<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 13, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
TRUEVISION INTERNATIONAL, INC.
(Name of Small Business Issuer in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 8741 84-1080044
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>
------------------------
1720 LOUISIANA BOULEVARD
SUITE 100
ALBUQUERQUE, NEW MEXICO 87110
505-256-3545
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL
EXECUTIVE OFFICES)
------------------------
JOHN C. HOMAN, CHIEF EXECUTIVE OFFICER
TRUEVISION INTERNATIONAL, INC.
1720 LOUISIANA BOULEVARD
SUITE 100
ALBUQUERQUE, NEW MEXICO 87110
505-256-3534 (TELEPHONE)
505-256-3521 (FACSIMILE)
(Name, Address, And Telephone Number Of Agent For Service)
------------------------
COPIES TO:
GREGORY BARTKO, ESQ. LAWRENCE B. FISHER, ESQ.
Law Office of Gregory Bartko Orrick, Herrington & Sutcliffe LLP
3475 Lenox Road, Suite 400 666 Fifth Avenue
Atlanta, Georgia 30326 New York, New York 10103
(404) 238-0550 (telephone) (212) 506-5000 (telephone)
(404) 238-0551 (facsimile) (212)-506-5151 (facsimile)
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of 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 this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /__________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box: / /__________________
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE PROPOSED MAXIMUM
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
<S> <C> <C> <C> <C>
Units, comprised of two shares of common
stock, par value $.001 per share and one
redeemable common stock purchase warrant,
to purchase one share of common stock
(2)...................................... 575,000 $16.10 $9,257,500 $2,574
Common stock underlying redeemable warrants
included in the units.................... 575,000 $9.60 $5,520,000 $1,535
Representative's warrants(3)............... 50,000 $.0001 $-- $--
Common stock issuable upon exercise of the
representative's warrants(4)............. 100,000 $9.60 $960,000 $267
Redeemable warrants issuable upon exercise
of the representative's warrants(4)...... 50,000 $.12 $6,000 $2
Common stock issuable on exercise of
redeemable warrants included in the
representatives warrants(2).............. 50,000 $9.60 $480,000 $135
Total................................ -- -- $16,223,500 $4,513
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 of the Securities Act.
(2) Includes 75,000 units that the underwriters have the option to purchase to
cover over-allotments, if any.
(3) No registration fee is required pursuant to Rule 457 of the Securities Act.
(4) Pursuant to Rule 416, we are registering additional securities as may become
issuable pursuant to the anti-dilution provisions of the redeemable
warrants, the representative's warrants and the redeemable warrants
underlying the representative's warrants.
<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER 13, 1999
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
[LOGO]
TRUEVISION INTERNATIONAL, INC.
500,000 UNITS
This is an initial public offering of 500,000 units of TrueVision
International, Inc., each unit consisting of two shares of common stock and a
redeemable common stock purchase warrant to purchase one share of common stock.
The common stock and the warrants will trade as separate securities 30 days
after this offering.
Before this offering, there has been no public market for any of our
securities. We anticipate that the initial public offering price will be $16.10
per unit, which consists of $8.00 per share of common stock and $.10 per
warrant. We have made an application to quote our common stock, our warrants,
and the units on the Nasdaq SmallCap Stock Market under the symbols "TRUE,"
"TRUE.W," and "TRUE.U."
These are speculative securities and investors will experience significant
dilution. Investing in the units involves certain risks. See "Risk Factors"
beginning on page 9.
NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PER UNIT TOTAL
---------- ----------
<S> <C> <C> <C>
- - Price to the public.............................................. $ $
- - Underwriting discounts and commissions........................... $ $
- - Proceeds, before expenses, to TrueVision......................... $ $
</TABLE>
The underwriters may, under certain circumstances, purchase an additional
75,000 units from us at the initial public offering price less the underwriting
discount to cover any over-allotments.
Delivery of the securities offered hereby will be made on or about
, 1999, in New York, New York. The underwriters are offering the
units on a firm commitment basis.
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities, and we are not soliciting an offer to buy these
securities, in any state where the offer and sale is not permitted.
DIRKS & COMPANY, INC.
PROSPECTUS DATED , 1999.
<PAGE>
[Photo depicting, at the top
of the page, a women serving as
a customer representative for a
medical services company. At the bottom
of the page, a women's eyes are
focused in close-up fashon.]
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
-------------
<S> <C>
Prospectus Summary...................................................................................... 3
Risk Factors............................................................................................ 7
Cautionary Note Regarding Forward-Looking Statements.................................................... 12
Use Of Proceeds......................................................................................... 12
Dividend Policy......................................................................................... 13
Capitalization.......................................................................................... 14
Dilution................................................................................................ 15
Selected Consolidated Financial Data.................................................................... 16
Management's Discussion And Analysis Of Financial Condition And Results Of Operations................... 18
Business................................................................................................ 23
Management.............................................................................................. 32
Certain Transactions.................................................................................... 38
Principal Stockholders.................................................................................. 42
Description Of Securities............................................................................... 43
Shares Eligible For Future Sale......................................................................... 47
Underwriting............................................................................................ 49
Legal Matters........................................................................................... 51
Experts................................................................................................. 51
Index To Consolidated Financial Statements.............................................................. F-1
</TABLE>
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS.
THIS SUMMARY IS NOT COMPLETE AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT
INVESTORS SHOULD CONSIDER BEFORE INVESTING IN OUR SECURITIES. INVESTORS SHOULD
READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE FINANCIAL STATEMENTS WHICH
ARE A PART OF THIS PROSPECTUS.
OUR BUSINESS
TrueVision International, Inc., through our operating subsidiaries,
TrueVision Laser Center of Albuquerque, Inc. and TrueVision of Nevada, Inc.,
provide laser vision correction and image enhancement procedures to individuals
at our TrueVision centers. Our doctors and those with which we are affiliated,
provide these services using state-of-the-art excimer laser technology. We also
offer patients ancillary image enhancement procedures and other vision
correction devices on a limited basis, including eye glasses and contact lenses.
We acquired our first TrueVision center in Albuquerque, New Mexico in April 1998
and opened our second center in Las Vegas, Nevada in July 1999. We do not
currently perform any procedures at our Las Vegas center.
OUR STRATEGY
Our goal is to be a leading provider of laser vision correction and other
cosmetic procedures. In order to achieve this goal, we will implement the
following strategies:
- Expand our geographic presence by opening additional TrueVision centers;
- Equip our centers with state-of-the-art medical technologies;
- Recruit, employ and affiliate talented doctors and capitalize on these
physicians' relationships within their local communities;
- Increase our marketing and sales efforts to further penetrate our target
markets; and
- Expand our services to include ancillary cosmetic procedures and other
vision correction products that permit cross-marketing of our core
services.
OUR INDUSTRY
The laser vision correction industry has experienced dramatic growth during
the past two years. The total number of laser correction procedures performed in
the United States is forecasted to grow nearly 450% from 200,000 in 1997 to
900,000 in 1999. Total sales, including revenues from procedures, for the laser
vision correction industry have been over $1.0 billion since approval of the
excimer laser in the U.S. in October 1995. However, despite the growth of this
industry, the estimated number of vision correction clients in 1998 represented
less than 0.28% of the 150 million people with refractive vision conditions in
the U.S. Therefore, we believe this represents an untapped market for which we
can offer our services.
CORPORATE BACKGROUND
We were incorporated on January 19, 1988 as Topform, Inc., in Delaware. On
March 16, 1999 we changed our name to TrueVision International, Inc. In April
1998, through a stock purchase and reorganization, we acquired a controlling
interest in TrueVision Laser Centers of Albuquerque, Inc., which had been
providing laser vision correction services using the VISX, Inc. excimer laser
since June 1996. In July 1999, we opened our second center in Las Vegas, Nevada,
through our wholly-owned subsidiary, TrueVision of Nevada, Inc., formed in
Nevada in August 1999. Our executive office is located at 1720 Louisiana
Boulevard N.E., Suite 100 Albuquerque, New Mexico 87110 and our telephone number
is (505) 256-3534. In this prospectus, "TrueVision", "we", "us" and "our" refer
to TrueVision International, Inc. and our consolidated subsidiaries, TrueVision
Laser Center of Albuquerque, Inc. and TrueVision of Nevada, Inc.
3
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities that we are offering.............. 500,000 units, each unit consisting of two
shares of common stock and one common stock
purchase warrant exercisable to purchase one
share of common stock at an exercise price of
$9.60 per share.
Common stock outstanding before this 2,329,560 shares.
offering...................................
Common stock to be outstanding after this
offering................................... 3,329,560 shares.
Redeemable common stock purchase warrants to
be outstanding after this offering......... 500,000 redeemable common stock purchase
warrants included as a part of the units
offered hereby.
Use of proceeds.............................. Laser facilities development expenses; sales
and marketing expenditures; facilities and
other capital expenditures; expansion of
internal operations; repayment of
indebtedness; and working capital and general
corporate purposes.
Proposed Nasdaq SmallCap symbols
Common stock............................. "TRUE"
Redeemable warrants...................... "TRUE.W"
Units.................................... "TRUE.U"
</TABLE>
Unless stated otherwise, all information in this prospectus assumes:
- an initial public offering price of $16.10 per unit; and excludes
- 458,332 shares of common stock issuable upon the exercise of 458,332
incentive stock options, each exercisable to purchase one share of our
common stock at $.86 per share;
- 312,500 common stock purchase warrants currently outstanding, each
exercisable to purchase one share of our common stock at $8.40 per
share;
- the exercise of the underwriter's over-allotment option to purchase
75,000 units; and
- the exercise of the 50,000 representative's warrants.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table summarizes the financial data of our business. This
information is qualified by reference to, and should be read together with, the
historical financial data for the years ended September 30, 1997 and 1998 and
should be read in conjunction with our audited financial statements included
elsewhere in this prospectus. The historical financial data as of June 30, 1999
and for the nine months ended June 30, 1998 and 1999 are derived from and should
be read in conjunction with our unaudited financial statements included
elsewhere in this prospectus. The data presented below should also be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements and accompanying notes
appearing elsewhere in this prospectus.
The issuance of our common stock for the acquisition of True Vision
Albuquerque is accounted for in a manner similar to a pooling of interests due
to the common ownership before and after the share exchange. The table reflects
our statement of operations data as if the April 15, 1998 issuance of 1,944,444
shares of common stock for True Vision Albuquerque occurred on October 1, 1997.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------- NINE MONTHS NINE MONTHS
SEPTEMBER 30, SEPTEMBER 30, JUNE 30, JUNE 30,
1997 1998 1998 1999
------------- ------------- ------------ ------------
UNAUDITED
<S> <C> <C> <C> <C>
Statement of Operations Data:
Revenues............................................... $ 770,704 $ 1,460,526 $ 956,894 $2,218,858
Cost of revneues....................................... 453,279 894,134 539,092 1,528,071
Operating costs and expenses........................... 502,106 565,729 376,811 725,474
(Loss) income from operations.......................... (184,681) 663 40,991 (34,687)
Interest expense....................................... (66,585) (117,955) (90,754) (91,078)
------------- ------------- ------------ ------------
Net loss............................................... $ (288,879) $ (117,292) $ (49,763) $ (263,623)
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------
Basic and diluted earnings per share................... $ (.14) $ (.06) $ (.02) $ (.12)
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------
Shares used in computing basic and diluted earnings per
share................................................ 2,051,215 2,127,820 2,092,592 2,233,507
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------
</TABLE>
- ------------------------
- The following table includes a summary of our balance sheet at June 30,
1999:
- on an actual basis;
- on a pro forma basis giving effect to the issuance during August 1999 of
$550,000 principal amount promissory notes bearing interest at 13% per
annum, due April 15, 2000, in connection with our private placement
conducted from April to August 1999 (for a total amount of outstanding
notes of $1,175,000), 34,384 shares of common stock issued in conjunction
with the above notes, issuance of 20,000 shares of common stock in
exchange for the retirement of a warrant to purchase 416,667 shares, and
the issuance of 41,667 shares of common stock as compensation for interest
and late fees on related party capital lease obligations
- as adjusted to give affect to, the issuance of 1,000,000 shares of common
stock and warrants for the purchase of 500,000 shares offered by us at an
offering price of $8.00 per share and $.10 per warrant, the repayment of
the $1,175,000 principal amount promissory notes and accrued interest,
issued April through August 1999, bearing interest at 13%, and the
repayment of $402,000 of accrued expenses from the proceeds of this
offering, which are primarily accrued consulting
5
<PAGE>
fees that were deferred as well as a state sales tax liability accrued by
our Albuquerque subsidiary.
<TABLE>
<CAPTION>
JUNE 30,
1999 AS
BALANCE SHEET DATA: ACTUAL PRO FORMA ADJUSTED
- --------------------------------------------------------- ----------- --------- ---------
UNAUDITED
<S> <C> <C> <C>
Cash and cash equivalents................................ $ 116,425 $ 666,425 $5,680,925
Total working capital (deficit).......................... (934,083) (886,183) 5,539,567
Total assets............................................. 1,096,790 1,718,290 6,553,040
Short term debt, current portion of long term liabilities
and current related party obligations.................. 1,172,910 1,675,010 500,010
Long term debt........................................... 365,645 365,645 365,645
Total liabilities........................................ 1,946,454 2,520,054 929,054
Stockholders' (deficit) equity........................... $(849,664) $(801,764) $5,623,986
</TABLE>
6
<PAGE>
RISK FACTORS
AN INVESTMENT IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. IN ADDITION
TO THE OTHER INFORMATION IN THIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS BEFORE INVESTING IN OUR SECURITIES.
WE HAVE A LIMITED OPERATING HISTORY AND MAY FACE DIFFICULTIES ENCOUNTERED BY
EARLY STAGE COMPANIES IN NEW AND RAPIDLY EVOLVING MARKETS. We have a limited
operating history and have only been providing our services since April 1998. As
a result, we have a limited history upon which you may evaluate our business and
prospects. Our prospects must be considered in light of the risks, expenses,
delays, problems and difficulties frequently experienced by early stage
companies.
WE HAVE INCURRED NET LOSSES SINCE COMMENCING OUR BUSINESS AND EXPECT LOSSES
FROM OPERATIONS IN THE FUTURE. We have not achieved profitability and expect to
continue to incur operating losses for the foreseeable future. Through June 30,
1999, our net loss was $263,623. We expect to continue to incur significant
operating and capital expenditures and, as a result, we expect significant net
losses in the future and we will need to generate significant revenues to
achieve and maintain profitability.
WE MAY BE UNABLE TO MEET OUR FUTURE CAPITAL REQUIREMENTS. Based on our
current operating plan, we anticipate that the net proceeds of this offering and
cash provided by operations will allow us to meet our cash and capital
requirements for at least 12 months following the date of this prospectus. Our
accountants have included in a note in their report that our consolidated
financial statements have been prepared assuming we will continue as a going
concern. If appropriate financing is not obtained by us through our public
offering, we intend to modify our operations accordingly. We may require
additional funding sooner than anticipated. If we raise additional capital
through the sale of equity, including preferred stock, or convertible debt
securities, the percentage of ownership of our stockholders will be diluted.
We currently do not have a credit facility or any commitments for additional
financing. We cannot be certain that additional financing will be available when
and to the extent required. If adequate funds are not available on acceptable
terms, we may be unable to fund our expansion, develop or enhance our services
or respond to competitive pressures.
OUR CHIEF EXECUTIVE OFFICER HAS A CONFLICT OF INTEREST WITH OTHER COMPANIES
THAT HAVE RELATIONSHIPS WITH US, AND THESE OFFICERS MAY HAVE TO DEVOTE
MANAGEMENT TIME TO THESE AFFILIATED COMPANIES. Our chief executive officer, Mr.
Homan, is an officer and director of TVLC Finance, Inc. and MTE/ Triad, Inc.
Both of these companies have provided specialty financing to enable us to
finance our equipment. Mr. Homan also serves as an officer and director of
TrueVision Laser Centers, Inc., a predecessor company that has since ceased
active operations. Since these companies provide access to equipment financing
for us, we are dependent on Mr. Homan's determination that the terms of
equipment financing provided by these affiliated companies are no less favorable
than we could obtain from independent sources. Mr. Homan's role with us could
result in a conflict of interest at some time. These separate responsibilities
by Mr. Homan could potentially prevent him from devoting full-time as our chief
executive officer.
SINCE THE LASER REFRACTIVE SURGERY MARKET IS RELATIVELY NEW, WE DO NOT KNOW
IF OUR SERVICES WILL GENERATE MARKET ACCEPTANCE. The commercial market for
laser refractive and image enhancement surgery in the United States is
relatively new and we do not know if these procedures will generate widespread
market acceptance. Several factors may contribute to refractive surgery not
achieving broad market acceptance, which include:
- cost of the procedure;
- effectiveness of conventional eye correction technologies including eye
glasses and contact lenses;
7
<PAGE>
- general resistance to surgery;
- availability of other surgical techniques;
- the short history of laser refractive surgery in the United States;
- side effects; and
- any resistance by third-party payors to reimburse patients for elective
laser vision correction.
POTENTIAL SIDE EFFECTS AND NEGATIVE LONG-TERM RESULTS OF LASER REFRACTIVE
SURGERY COULD DAMAGE THE DEMAND FOR OUR SERVICES. There are concerns about the
safety and efficacy of the performance of laser refractive surgery. These
concerns include:
- the predictability and stability of results;
- complications and side effects including:
- post-operative pain;
- corneal haze during healing;
- glare/halos;
- decrease in contrast sensitivity;
- temporary increases in intraocular pressure in reaction to post-procedure
medication;
- modest fluctuations in astigmatism and modest decreases in best corrected
vision;
- loss of fixation during the procedure;
- unintended over-or under-corrections; instability, reversion or regression
of effect; and
- corneal scars, corneal ulcers, and corneal healing disorders.
The occurrence of any of these or any other complications may damage the demand
for the services we offer.
THE TECHNOLOGIES WE USE IN OUR LASER VISION CORRECTION PROCEDURES ARE
SUBJECT TO RAPID TECHNOLOGICAL CHANGE AND COULD CAUSE US TO MAKE SIGNIFICANT
CAPITAL INVESTMENT IN NEW EQUIPMENT. Our market is characterized by rapid
technological changes. Newer technologies, techniques or products for the
treatment of refractive vision disorders, and the other services we offer, could
be developed with better performance than the excimer lasers and other
technologies that we use. The availability of new and better ophthalmic laser
technologies or other surgical or non-surgical methods for correcting refractive
vision disorders could require us to make significant investments in technology,
render our current technology obsolete and have a significant negative impact on
our business and results of operations.
WE MAY NOT COMPETE EFFECTIVELY WITH OTHER EYE CARE SERVICES COMPANIES THAT
HAVE MORE RESOURCES AND EXPERIENCE THAN US. Many of our competitors have
substantially greater financial, technical, managerial, marketing, and other
resources than we do may compete more effectively than we can. We compete with
NovaMed Eyecare Management, LLC, TLC The Laser Center, Inc., Clear Vision Laser
Centers, Inc., and other entities, including other refractive laser center
companies, hospitals, individual ophthalmologists and optometrists, other
surgery and laser centers, eye care clinics and providers of retail optical
products in offering our services and products. Our surgical procedures compete
with other surgical and non-surgical treatments for refractive disorders,
including eyeglasses, contact lenses, other types of refractive surgery, such as
radial keratotomy, and technologies currently under development. If our
competitors offer laser vision correction or other refractive surgery services
at lower prices than we do, we may have to lower the prices we charge, which
will adversely affect our results of operations.
8
<PAGE>
THE DEMAND FOR OUR SERVICES MAY BE ADVERSELY AFFECTED BY HEALTH CARE REFORM
INITIATIVES. The continuing effort of government regulators of health care
services to contain or reduce the costs of health care may reduce our revenues
and profitability by increasing our regulatory burden or increasing our
administrative costs associated with delivering services to our customers. We
cannot predict the effect that health care reforms may have on our business, and
it is possible that any reforms will hurt our business.
SIGNIFICANT DECREASES IN EXCIMER LASER PRICES COULD HARM OUR BUSINESS BY
MAKING IT MORE ATTRACTIVE FOR EYE SURGEONS TO BUY THEIR OWN LASERS AND FORCE US
TO LOWER PRICES. A significant reduction in the price of excimer lasers could
reduce the demand for our services by making it economically more attractive for
eye surgeons to buy excimer lasers for themselves instead of utilizing our
centers. Also, excimer laser price decreases could force us to reduce our fees
in response to this reduction in demand or as a means to remain competitive with
other laser providers.
WE ARE DEPENDENT UPON A LIMITED NUMBER OF SUPPLIERS FOR OUR LASER SURGERY
EQUIPMENT. We are dependent on a small number of manufacturers for our supply
of ophthalmic lasers. To our knowledge, only three companies, Summit
Technologies, Inc., Autonomous Technologies Corporation and VISX, Inc. have been
approved by the United States Food and Drug Administration for commercial sale
of excimer lasers in the U.S. If any of these manufactures were for any reason
to discontinue commercial sale of ophthalmic lasers, or be unwilling or unable
to meet our needs, we may not be able to equip our centers with the appropriate
technology.
OUR BUSINESS MAY BE IMPAIRED DUE TO GOVERNMENT REGULATIONS THAT COULD
RESTRICT OUR EQUIPMENT, SERVICES AND RELATIONSHIPS WITH DOCTORS, OPTOMETRISTS,
AND OTHER HEALTH CARE PROVIDERS. We are subject to extensive federal, state,
local and foreign laws, rules and regulations, including:
- restrictions on the approval, distribution, and use of medical devices;
- anti-kickback statutes;
- fee-splitting laws;
- corporate practice of medicine restrictions;
- self-referral laws;
- anti-fraud provisions;
- facility license requirements and certificates of need;
- conflict of interest regulations; and
- sales and use taxes
Many of these laws and regulations are ambiguous, and courts and regulatory
authorities have provided little clarification. Moreover, state and local laws
vary from jurisdiction to jurisdiction. As a result, we may not always be able
to accurately interpret applicable law, and some of our activities could be
challenged.
Failure to comply with applicable FDA requirements could subject us, and the
doctors who use our centers to enforcement actions, including product seizure,
recalls, withdrawal of approvals and civil and criminal penalties. Further,
failure to comply with regulatory requirements, or any adverse regulatory action
could result in limitations or prohibitions on our use of excimer lasers.
OUR MANAGEMENT WILL CONTROL 40.7% OF OUR COMMON STOCK AFTER THIS OFFERING
AND THEIR INTERESTS MAY BE DIFFERENT FROM AND CONFLICT WITH YOURS. Following
this offering, our executive officers and directors will beneficially own a
total of approximately 40.7%, 39.1% if the underwriter's over-allotment option
is exercised in full, of our outstanding common stock, assuming no exercise of
the redeemable
9
<PAGE>
common stock purchase warrants. Accordingly, if our management acts together,
they have the power to control the election of all of our directors and the
approval of significant corporate transactions for which the approval of our
stockholders is required. If you purchase our securities, you may have no
effective voice in our management.
THE NATURE OF OUR BUSINESS COULD SUBJECT US TO MALPRACTICE, PRODUCT
LIABILITY, AND OTHER CLAIMS. Providing laser refractive surgery and other eye
care services subjects us to the potential that significant physical injury will
occur to patients at our centers and the resulting risk of malpractice, product
liability and other claims. Our insurance may not be adequate to satisfy claims
or protect us or our affiliated providers against these claims. Furthermore, our
insurance coverage may not continue to be available at acceptable costs and
terms.
WE ARE DEPENDENT, IN PART, UPON OUR RELATIONSHIPS WITH OUR MEMBER-PHYSICIANS
AND OUR ABILITY TO ENTER INTO AFFILIATIONS WITH LICENSED MEDICAL
PROFESSIONALS. Since we do not practice medicine or optometry, our activities
are limited to establishing centers at which doctors and eye care professionals
that we employ, and others with whom we've established affiliations, render eye
care services. Accordingly, our success depends upon our ability to attract
talented physicians that we desire to employ and our ability to develop
relationships with affiliated physicians and to enter into agreements with
health care providers, including institutions, independent physicians and
optometrists, to render surgical and other professional services at centers
owned or managed by us. There can be no assurance that we will be able to enter
into these agreements with health care providers on satisfactory terms, if at
all. Our inability to enter into these affiliations would likely limit our
revenues, our services, and our ability to expand our operations.
THE MANNER IN WHICH WE OBTAIN OUR EXCIMER LASER SURGERY EQUIPMENT INCREASES
OUR LEVERAGE AND FINANCE COSTS. We finance the purchases of our excimer laser
equipment. The use of leverage to finance our equipment increases our risk of
loss as opposed to if we borrowed a smaller portion or none of the purchase
price of this equipment. Our risk is increased because we must satisfy these
obligations on specific dates, regardless of our revenues. If we do not meet our
debt service payments when due, we may be forced to forfeit the equipment
securing the debt.
OUR SUCCESS DEPENDS UPON THE EFFORTS OF, AND OUR ABILITY TO RETAIN, KEY
PERSONNEL, INCLUDING OUR CHIEF EXECUTIVE OFFICER. We believe that the efforts
of our senior management, key employees and contractors, particularly that of
our chief executive officer, John C. Homan, are essential to our operations and
growth. We have entered into a three-year employment agreement with Mr. Homan,
and have obtained key man life insurance on the life of Mr. Homan in the amount
of $1,000,000. If we do not succeed in retaining or motivating our current
personnel or in hiring additional qualified employees, our business will be
materially adversely affected. In addition, competition for personnel in our
industry, including the doctors who perform our services, is intense and there
can be no assurance that we will be able to attract and retain the necessary
personnel.
THE REPRESENTATIVE OF THE UNDERWRITERS WILL CONTINUE TO HAVE INFLUENCE OVER
US FOLLOWING THE COMPLETION OF THIS OFFERING. We have given Dirks & Company,
Inc., the representative of the underwriters, the right, for a period of five
years from the completion of this offering, to designate one person to our board
of directors. Upon completion of this offering, the representative will also
receive, for nominal consideration, warrants to purchase 100,000 shares of our
common stock and 50,000 redeemable common stock purchase warrants. Accordingly,
the representative will continue to have influence over our operations following
the completion of this offering.
THE REDEEMABLE NATURE OF OUR WARRANTS MAY IMPACT YOUR INVESTMENT DECISION AS
TO IF AND WHEN TO EXERCISE THEM. The 500,000 redeemable common stock purchase
warrants included in the units being offered by this prospectus are redeemable
by us. Commencing 12 months after the date of this prospectus, we can redeem the
warrants at a redemption price of $.10 per warrant if our common stock trades
10
<PAGE>
above $16.00 for any 20 trading days within a period of 30 consecutive trading
days ending on the fifth trading day prior to the date of the redemption notice.
If we decide to redeem the warrants, holders will lose their rights to purchase
the underlying shares of common stock unless the warrant is exercised before we
redeem them. Upon receipt of a notice of redemption, holders may be forced to
make an investment decision forcing the investor to exercise the warrants prior
to the time the investor desires to do so.
YOU CANNOT SELL THE SHARES UNDERLYING THE REDEEMABLE COMMON STOCK PURCHASE
WARRANTS IF WE DO NOT HAVE AN EFFECTIVE REGISTRATION STATEMENT. The redeemable
common stock purchase warrants included in the units offered by this prospectus
are not exercisable unless, at the time of exercise, we have a current
prospectus covering the shares of common stock issuable upon exercise of the
warrants, and the shares have been registered, qualified or deemed to be exempt
under the securities laws of the state of residence of the exercising holder of
the warrants. Although we have agreed to use our best efforts to keep a
registration statement covering the shares of common stock issuable upon the
exercise of the warrants effective for the term of the warrants, if we fail to
do so for any reason, the warrants may be deprived of value.
The common stock and warrants included in the units offered by this
prospectus are detachable and separately transferable 30 days following
completion of this offering. Purchasers may buy warrants in the aftermarket or
may move to jurisdictions in which the shares underlying the warrants are not so
registered or qualified during the period that the warrants are exercisable. In
that event, we would be unable to issue shares to those holders desiring to
exercise their warrants, and these holders would have no choice but to attempt
to sell the warrants in a jurisdiction where a sale is permissible or allow the
warrants to expire unexercised.
FAILURE OF COMPUTER SYSTEMS AND SOFTWARE PRODUCTS TO BE YEAR 2000 COMPLIANT
COULD NEGATIVELY IMPACT OUR BUSINESS. Many current installed computer systems
and software products only accept two digits to identify the year in any date.
Thus, the Year 2000 will appear as "00," which the system might consider to be
the Year 1900 rather than the Year 2000. This could result in system failures,
delays or miscalculations causing disruptions to our operations. The failure of
systems maintained by third parties to be Year 2000 compliant could cause us to
incur significant expense to remedy any problems, reduce our revenues from such
third parties or otherwise seriously damage our business. Our failure to correct
a material Year 2000 problem could result in an interruption in, or a failure
of, some of our normal business activities or operations.
The patients at our eye surgery and laser centers and our affiliated eye
care providers pay a portion of their charges for eye care services with
Medicare or third party payor reimbursements. Some private insurance companies
also provide partial or full coverage for elective procedures. In the event
Medicare or private insurance companies have difficulty processing and paying
claims because of Year 2000 issues, this could have a material adverse effect on
our business, financial condition and results of operations.
11
<PAGE>
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These forward-looking
statements are not historical facts, but rather are based on our current
expectations, estimates, and projections about our industry, our beliefs and
assumptions. Words including "may," "could," "would," "will," "anticipates,"
"expects," "intends," "plans," "projects," "believes," "seeks," "estimates," and
similar expressions are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties and other factors, some of which are beyond our control,
are difficult to predict and could cause actual results to differ materially
from those expressed or forecasted in the forward-looking statements. These
risks and uncertainties are described in "Risk Factors" and elsewhere in this
prospectus. We caution you not to place undue reliance on these forward-looking
statements, which reflect our management's view only as of the date of this
prospectus. We are not obligated to update these statements or publicly release
the result of any revisions to them to reflect events or circumstances after the
date of this prospectus or to reflect the occurrence of unanticipated events.
USE OF PROCEEDS
We estimate that we will receive net proceeds of approximately $6,603,500
from our sale of the 500,000 units offered hereby, assuming an initial public
offering price of $16.10 per unit. If the underwriters exercise their
over-allotment option in full, we will receive net proceeds of approximately
$7,650,000. These amounts are after deducting estimated underwriting discounts
and commissions, and after fees and expenses of approximately $400,000, payable
by us. We intend to use the net proceeds as follows:
<TABLE>
<CAPTION>
NET PERCENT
PROCEEDS OF TOTAL
------------ -----------
<S> <C> <C>
Laser facilities development expenses.................................. $ 2,500,000 37.9
Sales and marketing expenditures....................................... 500,000 7.6
Facilities and other capital expenditures.............................. 600,000 9.1
Expansion of internal operations....................................... 200,000 3.0
Repayment of indebtedness.............................................. 1,628,000 24.7
Working capital and general corporate purposes......................... 1,175,500 17.7
------------ ---
Total.............................................................. $ 6,603,500 100%
------------ ---
------------ ---
</TABLE>
We intend to use approximately 38% of the net proceeds of this offering to
open three to five new TrueVision laser centers within the 12 months following
completion of the offering, and for the continuing development of our center in
Las Vegas, Nevada. Net proceeds allocated to those centers will primarily be
used for equipment purchases, including additional excimer laser units, as well
as facilities costs associated with opening new centers, such as leasing and
upfitting expenses for new centers.
Proceeds allocated to sales and marketing expenditures will include the
costs of radio, television, and other media spots designed to increase public
awareness of our laser vision correction surgery procedures and the benefits of
the procedures for our customers.
Facilities expansion and related capital expenditures relate to build out
expenses in our Albuquerque center, consisting primarily of construction costs
for upfitting additional office and patient facilities, and the cost of mobile
excimer laser equipment.
A small portion of our net proceeds will be utilized for expansion of
internal corporate operations, which include expanding our computer network,
equipment for our corporate office facilities, software, and our Web site
development costs.
12
<PAGE>
We intend to use approximately 25% of the net proceeds to repay an aggregate
principal amount of $1,175,000 of the promissory notes, due April 15, 2000, plus
all accrued interest at 13% per annum, as well as $402,000 of accrued expenses.
These accrued expenses primarily include consulting fees that have been deferred
as well as state sales tax liabilities that have accrued in Albuquerque during
the last two years of operations.
The remaining net proceeds, or approximately 18% of the net proceeds, will
be utilized as working capital for general corporate purposes.
The proposed allocation of the net proceeds represents our management's best
estimate of the allocation of the net proceeds of the offering, based upon the
current status of our operations, our current plans and current economic
conditions. Our management may reallocate the net proceeds among the categories
listed above. We also may, when the opportunity arises, acquire or invest in
complementary businesses, products or technologies. However, we have no present
understandings, commitments or agreements with respect to any acquisition or
investment. Any net proceeds received from the sale of the underwriter's
over-allotment option will be allocated to working capital and general corporate
purposes.
We anticipate that the net proceeds of this offering along with cash
provided by operations, will be sufficient to fund our operations and capital
requirements for at least the 12 months following the date of this prospectus.
However, there can be no assurance that the net proceeds of this offering and
cash provided by operations will satisfy our requirements for any particular
period of time. To the extent capital resources are insufficient to meet future
capital requirements, we may have to raise additional funds to satisfy our
requirements. There can be no assurance that such funds will be available on
acceptable terms, if at all.
Pending application of the net proceeds in the manner described above, we
intend to invest the net proceeds in short-term, interest bearing investment
grade securities.
DIVIDEND POLICY
We have never declared or paid any cash or stock dividends on our capital
stock. So long as the 13% promissory notes are outstanding, we are prohibited
from declaring any dividends on our capital stock. We intend to reinvest
earnings, if any, to fund the development and expansion of our business and,
therefore, we do not anticipate paying cash dividends on our common stock in the
foreseeable future. The declaration of dividends will be at the discretion of
our board of directors and will depend upon our earnings, capital requirements,
financial position, general economic conditions, and other pertinent factors.
13
<PAGE>
CAPITALIZATION
The following table sets forth our:
- actual capitalization as of June 30, 1999;
- our pro forma capitalization as of June 30, 1999 giving effect to;
- the issuance of $550,000 principal amount of promissory notes bearing
interest at the rate of 13%, due April 15, 2000, in connection with our
April through August private placement resulting in a total issuance of
$1,175,000 principal amount of notes;
- the issuance of 34,384 shares of our common stock issued to the above
noteholders in the August private placement;
- the issuance of 20,000 shares of our common stock issued to one of our
consultants in exchange for the retirement of a warrant to purchase
416,667 shares and in lieu of accrued consulting fees due to the
consultant;
- the issuance of 41,667 shares of our common stock issued as compensation
for interest and late fees on related party capital lease obligations;
and
- pro forma as adjusted capitalization giving effect to the sale of the
500,000 units offered hereby at an assumed offering price of $16.10 per
unit, after deducting underwriting commissions and estimated offering
expenses, the payment of the promissory notes in the aggregate principal
amount of $1,175,000 and accrued interest at 13%, the repayment of
$402,000 of accrued expenses, including consulting fees that have been
deferred as well as state sales tax liabilities that have accrued in
Albuquerque during the last two years of operations, and the application
of the estimated net proceeds from this offering.
The following table should be read in conjunction with our consolidated
financial statements, related notes and other financial information included
elsewhere in this prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1999
-----------------------------------
PROFORMA
ACTUAL PROFORMA AS ADJUSTED
----------- --------- -----------
<S> <C> <C> <C>
(UNAUDITED)
Short term debt, current portion of long term liabilities and current
related party obligations................................................. $1,172,910 $1,675,010 $ 500,010
----------- --------- -----------
----------- --------- -----------
Long term debt.............................................................. $ 365,645 $ 365,645 $ 365,645
----------- --------- -----------
----------- --------- -----------
Stockholders' (deficit) equity:
Preferred stock, $.001 par value; 10,000,000 authorized, no shares
issued.................................................................. $ 0 $ 0 $ 0
----------- --------- -----------
Common stock, $.001 par value; 100,000,000 shares authorized; 2,233,507
issued andoutstanding, actual; 2,353,993 issued and outstanding, pro
forma: 3,353,993 issued and outstanding, as adjusted.................... 2,234 2,330 3,330
Additional paid in capital................................................ 20,911 115,487 6,717,987
Accumulated deficit....................................................... (872,809) (919,581) (1,097,331)
----------- --------- -----------
Total stockholders' (deficit) equity.................................... (849,664) (801,764) 5,623,986
----------- --------- -----------
Total capitalization.................................................... $ 688,891 $1,238,891 $6,489,641
----------- --------- -----------
----------- --------- -----------
</TABLE>
The preceding table does not include the exercise of:
- the underwriter's over-allotment option;
- the redeemable common stock purchase warrants;
- 312,500 common stock purchase warrants issued to the note holders;
- 50,000 representative's warrants; and
- 458,332 outstanding options.
14
<PAGE>
DILUTION
As of June 30, 1999, our pro forma net tangible book value (deficit) was
$(801,764), or approximately $(.34) per share of common stock. Pro forma net
tangible book value (deficit) per share represents the amount of our total
tangible assets less total liabilities divided by the number of shares of common
stock.
After giving effect to the sale of the 500,000 units offered hereby and
after deducting the underwriting discount and estimated offering expenses, net
tangible book value at June 30, 1999, would have been $5,623,986, or
approximately $1.69 per share of our common stock. This represents an immediate
increase in net tangible book value of $2.03 per share of common stock to our
existing stockholders and an immediate dilution in net tangible book value of
$6.31 per share of common stock, or approximately 78.9%, to new investors. The
following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price......................... $ 8.00
Pro forma net tangible book value(deficit) prior to the
offering.................................................... $ (.34)
Increase in net tangible book value per share attributable to
this offering............................................... 2.03
---------
Pro forma, as adjusted, net tangible book value per share
after the offering.......................................... 1.69
---------
Dilution of net tangible book value per share to new
investors................................................... $ 6.31
---------
---------
</TABLE>
If the over-allotment is exercised in full, our pro forma as adjusted net
tangible book value at June 30, 1999 would have been $6,670,486, or $1.92 per
share of common stock. This represents an immediate increase in net tangible
book value of $2.26 per share of common stock to existing stockholders and an
immediate dilution in net tangible book value of $6.08 per share of common
stock, or approximately 76.0% to new investors.
The following table summarizes, as of June 30, 1999, on a pro forma basis,
the number of shares of common stock purchased from us, the total consideration
paid and the average price per share paid by existing stockholders and investors
in this offering, and after giving effect to the sale of the 500,000 units
offered by this prospectus, assuming an initial offering price of $16.10 per
unit. The calculations are based upon total consideration given by new investors
and existing stockholders before any deduction of underwriting discounts,
offering expenses payable by us, and does not include the purchase of or any
exercise of the redeemable common stock purchase warrants offered hereby.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------------- ------------------------ PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ----------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.......... 2,329,560 70% $ 115,583 1.42% $ .05
New investors.................. 1,000,000 30% 8,050,000 98.58% $ 8.05
---------- ----- ------------ ----------
Total...................... 3,329,560 100% $ 8,165,583 100%
---------- ----- ------------ ----------
---------- ----- ------------ ----------
</TABLE>
15
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with our audited financial statements for the years ended September
30, 1997 and 1998 included elsewhere in the prospectus and Management's
Discussion and Analysis of Financial Condition and Results of Operations. The
historical selected financial data as of June 30, 1999 and for the nine months
ended June 30, 1998 and 1999 are derived from and should be read in conjunction
with our unaudited financial statements included elsewhere in the prospectus.
The unaudited financial statements, in our opinion, include all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
data for the periods presented. The results of operations for the nine months
ended June 30, 1999 are not necessarily indicative of results to be expected for
the full year.
The issuance of our common stock for the acquisition of True Vision
Albuquerque is accounted for in a manner similar to a pooling of interests due
to the common ownership before and after the share issuance. The table reflects
our statement of operations data as if the April 15, 1998 issuance of 1,944,444
shares of common stock for True Vision Albuquerque occurred on October 1, 1997.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30 NINE MONTHS ENDED JUNE 30
------------------------- -------------------------
<S> <C> <C> <C> <C>
1997 1998 1998 1999
----------- ------------ ----------- ------------
<CAPTION>
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................. $ 770,704 $ 1,460,526 $ 956,894 $ 2,218,858
Cost of Revenues.......................................... 453,279 894,134 539,092 1,528,071
----------- ------------ ----------- ------------
Gross profit.............................................. 317,425 566,392 417,802 690,787
Operating costs and expenses:
Sales and marketing..................................... 99,787 47,048 15,328 129,845
General and administrative.............................. 274,641 380,798 258,225 482,371
Depreciation............................................ 127,678 137,883 103,258 113,258
----------- ------------ ----------- ------------
Total operating costs and expenses.................... 502,106 565,729 376,811 725,474
----------- ------------ ----------- ------------
(Loss) income from operations............................. (184,681) 663 40,991 (34,687)
Interest expense.......................................... (66,585) (117,955) (90,754) (91,078)
Expenses relating to debt financing and agreements to
retire stock options in preparation of proposed public
offering................................................ 0 0 0 (137,858)
Minority interest in subsidiary's losses absorbed by
parent.................................................. (37,613) 0 0 0
----------- ------------ ----------- ------------
Net loss.................................................. $ (288,879) $ (117,292) $ (49,763) $ (263,623)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Basic and diluted net loss per share...................... $ (.14) $ (.06) $ (.02) $ (.12)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Shares used in computing basic and diluted
net loss per share...................................... 2,051,215 2,127,820 2,092,592 2,233,507
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
- The following table includes a summary of our balance sheet at June 30,
1999;
- on an actual basis;
- on a pro forma basis giving effect to the issuance during August 1999 of
$550,000 principal amount promissory notes bearing interest at 13% per
annum, due April 15, 2000 in connection with an August private placement
(for a total amount of outstanding notes of $1,175,000), 34,384 shares of
common stock issued in conjunction with the above notes, issuance of
20,000 shares of common stock in exchange for the retirement of a warrant
to purchase 416,667 shares, and the
16
<PAGE>
issuance of 41,667 shares of common stock as compensation for interest and
late fees on related party capital lease obligations;
- as adjusted to give affect to, the issuance of 1,000,000 shares of common
stock and warrants for the purchase of 500,000 shares offered by us at an
offering price of $8.00 per share and $.10 per warrant, the repayment of
the $1,175,000 principal amount promissory notes and accrued interest,
issued April through August 1999, bearing interest at 13%, and the
repayment of $402,000 of accrued expenses in connection with accrued
consulting fees and a state sales tax liability of our subsidiary accrued
during the past two years, from the proceeds of this offering.
BALANCE SHEET DATA:
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
---------------------------------------- YEAR ENDED
AS SEPTEMBER 30,
UNAUDITED PRO FORMA ADJUSTED 1998
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Cash and cash equivalents............................... $ 116,425 $ 666,425 $ 5,680,925 $ 2,176
Total working capital (deficit)......................... (934,083) (886,183) 5,539,567 (560,886)
Total assets............................................ 1,096,790 1,718,290 6,553,040 480,325
Short term debt, current portion of long term
liabilities and current related party obligations..... 1,172,910 1,675,010 500,010 376,065
Long term debt.......................................... 365,645 365,645 365,645 413,312
Total liabilities....................................... 1,946,454 2,520,054 929,054 1,066,366
Total shareholders' (deficit) equity.................... $ (849,664) $ (801,764) $ 5,623,986 $ (586,041)
</TABLE>
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL
STATEMENTS AND NOTES THERETO AND THE OTHER FINANCIAL INFORMATION INCLUDED
ELSEWHERE IN THIS PROSPECTUS.
OVERVIEW
We are a medical services company that focuses on delivering laser vision
correction surgical procedures and image enhancement procedures to consumers.
We were incorporated on January 19, 1988 as Topform, Inc. Between December
1995 and April 1998, our management was actively involved in developing laser
vision correction centers through our corporate predecessor, TrueVision Laser
Centers, Inc. In October 1995 and in March 1996, the United States Food and Drug
Administration approved the use of excimer lasers manufactured by Summit
Technology, Inc. and VISX, Inc., to treat low to moderate nearsightedness. In
June, 1996, TrueVision Laser Center of Albuquerque, Inc. opened the first
excimer laser center in Albuquerque, New Mexico. In April of 1998, we acquired a
controlling interest in TrueVision Laser Centers of Albuquerque, Inc., which had
been providing laser vision correction services using the VISX excimer laser.
We perform laser vision correction surgery and other image enhancement
procedures through affiliated and employed physicians in our Albuquerque, New
Mexico and expect to begin providing these services in our Las Vegas, Nevada
centers in the fourth quarter 1999. We provide our doctors and optometrists with
state-of-the-art equipment and facilities as well as support services necessary
to perform vision correction and image enhancement procedures.
The following tables set forth, for the periods indicated, certain operating
information expressed as a percentage of revenue. The results of operations data
for the nine months ended June 30, 1999 are not necessarily indicative of the
results to be expected for the full year or future periods.
<TABLE>
<CAPTION>
FISCAL FISCAL
YEAR ENDED YEAR ENDED NINE MONTHS NINE MONTHS
SEPTEMBER 30, SEPTEMBER 30, ENDED JUNE 30, ENDED JUNE 30,
1997 1998 1998 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Net revenues....................................... 100.0% 100.0% 100.0% 100.0%
Cost of revenues................................... 58.8% 61.2% 56.3% 68.9%
Gross margin....................................... 41.2% 38.8% 43.7% 31.1%
Sales and advertising expense...................... 12.9% 3.2% 1.6% 5.9%
General and administrative expense................. 35.6% 26.1% 27.0% 21.7%
Depreciation expense............................... 16.6% 9.4% 10.8% 5.1%
Total operating expenses........................... 65.1% 38.7% 39.4% 32.7%
Income (loss) from Operations...................... (24.0%) 0.0% 4.3% (1.6%)
Interest income or Expense......................... (8.6%) (8.1%) (9.5%) (4.1%)
Expenses relating to debt financing and agreements
to retire options in preparation of proposed
public offering.................................. 0.0% 0.0% 0.0% (6.2%)
Net loss........................................... (37.5%) (8.0%) (5.2%) (11.9%)
</TABLE>
18
<PAGE>
RESULTS OF OPERATIONS
COMPARISON OF NINE MONTHS ENDED JUNE 30, 1999 TO THE NINE MONTHS ENDED JUNE
30, 1998
REVENUES
Revenues increased to $2,218,858 for the nine months ended June 30, 1999
from $956,894 for the nine months ended June 30, 1998. This increase of
$1,261,964, or 132% is primarily a result of increases in volume of laser vision
correction procedures performed at our Albuquerque facility which was offset by
a decline in average revenue per procedure of approximately $200.
COST OF REVENUES
Costs of revenues consist primarily of royalty fees, advertising and
marketing expenditures, rent, equipment maintenance, and professional fees. Cost
of revenues increased to $1,528,071 or 68.9% of revenues for the nine months
ended June 30, 1999 from $539,092, or 56.3% of revenues for the nine months
ended June 30, 1998. The increase of $988,979 or 183% was due to a decline in
average revenue per procedure as a result of more aggressive discounts offered
in connection with our expanded marketing efforts.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses consist primarily of salaries, wages and
related costs for general corporate functions, including finance, accounting,
facilities, legal and other fees for professional services. General and
administrative expenses increased to $482,371 for the nine months ended June 30,
1999 from $258,225 for the nine months ended June 30, 1998. As a percentage of
revenue, general and administrative costs decreased from 27.0% to 21.7%. This
was due to the fact that our operations began in April 1998 after the effective
date of our reorganization.
SALES AND MARKETING
Sales and marketing expenses increased to $129,845 for the nine months ended
June 30, 1999 from $15,328 for the nine months ended June 30, 1998. As a
percentage of revenues, sales and marketing expenses increased from 1.6% to 5.9%
for the same periods. This increase of $114,517 is a result of our commencement
of our marketing efforts including the development of our seminar series and
media advertising events.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased to $113,258 for the nine months
ended June 30, 1999 from $103,258 for the nine months ended June 30, 1998. This
increase of $10,000, or 9.7% was due to surgical and medical equipment
purchases.
INTEREST EXPENSE
Interest expense increased from $90,754 to $91,078 for the nine months ended
June 30, 1998 and 1999, respectively. This increase of $324 was a result of our
increased borrowings during the later period.
EXPENSES RELATING TO DEBT FINANCING AND AGREEMENTS TO RETIRE STOCK OPTIONS
Expenses relating to debt financing and agreements to retire stock options
increased to $137,858 for the nine months ended June 30, 1999 due to the private
placement of our debt offering during April 1999 and agreements entered into in
preparation of our anticipated public offering.
19
<PAGE>
NET INCOME/LOSS
Our net loss for the nine months ended June 30, 1999 increased $213,860 from
$(49,763) for the nine months ended June 30, 1998 to $(263,623) for the same
period in 1999. The increase in our net loss is due to higher general and
administrative expenses, an increase in our costs of revenues, increased
marketing efforts for our Albuquerque center, and debt financing and expenses
for retiring stock options.
YEAR ENDED SEPTEMBER 30, 1998 COMPARED TO THE YEAR ENDED SEPTEMBER 30, 1997
REVENUES
Revenues increased to $1,460,526 for the fiscal year ended September 30,
1998 from $770,704 for the fiscal year ended September 30, 1997. This increase
in revenue is a result of an increase in the number of laser vision correction
procedures performed at our Albuquerque center, which was offset by a decline in
the average revenue per procedure.
COST OF REVENUES
Cost of revenues increased to $894,134 for the fiscal year ended September
30, 1998 from $453,279 for the fiscal year ended September 30, 1997. As a
percentage of revenues, cost of revenues increased from 58.8% to 61.2% for the
same periods. This increase of $440,855 or 97.3% is primarily due to new
agreements negotiated with our primary physician provider group along with
increased discounts experienced in connection with expanded marketing efforts
during the latter part of 1998.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased to $380,798 for the fiscal
year ended September 30, 1998 from $274,641 for the fiscal year ended September
30, 1997. As a percentage of revenue, general and administrative expenses
decreased from 35.6% to 26.1%. This decline, as a percentage of revenue, is a
result of the additional revenue generated in that period as a result of the
increase in volume of our surgical procedures.
SALES AND MARKETING EXPENSES
Sales and marketing expenses declined to $47,048 for the year ended
September 30, 1998 from $99,787 for the fiscal year ended September 30, 1997.
This decrease of $52,739, or 52.8% is due to a significant decline in marketing
expenses during the first six months of the fiscal year ended September 1998.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense increased to $137,883 for the fiscal
year ended September 30, 1998 from $127,678 for the fiscal year ended September
30, 1997. This increase of $10,205, or 8.0% is a result of new equipment
purchased in connection with expanded marketing efforts during the second half
of fiscal year 1998.
INTEREST EXPENSE
Interest expense increased to $117,955 for the year ended September 30, 1998
from $66,585 for the fiscal year ended September 30, 1997. This increase of
$51,370, or 77.1% is primarily a result of increased borrowings generated from
the financing costs of our excimer laser and ancillary equipment in our
Albuquerque center.
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NET INCOME/LOSS
Our net loss for the fiscal year ended September 30, 1998 decreased
$171,587, or 59.4% from $(288,879) for the fiscal year ended September 30, 1997
to $(117,292) for the same period in 1998. This decrease in our net loss is due
to an increase in the number of laser vision corrections procedures we performed
in the fiscal year ended September 30, 1998 as compared to the fiscal year ended
September 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
Since our inception, we have financed our operations through revenues and
capital recently raised in a private placement of 13% promissory notes and
common stock purchase warrants. As of June 30, 1999, we had $116,425 in cash.
Cash flows used for operating activities was $367,367 for the nine months ended
June 30, 1999. Net cash used for investing activities was $172,507 during the
same period including $153,165 used in the purchase of equipment as a result of
our expanded operations. Net cash flows provided by financing activities of
$654,123 consist primarily of borrowings on promissory notes payable.
From April through August 1999, we completed a private placement whereby we
sold $1,175,000 worth of promissory notes bearing interest at 13%, 312,500
common stock purchase warrants, each exercisable to purchase one share of our
common stock at an exercise price of $8.40 per share, and 34,384 shares of our
common stock. The promissory notes are due April 15, 2000. $625,000 of the
aggregate amount of the private placement was sold to subscribers that received
312,500 common stock purchase warrants. $550,000 of the aggregate amount of the
private placement was sold to subscribers that received no warrants, but
received a total of 34,384 shares of our common stock.
Costs incurred in connection with the private placement include finders'
fees and legal and accounting expenses. Net proceeds of our private placement
were used primarily for payment of the costs and expenses associated with our
initial public offering and to pay development costs for our newest laser center
in Las Vegas, Nevada. Before the date of this prospectus, we were in default in
the payment of consulting fees due to our consultants, and our subsidiary,
TrueVision Laser of Albuquerque, Inc. was delinquent in the payment of sales
taxes covering the last two years of operations. We have paid a portion of the
overdue consulting fees from the proceeds of our private placement and have
allocated $402,000 from the net proceeds of our public offering to pay the
remaining consulting fees and the sales tax liability owed by our subsidiary.
Based on our current operating plan, we anticipate that the net proceeds of
this offering, together with the cash flow from operations, will be sufficient
to fund our anticipated working capital and capital expenditures for the 12
months following completion of this offering. Our accountants have included in a
note in their report that our consolidated financial statements have been
prepared assuming we will continue as a going concern. If appropriate financing
is not obtained by us through our public offering, we intend to modify our
operations accordingly. Our capital requirements have grown since our inception
and we expect our capital requirements to continue to grow.
We currently offer a program for patient financing through various lenders.
We intend to expand that program over the next 12 months and may fund some or
all of this program ourselves. We believe that we could find a third party
lender, either directly or through a finance company affiliated with our
management, TVLC Finance, Inc.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. These systems and software
products will need to accept four digit entries to distinguish 21(st)century
dates from 20(th) century dates. As a result, computer systems and/or
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software used by many companies and governmental agencies may need to be
upgraded to comply with Year 2000 requirements or risk system failure or
miscalculations causing disruptions of normal business activities. Our services,
operations, customers, suppliers and service providers all rely on information
technology systems, using hardware and software, to function properly. This
includes readily apparent systems including those controlling the VISX excimer
lasers as well as less obvious systems, including those required to provide
electricity to our facilities.
SUPPLIERS: We have been surveying our suppliers about their Year 2000
compliance. VISX has advised us that its lasers will remain fully functional
from a medical standpoint through the Year 2000 and beyond. However, VISX has
determined that the laser systems do not properly print or store patient report
dates and procedures performed in the Year 2000 and beyond. We have been
informed that VISX is in the process of developing and testing a solution to
this problem and expects to have it available to us by the third quarter of
1999. If our other suppliers do not reply to our Year 2000 inquiries or cannot
provide Year 2000 compliant products, we may need to locate alternative sources
for goods or services.
OPERATIONS: We have been gathering information from our vendors and making
an assessment of Year 2000 compliance for each of the major elements of our
internal information systems. Based upon the representations of these vendors,
we believe:
- Our operating systems, which include Microsoft Windows NT, Microsoft
Windows 98 and Microsoft Windows 95, are all Year 2000 compliant in their
latest versions, which we currently have installed.
- Our key applications, which include Compu-Link ophthalmic management
software for Windows, and Microsoft Office 97, have been updated to a
level of revision that is Year 2000 compliant. Our Toshiba DK280 phone
system is also Year 2000 compliant. Our computer hardware, which is all
personal computer based, is Year 2000 compliant. We have received
representations from the owners and managers of our Albuquerque, New
Mexico facility that such facility is Year 2000 compliant with regard to
building security, heating and lighting controls.
COST TO ADDRESS YEAR 2000 ISSUES: We have not incurred significant costs to
date complying with Year 2000 requirements and we do not believe that we will
incur significant costs for these purposes in the foreseeable future. However,
we may spend more money than we have estimated, and this could have a material
adverse impact on our results of operations. At this stage in our assessment
process, we do not believe that the Year 2000 issue will materially impact our
financial position, results of operations or cash flows in future periods.
However, there can be no assurance that operating problems or expenses related
to the Year 2000 issue will not arise with our computer systems and software or
that our customers or suppliers will be able to resolve their Year 2000 issues
in a timely manner.
CONTINGENCY PLANS: Our failure to identify and correct a Year 2000 problem
could result in an interruption of normal business activities and operations. A
worst case Year 2000 scenario would be the failure of the VISX laser to properly
store patient report dates for procedures performed in the Year 2000 and beyond
and for this situation not to be resolved in a timely manner. We are prepared to
manually record such information and to manually prepare any necessary reports.
If our internal review and external surveys identifies any other problems that
are reasonably likely to occur, we will develop additional contingency plans to
minimize any impact on our business. However, despite our best efforts, we may
not anticipate all problems that may ultimately arise. We expect to be fully
Year 2000 complaint by the third quarter of 1999.
RECENTLY ISSUED ACCOUNTING STANDARDS
We believe that recently issued financial standards will not have a
significant impact on our results of operations, financial position, or cash
flows.
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BUSINESS
OVERVIEW
TrueVision International, Inc., through our operating subsidiaries,
TrueVision Laser Center of Albuquerque, Inc. and TrueVision of Nevada, Inc.,
provide laser vision correction and image enhancement procedures to individuals,
at our TrueVision centers. Our doctors, and those with which we are affiliated,
provide these services using state-of-the-art excimer laser technology. We also
offer patients ancillary image enhancement procedures and other vision
correction devices on a limited basis, including contact lenses. We acquired our
first TrueVision center in Albuquerque, New Mexico in April 1998 and opened our
second center in Las Vegas, Nevada in July 1999, where we expect to begin
offering laser vision correction procedures in the fourth quarter of 1999.
OUR STRATEGY
Our goal is to be a leading provider of laser vision correction and other
cosmetic procedures. In order to achieve this goal, we will implement the
following strategies:
- Expand our geographic presence by opening additional TrueVision centers;
- Equip our centers with state-of-the-art medical technologies;
- Recruit, employ and affiliate talented doctors and capitalize on these
physicians' relationships within their local communities;
- Increase our marketing and sales efforts to further penetrate our target
markets; and
- Expand our services to include ancillary cosmetic procedures and other
vision correction products that permit cross-marketing of our core
services.
OUR INDUSTRY
The laser vision correction industry has experienced dramatic growth during
the past two years. The total number of laser correction procedures performed in
the United States is forecasted to grow nearly 450% from 200,000 in 1997 to
900,000 in 1999. Total sales for the laser vision correction industry have been
over $1.0 billion since approval of the excimer laser in the U.S. in October
1995. However, despite the growth of this industry, the estimated number of
vision correction clients in 1998 represented less than 0.28% of the 150 million
people with refractive vision conditions in the U.S. Therefore, we believe this
represents an untapped market for which we can offer our services.
COMMON REFRACTIVE VISION DISORDERS
Refractive vision disorders typically result from improper curvature of the
cornea relative to the size and shape of the eye. If the curvature of the cornea
is not precisely correct, it cannot properly focus the light passing through it
onto the retina. The result is a blurred image. The three most common refractive
vision disorders are:
- Myopia (nearsightedness)--images focus in front of the retina, resulting
in a blurred perception of distant objects;
- Hyperopia (farsightedness)--images focus behind the retina, resulting in a
blurred perception of near objects;
- Astigmatism--images do not focus on any point due to the varying curvature
of the eye along different axes.
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CORRECTIVE LASER VISION PROCEDURES
Currently, eyeglasses and contact lenses are the most common and traditional
means of correcting common vision disorders. Vision correction is achieved
through the use of corrective lenses over the eye. Laser vision correction
procedures are designed to reshape the outer layers of the cornea to correct
refractive vision disorders. Changing the curvature of the cornea with an
excimer laser, eliminates or reduces the need for corrective lenses. We use the
excimer laser in our centers which is approved to treat nearsightedness of up to
- -12 diopters with astigmatism of up to -4 diopters, and farsightedness of up to
+6 diopters.
There are currently two outpatient procedures that we offer at our
TrueVision centers that use the excimer laser to correct common refractive
vision disorders. One is laser in-situ keratomileusis, commonly known as LASIK
and the other is photorefractive keratectomy, commonly known as PRK. Prior to
either LASIK or PRK, an assessment is made of the correction required to program
the excimer laser. Using a specially developed algorithm, the software of the
excimer laser then calculates the optimal number of pulses needed to achieve the
intended correction. The patient reclines in a chair, eyes focused on a fixed
target, while the doctor positions the patient's cornea for the procedure. An
eyelid holder is inserted to prevent blinking and topical anesthetic eye drops
are applied. The excimer laser emits energy in a series of pulses, with each
pulse lasting only several billionths of a second. High-energy ultraviolet light
produced by the excimer laser creates a non-thermal process known as ablation,
which removes tissue and reshapes the cornea without damaging adjacent tissue.
The amount of tissue removed depends upon the amount of corneal reshaping
required to correct the vision disorder.
Following the procedure, the front surface of the eye is flatter when
corrected for nearsightedness and steeper when corrected for farsightedness. In
effect, the change made in the middle orperiphery of the cornea is translated to
the front surface of the cornea and results in vision correction. A series of
patient follow-up visits are scheduled in our centers, with an optometrist or
doctor, to monitor the corneal healing process, to verify that there are no
complications and to test the amount of correction achieved by the laser vision
correction procedure. Our typical procedure takes 15 to 30 minutes from set-up
to completion. The excimer laser is generally used for less than 40 seconds.
LASIK. LASIK was approved for commercial use in the U.S. in 1996.
Currently, the majority of laser vision correction procedures are LASIK, since
it is believed that LASIK generally allows for:
- More precise correction than PRK for higher levels of nearsightedness and
farsightedness (with or without astigmatism);
- Greater predictability of results;
- Shorter patient recovery times and less discomfort; and
- Decreased possibility of corneal regression.
In the LASIK procedure, a small flap of the cornea is raised by use of a
microkeratome, a tiny surgical blade with rapid oscillations. The laser is then
applied to the surface of the cornea under the flap and the flap is put back in
place. Generally, no bandage contact lens is required and the patient
experiences minimal discomfort. Generally, LASIK has the advantage of a quicker
recovery as compared to PRK. With LASIK, our experience has been that most
patients see well enough to drive a car the next day and heal completely within
one to three months. LASIK also allows a doctor to generally treat both eyes in
one visit.
PRK. In PRK procedures, the doctor removes the thin layer of cells covering
the outer surface of the cornea (the epithelium), by applying the excimer laser
pulses directly to the surface of the cornea. Following the PRK procedure, a
contact lens bandage is placed on the eye to protect it. The patient typically
experiences discomfort for up to 24 hours and blurred vision for up to 72 hours
until the
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epithelium, the outer surface of the cornea, heals. To alleviate discomfort and
promote corneal healing, a doctor will typically prescribe topical
pharmaceuticals. Although a patient usually experiences improvement in clarity
of vision within a few days following the procedure, it usually takes one to
three months for the full benefit of the PRK procedure to be realized. Patients
usually have one eye treated per visit.
OUR LASER VISION CORRECTION CENTERS
We operate one laser vision correction center in New Mexico and we opened a
second center in Las Vegas, Nevada in July 1999. We plan to begin offering laser
vision correction procedures in our second center in the fourth quarter of 1999.
We own 84% of the TrueVision center in Albuquerque, New Mexico and operate it
through affiliated and employed doctors. We own 100% of the TrueVision center in
Las Vegas, Nevada and intend to operate it in the same manner as our first
center. Our centers are supported by our fully credentialed doctors and
optometrists who perform pre-procedure evaluations, laser vision correction
procedures, and post-procedure follow-ups. We recently began offering medical
services considered to be "cosmetic" in nature, such as derma-brasion
treatments, that we believe we can effectively cross-market to our patients.
We strive to meet the needs of our patients as well as our doctors and
optometrists. We provide our doctors and optometrists with:
- STATE-OF-THE-ART EQUIPMENT AND FACILITIES. We provide our doctors with
the facilities, equipment, support services and state-of-the-art laser
technologies necessary to perform vision correction procedures. Our
doctors focus on treating patients without the burden of meeting the
financial, management, administrative, maintenance and regulatory
requirements associated with establishing and operating a laser vision
correction and image enhancement center. Our two centers have a laser
procedure room, an image enhancement treatment room, a private examination
room and a patient waiting area. In our Albuquerque center, we are
equipped with a VISX Star laser. We also have corneal topography
instruments, ophthalmic examination equipment, a computer system, and
standard office equipment. When fully operational, our Las Vegas, Nevada
center will have an Autonmous laser and the same ancillary medical
equipment as the Albuquerque Center. We believe the Autonomous laser has
several enhancements, including an eye tracking feature, which is useful
to the laser technician and our doctors;
- A TRAINED TECHNICIAN AND SUPPORT STAFF. Staffing includes technicians who
assist the doctors during the laser vision correction and image
enhancement procedure. They also provide support services such as
sterilization of surgical instruments. The excimer laser manufacturer and
the microkeratome supplier, as well as the image enhancement equipment
manufacturers, certify our technicians. The center also has a medical
support director who supports our doctors and optometrists, and assists in
developing laser vision correction programs;
- OPPORTUNITIES FOR INCREMENTAL INCOME. The laser vision correction
procedure for each eye yields a procedure fee for the doctor. Doctors and
optometrists who perform pre-procedure evaluations or post-procedure
follow-ups also receive a professional fee for such services. Those
procedure and professional fees represent an incremental source of income
not subject to managed care or government reimbursement.
We provide our patients with:
- ACCESS TO HIGHLY CREDENTIALED DOCTORS AND OPTOMETRISTS. Our doctors have
completed extensive FDA-mandated training and have met our qualification
criteria. Our centers are designed to create a patient friendly
environment and reduce any anxiety associated with laser vision correction
and image enhancement procedures. We believe our centers have an
aesthetically pleasing
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and comfortable waiting area and our center staff is focused on addressing
the needs of each patient;
- EDUCATIONAL CONSULTATIONS AND MATERIALS. The education process begins
with our initial contact with the patient potential patients receive a
free consultation focused on educating the patient on vision correction
procedures, how the procedure corrects a specific refractive vision
disorder and the results the patient should expect after the procedure.
Patients are given written materials and can view a video of the procedure
or witness an actual procedure during their initial visit. Similar
information is provided for image enhancement procedures. We believe that
an educated patient has realistic expectations and should be more
satisfied with procedure results;
- REGULARLY SCHEDULED POST-PROCEDURE FOLLOW-UPS. We strive towards 100%
patient satisfaction. We schedule post-procedure follow-ups with patients
to monitor procedure results. In those instances when the desired
correction is not achieved, the patient receives a follow up procedure at
no cost to the patient;
- AFFORDABLE FINANCING ALTERNATIVES. Laser vision correction and image
enhancement procedures are elective and generally not reimbursable by
third-party payers. We offer patients several financing alternatives and
in certain circumstances promotional discounts. We have multiple payment
plans offered by an unaffiliated finance company. We also provide
information regarding installment plans, insurance coverage, home equity
loans and payment through employer-flexible benefit plans. In the majority
of the procedures financed, we bear no credit risk.
OUR SALES AND MARKETING STRATEGY
We are developing and implementing direct marketing campaigns. We believe
many of our competitors focus all of their resources on building affiliations
with eye care providers, and rely on doctor relationships to produce their
clients. Although our relationships with doctors is a key component of our
overall strategy, we focus much of our resources directly on the consumer and
attempt to create our own client relationships. Our "integrated marketing
protocol," a consumer oriented marketing program for our services, was developed
to focus our TrueVision staff on existing and prospective clients.
The heart of our marketing efforts is a seminar series. We hold seminars at
our centers. A television camera, mounted in the laser gives the audience a view
of exactly what the surgeon sees during the laser correction procedure.
Afterwards, both the doctor and the client are invited into the seminar to share
the experience and answer questions. We believe this aspect of our marketing
effort has been successful and therefore in the Albuquerque center we have
scheduled over 123 seminars for 1999.
We also attempt to refocus consumer demand. We seek out opportunities to
provide ancillary services and products targeted to drive our core business. We
offer related products, including sunglasses and contact lenses at our centers,
primarily as an accommodation to our customers. While meeting existing needs of
the consumers, we introduce our ancillary products in each of these locations.
For example, a contact lens client generally receives information on why laser
vision correction is a better option for most people. Further, we have developed
and are employing dedicated sales teams. Our marketing efforts include
developing and implementing programs that are focused on recruiting individual
clients as well as corporate accounts for our centers. Much of our current
efforts in expanding the number of our laser vision correction procedures
include local radio, television, and newspaper print advertisements explaining
the laser vision correction procedure to a prospective patient, and the costs
and benefits associated with each of our surgical procedures.
Our laser vision correction surgical procedures currently cost approximately
$3,925 for both eyes. Our ancillary medical services, such as our
micro-dermabrasion, a skin renewal procedure provided by
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us in a series of procedures generally consisting of six, 20 minute visits, are
currently offered by us at an average package cost of between $600 and $900.
TrueVision-employed doctors deliver our services and are paid on the basis of
the specified salaries, with no additional fees. TrueVision-affiliated doctors
are paid under various facility fee arrangements, ranging from $700 to $800 for
each eye.
COMPETITION
The market for laser vision correction and image enhancement surgery is
subject to intense competition. We compete with other entities, including
refractive laser center companies, hospitals, individual doctors, other surgery
and laser centers and manufacturers of laser equipment in offering such services
and access to related equipment. In addition, the laser vision correction and
other image enhancement surgical procedures provided at our centers compete with
more traditional non-surgical treatments for refractive conditions including
eyeglasses and contact lenses.
Eye care professionals interested in deploying excimer laser technology have
formed commercial enterprises in order to support the capital requirements for
acquiring the lasers and other necessary equipment. The industry today remains
highly fragmented, with most procedures performed by independent physician
groups. There are several laser vision correction companies developing national
operations. In addition, there are several eye care companies that feature
access to laser vision correction and other refractive surgery services as an
increasingly important component of their ophthalmic practice development
activities.
Our laser vision correction and image enhancement centers compete on the
basis of quality of patient care, reputation and price. Our principal corporate
competitors in the market for laser vision correction and other refractive
surgery include TLC The Laser Center, Inc., Laser Vision Centers, Inc.,
ClearVision Laser Centers, Ltd., LCA-Vision Inc., NovaMed EyeCare, Inc., and
ARIS Vision, Inc. The bases for competition in this market are systems, pricing,
strength of delivery network, strength of operational systems, the degree of
cost efficiencies and surgeries, marketing strength, information technology
systems, managed care expertise, patient access and quality assessment programs.
Many of our current and potential competitors have significantly greater
financial and human resources than we currently have, and as a result, we may be
at a competitive disadvantage to these current and potential competitors even
though we believe that we can successfully compete on the basis of our marketing
efforts, quality of patient care, our reputation and the price of our services.
Suppliers of conventional vision correction (e.g. eyeglasses and contact
lenses), such as optometric chains, may also compete with us either by marketing
alternatives to laser vision correction or other refractive surgery procedures
or by purchasing excimer lasers and offering refractive surgery to their
customers.
GOVERNMENT REGULATION
As a participant in the health care industry, our operations and the
operations of our affiliated doctors and optometrists are subject to extensive
and increasing regulation by governmental entities at the Federal, state and
local levels. Many of these laws and regulations are subject to varying
interpretations. We believe courts and regulatory authorities have generally
provided little clarification. Moreover, state and local laws and
interpretations vary from jurisdiction to jurisdiction. As a result, we may not
always be able to accurately predict interpretations of applicable law. As a
result, some of our activities, or the activities of our affiliated providers,
could be challenged.
The regulatory environment in which we and our affiliated providers operate,
may change significantly in the future. In response to new or revised laws,
regulations or interpretations, we could be required to: (a) revise the
structure of our legal arrangements or the structure of our fees; (b) incur
substantial legal fees, fines or other costs; (c) or curtail our business
activities, reducing the potential profit to us of some of our legal
arrangements. Any of these outcomes may have a material adverse effect on our
business, financial condition and results of operations.
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The following is a summary of some of the health care regulatory issues
affecting us, our affiliated eye care providers and our respective operations.
FEDERAL LAW
ANTI-KICKBACK STATUTE. The U.S. Federal anti-kickback statute prohibits the
knowing and willful solicitation, receipt, offer or payment of any direct or
indirect remuneration in return for the referral of patients or the ordering or
purchasing of items or services payable under Medicare, Medicaid or other
federal health care programs. Violations of this statute may result in criminal
penalties, such as imprisonment or criminal fines of up to $25,000 per
violation, civil penalties of up to $50,000 per violation, and exclusion from
federal programs including Medicare or Medicaid.
SELF-REFERRAL LAW. Subject to certain limited exceptions, the Federal
self-referral law, known as the "Stark Law," prohibits physicians and
optometrists from referring their Medicare or Medicaid patients for the
provision of "designated health services" to any entity with which they or their
immediate family members have a financial relationship. "Financial
relationships" include both compensation and ownership relationships.
"Designated health services" include clinical laboratory services, radiology and
ultrasound services, durable medical equipment and supplies, and prosthetics,
orthotics and prosthetic devices, as well as seven other categories of services.
We do not provide "designated health services." Our affiliated providers,
however, do provide certain limited categories of designated health services,
specifically, ultrasound services, such as A-scans and B-scans, and prosthetic
devices, such as eyeglasses and contact lenses furnished to patients following
cataract surgery.
Violating the Stark Law may result in denial of payment for the designated
health services performed. This may also result in civil fines of up to $15,000
for each service provided pursuant to a prohibited referral, a fine of up to
$100,000 for participation in a circumvention scheme, and exclusion from the
Medicare, Medicaid and other Federal health care programs. The Stark Law is a
strict liability statute. Any referral made where a financial relationship
exists that fails to meet an exception constitutes a violation of the law. To
the extent that our affiliated professional entities provide designated health
services to Medicare and Medicaid beneficiaries, or make or receive Medicare or
Medicaid referrals for such services, the Stark Law could be implicated.
STATE LAW
ANTI-KICKBACK LAWS. In addition to the Federal anti-kickback law, a number
of states have enacted laws, which prohibit the payment for referrals and other
types of anti-kickback arrangements. Such state laws typically apply to all
patients regardless of their source of payment.
SELF-REFERRAL LAWS. In addition to the Federal Stark Law, a number of
states have enacted laws that require disclosure of or prohibit referrals by
health care providers to entities in which the providers have an investment
interest or compensation relationship. In some states, those restrictions apply
regardless of the patient's source of payment.
CORPORATE PRACTICE OF MEDICINE LAWS. A number of states have enacted laws
that prohibit the corporate practice of medicine. Those laws are designed to
prevent interference in the medical decision-making process by anyone who is not
a licensed physician. Many states have similar restrictions in connection with
the practice of optometry. Application of the corporate practice of medicine
prohibition varies from state-to-state. While some states may allow a
corporation to exercise significant management responsibilities over the
day-to-day operation of a physician or optometric practice, other states may
restrict or prohibit certain activities.
FEE-SPLITTING LAWS. The laws of some states prohibit providers from
dividing with anyone, other than providers who are part of the same group
practice, any fee, commission, rebate or other form of compensation for any
services not actually and personally rendered. Penalties for violating these
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fee-splitting statutes or regulations may include revocation, suspension or
probation of a provider's license, or other disciplinary action. If we expand
into a state with different or more restrictive laws, we may need to amend or
restrict certain operations in order to ensure compliance with applicable state
laws, rules and regulations.
FACILITY LICENSURE AND CERTIFICATE OF NEED. We may be required to obtain
licenses from the state departments of health in states where we open or acquire
eye surgery and laser centers. Some states require a Certificate of Need, or
CON, prior to the construction or modification of an ambulatory surgery center,
such as our eye surgery and laser centers, or the purchase of certain medical
equipment in excess of an amount set by the state.
EXCIMER LASER REGULATION
Medical devices, such as the excimer lasers used in our eye surgery and
laser centers, are subject to regulation by the U.S. Food and Drug
Administration (FDA). Medical devices may not be marketed for commercial sale in
the U.S. until the FDA grants pre-market approval for the device.
The FDA has not approved the use of an excimer laser to treat both eyes on
the same day, called a bilateral treatment. The FDA has stated that it considers
the use of the excimer laser for bilateral treatment to be a practice of
medicine decision, which the FDA is not authorized to regulate. Physicians,
including our affiliated physicians, widely perform bilateral treatment as an
exercise of professional judgment in connection with the practice of medicine.
Failure to comply with applicable FDA requirements could subject us, our
affiliated providers or laser manufacturers to enforcement action, product
seizures, recalls, withdrawal of approvals and civil and criminal penalties.
Further, failure to comply with regulatory requirements, or any adverse
regulatory action, could result in a limitation on or prohibition of our use of
the excimer laser.
The marketing and promotion of laser vision correction and other image
enhancement surgical procedures in the U.S. are subject to regulation by the FDA
and the Federal Trade Commission. The FDA and FTC have released a joint
communique on the requirements for marketing these procedures in compliance with
the laws administered by both agencies.
INSURANCE
We believe that the insurance coverage for our business is generally in
accordance with industry standards, including adequate coverage for premises
liability which we may incur in both of our centers. We believe our insurance
coverage is adequate in light of our business and the risks to which we are
subject. We maintain key man life insurance on the life of John C. Homan in the
amount of $1,000,000. We intend to obtain officers' and directors' liability
insurance coverage prior to the completion of this offering.
EMPLOYEES
As of September 1, 1999, we had 29 full-time and part-time employees. Of our
total number of employees, 14 are full-time and 15 are part-time. Eight of these
people work in our corporate offices, with five full-time employees and three
part-time employees. We have eight full-time and nine part-time employees in our
Albuquerque medical center, and one full-time and three part-time employees in
our Las Vegas center. Of these employees, five are administrative employees,
four are clerical, seventeen are in our sales department, and three employees
function as medical or medical-technical employees. We have no collective
bargaining agreement with any of our employees and our management considers our
relationships with our employees to be good. We believe we will need to recruit
17 part-time and four full-time employees to staff our growing needs in both of
our existing centers. We intend that six of the part-time employees and five of
the full-time employees will be based in our
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Albuquerque center, and four part-time and six full-time employees will be based
in our Las Vegas center.
In addition to our employees, we have affiliate relationships with local
doctors who provide medical services to our patients. As of September 1, 1999,
we had three active member-affiliates for our Albuquerque center.
FACILITIES
We lease our principal executive office and our medical facilities in
Albuquerque, New Mexico. It consists of a total of approximately 5,000 square
feet, under three separate operating leases that have varying expiration dates.
We lease a 751 square foot facility adjacent to our Albuquerque center that
houses our call center under a month to month lease entered into on November 4,
1998, providing for a current monthly payment of $445.00. On September 12, 1995,
we leased 2,144 square feet of space adjacent to our Albuquerque center to house
additional medical personnel and a retail optical dispensary. This facility has
a lease term that ends November 30, 2000 and has a current monthly rental
obligation of $2,914. On March 25, 1999, we entered into a sublease for an
additional 2,079 square feet in Albuquerque to house our corporate operations.
This sublease terminates on December 28, 2001 and has a current monthly
obligation of $2,599. Our total monthly lease obligations for our Albuquerque
center are approximately $6,000 per month. We believe our facilities are
adequate for our current business operations in our Albuquerque center.
On July 21, 1999, we entered into a six month lease which commenced as of
August 1, 1999 for 4,000 square feet of space in Las Vegas, Nevada, with a
monthly rental obligation of $6,840 per month. This space temporarily houses our
Las Vegas TrueVision center until our permanent leased facility becomes
available. On July 30, 1999, we entered into a five-year lease agreement for our
permanent facilities in Las Vegas, which lease commences as of December 1, 1999
and consists of approximately 12,141 square feet of space and has a monthly
rental obligation of approximately $22,461 per month. Our lease gives us the
option of renewing the initial term of the lease for two additional five-year
terms. This lease agreement has been personally guaranteed by a principal
shareholder and consultant of the Company until the earlier of three years from
the date of the lease or our receipt of at least $5,000,000 in gross proceeds
from a public offering. We believe these facilities are adequate for our current
and planned business operations in our Las Vegas center.
LEGAL PROCEEDINGS
We are not involved in any pending, or to our knowledge threatened, legal
proceedings. From time to time, we may become a party to various legal
proceedings arising in the ordinary course of business.
WHERE YOU CAN FIND ADDITIONAL INFORMATION ABOUT US
We have filed with the Securities and Exchange Commission a registration
statement on Form SB-2 under the Securities Act with respect to the securities
offered by this prospectus. This prospectus, which forms a part of the
registration statement, does not contain all of the information set forth in the
registration statement and the exhibits and schedules thereto. For further
information with respect to us and the securities offered by this prospectus,
reference is made to the registration statement and the exhibits and schedules
thereto. Statements contained in this prospectus as to the contents of any
contract or other document filed as an exhibit to the registration statement are
not necessarily complete and are qualified in their entirety by reference to the
exhibits for a complete statement of their terms and conditions. The
registration statement, including all amendments, exhibits and schedules
thereto, may be inspected without charge at the offices of the Securities and
Exchange Commission at Judiciary Plaza, 450 Fifth Street NW, Washington, D.C.
20549 and the Commission's regional offices located at 7 World Trade Center,
13th Floor, New York, New York 10048 and 500 West Madison
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Street, Suite 1400, Chicago, Illinois 60661. Copies of this material may be
obtained at prescribed rates from the Public Reference Section of the Commission
at 450 Fifth Street NW, Washington, DC. 20549. The Securities and Exchange
Commission also maintains a Web site (http://www.sec.gov) through which the
registration statement and other information can be retrieved.
We have applied for listing of our securities on the Nasdaq SmallCap Market,
and upon listing, investors can obtain information about us on its Web site,
(http://www.nasdaqamex.com.)
Upon effectiveness of the registration statement, we will be subject to the
reporting and other requirements of the Securities Exchange Act and intend to
furnish our stockholders annual reports containing financial statements audited
by our independent accountants and to make available quarterly reports
containing unaudited financial statements for each of the first three quarters
of each fiscal year.
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MANAGEMENT
DIRECTORS AND OFFICERS
Our executive officers, directors, and key employees and their ages as of
September 1, 1999 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------- --- ------------------------------------------------------
<S> <C> <C>
John C. Homan................... 47 Chairman of the Board, Chief Executive Officer,
Treasurer and Director
Frank J. Seifert................ 54 Secretary and Director
C. Richard Hullihen, Jr. ....... 73 Director
Allison W. Evans................ 35 Vice-President of Business Development and Chief
Financial Officer
Robert S. Helmer................ 45 Clinical Support Manager
Dr. Donald E. Rodgers........... 57 Medical Director, TrueVision-Albuquerque
</TABLE>
JOHN C. HOMAN, co-founded TrueVision Laser Centers, Inc., our corporate
predecessor, in October 1995 and has served as its president and chief executive
officer through the present date. Since April 1998, Mr. Homan has served as our
president and chief executive officer. From October 1997 to the present, Mr.
Homan has also been the president and chief executive officer of TVLC Finance,
Inc., a specialty finance company, and since April 1997, he has served in those
same roles with MTE/ Triad, Inc., a venture leasing company. TVLC Finance and
MTE/Triad, which are controlled by Mr. Homan, provide us with equipment
financing and leasing services. Mr. Homan received a bachelor's degree in
accounting and marketing from the University of Akron in 1973 and received a
juris doctorate degree in 1977 from Cleveland-Marshall College of Law.
FRANK J. SEIFERT, was our executive vice president from May 1998 to August
1999 and became one of our outside consultants in August 1999. Mr. Seifert
co-founded TrueVision Laser Centers, Inc. with Mr. Homan in October 1995. From
October 1995 to April 1998, Mr. Seifert served as executive vice-president of
TrueVision Laser Centers, Inc. From April 1993 to the present, Mr. Seifert has
served on the board of directors and as president and chief executive officer of
American Natural Gas Corporation, and since July 1998, he has served as
president of Sheffield Equity Corporation, an early stage venture capital firm.
Mr. Seifert received a Bachelor of Arts degree in Business Administration and
Economics from St. Thomas College in 1969. Mr. Seifert received his juris
doctorate from the William Mitchell College of Law in 1977.
C. RICHARD HULLIHEN, JR., became one of our directors on September 9, 1999.
Mr. Hullihen has been retired since 1986. From June 1981 to October 1986, Mr.
Hullihen was a vice-president of Picker X-Ray Corporation and Picker's
successor, Picker International Corporation, where he spent a total of 34 years
in a number of positions. During the last 10 years, Mr. Hullihen has acted as a
general business consultant to a variety of medical facilities, companies, and
doctors involved in establishing nuclear magnetic resonance clinics. Most
recently, Mr. Hullihen consulted for Dynamic Digital Displays, Inc. and Advanced
Cryomagnetics, Inc. Mr. Hullihen earned his bachelor of science degree in
business management from Washington University in St. Louis, Missouri in 1950.
ALLISON W. EVANS, has been our vice-president of business development since
December 1998, while also serving as our chief financial officer. Ms. Evans
served as a director of marketing and advertising and controller of TrueVision
Laser Centers, Inc. from its inception in December 1995 through November, 1997,
and as its director of mergers and acquisitions from June 1997 through December
1998. Up until joining us full-time in December 1998, Ms. Evans also specialized
as a business development consultant to various clients in the multimedia
entertainment and advertising industry. In 1995, Ms. Evans founded "The Success
Exchange," a web-magazine and personal development organization. Ms. Evans is a
certified public accountant and started her career at Ernst & Young in 1988. She
earned
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her bachelor's degree in business administration from St. Mary's College in 1985
and her masters in business administration in marketing and finance from the
University of San Diego in 1988.
ROBERT S. HELMER, has been our clinical support manager in our Albuquerque
center since October 1998. Mr. Helmer is a graduate physician and surgical
assistant with 25 years of medical experience in emergency medicine, laser
medicine, dermatology, cosmetic surgery and hair transplant surgery. From May
1998 until joining us, Mr. Helmer was a director and the president of the
International College of Skin-Care Specialists. From October 1991 to October
1995, Mr. Helmer was a surgical assistant with Qualified Emergency Specialists,
Inc., in Cincinnati, Ohio, and from February 1991 to December 1991 was a
surgical assistant and electrologist for Dermatology Associates of Atlanta,
Georgia. Mr. Helmer has been a certified ophthalmic laser technician since
September 1998 and a certified microkeratome technician since June 1999. Mr.
Helmer received his associate of applied science degrees as a physician's
assistant and surgical assistant in 1974 from the Cincinnati Technical College.
He is a member of the American Academy of Physicians Assistants.
DONALD E. RODGERS, M.D. has been our medical director in our Albuquerque
center since February 1999. Dr. Rodgers first began performing laser vision
correction at our center in June, 1997. Since 1975, Dr. Rodgers has been in
private medical practice and is currently a partner with the New Mexico Eye
Clinic of Albuquerque, New Mexico, where his practice focuses on cataracts,
corneal transplants and keratorefractive surgery. Dr. Rodgers has been
performing refractive surgery since 1976. Dr. Rodgers is currently the State
Surgeon for the New Mexico National Guard having been appointed to that position
in 1990, where he holds the rank of Colonel in the U.S Army Medical Corp. Dr.
Rodgers served as the president of the New Mexico Society of Ophthalmology from
1992 to 1993; president of the Medical Staff-Presbyterian Hospital Albuquerque
from 1990 to 1991; on the Medical Executive Committee for St. Joseph's Hospital
from 1981 to 1985; and in that same capacity with the Presbyterian Hospital in
Albuquerque from 1982 to 1991. From 1988 to 1995, Dr. Rodgers was the Medical
Advisor for the New Mexico Lions Eye Bank. Dr. Rodgers received his medical
degree in 1968 and his B.A. degree in 1963, both from the University of New
Mexico. Dr. Rodgers completed an internship at the U.S. Naval Hospital in San
Diego, California from 1968 to 1969 and completed his residency in ophthalmology
at that same facility from 1972 to 1975.
DIRECTORS' COMPENSATION
Our non-employee directors receive $1,000 for attendance at each meeting of
the board of directors or any committee thereof and will be reimbursed for their
out-of-pocket expenses in connection with their attendance at any such meeting.
We anticipate that our board will meet at least twice each year. No directors'
fees have been paid to date.
BOARD COMPOSITION
Our board of directors consists of at least three members who serve as
directors for staggered terms that are divided into three classes. Class one
directors has a term expiring at the annual meeting next ensuing. Class two
directors has a term expiring one year after the class one directors. The third
class of directors has a term expiring two years after the class one directors.
There are no family relationships among any of our directors, officers or key
employees. Each director holds office until their successor is duly elected and
qualified. Vacancies in the office of any director may be filled by a majority
of the directors then in office. At least one additional independent director
will be added to our board of directors and our independent directors will serve
as members of both committees.
Our president and chief executive officer is appointed by our board, and all
of our other executive officers are appointed by the president and chief
executive officer.
We have agreed that for five years from the completion of this offering, the
representative may designate one person for election to our board of directors.
If this election is not exercised, the
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representative may designate one person to attend all meetings of our board of
directors. If the representative chooses to designate a person to attend our
directors' meetings, we have agreed to reimburse that person for out-of-pocket
expenses in connection with their attendance.
COMMITTEES OF THE BOARD
Upon completion of this offering, the board of directors will establish two
standing committees, an audit committee and a compensation committee. Our audit
committee will recommend to our entire board of directors the independent public
accountants to be engaged by us, reviews the plan and scope of our annual audit,
reviews our internal controls and financial management policies with our
independent public accountants and reviews all related party transactions. The
compensation committee will review and recommend to our board, the compensation
and benefits to be paid to our officers and directors, administer our stock
option plan, approve the grant of options under the stock option plan and
establish and review general policies relating to compensation and benefits of
our employees.
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid during our fiscal
year ended September 30, 1998 to our chief executive officer, John C. Homan. No
other executive officer received a salary and bonus in excess of $100,000 in
this year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
OTHER COMPENSATION
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
OTHER ANNUAL ALL OTHER
NAME AND POSITION SALARY($) BONUS($) COMPENSATION COMPENSATION
- -------------------------------------------------------------- ------------- ------------- ------------- -------------
John C. Homan, Chief Executive Officer........................ -0- -0- -- --
</TABLE>
The aggregate compensation paid to all persons who served in the capacity of
a director or executive officer during the fiscal year that ended September 30,
1998 (3 persons) $17,800.
OPTION GRANTS DURING THE YEAR
ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
PERCENT OF TOTAL OPTIONS
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NUMBER OF
SECURITIES GRANTED TO
UNDERLYING OPTIONS EMPLOYEES IN FISCAL EXERCISE EXPIRATION
NAME GRANTED YEAR 1998(1) PRICE($/SH) DATE
- --------------------------------------------- ------------------- --------------------- ------------- -------------
John C. Homan Chief Executive Officer........ 218,750 47.7% $ .86 April, 2008
</TABLE>
The aggregate number of options granted to all persons who served in the
capacity of a director or executive officer during the fiscal year that ended
September 30, 1998 (3 persons) was 277,083.
(1) The aggregate number of options granted to all officers and directors during
the fiscal year that ended September 30, 1998 was initially 1,177,084
options to purchase 1,177,084 shares of common stock. In April 1999, all
officers and directors holding these options agreed to surrender a portion
of their options, resulting in total outstanding incentive stock options of
458,332 at the date of this prospectus.
EMPLOYMENT AGREEMENTS
On September 7, 1998, we entered into a three-year employment agreement with
John Homan agreeing to employ him as our president and chief executive officer
on a full-time basis. On August 25,
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<PAGE>
1999, this employment agreement was amended. The terms of Mr. Homan's employment
agreement, as amended, provide for a base salary for the fiscal year ended
September 30, 1999 of $108,000 and a bonus, within the discretion of our board
of directors, that may be paid in cash or common stock. The salary for each
additional year is to be the greater of 125% of Mr. Homan's base salary for the
previous year or 75% of the previous year's gross compensation. Mr. Homan's
employment agreement provides that he is entitled to receive such employee
benefits as are generally made available to our other employees, which currently
include paid health care insurance. Mr. Homan's employment agreement also
entitles him to have us furnish for his business use a full-size car at our
expense. Mr. Homan is entitled to receive a minimum of five weeks of paid
vacation for the first year of the agreement, increasing one week each year up
to a maximum of ten vacation weeks per year. Mr. Homan has the right under the
agreement to accrue vacation time for up to three years after which he is then
entitled to receive cash compensation at his then current rate of compensation
in lieu of taking any or all of his vacation time.
During the term of the employment agreement, and for one year after
termination, Mr. Homan has agreed not to compete with our laser vision
correction business in any manner. If terminated from his employment for cause,
Mr. Homan is not entitled to the benefits of his employment agreement.
We entered into a management continuity agreement with Mr. Homan on
September 7, 1998 that provides for Mr. Homan's continued employment in his
roles as president and chief executive officer for three years following a
change of control of us. The management continuity agreement becomes effective
only if and when there is a change of control of us. Under this agreement, Mr.
Homan is entitled to the same authority or status, and he is entitled to receive
his base annual salary and annual bonus in amounts which would equal the amounts
he is entitled to receive under his employment agreement. Mr. Homan is also
entitled to receive the same or similar employee benefits as he did under his
employment agreement. The management continuation agreement will automatically
terminate on Mr. Homan's 70(th) birthday, his death, the termination provisions
in the agreement, or when all rights and obligations under the agreement are
satisfied. Pursuant to the agreement, if we were to terminate Mr. Homan without
cause from the management continuity agreement, we are obligated to pay him
within 90 days of termination, a lump sum cash payment equal to 300% of the sum
of his highest annual base salary prior to his termination, plus the highest
value for his employee fringe benefits, plus the highest bonus he received for
any year during the three-year period before termination. A similar lump sum
cash payment is also required by us within that same 90 day period for the value
of Mr. Homan's employer contributions made for his benefit during the last full
fiscal year. If Mr. Homan is terminated under this agreement without cause, his
outstanding unvested stock options immediately vest and become exercisable. If
Mr. Homan is terminated for cause as defined in the agreement, he is not
entitled to any of the above-described termination benefits.
CONSULTING AGREEMENTS
We entered into a consulting agreement with RB&A, LLC whereby RBA, LLC
agreed to provide us with long term strategic planning, management consulting
services, and marketing and finance expertise, in February 1998, and amended
this agreement on August 25, 1999. The compensation as contemplated by the
February agreement for these services is $4,000 per month for a period of two
years ending February 2000. We defaulted in the payment of this monthly
consulting fee to RB&A, LLC immediately after entering into the agreement, but
remedied our default at the time we agreed to enter into the amended consulting
agreement. In the August 25, 1999 amended consulting agreement, RBA, LLC, agreed
to convert 416,667 options which had been granted to purchase 416,667 shares of
common stock into 20,000 shares of common stock, which were issued as of the
date of the amended consulting agreement. As part of the August 25, 1999
amendment, we agreed to pay a lump sum of $31,800 to RBA, LLC for accrued and
unpaid monthly consulting fees of $76,000 and we agreed to pay additional
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<PAGE>
monthly consulting fees of $6,000 for four consecutive months beginning on
September 1, 1999. We are current in our agreement with RBA, LLC.
Commencing on June 13, 1997, we entered into a series of four consulting
agreements with Dr. Howard Silverman, that provided for the payment for
consulting services provided to us by Dr. Silverman. Dr. Silverman, a retired
optometrist, provides information, planning, business and professional advice
relative to the services we provide in our vision correction centers. We
defaulted in the payment of approximately $90,000 in accrued consulting fees
that were due on a monthly basis to Dr. Silverman. Our obligations to Dr.
Silverman under the consulting agreement are now current due to our payment of
$90,000 to Dr. Silverman on September 10, 1999.
The first consulting agreement, dated June 13, 1997 provided for the payment
of a $5,000 per month consulting fee for a one-year period. The second
consulting agreement dated April 1, 1998 extended the term of the first
agreement, and provided for a monthly consulting fee to Dr. Silverman of $5,000
until March, 2001, and granted to Dr. Silverman an option to purchase 166,667
shares of our common stock at $.001 per share. In addition, and as a part of Dr.
Silverman's role with us, he agreed to guarantee certain of our liabilities to
DVI Financial Services, Inc., which is a lease financing company that agreed to
finance our acquisition of an excimer laser used in our Albuquerque center. We
defaulted in the terms of the first and second consulting agreements with Dr.
Silverman by not paying the monthly consulting fees. The third consulting
agreement dated December 1, 1998 extended the second agreement and provided for
increased compensation, which compensation is currently in effect. The third
agreement carries an initial term of three years, and provides that Dr.
Silverman will receive a monthly consulting fee of $8,500 and that all unpaid,
but accrued consulting fees in the amount of $90,000, would be paid to Dr.
Silverman on or before July 31, 1999, which amount has not yet been paid to Dr.
Silverman. The December 1, 1998 consulting agreement re-affirmed the grant to
Dr. Silverman of an option to purchase 166,667 shares of our common stock at
$.001 per share, and that such shares are to be registered by us with the
Commission under the Securities Act on the first registration statement that we
file with the Commission after we complete a public offering, or if not
registered within six months after the date of the agreement, then Dr.
Silverman's shares are to be registered by us on Form S-8 as permissible under
the Securities Act. Dr. Silverman exercised this option and, in so doing,
purchased 166,667 shares of our common stock. The fourth consulting agreement
was entered into on August 30, 1999, and amended the registration rights
provisions covering Dr. Silverman's 166,667 options to purchase 166,667 shares
of common stock. As amended, Dr. Silverman has the right to demand registration
covering his 166,667 shares of common stock no later than six months after the
completion of an initial public offering of our securities.
On August 23, 1999, we entered into a three year consulting agreement with
one of our directors, and then executive vice president, Frank J. Seifert, who
agreed to provide business advice, investment banking services, and the
development of business opportunities for us. As a part of his services, Mr.
Seifert agreed to deliver an unconditional continuing guarantee in favor of DVI
Financial Services, Inc. with respect to the financing agreements entered into
between our Albuquerque, New Mexico subsidiary and DVI Financial Services, Inc.
for the financing of our excimer laser equipment used in the Albuquerque center.
Mr. Seifert's guarantee continues until the balance of the financing for our
excimer laser equipment is fully paid to DVI Financial Services, Inc. The
consulting agreement specifies that Mr. Seifert is an independent contractor for
us and will provide his consulting services as requested and supervised by our
board of directors.
The consulting agreement provides that we will use our best efforts to cause
Mr. Seifert to be a member of the board of directors so long as his guarantee is
in effect, and he is entitled to receive reimbursement for all reasonable costs
incurred for his attendance at directors' meetings. As compensation for his
consulting services, we have agreed to pay Mr. Seifert $60,000 per year payable
in monthly installments of $5,000 in advance. We agreed to commence making these
monthly payments retroactively from June 1, 1999. Mr. Seifert is also entitled
to receive the same non-cash benefits as our other
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<PAGE>
regular employees, such as healthcare insurance benefits. Mr. Seifert is
entitled to receive discretionary awards of incentive stock options under our
1998 incentive stock option plan, or any successor plan. In addition to Mr.
Seifert's annual consulting fee, the consulting agreement grants him an
immediately exercisable option to purchase 83,333 shares of our common stock at
an exercise price of $.86 per share. Mr. Seifert's shares underlying this option
are subject to piggyback registration rights which require us to register the
83,333 shares underlying the option under the Securities Act on the next
registration statement which we may file under the Securities Act after the
completion of this public offering, and if not registered within six months
after the date of the consulting agreement, then Mr. Seifert has the right to
require us to register his shares on Form S-8 under the Securities Act, no later
than seven months after the date of his consulting agreement. Our obligations to
Mr. Seifert under his consulting agreement are current.
1998 INCENTIVE STOCK OPTION PLAN
On April 13, 1998, we adopted an incentive stock option plan under which we
approved the reservation and issuance of up to 1,979,167 shares of our common
stock for issuance under the plan. As of the date of this prospectus, we have
granted 458,332 options which are outstanding and which permit the option
holders to purchase 458,332 shares of our common stock. Our plan allows us to
grant incentive and non-qualified options to our officers and key executives.
Incentive stock options granted under the plan will not have an exercise price
less than 100% of the fair market value of the shares at the time the options
are awarded. Non-qualified stock options granted under the plan will not have an
exercise price less than 85% of their fair market value at the time of the
grant. The compensation committee of our board of directors determines the terms
of each option grant. Our plan provides for grants of options with a term of up
to 10 years which may have a cashless exercise provision whereby the holders of
the options may exercise the options and tender payment for the option shares by
surrendering a number of shares of common stock whose value would equal the cash
required to exercise an additional number of shares. The compensation committee
will administer the stock option plan.
In 1998, pursuant to the plan, we originally granted 1,635,416 options to
purchase a like number of shares of our common stock. In April 1999, four
holders of our incentive stock options granted under the plan agreed to
surrender 1,177,084 of their options in exchange for our agreement to pay the
holders a total of $117,708, which is to be paid in equal quarterly installments
over the course of 10 quarters beginning with the quarter ending September 30,
1999. This surrender of a part of our outstanding incentive stock options
results in outstanding incentive stock options to purchase 458,332 shares of our
common stock held by our officers, employees, and directors. As of the date of
this prospectus, these 458,332 options are outstanding and fully vested, all
with an exercise price of $.86 per share of common stock. The weighted average
remaining contractual life of the option grants exceeds 8.6 years.
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our restated certificate of incorporation and our by-laws contain provisions
that eliminate the personal liability of our directors to us or our stockholders
for monetary damages for breach of their fiduciary duty as a director to the
fullest extent permitted by the Delaware General Corporation Law, except for
liability for:
- any breach of their duty of loyalty to us or our stockholders;
- acts or omissions not in good faith or which involve intentional;
- misconduct or a knowing violation of law;
- unlawful payments of dividends or unlawful stock repurchases or
redemptions;
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- any act or omission occurring prior to March 1998; and
- any transaction from which the director derived an improper personal
benefit.
Our restated certificate of incorporation and by-laws also contain
provisions that require us to indemnify our directors and permits us to
indemnify our incorporators, directors and officers to the fullest extent
permitted by Delaware law, including circumstances where indemnification would
be discretionary. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and persons controlling
us pursuant to the foregoing provisions, or otherwise, we have been advised that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities Act, and is therefore,
unenforceable.
CERTAIN TRANSACTIONS
Mr. Homan, our president and chief executive officer, serves as president
and a director of TVLC Finance, Inc., a Nevada corporation. TVLC Finance is a
specialty finance company that provides patient financing and equipment leasing
to us at what we believe to be competitive rates to the market. TVLC Finance is
not a subsidiary or sister company of ours. In certain cases, TVLC Finance
provides us with financing that may not be available to us from other sources.
TVLC Finance owns 96% of MTE/Triad, Inc., a Nevada corporation that has
provided equipment financing to our Albuquerque subsidiary. Mr. Homan is
president and a director of MTE/Triad and is the principal shareholder of that
company, owning 96% of its outstanding stock. Currently, the only equipment
financing in place through either TVLC Finance or MTE/Triad, Inc. relates to the
re-financing of our VISX excimer laser equipment in our Albuquerque center.
Originally, financing for the purchase of our excimer laser in Albuquerque was
provided by MTE/Triad through the syndication of a private placement offering
with doctors and optometrists in New Mexico, which raised a total of $170,000.
The remainder of the purchase price for our excimer laser was financed by the
manufacturer, VISX and through purchase money financing provided by InterAmerica
Bank in Albuquerque, New Mexico. In October 1997, TVLC Finance provided $300,000
in additional financing which was used to pay off the existing financing
provided by VISX and InterAmerica Bank. The refinancing provided by TVLC Finance
resulted in an assignment of the outstanding security interests to TVLC Finance.
In April 1998, DVI Financial, Inc., a specialty leasing company unaffiliated
with us, agreed to refinance the outstanding balance of the debt on our excimer
laser equipment. A portion of the original $300,000 financing from TVLC Finance
was used to acquire additional equipment used in our Albuquerque center. A
balance due to TVLC Finance of approximately $62,944 remained at the end of
fiscal year 1998. A condition of this refinancing was TVLC Finance's assignment
of its existing security interest in the laser equipment to DVI Financial. At
the time of this refinancing arrangement, VISX agreed to subordinate its
security interest in the excimer laser in favor of DVI Financial, however, VISX
retained the right to disable or foreclose on the excimer laser system if we
breach any obligation in the VISX patent and software license covering the VISX
excimer laser. Presently, DVI Financial has outstanding financing of our VISX
excimer laser equipment in Albuquerque based on a 48 month loan and security
agreement dated March 17, 1998 which provides for 48 monthly payments of $9,088
that began April 18, 1998 and continue for 48 successive months thereafter until
the balance is paid in full.
In settlement of a dispute between us and MTE/Triad regarding penalties for
unpaid interest due to MTE/Triad under our laser equipment lease dated July 1,
1997 that was owed by our Albuquerque subsidiary for the period July 1997
through April 1998, TrueVision Laser Centers, Inc. agreed to transfer 41,667 of
its shares of our common stock to MTE/Triad. MTE/Triad agreed to waive any
further penalties, fees and interest that were due from the non-payment of the
interest due upon its receipt of the shares, a $50,000 cash payment which was
due and was paid on or about May 1, 1999, and a second cash payment of $120,000
is due on January 1, 2000. We entered in to a mutual general release agreement
effective as of April 15, 1999 which provided for payments to be made to MTE/
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<PAGE>
Triad, Inc. by our subsidiary, TrueVision Laser Center of Albuquerque, Inc., and
the release of all other liabilities arising under the laser equipment lease
dated July 1, 1997 upon the receipt of the payments. Payments which we are
obligated to make under the terms of the mutual release and settlement agreement
are current.
We entered in to a consulting agreement with Dr. Howard Silverman on April
1, 1998, one of our principal shareholders. As part of the consideration to us,
Dr. Silverman agreed to execute and deliver an unconditional continuing
guarantee in favor of DVI Financial Services, Inc., which guarantee was a
financing requirement imposed on us by DVI Financial at the time that we
re-financed the VISX excimer laser equipment we use in our Albuquerque center.
Dr. Silverman's guarantee was delivered to DVI Financial pursuant to
subordination and financing agreements dated February 24, 1998. As a part of Dr.
Silverman's compensation under his April 1, 1998 consulting agreement, we
granted him an option to purchase 166,667 shares of common stock at an exercise
price of $.001 per share. We subsequently defaulted on Dr. Silverman's April 1,
1998 consulting agreement by our failure to pay the $5,000 monthly consulting
fees provided for in the agreement. We then amended our consulting agreement
with Dr. Silverman, and in that amended agreement, we agreed to increase Dr.
Silverman's monthly consulting fee to $8,500 beginning July 31, 1999. Dr.
Silverman was also to receive a lump sum payment of $90,000 as a consulting fee,
which was fully paid to him on September 10, 1999. Dr. Silverman's amended
consulting agreement dated December 1, 1998 states that so long as his guarantee
is in effect, we are obligated to engage him or his designee as a nonvoting
advisor to our board of directors. Dr. Silverman is entitled to receive notices
of and be invited to our board of directors' meetings, and is entitled to
receive reimbursement for reasonable out of pocket costs associated with his
attendance at our board of directors' meetings. Furthermore, Dr. Silverman is
entitled to receive the same compensation that we may pay to other non-employee
directors attending our board of directors' meetings.
As partial consideration for Dr. Silverman's consulting services pursuant to
the December 1, 1998 agreement, we re-affirmed our grant of an option to Dr.
Silverman to purchase 166,667 shares of our common stock, at an exercise price
of $.001 per share. This option includes certain demand registration rights
covering the shares underlying the options, which obligates us to register Dr.
Silverman's shares of common stock in our next available registration statement
filed with the Commission, or if we do not file any registration statement
within six months after the completion of a public offering, then we are
required to facilitate registration of Dr. Silverman's shares of common stock by
registering his shares on Form S-8.
