificates for the Series A Preferred Stock to be converted and
exchanged at the principal office of the Corporation, and shall give
written notice to the Corporation at said office that the holder elects
to convert such Series A Preferred Stock into shares of the Corporation's
Common Stock. Such notice shall also state the name or names (with
addresses) in which certificates for shares of Common Stock issuable on
such conversion shall be issued, subject to compliance with applicable
securities laws. No payment or adjustment shall be made upon any
conversion on account of any accrued and unpaid dividends on the Series A
Preferred Stock surrendered for conversion, and the right to payment of
any such accrued and
2
<PAGE> 3
unpaid dividends shall be waived and forfeited by conversion into Common
Stock.
2.3. The Corporation shall not issue fractions of shares of
Common Stock upon conversions of shares of Series A Preferred Stock. If
more than one certificate representing shares of the Series A Preferred
Stock shall be surrendered for conversion at one time by the same holder,
the number of full shares of Common Stock which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate number
of shares of Series A Preferred Stock so surrendered. If any fractional
interest in a share of Common Stock would otherwise be deliverable upon
the conversion of any shares of Series A Preferred Stock, the Corporation
shall pay a cash adjustment in respect of such fractional interest in an
amount equal to the current market value of such fractional interest. Any
such current market value shall be computed on the basis of the last
reported sale price of Common Stock on any securities exchange or as
reported by the National Association of Securities Dealers Automated
Quotation System (or the quoted closing bid price if there be no sales on
such date) at the close of business on the date of conversion (or, if
such day is not a trading day, on the next preceding trading day). So
long as there is outstanding any Series A Preferred Stock, there shall be
reserved unissued, out of the authorized but unissued shares of Common
Stock, a number of shares sufficient to provide for conversion of Series
A Preferred Stock in accordance with the provisions of this Section 2.
2.4. The Conversion Ratio shall be subject to adjustment from
time to time hereafter as follows:
(A) In case the Corporation at any time after February 5, 1996
shall issue a stock dividend on its outstanding shares of Common Stock or
shall subdivide or combine the outstanding shares of Common Stock
issuable upon conversion of the Series A Preferred Stock, the Conversion
Ratio and number of shares issuable upon conversion of the Series A
Preferred Stock shall be proportionately and equitably adjusted as if the
holder of record of Series A Preferred Stock had converted shares of
Series A Preferred Stock into Common Stock immediately prior to such
event. Any such adjustment shall become effective at the close of
business on the date that such stock dividend, subdivision or combination
relating to the Common Stock shall become effective. For the purposes of
such adjustment, the Conversion Ratio in effect immediately prior to such
stock dividend, subdivision or combination shall forthwith be changed to
a Conversion Ratio determined by:
(i) dividing the total number of shares of Common
Stock outstanding immediately after the stock dividend,
subdivision or combination, by an amount equal to the total
number of shares of Common Stock outstanding immediately prior
to such stock dividend, subdivision or combination; and
(ii) multiplying the result of clause (i) above by
the actual Conversion Ratio in effect immediately prior to
such stock dividend, subdivision or combination.
3
<PAGE> 4
and the total of shares of Common Stock thereafter issuable and
deliverable on conversion of the Series A Preferred Stock shall be the
number of shares obtained by applying the Conversion Ratio as so
adjusted.
(B) In case of any capital reorganization or any
reclassification of the shares of Common Stock of the Corporation (other
than as a result of a stock dividend, subdivision or combination, as
aforesaid), or in case of any consolidation with or merger of the
Corporation into or with another corporation, or the sale, lease or other
disposition of the properties of the Corporation as an entirety or
substantially as an entirety, then as a part of such reorganization,
reclassification, consolidation, merger, sale, lease or other
disposition, as the case may be, lawful provision shall be made so that
the holders of record of the Series A Preferred Stock shall have the
right thereafter to receive upon conversion thereof the kind and amount
of shares of stock or other securities or property which such holders
would have been entitled to receive if, immediately prior to such
reorganization, reclassification, consolidation, merger, sale, lease or
other disposition, such holders had held the number of shares of Common
Stock which were then issuable upon the conversion of the Series A
Preferred Stock then held by them. In any such case, appropriate
adjustment shall be made in the application of the provisions set forth
herein with respect to the rights and interests thereafter of the holders
of record of the Series A Preferred Stock, to the end that the provisions
set forth herein (including provisions with respect to adjustments of the
Conversion Ratio) shall thereafter be applicable, as nearly as reasonably
may be, in relation to any shares of stock or other property thereafter
deliverable upon the conversion of such Series A Preferred Stock.
(C) In addition to any adjustment required by the provisions
of subsections (A) and (B) of this Section 2.4, the Conversion Ratio
shall also be adjusted from time to time in accordance with the
provisions of this subsection (C):
C-1. Certain Definitions. For the purposes
of this subsection (C), the following terms and provisions
shall apply:
(i) "Conversion Price" shall initially
mean $5.00 per share of Common Stock, representing the
conversion price applicable to the purchase of Common Stock
upon conversion of Series A Preferred at the initial
Conversion Ratio in effect hereunder and taking the initial
value of each share of Series A Preferred for such purpose at
$5.00 per share; provided, that in the event of any adjustment
of the Conversion Ratio under subsections (A) or (B) above, or
in the event of any adjustment to the Conversion Price
required by the provisions of this subsection (C), the
Conversion Price in effect thereafter shall be proportionately
and equitably adjusted.
(ii) "Convertible Securities" shall
include any options, rights or warrants to subscribe for or
purchase Common Stock in the Corporation or any securities
convertible into or exchangeable for Common Stock without the
payment of any further consideration other than cash, if any.
4
<PAGE> 5
C-2. Certain Events Not Requiring
Adjustment.
(a) No adjustment of the Conversion
Price and Conversion Rate shall be made under the provisions
of this subsection (C) unless such adjustment would require an
increase or decrease of at least $.05 in the Conversion Price
per share of Common Stock (it being understood that the such
Conversion Price is initially $5.00 per share of Common Stock,
as aforesaid); provided that any adjustment(s) which by reason
of this clause (a) are not required to be made shall be
carried forward and shall be made at the time of, and together
with, the next subsequent adjustment hereunder which, together
with any adjustment(s) so carried forward, shall require an
increase or decrease of at least $.05 in the Conversion Price
then in effect hereunder.
(b) Notwithstanding anything to the
contrary hereinafter set forth, no adjustment to the
Conversion Price or to the number of shares of Common Stock
issuable upon conversion of Series A Preferred shares
hereunder will be required:
(i) upon the exercise of any options or warrants
to purchase securities granted or issued by
the Corporation prior to its initial public
offering of securities or upon the
conversion into Common Stock of any shares
of the Company's preferred stock issued in
connection with the Corporation's initial
public offering of securities or outstanding
prior to such initial public offering; or
(ii) upon the grant or exercise or any other
options to officers, directors, employees or
consultants which may hereafter be granted
or exercised under the Company's stock
option plan or under any other employee
benefit plan of the Corporation; or
(iii) upon the issuance or sale of Common Stock
upon conversion or exchange of any
Convertible Securities, whether or not any
adjustment in the Conversion Price was made
or required to be made upon the issuance or
sale of such Convertible Securities.
C-3. Adjustments. Except as provided above,
in case of the issuance or sale by the Corporation for cash or
other consideration of any Common Stock or Convertible
Securities (and whether or not the right of conversion or
exchange thereunder is immediately exercisable), in which the
price per share for which Common Stock is issuable, either in
such transaction or upon the conversion or exchange of such
Convertible Securities, shall be less than the Conversion
Price then in effect, then the Conversion Price to be in
effect after any such transaction shall be reduced to a
Conversion Price (calculated to the nearest cent) determining
by dividing
5
<PAGE> 6
(i) an amount equal to (a) the sum of the
number of shares of Common Stock outstanding and
issuable upon the conversion or exchange of all
Convertible Securities outstanding immediately prior
to the transaction, said sum to be multiplied by the
Conversion Price then in effect, plus (b) the
aggregate consideration to be received for the Common
Stock and/or Convertible Securities issuable in the
transaction (including any proceeds receivable upon
the exercise of any right of conversion or exchange
thereunder), by
(ii) the sum of the number of shares of
Common Stock outstanding and issuable upon the
conversion or exchange of all Convertible Securities
outstanding immediately after the transaction.
Whenever any adjustment to the Conversion Price is required
hereunder, a proportionate adjustment to the Conversion Ratio
and number of shares of Common Stock issuable upon conversion
of the Series A Preferred shall be made. Such adjustment shall
become effective as of the date upon which an transaction
requiring an adjustment hereunder shall take effect.
On the expiration of any right, warrant or option or
the termination of any right to convert or exchange any
Convertible Securities which required an adjustment hereunder,
the Conversion Price then in effect hereunder shall forthwith
be readjusted to such Conversion Price as would have obtained
(a) had the adjustments made upon the issuance or sale of such
rights, warrants, options or Convertible Securities been made
upon the basis of the issuance of only the number of shares of
Common Stock theretofore actually delivered (and the total
consideration received therefor) upon the exercise of such
rights, warrants or options or upon the conversion or exchange
of such Convertible Securities and (b) had adjustments been
made on the basis of the Conversion Price as adjusted under
clause (a) of this paragraph for all transactions (which would
have affected such adjusted Conversion Price) made after the
issuance or sale of such rights, warrants, options or
Convertible Securities.
In case the Corporation shall modify the rights of
conversion, exchange or exercise of any Convertible
Securities, other than the Series A Preferred stock, for any
reason other than an event that would require adjustment to
prevent dilution, such that the consideration per share to be
received by the Corporation after such modification is less
than the Conversion Price in effect prior to such
modification, the Conversion Price to be in effect after such
modification shall be determined by multiplying the Conversion
Price in effect immediately prior to such event by a fraction,
of which the numerator shall be the number of shares of Common
Stock outstanding and issuable upon the conversion or exchange
of all Convertible Securities outstanding immediately prior to
the transaction multiplied by the Conversion Price on the date
prior to the modification plus the number of shares of Common
Stock which the aggregate consideration receivable by the
Corporation for the securities affected
6
<PAGE> 7
by the modification would purchase at the then current market
price, and of which the denominator shall be the number of
shares of Common Stock outstanding and issuable upon the
conversion or exchange of all Convertible Securities
outstanding immediately after such modification plus the
number of shares of Common Stock to be issued upon conversion,
exchange or exercise of the modified securities at the
modified rate. Such adjustment shall become effective as of
the date upon which any such modification shall take effect.
In case of the sale of any shares of Common Stock,
any Convertible Securities, any rights or warrants to
subscribe for or purchase, or any options for the purchase of,
Common Stock or Convertible Securities requiring an adjustment
to the Conversion Price hereunder, the consideration received
by the Corporation therefor shall be deemed to be: (i) if sold
for cash, the gross sales price therefor without deducting
therefrom any expense paid or incurred by the Corporation or
any underwriting discounts or commissions or concessions paid
or allowed by the Corporation in connection therewith; and
(ii) if sold for property other than cash, the current fair
market value thereof as determined in good faith by the Board
of Directors of the Corporation.
2.5. Upon any conversion of Series A Preferred Stock in
accordance with the foregoing, all of such shares of Series A Preferred
Stock shall be canceled and revert to the status of authorized and
unissued shares of Preferred Stock.
SECTION 3. VOTING RIGHTS. The holders of Series A Preferred
Stock shall be entitled to one vote per share on all matters on which
stockholders of the Corporation are entitled to vote, in addition to any
voting rights required by law; provided, however, that in the event there
shall be an adjustment in the Conversion Ratio pursuant to the provisions
of Section 2.4 above, the number of votes per share for Series A
Preferred Stock shall be similarly adjusted so that the votes per share
of Series A Preferred Stock shall at all times be equal to the number of
full shares of Common Stock into which such shares of Series A Preferred
Stock may be converted.
SECTION 4. RANK AND PREFERENCE. Shares of Series A Preferred
Stock shall, with respect to dividend rights, rights on redemption and
rights on liquidation, winding up and dissolution, have preference over
and rank prior to all classes of Common Stock and shall rank pari passu
with all other series of Preferred Stock. In case the stated dividends
and the amounts payable on liquidation, distribution or sale of assets,
dissolution or winding up of the Corporation are not paid in full, the
shareholders of all series of Preferred Stock shall share ratably in the
payment of dividends, including accumulations, if any, in accordance with
the sums which would be payable on such shares if all dividends were
declared and paid in full and in any distribution of assets other than by
way of dividends, in accordance with the sums which would be payable on
such distribution if all sums payable were discharged and paid in full.
7
<PAGE> 8
SECTION 5. DIVIDENDS AND RESTRICTIONS ON CERTAIN REPURCHASES.
5.1. The holders of the shares of Series A Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors, out of funds legally available for the payment of dividends,
cumulative dividends at the annual rate of 10% per annum, or fifty cents
($0.50) per share. Each of such annual dividends shall be fully
cumulative and shall accrue (whether or not declared or permitted to be
paid), from the first day such shares were first issued.
5.2. If declared by the Board of Directors, dividends shall be
payable annually on the last day of the month in which the corporation
shall successfully complete an initial public offering of its securities
with the first dividend payment date to be in the year 1997. In the event
any shares of Series A Preferred Stock shall be outstanding for more or
less than the period covered by such dividend year, the amount of the
dividend shall be prorated for such periods. Such dividends shall be paid
to the holders of record at the close of business on the date specified
by the Board of Directors of the Corporation at the time the dividend is
declared; provided, however, that such record date shall be not more than
30 days nor less than 10 days prior to the respective dividend payment
date.
5.3. All dividends paid with respect to shares of the Series A
Preferred Stock shall be paid pro rata to the holders entitled thereto.
5.4. No dividends, other than dividends payable solely in
Common Stock, shall be declared by the Board of Directors on any class or
series of equity securities of the Corporation unless and until such time
as all accrued and unpaid dividends on the Series A Preferred Stock have
been paid in full or unless the Series A Preferred Stock has been
redeemed in accordance with its terms or are fully converted into Common
Stock of the Corporation or are otherwise reacquired and retired in full
by the Corporation. The Corporation may not pay or set apart for payment,
other than dividends or other distributions or payments payable solely in
Common Stock, any other distributions on any shares of the Corporation's
Common Stock, and may not purchase or otherwise redeem for cash or other
tangible property, other than in shares of Common Stock, any shares of
the Corporation's Common Stock or any warrants, rights or options
exercisable for or convertible into any shares of Common Stock unless and
until such time as the Series A Preferred Stock has been redeemed in
accordance with its terms or are fully converted into Common Stock of the
Corporation or are otherwise reacquired and retired in full by the
Corporation.
5.5. (a) In event the Corporation shall have accrued the
payment of dividends beyond a date on which dividends would otherwise be
declared hereunder, the Corporation, at the election of its Board of
Directors made at any time thereafter (so long as such dividends have not
been paid in cash), may elect to pay all cumulative accrued dividends
otherwise due and payable in shares of Series A Preferred Stock or Common
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Stock in lieu of cash. In such event, the Corporation shall advise each
holder of record of Series A Preferred Stock in writing on the Record
Date, not more than 30 days nor less than 10 days prior to the respective
dividend payment date, of the Corporation's election to make such
dividend payment in shares of the Corporation's Series A Preferred Stock
or Common Stock. For the purposes of this Certificate, "Common Stock"
shall mean the Corporation's Common Stock as constituted on the Record
Date.
(b) For any dividend payment to be made in Series A
Preferred Stock or Common Stock as herein provided, the number of shares
issuable for such dividend payment shall be determined by dividing the
cumulative accrued dividend payments due on said dividend payment date by
the Dividend Stock Value. "Dividend Stock Value" shall mean 100% of the
Fair Market Value per share of the series or class of securities to be
paid as dividends determined as of the applicable Record Date for the
payment of such accrued dividends. For this purpose "Fair Market Value"
as of any specific Record Date shall be determined by reference to the
unweighted average closing sale prices for the series or class of
securities to be paid as dividends during the ten days on which such
shares are actually traded in the NASDAQ system or on a national
securities exchange immediately prior to the Record Date upon which Fair
Market Value is to be determined. (If for any reason closing sale prices
are not quoted by the NASDAQ system on any such day, then the closing
market price for such day shall be deemed the closing bid price for such
day as reported by the National Quotation Bureau). In the event the
series or class of securities to be paid as dividends is not actively
quoted and traded in any securities market, the Fair Market Value thereof
shall be determined in the exclusive discretion of the Corporation's
Board of Directors acting in good faith.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING-UP.
6.1. In the event of any liquidation, dissolution or winding
up of the Corporation, either voluntary or involuntary, the holders of
Series A Preferred Stock then outstanding shall be entitled to receive
ratably, prior and in preference to any distribution of any of the assets
of the Corporation to the holders of any other equity securities of the
Corporation other than Preferred Stock, by reason of their ownership
thereof, the sum of FIVE DOLLARS ($5.00) per share outstanding plus all
accrued and unpaid dividends thereon, each payable in cash (which may be
payable from either capital or surplus) or, if cash is not then
available, in property of the Corporation. In the event it is necessary
or advisable for the Corporation to determine the value of property for
any purpose hereunder, the value of such property so received by holders
of Series A Preferred Stock will be deemed to be its fair market value as
determined in good faith by the Board of Directors of the Corporation
unless a majority in interest of the holders of issued and outstanding
Series A Preferred Stock shall demand an independent appraisal of such
property. If, upon the occurrence of any such event, the assets thus
distributed among the holders of the Series A Preferred Stock shall be
insufficient to permit the payment to such holders of the full
preferential amount due to them hereunder, then the entire assets of this
Corporation legally available for distribution shall be distributed
ratably among
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<PAGE> 10
the holders of all series of the Preferred Stock. Except as provided
above, holders of the Series A Preferred Stock shall not be entitled to
any distribution in the event of liquidation, dissolution or winding up
of the affairs of the Corporation.
6.2. For the purposes of this Section 6, a sale of all or
substantially all of the assets of this Corporation or a merger of the
Corporation with or into any other corporation or corporations where the
Corporation is not the surviving entity, shall not be deemed to be a
liquidation, dissolution or winding-up of the Corporation within the
meaning of Section 6.1 unless no provision has been made for the exchange
of securities for Series A Preferred Stock in connection with the
consummation of any such sale of assets or merger.
6.3. The liquidation payment with respect to each outstanding
fractional share of Series A Preferred Stock shall be equal to a ratably
proportionate amount of the liquidation payment with respect to each
outstanding share of Series A Preferred Stock.
SECTION 7. REDEMPTION.
7.1. No Mandatory Redemption. The Corporation shall have no
mandatory obligation to redeem shares of Series A Preferred Stock;
provided, however, in the event of any liquidation, dissolution or
winding-up of the Corporation, either voluntary or involuntary, or in the
event or sale of all or substantially all of the assets of this
Corporation or a merger of the Corporation with or into any other
corporation or corporations where the Corporation is not the surviving
entity and in which no provision has been made for the exchange of
securities for Series A Preferred Stock, each share of Series A Preferred
Stock then outstanding shall be entitled to receive the consideration
specified in Section 6.1 above.
7.2. Optional Redemption. The Corporation at its option, at
any time and from time to time, may redeem all or any portion of the
Series A Preferred Stock (and if only a portion, in an amount equal to an
even multiple of 10,000 shares) then outstanding at a redemption price of
SEVEN DOLLARS AND FIFTY CENTS ($7.50) per share plus the payment of all
accrued and unpaid dividends on the shares so redeemed.
7.3. Upon any redemption of Series A Preferred Stock, written
notice shall be given to the holders of the Series A Preferred Stock for
shares to be purchased or redeemed at least thirty (30) days prior to the
date fixed for redemption. The notice shall be addressed to each such
stockholder at the address of such holder appearing on the books of the
Corporation or given by such holder to the Corporation for the purpose of
notice, or, if no such address appears or is so given, at the last known
address of such shareholder. Such notice shall specify the date fixed for
redemption, shall state that all shares of Series A Preferred Stock
outstanding are to be redeemed and the number of shares of Series A
Preferred Stock to be so redeemed, and shall call upon such holder to
surrender to the Corporation on said date, at the place designated in the
notice, such
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<PAGE> 11
holder's certificate or certificates representing the shares to be
redeemed on the date fixed for redemption stated in such notice. Unless
such person shall elect to convert the same into Common Stock in
accordance with Section 2 above, each holder of shares of Series A
Preferred Stock called for redemption shall surrender the certificate or
certificates evidencing such shares to the Corporation at the place
designated in such notice and shall thereupon be entitled to receive
payment of the redemption price on the date fixed for redemption.
7.4. If, on or prior to any date fixed for redemption, the
Corporation deposits, with any bank or trust company in the State of New
York, as a trust fund, a sum sufficient to redeem all shares of Series A
Preferred Stock called for redemption which have not theretofore been
surrendered for conversion, with irrevocable instructions and authority
to the bank or trust company to pay, on or after the date fixed for
redemption, the redemption price of the shares to their respective
holders upon the surrender of their share certificates, then from and
after the date of redemption the shares to be redeemed shall be redeemed
and dividends and other distributions on those shares shall cease to
accrue after the date such shares were called for redemption. The deposit
shall constitute full payment for the shares of Series A Preferred Stock
to their holders and from and after the date of the deposit the shares of
Series A Preferred Stock shall no longer be outstanding, and the holders
thereof shall cease to be shareholders with respect to such shares, and
shall have no rights with respect thereto except the right to receive
from the bank or trust company payment of the redemption price of the
shares without interest upon surrender of their certificates therefor and
the right to receive from the Corporation any accrued dividends thereon
through the date such shares were called for redemption. Any interest
accrued on any funds so deposited shall be the property of, and paid to,
the Corporation.
7.5. In the event that fewer than all the outstanding shares
of Series A Preferred Stock are to be redeemed, the number of shares to
be redeemed shall be determined by the Board of Directors and the shares
to be redeemed shall be selected by lot or pro rata as may be determined
by the Board of Directors. In case it shall designate by lot the shares
so to be redeemed, the Board of Directors shall have full power and
authority to prescribe the manner in which the drawings by lot shall be
conducted.
7.6. Notwithstanding anything contained herein to the
contrary, the Corporation may not redeem any shares of Series A Preferred
Stock and no sums therefor shall be paid or set aside for payment by the
Corporation if, at the time and after giving effect to such payment, the
same is prohibited by the laws of the State of Nevada.
7.7. Upon any redemption of Series A Preferred Stock in
accordance with the foregoing, all of such shares of Series A Preferred
Stock shall be canceled and revert to the status of authorized and
unissued shares of Preferred Stock.
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SECTION 8. REQUIRED NOTICES. In case at any time:
(a) the Corporation shall declare or pay any dividend payable in
stock or other consideration or make any distribution to the
holders of its Common Stock; or
(b) the Corporation shall offer to the holders of its Common Stock
any additional shares of stock of any class or other rights;
(c) there shall be any capital reorganization or reclassification
of the capital stock of the Corporation, or any consolidation
or merger of the Corporation with, or sale of all or
substantially all of its assets to, another corporation; or
(d) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Corporation;
then, in any one or more of such cases, the Corporation shall cause to be
mailed to the holders of record of then outstanding shares of Series A
Preferred Stock (i) at least 30 days' prior written notice of the date on
which the books of the Corporation shall close or a record shall be taken
for such dividend, distribution or subscription rights or for determining
rights to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, and
(ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, at
least 30 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause (i) shall also
specify, in the case of any such dividend, distribution or subscription
rights, the date on which the holders of Common Stock shall be entitled
thereto, and such notice in accordance with the foregoing clause (ii)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up, as the case may be.
SECTION 9. AMENDMENTS AND ADDITIONAL COVENANTS.
9.1. So long as any Series A Preferred Stock shall be
outstanding, this Corporation shall not, without the prior approval of
the holders of not less than a majority of the then issued and
outstanding shares of Series A Preferred Stock voting as a class, permit
the Corporation to amend or repeal any provision of, or add any provision
to, this Certificate or the Corporation's Articles of Incorporation or
bylaws, if such action would alter or change the preferences, rights,
privileges or powers of, or the restrictions provided for the benefit of,
the Series A Preferred Stock.
9.2. So long as any Series A Preferred Stock shall be
outstanding, the
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Corporation shall:
9.2.1 maintain its books of account and financial statements and
records in accordance with generally accepted accounting
principles, and all determinations hereunder, if any, which
are dependent upon a calculation of the Corporation's
financial condition shall be determined in accordance with
generally accepted accounting principles;
9.2.2 promptly pay and discharge, or cause to be paid and
discharged, when due and payable, all lawful taxes,
assessments and governmental charges or levies imposed upon
the income, profits, property, or business of the Corporation
or any subsidiary, except where the Corporation is contesting
any of the foregoing in good faith by appropriate proceedings;
and
9.2.3 keep its properties in good repair, working order, and
condition, reasonable wear and tear excepted, and from time to
time make all needful and proper repairs, renewals,
replacements, additions, and improvements thereto, and the
Corporation shall at all times comply with the provisions of
all material leases to which it is a party or under which it
occupies property so as to prevent any loss or forfeiture
thereof or thereunder.
9.3. So long as any Series A Preferred Stock shall be
outstanding, the Corporation shall furnish to each holder of record of
the Series A Preferred Stock as soon as practicable, but in any event
within 150 days after the end of each fiscal year of the Corporation, an
income statement, statement of cash flow and statement of changes in
stockholders' equity for such fiscal year, and a balance sheet of the
Corporation as of the end of such year, such year-end financial
statements to be in reasonable detail, prepared in accordance with
generally accepted accounting principles, and audited and certified by
independent public accountants selected by the Board of Directors of the
Corporation.
"RESOLVED FURTHER, that the President or any Vice President of
this Corporation and the Secretary or any Assistant Secretary of the
Corporation are hereby authorized and directed to prepare, sign, and file
with the Secretary of the State of Nevada a Certificate of Designation of
Series A Preferred Stock of the Corporation in accordance with the
resolutions set forth herein."
(3) We further certify that the authorized number of shares of Preferred
Stock of this Corporation is 5,000,000 shares; and that the number of shares
constituting the first series of Preferred Stock established by the foregoing
resolutions, none of which have been issued, is 350,000 shares.
[Signature Page Follows]
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<PAGE> 14
IN WITNESS WHEREOF, we have executed this instrument as of the dates set
forth below.
___________________________________
J. Robert Griffin, Chairman
___________________________________
Thomas A. Schultz, Secretary
State of ____________________ )
) ss.:
County of _____________________________ )
On ______________________, 1996, personally appeared before
me, a Notary Public, J. Robert Griffin, who acknowledged that he executed the
above instrument.
(Notary Stamp or Seal)
___________________________________
Signature of Notary
State of ____________________ )
) ss.:
County of _____________________________ )
On ______________________, 1996, personally appeared before
me, a Notary Public, Thomas A. Schultz, who acknowledged that he executed the
above instrument.
(Notary Stamp or Seal)
___________________________________
Signature of Notary
14
<PAGE> 1
EXHIBIT 3.3
CERTIFICATE OF DESIGNATION
ESTABLISHING THE RIGHTS AND PREFERENCES OF
5% SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK
VISTA LASER CENTERS OF THE PACIFIC, INC.
A NEVADA CORPORATION
We, the undersigned, DAVID P. BATES, III and THOMAS A. SCHULTZ, do
hereby certify:
(1) They are the President and Secretary, respectively, of VISTA LASER
CENTERS OF THE PACIFIC, INC., a Nevada corporation (the "Corporation").
(2) Pursuant to the authority granted under the Corporation's Articles
of Incorporation, the Board of Directors of said Corporation, by unanimous
consent in writing effective as of February 5, 1996, amended as of July 10,
1996 and September 6, 1996, has duly adopted the following recitals and
resolutions:
"WHEREAS, this Corporation is authorized by its Articles of
Incorporation to issue 5,000,000 shares of preferred stock, par value
$0.01 per share (the "Preferred Stock"); and
"WHEREAS, this Corporation has previously designated 350,000
shares of its Preferred Stock as 10% Series A Cumulative Convertible
Preferred Stock, none of which are issued and outstanding; and
"WHEREAS, the Board of Directors of this Corporation is
authorized, as to the Preferred Stock, within the limitations and
restrictions stated in the Articles of Incorporation, to fix by
resolution or resolutions the designation of each series of Preferred
Stock and the powers, preferences and relative participating, optional
or other special rights and qualifications, limitations or restrictions
thereof, including, without limitation, such provisions as may be
desired concerning dividends, redemption, voting, dissolution or the
distribution of assets, conversion or exchange, and such other subjects
or matters as may be fixed by resolution or resolutions of the Board of
Directors; and
"WHEREAS, the Board of Directors of this Corporation desires,
pursuant to its authority granted under the Articles of Incorporation,
to determine and fix the rights, preferences, privileges and
restrictions relating to a second series of said Preferred Stock, and
to fix the number of shares constituting and the designation of such
series;
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"NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized a
series of Preferred Stock on the terms and with the provisions herein set forth:
SECTION 1. DESIGNATION, NUMBER AND RESTRICTIONS ON ISSUANCE. The
designation of the series of Preferred Stock authorized by these resolutions
shall be "5% Series B Cumulative Convertible Preferred Stock" (the "Series B
Preferred Stock"). The authorized number of shares constituting the Series B
Preferred Stock shall be Five Hundred Thousand (500,000) shares. The Board of
Directors is further authorized, within the limitations and restrictions set
forth in the Articles of Incorporation or stated in any resolution or
resolutions of the Board of Directors, to increase or decrease (but not below
the number of shares of such series then outstanding) the number of shares of
Series B Preferred Stock subsequent to the issuance of shares of such series. In
case the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior to the
adoption of these or any subsequent resolutions originally fixing the number of
shares of such series.
SECTION 2. CONVERSION RIGHTS.
2.1. As used herein, the term "Common Stock" shall mean and include the
Corporation's Common Stock, $.01 par value, as constituted on February 5, 1996,
and as the same shall be constituted thereafter including adjustments required
for any capital reorganization or reclassification thereof subsequent to
February 5, 1996. At any time hereafter and up to the close of business on the
second business day immediately preceding a date fixed for redemption of Series
B Preferred Stock in accordance with Section 7 below, at the election of the
respective holders of Series B Preferred Stock and subject to the terms and
conditions set forth herein, issued and outstanding shares of the Series B
Preferred Stock may be converted into fully paid and nonassessable shares of
Common Stock of the Corporation at the conversion ratio of One (1) share of
Common Stock for each share of Series B Preferred Stock, subject to adjustment
from time to time as provided in Section 2.4 below (herein called the
"Conversion Ratio").
2.2. In order to exercise the conversion privilege, a holder of
outstanding shares of Series B Preferred Stock shall surrender certificates for
the Series B Preferred Stock to be converted and exchanged at the principal
office of the Corporation, and shall give written notice to the Corporation at
said office that the holder elects to convert such Series B Preferred Stock into
shares of the Corporation's Common Stock. Such notice shall also state the name
or names (with addresses) in which certificates for shares of Common Stock
issuable on such conversion shall be issued, subject to compliance with
applicable securities laws. No payment or adjustment shall be made upon any
conversion on account of any accrued and unpaid dividends on the Series B
Preferred Stock surrendered for conversion, and the right to payment of any such
accrued and unpaid dividends shall be waived and forfeited by conversion into
Common Stock.
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<PAGE> 3
2.3. The Corporation shall not issue fractions of shares of Common
Stock upon conversions of shares of Series B Preferred Stock. If more than one
certificate representing shares of the Series B Preferred Stock shall be
surrendered for conversion at one time by the same holder, the number of full
shares of Common Stock which shall be issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Series B Preferred
Stock so surrendered. If any fractional interest in a share of Common Stock
would otherwise be deliverable upon the conversion of any shares of Series B
Preferred Stock, the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to the current market value of such
fractional interest. Any such current market value shall be computed on the
basis of the last reported sale price of Common Stock on any securities exchange
or as reported by the National Association of Securities Dealers Automated
Quotation System (or the quoted closing bid price if there be no sales on such
date) at the close of business on the date of conversion (or, if such day is not
a trading day, on the next preceding trading day). So long as there is
outstanding any Series B Preferred Stock, there shall be reserved unissued, out
of the authorized but unissued shares of Common Stock, a number of shares
sufficient to provide for conversion of Series B Preferred Stock in accordance
with the provisions of this Section 2.
2.4. The Conversion Ratio shall be subject to adjustment from time to
time hereafter as follows:
(A) In case the Corporation at any time after February 5, 1996 shall
issue a stock dividend on its outstanding shares of Common Stock or shall
subdivide or combine the outstanding shares of Common Stock issuable upon
conversion of the Series B Preferred Stock, the Conversion Ratio and number of
shares issuable upon conversion of the Series B Preferred Stock shall be
proportionately and equitably adjusted as if the holder of record of Series B
Preferred Stock had converted shares of Series B Preferred Stock into Common
Stock immediately prior to such event. Any such adjustment shall become
effective at the close of business on the date that such stock dividend,
subdivision or combination relating to the Common Stock shall become effective.
For the purposes of such adjustment, the Conversion Ratio in effect immediately
prior to such stock dividend, subdivision or combination shall forthwith be
changed to a Conversion Ratio determined by:
(i) dividing the total number of shares of Common Stock
outstanding immediately after the stock dividend, subdivision or
combination, by an amount equal to the total number of shares of Common
Stock outstanding immediately prior to such stock dividend, subdivision
or combination; and
(ii) multiplying the result of clause (i) above by the actual
Conversion Ratio in effect immediately prior to such stock dividend,
subdivision or combination.
and the total of shares of Common Stock thereafter issuable and deliverable on
conversion of the Series B Preferred Stock shall be the number of shares
obtained by
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<PAGE> 4
applying the Conversion Ratio as so adjusted.
(B) In case of any capital reorganization or any reclassification of
the shares of Common Stock of the Corporation (other than as a result of a stock
dividend, subdivision or combination, as aforesaid), or in case of any
consolidation with or merger of the Corporation into or with another
corporation, or the sale, lease or other disposition of the properties of the
Corporation as an entirety or substantially as an entirety, then as a part of
such reorganization, reclassification, consolidation, merger, sale, lease or
other disposition, as the case may be, lawful provision shall be made so that
the holders of record of the Series B Preferred Stock shall have the right
thereafter to receive upon conversion thereof the kind and amount of shares of
stock or other securities or property which such holders would have been
entitled to receive if, immediately prior to such reorganization,
reclassification, consolidation, merger, sale, lease or other disposition, such
holders had held the number of shares of Common Stock which were then issuable
upon the conversion of the Series B Preferred Stock then held by them. In any
such case, appropriate adjustment shall be made in the application of the
provisions set forth herein with respect to the rights and interests thereafter
of the holders of record of the Series B Preferred Stock, to the end that the
provisions set forth herein (including provisions with respect to adjustments of
the Conversion Ratio) shall thereafter be applicable, as nearly as reasonably
may be, in relation to any shares of stock or other property thereafter
deliverable upon the conversion of such Series B Preferred Stock.
2.5. Upon any conversion of Series B Preferred Stock in accordance with
the foregoing, all of such shares of Series B Preferred Stock shall be canceled
and revert to the status of authorized and unissued shares of Preferred Stock.
SECTION 3. VOTING RIGHTS. The holders of Series B Preferred Stock shall
be entitled to one vote per share on all matters on which stockholders of the
Corporation are entitled to vote, in addition to any voting rights required by
law; provided, however, that in the event there shall be an adjustment in the
Conversion Ratio pursuant to the provisions of Section 2.4 above, the number of
votes per share for Series B Preferred Stock shall be similarly adjusted so that
the votes per share of Series B Preferred Stock shall at all times be equal to
the number of full shares of Common Stock into which such shares of Series B
Preferred Stock may be converted.
SECTION 4. RANK AND PREFERENCE. Shares of Series B Preferred Stock
shall, with respect to dividend rights, rights on redemption and rights on
liquidation, winding up and dissolution, have preference over and rank prior to
all classes of Common Stock and shall rank pari passu with all other series of
Preferred Stock. In case the stated dividends and the amounts payable on
liquidation, distribution or sale of assets, dissolution or winding up of the
Corporation are not paid in full, the shareholders of all series of Preferred
Stock shall share ratably in the payment of dividends, including accumulations,
if any, in accordance with the sums which would be payable on such
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<PAGE> 5
shares if all dividends were declared and paid in full and in any distribution
of assets other than by way of dividends, in accordance with the sums which
would be payable on such distribution if all sums payable were discharged and
paid in full.
SECTION 5. DIVIDENDS AND RESTRICTIONS ON CERTAIN REPURCHASES.
5.1. The holders of the shares of Series B Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors, out of
funds legally available for the payment of dividends, cumulative dividends at
the annual rate of 5% per annum, or twelve and one-half cents ($0.125) per
share. Each of such annual dividends shall be fully cumulative and shall accrue
(whether or not declared or permitted to be paid), from the first day such
shares were first issued.
5.2. If declared by the Board of Directors, dividends shall be payable
annually on the last day of the month in which the corporation shall
successfully complete an initial public offering of its securities with the
first dividend payment date to be in the year 1997. In the event any shares of
Series B Preferred Stock shall be outstanding for more or less than the period
covered by such dividend year, the amount of the dividend shall be prorated for
such periods. Such dividends shall be paid to the holders of record at the close
of business on the date specified by the Board of Directors of the Corporation
at the time the dividend is declared; provided, however, that such record date
shall be not more than 30 days nor less than 10 days prior to the respective
dividend payment date.
5.3. All dividends paid with respect to shares of the Series B
Preferred Stock shall be paid pro rata to the holders entitled thereto.
5.4. No dividends, other than dividends payable solely in Common Stock,
shall be declared by the Board of Directors on any class or series of equity
securities of the Corporation other than its 10% Series A Cumulative Convertible
Preferred Stock unless and until such time as all accrued and unpaid dividends
on the Series B Preferred Stock have been paid in full or unless the Series B
Preferred Stock has been redeemed in accordance with its terms or are fully
converted into Common Stock of the Corporation or are otherwise reacquired and
retired in full by the Corporation. The Corporation may not pay or set apart for
payment, other than dividends or, other distributions or payments payable solely
in Common Stock, any other distributions on any shares of the Corporation's
Common Stock, and may not purchase or otherwise redeem for cash or other
tangible property, other than in shares of Common Stock, any shares of the
Corporation's Common Stock or any warrants, rights or options exercisable for or
convertible into any shares of Common Stock unless and until such time as the
Series B Preferred Stock has been redeemed in accordance with its terms or are
fully converted into Common Stock of the Corporation or are otherwise reacquired
and retired in full by the Corporation.
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5.5. (a) In event the Corporation shall have accrued the payment of
dividends beyond a date on which dividends would otherwise be declared
hereunder, the Corporation, at the election of its Board of Directors made at
any time thereafter (so long as such dividends have not been paid in cash), may
elect to pay all cumulative accrued dividends otherwise due and payable in
shares of Series B Preferred Stock or Common Stock in lieu of cash. In such
event, the Corporation shall advise each holder of record of Series B Preferred
Stock in writing on the Record Date, not more than 30 days nor less than 10
days prior to the respective dividend payment date, of the Corporation's
election to make such dividend payment in shares of the Corporation's Series B
Preferred Stock or Common Stock. For the purposes of this Certificate, "Common
Stock" shall mean the Corporation's Common Stock as constituted on the Record
Date.
(b) For any dividend payment to be made in Series B Preferred Stock or
Common Stock as herein provided, the number of shares issuable for such dividend
payment shall be determined by dividing the cumulative accrued dividend payments
due on said dividend payment date by the Dividend Stock Value. "Dividend Stock
Value" shall mean 100% of the Fair Market Value per share of the series or class
of securities to be paid as dividends determined as of the applicable Record
Date for the payment of such accrued dividends. For this purpose "Fair Market
Value" as of any specific Record Date shall be determined by reference to the
unweighted average closing sale prices for the series or class of securities to
be paid as dividends during the ten days on which such shares are actually
traded in the NASDAQ system or on a national securities exchange immediately
prior to the Record Date upon which Fair Market Value is to be determined. (If
for any reason closing sale prices are not quoted by the NASDAQ system on any
such day, then the closing market price for such day shall be deemed the closing
bid price for such day as reported by the National Quotation Bureau). In the
event the series or class of securities to be paid as dividends is not actively
quoted and traded in any securities market, the Fair Market Value thereof shall
be determined in the exclusive discretion of the Corporation's Board of
Directors acting in good faith.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING-UP.
6.1. In the event of any liquidation, dissolution or winding-up of the
Corporation, either voluntary or involuntary, the holders of Series B Preferred
Stock then outstanding shall be entitled to receive ratably, prior and in
preference to any distribution of any of the assets of the Corporation to the
holders of any other equity securities of the Corporation other than Preferred
Stock, by reason of their ownership thereof, the sum of TWO DOLLARS AND FIFTY
CENTS ($2.50) per share outstanding plus all accrued and unpaid dividends
thereon, each payable in cash (which may be payable from either capital or
surplus) or, if cash is not then available, in property of the Corporation. In
the event it is necessary or advisable for the Corporation to determine the
value of property for any purpose hereunder, the value of such property so
received by holders of Series B Preferred Stock will be deemed to be its fair
market value as determined in good faith by the Board of Directors of the
Corporation unless a majority in interest of the holders of issued and
outstanding Series B Preferred Stock shall demand an independent appraisal
6
<PAGE> 7
of such property. If, upon the occurrence of any such event, the assets thus
distributed among the holders of the Series B Preferred Stock shall be
insufficient to permit the payment to such holders of the full preferential
amount due to them hereunder, then the entire assets of this Corporation legally
available for distribution shall be distributed ratably among the holders of all
series of the Preferred Stock. Except as provided above, holders of the Series B
Preferred Stock shall not be entitled to any distribution in the event of
liquidation, dissolution or winding-up of the affairs of the Corporation.
6.2. For the purposes of this Section 6, a sale of all or substantially
all of the assets of this Corporation or a merger of the Corporation with or
into any other corporation or corporations where the Corporation is not the
surviving entity, shall not be deemed to be a liquidation, dissolution or
winding-up of the Corporation within the meaning of Section 6.1 unless no
provision has been made for the exchange of securities for Series B Preferred
Stock in connection with the consummation of any such sale of assets or merger.
6.3. The liquidation payment with respect to each outstanding
fractional share of Series B Preferred Stock shall be equal to a ratably
proportionate amount of the liquidation payment with respect to each outstanding
share of Series B Preferred Stock.
SECTION 7. REDEMPTION.
7.1. No Mandatory Redemption. The Corporation shall have no mandatory
obligation to redeem shares of Series B Preferred Stock; provided, however, in
the event of any liquidation, dissolution or winding-up of the Corporation,
either voluntary or involuntary, or in the event or sale of all or substantially
all of the assets of this Corporation or a merger of the Corporation with or
into any other corporation or corporations where the Corporation is not the
surviving entity and in which no provision has been made for the exchange of
securities for Series B Preferred Stock, each share of Series B Preferred Stock
then outstanding shall be entitled to receive the consideration specified in
Section 6.1 above.
7.2. Optional Redemption. The Corporation at its option, at any time
and from time to time, may redeem all or any portion of the Series B Preferred
Stock (and if only a portion, in an amount equal to an even multiple of 10,000
shares) then outstanding at a redemption price of FIVE DOLLARS ($5.00) per share
plus the payment of all accrued and unpaid dividends on the shares so redeemed.
7.3. Upon any redemption of Series B Preferred Stock, written notice
shall be given to the holders of the Series B Preferred Stock for shares to be
purchased or redeemed at least thirty (30) days prior to the date fixed for
redemption. The notice shall be addressed to each such stockholder at the
address of such holder appearing on the books of the Corporation or given by
such holder to the Corporation for the purpose of notice, or, if no such address
appears or is so given, at the last known address of such
7
<PAGE> 8
shareholder. Such notice shall specify the date fixed for redemption, shall
state that all shares of Series B Preferred Stock outstanding are to be redeemed
and the number of shares of Series B Preferred Stock to be so redeemed, and
shall call upon such holder to surrender to the Corporation on said date, at the
place designated in the notice, such holder's certificate or certificates
representing the shares to be redeemed on the date fixed for redemption stated
in such notice. Unless such person shall elect to convert the same into Common
Stock in accordance with Section 2 above, each holder of shares of Series B
Preferred Stock called for redemption shall surrender the certificate or
certificates evidencing such shares to the Corporation at the place designated
in such notice and shall thereupon be entitled to receive payment of the
redemption price on the date fixed for redemption.
7.4. If, on or prior to any date fixed for redemption, the Corporation
deposits, with any bank or trust company in the State of New York, as a trust
fund, a sum sufficient to redeem all shares of Series B Preferred Stock called
for redemption which have not theretofore been surrendered for conversion, with
irrevocable instructions and authority to the bank or trust company to pay, on
or after the date fixed for redemption, the redemption price of the shares to
their respective holders upon the surrender of their share certificates, then
from and after the date of redemption the shares to be redeemed shall be
redeemed and dividends and other distributions on those shares shall cease to
accrue after the date such shares were called for redemption. The deposit shall
constitute full payment for the shares of Series B Preferred Stock to their
holders and from and after the date of the deposit the shares of Series B
Preferred Stock shall no longer be outstanding, and the holders thereof shall
cease to be shareholders with respect to such shares, and shall have no rights
with respect thereto except the right to receive from the bank or trust company
payment of the redemption price of the shares without interest upon surrender of
their certificates therefor and the right to receive from the Corporation any
accrued dividends thereon through the date such shares were called for
redemption. Any interest accrued on any funds so deposited shall be the property
of, and paid to, the Corporation.
7.5. In the event that fewer than all the outstanding shares of Series
B Preferred Stock are to be redeemed, the number of shares to be redeemed shall
be determined by the Board of Directors and the shares to be redeemed shall be
selected by lot or pro rata as may be determined by the Board of Directors. In
case it shall designate by lot the shares so to be redeemed, the Board of
Directors shall have full power and authority to prescribe the manner in which
the drawings by lot shall be conducted.
7.6. Notwithstanding anything contained herein to the contrary, the
Corporation may not redeem any shares of Series B Preferred Stock and no sums
therefor shall be paid or set aside for payment by the Corporation if, at the
time and after giving effect to such payment, the same is prohibited by the laws
of the State of Nevada.
7.7. Upon any redemption of Series B Preferred Stock in accordance with
the foregoing, all of such shares of Series B Preferred Stock shall be canceled
and revert to the status of authorized and unissued shares of Preferred Stock.
8
<PAGE> 9
SECTION 8. REQUIRED NOTICES. In case at any time:
(a) the Corporation shall declare or pay any dividend payable in stock or
other consideration or make any distribution to the holders of its
Common Stock; or
(b) the Corporation shall offer to the holders of its Common Stock any
additional shares of stock of any class or other rights;
(c) there shall be any capital reorganization or reclassification of the
capital stock of the Corporation, or any consolidation or merger of the
Corporation with, or sale of all or substantially all of its assets to,
another corporation; or
(d) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Corporation;
then, in any one or more of such cases, the Corporation shall cause to be mailed
to the holders of record of then outstanding shares of Series B Preferred Stock
(i) at least 30 days' prior written notice of the date on which the books of the
Corporation shall close or a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to vote in respect
of any such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up, and (ii) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, at least 30 days' prior written notice of the date
when the same shall take place. Such notice in accordance with the foregoing
clause (i) shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto, and such notice in accordance with the foregoing clause (ii)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, as the case may be.
SECTION 9. AMENDMENTS AND ADDITIONAL COVENANTS.
9.1. So long as any Series B Preferred Stock shall be outstanding, this
Corporation shall not, without the prior approval of the holders of not less
than a majority of the then issued and outstanding shares of Series B Preferred
Stock voting as a class, permit the Corporation to amend or repeal any provision
of, or add any provision to, this Certificate or the Corporation's Articles of
Incorporation or bylaws, if such action would alter or change the preferences,
rights, privileges or powers of, or the restrictions provided for the benefit
of, the Series B Preferred Stock.
9.2. So long as any Series B Preferred Stock shall be outstanding, the
Corporation shall:
9.2.1 maintain its books of account and financial statements and records in
accordance
9
<PAGE> 10
with generally accepted accounting principles, and all determinations
hereunder, if any, which are dependent upon a calculation of the
Corporation's financial condition shall be determined in accordance
with generally accepted accounting principles;
9.2.2 promptly pay and discharge, or cause to be paid and discharged, when
due and payable, all lawful taxes, assessments and governmental charges
or levies imposed upon the income, profits, property, or business of
the Corporation or any subsidiary, except where the Corporation is
contesting any of the foregoing in good faith by appropriate
proceedings; and
9.2.3 keep its properties in good repair, working order, and condition,
reasonable wear and tear excepted, and from time to time make all
needful and proper repairs, renewals, replacements, additions, and
improvements thereto, and the Corporation shall at all times comply
with the provisions of all material leases to which it is a party or
under which it occupies property so as to prevent any loss or
forfeiture thereof or thereunder.
9.3. So long as any Series B Preferred Stock shall be outstanding, the
Corporation shall furnish to each holder of record of the Series B Preferred
Stock as soon as practicable, but in any event within 150 days after the end of
each fiscal year of the Corporation, an income statement, statement of cash flow
and statement of changes in stockholders' equity for such fiscal year, and a
balance sheet of the Corporation as of the end of such year, such year-end
financial statements to be in reasonable detail, prepared in accordance with
generally accepted accounting principles, and audited and certified by
independent public accountants selected by the Board of Directors of the
Corporation.
"RESOLVED FURTHER, that the President or any Vice President of this
Corporation and the Secretary or any Assistant Secretary of the Corporation are
hereby authorized and directed to prepare, sign, and file with the Secretary of
the State of Nevada a Certificate of Designation of Series B Preferred Stock of
the Corporation in accordance with the resolutions set forth herein."
(3) We further certify that the authorized number of shares of
Preferred Stock of this Corporation is 5,000,000 shares; that the number of
shares constituting the first series of Preferred Stock, none of which have been
issued, is 350,000 shares, and that the number of shares constituting the second
series of Preferred Stock established by the foregoing resolutions, none of
which have been issued, is 500,000 shares.
[Signature Page Follows]
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<PAGE> 11
IN WITNESS WHEREOF, we have executed this instrument as of the dates
set forth below.
_____________________________________
David P. Bates III, President
_____________________________________
Thomas A. Schultz, Secretary
State of_________________________)
)ss.:
County of________________________________)
On ________________________________________, 1996, personally appeared
before me, a Notary Public, David P. Bates III, who acknowledged that he
executed the above instrument.
(Notary Stamp or Seal) _____________________________________
Signature of Notary
State of_________________________)
)ss.:
County of________________________________)
On ________________________________________, 1996, personally appeared
before me, a Notary Public, Thomas A. Schultz, who acknowledged that he executed
the above instrument.
(Notary Stamp or Seal) _____________________________________
Signature of Notary
11
<PAGE> 1
EXHIBIT 3.4
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VISTA LASER CENTERS OF THE PACIFIC, INC.
--------------------------------------------
--------------------------------------------
BY-LAWS
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<PAGE> 2
TABLE OF CONTENTS
BYLAWS
<TABLE>
<CAPTION>
ARTICLE Page
----
<S> <C>
I. MEETINGS OF STOCKHOLDERS.................................. 1
II. DIRECTORS................................................. 5
III. OFFICERS AND THEIR DUTIES................................. 10
IV. CAPITAL STOCK............................................. 12
V. OFFICES AND BOOKS......................................... 14
VI. INDEMNIFICATION........................................... 15
VII. OTHER PROVISIONS.......................................... 17
VIII. AMENDMENT................................................. 18
</TABLE>
ByLaws - i -
<PAGE> 3
BY-LAWS
FOR THE REGULATION, EXCEPT AS
OTHERWISE PROVIDED BY STATUTE OR ITS
ARTICLES OF INCORPORATION,
OF
VISTA LASER CENTERS OF THE PACIFIC, INC.
(A NEVADA CORPORATION INCORPORATED JANUARY 30, 1996)
ARTICLE I -- MEETING OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. The annual meeting of the stockholders of
the corporation shall be held once each year at such place within or without the
State of Nevada as shall be designated by the Board of Directors, and if not
designated by the Board, then as designated by the Chairman of the Board or the
President, for the purpose of electing directors of the corporation to serve
during the ensuing year and for the transaction of such other business as may be
properly brought before the annual meeting. The annual meeting of stockholders
shall be held during the fifth or sixth month following the conclusion of the
corporation's fiscal year on such date which is not a weekend or legal holiday,
and at such time, as shall be designated by the Board of Directors, and if not
designated by the Board, then as designated by the Chairman of the Board or the
President, for the purpose.
SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders may
be held at the principal office of the corporation, within or without the State
of Nevada, whenever called by the Board of Directors, by the Chairman of the
Board, or by the President of the corporation, only for the purpose of
transacting such business as shall be specified in the notice of such special
meeting which may provide, however, for the transaction of other matters as may
be properly brought before the special meeting.
SECTION 3. NOTICE OF ANNUAL OR SPECIAL MEETINGS. Written notice of each
annual or special meeting of stockholders shall be given not less than ten (10)
nor more than sixty (60) days before the date of the meeting to each stockholder
entitled to vote thereat. Such notice shall state the place, date and hour of
the meeting and (i) in the case of a special meeting, the general nature of the
business to be transacted, and no other business may be transacted, or (ii) in
the case of the annual meeting, the election of directors and those other
matters which the Board, at the time of the mailing of the notice, intends to
present for action by the stockholders, but subject to the provisions of
applicable law, any proper matter may be presented at the meeting for such
action. The notice of any meeting at which directors are to be elected shall
include the names of nominees intended at the time of the notice to be presented
by management for election.
Notice of a stockholders' meeting shall be given either personally or
by mail or by other means of written communication, addressed to the stockholder
at the address of such stockholder appearing on the books of the corporation or
given by the stockholder to the corporation for the purpose of notice, or, if no
such address appears or is given, at the place where the principal office of the
corporation is located, either within or without the State of Nevada, or by
publication at least once in a newspaper of general circulation in the county in
which the principal office is located. Notice by mail shall be deemed to have
been given at the time a written notice is deposited in the United States mails,
postage prepaid. Any other written notice shall be deemed to have been given at
the time it is personally delivered to the recipient or is delivered to a common
carrier for transmission, or actually transmitted by the person giving the
notice by electronic means, to the recipient.
ByLaws - 1 -
<PAGE> 4
SECTION 4. QUORUM. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at any meeting of
stockholders. If a quorum is present, the affirmative vote of a majority of the
shares represented and voting at the meeting (which shares voting affirmatively
also constitute at least a majority of the required quorum) shall be the act of
the stockholders, unless the vote of a greater number or voting by classes is
required by law or by the Articles, except as provided in the following sentence
and in Section 5 of this Article I. The stockholders present at a duly called or
held meeting at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave less
than a quorum, if any action taken (other than adjournment) is approved by at
least a majority of the shares required to constitute a quorum.
SECTION 5. ADJOURNED MEETINGS AND NOTICE THEREOF. Any stockholders
meeting, whether or not a quorum is present, may be adjourned from time to time
by the vote of a majority of the shares represented either in person or by
proxy, but in the absence of a quorum (except as provided in Section 4 of this
Article) no other business may be transacted at such meeting.
It shall not be necessary to give any notice of the time and place of
the adjourned meeting or of the business to be transacted thereat, other than by
announcement at the meeting at which such adjournment is taken; provided,
however, when any stockholders meeting is adjourned for more than 45 days or, if
after adjournment a new record date is fixed for the adjourned meeting, notice
of the adjourned meeting shall be given as in the case of an original meeting.
SECTION 6. VOTING. The stockholders entitled to notice of any meeting
or to vote at any such meeting shall be only persons in whose names shares stand
on the stock records of the corporation on the record date determined in
accordance with Section 7 of this Article.
Elections of directors and other voting on proposal presented to
stockholders meeting need not be by ballot if dispensed by the meeting;
provided, however, that all elections for directors and other proposals to be
voted upon must be by ballot upon demand made by any stockholder at the meeting
and before the voting begins.
In any election of directors, the slate of candidates receiving a
plurality of votes cast of the shares entitled to be voted for directors shall
be elected.
Voting shall in all cases be subject to the provisions of Section
78.355 of the Nevada General Corporation Law and to the following provisions:
(a) Subject to clause (g), shares held by an administrator, executor,
guardian, conservator or custodian may be voted by such holder either in person
or by proxy, without a transfer of such shares into the holder's name; and
shares standing in the name of a trustee may be voted by the trustee, either in
person or by proxy, but no trustee shall be entitled to vote shares held by such
trustee without a transfer of such shares into the trustee's name.
(b) 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 the receiver's name if authority
to do so is contained in the order of the court by which such receiver was
appointed.
(c) Except where otherwise agreed in writing between the parties with a
copy furnished to the corporation, a stockholder whose shares are pledged shall
be entitled to vote such shares until the shares have been transferred into the
name of the pledgee, and thereafter the pledgee shall be entitled to vote the
shares so transferred.
ByLaws - 2 -
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(d) Shares standing in the name of a minor may be voted and the
corporation may treat all rights incident thereto as exercisable by the minor,
in person or by proxy, whether or not the corporation has notice, actual or
constructive, of the nonage, unless a guardian of the minor's property has been
appointed and written notice of such appointment given to the corporation.
(e) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent or proxyholder as the by-laws of
such other corporation may prescribe or, in the absence of such provision, as
the Board of Directors of such other corporation may determine or, in the
absence of such determination, by the chairman of the board, president or any
vice president of such other corporation, or by any other person authorized to
do so by the chairman of the board, president or any vice president of such
other corporation. Shares which are purported to be voted or any proxy purported
to be executed in the name of a corporation (whether or not any title of the
person signing is indicated) shall be presumed to be voted or the proxy executed
in accordance with the provisions of this clause, unless the contrary is shown.
(f) Shares of the corporation owned by any subsidiary shall not be
entitled to vote on any matter.
(g) Shares held by the corporation in a fiduciary capacity, and shares
of the issuing corporation held in a fiduciary capacity by any subsidiary, shall
not be entitled to vote on any matter, except to the extent that the settlor or
beneficial owner possesses and exercises a right to vote or to give the
corporation binding instructions as to how to vote such shares.
(h) If shares stand of record in the names of two or more persons,
whether fiduciaries, members of a partnership, joint tenants, tenants in common,
husband and wife as community property, tenants by the entirety, voting
trustees, persons entitled to vote under a stockholder voting agreement or
otherwise, or if two or more persons (including proxyholders) have the same
fiduciary relationship respecting the same shares, unless the Secretary of the
corporation is given written notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, their acts with respect to voting shall have the following
effect:
(i) If only one votes, such acts binds all;
(ii) If more than one vote, the act of the majority so
voting binds all;
(iii) If more than one vote, but the vote is evenly split
on any particular matter, each faction may vote the
securities in question proportionately.
If the instrument so filed or the registration of the shares shows that any such
tenancy is held in unequal interests, a majority or even split for the purpose
of this Section shall be a majority or even split in interest.
SECTION 7. RECORD DATE. The Board may fix, in advance, a record date
for the determination of the stockholders entitled to notice of any meeting or
to vote or entitled to receive payment of any dividend or other distribution, or
any allotment of rights, or to exercise rights in respect of any other lawful
action. The record date so fixed shall be not more than 60 days nor less than 10
days prior to the date of the meeting nor more than 60 days prior to any other
action. When a record date is so fixed, only stockholders of record on that date
are entitled to notice of and to vote at the meeting or to receive the dividend,
distribution, or allotment of rights, or to exercise of the rights, as the case
may be, notwithstanding any transfer of shares on the books of the corporation
after the record date. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting unless the Board fixes a new record date for the adjourned
meeting. The Board shall fix a new record date if the meeting is adjourned for
more than forty-five (45) days.
ByLaws - 3 -
<PAGE> 6
If no record date is fixed by the Board, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the business day next
preceding the day on which notice is given or, if notice is waived, at the close
of business on the business day next preceding the day on which the meeting is
held. The record date for determining stockholders for any purpose other than
set forth in this Section 7 or Section 9 of this Article I shall be at the close
of business on the day on which the Board adopts the resolution relating
thereto, or the sixtieth day prior to the date of such other action, whichever
is later.
SECTION 8. CONSENT OF ABSENTEES. The transactions of any meeting of
stockholders, however called and noticed, and wherever held, are as valid as
though had at a meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy, and if, either before or after the
meeting, each of the persons entitled to vote, not present in person or by
proxy, signs a written waiver of notice, or a consent to the holding of the
meeting or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting. Attendance of a person at a meeting shall constitute a
waiver of notice of and presence at such meeting, except when the person
objects, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened and except that
attendance at a meeting is not a waiver of any right to object to the
consideration of matters required by the Nevada General Corporation Law to be
included in the notice but not so included, if such objection is expressly made
at the meeting. Neither the business to be transacted at nor the purpose of any
regular or special meeting of stockholders need be specified in any written
waiver of notice, consent to the holding of the meeting or approval of the
minutes thereof.
SECTION 9. ACTION WITHOUT MEETING. Subject to Section 78-320 of the
Nevada General Corporation Law, any action which, under any provision of these
Bylaws of the Nevada General Corporation Law, may be taken at any annual or
special meeting of stockholders, may be taken without a meeting and without
prior notice if a consent in writing, setting forth the action so taken, shall
be signed by the holders of outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Unless a record date for voting purposes be fixed as provided in Section 7 of
this Article, the record date for determining stockholders entitled to give
consent pursuant to this Section 7, when no prior action by the Board has been
taken, shall be the day on which the first written consent is given. In no
instance where action is authorized by written consent need a meeting of
stockholders be called or notice given. The written consent must be filed with
the minutes of proceedings of the stockholders of the corporation.
SECTION 10. PROXIES. Every person entitled to vote shares has the right
to do so either in person or by one or more persons authorized by a written
proxy executed by such stockholder and filed with the Secretary. Any proxy duly
executed is not revoked and continues in full force and effect until revoked by
the person executing it prior to the vote pursuant thereto. Such revocation may
be effected either, (i) by a writing delivered to the Secretary of the
Corporation stating that the proxy is revoked, (ii) by a subsequent proxy
executed by the person executing the prior proxy and presented to the meeting,
or (iii) by attendance at the meeting and voting in person by the person
executing the prior proxy and presented to the meeting, or (iii) by attendance
at the meeting and voting in person by the person executing the proxy; provided,
however, that no proxy shall be valid after the expiration of eleven months from
the date of its execution unless otherwise provided in the proxy.
SECTION 11. INSPECTORS OF ELECTION. In advance of or at the
commencement of any meeting of stockholders, the Board or the Chairman of the
Board may appoint inspectors of election to act at such meeting and any
adjournment thereof. If inspectors of election be not so appointed, or if any
persons so appointed fail to appear or refuse to act, the chairman of any such
meeting may, and on the request of any stockholder or stockholder's proxy shall,
make such appointment at the meeting. The number of
ByLaws - 4 -
<PAGE> 7
inspectors shall be either one or three. If appointed at a meeting on the
request of one or more stockholders or proxies, the majority of shares present
shall determine whether one or three inspectors are to be appointed.
The duties of such inspectors shall include: determining the number of
shares outstanding and the voting power of each; determining the shares
represented at the meeting; determining the existence of a quorum; determining
the authenticity, validity and effect of proxies; receiving votes, ballots or
consents; hearing and determining all challenges and questions in any way
arising in connection with the right to vote; counting and tabulating all votes
or consents; determining when the polls shall close; determining the result; and
doing such acts as may be proper to conduct the election or vote with fairness
to all stockholders. If there are three inspectors of election, the decision,
act or certificate of a majority is effective in all respects as the decision,
act or certificate of all.
SECTION 12. STOCKHOLDERS LIST. At each meeting of the stockholders, a
full, true and complete list, in alphabetical order, of all the stockholders
entitled to vote at such meeting, and indicating the number of shares held by
each, certified by the Secretary of the corporation or by any employee of a
Transfer Agent duly appointed to act as such by the Board, shall be furnished.
Only the persons in whose names shares of stock are registered on the books of
the corporation on the record date for the meeting, as evidenced by the list of
stockholders so furnished, shall be entitled to attend and vote at such meeting.
Proxies and powers of attorney to vote must be filed with the Secretary of the
corporation before an election or a meeting of the stockholders, or they cannot
be used at such election or meeting.
SECTION 13. CONDUCT OF MEETINGS. The Chairman of the Board, if there be
such an officer, or the President shall preside as chairman at all meetings of
the stockholders. The chairman shall conduct each such meeting in a businesslike
and fair manner, but shall not be obligated to follow any technical, formal or
parliamentary rules or principles of procedure. The chairman's rulings on
procedural matters shall be conclusive and binding on all stockholders, unless
at the time of a ruling a request for a vote is made to the stockholders holding
shares entitled to vote and which are represented in person or by proxy at the
meeting, in which case the decision of a majority of such shares shall be
conclusive and binding on all stockholders. Without limiting the generality of
the foregoing, the chairman shall have all of the powers usually vested in the
chairman of a meeting of stockholders.
ARTICLE II -- DIRECTORS
SECTION 1. (a) NUMBER AND TERM. The Board of Directors of the
corporation shall consist of not less than three (3) nor more than fifteen (15)
persons who shall be elected by the stockholders annually, at the annual meeting
of the corporation's stockholders, and who shall hold office for approximately
one (1) year until the next annual meeting of stockholders and until their
successors are elected and shall qualify. The number of authorized directors
within such limitations shall be fixed from time to time by resolution of the
Board of Directors, except that no act of the Board of Directors in decreasing
the number of authorized directors may shorten the term of office of any
Director then duly elected and serving as a director.
(b) QUALIFICATIONS. Directors shall be natural persons age 18
or older. Directors need not be stockholders of the corporation, and need not be
citizens of the United States.
SECTION 2. AUTHORITY. The Board of Directors is vested with the
complete and unrestrained authority in the management of all the affairs of the
corporation, and is authorized to exercise for such purpose as the general agent
of the corporation, its entire corporate authority.
SECTION 3. FILLING VACANCIES. When any vacancy occurs among the
Directors by death,
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resignation, disqualification, an increase in the authorized number of
directors, or other cause, the stockholders, at any regular or special meeting,
or at any adjourned meeting thereof, or the remaining Directors, by the
affirmative vote of a majority thereof, shall elect a successor to hold office
for the unexpired portion of the term of the Director whose place shall have
become vacant and until his or her successor shall have been elected and shall
qualify.
SECTION 4. PLACE AND TIME OF MEETINGS. Meetings of the Directors may be
held at the principal office of the corporation designated by the Board of
Directors, whether within or without the State of Nevada or the United States,
at any time set forth in a notice of meeting given as provided in these ByLaws.
Meetings of the Directors may also be held elsewhere at such place or places and
at such time or time as the Board of Directors may from time to time determine,
or as shall be set forth in a notice of meeting given as provided in these
ByLaws, unless by special resolution the Board shall restrict or limit the place
or dates and time at which meetings of the Board are to be held.
SECTION 5. ANNUAL, REGULAR AND SPECIAL MEETINGS; NOTICE.
(a) Without notice or call, the Board of Directors shall hold its first
annual meeting for the year immediately after the annual meeting of the
stockholders or immediately after the election of Directors at such annual
meeting.
(b) Regular meetings of the Board of Directors, not more frequently
than once each month, may be held at the principal office of the corporation, or
elsewhere, as scheduled by action of the Board of Directors or its Chairman of
the Board or its President. Notice of such regular meetings shall be given by
regular mail, by telephone if the person is successfully contacted, by
telegraph, by facsimile telephone written communication, or by delivery in
person via courier service, to each Director by the President, the Secretary or
any Assistant Secretary at least ten (10) business days prior to the day fixed
for such meetings; but no regular meeting or any action taken thereat shall be
held void or invalid if such notice is not given to any Director that (i) was in
attendance at a meeting of the Board of Directors which fixed the time, date and
place of such regular meeting of the Board of Directors; or (ii) waives notice
of the regular meeting; or (iii) attends the regular meeting in person or by
telephone conference call; or (iv) executes a consent to action taken at the
meeting after having received the minutes of such regular meeting.
(c) Special meetings of the Board of Directors may be held on the call
of the Chairman of the Board, if there be such an officer, the President, the
Secretary or any Assistant Secretary on at least forty-eight (48) hours prior
written notice to Directors resident in the country at which the special meeting
is to be held, and on at least seventy-two (72) hours prior written notice to
Directors not resident in the country at which the special meeting is to be
held. Notice of such special meetings shall be given by regular mail (but only
if mailed at least five business days prior to such special meeting), by
telephone if the person is successfully contacted, by telegraph, by facsimile
telephone written communication, or by delivery in person via courier service,
to each Director by the President, the Secretary or any Assistant Secretary; but
no regular meeting or any action taken thereat shall be held void or invalid if
such notice is not given to any Director that (i) was in attendance at a meeting
of the Board of Directors which fixed the time, date and place of such special
meeting of the Board of Directors; or (ii) waives notice of the special meeting;
or (iii) attends the special meeting in person or by telephone conference call;
or (iv) executes a consent to action taken at the meeting after having received
the minutes of such special meeting.
(d) Provided a quorum shall be present, any meeting of the Board of
Directors, no matter where held, at which all of the members shall be present,
even though without notice, or of which notice shall have been waived by all
absentees, shall be valid for all purposes unless otherwise indicated in the
notice calling the meeting or in the waiver of notice. Any and all business may
be transacted by any meeting of the Board
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of Directors, either regular or special.
SECTION 6. ADJOURNMENT. A majority of the directors present, whether or
not a quorum is present, may adjourn any directors meeting to another time and
place. Notice of the time and place of holding an adjourned meeting need not be
given to absent directors if the time and place be fixed at the meeting
adjourned, except as provided in the next sentence. If the meeting is adjourned
for more than 24 hours, notice of any adjournment to another time or place shall
be given prior to the time of the adjourned meeting to the directors who were
not present at the time of the adjournment.
SECTION 7. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members
of the Board may participate in a meeting through use of conference telephone or
similar communications equipment, so long as all members participating in such
meeting can hear and speak to one another.
SECTION 8. WAIVER OF NOTICE. Notice of a meeting need not be given to
any director who signs a waiver of notice or a consent to holding the meeting or
an approval of the minutes thereof, whether before or after the meeting, or who
attends the meeting. All such waivers, consents and approvals shall be filed
with the corporate records and made a part of the minutes of the meeting.
SECTION 9. ACTION WITHOUT MEETING. Any action required or permitted to
be taken by the Board may be taken without a meeting if all members of the Board
shall individually or collectively consent in writing to such action. Such
consent or consents shall have the same effect as a unanimous vote of the Board
and shall be filed with the minutes of the proceedings of the Board.
SECTION 10. QUORUM. A majority of the Board of Directors in office
shall constitute a quorum for the transaction of business, but at any meeting of
the Board where be less than a quorum present, a majority of those present may
adjourn such meeting from time to time, until a quorum shall be present, and no
notice of such adjournment shall be required except as provided by Section 6 of
this Article II The Board of Directors may prescribe rules not in conflict with
these By-Laws for the conduct of its business.
SECTION 11. AGENDA. Unless otherwise agreed by the Board of Directors,
the regular order of business at meetings of the Board of Directors shall be as
follows:
(a) Reading and approval of the minutes of any previous meeting or
meetings, unless such minutes have been previously circulated in
written form to all members of the Board; provided that notwithstanding
prior circulation, the Board may correct any obvious errors in such
minutes.
(b) Reports of officers and committeemen;
(c) Election of officers, if an annual meeting or it proposed by the
chairman of the meeting;
(d) Unfinished business;
(e) New business;
(f) Adjournment.
SECTION 12. PRESUMPTION OF ASSENT. A director of the corporation
present at a meeting of the directors at which action on any corporate matter is
taken shall be presumed to have assented to the action taken as reflected in the
minutes of the meeting, unless his abstention from voting or dissenting vote is
entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the
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person acting as the Secretary of the meeting before the adjournment thereof.
Such right to dissent shall not apply to any director who voted in favor of such
action.
SECTION 13. EXECUTIVE COMMITTEE. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate an Executive
Committee consisting of members of the Board. The Executive Committee shall
consist of three (3) or more members, one of whom shall be either the Chairman
of the Board or the President of the corporation, which officer by virtue of his
or her office, shall be a member and the chairman thereof. The Executive
Committee shall, in the interim between the meetings of the Board, exercise all
powers of the Board of Directors in accordance with the general policy of the
corporation and as authorized by resolution of, and under the direction of, the
Board of Directors; provided, however, that the Executive Committee shall not
have the authority or power without prior authorization of the Board on matters
which:
(a) authorize the issuance of shares of this corporation's capital stock;
(b) designate the rights, preferences, powers and limitations of any class
or series of capital stock;
(c) authorize this corporation to incur indebtedness or to execute any
agreement, contract, lease, note, bond, debenture or other obligation
(other than checks in payment of indebtedness incurred by authority of
the Board of Directors) involving the payment of money or the credit of
the corporation for more than One Million Dollars ($1,0000,000) except
by prior authority conferred by the Board of Directors;
(d) approve of any action for which the Nevada General Corporation Law also
requires stockholders approval or approval of the outstanding shares;
(e) elects officers of the corporation;
(f) fills vacancies in the Board or on any committee of the Board;
(g) fixes compensation of directors for serving on the Board or on any
committee of the Board;
(h) amends or repeals ByLaws or adopts new ByLaws of the corporation;
(i) amends or repeals any resolution of the Board except to the extent such
resolutions shall permit the amendment thereof by the Executive
Committee;
(j) provides for a distribution to the stockholders of the corporation
except at a rate or in a periodic amount or within a range determined
by the Board; or
(k) appoints other committees of the Board or the members thereof.
The Executive Committee shall also attend to and supervise the financial
operations of the corporation, and shall examine and cause to be audited all the
corporation's accounts at the close of each fiscal year, and at such other times
as it may deem necessary. Any member of such Executive Committee designated by
it, or the Secretary or any Assistant Secretary of the corporation, shall be the
Secretary of the Executive Committee and shall attend its meetings, and its
meetings shall be held on the call of the chairman of the Executive Committee.
All members of the Executive Committee must be given notice of meetings of the
Executive Committee in the same manner as is provided for special meetings of
the Board of Directors provided by Section 5(c) of this Article II. A majority
of the members of the Executive Committee shall
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constitute a quorum. The Executive Committee shall keep due records of all
meetings and actions of the Executive Committee, and such records shall at all
times be open to the inspection of any Director.
SECTION 14. OTHER COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more other committees
of the Board including, without limitation, an Audit Committee and/or a
Compensation Committee, which committees, to the extent provided in the
resolution or resolutions of the Board or in the Bylaws of the corporation as
then in effect, shall have and may exercise the powers of the Board of Directors
in the business and affairs of the corporation, and may have the power to
authorize the seal of the corporation to be affixed to all papers on which the
corporation desires to place its corporate seal, if such a corporate seal shall
exist. Any such committee or committees must have such name or names as shall be
stated in the ByLaws of the corporation then in effect or as may be determined
from time to time by resolution adopted by the Board. Each such committee must
include at least one (1) member of the Board of Directors, and the Board of
Directors by resolution may appoint natural persons who are not Directors to
serve as regular or alternate members on one or more of such committees;
provided, however, that any committee authorized to administer stock option or
stock plans of the corporation shall consist only of persons who are members of
the Board of Directors.
The Board shall have the power to prescribe the manner in which
proceedings of any such committee shall be conducted. In the absence of any such
prescription, such committee shall have the power to prescribe the manner in
which its proceedings shall be conducted. Unless the Board or such committee
shall otherwise provide, the regular and special meetings and other actions of
any such committee shall be governed by the provisions of this Article
applicable to meetings and actions of the Board. Minutes shall be kept of each
meeting of each committee.
If the Board of Directors shall designate an Audit Committee, such
Audit Committee shall meet independently with the corporation's internal
auditing staff, with representatives of the corporation's independent
accountants, and with representatives of senior management, in each instance not
less frequently than once each fiscal year. The Audit Committee shall also be
responsible for reviewing the general scope of the audit, the fee charged by
independent accountants, and matters relating to internal control systems and
procedures.
If the Board of Directors shall designate a Compensation Committee, the
Compensation Committee shall be responsible for reviewing and reporting to the
Board on the recommended annual compensation for all officers and for preparing
any reports on compensation policies required by rules and regulations of the
Securities and Exchange Commission to which the corporation is subject.
SECTION 15. EXPENSES AND COMPENSATION.
(a) The Directors shall be allowed and paid all reasonable and
necessary expenses incurred in attending any meeting of the Board. In
determining whether specific items of expense are reasonable in amount, the
Board may from time to time establish policies as the type of airline travel and
hotel accommodations for which reimbursement of expenses will be paid by the
corporation.
(b) The Board of Directors may fix the compensation of directors for
services to the corporation as directors, as members of a committee of the
Board, or in any other capacity. Provided, however, that Directors shall not
receive compensation for their services as Directors except as authorized and
approved at a meeting of the Board of Directors at which at least two-third
(2/3) of the then duly elected and acting Directors shall be in attendance, and
only with the affirmative vote and approval at such meeting of at least a
majority of the Directors then duly elected and acting.
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SECTION 16. REPORT TO STOCKHOLDERS AND RATIFICATION BY STOCKHOLDERS.
(a) The Board of Directors, acting through a representative of the
Board or by the Chairman of the Board or the President, if such person shall be
a Director, shall make a report to the stockholders at annual meetings of the
stockholders of the condition of the corporation, and shall, on request, furnish
each of the stockholders with a true copy thereof. The requirement of furnishing
a copy of a statement of the condition of the corporation shall be satisfied if
annual report with financial statements for the last fiscal year of the
corporation is provided to stockholders of record at or prior to the annual
meeting.
(b) The Board of Directors, in its discretion, may submit any contract
or act for approval or ratification at any annual or special meeting of the
stockholders called for the purpose of considering any such contract or act,
which, if approved, or ratified by the vote of the holders of a majority of the
capital stock represented in person or by proxy at such meeting, provided that a
lawful quorum of stockholders be there represented in person or by proxy, shall
be valid and binding upon the corporation and upon all the stockholders thereof,
as if it had been approved or ratified by every stockholder of the corporation.
SECTION 17. RIGHTS OF INSPECTION. Every director shall have the
absolute right at any reasonable time to inspect and copy all books, records and
documents of every kind and to inspect the physical properties of the
corporation and also of its subsidiary corporations, domestic or foreign. Such
inspection by a director may be made in person or by agent or attorney and
includes the right to copy and obtain extracts.
ARTICLE III -- OFFICERS AND THEIR DUTIES
SECTION 1. DESIGNATION AND ELECTION OF OFFICERS AND AGENTS. The Board
of Directors, at its first meeting after the annual meeting of stockholders,
shall elect a President, a Secretary and a Treasurer, to hold office at the
pleasure of the Board and, unless removed without or without cause by the Board,
for a period of approximately one (1) year until the next annual meeting of the
Board and until their successors are elected and qualify. The Board of Directors
may from time to time, by resolution, appoint such additional officers and
agents, including without limitation a Chairman of the Board, Vice Presidents,
Assistant Secretaries, Assistant Treasurers and transfer agents as it may deem
advisable. The Board shall have authority to prescribe the duties of all
officers and to fix their compensation, and all such appointed officers shall be
subject to removal at any time by the Board of Directors. All officers, agents
and factors shall be chosen and appointed in such manner and shall hold their
office for such terms as the Board of Directors may by resolution prescribe.
No officer other than the Chairman of the Board, if such officer is
elected, shall be required to be a member of the Board of Directors. Any person
may hold more than two or more offices.
All officers shall serve at the pleasure of the Board of Directors and
any person may be removed from office by action of the Board of Directors at any
time, either with or without cause. Any vacancy in any of said offices may be
filled by the Board of Directors or, at the discretion of the Board, may be left
vacant except that the corporation shall at all times have a President, a
Secretary and a Treasurer.
SECTION 2. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such an
officer shall be designated and elected by the Board, shall act as chairman of
the Board and shall preside at all meetings of the Board of Directors and the
stockholders. The Chairman of the Board shall have authority to sign the
Certificates of Stock issued by the corporation, bills of exchange and
promissory notes of the
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corporation, and shall perform such other duties as shall be prescribed by the
Board of Directors. If so designated by resolution of the Board of Directors,
the Chairman of the Board shall also be the chief executive officer of the
corporation and shall have the supervision and, subject to the control of the
Board of Directors, the direction of the corporation's affairs, with full power
to execute all resolutions and orders of the Board of Directors not especially
entrusted to some other officer of the corporation.
SECTION 3. PRESIDENT. Unless such duties are assigned by resolution of
the Board to a Chairman of the Board, if there be such an officer, the President
shall be the chief executive officer of the corporation and shall have the
supervision and, subject to the control of the Board of Directors, the direction
of the corporation's affairs, with full power to execute all resolutions and
orders of the Board of Directors not especially entrusted to some other officer
of the corporation. If there shall not be a Chairman of the Board, the President
shall also preside at all meetings of the Board of Directors and stockholders.
If the Chairman of the Board shall be appointed as the corporation's chief
executive officer, then the President shall be the chief operating officer of
the corporation and shall have the supervision and, subject to the control of
the Chairman of the Board and the Board of Directors, the direction of the
corporation's day-to-day business affairs, with full power to execute all
resolutions and orders of the Board of Directors not especially entrusted to
some other officer of the corporation. The President shall have authority to
sign the Certificates of Stock issued by the corporation, bills of exchange and
promissory notes of the corporation, and shall perform such other duties as
shall be prescribed by the Board of Directors.
SECTION 4. VICE PRESIDENTS. In the absence or disability of the
President, the Vice Presidents in order of their rank as fixed by the Board or,
if not so ranked, any such Vice President, shall perform all the duties of the
President and, when so acting shall have all the powers of, and be subject to
all the restrictions upon, the President. The Vice Presidents shall have such
other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board. The Board may designate specific
functions or areas of responsibility for any Vice President by resolution of the
Board and/or by specifying at the time of his or her election that such person's
Vice President title and office include a designation of such function or
general area of responsibility; the authority of any such person in said
designated functions and areas of responsibility shall be subject to the control
of the Board of Directors and to right of supervision conferred upon the
Chairman of the Board and the President of the corporation. In the absence or
inability to act of the Chairman of the Board and the President, any Vice
President shall have authority to sign the Certificates of Stock issued by the
corporation.
SECTION 5. TREASURER. The Treasurer shall have the responsibility for
depositing all moneys and other valuables in the name and to the credit of the
corporation with such depositaries as may be designated by the Board and
otherwise protecting the custody of all the funds and securities of the
corporation. The Treasurer shall have the care and custody of the stocks, bonds,
certificates, vouchers, evidence of debts, securities, and such other property
belonging to the corporation as the Board of Directors shall designate. When
necessary or proper, he or she shall endorse on behalf of the corporation for
collection checks, notes, and other obligations. The Treasurer shall disburse
the funds of the corporation as may be ordered by the Board. In the absence of
the Chairman of the Board and the President, the Treasurer shall sign of behalf
of the corporation all bills of exchange and promissory notes of the
corporation; he or she shall sign all papers required by law or by these By-Laws
or the Board of Directors to be signed by the Treasurer, and shall perform such
other duties as shall be prescribed by the Board of Directors.
Whenever required by the Board of Directors or the President, the
Treasurer shall render a statement of the corporation's cash account, an account
of all transactions as Treasurer, and of the financial condition of the
corporation. The Treasurer shall enter regularly in the books of the corporation
to be kept by him or her for the purpose, full and accurate accounts of all
monies received and paid by him or her on account
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of the corporation. The Treasurer shall at all reasonable times exhibit the
books of account to any Director or the President of the corporation during
business hours, and shall perform all acts incident to the position of Treasurer
subject to the control of the Board of Directors.
The Treasurer shall, if required by the Board of Directors, give bond
to the corporation conditioned for the faithful performance of all his or her
duties as Treasurer in such sum, and with such security as shall be approved by
the Board of Directors, the expense of such bond to be borne by the corporation.
SECTION 6. ASSISTANT TREASURERS. The Board of Directors may appoint one
or more Assistant Treasurers who shall have such powers and perform such duties
as may be prescribed by the Treasurer of the corporation or by the Board of
Directors or the President of the corporation. Any Assistant Treasurer shall, if
required by the Board of Directors, give bond to the corporation conditioned for
the faithful performance of all his or her duties as Assistant Treasurer in such
sum, and with such security as shall be approved by the Board of Directors, the
expense of such bond to be borne by the corporation.
SECTION 7. SECRETARY. The Secretary shall keep the minutes of all
meetings of the Board of Directors and the minutes of all meetings of the
stockholders and of the Executive Committee in books provided for that purpose.
The Secretary shall attend to the giving and serving of all notices of the
corporation; he or she may sign with the Chairman of the Board, the President or
any Vice President, in the name of the corporation, all contracts authorized by
the Board of Directors or Executive Committee; he or she shall have the custody
of the corporate seal of the corporation, if there be a corporate seal; he or
she shall affix the such corporate seal, if there be one, to all certificates of
stock duly issued by the corporation; he or she shall have charge of the stock
certificate books, stock transfer books and stock ledgers, and such other books
and papers as the Board of Directors or the Executive Committee may direct, all
of which shall at all reasonable times be open to the examination of any
Director upon application at the office of the corporation during business
hours; and he or she shall, in general, perform all the duties incident to the
office of Secretary and such other duties as shall be prescribed by the Board of
Directors.
SECTION 8. ASSISTANT SECRETARIES. The Board of Directors may appoint
one or more Assistant Secretaries who shall have such powers and perform such
duties as may be prescribed by the Secretary or by the Board of Directors.
SECTION 9. REPRESENTATION OF THE CORPORATION. Unless otherwise ordered
by the Board of Directors, the Chairman of the Board or the President shall have
full power and authority in behalf of the corporation to attend and to act and
to vote at any meetings of the stockholders or holders of indebtedness of any
corporation in which the corporation may hold stock or evidences of
indebtedness, and at any such meetings, shall possess and may exercise any and
all rights and powers incident to the ownership of such stock or evidences of
indebtedness which the corporation might have possessed and exercised if
present. The Board of Directors, by resolution from time to time, may confer
like powers on any person or persons in place of the Chairman of the Board of
the President to represent the corporation for the purposes in this section
mentioned.
ARTICLE IV -- CAPITAL STOCK
SECTION 1. AUTHORITY OF THE BOARD. The capital stock of the corporation
shall be issued in such manner and at such times and upon such conditions as
shall be prescribed by the Board of Directors.
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SECTION 2. STOCK CERTIFICATES.
(a) Every holder of shares of the corporation shall be entitled to have
a certificate signed in the name of the corporation by the Chairman of the
Board, the President or a Vice-President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary, certifying the number of
shares and the class or series of shares owned by the stockholder. Any or all of
the signatures on the certificate may be facsimile if the stock certificate is
imprinted with the corporate seal. If any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if such person were an officer, transfer agent or registrar at the date of
issue.
(b) Certificates for shares may be issued prior to full payment under
such restrictions and for such purposes as the Board may provide, provided,
however, that on any certificate issued to represent any partly paid shares, the
total amount of the consideration to be paid therefor and the amount paid
thereon shall be stated or incorporated by reference to a document setting forth
the same.
(c) Except as provided in this Section, no new certificate for shares
shall be issued in lieu of an old one unless the latter is surrendered and
cancelled at the same time. The Board may, however, if any certificate for
shares is alleged to have been lost, stolen or destroyed, authorize the issuance
of a new certificate in lieu thereof, and the corporation may require that the
corporation be given a bond or other adequate security and an indemnification
agreement sufficient to indemnify it against any claim that may be made against
the corporation (including expense or liability) on account of the alleged loss,
theft or destruction of such certificate or the issuance of such new
certificate. The Board of Directors may, in its discretion, refuse to issue such
new or duplicate certificates save upon the order of a court of competent
jurisdiction in such matter, anything herein to the contrary notwithstanding.
(d) All certificates evidencing stock in this corporation of any class
or series shall be consecutively numbered; the name of the person owning the
shares represented thereby with the number of such shares and the date of issue
shall be entered on the corporation's books.
(e) The Board of Directors may appoint a transfer agent and a registrar
of transfers and may require all stock certificates to bear the signature of
each transfer agent and such registrar of transfer.
(f) The Board of Directors shall have power and authority to make all
such rules and regulations not inconsistent herewith as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
the capital stock of the corporation.
SECTION 3. CLOSING OF STOCK TRANSFER BOOKS FOR VOTING AND
DISTRIBUTIONS. The Stock Transfer Books shall be closed for all meetings of the
stockholders for the a period specified by the Board of Directors or by any
authorized officer of the corporation acting pursuant to authority of the Board
of Directors, for a period of not less than ten (10) and not more than sixty
(60) days prior to such meetings, and shall be closed for the payment of
dividends or other distributions by the corporation to its stockholders during
such periods as from time to time may be fixed by the Board of Directors.
SECTION 4. NO PREEMPTIVE RIGHTS. No stockholder or subscriber to shares
of this corporation shall be entitled to any preemptive or preferential rights
to purchase and/or subscribe for any part of any shares which may be issued at
any time by this corporation.
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ARTICLE V -- OFFICES AND BOOKS
SECTION 1. RESIDENT AGENT; REGISTERED OFFICE IN NEVADA; OTHER OFFICES.
(a) The corporation shall appoint and maintain a resident agent for the
corporation in accordance with the provisions of Section 78.090 of the Nevada
General Corporation Law, who may be either a natural person or a corporation,
resident or located in the State of Nevada. The resident agent may be changed
from time to time by action of the Board of Directors. The street address of the
resident agent where such agent maintains an office for the service of process
upon this corporation shall be the registered office of this corporation in the
State of Nevada (the "registered office").
(b) The corporation may have a principal office and such other offices
in the State of Nevada or any other state or territory as the Board of Directors
may designate from time to time.
SECTION 2. BOOKS AND RECORDS.
(a) A copy of the Articles of Incorporation of the corporation,
certified by the secretary of state of Nevada, a copy of the ByLaws of the
corporation, certified by an officer of this corporation, and a statement
setting out the name of the custodian of the stock ledger or a duplicate stock
ledger of this corporation, and the present and complete post office address,
including street and number, where the stock ledger or duplicate stock ledger is
kept, shall be kept and maintained at the registered office of the corporation
in the State of Nevada. All such documents maintained at the registered office
of the corporation shall be subject to inspection by any of the stockholders of
the corporation upon reasonable notice during customary business hours for a
proper purpose.
(b) The stock ledger and stock transfer books of the corporation shall
be kept at its principal office, either within or without the State of Nevada,
or at the offices of a stock transfer agent duly authorized to act as such by
resolutions adopted by the Board of Directors. The stock ledger shall be
available for the inspection of all who are authorized or have the right to see
the same in accordance with the Nevada General Corporation Law, and for the
transfer of stock.
(c) Any person who has been a stockholder of record of the corporation
for at least six (6) months immediately preceding his or her demand, or any
person holding, thereunto authorized in writing by the holders of, at least five
percent (5%) of all of the corporation's outstanding shares entitled to vote,
upon at least five (5) days' written demand is entitled to inspect in person or
by agent or attorney, during usual business hours, the stock ledger or duplicate
stock ledger of the corporation, whether kept in the registered office of the
corporation in the State of Nevada or elsewhere in accordance with paragraph (a)
of this Section 2, and to make extracts therefrom. An inspection authorized by
this paragraph (c) may be denied to a stockholder or other person upon such
person's refusal to furnish to the corporation an affidavit that such inspection
is not desired for a purpose which is in the interest of a business or object
other than the business of the corporation and that such person has not at any
time sold or offered for sale any list of stockholders or any domestic or
foreign corporation or aided or abetted any person in procuring any such record
of stockholders for any such purpose. In every instance where an attorney or
other agent of a stockholder seeks the right of inspection, the demand must be
accompanied by a power of attorney as provided by Section 78.105-9 of the Nevada
General Corporation Law.
(d) All other books and records of the corporation shall be kept at
such places as may be prescribed by the Board of Directors or by the President
of the Corporation acting pursuant to authority conferred by the Board of
Directors.
ByLaws - 14 -
<PAGE> 17
ARTICLE VI -- INDEMNIFICATION
SECTION 1. DEFINITIONS. For the purposes of this Article, "agent" means
any person who is or was a director, officer, employee or other agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent or another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, or was a director,
officer, employee or agent of a foreign or domestic corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation; "proceeding" means any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative; and "expenses" includes without limitation
attorneys' fees and any expenses of establishing a right to indemnification
under Sections 4 or 5(c) of this Article.
SECTION 2. INDEMNIFICATION IN ACTIONS BY THIRD PARTIES. The corporation
shall have power to indemnify any person who was or is a party or is threatened
to be made a party to any proceeding (other than an action by or in the right of
the corporation to procure a judgment in its favor) by reason of the fact that
such person is or was an agent of the corporation, against expenses, judgments,
fines, settlements and other amounts actually and reasonably incurred in
connection with such proceeding if such person acted in good faith and in a
manner such persons reasonably believed to be in the best interests of the
corporation and, in the case of a criminal proceeding, had no reasonable cause
to believe the conduct of such person was unlawful. The termination of any
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which the person reasonably
believed to be in the best interests of the corporation or that the person had
reasonable cause to believe that the person's conduct was unlawful.
SECTION 3. INDEMNIFICATION IN ACTIONS BY OR IN THE RIGHT OF THE
CORPORATION. The corporation shall have the power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that such person is or was an agent of the
corporation, against expenses actually and reasonably incurred by such person in
connection with the defense or settlement of such action if such person acted in
good faith, in a manner such person believed to be in the best interests of the
corporation and with such care, including reasonable inquiry, as an ordinarily
prudent person in a like position would use under similar circumstances.
SECTION 4. INDEMNIFICATION AGAINST EXPENSES. To the extent that an
agent of the corporation has been successful on the merits in defense of any
proceeding referred to in Sections 2 or 3 of this Article or in defense of any
claim, issue or matter therein, and as otherwise provided by authorization of
the Board of Directors or stockholders of this corporation, the agent shall be
indemnified against expenses actually and reasonably incurred by the agent in
connection therewith.
SECTION 5. REQUIRED DETERMINATIONS. Any indemnification under this
Article shall be made by the corporation only if authorized in the specific
case, upon a determination that indemnification of the agent is proper in the
circumstances because the agent has met the applicable standard of conduct set
forth in Sections 2 or 3 of this Article, by:
(a) A majority vote of a quorum consisting of directors who are not
parties to such proceeding;
or
(b) Approval of the stockholders, with the shares owned by the person
to be indemnified not being entitled to vote thereon; or
ByLaws - 15 -
<PAGE> 18
(c) The court in which such proceeding is or was pending upon
application made by the corporation or the agent or the attorney or other person
rendering services in connection with the defense, whether or not such
application by the agent, attorney or other person is opposed by the
corporation.
SECTION 6. ADVANCE OF EXPENSES. Expenses incurred in defending any
proceeding may be advanced by the corporation prior to the final disposition of
such proceeding upon receipt of an undertaking by or on behalf of the agent to
repay such amount unless it shall be determined ultimately that the agent is
entitled to be indemnified as authorized in this Article.
SECTION 7. OTHER INDEMNIFICATION. No provision made by the corporation
to indemnify it or its subsidiary's directors or officers for the defense of any
proceeding, whether contained in the Articles, By-laws, a resolution of
stockholders or directors, an agreement or otherwise, shall be valid unless
consistent with this Article and approved by a majority of the Directors;
provided, however, that any such agreement approved by a majority of the shares
of capital stock voted at any meeting called to consider the same or by written
consent of a majority of the shares entitled to vote for the election of
directors shall supercede the provision of this Article to the extent of any
inconsistencies. Nothing contained in this Article shall affect any right to
indemnification to which persons other than such directors and officers may be
entitled by contract or otherwise.
SECTION 8. FORMS OF INDEMNIFICATION NOT PERMITTED. No indemnification
or advance shall be made under this Article, except as provided in Sections 4 or
5(c), in any circumstances where it appears:
(a) That it would be inconsistent with a provision of the Articles,
these By-laws, a resolution of the stockholders or an agreement in effect at the
time of the accrual of the alleged cause of action asserted in the proceeding in
which the expenses were incurred or other amounts were paid, which prohibits or
otherwise limits indemnifications; or
(b) That it would be inconsistent with any condition expressly imposed
by a court in approving a settlement.
SECTION 9. INSURANCE. The corporation shall have power to purchase and
maintain insurance on behalf of any agent of the corporation against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such whether or not the corporation would have the
power to indemnify the agent against such liability under the provisions of this
Article.
SECTION 10. NONAPPLICABILITY TO FIDUCIARIES OF EMPLOYEE BENEFIT PLANS.
This Article does not apply to any proceeding against any trustee, investment
manager or other fiduciary of an employee benefit plan in such person's capacity
as such, even though such person may also be an agent of the corporation as
defined in Section 1 of this Article. The corporation shall have power to
indemnify such trustee, investment manager or other fiduciary to the extent
permitted by applicable law.
ARTICLE VII -- OTHER PROVISIONS
SECTION 1. AUTHORITY REQUIRED FOR COMMITMENTS IN EXCESS OF $250,000. No
agreement, contract, lease, note, bond, debenture or other obligation (other
than checks in payment of indebtedness incurred by authority of the Board of
Directors) involving the payment of money or the credit
ByLaws - 16 -
<PAGE> 19
of the corporation for more than Two Hundred Fifty Thousand Dollars ($250,000)
shall be made without the authority of the Board of Directors or of the
Executive Committee acting as such. The authority of the Executive Committee in
authorizing any such transaction shall be subject to the limitations set forth
in Section 13 of Articles II of these ByLaws.
SECTION 2. ENDORSEMENT OF DOCUMENTS; CONTRACTS. Subject to the
provisions of applicable law, any note, mortgage, evidence of indebtedness,
contract, option or warrants to purchase stock in this corporation, conveyance
or other instrument in writing and any assignment or endorsements thereof
executed or entered into between the corporation and any other person, when
signed by the Chairman of the Board, the President or any Vice President and the
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of
the corporation shall be valid and binding on the corporation in the absence of
actual knowledge on the part of the other person that the signing officers had
no authority to execute the same. Any such instruments may be signed by any
other person or persons and in such manner as from time to time shall be
determined by the Board, and, unless so authorized by the Board, no other
officer, agent or employee shall have any power or authority to bind the
corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or amount.
SECTION 3. STOCK PURCHASE PLANS. The corporation may adopt and carry
out one or more stock purchase plans or agreements or stock option plans or
agreements providing for the issue and sale of capital stock for such
consideration as may be fixed of its unissued shares, or of issued shares
acquired or to be acquired, to one or more of the employees, officer or
directors of, or consultants to, the corporation or of a subsidiary or to a
trustee on their behalf, and for the payment of such shares in installments or
at one time, and may provide for aiding any such persons in paying for such
shares by compensation for services rendered, promissory notes or otherwise.
Any such stock purchase plan or agreement or stock option plan or other
stock agreement may include, among other features, the fixing of eligibility for
participation therein, the class and price of shares to be issued or sold under
the plan or agreement, the number of shares which may be subscribed for, the
method of payment therefor, the reservation of title until full payment
therefor, the effect of the termination of employment, an option or obligation
on the part of the corporation to repurchase the shares upon termination of
employment, restrictions upon transfer of the shares, the time limits of and
termination of the plan, and any other matters, not in violation of applicable
law, as may be included in the plan as approved or authorized by the Board or
any committee of the Board.
SECTION 4. RESERVES AND DIVIDENDS. The Board of Directors shall have
power to reserve over and above the capital stock paid in, such amount, in its
discretion, as it may deem advisable to fix as a reserve fund, and may, from
time to time, declare dividends in excess of the amounts so reserved subject to
the provisions of the Nevada General Corporation Law, and pay the same to the
stockholders of the corporation, and may also, if it deems the same advisable,
declare stock dividends of the unissued capital stock.
SECTION 5. DEPOSIT OF FUNDS. Except for funds held in trust by
third-party fiduciaries, all monies of the corporation shall be deposited when
and as received by the Treasurer or any other employee or agent of the
corporation in such bank or banks or other depositary as may from time to time
be designated by the Board of Directors, and such deposits shall be made in the
name of the corporation.
SECTION 6. BOARD APPROVAL REQUIRED FOR LOANS TO OFFICERS OR
STOCKHOLDERS. No loan or advance of money shall be made by the corporation to
any stockholder or officer of the corporation, unless the Board of Directors
shall otherwise authorize; the foregoing provision shall not apply to advances
for business expenses made in the ordinary course of business to employees or
ByLaws - 17 -
<PAGE> 20
agents of the corporation who coincidentally are stockholders or officers of the
corporation.
SECTION 7. BOARD APPROVAL REQUIRED FOR COMPENSATION TO EXECUTIVE
OFFICERS. No executive officer shall be entitled to any salary or compensation
for any services performed for the corporation, unless such salary or
compensation shall be fixed by resolution of the Board of Directors or by a
committee thereof or the Chairman of the Board or the President of the
Corporation under authority conferred by the Board. For the purposes hereof, an
executive officer shall be deemed to include the Chairman of the Board, the
President, any Vice President, the Secretary and the Treasurer of the
corporation.
SECTION 8. POWER TO DEAL IN SECURITIES. The corporation may take,
acquire, hold, mortgage, sell, or otherwise deal in stocks or bonds or
securities of any other corporation, partnership, association or other business
entity, if and as often as the Board of Directors shall so elect.
SECTION 9. POWER TO CREATE SECURITY INTERESTS; STOCKHOLDER APPROVAL
REQUIRE TO DISPOSE OF ALL ASSETS. The Directors shall have power to authorize
and cause to be executed, mortgages and liens without limit as to amount upon
the property and franchise of this corporation, and pursuant to the affirmative
vote, either in person or by proxy, of the holders of a majority of the capital
stock issued and outstanding; the Directors shall have authority to dispose in
any manner of the whole property of this corporation.
SECTION 10. CORPORATE SEAL. The corporation may have a corporate seal
if so authorized by resolution of the Board, the design thereof being
established by the Board.
SECTION 11. FISCAL YEAR. The fiscal year of the corporation shall end
on December 31 of each year, subject to the right of the Board to change the
fiscal year if determined by the Board to be appropriate.
ARTICLE VIII -- AMENDMENT OF BY-LAWS
SECTION 1. Amendments and changes of these By-Laws may be made at any
regular or special meeting of the Board of Directors at which a quorum is
present and acting, by a vote of not less than two-thirds of the entire Board of
Directors, or may be made by a vote of, or a consent in writing signed by, the
holders of a majority of the issued and outstanding capital stock entitled to
vote for the election of directors.
ByLaws - 18 -
<PAGE> 21
CERTIFICATION OF BYLAWS:
The undersigned, being the duly elected and acting Chairman of the
corporation named in the above ByLaws, DOES HEREBY CERTIFY that the foregoing is
a true, correct and complete copy of the ByLaws of the above corporation as
adopted and approved by the Board of Directors of said corporation on February
5, 1996, and that the same have not been rescinded, modified or amended as of
this date of this certificate.
IN WITNESS WHEREOF, I have set my hand and the seal of the corporation
as of this 5th day of February, 1996.
---------------------------------
[CORPORATE SEAL] (Signature)
Name: J. Robert Griffin
Title: Chairman Of The Board
ByLaws - 19 -
<PAGE> 1
EXHIBIT NO. 4.1
NUMBER SHARES
1
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
JANUARY 30, 1996
VISTA LASER CENTERS OF THE PACIFIC, INC.
AUTHORIZED: 25,000,000 SHARES
20,000,000 SHARES COMMON STOCK 5,000,000 SHARES PREFERRED STOCK
$.01 PAR VALUE EACH $.01 PAR VALUE EACH
THIS CERTIFIES THAT _________________________________________ IS THE REGISTERED
HOLDER OF _______________________________________ SHARES OF THE COMMON STOCK OF
VISTA LASER CENTERS OF THE PACIFIC, INC.
HEREINAFTER DESIGNATED "THE CORPORATION," TRANSFERABLE ON THE SHARE REGISTER OF
THE CORPORATION UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED OR
ASSIGNED.
This certificate and the shares represented thereby shall be held
subject to all of the provisions of the Articles of Incorporation and the
By-laws of said Corporation, a copy of each of which is on file at the office
of the Corporation, and made a part hereof as fully as though the provisions
of said Articles of Incorporation and By-laws were imprinted in full on this
certificate, to all of which the holder of this certificate, by acceptance
hereof, assents and agrees to be bound.
Any shareholder may obtain from the principal office of the
Corporation, upon request and without charge, a statement of the number of
shares constituting each class or series of stock and the designation thereof;
and a copy of the rights, preferences, privileges, and restrictions granted to
or imposed upon the respective classes or series of stock and upon the holders
thereof by said Articles of Incorporation and the By-laws.
WITNESS THE SEAL OF THE CORPORATION AND THE SIGNATURES
OF ITS DULY AUTHORIZED OFFICERS.
DATED:
______________________________________ ______________________________________
SECRETARY PRESIDENT
<PAGE> 2
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- _________ Custodian _________
(Cust) (Minor)
TEN ENT -- as tenants by the entireties under Uniform Gifts to Minors
JT TEN -- as joint tenants with right of Act _________________
survivorship and not as tenants (State)
in common
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, __________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
_______________________________________________________________________________
_______________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute
and appoint ___________________________________________________________________
_______________________________________________________________________________
Attorney to transfer the said shares on the books of the within-named
Corporation with full power of substitution in the premises.
Dated ,______________________
In presence of _______________________________________
___________________________________
<PAGE> 1
EXHIBIT 4.3
NO. WA-__
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT"). ACCORDINGLY, NO TRANSFER OF THESE
SECURITIES OR ANY INTEREST THEREIN MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT UNLESS THE ISSUER HAS RECEIVED AN OPINION
OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION
UNDER THE ACT.
-------------------------------------------------
VISTA LASER CENTERS OF THE PACIFIC, INC.
(Incorporated under the laws of the State of Nevada)
CLASS A COMMON STOCK PURCHASE WARRANTS
_________ SHARES OF COMMON STOCK
VOID ON MARCH 31, 1999 OR EARLIER UPON THE SALE OF THE COMPANY'S BUSINESS OR
MERGER OF THE COMPANY APPROVED BY HOLDERS OF AT LEAST 50% OF THE VOTING CAPITAL
STOCK IN THE COMPANY
-------------------------------
This is to certify that, for value received, receipt of which is hereby
acknowledged, ________________________________________, (herein called the
"holder"), is entitled to purchase from VISTA LASER CENTERS OF THE PACIFIC,
INC., a Nevada corporation (hereinafter called the "Company"), at the warrant
exercise price of FOUR DOLLARS ($4.00) per share, subject to adjustment as
hereinafter provided (hereinafter called the "Warrant Price"), at any time on or
before the expiration date set forth below (the "Expiration Date"), up to
___________________________________ (________) fully paid and non-assessable
shares of Common Stock of the Company (hereinafter called "Common Stock"),
subject to the terms and conditions hereof, including such adjustments as may be
required under the terms hereof.
For the purposes of this Warrant, the Expiration Date shall mean the
earlier of: (i) March 31, 1999; or (ii) the date on which the Company shall
complete a sale of the Company's business (i.e. a sale of substantially all of
its assets relating to vision correction by means of laser equipment) or a
merger of the Company into another entity approved by the holders of at least
50% of the voting capital stock in the Company.
This Warrant was originally issued by the Company during 1996 as part
of an issue of Class A common stock purchase warrants (herein called the
"Warrants") in connection with private placement offering of securities by the
Company. This Warrant represents part of such issue and is herein called "this
Warrant."
This Warrant may be exercised by the holder as hereinabove provided as
to the whole or any part of the shares of Common Stock covered hereby, by
surrender of this Warrant at the principal office of any transfer agent for the
Common Stock, or, if the Company shall not have any transfer agent for the
Common Stock, at the principal office of the Company (any such transfer agent,
or the Company acting hereunder, being hereinafter called the "Warrant Agent"),
with the statement of election to subscribe attached hereto duly
1
<PAGE> 2
executed and upon payment to the Company of the Warrant Price for shares so
purchased in cash or by certified check or bank draft. Thereupon (except that
if, upon such date, the stock transfer books of the Company shall be closed,
then upon the next succeeding date on which such transfer books are open), this
Warrant shall be deemed to have been exercised and the person exercising the
same to have become a holder of record of shares of Common Stock purchased
hereunder for all purposes, and certificates for such shares so purchased shall
be delivered to the purchaser within a reasonable time (not exceeding five
business days, except while the transfer books of the Company are closed) after
this Warrant shall have been exercised as set forth hereinabove. If this Warrant
shall be exercised in respect of a part only of the shares of Common Stock
covered hereby, the holder shall be entitled to receive a similar warrant of
like tenor and date covering the number of shares in respect of which this
Warrant shall not have been exercised.
The Company covenants and agrees that all shares which may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be validly issued, fully paid and non-assessable and free from all taxes, liens
and charges with respect to the issue thereof (other than taxes in respect of
any transfer occurring contemporaneously with such issue). The Company further
covenants and agrees that, during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant.
The rights of the holder of this Warrant shall be subject to the
following terms and conditions:
SECTION 1. CERTAIN ADJUSTMENTS AND NOTICES
1.1. In case the Company shall hereafter at any time change as a whole,
by split-up, subdivision or combination in any manner or by the making of a
stock dividend, the number of outstanding shares of Common Stock into a
different number of shares of Common Stock with or without par value, (i) the
number of shares of Common Stock which immediately prior to such change the
holder of this Warrant shall have been entitled to purchase pursuant to this
Warrant shall be increased or decreased in direct proportion to the increase or
decrease, respectively, in the number of shares of Common Stock outstanding
immediately prior to such change, and (ii) the Warrant Price in effect
immediately prior to such change shall be increased or decreased, as the case
may be, in inverse proportion to such increase or decrease in the number of such
shares outstanding immediately prior to such change; in any such event, the
rights of the holder of this Warrant to an adjustment in the number of shares of
Common Stock purchasable on exercise of this Warrant as herein provided shall
continue and be preserved in respect of any shares, securities, or assets which
the holder of this Warrant becomes entitled to purchase hereafter.
1.2. In case of any capital reorganization or any reclassification of
the capital stock of the Company, as the case may be, the holder of this Warrant
shall thereafter be entitled to purchase (and it shall be a condition to the
consummation of any such reorganization or reclassification that appropriate
provision shall be made so that such holder shall thereafter be entitled to
purchase) the kind and amount of shares of stock and other securities and
property receivable, upon such capital reorganization or reclassification of
capital stock, by a holder of the number of shares of Common Stock which this
Warrant entitled the holder thereof to purchase immediately prior to such
capital reorganization or reclassification of capital stock; and in any such
case appropriate adjustments (as determined in good faith by the Board of
Directors of the Company) shall be made in the application of the provisions
herein set forth with respect to rights and interests thereafter of the holder
of this Warrant, to the end that the provisions set forth herein (including the
specified changes in and other adjustments of the Warrant Price) shall
thereafter be applicable, as near as reasonably may be, in relation to any
shares or other property thereafter purchasable upon the exercise of this
Warrant.
1.3. In case the Company shall hereafter at any time declare a dividend
upon shares of Common
2
<PAGE> 3
Stock payable otherwise than out of retained earnings or otherwise than in
shares of Common Stock or in stock or obligations directly or indirectly
convertible into or exchangeable for Common Stock, the holder of this Warrant
shall, upon exercise of this Warrant in whole or in part, be entitled to
receive, in addition to the number of shares of Common Stock deliverable upon
such exercise against payment of the Warrant Price therefor, but without further
consideration, the cash, stock or other securities or property which the holder
of this Warrant would have received as dividends (otherwise than out of such
retained earnings and otherwise than in shares of Common Stock or in such
convertible or exchangeable stock or obligations) if continuously since the date
set forth at the foot of this Warrant such holder (i) had been the holder of
record of the number of shares of Common Stock deliverable upon such exercise
and (ii) had retained all dividends in stock or other securities (other than
shares of Common Stock or such convertible or exchangeable stock or obligations)
paid or payable in respect of said number of shares of Common Stock or in
respect of any such stock or other securities so paid or payable as such
dividends. For purposes of this Section 1.3, a dividend payable otherwise than
in cash shall be considered to be payable out of retained earnings only to the
extent of the fair value of such dividend as determined by the Board of
Directors of the Company.
1.4. No certificates for fractional shares of Common Stock shall be
issued upon the exercise of this Warrant, but in lieu thereof the Company shall,
upon exercise in full of this Warrant, purchase out of funds legally available
therefor any such fractional interest for an amount in cash equal to the current
market value of such fractional interest calculated to the nearest cent,
computed on the basis of the closing sale price, as reported by the National
Association of Securities Dealers, Inc., of the Common Stock in the
over-the-counter market on the most recent day within ten days prior to the date
of such exercise for which such closing prices shall have been so reported, or,
if the Common Stock is listed on a stock exchange registered with the Securities
and Exchange Commission, the last reported sale price on such exchange on such
day; and if there shall have been no sale on said day, then the computation
shall be made on the basis of the last reported sale price on such exchange
within ten days prior to such date. If there have been no reported closing sale
prices, as the case may be, within such ten days, the current market value shall
be fixed in a manner determined in good faith by the Board of Directors of the
Company.
1.5. Whenever the Warrant Price is adjusted, as herein provided, the
Company shall forthwith file with the Warrant Agent a statement signed by the
President or any one of the Vice Presidents of the Company and by its Treasurer
or an Assistant Treasurer, stating the adjusted Warrant Price determined as
herein provided. Such statement shall show in detail the facts requiring such
adjustment, including a statement of the consideration received by the Company
for any additional securities issued. Whenever the Warrant Price is adjusted,
the Company will forthwith cause a notice stating the adjustment and the Warrant
Price to be mailed to the registered holder of this Warrant at the address of
such holder shown on the books of the Company.
1.6. Notices of Record Date, Etc. In case:
(a) the Company shall take a record of the holders
of its Common Stock (or any other securities issuable upon the exercise
of the Warrants) for the purpose of entitling them to receive any
dividend (other than a regular cash dividend at the same rate as the
rate of the last regular cash dividend theretofore paid) or other
distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities, or to
receive any other right; or
(b) of any capital reorganization of the Company,
any reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of the
assets of the Company to another corporation; or
(c) of any voluntary or involuntary dissolution,
liquidation or winding up of the
3
<PAGE> 4
Company,
then, and in each such case, the Company shall mail or cause to be mailed to
each holder of record of the Warrants at the time outstanding a notice
specifying, as the case may be, (i) the date on which a record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution or winding up is to take place, and the time, if any, is to be
fixed, as to which the holders of record of Common Stock (or such other
securities at the time receivable upon the exercise of the Warrants) shall be
entitled to exchange their shares of Common Stock (or such other securities) for
securities or other property deliverable upon such event. Such notice shall be
mailed at least 20 days prior to the date therein specified and the Warrants may
be exercised prior to said date during the term of the Warrants.
SECTION 2. INVESTMENT INTENT
2.1 The holder of this Warrant, by acceptance hereof, agrees to give
written notice to the Company before exercising or selling this Warrant of such
holder's intention to do so, describing briefly the manner of any proposed sale
of this Warrant or such holder's intention as to the disposition to be made of
shares of Common Stock issuable upon such proposed exercise hereof. Promptly
upon receiving such written notice, the Company shall present copies thereof to
counsel for the Company for such counsel's opinion. If in the opinion of such
counsel, or upon receipt by the Company of a reasonably satisfactory opinion
from any other counsel, to the effect that the proposed exercise or sale may be
effected without registration under the Securities Act of 1933, as amended (the
"Securities Act") of this Warrant or the shares of Common Stock issuable on the
exercise hereof, the holder of this Warrant shall be entitled to sell this
Warrant, or to exercise this Warrant in accordance with its terms and dispose of
the shares received upon such exercise, all in accordance with the terms of the
notice delivered by such holder to the Company. If in the opinion of counsel the
proposed exercise or sale described in said written notice given by the holder
of this Warrant may not be effected without registration of this Warrant or the
shares of Common Stock issuable on the exercise hereof, the Company shall
promptly give written notice of such opinion to the holder of this Warrant. The
holder of this Warrant agrees that, if the proposed exercise or sale by such
holder cannot, in the opinion of counsel, be effected without such registration,
the holder will not so exercise or sell this Warrant or the shares of Common
Stock issuable upon the exercise hereof unless this Warrant or the shares of
Common Stock issuable upon the exercise hereof are registered by the Company as
herein provided.
SECTION 3. MISCELLANEOUS
3.1. The issue of any stock or other certificate upon the exercise of
this Warrant shall be made without charge to the registered holder hereof for
any tax in respect of the issue of such certificate. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a name other
than that of the registered holder of this Warrant, and the Company shall not be
required to issue or deliver any such certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.
3.2. This Warrant and all rights hereunder or any portion thereof are
transferable on the books of the Company, upon surrender of this Warrant, with
the form of assignment attached hereto duly executed by the registered holder
hereof or by his attorney duly authorized in writing, to the Warrant agent at
its principal office hereinabove referred to, and thereupon there shall be
issued in the name of the transferee or transferees, in exchange for this
Warrant, a new Warrant or Warrants of like tenor and date, representing in the
aggregate the right to subscribe for and purchase the number of shares, or such
portion thereof as shall be so transferred,
4
<PAGE> 5
which may be subscribed for and purchased hereunder and if there shall be any
balance of such shares not so transferred, there shall be issued in the name of
the registered holder of this Warrant, a new Warrant or Warrants of like tenor
and date representing in the aggregate the right to subscribe for and purchase
the balance of the number of shares which may be subscribed for and purchased
hereunder.
3.3. If this Warrant shall be lost, stolen, mutilated or destroyed, the
Company may instruct the Warrant Agent, on such terms as to indemnify or
otherwise as the Company may in its discretion impose, to issue a new Warrant of
like denomination, tenor and date as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.
3.4. The Company and any Warrant Agent may deem and treat the
registered holder of this Warrant as the absolute owner of this Warrant for all
purposes and shall not be affected by any notice to the contrary.
3.5. This Warrant shall not entitle the holder to any rights of a
stockholder of the Company, either at law or in equity, including, without
limitation, the right to vote, to receive dividends and other distributions, to
exercise any preemptive rights or to receive any notice of meetings of
stockholders or of any other proceedings of the Company.
3.6. This Warrant shall be governed by the laws of the State of
Arizona.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its corporate name by its duly authorized officer as of the day and year written
below.
Dated: ____________________
VISTA LASER CENTERS OF THE PACIFIC, INC.
By: ________________________________
President
Attest:
________________________________
[Assistant] Secretary
5
<PAGE> 6
TRANSFER OF WARRANT
For value received ____________________________________________ hereby sells,
assigns and transfers unto ________________________, the right to purchase
_______________ of the shares of Common Stock of VISTA LASER CENTERS OF THE
PACIFIC, INC., a Nevada corporation, which rights are represented by the within
Warrant, and does hereby irrevocably constitute and appoint
_____________________ attorney to transfer said rights on the books of the
within named Company, with full power of substitution in the premises.
Dated: ___________________, _____ _________________________________________
(Signature)
_________________________________________
Signature Guarantee
[Medallion Signature Guarantee]
- -------------------------------------------------------------------------------
ELECTION TO SUBSCRIBE
Date:_________________, _____
To: VISTA LASER CENTERS OF THE PACIFIC, INC.: The undersigned hereby subscribes
for __________ of the shares of Common Stock covered by the within Warrant and
tenders payment herewith in the amount of $_______________ in accordance with
the terms thereof:
Deliver Stock Certificates(s)
[ ] [ ]
Issue Certificate(s) for said Stock by mail against
counter-receipt
TO: TO:
_________________________________ ___________________________________
(Name) (Name)
_________________________________ ___________________________________
(Taxpayer Identification Number) (Street and Number)
_________________________________ ___________________________________
(Street and Number) City State ZIP Code
_________________________________
City State ZIP Code
and if said number of shares shall not be all of the shares covered by the
within Warrant, that a new Warrant for the balance of the shares remaining be
registered in the name of, and delivered, to the registered holder of this
Warrant certificate.
_________________________________ ___________________________________
(Signature of Registered Holder) Signature Guarantee
6
<PAGE> 1
EXHIBIT 4.4
NO. WB-__
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "1933 ACT"). ACCORDINGLY, NO TRANSFER OF THESE
SECURITIES OR ANY INTEREST THEREIN MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT UNLESS THE ISSUER HAS RECEIVED AN OPINION
OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION
UNDER THE ACT.
------------------------------------------------
VISTA LASER CENTERS OF THE PACIFIC, INC.
(Incorporated under the laws of the State of Nevada)
CLASS B COMMON STOCK PURCHASE WARRANTS
_________ SHARES OF COMMON STOCK
VOID ON THE FOURTH ANNIVERSARY OF THE COMPANY'S INITIAL PUBLIC OFFERING
(AS DEFINED BELOW)
------------------------------------------------
This is to certify that, for value received, receipt of which is hereby
acknowledged, _______________________________, (herein called the "holder"), is
entitled to purchase from VISTA LASER CENTERS OF THE PACIFIC, INC., a Nevada
corporation (hereinafter called the "Company"), at the warrant exercise price of
ONE DOLLAR ($1.00) per share, subject to adjustment as hereinafter provided
(hereinafter called the "Warrant Price"), at any time on or before the
expiration date set forth below (the "Expiration Date"), up to
________________________(________) fully paid and non-assessable shares of
Common Stock of the Company (hereinafter called "Common Stock"), subject to the
terms and conditions hereof, including such adjustments as may be required under
the terms hereof.
For the purposes of this Warrant, the Expiration Date shall mean the
earlier of: (i) the fourth anniversary of the effective date for the Company's
registration statement for a public offering of Series A Preferred Stock which
is to be sold for not less than $6,000,000 of total net offering proceeds (the
"IPO"); or (ii) in the event a registration statement has not been declared
effective prior to December 31, 1996, then the Expiration Date shall be 5:00
P.M. Pacific time on December 31, 1997.
This Warrant was originally issued during 1996 as part of an issue of
Class B common stock purchase warrants (herein called the "Warrants") as a
private placement offering of securities by the Company to professional
consultants to the Company. This Warrant represents part of such issue and is
herein called "this Warrant."
This Warrant may be exercised by the holder as hereinabove provided as
to the whole or any part of the shares of Common Stock covered hereby, by
surrender of this Warrant at the principal office of any transfer agent for the
Common Stock, or, if the Company shall not have any transfer agent for the
Common Stock, at the principal office of the Company (any such transfer agent,
or the Company acting hereunder, being hereinafter called the "Warrant Agent"),
with the statement of election to subscribe attached hereto duly
1
<PAGE> 2
executed and upon payment to the Company of the Warrant Price for shares so
purchased in cash or by certified check or bank draft. Thereupon (except that
if, upon such date, the stock transfer books of the Company shall be closed,
then upon the next succeeding date on which such transfer books are open), this
Warrant shall be deemed to have been exercised and the person exercising the
same to have become a holder of record of shares of Common Stock purchased
hereunder for all purposes, and certificates for such shares so purchased shall
be delivered to the purchaser within a reasonable time (not exceeding five
business days, except while the transfer books of the Company are closed) after
this Warrant shall have been exercised as set forth hereinabove. If this Warrant
shall be exercised in respect of a part only of the shares of Common Stock
covered hereby, the holder shall be entitled to receive a similar warrant of
like tenor and date covering the number of shares in respect of which this
Warrant shall not have been exercised.
The Company covenants and agrees that all shares which may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be validly issued, fully paid and non-assessable and free from all taxes, liens
and charges with respect to the issue thereof (other than taxes in respect of
any transfer occurring contemporaneously with such issue). The Company further
covenants and agrees that, during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant.
The rights of the holder of this Warrant shall be subject to the
following terms and conditions:
SECTION 1. CERTAIN ADJUSTMENTS AND NOTICES
1.1. In case the Company shall hereafter at any time change as a whole,
by split-up, subdivision or combination in any manner or by the making of a
stock dividend, the number of outstanding shares of Common Stock into a
different number of shares of Common Stock with or without par value, (i) the
number of shares of Common Stock which immediately prior to such change the
holder of this Warrant shall have been entitled to purchase pursuant to this
Warrant shall be increased or decreased in direct proportion to the increase or
decrease, respectively, in the number of shares of Common Stock outstanding
immediately prior to such change, and (ii) the Warrant Price in effect
immediately prior to such change shall be increased or decreased, as the case
may be, in inverse proportion to such increase or decrease in the number of such
shares outstanding immediately prior to such change; in any such event, the
rights of the holder of this Warrant to an adjustment in the number of shares of
Common Stock purchasable on exercise of this Warrant as herein provided shall
continue and be preserved in respect of any shares, securities, or assets which
the holder of this Warrant becomes entitled to purchase hereafter.
1.2. In case of any capital reorganization or any reclassification of
the capital stock of the Company, or in the case of the consolidation or merger
of the Company with another corporation, or in case of any sale, transfer or
other disposition to another corporation of all or substantially all of the
property, assets, business and goodwill of the Company as an entirety, as the
case may be, the holder of this Warrant shall thereafter be entitled to purchase
(and it shall be a condition to the consummation of any such reorganization,
reclassification consolidation, merger, sale, transfer or other disposition that
appropriate provision shall be made so that such holder shall thereafter be
entitled to purchase) the kind and amount of shares of stock and other
securities and property receivable, upon such capital reorganization,
reclassification of capital stock, consolidation, merger, sale, transfer or
other disposition, by a holder of the number of shares of Common Stock which
this Warrant entitled the holder thereof to purchase immediately prior to such
capital reorganization, reclassification of capital stock, consolidation,
merger, sale, transfer or other disposition; and in any such case appropriate
adjustments (as determined in good faith by the Board of Directors of the
Company or of such other corporation, as the case may be) shall be made in the
application of the provisions herein set forth with respect to rights and
interests thereafter of the holder of this Warrant, to the end that the
2
<PAGE> 3
provisions set forth herein (including the specified changes in and other
adjustments of the Warrant Price) shall thereafter be applicable, as near as
reasonably may be, in relation to any shares or other property thereafter
purchasable upon the exercise of this Warrant.
1.3. In case the Company shall hereafter at any time declare a dividend
upon shares of Common Stock payable otherwise than out of retained earnings or
otherwise than in shares of Common Stock or in stock or obligations directly or
indirectly convertible into or exchangeable for Common Stock, the holder of this
Warrant shall, upon exercise of this Warrant in whole or in part, be entitled to
receive, in addition to the number of shares of Common Stock deliverable upon
such exercise against payment of the Warrant Price therefor, but without further
consideration, the cash, stock or other securities or property which the holder
of this Warrant would have received as dividends (otherwise than out of such
retained earnings and otherwise than in shares of Common Stock or in such
convertible or exchangeable stock or obligations) if continuously since the date
set forth at the foot of this Warrant such holder (i) had been the holder of
record of the number of shares of Common Stock deliverable upon such exercise
and (ii) had retained all dividends in stock or other securities (other than
shares of Common Stock or such convertible or exchangeable stock or obligations)
paid or payable in respect of said number of shares of Common Stock or in
respect of any such stock or other securities so paid or payable as such
dividends. For purposes of this Section 1.3, a dividend payable otherwise than
in cash shall be considered to be payable out of retained earnings only to the
extent of the fair value of such dividend as determined by the Board of
Directors of the Company.
1.4. No certificates for fractional shares of Common Stock shall be
issued upon the exercise of this Warrant, but in lieu thereof the Company shall,
upon exercise in full of this Warrant, purchase out of funds legally available
therefor any such fractional interest for an amount in cash equal to the current
market value of such fractional interest calculated to the nearest cent,
computed on the basis of the closing sale price, as reported by the National
Association of Securities Dealers, Inc., of the Common Stock in the
over-the-counter market on the most recent day within ten days prior to the date
of such exercise for which such closing prices shall have been so reported, or,
if the Common Stock is listed on a stock exchange registered with the Securities
and Exchange Commission, the last reported sale price on such exchange on such
day; and if there shall have been no sale on said day, then the computation
shall be made on the basis of the last reported sale price on such exchange
within ten days prior to such date. If there have been no reported closing sale
prices, as the case may be, within such ten days, the current market value shall
be fixed in a manner determined in good faith by the Board of Directors of the
Company.
1.5. Whenever the Warrant Price is adjusted, as herein provided, the
Company shall forthwith file with the Warrant Agent a statement signed by the
President or any one of the Vice Presidents of the Company and by its Treasurer
or an Assistant Treasurer, stating the adjusted Warrant Price determined as
herein provided. Such statement shall show in detail the facts requiring such
adjustment, including a statement of the consideration received by the Company
for any additional securities issued. Whenever the Warrant Price is adjusted,
the Company will forthwith cause a notice stating the adjustment and the Warrant
Price to be mailed to the registered holder of this Warrant at the address of
such holder shown on the books of the Company.
1.6. Notices of Record Date, Etc. In case:
(a) the Company shall take a record of the holders of
its Common Stock (or any other securities issuable upon the exercise of
the Warrants) for the purpose of entitling them to receive any dividend
(other than a regular cash dividend at the same rate as the rate of the
last regular cash dividend theretofore paid) or other distribution, or
any right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities, or to receive any other
right; or
3
<PAGE> 4
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation
or merger of the Company with or into another corporation, or any
conveyance of all or substantially all of the assets of the Company to
another corporation; or
(c) of any voluntary or involuntary dissolution,
liquidation or winding up of the Company,
then, and in each such case, the Company shall mail or cause to be mailed to
each holder of record of the Warrants at the time outstanding a notice
specifying, as the case may be, (i) the date on which a record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution or winding up is to take place, and the time, if any, is to be
fixed, as to which the holders of record of Common Stock (or such other
securities at the time receivable upon the exercise of the Warrants) shall be
entitled to exchange their shares of Common Stock (or such other securities) for
securities or other property deliverable upon such event. Such notice shall be
mailed at least 20 days prior to the date therein specified and the Warrants may
be exercised prior to said date during the term of the Warrants.
SECTION 2. INVESTMENT INTENT
2.1 The holder of this Warrant, by acceptance hereof, agrees to give
written notice to the Company before exercising or selling this Warrant of such
holder's intention to do so, describing briefly the manner of any proposed sale
of this Warrant or such holder's intention as to the disposition to be made of
shares of Common Stock issuable upon such proposed exercise hereof. Promptly
upon receiving such written notice, the Company shall present copies thereof to
counsel for the Company for such counsel's opinion. If in the opinion of such
counsel, or upon receipt by the Company of a reasonably satisfactory opinion
from any other counsel, to the effect that the proposed exercise or sale may be
effected without registration under the Securities Act of 1933, as amended (the
"1933 Act") of this Warrant or the shares of Common Stock issuable on the
exercise hereof, the holder of this Warrant shall be entitled to sell this
Warrant, or to exercise this Warrant in accordance with its terms and dispose of
the shares received upon such exercise, all in accordance with the terms of the
notice delivered by such holder to the Company. If in the opinion of counsel the
proposed exercise or sale described in said written notice given by the holder
of this Warrant may not be effected without registration of this Warrant or the
shares of Common Stock issuable on the exercise hereof, the Company shall
promptly give written notice of such opinion to the holder of this Warrant. The
holder of this Warrant agrees that, if the proposed exercise or sale by such
holder cannot, in the opinion of counsel, be effected without such registration,
the holder will not so exercise or sell this Warrant or the shares of Common
Stock issuable upon the exercise hereof unless this Warrant or the shares of
Common Stock issuable upon the exercise hereof are registered by the Company as
herein provided.
2.2 In the event the Company or any successor-in-interest shall
hereafter register the Common Stock under Section 12(g) or 12(b) of the
Securities Exchange Act of 1934, as amended, then during the term of this
Warrant and for a period of four years after any exercise of this Warrant, the
Company covenants and agrees to file on a timely basis all reports required to
be filed on behalf of the Company with the Securities and Exchange Commission,
and to use its best efforts to otherwise comply with any regulatory provisions
applicable to the Company so that the Common Stock issuable upon exercise of
this Warrant will be eligible for resale after the minimum applicable holding
period in accordance with the exemption from registration provided by Rule 144
promulgated under the 1933 Act, or any successor to such Rule.
4
<PAGE> 5
SECTION 3. MOST FAVORED POSITION AS TO REGISTRATION RIGHTS
3.1. If at any time during the term of this Warrant, the Company shall
either: (i) grant rights to register shares of its Common Stock under the 1933
Act, to the holders of any warrants, options or other securities convertible
into or exercisable for Common Stock (except for shares registered on Form S-8
or the IPO), or (ii) offer to the holders of any warrants, options or other
securities convertible into or exercisable for Common Stock the right of
participating in any registration of the Company's Common Stock under the 1933
Act (except for shares registered on Form S-8), then the Company shall provide
prompt written notice of such actions to the registered holder of this Warrant
and shall grant the registered holder of this Warrant rights to demand
registration of the Common Stock issuable upon the exercise of this Warrant
under the 1933 Act which is no less favorable to the registered holder of this
Warrant than the most favorable rights of registration (as determined by the
holder of this Warrant) granted to any third party holder of warrants, options
or other securities convertible into or exercisable for Common Stock of the
Company.
SECTION 4. MISCELLANEOUS
4.1. The issue of any stock or other certificate upon the exercise of
this Warrant shall be made without charge to the registered holder hereof for
any tax in respect of the issue of such certificate. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a name other
than that of the registered holder of this Warrant, and the Company shall not be
required to issue or deliver any such certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.
4.2. This Warrant and all rights hereunder or any portion thereof are
transferable on the books of the Company, upon surrender of this Warrant, with
the form of assignment attached hereto duly executed by the registered holder
hereof or by his attorney duly authorized in writing, to the Warrant agent at
its principal office hereinabove referred to, and thereupon there shall be
issued in the name of the transferee or transferees, in exchange for this
Warrant, a new Warrant or Warrants of like tenor and date, representing in the
aggregate the right to subscribe for and purchase the number of shares, or such
portion thereof as shall be so transferred, which may be subscribed for and
purchased hereunder and if there shall be any balance of such shares not so
transferred, there shall be issued in the name of the registered holder of this
Warrant, a new Warrant or Warrants of like tenor and date representing in the
aggregate the right to subscribe for and purchase the balance of the number of
shares which may be subscribed for and purchased hereunder.
4.3. If this Warrant shall be lost, stolen, mutilated or destroyed, the
Company may instruct the Warrant Agent, on such terms as to indemnify or
otherwise as the Company may in its discretion impose, to issue a new Warrant of
like denomination, tenor and date as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.
4.4. The Company and any Warrant Agent may deem and treat the
registered holder of this Warrant as the absolute owner of this Warrant for all
purposes and shall not be affected by any notice to the contrary.
4.5. This Warrant shall not entitle the holder to any rights of a
stockholder of the Company, either at law or in equity, including, without
limitation, the right to vote, to receive dividends and other distributions, to
exercise any preemptive rights or to receive any notice of meetings of
stockholders or of any other proceedings of the Company.
5
<PAGE> 6
4.6. This Warrant shall be governed by the laws of the State of
California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its corporate name by its duly authorized officer as of the day and year written
below.
Dated: ____________________
VISTA LASER CENTERS OF THE PACIFIC, INC.
By: ________________________________
President
Attest:
________________________________
[Assistant] Secretary
6
<PAGE> 7
TRANSFER OF WARRANT
For value received ____________________________________________ hereby sells,
assigns and transfers unto ________________________, the right to purchase
_______________ of the shares of Common Stock of VISTA LASER CENTERS OF THE
PACIFIC, INC., a Nevada corporation, which rights are represented by the within
Warrant, and does hereby irrevocably constitute and appoint
_____________________ attorney to transfer said rights on the books of the
within named Company, with full power of substitution in the premises.
Dated: ___________________, _____ ________________________________________
(Signature)
________________________________________
Signature Guarantee
[Medallion Signature Guarantee]
- -------------------------------------------------------------------------------
ELECTION TO SUBSCRIBE
Date:_________________, _____
To: VISTA LASER CENTERS OF THE PACIFIC, INC.: The undersigned hereby subscribes
for __________ of the shares of Common Stock covered by the within Warrant and
tenders payment herewith in the amount of $_______________ (or by tendering for
cancellation __________ warrants as "Tendered Warrants") in accordance with the
terms thereof:
Deliver Stock Certificates(s)
[ ] [ ]
Issue Certificate(s) for said Stock by mail against
counter-receipt
TO: TO:
_________________________________ ___________________________________
(Name) (Name)
_________________________________ ___________________________________
(Taxpayer Identification Number) (Street and Number)
_________________________________ ___________________________________
(Street and Number) City State ZIP Code
_________________________________
City State ZIP Code
and if said number of shares shall not be all of the shares covered by the
within Warrant, that a new Warrant for the balance of the shares remaining be
registered in the name of, and delivered, to the registered holder of this
Warrant certificate.
_________________________________ ___________________________________
(Signature of Registered Holder) Signature Guarantee
7
<PAGE> 1
EXHIBIT 4.5
NO. WC-__
""""""""""""""""""""""""""""""""""""""""""""""""
VISTA LASER CENTERS OF THE PACIFIC, INC.
(Incorporated under the laws of the State of Nevada)
CLASS C COMMON STOCK PURCHASE WARRANTS
_________ SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M. ON ___________________, 2001 (FIVE YEARS AFTER EFFECTIVE
DATE OF PROSPECTUS)
"""""""""""""""""""""""""""""""
This is to certify that, for value received, receipt of which is hereby
acknowledged, ________________________________, (herein called the "holder"), is
entitled to purchase from VISTA LASER CENTERS OF THE PACIFIC, INC., a Nevada
corporation (hereinafter called the "Company"), at the warrant exercise price of
SIX DOLLARS ($6.00) per share, subject to adjustment as hereinafter provided
(hereinafter called the "Warrant Price"), at any time on or before the
expiration date set forth below, up to _________________________________________
(_______) fully paid and non-assessable shares of Common Stock of the Company
(hereinafter called "Common Stock"), subject to the terms and conditions hereof,
including such adjustments as may be required under the terms hereof.
For the purposes of this Warrant, the Expiration Date shall mean 5:00
P.M. Pacific time on date of the fifth anniversary of the effective date for the
Company's registration statement for the public offering in which this Warrant
was distributed to the public (the "IPO").
This Warrant was originally issued during 1996 as part of an issue of
Class C common stock purchase warrants (herein called the "Warrants") as a
registered public offering of Units consisting of two (2) shares of Company
Common Stock and one Class C Warrant by the Company. This Warrant represents
part of such public distribution of securities and is herein called "this
Warrant."
This Warrant may be exercised by the holder as hereinabove provided as
to the whole or any part of the shares of Common Stock covered hereby, by
surrender of this Warrant at the principal office of any transfer agent for the
Common Stock, or, if the Company shall not have any transfer agent for the
Common Stock, at the principal office of the Company (any such transfer agent,
or the Company acting hereunder, being hereinafter called the "Warrant Agent"),
with the statement of election to subscribe attached hereto duly executed and
upon payment to the Company of the Warrant Price for shares so purchased in cash
or by certified check or bank draft. Thereupon (except that if, upon such date,
the stock transfer books of the Company shall be closed, then upon the next
succeeding date on which such transfer books are open), this Warrant shall be
deemed to have been exercised and the person exercising the same to have become
a holder of record of shares of Common Stock purchased hereunder for all
purposes, and certificates for such shares so purchased shall be delivered to
the purchaser within a reasonable time (not exceeding five business days, except
while the transfer books of the Company are closed) after this Warrant shall
have been exercised as set forth hereinabove. If this Warrant shall be exercised
in respect of a part only of the shares of Common
<PAGE> 2
Stock covered hereby, the holder shall be entitled to receive a similar warrant
of like tenor and date covering the number of shares in respect of which this
Warrant shall not have been exercised.
The Company covenants and agrees that all shares which may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be validly issued, fully paid and non-assessable and free from all taxes, liens
and charges with respect to the issue thereof (other than taxes in respect of
any transfer occurring contemporaneously with such issue). The Company further
covenants and agrees that, during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant.
The rights of the holder of this Warrant shall be subject to the
following terms and conditions:
SECTION 1. CERTAIN ADJUSTMENTS AND NOTICES
1.1. In case the Company shall hereafter at any time change as a whole,
by split-up, subdivision or combination in any manner or by the making of a
stock dividend, the number of outstanding shares of Common Stock into a
different number of shares of Common Stock with or without par value, (i) the
number of shares of Common Stock which immediately prior to such change the
holder of this Warrant shall have been entitled to purchase pursuant to this
Warrant shall be increased or decreased in direct proportion to the increase or
decrease, respectively, in the number of shares of Common Stock outstanding
immediately prior to such change, and (ii) the Warrant Price in effect
immediately prior to such change shall be increased or decreased, as the case
may be, in inverse proportion to such increase or decrease in the number of such
shares outstanding immediately prior to such change; in any such event, the
rights of the holder of this Warrant to an adjustment in the number of shares of
Common Stock purchasable on exercise of this Warrant as herein provided shall
continue and be preserved in respect of any shares, securities, or assets which
the holder of this Warrant becomes entitled to purchase hereafter.
1.2. In case of any capital reorganization or any reclassification of
the capital stock of the Company, or in the case of the consolidation or merger
of the Company with another corporation, or in case of any sale, transfer or
other disposition to another corporation of all or substantially all of the
property, assets, business and goodwill of the Company as an entirety, as the
case may be, the holder of this Warrant shall thereafter be entitled to purchase
(and it shall be a condition to the consummation of any such reorganization,
reclassification consolidation, merger, sale, transfer or other disposition that
appropriate provision shall be made so that such holder shall thereafter be
entitled to purchase) the kind and amount of shares of stock and other
securities and property receivable, upon such capital reorganization,
reclassification of capital stock, consolidation, merger, sale, transfer or
other disposition, by a holder of the number of shares of Common Stock which
this Warrant entitled the holder thereof to purchase immediately prior to such
capital reorganization, reclassification of capital stock, consolidation,
merger, sale, transfer or other disposition; and in any such case appropriate
adjustments (as determined in good faith by the Board of Directors of the
Company or of such other corporation, as the case may be) shall be made in the
application of the provisions herein set forth with respect to rights and
interests thereafter of the holder of this Warrant, to the end that the
provisions set forth herein (including the specified changes in and other
adjustments of the Warrant Price) shall thereafter be applicable, as near as
reasonably may be, in relation to any shares or other property thereafter
purchasable upon the exercise of this Warrant.
1.3. In case the Company shall hereafter at any time declare a dividend
upon shares of Common Stock payable otherwise than out of retained earnings or
otherwise than in shares of Common Stock or in stock or obligations directly or
indirectly convertible into or exchangeable for Common Stock, the holder of this
Warrant shall, upon exercise of this Warrant in whole or in part, be entitled to
receive, in addition to the
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<PAGE> 3
number of shares of Common Stock deliverable upon such exercise against payment
of the Warrant Price therefor, but without further consideration, the cash,
stock or other securities or property which the holder of this Warrant would
have received as dividends (otherwise than out of such retained earnings and
otherwise than in shares of Common Stock or in such convertible or exchangeable
stock or obligations) if continuously since the date set forth at the foot of
this Warrant such holder (i) had been the holder of record of the number of
shares of Common Stock deliverable upon such exercise and (ii) had retained all
dividends in stock or other securities (other than shares of Common Stock or
such convertible or exchangeable stock or obligations) paid or payable in
respect of said number of shares of Common Stock or in respect of any such stock
or other securities so paid or payable as such dividends. For purposes of this
Section 1.3, a dividend payable otherwise than in cash shall be considered to be
payable out of retained earnings only to the extent of the fair value of such
dividend as determined by the Board of Directors of the Company.
1.4. No certificates for fractional shares of Common Stock shall be
issued upon the exercise of this Warrant, but in lieu thereof the Company shall,
upon exercise in full of this Warrant, purchase out of funds legally available
therefor any such fractional interest for an amount in cash equal to the current
market value of such fractional interest calculated to the nearest cent,
computed on the basis of the closing sale price, as reported by the National
Association of Securities Dealers, Inc., of the Common Stock in the
over-the-counter market on the most recent day within ten days prior to the date
of such exercise for which such closing prices shall have been so reported, or,
if the Common Stock is listed on a stock exchange registered with the Securities
and Exchange Commission (the "SEC"), the last reported sale price on such
exchange on such day; and if there shall have been no sale on said day, then the
computation shall be made on the basis of the last reported sale price on such
exchange within ten days prior to such date. If there have been no reported
closing sale prices, as the case may be, within such ten days, the current
market value shall be fixed in a manner determined in good faith by the Board of
Directors of the Company.
1.5. Whenever the Warrant Price is adjusted, as herein provided, the
Company shall forthwith file with the Warrant Agent a statement signed by the
President or any one of the Vice Presidents of the Company and by its Treasurer
or an Assistant Treasurer, stating the adjusted Warrant Price determined as
herein provided. Such statement shall show in detail the facts requiring such
adjustment, including a statement of the consideration received by the Company
for any additional securities issued. Whenever the Warrant Price is adjusted,
the Company will forthwith cause a notice stating the adjustment and the Warrant
Price to be mailed to the registered holder of this Warrant at the address of
such holder shown on the books of the Company.
1.6. In case:
(a) the Company shall take a record of the holders of
its Common Stock (or any other securities issuable upon the exercise of
the Warrants) for the purpose of entitling them to receive any dividend
(other than a regular cash dividend at the same rate as the rate of the
last regular cash dividend theretofore paid) or other distribution, or
any right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities, or to receive any other
right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation
or merger of the Company with or into another corporation, or any
conveyance of all or substantially all of the assets of the Company to
another corporation; or
(c) of any voluntary or involuntary dissolution,
liquidation or winding up of the Company, then, and in each such case,
the Company shall mail or cause to be mailed to each holder of record
of the Warrants at the time outstanding a notice specifying, as the
case may be, (i) the date on which a record is to be taken for the
purpose of such dividend, distribution or right, and stating
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<PAGE> 4
the amount and character of such dividend, distribution or right, or
(ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution or winding up is to take
place, and the time, if any, is to be fixed, as to which the holders of
record of Common Stock (or such other securities at the time receivable
upon the exercise of the Warrants) shall be entitled to exchange their
shares of Common Stock (or such other securities) for securities or
other property deliverable upon such event. Such notice shall be mailed
at least thirty (30) days prior to the date therein specified and the
Warrants may be exercised prior to said date during the term of the
Warrants.
SECTION 2. REDEMPTION OF WARRANT
2.1. The Company may redeem this Warrant upon the notice (as described
below) at any time and from time to time after the Company's Common Stock shall
have traded in the over-the-counter market or on a stock exchange registered
with the SEC at a bid price equal to or in excess of $8.00 per share for ten
(10) consecutive days. The Warrants represented by this certificate may be
redeemed by the Company in whole or in part, by paying to the holder of record
the sum of Twenty-Five Cents ($.25) per Warrant (the "Redemption Price").
2.2. The Company shall give notice of its election to redeem this
Warrant by mailing a copy of such notice, postage prepaid, to the holder of
record of this Warrant, not less than thirty (30) days nor more than ninety (90)
days prior to the date designated as the date of redemption, addressed to the
holder's address as appearing on the books of the Company or its duly appointed
stock transfer agent. Failure to give notice, or any defect in a notice or in
mailing thereof, will not affect the validity of the redemption.
2.3. Prior to providing the notice to the Warrant holder required by
Section 2.2 above, the Company shall have registered for distribution with the
SEC, and the states wherein at least seventy-five percent (75%) of the holders
of all Warrants to be redeemed reside, an effective and current registration
statement on the number of shares of the Company's Common Stock equal to the
number of Warrants to be redeemed. In the event the Company Common Stock cannot
be registered for distribution in the state in which the holder of this Warrant
resides, the holder shall not be permitted to exercise this Warrant.
2.4. If only a portion of the Company's Class C Warrants then
outstanding is to be redeemed at a given time, the Company shall select the
Class C Warrants to be redeemed by lot or pro rata, in whatever reasonable
manner the Company's Board of Directors shall determine.
2.5. On and after the date of redemption specified in the notice, the
holder of record of this Warrant shall be entitled to receive the Redemption
Price hereof, upon presentation and surrender of this Warrant at the place
designated in such notice.
2.6. From and after the date of the redemption specified in the
required notice (unless the Company defaults in providing money for the payment
of the Redemption Price), all rights of the holder of record of this Warrant
shall cease, except for the right to receive the Redemption Price hereof,
without interest, and this Warrant shall no longer be deemed to be outstanding.
SECTION 3. MISCELLANEOUS
3.1. The issue of any stock or other certificate upon the exercise of
this Warrant shall be made without charge to the registered holder hereof for
any tax in respect of the issue of such certificate. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a name other
than that of the registered holder of this
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Warrant, and the Company shall not be required to issue or deliver any such
certificate unless and until the person or persons requesting the issue thereof
shall have paid to the Company the amount of such tax or shall have established
to the satisfaction of the Company that such tax has been paid.
3.2. This Warrant and all rights hereunder or any portion thereof are
transferable on the books of the Company, upon surrender of this Warrant, with
the form of assignment attached hereto duly executed by the registered holder
hereof or by his attorney duly authorized in writing, to the Warrant agent at
its principal office hereinabove referred to, and thereupon there shall be
issued in the name of the transferee or transferees, in exchange for this
Warrant, a new Warrant or Warrants of like tenor and date, representing in the
aggregate the right to subscribe for and purchase the number of shares, or such
portion thereof as shall be so transferred, which may be subscribed for and
purchased hereunder and if there shall be any balance of such shares not so
transferred, there shall be issued in the name of the registered holder of this
Warrant, a new Warrant or Warrants of like tenor and date representing in the
aggregate the right to subscribe for and purchase the balance of the number of
shares which may be subscribed for and purchased hereunder.
3.3. If this Warrant shall be lost, stolen, mutilated or destroyed, the
Company may instruct the Warrant Agent, on such terms as to indemnify or
otherwise as the Company may in its discretion impose, to issue a new Warrant of
like denomination, tenor and date as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.
3.4. The Company and any Warrant Agent may deem and treat the
registered holder of this Warrant as the absolute owner of this Warrant for all
purposes and shall not be affected by any notice to the contrary.
3.5. This Warrant shall not entitle the holder to any rights of a
stockholder of the Company, either at law or in equity, including, without
limitation, the right to vote, to receive dividends and other distributions, to
exercise any preemptive rights or to receive any notice of meetings of
stockholders or of any other proceedings of the Company.
3.6. This Warrant shall be governed by the laws of the State of
California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its corporate name by its duly authorized officer as of the day and year written
below.
Dated: ____________________
VISTA LASER CENTERS OF THE PACIFIC, INC.
By: ________________________________
President
Attest:
________________________________
[Assistant] Secretary
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<PAGE> 6
TRANSFER OF WARRANT
For value received ____________________________________________ hereby sells,
assigns and transfers unto ________________________, the right to purchase
_______________ of the shares of Common Stock of VISTA LASER CENTERS OF THE
PACIFIC, INC., a Nevada corporation, which rights are represented by the within
Warrant, and does hereby irrevocably constitute and appoint ____________________
attorney to transfer said rights on the books of the within named Company, with
full power of substitution in the premises.
Dated: ___________________, _____ ___________________________________
(Signature)
____________________________
Signature Guarantee [Medallion
Signature Guarantee]
********************************************************************************
ELECTION TO SUBSCRIBE
Date:_________________, _____
To: VISTA LASER CENTERS OF THE PACIFIC, INC.: The undersigned hereby subscribes
for __________ of the shares of Common Stock covered by the within Warrant and
tenders payment herewith in the amount of $_______________ in accordance with
the terms thereof:
Deliver Stock Certificate(s)
[ ] [ ]
Issue Certificate(s) for said Stock by mail against
counter-receipt
TO: TO:
___________________________________ ___________________________________
(Name) (Name)
___________________________________ ___________________________________
(Taxpayer Identification Number) (Street and Number)
___________________________________ ___________________________________
(Street and Number) City State ZIP Code
___________________________________
City State ZIP Code
and if said number of shares shall not be all of the shares covered by the
within Warrant, that a new Warrant for the balance of the shares remaining be
registered in the name of, and delivered, to the registered holder of this
Warrant certificate.
___________________________________ ___________________________________
(Signature of Registered Holder) Signature Guarantee
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<PAGE> 1
EXHIBIT 4.6
WARRANT AGREEMENT
----------------------------------------
VISTA LASER CENTERS OF THE PACIFIC, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
WARRANT AGENT
----------------------------------------
<PAGE> 2
This Warrant Agreement (the "Agreement") is dated as __________________
__________, 1996, between Vista Laser Centers Of The Pacific, Inc., a Nevada
corporation (the "Company"), and American Stock Transfer & Trust Company, New
York City, New York (the "Warrant Agent").