On February 23, 1998, we entered in to a stock purchase agreement and plan
of reorganization. When we entered in to this agreement, TrueVision Laser
Centers, Inc. owned 84% of the stock of our subsidiary, TrueVision Laser Centers
of Albuquerque, Inc. Through this agreement, we purchased all of the outstanding
stock of our subsidiary from TrueVision Laser Centers, Inc. in exchange for
1,944,444 shares of our common stock and 1,944,444 warrants to purchase an
additional 1,944,444 shares of our common stock. Our purchase of the outstanding
stock of our subsidiary was consummated on April 15, 1998. As a part of this
agreement all of the warrants issued in the reorganization expired without
exercise on April 15, 1999. As a part of our plan of reorganization, we granted
to Wilber F. Noyes, our then chief executive officer, a warrant to acquire
416,667 shares of our common stock at an exercise price of $.86 per share. We
subsequently defaulted on the terms of Mr. Noyes' consulting agreement dated
February 9, 1998 by not paying him all monthly consulting fees when they were
due, which totaled $76,000 as of August 1999. In order to cure any defaults in
Mr. Noyes' consulting agreement, we amended Mr. Noyes' agreement effective
August 25, 1999. In the amendment, Mr. Noyes surrendered all of his 416,667
unexercised options to purchase 416,667 shares of our common stock in exchange
for his receipt of 20,000 shares of our common stock, our payment to him of lump
sum compensation in the amount of $31,800 and a consulting fee of $6,000 per
month for four months following the date of the amended consulting agreement.
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<PAGE>
On August 23, 1999, we entered into a three year consulting agreement with
one of our directors, Frank J. Seifert, who has agreed to provide business
advice, investment banking services, and the development of business
opportunities for us. As a part of his services, Mr. Seifert agreed to deliver
an unconditional continuing guarantee in favor of DVI Financial Services, Inc.
with respect to the financing agreements entered into between our subsidiary and
DVI Financial Services, Inc. for the financing of our excimer laser equipment
used in the Albuquerque center. Mr. Seifert's guarantee continues in effect
until the financing provided by DVI Financial Services, Inc. for our excimer
laser equipment is paid in full. The consulting agreement specifies that Mr.
Seifert is an independent contractor for us and will provide his consulting
services as requested and supervised by our board of directors.
The consulting agreement provides that we will use our best efforts to cause
Mr. Seifert to be a member of the board of directors so long as his guarantee is
in effect, and he is entitled to receive reimbursement for all reasonable costs
incurred for his attendance at directors' meetings. As compensation for his
consulting services, we have agreed to pay Mr. Seifert $60,000 per year payable
in monthly installments of $5,000 in advance. We agreed to commence making these
monthly payments retroactively from June 1, 1999. Mr. Seifert is also entitled
to receive the same non-cash benefits as our other regular employees, such as
healthcare insurance benefits. Mr. Seifert is entitled to participate in
discretionary awards of incentive stock options under our 1998 Incentive Stock
Option Plan, or any successor plan. In addition to Mr. Seifert's annual
consulting fee, the consulting agreement grants him an option to purchase 83,333
shares of our common stock at an exercise price of $.86 per share. Mr. Seifert's
shares underlying this option are subject to demand registration rights which
require us to register the 83,333 shares underlying the option under the
Securities Act on the next registration statement which we may file under the
Securities Act after the completion of this public offering, and if not
registered within six months after the date of the consulting agreement, then
Mr. Seifert has the right to require us to register his shares on Form S-8 under
the Securities Act, no later than seven months after the date of his consulting
agreement. We are current with regards to our obligations to Mr. Seifert under
his consulting agreement.
On July 1, 1997, our Albuquerque subsidiary entered into an equipment lease
with MTE/ Triad, Inc. covering our lease of certain medical equipment, including
a VISX excimer laser used in our Albuquerque center. This agreement provides
that our subsidiary was to pay monthly rental to MTE Triad, Inc. for the use of
the equipment at the rate of $7,600 per month for a term of five years. Our
subsidiary defaulted on the payment terms of this equipment lease when it failed
to pay all monthly rental payments, accrued interest and late penalties. As a
consequence of this default, our Albuquerque subsidiary entered into a mutual
general release agreement with MTE/Triad, Inc. and TrueVision Laser Centers,
Inc. on April 15, 1999 in full settlement of the default by our subsidiary in
the payment of interest and other payments in accordance with an equipment
lease. The effect of this mutual general release was that our subsidiary
admitted that it defaulted in the payment of interest and penalties under the
July 1, 1997 lease and agreed to remedy all defaults by the delivery to
MTE/Triad, Inc. of 41,667 shares of our common stock and the payment of $50,000
on or about May 1, 1999 and an additional payment of $120,000 due on or about
January 1, 2000.
TVLC Finance, a separate company controlled by Mr. Homan, entered into a
financing arrangement with us that relates to certain equipment used in our
Albuquerque center. We delivered a promissory note to TrueVision Laser Centers,
Inc. bearing interest at 16.5% with interest and principal payable in monthly
installments of approximately $1,475 per month. This note is secured by certain
equipment and is due in full in September, 2002. As of September 30, 1998, the
principal balance we owed on this note was $51,581.
Mr. Homan also serves as president and a director of TrueVision Laser
Centers, Inc. From December 1995 to April 15, 1998, Mr. Homan developed laser
vision correction centers through his affiliattion with TrueVision Laser
Centers, Inc. Until April 15, 1998, TrueVision Laser Centers, Inc. held an 84%
ownership interest in TrueVision Albuquerque that was then acquired by us
pursuant to the agreement
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<PAGE>
and plan of reorganization. As of the date of the agreement, TrueVision Laser
Centers, Inc. ceased operations. It is, however, precluded from operating laser
vision centers in competition with us.
We have advanced to Mr. Homan as of September 30, 1998, the sum of $27,663
for business expenses that he anticipated incurring during our last fiscal year.
As of that date, Mr. Homan's advances were still due to us, but we have not made
any demand on Mr. Homan for the repayment of those advances. This advance is
non-interest bearing and the balance of the advances are due and payable to us
by Mr. Homan upon our demand. We advanced TVLC Finance, Inc. and TrueVision
Laser Centers, Inc. a total of $2,456 as of September 30, 1998, for expenses
which those two companies agreed to pay on our behalf. These advances are due
back to us and are due and payable on our demand and are non-interest bearing.
We have not made a demand for repayment of these advances to either TVLC Finance
or TrueVision Laser Centers, Inc.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of the date of this prospectus. The information
in this table provides the beneficial ownership for:
- each person known by us to be the beneficial owner of more than 5% of the
outstanding shares of our common stock;
- each of our directors and executive officers; and
- our executive officers and directors as a group.
Unless otherwise indicated, the address of each beneficial owner is the same
as our principal office location at 1720 Louisiana Boulevard, Suite 100,
Albuquerque, New Mexico 87110. Unless otherwise indicated, the individuals in
this table have sole voting and investment power with respect to all shares
shown as beneficially owned by them. Beneficial ownership is determined in
accordance with the rules and regulations of the Securities and Exchange
Commission. The number of shares beneficially owned by a person and the
percentage ownership of that person includes shares of our common stock issuable
upon exercise of options and warrants held by that person, but not those held by
any other persons, that are currently exercisable or exercisable within 60 days
from the date of this prospectus.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENT BENEFICIALLY OWNED
BENEFICIALLY --------------------------------
NAMES AND ADDRESS OF BENEFICIAL OWNER OWNED BEFORE OFFERING AFTER OFFERING
- --------------------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
John C. Homan...................................... 885,417(1) 34.7% 25.0%
Frank J. Seifert...................................
751 7th Ave. San Diego, CA 92101 433,333(2) 18.0 12.7
Allison W. Evans................................... 132,407(3) 5.5 3.9
Robert S. Helmer................................... -0- -0- -0-
C. Richard Hullihen................................ -0- -0- -0-
Howard Silverman................................... 391,667 16.8 11.8
TrueVision Laser Centers, Inc. ....................
751 7th Avenue, Suite M
San Diego, CA 92101 654,370 28.1 19.7
Dr. Donald E. Rodgers.............................. 83,333(4) 3.5 2.4
All directors and executive officers as a group (5
persons)......................................... 1,534,490 55.3% 40.7%
</TABLE>
- ------------------------
(1) Includes 218,750 fully-vested options, which expire in April 2008, and that
are exercisable at $.86 per share, held by Mr. Homan and 41,667 shares of
our common stock held by MTE/Triad, Inc., which is under the investment
control of Mr. Homan. This does not include the 654,370 shares of our common
stock that Mr. Homan has investment control over in his capacity as the
chief executive officer of TrueVision Laser Centers, Inc., a predecessor
company affiliated with Mr. Homan.
(2) Does not include 64,257 shares held by TrueVision Laser Centers, Inc. in
which Mr. Seifert is an officer and director, but over which he has no
investment control. Includes 83,333 fully-vested options held by Mr.
Seifert, that expire in May 2008 are that are exercisable at $.86 per share.
(3) Includes 58,333 fully-vested options, which expire in January 2009, and that
are exercisable at $.86 per share, held by Ms. Evans, but does not include
4,796 shares held by TrueVision Laser Centers, Inc. in which Ms. Evans is an
officer, but over which she has no investment control.
(4) Includes 83,333 fully-vested options, which expire in April 2008, and that
are exercisable at $.86 per share, held by Dr. Rodgers.
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<PAGE>
DESCRIPTION OF SECURITIES
GENERAL
Our authorized capital stock consists of 100,000,000 shares of common stock,
$.001 par value per share and 10,000,000 shares of preferred stock, $.001 par
value per share, the rights and preferences of which may be established from
time to time by our board of directors. As of August 31, 1999, there were
2,329,560 shares of our common stock issued and outstanding, and no shares of
our preferred stock outstanding.
The description of our securities are summaries and do not contain all the
information that may be important to you. For more complete information, you
should read our certificate of incorporation and all amendments, and the form of
promissory note and warrants issued by us in May through August 1999, which are
all filed as exhibits to the registration statement of which this prospectus
forms a part.
COMMON STOCK
Holders of our common stock are entitled to one vote for each share on all
matters submitted to a vote of stockholders and there are no cumulative voting
rights. Accordingly, holders of a majority of the shares of our common stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of common stock are entitled to receive ratably
such dividends, if any, as may be declared by our board of directors out of
funds legally available therefor, subject to any preferential dividend rights of
any outstanding shares of preferred stock. Upon the liquidation, dissolution or
winding up of us, holders of our common stock are entitled to share in our
assets remaining after the payment of all liabilities and liquidation
preferences on any outstanding shares of preferred stock. Holders of our common
stock have no preemptive, subscription, redemption or conversion rights, and
there are no redemption or sinking fund provisions applicable to our common
stock. All outstanding shares of common stock are, and the shares offered by us
in this offering will be, when issued and paid for, duly authorized, validly
issued, fully paid and non-assessable. The rights, preferences and privileges of
holders of our common stock are subject to, and may be adversely affected by,
the rights of the holders of shares of any series of preferred stock that we may
designate and issue in the future.
PREFERRED STOCK
Our board of directors has the authority, without stockholder approval, to
issue up to an aggregate of 10,000,000 shares of preferred stock, in one or more
series. The board may fix the rights, preferences, privileges and restrictions
of the shares of each series, including dividend rights, conversion rights,
voting rights, terms of redemption and liquidation preferences, and to fix the
number of shares constituting any series and the designations of these series.
These shares may have rights senior to our common stock. The issuance of
preferred stock may have the effect of delaying or preventing a change of
control of us. The issuance of preferred stock could decrease the amount of
earnings and assets available for distribution to the holders of our common
stock or could adversely affect the rights and powers, including voting rights,
of the holders of our common stock. We have no present plans to issue any shares
of preferred stock.
REDEEMABLE COMMON STOCK PURCHASE WARRANTS
GENERALLY. Each warrant entitles the registered holder to purchase, at any
time commencing 12 months after the date of this prospectus until 60 months
after the date of this prospectus, one share of common stock at a price equal to
120% of the initial public offering price of the common stock.
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<PAGE>
REDEMPTION PROVISIONS. Commencing 12 months after the date of this
prospectus, the warrants will be subject to redemption by us, in whole but not
in part, at $.10 per warrant on 30 days' prior written notice. The warrants may
only be redeemed if the average closing sale price of our common stock as
reported on the Nasdaq SmallCap Stock Market equals or exceeds 200% of the
initial public offering price per share of the common stock for any 20 trading
days within a period of 30 consecutive trading days ending on the fifth trading
day prior to the date of notice of redemption. The holder of any warrant may
exercise the warrant by surrendering the certificate representing the warrant to
the warrant agent, with the subscription form properly completed and executed,
together with payment of the exercise price. No fractional shares will be issued
upon the exercise of the warrants. The exercise price of the warrants bears no
relationship to any objective criteria of value and should in no event be
regarded as an indication of any future market price of the securities offered
in this offering.
ADJUSTMENTS. The exercise price of the warrants and the number of shares of
common stock that may be issued upon the exercise of the warrants are subject to
adjustment in certain events, including stock dividends, stock splits,
combinations or reclassifications of the common stock. Additionally, an
adjustment would be made in the case of a reclassification or exchange of common
stock, consolidation or merger of us with or into another corporation (other
than a consolidation or merger in which we are the surviving corporation) or
sale of all or substantially all of our assets, in order to enable warrant
holders to acquire the kind and number of shares of stock or other securities or
property receivable in such event by a holder of the number of the number of
shares of common stock that might otherwise have been purchased upon the
exercise of the warrant.
TRANSFER, EXCHANGE AND EXERCISE. The warrants are in registered form and
may be presented to the warrant agent for transfer, exchange or exercise at any
time on or prior to their expiration date, at which time they will be void and
have no value. The warrants may not be exercised until 12 months after the date
of this prospectus. If a market for the warrants develops, the holder may sell
the warrants instead of exercising them. There can be no assurance, however,
that a market for the warrants will develop or, if developed, will continue.
MODIFICATION OF WARRANTS. We and the warrant agent may make such
modifications to the warrants as we deem necessary and desirable that do not
adversely affect the interests of the warrant holders. We may, in our sole
discretion, lower the exercise price of the warrants for a period of no less
than 30 days on not less than 30 days' prior written notice to the warrant
holders and the representative. Modification of the number of securities
purchasable upon the exercise of any warrant, the exercise price (other than as
provided in the preceding sentence) and the expiration date with respect to any
warrant requires the consent of at least two-thirds of the warrant holders.
The warrants are not exercisable unless, at the time of the exercise, we
have a current prospectus covering the shares of common stock issuable upon
exercise of the warrants, and such shares have been registered, qualified or
deemed to be exempt under the securities or blue sky laws of the state of
residence of the exercising holders of the warrants. Although we have undertaken
to use our best efforts to have all of the shares of common stock issuable upon
exercise of the warrants registered or qualified on or before the exercise date
and to maintain a current prospectus relating thereto until the expiration of
the warrants, there can be no assurance that we will be able to do so.
Although the securities will not knowingly be sold to purchasers in
jurisdictions in which the securities are not registered or otherwise qualified
for sale, investors in such jurisdictions may purchase warrants in the secondary
market or investors may move to jurisdictions in which the shares underlying the
warrants are no so registered or qualified during the period that the warrants
are exercisable. In such event, we would be unable to issue shares to those
persons desiring to exercise their warrants, and holders of warrants would have
no choice but to attempt to sell the warrants in jurisdictions where such sale
is permissible or allow them to expire unexercised.
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<PAGE>
PROMISSORY NOTES
We sold $1,175,000 in the aggregate principal amount of 13% promissory notes
due April 15, 2000 from April through August 1999 in a private placement.
$625,000 of the aggregate amount of the private placement was sold to investors
that received 312,500 common stock purchase warrants. $550,000 of the aggregate
amount of the private placement was sold to subscribers that received no
warrants, but received a total of 34,384 shares of our common stock.
The promissory notes are unsecured and represent a general debt obligation
of ours, and, are subordinate to any existing senior indebtedness we have
outstanding. Each promissory note bears interest from the date of issuance at a
rate of 13% per annum. Interest is payable on the earlier of April 15, 2000 or
the closing of an initial public offering of our securities. Payment of
principal and accrued interest will be paid directly to the person in whose name
the promissory note is registered on the note register maintained by us. We
issued the promissory notes in denominations of $5,000 units, with each $5,000
note including 2,500 common stock purchase warrants entitling the warrant holder
to purchase 2,500 shares of our common stock at an exercise price of $8.40 per
share. All noteholders that purchased notes in our private placement in August
1999 received an aggregate of 34,384 shares of our common stock instead of
receiving warrants to purchase our common stock. Holders may transfer the notes
by surrendering them for transfer at the office of our registrar, together with
such written instrument of transfer as we may require, including without
limitation, an opinion of counsel, satisfactory to us, provided at the cost of
the transferring holder.
The promissory notes are subject to redemption at our option, at any time,
in whole or in part, without penalty. If we elect to redeem less than all of the
promissory notes, we will select which promissory notes to redeem, using such
method as we determine is fair and appropriate. The notes describe events of
default in the event that we fail to pay the principal and interest when due,
failure to perform any other covenants for 60 days after written notice
specifying the default and allowing the Company to remedy such default, if we
file bankruptcy or insolvency proceedings, or enter into a reorganization. Our
rights and obligations and the rights of the note holders may be modified under
certain circumstances. In addition, the holders of not less than seventy-five
percent (75%) in aggregate principal amount of outstanding notes may consent to
a postponement of any interest payment for a period not exceeding three years
from its due date.
For such time as the notes remain outstanding, we can not declare or pay any
cash dividends or dividends in kind on our shares of common stock other than
dividends payable solely in shares of our common stock.
WARRANTS
With respect to the first $625,000 aggregate amount of promissory notes
purchased in our private placement, we issued to each $5,000 promissory
noteholder 2,500 common stock purchase warrants entitling holders to purchase up
to 2,500 shares of our common stock at a price of $8.40 per share. We issued a
total of 312,500 warrants in our private placement, entitling the warrant
holders to purchase an aggregate of 312,500 shares of our common stock. The
warrants may be exercised in full or in part on or before April 15, 2004, but
can not be exercised for 12 months following their date of issuance. These
warrants may only be exercised upon payment in cash, and upon payment of the
exercise price, the holder of a warrant will receive one share of common stock
for each warrant exercised. The warrants include features for adjustment in the
event of a common stock split, stock dividend, reverse common stock split,
merger, consolidation or other similar change in our capital structure.
Holders of the warrants have no voting rights until such time as the
warrants are exercised and our underlying common stock is issued to the holder.
Upon the issuance of our common stock to the holders of the warrants, the
holders shall have the same rights as any other shareholder owning our common
stock.
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<PAGE>
THE REPRESENTATIVE'S WARRANTS
In connection with the offering, we have agreed to issue and sell to the
representative and/or its designees, at the closing of this offering, for
nominal consideration, five year warrants to purchase 100,000 shares of common
stock and/or 50,000 redeemable common stock purchase warrants. The
representative's warrants are exercisable at any time during a period of four
years commencing at the beginning of the second year after their issuance an
exercise price of 120% of the initial public offering price per share of common
stock and 120% of the initial public offering price per redeemable common stock
purchase warrant. The shares of common stock, redeemable warrants and shares of
common stock underlying the redeemable warrants issuable upon exercise of the
representative's warrants are identical to those offered to the public. The
representative's warrants contain anti-dilution provisions providing for
adjustment of the number of securities issuable upon the exercise of the
warrants under certain circumstances, including stock dividends, stock splits,
mergers, acquisitions and recapitalizations. The holders of the representative's
warrants will have no voting, dividend or other stockholder rights with respect
to the warrants.
For a period of five years after the completion of our initial public
offering, the holders of the representative's warrants and/or the shares of
common stock underlying the representative's warrants have piggyback
registration rights covering the underlying shares, at our expense, except as to
fees and expenses of the holders' counsel and selling commissions applicable to
those shares. In addition, for a five year period from the completion of our
initial public offering, upon demand by the holders of at least a majority of
the representative's warrants or of the underlying shares, the holders of the
representative's warrants and of the underlying shares, have a right to demand a
one time registration of the shares of common stock underlying the
representative's warrants. The cost of these registrations are at our expense,
except as to fees and expenses of the holders' counsel and selling commissions
applicable to the warrants and the shares.
OPTIONS FROM OUR 1998 STOCK OPTION PLAN
Several of our officers and directors were previously granted incentive
options to purchase our common stock from our 1998 stock option plan. There are
currently 458,332 fully-vested options outstanding entitling the holders to
purchase 458,332 shares of our common stock at an exercise price of $.86 per
share. All outstanding incentive stock options expire 10 years from the date of
grant, which means that our outstanding options will expire in April 16, 2008.
The incentive stock options granted under the 1998 stock option plan permit a
cashless exercise of the options whereby the holder may exercise the options and
tender payment for the option shares by surrendering a number of shares of
common stock whose value would equal the cash required to exercise an additional
number of options.
REGISTRATION RIGHTS
We are obligated to register the shares of common stock issuable upon
exercise of the warrants and the shares of common stock issued to the promissory
note holders in our private placement in certain registration statements filed
with the Securities and Exchange Commission. The shares are entitled to one-time
piggyback registration rights on the first registration statement filed by us
after we become a public company. We are also obligated to provide a one-time
demand registration covering the warrant shares if we do not file a registration
statement covering the shares before December 31, 1999. Registration rights are
subject to cutbacks that may be imposed by the underwriters involved in our
registrations.
If we file a registration statement pursuant to the piggyback or demand
registration rights given to the holders of these warrants, we may register our
shares of common stock in a single registration statement to cover all of our
warrant holders' registration rights. The holders of our common stock then shall
be entitled to sell our common stock simultaneously with and upon the terms and
conditions
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<PAGE>
as the securities sold for our own account sold pursuant to the registration
statement, subject to limitations that may be reasonably imposed by the
underwriter, receipt of minimum proceeds, and other terms of the registration
rights provisions of the warrant and the registration statement.
The holders of 458,332 of our outstanding incentive stock options granted
under the 1998 stock option plan, also were granted registration rights
consistent with the above described piggyback registration rights, entitling
them to register 458,332 shares of our common stock underlying their incentive
stock options.
The holders of 50,000 representative's warrants will also have demand and
piggyback registration rights.
TRANSFER AGENT AND REGISTRAR
We intend to appoint Continental Stock Transfer & Trust Company, New York,
New York as our transfer agent, warrant agent, and registrar.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for any of our
securities and there can be no assurance that a significant public market for
any of our securities will be developed or sustained after this offering. Sales
of substantial amounts of our common stock in the public market after this
offering, or the possibility of those sales occurring could adversely affect the
prevailing market price for our securities and our ability to raise equity
capital in the future.
Upon completion of this offering, there will be 3,329,560 shares of our
common stock outstanding, assuming no exercise of the underwriter's
over-allotment option or any exercise of the redeemable common stock purchase
warrants. The 1,000,000 shares of common stock included in the units being
offered by this prospectus will be freely tradable without restriction under the
Securities Act, unless purchased by an affiliate of ours, as that term is
defined under the rules and regulations of the Securities Act, which will be
subject to the resale limitations of Rule 144 under the Securities Act.
The remaining 2,329,560 shares of our common stock are considered
"restricted securities" as defined in Rule 144. These shares were issued in
private transactions and have not been registered under the Securities Act and,
therefore, may not be sold unless registered under the Securities Act or sold
pursuant to an exemption from registration, such as the exemption provided by
Rule 144.
In general, under Rule 144, beginning 90 days after the completion of this
offering, a person, or persons whose shares are aggregated, who has beneficially
owned restricted shares for at least one year, including the holding period of
any prior owner who is not an affiliate of ours, would be entitled to sell
within any three-month period, a number of shares that does not exceed the
greater of:
- one percent, or approximately 33,295 shares following this offering, of
the number of shares of our common stock then outstanding; or
- the average weekly trading volume of our common stock during the four
calendar weeks preceding the sale.
Sales under Rule 144 are also subject to manner of sale provisions, notice
requirements and to the availability of current public information about us.
Under Rule 144(k), a person who is not deemed to have been an affiliate of
ours at any time during the 90 days preceding a sale, and who has beneficially
owned the shares for at least two years, including the holding period of any
prior owner who is not an affiliate of ours, would be entitled to sell those
shares under Rule 144(k) without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.
47
<PAGE>
Beginning 90 days after the completion of this offering, shares of common
stock issuable upon exercise of options granted by us prior to the effective
date of the registration statement will be eligible for sale in the public
market pursuant to Rule 701 under the Securities Act, subject to the lock-up
agreements described below. In general, Rule 701 permits resales of shares
issued under certain compensatory benefit plans commencing 90 days after the
issuer becomes subject to the reporting requirements of the Securities Exchange
Act in reliance upon Rule 144, but without compliance with restrictions,
including the holding period requirements, contained in Rule 144.
Holders of 312,500 common stock purchase warrants to purchase an aggregate
of 312,500 shares of our common stock have certain piggyback and demand
registration rights with regard to the shares issuable upon exercise of these
warrants. Additionally, holders of 34,384 shares of our common stock issued in
connection with our August 1999 private placement have certain piggyback and
demand registration rights. Additionally, holders of 458,332 options to purchase
an aggregate of 458,332 shares of our common stock have certain piggyback and
demand registration rights with regard to the shares underlying those options.
These option and warrant holders could require us to register the shares
issuable upon exercise of the warrants and options and such shares would then be
freely tradable, subject to the lock-up agreements described below. All of our
securityholders have waived their registration rights with respect to this
offering.
We and all of our existing stockholders, our executive officers and
directors, have agreed that, for a period of 12 months from the completion of
this offering, we and they will not, without the prior written consent of Dirks
& Company, Inc.:
- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of our common stock or any securities convertible
into or exercisable or exchangeable for our common stock.
48
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement, the form
of which is filed as an exhibit to the registration statement filed with the
Commission of which this prospectus is a part, the underwriters named below,
severally and not jointly, have agreed through Dirks & Company, Inc. as the
representative of the underwriters, to purchase from us, and we have agreed to
sell to the underwriters, the aggregate number of units set forth opposite their
respective names:
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF UNITS
- ----------------------------------------------------------------------------- ---------------
<S> <C>
Dirks & Company, Inc.........................................................
-------
Total.................................................................. 500,000
-------
-------
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters under that agreement are subject to certain conditions precedent,
including the absence of any material adverse change in our business and the
receipt of certain certificates, opinions and letters from our counsel and our
independent public accountants. The underwriters are committed to take and to
pay for all of the units offered hereby, if any are purchased. In the event of a
default by any of the underwriters, the purchase commitments of the
non-defaulting underwriters may be increased or the underwriting agreement may
be terminated.
The underwriters will offer the units to the public at the public offering
price set forth on the cover page of this prospectus. The underwriters may allow
some dealers concessions of not more than $ per unit. The underwriters also
may allow, and those dealers may re-allow, a concession of not more than $ per
unit to some other dealers. The public offering price, concessions, and
re-allowances may be changed after the completion of this offering.
We have granted to the underwriters an option, exercisable within 45 days
after the effective date of the registration agreement, to purchase up to an
additional 150,000 shares of common stock and/or 75,000 redeemable common stock
purchase warrants at the initial public offering price less the underwriting
discounts and non-accountable expenses allowance. The underwriters may exercise
this option only to cover over-allotments, if any. If any shares and/or warrants
are purchased pursuant to this option, the underwriters will severally purchase
the shares and/or warrants in approximately the same proportion as set forth
above.
We have agreed to indemnify the underwriters and their controlling persons
against certain liabilities, including liabilities under the Securities Act, and
to contribute to payments the underwriters and their controlling persons may be
required to make in respect thereof.
We have also agreed to pay to the representative, a non-accountable expense
allowance equal to three percent of the gross proceeds of this offering, $25,000
of which has been paid to date.
We have also agreed to pay all expenses in connection with qualifying the
securities under the laws of those states that the representative may designate,
including fees and expenses of counsel retained for these purposes by the
representative, and the costs and expenses in connection with qualifying the
offering with the National Association of Securities Dealers, Inc.
The representative of the underwriters has informed us that the underwriters
do not expect sales of the units offered by this prospectus to be made to
discretionary accounts to exceed five percent of the total number of units
offered.
49
<PAGE>
We and all of our existing stockholders, our executive officers and
directors, have agreed that, for a period of 12 months from the completion of
this offering, we and they will not, without the prior written consent of Dirks
& Company, Inc.:
- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of our common stock or any securities convertible
into or exercisable or exchangeable for our common stock.
We have agreed to issue and sell to the representative of the underwriters
and/or its designees, for nominal consideration, five-year warrants to purchase
100,000 shares of our common stock and/or 50,000 redeemable common stock
purchase warrants. The representative's warrants are exercisable for a period of
four years commencing one-year after the date of issuance at a price equal to
120% of the initial public offering price per share of common stock and
redeemable common stock purchase warrant. The representative's warrants contain
anti-dilution provisions providing for adjustments of the exercise price and the
number of shares issuable upon exercise, upon the occurrence of certain events,
including stock dividends, stock splits, and recapitalizations. The
representative's warrants contain certain demand and piggyback registration
rights relating to the shares of common stock issuable thereunder. For the life
of the representative's warrants, the representative will have the opportunity
to profit from a rise in the market price of our shares of common stock. The
representative's warrants are restricted from sale, transfer, assignment or
hypothecation for the one year period from the date of this prospectus, except
to officers or partners of the underwriters and members of the selling group
and/or their officers or partners.
We have agreed to grant the representative a right of first refusal for a
period of three years after the completion of this offering for any sale of
securities made by us or any of our subsidiaries.
We have agreed that for five years from the completion of this offering, the
representative may designate one person for election to our board of directors.
In the event that the representative elects not to exercise this right, then it
may designate one person to attend all meetings of our board of directors. The
representative has not yet exercised this right to designate this person. We
have agreed to reimburse the representative's designee for all out-of-pocket
expenses incurred in connection with the designee's attendance at meetings of
our board of directors.
Prior to this offering, there has been no public market for any of our
securities. The initial public offering price of the units offered hereby will
be determined by negotiations between the representative and us. Among the
factors considered in determining the price, include the prevailing market
conditions, including the history of and the prospects for the industry in which
we compete, an assessment of our management, our prospects, and our capital
structure. The offering price does not necessarily bear any relationship to our
assets, results of operations or net worth. There can be no assurance that an
active trading market will develop for any of the securities offered by this
prospectus, or that such securities will trade in the public market at or above
the initial public offering price.
The representative, on behalf of the underwriters, may engage in
over-allotments, stabilizing transactions, syndicate covering transactions and
penalty bids. An over-allotment involves syndicate sales in excess of this
offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the shares of common stock and/or warrants
being offered so long as the stabilizing bids do not exceed a specified maximum.
Syndicate covering transactions involve purchases of the shares of common stock
in the open market after the distribution has been completed in order to cover
syndicate short positions. Penalty bids permit the representative to reclaim a
selling concession from a syndicate member when the shares of common stock and
warrants originally sold by the syndicate member are purchased in a syndicate
covering transaction and penalty bids may cause the price of the shares of
common stock to be higher than it would otherwise be in the absence of such
transactions. These transactions may be effected on the Nasdaq SmallCap Stock
Market or otherwise, and if commenced,
50
<PAGE>
may be discontinued at any time. In addition, the underwriters may engage in
passive market making transactions in our securities on the Nasdaq SmallCap
Stock Market in accordance with Rule 103 of Regulation M. Neither we nor the
underwriters make any representation or prediction as to the direction or
magnitude of any effect that the transactions described above may have on the
price of the securities offered by this prospectus.
Certain persons participating in this offering may engage in transactions
that stabilize, maintain or otherwise affect the price of our securities offered
in this prospectus. These actions include purchasing the securities to cover
some or all of a short position of any of the securities maintained by the
representative and the imposition of penalty bids.
LEGAL MATTERS
The validity of the shares of common stock and the redeemable common stock
purchase warrants being offered by this prospectus will be passed upon for us by
Gregory Bartko, Esq., of the Law Offices of Gregory Bartko, Atlanta, Georgia,
our legal counsel. Certain legal matters will be passed upon for the
underwriters by Orrick, Herrington & Sutcliffe LLP, New York, New York.
EXPERTS
Our financial statements as of September 30, 1997 and 1998 and for the years
ended September 30, 1997 and 1998 included in this prospectus have been so
included in reliance on the report of Pannell Kerr Forster, Certified Public
Accountants, A Professional Corporation, San Diego, California, independent
auditors, given on the authority of such firm as experts in auditing and
accounting.
51
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
TABLE OF CONTENTS
<TABLE>
<S> <C>
INDEPENDENT AUDITOR'S REPORT.................................................... F-2
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets as of September 30, 1997, 1998 and June 30, 1999
(unaudited)................................................................... F-3
Consolidated Statements of Operations for the years ended September 30, 1997,
1998 and for the nine months ended June 30, 1998 and 1999 (unaudited)......... F-4
Consolidated Statements of Changes in Shareholders' Deficit for the years ended
September 30, 1997, 1998 and for the nine months ended June 30, 1999
(unaudited)................................................................... F-5
Consolidated Statements of Cash Flows for the years ended September 30, 1997,
1998 and for the nine months ended June 30, 1998 and 1999 (unaudited)......... F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS...................................... F-7-F-18
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
TrueVision International, Inc.
San Diego, California
We have audited the consolidated balance sheets of TrueVision International,
Inc. and Subsidiary (the "Company") as of September 30, 1997 and 1998, and the
related consolidated statements of operations, changes in shareholders' deficit,
and cash flows for the years then ended. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of TrueVision
International, Inc. and Subsidiary as of September 30, 1997 and 1998, and the
consolidated results of its operations and its cash flows for the years then
ended, in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
San Diego, California /s/ PANNELL KERR FORSTER
May 24, 1999 ----------------------------
PANNELL KERR FORSTER
Certified Public Accountants
A Professional Corporation
</TABLE>
F-2
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1997, 1998 AND JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------
1997 1998 JUNE 30, 1999
--------- --------- -------------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................................ $ 250 $ 2,176 $ 116,425
Accounts receivable, net of allowance for doubtful accounts of $0,
$24,833 and $24,833, at September 30, 1997, 1998 and June 30, 1999
(unaudited), respectively.............................................. 13,448 59,353 202,634
Inventory................................................................ 3,120 520 7,020
Deposits and prepaid expenses............................................ -- -- 184,936
Due from related parties................................................. -- 30,119 27,461
Deferred offering costs.................................................. -- -- 40,000
Deferred financing costs................................................. -- -- 68,250
--------- --------- -------------
Total current assets................................................. 16,818 92,168 646,726
--------- --------- -------------
NONCURRENT ASSETS:
Property and equipment, net of accumulated depreciation.................. 504,461 388,157 428,064
Trademarks and copyrights................................................ -- -- 22,000
--------- --------- -------------
Total noncurrent assets.................................................. 504,461 388,157 450,064
--------- --------- -------------
Total assets......................................................... $ 521,279 $ 480,325 $ 1,096,790
--------- --------- -------------
--------- --------- -------------
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Bank overdraft........................................................... $ 2,985 $ 7,732 $ --
Accounts payable and accrued liabilities................................. 119,173 120,880 211,639
Sales tax payable........................................................ 42,141 148,377 196,260
Due to related parties................................................... 293,471 224,474 383,365
Short-term debt.......................................................... 296,973 -- 625,000
Current portion of long-term debt........................................ -- 77,675 84,292
Current portion of capital lease obligation to related party............. 53,847 63,998 71,834
Current portion of note payable to related party......................... -- 9,918 8,419
--------- --------- -------------
Total current liabilities............................................ 808,590 653,054 1,580,809
--------- --------- -------------
LONG-TERM LIABILITIES:
Due to related parties................................................... -- -- 70,625
Long-term debt, net of current maturities................................ -- 236,709 179,345
Capital lease obligation to related party................................ 198,938 134,940 80,692
Note payable to related party............................................ -- 41,663 34,983
--------- --------- -------------
Total long-term liabilities.......................................... 198,938 413,312 365,645
--------- --------- -------------
Total liabilities.................................................... 1,007,528 1,066,366 1,946,454
--------- --------- -------------
Commitments and contingencies (Note 7)
SHAREHOLDERS' DEFICIT:
Common stock, $.001 par value, 100,000,000 shares authorized; issued and
outstanding:
2,051,215 and 2,233,507 shares at September 30, 1997 and 1998,
respectively; 2,233,507 shares at June 30, 1999 (unaudited)............ 2,051 2,234 2,234
Additional paid in capital............................................... 3,594 20,911 20,911
Accumulated deficit...................................................... (491,894) (609,186) (872,809)
--------- --------- -------------
Total shareholders' deficit.................................................. (486,249) (586,041) (849,664)
--------- --------- -------------
Total liabilities and shareholders' deficit.................................. $ 521,279 $ 480,325 $ 1,096,790
--------- --------- -------------
--------- --------- -------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1998 AND
FOR THE NINE MONTHS ENDED JUNE 30, 1998 AND 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED SEPTEMBER 30, JUNE 30,
------------------------- -------------------------
1997 1998 1998 1999
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Revenues................................................... $ 770,704 $ 1,460,526 $ 956,894 $ 2,218,858
Costs and expenses:
Cost of revenues......................................... 453,279 894,134 539,092 1,528,071
General and administrative............................... 274,641 380,798 258,225 482,371
Sales and marketing...................................... 99,787 47,048 15,328 129,845
Depreciation............................................. 127,678 137,883 103,258 113,258
----------- ------------ ----------- ------------
Total costs and expenses................................. 955,385 1,459,863 915,903 2,253,545
----------- ------------ ----------- ------------
(Loss) income from operations.............................. (184,681) 663 40,991 (34,687)
Other expenses:
Interest expense......................................... (66,585) (117,955) (90,754) (91,078)
Expenses relating to debt financing and agreements to
retire stock options in preparation of proposed public
offering............................................... -- -- -- (137,858)
Minority interest in subsidiary's losses absorbed by
parent................................................. (37,613) -- -- --
----------- ------------ ----------- ------------
Total other expenses..................................... (104,198) (117,955) (90,754) (228,936)
----------- ------------ ----------- ------------
Net loss................................................... $ (288,879) $ (117,292) $ (49,763) $ (263,623)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Basic and diluted net loss per share....................... $ (.14) $ (.06) $ (.02) $ (.12)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Shares used to compute basic and diluted net loss per
share.................................................... 2,051,215 2,127,820 2,092,592 2,233,507
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1998 AND
FOR THE NINE MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
--------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
---------- --------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance, September 30, 1996......................... 106,771 $ 107 $ 5,438 $ (203,015) $ (197,470)
Issuance of common stock for purchase of
subsidiary...................................... 1,944,444 1,944 (1,844) -- 100
Net loss.......................................... -- -- -- (288,879) (288,879)
---------- --------- ----------- ------------ -----------
Balance, September 30, 1997......................... 2,051,215 2,051 3,594 (491,894) (486,249)
Issuance of common stock for consulting
services........................................ 15,625 16 2,484 -- 2,500
Exercise of stock option granted for loan
guarantee (Note 8).............................. 166,667 167 14,833 -- 15,000
Net loss.......................................... -- -- -- (117,292) (117,292)
---------- --------- ----------- ------------ -----------
Balance, September 30, 1998......................... 2,233,507 2,234 20,911 (609,186) (586,041)
UNAUDITED INFORMATION:
Net loss for the nine months ended June 30,
1999............................................ -- -- -- (263,623) (263,623)
---------- --------- ----------- ------------ -----------
Balance, June 30, 1999 (Unaudited).................. 2,233,507 $ 2,234 $ 20,911 $ (872,809) $ (849,664)
---------- --------- ----------- ------------ -----------
---------- --------- ----------- ------------ -----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1998 AND
FOR THE NINE MONTHS ENDED JUNE 30, 1998 AND 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED SEPTEMBER 30, JUNE 30,
-------------------------- ------------------------
1997 1998 1998 1999
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Cash flows from operating activities:
Net loss................................................ $ (288,879) $ (117,292) $ (49,763) $(263,623)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Bad debts............................................. -- 28,032 14,004 --
Depreciation.......................................... 127,678 137,883 103,258 113,258
Interest on long term debt and obligations to related
parties............................................. 10,304 101,198 86,054 87,323
Minority interest in subsidiary's losses absorbed by
parent.............................................. 37,613 -- -- --
Issuance of common stock and options for consulting
and other services.................................. -- 17,333 -- --
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable............ 3,296 (73,937) (141,014) (143,281)
Decrease (increase) in inventory...................... 10,470 2,600 2,600 (6,500)
Increase in deposits and prepaid expenses............. -- -- -- (184,936)
Increase in deferred offering and financing costs..... -- -- -- (108,250)
Increase (decrease) in accounts payable............... 103,612 1,707 (20,576) 90,759
Increase in sales tax payable......................... 42,141 106,236 65,079 47,883
------------ ------------ ----------- -----------
Net cash flows provided by (used in) operating
activities............................................ 46,235 203,760 59,642 (367,367)
------------ ------------ ----------- -----------
Cash flows from investing activities:
Purchase of property and equipment...................... (67,414) (21,579) (4,072) (153,165)
Increase in trademarks and copyrights................... -- -- -- (22,000)
(Increase) decrease in due from related parties......... -- (30,119) -- 2,658
------------ ------------ ----------- -----------
Net cash flows used in investing activities............. (67,414) (51,698) (4,072) (172,507)
------------ ------------ ----------- -----------
Cash flows from financing activities:
Increase (decrease) in bank overdraft................... 2,985 4,747 9,129 (7,732)
Borrowings from related parties......................... 55,673 26,537 -- 157,708
Borrowings on short-term debt........................... -- -- -- 625,000
Borrowings on long-term debt............................ -- 350,000 350,000 --
Borrowings on note payable to related party............. -- 360,000 360,000 --
Repayments on short-term debt........................... -- (304,295) (304,295) --
Repayments on due to related parties.................... -- (215,115) (130,282) (18,033)
Repayments on capital lease obligation to related
party................................................. (50,810) -- -- --
Repayments on long-term debt............................ -- (54,477) (27,264) (88,649)
Repayments on note payable to related party............. -- (317,700) (313,275) (14,171)
Issuance of common stock on exercise of option.......... -- 167 167 --
------------ ------------ ----------- -----------
Net cash flows provided by (used in) financing
activities............................................ 7,848 (150,136) (55,820) 654,123
------------ ------------ ----------- -----------
Net increase (decrease) in cash and cash equivalents...... (13,331) 1,926 (250) 114,249
Cash and cash equivalents at beginning of period.......... 13,581 250 250 2,176
------------ ------------ ----------- -----------
Cash and cash equivalents at end of period................ $ 250 $ 2,176 $ -- $ 116,425
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest.................................................. $ 44,041 $ 52,221 $ 29,505 $ 30,394
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
Income taxes.............................................. $ -- $ -- $ -- $ --
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
Supplemental disclosure of noncash investing and financing
activities:
Payments due on capital lease obligation to related party
included in amounts due to related parties.............. $ -- $ 89,979 $ 68,247 $ 67,596
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1998
NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS
TrueVision International, Inc. (the "Company") (formerly Topform, Inc.) was
incorporated in the state of Delaware on January 19, 1988. The Company, through
its operating subsidiary, provides laser vision correction and image enhancement
procedures to individuals with refractive vision conditions. The Company's
ophthalmologists and optometrists, and those with which the Company is
affiliated, provide laser vision services using excimer laser technology. The
Company also offers patients ancillary image enhancement procedures and other
vision correction devices, including eye glasses and contact lenses on a limited
basis.
Effective April 15, 1998 (the "Exchange Date"), the shareholders of the
Company and the shareholders of TrueVision Laser Centers, Inc., a Nevada
corporation ("TVLC"), approved a stock purchase agreement and plan of
reorganization (the "TVA reorganization") between the Company, TVLC and a
subsidiary of TVLC, TrueVision Laser Centers of Albuquerque, Inc., a New Mexico
corporation ("TVA"). The TVA reorganization resulted in the Company acquiring
84% of the outstanding capital stock of TVA, and TVA becoming an operating
subsidiary of the Company. Management of TVLC and TVA prior to the
reorganization has now become the Company's management. Effective March 16,
1999, the Company changed its name from Topform, Inc. to TrueVision
International, Inc. The reorganization has been accounted for in a manner
similar to a pooling of interest and, accordingly, the accompanying consolidated
financial statements have been presented as if TVA had always been a part of the
Company. (See Note 2).
Prior to the Exchange Date, the Company was inactive since inception. TVA
operates an ophthalmic laser vision correction center in Albuquerque, New
Mexico. Doctors in the local eye community own 16% of the laser center. TVA was
a development stage company prior to the fiscal year beginning October 1, 1996.
In April 1998, the shareholders of the Company approved a 4-for-1 reverse
split of the Company's common stock, and in March 1999, the shareholders of the
Company approved a 2.4-for-1 reverse split of the Company's common stock. Number
of shares and per share amounts have been restated as though the transactions
occurred on September 30, 1996.
FISCAL YEAR
The Company changed its year-end for financial reporting purposes from
December 31 to September 30, beginning with the fiscal year ended September 30,
1997.
INTERIM FINANCIAL STATEMENTS
The accompanying balance sheet as of June 30, 1999 and the statements of
operations and cash flows for the nine month periods ended June 30, 1998 and
1999, respectively, have not been audited. However, these financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form SB-2 of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In management's opinion, the accompanying financial
statements reflect all material adjustments (consisting only of normal recurring
adjustments) necessary for a fair statement of the results for the interim
periods presented. The results for
F-7
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1998
NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
the interim periods are not necessarily indicative of the results which will be
reported for the entire year.
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements consolidate the accounts of the
Company and its majority-owned subsidiary, TrueVision Laser Centers of
Albuquerque, Inc. Minority interest in the subsidiary's losses have been
absorbed by the Company as they are non-recourse. All significant intercompany
accounts and transactions have been eliminated in consolidation.
FINANCIAL INSTRUMENTS
The carrying amounts reported in the balance sheets for cash, accounts
receivable, amounts due from related parties, bank overdraft, accounts payable,
sales tax payable, short-term debt and amounts due to related parties
approximate fair value due to the immediate short-term maturity of these
financial instruments.
The fair value of the Company's long-term debt, capital lease obligation and
note payable to related party approximates the carrying amount based on the
current rates offered to the Company for debt of the same remaining maturities
with similar collateral requirements.
INVENTORY
Inventory, consisting of key cards to operate the excimer laser, is stated
at the lower of cost (determined on a first-in, first-out basis) or market.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation is calculated on a
straight-line basis over the estimated useful lives of the depreciable assets
which range from three to five years.
REVENUE RECOGNITION
Revenues are generated by the vision correction procedures performed at the
Company's laser center. Revenue is recognized when services are provided by the
Company.
CONCENTRATION RISK
The Company's revenues are generated by the vision correction procedures
performed at the laser center in Albuquerque, New Mexico. If the demand for this
procedure decreased or if the Company's ability to continue to provide this
service was impaired, the Company's revenue source would be severely impacted.
STOCK BASED COMPENSATION
In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation." This statement allows entities to measure
compensation costs related to awards of stock-based compensation, using
F-8
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1998
NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
either the fair value method or the intrinsic value method. The Company has
elected to account for stock-based compensation programs using the intrinsic
value method. See note 8 for the proforma disclosures of the effect on net loss
and net loss per share.
LONG-LIVED ASSETS
In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of the impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS No. 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The Company adopted SFAS No. 121
effective October 1, 1996. No impairment of long-lived assets has been
recognized as of September 30, 1998.
INCOME TAXES
The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, deferred income taxes are recognized for
the tax consequences of "temporary differences" by applying enacted statutory
tax rates applicable to future years to differences between the financial
statement carrying amounts and the tax bases of existing assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized.
NET LOSS PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for earnings
per share for entities with publicly held common stock. SFAS No. 128 supercedes
the provisions of APB No. 15, and requires the presentation of basic earnings
per share and diluted earnings per share. The Company has adopted the provisions
of SFAS No. 128 effective October 1, 1996.
Basic net loss per share excludes dilution and is computed by dividing net
loss by the weighted average number of common shares outstanding during the
reported periods. Diluted net loss per share reflects the potential dilution
that could occur if stock options and other commitments to issue common stock
were exercised.
COMPREHENSIVE INCOME
The FASB recently issued SFAS No. 130, "Reporting Comprehensive Income."
This statement establishes standards for reporting and display of comprehensive
income and its components. The Company adopted this statement effective October
1, 1996. For the years ended September 30, 1997 and 1998, the Company had no
items that were required to be recognized as components of comprehensive income.
F-9
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1998
NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SEGMENT INFORMATION
The FASB recently issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This statement requires companies to report
certain information about operating segments. The Company adopted this statement
effective October 1, 1996. For the years ended September 30, 1997 and 1998, the
Company had only one operating segment, laser vision correction, which operated
in only one geographic area, the State of New Mexico.
MANAGEMENT'S PLANS FOR FUTURE OPERATIONS AND FINANCING
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. The Company was
inactive since inception through the Exchange date. At present, the Company's
working capital plus limited capital resources will not be sufficient to meet
the Company's objectives as structured. The Company estimates it needs
substantial new capital to achieve its operations as planned, and plans to seek
up to $8 million in equity financing via a Form SB-2 offering pursuant to the
Securities Act of 1933. If appropriate financing is not obtained, either
privately or through this public offering, the Company has a plan to modify its
operations.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company generally classifies as cash equivalents all highly liquid
instruments with a maturity of three months or less at the time of purchase.
NOTE 2--ACQUISITIONS
In connection with the TVA acquisition and plan of reorganization, the
Company issued 1,944,444 shares (95%) of its common stock, plus 1,944,444
warrants (the "Warrants"), each warrant exercisable to purchase one share of
common stock at an exercise price of $0.86 per share, in exchange for 84,000
shares (84%) of TVA held by TVLC. None of the above Warrants were redeemed and
all of the Warrants expired unexercised on April 15, 1999.
F-10
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1998
NOTE 3--PROPERTY AND EQUIPMENT
Property and equipment consists of the following as of September 30, 1997
and 1998:
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Excimer laser and related equipment................................... $ 595,965 $ 595,965
Furniture and fixtures................................................ 64,742 68,816
Leasehold improvement................................................. 9,413 9,413
Motor vehicle......................................................... -- 17,505
---------- ----------
670,120 691,699
Less accumulated depreciation......................................... (165,659) (303,542)
---------- ----------
Net property and equipment............................................ $ 504,461 $ 388,157
---------- ----------
---------- ----------
</TABLE>
The Company expenses maintenance costs as they are incurred.
NOTE 4--SHORT-TERM DEBT
Short-term debt consists of the following as of September 30, 1997 and 1998:
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Secured promissory note bearing interest at 10.25%. Interest is
payable monthly and principal is payable on maturity in August 1997.
The note is secured by the excimer laser and related equipment. The
note was repaid in November 1997 via the proceeds of the note
payable described in Note 5......................................... $ 296,973 $ --
---------- ----------
---------- ----------
</TABLE>
NOTE 5--LONG-TERM DEBT
Long-term debt consists of the following as of September 30, 1997 and 1998:
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Secured loan, bearing interest at 11.25% with interest and principal
payable in monthly installments of approximately $9,100. The note is
secured by a first security interest in the excimer laser and
related equipment, and personal guarantees of certain of the
Company's directors. The note is due in March 2002.................. $ -- $ 314,384
Less: Current portion................................................. -- (77,675)
---------- ----------
$ -- $ 236,709
---------- ----------
---------- ----------
</TABLE>
See Note 6 for aggregate maturities of long-term obligations.
F-11
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1998
NOTE 6--RELATED PARTY TRANSACTIONS
DUE FROM RELATED PARTIES
Amounts due from related parties consists of the following as of September
30, 1997 and 1998:
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Unsecured advances to the CEO. The advances are non-interest bearing
and due on demand................................................... $ -- $ 27,663
Other................................................................. -- 2,456
---------- ----------
$ -- $ 30,119
---------- ----------
---------- ----------
</TABLE>
DUE TO RELATED PARTIES
Amounts due to related parties consists of the following as of September 30,
1997 and 1998:
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Amount due to a doctor optionholder for the purchase of related
equipment, payable in monthly installments by increasing the
doctor's percentage of revenue. The amount was secured by the
related equipment and repaid during the year ended September 30,
1998................................................................ $ 40,000 $ --
Installments in arrears on capital lease obligation to MTE\Triad,
Inc., related party, (including accrued interest of approximately
$7,000 and $36,000, respectively), plus penalties and interest on
late payment of approximately $0 and $30,000 for the years ended
September 30, 1997 and 1998, respectively........................... 15,412 161,530
Amount due to related entity.......................................... 238,059 62,944
---------- ----------
$ 293,471 $ 224,474
---------- ----------
---------- ----------
</TABLE>
F-12
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1998
NOTE 6--RELATED PARTY TRANSACTIONS (CONTINUED)
CAPITAL LEASE OBLIGATION TO RELATED PARTY
Capital lease obligation to related party consists of the following as of
September 30, 1997 and 1998:
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Capital lease obligation to MTE\Triad, Inc.,a corporation controlled
by the Company's CEO, bearing interest at 15.5% with interest and
principal payable in monthly installments of approximately $7,600.
The note is secured by a portion of the excimer laser and related
equipment and is due in June, 2001.................................. $ 252,785 $ 198,938
Less: Current portion................................................. (53,847) (63,998)
---------- ----------
Capital lease obligation to related party, long-term portion.......... $ 198,938 $ 134,940
---------- ----------
---------- ----------
</TABLE>
NOTE PAYABLE TO RELATED PARTY
Note payable to related party consists of the following as of September 30,
1997 and 1998:
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Secured promissory note to, TVLC Finance, Inc., a corporation
controlled by the CEO of the Company, bearing interest at 16.5% with
interest and principal payable in monthly installments of
approximately $1,475. The note is secured by a portion of the
excimer laser and related equipment and is due in September 2002.... $ -- $ 51,581
Less: Current portion................................................. -- (9,918)
---------- ----------
Note payable to related party, long-term.............................. $ -- $ 41,663
---------- ----------
---------- ----------
</TABLE>
Aggregate maturities of long-term obligations (excluding capital lease
obligations) at September 30 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED AMOUNT
- ---------------------------------------------------------------------------------- ----------
<S> <C>
1999.............................................................................. $ 87,593
2000.............................................................................. 98,741
2001.............................................................................. 106,042
2002.............................................................................. 73,589
2003.............................................................................. --
Thereafter........................................................................ --
----------
$ 365,965
----------
----------
</TABLE>
F-13
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1998
NOTE 7--COMMITMENTS AND CONTINGENCIES
LEASES
The Company leases its corporate office facility and its Albuquerque laser
vision correction center under a non-cancelable operating lease that expires in
January, 2001. The Company also leases certain of its property and equipment
from MTE\Triad, Inc.,a related party, through a capital lease that expires in
June, 2001. Capitalized leases included in property and equipment amounted to
approximately $270,000, before accumulated depreciation of approximately $72,000
as of September 30, 1998. Minimum future obligations under these leases as of
September 30, 1998, are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30, CAPITAL OPERATING
- ------------------------------------------------------------------- ------------- ----------
<S> <C> <C>
1999............................................................... $ 90,995 $ 59,314
2000............................................................... 90,995 95,728
2001............................................................... 68,246 17,000
------------- ----------
Total minimum lease payments....................................... 250,236 $ 172,042
------------- ----------
Amount representing interest....................................... 51,298
-------------
Present value of minimum lease payments............................ $ 198,938
-------------
-------------
</TABLE>
Rent expense under the non-cancelable operating lease was $34,592 and
$35,432 for the years ended September 30, 1997 and 1998.
CONSULTING AGREEMENTS
In February, 1998, the Company entered into a consulting agreement with a
shareholder for advisory services. The compensation for these services is $4,000
per month for a period of two years ending in February, 2000.
In April, 1998, the Company entered into a consulting agreement with a
shareholder for advisory services beginning in July, 1998. The compensation for
these services increases from $5,000 per month to $8,500 per month effective
December 1998. The term of the agreement is three years ending in December 2001.
EMPLOYMENT AGREEMENT
During September 1998, the Company entered into a three year employment
agreement with the president and chief executive officer. The agreement provides
for a base salary and a bonus based on the profitability of the Company, which
may be paid in cash or common stock. The salary adjusts each year and is to be
the greater of the previous year's base salary plus 5% or 75% of the previous
year's gross compensation. In conjunction with this agreement the president has
agreed not to compete with the Company's laser vision correction business during
the term of his employment and for one year after termination.
The Company also entered into a management continuity agreement with the
president that provides for his continued employment as president and chief
executive officer for three years following a change in control of the Company.
This agreement calls for certain compensation to be delivered to
F-14
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1998
NOTE 7--COMMITMENTS AND CONTINGENCIES (CONTINUED)
the President if he is terminated without cause during the three year period. No
amounts are due if the president is terminated with "cause" as defined in the
agreement. This agreement becomes effective only upon the change in control of
the Company.
NOTE 8--SHAREHOLDERS' EQUITY
STOCK, OPTIONS AND WARRANTS ISSUED FOR SERVICES
In April 1998, the Company issued 15,625 shares of common stock to a
shareholder in settlement of consulting expenses incurred by the shareholder on
behalf of the Company.
In April 1998, the Company granted a consultant and shareholder an option to
purchase 166,667 shares of common stock in return for a loan guarantee for the
Company in connection with a financing agreement with another corporation. The
options were granted at an exercise price $.001 per share and were immediately
exercised.
During 1996, the Company granted the former CEO (and a consultant) of the
Company a warrant to purchase 416,667 shares of common stock at an exercise
price of $.86 per share, in exchange for assistance provided to the Company.
This warrant was unexercised as of September 30, 1998.
STOCK OPTION PLANS
In 1998, the Company adopted an incentive stock option plan (the Plan) under
which options to purchase up to 458,332 shares of common stock may be granted to
officers, employees or directors of the Company, as well as consultants,
independent contractors or other service providers of the Company. Incentive
options may be granted at an exercise price equal to the fair market value of
the shares on the date of the grant. The Plan provides for grants of options
with a term of up to 10 years with a "cashless exercise" provision whereby the
holder may exercise the option and tender payment for the option shares by
surrendering a number of shares of common stock whose value would equal the cash
required to exercise an additional number of options.
In 1998, pursuant to the Plan, the Company granted options to purchase
458,332 shares of common stock to officers, employees and directors under the
Plan. These options have an exercise price of $.86.
Companies that do not choose to adopt the expense recognition rules of SFAS
No. 123 will continue to apply the existing accounting rules contained in
Accounting Principles Board Opinion (APB) No. 25, but are required to provide
pro forma disclosures of the compensation expense determined under the
fair-value provisions of SFAS No. 123. APB No. 25 requires no recognition of
compensation expense for most of the stock-based compensation arrangements
provided by the Company, namely, broad-based employee stock purchase plans and
option grants where the exercise price is equal to the market price at the date
of the grant.
The Company has elected to account for incentive grants and grants under its
Plan following APB No. 25 and related interpretations. Accordingly, no
compensation costs have been recognized for incentive options for the year ended
September 30, 1998. The Company has adopted the disclosure provisions of SFAS
No. 123 effective October 1, 1996. Under SFAS No. 123, the fair value of each
option granted during the year ended September 30, 1998 was estimated on the
measurement date utilizing
F-15
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1998
NOTE 8--SHAREHOLDERS' EQUITY (CONTINUED)
the then current fair value of the underlying shares, as estimated by
management, less the exercise price discounted over the average expected life of
the options of 10 years, with an average risk free interest rate of 5%, price
volatility of .1 and no dividends. Had compensation cost for all awards been
determined based on the fair value method as prescribed by SFAS No.123, reported
net (loss) and net (loss) per common share would have been as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998
-------------
<S> <C>
Net (loss):
As reported.................................................................... $ (117,292)
Pro forma...................................................................... $ (272,714)
Basic and diluted net (loss) per share:
As reported.................................................................... $ (.06)
Pro forma...................................................................... $ (.13)
</TABLE>
A summary of the activity of the stock options for the year ended September
30, 1998 is as follows:
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30, 1998
----------------------
<S> <C> <C>
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE
--------- -----------
Outstanding at beginning of period...................................... -- $ --
Granted................................................................. 458,332 0.86
Forfeited............................................................... -- --
Expired................................................................. -- --
--------- -----
Outstanding at end of period............................................ 458,332 $ 0.86
--------- -----
--------- -----
Exercisable at end of period............................................ 458,332 $ 0.86
--------- -----
--------- -----
Weighted-average fair value of options granted during the period........ $ 0.34
-----
-----
</TABLE>
A further summary of options outstanding at September 30, 1998 is as
follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
- ------------------------------------------------ OPTIONS EXERCISABLE
WEIGHTED AVERAGE ------------------------------
NUMBER REMAINING WEIGHTED AVERAGE NUMBER WEIGHTED AVERAGE
OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- ----------- ---------------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C>
458,332 9.6 years $ 0.86 458,332 $ 0.86
-------- ----- ----------- -----
-------- ----- ----------- -----
</TABLE>
F-16
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1998
NOTE 9--INCOME TAXES
Deferred income taxes reflect the net tax effects of the temporary
differences between the carrying amounts of assets and liabilities for financial
reporting and the amounts used for income tax purposes. The tax effect of
temporary differences consisted of the following as of September 30:
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards...................................... $ 203,300 $ 251,900
Other................................................................. 18,600 --
---------- ----------
Gross deferred tax assets............................................. 221,900 251,900
Less valuation allowance.............................................. (184,500) (210,700)
---------- ----------
37,400 41,200
Deferred tax liabilities, equipment................................... (37,400) (41,200)
---------- ----------
$ -- $ --
---------- ----------
---------- ----------
</TABLE>
Realization of deferred tax assets is dependant upon sufficient future
taxable income during the period that deductible temporary differences and
carryforward are expected to be available to reduce taxable income. As the
achievement of required future taxable income is uncertain, the Company recorded
a valuation allowance. The valuation allowance increased by $26,200 from 1997.
As of September 30, 1998, the Company has net operating loss carryforwards
for both federal and state income tax purposes. Federal and state net operating
loss carryforwards totaling approximately $595,000 expire as follows: $199,000
in 2011, $282,000 in 2012 and $114,000 in 2018. Due to federal and state laws,
the availability of the operating loss carryforwards are limited due to a
cumulative change in the Company's ownership resulting in a change in control.
The Company had such a change during the year ended September 30, 1998. The
Company has not yet calculated the limitation of the utilization of the net
operating loss carryforwards.
A reconciliation of the effective tax rates with the federal statutory rate
is as follows for the years ended September 30:
<TABLE>
<CAPTION>
1997 1998
----------- ----------
<S> <C> <C>
Income tax benefit at 35% statutory rate............................. $ (101,000) $ (41,000)
Change in valuation allowance........................................ 93,600 26,200
Nondeductible expenses............................................... 500 18,000
State income taxes, net.............................................. (9,000) (4,000)
Other................................................................ 15,900 800
----------- ----------
$ -- $ --
----------- ----------
----------- ----------
</TABLE>
NOTE 10--SUBSEQUENT EVENTS
In January 1999, the Board of Directors amended the Company's certificate of
incorporation to authorize 10,000,000 shares of $.001 par value Preferred stock.
F-17
<PAGE>
TRUEVISION INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1998
NOTE 10--SUBSEQUENT EVENTS (CONTINUED)
In April 1999, the Board of Directors surrendered a portion of certain stock
options previously granted to them by the Company pursuant to the Plan, in
exchange for $.10 per option surrendered. The total amount due to the directors
as a result of the above surrender is $117,708, to be paid in ten equal
quarterly installments. This amount is included in "Expenses relating to debt
financing and agreements to retire stock options in preparation of proposed
public offering". The stock option figures disclosed in Note 7 have been
restated as thought the surrender took place on the date the options were
granted.
In April 1999, the Board of Directors approved the Company's offer and
issuance of a maximum of $1,000,000 of its 13% subordinated promissory notes due
April 15, 2000 attached with non-detachable common stock purchase warrants
entitling the holder to purchase additional shares of the Company's common stock
at an exercise price of $8.40 per share.
In May 1999, the Board of Directors authorized management of the Company to
file a Registration Statement with the Securities and Exchange Commission
permitting the Company to sell shares of common stock to the public ("IPO"). The
Company anticipates the sale of 1,000,000 shares of common stock. The
anticipated proceeds will be used to retire short term debt, acquire additional
lasers and expand the Company's operations.
There is no guarantee that the proposed IPO will be consummated or that the
IPO, if consummated, will provide proceeds to fund the transactions described
above.
F-18
<PAGE>
[Inside back cover of prospectus depicts two
photographic charts, one depicting a diagram of
laser vision correction of myopia--ablation
depth and the second depicting excimer laser
correction of hyperopia--ablation depth.]
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON, OR ANY OTHER PERSON TO PROVIDE YOU
WITH DIFFERENT INFORMATION OR REPRESENT ANYTHING THAT IS NOT CONTAINED IN THIS
PROSPECTUS. THE INFORMATION IN THIS PROSPECTUS MAY ONLY BE ACCURATE AS OF THE
DATE ON THE FRONT COVER OF THIS PROSPECTUS. OUR BUSINESS, FINANCIAL CONDITION,
RESULTS OF OPERATIONS, AND PROSPECTS MAY HAVE CHANGED SINCE THAT DATE. THIS
PROSPECTUS IS AN OFFER TO SELL ONLY THE UNITS, AND COMPONENTS THEREOF, OFFERED
HEREBY, BUT ONLY UNDER CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS LAWFUL TO
DO SO.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 7
Cautionary Note Regarding Forward-Looking
Statements................................... 12
Use Of Proceeds................................ 12
Dividend Policy................................ 13
Capitalization................................. 14
Dilution....................................... 15
Selected Consolidated Financial Data........... 16
Management's Discussion And Analysis Of
Financial Condition And Results
Of Operations................................ 18
Business....................................... 23
Management..................................... 32
Certain Transactions........................... 38
Principal Stockholders......................... 42
Description Of Securities...................... 43
Shares Eligible For Future Sale................ 47
Underwriting................................... 49
Legal Matters.................................. 51
Experts........................................ 51
Index To Consolidated Financial Statements..... F-1
</TABLE>
UNTIL , 1999, 25 DAYS AFTER THE DATE OF THIS PROSPECTUS, ALL DEALERS THAT
BUY, SELL OR TRADE THE UNITS, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, 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.
500,000 UNITS CONSISTING OF
TWO SHARES OF COMMON STOCK
AND ONE REDEEMABLE COMMON
STOCK PURCHASE WARRANT.
[LOGO]
---------------------
PROSPECTUS
---------------------
DIRKS & COMPANY, INC.
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by reason of such person being
or having been a director, officer, employee or agent of the company. The
Delaware General Corporation Law provides that Section 145 is not exclusive of
any other rights to which those seeking indemnification may be entitled under
any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise. Article XII of the Registrant's Amended Articles of Incorporation
dated March 16, 1999, provides for indemnification by the Registrant of its
directors, officers and employees to the fullest extent permitted by the
Delaware General Corporation Law.
Section 102(b) of the Delaware General Corporation Law permits a corporation
to provide in its certificate of incorporation that a director of the
corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases, redemptions or
other distributions, or (iv) for any transaction from which the director derived
an improper personal benefit. The Registrant's Certificate of Incorporation
eliminates the personal liability of directors to the furthest extent
permissible under the Delaware General Corporation Law.
The Registrant intends to obtain directors' and officers' insurance
providing indemnification for certain of the Registrant's directors, officers
and employees against certain liabilities, prior to the completion of this
offering.
Reference is also made to the underwriting agreement filed as Exhibit 1.1 to
the Registration Statement for information concerning the Underwriters'
obligation to indemnify the Registrant and its officers and directors in certain
circumstances, and our obligation to indemnify the underwriters. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
II-1
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be incurred in connection with this offering are
as follows:
<TABLE>
<S> <C>
SEC Registration Fee.............................................. $ 3,694
Nasdaq SmallCap Stock Market Listing Fee.......................... $ 3,775
NASD Filing Fee................................................... $ 2,122
Accounting Fees and Expenses*..................................... $ 70,000
Printing and Engraving*........................................... $ 100,000
Legal Fees and Expenses*.......................................... $ 145,000
Blue Sky Fees and Expenses*....................................... $ 30,000
Transfer Agent and Registrar Fees*................................ $ 10,000
Miscellaneous Expenses*........................................... $ 35,409
---------
Total....................................................... $ 400,000
---------
---------
</TABLE>
- ------------------------
* Estimated.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
During the last three years, the Registrant has sold and issued the
following unregistered securities in transactions which were exempt from
registration under the Securities Act of 1933, pursuant to Section 4(2) of the
Securities Act, as they were transactions not involving a public offering:
Pursuant to the Registrant's Stock Purchase Agreement and Plan of
Reorganization dated February 23, 1998, the Registrant issued 1,944,444 shares
of common stock and 1,944,444 warrants to purchase an additional 1,944,444
shares of common stock in a transaction which was exempt from registration under
the Securities Act under Section 4(2) of the Securities Act. All of the
Registrant's warrants issued in the reorganization expired without exercise on
April 15, 1999 and are no longer outstanding. The shares of common stock issued
in the reorganization are now held by 173 stockholders.
In a private placement to accredited investors between April 1999 and August
1999, which was exempt from registration under the Securities Act pursuant to
Rule 506 of Regulation D promulgated thereunder, the Registrant offered and sold
$1,175,000 principal amount 13% promissory notes due April 15, 2000, with
noteholders that purchased between April 1999 and July 1999 also receiving 2,500
bridge warrants for each $5,000 in principal amount of promissory notes, which
warrants are exercisable to purchase 2,500 shares of our common stock at $8.40
per share, and noteholders that purchased in August 1999 receiving 1,563 shares
of our common stock for each $25,000 in principal amount of promissory notes. In
the aggregate the purchasers of our notes in August 1999 received 34,384 shares
of our common stock.
ITEM 27. EXHIBITS.
a. The following Exhibits are filed as a part of this registration
statement pursuant to Item 601 of Regulation S-B:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.0 Form of Underwriting Agreement*
1.2 Form of Representative's Warrant Agreement, including Form of Representative's Warrant*
3.1 Articles of Incorporation of Registrant
3.2 Amendment to Articles of Incorporation of Registrant
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
3.3 Certificate of Renewal of Charter Dated July 5, 1995
3.4 Certificate of Renewal of Charter Dated February 2, 1998
3.5 By-laws of the Registrant
3.6 Amended and Restated Bylaws of the Registrant
3.7 Articles of Incorporation of TrueVision Laser Center of Albuquerque, Inc.
3.8 Articles of Incorporation of TrueVision of Nevada, Inc.
4.3 Specimen of Common Stock Certificate*
4.4 Specimen of Common Stock Purchase Warrant*
4.5 Form of 13% Promissory Note Due April 15, 2000
4.6 Form of Common Stock Purchase Warrant
5.0 Opinion of Gregory Bartko, Esq.*
10.0 Employment Agreement for John C. Homan Dated September 7, 1998
10.1 Amended Employment Agreement for John C. Homan Dated August 25, 1999
10.2 Consulting Agreement for Frank J. Seifert Dated August 23, 1999
10.3 Consulting Agreement for Howard P. Silverman Dated June 13, 1997
10.4 Consulting Agreement for Howard P. Silverman Dated April 1, 1998
10.5 Consulting Agreement for Howard P. Silverman Dated December 1, 1998
10.6 Amended Consulting Agreement for Howard P. Silverman Dated August 30, 1999
10.7 Restricted Stock Option Agreement Dated January, 1999 Between the Registrant and Dr. Pamela Medley
10.8 Equipment Lease Dated July 1, 1997 Between MTE/Triad, Inc. and TrueVision Laser Center of Albuquerque,
Inc.
10.9 Consulting Agreement for RB&A, LLC Dated February 9, 1998
10.10 Amended Consulting Agreement for RB&A, LLC Dated August 25, 1999
10.11 Form of Stock Purchase Warrant of the Registrant Dated March 15, 1998
10.12 1998 Incentive Stock Option Plan
10.13 Form of Non-Statutory Stock Option Agreement
10.14 Form of Stock Option Agreement
10.15 Form of Stock Purchase Agreement Dated March 15, 1998
10.16 Ophthalmologist Membership Agreement Dated February 20, 1997 Between TrueVision Laser Center of
Albuquerque, Inc. and Dr. Daniel R. Peters.
10.17 Ophthalmologist Membership Agreement Dated April 3, 1997 Between TrueVision Laser Center of Albuquerque,
Inc. and Dr. Donald E. Rodgers
10.18 Ophthalmologist Membership Agreement Dated July 30, 1997 Between TrueVision Laser Center of Albuquerque,
Inc. and Dr. Alfred Lavato*
10.19 Private Placement Memorandum Dated April 6, 1999 Relating to the 13% Promissory Notes and Common Stock
Purchase Warrants
10.20 Mutual General Release Agreement Dated April 15, 1999 Among MTE/Triad, Inc.; TrueVision Laser Centers,
Inc.; and TrueVision Laser Center of Albuquerque, Inc.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.21 Agreement As Condition To Consent To Sublease Between the Registrant and Metro Center Associates, LP
Dated April 26, 1999
10.22 Sublease Dated March 25, 1999 Between the Registrant and Interim Healthcare, Inc.
10.23 First Amendment to Sublease Dated April 15, 1999 Between the Registrant and Interim Healthcare, Inc.
10.24 Lease Agreement Dated September 12, 1995 Between Metro Center Associates, LP and Dr. Stephen Graham,
d/b/a Albuquerque Corrective Eye Surgery, Inc.
10.25 Addendum to Lease Agreement Between Metro Center Associates, LP and Dr. Stephen Graham, d/b/a
Albuquerque Corrective Eye Surgery, Inc. Dated September 12, 1995
10.26 Second Addendum to Lease Agreement Between Metro Center Associates, LP and Dr. Stephen Graham, d/b/a
Albuquerque Corrective Eye Surgery, Inc. Dated January 8, 1996
10.27 Assignment of Leasehold Interest With Consent of Landlord Dated May 31, 1996 Between Metro Center
Associates, LP; Dr. Stephen Graham, d/b/a Albuquerque Corrective Eye Surgery, Inc.; TrueVision Laser
Center of Albuquerque, Inc.; and TrueVision Laser Centers, Inc.
10.28 Loan and Security Agreement Dated March 17, 1998 Between TrueVision Laser Center of Albuquerque, Inc.
and DVI Financial Services, Inc.
10.29 Acceptance Certificate Dated March 17, 1998 By TrueVision Laser Center of Albuquerque, Inc. to DVI
Financial Services, Inc.
10.30 Equipment Lease Dated July 21, 1999 Between Autonomous Technologies Corporation and TrueVision
International, Inc.
10.31 Equipment Sales Agreement with VISX Dated June 25, 1999.*
10.32 Lease Agreement Dated July 21, 1999 Between Flamingo '84 LP, d/b/a Phoenix Plaza III, and TrueVision
International, Inc.
10.33 Office Building Lease Dated July 30, 1999 Between Rainbow Corporate Center Limited Partnership and
TrueVision International, Inc.
10.34 Stock Purchase Agreement and Plan of Reorganization Dated February 23, 1998 Between the Registrant and
TrueVision Laser Center of Albuquerque, Inc.
10.35 Management Continuity Agreement Dated September 7, 1998 Between John C. Homan and the Registrant
21.0 Subsidiaries of the Registrant
23.0 Consent of Gregory Bartko, Esq. (included in opinion filed as Exhibit 5.0)*
23.1 Consent of Pannell Kerr Forster, Certified Public Accountants, A Professional Corporation, San Diego,
California, independent auditors
24.0 Power of Attorney (included in Part II of the Registration Statement under the caption "Signatures")
27.0 Financial Data Schedule
</TABLE>
- ------------------------
* To be filed by amendment
II-4
<PAGE>
ITEM 28. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing provisions, or otherwise,
the undersigned Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the undersigned Registrant of expenses incurred or
paid by a director, officer or controlling person of the undersigned Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the undersigned Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(b) The undersigned Registrant in all instances 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.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the undersigned Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed
to be part of the registration statement as of the time it was declared
effective; and
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(d) The undersigned Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement. 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 prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in 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; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
II-5
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Albuquerque, New Mexico, on the 10th day of
September, 1999.
TRUEVISION INTERNATIONAL, INC.
By: /S/ JOHN C. HOMAN
-----------------------------------------
John C. Homan
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in their
respective capacities and on the respective dates set forth opposite their
names. Each person whose signature appears below hereby authorizes each of John
C. Homan and Frank J. Seifert and each with full power of substitution, to
execute in the name and on behalf of such person any amendment or any
post-effective amendment to this Registration Statement, and any registration
statement relating to any offering made in connection with the offering covered
by this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act of 1933, as amended, and to file the same,
with exhibits thereto, and other documents in connection therewith, making such
changes in this Registration Statement as the Company deems appropriate, and
appoints each of John C. Homan and Frank J. Seifert, each with full power of
substitution, attorney-in-fact to sign any amendment and any post-effective
amendment to this Registration Statement and to file the same, with exhibits
thereto, and other documents in connection therewith.
SIGNATURES TITLE DATE
- ------------------------------ --------------------------- -------------------
/s/ JOHN C. HOMAN Chief Executive Officer and
- ------------------------------ Director (Principal September 10, 1999
John C. Homan Executive Officer)
/s/ FRANK J. SEIFERT Executive Vice President
- ------------------------------ and Director September 10, 1999
Frank J. Seifert
/s/ ALLISON EVANS Chief Financial Officer
- ------------------------------ (Principal Financial and September 10, 1999
Allison Evans Accounting Officer)
/s/ C. RICHARD HULLIHEN Director
- ------------------------------ September 10, 1999
C. Richard Hullihen
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.0 Form of Underwriting Agreement*
1.2 Form of Representative's Warrant Agreement, including Form of Representative's Warrant*
3.1 Articles of Incorporation of Registrant
3.2 Amendment to Articles of Incorporation of Registrant
3.3 Certificate of Renewal of Charter Dated July 5, 1995
3.4 Certificate of Renewal of Charter Dated February 2, 1998
3.5 By-laws of the Registrant
3.6 Amended and Restated Bylaws of the Registrant
3.7 Articles of Incorporation of TrueVision Laser Center of Albuquerque, Inc.
3.8 Articles of Incorporation of TrueVision of Nevada, Inc.
4.3 Specimen of Common Stock Certificate*
4.4 Specimen of Common Stock Purchase Warrant*
4.5 Form of 13% Promissory Note Due April 15, 2000
4.6 Form of Common Stock Purchase Warrant
5.0 Opinion of Gregory Bartko, Esq.*
10.0 Employment Agreement for John C. Homan Dated September 7, 1998
10.1 Amended Employment Agreement for John C. Homan Dated August 25, 1999
10.2 Consulting Agreement for Frank J. Seifert Dated August 23, 1999
10.3 Consulting Agreement for Howard P. Silverman Dated June 13, 1997
10.4 Consulting Agreement for Howard P. Silverman Dated April 1, 1998
10.5 Consulting Agreement for Howard P. Silverman Dated December 1, 1998
10.6 Amended Consulting Agreement for Howard P. Silverman Dated August 30, 1999
10.7 Restricted Stock Option Agreement Dated January, 1999 Between the Registrant and Dr. Pamela Medley
10.8 Equipment Lease Dated July 1, 1997 Between MTE/Triad, Inc. and TrueVision Laser Center of Albuquerque,
Inc.
10.9 Consulting Agreement for RB&A, LLC Dated February 9, 1998
10.10 Amended Consulting Agreement for RB&A, LLC Dated August 25, 1999
10.11 Form of Stock Purchase Warrant of the Registrant Dated March 15, 1998
10.12 1998 Incentive Stock Option Plan
10.13 Form of Non-Statutory Stock Option Agreement
10.14 Form of Stock Option Agreement
10.15 Form of Stock Purchase Agreement Dated March 15, 1998
10.16 Ophthalmologist Membership Agreement Dated February 20, 1997 Between TrueVision Laser Center of
Albuquerque, Inc. and Dr. Daniel R. Peters.
10.17 Ophthalmologist Membership Agreement Dated April 3, 1997 Between TrueVision Laser Center of Albuquerque,
Inc. and Dr. Donald E. Rodgers
10.18 Ophthalmologist Membership Agreement Dated July 30, 1997 Between TrueVision Laser Center of Albuquerque,
Inc. and Dr. Alfred Lavato*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.19 Private Placement Memorandum Dated April 6, 1999 Relating to the 13% Promissory Notes and Common Stock
Purchase Warrants
10.20 Mutual General Release Agreement Dated April 15, 1999 Among MTE/Triad, Inc.; TrueVision Laser Centers,
Inc.; and TrueVision Laser Center of Albuquerque, Inc.
10.21 Agreement As Condition To Consent To Sublease Between the Registrant and Metro Center Associates, LP
Dated April 26, 1999
10.22 Sublease Dated March 25, 1999 Between the Registrant and Interim Healthcare, Inc.
10.23 First Amendment to Sublease Dated April 15, 1999 Between the Registrant and Interim Healthcare, Inc.
10.24 Lease Agreement Dated September 12, 1995 Between Metro Center Associates, LP and Dr. Stephen Graham,
d/b/a Albuquerque Corrective Eye Surgery, Inc.
10.25 Addendum to Lease Agreement Between Metro Center Associates, LP and Dr. Stephen Graham, d/b/a
Albuquerque Corrective Eye Surgery, Inc. Dated September 12, 1995
10.26 Second Addendum to Lease Agreement Between Metro Center Associates, LP and Dr. Stephen Graham, d/b/a
Albuquerque Corrective Eye Surgery, Inc. Dated January 8, 1996
10.27 Assignment of Leasehold Interest With Consent of Landlord Dated May 31, 1996 Between Metro Center
Associates, LP; Dr. Stephen Graham, d/b/a Albuquerque Corrective Eye Surgery, Inc.; TrueVision Laser
Center of Albuquerque, Inc.; and TrueVision Laser Centers, Inc.
10.28 Loan and Security Agreement Dated March 17, 1998 Between TrueVision Laser Center of Albuquerque, Inc.
and DVI Financial Services, Inc.
10.29 Acceptance Certificate Dated March 17, 1998 By TrueVision Laser Center of Albuquerque, Inc. to DVI
Financial Services, Inc.
10.30 Equipment Lease Dated July 21, 1999 Between Autonomous Technologies Corporation and TrueVision
International, Inc.
10.31 Equipment Sales Agreement with VISX Dated June 25, 1999.*
10.32 Lease Agreement Dated July 21, 1999 Between Flamingo '84 LP, d/b/a Phoenix Plaza III, and TrueVision
International, Inc.
10.33 Office Building Lease Dated July 30, 1999 Between Rainbow Corporate Center Limited Partnership and
TrueVision International, Inc.
10.34 Stock Purchase Agreement and Plan of Reorganization Dated February 23, 1998 Between the Registrant and
TrueVision Laser Center of Albuquerque, Inc.
10.35 Management Continuity Agreement Dated September 7, 1998 Between John C. Homan and the Registrant
21.0 Subsidiaries of the Registrant
23.0 Consent of Gregory Bartko, Esq. (included in opinion filed as Exhibit 5.0)*
23.1 Consent of Pannell Kerr Forster, Certified Public Accountants, A Professional Corporation, San Diego,
California, independent auditors
24.0 Power of Attorney (included in Part II of the Registration Statement under the caption "Signatures")
27.0 Financial Data Schedule
</TABLE>
- ------------------------
* To be filed by amendment
<PAGE>
Exhibit 3.1
ARTICLES OF INCORPORATION
OF
TOPFORM, INC.
The undersigned natural person, being more than eighteen (18) years of
age, acting as incorporator in order to organize and establish a corporation
under and pursuant to the General Corporation Law of the State of Delaware,
as amended, does hereby adopt the following Articles of Incorporation:
ARTICLE I
NAME
The name of the corporation is Topform, Inc.
ARTICLE II
PERIOD OF DURATION
The period of duration of the corporation shall be perpetual, unless
dissolved according to law.
ARTICLE III
PURPOSE
The purpose for which the corporation is organized is to transact any
lawful business or to conduct any activity in which a corporation may
lawfully engage under the General Corporation Law of the State of Delaware,
as amended.
ARTICLE IV
RIGHTS, POWERS AND PRIVILEGES
In furtherance of the foregoing purpose and in furtherance of the
conduct of all of its business and affairs, the corporation shall have and
may exercise all the rights, powers and privileges now or hereafter conferred
upon corporations organized under the General Corporation Law of the State of
Delaware, as amended, and all other rights, powers and privileges of any kind
whatsoever which are necessary, suitable or proper for the accomplishment of
its corporate purpose.
ARTICLE V
CAPITAL
1. AUTHORIZED SHARES. The aggregate number of shares which the
corporation shall have the authority to issue is one hundred million
(100,000,000) shares of common stock, each with a par value of one-tenth cent
($.001) per share.
<PAGE>
The shares of said stock may be issued from time to time by the board of
directors of the corporation for cash, services rendered, property or such
other consideration as the board of directors may determine, and in all cases
shall be deemed fully paid and non-assessable. The judgment of the board of
directors as to the adequacy of any consideration received for any shares,
options or any other securities which the corporation may at any time be
authorized to issue or sell or otherwise dispose of shall be conclusive in the
absence of fraud, subject to the provisions of these Articles of
Incorporation.
Each and every share of stock shall be equal and without preference or
classification as between such shares of stock. None of such shares of stock
shall, in the hands of any person whosoever, render such person liable to pay
any assessment or any obligation or payment on account of the debts or
obligations of the corporation.
2. NO CUMULATIVE VOTING. Each shareholder of record shall have one vote
for each share of stock standing in his name on the books of the corporation.
Cumulative voting shall not be allowed in the election of directors or for
any other purpose.
3. NO PREEMPTIVE RIGHTS. No shareholder of the corporation shall have
any preemptive or similar right to acquire or subscribe for: any additional,
unissued or treasury shares of stock; other securities of any class; rights,
warrants, or options to purchase stock; or, securities of any kind
convertible into stock or carrying stock purchase warrants or privileges.
4. WARRANTS. The board of directors may create and issue at any time,
whether or not in connection with the issuance and sale of any shares or
securities, rights or options entitling the holders thereof to purchase
shares of the capital stock of the corporation. The form of such rights or
options, the terms upon which they shall be issued, the price of the shares
to be purchased upon the exercise thereof, and the time of exercise shall be
determined by the board of directors.
5. TRANSFER RESTRICTIONS. The board of directors may restrict the
transfer of the corporation's stock by giving the corporation or any other
person "first right of refusal to purchase" the stock, by making the stock
redeemable, or by restricting the transfer of the stock under such terms and
in such manner as the directors may deem necessary and which is not
inconsistent with the laws of the State of Delaware. Any stock so restricted
must carry a conspicuous legend noting the restriction and the place where
such restriction may be found in the records of the corporation.
-2-
<PAGE>
6. DISTRIBUTIONS. The board of directors may from time to time distribute
to the shareholders, as a dividend or in partial liquidation, out of either
stated capital or surplus capital of the corporation, a portion of its
assets, in cash or property, subject to the limitations contained in the laws
of Delaware.
ARTICLE VI
SHAREHOLDER VOTING
At all meetings of shareholders, one-third (1/3) of the shares entitled
to vote at such meeting represented in person or by proxy shall constitute a
quorum. At any meeting at which a quorum is present, the affirmative vote of
a majority of the shares represented at such meeting and entitled to vote on
the subject matter shall be the act of the shareholders; except that the
following actions shall require the affirmative vote or concurrence of a
majority of all of the outstanding shares of the corporation entitled to vote
thereon: (1) adopting an amendment to these Articles of Incorporation; (2)
lending money to, guaranteeing the obligations of, or otherwise assisting any
of the directors of the corporation; (3) authorizing the sale, lease,
exchange, or other disposition of all or or substantially all of the property
and assets of the corporation, with or without its goodwill, not in the
usual and regular course of business; (4) approving a plan of merger or
consolidation; (5) adopting a resolution submitted by the board of directors
to dissolve the corporation; (6) adopting a resolution submitted by the board
of directors to revoke voluntary dissolution proceedings; and (7) any other
action which the General Corporation Law of the State of Delaware, as
amended, requires to be approved by the shareholders.
ARTICLE VII
REGISTERED OWNER OF STOCK
The corporation shall be entitled to treat the registered holder of any
shares of the corporation as the owner thereof for all purposes, including
all rights deriving from such shares; and shall not be bound to recognize any
equitable or other claim to, or interest in, such shares or rights deriving
from such shares, on the part of any other person, including but without
limiting the generality hereof, a purchaser, assignee or transferee of such
shares or rights deriving from such shares, unless and until such purchaser,
assignee, transferee or other person becomes the registered holder of such
shares, whether or not the corporation shall have either actual or
constructive notice of the interest of such purchaser, assignee, transferee
or other person. The purchaser, assignee, or transferee of any of the shares
of the corporation shall not be entitled: to receive notice of the meetings
of the shareholders; to vote at such meetings; to be
- 3 -
<PAGE>
paid dividends or other sums payable to shareholders; or, to own, enjoy or
exercise any other property or rights deriving from such shares against the
corporation, until such purchaser, assignee, or transferee has become the
registered holder of such shares.
ARTICLE VIII
BOARD OF DIRECTORS
1. NUMBER OF DIRECTORS. The number of directors shall be at least three:
except that there need be only as many directors as there are, or initially
will be, shareholders (if the outstanding shares are, or initially will be,
held of record by fewer than three shareholders). Subject to this
limitation, the number of directors shall be fixed in accordance with the
bylaws.
2. INITIAL BOARD OF DIRECTORS. The initial board of directors shall
consist of three (3) members.
The names and addresses of the persons who are to serve as directors of
the corporation until the first annual meeting of shareholders, and until
their successors shall be elected and shall qualify, are as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
---- -------
<S> <C>
Diane Pankovoin 818 Fifth Avenue, Suite 303
San Rafael, California 94901
John Mohalley 818 Fifth Avenue, Suite 303
San Rafael, California 94901
Lisa Row 818 Fifth Avenue, Suite 303
San Rafael, California 94901
</TABLE>
ARTICLE IX
PROVISIONS FOR REGULATIONS OF THE
INTERNAL CORPORATE AFFAIRS
The following provisions are inserted for the management of the business
and for the regulation of the internal affairs of the corporation, and the
same are in furtherance of and not in limitation or exclusion of the powers
conferred by law.
1. BYLAWS. The board of directors shall have the power to adopt, alter,
amend or repeal, form time to time, such bylaws as it deems proper for the
management of the affairs of the corporation. Such bylaws shall not be
inconsistent with these Articles of Incorporation and the General Corporation
Law of the State of Delaware, as amended.
- 4 -
<PAGE>
2. COMPENSATION TO DIRECTORS. The board of directors is authorized to
make provisions for reasonable compensation to its members for their services
as directors. Any director of the corporation may also serve the corporation,
in any other capacity and receive compensation therefor in any form.
3. CONFLICTS OF INTEREST. No contract or other transaction between the
corporation and any other person, firm, partnership, corporation, trust,
joint venture, syndicate or other entity shall be in any way affected or
invalidated solely by: (a) the fact that any director or officer of the
corporation is pecuniarily or otherwise interested in, or is a director,
officer, shareholder, employee, fiduciary or member of such other entity; or
(b) the fact that any director or officer individually, or jointly with
others, or any entity in which any director or officer is in any way
interested, may be a party to or may be interested in a contract or other
transaction of the corporation.
4. CORPORATE OPPORTUNITIES. The officers, directors and other members of
management of the corporation shall be subject to the doctrine of corporate
opportunities only insofar as it applies to business opportunities in which
the corporation has expressed an interest as determined from time to time by
the board of directors as evidenced by resolutions appearing in the
corporation's minutes. When such areas of interest are delineated, all such
business opportunities within such areas of interest which come to the
attention of the officers, directors and other members of management shall be
disclosed promptly to the corporation and made available to it. The board of
directors may reject any business opportunity presented to it, and thereafter
each officer, director or member of management may avail himself of such
opportunity. Until such time as the corporation, through its board of
directors, has designated an area of interest, the officers, directors and
other members of management shall be free to engage in that area of interest
on their own; and this doctrine shall not limit the rights of any officer,
director or other member of management to continue a business existing prior
to the time that such area of interest is designated by the corporation. This
provision shall not be construed to release any employee of the corporation
(other than an officer, director or member of management) from duties which
he may have to the corporation.
5. INDEMNIFICATION. The corporation shall indemnify each incorporator,
director and officer, and their heirs, executors, personal representatives
and administrators to the fullest extent allowed by the Laws of Delaware.
- 5 -
<PAGE>
ARTICLE X
REGISTERED OFFICE AND AGENT
The address of the initial registered office of the corporation is Suite
600, One Commerce Center, 12th & Orange Streets, Wilmington, New Castle
County, Delaware 19801, and the name of the initial registered agent of the
corporation at such address is Agents and Corporations, Inc. Either the
registered office or agent may be changed in the manner permitted by law.
ARTICLE XI
INCORPORATOR
The name and address of the incorporator of the corporation is as
follows:
<TABLE>
<CAPTION>
NAME ADDRESS
---- -------
<S> <C>
Florence L. Valastiak 1625 Broadway, Suite 770
Denver, Colorado 80202
</TABLE>
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
designated in Article XI above, have executed these Articles of Incorporation
in duplicate on January 23, 1988.
/s/ Florence L. Valastiak
-----------------------------
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
I, Catherine S. Morrison, a Notary Public, hereby certify that Florence
L. Valastiak, known to me to be the person whose name is subscribed to the
foregoing Articles of Incorporation, appeared before me this day in person
and being by me first duly sworn, acknowledged and declared that she signed
said Articles of Incorporation as her free and voluntary act and deed for the
uses and purposes therein set forth and that the statements therein contained
are true.
Witness my hand and notarial seal this 13th day of January, 1988.
My commission expires: September 23, 1991.
Notary Seal Catherine S. Morrison
-----------------------------
Notary Public
- 6 -
<PAGE>
Exhibit 3.2
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
OF TOPFORM, INC.
A DELAWARE CORPORATION
INCORPORATED JANUARY 19, 1988
FIRST: Article I of the Certificate of Incorporation of TOPFORM, INC.
(the Corporation), as adopted by the Corporation on January 19, 1988, is
hereby amended in its entirety to effect a change in the name of the
Corporation to "TRUEVISION INTERNATIONAL, INC.", effective with the filing of
the Certificate with the State of Delaware as follows:
ARTICLE 1
NAME
----
The name of the corporation (the "Corporation") is TRUEVISION
INTERNATIONAL, INC.
SECOND: Article V of the Certificate of Incorporation of TOPFORM, INC.
(the Corporation), as adopted by the Corporation on January 19, 1988, is
hereby amended in its entirety to effect a change in the Capital structure of
the Corporation by amending the attributes of the existing class of Common
Stock, and by authorizing an additional class of stock entitled "Preferred
Stock", effective with the filing of the Certificate with the State of
Delaware as follows:
ARTICLE V
CAPITAL
-------
The aggregate number of shares of Capital Stock which the Corporation is
authorized to issue is one hundred ten million (110,000,000), divided into
two classes of stock designated as COMMON STOCK and PREFERRED STOCK, and the
total number of shares of each class, and their respective par values, which
this Corporation shall have authority to issue is set forth as follows:
Preferred Stock - 10,000,000 shares, par value $0.001,
per share,
Common Stock - 100,000,000 shares, par value $0.001,
per share.
A statement of all the relative designations, powers, rights,
preferences, restrictions and limitations of the shares of each class of
stock is as follows;
(1) THE PREFERRED STOCK:
(A) Shares of the Preferred Stock of the Corporation may be
issued, from time to time, in one or more series, each of which series shall
have such distinctive designations, restrictions or title,
<PAGE>
and shall be issued in such amounts as shall be determined and fixed by the
Board of Directors of the Corporation alone, prior to the issuance of any
shares thereof.
(B) At the time of such issuance, a certificate shall be filed
as may be required by the General Corporation Law of the State of Delaware
("General Corporation Law"), or its successor legislation. The Board of
Directors of the Corporation is hereby expressly granted authority to fix or
alter, by only adopted resolution or resolutions, the designations and the
relative powers and preferences, the relative participation rights, optional
voting, conversion or other special rights, the terms and conditions of any
redemptions and the relative qualifications, limitations or restrictions as
may be authorized or permitted by the General Corporation Law with respect to
each such series of Preferred Stock.
(2) THE COMMON STOCK:
(A) DIVIDENDS - Subject to any and all prior rights of the
holders of any outstanding shares of the Preferred Stock of the Corporation,
of any and all series, the Board of Directors may declare and pay ratable
dividends or make other distributions in cash, its bonds or its property,
including shares or bonds of other corporations, on the outstanding shares of
its Common Stock, payable to the full extent permitted under the laws of the
State of Delaware, EXCEPT when currently the Corporation is insolvent or
would thereby be made insolvent. Dividends may be declared or paid and
distributions may only be made out as surplus (as then defined under the
General Corporation Law). Once declared, holders of Common Stock are entitled
to prompt payment of dividends, without interest, to the extent that surplus
then exists, Dividends in the shares of the Corporation's own capital stock
may be declared and paid pro rata on the outstanding shares of its Common
Stock to the extent permitted by the General Corporation Law, as amended, and
Rule 10b-12 under the Securities Exchange Act of 1934, and its successor
provisions.
(B) LIQUIDATING DISTRIBUTIONS - In the event of any
distribution of all of the assets of the Corporation, upon liquidation,
dissolution or winding up of the Corporation, voluntary or involuntary, after
payment of the full preferential amounts to which the holders of the Preferred
Stock shall be entitled, the holders of the Common Stock shall be ratably
entitled to receive all of the remaining assets of the Corporation in
proportion to the number of shares held by them respectively. If the assets
distributable in respect thereof shall be less than the amount necessary to
pay the holders of the Preferred Stock the full preferential amount thereof,
then the entire assets are to be distributed among the holders of the
Preferred Stock, of any and all series then outstanding, ratably in
proportion to the full preferential amounts to which they are respectively
entitled.
(C) VOTING - Each holder of the Common Stock shall be entitled
to one vote for each share of Common Stock held by him of record on the stock
transfer books of the Corporation.
<PAGE>
(3) SHARES DEEMED FULLY PAID AND NONASSESSABLE: TRANSFER RESTRICTIONS:
(A) All shares of Capital Stock of the Corporation issued for the
consideration therefor fixed at or prior to the date of issuance thereof by
the Board of Directors of the Corporation, which consideration shall be equal
to not less than the par value of such shares of stock so issued, shall be
deemed fully paid and shall be nonassessable when the Corporation receives
payment of such consideration unless the consideration is future services or
payment which is not represented by a promissory note.
(B) At the time of each receipt of consideration, the owner, or
subscriber, shall have all the rights and privileges of a holder of such
class shares, including registration in his name and a certificate
representing them. Where the consideration is future services or payment
which is not represented by a promissory note, the rights of the subscriber
shall be determined by the subscription agreement and the shares subscribed
for shall be deemed to be nonassessable, but not fully paid until the
Corporation receives such services or payments.
(4) ISSUANCE AND CANCELLATION OF SHARES:
The authorized Capital Stock may be paid for in cash or in
property, labor, promissory note, or past or future services at a just
valuation to be fixed by the Board of Directors and it may be paid for
before, concurrently or after its issuance as determined by the Board of
Directors. In the absence of fraud, the judgment of the shareholders or of
the Board of Directors as to the value of the consideration received for such
shares shall be conclusive. Any unissued shares of any class herein
authorized or hereafter increased or created may be issued from time to time
by the Corporation in such manner, amounts and proportions, as shall be
determined from time to time by the Board of Directors and as may be
permitted by law existing at the time of said issuance. All shares of Capital
Stock which have been reacquired by the Corporation in any manner shall be
canceled and revert to the status of authorized but unissued shares which may
be reissued under this provision.
(5) TRANSFER RESTRICTIONS:
Notwithstanding any provisions contained in this Article V to the
contrary, the Board of Directors of the Corporation shall have the power to
restrict the transfer of shares of the Corporation's Capital Stock under such
terms and in such manner as the Directors may deem appropriate and necessary,
provided that such restriction shall not be inconsistent with the General
Corporation Law. The certificates of any shares of Capital Stock so
restricted shall be marked, in a conspicuous location, with a restrictive
endorsement indicating the nature of the restriction and/or the place where
such restriction may be found in the records of the Corporation.
Additionally, the Board of Directors may also impose similar restrictions on
shares of stock or certificates of ownership of other entities that may be
distributed to its shareholders.
<PAGE>
(6) NO PRE-EMPTIVE RIGHTS:
No shareholder of the Corporation shall have any pre-emptive or
other right to purchase or subscribe for any shares of the Capital Stock of
the Corporation which it may issue or sell, whether now or hereafter
authorized, other than such right, if any, as the Board of Directors of the
Corporation in its discretion may from time to time determine.
(7) FRACTIONAL SHARES:
The Corporation may issue certificates for fractions of a share
where necessary to effect share transfers, share distributions or a
reclassification, merger, consolidation or reorganization, which shall
entitle the holders, in proportion to their fractional holdings, to exercise
voting rights, receive dividends and participate in liquidating
distributions. As an alternative, the Corporation may: (i) pay in cash the
fair value of fractions of a share as of the time when those entitled to
receive the fractions are determined or (ii) issue scrip in registered or
bearer form over the manual or facsimile signature of an officer of the
Corporation or if its agent, exchangeable as therein provided for full
shares, but such scrip shall not entitle the holder to any right of a
shareholder except as therein provided. The scrip shall be issued subject to
the condition that it becomes void if not exchanged for certificates
representing full shares before a specified date. The scrip may be subject to
the condition that the shares for which the scrip is exchangeable may be sold
by the Corporation and the proceeds thereof distributed to the holders of the
scrip, or subject to any other condition which the Board of Directors may
determine. The Corporation may provide reasonable opportunity for persons
entitled to fractions of a share scrip to sell them or to purchase additional
fractions of a share or scrip needed to acquire a full share.
(8) WARRANTS, OPTIONS, RIGHTS, CONVERTIBLES:
Subject to the restrictions of the General Corporation Law, and its
successor provisions, the Corporation is hereby expressly authorized and
empowered, from time to time, by resolution of its Board of Directors, to fix
the terms, conditions and provisions of and authorize the issuance of rights,
warrants or options to purchase or subscribe for shares of Capital Stock of
the Corporation. The consideration and terms upon which, the time or times,
which may be limited or unlimited in duration, at or within which, and the
price or prices at which any such rights, warrants or options and/or any such
shares or other securities may be purchased or acquired from the Corporation
upon the exercise or conversion of any such rights, warrants, or options
shall be such as shall be fixed in a resolution or resolutions adopted by the
Board of Directors providing for the creation and issuance of such rights,
warrants or options, and as shall be permitted by law. Any and all shares or
securities which may be purchased or acquired or issued upon the exercise or
conversion of any such right, warrant or option shall be deemed fully paid
shares and not liable to any further call or assessment, or partly paid and
liable to further call or assessment, as the terms of the rights, warrants,
or options shall provide. Except as otherwise provided by law, the Board of
Directors shall have full power and discretion to prescribe and regulate from
time to time the procedure to be followed, and all other matters concerning
the creation, issuance, conversion and exercise of any such rights, warrants,
and options and the reservation of shares
<PAGE>
or other securities for the conversion and/or exercise thereof, and the
issuance of such shares or other securities upon the conversion or exercise
thereof. Authority under this provision shall not be deemed to authorize
creation of any new class of Capital Stock or to increase the authorized
number of shares in any class of Capital Stock as set forth elsewhere in
these Articles of Incorporation.
(9) REGISTERED OWNERS:
The Corporation shall be entitled to treat the person in whose name
any share of its Capital Stock is registered on its transfer books as the
owner thereof, for all purposes, and shall not be bound to recognize any
equitable or other claim to, or interest in, such share on the part of any
other person, whether or not the Corporation shall have notice thereof, save
as expressly provided by the General Corporation Law.
(10) BONDHOLDERS' RIGHTS:
The Board of Directors may confer upon the holders of bonds issued
or to be issued by it, rights to inspect the corporate books and records and
to vote in the election of directors and on any other matters on which
shareholders of the Corporation may vote to the extent, in the manner, and
subject to the conditions prescribed in the resolutions conferring such
rights under the terms of any bonds issued or to be issued by the Corporation.
THIRD: The Certificate of Incorporation of TOPFORM, INC., is hereby
amended by the addition of the following Article XII;
ARTICLE XII
DIRECTOR INDEMNIFICATION
No Director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, provided that this Article shall not eliminate or limit
the liability of a Director: (i) For any breach of the Director's duty of
loyalty to the corporation or its stockholders: (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) for violation of Section 174 of the General
Corporation Law of the State of Delaware; (iv) for any transaction from which
the Director derived an improper personal benefit; or (v) for any act or
omission prior to the effective date of this amendment.
If the General Corporation Law of the State of Delaware is hereafter
amended to further eliminate or limit the liability of a Director of a
corporation, then a Director of the corporation, in addition to the
circumstances set forth herein, shall not be liable to the fullest extent
permitted by the General Corporation Law of the State of Delaware as so
amended. Any repeal or modification of the Article Twelfth shall not adversely
affect any right or protection of a Director of the Corporation existing
hereunder with respect to any act or omission occurring prior to the time of
such repeal or modification.
<PAGE>
FOURTH: In all other respects, the Certificate of Incorporation of
TOPFORM, INC., filed January 19, 1988, as amended by this Certificate of
Amendment of the Certificates of Incorporation, dated this 29th day of
January 1, 1999, is hereby affirmed.
FIFTH: This Amendment to the Certificate of Incorporation was duly
adopted pursuant to the requirements of the General Corporation Law of the
State of Delaware by the unanimous consent of the Board of Directors and the
affirmative written consent in lieu of a meeting of a majority of the
Shareholders of TOPFORM, INC.
IN WITNESS WHEREOF, the President of TOPFORM, INC., has executed this
instrument and the Secretary has affixed the Corporate Seal and attended
thereto on this 29th day of January, 1999.
TOPFORM, INC.
A DELAWARE CORPORATION
By: /s/ JOHN C. HOMAN
---------------------------------
John C. Homan
Its President
ATTESTED TO:
By: /s/ FRANK J. SEIFERT
---------------------------------
Frank J. Seifert
Its Secretary CORPORATE SEAL:
<PAGE>
STATE OF CALIFORNIA )
) SS.
COUNTY OF SAN DIEGO )
I, Elaine Jim, a Notary Public do hereby certify that on the 30th day of
January, 1999, before me personally appeared John C. Homan, President of
TOPFORM, INC., a Delaware corporation, to me known to be the person who is
described in and who executed the foregoing instrument and acknowledged to me
that he executed the same on behalf of said corporation with the full
authority of the Board of Directors, for the purposes therein expressed.
OFFICIAL SEAL /s/ ELAINE JIM
ELAINE JIM ------------------------------
Elaine Jim, Notary Public
Bernalillo County, New Mexico
My commission expires: April 25, 2000
STATE OF CALIFORNIA )
) SS.
COUNTY OF SAN DIEGO )
I, Frank J. Seifert, Secretary of TOPFORM INC., organized and existing under
the laws of the State of Delaware, hereby certify as such Secretary and under
seal of the Corporation, that the majority of the stockholders of TOPFORM,
INC., a Delaware corporation, have given their written consent in lieu of
meeting pursuant to Section 228(a) of the General Corporation Law of the
State of Delaware to amend the Certificate of Incorporation as stated herein
and that the said Certificate was executed by the President of the
Corporation and attested to by myself as Secretary of the Corporation.
WITNESS MY HAND AND SEAL OF TOPFORM, INC., a Delaware corporation, on
this 13th day of January, 1999.
By: /s/ FRANK J. SEIFERT
--------------------------
Frank J. Seifert
Its Secretary
Subscribed and sworn to before
me this 13th day of January, 1999.
MICHAEL G. WYATT /s/ MICHAEL G. WYATT
SEAL -------------------------------
Michael G. Wyatt, Notary Public
San Diego County, California
My commission expires: 7 FEB 2003.
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 07/12/1995
950155786 - 2149638
EXHIBIT 3.3
CERTIFICATE
FOR RENEWAL AND REVIVAL OF CHARTER
Topform, Inc., a corporation organized under the laws of Delaware, the
charter of which was voided for non-payment of taxes, now desires to procure
a restoration, renewal and revival of its charter, and hereby certifies as
follows:
1. The name of this corporation is Topform, Inc.
2. Its registered office in the State of Delaware is located at Twelfth
and Orange Streets, One Commerce Center, Suite 600, City of Wilmington, Zip
Code is 19899-0511, County of New Castle. The name and address of the
registered agent is Agents and Corporations, Inc., P.O. Box 511, Wilmington,
Delaware 19899-0511.