WHEREAS, the Company proposes to distribute to in a registered unit
offering (the "Offering") up to 690,000 Class C Common Stock Purchase Warrants
(the "C Warrants") to purchase additional shares of Common Stock upon the terms
and conditions set forth in the Registration Statement on Form SB-2 to be
declared effective by the Securities and Exchange Commission; and
WHEREAS, after such proposed distribution, the Company anticipates its
issuance of up to 690,000 shares of Common Stock (the "Warrant Shares"); and
WHEREAS, the Company desires to provide for issuance of warrant
certificates (the "Warrant Certificates") representing up to 690,000 Class C
Warrants and the issuance of up to 690,000 Warrant Shares upon the exercise of
the Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, transfer and exchange of Warrant Certificates and
exercise of the Warrants and the issuance of the Warrant Shares.
NOW, THEREFORE, in consideration of the promises and mutual agreements
hereinafter set forth, it is agreed that:
1. Warrants/Warrant Certificates. Each Class C Warrant shall entitle
the holder (the "Registered Holder" or in the aggregate, the "Registered
Holders") in whose name the Warrant Certificate shall be registered on the books
maintained by the Warrant Agent to purchase one (1) share of Common Stock of the
Company on exercise thereof, subject to modification and adjustment as provided
in Section 8 and the Company's right of redemption as provided in Section 4.
Warrant Certificates representing the right to purchase Warrant Shares shall be
executed by the Company's President and attested to by the Company's Secretary
or Assistant Secretary and delivered to the Warrant Agent upon execution of this
Agreement. Such Warrant Certificates shall be attached to certificates
representing an aggregate of up to 690,000 units of Company Common Stock and
Class C Warrants and distributed to the purchasers in the Offering.
Subject to the provisions of Sections 3, 6 and 7, the Warrant Agent
shall deliver Warrant Certificates in required whole number denominations to
Registered Holders in connection with any transfer or exchange permitted under
this Agreement. Except as provided in Section 7 hereof, no Warrant Certificates
shall be issued except:
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<PAGE> 3
(i) Warrant Certificates initially issued hereunder; (ii) Warrant Certificates
issued on or after the initial issuance date, upon the exercise of any Warrants,
to evidence the unexercised Warrants held by the exercising Registered Holder;
and (iii) Warrant Certificates issued after the initial issuance date upon any
transfer or exchange of Warrant Certificates or replacement of lost or mutilated
Warrant Certificates.
2. Form and Execution of Warrant Certificates. The Warrant Certificates
shall be substantially in the form attached as Exhibit A. The Warrant
Certificates shall be dated as of the date of their issuance, whether on initial
issuance, transfer or exchange or in lieu of mutilated, lost, stolen or
destroyed Warrant Certificates.
Each such Warrant Certificate shall be numbered serially with the
designation "C-W" appearing on each Warrant Certificate.
The Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. In any
event, if any officer of the Company who executed the Warrant Certificates shall
cease to be an officer of the Company before the date of issuance of the Warrant
Certificates or before countersignature and delivery by the Warrant Agent, such
Warrant Certificates may be countersigned, issued and delivered by the Warrant
Agent with the same force and effect as though the person who signed such
Warrant Certificates had not ceased to be an officer of the Company.
3. Exercise. Subject to the provisions of Sections 5 and 8, the
Warrants when evidenced by a Warrant Certificate, may be exercised at a price
(the "Exercise Price") of $6.00 per share of Common Stock in whole or in part at
any time during the period (the "Exercise Period") commencing the date (the
"Initial Exercise Date") of the Company's Prospectus and terminating on
__________________________, 2001 (the "Expiration Date"). A Warrant shall be
deemed to have been exercised immediately prior to the close of business on the
date (the "Exercise Date") of the surrender for exercise of the Warrant
Certificate. The exercise form shall be executed by the Registered Holder or his
attorney duly authorized in writing and will be delivered together with payment
to the Warrant Agent at its corporate offices (the "Corporate Office"), in cash
or by official bank or certified check, of an amount equal to the aggregate
Exercise Price, in lawful money of the United States of America.
Unless Warrant Shares may not be issued as provided herein, the person
entitled to receive the number of Warrant Shares deliverable on such exercise
shall be treated for all purposes as the holder of such Warrant Shares as of the
close of business on the Exercise Date. In addition, the Warrant Agent shall
also, at such time, verify that all of the conditions precedent to the issuance
of Warrant Shares, set forth in Section 5, have been
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<PAGE> 4
satisfied as of the Exercise Date. If any one of the conditions precedent set
forth in Section 5 are not satisfied as of the Exercise Date, the Warrant Agent
shall request written instructions from the Company as to whether to return the
Warrant and pertinent Exercise Price payment to the exercising Registered Holder
or to hold the same until all such conditions have been satisfied. The Company
shall not be obligated to issue any fractional share interests in Warrant Shares
issuable or deliverable on the exercise of any Warrant or scrip or cash therefor
and such fractional shares shall be of no value whatsoever. If more than one
Warrant shall be exercised at one time by the same Registered Holder, the number
of full Warrant Shares which shall be issuable on exercise thereof shall be
computed on the basis of the aggregate number of full Warrant Shares issuable on
such exercise.
Within fifteen (15) days after the Exercise Date, the Warrant Agent
shall cause to be issued and delivered to the person or persons entitled to
receive the same, a certificate or certificates for the number of Warrant Shares
deliverable on such exercise. No adjustment shall be made in respect of cash
dividends on Warrant Shares delivered on exercise of any Warrant.
Upon the exercise of any Warrant, the Warrant Agent shall promptly
deposit the payment into an escrow account established by mutual agreement of
the Company and the Warrant Agent at a federally insured commercial bank. All
funds deposited in the escrow account will be disbursed on a weekly basis to the
Company once they have been determined by the Warrant Agent to be collected
funds. Once the funds are determined to be collected, the Warrant Agent shall
cause the share certificate(s) representing the exercised Warrants to be issued.
Expenses incurred by the Warrant Agent will be paid by the Company.
These expenses, including delivery of share certificates to the shareholder,
will be deducted from the exercise fee submitted prior to distribution of funds
to the Company.
A detailed accounting statement relating to the number of shares
exercised and the net amount of exercised funds remitted will be given to the
Company with the payment of each exercise amount.
The Company may deem and treat the Registered Holder of the Warrants at
any time as the absolute owner thereof for all purposes, and the Company shall
not be affected by any notice to the contrary. The Warrants shall not entitle
the holder thereof to any of the rights of shareholders or to any dividend
declared on the Common Stock unless the holder shall have exercised the Warrants
and purchased the shares of Common Stock prior to the record date fixed by the
Board of Directors of the Company for the determinations of holders of Common
Stock entitled to such dividend or other right.
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<PAGE> 5
4. Redemption of Warrants. The Company may redeem the Warrants upon the
notice (as described below) at any time and from time to time after the
Company's Common Stock shall have traded in the over-the-counter market or on a
stock exchange registered with the SEC at a bid price equal to or in excess of
$8.00 per share for ten (10) consecutive days. The Warrants may be redeemed by
the Company in whole or in part, by paying to the holder of record the sum of
Twenty-Five Cents ($.25) per Warrant (the "Redemption Price").
The Company shall give notice of its election to redeem this Warrant by
providing to the Warrant Agent a copy of such notice, which the Warrant Agent
shall mail, postage prepaid, to the Registered Holders of the Warrants, not less
than thirty (30) days nor more than ninety (90) days prior to the date
designated as the date of redemption, addressed to the Registered Holders'
addresses as appearing on the books of the Company.
Prior to the Warrant Agent's providing the notice to the Registered
Holders as required above, the Company shall have registered for distribution
with the SEC, and the states wherein at least seventy-five percent (75%) of the
Registered Holders of all Warrants to be redeemed reside, an effective and
current registration statement on the number of shares of the Company's Common
Stock equal to the number of Warrants to be redeemed. In the event the Company
Common Stock cannot be registered for distribution in the state in which any
Registered Holder resides, such Registered Holder shall not be permitted to
exercise his Warrant.
If only a portion of the Company's Class C Warrants then outstanding is
to be redeemed at a given time, the Company shall select the Class C Warrants to
be redeemed by lot or pro rata, in whatever reasonable manner the Company's
Board of Directors shall determine.
On and after the date of redemption specified in the notice, the
Registered Holders of the Warrants shall be entitled to receive the Redemption
Price hereof, upon presentation and surrender of the Warrants at the place
designated in such notice. Three (3) days prior to the date of redemption the
Company shall deposit with the Warrant Agent a sum equal to the maximum amount
to be paid to all Registered Holders upon the redemption of the Warrants.
From and after the date of the redemption specified in the required
notice (unless the Company defaults in providing money for the payment of the
Redemption Price), all rights of the Registered Holders of the Warrants shall
cease, except for the right to receive the Redemption Price hereof, without
interest, and the Warrants shall no longer be deemed to be outstanding.
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<PAGE> 6
5. Reservation of Shares and Payment of Taxes. The Company covenants
that it will at all times reserve and have available from its authorized Common
Stock such number of shares as shall then be issuable on the exercise of all
outstanding Warrants. The Company covenants that all Warrant Shares which shall
be so issuable shall be duly and validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issue thereof.
The Company and the Warrant Agent acknowledge that the Company will be
required, pursuant to the Securities Act of 1933, as amended (the "Act"), to
deliver to each Registered Holder, upon the exercise of Warrants, a prospectus
covering the issuance of the Warrant Shares which meets the requirements of the
Act, which prospectus must be a part of an effective registration statement
under the Act at the time that the Warrant is exercised. No Warrants may be
exercised nor may Warrant Shares be issued by the Company's transfer agent or
delivered by the Warrant Agent unless, on the Exercise Date: (i) the Company has
an effective registration statement covering the issuance of the Warrant Shares
under the Act; (ii) the Warrant Agent has copies of the prospectus which is a
part of such effective registration statement and which the Warrant Agent hereby
agrees to deliver with the Warrant Shares; and (iii) the Warrant Shares may
legally be issued and delivered to the exercising Registered Holder under the
securities laws of the state in which such Registered Holder resides.
The Company agrees to use its best efforts to maintain, to the extent
required by the Act, an effective registration statement covering the issuance
of the Warrant Shares during the period the Warrants are exercisable. The
Company further agrees, from time to time, to furnish the Warrant Agent with
copies of the Company's prospectus to be delivered to exercising Registered
Holders, as set forth above.
If any shares of Common Stock to be reserved for the purpose of
exercise of Warrants hereunder require any other registration with or approval
of any government authority under any federal or state law before such shares
may be validly issued or delivered, then the Company covenants that it will in
good faith and as expeditiously as possible endeavor to secure such registration
or approval. No Warrant Shares shall be issued unless and until any such
registration requirements have been satisfied or such approval has been
obtained.
The Registered Holder shall pay all documentary, stamp or similar taxes
and other governmental charges that may be imposed with respect to the issuance
of the Warrants, or the issuance, transfer or delivery of any Warrant Shares on
exercise of the Warrants. In the event the Warrant Shares are to be delivered in
the name other than the name of the Registered Holder of the Warrant
Certificate, no such delivery shall be made unless the
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<PAGE> 7
person requesting the same has paid to the Warrant Agent the amount of any such
taxes or charges incident thereto.
In the event the Warrant Agent ceases to also serve as the stock
transfer agent for the Company, the Warrant Agent is irrevocably authorized to
requisition the Company's new transfer agent from time to time for certificates
of Warrant Shares required upon exercise of the Warrants, and the Company will
authorize such transfer agent to comply with all such requisitions. The Company
will file with the Warrant Agent a statement setting forth the name and address
of its new transfer agent, for shares of Common Stock or other capital stock
issuable upon exercise of the Warrants and of each successor transfer agent.
6. Registration of Transfer. The Warrant Certificates may be
transferred in whole or in part. Warrant Certificates to be exchanged shall be
surrendered to the Warrant Agent at its corporate office. The Company shall
execute and the Warrant Agent shall countersign, issue and deliver in exchange
therefor the Warrant Certificate or Certificates which the holder making the
transfer shall be entitled to receive.
The Warrant Agent shall keep transfer books at its corporate office
which shall register Warrant Certificates and the transfer thereof. On due
presentment for registration of transfer of any Warrant Certificate at such
office, the Company shall execute and the Warrant Agent shall issue and deliver
to the transferee or transferees a new Warrant Certificate or Certificates
representing an equal aggregate number of Warrants. All Warrant Certificates
presented for registration of transfer or exercise shall be duly endorsed or be
accompanied by a written instrument or instruments or transferred in a form
satisfactory to the Company and the Warrant Agent. At the time of exercise, the
transfer fee shall be paid by the Company. The Company may require payment of a
sum sufficient to cover any tax or other government charge that may be imposed
in connection therewith.
All Warrant Certificates so surrendered, or surrendered for exercise or
for exchange in case of mutilated Warrant Certificates, shall be promptly
cancelled by the Warrant Agent and thereafter retained by the Warrant Agent
until termination of the agency created by this Agreement. Prior to due
presentment for registration of transfer thereof, the Company and the Warrant
Agent may treat the Registered Holder of any Warrant Certificate as the absolute
owner thereof (notwithstanding any notations of ownership or writing thereon
made by anyone other than the Company or the Warrant Agent), and the parties
hereto shall not be affected by any notice to the contrary.
7. Loss or Mutilation. On receipt by the Company and the Warrant Agent
of evidence satisfactory as to the ownership of the loss, theft, destruction or
mutilation of any Warrant Certificate,
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<PAGE> 8
the Company shall execute, and the Warrant Agent shall countersign and deliver
in lieu thereof, a new Warrant Certificate representing an equal aggregate
number of Warrants. In the case of loss, theft or destruction of any Warrant
Certificates, the individual requesting issuance of a new Warrant Certificate
shall be required to indemnify the Company and Warrant Agent in an amount
satisfactory to each of them. In the event a Warrant Certificate is mutilated,
such Certificate shall be surrendered and cancelled by the Warrant Agent prior
to delivery of a new Warrant Certificate. Applicants for a new Warrant
Certificate shall also comply with such other regulations and pay such other
reasonable charges as the Company may prescribe.
8. Adjustment of Exercise Price and Shares. After each adjustment of
the Exercise Price pursuant to this Section 8, the number of shares of Common
Stock purchasable on the exercise of such Warrants shall be the number derived
by dividing such adjusted Exercise Price into the original Exercise Price. The
Exercise Price shall be subject to adjustment as follows:
(a) In the event, prior to the expiration of the Warrants by
exercise or by their terms, the Company shall issue any shares of its
Common Stock as a share dividend or shall subdivide the number of
outstanding shares of Common Stock into a greater number of shares,
then, in either of such events, the Exercise Price per share of Common
Stock purchasable pursuant to the Warrants in effect at the time of
such action shall be reduced proportionately and the number of shares
purchasable pursuant to the Warrants shall be increased
proportionately. Conversely, in the event the Company shall reduce the
number of shares of its outstanding Common Stock by combining such
shares into a smaller number of shares, then, in such event, the
Exercise Price per share purchasable pursuant to the Warrants in effect
at the time of such action shall be increased proportionately and the
number of shares of Common Stock at that time purchasable pursuant to
the Warrants shall be decreased proportionately. Any dividend paid or
distributed on the Common Stock in shares of Common Stock of the
Company shall be treated as a share dividend pursuant to the preceding
sentence. However, any dividend paid or distributed on the Common Stock
in securities of the Company other than Common Stock, regardless if
exercisable for or convertible into Common Stock of the Company, shall
not be treated as a share dividend pursuant to the penumbra sentence.
(b) In the event the Company, at any time while the Warrants
shall remain unexpired and unexercised, shall sell all or substantially
all of its property, and thereafter dissolves, liquidates or winds up
its affairs, then no provision need be made as part of the terms of any
such sale, dissolution, liquidation or winding up to allow
Warrantholders to exercise all or any Warrants held, in order to
receive the
8
<PAGE> 9
same kind and amount of any share, securities or assets as may be
issuable, distributable or payable on any such sale, dissolution,
liquidation or winding up with respect to each share of Common Stock of
the Company.
(c) Notwithstanding the provisions of this Section 8, no
adjustment on the Exercise Price shall be made whereby such price is
adjusted in an amount less than $.05 or until the aggregate of such
adjustments shall equal or exceed $.05.
(d) No adjustment of the Exercise Price shall be made as a
result of or in connection with: (i) the issuance of Common Stock of
the Company pursuant to options, warrants and share purchase agreements
outstanding or in effect on the date hereof; (ii) the establishment of
additional option plans, common stock purchase warrants or security
offerings of the Company, the modification, renewal or extension of any
such plan, warrants or offerings now in effect or hereafter created, or
the issuance of Common Stock on exercise of any such options or
warrants; or (iii) the issuance of Common Stock in connection with an
acquisition or merger of any type.
(e) This Warrant Agreement shall be incorporated by referenced
on the Warrant Certificates.
Before taking any action which would cause an adjustment reducing the
Exercise Price below the then par value of the shares of Common Stock issuable
upon exercise of the Warrants, the Company will take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of such Common
Stock at such adjusted Exercise Price.
Upon any adjustment of the Exercise Price required to be made pursuant
to this Section 8, the Company within thirty (30) days thereafter shall: (i)
cause to be filed with the Warrant Agent a certificate setting forth the
pertinent Exercise Price after such adjustment and setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based; and (ii) cause to be mailed to each of the Registered Holders of the
Warrant Certificates written notice of such adjustment.
9. Reduction in Exercise Price at Company's Option. In addition to any
adjustments made to the Exercise Price pursuant to Section 8, the Company's
Board of Directors may, at its sole discretion, reduce the Exercise Price of the
Warrants in effect at any time either for the life of the Warrants or any
shorter period of time determined by the Company's Board of Directors. The
Company shall promptly notify the Warrant Agent of any such reductions in the
Exercise Price.
9
<PAGE> 10
10. Duties, Compensation and Termination of Warrant Agent. The Warrant
Agent shall act hereunder as agent and in a ministerial capacity for the
Company, and its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not, by issuing and delivering Warrant Certificates or by
any other act hereunder, be deemed to make any representations as to the
validity, value or authorization of the Warrant Certificates or the Warrants
represented thereby or of the Common Stock or other property delivered on
exercise of any Warrant. The Warrant Agent shall not at any time be under any
duty or responsibility to any holder of the Warrant Certificates to make or
cause to be made any adjustment of the Exercise Price or to determine whether
any fact exists which may require any such adjustments.
The Warrant Agent shall not: (i) be liable for any recital or statement
of fact contained herein or for any action taken or omitted by it in reliance on
any Warrant Certificate or other document or instrument believed by it in good
faith to be genuine and to have been signed or presented by the proper party or
parties; (ii) be responsible for any failure on the part of the Company to
comply with any of its covenants and obligations contained in this Agreement,
except for its own negligence or willful misconduct; or (iii) be liable for any
act or omission in connection with this Agreement except for its own negligence
or willful misconduct.
The Company agrees to indemnify the Warrant Agent against any and all
losses, expenses and liabilities which the Warrant Agent may incur in connection
with the delivery of copies of the Company's prospectus to exercising Registered
Holders upon the exercise of any Warrants as set forth in Section 5.
The Warrant Agent may at any time consult with counsel satisfactory to
it (which may be counsel for the Company) and shall incur no liability or
responsibility for any action taken or omitted by it in good faith in accordance
with the opinion or advice of such counsel. Any notice, statement, instruction,
request, direction, order or demand of the Company shall be sufficiently
evidenced by an instrument signed by its President and attested by its Secretary
or Assistant Secretary. The Warrant Agent shall not be liable for any action
taken or omitted by it in accordance with such notice, statement, instruction,
request, order or demand.
The Company agrees to pay the Warrant Agent reasonable compensation for
its services hereunder and to reimburse the Warrant Agent for its reasonable
expenses. The Company further agrees to indemnify the Warrant Agent against any
and all losses, expenses and liabilities, including judgments, costs and counsel
fees, for any action taken or omitted by the Warrant Agent in the execution of
its duties and powers hereunder, excepting losses,
10
<PAGE> 11
expenses and liabilities arising as a result of the Warrant Agent's negligence
or willful misconduct.
The Warrant Agent may resign its duties or the Company may terminate
the Warrant Agent and the Warrant Agent shall be discharged from all further
duties and liabilities hereunder (except liabilities arising as a result of the
Warrant Agent's own negligence or willful misconduct), on thirty (30) days prior
written notice to the other party. At least fifteen (15) days prior to the date
such resignation is to become effective, the Warrant Agent shall cause a copy of
such notice of resignation to be mailed to the Registered Holder of each Warrant
Certificate. On such resignation or termination the Company shall appoint a new
warrant agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after it has been notified in writing of the
resignation by the Warrant Agent, then the Registered Holder of any Warrant
Certificate may apply to any court of competent jurisdiction for the appointment
of a new warrant agent.
After acceptance in writing of an appointment of a new warrant agent is
received by the Company, such new warrant agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
herein as the Warrant Agent, without any further assurance, conveyance, act or
deed; provided, however, if it shall be necessary or expedient to execute and
deliver any further assurance, conveyance, act or deed, the same shall be done
at the expense of the Company and shall be legally and validly executed. The
Company shall file a notice of appointment of a new warrant agent with the
resigning Warrant Agent and shall forthwith cause a copy of such notice to be
mailed to the Registered Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new warrant agent
may be converted or merged, or any corporation resulting from any consolidation
to which the Warrant Agent or any new warrant agent shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant Agent
shall be a successor warrant agent under this Agreement, provided that such
corporation is eligible for appointment as a successor to the Warrant Agent
under the provisions of the preceding paragraph. Any such successor warrant
agent shall promptly cause notice of its successor as Warrant Agent to be mailed
to the Company and to the Registered Holder of each Warrant Certificate. No
further action shall be required for establishment and authorization of such
successor warrant agent.
The Warrant Agent, its officers or directors and its subsidiaries or
affiliates may buy, hold or sell warrants or other securities of the Company and
otherwise deal with the Company in the same manner and to the same extent and
with like effect as though it were not Warrant Agent. Nothing herein shall
preclude
11
<PAGE> 12
the Warrant Agent from acting in any other capacity for the Company or for any
other legal entity.
11. Modification of Agreement. The Warrant Agent and the Company may by
supplemental agreement make any changes or corrections in this Agreement: (i)
that they shall deem appropriate to cure any ambiguity or to correct any
defective or inconsistent provision or mistake or error herein contained; or
(ii) that they may deem necessary or desirable and which shall not adversely
affect the interest of the holders of Warrant Certificates; provided, however,
this Agreement shall not otherwise be modified, supplemented or altered in any
respect except with the consent in writing of the Registered Holders of Warrant
Certificates representing not less than fifty-one percent (51%) of the Warrants
outstanding. Additionally, except as provided in Sections 8 and 9, no change in
the number or nature of the Warrant Shares purchasable on exercise of a Warrant,
or increase of the purchase price therefor shall be made without the consent in
writing of the Registered Holder of the Warrant Certificate representing such
Warrant, other than such changes as are specifically prescribed or allowed by
this Agreement.
12. Notices. All notices, demands, elections, options or requests
(however characterized or described) required or authorized hereunder shall be
deemed sufficient if made in writing and sent by registered or certified mail,
return receipt requested and postage prepaid, or by tested telex, telegram or
cable to the principal office of the addressee, and if to the Registered Holder
of a Warrant Certificate, at the address of such holder as set forth on the
books maintained by the Warrant Agent.
13. Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the Company, the Warrant Agent and their respective successors
and assigns, and the holders from time to time of Warrant Certificates. Nothing
in this Agreement is intended or shall be construed to confer upon any other
person any right, remedy or claim or to impose on any other person any duty,
liability or obligation.
14. Further Instruments. The parties hereto shall execute and deliver
any and all such other instruments and shall take any and all other actions as
may be reasonably necessary to carry out the intention of this Agreement.
15. Severability. If any provision of this Agreement shall be held,
declared or pronounced void, voidable, invalid, unenforceable or inoperative for
any reason by any court of competent jurisdiction, government authority or
otherwise, such holding, declaration or pronouncement shall not affect adversely
any other provision of this Agreement, which shall otherwise remain in full
force and effect and be enforced in accordance with its
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<PAGE> 13
terms, and the effect of such holding, declaration or pronouncement shall be
limited to the territory or jurisdiction in which made.
16. Waiver. All the rights and remedies of either party to this
Agreement are cumulative and not exclusive of any other rights and remedies as
provided by law. No delay or failure on the part of either party in the exercise
of any right or remedy arising from the breach of this Agreement will constitute
a waiver of any other right or remedy. The consent of any party where required
hereunder to act or occurrence shall not be deemed to be a consent to any other
action or occurrence.
17. General Provisions. This Agreement shall be construed and enforced
in accordance with, and governed by, the laws of the State of Colorado. Except
as otherwise expressly stated herein, time is of the essence in performing
hereunder. This Agreement embodies the entire agreement and understanding
between the parties and supersedes all prior agreements and understandings
relating to the subject matter hereof, and this Agreement may not be modified or
amended or any term or provisions hereof waived or discharged except in writing,
signed by the party against whom such amendment, modification, waiver or
discharged is sought to be enforced. The headings of this Agreement are for
convenience and references only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
VISTA LASER CENTERS OF THE PACIFIC, INC.
By:
---------------------------------
David P. Bates III, President
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
-------------------------------------
, Authorized Officer
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<PAGE> 1
EXHIBIT 10.1
VISTA LASER CENTERS OF THE PACIFIC, INC.
1996 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN. The purpose of the Vista Laser Centers Of The
Pacific, Inc. 1996 Stock Option Plan (herein called the "Plan") is to encourage
ownership of the common stock of Vista Laser Centers Of The Pacific, Inc., a
Nevada corporation ("Company"), by eligible key employees, directors, officers
and consultants providing service to the Company and its subsidiaries and to
provide increased incentive for such directors, officers, employees and other
consultants to render services to the Company and its subsidiaries in the future
and to exert maximum effort for the success of the business of the Company and
its subsidiaries.
2. DEFINITIONS. As used herein, and in any Option granted hereunder,
the following definitions shall apply:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Common Stock" shall mean the Common Stock of the Company.
(c) "Company" shall mean Vista Laser Centers Of The Pacific, Inc., a Nevada
corporation originally incorporated on January 30, 1996.
(d) "Committee" shall mean: (i) prior to any date on which equity
securities of the Company are first effectively registered under
Section 12 of the Exchange Act, all the members of the Board; and (ii)
thereafter, a Committee of two or more members of the Board which shall
be composed of only disinterested directors of the Company as defined
in Rule 16b-3(c)(2) promulgated under the Exchange Act who have not,
during his or her period of service on the Committee and during the
period of 12 months prior to service on the Committee, received an
option to acquire or purchase equity securities of the Company or any
of its affiliates under the Plan or under any other stock option or
other stock incentive plan of the Company and its affiliates except for
participation in a plan expressly permitted under the provisions of
subsection (i) of Rule 16b-3(c)(2) promulgated under the Exchange Act.
Such restrictions may be amended by the Board of Directors of the
Company in the event of amendments to Rule 16b-3(c)(2) no longer
requiring or modifying such restrictions.
(e) "Continuous Employment" or "Continuous Status as an Employee" shall
mean the absence of any interruption or termination of employment by,
or other consulting affiliation with, the Company or any Subsidiary.
Continuous Employment shall not be considered interrupted in the case
of sick leave, military leave or any other leave of absence approved by
the Company or in the case of transfers between locations of the
Company or between the Company, its Subsidiaries or its successor.
(f) "Eligible Party" shall mean any person, including officers, directors,
employees and consultants, employed by the Company or any Subsidiary on
either a full-time or part-time basis.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Incentive Stock Option" shall mean any Option granted under this Plan,
or any other option granted
<PAGE> 2
to an Eligible Party, which complies with the provisions of Section
422A of the Internal Revenue Code of 1986, as amended from time to time
(herein called the "Code").
(i) "Non-Qualified Stock Option" shall mean any Option granted under this
Plan which does not qualify in whole or in part as an "incentive stock
option" under the provisions of Section 422A of the Code.
(j) "Option" shall mean a stock option granted pursuant to the Plan.
(k) "Optioned Shares" shall mean the Common Stock subject to an Option
granted pursuant to the Plan.
(l) "Optionee" shall mean a person who receives an Option under the Plan.
(m) "Plan" shall mean this 1996 Stock Option Plan.
(n) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 6(i) of the Plan.
(o) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the
time of the granting of the Option, each of the corporations other than
the last corporation in the unbroken chain owns stock possessing 50
percent or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
3. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. The Plan shall be administered by the Committee;
provided that after any date on which equity securities of the Company are first
effectively registered under Section 12 of the Exchange Act, no member of the
Committee shall be granted an Option under the Plan unless he or she shall be
first resign as a member of the Committee. Once appointed, the Committee shall
continue to serve until otherwise directed by the Board of Directors of the
Company. From time to time, the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitutions therefor, fill vacancies, however caused,
all subject to the provisions of Section 2(d) above, and to remove all members
of the Committee.
(b) POWERS OF THE COMMITTEE. Subject to the provisions of the Plan, the
Committee shall have the authority: (i) to determine, upon review of relevant
information, the fair market value of the Common Stock; (ii) to determine the
exercise price of Options to be granted (which price, in the case of Incentive
Stock Options, shall be not less than the minimum specified in Section 6(b)
hereof), the Eligible Parties to whom and the time or times at which Options
shall be granted, and the number of Shares to be represented by each Option;
(iii) to interpret the Plan; (iv) to prescribe, amend and rescind rules and
regulations relating to the Plan, (v) to determine the terms and provisions of
each Option granted under the Plan (which need not be identical) and, with the
consent of the holder thereof, to modify or amend any Option; (vi) to authorize
any person to execute on behalf of the Company any instrument required to
effectuate the grant of an Option previously granted by the Committee, and (vii)
to make all other determinations deemed necessary or advisable for the
administration of the Plan.
(c) EFFECT OF COMMITTEE'S DECISION. All decisions, determinations and
interpretations of the Committee shall be final and binding on all Optionees and
any other holders of any Options granted under the Plan.
1996 Stock Option Plan Page 2
<PAGE> 3
4. STOCK RESERVED FOR THE PLAN. Subject to adjustment as provided in
paragraph 6(h) and 6(i) hereof and to the provisions of Section 9 hereof, a
total of FIVE HUNDRED THOUSAND (500,000) shares of Common Stock shall be subject
to the Plan. The Shares subject to the Plan shall consist of unissued shares or
previously issued shares reacquired and held by the Company, and such amount of
shares shall be and is hereby reserved for sale for such purpose. Any of such
shares which may remain unsold and which are not subject to outstanding Options
at the termination of the Plan shall cease to be reserved for the purpose of the
Plan, but until termination of the Plan the Company shall at all times reserve a
sufficient number of shares to meet the requirements of the Plan. Should any
Option expire or be canceled prior to its exercise in full, the shares
theretofore subject to such Option may again be made subject to an Option under
the Plan.
5. ELIGIBILITY.
(a) Subject to Section 3(a) above, Incentive Stock Options under the
Plan may be granted only to Eligible Parties for a reason connected with their
employment by, or consulting services to, the Company or any Subsidiary. Subject
to Section 3(a) above, Non-Qualified Stock Options may be granted under the Plan
to Eligible Parties for a reason connected with their employment or other
service to the Company or any Subsidiary. An Eligible Party who has been granted
an Incentive Stock Option or a Non-Qualified Stock Option, if he or she is
otherwise eligible, may be granted additional Incentive Stock Options or Non-
Qualified Stock Options.
(b) The aggregate fair market value (determined at the time an
Incentive Stock Option is granted) of the Common Stock with respect to which any
Incentive Stock Option may be exercisable for the first time by an Optionee
during any calendar year (under this Plan and any other stock option plans of
the Company and its Subsidiaries) shall not exceed $100,000.
The Plan shall not confer upon any Optionee any right with respect to
continuation of employment by the Company, nor shall it interfere in any way
with his right or the Company's right to terminate his employment or other
position at any time.
6. TERMS AND CONDITIONS. Each Option granted under the Plan shall be
evidenced by an agreement, in a form approved by the Committee, which shall be
subject to the following express terms and conditions and to such other terms
and conditions as the Committee may deem appropriate.
(a) OPTION PERIOD. Each option agreement shall specify the period for
which the Option thereunder is granted (which in no event shall exceed ten years
from the date of grant) and shall provide that the Option shall expire at the
end of such period. In the case of Incentive Stock Options, if the Optionee owns
more than ten percent (10%) of the outstanding stock of the Company (determined
in accordance with Section 425(d) of the Code) on the date the Incentive Stock
Option is granted to him, the option period shall not exceed five years from the
date of grant.
(b) OPTION PRICE. The purchase price of each share of Common Stock
subject to each Option granted pursuant to the Plan shall be determined by the
Committee at the time the Option is granted. In the case of all Incentive Stock
Options and Non-Qualified Stock Options, such purchase price shall not be less
than the fair market value of a share of Common Stock on the date the Option is
granted, as determined by the Committee; provided, however, that in the case of
an Incentive Stock Option granted to an Optionee who owns more than ten percent
(10%) of the outstanding stock of the Company (determined in accordance with
Section 425(d) of the Code) on the date the Option is granted, the option price
shall not be less than 110% of the fair market value of a share of Common Stock
on such date.
1996 Stock Option Plan Page 3
<PAGE> 4
(c) EXERCISE PERIOD. No part of any Option may be exercised until the
Optionee shall have remained in the employ of, or active as a consultant to, the
Company or any of its Subsidiaries for such period after the date on which the
Option is granted as the Committee may specify in the option agreement.
(d) PROCEDURE FOR EXERCISE. Options shall be exercised by the delivery
of written notice to the Company setting forth the number of shares with respect
to which the Option is to be exercised. An Option may not be exercised for
fractional shares. Unless stock of the Company is used to acquire such shares in
accordance with paragraph 6(k), such notice shall be accompanied by cash or
certified check, bank draft, or postal or express money order payable to the
order of the Company for an amount equal to the Option price of such shares and
specifying the address to which the certificates for such shares are to be
mailed. As promptly as practicable after receipt of such written notification
and payment, the Company shall deliver to the Optionee certificates for the
number of shares with respect to which such Option has been so exercised, issued
in the Optionee's name; provided, however, that such delivery shall be deemed
effected for all purposes when a stock transfer agent of the Company shall have
deposited such certificates in the United States mail, addressed to the
Optionee, at the address specified pursuant to this paragraph 6(d). Until the
issuance of the stock certificates, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the optioned shares.
(e) TERMINATION OF EMPLOYMENT. If an Optionee to whom an Option has
been granted ceases to be employed by the Company or any of its Subsidiaries for
any reason other than death or disability, the Options granted to him shall
thereupon terminate. Any Options which are exercisable on the date of such
termination of employment may be exercised during a three month period beginning
on such date.
(f) DISABILITY OR DEATH OF OPTIONEE. In the event of the disability or
death of the holder of an Option under the Plan while he is employed by the
Company or any of its Subsidiaries, the Options previously granted to him may be
exercised (to the extent he would have been entitled to do so at the date of his
disability or death) at any time and from time to time, within a period of one
year after his disability or death, by the Optionee, by the executor or
administrator of his estate or by the person or persons to whom his rights under
the Option shall pass by will or the laws of descent and distribution, but in no
event may the Option be exercised after its expiration. An employee shall be
deemed to be disabled if, in the opinion of a physician selected by the
Committee, he is incapable of performing services for the Company or any of its
subsidiaries by reason of any medically determinable physical or mental
impairment which can be expected to result in death or to be of long, continued
and indefinite duration lasting not less than 12 months.
(g) NO RIGHTS AS STOCKHOLDER. No Optionee shall have any rights as a
stockholder with respect to shares covered by an Option until the date of
issuance of a stock certificate for such shares; except as provided in
paragraphs 6(h) or 6(i), no adjustment for dividends, or otherwise, shall be
made if the record date therefore is prior to the date of issuance of such
certificate.
(h) EXTRAORDINARY CORPORATE TRANSACTIONS; ADJUSTMENT FOR
RECAPITALIZATION, MERGER, ETC.
If the Company is dissolved or liquidated, or is merged or consolidated
into or with another corporation, other than by a merger or consolidation in
which the Company is the surviving corporation, the then exercisable but
unexercised Options granted under the Plan shall not be exercisable after the
date of such dissolution, liquidation, merger or consolidation, unless such
other surviving corporation makes provision for adoption of the Plan and the
assumption of the Company's obligations thereunder.
Notwithstanding any provision of this Plan, the Committee is authorized
to take such action upon the date of grant of an Option or at any time
thereafter as it determines to be necessary or advisable, and
1996 Stock Option Plan Page 4
<PAGE> 5
fair and equitable to Optionees, with respect to Options held by Optionees in
the event of a sale or transfer of all or substantially all of the Company's
assets, or merger or consolidation (other than a merger or consolidation in
which the Company is the surviving corporation and no shares are converted into
or exchanged for securities, cash or any other thing of value). Such action may
include (but is not limited to) the following:
(A) Accelerating the exercisability of any Option to permit its exercise in
full during such period as the Committee in its sole discretion shall
prescribe following the public announcement of a sale or transfer of
assets or merger or consolidation.
(B) Permitting an Optionee, at any time during such period as the Committee
in its sole discretion shall prescribe following the consummation of
such a merger, consolidation or sale or transfer of assets, to
surrender any Option (or any portion thereof) to the Company for
cancellation.
(C) Requiring any Optionee, at any time following the consummation of such
a merger, consolidation or sale or transfer of assets, if required by
the terms of the agreements relating thereto, to surrender any Option
(or any portion thereof) to the Company in return for a substitute
Option which is issued by the corporation surviving such merger or
consolidation or the corporation which acquired such assets (or by an
affiliate of such corporation) and which the Committee, in its sole
discretion, determines to have a value to the Optionee substantially
equivalent to the value to the Optionee of the Option (or portion
thereof) so surrendered.
Subject to any action which the Committee may take pursuant to the provisions of
this paragraph 6(h) and paragraph 6(i), in the event of any merger,
consolidation or sale or transfer of assets referred to in this paragraph 6(h)
or paragraph 6(i), upon any exercise thereafter of an Option, and Optionee
shall, at no additional cost other than payment of the exercise price of the
Option, be entitled to receive in lieu of Shares, (1) the number and class of
Shares or other security, or (2) the amount of cash, or (3) property, or (4) a
combination of the foregoing, to which the Optionee would have been entitled
pursuant to the terms of such merger, consolidation or sale or transfer of
assets, if immediately prior thereto the Optionee had been the holder of record
of the number of Shares for which such Option shall be so exercised.
(i) CHANGES IN COMPANY'S CAPITAL STRUCTURE. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalization, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issuance of Common Stock or subscription rights thereto, or any issuance of
bonds, debentures, preferred or prior preference stock ahead of or affecting the
Common Stock or the rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise. Provided, however, that if the outstanding shares of Common Stock of
the Company shall at any time be changed or exchanged by declaration of a stock
dividend, stock split, combination of shares, or recapitalization, the number
and kind of shares subject to the Plan or subject to any Options theretofore
granted, and the option prices, shall be appropriately and equitably adjusted so
as to maintain the proportionate number of shares without changing the aggregate
option price.
(j) INVESTMENT REPRESENTATION. Each option agreement shall contain an
agreement that, upon demand by the Committee for such a representation, the
Optionee [or any person acting under paragraph 6(f)] shall deliver to the
Committee at the time of any exercise of an Option a written representation that
the shares to be acquired upon such exercise are to be acquired for investment
and not for resale or with a view to the distribution thereof. Upon such demand,
delivery of such a representation prior to the delivery of any
1996 Stock Option Plan Page 5
<PAGE> 6
shares issued upon exercise of an Option and prior to the expiration of the
option period shall be a condition precedent to the right of the Optionee or
such other person to purchase any shares.
(k) PAYMENT WITH STOCK. Subject to approval of the Committee, an
Optionee may pay for any shares of Common Stock with respect to which an Option
has been exercised by tendering to the Company other shares of Common Stock at
the time of the exercise of such Option, provided, however, that at the time of
such exercise, the Company shall have a Committee consisting of two (2) or more
disinterested directors who shall approve the payment for option shares with
other shares. The certificates representing such other shares of Common Stock
must be accompanied by a stock power duly executed with signature guaranteed.
The value of Common Stock so tendered shall be determined by the Committee in
its sole discretion. The Committee may, in its sole and absolute discretion,
refuse any tender of shares of Common Stock, in which case it shall deliver the
tendered shares of Common Stock back to the employee and notify the employee of
such refusal.
(l) OPTIONS NOT TRANSFERABLE. No Option or interest or right therein or
part thereof shall be liable for the debts, contracts or engagements of the
Optionee or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy) and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that nothing in this
Section 6 shall prevent transfers by will, by the applicable laws of descent and
distribution, or by a qualified domestic relations order as defined by the
Internal Revenue Code of 1986, as amended, or the rules thereunder; and further
provided, that options designated for Eligible Parties rendering consulting
services to the Company may, at the direction of such party, be granted in favor
of a beneficiary corporation if all of the issued and outstanding capital stock
of the Optionee-corporation shall be owned by such Eligible Party and conditions
as to the vesting and termination of such options shall apply at all terms
during the term of such options as if the Eligible Party were the named
Optionee.
(k). SIX MONTH RESTRICTION ON SALE OR DISPOSITION. No part of any
shares acquired on exercise of an Option granted under the Plan may be sold or
otherwise disposed of by an Optionee until the expiration of at least six months
following the date on which such Option so exercised was originally granted by
the Company. In the event an Option is exercised within six months of its date
of grant, the securities evidencing the shares may bear a legend referring to
the restrictions set forth in this Section.
7. AMENDMENTS OR TERMINATION. The Board of Directors may amend, alter
or discontinue the Plan, but no amendment or alteration shall be made which
would impair the rights of any participant under any Option theretofore granted
without his consent, or which without the approval of the shareholders, would:
(i) except as is provided in paragraphs 6(h) and 6(i) of the Plan, increase the
total number of shares reserved for the purposes of the Plan or decrease the
option price provided for in paragraph 6(b) of the Plan, (ii) change the class
of persons eligible to participate in the Plan as provided in paragraph 5 of the
Plan, (iii) extend the option period provided for in paragraph 6(a) of the Plan,
or (iv) extend the expiration date of this Plan set forth in paragraph 9 of the
Plan.
8. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the grant and
exercise of Options thereunder, and the obligation of the Company to sell and
deliver shares under such Options, shall be subject to all applicable federal
and state laws, rules and regulations and to such approvals by the governmental
or regulatory agency as may be required. The Company shall not be required to
issue or deliver any certificates for shares of Common Stock prior to the
completion of any registration or qualification of such shares under any federal
or state law, or any ruling or regulation of any government
1996 Stock Option Plan Page 6
<PAGE> 7
body which the Company shall, in its sole discretion, determine to be necessary
or advisable. Further, it is the intention of the Company that the Plan comply
in all respects with the provisions of Rule 16b-3 of the United States
Securities and Exchange Act of 1934, as amended. If any Plan provision is found
or determined not to be in compliance with such Rule 16b-3, the provision shall
be deemed null and void and this Plan shall be deemed appropriately amended,
retroactive to the date of initial adoption of this Plan, to provide for
compliance with Rule 16b-3.
9. EFFECTIVENESS AND EXPIRATION OF PLAN. The Plan shall be effective on
January 30, 1996, the date the Board of Directors of the Company initially
adopted the Plan, subject to the express condition that any Incentive Stock
Option granted thereunder shall be subject to the condition that shareholders of
the Company shall have approved and ratified the Plan within one year
thereafter. Notwithstanding anything to the contrary set forth in the Plan or
any option agreement pursuant to the Plan, no Incentive Stock Option under the
Plan may be exercised unless shareholders of the Company shall have approved and
ratified the Plan within one year of its effective date; the failure to obtain
such approval by shareholders shall not affect the validity or right to exercise
any Non-Qualified Stock Option granted hereunder in accordance with its terms.
For the purpose of granting Options hereunder, this Plan shall expire on January
30 2006, ten years after the effective date of the Plan and thereafter no Option
shall be granted pursuant to the Plan.
10. INFORMATION TO STOCKHOLDERS. If the vote or written consent of
stockholders required by the provisions of Section 9 of this Plan was not
solicited substantially in accordance with the rules and regulations in effect
under Section 14(a) of the Exchange Act, then after the first registration of
equity securities of the Company under Section 12 of the Exchange Act and prior
to the first annual meeting of stockholders held subsequent thereto, the Company
shall furnish in writing to the holders of record of securities entitled to vote
substantially the same information concerning the Plan which would have been
required by the rules and regulations under Section 14(a) of the Exchange Act
then in effect as if proxies to approve the Plan were being solicited at that
time,
11. CANCELLATION AND ISSUANCE. The Committee may, at its sole
discretion, subject to the provisions of the Plan, cancel outstanding Options
and issue replacement Options under the Plan under terms and at exercise prices
it deems beneficial to the Company and the Optionees, to further the purposes of
the Plan. Notwithstanding this Section, no Option may be canceled, or otherwise
amended or modified, without the written consent of the Optionee.
# # # # # #
1996 Stock Option Plan Page 7
<PAGE> 1
EXHIBIT 10.2
LICENSE AGREEMENT
This AGREEMENT (the "Agreement") dated as of February 5, 1996, is by
and between:
VISTA LASER CENTERS OF THE PACIFIC, INC., a Nevada corporation (herein
called the "Company"); and
REFRACTIVE SERVICES 800 CORP., a Nevada corporation (herein called
"Licensor").
1. BUSINESS OF THE COMPANY
1.1. The Company, upon completion of an initial public offering of the
Company's securities generating at least $3,000,000 in net cash proceeds to the
Company (the "IPO"), will own and manage outpatient surgical centers (the "VLC
CENTERS") in the States of California and Nevada providing facilities, equipment
and various support services to qualified ophthalmologists and optometrists for
vision correction by use of advanced laser technology, focusing in particular on
laser vision correction of common refractive disorders such as myopia, hyperopia
and astigmatism ("LVC CARE"). The target market of the Company will be the
western United States, in particular, the states of California and Nevada. The
parties understand that the Company is in the development stage and plans to
engage in certain development activities relating to its plan of operation prior
to completing an IPO.
1.2. The Company will apply a portion of proceeds from the IPO adequate
to establish one or more Company-owned and managed LVC Centers. The first such
LVC Center will be located in Sacramento, California. Such facility will be
equipped with equipment selected by the Company's Board of Directors adequate to
establish and maintain an advanced, state-of-the art refractive and ophthalmic
LVC Center.
2. LICENSE AND PAYMENT OF CERTAIN COSTS BY LICENSOR AND COMPANY
2.1. During the term of this Agreement, Licensor covenants and agrees
to grant to the Company the right to license, at the Company's option, on an
exclusive basis for specific geographic areas of the states of California and
Nevada (collectively, the "Territory"), to use 800 area code and 900 area code
telephone numbers in which the Licensor has acquired right, title and interest
from telephone companies (the "Licensed Rights"). The telephone numbers included
in such Licensed Rights include, without limitation, the following:
800-933-6775 (800-WE-DO-PRK)
800-566-9775 (800-KNOW-PRK)
900-933-6775 (900-WE-DO-PRK)
900-933-6393 (900-WE-DO-EYE)
<PAGE> 2
In the event the Licensor shall obtain the right to license additional 800 or
900 area code numbers during the term of this Agreement that translate to
telephone numbers useful in promoting the benefits or services or LVC Centers,
the Licensor shall promptly advise the Company of the same and such additional
telephone numbers shall be included in the Licensed Rights covered by this
Agreement.
2.2. All charges to 800 and 900 area code numbers used by the Licensee
during the term of this Agreement shall be paid by the Licensee and reimbursed
to the Licensor for telephone calls originated within the Territory. Company
shall promptly reimburse the Licensor for any amounts so billed.
3. LICENSE FEES PAYABLE TO LICENSOR BY THE COMPANY. In the event the
Company elects to utilize Licensor's Licensed Rights hereunder, the Company
shall pay the following royalties to the Licensor during the term of this
Agreement: an amount equal to 2.5% of the 800-900 Related Revenues received by
the Company during the term of this Agreement, payable within 15 days after the
end of each month.
For the purposes of this Agreement, "800-900 RELATED REVENUES" shall
mean only those revenues received by the Company and its consolidated
subsidiaries for use of their LVC Center facilities and equipment which are
generated as direct result of responses to telemarketing activities of the
Company by use of any one or more of the Licensed Rights.
To the extent that 800-900 Related Revenues received by the Company are
revenues attributable to a majority-owned subsidiary in which less than 100% of
the equity is owned by the Company, the portion of that subsidiary's 800-900
Related Revenues on which the 2.5% shall be based shall be the Company's
percentage interest in such revenues based upon its percentage ownership of the
equity in said majority-owned subsidiary. (Majority-owned subsidiaries shall
mean any corporation or other business entity in which at least a majority of
the voting capital stock or other voting rights are beneficially owned or
controlled by the Company.) To the extent that 800-900 Related Revenues received
by the Company are revenues attributable to a less than majority-owned
subsidiary, the portion of that subsidiary's 800-900 Related Revenues on which
the 2.5% shall be based shall be the 800-900 Related Revenues actually received
by the Company as a result of its percentage interest in subsidiary. No
royalties shall be payable on such revenues unless they are actually collected
by the Company.
The Company shall provide Licensor with a detailed accounting of its
800-900 Related Revenues within 15 days after the end of each month, together
with such additional detail as Licensor or its authorized representatives shall
request. In the event of any overpayment or underpayment of compensation to
Licensor hereunder in any month, the amount thereof shall be credited or charged
as an adjustment to amounts due in the next month of this Agreement until such
overpayment or
2
<PAGE> 3
underpayment has been offset.
4. TERM AND TERMINATION.
4.1. The initial term of this Agreement shall commence effective with
the successful completion of the Company's IPO and shall continue for a period
of five (5) years following the completion of the Company's IPO unless earlier
terminated in accordance with the following provisions:
4.1.1. In the event the Company's IPO has not been
successfully completed on or before December 31, 1996, this Agreement may be
terminated by Licensor at its sole discretion at any time thereafter upon thirty
(30) days prior written notice to the Company unless the Company's IPO is
completed during such 30 day period of grace. If this Agreement is terminated in
accordance with this Section 4.1.1, the parties shall be released from all
obligations hereunder and the Company shall promptly cease and desist from any
further use of the Licensed Rights.
4.1.2. In the event the Company or Licensor shall be in
material breach of any other covenant or agreement on its part to be performed
in this Agreement, this Agreement may be terminated by the other party at its
sole discretion at any time thereafter upon thirty (30) days prior written
notice unless such material breach has been cured during such 30 day period of
grace. Upon any such termination, the Company shall promptly cease and desist
from any further use of the Licensed Rights.
4.2. Upon the expiration of the initial term of this Agreement, this
Agreement shall be automatically renewed for successive periods of one year each
unless any party hereto shall provide the other party with written notice of its
intent to terminate this Agreement at least six (6) months prior to the
expiration of the then current term of this Agreement or any renewal thereof.
5. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered or
certified mail, postage prepaid, or by commercial overnight courier (such as
Federal Express, DHL, etc.) with written verification of receipt, to the last
known principal office of the other party hereto. Royalty payments to the
Licensor hereunder shall be paid to the Licensor at its offices in The
Netherlands, c/o Refractive Services 800 Ltd., Statenhof Building, Reaal 5V,
P.O. Box 4, 2350 AA Leiderdorp, The Netherlands.
6. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed by a waiver of any
subsequent breach.
7. GOVERNING LAW. This Agreement shall be governed by and construed
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<PAGE> 4
and enforced in accordance with the laws of the State of California.
8. ASSIGNMENT. The rights and obligations of the parties to this
Agreement shall inure to the benefit of and shall be binding upon their
respective successors and assigns.
9. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties. It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, modification,
extension or discharge is sought.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day first written above.
"Company": VISTA LASER CENTERS OF THE PACIFIC, INC.
By:______________________________
J. Robert Griffin, Chairman
"Licensor" REFRACTIVE SERVICES 800 CORP.
By:______________________________
Sukumal Chintagavongse, President
4
<PAGE> 5
TERMINATION AGREEMENT
This Termination Agreement (the "Agreement") is entered into by and
between VISTA LASER CENTERS OF THE PACIFIC, INC. ("VLC-P") and REFRACTIVE
SERVICES 800 CORP. ("RS800"), as of July 31, 1996.
WHEREAS, VLC-P and RS800 have previously executed a license agreement
dated as of February 5, 1996 (the "License Agreement") with respect to VLC-P's
possible use of 800 and 900 number telephone lines owned by RS800.
WHEREAS, VLC-P does not currently anticipate using RS800's telephone
lines.
WHEREAS, the ownership of RS800 changed as of July 18, 1996.
NOW THEREFORE, in consideration of the mutual covenants set forth
below, the parties hereto agree as follows:
1. The License Agreement is hereby terminated and cancelled.
2. Neither party is entitled to receive any sum from the other party
hereto as the result of any service rendered or performed pursuant to the
License Agreement or as a result of the termination of the License Agreement as
described herein.
IN WITNESS WHEREOF, the parties hereto have caused their duly appointed
officers to execute this Agreement, effective as of the date first above
written.
VISTA LASER CENTERS OF THE PACIFIC, INC.
By:______________________________________
David P. Bates III, President
REFRACTIVE SERVICES 800 CORP.
By:______________________________________
Thomas A. Schultz, President
5
<PAGE> 1
EXHIBIT 10.3
CONSULTING SERVICES AGREEMENT
This AGREEMENT (the "Agreement") dated as of August 16, 1996, is by and
between:
VISTA LASER CENTERS OF THE PACIFIC, INC., a Nevada corporation (herein
called the "Company"); and
VISTA TECHNOLOGIES INC., a Nevada corporation (herein called "Vista").
1. ENGAGEMENT. The Company hereby engages the services of Vista as a
consultant to the Company, and Vista hereby accepts such engagement, all subject
to the terms and conditions set forth in this Agreement and effective on
completion of the Company IPO defined below.
2. BUSINESS AND TERRITORY OF THE COMPANY AND PRIOR INVESTMENT BY VISTA
2.1. The Company, upon completion of an initial public offering of the
Company's securities generating at least $6,000,000 in gross cash proceeds to
the Company (the "IPO"), will own and manage outpatient surgical centers (the
"LVC CENTERS") in the states of California and Nevada providing facilities,
equipment and various support services to qualified ophthalmologists and
optometrists for vision correction by use of advanced laser technology, focusing
in particular on laser vision correction of common refractive disorders such as
myopia, hyperopia and astigmatism ("LVC CARE"). The target market of the Company
will be the states of California and northern Nevada, in particular all of
California north of and including San Luis Obispo and Reno, Nevada (the
"Territory"). The parties understand that the Company is in the development
stage and plans to engage in certain development activities relating to its plan
of operation prior to completing an IPO.
2.2. The Company will apply a portion of proceeds from the IPO adequate
to establish one or more Company-owned and managed LVC Centers. The first such
LVC Centers will be located in Sacramento, California. Such facility will be
leased at a rate competitive with similar office space in the immediate area,
and will be equipped with equipment selected by the Company's Board of Directors
adequate to establish and maintain an advanced, state-of-the art refractive and
ophthalmic LVC Center.
2.3 Vista hereby agrees that the Company shall have the option to
acquire the additional territory of all of California south of San Luis Obispo
("Southern California") by opening at least four (4) full-service (including
laser equipment) LVC Centers in Southern California within the later of one (1)
year after the effective date of the IPO or February 16, 1998. The Company shall
receive the written consent of Vista to the material details of each of such
proposed LVC Center prior to such opening; however, such Vista consent shall not
be unreasonably withheld. Upon the opening of the fourth
<PAGE> 2
full-service LVC Center in Southern California to which Vista consented,
Southern California shall be added to the definition of "Territory" as set forth
in Section 2.1 above for the remaining term of this Agreement.
2.4. The parties acknowledge that Vista currently owns 600,000
restricted shares of the Company's Common Stock. The parties further acknowledge
that Vista has experience in the ownership and operation of LVC Centers in
Europe and has access to personnel experienced in the administration of a
publicly-owned corporation.
3. SERVICE MARK OF VISTA
3.1 Vista has applied to the U.S. Patent and Trademark Office for a
service mark on the mark "Vista Laser Center" as applied to LVC Care (the
"Service Mark").
3.2 Vista hereby grants to the Company and its subsidiaries the right
to the full use of the Service Mark in the Company's Territory as defined
hereinabove during the term of this Agreement as described in Section 7 below.
Upon the expiration of this Agreement pursuant to Section 7 below, the Company
shall cease all use of the Service Mark and shall immediately take action to
change the Company's name to a name which will not be confused with the Service
Mark.
3.3 Vista hereby agrees that it shall not use, and it shall not execute
any agreement which provides for any other company to use, the Service Mark in
the Territory during the term of this Agreement and/or in Southern California
during the first year following the date of this Agreement. Further, Vista shall
not aid, provide assistance to, support or benefit any competitor, direct or
indirect, of the Company within the Territory during the term of this Agreement
and/or in Southern California during the first year following the IPO.
4. CONSULTING SERVICES. During the term of this Agreement, Vista
covenants and agrees to provide the following services to the Company:
(a) Advice and assistance as to developments in LVC Care available to
Vista as a result of Vista's ownership and operation of LVC centers in Europe.
(b) Advice and assistance in obtaining corporate financing for the
Company.
(c) Advice and assistance in the location and negotiation of suitable
facility leases for LVC Centers required by the Company and in seeking equipment
financing alternatives.
(d) Advice and assistance in communication and coordinating activities
of mutual interest with other companies providing laser vision correction
facilities, equipment and support services to health care professionals,
including other such companies in areas outside of the Company's targeted
regional markets that may be hereafter sponsored by Vista as well as entities
that are not affiliated with Vista.
2
<PAGE> 3
(e) Advice and assistance as to accounting requirements and legal
compliance with periodic reporting obligations of the Company to the U.S.
Securities and Exchange Commission.
(f) Advice and assistance as to legal compliance with federal and state
laws and regulations relating to the nature of the Company's relationships and
compensation provisions with health care professionals.
(g) Advice and assistance concerning investor relations activities and
requirements of the Company and coordinating communications with market-markers
for the Company's publicly traded securities.
(h) Advice and assistance as to the Company's legal compliance in the
United States with rules and regulations at the federal and state level
affecting Company operations in the health care industry and the manner in which
the Company may establish and operate LVC Centers.
5. CONSULTING FEES PAYABLE TO VISTA BY THE COMPANY. In consideration of
all consulting services rendered and the Service Mark granted to the Company and
its subsidiaries hereunder, the Company shall pay Vista the following consulting
fees during the term of this Agreement as described in Section 7 below:
(a) an amount equal to 5% of the LVC Center Revenues received
by the Company and its majority-owned subsidiaries during the term of this
Agreement, payable within 15 days after the end of each month. (Majority-owned
subsidiaries shall mean any corporation or other business entity in which at
least a majority of the voting capital stock or other voting rights are
beneficially owned or controlled by the Company. To the extent that revenues
received by the Company are revenues attributable to a majority-owned subsidiary
in which less than 100% of the equity is owned by the Company, the portion of
that subsidiary's revenues on which the 5% shall be based shall be the Company's
percentage interest in such revenues based upon its percentage ownership of the
equity in said majority-owned subsidiary).
(b) an amount equal to 2 1/2% of the LVC Center Revenues
actually received by the Company during the term of this Agreement that are
attributable to any subsidiaries of the Company that are not majority-owned
subsidiaries, payable within 15 days after the end of each month. No consulting
fees shall be payable on such revenues unless they are actually collected by the
Company.
For the purposes of this Agreement, "LVC Center Revenues" shall mean revenues
received by the Company and its subsidiaries for use of their LVC Center
facilities and equipment and for providing support and patient referral services
to health care professionals relating to LVC Care at LVC Centers.
The Company shall provide Vista with a detailed accounting of its LVC
Center Revenues within 15 days after the end of each month, together with such
additional
3
<PAGE> 4
detail as Vista or its authorized representatives shall request. In the event of
any overpayment or underpayment of compensation to Vista hereunder in any month,
the amount thereof shall be credited or charged as an adjustment to amounts due
in the next month of this Agreement until such overpayment or underpayment has
been offset.
6. OTHER COVENANTS AND AGREEMENTS OF THE PARTIES.
6.1. In consideration of its subscription to the Company's Common Stock
and the services to be provided by Vista hereunder, the Company covenants and
agrees that during the term of this Agreement it will use the Company's best
efforts to cause at least two (2) nominees designated by Vista, and reasonably
satisfactory to the Company's Board of Directors, to be elected as directors on
the Company's Board of Directors.
6.2. Vista agrees to establish and maintain a Vista Medical Advisory
Board, and to adopt a stock option program for members of the Vista Medical
Advisory Board, during the term of this Agreement.
Vista's Medical Advisory Board will consist ophthalmologists
and optometrists who will meet and confer each year at the American Academy of
Ophthalmology annual meeting and at additional meetings, if any, as may be
called from time to time by the Executive Committee of Vista's Medical Advisory
Board. The Executive Committee of Vista's Medical Advisory Board shall consist
of approximately five ophthalmologists and approximately five optometrists, one
of whom shall be a health care professional designated by the Company meeting
credential requirements of such Executive Committee. The Executive Committee of
Vista's Medical Advisory Board shall establish credential requirements for
members of the Medical Advisory Board and shall administer the Vista Medical
Advisory Board. Members of the Vista Medical Advisory Board shall be compensated
as determined in accordance with policies established from time to time by
Vista's board of directors.
As a material part of its compensation program for members of
the Vista Medical Advisory Board, Vista agrees to cause stock options (granted
at an option exercise price equal to fair market value on the date of grant) to
be to be granted to one credentialed health care professional designated by the
Company which are at least equal in amount to the most favorable stock option
package granted to any other member of the Vista Medical Advisory Board.
7. TERM AND TERMINATION.
7.1. The initial term of this Agreement shall commence effective with
the successful completion of the Company's IPO and shall continue for a period
of ten (10) years following the completion of the Company's IPO unless earlier
terminated in accordance with the following provisions:
7.1.1. In the event the Company's IPO has not been
successfully
4
<PAGE> 5
completed on or before December 31, 1996, this Agreement may be terminated by
Vista at its sole discretion at any time thereafter upon thirty (30) days prior
written notice to the Company unless the Company's IPO is completed during such
30 day period of grace. If this Agreement is terminated in accordance with this
Section 7.1.1, the parties shall be released from all obligations hereunder.
7.1.2. In the event the Company or Vista shall be in material
breach of any other covenant or agreement on its part to be performed in this
Agreement, this Agreement may be terminated by the other party at its sole
discretion at any time thereafter upon thirty (30) days prior written notice
unless such material breach has been cured during such 30 day period of grace.
7.2. Upon the expiration of the initial ten (10) year term of this
Agreement, this Agreement shall be automatically renewed for successive periods
of five (5) years each unless any party hereto shall provide the other party
with written notice of its intent to terminate this Agreement at least six (6)
months prior to the expiration of the then current term of this Agreement or any
renewal thereof.
8. DISPUTE RESOLUTION.
8.1. In the event of a dispute between the parties to this Agreement,
the parties agree to promptly meet and confer with the goal of settling such
dispute. If the parties are unable to a reach a prompt, amicable agreement
concerning such dispute, the parties agree to submit the matter to non-binding
mediation. If the parties cannot agree on a mediator, the Judicial Arbitration
and Mediation Service, Inc., San Francisco, California office ("J.A.M.S") will
be requested to provide a mediator with expertise in consulting agreements. The
mediation fee, in any, shall be divided equally between the parties.
8.2. Failing the resolution of their dispute by mediation, any dispute
or claim in law or in equity arising out of this Agreement or any resulting
transaction shall be decided by neutral, binding arbitration in accordance with
Part 3, Title 9 of the California Code of Civil Procedure, and not by court
action except as provided by California law for judicial review of arbitration
proceedings. Judgment upon the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. The parties to the arbitration shall
have the right to discovery in accordance with the California Discovery Act
(Code of Civil Procedure 2016 et. seq.). The arbitrator shall be agreed on by
the parties or appointed by request and according to procedures of J.A.M.S. The
losing party shall pay the J.A.M.S.'s fees, the other party's reasonable fees,
costs and necessary disbursements. The filing of a judicial action to enforce
the recording of a notice of pending action, or order of attachment,
receivership, injunction or other provisional remedies shall not constitute a
waiver of the right to arbitrate (or mediate) under this (or the preceding)
provision.
9. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered or
certified mail,
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<PAGE> 6
postage prepaid, or by commercial overnight courier (such as Federal Express,
DHL, etc.) with written verification of receipt, to the last known principal
office of the other party hereto.
10. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed by a waiver of any
subsequent breach.
11. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California.
12. ASSIGNMENT. The rights and obligations of the parties to this
Agreement shall inure to the benefit of and shall be binding upon their
respective successors and assigns.
13. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties. It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, modification,
extension or discharge is sought.
IN WITNESS WHEREOF, the parties have executed this Agreement, effective
as of the day first written above.
"Company" VISTA LASER CENTERS OF THE PACIFIC, INC.
By:________________________________
J. Robert Griffin, Chairman
"Vista" VISTA TECHNOLOGIES INC.
By:________________________________
Thomas A. Schultz, President
6
<PAGE> 1
EXHIBIT 10.4
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT (the "Agreement") is made and entered
into, effective as of the 23rd of April, 1996 (the "Effective Date") by and
between VISTA TECHNOLOGIES INC, a Nevada corporation ("Vista" ), and VISTA LASER
CENTERS OF THE PACIFIC, INC., a Nevada corporation ("Pacific").
RECITALS
WHEREAS, Vista desires to acquire capital stock shares of Pacific; and
WHEREAS, Pacific desires to acquire capital stock shares of Vista; and
WHEREAS, the parties have had several discussions regarding different
classes of shares and exchange rates.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties agree as
follows:
1. Vista shall issue 500,000 shares of its common stock (the "Vista Shares") to
Pacific and Pacific shall issue 500,000 of its Series B Preferred Stock to
Vista.
2. The exchange of securities described herein is made pursuant to Section 4(2)
of the Securities Act of 1933 (the "Act") and is made by distributions of
securities not involving a public offering. Vista and Pacific hereby represent
to each other that they are purchasing the respective shares for investment, for
their own account, and not with a view towards distribution.
3. The Vista Shares and the Pacific Shares are "restricted securities" as
defined in Rule 144 promulgated under the Act by the Securities and Exchange
Commission (the "SEC") and , therefore, Vista and Pacific hereby agree to hold
the respective shares for a period of at least two (2) years.
4. The Vista Shares and the Pacific Shares may not be resold by the respective
party unless registered or an exemption from registration exists, which
exemption shall be demonstrated by a legal opinion from an attorney satisfactory
to the issuer of such shares. The parties hereby agree that Regulation S of the
SEC shall not be deemed to be a valid exemption from registration.
[Signature Page Follows]
<PAGE> 2
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
VISTA TECHNOLOGIES INC.
By:_______________________________________
Thomas A. Schultz, President
VISTA LASER CENTERS OF THE PACIFIC, INC.
By:_______________________________________
J. Robert Griffin, Chairman
<PAGE> 1
EXHIBIT 10.5
IRREVOCABLE PROXY AND VOTING AGREEMENT
COVERING COMMON STOCK OF VISTA TECHNOLOGIES INC.
This IRREVOCABLE PROXY and VOTING AGREEMENT (this "Proxy") is executed
as of April 23, 1996, by VISTA LASER CENTERS OF THE PACIFIC, INC., a Nevada
corporation (the "VLC Stockholder"), in favor of THE DULY ELECTED AND ACTING
BOARD OF DIRECTORS OF VISTA TECHNOLOGIES INC., a Nevada corporation
("PROXYHOLDER"), with reference to all shares of voting capital stock in VISTA
TECHNOLOGIES, INC., a Nevada corporation (the "Corporation"), owned of record
and beneficially by the VLC Stockholder (all of such shares of voting stock
being herein called the "Voting Shares"). Any other voting capital stock of the
Corporation hereafter received by the VLC Stockholder as a result of the
acquisition or conversion or reclassification of such Voting Shares into another
class of stock or as a result of stock dividends or other distributions with
respect to the Voting Shares shall be subject to this Proxy and included within
the definition of Voting Shares for the purposes hereof.
WHEREAS, the parties hereto believe it to be essential to their
respective interests and to the interests of the Corporation to assure
continuity of the policies and management of the Corporation by having the
Voting Shares of the Corporation subject to this Proxy and voted and dealt with
as herein provided for the period of time specified herein;
NOW, THEREFORE, and in consideration of the premises and of the
covenants and agreements herein contained, it is mutually agreed as follows:
SECTION 1. GRANT OF PROXY. The undersigned VLC Stockholder, acting in
consideration of the investment of the Corporation in the VLC Stockholder,
HEREBY APPOINTS the PROXYHOLDER as the true and lawful attorney-in-fact, agent
and proxy of the undersigned VLC Stockholder, with full power of substitution,
to vote all shares of the Corporation's common stock and any other Voting Shares
which the undersigned VLC Stockholder may be entitled to vote at any meeting of
stockholders of the Corporation, or otherwise, and at any adjournment thereof,
with all powers which the undersigned VLC Stockholder would possess if
personally present, including the right to vote, give consents and execute
waivers in respect to all matters, whether or not in the ordinary course of
business of the Corporation. The proxy granted by this Section 1 shall be
personal to the PROXYHOLDER and may not be assigned or transferred by the
PROXYHOLDER to any other party.
SECTION 2. IRREVOCABLE NATURE AND TERM OF THIS PROXY. This proxy,
having been granted in consideration of the investment of the Corporation in
shares of the Series B preferred stock of the VLC Stockholder, shall be deemed a
proxy coupled with an interest and shall be irrevocable until five years after
the date of this Agreement.
SECTION 3. OWNERSHIP OF, AND RESTRICTIONS UPON, PROXY SHARES. The
undersigned VLC Stockholder hereby represents and warrants that (a) the
undersigned VLC Stockholder owns of record and beneficially 500,000 shares of
the Corporation's common stock; and (b) the undersigned VLC Stockholder has not
granted, and for the term hereof will not grant, any proxy or other voting
interest with respect to such shares to any other party. Nothing herein shall be
construed to prohibit the sale, assignment or other disposition of all, or any
portion from time to time, of the Voting Shares by the VLC Stockholder to an
unaffiliated third party in a bona fide sale transaction free and clear of the
provisions of this Proxy.
<PAGE> 2
SECTION 5. LEGEND. The undersigned VLC Stockholder agrees to cause the
certificates evidencing the Voting Shares to be promptly imprinted with a legend
referring to the proxy and voting agreement imposed by this Proxy agreement and
to furnish evidence thereof to the PROXYHOLDER and the Corporation.
SECTION 6. FILING OF PROXY. The undersigned VLC Stockholder authorizes
and directs the PROXYHOLDER to file this Proxy with the Secretary of the
Corporation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"VLC STOCKHOLDER" VISTA LASER CENTERS OF THE PACIFIC, INC.
By:_____________________________________
J. Robert Griffin, Chairman
- -------------------------------------------------------------------------------
THE UNDERSIGNED CORPORATION HEREBY ACKNOWLEDGES RECEIPT OF A COPY OF
THE ABOVE IRREVOCABLE PROXY AND VOTING AGREEMENT
"CORPORATION" VISTA TECHNOLOGIES INC.
By:_____________________________________
Thomas A. Schultz, President
LEGEND TO BE IMPRINTED ON THE VOTING SHARE CERTIFICATES AND ANY REISSUANCE(S) OR
CONVERSION THEREOF INTO COMMON STOCK AND STOCK DIVIDENDS OR OTHER VISING
SECURITIES DISTRIBUTED WITH RESPECT THERETO:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
IRREVOCABLE PROXY AND VOTING AGREEMENT EXECUTED BY THE REGISTERED
HOLDER OF THIS CERTIFICATE IN FAVOR OF THE BOARD OF DIRECTORS OF THE
CORPORATION. A COPY MAY BE OBTAINED FROM THE SECRETARY OF THE
CORPORATION AT ITS PRINCIPAL EXECUTIVE OFFICE.
-2 -
<PAGE> 1
EXHIBIT 10.6
IRREVOCABLE PROXY AND VOTING AGREEMENT
COVERING PREFERRED STOCK OF VISTA LASER CENTERS OF THE PACIFIC, INC.
This IRREVOCABLE PROXY and VOTING AGREEMENT (this "Proxy") is executed
as of April 23, 1996, by VISTA TECHNOLOGIES INC., a Nevada corporation (the
"Stockholder"), in favor of THE DULY ELECTED AND ACTING BOARD OF DIRECTORS OF
VISTA LASER CENTERS OF THE PACIFIC, INC., a Nevada corporation ("PROXYHOLDER"),
with reference to all shares of voting capital stock in VISTA LASER CENTERS OF
THE PACIFIC, INC., a Nevada corporation (the "Corporation"), owned of record and
beneficially by the Stockholder (all of such shares of voting stock being herein
called the "Voting Shares"). Any other voting capital stock of the Corporation
hereafter received by the Stockholder as a result of acquisition or conversion
or reclassification of such Voting Shares into another class of stock or as a
result of stock dividends or other distributions with respect to the Voting
Shares shall be subject to this Proxy and included within the definition of
Voting Shares for the purposes hereof.
WHEREAS, the parties hereto believe it to be essential to their
respective interests and to the interests of the Corporation to assure
continuity of the policies and management of the Corporation by having the
Voting Shares of the Corporation subject to this Proxy and voted and dealt with
as herein provided for the period of time specified herein;
NOW, THEREFORE, and in consideration of the premises and of the
covenants and agreements herein contained, it is mutually agreed as follows:
SECTION 1. GRANT OF PROXY. The undersigned Stockholder, acting in
consideration of the investment of the Corporation in the Stockholder, HEREBY
APPOINTS the PROXYHOLDER as the true and lawful attorney-in-fact, agent and
proxy of the undersigned Stockholder, with full power of substitution, to vote
all shares of the Corporation's common stock and any other Voting Shares which
the undersigned Stockholder may be entitled to vote at any meeting of
stockholders of the Corporation, or otherwise, and at any adjournment thereof,
with all powers which the undersigned Stockholder would possess if personally
present, including the right to vote, give consents and execute waivers in
respect to all matters, whether or not in the ordinary course of business of the
Corporation. The proxy granted by this Section 1 shall be personal to the
PROXYHOLDER and may not be assigned or transferred by the PROXYHOLDER to any
other party.
SECTION 2. IRREVOCABLE NATURE AND TERM OF THIS PROXY. This proxy,
having been granted in consideration of the investment of the Corporation in
shares of the common stock of the Stockholder, shall be deemed a proxy coupled
with an interest and shall be irrevocable until five years after the date of
this Agreement.
SECTION 3. OWNERSHIP OF, AND RESTRICTIONS UPON, PROXY SHARES. The
undersigned Stockholder hereby represents and warrants that (a) the undersigned
Stockholder owns of record and beneficially 500,000 shares of the Corporation's
Series B preferred stock; and (b) the undersigned Stockholder has not granted,
and for the term hereof will not grant, any proxy or other voting interest with
respect to such shares to any other party. Nothing herein shall be construed to
prohibit the sale, assignment or other disposition of all, or any portion from
time to time, of the Voting Shares by the Stockholder to an unaffiliated third
party in a bona fide sale transaction free and clear of the provisions of this
Proxy.
<PAGE> 2
SECTION 5. LEGEND. The undersigned Stockholder agrees to cause the
certificates evidencing the Voting Shares to be promptly imprinted with a legend
referring to the proxy and voting agreement imposed by this Proxy agreement and
to furnish evidence thereof to the PROXYHOLDER and the Corporation.
SECTION 6. FILING OF PROXY. The undersigned Stockholder authorizes and
directs the PROXYHOLDER to file this Proxy with the Secretary of the
Corporation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"STOCKHOLDER" VISTA TECHNOLOGIES INC.
By:_____________________________________
Thomas A. Schultz, President
- -------------------------------------------------------------------------------
THE UNDERSIGNED CORPORATION HEREBY ACKNOWLEDGES RECEIPT OF A COPY OF
THE ABOVE IRREVOCABLE PROXY AND VOTING AGREEMENT
"CORPORATION" VISTA LASER CENTERS OF THE PACIFIC, INC.
By:_____________________________________
J. Robert Griffin, Chairman
LEGEND TO BE IMPRINTED ON THE VOTING SHARE CERTIFICATES AND ANY REISSUANCE(S) OR
CONVERSION THEREOF INTO COMMON STOCK AND STOCK DIVIDENDS OR OTHER VISING
SECURITIES DISTRIBUTED WITH RESPECT THERETO:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
IRREVOCABLE PROXY AND VOTING AGREEMENT EXECUTED BY THE REGISTERED
HOLDER OF THIS CERTIFICATE IN FAVOR OF THE BOARD OF DIRECTORS OF THE
CORPORATION. A COPY MAY BE OBTAINED FROM THE SECRETARY OF THE
CORPORATION AT ITS PRINCIPAL EXECUTIVE OFFICE.
-2 -
<PAGE> 1
EXHIBIT 10.7
NO. WB-2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT"). ACCORDINGLY, NO TRANSFER OF
THESE SECURITIES OR ANY INTEREST THEREIN MAY BE MADE EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT UNLESS THE ISSUER HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT REQUIRE
REGISTRATION UNDER THE ACT.
------------------------------------------------
VISTA LASER CENTERS OF THE PACIFIC, INC.
(Incorporated under the laws of the State of Nevada)
CLASS B COMMON STOCK PURCHASE WARRANTS
135,000 SHARES OF COMMON STOCK
VOID FOUR YEARS AFTER INITIAL PUBLIC OFFERING OR DECEMBER 31, 2000,
WHICHEVER FIRST OCCURS
-------------------------------
This is to certify that, for value received, receipt of which is hereby
acknowledged, J. ROBERT GRIFFIN GRIFFIN, (herein called the "holder"), is
entitled to purchase from VISTA LASER CENTERS OF THE PACIFIC, INC., a Nevada
corporation (hereinafter called the "Company"), at the warrant exercise price of
ONE DOLLAR ($1.00) per share, subject to adjustment as hereinafter provided
(hereinafter called the "Warrant Price"), at any time on or before the
expiration date set forth below (the "Expiration Date"), up to ONE HUNDRED
THIRTY-FIVE THOUSAND (135,000) fully paid and non-assessable shares of Common
Stock of the Company (hereinafter called "Common Stock"), subject to the terms
and conditions hereof, including such adjustments as may be required under the
terms hereof.
For the purposes of this Warrant, the Expiration Date shall mean the
earlier of: (i) the fourth anniversary of the effective date for the Company's
registration statement for a public offering of Series A Preferred Stock which
is to be sold for not less than $6,000,000 of total net offering proceeds (the
"IPO"); or (ii) in the event a registration statement has not been declared
effective prior to December 31, 1996, then the Expiration Date shall be 5:00
P.M. Pacific time on December 31, 2000.
This Warrant was originally issued during 1996 as part of an issue of
Class B common stock purchase warrants (herein called the "Warrants") as a
private placement offering of securities by the Company to professional
consultants to the Company. This Warrant represents part of such issue and is
herein called "this Warrant."
This Warrant may be exercised by the holder as hereinabove provided as
to the whole or any part of the shares of Common Stock covered hereby, by
surrender of this Warrant at the principal office of any transfer agent for the
Common Stock, or, if the Company shall not have any transfer agent for the
Common Stock, at the principal office of the Company (any such transfer agent,
or the Company acting hereunder, being hereinafter called the "Warrant Agent"),
with the statement of election to subscribe attached hereto duly
1
<PAGE> 2
executed and upon payment to the Company of the Warrant Price for shares so
purchased in cash or by certified check or bank draft. Thereupon (except that
if, upon such date, the stock transfer books of the Company shall be closed,
then upon the next succeeding date on which such transfer books are open), this
Warrant shall be deemed to have been exercised and the person exercising the
same to have become a holder of record of shares of Common Stock purchased
hereunder for all purposes, and certificates for such shares so purchased shall
be delivered to the purchaser within a reasonable time (not exceeding five
business days, except while the transfer books of the Company are closed) after
this Warrant shall have been exercised as set forth hereinabove. If this Warrant
shall be exercised in respect of a part only of the shares of Common Stock
covered hereby, the holder shall be entitled to receive a similar warrant of
like tenor and date covering the number of shares in respect of which this
Warrant shall not have been exercised.
The Company covenants and agrees that all shares which may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be validly issued, fully paid and non-assessable and free from all taxes, liens
and charges with respect to the issue thereof (other than taxes in respect of
any transfer occurring contemporaneously with such issue). The Company further
covenants and agrees that, during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant.
The rights of the holder of this Warrant shall be subject to the
following terms and conditions:
SECTION 1. CERTAIN ADJUSTMENTS AND NOTICES
1.1. In case the Company shall hereafter at any time change as a whole,
by split-up, subdivision or combination in any manner or by the making of a
stock dividend, the number of outstanding shares of Common Stock into a
different number of shares of Common Stock with or without par value, (i) the
number of shares of Common Stock which immediately prior to such change the
holder of this Warrant shall have been entitled to purchase pursuant to this
Warrant shall be increased or decreased in direct proportion to the increase or
decrease, respectively, in the number of shares of Common Stock outstanding
immediately prior to such change, and (ii) the Warrant Price in effect
immediately prior to such change shall be increased or decreased, as the case
may be, in inverse proportion to such increase or decrease in the number of such
shares outstanding immediately prior to such change; in any such event, the
rights of the holder of this Warrant to an adjustment in the number of shares of
Common Stock purchasable on exercise of this Warrant as herein provided shall
continue and be preserved in respect of any shares, securities, or assets which
the holder of this Warrant becomes entitled to purchase hereafter.
1.2. In case of any capital reorganization or any reclassification of
the capital stock of the Company, or in the case of the consolidation or merger
of the Company with another corporation, or in case of any sale, transfer or
other disposition to another corporation of all or substantially all of the
property, assets, business and goodwill of the Company as an entirety, as the
case may be, the holder of this Warrant shall thereafter be entitled to purchase
(and it shall be a condition to the consummation of any such reorganization,
reclassification consolidation, merger, sale, transfer or other disposition that
appropriate provision shall be made so that such holder shall thereafter be
entitled to purchase) the kind and amount of shares of stock and other
securities and property receivable, upon such capital reorganization,
reclassification of capital stock, consolidation, merger, sale, transfer or
other disposition, by a holder of the number of shares of Common Stock which
this Warrant entitled the holder thereof to purchase immediately prior to such
capital reorganization, reclassification of capital stock, consolidation,
merger, sale, transfer or other disposition; and in any such case appropriate
adjustments (as determined in good faith by the Board of Directors of the
Company or of such other corporation, as the case may be) shall be made in the
application of the provisions herein set forth with respect to rights and
interests thereafter of the holder of this Warrant, to the end that the
2
<PAGE> 3
provisions set forth herein (including the specified changes in and other
adjustments of the Warrant Price) shall thereafter be applicable, as near as
reasonably may be, in relation to any shares or other property thereafter
purchasable upon the exercise of this Warrant.
1.3. In case the Company shall hereafter at any time declare a dividend
upon shares of Common Stock payable otherwise than out of retained earnings or
otherwise than in shares of Common Stock or in stock or obligations directly or
indirectly convertible into or exchangeable for Common Stock, the holder of this
Warrant shall, upon exercise of this Warrant in whole or in part, be entitled to
receive, in addition to the number of shares of Common Stock deliverable upon
such exercise against payment of the Warrant Price therefor, but without further
consideration, the cash, stock or other securities or property which the holder
of this Warrant would have received as dividends (otherwise than out of such
retained earnings and otherwise than in shares of Common Stock or in such
convertible or exchangeable stock or obligations) if continuously since the date
set forth at the foot of this Warrant such holder (i) had been the holder of
record of the number of shares of Common Stock deliverable upon such exercise
and (ii) had retained all dividends in stock or other securities (other than
shares of Common Stock or such convertible or exchangeable stock or obligations)
paid or payable in respect of said number of shares of Common Stock or in
respect of any such stock or other securities so paid or payable as such
dividends. For purposes of this Section 1.3, a dividend payable otherwise than
in cash shall be considered to be payable out of retained earnings only to the
extent of the fair value of such dividend as determined by the Board of
Directors of the Company.
1.4. No certificates for fractional shares of Common Stock shall be
issued upon the exercise of this Warrant, but in lieu thereof the Company shall,
upon exercise in full of this Warrant, purchase out of funds legally available
therefor any such fractional interest for an amount in cash equal to the current
market value of such fractional interest calculated to the nearest cent,
computed on the basis of the closing sale price, as reported by the National
Association of Securities Dealers, Inc., of the Common Stock in the
over-the-counter market on the most recent day within ten days prior to the date
of such exercise for which such closing prices shall have been so reported, or,
if the Common Stock is listed on a stock exchange registered with the Securities
and Exchange Commission, the last reported sale price on such exchange on such
day; and if there shall have been no sale on said day, then the computation
shall be made on the basis of the last reported sale price on such exchange
within ten days prior to such date. If there have been no reported closing sale
prices, as the case may be, within such ten days, the current market value shall
be fixed in a manner determined in good faith by the Board of Directors of the
Company.
1.5. Whenever the Warrant Price is adjusted, as herein provided, the
Company shall forthwith file with the Warrant Agent a statement signed by the
President or any one of the Vice Presidents of the Company and by its Treasurer
or an Assistant Treasurer, stating the adjusted Warrant Price determined as
herein provided. Such statement shall show in detail the facts requiring such
adjustment, including a statement of the consideration received by the Company
for any additional securities issued. Whenever the Warrant Price is adjusted,
the Company will forthwith cause a notice stating the adjustment and the Warrant
Price to be mailed to the registered holder of this Warrant at the address of
such holder shown on the books of the Company.
1.6. Notices of Record Date, Etc. In case:
(a) the Company shall take a record of the holders of
its Common Stock (or any other securities issuable upon the exercise of
the Warrants) for the purpose of entitling them to receive any dividend
(other than a regular cash dividend at the same rate as the rate of the
last regular cash dividend theretofore paid) or other distribution, or
any right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities, or to receive any other
right; or
3
<PAGE> 4
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation
or merger of the Company with or into another corporation, or any
conveyance of all or substantially all of the assets of the Company to
another corporation; or
(c) of any voluntary or involuntary dissolution,
liquidation or winding up of the Company,
then, and in each such case, the Company shall mail or cause to be mailed to
each holder of record of the Warrants at the time outstanding a notice
specifying, as the case may be, (i) the date on which a record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution or winding up is to take place, and the time, if any, is to be
fixed, as to which the holders of record of Common Stock (or such other
securities at the time receivable upon the exercise of the Warrants) shall be
entitled to exchange their shares of Common Stock (or such other securities) for
securities or other property deliverable upon such event. Such notice shall be
mailed at least 20 days prior to the date therein specified and the Warrants may
be exercised prior to said date during the term of the Warrants.
SECTION 2. INVESTMENT INTENT
2.1 The holder of this Warrant, by acceptance hereof, agrees to give
written notice to the Company before exercising or selling this Warrant of such
holder's intention to do so, describing briefly the manner of any proposed sale
of this Warrant or such holder's intention as to the disposition to be made of
shares of Common Stock issuable upon such proposed exercise hereof. Promptly
upon receiving such written notice, the Company shall present copies thereof to
counsel for the Company for such counsel's opinion. If in the opinion of such
counsel, or upon receipt by the Company of a reasonably satisfactory opinion
from any other counsel, to the effect that the proposed exercise or sale may be
effected without registration under the Securities Act of 1933, as amended (the
"1933 Act") of this Warrant or the shares of Common Stock issuable on the
exercise hereof, the holder of this Warrant shall be entitled to sell this
Warrant, or to exercise this Warrant in accordance with its terms and dispose of
the shares received upon such exercise, all in accordance with the terms of the
notice delivered by such holder to the Company. If in the opinion of counsel the
proposed exercise or sale described in said written notice given by the holder
of this Warrant may not be effected without registration of this Warrant or the
shares of Common Stock issuable on the exercise hereof, the Company shall
promptly give written notice of such opinion to the holder of this Warrant. The
holder of this Warrant agrees that, if the proposed exercise or sale by such
holder cannot, in the opinion of counsel, be effected without such registration,
the holder will not so exercise or sell this Warrant or the shares of Common
Stock issuable upon the exercise hereof unless this Warrant or the shares of
Common Stock issuable upon the exercise hereof are registered by the Company as
herein provided.
2.2 In the event the Company or any successor-in-interest shall
hereafter register the Common Stock under Section 12(g) or 12(b) of the
Securities Exchange Act of 1934, as amended, then during the term of this
Warrant and for a period of four years after any exercise of this Warrant, the
Company covenants and agrees to file on a timely basis all reports required to
be filed on behalf of the Company with the Securities and Exchange Commission,
and to use its best efforts to otherwise comply with any regulatory provisions
applicable to the Company so that the Common Stock issuable upon exercise of
this Warrant will be eligible for resale after the minimum applicable holding
period in accordance with the exemption from registration provided by Rule 144
promulgated under the 1933 Act, or any successor to such Rule.
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<PAGE> 5
SECTION 3. MOST FAVORED POSITION AS TO REGISTRATION RIGHTS
3.1. If at any time during the term of this Warrant, the Company shall
either: (i) grant rights to register shares of its Common Stock under the 1933
Act, to the holders of any warrants, options or other securities convertible
into or exercisable for Common Stock (except for shares registered on Form S-8
or the IPO), or (ii) offer to the holders of any warrants, options or other
securities convertible into or exercisable for Common Stock the right of
participating in any registration of the Company's Common Stock under the 1933
Act (except for shares registered on Form S-8), then the Company shall provide
prompt written notice of such actions to the registered holder of this Warrant
and shall grant the registered holder of this Warrant rights to demand
registration of the Common Stock issuable upon the exercise of this Warrant
under the 1933 Act that are no less favorable to the registered holder of this
Warrant than the most favorable rights of registration granted to any third
party holder of warrants, options or other securities convertible into or
exercisable for Common Stock of the Company.
SECTION 4. MISCELLANEOUS
4.1. The issue of any stock or other certificate upon the exercise of
this Warrant shall be made without charge to the registered holder hereof for
any tax in respect of the issue of such certificate. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a name other
than that of the registered holder of this Warrant, and the Company shall not be
required to issue or deliver any such certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.
4.2. This Warrant and all rights hereunder or any portion thereof are
transferable on the books of the Company, upon surrender of this Warrant, with
the form of assignment attached hereto duly executed by the registered holder
hereof or by his attorney duly authorized in writing, to the Warrant agent at
its principal office hereinabove referred to, and thereupon there shall be
issued in the name of the transferee or transferees, in exchange for this
Warrant, a new Warrant or Warrants of like tenor and date, representing in the
aggregate the right to subscribe for and purchase the number of shares, or such
portion thereof as shall be so transferred, which may be subscribed for and
purchased hereunder and if there shall be any balance of such shares not so
transferred, there shall be issued in the name of the registered holder of this
Warrant, a new Warrant or Warrants of like tenor and date representing in the
aggregate the right to subscribe for and purchase the balance of the number of
shares which may be subscribed for and purchased hereunder.
4.3. If this Warrant shall be lost, stolen, mutilated or destroyed, the
Company may instruct the Warrant Agent, on such terms as to indemnify or
otherwise as the Company may in its discretion impose, to issue a new Warrant of
like denomination, tenor and date as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.
4.4. The Company and any Warrant Agent may deem and treat the
registered holder of this Warrant as the absolute owner of this Warrant for all
purposes and shall not be affected by any notice to the contrary.
4.5. This Warrant shall not entitle the holder to any rights of a
stockholder of the Company, either at law or in equity, including, without
limitation, the right to vote, to receive dividends and other distributions, to
exercise any preemptive rights or to receive any notice of meetings of
stockholders or of any other proceedings of the Company.
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<PAGE> 6
4.6. This Warrant shall be governed by the laws of the State of
California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its corporate name by its duly authorized officer as of the day and year written
below.
Dated: ____________________
VISTA LASER CENTERS OF THE PACIFIC, INC.
By: ________________________________
President
Attest:
________________________________
[Assistant] Secretary
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<PAGE> 7
TRANSFER OF WARRANT
For value received ____________________________________________ hereby sells,
assigns and transfers unto ________________________, the right to purchase
_______________ of the shares of Common Stock of VISTA LASER CENTERS OF THE
PACIFIC, INC., a Nevada corporation, which rights are represented by the within
Warrant, and does hereby irrevocably constitute and appoint
_____________________ attorney to transfer said rights on the books of the
within named Company, with full power of substitution in the premises.
Dated: ___________________, _____ _________________________________________
(Signature)
_________________________________________
Signature Guarantee
[Medallion Signature Guarantee]
- -------------------------------------------------------------------------------
ELECTION TO SUBSCRIBE
Date:_________________, _____
To: VISTA LASER CENTERS OF THE PACIFIC, INC.: The undersigned hereby subscribes
for __________ of the shares of Common Stock covered by the within Warrant and
tenders payment herewith in the amount of $_______________ in accordance with
the terms thereof:
Deliver Stock Certificates(s)
[ ] [ ]
Issue Certificate(s) for said Stock by mail against
counter-receipt
TO: TO:
_________________________________ ___________________________________
(Name) (Name)
_________________________________ ___________________________________
(Taxpayer Identification Number) (Street and Number)
_________________________________ ___________________________________
(Street and Number) City State ZIP Code
_________________________________
City State ZIP Code
and if said number of shares shall not be all of the shares covered by the
within Warrant, that a new Warrant for the balance of the shares remaining be
registered in the name of, and delivered, to the registered holder of this
Warrant certificate.
_________________________________ ___________________________________
(Signature of Registered Holder) Signature Guarantee
7
<PAGE> 1
EXHIBIT 10.8
NO. WB-6
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "1933 ACT"). ACCORDINGLY, NO TRANSFER OF THESE
SECURITIES OR ANY INTEREST THEREIN MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT UNLESS THE ISSUER HAS RECEIVED AN OPINION
OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION
UNDER THE ACT.
-------------------------------------------------
VISTA LASER CENTERS OF THE PACIFIC, INC.
(Incorporated under the laws of the State of Nevada)
CLASS B COMMON STOCK PURCHASE WARRANTS
72,000 SHARES OF COMMON STOCK
VOID FOUR YEARS AFTER INITIAL PUBLIC OFFERING OR DECEMBER 31, 2000,
WHICHEVER FIRST OCCURS
-------------------------------
This is to certify that, for value received, receipt of which is hereby
acknowledged, GARY M. KAWESCH, (herein called the "holder"), is entitled to
purchase from VISTA LASER CENTERS OF THE PACIFIC, INC., a Nevada corporation
(hereinafter called the "Company"), at the warrant exercise price of ONE DOLLAR
($1.00) per share, subject to adjustment as hereinafter provided (hereinafter
called the "Warrant Price"), at any time on or before the expiration date set
forth below (the "Expiration Date"), up to SEVENTY-TWO THOUSAND (72,000) fully
paid and non-assessable shares of Common Stock of the Company (hereinafter
called "Common Stock"), subject to the terms and conditions hereof, including
such adjustments as may be required under the terms hereof.
For the purposes of this Warrant, the Expiration Date shall mean the
earlier of: (i) the fourth anniversary of the effective date for the Company's
registration statement for a public offering of Series A Preferred Stock which
is to be sold for not less than $6,000,000 of total net offering proceeds (the
"IPO"); or (ii) in the event a registration statement has not been declared
effective prior to December 31, 1996, then the Expiration Date shall be 5:00
P.M. Pacific time on December 31, 2000.
This Warrant was originally issued during 1996 as part of an issue of
Class B common stock purchase warrants (herein called the "Warrants") as a
private placement offering of securities by the Company to professional
consultants to the Company. This Warrant represents part of such issue and is
herein called "this Warrant."
This Warrant may be exercised by the holder as hereinabove provided as
to the whole or any part of the shares of Common Stock covered hereby, by
surrender of this Warrant at the principal office of any transfer agent for the
Common Stock, or, if the Company shall not have any transfer agent for the
Common Stock, at the principal office of the Company (any such transfer agent,
or the Company acting hereunder, being hereinafter called the "Warrant Agent"),
with the statement of election to subscribe attached hereto duly
1
<PAGE> 2
executed and upon payment to the Company of the Warrant Price for shares so
purchased in cash or by certified check or bank draft. Thereupon (except that
if, upon such date, the stock transfer books of the Company shall be closed,
then upon the next succeeding date on which such transfer books are open), this
Warrant shall be deemed to have been exercised and the person exercising the
same to have become a holder of record of shares of Common Stock purchased
hereunder for all purposes, and certificates for such shares so purchased shall
be delivered to the purchaser within a reasonable time (not exceeding five
business days, except while the transfer books of the Company are closed) after
this Warrant shall have been exercised as set forth hereinabove. If this Warrant
shall be exercised in respect of a part only of the shares of Common Stock
covered hereby, the holder shall be entitled to receive a similar warrant of
like tenor and date covering the number of shares in respect of which this
Warrant shall not have been exercised.
The Company covenants and agrees that all shares which may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be validly issued, fully paid and non-assessable and free from all taxes, liens
and charges with respect to the issue thereof (other than taxes in respect of
any transfer occurring contemporaneously with such issue). The Company further
covenants and agrees that, during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant.
The rights of the holder of this Warrant shall be subject to the
following terms and conditions:
SECTION 1. CERTAIN ADJUSTMENTS AND NOTICES
1.1. In case the Company shall hereafter at any time change as a whole,
by split-up, subdivision or combination in any manner or by the making of a
stock dividend, the number of outstanding shares of Common Stock into a
different number of shares of Common Stock with or without par value, (i) the
number of shares of Common Stock which immediately prior to such change the
holder of this Warrant shall have been entitled to purchase pursuant to this
Warrant shall be increased or decreased in direct proportion to the increase or
decrease, respectively, in the number of shares of Common Stock outstanding
immediately prior to such change, and (ii) the Warrant Price in effect
immediately prior to such change shall be increased or decreased, as the case
may be, in inverse proportion to such increase or decrease in the number of such
shares outstanding immediately prior to such change; in any such event, the
rights of the holder of this Warrant to an adjustment in the number of shares of
Common Stock purchasable on exercise of this Warrant as herein provided shall
continue and be preserved in respect of any shares, securities, or assets which
the holder of this Warrant becomes entitled to purchase hereafter.
1.2. In case of any capital reorganization or any reclassification of
the capital stock of the Company, or in the case of the consolidation or merger
of the Company with another corporation, or in case of any sale, transfer or
other disposition to another corporation of all or substantially all of the
property, assets, business and goodwill of the Company as an entirety, as the
case may be, the holder of this Warrant shall thereafter be entitled to purchase
(and it shall be a condition to the consummation of any such reorganization,
reclassification consolidation, merger, sale, transfer or other disposition that
appropriate provision shall be made so that such holder shall thereafter be
entitled to purchase) the kind and amount of shares of stock and other
securities and property receivable, upon such capital reorganization,
reclassification of capital stock, consolidation, merger, sale, transfer or
other disposition, by a holder of the number of shares of Common Stock which
this Warrant entitled the holder thereof to purchase immediately prior to such
capital reorganization, reclassification of capital stock, consolidation,
merger, sale, transfer or other disposition; and in any such case appropriate
adjustments (as determined in good faith by the Board of Directors of the
Company or of such other corporation, as the case may be) shall be made in the
application of the provisions herein set forth with respect to rights and
interests thereafter of the holder of this Warrant, to the end that the
2
<PAGE> 3
provisions set forth herein (including the specified changes in and other
adjustments of the Warrant Price) shall thereafter be applicable, as near as
reasonably may be, in relation to any shares or other property thereafter
purchasable upon the exercise of this Warrant.
1.3. In case the Company shall hereafter at any time declare a dividend
upon shares of Common Stock payable otherwise than out of retained earnings or
otherwise than in shares of Common Stock or in stock or obligations directly or
indirectly convertible into or exchangeable for Common Stock, the holder of this
Warrant shall, upon exercise of this Warrant in whole or in part, be entitled to
receive, in addition to the number of shares of Common Stock deliverable upon
such exercise against payment of the Warrant Price therefor, but without further
consideration, the cash, stock or other securities or property which the holder
of this Warrant would have received as dividends (otherwise than out of such
retained earnings and otherwise than in shares of Common Stock or in such
convertible or exchangeable stock or obligations) if continuously since the date
set forth at the foot of this Warrant such holder (i) had been the holder of
record of the number of shares of Common Stock deliverable upon such exercise
and (ii) had retained all dividends in stock or other securities (other than
shares of Common Stock or such convertible or exchangeable stock or obligations)
paid or payable in respect of said number of shares of Common Stock or in
respect of any such stock or other securities so paid or payable as such
dividends. For purposes of this Section 1.3, a dividend payable otherwise than
in cash shall be considered to be payable out of retained earnings only to the
extent of the fair value of such dividend as determined by the Board of
Directors of the Company.
1.4. No certificates for fractional shares of Common Stock shall be
issued upon the exercise of this Warrant, but in lieu thereof the Company shall,
upon exercise in full of this Warrant, purchase out of funds legally available
therefor any such fractional interest for an amount in cash equal to the current
market value of such fractional interest calculated to the nearest cent,
computed on the basis of the closing sale price, as reported by the National
Association of Securities Dealers, Inc., of the Common Stock in the
over-the-counter market on the most recent day within ten days prior to the date
of such exercise for which such closing prices shall have been so reported, or,
if the Common Stock is listed on a stock exchange registered with the Securities
and Exchange Commission, the last reported sale price on such exchange on such
day; and if there shall have been no sale on said day, then the computation
shall be made on the basis of the last reported sale price on such exchange
within ten days prior to such date. If there have been no reported closing sale
prices, as the case may be, within such ten days, the current market value shall
be fixed in a manner determined in good faith by the Board of Directors of the
Company.
1.5. Whenever the Warrant Price is adjusted, as herein provided, the
Company shall forthwith file with the Warrant Agent a statement signed by the
President or any one of the Vice Presidents of the Company and by its Treasurer
or an Assistant Treasurer, stating the adjusted Warrant Price determined as
herein provided. Such statement shall show in detail the facts requiring such
adjustment, including a statement of the consideration received by the Company
for any additional securities issued. Whenever the Warrant Price is adjusted,
the Company will forthwith cause a notice stating the adjustment and the Warrant
Price to be mailed to the registered holder of this Warrant at the address of
such holder shown on the books of the Company.
1.6. Notices of Record Date, Etc. In case:
(a) the Company shall take a record of the holders of
its Common Stock (or any other securities issuable upon the exercise of
the Warrants) for the purpose of entitling them to receive any dividend
(other than a regular cash dividend at the same rate as the rate of the
last regular cash dividend theretofore paid) or other distribution, or
any right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities, or to receive any other
right; or
3
<PAGE> 4
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation
or merger of the Company with or into another corporation, or any
conveyance of all or substantially all of the assets of the Company to
another corporation; or
(c) of any voluntary or involuntary dissolution,
liquidation or winding up of the Company,
then, and in each such case, the Company shall mail or cause to be mailed to
each holder of record of the Warrants at the time outstanding a notice
specifying, as the case may be, (i) the date on which a record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution or winding up is to take place, and the time, if any, is to be
fixed, as to which the holders of record of Common Stock (or such other
securities at the time receivable upon the exercise of the Warrants) shall be
entitled to exchange their shares of Common Stock (or such other securities) for
securities or other property deliverable upon such event. Such notice shall be
mailed at least 20 days prior to the date therein specified and the Warrants may
be exercised prior to said date during the term of the Warrants.
SECTION 2. INVESTMENT INTENT
2.1 The holder of this Warrant, by acceptance hereof, agrees to give
written notice to the Company before exercising or selling this Warrant of such
holder's intention to do so, describing briefly the manner of any proposed sale
of this Warrant or such holder's intention as to the disposition to be made of
shares of Common Stock issuable upon such proposed exercise hereof. Promptly
upon receiving such written notice, the Company shall present copies thereof to
counsel for the Company for such counsel's opinion. If in the opinion of such
counsel, or upon receipt by the Company of a reasonably satisfactory opinion
from any other counsel, to the effect that the proposed exercise or sale may be
effected without registration under the Securities Act of 1933, as amended (the
"1933 Act") of this Warrant or the shares of Common Stock issuable on the
exercise hereof, the holder of this Warrant shall be entitled to sell this
Warrant, or to exercise this Warrant in accordance with its terms and dispose of
the shares received upon such exercise, all in accordance with the terms of the
notice delivered by such holder to the Company. If in the opinion of counsel the
proposed exercise or sale described in said written notice given by the holder
of this Warrant may not be effected without registration of this Warrant or the
shares of Common Stock issuable on the exercise hereof, the Company shall
promptly give written notice of such opinion to the holder of this Warrant. The
holder of this Warrant agrees that, if the proposed exercise or sale by such
holder cannot, in the opinion of counsel, be effected without such registration,
the holder will not so exercise or sell this Warrant or the shares of Common
Stock issuable upon the exercise hereof unless this Warrant or the shares of
Common Stock issuable upon the exercise hereof are registered by the Company as
herein provided.
2.2 In the event the Company or any successor-in-interest shall
hereafter register the Common Stock under Section 12(g) or 12(b) of the
Securities Exchange Act of 1934, as amended, then during the term of this
Warrant and for a period of four years after any exercise of this Warrant, the
Company covenants and agrees to file on a timely basis all reports required to
be filed on behalf of the Company with the Securities and Exchange Commission,
and to use its best efforts to otherwise comply with any regulatory provisions
applicable to the Company so that the Common Stock issuable upon exercise of
this Warrant will be eligible for resale after the minimum applicable holding
period in accordance with the exemption from registration provided by Rule 144
promulgated under the 1933 Act, or any successor to such Rule.
4
<PAGE> 5
SECTION 3. MOST FAVORED POSITION AS TO REGISTRATION RIGHTS
3.1. If at any time during the term of this Warrant, the Company shall
either: (i) grant rights to register shares of its Common Stock under the 1933
Act, to the holders of any warrants, options or other securities convertible
into or exercisable for Common Stock (except for shares registered on Form S-8
or the IPO), or (ii) offer to the holders of any warrants, options or other
securities convertible into or exercisable for Common Stock the right of
participating in any registration of the Company's Common Stock under the 1933
Act (except for shares registered on Form S-8), then the Company shall provide
prompt written notice of such actions to the registered holder of this Warrant
and shall grant the registered holder of this Warrant rights to demand
registration of the Common Stock issuable upon the exercise of this Warrant
under the 1933 Act that are no less favorable to the registered holder of this
Warrant than the most favorable rights of registration granted to any third
party holder of warrants, options or other securities convertible into or
exercisable for Common Stock of the Company.
SECTION 4. MISCELLANEOUS
4.1. The issue of any stock or other certificate upon the exercise of
this Warrant shall be made without charge to the registered holder hereof for
any tax in respect of the issue of such certificate. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a name other
than that of the registered holder of this Warrant, and the Company shall not be
required to issue or deliver any such certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.
4.2. This Warrant and all rights hereunder or any portion thereof are
transferable on the books of the Company, upon surrender of this Warrant, with
the form of assignment attached hereto duly executed by the registered holder
hereof or by his attorney duly authorized in writing, to the Warrant agent at
its principal office hereinabove referred to, and thereupon there shall be
issued in the name of the transferee or transferees, in exchange for this
Warrant, a new Warrant or Warrants of like tenor and date, representing in the
aggregate the right to subscribe for and purchase the number of shares, or such
portion thereof as shall be so transferred, which may be subscribed for and
purchased hereunder and if there shall be any balance of such shares not so
transferred, there shall be issued in the name of the registered holder of this
Warrant, a new Warrant or Warrants of like tenor and date representing in the
aggregate the right to subscribe for and purchase the balance of the number of
shares which may be subscribed for and purchased hereunder.
4.3. If this Warrant shall be lost, stolen, mutilated or destroyed, the
Company may instruct the Warrant Agent, on such terms as to indemnify or
otherwise as the Company may in its discretion impose, to issue a new Warrant of
like denomination, tenor and date as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.
4.4. The Company and any Warrant Agent may deem and treat the
registered holder of this Warrant as the absolute owner of this Warrant for all
purposes and shall not be affected by any notice to the contrary.
4.5. This Warrant shall not entitle the holder to any rights of a
stockholder of the Company, either at law or in equity, including, without
limitation, the right to vote, to receive dividends and other distributions, to
exercise any preemptive rights or to receive any notice of meetings of
stockholders or of any other proceedings of the Company.
5
<PAGE> 6
4.6. This Warrant shall be governed by the laws of the State of
California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its corporate name by its duly authorized officer as of the day and year written
below.
Dated: ____________________
VISTA LASER CENTERS OF THE PACIFIC, INC.
By: ________________________________
President
Attest:
________________________________
[Assistant] Secretary
6
<PAGE> 7
TRANSFER OF WARRANT
For value received ____________________________________________ hereby sells,
assigns and transfers unto ________________________, the right to purchase
_______________ of the shares of Common Stock of VISTA LASER CENTERS OF THE
PACIFIC, INC., a Nevada corporation, which rights are represented by the within
Warrant, and does hereby irrevocably constitute and appoint
_____________________ attorney to transfer said rights on the books of the
within named Company, with full power of substitution in the premises.
Dated: ___________________, _____ _________________________________________
(Signature)
_________________________________________
Signature Guarantee
[Medallion Signature Guarantee]
- -------------------------------------------------------------------------------
ELECTION TO SUBSCRIBE
Date:_________________, _____
To: VISTA LASER CENTERS OF THE PACIFIC, INC.: The undersigned hereby subscribes
for __________ of the shares of Common Stock covered by the within Warrant and
tenders payment herewith in the amount of $_______________ in accordance with
the terms thereof:
Deliver Stock Certificates(s)
[ ] [ ]
Issue Certificate(s) for said Stock by mail against
counter-receipt
TO: TO:
_________________________________ ___________________________________
(Name) (Name)
_________________________________ ___________________________________
(Taxpayer Identification Number) (Street and Number)
_________________________________ ___________________________________
(Street and Number) City State ZIP Code
_________________________________
City State ZIP Code
and if said number of shares shall not be all of the shares covered by the
within Warrant, that a new Warrant for the balance of the shares remaining be
registered in the name of, and delivered, to the registered holder of this
Warrant certificate.
_________________________________ ___________________________________
(Signature of Registered Holder) Signature Guarantee
7
<PAGE> 1
EXHIBIT 10.9
NO. WB-8
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "1933 ACT"). ACCORDINGLY, NO TRANSFER OF THESE
SECURITIES OR ANY INTEREST THEREIN MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT UNLESS THE ISSUER HAS RECEIVED AN OPINION
OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION
UNDER THE ACT.
-------------------------------------------------
VISTA LASER CENTERS OF THE PACIFIC, INC.
(Incorporated under the laws of the State of Nevada)
CLASS B COMMON STOCK PURCHASE WARRANTS
30,240 SHARES OF COMMON STOCK
VOID FOUR YEARS AFTER INITIAL PUBLIC OFFERING OR DECEMBER 31, 2000,
WHICHEVER FIRST OCCURS
-------------------------------
This is to certify that, for value received, receipt of which is hereby
acknowledged, DAVID P. BATES III, (herein called the "holder"), is entitled to
purchase from VISTA LASER CENTERS OF THE PACIFIC, INC., a Nevada corporation
(hereinafter called the "Company"), at the warrant exercise price of ONE DOLLAR
($1.00) per share, subject to adjustment as hereinafter provided (hereinafter
called the "Warrant Price"), at any time on or before the expiration date set
forth below (the "Expiration Date"), up to THIRTY THOUSAND TWO HUNDRED FORTY
(30,240) fully paid and non-assessable shares of Common Stock of the Company
(hereinafter called "Common Stock"), subject to the terms and conditions hereof,
including such adjustments as may be required under the terms hereof.
For the purposes of this Warrant, the Expiration Date shall mean the
earlier of: (i) the fourth anniversary of the effective date for the Company's
registration statement for a public offering of Series A Preferred Stock which
is to be sold for not less than $6,000,000 of total net offering proceeds (the
"IPO"); or (ii) in the event a registration statement has not been declared
effective prior to December 31, 1996, then the Expiration Date shall be 5:00
P.M. Pacific time on December 31, 2000.
This Warrant was originally issued during 1996 as part of an issue of
Class B common stock purchase warrants (herein called the "Warrants") as a
private placement offering of securities by the Company to professional
consultants to the Company. This Warrant represents part of such issue and is
herein called "this Warrant."
This Warrant may be exercised by the holder as hereinabove provided as
to the whole or any part of the shares of Common Stock covered hereby, by
surrender of this Warrant at the principal office of any transfer agent for the
Common Stock, or, if the Company shall not have any transfer agent for the
Common Stock, at the principal office of the Company (any such transfer agent,
or the Company acting hereunder, being hereinafter called the "Warrant Agent"),
with the statement of election to subscribe attached hereto duly
1
<PAGE> 2
executed and upon payment to the Company of the Warrant Price for shares so
purchased in cash or by certified check or bank draft. Thereupon (except that
if, upon such date, the stock transfer books of the Company shall be closed,
then upon the next succeeding date on which such transfer books are open), this
Warrant shall be deemed to have been exercised and the person exercising the
same to have become a holder of record of shares of Common Stock purchased
hereunder for all purposes, and certificates for such shares so purchased shall
be delivered to the purchaser within a reasonable time (not exceeding five
business days, except while the transfer books of the Company are closed) after
this Warrant shall have been exercised as set forth hereinabove. If this Warrant
shall be exercised in respect of a part only of the shares of Common Stock
covered hereby, the holder shall be entitled to receive a similar warrant of
like tenor and date covering the number of shares in respect of which this
Warrant shall not have been exercised.
The Company covenants and agrees that all shares which may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be validly issued, fully paid and non-assessable and free from all taxes, liens
and charges with respect to the issue thereof (other than taxes in respect of
any transfer occurring contemporaneously with such issue). The Company further
covenants and agrees that, during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant.
The rights of the holder of this Warrant shall be subject to the
following terms and conditions:
SECTION 1. CERTAIN ADJUSTMENTS AND NOTICES
1.1. In case the Company shall hereafter at any time change as a whole,
by split-up, subdivision or combination in any manner or by the making of a
stock dividend, the number of outstanding shares of Common Stock into a
different number of shares of Common Stock with or without par value, (i) the
number of shares of Common Stock which immediately prior to such change the
holder of this Warrant shall have been entitled to purchase pursuant to this
Warrant shall be increased or decreased in direct proportion to the increase or
decrease, respectively, in the number of shares of Common Stock outstanding
immediately prior to such change, and (ii) the Warrant Price in effect
immediately prior to such change shall be increased or decreased, as the case
may be, in inverse proportion to such increase or decrease in the number of such
shares outstanding immediately prior to such change; in any such event, the
rights of the holder of this Warrant to an adjustment in the number of shares of
Common Stock purchasable on exercise of this Warrant as herein provided shall
continue and be preserved in respect of any shares, securities, or assets which
the holder of this Warrant becomes entitled to purchase hereafter.
1.2. In case of any capital reorganization or any reclassification of
the capital stock of the Company, or in the case of the consolidation or merger
of the Company with another corporation, or in case of any sale, transfer or
other disposition to another corporation of all or substantially all of the
property, assets, business and goodwill of the Company as an entirety, as the
case may be, the holder of this Warrant shall thereafter be entitled to purchase
(and it shall be a condition to the consummation of any such reorganization,
reclassification consolidation, merger, sale, transfer or other disposition that
appropriate provision shall be made so that such holder shall thereafter be
entitled to purchase) the kind and amount of shares of stock and other
securities and property receivable, upon such capital reorganization,
reclassification of capital stock, consolidation, merger, sale, transfer or
other disposition, by a holder of the number of shares of Common Stock which
this Warrant entitled the holder thereof to purchase immediately prior to such
capital reorganization, reclassification of capital stock, consolidation,
merger, sale, transfer or other disposition; and in any such case appropriate
adjustments (as determined in good faith by the Board of Directors of the
Company or of such other corporation, as the case may be) shall be made in the
application of the provisions herein set forth with respect to rights and
interests thereafter of the holder of this Warrant, to the end that the
2
<PAGE> 3
provisions set forth herein (including the specified changes in and other
adjustments of the Warrant Price) shall thereafter be applicable, as near as
reasonably may be, in relation to any shares or other property thereafter
purchasable upon the exercise of this Warrant.
1.3. In case the Company shall hereafter at any time declare a dividend
upon shares of Common Stock payable otherwise than out of retained earnings or
otherwise than in shares of Common Stock or in stock or obligations directly or
indirectly convertible into or exchangeable for Common Stock, the holder of this
Warrant shall, upon exercise of this Warrant in whole or in part, be entitled to
receive, in addition to the number of shares of Common Stock deliverable upon
such exercise against payment of the Warrant Price therefor, but without further
consideration, the cash, stock or other securities or property which the holder
of this Warrant would have received as dividends (otherwise than out of such
retained earnings and otherwise than in shares of Common Stock or in such
convertible or exchangeable stock or obligations) if continuously since the date
set forth at the foot of this Warrant such holder (i) had been the holder of
record of the number of shares of Common Stock deliverable upon such exercise
and (ii) had retained all dividends in stock or other securities (other than
shares of Common Stock or such convertible or exchangeable stock or obligations)
paid or payable in respect of said number of shares of Common Stock or in
respect of any such stock or other securities so paid or payable as such
dividends. For purposes of this Section 1.3, a dividend payable otherwise than
in cash shall be considered to be payable out of retained earnings only to the
extent of the fair value of such dividend as determined by the Board of
Directors of the Company.
1.4. No certificates for fractional shares of Common Stock shall be
issued upon the exercise of this Warrant, but in lieu thereof the Company shall,
upon exercise in full of this Warrant, purchase out of funds legally available
therefor any such fractional interest for an amount in cash equal to the current
market value of such fractional interest calculated to the nearest cent,
computed on the basis of the closing sale price, as reported by the National
Association of Securities Dealers, Inc., of the Common Stock in the
over-the-counter market on the most recent day within ten days prior to the date
of such exercise for which such closing prices shall have been so reported, or,
if the Common Stock is listed on a stock exchange registered with the Securities
and Exchange Commission, the last reported sale price on such exchange on such
day; and if there shall have been no sale on said day, then the computation
shall be made on the basis of the last reported sale price on such exchange
within ten days prior to such date. If there have been no reported closing sale
prices, as the case may be, within such ten days, the current market value shall
be fixed in a manner determined in good faith by the Board of Directors of the
Company.
1.5. Whenever the Warrant Price is adjusted, as herein provided, the
Company shall forthwith file with the Warrant Agent a statement signed by the
President or any one of the Vice Presidents of the Company and by its Treasurer
or an Assistant Treasurer, stating the adjusted Warrant Price determined as
herein provided. Such statement shall show in detail the facts requiring such
adjustment, including a statement of the consideration received by the Company
for any additional securities issued. Whenever the Warrant Price is adjusted,
the Company will forthwith cause a notice stating the adjustment and the Warrant
Price to be mailed to the registered holder of this Warrant at the address of
such holder shown on the books of the Company.
1.6. Notices of Record Date, Etc. In case:
(a) the Company shall take a record of the holders of
its Common Stock (or any other securities issuable upon the exercise of
the Warrants) for the purpose of entitling them to receive any dividend
(other than a regular cash dividend at the same rate as the rate of the
last regular cash dividend theretofore paid) or other distribution, or
any right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities, or to receive any other
right; or
3
<PAGE> 4
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation
or merger of the Company with or into another corporation, or any
conveyance of all or substantially all of the assets of the Company to
another corporation; or
(c) of any voluntary or involuntary dissolution,
liquidation or winding up of the Company,
then, and in each such case, the Company shall mail or cause to be mailed to
each holder of record of the Warrants at the time outstanding a notice
specifying, as the case may be, (i) the date on which a record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution or winding up is to take place, and the time, if any, is to be
fixed, as to which the holders of record of Common Stock (or such other
securities at the time receivable upon the exercise of the Warrants) shall be
entitled to exchange their shares of Common Stock (or such other securities) for
securities or other property deliverable upon such event. Such notice shall be
mailed at least 20 days prior to the date therein specified and the Warrants may
be exercised prior to said date during the term of the Warrants.
SECTION 2. INVESTMENT INTENT
2.1 The holder of this Warrant, by acceptance hereof, agrees to give
written notice to the Company before exercising or selling this Warrant of such
holder's intention to do so, describing briefly the manner of any proposed sale
of this Warrant or such holder's intention as to the disposition to be made of
shares of Common Stock issuable upon such proposed exercise hereof. Promptly
upon receiving such written notice, the Company shall present copies thereof to
counsel for the Company for such counsel's opinion. If in the opinion of such
counsel, or upon receipt by the Company of a reasonably satisfactory opinion
from any other counsel, to the effect that the proposed exercise or sale may be
effected without registration under the Securities Act of 1933, as amended (the
"1933 Act") of this Warrant or the shares of Common Stock issuable on the
exercise hereof, the holder of this Warrant shall be entitled to sell this
Warrant, or to exercise this Warrant in accordance with its terms and dispose of
the shares received upon such exercise, all in accordance with the terms of the
notice delivered by such holder to the Company. If in the opinion of counsel the
proposed exercise or sale described in said written notice given by the holder
of this Warrant may not be effected without registration of this Warrant or the
shares of Common Stock issuable on the exercise hereof, the Company shall
promptly give written notice of such opinion to the holder of this Warrant. The
holder of this Warrant agrees that, if the proposed exercise or sale by such
holder cannot, in the opinion of counsel, be effected without such registration,
the holder will not so exercise or sell this Warrant or the shares of Common
Stock issuable upon the exercise hereof unless this Warrant or the shares of
Common Stock issuable upon the exercise hereof are registered by the Company as
herein provided.
2.2 In the event the Company or any successor-in-interest shall
hereafter register the Common Stock under Section 12(g) or 12(b) of the
Securities Exchange Act of 1934, as amended, then during the term of this
Warrant and for a period of four years after any exercise of this Warrant, the
Company covenants and agrees to file on a timely basis all reports required to
be filed on behalf of the Company with the Securities and Exchange Commission,
and to use its best efforts to otherwise comply with any regulatory provisions
applicable to the Company so that the Common Stock issuable upon exercise of
this Warrant will be eligible for resale after the minimum applicable holding
period in accordance with the exemption from registration provided by Rule 144
promulgated under the 1933 Act, or any successor to such Rule.
4
<PAGE> 5
SECTION 3. MOST FAVORED POSITION AS TO REGISTRATION RIGHTS
3.1. If at any time during the term of this Warrant, the Company shall
either: (i) grant rights to register shares of its Common Stock under the 1933
Act, to the holders of any warrants, options or other securities convertible
into or exercisable for Common Stock (except for shares registered on Form S-8
or the IPO), or (ii) offer to the holders of any warrants, options or other
securities convertible into or exercisable for Common Stock the right of
participating in any registration of the Company's Common Stock under the 1933
Act (except for shares registered on Form S-8), then the Company shall provide
prompt written notice of such actions to the registered holder of this Warrant
and shall grant the registered holder of this Warrant rights to demand
registration of the Common Stock issuable upon the exercise of this Warrant
under the 1933 Act that are no less favorable to the registered holder of this
Warrant than the most favorable rights of registration granted to any third
party holder of warrants, options or other securities convertible into or
exercisable for Common Stock of the Company.
SECTION 4. MISCELLANEOUS
4.1. The issue of any stock or other certificate upon the exercise of
this Warrant shall be made without charge to the registered holder hereof for
any tax in respect of the issue of such certificate. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a name other
than that of the registered holder of this Warrant, and the Company shall not be
required to issue or deliver any such certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.
4.2. This Warrant and all rights hereunder or any portion thereof are
transferable on the books of the Company, upon surrender of this Warrant, with
the form of assignment attached hereto duly executed by the registered holder
hereof or by his attorney duly authorized in writing, to the Warrant agent at
its principal office hereinabove referred to, and thereupon there shall be
issued in the name of the transferee or transferees, in exchange for this
Warrant, a new Warrant or Warrants of like tenor and date, representing in the
aggregate the right to subscribe for and purchase the number of shares, or such
portion thereof as shall be so transferred, which may be subscribed for and
purchased hereunder and if there shall be any balance of such shares not so
transferred, there shall be issued in the name of the registered holder of this
Warrant, a new Warrant or Warrants of like tenor and date representing in the
aggregate the right to subscribe for and purchase the balance of the number of
shares which may be subscribed for and purchased hereunder.
4.3. If this Warrant shall be lost, stolen, mutilated or destroyed, the
Company may instruct the Warrant Agent, on such terms as to indemnify or
otherwise as the Company may in its discretion impose, to issue a new Warrant of
like denomination, tenor and date as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.
4.4. The Company and any Warrant Agent may deem and treat the
registered holder of this Warrant as the absolute owner of this Warrant for all
purposes and shall not be affected by any notice to the contrary.
4.5. This Warrant shall not entitle the holder to any rights of a
stockholder of the Company, either at law or in equity, including, without
limitation, the right to vote, to receive dividends and other distributions, to
exercise any preemptive rights or to receive any notice of meetings of
stockholders or of any other proceedings of the Company.
5
<PAGE> 6
4.6. This Warrant shall be governed by the laws of the State of
California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its corporate name by its duly authorized officer as of the day and year written
below.
Dated: ____________________
VISTA LASER CENTERS OF THE PACIFIC, INC.
By: ________________________________
Chairman
Attest:
________________________________
[Assistant] Secretary
6
<PAGE> 7
TRANSFER OF WARRANT
For value received ____________________________________________ hereby sells,
assigns and transfers unto ________________________, the right to purchase
_______________ of the shares of Common Stock of VISTA LASER CENTERS OF THE
PACIFIC, INC., a Nevada corporation, which rights are represented by the within
Warrant, and does hereby irrevocably constitute and appoint
_____________________ attorney to transfer said rights on the books of the
within named Company, with full power of substitution in the premises.
Dated: ___________________, _____ _________________________________________
(Signature)
_________________________________________
Signature Guarantee
[Medallion Signature Guarantee]
- -------------------------------------------------------------------------------
ELECTION TO SUBSCRIBE
Date:_________________, _____
To: VISTA LASER CENTERS OF THE PACIFIC, INC.: The undersigned hereby subscribes
for __________ of the shares of Common Stock covered by the within Warrant and
tenders payment herewith in the amount of $_______________ in accordance with
the terms thereof:
Deliver Stock Certificates(s)
[ ] [ ]
Issue Certificate(s) for said Stock by mail against
counter-receipt
TO: TO:
_________________________________ ___________________________________
(Name) (Name)
_________________________________ ___________________________________
(Taxpayer Identification Number) (Street and Number)
_________________________________ ___________________________________
(Street and Number) City State ZIP Code
_________________________________
City State ZIP Code
and if said number of shares shall not be all of the shares covered by the
within Warrant, that a new Warrant for the balance of the shares remaining be
registered in the name of, and delivered, to the registered holder of this
Warrant certificate.
_________________________________ ___________________________________
(Signature of Registered Holder) Signature Guarantee
7
<PAGE> 1
EXHIBIT 10.10
NO. WB-5
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT"). ACCORDINGLY, NO TRANSFER OF
THESE SECURITIES OR ANY INTEREST THEREIN MAY BE MADE EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT UNLESS THE ISSUER HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT REQUIRE
REGISTRATION UNDER THE ACT.
-------------------------------------------------
VISTA LASER CENTERS OF THE PACIFIC, INC.
(Incorporated under the laws of the State of Nevada)
CLASS B COMMON STOCK PURCHASE WARRANTS
12,960 SHARES OF COMMON STOCK
VOID FOUR YEARS AFTER INITIAL PUBLIC OFFERING OR DECEMBER 31, 2000,
WHICHEVER FIRST OCCURS
-------------------------------
This is to certify that, for value received, receipt of which is hereby
acknowledged, MARK MANDEL, (herein called the "holder"), is entitled to purchase
from VISTA LASER CENTERS OF THE PACIFIC, INC., a Nevada corporation (hereinafter
called the "Company"), at the warrant exercise price of ONE DOLLAR ($1.00) per
share, subject to adjustment as hereinafter provided (hereinafter called the
"Warrant Price"), at any time on or before the expiration date set forth below
(the "Expiration Date"), up to TWELVE THOUSAND NINE HUNDRED SIXTY (12,960) fully
paid and non-assessable shares of Common Stock of the Company (hereinafter
called "Common Stock"), subject to the terms and conditions hereof, including
such adjustments as may be required under the terms hereof.
For the purposes of this Warrant, the Expiration Date shall mean the
earlier of: (i) the fourth anniversary of the effective date for the Company's
registration statement for a public offering of Series A Preferred Stock which
is to be sold for not less than $6,000,000 of total net offering proceeds (the
"IPO"); or (ii) in the event a registration statement has not been declared
effective prior to December 31, 1996, then the Expiration Date shall be 5:00
P.M. Pacific time on December 31, 2000.
This Warrant was originally issued during 1996 as part of an issue of
Class B common stock purchase warrants (herein called the "Warrants") as a
private placement offering of securities by the Company to professional
consultants to the Company. This Warrant represents part of such issue and is
herein called "this Warrant."
This Warrant may be exercised by the holder as hereinabove provided as
to the whole or any part of the shares of Common Stock covered hereby, by
surrender of this Warrant at the principal office of any transfer agent for the
Common Stock, or, if the Company shall not have any transfer agent for the
Common Stock, at the principal office of the Company (any such transfer agent,
or the Company acting hereunder, being hereinafter called the "Warrant Agent"),
with the statement of election to subscribe attached hereto duly
1
<PAGE> 2
executed and upon payment to the Company of the Warrant Price for shares so
purchased in cash or by certified check or bank draft. Thereupon (except that
if, upon such date, the stock transfer books of the Company shall be closed,
then upon the next succeeding date on which such transfer books are open), this
Warrant shall be deemed to have been exercised and the person exercising the
same to have become a holder of record of shares of Common Stock purchased
hereunder for all purposes, and certificates for such shares so purchased shall
be delivered to the purchaser within a reasonable time (not exceeding five
business days, except while the transfer books of the Company are closed) after
this Warrant shall have been exercised as set forth hereinabove. If this Warrant
shall be exercised in respect of a part only of the shares of Common Stock
covered hereby, the holder shall be entitled to receive a similar warrant of
like tenor and date covering the number of shares in respect of which this
Warrant shall not have been exercised.
The Company covenants and agrees that all shares which may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be validly issued, fully paid and non-assessable and free from all taxes, liens
and charges with respect to the issue thereof (other than taxes in respect of
any transfer occurring contemporaneously with such issue). The Company further
covenants and agrees that, during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant.
The rights of the holder of this Warrant shall be subject to the
following terms and conditions:
SECTION 1. CERTAIN ADJUSTMENTS AND NOTICES
1.1. In case the Company shall hereafter at any time change as a whole,
by split-up, subdivision or combination in any manner or by the making of a
stock dividend, the number of outstanding shares of Common Stock into a
different number of shares of Common Stock with or without par value, (i) the
number of shares of Common Stock which immediately prior to such change the
holder of this Warrant shall have been entitled to purchase pursuant to this
Warrant shall be increased or decreased in direct proportion to the increase or
decrease, respectively, in the number of shares of Common Stock outstanding
immediately prior to such change, and (ii) the Warrant Price in effect
immediately prior to such change shall be increased or decreased, as the case
may be, in inverse proportion to such increase or decrease in the number of such
shares outstanding immediately prior to such change; in any such event, the
rights of the holder of this Warrant to an adjustment in the number of shares of
Common Stock purchasable on exercise of this Warrant as herein provided shall
continue and be preserved in respect of any shares, securities, or assets which
the holder of this Warrant becomes entitled to purchase hereafter.
1.2. In case of any capital reorganization or any reclassification of
the capital stock of the Company, or in the case of the consolidation or merger
of the Company with another corporation, or in case of any sale, transfer or
other disposition to another corporation of all or substantially all of the
property, assets, business and goodwill of the Company as an entirety, as the
case may be, the holder of this Warrant shall thereafter be entitled to purchase
(and it shall be a condition to the consummation of any such reorganization,
reclassification consolidation, merger, sale, transfer or other disposition that
appropriate provision shall be made so that such holder shall thereafter be
entitled to purchase) the kind and amount of shares of stock and other
securities and property receivable, upon such capital reorganization,
reclassification of capital stock, consolidation, merger, sale, transfer or
other disposition, by a holder of the number of shares of Common Stock which
this Warrant entitled the holder thereof to purchase immediately prior to such
capital reorganization, reclassification of capital stock, consolidation,
merger, sale, transfer or other disposition; and in any such case appropriate
adjustments (as determined in good faith by the Board of Directors of the
Company or of such other corporation, as the case may be) shall be made in the
application of the provisions herein set forth with respect to rights and
interests thereafter of the holder of this Warrant, to the end that the
2
<PAGE> 3
provisions set forth herein (including the specified changes in and other
adjustments of the Warrant Price) shall thereafter be applicable, as near as
reasonably may be, in relation to any shares or other property thereafter
purchasable upon the exercise of this Warrant.
1.3. In case the Company shall hereafter at any time declare a dividend
upon shares of Common Stock payable otherwise than out of retained earnings or
otherwise than in shares of Common Stock or in stock or obligations directly or
indirectly convertible into or exchangeable for Common Stock, the holder of this
Warrant shall, upon exercise of this Warrant in whole or in part, be entitled to
receive, in addition to the number of shares of Common Stock deliverable upon
such exercise against payment of the Warrant Price therefor, but without further
consideration, the cash, stock or other securities or property which the holder
of this Warrant would have received as dividends (otherwise than out of such
retained earnings and otherwise than in shares of Common Stock or in such
convertible or exchangeable stock or obligations) if continuously since the date
set forth at the foot of this Warrant such holder (i) had been the holder of
record of the number of shares of Common Stock deliverable upon such exercise
and (ii) had retained all dividends in stock or other securities (other than
shares of Common Stock or such convertible or exchangeable stock or obligations)
paid or payable in respect of said number of shares of Common Stock or in
respect of any such stock or other securities so paid or payable as such
dividends. For purposes of this Section 1.3, a dividend payable otherwise than
in cash shall be considered to be payable out of retained earnings only to the
extent of the fair value of such dividend as determined by the Board of
Directors of the Company.
1.4. No certificates for fractional shares of Common Stock shall be
issued upon the exercise of this Warrant, but in lieu thereof the Company shall,
upon exercise in full of this Warrant, purchase out of funds legally available
therefor any such fractional interest for an amount in cash equal to the current
market value of such fractional interest calculated to the nearest cent,
computed on the basis of the closing sale price, as reported by the National
Association of Securities Dealers, Inc., of the Common Stock in the
over-the-counter market on the most recent day within ten days prior to the date
of such exercise for which such closing prices shall have been so reported, or,
if the Common Stock is listed on a stock exchange registered with the Securities
and Exchange Commission, the last reported sale price on such exchange on such
day; and if there shall have been no sale on said day, then the computation
shall be made on the basis of the last reported sale price on such exchange
within ten days prior to such date. If there have been no reported closing sale
prices, as the case may be, within such ten days, the current market value shall
be fixed in a manner determined in good faith by the Board of Directors of the
Company.
1.5. Whenever the Warrant Price is adjusted, as herein provided, the
Company shall forthwith file with the Warrant Agent a statement signed by the
President or any one of the Vice Presidents of the Company and by its Treasurer
or an Assistant Treasurer, stating the adjusted Warrant Price determined as
herein provided. Such statement shall show in detail the facts requiring such
adjustment, including a statement of the consideration received by the Company
for any additional securities issued. Whenever the Warrant Price is adjusted,
the Company will forthwith cause a notice stating the adjustment and the Warrant
Price to be mailed to the registered holder of this Warrant at the address of
such holder shown on the books of the Company.
1.6. Notices of Record Date, Etc. In case:
(a) the Company shall take a record of the holders of
its Common Stock (or any other securities issuable upon the exercise of
the Warrants) for the purpose of entitling them to receive any dividend
(other than a regular cash dividend at the same rate as the rate of the
last regular cash dividend theretofore paid) or other distribution, or
any right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities, or to receive any other
right; or
3
<PAGE> 4
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation
or merger of the Company with or into another corporation, or any
conveyance of all or substantially all of the assets of the Company to
another corporation; or
(c) of any voluntary or involuntary dissolution,
liquidation or winding up of the Company,
then, and in each such case, the Company shall mail or cause to be mailed to
each holder of record of the Warrants at the time outstanding a notice
specifying, as the case may be, (i) the date on which a record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (ii) the date on which
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution or winding up is to take place, and the time, if any, is to be
fixed, as to which the holders of record of Common Stock (or such other
securities at the time receivable upon the exercise of the Warrants) shall be
entitled to exchange their shares of Common Stock (or such other securities) for
securities or other property deliverable upon such event. Such notice shall be
mailed at least 20 days prior to the date therein specified and the Warrants may
be exercised prior to said date during the term of the Warrants.
SECTION 2. INVESTMENT INTENT
2.1 The holder of this Warrant, by acceptance hereof, agrees to give
written notice to the Company before exercising or selling this Warrant of such
holder's intention to do so, describing briefly the manner of any proposed sale
of this Warrant or such holder's intention as to the disposition to be made of
shares of Common Stock issuable upon such proposed exercise hereof. Promptly
upon receiving such written notice, the Company shall present copies thereof to
counsel for the Company for such counsel's opinion. If in the opinion of such
counsel, or upon receipt by the Company of a reasonably satisfactory opinion
from any other counsel, to the effect that the proposed exercise or sale may be
effected without registration under the Securities Act of 1933, as amended (the
"1933 Act") of this Warrant or the shares of Common Stock issuable on the
exercise hereof, the holder of this Warrant shall be entitled to sell this
Warrant, or to exercise this Warrant in accordance with its terms and dispose of
the shares received upon such exercise, all in accordance with the terms of the
notice delivered by such holder to the Company. If in the opinion of counsel the
proposed exercise or sale described in said written notice given by the holder
of this Warrant may not be effected without registration of this Warrant or the
shares of Common Stock issuable on the exercise hereof, the Company shall
promptly give written notice of such opinion to the holder of this Warrant. The
holder of this Warrant agrees that, if the proposed exercise or sale by such
holder cannot, in the opinion of counsel, be effected without such registration,
the holder will not so exercise or sell this Warrant or the shares of Common
Stock issuable upon the exercise hereof unless this Warrant or the shares of
Common Stock issuable upon the exercise hereof are registered by the Company as
herein provided.
2.2 In the event the Company or any successor-in-interest shall
hereafter register the Common Stock under Section 12(g) or 12(b) of the
Securities Exchange Act of 1934, as amended, then during the term of this
Warrant and for a period of four years after any exercise of this Warrant, the
Company covenants and agrees to file on a timely basis all reports required to
be filed on behalf of the Company with the Securities and Exchange Commission,
and to use its best efforts to otherwise comply with any regulatory provisions
applicable to the Company so that the Common Stock issuable upon exercise of
this Warrant will be eligible for resale after the minimum applicable holding
period in accordance with the exemption from registration provided by Rule 144
promulgated under the 1933 Act, or any successor to such Rule.
4
<PAGE> 5
SECTION 3. MOST FAVORED POSITION AS TO REGISTRATION RIGHTS
3.1. If at any time during the term of this Warrant, the Company shall
either: (i) grant rights to register shares of its Common Stock under the 1933
Act, to the holders of any warrants, options or other securities convertible
into or exercisable for Common Stock (except for shares registered on Form S-8
or the IPO), or (ii) offer to the holders of any warrants, options or other
securities convertible into or exercisable for Common Stock the right of
participating in any registration of the Company's Common Stock under the 1933
Act (except for shares registered on Form S-8), then the Company shall provide
prompt written notice of such actions to the registered holder of this Warrant
and shall grant the registered holder of this Warrant rights to demand
registration of the Common Stock issuable upon the exercise of this Warrant
under the 1933 Act that are no less favorable to the registered holder of this
Warrant than the most favorable rights of registration granted to any third
party holder of warrants, options or other securities convertible into or
exercisable for Common Stock of the Company.
SECTION 4. MISCELLANEOUS
4.1. The issue of any stock or other certificate upon the exercise of
this Warrant shall be made without charge to the registered holder hereof for
any tax in respect of the issue of such certificate. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a name other
than that of the registered holder of this Warrant, and the Company shall not be
required to issue or deliver any such certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.
4.2. This Warrant and all rights hereunder or any portion thereof are
transferable on the books of the Company, upon surrender of this Warrant, with
the form of assignment attached hereto duly executed by the registered holder
hereof or by his attorney duly authorized in writing, to the Warrant agent at
its principal office hereinabove referred to, and thereupon there shall be
issued in the name of the transferee or transferees, in exchange for this
Warrant, a new Warrant or Warrants of like tenor and date, representing in the
aggregate the right to subscribe for and purchase the number of shares, or such
portion thereof as shall be so transferred, which may be subscribed for and
purchased hereunder and if there shall be any balance of such shares not so
transferred, there shall be issued in the name of the registered holder of this
Warrant, a new Warrant or Warrants of like tenor and date representing in the
aggregate the right to subscribe for and purchase the balance of the number of
shares which may be subscribed for and purchased hereunder.
4.3. If this Warrant shall be lost, stolen, mutilated or destroyed, the
Company may instruct the Warrant Agent, on such terms as to indemnify or
otherwise as the Company may in its discretion impose, to issue a new Warrant of
like denomination, tenor and date as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.
4.4. The Company and any Warrant Agent may deem and treat the
registered holder of this Warrant as the absolute owner of this Warrant for all
purposes and shall not be affected by any notice to the contrary.
4.5. This Warrant shall not entitle the holder to any rights of a
stockholder of the Company, either at law or in equity, including, without
limitation, the right to vote, to receive dividends and other distributions, to
exercise any preemptive rights or to receive any notice of meetings of
stockholders or of any other proceedings of the Company.
5
<PAGE> 6
4.6. This Warrant shall be governed by the laws of the State of
California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its corporate name by its duly authorized officer as of the day and year written
below.
Dated: ____________________
VISTA LASER CENTERS OF THE PACIFIC, INC.
By: ________________________________
President
Attest:
________________________________
[Assistant] Secretary
6
<PAGE> 7
TRANSFER OF WARRANT
For value received ____________________________________________ hereby sells,
assigns and transfers unto ________________________, the right to purchase
_______________ of the shares of Common Stock of VISTA LASER CENTERS OF THE
PACIFIC, INC., a Nevada corporation, which rights are represented by the within
Warrant, and does hereby irrevocably constitute and appoint
_____________________ attorney to transfer said rights on the books of the
within named Company, with full power of substitution in the premises.
Dated: ___________________, _____ _________________________________________
(Signature)
_________________________________________
Signature Guarantee
[Medallion Signature Guarantee]
- -------------------------------------------------------------------------------
ELECTION TO SUBSCRIBE
Date:_________________, _____
To: VISTA LASER CENTERS OF THE PACIFIC, INC.: The undersigned hereby subscribes
for __________ of the shares of Common Stock covered by the within Warrant and
tenders payment herewith in the amount of $_______________ in accordance with
the terms thereof:
Deliver Stock Certificates(s)
[ ] [ ]
Issue Certificate(s) for said Stock by mail against
counter-receipt
TO: TO:
_________________________________ ___________________________________
(Name) (Name)
_________________________________ ___________________________________
(Taxpayer Identification Number) (Street and Number)
_________________________________ ___________________________________
(Street and Number) City State ZIP Code
_________________________________
City State ZIP Code
and if said number of shares shall not be all of the shares covered by the
within Warrant, that a new Warrant for the balance of the shares remaining be
registered in the name of, and delivered, to the registered holder of this
Warrant certificate.
_________________________________ ___________________________________
(Signature of Registered Holder) Signature Guarantee
7
<PAGE> 1
EXHIBIT 10.11
LASER VISION CONSULTANTS, LLC
400 ESTUDILLO AVENUE, SUITE 208
SAN LEANDRO, CA 94577
May 9, 1996
Robert Griffin, M.D., President
Vista Laser Centers of the Pacific, Inc.
651 Fulton Ave.
Sacramento, CA 95825
Re: Letter of Intent
Dear Dr. Griffin,
This letter, when executed by all parties, will constitute a binding
letter of intent and an agreement in principle for the acquisition of
substantially all of the assets of Laser Vision Consultants, LLC, a California
limited liability company ("Laser Vision"), excluding accounts receivables and
cash on hand, by Vista Laser Centers of the Pacific, Inc, a Nevada corporation
("VLC-PAC").
The purpose of this letter is to set forth the principal terms and
conditions of our agreement with respect to the acquisition. Notwithstanding
anything to the contrary set forth in this letter, this acquisition is
conditioned upon the completion by VLC-Pac of an initial public offering of its
shares at least 30 days prior to December 31, 1996.
Acquisition. VLC-PAC shall acquire substantially all of the assets of
Laser Vision, excluding cash and accounts receivables (ie "Acquired Assets"),
for a purchase price of $607,105.00; this amount includes: (i) $100,000 paid in
capital by its members; (ii) market value of Laser effective May 1 of $482,105;
and (iii) purchase of exam and office equipment for $25,000. Such amount shall
be paid in one lump sum cash payment at the closing which shall take place no
later than 30 days after completion of the initial public offering of shares by
VLC-PAC (the "IPO"). Out of these proceeds Laser Vision will pay off all
liabilities encumbering the acquired assets. In the event that such closing does
not take place by December 31, 1996 and unless the parties agree otherwise in
writing, this agreement shall end and, other than an expressly set forth herein,
the parties shall have no further obligations hereunder.
The parties acknowledge and agree that more definitive agreements need
to be prepared setting forth with greater specificity all of the terms,
covenants, representations and conditions of our agreement with respect to the
acquisition. These agreements include, without limitation, an acquisition
agreement. The parties agree to complete these agreements in an expeditious
manner following the closing of the IPO so that the closing can take place no
later than 30 days after the closing of the IPO.
<PAGE> 2
Robert Griffin, M.D., President
May 9, 1996
Page 2
LEASE. Effective June 1,1996, and until the purchase of the Acquired
Assets, or in the event that the Acquired Assets are not purchased by December
31, 1996, for so long as the parties agree, VLC-PAC shall lease Summit Excimer
Laser owned and operated by Laser Vision and located at 15035 E. 14th Street,
San Leandro, California (the "Center"), in accordance with the terms hereof
which are further in a definitive lease (the "Lease"). Monthly lease payments
for Summit Excimer Laser will be $11,015.43 beginning 6/1/96 and continuing
until the acquisition of Laser Vision is completed. VLC-PAC shall further
sublease the premises at which the Center is located, on a triple net basis, and
pursuant to a sublease agreed upon by the parties, for a rental of $650.00 per
month, plus certain costs required to be paid by Laser Vision under the master
lease between Laser Vision and the San Leandro Surgery Center, plus $25.00 per
hour for the use of a technician provided by the San Leandro Surgery Center in
accordance with the master lease.
ADVERTISING AND LEADS. VLC-PAC shall be responsible for all advertising
for services to be provided by the Center on and after June 1, 1996 and so long
as this letter or the lease is in effect. All leads generated from patients
residing or working in Alameda, Contra Costa, and Stanislaus Counties and within
a 20 mile radius of the City of Sonora, California (the "Laser Vision Area"),
resulting from the advertising provided hereunder will be forwarded to Laser
Vision on an exclusive basis. This provision will survive the termination of
this letter agreement and the Lease.
INDEMNITY. Laser Vision agrees to indemnify, protect, defend and hold
VLC-PAC harmless from all claims, expenses, costs and liabilities, including
without limitation attorney fees, arising from any of Laser Vision's activities
prior to the leasing of the Center to VLC-PAC. VLC-PAC agrees to indemnify,
protect, defend and hold Laser Vision and its members harmless from all claims,
expenses, costs and liabilities, including without limitation attorney fees,
arising from any of the Center's activities following the leasing of the Center
to VLC-PAC.
ACCESS AND CONFIDENTIAL INFORMATION. Each party to the acquisition will
have the right to inspect all of the books and records of the other party prior
to the completion of the acquisition. Each party to this agreement agrees to
keep all of the proprietary information provided to that party by the other
party hereto confidential and further agrees to not use for its own or any other
person's benefit or disclose such information to third parties without the
consent of the party supplying the information, unless such party is legally
required to disclose such information. Unless otherwise agreed upon by the
parties, each of the parties agrees to maintain the confidentiality of the terms
of the transactions contemplated by this agreement.
TERMINATION AND NEGOTIATIONS WITH OTHERS. This agreement will terminate
upon the earlier to occur of (a) mutual agreement, (b) upon notice by a party of
the breach by the other party of any obligation set forth in this agreement or
(c) if the acquisition is not closed by December 31, 1996, unless the parties
agree to extend such date. During the period this agreement is in effect, Laser
Vision will not negotiate with any other party to sell the assets associated
with the Center and VLC-PAC shall not negotiate with any other party to acquire
by lease or otherwise, an excimer laser in the Laser Vision Area.
<PAGE> 3
Robert Griffin, M.D., President
May 9, 1996
Page 3
COMPLETE AGREEMENT. This letter is the complete agreement as of the
date hereof among the parties with respect to the subject matter of this
agreement and supersedes all prior discussions.
Please indicate your agreement with the foregoing by signing this
letter agreement below and returning a signed copy of this letter to me by
___________________, 1996. Once this letter is signed by all parties, it will be
deemed to be in effect and will bind all parties. Also once this agreement is
executed, the parties will enter into a definitive Lease and sublease
incorporating the relevant provisions hereof.
We look forward to hearing from you.
Very truly yours,
LASER VISION CONSULTANTS, LLC
By:_____________________________________ By:________________________________
Stephen G. Turner, M.D., Manager Mark R. Mandel, M.D., Manager
AGREED AND ACCEPTED
VISTA LASER CENTERS OF THE PACIFIC, INC.
By:_____________________________________
J. Robert Griffin, M.D., Chairman
and Chief Executive Officer
<PAGE> 1
EXHIBIT 10.12
VISTA LASER CENTERS OF THE PACIFIC, INC.
651 FULTON AVENUE
SACRAMENTO, CALIFORNIA 95825
May 9, 1996
J. Robert Griffin, President
Griffin & Reed Eye Care, Inc.
651 Fulton Avenue
Sacramento, CA 95825
Re: Agreement In Principle
Dear Dr. Griffin:
Reference is made to the past discussions between yourself representing
Griffin & Reed Eye Care, Inc. ("G&R") and myself representing Vista Laser
Centers Of The Pacific, Inc. ("Pacific").
This letter agreement when executed by all parties, will constitute a
binding agreement in principal for: (i) the acquisition by Pacific from G&R of a
VISX Star excimer laser (the "Laser"); (ii) the sublease from G&R of medical
office space by Pacific; (iii) the purchase by Pacific of certain tenant
improvements to the Center; (iv) the purchase by Pacific of certain office
furniture and inventory; and (v) reimbursement of certain employee costs.
The parties hereto acknowledge and agree that more definitive agreements
need to be prepared setting forth with greater specificity all of the terms,
covenants, representations and conditions of this agreement with respect to the
transactions described herein. These agreements include, without limitation, an
asset purchase agreement, a real estate sublease and an equipment lease
assignment and sublease. The parties agree to complete these agreements in an
expeditious manner following the execution of this agreement and in no event
more later than 30 days after the closing of the IPO.
1. ACQUISITION OF LASER. Pacific shall acquire and G&R shall sell all
rights, title and interest in the Laser, which are subject to an equipment loan
(the "Loan") from a local bank (the "Bank"), by Pacific paying to G&R the sum of
$52,500 (the "Laser Payment") and assuming the Loan obligations. The Laser
Payment shall be paid to G&R within 2 days of the execution of this agreement.
The assumption of the Loan shall commence on June 1, 1996 and after that date
Pacific shall bear all of the responsibilities, obligations and liabilities
stated in or arising under the Loan. The parties hereto understand that the
consent of the Bank to Pacific's assumption of the Loan will be required and
they agree to use their reasonable best efforts to persuade the Bank to permit
<PAGE> 2
J. ROBERT GRIFFIN
MAY 28, 1996
PAGE 2
the assumption of the Loan by Pacific. Pacific may also re- structure or
re-finance the Loan with the Bank's consent.