3. The date or filing of the original Certificate of Incorporation was
January 19, 1988
4. The date when restoration, renewal, and revival of the charter of
this company is to commence the 29th day of February 1992, same being prior
to the date of the expiration of the charter. This renewal and revival of the
charter of this corporation is perpetual.
5. This corporation was duly organized and carried on the business
authorized by its charter until the 1st day of March A.D. 1992, at which time
its charter became inoperative and void for non-payment of taxes and this
certificate for renewal and revival is filed by authority of the duly elected
directors of the corporation in accordance with the laws of the state of
Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section
312 of the General Corporation of Law of the State of Delaware, as amended,
providing for the renewal, extension and restoration of charters, Wilbur F.
Noyes, the last and acting President, and Richard Daniel Noyes, Secretary of
Topform, Inc. have hereunto set their hands to this certificate this 5th day
of July, 1995.
/s/ Wilbur F. Noyes
-------------------------------------
Wilbur F. Noyes
Last and Acting President
/s/ Richard Daniel Noyes
-------------------------------------
Richard Daniel Noyes
Secretary
<PAGE>
EXHIBIT 3.4
CERTIFICATE
FOR RENEWAL AND REVIVAL OF CHARTER
Topform, Inc., a corporation organized under the laws of Delaware, the
Charter of which was voided for non-payment of taxes, now desires to procure
a restoration, renewal and revival of its charter, and hereby certifies as
follows:
1. The name of this corporation is Topform, Inc.
2. Its registered office in the State of Delaware is located at Twelfth and
Orange Streets, One Commerce Center, Suite 600, City of Wilmington, Zip
Code is 19899-0511, County of New Castle. The name and address of the
registered agent is Agents and Corporations, Inc., P.O. Box 511,
Wilmington, Delaware 19899-0511
3. The date or filing of the original Certificate of Incorporation was
January 19, 1988
4. The date when restoration, renewal, and revival of the charter of this
company is to commence the 28th day of February 1997, same being prior to
the date of the expiration of the charter. This renewal and revival of the
charter of this corporation is perpetual.
5. This corporation was duly organized and carried on the business authorized
by its charter until the 1st day of March A.D. 1997, at which time its
charter became inoperative and void for non-payment of taxes and this
certificate for renewal and revival is filed by authority of the duly
elected directors of the corporation in accordance with the laws of the
state of Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section 312 of
the General Corporation of Law of the State of Delaware, as amended,
providing for the renewal, extension and restoration of charters, Wilbur F.
Noyes, the last and acting President, and Richard Daniel Noyes, Secretary of
Topform, Inc. have hereunto set their hands to this certificate this second
day of February, 1998
/s/ Wilbur F. Noyes
-------------------------------------
Wilbur F. Noyes
Last and Acting President
/s/ Richard Daniel Noyes
-------------------------------------
Richard Daniel Noyes
Secretary
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 02/09/1998
981051650 - 2149638
<PAGE>
EXHIBIT 3.5
BYLAWS
OF
TOPFORM, INC.
ARTICLE I
OFFICES
The principal office of the corporation shall initially be located at
1625 Broadway, Suite 770, Denver, Colorado 80202. The corporation may have
such other offices, either within or outside the State of Delaware, as the
board of directors may designate or as the business of the corporation may
require from time to time.
The registered office of the corporation required by the Delaware
General Corporation Law to be maintained in the State of Delaware may be, but
need not be, identical with the principal office, if in the State of
Delaware, and the address of the registered office may be changed from time
to time in accordance with the Delaware General Corporation Law.
ARTICLE II
STOCKHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of the stockholders for
the purpose of electing directors and for the transaction of such other
business as may come before the meeting shall be held at such time and date
as the board of directors shall designate from time to time by resolution
duly adopted. If the day fixed for the annual meeting shall be a legal
holiday in the State of Delaware, such meeting shall be held on the next
succeeding business day. If the election of directors shall not be held on
the day designated herein for any annual meeting of the stockholders, or at
any adjournment thereof, the board of directors shall cause the election to be
held at a special meeting of the stockholders as soon thereafter as is
convenient.
Section 2. SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose, unless otherwise prescribed by statute, may be called by the
president or by a majority of the board of directors, and shall be called by
the secretary at the request of the holders of not less than one-tenth of all
the outstanding shares of the corporation entitled to vote at the meeting.
Section 3. PLACE OF MEETING. The board of directors may designate any
place, either within or outside of Delaware, as the place for any annual
meeting or for any special meeting called by
- 1 -
<PAGE>
the board of directors. A waiver of notice signed by all stockholders
entitled to vote at a meeting may designate any place, either within or
outside of Delaware, as the place for such meeting. If no designation is
made, or if a special meeting shall be called otherwise than by the board,
the place of meeting shall be the registered office of the corporation in
Delaware.
Section 4. NOTICE OF MEETING. Written or printed notice stating the
place, day and hour of the meeting, and, in case of a special meeting, the
purposes for which the meeting is called, shall be delivered not less than ten
nor more than sixty days before the date of the meeting, either personally or
by mail, by or at the direction of the president, or the secretary, or the
officer or persons calling the meeting, to each stockholder of record
entitled to vote at such meeting, except that if the authorized capital
stock is to be increased at least thirty days notice shall be given. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the stockholder at his address as it appears
on the stock transfer books of the corporation, with postage thereon prepaid.
If requested by the person or persons lawfully calling such meeting, the
secretary shall give notice thereof, at corporate expense.
Section 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or stockholders entitled
to receive payment of any dividend, or in order to make a determination of
stockholders for any other proper purpose, the board of directors may provide
that the stock transfer books shall be closed for any stated period not
exceeding sixty days. If the stock transfer books shall be closed for the
purpose of determining stockholders entitled to notice of or to vote at a
meeting of stockholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of closing the stock transfer
books, the board of directors may fix in advance a date as the record date
for any such determination of stockholders, such date in any case to be not
more than sixty days and, in case of a meeting of stockholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of stockholders, is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of stockholders
entitled to notice of or to vote at a meeting of stockholders, or stockholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the board of
directors declaring such dividend is adopted, as the case may be, shall be
the record date for such determination of stockholders. When a determination
of stockholders entitled to vote at any meeting of stockholders shall be
deemed to have been made as provided in this section, such determination has
been made through the
- 2 -
<PAGE>
closing of the stock transfer books and the state period of closing expired.
Section 6. VOTING LISTS. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make, at least ten
days before each meeting of stockholders, a complete list of the stockholders
entitled to vote at such meeting, or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by
each, which list, for a period of ten days prior to such meeting, shall be
kept on file at the principal office of the corporation, whether within or
outside Delaware, and shall be subject to inspection by any stockholder at
any time during usual business hours. Such list shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any stockholder during the whole time of the meeting. The
original stock transfer books shall be prima facie evidence as to who are the
stockholders entitled to examine such list or transfer books or to vote at
any meeting of stockholders.
Section 7. QUORUM. At least one-third of the outstanding shares of
the corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than one-third of
the outstanding shares are represented at a meeting, a majority of the shares
so represented may adjourn the meeting from time to time without further
notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted
at the meeting as originally notified. The stockholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
If a quorum is present, the affirmative vote of a majority of the
shares represented at a meeting and entitled to vote on the subject matter
shall be the act of the stockholders, unless the vote of a greater number, or
voting by classes, is required by law, or the articles of incorporation.
Section 8. PROXIES. At all meetings of the stockholders, a
stockholder may vote by proxy executed in writing by the stockholder or by
his duly authorized attorney in fact. Such proxy shall be filed with the
secretary of the corporation before or at the time of the meeting. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided in the proxy.
Section 9. VOTING OF SHARES. Each outstanding share, regardless of
class, shall be entitled to one vote, and each fractional share shall be
entitled to a corresponding fractional vote on each matter submitted to a
vote at a meeting of
- 3 -
<PAGE>
stockholders, except to the extent that the voting rights of the shares of
any class or classes are limited or denied by the articles of incorporation
as permitted by the Delaware General Corporation Law. In the election of
directors, each record holder of stock entitled to vote at such election
shall have the right to vote the number of shares owned by him for as many
persons as there are directors to be elected, and for whose election he has
the right to vote. Cumulative voting shall not be allowed.
Section 10. VOTING OF SHARES BY CERTAIN HOLDERS. Treasury shares
shall not be voted at any meeting and shall not be counted in determining the
total number of outstanding shares at any given time.
Shares standing in the name of another corporation may be voted by
such officer, agent or proxy as the bylaws of such corporation may prescribe,
or, in the absence of such provision, as the board of adjournment of such
corporation may determine.
Shares held by an administrator, executor, personal representative,
guardian or conservator may be voted by him, either in person or by proxy,
without a transfer of such shares into his name. Shares standing in the name
of a trustee may be voted by him, either in person or by proxy, but no
trustee shall be entitled to vote shares held by him without a transfer of
such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted
by such receiver without the transfer thereof into his name if authority so
to do is contained in an appropriate order of the court by which such
receiver was appointed.
A stockholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the
pledge, and thereafter the pledgee shall be entitled to vote the shares so
transferred.
Section 11. INFORMAL ACTION BY STOCKHOLDERS. Any action required
to be taken at a meeting of the stockholders, or any other action which may
be taken at a meeting of the stockholders, may be taken without a meeting,
without prior notice an without a vote, if a consent in writing, setting
forth the action so taken, is signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. The consent shall have the same force
and effect as a vote of the stockholders, and may be stated as such in any
articles or document
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filed with the Secretary of State of Delaware under the Delaware General
Corporation Law.
ARTICLE III
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by its board of directors, except as otherwise provided in
the Delaware General Corporation Law or the articles of incorporation.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. The board of directors
shall consist of at least three members as shall be designated by the board
of directors from time to time and, in the absence of such designation, the
board of directors shall consist of three members; provided, however, that in
the event the outstanding shares of the corporation are held of record by
fewer than three stockholders, there shall be only as many directors as there
are stockholders absent a designation by the board of directors to the
contrary. Directors shall be elected at each annual meeting of stockholders.
Each director shall hold office until the next annual meeting of stockholders
and thereafter until his successor shall have been elected and qualified.
Directors need not be residents of Delaware or stockholders of the
corporation. Directors may be removed in the manner provided by the Delaware
General Corporation Law. Directors shall be natural persons of the age of 21
years or older.
Section 3. REMOVALS AND RESIGNATIONS. Except as may otherwise be
provided by statute, the stockholders may, at any special meeting called for
the purpose, by a vote of the holders of the majority of the shares then
entitled to vote at an election of directors, remove any or all directors
from office, with or without cause.
A director may resign at any time by giving written notice to the board
of directors, the president or secretary of the corporation. The resignation
shall take effect immediately upon the receipt of the notice, or at any
later period of time specified therein. The acceptance of such resignation
shall not be necessary to make it effective, unless the resignation requires
acceptance for it to be effective.
Section 4. VACANCIES. Any vacancy occurring in the office of a
director, whether by reason of an increase in the number of directorships or
otherwise, may be filled by a majority of the directors then in office,
though less than a quorum. A director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office, unless sooner
displaced.
When one or more directors resign from the board, effective at a future
date, a majority of the directors then in office,
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including those who have so resigned, shall have the power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective. Each director so chosen shall hold
office as herein provided in the filling of other vacancies.
Section 5. ANNUAL MEETINGS. The board of directors shall meet each year
immediately after the annual meeting of the stockholders for the purpose of
organization, election of officers, and consideration of any other business
that may be properly brought before the meeting. No notice of any kind to
either old or new members of the board of directors for such meeting shall
be necessary.
Section 6. REGULAR MEETINGS. The board of directors from time to time
may provide by resolution for the holding of regular meetings and fix the
time and place of such meetings. Regular meetings may be held within or
without the State of Delaware. The board need not give notice of regular
meetings provided that the board promptly gives notice of any change in the
time or place of such meetings to each director not present at the meeting at
which such change was made.
Section 7. SPECIAL MEETINGS. Special meetings of the board of
directors may be called by or at the request of the president or any two
directors. The person or persons authorized to call special meetings of the
board of directors may fix any place, either within or outside Delaware, as
the place for holding any special meeting of the board of directors called by
them.
Section 8. NOTICE. Notice of any special meeting shall be given at
least five days prior thereto by written notice delivered personally or mailed
to each director at his business address, or by notice given at least two
days prior thereto by telegraph. If mailed, such notice shall be deemed to
be delivered when deposited in the United States mail so addressed, with
postage thereon prepaid. If notice be given by telegram, such notice shall
be deemed to be delivered when the telegram is delivered to the telegraph
company. Any director may waive notice of any meeting. The attendance of a
director at a meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express purpose of
objecting to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the board of directors need
be specified in the notice or wavier of notice of such meeting.
Section 9. QUORUM. A majority of the number of directors fixed by
Section 2 shall constitute a quorum for the transaction of business at any
meeting of the board of directors, but if less than such majority is present
at a meeting, a majority of the
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directors present may adjourn the meeting from time to time without further
notice.
Section 10. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the
board of directors.
Section 11. COMPENSATION. By resolution of the board of directors, any
director may be paid any one or more of the following: his expenses, if any,
of attendance at meetings; a fixed sum for attendance at each meeting; or a
stated salary as director. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
Section 12. PRESUMPTION OF ASSENT. A director of the corporation who
is present at a meeting of the board of directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person
acting as the secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
Section 13. EXECUTIVE COMMITTEE. By resolution adopted by a majority
of the board of directors, the board may designate one or more committees,
including an executive committee, each consisting of one or more directors.
The board of directors may designate one or more directors as alternate
members of such committee, who may replace any absent or disqualified member
at any meeting of such committee. Any such committee, to the extent provided
in the resolution and except as may otherwise be provided by statute, shall
have and may exercise the powers of the board of directors in the management
of the business and affairs of the corporation and may authorize the seal of
the corporation to be affixed to all papers which may require the same. The
designation of such committee and the delegation thereto of authority shall
not operate to relieve the board of directors, or any member thereof, of any
responsibility imposed upon it or him by law. If there be more than two
members on such committee, a majority of any such committee may determine its
action and may fix the time and place of its meetings, unless provided
otherwise by the board. If there be only two members, unanimity of action
shall be required. Committee action may be by way of a written consent
signed by all committee members. The board shall have the power at any time
to fill vacancies on committees, to discharge or abolish any such committee,
and to change the size of any such committee.
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Except as otherwise prescribed by the board of directors, each committee
may adopt such rules and regulations governing its proceedings, quorum, and
manner of acting as it shall deem proper and desirable.
Each such committee shall keep a written record of its acts and
proceedings and shall submit such record to the board to directors. Failure
to submit such record, or failure of the board to approve any action
indicated therein will not, however, invalidate such action to the extent it
has been carried out by the corporation prior to the time the record of such
action was, or should have been, submitted to the board of directors as
herein provided.
Section 14. INFORMAL ACTION BY DIRECTORS. Any action required or
permitted to be taken at a meeting of the directors may be taken without a
meeting if a consent in writing, setting forth the action so taken, is signed
by all of the directors entitled to vote with respect to the subject matter
thereof. The consent shall have the same force and effect as a unanimous
vote of the directors, and may be stated as such in any articles or document
filed with the Secretary of State of Delaware under the Delaware General
Corporation Law.
ARTICLE IV
OFFICERS AND AGENTS
Section 1. GENERAL. The officers of the corporation shall be a
president, one or more vice presidents, if deemed appropriate and necessary
by the board of directors, a secretary and treasurer. The board of directors
may appoint such other officers, assistant officers, committees and agents,
including a chairman of the board, assistant secretaries and assistant
treasurers, as they may consider necessary, who shall be chosen in such
manner and hold their offices for such terms and have such authority and
duties as from time to time may be determined by the board of directors. The
salaries of all the officers of the corporation shall be fixed by the board
of directors. One person may hold more than one office, except no person may
simultaneously hold the offices of president and secretary. In all cases
where the duties of any officer, agent or employee are not prescribed by the
bylaws or by the board of directors, such officer, agent or employee shall
follow the orders and instructions of the president.
Section 2. ELECTION AND TERM OF OFFICE. The board of directors which
serves as such prior to the first annual meeting of the stockholders shall
elect the officers of the corporation. The officers of the corporation shall
thereafter be elected by the board of directors annually at each annual
meeting of the board of directors. If the election of officers shall not be
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held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until the first of the
following to occur: until his successor shall have been duly elected and
shall have qualified; or until his death; or until he shall resign; or until
he shall have been removed in the manner hereinafter provided.
Section 3. REMOVAL. Any officer or agent may be removed by the board
of directors or by the executive committee whenever in its judgment the best
interests of the corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not in itself create
contract rights.
Section 4. VACANCIES. A vacancy in any office, however occurring, may
be filled by the board of directors for the unexpired portion of the term.
Section 5. PRESIDENT. The president shall, subject to the direction
and supervision of the board of directors, be the chief executive officer of
the corporation and shall have general supervision of its officers, agents
and employees; he shall perform all the duties commonly incident to his office
and shall perform such other duties as the board of directors shall designate.
He shall, unless otherwise directed by the board of directors, attend in
person or by substitute appointed by him, or shall execute on behalf of the
corporation written instruments appointing a proxy or proxies to represent the
corporation, at all meetings of the stockholders of any other corporation in
which the corporation shall hold any stock. He may, on behalf of the
corporation, in person or by substitute or by proxy, execute written waivers
of notice and consents with respect to any such meetings. At all such
meetings and otherwise, the president, in person or by substitute or proxy as
aforesaid, may vote the stock so held by the corporation and may execute
written consents and other instruments with respect to such stock and may
exercise any and all rights and powers incident to the ownership of the
stock, subject however to the instructions, if any, of the board of
directors. The president shall have custody of the treasurer's bond, if any.
Section 6. VICE PRESIDENTS. The vice presidents shall assist the
president and shall perform such duties as may be assigned to them by
the president or by the board of directors. In the absence of the president,
the vice president designated by the board of directors or, (if there be no
such designation) designated in writing by the president shall have the
powers and perform the duties of the president. If no such designation shall
be made all vice presidents may exercise such powers and perform such duties.
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Section 7. THE SECRETARY. The secretary shall: (a) keep the minutes
of the proceedings of the stockholders, executive committee and the board of
directors; (b) see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law; (c) be custodian of the
corporate records and of the seal of the corporation and affix the seal to
all documents when authorized by the board of directors; (d) keep at its
registered office or principal place of business within or outside Delaware a
record containing the names and addresses of all stockholders and the number
and class of shares held by each, unless such a record shall be kept at the
office of the corporation's transfer agent or registrar; (e) sign with the
president, or a vice president, certificates for shares of the corporation,
the issuance of which shall have been authorized by resolution of the board
of directors; (f) have general charge of the stock transfer books of the
corporation, unless the corporation has a transfer agent; and (g) in general
perform all duties incident to the office of secretary and such other duties
as from time to time may be assigned to him by the president or by the board
of directors. Assistant secretaries, if any, shall have the same duties and
powers, subject to supervision by the secretary.
Section 8. TREASURER. The treasurer shall be the principal financial
officer of the corporation and shall have the care and custody of all funds,
securities, evidences of indebtedness and other personal property of the
corporation and shall deposit the same in accordance with the instructions of
the board of directors. He shall receive and give receipts and acquittances
for moneys paid in on account of the corporation, and shall pay out of the
funds on hand all bills, payrolls and other just debts of the corporation of
whatever nature upon maturity. He shall perform all other duties incident to
the office of the treasurer and, upon request of the board, shall make such
reports to it as may be required at any time. He shall, if required by the
board, give the corporation a bond in such sums and with such sureties as
shall be satisfactory to the board, conditioned upon the faithful performance
of his duties and for the restoration to the corporation of all books,
papers, vouchers, money and other property of whatever kind in his possession
or under his control belonging to the corporation. He shall have such other
powers and perform such other duties as may be from time to time prescribed
by the board of directors or the president. Assistant treasurers, if any,
shall have the same powers and duties, subject to the supervision of the
treasurer.
ARTICLE V
STOCK
Section 1. CERTIFICATES. The shares of stock shall be represented by
consecutively numbered certificates signed in the name of the corporation by
its president or a vice president and
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the secretary or an assistant secretary, and shall be sealed with the seal of
the corporation, or with a facsimile thereof. The signatures of the company's
officers on such certificate may also be facsimiles if the certificate is
countersigned by a transfer agent, or registered by a registrar, other than
the corporation who has signed or whose facsimile signature has been placed
upon such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer at the date of its issue. Certificates of
stock shall be in such form consistent with law as shall be prescribed by the
board of directors. No certificate shall be issued until the shares
represented thereby are fully paid.
Section 2. CONSIDERATION FOR SHARES. Shares shall be issued for such
consideration, expressed in dollars (but not less than the par value thereof)
as shall be fixed from time to time by the board of directors. Treasury
shares shall be disposed of for such consideration expressed in dollars as
may be fixed from time to time by the board. The consideration may consist, in
whole or in part, of money, other property, tangible or intangible, or in
labor or services actually performed for the corporation, but neither
promissory notes nor future services shall constitute payment or part payment
for shares.
Section 3. LOST CERTIFICATE. In case of the alleged loss, destruction or
mutilation of a certificate of stock the board of directors may direct the
issuance of a new certificate in lieu thereof upon such terms and conditions
in conformity with law as it may prescribe. The board of directors may in its
discretion require a bond in such form and amount and with such surety as it
may determine, before issuing a new certificate.
Section 4. TRANSFER OF SHARES. Upon surrender to the corporation or to a
transfer agent of the corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and such documentary stamps as may be required by law, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate. Every such transfer of stock shall
be entered on the stock book of the corporation which shall be kept at its
principal office, or by its registrar duly appointed.
The corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof, and, accordingly shall not be
bound to recognize any equitable or other claim to or interest in such share
on the part of any other person whether or not it shall have express or other
notice thereof, except as may be required by the laws of Delaware.
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INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 1. EXCULPATION. No director or officer of the corporation shall
be liable for the acts, defaults, or omissions of any other director or
officer, or for any loss sustained by the corporation, unless the same has
resulted from his own willful misconduct, willful neglect or negligence.
Section 2. INDEMNIFICATION. Each director and officer of the
corporation and each person who shall serve at the corporation's request as a
director or officer of another corporation in which the corporation owns
shares of capital stock or of which it is a creditor shall be indemnified by
the corporation against all reasonable costs, expenses and liabilities
(including reasonable attorney's fees) actually and necessarily incurred by
or imposed upon him in connection with, or resulting from, any claim, action,
suit, proceeding, investigation, or inquiry of whatever nature in which he
may be involved as a party or otherwise by reason of his being or having
been a director or officer of the corporation or a director or officer of
such other corporation whether or not he continues to be a director or
officer of the corporation or a director or officer of such other corporation
at the time of the incurring or imposition of such costs, expenses or
liabilities, except in relation to matters as to which he shall be finally
adjudged in such action, suit, proceeding, investigation, or inquiry to be
liable for willful misconduct, willful neglect or negligence toward or on
behalf of the corporation in the performance of his duties as such director
or officer of the corporation or as such director or officer of such other
corporation. As to whether or not a director or officer was liable by reason
of willful misconduct, willful neglect or negligence toward or on behalf of
the corporation in the performance of his duties as such director or officer
of the corporation or as such director or officer of such other corporation,
in the absence of such final adjudication of the existence of such liability,
the board of directors and each director and officer may conclusively rely
upon an opinion of independent legal counsel selected by or in the manner
designated by the board of directors. The foregoing right to indemnification
shall be in addition to and not in limitation of all other rights to which
such person may be entitled as a matter of law and shall inure to the benefit
of the legal representatives of such person.
Section 3. LIABILITY INSURANCE. The corporation may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation or who is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, association or other
enterprise against any liability asserted against him and incurred by
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him in such capacity or arising out of his status as such, whether or not he
is indemnified against such liability by this Article VI.
ARTICLE VII
MISCELLANEOUS
Section 1. TRANSACTIONS INVOLVING DIRECTORS OR OFFICERS.
No contract or other transaction between the corporation and any person,
firm, partnership, business or other corporation and no other act of the
corporation shall in the absence of fraud, in any way be affected or
invalidated by the fact that any of the directors or officers of the
corporation are pecuniarily or are interested in, or are directors or
officers of, such other corporation, firm, person, partnership, or business.
Any officer or director of the corporation individually or any firm or
association of which any officer or director may be a member, may be a party
to, or may be pecuniarily or otherwise interested in, any contract or
transaction of the corporation, provided that the fact that he individually
or such firm or association is so interested shall be disclosed or shall have
been known to the board of directors at which action upon any such contract
or transaction shall be taken. Any director or officer of the corporation
who is also a director of officer of such other corporation or is so
interested may be counted in determining the existence of a quorum at any
meeting if the board of directors which shall authorize any such contract or
transaction, and may vote thereat to authorize any such contract or
transaction, with like force and effect as if he were not such director or
officer of such other corporation or not so interested. Any director of the
corporation may vote upon any contract or other transaction between the
corporation and any subsidiary or affiliated corporation without regard to
the fact that he is also a director or officer of such subsidiary or
affiliated corporation.
Section 2. SEAL. The seal of this corporation shall consist of a
flat-faced circular die with such words and figures cut or engraved thereon
as the board of directors may from time to time determine.
Section 3. AMENDMENTS. The bylaws of the corporation regardless of
whether made by the stockholders or by the board of directors, may be
amended, added to, or repealed by vote of a majority of the then existing
directors at a regular or special directors' meeting or by vote of the
holders of not less than seventy-five percent (75%) of the issued and
outstanding capital stock of this corporation, at any meeting of the
stockholders, provided notice of the proposed change is given in the notice
of meeting, or notice thereof is waived.
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Section 4. WAIVER OF NOTICE. Whenever any notice whatever is required
to be given by these bylaws, or the articles of incorporation of this
corporation, or any of the corporation laws of the State of Delaware, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE VIII
UNIFORMITY OF INTERPRETATION AND SEVERABILITY
The bylaws shall be so interpreted and construed as to conform to the
Articles of Incorporation and the statutes of the State of Delaware or of any
other state in which conformity may become necessary by reason of the
qualification of the corporation to do business in such foreign state, and
where conflict between these bylaws and the Articles of Incorporation or the
statutes of the State of Delaware has arisen or shall arise, these bylaws
shall be considered to be modified to the extent, but only to the extent,
conformity shall require. If any provision hereof or the application thereof
shall be deemed to be invalid by reason of the foregoing sentence, such
invalidity shall not affect the validity of the remainder of the bylaws
without the invalid provisions or the application thereof, and the provisions
of these bylaws are declared to be severable.
Adopted this 8th day of February, 1988.
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EXHIBIT 3.6
AMENDED AND RESTATED
BYLAWS
OF
TRUEVISION INTERNATIONAL, INC.
ARTICLE I
OFFICES
The principal office of the corporation shall initially be located at
1720 Louisiana Boulevard, Suite 102, Albuquerque, New Mexico 87110. The
corporation may have such other offices, either within or outside the State of
Delaware, as the board of directors may designate or as the business of the
corporation may require from time to time.
The registered office of the corporation required by the Delaware
General Corporation Law to be maintained in the State of Delaware may be, but
need not be, identical with the principal office, if in the State of Delaware,
and the address of the registered office may be changed from time to time in
accordance with the Delaware General Corporation Law.
ARTICLE II
STOCKHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of the stockholders for
the purpose of electing directors and for the transaction of such other business
as may come before the meeting shall be held at such time and date as the board
of directors shall designate from time to time by resolution duly adopted. If
the day fixed for the annual meeting shall be a legal holiday in the State of
Delaware, such meeting shall be held on the next succeeding business day. If the
election of directors shall not be held on the day designated herein for any
annual meeting of the stockholders, or at any adjournment thereof, the board of
directors shall cause the election to be held at a special meeting of the
stockholders as soon thereafter as is convenient.
Section 2. SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose, unless otherwise prescribed by statute, may be called by the
president or by a majority of the board of directors, and shall be called by the
secretary at the request of the holders of not less than one-tenth of all the
outstanding shares of the corporation entitled to vote at the meeting.
Section 3. PLACE OF MEETING. The board of directors may designate any
place, either within or outside of Delaware, as the place for any annual meeting
or for any special meeting called by the board of directors. A waiver of notice
signed by all stockholders entitled to vote at a meeting may designate any
place, either within or outside of Delaware, as the place for such meeting. If
no designation is made, or if a special meeting shall be called otherwise than
by the board, the place of meeting shall be the registered office of the
corporation in Delaware.
<PAGE>
Section 4. NOTICE OF MEETING. Written or printed notice stating the
place, day and hour of the meeting, and, in case of a special meeting, the
purposes for which the meeting is called, shall be delivered not less than ten
nor more than sixty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, or the secretary, or the officer
or persons calling the meeting, to each stockholder of record entitled to vote
at such meeting, except that if the authorized capital stock is to be increased
at least thirty days notice shall be given. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail, addressed to
the stockholder at his address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid. If requested by the person or persons
lawfully calling such meeting, the secretary shall give notice thereof, at
corporate expense.
Section 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or stockholders entitled to
receive payment of any dividend, or in order to make a determination of
stockholders for any other proper purpose, the board of directors may provide
that the stock transfer books shall be closed for any stated period not
exceeding sixty days. If the stock transfer books shall be closed for the
purpose of determining stockholders entitled to notice of or to vote at a
meeting of stockholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the board of directors may fix in advance a date as the record date for any
such determination of stockholders, such date in any case to be not more than
sixty days and, in case of a meeting of stockholders, not less than ten days
prior to the date on which the particular action, requiring such determination
of stockholders, is to be taken. If the stock transfer books are not closed and
no record date is fixed for the determination of stockholders entitled to notice
of or to vote at a meeting of stockholders, or stockholders entitled to receive
payment of a dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the board of directors declaring such dividend
is adopted, as the case may be, shall be the record date for such determination
of stockholders. When a determination of stockholders entitled to vote at any
meeting of stockholders shall be deemed to have been made as provided in this
section, such determination has been made through the closing of the stock
transfer books and the stated period of closing expired.
Section 6. VOTING LISTS. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make, at least ten days
before each meeting of stockholders, a complete list of the stockholders
entitled to vote at such meeting, or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each,
which list, for a period of ten days prior to such meeting, shall be kept on
file at the principal office of the corporation, whether within or outside
Delaware, and shall be subject to inspection by any stockholder at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
stockholder during the whole time of the meeting. The original stock transfer
books shall be prima facie evidence as to who are the stockholders entitled to
examine such list or transfer books or to vote at any meeting of stockholders.
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Section 7. QUORUM. At least one-third of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than one-third of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
If a quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders, unless the vote of a greater number, or
voting by classes, is required by law, or the articles of incorporation.
Section 8. PROXIES. At all meetings of the stockholders, a stockholder
may vote by proxy executed in writing by the stockholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
Section 9. VOTING OF SHARES. Each outstanding share, regardless of
class, shall be entitled to one vote, and each fractional share shall be
entitled to a corresponding fractional vote on each matter submitted to a vote
at a meeting of stockholders, except to the extent that the voting rights of the
shares of any class or classes are limited or denied by the articles of
incorporation as permitted by the Delaware General Corporation Law. In the
election of directors, each record holder of stock entitled to vote at such
election shall have the right to vote the number of shares owned by him for as
many persons as there are directors to be elected, and for whose election he has
the right to vote. Cumulative voting shall not be allowed.
Section 10. VOTING OF SHARES BY CERTAIN HOLDERS. Treasury shares shall
not be voted at any meeting and shall not be counted in determining the total
number of outstanding shares at any given time.
Shares standing in the name of another corporation may be voted by such
officer, agent or proxy as the bylaws of such corporation may prescribe, or, in
the absence of such provision, as the board of directors of such corporation may
determine.
Shares held by an administrator, executor, personal representative,
guardian or conservator may be voted by him, either in person or by proxy,
without a transfer of such shares into his name. Shares standing in the name of
a trustee may be voted by him, either in person
- -3-
<PAGE>
or by proxy, but no trustee shall be entitled to vote shares held by him
without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority so to do
is contained in an appropriate order of the court by which such receiver was
appointed.
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.
Section 11. INFORMAL ACTION BY STOCKHOLDERS. Any action required to be
taken at a meeting of the stockholders ' or any other action which may be taken
at a meeting of the stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, is signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. The consent shall have the same force and effect as a vote of the
stockholders, and may be stated as such in any articles or document filed with
the Secretary of State of Delaware under the Delaware General Corporation Law.
ARTICLE III
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by its board of directors, except as otherwise provided in the
Delaware General Corporation Law or the articles of incorporation.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. The board of directors
shall consist of at least three members as shall be designated by the board of
directors from time to time and, in the absence of such designation, the board
of directors shall consist of three members; provided, however, that in the
event the outstanding shares of the corporation are held of record by fewer than
three stockholders, there shall be only as many directors as there are
stockholders absent a designation by the board of directors to the contrary.
Directors shall be elected in three separate or staggered classes, with each
class having a different term than the other two classes. The first class of
directors shall have a term expiring at the annual meeting next ensuing after
their election; the second class of directors shall have a term expiring two
years after their election; and the third class shall have a term expiring three
years after their election.. Each director shall hold office until his successor
shall have been elected and qualified. Directors need not be residents of
Delaware or stockholders of the corporation. Directors may be removed in the
manner provided by the Delaware General Corporation Law. Directors shall be
natural persons of the age of 21 years or older.
- -4-
<PAGE>
Section 3. REMOVALS AND RESIGNATIONS. Except as may otherwise be
provided by statute, the stockholders may, at any special meeting called for the
purpose, by a vote of the holders of the majority of the shares then entitled to
vote at an election of directors, remove any or all directors from office, with
or without cause.
A director may resign at any time by giving written notice to the board
of directors, the president or secretary of the corporation. The resignation
shall take effect immediately upon the receipt of the notice, or at any later
period of time specified therein. The acceptance of such resignation shall not
be necessary to make it effective, unless the resignation requires acceptance
for it to be effective.
Section 4. VACANCIES. Any vacancy occurring in the office of a
director, whether by reason of an increase in the number of directorships or
otherwise, may be filled by a majority of the directors then in office, though
less than a quorum. A director elected to fill a vacancy shall be elected for
the unexpired term of his predecessor in office, unless sooner displaced.
When one or more directors resign from the board, effective at a future
date, a majority of the directors then in office, including those who have so
resigned, shall have the power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective. Each director so chosen shall hold office as herein provided in the
filling of other vacancies.
Section 5. ANNUAL MEETINGS. The board of directors shall meet each year
immediately after the annual meeting of the stockholders for the purpose of
organization, election of officers, and consideration of any other business that
may be properly brought before the meeting. No notice of any kind to either old
or new members of the board of directors for such meeting shall be necessary.
Section 6. REGULAR MEETINGS. The board of directors from time to time
may provide by resolution for the holding of regular meetings and fix the time
and place of such meetings. Regular meetings may be held within or without the
State of Delaware. The board need not give notice of regular meetings provided
that the board promptly gives notice of any change in the time or place of such
meetings to each director not present at the meeting at which such change was
made.
Section 7. SPECIAL MEETINGS. Special meetings of the board of directors
may be called by or at the request of the president or any two directors. The
person or persons authorized to call special meetings of the board of directors
may fix any place, either within or outside Delaware, as the place for holding
any special meeting of the board of director's called by them.
Section 8. NOTICE. Notice of any special meeting shall be given at
least five days prior thereto by written notice delivered personally or mailed
to each director at his business address, or by notice given at least two days
prior thereto by telegraph. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail so addressed, with postage
thereon prepaid. If notice be given by telegram, such notice shall be deemed to
be delivered
- -5-
<PAGE>
when the telegram is delivered to the telegraph company. Any director may
waive notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting to the transaction of
any business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the board of directors need be specified in the notice or waiver
of notice of such meeting.
Section 9. QUORUM. A majority of the number of directors fixed by
Section 2 shall constitute a quorum for the transaction of business at any
meeting of the board of directors, but if less than such majority is present at
a meeting, a majority of the directors present may adjourn the meeting from time
to time without further notice.
Section 10. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors.
Section 11. COMPENSATION. By resolution of the board of directors, any
director may be paid any one or more of the following: his expenses, if any, of
attendance at meetings; and, a fixed sum of $1,000 per meeting for attendance at
each meeting.. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 12. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the secretary
of the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 13. EXECUTIVE COMMITTEE. By resolution adopted by a majority of
the board of directors, the board may designate one or more committees,
including an executive committee, a compensation committee and an audit
committee, each consisting of one or more directors. The board of directors may
designate one or more directors as alternate members of such committee, who may
replace any absent or disqualified member at any meeting of such committee. Any
such committee, to the extent provided in the resolution and except as may
otherwise be provided by statute, shall have and may exercise the powers of the
board of directors in the management of the business and affairs of the
corporation and may authorize the seal of the corporation to be affixed to all
papers which may require the same. The designation of such committee and the
delegation thereto of authority shall not operate to relieve the board of
directors, or any member thereof, of any responsibility imposed upon it or him
by law. If there be more than two members on such committee, a majority of any
such committee may determine its action and may fix the time and place of its
meetings, unless provided otherwise by the board. If there be only two members,
unanimity of action shall be required. Committee action may be by way of a
written consent signed by all committee
- -6-
<PAGE>
members. The board shall have the power at any time to fill vacancies on
committees, to discharge or abolish any such committee, and to change the size
of any such committee.
Except as otherwise prescribed by the board of directors, each
committee may adopt such rules and regulations governing its proceedings,
quorum, and manner of acting as it shall deem proper and desirable.
Each such committee shall keep a written record of its acts and
proceedings and shall submit such record to the board of directors. Failure to
submit such record, or failure of the board to approve any action indicated
therein will not, however, invalidate such action to the extent it has been
carried out by the corporation prior to the time the record of such action was,
or should have been, submitted to the board of directors as herein provided.
Section 14. INFORMAL ACTION BY DIRECTORS. Any action required or
permitted to be taken at a meeting of the directors may be taken without a
meeting if a consent in writing, setting forth the action so taken, is signed by
all of the directors entitled to vote with respect to the subject matter
thereof. The consent shall have the same force and effect as a unanimous vote of
the directors, and may be stated as such in any articles or document filed with
the Secretary of State of Delaware under the Delaware General Corporation Law.
ARTICLE IV
OFFICERS AND AGENTS
Section 1. GENERAL. The officers of the corporation shall be a president, one or
more vice presidents, if deemed appropriate and necessary by the board of
directors, a secretary and treasurer. The board of directors may appoint such
other officers, assistant officers, committees and agents, including a chairman
of the board, assistant secretaries and assistant treasurers, as they may
consider necessary, who shall be chosen in such manner and hold their offices
for such terms and have such authority and duties as from time to time may be
determined by the board of directors. The salaries of all the officers of the
corporation shall be fixed by the board of directors. One person may hold more
than one office, except no person may simultaneously hold the offices of
president and secretary. In all cases where the duties of any officer, agent or
employee are not prescribed by the bylaws or by the board of directors, such
officer, agent or employee shall follow the orders and instructions of the
president.
Section 2. ELECTION AND TERM OF OFFICE. The board of directors which
serves as such prior to the first annual meeting of the stockholders shall elect
the officers of the corporation. The officers of the corporation shall
thereafter be elected by the board of directors annually at each annual meeting
of the board of directors. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may be.
Each officer shall hold office until the first of the following to occur: until
his successor shall have been duly elected and shall have qualified; or until
his death; or until he shall resign; or until he shall have been removed in the
manner hereinafter provided.
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<PAGE>
Section 3. REMOVAL. Any officer or agent may be removed by the board of
directors or by the executive committee whenever in its judgment the best
interests of the corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not in itself create
contract rights.
Section 4. VACANCIES. A vacancy in any office, however occurring, may
be filled by the board of directors for the unexpired portion of the term.
Section 5. PRESIDENT. The president shall, subject to the direction and
supervision of the board of directors, be the chief executive officer of the
corporation and shall have general supervision of its officers, agents and
employees; he shall perform all the duties commonly incident to his office and
shall perform such other duties as the board of directors shall designate. He
shall, unless otherwise directed by the board of directors, attend in person or
by substitute appointed by him, or shall execute on behalf of the corporation
written instruments appointing a proxy or proxies to represent the corporation,
at all meetings of the stockholders of any other corporation in which the
corporation shall hold any stock. He may, on behalf of the corporation, in
person or by substitute or by proxy, execute written waivers of notice and
consents with respect to any such meetings. At all such meetings and otherwise,
the president, in person or by substitute or proxy as aforesaid, may vote the
stock so held by the corporation and may execute written consents and other
instruments with respect to such stock and may exercise any and all rights and
powers -Incident to the ownership of the stock, subject however to the
instructions, if any, of the board of directors. The president shall have
custody of the treasurer's bond, if any.
Section 6. VICE PRESIDENTS. The vice presidents shall assist the
president and shall perform such duties as may be assigned to them by the
president or by the board of directors. In the absence of the president, the
vice president designated by the board of directors or, (if there be no such
designation) designated in writing by the president shall have the powers and
perform the duties of the president. If no such designation shall be made all
vice presidents may exercise such powers and perform such duties.
Section 7. THE SECRETARY. The secretary shall: (a) keep the minutes of
the proceedings of the stockholders, executive committee and the board of
directors; (b) see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law; (c) be custodian of the
corporate records and of the seal of the corporation and affix the seal to all
documents when authorized by the board of directors; (d) keep at its registered
office or principal place of business within or outside Delaware a record
containing the names and addresses of all stockholders and the number and class
of shares held by each, unless such a record shall be kept at the office of the
corporation's transfer agent or registrar; (e) sign with the president, or a
vice president, certificates for shares of the corporation, the issuance of
which shall have been authorized by resolution of the board of directors; (f)
have general charge of the stock transfer books of the corporation, unless the
corporation has a transfer agent; and (g) in general perform all duties incident
to the office of secretary and such other duties as from time to time may be
assigned to him by the president or by the board of directors. Assistant
- -8-
<PAGE>
secretaries, if any, shall have the same duties and powers, subject to
supervision by the secretary.
Section 8. TREASURER. The treasurer shall be the principal financial
officer of the corporation and shall have the care and custody of all funds,
securities, evidences of indebtedness and other personal property of the
corporation and shall deposit the same in accordance with the instructions of
the board of directors. He shall receive and give receipts and acquittances for
moneys paid in on account of the corporation, and shall pay out of the funds on
hand all bills, payrolls and other just debts of the corporation of whatever
nature upon maturity. He shall perform all other duties incident to the office
of the treasurer and, upon request of the board, shall make such reports to it
as may be required at any time. He shall, if required by the board, give the
corporation a bond in such sums and with such sureties as shall be satisfactory
to the board, conditioned upon the faithful performance of his duties and for
the restoration to the corporation of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the corporation. He shall have such other powers and perform such other
duties as may be from time to time prescribed by the board of directors or the
president. Assistant treasurers, if any, shall have the same powers and duties,
subject to the supervision of the treasurer.
ARTICLE V
STOCK
Section 1. CERTIFICATES. The shares of stock shall be represented by
consecutively numbered certificates signed in the name of the corporation by its
president or a vice president and the secretary or an assistant secretary, and
shall be sealed with the seal of the corporation, or with a facsimile thereof.
The signatures of the company's officers on such certificate may also be
facsimiles if the certificate is countersigned by a transfer agent, or
registered by a registrar, other than the corporation itself or an employee of
the corporation. In case any officer who has signed or whose facsimile signature
has been placed upon such certificate shall have ceased to be such officer
before such certificate is issued, it may be issued by the corporation with the
same effect as if he were such officer at the date of its issue. Certificates of
stock shall be in such form consistent with law as shall be prescribed by the
board of directors. No certificate shall be issued until the shares represented
thereby are fully paid.
Section 2. CONSIDERATION FOR SHARES. Shares shall be issued for such
consideration, expressed in dollars (but not less than the par value thereof) as
shall be fixed from time to time by the board of directors. Treasury shares
shall be disposed of for such consideration expressed in dollars as may be fixed
from time to time by the board. The consideration may consist, in whole or in
part, of money, other property, tangible or intangible, or in labor or services
actually performed for the corporation, but neither promissory notes nor future
services shall constitute payment or part payment for shares.
Section 3. LOST CERTIFICATE. In case of the alleged loss, destruction
or mutilation of a certificate of stock the board of directors may direct the
issuance of a new certificate in lieu
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<PAGE>
thereof upon such terms and conditions in conformity with law as it may
prescribe. The board of directors may in its discretion require a bond in such
form and amount and with such surety as it may determine, before issuing a new
certificate.
Section 4. TRANSFER OF SHARES. Upon surrender to the corporation or to
a transfer agent of the corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and such documentary stamps as may be required by law, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate. Every such transfer of stock shall be
entered on the stock book of the corporation which shall be kept at its
principal office, or by its registrar duly appointed.
The corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof, and, accordingly shall not be
bound to recognize any equitable or other claim to or interest in such share on
the part of any other person whether or not it shall have express or other
notice thereof, except as may be required by the laws of Delaware.
ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 1. EXCULPATION. No director or officer of the corporation shall
be liable for the acts, defaults, or omissions of any other director or officer,
or for any loss sustained by the corporation, unless the same has resulted from
his own willful misconduct, willful neglect or negligence.
Section 2. INDEMNIFICATION. Each director and officer of the
corporation and each person who shall serve at the corporation's request as a
director or officer of another corporation in which the corporation owns shares
of capital stock or of which it is a creditor shall be indemnified by the
corporation against all reasonable costs, expenses and liabilities (including
reasonable attorneys' fees) actually and necessarily incurred by or imposed upon
him in connection with, or resulting from, any claim, action, suit, proceeding,
investigation, or inquiry of whatever nature in which he may be involved as a
party or otherwise by reason of his being or having been a director or officer
of the corporation or a director or officer of such other corporation whether or
not he continues to be a director or officer of the corporation or a director or
officer of such other corporation at the time of the incurring or imposition of
such costs, expenses or liabilities,, except in relation to matters as to which
he shall be finally adjudged in such action, suit, proceeding, investigation, or
inquiry to be liable for willful misconduct, willful neglect or negligence
toward or on behalf of the corporation in the performance of his duties as such
director or officer of the corporation or as such director or officer of such
other corporation. As to whether or not a director or officer was liable by
reason of willful misconduct, willful neglect or negligence toward or on behalf
of the corporation in the performance of his duties as such director or officer
of the corporation or as such director or officer of such other corporation, in
the absence of such final adjudication of the existence of
-10-
<PAGE>
such liability, the board of directors and each director and officer may
conclusively rely upon an opinion of independent legal counsel selected by or in
the manner designated by the board of directors. The foregoing right to
indemnification shall be in addition to and not in limitation of all other
rights to which such person may be entitled as a matter of law and shall inure
to the benefit of the legal representatives of such person.
Section 3. LIABILITY INSURANCE. The corporation may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation or who is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, association or other enterprise
against any liability asserted against him and incurred by him in such capacity
or arising out of his status as such, whether or not lie is indemnified against
such liability by this Article VI.
ARTICLE VII
MISCELLANEOUS
Section 1. TRANSACTIONS INVOLVING DIRECTORS OR OFFICERS. No contract or
other transaction between the corporation and any person, firm, partnership,
business or other corporation and no other act of the corporation shall in the
absence of fraud, in any way be affected or invalidated by the fact that any of
the directors or officers of the corporation are pecuniarily or are interested
in, or are directors or officers of, such other corporation, firm, person,
partnership, or business. Any officer or director of the corporation
individually or any firm or association of which any officer or director may be
a member, may be a party to, or may be pecuniarily or otherwise interested in,
any contract or transaction of the corporation, provided that the fact that he
individually or such firm or association is so interested shall be disclosed or
shall have been known to the board of directors at which action upon any such
contract or transaction shall be taken. Any director or officer of the
corporation who is also a director of officer of such other corporation or is so
interested may be counted in determining the existence of a quorum at any
meeting if the board of directors which shall authorize any such contract or
transaction, and may vote thereat to authorize any such contract or transaction,
with like force and effect as if he were not such director or officer of such
other corporation or not so interested. Any director of the corporation may vote
upon any contract or other transaction between the corporation and any
subsidiary or affiliated corporation without regard to the fact that he is also
a director or officer of such subsidiary or affiliated corporation.
Section 2. SEAL. The seal of this corporation shall consist of a
flat-faced circular die with such words and figures cut or engraved thereon as
the board of directors may from time to time determine.
Section 3. AMENDMENTS. The bylaws of the corporation regardless of
whether made by the stockholders or by the board of directors, may be amended,
added to, or repealed by vote of a majority of the then existing directors at a
regular or special directors' meeting or by vote of the holders of not less than
seventy-five percent (75%) of the issued and outstanding capital
- -11-
<PAGE>
stock of this corporation, at any meeting of the stockholders, provided notice
of the proposed change is given in the notice of meeting, or notice thereof is
waived.
Section 4. WAIVER OF NOTICE. Whenever any notice whatever is required
to be given by these bylaws, or the articles of incorporation of this
corporation, or any of the corporation laws of the State of Delaware, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto.
ARTICLE VIII
UNIFORMITY OF INTERPRETATION AND SEVERABILITY
The bylaws shall be so interpreted and construed as to conform to the
Articles of Incorporation and the statutes of the State of Delaware or of any
other state in which conformity may become necessary by reason of the
qualification of the corporation to do business in such foreign state, and where
conflict between these bylaws and the Articles of Incorporation or the statutes
of the State of Delaware has arisen or shall arise, these bylaws shall be
considered to be modified to the extent, but only to the extent,, conformity
shall require. If any provision hereof or the application thereof shall be
deemed to be invalid by reason of the foregoing sentence, such invalidity shall
not affect the validity of the remainder of the bylaws without the invalid
provisions or the application thereof, and the provisions of these bylaws are
declared to be severable.
Adopted this 8th day of February, 1988.
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<PAGE>
EXHIBIT 3.7
STATE OF NEW MEXICO
[SEAL]
OFFICE OF
THE STATE CORPORATION COMMISSION
CERTIFICATE OF COMPARISON
OF
TRUEVISION LASER CENTERS OF ALBUQUERQUE, INC.
1796176
The State Corporation Commission certifies that the attached is a true
and complete copy of the ****3**** page document(s), on file in this office.
This Certification is in accordance with Section 53-18-4 or Section
53-8-93, NMSA 1978.
Dated: MAY 9, 1996
In Testimony Whereof, the State Corporation
Commission of the State of New Mexico has
caused this certificate to be signed by its
Chairman and the Seal of said Commission to
be affixed at the City of Santa Fe.
[SEAL]
/s/ Gloria Tristani
-------------------------
Chairman
/s/ [ILLEGIBLE]
-------------------------
Director
<PAGE>
ARTICLES OF INCORPORATION
OF
TrueVision Lazer Centers of Albuquerque, Inc.
- -------------------------------------------------------------------------------
(NAME OF CORPORATION)
The undersigned, acting as incorporator(s) to form a corporation under the
New Mexico Business Corporation Act (53-11-1 to 53-18-12 NMSA 1978), adopts
the following Articles of Incorporation for such corporation:
FIRST: The corporate name of the corporation is
TrueVision Laser Centers of Albuquerque, Inc.
---------------------------------------------
SECOND: The period of its duration is Perpetual
---------
THIRD: The purpose or purposes for which the corporation is organized are:
Laser Refracting Vision Correction
FOURTH: The aggregate number of shares which the corporation shall have
authority to issue is:
(ATTACH SCHEDULE, IF NEEDED)
NUMBER
= Hundred Thousand Shares (100,000) of Common Stock at No Par Value
FIFTH: Any provision limiting or denying to shareholders the preemptive
right to acquire unissued or treasury shares, or securities convertible into
such shares or carrying a right to subscribe to or to acquire shares is:
<PAGE>
SIXTH: The name of its initial registered agent and the street address and
city of the initial registered office in New Mexico are:
NAME ADDRESS
C T CORPORATION SYSTEM
119 EAST MARCY
Santa Fe, New Mexico 87501
SEVENTH: The number of directors constituting the initial board of directors
is 1 and the names and addresses of the persons who are to serve as directors
until the first annual meeting of shareholders or until their successors are
elected and qualified are:
NAME ADDRESS
John C. Homan 3969 4th Avenue, Suite 202
San Diego, CA 92103
EIGHTH: The name and address of each incorporator is:
NAME ADDRESS
R.C. Dunn 818 W. Seventh Street
Los Angeles, CA 90017
DATED: May 6, 1996
-----------------------
/s/ R.C. DUNN
--------------------------------
--------------------------------
--------------------------------
Signature of Incorporator(s)
(FILE DUPLICATE ORIGINALS)
<PAGE>
(DOMESTIC-INITIAL)
FILE DUPLICATE ORIGINALS
AFFIDAVIT OF ACCEPTANCE OF APPOINTMENT
BY DESIGNATED INITIAL REGISTERED AGENT
To the State Corporation Commission
State of New Mexico
STATE OF California )
) SS.:
COUNTY OF Los Angeles )
On this 6th day of May, 1996, before me a Notary Public in and for the State
and County aforesaid, personally appeared Thomas C. Totaro who is to me known
to be the person and who, being by me duly sworn, acknowledged to me that he
does hereby accept his appointment as the Initial Registered Agent of
TrueVision Laser Centers of Albuquerque, Inc.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
the corporation which is named in the annexed Articles of Incorporation, and
which is applying for a Certificate of Incorporation pursuant to the
provisions of the Business Corporation Act of the State of New Mexico.
C T CORPORATION SYSTEM
------------------------------------
REGISTERED AGENTS SIGNATURE
BY(1) /s/ THOMAS C. TOTARO
------------------------------------
Thomas C. Totaro
Subscribed and sworn to before me Assistant Vice President
on the day, month, and year first
above set forth
/s/ ROBIN C. MINDLIN
- ----------------------------------
NOTARY PUBLIC
------------------------------
Commission Expires: March 12, 1999 ROBIN C. MINDLIN
--------------- COMM. #1063130
Notary Public - California
(Notarial seal) LOS ANGELES COUNTY
My Comm. Expires MAR 12, 1999
------------------------------
NOTE (1) If the Agent is a Corporation then the affidavit must be executed
by the President or Vice-President of the Corporation.
<PAGE>
[LETTERHEAD]
CORPORATE CHARTER
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that TRUEVISION OF NEVADA, INC. did on August 17, 1999 file in
this office the original Articles of Incorporation; that said Articles are
now on file and of record in the office of the Secretary of State of the
State of Nevada, and further, that said Articles contain all the provisions
required by the law of said State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand
and affixed the Great Seal of State, at my office,
in Carson City, Nevada, on August 17, 1999.
/s/ Dean Heller
----------------------
Secretary of State
[SEAL]
By /s/ [ILLEGIBLE]
-------------------
Certification Clerk
<PAGE>
ARTICLES OF INCORPORATION
-------------------------
OF
--
TRUEVISION OF NEVADA, INC.
--------------------------
FIRST. The name of the corporation is:
TRUEVISION OF NEVADA, INC.
SECOND. Its principle office in the State of Nevada is located at 251
Jeanell Dr. Suite 3, Carson City, NV 89703, although this Corporation may
maintain an office, or offices, in such other place within or without the
state of Nevada as may from time to time be designated by the Board of
Directors, or by the by-laws of said Corporation, and that this Corporation
may conduct all Corporation business of every kind and nature, including the
holding of all meetings of Directors and Stockholders, outside the State of
Nevada as well as within the State of Nevada.
THIRD. The objects for which this Corporation is formed are: To engage
in any lawful activity, including, but not limited to the following:
(A) Shall have such rights, privileges and powers as may be conferred
upon corporations by any existing law.
(B) may at any time exercise such rights, privileges and powers, when
not inconsistent with the purposes and objects for which this corporation is
organized
(C) Shall have power to have succession by its corporate name for the
period limited in its certificate or articles of incorporation, and when no
period is limited, perpetually, or until dissolved and its affairs wound up
according to law.
(D) Shall have power to sue and be sued in any court of law or equity.
(E) Shall have power to make contracts.
(F) Shall have power to hold, purchase and convey real and personal
estate and to mortgage or lease any such real and personal estate with its
franchises. The power to hold real and personal estate shall include the
power to take the same devise or bequest in the State of Nevada, or any other
state, territory or country.
<PAGE>
(G) Shall have power to appoint such officers and agents as the affairs
of the corporation shall require, and to allow them suitable compensation.
(H) Shall have power to make by-laws not inconsistent with the
constitution of the United States, or of the State of Nevada, for the
management, regulation and government of its affairs and property, the
transfer of its stock, the transaction of its business, and the calling and
holding of meetings of its stockholders.
(I) Shall have power to wind up and dissolve itself, or be wound up or
dissolved.
(J) Shall have power to adopt and use a common seal or stamp by the
corporation on any corporate documents is not necessary. The corporation may
use a seal or stamp, if it desires, but such non-use shall not in any way
affect the legality of the document.
(K) Shall have power to borrow money and contract debts when necessary
for the transaction of its business, or for the exercise of its corporate
rights, privileges or franchises, or for any other lawful purpose of its
incorporation; to issue bonds, promissory notes, bills of exchange,
debentures, and other obligations and evidences of indebtedness, payable upon
the happening of a specified event or events, whether secured by mortgage,
pledge, or otherwise, or unsecured, for money borrowed, or in payment for
property purchased, or acquired, or for any other lawful object.
(L) Shall have power to guarantee, purchase, hold, sell, assign,
transfer, mortgage, pledge or otherwise dispose of the shares of the capital
stock, or any bonds, securities or evidences of the indebtedness created by,
any other corporation or corporations of the State of Nevada, or any other
state or government, and while owners of such stock, bonds, securities or
evidences of indebtedness, to exercise all the rights, powers and privileges
of ownership, including the right to vote, if any.
(M) Shall have power to purchase, hold, sell and transfer shares of its
own capital stock, and use therefor its capital, capital surplus, surplus, or
other property or fund.
(N) Shall have power to conduct business, have one or more offices, and
hold, purchase, mortgage and convey real and personal property in the State
of Nevada, and in any of the states, territories, possessions and
dependencies of the United States, the District of Columbia, and any foreign
countries.
<PAGE>
(O) Shall have power to do all and everything necessary and proper for
the accomplishment of the objects enumerated in its certificate or articles
of incorporation, or any amendment thereof, or necessary or incidental to the
protection and benefit of the corporation, and, in general, to carry on any
lawful business necessary or incidental to the attainment of the objects of
the corporation, or any amendment thereof.
(P) Shall have the power to make donations for the public welfare or for
charitable, scientific or educational purposes.
(Q) Shall have the power to enter into partnerships, general or limited,
or joint ventures, in connection with any lawful activities.
FOURTH. That the voting common stock authorized may be issued by the
corporation is ONE HUNDRED THOUSAND shares of stock with a nominal or par
value of .0001 and no other class of stock shall be authorized. Said shares
with a nominal or par value of .0001 may be issued by the corporation from
time to time for such considerations as may be fixed from time to time by the
Board of Directors.
FIFTH. The governing body of the corporation shall be known as
directors, and the number of directors may from time to time be increased or
decreased in such manner as shall be provided by the By-Laws of this
Corporation, providing that the number of directors shall be reduced to no
less than one (1). The name and post office address of the first board of
Directors shall be one (1) in number and listed as follows:
NAME POST OFFICE ADDRESS
Michael D. Taylor 251 Jeanell Dr. Suite 3
Carson City, NV 89703
SIXTH. The capital stock, after the amount of the subscription price,
or par value, has been paid in, shall not be subject to assessment to pay the
debts of the corporation.
<PAGE>
SEVENTH. The name and post office address of the incorporator(s) signing
the Articles of Incorporation is as follows:
NAME ADDRESS
Michael D. Taylor 251 Jeanell Dr. Suite 3
Carson City, NV 89703
EIGHTH. The resident agent for this corporation shall be:
CORPORATE ADVISORY SERVICE, INC.
The address of said agent, and, the principle or statutory address of this
corporation in the State of Nevada is.
251 Jeanell Dr. Suite 3,
Carson City, Nevada 89703
NINTH. The corporation is to have perpetual existence.
TENTH. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
Subject to the By-Laws, if any, adopted by the stockholders, to
make, alter or amend the By-Laws of the Corporation.
To fix the amount to be reserved as working capital over and above
its capital stock paid in; to authorize and cause to be executed, mortgages
and liens upon the real and personal property of this corporation.
By resolution passed by a majority of the whole Board, to consist of
one (1) or more committees, each committee to consist of one or more
directors of the corporation, which, to the extent provided in the
resolution, or in the By-Laws of the Corporation, shall have and may exercise
the powers of the Board of Directors in the management of the business and
affairs of the Corporation. Such committee, or committees, shall have such
name, or names, as may be stated in the By-Laws of the Corporation, or as may
be determined from time to time by resolution adopted by the Board of
Directors.
<PAGE>
When and as authorized by the affirmative vote of the Stockholders
holding stock entitling them to exercise at lease a majority of the voting
power given at a Stockholders meeting called for the purpose, or when
authorized by written consent of the holders of at least a majority of the
voting stock issued and outstanding, the Board of Directors shall have power
and authority at any meeting to sell, lease or exchange all of the property
and assets of the Corporation, including its good will and its corporate
franchises, upon such terms and conditions as its Board of Directors deems
expedient and for the best interests of the Corporation.
ELEVENTH. No shareholder shall be entitled as a matter of right to
subscribe for, or receive additional shares of any class of stock of the
Corporation, whether now or hereafter authorized, or any bonds, debentures or
securities convertible into stock may be issued or disposed of by the Board
of Directors to such persons and on such terms as is in its discretion it
shall deem advisable.
TWELFTH. No director or officer of the Corporation shall be personally
liable to the Corporation or any of its stockholders for damages for breach
of fiduciary duty as a director or officer involving any act of omission of
any such director or officer; provided, however, that the foregoing provision
shall not eliminate or limit the liability of a director or officer (i) for
acts or omissions which involve intentional misconduct, fraud or a knowing
violation of the law, or (ii) the payment of dividends in violation of
Section 78.300 of the Nevada Revised Statutes. Any repeal or modification of
this Article by the stockholders of the Corporation shall be prospective
only, and shall not adversely affect any limitation on the personal liability
of a director or officer of the Corporation for acts or omissions prior to
such repeal or modification.
THIRTEENTH. This Corporation reserves the right to amend, alter, change,
in any manner now or hereafter prescribed by statute, or by the Articles of
Incorporation, and all rights conferred upon Stockholders herein are granted
subject to this reservation.
<PAGE>
I, THE UNDERSIGNED, being the Incorporator Herein before named for
the purpose of forming a Corporation pursuant to the General Corporation Law
of the State of Nevada, do make and file these Articles of Incorporation,
hereby declaring and certifying that the facts herein are true, and
accordingly have hereunto set my hand this 17th day of August, 1999.
/s/ Michael D. Taylor
---------------------
Michael D. Taylor
STATE OF NEVADA )
) SS:
CARSON CITY )
On this 17th day of August, 1999, in Carson City, Nevada, before me, the
undersigned, a Notary Public in and for Carson City, State of Nevada,
personally appeared:
Michael D. Taylor
Known to be the person whose name is subscribed to the foregoing document and
acknowledged to me that he executed the same.
/s/ Deanna K. Kelly
- ------------------------- [SEAL]
Notary Public
Corporate Advisory Service, Inc. does hereby accept as Resident Agent for the
previously named Corporation.
Corporate Advisory Service, Inc.
Michael D. Taylor 8/17/99
- -------------------------------- -----------------
By Michael D. Taylor, President Date
<PAGE>
EXHIBIT 4.5
EXHIBIT "A"
FORM OF PROMISSORY NOTE
-----------------------
AMOUNT: $________________ DATE:________________, 1999
ALBUQUERQUE, NEW MEXICO
FOR VALUE RECEIVED, PAMELA MEDLEY (the "Maker"), promises to pay to the
order of TRUEVISION INTERNATIONAL, INC. (the "Payee") the principal sum of
________________ ($________________) Dollars, with interest at the rate of
ten (10%) percent, per annum, from the date hereof until paid, said principal
and interest payable on or before one (1) year from the date hereof or within
three (3) business days following the sale of the collateral securing the
obligation of this Note. This Note may be prepaid in whole or in part at any
time without penalty.
This note is secured by ________________ (________________) shares of
the $0.001 par value, Common Stock of TrueVision International, Inc. pursuant
to the terms and conditions of a certain Restricted Stock Option Agreement
entered into between the parties hereto on January __, 1999.
Upon default in the payment of any installment of principal or interest,
or any sum due hereunder, the whole of the principal sum and all interest
accrued hereon shall, at the holder's option, without notice or demand, at
once become due and payable, together with interest at the maximum legal
rate, collection charges, and a reasonable sum as attorney's fees.
The undersigned and all endorsers, suretics, and guarantors hereof,
hereby jointly and severally waive presentment, demand for payment, notice of
dishonor, notice of protest, and all other notices or demands in connection
with the delivery, acceptance, performance, default, endorsement or guarantee
of this instrument.
WITNESSES:
/s/ PAMELA MEDLEY
- -------------------------------- --------------------------------
PAMELA MEDLEY
- --------------------------------
<PAGE>
Exhibit 4.6
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of ______________, 1999, between TVI
INTERNATIONAL, INC., a Delaware corporation (the "Company"), and the persons
whose names and addresses are set forth on Schedule I annexed hereto (the
"Holders").
W I T N E S S E T H:
1. Issue. The Company shall issue to each Holder a certificate (the
"Warrant Certificate") dated as of the date hereof providing each such Holder
with the right to purchase, at any time, from _____________, 1999, until 5:30
p.m., New York time, on _______________, the number of Common Shares listed next
to the name of each such Holder on Exhibit I (the "Warrant Shares") (subject to
adjustment as provided in Section 9 hereof), at an exercise price (subject to
adjustment as provided in Section 9 hereof) of $0.8073 per Common Share.
2. Warrant Certificate. The Warrant Certificate to be delivered
pursuant to this Agreement shall be in the form set forth in Exhibit X, attached
hereto and made a part hereof, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Agreement.
3. Exercisability of Warrants. The Warrants shall be exercisable at any
time from ____________, 1999, until 5:30 p.m., New York time, on ______________,
2004.
4. Procedure for Exercise of Warrants.
4.1 Cash Exercise. The Warrants are exercisable at an
aggregate initial exercise price per Common Share set forth in Section
7 hereof payable by certified check or official bank check in New York
Clearing House funds. Upon surrender of a Warrant Certificate with the
annexed Form of Election to Purchase duly executed, together with
payment of the Exercise Price (as hereinafter defined) for the Warrant
Shares purchased, at the Company's principal offices in Albuquerque,
New Mexico (presently located at 1720 Louisiana Boulevard, Suite 100,
Albuqueque, New Mexico) the registered holder of a Warrant Certificate
(individually a "Holder" and sometimes collectively the "Holders")
shall be entitled to receive a certificate for the Warrant Shares so
purchased. The purchase rights represented by the Warrant Certificate
are exercisable at the option of the Holder thereof, in whole or in
part (but not as to fractional Common Shares underlying the Warrants).
In the case of the purchase of less than all the Warrant Shares
purchasable under the Warrant Certificate, the Company shall cancel
said Warrant Certificate upon the surrender thereof and shall execute
and deliver a new Warrant Certificate of like tenor for the balance of
the Warrant Shares purchasable thereunder.
4.2 Cashless Exercise. In addition to the exercise of all or a
portion of the Warrants by the payment of the Exercise Price in cash or
check as set forth in Section 4.1 above, and in lieu of any such
payment, the Holder has the right to exercise the Warrants, in full or
in part, by surrendering the Warrant Certificate with the annexed Form
of
1
<PAGE>
Election to Purchase duly executed, in exchange for the number of
Common Shares equal to the product of (x) the number of Common Shares
as to which the Warrants are being exercised multiplied by (y) a
fraction, the numerator of which is the Current Market Price of the
Common Shares (as defined below) less the Exercise Price then in effect
and the denominator of which is the Current Market Price.
4.3 Current Market Price. The term "Current Market Price"
shall mean (i) if the Shares are traded in the over-the-counter market
or on the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), the average per Share closing bid prices
on the 20 consecutive trading days immediately preceding the date of
exercise, as reported by NASDAQ or an equivalent generally accepted
reporting service, or (ii) if the Shares are traded on a national
securities exchange, the average for the 20 consecutive trading days
immediately preceding the exercise date of the daily per Share closing
prices on the principal stock exchange on which the Shares are listed,
as the case may be. The closing price referred to in clause (ii) above
shall be the last reported sales price or, if no such reported sale
takes place on such day, the average of the reported closing bid and
asked prices, in either case on the national securities exchange on
which the Shares are then listed.
5. Issuance of Certificate. Upon the exercise of the Warrants, the
issuance of a certificate for Warrant Shares (or Other Securities)
shall be made forthwith (and in any event within five (5) business days
thereafter) without charge to the Holder thereof including, without
limitation, any tax which may be payable in respect of the issuance
thereof, and such certificate shall (subject to the provisions of
Sections 6 and 8 hereof) be issued in the name of, or in such names as
may be directed by, the Holder thereof; provided, however, that the
Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any
such certificate in a name other than that of the Holder and the
Company shall not be required to issue or deliver such certificate
unless or until the person or persons requesting the issuance 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. The Warrant Certificate and the certificate representing the
Warrant Shares (or Other Securities) shall be executed on behalf of the
Company by the manual or facsimile signature of the then present
Chairman or Vice Chairman of the Board of Directors or President or any
Vice President of the Company under its corporate seal reproduced
thereon, attested to by the manual or facsimile signature of the then
present Secretary or any Assistant Secretary of the Company. The
Warrant Certificate shall be dated the date of execution by the Company
upon initial issuance, division, exchange, substitution or transfer.
6. Transfer of Warrants. The Holder of the Warrant Certificate, by its
acceptance thereof, covenants and agrees that the Warrants are being
acquired as an investment and not with a view to the distribution
thereof. The Warrants may be sold, transferred, assigned, hypothecated
or otherwise disposed of, in whole or in part, without restriction,
subject to compliance with applicable securities laws.
2
<PAGE>
7. Exercise Price.
7.1 Initial and Adjusted Exercise Price. Except as otherwise
provided in Section 9 hereof, the initial exercise price of each
Warrant shall be the price set forth in Section 1 hereof per Warrant
Shares issued thereunder. The adjusted exercise price shall be the
price which shall result from time to time from any and all adjustments
of the initial exercise price in accordance with the provisions of
Section 9 hereof.
7.2 Exercise Price. The term "Exercise Price" herein shall
mean the initial exercise price or the adjusted exercise price,
depending upon the context.
8. Registration Under the Securities Act of 1933. Subject to the
Registration Rights Agreement between the Company and the Holders dated
as of the date hereof, the Warrants, the Warrant Shares and any of the
Other Securities issuable upon exercise of the Warrants have not been
registered under the Securities Act of 1933, as amended (the "Act").
Upon exercise, in whole or in part, of the Warrants, a certificate
representing the Warrant Shares underlying the Warrants, and any of the
Other Securities issuable upon exercise of the Warrants (collectively,
the "Warrant Securities") shall bear the following legend unless such
Warrant Shares previously have been registered under the Act in
accordance with the terms hereof: THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED ("ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO
(i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER
THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION
OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL
TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE.
9. Adjustments to Exercise Price and Number of Securities. The Exercise
Price and, in some cases, the number of Warrant Shares purchasable upon
the exercise of the Warrants, shall be subject to adjustment from time
to time upon the occurrence of certain events described in this Section
9.
9.1 Subdivision or Combination of Common Shares and Common
Share Dividend. In case the Company shall at any time subdivide its
outstanding Common Shares into a greater number of Common Shares or
declare a dividend upon its Common Shares payable solely in Common
Shares, the Exercise Price in effect immediately prior to such
subdivision or declaration shall be proportionately reduced, and the
number of Warrant Shares issuable upon exercise of the Warrants shall
be proportionately increased. Conversely, in case the outstanding
Common Shares of the Company shall be combined into a smaller number of
Common Shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased, and the number of
Warrant Shares issuable upon exercise of the Warrants shall be
proportionately reduced.
3
<PAGE>
9.2 Dilutive Issuances. In the event that the Company shall
sell or issue at any time after the date of this Warrant and prior to
its termination, Shares (other than Excluded Shares, as defined in
Section 9.2.5) at a consideration per Share less than $0.8073, then the
Exercise Price shall be adjusted to a new Exercise Price (calculated to
the nearest cent) determined by dividing (a) an amount equal to (i) the
total number of Shares Outstanding (as defined below and subject to
adjustment in the manner set forth in Section 9.1) on the date of
issuance of this Warrant multiplied by the Exercise Price in effect on
the date of issuance of this Warrant (subject, however, to adjustment
in the manner set forth in Section 9.1), plus (ii) the aggregate of the
amount of all consideration, if any, received by the Company for the
issuance or sale of Shares since the date of issuance of this Warrant,
by (b) the total number of Shares Outstanding immediately after such
issuance or sale. In no event shall any such adjustment be made
pursuant to this Section 9.2 if it would increase the Exercise Price in
effect immediately prior to such adjustment, except as provided in
Sections 9.2.3 and 9.2.4. Upon each adjustment of the Exercise Price
pursuant to this Section 9.2, the holder of this Warrant shall
thereafter be entitled to purchase, at the Exercise Price resulting
from such adjustment, the number of Warrant Shares obtained by
multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment, and dividing the product thereof
by the Exercise Price resulting from such adjustment.
9.2.1 Definitions. For purposes of this Section 9.2, the
following definitions shall apply: (a) "Convertible Securities" shall
mean any indebtedness or securities convertible into or exchangeable
for Shares. (b) "Options" shall mean any rights, warrants or options to
subscribe for or purchase Shares or Convertible Securities other than
rights, warrants or options to purchase Excluded Securities (as defined
in Section 9.2.5). (c) "Shares Outstanding" shall mean the aggregate of
all Shares outstanding and all Shares issuable upon exercise of all
outstanding Options and conversion of all outstanding Convertible
Securities.
9.2.2 For the purposes of this Section 9.2, the following
provisions shall also be applicable:
9.2.2.1 Cash Consideration. In case of the issuance
or sale of additional Shares for cash, the
consideration received by the Company therefor shall
be deemed to be the amount of cash received by the
Company for such Shares (or, if such Shares are
offered by the Company for subscription, the
subscription price, or, if such Shares are sold to
underwriters or dealers for public offering without a
subscription offering, the public offering price),
without deducting therefrom any compensation or
discount paid or allowed to underwriters or dealers
or others performing similar services or for any
expenses incurred in connection therewith.
9.2.2.2 Non-Cash Consideration. In case of the
issuance (otherwise than upon conversion or exchange
of Convertible Securities) or sale of additional
Shares, Options or Convertible Securities for a
consideration
4
<PAGE>
other than cash or a consideration a part of which
shall be other than cash, the fair value of such
consideration as determined by the Board of Directors
(if any, otherwise by the Managers) of the Company in
the good faith exercise of its business judgment,
irrespective of the accounting treatment thereof,
shall be deemed to be the value, for purposes of this
Section 9, of the consideration other than cash
received by the Company for such securities.
9.2.2.3 Options and Convertible Securities. In case
the Company shall in any manner issue or grant any
Options or any Convertible Securities, the total
maximum number of Shares of issuable upon the
exercise of such Options or upon conversion or
exchange of the total maximum amount of such
Convertible Securities at the time such Convertible
Securities first become convertible or exchangeable
shall (as of the date of issue or grant of such
Options or, in the case of the issue or sale of
Convertible Securities other than where the same are
issuable upon the exercise of Options, as of the date
of such issue or sale) be deemed to be issued and to
be outstanding for the purpose of this Section 9.2
and to have been issued for the sum of the amount (if
any) paid for such Options or Convertible Securities
and the amount (if any) payable upon the exercise of
such Options or upon conversion or exchange of such
Convertible Securities at the time such Convertible
Securities first become convertible or exchangeable;
provided that, subject to the provisions of Section
9.2.3, no further adjustment of the Exercise Price
shall be made upon the actual issuance of any such
Shares or Convertible Securities or upon the
conversion or exchange of any such Convertible
Securities. 9.2.3 Change in Option Price or
Conversion Rate. In the event that the purchase price
provided for in any Option referred to in subsection
9.2.2.3, or the rate at which any Convertible
Securities referred to in subsection 9.2.2.3 are
convertible into or exchangeable for Shares shall
change at any time (other than under or by reason of
provisions designed to protect against dilution),
then, for purposes of any adjustment required by
Section 9.2, the Exercise Price in effect at the time
of such event shall forthwith be readjusted to the
Exercise Price that would have been in effect at such
time had such Options or Convertible Securities still
outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or
sold, provided that if such readjustment is an
increase in the Exercise Price, such readjustment
shall not exceed the amount (as adjusted by Sections
9.1 and 9.2) by which the Exercise Price was
decreased pursuant to Section 9.2 upon the issuance
of the Option or Convertible Security. In the event
that the purchase price provided for in any such
Option referred to in subsection 9.2.2.3, or the
additional consideration (if any) payable upon the
conversion or exchange of any Convertible Securities
referred to in subsection 9.2.2.3, or the rate at
which any Convertible Securities referred to in
subsection 9.2.2.3 are convertible into or
exchangeable for Shares,
5
<PAGE>
shall be reduced at any time under or by reason of
provisions with respect thereto designed to protect
against dilution, then in case of the delivery of
Shares upon the exercise of any such Option or upon
conversion or exchange of any such Convertible
Security; the Exercise Price then in effect hereunder
shall, upon issuance of such Shares, be adjusted to
such amount as would have obtained had such Option or
Convertible Security never been issued and had
adjustments been made only upon the issuance of the
Shares delivered as aforesaid and for the
consideration actually received for such Option or
Convertible Security and the Shares, provided that if
such readjustment is an increase in the Exercise
Price, such readjustment shall not exceed the amount
(as adjusted by Sections 9.1 and 9.2) by which the
Exercise Price was decreased pursuant to Section 9.2
upon the issuance of the Option or Convertible
Security.
9.2.3 Termination Of Option or Conversion Rights. In the
event of the termination or expiration of any right
to purchase Shares under any Option granted after the
date of this Warrant or of any right to convert or
exchange Convertible Securities issued after the date
of this Warrant, the Exercise Price shall, upon such
termination, be readjusted to the Exercise Price that
would have been in effect at the time of such
expiration or termination had such Option or
Convertible Security, to the extent outstanding
immediately prior to such expiration or termination,
never been issued, and the Shares issuable thereunder
shall no longer be deemed to be Shares Outstanding,
provided that if such readjustment is an increase in
the Exercise Price, such readjustment shall not
exceed the amount (as adjusted by Sections 9.1 and
9.2) by which the Exercise Price was decreased
pursuant to Section 9.2 upon the issuance of the
Option or Convertible Security. The termination or
expiration of any right to purchase Shares under any
Option granted prior to the date of this Warrant or
of any right to convert or exchange Convertible
Securities issued prior to the date of this Warrant
shall not trigger any adjustment to the Exercise
Price, but the Shares issuable under such Options or
Convertible Securities shall no longer be counted in
determining the number of Shares Outstanding on the
date of issuance of this Warrant for purposes of
subsequent calculations under this Section 9.2.
9.2.4 Excluded Shares. Notwithstanding anything herein to
the contrary, the Exercise Price shall not be
adjusted pursuant to this Section 9.2 by virtue of
the issuance and/or sale of Excluded Shares, which
shall mean the following: (a) Shares issuable upon
the exercise of the Warrants; (b) Shares, Options or
Convertible Securities to be issued and/or sold to
employees, advisors (including, without limitation,
financial, technical and legal advisers), directors,
or officers of, or consultants to, the Company or any
of its subsidiaries pursuant to a share grant, share
option plan, share purchase plan, pension or profit
sharing plan or other share agreement or arrangement
existing as of the date hereof or approved by the
Company's
6
<PAGE>
Board of Directors (if any, otherwise by the
Managers); (c) the issuance of Shares, Options and/or
Convertible Securities pursuant to Options and
Convertible Securities outstanding as of the date of
this Warrant; (d) the issuance of Shares, Options or
Convertible Securities as a share dividend or upon
any subdivision or combination of Shares or
Convertible Securities; (e) the issuance of Shares,
Options or Convertible Securities in connection with
strategic partnerships or other business and/or
product consolidations or joint ventures and (f) the
issuance of Shares, Options or Convertible Securities
by the Company in connection with a contemplated
equity financing currently in progress as of the date
hereof. For all purposes of this Section 9.2, all
Shares of Excluded Shares shall be deemed to have
been issued for an amount of consideration per Share
equal to the initial Exercise Price (subject to
adjustment in the manner set forth in Section 9.1).
In addition, if the amount of any adjustment pursuant
to this Section 9 shall be less than two cents (24)
per Warrant Share no adjustment to the Exercise Price
or to the number of Warrant Shares issuable upon the
exercise of the Warrants shall be made; provided,
however, that in such case any adjustment that would
otherwise be required then to be made shall be
carried forward and shall be made at the time of and
together with the next subsequent adjustment which,
together with any adjustment so carried forward,
shall amount to at least two cents (24) per Warrant
Share.
9.3 Notice of Adjustment. Promptly after adjustment of the Exercise
Price or any increase or decrease in the number of Warrant Shares purchasable
upon the exercise of this Warrant, the Company shall give written notice
thereof, by first class mail, postage prepaid, addressed to the registered
holder of this Warrant at the address of such holder as shown on the books of
the Company. The notice shall be signed by the Company's chief financial officer
and shall state (i) the effective date of the adjustment and the Exercise Price
resulting from such adjustment and (ii) the increase or decrease, if any, in the
number of Common Shares purchasable at such price upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
9.4 Other Notices. If at any time: (a) the Company shall declare any
cash dividend upon its Common Shares; (b) the Company shall declare any dividend
upon its Common Shares payable in securities (other than a dividend payable
solely in Common Shares) or make any special dividend or other distribution to
the holders of its Common Shares; (c) there shall be any consolidation or merger
of the Company with another corporation, or a sale of all or substantially all
of the Company's assets to another corporation; or (d) there shall be a
voluntary or involuntary dissolution, liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give, by certified or
registered mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company, (i)
at least 15 days' prior written notice of the date on which the books of the
Company 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
dissolution, liquidation or winding-up; (ii) at least 10 days' prior written
notice of the date on which the books of the Company shall
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<PAGE>
close or a record shall be taken for determining rights to vote in respect of
any such reorganization, reclassification, consolidation, merger or sale, and
(iii) in the case of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up, at least 15 days' written
notice of the date when the same shall take place. Any notice given in
accordance with clause (i) above shall also specify, in the case of any such
dividend, distribution or option rights, the date on which the holders of Common
Shares shall be entitled thereto. Any notice given in accordance with clause
(iii) above shall also specify the date on which the holders of Common Shares
shall be entitled to exchange their Common Shares for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up, as the case may be. If the
Holder of the Warrant does not exercise this Warrant prior to the occurrence of
an event described above, except as provided in Sections 9.1 and 9.5, the Holder
shall not be entitled to receive the benefits accruing to existing holders of
the Common Shares in such event.
9.5 Changes in Common Shares. In case at any time the Company shall be
a party to any transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the Company's assets or
recapitalization of the Common Shares) in which the previously outstanding
Common Shares shall be changed into or exchanged for different securities of the
Company or common stock or other securities of another corporation or interests
in a non-corporate entity or other property (including cash) or any combination
of any of the foregoing (each such transaction being herein called the
"Transaction" and the date of consummation of the Transaction being herein
called the "Consummation Date"), then, as a condition of the consummation of the
Transaction, lawful and adequate provisions shall be made so that each Holder,
upon the exercise hereof at any time on or after the Consummation Date, shall be
entitled to receive, and this Warrant shall thereafter represent the right to
receive, in lieu of the Common Shares issuable upon such exercise prior to the
Consummation Date, the highest amount of securities or other property to which
such Holder would actually have been entitled as a holder of an Common Shares
upon the consummation of the Transaction if such Holder had exercised such
Warrant immediately prior thereto. The provisions of this Section 9.5 shall
similarly apply to successive Transactions.
10. Exchange and Replacement of Warrant Certificate. The Warrant Certificate is
exchangeable without expense, upon the surrender thereof by the registered
Holder at the principal executive office of the Company, for a new Warrant
Certificate of like tenor and date representing in the aggregate the right to
purchase the same number of Warrant Shares in such denominations as shall be
designated by the Holder thereof at the time of such surrender. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of the Warrant Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it,
and reimbursement to the Company of all reasonable expenses incidental thereto,
and upon surrender and cancellation of the Warrants, if mutilated, the Company
will make and deliver a new Warrant Certificate of like tenor, in lieu thereof.
11. Elimination of Fractional Interests. The Company shall not be required to
issue certificates representing fractions of Common Shares upon the exercise of
the Warrants, nor shall it be required to issue scrip or pay cash in lieu of
fractional interests, it being the intent of the
8
<PAGE>
parties that all fractional interests shall be eliminated by rounding any
fraction up to the nearest whole number of Common Shares or Other Securities.
12. Reservation of Securities. The Company shall at all times reserve and keep
available out of its authorized Common Shares, solely for the purpose of
issuance upon the exercise of the Warrants, such number of Common Shares or
Other Securities as shall be issuable upon the exercise thereof. The Company
covenants and agrees that, upon exercise of the Warrants and payment of the
Exercise Price therefor, all Common Shares or Other Securities issuable upon
such exercise shall be duly and validly issued, fully paid, non-assessable and
not subject to the preemptive rights of any holder of Common Shares.
13. Notices to Warrant Holder. Except as otherwise provided in Section 9.4,
nothing contained in this Agreement shall be construed as conferring upon the
Holder by virtue of his holding the Warrant the right to vote or to consent or
to receive notice as a holder of Common Shares in respect of any meetings of
such holders for the election of directors or any other matter, or as having any
rights whatsoever as such a holder of the Company.
14. Notices. All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made and sent when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holder of the Warrants, to the address of such Holder
as shown on the books of the Company; or (b) If to the Company, to the address
set forth in Section 4 hereof or to such other address as the Company may
designate by notice to the Holder.
15. Supplements and Amendments. The Company and Holder may from time to time
supplement or amend this Agreement in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company and Holder may deem necessary
or desirable.
16. Successors. All the covenants and provisions of this Agreement shall be
binding upon and inure to the benefit of the Company, the Holder and their
respective successors and assigns hereunder.
17. Termination. This Agreement shall terminate at the close of business on the
tenth anniversary of the issuance of the Warrants.
18. Governing Law. This Agreement and the Warrant Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of New York
and for all purposes shall be construed in accordance with the laws of the State
of New York without giving effect to the rules of the State of New York
governing the conflicts of laws.
19. Entire Agreement; Modification. This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof and may not be modified or amended except by a writing duly signed by the
party against whom enforcement of the modification or amendment is sought.
9
<PAGE>
20. Severability. If any provision of this Agreement shall be held to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Agreement.
21. Captions. The caption headings of the Sections of this Agreement are for
convenience of reference only and are not intended, nor should they be construed
as, a part of this Agreement and shall be given no substantive effect.
22. Benefits of this Agreement. Nothing in this Agreement shall be construed to
give to any person or corporation other than the Company and Holder any legal or
equitable right, remedy or claim under this Agreement; and this Agreement shall
be for the sole and exclusive benefit of the Company and Holder.
23. Counterparts. This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed, as of the day and year first above written.
Very truly yours,
TRUEVISION INTERNATIONAL, INC.
By:
-------------------------------
Authorized Officer
ACCEPTED AND AGREED TO: INVESTOR:
- --------------------------------------------
Name: Address: Social Security/Tax I.D. No.:
10
<PAGE>
TRUEVISION INTERNATIONAL, INC.
SCHEDULE I
Investor (Name) No. of Warrant Shares
- --------------- ---------------------
11
<PAGE>
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i)
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY
SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii)
AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE. EXERCISABLE FROM ________________, 1999 UNTIL 5:30 P.M., NEW YORK
TIME, _____________, 2003
WARRANT CERTIFICATE
This Warrant Certificate certifies that or his/her registered
assigns ("Holder"), is the registered holder of [ ] Warrants to purchase
initially at any time from _____________, 1999, until 5:30 p.m. New York time
on _____________________, 2004 ("Expiration Date"), up to [ ] fully-paid
and non-assessable shares of common stock, par value $.0001 per share
("Common Shares") of TRUEVISION INTERNATIONAL, INC., a Delaware corporation
(the "Company"), at an initial exercise price, subject to adjustment in
certain events (the "Exercise Price"), equal to $8.40 per Common Share, upon
surrender of this Warrant Certificate and payment of the initial exercise
price at an office or agency of the Company, but subject to the conditions
set forth herein and in the Warrant Agreement dated as of the date hereof
between the Company and Holder (the "Warrant Agreement"). Payment of the
Exercise Price shall be made by certified check or official bank check in New
York Clearing House funds payable to the order of the Company, unless
exercise is made pursuant to Section 4.2 of the Warrant Agreement. No Warrant
may be exercised after 5:30 p.m., New York time, on the Expiration Date, at
which time all Warrants evidenced hereby, unless exercised prior thereto,
shall thereafter be void. The Warrants evidenced by this Warrant Certificate
are part of a duly authorized issue of Warrants issued pursuant to the
Warrant Agreement, which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for
a description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the Holder (the word "Holder"
meaning the registered holder) of the Warrants. The Warrant Agreement
provides that upon the occurrence of certain events the Exercise Price and
the type and/or number of the Company's securities issuable thereupon may,
subject to certain conditions, be adjusted. In such event, the Company will,
at the request of the holder, issue a new Warrant Certificate evidencing the
adjustment in the Exercise Price and the number and/or type of securities
issuable upon the exercise of the Warrants; provided, however, that the
failure of the Company to issue such new Warrant Certificate shall not in any
way change, alter, or otherwise impair, the rights of the holder as set forth
in the Warrant Agreement. Upon due presentment for registration of transfer
of this Warrant Certificate at an office or agency of the Company, a new
Warrant Certificate or Warrant Certificates of like tenor and evidencing in
the aggregate a like number of Warrants shall be issued to the transferee(s)
in exchange for this Warrant Certificate,
12
<PAGE>
subject to the limitations provided herein and in the Warrant Agreement, without
any charge except for any tax or other governmental charge imposed in connection
with such transfer. Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such number of unexercised Warrants. The
Company may deem and treat the registered holder(s) hereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof,
and of any distribution to the holder(s) hereof, and for all other purposes, and
the Company shall not be affected by any notice to the contrary. All terms used
in this Warrant Certificate which are defined in the Warrant Agreement shall
have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed.
Dated as of , 1999
----------------
TRUEVISION INTERNATIONAL, INC.
- ----------------------------------
By: /s/ John C. Homan
Authorized Officer
13
<PAGE>
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _______ Common Shares and
herewith tenders in payment for such securities a certified check or official
bank check payable in New York Clearing House Funds to the order of TRUEVISION
INTERNATIONAL, INC. in the amount of $_____, all in accordance with the terms of
Section 4 of the Warrant Agreement dated as of __________________, 1999, between
TRUEVISION INTERNATIONAL, INC. and the undersigned (or its assignor). The
undersigned requests that a certificate for such securities be registered in the
name of __________ whose address is __________ and that such Certificate be
delivered to whose address is _________.
Dated:
Signature _________________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.) (Insert Social Security or Other Identifying
Number of Holder)
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder desires to
transfer the Warrant Certificate.)
FOR VALUE RECEIVED _______ hereby sells, assigns and transfers unto
(Please print name and address of transferee) this Warrant Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint Attorney, to transfer the within Warrant Certificate on
the books of the within-named Company, with full power of substitution.
Dated: ________________
Signature:________________________ SSN:__________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.) (Insert Social Security or Other Identifying
Number of Assignee)
14
<PAGE>
Exhibit 10.0
EMPLOYMENT CONTRACT FOR JOHN C. HOMAN
CONTRACT
THIS AGREEMENT, made and entered into the seventh day of September 1998,
by and between John C. Homan, residing at 303 Market St. #204, San Diego, CA
92101 (hereinafter called "Employee"), and Topform, Inc. a Delaware
corporation (hereinafter called "Employer").
WITNESSETH:
WHEREAS, Employer desires to employ Employee as President and Chief
Executive Officer, and
WHEREAS, Employee desires so to be employed.
NOW, THEREFORE, in consideration of the premises, of the mutual covenants
herein contained, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the panics hereby agrees as
follows:
1. Employer hereby employs Employee and Employee agrees so to be employed
as President and Chief Executive Officer of Employer. The term of employment
shall be for an initial term of three years commencing as of the date hereof.
This Agreement and the employment provided for herein shall be extended from
year to year thereafter (the "renewal term"), except that either party may
terminate this Agreement effective as of the end of the term or of any
renewal term by giving the other written notice of its intention to do so not
later than one hundred eighty (180) days prior to the expiration of the term
hereof or of any renewal term.
2. (a) Employee hereby accepts such employment upon the terms and
conditions herein set forth. Employee's duties hereunder shall be to perform
as the President and Chief Executive Officer of the Employer in its business
subject to supervision by the Board of Directors of the Employer. Said duties
shall include all responsibilities generally recognized as being reasonable
for the general management of a company operating in the public trust,
including the hiring and firing of all personnel, creation and elimination of
positions, operating entities, etc.
(b) Employee agrees to devote his best efforts and his sufficient time
and attention to the performance of his duties hereunder. The principal place
of employment shall be in San Diego, California. Employee shall travel as
reasonable required in the performance of his duties hereunder.
3. (a) As compensation for the services to be rendered by Employee during
the term hereof and any renewal term, Employer shall pay to Employee and
Employee shall accept a salary of $108,000 per annum for the first year of
the term payable in accordance with Employer's payroll practices ("base
salary"). Base salary of Employee shall be the greater of 125% of the prior
years base salary or seventy-five percent (75%) of the prior years total
compensation, whichever is greater ("increased amount") after the expiration
of each year from the date hereof.
<PAGE>
(b) Employee shall be entitled to such stock, stock option and cash
bonuses based upon the completion of various milestones and objectives as
determined by the Board of Directors from time to time, but no less than five
percent of the pretax profit per fiscal year.
(c) Employee shall be reimbursed for his reasonable expenses incurred in
the performance of his duties hereunder upon presentation of proper
documentation therefor.
4. (a) Employee shall be entitled to receive such other employee benefits
as Employer may now have or hereafter make generally available to its
employees from time to time.
(b) Employer shall furnish to Employee for use in the performance of his
services hereunder a full-size car as mutually agreed. Upon the expiration or
termination of this Agreement for any reason whatsoever Employee shall the
option of purchasing the car for the lower of its wholesale value as
determined by the NADA used car guide for the Central Region or return the
car to Employer.
(c) Employee shall be entitled to five weeks vacation during the first
year of the term increasing by one week per year to a maximum of ten weeks
per year. Employee has the right to accrue vacation for up to three years
after which he shall be entitled to receive compensation at his then current
rate in lieu of taking any or all of said vacation.
(d) Employee shall at no time be prohibited or discouraged from pursuing
any and all activities that Employee, in his sole discretion, deems to be
acceptable to him, including, but not limited to scuba diving, flying, sky
diving, etc.
(e) Employee shall comply with all of the terms and provisions of any
code of ethics at any time or from time to time instituted by Employer and
which is generally applicable to all other similarly situated employees of
Employer.
(f) Employee acknowledges that the Employer's consumer advertising and
marketing programs ("Programs") consisting of print, radio, TV and public
relations has been developed by Employer at its expense and is the basis for
its business and that any disclosure of such Programs will cause grievous
harm to Employer. Employee acknowledges that the Programs are unique and
unusual and constitutes the sole proprietary technology of Employer.
Therefore, Employee shall not, during the term of this Agreement or any time
thereafter, divulge, furnish or make accessible to anyone (other than in the
regular course of employer's business) any knowledge or information with
respect to the Programs and any financial information concerning the
business, methods of operation, finances and other aspects of the business of
Employer as now or hereafter conducted.
(g) Employee agrees that during the term of the employment, and for a
period of one (1) year thereafter, Employee will not, either through any
agent, firm or third party and whether as principal, agent or employee,
engage in any business of any nature which is competitive with the laser
vision correction business of the Employer at the time thereof.
(h) Employer shall be entitled to injunctive and/or other equitable
relief to prevent or remedy a breach of any of the provisions of this
Agreement and to secure their enforcement, in addition to any other remedies
or damages which may be available to Employer.
If to Employer:
John C. Homan
303 Market St. #204
San Diego, CA 92101
11. The failure of either party as any time to require performance by the
other party of any provision hereunder shall in no way affect the right of
that party thereafter to enforce the same, nor shall it affect the party's
right to enforce any of the other provisions in this Agreement; nor shall the
waiver by either party of the breach of any provision hereof be taken or held
to be a waiver of any subsequent breach of such provision or as a waiver of
the provision itself.
<PAGE>
12. This Agreement constitutes the entire agreement between the parties. No
modification, variance or change in any of its terms or provisions shall be
valid unless in writing and signed by both parties. This Agreement shall be
governed and construed in accordance with the laws of the State of California.
13. The Employee is entitled to the following additional benefits:
(a) The Employee is entitled to fifteen paid days per year for
attendance or participation at lectures, colloquium conventions, courses and
continuing professional education.
(b) The Employee is entitled to ten days of paid sick leave in any
calendar year. The Employee will receive half pay for up to an additional
sixty days of sick leave in any calendar year, and unpaid leave if he is
unable to return to work after ninety days. If the Employee is not totally
and permanently disabled and does not return within one year of the end of a
sick leave period, the Employee will be deemed to have resigned his
employment. Total and permanent disability is defined as the inability of the
employee to carry out the normal duties of his position.
(c) If the Employee's physical condition makes full-time employment
impossible but part-time employment possible, the Employee and Employer will
negotiate an agreement providing for reduced duties and reduced compensation.
(d) The Employer's policy calls for no mandatory retirement age.
(e) The Employer agrees to pay death benefits to the surviving spouse
or estate of the Employee if the Employee's death occurs while this agreement
is in force in the amount of the aggregate of all compensation paid to
Employee during the past twelve months times five or five hundred thousand
dollars, whichever is greater.
6. Officer and Directors Insurance. The Employer agrees to maintain
Officers and Directors liability insurance covering the Employee in the
amount of at least $1,000,000 per occurrence and $5,000,000 overall per
policy year.
IN WITNESS WHEREOF,
duly executed and delivered as of the date set forth above.
- -----------------------------------
Frank J. Seifert, Vice President
- -----------------------------------
John C. Homan
<PAGE>
EXHIBIT 10.1
AMENDED EMPLOYMENT AGREEMENT
This AMENDED EMPLOYMENT AGREEMENT ("Amendment"), is hereby made and
entered into this 25th day of August, 1999, by and between John C. Homan, an
individual residing at 260 East Flamingo Street, #423, Las Vegas, Nevada
89109 ("Employee"), and TrueVision International, Inc., a Delaware
corporation with its executive office located at 1720 Louisiana Boulevard,
Suite 102, Albuquerque, New Mexico, 87110, formerly known as Topform, Inc.
("TrueVision").
W I T N E S S E T H:
WHEREAS, the Employee and TrueVision previously entered into a certain
written employment agreement dated September 7, 1998 whereby the Employee
agreed to become employed by TrueVision as the President and Chief Executive
Officer of the company; and
WHEREAS, the parties hereto have, as of this date, agreed to amend
certain terms and conditions of the September 7, 1998 employment agreement,
and to otherwise continue with the other terms and conditions of the
September 7, 1998 employment agreement; and
WHEREAS, both parties hereto agree that it is now in their best interests
and that of the shareholders of TrueVision to provide for the following
amended terms of employment for the Employee.
NOW THEREFORE, in consideration of the premises, of the mutual covenants
herein contained, for the consideration recited in the original September 7,
1998 employment agreement between these parties, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree to amend the September 7, 1998
employment agreement as follows:
1. TERMS OF COMPENSATION. Paragraph 3(a) and 3(b) of the September 7,
1998 employment agreement between these parties shall be and the same is
hereby amended, as of the date hereof, to be as follows:
"(a) As compensation for the services to be rendered by Employee during
the term hereof and any renewal term, Employer shall pay to Employee and
Employee shall accept a salary of $108,000 per annum for the first year of
the term payable in accordance with Employer's payroll practices ("Base
Salary"). Base salary of Employee shall be the greater of 125% of the prior
year's Base Salary or 75% of the prior year's total compensation, which ever
is greater (the "Increased Amount"), after the expiration of each year from
the date hereof.
(b) Employee shall be entitled to such stock, stock option and cash
bonuses based upon the completion of various performance milestones and
objectives as determined and established by the TrueVision Board of Directors
from time to time, and shall receive
1
<PAGE>
such stock, option grants, or cash bonuses within the Board's discretion."
2. AFFIRMATION OF EMPLOYMENT TERMS. Except as specifically modified by
this Amendment, the parties re-affirm the terms and conditions of the
September 7, 1998 employment agreement entered into by these parties as of
the date thereof.
IN WITNESS WHEREOF, this Amendment has been duly executed by the parties
hereto as of the date first above written.
Employee:
/s/ John C. Homan
- --------------------
John C. Homan
TrueVision International, Inc.
By: /s/ Frank J. Seifert
------------------------
Frank J. Seifert, Executive
Vice-President
2
<PAGE>
Exhibit 10.2
CONSULTING AGREEMENT
AGREEMENT made as of this 23rd day of August, 1999 by and between
TrueVision International, Inc. ("TrueVision") with an address at 1720
Louisiana NE, Suite 110, Albuquerque, New Mexico 87110 and Frank J. Seifert
(the "Consultant"), with an address at 671 Loring St., San Diego, CA 92109.
W I T N E S S E T H
WHEREAS, Consultant possesses certain knowledge and expertise in certain
fields in which the Company is conducting research and development and/or is
otherwise engaged in business (the "Field"), and desires to provide services
to the Company;
WHEREAS, the Company desires to retain the Consultant to provide
required Business advisory services and investment banking advice in the
Field;
WHEREAS, the Consultant desires to be retained to render such services
upon the terms and conditions hereto set forth; and
WHEREAS, the Company desires the Consultant not to compete with the
Company.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:
1. Simultaneous with the execution of this Agreement, Consultant shall
have entered into and executed an Unconditional Continuing Guaranty (the
"Guaranty") in favor of DVI Financial Services, Inc. ("DVI"). The Guaranty is
provided pursuant to the Subordination Agreement entered into on February 24,
1999 and is to replace Pam Medley, M.D., the previous Guarantor to a certain
loan to TrueVision Laser Center of Albuquerque, Inc. ("TrueVision") and DVI
Financial Services, Inc., ("DVI"). Truevision, has obtained leases, loans,
extensions of credit and other financial services from DVI, and was required
to provide the Guaranty in order to close the refinancing of the Albuquerque
VIX laser facility.
2. (a) Subject all times to the supervision and direction of the
officers and Board of Directors of the Company, the Consultant shall during
the term hereof render Business advisory, investment banking consulting and
technical services to the Company (the "Services"). Such Services shall
relate to further research and development of the Company, as part of the
business of the Company, as the same shall now or hereafter exist, or as the
Company's Board of Directors or officers may from time to time reasonably
request. The Consultant shall perform his duties as an independent
contractor, and not as an employee, by use of his best efforts and due
diligence.
(b) Consultant may offer ideas or concepts to Company at any time that
are not specifically requested by the Company, however, Consultant shall
first present a broad and general oral outline of the proposed Services to
the Company, for the purpose of minimizing Consultant's efforts in those
instances where the proposed idea or concept may not appear to be consistent
with the Company's research objectives; may appear to duplicate Company
activities planned or in progress; or may appear to have been previously
considered by the Company. It is understood that the Company shall have the
sole and exclusive right to accept or reject any Service offered, and the
sole and exclusive right to determine the extent, if any, to which a Service
idea or concept shall be further studied or developed.
(c) As long as the Guaranty is in effect, the Company shall engage
Consultant as a Member of the Company's Board of Directors. Consultant shall
be entitled to receive reimbursement for all reasonable costs incurred in
meetings including, but not limited to food, lodging and transportation. In
addition, Consultant shall be entitled to the same compensation as the
Company gives to other non-employee directors for acting in such capacity.
3. This Agreement is for a term of thirty-six (36) months (the "Term"),
subject to earlier termination as provided in paragraph 6 below. The
foregoing notwithstanding, this Agreement may be extended or renewed by
mutual consent of the parties hereto.
1
<PAGE>
4. In full satisfaction for services to be rendered hereunder pursuant
to paragraph, the Consultant hereby accepts, the following compensation:
(a) The Consultant will receive an annual consulting fee of
$60,000 paid monthly in advance at the rate of $5,000 per month (the
"Monthly Fee") for services rendered. The monthly Fee will commence June
1, 1999. In addition to the Monthly Fee, the Company will reimburse the
Consultant on a monthly basis for all reasonable travel and
out-of-pocket expenses incurred by the Consultant in the performance of
his duties hereunder, and the Consultant shall account for such expenses
to the Company. Consultant shall also be entitled to receive the same
benefits that are available to employees of the Company on the same
terms and conditions as such employees, and shall participate in the
grant or award of stock options from the Company's 1998 Stock Option
Plan (and any successor or supplemental stock option plan) at a level
which is commensurate with other senior management of the Company.
(b) In addition to the consideration set forth in Section 2(a)
above, the Company shall cause to be assigned to the Consultant certain
issued and outstanding options to purchase 83,333 post split shares (the
"Shares") of the Company's Common Stock at $0.86 per share, which
options ("Medley Options") were initially issued to Dr. Pamela Medley
("Dr. Medley") in exchange for her delivery of an irrevocable and
continuing guarantee agreement given by Dr. Medley on or about February
24, 1998, and which is referred to in Section 1 of this Agreement. The
Medley Options shall be assigned to the consultant within ten business
days after the date of this Agreement, and the Company shall enter such
assignment on its option registry in order to reflect the assignment of
the Medley Options from Dr. Medley to the Consultant as of the date
hereof. The shares underlying these options shall be registered by the
Company with the Securities and Exchange Commission ("SEC") on the next
available registration statement and if not so registered within six
months from the date hereof, shall be included on a Form S-8
Registration Statement or any other available registration statement to
be filed within seven months from the date hereof.
(c) The Company hereby represents and warrants it will use its
best efforts to make all laser financing payments to DVI described in
Section 1 above, on a timely basis.
5. All obligations of the Consultant contained herein shall be subject
to the Consultant's reasonable availability for such performance, in view of
the nature of the requested service and the amount of notice received. The
Consultant shall devote such time and effort to the performance of his duties
hereunder as the Consultant shall determine is reasonably necessary for such
performance. The Consultant may look to such others for such factual
information, investment recommendations, economic advice and/or research upon
which to base his advice to the Company hereunder, as it shall deem
appropriate. The Company shall furnish to the Consultant all information
relevant to the performance by the Consultant of his obligations under this
Agreement, or particular projects as to which the Consultant is acting as
advisor, which will permit the Consultant to know all facts material to the
advice to be rendered, and all material or information reasonably requested
by the Consultant. In the event that the Company fails or refuses to furnish
any such material or information reasonably requested by the Consultant, and
thus prevents or impedes the Consultant's performance hereunder, any
inability of the Consultant to perform shall not be a breach of his
obligations hereunder.
6. If, during the term of the agreement, the Consultant voluntarily
terminates his services as Consultant or is terminated by the Company for
Cause, as such term is defined below, then the term of this agreement shall
end without further action by either party hereto, and all rights and
obligations of the parties hereunder, except those set forth in paragraphs 8
and 9 hereof, shall terminate as of such date. For the purposes of this
Agreement, "Cause" shall mean either the nonperformance of the Consultant's
duties set forth herein, as reasonably determined by the Company, or the
conviction of the Consultant for a felony committed against the Company.
7. Except with respect to business activities competitive to the
Company's Field, nothing contained in this Agreement shall limit or restrict
the right of the Consultant or of any partner, employee, agent or
representative of the Consultant, to be a partner, director, officer,
employee, agent or representative of, or to engage in any other business,
whether of a similar nature or not, nor to limit or restrict the right of the
Consultant to render services of any kind to any other corporation, firm,
individual or association.
2
<PAGE>
8. The Consultant will hold in confidence any confidential information,
which the Company provides to the Consultant pursuant to this Agreement
unless the Company gives the Consultant permission in writing to disclose
such confidential information to a specific third party. Notwithstanding the
foregoing, the Consultant shall not be required to maintain confidentiality
with respect to information (i) which is or becomes part of the public
domain; (ii) of which it had independent knowledge prior to disclosure; (iii)
which comes into the possession of the Consultant in the normal and routine
course of his own business from and through independent non-confidential
sources; or (iv) which is required to be disclosed by the Consultant by
governmental requirements. If the Consultant is requested or required (by
oral questions, interrogatories, requests for information or document
subpoenas, civil investigative demands, or similar process) to disclose any
confidential information supplied to him by the Company or its
representatives, the Consultant shall, unless prohibited by law, promptly
notify the Company of such request(s) so that the Company may seek an
appropriate protective order. This Paragraph shall survive the termination of
this Agreement.
9. The Company and the Consultant agree to indemnify and hold each other
harmless including their respective partners, employees, agents,
representatives and controlling persons (and the officers, directors,
employees, agents, representatives and controlling persons of each of them)
from and against any and all losses, claims, damages, liabilities, costs and
expenses (and all actions, suits, proceedings or claims in respect thereof
and any legal or other expenses in giving testimony or furnishing documents
in response to a subpoena or otherwise (including, without limitation, the
cost of investigating, preparing or defending any such action, suit,
proceeding or claim, in which either the Company or the Consultant is a
party), as and when incurred, directly or indirectly, caused by, relating to,
based upon or arising out of this Agreement. This Paragraph shall survive the
termination of this Agreement.
10. This Agreement may not be transferred, assigned or delegated by any of
the parties hereto without the prior written consent of the other party
hereto.
11. The failure or neglect of the parties hereto to insist, in any one or
more instances, upon the strict performance of any of the terms or conditions
of this Agreement or their waiver of strict performance of any of the terms
or conditions of this Agreement shall not be construed as a waiver or
relinquishment in the future of such term or condition, but the same shall
continue in full force and effect.
12. Any notices hereunder shall be sent to the Company and to the Consultant
at their respective addresses set forth above. Any notice shall be given by
registered or certified mail, postage prepaid, and shall be deemed to have
been given when deposited in the United States mail. Either party may
designate any other address to which notice shall be given, by giving written
notice to the other of such change of address in the manner herein provided.
13. This Agreement has been made in the State of California and shall be
construed and governed in accordance with the laws thereof without giving
effect to principles governing conflicts of law.
14. This Agreement contains the entire agreement between parties, may
not be altered or modified, except in writing and signed by the party to be
charged thereby, and supersedes any and all previous agreements between the
parties relating to the subject matter hereof.
15. This Agreement shall be binding upon the parties hereto, the indemnified
parties referred to in Section 9, and their respective heirs, administrators,
successors and permitted assigns.
<PAGE>
3
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first above written.
Consultant
/s/ FRANK J. SEIFERT
- --------------------------------------
Frank J. Seifert
TrueVision International, Inc.:
By: /s/ JOHN HOMAN
- --------------------------------------
John Homan, President
4
<PAGE>
EXHIBIT 10.3
[TRUEVISION LASER CENTERS, INC. LOGO]
June 13, 1997
Dr. Howard P. Silverman
2618 South Beverly Drive
Los Angeles, CA 90034
Dear Dr. Silverman:
TrueVision Laser Centers, Inc. is pleased that you have accepted a position
on our Corporate Medical Advisory Committee. Your one-year appointment to the
Commitee is effective on July 1, 1997.
This board consists of a handful of optometrists and opthalmologists who are
considered leaders in their fields. We rely on the Medical Advisory Committee
to help us set corporate standards for our Centers nationwide. The Committee
guides us through the medical and professional issues that we face in the
continued development of TrueVision. Thank you very much for honoring us with
your commitment to serve on the Corporate Medical Advisory Committee.
In consideration for these services, you will be paid $5,000 in advance per
month.
True Vision will reimburse you for all directed reasonable and customary
business expenses (including $.31 per mile business mileage expense) you may
incur while employed by TrueVision Laser Centers, Inc. I will authorize and
monitor any business expenses that you may incur. Should you have a question
about any business expense reimbursement, please ask me in advance of
incurring the expense.
This letter contains all the terms of your agreement with TrueVision laser
Centers, Inc. You understand that no representative of TrueVision Laser
Center, Inc. has been authorized to make any commitments to you, or enter
into any agreements with you which are in addition to, or inconsistent with,
the terms of this letter. Further, the terms of this letter may not be
modified in any way except in writing, signed by you and TrueVision Laser
Centers, Inc.
625 Broadway Suite 1400 San Diego CA 92101
Phone 619-696-3200 Fax 619-696-1010 E-mail [email protected]
<PAGE>
[LOGO]
Dr. Howard P. Silverman
June 13, 1997
Page 2 of 2
Please read this agreement and the attached Confidentiality Agreement.
Address any questions directly to me. Sign and return this letter, and
complete all of the referenced documents and return them to my attention
within 3 days of receiving this offer. Your signature of this offer letter is
acknowledgment of the contents and acceptance of this agreement.
We look forward to a mutually satisfactory relationship.
Respectfully,
/s/ John C. Homan
- -------------------------------
John C. Homan
President and CEO
Enclosures: Confidentiality Agreement
JCH:bll
I, HOWARD P. SILVERMAN, accpet TrueVision Laser Center's offer of employment
on the terms and conditions descriged above.
/s/ Howard P. Silverman 6/13/97
- ------------------------------- -------------------------------
(Signature) (Date)
<PAGE>
Exhibit 10.4
CONSULTING AGREEMENT
AGREEMENT made as of this 1st day of April, 1998 by and between TopForm, Inc
("TopForm") with an address at 445 G Street, San Diego, CA 92101 and Howard
Silverman (the "Consultant"), with an address of 2618 S. Beverly Dr., Los
Angeles, CA 90034.
W I T N E S S E T H
WHEREAS, Consultant possesses certain knowledge and expertise in certain
fields in which the Company is conducting research and development and/or is
otherwise engaged in business (the "Field"), and desires to provide services
to the Company;
WHEREAS, the Company desires to retain the Consultant to provide required
medical advisory services and investment banking advice in the Field;
WHEREAS, the Consultant desires to be retained to render such services upon
the terms and conditions herein set forth; and
WHEREAS, the Company desires the Consultant not to compete with the Company.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the parties hereto hereby agree as follows:
1. Simultaneous with the execution of this Agreement, Consultant shall have
entered into and executed an Unconditional Continuing Guaranty (the
"Guaranty") in favor of DVI Financial Services, Inc. ("DVI"). The Guaranty
was provided pursuant to a Subordination Agreement entered into on February
24, 1998 by and among Consultant, Pam Medley, M.D.; Truevision Laser Center
of Albuquerque, Inc. ("Truevision") and DVI Financial Services, Inc.,
("DVI"). Truevision, is obtaining leases, loans, extensions of credit and
other financial services from DVI, and was required to provide the Guaranty
in order to close the refinancing of the Albuquerque VISX laser facility.
2. (a) Subject all times to the supervision and direction of the officers
and Board of Directors of the Company, the Consultant shall during the term
hereof render medical advisory, investment banking consulting and technical
services to the Company (the "Services"). Such Services shall relate to the
further research and development of the Field, as part of the business of the
Company, as the same shall now or hereafter exist, or as the Company's Board
of Directors or officers may from time to time reasonably request. The
Consultant shall perform his duties as an independent contractor, and not as
an employee, by use of his best efforts and due diligence.
-1-
<PAGE>
(b) Consultant may offer ideas or concepts to Company at any time that
are not specifically requested by the Company, however, Consultant shall
first present a broad and general oral outline of the proposed Services to
the Company, for the purpose of minimizing Consultant's efforts in those
instances where the proposed idea or concept may not appear to be consistent
with the Company's research objectives; may appear to duplicate Company
activities planned or in progress; or may appear to have been previously
considered by the Company. It is understood that the Company shall have the
sole and exclusive right to accept or reject any Service offered, and the
sole and exclusive right to determine the extent, if any, to which a Service
idea or concept shall be further studied or developed.
(c) As long as the Guaranty is in effect, the Company shall engage
Consultant or his designee as a nonvoting advisor to the Company's Board of
Directors. The Company shall notify and invite Consultant to each meeting of
the Board. Consultant shall receive all notices and other correspondence and
communications set by the Company to Members of the Board. Consultant shall
be entitled to receive reimbursement for all reasonable costs incurred in
attending such meetings including, but not limited, food, lodging, and
transportation. In addition, Consultant shall be entitled to the same
compensation as the Company gives to other non-employee directors for acting
in such capacity.
3. This Agreement is for a term of thirty-six (36) months (the "Term"),
subject to earlier termination as provided in paragraph 6 below. The
foregoing notwithstanding, this Agreement may be extended or renewed by
mutual consent of the parties hereto.
4. In full satisfaction for services to be rendered hereunder pursuant to
paragraph 1, the Consultant hereby accepts, the following compensation:
(a) The Consultant will receive an annual salary of $60,000 paid
monthly in advance at the rate of $5,000 per month (the "Monthly Fee") for
services rendered as a member of the Company's Medical Advisory Board. The
Monthly Fee will commence on July 1, 1998. In addition to the Monthly Fee, the
Company will reimburse the Consultant on a monthly basis for all reasonable
travel and out-of-pocket expenses incurred by the Consultant in the
performance of his duties hereunder,and the Consultant shall account for such
expenses to the Company.
(b) In addition to the consideration set forth in Section 2(a) above,
the Consultant shall be entitled to purchase 400,000 post split shares (the
"Shares") of the Company's Common Stock at par value. The Shares shall be
registered by the Company with the Securities and Exchange Commission ("SEC")
on the next available registration statement and if not so registered within
six months from the date hereof, shall be included on a Form S-8 Registration
Statement or any other available registration statement to be filed within
seven months from the date hereof.
(c) Immediately following the completion of the DVI Laser Refinancing,
Consultant shall be paid all outstanding expenses in the amount of
approximately $6,400.
-2-
<PAGE>
(d) Consultant shall be paid all past due and then pending consultant
fees owed to him by True Vision, accrued at the rate of $5,000 per month, or
an aggregate of $50,000 as of this date. The monies shall be paid to
Consultant from the proceeds of the Company's proposed private placement but
in any event no later than June 30, 1998.
(e) The Company hereby represents and warrants that it will use its best
efforts to make all laser financing payments to DVI described in Section 1
above, on a timely basis.
5. All obligations of the Consultant contained herein shall be subject to
the Consultant's reasonable availability for such performance, in view of the
nature of the requested service and the amount of notice received. The
Consultant shall devote such time and effort to the performance of his duties
hereunder as the Consultant shall determine is reasonably necessary for such
performance. The Consultant may look to such others for such factual
information, investment recommendations, economic advice and/or research,
upon which to base his advice to the Company hereunder, as it shall deem
appropriate. The Company shall furnish to the Consultant all information
relevant to the performance by the Consultant of his obligations under this
Agreement, or particular projects as to which the Consultant is acting as
advisor, which will permit the Consultant to know all facts material to the
advice to be rendered, and all material or information reasonably requested
by the Consultant. In the event that the Company fails or refuses to furnish
any such material or information reasonably requested by the Consultant, and
thus prevents or impedes the Consultant's performance hereunder, any
inability of the Consultant to perform shall not be a breach of his
obligations hereunder.
6. If, during the term of this agreement, the Consultant voluntarily
terminates his services as Consultant or is terminated by the Company for
Cause, as such term is defined below, then the term of this agreement shall
end without further action by either party hereto, and all rights and
obligations of the parties hereunder, except those set forth in paragraphs 8
and 9 hereof, shall terminate as of such date. For the purposes of this
Agreement, "Cause" shall mean either the non-performance of the Consultant's
duties set forth herein, as reasonably determined by the Company, or the
conviction of the Consultant for a felony committed against the Company.
7. Except with respect to business activities competitive to the Company's
Field, nothing contained in this Agreement shall limit or restrict the right
of the Consultant or of any partner, employee, agent or representative of the
Consultant, to be a partner, director, officer, employee, agent or
representative of, or to engage in, any other business, whether of a similar
nature or not, nor to limit or restrict the right of the Consultant to render
services of any kind to any other corporation, firm, individual or
association.
8. The Consultant will hold in confidence any confidential information, which
the Company provides to the Consultant pursuant to this Agreement unless the
Company gives the Consultant permission in writing to disclose such
confidential information to a specific third party. Notwithstanding the
foregoing, the Consultant shall not be required to maintain confidentiality
with respect to information (i) which is or becomes part of the public
domain; (ii) of which it had
3
<PAGE>
independent knowledge prior to disclosure; (iii) which comes into the
possession of the Consultant in the normal and routine course of his own
business from and through independent non-confidential sources; or (iv) which
is required to be disclosed by the Consultant by governmental requirements.
If the Consultant is requested or required (by oral questions,
interrogatories, requests for information or document subpoenas, civil
investigative demands, or similar process) to disclose any confidential
information supplied to him by the Company or its representatives, the
Consultant shall, unless prohibited by law, promptly notify the Company of
such request(s) so that the Company may seek an appropriate protective order.
This Paragraph shall survive the termination of this Agreement.
9. The Company and the Consultant agree to indemnify and hold each other
harmless including their respective partners, employees, agents,
representatives and controlling persons (and the officers, directors,
employees, agents, representatives and controlling persons of each of them)
from and against any and all losses, claims, damages, liabilities, costs and
expenses (and all actions, suits, proceedings or claims in respect thereof
and any legal or other expenses in giving testimony or furnishing documents
in response to a subpoena or otherwise (including, without limitation, the
cost of investigating, preparing or defending any such action, suit,
proceeding or claim, in which either the Company or the Consultant is a
party), as and when incurred, directly or indirectly, caused by, relating to,
based upon or arising out of this Agreement. This Paragraph shall survive the
termination of this Agreement.
10. This Agreement may not be transferred, assigned or delegated by any of
the parties hereto without the prior written consent of the other party
hereto.
11. The failure or neglect of the parties hereto to insist, in any one or
more instances, upon the strict performance of any of the terms or conditions
of this Agreement, or their waiver of strict performance of any of the terms
or conditions of this Agreement shall not be construed as a waiver or
relinquishment in the future of such term or condition, but the same shall
continue in full force and effect.
12. Any notices hereunder shall be sent to the Company and to the Consultant
at their respective addresses set forth above. Any notice shall be given by
registered or certified mail, postage prepaid, and shall be deemed to have
been given when deposited in the United States mail. Either party may
designate any other address to which notice shall be given, by giving written
notice to the other of such change of address in the manner herein provided.
13. This Agreement has been made in the State of California and shall be
construed and governed in accordance with the laws thereof without giving
effect to principles governing conflicts of law.
4
<PAGE>
14. This Agreement contains the entire agreement between parties, may
not be altered or modified, except in writing and signed by the party to be
charged thereby, and supersedes any and all previous agreements between the
parties relating to the subject matter hereof.
15. This Agreement shall be binding upon the parties hereto, the indemnified
parties referred to in Section 9, and their respective heirs, administrators,
successors and permitted assigns.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first above written.
/s/ HOWARD SILVERMAN
- --------------------------------------
Howard Silverman
TOPFORM, INC.
By: /s/ JOHN HOMAN
- --------------------------------------
John Homan, President
5
<PAGE>
EXHIBIT 10.5
CONSULTING AGREEMENT
--------------------
AGREEMENT made as of this 1st day of December, 1998 by between TopForm Inc
("TopForm") with an address of 445 G Street, San Diego, CA. 92101 and Howard
Silverman (the "Consultant"), with an address at 2618 S. Beverly Dr., Los
Angeles, CA. 90034.
WITNESSETH
----------
WHEREAS, Consultant posses certain knowledge and expertise in certain fields
in which the Company is conducting research and development and/or is
otherwise engaged in business (the "Field"), and desired to provide services
to the Company;
WHEREAS, the Company desired to retain the Consultant to provide required
medical advisory services and investment banking advise in the Field;
WHEREAS, the Consultant desires to be retained to render such services upon
the terms and conditions herein set forth; and
WHEREAS, The Company desires the Consultant not to compete with the Company.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the partie hereto hereby agree as follows:
1. Prior to the execution of this Agreement, Consultant has entered into
and executed an Unconditional Continuing Guaranty (the "Guaranty") in
favor of DVI Financial Services, Inc. ("DVI"). The Guaranty was
provided pursuant to a Subordination Agreement entered into on February
24, 1998 by and among Consultant, Pam Medley, M.D.: Truvision Laser
Center of Albuquerque, Inc. ("Truvision") and DVI Financial Services,
Inc., ("DVI"). Truvision, is obtaining leases, loans, extensions of
credit and other financial services from DVI, and was required to
provide the Guaranty in order to close the refinancing of the
Albuquerque VISX laser facility.
<PAGE>
2.(a) Subject all times to the supervision and direction of the officers and
Board of Directors of the Company, the Consultant shall during the term
hereof render medical advisory, investment banking consulting and
technical services to the Company ("the Services"). Such Services shall
relate to the further research and development of the Field, as part of
the business of the Company, as the same shall now or hereafter exist,
or as the Company's Board of Directors or officers may from time to
time reasonable request. The Consultant shall perform his duties as an
independent contractor, and not as an employee, by use of his best
efforts and due diligence.
(b) Consultant may offer ideas or concepts to Company at any time that are
not specifically requested by the Company, however, Consultant shall
first present a broad and general oral outline of the proposed Services
to the Company, for the purpose of minimizing Consultant's efforts in
those instances where the proposed idea or concept may not appear to be
consistent with the Company's research objectives, may appear to
duplicate Company activities planned or in progress; or may appear to
have been previously considered by the Company. It is understood that
the Company shall have the sole and exclusive right to accept or reject
any Service offered, and the sole and exclusive right to accept or
reject any Service offered, and the sole and exclusive right to
determine the extent, if any, to which a Service idea or concept shall
be further studied or developed.
(c) As long as the Guaranty is in effect, the Company shall engage
Consultant or his designee as a nonvoting advisor to the Company's
Board of Directors. The Company shall notify and invite Consultant to
each meeting of the Board. Consultant shall receive all notices and
other correspondence and communications set by the Company to Members
of the Board. Consultant shall be entitled to receive reimbursement for
all reasonable costs incurred in meetings including but not limited,
food, lodging, and transportation. In addition, Consultant shall be
entitled to the same compensation as the Company gives to other
non-employee directors for acting in such capacity.
<PAGE>
3. This Agreement is for a term of thirty-six (36) months (the "Term"),
subject to earlier termination as provided in paragraph 6 below. The
foregoing notwithstanding, this Agreement may be extended or renewed by
mutual consent of the parties hereto.
4. In full satisfaction for services to be rendered hereunder pursuant to
paragraph 1, the Consultant hereby accepts, the following compensation:
(a) The consultant will receive an annual salary of $102,000.00 paid
monthly in advance at the rate of $8,500.00 per month (the "Monthly
Fee") for services rendered as a member of the Company's Medical
Advisory Board. The monthly fee will commence upon receipt of the
Company proceeds of the proposal or for July 31, 1999, whichever
comes first. In addition to the Monthly Fee, the Company will
reimburse the Consultant on a monthly basis for all reasonable
travel and out-of-pocket expenses incurred by the Consultant in the
performance of his duties hereunder, and the Consultant shall
account for such expenses to the Company.
(b) In addition to the consideration set forth in Section 2 (a) above,
the Consultant shall be entitled to purchase 400,000 post split
shares (the "Shares") of the Company's Common Stock at par value.
The Shares shall be registered by the Company with the Securities
and Exchange Commission ("SEC") on the next available registration
statement and if not so registered within six months from the date
hereof, shall be included on a Form S-8 Registration Statement or
any other available registration statement to be filed within seven
months from the date hereof.
(c) Consultant shall be paid all past due and then pending consultant
fees owed by Tru Vision, accrued at the rate of $5,000.00 per month,
or an aggregate of $90,000.00 as if this date. The monies shall be
paid to Consultant from the proceeds of the Company's proposed
private placement but in any event no later than July 31, 1999.
(d) The Company hereby represents and warrants it will use its best
efforts to make all laser financing payments to DVI described in
Section 2 above, on a timely basis.
<PAGE>
5. All obligations of the Consultant contained herein shall be subject to
the Consultant's reasonable availability for such performance, in view of the
nature of the requested service and the amount of notice received. The
Consultant shall devote such time and effort to the performance of his duties
hereunder as the Consultant shall determine is reasonable necessary for such
performance. The Consultant may look to such others for such factual
information, investment recommendations, economic advice and/or research,
upon which to base his advise to the Company hereunder, as it shall deem
appropriate. The Company shall furnish to the Consultant all information
relevant to the performance by the Consultant of his obligations under this
Agreement, or particular projects as to which the Consultant is acting as
advisor, which will permit the Consultant to know all facts material to the
advice to be rendered, and all material or information reasonable requested
by the Consultant. In the event that the Company fails or refuses to furnish
any such material or information reasonable requested by the Consultant, and
thus prevents or impedes the Consultant's performance hereunder, any
inability of the Consultant to perform shall not be a breach of his
obligations hereunder.
6. If, during the term of agreement, the Consultant voluntarily terminates
his services as Consultant or is terminated by the Company for Cause, as
such term is defined below, then the term of this agreement shall end without
further action by either party if hereto, and all rights and obligations of the
parties hereunder, except those set forth in paragraphs 8 and 9 hereof, shall
terminate as of such date. For the purposed of this Agreement, "Cause" shall
mean either the non-performance of the Consultant's duties set forth herein,
as reasonable determined by the Company, or the conviction of the Consultant
for a felony committed against the Company.
7. Except with respect to business activities competitive to the Company's
Field, nothing contained in the Agreement shall limit or restrict the right
of the Consultant or of any partner employee, agent or representative of the
Consultant, to be a partner, director, officer, employee, agent or
representative of, or to engage in, any other business, whether of a similar
nature or not, nor to limit or restrict the right of the Consultant to render
services of any kind to any other corporation, firm, individual or
association.
8. The Consultant will hold in confidence any confidential information which
the Company provides to the Consultant pursuant to this Agreement unless the
Company gives the Consultant permission in writing to disclose such
confidential information to
<PAGE>
a specific third party. Notwithstanding the foregoing, the Consultant shall
not be required to maintain confidentiality with respect to information (i)
which is or becomes part of the public domain; (ii) of which it had
independent knowledge prior to disclosure; (iii) which comes into the
possession of the Consultant in the normal routine course of his own business
from and through independent non-confidential sources; or (iv) which is
required to be disclosed by the Consultant by governmental requirements. If
the Consultant is requested or required (by oral questions, interrogatories,
request for information or document subpoenas, civil investigative demands,
or similar process) to disclose any confidential information supplied to him
by the Company, or the existence of other negotiations in the course of his
dealings with the Company or its representatives, the Consultant shall, unless
prohibited by law, promptly notify the Company of such request(s) so that the
Company may seek an appropriate protective order. The Paragraph shall survive
the termination of this Agreement.
9. The Company and the Consultant agree to indemnify and hold each other
harmless including their respective partners, employees, agents,
representatives and controlling persons (and the officers, directors,
employees, agents, representatives and controlling persons of each of them)
form and against any and all losses, claims, damages, liabilities, costs and
expenses (and all actions, suits, proceedings or claims in respect thereof)
and any legal or other expenses in giving testimony or giving documents in
response to a subpoena or otherwise (including, without limitation, the cost
of investigating, preparing or defending any such action, suit, proceeding or
claim, whether or not in connection with any action, suit, proceeding or
claim in which either the Company or the Consultant is a party), as and when
incurred, directly or indirectly, caused by, relating to, based upon or
arriving out of their respective obligations under the Agreement. This
paragraph shall survive the termination of this agreement.
10. This agreement may not be transferred, assigned or delegated by any of
the parties hereto without the prior written consent of the other party
hereto.
11. The failure or neglect of the parties hereto to insist, in any one or
more instances, upon the strict performance of any of the terms or
conditions of this Agreement, or their waiver of strict performance of any
of the terms or conditions of this Agreement, shall not be construed as a
waiver or relinquishment in the future of such terms or condition, but the
same shall continue in full force and effect.
<PAGE>
12. Any notices hereunder shall be sent to the Company and to the Consultant
at their respective addresses set forth above. Any notice shall be given by
registered or certified mail, postage prepaid, and shall be deemed to have
been given when deposited in the Bermudian or United States mail. As the case
may be. Either party may designate any other address to which notice shall be
given, by giving written notice to the other of such change of address in the
manner herein provided.
13. This Agreement has been made in the State of California and shall be
construed and governed in accordance with the laws thereof without giving
effect to principles governing conflicts of law.
14. This Agreement contains the entire agreement between the parties, may not
be altered or modified, except in writing and signed by the party to be
charged thereby, and supersedes any and all previous agreements between the
parties relating to the subject matter hereof.
15. This Agreement shall be binding upon the parties hereto, the indemnified
parties referred to in Section 9, and their respective heirs, administrators,
successors and permitted assigns.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first above written.
/s/ Howard P. Silverman /s/ John Homan
- ----------------------- -------------------
Howard P. Silverman John Homan
TOPFORM, Inc.
<PAGE>
AMENDED CONSULTING AGREEMENT
THIS AMENDED CONSULTING AGREEMENT ("Amendment") is hereby made as of
this 30th day of August, 1999, by and between TrueVision International, Inc.,
a Delaware corporation with its executive office located at 1720 Louisiana
Boulevard, Suite 102, Albuquerque, New Mexico 87110 ("TrueVision"), and
Howard Silverman ("Consultant"), an individual resident at 2618 South Beverly
Drive, Los Angeles, California 90034.
W I T N E S S E T H
WHEREAS, TrueVision and the Consultant entered in to a Consulting
Agreement dated December 1, 1998, which provided in part that the Consultant
agreed to provide certain described consulting services to TrueVision, and
TrueVision agreed to compensate the Consultant as described therein; and
WHEREAS, the parties hereto now desire to amend and modify the December
1, 1998 Consulting Agreement, as described below.
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties hereto agree to amend and
modify their December 1, 1998 Consulting Agreement as follows:
4 (b). Paragraph 4(b) of the December 1, 1998 Consulting Agreement shall
be restated and amended as follows:
"In addition to the consideration set forth in Section 2(a), above,
the Consultant shall be entitled to purchase 16,667 post split shares (the
"Shares") of the Company's Common Stock at par value. The Shares shall be
registered by the Company with the Securities and Exchange Commission ("SEC")
on the next available registration statement, and if not so registered within
six months after the completion of the Company's initial public offering, they
shall be included on a Form S-8 registration statement or any other available
registration statement to be filed within seven months from and after the
date of the initial public offering."
IN WITNESS WHEREOF, this Amendment has been executed by the parties as
of the date first written above.
Consultant: TrueVision International, Inc.
/s/ Howard F. Silverman By: /s/ John C. Homan
- ----------------------------- ---------------------------
Howard F. Silverman John c. Homan, President
<PAGE>
Exhibit 10.7
RESTRICTED STOCK OPTION AGREEMENT
This Restricted Stock Option Agreement ("Agreement") is made and entered
into as of the ___ day of January, 1999, by and between Top Form, Inc. ("Top
Form"), a Delaware corporation ("Top Form"), TrueVision Laser Centers, Inc.
("TVLC"), a Nevada corporation and TrueVision Laser Centers of Albuquerque,
Inc. ("TVLCA"), a New Mexico corporation (hereinafter, Top Form, TVLC and
TVLCA are collectively referred to as the "Company"), and Pamela Medley, an
individual (hereinafter referred to as "Medley").
RECITALS:
--------
WHEREAS, the Company desires to have Medley's personal signature
guarantee (hereinafter referred to as "Guarantee") of a certain financial
obligation of the Company pertaining to the refinancing of the Company's
laser equipment; and
WHEREAS, Medley is willing to provide such Guarantee in consideration of
the restricted stock option granted hereunder by the Company (hereinafter
referred to as the "Option"); and
WHEREAS, the parties hereto have mutually agreed upon the terms and
conditions under which Medley will provide such Guarantee, and under which the
Company will grant the Option;
NOW, THEREFORE, in consideration of the foregoing recitals, and of the
mutual covenants and conditions contained in this Agreement, it is agreed by
and between the parties hereto as follows:
1. GRANT OF OPTION. Subject to the terms and conditions stated below, the
Company hereby grants to Medley the Option to purchase two hundred thousand
(200,000) shares (hereinafter, said shares underlying the Option shall be
referred to as the "Shares") of the $0.001, par value, Common Stock of Top
Form.
2. PURCHASE PRICE OF THE SHARES. The purchase price for the Shares shall be
Thirty Six Cents ($0.36), per Share ("Exercise Price"), payable in cash or
certified check upon exercise of the Option; or, at the election of Medley,
the full purchase price of the Shares may be paid to the Company by Medley's
delivery and execution of a promissory note, in the form attached hereto as
Exhibit "A", which is made a part of this Agreement.
3. CONSIDERATION. In consideration of the Options granted hereby, Medley
agrees to execute her Guarantee of a certain financial obligation of the
Company pertaining to the refinancing of the Company's laser equipment, as
provided for by separate agreement. Further, Medley hereby acknowledges and
agrees that this Agreement is predicated upon the condition precedent that
the Option provided for herein may not be exercised until Medley has fully
paid the the sum provided for, in cash or by execution and delivery of a
promissory note of even date, said cash or promissory note being partial
consideration for the acquisition by Medley from the Company of the Shares
underlying the Option.
4. TERMS OF EXERCISE OF OPTION.
(a) The Option shall be exercisable for a period commencing on the date
hereof ("Date of Grant") and ending on such date upon which Medley is no
longer serving as a guarantor of any financial obligation of the Company, or
on the third anniversary of the Date of Grant, whichever date shall first
occur ("Expiration Date").
(b) Medley may exercise the Option at any time on or before the
Expiration Date by giving written notice to the Secretary of Company. The
notice shall be signed by Medley and shall specify the election to exercise
the Option, the number of Shares for which it is being exercised, and
the method of payment therefor. At the time of giving such notice, Medley
shall deliver to the Secretary of Company the full amount of the Exercise
Price, paid by either cash, cashier's check or by promissory note in the form
attached as Exhibit "A". Within thirty (30) days following the Company's
receipt of such notice and proper payment for the Shares, the Company shall
cause to be issued to Medley a stock certificate(s) representing the number
of Shares purchased in accordance with the foregoing, duly registered in the
name of Medley.
Page 1 of 8
<PAGE>
(c) If Medley fails to exercise the Option on or before the Expiration
Date, the parties hereto shall be deemed whole, without having any claim
against the other, and this Agreement, and the Option granted hereby; shall
expire without further force or effect.
5. SHARES RESERVED. The Company agrees that it will, at all times during
the term of the Option, reserve for issuance out of its authorized capital
the number of Shares that are subject to the Option. The Shares, when issued,
shall be validly issued, fully paid and nonassessable, and shall be free and
clear of all claims, liens and encumbrances of every nature and any
conditions or restrictions on ownership or transfer, except for any security
interest created by any promissory note of Medley which may be used to
purchase the Shares, and any restrictions on transfer imposed by applicable
state and federal securities laws.
6. RIGHTS AS A SHAREHOLDER. Medley shall have no rights whatsoever as a
shareholder of the Company, with respect to the Shares underlying the Option,
nor shall Medley be deemed the holder of the Shares for any purpose until
such Shares have been issued in the name of Medley in accordance with this
Agreement. Medley shall have no right to vote such Shares, or to give or
withhold consent to any action by the Company (whether upon any
recapitalization, issue of stock, reclassification of stock consolidation,
merger, conveyance or otherwise), or to receive notice of meetings or other
actions affecting shareholders of the Company, or to receive dividends or
subscription rights, or otherwise, or to receive distributions of any assets
or proceeds from the sale of the Company's assets upon liquidation until Medley
has effectively exercised the Option and fully paid for the Shares.
7. ADJUSTMENTS TO OPTION. Subject to any required action by the
shareholders of Company, the number and kind of Shares subject to the Option,
and the Exercise Price therefor, shall be proportionally adjusted for any
change in the capital structure of Company resulting from any stock dividend,
stock split, recapitalization, merger, reorganization, consolidation or
similar transaction occurring while the Option is in effect. If the Company
proposes to dissolve or to liquidate, or proposes to combine, merge or
consolidate with or into any other corporation, or to sell substantially all
of its assets, whether for cash, securities or any other property or
consideration, the Shares granted under the Option shall be adjusted so as to
apply to the securities, notes or other property or consideration to which a
holder of the number Shares subject to the Option would have been entitled to
by reason of such combination, merger, consolidation or sale. Any and all
new, substituted or additional securities, or other property, other than
cash, to which Medley would be entitled to by reason of her right to acquire
the Shares hereunder, shall be immediately subject to this Agreement and
shall be included in the word "Shares" for all purposes with the same force
and effect as the Shares presently subject to this Agreement, and the
Exercise Price of the Shares shall be appropriately and proportionally
adjusted. The Company shall not be obligated to issue any fractional shares
of any securities under this Agreement on account of any such adjustment.
To the extent that the foregoing adjustments relate to securities of
Company, such adjustments shall be made by the Board of Directors of Company,
whose determination shall be conclusive and binding on all persons.
The grant of the Option shall not affect in any way the right or power
of Company to make adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of its business or
assets.
Whenever the Company shall take any action resulting in any adjustment
provided for in this paragraph, the Company shall deliver notice of such
action to Medley, which notice shall set forth the number of Shares subject
to the Option and the Exercise Price resulting from such adjustment.
8. WITHHOLDING TAXES. In the event that Company determines that it is
required to withhold federal, state or local tax as a result of any exercise
of the Option, Medley, as a condition to such exercise of the Option, shall
make arrangements satisfactory to Company to enable it to satisfy such
withholding requirements.
9. EXEMPTION OF SALE OF SHARES FROM QUALIFICATION. The offer and sale of
the Option and the Shares has not and will not be registered with the
Securities and Exchange Commission or qualified with any other federal or
state regulatory agency. The offer and sale will and is being made in
reliance, in part, upon the exemption from the federal securities
registration requirements provided under Sections 3 and 4 of the Securities
Act of 1933, as amended (the "1933 Act"), and upon exemptions from
qualification requirements provided under any state securities laws. All
Share certificates issued hereunder shall bear the following legend:
Page 2
<PAGE>
10. No Data
11. No Data
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (a)
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (b) THE ISSUER HAS BEEN FURNISHED WITH AN OPINION OF
COUNSEL ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT NO REGISTRATION UNDER THE
SECURITIES (NO DATA GIVEN)
Page 3
<PAGE>
(j) Medley has the capacity to execute this Agreement and purchase the
Shares.
(k) Medley understands that this Agreement, together with the
agreements and documents executed concurrently with this Agreement, contain
the entire agreement and understanding between Medley and the Company with
respect to Medley's purchase of the Shares.
(l) Medley knows of no public solicitation or advertisement conducted by
the Company and/or its agents and representatives with respect to the offer
and sale of the Shares.
(m) Medley acknowledges and agrees that, in the event the Shares are
purchased by promissory note, the Company will retain a security interest in
the Shares pursuant to the terms of such promissory note.
11. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties and covenants of Medley set forth in this
Agreement, and the provisions of paragraph 14, hereunder, shall survive the
purchase of the Shares and the termination of this Agreement.
12. LEGALITY OF ISSUANCE. No Shares shall be issued upon the exercise of the
Option unless and until Top Form has determined that:
(a) it and Medley have taken all actions required to either: (1)
register the shares under the Securities Act of 1933, and the appropriate
state securities laws, or (2) to perfect an exemption from the registration
requirements thereof; and
(b) Any applicable listing requirement of any stock exchange on which
Top Form's Common Stock may be listed has been satisfied; and
(c) Any other applicable provision of state or federal law has been
satisfied.
13. NO TRANSFER OR ASSIGNMENT OF OPTION. Except as otherwise provided in this
Agreement, the Option and the rights and privileges conferred hereunder shall
not be transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to sale under
execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of the Option, the
underlying Shares, or of any rights or privilege conferred by this Agreement,
contrary to the provisions hereof, or upon any attempted sale under any
execution, attachment or similar process upon the rights and privileges
conferred by this Agreement, the Option and the rights and privileges
conferred hereunder shall immediately become null and void.
14. NON-COMPETITION; NON-DISCLOSURE. For a period of three (3) years
following the Date of Grant, Medley shall not, directly or indirectly, as an
employee, employer, contractor, consultant, agent, principal, partner,
shareholder, officer or director, or in any other individual or
representative capacity:
(a) Engage or participate in any business or activity competitive with
the existing or planned business of Company within a fifty (50) mile radius
of any location from which the Company conducts its business; or
(b) Undertake planning for or organization of any business activity
competitive with the Company's existing or planned business activities or
combine or conspire with employees or representatives of the Company's
business or others for the purpose of organizing any such competitive
business activity.
(c) Disclose, reveal, utilize or make known any confidential or
proprietary information concerning the business of the Company to any person,
entity or organization not authorized herein, without the prior written
consent of the Company, except, as may be specifically requried by a court or
regulatory body of competent jurisdiction (and then only after consultation
with the Company).
(d) REASONABLENESS. Medley acknowledges that her relationship with the
Company has afforded her access to confidential and proprietary information
vital to the goodwill and value of the Company and, accordingly, that the
restrictive covenants set forth above are necessary to protect and maintain
the goodwill and value of the Company.
Page 4
<PAGE>
(e) INJUNCTIVE RELIEF. Medley acknowledges and agrees that the remedy at
law for any breach by Medley of the covenants set forth in this paragraph 14
will be inadequate and the Company shall in addition to all other available
remedies (including without limitation seeking such damages as they can show
they have sustained by reason of such breach) be entitled to injunctive
relief without being required to post bond or other security and without
having to prove the inadequacy of the available remedies at law.
(f) POWER TO LIMIT COVENANTS. Medley acknowledges and agrees that the
type and periods of restriction imposed are fair and reasonable and are
reasonably required for the protection of the Company and the goodwill
associated with the business of the Company and are given as an integral part
of this Agreement. If all or any part of any covenant contained in this
Agreement is construed to be invalid or unenforceable, such determination
shall not effect the remainder of the covenant, which shall be given full
effect without regard to the invalid portion. If all or any part of any
covenant contained in this Agreement is held to be unenforceable because of
the duration of such provision or the area covered thereby, the parties agree
that the court making such determination shall have the power to reduce the
duration and/or geographic area of such provision, and in its reduced form,
such provision shall then be enforceable.
(g) JURISDICTION. Medley intends to and hereby confers jurisdiction to
enforce the covenants contained in this Agreement upon the courts of any
state or other jurisdiction within the geographical scope of such covenants.
If the courts of any one or more of such jurisdictions shall hold such
covenants wholly unenforceable by reason of the breach of such
scope or otherwise, the parties intend that such determination not bar or in
any way affect the Company's right to the relief provided above if the courts
of any other jurisdiction within the geographical scope of such covenants, as
to breaches of such covenants in such other jurisdictions, and for this
purpose the above covenants as they relate to each jurisdiction shall be
deemed revocable into diverse and independent covenants.
15. REGISTRATION RIGHTS. The Company shall not be obligated to register any
of the Shares under the Securities Act of 1933, or take any affirmative
action in order to cause Medley's sale of the Shares to comply with any
applicable laws.
16. VALUATION OF SHARES. Medley understands that it is possible that
regardless of the restrictions on ownership and transfer of the Shares
imposed by this Agreement, the Internal Revenue Service may successfully
assert that the fair market value of the Shares on the date of purchase is
substantially greater than the purchase price set forth in this Agreement. If
the Internal Revenue Service prevails in such determination, the additional
value would constitute taxable ordinary income to Medley as of the date the
Shares are issued. Medley assumes all responsibility for such potential tax
liability (including interest and penalties, if any), and acknowledges that
the Company has no obligation and does not intend to reimburse Medley for any
such tax liability.
17. NO AGREEMENT TO EMPLOY: AT-WILL EMPLOYMENT. Medley acknowledges that
nothing contained in this Agreement shall confer upon her the right to
continue in the employment of the Company for any fixed period of time or
constitute any additional agreement of employment or interfere or affect in
any way the right of the Company to terminate Medley's employment with the
Company at will, at any time and for any reason, or with no reason, or the
right of the Company to adjust her compensation and benefits.
18. GENERAL PROVISIONS.
(a) TERMINATION OF AGREEMENT. This Agreement shall terminate on the
earlier of the following events: (1) the Expiration Date of the Option; or
(2) the date upon which the Option has been fully exercised and the Shares
have been paid for, or (3) upon Medley's violation of any provisions
contained in paragraphs 13 or 14 of this Agreement.
(b) AMENDMENT AND WAIVER. The provisions of this Agreement may be
waived, altered, amended or repealed in whole or in part only upon the
written agreement of all parties hereto. Waiver of any provision of this
Agreement shall not be deemed or constitute a waiver of any other provision,
nor shall such waiver constitute a continuing waiver.
(c) ASSIGNMENT, SUCCESSORS AND ASSIGNS. The Company may assign its
rights and obligations under this Agreement, provided written notice of such
assignment is given to Medley. Medley shall not assign or transfer all or any
part of Medley's rights and obligations under this Agreement. Subject to the
restriction on assignment set forth in
Page 5
<PAGE>
the preceding sentence, this Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective heirs,
beneficiaries, legal representatives, successors and assigns.
(d) NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given
(i) on the date of delivery if personally delivered, (ii) one (1) business
day after delivery by overnight courier, telegram or facsimile (with receipt
of transmission confirmed), or (iii) three (3) business days after mailing if
mailed by first-class mail, postage prepaid, to the parties at their address
as set forth on the signature page, or such other address designated from
time to time in writing by such party to all other parties.
(e) GOVERNING LAW AND TIME. This Agreement shall be construed in
accordance with and governed by Delaware law, without regard to its
principles of conflicts of laws, and irrespective of the fact that one or
more of the parties hereto resides in, or is domiciled in another state. Time
is of the essence.
(f) LEGAL PERFORMANCE. Medley acknowledges and agrees it is impossible
to measure in money the damages which will accrue to the Company by reason of
a failure of Medley, or Medley's legal representative, to perform any of the
obligations required to be performed by Medley under this Agreement.
Therefore, if the Company institutes an action or proceeding to enforce any
provisions of this Agreement, Medley hereby waives the claim or defense that
the Company has an adequate remedy at law.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument.
(h) ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties with respect to the subject matter set forth above, and
supersedes all previous oral and written agreements, communications,
representations or commitments.
(i) FURTHER ASSURANCES. The parties hereby covenant and agree that they
will execute such other and further instruments and documents as are, or may
become, necessary or convenient to effectuate and carry out the purposes of
this Agreement upon the written request of either party hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly appointed representatives whose signatures appear
below.
WITNESSES: COMPANY:
TOP FORM, INC.
/s/ [illegible] BY: /s/ John C. [illegible]
- -------------------------------- -------------------------------
[illegible] John C. [illegible]
Its: President
TRUEVISION LASER CENTERS, INC.
/s/ [illegible] BY: /s/ John C. [illegible]
- ------------------------------- -------------------------------
[illegible] John C. [illegible]
Its: President
<PAGE>
WITNESSES: COMPANY:
TRUEVISION LASER CENTERS OF ALBUQUERQUE,
INC.
/s/ [illegible] BY: /s/ John C. [illegible]
- -------------------------------- --------------------------------
[illegible] John C. [illegible]
Its: President
Address: 1726 Louisiana Blvd., Suite 100
Albuquerque, New Mexico 87110
MEDLEY:
/s/ [illegible] BY:
- ------------------------------- --------------------------------
[illegible] Pamela Medley
Address: 7280 [illegible], N.E.
Albuquerque, New Mexico 87109
<PAGE>
Exhibit 10.8
MTE:: TRIAD
P.O. Box 2596
LAJOLLA, CALIFORNIA 92038
EQUIPMENT LEASE
No. TV-001
LESSE's TAX ID NUMBER
931200905
TERMS AND CONDITIONS
MTE/TRIAD, INC. ("Lessor") agrees to lease to Lessee, and Lessee agrees to
lease from Lessor, the personal property, together with all attachments,
replacements, parts, additions, and accessories ("Equipment") listed on any
Lease Schedule attached hereto and incorporated herein by reference. The
words YOU, YOUR, and YOURS mean the Lessee indicated below. The words WE, US,
and OUR, refer to the Lessor indicated above.
1. TERM. The term of this lease will start on the date we sign the lease
("Lease Commencement Date"). The payments of rent are payable periodically in
advance as stated on any Lease Schedule. You promise to pay the total amount
of all rent payments stated in any Lease Schedule, plus any other amounts
provided for in this lease. This lease cannot be cancelled by you.
2. RENT.
A) You will pay as rent for use of the Equipment all rent payments and
other amounts provided for in this lease. Consecutive periodic rent payments
will be due on the first day of the month following the Acceptance Date (see
Section 3, Acceptance) of the Equipment (the "Payment Date"). You agree to
pay one ________ rent payment from the Acceptance Date to the first Payment
Date. You will pay all rent payments even if you do not receive a notice that
the payments are due. All rent payments and other amounts due will be made to
us at the address on this lease, or to any other address we designate in
writing.
B) You will pay a late charge of five percent (5%) on any part of a
rent payment or other amount payable not made by you within five (5) days of
the due date, but only to the extent permitted by law.
C) The rent payment on a Lease Schedule shall be raised or lowered, in
a proportionate manner, if there is an adjustments to the equipment cost, or
if a test is required, on the purchase of the Equipment or the rent. We are
authorized by you to insert the amount of the adjusted rent on the
appropriate Lease Schedule.
3) ACCEPTANCE. On the date the Equipment is available for first use (the
"Acceptance Date"), you will sign and deliver to us an acceptance certificate
in a form satisfactory to us. We may terminate this lease without _____ for
any Equipment you have not accepted within six (6) months of our issuing a
purchase order for the Equipment.
4) NET LEASE. THIS IS NOT A LEASE. You promise to pay when due all taxes,
licenses, fines, penalties, and other charges (including but not limited to
personal property, sales, state, Federal, and local taxes) relating to this
lease of the Equipment. Any taxes due will be based on the full amount of the
tax, regardless of any discounts we may receive.
(5) END OF LEASE OPTION; REDELIVERY OF EQUIPMENT LEASE EXTENSION.
A) END OF LEASE OPTION. Provided you are not in default, at the
expiration of the lease term of any Lease Schedule, you have the option to:
(i) renew this lease with respect to all the Equipment on that lease Schedule
for a term agreeable to us and at a cost equal to the then fair market rental
for the renewal term, payable in advance, or (ii) purchase all, but not less
than all, of the Equipment provided on that Lease Schedule for the then fair
market value, or (iii) return the Equipment to us. You will give us ninety
(90) days prior written notice of the option you choose.
B) REDELIVERY OF EQUIPMENT. If you decide not to renew or purchase all
the Equipment, then when the term of that Lease Schedule expires, at your own
risk and expense, you will disconnect, properly package for transportation,
and return the Equipment to us, freight prepaid, to a location designated by
us within the continental United States. You agree to include all instruction
and service manuals, software documentation, service records, and a
certificate from the manufacturer of the Equipment or other service
organization reasonably acceptable to us that (i) at the time of shipment to
us, the Equipment is in good condition and contains all software and (ii) the
manufacturer will provide an extended maintenance contract to new user at a
new location to perform the same or similar procedures as performed by you,
without additional costs for repair, refurbishment or software.
<PAGE>
C) INSPECTION. Upon our request, you will confirm the location of any
of the Equipment for us and, at any reasonable time, allow us to inspect and
observe the use and condition of the Equipment and copy your operating and
maintenance records relating to the Equipment.
18. NOTICE. If any notices or demands are required under this lease, they
shall be sufficient if given in writing either personally or by first-class
mail, postage prepaid, to the addresses in the Lease Schedules, or to any
other address either party may designate in writing. Such notice shall be
effective which deposited in the United States mail.
19. JURISDICTION. THIS LEASE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
CALIFORNIA, THE STATE IN WHICH LESSOR'S PRINCIPAL PLACE OF BUSINESS IS
LOCATED. YOU AGREE THAT THE COURT OF THE STATE OF CALIFORNIA FOR SAN DIEGO
COUNTY OR ANY OTHER FEDERAL DISTRICT COURT HAVING THE JURISDICTION IN THAT
COUNTY SHALL HAVE NON-EXCLUSIVE JURISDICTION FOR DETERMINING ALL DISPUTES
ARISING UNDER THIS LEASE. HOWEVER, LESSOR MAY BRING ANY ACTION OR CLAIM TO
ENFORCE THE PROVISIONS OF THIS LEASE IN ANY OTHER APPROPRIATE STATE OF FORUM.
YOU WILL WAIVE TRIAL BY JURY IN ANY ACTION BETWEEN US.
20. FINANCING STATEMENTS. You give us the right to immediately file any
financing statements and other documents we may require with respect to the
lease and the Equipment, as well as the right to sign any such financing
statements as your attorney-in-fact.
21. UCC-ARTICLE 2A PROVISIONS. You agreed that this lease is a "Finance
Lease" under Article 2A of the Uniform Commercial Code; that is you
acknowledge that (a) we did not select, manufacture or supply the Equipment,
but we did purchase the Equipment for lease to you; and (b) we have given you
the name of the seller of the Equipment you are leasing from us in the Lease
Schedule. You may have rights under the supply contracts any may contact the
seller for a description of those rights of warranties. To the extent
permitted by applicable law, you waive any and all rights and _______ given
to you under UCC Sections 2A-303 and 2A-(illegible) through 522-22.
22. PUBLICITY. You authorize us to (illegible), at our sole option,
appropriate (illegible) releases and to create a (illegible) to be published
announcing the completion of this transaction and the total amount of the
lease.
23. MISCELLANEOUS. This lease contains the entire agreement between Lessee
and Lessor and it may not be altered, amended, modified, terminated or
otherwise changed except in writing and signed by both parties. This lease is
for the benefit of and obligates you and your personal representatives,
successors, and assigns. The captions used in this lease are for convenience
only and shall not define or limit any of the terms of this lease. If more
than one Lessee is named in the lease and any Lease Schedule, the liability of
each Lessee shall be joint and several.
The parties hereto have executed this lease dated as of the first day of
July, 1997.
MTE/Triad, Inc.
- ---------------------- True Vision Laser Center of
Albuquerque, Inc.
Lessor Lessee
By: Illegible President By: Illegible
------------------------ --------------------------------
Title Secretary Title
<PAGE>
SCHEDULE "A"
EQUIPMENT LOSS VALUATION SCHEDULE
THIS SCHEDULE is attached to and made part of a certain Equipment Lease
Agreement No. TV-001 dated July 1, 1997 between MTE/TRIAD, Inc. as Leaser and
True Vision Laser Centers of Albuquerque, Inc. as Lessee.
QUANTITY EQUIPMENT DESCRIPTION STIPULATED LOSS VALUE
1 Alcom Topographer $17,000
(purchased from Dr. Graham)
1 American Optical Eye Lane $15,000
(purchased from Dr. Graham)
1 Patient Education A/V Center $6,000
(purchased from Sound Ideas)
1 Lighted Exterior Sign 4ft x 48ft $16,000
1 Fisher Autoclave - Model 750 $1,000
1 VISX Exeimer Laser $115,000
--------
Total $270,000
--------
--------
Leasor hereby certifies that the description of personal property set forth
above constitutes an accurate account of the Equipment and its stipulated
loss value, as such defined in the Equipment Lease Agreement of which this
Schedule is a part.
LESSOR: MTE/Triad, Inc. LESSEE: True Vision Laser Centers
of Albuquerque, Inc.
By: /s/ John C. [illegible] By: /s/ illegible
----------------------------------- -----------------------------------
John C. [illegible]
Title: President and CEO Title: Secretary
-----------------------------------
Date: 7/1/97 Date: 7/1/97
----------------------------------- -----------------------------------
<PAGE>
EXHIBIT 10.9
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is made and entered into effective as of February
9, 1998, by and between TrueVision Laser Centers of Albuquerque, Inc. (the
"Company"), a Nevada corporation, RB&A, Inc. (the "Consultant"), and Topform,
Inc. ("Topform").
RECITALS
WHEREAS, the Company desires to utilize the services of the Consultant to
assist in the development of a long-term strategic plan for the Company,
including, but not limited to the areas of management, marketing and finance,
and for such other management consulting services as may be mutually agreed
upon by Consultant and the Chairman of the Board of Directors of the Company;
WHEREAS, the Company desires to enter into an arrangement with Consultant
under which Consultant will be guaranteed a minimum amount of cash
compensation and will be provided with stock options;
WHEREAS, the Company and the Consultant acknowledge that certain stockholders
of the Company have entered into a letter intent under which Topform will
acquire 84% of the Company's Common Stock;
WHEREAS, the Consultant is willing to provide said services upon the terms
and conditions herein provided; and
WHEREAS, both parties desire to embody the terms and conditions of the
Consultant's service to the Company into a written agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto hereby agree as follows:
1. SERVICES. During the term hereof, the Consultant will (i) assist
the company in the development of a long-term strategic plan, including, but
not limited to the areas of management, marketing and finance; and (ii)
perform such other management consulting services as may be mutually agreed
upon by Consultant and the Chairman of the Board of Directors of the Company.
The Consultant agrees to devote as much time as necessary to the performance
of said duties.
2. COMPENSATION. In consideration of Consultant's agreement to enter
into the Agreement and to perform the services referenced in Section 1 hereof
on a basis which calls for certain specific payments to be made without
regard to the Company's financial condition, the Company shall pay the
Consultant as follows:
1 CONSULTING AGREEMENT
<PAGE>
(i) Options to purchase eighteen thousand (18,000) shares of the
Company's common stock at a price of $20.00 per share ("Options") shall
be issued to consultant immediately upon execution of the Agreement. The
Options shall not be exercisable unless the shareholders of the Company
shall consummate the proposed transaction with Topform. Further, the
Options shall have a cashless exercise provision, and shall be
automatically converted at the time that Topform acquires 84% of the
Company's outstanding Common Stock into options to acquire 4,000,000
shares of Topform at $.09 per share, which represents a proportional
adjustment in the same ratio that the Topform Shareholders will be
exchanging their shares of the Company for shares of Topform.
(ii) Subject to the condition that Topform consummate the
acquisition of 84% of the outstanding Common Stock of the Company, cash
compensation in the amount of $4,000 per month for 24 months (i.e., an
aggregate of $96,000). Such compensation shall begin to accrue on the
day that Topform acquires 84% of the Company's outstanding Common Stock
(the "Closing Date") with additional amounts accruing on the same day of
each succeeding month until a total of $96,000 has been accrued and paid
to Consultant. Payments will commence at the earlier of the time that
either Topform or the Company complete a private placement in which
gross proceeds of $25,000 are raised on June 1, 1998 (the "First Payment
Date"), with the first payment being equal to the total amount accrued
from the Closing Date until the First Payment Date. If the Company fails
to make any payment when due, and such payment is not made within
forty-five (45) days after the due date, the entire remaining balance
due to Consultant shall be accelerated and become immediately due and
payable. For example if the Company made twelve payments on time and
then failed to make the thirteenth payment no later than the forty-fifth
day after such payment was due, then the remaining twelve payments
(i.e., $48,000) would be immediately due and payable. Further, the
parties agree that Consultant may elect to have any monthly payment due
hereunder applied to the partial exercise of the Option referenced above
in Section 2(i).
3. TERM. The term of this Agreement shall be effective from February
9, 1998, and continue until twenty-four months after Topform consummates the
acquisition of 84% of the Company's outstanding Common Stock, unless extended
by mutual consent in writing by the Company and Consultant. If Topform fails
to consummate such acquisition on or before March 31, 1998 (unless the
parties agree to a later date), then this Agreement shall automatically
terminate and the obligations of the parties under this Agreement shall
automatically terminate and no party shall have any further obligations to
any other party under this Agreement.
4. EXPENSES. The consultant shall be reimbursed for all reasonable
out-of-pocket expenses, including, but not limited to travel expenses,
actually and properly incurred by him in connection with his duties
hereunder, upon presentation of vouchers therefore.
5. CONSULTANT AS INDEPENDENT CONTRACTOR. This Agreement shall not
constitute an employer-employee relationship. It is the intent of each party
that Consultant be an independent contractor and not an employee of the
company or any of its affiliates.
2 CONSULTING AGREEMENT
<PAGE>
6. CONFIDENTIALITY. Unless otherwise authorized by the Company,
Consultant shall treat a proprietary all non-public information belonging to
the Company or its affiliates which is disclosed to the Consultant in the
course of the performance of services hereunder.
7. ASSIGNMENT. Consultant may assign any rights to payment provided
for hereunder; provided that the services to be provided by Consultant must
continue to be provided by Will F. Noyes. Any attempt by the Company to
assign any rights, duties or obligations which arise under this Agreement
without the prior written sent of Consultant shall be void and shall
constitute a breach of the terms of this Agreement.
8. ENTIRE AGREEMENT MODIFICATION. This Agreement constitutes the
entire agreement between the parties hereto. No promises, guarantees,
inducements or agreement, whether oral or written, express or implied have
been made or shall be of any force or effect other than as contained in this
Agreement. This Agreement can only be modified or changed in writing signed
by both parties.
9. NOTICES. any notices, request, demand or other communication
required or permitted hereunder shall be deemed properly given when
personally served in writing or when deposited in the United States mail,
postage prepaid, addressed to the other party at the following address:
If to the Company: 445 G Street, Suite 271
San Diego, CA 92101
If to the Consultant 3107 West Colorado Avenue, Suite 128
Colorado Springs, CO 80904
10. BENEFIT OF AGREEMENT. This Agreement shall inure to the benefit and
be binding upon the parties hereto and their respective legal
representatives, administrators, executors, successors, subsidiaries and
affiliates.
11. GOVERNING LAW. This Agreement is made and shall be governed and
construed in accordance with the laws of the State of Colorado.
12. SURVIVAL. The duty of the Company to make, and the right of the
consultant to receive the payments provided for in Section 2(ii) of this
Agreement shall survive the termination of the Agreement, except as otherwise
provided in said Section 2.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and
its seal to be affixed hereunto by its officer thereunto duly authorized and
the consultant has signed this Agreement, all as of the day and year written
above.
3 CONSULTING AGREEMENT
<PAGE>
RB&A, INC.
By: /s/ WILL F. NOYES
----------------------------------------------------
Will F. Noyes, Consultant
TOPFORM, INC.
By: /s/ WILL F. NOYES
----------------------------------------------------
Will F. Noyes, President
TRUEVISION LASER CENTERS OF ALBUQUERQUE, INC.
By: /s/ JOHN C. HOMAN
----------------------------------------------------
John C. Homan, President
4 CONSULTING AGREEMENT
<PAGE>
EXHIBIT 10.10
RESTATEMENT AND
AMENDMENT TO CONSULTING AGREEMENT
THIS RESTATEMENT AND AMENDMENT TO CONSULTING AGREEMENT ("Amendment"), is
hereby made and entered into on the 25th day of August, 1999, by and among
TrueVision Laser Center of Albuquerque, Inc., a New Mexico corporation;
TrueVision International, Inc., a Delaware corporation, both with their
principal office location at 1720 Louisiana Boulevard, Suite 100,
Albuquerque, New Mexico (collectively "TrueVision"), and RB&A, LLC, (formerly
known as RB&A, Inc.), or its assigns, with its address being at 3107 West
Colorado Avenue, Suite 128, Colorado Springs, Colorado ("RB&A").
RECITALS
WHEREAS, TrueVision and RB&A previously entered in to a Consulting
Agreement dated February 09, 1998 (the "Consulting Agreement"), where RB&A
agreed to provide long term strategic planning, management consulting
services, and marketing and finance expertise; and
WHEREAS, TrueVision and the RB&A have negotiated certain changes in the
terms of the Consulting Agreement, and each party thereto has agreed to
change certain provisions of the Consulting Agreement by entering in to this
Restatement and Amendment.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Amendment, and other good and valuable consideration, the sufficiency
thereof is hereby acknowledged by these parties, TrueVision and RB&A agree as
follows:
1. SERVICES. RB&A has met all of the terms of the prior agreement and
nothing further is required.
2. COMPENSATION. The parties previously agreed to certain compensation
to be paid to RB&A as set forth in the Consulting Agreement. As of the date
of this Amendment, all such compensation has not been paid by TrueVision. By
entering in to this Amendment RB&A & TrueVision agrees that upon completion
of the following provisions the obligations of the Consulting Agreement will
thereby be cancelled: (i) RB&A agrees to sell back to TrueVision the options
described below; (ii), and in lieu of the options, RB&A agrees to be
compensated by TrueVision as follows, in accordance with this Amendment:
(a). RB&A agrees to sell to TrueVision and to surrender any and all
claims in which RB&A has or may have to receive 1,000,000 options to purchase
1,000,000 shares of common stock of TrueVision's parent corporation,
TrueVision International, Inc. ("TVI"), at a price of $.09 per share, in
consideration for the following:
(i). RB&A shall, on the date of execution of this Amendment, receive from
TVI, 20,000 shares of TVI common stock in trade to TVI for 20,000 of said
options;
(ii). RB&A shall, on the date of execution of this Amendment, receive a
cash payment of $31,800 as consideration for the sale to TVI of the balance
of said options.
<PAGE>
RESTATEMENT & AMENDMENT TO CONSULTING AGREEMENT Page 2
(iii). Additionally, for a period of four months from and after the date
of this Amendment, and commencing on September 1, 1999, and continuing on the
first day of each month thereafter through and including December 1, 1999,
RB&A shall receive $6,000 each month for the four months following the date
of this Amendment.
3. ENTIRE AGREEMENT. This Amendment shall be in addition to the terms of
the original Consulting Agreement heretofore entered in to by these parties.
All provisions of the Consulting Agreement that are not in conflict with this
Amendment shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by its duly authorized officers, as of the day and year first above
written.
<TABLE>
<S> <C>
TRUEVISION LASER OF ALBUQUERQUE, INC. RB&A, LLC
By: /s/ John C. Homan By: /s/ S. Coury
---------------------------- --------------------------
John C. Homan, President S. Coury, Attorney-in-Fact
</TABLE>
<PAGE>
FORM OF STOCK PURCHASE OPTION
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION ("BLUE SKY LAWS"), AND CANNOT BE RESOLD UNLESS THEY ARE
REGISTERED UNDER THE ACT AND ANY APPLICABLE BLUE SKY LAWS, UNLESS AN
EXEMPTION IS AVAILABLE. THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE OR DISTRIBUTION THEREOF.
TOPFORM, INC.
STOCK PURCHASE WARRANT
WARRANT TO PURCHASE ______________ SHARES OF COMMON STOCK AS DESCRIBED HEREIN
Dated: As of March 15, 1998
This certifies that, for value received, including services to be performed
pursuant to various employment agreements by and between Topform, Inc. and
TrueVision Laser Centers, Inc. is entitled to purchase from Topform, Inc., a
Delaware corporation (the "Company"), having its principal office located at
445 "G" Street, Suite 217, San Diego, California 92101, eighteen million, six
hundred sixty six thousand and six hundred sixty seven (18,666,67) fully paid
and nonassessable shares of Common Stock, no par value, of the Company (the
"Common Stock"), subject to the terms set forth herein, at an exercise price
of Nine Cents ($0.09), per share, subject to adjustment as provided elsewhere
herein (the "Warrant Price"). The holder of this Warrant shall be referred to
herein as the "Warrantholder" or the "Holder."
1. "COMMON STOCK." If at any time, as a result of an adjustment made
pursuant to Section, the Securities or other property obtainable upon exercise
of this Warrant shall include shares or other securities of the Company other
than common stock or securities of another corporation or other property,
thereafter the number of such other shares or other securities or property so
obtainable shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect
to the Common Stock contained in Section, and all other provisions of this
Warrant with respect to the Common Stock shall apply on like terms to any such
other shares or other securities or property. Subject to the foregoing, and
unless the context requires otherwise, all references herein to "Common
Stock" shall, in the event of an adjustment pursuant to Section, be deemed to
refer as well to any other securities or property then obtainable as a result
of such adjustments.
2. EXERCISE OF WARRANT. The purchase rights represented by this Warrant
may be exercised by the Warrantholder or its duly authorized attorney or
representative, in whole or in part (but not as to a fractional share of
Common Stock), at any time and from time to time during the period commencing
on the date of this Warrant (the "Commencement Date") and expiring at 5:00 p.m.,
Pacific Standard Time, April 15, 1999 (the "Expiration Date") (or such
earlier date as may be provided pursuant to Section 9 herein), or if such
date is a day on which federal or state chartered banking institutions are
authorized by law to close, then on the next succeeding day which shall not
be such a day, upon presentation of this Warrant at the principal office of
the Company, or at the office of its stock transfer agent, if any, with the
purchase form attached hereto duly completed and signed, and upon payment to
the Company in cash or by certified check or bank draft of an amount equal to
the number of shares being so purchased multiplied by the Warrant Price,
together with all taxes applicable upon such exercise. The Company
<PAGE>
agrees that the Warrantholder will be deemed the record owner of such shares
as of the close of business on the date on which the Warrant shall have been
presented and payment shall have been made for such shares as aforesaid.
Certificates for the shares of Common Stock so purchased shall be delivered
to the Warrantholder within a reasonable time, not exceeding 20 days, after
the exercise in full of the rights represented by this Warrant. If the
Warrant is exercised in part only, the Company shall, upon surrender of this
Warrant for cancellation, deliver a new Warrant evidencing the rights of the
Warrantholder to purchase the balance of the shares of Common Stock which the
Warrantholder is entitled to purchase hereunder.
3. VESTING. Subject to Section 9 herein, the purchase rights represented
by this Warrant shall become exercisable immediately upon issuance, which
shall occur on or before March 31, 1998.
4. CERTAIN ADJUSTMENTS TO WARRANT. (a) In case the Company shall (i) pay a
dividend in shares of Common Stock or make a distribution in shares of Common
Stock, (ii) subdivide its outstanding shares of Common Stock, (iii) combine
its outstanding shares of Common Stock into a smaller number of shares of
Common Stock or (iv) issue by reclassification of its shares of Common Stock
other securities of the Company, the number of shares of Common Stock
purchasable upon exercise of this Warrant immediately prior thereto shall be
adjusted so that the Warrantholder shall be entitled to receive the kind and
number of shares of Common Stock or other securities of the Company which he
would have owned or have been entitled to receive at the happening of any of
the events described above, had such Warrant been exercised immediately prior
to the happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event. (b) Whenever the number of shares of Common
Stock purchasable upon the exercise of this Warrant is adjusted, as herein
provided, the Warrant Price shall be adjusted by multiplying such Warrant
Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of shares of Common Stock purchasable upon the
exercise of this Warrant immediately prior to such adjustment, and of which
the denominator shall be the number of shares of Common Stock so purchasable
immediately thereafter. (c) In the event of any adjustment pursuant to this
Section, no fractional shares of Common Stock shall be issued in connection
with the exercise of any Warrants, but the Company shall, in lieu of such
fractional shares, make such cash payment therefor on the basis of the
current market price on the day immediately prior to exercise. (d)
Irrespective of any adjustments pursuant to this Section to the Warrant Price
or to the number of shares or other securities obtainable upon exercise of
this Warrant, this Warrant may continue to state the Warrant Price and the
number of shares obtainable upon exercise, as the same price and number of
shares stated herein.
5. MERGER. In the event of a merger, consolidation or reorganization with
another corporation in which the Company is not the surviving
corporation, the Company (subject to the approval of the Board) or the
board of directors of any corporation assuming the obligations of the
Company hereunder shall take action pursuant to either clause (a) or (b)
below:
(a) Appropriate provision may be made for the protection of this
Warrant by the substitution on an equitable basis of
appropriate shares of the surviving corporation, provided that
the excess of the aggregate fair market value (as determined by
the Company) of the shares subject to this Warrant immediately
before such substitution over the exercise price hereof is not
more than the excess of the aggregate fair market value of the
substituted shares made subject to purchase immediately after
such substitution over the exercise price thereof; or
(b) Appropriate provision may be made for the cancellation of this
Warrant. In such event, the Company, or the corporation
assuming the obligations of the Company hereunder, shall pay
the Holder an amount of cash (less normal withholding taxes)
equal to the excess of the
<PAGE>
highest fair market value per share of the Common Stock during
the 60-day period immediately preceding the merger,
consolidation or reorganization over the exercise price,
multiplied by the number of shares subject to this Warrant
(whether or not then exercisable).
6. COVENANTS OF THE COMPANY. The Company covenants and agrees that:
(a) During the period within which the rights represented by the Warrant
may be exercised, the Company will at all times reserve and keep available,
free from preemptive rights out of the aggregate of its authorized but
unissued Common Stock, for the purpose of enabling it to satisfy any
obligation to issue shares of Common Stock upon the exercise of this
Warrant, the number of shares of Common Stock deliverable upon the
exercise of this Warrant. If at any time the number of shares of
authorized Common Stock shall not be sufficient to effect the exercise
of this Warrant, the Company will take such corporate action as may be
necessary to increase its authorized but unissued Common Stock to such
number of shares as shall be sufficient for such purpose. The Company
shall have analogous obligations with respect to any other securities or
properties issuable upon exercise of this Warrant. The Company's issuance
of this Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute and
issue the necessary certificates for shares of Common Stock upon the
exercise of this Warrant;
(b) All Common Stock that may be issued upon exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully
paid, non-assessable, and free from all taxes, liens, and charges with
respect to the issue thereof; and
(c) All original issue taxes payable with respect to the issuance of
shares upon the exercise of the rights represented by this Warrant will
be borne by the Company but in no event will the Company be responsible
or liable for income taxes or transfer taxes upon the transfer of any
Warrant.
7. NO STOCKHOLDER RIGHTS. Until exercised, this Warrant shall not entitle
the Warrantholder to any voting rights or other rights as a stockholder
of the Company. The rights of the Holder are limited to those expressed
in this Warrant and are not enforceable against the Company except to
the extent set forth herein.
8. TRANSFER RESTRICTIONS.
(a) This Warrant is not transferable except by will or the laws of
descent and distribution and, during Holder's lifetime, it may only
be exercised by Holder.
(b) Neither this Warrant nor the shares of stock issuable upon the
exercise hereof have been registered under the Securities Act of
1933, as amended (the "Securities Act") or under any state
securities laws and unless so registered may not be transferred,
sold, pledged, hypothecated or otherwise disposed of unless an
exemption from such registration is available. In the event Holder
desires to transfer any of the shares of stock issued hereunder,
the Holder must give the Company prior written notice of such
proposed transfer including the name and address of the proposed
transferee. Such transfer may be made only either (i) upon
publication by the Securities and Exchange Commission (the
"Commission") of a ruling, interpretation, opinion or "no action
letter" based upon facts presented to said Commission, or (ii) upon
receipt by the Company of an opinion of counsel to the Company in
either case to the effect that the proposed transfer will not
violate the provisions of the Securities Act, the Securities
Exchange Act of 1934, as amended, or the rules and regulations
promulgated under either such act, or in the case of clause (ii)
above, to the effect that the shares of stock to be sold or
transferred have been
<PAGE>
registered under the Securities Act and that there is in effect
a current prospectus meeting the requirements of Subsection 10(a) of
the Securities Act, which is being or will be delivered to the
purchaser or transferee at or prior to the time of delivery of the
certificates evidencing the shares of stock to be sold or
transferred.
(c) Prior to any such proposed transfer, and as a condition thereto, if
such transfer is not made pursuant to an effective registration
statement under the Securities Act, the Holder will, if requested
by the Company, deliver to the Company (i) an investment covenant
signed by the proposed transferee, (ii) an agreement by such
transferee to the impression of the restrictive investment legend
set forth herein on the certificate or certificates representing
the securities acquired by such transferee, (iii) an agreement by
such transferee that the Company may place a "stop transfer order"
with its transfer agent or registrar, and (iv) an agreement of the
transferee to indemnify the Company to the same extent as set forth
in paragraph 8(d) below.
(d) Holder acknowledges that Holder understands the meaning and legal
consequences of this Section 8, and the Holder hereby agrees to
indemnify and hold harmless the Company, its representatives and
each officer and director thereof from and against any and all
loss, damage or liability (including all attorney's fees and costs
incurred in enforcing this indemnity provision) due to or arising
out of (i) the inaccuracy of any representation or the breach of
any Warrant of Holder contained in, or any other breach of, this
Warrant Agreement, (ii) any transfer of any of this Warrant or the
shares of stock issuable hereunder in violation of the Securities
Act, the Securities Exchange Act of 1934, as amended, or the rules
and regulations promulgated under either of such acts, (iii) any
transfer of this Warrant or any of said shares of stock not in
accordance with this Warrant Agreement or (iv) any untrue
statement or omission to state any material fact in connection
with the investment representations or with respect to the facts
and representations supplied by the Holder to counsel to the
Company upon which its opinion as to a proposed transfer shall have
been based.
(e) Any assignment, transfer, pledge, hypothecation or other
disposition of this Warrant attempted contrary to the provisions of
this Warrant Agreement, or any levy of execution, attachment or
other process attempted upon the Warrant, shall be null and void
and without effect.
(f) Unless the shares of stock issuable hereunder have been registered
under the Securities Act, upon exercise of this Warrant (in whole
or in part) and the issuance of any of said shares, the Company
shall instruct its transfer agent to enter stop transfer orders
with respect to such shares, and all certificates representing
said shares shall bear on the face thereof substantially the
following legend, insofar as is consistent with all Federal and
State securities law:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
OFFERED FOR SALE, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED PURSUANT TO THE PROVISIONS OF THAT ACT OR AN OPINION OF COUNSEL TO
THE COMPANY IS OBTAINED STATING THAT SUCH DISPOSITION IS IN COMPLIANCE WITH
AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION."
9. TERMINATION OF THE WARRANT. Notwithstanding anything herein to be the
contrary, this Warrant will expire and be of no further force and effect on
April 15, 1999.
10. LOST CERTIFICATE. If this Warrant is lost, stolen, mutilated or
destroyed, the Company shall, on such terms as the Company may reasonably
impose, including a requirement that the Warrantholder obtain a bond,
issue a new Warrant of like denomination tenor and date.
<PAGE>
PURCHASE FORM
TO BE EXECUTED UPON EXERCISE OF WARRANT The undersigned hereby exercises the
right to purchase ______ shares of Common Stock, evidenced by the within
Warrant, according to the terms and conditions thereof, and herewith makes
payment of the purchase price in full. The undersigned requests that
certificate(s) for such shares shall be issued in the name set forth below.
Dated: [NAME OF HOLDER]
-------------
By:
------------------
(Signature)
Name:
---------------
(Please Print)
Address:
------------
--------------------
--------------------
Employer Identification No., Social Security No. or other identifying member:
- -----------------------------
If the number of shares specified above shall not be all the shares
purchasable under the within Warrant, the Warrantholder hereby requests that a
new Warrant for the unexercised portion shall be registered in Warrantholder's
name and delivered to the address set forth in the Warrant.
<PAGE>
EXHIBIT 10.12
APPENDIX C
TOPFORM, INC.
1998 INCENTIVE STOCK OPTION PLAN
SAN DIEGO, CALIFORNIA
APRIL 26, 1998
The 1998 Incentive Stock Option Plan is hereby adopted for the benefit of
key officers and executives of TOPFORM, INC. (the "Company").
1. PURPOSE. The purposes of the 1998 Incentive Stock Option Plan (the
"Plan") are as follows:
a. To further the growth, success, and interest of the Company and
its shareholders by enabling key officers and executives of the Company who
have been or will be given responsibility for the administration of the
affairs of the Company to acquire shares of its Common Stock under the terms
and conditions and in the manner contemplated by this Plan, thereby
increasing their personal involvement in the Company; and
b. To enable the Company to obtain and retain the services of key
officers and executives the Company desires to employ by providing such key
officers and executives with an opportunity to become owners of Common Stock
of the Company under the terms and conditions and in the manner contemplated
by this Plan.
2. ADMINISTRATION OF PLAN. This Plan shall be administered by the
Compensation Committee of the Board of Directors (the "Committee"). The
Committee shall interpret the Plan to the extent and in the manner
contemplated in the Plan, shall determine who shall participate in the Plan,
and how many shares shall be made available to each participant. Neither the
Board of Directors nor the Committee shall be liable for any action or
determination in respect thereto if made in good faith.
3. ELIGIBLE EXECUTIVES. Key officers and executives of the Company whom
the Committee selects shall be eligible for participation under the Plan. A
Director shall not vote to approve his own participation in the Plan.
4. SHARES SUBJECT TO PLAN. An aggregate of nineteen million (6,500,000)
shares of the Common Stock, One ($.01) Cent par value, of the Company shall
be subject to this Plan either from authorized but previously unissued shares
or from shares reacquired by the Company, including shares purchased in the
open market.
5. PRICE. The Shares awarded under the Plan shall be at prices determined
by the Committee which may not be less than the greater of (a) One ($.001)
Cent per Share, (b) fair market value of the shares at the time the options
are awarded or (c) in the case of non-statutory stock options, 85% of such
fair market value. The option price shall be paid by the participant at the
time of the exercise of the option in cash or, in the Committee's discretion,
by the participant's promissory note, surrendering an amount of options whose
unrestricted cash value would equal the exercise price or in Common Stock of
the Company valued at its fair market value as determined above.
6. TERM OF OPTION. The terms of all options granted under the Plan shall
expire not later than ten (10) years from the date the option is granted.
7. TERMINATION OF EMPLOYMENT. In the event of termination of employment
other than by death, the option may be exercised (to the extent that the
right to exercise such option has accrued or vested at the time of
Page - 22
<PAGE>
such termination) at any time within one (1) month after such termination,
but not later than ten (10) years from the date that the option was granted.
8. DEATH OF PARTICIPANT. In the event of the death of a participant,
while in the employ of the Company or within one (1) month after the
termination of his employment, the person or persons to whom such executive's
rights under such option may pass by will or by the laws of descent and
distribution shall have the right (to the extent that he might have exercised
it at the time of his death) at any time within ninety (90) days from the
date of such optionee's death to exercise such option but not later than ten
(10) years from the date that the option was granted.
9. CAPITAL ADJUSTMENTS. The aggregate number of shares with respect to
which options may be granted hereunder, the number of shares thereof covered
by each outstanding option, and the price per share thereof in each such
option, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of the Company resulting from a stock split, the
payment of a stock dividend, or other increase or decrease in such shares
effected without receipt of consideration by the Company. Subject to any
required action by stockholders, if the Company shall be the surviving
corporation in any merger or consolidation, any option granted hereunder
shall pertain to and apply to the securities to which a holder of the number
of shares subject to the option would have been entitled; but a dissolution
or liquidation of the Company, or a merger or consolidation in which the
Company is not the surviving corporation, shall give the Company the right to
terminate every option outstanding hereunder.
10. VESTING. The option awarded may be exercised with respect to twenty
(20%) percent of the optioned stock at any time after issuance, and as to an
additional twenty (20%) percent on each anniversary of service, vesting one
hundred (100%) percent after four (4) years of service.
a. The foregoing schedule shall be accelerated to provide for
immediate vesting of one hundred (100%) percent of all executives optionee
stock awarded and not purchased upon the occurrence of any one of the
following:
(1) The Company entering into an agreement to merge with or
be otherwise acquired by another corporation;
(2) The Company being subject to a tender offer upon its
outstanding shares.
b. The foregoing vesting schedule shall be accelerated to provide
for immediate vesting of one hundred (100%) percent of any single executive's
optionee stock awarded and not purchased upon the occurrence of the
following: Such executive terminating his employment with the Company because
of retirement at the age of 65 or more, death, total disability or early
retirement with the consent of the Board of Directors.
11. PURCHASE. The option shall be exercised by the participant by
delivery of Notice of Exercise to the Committee stating the number of shares
with respect to which the option is being exercised and specifying a date,
not less than five (5) nor more than ten (10) business days after such
notice, as the date the participant will take up and pay for such stock. Such
notice shall be in form substantially as provided in the Notice of Exercise
attached hereto as Exhibit A. Failure to elect to purchase one hundred (100%)
percent of the stock available to a participant at the time of exercise of
his option shall not prevent him from future purchase of such shares. Method
and manner of payment shall be determined by the Committee subject to the
terms and conditions of this Plan.
12. RESTRICTIONS. The Committee may impose such restrictions on any
shares sold pursuant to this Plan as he may deem advisable, including,
without limitation, restrictions under the Securities Act of 1933, as
amended, under the requirements of any stock exchange upon which such shares
or shares of the same class are then listed, and under any blue sky or
securities laws applicable to such shares.
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<PAGE>
13. ESCROW. In order to enforce the restrictions imposed upon shares
issued under this Plan, the Committee may require any participant to enter
into an Escrow Agreement providing that the certificates representing shares
issued pursuant to this Plan shall remain in the physical custody of an
escrow holder until any or all of the restrictions imposed pursuant to the
Plan have terminated.
14. LEGEND. In order to enforce the restrictions imposed upon shares
under this Plan the Committee may cause a legend or legends to be placed on
any certificates representing shares issued pursuant to this Plan, which
legend or legends shall make appropriate reference to the restrictions
imposed under it.
15. AMENDMENTS. This Plan may be amended at any time by the Board of
Directors of the Company, provided that if this Plan shall have been approved
by the shareholders of the Company no such amendment shall increase the
maximum number of shares that may be issued pursuant to this Plan without the
further approval of such shareholders.
16. TERMINATION. This Plan shall terminate and no additional options
shall be granted on or after June 30, 2003, or such earlier date as may be
determined by the Committee. The termination of this Plan, however, shall not
affect any options previously granted pursuant to this Plan.
17. ASSIGNMENT. This Plan is solely for the benefit of those officers and
executives granted an option hereunder and may not be assigned, sold or
otherwise transferred except as to a totally disabled or deceased executive,
in which case such executive's legal representative may exercise such option
on behalf of the executive's estate.
18. GENDER. Wherever in this Plan words, including pronouns, are used in
the masculine, they shall be read and construed in the feminine or neuter
wherever they would so apply, and wherever in this Plan, words, including
pronouns, are used in the singular or plural, they shall be read and
construed in the plural or singular, respectively, wherever they would so
apply.
19. NOTICES. Any and all notices or any other communication provided for
herein or otherwise affecting this Plan shall be deemed sufficient if given
in writing, delivered personally to the appropriate party or mailed by
registered or certified mail, which shall be addressed to the last known
address of the party. Each such notice shall be deemed given at the time it
is personally delivered or at the time it is mailed at any post office or
branch post office. Any party may change its mailing address by delivering
written notice of a new address to the other party.
20. GOVERNING LAW. This Plan shall be subject to and governed by the laws
of the State of Delaware, irrespective of the fact that one or more of the
parties now is, or may hereafter become, a resident of a different state or
province.
Dated: March 26, 1998
TOPFORM, INC.,
A DELAWARE CORPORATION
By:
-------------------------------------
John C. Homan, Chairman of the Board
Page - 24
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
The undersigned does hereby give notice to the Committee of the Topform,
Inc. 1998 Incentive Stock Option Plan of the executive's intent to exercise
his option to purchase (number) shares on (date).
-------- ------
Dated: ___________________ Name: ___________________________
Page - 25
<PAGE>
Exhibit 10.13
NONSTATUTORY STOCK OPTION AGREEMENT
TRUEVISION INTERNATIONAL, INC., a Delaware corporation (the
"Company"), hereby grants to _________________________ (the Optionee") an option
(the "Option") to purchase a total of ________________________________
(_________) shares of Common Stock of the Company (the "Shares"), at the price
set forth herein, and in all respects subject to the terms, definitions and
provisions of the Company's 1998 Stock Option Plan (the "Plan"), which is
incorporated herein by reference.
1. NATURE OF THE OPTION. The Option is intended to be a
nonstatutory option and not an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. OPTION PRICE. The Option Price is $ ____________ for each
Share.
3. VESTING AND EXERCISE OF OPTION. The Option shall vest and
become exercisable during its term in accordance with the provisions of Section
7 of the Plan as follows:
(a) VESTING AND RIGHT TO EXERCISE.
(i) The Option shall vest (and become
exercisable) with respect to _______________________ of the Shares subject to
the Option at the end of each of the first ______________ (_____) years from
__________________. Subject to the provisions of subparagraphs (ii) and (iii)
below' the Optionee can exercise any portion of the Option which has vested
until the expiration of the Option term.
(ii) In the event of the Optionee's death,
disability or other termination of employment, the exercisability of the Option
shall be governed by Sections 9(d), (e) and (f) of the Plan.
(iii) The Option may not be exercised for
fractional shares or for less than ______________________ (______) Shares.
(b) METHOD OF EXERCISE. In order to exercise any
portion of this Option which has vested, the Optionee shall notify the Company
in writing of the election to exercise the Option, the number of shares in
respect of which the Option is being exercised, (and shall execute and deliver
to the Chief Financial Officer of the Company the Purchase Agreement, together
with the Stock Assignments, Escrow Agreement and if applicable, the Consent of
Spouse, forms of which are attached as exhibits to the Purchase Agreement. The
Purchase Agreement must be accompanied by payment in full of the aggregate
purchase price of the Shares to be purchased. The certificate or certificates
for Shares as to which the Option has been exercised shall be registered in the
name of the Optionee.
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<PAGE>
(c) RESTRICTIONS ON EXERCISE. This Option may not be
exercised if the issuance of the shares upon such exercise or the method of
payment of consideration for such shares would constitute a violation of any
applicable Federal or state securities law or any other law or regulation.
Furthermore, the method and manner of payment of the Option Price will be
subject to the rules under Part 207 of Title 12 of the Code of Federal
Regulations ("Regulation GI') as promulgated by the Federal Reserve Board if
such rules apply to the Company at the date of exercise. As a condition to the
exercise of this Option, the Company may require the Optionee to make any
representation or warranty to the Company at the time of exercise of the Option
as in the opinion of legal counsel for the Company may be required by any
applicable law or regulation, including the execution and delivery of an
appropriate representation statement. Accordingly, the stock certificates for
the Shares issued upon exercise of this Option may bear appropriate legends
restricting transfer.
4. NON-TRANSFERABILITY OF OPTION. This Option may be exercised
during the lifetime of the Optionee only by the Optionee and, subject to the
provisions of Section 7(f) of the Plan, may not be transferred in any manner
other than by will or by the laws of descent and distribution. The terms of this
Option shall be binding upon the executors, administrators, heirs and successors
of the Optionee.
5. METHOD OF PAYMENT. Payment of the exercise price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash;
(b) certified or bank cashier's check; or
(c) in the event there exists a public market for the
Company's Common Stock on the date of exercise, by surrender of shares of the
Company's Common Stock, provided that if such shares were acquired upon exercise
of an incentive stock option, the Optionee must have first satisfied the holding
period requirements under Section 422(a)(1) of the Code. In this case payment
shall be made as follows:
(i) In addition to the execution and
delivery of the Purchase Agreement, Optionee shall deliver to the Secretary of
the Company a written notice which shall set forth the portion of the purchase
price the Optionee wishes to pay with Common Stock, and the number of shares of
such Common Stock the Optionee intends to surrender pursuant to the exercise of
this Option, which shall be determined by dividing the aforementioned portion of
the purchase price by the average of the last reported bid and asked prices per
share of Common Stock of the Company, as reported in THE WALL STREET JOURNAL
(or, if not so reported, as otherwise reported by the National Association of
Securities Dealers Automated Quotation (NASDAQ) System or, in the event the
Common Stock is listed on a national securities exchange, or on the NASDAQ
National Market System (or any successor national market system), the closing
price of Common Stock of the Company on such exchange as reported in THE WALL
STREET JOURNAL, for the day on which the notice of exercise is sent or
delivered;
2
<PAGE>
(ii) Fractional shares shall be disregarded
and the Optionee shall pay in cash an amount equal to such fraction multiplied
by the price determined under subparagraph (i) above;
(iii) The written notice shall be
accompanied by a duly endorsed blank stock power with respect to the number of
Shares set forth in the notice, and the certificates) representing said Shares
shall be delivered to the Company at its principal offices within three (3)
working days from the date of the notice of exercise;
(iv) The Optionee hereby authorizes and
directs the Secretary of the Company to transfer so many of the Shares
represented by such certificates) as are necessary to pay the purchase price in
accordance with the provisions herein;
(v) If any such transfer of Shares requires
the consent of some other agency under the securities laws of any other state,
or an opinion of counsel for the Company or Optionee that such transfer may be
effected under applicable Federal and state securities laws, the time periods
specified herein shall be extended for such periods as the necessary request for
consent to transfer is pending before said agency, or until counsel renders such
an opinion, as the case may be. All parties agree to cooperate in making such
request for transfer, or in obtaining such opinion of counsel, and no transfer
shall be effected without such consent or opinion if required by law; and.
(vi) Notwithstanding any other provision
herein, the Optionee shall only be permitted to pay the purchase price with
shares of the Company's Common Stock owned by him as of the exercise date in
the manner and within the time periods allowed under 17 CFR Section 240.16b-3
promulgated under the Securities Exchange Act of 1934 as such regulation is
presently constituted, as it is amended from time to time, and as it is
interpreted now or hereafter by the Securities and Exchange Commission.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. The
number of Shares covered by this Option shall be adjusted in accordance with the
provisions of Section 10 of the Plan in the event of changes in the
capitalization or organization of the Company, or if the Company is a party to a
merger or other corporate reorganization.
7. TERM OF OPTION. This Option may not be exercised more than
ten (10) years from the date of grant of this Option, as set forth below, and
may be exercised during such term only in accordance with the Plan and the terms
of this Option.
8. NOT EMPLOYMENT CONTRACT. Nothing in this Agreement or in
the Plan shall confer upon the Optionee any right to continue in the employ of
the Company or shall interfere with or restrict in any way the rights of the
Company, which are hereby expressly reserved, to discharge the Optionee at any
time for any reason whatsoever, with or without cause, subject to the provisions
of applicable law. This is not an employment contract.
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<PAGE>
10. INCOME TAX WITHHOLDING. The Optionee authorizes the
Company to withhold in accordance with applicable law from any compensation
payable to him or her any taxes required to be withheld by Federal, state or
local laws as a result of the exercise of this Option. Furthermore, in the event
of any determination that the Company has failed to withhold a sum sufficient to
pay all withholding taxes due in connection with the exercise of this Option,
the Optionee agrees to pay the Company the amount of any such deficiency in cash
within five (5) days after receiving a written demand from the Company to do so,
whether or not Optionee is an employee of the Company at that time.
DATE OF GRANT: _________________, 19__________
TRUEVISION INTERNATIONAL, INC.
By:
------------------------------
Title: CHIEF EXECUTIVE OFFICER
The Optionee acknowledges receipt of a copy [copies] of the
Plan, and the exhibits referred to therein and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Option
subject to all of the terms and provisions thereof. The Optionee hereby agrees
to accept as binding, conclusive and final all decisions or interpretations of
the Committee upon any questions arising under the Plan.
Dated: _________________, 19__________
------------------------------
CONSENT OF SPOUSE
I, ___________________________, spouse of the Optionee who
executed the foregoing Agreement, hereby agree that my spouse's interest in the
shares of Common Stock subject to said Agreement shall be irrevocably bound by
the Agreement's terms. I further agree that my community or joint property
interest in such shares, if any, shall similarly be bound by said Agreement and
that such consent is binding upon my executors, administrators, heirs and
assigns. I agree to execute and deliver such documents as may be necessary to
carry out the intent of said Agreement and this consent.
Dated: _________________, 19__________
------------------------------
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<PAGE>
Exhibit 10.14
STOCK OPTION AGREEMENT
TRUEVISION INTERNATIONAL, INC., a Delaware corporation (the
"Company"), hereby grants to ______________________ (the "Optionee"), an option
(the "Option") to purchase a total of ___________________ (______________)
shares of Common Stock (the "Shares") of the Company, at the price set forth
herein, and in all respects subject to the terms, definitions and provisions of
the Company's 1998 Stock Option Plan (the "Plan"), which is incorporated herein
by this reference.
1. NATURE OF THE OPTION. The Option is intended to be an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
2. OPTION PRICE. The Option Price is $ _______ for each Share.
3. VESTING AND EXERCISE OF OPTION. The Option shall vest and
become exercisable during its term in accordance with the provisions of Section
9 of the Plan as follows:
(a) VESTING AND RIGHT TO EXERCISE.
(i) The Option shall vest and become
exercisable with respect to ______________ of the Shares subject to the Option
at the end of each of the first _________ (______) years from ________________.
Subject to the provisions of subparagraphs (ii) and (iii) below, the Optionee
can exercise any portion of the Option which has vested until the expiration of
the Option term.
(ii) In the event of the Optionee's death,
disability or other termination of employment, the exercisability of the Option
shall be governed by Sections 9(d), (e) and (f) of the Plan.
(iii) The Option may not be exercised for
fractional shares or for less than ____________ (________) Shares.
(b) METHOD OF EXERCISE. In order to exercise any
portion of this Option [which has vested), the Optionee shall notify the Company
in writing of the election to exercise the Option, the number of shares in
respect of which the Option is being exercised, and shall execute and deliver to
the Chief Financial Officer of the Company the Purchase Agreement, together with
the Stock Assignments, Escrow Agreement and, if applicable, the Consent of
Spouse, forms of which are attached as exhibits to the Purchase Agreement. The
Purchase Agreement must be accompanied by payment in full of the aggregate
purchase price for the Shares to be purchased. The certificate or certificates
representing Shares as to which this Option has been exercised shall be
registered in the name of the Optionee.
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<PAGE>
(c) RESTRICTIONS ON EXERCISE. This Option may not be
exercised if the issuance of the Shares upon such exercise or the method of
payment of consideration for such shares would constitute a violation of any
applicable Federal or state securities law or other law or regulation.
Furthermore, the method and manner of payment of the Option Price will be
subject to the rules under Part 207 of Title 12 of the Code of Federal
Regulations ("Regulation G") as promulgated by the Federal Reserve Board if such
rules apply to the Company at the date of exercise. As a condition to the
exercise of this Option, the Company may require the Optionee to make any
representation or warranty to the Company at the time of exercise of this Option
as in the opinion of legal counsel for the Company may be required by any
applicable law or regulation, including the execution and delivery of an
appropriate representation statement. Accordingly, the stock certificates for
the Shares issued upon exercise of this Option may bear appropriate legends
restricting transfer.
4. NON-TRANSFERABILITY OF OPTION. This option may be exercised
during the lifetime of the Optionee only by the Optionee and, subject to the
provisions of Section 9(f) of the Plan, may not be transferred in any manner
other than by will or by the laws of descent and distribution. The terms of this
Option shall be binding upon the executors, administrators, heirs and successors
of the Optionee.
5. METHOD OF PAYMENT. Payment of the exercise price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash;
(b) certified or bank cashier's check; or
(c) in the event there exists a public market for the
Company's Common Stock on the date of exercise, by surrender of shares of the
Company's Common Stock, provided that if such shares were acquired upon exercise
of an incentive stock option, the Optionee must have first satisfied the holding
period requirements under Section 422(a)(1) of the Code. In this case payment
shall be made as follows:
(i) In addition to the execution and
delivery of the Purchase Agreement, Optionee shall deliver to the Secretary of
the Company a written notice which shall set forth the portion of the purchase
price the Optionee wishes to pay with Common Stock, and the number of shares of
such Common Stock the Optionee intends to surrender pursuant to the exercise of
this Option, which shall be determined by dividing the aforementioned portion of
the purchase price by the average of the last reported bid and asked prices per
share of Common Stock of the Company, as reported in THE WALL STREET JOURNAL
(or, if not so reported, as otherwise reported by the National Association of
Securities Dealers Automated Quotation (NASDAQ) System or, in the event the
Common Stock is listed on a national securities exchange, or on the NASDAQ
National Market System (or any successor national market system), the closing
price of Common Stock of the Company on such exchange as reported in THE WALL
STREET JOURNAL, for the day on which the notice of exercise is sent or
delivered;
2
<PAGE>
(ii) Fractional shares shall be disregarded
and the Optionee shall pay in cash an amount equal to such fraction multiplied
by the price determined under subparagraph (i) above;
(iii) The written notice shall be
accompanied by a duly endorsed blank stock power with respect to the number of
Shares set forth in the notice, and the certificate(s) representing said Shares
shall be delivered to the Company at its principal offices within three (3)
working days from the date of the notice of exercise;
(iv) The Optionee hereby authorizes and
directs the Secretary of the Company to transfer so many of the Shares
represented by such certificates as are necessary to pay the purchase price in
accordance with the provisions herein;
(v) If any such transfer of Shares requires
the consent of some other agency under the securities laws of any other state,
or an opinion of counsel for the Company or Optionee that such transfer may be
effected under applicable Federal and state securities laws, the time periods
specified herein shall be extended for such periods as the necessary request for
consent to transfer is pending before said agency, or until counsel renders such
an opinion, as the case may be. All parties agree to cooperate in making such
request for transfer, or in obtaining such opinion of counsel, and no transfer
shall be effected without such consent or opinion if required by law; and
(vi) Notwithstanding any other provision
herein, the Optionee shall only be permitted to pay the purchase price with
Shares of the Company's Common Stock owned by him as of the exercise date in
the manner and within the time periods allowed under 17 CFR Section 240.16b-3
promulgated under the Securities Exchange Act of 1934 as such regulation is
presently constituted, as it is amended from time to time, and as it is
interpreted now or hereafter by the Securities and Exchange Commission.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. The
number of Shares covered by this Option shall be adjusted in accordance with the
provisions of Section 11 of the Plan in the event of changes in the
capitalization or organization of the Company, or if the Company is a party to a
merger or other corporate reorganization.
7. TERM OF OPTION. This Option may not be exercised more than
ten (10) years from the date of grant of this Option, as set forth below, and
may be exercised during such term only in accordance with the Plan and the terms
of this Option.
8. NOT EMPLOYMENT CONTRACT. Nothing in this Agreement or in
the Plan shall confer upon the Optionee any right to continue in the employ of
the Company or shall interfere with or restrict in any way the rights of the
Company, which are hereby expressly reserved, to discharge the Optionee at any
time for any reason whatsoever, with or without cause, subject to the provisions
of applicable law. This is not an employment contract.
3
<PAGE>
9. INCOME TAX WITHHOLDING. The Optionee authorizes the Company
to withhold in accordance with applicable law from any compensation payable to
him or her any taxes required to be withheld by Federal, state or local laws as
a result of the exercise of this Option. The Optionee agrees to notify the
Company immediately in the event of any disqualifying disposition (within the
meaning of Section 421(b) of the Code) of the shares acquired upon exercise of
an incentive stock option. Furthermore, in the event of any determination that
the Company has failed to withhold a sum sufficient to pay all withholding taxes
due in connection with the exercise of this Option, or a disqualifying
disposition of the shares acquired upon exercise of an incentive stock option,
the Optionee agrees to pay the Company the amount of such deficiency in cash
within five (5) days after receiving a written demand from the Company to do so,
whether or not Optionee is an employee of the Company at that time.
DATE OF GRANT: _________________, 19__________
TRUEVISION INTERNATIONAL, INC.
By:
-------------------------------------
Title: CHIEF EXECUTIVE OFFICER
The Optionee acknowledges receipt of a copy [copies] of the
Plan, and the exhibits referred to therein, and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Option
subject to all of the terms and provisions thereof. The Optionee hereby agrees
to accept as binding, conclusive and final all decisions or interpretations of
the Committee upon any questions arising under the Plan.
Dated: _________________, 19__________
--------------------------------------
CONSENT OF SPOUSE
I, ____________________________, spouse of the Optionee who
executed the foregoing Agreement, hereby agree that my spouse's interest in the
shares of Common Stock subject to said Agreement shall be irrevocably bound by
the Agreement's terms. I further agree that my community or joint property
interest in such shares, if any, shall similarly be bound by said Agreement and
that such consent is binding upon my executors, administrators, heirs and
assigns. I agree to execute and deliver such documents as may be necessary to
carry out the intent of said Agreement and this consent.
Dated: _________________, 19__________
--------------------------------------
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<PAGE>
EXHIBIT 10.15
FORM OF STOCK PURCHASE WARRANT
------------------------------
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE
OR OTHER JURISDICTION ("BLUE SKY LAWS"), AND CANNOT BE RESOLD UNLESS
THEY ARE REGISTERED UNDER THE ACT AND ANY APPLICABLE BLUE SKY LAWS,
UNLESS AN EXEMPTION IS AVAILABLE. THE SECURITIES REPRESENTED BY THIS
WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR
IN CONNECTION WITH, THE SALE OF DISTRIBUTION THEREOF.
TOPFORM, INC.
STOCK PURCHASE WARRANT
WARRANT TO PURCHASE ____________ SHARES OF COMMON STOCK AS
DESCRIBED HEREIN
Dated: As of March 15, 1998
This certified that, for value received, including services to be performed
pursuant to various employment agreements by and between Topform, Inc. and
TrueVision Laser Centers, Inc. is entitled to purchase from Topform, Inc., a
Delaware corporation (the "Company"), having its principal office located at
445 "G" Street, Suite 217, San Diego, California 92101, eighteen million, six
hundred sixty sis thousand and six hundred sixty seven (18,666,667) fully
paid and nonassessable shares of Common Stock, no par value, of the Company
(the "Common Stock"), subject to the terms set forth herein, at an exercise
price of Nine Cents ($0.09), per share, subject to adjustment as provided
elsewhere herein (the "Warrant Price"). The holder of this Warrant shall be
referred to herein as the "Warrantholder" or the "Holder."
1. "COMMON STOCK." If at any time, as a result of an adjustment made
pursuant to Section , the securities or other property obtainable upon
exercise of this Warrant shall include shares or other securities of the
Company other than common stock or securities of another corporation or other
property, thereafter the number of such other shares or other securities or
property so obtainable shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provision with
respect to the Common stock contained in Section, and all other provisions of
this Warrant with respect to the Common stock shall apply on like terms to
any such other shares or other securities or property. Subject to the
foregoing, and unless the context requires otherwise, all references herein
to "Common Stock" shall, in the event of an adjustment pursuant to Section,
be deemed to refer as well to any other securities or property then
obtainable as a result of such adjustments.
2. EXERCISE OF WARRANT. The purchase rights represented by this Warrant
may be exercised by the Warrantholder or its duly authorized attorney or
representative, in whole or in part (but not as to a fractional share of
Common Stock), at any time and from time to time during the period commencing
on the date of this Warrant (the "Commencement Date") and expiring at 5:00
p.m., Pacific Standard Time, April 15, 1999 (the "Expiration Date") (or such
earlier date as may be provided pursuant to Section 8 herein), or if such
date is a day on which federal or state chartered banking institutions are
authorized by law to close, then on the next succeeding day which shall not
be such a day, upon presentation of this Warrant at the principal office of
the Company, or at the office of its stock transfer agent, if any, with the
purchase form attached hereto duly completed and signed, and upon payment to
the Company in cash or by certified check or bank draft of an amount equal to
the number of shares being so purchased multiplied by the Warrant Price,
together with all taxes applicable upon such exercise. The Company
<PAGE>
agrees that the Warrantholder will be deemed the record owner of such shares
as of the close of business on the date on which the Warrant shall have been
presented and payment shall have been made for such shares as aforesaid.
Certificates for the shares of Common Stock so purchased shall be delivered
to the Warrantholder within a reasonable time, not exceeding 20 days, after
the exercise in full of the rights represented by this Warrant. If the
Warrant is exercised in part only, the Company shall, upon surrender of this
Warrant for cancellation, deliver a new Warrant evidencing the rights of the
Warrantholder to purchase the balance of the shares of Common Stock which the
Warrantholder is entitled to purchase hereunder.
3. VESTING. Subject to Section 9 herein, the purchase rights
represented by this Warrant shall become exercisable immediately upon
issuance, which shall occur on or before March 31, 1998.
4. CERTAIN ADJUSTMENTS TO WARRANT. (a) In case the Company shall (i)
pay a dividend in shares of Common Stock or make a distribution in shares of
Common Stock, (ii) subdivide its outstanding shares of Common Stock, (iii)
combine its outstanding shares of Common Stock into a small number of shares
of Common Stock or (iv) issue by reclassification of its shares of Common
Stock other securities of the Company, the number of shares of Common Stock
purchasable upon exercise of this Warrant immediately prior thereto shall be
adjusted so that the Warrantholder shall be entitled to receive the kind and
number of shares of Common Stock or other securities of the Company which he
would have owned or have been entitled to receive at the happening of any of
the events described above, had such Warrant been exercised immediately prior
to the happening of such event or any record date with respect thereto. An
adjustment made the pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event. (b) Whenever the number of shares of Common
Stock purchasable upon the exercise of this Warrant is adjusted, as herein
provided, the Warrant Price shall be adjusted by multiplying such Warrant
Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of shares of Common Stock purchasable upon the
exercise of this Warrant immediately prior to such adjustment, and of which
the denominator shall be the number of shares of Common Stock so purchasable
immediately thereafter. (c) In the event of any adjustment pursuant to this
Section, no fractional shares of Common Stock shall be issued in connection
with the exercise of any Warrants, but the Company shall, in lieu of such
fractional shares, make such cash payment therefor on the basis of the
current market price on the day immediately prior to exercise. (d)
Irrespective of any adjustments pursuant to this Section to the Warrant Price
or to the number of shares or other securities obtainable upon exercise of
this Warrant, this Warrant may continue to state the Warrant Price and the
number of shares obtainable upon exercise, as the same price and number of
shares stated herein.
5. MERGER. In the event of a merger, consolidation or reorganization with
another corporation in which the Company is not the surviving corporation,
the Company (subject to the approval of the Board) or the board of
directors of any corporation assuming the obligations of the Company
hereunder shall take action pursuant to either clause (a) or (b) below:
(a) Appropriate provision may be made for the protection of this
Warrant by the substitution on an equitable basis of appropriate
shares of the surviving corporation, provided that the excess of
the aggregate fair market value (as determined by the Company) of
the shares subject to this Warrant immediately before such
substitution over the exercise price hereof is not more than the
excess of the aggregate fair market value of the substituted shares
made subject to purchase immediately after such substitution over
the exercise price thereof; or
(b) Appropriate provision may be made for the cancellation of this
Warrant. In such event, the Company, or the corporation assuming
the obligations of the Company hereunder, shall pay the Holder an
amount of cash (less normal withholding taxes) equal to the excess
of the
<PAGE>
highest fair market value per share of the Common Stock during the
60-day period immediately preceding the merger, consolidation or
reorganization over the exercise price, multiplied by the number of
shares subject to this Warrant (whether or not then exercisable).
6. COVENANTS OF THE COMPANY. The Company covenants and agrees that:
(a) During the period within which the rights represented by the Warrant
may be exercised, the Company will at all times reserve and keep
available, free from preemptive rights out of the aggregate of its
authorized but unissued Common Stock, for the purpose of enabling it to
satisfy any obligation to issue shares of Common Stock upon the exercise
of this Warrant, the number of shares of authorized Common Stock shall not
be sufficient to effect the exercise of this Warrant, the Company will
take such corporate action as may be necessary to increase its authorized
but unissued Common Stock to such number of shares as shall be sufficient
for such purpose. The company shall have analogous obligations with
respect to any other securities or properties issuable upon exercise of
this Warrant. The Company's issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the exercise of this Warrant;
(b) All Common Stock that may be issued upon exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully
paid, non-assessable, and free from all taxes, liens, and charges with
respect to the issue thereof; and
(c) All original issue taxes payable with respect to the issuance of
shares upon the exercise of the rights represented by this Warrant will be
borne by the Company but in no event will the Company be responsible or
liable for income taxes or transfer taxes upon the transfer of any Warrant.
7. NO STOCKHOLDER RIGHTS. Until exercised, this Warrant shall not entitle the
Warrantholder to any voting rights or other rights as a stockholder of the
Company. The rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent
set forth herein.
8. TRANSFER RESTRICTIONS.
(a) This Warrant is not transferable except by will or the laws of descent
and distribution and, during Holder's lifetime, it may only be
exercised by Holder.