2. OFFICE SUBLEASE. Effective June 1, 1996 Pacific shall enter into a
sublease (the "Sublease") with an affiliate of G&R for approximately 620 square
feet of office space presently leased by G&R at 651 Fulton Avenue in Sacramento,
California (the "Center"), and this sublease shall provide for Pacific to pay
the landlord thereof the following monthly rent: $1.83 per square foot for full
service and all costs included. It is the parties' understanding that such a
sublease does not require the landlord's consent, but if such consent is
required, the parties shall use their reasonable best efforts to obtain that
consent as soon as possible.
3. CENTER IMPROVEMENTS. Pacific shall reimburse G&R for any and all costs
and expenses (approximately $37,000) incurred in remodeling or improving the
Center (the "Center") and thereby acquire G&R's interest in such lease
improvements. Pacific shall make such reimbursement to G&R upon the later of the
execution of this agreement or two days after verifiable invoices of such
expenses are provided to Pacific by G&R.
4. OTHER ASSETS PURCHASED. Pacific shall reimburse G&R for any and all
expenses (approximately $9,000) incurred in purchasing or remodeling of
furniture placed in the Center by G&R or previously ordered for delivery to the
Center (the "Furniture") and thereby acquire the Furniture from G&R. Pacific
shall reimburse G&R for all of its costs incurred in preparing and producing
various marketing material and advertising programs, including a Web site "WWW.
Nearsighted. Com" (for $3,000) and the telephone number "1-800-921-2020" (for
$5,000) and thereby acquire G&R's rights to these assets. Pacific shall make
such reimbursement to G&R for the Furniture and the marketing assets upon the
later of the execution of this agreement or two days after verifiable invoices
of such expenses are provided to Pacific by G&R.
5. INVENTORY. Pacific shall purchase from G&R all of the "Pillar Point"
laser cards and laser related medical supplies owned by G&R and located at the
Center on June 1, 1996 at G&R's costs therefor and thereby acquire such assets
from G&R. Pacific shall make such payment to G&R for these inventoried assets
two days after verifiable invoices of such asset costs are provided to Pacific
by G&R.
6. EMPLOYEES. Effective June 1, 1996, Pacific shall reimburse G&R for its
cost of providing such employees as deemed necessary by Pacific to operate the
Center for such hours as requested by Pacific. G&R costs shall include such
items as taxes, workmen's compensation insurance, health insurance and vacation
pay. G&R shall submit a detailed invoice to Pacific monthly for
<PAGE> 3
J. ROBERT GRIFFIN
MAY 28, 1996
PAGE 3
such employee costs and Pacific shall pay such invoice within five (5) days of
receipt and verification. G&R shall be responsible for the payment of all wages
to the employees, and all payroll taxes, workmen's compensation insurance and
any other employee related expenses to all applicable federal, state and local
governmental agencies.
7. ADVERTISING AND PATIENT LEADS. The Center will be serviced by G&R and
doctors affiliated with G&R in G&R's sole discretion. Pacific shall be
responsible for all costs and expenses of advertising for the medical services
to be rendered by G&R at the Center after June 1, 1996 and so long as this
agreement is in effect. All "leads" on potential patients in the Sacramento and
Stockton, California areas (the "Laser Vision Area") resulting from such Pacific
advertising will be forwarded to G&R on an exclusive basis for distribution
among the doctors servicing the Center.
8. INDEMNITY. G&R agrees to indemnify, protect, defend and hold Pacific
harmless from all claims, expenses, costs and liabilities, including without
limitation attorney fees, arising from any of G&R's activities prior to the
execution of this agreement. Pacific agrees to indemnify, protect, defend and
hold G&R harmless from all claims, expenses, costs and liabilities, including
without limitation attorney fees, arising from Pacific's activities prior to the
execution of this agreement.
9. ACCESS AND CONFIDENTIAL INFORMATION. Each party to this agreement will
have the right to inspect all of the books and records of the other party prior
to the completion of the transactions described herein. Each party to this
agreement agrees to keep all of the proprietary information provided to that
party by the other party hereto confidential and further agrees to not use such
information for its own or any other person's benefit or disclose such
information to third parties without the consent of the party supplying the
information, unless such party holding the confidential information is legally
required to disclose such information. Unless otherwise agreed upon by the
parties hereto, each of the parties hereto agrees to maintain the
confidentiality of the terms of the transactions contemplated by this agreement.
10. TERMINATION. This agreement will terminate upon the earlier to occur of
(a) the mutual written agreement of the parties hereto; (b) upon notice by a
party hereto of a breach by the other party of any obligation set forth in this
agreement; or (c) if the transactions described above are not closed by December
31, 1996, unless the parties agree to extend such date. Within 30 days after the
termination of this agreement, G&R shall pay to Pacific all sums paid to it by
Pacific pursuant to paragraphs 1, 2, 3, and 4 above, at which time Pacific shall
return to G&R all of the assets
<PAGE> 4
J. ROBERT GRIFFIN
MAY 28, 1996
PAGE 4
acquired pursuant to those paragraphs. G&R shall also purchase all inventoried
and ordered medical supplies and "Pillar Point" laser cards owned by Pacific on
December 31, 1996. G&R shall assume and become responsible for the Loan and
Sublease described in Paragraphs 1 and 2 above, respectively. In the event the
Loan and the Sublease are not assumable by G&R at that time, it shall pay to
Pacific the sums due under said Loan and Sublease 7 days before such sums are
due.
11. NEGOTIATIONS WITH OTHERS. During the term of this agreement G&R will
not negotiate with any other party to sell, lease or sublease its assets
described herein and Pacific will not negotiate with any other party to acquire,
lease or operate another excimer laser in the Laser Vision Area.
12. COMPLETE AGREEMENT. This letter agreement is the complete agreement as
of the date hereof among the parties with respect to the subject matter
described herein and reasonably related thereto and supersedes all prior
discussions, arrangements, understandings and agreements. This agreement may
only be changed, amended or modified by a written agreement executed by both
parties hereto.
Please indicate your agreement with the foregoing by signing this letter
agreement below and returning a signed copy to me as soon as possible. Once
signed by you this agreement will be deemed to be in effect and will bind both
parties. Once this agreement has been executed by you, both parties shall
commence to prepare the definitive documents discussed herein.
Very truly yours,
VISTA LASER CENTERS OF THE PACIFIC
By:____________________________________
David P. Bates III, President
Agreed To and Accepted.
GRIFFIN AND REED EYE CARE, INC
Date:_____________, 1996
By:____________________________________
J. Robert Griffin, President
<PAGE> 5
J. ROBERT GRIFFIN
MAY 28, 1996
PAGE 5
ADDENDUM
This addendum (the "Addendum") is dated effective as of June 1, 1996,
by and between Vista Laser Centers Of The Pacific, Inc. ("Vista") and Griffin
and Reed Eye Care, Inc. ("G&R").
WHEREAS, the parties hereto executed that certain letter agreement
dated May 9, 1996, concerning the purchase of certain assets by Vista from G&R
(the "Agreement").
NOW THEREFORE, the parties hereto amend the Agreement as follows:
1. Because Vista was unable to commence its advertising programs until
late June 1996, Vista shall not commence the sublease of the 620 square feet of
space at 651 Fulton Avenue in Sacramento, California until July 1, 1996, and G&R
shall pay no fees to Vista for using Vista's laser for vision correction
procedures during the month of June 1996.
2. The remainder of the terms of the Agreement shall remain unchanged.
VISTA LASER CENTERS OF
THE PACIFIC, INC.
By:_______________________________
David P. Bates III, President
GRIFFIN AND REED EYE CARE,INC.
By:________________________________
J. Robert Griffin, President
<PAGE> 1
EXHIBIT 10.13
VISTA LASER CENTERS OF THE PACIFIC, INC.
651 FULTON AVENUE
SACRAMENTO, CALIFORNIA 95825
May 30, 1996
Gary M. Kawesch, President
RK and Laser Eye Institute of California
4585 Stevens Creek Blvd., Number 100
Santa Clara, CA 95051
Re: Agreement In Principle
Dear Dr. Kawesch:
Reference is made to the past discussions between yourself representing RK
and Laser Eye Institute of California ("RKLE") and Eye Laser Associates, LLC
("ELA"), and myself representing Vista Laser Centers Of The Pacific, Inc.
("Pacific").
This letter agreement when executed by all parties, will constitute a
binding agreement in principal for: (i) the acquisition by Pacific from ELA of a
VISX Star excimer laser (the "Laser"); (ii) the sublease from RKLE of medical
office space by Pacific; (iii) the purchase by Pacific from RKLE of certain
tenant improvements to the Center; (iv) the purchase by Pacific from RKLE of
certain legal documents and research; and (v) reimbursement of certain employee
costs to RKLE.
The parties hereto acknowledge and agree that more definitive agreements
need to be prepared setting forth with greater specificity all of the terms,
covenants, representations and conditions of this agreement with respect to the
transactions described herein. These agreements include, without limitation, an
asset purchase agreement, a real estate sublease and an equipment lease
assignment and sublease. The parties agree to complete these agreements in an
expeditious manner following the execution of this agreement and in no event
more later than 30 days after the closing of Pacific's initial public offering
for not less than $3.0 Million in net offering proceeds (the "IPO").
1. ACQUISITION OF LASER.
(a) Pacific shall acquire and ELA shall sell all rights, title and interest
in the Laser, which are subject to an equipment
<PAGE> 2
GARY M. KAWESCH
MAY 30, 1996
PAGE 2
lease (the "Lease") with Hillside Financial International, LLC ("Hillside"), by
Pacific paying to ELA the sum of $52,500 (the "Laser Payment") and assuming the
Lease. The Laser Payment shall be paid to ELA within 2 days of the execution of
this agreement. The assumption of the Lease shall commence on June 1, 1996 and
after that date Pacific shall bear all of the responsibilities, obligations and
liabilities stated in or arising under the Lease. The parties hereto understand
that the consent of Hillside to Pacific's assumption of the Lease will be
required and they agree to use their reasonable best efforts to persuade
Hillside to permit the assumption of the Lease by Pacific. Pacific shall also
use its best efforts to persuade Hillside to release RKLE from its guaranty of
and the User Agreement under the Lease. Pacific may also restructure or
re-finance the Lease with Hillside's consent.
(b) In the event Hillside does not release RKLE from its guaranty of and
the User Agreement under the Lease and Pacific fails to make a payment required
under the Lease or breaches any other provision of the Lease, upon notice
thereof by Hillside to RKLE, RKLE shall be entitled to elect any of the
following with respect to any and all monies due to Pacific pursuant to its
services agreement for laser vision correction services provided by Pacific: (i)
to pay such sums directly to Hillside to reduce the amount owed under the Lease;
or (ii) to deposit such sums in an attorney's trust account or other reasonable
escrow account for future delivery to Hillside to reduce the amount owed under
the Lease or to Pacific upon its full payment of amounts due to Hillside.
(c) In the event Hillside does not release RKLE from its guaranty of and
the User Agreement under the Lease and Hillside gives Dr. Kawesch notice of
default under the Lease and demands payment therefor under the terms of the
guaranty, RKLE shall be entitled to: (i) terminate this agreement and all other
relationships with Pacific with no payment to Pacific, notwithstanding paragraph
9 hereof; (ii) obtain ownership and possession of the Laser, including without
limitation any and all improvements thereof at no cost, and assume the remaining
payments and all other remaining obligations under the Lease; and (iii)
terminate the Sublease (defined below) with Pacific.
2. OFFICE SUBLEASE. Effective June 1, 1996 Pacific shall enter into a
sublease (the "Sublease") with RKLE for approximately 4,000 square feet of
office space presently leased by RKLE on Winchester Boulevard in San Jose,
California (the "Center"), and this sublease shall provide for Pacific to pay
the landlord thereof the following monthly rent: $1.25 per square foot plus the
square footage allocation of the landlord's "triple net" (taxes, insurance and
utilities) and all other costs and assessments applicable to
<PAGE> 3
GARY M. KAWESCH
MAY 30, 1996
PAGE 3
RKLE. It is the parties' understanding that such a sublease does not require the
landlord's consent, but if such consent is required, the parties shall use their
reasonable best efforts to obtain that consent as soon as possible.
In the event that RKLE (or Dr. Gary M. Kawesch, individually) shall acquire
full right title and interest in the land and building in which the Center is
located, Pacific agrees that the sublease may be terminated by said new landlord
and, within 30 days of such termination, Pacific shall execute a lease with said
new landlord at then fair market rates, but not less than the rental and charges
under the Sublease.
3. CENTER IMPROVEMENTS. Pacific shall reimburse RKLE (or Dr. Kawesch
individually) or pay the supplier or contractor directly for any and all costs
and expenses incurred in remodeling or improving the Center (the "Center") and
thereby acquire RKLE's interest in such lease improvements. Pacific shall make
such reimbursement to RKLE upon the later of the execution of this agreement or
two days after verifiable invoices of such expenses are provided to Pacific by
RKLE or the supplier or contractor thereof.
4. OTHER ASSETS PURCHASED. At the request of RKLE, Pacific shall reimburse
RKLE for all of the costs of preparing certain legal documents relating to a
contemplated relationship between RKLE and a group of optometrists (the
"Documents") presently estimated not to exceed $20,000 and thereby acquire the
Documents from RKLE; provided, however, that all copies of such documents and
all legal research previously delivered to RKLE and the optometrists are
delivered to Pacific. Pacific shall also pay to RKLE the sum of $8,000 and RKLE
shall grant to Pacific the right to make modifications to the infomercial
licensed to RKLE by Paul DeCorte Productions (the "Infomercial") and broadcast
the new Pacific infomercial in the licensed territory. Pacific shall make such
reimbursement to RKLE for the Documents and the payment for the Infomercial
modification rights upon the later of the execution of this agreement or two
days after verifiable invoices of expenses are provided to Pacific by RKLE.
5. EMPLOYEES. Effective June 1, 1996, Pacific shall reimburse RKLE for its
cost of providing such employees as deemed necessary by Pacific to operate the
Center for such hours as requested by Pacific. RKLE costs shall include such
items as taxes, workmen's compensation insurance, health insurance and vacation
pay. RKLE shall submit a detailed invoice to Pacific monthly for such employee
costs and Pacific shall pay such invoice within five (5) days of receipt and
verification. RKLE shall be responsible for
<PAGE> 4
GARY M. KAWESCH
MAY 30, 1996
PAGE 4
the payment of all wages to the employees, and all payroll taxes, workmen's
compensation insurance and any other employee related expenses to all applicable
federal, state and local governmental agencies.
6. ADVERTISING AND PATIENT LEADS. Pacific shall be responsible for all
costs and expenses of advertising for the medical services to be rendered by
RKLE at the Center after June 1, 1996 and so long as this agreement is in
effect. Pacific shall expend a minimum of $1,000,000 in the 12 month period
commencing with July 1, 1996 on advertising and marketing in the northern
California market, including Santa Clara and San Mateo counties, the PRK and
other advanced laser correction services available at its centers . All "leads"
on potential patients residing or working in Santa Clara County, California and
in San Mateo County, California south of Foster City (the "Laser Vision Area")
resulting from such Pacific advertising and marketing will be forwarded to RKLE
on an exclusive basis. RKLE shall retain the right to broadcast its own Paul
DeCorte informercial at its own expense, but only in broadcasts targeted for the
Laser Vision Area hereinabove described.
7. INDEMNITY. RKLE agrees to indemnify, protect, defend and hold Pacific
harmless from all claims, expenses, costs and liabilities, including without
limitation attorney fees, arising from any of RKLE's activities prior to the
execution of this agreement. Pacific agrees to indemnify, protect, defend and
hold RKLE harmless from all claims, expenses, costs and liabilities, including
without limitation attorney fees, arising from Pacific's activities prior to the
execution of this agreement.
8. CONFIDENTIAL INFORMATION. Each party to this agreement agrees to keep
all of the proprietary information provided to that party by the other party
hereto confidential and further agrees to not use such information for its own
or any other person's benefit or disclose such information to third parties
without the consent of the party supplying the information, unless such party
holding the confidential information is legally required to disclose such
information. Unless otherwise agreed upon by the parties hereto, each of the
parties hereto agrees to maintain the confidentiality of the terms of the
transactions contemplated by this agreement.
9. DIRECTORSHIP OF PACIFIC. During the term of this agreement and after the
closing of the IPO, upon the request of Dr. Kawesch Pacific shall nominate him
as one of its nominees for election to Pacific's Board of Directors and Pacific
shall vote all of the shares for which it (or any of its officers or Directors)
is named a proxy of a shareholder, including the 500,000 shares of Pacific
Series B Preferred Stock owned by Vista Technologies Inc.
<PAGE> 5
GARY M. KAWESCH
MAY 30, 1996
PAGE 5
(the "Proxy Shares"), in favor of Dr. Kawesch's election as a Director of
Pacific. Further, Pacific shall vote all of the Proxy Shares against the removal
of Dr. Kawesch as a Director, in the event such action is proposed for a vote of
Pacific's shareholders.
10. TERMINATION. This agreement will terminate upon the earlier to occur of
(a) the mutual written agreement of the parties hereto; (b) upon notice by a
party hereto of a breach by the other party of any obligation set forth in this
agreement; or (c) if the IPO is not closed by December 31, 1996, unless the
parties agree to extend such date. Within 30 days after the termination of this
agreement, RKLE shall pay to Pacific all sums paid to it (or Dr. Kawesch
individually) by Pacific pursuant to paragraphs 3 and 4 above (but not
paragraphs 1 and 2), at which time Pacific shall return to RKLE all of the
assets acquired pursuant to those paragraphs and RKLE shall assume and become
solely responsible for the Lease and Sublease described in Paragraphs 1 and 2
above, respectively. In the event the Lease and the Sublease are not assumable
by RKLE at that time, it shall pay to Pacific the sums due under said Lease and
Sublease 7 days before such sums are due.
11. NEGOTIATIONS WITH OTHERS. During the term of this agreement ELA and
RKLE will not negotiate with any other party to sell, lease or sublease their
respective assets described herein and Pacific will not negotiate with any other
party to acquire, lease or operate another excimer laser in the Laser Vision
Area.
12. COMPLIANCE WITH CALIFORNIA LAW. All of the terms of this agreement and
all of the other presently contemplated relationships of Pacific to RKLE and to
Dr. Kawesch shall be in compliance with acceptable California law or this
agreement shall be null and void. Pacific shall reasonably demonstrate such
compliance with California law to RKLE before the closing of the IPO.
13. COMPLETE AGREEMENT. This letter agreement is the complete agreement as
of the date hereof among the parties with respect to the subject matter
described herein and reasonably related thereto and supersedes all prior
discussions, arrangements, understandings and agreements. This agreement may
only be changed, amended or modified by a written agreement executed by both
parties hereto.
[Signature Page Follows]
<PAGE> 6
GARY M. KAWESCH
MAY 30, 1996
PAGE 6
Please indicate your agreement with the foregoing by signing this letter
agreement below and returning a signed copy to me as soon as possible. Once
signed by you this agreement will be deemed to be in effect and will bind both
parties. Once this agreement has been executed by you, both parties shall
commence to prepare the definitive documents discussed herein.
Very truly yours,
VISTA LASER CENTERS OF THE PACIFIC
By:____________________________________
David P. Bates III, President
Agreed To and Accepted.
Date:_____________, 1996
RK AND LASER EYE INSTITUTE OF CALIFORNIA
By:____________________________________
Gary M. Kawesch, President
EYE LASER ASSOCIATES, LLC
By:____________________________________
Gary M. Kawesch, Managing Member
<PAGE> 1
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated effective as of May
1, 1996, is entered into between VISTA LASER CENTERS OF THE PACIFIC, INC.
(VLC-PAC) (the "Employer"), and DAVID P. BATES III (the "Employee") in reference
to the following facts:
R E C I T A L S:
A. Employer owns and operates centers which provide refractive eye
surgery to patients on an outpatient basis (the "Centers").
B. Employee has extensive experience in connection with the management
of outpatient medical offices, and specifically those devoted to the treatment
of diseases of the eye.
C. The parties desire that Employee act as President and Chief
Operating Officer of Employer, and generally to manage operations of the
Centers, pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereby agree as follows:
1. EMPLOYMENT.
1.1 DUTIES. The Employer hereby employs Employee and Employee
agrees to provide services to Employer as an employee upon the terms and
conditions set forth in this Agreement Employee shall serve as the President and
Chief Operating Officer of Employer. Employee shall do and perform all such
services, acts and duties as are customary for his position. Employee shall
additionally provide such services as the Chairman and Chief Executive Officer
of the Employer may reasonably assign him from time to time.
1.2 LOYALTY. Employee shall at all times be loyal to the
interests of Employer, and he shall not be involved in or take any action or
actions, either directly to indirectly, which would be detrimental to Employer
or its business or properties, including without limitation: (1) during the term
of employment hereunder, competing in any way with Employer; (2) during the term
of employment hereunder, rendering any assistance or cooperating with, or
engaging in any employment relationship with, or obtaining or maintaining any
ownership interest in, any competitor of Employer; or (3) whether during or
after the term of his employment hereunder, disclosing to anyone, other than an
authorized employee or director of Employer, or making use of, other than in the
proper conduct of his duties as an employee hereunder, any trade secrets or
proprietary or confidential information of the Employer, except as disclosure
may be required by law or legal process (provided, however, Employee shall give
notice to Employer before making any disclosure Employee believes is required by
law or legal process in order to afford Employer a reasonable opportunity to
object to such disclosure and to seek injunctive relief in connection
therewith). Upon termination of his employment hereunder by Employer, Employee
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<PAGE> 2
agrees to promptly deliver to Employer all of its records and confidential
information which is in his possession and control.
1.3 AUTHORITY. Employee's authority to act on behalf of the
Employer and to bind the Employer shall be subject to any relevant provisions of
the Employer By-Laws, as amended from time to time.
1.4 FIDELITY BOND. Employee's continued employment by Employer
is conditioned on Employee's continuing eligibility for a fidelity bond. If
Employee becomes ineligible for a fidelity bond, The Employer shall have the
right to terminate Employee's employment immediately with cause.
2. COMPENSATION. For all services rendered by Employee in any capacity
hereunder during the term of this Agreement, the Employer shall pay Employee
compensation determined as follows:
2.1 BASE COMPENSATION. The Employer shall pay Employee base
compensation equal to $110,000 per year (paid bi-weekly) during the term of this
Agreement.
2.2 ADDITIONAL COMPENSATION. Employee shall also be entitled
to receive a year end bonus equal to 50% of base compensation. The year end
bonus will be based on accomplishment of specific goals established by Employer
within the first 60 days of each year of employment.
2.3 STOCK OPTIONS. Employee will be granted stock options for
50,000 shares of VLC-PAC stock on the exact terms as those options granted to
the Chairman and Chief Executive Officer of Employer.
2.4 FRINGE BENEFITS. Employee shall be entitled to receive the
fringe benefits extended to all other full time employees of the Employer.
Fringe benefits may include paid vacation, disability insurance, health
insurance, etc.
2.5 SEVERANCE BENEFIT. Upon termination of Employee's
employment for any reason other than pursuant to Paragraphs 5.1 or 5.3 of this
Agreement, Employee shall be entitled to receive compensation pursuant to
Paragraphs 2.1 and 2.2 above for a period of twelve months following Employee's
last day of employment.
3. TERM. The term of employment hereunder shall commence on May 1,
1996, and shall continue through May 1,1998 (the "Expiration Date"), and from
year to year thereafter, unless terminated earlier pursuant to Section 5 of this
Agreement.
4. EXPENSES. Employee shall be entitled to reimbursement for reasonable
expenses of travel and lodging incurred on behalf of the Employer in accordance
with the Employer's policy in effect at the time of the expenditure. Employee
shall be entitled to attend professional conferences only if approved by the
Employer. Employee shall be entitled to reasonable expenses in connection with
the attendance of such conference or conferences, as the case may be, including
but not limited to travel, lodging, and tuition.
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<PAGE> 3
5. TERMINATION.
5.1 EVENTS RESULTING IN TERMINATION. Employee's employment
shall terminate upon the occurrence of any of the following events:
5.1.1. The resignation, retirement, or death of the
Employee.
5.1.2. At the option of the Employer, upon the
disability of Employee, which disability continues for a period of more than 90
days from the date the disability commences. Employee shall be deemed to be
"disabled" if Employee is unable to perform substantially all of his duties
hereunder due to illness, accident, or injury, as determined by the Employer, in
his reasonable discretion.
5.2 NON-RENEWAL. This Agreement shall not be renewed if either
party provides the other party with prior written notice of such party's intent
not to renew this Agreement upon the Expiration Date or any anniversary thereof,
as the case may be, which written notice is given at least 30 days prior to the
Expiration Date or the anniversary thereof, as the case may be.
5.3 TERMINATION FOR CAUSE. Employer may at any time terminate
Employee's employment immediately upon notice for cause. For purposes of this
Agreement, "cause" shall be defined as: (1) a material failure to perform any of
the material obligations under this Agreement or any of the material
responsibilities of Employee to Employer, including without limitation conduct
injurious to the interest of Employer or failure in any substantial respect to
perform any reasonable and lawful executive or senior management duty assigned
to Employee by the Employer; (2) any illegal, immoral, or dishonest act or
omission by Employee which could result in damages to Employer; (3) intentional
nonperformance by Employee of any of his material duties to Employer; (4)
habitual neglect of duty; (5) commission by Employee of any serious criminal
act, fraud, or dishonesty, whether or not related to the performance of his
duties hereunder; or (6) inability for any reason to fully perform the material
obligations of Employee to Employer for a continuous period of 60 days.
5.4 COMPENSATION. Except as provided in Paragraph 2.5, upon
termination of Employee's employment, Employee shall be entitled to receive only
that compensation earned through the last full day worked by Employee. Further,
Employee shall be entitled to receive only those Employer-sponsored benefits to
which he was entitled on the date of such termination or, if such benefits are
determined on an annual basis, the pro rata portion of those benefits accrued
through the last day actually worked by Employee.
5.5 SURVIVAL OF CERTAIN PROVISIONS. Notwithstanding the
termination of Employee's employment, the parties shall be required to carry out
any provisions hereof which contemplate performance by them subsequent to
termination; nor shall such termination affect any liability or obligation which
shall have accrued prior to such termination, including but not limited to any
liability for loss or damage on account of default.
6. MISCELLANEOUS.
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6.1 APPLICABLE LAW. This Agreement shall be interpreted and
enforced pursuant to the laws of the State of California.
6.2 NOTICES. Any notice to be given hereunder by one party to
the other shall be deemed given upon personal delivery or two business days
after deposit in the United States mail, postage prepaid, first-class, addressed
to the party at the address below their signature. Each party may change the
address for such notice in accordance with this paragraph.
6.3 ENTIRE AGREEMENT AND AMENDMENT. This Agreement supersedes
all other agreements, oral or written, between the parties with respect to
employment of Employee, and contains all of the covenants and agreements between
the parties with respect thereto. Each party to this Agreement acknowledges that
no representations, inducements, promises, or agreements, oral or otherwise,
shall be binding on any party, or anyone acting on behalf of any party, unless
expressly set forth herein. Any modification or amendment of this Agreement
shall be effective only if in writing and signed by both of the parties hereto.
6.4 SEVERABILITY. If any provision of this Agreement is held
to be or deemed to be unenforceable or invalid, the remaining portions shall
nevertheless continue in full force and effect.
6.5 WAIVER. The failure from time to time of the Employer to
require performance of any obligation hereunder shall in no way affect the
Employer's right to enforce any provision of this Agreement at a subsequent
time, and the waiver by the Employer of one breach hereof, shall not be
construed as waiver of any subsequent breach.
6.6 PARTIES BOUND. No right or rights hereunder may be
assigned without the prior written consent of the other party. This Agreement
shall inure to the benefit of and shall be binding upon the heirs, successors,
personal representatives and assigns of each of the parties hereto.
6.7 DISPUTE RESOLUTION. The parties shall attempt to settle
any controversy or claim arising out of or related to this Agreement, or the
breach thereof, including any dispute regarding the validity or scope of this
agreement, in an amicable manner by mediation under the Commercial Mediation
Rules of the American Arbitration Association. If the parties are unable to
resolve their disputes by mediation, the disputes shall be settled and decided
by one arbitrator pursuant to arbitration conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association ("Rules"),
as then in effect, unless the parties hereto mutually agree otherwise in
writing. Any such arbitration shall be held and conducted in Alameda County,
California, within 90 days of the appointment of the arbitrator, in accordance
with the provisions set forth in said Rules. The award rendered by the
arbitrator shall be final, and judgment may be entered upon it in accordance
with applicable law in any court having jurisdiction thereof. The demand for
arbitration shall be made within a reasonable time after the claim, dispute, or
other matter in question has arisen. In no event shall the demand for
arbitration be made after the date when institution of legal or equitable
proceedings based on such claim, dispute, or other matter in question would be
barred by the applicable statute of limitations. The prevailing party in any
arbitration hereunder shall be awarded reasonable counsel fees, expert and
non-expert witness costs and expenses, and all other costs and
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<PAGE> 5
expenses incurred directly or indirectly in connection with said arbitration
unless the arbitrator for good cause determines otherwise in his order, in which
event the prevailing party shall pay all of its own costs, expenses, and fees.
The provisions of Title 9 of Part 3 of the California Code of Civil Procedure,
including Section 1283.05 thereof permitting expanded discovery proceedings,
shall be applicable to all disputes or controversies which are arbitrated
pursuant to this Agreement.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first written above.
EMPLOYER EMPLOYEE:
VISTA LASER CENTERS OF THE PACIFIC, INC.
By:_________________________________________ ____________________________
J. ROBERT GRIFFIN, M.D. DAVID P. BATES III
Chairman and Chief Executive Officer
Address: Address:
651 Fulton Avenue 221 Masonic Drive
Sacramento, California 95825 Vallejo, California 94591
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<PAGE> 1
EXHIBIT 10.15
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (the "AGREEMENT") dated as of May 1, 1996, is
by and between:
VISTA LASER CENTERS OF THE PACIFIC, INC., a corporation incorporated
under the laws of the State of Nevada (herein called the "COMPANY");
and
GRIFFIN & REED EYE CARE, INC., a California corporation (herein called
"G&R"), which has access to the services of DR. J. ROBERT GRIFFIN, a
California resident (herein called the "PROFESSIONAL").
R E C I T A L S:
A. The Company, upon completion of an initial public offering of
securities by the Company generating at least $3,000,000 in net cash proceeds to
the Parent (the "IPO"), will own and manage outpatient surgical centers (the
"LVC CENTERS") providing facilities, equipment and various support services to
qualified ophthalmologists and optometrists for vision correction by use of
advanced laser technology, focusing in particular on laser vision correction of
common refractive disorders such as myopia, hyperopia and astigmatism;
B. G&R has the authority to contract to provide services of the
Professional and the Professional has substantial experience in vision
correction by use of advanced laser technology; and
C. The Company desires to obtain certain training and consulting
services of the Professional;
NOW, THEREFORE, the parties hereto covenant and agree as follows:
1. CERTAIN DEFINITIONS. For the purposes of this Agreement, the
following capitalized terms are defined as follows:
"LASER PROCEDURES" shall mean surgical procedures for vision correction
and related patient eye care treatment by use of laser equipment including,
without limitation, photorefractive keratectomy ("PRK"), laser assisted in situ
keratomileusis ("LASIK"), phototherapeutic keratectomy ("PTK"), laser
thermalkeratoplasty ("LTK") and laser sclerostomy ("LS").
"MDS" shall mean duly licensed ophthalmologists designated by the
Company
<PAGE> 2
to receive training in Laser Procedures.
"ODS" shall mean duly licensed optometrists designated by the Company
to receive training in Laser Procedures.
"LVC PATIENT TREATMENTS" shall mean, collectively, Procedures, Re-Op
Procedures, Post-Op Care and any other vision eye care services rendered for
patients by licensed MDs and ODs. A "PROCEDURE" shall mean a refractive surgical
procedure for treatment of a patient's eye (bilateral treatment of both eyes
shall be considered two Procedures for purposes hereof). A "RE-OP PROCEDURE"
shall mean a Procedure for treatment of a patient's eye required to correct or
adjust a previous Procedure as to the same eye. For the purposes hereof, a
Procedure for a single eye and any related Re- Op Procedure arising as a result
of such Procedure shall all be considered one LVC Patient Treatment. "POST-OP
CARE" shall mean post-operative care performed with respect to Procedures and
Re-Op Procedures.
2. ENGAGEMENT OF CONSULTANT. The Company hereby engages G&R to provide
the services of the Professional to the Company in the following capacities, and
the Professional hereby accepts such engagement:
(a) Commencing as of approximately May 1, 1996, G&R consents to the
Professional's appointment as the Chairman of the Board of the Company's Board
of Directors and to being named in that capacity in the Company's registration
statement for its IPO. G&R will cause the Professional to devote such time as is
reasonably required by the Company and acceptable to G&R for the Professional to
conduct his duties as Chairman of the Board including, in such capacity,
attendance and participation in: (i) meetings of the Company's Board of
Directors; (ii) presentations from time to time to groups of prospective MDs and
ODs; and (iii) seminars with prospective investor groups in connection with
capital formation and promotional programs of the Company. The Company agrees to
use its best efforts to schedule such meetings, presentations and seminars at
mutually convenient times and places to insure that such employment services
shall not conflict with professional service obligations of the Professional to
his patients or other professional commitments of the Professional.
(b) During the term of this Agreement, G&R agrees to cause the
Professional to assume responsibility for managing the Company's program for,
and to also conduct and participate in, training and education seminars for MDs
and ODs in the use and performance of Laser Procedures for vision correction and
treatment. Such services shall be rendered by the Professional at mutually
convenient times and places, and shall not conflict with professional service
obligations of the Professional to his patients or his other professional
commitments.
The Professional will recommend standards, for review and
approval by
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the Company's Board of Directors with the advise and consent of the Company's
Medical Advisory Board, to establish a program of credentialing MDs and ODs in
various aspects of Laser Procedures and LVC Patient Treatments. The parties
contemplate that full accreditation will occur only for MDs and ODs who achieve
and maintain levels of professional care, continuing education and frequent
practice necessary to demonstrate professional competence in rendering LVC
Patient Treatments in accordance with standards established by the Company's
Medical Advisory Board or the Executive Committee thereof designed to assure
that such MDs and ODs attain levels of professional competence and excellence.
(c) Following the completion of the IPO, G&R agrees to cause the
Professional to render professional consulting services to the Company
concerning the establishment of ethical standards and procedures for Laser
Procedures at the Company's LVC Centers, provided that such services shall not
conflict with professional service obligations of the Professional to his
patients or his other professional commitments.
G&R and the Professional hereby accept such engagement, all subject to the terms
and conditions set forth in this Agreement. G&R represents and warrants that at
all times during the term of this Agreement, the Professional will own a portion
of the issued and outstanding capital stock of G&R.
3. COVENANTS AND AGREEMENTS OF THE COMPANY. Following the effective
date of the IPO and during the term of this Agreement, the Company covenants and
agrees as follows:
(a) to maintain a LVC Center in Sacramento, California meeting
all ethical and professional standards prescribed by the Company's Medical
Advisory Board, and complying with all standards required by applicable laws and
regulations, equipped with state-of-the-art equipment appropriate for LVC Care.
(b) to establish and maintain, as soon as a determination to
do so is made by the Company's Board of Directors, at least two additional LVC
Centers in California meeting all ethical and professional standards prescribed
by the Company's Medical Advisory Board, and complying with all standards
required by applicable laws and regulations, equipped with state-of-the art
laser equipment to perform Laser Procedures permitted for commercial use in the
jurisdiction in which such LVC Center is located.
(c) to establish a Medical Advisory Board to the Company
consisting of ophthalmologists and optometrists who will meet and confer each
year at the American Academy of Ophthalmology annual meeting and at additional
meetings, if any, as may be called from time to time by the Executive Committee
of the Medical Advisory Board.
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<PAGE> 4
(d) to obtain and maintain (i) an officers' and directors'
errors and omissions insurance policy to insure individual officers and
directors against liabilities and expenses for their acts and omissions in such
capacities, and (ii) a professional medical errors and omissions insurance
policy to insure the Professional against liabilities and expenses for his acts
and omissions relating to the practice of medicine in connection with services
rendered hereunder.
The Executive Committee of the Company's Medical Advisory Board shall
consist of approximately five ophthalmologists, one of whom shall be the
Professional for the term of this employment agreement, and approximately five
optometrists who meet credential requirements established by the Board of
Directors with the advise and consent of the Company's Medical Advisory Board or
its Executive Committee. The Executive Committee shall also establish credential
requirements for ophthalmologist and optometrist members of the Company's
Medical Advisory Board, shall administer the Medical Advisory Board and shall
provide consulting services to the Company relating to the Company's business,
operations and facilities standards. The initial members of the Medical Advisory
Board will be appointed by the Company's Board of Directors, and shall be
compensated for their services as members of the Company's Medical Advisory
Board as determined in accordance with policies established from time to time by
the Company's Board of Directors in accordance with applicable laws and
regulations.
4. COMPENSATION.
4.1. In consideration of the services to be rendered by the
Professional hereunder, and subject to applicable laws, rules and regulations of
any entity or governing body of competent jurisdiction, the parties covenant and
agree that the Company shall pay G&R the following compensation during the term
of this Agreement:
(a) For the Professional's services as the Chairman of the
Board and related activities, cash compensation in the amount of $120,000 per
annum. Such compensation shall be paid at the rate of $10,000 per month on or
before the fifth day of each month for the balance of the term of this
Agreement, commencing with May 1996.
(b) As compensation for G&R's and the Professional's efforts
on behalf of the Company in its organization and formation since February 5,
1996, the sum of $30,000 cash upon the execution of this Agreement.
(c) G&R shall be paid a year-end bonus within 100 days of the
Company's fiscal year-end of up to 50% of the base compensation stated in
Section 4.1(a) above (maximum year-end bonus - $60,000). This year-end bonus
will be based upon the Professional or the Company achieving specific goals
related to the Company's business and operations as established by the Company's
Board of
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<PAGE> 5
Directors. The Company's Board of Directors shall establish and advise G&R of
these specific goals no later than June 30, 1996.
4.2. Nothing herein shall be deemed to preclude the Company from
awarding additional compensation or benefits to G&R during the term of this
Agreement, upon approval of Company's Board of Directors, whether in the form of
additional compensation, bonuses, fringe benefits, or otherwise.
4.3. G&R shall reimburse the Company for any penalties, fines and
damages levied by any state, federal or local taxing authority as a result of
the Company's paying G&R pursuant to this Agreement, instead of paying the
Professional as an employee.
5. SEVERABILITY AND AGREEMENT TO REFORM. The parties hereto agree that
the covenants and agreements contained in this Agreement shall be construed as
if the covenants and agreements are divided into separate and distinct covenants
in respect of each of the obligations of the parties hereunder. Nothing in this
Agreement is intended or shall be construed as requiring any act or agreement in
violation of law or of applicable rules and regulations of any entity or
governing body having competent jurisdiction of the subject matter, whether now
in effect or as the same may be amended or become effective during the term of
this Agreement. Should any provisions of this Agreement be determined to be
unenforceable, in violation of public policy, or contrary to applicable laws,
rules or regulations of any entity of governing body having competent
jurisdiction, the parties covenant and agree promptly to amend and reform this
Agreement for the purpose of deleting any such provisions and to substitute
therefor such alternative provisions for the purposes of implementing, to the
extent possible in compliance with applicable law, rules and regulations, (i)
either the intention of the parties in entering into this Agreement and the
economic relationships between them as originally contemplated herein, or (ii) a
fair and equitable adjustment of the remaining provisions of this Agreement to
compensate any party injured by the deletion of one or more portions of this
Agreement. Subject to the foregoing provisions of this paragraph in the event
any covenant or other provision contained in this Agreement shall be deemed to
be illegal, unenforceable or unreasonable by a court or other entity or
governing body of competent jurisdiction, such determination shall not affect
the enforceability of the remaining covenants and provisions of this Agreement,
all of which shall remain enforceable to the extent permitted by law.
6. TERM AND TERMINATION.
6.1. The initial term of this Agreement shall commence effective with
the execution and delivery of this Agreement by all parties hereto, and shall
continue for a period of two (2) years following the effective date of the IPO,
unless earlier terminated in accordance with the following provisions:
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<PAGE> 6
6.1.1. In the event the Company's IPO has not been
successfully completed on or before December 31, 1996, this Agreement may be
terminated by G&R at its sole discretion at any time thereafter upon written
notice to the Company. If this Agreement is terminated in accordance with this
Section 6.1.1, the parties shall be released from all obligations hereunder.
6.1.2. In the event the Company shall be in material breach of
any covenant or agreement on its part to be performed in this Agreement, this
Agreement may be terminated by G&R at his sole discretion at any time thereafter
upon thirty (30) days prior written notice to the Company unless such material
breach has been cured during such 30 day period of grace. The inability of the
Professional to render employment services by reason of force majeure shall not
be deemed a material breach unless the Company is unable to place its LVC Center
facilities in a condition suitable for the performance of employment services by
the Professional in keeping with high medical standards of professional care
within a reasonable period. Any such termination of this Agreement shall not
relieve the parties hereto of obligations incurred through the effective date of
termination.
6.1.3. In the event G&R or the Professional shall be in
material breach of any covenant or agreement on their part to be performed in
this Agreement, this Agreement may be terminated by the Company at any time
thereafter upon thirty (30) days prior written notice to G&R unless such
material breach has been cured during such 30 day period of grace. The inability
of the Professional to render employment services by reason of disability shall
not be deemed a material breach unless such inability is continuous for a period
of at least six (6) consecutive months. Any such termination of this Agreement
shall not relieve the parties hereto of obligations incurred through the
effective date of termination.
6.2. Upon the expiration of the initial term of this Agreement, this
Agreement shall be automatically renewed for successive periods of one (1) year
each unless any party hereto shall provide the other parties with written notice
of its intent to terminate this Agreement at least three (3) months prior to the
expiration of the then current term of this Agreement or any renewal thereof.
7. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered or
certified mail, postage prepaid, or by commercial overnight courier (such as
Federal Express, DHL, etc.) with written verification of receipt, to its last
known principal office or residence in the case of G&R or to its last known
principal office in the case of the Company.
8. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed by a waiver of any
subsequent breach.
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9. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California.
10. ASSIGNMENT. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
of the Company. G&R may assign all or any portion of the benefits of this
Agreement to any corporation beneficially owned by the Professional, but shall
not assign any of the Professional's duties under this Agreement since the
parties hereby agree such are personal and unique to the Professional.
11. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties as to the subject matter hereof. This Agreement may not be changed
orally but only by an agreement in writing signed by the party against whom
enforcement of any waiver, modification, extension or discharge is sought.
IN WITNESS WHEREOF, the parties have executed this Agreement, effective
as of the day first written above.
"G&R" GRIFFIN & REED EYE CARE, INC.
By:__________________________________________
Dr. J. Robert Griffin, President
"Professional" __________________________________________
Dr. J. ROBERT GRIFFIN
"Company" VISTA LASER CENTER OF THE PACIFIC, INC.
By:__________________________________________
David P. Bates, President
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<PAGE> 1
EXHIBIT 10.16
PLEASE RETURN TO HILLSIDE FINANCE INTERNATIONAL
WHEN RECORDED MAIL TO:
HILLSIDE FINANCE INTERNATIONAL, LLC
325 GEORGE HILL ROAD
LANCASTER, MA 01523 THIS SPACE FOR RECORDER'S USE
- -------------------------------------------------------------------
LANDLORD'S/MORTGAGEE'S WAIVER
This Landlord's/Mortgagee's Waiver ("Waiver") is entered into by
Hillside Finance International, LLC, ("LESSOR") and Eye Laser Associates.
("UNDERSIGNED")
This Waiver is entered into in light of the following mutually agreed
to facts:
WHEREAS, Eye Laser Associates, LLC, ("LESSEE") has entered into a
certain lease of real estate located at 4585 Steven Creek Blvd., Suite 100,
Santa Clara, CA 95051 ("PREMISES") a legal description of which is attached
hereto as Schedule A with Undersigned having an address at __________________
________________________________; and
WHEREAS, Lessor, pursuant to that certain Per Procedure Equipment Lease
dated as of _________________________, ("LEASE") and Annex A - Equipment
Schedule No. Kawesh-101 dated as of ________________________, between Lessor
and Lessee, personal property consisting of machinery and/or equipment,
including any and all present and future accessories, additions, upgrades,
attachments, repairs and replacement parts, all as more fully described in
Schedule B hereto or subsequent Schedules entered into between Lessor and
Lessee (all hereinafter collectively referred to as the "EQUIPMENT"), for the
better utilization of the Premises by the Lessee;
NOW THEREFORE, the Undersigned, in consideration of the Lessor's
leasing the Equipment to the Lessee, and in consideration of the benefit to the
Undersigned resulting from such better utilization of the Premises, and
intending to be legally bound, does hereby agree that:
1. Title to, ownership of, and the right to possession as provided in
the Lease, of the Equipment shall be and remain at all times in the Lessor, its
successors, and assigns, free of any claim or right of the Undersigned, its
successors and assigns. The Undersigned waives each and every right which it
now has, or may hereafter have, under the laws of any state, or by virtue of
the Lease between Undersigned and Lessee or any other instrument or agreement
now in effect or hereafter executed, to levy upon or distrain for rent in
arrears or in any manner to claim or assert ownership, possession or title to,
or to place a lien upon the Equipment.
2. The Equipment so leased by the Lessor to the Lessee under the Lease
or any renewal, extension or modification thereof, shall not, by reason of its
installation or being placed in or upon the Premises, be construed as real
property or as forming a part of any building thereon, but shall retain its
character as personal property and shall at all times be severable from the
Premises, and shall not be or be deemed a fixture by reason of being placed in
any such building or in any manner annexed,
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attached or connected to the Premises.
3. It is further agreed that Lessor or its assigns or agents may
enter the Premises at any time for the purpose of inspecting, preserving,
protecting, displaying, selling and/or removing the Equipment from the Premises
whenever Lessor feels it is necessary to do so to protect its interest and
without liability or accountability to the Undersigned.
4. Lessor may, without affecting the validity of this Agreement,
extend the times of payment of any indebtedness of Lessee to Lessor or alter the
performance of any of the terms and conditions of the Lease, without the
consent of the Undersigned and without giving notice to the Undersigned.
5. The Undersigned will notify any purchaser of the Premises, or any
part thereof, and any future mortgagee or other encumbrance holder with respect
to the Premises, or any part thereof, of the existence of this Waiver; and this
Waiver shall run with the land and shall be binding upon the successors and
assigns of the Undersigned and shall inure to the benefit of the successors and
assigns of the Lessor.
6. This instrument shall in all respects be governed by and construed
in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, we have executed this Landlord's/Mortgagee's Waiver
as of this ___ day of ____________, ____.
_________________________________
(Landlord/Mortgagee)
By: /s/ Gary Kawesh
---------------------------------
Title: Managing Member
---------------------------------
Eye Laser Associates
Gary Kawesh
--------------------------------
(Print Name)
State of )
) ss.
County of )
On ___________, before me, the undersigned, a notary public in and for said
State, personally appeared __________________________________, known to me (or
proved to me on the basis of satisfactory evidence ) to be person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature __________________(SEAL)
NOTARY PUBLIC
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SCHEDULE A
(LEGAL DESCRIPTION OF PREMISES)
3
<PAGE> 4
SCHEDULE B
One (1) VISX STAR Excimer Laser System including: 1) Excimer Laser System, 1)
Patient Chair, 1) Printer, 1) Accessory Kit, Installation, 2 Years Warranty,
10) Key Cards for PTK and 10) Vision Key Cards for PRK, TOGETHER WITH ALL
PARTS, ACCESSORIES, ATTACHMENTS, ACCESSIONS, ADDITIONS, REPLACEMENTS, AND
SUBSTITUTIONS THERETO AND THEREFORE., TOGETHER WITH ALL PARTS, ACCESSORIES,
ATTACHMENTS, ACCESSIONS, ADDITIONS, REPLACEMENTS, AND SUBSTITUTIONS THERETO,
AND THEREFOR
Delivery included
4
<PAGE> 5
Eye Laser Associates, LLC
4585 Steven Creek Blvd.
Suite 100
Santa Clara, CA 95051
Re: Notice of Assignment
Gentlemen:
Pursuant to the Per Procedure Lease No. Kawesh-101 the ("Lease"), between the
undersigned, as lessor ("Lessor"), and Eye Laser Associates, LLC as lessee
("Lessee"), Lessor leased to Lessee the equipment (the "Equipment") described
therein. Please be advised that Lessor has sold the Equipment to DVI CAPITAL
COMPANY ("Purchaser") and has assigned to Purchaser as of ___________________,
19____ all of the Lessor's rights under the Lease, but none of the obligations,
pursuant to a Purchase and Sale Agreement and Lease Assignment to be executed
between the parties. Lessor remains fully liable for all lessor obligations
under the Lease.
Please pay to Purchaser directly (or to any other party designated by Purchaser
in a notice delivered to you) all "rent" (as that term is used in the Lease)
payable under the Lease beginning on the Lease Commencement Date, as well as
all other sums payable under the Lease at any time (the "Rent") at the
following address:
DVI CAPITAL COMPANY
P.O. BOX 1312
DEPARTMENT 15092
NEWARK, NJ 07101-1213
By executing this letter, Lessee acknowledges and affirms (for the benefit of
Purchaser) as follows:
1. The Lease has been duly and validly executed and delivered by Lessee, is
the valid and binding obligation of Lessee, and is in full force and
effect.
2. No default or condition, which, with or without the passage of time, the
giving of notice or both, would constitute a default, exists under the
Lease by either Lessee or, to the best of Lessee's knowledge, Lessor.
3. The Lease term for the items of Equipment is 66 months, commencing on
the Lease Commencement Date as such term is defined in the Lease and
terminating _____________________________, 19____. There are 6 remaining
consecutive monthly rentals each payable in the amount $0 and 60
remaining consecutive minimum monthly rentals each payable in the amount
of $12,800.00 (plus all applicable taxes) beginning on the Lease
Commencement Date. Notwithstanding the foregoing, the terms of the Lease
provide that the minimum monthly rental in any month will only be paid
in such month to the extent that the number of procedures performed
multiplied by the Per Procedure Fee equals or exceeds such monthly
rental. If the number of procedures performed exceeds the Monthly
Target, then the rentals due in that month will exceed the minimum
monthly rental. If the number of procedures performed is less than the
Monthly Target, then the rentals due in that month will be less than the
minimum monthly rental.
4. The Equipment is in good working order and condition and is acceptable
for leasing under the Lease and is currently in the possession and
control of Lessee at: 4585 Steven Creek Blvd., Suite 100, Santa Clara,
CA 95051
5. There are no additional agreements between Lessee and Lessor relating to
the Equipment subject to the Lease.
6. Lessee consents to the assignment herein by Lessor and will remit and
deliver all rent directly to Purchaser at the address set forth above.
<PAGE> 6
7. Lessee by certified mail, will deliver all notices and other
communications, relating to any default or alleged default under the Lease, any
sublease or relocation of the Equipment or any other matter which could have a
material adverse effect on Purchaser's interest in the Equipment or the Lease,
given to or made by Lessee pursuant to the Lease to Purchaser at the following
address: 6611 Rockside Road, Suite 110, Independence, OH 44131, Attn: Portfolio
Administration
8. Lessee will not enter into any agreement amending, modifying or
terminating the Lease without the prior written consent of Purchaser, and any
such attempted agreement shall be void.
9. Lessee will not assert against the Purchaser any defense, counterclaim
or offset that Lessee may have against Lessor or any other party.
10. Lessee acknowledges and agrees that only the copy of the Per Procedure
Lease Agreement stamped "Counterpart Number 1" constitutes chattel paper the
possession of which can perfect a security interest.
Please return this letter, when executed by Lessee, to the undersigned at the
address set forth herein.
Very truly yours,
Hillside Finance International LLC
By: __________________________________
Title: _______________________________
Acknowledged by:
Eye Laser Associates, LLC
By: /s/
__________________________________
Title: Managing Member
______________________________
Date: 3-28-96
_______________________________
<PAGE> 7
89193 IMPORTANT--READ INSTRUCTIONS ON BACK BEFORE FILLING OUT FORM
This FINANCING STATEMENT is presented for filing, and will remain
effective with certain exceptions for a period of five years from
the date of filing pursuant to section 9403 of the California
Uniform Commercial Code.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. DEBTOR (LAST NAME FIRST--IF AN INDIVIDUAL) 1A. SOCIAL SECURITY OR FEDERAL
Eye Laser Associates, LLC TAX NO.
- ------------------------------------------------------------------------------------------------------------------------------------
1B. MAILING ADDRESS 1C. CITY, STATE 1D. ZIP CODE
4585 Steven Creek Blvd, Suite 100 Santa Clara, CA 95051
- ------------------------------------------------------------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR (IF ANY) (LAST NAME FIRST--IF AN INDIVIDUAL) 2A. SOCIAL SECURITY OR FEDERAL
TAX NO.
- ------------------------------------------------------------------------------------------------------------------------------------
2B. MAILING ADDRESS 2C. CITY, STATE 2D. ZIP CODE
- ------------------------------------------------------------------------------------------------------------------------------------
3. DEBTOR'S TRADE NAMES OR STYLES (IF ANY) 3A. FEDERAL TAX NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
4. SECURED PARTY 4A. SOCIAL SECURITY NO., FEDERAL
NAME Hillside Finance International, LLC TAX NO. OR BANK TRANSIT
MAILING ADDRESS 325 George Hill Road AND A.B.A. NO.
CITY Lancaster, STATE MA ZIP CODE 01523 04,3293183
- ------------------------------------------------------------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY (IF ANY) 5A. SOCIAL SECURITY NO., FEDERAL
NAME TAX NO. OR BANK TRANSIT
MAILING ADDRESS AND A.B.A. NO.
CITY STATE ZIP CODE
- ------------------------------------------------------------------------------------------------------------------------------------
6. This FINANCING STATEMENT covers the following types or items of property (INCLUDE DESCRIPTION OF REAL PROPERTY ON WHICH LOCATED
AND OWNER OF RECORD WHEN REQUIRED BY INSTRUCTION 4).
SEE ATTACHED SCHEDULE
- ------------------------------------------------------------------------------------------------------------------------------------
7. CHECK /X/ 7A. / / PRODUCTS OF COLLATERAL 7B. DEBTOR(S) SIGNATURE NOT REQUIRED IN ACCORDANCE WITH
IF APPLICABLE ARE ALSO COVERED INSTRUCTION 5(a) ITEM:
/ / (1) / / (2) / / (3) / / (4)
- ------------------------------------------------------------------------------------------------------------------------------------
8. CHECK /X/ / / DEBTOR IS A "TRANSMITTING UTILITY"
IF APPLICABLE IN ACCORDANCE WITH UCC SEC. 9105 (1)(n)
- ------------------------------------------------------------------------------------------------------------------------------------
9. DATE: C 10. THIS SPACE FOR USE OF FILING OFFICER
/s/ 3-28-96 O (DATE, TIME, FILE NUMBER AND FILING
SIGNATURE(S) OF DEBTOR(S) D OFFICER)
- -------------------------------------------------------------------------------- E
/s/ 1
TYPE OR PRINT NAME(S) OF DEBTOR(S) 2
- -------------------------------------------------------------------------------- 3
4
SIGNATURE(S) OF SECURED PARTY(IES) 5
- -------------------------------------------------------------------------------- 6
7
TYPE OR PRINT NAME(S) OF SECURED PARTY(IES) 8
================================================================================ 9
11. Return copy to: 0
NAME
ADDRESS
CITY
STATE
ZIP CODE
================================================================================
FORM UCC-1--
APPROVED BY THE SECRETARY OF STATE
</TABLE>
<PAGE> 8
ANNEX A TO LEASE: Kawesh-101
EQUIPMENT SCHEDULE: Kawesh-101
Certain Terms and Provisions
LESSEE:
Full Legal Name: Eye Laser Associates, LLC
Billing and Notice Address: 4585 Steven Creek Blvd.
Suite 100
Santa Clara, CA 95051
Fed. Tax I.D.:
Send Invoice to Attention of: _____________________________
EQUIPMENT: The equipment described on Schedule I to this Annex A -
Equipment Schedule Kawesh-101.
EQUIPMENT LOCATION: 4585 Steven Creek Blvd.
Suite 100
Santa Clara, CA 95051
INTERIM TERM: The period commencing on the Lease Commencement Date and
ending on, and including 180 days thereafter.
BASE TERM COMMENCEMENT DATE: If there is an Interim Term, the Base Term
Commencement Date shall be the day immediately
following the last day of the Interim Term. If
there is no Interim Term, the Base Term
Commencement Date shall be the Lease
Commencement Date.
BASE TERM: The period commencing on the Base Term Commencement Date and
ending on, and including, the 60 monthly anniversary of the Base
Term Commencement Date.
LEASE COMMENCEMENT DATE:
PER PROCEDURE FEE: $256.00
PER PROCEDURE USE TAX: 0
MONTHLY TARGET: 50.
TOTAL REQUIRED RENT: $768,000.00 (The product of the Per Procedure Fee times
the Monthly Target times the total number of Monthly
Payment Periods in the Base Term).
RENT FOR INTERIM TERM: $0
LESSOR'S ADDRESS FOR NOTICES: Hillside Finance International, LLC
325 George Hill Road
Lancaster, MA 01523
GUARANTOR:
THIS COUNTERPART [IS____/IS NOT____] THE ORIGINAL CHATTEL PAPER COUNTERPART
(Check whichever is applicable).
1
<PAGE> 9
SCHEDULE 1
TO
EQUIPMENT SCHEDULE NO. KAWESH-101
One (1) VISX STAR Excimer Laser System including: 1) Excimer Laser System, 1)
Patient Chair, 1) Printer, 1) Accessory Kit, Installation, 1 Year Warranty, 10)
Key Cards for PTK and 10) Vision Key Cards for PRK, TOGETHER WITH ALL PARTS,
ACCESSORIES, ATTACHMENTS, ACCESSIONS, ADDITIONS, REPLACEMENTS, AND SUBSTITUTIONS
THERETO AND THEREFORE., TOGETHER WITH ALL PARTS, ACCESSORIES, ATTACHMENTS,
ACCESSIONS, ADDITIONS, REPLACEMENTS, AND SUBSTITUTIONS THERETO AND THEREFOR.
Eye Laser Associates, LLC
(Lessee)
By: /s/ Gary Kawesh
-------------------------
Title: Managing Member
------------------------
Gary Kawesh
------------------------
(Print Name)
<PAGE> 10
Lease Number: Kawesh-101
PER PROCEDURE LEASE AGREEMENT
This PER PROCEDURE LEASE AGREEMENT, dated as of the date set forth
below the signature hereto of Lessor (this "Lease"), is between Hillside
Finance International LLC, as lessor ("Lessor"), and the lessee identified in
Annex A ("Lessee").
In consideration of the mutual agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree
as follows:
1. DEFINITIONS: The terms "Equipment", "Equipment Location", "Interim
Term", "Base Term", "Base Term commencement Date", "Per Procedure Fee",
"Monthly Target" and "Total Required Rent" shall have the meanings specified in
Annex A. Certain other terms are defined in the body of this Lease. The
following terms shall have the following meanings:
"Business Day" shall mean any day other than a Saturday or Sunday or
any other day on which banks located in New York, New York are legally
authorized to be closed.
"Delivery and Acceptance Certificate" shall mean a delivery and
acceptance certificate relating to the Equipment and executed by Lessee, in
substantially the form attached hereto as Annex B.
"Lease Commencement Date" shall mean the date as of which Lessee shall
have executed the Delivery and Acceptance Certificate pursuant to Section 2 or
such other date as set forth in Annex A.
"Monthly Payment Period"" shall mean the successive monthly periods
during the Base Term beginning, in each case, immediately following the end of
the next preceding Monthly Payment Period (or, in the case of the first
Monthly Payment Period, on the Base Term Commencement Date) and ending in the
next succeeding month on the same day (or, if there is no same day, the last
day) of such month as the day of the month on which the Base Term Commencement
Date occurs.
"Procedure" shall mean a single use of the Equipment for a corrective
eye surgery procedure.
"Rent" shall mean, for the Base Term, all amounts payable by Lessee
pursuant to Section 3(a), for any Renewal Term, the Rent payable by Lessee for
such Renewal Term as determined pursuant to Section 10, and for the Interim
Term, the Rent, if any, so specified in Annex A.
"Semiannual Payment Period" shall mean the period comprised of the
first six Monthly Payment Periods and each successive period thereafter of six
consecutive Monthly Payment Periods during the Base Term.
"Term" shall mean the Interim Term, if any, the Base Term and, if this
Lease shall have been renewed pursuant to Section 10 for one or more Renewal
Terms, all such Renewal Terms.
"User" shall mean each user of the Equipment for one or more Procedures.
1
<PAGE> 11
"User Agreement" shall mean a user agreement with respect to the Equipment
between Lessee and a User.
The terms "hereof", "herein", "hereunder" and comparable terms refer to
this Lease as a whole and not to a particular section, subsection, paragraph or
other subdivision hereof.
2. ACCEPTANCE AND LEASE OF EQUIPMENT. Promptly after delivery of the
Equipment to Lessee at the Equipment Location, Lessee shall execute and deliver
to Lessor the Delivery and Acceptance Certificate. Lessee agrees that effective
upon such execution and delivery all of the certifications and acknowledgements
of Lessee contained therein are incorporated herein by reference as if fully set
forth herein.
Lessor hereby agrees to lease to Lessee hereunder, and Lessee hereby agrees
to lease from Lessor hereunder, the Equipment for the Term.
3. RENT: (a) As Rent for the Equipment during the Base Term, Lessee shall
pay to Lessor the amounts set forth below, such payments to be made at the times
and in the manner specified below:
(i) For each Monthly Payment Period Lessee shall pay to Lessor an amount
equal to the Per Procedure Fee times the number of Procedures performed during
such Monthly Payment Period.
(ii) For each Semiannual Payment Period, Lessee shall pay to Lessor (in
addition to all amounts payable pursuant to paragraph (i) above) an amount equal
to the excess, if any, of (1) the product of the Monthly Target times the Per
Procedure Fee times the total number of Monthly Payment Periods elapsed from the
Base Term Commencement Date through the end of such Semiannual Payment Period
over (2) the sum of (x) the total amount of Rent payable pursuant to paragraph
(a)(i) above for all Monthly Payment Periods elapsed from the Base Term
Commencement Date through the end of such Semiannual Payment Period plus (y) the
total amount of Rent payable pursuant to this paragraph (a)(ii) for all prior
Semiannual Payment Periods.
(iii) Notwithstanding the provisions of paragraphs (a)(i) and (a)(ii)
above, the aggregate amount of Rent payable by Lessee hereunder for the Base
Term pursuant to this paragraph (a) shall be the Total Required Rent. Lessee
shall not be required to make any payment of Rent under paragraph (a)(i) or
(a)(ii) above to the extent that the amount of such payment, when added to all
other Rent previously or concurrently paid by Lessee hereunder, shall exceed the
Total Required Rent.
(b) Within two Business Days after the end of each Monthly Payment Period,
Lessee shall inform Lessor as to the number of Procedures performed during such
Monthly Payment Period, together with such information with respect thereto as
Lessor shall have reasonably requested. Lessee hereby authorizes Lessor to
obtain from the manufacturer of the Equipment and from any person entitled to
royalties for the use thereof information as to the number of key cards sold
with respect to the Equipment for any Monthly Payment Period. If Lessee fails to
provide Lessor information as to the number of Procedures for any Monthly
Payment Period as required above, such number may be estimated by Lessor. Upon
such information becoming available to Lessor, Lessor shall invoice Lessee for,
and Lessee shall forthwith pay to Lessor, any resulting underpayment of Rent,
and Lessor shall reflect any resulting overpayment of Rent as a credit in
Lessor's next monthly invoice to Lessee.
(c) Lessor shall invoice Lessee for Rent payable pursuant to paragraphs
(a)(i) and (a)(ii) above. Lessee agrees to make each payment of Rent, in the
manner specified by
2
<PAGE> 12
Lessor, not later than the fifth Business Day after the date of the invoice
therefor.
(d) Rent for the Equipment for any Renewal Term shall be payable in
the amounts and at the times determined pursuant to Section 10. Rent, if any,
for the Interim Term shall be payable in the amounts and at the times specified
in Annex A.
(e) The obligation of Lessee to pay Rent hereunder shall be absolute
and unconditional and shall not be affected by any circumstance of any
character, including, without limitation: (1) any counterclaim, setoff,
recoupment, interruption, deduction, defense, abatement, suspension, deferment,
diminution or reduction; (2) any defect in the condition, design, quality,
operation or fitness for use or purpose of the Equipment; (3) any damage to,
removal, abandonment, salvage, loss, scrapping or destruction of, or any
requisition or taking of, the Equipment, or any part thereof or interest
therein; (4) any restriction, prevention, interruption or curtailment of or
interference with any use, operation or possession of the Equipment, or any
part thereof or interest therein; (5) any defect in, or any lien or
encumbrance on title to, the Equipment; or (6) any other occurrence
whatsoever, whether similar or dissimilar to the foregoing. This Lease if NON
CANCELABLE.
(f) If, prior to or at the end of any Semiannual Payment Period, the
average number of Procedures per month performed during such Semiannual Payment
Period is less than the Monthly Target and an amount equal to or greater than
the Monthly Target times the Per Procedure Fee has become or is expected to
become payable pursuant to paragraph (a)(ii) above for such Semiannual Payment
Period, then Lessor may require Lessee to provide an explanation of (x) the
circumstances under which such average number of Procedures per months is less
than the Monthly Target and (y) the actions which have been taken to eliminate
such deficiency. Failing a suitable explanation or course of remedial action,
Lessor shall have the right to give notice to Lessee unilaterally amending the
definitions in this Lease of "Monthly Target" and "Per Procedure Fee" in order
to more accurately reflect Lessee's performance, provided that the product of
the Monthly Target times the Per Procedure Fee shall remain unchanged. Upon the
giving of such notice such definitions shall be amended as set forth therein,
effective as of the commencement of the Monthly Payment Period next following
the date of such notice.
4. SELECTION OF EQUIPMENT; DISCLAIMER OF WARRANTY: Lessee has
selected the Equipment and the supplier or manufacturer from whom Lessor has
agreed to purchase the Equipment; Lessor is not the manufacturer of the
Equipment and Lessor is leasing the Equipment to Lessee "AS IS". LESSOR MAKES NO
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE IN CONNECTION WITH THIS LEASE OR AS TO THE
ABSENCE OF ANY PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT. Lessor transfers to
Lessee for the Term all warranties, if any, made by the manufacturer of the
Equipment.
LESSEE ALSO ACKNOWLEDGES THAT NEITHER THE SUPPLIER NOR ANY SALESMAN,
EMPLOYEE, REPRESENTATIVE OR AGENT OF THE SUPPLIER IS LESSOR'S AGENT OR
REPRESENTATIVE AND THAT NONE OF THEM IS AUTHORIZED TO WAIVE OR CHANGE ANY TERM,
PROVISION OR CONDITION OF THIS LEASE AND EXCEPT FOR THE MANUFACTURER'S
WARRANTIES, MAKE ANY REPRESENTATION OR WARRANTY ABOUT THIS LEASE OR THE
EQUIPMENT. LESSOR SHALL NOT BE LIABLE OR RESPONSIBLE FOR ANY DELAYS IN MAKING
DELIVERIES OR REPAIRS NOR FOR ANY DAMAGES WHATSOEVER OCCASIONED BY ANY BREACH
OF WARRANTY OR REPRESENTATION OR RESULTING FROM THE USE OR PERFORMANCE OF THE
EQUIPMENT. LESSEE'S OBLIGATION TO PAY IN FULL ANY AMOUNT DUE UNDER THIS LEASE
SHALL NOT BE AFFECTED BY ANY DISPUTE, CLAIM COUNTERCLAIM, DEFENSE OR OTHER
RIGHT WHICH LESSEE MAY HAVE OR
3
<PAGE> 13
ASSERT AGAINST THE SUPPLIER OR THE EQUIPMENT MANUFACTURER.
5. USE OF EQUIPMENT: Lessee shall, and shall cause each User to,
comply with all federal, state and local laws, rules and regulations, all
manufacturer's recommendations and warranty requirements and all professional
standards and practices in connection with the use of the Equipment. Lessee
shall not permit the Equipment to be used other than by qualified personnel.
Prior to the use of the Equipment by any User other than Lessee, Lessee shall
enter into a User Agreement with such User in substantially the form set forth
in Annex C or in such other form as shall be acceptable to Lessor. Lessee
hereby assigns to Lessor, and grants to Lessor a security interest in, all of
Lessee's rights in each such User Agreement; provided that upon request of
Lessor Lessee shall enter into an Assignment and Security Agreement
substantially in the form attached hereto as Annex D.
6. MAINTENANCE AND REPAIR: Lessee shall, at its own cost and expense,
keep the Equipment in good repair, condition and working order, except for
ordinary wear and tear, and Lessee will supply all parts and servicing
required. All replacement parts used and installed and repairs made to the
Equipment will become Lessor's property. Lessee shall, at its own cost and
expense, make any modifications to the Equipment which may be required by law.
Lessee may, with Lessor's prior written consent, make other modifications to
the Equipment subject to such conditions relating thereto as shall be specified
by Lessor. Lessor shall be deemed the owner of any such modifications which
are required by law or which are not easily removable without causing damage to
the Equipment. Before returning the Equipment, Lessee shall remove all other
such modifications and restore the Equipment to its original condition. If
Lessee fails to remove such modifications, Lessor shall be deemed the owner of
such modifications (but without waiving any of Lessor's rights regarding the
foregoing removal and restoration obligations of Lessee).
7. TITLE, PERSONAL PROPERTY, LOCATION AND INSPECTION: Lessor owns the
Equipment and Lessee has the right to use the Equipment for the full term
provided Lessee complies with the terms and conditions of this Agreement. The
Equipment is personal property even though the Equipment may become attached to
any real estate. Lessee agrees not to permit a lien or encumbrance to be
placed upon the Equipment or to remove the Equipment from the Equipment
Location without Lessor's prior written consent. If Lessor feels it is
necessary, Lessee agrees to provide Lessor with waivers of interest or liens,
from anyone claiming any interest in the real estate on which the Equipment is
located. Lessor shall also have the right, at reasonable times, to inspect the
Equipment. If requested by Lessor, Lessee will place and maintain on the
Equipment a marker satisfactory to Lessor identifying Lessor as the owner of
the Equipment.
8. ASSIGNMENT: LESSEE AGREES NOT TO TRANSFER, SELL, SUBLEASE, ASSIGN,
PLEDGE OR ENCUMBER EITHER THE EQUIPMENT OR ANY RIGHTS UNDER THIS LEASE WITHOUT
LESSOR'S PRIOR WRITTEN CONSENT. Lessor may sell, assign or transfer this
Lease, including an assignment for security purposes. Lessee agrees that if
Lessor shall sell, assign or transfer this Lease, the new owner will have the
same rights and benefits that Lessor now has and will be obligated to perform
Lessor's obligations only to the extent provided in the instrument of
assignment or transfer. Lessee agrees that the right of the new owner will not
be subject to any claims, defenses, or set-offs that Lessee may have against
Lessor.
9. REDELIVERY AND RENEWAL: On or prior to the last day of the Term,
Lessee shall return the Equipment, freight and insurance prepaid, to Lessor in
good condition and working order, ordinary wear and tear excepted, and free and
clear of all liens and encumbrances, in a manner and to a location designated
by Lessor.
10. RENEWAL RIGHT: So long as no default by Lessee under this Lease
exists and subject to the terms of this Section 10, Lessee shall have the right
to renew this
4
<PAGE> 14
Lease for a period of one year (a "Renewal Term") commencing upon the
expiration of the Base Term and may similarly renew this Lease, for an
unlimited number of times, upon the expiration of any Renewal Term then in
effect for an additional Renewal Term of one year. To exercise such option,
Lessee shall give Lessor notice thereof not later than 90 nor earlier than 120
days prior to the expiration of the Base Term or then current Renewal Term, as
the case may be. The rent payable during any Renewal Term shall be the then
fair rental value of the Equipment (assuming the Equipment has been maintained
in the condition required by this Section 6), as such fair rental value and the
times for payment of and other terms relating to such rent shall be mutually
agreed by Lessor and Lessee. All of the other terms and provisions of this
Lease shall be applicable during any Renewal Term. Notwithstanding the
foregoing, if Lessor and Lessee are unable to reach agreement as to the amount,
times for payment of and other terms relating to the rent for the Equipment for
any proposed Renewal Term as to which Lessee has given notice of election as
provided above, Lessee's notice of election shall be void and of no effect and
this Lease shall terminate at the end of the Base Term or then current Renewal
Term, as the case may be.
11. PURCHASE OPTION: Notwithstanding anything to the contrary in the
Per Procedure Lease and Annex A to Lease, Lessor and Lessee hereby agree,
provided no default has occurred and is continuing under the Per Procedure
Lease, at the end of the Base Term, Lessor will sell all, but not part of, the
Equipment listed on the Annex A to Lease AS IS, WHERE IS and transfer title to
Lessee for the consideration of One Dollar ($1.00) and will execute such
documentation as necessary to effect such transfer of title to the extent title
was conveyed to Lessor. Any instrument of transfer shall contain the
following: THE EQUIPMENT TRANSFERRED HEREBY IS TRANSFERRED "AS IS" AND "WHERE
IS". THE SELLER MAKES NO EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS OF
ANY KIND WHATSOEVER IN REGARD TO SUCH EQUIPMENT. THE SELLER HEREBY DISCLAIMS
ANY AND ALL REPRESENTATIONS AND WARRANTIES IN REGARD TO SUCH EQUIPMENT,
INCLUDING, WITHOUT LIMITATION, THOSE OF MERCHANTABILITY OR FITNESS FOR USE OR
FITNESS FOR ANY PARTICULAR USE, OR OF QUALITY, DESIGN, CONDITION, CAPACITY,
SUITABILITY OR PERFORMANCE.
12. LOSS OR DAMAGE: Lessee is responsible for the risk of loss or
destruction of, or damage to, the Equipment. No such loss or damage shall
relieve Lessee from any obligations under this Lease. In the event of damage
to or loss or destruction of the Equipment, Lessee agrees to promptly notify
Lessor in writing of such fact and shall, at Lessor's option, (a) repair the
Equipment to good condition and working order, (b) replace the Equipment with
like equipment by transferring title thereto to Lessor, free of all liens and
encumbrances, in which case such equipment shall be subject to this Lease and
be deemed the Equipment, or (c) pay to Lessor the present value of the total of
all unpaid Rent payments for the full Term (which, in the case of the Base
Term, shall be the unpaid portion of the Total Required Rent) plus the
estimated fair market value of the Equipment at the end of the Term, all
discounted at [six percent (6%)] per year, together with all other amounts due
and unpaid hereunder, whereupon this Lease shall terminate. All proceeds or
insurance received by Lessor as a result of such loss or damage will be applied,
where applicable, toward the replacement or repair of the Equipment or the
payment of Lessee's obligations. For purposes of this Section 12 and Section
17a, the estimated fair market value of the Equipment at the end of the Term
shall be determined by mutual agreement between Lessor and Lessee or, at the
request of either party, by an independent appraiser selected by Lessor.
Lessee shall pay all fees, costs and expenses of any such appraiser.
13. INDEMNITY: Lessor shall not be responsible for any losses or
injuries caused by the Equipment or the installation, use, maintenance or
condition thereof. Lessee agrees to indemnify Lessor and its officers,
directors, employees and agents, on an
5
<PAGE> 15
after-tax basis, for and to defend and hold harmless Lessor and each such other
person against any and all claims, including claims for personal injury,
liabilities, losses, costs or damages, including attorneys fees and costs,
resulting or arising in any manner from or in connection with the Equipment,
including the installation, use, maintenance or condition thereof.
14. TAXES: Lessee agrees to pay when due all license and registration fees,
sale and use taxes, personal property taxes and all other taxes and charges,
relating to the ownership, leasing, rental, sale, purchase, possession or use of
the Equipment, but excluding any net income taxes payable by Lessor on payments
of Rent hereunder. Lessee further agrees to pay Lessor, on demand, any tax
(including any income tax) payable by Lessor by reason of any payments made by
Lessee pursuant to the immediately preceding sentence. Lessee agrees that if
Lessor pays any taxes or charges on Lessee's behalf, Lessee shall reimburse
Lessor, on an after-tax basis, for all such payments and shall pay Lessor on
demand interest thereon from the date paid by Lessor until reimbursed by Lessee
at the rate specified in Section 17 plus reasonable costs incurred by Lessor in
collecting and administering any taxes, assessments or fees and remitting
thereto the same to appropriate authorities. Lessee agrees that Lessor shall
have the right each year to estimate the yearly personal property taxes that
will be due for the Equipment, together with such additional amount as shall be
necessary so that the payments to Lessor by Lessee pursuant to this sentence
shall be on an after-tax basis, and Lessee will pay Lessor 1/12th of the
estimated taxes and such additional amount within ___ days after the end of each
Monthly Payment Period. Promptly after the actual amount of such taxes is
determined, Lessee shall pay to Lessor the amount of any underpayment together
with an additional amount thereon calculated as provided in the next preceding
sentence, and Lessor shall refund to Lessee any overpayment together with the
portion of the additional amount paid pursuant to the next preceding sentence
which is allocable thereto.
15. INSURANCE: During the term of this Lease, Lessee will keep the
Equipment insured with responsible insurers against all risks of loss or damage
in an amount not less than the higher of 110% of the initial purchase price of
the Equipment from the supplier or manufacturer and the replacement cost of the
Equipment, without deductible and without co-insurance. Lessee shall also obtain
and maintain for the term of this Lease, comprehensive public liability
insurance covering both personal injury and property damage of at least
$2,000,000 per occurrence. Lessor shall be the sole named loss payee on the
property insurance and shall be named as an additional insured on the public
liability insurance. Each such insurance policy shall (i) provide that no
cancellation or termination of coverage shall be effective as to Lessor unless
the insurer shall have provided Lessor 30 days prior written notice thereof by
certified mail and (ii) contain such other provisions for the benefit of the
loss payee or additional insured, as the case may be, as shall be requested by
Lessor. Lessee will pay all premiums for such insurance and shall deliver from
time to time upon request of Lessor proof of insurance coverage satisfactory to
Lessor. If Lessee does not provide such insurance, Lessee agrees that Lessor
shall have the right, but not the obligation, to obtain such insurance, in which
event Lessee shall pay Lessor for all costs thereof.
16. DEFAULT: Lessee shall be in default under this Lease if any of the
following occurs: (a) Lessee shall fail to pay when due any payment of Rent or
other sum payable under this Lease; (b) Lessee shall breach any warranty or
other obligation under this Lease, or any other agreement with Lessor; (c)
Lessee shall breach any warranty or other obligation under any license agreement
governing the use and operation of the Equipment; or (d) Lessee, any partner of
Lessee or any guarantor of Lessee obligations hereunder dies, Lessee shall
become insolvent or unable to pay its debts when due, Lessee shall stop doing
business as a going concern; Lessee shall merge, consolidate, transfer all or
substantially all its assets; Lessee, any guarantor of Lessee's obligations
hereunder or any partner of Lessee shall voluntarily file or have filed against
it involuntarily, a petition of liquidation, reorganization, adjustment of debt
or similar relief under the Federal Bankruptcy Code or any other present or
future federal or state bankruptcy or insolvency law, or a trustee, receiver or
liquidator shall be appointed of it or a substantial part of its assets.
6
<PAGE> 16
17. REMEDIES: Lessor shall have the following remedies if a
default by Lessee under this Lease shall occur:
a. Lessor may upon written notice, declare the entire balance
of the unpaid Rent for the full Term (which in the case of the Base
Term shall be the unpaid portion of the Total Required Rent)
immediately due and payable, sue for and receive all such unpaid Rent
and any other payments then accrued or accelerated under this Lease or
any other agreement between Lessor and Lessee plus the estimated fair
market value of the Equipment at the end of the Term; provided that all
such accelerated Rent and the estimated fair market value of the
Equipment shall be discounted to the date of the default at six (6%)
per year (or at such other rate as shall be required by law);
b. Lessor may charge Lessee interest on all moneys due Lessor
at the rate of fifteen percent (15%) per year from the date of default
until paid, but in no event more than the maximum rate permitted by law;
c. Lessor may charge a return-check or non-sufficient funds
charge ("NSF Charge") to reimburse Lessor for the time and expense
incurred with respect to the check that is returned for any reason
including insufficient or uncollected funds, which NSF Charge is
stipulated and liquidated at $25.00;
d. Lessor may require that Lessee return the Equipment to
Lessor, and in the event Lessee shall fail to return the Equipment
Lessor or its agents may enter upon the premises peaceably with or
without legal process where the Equipment is located and repossess the
Equipment. Such return or repossession of the Equipment shall not
constitute a termination of this Lease unless Lessor expressly so
notifies Lessee in writing. In the event the Equipment is returned or
repossessed by Lessor and unless Lessor shall have terminated this
Lease, Lessor shall sell or re-rent the Equipment to such persons and
upon such terms as Lessor may determine, at one or more public or
private sales and with or without notice to Lessee and apply the net
proceed after deducting the costs and expenses of such sale or re-rent,
to Lessee's obligations with Lessee remaining liable for any
deficiency and with any excess being retained by Lessor. The credit
for any sums to be received by Lessee from any such rental shall be
discounted to the date of the rental agreement at six percent (6%) per
year; and
e. Lessor may exercise any and all other remedies permitted by
applicable law, including, without limitation, the Uniform Commercial
Code as in effect in New York or any other relevant jurisdiction.
Lessee shall also be required to pay all expenses incurred by Lessor in
connection with the enforcement of any remedies hereunder, including all
expenses of repossessing, storing, shipping, repairing and selling the
Equipment and all reasonable attorney's fees.
Whenever any payment of Rent is not made when due, Lessee
agrees to pay Lessor, on demand, interest on such unpaid Rent from the date
due until such Rent shall have been paid at the rate of fifteen percent (15%)
per annum, but in no event more than the maximum rate permitted by law. Such
amount is payable in addition to all amounts payable by Lessee as a result of
the exercise of any other remedies.
All of Lessor's remedies hereunder are cumulative, and are in
addition to any other remedies provided for by law, and may, to the extent
permitted by law, be exercised either concurrently or separately. The exercise
of any one remedy shall not be deemed an election of such remedy, or preclude
the exercise of any other remedy. No failure on Lessor's
7
<PAGE> 17
part to exercise any right or remedy and no delay in exercising any right or
remedy shall operate as a waiver of any right or remedy or modify the terms of
this Lease. A waiver of any default shall not be construed as a waiver of any
other or subsequent default.
18. WARRANTY OF BUSINESS PURPOSE: Lessee hereby warrants and
represents that the Equipment will be used for business purposes, and not for
personal, family or household purposes.
19. UCC FILINGS; FURTHER ASSURANCES; FINANCIAL STATEMENTS: Lessee
authorized Lessor to file a financing statement with respect to the Equipment
or Lessor's security interest in any Service Agreement signed by Lessor where
permitted by the Uniform Commercial Code and grants Lessor the right to sign
such financing statement on Lessee's behalf. Lessee agrees to sign any such
financing statement upon request of Lessor. The filing of a financing
statement with respect to the Equipment is not to be construed as evidence that
any security interest was intended to be created, but only to give public
notice of Lessor's ownership of the Equipment. If this Lease is deemed at any
time to be one intended as security then Lessee grants to Lessor a security
interest in the Equipment and the proceeds from the sale, rent or other
disposition in the Equipment. Lessee agrees to execute such further instruments
as Lessor may reasonably request to carry out more effectively the intent and
purpose of this Lease and to protect and maintain Lessor's right, title and
interest in and to the Equipment. If Lessor shall so request, Lessee agrees to
submit financial statements (audited if available) on a quarterly basis.
20. GUARANTY: If a Guarantor is identified on Annex A, Lessee
agrees to cause such guarantor to execute and deliver in favor of Lessor a
guaranty in substantially the form set forth in Annex E on or prior to the
Lease Commencement Date.
21. CHOICE OF LAW: THE TERMS OF THIS LEASE AND ALL RIGHTS AND
OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS EXECUTED AND DELIVERED, AND TO BE FULLY PERFORMED, IN
THE STATE OF NEW YORK, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.
Lessee consents to and agrees that personal jurisdiction over Lessee and
subject matter jurisdiction over the Equipment shall be with the courts of the
State of New York or the Federal District Court for the Southern District of
New York, solely at Lessor's option, with respect to the provisions of this
Lease.
22. NOTICE: Written notices will be deemed to have been given to
either party hereto when delivered personally or deposited in the United States
mail, postage prepaid, addressed to such party at its address set forth in Annex
A or at such other address as such party may have subsequently provided in
writing.
23. ENTIRE AGREEMENT; SEVERABILITY; WAIVERS: This Lease contains
the entire agreement and understanding of the parties with respect to the
subject matter hereof. No agreements or understanding are binding on the parties
unless set forth in writing and signed by the parties. Any provision of this
Lease which for any reason may be held unenforceable in any jurisdiction shall,
as to jurisdiction, be ineffective without invalidating the remaining
provisions of this Lease. It is further agreed that the rights and remedies of
the parties are governed by this Lease and Lessee waives any and all rights and
remedies granted by Sections 2A-506 through 2A-522 of the Uniform Commercial
Code.
24. COUNTERPARTS: This Lease may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute but one and
the same instrument. To the extent,
8
<PAGE> 18
if any, that this Lease constitutes chattel paper (as such term is defined in
the Uniform Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease may be created through the transfer or
possession of any counterpart hereof other than the original chattel paper
counterpart so identified on Annex A.
25. REPRESENTATIONS AND WARRANTIES: Lessee represents and warrants
that it has full power and authority to enter into this Lease, that this Lease
has been duly authorized (if Lessee is a corporation or a partnership), executed
and delivered by Lessee, and that this Lease constitutes the legal, valid and
binding obligation of Lessee, enforceable against Lessee in accordance with its
terms.
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year set forth below the signature of Lessor.
HILLSIDE FINANCE INTERNATIONAL
("LESSOR")
Signature:
-----------------------------
Title: Managing Director
For: Hillside Finance International LLC
Date:
----------------------------------
Eye Laser Associates, LLC
("LESSEE")
Signature: /s/ Gary Kawesh
-----------------------------
Title: Managing Member
---------------------------------
For: Eye Laser Associates, LLC
9
<PAGE> 19
ADDENDUM TO PER PROCEDURE LEASE AGREEMENT
NO. KAWESH-101,
DATED , 1995
BETWEEN HILLSIDE FINANCE INTERNATIONAL, LLC AS LESSOR
AND
EYE LASER ASSOCIATES, LLC
BETWEEN HILLSIDE FINANCE INTERNATIONAL, as Lessor and Eye Laser Associates,
LLC, as Lessee
In consideration of Lessor entering into an Per Procedure Lease Agreement with
Lessee, dated __________________________, the undersigned agree that:
The monthly payments due to Lessor under the Per Procedure Lease
Agreement shall have a priority over any withdrawal of funds by the
principals of Lessee and no payment, transfer, withdrawal or
distribution shall be made by Lessee to any individual or corporate or
partnership owner of Lessee or to any affiliated individual, corporation
or partnership until such time as the monthly lease payment has been
made. Any breach of this Addendum or Agreement, shall constitute an
Event of Default under the Per Procedure Lease Agreement.
HILLSIDE FINANCE INTERNATIONAL, LLC (LESSOR)
BY: ________________________________
TITLE: ____________________________
EYE LASER ASSOCIATES, LLC (LESSEE)
BY: /s/
--------------------------------
TITLE: Managing
-----------------------------
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<PAGE> 20
ANNEX B TO LEASE
DELIVERY AND ACCEPTANCE CERTIFICATE
TO
PER PROCEDURE LEASE AGREEMENT NO. KAWESH-101
ANNEX A- EQUIPMENT SCHEDULE NO. KAWESH-101
THIS DELIVERY AND ACCEPTANCE CERTIFICATE ("Certificate") is being executed and
delivered pursuant to the Per Procedure Lease Agreement and Annex A - Equipment
Schedule referenced above, (collectively, the "Lease") between Hillside Finance
International, LLC as lessor ("LESSOR") and Eye Laser Associates, LLC as
lessee ("LESSEE") and for the benefit of the Lessor and pertains to the
following equipment ("EQUIPMENT"):
SEE ATTACHED EXHIBIT A
WE HEREBY CERTIFY AND ACKNOWLEDGE that all the Equipment subject to the above
referenced Lease and specified herein or in any above referenced schedule has
been delivered to us; that any necessary installation of the Equipment has been
fully and satisfactorily performed; that the Equipment has been examined and/or
tested and is in good operating order and condition and in all respects
satisfactory to Lessee; and that, after full inspection thereof, we have
accepted the Equipment for all purposes as of the date hereof, including,
without limitation, for purposes of the above referenced Lease. We hereby
represent and warrant that any right we may have now or in the future to reject
the Equipment or to revoke our acceptance thereof has terminated as of the date
of this Certificate, and we hereby waive any such right by the execution
hereof.
WE HEREBY FURTHER CERTIFY AND ACKNOWLEDGE that the Lessor has fully and
satisfactorily satisfied all its obligations under the Lease, and that any and
all conditions to the effectiveness of the Lease or to our obligations under
the Lease have been satisfied, and that we have no defenses, set-offs or
counterclaims to any such obligations, and that the Lease is in full force and
effect, and that no event of default has occurred thereunder.
WE HEREBY FURTHER CERTIFY AND ACKNOWLEDGE (IN ADDITION TO, AND WITHOUT IN ANY
WAY LIMITING, THE DISCLAIMERS OF LESSOR'S WARRANTIES SET FORTH IN THE LEASE)
THAT THE LESSOR MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO
THE CAPACITY, CONDITION, DESIGN, DURABILITY, MATERIAL, MERCHANTABILITY,
PERFORMANCE, QUALITY, SUITABILITY, WORKMANSHIP OR VALUE OF THE EQUIPMENT OR ITS
FITNESS FOR ANY PARTICULAR PURPOSE OR THAT THE EQUIPMENT WILL SATISFY THE
REQUIREMENTS OF ANY LAW, RULE, REGULATION, SPECIFICATION OR CONTRACT, OR ANY
OTHER REPRESENTATION OR WARRANTY OF ANY KIND OF NATURE WHATSOEVER WITH RESPECT
TO THE EQUIPMENT OR ANY ASSOCIATED ITEM OR ANY ASPECT THEREOF.
WE HEREBY FURTHER CERTIFY AN ACKNOWLEDGE that in the event the Equipment
subject to the Lease fails to perform as expected or represented by the
manufacturer/supplier, Lessee shall continue to make monthly payments to Lessor
as required under the terms of the Lease and Lessee shall look solely to the
manufacturer or supplier for the performance of all covenants and warranties
with respect to the Equipment and hereby agrees to indemnify Lessor and hold it
harmless from such non-performance or breach of warranty with respect to the
Equipment.
WE HEREBY FURTHER CERTIFY AND ACKNOWLEDGE that Lessor is not the manufacturer,
supplier, distributor or seller of the Equipment and has no control, knowledge
of familiarity with the conditioning, capacity, functioning or other
characteristics of the Equipment.
WE HEREBY FURTHER ACKNOWLEDGE that Lessor is relying upon this Certificate as a
condition to making payment to the manufacturer and/or supplier of the
Equipment.
Date Equipment Accepted:________________________
Eye Laser Associates, LLC (Lessee)
By: /s/
-----------------------------
Title: Managing Member
--------------------------
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<PAGE> 21
EXHIBIT A
ONE (1) VISX STAR Excimer Laser System including: 1) Excimer Laser System, 1)
Patient Chair, 1) Printer, 1) Accessory Kit, Installation, 1 Year Warranty,
10) Key Cards for PTK and 10) Vision Key Cards for PRK, TOGETHER WITH ALL
PARTS, ACCESSORIES, ATTACHMENTS, ACCESSIONS, ADDITIONS, REPLACEMENTS, AND
SUBSTITUTIONS THERETO AND THEREFORE., TOGETHER WITH ALL PARTS, ACCESSORIES,
ATTACHMENTS, ACCESSIONS, ADDITIONS, REPLACEMENTS, AND SUBSTITUTIONS THERETO AND
THEREFORE.
2
<PAGE> 22
ANNEX C TO LEASE
PER PROCEDURE USER AGREEMENT
This PER PROCEDURE USER AGREEMENT, dated as of the Commencement Date
(this "Agreement"), is between the Laser Center Operator identified in Annex A
("Operator"), and the user identified in Annex A ("User").
In consideration of the mutual agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree
as follows:
1. DEFINITIONS: The terms "Equipment", "Equipment Location," "Term,"
"Per Procedure Fee," "Monthly Target," and "Total Required Payments" shall have
the meanings specified in Annex A. Certain other terms are defined in the body
of this Agreement. The following terms shall have the following meanings:
"Business Day" shall mean any day other than a Saturday or Sunday or
any other day on which banks located in New York, New York are legally
authorized to be closed.
"Commencement Date" shall mean the date as of which Operator shall have
executed this Agreement, as set forth below Operator's signature hereto.
"Monthly Payment Period" shall mean the successive monthly periods
during the Term beginning, in each case, immediately following the end of the
next preceding Monthly Payment Period (or, in the case of the first Monthly
Payment Period, on the Commencement Date) and ending in the next succeeding
month on the same day (or, if there is no same day, the last day) of such month
as the day of the month on which the Commencement Date occurs.
"Procedure" shall mean a single use of the Equipment for a corrective
eye surgery procedure.
"Semiannual Payment Period" shall mean the period comprised of the
first six Monthly Payment Periods and each successive period thereafter of six
consecutive Monthly Payment Periods during the Term.
The terms "hereof", "herein", "hereunder" and comparable terms refer to
this Agreement as a whole and not a particular section, subsection, paragraph
or other subdivision hereof.
2. GRANT OF RIGHT TO USE: Effective as of the Commencement Date,
Operator hereby grants to User, and User hereby accepts, the right to use the
Equipment for Procedures during the Term at the Equipment Location for
Procedures on the terms and conditions set forth in this Agreement.
<PAGE> 23
3. SERVICE FEE: (a) User shall pay to Operator for the use of the Equipment
during the Term the amounts set forth below ("Service Fee Payments"), such
Service Fee Payments to be made at the times and in the manner specified below:
(i) For each Monthly Payment Period, User shall pay to Operator an amount
equal to the Per Procedure Fee times the number of Procedures performed during
such Monthly Payment Period.
(ii) For each Semiannual Payment Period, User shall pay to Operator (in
addition to all amounts payable pursuant to paragraph (i) above) an amount equal
to the excess, if any, of (1) the product of the Monthly Target times the Per
Procedure Fee times the total number of Monthly Payment Periods elapsed from the
Commencement Date through the end of such Semiannual Payment Period over (2) the
sum of (x) the total amount of Service Fee Payments payable pursuant to
paragraph (a)(i) above for all Monthly Payment Periods elapsed from the
Commencement Date through the end of such Semiannual Payment Period plus (y) the
total amount of Service Fee Payments payable pursuant to this paragraph (a)(ii)
for all prior Semiannual Payment Periods.
(iii) Notwithstanding the provisions of paragraphs (a)(i) and (a)(ii)
above, the aggregate amount of Service Fee Payments payable by User hereunder
for the Term pursuant to this paragraph (a) shall be the Total Required
Payments. User shall not be required to make any Service Fee Payment under
paragraph (a)(i) or (a)(ii) above to the extent that the amount of such Service
Fee Payment, when added to all other Service Fee Payments previously or
concurrently paid by User hereunder, shall exceed the Total Required Payments.
(b) Within two Business Days after the end of each Monthly Payment Period,
User shall inform Operator as to the number of Procedures performed during such
Monthly Payment Period, together with such information with respect thereto as
Operator shall have reasonably requested.
(c) Operator shall invoice User for Service Fee Payments payable pursuant
to paragraphs (a)(i) and (a)(ii) above. User agrees to make each Service Fee
Payment, in the manner specified by Operator on its behalf, not later than the
fifth Business Day after the date of the invoice therefor.
(d) Subject to the continuing obligation of Operator to make available the
Equipment for User's use, the obligation of User to make Service Fee Payments
hereunder shall be absolute and unconditional. Except as otherwise provided
herein, this Agreement in NON CANCELABLE.
4. USE OF EQUIPMENT: User shall comply with all federal, state and local
laws, rules and regulations, all manufacturer's recommendations and warranty
requirements, all professional standards and practices and all reasonable
requirements of Operator in connection with the use of the Equipment.
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<PAGE> 24
5. ASSIGNMENT: USER AGREES NOT TO TRANSFER, SELL, SUBLEASE, ASSIGN, PLEDGE
OR ENCUMBER ANY RIGHTS UNDER THIS AGREEMENT WITHOUT OPERATOR'S PRIOR WRITTEN
CONSENT. Operator may sell, assign or transfer this Agreement, including an
assignment for security purposes, to any person. User agrees that if Operator
shall sell, assign or transfer this Agreement, the new owner will have the same
rights and benefits that Operator now has and will be obligated to perform
Operator's obligations only to the extent provided in the instrument of
assignment or transfer.
6. INDEMNITY: User agrees to indemnify Operator, any assignee of Operator's
rights hereunder and their respective officers, directors, employees and agents
for and to defend and hold harmless each such person against any and all claims,
including claims for personal injury, liabilities, losses, costs or damages,
including attorneys fees and costs, resulting or arising in any manner from or
in connection with the use of the Equipment by User or by any other person with
User's permission.
7. DEFAULT: User shall be in default under this Agreement if any of the
following occurs: (a) User shall fail to pay when due any Service Fee Payment or
other sum payable under this Agreement; (b) User shall breach any warranty or
other obligation under this Agreement, or any other agreement with Operator; (c)
Operator shall breach any warranty or other obligation under any license
agreement governing the use and operation of the Equipment; or (d) User dies,
shall become insolvent or unable to pay its debts when due, shall voluntarily
file or have filed against it involuntarily, a petition of liquidation,
reorganization, adjustment of debt or similar relief under the Federal
Bankruptcy Code or any other present or future federal or state bankruptcy or
insolvency law, or a trustee, receiver or liquidator shall be appointed of it or
a substantial part of its assets.
If a default by User under this Agreement shall occur, Operator may, at its
option, terminate this Agreement by giving written notice of termination to
User, and may pursue any and all other remedies permitted by applicable law.
Whenever any Service Fee Payment is not made when due, User agrees to pay
Operator, on demand, interest on such unpaid Service Fee Payment from the date
due until such Service Fee Payment shall have been paid at the rate of fifteen
percent (15%) per annum, but in no event more than the maximum rate permitted by
law. Such amount is payable in addition to all amounts payable by User as a
result of the exercise of any other remedies.
All of Operator's remedies hereunder are cumulative, and are in addition to
any other remedies provided for by the law, and may, to the extent permitted by
law, be exercised either concurrently or separately. The exercise of any one
remedy shall not be deemed an election of such remedy, or preclude the exercise
of any other remedy. No failure on Operator's part to exercise any right or
remedy and no delay in exercising any right or remedy shall operate as a waiver
of any right or remedy or modify the terms of this Agreement. A waiver of
default shall not be construed as a waiver of any other or subsequent default.
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<PAGE> 25
8. WARRANTY OF BUSINESS PURPOSE: User hereby warrants and
represents that the Equipment will be used by User for business purposes, and
not for the personal, family or household purposes.
9. CHOICE OF LAW: THE TERMS OF THIS AGREEMENT AND ALL RIGHTS AND
OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS EXECUTED AND DELIVERED, AND TO BE FULLY PERFORMED, IN
THE STATE OF NEW YORK, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.
10. NOTICE: Written notices will be deemed to have been given to
either party when delivered personally or deposited in the United Stated mail,
postage prepaid, addressed to such party at its address set forth in Annex A or
at such other address as such party may have subsequently provided in writing.
So long as any security or other assignment by Operator of any of Operator's
rights hereunder shall be in effect, User shall furnish to the assignee a copy
of all notices which User gives to Operator hereunder.
11. ENTIRE AGREEMENT; SEVERABILITY: This Agreement contains the
entire agreement and understanding of the parties with respect to the subject
matter hereof. No agreements or understanding are binding on the parties unless
set forth in writing and signed by the parties. Any provision of this Agreement
which for any reason may be held unenforceable in any jurisdiction shall, as to
jurisdiction, be ineffective without invalidating the remaining provisions of
this Agreement.
IN WITNESS WHEREOF, Operator and User have each caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year set forth below.
OPERATOR
Signature: /s/ Gary Kawesh
---------------------------
Title: Managing Member
-------------------------------
For: Eye Laser Associates, LLC
Date:
--------------------------------
USER
Signature: /s/ Gary Kawesh
---------------------------
Title:
-------------------------------
For: RK and Laser Eye Institute of
California
4
<PAGE> 26
ANNEX A
Certain Terms and Provisions
LASER CENTER OPERATOR:
Full Legal Name: Eye Laser Associates, LLC
Notice Address: 4585 Steven Creek Blvd.
Suite 100
Santa Clara, CA 95051
USER:
Full Legal Name:
Billing and Notice Address:
Fed. Tax I.D.:
Send Invoice to Attention of:
EQUIPMENT: The equipment described in Schedule I to this Annex A.
EQUIPMENT LOCATION: 4585 Steven Creek Blvd.
Suite 100
Santa Clara, CA 95051
TERM: The period commencing on the Commencement Date and ending on, and
including, the 66 monthly anniversary of the Commencement Date.
PER PROCEDURE FEE: $256.00
MONTHLY TARGET: .
TOTAL REQUIRED PAYMENTS: $ (The product of the Per Procedure
Fee times the Monthly Target times the total number
of Monthly Payment Periods in the Base Term.)
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<PAGE> 27
ANNEX D TO LEASE
ASSIGNMENT AND SECURITY AGREEMENT
ASSIGNMENT AND SECURITY AGREEMENT (this "Assignment") dated as of the
date set forth in Annex A, is between the assignor identified in Annex A
("Assignor") and Hillside Finance International LLC, as assignee ("Assignee").
WITNESSETH
WHEREAS, Assignee, as lessor, and Assigner, as lessee, have entered
into the Lease identified in Annex A (the "Lease"), which provides for the
lease by Assignee to Assignor of the Equipment identified in Annex A, and
WHEREAS, Assignor and the user identified in Annex A (the "User") have
entered into the user agreement identified in Annex A (the "User Agreement")
providing for the use of the Equipment by User; and
WHEREAS, Section 5 of the Lease requires that Assignor enter into with
Assignee this Assignment whereby Assignor, as security for its obligations
under the Lease, shall assign to Assignee its rights under the User Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein and in the Lease, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION .1. Certain Defined Terms
.1.1 Certain terms are defined in the body of this Assignment. The
terms "hereof", "herein", "hereunder" and comparable terms refer to this
Assignment as a whole and not to a particular section, subsection, paragraph or
other division hereof. As used in this Assignment, the term "Assigned Rights"
shall mean all of the rights and property assigned to the Assignees hereunder.
SECTION .2. Assignment of Rights, Title and Interest in, to and under
the Assigned Agreements.
.2.1 Assignor, as security for the full payment and performance as and
when due of all obligations of Assignor under the Lease and this Assignment,
including without limitation the payment when due of all Rent (as defined in
the Lease) and all other amounts payable by Assignor under the Lease or this
Assignment, (collectively, the "Secured Obligations"), hereby assigns,
transfers, conveys and sets over to Assignee, and grants to Assignee a
continuing security interest in, all of Assignee's rights, title and interest
in, to and under the User Agreement and all proceeds thereof, including without
limitation:
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<PAGE> 28
(a) all Service Fee Payments (as defined in the User
Agreement) and all other payments due and to become due under the User
Agreement, whether as contractual obligations, damages payable to
Assignor for any breach thereunder, or otherwise;
(b) all of Assignor's claims, rights, powers or privileges and
remedies under the User Agreement;
(c) all rights of Assignor to receive proceeds of any bonds,
insurance, indemnity, warranty or guaranty with respect to the User
Agreement;
(d) all of Assignor's rights under the User Agreement (i) to
make determinations, (ii) to exercise any right of election (including
election of remedies) or option or to give or receive any notice,
consent, waiver or approval together with full power and authority to
demand, receive, enforce, collect or give receipt for any of the
foregoing or any property which is the subject of the User Agreement,
(iii) to endorse any checks, or other instruments or orders, (iv) to
terminate, amend, supplement or modify the User Agreement, (v) to file
any claims and (vi) to take any action which, in the opinion of
Assignee, may be necessary or advisable in connection with any of the
foregoing; and
(e) the proceeds and products of any and all of the foregoing.
.2.2 It is hereby expressly agreed that, anything contained
herein to the contrary notwithstanding, Assignor shall remain liable under the
User Agreement to perform all the obligations assumed by it thereunder and
Assignee shall have no obligation or liability thereunder by reason of or
arising out of the assignments herein contained, nor shall Assignee be required
or obligated in any manner to perform or fulfill any obligations of Assignor
under the User Agreement or pursuant thereto, or to make any payment, or to
present or file any claim, or to take any other action to enforce any right
assigned to it hereunder or to which it may be entitled pursuant thereto any
time or times.
.2.3 Assignor hereby undertakes that, notwithstanding the
assignments herein contained, it shall punctually perform all its obligations
under the User Agreement.
.2.4 Following the occurrence and continuance of a default by
Assignor under Section 16 of the Lease, Assignee shall be entitled but not
obligated to perform, itself or through its nominee(s), all or any of
Assignor's obligations under the User Agreement without thereby releasing
Assignor from its obligations thereunder, and to perform in its or Assignor's
name all acts which Assignor is entitled to perform with respect to the User
Agreement.
.2.5 Except as otherwise provided in this Section 2, and
except during any period when a default by Assignor under Section 16 of the
Lease shall be continuing, Assignor may collect and receive all amounts payable
by User, and exercise all of its rights, powers
3
<PAGE> 29
privileges and remedies, under the User Agreement; provided, that without the
prior written consent of Assignor, Assignee shall not waive any of its rights
under, or enter into or consent to any amendment, modification, waiver or
termination of, the User Agreement.
.2.6 Assignor hereby agrees that, forthwith upon the execution of
this Assignment, it will give to User notice by registered mail of the
execution and delivery hereof and of the assignment of the User Agreement
hereunder. Said notice shall also contain a request that a copy of all
notices, demands or declarations at any time delivered to Assignor by User
shall be delivered to Assignee. Assignor will immediately upon the receipt
thereof, deliver to Assignee copies of all such notices, demands or
declarations at any time received by Assignor from User.
SECTION .3. Remedies
.3.1 If a default by Assignor under Section 16 of the Lease shall be
continuing, Assignee shall, subject to the terms of the User Agreement, have
all rights of a secured party under the Uniform Commercial Code of New York or
any other relevant jurisdiction to enforce the assignments and security
interests contained herein and in addition shall have the right (a) to enforce
all remedies, rights, powers and privileges of Assignor under any or all of
the Assigned Rights, (b) to sell any or all of the Assigned Rights at public or
private sale upon at least 10 days prior written notice and/or (c) to
substitute itself or any nominee or agent in lieu of Assignor as a party to the
User Agreement.
.3.2 Assignor irrevocably appoints Assignee, its successors and
assigns, Assignor's true and lawful attorney, with full power (in the name of
Assignor, the predecessor in interest under the User Agreement or otherwise),
upon the occurrence and during the continuance of a default
by Assignor under Section 16 of the Lease, (i) to carry out the provisions
of this Assignment and to take any action and execute any instrument which
Assignee may deem necessary or advisable to accomplish the purposes hereof in
accordance with the terms of this Assignment, and (ii) to ask, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies due and to become due under or arising out of the User Agreement, to
endorse any checks or other instruments or orders in connection therewith and
to file any claims or take any action or institute (or, if previously
commenced, assume control of) any proceedings and to obtain any recovery in
connection therewith which Assignee may deem to be necessary or advisable. The
foregoing appointment is irrevocable and coupled with an interest.
SECTION .4. Miscellaneous
.4.1 Expenses. Assignor agrees to pay, upon demand, to Assignee
(together with interest thereon at the rate specified in Section 17b of the
Lease), the amount of any and all fees and expenses, including without
limitation the reasonable fees and expenses of its counsel, which Assignee may
incur in connection with (x) the preservation or protection of the Assigned
Rights or any of Assignee's rights under this Agreement, (y) the exercise or
enforcement of any rights or remedies of Assignee hereunder or (z) the failure
by Assignor to perform or observe any of the provisions hereof.
4
<PAGE> 30
.4.2 Further Assurances. Assignor hereby undertakes, at its own expense,
to accomplish any appropriate filings (including the filing of financing
statements) relative to the assignments herein contained and execute, sign,
deliver and (if required) make any appropriate filings in connection with such
further assurance, instrument, document, act or thing as in the opinion of
Assignee may be necessary or desirable for the purpose of more effectually
assigning the Assigned Rights and/or perfecting the assignments herein contained
and/or enabling Assignee to enjoy the full benefit of the assignments and the
rights and the powers herein granted to Assignee. Assignor hereby authorizes
Assignee to file one or more financing or continuation statements, and
amendments thereto, relating to all or any part of the Assigned Rights without
the signature of Assignor where permitted by law.
.4.3 Payments. All moneys collected or received in respect of the
Assigned Rights, and any and all moneys collected or received in any proceedings
pursuant to this Assignment shall be applied to the Secured Obligations.
.4.4 Binding Effect. All of the covenants, warranties, undertakings and
agreements of Assignor hereunder shall bind Assignor and its permitted
successors and assigns and shall inure to the benefit of Assignee and its
successors and assigns whether so expressed or not.
.4.5 No Waiver; Cumulative Remedies. No failure to exercise, and no delay
in exercising, any right, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude or require any other or future exercise thereof or
the exercise of any right, power or privilege hereunder. All rights, powers and
remedies granted to Assignee hereunder shall be cumulative, may be exercised
singly or concurrently and shall not be exclusive or any rights or remedies
provided by law.
.4.6 Illegality. In the event that by reason of any law or regulation in
force or to become in force, or by reason or a ruling of any court whatsoever,
or by any other reason whatsoever, the assignments herein contained and security
interest granted hereby are either wholly or partly defective, Assignor hereby
undertakes to furnish Assignee with the alternative assignments and security
and/or to do all such other acts as, in the opinion of Assignee, shall be
required in order to ensure and give effect to the full intent of this
Assignment.
.4.7 Continuing Assignment and Termination. This Assignment shall create
a continuing assignment of the Assigned Rights and shall remain in full force
and effect until payment in full of the Secured Obligations.
.4.8 Waivers, Amendments, Supplements and Other Modifications. The
provisions of this Assignment may be waived, amended, supplemented or otherwise
modified from time to time, in whole or in part, only by writing signed by
Assignor and Assignee.
.4.9 Assignment. Assignor hereby consents to any assignment of this
Assignment in whole or in part by Assignee in connection with the assignment of
its rights
5
<PAGE> 31
under the Lease in whole or in part. In the event of any assignment or transfer
of this Assignment, the term "Assignee" as used in this Agreement shall be
deemed to mean any such assignee or transferee, as the case may be. No
assignment of this Assignment may be made by Assignor without the prior written
consent of Assignee.
.4.10 Notices. Any notice or other communication hereunder shall be
given in the manner set forth in the Lease.
.4.11 Governing Law. THE TERMS OF THIS ASSIGNMENT AND ALL RIGHTS AND
OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS EXECUTED AND DELIVERED, AND TO BE FULLY PERFORMED, IN
THE STATE OF NEW YORK, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.
.4.12 Survival of Agreements. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Assignment.
.4.13 Severability. In case any one or more of the provisions contained
in this Assignment shall be invalid, illegal or unenforceable in any respect
under any law, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby.
.4.14 Execution of Counterparts. This Assignment may be executed in
any number of counterparts. All such counterparts shall be deemed to be
originals and shall together constitute but one and the same instrument.
.4.15 Representations and Warranties. Assignor represents and warrants
that it has full power and authority to enter into this Assignment, that this
Assignment has been duly authorized (if Assignor is a corporation or a
partnership), executed and delivered by Assignor, and that this Assignment
constitutes the legal, valid and binding obligation of Assignor, enforceable
against Assignor in accordance with its terms.
IN WITNESS WHEREOF this Assignment has been executed and delivered as of
the date and year specified in Annex A.
ASSIGNOR
Signature: /s/
----------------------------
Title: Managing Member
--------------------------------
For: Eye Laser Associates, LLC
ASSIGNEE
Signature:
----------------------------
Title:
--------------------------------
For: Hillside Finance International, LLC
6
<PAGE> 32
ANNEX A TO ASSIGNMENT
CERTAIN TERMS AND PROVISIONS
DATE OF ASSIGNMENT:
ASSIGNOR: Eye Laser Associates, LLC
USER AGREEMENT:
USER:
EQUIPMENT: The equipment described in Schedule I to this Annex A.
1
<PAGE> 33
HILLSIDE FINANCE INTERNATIONAL, LLC
Per Procedure Lease No. Kawesh-101
UNLIMITED GUARANTY OF PER PROCEDURE LEASE
The undersigned, jointly and severally request that Hillside Finance
International, LLC herein after called Lessor, extend credit or to otherwise do
business with Eye Laser Associates, LLC hereinafter called Lessee, and in
consideration thereof and of benefits to accrue to each of us therefrom each of
the undersigned as a primary obligor, severally and jointly and unconditionally
guarantees to you that Lessee will fully and promptly perform, pay and
discharge all its present and future obligations to you, irrespective of any
invalidity therein, or the unenforceability thereof, and agree without your
first having to proceed against Lessee of to liquidate any security therefor,
to pay on demand all sums due you from Lessee and all losses, costs, attorney's
fees or expenses, which may be suffered by you by reason of Lessee's default or
default of any of the undersigned.
Each of the undersigned waives notice of acceptance hereof and of presentment
demand, protest, and notice of nonpayment or protest as to any note or
obligation signed, accepted, endorsed, or assigned to you by said Lessee, and
all exemptions and Homestead Laws and any other demands and notices required by
law, and we and each of use waive all defenses, set-offs, and counterclaims.
You may, without notice to us, renew or extend any obligation of Lessee or of
co-guarantors, accept partial payments thereon or settle, release by operation
of law, or otherwise compound, compromise, collect, consent to the release or
transfer of such security and bid and purchase at any sale without affecting or
impairing the obligation of the undersigned hereunder.
THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE UNDER, AND SHALL BE GOVERNED
BY, THE LAWS OF THE STATE OF NEW YORK IN ALL RESPECTS, INCLUDING MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE. LESSOR AND GUARANTORS AGREE THAT ANY
CONTROVERSY OR CLAIMS ARISING OUT OF OR RELATING TO THIS GUARANTY SHALL BE
RESOLVED AT LESSOR'S OPTION IN ITS SOLE DISCRETION EITHER (a) BY ARBITRATION
IN THE STATE OF NEW YORK IN ACCORDANCE WITH THE RULES AND PRACTICES OF THE
AMERICAN ARBITRATION ASSOCIATION AND A JUDGMENT ON THE AWARD MAY BE ENTERED BY
ANY COURT OF COMPETENT JURISDICTION, OR (b) IN ANY STATE OR FEDERAL COURT IN
THE STATE OF NEW YORK, GUARANTORS HEREBY KNOWINGLY AND IRREVOCABLY WAIVES ANY
OBJECTIONS ON THE GROUNDS OF IMPROPER JURISDICTION OR VENUE TO AN ACTION IN THE
STATE OF NEW YORK AND AGREES THAT EFFECTIVE SERVICE OF PROCESS MAY BE MADE UPON
GUARANTOR BY MAIL.
All liabilities of Lessee shall mature immediately upon insolvency of the
Lessee, or the filing by or against the Lessee of any insolvency proceeding, or
the calling of a meeting of Lessee's creditors, or the death of Lessee, if an
individual.
This guaranty shall bind our respective heirs, administrators, personal
representatives, successors and assigns, and shall inure to your successors and
assigns. All of your rights hereunder are cumulative and not alternative.
WITNESS our hands and seal this 28 day of March, 1996
INDIVIDUAL GUARANTOR'S SIGNATURE
/s/ Gary M. Kawesh
- ----------------------------------------
Name: Gary M. Kawesh, M.D.
Address: 14526 Berry Way
City: San Jose State: California Zip: 95124
Telephone No.: 408-296-1010
State of: _______________________________
County of : ____________________________
This foregoing Guaranty was subscribed and sworn to, before me, on this _____
day of _________________ 19___
X ___________________________________________________
Notary Public
My Commission expires: ____________________________
1
<PAGE> 34
PLEASE FORWARD TO YOUR INSURANCE AGENT
Dear Agent:
Please use this letter as a request for insurance coverage for Eye Laser
Associates, LLC, in the amount of $584,650.00 which is equal to 110% of the
equipment cost. As you are the agent for Eye Laser Associates, LLC we request
that the policy be amended to incorporate the following items:
DVI CAPITAL COMPANY IS TO BE NAMED LOSS PAYEE AND ADDITIONAL INSURED
UNDER THE PROPERTY DAMAGE COVERAGE IN THE AMOUNT OF: $584,650.00.
DVI CAPITAL COMPANY IS TO BE NAMED ADDITIONAL INSURED UNDER THE EXISTING
LIABILITY COVERAGE ($2,000,000.00 minimum).
DVI CAPITAL COMPANY IS TO BE NAMED ADDITIONAL INSURED UNDER THE EXISTING
AUTOMOBILE LIABILITY COVERAGE. PLEASE INCLUDE PROPERTY DAMAGE COVERAGE.
COVERAGE IS ALL RISK WITH A 30 DAY NOTICE PRIOR TO CANCELLATION AND/OR
TERMINATION BY CERTIFIED MAIL.
EQUIPMENT LOCATION TO BE COVERED:
4585 Steven Creek Blvd.
Suite 100
Santa Clara, CA 95051
EQUIPMENT DESCRIPTION: Hillside Finance International, LLC Per
Procedure Lease Kawesh-101, Annex A - Equipment Schedule Kawesh-101
The items listed on the attached invoice(s) and made a part hereof constitute
the Equipment which is subject to the terms of the insurance coverage, TOGETHER
WITH ALL PARTS, ACCESSORIES, ATTACHMENTS, ACCESSIONS, ADDITIONS, REPLACEMENTS,
AND SUBSTITUTIONS THERETO AND THEREFOR.
NOTE: KINDLY LIST LEASE # AND EQUIPMENT DESCRIPTION ON INSURANCE CERTIFICATE.
Property damage coverage will need to be increased to cover the above dollar
amount where the existing policy is insufficient so that our equipment will be
adequately insured.
Please issue a Certificate of Insurance evidencing the above items including
policy number(s) and date(s) of expiration and fax DVI Capital Company at (216)
520-2908 for review and approval prior to following up with the original hard
copy direct to DVI Capital Company, 6611 Rockside Road, Suite 110,
Independence, OH 44131 (address for certificate holder).
In case we need to get in touch with you, please also include your name and
telephone number in the box for agent. If you are not authorized to issue a
Certificate, please contact our office as soon as possible so that we may
discuss how to proceed.
Sincerely,
Eye Laser Associates, LLC
By: /s/
------------------------------------
Date: 3/28/96
-----------------------------------
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<PAGE> 35
DVI Capital Company
6611 Rockside Road
Suite 110
Independence, OH 44131
RE: Hillside Finance International, LLC PER PROCEDURE LEASE No.
Kawesh-101 Annex A - Equipment Schedule No. Kawesh-101
Gentlemen:
I herewith instruct DVI Capital Company to contact my insurance agent for the
purpose of obtaining insurance coverage on equipment I will be leasing/financing
from them. My insurance agent is as follows:
Agent: __________________________________________________________
Agency Name: __________________________________________________________
Address: __________________________________________________________
__________________________________________________________
Phone No.: __________________________________________________________
Insurance Carrier: ____________________________________________________
A copy of this authorization shall act as the original for the sole purpose of
obtaining insurance as set forth above.
Eye Laser Associates, LLC
Lessee
By /s/ Gary Kawesh
-------------------------------
Title Managing Member
----------------------------
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<PAGE> 36
LESSEE'S CERTIFICATE OF SECRETARY
I, Gary Kawesh, as (Assistant) Secretary of Eye Laser Associates, LLC, a
California limited liability corporation (the "Corporation"), hereby certifies
that:
1. The following is a complete and correct copy of resolutions duly
adopted by the Board of Directors of the Corporation at a meeting duly called,
conveyed and held on ______________, 19__, at which a quorum was present and
acting throughout and that the resolutions have not been amended or modified and
are in full force and effect:
RESOLVED, that the President, any Vice President, Treasurer, and Secretary
of this Corporation be, and each hereby is, authorized and empowered, for
and on behalf of this Corporation, to execute and deliver the Per Procedure
Lease Agreement ("Lease") dated as of _____________, 19__, between Hillside
Financial International, LLC as Lessor and the Corporation as Lessee and
any Lease Schedules, Addenda or Riders which are now attached to, and a
part of, the Lease and which may be executed from time to time hereafter;
the execution and delivery of the Lease by any such officers to be
conclusive evidence of the due authorization and approval thereof by this
Corporation.
RESOLVED, that the President, any Vice President, Treasurer, and Secretary
of this Corporation be, and each hereby is, authorized and empowered, for
and on behalf of this Corporation, to do such acts and things, and to
execute and deliver any and all Schedules, certificates, instructions,
requests, financing statements, and other instruments and documents as, in
their judgment, may be necessary or appropriate to consummate the
transactions and perform the obligations contemplated in the Lease; and
doing of such acts and things and the execution and delivery of such
amendments, certificates, instructions, requests, financing statements and
other instruments and documents to be conclusive evidence of the due
authorization and approval thereof by this Corporation.
2. The Lease, in substantially the same form as executed and delivered by
the Corporation, was presented to and approved by the Board of Directors of the
Corporation in connection with the adoption of the foregoing resolutions and
ordered filed with the Minutes of the Corporation.
3. I have examined the Charter, Articles of Incorporation and By-Laws of
the Corporation and am familiar therewith and there are no restrictions imposed
therein on the power and authority of the Board of Directors of the Corporation
to adopt the foregoing resolutions or upon the Corporation or its officers to
act in accordance therewith.
4. No proceeding of or the amendment of the Charter, Articles of
Incorporation or By-Laws of the Corporation or for the merger, consolidation,
sale of assets and business, liquidation or dissolution of the Corporation has
been commenced or is ending.
5. The Corporation is validly existing and in good standing under the laws
of the jurisdiction of its incorporation and is duly qualified to do business
and is in good standing in all jurisdictions in which any of the personal
property subject to the Lease is or may be located.
6. The following persons are on the date hereof duly elected, qualified
and acting officers of the Corporation holding the respective offices set
opposite their respective names and offices below are their genuine signatures.
<TABLE>
<CAPTION>
NAME TITLE SIGNATURE
---- ----- ---------
<S> <C> <C>
Gary Kawesh Managing Member /s/ Gary Kawesh
- --------------------- ------------------- --------------------
- --------------------- ------------------- --------------------
</TABLE>
7. That, pursuant to the Corporation's By-Laws, Certificate of
Incorporation and any other appropriate documents of the Corporation as may be
necessary, I have the power and authority to execute this Certificate on behalf
of the Corporation, and that I have so executed this Certificate and set the
seal of the Corporation on the 28 day of March, 1996.
[Seal]
/s/ Gary Kawesh
----------------------------
(Assistant) Secretary
1
<PAGE> 1
EXHIBIT 10.17
COMMERCIAL BANK
OF SAN FRANCISCO
AMENDED COMMITMENT LETTER
August 1, 1996 333 Pine Street
San Francisco, CA 94101
Mr. David P. Bates III
President Tel: 415.627.0333
Vista Laser Centers of the Pacific, Inc. Fax: 415.627.0325
400 Estudillo Avenue, Suite 208
San Leandro, California 94577
Re: Two $525,000 Five-Year Equipment Term Loans
Dear David:
Commercial Bank of San Francisco ("CBSF") is pleased to present a letter of
commitment to establish the following credit facilities as a part of a
long-term banking relationship with your fine company:
1. Borrower. Vista Laser Centers of the Pacific, Inc. (VISTA), a Nevada
Corporation.
2. Credit Facilities. Two term loans in the amount of $525,000 each.
3. Purpose: The loans shall be used to purchase, at up to 100% of invoice,
two VISX Star Laser System machines to be used in laser vision
correction surgery.
4. Loan Type/Term. Each loan shall be structured as a term loan due five
years from date of closing.
5. Interest Rate and Repayment Schedule. Each loan shall bear interest at
a variable rate of 0.50% above the Prime Rate. The loan shall be repaid
in sixty equal monthly installments of principal, plus interest.
6. Loan Fee. Borrower shall pay a loan fee of 0.750% of the loan amount
and a documentation fee of $100 per loan. A non-refundable good faith
deposit of $1,968.75 or 25% of the loan fee for both loans will be due
upon acceptance of this Commitment Letter and will be credited towards
the loan fee. The balance will be due upon loan closing. CBSF shall not
have any obligation of any kind whatsoever to pay fees incurred by
Borrower to any persons acting on Borrower's behalf for any reason.
1
<PAGE> 2
7. Prepayment Penalty. Borrower shall pay a prepayment penalty if all or a
portion of the amount owed is paid earlier than it is due within the
first two years of the loan. This prepayment penalty shall be equal to
2% of the amount prepaid in the first year and 1% in the second year.
8. Collateral. The loans shall be secured by perfected first priority liens
on the VISX Star Laser System equipment purchased by Borrower and
financed by Bank.
9. Guarantors. The first loan shall be personally guaranteed on a joint and
several basis by David B. Davis, Mark R. Mandel, Sanford L. Severin and
Stephen G. Turner. The second loan shall be personally guaranteed on a
joint and several basis by J. Robert Griffin, Douglas B. Reed and David
P. Bates III.
10. Release of Guarantees. Upon the Borrower's written request, the Bank may
agree to release any, any combination, or all of the guarantees based on
criteria to be jointly determined by Bank and Borrower. In the event
that the parties are unable to agree on this criteria within six months
of funding, Borrower may retire the loan without prepayment penalty.
11. Funding. Funding of the loans is contingent on the execution of the
Bank's standard loan documents, including a Business Loan Agreement,
requiring at a minimum, the following financial information:
11.1 Annual fiscal year-end audited financial statements upon
completion.
11.2 Quarterly form 10-Qs and annual form 10-Ks.
11.3 Annual income tax returns and annually updated personal
financial statements of the guarantors.
12. Expiration. The loans must be funded by September 30, 1996 or the
commitment will expire at 5 P.M. on that date if not funded.
2
<PAGE> 3
It has been a pleasure working with you in the structuring of these credit
facilities and we are looking forward to funding them soon.
Sincerely,
/s/ Victor J. Reizman
- ------------------------------
Victor J. Reizman
Executive Vice President
ACKNOWLEDGMENT
To proceed with funding your loan request, please sign below indicating your
understanding and acknowledgment of the general terms of this loan commitment,
and return to my attention, along with a non-refundable deposit of 25% of the
loan fees or $1,968.75 which will be applied to the loan fee if funded. This
commitment must be accepted by August 7, 1996 or will expire at 5 P.M. on that
date.
Acknowledged:
/s/ D Bates 8-2-96
- ------------------------------- -------------------------------
David P. Bates III Date
President
3
<PAGE> 1
EXHIBIT 10.18
SERVICE AGREEMENT
This SERVICE AGREEMENT (the "AGREEMENT") dated as of _____________,
1996 and effective as of the Effective Date defined below, is by and between:
VISTA LASER CENTERS OF THE PACIFIC, INC., a corporation incorporated
under the laws of the State of Nevada (herein called the "COMPANY");
and
____________________________ (herein called the "PROFESSIONAL").
R E C I T A L S:
A. The Company is in the business of managing and administering laser
vision correction equipment and related support services (collectively,
the "LVC SERVICES") to qualified ophthalmologists for vision correction
by use of advanced laser technology, focusing in particular on laser
vision correction of common refractive disorders such as myopia and
astigmatism.
B. The Professional has experience in vision correction by use of advanced
laser technology; and
C. The Professional may elect to utilize facilities, equipment and support
services of the Company for professional services rendered to patients
by the Professional.
NOW, THEREFORE, the parties hereto covenant and agree as follows:
1. CERTAIN DEFINITIONS. For the purposes of this Agreement, the
following capitalized terms are defined as follows:
1.1. LVC Procedures, Care and Centers:
1.1(a) "PROCEDURE" shall mean a refractive surgical procedure for
treatment of a patient's eye (bilateral treatment of both eyes shall be
considered two Procedures for purposes hereof).
1.1(b) "RE-OP PROCEDURE" shall mean a Procedure for treatment of a
patient's eye required to correct or adjust a previous Procedure as to the same
eye within 18 months of the previous Procedure.
1.1(c) "POST-OP CARE" shall mean post-operative care performed with
respect to Procedures and Re-Op Procedures within 12 months of such Procedures.
<PAGE> 2
1.1(d) "LVC CARE" shall mean, collectively, Procedures, Re-Op
Procedures, Post-Op Care and any other vision eye care services rendered for
patients by licensed health care professionals covered by the terms of this
Agreement.
1.1(e) "LVC CENTERS" shall mean, collectively, the facilities and sites
established by the Company for the rendering of LVC Care by the Professional.
1.2. Professional Fees:
1.2(a) "SURGICAL FEE" shall mean a fee paid to the Professional or any
other licensed health care professional designated by the Professional for
performing a surgical Procedure and, if necessary, a Re-Op Procedure. The
parties hereto understand that any Re-Op Procedure is included free of charge
with the original Procedure, and therefore the Surgical Fee for the Re-Op
Procedure shall be considered part of the Surgical Fee for the original
Procedure.
1.2(b) "POST-OP FEE" shall mean a fee paid to the Professional or any
other licensed health care professional designated by the Professional for
Post-Op Care and treatment.
1.2(c) "PROFESSIONAL FEES" shall mean, collectively, Surgical Fees,
Post- Op Fees and any other fees for professional medical services rendered by a
licensed health care professional.
1.3. Company LVC Support Fees:
1.3(a) "SERVICE FEES" shall mean amounts charged to licensed health
care professionals and providers for use of the LVC Services to support the
Professional's LVC Care activities. Service Fees shall include, among any other
relevant charges, amounts charged for equipment use, medical supplies and for
any other charges relating to the use of equipment, but excluding all
Professional Fees.
1.3(b) "ADMINISTRATIVE FEES" shall mean all charges of the Company for
billing, collection and accounting services, training and education, marketing
and advertising, and management and administration of operations, facilities and
equipment, but excluding all Professional Fees.
1.3(c) "TOTAL SUPPORT FEES" shall mean, collectively, Service Fees and
Administrative Fees and any other fees and costs included directly or indirectly
in charges to professionals and health care providers for LVC Care, but
excluding all Professional Fees and excluding all goods and services, sales or
use taxes applicable to Total Support Fees.
1.4. "GROSS PROCEDURE FEE" shall mean the total Professional Fees
2
<PAGE> 3
and Total Support Fees established hereunder and charged by the Professional to
a patient for a Procedure and, if applicable, a Re-Op Procedure and other LVC
Care. The Gross Procedure Fees accordingly includes all Professional Fees
charged by the Professional and other licensed health care professionals engaged
by the Professional and all Total Support Fees charged to such health care
providers by the Company for LVC Care, all as the foregoing terms are defined
above.
Unless otherwise directed by the Professional, the
Company understands that the standard allocation distribution of the
Professional Fees portion of the Gross Procedure Fee shall be one hundred
percent (100.0%) of the Professional Fees shall be paid to the Professional or
another licensed health care provider designated by the Professional for the
Procedure, any related Re-Op Procedures and/or Post-Op Care.
2. LVC SERVICES AND SUPPORT TO BE RENDERED BY THE COMPANY. During the
term of this Agreement, the Company covenants and agrees to provide the
Professional with the following support services:
(a) To acquire and maintain LVC equipment in the metropolitan
area of ___________, Califonia, with such LVC equipment and maintenance thereof
to meet all ethical and professional standards as prescribed by the Company's
Medical Advisory Board and the manufacturer's requirements.
(b) To establish a public education and marketing program to
promote LVC Care to the public in the geographic markets of the state of
California by means of advertising and other programs conforming to ethical and
professional standards established by the Company's Board of Directors with the
advice and consent of the Company's Medical Advisory Group.
(c) To train and maintain an adequate support staff for the
management, administration, operation and maintenance of the Company's LVC
Services, consistent with ethical and professional standards established by the
Company's Board of Directors with the advice and consent of the Company's
Medical Advisory Group.
(d) To sponsor and promote general awareness of LVC Care
within the professional community by sponsoring and promoting educational and
training seminars for health care professionals at the Company's LVC Centers,
all at the cost of the Company.
3
<PAGE> 4
3. TOTAL SUPPORT FEES PAYABLE TO THE COMPANY.
3.1. The parties hereto agree that the Gross Procedure Fee for
each Procedure performed at an LVC Center, together with any related Post-Op
Care and related Re-Op Procedure, if necessary, shall be established by the
Professional from time to time for each such Procedure performed hereunder by
the Professional. Provided, however, that the parties covenant and agree that
the Gross Procedure Fee shall in no event be less than $1,950 per Procedure
(United States funds) unless the parties hereto shall have mutually agreed in
writing to a lower minimum Gross Procedure Fee based upon all relevant factors.
The billing, collection and payment of the Gross Procedure Fee shall be subject
to applicable laws, rules and regulations of any entity or governing body of
competent jurisdiction. Subject to the above, the Professional shall provide the
Company with a schedule of the various Gross Procedure Fees established from
time to time for LVC Care services, and shall not amend such Gross Procedure
Fees except on prior written notice to the Company.
3.2. In consideration of equipment use, accounting,
administration, general marketing and other support services to be rendered by
the Company hereunder, the parties covenant and agree that the Total Support
Fees to be charged by the Company during the term of this Agreement to the
Professional and to other licensed health care providers designated by the
Professional shall be $500 for each Procedure plus the manufacturer's patent
royalty fee to the excimer laser manufacturer and any applicable goods and
services, sales or use taxes applicable to such Total Support Fees. The Company
may change the Total Support Fees to be charged to the Professional upon two (2)
weeks written notice to the Professional.
3.3. At the Professional's request, the Company will bill
patients on behalf of the Professional for all such Gross Procedure Fees and
shall use its best efforts to collect the same for the joint account of the
Professional, other health care providers designated by the Professional and the
Company. The Company shall disburse to itself the sum equal to the Total Support
Fees portion of the Gross Procedure Fees collected on behalf of the
Professional. The Company shall provide the Professional with a detailed
accounting of billings and collections of such Gross Procedure Fees within 15
days after the end of each month, together with such additional detail as the
Professional or his representative shall request in order to calculate any
payments made to the Company under the terms of this Agreement.
4. REPRESENTATIONS OF PROFESSIONAL. The professional hereby makes the
following representaions to the Company:
(a) The Professional is duly licensed to practice ophthmalogy in the
State of California and shall be certified to perform all Procedures that he
shall perform at the Company's Laser Services Centers.
4
<PAGE> 5
(b) The Professional shall be covered by a medical malpractice
insurance policy with coverage on each Prodcedure to be performed by the
Professional of not less than $1,000,000 per claim at the time of performing all
Procedures at the Company's Laser Services Centers.
5. SEVERABILITY AND AGREEMENT TO REFORM.
5.1. The parties hereto agree that the covenants and agreements
contained in this Agreement shall be construed as if the covenants and
agreements are divided into separate and distinct covenants in respect of each
of the obligations of the parties hereunder. Nothing in this Agreement is
intended or shall be construed as requiring any act or agreement in violation of
law or of applicable rules and regulations of any entity or governing body
having competent jurisdiction of the subject matter, whether now in effect or as
the same may be amended or become effective during the term of this Agreement.
Should any provisions of this Agreement be determined to be unenforceable, in
violation of public policy, or contrary to applicable laws, rules or regulations
of any entity of governing body having competent jurisdiction, the parties
covenant and agree promptly to amend and reform this Agreement for the purpose
of deleting any such provisions and to substitute therefor such alternative
provisions for the purposes of implementing, to the extent possible in
compliance with applicable law, rules and regulations, (i) either the intention
of the parties in entering into this Agreement and the economic relationships
between them as originally contemplated herein, or (ii) a fair and equitable
adjustment of the remaining provisions of this Agreement to compensate any party
injured by the deletion of one or more portions of this Agreement.
5.2. Subject to the foregoing provisions of Section 5.1, in the event
any covenant or other provision contained in this Agreement shall be deemed to
be illegal, unenforceable or unreasonable by a court or other entity or
governing body of competent jurisdiction, such determination shall not affect
the enforceability of the remaining covenants and provisions of this Agreement,
all of which shall remain enforceable to the extent permitted by law.
6. TERM AND TERMINATION.
6.1. The initial term of this Agreement shall commence with the
execution of this Agreement by all parties hereto and shall be deemed effective
as of the date first above written (the "Effective Date"), and shall continue
for a period of five (5) years following the Effective Date, unless earlier
terminated in accordance with the following provisions:
6.1.1. The parties may mutually agree to terminate this
Agreement at any time by written consent executed by Company and the
Professional.
5
<PAGE> 6
6.1.2. In the event the Company shall be in material breach of
any covenant or agreement on its part to be performed in this Agreement, this
Agreement may be terminated by the Professional at his sole discretion at any
time thereafter upon thirty (30) days prior written notice to the Company unless
such material breach has been cured during such 30 day period of grace. The
inability of the Professional to use outpatient surgical LVC Services of the
Company by reason of force majeure shall not be deemed a material breach unless
the Company is unable to place its LVC equipment in a condition suitable for the
performance of Procedures in keeping with high medical standards of professional
care within a reasonable period. Any such termination of this Agreement shall
not relieve the parties hereto of obligations incurred through the effective
date of termination.
6.1.3. In the event the Professional shall be in material
breach of any covenant or agreement on his part to be performed in this
Agreement, this Agreement may be terminated by the Company at any time
thereafter upon thirty (30) days prior written notice to the Professional unless
such material breach has been cured during such 30 day period of grace. The
inability of the Professional to perform Procedures, whether by reason of
disability or any other cause, shall not be deemed a material breach unless such
inability is continuous for a period of at least six (6) consecutive months. Any
such termination of this Agreement shall not relieve the parties hereto of
obligations incurred through the effective date of termination.
6.2. Upon the expiration of the initial term of this Agreement, this
Agreement shall be automatically renewed for successive periods of one (1) year
each unless any party hereto shall provide the other party with written notice
of its intent to terminate this Agreement at least three (3) months prior to the
expiration of the then current term of this Agreement or any renewal thereof.
7. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered or
certified mail, postage prepaid, or by commercial overnight courier (such as
Federal Express, DHL, etc.) with written verification of receipt, to his last
known business address or residence in the case of the Professional or to its
last known principal office in the case of the Company.
8. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed by a waiver of any
subsequent breach.
9. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California.
6
<PAGE> 7
10. ASSIGNMENT. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
of the Company. The Professional may assign all or any portion of the benefits
of this Agreement to any professional corporation beneficially owned by the
Professional, but shall not assign any of the Professional's duties under this
Agreement which the parties hereby agree are personal and unique.
11. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties as to the subject matter hereof and thereof. This Agreement may not
be changed orally but only by an agreement in writing signed by the party
against whom enforcement of any waiver, modification, extension or discharge is
sought.
IN WITNESS WHEREOF, the parties have executed this Agreement, effective
as of the day first written above.
"PROFESSIONAL": ________________________________________
(SIGNATURE)
________________________________________
Print Name of Professional
"COMPANY": VISTA LASER CENTERS OF THE PACIFIC, INC.
By:____________________________________
David P. Bates III, President
7
<PAGE> 8
ADDENDUM TO SERVICE AGREEMENT
This ADDENDUM (the "Addendum") to the Service Agreement dated as of
________________, 1996 (the "Serivce Agreement") by and between the Company and
___________________ (the "Professional"), hereby amends the Service Agreement,
but only to the extend set forth below:
A. In consideration of the mutual covenants herein contained the
Company shall conduct an extensive marketing and advertising program on behalf
of the Professional and other health care providers with which the Company has
contracted or will contract. The Company hereby agrees to refer all pertinent
information with respect to potential patients (the "Patient Leads") for Patient
Leads which indicate such patient lives or works in the following geographic
territory (the "Territory")____________________________________, California,
which comes into the Company's possession as a result of its marketing and
advertising program, to the Professional. "Patient Leads" as used herein shall
also be deemed to include all information obtained by the Company from actual
patients of the Professional or other health care providers represented by the
Company which originated from a Patient Lead provided by the Company. In the
event both the Company and the Professional have contacted the Patient Lead, it
is hereby agreed that whichever contacted the Patient Lead last shall be deemed
to have produced the patient.
B. The Professional hereby agrees to perform all LVC Procedures on his
patients which result from the Patient Leads at the Company's LVC Service
Centers and pay the Company the required Total Services Fees therefor, all as
described in the Service Agreement. In addition, the Professional agrees to pay
to the Company from the Gross Procedure Fee (defined in the Service Agreement)
collected by the Company or otherwise, a referral fee of $420 for each PRK
Procedure performed on the patient and $510 for each LASIK Procedure performed
on the patient.
C. In the event the Professional terminates this Addendum to the
Service Agreement or the Service Agreement, the Professional agrees that neither
he nor any or his employees, agents or assigns shall ever contact a patient
which resulted from a Patient Lead for the purpose of obtaining any additional
information with respect to additional patients. The Professional hereby agrees
that the Company shall be entitled to obtain preliminary injunctive relief
against the Professional as a remedy for the breach of this covenant in this
Addendum.
[SIGNATURE PAGE FOLLOWS]
8
<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Addemdum, effective
as of the day first written above.
"PROFESSIONAL": ________________________________________
(SIGNATURE)
________________________________________
Print Name of Professional
"COMPANY": VISTA LASER CENTERS OF THE PACIFIC, INC.
By:____________________________________
David P. Bates III, President
9
<PAGE> 1
EXHIBIT 10.19
SUBLEASE
SAN LEANDRO SURGERY CENTER, LTD.
and
LASER VISION CONSULTANTS
January 1, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Definition of Certain Terms ........................................ 1
1.01 Definitions ................................................... 1
2. Term of Lease; Quiet Enjoyment; Use of Premises .................... 4
2.01 Term and Option to Extend, Quiet Enjoyment .................... 4
2.02 Use of Demised Premises; Signage .............................. 5
3. Rent ............................................................... 6
3.01 Rent .......................................................... 6
3.01 (a) Base Rent ................................................. 6
3.01 (b) Additional Rent ........................................... 6
3.01 (c) Tenant Tax Contribution ................................... 6
3.01 (d) Partial Month ............................................. 6
3.01 (e) Rent Due Date ............................................. 6
3.02 Parking ...................................................... 7
4. Intentionally Omitted .............................................. 7
5. Insurance .......................................................... 7
5.01 Insurance Required ............................................ 7
5.02 Policy Terms and Beneficiaries ................................ 8
6. Personal Property of Tenant ........................................ 9
6.01 Tenant's Property ............................................. 9
6.02 Removal ....................................................... 9
7. Maintenance; Repairs, Utilities .................................... 9
7.01 Repairs and Maintenance ....................................... 9
8. Construction of Improvements; Possession; Later Improvements .......10
8.01 Tenant's Required Improvements ................................10
8.02 Possession of Demised Premises ................................10
8.03 Tenant Leasehold Improvements .................................10
8.04 Ownership and Maintenance .....................................11
8.05 No Liability ..................................................12
9. Compliance with Legal Requirements .................................12
9.01 Legal Requirements ............................................12
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
10. Discharge of Liens ...................................................12
10.01 No Liens Permitted, Removal ....................................12
11. Damage or Destruction ................................................12
11.01 Election to Terminate Lease ....................................12
11.02 Repair .........................................................13
11.03 Waiver of Subrogation ..........................................13
12. Condemnation .........................................................13
12.01 Entire Property ................................................13
12.02 Partial Taking .................................................13
12.03 Allocation of Award ............................................14
12.04 Temporary Taking ...............................................14
12.05 Definitions ....................................................14
12.06 Waiver .........................................................15
13. Going Dark ...........................................................15
13.01 Going Dark ....................................................15
14. Tenant's Default; Landlord's Remedies ................................15
14.01 Events of Default ..............................................15
14.02 Remedies .......................................................16
14.03 Bankruptcy .....................................................18
14.04 Survival .......................................................18
15. Tenant's Notice to Landlord of Defaults ..............................18
15.01 Landlords Default ..............................................18
16. Assignments and Subleases ............................................18
16.01 Restrictions on Assignment and Subletting ......................18
16.02 Notice of Offer, Right to Terminate ............................18
16.03 Related Companies ..............................................19
16.04 Liability Continues ............................................20
17. Termination of Lease; Surrender ......................................20
17.01 Surrender, Holding Over ........................................20
17.02 Survival .......................................................20
18. Landlord's Right to Perform Tenant's Covenants .......................21
18.01 Right to Perform ...............................................21
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
19. Inspection by Landlord ...............................................21
19.01 Inspection .....................................................21
20. Indemnification ......................................................21
20.01 Tenant's Indemnification .......................................21
20.02 Environmental Matters ..........................................22
20.03 Landlord's Obligations .........................................22
20.04 Survival .......................................................22
21. Landlord's Exculpation ...............................................23
21.01 Limitation of Liability ........................................23
21.02 Sale of Demised Premises .......................................23
21.03 Survival .......................................................23
22. Notices ..............................................................23
22.01 Method; Effective Date .........................................23
22.02 Reduced Time ...................................................23
23. Certificates .........................................................24
23.01 Lease Estoppel .................................................24
23.02 Environmental, Certificate .....................................24
23.03 Tenant Compliance ..............................................24
23.04 Tenant Financial Statements ....................................24
24. Miscellaneous Provisions .............................................24
24.01 Invalidity of Certain Provisions ...............................25
24.02 Captions and Table of Contents .................................25
24.03 Independent Operation ..........................................25
24.04 Time of the Essence ............................................25
24.05 Waiver .........................................................25
24.06 Counterparts ...................................................25
24.07 Short Form Lease ...............................................26
24.08 Covenants to Bind and Benefit Respective Parties ...............26
24.09 Integration; No Oral Modifications .............................26
24.10 Gender; Number .................................................26
24.11 Rights and Remedies Cumulative .................................26
24.12 Covenants Independent ..........................................26
24.13 Corporate Authority and Status .................................26
24.14 Cost of Performance ............................................27
24.15 Attorney's Fees ................................................27
24.16 No Offer .......................................................27
24.17 Applicable Law .................................................27
24.18 Reasonableness; Construction ...................................27
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
25. Management Services Provided by Sublandlord ................................28
</TABLE>
TABLE OF EXHIBITS
Exhibit A Legal Description of Demised. Premises - Section 1.01 (d)
Exhibit B Site Plan - Section 1.01 (d)
iv
<PAGE> 6
SUBLEASE FOR LASER VISION CONSULTANTS
THIS SUBLEASE made as of the first day of January, 1996, between San
Leandro Surgery Center, Ltd., a California Limited Partnership, (hereafter
"Sublandlord"), and Laser Vision Consultants, (hereafter referred as
"Subtenant").
RECITALS
A. Sublandlord has a leasehold interest in a building located at 15035
East 14th Street, San Leandro, California (the "Building"), pursuant to the
terms of a lease executed on June 10, 1994 ("Master Lease"), by and between
Sublandlord and Shadrall Associates, a New York general partnership that is the
owner of the Building ("Landlord"). The Building shall house an ambulatory
surgery center to be developed and operated by Sublandlord.
B. Sublandlord desires to sublease to Subtenant a portion of the
premises now occupied by Sublandlord under the terms of the Master Lease.
C. Laser Vision Consultants conducts a private ophthalmology clinic
that offers vision therapies to its patients, and desires to sublease from
Sublandlord medical office space in the Building.
AGREEMENT
For and in consideration of the mutual promises, covenants and
conditions herein contained and the rent reserved by Sublandlord to be paid by
Subtenant to Sublandlord, Sublandlord hereby subleases to Subtenant and
Subtenant hereby rents from Sublandlord the Demised Premises, as hereinafter
defined, for the term, at the rentals and upon the terms and conditions set
forth below.
ARTICLE 1 - DEFINITION OF CERTAIN TERMS.
Section 1.01 - Definitions. As used in this Sublease, the following
terms shall have the meanings set forth below:
(a) "Additional Rent" shall mean and include any amounts other
than Base Rent required to be paid by Subtenant to Sublandlord
pursuant to any of the provisions of this Sublease, including,
without limitation, common area maintenance, tax, insurance
and utilities contributions.
(b) "Alterations" shall mean and include all improvements,
changes, alterations and betterment to the Demised Premises.
(c) "Commencement Date" shall mean January 1, 1996.
(d) "Demised Premises" shall mean the leasehold space as described
in EXHIBIT A OF THIS LEASE together with all improvements
therein and any and all leasehold improvements permanently
affixed or attached at any time by Sublandlord, Subtenant or a
previous occupant in the Demised Premises, including, without
limitation, any heating, ventilation, air conditioning
<PAGE> 7
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 2.
units and electrical systems. Demised Premises also includes
free parking for Subtenant's employees, patients and visitors.
(e) "Environmental Laws" shall mean all laws referred to in
subparagraph (g) of this Section; each Environmental Law is a
Legal Requirement.
(f) "Force Majeure" shall mean causes beyond the reasonable
control of Subtenant or Sublandlord, as the case may be,
including but not limited to "acts of God", fire and other
casualties, earthquakes and floods, strikes, lock-outs,
protests, riots, insurrection, war, nuclear disaster,
unavailability of materials, acts of governmental authority,
including courts, or acts or conduct of the other party to
this Sublease, its employees or agents, in violation of this
Sublease. Such causes shall not include financial difficulties
or inability to obtain financing.
(g) "Hazardous Materials" shall mean any hazardous, toxic or
infectious substance, material, gas or waste which is or
becomes regulated by any governmental authority or the United
States Government or any of their agencies, or which has been
identified as a toxic, cancer causing or otherwise hazardous
substance. The term "Hazardous Materials" includes, without
limitation, any material or substance which is (a) defined as
a "hazardous waste", "extremely hazardous waste" or
"restricted hazardous waste" under Sections 25115, 25117 or
25122.7, or is listed pursuant to Section 25140, of the
California Health and Safety Code, Division 20, Chapter 6.5,
as it may from time to be amended (the "Hazardous Waste
Control Law"), (b) defined as "hazardous substance" under
Section 25316 of the California Health and Safety Code,
Division 20, Chapter 6.8 as now existing or hereafter amended
(the "Carpenter-Presley-Tanner Hazardous Substance Account
Act"), (c) defined as a "hazardous material", "hazardous
substance" or "hazardous waste" under Section 25501 of the
California Health and Safety Code, Division 20, Chapter 6.95
as presently existing or hereafter amended (the "Hazardous
Materials Release Response Plans and Inventory"), (d) defined
as a "Hazardous Substance" under Section 25281 of the
California Health and Safety Code Division 20, Chapter 6.7 as
presently existing or hereafter amended (the "Underground
Storage of Hazardous Substances Act"), (e) petroleum, (f)
polychlorinated biphenyl (PCB), (g) asbestos, (h) listed under
Article 9 or defined as hazardous or extremely hazardous
pursuant to Article 11 of Title 22 of the California
Administrative Code, Division 4, Chapter 20, as now existing
or hereafter amended, (i) designated as a "hazardous
substance" pursuant to Section 307 of the Federal Water
Pollution Control Act (33 U.S.C. Section 1317), as presently
existing or hereafter amended or designated as a "hazardous
substance" pursuant to Section 311 of the Clean Water Act (33
U.S.C. Section 1251 et seq.), (j) defined as a "hazardous
waste" pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act (42 U.S.C. 6901 et seq.), as
presently existing or hereafter amended or (k) defined as a
"hazardous substance" pursuant to Compensation and Liability
Act (42 U.S.C. Section 9601 et seq.), all statutes and
regulations as presently existing or hereafter amended.
(h) "Sublandlord" shall mean San Leandro Surgery Center, Ltd. and
any purchasers, successors or assigns of the Demised Premises
or any assignee of their interest under this Sublease.
(i) "Sublease Year" shall refer to a period of 365 days (366 in
any leap year) commencing on the Commencement Date or an
anniversary of the Commencement Date. In the event the
<PAGE> 8
SUBLEASE/LASER VISION CONSULTANT'S
January 1, 1996
Page 3.