(b) Neither this Warrant nor the shares of stock issuable upon the
exercise hereof have been registered under the Securities Act of 1933,
as amended (the "Securities Act") or under any state securities laws
and unless so registered may not be transferred, sold, pledged,
hypothecated or otherwise disposed of unless an exemption from such
registration is available. In the event Holder desires to transfer any
of the shares of stock issued hereunder, the Holder must give the
Company prior written notice of such proposed transfer including the
name and address of the proposed transferee. Such transfer may be made
only either (i) upon publication by the Securities and Exchange
Commission (the "Commission") of a ruling, interpretation, opinion or
"no action letter" based upon facts presented to said Commission, or
(ii) upon receipt by the Company of an opinion of counsel to the
Company in either case to the effect that the proposed transfer will
not violate the provisions of the Securities Act, the Securities
Exchange Act of 1934, as amended, or the rules and regulations
promulgated under either such act, or in the case of clause (ii) above,
to the effect that the shares of stock to be sold or transferred have
been
<PAGE>
registered under the Securities Act and that there is in effect a
current prospectus meeting the requirements of Subsection 10(a) of the
Securities Act, which is being or will be delivered to the purchaser
or transferee at or prior to the time of delivery of the certificates
evidencing the shares of stock to be sold or transferred.
(c) Prior to any such proposed transfer, and as a condition thereof, if
such transfer is not made pursuant to an effective registration
statement under the Securities Act, the Holder will, if requested by
the Company, deliver to the Company (i) an investment covenant signed
by the proposed transferee, (ii) an agreement by such transferee to
the impression of the restrictive investment legend set forth herein
on the certificate or certificates representing the securities
acquired by such transferee, (iii) an agreement by such transferee
that the Company may place a "stop transfer order" with its transfer
agent or registrar, and (iv) an agreement by the transferee to
indemnify the Company to the same extent as set forth in paragraph
8(d) below.
(d) Holder acknowledges that Holder understands the meaning and legal
consequences of this Section 8, and the Holder hereby agrees to
indemnify and hold harmless the Company, its representatives and each
officer and director thereof from and against any and all loss, damage
or liability (including all attorneys' fees and costs incurred in
enforcing this indemnity provision) due to or arising out of (i) the
inaccuracy of any representation or the breach of any Warranty of
Holder contained in, or any other breach of, this Warrant Agreement,
(ii) any transfer of any of this Warrant or the shares of stock
issuable hereunder in violation of the Securities Act, the Securities
Exchange Act of 1934, as amended, or the rules and regulations
promulgated under either of such acts, (iii) any transfer of this
Warrant or any of said shares of stock not in accordance with this
Warrant Agreement or (iv) any untrue statement or omission to state
any material fact in connection with the investment representations or
with respect to the facts and representations supplied by the Holder
to counsel to the Company upon which its opinion as to a proposed
transfer shall have been based.
(e) Any assignment, transfer, pledge, hypothecation or other disposition
of this Warrant attempted contrary to the provisions of this Warrant
Agreement, or any levy of execution, attachment or other process
attempted upon the Warrant, shall be null and void without effect.
(f) Unless the shares of stock issuable hereunder have been registered
under the Securities Act, upon exercise of this Warrant (in whole or
in part) and the issuance of any of said shares, the Company shall
instruct its transfer agent to enter stop transfer orders with respect
to such shares, and all certificates representing said shares shall
bear on the face thereof substantially the following legend, insofar
as is consistent with all Federal and State securities law:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
OFFERED FOR SALE, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED PURSUANT TO THE PROVISIONS OF THAT ACT OR AN OPINION OF COUNSEL TO
THE COMPANY IS OBTAINED STATING THAT SUCH DISPOSITION IS IN COMPLIANCE WITH
AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION."
9. TERMINATION OF THE WARRANT. Notwithstanding anything herein to the
contrary, this Warrant will expire and be of no further force and effect
on April 15, 1999.
10. LOST CERTIFICATE. If this Warrant is lost, stolen, mutilated or
destroyed, the Company shall, on such terms as the Company may reasonably
impose, including a requirement that the Warrantholder obtain a bond,
issue a new Warrant of like denomination, tenor and date.
<PAGE>
11. BINDING EFFECT. This Warrant shall inure to the benefit of and be binding
upon the Warrantholder, the Company and their respective successors and
permitted assigns.
12. COMPANY'S NOTICE OF CERTAIN EVENTS. So long as this Warrant shall be
outstanding and unexercised (i) if the Company shall pay any dividend or
make any distribution upon the Common Stock,or (ii) if the company shall
offer to the holders of Common Stock for subscription or purchase y them
any shares of stock of any class or any other rights, or (iii) in the
event of any capital reorganization of the Company, reclassification of
the company, reclassification of the capital stock of the Company,
consolidation or merger of the Company with or into another corporation,
sale, lease or transfer of shall or substantially all of the property ad
assets of the Company to another corporation, or voluntary or involuntary
dissolution, the Company shall cause to be delivered to the Holder, at
least ten days prior to the date specified in (a) or (b) below,a s the
case may be, a notice containing a brief description of the the proposed
action and stating the date on which (a) a record is to be taken for the
purpose of such dividend, distribution or rights, or (b) such
reclassification, reorganization, consolidation, merger, conveyance,
lease, dissolution, liquidation or winding up is to take place and the
date, if any, is to be fixed, as of which the holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution,
liquidation or winding up.
13. NOTICE. Notices and other communications to be given to the Holder of the
Warrants evidenced by this certificate shall be delivered by hand, by
facsimile transmission, or by overnight express courier or mailed,
postage prepaid, to the Holder at the address set forth agove, or such
other address as Holder shall have designated by written notice to the
Company as provided herein. Notices or other communications to the
Company shall be deemed to have been sufficiently given if delivered by
hand, by facsimile transmission, or by overnight express courier or
mailed, postage prepaid, to the Company at 445 "G" Street, Suite 217, San
Diego, California 92101, or such other address as the Company shall have
designated by written notice to such registered owner as herein provided.
All notices required hereunder shall be in writing and shall be deemed
received when delivered personally, one business day after delivery to a
nationally recognized commercial overnight courier service, or two
business days after mailing when mailed by certified or registered mail
to the Company or the Warrantholder.
14. GOVERNING LAW. The validity, interpretation, and performance of this
Warrant and of the terms and provisions hereof shall be governed by and
construed in accordance with the laws of the State of Delaware without
giving effect to the principles of conflicts of laws.
15. AMENDMENT. this Warrant may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written
agreement executed by the Company and the Warrantholder.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed effective as of March 15, 1998.
Topform, Inc.
By: /s/ John C. Homan
- -----------------------------------
John C. Homan, President
<PAGE>
[LETTERHEAD]
OPTHALMOLOGIST MEMBERSHIP AGREEMENT
TRUEVISION LASER CENTER OF ALBUQUERQUE, INC.
THIS AGREEMENT entered into the 20TH day of FEB, 1997, by and between
TRUEVISION LASER CENTER OF ALBUQUERQUE, INC. (hereinafter "TrueVision")
and DANIEL R. PETERS M.D. (hereinafter referred to as "Doctor").
WHEREAS, TrueVision is in the business of operating an opthalmic laser
center which will perform laser refractive procedures using an excimer laser
(hereinafter the "Laser Center"); and,
WHEREAS, is support of the operations of the Laser Center, TrueVision is
establishing a network of members to provide professional services to
patients undergoing certain accepted laser refractive procedures (hereinafter
"LR Procedures") at the Laser Center, such professional services to consist
of patient screening, pre-operative and post-operative care along with the
actual performance of the LR Procedures; and,
WHEREAS, Doctor holds a valid and unrestricted license to practice
medicine in the State of New Mexico and is qualified as a specialist in
opthalmology; and,
WHEREAS, Doctor desires to associate with TrueVision to provide
professional services to Doctor's patients undergoing the LR Procedures at
the Laser Center and seeks to become a member with the obligations and
benefits related thereto; and
WHEREAS, TrueVision desires to accept Doctor as a member of the TrueVision
network.
NOW, THEREFORE, the parties hereto agrees as follows:
1. ACCEPTANCE AS MEMBER. TrueVision hereby conditionally accepts Doctor
as a member of TrueVision Laser Center of Albuquerque, Inc. and, subject to the
provisions herein with regard to training, credentialing, licensing and
insurance, agrees that Doctor has the right to provide professional services
to patients undergoing the LR Procedures and to use the excimer laser and
other equipment services and facilities at the Laser Center, it being
expressly understood that this right shall be exercised in accordance with the
guidelines, protocols, procedures, and rules established by the Board of
Directors and the Medical Advisory Committee. It is expressly understood
that Doctor's rights hereunder are to be exercised in accordance with the
guidelines, protocols, procedures and rules established by the Board of
Directors and the Medical Advisory Committee.
<PAGE>
2. CREDENTIALING AND TRAINING.
a. CREDENTIALING:
Immediately UPON the complete execution of this Agreement, Doctor
shall deliver to TrueVision:
(1) A completed Application for Professional Membership;
(2) Evidence of current unrestricted license to practice in the
State of New Mexico;
(3) Evidence of current board certification, if any; and
(4) Evidence of the insurance required in paragraph 4b, below.
TrueVision will promptly review Doctor's professional application and act upon
it in accordance with its usual credentialing policies and procedures, which
are attached as Exhibit 'A' which may be modified from time to time. Doctor
will not have any rights of a Member until Professional Membership has been
approved.
b. TRAINING Upon positive conclusion of the credentialing
process. Doctor will be required to participate in the TrueVision Physician
Orientation to complete the mandatory FDA excimer laser training. From time
to time, TrueVision will sponsor the FDA training. This Program will be
provided to Doctor by TrueVision in Albuquerque, HI for such fee that the
Board of Directors of TrueVision may determine is necessary to cover the
costs of such training. Doctors may also complete the mandatory FDA training
at any manufacturer approved location conducted by a certified trainer,
provided that he/she submits evidence of the successful completion of said
training acceptable to the Medical Advisory Committee. Upon successful
completion of the TrueVision orientation and receipt of laser certification,
Doctor will be accepted as a full member/affiliate of the TrueVision network
with all the rights and obligations contained herein.
3. OPERATION OF LASER CENTER.
a. FACILITY TrueVision hereby agrees to establish and maintain
the operations of the Laser CENTER AT ITS EXPENSE. In addition to leasing
appropriate space for the Laser Center, TrueVision shall acquire, maintain,
repair and/or replace all equipment and supplies necessary to perform the LR
Procedure including, but not limited to, the excimer laser and related
ancillary equipment.
b. SUPPORT STAFF TrueVision further agrees to provide the
reasonably trained and qualified support staff (professional, technical,
managerial, and/or clerical) necessary to provide Doctor a state of the art,
fully supported location to perform the accepted LR Procedures. All
professional and technical staff shall have such certifications as may be
required for the services they will provide at the Laser Center.
- 2 -
<PAGE>
c. MANAGEMENT. The business operations of the Laser Center will be
controlled by the officers and Board of Directors of True Vision. Decisions
regarding local medical and professional issues, will be made by an elected
Medical Advisory Committee.
d. MEDICAL ADVISORY COMMITTEE. Each member will be entitled to
participate in the election of the Medical Advisory Committee and receive one
vote per person regardless of the number of membership units owned. This
Committee will be elected approximately six (6) months after the commencement
of LR Procedures at the Center. Until said Committee is elected, the Board
of Directors of True Vision will serve in that capacity. Further, the
members, as a group, will be entitled to elect one member to the Board of
Directors of True Vision of Albuquerque, Inc.
e. REFERRAL PROGRAM. The member network established by True Vision
will include both ophthalmologists and optometrists. These professionals will
be trained and encouraged to work together in conjunction with the Marketing
Program discussed below to establish cross referrals among members. Those
individual patients who contact True Vision directly and are not existing
patients of a member, will be referred to a member or members for
professional services. The True Vision referrals to Doctor will be
distributed in accordance with policies and procedures to be established from
time to time by the Medical Advisory Committee.
f. ADMINISTRATIVE SERVICES.
(1) BILLING. TrueVision will be responsible for collections
from all patients who undergo any procedure at the Laser Center. The
surgeon's fee and any co-manager's fees, as well as TrueVisions portion for
facility usage, royalties, licenses, taxes and supplies will be included in
one bill to the patient. For purposes of administrative ease after the
subtraction of any and all royalties, licenses and fees, that may be imposed
by any governmental agencies or the manufacturers of the LR equipment,
various patient holders of LR technology, including but not limited to
"Pillar Point" fees, the allocation of the billing will be 50% to the Doctor
and/or co-managing members and 50% to TrueVision. The Medical Advisory
Committee and the Board of Directors shall review this allocation from time
to time to ensure that it is fair and reasonable and supports the financial
viability of the Center. If more than one True Vision member is providing
care for a patient, the co-management fees shall be paid by TrueVision as
agreed upon by those members. Written direction shall be given to TrueVision,
in advance of the LR procedure, by those members. The Medical Advisory
Committee establishes the non-binding guidelines for the distribution of fees
between medical professionals based upon medically acceptable allocations of
pre and post procedure care as well as the actual performance of the L.R.
procedure. These guidelines will be reviewed from time to time by the Medical
Advisory Committee and/or the TrueVision Laser Centers, Inc. Medical Advisory
Committee and modified to reflect contemporary standards of practice and
consistent clinical outcomes for the patient.
- 3 -
<PAGE>
(2) FINANCING AND COLLECTIONS. TrueVision will facilitate a
financing program to allow patients to defer the cost of the LR procedure.
TrueVision, or its agent, will collect all payments from patients undergoing
procedures at the Laser Center.
(3) PAYMENT TO DOCTOR. TrueVision payment to Doctor as provided
for in paragraph g(1) will be made by TrueVision to the Doctor as fees are
received from the patient. All payments to the Doctor will be issued as
determined by TrueVision but in no case less than monthly. The payment to the
Doctor will include all collected professional fees of that Doctor within the
time period included in that payment. Payments are subject to adjustment for
NSF checks, disputed billing and/or charge backs from credit providers.
h. TRAINING PROGRAMS. TrueVision will maintain ongoing Continuing
Professional Education programs at a nominal cost for the benefit of Doctor
and the staff of Doctor's office. These programs may be conducted at the
Laser Center or other location as determined by the Medical Advisory
Committee.
(4) DUTIES OF DOCTOR. In order to retain the full use of the
Laser Center and to otherwise take advantage of the other benefits of
membership described herein. Doctor agrees to the following:
a. MAINTENANCE OF PROFESSIONAL STANDING. Doctor shall take all
reasonable steps necessary to maintain all licenses, privileges, and
certifications necessary to continue to practice as an Ophthalmologist.
Further, Doctor shall meet all requirements set from time to time by the
Medical Advisory Committee for continued credentialing by the Laser Center as
well as certifications that may be necessary to perform the Laser Procedures.
b. INSURANCE. Doctor shall maintain at Doctor's expense, general and
professional liability insurance covering Doctor's acts and the acts of all
those in Doctor's employ or control. Such liability insurance shall be in an
amount not less than $200,000/$600,000. Doctor shall, annually, during the
term of this Agreement provide a certificate of insurance to TrueVision
evidencing such insurance coverage.
TrueVision shall maintain at TrueVision's expense, general liability
insurance, covering TrueVision's acts and the act of all those in
TrueVision's employ or control. Such general liability insurance shall
provide coverage of $1,000,000/$3,000,000. TrueVision shall, annually during
the term of this Agreement provide a certificate of insurance to Doctor
evidencing such insurance coverage.
c. PATIENT INFORMATION. Doctor shall provide pre-operative and
post-operative ophthalmic data to TrueVision on all patients who are treated
at the Laser Center.
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<PAGE>
5. RELATIONSHIP OF PARTIES. In the performance of the work, duties and
obligations undertaken by Doctor under the terms of this Agreement, it is
mutually understood and agreed that Doctor is at all times acting as an
independent contractor practicing as an Ophthalmologist for the benefit of
Doctor's patients. Doctor is not an employee of TrueVision. TrueVision shall
neither have nor exercise any control over Doctor's professional work. The
standards of practice, professional duties, and guidelines of Doctor in the
performance of procedures at the Laser Center, shall be determined by the
Medical Advisory Committee.
6. INDEMNIFICATION. TrueVision and Doctor each hereby indemnify and
hold harmless the other from any liability, claim, cost, or expense(including
but not limited to attorney's fees and court costs) which may arise out of
any act or omission of the other, their employees or agents. In addition to
the foregoing and not in limitation thereof, Doctor indemnifies TrueVision
and holds it harmless from any liability, claim, cost or expense(including
but not limited to attorney's fees and court costs) which may arise from any
professional services which were performed or which should have been
performed by Doctor and Doctor's employees, agents and any other individual
or entity in Doctor's control or for whom Doctor might otherwise have legal
responsibility. This duty to indemnify shall survive the term of this
agreement and insure to the benefit of any and all successors and assigns of
either party.
7. CHANGES OF LAWS/REGULATORY COMPLIANCE. The parties recognize that
this Agreement at all times is to be subject to applicable state, local and
federal law and all regulations and policies arising therefrom. The parties
further recognize that this Agreement shall be subject to amendments in such
laws and regulations or changes in interpretation thereof. Any provisions or
regulations which would invalidate or otherwise be inconsistent with the
terms of this Agreement or that would cause one or both of the parties to be
in violation of law, shall be deemed to have superseded the terms of this
Agreement, provided, however, that the parties shall exercise their best
efforts to accommodate the terms and intent of this Agreement to the greatest
extent possible consistent with the then requirements of law and regulations.
In the event that a change in law or regulation or the interpretation
thereof impacts upon the ability of a party hereto to receive the economic
benefits intend by this Agreement, the affected party shall have the right to
request the recognition of this Agreement. In the event that such recognition
does not result in a satisfactory Agreement in the light of the changed laws
and/or regulations the affected party may terminate this Agreement.
- 5 -
<PAGE>
8. ASSIGNMENT. This Agreement is personal to Doctor and therefore may
not be assigned to any other individual or entity without prior written
consent of TrueVision, which may be withheld at its absolute discretion.
TrueVision's rights and obligations hereunder may be assigned to any other
entity controlled by TrueVision or by any entity which controls TrueVision.
9. TERM/TERMINATION. This Agreement shall be for an initial term of
three (3) years from the date set forth above. After the initial term, it
shall be renewable at the option of either party for an additional three year
term upon terms agreeable to the parties. Either party may terminate this
Agreement at any time, without cause, upon ninety (90) days written notice to
the other.
This Agreement may be terminated by TrueVision, immediately, in the
event that the Medical Advisory Committee determines in good faith that
Doctor is not providing adequate patient care or that the safety of patients
is jeopardized by continuing Doctor's privileges under this Agreement.
TrueVision may terminate this agreement at its option upon the vote of the
Medical Advisory Committee for cause, including but not limited to fraud
and/or abuse of privilege.
This Agreement shall automatically be terminated upon Doctor's loss of
license, of Doctor's death or permanent disability.
10. NONDISCLOSURE.
a. Doctor acknowledges that during the term of this Agreement,
Doctor will acquire knowledge of certain confidential information regarding
the Laser Center. Doctor agrees to keep all such information confidential.
Doctor shall not at any time disclose any confidential information to any
individual or entity, subject only to Doctor's disclosure obligations to
Doctor's patient or any subpoena or Court order requiring disclosure of such
information and then only after notice and approval by TrueVision of the
nature and extent of any disclosure that will be made. Such approval shall be
specifically in writing and shall not be unreasonably withheld.
11. MISCELLANEOUS.
a. JURISDICTION AND VENUE. This Agreement is entered into in
Albuquerque, New Mexico and the parties hereby agree that for all disputes,
controversies, and/or litigation which may arise under this Agreement, New
Mexico law shall govern. Exclusive vents shall be with the Courts of
Bervialillo County, New Mexico. Doctor and TrueVision agree to submit to the
personal jurisdiction of such Courts.
b. ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement of the parties hereto regarding membership in the TrueVision Member
network and all prior written or oral
- 6 -
<PAGE>
negotiations, representations, arrangements, and / or agreements regarding the
subject matter of this Agreement are merged into and superceded by this
Agreement.
c. SEVERABILITY. All provisions of this agreements are severable
and this Agreement shall not be affected by the invalidity of any provision
hereof so long as the basic intent of the parties and the economic benefits
to each is not materially adversely affected by the invalidity of such
provision.
d. INUREMENT. This Agreement shall be binding upon and inure to the
benefit of the parties herein, their respective heirs, successors and
permitted assigns.
e. AMENDMENT. This Agreement may not be amended except in writing
signed by the parties hereto.
f. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which no executed and delivered shall constitute and
original, but all such counterparts shall together constitute one and the
same instrument. Any such counterpart may comprise one or more duplicates or
duplicate signature pages any of which may be executed by less than all of
the parties provided that each party executes at least one such duplicate or
duplicate signature page.
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<PAGE>
IN WITNESS THEREOF, the parties hereto have hereunto set their hands on the
date above written.
WITNESSED BY:
David E. Magnus O.D. Feb 20, 1997
- ------------------------------- -------------------------------
Name Dated
/s/ DAVID E. MAGNUS O.D.
- -------------------------------
Signature
"DOCTOR"
Daniel R. Peters M.D. Feb 20, 1997
- ------------------------------ -------------------------------
Name Dated
/s/ DANIEL R. PETERS M.D.
- ------------------------------
Signature
"TRUEVISION"
TRUEVISION LASER CENTER OF ALBUQUERQUE, Inc.
- ------------------------------ -------------------------------
Name Dated
- ------------------------------ -------------------------------
Signature Title
- 8 -
<PAGE>
[LOGO]
Exhibit 10.17
OPTHALMOLOGIST MEMBERSHIP AGREEMENT
TRUEVISION LASER CENTER OF ALBUQUERQUE, INC.
THIS AGREEMENT entered into this 3RD day of APRIL, 1997, by and between
TRUEVISION LASER CENTER OF ALBUQUERQUE, INC. (hereinafter "TrueVision")
and DONALD E. RODGERS (hereinafter referred to as "Doctor").
WHEREAS, TrueVision is in the business of operating an opthalmic laser
center which will perform laser refractive procedures using an excimer laser
(hereinafter the "Laser Center"); and,
WHEREAS, in support of the operations of the Laser Center, TrueVision is
establishing a network of members to provide professional services to
patients undergoing certain accepted laser refractive procedures (hereinafter
"LR Procedures") at the Laser Center, such professional services to consist
of patient screening, pre-operative and post-operative care along with the
actual performance of the LR Procedures; and,
WHEREAS, Doctor holds a valid and unrestricted license to practice
medicine in the State of New Mexico and is qualified as a specialist in
opthalmology; and,
WHEREAS, Doctor desires to associate with TrueVision to provide
professional services to Doctor's patients undergoing the LR Procedures at
the Laser Center and seeks to become a member with the obligations and
benefits related thereto; and
WHEREAS, TrueVision desires to accept Doctor as a member of the TrueVision
network.
NOW, THEREFORE, the parties hereto agrees as follows:
1. ACCEPTANCE AS MEMBER. TrueVision hereby conditionally accepts Doctor
as a member of TrueVision Laser Center of Albuquerque, Inc. and, subject to the
provisions herein with regard to training, credentialing, licensing and
insurance, agrees that Doctor has the right to provide professional services
to patients undergoing the LR Procedures and to use the excimer laser and
other equipment, services and facilities at the Laser Center, it being
expressly understood that this right shall be exercised in accordance with the
guidelines, protocols, procedures, and rules established by the Board of
Directors and the Medical Advisory Committee.
<PAGE>
2. CREDENTIALING AND TRAINING.
a. CREDENTIALING:
Immediately UPON the complete execution of this Agreement, Doctor
shall deliver to TrueVision:
(1) A completed Application for Professional Membership;
(2) Evidence of current unrestricted license to practice medicine
in the State of New Mexico;
(3) Evidence of current board certification, if any; and
(4) Evidence of the insurance required in paragraph 4b, below.
TrueVision will promptly review Doctor's professional application and act upon
it in accordance with its usual credentialing policies and procedures, which
are attached as Exhibit 'B' and as may be modified from time to time. Doctor
will not have any rights of a Member until Professional Membership has been
approved.
b. TRAINING Upon positive conclusion of the credentialing
process Doctor will be required to participate in the TrueVision Physician
Orientation to complete the mandatory FDA excimer laser training. From time
to time, TrueVision will sponsor the FDA training. This Program will be
provided to Doctor by TrueVision in Albuquerque, NM for such fee that the
Board of Directors of TrueVision may determine is necessary to cover the
costs of such training. Doctors may also complete the mandatory FDA training
at any manufacturer approved location conducted by a certified trainer,
provided that he/she submits evidence of the successful completion of said
training acceptable to the Medical Advisory Committee. Upon successful
completion of the TrueVision orientation and receipt of laser certification,
Doctor will be accepted as a full member of the TrueVision network
with all the rights and obligations contained herein.
3. OPERATION OF LASER CENTER.
a. FACILITY. TrueVision hereby agrees to establish and maintain
the operations of the Laser Center at its expense. In addition to leasing
appropriate space for the Laser Center, TrueVision shall acquire, maintain,
repair and/or replace all equipment and supplies necessary to perform the LR
Procedure including, but not limited to, the excimer laser and related
ancillary equipment.
b. SUPPORT STAFF. TrueVision further agrees to provide the
reasonably trained and qualified support staff (professional, technical,
managerial, and/or clerical) necessary to provide Doctor a state of the art,
fully supported location to perform the accepted LR Procedures.
2
<PAGE>
c. MANAGEMENT. The business operations of the Laser Center will be
controlled by the officers and Board of Directors of TrueVision. Decisions
regarding local medical and professional issues, will be made by an elected
Medical Advisory Committee.
d. MEDICAL ADVISORY COMMITTEE. Each member will be entitled to
participate in the election of the Medical Advisory Committee and receive one
vote per person regardless of the number of membership units owned. This
Committee will be elected six (6) months after the commencement of LR
Procedures at the Center. Until said Committee is elected, the Board
of Directors will serve in that capacity. Further, the members, as a group,
will be entitled to elect one member to the Board of Directors of TrueVision
of Albuquerque, Inc.
e. REFERRAL PROGRAM. The member network established by TrueVision
will include both ophthalmologists and optometrists. These professionals will
be trained and encouraged to work in conjunction with the Marketing
Program discussed below to establish cross referrals among members. Those
individual patients who contact TrueVision directly and are not existing
patients of a member, will be referred to a member or members for
professional services. The TrueVision referrals to Doctor will be
distributed in accordance with policies and procedures to be established from
time to time by the Medical Advisory Committee.
f. MARKETING PROGRAM. TrueVision will undertake a multifaceted
marketing effort to both increase general patient awareness of and demand for
the LR Procedure. Said multifaceted marketing effort will be undertaken
without contribution from Doctor and will in no way promote the practice of
one doctor over another, nor will it specifically support any one member over
any other member. Further TrueVision will assist individual member doctors in
their marketing efforts with specific programs, including but not limited to:
patient referral programs, in-office training, support and materials,
consumer advertising programs; which may include television, radio and
newspaper. TrueVision will also provide all members with access to
cooperative advertising programs allowing for the sharing of the costs of
certain approved advertising and marketing programs to the Doctor. These
programs will be available from time to time and may be expanded or reduced
without the prior consent of the members.
g. ADMINISTRATIVE SERVICES.
(1) BILLING. TrueVision will be responsible for collections
from all patients who undergo any procedure at the Laser Center. The
fees for Doctor's professional services, the professional services of any
other member, as well as TrueVisions portion for facility usage, royalties,
licenses, taxes and supplies will be included in one bill to the patient. For
purposes of administrative ease after the subtraction of any and all
royalties, licenses and fees, that may be imposed by any governmental agencies
or the manufacturers of the LR equipment, various patient holders of LR
3
<PAGE>
technology; including but not limited to "Pillar Point" fees, the allocation
of the billing will be 50% to the Doctor and/or co-managing members and 50%
to TrueVision. The Medical Advisory Committee and the Board of Directors
shall review this allocation from time to time to ensure that it is fair and
reasonable and supports the financial viability of the Center. If more than
one TrueVision member is providing care for a patient, the co-management care
and fees shall be paid by TrueVision as agreed upon by those members. Written
direction shall be given to TrueVision, in advance of the procedure, by
those members. The Medical Advisory Committee establishes the non-binding
guidelines for the distribution of fees between medical professionals based
upon medically acceptable allocation of pre and post procedure care as well
as the actual performance of the procedure. These guidelines will be
reviewed from time to time by the Medical Advisory Committee and/or the
TrueVision Laser Centers, Inc. Medical Advisory Board and modified to
reflect contemporary standards of practice and consistent clinical outcomes
for the patient.
(2) FINANCING AND COLLECTIONS. TrueVision will facilitate a
financing program to allow patients to defer the cost of the LR procedure.
TrueVision will collect all payments from patients undergoing
procedures at the Laser Center.
(3) PAYMENT TO DOCTOR. TRUEVISION Payment to Doctor as
provided for in paragraph g(1) for professional services rendered by
Doctor will be made as fees are received from the patient. All payments to
the Doctor will be made as determined by TrueVision but in no case less than
monthly. The payment to the Doctor will include all collected professional
fees of Doctor within the time period included in that payment. Payments are
subject to adjustment for NSF checks, disputed billing and/or charge backs
from credit providers.
h. TRAINING PROGRAMS. TrueVision will maintain ongoing Continuing
Professional Education programs at a nominal cost for the benefit of Doctor
and the staff of Doctor's office. These programs may be conducted at the
Laser Center or other location as determined by the Medical Advisory
Committee.
(4) DUTIES OF DOCTOR. In order to retain the full use of the
Laser Center and to otherwise take advantage of the other benefits of
membership described herein. Doctor agrees to the following:
a. MAINTENANCE OF PROFESSIONAL STANDING. Doctor shall take all
reasonable steps necessary to maintain all licenses, privileges, and
certifications necessary to continue to practice as an Ophthalmologist.
Further, Doctor shall meet all requirements set from time to time by the
Medical Advisory Committee for continued credentialing by the Laser Center as
well as certifications that may be necessary to perform the Laser Procedures.
4
<PAGE>
b. INSURANCE. Doctor shall maintain at Doctor's expense, general and
professional liability insurance covering Doctor's acts and the acts of all
those in Doctor's employ or control. Such liability insurance shall be in an
amount not less than $1,000,000/$600,000. Doctor shall, annually, during the
term of this Agreement provide a certificate of insurance to TrueVision
evidencing such insurance coverage.
c. MARKETING SUPPORT. Doctor shall actively participate in and
support those marketing activities which TrueVision shall establish from time
to time. These services may include complimentary screening, patient
education seminars, media interviews, etc. as received and agreed to by the
Medical Advisory Committee but shall not require any other financial
contribution by the Doctor.
Optional, cooperative, cost-saving marketing programs may be
offered to members from time to time which will specifically allow for
TrueVision to contribute funding in support of that member's personal
marketing program.
d. REFERRAL PATIENTS. Doctor agrees that if in Doctor's
professional judgment, the LR Procedure is appropriate for any patient
referred to Doctor by TrueVision, the LR Procedure will be performed at the
Laser Center. If the patient elects laser vision correction in any form at
any time within three (3) years after the referral by TrueVision, Doctor
agrees to use Doctor's best efforts to encourage the patient to have the
procedure performed at the Laser Center, so long as if in Doctor's
professional judgment such treatment would be appropriate.
e. PATIENT INFORMATION. Doctor shall provide pre-operative and
post-operative ophthalmic data to TrueVision on all patients who are treated
at the Laser Center.
5. RELATIONSHIP OF PARTIES. In the performance of the work, duties and
obligations undertaken by Doctor under the terms of this Agreement, it is
mutually understood and agreed that Doctor is at all times acting as an
independent contractor practicing as an Ophthalmologist for the benefit of
Doctor's patients. Doctor is not an employee of TrueVision. TrueVision shall
neither have nor exercise any control over Doctor's professional work. The
standards of practice, professional duties, and guidelines of Doctor in the
performance of procedures at the Laser Center, shall be determined by the
Medical Advisory Committee.
6. INDEMNIFICATION. TrueVision and Doctor each hereby indemnify and
hold harmless the other from any liability, claim, cost, or expense(including
but not limited to attorney's fees and court costs) which may arise out of
any act or omission of the other, their employees or agents. In addition to
the foregoing, and not in limitation thereof, Doctor indemnifies TrueVision
and holds it harmless
5
<PAGE>
from any liability, claim, cost or expense (including but not limited to
attorney's fees and court costs) which may arise from any professional
services which were performed or which should have been performed by Doctor
and Doctor's employees, agents and any other individual or entity in Doctor's
control or for whom Doctor might otherwise have legal responsibility. This
duty to indemnify shall survive the term of this agreement and inure to the
benefit of any and all successors and assigns of either party.
7. CHANGES OF LAWS/REGULATORY COMPLIANCE. The parties recognize that
this Agreement at all times is to be subject to applicable state, local and
federal law and all regulations and policies arising therefrom. The parties
further recognize that this Agreement shall be subject to amendments in such
laws and regulations or changes in interpretation thereof. Any provisions or
regulations which would invalidate or otherwise be inconsistent with the
terms of this Agreement or that would cause one or both of the parties to be
in violation of law, shall be deemed to have superseded the terms of this
Agreement, provided, however, that the parties shall exercise their best
efforts to accommodate the terms and intent of this Agreement to the greatest
extent possible consistent with the then requirements of law and regulations.
In the event that a change in law or regulation or the interpretation
thereof impacts upon the ability of a party hereto to receive the economic
benefits intend by this Agreement, the affected party shall have the right to
request the renegotiation of this Agreement. In the event that such
renegotiation does not result in a satisfactory Agreement in the light of the
changed laws and/or regulations, the affected party may terminate this
Agreement.
8. ASSIGNMENT. This Agreement is personal to Doctor and therefore may
not be assigned to any other individual or entity without prior written
consent of TrueVision, which consent may be withheld at its absolute
discretion. TrueVision's rights and obligations hereunder may be assigned to
any other entity controlled by TrueVision or by any entity which controls
TrueVision.
9. TERM/TERMINATION. This Agreement shall be for an initial term of
three (3) years from the date set forth above. It shall be renewable at the
option of either party for an additional three year term upon terms agreeable
to the parties, after the initial term. Either party may terminate this
Agreement at any time, without cause, upon ninety (90) days written notice to
the other.
This Agreement may be terminated by TrueVision, immediately, in the
event that the Medical Advisory Committee determines in good faith that
Doctor is not providing adequate patient care or that the safety of patients
is jeopardized by continuing Doctor's privileges under this Agreement.
6
<PAGE>
TrueVision may terminate this agreement at its option upon the vote of the
Medical Advisory Committee for cause, including but not limited to fraud,
abuse of privilege, and/or failure to promote the interest of this center.
This Agreement shall automatically be terminated upon Doctor's loss of
license of Doctor's death or permanent disability.
10. NONDISCLOSURE.
a. Doctor acknowledges that during the term of this Agreement,
Doctor will acquire knowledge of certain confidential information regarding
the Laser Center. Doctor agrees to keep all such information confidential.
Doctor shall not at any time disclose any confidential information to any
individual or entity, subject only to Doctor's disclosure obligations to
Doctor's patient or any subpoena or Court order requiring disclosure of such
information and then only after notice and approval by TrueVision of the
nature and extent of any disclosure that will be made. Such approval shall be
specifically in writing and shall not be unreasonably withheld.
11. MISCELLANEOUS.
a. JURISDICTION AND VENUE. This Agreement is entered into in
Albuquerque, New Mexico and the parties hereby agree that for all disputes,
controversies, and/or litigation which may arise under this Agreement, New
Mexico Law shall govern. Exclusive venue shall be with the Courts of
Bervialillo County, New Mexico. Doctor and TrueVision agree to submit to the
personal jurisdiction of such Courts.
b. ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement of the parties hereto regarding membership in the TrueVision Doctor
network and all prior written or oral negotiations, representations,
arrangements, and / or agreements regarding the subject matter of this
Agreement are merged into and superceded by this Agreement.
c. SEVERABILITY. All provisions of this agreements are severable
and this Agreement shall not be affected by the invalidity of any provision
hereof so long as the basic intent of the parties and the economic benefit
to each is not materially adversely affected by the invalidity of such
provision.
d. INUREMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective heirs, successors and
permitted assigns.
e. AMENDMENT. This Agreement may not be amended except in writing
signed by the parties hereto.
7
<PAGE>
IN WITNESS THEREOF, the parties hereto have hereunto set their hands on the
date above written.
WITNESSED BY:
STEPHEN C. COLEMAN, M.D. APRIL 3, 1997
- ------------------------------- -------------------------------
Name Dated
/s/ STEPHEN C. COLEMAN, M.D.
- -------------------------------
Signature
"DOCTOR"
DONALD E. RODGERS APRIL 3, 1997
- ------------------------------ -------------------------------
Name Dated
/s/ DONALD E. RODGERS
- ------------------------------
Signature
"TRUEVISION"
TRUEVISION LASER CENTER
OF ALBUQUERQUE, Inc.
JOHN DE SANSIS APRIL 3, 1997
- ------------------------------ -------------------------------
Name Dated
/s/ JOHN DE SANSIS SENIOR VICE PRESIDENT
- ------------------------------ -------------------------------
Signature Title
8
<PAGE>
Exhibit 10.19
ACCREDITED INVESTORS ONLY MEMORANDUM # __________
CONFIDENTIAL OFFERING MEMORANDUM
$1,000,000 MAXIMUM OFFERING
$250,000 MINIMUM OFFERING
TRUEVISION INTERNATIONAL, INC.
A DELAWARE CORPORATION
13% NOTES DUE APRIL 15, 2000
DENOMINATED IN $5,000 INCREMENTS
WITH COMMON STOCK WARRANTS ATTACHED
MINIMUM PURCHASE - 5 NOTES ($25,000)
TrueVision International, Inc. (the "Company" or "TrueVision") hereby offers
(the "Offering"), on a "best efforts" basis to Accredited Investors only, as
that term is defined in Regulation D under the Securities Act of 1933, as
amended (the "Securities Act"), a maximum aggregate principal amount of
$1,000,000 of its subordinated promissory notes (the "Notes"), subject to a
minimum aggregate Offering of $250,000 of its Notes, due April 15, 2000. The
Notes are being offered in denominations of $5,000 per Note, with a minimum
purchase of 5 Notes ($25,000) per purchaser. Each Note will have 2,500
non-detachable Common Stock warrants (the "Warrants") which entitle the holder
thereof the right to purchase 2,500 Units of the Company's Common Stock, $.001
par value ("Common Stock") at an exercise price of $8.40 per share. One Note and
2,500 Warrants are being offered as a "Unit." The Warrants will expire without
value on April 15, 2004, unless exercised by the holder. The proceeds from the
sale of the Units will be used as "bridge capital" to reduce existing
obligations, to provide working capital to enable the Company to conduct an
underwritten public offering of its Common Stock, and to support expansion into
additional geographic markets and related marketing activities conducted
primarily through TrueVision Laser Center of Albuquerque, a New Mexico
corporation ("TVLCA"), a subsidiary corporation. The Notes are unsecured and
constitute a general obligation of the Company. The Notes will bear simple
interest at the rate of 13% per annum, payable at maturity, and are subject to a
mandatory, early redemption by the Company, at their principal face value, plus
any accrued interest (without penalty), from the proceeds of the Company's
proposed initial public offering (the "IPO"). However, there can be no assurance
that the Company will effect any such proposed IPO of its securities. (See "Risk
Factors" and "Proposed Public Offering")
THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. INVESTORS
WILL BE REQUIRED TO REPRESENT THAT THEY ARE FAMILIAR WITH AND UNDERSTAND THE
TERMS, RISKS AND MERITS OF THIS OFFERING (SEE "RISK FACTORS").
THESE SECURITIES ARE BEING OFFERED WITHOUT REGISTRATION UNDER ANY FEDERAL OR
STATE SECURITIES LAWS, BUT ARE BEING OFFERED UNDER AN EXEMPTION FROM
REGISTRATION PURSUANT TO SECTIONS 3(b), 4(2), AND 4(6), AND RULE 506 OF
REGULATION D, PROMULGATED UNDER THE ACT , AND UNDER COMPARABLE EXEMPTIONS
AVAILABLE UNDER VARIOUS STATE SECURITIES LAWS. THESE SECURITIES ARE OFFERED ONLY
WHERE SUCH EXEMPTIONS FROM REGISTRATION IS AVAILABLE. HOWEVER, THE SECURITIES
AND EXCHANGE COMMISSION ("COMMISSION") HAS NOT DETERMINED THAT THESE SECURITIES
ARE EXEMPT FROM REGISTRATION. THESE SECURITIES HAVE NOT BEEN REVIEWED, APPROVED
OR DISAPPROVED BY THE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY,
ADEQUACY, COMPLETENESS OR MERITS OF THIS OFFERING MEMORANDUM. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO OFFERING NET TO THE
INVESTORS (1) EXPENSES (2) COMPANY (3)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER UNIT $5,000 $650 $4,350
MINIMUM INVESTMENT ($25,000) $25,000 $3,250 $21,750
MINIMUM OFFERING $250,000 $32,500 $217,500
TOTAL MAXIMUM OFFERING $1,000,000 $130,000 $870,000
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
(SEE NOTES TO TABLE ON FOLLOWING PAGE)
THE DATE OF THIS OFFERING MEMORANDUM IS APRIL 6, 1999.
<PAGE>
NOTES TO TABLE ON COVER PAGE
(1) The Units are being offered by the Company on a "best efforts" basis to
Accredited Investors only (as that term is defined under Regulation D,
Rule 501 of the Securities Act. A minimum purchase of 5 Units or a
total aggregate of $25,000 in principal amount of the Notes, with a
total of 1,500 Warrants attached, is required for each subscriber. The
offering price has been determined arbitrarily by the Company and bears
no relation to any market value of the Units, book value of the Company
or any other recognized criteria of value.
(2) In connection with this Offering, the Company may utilize the services
of selected broker/dealers, who are member firms of the National
Association of Securities Dealers, Inc. (the "NASD"), and other
commissioned selling agents, although no such arrangements have been
made with any broker/dealers or selling agents as of the date of this
Memorandum, and no broker/dealer is under any obligation to purchase
any of the Units. No commissions or non-accountable expenses will be
paid on Units sold directly to purchasers by the Company, or its
officers and directors. The Offering Expenses set forth above include
sales commissions of 10% and a non-accountable expense allowance of 3%,
which may be paid on Units sold by broker/dealers or commissioned sales
agents, but do not include any additional expenses expected to be
incurred by the Company in connection with the Offering, including, but
not limited to, legal, accounting, printing and other costs.
(3) Pending receipt of the minimum aggregate Offering amount of $250,000,
all funds will be held in a bank escrow account to be established
immediately after commencement of the Offering. The escrow agreement
will provide that funds shall be released upon receipt by the escrow
agent of subscriptions in the amount of $250,000 being deposited into
the escrow account. Unless the minimum subscription of the Offering has
been sold by June 30, 1999 (which date may be extended for up to an
additional 90 days at the discretion of the Company), no Units will be
sold and all funds collected from subscribers will be refunded
promptly, without interest or deduction. The Company has reserved the
right to terminate the Offering at any time, and will terminate the
Offering if less than fifty Notes ($250,000) are subscribed to.
Prior to this Offering, there has been no market for the securities of the
Company and there can be no assurance that any trading market in the Units or
any securities of the Company will ever develop, or that if any trading market
is developed, that it will continue. The Company is not subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and accordingly, is not required to file annual or
quarterly reports with the Securities and Exchange Commission (the
"Commission"). The Company is conducting this Offering pursuant to Rule 506 of
Regulation D, under the Securities Act.
--------------------------------------------------------
NOTICE TO ALL SUBSCRIBERS
THIS MEMORANDUM CONTAINS CONFIDENTIAL NON-PUBLIC INFORMATION. ANY
REPRODUCTION OR DISTRIBUTION, IN WHOLE OR IN PART, OR THE DISCLOSURE OF ANY OF
THE INFORMATION CONTAINED HEREIN, WITHOUT THE PRIOR CONSENT OF THE COMPANY IS
PROHIBITED. THE RECIPIENT OF THIS MEMORANDUM AGREES TO RETURN THIS MEMORANDUM
PROMPTLY TO THE COMPANY WITHOUT MAKING OR RETAINING COPIES THEREOF IF THE
RECIPIENT ELECTS NOT TO SUBSCRIBE.
THE SECURITIES MAY NOT BE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FILED PURSUANT TO FEDERAL AND ANY APPLICABLE STATE
SECURITIES LAWS, OR AN ACCEPTABLE OPINION OF COUNSEL THAT AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS IS AVAILABLE.
THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER IN ANY JURISDICTION IN
WHICH AN OFFER IS NOT AUTHORIZED, OR TO ANY INDIVIDUAL WHO DOES NOT MEET THE
INVESTOR SUITABILITY STANDARDS DESCRIBED IN THIS MEMORANDUM. PROSPECTIVE
INVESTORS WILL BE REQUIRED TO REPRESENT THAT THEY MEET THE INVESTOR SUITABILITY
STANDARDS AND THAT THEY ARE FAMILIAR WITH AND UNDERSTAND THE TERMS, RISKS AND
MERITS OF THIS OFFERING. OFFERS ARE MADE ONLY TO PERSONS WHO MEET THE INVESTOR
SUITABILITY STANDARDS SET FORTH UNDER "INVESTOR SUITABILITY STANDARDS."
NO PERSON OTHER THAN AN AUTHORIZED REPRESENTATIVE OF THE COMPANY HAS
BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THIS MEMORANDUM, AND IF GIVEN OR MADE BY ANY OTHER SUCH
PERSON, SUCH INFORMATION MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE
COMPANY.
THE SECURITIES OFFERED HEREBY ARE SUBJECT TO THE PROVISIONS OF, AND
EACH OF THE INVESTORS PURCHASING ANY SECURITIES WILL BE REQUIRED TO EXECUTE, A
SUBSCRIPTION AGREEMENT AND REGISTRATION RIGHTS AGREEMENT ATTACHED HERETO AS
EXHIBITS C AND D, RESPECTIVELY. PURCHASE OF ANY SECURITIES SHOULD BE MADE ONLY
AFTER A COMPLETE AND
<PAGE>
THOROUGH REVIEW OF THE PROVISIONS OF SUCH DOCUMENTS. IN THE EVENT THAT ANY OF
THE TERMS, CONDITIONS OR OTHER PROVISIONS OF SUCH DOCUMENTS ARE INCONSISTENT
WITH OR CONTRARY TO THE DESCRIPTIONS OR TERMS IN THIS MEMORANDUM, SUCH DOCUMENTS
WILL CONTROL.
PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS
MEMORANDUM AS LEGAL, ACCOUNTING OR TAX ADVICE OR AS INFORMATION NECESSARILY
APPLICABLE TO EACH PROSPECTIVE INVESTOR'S PARTICULAR FINANCIAL SITUATION. EACH
INVESTOR SHOULD CONSULT HIS OWN FINANCIAL ADVISER, COUNSEL AND ACCOUNTANT AS TO
THE LEGAL, TAX AND RELATED MATTERS CONCERNING HIS OR HER INVESTMENT.
INVESTORS WHO PURCHASE SECURITIES AND RESELL THE SECURITIES MAY BE
DEEMED TO BE "UNDERWRITERS" UNDER SECTION 2(11) OF THE SECURITIES ACT AND MAY BE
SUBJECT TO ALL LIABILITIES IMPOSED UPON "UNDERWRITERS" UNDER SUCH SECURITIES ACT
IN CONNECTION WITH THE RESALE OF THE SECURITIES.
THIS OFFER CAN BE WITHDRAWN AT ANY TIME BEFORE ANY CLOSING AND IS
SPECIFICALLY MADE SUBJECT TO THE CONDITIONS DESCRIBED IN THIS MEMORANDUM. THE
COMPANY, IN ITS SOLE DISCRETION, RESERVES THE RIGHT TO REJECT ANY SUBSCRIPTION
IN WHOLE OR IN PART OR TO ALLOT TO ANY SUBSCRIBER LESS THAN THE AMOUNT FOR WHICH
THE SUBSCRIBER HAS SUBSCRIBED.
THIS OFFERING MAY NOT BE CONDUCTED PURSUANT TO ANY GENERAL SOLICITATION
OR ADVERTISING.
THIS MEMORANDUM CONTAINS WHAT THE COMPANY CONSIDERS TO BE FAIR
SUMMARIES OF CERTAIN PROVISIONS OF THE DOCUMENTS THAT WILL GOVERN THIS
INVESTMENT. NEVERTHELESS, THE SUMMARIES DO NOT PURPORT TO BE COMPLETE AND ARE
QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE TEXTS OF THE ORIGINAL DOCUMENTS.
COPIES OF THE DOCUMENTS THAT HAVE BEEN REFERRED TO IN THIS MEMORANDUM ARE
AVAILABLE FROM THE COMPANY UPON REQUEST. INVESTORS MUST NOT RELY UPON ANY
REPRESENTATIONS OR INFORMATION OTHER THAN AS SET FORTH IN THIS MEMORANDUM AND IN
ANY DOCUMENTS REFERRED TO HEREIN AVAILABLE FROM THE COMPANY UPON REQUEST.
EACH PROSPECTIVE INVESTOR WILL BE GIVEN AN OPPORTUNITY TO ASK QUESTIONS
OF AND RECEIVE ANSWERS FROM THE COMPANY AND ITS OFFICERS AND DIRECTORS
CONCERNING THE TERMS AND CONDITIONS OF THIS OFFERING AND TO OBTAIN ANY
ADDITIONAL INFORMATION, TO THE EXTENT THAT THE COMPANY POSSESSES SUCH
INFORMATION OR CAN ACQUIRE IT WITHOUT UNREASONABLE EFFORT OR EXPENSE, AS
NECESSARY TO VERIFY THE ACCURACY OF THE INFORMATION CONTAINED IN THIS MEMORANDUM
OR DEEMED BY THE RECIPIENT AS NECESSARY TO MAKE AN INFORMED INVESTMENT DECISION.
QUESTIONS REGARDING THIS MEMORANDUM OR WRITTEN REQUESTS FOR ADDITIONAL
INFORMATION SHOULD BE DIRECTED TO:
TRUEVISION INTERNATIONAL, INC.
1720 Louisiana Blvd., Suite 100
Albuquerque, New Mexico 87110
Phone: (877) 878-3847, or (505) 256-3534
Fax: (505) 256-3521, E-mail: [email protected]
iii
<PAGE>
STATE SECURITIES NOTICES
NASAA UNIFORM LEGEND
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO
BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
ALABAMA
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE
SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS NOT
BEEN FILED WITH THE SECURITIES COMMISSION. THE COMMISSION DOES NOT RECOMMEND OR
ENDORSE THE PURCHASE OF ANY SECURITIES, NOR DOES IT PASS UPON THE ACCURACY OR
COMPLETENESS OF THIS PRIVATE PLACEMENT MEMORANDUM. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
ALASKA SUBSCRIBERS
THE SECURITIES OFFERED HAVE BEEN REGISTERED WITH THE ADMINISTRATOR OF SECURITIES
OF THE STATE OF ALASKA UNDER PROVISIONS OF 3 AAC 08.500 -- 3 AAC 08.506. THE
INVESTOR IS ADVISED THAT THE ADMINISTRATOR HAS MADE ONLY A CURSORY REVIEW OF THE
REGISTRATION STATEMENT AND HAS NOT REVIEWED THIS DOCUMENT SINCE THE DOCUMENT IS
NOT REQUIRED TO BE FILED WITH THE ADMINISTRATOR. THE FACT OF REGISTRATION DOES
NOT MEAN THAT THE ADMINISTRATOR HAS PASSED IN ANY WAY UPON THE MERITS,
RECOMMENDED, OR APPROVED THE SECURITIES. ANY REPRESENTATION TO THE CONTRARY IS A
VIOLATION OF AS 45.55.170. THE INVESTOR MUST RELY ON THE INVESTOR'S OWN
EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE
OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED, IN MAKING AN INVESTMENT
DECISION ON THESE SECURITIES.
ARIZONA SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF ARIZONA.
THEY CANNOT BE RESOLD UNLESS THEY ARE REGISTERED UNDER THE ARIZONA SECURITIES
ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
ARKANSAS SUBSCRIBERS
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER SECTION
14(b)(14) OF THE ARKANSAS SECURITIES ACT AND SECTION 4(2) OF THE SECURITIES ACT
OF 1933. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS NOT BEEN
FILED WITH THE ARKANSAS SECURITIES DEPARTMENT OR WITH THE SECURITIES AND
EXCHANGE COMMISSION. NEITHER THE DEPARTMENT NOR THE COMMISSION HAS PASSED UPON
THE VALUE OF THESE SECURITIES, MADE ANY RECOMMENDATIONS AS TO THEIR PURCHASE,
APPROVED OR DISAPPROVED THE OFFERING, OR PASSED UPON THE ADEQUACY OR ACCURACY OF
THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
CALIFORNIA SUBSCRIBERS
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS OFFERING MEMORANDUM HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY
PART OF THE CONSIDERATION THEREFORE PRIOR TO SUCH QUALIFICATION IS UNLAWFUL,
UNLESS THE SALE OF THE SECURITIES IS EXEMPT FROM QUALIFICATION UNDER SECTIONS
25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL
PARTIES TO THE SUBSCRIPTION
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AGREEMENT HEREIN ARE EXPRESSLY CONDITIONED UPON SUCH
QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT
COLORADO SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE COLORADO SECURITIES ACT OF 1981 BY REASON OF SPECIFIC EXEMPTIONS
THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE
SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY PERSON OR
ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE COLORADO SECURITIES ACT OF 1981 IF SUCH REGISTRATION IS
REQUIRED.
CONNECTICUT SUBSCRIBERS
THE SECURITIES DESCRIBED HEREIN HAVE NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED, NOR UNDER THE SECURITIES ACT OF ANY STATE.
THE SECURITIES DESCRIBED HEREIN ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
SECURITIES ACT OF CERTAIN STATES. THESE SECURITIES HAVE NOT BEEN APPROVED NOR
DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION. NEITHER HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY AND ADEQUACY OF THE
INFORMATION CONTAINED HEREIN. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
DELAWARE SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES ACT OF ANY JURISDICTION BY REASON OF SPECIFIC
EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OF OTHERWISE DISPOSED OF TO ANY
PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAW, IF SUCH REGISTRATION IS
REQUIRED.
FLORIDA SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE FLORIDA SECURITIES ACT, BY REASON OF SPECIFIC EXEMPTIONS
THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE
SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY PERSON OR
ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE LAWS OF THIS STATE, IF SUCH REGISTRATION IS REQUIRED.
THE FLORIDA SECURITIES ACT PROVIDES, WHERE SALES ARE MADE TO FIVE OR MORE
PERSONS IN FLORIDA, THAT ANY SALE MADE PURSUANT TO SUBSECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT SHALL BE VOIDABLE BY SUCH FLORIDA PURCHASER EITHER WITHIN
THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO
THE ISSUER, AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN THREE DAYS
AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER,
WHICHEVER OCCURS LATER.
GEORGIA SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES ACT OF ANY JURISDICTION BY REASON OF SPECIFIC
EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY
PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAW, IF SUCH REGISTRATION IS
REQUIRED.
HAWAII SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES ACT OF ANY JURISDICTION BY REASON OF SPECIFIC
EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY
PERSON OR ENTITY UNLESS
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SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAW, IF SUCH REGISTRATION IS REQUIRED.
IDAHO SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE IDAHO SECURITIES ACT AND,
THEREFORE, CANNOT BE RESOLD OR TRANSFERRED UNLESS THEY ARE SO REGISTERED OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
ILLINOIS SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES ACT OF ANY JURISDICTION BY REASON OF SPECIFIC
EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY
PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAW, IF SUCH REGISTRATION IS
REQUIRED.
INDIANA SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER SECTION 3 OF THE INDIANA
SECURITIES ACT AND, THEREFORE, CANNOT BE RESOLD OR TRANSFERRED UNLESS THEY ARE
SO REGISTERED OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
KANSAS SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES ACT OF ANY JURISDICTION BY REASON OF SPECIFIC
EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY
PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAW, IF SUCH REGISTRATION IS
REQUIRED.
KENTUCKY SUBSCRIBERS
THE SECURITIES REPRESENTED IN THIS MEMORANDUM OR SUBSCRIPTION DOCUMENTS ARE
BEING SOLD PURSUANT TO A CLAIM OF EXEMPTION FROM THE REGISTRATION OR
QUALIFICATION PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS AND MAY NOT BE
SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION
PROVISION OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE
EXEMPTIONS THEREFROM.
LOUISIANA SUBSCRIBERS
THE SECURITIES REPRESENTED IN THIS MEMORANDUM OR SUBSCRIPTION DOCUMENTS ARE
BEING SOLD PURSUANT TO A CLAIM OF EXEMPTION FROM THE REGISTRATION OR
QUALIFICATION PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS AND MAY NOT BE
SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE
EXEMPTIONS THEREFROM. ANY NON-ACCREDITED INVESTOR IN THE STATE OF LOUISIANA MUST
MEET LOUISIANA SUITABILITY STANDARDS. SUITABILITY IS PRESUMED TO HAVE BEEN
ESTABLISHED IF THE INVESTMENT DOES NOT EXCEED TWENTY-FIVE PERCENT (25%) OF THE
PURCHASER'S NET WORTH.
MAINE SUBSCRIBERS
THESE SECURITIES ARE BEING SOLD PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH
THE BANK SUPERINTENDENT OF THE STATE OF MAINE UNDER SECTION 10502(2)(R) OF TITLE
32 OF THE MAINE REVISED STATUTES. THESE SECURITIES MAY BE DEEMED RESTRICTED
SECURITIES AND AS SUCH THE HOLDER MAY NOT BE ABLE TO RESELL THE SECURITIES
UNLESS PURSUANT TO REGISTRATION UNDER THE STATE OR FEDERAL SECURITIES LAWS OR
UNLESS AN EXEMPTION UNDER SUCH LAWS EXISTS.
MARYLAND SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE MARYLAND SECURITIES ACT, BY REASON OF SPECIFIC EXEMPTIONS
THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE
SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY PERSON OR
ENTITY UNLESS
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SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE MARYLAND SECURITIES ACT, IF SUCH REGISTRATION IS REQUIRED.
MASSACHUSETTS SUBSCRIBERS
THE FINANCIAL ILLUSTRATIONS AND ASSUMPTIONS HAVE BEEN REMOVED FROM ALL OFFERING
MATERIALS DISTRIBUTED TO PROSPECTIVE INVESTORS IN MASSACHUSETTS AT THE REQUEST
OF THE MASSACHUSETTS DIVISION OF SECURITIES.
MICHIGAN SUBSCRIBERS
THIS OFFERING MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREUNDER UNTIL A PERIOD OF AT
LEAST 48 HOURS HAS ELAPSED BETWEEN DELIVERY HEREOF TO A PROSPECTIVE PURCHASER
AND WRITTEN ACCEPTANCE OF HIS PURCHASE OF UNITS HEREUNDER BY THE COMPANY AND,
THEREAFTER, IT CONSTITUTES SUCH AN OFFER ONLY IN A JURISDICTION OR TO A PERSON
TO WHOM IT IS LAWFUL TO MAKE SUCH OFFER, SALE OR SOLICITATION. VARIOUS REPORTS
OF THE DISPOSITION OF THE FUNDS AND ANNUAL FINANCIAL STATEMENTS WILL BE TIMELY
DISBURSED. NO ADVERTISING OR GENERAL SOLICITATION IS PERMITTED.
MINNESOTA SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE MINNESOTA
DEPARTMENT OF COMMERCE NOR HAS THE DIVISION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
MISSOURI SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES ACT OF ANY JURISDICTION BY REASON OF SPECIFIC
EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY
PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAW, IF SUCH REGISTRATION IS
REQUIRED.
NEBRASKA SUBSCRIBERS
THE SECURITIES REPRESENTED IN THE MEMORANDUM OR SUBSCRIPTION DOCUMENTS ARE BEING
SOLD PURSUANT TO A CLAIM OF EXEMPTION FROM THE REGISTRATION OR QUALIFICATION
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS
OF APPLICABLE REFERRAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS
THEREFROM.
DELAWARE SUBSCRIBERS
THE SECURITIES REPRESENTED IN THE MEMORANDUM OR SUBSCRIPTION DOCUMENTS ARE BEING
SOLD PURSUANT TO A CLAIM OF EXEMPTION FROM THE REGISTRATION OR QUALIFICATION
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS
OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS
THEREFROM.
NEW JERSEY SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE BUREAU OF
SECURITIES OF THE STATE OF NEW JERSEY, NOR HAS THE BUREAU PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING. THE FILING OF THE WITHIN OFFERING DOES NOT
CONSTITUTE APPROVAL OF THE ISSUE OR THE SALE THEREOF BY THE BUREAU OF
SECURITIES. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
NEW MEXICO SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES BUREAU
OF THE NEW MEXICO DEPARTMENT OF REGULATION AND LICENSING, NOR HAS THE SECURITIES
BUREAU PASSED UPON THE ACCURACY OR ADEQUACY OF THE PRIVATE PLACEMENT MEMORANDUM.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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NEW YORK SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE NEW YORK FRAUDULENT PRACTICES (MARTIN) ACT, BY REASON OF
SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE
OFFERING. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
TO ANY PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE NEW YORK FRAUDULENT PRACTICE ("MARTIN") ACT, IF SUCH
REGISTRATION IS REQUIRED.
THE PRIVATE PLACEMENT MEMORANDUM HAS NOT BEEN REVIEWED BY THE ATTORNEY GENERAL
PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS
NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
THE PRIVATE PLACEMENT MEMORANDUM DOES NOT CONTAIN AN UNTRUE STATEMENT OF A
MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS
IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY ARE MADE NOT MISLEADING. IT
CONTAINS A FAIR SUMMARY OF THE MATERIAL TERMS OF THE DOCUMENT PURPORTED TO BE
SUMMARIZED THEREIN.
NORTH CAROLINA SUBSCRIBERS
THE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE NORTH
CAROLINA SECURITIES ACT. THE NORTH CAROLINA SECURITIES ADMINISTRATOR NEITHER
RECOMMENDS NOR ENDORSES THE PURCHASE OF ANY SECURITIES, NOR HAS THE
ADMINISTRATOR PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION PROVIDED
HEREIN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NORTH DAKOTA SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
COMMISSIONER OF THE STATE OF NORTH DAKOTA NOR HAS THE COMMISSIONER PASSED UPON
THE ACCURACY OR ADEQUACY OF THE PRIVATE PLACEMENT MEMORANDUM. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
OHIO SUBSCRIBERS
THE SECURITIES REPRESENTED IN THE MEMORANDUM OR SUBSCRIPTION DOCUMENTS ARE BEING
SOLD PURSUANT TO A CLAIM OF EXEMPTION FROM THE REGISTRATION OR QUALIFICATION
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS
OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS
THEREFROM.
OKLAHOMA SUBSCRIBERS
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE OKLAHOMA SECURITIES ACT. THE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED FOR VALUE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION OF THEM UNDER THE SECURITIES ACT OF 1933
AND/OR THE OKLAHOMA SECURITIES ACT, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR ACTS.
OREGON SUBSCRIBERS
THE SECURITIES OFFERED HAVE BEEN REGISTERED WITH THE CORPORATION COMMISSIONER OF
THE STATE OF OREGON UNDER PROVISIONS OF OAR 815 DIVISION 36. THE INVESTOR IS
ADVISED THAT THE COMMISSIONER HAS MADE ONLY A CURSORY REVIEW OF THE REGISTRATION
STATEMENT AND HAS NOT REVIEWED THIS DOCUMENT SINCE THE DOCUMENT IS NOT REQUIRED
TO BE FILED WITH THE COMMISSIONER.
THE INVESTOR MUST RELY ON THE INVESTOR'S OWN EXAMINATION OF THE COMPANY CREATING
THE SECURITIES, AND THE TERMS OF THE OFFERING INCLUDING THE MERITS AND RISKS
INVOLVED IN MAKING AN INVESTMENT DECISION ON THESE SECURITIES.
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PENNSYLVANIA SUBSCRIBERS
SALES OF SECURITIES TO RESIDENTS OF THE COMMONWEALTH OF PENNSYLVANIA ARE SUBJECT
TO THE FOLLOWING CONDITIONS: PURSUANT TO SECTION 207(m) OF THE PENNSYLVANIA
SECURITIES ACT OF 1972, EACH PENNSYLVANIA RESIDENT WHO ACCEPTS AN OFFER TO
PURCHASE A SECURITY DIRECTLY FROM AN ISSUER OR AN AFFILIATE OF AN ISSUER SHALL
HAVE THE RIGHT TO WITHDRAW HIS ACCEPTANCE WITHOUT INCURRING ANY LIABILITY TO THE
SELLER, UNDERWRITER (IF ANY) OR ANY OTHER PERSON, WITHIN TWO BUSINESS DAYS FROM
THE DATE OF RECEIPT BY THE ISSUER OF HIS WRITTEN BINDING CONTRACT OF PURCHASE
OR, IN THE CASE OF A TRANSACTION IN WHICH THERE IS NO WRITTEN BINDING CONTRACT
OF PURCHASE, WITHIN TWO BUSINESS DAYS AFTER HE MAKES THE INITIAL PAYMENT FOR THE
SECURITY BEING OFFERED. TO ACCOMPLISH THIS WITHDRAWAL, A SUBSCRIBER NEED ONLY
SEND A LETTER OR TELEGRAM TO THE COMPANY INDICATING HIS OR HER INTENTION TO
WITHDRAW. SUCH LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END
OF THE AFOREMENTIONED SECOND BUSINESS DAY. IT IS PRUDENT TO SEND SUCH LETTER BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND ALSO
EVIDENCE OF THE TIME WHEN IT WAS MAILED. IF THE REQUEST IS MADE ORALLY (IN
PERSON OR BY TELEPHONE), TO THE PERSON NAMED ABOVE AT THE NUMBER LISTED, A
WRITTEN CONFIRMATION THAT THE REQUEST HAS BEEN RECEIVED SHOULD ALSO BE
REQUESTED.
RHODE ISLAND SUBSCRIBERS
THE SECURITIES REPRESENTED IN THE MEMORANDUM OR SUBSCRIPTION DOCUMENTS ARE BEING
SOLD PURSUANT TO A CLAIM OF EXEMPTION FROM THE REGISTRATION OR QUALIFICATION
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS
OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS
THEREFROM.
SOUTH CAROLINA SUBSCRIBERS
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE SOUTH
CAROLINA UNIFORM SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS NOT BEEN FILED WITH THE SOUTH CAROLINA SECURITIES COMMISSIONER.
THE COMMISSIONER DOES NOT RECOMMEND OR ENDORSE THE PURCHASE OF ANY SECURITIES,
NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF THIS PRIVATE PLACEMENT
MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SOUTH DAKOTA SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER CHAPTER 47-31 OF THE SOUTH
DAKOTA SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
FOR VALUE EXCEPT PURSUANT TO REGISTRATION, EXEMPTION THEREFROM, OR OPERATION OF
LAW.
TENNESSEE SUBSCRIBERS
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. ANY NON-ACCREDITED INVESTOR IN THE STATE OF TENNESSEE MUST MEET
TENNESSEE SUITABILITY STANDARDS. SUITABILITY IS PRESUMED TO HAVE BEEN
ESTABLISHED IF THE INVESTMENT DOES NOT EXCEED TEN PERCENT (10%) OF THE
INVESTOR'S NET WORTH.
THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES
COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE
NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT.
ANY REPRESENTATION TO THE CONTRARY IS CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISK OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.
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TEXAS SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER APPLICABLE SECURITIES LAWS OF
TEXAS AND THEREFORE CANNOT BE RESOLD OR TRANSFERRED UNLESS THEY ARE SUBSEQUENTLY
REGISTERED OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
UTAH SUBSCRIBERS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UTAH UNIFORM SECURITIES ACT
AND, THEREFORE, CANNOT BE RESOLD OR TRANSFERRED UNLESS THEY ARE REGISTERED OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
WASHINGTON SUBSCRIBERS
THE ADMINISTRATOR OF SECURITIES HAS NOT REVIEWED THE OFFERING OR THE PRIVATE
PLACEMENT MEMORANDUM AND THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF WASHINGTON, CHAPTER 21.20 RCW, AND, THEREFORE, CANNOT BE
RESOLD UNLESS THEY ARE REGISTERED UNDER CHAPTER 21.20 RCW OF SAID ACT OR UNLESS
AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE.
WEST VIRGINIA SUBSCRIBERS
THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE UNIFORM
SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS NOT
BEEN FILED WITH THE WEST VIRGINIA SECURITIES COMMISSIONER. THE COMMISSIONER DOES
NOT RECOMMEND NOR ENDORSE THE PURCHASE OF ANY SECURITIES, NOR DOES IT PASS UPON
THE ACCURACY OR COMPLETENESS OF THIS PRIVATE PLACEMENT MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR
JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER
THE DELIVERY OF THE MEMORANDUM NOR ANY SALE MADE THEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS NOT BEEN A CHANGE IN THE
MATTERS DISCUSSED HEREIN SINCE THE DATE HEREOF.
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PURCHASER SUITABILITY STANDARDS
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK
The Company is offering the Units in reliance upon certain exemptions from the
registration and qualification requirements of federal and state securities
laws. The Company has established certain standards that must be met by persons
who wish to purchase the Units. All prospective purchasers and/or purchasers'
representatives must be capable of evaluating the merits and risks of their
investment and have a net worth or income level sufficient to withstand a loss
of their entire investment. Those persons who wish to purchase the Units must
meet all applicable criteria explained below.
ACCREDITED INVESTOR FINANCIAL REQUIREMENTS
The Company may sell Units only to purchasers who are both (i) an "Accredited
Investor" as that term is defined in Rule 501(a) of Regulation D promulgated by
the Securities and Exchange Commission and (ii) accredited, exempt or otherwise
excluded purchasers under all other applicable "blue sky" statutes and
regulations ("Accredited Purchasers"). Under Regulation D, a purchaser must meet
at least one of the following criteria in order to be an Accredited Investor:
(1) Any natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of his or her purchase exceeds
$1,000,000;
(2) Any natural person who had (i) an individual income in excess of
$200,000 in each of the two most recent years and has a reasonable
expectation of reaching the same income level in the current year, or
(ii) joint income with that person's spouse in excess of $300,000 in
each of the two most recent years and has a reasonable expectation of
reaching the same income level in the current year;
(3) Any trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Section
230.506(b)(2)(ii) of Regulation D;
(4) Any bank as defined in section 3(a)(2) of the Securities Act, or any
savings and loan association or other institution as defined in section
3(a)(5)(A) of the Securities Act whether acting in its individual or
fiduciary capacity; any broker or dealer registered pursuant to section
15 of the Securities Exchange Act of 1934 (the "Exchange Act"); any
insurance company as defined in section 2(13) of the Securities Act;
any investment company registered under the Investment Company Act of
1940 or a business development company as defined in section 2(a)(48)
of that Act; any Small Business Investment Company licensed by the U.S.
Small Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958; any plan established and maintained by
a state, its political subdivisions, or any agency or instrumentality
of a state or its political subdivisions for the benefit of its
employees, if such plan has total assets in excess of $5,000,000; any
employee benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974 if the investment decision is made by a
plan fiduciary, as defined in section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or
registered investment adviser, or if the employee benefit plan has
total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited
investors;
(5) Any private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940;
(6) Any organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $5,000,000;
(7) Any director, executive officer, or general partner of the issuer of
the securities being offered or sold, or any director, executive
officer, or general partner of a general partner of that issuer;
(8) Any entity in which all of the equity owners are accredited investors.
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ADDITIONAL STATE SUITABILITY STANDARDS
Some states have established suitability standards for initial investors and
subsequent transferees which are different from those described above.
Prospective purchasers in such states who wish to purchase Units are required to
satisfy the standards applicable in such states in addition to the suitability
standards described above. By executing the Subscription Agreement, attached
hereto as an Exhibit, each prospective purchaser represents that he meets the
suitability standards applicable to him.
RELIANCE ON SUBSCRIBER INFORMATION
All representations by prospective purchasers shall be reviewed and relied upon
by the Company in determining the suitability of such persons under applicable
securities laws and regulations. These suitability standards for accredited
investors represent minimum requirements under federal and state law, and a
prospective purchaser's satisfaction of the standards does not necessarily mean
that the Units are a suitable investment for such potential purchaser.
Representations and requests for information regarding purchaser suitability
standards must be completed by each prospective purchaser as part of the
Subscription Agreement. Neither the Notes, nor the Warrants have been registered
under the Securities Act. The Units will be offered in reliance on exemptions
from registration under Sections 3(b) and 4(2) of the Securities Act, and Rule
506 of Regulation D, as promulgated by the Commission, and on applicable state
law exemptions from registration provisions. Accordingly, the Company will make
all inquiries reasonably necessary to satisfy itself that the prerequisites of
such exemptions have been met. Prospective purchasers will also be required to
provide whatever additional evidence is deemed necessary by the Company to
substantiate the information or representations contained in the Subscription
Agreement or the Purchaser Suitability Questionnaire. The standards set forth
above are only minimum standards. The Company reserves the right, in its sole
discretion, to reject subscriptions for any reason regardless of whether a
prospective purchaser meets the minimum suitability standards.
The suitability standards referred to above represent minimum suitability
requirements for prospective purchasers. IF YOU DO NOT MEET THE REQUIREMENTS SET
FORTH ABOVE, OR EVEN IF YOU DO BUT STILL FEEL THE LOSS OF YOUR INVESTMENT WOULD
CAUSE YOU UNDUE HARDSHIP, DO NOT INVEST IN THESE SECURITIES.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Notice To All Subscribers...................................................................ii
States Securities Notices...................................................................iv
Purchaser Suitability Standards.............................................................xi
Summary of the Company and Certain Terms of the Offering.....................................1
Risk Factors.................................................................................8
Conflicts of Interest.......................................................................13
Terms of the Offering.......................................................................14
Dilution....................................................................................16
Use of Proceeds.............................................................................16
Dividend Policy.............................................................................17
Selected Financial Data.....................................................................17
Description of the Business.................................................................18
Competition.................................................................................21
Description of the Securities...............................................................23
Management..................................................................................26
Principal Shareholders......................................................................29
Certain relationships and Related Transactions..............................................31
Plan of Distribution........................................................................32
Summary of Promotional Material.............................................................32
Legal Proceedings...........................................................................32
Legal Matters...............................................................................32
Financial Statements........................................................................33
</TABLE>
EXHIBITS AND APPENDICES
<TABLE>
<CAPTION>
<S> <C>
Subscription Documents...................................................................A---D
TVLCA Financial Projections........................................................Appendix B
Financial Projections............................................................. Appendix C
</TABLE>
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<PAGE>
SUMMARY OF THE COMPANY AND CERTAIN TERMS OF THE OFFERING
THE SUMMARY SET FORTH BELOW IS INTENDED FOR GENERAL REFERENCE ONLY. NOT ALL OF
THE MATERIAL FACTS RELATING TO AN INVESTMENT IN THE COMPANY APPEAR IN THIS
SUMMARY. THE PRIVATE PLACEMENT MEMORANDUM, EXHIBITS, SUPPLEMENTS AND AGREEMENTS
FOR THE OFFERING, SHOULD BE READ AND UNDERSTOOD IN THEIR ENTIRETY BY PROSPECTIVE
PURCHASERS PRIOR TO MAKING AN INVESTMENT IN THE COMPANY. SPECIAL ATTENTION IS
DIRECTED TO THE INFORMATION SET FORTH UNDER "RISK FACTORS."
COMPANY OVERVIEW: TrueVision International, Inc. (the
"Company" or "TrueVision"), is a
company which conducts its current
operations through its subsidiary,
TrueVision Laser Center of
Albuquerque, Inc., a New Mexico
corporation ("TVLCA"). TVLCA was
founded in June 1996, to own and
operate a free-standing Laser Vision
Correction ("LVC") center in
Albuquerque, New Mexico. The Company
(through its subsidiary TVLCA)
presently offers laser refractive
eye surgery procedures, using
excimer laser technology, for the
treatment of common refractive
vision disorders such as myopia
(nearsightedness), hyperopia
(farsightedness) and astigmatism.
The Company has recently developed
and implemented an innovative
marketing approach, employing
"in-house" sales techniques, which
has proven successful in
significantly increasing patient
volume and produced the Company's
first profitable calendar quarter
for the period ended December, 1998.
The Company will continue to focus
its efforts on providing LVC
services in the New Mexico market
and, upon completion of this
Offering, and completion of the
planned IPO, plans to acquire,
develop, market and operate, in
selected geographic markets, fully
integrated, corporately controlled
Image Enhancement Centers, an
expanded concept that will offer
consumers both LVC and cosmetic
image enhancement procedures.
COMPANY HISTORY: The Company was incorporated under
the laws of the State of Delaware on
January 19, 1988, as Topform, Inc.
In March of 1998, the Company
acquired eighty-four (84%) percent
of the total authorized and
outstanding capital stock of TVLCA,
which became a subsidiary
corporation in a "stock-for-stock"
merger transaction with TVLCA's
parent corporation, TrueVision Laser
Centers, Inc., a Nevada corporation
("TVLC"). Pursuant to the merger,
the Company (as Topform, Inc.)
issued 18,666,667 shares of its
Common Stock, plus warrants to
purchase an additional 18,666,667
shares of its Common Stock, to TVLC
in exchange for 84,000 shares of
TVLCA's capital stock. At the annual
shareholder meeting of Topform,
Inc., held in April, 1998, the
shareholders voted to effectuate a
"reverse" split of its outstanding
Common Stock by issuing one new
share for each 4 shares outstanding.
On January 29, 1999, the board of
directors voted to change the
Company's name to TrueVision
International, Inc. As of the date
of this Offering, all warrants
issued to TVLC have expired without
exercise.
In March of 1999, the Company
entered into a preliminary letter of
intent with Dirks & Company, an NASD
member broker dealer, which
contemplates that the Company will
conduct an underwritten initial
public offering of its Common Stock
(the "LOI"), pursuant to a
registration statement to be filed
on Form S-1 (or other appropriate
2
<PAGE>
form) under the Securities Act with
the Commission. The LOI contemplates
that the Company will immediately
begin the process of preparing and
filing such registration statement
with the Commission with a view
towards consummating an initial
public offering of its Common Stock
in the third or fourth quarter of
1999, with a preliminary offering
price range of approximately $7.00
per share.
The LOI requires that the Company
effect certain changes to its
capital structure that will reduce
the total outstanding shares of
Common Stock, including stock
options. Accordingly, on March 31,
1999, the Company's board of
directors approved a resolution,
which was ratified by the
affirmative written consent of a
majority of its shareholders, to
effectuate a "reverse" split of its
and outstanding Common Stock by
issuing 1 new share for each 2.4
shares outstanding, and to make
appropriate adjustments to all
outstanding options, warrants, or
other similar agreements entitling
holders to acquire additional
securities of the Company. After
consummation of this recent stock
split, the Company has 2,275,174
shares of Common Stock outstanding,
and stock options outstanding which
provide for the issuance of an
additional 458,333 shares of Common
Stock upon exercise. These share
balances exclude any securities that
may be issued in connection with
this Offering.
BACKGROUND. The Laser Vision Correction industry
began in the United States upon
approval of the excimer laser by the
FDA in October 1995. The industry
anticipated immediate demand for the
procedure. However the projected
numbers of initial patients was
greatly overestimated. Few people
were sufficiently knowledgeable to
distinguish the benefits of the
laser from radial keratotomy.
Millions of dollars were spent by as
many as seventeen national companies
to introduce this technology with
little impact. In the ensuing three
years all but five of those
companies vanished. With only one
center remaining in Albuquerque, NM,
TrueVision nearly became one of the
casualties. Laden with accumulated
debts in excess of one million
dollars, it was only able to survive
by selling its existing successful
center to Topform, a company not
burdened with debt and with access
to public markets for additional
equity to grow and expand. This
occurred in April of 1998 with
TrueVision receiving 4,666,667
shares in exchange for its equity
interest in for the Albuquerque
operation. On January 19, 1999,
Topform changed its name to
TrueVision International, Inc.
(TVI).
CURRENT INDUSTRY RESULTS. The situation of the industry has
significantly changed. In April
1999, Hambrecht & Quist raised its
estimate of the number of laser
vision correction procedures that
will be performed in the U.S. for
the second time in recent weeks. It
now projects 800,000 for 1999 and
1.1 million for the year 2000.
Financial results reported by many
operators of both national and
single centers show dramatic
increases in volumes over the last
nine months. Additional growth is
anticipated because of mainstream
interest from highly visible
celebrities, athletes and news
anchor people who are raving about
their personal experience with laser
vision correction. The results
posted by several of the publicly
traded operators reflect what is
occurring throughout the industry.
On January 12, 1999 Laser Vision
Centers, Inc. (LVCI) announced that
some center revenues were up 68%
over the same period last year and
that total revenues were up 134%
from a year ago. Additionally they
reported that December 1998 case
volumes were up 17% from their
3
<PAGE>
previously highest month. On January
25, 1999 LCA Vision (LCAV) reported
that its revenues were up 135% for
the quarter and 219% over the prior
year. On January 12, 1999 TLC (LZRC)
reported that it performed its
100,000th laser procedure and said
that it could reach 200,000 this
year. TLC further reported revenues
for the quarter ended 11/30/98 was
double the previous year.
TRUEVISION OF ALBUQUERQUE RESULTS. TrueVision Albuquerque has also
shown an increasing number of
procedures each month at the
Albuquerque center. The count
doubled within three months from 70
eyes in September '98 to 142 eyes in
December '98. Revenues more than
doubled for fiscal year 1998
compared to 1997. Even more
impressive is the revenue for the
last three months. In the last
calendar quarter of 1998, revenues
exceeded $680,000, and totaled more
than $260,000 in December alone.
(See "Exhibit B - Albuquerque
Financial Results")
This sharp increase in volume has
been the direct result of
TrueVision's recently introduced
Integrated Marketing Protocol (IMP).
IMP is a proprietary integrated
program of ancillary product sales,
promotions and targeted marketing
activities. IMP is designed to
identify and quickly transform
prospective laser vision correction
(LVC) candidates to become satisfied
LVC patients and walking
testimonials for this miracle of
modern medicine.
A key element of IMP is TrueVision's
seminar series. These seminars are
held at the TrueVision center. A
television camera is mounted on the
laser, so the guests can watch the
procedure in real time on a monitor.
Afterwards, the patient sits with
the guests to share the experience
and answer questions. The response
has been terrific. A recent seminar
drew 16 guests and 14 took the first
step towards vision correction by
registering for the eye exam. On
average more than sixty percent of
attendees take this first step to
vision freedom. This new IMP system
has been so successful that seminars
are being scheduled three nights per
week with additional weekend
seminars scheduled to commence in
March.
Currently, gross profit is shared
equally between TrueVision and its
member doctors. This formula results
in inefficiencies and an inability
to control its business and remain
competitive. TrueVision has revised
its strategy to address these
issues. By adding a medical staff to
the centers, the Company will
develop and manage it's proprietary
patient database. By hiring a staff
Ophthalmologist to perform LVC
procedures and an Optometrist to
perform evaluations the centers will
operate more efficiently resulting
in increased profitability. This
will also allow the Company
increased control over its future
and strategically position
TrueVision to manage future pricing
changes in the marketplace.
Negotiations are currently underway
for the Company to have an internal
medical staff and to sign
exclusivity agreements with certain
member doctors.
TrueVision International is now
moving forward to establish a
presence in other markets. It
recently ordered a new laser for a
Las Vegas facility and is
negotiating for sites in Los Angeles
and San Diego. A Securities offering
is being prepared to support this
expansion and is expected to go
become effective within the next few
months. The
4
<PAGE>
expected infusion of additional
equity capital will be
combined with the Company's IMP
program and internal medical staff
resulting in improved profitability
and immediate growth.
MARKET SIZE. It is estimated that as many as
2,00,000 patients worldwide have
benefited from the LVC procedure
over the past few years. The United
States is the world's largest market
for cosmetic surgeries with billions
of dollars spent annually for a
variety of procedures. LVC is an
attractive alternative for patients
who desire a lifestyle free of
glasses and contact lenses. LVC is
an elective, outpatient vision
correction and currently costs up to
$2,250 per eye. The procedure is not
currently covered by health
insurance or public health programs
and is prepaid or financed by the
patient, which practically
eliminates collection problems.
Patient financing is readily
available through specialized
consumer finance companies. The
typical patient spends just 20 to 30
minutes at the Center, with the
actual LVC laser vision correction
procedure taking less than a minute.
Industry results have shown that
more than 90% of LVC patients
experience little or no pain and
their eyes stabilize with a visual
acuity of 20/40 or better, which
eliminates the need for glasses or
contact lenses for normal
activities. Patient satisfaction
with LVC is very high. According to
several market research studies,
approximately 95% of the
participants indicated that they
would recommend the LVC procedure to
a friend.
EXPECTED RESULTS. The projected results of this
strategy are detailed in the
following sections. However,
adopting the integrated model alone,
with no other changes will add an
additional $1.0 million to current
financial results. By the third
year, an excess of $157.7 million
will be produced with profits
exceeding $60.1 million (See
"Exhibit C - Consolidated
Projections").
MANAGEMENT: The Company's management team
("Management") is comprised of a
cohesive group of highly-motivated
and experienced professionals who
possess the business knowledge and
entrepreneurial skills to
successfully develop, finance and
manage the growth of the Company.
The core management team of
TrueVision has been involved in the
LVC industry since 1995, and has
participated in the evolution of the
US market since its inception.
Involved with the operation of the
Albuquerque center (TVLCA) since its
founding, Management has first hand
knowledge of what it takes to
succeed in the industry. Generating
$771,000 of revenue in the first
full year of operations, the Company
lost nearly $250,000. The second
year, which ended on September 30,
1998 showed a doubling of revenues
to $1.4 million and a narrowing of
the loss to just $23,000. On a cash
flow basis, the TVLCA center
generated $225,000 in cash to begin
to repay its existing financial
obligations. The first quarter of
the current fiscal year has shown an
even more dramatic improvement with
sales and profits reaching record
levels.
PROPOSED PUBLIC OFFERING: The Company intends to prepare and
file a registration statement under
the Securities Act, to effect an
initial public offering of its
Common Stock to access funds
available in the public markets.
Upon effectiveness of any proposed
registration statement by the
appropriate regulatory authorities,
the Company will endeavor to develop
a trading market for its Common
Stock by applying for a listing with
either the
5
<PAGE>
NASD's OTC Electronic Bulletin
Board, the NASDAQ SmallCap
Market(TM), or some other nationally
recognizED securities exchange.
Thereafter, Management will commence
quarterly reporting to the
Commission as required by the
Securities Exchange Act of 1934, as
amended ("Exchange Act"). No
assurances can be given to the
purchasers of the Notes that the
Company will be successful in its
planned efforts to have its
securities quoted or traded on any
recognized public securities market.
TERMS OF THE OFFERING
SECURITIES OFFERED: $250,000 aggregate minimum principal
amount and $1,000,000 aggregate
maximum amount of subordinated,
promissory notes (the "Notes") due
April 15, 2000, offered as Units
with attached Warrants, in
denominations of $5,000 each. (See
"Description of Securities - Units")
ESCROW ACCOUNT/
MINIMUM SUBSCRIPTION: An escrow account for the Offering
will be established with a
nationally recognized banking
institution immediately upon
commencement of the Offering. All
funds raised will be deposited into
such escrow account and held until
aggregate subscriptions of $250,000
are on deposit. At that time the
stated Offering Expenses, if any,
will be paid to applicable selling
agent and the net proceeds will be
transferred to the Company.
Subsequent funds will be deposited
in the escrow account and disbursed
according to the terms of the escrow
agreement.
INTEREST RATE - NOTES: 13% per annum, simple interest,
payable at maturity.
SUBORDINATION OF NOTES: The Notes are unsecured and
constitute a general debt obligation
of TrueVision International, Inc.
The Notes are subordinate in rank to
existing Senior Indebtedness of the
Company. The terms of the Notes do
not restrict TrueVision or its
subsidiary from incurring additional
Senior Indebtedness. (See
"Description of Securities - Notes",
"Senior Indebtedness" and "Risk
Factors - Subordination")
EARLY NOTE REDEMPTION: The Notes are subject to early
redemption by the Company, at their
principal face value, plus any
accrued interest (without penalty),
at any time before maturity.
Further, the Company is obligated to
effect a mandatory redemption of all
outstanding Notes from the proceeds
of the Company's proposed IPO.
However, there can be no assurance
that the Company will effect any
such proposed IPO of its securities,
and purchasers of the Notes should
place no reliance on the
satisfactory occurrence of the
planned IPO. (See "Risk Factors" and
"Proposed Public Offering")
WARRANTS: Common Stock Warrants are attached
to the Notes that allow for the
purchase of up to 500,000 shares of
the Company's Common Stock (assuming
the Maximum Offering amount) at a
price of $8.40 per share, and expire
on April 15, 2005. Each Note will
permit the holder to purchase 2,500
shares of the Company's Common
Stock.
DILUTION: The purchasers of Units offered
hereby, upon exercise of the
attached Warrants, will incur
immediate and substantial dilution
of their investment in the Company's
Common Stock. (See "Dilution" and
"Risk Factors")
6
<PAGE>
REGISTRATION RIGHTS: The Company is obligated to register
the shares of Common Stock issuable
upon exercise of the Warrants
attached to the Notes (the "Warrant
Shares") in certain registration
statements for Common Stock filed by
the Company with the Commission. If
a registration statement has not
been filed prior to the expiration
of the Warrants, on which piggyback
rights attach, then one time demand
registration rights will accrue to
the persons, as a group, who hold
Warrant Shares. Such demand
registration rights will, however,
be subject to any requirements of
the Company's underwriter and a
single registration shall be filed
pursuant to all shareholder demand
rights. The holders of such Warrant
Shares shall be entitled to sell the
same simultaneously with and upon
the terms and conditions as the
securities sold for the account of
the Company being sold pursuant to
such registration statement, subject
to any applicable limitations which
may be reasonably imposed by any
underwriter, receipt of minimum
proceeds by the Company and other
terms of the registration rights
agreement and the registration
statement. In addition, certain
other holders of Common Stock and
other securities have been granted
demand and/or piggyback registration
rights. (See "Description of
Securities -- Registration Rights")
PLAN OF DISTRIBUTION: The Units are being offered on a
"best efforts" basis by the
Company's officers and directors
(without compensation). The Company
reserves the right to utilize
selected registered securities
broker-dealers and/or commissioned
sales agents to undertake the sale
of its Units. However, as of the
date of this Offering, there are no
agreements with any such
broker-dealers or sales agents. Such
broker-dealers or sales agents may
receive a sales commission of up to
10% for any Units sold by them, plus
a non-accountable expense allowance
of 3%. No commission will be paid
for sales generated by the Company
or its personnel. There is no
assurance that any or all of the
Units will be sold. The Offering
will terminate on June 30, 1999, or
earlier upon the sale of all 200
Units. However, the Company reserves
the right to terminate this Offering
without notice at any time prior to
the sale of all of the Units, or to
extend this Offering without notice
for a period of 90 additional days
or as allowable by securities laws.
The aggregate offering price and
number of Units offered hereby was
determined arbitrarily by the
Company after considering the
financial condition of the Company,
its business potential and the
anticipated cash needs of the
Company between the date of this
Offering and the planned IPO. (See
"Risk Factors", "Terms of the
Offering" and "Description of
Securities")
USE OF PROCEEDS: The proceeds from sale of the Units
will be used to reduce existing
obligations and to provide immediate
"bridge capital" for the Company for
use between the date of this
Offering and the receipt of net
proceeds which Management
anticipates from consummation of the
Company's planned IPO during the
third quarter of 1999. Reliance,
however, should not be placed upon
the occurrence of any IPO presently
contemplated by the Company.
PURCHASER SUITABILITY: Prospective purchasers should
satisfy themselves that an
investment in this Offering is
financially suitable in light of
their financial objectives and their
ability and willingness to accept
highly speculative risks, including
the risk of a total loss of
investment in the Units. The
Offering is specifically limited to
prospective Accredited Investors who
7
<PAGE>
meet the suitability standards set
forth herein. (See "Purchaser
Suitability Standards" and "Risk
Factors")
CONFLICTS OF INTEREST: Management of the Company will be
subject to various conflicts of
interest that may not be resolved to
the benefit of the Company. (See
"Conflicts of Interest")
RISK FACTORS: This Offering involves a high degree
of risk, and the securities offered
hereby should be purchased only by
persons who can afford the loss of
their entire investment. There are
numerous significant risk factors
pertaining to the Company, its
business, financial condition, plan
of operation and the LVC industry.
The investor is encouraged to
consult with his accountant,
attorney or financial advisor
regarding their investment decision.
(See "Risk Factors")
OUTSTANDING SECURITIES: The Company's articles of
incorporation authorize the issuance
of up to 110,000,000 shares of
capital stock, of which 100,000,000
shares are designated as Common
Stock, par value $.001, and
10,000,000 shares are designated as
Preferred Stock, par value $.001.
There are presently 2,275,174 shares
of Common Stock issued and
outstanding, and no shares of
Preferred Stock have been issued. In
conjunction with the Offering, the
Company has authorized the issuance
of up to 500,000 Common Stock
Warrants, in increments of 2,500
Warrants attached to each $5,000
Note, which allow for the purchase
of up to 500,000 shares of Common
Stock at an exercise price of $8.40
per share. In addition, the Company
has granted incentive stock options,
providing for the issuance of up to
an additional 458,333 shares of
Common Stock upon exercise, to
certain consultants, executives or
employees of the Company in
connection with their services. (See
"Description of Securities",
"Management - Compensation" and
"Principal Shareholders")
SUMMARY FINANCIAL INFORMATION: The financial statements of the
Company as presented herein for the
fiscal year ended September 30,
1998, and the three-month period
ended December 31, 1998, were
compiled by management, without
audit. Selected highlights of these
financial statements are shown below
(See "Financial Statements.")
<TABLE>
<CAPTION>
BALANCE SHEET DATA AS OF: SEPTEMBER 30, 1998 DECEMBER 31, 1998
<S> <C> <C>
(UNAUDITED) (UNAUDITED)
------------------------------------
Total Assets $2,513,000 $ 2,599,000
Total Liabilities $1,021,000 $ 1,144,000
Total Shareholders' Equity $1,492,000 $ 1,454,000
</TABLE>
FORWARD LOOKING
FINANCIAL STATEMENTS: This Offering Memorandum contains,
in addition to historical financial
information, forward-looking
statements within the meaning of
Section 27A of the Securities Act
and Section 21E of the Exchange Act
and the Company intends that such
forward-looking statements be
subject to the safe harbors created
thereby. Such forward-looking
statements involve risks and
uncertainties and include, but are
not limited to, statements regarding
future events and the Company's
plans and expectations. The
Company's actual results may differ
materially from such statements.
Factors that cause or contribute to
such differences include, but are
note limited to, those discussed in
"Risk Factors," as well as those
discussed elsewhere in this
Memorandum and the documents
incorporated herein by reference.
Although the Company
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<PAGE>
believes that the assumptions
underlying the forward-looking
statements herein are reasonable,
any of the assumptions could prove
inaccurate and, therefore, there can
be no assurance that the results
contemplated in such forward-looking
statements will be realized. In
addition, as disclosed under "RISK
FACTORS," the business and
operations of the Company are
subject to substantial risks which
increase the uncertainties inherent
in the forward-looking statements
included in this Memorandum. The
inclusion of such forward-looking
information should not be regarded
as a representation by the Company
or any other person that the future
events, plans or expectations
contemplated by the Company will be
achieved. (See "Forecasted Income
Statements" and "Risk Factors")
9
<PAGE>
RISK FACTORS
THE PURCHASE OF THE UNITS OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK AND IS
SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL MEANS WHO HAVE NO NEED FOR LIQUIDITY
WITH RESPECT TO AN INVESTMENT IN THE COMPANY AND WHO CAN RISK THE LOSS OF THEIR
ENTIRE INVESTMENT. THESE RISKS ARE SUMMARIZED BELOW, ARE SET FORTH UNDER
"CONFLICTS OF INTEREST", AND ELSEWHERE IN THE MEMORANDUM.
LIMITED OPERATING HISTORY; NO RECORD OF EARNINGS OR OPERATIONS. The Company is a
newly formed business and, as such, does not yet have a significant operating
history upon which prospective purchasers can evaluate future business
potential. Furthermore, prospective purchasers should be aware that the
projections and financial illustrations contained in this Memorandum are based
on certain assumptions regarding future business volume and Company
expenditures. To the extent that the Company fails to achieve projected patient
volume, its revenues, profitability, and financial condition will be adversely
affected. No assurance can be given that an adequate level of continuing
business can be sustained by the Company. No assurance can be given that the
Company's operations will be successful or that it will meet its objectives.
Specifically, there is no assurance that cash will be available for distribution
or that a market will develop for the Company's shares.
The Company has a very limited operating history, is in its developmental stage,
and has not generated any significant operating revenues to date. Through its
most recent fiscal year, which ended September 30, 1998, and its first quarter
which ended December 31, 1998, the Company generated a net loss from operations
of $(89,000), and $(69,000), respectively, on total revenue of $1,385,000, and
$637,000, for those respective periods. Potential purchasers must be aware of
the difficulties encountered by a new enterprise in this stage of development,
especially in view of potential competition from companies with established
operations and significantly greater financial resources. (See "Description of
Business")
COMPETITION. The demand for an excimer laser facility depends on a number of
factors including patient population, certain demographics, and the number of
competing laser facilities in a given service area. Competing excimer laser
facilities opened in the TrueVision service areas could reduce the Company's
revenues. The Company will be competing with established companies, private
investors, limited partnerships and other entities, many of which may possess
substantially greater resources than the Company, in the management and
operation of ophthalmic vision correction Image Enhancement Centers. Many
competitors are larger, have more substantial histories, backgrounds, experience
and records of successful operations, greater financial, technical, marketing
and other resources, more employees and more extensive facilities than the
Company now has, or will have in the foreseeable future. There is no assurance
that the Company can successfully compete. Inability to compete successfully
will result in increased costs, reduced yields and additional risks to the
purchasers.
EQUIPMENT AND EQUIPMENT OBSOLESCENCE. Management will select equipment to be
owned or leased by the Company. The laser equipment will most likely be
manufactured by Summit or VlSX, industry leaders with over 800 systems
worldwide. The Company will be involved in a field traditionally characterized
by extensive research and changing technology. There can be no assurance that
any or all of the Company's equipment will not be rendered obsolete by equipment
which may be developed using more advanced technologies. Technical obsolescence
of the Company's equipment might result from new, more advanced equipment or
clinical software which performs the same or similar functions in a
scientifically improved manner or for less cost. However, such new equipment
will be subjected to the typically long FDA approval process during which time
it is generally known to the industry. No technology that could replace the
excimer laser is projected to be available in the next two to four years in the
United States.
In addition to technological and economic obsolescence, equipment is subject to
other risks including physical deterioration, increasing maintenance and
operating costs. The success of the Company will be dependent upon the quality
and durability of the equipment and the skill of the Company's technical staff
in operating the equipment to minimize physical breakdowns or damage.
Substantial deterioration of, or damage to, the equipment could result in
periods of disuse that would adversely affect the revenues and profitability of
the Company. The Company has
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<PAGE>
provided a reserve for obsolescence. It will also enter into appropriate upgrade
agreements and maintenance contracts with the manufacturers, its agents and
appropriate service providers to minimize the risks of obsolescence and physical
deterioration.
REFERRAL PATTERNS. Though the value of the excimer laser to the consumer is now
well established in international markets, the benefits are not fully understood
and appreciated in the United States. The success of this project will largely
be determined in part by the ability of the staff of the Company to effectively
educate the general public and the referring doctors. Its success will also be
dependent on the Company's ability to recruit doctors to refer their patients to
the Company's Image Enhancement Centers.
MEDICAL MALPRACTICE LIABILITY INSURANCE. The Company cannot practice medicine.
Therefore, it will not obtain medical malpractice insurance. Liability for an
injury arising from use of the laser could have a materially adverse effect on
the Company's financial condition. The Company will require medical
professionals who perform services with the Company's lasers to maintain medical
malpractice insurance. The Company will obtain general liability insurance and
other insurance that, in its sole discretion, it determines is prudent to
protect the Company from claims or liabilities arising from the use of the
lasers and from any other source.
RISK OF UNDERFUNDING. Even if this Offering is fully funded there can be no
assurance that the Company will be successful without the infusion of additional
capital from subsequent offerings or a similar source. Failure to fully fund
this Offering will substantially increase the risk that the Company will not
meet its projections or sustain operations, especially if the Company's
financial projections fail to be realized as planned. There is no assurance that
the Company can obtain additional capital after this Offering has been completed
nor that its projections will be realized. Lack of capital may increase risks to
the Company and result in total loss of the shareholder's investment.
RISKS OF BRIDGE FINANCING. The net proceeds to be received by the Company in
this Offering are to be utilized primarily for the repayment of existing
indebtedness of the Company, for short term working capital needs of the
Company, and to finance certain anticipated expenses to be incurred by the
Company in preparation for the planned IPO. Furthermore, repayment of the Notes
at maturity or before, is most likely to be made using the net proceeds the
Company anticipates receiving at the time the planned IPO is consummated.
However, since there is no assurance that the Company will in fact complete an
IPO, or in the alternative that the Company would be able to raise equity
capital in a manner which does not involve an IPO, purchasers of the Units are
substantially at risk that the Company may not be able to repay the principal
and interest on the Notes when due.
RISKS OF LEVERAGE. Purchases of equipment may be financed by lessors or lenders.
The use of leverage, as anticipated by the Company, will cause the risk of loss
to the Shareholders to be greater than if a smaller portion or none of the
purchase price of the Company's equipment were borrowed. The risk is increased
because fixed payment obligations must be met on specified dates regardless of
the revenues derived by the Company. If debt service payments are not paid when
due, the Company may be required to forfeit the use of the equipment securing
the debt as a result of foreclosure by the debt holder.
The Company has obtained a conditional financing commitment from MTE/Triad, a
venture leasing company, for its equipment but must fulfill certain conditions
to utilize this arrangement. The financial illustrations presented as an Exhibit
to this Memorandum are based in part on the assumption that loans and/or leases
will be obtained in compliance with those conditions and commitments. If such
loans or leases are not obtained, or are obtained in amounts or on terms which
differ from those assumed, the Company may purchase the equipment so encumbered,
or may purchase substitute equipment. In either event, the results presented in
the financial illustrations may differ from those presented.
DEPENDENCE ON KEY INDIVIDUALS. The future success of the Company is dependent
upon the Company's ability to attract and retain qualified senior management,
key employees and contractors, especially its present Chief Executive Officer,
John C. Homan. The inability to employ such individuals would have a negative
effect upon the business of the Company. The Company has entered into employment
agreements with current key management, including Mr. Homan, and will continue
to establish and pursue satisfactory relationships with future key management
personnel. (See "Management")
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<PAGE>
EXPERIENCE OF OFFICERS. The financial success of the Company is dependent upon
the management expertise, judgment and experience of its officers and directors.
The death, disability or resignation of such officers may adversely affect the
financial performance of the Company. The Company may apply for key-man life
insurance, but has no such insurance coverage at this time. The officers and
directors will have exclusive authority to manage and control and make all
decisions regarding the business and affairs of the Company. (See "Conflicts of
Interest")
LIMITATION OF LIABILITY AND INDEMNIFICATION. Pursuant to an amendment of the
Articles of Incorporation, filed with the State of Delaware on January 29, 1999,
Officers and Directors will not be liable to the Company for any action or
failure to act if they, in good faith, determined that the course of conduct in
question was in the Company's best interest. The amendment to the Articles of
Incorporation also provides that the officers and directors shall be indemnified
out of the Company's assets for any liability and related costs incurred by them
in connection with the Company. By executing the Subscription Agreement, each
purchaser agrees to adopt the terms of the Company's amended Articles of
Incorporation, and to indemnify the Company against all costs or liabilities
that might be incurred if the representations such purchaser makes in the
Subscription Agreement are false or incorrect. IN THE OPINION OF THE COMMISSION,
INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT IS CONTRARY TO
PUBLIC POLICY AND IS THEREFORE UNENFORCEABLE.
FINANCIAL CONDITION. Although Management anticipates that the Company will have
adequate funding to pay all operating expenses, there can be no assurance that
this will occur nor that the Company can be operated in a profitable manner.
Profitability depends upon many factors, including the success of this Offering,
the proposed IPO, the development of ophthalmic vision correction Image
Enhancement Centers, vision correction Referral Centers and/or the management of
ophthalmic vision correction Image Enhancement Centers for other clients.
FINANCIAL PROJECTIONS. The Financial Projections contained in Appendices to this
Memorandum are based upon assumptions about the operations and the use of the
equipment by the Company. The projections are believed to be reasonable, and are
made without the benefit of any operating history of the Company. No assurance
can be given that assumptions upon which the Financial Projections are based
will prove to be correct or that predicted results of operations will actually
be achieved.
NO INDEPENDENT MARKET RESEARCH. No independent organization has conducted market
research to provide Management with objective support for estimates of the
potential demand for the Company's proposed operations.
FLUCTUATIONS IN ECONOMY. Demand for the Company's proposed services is affected
by general economic conditions which tend to be cyclical in nature. Prolonged
periods of recession may likely affect the Company's ability to achieve the
projected operational goals or profitability.
AVAILABILITY OF FINANCING. Interest rate fluctuations in the money markets may
affect the availability and cost of equipment loans and leases. The Company
cannot predict what market conditions will exist at the time the Company seeks
to finance equipment. Adverse conditions may make financing difficult or costly
to obtain.
FUTURE SALES OF AND MARKET FOR THE COMMON STOCK. Subsequent to the Company's
most recent reverse stock split, as of the date of this Offering, the Company
has 2,275,174 shares of Common Stock outstanding and, assuming all Warrants
attached to the Notes offered hereby are exercised, resulting in the issuance of
an additional 500,000 shares, there will be 2,775,174 shares of common stock
outstanding. Additionally, the Company is obligated to issue up to an additional
458,333 shares of its Common Stock upon the exercise of incentive stock options
granted to its initial shareholders, officers, employees, consultants and
directors at a price of $.36 per share. Assuming all 500,000 Warrants are
exercised, and all stock options are exercised, the Company will have a total of
3,233,507 shares of Common Stock outstanding.
With the exception of 122,396 shares of Common Stock that were outstanding prior
to the Company's acquisition of TVLCA, all shares of Common Stock outstanding,
including any shares that may be issued in connection with the exercise of any
options or warrants (including the Warrants issued in connection with this
Offering), will be deemed "restricted" securities, as that term is defined under
Rule 144, pursuant to the Securities Act. Provided that certain current
information pertaining to the Company is published and available, Rule 144,
promulgated under the Securities Act, provides a "safe harbor" exemption
permitting the public sale of limited amounts of restricted
12
<PAGE>
securities. In general, a person (or persons whose shares are aggregated)
holding restricted securities who has satisfied a one (1) year holding period
may, commencing 90 days after the date thereof, under certain circumstances,
sell within any three-month period that number of shares which does not exceed
the greater of 1% of the then outstanding shares of Common Stock or the average
weekly reported trading volume during the four calendar weeks prior to filing a
Rule 144 notice. Future sales of the Company's Common Stock under Rule 144,
especially any substantial sales by any affiliates of the Company, could have an
adverse effect on the market price of the shares of Common Stock should a public
market develop for such securities. Although, the Company does not currently
publish the information necessary to permit re-sales pursuant to Rule 144, or
other rules and regulations under the Securities Act, it does plan to undertake
efforts to publish such required information and to establish a trading market
for its Common Stock, in compliance with applicable federal and state securities
laws and regulations. No assurances can be given to the purchasers that a public
trading market in the Company's securities will develop at any time during or
after this Offering.