Commencement Date is other than the first day of a month, each
Sublease Year shall commence on the first day, and each
anniversary thereof, of the first full calendar month
following the Commencement Date, and any additional days
between the Commencement Date and the beginning of the first
Sublease Year shall be included as a part of the first
Sublease Year.
(j) "Legal Requirements" shall mean (i) all present and future
laws, ordinances, orders, rules, regulations and requirements
of all federal, state and municipal governments, departments,
commissions, boards and courts, and rules and regulations of
any insurance rating organization or any other body exercising
similar functions, foreseen or unforeseen, ordinary as well as
extraordinary, which may be applicable to the Demised Premises
or to the use or manner of use of the Demised Premises by the
owners, tenants, or occupants thereof; (ii) the requirements
of all companies providing public liability, fire and other
policies of insurance at any time in force with respect to the
Demised Premises; (iii) the provisions of any covenants,
conditions, restrictions, easements or agreements of record
governing the Demised Premises; and (iv) the requirements of
any Mortgage.
(k) "Mortgage" shall mean any mortgage, deed of trust or security
agreement now or hereafter encumbering or creating a lien on
any portion of the Demised Premises, as the same may be
consolidated, renewed, replaced, extended or modified,
excluding security interests encumbering Subtenant's leasehold
interest only.
(l) "Mortgagee" shall mean the holder or holders of any Mortgage
or the beneficiary or beneficiaries under any deed of trust
constituting a Mortgage.
(m) "Personalty" shall mean and include any and all personal
property, inventory, goods, stock, chattels, trade fixtures,
furniture, furnishings and equipment (excluding those items
included within the definition of Demised Premises as set
forth in Subsection 1.01(d)(ii), which items are and shall
remain the property of Sublandlord from and after the time
they are installed) owned by Subtenant or any subtenant,
concessionaire or licensee and now or hereafter located on or
used in connection with the Demised Premises.
(n) "Real Estate Taxes" shall mean any form of real property tax,
excise or assessment (whether general or special), tax on
commercial rentals and receipts, gross receipts tax (but not
any federal or state net income, gift, inheritance, estate or
transfer taxes), or documentary transfer tax on the making of
this Sublease, imposed now or in the future by any authority
having the direct or indirect power to tax, including, but not
limited to, any city, county, state or federal government, or
any school, agricultural, lighting, drainage or other
improvement district thereof, levied against or with respect
to the land and buildings comprising, or any legal or
equitable interest of Sublandlord in, the Demised Premises, or
Sublandlord's business of leasing the Demised Premises, or
gross income derived from such business, and further including
all reasonable costs and expenses, including reasonable
attorneys', consultants' and accountants' fees, incurred in
determining, filing, contesting and appealing any such tax,
excise or assessment or a judgment with respect thereto. In
the event a taxing authority shall impose taxes in lieu of
real property taxes described above, such taxes shall be
deemed included within the definition of Real Estate Taxes.
Sublandlord represents that it has
<PAGE> 9
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 4.
received no written notice of, nor has it any actual knowledge
concerning, any general or special assessment relating to the
Demised Premises other than real estate taxes based on the
value of the Demised Premises.
(o) "Related Company" shall mean an entity affiliated with or
which directly or indirectly controls, is controlled by or
shares substantial common ownership with Subtenant (including,
without limitation, a parent, subsidiary or sister
corporation).
(p) "Rent Commencement Date" shall mean the first day of January,
1996.
(q) "Subtenant" shall mean Laser Vision Consultants and any party
or parties succeeding to the interest in the Demised Premises
of such named party in accordance with the provisions of this
Sublease.
ARTICLE 2 - TERM OF SUBLEASE; QUIET ENJOYMENT; USE OF PREMISES.
Section 2.01 - Term and Option to Extend; Quiet Enjoyment.
(a) The term of this Sublease shall commence on the Commencement
Date and shall end at 11:59 p.m. on December 31, 2000 (the
"Initial Term"), unless such term shall be extended as
provided in subsection (b) below or sooner terminated as
hereinafter provided. The term of this Sublease, including any
extension thereof if Subtenant exercises the Option Term in
accordance with the provisions hereof, is referenced herein as
the "Sublease Term".
(b) Provided that Subtenant is not then in default hereunder, and
the Master Lease has not terminated, Subtenant may extend the
Initial Term by furnishing written notice to Sublandlord of
its exercise of Subtenant's right to extend the term of this
Sublease, not more than two years nor less than one year prior
to the expiration of the last year of the Initial Term.
Subtenant may upon compliance with such conditions extend the
term of this Sublease for additional periods of two years each
up to a maximum of ten (10) years ("Option Term"). If
Subtenant shall be in default beyond any cure period provided
in this Sublease on the day before the Option Term is to
commence, at Sublandlord's election and notice to Subtenant,
Subtenant's exercise of the extension pertaining to the Option
Term shall be deemed void and this Sublease shall thereupon
terminate.
(c) Sublandlord shall deliver possession of the Demised Premises
to Subtenant on the Commencement Date. Sublandlord covenants
that so long as Subtenant shall fully and timely perform the
agreements, terms, covenants and conditions hereof, and so
long as the Master Lease remains in effect, Subtenant shall
and may peaceably and quietly have, hold and enjoy the Demised
Premises for the Sublease Term without disturbance by or from
Sublandlord or anyone claiming under Sublandlord, subject to
all Mortgages and other matters to which this Sublease is or
may become subordinate and to the provisions contained herein.
<PAGE> 10
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 5.
Section 2.02 - Use of Demised Premises; Signage.
(a) Subtenant covenants and agrees that Subtenant will use or
permit the use of the Demised Premises only as an
ophthalmology clinic, for out-patient medical services and for
medical offices related thereto and no other use. Subtenant
represents and covenants that it, and each assignee, sublessee
and all professional employees of Subtenant and each assignee
and sublessee, shall at all times during the Sublease Term be
licensed to conduct the business contemplated by the foregoing
and carried on in the Demised Premises, and Subtenant agrees
to maintain and caused to be maintained at all times, at its
sole cost and expense, all requisite permits and/or licenses
in connection therewith. Notwithstanding the foregoing,
Subtenant will in no event use or occupy the Demised Premises
or allow the Demised Premises to be used or occupied. (i) for
any unlawful or immoral purpose, and will not suffer any
unlawful or immoral act to be done or any unlawful or immoral
condition to exist on the Demised Premises; (ii) for any
business or purpose deemed extra hazardous on account of fire
or otherwise; (iii) in violation of any Legal Requirement;
(iv) so as to commit or permit to be committed any waste
thereon; (v) for any retail sales other than sales of medical
products incidental to the use of the Demised Premises as
provided above; (vi) so as to allow or suffer any act or thing
which may be a nuisance, annoyance, inconvenience or damage to
Sublandlord or any adjacent property; and (vii) so as to
permit any noxious odors or vapors, or any noise, which are
objectionable to any tenant of any adjacent property.
(b) Subtenant covenants and agrees that it shall fixturize and
initially open for business and continually operate during the
term of this Sublease in the Demised Premises as specified in
(a) above within one (1) month after the Commencement Date
(the "Opening Date"), subject to delays caused by Force
Majeure of which Subtenant shall give Sublandlord notice
within 15 days after each such delay begins. Failure to so
open for business shall be a default of this Sublease.
(c) Subject to the approval of the appropriate municipal authority
and the Sublandlord (as to which such approval shall not be
unreasonably withheld), Subtenant may erect and maintain signs
on the exterior of the Demised Premises. All signs shall
comply with all Legal Requirements. Subtenant shall keep
insured and shall maintain such signs in good condition and
repair at all times. Subtenant shall remove all such signs at
the end of the Sublease Term, repairing any damage caused
thereby.
(d) Subtenant covenants and agrees that Subtenant and its
successors, assigns, subtenants, licensees, concessionaires
and occupants and their agents, employees, contractors, and
invitees, shall not, at any time during the Initial Term or
any Option Term, cause or permit any Hazardous Materials,
other than cleaning supplies and medical supplies and wastes
which shall be stored, handled, used and disposed of in
accordance with all Legal Requirements, to be brought upon,
stored, manufactured, blended, handled, or used in, on, or
about the Demised Premises for any purpose. Prior to the use
of the Demised Premises by Subtenant, Subtenant shall apply
for, obtain and deliver copies to Sublandlord, all permits,
approvals and licenses necessary or advisable so as reasonably
deemed by Sublandlord, to Sublandlord. All such permits,
approvals and licenses shall be maintained in effect during
the Sublease Term.
<PAGE> 11
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 6.
ARTICLE 3 - RENT.
Section 3.01 - Rent. Subtenant shall pay to Sublandlord or such other
party as Sublandlord may from time to time designate by notice to Subtenant, in
legal tender of the United States, without deduction, abatement or set off,
except as provided in this Sublease, at the address of Sublandlord specified
herein or furnished pursuant to the terms hereof. Rent payments will begin on
the Rent Commencement Date as described herein.
(a) Base Rent. Subtenant shall pay triple net rent ("Base Rent")
in the amount of $1.35 per square foot of the Demised Premises
per month during the first year of the Initial Term, which
amount will increase by the amount of the CPI Index for the
San Francisco Metropolitan Area each year for the next four
years of the Initial Term.
All Base Rent due pursuant to this Sublease shall be paid in
equal monthly installments in advance on the first day of each
calendar month during the Sublease Term.
(b) Additional Rent. In addition to Base Rent, Subtenant shall pay
to Sublandlord as Additional Rent a Service Charge for
Subtenant's prorated share of utilities, real estate taxes,
general repairs and maintenance and facility operations. For
purposes of this section, utilities shall mean water, gas,
electricity, sewer service and trash collection. Where
possible, utilities will be charged based on metered usage.
Otherwise utilities will be charged on a prorated basis as
described herein. As shown in Exhibit A, Subtenant's Demised
Premises constitute two and one half percent (2.5%) of the
total space in the facility. Therefore, Subtenant will be
charged as Additional Rent, 2.5% of those costs that are
prorated to each tenant in the facility.
(c) Subtenant Tax Contribution. Subtenant covenants and agrees to
pay promptly when due all taxes imposed upon its business
operations, its Personalty, and any fixtures or appurtenances
included as a part of the Demised Premises that are the
property of Subtenant and not Sublandlord.
(d) Partial Month. In the event that the Rent Commencement Date is
on a date other than the first day of a month, the payment
owing for Base Rent for such partial month shall be the
monthly rent divided by the number of days in the month and
multiplied by the number of days left in the partial month.
(e) Rent Due Date. All rent is due the first working day of the
month and must be paid no later than ten (10) days thereafter.
Section 3.02 - Parking. Subtenant is afforded free parking. If
Sublandlord is required to assess parking fees by any governmental agency,
Sublandlord reserves the right to pass these fees on to Subtenant as Additional
Rent.
ARTICLE 4 - INTENTIONALLY OMITTED.
<PAGE> 12
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 7.
ARTICLE 5 - INSURANCE.
Section 5.01 - Insurance Required.
(a) During the Sublease Term, Subtenant, at its sole cost and
expense, shall provide and keep in force, or cause to be kept
in force:
(i) commercial general liability insurance with the broad
form endorsement including, but not limited to,
personal injury and contractual liability coverage of
at least $3,000,000.00, combined single limit for
both bodily injury and property damage resulting from
a single occurrence, occurring in and around the
Demised Premises and any exterior signs maintained by
Subtenant, automobile liability insurance with limits
of not less than $1,000,000.00 combined single limit
for both bodily injury and property damage resulting
from one occurrence and a general liability umbrella;
(ii) at all times during which construction is being
performed upon the Demised Premises by Subtenant, its
agents or contractors, "All Risk" builders risk
insurance with limits of coverage not less than 100%
of full replacement cost of Subtenant's leasehold
improvements and owner's and contractor's protective
insurance and independent contractor's insurance with
coverage of at least $2,000,000.00 for a single
occurrence and for property damage;
(iii) workmen's compensation insurance at legally required
levels and employers liability insurance at limits of
not less than $500,000.00 per accident for the
benefit of all employees entering upon the Demised
Premises or any portion thereof as a result of or in
connection with their employment by Subtenant;
(iv) professional liability insurance by each professional
who is an employee of Subtenant, at or is otherwise
working in, the Demised Premises with coverage of at
least $1,000,000 per professional per incident,
$3,000,000 per professional aggregate per year, and
(v) "All Risk" casualty insurance against loss or damage
by fire and other perils, vandalism and malicious
mischief, in an amount covering not less than 100% of
the replacement cost of trade fixtures, equipment,
and furnishings of Subtenant in the Demised Premises;
in no event shall Sublandlord be responsible for any
such loss or damage in excess of insurance required
by Subtenant hereunder.
(b) Sublandlord shall obtain casualty and other insurance covering
loss, injury and damage in, on and to the Demised Premises,
but excluding the insurance described in Section 5.01 (a).
Such insurance shall include "all risk" casualty insurance and
insurance against sprinkler damage, boiler or compressor
explosion and vandalism and malicious mischief in an amount
equal to the full replacement cost of the improvements so
insured (less items which Subtenant is required to insure),
and, in Sublandlord's business judgment (but Sublandlord shall
notify Subtenant if it terminates earthquake insurance
relating to the Demised Premises), earthquake and (if the
Demised Premises is located in a flood hazard area) flood
insurance, which
<PAGE> 13
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 8.
insurance may be in the form of a general coverage or blanket
policy covering the Demised Premises and other properties.
Sublandlord's "all risk" casualty insurance currently carries
a deductible of $5,000.00.
Section 5.02 - Policy Terms and Beneficiaries. All insurance provided
by Subtenant shall name Sublandlord and each Mortgagee as additional named
insured, as their respective interests may appear. No policy may contain a
deductible amount greater than $10,000.00, unless such greater amount has been
approved by Sublandlord in writing; in any event Subtenant shall be liable for
all deductible amounts. Prior to the Commencement Date and 20 days prior to the
expiration date of any prior insurance policy, Subtenant shall deliver to
Sublandlord copies of all policies required hereunder or certificates evidencing
the existence and amount of such insurance, issued by an insurer or insurers
reasonably satisfactory to Sublandlord, licensed or otherwise authorized to do
business in the State of California, and rated A-/X or better as to policy
holder rating and as to financial rating in the most current issue of Best's Key
Rating Guide. Subtenant shall procure policies for all insurance at least 30
days before the expiration of prior policies. Each insurance policy shall
contain the following provisions: (i) the agreement of the insurer to give
Sublandlord and each Mortgagee at least 30 days notice by registered mail prior
to cancellation, change in coverage or any other material change in such policy;
(ii) agreement to waiver of subrogation rights against Sublandlord; (iii)
agreement that such policy is primary and non-contributing with any insurance
that may be carried by Sublandlord; (iv) a statement that the insurance shall
not be invalidated should any insured waive in writing prior to a loss any or
all right of recovery against any party for loss occurring to the property
described in the insurance policy, and (v) a statement that no act or omission
of Subtenant or any other insured shall affect or limit the obligation of the
insurance company to pay the amount of any loss sustained. Subtenant's casualty
insurance may be in the form of a general coverage or blanket policy covering
the Demised Premises and other premises, provided that Sublandlord and each
Mortgagee are specifically named therein as additional named insured with regard
to the Center.
Subtenant shall pay all of any increase in premiums for any insurance
which is a result of the type of services rendered by Subtenant or its
activities in the Demised Premises, whether or not Sublandlord has consented to
the same.
In the event Subtenant fails at any time during the term of this
Sublease to obtain and keep in force required insurance or to provide
satisfactory evidence thereof, Sublandlord shall have the right but not the duty
to procure such insurance, and Subtenant shall pay to Sublandlord the costs and
expenses thereof upon demand as Additional Rent. Subtenant and Sublandlord
hereby waive any right of subrogation against the other party hereto. The
amounts of any insurance required of Subtenant in this Sublease shall in no
event be less than the amount required by any Mortgagee of Sublandlord, and the
limits of insurance shall not limit Subtenant's liability under this Sublease.
ARTICLE 6 - PERSONAL PROPERTY OF SUBTENANT.
Section 6.01 - Subtenant's Property. All Personalty shall remain the
property of Subtenant. Sublandlord shall under no circumstances whatsoever be
responsible for any loss or damage occurring to any Personalty, except for the
gross negligence of Sublandlord. No x-ray machines or other electrical or
electronic or electromagnetic or other medical equipment, machines or devices
shall be installed or used in the Demised Premises unless completely at
Subtenant's sole cost and expenses, in accordance with all terms and conditions
of this Sublease, including without limitation all Legal Requirements.
<PAGE> 14
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 9.
Section 6.02 - Removal. Upon the expiration or earlier termination of
this Sublease, Subtenant shall remove any and all Personalty and repair any
damage to the Demised Premises caused thereby. Subtenant shall not remove any
plumbing or electrical fixtures or equipment (other than medical fixtures or
equipment installed by Subtenant, such as surgical lamps, scrub sinks and
autoclave equipment, all of which shall be removed by Subtenant), heating or air
conditioning equipment, floor or wall coverings, paneling, tile or other
materials on the walls, floors or ceilings, any fixtures or appurtenances
included within the definition of Demised Premises or any fixtures or machinery
that were furnished or paid for by Sublandlord, all of which shall be deemed to
constitute a part of Sublandlord's estate. The Demised Premises and the
immediate areas in front of, behind and adjacent to it shall be left in a
broom-clean condition. If Subtenant shall fail to so remove its Personalty, or
any medical fixtures or equipment as noted above, at the termination of this
Sublease, such Personalty and medical fixtures or equipment not removed by
Subtenant shall be deemed abandoned by Subtenant, and, at the option of
Sublandlord, (i) shall become the property of Sublandlord or (ii) may be
disposed of without accountability in such manner as Sublandlord may see fit,
and Subtenant shall pay to Sublandlord the cost and expense of removal and
repair of all damage to the Demised Premises which is caused by such removal.
ARTICLE 7 - MAINTENANCE; REPAIRS; UTILITIES.
Section 7.01 - Repairs and Maintenance. After the Commencement Date and
until termination or expiration of this Sublease, Subtenant shall make and pay
for all repairs and replacements to the exterior and interior of the Demised
Premises that have been damaged by Subtenant or any of its employees, agents or
other parties to whom Subtenant has given access to the demised premises,
ordinary wear and tear excluded. Sublandlord will provide ordinary maintenance
to the Demised Premises except for those fixtures and equipment that are part of
Subtenant's Personality. Sublandlord's responsibilities shall include, but not
be limited to, all structural components, roof, roof systems, exterior and
interior walls, exterior and interior lighting facilities, exterior and interior
doors and windows, loading docks, exterior and interior signs, the canopy along
the front of the Demised Premises, utility equipment systems and installations
including air conditioning, heating, water heating, plumbing, and electrical to
the extent that such systems and installations service the Demised Premises,
glass and show windows, moldings and bulkheads, partitions, floor surfaces and
subsurfaces, ceilings, fixtures, and equipment and all appurtenances thereto,
parking lot, planters, landscaping, wheel stops, lights and light standards,
curbs and curb costs, sidewalks, exterior columns and the trash enclosure.
Subtenant shall at its expense maintain and operate all of its interior and
exterior signs, and shall keep the surfaces of the Demised Premises, including
signs, in good, sightly and clean condition. Any damage to the exterior walls,
canopy or roof to which any sign may be attached, including but not limited to
rust stains and structural cracking of the facia, caused by Subtenant's use of
such sign, shall be repaired by Subtenant at its own cost. Subtenant shall
promptly make all maintenance, repairs and replacements in and to the Demised
Premises as are needed to maintain the standard set forth above. In addition to
the foregoing, Sublandlord shall install, repair, replace and maintain fire
extinguishers and other fire preventative equipment, including, but not limited
to, the fire sprinkling system, in the Demised Premises, in accordance with all
present and future Legal Requirements. When used in this Sublease, the term
"repairs" shall include, but not be limited to, maintenance, replacements and
restorations. All repairs made by Subtenant shall be comparable in quality and
class to the original work.
If Subtenant fails to properly repair the Demised Premises as required
hereunder within 20 days after written notice, or in the event that such repair
shall take more than 20 days to complete and if Subtenant fails to promptly
commence such repair and diligently pursue such repair to completion, or in the
event of an
<PAGE> 15
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 10.
emergency, Sublandlord and/or Landlord may, but shall not be obligated to, make
such repairs, and, upon completion thereof, Subtenant shall pay Sublandlord's
costs of making such repairs within 10 days after presentation of the bill;
there shall be no warranty, either express or implied, with respect to any such
repairs performed by Sublandlord and/or Landlord.
Sublandlord and Landlord shall have no obligation to repair or replace
any part of the Demised Premises.
ARTICLE 8 - CONSTRUCTION OF IMPROVEMENTS; POSSESSION; LATER IMPROVEMENTS.
Section 8.01 - Subtenant's Required Improvements. As a condition of
Sublandlord entering into this Sublease, Sublandlord agrees to provide the
Subleasehold Improvements specified by Subtenant and as indicated in the plans
for this work which Subtenant has approved, and which are made a part of this
Sublease as EXHIBIT B. Sublandlord shall pay the cost of the Subleasehold
Improvements up to the cost of $57.10 per square foot of construction in the
Demised Premises. This restriction shall apply only to Subtenants primary space,
and not to shared space or Subtenant's share of Public Space in the Building.
Sublandlord reserves the right to impose certain building standards as to
construction, architectural design and other features in the plans, such as
special ceilings, even if the addition of such items fall within the $57.10
limitation. Items so designated by Sublandlord may be provided for Subtenant at
Subtenant's expense. Otherwise, costs exceeding $57.10 per square foot will be
the expense of the tenant. When Sublandlord knows the cost of items that exceed
the limitations as described in this section, Sublandlord shall notify
Subtenant, and obtain Subtenant's written approval to proceed with the
construction. In this case, Subtenant shall provide an escrow account into which
the full cost of the construction exceeding the limit shall be placed.
Sublandlord agrees to charge only the actual cost of the improvements.
Section 8.02 - Possession of Demised Premises. Subtenant shall take
possession of the Demised Premises on the Commencement Date.
Section 8.03 - Subtenant Subleasehold Improvements.
(a) After the Commencement Date, Subtenant from time to time may
construct improvements to the interior of the Demised Premises
("Interior Improvements") upon prior notice to Sublandlord
with copies of plans thereof. Interior Improvements affecting
the structure of the Demised Premises or having a total cost
in excess of $10,000.00, or Interior Improvements that change
the character of the Demised Premises to other than a facility
for the uses permitted by Section 2.02 (a), shall require
Sublandlord's prior written approval, which approval (other
than for work done pursuant to Sections 8.01 and 8.03) may be
withheld for any reason whatsoever. Subtenant shall not
construct improvements to the structure, roof or exterior of
the improvements on the Demised Premises or to the parking or
other exterior areas of the Demised Premises ("Exterior
Improvements") without Sublandlord's prior written approval,
which may be withheld for any reason whatsoever (other than
for work done pursuant to Sections 8.01 and 8.03); Interior
Improvements not affecting the structure of, or the general
layout of the existing improvements in, the Demised Premises,
or having a total cost of $10,000.00 or less, shall require
Sublandlord's prior written approval, which approval
<PAGE> 16
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 11.
shall not be unreasonably withheld or delayed. Subtenant shall
make such improvements to the Demised Premises as may be
required by governmental entities having jurisdiction thereof.
(b) Construction of Interior and Exterior Improvements
(collectively, the "Improvements") is subject to the
following:
(i) Prior to construction of Interior or Exterior
Improvements requiring Sublandlord's consent,
Subtenant shall submit plans and specifications
therefor ("Preliminary Plans") to Sublandlord for its
approval. Within ten (10) days after submission of
the Preliminary Plans, Sublandlord shall either
approve the Preliminary Plans or notify Subtenant in
writing of the reason(s), if any, for disapproval
thereof. In the event of Sublandlord disapproval
based on requested changes to such plans, Sublandlord
and Subtenant shall thereafter discuss changes to the
Preliminary Plans which meet the approval of
Sublandlord. The plans and specifications as finally
approved by Sublandlord are hereinafter referred to
as "Final Plans";
(ii) Prior to commencement of construction, Subtenant
shall notify Sublandlord of the date Subtenant
intends to commence construction of Improvements so
that Sublandlord may post or record notices of
non-responsibility;
(iii) Prior to the commencement of construction, Subtenant
shall apply for, obtain and provide copies to
Sublandlord of, all building permits and other
governmental approvals and entitlements which may be
necessary for the construction of the Improvements;
(iv) Prior to the commencement of construction and during
construction of Improvements, Subtenant shall comply
with all terms and conditions of this Sublease,
including, but not limited to, the requirements set
forth in Sections 5.01(a)(iii), 9.01 and 10.01
hereof, and
(v) Improvements shall be constructed by Subtenant in
substantial compliance with the Final Plans in a good
and workmanlike manner using new or like-new
materials, and shall proceed with due diligence and
promptly to completion.
Section 8.04 - Ownership and Maintenance. All Alterations and
Improvements, including, without limitation, all lighting fixtures, intercom
systems, installations and fixtures (other than trade fixtures), are and shall
be deemed to be and immediately become part of the Demised Premises and the sole
and absolute property of Sublandlord; provided, however, upon termination of
this Sublease at the election of Sublandlord, Subtenant shall remove at its sole
cost and expense from the Demised Premises all Alterations and Improvements made
by Subtenant. Notwithstanding the foregoing, Subtenant shall maintain insurance
coverage with respect to same, and shall maintain, repair and replace same, all
as more particularly provided for in this Sublease.
Section 8.05 - No Liability. Sublandlord's approval rights as provided
for herein are solely for Sublandlord's benefit and shall not give rise to any
liability whatsoever on the part of Sublandlord.
<PAGE> 17
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 12.
ARTICLE 9 - COMPLIANCE WITH LEGAL REQUIREMENTS.
Section 9.01 - Legal Requirements. This Sublease is subject to all
Legal Requirements now or hereafter applicable to the Demised Premises.
Subtenant shall promptly and fully comply with all Legal Requirements relating
to the Demised Premises and Subtenant's use thereof
ARTICLE 10 - DISCHARGE OF LIENS.
Section 10.01 - No Liens Permitted, Removal. Subtenant shall not permit
or suffer any (i) claim of lien to be filed by any person under any mechanics'
lien statute or materialmen's lien statute, (ii) lien imposed under any
Environmental Law or (iii) other liens against the Demised Premises, which claim
of lien relates to any action or failure to act by Subtenant, its employees,
agents, contractors or invitees. If any such claim of lien shall be filed
against the Demised Premises, Subtenant shall cause the lien to be discharged,
provided, however, that Subtenant may contest any such lien, so long as the
enforcement thereof is stayed and the lien is removed of record by means of a
bond or any other lawful means. If Subtenant shall fail to cause said lien to be
released of record within 45 days after notice to Subtenant from Sublandlord,
then Sublandlord may, but shall not be obligated to, discharge the same by
deposit or bonding. Any amount paid by Sublandlord and all costs and expenses
incurred by Sublandlord in connection therewith shall constitute Additional Rent
and shall be paid by Subtenant to Sublandlord on demand, along with interest at
the lower of 18% per annum or the highest rate then permissible under applicable
law.
Nothing herein shall be deemed to subject Sublandlord's estate in the
Demised Premises to any lien or liability under any law relating to liens.
Subtenant shall indemnify Sublandlord from and against all liabilities, damages,
losses, costs and expenses resulting from any lien filed against the Demised
Premises claimed to have resulted from Subtenant's actions or failure to act.
ARTICLE 11 - DAMAGE OR DESTRUCTION.
Section 11.01 - Election to Terminate Sublease. In the event the
Demised Premises shall be damaged (i) as a result of a risk not covered by
insurance required to be maintained under Section 5.01(b), or (ii) to the extent
of at least 20% of the replacement cost of the Demised Premises during the last
12 months, or to the extent of at least 35% of the replacement cost thereof
during the penultimate 12 months, of the Sublease Term (as the same may have
been extended as of the date of the damage), then Sublandlord or Subtenant shall
have the option, which shall be exercised within 60 days following such damage,
of terminating this Sublease, effective 90 days after the date of giving notice
thereof, provided that if, within sixty (60) days after the damage occurs,
Subtenant exercises its next option to extend (provided any such option is
otherwise exercisable by Subtenant), it shall waive its option to terminate; and
shall nullify or preclude exercise of Sublandlord's option to terminate under
(ii) above. If this Sublease is terminated under the preceding sentence on
account of a risk covered by insurance required to be maintained by Section 5.01
(b), Subtenant shall not be obligated to repair, restore or reconstruct the
Demised Premises, but Subtenant shall be responsible for the cost and expense of
such repair, reconstuction only to the extent of any deductible, and all
proceeds of such insurance shall be paid to Sublandlord.
<PAGE> 18
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 13.
Section 11.02 - Repair. If this Sublease shall not be terminated as
provided in Section 11.01 above, this Sublease shall continue in full force and
effect and there shall be no abatement of Base Rent, Additional Rent or any
other sum payable under this Sublease (except to the extent of proceeds
available from rental interruption insurance obtained pursuant to Section 5.01
(b)), and Subtenant shall, at Subtenant's expense (proceeds of casualty
insurance required to be obtained pursuant to Section 5.01 (b) being made
available to Subtenant for the cost of such repair and restoration), proceed
with and diligently pursue the repair or restoration of the Demised Premises and
return the Demised Premises to substantially the same condition they were in
immediately preceding the damage or destruction. Upon substantial completion
thereof, Subtenant shall promptly repair or replace all of its Personalty
damaged or destroyed, including, but not limited to, it's stock in trade, trade
fixtures and furniture.
Notwithstanding any provision herein to the contrary, subject to the
provisions of Section 11.03, Subtenant shall be responsible for all damages
resulting from and shall make all repairs and replacements necessitated by, any
damage caused by the negligent or intentional tortious acts or omissions of
Subtenant and its agents, employees, invitees and contractors.
Section 11.03 - Waiver of Subrogation. In the event the Demised
Premises or the fixtures or merchandise therein are damaged or destroyed by fire
or other casualty that is covered by insurance of Subtenant, Sublandlord or the
tenants, subtenants, concessionaires or licensees of Subtenant or Sublandlord,
regardless of cause or origin, including negligence, then the rights, if any, of
any party against the other, or against the employees, agents, subtenants,
concessionaires or licensees of any party, with respect to such damage or
destruction and with respect to any loss resulting therefrom, including the
interruption of the business of any of the parties, are hereby waived to the
extent of any recovery under said insurance. If the provisions of this section
limit insurance coverage for either party, the parties agree to renegotiate this
section.
ARTICLE 12 - CONDEMNATION.
Section 12.01 - Entire Property. If the whole of the Demised Premises
shall permanently be taken or damaged by any competent authority, this Sublease
shall terminate as of the date physical possession of the Demised Premises is
taken or damaged or immediate possession is ordered. Base Rent, Additional Rent
and all other charges payable hereunder shall be apportioned and paid up to said
date.
Section 12.02 - Partial Taking.
(a) If there is a taking of or damage to less than the entire
Demised Premises, this Sublease shall terminate as of the date
physical possession of the Demised Premises is taken or
damaged or immediate possession is ordered as to the portion
of the Demised Premises so taken or damaged, and the Base
Rent, Additional Rent and all other charges payable by
Subtenant hereunder allocable to the portion taken or damaged
shall be prorated to the date of such termination. With
respect to that portion of the Demised Premises not taken or
damaged, this Sublease shall continue in effect and the Base
Rent to reflect any loss of use of the building on the Demised
Premises.
(b) Subtenant shall, as promptly as possible, restore, repair and
replace that portion of the improvements on the Demised
Premises not so taken or damaged to a complete architectural
unit or units for the use and occupancy of Subtenant and, as
nearly as possible, to the
<PAGE> 19
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 14.
condition existing prior to the taking or damaging, the cost,
plans and specifications for which shall be subject to the
approval of Sublandlord, which shall not be unreasonably
withheld.
(c) So much of the award as is necessary for restoration, repair
and replacement of the Demised Premises as provided in
subsection (b) above shall be paid to Subtenant, and any
excess shall be allocated as provided in Section 12.03 below.
If the amount of the award is insufficient for such work of
repair and restoration, Sublandlord shall pay the deficiency.
(d) Notwithstanding the foregoing, Sublandlord or Subtenant may
elect, within 30 days after the taking or damaging, to
terminate the Sublease if so much of the ground floor area of
the Demised Premises is taken or damaged that Subtenant cannot
reasonably operate as contemplated by this Sublease, upon
written notice to the other, which notice shall specify a
termination date at least 30 days and not more than 90 days
from the date thereof. In such event, Subtenant shall not be
obligated to repair, restore or reconstruct the Demised
Premises.
Section 12.03 - Allocation of Award. Subject to Section 12.02(c) above,
the entire award or compensation, including interest, whether for a total or
partial taking or damaging or for a diminution in the value of Subtenant's
leasehold or Sublandlord's fee or other interest, shall belong to and be the
property of Sublandlord, and Subtenant hereby assigns to Sublandlord all of
Subtenant's interest in any award. Subtenant shall have the right to prove in
the proceedings related to the taking or damaging loss of, and to receive any
separate award which may be made for damage to or condemnation of, Subtenant's
equipment, trade fixtures, furniture and furnishings, and for relocation costs
and goodwill.
Section 12.04 - Temporary Taking. If there is a taking or damaging of
the temporary use of the Demised Premises, Subtenant shall give prompt notice
thereof to Sublandlord. The Sublease Term shall not be reduced or affected in
any way by such temporary taking or damaging, and the Base Rent and Additional
Rent shall not be abated during such period. Subtenant shall be entitled to and
shall receive the entire award for such taking or damaging during the Sublease
Term (whether paid by way of damages, rent or otherwise). At the termination of
any such use or occupation of the Demised Premises during the Sublease Term,
Subtenant will repair and restore the Demised Premises as nearly as reasonably
possible to its condition immediately prior to such taking or damaging.
Subtenant shall be entitled to claim, sue for and recover from the governmental
authority all damages and awards arising out of the failure of the governmental
authority to repair and restore the Demised Premises at the expiration of such
temporary taking or damaging. Any recovery or sum received as an award or
compensation for physical damage to the Demised Premises caused by and during
the temporary taking or damaging shall be deemed a trust fund held by the party
who receives the same for the purpose of repairing or restoring such damage.
Section 12.05 - Definitions. As used in this Article 12, (i) the term
"taking or damaging" shall mean any taking of or damage to all or any part of
the Demised Premises or any interest therein because of the exercise of the
power of eminent domain, whether by condemnation proceedings or otherwise,
including acts or omissions constituting inverse condemnation, or any transfer
of any part of the Demised Premises or any interest therein made in avoidance of
the power of eminent domain; and (ii) the "award" shall include, without
limitation, all monies awarded for the taking or damaging of the Demised
Premises and all estates or interests therein occurring before or after the
commencement of litigation proceedings.
<PAGE> 20
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 15.
Section 12.06 - Waiver. Each party waives the provisions of any
statute, rule or regulation, including the provisions of California Code of
Civil Procedure Section 1265.130, which otherwise allows either party to
petition the Superior Court to terminate this Sublease in the event of a partial
taking of the Demised Premises, and elects to be governed by the terms of this
Sublease.
ARTICLE 13 - GOING DARK.
Section 13.01 - Going Dark. Notwithstanding anything to the contrary in
this Sublease, Subtenant shall notify Sublandlord 60 days prior to the time, if
any, that it intends to cease operating a business in the Demised Premises ("Go
Dark Notice"). Subtenant may cease operating a business ("Go Dark") in the
Demised Premises 60 to 90 days from the date of the Go Dark Notice. Any time
after Subtenant has Gone Dark in the Demised Premises for a period of fifteen
(15) or more days, Sublandlord may terminate this Sublease as of a date no less
than 60 days and no more than 90 days from delivery of a notice to Subtenant
setting forth a termination date (the "Termination Date"). Upon the Termination
Date specified in Sublandlord's notice, this Sublease shall terminate as if the
Termination Date were the date specified in this Sublease for the expiration of
this Sublease. All obligations of Sublandlord and Subtenant under this Sublease
(excluding those that expressly survive expiration hereof), and all rights of
any assignees, sublessees, concessionaires and licensees of Subtenant, shall
expire on the Termination Date and be of no further force and effect.
ARTICLE 14 - SUBTENANT'S DEFAULT; SUBLANDLORD'S REMEDIES.
Section 14.01 - Events of Default. Each of the following events shall
be a default by Subtenant and breach of this Sublease:
(a) If Subtenant fails to pay Sublandlord any Base Rent, or fails
to pay any Additional Rent or other charges required to be
paid by Subtenant under this Sublease, within ten (10) days
after written notice to Subtenant of such default, which
notice shall be in lieu of and not in addition to any notice
required by law.
(b) If Subtenant fails to perform any of the agreements, terms,
covenants or conditions of this Sublease to be performed by
Subtenant other than the payment of rent, and such
non-performance continues for a period of 30 days after
receipt of written notice by Sublandlord to Subtenant, which
notice shall be in lieu of and not in addition to any notice
required by law, or if such performance cannot be completed
within such 30 day period, Subtenant shall not in good faith
have commenced such performance within such 30 day period and
diligently proceeded therewith to completion;
(c) If a levy under execution or attachment shall be made against
Subtenant of all or substantially all of Subtenant's property
in or at the Demised Premises and such execution or attachment
shall not be satisfied, stayed, vacated or removed by payment,
court order, bonding or otherwise within a period of 60 days
after entry of such execution or attachment;
(d) The filing of an involuntary petition against Subtenant under
the Bankruptcy Code or any other state or federal law relating
to bankruptcy or insolvency that is not dismissed within 90
<PAGE> 21
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 16.
days after being filed or the making or entry of a decree or
order by a court or determination by any regulatory or
governmental agency, if any, having jurisdiction over
Subtenant (i) that Subtenant is a bankrupt or is insolvent, or
(ii) approving as properly filed a petition seeking
reorganization of Subtenant under the Bankruptcy Code or any
other state or federal law relating to bankruptcy or
insolvency, or (iii) appointing a receiver or liquidator or
trustee in bankruptcy or insolvency of Subtenant or of its
property or any substantial portion of its property, or (iv)
constituting the winding up or liquidation of the affairs of
Subtenant;
(e) If Subtenant shall (i) institute proceedings to be adjudged a
voluntary bankrupt, or (ii) consent to the filing of a
bankruptcy proceeding against it, or (iii) file a petition or
answer or consent seeking reorganization or readjustment under
the Bankruptcy Code or any other state or federal law, or
otherwise invoke any law for the aid of debtors, or consent to
the filing of any such petition, or (iv) consent to the
appointment of a receiver or liquidator or trustee in
bankruptcy or insolvency of it or of its property, or (v) make
an assignment for the benefit of the creditors, or (vi) admit
in writing its inability to pay its debts generally as they
become due, or (vii) take any corporate action in furtherance
of any of the aforesaid purposes or (viii) be unable to meet
current obligations as they mature, even though its assets may
greatly exceed its liabilities.
Section 14.02 - Remedies. Upon the occurrence of an event of default by
Subtenant under this Sublease, Sublandlord may, at its option, take any or all
of the following actions:
(a) Elect not to terminate this Sublease or Subtenant's right to
possession of the Demised Premises, and enforce all of
Sublandlord's rights and remedies under this Sublease,
including the right to recover the rent as it becomes due and
payable by Subtenant. No acts by Sublandlord to maintain,
preserve or re-let the Demised Premises, or to appoint a
receiver to protect Sublandlord's interest under this
Sublease, or to remove property or store it at a public
warehouse or elsewhere at the cost of and for the account of
Subtenant, or otherwise, shall constitute an election to
terminate this Sublease or Subtenant's right of possession
unless written notice of such intention is given by
Sublandlord to Subtenant. Sublandlord may elect to terminate
this Sublease upon a re-letting of the Demised Premises or at
any other time after electing the remedy provided by this
Subsection, in which event the rent shall cease to accrue and
the damages provided by subsection (b) shall become available
to Sublandlord.
During the period Subtenant is in default, Sublandlord may
enter the Demised Premises and re-let them, or any part of
them, to third parties for Subtenant's account. Re-letting may
be for a period shorter or longer than the remaining term of
this Sublease. Subtenant shall pay to Sublandlord the rent due
under this Sublease on the dates the rent is due, less the
rent Sublandlord receives from any re-letting. If Sublandlord
re-lets the Demised Premises as provided in this subsection,
rent that Sublandlord receives from re-letting shall be
applied to the payment of: (i) first, any indebtedness from
Subtenant to Sublandlord other than rent due from Subtenant;
(ii) second, all reasonable costs, including those for
maintenance, remodeling and brokers' commissions, incurred by
Sublandlord in re-letting; and (iii) finally, rent due and
unpaid under this Sublease. After deducting the payments
referred to in this subsection, any sum remaining from the
rent Sublandlord receives from re-letting shall be held by
Sublandlord and applied in payment of future rent as rent
becomes due under this Sublease. If, on the date
<PAGE> 22
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 17.
rent is due under this Sublease, the rent received from the
re-letting and applied to rent due is less than the rent due
on that date, Subtenant shall pay to Sublandlord the remaining
rent due.
(b) Terminate this Sublease and all rights of Subtenant and any
subtenants, licensees or concessionaires hereunder by giving
written notice of such intention to terminate. In the event
that Sublandlord shall elect to terminate this Sublease as
provided in this subsection, then Sublandlord may recover from
Subtenant:
(i) The worth at the time of award of any unpaid rent
which has been earned at the time of such
termination;
(ii) The worth at the time of award of the amount by which
the unpaid rent that would have been earned after
termination until the time of award exceeds the
amount of such rental loss Subtenant proves could
have been reasonably avoided;
(iii) The worth at the time of award of the amount by which
the unpaid rent for the balance of the term after the
time of award exceeds the amount of such rental loss
that Subtenant proves could be reasonably avoided;
(iv) Any other amount necessary to compensate Sublandlord
for all the detriment proximately caused by
Subtenant's failure to perform its obligations under
this Sublease or which in the ordinary course of
events would be likely to result therefrom; and
(v) At Sublandlord's election, such other amounts in
addition to or in lieu of the foregoing as may be
permitted from time to time by the laws of the State
of California.
The term "rent" as used in this Article 14 shall be
deemed to be and to mean Base Rent, Additional Rent
and all other sums required to be paid by Subtenant
pursuant to the terms of this Sublease. As used in
sub-parts (i) and (ii) of this subsection (b), the
"worth at the time of award" is computed by allowing
interest at the lower of 18% per annum or the highest
rate then permitted by law. As used in sub-part (iii)
of this subsection (b), the "worth at the time of
award" is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent.
(c) Take any and all other action and pursue all other
rights and remedies provided at law, in equity
(including moving to enjoin a breach or threatened
breach) or under this Sublease. Efforts by
Sublandlord to mitigate the damages caused by
Subtenant's default shall not constitute a waiver of
Sublandlord's right to recover damages hereunder;
however, Sublandlord shall attempt to mitigate any
damages hereunder in accordance with applicable Legal
Requirements.
Section 14.03 - Bankruptcy. Nothing in this Article 14 shall limit or
prejudice the right of Sublandlord to prove or obtain as liquidated damages in
any bankruptcy, insolvency, receivership, reorganization or dissolution
proceeding an amount equal to the maximum allowed by a statute or rule of law
governing such
<PAGE> 23
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 18.
proceedings and in effect at the time when such damages are to be proved,
whether or not such amount is greater, equal to or less than the amount of the
damages referred to in any of the preceding sections.
Section 14.04 - Survival. The rights of Sublandlord as contained in
this Article 14 shall survive any termination of this Sublease.
ARTICLE 15 - TENANT'S NOTICE TO LANDLORD OF DEFAULTS.
Section 15.01 - Sublandlord's Default. Sublandlord shall not be in
default of this Sublease for failure to perform any of the agreements, terms,
covenants or conditions of this Sublease to be performed by Sublandlord unless
such non-performance continues for a period of 30 days after notice by Subtenant
to Sublandlord or, if such performance cannot be completed within such 30 day
period, Sublandlord shall not in good faith have commenced such performance
within such 30 day period and diligently proceeded therewith to completion. In
the event of an emergency requiring immediate action so as to prevent or
mitigate material damage to Subtenant's goods in the Demised Premises, Subtenant
may cure any default by Sublandlord hereunder after giving Sublandlord notice of
Subtenant's intention to do so, and Sublandlord shall pay to Subtenant the
reasonable direct costs incurred by Subtenant with regard to such cure within 30
days of receiving a bill therefor.
ARTICLE 16 - ASSIGNMENTS AND SUBSUBLEASES.
Section 16.01 - Restrictions on Assignment and Subletting. Subtenant
shall not (a) assign this Sublease by operation of law or otherwise without the
prior written consent of Sublandlord, which consent may not be withheld
unreasonably; (b) sublet all of the Demised Premises by operation of law or
otherwise without the prior written consent of Sublandlord, which consent may
not be withheld unreasonably; (c) sublet a portion (but in the aggregate not to
exceed fifty percent (50%) of the floor area thereof) of the Demised Premises
without giving notice thereof to Sublandlord, together with a copy of such
sublease, within five (5) days of signing such sublease; (d) partially assign
this Sublease under any circumstances; or (e) sublet any space in the Demised
Premises to other than a licensed medical professional and/or entity. It is the
specific, agreed intent of the parties that the Demised Premises shall be
maintained as a unified operation under a "major" tenant and that the preceding
restriction on partial assignments and sub-lettings is necessary to accomplish
this goal. Upon a sublease of a portion of the Demised Premises, Subtenant shall
construct a demising wall around the portion to be sublet in accordance with all
Legal Requirements.
Section 16.02 - Notice of Offer
(a) Whenever Subtenant has obtained an offer to assign this
Sublease or to sublease all or substantially all of the
Demised Premises or the portion thereof not previously sublet
by Subtenant, Subtenant shall provide to Sublandlord the name
and address of said proposed assignee or sublessee, the
minimum rent and percentage rent offered, the proposed use by
the proposed assignee or sublessee, the proposed effective
date of the assignment or subletting,
and any other business terms which are material to the offer and which differ
from the provisions of this Sublease ("Notice of Offer"). Subtenant shall also
provide to Sublandlord the nature of business, financial
<PAGE> 24
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 19.
statement and business experience resume for the immediately preceding five
years of the proposed assignee or sublessee and such other information
concerning such proposed assignee or sublessee as Sublandlord may reasonably
require. The foregoing information shall be in writing and shall be received by
Sublandlord no less than 30 days prior to the effective date of the proposed
assignment or sublease.
(b) Within 30 days after receiving a Notice of Offer for the
proposed assignment of this Sublease or the subletting of all
or substantially all of the Demised Premises or the portion
thereof not previously sublet by Subtenant which subletting or
assignment requires the consent of Sublandlord under this
Sublease, Sublandlord shall notify Subtenant that Sublandlord
either consents or declines to consent to the proposed
assignment or subletting. If Sublandlord does not consent to
the proposed assignment or subletting within 30 days after
receiving a Notice of Offer, Sublandlord shall be deemed to
have consented to the proposed assignment or subletting. If
the terms of any proposed subletting set forth in a Notice of
Offer and consented to by Sublandlord provide for rent at a
rate higher than that which is then being paid by Subtenant
(the "Current Rent"), then Sublandlord and Subtenant shall
share equally the difference between the Current Rent and the
proposed new rent.
(c) Any consent by Sublandlord to any assignment or sublease shall
not constitute a waiver of the necessity for consent to any
subsequent assignment or sublease. Anything herein contained
to the contrary notwithstanding, Subtenant shall not enter
into any assignment or subletting if same would violate any of
the terms of this Sublease or any Legal Requirement.
Section 16.03 - Related Companies. Anything in this Sublease to the
contrary notwithstanding, Subtenant shall have the right, without Sublandlord's
consent but only upon prior written notice and in each case to an entity which
is in the same principal business as the use permitted under this Sublease, to
assign this Sublease or to sublet the Demised Premises to any Related Company,
to any entity to whom it shall sell or transfer all of its capital stock,
substantially all of its assets, or, in the event of a merger or consolidation
of Subtenant with another corporation then to such corporation, provided,
however, that such entity's net worth shall in no event be less than $5,000,000.
A sale of stock by Subtenant (whether by an initial public offering or
otherwise) or by a shareholder of Subtenant shall not constitute an assignment
under the terms of this Sublease, unless such sale is in conjunction with a
transfer of the Demised Premises to a third party; a transfer to a third party
shall be deemed to have occurred if, following any transfer of stock, the use of
the Demised Premises is not in accordance with the uses presented by Section
2.02 (a). If Subtenant assigns this Sublease to any Related Company or other
entity described in this Section 16.04, Subtenant shall, by executing a guaranty
in form and content acceptable to Sublandlord, guarantee to Sublandlord
complete, absolute and unconditional performance of all terms and conditions of
this Sublease as if Subtenant remained the Subtenant under this Sublease and had
not assigned the same. No event or transaction described in, and in accordance
with, this Section 16.04 shall effect a change or modification to this Sublease
or permit Sublandlord to terminate this Sublease.
<PAGE> 25
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 20.
Section 16.04 - Liability Continues. Subtenant shall perform and
observe each and every term and condition to be performed or observed by
Subtenant as assignor or sublessor under all present and future assignments or
subleases. Subtenant shall be responsible for and liable to Sublandlord for all
acts and omissions on the part of any assignee or subtenant of Subtenant in the
Demised Premises. Any violation of any of the terms, provisions or conditions of
this Sublease, whether by act or omission, by any assignee or subtenant shall
constitute a breach of this Sublease by Subtenant. Permission is hereby granted
to Subtenant to bring proceedings to enforce the terms, provisions and
conditions of this Sublease against assignees and subtenants in Subtenant's own
name or in the name of Sublandlord, provided, however, that Sublandlord incurs
no cost or expense thereby or liability or obligation in connection therewith,
and Subtenant shall indemnify, defend and hold Sublandlord harmless from any
such costs, liabilities and expenses. Notwithstanding anything to the contrary
in this Sublease, no assignment or subletting, with or without consent, shall
release Subtenant from any of its obligations and liabilities under this
Sublease.
ARTICLE 17 - TERMINATION OF SUBLEASE; SURRENDER.
Section 17.01 - Surrender; Holding Over.
(a) On the last day of the Sublease Term or upon any earlier
termination of this Sublease, or upon any re-entry by
Sublandlord upon the Demised Premises pursuant to Article 14,
Subtenant shall (i) at the election of Sublandlord, remove
Subtenant Improvements made after the Commencement Date and
return the Demised Premises to the condition they were in
prior to making such Improvements, (ii) surrender and deliver
the Demised Premises free and clear of all subtenancies,
occupancies, liens and encumbrances created by Subtenant to
the possession and use of Sublandlord without delay and in
good order, condition and repair, reasonable wear and tear
excepted, and (iii) promptly surrender all keys for the
Demised Premises to Sublandlord at the place then fixed for
the payment of rent and inform Sublandlord of all combinations
on locks, safes and vaults, if any, in the Demised Premises.
(b) In the event Subtenant remains in possession of the Demised
Premises after the expiration of the Sublease Term, whether or
not with the consent or acquiescence of Sublandlord, and
without the execution of a new Sublease, Subtenant shall be
deemed to be occupying the Demised Premises on a month to
month tenancy only. Rent during this month to month tenancy
shall be payable monthly in advance in an amount equal to 150%
of the Base Rent and other charges due and payable immediately
prior to the expiration of the Sublease Term without prejudice
to Sublandlord's right to any damages which Sublandlord may
suffer if Subtenant fails to vacate upon the expiration of the
Sublease Term or the earlier termination of this Sublease. The
terms of such month to month tenancy shall be otherwise the
same as the terms, conditions, covenants, provisions and
obligations contained in this Sublease.
Section 17.02 - Survival. The provisions of this Article 17 shall
survive any termination of this Sublease.
<PAGE> 26
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 21.
ARTICLE 18 - SUBLANDLORD'S RIGHT TO PERFORM SUBTENANT'S COVENANTS.
Section 18.01 - Right to Perform. If Subtenant, at any time after the
lapse of 30 days from the receipt of written notice from Sublandlord, shall fail
to make any payment or perform any other act on its part to be made or
performed, then Sublandlord, without waiving Subtenant's default, may (but shall
be under no obligation to) make any payment or perform any other act on
Subtenant's part to be made or performed as provided in this Sublease. All sums
paid by Sublandlord and all reasonable costs and expenses incurred by
Sublandlord in connection with the performance of any such act, including,
without limitation, reasonable attorneys' fees, shall constitute Additional Rent
and shall be paid by Subtenant to Sublandlord within 30 days after receipt of an
invoice.
ARTICLE 19 - INSPECTION BY SUBLANDLORD.
Section 19.01 - Inspection. Subtenant will permit Sublandlord and its
authorized representatives to enter the Demised Premises upon reasonable notice
at all reasonable times for the purpose of (i) inspecting the same, (ii) making
any necessary repairs and performing any work contemplated in this Sublease,
including, without limitation, Articles 7 and 18, which entry may be made at any
time in the event of an emergency, (iii) showing the same to prospective
purchasers or Mortgagees, and (iv) showing the same to prospective tenants
during the last 12 months of the Sublease Term and (v) conducting any
environmental testing, sampling, borings, and analysis it deems necessary; such
testing shall be at Subtenant's expense if Sublandlord has a reasonable basis
for suspecting that Subtenant has breached its Hazardous Materials covenant
contained in Section 2.02(d) of this Sublease or if Sublandlord reasonably
believes that Hazardous Materials are present in the Demised Premises or the
soil or surface or ground water in, on, under, about or near the Demised
Premises due to acts or omissions of Subtenant or its successors, assigns,
subtenants, licensees, concessionaires or occupants of the Demised Premises or
their agents, contractors, employees and invitees.
ARTICLE 20 - INDEMNIFICATION.
Section 20.01 - Subtenant's Indemnification. Except to the extent
caused by the sole gross negligence or intentional tortious acts of Sublandlord,
Subtenant shall indemnify, defend and hold Sublandlord harmless from and against
any and all actions, claims, demands, penalties, liabilities or costs (including
reasonable attorneys' fees) incurred in connection with any loss, damage or
injury to persons or property occurring in or on the Demised Premises on and
after the Commencement Date (and in the event of any claims under Environmental
Laws, this shall also include any loss, damage or injury to persons or property
under, about or near the Demised Premises but as to claims under Environmental
Laws, Subtenant's indemnification hereunder shall relate only to a breach of
such laws by Subtenant, its contractors, subcontractors, subtenants,
concessionaires, licensees, agents, employees and invitees in the Demised
Premises occurring on and after the Commencement Date), or the operations or
activities of Subtenant and its subtenants, concessionaires, licensees or
occupants of the Demised Premises or any of their contractors, agents, employees
or invitees, or arising out of Subtenant's and their use of the Demised
Premises, or caused by the acts or negligence of Subtenant, its subtenants,
concessionaires, licensees or occupants and their contractors, agents, employees
or invitees. Subtenant shall in no event be responsible for (i) any
environmental matter existing in the Demised Premises as of the date of this
Sublease, or (ii) a breach hereafter of any Environmental Law by Sublandlord,
its agents or employees.
<PAGE> 27
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 22.
Section 20.02 - Environmental Matters. Subtenant covenants and agrees
that the storage, handling, removal and disposal of all medical waste matter at
and from the Demised Premises shall be done in compliance with all Legal
Requirements and shall be performed by Subtenant at Subtenants sole cost and
expense except for waste products that may legally be disposed of through the
waste and trash collection provided by landlord as part of the Services provided
by Sublandlord to Subtenant. The obligation of Subtenant to indemnify, defend,
and hold harmless Sublandlord for claims under Environmental Laws includes,
without limitation, costs incurred in connection with any investigation of site
conditions or any cleanup, remedial, removal, or restoration work required by
Sublandlord, any Mortgagee or any federal, state or local governmental agency or
political subdivision because of any Hazardous Materials occurring or present in
the Demised Premises, the soil or surface or ground water in, on, under, about
or near the Demised Premises, diminution in value of the Premises, damages for
the loss or restriction on use of rentable or usable space or of any amenity of
the Demised Premises, damages arising from any adverse impact on marketing of
space in the Demised Premises, and sums paid in settlement of claims, penalties,
attorneys' fees, court costs, consultant and laboratory fees and expert's fees.
Without limiting the foregoing, if any Hazardous Materials are found in the soil
or surface or ground water in, on, under, about or near the Premises, Subtenant
shall promptly take all actions required by Sublandlord, Mortgagee or
governmental agencies, at Subtenant's sole expense, necessary to return the
Demised Premises to the condition existing prior to the introduction of
Hazardous Materials in, on, under, about or near the Demised Premises in
accordance with Legal Requirements; any action undertaken by Subtenant shall be
subject to Sublandlord's prior approval of such actions, which approval shall
not be unreasonably withheld.
Section 20.03 - Sublandlord's Obligations. Anything in this Sublease to
the contrary notwithstanding, Subtenant shall have no obligation to Sublandlord
with regard to any environmental contamination of the Demised Premises existing
on the Commencement Date. Sublandlord agrees to enforce its rights pertaining to
such contamination against the party(ies) responsible therefor relating to the
costs and expenses of remediation thereof and to comply with directives of all
governmental agencies relating to hazardous materials existing on the Demised
Premises as of the Commencement Date, and Sublandlord shall indemnify and hold
Subtenant harmless from, and defend Subtenant with an attorney of Sublandlord's
choice against, the costs and expenses of any remediation relating thereto as
required by Environmental Laws or any litigation arising as a result of the
breach of any Environmental Laws existing as of the Commencement Date and any
claim against Subtenant arising therefrom; the foregoing indemnification by
Sublandlord shall be limited solely to the direct actual costs and expenses of
remediation, litigation and claims, and in no event shall extend to or include
lost opportunity, lost profits, property damage or other similar costs or
expenses. Anything in this Sublease to the contrary notwithstanding, Subtenant
acknowledges and agrees that Sublandlord or Landlord may enter in, upon and
under the Demised Premises to satisfy their obligations hereunder and to
accomplish remediation of any such environmental contamination, and any such
entry shall not be a breach of this Sublease by Sublandlord; provided, however,
Sublandlord shall use reasonable efforts to minimize disruption of Subtenant's
business in the Demised Premises caused by any such entry, and if Subtenant is
unable to operate its business in the Demised Premises due to any such entry,
then Rent hereunder shall abate to the extent that the amounts so abated are
recoverable from rental interruption insurance obtained pursuant to Section
5.01(b); and provided further that if such interruption shall extend beyond the
period as to which such abatement shall occur, then Subtenant may elect to
terminate this Sublease by notice to Sublandlord given not later than fifteen
(15) days after the end of such abatement period, such termination to be
effective fifteen (15) days thereafter.
Section 20.04 - Survival. The provisions of this Article 20 shall
survive any termination of this Sublease as to matters or occurrences which
preceded the termination.
<PAGE> 28
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 23.
ARTICLE 21 - LANDLORD EXCULPATION.
Section 21.01 - Limitation of Liability. Notwithstanding anything to
the contrary in this Sublease, any judgment obtained by Subtenant against
Sublandlord in any action relating to this Sublease or the Demised Premises
shall be satisfied only out of Sublandlord's interest in the Demised Premises
and the rents receivable by Sublandlord therefrom. Neither Sublandlord nor any
of its general or limited partners, officers, directors, shareholders,
beneficiaries or employees shall have any personal liability for any matter in
connection with this Sublease or its obligations as Sublandlord of the Demised
Premises, except as provided above. Subtenant shall not institute, seek or
enforce any personal or deficiency judgment against Sublandlord or any of its
general or limited partners, officers, directors, shareholders, beneficiaries or
employees, and none of their property, except the Demised Premises, shall be
available to satisfy any judgment hereunder.
Section 21.02 - Sale of Demised Premises. In the event of any sale or
transfer of the Demised Premises, the seller, transferor or assignor shall be
and hereby is entirely freed and relieved of all agreements, covenants and
obligations of Sublandlord thereafter to be performed, and it shall be deemed
and construed without further agreement between the parties or their successors
in interest or between the parties and the purchaser, transferee or assignee in
any such sale, transfer or assignment that such purchaser, transferee or
assignee has assumed and agreed to carry out any and all agreements, covenants
and obligations of Sublandlord hereunder.
Section 21.03 - Survival. The provisions of this Article 21 shall
survive any termination of this Sublease.
ARTICLE 22 - NOTICES.
Section 22.01 - Method; Effective Date. Whenever it is provided herein
that notice, notification, demand, request or approval is required, the same
shall be in writing and, any law or statute to the contrary notwithstanding, it
shall be effective for any purpose if given or served by intracity messenger
service or overnight courier service such as Federal Express or by mailing by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows: (a) If by Sublandlord, to Subtenant at 14075 East l4th
Street, San Leandro, California 94578, or at such other address as Subtenant may
from time to time designate by notice given to Sublandlord; and (b) If by
Subtenant, to Sublandlord at 345 Estudillo Avenue, San Leandro, California
94577, or at such other addresses as Sublandlord may from time to time designate
by notice given to Subtenant. Every notice, demand, request, approval or other
communication hereunder shall be deemed to have been given or served at the
earlier of actual receipt or one day after first attempted delivery.
Section 22.02 - Reduced Time. If any notice is given to Sublandlord by
a governmental agency pursuant to the Environmental Laws, or if any action is
required by a governmental agency pursuant to Environmental Laws in a period or
time which is less than thirty (30) days, then the notice and time periods
provided for in Section 14.01(b) and 18.01 shall be reduced to a time period
equal to the statutory time less two (2) days; the provision of this Section
shall prevail over the time periods provided for in Sections 14.01(b) and
18.01.
<PAGE> 29
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 24.
ARTICLE 23 - CERTIFICATES.
Section 23.01 - Sublease Estoppel. Each party (the "Certifying Party")
shall from time to time, within 20 days after receipt of written request
therefor, execute, acknowledge and deliver to the requesting party (the
"Requesting Party") or any existing or proposed Mortgagee or purchaser or
assignee of the Demised Premises or of any Mortgage, without charge, a duly
executed recordable certificate prepared by the Requesting Party certifying all
of the following to the best of the knowledge of the Certifying Party: (i) that
this Sublease is valid, subsisting, in full force and effect and unmodified (or,
if modified, that the Sublease as modified is valid, subsisting and in full
force and effect and stating with specificity all modifications); (ii) the dates
to which the rent and other charges have been paid; (iii) the Sublease Term;
(iv) that all conditions to Subtenant's possession of the Demised Premises and
commencement of the Sublease Term have been satisfied; if accurate, and if not,
stating those conditions which have not been satisfied; (v) that the Requesting
Party is not in default under any provisions of this Sublease, if accurate, and
if not, stating any defaults; (vi) that there are no offsets or defenses which
the Certifying Party then has against Requesting Party (or if there are any
offsets or defenses then claimed, stating the nature of same with specificity);
and (vii) such other information as may be reasonably requested and of which the
party requested has knowledge. It is intended that any such statement delivered
pursuant to this Article may be relied upon by the parties for whom it is
intended.
Section 23.02 - Environmental Certificate. Subtenant, in writing to
Sublandlord, within 20 days after receipt or request therefor, shall execute,
acknowledge and deliver to Sublandlord or any existing or proposed Mortgagee or
purchaser or assignee of the Demised Premises or any Mortgage, without charge, a
certificate stating that to the Subtenant's actual knowledge after due inquiry:
(i) Subtenant, its subtenants, concessionaires, licensees, occupants and their
contractors, agents, employees and invitees, have complied with the requirements
of all Environmental Laws, (ii) Subtenant, its subtenants, concessionaires,
licensees, occupants and their contractors, agents, employees and invitees have
not disposed of Hazardous Materials on, in, under, about or near the Demised
Premises, (iii) Subtenant, its subtenants, concessionaires, licensees, occupants
and their contractors, agents, employees and invitees have not released
Hazardous Materials on, in, under, about or near the Demised Premises, and (iv)
Subtenant received no notice and has no knowledge that soil or surface or ground
water contamination has occurred during the Sublease Term on, in, under, about
or near the Demised Premises. At any time during the Initial Term and the Option
Term, Subtenant shall, if requested by Sublandlord, promptly remove any and all
equipment, materials and other items which may cause, contribute to or result in
Hazardous Material contamination of the Demised Premises (the soil or surface or
ground water in, on, under, about or near the Demised Premises), and
investigate, remedy and clean up any Hazardous Material contamination if
Sublandlord or any governmental agency reasonably suspects contamination is
present or has occurred. Subtenant shall promptly [not later than two (2)
business days] notify Sublandlord of any release of Hazardous Materials on, in,
under, about or near the Demised Premises, specifying the nature and quantity of
the release, the location of the release, and the measures taken to contain and
clean up the release and ensure that future releases do not occur.
Section 23.03 - Subtenant Compliance. Subtenant hereby certifies that
the business activities which it intends to conduct in the Demised Premises do
not use any Hazardous Materials which shall be used in a manner so as to fail to
be in full compliance with Environmental Laws. Subtenant shall give notice to
Sublandlord of all Hazardous Materials used on the Demised Premises.
Section 23.04 - Subtenant Financial Statements. Upon the Commencement
Date, and thereafter upon written request by Sublandlord in the event of a
potential sale, financing or refinancing of the Demised
<PAGE> 30
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 25.
Premises, Subtenant shall furnish to Sublandlord at no cost Subtenant's most
recent year-end balance sheet and income and expense statement accompanied by a
certification of Subtenant's authorized financial officer that such financial
statements are true, accurate and complete.
ARTICLE 24 - MISCELLANEOUS PROVISIONS.
Section 24.01 - Invalidity of Certain Provisions. If any term or
provision of this Sublease or the application thereof to any person or
circumstance shall, to any extent be invalid or unenforceable, the remainder of
this Sublease, or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term and provision of this Sublease shall
be valid and be enforced to the fullest extent permitted by law.
Section 24.02 - Captions and Table of Contents. The captions and table
of contents appearing in this Sublease are for convenience and reference only
and in no way define, limit or describe the scope or intent of this Sublease, or
in any way affect this Sublease.
Section 24.03 - Independent Operation. Nothing in this Sublease shall
cause Sublandlord in any way to be construed as a partner, joint venturer or an
associate of Subtenant in the operation of the Demised Premises or subject
Sublandlord to any obligations, losses, charges or expenses connected with or
arising from the operation or use of the Demised Premises.
Section 24.04 - Time of the Essence. Time is of the essence of this
Sublease as to each of the terms, conditions, obligations and performances
contained herein or required hereunder of which time is a factor.
Section 24.05 - Waiver. No failure by either party to insist upon the
strict performance of any covenant, agreement, term or condition of this
Sublease or to exercise any right or remedy following a breach or default
thereof, no forbearance by either party to enforce one or more of the remedies
herein provided upon an event of default, and no acceptance of full or partial
rent during the continuance of any such breach or default, shall constitute a
waiver of any such breach or default or of such covenant, agreement, term or
condition. No covenant, agreement, term or condition of this Sublease to be
performed or complied with and no breach or default thereof shall be waived,
altered or modified except by a written instrument. No waiver of any breach or
default shall affect or alter this Sublease, but each and every covenant,
agreement, term and condition of this Sublease shall continue in full force and
effect with respect to any other then existing or subsequent breach or default
thereof. The maintenance of any action or proceeding to recover possession of
the Demised Premises or any installment or installments of Base Rent or any
other monies that may be due or become due from Subtenant to Sublandlord shall
not preclude Sublandlord from thereafter instituting and maintaining subsequent
actions or proceedings for the recovery of possession of the Demised Premises or
of Base Rent or any other monies that may be due or become due from Subtenant,
including all expenses, court costs and attorneys' fees and disbursements
incurred by Sublandlord. An entry or re-entry by Sublandlord shall not be deemed
to absolve or discharge Subtenant from liability hereunder.
Section 24.06 - Counterparts. This Sublease may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
<PAGE> 31
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 26.
Section 24.07 - Short Form Sublease. Sublandlord and Subtenant agree
that if either party so desires, they will execute a Short Form Sublease setting
forth the existence of this Sublease and the Sublease Term, which may be
recorded. The requesting party shall pay the recording charges and any
documentary transfer taxes associated therewith.
Section 24.08 - Covenants to Bind and Benefit Respective Parties. The
agreements, terms, covenants and conditions herein shall bind and inure to the
benefit of Sublandlord and Subtenant and their respective heirs, personal
representatives, successors and permitted assigns; provided that this section
shall not constitute a permission or authorization by Sublandlord to Subtenant
to assign or in any way transfer its interest in this Sublease.
Section 24.09 - Integration; No Oral Modifications. Subtenant hereby
acknowledges that except as and to the extent specifically provided for in this
Sublease, neither Sublandlord, nor any of its agents, representatives or
employees, have made any representations, warranties, agreements or promises,
and none shall be implied by law. This Sublease is intended by the parties to be
a final expression and a complete and exclusive statement of the agreement of
the parties regarding the subject matter hereof, and all negotiations between
the parties are merged herein. This Sublease cannot be changed, modified or
terminated orally, but may be amended only by an instrument in writing executed
by the party against whom enforcement of any waiver, change, modification or
discharge is sought.
Section 24.10 - Gender; Number. The use of the neuter pronoun in any
reference to Sublandlord or Subtenant shall be deemed to include any individual
landlord or tenant, and the use herein of the words "successors and assigns" or
"successors or assigns" of Sublandlord or Subtenant shall be deemed to include
the heirs, legal representatives and assigns of any individual landlord or
tenant. The use of the plural shall include the singular, and the use of the
singular shall include the plural, as the context may require or permit.
Section 24.11 - Rights and Remedies Cumulative. Each right and remedy
of Sublandlord and Subtenant provided for in this Sublease shall be cumulative
and shall be in addition to every other right or remedy provided for in this
Sublease or now or hereafter existing at law or in equity. The exercise or
beginning of the exercise by Sublandlord or Subtenant of any one or more rights
or remedies shall not preclude the simultaneous or later exercise by Sublandlord
or Subtenant of any or all other rights or remedies, nor shall it constitute a
forfeiture or waiver of any amounts owed to Sublandlord or Subtenant.
Section 24.12 - Covenants Independent. Each and every covenant and
agreement contained in this Sublease shall be deemed separate and independent
and not dependent upon any other provisions of this Sublease, and the damages
for failure to perform the same shall be deemed in addition to and separate and
independent of the damages accruing by reason of the breach of any other
covenant contained in this Sublease.
Section 24.13 - Corporate Authority and Status. If Subtenant is a
corporation, the person(s) signing this Sublease on behalf of Subtenant warrant
that such person(s) are authorized to execute this Sublease on behalf of
Subtenant, that no other signature is required, and that this Sublease shall be
binding on Subtenant. Subtenant's corporate status is in good standing.
Subtenant shall continuously keep its corporate status throughout the Sublease
Term in good standing, active and current with the state of its incorporation
and shall be and remain licensed to do business in the state in which the Center
is located.
<PAGE> 32
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 27.
Section 24.14 - Cost of Performance. Whenever it is indicated in this
Sublease that Sublandlord or Subtenant may, shall or will perform any act, then
such act shall be performed at the sole cost and expense of the performing party
unless otherwise specifically indicated to the contrary.
Section 24.15 - Attorneys' Fees. If either party becomes a party to any
litigation concerning this Sublease, the Demised Premises, or the building or
other improvements of which the Demised Premises form a part, by reason of any
act or omission of the other party or its authorized representatives, the party
that causes the other party to become involved in the litigation shall be liable
to that party for reasonable attorneys' fees, court costs, investigation
expenses, discovery costs, and costs of appeal incurred by it in the litigation.
If either party commences an action against the other party arising out of or in
connection with this Sublease, the prevailing party shall be entitled to have
and recover from the losing party reasonable attorneys' fees, court costs,
investigation expenses, discovery costs and costs of appeal.
Section 24.16 - No Offer. The delivery of an unsigned copy of this
Sublease to Subtenant shall not constitute an offer to Sublease the Demised
Premises or grant any rights to Subtenant as a result thereof, and this Sublease
shall not be binding on Sublandlord or Subtenant until executed by Sublandlord
and Subtenant and delivered.
Section 24.17 - Applicable Law. This Sublease shall be construed under
the laws of the State of California.
Section 24.18 - Reasonableness; Construction. This Sublease shall be
construed fairly as between both Sublandlord and Subtenant and without regard to
which party drafted the same. Except as otherwise provided, whenever this
Sublease provides that consent or approval of either party is required, such
consent or approval will not be unreasonably withheld or delayed. There are
certain provisions of this Sublease in which Sublandlord may withhold its
consent "for any reason whatsoever" and other provisions which prohibit certain
assignments and subleases or allow Sublandlord in certain circumstances to
terminate this Sublease in lieu of, or share profit upon, an assignment or
subletting of all or any portion of the Demised Premises or a cessation of
business therein. These specific provisions, which may be viewed as allowing
Sublandlord to deviate from a standard of reasonableness which is imposed on
Sublandlord and Subtenant in connection with other provisions of this Sublease,
have been lengthily negotiated and bargained for and represent a material part
of the consideration to be received by each party. The parties specifically
acknowledged and agree:
1. Both Sublandlord and Subtenant are sophisticated parties;
2. Neither party has unequal bargaining power;
3. Each party has been represented by counsel of their own
choosing who have advised the parties that there have been
recent legal cases interpreting lease provisions and imposing
covenants of good faith and fair dealing together with
reasonableness standards in connection with the type of lease
consents and provisions described above;
4. The parties, bearing in mind the rights, duties and
obligations of the parties to honor the implied covenants of
good faith and fair dealing, have specifically bargained for
and agreed that it is the intent of the parties that
Sublandlord, where provided for in this Sublease, may
<PAGE> 33
SUBLEASE/LASER VISION CONSULTANTS
January 1, 1996
Page 28.
exercise its consent authority pursuant to a subjective
standard of sole discretion, and further that it is the intent
of the parties that no person interpreting this Sublease shall
have the right to impose any standard on, or restriction of,
Sublandlord's rights (i) to withhold consent for any reason
whatsoever, or (ii) which restrict or condition Sublandlord's
consent on payment being made to Sublandlord, or (iii) which
provide for Sublandlord to terminate this Sublease, or (iv)
which prohibit certain assignments and subleases; and
5. The parties acknowledge that the provisions in favor of
Sublandlord may constitute a restraint on alienation; however,
the parties agree that if they are restraints, then they are
reasonable restraints on alienation.
6. The parties understand that Sublandlord intends to make
reasonable efforts to keep the Master Lease in force.
ARTICLE 25 - MANAGEMENT SERVICES PROVIDED BY SUBLANDLORD.
Upon request presented by subtenant to sublandlord in writing,
sublandlord will provide management services that may include but not
necessarily be limited to provision of personnel, supplies and similar services,
for which subtenant will reimburse sublandlord at rates agreed upon at the time
the agreement to provide such services is executed.
IN WITNESS WHEREOF, the parties hereto have executed this Sublease as
of the day and year first above written.
SUBLANDLORD: SAN LEANDRO SURGERY CENTER, LTD.
By: /s/ Sheila L. Cook, R.N.
----------------------------
Sheila L. Cook, R.N.
Managing General Partner
SUBTENANT: LASER VISION CONSULTANTS
By: /s/ David Bates
----------------------------
David Bates
Chief Executive Officer
<PAGE> 1
EXHIBIT 10.20
SUBLEASE AGREEMENT
THIS SUBLEASE, by and between Griffin & Reed Eye Care, Inc., a
California corporation ("Lessor"), and Vista Laser Centers of the Pacific, Inc.,
a Nevada corporation, ("Lessee"), is entered into effective as of July 1, 1996.
IT IS HEREBY AGREED AS FOLLOWS:
1. DESCRIPTION. Lessor does hereby sublease to Lessee and Lessee does
hereby sublease from Lessor under the terms and conditions hereinafter set forth
the office space situated in the office building owned by an affiliate of the
Lessor located at 651 Fulton Avenue, Sacramento, California. Said office space
has an area of approximately 620 square feet.
2. TERM. The term of the within sublease shall be nonth-to-month until
the Lessee completes its initial public offering (the "IPO"), after which date
this Sublease shall have a term of an additional three (3) years. This Sublease
shall be automatically renewed for additional periods of two (2) years, unless
terminated. Prior to the IPO, either party may terminate this sublease without
cause at any time by giving the other party at least thirty (30) days prior
written notice. After the IPO, the Lessor may not terminate this Sublease
without cause and the Lessee may terminate this Sublease without cause upon six
(6) months prior written notice.