ARBITRARY OFFERING PRICE. The offering price of $5,000 per Unit, and the Warrant
exercise price of $8.40, per share of Common Stock, has been arbitrarily
determined by the Company with consideration of such factors as the financial
objectives of the Company, the proceeds to be raised by this Offering, the funds
immediately available to the Company to sustain operations, and the expenses
anticipated for its proposed IPO. Having established that the gross proceeds of
this Offering is $1,000,000, the price of $5,000 per Unit, and the Warrant
exercise price of $8.40, per share of Common Stock, was determined arbitrarily
by the Company and bears no relationship whatsoever to assets, earnings, book
value or any other objective standard of value. (See "Dilution" and "Terms of
the Offering")
NO PUBLIC MARKET. There is presently no public market for the Company's Common
Stock or the Warrants, and there can be no expectation that a public market will
ever develop as a result of this Offering. Consequently holders of the Company's
securities will, in all probability, not be able to liquidate their investment
in the event of an emergency or for any other reason. Purchase of the Units and
the exercise of the Warrants and purchase of the Common Stock should therefore
be considered a long term investment of at least two to three years. The Units
and the attached Warrants issued hereby may only be transferred with the opinion
of the Company's attorneys that such transfer would not require registration
prior to such transfer.
DILUTION. If the purchasers in this Offering were to exercise their Warrants and
purchase shares of Common Stock at $8.40 as of the date of this Offering, they
would experience substantial price dilution. Assuming that all Warrants issued
hereby are exercised at a price of $8.40 per share, the Company will have
2,775,174 shares of Common Stock outstanding, of which 1,090,741 shares, or
39.3%, is held by consultants, directors and officers of the Company who
received such shares for a nominal value. (See "Dilution" and "Principal
Shareholders")
PURCHASERS MUST BEAR RISK OF LOSS. Purchasers who purchase the Units in this
Offering will bear most of the risk of the Company's operations until such time
as the Company attains profitable operations, if ever. However, the Company's
Management stands to realize substantial benefits from the payment of salaries,
expenses and the receipt of stock options, regardless of the profitability of
the Company.
GOVERNMENT REGULATION. The operations of the Company will be subject to a number
of regulatory and governmental requirements. While the Company believes its
proposed plan of operations complies with applicable federal and state
regulations, there can be no assurance that new laws or the interpretation of
existing laws will not prohibit or render the Company's plan of operation
impractical. Notwithstanding, the Company intends to use its best efforts to be
in compliance with all federal, state and local regulations. In the event that
the Company's management were to conclude that, for any reason, the operations
of the Company could no longer comply with applicable laws or regulations, the
Company will be dissolved and its assets will be liquidated.
SECURITIES RISKS. Purchasers should be aware of the long term nature of their
investment in the Company. Each purchaser will be required to represent that
they are purchasing the Units for their own account for investment and not with
a view toward resale or distribution. Transfer of the Units will be
substantially restricted by state and federal securities laws.
SECURITIES REGISTRATION. The securities being offered by the Company have not
been registered with the Commission or with any State agency, but are being
offered in reliance upon exemptions from registration
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<PAGE>
requirements under Sections 3(b), 4(2) and 4(6) of the Securities Act, and Rule
506 of Regulation D, promulgated under the Securities Act. As a result, a
potential purchaser does not have the benefit of having had this Memorandum
reviewed by any governmental regulatory agency. In addition, the Company is
relying on exemptions from federal and state laws that could require the Company
to register as a broker-dealer. If the Company should fail to comply with the
requirements of any exemption provisions, which are highly technical in nature,
purchasers may have the right to rescind their purchase of the Units sold
hereunder or sue for damages. If one or more purchasers were to successfully
seek rescission or institute a lawsuit, the Company may face severe financial
demands, which could adversely affect the Company as a whole. Furthermore, no
Units, or the Notes and Warrants comprising the Units, may be resold, assigned
or transferred unless subsequently registered and qualified under federal and
state securities laws or, in the opinion of counsel satisfactory to the Company,
an exemption from such registration and qualification is available. Therefore,
purchasers may not be able to liquidate their investment in the Company when
desired.
LEVERAGE AND DEBT SERVICE. Although the Company will use the net proceeds from
this Offering to repay certain indebtedness, the Company will remain
significantly leveraged following the Offering. As of March 31, 1999, after
giving effect to the application of the net proceeds from the Minimum Offering
and Maximum Offering amounts, the Company's indebtedness would have been
approximately $921,000 and $1,044,000, respectively, and net shareholders'
equity would have been approximately $1,709,500 and $2,324,000, respectively.
See "Use of Proceeds" and "Capitalization." Holders of the Notes will be relying
on the revenues derived from the Company's operations to service and retire the
indebtedness represented by the Notes. No sinking fund for repayment of the
Notes will be established. While the Company anticipates that the Notes will be
repaid from the proceeds of its proposed IPO, there can be no assurance that
such a public offering will occur, nor can any assurance be given that cash flow
from the Company's existing operations will be sufficient to meet the interest
or principal payments required under the Notes.
SECURITY OF THE NOTES. The Notes will not be secured by any of the assets of the
Company. In addition to the obligations created by the Notes offered hereby, the
Company has incurred $1,144,000 in total liabilities as of March 31, 1999. The
Company presently anticipates that cash flow from its current operations will be
sufficient to repay these liabilities as they become due. The Company does not
presently intend to incur any additional long-term indebtedness. There can be no
assurance that in the event of bankruptcy or liquidation of the Company that the
proceeds from liquidation of assets of the Company would be sufficient to repay
the obligations represented by the Notes. (See "Description of the Notes.")
NO GUARANTEE OF WARRANT EXERCISE. The Units offered hereby include Warrants to
purchase shares of the Company's Common Stock at a price of $8.40, per share.
The Warrants will expire, without value, on April 15, 2000. Consequently, in the
event that a public trading market does not develop for the Company's securities
prior to April 15, 2000, the Warrants may not have any recognized value. There
can be no guarantee that a market will be developed for the Common Stock and, in
the event the Company is successful in developing such a market, there can be no
assurance or guarantee that the price of the Common Stock will be above $8.40,
making the exercise of the Warrants economically feasible.
FAILURE TO REGISTER COMMON STOCK. Pursuant to the terms of the Warrants, under
certain conditions, the Company will be required to effect the registration of
the Common Stock, which is issuable upon exercise of the Warrants, unless a
suitable exemption therefrom is available. (See "Description of Warrants -
Registration Rights"). However, the ability of the Company to effectively
register or publicly offer the Common Stock will be subject to a number of
factors, including the financial resources of the Company at the time of any
such attempted registration or public offering. Although Management fully
intends to pursue such course of action, no assurances can be given that the
Company will posses the financial resources to effect such action. In addition,
the effectiveness of any registration is subject to a review by the Commission
and may be subject to various states securities laws. As a result, the Company
can not guarantee the effectiveness of such registration, or that it will become
effective on order of the Commission; nor can it guarantee that any exemption
from registration will be available. Finally, in the event conditions relating
to the registration, or exemption therefrom, or public offering of the Common
Stock underlying the Warrants are not, or can not be met, the Company is under
no further obligation and shall not be liable to any holder of such Common Stock
for damages (see "Description of Warrants Registration Rights"). Accordingly, if
such Common Stock is not effectively registered under the Securities Act with
the Commission, or subsequently
14
<PAGE>
offered to the public, the holders will be unable to sell or transfer their
Common Stock, except through an appropriate exemption under the Securities Act,
and under any applicable state securities laws.
TAX CONSIDERATIONS. The Units acquired under this Offering Memorandum are not
"tax sheltered" in any manner. Income received from the Company by a purchaser
of the Units will be characterized as "interest" income. EACH PROSPECTIVE
PURCHASER IS URGED TO CONSULT THEIR OWN TAX ADVISORS WITH SPECIFIC REFERENCE TO
THEIR PERSONAL TAX SITUATION, THE TAX TREATMENT OF ANY GAIN OR LOSS ON ANY SALE
OR EXCHANGE, AND THE IMPACT OF ANY CHANGES IN THE APPLICABLE LAW.
ERISA MATTERS. The ERISA implications of an investment in the Units by a
qualified plan or IRA purchaser are complex, and may vary depending on the
particular circumstances of the investment. EACH PROSPECTIVE QUALIFIED PLAN OR
IRA PURCHASER SHOULD CONSULT ITS OWN ADVISORS PRIOR TO AN INVESTMENT IN THE
COMPANY.
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CONFLICTS OF INTEREST
CONFLICTS OF INTEREST GENERALLY. The interests of purchasers may be inconsistent
in some respects with the interests of Management of the Company. Since the
executive officers and directors will control the daily operations of the
Company and its affiliates, there may also be occasions where interests of the
Company's affiliates may be inconsistent with interests of the Company. The risk
exists that such conflicts will not be resolved in the best interest of the
Company, or in favor of the holders of the Notes or Warrants.
ALLOCATION OF MANAGEMENT TIME. The Company will rely on its officers and
directors to manage the Company's business operations. All officers and
directors will devote as much of their time to the business of the Company as,
in their judgment, is reasonably necessary to operate the Company in a
profitable manner. These individuals may engage for their own account, or for
the account of others in other business ventures for which the Company is not
entitled to compensation. At some time in the future, the Company may compete
for the management services of the officers of the Company. As a result, these
individuals may be placed in a position where their decision to favor other
operations in which they are associated over those of the Company will result in
a conflict of interest. In allocating their time, Management will recognize
their fiduciary obligations to the Company, the prevailing industry standards
and the financial situation of the Company.
CONFLICTS OF INTEREST POLICY. The Company has adopted a policy that any
transactions with directors, officers or entities of which they are also
officers or directors, or in which they have a financial interest, will only be
on terms consistent with industry standards and, at such time as the board of
directors includes "disinterested directors," approved by a majority of the
disinterested directors of the Company's board. The Bylaws of the Company
provide that such transactions by the Company shall not be void or voidable
solely because of the financial interest of the directors or officers or solely
because such directors are present at the meeting of the board of directors of
the Company or a committee thereof which approves such transactions, or solely
because their votes are counted for such purpose. Company Bylaws require (i)
that such common directorship or financial interest be disclosed or known by the
board of directors or committee and noted in the minutes, and the board or
committee authorizes, approves or ratifies the contract or transaction in good
faith by a vote for that purpose without counting the vote or votes of such
interested directors; or (ii) that such common directorship or financial
interest be disclosed to or be known by the shareholders entitled to vote and
that they approve or ratify the contract or transaction in good faith by a
majority vote or written consent of shareholders holding a majority of the
Common Stock entitled to vote. The votes of the shareholders or interested
directors or officers shall be counted in any such vote of shareholders; or
(iii) the contract or transaction is fair and reasonable to the Company at the
time it is authorized or approved. In addition, interested directors may be
counted in determining the presence of a quorum at a meeting of the board of
directors of the Company or a committee thereof which approves such
transactions.
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TERMS OF THE OFFERING
OFFERING AMOUNT. The Company is offering a maximum aggregate principal amount of
$1,000,000 of its subordinated, promissory notes due April 15, 2000 (the
"Notes"), subject to a minimum aggregate Offering amount of $250,000. The Notes
are being offered as "Units", in increments of $5,000 per Unit, with each Unit
comprised of one $5,000 Note and 2,500 Common Stock Warrants attached (the
"Warrants"). The minimum purchase is 5 Units, or $25,000, per purchaser. The
Company may, in its sole discretion, accept subscriptions for less than 5 Units
($25,000). The Warrants attached to each Note are non-detachable and entitle the
holder to purchase 2,500 shares of the Company's Common Stock at an exercise
price of $8.40 per share. The Common Stock to be purchased pursuant to the
exercise of the Warrants will carry certain registration rights. The Warrants
will expire without value on April 15, 2004, unless exercised prior thereto by
the holder. (See "Description of Securities")
Offers and sales of the Units will be made by officers and directors of the
Company on a "best efforts" basis to Accredited Investors only (See "Purchaser
Suitability Standards"); provided, however that the Company retains the right to
utilize selected broker-dealers registered with the National Association of
Securities Dealers, Inc. ("NASD"), and/or commissioned selling agents to sell
all or any portion of the Units.
Payment for the Units must be made in cash, or by check, upon submission of the
Subscription Documents. All funds raised will be deposited in a bank escrow
account (to be selected by the Company immediately after commencement of the
Offering) and held until subscriptions of $250,000 are on deposit. At that time,
the stated Offering Expenses, if any, will be paid to broker-dealers or
commissioned selling agents for any Units sold by them, and the net proceeds
will be released to the Company. Subsequent funds will be deposited in the
escrow account and disbursed according to the terms of the escrow agreement. In
the event the Offering is terminated prior to the sale of the Minimum Offering
amount ($250,000), all funds received from purchasers will be returned without
interest upon such termination, and no Units will be deemed to have been sold.
SUBSCRIPTION PERIOD AND CLOSING DATES. This Offering shall terminate the earlier
of (i) June 30, 1999, unless extended by the Company to a date not more than 90
days thereafter, or (ii) the date on which the Company has accepted
subscriptions for all 200 Units, or the maximum Offering amount of $1,000,000.
The Company may, in its sole discretion, terminate the Offering at any time
prior to the sale of 200 Units.
HOW TO SUBSCRIBE. Each purchaser desiring to purchase the Units offered hereby
must:
1. Subscribe to purchase a minimum of 5 Units ($25,000). The Company, in
its sole discretion, may permit an investment of less than 5 Units.
2. Complete, date, execute and deliver to TrueVision International, Inc.,
at 1720 Louisiana Blvd., Suite 100, Albuquerque, New Mexico 87110, the
following documents:
a. A check payable to "TrueVision International, Inc." in the amount
of $5,000 for each Unit subscribed for, subject to a minimum
investment of $25,000 (5 Units);
b. A Subscription Agreement in the form attached hereto as an Exhibit;
c. A Confidential Purchaser Questionnaire attached as an Exhibit; and
d. Such other documents as may be required by the Company.
DEPOSIT TO ESCROW ACCOUNT. Upon receipt of the documents referenced above, the
Company will deposit all funds into the escrow account until such time as
either: (i) the minimum Offering amount has been deposited in the escrow
account, or (ii) the Offering is terminated. The Company will establish a bank
escrow account immediately upon commencement of the Offering. The Company may
reject subscriptions, in whole or in part, in its sole discretion. If this
Offering is oversubscribed, the Company, acting in its sole discretion, will
determine which subscriptions will be accepted.
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PURCHASER SUITABILITY. The Units may be sold only to Accredited Investors.
Prospective purchasers of the Units should satisfy themselves that an investment
in the Units is suitable for them. They should examine this Private Placement
Memorandum and all exhibits annexed hereto, and should avail themselves of
access to such additional information about the Offering and the Company as they
consider necessary to make an informed investment decision. In addition to the
Accredited Investor standards discussed below, each purchaser must have funds
adequate to meet their personal needs and contingencies; must have no need of
liquidity from the investment in Units offered hereby and must purchase the
Units for investment only without a view toward resale or distribution of the
Units, the Notes or the Warrants attached thereto. Because of the long-term
nature of an investment in the Company and the risks of investment, a purchase
of Units is not suitable for a purchaser who does not meet these standards.
ACCREDITED INVESTOR. To qualify as an Accredited Investor, a prospective
purchaser must satisfy the definition of Accredited Investor under Rule 501(a)
promulgated by the Commission under the Securities Act. To be treated as an
Accredited Investor, a prospective purchaser must meet one of the tests set
forth under "Purchaser Suitability Standards -- Accredited Investor Financial
Requirements."
RELIANCE ON SUBSCRIBER INFORMATION. Representations and requests for information
regarding purchaser suitability requirements must be completed by each
prospective purchaser as part of the Subscription Agreement and Purchaser
Suitability Questionnaire. The Units have not been registered under the Act. The
Units will be offered in reliance upon Section 4(2), 4(6), and Rule 506 of
Regulation D, promulgated by the Commission, and on applicable state law
exemptions or registration provisions. Accordingly, the Company will make
inquiries reasonably necessary to satisfy itself that the prerequisites of such
exemptions have been met. Prospective purchasers will also be required to
provide whatever additional evidence is deemed necessary by the Company to
substantiate the information or representations contained in the Subscription
Agreement and Purchaser Suitability Questionnaire. The standards set forth above
are minimum standards. The Company reserves the right, in its sole discretion,
to reject subscriptions for any reason regardless of whether a prospective
purchaser meets the minimum suitability standards in which case the amount of
such subscription will be returned as soon as possible after such rejection,
with any interest earned thereon.
NO TRANSFERABILITY. Neither the Notes nor the Warrants have been registered
under the Securities Act nor under applicable state securities laws. The Units
will be offered and sold only to individuals who are able to assume the risk
incident to an investment who represent they are not buying with a view to the
resale or distribution thereof and who recognize and acknowledge that the Units
(including the securities comprising same) cannot be sold for an indefinite
period of time.
ACCESS TO FURTHER INFORMATION. Qualified prospective purchasers shall, at their
request, have the opportunity to meet with and ask questions of the executive
officers and directors of the Company. At any such conference, the prospective
purchasers and their investment advisors, if any, will have the opportunity to
obtain further information or documentation, to the extent possessed or
obtainable by the Company without unreasonable effort or expense, which
prospective purchasers request to verify or supplement the information contained
in this Memorandum. PROSPECTIVE PURCHASERS SHOULD NOT EXECUTE THE SUBSCRIPTION
AGREEMENT UNLESS ANY QUESTIONS THEY MAY HAVE REGARDING THIS PROGRAM HAVE BEEN
ANSWERED TO THEIR SATISFACTION.
18
<PAGE>
DILUTION
Because the Notes are debt obligations of the Company, no immediate dilution
will result to the purchasers of Units. However, assuming the immediate exercise
of the Warrants attached to the Notes, purchasers would suffer substantial
dilution. The net tangible book value of the Company on December 31, 1998 was
$(463,000), or $(.20) per share, based upon the outstanding 2,275,174 shares of
Common Stock on March 31, 1999, and as adjusted for the March 31, 1999 reverse
stock split. The following table illustrates the pro-forma per share dilution if
the Warrants were exercised at closing, assuming that none of the Company's
outstanding stock options are exercised:
<TABLE>
<CAPTION>
- ------------------------------------ ------------- ------------
MINIMUM MAXIMUM
OFFERING OFFERING
- ------------------------------------------ ------------- ------------
<S> <C> <C>
Warrant Exercise Price $ 8.40 $ 8.40
- ------------------------------------------ ------------- ------------
Net Tangible Book Value before $ (.20) $ (.20)
Offering
Net Tangible Book Value after Offering and $ 1.42 $ 1.66
Assuming Full Exercise of All Warrants
Resultant Increase for present $ 1.62 $ 1.86
Shareholders
Per share Dilution to new Shareholders $ 6.98 $ 6.74
Upon Exercise of the Warrants
- ------------------------------------------ ------------- ------------
</TABLE>
USE OF PROCEEDS
The Company believes that the estimated net proceeds of the Maximum Offering
amount will be adequate to satisfy its anticipated capital requirements between
the date of this Offering and consummation of the Company's planned IPO. The net
proceeds to the Company from the sale of the Units offered hereby are estimated
to be as follows:
<TABLE>
<CAPTION>
MINIMUM MAXIMUM
OFFERING OFFERING
-------------- ------------
<S> <C> <C>
SOURCE OF FUNDS:
Notes(1)...................................... $250,000 $1,000,000
USE OF FUNDS:
Selling Commissions and
Marketing Allowance(2)...................... 25,000 100,000
Nonaccountable Expense Allowance(3) 7,500 30,000
Working Capital............................... 102,500 745,000
Direct Offering Expenses...................... 10,000 25,000
Prior Obligations(4).......................... 100,000 100,000
------- ---------
Total......................................... $250,000 $1,000,000
======= =========
</TABLE>
FOOTNOTES:
(1) The minimum investment that will be offered to any prospective
purchaser is 5 Units, or $25,000. The Company has retained the right to
accept subscriptions for amounts less than the stated minimum.
(2) The Company has allocated cash commissions of 10% of the gross
proceeds from the sale of Units sold by broker-dealers and selling
agents.
(3) The Company has also allocated a fee for non-accountable expenses
equal to 3% of the gross proceeds from the sale of Units sold by
broker-dealers and selling agents.
(4) Prior obligations include payment of trade creditors and past
salaries to current and former employees.
19
<PAGE>
DIVIDEND POLICY
The Company has not paid any cash dividend since its inception and does not
anticipate paying any cash dividends on its Common Stock, or any of its
securities, in the foreseeable future. The Company currently intends to reinvest
earnings, if any, in the development and expansion of its business. Any future
determination with respect to the payment of dividends will be subject to the
discretion of the board of directors and will depend upon the earnings, capital
requirements, and financial position of the Company, general economic conditions
and other factors.
SELECTED FINANCIAL DATA
The selected financial data set forth below for the fiscal year ended September
30, 1998, and the three month period ended December 31, 1998, has been derived
from the unaudited financial statements of the Company, and may not be prepared
in accordance with generally accepted accounting principals. The Company
believes that the financial statements include all adjustments (consisting only
of normal recurring adjustments) necessary for a fair presentation of the
information set forth therein. The results for the three month period ended
December 31, 1998, are not necessarily indicative of the results to be expected
for the entire fiscal year ending September 30, 1999. This information should be
read in conjunction with the Financial Statements and notes set forth as
Exhibits hereto.
<TABLE>
<CAPTION>
Fiscal Year Three Month
Ended Period Ended
September 30, 1998 December 31, 1998
--------------------- -----------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales...................................... $558,000 $213,000
Net loss....................................... (89,000) (69,000)
Loss per share................................. (.04) (.03)
Shares outstanding(1).......................... 2,275,174 2,275,174
At At
September 30, 1998 December 31, 1998
--------------------- ------------------
BALANCE SHEET DATA:
Total assets................................... 2,513,000 2,599,000
Long-term debt, less current portion........... 561,000 531,000
Shareholder's equity........................... 1,492,000 1,454,000
- -------------
</TABLE>
(1) No effect was given to any potential increase in equity that may be
realized from the exercise of any outstanding warrants or options.
20
<PAGE>
DESCRIPTION OF THE BUSINESS
TrueVision International, Inc. (the "Company" or "TrueVision"), was incorporated
under the laws of the State of Delaware on January 19, 1988, as Topform, Inc. In
March, 1998, pursuant to the terms of a Plan of Reorganization and Merger
Agreement, the Company issued 18,666,667 shares of its Common Stock, plus
warrants to purchase an additional 18,666,667 shares of Common Stock, to
TrueVision Laser Centers, Inc., a Nevada corporation ("TVLC"), from whom it
acquired eighty-four (84%) percent of the total authorized and outstanding
capital stock (represented by 84,000 shares of Common Stock) of TrueVision Laser
Centers of Albuquerque, Inc., a New Mexico corporation ("TVLCA"). Accordingly,
TVLCA became a subsidiary of the Company, and TVLC became the majority
stockholder of the Company. At the annual shareholder meeting of Topform, Inc.,
held in April, 1998, the shareholders voted to effectuate a "reverse" split of
its outstanding Common Stock by issuing one new share for each 4 shares held. At
a board meeting held on January 29, 1999, the board voted to change the
Company's name to TrueVision International, Inc.
In March of 1999, the Company entered into a preliminary letter of intent with
Dirks & Company, an NASD member broker dealer, which contemplates that the
Company will conduct an underwritten initial public offering of its Common Stock
(the "LOI"), pursuant to a registration statement to be filed on Form S-1 (or
other appropriate form) under the Securities Act with the Commission. The LOI
contemplates that the Company will immediately begin the process of preparing
and filing such registration statement with the Commission with a view towards
consummating an initial public offering of its Common Stock in the third or
fourth quarter of 1999, with a preliminary offering price range of approximately
$7.00 per share.
Pursuant to its obligations under the LOI, the Company is required to effect
certain changes to its capital structure that reduce the total outstanding
shares of Common Stock, including all stock options and warrants. Accordingly,
on March 31, 1999, the Company's board of directors approved a resolution, which
was ratified by the affirmative written consent of a majority of its
shareholders, to effectuate a "reverse" split of its outstanding Common Stock by
issuing one new share in exchange for each 2.4 shares outstanding, and to make
appropriate adjustments to all outstanding options, warrants, or other similar
agreements entitling holders to acquire additional securities of the Company.
After consummation of this reverse stock split on March 31, 1999, the Company
had 2,275,174 shares of Common Stock outstanding, and stock options outstanding
which provide for the issuance of an additional 458,333 shares of Common Stock
upon exercise. These capitalization adjustments do not include any securities
that may be issued in connection with this Offering.
TrueVision is the corporate successor to TrueVision Laser Centers of
Albuquerque, Inc., a New Mexico corporation ("TVLCA"), which it acquired an
eighty four (84%) percent interest in through a statutory merger transaction,
pursuant to the provisions of a Plan of Reorganization and Merger Agreement on
March 18, 1998. TVLCA was previously owned by TrueVision Laser Centers, Inc., a
Nevada corporation. The Company's executive offices are located at: 1720
Louisiana Blvd., Suite 100, Albuquerque, New Mexico 87110. The Company's
telephone numbers are:
(877) 878-3847, or (505) 256-3534; Fax: (505) 256-3521.
The Company plans to develop, acquire, operate and market ophthalmic laser
vision correction Centers (Image Enhancement Centers) and laser vision
correction referral centers (Referral Centers). The Image Enhancement Centers
will utilize excimer laser technology which was granted FDA approval in October,
1995 for use in the United States. The Referral Centers will market Laser
Procedures and recruit patients to have Laser Refractive Procedures at a
TrueVision Image Enhancement Center or other affiliated Image Enhancement
Centers. TrueVision commenced with funds provided by its principals and is
committing $1.0 million of equity from its first Private Offering to develop its
corporate infrastructure and open two Image Enhancement Centers.
The Company has the authority to issue an aggregate of one hundred ten million
(110,000,000) shares of capital stock. One hundred million (100,000,000) shares
are designated as Common Stock, par value $0.001 and ten million (10,000,000)
shares are designated as Preferred Stock , par value $0.001. As of the date of
this Memorandum, there are presently 2,274,174 shares of Common Stock issued and
outstanding, and no shares of preferred stock have been issued. (See "Dilution"
and "Description of Securities.")
21
<PAGE>
BUSINESS OBJECTIVE. The Company's primary business objective is to acquire,
develop, operate and market 50 to 60 Laser Vision Correction and Image
Enhancement Centers that enjoy a commanding market share, stable fees, and a
high likelihood of commercial success in offering these services. The Company
has expanded that concept to include the development of vision correction
Referral Centers (See "Referral Centers.")
BACKGROUND. The Laser Vision Correction industry began in the United States upon
approval of the excimer laser by the FDA in October 1995. The industry
anticipated immediate demand for the procedure. However the projected numbers of
initial patients was greatly overestimated. Few people were sufficiently
knowledgeable to distinguish the benefits of the laser from radial keratotomy.
Millions of dollars were spent by as many as seventeen national companies to
introduce this technology with little impact. In the ensuing three years all but
five of those companies vanished. With only one center remaining in Albuquerque,
NM, TrueVision nearly became one of the casualties. Laden with accumulated debts
in excess of one million dollars, it was only able to survive by selling its
existing successful center to Topform, a company not burdened with debt and with
access to public markets for additional equity to grow and expand. This occurred
in April of 1998 with TrueVision receiving 4,666,667 shares in exchange for its
equity interest in for the Albuquerque operation. On January 19, 1999, Topform
changed its name to TrueVision International, Inc. (TVI).
CURRENT INDUSTRY RESULTS. In April 1999, Hambrecht & Quist raised its estimate
of the number of laser vision correction procedures that will be performed in
the U.S. for the second time in recent weeks. It now projects 800,000 for 1999
and 1.1 million for the year 2000. The situation of the industry has
significantly changed. Financial results reported by many operators of both
national and single centers show dramatic increases in volumes over the last
nine months. Additional growth is anticipated because of mainstream interest
from highly visible celebrities, athletes and news anchor people who are raving
about their personal experience with laser vision correction. The results posted
by several of the publicly traded operators reflect what is occurring throughout
the industry. On January 12, 1999 Laser Vision Centers, Inc. (LVCI) announced
that some center revenues were up 68% over the same period last year and that
total revenues were up 134% from a year ago. Additionally they reported that
December 1998 case volumes were up 17% from their previously highest month. On
January 25, 1999 LCA Vision (LCAV) reported that its revenues were up 135% for
the quarter and 219% over the prior year. On January 12, 1999 TLC (LZRC)
reported that it performed its 100,000th laser procedure and said that it could
reach 200,000 this year. TLC further reported revenues for the quarter ended
11/30/98 was double the previous year.
TRUEVISION ALBUQUERQUE RESULTS. TrueVision Albuquerque has also shown an
increasing number of procedures each month at the Albuquerque center. The count
doubled within three months from 70 eyes in September '98 to 142 eyes in
December '98. Revenues more than doubled for fiscal year 1998 compared to 1997.
Even more impressive is the revenue for the last three months. In the last
calendar quarter of 1998, revenues exceeded $680,000, and totaled more than
$260,000 in December alone. (See " Exhibit B - Albuquerque Financial Results")
This sharp increase in volume has been the direct result of TrueVision's
recently introduced Integrated Marketing Protocol (IMP). IMP is a proprietary
integrated program of ancillary product sales, promotions and targeted marketing
activities. IMP is designed to identify and quickly transform prospective laser
vision correction (LVC) candidates to become satisfied LVC patients and walking
testimonials for this miracle of modern medicine.
A key element of IMP is TrueVision's seminar series. These seminars are held at
the TrueVision center. A television camera is mounted on the laser, so the
guests can watch the procedure in real time on a monitor. Afterwards, the
patient sits with the guests to share the experience and answer questions. The
response has been terrific. A recent seminar drew 16 guests and 14 took the
first step towards vision correction by registering for the eye exam. On average
more than sixty percent of attendees take this first step to vision freedom.
This new IMP system has been so successful that seminars are being scheduled
three nights per week with additional weekend seminars scheduled to commence in
March.
The original TrueVision marketing plan required affiliations with local doctors
to develop patients for the laser. However, the experience of another Corporate
Center operator, which followed a business plan similar to TrueVision's, has
mandated a significant change in the plan. After building a successful business
the Company was effectively put out of business when the local doctors bought
their own laser. TrueVision learned two things from that situation. First that
the Company must be able to generate it's own source of patients. Second, that
TrueVision
22
<PAGE>
needs a Company staff of employed doctors and member doctors with exclusive
contractual commitments to perform the procedures in order to maintain control
of its client base.
The ability to directly develop patients has been a major stumbling block for
the vision correction industry. Traditional forms of advertising alone such as
television, radio and print, can be expensive and inefficient. On the other
hand, the IMP system is relatively inexpensive while being effective and
efficient at converting prospective candidates to LVC patients. The success of
the IMP system gives TrueVision the confidence to compete in the largest markets
and increase the possibilities for center expansion. It also creates flexibility
for the Company in selecting locations for additional centers. In the past, the
Company's development strategy focused on acquisitions or alliances with
existing doctors. The underlying motivation for this affiliation strategy rather
than starting centers from scratch was to capture and cultivate the doctor's
source of patients. Such an affiliation is no longer necessary. The success of
the IMP system gives TrueVision International significant independence for
developing and maintaining its business.
Currently, gross profit is shared equally between TrueVision and its member
doctors. This formula results in inefficiencies and an inability to control its
business and remain competitive. TrueVision has revised its strategy to address
these issues. By adding a medical staff to the centers, the Company will develop
and manage it's proprietary patient database. By hiring a staff Ophthalmologist
to perform LVC procedures and an Optometrist to perform evaluations the centers
will operate more efficiently resulting in increased profitability. This will
also allow the Company increased control over its future and strategically
position TrueVision to manage future pricing changes in the marketplace.
Negotiations are currently underway for the Company to have an internal medical
staff and to sign exclusivity agreements with certain member doctors.
TrueVision International is now moving forward to establish a presence in other
markets. It recently ordered a new laser for a Las Vegas facility and is
negotiating for sites in Los Angeles and San Diego. A Securities offering is
being prepared to support this expansion and is expected to go become effective
within the next few months. The expected infusion of additional equity capital
will be combined with the Company's IMP program and internal medical staff
resulting in improved profitability and immediate growth.
MARKET SIZE. It is estimated that as many as 2,00,000 patients worldwide have
benefited from the LVC procedure over the past few years. The United States is
the world's largest market for cosmetic surgeries with billions of dollars spent
annually for a variety of procedures. LVC is an attractive alternative for
patients who desire a lifestyle free of glasses and contact lenses. LVC is an
elective, outpatient vision correction and currently costs up to $2,250 per eye.
The procedure is not currently covered by health insurance or public health
programs and is prepaid or financed by the patient, which practically eliminates
collection problems. Patient financing is readily available through specialized
consumer finance companies. The typical patient spends just 20 to 30 minutes at
the Center, with the actual LVC laser vision correction procedure taking less
than a minute. Industry results have shown that more than 90% of LVC patients
experience little or no pain and their eyes stabilize with a visual acuity of
20/40 or better, which eliminates the need for glasses or contact lenses for
normal activities. Patient satisfaction with LVC is very high. According to
several market research studies, approximately 95% of the participants indicated
that they would recommend the LVC procedure to a friend.
TARGET MARKETS. TrueVision will open and operate Image Enhancement Centers in
areas of dense population and will have the excimer laser on site. TrueVision
will also have a network of Referral Centers which will be selling related
products in retail locations and in less populated areas which will also market
LVC and provide referrals for the Centers. TrueVision's objective is to assemble
a network of 30 to 50 TrueVision Centers and 30 to 50 TrueVision Laser Referral
Centers throughout the United States. It will select markets where the Company's
unique strategy will result in a strong marketing presence and market dominance.
The prototype TrueVision Image Enhancement Center is projected to achieve a 34%
to 45% share of its market area over a five-year period, with proportionately
larger total revenues. As of the date of this offering, the Company has one
market open, another planned to open within one hundred and twenty days with
three other markets in the development stage.
BACKGROUND AND EXPERIENCE. The core management team of TrueVision has been
involved in the LVC industry since 1995 and has participated in the evolution of
the US market since its inception. Involved with the operation of the
Albuquerque center since its founding, management has first hand knowledge of
what it takes to succeed in this
23
<PAGE>
industry. Generating $771,000 of revenue in the first full year of operations,
the Albuquerque lost nearly $250,000. The second year, which ended on September
30, 1998 showed a doubling of revenues to $1.4 million and a narrowing of the
loss to just $23,000. On a cash flow basis, the center generated $225,000 in
cash to begin to repay its financial obligations. The first quarter of the
current fiscal year has shown an even more dramatic improvement with sales and
profits reaching record levels. This dramatic change came as a result of a new
marketing program that the company could only recently afford to initiate. ( See
Exhibit b - Albuquerque Results)
TRUEVISION "INTEGRATED CENTER" MARKETING STRATEGY. The first business plan for
TrueVision required that the local doctors be members of a TrueVision Center to
use the laser. TrueVision believes that the market has now advanced to the level
that a fully integrated, corporately controlled, retail oriented operation can
emerge and capture a significant market share. TrueVision Albuquerque, a
membership center, has always operated from a highly identifiable location and
has had a retail mentality. In the past, it relied upon a network of surgeons to
provide the patients. As the market has developed, TrueVision has implemented
more of its retail programs. This has resulted in patient volumes which have
doubled in the most recent ninety-day period. Projecting those efforts result in
an almost immediate doubling in sales again. However, the single most
prohibitive factor to future growth is the inability for the Company to control
the sales process. Prospective patients are currently directed to a member
doctor for an evaluation. The member doctor is charged with converting that
prospect to a patient. This process has resulted in many missed sales
opportunities. Relying on the sales skills of the member doctors and their staff
to make the center profitable has been a mistake.
TrueVision is currently combining its consumer marketing, retail strategies and
inside sales capabilities with a new model for the delivery of these services.
Future centers will employ optometrists and surgeons directly on a salary basis.
By retaining the portion of the revenue currently paid to member doctors (i.e.:
50% of the total fee) TrueVision can afford to employ these medical
professionals, pay above market salaries and bonuses and dramatically improve
sales. Further, by employing the services of an in-house medical staff
TrueVision will have eliminated its largest single variable expenses and
replaced it with a relatively modest fixed monthly cost. This represents
one-third the cost of the 50% that is currently paid to member doctors for the
same services. With this new approach to the business, TrueVision will employ
well-trained medical professionals fully capable of delivering consistent, high
quality outcomes. This will allow for continued improvement in its consumer
marketing and retail delivery expertise.
EXPECTED RESULTS. Management believes that the Company is ready to expand its
model into additional communities throughout the U.S., employing its marketing
strategy to open new facilities. The proceeds of this Offering are expected to
"bridge" the Company's working capital needs until its proposed IPO can be
accomplished. The projected results of this strategy are detailed in the
Financial Projections attached hereto as Exhibits to this Memorandum. However,
adopting the integrated model alone, with no other changes, is projected to add
an additional $1.0 million in revenues to current operations. By the third year,
an excess of $157.7 million in gross revenues is projected to generate profits
exceeding $60.1 million. (See "Appendix - Consolidated Projections")
EXPANSION OF PRODUCT LINE. The addition of several new products and procedures
will further improve profitability and cross marketing opportunities. This will
include extending its participation in the vision industry and entering other
high margin cosmetic procedures.
OPERATIONAL RESPONSIBILITIES. TrueVision will be responsible for the management
of each Center, including the purchase or lease and maintenance of equipment.
TrueVision will also perform all marketing and administrative functions
including advertising, marketing, accounting, patient scheduling, registration,
fee collection, and patient follow-up. TrueVision will also recruit and train
dedicated refractive surgeons and optometrists to provide the required
professional services at each Center. Dedicated, highly trained and experienced
personnel will staff each location. Specialists in advertising, marketing,
finance, optometry, ophthalmology and operations at the national level will
support these local professionals.
PROPOSED PUBLIC OFFERING. TrueVision has recently entered into a preliminary
letter of intent with Dirks & Company, an NASD member broker dealer, which
contemplates that Dirks & Company will act as managing underwriter for the
Company's proposed IPO. The Company plans to commence the preparation of a
registration statement, to be filed on Form S-1 (or other appropriate form)
under the Securities Act with the Commission,
24
<PAGE>
immediately upon completion of this Offering, with a view towards consummating
an IPO of its Common Stock in the third or fourth quarter of 1999, with a
preliminary offering price of approximately $7.00 per share.
COMPETITION
LVC utilizes an excimer laser to correct vision problems related to the shape of
the eye. These include myopia (nearsighted), hyperopia (farsighted), and
astigmatism. The conditions affect nearly one half of Americans, or more than
130 million people. The procedures were first made available for moderate myopic
correction in the U.S. in late 1995 when the FDA approved the use of the first
generation of excimer lasers. It was not until the end of 1998 when all aspects
of LVC were approved by the FDA, which made LVC available on a widespread basis.
Although several Companies entered this emerging segment early to take advantage
of the new technology, only a few survived. The projected number of patients
eager to utilize this technology was greatly overestimated. Millions of dollars
were spent by as many as seventeen national companies to introduce this
technology with little impact. In the ensuing three years all but five of these
companies have vanished. The situation has now changed. Financial results
reported now by all operators, both national and single center, have shown
dramatic increases in volumes during the last nine months.
The results posted by several of the publicly traded operators reflect what is
occurring throughout the industry. On January 12, 1999 Laser Vision Centers,
Inc. (LVCI) announced that same center revenues were up 68% over the same period
last year and that total revenues were up 134% from a year ago. Additionally
they reported that December 1998 case volumes were up 17% from their previously
highest month. On January 25, 1999 LCA Vision (LCAV) reported that its revenues
were up 135% for the quarter and 219% over the prior year. On January 12, 1999
TLC (LZRC) reported that it had performed its 100,000 laser procedure and said
that it could reach 200,000 this year. TLC further reported revenues for the
quarter ended 11/30/98 was double the previous year.
Patient volumes are up at nearly all centers nationwide, but few are profitable.
Operators like TLC are typical. TLC recently announced that it earned a profit
of $660,000 on $43.5 million of revenue (1.5%) vs a loss of $1.9 million for the
same period last year. Successful Centers are typically profitable because of
the efforts of a high profile refractive surgeon. To better understand this, it
is important to understand the basic business models currently being followed in
the industry. Existing centers can be grouped into four basic models:
OPEN ACCESS AND MEMBERSHIP FACILITIES. This category includes most hospital
owned lasers, and operators such as LCA Vision (NASDAQ - LCAV), Laser
Vision Centers, Inc. (NASDAQ - LVCI), and ClearVision. Most Centers
whether corporate, hospital or community owned, were established with
the belief that many Ophthalmologists and Optometrists within each
community would want to access an LVC facility for their own patients.
This has not proven to be true. In most cases, those centers have had
limited success. Some, like TrueVision, which has provided dedicated
marketing support, have allowed several surgeons to become successful.
Other Centers can chart their success by identifying one or two surgeons
who have provided most of the volume. Those surgeons share in fifty
percent of the gross profit from the surgeries, so they are the single
largest cost for the center. To the surgeon who is generating the
patient, the center is his single largest expense. As the surgeon
evaluates his business, it becomes apparent that most centers provide no
real added value. Therefore, as the market continues to expand, those
surgeons will likely invest in their own laser, rather than continue to
share revenues with a center operator.
OPTOMETRIC NETWORKS. This category includes TLC The Laser Center (NASDAQ -
LZRC) and Sterling Optical (NASDAQ - ISEE). The centers are built on the
premise that most people ( i.e.: 90%) identify an optometrist as their
source for glasses or contacts rather than an ophthalmologist. Those
networks have generally done poorly. Most optometrists resist promoting
LVC, fearing that, once treated, the patients will not return. Even
those that support LVC only present it as AN OPTION to glasses or
contacts. Consequently the referrals from the optometric networks are
limited and do not provide a reliable source of patients for a Center.
25
<PAGE>
INDEPENDENT REFRACTIVE SURGEONS. Centers operated by single surgeons
dedicated to LVC have generally been the most successful. The doctor's
commitment of LVC and his access to an existing client base were the
keys to his success. Many of the single centers have far outperformed
the industry. n some cases, several of these entrepreneurial centers
have formed an alliance and operate under a single corporate identity.
As such, they often report significant revenues and profit. However they
lack a fully integrated business model that can maximize the market's
potential or to support the integrated growth strategy that will be
required to maximize industry potential in the long term
MOBILE OPERATORS. Several Companies established mobile routes using a truck
mounted, single laser which travels between multiple sites. While this
has the potential to be a successful strategy in the future, the
logistics can be complicated. As volumes increase, the surgeons served
will find it cost effective to purchase their own laser. That will force
the mobile out of the Market.
The treatments offered by the Company's Laser Vision Correction Centers also
compete with other present forms of treatment for refractive disorders,
including eyeglasses, contact lenses, refractive surgery, corneal transplants
and other technologies currently under development. The Company expects that
companies which have developed or are developing new technologies or products,
as well as other companies (including established and newly formed companies),
may attempt to develop new products directly competitive with the excimer lasers
that are to be utilized by the Company or could introduce new or enhanced
products with features which render the equipment to be used by the Company
obsolete or less marketable. The ability of the Company to compete successfully
will depend in large part on its ability to adapt to technological changes and
advances in the treatment of refractive vision disorders. There can be no
assurance that, as the market for excimer laser surgery and other treatments of
eye disorders develops, the Company's equipment will not become obsolete, and if
this occurs, that the Company will be able to secure new equipment to allow it
to compete effectively.
DESCRIPTION OF THE SECURITIES
The following statements constitute brief summaries of the Company's Articles of
Incorporation and Bylaws, as amended. Such summaries do not purport to be
complete and are qualified in their entirety by reference to the full text of
the documents referred to.
EXISTING CAPITAL STRUCTURE
The Company's Articles of Incorporation authorize the issuance of up to
100,000,000 shares of Common Stock, par value $0.001, per share, and up to
10,000,000 shares of Preferred Stock, par value $0.001, per share. As of the
date of this Private Placement Memorandum, 2,275,174 shares of Common Stock are
currently outstanding, and no shares of preferred stock have been issued. In
addition, the Company has granted stock options to certain consultants,
directors, employees and officers that provide for the issuance of an additional
458,333 shares of Common Stock upon exercise at varying prices. (See "Management
- - Compensation")
COMMON STOCK. Holders of Common Stock are entitled to one vote per share on all
matters for which holders of Common Stock are entitled to vote. Cumulative
voting in the election of directors is permitted. The quorum required at a
shareholder's meeting is a majority of the shares entitled to vote, represented
in person or by proxy. If a quorum is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on a
matter is required for shareholder approval, unless a greater percentage is
otherwise required by law. Holders of the Common Stock are entitled to receive
ratably such dividends, if any, as may be declared by the board of directors out
of funds legally available. Upon liquidation of the Company such holder would
share ratably in the assets, if any, remaining after payment of all debts and
liabilities and distributions on any senior securities. Holders of Common Stock
do not have preemptive, conversion or redemption rights.
The authorized but unissued shares of Common Stock are available for future
issuance without shareholder approval. These additional shares may be utilized
for a variety of corporate purposes, including for future offerings to raise
additional capital, to facilitate corporate acquisitions and for employee
benefits plans. One of the effects of
26
<PAGE>
the existence of unissued and unreserved Common Stock may be to enable the board
of directors to issue shares to persons friendly to current Management which
could render more difficult or discourage an attempt to obtain control of the
Company by means of a merger, tender offer, proxy contest or otherwise, and
thereby protect the continuity of the Company's Management.
There are no limitations or restrictions upon the rights of the board of
directors to declare dividends out of funds legally available. The Company has
not paid dividends to the Common Stock shareholders to date and it is not
anticipated that any dividends will be paid to the common shareholders in the
foreseeable future. Initially, the board of directors may follow a policy of
retaining earnings, if any, to finance the future growth of the Company.
Accordingly, future dividends, if any, will depend upon the Company's need for
working capital and its financial condition at that time.
PREFERRED STOCK. The Company's Articles of Incorporation authorizes the board of
directors to issue up to 10,000,000 shares of "blank check" Preferred Stock, par
value $.001, from time to time in one or more series. The board of directors is
authorized to establish such series, to fix and determine the variations and the
relative rights and preferences as between series, and to thereafter issue such
stock from time to time. The board of directors is also authorized to provide
for conversion of the Preferred Stock to Common Stock, and to determine voting
rights under terms and conditions as it determines.
EXISTING WARRANTS AND OPTIONS. A warrant is a contractual right by which the
holder thereof may purchase another security of the Company at a predetermined
price before the stated expiration date. An option is also a contractual right
by which an employee holder thereof may purchase Common Stock of the Company at
a predetermined price under the specific terms of the option agreement before
the stated expiration date.
In connection with the Company's acquisition of TrueVision Laser Center of
Albuquerque, 4,666,667 warrants were issued (adjusted to reflect a 1-for-4
"reverse" split which occurred in April, 1998). These warrants have since
expired. Pursuant to a resolution passed by the board of directors, the Company
authorized the grant of 458,333 incentive stock options to consultants,
directors and officers of the Company, for the purchase of a like amount of
Common Stock, at a price of $0.36 per share. Therefore, there remains
outstanding, options entitling the holders thereof to purchase 458,333 shares of
Common Stock at varying prices.
The Company has also authorized the issuance of an additional 500,000 Warrants
to purchase Common Stock, at a price of $8.40 per share, in connection with this
Offering and as a part of the Units offered.
Set forth below is a listing of the number of warrants and options for the
purchase of the Company's Common Stock, the exercise price and the expiration
date of those warrants outstanding as of the date of this Memorandum:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
WARRANTS OPTIONS OPTIONS - HOLDERS EXERCISE PRICE EXPIRATION DATE
-------- ------- ----------------- -------------- ---------------
291,666 Executive Officers & Directors $0.36 04-1-09
166,667 Employees (non-officers) $0.36 04-01-09
500,000 Note Holders $8.40 04-15-00
</TABLE>
THE UNITS
The Company is offering a maximum aggregate principal amount of $1,000,000 of
its subordinated, promissory notes due April 15, 2000 (the "Notes"), subject to
a minimum aggregate Offering amount of $250,000. The Notes are being offered as
"Units", in increments of $5,000 per Unit, with each Unit comprised of one
$5,000 Note and 2,500 Common Stock Warrants attached (the "Warrants"). The
minimum purchase is 5 Units, or $25,000, per purchaser. The Company may, in its
sole discretion, accept subscriptions for less than 5 Units ($25,000). The
Warrants attached to each Note are non-detachable and entitle the holder to
purchase 2,500 shares of the Company's Common Stock at an exercise price of
$8.40 per share. The Common Stock to be purchased pursuant to the exercise of
the Warrants will carry certain registration rights.
27
<PAGE>
DESCRIPTION OF NOTES. The Notes will be issued by the Company directly to the
purchasers. The form of the Note is attached to this Memorandum as an Exhibit.
The following statements summarize certain provisions of the Notes. The summary
statements do not purport to be complete, and are subject and qualified in their
entirety by reference to all of the provisions of the Notes, including the
definitions therein of certain terms (generally capitalized when used herein),
which provisions and definitions are incorporated herein by reference.
The Notes to be issued will be in an aggregate maximum principal amount of
$1,000,000 and a minimum amount of $250,000. The Notes are not secured and
represent a general debt obligation of TrueVision International, Inc., and, in
terms of preference, are subordinate to any existing senior indebtedness of the
Company. Each Note will bear interest from the date of issuance at a rate of 13%
per annum, simple interest, payable at maturity (April 15, 2000). Payment of
principal and accrued interest will be paid directly to the person in whose name
the Note is registered on the Note Register maintained by the Company.
TrueVision will issue the Notes in denominations of $5,000. TrueVision will not
assess a service charge for any transfer or exchange of the Notes, but it may
require payment of a sum sufficient to cover the tax or governmental charge
payable in connection therewith. Holders may transfer the Notes by surrendering
them for transfer at the office of the Registrar, together with such written
instrument of transfer as TrueVision may require, including without Company
limitation, an opinion of counsel, satisfactory to TrueVision, provided at the
cost of the transferring Holder.
REDEMPTION. The Notes will be subject to redemption at the option of TrueVision,
at any time after issuance, in whole or in part, from time to time, without
penalty. If TrueVision elects to redeem less than all of the Notes, the Company
will select which Notes to redeem, using such method as it shall deem fair and
appropriate. Such method may include the selection for redemption of portions
(equal to $5,000 or any multiple thereof) of the principal amount of any Note of
a denomination larger than $25,000. In the event that the Company is successful
in effecting its anticipated public offering, it will redeem the entire amount
of all Notes outstanding from the proceeds of the public offering. However,
there can be no assurance that the Company will be successful in effectuating
its proposed public offering.
EVENTS OF DEFAULT. The Notes define the following as an "Events of Default": (1)
failure to pay principal and accrued interest when due at Maturity; (2) failure
to perform any other covenants for 60 days after written notice specifying the
default and allowing TrueVision to remedy such default; or (3) certain events of
bankruptcy, insolvency, or reorganization.
The Notes provide that the Company shall, within 30 days after the occurrence of
an Event of Default, give the holders thereof written notice of all unsecured
defaults known to it. The term "default" means the above specified events
without grace periods; provided that, except in the case of default in the
payment of principal and interest on any of the Notes at maturity, the Company
shall be protected in withholding such notice if and so long as it in good
faith, determines that the withholding of such notice is in the interest of the
holders of the Notes. In the case of default based on a breach of a material
covenant or warranty, notice shall not be given until 30 days after the
occurrence of such event of default.
If an Event of Default shall occur, and be continuing, the holders of at least a
majority in aggregate principal amount of outstanding Notes may accelerate the
maturity of all such outstanding Notes. Prior to acceleration of maturity of
such Notes, the holders of Notes of at least a majority in principal amount of
outstanding Notes may waive any past defaults, except for default in certain
covenants a provided in the Notes, which require unanimous consent. The holders
of Notes of at least a majority in aggregate principal amount of outstanding
Notes may waive an Event of Default resulting in acceleration, and annul the
acceleration, of such Notes, but only if all the Events of Default have been
remedied and all payments (other than those due as a result of acceleration)
have been made.
MODIFICATION, WAIVER OF CERTAIN COVENANTS AND SATISFACTION OF NOTES. The rights
and obligations of TrueVision and the rights of Noteholders may be modified with
the consent of holders of not less than a majority in aggregate principal amount
of outstanding Notes affected thereby; provided that TrueVision may make no such
modification without the consent of each Noteholder affected thereby if such
modification would (1) impair or affect the rights of such Noteholder to receive
principal and interest in accordance with the terms of the Notes; (2) impair or
affect the
28
<PAGE>
right to institute suit for the enforcement of any such payment (except as to
postponement of an interest payment as provided below), or (3) modify the
foregoing requirements. The holders of not less than seventy-five percent (75%)
in aggregate principal amount of outstanding Notes may consent to a postponement
of any interest payment for a period not exceeding three years from its due
date.
The holders of a majority in aggregate principal amount of outstanding Notes may
waive TrueVision's compliance with certain restrictive provisions of the
contained in the Notes.
The Notes shall be satisfied and discharged when (i) either (a) all
authenticated and delivered Notes have been delivered to the Company for
cancellation; or (b) all Notes not delivered for cancellation are or will be due
and payable, or are to be called for redemption, within six months, and
TrueVision has deposited sufficient amounts to pay the amounts due on the Notes;
(ii) TrueVision has paid all other sums payable by TrueVision under the Notes;
and (iii) TrueVision has delivered a certificate of an officer of TrueVision and
an opinion of counsel stating that all conditions precedent to discharge have
been completed.
RESTRICTIONS ON DIVIDENDS. For such time as the Notes remain outstanding,
TrueVision will not declare or pay any cash dividends or dividends in kind on
its shares of Common Stock other than dividends payable solely in shares of
TrueVision Common Stock.
LIMITATION ON LIQUIDATION. Neither the board of directors nor the holders of
Common Stock shall adopt a plan of liquidation that provides for (i) the sale,
lease, conveyance or other disposition of all of the assets of TrueVision, other
than all or substantiallly all of its assets in their entirety, and (ii) the
distribution of all or substantially all of the proceeds of such transaction, or
of the remaining assets of TrueVision, to the holders of Common Stock or
Preferred Stock unless TrueVision, prior to making any liquidation distribution
pursuant to such plan, makes provision for the satisfaction of its obligations
as to the payment of principal and interest on the Notes.
RESTRICTIONS ON TRANSFERABILITY. Securities, including the Notes and Warrants,
issued by the Company have not been registered under the Securities Act, or
under any state laws in reliance upon the "private offering" exemptions pursuant
to Section 4(2), Section 4(6), and Rule 506 of Regulation D, promulgated
thereunder, and upon similar "private offering" exemptions from registration
under various state securities laws. The availability of such exemptions is
dependent, in part, upon a prospective purchaser acquiring the Units for
investment purposes only and not with a view to or for resale in connection with
any distribution of such Units. The Units may not be sold or otherwise
transferred without registration under applicable securities laws or exemptions
therefrom.
The Company intends to place a legend on the documents evidencing the Notes and
the Warrants which states that they have not been registered under any
applicable securities laws and which sets forth or refers to the restrictions on
transferability and sale of the Notes and Warrants. The Company will transcribe
in its records that the Notes and Warrants are subject to transfer restrictions.
By signing the Subscription Agreement, a Purchaser will agree that the Notes and
Warrants will not be sold without registration under applicable securities laws
or exemptions therefrom.
As a result of restrictions imposed by securities laws, there is no public or
other market for the Notes or the Warrants, nor is it anticipated that any such
market will develop. Until such time, if ever, as the Company completes a
registration statement covering the sale or transfer of the Common Stock, owners
of the Notes and the Warrants may have to hold them indefinitely and may not be
able to liquidate their investment in the Company in the event of an emergency.
Each purchaser should have other liquid funds sufficient to protect him against
financial contingencies before making an investment in the Company.
WARRANTS. Attached to each Note are 2,500 Warrants entitling the holder to
purchase up to 2,500 shares of the Company's Common Stock at a price of $8.40
per share. The Warrants must be exercised in full on or before April 15, 2004.
Upon payment of the Exercise Price, the holder of a Warrant issued hereby will
receive one share of Common Stock from the Company for each Warrant so
exercised. To exercise a Warrant, the holder thereof must deliver to the Company
before the Exercise Date (i) payment of the designated exercise price for the
Warrant; (ii) the Warrant Certificate(s); and (iii) instructions as to how many
Warrants are to be exercised. The Company will cause the transfer agent to
issue, within 60 days after receipt of the exercise of the Warrant, one share of
Common Stock for each Warrant exercised. The Warrants will be adjusted in the
event of a Common Stock split, stock
29
<PAGE>
dividend, reverse Common Stock split, merger, consolidation or other similar
change in the capital structure of the Company. However, the Warrants do not
contain "anti-dilution" provisions and the Company may issue additional
securities for value, without adjustment to the Warrants.
VOTING RIGHTS. Except as may be required under Delaware law, holders of the
Notes and/or the Warrants have no voting rights whatsoever until such time as
the Warrants are exercised and the underlying Common Stock is issued to the
holder. Upon the issuance of Common Stock to the holder of the Warrants, the
holder shall have the same rights as any other shareholder owning the Company's
Common Stock.
REDEMPTION. The Notes are subject to early redemption by the Company, at their
principal face value of $5,000 each, plus any accrued interest, without penalty,
at any time before maturity. Further, the Company is obligated to effect a
mandatory redemption of all outstanding Notes from the proceeds of the Company's
proposed IPO. However, there can be no assurance that the Company will be
successful in effecting any such IPO. (See "Risk Factors" and "Proposed Public
Offering")
REGISTRATION RIGHTS. The Company is obligated to register the shares of Common
Stock issuable upon exercise of the Warrants attached to the Notes (the "Warrant
Shares") in certain registration statements for Common Stock filed by the
Company with the Commission. If a registration statement is not effective on or
before December 31, 1999, then a "one-time" demand registration right will
accrue to all holders of the Warrants, as a group, in lieu of such "piggy-back"
registration rights. Such demand registration rights will, however, be subject
to any requirements of the Company's underwriter and a single registration shall
be filed pursuant to all shareholder demand rights. The holders of such Common
Stock shall be entitled to sell the same simultaneously with and upon the terms
and conditions as the securities sold for the account of the Company being sold
pursuant to such registration statement, subject to any applicable limitations
which may be reasonably imposed by the underwriter, receipt of minimum proceeds
by the Company and other terms of the registration rights agreement and the
registration statement. In addition, certain other holders of Common Stock and
other securities have been granted demand and/or piggyback registration rights.
The Company intends to place a legend on the document evidencing that the
Warrants have not been registered under any applicable securities laws and which
sets forth or refers to the restrictions on transferability and sale of the
Warrants prior to exercise. The Company will note in its records that the
Warrants are subject to transfer restrictions. By signing the Subscription
Agreement, all purchasers will agree that the Warrants will not be sold without
registration under applicable securities laws or exemptions therefrom.
Since, as a result of restrictions imposed under securities laws, there is no
public or other market for the Warrants, or the underlying Common Stock, nor can
there be any assurances that any such market will develop, holders of the
Warrants may have to hold them indefinitely and may not be able to realize any
economic benefit from their exercise.
MANAGEMENT
OFFICERS AND DIRECTORS.
Pursuant to the Articles of Incorporation, as amended, all directors will be
elected to hold office on a "staggered-term" basis and divided into three
classes: (i) Class One to have a term expiring at the annual meeting next
ensuing, and (ii) Class Two to have a term expiring one year thereafter, and
(iii) Class Three to have a term expiring two years thereafter. This will result
in a staggering of the directors' terms consistent with the Company's desire to
preserve continuity of directorships. All directors shall serve until the annual
meeting of the stockholders coinciding with the completion of their term, or
until a qualified successor is elected. Directors may only be removed for
"cause", as defined in the Bylaws. In addition, at such time as the Company
qualifies for listing its securities on a recognized national securities
exchange, certain "corporate governance" requirements imposed by each securities
exchange must be complied with in order to continue the Company's listing on
such exchange(s). There are currently only three directors of the Company.
30
<PAGE>
The executive officers and directors of the Company are:
<TABLE>
<CAPTION>
NAME POSITION TERM(S) OF OFFICE
----- --------- -----------------
<S> <C> <C>
John C. Homan Chief Executive Officer/ Two years from April 15, 1998
President/Treasurer/Director
Frank J. Seifert Exec. Vice President/Secretary Two years from April 15, 1998
Director
Gary Rasmussen Director One year from April 15, 1998
</TABLE>
JOHN C. HOMAN, President, Director, Treasurer, 47, founded the Company and is
its President and Chief Executive Officer. Mr. Homan was involved in the
formation of several Centers while associated with ClearVision Laser Centers,
before forming TrueVision. In addition to his venture capital experience with
Cardiff Capital, he was a Consultant to various early stages, high-tech medical
ventures. Mr. Homan has served as President, Chief Operating Officer, Vice
President of Sales and Marketing, General Counsel, as well as Chief Financial
Officer. He is currently president of IMTE, Inc., a management consulting firm
specializing in developing early stage companies, TVLC Finance, Inc., a
specialty finance company, MTE/Triad, a venture leasing company, and TrueVision
Laser Centers, Inc., a private company involved in laser center development
company. Mr. Homan has been involved in the medical industry since 1979 when he
became Division Controller for Picker International, a $1.0 billion worldwide
manufacturer of medical diagnostic imaging equipment. After being selected to
assume operational responsibilities within that company's newly created $100
million service division, Mr. Homan was intimately involved in the launch of new
technologies including MRI (Magnetic Resonance Imaging), CT and Ultrasound. His
other positions at Picker included Marketing Manager, National Account Service
Manager and Sales Manager. He previously worked for ITT where he served as
assistant General Counsel and financial manager responsible for more than 450
separate operating locations. Mr. Homan has a bachelor's degree in accounting
and marketing from the University of Akron and a Juris Doctorate from
Cleveland-Marshall College of Law and is a licensed attorney and a member of the
American Bar Association. He is also an instrument rated pilot.
FRANK J. SEIFERT, Executive Vice President, Secretary, Director, 54, served four
years in the United States Air Force as a Staff Judge Advocate. Over the past
twenty years, Mr. Seifert has been actively involved in the venture capital and
equity markets. He has structured and capitalized substantial Partnership
Investment Offerings. Mr. Seifert was Vice President with ENI Companies, Vice
President for Remco Oil & Gas and Corporate Counsel for Huntington Energy
Corporation. Most recently, Mr. Seifert serves on the Board as President and CEO
of American Natural Gas Corporation and president of Sheffield Equities, an
early stage venture capital firm. In addition to experience in sales management,
Mr. Seifert structured and marketed venture capital real estate and business
development programs. Mr. Seifert received a Bachelor of Arts degree in Business
Administration and Economics from St. Thomas College. He received his Juris
Doctorate from the William Mitchell College of Law and is a licensed attorney.
GARY A. RASMUSSEN, Business Consultant and Director, 48, has an extensive
background spanning over 25 years as an entrepreneur with a broad base of
knowledge and "hands-on" experience in all phases of business development having
been a founder, chief executive officer or director of several publicly-held
corporations in the areas of cable television, investment banking, mortgage
banking and motion pictures. He has extensive experience in raising debt and
equity capital for both public and private enterprises, implementing short and
long term business planning and strategic concepts, acquisitions and
divestitures, and has played a leading role in spearheading several
publicly-held corporations from their inception. He is also skilled in strategic
acquisitions, business development, and implementation of marketing concepts.
Mr. Rasmussen is currently the co-founder and Chairman of NU Quest Health
Technologies, Inc., a multi-faceted corporation engaged in the development,
manufacturing and marketing of health and Internet-related technologies, using
Infomercials. Mr. Rasmussen has assisted the Company in its acquisition of
TrueVision Laser Center of Albuquerque, and plans to assist the Company in its
growth and strategic business planning as a Director. Mr. Rasmussen holds a
Bachelor's Degree in Business Administration and attended law school at Western
Michigan University. He is also a licensed commercial pilot.
ALLISON EVANS, Vice President of Business Development, 35, joined TrueVision in
December 1995 as Controller. Ms. Evans is a Certified Public Accountant, who
began her professional career in the audit department of Ernst & Young in 1988.
Her audit experience includes both high technology and biomedical clients. She
has served as the
31
<PAGE>
Director of Business Services for the Schmidt Accountancy Corporation for the
past three years. In that capacity, she has been responsible for the
coordination and control of new account development. Ms. Evans has a bachelor's
degree in business administration from St. Mary's College and an MBA in
marketing from the University of San Diego.
BOARD OF DIRECTORS COMPENSATION. Members of the board of directors will receive
an amount yet to be determined for their participation. They will be required to
attend a minimum of four meetings per fiscal year. All expenses for meeting
attendance or out of pocket expenses connected directly with their board
representation will be reimbursed by the Company. Director liability insurance
will be provided to all members of the board of directors. No differentiation is
made in the compensation of "outside directors" and officers of the Company
serving in that capacity.
INDEMNIFICATION. The Company shall indemnify to the fullest extent permitted by,
and in the manner permissible under the laws of the State of Delaware, any
person made, or threatened to be made, a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he is or was a director or officer of the Company, or served any other
enterprise as director, officer, employee or contractor at the request of the
Company. The board of directors, in its discretion, shall have the power on
behalf of the Company to indemnify any person, other than a director or officer,
made a party to any action, suit or proceeding by reason of the fact that he/she
is or was an employee or contractor of the Company.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the corporation, the
Company has been advised that in the opinion of the 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 Company of expenses incurred or
paid by a Director, officer or controlling person of the Company in the
successful defense of any action, suit or proceedings) is asserted by such
director, officer, or controlling person in connection with any securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by 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 issues. INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE COMPANY
FOR LIABILITIES ARISING UNDER THE SECURITIES ACT IS HELD TO BE AGAINST PUBLIC
POLICY BY THE COMMISSION AND IS THEREFORE UNENFORCEABLE.
MANAGEMENT COMPENSATION
COMPENSATION. Cash compensation is based upon the experience and qualifications
of those involved and has been set at levels below what would be considered the
market wage rate for the various jobs performed. In exchange for accepting
reduced cash compensation at this time, all current employees have accepted
stock as partial remuneration and will participate in the Company's
non-qualified stock option program. Amounts above the initial minimum
compensation will be based upon each employee achieving specified goals as well
as the Company achieving specified milestones.
EXECUTIVE COMPENSATION. The Company has entered into employment agreements with
certain key personnel and intends to enter into similar agreements with other
key personnel as they are identified and hired. These agreements provide for (a)
monthly compensation in the form of a salary; (b) group insurance; (c) incentive
compensation in the form of cash bonuses and stock options; and (d) other
benefits consistent with the industry that are determined to be appropriate by
the board of directors of the Company. These agreements assure that Management
is clearly focused upon creating value in the stock of the Company, minimizing
dilution, maximizing market penetration, and maximizing the profit potential for
the shareholders. These agreements are binding and can only be terminated for
just and reasonable cause. The Company believes that this combination of
incentives, contractual requirements and commitments provides assurance to the
shareholders of the continuity and focus of Management and creates a unified
objective. The table below summarizes the annual base salaries of the officers,
directors and key employees:
32
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NAME TITLE BASE SALARY STOCK OPTIONS
---- ------- ------------ --------------
John C. Homan (1) CEO, President, Director $96,000 218,750
Frank J, Seifert (2) Executive V.P., Secretary, Director $60,000 - 0 -
Allison Evans (3) V.P. Business Development $84,000 58,333
Gary A. Rasmussen (4) Consultant, Director $- 0 - 14,583
</TABLE>
NOTES:
(1) Cash and stock option bonuses are based upon the number of Image
Enhancement Centers opened by the Company and the profitability of the
Company and the Image Enhancement Centers in the aggregate.
(2) Cash bonuses are based upon the Company achieving various levels of
capitalization.
(3) Cash and stock bonuses are based upon the achievement of various
patient volumes and profitability at each Image Enhancement Center.
(4) Compensation is based upon a per project, or hourly basis, with no
fixed salary amount.
EMPLOYEE STOCK OPTIONS. Pursuant to the Company's 1998 Incentive Stock Plan, the
board of directors was authorized to grant stock options to its consultants,
employees, executive officers and directors to purchase an aggregate of
7,500,000 shares of Common Stock at $.36 per share. However, in connection with
its proposed IPO, and in compliance with the provisions of its preliminary
agreement with Dirks & Company, the Company's board of directors has approved a
resolution to limit the total number of options that can be granted to 458,333.
The option term is ten years from the date of issuance and carries a "cashless
exercise" provision whereby the holder may exercise the option and may tender
payment for the option shares by surrendering a number of shares of Common Stock
whose value would equal the cash required to exercise an additional number of
options. Pursuant to this plan, the Company has granted options to purchase an
aggregate amount of 458,333 shares of Common Stock, which were outstanding as of
the date of this Memorandum. The table below lists the outstanding options
granted to all consultants, directors, employees and officers of the Company:
<TABLE>
<CAPTION>
RELATIONSHIP INCENTIVE STOCK
NAME TO COMPANY OPTIONS GRANTED
--------------- -------------- ----------------
<S> <C> <C>
John C. Homan CEO/President / Director 218,750
Frank Seifert Executive V.P./ Director - 0 -
Gary A. Rasmussen Consultant / Director 14,583
Alison Evans V.P. 58,333
Pamela Medley Former Employee 83,333
Dr. Donald Rodgers Medical Director - TVLCA 83,334
------------------ ------------------------ ---------
TOTAL OPTIONS GRANTED 458,333
</TABLE>
PRINCIPAL SHAREHOLDERS
There are currently 2,275,174 shares of Common Stock issued and outstanding, and
no Preferred Stock has been issued. The following table and notes thereto set
forth certain information regarding beneficial ownership of the Company's Common
Stock as of March 31, 1999, by (i) all those known by the Company to be
beneficial owners of more than 5% of the Company's Common Stock, (ii) all of the
Company's directors and executive officers, and (iii) all directors and
executive officers of the Company as a group. Pursuant to the rules of the
Commission, shares of Common Stock which an individual or group has a right to
acquire within sixty (60) days pursuant to the exercise of options or warrants
are deemed to be outstanding for the purpose of computing the percentage of
ownership of such individual or group, but are not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person shown in
the table. The percentage of ownership of the persons listed below assumes full
exercise of all Warrants offered as a part of the Units offered by the Company.
[TABLE TO FOLLOW]
33
<PAGE>
<TABLE>
<CAPTION>
AMOUNT OF SECURITIES BENEFICIALLY PERCENTAGE OF COMMON STOCK BENEFICIALLY
DIRECTORS, OFFICERS OWNED OWNED
AND 5% SHAREHOLDERS COMMON STOCK OPTIONS TOTAL PRIOR TO OFFERING AFTER OFFERING
- ---------------------- -------------------------------------- ------------------ --------------
<S> <C> <C> <C> <C> <C>
John C. Homan (1) 666,667 218,750 885,417 38.9% 31.9%
1720 Louisana Street
Suite 100
Albuquerque, NM 87110
Frank J. Seifert (2) 350,000 - 0 - 350,000 15.4% 12.6%
751 7th Ave.
San Diego, CA 92101
Gary A. Rasmussen - 0 - 14,583 14,583 * *
751 7th Avenue, Suite M
San Diego, CA 92101
Alison Evans (3) 74,074 58,333 132,407 5.8% 4.8%
1720 Louisana Street
Suite 100
Albuquerque, NM
Howard Silverman 391,667 - 0 - 391,667 17.2% 14.1%
1720 Louisana Street
Suite 100
Albuquerque, NM
TrueVision Laser Centers, Inc. 670,370 - 0 - 670,370 29.5% 24.3%
751 7th Avenue, Suite M
San Diego, CA 92101
- --------------------------------------------------------------------------------------------------------------------
All directors and executive
officers as a group (4 persons) 1,090,741 291,666 1,382,407 60.8% 49.8
- -------------------------------
</TABLE>
NOTES:
(1) Includes 41,667 shares of Common Stock owned by MTE/Triad, Inc., a company
which is 99% owned by Mr. Homan, but does not include 264,408 shares held by
TVLC in which Mr. Homan has an indirect beneficial interest in. (See "Principal
Shareholders - Securities Held By TrueVision Laser Centers, Inc.").
(2) Does not include 63,773 shares held by TVLC in which Mr. Seifert has an
indirect beneficial interest in. (See "Principal Shareholders - Securities Held
By TrueVision Laser Centers, Inc.").
(3) Does not include 4,783 shares held by TVLC in which Ms. Evans has an
indirect beneficial interest in. (See "Principal Shareholders - Securities Held
By TrueVision Laser Centers, Inc.").
SECURITIES HELD BY TRUEVISION LASER CENTERS, INC. Pursuant to the merger
transaction wherein the Company acquired an eighty-four (84%) percent interest
in TrueVision Laser Center of Albuquerque (now a subsidiary of the Company), the
Company issued 4,666,667 shares of Common Stock, plus warrants to purchase an
additional 4,666,667 shares of Common Stock (adjusted to reflect a one-for-four,
reverse split of the Company's shares on April 15, 1998) to TrueVision Laser
Centers, Inc. (TVLC). Pursuant to a resolution of TVLC's board of directors,
dated July 10, 1998, TVLC effectively transferred 1,500,000 shares and 840,000
shares of the Company's Common Stock to John C. Homan and Frank J. Seifert,
respectively, as consideration for past due wages, leaving TVLC with a balance
of 2,326,667 shares of the Company's Common Stock. After giving effect to the
one for 2.4 reverse stock split on March 31, 1999, the shares of the Company's
Common Stock transferred by TVLC to Mr. Homan and Mr. Seifert have been adjusted
to reflect 625,000 shares and 350,000 shares, respectively, and the Common Stock
now
34
<PAGE>
held by TVLC has been adjusted to reflect 670,370 shares. All warrants
previously held by TVLC have expired. The voting control of the Company's
securities held by TVLC is vested in the board of directors of TVLC, which is
comprised entirely by persons who are also directors of the Company. In other
words, the Company is under common control with TVLC.
The following table sets forth the stock ownership in TVLC, which is held by the
directors and officers of the Company, along with their respective positions and
titles with TVLC, and the effective indirect ownership of the Company's Common
Stock (calculated as though the securities were distributed to TVLC shareholders
on a pro-rata basis) held in the name of TVLC, as of March 31, 1999:
<TABLE>
<CAPTION>
EFFECTIVE INDIRECT OWNERSHIP
COMMON STOCK OF THE COMPANY'S
NAME TVLC POSITION BENEFICIALLY OWNED PERCENTAGE COMMON STOCK
- ------- -------------- ------------------- ----------- -------------
<S> <C> <C> <C> <C>
John C. Homan CEO, President, Director 1,658,446 (a) 39.44% 264,408
Frank Seifert Executive V.P., Director 400,000 9.51% 63,773
Gary Rasmussen Director - 0 - 0.00% - 0 -
Alison Evans V.P. 30,000 0.71% 4,783
- ------------- ----- ------ ----- --------
Directors and officers as a group 2,088,446 49.66% 332,964
</TABLE>
(a) Includes: 100,000 shares owned directly; 900,000 shares owned by the Homan
Family Trust, of which John Homan is the Trustee and beneficial owner;
600,000 shares owned by MTE/Triad, Inc., which is 100% owned by TVLC
Finance, Inc. (TVLC Finance, Inc. is 99% owned by John Homan); and 58,446
shares owned by TVLC Finance, Inc.
(99% owned by John Homan).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into a three year employment agreement with John Homan.
The terms of this agreement provide for a base salary for the fiscal year ended
September 30, 1999 of $96,000 and a bonus equal to ten percent of the net profit
from operations to be paid in cash or stock. The salary for each additional year
is to be the greater of the base salary of the previous year plus five percent
or seventy-five percent of the previous year's gross compensation. Further, the
Company has entered into a management continuity agreement with Mr. Homan that
provides for his continued involvement in his present capacity for three years
should a change of control of the Company occur.
Mr. Homan serves as president of TVLC Finance, Inc. ("TVLC Finance"), a Nevada
corporation. TVLC Finance is a specialty finance company that provides patient
financing and equipment leasing for the Company at competitive rates to the
market. In certain cases it is in a position to provide financing that may not
be available to the Company from other sources for certain transactions. TVLC
Finance also owns ninety-six percent of MTE/Triad, Inc., a Nevada corporation
("MTE/Triad") that has provided financing in the past to Truevision Laser
Centers of Albuqueurque, Inc. This financing was arranged by MTE/Triad through
the syndication of a private placement offering with Ophthalmologists and
Optometrists in New Mexico. In settlement of a dispute between the Company and
MTE/Triad regarding penalties for unpaid interest that was owed by TrueVision
Laser Centers of Albuquerque, Inc. for the period June 1996 through April 1998,
TVLC agreed to transfer 41,667 (as adjusted for the 1 for 4 reverse stock split)
of its shares of the Company to MTE/Triad. MTE/Triad agreed to waive any
penalties that may otherwise be due from the non-payment of this interest due.
Mr. Homan is president and a director of MTE/Triad and is the principal
shareholder of that company.
Mr. Homan also serves as president and a director TVLC. Until April 15, 1998,
TVLC held the eighty-six percent ownership interest in TrueVision Laser Centers
of Albuquerque, Inc. that was then acquired by the Company. As of that date,
TVLC ceased active operations and is presently evaluating its financial options.
However, it is precluded from operating laser vision centers in competition with
the Company.
35
<PAGE>
In March 1998, the Company entered into a consulting agreement with Wilbur F.
Noyes ("Mr. Noyes") for advisory services. The compensation for these services
is $4,000 per month for a period of two years ending in February 2000. In
addition Mr. Noyes was to receive warrants to purchase the Company's Common
Stock. On April 1, 1999, this agreement was modified. As modified, the agreement
eliminates the warrants to Mr. Noyes and converts a portion of the consulting
fees that had been earned but were unpaid into 17,500 shares of the Company's
Common Stock.
In April 1998, the Company entered into a consulting agreement with Dr. Howard
Silverman, that provided for compensation during 1998 of $5,000 per month.
Commencing in July 1999 the consulting fees increase to $7,000 per month. The
term of this agreement is three years, expiring in March 2001. To date, these
consulting fees have not actually been paid, but have accrued.
PLAN OF DISTRIBUTION
The Units are being offered on a "best efforts" basis by the Company's officers
and directors (without compensation). The Company reserves the right to utilize
selected registered securities broker-dealers and/or commissioned sales agents
to undertake the sale of its Units. However, as of the date of this Offering,
there are no agreements with any such broker-dealers or sales agents. Such
broker-dealers or sales agents may receive a sales commission of up to 10% for
any Units sold by them, plus a non-accountable expense allowance of 3%. No
commission will be paid for sales generated by the Company or its personnel.
There is no assurance that any or all of the Units will be sold. The Offering
will terminate on June 30, 1999, or earlier upon the sale of all 200 Units.
However, the Company reserves the right to terminate this Offering without
notice at any time prior to the sale of all of the Units, or to extend this
Offering without notice for a period of 90 additional days or as allowable by
securities laws. The aggregate offering price and number of Units offered hereby
was determined arbitrarily by the Company after considering the financial
condition of the Company, its business potential and the anticipated cash needs
for the next nine months. (See "Risk Factors", "Terms of the Offering" and
"Description of Securities")
SUMMARY OF PROMOTIONAL MATERIAL
The Company has summarized the Offering and portions of this Memorandum in an
Investment Summary for use in conjunction with the Offering. The Investment
Summary does not constitute an offer to sell or solicitation of any offer to buy
the Units. Such offers or solicitations of offers are made only through this
Memorandum.
LEGAL PROCEEDINGS
The Company is not involved in any legal proceedings as of the date of this
Memorandum.
LEGAL MATTERS
Certain legal matters in connection with the Offering will be passed upon for
the Company by Gregory Bartko, Esq., of the Law Office of Gregory Bartko, of
Atlanta, Georgia.
36
<PAGE>
INDEX TO FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS OF TRUEVISION INTERNATIONAL, INC.
Consolidated Balance Sheet as of September 30, 1998, and December 31, 1998
(unaudited)...................................................................
Consolidated Statement of Operations for the Fiscal Year ended September 30,
1998 & three months ended December 31, 1998 (unaudited).......................
37
<PAGE>
EXHIBIT F TRUEVISION INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 DECEMBER 31, 1998
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
ASSETS
Currents Assets:
Accounts Receivable $ 39,000 $ 97,000
Inventory 1,000 7,000
Other current assets 19,000 31,000
----------- -----------
Total current assets 59,000 135,000
Property and equipment, net 518,000 541,000
Goodwill 1,930,000 1,918,000
Other assets 6,000 5,000
----------- -----------
$ 2,513,000 $ 2,599,000
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 460,000 $ 613,000
Long-term liabilities 561,000 531,000
----------- -----------
Total liabilities 1,021,000 1,144,000
----------- -----------
Minority interest -- 1,000
Shareholders' equity:
Common stock 20,000 20,000
Additional paid-in capital 1,666,000 1,666,000
Retained Earnings (105,000) (163,000)
Net income (loss) (89,000) (69,000)
Total shareholders' equity 1,492,000 1,454,000
----------- -----------
$ 2,513,000 $ 2,599,000
----------- -----------
----------- -----------
</TABLE>
Page - 1
<PAGE>
TRUEVISION INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
SEPTEMBER 30, 1998 DECEMBER 31, 1998
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Revenue $ 1,385,000 $ 637,000
Cost of revenue 827,000 424,000
----------- ----------
558,000 213,000
Operating expenses:
General and administrative 341,000 137,000
Travel & Training 24,000 9,000
Sales and marketing 24,000 31,000
----------- ----------
Income (Loss) from operations 169,000 36,000
Other expense:
Interest expense, net 88,000 17,000
Depreciation & Amortization 170,000 88,000
----------- ----------
Net Loss $ (89,000) $ (69,000)
----------- ----------
----------- ----------
</TABLE>
Page - 2
<PAGE>
APPENDIX B - ALBUQUERQUE FINANCIAL RESULTS AND PROJECTIONS
The financial results for the preceding two years and the current quarter are
presented as Appendix A. Revenues were up 80% for FY 1998 compared to FY 1997,
far ahead of that reported by its competitor LVCI, mentioned previously in this
report. Further the $248,000 loss reported in FY 1997 was virtually eliminated
by FY 1998. Even more dramatic is that the running rate for the first fiscal
quarter of FY 1999 is 184% of the previous year, while the December 1998 running
rate of $2,311,000 is 231% of the previous year. Projections for the current
fiscal year are presented as Appendix B. Those projections suggest that the
Company may top $4.4 million in sales and more than $1.0 million in profit for
the current fiscal year. The Company implemented its new marketing programs in
November of 1998, which resulted in dramatically improved financial results by
December, reporting a profit of $16,000 compared to a loss of $68,000 for the
preceding quarter and a profit of $32,000 compared to a loss of $4,000 and
$8,000 for the preceding two months. The Company is adding a resident
optometrist in March and will hire a surgeon to work in Albuquerque and in the
soon to be opened Las Vegas office. In just the first quarter after changing to
the integrated format, these medical professionals are projected to add more
than $440,000 in sales at a cost of just $99,000. Further improvements in the
remaining quarters translate to increased profitability. Even more important is
the control that the Company will then have over the complete sales process. At
Appendix B, column 6, TrueVision has recast its projected FY1999 results to
demonstrate the dramatic effect that changing from a "membership" center to an
"integrated" center. This change would result nearly doubling profits and adding
more than $1.0 million of incremental profit.
The second largest variable cost incurred in operating the laser center is the
$260 per procedure royalty cost that is paid to the laser manufacturer.
Continued industry pressure on these manufacturers may result in the reduction
or elimination of these royalties. At Appendix B, column 7 the FY1999
projections are recast to show the impact of the elimination of these royalties,
should it occur. The combined effect of the elimination of the royalty and the
conversion to an integrated model will still result in a $1.5 million profit on
$3.2 million of revenues, or 48%!
The increasing popularity of laser vision correction may allow for a decrease in
per procedure pricing. At Appendix B, column 8, FY1999 has been recast to show
the result of reducing the per procedure price by $650 (or 33%) to $1,300 per
eye. Even with such a dramatic price reduction, the fully integrated model will
continue to produce more than $1.0 million of profit or a fifty percent pre-tax
profit.
ALBUQUERQUE FINANCIAL PROJECTIONS. The financial projections for the Albuquerque
center for the three-year period ended September 30, 2001 are shown at Appendix
B, C & D. Some of the assumptions used in these projections are listed below:
Total Equipment Cost
Laser $520,000
Other 137,000
Revenue per Eye
Year 1 $1,820
Year 2 1,300
Year 3 1,300
Member doctors receive one half of net revenue minus royalty
paid per procedure TrueVision doctors are employees
Surgeon $25,000 per month
Optometrist 8,000
Advertising is 5% of revenue.
An additional 5% of net profit is reserved for incentives to
be paid as year-end bonuses.
Additional 1/2 surgeon and full-time optometrist to be added
to third year costs.
SCHEDULE B1 - COMPARATIVE INCOME FOR FY 9/30/97, FY 9/30/98 AND QUARTER ENDED
12/31/98
SCHEDULE B2 - PROJECTED INCOME FOR FISCAL YEAR 1999
SCHEDULE B3 - PROJECTED INCOME FOR FISCAL YEAR 2000
SCHEDULE B4 - PROJECTED INCOME FOR FISCAL YEAR 2001
Page - 3
<PAGE>
Page - 4
<PAGE>
APPENDIX C - CONSOLIDATED PROJECTED INCOME STATEMENT AND
NEW CENTER EXPANSION PROGRAM
NEW TRUEVISION CENTERS. As a result of its existing participation in the LVC
industry, the Company has developed a comprehensive strategy to develop
"integrated" centers that not only will result in a dramatic improvement in the
revenues that it generates from LVC, but will also result in much greater
profits from operations. Implementation of the first phase of this strategy
occurred in Albuquerque in November 1997. Phase two will occur in February 1999,
with the final phase occurring in April 1999. A new center is being planned for
opening in April 1999. This center, to be located in Las Vegas, NV will
implement this comprehensive strategy at its opening. The Company anticipates
opening additional centers during 1999 after taking time to assure that it can
successfully implement its strategy in the Las Vegas market. Current plans call
for the opening of four additional centers during 1999. Opening dates are
currently targeted for April, July, October and December respectively.
NEW CENTER PROFILE. New centers will be located in high profile locations near
major population centers and have an upscale retail character and outstanding
outdoor signage. Each center will consist of a combination seminar conference
facility that can seat approximately fifty prospective patients. These
facilities will be equipped with sophisticated multi-media presentation
capabilities and the ability to demonstrate the procedures to the prospects in
real time. In addition, each facility will be equipped with an upscale waiting
area, combination informed consent - sales areas, front and back office space,
exam and treatment facilities and laser rooms. The average facility will occupy
from 3,500 to 4,500 ft of space.
Each will employ an optometrist and a surgeon to perform laser vision correction
and other procedures. Each center will also employ appropriate medical support
personnel, administrative personnel and marketing and sales professionals. Each
will be backed up with a regional inside sales function. The inside sales
function will handle responses to advertisements as well as serve as an out
bound appointment-setting vehicle. It will be responsible for scheduling free
evaluations at the center, as well as booking guests for seminars. Seminars will
be conducted three evenings per week and on weekends. It is anticipated that
approximately 100 prospects will be introduced to the Company's technologies per
week.
FINANCIAL PROJECTIONS. The financial projections for a sample new center are
shown at Appendix E. Some of the assumptions used in these projections are
listed below:
Total Equipment Cost
Laser $552,000
Other 264,000
Revenue per Eye
Year 1 $1,500
Year 2 1,300
Year 3 1,300
Member doctors receive one half of net revenue minus royalty
paid per procedure
TrueVision doctors are employees
Surgeon $25,000 per month
Optometrist 8,000
Advertising is $20,000 per month plus 5% of revenue for first
six months, 5% of revenue thereafter.
An additional 5% of net profit is reserved for incentives to
be paid as year-end bonuses.
Additional 1/2 surgeon and full-time optometrist to be added
to third year costs.
TRUEVISION INTERNATIONAL CONSOLIDATED RESULTS. TrueVision intends to expand its
Network of centers in 1999 and beyond with the establishment of new centers in
larger metropolitan markets. The consolidated financial projections reflected on
Schedules C-2, C-3 & C-4 represent centers being added on the following
schedule:
Page - 5
<PAGE>
July 1999 Open Center 2
October 1999 Open Center 3
December 1999 Open Center 4
February 2000 Open Center 5
April 2000 Open Center 6
June 2000 Open Center 7
August 2000 - May 2001 Open One Center Per Month (Total 18)
June 2001 - September 2001 Open Two Centers Per Month (Total 26)
October 2001 - March 2002 Open Three Centers Per Month (Total 44)
The total expenditure for Administrative and Marketing costs are recorded at
1.0% and 6.5% respectively and will be used to fund the requirements of the
corporate infrastructure. It is assumed that this level of funding is sufficient
to meet all of the financial needs of the corporate infrastructure
<TABLE>
<S> <C>
SCHEDULE C-1 PROJECTED NEW CENTER INCOME STATEMENT
SCHEDULE C-2 CONSOLIDATED PROJECTED INCOME, FISCAL YEAR ENDED SEPTEMBER 30, 1999
SCHEDULE C-3 CONSOLIDATED PROJECTED INCOME, FISCAL YEAR ENDED SEPTEMBER 30, 2000
SCHEDULE C-4 CONSOLIDATED PROJECTED INCOME, FISCAL YEAR ENDED SEPTEMBER 30, 2001
</TABLE>
Page - 6
<PAGE>
Page - 7
<PAGE>
EXHIBIT "A"
FORM OF PROMISSORY NOTE
TRUE VISION INTERNATIONAL, INC.
13% PROMISSORY NOTE
$25,000 Albuquerque, New Mexico
April ___, 1999
FOR VALUE RECEIVED, the undersigned, True Vision International, Inc., a
Nevada corporation (the "Maker"), hereby promises to pay to the order of
________________ (the "Payee"), at Payee's address at
______________________________, or such other address which Payee may specify by
written notice to Maker, in Federal or other funds immediately available at the
Payee's address, the principal sum of TWENTY-FIVE THOUSAND DOLLARS ($25,000.00),
together with interest, as described below.
This Note has been executed and delivered pursuant to, and is subject
to and governed by, that certain Subscription Agreement (the "Subscription
Agreement") dated as of April ___, 1999, by and between Payee and Maker, as
amended and modified from time to time. This Note is the "Note" referred to in
the Subscription Agreement and the Maker's Offering Memorandum dated April __,
1999. Unless otherwise defined in this Note or unless the context of this Note
otherwise requires, capitalized terms not otherwise defined in this Note have
the meanings ascribed to them in the Subscription Agreement. The interest on
this Note shall be payable as it accrues on the principal balance on May 1, 1999
and on the first day of each calendar month thereafter (unless the first day of
the month is not a Business Day, then on the next succeeding Business Day) until
maturity of the Note. The entire principal balance of this Note and all accrued
but unpaid interest on this Note shall be due and payable on April 15, 2000.
Interest shall be computed based on the number of actual days
elapsed, but assuming a calendar year of 360 days. Subject to the terms and
conditions of the Subscription Agreement, Maker shall be entitled to prepay the
principal of this Note from time to time and at any time, in whole or in part,
without penalty.
Upon the occurrence and during the continuance of an Event of Default,
and upon the conditions stated in the Subscription Agreement, the holder of this
Note (the "Holder") may, at its option, declare the entire unpaid principal of
and accrued interest on this Note immediately due and payable (provided that,
upon the occurrence of certain Events of Default, and upon the conditions stated
in the Subscription Agreement, such acceleration shall be automatic), without
notice, demand, or presentment, all of which are hereby waived, and the Holder
shall have the right to offset against this Note any sum or sums owed by the
Holder to Maker. Interest shall accrue on any amounts that are past due on this
Note from the date due until paid at the Default Rate of eighteen (18%) per
annum; provided that in no event shall the rate charged under this Note exceed
the Maximum Lawful Rate.
If at any time the rate of interest calculated under this Note (the
"Note Rate") exceeds the Maximum Lawful Rate, the rate of interest under this
Note shall be limited to the Maximum Lawful Rate, but any subsequent reductions
in the Note Rate shall not reduce the rate of interest on this Note below the
Maximum Lawful Rate until the total amount of interest accrued equals the amount
of interest which would have accrued if the Note Rate had at all times been in
effect. If at the maturity (stated or by acceleration) or at the final payment
of this Note the total amount of interest paid or accrued on this Note is less
than the amount of interest which would have accrued if the Note Rate had at all
times been in effect with respect thereto, then at such time the Maker shall pay
to the Holder an amount equal to the difference between (a) the lesser of the
amount of interest which would have accrued if the Note Rate had at all times
been in effect and the amount of interest which would have accrued if the
Maximum Lawful Rate had at all times been in effect, and (b) the amount of
interest actually paid or accrued on this Note.
Maker, and each surety, endorser, guarantor, and other party ever
liable for payment of any sums of money evidenced by this Note, jointly and
severally waive presentment and demand for payment, protest, notice of protest
and nonpayment, and notice of acceleration and the intention to accelerate, and
agree that their liability on this Note shall not be affected by any renewal or
extension in the time of payment hereof, by any indulgences, or by any release
or change in any security for the payment of this Note, and hereby consent to
any and all renewals, extensions,
Page - 8
<PAGE>
indulgences, releases, or changes, regardless of the number of such renewals,
extensions, indulgences, releases or changes.
THIS NOTE AND THE OTHER TRANSACTION DOCUMENTS COLLECTIVELY REPRESENT
THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES
True Vision International, Inc.
By:
-----------------------------------
Name: John C. Homan
Title: Chief Executive Officer
Page - 9
<PAGE>
EXHIBIT "B"
FORM OF WARRANT
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF, HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. NO SALE, TRANSFER OR OTHER DISPOSITION OF THIS
WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (I) AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO, OR (II) AN OPINION OF COUNSEL FOR THE HOLDER,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK OF
TRUEVISION INTERNATIONAL, INC.
(VOID AFTER APRIL 15, 2004)
THIS CERTIFIES THAT, for value received, ___________________________
is entitled to subscribe for and purchase from TrueVision International,
Inc., a Delaware corporation ("Company"), ______ of the Company's $.001 par
value, Common Stock (as adjusted pursuant to provisions hereof, the
"Shares"), for cash or cashier's or certified check at a price per share of
$8.40 (such price and such other price as shall result, from time to time,
from adjustments specified herein is herein referred to as the "Warrant
Price"), at any time on or before April 15, 2004 ("Expiration Date"), subject
to the provisions and upon the terms and conditions hereinafter set forth.
1. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT. The purchase right
represented by this Warrant may be exercised by the holder hereof (the
"Holder"), in whole or in part, at any time and from time to time prior to the
Expiration Date, by the surrender of this Warrant (with the Notice of Exercise
form attached hereto as Schedule 1, duly filled in and signed) at the principal
office of the Company, and the payment to the Company, by cash or cashier's or
certified check, of an amount equal to the then applicable Warrant Price per
share multiplied by the number of Shares then being purchased. The person or
persons in whose name(s) any certificate(s) representing shares of Common Stock
shall be issuable upon exercise of this Warrant shall be deemed to have become
the Holder(s) of record of, and shall be treated for all purposes as the record
Holder(s) of, the shares represented thereby (and such shares shall be deemed to
have been issued) immediately prior to the close of business on the date or
dates upon which this Warrant is exercised. In the event of any exercise of the
rights represented by this Warrant, certificates for the Shares so purchased
shall be delivered to the Holder hereof as soon as possible and in any event
within thirty (30) days of receipt of such notice and, unless this Warrant has
been fully exercised or expired, a new Warrant representing the portion of the
Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the Holder hereof as soon as possible and in
any event within such thirty-day period.
2. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares that may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance, be
fully paid and nonassessable, and free from all taxes, liens and charges with
respect to the issue thereof. During the period within which the rights
represented by the Warrant may be exercised, the Company will at all times have
authorized and reserved for the purpose of issuance upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Common Stock to provide for the exercise of the right represented by this
Warrant.
3. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. In case of any changes in
the outstanding shares of Common Stock or other shares at any time receivable
upon exercise of this Warrant by reason of stock dividends, split ups,
recapitalizations, reclassifications, mergers, consolidations, combinations or
exchanges of shares, separations, reorganizations, liquidations, or the like,
the number and class of shares available under this Warrant in the aggregate and
the Warrant Price shall be correspondingly adjusted, as appropriate, by the
Company. The adjustment shall be such as will give the Holder of this Warrant on
exercise for the same aggregate Warrant Price the total number, class and kind
of shares as he would have owned had he continued to hold such shares until
after the event requiring adjustment.
4. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price shall be adjusted pursuant
to the provisions hereof, the Company shall within thirty (30) days of such
adjustment deliver a certificate signed by its Corporate Secretary to the
registered Holder(s) hereof setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the
Page - 10
<PAGE>
adjustment, the method by which such adjustment was calculated, and the Warrant
Price after giving effect to such adjustment.
5. FRACTIONAL SHARES. No fractional shares of Common Stock will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Warrant
Price then in effect.
6. COMPLIANCE WITH SECURITIES ACT. The Holder of this Warrant, by acceptance
hereof, agrees that this Warrant and the shares of Common Stock to be issued
upon exercise hereof are being acquired for investment and that such Holder will
not offer, sell or otherwise dispose of this Warrant or any shares of Common
Stock to be issued upon exercise hereof except under circumstances which will
not result in a violation of the Securities Act of 1933, as amended (the "Act"),
or applicable state securities laws. This Warrant and all shares of Common Stock
issued upon exercise of this Warrant (unless registered under the Act and
applicable state securities laws) shall be stamped or imprinted with a legend in
substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY TAKE
PLACE WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, OR (ii)
AN OPINION OF COUNSEL FOR THE HOLDER, WHICH IS REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
7. SHAREHOLDER RIGHTS. No Holder of the Warrant, as such, shall be entitled to
vote or receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
thereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder of this Warrant, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to receive
notice of meetings, or to receive dividends or subscription rights or otherwise
until this Warrant shall have been exercised and the Shares purchasable upon the
exercise hereof shall have become deliverable, as provided herein.
8. REGISTRATION RIGHTS. If and at such time as the Company elects to register
any of its Common Stock under the Securities Act of 1933, the Company shall
register under the Securities Act of 1933 any Shares issued upon the exercise of
this Warrant. The Company shall not be obligated, however, to register any of
its shares under the Securities Act of 1933 or take any affirmative action in
order to cause the Holder's sale of Shares to comply with any law except as
specifically provided in this paragraph.
9. REPRESENTATIONS AND WARRANTIES. This Warrant is issued and delivered on the
basis of the following:
(a) This Warrant has been duly authorized and executed by the Company
and when delivered will be the valid and binding obligation of the Company
enforceable in accordance with its terms;
(b) The Shares have been duly authorized and reserved for issuance by
the Company and, when issued in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable; and
(c) The execution and delivery of this Warrant are not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Articles of
Incorporation or Bylaws, do not and will not contravene any law, governmental
rule or regulation, judgment or order applicable to the Company, and do not and
will not contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound or require the consent or approval of, the giving
of notice to, except such notice which may be required under applicable state
and federal securities laws, the registration with or the taking of any action
in respect of or by, any Federal, state or local government authority or agency
or other person.
10. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
11. NOTICES. Any notice, request or other document required or permitted to be
given or delivered to the Holder hereof or the Company shall be delivered, or
shall be sent by first class mail, postage prepaid, to each such Holder at its
address as shown on the books of the Company or to the Company at the address
indicated therefore on the signature page of this Warrant.
Page - 11
<PAGE>
12. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets, and all of the obligations of
the Company relating to the Common Stock issuable upon the exercise of this
Warrant shall survive the exercise and termination of this Warrant and all of
the covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the holder hereof.
13. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of
this Warrant are inserted for convenience only and do not constitute a part of
this Warrant.
14. GOVERNING LAW. This Warrant shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the state
of Delaware, regardless of the fact that one or more of the parties is now, or
may become, a resident of or domiciled in another jurisdiction.
15. FURTHER ASSURANCES. The parties covenant that they will execute such other
and further instruments and documents as are or may become necessary or
convenient to effectuate and carry out this Warrant.
TRUEVISION INTERNATIONAL, INC.
BY:
--------------------------------------
JOHN C. HOMAN
TITLE: PRESIDENT
ADDRESS: 1720 LOUISIANA STREET, SUITE 100
ALBUQUERQUE, NEW MEXICO 87110
DATE: , 1999.
-------------------
Page - 12
<PAGE>
SCHEDULE 1
NOTICE OF EXERCISE
TO: TRUEVISION INTERNATIONAL, INC.
1. The undersigned hereby elects to purchase ______ shares of Common Stock of
TrueVision International, Inc., pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price of such shares of Common
Stock in full.
2. Please issue a certificate or certificates representing said shares of Common
Stock in the name of the undersigned or in such other name or names as are
specified below:
(Name)
--------------------------
(Address)
--------------------------
--------------------------
--------------------------
3. THE UNDERSIGNED REPRESENTS THAT THE AFORESAID SHARES OF COMMON STOCK ARE
BEING ACQUIRED FOR THE ACCOUNT OF THE UNDERSIGNED FOR INVESTMENT PURPOSES ONLY
AND NOT WITH A VIEW TOWARD, OR FOR RESALE IN CONNECTION WITH, THE DISTRIBUTION
THEREOF AND THAT THE UNDERSIGNED HAS NO PRESENT INTENTION OF DISTRIBUTING OR
RESELLING SUCH SHARES OF COMMON STOCK ACQUIRED.
(Signature)
--------------------------
(Date)
--------------------------
Page - 13
<PAGE>
EXHIBIT "C"
FOR OFFICE USE ONLY
- ------------------------------------------------------
BROKER/DEALER NAME & ADDRESS
- ------------------------------------------------------
Investor: ____________
Investor #:____________
SUBSCRIPTION AGREEMENT
FOR
TRUEVISION INTERNATIONAL, INC.
REGULATION D, RULE 506, OFFERING
13% NOTES DUE APRIL 15, 2000
DENOMINATED IN $5,000 INCREMENTS
WITH COMMON STOCK WARRANTS ATTACHED
PERSONS INTERESTED IN PURCHASING UNITS OF TRUEVISION INTERNATIONAL,
INC. ("ISSUER") MUST COMPLETE AND RETURN THIS SUBSCRIPTION AGREEMENT ALONG WITH
THEIR CHECK OR MONEY ORDER TO:
TRUEVISION INTERNATIONAL, INC.
TRUEVISION INTERNATIONAL, INC.
1720 Louisiana Blvd., Suite 100
Albuquerque, New Mexico 87110
Phone: (877) 878-3847, or (505) 256-3534
Fax: (505) 256-3521, E-mail: [email protected]
Subject only to acceptance hereof by the Issuer in its discretion, the
undersigned hereby subscribes for the number of Units and at the aggregate
subscription price set forth below.
An accepted copy of this Agreement will be returned to the Subscriber
as a receipt, and the physical Note and Warrant certificates shall be delivered
to each Subscriber within sixty (60) days of the date the Subscription Agreement
is accepted by the Issuer.
SECURITIES OFFERED - The Company is offering 13% Notes Due April 15,
2000 denominated in $5,000 increments, with 2,500 Warrants attached for each
Note (offered as "Units"), entitling the holder of the Note and Warrants to
acquire 2,500 additional shares of the Company's Common Stock at an exercise
price of $8.40 per share. The Warrants have a term of five years from the date
of issuance. The total aggregate offering amount is $1,000,000.
MINIMUM SUBSCRIPTION - The minimum subscription amount per purchaser is
five Units, which equals $25,000 in principal amount of the Notes. In connection
with this subscription the undersigned hereby subscribes to the number of Units
shown in the table set forth below.
LIMITATIONS IN CERTAIN STATES - Depending on the state of residence of
a Subscriber, there may be certain purchaser suitability qualifications and
numerical limitations imposed on the Issuer in order to qualify the offering as
exempt from securities registration within such state(s). All Subscriptions
shall be subject to all applicable state securities laws and regulations.
<TABLE>
<S> <C>
NUMBER OF UNITS =
-----------
MULTIPLY BY UNIT PRICE = X $5,000 PER UNIT
-----------------
AGGREGATE SUBSCRIPTION PRICE = $
-----------
</TABLE>
Page - 14
<PAGE>
TrueVision International, Inc.
Subscription Agreement
Page 2
Check or money order shall be made payable to: TRUEVISION
INTERNATIONAL, INC.
In connection with your purchase of the Units from the Company, I/we
represent and warrant as follows:
a) Prior to tendering payment for the Units, I received a copy of and
read the Company's Confidential Private Placement Memorandum dated
April 6, 1999.
b) I am a bona fide resident of the state of _________________________.
c) In the event that it becomes necessary to prepare and deliver to the
Issuer a Purchaser Suitability Questionnaire ("Questionnaire") as a
requirement of state or federal securities laws, all of the
information contained in such Questionnaire is correct and accurate as
of the date thereof and may be relied upon by the Issuer in complying
with all applicable state securities laws and regulations.
d) The Issuer and the other purchasers are relying on the truth and
accuracy of the declarations, representations and warranties herein
made by the undersigned. Accordingly, the foregoing representations
and warranties and undertakings are made by the undersigned with the
intent that they may be relied upon in determining his/her suitability
as a purchaser. Investor agrees that such representations and
warranties shall survive the acceptance of the investor as a
purchaser, and the investor indemnifies and agrees to hold harmless,
the Issuer, its agents, officers, directors, and its financial
consultants or advisors, and each other purchaser from and against all
damages, claims, expenses, losses or actions resulting from the
untruth of any of the warranties and representations contained in this
Subscription Agreement.
Please register the Units that I/we am purchasing as follows:
Name(s)__________________________________________ Date: April ___, 1999
As (check one):
____Individual ____Tenants-in-Common ____Existing Partnership
____Joint Tenants ____Corporation ____Trust
____Minor with adult custodian under the Uniform Gift to Minors Act
____Tenants By The Entireties
For the person(s) who will be registered Note and Warrant holder(s):
- ------------------------------ -------------------------------
Signature of Subscriber Residence Address
- ------------------------------ ------------------------------
Name of Subscriber City or Town
- ------------------------------ -------------------------------
Signature of Co-Subscriber State Zip Code
- ------------------------------ -------------------------------
Name of Co-Subscriber Telephone Number
- ------------------------------ -------------------------------
Subscriber Tax I.D. or Co-Subscriber Tax I.D. or
Social Security Number Social Security Number
ACCEPTED BY TRUEVISION INTERNATIONAL, INC.
BY:___________________________ Date: April ___, 1999
John C. Homan, President
Page - 15
<PAGE>
EXHIBIT "D"
CONFIDENTIAL PROSPECTIVE PURCHASER QUESTIONNAIRE
THIS QUESTIONNAIRE IS TO BE COMPLETED BY EACH PERSON WHO DESIRES TO INVEST IN
TRUEVISION INTERNATIONAL, INC. (THE "COMPANY"). THIS MATERIAL DOES NOT
CONSTITUTE AN OFFER TO SELL NOR IS IT A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES. THE OFFERING WILL BE MADE SOLELY PURSUANT TO THE TERMS AND
CONDITIONS OF THE PRIVATE PLACEMENT MEMORANDUM WHICH CONTAINS MATERIAL
INFORMATION REQUIRED TO BE REVIEWED IN CONNECTION WITH ANY INVESTMENT DECISION.
***************************
INSTRUCTIONS
This Questionnaire is being given to each person who has expressed an interest
in investing in the Private Placement Memorandum cited above. The purpose of
this Questionnaire is to determine whether you meet certain standards, because
the securities of the Company HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933 AS AMENDED (THE "SECURITIES ACT"). PLEASE CAREFULLY
REVIEW THE INFORMATION PROVIDED WITHIN THE PRIVATE PLACEMENT MEMORANDUM
CAREFULLY BEFORE PROCEEDING WITH THIS QUESTIONNAIRE. The Common Stock of the
Company, as well as the Notes and Warrants are referred to herein as the
"Securities".
Your answers will be kept confidential by the Company at all times, however, you
hereby agree that the Company may present this Questionnaire to such parties as
it deems appropriate in order to assure itself that the offer and sale of shares
to you will not result in a violation of federal or state securities laws which
are being relied upon by the Company in connection with the offer and sale
thereof.
PRINT OR TYPE YOUR RESPONSE
Page - 16
<PAGE>
Page - 17
<PAGE>
INSTRUCTIONS: Please type or clearly print your answer, and state "no" or "not
applicable" when appropriate. Please complete Section A and each other Section
you are requested to complete in Question A3. If there is insufficient space for
any of your answers, please attach additional pages. If the Units are to be
owned by more than one individual or by a corporation or partnership, you may
need extra copies from this Questionnaire. You may use photocopies or request
extra copies from the Company.
SECTION A: SUBSCRIBER INFORMATION
A1. NAME(S) OF SUBSCRIBER(S):
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
<TABLE>
<S> <C>
A2. PRINCIPAL AMOUNT OF UNITS SUBSCRIBED FOR: $
----------------------------------------------------------------------
A3. MANNERS OF OWNERSHIP OF SECURITIES:
One Individual Please complete Section A, B, C and, if applicable D, E and F.
----------
Husband and wife Tenants by Please have one spouse complete Section A, B, C
---------- the Entirety and if applicable, D, E and F. Please have both spouses complete
Section C.
Tenants in Common Please have each individual separately complete
---------- Section A, B, and C and if applicable, D, E and F.
Joint Tenants with Right of Please have each individual separately complete
---------- Survivorship two or More Section A, B, and C and if applicable, D, E, and F.
Individuals (but not husband and
wife)
----------
Corporate Ownership Please complete Section A, B, D and, if applicable, E
---------- and F for the corporation. Please haveeach person who own an
equity interest in the separately complete Sections B and, if
applicable, C, D, E and F.
Partnership Ownership Please complete Sections A, B and D, and each
---------- general partner and limited partner separately complete Section
B, C, D, E and F, if applicable.
Trust Ownership Please complete Sections A, B and F, if applicable,
---------- have each beneficiary and trustee of the trust separately complete
Sections B, C, D, E and F, if applicable.
</TABLE>
Page - 1
<PAGE> Page - 2
<PAGE>
SECTION B: INDIVIDUAL INFORMATION
B1. GENERAL INFORMATION:
Name:
-----------------------------------------------------------------
-----------------------------------------------------------------
Age: Social Security Number:
-------------------- ---------------------
If the Securities are to be owned by two or more individual (not husband and
wife), are you related to any other co-owner(s)?
Yes No
- -------------- ------------------
If yes, please explain the relationship(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B2. PRINCIPAL RESIDENCE:
Address:
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
Mailing Address (if other than Principal Residence above):
Address:
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
Telephone Number: (------)-------------------------
B3. CURRENT EMPLOYER OR BUSINESS ACTIVITY:
Company Name:
----------------------------------------------------------------
Address:
----------------------------------------------------------------
----------------------------------------------------------------
Telephone Number: (------)-------------------------
Principal Business:
------------------------------------------------------------
Position and Title:
------------------------------------------------------------
Page - 1
<PAGE>
Description of Duties and Responsibilities:
------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Length of Time in Present Position:
--------------------------------------------
Is company publicly owned? Yes No
-------- --------
B4. EDUCATION:
Please describe your business or professional education or training, listing any
schools you have attended and degrees you have received.
Dates School Major Degrees (if any)
- ----- ------ ----- ----------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B5. PRIOR EMPLOYMENT OR BUSINESS ACTIVITY:
Please describe your prior employment or principal business activities during
the last five years, providing all information requested below.
Company Name Principal Position Description of Duties
and Address & Title and Responsibilities
- ----------- ------- --------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B6. FINANCIAL STATEMENT will be provided by the undersigned if requested by the
Company.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page - 2
<PAGE>
B7. NET WORTH, inclusive of the net worth of your spouse and the value of your
principal residence, furnishings therein and personal automobiles:
IT IS IMPORTANT THAT YOU CHECK THE HIGHEST APPLICABLE AMOUNT
<TABLE>
<S> <C> <C>
( ) Less than $100,000 ( ) $200,000 to $249,000 ( ) $700,000 to $799,000
( ) $100,000 to $149,000 ( ) $250,000 to $349,000 ( ) $800,000 to $1,000,000
( ) $150,000 to $199,000 ( ) $350,000 to $699,000 ( ) over $1,000,000
</TABLE>
B8. NET WORTH: Your net worth, inclusive of the net worth of your spouse and
excluding the value of your principal residence, furnishings therein and
personal automobiles:
IT IS IMPORTANT THAT YOU CHECK THE HIGHEST APPLICABLE AMOUNT
<TABLE>
<S> <C> <C>
( ) Less than $100,000 ( ) $200,000 to $249,000 ( ) $700,000 to $799,000
( ) $100,000 to $149,000 ( ) $250,000 to $349,000 ( ) $800,000 to $1,000,000
( ) $150,000 to $199,000 ( ) $350,000 to $699,000 ( ) over $1,000,000
</TABLE>
B9. INCOME: (a) individual income from all sources for the calendar years 1995
and 1996 estimated income for 1997 or (b) your joint income with your spouse
from all sources for the calendar year 1995 and 1996 and estimated income for
1997.
IT IS IMPORTANT THAT YOU CHECK THE HIGHEST APPLICABLE AMOUNT
(A) INDIVIDUAL INCOME:
<TABLE>
<CAPTION>
$60,000 $100,001 $150,000 $200,000 $300,000
to to To to and
$100,000 $149,999 $199,999 $299,000 over
<S> <C> <C> <C> <C> <C>
1997 ( ) ( ) ( ) ( ) ( )
1998 ( ) ( ) ( ) ( ) ( )
1999 (est.) ( ) ( ) ( ) ( ) ( )
(B) JOINT INCOME:
$60,000 $100,001 $150,000 $200,000 $300,000
to to To to and
$100,000 $149,999 $199,999 $299,000 over
1997 ( ) ( ) ( ) ( ) ( )
1998 ( ) ( ) ( ) ( ) ( )
1999 (est.) ( ) ( ) ( ) ( ) ( )
</TABLE>
Page - 3
<PAGE>
B10. TAXES:
(a) Was some portion of your income during your last taxable year taxed at the
highest rate for federal income tax purposes?
Yes No
- -------- --------
(b) Do you anticipate that some portion of your income during your current
taxable year will be taxed at the highest rate for federal income tax purposes?
Yes No
- -------- --------
B11. INVESTMENT EXPERIENCE:
(a) The frequency with which you invest in MARKETABLE securities is:
( ) often ( ) occasionally ( ) never
(b) The frequency with which you invest in UNMARKETABLE securities is:
( ) often ( ) occasionally ( ) never
Page - 4
<PAGE>
SECTION C: CORPORATE OFFEREES OR PARTNERSHIP OFFEREES
C1. LEGAL NAME OF CORPORATION OR PARTNERSHIP:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Fictitious Name:
--------------------------------------------------------------
State of Incorporation: Federal ID Number:
------------------- ----------------
Fiscal Year Ends: Number of Equity Owners:
------------------------- ----------
Name and Title of Executive Officer Executing Questionnaire:
------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
C2. BUSINESS ADDRESS:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Mailing Address (if different):
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Telephone Number: ( ) Fax Number: ( )
--------------------------- ----------------------
- -------------------------------------------------------------------------------
C3. NAME OF PRIMARY BANK:
--------------------------------------------------
- -------------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Telephone Number: ( ) Account Type and Number:
-------------------------
-------------------------------------
-------------------------------------
Person Familiar with your Account:
--------------------------------------------
C4. Was the corporation or partnership formed for the specific purpose of
purchasing securities?
Yes No
- --------------- ----------
Check if applicable for the corporation:
Page - 5
<PAGE>
Subchapter S Professional
- --------------- ------------
C5. THE UNDERSIGNED REPRESENTS AND WARRANTS AS FOLLOWS:
(a) The corporation or partnership, as the case may be, has been duly
incorporated or formed (if a partnership) is validly existing as a
corporation or partnership in good standing under the laws of the
jurisdiction of its incorporation or formation with full power and
authority to enter into the transactions contemplated by the
Subscription Agreement;
(b) (i) The officers or partners of the undersigned who, on behalf of the
undersigned, have considered the purchase of the shares and the
advisors, if any, of the corporation or the partnership, as the case may
be, in connection with such consideration, are named below in this
Questionnaire, and such officers and advisors or partners, if any, were
duly authorized to act for the Corporation of the partnership in
reviewing such investment:
(ii) The names and positions of the officers or partners, of the
undersign who, on its behalf, have reviewed the purchase of the Share(s)
are as follows:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(iii) In evaluating the merits and risk of the purchase of the shares,
the Corporation or the partnership, as the case may be intends to rely
upon the advice of, or will consult with the following persons:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(c) The officers of the Corporation (if not accredited investors) or the
partnership who, on its behalf, have considered the purchase of the shares
and advisors, if any, of the corporation or the partnership who, in
connection with such consideration, together have such knowledge and
experience in financial and business matters that such officers, partners
and such advisors, if any, together are capable of evaluating the merits and
risks of the purchase of the shares and of making an informed investment
decision;
(d) Together with any corporation or group of corporations with which it
files a consolidated federal income tax return, the undersigned has reserves
and/or net worth adequate to permit it to satisfy any tax or other
liabilities arising from its personal liability with respect to the
investment and the operation thereof;
(e) The net worth of the corporation or the partnership is in excess of
$ ;
---------------
(f) The corporation or the partnership has had, during each of its two years,
gross income from all sources of at least $____________,and
$______________respectively;
(g) The undersigned expects the corporation or the partnership to have during
the current and the next year, gross income from all sources of at least
$_________; and
(h) The undersigned knows of no pending or threatened litigation the outcome of
which could adversely affect the answers to any question hereunder;
(i) Indicate the following if a partnership offeree: _________________________
(1) The date _____ the partnership was formed and the state of formation
--------------
Page - 6
<PAGE>
------------------------------------------
(2) The names of each partner:
------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
PLEASE HAVE EACH INDIVIDUAL PARTNER EXECUTE A SEPARATE QUESTIONNAIRE.
Page - 7
<PAGE>
SECTION D. TRUST OFFERS
D1. GENERAL INFORMATION:
----------------------------------------------------
Legal name:
-------------------------------------------------------------------
-------------------------------------------------------------------
State of Formation: Date of Formation:
---------------------------- ---------------
-------------------------------------------------------------------
Federal ID. No.: Fiscal Year Ends: No. of Beneficiaries:
---------- -------- ----
-------------------------------------------------------------------
Principal Purpose:
-------------------------------------------------------------
Was the trust formed for the specific purpose of purchasing shares? Yes No
--- ---
D2. BUSINESS ADDRESS:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
Mailing Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
Telephone Number:( ) Fax Number: ( )
----------------------------- --------------------
D3. AUTHORIZATION:
If the trust was established in connection with a deferred compensation plan,
please attach a copy of the trust organizational documents and a properly
certified copy of the resolutions adopted by the trust's Board of Directors
authorizing the trust to purchase shares and authorizing the trustee named
below to execute on behalf of the trust all relevant documents necessary to
subscribe for an purchase shares. In all cases, please attach a properly
certified copy of the resolution adopted by the trustees of the trust
authorizing the trust to purchase shares and authorizing the trustee to
execute on behalf of the trust all relevant documents necessary to subscribe
for and purchase shares.
Name of Authorized Trustee:
---------------------------------------------------
D4. NAME OF PRIMARY BANK:
---------------------------------------------------
Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Page - 8
<PAGE>
- -------------------------------------------------------------------------------
Telephone Number: ( ) Fax Number: ( )
------------------------------ -------------------
Account Type and Number:
------------------------------------------------------
------------------------------------------------------
Person Familiar with Your Account:
---------------------------------------------
SECTION E. QUALIFIED PENSION PLAN ("PLAN") OFFERS
E1. PLEASE INITIAL THE APPROPRIATE SPACE BELOW:
a. The plan requires the investment of each beneficiary or a
- ------ participant to be held in a segregated account and the plan
allows each beneficiary or participant to make his own investment
decisions and the decision to purchase the shares has been made
by the beneficiary or participant. (Please have each such
beneficiary or participant execute a separate Questionnaire.)
OR
b. The investment decision made for the Plan are made by a Plan
- ------ fiduciary, whether a bank, an insurance company, or a registered
investment advisor.
OR
c. The Plan has total assets exceeding $5,000,000.
- ------
E2. GENERAL INFORMATION:
Legal name:
------------------------------------------------------------------
------------------------------------------------------------------
State of Formation: Date of Formation:
---------------------------- --------------
Federal ID. No.: Fiscal Year Ends: No. of Beneficiaries:
---------- ----- ----------
Principal Purpose:
------------------------------------------------------------
Was the trust formed for the specific purpose of purchasing share? Yes No
--- ---
E3. BUSINESS ADDRESS:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
Mailing Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
Page - 9
<PAGE>
- -------------------------------------------------------------------------------
Telephone Number: ( ) Fax Number: ( )
------------------------------ -------------------
E4. AUTHORIZATION: If the investment decision is being made by a beneficiary
or a Plan, please attach applicable Trust documents which permit each
beneficiary or participant to make his own investment plan. In all other
cases, please attach a properly certified copy of the resolutions adopted by
the trustees of the plan authorizing the plan to purchase shares and
authorizing the fiduciary named below to execute on behalf of the plan all
relevant documents necessary to subscribe for and purchase shares.
-----------------------------------------------
Name of authorized Fiduciary:
-----------------------------------------------
Page - 10
<PAGE>
-----------------------------------------------
E5. NAME OF PRIMARY BANK:
-----------------------------------------------
Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
Telephone Number: ( ) Fax Number: ( )
------------------------------ -------------------
Account Type and Number:
----------------------------------------------------
----------------------------------------------------
Person Familiar with Your Account:
-----------------------------------------
Page - 11
<PAGE>
The undersigned hereby represents and warrants that the foregoing statements
are true and accurate to the best of the information and belief of the
undersigned and the undersigned will promptly notify the Company of any
changes in the foregoing answers.
- -------------------------------------------------------------------------------
FOR INDIVIDUALS:
- ---------------------------------------------------------------
Print Name
Dated: April__1999
- -------------------------------------------------------------
Signature
- -------------------------------------------------------------------------------
FOR CORPORATIONS:
- ---------------------------------------------------------------
Name of Company
- ---------------------------------------------------------------
Executive Officer of Company
Dated: April__1999
- -------------------------------------------------------------
Signature of Officer
- -------------------------------------------------------------------------------
FOR PARTNERSHIPS:
- ---------------------------------------------------------------
Name of Company
- ---------------------------------------------------------------
Name of Partnership
Dated: April__1999
- -------------------------------------------------------------
Name of Partner Executing Questionnaire
- -------------------------------------------------------------------------------
FOR TRUSTS:
- ---------------------------------------------------------------
Name of Trust
- ---------------------------------------------------------------
Name of Authorized Trustee
Dated: April__1999
- -------------------------------------------------------------
Signature of Authorized Trustee
- -------------------------------------------------------------------------------
Page - 12
<PAGE>
- -------------------------------------------------------------------------------
FOR QUALIFIED PENSION PLANS:
- ---------------------------------------------------------------
Name of Qualified Pension Plan
- ---------------------------------------------------------------
Name of Plan Fiduciary Executing Questionnaire
Dated ,1997
- -------------------------------------------------------- ------------
Signature of Plan Fiduciary Executing Questionnaire
OR
- ---------------------------------------------------------------
Name of Plan Beneficiary Executing Questionnaire
Dated ,1997
- -------------------------------------------------------- ------------
Signature of Plan Beneficiary Executing Questionnaire
- -------------------------------------------------------------------------------
Page - 13
<PAGE>
EXHIBIT "E"
FINANCIAL PROJECTIONS
The attached Exhibits contains statements of summarized financial
projections. The statements present, to the best of Management's knowledge
and belief, the Company's expected operating income, balance sheet and
significant sources and uses of cash during the projection periods.
Accordingly, the projections reflect Management's judgment as of the date of
the projections, of expected alternative conditions and its expected courses
of action in each case. The assumptions disclosed as an integral part of the
projections are those that Management believes are significant to the
projections. There will usually be differences between the projected and
actual results, because events and circumstances frequently do not occur as
expected, and those differences may be material.
All of the schedules should be read in conjunction with the accompanying
projection assumptions which are and integral part of the schedules. (See
"Risk Factors" and other disclosures contained in this Memorandum) ALTHOUGH
MANAGEMENT BELIEVES THE ASSUMPTIONS ON WHICH THE PROJECTIONS ARE BASED ARE
REASONABLE, NO REPRESENTATION IS MADE OR SHOULD BE INFERRED WITH RESPECT TO
THE ACCURACY OR COMPLETENESS OF THE "EXHIBITS" OR THE LIKELIHOOD THAT THE
PROJECTIONS SET FORTH IN THE "EXHIBITS" CAN OR WILL BE ACHIEVED. NO PURCHASER
SHOULD INVEST IN THE COMPANY IN RELIANCE ON THE ACCURACY OR ADEQUACY OF THE
"EXHIBITS." MANAGEMENT DOES NOT INTEND TO UPDATE THESE FINANCIAL PROJECTIONS.
Page - 14
<PAGE>
APPENDIX A: FINANCIAL RESULTS OF TRUEVISION LASER CENTER OF ALBUQUERQUE, INC.
TrueVision Laser Center of Albuquerque, Inc. was founded in June 1996 to
perform laser vision correction in the New Mexico market. Founded as a
"membership" or "community" resource for participating Ophthalmologists, the
center recently developed a unique marketing formula that has resulted in a
dramatic increase in patient volume and profits. Plans to add on-staff
medical professionals will result in dramatically increased profitability. It
will also allow for a more controlled sales cycle, which will give an
improved lead conversion to sales ratio.
FINANCIAL RESULTS. The financial results for the preceding two years
and the current quarter are presented as Appendix A. Revenues were up
80% for FY 1998 compared to FY 1997. That is far ahead of the
performance reported by LVCI, a competitor previously mentioned in
this report. Further the $248,000 loss reported in FY 1997 was
virtually eliminated by FY 1998. Even more dramatic is the running
rate of 184% for the previous year recorded during the first fiscal
quarter of FY 1999.The running rate for December 1998 running rate of
$2,311,000 is 231% of the previous year. Projections for the current
fiscal year are presented as Appendix B. They suggest that the Company
may top $4.4 million in sales and more than $1.1 million in profit for
the current fiscal year. The Company implemented its new marketing
programs in November of 1998. They resulted in dramatically improved
financial results by December, reporting a profit of $16,000 compared
to a loss of $68,000 for the preceding quarter. The Company is adding
a resident optometrist in March and will hire a surgeon who will cover
both Albuquerque and the soon to be opened Las Vegas office. In just
the first quarter of 1999 after changing to the integrated format, the
medical professionals are projected to add more than $440,000 in sales
at a cost of just $99,000. Further improvements in the remaining
quarters translate into increased profitability. Even more important
is the control that the Company will then have over the complete sales
process. At Appendix B, column 6, TrueVision has recast its projected
FY1999 results to demonstrate the dramatic effect that changing from a
"membership" center to an "integrated" center. This change would
result nearly doubling profits and adding more than $1.0 million of
incremental profit.
The second largest variable cost incurred in operating the laser
center is the $260 per procedure royalty cost that is paid to the
laser manufacturer. Continued industry pressure on these manufacturers
may result in the reduction or elimination of these royalties. At
Appendix B, column 7 the FY1999 projections are recast to show the
impact of the elimination of these royalties, should it occur. The
combined effect of the elimination of the royalty and the conversion
to an integrated model to recover the However, in connection with its
proposed IPO, and in conformity with the provisions of its preliminary
agreement with Dirks & Company, the Company has elected to limited the
total number of options to 458,333,majority of the 50% of revenues
currently paid to the doctor for each procedure will result in a
$1.5 million profit on $3.2 million of revenues, or 48%!
The increasing popularity of laser vision correction may allow for a
decrease in per procedure pricing. At Appendix B, column 8, FY1999 has
been recast to show the effect of reducing the per procedure price
$650 (or 33%) to $1,300 per eye. Even with such a dramatic price
reduction, the fully integrated model will continue to produce more
than $1.0 million of profit or a fifty percent pre-tax profit.
Page - 15
<PAGE>
APPENDIX B: FINANCIAL PROJECTIONS
ASSUMPTIONS RELATED TO FINANCIAL PROJECTIONS. The financial
projections for the Albuquerque center for the three-year period ended
September 30, 2001 is shown at Appendix C. Some of the assumptions
used in these projections are as follows:
Total Equipment Cost
Laser $520,000
Other 137,000
Revenue per Eye
Year 1 $ 1,950
Year 2 1,300
Year 3 1,300
Member doctors one half of net revenue minus royalty paid per
procedure
TrueVision doctors are employees
Surgeon $25,000 per month
Optometrist 8,000
Advertising is 5% of revenue.
An additional 5% of net profit is reserved for incentives to
be paid as year-end bonuses.
Additional 1/2 surgeon and optometrist to be added to third
year costs.
NEW TRUEVISION CENTERS. As a result of its three years of experience in the
LVC industry, the Company has developed a comprehensive strategy to develop
"integrated" centers. Such a structure will not only will result in a
dramatic improvement in the revenues generated from LVC, but will result in
much greater profits from operations. Implementation of the first phase of
this strategy occurred in Albuquerque in November 1997. Phase two will occur
in February 1999, and the final phase will occur in April 1999. A new center
is being planned for opening in April 1999in Las Vegas, NV. It will implement
this comprehensive strategy at its opening. The Company anticipates opening
additional centers during 1999 after taking time to assure that it can
successfully implement its strategy in the Las Vegas market. Current plans
call for the opening of three additional centers during 1999. Opening dates
are currently targeted for April, July, October and December respectively.
NEW CENTER PROFILE. New centers will be located in high profile
locations near major population centers. They will have an upscale
retail character and outstanding outdoor signage. Each center will
consist of a combination seminar - conference facility that can seat
approximately fifty prospective patients. These facilities will be
equipped with sophisticated multi-media presentation capabilities with
the ability to demonstrate the procedures to the prospects in real
time. Each facility will be equipped with an upscale waiting area,
combination informed consent - sales areas, front and back office
space, exam and treatment facilities and laser rooms. The average
facility will occupy from 3,500 to 4,500 ft of space.
Each Center will employ an optometrist to perform eye exams and a
surgeon to perform laser vision correction and other procedures. Each
center will employ appropriate medical support personnel,
administrative personnel and marketing and sales professionals. Each
will be backed up with a regional inside sales function. The inside
sales function will handle responses to advertisements, be responsible
for scheduling free evaluations at the center, and will book guests
for seminars. Seminars will be conducted three evenings per week and
on weekends. It is anticipated that approximately 100 prospects will
be introduced to the Company's technologies per week.
FINANCIAL PROJECTIONS. An example of financial projections for a new
center is shown at Appendix D. Some of the assumptions used in the
projections are listed below:
1.Total Equipment Cost
Laser $552,000
Other 264,000
Page - 16
<PAGE>
2.Revenue per Eye
Year 1 $1,500
Year 2 1,300
Year 3 1,300
3.Member doctors receive one half of net revenue minus
royalty paid per procedure
4.TrueVision doctors are employees
Surgeon $25,000 per month
Optometrist 8,000
5.Advertising is $20,000 per month plus 5% of revenue for
first six months, 5% of revenue thereafter.
6.An additional 5% of net profit is reserved for incentives
to be paid as year-end bonuses.
7.Additional 1/2 surgeon and optometrist to be added to
third year costs.
FUNDING REQUIREMENTS. Funding for new centers is expected to be in the
form of individual Limited Liability Company (LLC) offerings. Each
offering will be for investment in a specific market. The LLC
offerings will range in size between $500,000 and $1.0 million,
depending on the requirements of the market to be developed. The first
of these offerings is currently being prepared and is likely to be
utilized to support the development of the Las Vegas, NV market. It is
anticipated that this offering should be ready for sale by April 1999.
TRUEVISION INTERNATIONAL CONSOLIDATED RESULTS. TrueVision intends to expand
itsNetwork of centers in 1999 and beyond with the establishment of new
centers in larger metropolitan markets. The consolidated financial
projections reflected on Appendix E represent centers being added on the
following schedule:
July 1999 Open Center 3
October 1999 Open Center 4
December 1999 Open Center 5
February 2000 Open Center 6
April 2000 Open Center 7
June Open Center 8
August 2000 - May 2001 Open One Center Per Month
June 2001 - September 2001 Open Two Centers Per Month
October 2001 - March 2002 Open Three Centers Per Month
The total expenditure for Administrative (1.0%) and Marketing costs
(6.5%)will be used to fund the requirements of the corporate infrastructure.
It is assumed that this level of funding is sufficient to meet all of the
financial needs of the corporate infrastructure.
Page - 17
<PAGE>
EXHIBIT 10.20
MUTUAL GENERAL RELEASE AGREEMENT
This Mutual General Release Agreement ("Agreement") is made and entered
into as of this 15th day of April, 1998, by and between MTE/TRIAD, INC.
("MTE") on the one hand, and TRUEVISION LASER CENTERS, INC. ("TVLC") and
TRUEVISION LASER CENTER OF ALBUQUERQUE, INC. ("TVLCA") on the other hand,
with reference to the following facts:
RECITALS:
WHEREAS, MTE has lodged a complaint against TVLC and TVLCA alleging that
TVLCA has failed to make timely payments of interest and other payments in
accordance with a certain Equipment Lease entered into between MTE/Triad,
Inc. as lessor and TVLCA as lessee, originally dated July 1, 1997 and amended
thereafter (the "Lease Agreement"); and
WHEREAS, it is acknowledged by all parties to the Lease Agreement that
TVLCA now over certain unpaid interest and penalties which have accrued under
the terms of the Lease Agreement ("Overdue Payments"); and
WHEREAS, the parties to this Agreement and to the Lease Agreement desire
to reach agreement as to the amounts to be paid by TVI on behalf of TVLCA
in full and final satisfaction of the overdue interest and penalties due to
MTE in accordance with the Lease Agreement, and to settle this matter and
mutually release one another from all claims in accordance with the
provisions contained in this Agreement; and
WHEREAS, the parties to the Lease Agreement intend to re-affirm and
continue the rental payments due to MTE in accordance with the Lease
Agreement for the remainder of the term;
NOW THEREFORE, in consideration of the mutual covenants, conditions,
promises and releases contained herein, and for other valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereby agree as follows:
2. MUTUAL RELEASES
(a) Subject to the payments and deliveries described in paragraph 2
hereof, MTE, TVLC and TVLCA hereby unconditionally release and forever
discharge each other, their current and former officers, directors,
shareholders, partners, beneficiaries, agents, subsidiaries, affiliates,
affiliated agents, employees, attorneys, representatives, insurers,
successors, assigns and heirs from any and all sums of money, accounts, and
claims, arising out of or relating to TVLCA's failure to pay the Overdue
Payments to MTE in accordance with the Lease Agreement.
(b) All parties to this Agreement do hereby acknowledge that there is a
risk that subsequent to the execution of this Agreement, one or more parties
may incur or suffer loss, damage or injuries which are in some way caused by
the transactions or dealings referred to in paragraph 1(a) above, but which
are unknown and unanticipated at the time this Agreement is signed.
(c) All parties hereto do hereby assume the above-mentioned risks and
intend that this Agreement shall apply to all unknown or unanticipated
results of the transactions and occurrences described above, as well as those
known and anticipated, and upon the advice of legal counsel, all parties do
hereby waive any and all rights to bring forth any claims whatsoever relating
to transactions or dealings between the parties hereto.
(d) The advice of legal counsel has been obtained by all parties prior
to signing this Agreement. All parties represent that they have executed this
Agreement voluntarily, with full knowledge of its significance, and with the
express intention of extinguishing of all obligations between the parties
arising out of or relating to the transactions or dealings referred to in
paragraph 1(a) above.
(e) Each party hereto represents and warrants that no portion of any
claim or claims, nor any portion of any recovery or settlement, To Whom It
May Concern: which each party might be entitled has been assigned,
<PAGE>
subrogated or transferred to any other person or entity, whether firm,
partnership, corporation or otherwise. In the event that any claim, demand or
suit should be made or instituted against any of the parties hereto because
of any such purported assignment or subrogation or transfer, the other party,
as the case may be, agrees to defend, indemnify and hold harmless the other
parties against any claim or claims, and to pay and satisfy any such claims,
sale or demand, including necessary expenses of investigation, attorneys'
fees and costs. It is the express intention of the parties hereto that
payment is not a condition precedent to this Indemnity.
2. CONSIDERATION. Immediately upon the execution of this Agreement, TVLC,
on behalf of TVLCA and itself, shall duly issue one hundred thousand
(100,000) shares of common stock into the name of MTE/Triad, Inc. and shall
further promise to pay to MTE/Triad, Inc. a minimum of $50,000 on or about
May 1, 1999 and another $120,000 on or about January 1, 2000, said amount to
be applied to the total Unpaid Payments. Upon the final payment of said
consideration, MTE/Triad, Inc. shall forgive any further penalty and interest
which may have accrued under the terms of the Lease Agreement for obligations
which accrued under the Lease Agreement through and including the date of
this Agreement.
3. CONTINUATION OF LEASE AGREEMENT. Nothing contained in this Agreement
shall forgive or modify the ongoing obligations for the payment of rent by
TVLCA to MTE in accordance with the Lease Agreement from and after the date
of this Agreement until the termination or expiration of the Lease Agreement.
This Agreement is limited to the claims made by MTE for all Overdue Payments
up to and including the date hereof.
4. ATTORNEY'S FEES. In the event that any party shall institute any action
or proceeding against the other to enforce the provisions of this Mutual
General Release, any judgment or agreement entered into pursuant to this
Mutual General Release or any default or controversy thereunder, the
prevailing party shall be entitled to recover its expenses, including
attorneys' fees, in addition to any other relief to which it is found
entitled.
5. PARTIES BOUND. This Agreement shall be binding upon and shall inure to
the benefit of the heirs, executors, administrators, successors and assigns
of the parties hereto.
6. MODIFICATION AND APPLICABLE LAW. No addition or modification of any term
or provision hereof shall be effective unless set forth in writing signed by
each party hereto. This Agreement shall be interpreted and construed in
accordance with the laws of the State of New Mexico, without regard to its
conflicts of principals of law.
7. SEVERABILITY. Should any part, term or provision of this Mutual General
Release or any document required herein to be executed be declared invalid,
void or unenforceable, such invalidity shall be limited to such specific
provision or portion thereof, and this Agreement shall be construed and
applied in such manner as to minimize such unenforceability. This Agreement
shall otherwise remain in full force and effect.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire and whole
agreement between the parties hereto and supersedes any prior agreements
between such parties. This Agreement may not be modified or amended except by
a written instrument, signed by each of the parties hereto, expressing such
amendment or modification.
9. COUNTERPARTS. This Agreement may be exercised in three (3) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
WITNESSES: "MTE"
MTE/TRIAD, INC.
/s/ Allison Evans By: /s/ John C. Homan
- --------------------------------- --------------------------------
Its: President
--------------------------------
<PAGE>
"TVLC"
TRUEVISION LASER CENTERS, INC.
By: /s/ Frank Seifert
--------------------------------
Its: Exec. VP
--------------------------------
"TVLC"
TRUEVISION LASER CENTER OF
ALBUQUERQUE, INC.
/s/ Allison Evans By: /s/ John C. Homan
- --------------------------------- --------------------------------
Its: President
--------------------------------
<PAGE>
EXHIBIT 10.21
AGREEMENT AS CONDITION TO CONSENT TO SUBLET
This Agreement is made an entered into by and between Metro Center
Associates, Limited Partnership, a New Mexico limited partnership ("Lessor")
and True Vision International, Inc., a Delaware corporation ("Subtenant")
effective April 26, 1999.
RECITALS
A. Lessor is the owner of the building located on the real estate
commonly referred to as 1720 Louisiana Blvd. NE, Metro Centre, City of
Albuquerque, Bernalillo County, New Mexico ("Building").
B. Lessor leases space in the Building to Interim HealthCare, Inc.
("Lessee") pursuant to a written lease ("Lease"), including the space
referred to as Suite 110 ("Suite 110").
C. Subtenant desires to sublet Suite 110 from Lessee pursuant to a
written sublease ("Sublease"). Lessee may not sublet Suite 110 to Subtenant
without the prior written consent of Lessor.
D. Subtenant already leases space within the Building under a directly
lease from Lessor ("Principal Lease").
E. Lessor is willing to give its consent to Lessee to sublet Suite 110
to Subtenant upon certain conditions, one of which is that Subtenant enter
into an agreement with Lessor.
NOW, THEREFORE, in consideration of the foregoing, Lessor consenting to
Lessee subletting Suite 110 to Subtenant, and the mutual promises stated
below, Lessor and Subtenant agree as follows:
1. LIMITATION OF LIABILITY. Lessor's responsibility for liability to
Subtenant, or to Subtenant's officers, directors, shareholders, partners,
agents, contractors or invitees, arising out of or resulting from Subtenant's
occupancy of Suite 110 shall be limited as provided in the Principal Lease.
2. SUBTENANT'S INDEMNITY. Subtenant's hereby agrees to and will defend,
indemnify and hold harmless Lessor and Lessor's officers, directors,
shareholders, partners, members, agents and employees from and against all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs, expenses, and disbursements (including court costs and reasonable
attorneys' and/or paralegal fees) resulting from any injuries to or death of
any person or damage to any property occurring in or about the Building or
Suite 110 caused in whole or in part by Subtenant's negligence or other
tortious conduct.
3. LIMITATION REGARDING SUBLEASE. Subtenant agrees that the Sublease does
not grant to, transfer to or confer upon Subtenant any enforceable rights
against Lessor, and that by consenting
<PAGE>
to Leasee subletting Suite 110 to Subtenant, and by executing and delivering
to Lessee any written consent to sublease, Lessor undertakes no obligations
to Subtenant. Lessor's only affirmative obligations to Subtenant arising out
of Subtenant's occupancy of Suite 110 are those expressly stated in this
Agreement.
4. NOTICES. Any notice which may be given by one party to the other party,
under this Agreement or under any statute, may and shall be given in the
manner provided in the Principal Lease.
5. FEES AND COSTS. In addition to all other relief or remedy, in any
action or proceeding to enforce this Agreement, for interpretation or
construction of this Agreement, or on account of any alleged breach of or
default under this Agreement, the prevailing party as determined by the trier
of fact shall be entitled to recover from the opposing party or parties
reasonable attorney's fees and costs incurred by the prevailing party in
connection with such action, including, but not limited, during any
investigation of a litigated matter, and on appeal thereof. Costs shall
include the cost of all depositions reasonably necessary to be taken in
connection with any proceeding, whether or not actually used in the
proceeding. The term "prevailing party" means the party that obtains
substantially the relief sought, whether by compromise, settlement or
judgment.
6. AMENDMENTS. This Agreement may be amended only by a writing executed by
both parties hereto.
7. INTERPRETATION. The captions pertaining to the sections and paragraphs
of this Agreement are for convenience only, and shall not be relied upon to
limit, augment or modify the text of any section or paragraph. Unless
otherwise provided, all words have the meaning given them in ordinary and
customary English usage. The parties have agreed to the particular language
of this Agreement. Any question of doubtful interpretation shall not be
resolved by any rule providing for interpretation against the party who
causes the uncertainty to exist or against the draftsman. All pronouns used
in this Agreement shall be read to include all genders as the context
requires.
8. LIMITATION ON INDEMNITY. Notwithstanding anything to the contrary
contained in this Agreement, any indemnitor's obligation to indemnify shall
not extend to liability, claims, damages, losses or expenses, including
attorney fees, arising out of:
a. the preparation or approval of maps, drawing, opinions, reports,
surveys, change orders, designs or specifications by the indemnitee, or
agents or employees of the indemnitee; or
b. the giving of or the failure to give directions or instructions by
the indemnitee, or the agents or employees of the indemnitee, where such
giving or failure to give directions or instructions is the primary cause of
bodily injury to persons or damage to property.
9. SURVIVAL. All of the agreements, covenants, representations,
indemnities, obligations and liabilities made or undertaken by a party to
this Agreement shall continue, shall survive the execution and delivery of
the Sublease and Lessor's written Consent to Lessee subletting Suite 110
2
<PAGE>
10. SEPARABILITY. If any provision of this Agreement, or any application
thereof, shall be declared invalid or unenforceable by any court of competent
jurisdiction, the remainder of this Agreement, and any other application of
such provision, shall continue in full force and effect.
11. ENTIRE AGREEMENT. This Agreement contains the entire agreement between
Lessor and Subtenant. All prior discussions, negotiations, and agreements
between Lessor and Subtenant are merged into this Agreement.
IN WITNESS WHEREOF, Lessor and Subtenant have executed this Agreement as
of the date and year first written above.
Metro Center Associates, Limited Partnership,
a New Mexico limited partnership
By: BGK Asset Management Corp., its limited agent
By:
---------------------------------------------
J.F. Vigil, President
True Vision International, Inc.,
a Delaware corporation
By: /s/ [Illegible]
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
3
<PAGE>
EXHIBIT 10.22
SUBLEASE
AGREEMENT OF SUBLEASE ("Sublease) made this 25th day of March 1999, between
INTERIM HEALTHCARE, INC, having its principal office at 2050 Spectrum
Boulevard, Fort Lauderdale, Florida 33309, hereinafter referred to as
("Sublandlord"), and True Vision International, Inc. a Delaware corporation
("Subtenant").
NOW, THEREFORE, in consideration of the premises and the mutual undertakings,
covenants, promises, and agreements of the parties, IT IS AGREED AS FOLLOWS:
1. SUBLEASE
1.1 Metro Center Associates, L.P. successor in interest to Unum Pension
and Insurance Company ("Landlord")and Sublandlord entered into a lease
("Lease") made the 9th day of August, 1991, and 1st amendment to lease dated
11th day of November, 1996, for certain premises ("Leasehold") in the
building located at 1720 Louisiana BLVD, N.E., Suite 110, Albuquerque, NM,
87110 ("Building"), a copy of which Lease is attached hereto and made a part
hereof as EXHIBIT "A". Sublandlord hereby leases to Subtenant and Subtenant
hereby leases from Sublandlord a portion of the Leasehold ("Subleased
Premises") shown cross-hatched on EXHIBIT "B" attached hereto and made a part
hereof.
1.2 This Sublease is expressly made subject and subordinate to all the
terms, covenants and conditions of said Lease which are incorporated herein
by reference. Subtenant agrees to use the Subleased Premises in accordance
with the terms, covenants and conditions of said Lease, and not do or omit to
do anything which will breach any of the terms, conditions and covenants
thereof. Subtenant further agrees to assume the obligation for performance of
all Sublandlord's obligations under the Lease, except as may be specifically
modified by this Sublease, with respect only to the Subleased Premises, and
except in respect to the amount of Rent (as defined below) to be paid.
Sublandlord has not offered nor conveyed any rights not afforded Sublandlord
by Landlord under the Lease.
1.3 Subtenant has no authority to contact or make any agreement with
Landlord concerning the Subleased Premises or the Lease, and Subtenant shall
not make any payment of Rent or other charges to Landlord but only to
Sublandlord; the Lease describes Landlord's duties; and Sublandlord is not
obligated to perform Landlord's duties. If Landlord fails to perform its
duties, Subtenant shall promptly provide notice to Sublandlord, then
Sublandlord shall promptly notify Landlord and demand that Landlord comply
with the Lease. In no event shall Sublandlord incur any liability, be
responsible nor shall there be any set-off, deduction or abatement of Rent
arising from Landlord's failure to comply with its duties.
2. TERM: POSSESSION
2.1 The term ("Term") of this Sublease shall commence on May 1, 1999
("Commencement Date") and shall expire on December 28, 2001, unless sooner
terminated pursuant to the terms hereof or the Lease. Notwithstanding the
foregoing, it is expressly understood and agreed by Subtenant that this
Sublease is subject to approval of Landlord pursuant to the provisions of the
Lease. In the event this Sublease is not approved by Landlord, Sublandlord
shall not be liable to Subtenant for any costs, expenses (including, without
limitation, attorneys fees and expenses) or for any damages in any manner
whatsoever, and this Sublease shall be null and void and of no force and
effect ab initio.
2.2 Subject to receipt of a fully executed Sublease agreement, the
Deposit and Landlord's
Page 1 of 7
<PAGE>
consent to this Sublease including, without limitation, execution by
Landlord, Sublandlord and Subtenant of a written consent to this Sublease,
Sublandlord shall render to Subtenant possession of the Subleased Premises
upon full execution of this sublease. If tender of possession of the
Subleased Premises by Sublandlord to Subtenant is delayed through no fault of
Sublandlord beyond the date stated in the preceding sentence, including,
without limitation, any delay occasioned by the approval by Landlord and
execution by all parties of a written consent to this Sublease, the Sublease
shall remain in full force and effect, except that the Rent shall be abated
on a pro-rata basis for the period until possession shall be tendered to
Subtenant unless such delay is caused by act, omission or misconduct of
Subtenant.
3. RENT: DEPOSIT
3.1 Subtenant shall pay rent ("Rent") to Sublandlord at the address
designated in Article 8 hereof or at such other location designated by
Sublandlord in monthly installments in advance on the first (1st) day of each
month without offset, deduction, or abatement and without notice as follows:
BASE RENTAL Annual base rent per square foot comprising of
approximately 2,079 rentable square feet.
4/1/1999--12/31/99-$15.00 P.S.F.
1/1/2000--12/31/2000-$15.50 P.S.F.
1/1/2001--12/29/2001-$16.00 P.S.F. Subtenant shall pay any sales
tax on Rent, if any, with each monthly installment of Rent. All sums to be
paid by Subtenant other than Rent shall be payable as additional rent
("Additional Rent") (collectively herein "Rent" and "Additional Rent" are
referred to as "Rent"). RENT SHALL BE ABATED FROM APRIL 1, 1999 THROUGH AND
INCLUDING APRIL 30, 1999.
3.2 Subtenant shall, concurrently with execution of this Sublease,
deliver to Sublandlord a security deposit ("Deposit") in the amount of
$5544.00. The Deposit shall be held by Sublandlord to insure Subtenant's
performance of all of its obligations under the Sublease. Sublandlord shall
have the right from time to time without prejudice to any other remedy
Sublandlord may have on account hereof, to apply the Deposit, or any part
thereof, to Sublandlord's damages arising from any default on the part of
Subtenant. Provided Subtenant shall have fully and timely complied with all
of the terms, covenants and conditions of this Sublease, Sublandlord shall
return the Deposit, or remainder thereof not previously applied, to Subtenant
on the expiration or earlier termination of the Term and surrender by
Subtenant of possession of the Subleased Premises to Sublandlord. Sublandlord
may hold the Deposit without any obligation to pay interest thereon and may
commingle the Deposit with Sublandlord's other funds. If Sublandlord conveys
Sublandlord's interest under this Sublease, the Deposit, or any part thereof
not previously applied, may be turned over by Sublandlord to Sublandlord's
grantee, whereupon, Subtenant agrees to look solely to such grantee for
application and return of the Deposit in accordance herewith.
4. SERVICES: UTILITIES. Subtenant shall look solely to Landlord to furnish
services required under the Lease, and in no event whatsoever shall Subtenant
look to Sublandlord to furnish any services or shall this Sublease be
construed to create any obligation on Sublandlord to furnish any services.
Subtenant shall at all times cooperate with Landlord and Sublandlord and
abide by all regulations and requirements established from time to time by
Landlord for the proper functioning and protection of the heating,
ventilating and air conditioning systems, utilities and other services
necessary for the operation of the Subleased Premises and/or Building.
Subtenant agrees to provide access to the Subleased Premises to Landlord, its
agents and contractors for the performance of janitorial services, and to
otherwise comply with the provisions of the Lease. Subtenant shall not be
entitled to any diminution, reduction or abatement of Rent, or to any
compensation, or to claim that this Sublease or any obligation of Sublandlord
hereunder has been affected, diminished or terminated, due to any
interruption, stoppage or curtailment of any
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services to be provided by Landlord. Subtenant agrees promptly notify
Sublandlord of any interruption, diminution, delay or discontinuance of
services. Subtenant shall pay immediately upon request by Sublandlord or
Landlord charges related to any additional (non-standard) services to the
Subleased Premises requested by Subtenant for which extra costs are
attributable.
5. USE. The Subleased Premises shall be used and occupied by Subtenant for
the use set forth in the Lease and for no other purposes. Subtenant shall
fully and promptly comply with the requirements of all present and future
laws, rules, orders, ordinances and regulations applicable to the Subleased
Premises to the same extent and in the same form as required of "Tenant"
under the Lease. If Subtenant receives any notice of violation of any of the
foregoing, Subtenant shall give prompt notice thereof to Sublandlord.
6. CONDITION OF SUBLEASED PREMISES; SURRENDER; HOLDOVER.
6.1 Subtenant accepts the Subleased Premises in their "AS-IS" condition.
Subtenant acknowledges that it is not relying on any representation pr
warranty whatsoever of Sublandlord or its agents and/or employees as to the
condition, sufficiency or permitted uses of the Subleased Premises. Upon the
expiration or earlier termination of the Terms, Subtenant shall, at its sole
cost and expense, quit and surrender the Subleased Premises in as good a
condition as when possession was delivered to Subtenant including, without
limitation, removal of all Alterations (as defined below), damage thereto by
fire or other insured casualty and normal wear and tear excepted, but only to
the extent permitted under the Lease.
6.2 Subtenant shall not holdover after the expiration of the Term, such
possession shall be construed a tenancy at sufferance and Subtenant shall
remain liable to Sublandlord for daily use and occupancy at the rate of two
(2) times the per diem Rent then in effect during the last month of the Term;
and shall save, protect, defend (by counsel acceptable to Sublandlord) and
hold Sublandlord harmless for all damages including, without limitation,
consequential damages, arising from such holdover.
7. REPAIRS; ALTERATIONS; MECHANIC'S LIENS.
7.1 Subtenant shall be responsible for the payment of all repair costs
in and to the Subleased Premises and the Building which would otherwise have
been the responsibility of Sublandlord, including, without limitation, costs
for any repairs due to work performed by Subtenant, the installation, use or
operation of the Subleased Premises by Subtenant, the moving of any property
of Subtenant in or out of the Subleased Premises and/or the Building, and/or
any act, omission, neglect or misuse of the Subtenant or any of its
employees, agents, contractors, invitees or licensees; and any fees due to
Landlord under the Lease in connection with the performance of such repairs.
7.2 Subtenant shall comply with all provisions of this Sublease and the
Lease governing alterations, additions and improvements (collectively,
"Alterations") and all other work to be performed by or on behalf of
Subtenant to the Subleased Premises. All work to be performed by or for
Subtenant and Alterations including, without limitation, construction and
preparation of the Subleased Premises for Subtenant's occupancy, shall be at
Subtenant's sole cost and expense and subject to Sublandlord's and Landlord's
prior written consent.
7.3 Subtenant shall keep the Subleased Premises, Building and all parts
thereof at all times free of mechanic's liens and any other liens for labor,
services, supplies, equipment or material purchased or procured, directly or
indirectly, by or for Subtenant. Subtenant further agrees that Subtenant
shall
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<PAGE>
promptly pay, satisfy, bond against and/or discharge all liens of
contractors, subcontractors, mechanics, laborers, materialmen, and other
items of like character, and will indemnify, defend (by counsel acceptable to
Sublandlord) and hold Sublandlord harmless against all costs and expenses
incurred in the defense of any suit in discharging the Premises, Building or
any part thereof from any liens, judgements, or encumbrances caused by
Subtenant. All materialmen, contractors, mechanics and laborers are hereby
charges with notice that they must look solely to the Subtenant, and not the
Sublandlord, Landlord or their interest in the Subleased Premises, Leasehold
or Building, to secure the payment of any bill for work done or material
furnished at the request or instruction of Subtenant.
8. INDEMNIFICATION; INSURANCE
8.1 Subtenant shall indemnify, defend (by counsel acceptable to
Sublandlord) and hold Sublandlord harmless against any and all claims,
losses, damages, liabilities and expenses arising from Subtenant's use or
occupancy of the Subleased Premises and/or other portions of the Building,
including without limitation, the parking areas, or arising from any acts,
omissions, neglect or fault of Subtenant or Subtenant's agents, employees, or
invitees, or arising from Subtenant's failure to comply with the terms,
covenants and/or conditions of this sublease, the Lease and/or any laws,
statutes, ordinances, codes or regulations of any regulatory, governmental or
quais-government local, state or federal authority. Sublandlords shall not be
liable to Subtenant for any damages, losses or injures to the persons or
property of Subtenant, except when arising from the gross negligence of
Sublandlord, its agents or employees. All personal property placed or moved
into the Subleased Premises or Building shall be at the risk of Subtenant or
the owner thereof, and Sublandlord shall not be liable to Subtenant for any
damage to said personal property. In the event Sublandlord shall be made a
party to any litigation commenced against Subtenant. Subtenant shall save,
indemnify, defend (by counsel acceptable to Sublandlord) and hold Sublandlord
harmless in connection with such litigation and any appeal thereof.
8.2 Subtenant shall carry commercial general liability insurance,
including blanket contractual liability and automotive liability, and "All
Risk" property insurance insuring the Subleased Premises against damage or
destruction due to risk including fire, vandalism, malicious mischief, flood,
earthquake, insuring Subtenant, Sublandlord and Landlord against any claims
in reasonable amounts and upon terms and conditions as approved by
Sublandlord but in no event with amounts lower than the greater of those
required in the Lease, and Subtenant worker's compensation insurance with at
least statutory minimum required limits, and in no event without an
endorsement on all such policies that insurer shall provide at least thirty
(30) days prior written notice to Sublandlord of change in terms of insurance
or cancellation thereof, which shall be written by good and solvent insurance
companies of recognize responsibility, licensed to do business in the state
where the Sublease Premises is located and acceptable to Sublandlord.
Subtenant shall include Sublandlord and Landlord as "additional insureds" on
all liability policies required to be maintained by Subtenant, shall provide
for a waiver of suborgation against Sublandlord and Landlord on all casualty
policies required to be maintained by Subtenant, shall provide Sublandlord
with duplicate originals of all policies and endorsements or a certificate
thereof, and shall provide Sublandlord notices and other documents provided
to Landlord in satisfaction of the requirements of the Lease at such times as
the same are provided to the Landlord. Subtenant's liability shall not be
limited by the amount of insurance coverage to be maintained by Subtenant
hereunder. Subtenant shall look solely to Sublandlord's leasehold interest in
the Subleased Premises for the satisfaction of any monetary remedies obtained
by Subtenant against Sublandlord, and no other property or assets of
Sublandlord or its partners, principals, subsidiaries or parent companies,
disclosed or undisclosed, shall be subject to levy, execution or other
enforcement procedure for the satisfaction of Subtenant's remedies.
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<PAGE>
9. ASSIGNMENT. Subtenant shall neither assign any of its rights hereunder
nor re-sublet any of Subleased Premises without the prior written consent of
Sublandlord, and Landlord if applicable.
10. DEFAULT BY SUBLANDLORD. If Sublandlord shall fail to comply with the
Lease for more than thirty (30) days after written notice from Subtenant and
such failure materially effects Subtenant's possession of the Subleased
Premises, then Subtenant shall provide Sublandlord and Landlord a second
notice, and Sublandlord and Landlord shall have thirty (30) days from receipt
of such second notice to cure said failure. If Sublandlord or Landlord have
commenced curing within such period and continue to diligently prosecute
curing said default such period shall be extended for such period as
Sublandlord and/or Landlord continue to diligently prosecute said default.
11. DEFAULT BY SUBTENANT; REMEDIES.
11.1 In addition to all of the rights and remedies that Sublandlord may
exercise against Subtenant under the terms of this Sublease (and/or by law)
in the event of Subtenant's default, Sublandlord shall be entitled to
exercise against Subtenant all of such other and further rights and remedies
as the "Landlord" may exercise against the "Tenant" under the Lease with
regard to the Subleased Premises.
11.2 The prevailing party shall bear all costs and expenses including,
without limitation, reasonable attorneys' fees, arising from enforcement of
the provisions of this Sublease. The remedies described in this section and
the Lease are cumulative and in addition to and without waiver of all
remedies allowed Sublandlord by this Sublease, case law, common law and/or
statute now or hereafter in effect, and are not mutually exclusive.
Subtenant agrees that the rights and remedies granted Sublandlord in this
section are commercially reasonable.
11.3 Nothing herein contained shall be construed as precluding
Sublandlord from having such remedy as may be and become necessary in order
to preserve the Sublandlord's right or the interest of Sublandlord in the
Subleased Premises and in this Sublease, even before the expiration of the
grace or notice periods, if any, provided for in this Sublease, if under
particular circumstances then existing the allowance of such grace or the
giving of such notice will prejudice or will endanger the rights and estate
of Sublandlord in this Sublease or in the Subleased Premises.
12. NOTICE. All notices shall be in writing, and if to Subtenant shall be
sent by nationally recognized reputable overnight courier requiring signature
of addressee upon delivery, or by registered mail, return receipt requested,
postage prepaid, addressed to the Subleased Premises, 1720 Louisiana Blvd.,
N.E., Suite 110, Albuquerque, New Mexico 87110, and if to Sublandlord shall
be sent by nationally recognized reputable overnight courier requiring
signature of addressee upon delivery, or by registered mail, return receipt
requested, postage prepaid, addressed to 2050 Spectrum Boulevard, Fort
Lauderdale, FL 33309, Attention: Real Estate Department, or to such other
address as either party shall designate by written notice to the other.
Notice shall be deemed given upon receipt or refusal to accept same.
13. RIGHT OF ENTRY. In addition to the rights of entry granted to the
Landlord under the Lease with regard to the Subleased Premises, Sublandlord
and/or any of its agents shall have the right to enter the Subleased Premises
during all reasonable hours to examine the same, and/or to make any repairs,
alterations, improvements, or additions pursuant to the terms of this
Sublease, and/or to effect any cure of Subtenant's default (which Sublandlord
has elected to cure) pursuant to the provisions of this Sublease, and/or to
exhibit the Subleased Premises to third parties, including, without
limitation, mortgagees. In addition, Sublandlord shall be entitled (but not
obligated) to enter the Subleased Premises at any time
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<PAGE>
without notice in the event of an emergency.
14. ESTOPPEL STATEMENT. Subtenant hereby agrees that from time to time,
upon not less than ten (10) days prior request by Sublandlord, Subtenant will
deliver to Sublandlord and to Sublandlord's designee a statement in writing
certifying (a) that this Sublease is unmodified and in full force and effect
(or if there have been modifications, that the Sublease as modified is in
full force and effect and stating the modifications); (b) the dates to which
the Rent and other charges have been paid; (c) that Sublandlord is not in
default under any provisions of this Sublease, or if in default, the nature
thereof in detail; and (d) other matters reasonably requested by Sublandlord
and/or Sublandlord's designee. Subtenant's failure to deliver such statement
within ten (10) days of request shall be conclusive upon Subtenant that this
Sublease is in full force and effect, free of any set-off and free of any
default on Sublandlord's part.
15. ENTIRE AGREEMENT. This Sublease contains the entire agreement and
understanding between the parties hereto with respect to the Subleased
Premises, and there are no other terms, covenants, obligations, or
representations, oral or written, of any kind whatsoever. Sublandlord and
Subtenant have participated fully in the negotiation and preparation hereof,
and this Sublease shall not be more strictly construed against either of the
parties hereto. This Sublease may not be cancelled, changed or altered in
any way unless in writing executed by Sublandlord and Subtenant (and Landlord
if required by the Lease).
16. SUCCESSORS AND ASSIGNS. This Sublease shall be binding upon, and shall
inure to the benefit of, the parties hereto, their respective heirs,
administrators and permitted successors and assigns.
17. NO WAIVER. The failure of Sublandlord to insist in any instance upon
the strict performance or observance of any obligation by Subtenant
hereunder, or to exercise any right or option contained herein shall not be
construed as a waiver or relinquishment for the future of any such obligation
by Subtenant or any right or option of Sublandlord. Sublandlord's receipt
and acceptance of Rent or other amounts, or both, or Sublandlord's acceptance
of performance of any other obligation by Subtenant, with knowledge of the
Subtenant's breach of any provision of this Sublease shall not be deemed a
waiver of such breach.
18. WAIVER OF JURY TRIAL; RIGHT TO COUNTERCLAIM. SUBTENANT AND SUBLANDLORD
EACH HEREBY WAIVE ANY RIGHT THAT EITHER MAY HAVE TO TRIAL BY JURY IN ANY
SUMMARY PROCEEDING OR OTHER ACTION OR COUNTERCLAIM ARISING OUT OF OR IN ANY
WAY CONNECTED WITH THIS SUBLEASE, WITH THE RELATIONSHIP OF SUBLANDLORD TO
SUBTENANT, OR WITH THE SUBLEASE PREMISES AND THE USE AND OCCUPANCY THEREOF.
SUBTENANT HEREBY WAIVES ANY AND ALL RIGHTS TO ASSERT OR INTERPOSE A
COUNTERCLAIM, OFFSET OR DEDUCTION OF WHATEVER NATURE IN ANY PROCEEDING,
ACTION OR OTHERWISE TO RECOVER OR OBTAIN POSSESSION OF THE SUBLEASED PREMISES.
19. AUTHORITY. If Sublandlord or Subtenant sign as a corporation,
partnership or other firm or entity, each of their persons executing this
Sublease on behalf of the Sublandlord or Subtenant do hereby covenant and
warrant that Sublandlord and Subtenant, as applicable, are duly authorized to
transact business, are in good standing and existing, and are qualified to do
business in where the Subleased Premises is located; that the Sublandlord and
Subtenant, as applicable, have full right and authority to enter into this
Sublease; and that the persons signing on behalf of the entity have been duly
authorized to do so.
20. BROKER. Both parties warrant and represent to each other that each
party did not authorize any broker, salesman, agent or finder to act on its
behalf in connection with the consummation of this Sublease
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<PAGE>
other than Cushman & Wakefield whose fee shall be paid by Interim Health Care
Inc., and agree to hold the other party harmless from any claims arising out
of this transaction. The provisions of this paragraph shall survive the
expiration or earlier termination of this Sublease.
21. MISCELLANEOUS. This Sublease shall in all aspects be governed by the
laws of the state where the Sublease Premises is located. Any costs arising
from Sublandlord's or Landlord's consent shall be borne by Subtenant, whether
or not consent is given. Time shall be of the essence with respect to the
performance of all Subtenant's obligations hereunder. Capitalized terms used
but not defined herein shall have the meanings set forth in the Lease.
Captions are inserted only as a matter of convenience and for reference and
in no way define, limit or describe the scope of this Sublease nor the intent
of any provision thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date, month, and year first above written.
SUBLANDLORD:
INTERIM HEALTHCARE, INC.
By: /s/ KATHLEEN A. [illegible]
-------------------------------
Title: C.O.O.
-------------------------------
Date: 4/28/99
-------------------------------
SUBTENANT:
By: /s/ [illegible]
-------------------------------
Title: President
-------------------------------
Date: 4/15/99
-------------------------------
Attest: /s/ [illegible]
------------------------------
The undersigned, Landlord under the Lease in Exhibit A, hereby consents to
the subletting of the premises described in Exhibit B on the terms and
conditions contained in this Sublease and does not release Sublandlord from
any of its obligations under the Lease. This consent shall apply only to this
Sublease and shall not be deemed a consent to any other sublease.
LANDLORD:
By:
-------------------------------
Title:
-------------------------------
Date:
-------------------------------
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EXHIBIT 10.23
FIRST AMENDMENT TO SUBLEASE
DATED APRIL 15TH, 1999
This first Amendment to the Sublease dated April 15, 1999, incorporated
herein and made part of that Sublease, dated March 25th, 1999, by and between
Interim HealthCare, formally Personnel Pool of America, Inc., hereinafter
designated "Sublandlord" and True Vision International, Inc., "Subtenant".
AGREEMENT:
This Amendment to reaffirm specifically the terms of the Cancellation Clause
as stated in Paragraph 6 of the "First Amendment To Lease" dated November 11,
1996. Moreover, Subtenant's right to elect the said Cancellation Clause as
part of the Sublease Agreement.
Except as hereby extended, modified, supplemented or amended, all terms
covenants or conditions, of the Sublease shall remain in full force and
effect.
AGREED AND ACCEPTED:
SUBLANDLORD
INTERIM HEALTHCARE, INC.
By: /s/ KATHLEEN A. [illegible]
-------------------------------
Title: C.O.O.
-------------------------------
Date: 4/28/99
-------------------------------
SUBTENANT:
By: /s/ [illegible]
-------------------------------
Title: President
-------------------------------
Date: 4/15/99
-------------------------------
LANDLORD:
BGK ASSET MANAGEMENT CORP.,
AGENT FOR METRO CENTER ASSOCIATES, L.P.
By:
-------------------------------
Title:
-------------------------------
Date:
-------------------------------
<PAGE>
EXHIBIT 10.24
LEASE AGREEMENT
STANDARD OFFICE LEASE
METRO CENTER ASSOCIATES, L.P.
-----------------------------
This Lease made as of this September 12, 1995 by and between METRO CENTER
ASSOCIATES, L.P., A NEW MEXICO LIMITED PARTNERSHIP, (hereinafter "Landlord")
and DR. STEPHEN GRAHAM, D/B/A ALBUQUERQUE CORRECTIVE EYE SURG [UNREADABLE]
VISION SCULPTING (hereinafter "Tenant").
1. PREMISES. Landlord does hereby lease to Tenant, and Tenant does hereby
take from Landlord, those certain premises to be known as Suite 100
comprising approximately 2144 square feet of rentable area hatched
in red on Exhibit A attached hereto (hereinafter the "Leased Premises").
The Leased Premises is located in a complex known as the METRO CENTER,
which is located at 1720 LOUISIANA BLVD., N.E., Albuquerque, New Mexico
and which includes surface parking, walking areas, landscaped areas and
certain common areas and facilities that are shared with other occupants
under rules and regulations as initiated by Landlord from time to time.
2. LEASE TERM. The Lease Term shall commence upon occupancy (hereinafter
"Commencement Date") and shall continue thereafter to include sixty (60)
months of occupancy. When the date for the end of the Lease term has been
determined, such date shall be set forth in a document, (in substantially
the form of Exhibit "B"), executed by Landlord and Tenant. The
Commencement Date for the Lease shall be SIX (6) WEEKS FROM THE DATE OF
[UNREADABLE] LEASE EXECUTION, APPROXIMATELY NOVEMBER 1, 1995.
3. ANNUAL BASE RENT AND RENTAL ADJUSTMENT. Tenant shall pay to Landlord
during the lease term an annual base rent in monthly installments
pursuant to the following Schedule (hereinafter "Annual Base Rent"):
An annual Base Rent in the first year of the Lease Term, the sum of
THIRTY THOUSAND FIVE HUNDRED NINETY-FOUR AND 84/100 DOLLARS ($30,594.84),
payable in equal monthly installments of TWO THOUSAND FIVE HUNDRED
FORTY-NINE AND 57/100 DOLLARS ($2,549.57) on the first day of each month.
An annual Base Rent in the second year, the sum of THIRTY-ONE THOUSAND
NINE HUNDRED EIGHTY-EIGHT AND 40/100 DOLLARS ($31,988.40) payable in
equal monthly installments of TWO THOUSAND SIX HUNDRED SIXTY-FIVE AND
70/100 DOLLARS ($2,665.70) on the first day of each month.
An annual Base Rent in the third year, the sum of THIRTY-THREE THOUSAND
FOUR HUNDRED FORTY-SIX AND 40/100 DOLLARS ($33,446.40) payable in equal
monthly installments of TWO THOUSAND SEVEN HUNDRED EIGHTY-SEVEN AND
20/100 DOLLARS ($2,787.20) on the first day of each month.
An annual Base Rent in the fourth year, the sum of THIRTY-FOUR THOUSAND
NINE HUNDRED SIXTY-EIGHT AND 60/100 DOLLARS ($34,968.60) payable in
monthly installments of TWO THOUSAND NINE HUNDRED FOURTEEN AND 05/100
DOLLARS ($2,914.05) on the first day of each month.
An annual Base Rent in the fifth year, the sum of THIRTY-SIX THOUSAND
FIVE HUNDRED NINETY-EIGHT AND 08/100 DOLLARS ($36,598.08) payable in
monthly installments of THREE THOUSAND FORTY-NINE AND 84/100 DOLLARS
($3,049.84) on the first day of each month.
The monthly installments of Annual Base Rent shall be due and payable in
advance on the 1st day of each month.
Should the Tenant fail within five (5) days of the date due, to pay all
of the rents provided for herein at the time and in the manner hereto
provided, Landlord may, at his option, impose a collection fee of 10% of
the amount then due.
A. Cost Adjustment. In the event that the "building operating costs" of
the Building shall increase during any calendar year over the "basic
operating costs", then the fixed rental for said premises shall be
adjusted commencing with the first day of the calendar year next
following such increase and each year thereafter in the manner
hereinafter provided. Building operating costs means the actual
expense incurred and paid by the Landlord for the operating
maintenance of the Building in accordance with accepted principles of
sound management and accounting practices as applied to office
buildings, including, without limitation:
*1. janitor labor and supplies;
*2. maintenance and engineering labor and supplies;
3. insurance applicable solely to the Building and it's operation;
4. water, gas and other fuels;
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<PAGE>
5. electricity used in the operation and maintenance of the Building;
*6. salaries and wages of employees other than employees above the
grade of Building Superintendent whose time is spent directly and
solely in the operation of the Building; and
7. all real property taxes paid by the Landlord.
*8. expenses incurred in connection with the maintenance and operation
of any parking area.
*LANDLORD'S "CONTROLLABLE" EXPENSES WHICH SHALL NOT EXCEED 5% ANNUAL
INCREASES.
Notwithstanding anything to the contrary, the following expenses are excluded
from Building Operating Costs:
1. expenses for any capital improvements made to the land or Building;
2. expenses for painting, redecorating or other work which Landlord
performs for any tenant of the Building;
3. expenses for repairs or other work occasioned by fire, windstorm,
or other insurable casualty;
4. expenses incurred in leasing or procuring new tenants;
5. expenses incurred in enforcing the terms of this Lease;
6. interest or amortization payments on any mortgage;
Promptly after January 1st of each calendar year of this Lease, Landlord
shall determine the building operating costs for the preceding calendar year.
In the event that the building operating costs for said preceding calendar
year shall exceed the basic operating costs, then the percentage of such
increase shall be computed and the Tenant's share determined. Landlord agrees
to promptly notify Tenant in writing of the amount of Tenant's share of such
increase. Tenant agrees to pay to Landlord monthly Tenant's share of such
increase. Such additional rental payments shall commence as of the first day
of January next following each calendar year in which such operating costs
have exceeded said basic operating costs.
"Basic Operating Costs" shall mean the building operating costs for the
calendar year 1996. Landlord shall determine the basic operating costs and
shall notify Tenant in writing of the amount thereof.
Tenant's percentage share of the increasing costs shall be determined by
dividing the total number of square feet then currently leased by Tenant by
the total gross leasable square feet of the buildings comprising of
approximately 47,044 SQUARE FEET.
B. Other Adjustments. If Landlord's expenses increase due to any fees,
levies or other taxes imposed by any governmental agency effecting the
operations of this property subsequent to execution of this Lease, then
Tenant shall pay his percentage share of such fee, levy or tax.
1. Determining Base Year Tax: If the amount of Taxes payable for the
Calendar Tax Year 1996 ("Base Year Tax") is reduced by final
determination of legal proceedings, settlement, or otherwise, such
reduced amount as finally determined shall be the Base Year Tax and
shall determine the amount of the Tax Payments pursuant to this
Clause.
2. Recompute Taxes. The Tax Payments theretofore paid or payable under
this Clause shall be computed on the basis of such reduction, and
the Tenant shall pay to Owner as Additional Rent within ten (10)
days after being billed therefor, any deficiency between the amount
of the Tax Payments computed prior to the reduction and the amount
therefor due as a result of such recomputation.
C. Payment of Additional Rent. Any and all increases in rental pursuant
to this paragraph shall be additional rent payable by Tenant hereunder
and in the event of non-payment thereof, Landlord shall have similar
rights with respect to such non-payment as it has with respect to any
other non-payment of rent hereunder.
D. Security Deposit. Tenant has deposited with Landlord the sum of
TWO THOUSAND FIVE HUNDRED FORTY-NINE AND 57/100 DOLLARS ($2,549.57)
receipt of which is hereby acknowledged by Landlord, as security for
the performance by Tenant and all of the terms, covenants, and
conditions of this Lease. Security Deposit shall be returned to Tenant
upon the termination of this Lease, without interest, provided Tenant
has complied with all the terms, conditions and covenants hereof, and
that the Tenant's premises are left in good condition, cleaned and
restored to the condition of the premises at the time of the
commencement of the Lessee, usual wear and tear excepted.
5. USE AND INSURANCE RATING. Tenant shall use the Leased Premises for the
following purposes and for no other purposes whatsoever. EYE CLINIC AND
RELATED EYE PROFESSIONAL OFFICES. Tenant will not construct or permit to
be conducted any activity or place any equipment in or about the Leased
Premises, which will in any way increase the rate of fire insurance or
other insurance on the Building, and if any increase in the rate of fire
insurance or other insurance is stated by any insurance company or by the
applicable insurance rating bureau
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<PAGE>
to be due to activity or equipment of Tenant in or about the Leased
Premises, such statement shall be conclusive evidence that such increase
in such rate is due to such activity or equipment, and as a result
thereof, Tenant shall be liable for each increase and shall reimburse
Landlord therefor.
6. NO WARRANTIES BY LANDLORD AND AGENTS ACCEPTANCE OF PREMISES. Neither
Landlord nor any agents or employees of Landlord has made any
representations or promises with respect to the Leased Premises or the
Building, except as expressly set forth herein and no rights, privileges,
easements or licenses are required by Tenant, except as expressly set
forth herein.
If for any reason Landlord cannot deliver possession of the Premises to
Tenant by the Commencement Date, Landlord shall not be subject to any
liability therefor, nor shall failure affect the validity of this Lease,
or the obligations of Tenant hereunder, or extend the terms hereof, but
such case, Tenant shall not, except as otherwise provided herein, be
obligated to pay rent or perform any other obligation of Tenant under the
terms of this Lease until Landlord delivers possession of the Premises to
Tenant. If possession of the Premises is not delivered to Tenant within
sixty (60) Days after the Commencement Date, Tenant may, at its option,
by notice in writing to Landlord within ten (10) days after the end of
said sixty (60) day period, cancel this Lease, in which event the parties
shall be discharged from all obligations hereunder; provided further,
however, that if such written notice of Tenant is not received by
Landlord within said ten (10) day period, Tenant's rights to cancel this
Lease hereunder shall terminate and be of no further force or effect.
Except as may be otherwise provided, and regardless of when the Original
term actually commences. If possession is not rendered to Tenant when
required by this Lease and Tenant does not terminate this Lease, as
aforesaid, the period free of obligations to pay Base Rent, if any,
that Tenant would otherwise ??? under the terms hereof, but minus any
days of delay caused by the acts, changes or omissions of Tenant.
The taking of a possession of the Leased Premises by Tenant shall be
conclusive evidence that, except for minor "punch list" items, if any,
the Leased Premises were on each date of possession in good, clean and
tenable condition and that the Tenant accepts the Leased Premises IN
ACCORDANCE WITH EXHIBIT "A" LANDLORD'S LEASE CONTRIBUTION SHALL NOT
EXCEED FORTY-TWO THOUSAND EIGHT HUNDRED EIGHTY AND 00/100 DOLLARS
($42,880.00). AN EXCESS OF THIS AMOUNT SHALL BE DONE SOLELY BY TENANT.
7. ASSIGNMENT AND SUB-LETTING. Tenant shall the right to assign this Lease
or sub-let all or any part of the Leased Premises with the prior written
consent of the Landlord provided as follows:
A. the Landlord may in its sole discretion withhold its consent to an
assignment or a sub-lease (i) to any present tenant of Landlord in the
Building or any other location or (ii) to any tenant whose occupancy
would be inconsistent with the type of tenant in the METRO CENTER.
B. such assignment or sublease shall not relieve Tenant of its
obligations under this Lease;
C. any profit received from such assignment or sub-lease shall promptly,
upon receipt thereof, be paid by Tenant to Landlord; "Profit" as used
hereto shall mean any amount paid by an assignee or sub-tenant in
excess of the Base Annual Rent and additional rent attributable to the
Lease Premises being assigned or sublet after deducting therefrom any
amounts Tenant has paid for outside leasing commissions and reasonable
tenant improvements occasioned by such assignment or sub-letting;
D. Tenant shall provide Landlord with notices of any assignment or
sub-lease in writing together with a copy of each assignment or
sub-lease, and Landlord shall have thirty (30) days from receipts
thereof to make a decision concerning such assignment or sub-lease;
E. each assignment or sub-lease shall not violate rules, from time to
time adopted by Landlord for general application throughout the
Building;
F. the financial condition and credit record of the assignee shall be
reasonably acceptable to Landlord; and
G. any assignment or sub-letting made in violation of the provisions
contained herein shall be ineffective.
8. ALTERATIONS. Tenant will not make any alterations of or additions to the
Leased Premises without the prior written approval of Landlord. All work
to be performed in the Leased Premises shall be performed by competent
contractors and subcontractors, approved by Landlord, which approval
shall not be unreasonably withheld by Landlord, except that Landlord may
in any event condition its approval of such contractors and
subcontractors on the Tenant's furnishing separate performance and
payment surety bonds covering any work to be performed by such
contractors or subcontractors on the Leased Premises, and Landlord may,
in any event, require that contractors and subcontractors normally
employed by Landlord be engaged for any mechanical or electrical work and
thus any alterations be done by contractors or subcontractors compatible
with those workmen, contractors and subcontractors employed from time to
time in the Building by Landlord. All alteration work performed by or for
Tenant hereunder must be performed in such manner to avoid disruption of
the Building operations or disturbance of other tenants in the Building.
Unless Landlord requires the Tenant to restore the Leased Premises as set
forth in this Lease, all alterations, additions or improvements which may
be made by either of the parties hereto upon the Leased Premises, except
office furnishings purchased by Tenant which may be removed without
damage or destruction to the Leased Premises, shall be the property of
Landlord and shall remain upon and be surrendered with the Leased
Premises as a part thereof
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at the termination of this Lease or any calculation thereof. Tenant will
not permit any mechanics, laborers or materialmen's liens to stand against
the Leased Premises and will immediately remove all such liens. Landlord
may remove such liens and Tenant shall immediately reimburse Landlord upon
demand for all costs and expenses, including attorney's fees, incurred by
Landlord in removing such mechanic's or materialmen's lien.
9. TENANT EQUIPMENT AND FURNISHINGS. Tenant may install or operate in the
Leased Premises any electrically operated equipment or other machinery
which uses standard 110 volt current and which Landlord determines in its
reasonable judgment to constitute standard office equipment. LANDLORD
HEREBY AGREES TO THE INSTALLATION OF A 220 VOLT CIRCUIT, THE COST OF
METERING SHALL BE PART OF TENANT IMPROVEMENT ALLOWANCE AND ELECTRICITY
COSTS SHALL BE PAID BY TENANT. Tenant shall not install any other equipment
of any kind or nature whatsoever which will or may require any changes,
replacements or additions to or in the use of the heating, air
conditioning, electrical or plumbing systems of the Leased Premises of the
Building without first obtaining the prior written consent of the Landlord.
No plumbing fixtures of any type shall be installed within the Leased
Premises without Landlord's written approval. If Tenant's business machines
and mechanical equipment cause noise or vibration that may be transmitted to
the structure of the Building or to any space therein to such a degree as to
be reasonably objectable to Landlord or to any tenant in the Building, then
Tenant shall install vibration eliminators or other devices sufficient to
eliminate such noise and vibration at Tenant's cost. If Tenant uses heat
generating machines or equipment (other than standard office equipment
designated by Landlord as set forth above) in the Leased Premises which
affect the temperature in the Leased Premises otherwise maintained by the
air conditioning system furnished by Landlord as set forth in Section 12,
Landlord reserves the right to install or to require Tenant to install
adequate supplementary air conditioning equipment in the Leased Premises
at Tenant's cost.
No furniture, equipment or other bulky items of any description will be
received into the Building or carried in the elevators except as approved
by Landlord. All moving of furniture, equipment and other materials shall
be done during hours previously approved by Landlord or Landlord's agent,
be under the direct control and supervision of Landlord or its agent which
shall not be responsible for any damage to or charges for moving the same.
Tenant shall promptly remove from the public and common area in the Building
any of the Tenant's furniture, equipment or other material then delivered or
deposited. Landlord shall have the right to limit the weight and prescribe
the position of sales and other heavy equipment or fixtures. In no event
will Tenant be allowed to place a load exceeding fifty (50) pounds per
square foot on any floor of the Building (except a floor on grade) without
prior written consent of Landlord. Any and all damage or injury to the
Leased Premises or the Building caused by moving the property of Tenant in
or out of the Leased Premises, or due to the same being on the Leased
Premises, shall be repaired by and at the sole cost of Tenant.
If any electrical equipment, machinery, plumbing fixtures or other
mechanical equipment installed or used by Tenant in the Leased Premises
commence or require utility service in addition to those services to be
furnished by Landlord pursuant to Section 12, Tenant shall promptly pay, as
additional rent, all charges for such additional utilities and utility
service furnished to the Leased Premises during the term of this Lease. If
such utilities are separately metered to the Leased Premises, Tenant shall
pay all such additional charges directly to the utility company furnishing
the same. To the extent that utilities are furnished to the Leased Premises
without separate metering, the amount which may be specially charged to
Tenant for additional utility usages shall be determined by Landlord on the
basis of Landlord's reasonable estimates of consumption by Tenant of such
utilities in the Leased Premises, and on the basis of the costs incurred by
Landlord in purchasing such additional utilities for use in the Building.
PERSONAL PROPERTY TAX. Tenant shall pay all taxes levied against Tenant's
personal property, of every description, maintained on and used by the
Tenant in connection with the Leased Premises.
10. SERVICES FURNISHED BY LESSOR. Landlord agrees to furnish the following
services to Tenant upon the terms and conditions set forth herein with the
costs for such services being part of the Operating Costs.
A. HEATING AND AIR CONDITIONING. Landlord agrees to furnish sufficient
heat and air conditioning to provide a temperature condition required
in Landlord's reasonable judgment for comfortable occupancy of the
Leased Premises under normal business operations between 7:00 a.m. and
6:00 p.m. Monday through Friday and 8:00 a.m. to 1:00 p.m. Saturdays
except holidays. Upon request of Tenant, Landlord will furnish air
conditioning and heating at other times (that is, at times other than
the times specified above); provided, however, Tenant must request
such additional services before 2:00 p.m. on the business day prior
to the day Tenant desires the same. If such services are furnished by
Landlord in any such other times, Tenant shall reimburse Landlord for
furnishing such services at the rate of $25.00 per hour for each hour
Tenant is present.
B. LAVATORY SERVICE. Landlord will provide reasonable sewer service and
water for drinking, lavatory and toilet purposes in the Building.
C. ELECTRICITY. Landlord agrees to provide 110 volt current electricity to
the Leased Premises.
D. ELEVATOR SERVICE. Landlord will provide passenger elevator service at
all times.
E. JANITOR SERVICE. Landlord will provide daily janitor service.
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F. KEYS AND LOCKS. Landlord shall furnish Tenant with two (2) keys for
the lock on each corridor door entering the Premises. Additional keys will
be furnished at a charge by Landlord on an order signed by Tenant or Tenant's
authorized representative. All such keys shall remain in the property of
Landlord. No additional locks shall be allowed on any door of the Premises
without Landlord's permission, and Tenant shall not make or permit to be made
any duplicate keys except those furnished by Landlord. Upon termination of
this Lease, Tenant shall surrender to Landlord all keys to the Premises and
give to Landlord the explanation of the combination of all locks for safes,
safe cabinets and vault doors, if any, in the Premises provided, however,
Tenant shall place no safes, safe cabinets or vaults within the Premises
without the prior written consent of Landlord.
G. GRAPHICS. Landlord shall provide and install, at Tenant's cost all
letters or numerals on entrance doors to the Premises; all such letters and
numerals shall be in the building standard graphics, and no others shall be
used or permitted on the exterior of, or which may be visible from outside,
the Premises, without Landlord's consent.
11. NO WARRANTY AS TO SERVICES. Landlord does not warrant that any of the
services it is required to provide under the terms of this Lease will be free
from interruption. Interruption of service shall never be deemed an eviction
or disturbance of Tenant's ??? and possession of the Leased Premises or any
part thereof, or render Landlord or Landlord's agents or employees liable to
Tenant for damages, or relieve Tenant from performance of Tenant's
obligations under this Lease. Provided, however, that Landlord will use due
diligence to restore the interrupted service as soon as reasonably possible
and, to the extent that, the interruption of service is under the control of
Landlord, such interruption will be during non-business hours as much as
possible.
12. COMPLIANCE WITH LAW - ENERGY POLICIES. Wherever in this Lease any terms,
covenants or conditions are required to be performed by the Landlord, the
Landlord shall be deemed to have kept and performed such terms, covenants and
conditions notwithstanding any action taken by the Landlord, if such notice
is pursuant to any governmental regulations, requirements or directives.
Without limiting the generality of the foregoing, the Landlord may reduce the
quantity and quality of all utility and any other service and impose such
regulations as the Landlord deems necessary in order to preserve energy.
Landlord agrees that its determination hereunder shall in all instances be
reasonable.
13. PERSONAL INJURY - LIMITATION OF LIABILITY AND INDEMNIFICATION OF
LANDLORD. Landlord shall not be liable to Tenant for any personal injury as
a result of any act, omission or negligence (excluding gross negligence) of
the Landlord, the condition of the Leased Premises or the Building or any
other case whatsoever, including but not limited to, fire and other perils.
Tenant furthers agrees that it will indemnify and hold Landlord harmless from
any and all claims for injury or damage to persons resulting from any act,
omission or neglect by Tenant, or any other cause which arises from or is
connected with the Tenant's possession or use of the Leased Premises of the
Building.
14. PROPERTY DAMAGE - MUTUAL WAIVER OF LIABILITY. Except for specific
obligations to repair damage or destruction to the Leased Premises as set
forth in this Lease, Landlord and Tenant are hereby minimally released from
any and all claims of any nature now or hereafter arising from or on account
of damage or destruction to the Leased Premises of the Building or to any
personal property of any of the foregoing contained therein or thereon,
whether such damage or destruction is caused by, arises or results from fire,
other perils or any other cause whatsoever. Landlord and Tenant each agree
to look to their respective insurance carriers for protection against any
such damages or destruction to any of their respective real or personal
property and do hereby waive all rights of subrogation.
15. LIABILITY OF LANDLORD LIMITED TO INTEREST IN PROPERTY. In the event of
a default, breach or violation by Landlord (which term includes Landlord's
officers, directors, employees, agents or representatives) of any of
Landlord's obligations under this Lease, Landlord's liability to the Tenant
shall be limited to its ownership interest in the Property.
16. TENANT INSURANCE. Tenant agrees to purchase, in advance, and to carry
in full force and effect, adequate insurance with a carrier acceptable to
Landlord including at a minimum the following interest:
A. "All Risk" fire and casualty insurance, including endorsements for
extended coverage, vandalism and malicious mischief and water damage
covering the full replacement value of all Tenant's fixtures and
personal property owned by Tenant that Tenant has a right to remove
from the Leased Premises at the termination of the Lease.
B. Liability Insurance covering all acts of Tenant, within the Leased
Premises and the Building in a local combined single limit coverage
amount of not less than $1,000,000 for personal injury, death and
property damage.
C. Such other or additional insurance coverage as Landlord shall, from
time to time, deem reasonably necessary, notice of which shall be
given to Tenant.
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D. Such insurance policies shall, unless Landlord shall otherwise agree,
include a waiver of subrogation endorsement.
All such insurance shall name Landlord as an additional insured and
shall not be cancelable with less than thirty (30) days written notice
to Landlord by the insurer. Certificates of all such insurance shall be
delivered to the Landlord prior to the occupancy of the Leased Premises
by Tenants at least thirty (30) days prior to the termination date of
any existing policy.
17. FIRE OR OTHER CASUALTIES. If the Building is substantially damaged or
destroyed by fire or other casualty, the Landlord shall have the right to
terminate this Lease, provided it gives written notice thereof to the Tenant
with ninety (90) days after such damage or destruction. If a portion of the
Leased Premises is damaged by fire or other casualty, and Landlord elects not
to terminate this Lease, the Landlord shall within a reasonable time and at
its own expense, restore the Leased Premises, exclusive of any alterations or
other changes made to the Leased Premises at any time by or at the direction
or request of Tenant, to as near the condition which existed immediately
prior to such damage or destruction as reasonably possible. In the event
Landlord so elects to restore the Leased Premises, rent shall abate during
such period of time as the Leased Premises are unusable in proportion that
the unusable portion of the Leased Premises shall bear to the entire Leased
Premises. If the substantial destruction to the Building or to that portion
of the Building subject to this Lease and the Leased Premises cannot be
substantially restored within 180 days from the time of such damage or
destruction, then the Tenant shall have the right to terminate this Lease.
The Landlord shall not be responsible to the Tenant for damages to or
destruction of any furniture, equipment, alterations or other changes made or
installed in, on or about the Leased Premises regardless of the cause or the
damage or destruction.
18. EMINENT DOMAIN. If the entire Building or that portion of the Building
which includes all or substantially all of the Leased Premises is permanently
taken by eminent domain, this Lease shall automatically terminate as of the
date of such taking. If any portion of the Building is taken by eminent
domain, Landlord shall also have the right to terminate this Lease by giving
written notice thereof to Tenant within ninety (90) days after the date of
taking. If only a portion of the Leased Premises is taken by eminent domain
and Landlord elects not to terminate this Lease, Landlord shall, at its
expense, restore the Leased Premises, exclusive of any improvements or other
changes made to the premises by Tenant, to as near the condition which
existed immediately prior to the date of taking as reasonably possible. Rent
shall abate during such period of time as the Leased Premises are unusable in
proportion that the unusable portion of the Leased Premises shall bear to the
entire Leased Premises and upon completion of restoration necessary
adjustments shall be made in the Annual Base Rent, additional rent or other
costs to reflect a reduction in the size of the Leased Premises and/or the
total rentable area of the Building. Tenant shall have no right to any of the
award or payment made in connection with such taking provided, however, that
Tenant shall be entitled to recover any separate amount for Tenant fixtures
and/or relocation costs provided under appropriate statutes, ordinances or
regulations.
19. RULES AND REGULATIONS. Tenant shall use the Leased Premises and the
public and common areas in the Building in accordance with such rules,
regulations and procedures as may, from time to time, be made by the Landlord
for the general safety, comfort and convenience of the owners, occupants and
tenants of the Building and shall cause Tenant's employees and invitees to
abide by such rules and regulations.
20. WASTE. Tenant shall use due care in the use of heat, water and
electricity, the use of the Leased Premises and the public and common areas in
the Building and without qualifying the foregoing, shall not neglect or
misuse water fixtures, electric lights and heating.
21. RUBBISH AND DEBRIS. No rubbish, dirt, overshoes, mats, umbrellas or
objects of any kind shall be put in the public or common areas in the
Building by Tenant.
32. HAZARDOUS SUBSTANCES.
A. Tenant hereby represents that Tenant uses only those Hazardous
Materials (as defined below) set forth on Exhibit C herein, in the
conduct of its business on the Premises. Otherwise, Tenant does not
and shall not use or permit the use of the Premises for any purpose
relating to the storage and use of Hazardous Materials. Tenant shall
not, in any event, generate, manufacture, produce, release, discharge
or dispose of on, in or under the Premises or the property of which
the Premises are a part (the "Property"), or transport to or from the
Premises or the Property, any Hazardous Materials, or allow any other
person or entity to do so.
B. Tenant shall comply with all local, state or federal laws, ordinances
or regulations relating to Hazardous Materials and above ground and
underground storage tanks on, in, under or about the Premises.
C. Tenant shall promptly notify Landlord should Tenant receive notice of
or otherwise become aware of any (i) pending or threatened
environmental regulatory action against Tenant, the Premises or the
Property; (ii) claims made or threatened by any third party relating
to any loss or injury resulting from any Hazardous Material; or
(iii) release or discharge or threatened release or discharge of any
Hazardous Material in, on, under or about the Premises or the Property.
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D. Tenant shall promptly deliver copies of any documents relating to any
governmental proceeding relating to Hazardous Materials and all
engineering reports, test reports and laboratory analyses concerning
the Hazardous Materials to Landlord.
E. Tenant shall promptly and thoroughly investigate suspected Hazardous
Materials contamination of the Premises or the Property or the ground
water of the Property, resulting from Tenant's use of the Premises.
F. Upon reasonable request, Landlord has the right to investigate
Tenant's operations. In Landlord's sole reasonable discretion,
Landlord may, if it deems it necessary, requires an audit of Tenant's
operation on the premises, at Tenant's expense, to ensure compliance
with environmental laws and regulations and this section 22. Upon
receipt of written notice from Landlord, tenant shall promptly
correct any violations and/or deficiencies cited in the audit. IF
TENANT IS FOUND TO BE IN TOTAL COMPLIANCE, ALL REASONABLE COSTS
ASSOCIATED WITH THE AUDIT SHALL BE REIMBURSED TO TENANT BY LANDLORD.
G. If an Event of Default occurs, Landlord, at Tenant's expense, shall
have the right to cause to be conducted an investigation of the
Premises for Hazardous Materials and Tenant shall forthwith remove,
repair, clean up or detoxify any Hazardous Materials from the
Premises, the Property, or ground water of the Property resulting
from Tenant's use, whether or not such actions are required by law.
H. Tenant shall permit Landlord or its agents to inspect the Premises at
any reasonable times and agree to fully cooperate with Landlord in
determining compliance with this Section 22.
I. Tenant shall protect, indemnify and hold harmless Landlord, its
directors, officers, employees, agents, successors and assigns from
and against any and all loss, damage, cost, expenses or liability
(including attorney's fees and costs) arising directly or indirectly
out of Tenant's use of the Premises, or from the conduct of Tenant's
business or attributable to Tenant's failure to comply with this
Section 22, including without limitation (i) all foreseeable
consequential damages; and (ii) the costs of any required or
necessary repair, clean up, or detoxification of the Premises or the
Property and the preparation and implementation of any closure,
remedial or other required plans. This indemnity shall survive
termination or cancellation of this Lease for any reason.
J. "Hazardous Materials" shall mean any flammable explosives, radioactive
materials, hazardous wastes, toxic substances or related materials,
including, without limitation, any substance defined as or included
in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "toxic substances", "contaminants" or
"pollutants" under any applicable federal or state laws or
regulations.
23. VENDING MACHINES. No vending machines shall be installed in the Leased
Premises without the written consent of Landlord.
24. LESSOR'S RIGHT TO ENTER PREMISES. Landlord, or its authorized agents or
attorneys, may at any reasonable time enter the Leased Premises to
inspect, make repairs and improvements and/or changes in the Leased
Premises or other premises in the Building as Landlord may deem proper.
Landlord's reserved rights hereunder shall include, without limitation,
free unhampered and unobstructed access to Building airways, equipment
ducts, under floor heater ducts, stairways, access panels and all
cleaning and utility services. There shall be no diminution of real or
injury to business caused by Landlord's exercise of the rights reserved
by Landlord in this paragraph.
25. SECURITY OF LEASED PREMISES. Tenant assumes full responsibility for
protecting the Leased Premises from theft, robbery and pilferage, which
includes keeping doors locked and other access of entry to the Leased
Premises closed and secured after normal business hours.
26. REPAIRS. Tenant shall promptly pay to Landlord upon request an amount
equal to any cost incurred by Landlord in repairing the Leased Premises
and/or public and common areas in the Building when such repairs were
made necessary by the negligence or of misuse by the Tenant.
27. LEASE TO BE SUBORDINATE. Landlord may cause this Lease to be made subject
and subordinate to all ground or underlying leases, mortgages and
restrictions which may now or hereafter affect the Building and to all
renewals and extensions thereof. For confirmation of such subordination,
Tenant shall execute promptly any subordination agreement requested by
Landlord. Tenant hereby irrevocably constitutes and appoints Landlord as
Tenant's agent to execute any such subordination agreement or agreements
for or on behalf of Tenant. Such subordination is subject to Tenant
enjoying the quiet possession of the Leased Premises if any Ground
Landlord or Mortgagee becomes landlord hereunder provided that Tenant is
not then in default hereunder or does not default in the future.
28. BROKERAGE. Tenant and Landlord respectively represent and warrant to the
other that no brokers were retain, used or referred to with respect to
this Lease and/or Leasing, except for BGK Asset Management Corp., who
represents Landlord and CB Commercial Real Estate Group, Inc., who
represents Tenant and no other claims for commission or fees are valid or
warranted with respect to our connection with this Lease and that each
shall defend, indemnify and hold the other harmless from any and all
costs, claims or causes of action for such commissions or fees resulting
from its own acts.
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29. ESTOPPEL CERTIFICATE. Tenant agrees that at any time and from time to
time upon not less than five (5) days prior written notice by Landlord,
to execute, acknowledge and deliver to Landlord a statement in writing:
A. Certifying that this Lease is unmodified and in full force and
effect if there have been modifications, that this Lease is in full
force and effect as modified and stating the modifications.
B. Stating the dates in which the rent and other charges hereunder
have been paid by Tenant.
C. Stating whether or not, to the best knowledge of Tenant, Landlord
is in default in the performance of any covenants, agreements or
conditions contained in this Lease and if so, specifying each such
default of which Tenant may have knowledge.
D. Responding to such other matters as Landlord reasonably requests.
Any such statement delivered pursuant hereto may be relied upon by
any owner or prospective purchasers of the Building, any prospective
mortgage of the Building or Landlord's Interest therein or any
prospective assignee of any such mortgage.
30. TENANT TO SURRENDER PREMISES IN GOOD CONDITION. Upon the expiration or
termination of the lease term, Tenant shall at its expense:
A. Remove Tenant's goods and effects and those of all persons claiming
through Tenant:
B. Quit and deliver up the Leased Premises in Landlord peaceably and
quietly in as good order and condition as the same were on the date
the lease term commenced or were thereafter in place by Lessor,
reasonable wear and tear and damages from fire and other casualties
excepted; and
Any property left in the Leased Premises after the expiration or
termination of the Lease Term shall be deemed to have been abandoned
and shall be deemed the property of Landlord to be disposed of as
Landlord sees fit.
31. HOLDING OVER. Tenant agrees that no holding over by Tenant after the
expiration of this Lease Agreement whether with or without the consent
of Landlord, shall operate to extend and renew this Lease Agreement. The
monthly rental which had been payable at the time immediately prior to
such holding over times 1.50 shall be the monthly rental rate for any
additional period. Such tenancy shall be subject to all the terms and
conditions of this Lease. Upon holding over, Tenant's month-to-month
tenancy shall continue until such tenancy shall be terminated by
Landlord or until said Tenant shall have given to Landlord a written
notice of at least one (1) month prior to the date of the termination of
such monthly tenancy of his intention to terminate such tenancy and
shall, at the expiration of such month, have vacated and surrendered
possession of said premises to said Landlord.
32. DEFAULT. The occurrence of any of the following events shall constitute
a default by Tenant under this Lease:
A. If Tenant shall fail to pay any amounts to be paid by it hereunder,
including but not limited to Base Annual Rent and additional rent
and such default shall continue for a period of seven (7) days
after Landlord has given Tenant written notice of such failure to
pay; or
B. If Tenant fails to perform or observe any of Tenant's other
obligations, covenants or agreements herein or hereunder, and such
failure shall continue for a period of twenty (20) days after
Landlord has given Tenant written notice thereof; or
C. If Tenant makes a general assignment for the benefits of creditors,
or, subject to the rights of a Trustee in Bankruptcy files, or has
filed against it, a petition in bankruptcy under the Bankruptcy
Reform Act of 1978 or under any other applicable law of the United
States of America or any state thereof, consents to this
appointment of a trustee or receive for Tenants or for its
property, or if Tenant takes any action for the purpose of
effecting or consenting to any of the foregoing; or
D. The abandonment or vacating of the Premises by Tenant.
Upon the occurrence of any of the foregoing defaults, Landlord may, but
with no obligation to do so, immediately re-enter the Leased Premises
and remove all persons and property therefrom. Landlord shall have the
right to keep this Lease in full force and effect, or, at its option,
terminate this Lease as to all future rights of Tenant. Tenant hereby
expressly waives the service of any notice in writing of Landlord's
intent to re-enter the Leased Premises. Tenant shall be liable to
Landlord against all loss of rents and other damages which it may incur
by reason of such default, including all attorney's fees and expenses
incurred in enforcing any of the terms of this Lease. If Tenant defaults
before expiration or termination of the term of this Lease, and Landlord
elects to terminate this Lease, Landlord may accelerate Tenant's
financial obligation hereunder, upon such acceleration, the entire
Annual Base Rent and additional rent and other costs as reasonably
determined by the Landlord due for the balance of the term hereof shall
be immediately due and payable. In the event Landlord re-enters the
Leased Premises as set forth herein, and, whether it elects to keep this
Lease in effect or terminate it, Landlord may re-let the Leased Premises
for such rent and upon such terms as are not
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unresumable under the circumstances. In such event, Tenant shall be
liable for all costs, expenses and damages incurred or sustained by
Landlord in re-letting the Leased Premises including, without
limitation, deficiency in rent, attorney's fees, expenses for placing
the Leased Premises in first class rentable condition, brokerage fees,
tenant allowances, improvements or payment of any other tenant
inducement. Landlord shall have the right to commence one or more
actions to enforce the terms hereof and the commencement and prosecution
of one action shall not be deemed a waiver or an estoppel from commencing
one or more actions from time to time in the future. Provisions
contained in this section shall be in addition to and shall not prevent
the enforcement of any claim Landlord may have against Tenant for
anticipatory breach of the unexpired term of this Lease. All rights and
remedies of Landlord under this Lease shall be cumulative and shall not
be exclusive of any other rights and remedies provided to Landlord under
applicable law.
33. RIGHT TO CURE DEFAULTS. If Tenant defaults in the observance or
performance of any of Tenant's covenants, agreements, or obligations
hereunder wherein the default can be cured by the expenditure of money,
Landlord may, but without obligation, and without limiting any other
remedies which it may have by reason of such default, cure the default,
charge the cost thereof to Tenant and Tenant shall pay the same
forthwith upon demand. If Landlord is required to commence a legal
action to recover such sums from the Tenant, Landlord shall also have
the right to recover all Interest costs and attorney's fees in
connection with such litigation.
34. USE OF THE TERMS "LANDLORD" AND "TENANT". The terms "Landlord" and
"Tenant" wherever used in this Lease, shall be construed to mean plural
in all cases where there is more than one Landlord or Tenant, and the
necessary grammatical changes required to make the provisions hereof
apply to corporations, partnerships or individuals, men or women, shall
in all cases be assumed as though in each case fully expressed. In
addition, where relevant in this Lease and especially in connection with
the provisions of this Lease relating to personal injury, limitation of
liability, indemnification, property damage and insurance, "Landlord"
shall mean Landlord, its respective employees, agents, invitees,
licensees, customers, clients, partners and shareholders and "Tenant"
shall mean its employees, agents, business invitees, licensees,
customers and clients, family members, guests, trespassers, partners and
shareholders.
35. LANDLORD'S CONSENT. Unless it is expressly stated herein that, as in any
particular required consent, Landlord's consent shall not be
unreasonably withheld. Landlord's consent need be given only at
Landlord's sole discretion.
36. EXECUTION BY LESSOR. Submission of this instrument to Tenant, or Tenant's
agents or attorneys, for examination or signature does not constitute or
imply an offer to lease, reservation of space, or option in lease and
this Lease shall have no binding effect until execution hereof by both
Landlord and Tenant.
37. CONTINUANCE OF AGREEMENT. This Agreement shall be binding upon and inure
for the benefit of the parties hereto and subject to the restrictions
and limitations herein contained, their respective heirs, successors and
assigns.
38. PROTECTION OF LANDLORD IN THE EVENT OF SALE OF THE PROPERTY. "Landlord",
as that term is used in this Lease, means only the owner of the
mortgage in possession or granted in possession under a deed of trust,
or the owner of this Lease, or in the event of any sale or sales of such
land and/or building or of this Lease, or in the event of a granted lease
of such land, the Landlord shall be and hereby is entirely freed and
relieved of all covenants and obligations of Landlord hereunder, and it
shall be deemed and construed without further agreement between the
parties or their successors-in-interest that the purchaser of the lessor
or assignee of the land and/or building has assumed and agreed to
carry out any and all covenants and obligations of the Landlord
hereunder.
39. SEVERABILITY. The provisions of this Lease are expressly severable, and
the unenforceability of any provision or provisions hereof shall not
affect or impair the enforceability of any other provision or provisions.
40. MEMORANDUM LEASE. Tenant and Landlord shall, upon the written request of
the other, execute a memorandum or short form lease, in a form suitable
for recording. Said Memorandum Lease shall be dated on the date and year
of the execution of this Lease and shall disclose the parties, the terms
of the Lease, the legal description of the Demised Premises and may
contain, in addition to the foregoing, each other terms and conditions
as Landlord or Tenant, as the case may be, may require.
41. WAIVER OF COVENANTS. Failure of Landlord to insist, in any one or more
instances, upon strict performance of any term, covenant or condition of
this Lease, or to any exercise any option herein contained, shall not be
construed as a waiver, or a relinquishment for the future of such term,
covenant, condition or option, but the same shall continue and remain in
full force and effect. The receipt by Landlord of rents with knowledge
of a breach in any of the terms, covenants and conditions of this Lease
to be kept or performed by Tenant shall not be deemed a waiver of such
breach, and Landlord shall not be deemed to have waived any provision of
this Lease unless expressed in writing and signed by Landlord.
42. NOTICES. Any notice or demand which, under the terms of this Lease or
under any statute must or may be given or made by the parties hereto,
shall be in writing and may be given or made by personal delivery or
mailing the same by registered mail, addressed to the other party at the
address mentioned below. Either party, however, may designate in writing
such new or other address to which such notice or demand shall hereafter
be so given, made or mailed. Any notice given hereunder by mail shall be
deemed delivered when
9
<PAGE>
deposited in the United States mails, certified mail, return receipt
requested, postage prepaid, and addressed as herein provided:
Landlord: METRO CENTER ASSOCIATES, L.P.
BGK ASSET MANAGEMENT CORP.
6301 Indian School Road NE. Ste. 650
Albuquerque, NM 67110
If to Tenant, at the Leased Premises unless notice of change of address
is given pursuant to this section.
43. RIGHT TO RELOCATE. If the Premises are less than 2,000 square feet in
area, Landlord reserves the right, as its option and upon given thirty
(30) days notice to Tenant, in transfer and remove Tenant from the
Premises to any other available space in the Building of equal size and
area. Landlord shall bear the expense of moving Tenant's furniture,
fixtures, telephone service, and other personal property as well as the
expense of any renovations or alteration necessary to make the new space
similar in arrangement and layout to the original Premises.
44. AMENDMENTS. This Lease may be amended only by a writing executed by both
parties herein.
45. MISCELLANEOUS. This Lease shall be construed according to the laws of
the State of New Mexico. The captions in this Lease are for convenience
only and are not part of this Lease.
46. REPRESENTATIONS. This Lease conditions the final agreement of the parties
hereto and supersedes all negotiations, representations or agreements,
whether written or oral, made prior to the execution hereof. Landlord
makes no representations or warranties regarding the Leased Premises or
of Landlord's or Tenant's rights, obligations, or duties with respect
thereto other than those expressly set forth in this Lease. By execution
of this Lease, Tenant acknowledges that no representations or warranties
have been made by Landlord (or Landlord's agents, representatives, or
employees, or by anyone acting on behalf of Landlord or under contract
with Landlord) upon which Tenant has relied is executing this Lease other
than such representations or warranties that are expressly set forth
herein.
47. ATTORNEY'S FEES. If the Tenant defaults in the performance of any of the
covenants of this Lease and by reason thereof the Landlord employs the
services of an attorney to enforce performance of the covenants by the
Tenant, to advise the Tenant, to collect moneys due by the Tenant, or to
perform any service based upon said default, then in any of said events
the Tenant does agree to pay a reasonable attorney's fees and all
expenses and costs incurred by the Landlord pertaining thereto and in
enforcement of any remedy available to the Landlord. In any proceeding
brought by either Landlord or Tenant against the other relating to this
Lease, a reasonable attorney's fee, to be fixed by the court in such
proceeding, shall be added in and made a part of the costs recovered in
such proceeding by the successful party therein.
48. TIME. It is understood and agreed between the parties herein that time is
of the essence in all of the terms and provisions of this Lease.
IN WITNESS WHEREOF, Landlord and Tenant respectfully have duly signed and
sealed these presents the day and year first above written.
LANDLORD
BGK ASSET MANAGEMENT CORP.
Agent for Metro Center Associates, L.P.
DATE: Nov. 27, 1995 By: /s/ LINDA C. [ILLEGIBLE]
------------- ------------------------------
Linda C. [ILLEGIBLE]/President
TENANT
ALBUQUERQUE CORRECTIVE EYE
SURGERY/
DATE: Nov. 27, 1995 By: /s/ STEPHEN GRAHAM
------------- ------------------------------
Stephen Graham
-10-
<PAGE>
State of New Mexico )
) ss.
County of Bonnadillo )
It is hereby acknowledged that the above Lease was sworn to and executed
before me on this 27th day of November, 1995 by Stephen Graham as Individual
of or and on behalf of ALBUQUERQUE CORRECTIVE EYE SURGERY, Tenant.
/s/ TORIA RACHELL MCCONNELL
--------------------------------------------
NOTARY PUBLIC
My Commission Expires:
7-7-99 [NOTARY SEAL]
- ----------------------
State of New Mexico )
) ss.
County of Bonnadillo )
It is hereby acknowledged that the above Lease was sworn to and executed
before me on this 27th day of November, 1995 by Linda G. Guiterrez as
President of or and on behalf of BGK ASSET MANAGEMENT CORP. AS AGENT FOR
METRO CENTER ASSOCIATES, L.P., A NEW MEXICO PARTNERSHIP.
/s/ TORIA RACHELL MCCONNELL
--------------------------------------------
NOTARY PUBLIC
My Commission Expires:
7-7-99 [NOTARY SEAL]
- ----------------------
11
<PAGE>
GUARANTY
In consideration of the making of the attached lease by the Landlord with
Tenant at the request of the undersigned and in reliance on this Guaranty,
the undersigned hereby guarantees the payment of the rent to be paid by
Tenant and the performance by the Tenant of all terms, conditions, covenants
and agreements of the Lease, and the undersigned promises to pay all the
Landlord's expenses, including reasonable attorney's fees, incurred by the
Landlord in enforcing this Guaranty. Landlord's consent to any assignment or
assignments, shall in no way or manner release the undersigned from Liability
as Guarantor.
The foregoing Guaranty relates to that certain lease dated SEPTEMBER 12,
1995, covering premise located at 1720 LOUSIANA BLVD. N.E., Albuquerque,
County of Bonnadillo, State of New Mexico in which METRO CENTER ASSOCIATES,
LP., A NEW MEXICO LIMITED PARTNERSHIP is Landlord and BGK ASSET MANAGEMENT
CORPORATION is Agent for Landlord and DR. STEPHEN GRAHAM, d/b/s ALBUQUERQUE
CORRECTIVE EYE SURGERY is Tenant.
By: /s/ STEPHEN GRAHAM
----------------------------------------
Stephen Graham
12
<PAGE>
[GRAPHIC]
VISION SCULPTING - ALBUQUERQUE METRO CENTER - SUITE 100
PRELIMINARY-PARTITION PLAN
SCALE 1/4" = 1'-0"
<PAGE>
ADDENDUM TO LEASE
METRO CENTER OFFICE BUILDING
THIS ADDENDUM TO LEASE AGREEMENT made and entered into this 12th day of
September, 1995 by and between METRO CENTER ASSOCIATES, L.P. hereinafter
referred to as "Landlord" and [Illegible] STEPHEN GRAHAM, dba
ALBUQUERQUE CORRECTIVE EYE SURGERY hereinafter referred to as "Tenant",
I. Re: Signage. Landlord hereby grants Tenant the right to affix
pre-approved signage to the northwest fascia of the building. Tenant
agrees to pay $150.00 per month as additional rent for said signage.