3. RENT. Rent for the subleased space shall be $1.83 per square foot
per month, or $1,134.60 per month, including full service and all costs.
4. MAINTENANCE AND REPAIRS. Lessee shall be solely responsible for
repairs and maintenance originating within the inside perimeter of the subleased
premises. Lessor shall be responsible for such repairs and maintenance
originating elsewhere.
5. USE OF PREMISES. Lessee shall use the demised premises for only
refractive surgery services, conducted through employed or contracted personnel
duly licensed by the State of California, together with all ancillary services
related to refractive surgery.
6. ALTERATIONS. Lessee shall not make any alterations of said subleased
premises without the written consent of Lessor. Any additions to or alterations
of said premises shall become at once a part of the realty and belong to Lessor
at the termination of this Sublease. Lessee shall keep demised premises free
from any liens arising out of any work performed, material furnished or
obligations incurred by Lessee.
7. INDEMNITY. Lessee hereby agrees to indemnify Lessor against and hold
Lessor harmless from any and all claims or demands for loss of or damage to
property or for injury or death to any person from any cause whatsoever while
in, upon or about demised premises or the sidewalks adjacent thereto during the
term of this Sublease or any extension thereof, provided, however, that this
covenant shall not apply to injury to person or property resulting from acts of
Lessor, its agents, or employees while in or on the subleased premises. Lessee
<PAGE> 2
SUBLEASE - PAGE 2
agrees to obtain and maintain with a reputable insurance company at its sole
cost and expense, public liability insurance against property damage or personal
injury growing out of use of or occurring on or about the subleased premises,
with liability limits acceptable to Lessor.
8. ENTRY AND INSPECTION. The Lessee shall permit Lessor and its agents
to enter the subleased premises at all reasonable times
9. ASSIGNMENT AND SUBLETTING. Lessee shall not assign this Sublease or
any interest therein and shall not sublet the premises or any part thereof or
any right or privilege appurtenant thereto, without written consent of Lessor.
Lessor has sole right to terminate this Sublease with thirty (30) days notice if
notified in writing of any proposed or actual sublease by Lessee to another
party.
10. DESTRUCTION OF PREMISES. In the event of a partial destruction of
the premises during said term, from any cause, Lessor shall forthwith repair the
same. However, in the event of partial or total destruction of the premises,
this Sublease may be terminated at the option of either party.
11. LAWS AND REGULATIONS. Lessee at his own cost and expenses shall
comply with all laws, rules and orders of all federal, state and municipal
governments, or departments, which may be applicable to the subleased premises
and to Lessee's staff using said premises, including professional licensure.
12. SERVICE INTERRUPTION. Lessor shall not be liable to Lessee for
service interruption, including utility service interruption, whether occurring
by reason of earthquake, fire, flood, accident or any other reason.
13. HOLDING OVER. Any holding over after expiration of the said term
with the consent of Lessor shall be so construed to be a tenancy from
month-to-month at the then monthly rental, and shall otherwise be on the terms
and conditions herein specified so far as applicable.
14. SUBORDINATION. Lessee agrees that this Sublease shall be
subordinate to any mortgages or deed of trust in the nature of mortgages that
may hereafter be placed upon the premises.
15. COMPETITIVE COVENANT. So long as Lessee is occupying the premises
herein subleased and is not in default under this Sublease or any renewal
thereof, Lessor covenants that no space in the suite of which the subleased
premises are a part will be rented, leased, or occupied by any individual or
organization offering refractive surgery and associated services which are not
in competition with Lessee.
16. NOTICES. All notices to be given to Lessee by Lessor may be given
in writing personally or depositing the same in the United States Mail, postage
prepaid, and addressed to:
<PAGE> 3
SUBLEASE - PAGE 3
David P. Bates III, President
Vista Laser Centers of the Pacific, Inc.
14895 East 14th Street, Suite 400
San Leandro, CA 94578
All notices to be given to Lessor by Lessee may be given in writing personally
or depositing the same in the United States Mail, postage prepaid, and addressed
to:
Dr. J. Robert Griffin
Griffin & Reed Eye Care, Inc.
651 Fulton Avenue
Sacramento, CA 95825
IN WITNESS WHEREOF, Lessor and Lessee have executed this Sublease,
effective as of the day and year first above written.
GRIFFIN & REED EYE CARE, INC. VISTA LASER CENTERS OF THE
Lessor PACIFIC, INC.
Lessee
By:________________________________ By:____________________________
J. Robert Griffin, President David P. Bates III, President
<PAGE> 1
BASIC LEASE INFORMATION
OFFICE LEASE
Lease Date: May 15, 1996
Landlord: Bayfair Building, a California partnership
Managing Agent: Ardenbrook, Inc., a California corporation, Agent
Landlord's Address: Bayfair Building
c/o Ardenbrook, Inc., Agent
7901 Oakport Street
Oakland, CA 94621
Tenant: Vista Laser Centers of the Pacific, Inc., a Nevada corporation
Tenant's Address: Bayfair Building, Suite 400
14895 E. 14th Street
San Leandro, CA 94578
Legal Description of Land: See Exhibit "A"
Premises: Bayfair Building
14895 E. 14th Street, Suite 400
San Leandro, CA 94578
Rentable Area of
the Premises: Approximately One Thousand Two Hundred & Twenty Five plus or
minus (1,225 plus or minus) (Rentable) Sq. Ft.
Permitted Uses: General offices purposes only and no other use.
Term: Twelve calendar months (12) with an option to renew for Thirty Six (36)
calendar months, see attached.
Scheduled Term
Commencement Date: June 1, 1996
Annual Base Rent: ($ 12,000.00 /rentable square foot = $9.80
-------------
Monthly Base Rent: ($ 1,000.00 /rentable square foot = $.82
------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
------- ----
<S> <C> <C>
1. PREMISES..................................................... 1
1.01 Premises.............................................. 1
1.02 Exhibits.............................................. 1
1.03 Common Areas.......................................... 1
1.04 Landlord's Reserved Rights in Common Areas............ 1
1.05 Rentable Area......................................... 1
2. IMPROVEMENTS................................................. 2
2.01 Plans................................................. 2
2.02 Construction.......................................... 2
2.03 Failure to Complete Construction...................... 2
3. TERM......................................................... 2
3.01 Commencement of Term.................................. 2
4. RENT......................................................... 2
4.01 Base Rent............................................. 2
4.02 Additional Rent....................................... 2
4.03 Escalation............................................ 2
4.04 Late Payment.......................................... 3
4.05 Security Deposit...................................... 3
5. INSURANCE.................................................... 3
5.01 All Risk Coverage..................................... 3
5.02 Public Liability...................................... 3
5.03 Rental Abatement Insurance............................ 3
5.04 Insurance Certificates................................ 3
5.05 Tenant's Failure...................................... 3
5.06 Waiver of Subrogation................................. 4
5.07 Tenant's Property and Fixtures........................ 4
5.08 Indemnification of Landlord........................... 4
5.09 Earthquake and Flood Insurance........................ 4
6. OPERATING EXPENSES........................................... 4
6.01 Operating Expenses.................................... 4
6.02 Impositions........................................... 5
6.03 Services and Utilities................................ 5
6.04 Special Services...................................... 5
7. REPAIRS AND MAINTENANCE...................................... 6
7.01 Tenant Repairs and Maintenance........................ 6
7.02 Inspection of Premises................................ 6
7.03 Liens................................................. 6
8. FIXTURES, PERSONAL PROPERTY AND ALTERATIONS.................. 6
8.01 Fixtures and Personal Property........................ 6
8.02 Alterations........................................... 6
9. USE AND COMPLIANCE WITH LAWS................................. 6
9.01 General Use and Compliance with Laws.................. 6
9.02 Signs................................................. 7
9.03 Parking Access........................................ 7
9.04 Floor Load............................................ 7
9.05 Deliveries............................................ 7
10. DAMAGE AND DESTRUCTION....................................... 7
10.01 Reconstruction........................................ 7
10.02 Rent Abatement........................................ 7
10.03 Excessive Damage or Destruction....................... 7
10.04 Uninsured Casualty.................................... 7
10.05 Waiver................................................ 7
</TABLE>
<PAGE> 3
STANDARD OFFICE LEASE
THIS LEASE ("Lease"), dated as of this 15 day of May, 1996, by and between:
Bayfair Building, a California partnership
("Landlord") and
Vista Laser Centers of the Pacific, a Nevada corporation & J. Robert Griffin
M.D., a married man jointly & Severalty & David Bates, a married man jointly
and severalty
("Tenant") of space in the Bayfair Building ("Building")
located in the City of San Leandro, County of Alameda, State of California,
commonly known as 14895 E. 14th Street, Suite 400, described more particularly
on the Legal Description, attached hereto as Exhibit A, shall be upon the terms
and conditions contained hereinafter.
1. PREMISES
1.01. Premises. Landlord leases to Tenant, subject to the provisions
of this Lease. Approximately One Thousand Two Hundred & Twenty Five plus or
minus Sq. Ft. (Rentable) (1,225 plus or minus Rentable Sq. Ft.) rentable square
feet of office space in the Building, the usable space of which is shown on the
Building Floor Plan, attached hereto as Exhibit B ("Premises"). By entering
the Premises, Tenant shall be deemed to accept the same in their condition
existing as of the date of such entry and subject to all applicable municipal,
county, state and federal statutes, laws, ordinances, including zoning
ordinances, and regulations governing and relating to the use, occupancy or
possession of the Premises. Tenant acknowledges that the only warranties and
representations Landlord has made in connection with the physical condition of
the Premises or Tenant's use of the same upon which Tenant has relied directly
or indirectly for any purpose are those expressly provided in this Lease.
1.02. Exhibits. The following Exhibits are attached to this Lease
after the signatures and by reference thereto are incorporated herein:
Exhibit A -- Legal Description Exhibit D -- Work Letter
Exhibit B -- Building Floor Plan Exhibit E -- Rules and Regulations
Exhibit C -- Preliminary Plans Exhibit F -- Acknowledgment of
Commencement
1.03. Common Areas. Tenant shall have, as appurtenant to the Premises
and subject to reasonable rules and regulations from time to time made by
Landlord of which Tenant is given notice, the right to the use of the following
in common:
(a) Building Common Area. The common stairways and accessways,
conference rooms, lobbies, entrances, stairs, elevators and any passageways
thereto, and the common pipes, ducts, conduits, wires and appurtenant equipment
serving the Premises;
(b) Land Common Area. The common walkways, sidewalks, parking spaces
and driveways necessary for access to the Building and parking spaces; and
(c) Garage. The common parking garage ("Garage") and storage areas
therein, if any.
1.04. Landlord's Reserved Rights in Common Areas. Landlord reserves
the right from time to time:
(a) Building Changes. To install, use, maintain, repair and replace
pipes, ducts, conduits, wires and appurtenant meters and equipment for service
to other parts of the Building above the ceiling surfaces, below the floor
surfaces, within the walls and in the central core areas, and to relocate any
pipes, ducts, conduits, wires and appurtenant meters and equipment included in
the Premises which are so located or located elsewhere outside the Premises;
(b) Boundary Changes. To change the lines of the lot on which the
Building stands ("Lot") and to redesign and restripe the parking facilities
around the Building and make other reasonable changes and grant other rights
thereto, including without limitation, the granting of easements, rights of way
and rights of ingress and egress and similar rights to users of parcels
adjacent to the Lot.
(c) Facility Changes. To alter or relocate any other common areas or
facility.
(d) Garage Parking. Landlord reserves the right to grant exclusive use
to portions of the Garage and storage areas to tenants and to impose parking
charges from time to time for use of the Garage.
1.05 Rentable Area. As used in this Lease, the rentable area of space
within the Building shall be determined applying the Building Owners and
Managers Association ("BOMA") American National Standard (Reprinted May, 1981)
and shall include any balconies, which are for the specific use of Tenant. The
total rentable floor space in the Building shall be Approximately Forty
Thousand, Seven Hundred & Fifty-Three plus or minus (40,753 plus or minus)
square feet.
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adjustment date and the Base Index, and the denominator of which shall be the
Base Index; (c) in no event shall the Base Rent, as adjusted hereunder, be less
than that payable during the lease year immediately preceding such adjustment;
(d) in the event that there is a change in the method of calculation of the
CPI, Landlord shall, at Landlord's option, be permitted to make such adjustment
as may be necessary in order to approximate the result that would have occurred
had there been no change in the method of calculating the CPI; and (e) if it
becomes impossible to make the adjustment provided in (d) above, or if the CPI
fails to exist, then the CPI shall be replaced by such other index selected by
Landlord as may be generally recognized as a successor index, or if none, then
any other reasonable index which Landlord may select.
4.04. Late Payment. If any installment of Rent is not paid promptly on
the first of the month or otherwise when due, Tenant shall pay to Landlord a
late payment charge equal to ten percent (10%) of the amount of such delinquent
payment of Rent in addition to the installment of Rent then owing, regardless
of whether or not a notice of default or notice of termination has been given
by Landlord. This provision shall not relieve Tenant from payment of Rent at
the time and in the manner herein specified.
4.05. Security Deposit. Upon executing this Lease, Tenant shall
deposit the amount of Two Thousand and No/100 Dollars ($2,000.00) as security
deposit ("Security Deposit") with Landlord. The Security Deposit shall secure
Tenant's obligations under this Lease to pay rent and other monetary amounts,
to maintain the Premises and repair damages thereto, to surrender the Premises
to Landlord in clean condition and repair upon termination of this Lease as
required pursuant to Article 17.15 below and to discharge Tenant's other
obligations hereunder. Landlord may use and commingle the Security Deposit with
other funds of Landlord. If Tenant fails to perform Tenant's obligations
hereunder, Landlord may, but without any obligation to do so, apply all or any
portion of the Security Deposit towards fulfillment of Tenant's unperformed
obligations. If Landlord does so apply any portion of the Security Deposit,
Tenant, upon demand by Landlord, shall immediately pay Landlord a sufficient
amount in cash to restore the Security Deposit to the full original amount.
Tenant's failure to forthwith remit to Landlord a sufficient amount in cash to
restore the Security Deposit to the original sum deposited within five (5) days
after receipt of such demand, in the event that Landlord shall expend the same
in order to cure Tenant's default hereunder, shall constitute an Event of
Default. The Security Deposit shall be held by Landlord without liability for
interest on the same. Upon termination of this Lease, if Tenant has then
performed all of Tenant's obligations hereunder, Landlord shall return the
Security Deposit to Tenant. If Landlord sells or otherwise transfers Landlord's
rights or interest under this Lease, Landlord may deliver the Security Deposit
to the transferee, whereupon Landlord shall be released from any further
liability to Tenant with respect to the Security Deposit.
5. INSURANCE
5.01. All Risk Coverage. During the Term, Landlord shall procure and
maintain in full force and effect with respect to the Building, a policy or
policies of all risk insurance (including sprinkler, vandalism and malicious
mischief coverage, and any other endorsements required by the holder of any fee
or leasehold mortgage) in an amount equal to one hundred percent (100%) of the
full insurance replacement value (replacement cost new, including debris
removal, and demolition) thereof. If the annual premiums charged Landlord for
such casualty insurance exceed the standard premium rates because the nature of
Tenant's operations results in increased exposure, then Tenant shall, upon
receipt of appropriate premium invoices, reimburse Landlord for such increased
amount. During the Term, Tenant shall maintain in full force and effect a
similar policy of insurance with respect to all tenant improvements owned by
Tenant (but not with respect to those owned by Landlord) pursuant to the terms
of this Lease, insuring one hundred percent (100%) of the full replacement value
of said tenant improvements.
5.02. Public Liability. Tenant shall, at its own cost and expense,
keep and maintain in full force during the Term, a policy or policies of
comprehensive public liability insurance, written by an insurance company
approved by Landlord in the form customary to the locality, insuring Tenant's
activities with respect to the Premises and/or Building against the loss,
damage or liability for personal injury or death of any person or loss or
damage to property occurring in, upon or about the Premises covering bodily
injury in the amounts of Three Million Dollars ($3,000,000) per person and
Three Million Dollars ($3,000,000) per occurrence and covering property damage
in the amount of One Million Dollars ($1,000,000); provided, however, that if
at any time during the Term, Tenant shall have in full force and effect a
blanket policy of public liability insurance with the same coverage for the
Premises as described above, as well as coverage of other premises and
properties of Tenant, or in which Tenant has some interest, such blanket
insurance shall satisfy the requirement hereof.
5.03. Rental Abatement Insurance. Landlord shall keep and maintain in
full force and effect during the Term, rental abatement insurance against
abatement or loss of Rent in case of fire or other casualty, in an amount at
least equal to the amount of the Rent payable by Tenant during one year next
ensuing, as reasonably determined by Landlord.
5.04. Insurance Certificates. Tenant shall furnish to Landlord. upon
the date of commencement of this Lease and thereafter within thirty (30) days
prior to the expiration of each such policy, a certificate of insurance issued
by the insurance carrier of each policy of insurance carried by Tenant
pursuant hereto. Said certificates shall expressly provide that such policies
shall not be cancellable or subject to reduction of coverage or otherwise be
subject to modification except after thirty (30) days' prior written notice to
the parties named as insureds in this Article 5.04. Landlord, its successors
and assigns, and any nominee of Landlord holding any interest in the Premises,
including without limitation, any ground lessor and the holder of any fee or
leasehold mortgage, shall be named as insureds under each such policy of
insurance maintained by Tenant pursuant to this Lease.
5.05. Tenant's Failure. If Tenant fails to maintain any insurance
required in this Lease, Tenant shall be liable for any loss or cost resulting
from said failure. This Article 5.05 shall not be deemed to be a waiver of any
of Landlord's rights and remedies under any other section of this Lease.
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year. If Tenant has overpaid the amount of Additional Rent owing pursuant
to this provision, Landlord shall credit Tenant the amount of such
overpayment in determining Tenant's estimated payments for the following
lease year; provided, that in the case of an overpayment for the final
lease year of the Term, Landlord shall refund such overpayment to Tenant
within thirty (30) days after the end of the Landlord's accounting year. If
Tenant has underpaid the amount of Additional Rent owing pursuant to this
provision, Tenant shall pay the amount of such underpayment to Landlord, as
Additional Rent, within thirty (30) days after the end of Landlord's
accounting year; and
(e) Adjustment. Notwithstanding any provision herein to the
contrary, in the event the Building is not fully occupied during any year
of the Term, an adjustment shall be made in computing Operating Expenses
for such year so that the same shall be computed for such year as though
the Building had been fully occupied during such year.
6.02. Impositions. All transit charges, housing fund assessments, real
estate taxes and all other taxes relating to the Premises and/or the Building,
all other taxes which may be levied in lieu of real estate taxes, all
assessments, assessment bonds, levies, fees and other governmental charges
(including, but not limited to, charges for traffic facilities improvements,
water service studies and improvements, and fire service studies and
improvements) or amounts necessary to be expended because of governmental
orders, whether general or special, ordinary or extraordinary, unforeseen as
well as foreseen, of any kind and nature for public improvements, services,
benefits, or any other purpose which are assessed, levied, confirmed, imposed or
become a lien upon the Premises or Building or become payable during the Term
shall collectively be referred to as "Impositions."
(a) Installment Election. In the case of any Impositions which may
be evidenced by improvement or other bonds or which may be paid in annual
or other periodic installments, Landlord shall elect to cause such bonds to
be issued or cause such assessment to be paid in installments over the
maximum period permitted by law.
(b) Limitation. Nothing contained in this Lease shall require
Tenant to pay any franchise, estate, inheritance or succession transfer tax
of Landlord, or any income, profits or revenue tax or charge, upon the net
income of Landlord from all sources; provided, however, that if at any time
during the Term under the laws of the United States Government or the State
of California, or any political subdivision thereof, a tax or excise on
rent, or any other tax however described, is levied or assessed by any such
political body against Landlord on account of Rent, or a portion thereof,
Tenant shall pay one hundred percent (100%) of any said tax or excise as
Additional Rent.
(c) Personal Property Taxes. Tenant shall pay or cause to be paid,
prior to delinquency, any and all taxes and assessments levied upon all
trade fixtures, inventories and other personal property placed in and upon
the Premises by Tenant.
6.03. Services and Utilities. So long as Tenant is not in default under
this Lease, Landlord shall provide: (i) to the Premises during Business Hours,
as defined in the Rules and Regulations, electricity, gas, water, lighting,
janitorial services, elevator service, heating, ventilating and air conditioning
and other Building services required in Landlord's reasonable judgment for the
comfortable use and occupancy of the Premises; and, (ii) to the common areas
during Business Hours, as defined in the Rules and Regulations, utilities and
maintenance as required in Landlord's reasonable judgment for the comfortable
use and occupancy of the Premises. Landlord shall not be liable for, and Tenant
shall not be entitled to, any reduction or abatement of Rent on account of any
failure on the part of Landlord to deliver the services and utilities provided
in this Lease unless the same results from the wilful or intentional misconduct
of Landlord, nor shall Landlord be liable under any circumstances for a loss of
or injury to property, however occurring, incidental to any failure to furnish
any utilities or services.
6.04. Special Services.
(a) Additional Services. In the event Landlord provides utilities,
elevator, heating, air conditioning and/or cleaning services to Tenant
beyond the standard services related to the operation and management of a
first class office building or at times other than during the Business
Hours, as defined in the Rules and Regulations, Tenant shall pay Landlord's
reasonable charge for such special services as Additional Rent. Any
cleaning of lunchrooms, cafeterias, conference rooms, etc., shall be on a
special services basis (except with respect to the removal of trash from
trash receptacles or cleaning incidental to normal cleaning).
(b) Utility Consumption. If Tenant is likely to or does not consume
quantities of electricity, water or gas in excess of the amounts
customarily consumed by users of office space, Landlord shall have the
right, at Tenant's sole cost and expense, to install separate metering for
such utilities or to separately charge Tenant for any quantity of such
utilities consumed by Tenant beyond the amounts customarily consumed by
office users. Any such charges made by Landlord to Tenant shall be
reasonably determined by Landlord and shall be promptly paid by Tenant to
Landlord as Additional Rent. Landlord may, at Landlord's sole option, elect
to rate the quantity of utilities consumed by Tenant at the Premises. Such
consumption shall be determined by one of the following methods: (i) a
rating by an appropriately licensed engineer with costs to be computed on
an average daily basis; (ii) metering by a licensed utility company
responsible for service to the project; or (iii) a rating by an
appropriately licensed engineer and monitored by Landlord's central project
computer. In each such case, the costs for administering such methods shall
be borne by Tenant.
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9.02. Signs. Tenant shall not install any sign on the Premises or
Building; provided, however, that Landlord shall install for Tenant an
identifying sign at the main entrance to the Premises in conformance with the
Building Standard Improvements. Any sign placed by Landlord for the benefit of
Tenant on the Premises or Building shall be installed at Tenant's sole cost
and expense, and shall contain only Tenant's name, or the name of any affiliate
of Tenant actually occupying the Premises, and no advertising matter. Tenant
shall remove any such sign upon termination of this Lease and shall return the
Premises to their condition prior to the placement or erection of said sign.
9.03. Parking Access. In addition to the general obligation of Tenant
to comply with laws and without limitation thereof, Landlord shall not be
liable to Tenant nor shall this Lease be affected if any parking privileges
appurtenant to the Premises are impaired by reason of any moratorium,
initiative, referendum, statute, regulation, or other governmental decree or
action which could in any manner prevent or limit the parking rights of Tenant
hereunder. Any governmental charges or surcharges or other monetary obligations
imposed relative to parking rights with respect to the Premises, Building and
Lot shall be considered as Impositions and shall be payable by Tenant under the
provisions of Article 6 hereinabove.
9.04. Floor Load. Tenant shall not place a load upon any floor of the
Premises which exceeds the load per square foot which such floor is designed to
carry and which is than allowed by law.
9.05. Deliveries. All deliveries to and from the Premises shall be
made using the freight elevator designated by Landlord during the time periods
specified by Landlord and so as to cause the minimum amount of interference
with the business of other tenants.
10. DAMAGE AND DESTRUCTION
10.01. Reconstruction. If the premises are damaged or destroyed
during the Term, Landlord shall, to the extent that insurance proceeds are
available therefor and are not applied by any lender against payment of an
existing loan on the Building or Lot, except as hereinafter provided,
diligently repair or rebuild them to substantially the condition in which they
existed immediately prior to such damage or destruction: provided, however,
that any damage which is estimated in good faith by Landlord to be under One
Thousand Dollars ($1,000) shall be repaired by Tenant, and Landlord shall
reimburse Tenant upon demand for expenses incurred in such repair work.
10.02. Rent Abatement. Rent due and payable hereunder shall be abated
proportionately, but only to the extent of any proceeds received by Landlord
from rental abatement insurance described in Article 5.03 hereinabove, during
any period in which, by reason of any such damage or destruction, Tenant
reasonably determines that there is substantial interference with the operation
of Tenant's business in the Premises, having regard to the extent to which
Tenant may be required to discontinue its business in the Premises. Such
abatement shall continue for the period commencing with such damage or
destruction and ending with a substantial completion by Landlord of the work of
repair or reconstruction which Landlord is obligated or undertakes to do. If it
be determined that continuation of business is not practical pending
reconstruction, Base Rent due and payable hereunder shall abate to the extent
of proceeds from rental abatement insurance until reconstruction is
substantially completed or until business is totally or partially resumed,
whichever is the earlier.
10.03. Excessive Damage or Destruction. If the Building is damaged or
destroyed to the extent that Landlord determines that it cannot, with reasonable
diligence, be fully repaired or restored by Landlord within one hundred eighty
(180) days after the date of the damage or destruction, Landlord may terminate
this Lease. Notwithstanding the fact that the Premises have been damaged or
destroyed, Landlord shall determine whether the Building can be fully repaired
or restored within the one hundred eighty (180) day period, and Landlord's
determination shall be binding upon Tenant. Landlord shall notify Tenant of its
determination, in writing, within forty-five (45) days after the date of the
damage or destruction. If Landlord determines that the Building can be fully
repaired or restored within the one hundred eighty (180) day period, or if it
is determined that such repair or restoration cannot be made within said period
but Landlord does not elect to terminate within forty-five (45) days from the
date of said determination, this Lease shall remain in full force and effect
and Landlord shall diligently repair and restore the damage as soon as
reasonably possible.
10.04. Uninsured Casualty. Notwithstanding anything contained herein
to the contrary, in the event of damage to or destruction of all or any portion
of the Building which is not fully covered by the insurance proceeds received
by Landlord under the insurance policies required under Article 5.01
hereinabove, Landlord may terminate this Lease by written notice to Tenant,
given within forty-five (45) days after the date of notice to Landlord that
said damage or destruction is not so covered. If Landlord does not elect to
terminate this Lease, the Lease shall remain in full force and effect and the
Building shall be repaired and rebuilt in accordance with the provisions for
repair set forth in Article 10.01 hereinabove.
10.05. Waiver. With respect to any destruction which Landlord is
obligated to repair or may elect to repair under the terms of this Article 10,
Tenant hereby waives all rights to terminate this Lease pursuant to rights
otherwise presently or hereafter accorded by law to tenants, except as
expressly otherwise provided herein.
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(h) Attachment. Attachment, execution or other judicial
seizure of substantially all of Tenant's assets or this leasehold.
12.02. Landlord's Remedies.
(a) Abandonment. If Tenant vacates or abandons the Premises,
this Lease shall continue in effect. Landlord shall not be deemed to
have terminated this Lease other than by written notice of termination
from Landlord, and Landlord shall have all of the remedies of a landlord
provided by Article 1951.4 of the Civil Code of the State of California.
At any time subsequent to vacation or abandonment of the Premises by
Tenant, Landlord may give notice of termination and shall thereafter
have all of the rights hereinafter set forth.
(b) Termination. Following the occurrence of any Event of
Default, Landlord shall have the right, so long as the default
continues, to terminate this Lease by written notice to Tenant setting
forth: (i) the default; (ii) the requirements to cure it; and (iii) a
demand for possession, which shall be effective three (3) days after it
is given or upon expiration of the times specified in Article 12.01
hereinabove, whichever is later.
(c) Possession. Following termination under subsection (b),
without prejudice to any other remedies Landlord may have by reason of
Tenant's default or of such termination, Landlord may then or at anytime
thereafter, (i) peaceably re-enter the Premises, or any part thereof,
upon voluntary surrender by Tenant or expel or remove Tenant therefrom
and any other persons occupying them, using such legal proceedings as
are then available; (ii) repossess and enjoy the Premises, or relet the
Premises or any part thereof for such term or terms (which may be for a
term extending beyond the Term) at such rental or rentals and upon such
other terms and conditions as Landlord in its sole discretion shall
determine, with the right to make reasonable alterations and repairs to
the Premises; and (iii) remove all personal property therefrom.
(d) Recovery. Following termination under subsection (b),
Landlord shall have all the rights and remedies of a landlord provided
by Article 1951.2 of the Civil Code of the State of California. The
amount of damages which Landlord may recover following termination under
subsection (b) shall include: (i) the worth at the time of the award of
the unpaid rent and other amounts which had been earned at the time of
termination; (ii) the worth at the time of the award of the amount by
which the unpaid rent which would have been earned after termination
until the time of the award exceeds the amount of such rental loss that
the Tenant proves could have been reasonably avoided; (iii) the worth at
the time of the award of the amount by which the unpaid Rent for the
balance of the Term after the time of award exceeds the amount of rental
loss Tenant proves could be reasonably avoided; and (iv) any other
amount necessary to compensate Landlord for all detriment proximately
caused by Tenant's failure to perform its obligations under this Lease.
The "worth at the time of the award" of the amount referred to in (iii)
above shall be computed by discounting such amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus
one percent (1%).
(e) Additional Remedies. In addition to the foregoing remedies,
Landlord shall, so long as this Lease is not terminated, have the right
to remedy any default of Tenant, to maintain or improve the Premises
without terminating this Lease, to incur expenses on behalf of Tenant in
seeking a new subtenant, or to cause a receiver to be appointed to
administer the Premises and new or existing subleases, and to add to the
Rent payable hereunder all of Landlord's reasonable costs in so doing,
with interest at the lower of the prime rate of interest at the time of
said default charged by Wells Fargo Bank N.A. plus two percent (2%) or
the maximum lawful rate.
(f) Other. If Tenant causes or threatens to cause a breach of
any of the covenants, agreements, terms or conditions contained in this
Lease, Landlord shall be entitled to retain all sums held by Landlord by
any trustee or in any account provided for herein, to enjoin such breach
or threatened breach, and to invoke any right and remedy allowed at law
or in equity or by statute or otherwise as though re-entry, summary
proceedings and other remedies were not provided for in this Lease.
(g) Cumulative. Each right and remedy of Landlord provided for
in this Lease shall be cumulative and shall be in addition to every
other right or remedy provided for in this Lease or now or hereafter
existing at law or in equity or by statute or otherwise. The exercise or
beginning of the exercise by Landlord of any one or more of the rights
or remedies provided for in this Lease, or now or hereafter existing at
law or in equity or by statute or otherwise, shall not preclude the
simultaneous or later exercise by Landlord of any or all other rights or
remedies provided for in this Lease or now or hereafter existing at law
or in equity or by statute or otherwise.
(h) No Waiver. No failure by Landlord to insist upon the strict
performance of any term hereof or to exercise any right or remedy
consequent upon a breach thereof, and no acceptance of full or partial
payment of Rent during the continuance of any such breach shall
constitute a waiver of any such breach or of any such term. Efforts by
Landlord to mitigate the damages caused by Tenant's breach of this Lease
shall not be construed to be a waiver of Landlord's right to recover
damages under this Article 12. Nothing in this Article 12 affects the
right of Landlord to indemnification by Tenant in accordance with
Article 5.08 hereinabove for liability arising prior to the termination
of this Lease for personal injuries or property damage.
13. ASSIGNMENT AND SUBLETTING
13.01. Assignment and Subletting: Prohibition. Tenant shall not
assign, mortgage, pledge or otherwise transfer, this Lease, in whole or in
part, nor sublet or permit occupancy by any party other than Tenant of all or
any part of the Premises, without the prior written consent of Landlord in each
instance, which shall not be unreasonably withheld. Tenant shall submit each
proposed
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15. NOTICES
15.01. Notices. All notices required to be given hereunder shall be in
writing (except for notice required pursuant to Article 12.01(b) and mailed
postage prepaid by certified or registered mail, return receipt requested, or
by personal delivery, to the appropriate address indicated below or at such
other place or places as either Landlord or Tenant may, from time to time,
respectively, designate in a written notice given to the other. Notices shall
be deemed sufficiently served four (4) days after the date of mailing thereof.
To Landlord: Bayfair Building
c/o Ardenbrook, Inc., Agent
7901 Oakport Street, Suite 3000
Oakland, CA 94621
To Tenant: J. Robert Griffin, M.D.
David Bates
Vista Laser Centers of the Pacific, Inc.
Bayfair Building
14895 E. 14th Street, Suite 400
San Leandro, CA 94578
16. SUCCESSORS BOUND
16.01. Successors Bound. This Lease and each of its covenants and
conditions shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, successors and legal representatives and
their respective assigns, subject to the provisions hereof. Whenever in this
Lease a reference is made to the Landlord, such reference shall be deemed to
refer to the person in whom the interest of the Landlord shall be vested, and
Landlord shall have no obligation hereunder as to any claim arising after the
transfer of its interest in the Premises. Any successor or assignee of the
Tenant who accepts an assignment or the benefit of this Lease and enters into
possession or enjoyment hereunder shall thereby assume and agree to perform and
be bound by the covenants and conditions thereof. Nothing herein contained
shall be deemed in any manner to give a right of assignment to Tenant without
the written consent of Landlord.
17. MISCELLANEOUS
17.01. Waiver. No waiver of any default or breach of any covenant by
either party hereunder shall be implied from any omission by either party to
take action on account of such default if such default persists or is repeated,
and no express waiver shall affect any default other than the default specified
in the waiver, and then said waiver shall be operative only for the time and to
the extent therein stated. Waivers of any covenant, term or condition contained
herein by either party shall not be construed as a waiver of any subsequent
breach of the same covenant, term or condition. The consent or approval by
either party to or of any act by either party requiring further consent or
approval shall not be deemed to waive or render unnecessary their consent or
approval to or of any subsequent similar acts.
17.02. Easements. Landlord reserves the right to (i) alter the
boundaries of the Lot and (ii) grant easements on the Lot and dedicate for
public use portions thereof without Tenant's consent; provided, however, that
no such grant or dedication shall materially interfere with Tenant's use of the
Premises. From time to time, and upon Landlord's demand, Tenant shall execute,
acknowledge and deliver to Landlord, in accordance with Landlord's
instructions, any and all documents, instruments, maps or plats necessary to
effectuate Tenant's covenants hereunder.
17.03. Relocation. At any time after Tenant's execution of this
Lease, Landlord shall have the right, upon providing Tenant thirty (30) days'
notice in writing, to provide Tenant with reasonably similar space elsewhere in
the Building of approximately the same size as the Premises and to move Tenant
to said space. In the event that Landlord shall exercise such right subsequent
to the actual occupancy of the Premises by Tenant. Landlord shall arrange for
moving Tenant and shall pay the costs of moving Tenant to such new space and
all other reasonable expenses related to such relocation. In the event Landlord
moves Tenant to such new space, then this Lease and each and all of the terms
and covenants and conditions hereof shall remain in full force and effect and
thereupon be deemed applicable to such new space except that a revised floor
plan shall become part of this Lease and shall reflect the location of the new
space. Should Tenant refuse to permit Landlord to move Tenant to such new space
at the end of said thirty (30) day period, Landlord shall have the right to
terminate this Lease by notice given to Tenant in writing within ten (10) days
following the end of said thirty (30) day period, which termination shall be
effective sixty (60) days after the date of the original notice of relocation
by Landlord.
17.04. No Light, Air or View Easement. Any diminution or shutting off
of light, air or view by any structure which may be erected on lands adjacent
to or in the vicinity of the Building shall in no way affect this Lease or
impose any liability on Landlord.
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fee in connection with this Lease. Tenant agrees to indemnify Landlord and hold
Landlord harmless from and against any and all claims, demands, losses,
liabilities, lawsuits, judgments, costs and expenses (including without
limitation, attorneys' fees and costs) with respect to any leasing commission
or equivalent compensation alleged to be owning on account of Tenant's dealings
with any real estate broker or agent other than Broker.
17.19. Landlord's Right to Perform. Upon Tenant's failure to perform
any obligation of Tenant hereunder, including without limitation, payment of
Tenant's insurance premiums, charges of contractors who have supplied materials
or labor to the Premises, etc., Landlord shall have the right to perform such
obligation of Tenant on behalf of Tenant and/or to make payment on behalf of
Tenant to such parties. Tenant shall reimburse Landlord the reasonable cost of
Landlord's performing such obligation on Tenant's behalf, including
reimbursement of any amounts that may be expended by Landlord, plus interest at
the rate of three percent (3%) over the prime rate as announced, from time to
time, by Wells Fargo Bank, N.A. per annum, as Additional Rent.
17.20. Mortgage Protection. No act or failure to act on the part of
Landlord which would entitle Tenant under the terms of this Lease, or by law,
to be relieved of Tenant's obligations hereunder or to terminate this Lease,
shall result in a release of such obligations or a termination of this Lease
unless (a) Tenant has given notice by registered or certified mail to any
beneficiary of a deed of trust or mortgage covering the Premises whose address
shall have been furnished to Tenant, and (b) Tenant offers such beneficiary or
mortgagee a reasonable opportunity to cure the default, including time to
obtain possession of the Premises by power of sale or of judicial foreclosure,
if such should prove necessary to effect a cure.
17.21. Nonliability. Landlord shall not be in default hereunder or be
liable for any damages directly or indirectly resulting from, nor shall the
rental herein reserved be abated by reason of (i) the interruption of use of
the Premises as a result of the installation of any equipment in connection
with the Premises or building or (ii) any failure to furnish or delay in
furnishing any services required to be provided by Landlord when such failure
or delay is caused by accident or any condition beyond the reasonable control
of Landlord or by the making of necessary repairs or improvements to the
Premises or to the Building, or the limitation, curtailment, rationing or
restriction on use of water or electricity, gas or any other form of energy or
any other service or utility whatsoever serving the Premises or the Building.
Landlord shall use reasonable efforts to remedy any interruption in the
furnishing of such services.
17.22. Limitation on Liability. The obligations of Landlord under this
Lease do not constitute personal obligations of the individual partners,
directors, officers or shareholders of Landlord, and Tenant shall not seek
recourse against the individual partners, directors, officers or shareholders
of Landlord or any of their personal assets for satisfaction of any liability
in respect to this Lease.
17.23. Modification for Lender. If, in connection with obtaining
construction, interim or permanent financing for the Building, the lender shall
request reasonable modifications in this Lease as a condition to such
financing, Tenant will not unreasonably withhold, delay or defer its consent
thereto, provided that such modifications do not increase the obligations of
Tenant hereunder or materially adversely affect the leasehold interest hereby
created or Tenant's rights hereunder.
17.24. Recording. Neither Landlord nor Tenant shall record this Lease
nor a short form memorandum thereof without the consent of the other.
17.25. Entire Agreement. This Lease sets forth all covenants,
promises, agreements, conditions and understandings between Landlord and Tenant
concerning the Premises, Building and Lot, and there are no covenants,
promises, agreements, conditions or understandings, either oral or written,
between Landlord and Tenant other than as are herein set forth. Except as
herein otherwise provided, no subsequent alteration, amendment, change or
addition to this Lease shall be binding upon Landlord or Tenant unless reduced
to writing and signed by Landlord and Tenant.
17.26. Special Provisions. Special provisions of the Lease numbered
18.0 through 25.01 are attached hereto and made a part hereof. If none, so
state in the following space _________________________________________.
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
first above-written.
"Landlord" Bayfair Building, "Tenant" Vista Laser Centers of
a California partnership the Pacific Inc., a
Nevada corporation & J.
Robert Griffin, M.D., a
married man jointly &
By /s/ severalty & David Bates,
-------------------------------- a married man jointly &
severalty. As their sole
Its Owner/Mgr and separate property.
----------------------------
By By /s/ J. Robert Griffin
-------------------------------- ---------------------------------
Its Its Chairman
---------------------------- -----------------------------
(SEAL) (SEAL)
By /s/ David Bates
---------------------------------
Its President
-----------------------------
13
<PAGE> 10
LEASE RIDER
This rider is attached to and forms a part of that certain Lease dated as of
the 15th day of May, 1996, by and between Brookmat, Corp., a California
corporation, as Landlord; and Vista Laser Centers of the Pacific, Inc., a Nevada
corporation, and J. Robert Griffin, M.D., a married man jointly and severalty,
and David Bates, a married man jointly and severalty, as Tenant; and
constitutes additional covenants and agreements thereto as set forth in the
Lease, with the covenants and agreements contained herein to prevail in case of
any conflict between the covenants and agreements that are contained herein and
those in the Lease.
18. HAZARDOUS/TOXIC MATERIALS
18.01. Restrictions on Use. The use, storage or disposal of toxic or
hazardous substance on the Premises is prohibited without the express consent
of Landlord. The Landlord may, in its sole discretion and upon application by
the Tenant, consent to the use of toxic or hazardous substances on the
Premises. In the event that the Landlord consents to the use of the toxic or
hazardous substances on the Premises, the Landlord may require an additional
security deposit in the form of cash, cashier's check or a letter of credit.
Tenant shall indemnify and hold Landlord harmless for any claims caused by its
bringing any hazardous materials on the Premises.
18.02. Compliance With Law. Tenant shall comply with all laws,
regulations and orders of all governmental authorities at the federal, state
and local levels, including, but not limited to, all environmental laws
regarding the use, monitoring, storage, or disposal of toxic hazardous
substances. Such compliance shall include, but not to be limited to,
compliance with the Comprehensive Environmental Response Compensation and
Liability Act of 1980, Hazardous Waste Control Act, the California Safe
Drinking Water and Toxic Enforcement Act, the California Superfund Act, Water
Quality Control Act and all city and country laws relating to toxic or
hazardous substance use, monitoring, storage and disposal.
18.03. Representations and Warranties. Tenant represents and warrants
to the Landlord that it will not use, store or dispose of any toxic or
hazardous substances on the Premises without first obtaining Landlord's express
consent. Prior to any renewal or extension of the Lease Agreement, Tenant
shall reaffirm this representation and warranty. See Paragraph 18.01.
18.04. Right of Entry. Landlord and Landlord's agents reserve the
right to enter the premises at all reasonable times to test the Premises, the
soil and the ground water for contamination if they have reasonable cause to
believe that contamination may be present. Tenant agrees to pay for such
testing if the results establish that there is a contamination and Landlord has
reasonable cause to believe that such contamination is due to the Tenant's
operations.
18.05. Permits. Tenant shall maintain current permits for all of its
operations including such operations as require the use, storage or disposal of
toxic or hazardous substances. Copies of such permits must be delivered to the
Landlord within five (5) days of receipt.
18.06. Indemnification. Tenant hereby agrees to indemnify, hold
harmless and defend Landlord for any liability and claim for all damages, costs
and expenses, including attorney's fees and costs on account of, arising out or
alleged to have arisen out of directly or indirectly, the use, storage and
disposal of toxic or hazardous substances by the Tenant or the Tenant's agents,
employees or invitees. The foregoing obligation shall survive the termination
of this Lease.
18.07. Operating Expenses. If by any reason of an act of Tenant,
Landlord is obligated to incur the cost of cleanup of any release caused by
Tenant, Tenant's operations or Tenant's agents, employees or invitees, Tenant
shall pay, as additional rent, any excess caused thereby, with the amount
thereof to be payable upon the next succeeding rent payment date.
18.08. Maintenance. Tenant agrees and covenants to maintain the
Premises free of any toxic or hazardous substance. Tenant shall, at Tenant's
sole cost and expense comply with any and all requirements pertaining to the
monitoring and cleanup of any releases that may occur as the result of Tenant,
Tenant's agent, employee or invitee's acts. Nothing in the forgoing shall be
construed to prevent Landlord for undertaking the cleanup of any toxic or
hazardous
Page 1 of 6
<PAGE> 11
substances in the event that Tenant fails to do so after ten (10) days notice
by Landlord.
18.09. Notification. Tenant agrees that it is a requirement of this
Lease that Tenant notify the Landlord of any release on or near the Premises
with twenty-four (24) hours whether or not such release is in quantities that
would otherwise be reportable to a public agency. California Health and Safety
Code Section 25359.7 requires a Tenant of nonresidential property who knows or
has reasonable cause to believe that toxic or hazardous substances have been
released on or beneath real property to notify the Landlord or risk losing its
lease. A knowing or willful failure to disclose such release carries civil
penalties of $5,000.00.
18.10. Defaults. (i) Any of the following events shall constitute an
event of default under this Lease:
(a) Tenant or Tenant's agent, employee or invitee's release of toxic
or hazardous substances on the Premises.
(b) Tenant's failure to notify Landlord promptly of the release of
toxic or hazardous substances on the Premises.
(c) Tenant's failure to maintain proper use, monitoring and storage
procedures for toxic and hazardous substances on the Premises.
(d) Tenant's failure to apply for and maintain proper permits for the
use and storage of toxic or hazardous substances on the Premises.
(e) Tenant's failure to properly and lawfully dispose of toxic or
hazardous substances for the Premises.
(ii) In the event of default, the Landlord shall have the right to
either (i) terminate the Lease and collect damages according to proof,
including but not limited to the cost of the cleanup of any releases onto the
Premises, the soil or ground water, or through improper disposal (ii) re-enter
the Premises immediately and remove all persons, property, or toxic or
hazardous substance located therein and store such property in a public
warehouse or other appropriate storage facility of and for the account of
Tenant and require the cleanup and proper disposal of any contamination. After
any such entry, Landlord shall have the option to terminate this Lease or,
without terminating this Lease, undertaking such cleanup of contamination as
Landlord deems reasonable and necessary. Tenant shall pay the Landlord as soon
as determined the reasonable costs and expenses incurred by Landlord in such
cleanup of toxic or hazardous substances contamination.
18.11. Limitation of Liability. If Landlord shall be held liable to
Tenant for any act or failure to act arising out of the relationship
established in this Lease, Landlord's liability to Tenant shall be limited to
Landlord's interest in the Premises.
18.12. Termination and Expiration. Upon termination or expiration of
the Lease, Landlord reserves the right to require Tenant to remove any and all
of its improvements, fixtures or machinery from the Premises. In the event any
equipment or improvements to the Premises could be contaminated by toxic or
hazardous substances, all such removal must be carried out in accordance with
all applicable laws. In the event such removal requires more that two (2) days
after the termination of this Lease, Tenant shall continue to pay Landlord on a
prorated basis the rent established pursuant to this Lease.
18.13. Representations by Broker. Broker has no expertise with
respect to the nature or extent of toxic wastes or hazardous materials as
defined by federal, state or local law, or other undesirable substances which
may be present in the Premises. Broker and its agents have not made and will
not make any representations regarding same. It is agreed that it is the
responsibility of Landlord and Tenant to deal with this subject and to retain
experts to assist them in determining the allocation of responsibility for
remediation, as well as provisions pertaining thereto to be included in the
Lease.
Page 2 of 6
<PAGE> 12
19. NOTICE PURSUANT TO STATE OF CALIFORNIA SAFE WATER AND TOXIC ENFORCEMENT
ACT OF 1986.
19.01. Disclosure. At the time the Property was constructed, asbestos
was commonly used in the construction industry throughout the United States for
purposes of insulation, fireproofing, floor tiles and acoustical coatings.
Accordingly, asbestos maybe present in one or more building products at the
Property. Under the State of California Safe Drinking Water and Toxic
Enforcement Act of 1986 (Proposition 65), asbestos is listed as one of the many
chemicals known to cause cancer.
19.02. Notice. (i) Pursuant to the State of California Safe Drinking
Water and Toxic Enforcement Act of 1986, if a product individual but not
limited to asbestos, contains certain chemical substances which the State of
California believes can cause cancer, birth defects, or other reproductive
defects, an appropriate warning must be given to individuals exposed to these
products - even if such chemical substances are present at extremely low levels.
(ii) In compliance with this Act, Landlord and Wm.
Mathews & Co. issues this notice:
WARNING
DETECTABLE AMOUNTS OF CHEMICAL KNOWN TO THE STATE OF CALIFORNIA TO
CAUSE CANCER, BIRTH DEFECTS OR OTHER REPRODUCTIVE HARM MAY BE FOUND
IN AND AROUND THIS FACILITY. (HEALTH AND SAFETY CODE SECTION 25249.6)
20. INSPECTION DISCLOSURE AND RELEASE
20.01. Notice. Under California Law, a Landlord, and/or its agent,
is required to disclose to any proposed tenant any information to the proposed
tenant which could adversely impact that tenant's proposed use of a Premises.
20.02. Disclosure. Preceding execution of this Lease, Landlord,
and/or it's agent, has advised Tenant to hire competent independent consults to:
(i) Physically inspect the leasehold to determine whether the
Premises and its physical characteristics are suitable for
the Tenant's proposed use; and
(ii) Investigate the general geographic and marketing area in
which the Premises is located to determine the feasibility
for the intended use of the business.
20.03. Tenant Acknowledgement. By executing this Lease, Tenant
acknowledges the Tenant has had the opportunity to personally, and with
Tenant's independent consultants, to reasonably and diligently inspect the
Premises and the geographic and marketing area in which the Premises is located
for suitability with the Tenant's intended use. Furthermore, Tenant forever
releases Landlord and its agents, as well as their directors, officers,
employees, principals and their agents, from any liability for any breach,
known or unknown, of the duty to disclose any information of the general
character referred to above, accruing through the execution date of this Lease.
20.04. General Release. With respect to such release, Tenant
expressly waives the benefits of Section 1542 of the California Civil Code:
"1542. A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have
materially affected his settlement with the Debtor."
Page 3 of 6
<PAGE> 13
21. ARBITRATION
21.01. ARBITRATION OF DISPUTES. (i) Any dispute, controversy or claim
arising out of or relating to the Lease and/or any amendment(s) thereto, or the
breach, performance or non-performance thereunder, including without limitation
any claim related to bodily injury, property damage or death, but excluding
specifically and only non-payment by Tenant of Rent, shall be settled by binding
arbitration in Fremont, California, in accordance with the rules of the
American Arbitration Association then existing, and judgement on the arbitration
award may be entered in any court having jurisdiction over the subject matter
of the controversy. This agreement to arbitrate does no waive or modify the
hold harmless provision(s), liability, or other release(s) contained in the
Lease and/or any amendment(s) thereto.
(ii) NOTICE. BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE
ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE ARBITRATION OF
DISPUTES PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY
CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO
HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN
THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND
APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE ARBITRATION
OF DISPUTES PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER
AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS
ARBITRATION PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN THE ARBITRATION OF DISPUTES
PROVISION TO NEUTRAL ARBITRATION.
Agreed To: /s/
---------------------
Initial
22. TELECOMMUNICATIONS
22.01. Limitation of Responsibility. Tenant acknowledges and agrees
that all telephone and telecommunications services desired by Tenant shall be
ordered and utilized at the sole expense of Tenant. Unless Landlord otherwise
requests or consents in writing, all of Tenant's telecommunications equipment
shall be and remain solely in the Tenant's Premises and, in accordance with
rules and regulations adopted by Landlord from time to time, the telephone
closet(s) on the floor(s) on which the Tenant's Premises is located. Unless
otherwise specifically agreed in writing, Landlord shall have no responsibility
for the maintenance of Tenant's telecommunications equipment, including wiring
not for any wiring or other infrastructure to which tenant's telecommunications
equipment may be connected. Tenant agrees that to the extent any such service
is interrupted, curtailed or discontinued, Landlord shall have no obligation or
liability with respect thereto and it shall be the sole obligation of Tenant at
its expense to obtain substitute service.
22.02. Necessary Service Interruptions. Landlord shall have the
right, upon reasonable prior notice to Tenant, to interrupt or turn off
telecommunications facilities in the event of emergency or as necessary in
connection with repairs to the Building or installation of telecommunications
equipment for other Tenants of the Building.
22.03. Removal of Equipment, Wiring and Other Facilities. Any and all
telecommunications equipment installed in the Tenant's Premises or elsewhere in
the Building by or on behalf of Tenant including, but limited to, wiring, or
other facilities for telecommunications transmittal, shall be removed prior to
the expiration or earlier termination of the Lease Term, by Tenant at its sole
cost or, at Landlord's election, by Landlord at Tenant's sole cost, with the
cost thereof to be paid as Additional Rent. Landlord shall have the right,
however, upon written notice to Tenant given no later than thirty (30) days
prior to the expiration or earlier termination of the Lease Term, to require
Tenant to abandon and leave in place, without additional payment to Tenant or
credit against Rent, any and all telecommunications wiring and related
infrastructure, or selected components thereof, whether located in the Tenant's
Premises or elsewhere in the Building.
22.04. New Provider Installations. In the event that Tenant wishes at
any time to utilize the services of a
Page 4 of 6
<PAGE> 14
telephone or telecommunications provider whose equipment is not then servicing
the Building, no such provider shall be permitted to install its lines or other
equipment within the Building without first securing the prior written approval
of the Landlord. Landlord's approval shall not be deemed any kind of warranty or
representation by Landlord, including, without limitation, any warranty or
representation as the suitability, competence, or financial strength of the
provider. Without limitation of the foregoing standard, unless all of the
following conditions are satisfied to Landlord's satisfaction, it shall be
reasonable for Landlord to refuse to give its approval:
(i) Landlord shall incur no expense whatsoever with respect to any
aspect of the provider's provision of its services, including without
limitation, the costs of installation, materials and services;
(ii) prior to commencement of any work in or about the Building by the
provider, the provider shall supply Landlord with such written
indemnities, insurance, financial statements, and such other items as
Landlord reasonably determines to be necessary to protect its financial
interests and the interests of the Building relating to the proposed
activities of the provider;
(iii) the provider agrees in writing to abide by such rules and
regulations, Building and other Codes, job site rules and guidelines and
such other requirements as are reasonably determined by Landlord to be
necessary to protect the interests of the Building, the tenants in the
Building and Landlord, in the same or similar manner as Landlord has the
right to protect itself and the Building with respect to proposed
alterations as described elsewhere in this Lease;
(iv) Landlord reasonably determines that there is sufficient space
in the Building for the placement of all of the provider's equipment and
materials;
(v) Landlord receives from the provider such compensation as is
reasonably determined by Landlord to compensate it for space used in the
Building for the storage and maintenance of the provider's equipment,
for the fair market value of a provider's access to the Building, and
the costs which may reasonably be expected to be incurred by Landlord;
(vi) all of the foregoing matters are documented in a written
agreement between landlord and the provider, the form and content of
which is reasonably satisfactory to Landlord.
22.05. Installation and Usage of Wireless Technologies. Tenant shall
not utilize any wireless communications equipment (other than usual and
customary cellular telephones), including antenna and satellite receiver dishes,
within the Tenant's Premises or Building, without Landlord's prior written
consent. Such consent shall not be unreasonably withheld, but may be conditioned
in such a manner so as to protect Landlord's financial interests and the
Building's, and the other Tenants' therein, in a manner similar to the
arrangements as described in the immediately preceding paragraphs.
22.06. Limit if Default or Breach. Notwithstanding any provision of
the proceeding paragraphs to the contrary, the refusal of Landlord to grant its
approval to any prospective provider shall not be deemed a default or breach by
Landlord of its obligation under this Lease unless and until Landlord is
adjudicated to have acted recklessly or maliciously with respect to Tenant's
request for approval, and in that event, Tenant shall still have no right to
terminate the Lease or claim an entitlement to Rent abatement, but may assert a
claim for its direct damages, subject to and limited by the other provisions of
the Lease. The provisions of this paragraph may be enforced solely by Tenant and
Landlord, are not for the benefit of any other party, and specifically but
without limitation, no telephone or telecommunications provider shall be deemed
a third party beneficiary of this Lease.
23. INTERIOR STANDARD SIGNAGE CHARGE
23.01. Interior Standard Signage Charge. Tenant shall not be required
to pay Landlord the Standard Interior Signage Charge of One Hundred and Fifty
Dollars ($150.00). However, Landlord's shall furnish and install Tenant's name
on Suite Signage outside the Premises in the common hallway wall, on the
Building Lobby Directory, and on Floor Directory, as applicable. Should Tenant
wish to have signage additionally on the monument sign immediately in front of
the Building lobby entrance, such shall be installed by Landlord at the cost of
Tenant.
Page 5 of 6
<PAGE> 15
24. MULTIPLE COUNTERPARTS/FACSIMILE TRANSMISSION
24.01. Multiple Counterparts/Facsimile Transmission. This Lease may be
signed by the parties in different counterparts and the signature pages
combined to create a document binding on all parties. Additionally, execution
of the Lease by the parties may be accomplished by means of facsimile
transmission and such execution shall be fully binding on all the parties upon
delivery by such a facsimile transmission of the fully executed Lease document.
25. OPTION TO RENEW
25.01 Option to Renew.
(a) Tenant is hereby granted and shall, if not at the time in default
under the Lease, have one (1) individual three (3) year option to renew the
Term of this Lease for an additional three (3) years from the expiration date
of the Term hereof, but otherwise on the same terms, covenants, and conditions
herein contained.
(b) This option shall be exercised only upon Tenant delivering to
Landlord in person or by United States mail on or before one hundred eighty
(180) days before the expiration of the Term hereof, written notice of its
election to extend the Term of this Lease as herein provided.
IN WITNESS WHEREOF, the parties have executed this Lease Rider as of the date
first above written.
LANDLORD: Bayfair Building, TENANT: Vista Laser Centers of the
a California partnership Pacific, Inc.,
a Nevada corporation, and
J. Robert Griffin, M.D.,
a married man jointly and
severalty, and David Bates,
a married man jointly and
severalty as their sole and
separate property
By /s/ By /s/ J. ROBERT GRIFFIN
------------------------------- ------------------------------
Its Owner/Mgr Its Chairman
------------------------------- ------------------------------
Its Its /s/ D. BATES
------------------------------- ------------------------------
By By President
------------------------------- ------------------------------
(Seal) (Seal)
Page 6 of 6
<PAGE> 16
Undivided one-quarter interest in real property located at 14895 E. 14th
Street, San Leandro, together with unimproved lot adjacent, in Alameda County,
described as:
PARCEL ONE:
Beginning at the intersection of the western line of Hesperian Blvd.,
formerly Telegraph Road, with the southwestern line of East 14th Street,
as said streets now exist since May 7, 1929; running thence along said
western line of Hesperian Blvd., south 0 degrees 28' East 190 ft; thence
south 89 degrees 44' 19" west 132.33 ft; thence; north 49 degrees west
156.66 ft; thence north 41 degrees east 230 ft. to said southwestern
line of East 14th St.; thence along the last mentioned line, south 49
degrees east 130 feet to the point of beginning.
PARCEL TWO:
Beginning at a point on the Western line of Hesperian Blvd., formerly
Telegraph Road distant thereon Sough 0 degrees 28' East 195.73 feet from
the intersection thereof with the southwestern line of East 14th St., as
said streets now exist since May 7, 1929; running thence South 89
degrees 44' 19" West 109.95 feet to the direct extension Northeasterly
of the Northwestern line of Lot 10 in Block "b" as said Lot and Block
are shown on the map of "Tract 831", etc. filed Nov. 7, 1947 in Book 27
of Maps, page 59, in the office of the County Recorder of Alameda
County; thence along said last mentioned extended line and along said
Northwestern line of Lot 10, South 41 degrees West 150.86 ft. to the
general Northern line of Donna St., as said street is shown on said map
of Tract 831; thence along the last mentioned line from a tangent that
bears South 0 degrees 15' 41" East on a curve to the left, with a radius
of 20 ft., a distance of 31.42 feet, thence tangent with the last
mentioned curve North 89 degrees 44' 19" East 169.84 ft., thence along
the arc of a curve to the left with a radius of 20 ft., a distance of
31.49 ft. to said Western line of Hesperian Blvd.; thence along the
last mentioned line North 0 degrees 28' West 113.33 ft. to the pont of
beginning.
EXHIBIT A
<PAGE> 17
EXHIBIT B
[A DRAWING OF THE FLOOR PLAN OF THE FOURTH FLOOR]
<PAGE> 18
EXHIBIT C
[A DRAWING OF SUITE 480 CHANGES TO BE COMPLETED]
Suite 480
Portion of 480 = 401 sf
Existing 400 = 824 sf
Total = 1,225 sf
PROPOSAL
Reconfiguration of Suite 400
Existing
SCHEMATIC 1/8" = 1'
Dimensions approximate
General Interior Layout
Not Intended as "Blueprint"
- Existing 110v Duplex Electrical Outlet
<PAGE> 19
EXHIBIT D WORK LETTER
1. Landlord shall perform standard Suite preparation including but not limited
to: light fixtures,/lens cleaning, re-lamping; repairing/replacing ceiling tiles
where necessary; carpet cleaning; and cleaning up, patching and or painting
interior walls and or doors.
2. All of the above items are to be furnished at the expense of the Landlord
prior to occupancy by Tenant.
//
//
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//
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JG1.51
<PAGE> 20
EXHIBIT E
RULES AND REGULATIONS
1. The sidewalks, entrances, lobby, elevators, stairways and public
corridors shall be used only as a means of ingress and egress and shall remain
unobstructed at all times. The entrance and exit doors of all suites are to be
kept closed at all times except at required for orderly passage to and from a
suite. Loitering in any part of the Building or obstruction of any means of
ingress or egress shall not be permitted. Doors and windows shall not be
covered or obstructed.
2. Plumbing fixtures shall not be used for any purposes other than
those for which they were constructed, and no rubbish, newspapers, trash or
other substances of any kind shall be thrown into them. Walls, floors and
ceilings shall not be defaced in any way and no one shall be permitted to mark,
drive nails, screws or drill into, paint, or in any way mar any Building
surface, except that pictures, certificates, licenses and similar items
normally used in Tenant's business may be carefully attached to the walls by
Tenant in a manner to be prescribed by Landlord. Upon removal of such items by
Tenant any damage to the walls or other surfaces, except minor nail holes,
shall be repaired by Tenant.
3. No awning, shade, sign, advertisement or notice shall be inscribed,
painted, displayed or affixed on, in or to any window, door or balcony or any
other part of the outside or inside of the Building or the demised premises.
No window displays or other public displays shall be permitted without the prior
written consent of Landlord. All tenant identification on public corridor
doors beyond building standard will be installed by Landlord for Tenant but
the cost shall be paid by Tenant. No lettering or signs other than the name of
Tenant will be permitted on public corridor doors with the size and type of
letters to be prescribed by Landlord. The directory of the Building will be
provided exclusively for the display and location of Tenant only and Landlord
reserves the right to exclude all other names therefrom. All requests for
listing on the Building directory shall be submitted to the office of Landlord
in writing. Landlord reserves the right to approve all listing requests. Any
change requested by Tenant of Landlord of the name or names posted on directory,
after initial posting, will be charged to Tenant.
4. The cost of any special electrical circuits for items such as
copying machines, computers, microwaves, etc., shall be borne by Tenant unless
the same are part of the building standard improvements. Prior to installation
of equipment Tenant must receive written approval from Landlord.
5. The weight, size and position of all safes and other unusually
heavy objects used or placed in the Building shall be prescribed by Landlord
and shall, in all cases, stand on metal plates of such size as shall be
prescribed by Landlord. The repair of any damage done to the Building or
property therein by putting in or taking out or maintaining such safes or other
unusually heavy objects shall be paid for by Tenant.
6. All freight, furniture, fixtures and other personal property shall
be moved into, within and out of the building at times designated by and under
the supervision of Landlord and in accordance with such regulations as may be
posted in the office of the Building manager. In no event will Landlord be
responsible for any loss or damage to such freight, furniture, fixtures or
personal property from any cause.
7. No improper noises, vibrations or odors will be permitted in the
Building, nor shall any person be permitted to interfere in any way with
tenants or those having business with them. No person will be permitted to
bring or keep within the Building any animal, bird or bicycle or any toxic or
flammable substances without Landlord's prior permission. No person shall
throw trash, refuse, cigarettes or other substances of any kind any place
within or out of the Building except in the refuse containers provided
therefor. Landlord reserves the right to exclude or expel from the Building
any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs or who shall in any manner do any act in violation
of the rules and regulations of the Building.
8. All re-keying of office doors or changes to the card access
system, after occupancy, will be at the expense of Tenant. Tenant shall not
re-key any doors or change the card access system in any way without making
prior arrangements with Landlord.
9. Tenant will not install or use any window coverings except those
provided by Landlord, nor shall Tenant use the balconies, if any, for storage,
barbecues, drying of laundry or any other activity which would detract from the
appearance of the Building or interfere in any way with the use of the Building
by other tenants.
10. If Tenant uses the Premises after regular business hours or on
non-business days shall lock any entrance doors to the Building used by Tenant
or take such other steps as are necessary to secure the Building's doors
immediately after entering or leaving the Building.
11. Tenant shall provide and cause all Tenant's employees to use
protective floor mats under all desk chairs used in the Premises.
12. If Tenant requires telegraphic, telephonic, burglar or of similar
services, it shall first obtain, and comply with, Landlord's instructions in
their installations.
13. Tenant shall not waste electricity, water or air-conditioning and
agrees to cooperate fully with Landlord to assure the most effective operation
of the Building's heating and air-conditioning.
14. Landlord reserves the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the Building.
15. Tenant shall not obtain for use on the Premises ice, drinking
water, food, beverage, towel or other similar services or accept barbering or
bootblacking services upon the Premises, except at such hours and under such
regulations as may be fixed by Landlord.
E-1
<PAGE> 21
EXHIBIT F
ACKNOWLEDGMENT OF COMMENCEMENT
This Acknowledgment is made as of May 15, 1996, with reference to that certain
Lease Agreement (hereinafter referred to as the "Lease") dated May 15, 1996, by
and between Bayfair Building, as "Landlord" herein, and Vista Laser Centers of
the Pacific, as "Tenant".
The undersigned hereby confirms the following:
1. That the Tenant accepted possession of the demised Premises (as described
in said Lease) on May 24, 1996, and acknowledges that the demised Premises are
as represented by Landlord and in good order, condition and repair, and that
the improvements, if any required to be constructed for Tenant by Landlord
under this Lease have been so constructed and are satisfactorily completed in
all respects.
2. That all conditions of said Lease to be performed by Landlord prerequisite
to the full effectiveness of said Lease have been satisfied and that Landlord
has fulfilled all of its duties of an inducement nature.
3. That in accordance with the provisions of Article 3 of said Lease the
Commencement Date of the Term is June 1, 1996, and that, unless sooner
terminated, the original Term thereof expires on May 31, 1997.
4. That said Lease is in full force and effect and that the same represents
the entire agreement between Landlord and Tenant concerning said Lease.
5. That there are no existing defenses which Tenant has against the
enforcement of said Lease by Landlord, and no offsets or credits against Rents.
6. That the Minimum Monthly Base Rent obligation of said Lease is presently in
effect and that all rentals, charges and other obligations on the part of
Tenant under said Lease commenced to accrue on June 1, 1996.
7. That the undersigned Tenant has not made any prior assignment,
hypothecation or pledge of said Lease or of the rents thereunder.
Landlord Bayfair Building, Tenant Vista Laser Centers of
a California partnership the Pacific, Inc., a
Nevada corporation &
J. Robert Griffin, M.D.,
a married man jointly &
By /s/ severalty & David Bates,
-------------------------------- a married man jointly &
severalty. As their
Title Owner/Mgr sole & separate property.
----------------------------
By By /s/ J. Robert Griffin
-------------------------------- ---------------------------------
Title
---------------------------- By
---------------------------------
By /s/ David Bates
---------------------------------
Page 1 of 1
<PAGE> 1
EXHIBIT 10.23
LEASE AGREEMENT
THIS LEASE, by and between North Bay Eye Associates, Inc., a California
Professional Corporation, Lessor, and Vista Laser Centers of the Pacific, Inc.,
a Nevada Corporation, Lessee.
IT IS HEREBY AGREED AS FOLLOWS:
1. DESCRIPTION. Lessor does hereby lease to Lessee and Lessee does
hereby lease from Lessor under the terms and conditions hereinafter set forth
the office space situated in the office building owned by Lessor located at 104
Lynch Creek Way, Petaluma, California, and which office space is numbered Suite
15. Said office space has an area of approximately 252 square feet plus
approximately 236 square feet of common area, as measured by the building
manager. All space is particularly described as set forth in Exhibit A attached
hereto and made a part hereof.
2. TERM. The term of the within lease is for one (1) year, commencing
on the date the offices are ready for occupancy. Lease shall be automatically
renewed for additional periods of one (1) year, unless terminated. Either party
may terminate this lease without cause at any time by giving the other party at
least sixty (60) days prior written notice.
3. RENT.
A. Surgical Suite. Base rent for the surgical suite (Paragraph
1, Exhibit A) shall be $1.65 per square foot per month, or $267.30 per month.
B. Examination Room. Base rent for the Examination Room
(Paragraph 2, Exhibit A) shall be $1.65 per square foot per month. Rent shall be
charged monthly, pro-rated based upon the number of days the Examination Room is
used by Lessee's physicians and/or staff.
C. Common Areas. Base rent for the Common Areas (Paragraph 3,
Exhibit A) shall be $1.65 per square foot per month.. Rent shall be charged
monthly, pro-rated based upon the number of days the Common Areas are used by
Lessee's patients and/or prospective patients.
4. STAFF. Lessor's staff shall be made available to Lessee for patient
reception, telephone service, and medical/technical services. Lessee, as a
condition of this lease, agrees to reimburse Lessor for the time devoted to
Lessee activities by such staff. Reimbursement shall be based upon the actual
hourly cost to Lessor for the same activities.
5. EQUIPMENT/UTILITIES. Lessee shall pay for installation of and
monthly utility charges for all equipment specifically installed for and related
to the operation of Lessee's business.
<PAGE> 2
LEASE - PAGE 2
6. MAINTENANCE AND REPAIRS. Lessee shall be solely responsible for
repairs and maintenance originating within the inside perimeter of the Surgical
Suite portion of the leased premises. Lessor shall be responsible for such
repairs and maintenance originating elsewhere.
7. USE OF PREMISES. Lessee shall use the demised premises for only
refractive surgery services, conducted through employed or contracted personnel
duly licensed by this state, together with all ancillary services related to
refractive surgery.
8. ALTERATIONS. Lessee shall not make any alterations of said premises
without the written consent of Lessor. Any additions to or alterations of said
premises shall become at once a part of the realty and belong to Lessor at the
termination of this lease. Lessee shall keep demised premises free from any
liens arising out of any work performed, material furnished or obligations
incurred by Lessee.
9. INDEMNITY. Lessee hereby agrees to indemnify Lessor against and hold
Lessor harmless from any and all claims or demands for loss of or damage to
property or for injury or death to any person from any cause whatsoever while
in, upon or about demised premises or the sidewalks adjacent thereto during the
term of this lease or any extension thereof, provided, however, that this
covenant shall not apply to injury to person or property resulting from acts of
Lessor, its agents, or employees while in or on the leased premises. Lessee
agrees to obtain and maintain with a reputable insurance company at its sole
cost and expense, public liability insurance against property damage or personal
injury growing out of use of or occurring on or about the leased premises, with
liability limits acceptable to Lessor.
10. ENTRY AND INSPECTION. The Lessee shall permit Lessor and his agents
to enter the Leased premises at all reasonable times
11. ASSIGNMENT AND SUBLETTING. Lessee shall not assign this lease or
any interest therein and shall not sublet the premises or any part thereof or
any right or privilege appurtenant thereto, without written consent of Lessor.
Lessor has sole right to terminate this lease with thirty (30) days notice if
notified in writing of any proposed or actual sublease or sale of Vista Pacific
to another party.
12. DESTRUCTION OF PREMISES. In the event of a partial destruction of
the premises during said term, from any cause, Lessor shall forthwith repair the
same. However, based on the cost of such repairs, the availability of insurance
coverage, and the amount of time necessary to complete such repairs, this lease
may be terminated at the option of either party.
13. LAWS AND REGULATIONS. Lessee at his own cost and expenses shall
comply with all laws,. rules and orders of all federal, state and municipal
governments, or departments, which may be applicable to the leased premises and
to Lessee's staff using said premises, including professional licensure.
<PAGE> 3
LEASE - PAGE 3
14. SERVICE INTERRUPTION. Lessor shall not be liable to Lessee for
service interruption, including utility service interruption, whether occurring
by reason of earthquake, fir, flood, accident or any other reason.
15. HOLDING OVER. Any holding over after expiration of the said term
with the consent of Lessor shall be so construed to be a tenancy from month to
month at the then monthly rental, and shall otherwise be on the terms and
conditions herein specified so far as applicable.
16. SUBORDINATION. Lessee agrees that this lease shall be subordinate
to any mortgages or deed of trust in the nature of mortgages that may hereafter
be placed upon the premises.
17. COMPETITIVE COVENANT. So long as Lessee is occupying the premises
herein leased and is not in default under this lease or any renewal thereof,
Lessor covenants that no space in the suite of which the leased premises are a
part will be rented, leased, or occupied by any individual or organization
offering refractive surgery and associated services which are in competition
with Lessee.
18. SECURITY DEPOSIT. First and last month's base rent for the surgical
suite shall be payable to Lessor upon one day prior to occupancy of premises by
Lessee.
19. NOTICES. All notices to be given to Lessee by Lessor may be given
in writing personally or depositing the same in the United States Mail, postage
prepaid, and addressed to:
David P. Bates III, President
Vista Laser Centers of the Pacific, Inc.
14895 East 14th Street, Suite 400
San Leandro, CA 94578
All notices to be given to Lessor by Lessee may be given in writing personally
or depositing the same in the United States Mail, postage prepaid, and addressed
to:
Paul Campion, M.D., President
North Bay Eye Associates, Inc.
104 Lynch Creek Way, Suite 14
Petaluma, CA 94954
IN WITNESS WHEREOF, Lessor and Lessee have executed this lease the day
and year first above written.
__________________________________ ________________________________________
NORTH BAY EYE ASSOCIATES, INC. VISTA LASER CENTERS OF THE
Lessor PACIFIC, INC.
Lessee
<PAGE> 4
LEASE - PAGE 4
LEASE
EXHIBIT A
LEASED SPACE
1. SURGICAL SUITE
A room in the northeast corner of Suite 14, 104 Lynch Creek Way,
Petaluma California. Approximately 13.5 x 12 feet, 162 Square Feet.
This room shall be dedicated to the provision of refractive surgery
services for Vista Pacific patients.
2. EXAMINATION ROOM
A room immediately south of the Surgical Suite. Approximately 90.25
Square Feet. The examination room shall be shared by Lessor and Lessee,
and billed to Lessee based upon time used per month.
3. COMMON SPACE
Consists of general patient access areas, primarily reception and
waiting areas. Approximately 236.25 Square Feet. Common space shall be
shared by Lessor and Lessee, and billed to Lessee based upon time used
per month.
<PAGE> 1
EXHIBIT 23.1
The Board of Directors
Vista Laser Centers of the Pacific, Inc.
Our report dated August 1, 1996, contains an explanatory paragraph that
states that the Company is currently a development stage enterprise and
dependent on raising additional financing through a public offering or private
placement to meet its current obligations and commitments, which raises
substantial doubt about its ability to continue as a going concern. The
consolidated financial statements do not include any adjustments that might
result from the outcome of that uncertainty.
We consent to the use of our reports included herein and to the reference
to our firm under the headings "Selected Financial Data" and "Experts" in the
Prospectus.
KPMG Peat Marwick LLP
Short Hills, New Jersey
September , 1996
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints J. ROBERT GRIFFIN, as his or her true and lawful attorney-in-fact and
agent, with full powers of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities indicated below,
to sign this Registration Statement and any or all amendments, including
post-effective amendments, to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and applicable state securities
administrators, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Dated: July ___, 1996 ___________________________________
Mark R. Mandel, Director
Dated: July ___, 1996 ___________________________________
Donald G. Johnson, Director
Dated: July ___, 1996 ___________________________________
Gary M. Kawesch, Director
Dated: July ___, 1996 ___________________________________
Murray D. Watson, Director
Dated: July ___, 1996 ___________________________________
Thomas A. Schultz, Director