Tenant shall be responsible for all costs incurred including placement,
removal and any associated repairs.
II. In the event that tenant does not require the entire amount of additional
tenant improvement dollars that are being amortized over the lease term,
the amortized amount shall be adjusted accordingly. Landlord and Tenant
hereby agree to execute a lease addendum reflecting this adjustment.
III. [Illegible] grants tenant a right of fist refusal on Suite 101B consisting
of approximately 716 SFR. Landlord shall notify tenant of the availability
of said space. Tenant shall have five (5) business days to respond with
respect to its intent to the expansion space. No response after the five
(5) day period shall be deemed a waiver of this right. Said expansion
space shall be available at the same base rent as is in effect [illegible]
expansion and term shall run [illegible] with the existing lease. Any
additional concessions (ie tenant improvements) shall be negotiated between
the parties prior to mutual execution of the lease expansion addendum.
Tenant: ALBUQUERQUE CORRECTIVE EYE SURGERY
By: /s/ STEPHEN GRAHAM
---------------------------------------
Date: 27, Nov. 1995
----------------------
Landlord: BGK ASSET MANAGEMENT CORP. as
Agent for METRO CENTER ASSOCIATES, L.P.
By: /s/ LINDA C. GUTIERREZ
---------------------------------------
Linda C. Gutierrez President
Date: Nov. 27, 1995
----------------------
<PAGE>
EXHIBIT "C"
HAZARDOUS SUBSTANCES
Argon Flouride Gas
------------------
<PAGE>
EXHIBIT "D"
METRO CENTER
BUILDING RULES AND REGULATIONS
1. Sidewalks, doorways, vestibules, halls, stairways and other similar
areas shall not be used for the disposal of trash, be obstructed by
Tenants, or be used by Tenants for any purpose other than entrance and
exit to and from their leased areas and for going from one part of the
Building to another part of the Building.
2. Plumbing fixtures shall be used only for the purpose for which they
are designed, and no seepings, rubbish, rags or other unsuitable
materials shall be disposed into them. Damage resulting to any such
fixtures from misuse by Tenant shall be the liability of that Tenant.
3. Signs, advertisements, graphics or notices visible in or from public
corridors or from outside the Building shall be subject to Landlord's
prior written approval.
4. No Tenant will make any alterations or physical additions in or to the
Premises without first obtaining the written consent of Landlord.
5. All locks for doors in each Tenant's leased areas shall be building
standard and no Tenant shall place any additional lock or locks on any
doors in its leased area without Building Management's written consent.
All requests for duplicate keys shall be made to Building Management.
6. Movement in or out of the Building of furniture, office equipment or
any other bulky or heavy materials shall be restricted to such hours as
Landlord designates. Reasonable advance written notice of intent to move
such items must be made to the Building Management Office. Landlord will
determine the method and routing of said items so as to ensure the safety
of all concerned.
7. All routine deliveries to Tenant's leased area during 8:00 am to 3:00 pm
weekdays may be made through the passenger elevator. Passenger
elevators are to used only for the movement of persons unless an
exception is approved by the Building Management Office.
8. Any damage to elevators, office space, grounds, halls, common areas,
parking areas or structures will be the responsibility of the Tenant to
which the delivery was made or moving performed for.
9. Building Management shall have the authority to prescribe the weight
of illegible and other heavy equipment and the manner in which they
are positioned.
10. Corridor doors, when not in use, shall be kept closed.
11. Tenant space that is visible from public areas must be kept neat and
clean. Blinds on windows facing interior halls may not be raised.
12. All stairwells are to be kept neat and clean. The disposal of trash or
storage of materials in these areas is prohibited.
13. No vending machines of any type shall be allowed in a Tenant's leased
space without the prior written consent of Building Management.
14. No birds or animals of any type shall be brought into or kept in, on or
about public area of a Tenant's leased space.
15. No Tenant shall tamper with or attempt to adjust temperature control
thermostats in its leased space. Building Management shall adjust
thermostats as required to maintain the building standard temperature.
It is requested that all window blinds remain down and tilted at a
forty-five (45) degree angle toward the street to help maintain
comfortable room temperatures and conserve energy.
16. Tenants must comply with all requirements necessary for the security of
the Building, both during business hours and after hours and on weekends.
17. Tenants are requested to lock all office doors leading to corridors and
to turn out all lights at the close of their working day.
18. All requests for overtime air conditioning or heating must be submitted
in writing to Landlord by 2:00 pm on the business day prior to the day a
Tenant desires such service.
<PAGE>
19. All Tenant modifications resulting from remodeling in or to its leased
area must conform to the CIty of Albuquerque Building and Fire Codes.
Tenants shall obtain approval from Landlord of any such modifications and
shall deliver "as-built" plans therefor to Landlord upon completion.
20. Building Management reserves the right to rescind any of these rules
and regulations and to make such other and further rules and regulations
as in its judgement shall from time to time be required for the safety,
protection, care and cleanliness of the Building, the operation thereof,
the preservation of good order therein and the protection and comfort of
the Tenants and their agents, employees, and advisors. Such rules and
regulations, when made and written notice thereof given to a Tenant,
shall be binding upon such Tenant in like manner as if originally herein
prescribed.
21. Building Management will not be liable or responsible for lost or
stolen money, jewelry or other personal property from a Tenant's lease
area or public areas, regardless of whether such loss occurs when the
areas are locked against entry or not.
22. Building Management reserves the right to assign an employee to monitor
the moving in and out of furniture or equipment and to charge the Tenant
for the cost of the employee's time.
23. The elevator will normally be on security from 7:00 pm until 6:00 am
and all day Saturday and Sunday.
24. If you need the elevator doors unlocked for a special meeting after
hours, please inform Building Management at least 24 hours in advance.
<PAGE>
EXHIBIT 10.26
SECOND ADDENDUM TO LEASE
DATED SEPTEMBER 12, 1996
METRO CENTER OFFICE BUILDING
THIS SECOND ADDENDUM TO LEASE AGREEMENT dated this 8TH DAY of JANUARY, 1996
by and between METRO CENTER ASSOCIATES, L.P. hereinafter referred to as
"Landlord" and DR. STEPHEN GRAHAM, the ALBUQUERQUE CORRECTIVE EYE SURGERY
hereinafter referred to as "Tenant".
I. Re: ADDITIONAL TENANT IMPROVEMENTS: Landlord and Tenant
hereby agree to amortize the additional tenant
improvements in the amount of $4,076.00 at 10% annual
interest in the following manner: Tenant to make 12
payments in the amount of $355.38 beginning February,
1996, due and payable with the monthly installments
of rent.
TENANT: ALBUQUERQUE CORRECTIVE EYE SURGERY
BY: /s/ [cad 157]ILLEGIBLE[cad 179]
--------------------------------
Date: 8 Jan 96
--------------------------------
LANDLORD: BGK ASSET MANAGEMENT CORP. AS
AGENT FOR METRO CENTER ASSOCIATES, L.P.
BY: /s/ LINDA C. GUTIERREZ
---------------------------------
Linda C. Gutierrez, President
DATE: Jan 8, 1996
---------------------------------
<PAGE>
ASSIGNMENT OF LEASEHOLD INTEREST
WITH CONSENT OF LANDLORD
"LANDLORD"
BGK ASSET MANAGEMENT CORP.
BY: /s/ LINDA GUTIERREZ
---------------------------------
IT'S: PRESIDENT
----------------------------------
AS MANAGING AGENT ON BEHALF
OF METRO CENTER ASSOCIATES, L.P.
"TENANT"
DR. STEPHEN GRAHAM, D.B.A. ALBUQUERQUE CORRECTIVE EYE SURGERY
BY: /s/ S GRAHAM
-----------------------------------
Dr. Stephen Graham
"TRUEVISION"
TRUEVISION LASER CENTERS OF ALBUQUERQUE, INC., A NEW MEXICO CORPORATION
BY: /s/ JOHN C. HOMAN
------------------------------------
John C. Homan
IT'S: PRESIDENT
-------------------------------------
"GUARANTOR"
TRUEVISION LASER CENTERS, INC. A NEVADA CORPORATION
BY: /s/ JOHN C. HOMAN
------------------------------------
John C. Homan
IT'S: PRESIDENT
-------------------------------------
Date: May 31, 1996
------------
STATE OF
CALIF )
------------
)ss.
COUNTY OF SAN DIEGO )
------------
It is hereby acknowledged that the above Lease Assignment was sworn to and
executed before me on this 31 day of May 1996 by John
-- --- -
Homan as President of or and on behalf of the TrueVision Laser Centers of
Albuquerque, Inc., Tenants.
Signature
-----------------------
NOTARY PUBLIC
My Commission Expires: 16/4//99
--------
<PAGE>
1844
ALBUQUERQUE CENTER FOR RADIAL KERATOTOMY
2309 FLENARO PL SE STE. 207 PH. 505-242-2556 96-27/1070
ALBUQUERQUE NM 87106
27 Nov 1995
------- --
PAY
TO THE
ORDER OF Metro Center Assoc $2549.57
-----------------------------------------------------------
Two thousand five hundred forty nine and 57/100 DOLLARS
- ---------------------------------------------------------------------
First Security Bank of New Mexico
First Headquarters
Security P.O. Box 1303
Bank Albuquerque, New Mexico 87103
for Security Deposit 1720 LOUISIANA S Graham MD
- ----------------------------------- -------------------
001844 107000275 769661906
- 410.89
----------
$2138.68
Security Deposit
<PAGE>
EXHIBIT 10.27
ASSIGNMENT OF LEASEHOLD INTEREST
WITH CONSENT OF LANDLORD
THIS AGREEMENT, is made this 31st day of May, 1996, by and between METRO
CENTER ASSOCIATES, L.P. a NEW MEXICO LIMITED PARTNERSHIP by and through its
managing agent BGK ASSET MANAGEMENT CORP., a NEW MEXICO Corporation
(hereinafter "Landlord"), DR. STEPHEN GRAHAM d.b.a. ALBUQUERQUE CORRECTIVE
EYE SURGERY, a NEW MEXICO Corporation (hereinafter "Tenant") TRUEVISION
LASER CENTERS OF ALBUQUERQUE, INC. a NEW MEXICO Corporation (hereinafter
"TrueVision") and TRUEVISION LASER CENTERS, INC. a NEVADA CORPORATION),
(hereinafter "Guarantor")
RECITALS:
I. Landlord interest is with that certain Lease Agreement dated September
12, 1995, by and between Metro Center Associates, L.P. (therein "Landlord")
and Dr. Stephen Graham, d.b.a. Albuquerque Corrective Eye Surgery, a New
Mexico Corporation (therein "Tenant"), hereinafter "the Lease Agreement".
II. A true, accurate and complete copy of the Lease Agreement is attached
hereto and made a part of hereof as EXHIBIT "A".
III. Tenant desires to assign its Leasehold interest (rights, title and
obligations) in and to the Lease Agreement to TrueVision. Included with the
Leasehold interest, TrueVision will assume the additional Tenant Improvements
Loan as defined in the Second Amendment to Lease dated September 12, 1996,
which is attached hereto and made a part hereof as Exhibit "B".
In consideration of the mutual promises, covenants and conditions herein
contained and other valuable consideration the receipt of which is hereby
acknowledged, the parties hereto intending to be legally bound agree, as
follows:
1. That Tenant does hereby assign all of its rights, title and
interest in and to the Lease Agreement unto TrueVision, including
all of its right, title and interest in and to any prepaid rent
and/or security deposit paid in connection with the Lease Agreement.
2. That, TrueVision does hereby accept said assignment of the Lease
herein made by Tenant and does hereby covenant and agree to keep
and perform all the said terms, covenants, agreement and conditions
contained within the Lease Agreement to be kept and performed by
Tenant.
3. That Landlord does hereby grant its consent to Tenant in the
making of the assignment of the Lease Agreement unto TrueVision
and does hereby accept TrueVision as the successor in interest of
Tenant in and to the Lease Agreement.
4. That, Guarantor does hereby guarantee the faithful and timely
performance of all terms, covenants, conditions and agreements
to be kept and performed by TrueVision under the Lease Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day,
month and year first above written.
<PAGE>
ASSIGNMENT OF LEASEHOLD INTEREST
WITH CONSENT OF LANDLORD
STATE OF CALIFORNIA)
)SS.
COUNTY OF SAN DIEGO)
It is hereby acknowledged that the above Lease Assignment was sworn to
and executed before me on this 31st day of May 199_ by John Homan as President
of or and on behalf of TrueVision Laser Centers, Inc., Guarantor.
/s/ CHARLOTTE MITCHELL
__________________________
NOTARY PUBLIC
12/4/97
My Commission Expires: _____________
STATE OF NEW MEXICO)
)SS.
COUNTY OF BERNALILLO)
It is hereby acknowledged that the above Lease Assignment was sworn
to and executed before me on this 31st day of May 1996 by Linda C. Gutierrez,
as President of BGK Asset Management Corp. or and on behalf of Metro Center
Associates, L.P.
/s/ GENOVA R. KEITH
___________________________
NOTARY PUBLIC
July 21,1998
My Commission Expires: ______________
<PAGE>
EXHIBIT 10.28
LOAN AND SECURITY AGREEMENT
Loan #0001786
THIS LOAN AND SECURITY AGREEMENT ("Agreement") is made as of the
date set forth below
BETWEEN:
SECURED PARTY: DVI Financial Services Inc.; and
DEBTOR: TRUEVISION LASER CENTER OF ALBUQUERQUE, INC.
_____________________________________________________________________
1. CERTAIN DEFINITIONS. The following terms shall have the following
respective meanings:
(a) ADVANCE. Advances of funds to the Debtor pursuant to
Section 2 hereof and Schedules which may be executed between Secured Party
and Debtor from time to time.
(b) COLLATERAL. "Collateral" shall have the meaning set forth
in Section 2.2 hereof.
(c) EVENT OF DEFAULT. Those events set forth in Section 9
hereof.
(d) MONTHLY LOAN REPAYMENT. The amount set forth in any
Schedule executed in connection with any Advance under this Agreement.
(e) SCHEDULE(S). Any and all or each (as the context shall
require) of the Loan and Collateral Schedules of the Debtor, to be executed
by the parties under this Agreement.
(f) SECURED OBLIGATIONS. The payment of the principal and
interest as set forth in each and all of the Schedules, and the payment of
all additional amounts and other sums at any time due and owing under the
Schedules for this Agreement, and the performance and observance of all
covenants and conditions contained herein and therein.
(g) SUPPLIER. The entity from whom the Debtor purchased the
Collateral including manufacturers, dealers, sellers and vendors.
2. PURPOSE OF FINANCING AND DESCRIPTION OF LOANS;
GRANT OF SECURITY INTEREST; COLLATERAL.
(a) Secured Party agrees, subject to the terms and conditions
of this Agreement, to make Advances to the Debtor in an aggregate amount to
be determined by Secured Party in its sole and absolute discretion.
(b) Debtor agrees that the proceeds of any Advance will be
used solely to refinance the Collateral as by satisfying the lien of
TrueVision Laser Centers, Inc. as described in the Schedule executed in
connection with said advance.
(c) The amount of any Advances to Debtor shall be set forth on
the Schedule executed in connection with said Advance.
(d) The term of repayment of any Advance made under this
Agreement (the "Term") shall commence on the date set forth in the Schedule
executed in connection with said Advance and shall continue for the period
set forth in said Schedule, and for all extensions and renewals of such
period.
(e) Debtor shall pay to Secured Party the Monthly Loan
Repayment for each Advance in amounts and on the dates set forth in the
Schedule executed in connection with said Advance, whether or not Secured
Party has rendered an invoice to Debtor. Debtor agrees to pay the Monthly
Loan Repayment to Secured Party at the office of the Secured Party set forth
below, or to such entity and/or at such other
1
<PAGE>
place as Secured Party may from time to time designate by notice to Debtor.
Any other amounts required to be paid to Secured Party under this Agreement
are due upon Debtor's receipt of Secured Party's invoice and will be payable
as directed in the invoice. Payments under this Agreement may be applied to
the Debtor's then accrued Secured Obligations in such order as Secured Party
may choose.
(f) The Advances shall not be subject to prepayment or
redemption in whole or in part prior to the expiration of the Term set forth
in the Schedule executed in connection with said Advance.
2.1 GRANT OF SECURITY INTEREST. In consideration of the Advances
to be made by Secured Party to Debtor under this Agreement, and to secure the
payment and performance of the Secured Obligations, Debtor hereby grants and
assigns to Secured Party, its successors and assigns, a security interest in
the Collateral described in section 2.2 below.
2.2 COLLATERAL. All personal property consisting of "goods",
"equipment", and "proceeds" as defined in the Pennsylvania Commercial Code
and all furniture, fixtures and machinery or other property as described in
any and all Schedule(s) executed pursuant to this Agreement, whether now
owned or hereafter acquired, and all substitutions, renewals or replacements
of and alterations, additions or improvements, if any, to such Collateral,
together with, in each and every case, all proceeds thereof. Each item of
Collateral shall secure not only the specific Advances made by Secured Party
to Debtor as set forth in any Schedule, but also all other present and future
indebtedness or obligations of Debtor to Secured Party of every kind and
nature whatsoever. Debtor warrants and agrees that the collateral will be
used primarily for business or commercial purposes and that regardless of the
manner of allocation, the Collateral shall remain personal property and shall
not become part of the real estate. Debtor agrees to keep the Collateral at
the locations set forth in the Schedule(s) covering said Collateral and will
not make any change in the location of the Collateral within such state, and
will not remove the Collateral from such state without the prior written
consent of Secured Party.
3. TIME IS OF THE ESSENCE; LATE CHARGES. Time is of the essence in
this Agreement and if any Monthly Loan Repayment is not paid within the ten
(10) days after the due date thereof, Secured Party shall have the right to
add and collect, and Debtor agrees to pay:
(a) A late charge on and in addition to, such Monthly Loan
Repayment equal to five percent (5%) of such Monthly Loan Repayment or a
lesser amount if established by any State or Federal statute applicable
thereto; and
(b) Interest on such Monthly Loan Repayment from thirty (30)
days after the due date until paid at the rate of eighteen (18%) per annum.
4. NO WARRANTIES. This Agreement is solely a financing agreement.
Debtor acknowledges that: The Collateral has or will have been selected and
acquired solely by Debtor for Debtor's purposes; Secured Party is not the
manufacturer, dealer, vendor or supplier of the Collateral; the Collateral is
of a size, design, capacity, description and manufacture selected by Debtor;
Debtor is satisfied that the Collateral is suitable and fit for its purposes;
and SECURED PARTY HAS NOT MADE AND DOES NOT MAKE ANY WARRANTY OR
REPRESENTATION WHATSOEVER, EITHER EXPRESS OR IMPLIED, AS TO THE FITNESS,
CONDITION, MERCHANTABILITY, DESIGN OR OPERATION OF THE COLLATERAL, ITS
FITNESS FOR ANY PARTICULAR PURPOSE. THE VALUE OF THE COLLATERAL, THE QUALITY
OR CAPACITY OF THE MATERIALS IN THE COLLATERAL OR WORKMANSHIP IN THE
COLLATERAL NOR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER.
4.1 NO AGENCY. Debtor acknowledges and agrees that none of the
manufacturer, vendor, dealer or supplier, nor any salesman, representative,
or other agent of the manufacturer, dealer, vendor or supplier, is an agent
of Secured Party. No salesman, representative or agent of the manufacturer,
dealer, vendor or supplier is authorized to waive or alter any term or
condition of this Agreement, and no representation as to the Collateral or
any other matter by any manufacturer, dealer, vendor or supplier shall in any
way affect Debtor's duty to pay the Monthly Loan Repayment and perform his
other obligations as set forth in this Agreement.
2
<PAGE>
5. ACCEPTANCE. Execution by Debtor and Secured Party of the Schedule
covering the Collateral will conclusively establish that such Collateral has
been included under and will be subject to all of the terms and conditions of
this Agreement. If Debtor has not furnished Secured Party with an executed
Schedule by the earlier of fourteen (14) days after receipt thereof or
expiration of the commitment set forth in any applicable Equipment Financing
Commitment Secured Party may terminate its obligation to make any Advances
with respect to any applicable Collateral.
6. INSURANCE AND RISK OF LOSS. All risk of loss of, damage to, or
destruction of the Collateral shall at all times be borne by Debtor. Debtor
will procure forthwith and maintain property and general liability insurance
with extended or combined additional coverage on the Collateral for the full
insurable value thereof for the life of this Agreement and any Schedule(s)
plus such other insurance as Secured Party may specify, and promptly deliver
each policy to Secured Party with a standard long form endorsement attached
showing Secured Party or assigns as additional insureds and loss payees.
Each insurer shall agree by endorsement upon such policy issued by it or by
independent instrument furnished to Secured Party and Debtor that it will
give Secured Party and Debtor thirty (30) days written notice before the
policy in question shall be materially altered or cancelled. Secured Party's
acceptance of policies in lesser amounts or risks shall not be a waiver of
Debtor's foregoing obligation.
7. DEBTOR'S REPRESENTATIONS AND WARRANTIES. Debtor represents and
warrants to Secured Party as follows:
(a) Debtor is duly organized and existing under the laws of
the State of its formation without limit as to the duration of its existence,
and is authorized and in good standing to do business in sold State: Debtor
has corporate powers and adequate authority, rights and franchises to own its
own property and to carry on its business as now conducted, and is duly
qualified and in good standing in each state in which the character of the
properties owned by it therein or the conduct of its business makes such
qualifications necessary; and Debtor has the corporate power and adequate
authority to make and carry out this Agreement.
(b) The execution, delivery and performance of this Agreement
are duly authorized and do not, to the best of the Debtor's knowledge,
require the consent or approval of any governmental body or other regulatory
authority; are not in contravention of or in conflict with any law,
regulation or any term or provision of its articles of formation or bylaws,
and this Agreement is a valid and binding obligation of Debtor legally
enforceable in accordance with its terms.
(c) The execution, delivery and performance of this Agreement
will not contravene or conflict with any agreement, indenture or undertaking
to which Debtor is a party or by which it or any of its property may be bound
by or affected, and will not cause any lien, charge or other encumbrance to
be created or imposed upon any such property by reason thereof.
(d) There is no material litigation or other proceeding
pending or threatened against or affecting Debtor, and it is not in default
with respect to any order, writ, injunction, decree or demand of any court or
other governmental or regulatory authority. The balance sheets of Debtor and
the related profit and loss statements and other financial data as submitted
in writing by Debtor to Secured Party in connection with this Agreement, are
true and correct, and said balance sheets and profit and loss statements
truly represent the financial condition of Debtor as of the dates thereof.
(e) Debtor has good and valid title to the Collateral which is
free from and will be kept free from all liens, claims, security interests
and encumbrances, except for the security interest granted hereby and except
for a subordinate lien in favor of TrueVision Laser Centers, Inc. securing on
obligation in excess of $100,000.00.
(f) No financing statement covering the Collateral or any
proceeds thereof is on file in favor of anyone other than Secured Party and
the subordinated junior lienholder described in Paragraph 7(e) above.
(g) All necessary action, including the filing of a UCC-1
Financing Statement has or will be made to give Secured Party a first
priority security interest in the Collateral. Debtor agrees to permit
Secured Party to pre-file any UCC-1 Financing Statement pursuant to New
Mexico Commercial Code Section9402.
3
<PAGE>
8. DEBTOR'S AGREEMENT. Debtor agrees:
(a) To defend at Debtor's own cost and expense any action
proceeding or claim affecting the Collateral.
(b) To pay reasonable attorney's fees and other expenses
incurred by Secured Party in enforcing its rights in the event of Debtor's
default under this Agreement.
(c) To pay promptly all taxes, assessments, license fees and
other public or private charges when levied or assessed against the
Collateral or this Agreement and this obligation shall survive the
termination of this Agreement.
(d) That if a certificate of title is required or permitted by
law, Debtor shall obtain such certificate with respect to the Collateral,
showing the security interest of Secured Party thereon and in any event do
everything necessary or expedient to preserve or perfect the security of
Secured Party.
(e) That Debtor will not misuse, fail to keep in good repair,
secrete, or without the prior written consent of Secured Party, and
notwithstanding Secured Party's claim to proceeds, sell, rent, lend, encumber
or transfer any of the Collateral. The Collateral shall be maintained in
accordance with the manufacturer's specifications and shall at all times be
eligible for manufacturer's maintenance program.
(f) That Secured Party may enter upon Debtor's premises or
wherever the Collateral may be located at any reasonable time to inspect the
Collateral and Debtor's books and records pertaining to the Collateral and
Debtor shall assist Secured Party in making such inspection.
(g) That the security interest granted by Debtor to Secured
Party shall continue effective irrespective of the payment of the Secured
Obligations, so long as there are any obligations of any kind, including
obligations under guaranties or assignments, owed by Debtor to Secured Party.
(h) To mark and identify the Collateral with all information
and in such manner as Secured Party may request from time to time and replace
promptly any such markings or identifications which are removed, defaced or
destroyed.
(i) To indemnify and hold Secured Party harmless from and
against all claims, losses, liabilities (including negligence, tort and
strict liability), damage, judgements, suits and all legal proceedings, and
any and all costs and expenses in connection therewith (including attorney's
fees) arising out of or in any manner connected with the manufacture,
purchase, financing, ownership, delivery, rejection, nondelivery, possession,
use, transportation, storage, operation, maintenance, repair, return or other
disposition of the Collateral or with this Agreement, including without
limitation, claims for injury to, or death of, persons and for damage to
property, and give Secured Party prompt notice of such claims or liability.
(j) That Debtor will not part with possessions of or control
of or suffer or allow to pass out of its possession or control items of
Collateral or change the location of the Collateral or any part thereof from
the address shown in the appropriate Schedule without the prior written
consent of Secured Party.
(k) That Debtor shall not ASSIGN OR IN ANY WAY DISPOSE OF ALL
OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT OR SELL, LEASE,
TRANSFER, PLEDGE OR HYPOTHECATE ANY PART OF THE COLLATERAL. DEBTOR'S
INTEREST IN THIS AGREEMENT AND THE COLLATERAL IS NOT ASSIGNABLE AND WILL NOT
BE ASSIGNED OR TRANSFERRED BY OPERATION OF LAW. CONSENT TO ANY OF THE
FOREGOING PROHIBITED ACTS APPLIES ONLY IN THE GIVEN INSTANCE AND IS NOT
CONSENT TO SUBSEQUENT LIKE ACT BY DEBTOR OR ANOTHER ENTITY.
9. EVENTS OF DEFAULT. Any of the following events or conditions shall
constitute an Event of Default hereunder.
(a) Debtor's failure to pay any Monthly Loan Repayment or any
installment of the principal or interest due under any schedule when and
after the same shall become due and payable, whether at the due date thereof,
or at the date fixed for prepayment or by acceleration or otherwise;
4
<PAGE>
(b) Debtor failure to observe or perform any covenant or
agreement to be observed or performed by Debtor under this Agreement, any
Schedule or any other instrument or agreement delivered by Debtor to Secured
Party in connection with this or any other transaction;
(c) Any representation or warranty made by Debtor herein or in
any report, certificate, financial or other statement furnished in connection
with this Agreement shall prove to be false or misleading in any material
respect; or
(d) Debtor is (i) adjudicated insolvent or a bankrupt, or
ceases, becomes unable, or admits in writing its inability, to pay its debts
as they mature, or makes a general assignment for the benefit of, or enters
into any composition or arrangement with, creditors; (ii) applies for or
consents to the appointment of a receiver, trustee or liquidator of it or of
a substantial part of its property, or authorizes such application or
consent, or proceedings seeking such appointment shall be instituted against
it without such authorization, consent or application and continues
undismissed for a period of 60 calendar days; (iii) authorizes or files a
voluntary petition in bankruptcy or applies for or consents to the
application of any bankruptcy, reorganization in bankruptcy, arrangement,
readjustments or debts, insolvency, dissolution, moratorium or other similar
laws of any jurisdiction, or authorizes such application or consent, or
proceedings to such end shall be instituted against it without such
authorization, application or consent and such proceeding instituted against
it shall continue undismissed for a period of 60 calendar days; or
(e) Secured Party, in good faith, believes the prospect of
payment or performance is impaired or in good faith believes the Collateral
is insecure;
(f) Any agreement made by a guarantor, surety or endorser for
Debtor's default in any obligation or liability to Secured Party or any
guaranty obtained in connection with this transaction is terminated or
breached.
10. SECURED PARTY'S REMEDIES. Debtor agrees that when an Event of
Default has occurred and is continuing, Secured Party shall have the rights,
opinions, duties and remedies of a Secured Party and Debtor shall have the
rights and duties of a Debtor under the Uniform Commercial Code in effect in
each jurisdiction where the Collateral or any part thereof is located and,
without limiting the foregoing, Secured Party may exercise one or more or
all, and in any order, of the remedies hereinafter set forth:
(a) By notice in writing to Debtor, declare the entire unpaid
principal balance due under ANY, EACH, AND ALL Schedule(s) to be immediately
due and payable; and thereupon all such unpaid balance(s), together with all
accrued and unpaid interest thereon, shall be immediately due and payable;
(b) Personally, or by agents or attorneys, take immediate
possession of the Collateral or any portion thereof and for that purpose
pursue the same wherever it may be found and enter any of the premises of
Debtor with or without notice, demand, process of law or legal procedure, and
search for, take possession of, remove, keep and store the same, or use,
operate, or lease the same until sold and otherwise exercise any and all of
the rights and powers of Debtor in respect thereof;
(c) Either with or without taking possession and without
instituting any legal proceedings whatsoever (having first given notice of
such sale by mail to Debtor once at least 10 calendar days prior to the date
of such sale, and any other notice of such sale which may be required by law,
if said notice is sufficient), sell and dispose of the Collateral or any part
thereof at public auction(s) to the highest bidder, or at a private sale(s)
in one lot as an entirety or in several lots, and either for cash or for
credit and on such terms as Secured Party may determine, and at any place
(whether or not it is the location of the Collateral or any part thereof,
designated in the notice above referred to. Any such sale or sales may be
adjourned from time to time by announcement of the time and place appointed
for such sale or sales, or for such adjourned sales or sales without further
notice, and Secured Party may bid and become the purchaser at any such sale;
(d) Secured Party may proceed to protect and enforce this
Agreement and any Schedule(s) by suit or suits or proceedings in equity, at
law or in bankruptcy, and whether for the specific performance of any
covenant or agreement herein contained, or execution or aid of any power
herein granted, or for foreclosure hereunder, or for the appointment of a
receiver or receivers for the Collateral, or any party thereof, or for the
enforcement of any proper, legal or equitable remedy available under
applicable law.
5
<PAGE>
(e) Secured Party may require Debtor to assemble the
Collateral and return it to Secured Party at at place to be designated by
Secured Party which is reasonably convenient to both parties.
(f) Debtor agrees to pay the Secured Party all expenses or
retaking, holding, preparing for sale, or selling the Collateral in addition
to attorneys' fees as set forth above.
11. ACCELERATION CLAUSE. In case of any sale of the Collateral, or any
part thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Agreement, the
outstanding principal due under any Schedule, if not previously due, the
interest accrued thereon and all other sums required to be paid by Debtor
pursuant to this Agreement shall at once become and be immediately due and
payable.
12. EXERCISE OF RIGHTS. No delay or omission of Secured Party in the
exercise of any right or power arising from any default shall act as a waiver
of or impair any such right or power or prevent its exercise during the
continuance of such default. No waiver by Secured Party of any such default,
whether such waiver be full or partial, shall extend to or be taken to affect
any subsequent default, nor shall it impair the rights resulting therefrom
except as may be otherwise provided therein. The giving, taking or
enforcement of any other or additional security, collateral, or guarantee for
the payment of the Secured Obligations shall not operate to prejudice, waive,
or affect the security of this Agreement or any rights, powers, or remedies
hereunder, and Secured Party shall not be required to look first to enforce
or exhaust such other additional security, collateral, or guarantees. All
rights, remedies, and options of Secured Party hereunder, or by law shall be
cumulative.
13. ASSIGNMENT BY SECURED PARTY. SECURED PARTY MAY ASSIGN OR TRANSFER
THIS AGREEMENT OR SECURED PARTY'S INTEREST IN THE COLLATERAL WITHOUT NOTICE
TO DEBTOR. Any assignee of Secured Party shall have all of the rights but
none of the obligations, of Secured Party under this Agreement, and Debtor
agrees that it will not assert against any assignee of Secured Party any
defense, counterclaim or offset that Debtor may have against Secured Party.
14. NON-TERMINABLE AGREEMENT: OBLIGATIONS UNCONDITIONAL. This
Agreement cannot be cancelled or terminated except as expressly provided
herein. Debtor hereby agrees that Debtor's obligation to pay all Secured
Obligations shall be absolute and unconditional and Debtor will not be
entitled to any abatement of Monthly Loan Repayments or other payments due
under this Agreement or any reduction thereof under circumstances or for any
reason whatsoever. Debtor hereby waives any and all existing and future
claims, as offsets against any Monthly Loan repayments and other payments due
under this Agreement as and when due regardless of any offset or claim which
may be asserted by Debtor or on its behalf. The obligations and liabilities
of Debtor hereunder will survive the termination of this Agreement.
15. ADDITIONAL DOCUMENTS. In connection with and in order to provide
effective evidence of the security interest in the Collateral granted Secured
Party under this Agreement, Debtor will execute and deliver to Secured Party
such financing statements and similar documents as Secured Party requests.
Debtor authorizes Secured Party where permitted by law to make filings of
such financing statements without Debtor's signature. Debtor further agrees
to furnish Secured Party:
(a) On a timely basis, Debtor's future financial statements,
including Debtor's most recent annual report, balance sheet and income
statement, prepared in accordance with generally accepted accounting
principles, which reports, Debtor warrants, shall fully and fairly represent
the true financial condition of Debtor;
(b) Any other financial information normally provided by
Debtor to the public; and
(c) Such other financial data or information relative to this
Agreement and the Collateral, including, without limitation, copies of
Suppliers' proposals and purchase orders and agreements, listings of serial
numbers or other identification data and confirmations of such information,
as Secured Party may from time to time reasonably request. Debtor will
procure and/or execute, have executed, have acknowledged, and/or deliver to
Secured Party, record and file such other documents and notices as Secured
Party deems necessary or desirable to protect its interest in and rights
under this Agreement and Collateral. Debtor will pay for all filings,
searches, title reports, legal and other fees incurred by Secured Party in
connection with any documents to be provided by Debtor pursuant to this
Agreement and any other similar documents Secured Party may procure.
6
<PAGE>
16. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. Whenever any of the parties
hereto is referred to, such reference shall be deemed to include the
successors and assigns of such parties, and all the covenants, promises, and
agreements in this Agreement contained by or on behalf of Debtor or Secured
Party shall bind and inure to the benefit of the respective successors and
assigns of each party whether so expressed or not.
(b) PARTIAL INVALIDITY. The enforceability or invalidity of
any provision(s) of this Agreement shall not render any other provision(s)
herein contained unenforceable or invalid.
(c) COMMUNICATIONS. All communications provided for herein
shall be in writing and shall be deemed to have been given (unless otherwise
required by the specific provisions in respect of any matter) ((i) when
addressed and delivered personally or (ii) three (3) calendar days following
deposit in the United States mail, registered or certified, postage prepaid,
and addressed to the address set forth beneath the respective parties'
signature lines below, or as to Debtor or Secured Party at such other address
as they may designate by notice duly given in accordance with this Section to
the other party.
(d) COUNTERPART, GOVERNING LAW. This Agreement may be
executed, acknowledged, and delivered in any number of counterparts, each of
such counterparts constituting an original but all together only one
Agreement. This Agreement and any Schedule shall be construed and enforced in
accordance with and governed by the laws of the Commonwealth of Pennsylvania.
Debtor agrees to submit to the jurisdiction of the State and/or Federal
Courts in Pennsylvania.
(e) ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding or agreement between Secured Party and Debtor and there is no
understanding or agreement, oral or written, which is not set forth herein.
This Agreement may not be amended except by a writing signed by Secured Party
and Debtor and shall be binding upon and inure to the benefit of the parties
hereto, their permitted successors and assigns.
DATED: March 17, 1998
<TABLE>
<S> <C>
DEBTOR:
TRUEVISION LASER CENTER OF ALBUQUERQUE, INC. SECURED PARTY:
DVI FINANCIAL SERVICES, INC.
By: /s/ JOHN C. HOMAN By: /s/ JOSEPH F. MATOFF
------------------------- -------------------------
John C. Homan Joseph F. Matoff
------------------------- -------------------------
(Print Name) (Print Name)
Director
Its President Its Credit/Documentation
------------------------- -------------------------
(Title) (Title)
Address: Address:
445 G Street 500 Hyde Park
San Diego, CA 92101 Doylestown, Pennsylvania 18901
</TABLE>
NO SECURITY INTEREST IN AN EQUIPMENT SCHEDULE MAY BE CREATED THROUGH THE
TRANSFER OR POSSESSION OF ANY COUNTERPART OF THE ORIGINAL EQUIPMENT SCHEDULE
OTHER THAN THAT EQUIPMENT SCHEDULE MARKED "SECURED PARTY'S ORIGINAL" AND A
CERTIFIED COPY OF THE MASTER AGREEMENT.
CERTIFIED TO BE A TRUE AND CORRECT THIS CONTRACT (AND EQUIPMENT SCHEDULE
DOCUMENT AS SUBMITTED TO AND MASTER LEASE THE TERMS OF WHICH IT
[ILLEGIBLE] SERVICES, INC. INCORPORATES) HAS BEEN ASSIGNED TO, IS
SUBJECT TO THE SECURITY INTEREST OF AND
IS HELD IN TRUST FOR THE BENEFIT OF
FLEET BANK N.A. AS AGENT, PURSUANT TO
<PAGE>
EXHIBIT 10.29
LETTERHEAD
August 25, 1998
Mr. John Homan
Truevision Laser Center of Albuquerque, Inc.
1720 Louisiana Blvd., NE, Ste 100
Albuquerque, NM 87110
Dear John:
I finally got the folks at headquarters to sit down and resolve the start
date issue on your transaction. As you'll recall we booked the deal on March
18 but did not fund you until April 13. To resolve this, please sign the
attached new Acceptance Certificate which is dated April 13th. This will
coincide with the fund date and therefore make your first payment due May 13
(30 days in arrears). Our records indicate that you have made 3 payments
which would bring you current through July 13. Please forward the August 13th
payment ASAP so we can get this current. Please call if you have any
questions.
Sincerely,
/s/ TIM J. KEEL
- ------------------------------
Tim J. Keel
Regional Sales Manager
DVI FINANCIAL SERVICES INC.
<PAGE>
ACCEPTANCE CERTIFICATE
TO: DVI Financial Services Inc.
Loan and Collateral Schedule No. 001
dated: March 17, 1998
THIS ACCEPTANCE CERTIFICATE ("Certificate") is being executed and
delivered pursuant to the Loan and Collateral Schedule No. 001 and Loan and
Security Agreement ("Schedule") each dated as of March 17, 1998 between DVI
Financial Services Inc. as secured party ("Secured Party") and Truevision
Laser Center of Albuquerque, Inc. as debtor ("Debtor") for the following
equipment ("Equipment"):
MANUFACTURER, MODEL AND SERIAL/IDENTIFICATION NUMBER:
VISX EXCIMER LASER
TOGETHER WITH ALL PARTS, ACCESSORIES, ATTACHMENTS, ACCESSIONS, ADDITIONS,
REPLACEMENTS, AND SUBSTITUTIONS THERETO AND THEREFOR
WE HEREBY CERTIFY AND ACKNOWLEDGE that all the Equipment subject to the
above-referenced Schedule and as described herein 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 is of the manufacture,
design and specifications selected by us and is in all respects satisfactory
to Debtor; 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 Schedule. 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 Secured Party has fully
and satisfactorily satisfied all its obligations under the Schedule, and that
any and all conditions to the effectiveness of the Schedule or to our
obligations under the Schedule have been satisfied, and that we have no
defenses, set-offs or counterclaims to any such obligations, and that the
Schedule is in full force and effect, and that no event of default has
occurred thereunder.
WE HEREBY FURTHER CERTIFY AND ACKNOWLEDGE THAT SECURED PARTY 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 OR NATURE WHATSOEVER WITH
RESPECT TO THE EQUIPMENT OR ANY ASSOCIATED ITEM OR ANY ASPECT THEREOF.
<PAGE>
WE HEREBY FURTHER CERTIFY AND ACKNOWLEDGE that in the event the
Equipment subject to the Schedule fails to perform as expected or represented
by the manufacturer/supplier, Debtor shall continue to make monthly payments
to Secured Party as required under the terms of the Schedule and Debtor 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 Secured Party and hold it harmless from such non-performance or
breach of warranty with respect to the Equipment.
WE HEREBY FURTHER CERTIFY AND ACKNOWLEDGE that Secured Party is not the
manufacturer, supplier, distributor or seller of the Equipment and has no
control, knowledge or familiarity with the conditioning, capacity,
functioning or other characteristics of the Equipment.
WE HEREBY FURTHER ACKNOWLEDGE that Secured Party is relying upon this
Certificate as a condition to making payment to the manufacturer and/or
supplier of the Equipment.
Date Equipment Accepted: 4/13/98
------------------
DEBTOR: TRUVISION LASER CENTER OF ALBUQUERQUE, INC.
By: /s/ JOHN HOMAN
------------------------------
John Homan
- ------------------------------
(Print Name)
Its President
- ------------------------------
PLEASE SIGN, DATE AND RETURN TO:
DVI Financial Services Inc.
500 Hyde Park
Doylestown, Pennsylvania 18901
<PAGE>
[Copy of Check]
<TABLE>
<CAPTION>
Due Date Description Amount Due
<S> <C> <C>
Late Charges 908.84
06/18/98 Contract Payment 9,088.48
07/18/98 Contract Payment 9,088.48
08/18/98 Contract Payment 9,088.48
---------
Total Due 28,174.28
---------
</TABLE>
- -----------------------------------------------------------------------------
TO ENSURE PROPER CREDIT OF YOUR PAYMENT
RETURN THIS PORTION WITH CHECK PAYABLE TO:
DVI, INC. TRUEVISION LASER CENTER, INC
P.O. BOX 8500-6270 1720 LOUSIANA BLVD NE
PHILADELPHIA, PA 19178-6270 ALBUQUERQUE, NM 87110
----------
Contract Number: 019-0001786-001 Total Due: $28,174.28
----------
----------
Invoice Number: 98668
Invoice Date: 07/28/98 Amount Enclosed: $ 9,088.48
----------
Lead Bank: 019
019 0190001786001 098668 002817428 072898
<PAGE>
CMAINT. 11 Lease Contract Inquiry 08/24/1998
Payment History Inquiry
Contract 019-0001786-001 TRUEVISION LASER CENTER, INC
<TABLE>
<CAPTION>
Trans Type Check/Memo Date Due Date Rcvd Amount Rcvd Tot Rental
<S> <C> <C> <C> <C> <C> <C> <C>
0001) 108032 Stand 1289 05/18/98 07/06/98 9,088.48 9,088.48
0002) 105783 Man'l WAIVE/LATE 04/28/98 06/17/98 454.42
0003) 105782 Over 3630 & 068 04/18/98 06/17/98 2,500.00 2,500.00
0004) 104889 Stand 1246 04/18/98 04/18/98 6,588.48 6,588.48
0005) Summary Totals
</TABLE>
Selection 5/13 End of List
6/13
7/13
8/13
<PAGE>
EXHIBIT 10.30
STANDARD TERMS AND CONTRACT FOR USE
OF LADARVISION-Registered Trademark- SYSTEM
THIS AGREEMENT IS PRESENTED IN "PLAIN ENGLISH" BY ATC IN AN EFFORT TO
SIMPLIFY THE AGREEMENT
PARTIES
- -------
Autonomous Technologies Corporation ("ATC" or "Autonomous") located at 2800
Discovery Drive, Orlando, FL 32826 and TRUEVISION INTERNATIONAL ("Account" or
"Customer") located at 1720 LOUISIANA BLVD., #100, ALBUQUERQUE, NEW MEXICO,
87110.
PRODUCT AND LOCATION
- --------------------
The "System" is the LADARVision-Registered Trademark- Tracker-Guided Excimer
System as described in Exhibit A. The location of the System will be:
RAINBOW CORPORATE CENTER, 777 RAINBOW BLVD, LAS VEGAS, NV 89102
(Address of Site)
SHIP DATE
- ---------
On or before: SEPTEMBER 30, 1999
ATC is responsible for all shipping costs including crating, transportation,
and insurance while machine is in transit. Costs beyond normal shipping
charges will be absorbed by Customer. Examples of additional possible costs
are as follows but not limited to: cranes or other special rental equipment
for installation; removal of walls, doors, or windows; accelerated delivery
at clients request (i.e., air shipments).
Upon signing of contract and prior to delivery of the LADARVision unit, our
insurance carrier requires that a certificate of insurance be provided to
Autonomous. This certificate should include the following 2 items: 1)
Commercial General Liability Insurance naming Autonomous as "Additional
Insured Lessor" and 2) Property Insurance naming Autonomous as "Additional
Loss Payee".
CONTRACT
- --------
Autonomous agrees to supply Account with a System for use for a period of 36
months (the "Contract Period") subject to the terms of this Agreement.
PATENT LICENSE
- --------------
Subject to ("Account" or "Customer") execution of an Autonomous Laser Patent
and Software License agreement (Exhibit B) in form acceptable to Autonomous,
the procedure fee for the use of the System provides licenses to all
applicable system software, Autonomous patents, Summit patents, and Visx
patents.
Page 1 of 6
<PAGE>
SERVICES AND MAINTENANCE PROVIDED BY AUTONOMOUS
- -----------------------------------------------
All service, parts, maintenance, gases, optics for contracted model.
On-site service response time within 48 hours.
UPGRADES PROVIDED
- -----------------
Future software upgrades for the System, including hyperopia, if, as, and
when approved. (Does not include CustomComea-Registered Trademark-)
TRAINING
- --------
Autonomous will provide one training session for up to 6 individuals to use
the System at the Account's site. Additional training sessions can be
requested by the Account at a per diem cost plus expenses.
CREDITS FOR RETREATMENTS/ENHANCEMENTS
- -------------------------------------
All procedures, including retreatments, are prepaid by the Account at the
current contracted rate. Upon submission of the appropriate documentation,
(Exhibit C), credits will be issued as follows:
- - Eyes previously treated with ATC system: full credit
- - Eyex treated on another excimer system by ATC-qualified doctors at the
Site within 12 months of System installation will be issued a credit to
reduce the net cost of $300 per eye.
Retreatments cannot be counted towards the Minimum Quarterly Procedure Volume
(1/4 of the Annual Minimum Procedure Volume).
AFFILIATE FEE SCHEDULE
- ----------------------
Account commits to one of the following Pricing Classes:
<TABLE>
<CAPTION>
SPECIAL AAO '98 INTRODUCTORY PRICING SCHEDULE
---------------------------------------------
PRICING CLASS ANNUAL MINIMUM/MAXIMUM PROCEDURE INITIAL PAYMENT:
MINIMUM VOLUME AND PER PROCEDURE FEE MONTHLY PREPAYMENT
<S> <C> <C>
CLASS I 600- 749/YR. @ $500 PER PROCEDURE $25,000
CLASS II 750- 999/YR. @ $475 PER PROCEDURE $29,688
CLASS III 1,000-1,149/YR. @ $400 PER PROCEDURE $33,333
CLASS IV 1,150-1,299/YR. @ $375 PER PROCEDURE $35,938
CLASS V 1,300-1,999/YR. @ $350 PER PROCEDURE $37,917
CLASS VI 2,000+/YR.@ $300 PER PROCEDURE $50,000
</TABLE>
CLASS SELECTED
- --------------
Account hereby elects the following Pricing Class: ________ (please initial)
Page 2 of 6
<PAGE>
MINIMUM REQUIRED PAYMENTS
- -------------------------
Account agrees to pay for 50 procedures per month for a minimum total of 600
procedures per year at the Minimum Monthly Prepayment of $25,000 (plus sales
tax if applicable) for Pricing Class I selected. Minimum Monthly Prepayments
are calculated by taking the minimum volume for the Pricing Class, multiplying
by the Per Procedure Fee and dividing by 12.
The Account may elect to move to a higher Pricing Class at the following
times:
- - The beginning of each quarter for the first year only. For this year, the
Annual Minimum Procedure Volume will be the sum of the Minimum Quarterly
Procedure Volume for the four quarters.
- - The first month for years two and three
Activating these options automatically raises the Minimum Monthly Prepayment
to the one listed for the Pricing Class chosen.
Notification of the selection of a higher Pricing Class must be received in
writing by ATC no later than 30 days prior to the periods designated for such
elective changes. See above.
In the event the system is not operable for longer than 5 working days,
minimums for that month will be prorated upon receipt of reasonable
documentation by ATC for missed surgeries that could not be rescheduled within
the quarter and subsequently lost to the market. Such credits will be noted
in the first month of the following quarter.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
AFFILIATE PREPAYMENTS
- -----------------------------------------------------------------------------------
<S> <C>
- -----------------------------------------------------------------------------------
- - LAST MONTH'S MINIMUM MONTHLY PREPAYMENT $ 25,000.00
- - APPLICABLE SALES/USE TAX (7.25%) $ 1,812.50
- - LESS DEPOSIT WITH LETTER OF INTENT $ (10,000.00)
TOTAL DUE AT CONTRACT SIGNING (LAST MONTH OF CONTRACTED
MINIMUM MONTHLY PREPAYMENT LESS $10,000 INITIAL DEPOSIT, PLUS TAX) $ 16,812.50
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- - FIRST MONTH'S MINIMUM MONTHLY PREPAYMENT $ 25,000.00
- - APPLICABLE SALES/USE TAX (7.25%) $ 1,812.50
TOTAL DUE 30 DAYS PRIOR TO SHIP DATE (FIRST
MONTH'S MINIMUM MONTHLY PREPAYMENT) $ 26,812.50
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
TOTAL DUE FOR FIRST AND LAST MINIMUM MONTHLY PREPAYMENTS $ 43,625.00
- -----------------------------------------------------------------------------------
</TABLE>
BILLING
- -------
Billing period starts at the time of "Installation and Acceptance" of the
System (Exhibit D) by the Account.
Page 3 of 6
<PAGE>
The Account agrees to pay the Minimum Monthly Prepayment for the Pricing
Class selected, which will remain fixed for the entire Contract Period unless
the Account elects a higher Pricing Class at the times specified in the
Minimum Required Payments section.
On the 10th of each month, the Account will receive an invoice for the
following month's Minimum Monthly Prepayment. Monies are due net 15 days
following receipt of invoice. Late payments will result in late fees of 1.5%
per month.
An invoice for the second month's Minimum Monthly Prepayment will be issued
at the time of "Installation and Acceptance" and be adjusted to reflect the
pro-rata credit due as a result of a difference in the date of System
"Acceptance" at the Site and the total number of days in the month of
installation.
Every three months, ATC will reconcile on a quarterly and year-to-date basis
the actual procedures performed against the Minimum Monthly Prepayments.
Procedures performed in excess of those covered by the total quarterly and
year-to-date Minimum Monthly Prepayments will be billed at the rate of the
Pricing Class selected and noted on a separate Quarterly Adjustment Bill,
payable net 15 days after receipt. Credits due the Account as a result of a
variance between total billed procedures, Minimum Monthly Prepayments and
actual year-to-date procedures performed will be issued on the next
Quarterly Adjustment Bill.
No credit will be issued if fewer procedures are performed than the number
paid for by the quarterly and year-to-date Minimum Monthly Prepayments. The
Account may not credit excess monthly or quarterly procedures against the
next month's billing to reduce the Minimum Monthly Prepayment.
Procedures completed over the Annual Maximum Procedure Volume for the Pricing
Class selected will be eligible for the reduced Per Procedure Fee of the next
Pricing Class. Any credits due as a result of these lower Per Procedure Fees
will be calculated and given at the end of the quarter in which they occurred.
At the end of the third and final year of the contract, any such credits will
be refunded to the Account.
Applicable local, state, personal property and sales/use taxes must be paid
by Account and will be added to the Minimum Monthly Prepayments and to the
Quarterly Adjustment Bills.
ATC shall have the right to deactivate or remove the System if Account is
late in paying two consecutive payments. In such event, Account will be
responsible for paying the Early Termination Fee (Exhibit E).
SITE REQUIREMENTS
- -----------------
The Account shall prepare, maintain, and use the Site according to the
attached LADARVision-Registered Trademark- System Site Requirements
(Exhibit F).
Failure of the Site to meet the Site Requirements prior to Ship Date may
result in the Ship Date being postponed by ATC.
Page 4 of 6
<PAGE>
If, after inspection of the Site by ATC, Account wishes the System to be
installed in a different location, either at the same Site or a different
Site altogether, Account must notify ATC of new location at least 90 days
prior to Ship Date. Failure to do so may result in a postponement of Ship
Date.
QUALIFIED USERS
- ---------------
Only persons trained and certified by ATC or by an ATC-designated trainer
shall be permitted to use the System; System must be used in accordance with
Operator's Manual.
WARRANTY
- --------
Autonomous warrants that the System is free of defects in material and
workmanship and that the System will operate according to the Operator's
Manual. Warranty valid only if the System is operated in accordance with the
Operator's Manual. AUTONOMOUS MAKES NO WARRANTY OF MERCHANTABILITY OR ANY
OTHER WARRANTY, EXPRESSED OR IMPLIED.
SYSTEM DISCLOSURE
- -----------------
The System may be new or refurbished, and may contain new or refurbished
parts.
LIMITATION OF LIABILITY
- -----------------------
Autonomous shall not be liable for consequential or incidental damages caused
by either a defect in the System or an uncured breach of the Contract or
actual, consequential, or incidental damages resulting from a force majeur.
OWNERSHIP OF THE SYSTEM AND STUDY RESULTS
- -----------------------------------------
Autonomous maintains title to and ownership of the System (hardware and
software) and any results of studies commissioned by ATC during and following
termination of this Contract. Account agrees to permit ATC personnel access
to the System at all times for the purpose of servicing and supporting the
System.
CONTRACT ASSIGNMENT
- -------------------
The Account may not assign this Contract.
TERMINATION RIGHTS
- ------------------
The Account may not terminate this Contract unless ATC breaches this Contract
in some significant way and has had a reasonable opportunity to cure the
breach.
EARLY TERMINATION BY ATC: EARLY TERMINATION FEE
- -----------------------------------------------
Autonomous may terminate this Contract or remove the System, or both, upon a
significant breach of any term by the Account. If the breach is capable of
being cured, Account shall be given a reasonable opportunity to cure the
breach. If Autonomous terminates this Contract due
Page 5 of 6
<PAGE>
to a breach by the Account, the Account shall pay to Autonomous the early
Termination Fee set forth on Exhibit E.
CONTRACT CONFIDENTIALITY
- ------------------------
Both parties agree to maintain the confidentiality of the terms of this
Contract and Operator's Manual. If Account violates this Confidentiality
provision, ATC can terminate this Contract and Account will be responsible
for payment of the Early Termination Fee.
EFFECTIVE DATE
- --------------
The above terms constitute an agreement between Autonomous Technologies
Corporation and TRUE VISION INTERNATIONAL ("Account" or "Customer"),
effective as of ___________________________.
AUTONOMOUS TECHNOLOGIES (ACCOUNT/CUSTOMER)
CORPORATION
By: By: [ILLEGIBLE]
----------------------------- -----------------------------
Title: Title: PRESIDENT
----------------------------- -----------------------------
Page 6 of 6
<PAGE>
AUTONOMOUS
GET THE VISION
CONTRACT EXHIBITS PACKAGE
The following Exhibits are referenced in Contract
Exhibit A - LADARVision Specifications
Exhibit B - Autonomous Laser Patent and Software License
Exhibit C - Documentation Required to Issue Credit for Retreatments
Exhibit D - Installation and Acceptance Checklist
Exhibit E - Early Termination Fee
Exhibit F - LADARVision System Site Requirements
<PAGE>
EXHIBIT A
SYSTEM SPECIFICATIONS
HARDWARE CHARACTERISTICS
Excimer (Corneal Scultping) Laser(1)
ATF EXCIMER LASER @ 193 NM
DUAL AXIS PRECISION SCANNER
SMALL BEAM (Less Than 1MM DIAMETER)
WITH SMOOTHING ALGORITHM
LADARVision-Registered Trademark- Eye Tracker(1)
SURGEON DETERMINED CENTRATION
SACCADE SENSITIVE TRACKING SYSTEM
UP TO 4000 SAMPLES/SECOND
Direct View Optics(1)
STEREO MICROSCOPE WITH ZOOM
PATIENT FIXATION TARGET
Operator's Computer Station
GRAPHICAL USER INTERFACE - ACCESSIBLE
- PATIENT DATABASE
- QUICK AUTOMATED CALIBRATION
- ALL SURGICAL PARAMETERS
Installation Parameters
STANDARD AC POWER
COMPACT FOOTPRINT
SOLID CONSTRUCTION
PHYSICIAN OFFICE COMPATIBLE
Patient Safety
EVEN IF -
- LOSS OF POWER
- SOFTWARE SHUTDOWN
- MOVING OBJECT INTO FIELD
- PATIENT MOVING OUT OF FIELD
- FOOT COMING OFF FOOT SWITCH
SURGERY CAN BE RESTARTED FROM
EXACT POINT OF INTERRUPTION
FUNCTIONAL CHARACTERISTICS
MYOPIA, ASTIGMATISM (HYPEROPIA, LASIX)(2)
AVERAGE FLUENCE 200 MJ/CM(2)
UP TO 10 MM SCANNED ALBATION ZONE
Less Than 10 SECONDS/DIAPTER FOR 6 MM ZONE OF MYOPIA
TRACKS SACCADIC EYE MOVEMENT
HIGH PRECISION @ 100 DEGREES/SECOND
TRACKER STABLIZIED COLOR VIDEO
EXIMER BEAM CAN BE ALIGNED EXACTLY TO ON-AXIS POSITION
DIRECT VIEW COLOR VIDEO
FINE ALIGNMENT FOR TRACKER ACQUISITION
EASY-TO-USE WINDOWS(2) ENVIRONMENT
PATIENT RECORD RETRIEVAL
ABLATION TEST PLATES
110 VOLTS AC: 60HZ OR 200-240 VAC, 50HZ
1.0M WIDE x 2.4M LONG x 1.5 HIGH
363KG
TRACKER ENSURES ACCURACY & PRECISION
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(1) Patents Pending on LADARVision-Registered Trademark- Laser Scanner, Scan
Pattern, Fixation Target and Optics (2) CAUTION Investigational Device.
Limited by U.S. Federal Law to Investigatorial Use.
<PAGE>
EXHIBIT B
---------
AUTONOMOUS LASER PATENT AND SOFTWARE LICENSE
--------------------------------------------
<TABLE>
<S> <C>
Authorized Licensee: ("Licensee") System Model: (The "System")
- --------------------------------- ----------------------------
TRUE VISION INTERNATIONAL LADARVision-Registered Trademark-
1720 LOUISIANA BLVD NE, STE 100
Albuquerque, NM 87110 Serial Number:
--------------------------------------
Initial Installation Site: ("Site") Authorized Users: ("Authorized Users")
- ----------------------------------- --------------------------------------
RAINBOW CORPORATE CENTER --------------------------------------
777 Rainbow Blvd
Las Vegas, NV 89102 --------------------------------------
--------------------------------------
</TABLE>
License Fees: As set forth in standard Terms and Contract for the use of
Autonomous Technologies Corporation LADARVision System between Autonomous and
Licensee dated _________________ ("Use Agreement").
1. The System, certain related disposables and their use are covered by
several United States patents for which Autonomous has the authority to
provide this license. The patents cover methods and apparatus for
performing ophthalmic laser surgery. A list of these Patents is attached
as Schedule A ("Patents"). Use of the System to perform any procedure
covered by the Patents is prohibited unless such use is authorized by a
valid Autonomous Laser Patent License. The sale, lease or other placement
of the System by Autonomous does not in any way grant a license under any
Patent to use the System to perform any procedures. Such license may only
be granted by the execution and delivery by Autonomous of an Autonomous
Laser Patent License.
2. Subject to Licensee's compliance herewith, Autonomous hereby grants to
the Licensee the right under the Patents to permit the Authorized Users
to use the System and related disposables to perform at the site any
ultraviolet laser corneal surgery procedure that is covered by at least
one claim of a Patent ("Licensed Procedure"). In consideration of the
grant of the rights to use the Software and to perform Licensed
Procedures covered by the Patents, Licensee shall pay the License Fee set
forth above on the front page of this License each time the System is
used to perform a Licensed Procedure. Payment terms will be as set forth
in the Use Agreement. If Autonomous hereafter is granted or acquires any
additional patents covering apparatus or procedures for performing
ophthalmic procedures with the System or otherwise obtains the right to
provide licenses of any such patents, it shall make licenses thereof
available to Licensee on terms to be determined by Autonomous at that
time.
3. The following provisions apply to the software incorporated in the System
(including any upgrades, modifications or enhancements which may be
incorporated in the future):
(a) The System includes a copy of computer software and may be upgraded
to include additional software (the "Copy"). All such software (the
"Software") is protected under copyrights, trade secret rights and
other proprietary rights owned by or licensed to Autonomous
(collectively, the "Autonomous Rights").
(b) Autonomous licenses the Copy to Licensee and, to the extent that it
has the right and power to do so, grants Licensee the non-exclusive
right and license under the Autonomous Rights to use the Copy solely
(i) for the purpose of using the System to perform Licensed
Procedures, or (ii) in connection with the maintenance of the System
by Autonomous or by a third party expressly licensed by Autonomous
to use such Copy for maintenance. Notwithstanding any other
provision of this Agreement, as between Autonomous and Licensee,
Autonomous retains title to and ownership of the Copy and of all
Autonomous Rights.
(c) Except as expressly provided in Section 3(b), Autonomous does not
grant Licensee right to license under the Autonomous Rights,
including without limitation any right or license to copy, create
derivative works based on, distribute, or publicly display or
perform the Software or Copy, except that Autonomous grants Licensee
a non-exclusive license to create copies of the Software
1
<PAGE>
(or parts thereof) in Random Access Memory to the extent that doing
so is a necessary step in using the Copy for the purposes authorized
under paragraph 3(b) (the "RAM Copy License"). The RAM Copy Licenses
may not be assigned, sublicensed or otherwise transferred without
Autonomous' prior written consent.
4. Licensee shall permit only ophthalmologists who are legally qualified,
properly licensed and fully trained to perform Licensed Procedures with
the System.
5. The Authorized Users are named above. Licensee may, by providing 10 days
prior written notice to Autonomous, add or delete practitioners from the
list of Authorized Users who are permitted to perform Licensed Procedures
with the System.
6. Licensee shall not move the System from the Site unless it provides at
least 30 days prior written notice of the new site to Autonomous and has
obtained the prior written consent of Autonomous to such move. In the
event the System is moved from the Site in violation of this provision,
then, in addition to all other rights and remedies at law and equity
which may be available to Autonomous, Autonomous shall have the right to
enter upon the premises where the System is located and seize the System
or disable the System from performing additional procedures.
7. Licensee may not sell or otherwise transfer the System unless the
proposed transferee has first entered into the then current form of
Autonomous Laser Patent License for the System. Licensee may not transfer
or sublicense any of its rights or obligations hereunder without
Autonomous' prior written consent, except as may be implicit in its
granting the Authorized Users the privilege to use the System pursuant
hereto. In the event the System is sold or transferred in violation of
this provision, then, in addition to all other rights and remedies at law
and equity which may be available to Autonomous, Autonomous shall have
the right to enter upon the premises where the System is located and
seize the System or disable the System from performing additional
procedures.
8. Licensee shall allow Autonomous, at Autonomous' sole expense, from time
to time to install or to attach to the System, and to modify, adjust and
read, a memory, recording or other device and/or software (including
telephone connections of the devices with Autonomous) which measures the
number and types of Licensed Procedures performed with the System.
Licensee shall not permit anyone other than an authorized Autonomous
representative to tamper with, alter or remove any such devices or
software. In the event Autonomous determines that any such devices or
software have been tampered with, altered or removed, or that such
tampering, alteration or removal has been attempted, then, in addition to
all other remedies at law and equity which may be available to
Autonomous, Autonomous shall have the right to enter upon the premises
where the System is located and seize the System or disable the System
from performing additional procedures. Further, such actual or attempted
alteration, removal or tampering shall constitute presumptive evidence of
Licensee's intentional infringement of the Patents.
9. Licensee shall comply with, and shall cause each Authorized User to
comply with, all applicable laws affecting the System, including, without
limitation, the Federal Food, Drug, and Cosmetic Act as well as all
applicable rules, regulations and any labeling promulgated thereunder.
Licensee shall not remove or tamper with any label affixed to the System.
Licensee and the Authorized Users shall use the System in accordance with
Autonomous' user's manual as same may from time to time be amended.
10. This License will continue until the expiration of the last of the
Patents and Licensee's obligation to pay Procedure Royalties shall
terminate for a given procedure on the expiration of the last of the
Patents containing one or more method claims which cover such procedure.
This License may be terminated at any time by Autonomous if (a) Licensee
fails to make any payment due hereunder within 30 days of the due date or
(b) Licensee fails to cure any other breach hereof within 30 days after
Autonomous provides written notice of such breach to Licensee. Upon any
early termination Licensee and all Authorized Users shall cease all use
of the System, and the provisions of this agreement shall survive.
11. Licensee shall allow Autonomous' duly identified representatives access
to the System at mutually convenient times during reasonable business
hours upon at least 24 hours notice to obtain monitored information and
to assess Licensee's compliance with this License. In the event
Autonomous is denied access to the System in violation of this provision,
then, in addition to all other rights and remedies at law and equity
which may be available to Autonomous, Autonomous shall have the right to
enter upon the
2
<PAGE>
premises where the System is located and seize the System or disable the
System from performing additional procedures.
12. This agreement between Autonomous and Licensee is binding on their
respective successors and assigns and legal representatives. This License
is subject to and interpreted under the laws of the Commonwealth of
Massachusetts (without regard to principles of conflict of laws), cannot
be amended, nor can any term be waived, except in a writing signed by
both parties. No waiver or modification in any one instance shall be a
waiver or modification in any other. No third party rights will be
created by the execution or performance of this License. This License
contains the entire understanding between Autonomous and Licensee with
respect to its subject matter and supersedes all other agreements,
discussions, and understandings with respect to the subject matter.
Licensee acknowledges that Autonomous' legal remedies hereunder are
inadequate to protect Autonomous' interests in the event of any breach
hereunder by Licensee and that, in addition to any other remedies against
Licensee which may be available to Autonomous in such event, Autonomous
shall be entitled to equitable, including injunctive, relief. Notices
hereunder shall be sent by reputable overnight courier to the principal
offices of the subject party.
13. So long as the Licensee and its Authorized Users comply in full with this
License Agreement, the Licensee and the Authorized Users are hereby
granted immunity from any infringement or other legal action under the
Patents, although Autonomous makes no representation or warranty
regarding the scope or validity of any of the Patents or that the System
or its use is free of infringement of third party rights. No implied
licenses are created hereby.
Executed under seal.
AUTONOMOUS TECHNOLOGIES CORPORATION LICENSEE:
By: _____________________________
Title: __________________________
[Performance of all of the obligations of Leasing Party hereunder are
unconditionally guaranteed by
By: /s/ John [illegible]
______________________________
Name (Printed): John [illegible]
__________________
Title: President
__________________________
Date: 7/ /99 ]
__________________________
3
<PAGE>
SCHEDULE A
----------
UNITED STATES PATENTS
PATENT NUMBERS
--------------
<TABLE>
<S> <C>
4,665,913 5,312,330
4,669,466 5,473,392
4,718,418 4,388,924
4,721,379 5,312,330
4,729,372 5,360,424
4,732,148 5,395,356
4,773,414 5,395,363
4,798,204 5,411,501
4,842,360 5,437,658
4,856,513 5,461,212
4,902,122 5,613,965
4,903,695 5,651,784
4,911,711 5,772,656
4,941,093 5,098,426
4,973,330 5,865,832
4,994,058
5,019,074
5,108,388
5,147,352
5,163,934
5,188,631
5,207,668
5,219,343
5,219,344
5,312,320
5,334,190
5,423,801
5,324,281
5,507,741
5,549,597
5,556,395
5,711,762
5,713,892
5,735,843
5,795,351
5,807,379
5,442,412
5,594,753
5,632,742
5,740,803
5,752,950
5,828,686
5,849,006
5,505,723
5,437,658
</TABLE>
4
<PAGE>
EXHIBIT C
---------
DOCUMENTATION REQUIRED TO ISSUE CREDIT FOR
RETREATMENTS
PATIENT NAME__________________________________________________________________
LASER USED____________________________________________________________________
LOCATION OF LASER_____________________________________________________________
SUREGON PERFORMING RETREATMENT PROCEDURES_____________________________________
DATE OF FIRST SURGERY_________________________________________________________
(Please attach surgery print-out copy)
- - PRE-OP REFRACTION___________________________________________________________
- - PRE-OP UCVA_________________________ PRE-OP BCVA____________________________
- - TREATMENT CORRECTION________________________________________________________
i.e. does this differ from pre-op (monovision or nomogram adjustment)
DATE OF SECOND SURGERY________________________________________________________
(Please attach surgery print-out copy)
- - POST-OP REFRACTION AT LAST VISIT PRIOR TO TREATMENT_________________________
- - THIS VISIT: POST-OP UCVA____________ POST-OP BCVA___________________________
- - RETREATMENT CORRECTION______________________________________________________
REASON FOR RETREATMENT; I.E. PATIENT PREFERENCE, UNDERCORRECTION, REGRESSION,
ETC.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
<PAGE>
EXHIBIT D
---------
AUTONOMOUS
GET THE VISION
CERTIFICATE OF INSTALLATION & ACCEPTANCE
This Certificate of Installation & Acceptance confirms that your LADARVision
System has been delivered and installed, you have completed In-service and
Clinical training, and the system is functioning according to Autonomous
Technology installation specifications.
Serial #: _____________________________ Date: _____________________________
City/Country: _________________________ Part Number: ______________________
Autonomous Technologies Representative:_______________________________________
Customer Representative: _____________________________________________________
Autonomous Customer Support
2800 Discovery Drive
Orlando, Florida 32826
Tel 877-LADARVision
Fax 407 384-1677
www.autonomous.com
<PAGE>
EXHIBIT E
---------
EARLY TERMINATION FEE
In the event ATC terminates this Contract as a result of a breach by the
Account, the Account shall pay to ATC within ten days following such
termination an Early Termination Fee determined by the table below:
NOTIFICATION PERIOD* AMOUNT
- ------------------- ------
(1-3 months) $300,000
(4-6 months) $276,000
(7-9 months) $249,000
(10-12 months) $225,000
(13-15 months) $201,000
(16-18 months) $174,000
(19-21 months) $150,000
(22-24 months) $126,000
(25-27 months) $ 99,000
(28-30 months) $ 75,000
(31-33 months) $ 51,000
(34-36 months) $ 24,000
*The number of months in the Notification Period refers to the number of
months after commencement of the contract during which terminaiton occurs.
<PAGE>
EXHIBIT F
---------
LADARVISION SYSTEM SITE REQUIREMENTS
The site requirements described below ensure that the LADARVision-Registered
Trademark- System will meet all performance and quality requirements at the
time of installation and provide the customer with the best possible
long-term reliability.
1. ROOM REQUIREMENTS
a) The required minimum floor area is 11 feet by 14 feet (3.3 meters by
4.3 meters). See attached floor plan (Figure 1) for door, electrical,
cabinet, and sink placement options, a plan view of the System and
the recommended layout and dimensions for the laser room.
b) The surface of the walls and ceiling should not produce dust from
wallpaper and other coverings.
c) Linoleum or tile should be used instead of carpet for flooring, then
sealed and waxed to reduce dust. The floor must be a solid foundation
capable of supporting the 800 pound (363 kilograms) System weight.
d) The door of the surgery room must be lockable with a rubber wiper on
the bottom to form a seal. A sink in the room is recommended, but not
required.
2. SAFETY
a) All local laser safety regulations and standards must be observed.
b) In case of a gas leak inside the laser enclosure, an internal
scrubber is provided. During gas bottle replacement, a leak is
possible. Ventilation to the exterior or a stand-alone air purifier
to change the air in the room must be supplied. When venting to the
exterior, make sure it is in compliance with local air quality
regulations. If an air purifier is used, an activation switch should
be mounted within easy access to the exit door.
c) A Halon or equivalent fire extinguisher that is appropriate for use
near electrical equipment needs to be present in the surgery room.
3. ENVIRONMENT
a) The air must be clean (free of dust, soot, and vapors from adhesives,
grease or volatile organic chemicals). An air filter that removes a
minimum of 30% of all particulate for each cycle of air is required.
b) The room must be climate controlled to provide an environment between
70 and 75 degrees Fahrenheit (21 to 24 degrees Celsius).
c) The humidity shall be controlled to greater than or equal to 40% and
less than or equal to 60%. In extremely dry climates, a humidifier
may be necessary.
d) The climate control system must be capable of handling a heat load of
1.5 kilowatts.
e) All returns to the central HVAC system must be capable of being
sealed by isolation dampers from other areas in case of a gas leak.
<PAGE>
EXHIBIT F
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LADARVISION SYSTEM SITE REQUIREMENTS
4. ELECTRICAL
a) There must be a dedicated 120 VAC 20 Amp or 220 VAC 13 Amp, 50-60 Hz
electrical outlet accessible to the foot of the System. Two
additional outlets are required for the remote modem and printer.
b) Additional outlets may be required for air purifiers, microkeratomes,
humidifiers and other devices.
c) Ability to dim the lights is recommended.
5. CLEANING
a) The optical components of the System are very sensitive to airborne
chemicals that are produced by cleaning supplies. An unscented soap
solution must be used to clean the floor, walls, cabinets.
b) The room cannot be painted within 2 weeks of the planned installation.
6. COMMUNICATIONS
a) There must be a dedicated direct dial phone line (tone) for the
internal modem of the LADARVision-Registered Trademark- System.
b) The phone line cannot share access with another modem or fax machine.
There cannot be a connection to an internal network phone system,
multi-extension or business phone configuration.
c) A 1FB analog phone line should be installed close to the electrical
outlet.
7. ACCESS
a) Access for the LADARVision-Registered Trademark- System from the
delivery truck to the room must be reasonable with no tight turns or
obstructions.
b) The doors leading from the delivery truck to the room must be at
least 36 inches (91 centimeters) wide.
c) If an elevator must be used to reach the room, then it must be at
least 95 inches (241 centimeters) long and 36 inches (91 centimeters)
wide.
<PAGE>
EXHIBIT F
---------
LADARVISION SYSTEM SITE REQUIREMENTS
[GRAPHIC]
Figure 1 - System Layout Floor Plan Recommendations
<PAGE>
FDA APPROVES AUTONOMOUS TECHNOLOGIES' LADARVISION-Registered Trademark- SYSTEM;
COMPANY ANNOUNCES U.S. PRODUCT LAUNCH
ORLANDO, FLA. (NOVEMBER 3, 1998) - AUTONOMOUS TECHNOLOGIES CORPORATION
(NASDAQ NM: ATCI) today announced that the U.S. Food and Drug Administration
(FDA) has approved the Company's LADARVision-Registered Trademark- System,
for the correction of nearsightedness and astigmatism. The Company's
LADARVision System is the first and only U.S. approved system to incorporate
a small spot shaping and eye tracking system into a surgical system. The FDA
approved the LADARVision System for the treatment of mild to moderate
nearsightedness
(-1.00 to -10.00 diopters) with or without astigmatism (up to -4.00 diopters)
with photorefractive keratectomy (PRK).
Myopia, or nearsightedness, occurs when light rays are focused in front of
- - instead of on - the retina, and the person cannot see distant objects
clearly. Astigmatism results in light rays being focused at different points
in front of the retina. In both cases, blurred vision results.
The Autonomous LADARVision System uses an ultraviolet excimer laser to
change the shape of the cornea which makes it possible for the eye to focus
properly. For example, in the treatment of myopia, the laser is used to
remove tissue from the cornea in order to flatten its shape. The correction
of astigmatism requires the laser to remove tissue in a more complex pattern.
Both procedures require precise shaping of the cornea which depends on
accurate placement of a laser beam. Without a system to track eye movement,
any eye movement can affect the placement of the laser beam. By tracking eye
movement, the LADARVision System maintains accurate placement of its laser
beam.
The LADARVision System uses a small diameter (LESS THAN 1 mm) excimer laser
beam that is delivered to the cornea in a calculated pattern of
non-sequential pulses. According to George Pettit, M.D., Ph.D., Vice
President for Research at Autonomous, "The LADARVision System sculpts the
cornea by delivering hundreds to thousands of excimer laser pulses to the eye
in a complex pattern of spatially overlapping spots." Dr. Pettit added, "The
accuracy of the small spot treatment is brought about by the unique
eye-tracking features of the LADARVision System. The tracker guided system
uses technology originally developed by Autonomous for the Strategic Defense
Initiative, or `Star Wars,' and is able to catch, track, and compensate for
rapid eye movements. Using proprietary laser radar, or LADAR technology, the
tracker repositions mirrors in the laser beam path and ensures precise
delivery of the treatment laser beam."
Previously approved laser systems require patients to minimize eye movement
during surgery by voluntarily fixating their eyes on a small light located
just above the patient. Marguerite McDonald, M.D., Medical Director and
consultant to Autonomous, explains, "When the average person fixates on
something, he or she has five saccadic eye movements per second. The
LADARVision System's ability to follow eye movements in real time greatly
reduces the dependency of stable fixation by the patient and allows for
precise corneal shaping."
Randy Frey, Chairman and CEO of Autonomous, comments: "Physicians now have a
powerful and truly differentiated product alternative to further drive their
laser vision correction practice. Our FDA approval is for a broad indication
for use supported by excellent clinical results in the labeling. In addition,
the financial and business strength that the Summit merger brings to
Autonomous, along with the royalty free patent license and strong service
organization, allows Autonomous to set high goals in capturing procedure
market share. We are highly encouraged by our clinical trial progress in
LASIK, Hyperopia with Astigmatism and our R&D efforts in CustomCornea-TM-. I
believe physicians recognize that the LADARVision System is the technology
platform for the future of this industry. Furthermore, no other company
offers physicians a per-procedure business model with a stronger partnership
commitment to individual practice success. Finally, I would like to
congratulate and thank the Autonomous Team: our employees, consultants,
clinical investigators and vendors for their highly dedicated contributions
that made reaching this milestone possible."
Vision correction is among the largest medical markets, with approximately
136 million people in the U.S. using eyeglasses or contact lenses. Within
this group, approximately 60 million are myopic. Industry sources estimate
that Americans spend approximately $13 billion at retail on eyeglasses,
contact lenses and other vision correction products and services annually.
According to Michael Lachman, an industry analyst with Hambrecht & Quist, the
laser vision correction (LVC) market in the United States is growing rapidly.
So far this year, the industry is on a pace to achieve an estimated 375,000
procedures compared to about 200,000 in 1997 and 70,000 in 1996. Mr. Lachman
expects that annual U.S. procedures could reach 675,000 by the year 2000.
1 of 2
<PAGE>
Autonomous plans to offer its LADARVision System to physicians on a
per-procedure service fee basis. The fee will be based on the physician's
procedure volume and will not contain, or be subject to, any third party
patent royalties once the announced merger is completed. The Company's
pricing strategy significantly reduces the initial capital investment
required by the physician, and eliminates the highly variable operating and
upgrade costs experienced by many LVC practitioners. The new strategy also
allows Autonomous to partner with physicians and grow together as practice
volumes increase. Laser vision correction practices will also benefit from a
comprehensive, Company sponsored, Technology Enhanced Area Marketing program,
or "TEAM". This customized marketing program is designed to leverage the
unique technology and differentiate the Autonomous user from other
competitive sites. The TEAM goal is to use this differentiation to build
procedure volume.
Autonomous has completed staffing its sales and marketing team and plans to
begin an aggressive marketing campaign beginning at the American Academy of
Ophthalmology Annual Conference which begins next week in New Orleans.
Autonomous will be featured with its strategic partner, CIBA Vision during
the conference.
Autonomous announced on October 1, 1998 that it has agreed to be acquired by
Summit Technology subject to the approval of the shareholders of both
companies. Summit has agreed to acquire all of the outstanding shares of
Autonomous in exchange for 11.65 million shares of Summit common stock and an
equal value of cash, up to $50 million. The actual value of the transaction
will not be determinable until closing, which is currently expected to be
within the next three months.
Autonomous designs, develops and markets next generation excimer laser
instruments for laser vision correction. The company's LADARVision System
combines high-speed, laser radar eye tracking with precisely controlled small
beam shaping technology. For more information, contact Autonomous
Technologies at 2800 Discovery Drive, Orlando, FL 32826 (407) 384-1600, or
visit us on the web at www.autonomous.com.
------------------
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
PROJECTED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF A NUMBER OF
IMPORTANT FACTORS, INCLUDING: A DECLINE IN THE PRICE OF SUMMIT STOCK PRIOR TO
THE CLOSING; AND THAT THERE ARE NO ASSURANCES THE SHAREHOLDERS OF BOTH
COMPANIES WILL TAKE THE NECESSARY ACTIONS TO COMPLETE THE ACQUISITION; AND
THAT THE COMPANY MAY NOT RECEIVE THE REGULATORY APPROVAL NECESSARY TO
COMPLETE THE ACQUISITION; AND THAT THE COMPETITIVE RESPONSES MAY OCCUR
PREVENTING THE ACHIEVEMENT OF INCREASED MARKET SHARE. FOR A DISCUSSION OF THE
IMPORTANT FACTORS THAT COULD AFFECT THE COMPANY'S RESULTS, PLEASE REFER TO
THE OVERVIEW SECTION, THE MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, AND THE RISK FACTORS SECTION IN THE
COMPANY'S ANNUAL REPORT ON FORM 10-K AS AMENDED.
***
<TABLE>
<S> <C>
COMPANY CONTACT: INVESTOR RELATIONS CO
Autonomous Technologies Corporation Lippert/Heilshorn & Asso
Randy Frey B
Chairman & CEO Bruce@
[email protected] ------
- ------------------------ (310)
Jonathan Kennedy Ruth M
Manager of Investor Relations Ruth@
[email protected] -----
- ----------------------- (212)
(407) 384-1600
www
---
</TABLE>
2 of 2
<PAGE>
Exhibit 10.32
LEASE
-----
THIS LEASE ("Lease") is made and entered into this day of, by
---- ---------
and between FLAMINGO '84, a Nevada LIMITED PARTNERSHIP D.H.A PHOENIX PLAZA
III (herein referred to as "Landlord"), and TRUE VISION LASER CENTERS
INTERNATIONAL, INC. (herein referred to as "Tenant")
SECTION 1
PREMISES
1.1 Upon the conditions, limitations, covenants and agreements herein
set forth. Landlord hereby leases to Tenant, and Tenant hereby accepts,
hires and leases from Landlord, that unit or space in PHOENIX PLAZA III -
6370 W. FLAMINGO ROAD, LAS VEGAS, NV 89103, LAS VEGAS, Nevada (the
"Property"), which Property is described on Exhibit A-I attached hereto and
incorporated herein by reference, which unit or space is indicated by
cross-hatching on the Site Plan attached hereto as Exhibit A-2 and
incorporated herein by reference and identified as 6370 W. FLAMINGO ROAD,
SUITE #5, LAS VEGAS, Nevada (herein referred to as the "Premises") consisting
of approximately 4000 square feet. If demising walls are to be installed or
relocated, then to determine the actual square footage of the Premises,
Landlord shall measure the Premises promptly following the date that the
demising walls are established ("Landlord's Final Measurement"); otherwise
the aforesaid square footage is Landlord's Final Measurement. Landlord's
Final Measurement shall be binding upon Tenant unless Tenant notifies
Landlord of any actual error therein within 10 calendar days after written
notice thereof. (Interior spaces shall be measured from center line to center
line of party walls; exterior spaces shall be measured from center line of
party walls to outside face of exterior walls; depth shall be measured from
outside face of exterior walls.) There shall be no reduction of square
footage by reason of any columns or architectural elements within the
Premises.
1.2 Landlord reserves to itself the exclusive use of the roof,
exterior walls and the area above and below the Premises (other than roll-up
doors and exterior doorways), together with the right to install, maintain,
use, repair and replace pipes, ducts, conduits, wires and structural elements
now or in the future leading through the Premises and which serve other parts
of the Property.
1.3 The Property, and Tenant's occupancy and use of the Premises, are
subject to certain covenants, conditions and restrictions, reciprocal
casements, and rights of way, including without limitation, that certain
Declaration of Covenants, Conditions and Restrictions, recorded in the
Office of the Recorder of Clark County, Nevada ("Declaration") pertaining to
the Property.
1.4 Tenant shall not utilize any name selected by Landlord from time
to time for any or all of the Property as any part of Tenant's corporate or
trade name. Landlord shall have the right to change the name or designation
of the Property without notice or liability.
1
<PAGE>
SECTION 2
TERM
2.1 The term of this lease shall be for a period of SIX (6) months,
beginning on the Occupancy Date, as herein defined, unless terminated earlier
as elsewhere herein provided ("Term"); provided that if the Occupancy Date is
not the first day of a calendar month the Term hereof shall be for the
aforesaid length of time plus the period between the Occupancy Date and the
first day of the next succeeding calendar month. At such time as the
Occupancy Date shall have been established, Landlord shall notify Tenant of
the same in writing and in the absence of any written objection by Tenant
delivered to Landlord within FIVE (5) days of such notification, such date
shall be conclusively deemed to be the Occupancy Date. In the event that the
Tenant fails or refuses to open the Premises for, and to commence the
conduct of, its business within FIVE (5) days after the Occupancy Date, then,
at the option of Landlord, Landlord may treat such failure or refusal as a
Default. If Landlord shall not terminate this Lease, Landlord may, without
waiving its right to thereafter terminate this Lease for such failure to
open, collect all rents due or to become due hereunder.
2.1.1 The words "occupancy date" or "Occupancy Date," whenever
used in this Lease shall be deemed to refer to JULY 15, 1999.
2.1.2 If Tenant occupies the Premises prior to the Occupancy
Date, Tenant's occupancy of the Premises shall be subject to all of the
provisions of this Lease, provided however, that such early occupancy shall
not advance the expiration date of this Lease.
2.1.3 The words "commencement date" or "Commencement Date"
whenever used in this Lease shall refer to AUGUST 1, 1999.
2.2 If Tenant shall hold possession of the Premises with the consent
of Landlord after the expiration of the Term of this Lease, such holding over
shall create a tenancy from month to month only, upon the same terms and
conditions as are herein set forth, except that Minimum Monthly Rent shall be
one hundred fifty percent (150%) of the Minimum Monthly Rent as of the
expiration hereof. Additionally, the acceptance by Landlord of rent after
the expiration of the Lease shall not constitute a consent to hold over or
result in a renewal of this Lease. The foregoing provisions of this Section
are in addition to, and do not affect, Landlord's right to re-entry or any
other rights of Landlord under this Lease or at law or in equity.
2
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Initials
<PAGE>
SECTION 3
RENT
3.1 Beginning on the Commencement Date, as defined in subparagraph
2.1.3 above, Tenant shall pay, in advance, to Landlord without deduction or
setoff for any reasons, in legal tender of the United States of America,
minimum monthly rent ("Minimum Monthly Rent") as follows:
3.1.1 Year One Minimum Monthly Rent shall be $5,800.00 per month;
Plus CAM.
(a) If the Term includes a fractional month, for that
fractional month Tenant shall pay as Minimum Monthly Rent that proportion of
the Minimum Monthly Rent due which the number of days in said fractional month
bears to the total number of days in said month. The phrase Minimum Monthly
Rent shall mean the base monthly rent then due Landlord as herein provided.
Tenant shall pay, in addition to the Minimum Monthly Rent, all other costs as
more specifically set forth below.
(b) After the Commencement Date and upon the expiration of
each twelve (12) calendar month period thereafter during the Term hereof,
including any extensions, Minimum Monthly Rent shall be adjusted by
multiplying the then-current Minimum Monthly Rent by a fraction, which
fraction shall have as its numerator the Consumer Price Index For All Urban
Consumers using the U.S. City Average (or such alternative thereto as is
hereinafter provided) (Base Period 1982-84--100), as published by the U.S.
Department of Labor, Bureau of Labor Statistics, for the calendar month which
is four (4) months prior to the expiration of the applicable twelve (12)
month period, and which such fraction shall have as its denominator said
Consumer Price Index, as published for the calendar month which is four (4)
months prior to the commencement of the Term. If the present base of said
Index should hereafter be changed, the new base shall be converted to the
base now used. In the event said Bureau shall publish more than one such
Index figure, the Index figure showing the greater proportionate increase
shall be used. In the event that the Bureau should cease to publish said
index figure, then any similar index figure published by any other branch or
department of the U.S. Government shall be used, and if none is so published,
then another index figure generally recognized as authoritative shall be
substituted by agreement of the parties hereto, or if no such agreement is
reached within a reasonable time, either party may make application to any
court of competent jurisdiction to designate such other index. In any event,
the base used by any new index shall be reconciled to the 1982-84--100 Base
Index. In no even shall the Minimum Monthly Rent to be paid by Tenant
pursuant hereto be less than the Minimum Monthly Rent with respect to the
immediately preceding twelve (12) month period. In the event the numerator
of said fraction is not available at the time of adjustment of the Minimum
Monthly Rent as provided herein, Tenant shall continue to pay the Minimum
Monthly Rent established for the immediately preceding twelve (12) month
period; provided, however, Tenant shall promptly pay to Landlord any
deficiency at such time as said Minimum Monthly Rent is adjusted.
(c) Concurrently with the execution and delivery hereof,
Tenant has delivered to Landlord the sum of $6,840.00 being Minimum Monthly
Rent, plus Tenant's estimated pro rata portion of the Property's Operating
Cost, for the first month of the Term, and pending the commencement date
same shall be held by Landlord in the same manner as the Security Deposit.
3
<PAGE>
3.2 As used in this Lease, the following terms shall have the
following meanings:
3.2.1 "Lease Year" shall mean a twelve (12) month calendar year,
except that in the event the occupancy date occurs on a date other than
January 1, the first Lease Year hereunder shall be that fractional part of
the calendar year from the occupancy date to December 31 of the same year and
the final Lease Year shall be that fractional part of the calendar year from
January 1 to the expiration date.
3.2.2 "Rental Year" shall mean a twelve (12) calendar month year
beginning on the commencement date and ending twelve (12) full calendar months
thereafter and each full twelve (12) calendar months respectively thereafter.
3.2.3 "Tenant's pro-rata portion of share" shall mean a percent
based upon a fraction the numerator of which is the total number of rentable
square feet of the Premises and the denominator of which is the total number of
rentable square feet of the buildings from time-to-time then-constructed within
the Property and which are occupiable.
3.3 In addition to the Minimum Monthly Rent, Tenant shall pay
Landlord, at the time and in the manner herein set forth, the following
additional rent:
3.3.1 Tenant's pro-rata portion, as defined above, of the
Property's Operating Cost, subject to the limitations (if any) set forth in
the Addendum to Lease. The additional rent provided to be paid herein shall
be estimated annually on a Lease Year basis by Landlord. Tenant shall be
notified in writing of Landlord's "good faith" estimate prior to the last day
of each Lease Year of the Lease Term. Tenant shall commence payment of one
twelfth (1/12) of such estimated annual costs without further demand or any
deduction or setoff, in advance, on the first day of each subsequent calendar
month during such ensuing Lease Year. Within a reasonable period of time
following the end of each Lease Year, Landlord will ascertain the actual
Property's Operating Cost for the previous Lease Year and will notify Tenant
in writing of such actual Property's Operating Cost. After determining such
Property's Operating Cost for the previous Lease Year, Landlord shall then
determine if Tenant owes any additional sums therefor, or if Tenant has paid
Landlord more than its pro-rata share thereof. Tenant shall pay to Landlord
on demand, the amount, if any, equal to the difference between the actual
payments made by Tenant and the final Property's Operating Cost as determined
by Landlord within thirty (30) days of receiving written notice from Landlord
regarding Tenant's underpayment even though same may be received after the
expiration or termination of this Lease. If any excess payment has been made
by Tenant, then same shall be held by Landlord and applied to Tenant's
next-monthly payment(s) of the Property's Operating Cost, as additional rent
provided to be paid hereunder, and if necessary, each monthly payment
thereafter until such overpayment shall be fully exhausted. Tenant shall not
be entitled to receive interest on any additional rent paid hereunder.
(a) The term "Property's Operating Cost" shall mean the
total cost and expense incurred in managing, operating, equipping, lighting,
repairing, replacing and maintaining the Property. Such operating and
maintenance costs shall include all costs and expenses of operating and
maintaining such areas and facilities in such manners as Landlord may from
time to time, in its sole discretion, deem
4
<PAGE>
appropriate and for the best interests of the tenants of the Property,
including, without limitation, all Impositions (as that term is defined
below), providing private police protection, security patrol, or night
watchmen (including, but not limited to uniforms), fire protection and
security alarm systems and equipment, preventive maintenance for heating and
air conditioning, labor compensation insurance, payroll taxes, materials,
supplies, and all other costs of operating and repairing, lighting, cleaning,
sweeping, painting, striping, removing of rubbish or debris, policing and
inspecting, depreciation on or rentals of machinery and equipment, the
amortized costs (as reasonably determined by Landlord) to repair, maintain or
install capital improvements, all utility expenses not separately metered to
any specific tenant(s) of the Property, costs and expenses for the rental of
music program services and loudspeaker systems (if Landlord elects to provide
the same), including, but not limited to, furnishing electricity therefor,
Landlord's insurance including fire and extended coverage, liability,
property damage, rent loss, boiler insurance, vandalism, malicious mischief,
earthquake insurance, insurance against liability for defamation and claims
of false arrest, and such other insurance in such amounts and covering
hazards deemed appropriate by Landlord, fidelity bonds, and all costs of
repairs, maintenance, or replacement of paving, curbs, walkways, remarking,
directional or other signs, landscaping, drainage, lighting facilities,
repair and maintenance of the Common Areas (defined below) and parking areas,
costs and expenses of planting, replanting and replacing flowers, shrubbery
and other landscaping, fees or required licenses and permits, costs of
compliance with any and all governmental laws, ordinances and regulations
applicable to the Property which may be incurred by Landlord, and the cost to
Landlord of servicing and maintaining any sprinkler system. There shall also
be included the cost of leasing and operating any signs, the cost of
personnel to implement any service described above, to direct traffic and to
police the Common Areas, property management fees, and an administrative fee
not to exceed fifteen per cent (15%) of the total cost of the Property's
Operating Cost, which fees shall be payable to Landlord or to any other entity
which is managing or administering the Property.
(b) In the event that the Property consists of more than one
parcel, as shown on the Property's subdivision map of record (or equivalent),
Landlord may at Landlord's sole option compute "Property's Operating Cost" in
such a manner as will exclude any or all parcels (i) not owned by Landlord,
or (ii) wholly leased by one tenant, so that third parties who own any parcel
within the Property, or tenants who lease a complete parcel within the
Property, may at Landlord's option be required to separately pay all expenses
attributable to any such parcel(s).
(c) Landlord shall provide to Tenant an annual statement
reflecting all of the Property's Operating Cost.
3.3.2 Monthly, in advance, in addition to all other rental amounts
specified herein, as further additional rent, Tenant's pro-rata portion of
Impositions, as herein defined. The amounts due hereunder shall be estimated
on a Lease Year basis in advance by Landlord and shall be paid in the same
manner as specified in subparagraph 3.3.1 for payment of the Tenant's portion
of the Property's Operating Cost. For the purpose of this Lease "Impositions"
means:
(a) Any real estate taxes, fees, assessments or other charges
assessed against the Property or any improvements thereon.
5
<PAGE>
(b) All personal property taxes on personal property used in
connection with the Property and related structures other than taxes payable
by Tenant under Section 11 hereof and taxes of the same kind as those
described in said Section 11 payable by other tenants in the Property
pursuant to corresponding provisions of their leases.
(c) Any and all taxes, assessments, license fees, and public
charges levied, assessed, or imposed and which become payable during the term
hereof upon all leasehold improvements, over and above the building shell,
whether installed by Landlord or Tenant.
(d) Any and all environmental levies or charges now in force
affecting the Property or any portion thereof or which may hereafter become
effective, including, but not limited to, parking taxes, levies, or charges,
employer parking regulations, and any other parking or vehicular regulations,
levies, or charges imposed by any municipal, state or federal agency or
authority.
(e) Any other taxes levied or assessed in addition to, as a
replacement, alteration, or substitute for, or in lieu of such real or
personal property taxes.
(f) Any and all fees paid by Landlord in its opposition to any
tax assessments, but only to the maximum amount of one-half (1/2) of the taxes
that would have been otherwise payable if Landlord had not opposed the
original tax assessment.
3.4 All rents and other monies required to be paid by Tenant hereunder
shall be paid to Phoenix Plaza III without deduction or offset, prior notice
or demand, in legal tender of the United States of America, at 3311 S.
Rainbow Blvd., Suite 225, Las Vegas, Nevada 89146, or at such other place
as Landlord may, from time to time, designate in writing. Tenant agrees that
all monies required to be paid by Tenant pursuant to this Lease, except for
the Minimum Monthly Rent, are hereby conclusively deemed to be "Additional
Rent."
3.4.1 If Tenant shall fail to pay, within five (5) days after the
same is due and payable, any Minimum Monthly Rent, Additional Rent or any
other amount or charge to be paid as Additional Rent by Tenant hereunder,
such unpaid amount shall be subject to a late charge equal to five percent
(5%) of such unpaid amount. In addition, any such unpaid amount shall bear
interest from the thirtieth (30th) day after the due date thereof to the date
of payment at the rate of eighteen percent (18%) per annum. The foregoing are
not exclusive of Landlord's rights due to Tenant's default under this Lease
and the remedies therefor.
SECTION 4
SECURITY DEPOSIT
4.1 Tenant, concurrently with the execution of this Lease, has
deposited with Landlord the sum of $6,840.00, receipt of which is hereby
acknowledged by Landlord ("Deposit"). Said Deposit
6
<PAGE>
will be held by Landlord as security for the faithful performance by Tenant
of all the terms, covenants and conditions of this Lease by Tenant to be kept
and performed during the Term hereof, including the vacating of the Premises by
Tenant; provided that Tenant shall not be excused from the payment of any
rent herein reserved or any other charge herein provided. If Tenant defaults
with respect to any provision of this Lease, Landlord may, but shall not be
required to, use or retain all or any part of the Deposit for the payment of
any rent or other monies due Landlord, to repair damages to the Premises, to
clean the Premises or to compensate Landlord for any other loss or damage
which Landlord may suffer by reason of Tenant's default. If any portion of
the Deposit is so used or applied, Tenant shall, within five (5) days after
written demand therefor, deposit cash with Landlord in an amount sufficient
to restore the Deposit to its original amount.
4.1.1 Landlord shall not be required to keep the Deposit separate
from its general funds, and Tenant shall not be entitled to interest on the
Deposit. Should Tenant comply with all of said terms, covenants and
conditions and promptly pay all the rent herein provided for and all other
sums payable by Tenant to Landlord hereunder as the same fall due, then the
Deposit shall be returned to Tenant thirty (30) days after the end of the
Term, or after the last payment due from Tenant to Landlord, whichever last
occurs. In the event of sale, transfer or the making of a master lease of the
Property or of any portion thereof containing the Premises, if Landlord
transfers the Deposit to the vendee, lessee or transferee for the benefit of
the Tenant, or if such vendee, lessee or transferee assumes all liability
with respect to the Deposit, then Landlord shall be considered released by
Tenant from all liability for the return of the Deposit, and Tenant agrees to
look solely to the new landlord for the return of the Deposit, and it is
agreed that this Section 4 shall apply to every transfer or assignment to a
new landlord. No mortgagee or beneficiary holding a lien on the Property or
any portion thereof shall be liable to Tenant for any Deposit, unless said
Deposit has actually been delivered to such mortgagee or beneficiary.
4.1.2 Tenant shall have no right or privilege to mortgage, encumber,
transfer or assign the Deposit without the prior written consent of Landlord.
4.2 Tenant may not deduct from its Minimum Monthly Rent, Additional
Rent, or from other payments to Landlord under this Lease, the Deposit, and
Landlord's right to possession of the Premises or to take appropriate action
for nonpayment of any rent or for any other reason shall not be affected by
the fact that Landlord holds the Deposit and does not use, apply or retain
same as set forth herein.
SECTION 5
POSSESSION AND SURRENDER
5.1 Tenant has had the opportunity to inspect the Premises and shall, by
entering upon and occupying the Premises, be deemed to have accepted the
Premises and all parts thereof in the current "AS-IS" condition, and Landlord
shall not be liable for any latent or patent defect therein.
5.2 Upon the expiration or sooner termination of the Term of this Lease,
if Tenant has fully and faithfully performed all of the terms, conditions and
covenants of this Lease to be performed by Tenant, but
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not otherwise, Tenant shall, at its sole cost and expense, remove all
personal property and trade fixtures which Tenant has installed or placed in
or on the Premises (all of which are hereinafter referred to as "Tenant's
Property") from the Premises and repair all damage thereto resulting from
such removal and Tenant shall thereupon surrender the Premises in the same
condition as on the date when the Premises was ready for occupancy,
reasonable wear and tear excepted.
5.3 If Tenant has not fully and faithfully performed all of the terms,
conditions and covenants of this Lease to be performed by Tenant, Tenant
shall nevertheless remove Tenant's property from the Premises in the manner
aforesaid within fifteen (15) days after receipt of written direction to do
so from Landlord.
5.4 In the event Tenant shall fail to remove any of Tenant's property
as provided herein, Landlord may, but is not obligated to, at Tenant's
expense, remove all of such Tenant's property not so removed and repair all
damage to the Premises resulting from such removal, and Landlord shall have
no responsibility to Tenant for any loss or damage to Tenant's property
caused by or resulting from such removal or otherwise. If the Premises is not
surrendered at the end of the Term, Tenant shall indemnify Landlord against
all loss or liability resulting from delay by Tenant in so surrendering the
Premises including, without limitation, any claims made by any succeeding
tenant founded on such delay.
SECTION 6
USE OF PREMISES
6.1 The Premises is leased to Tenant solely for EYE LASER SURGERY AND
OTHER RELATED COMETIC PROCEDURES. Tenant shall not use or suffer to be used
the Premises, or any portion thereof, for any other purpose or purposes
whatsoever, without Landlord's prior written consent therefor. Tenant shall
conduct business under the trade name of TRUE VISION LASER INTERNATIONAL,
INC. and no other without the prior written consent of Landlord.
6.2 Tenant shall not, without Landlord's prior written approval,
operate or permit to be operated on the Premises any coin or token-operated
vending machines or similar device for the sale or leasing to the public of
any goods, wares, merchandise, food, beverages, and or service, including,
without limitation, pay telephones, pay lockers, pay toilets, scales and
amusement devices.
6.3 Tenant shall refrain from using or permitting the use of the
Premises or any portion thereof as living quarters, sleeping quarters or
lodging rooms.
6.4 Tenant shall not, without Landlord's prior written approval, cover
or obstruct any windows, glass doors, lights, skylights, canopies or other
apertures that reflect or admit light into the Premises. Tenant shall be
allowed to install blinds or use other similar window covers to obstruct the
view through windows.
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6.5 Tenant shall refrain from keeping or permitting the keeping of any
animals of any kind in, about or upon the Premises without Landlord's prior
written approval.
6.6 Except as provided for elsewhere herein and unless Landlord shall
cause such problem(s), Tenant shall keep and maintain, at Tenant's sole cost
and expense, in good order, condition and repair (including any such
replacement and restoration as is required for that purpose) the Premises and
every part thereof and any and all appurtenances thereto wherever located,
including, but without limitation, the exterior and interior portion of all
doors, door checks, windows, plate glass, Tenant signage, all plumbing and
sewage facilities within the Premises including free flow up to the main
sewer line, fixtures, heating and air conditioning and electrical systems
(whether or not located in the Premises), sprinkler system, walls, floors and
ceilings, and any work performed by or on behalf of Tenant hereunder. Tenant
shall also keep and maintain in good order, condition and repair (including
any such replacement and restoration as is required for that purpose) any
special equipment, fixtures or facilities other than the usual and ordinary
plumbing and utility facilities, which special facilities shall include, but
not be limited to, grease traps facilities located outside the Premises.
Landlord agrees to assign to Tenant any warranties Landlord may have
pertaining to those parts of the Premises Tenant is responsible for
maintaining hereunder.
6.7 Tenant shall store all trash and garbage in metal containers
located where designated by Landlord so as not to be visible or create a
nuisance to customers and business invitees in the Property, and so as not to
create or permit any health or fire hazard. Landlord shall arrange for the
regular removal thereof. If Tenant requires more frequent refuse removal or
larger refuse facilities over that generally provided by Landlord, Tenant
shall pay for same.
6.7.1 In the event Tenant shall be a medical and/or dental
oriented facility, lab or operation, Tenant shall be responsible for
installing appropriate medical waste containers and providing for the safe
storage and disposal of same, all at its expense.
6.8 Tenant hereby covenants and agrees that it, its agents, employees,
servants, contractors, subtenants and licensees shall abide by the Rules and
Regulations attached hereto as Exhibit E and incorporated herein by
reference, and such additional rules and regulations hereafter adopted, and
amendments and modifications of any of the foregoing, as Landlord may, from
time to time, adopt for the safety, care and cleanliness of the Premises or
the Property or for the preservation of good order thereon and therein.
6.9 Tenant shall operate all of the Premises during the entire Term
with sound business practice, due diligence and efficiency. Tenant shall
provide, install and at all times maintain in the Premises all suitable
furniture, fixtures, equipment and other personal property necessary for the
conduct of Tenant's business therein, in a businesslike manner.
6.10 Tenant shall not do, permit or suffer anything to be done, or kept
upon the Premises which will obstruct or interfere with the rights of other
tenants, Landlord or the patrons and customers of any of them, or which will
annoy any of them or their patrons by reason of unreasonable noise or
otherwise, nor
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will Tenant commit or permit any nuisance on the Premises or commit or suffer
any immoral or illegal act to be committed thereon.
6.11 The use of the Premises and all common areas whatsoever by Tenant,
its employees, agents, customers, licensees, invitees and contractors, shall
at all times be in compliance with all covenants, conditions and restrictions;
easements; reciprocal casement agreements; and all matters presently of
public record or which may hereafter be placed of public record, which affect
the Premises or the Property, or any part thereof.
6.12 Tenant acknowledges and agrees that Landlord may, but will not be
required to, adopt and provide security services for the Property from time
to time. However, Landlord will not be required to provide any such services
for the Premises or for the Property, and any security services that are
voluntarily undertaken by Landlord may be changed or discontinued from time
to time in Landlord's sole and absolute discretion, without liability to
Tenant, its employees, agents, customer and invitees. Tenant waives any
claims it may have against Landlord arising out of any security services
provided by Landlord, or the inadequacy or absence thereof, specifically
including Landlord's negligence with respect to the providing or failure to
provide such services. Tenant assumes the total and sole responsibility for
pursuing any civil or criminal remedies against any other person.
6.13 Tenant shall, at its sole cost and expense, comply with all
federal, state, city and municipal statutes, ordinances, rules and
regulations and the orders and regulations of any ISO (Insurance Services
Office) or any other body or entity exercising similar functions in force
during the Term and affecting the Property, the Premises or Tenant's use
thereof. Further, Tenant shall not use the Premises so as to create waste or
constitute a nuisance or disturb other tenants located in the Property.
6.13.1 Tenant shall not use the Premises for the generation,
storage, manufacture, production, releasing, discharge, or disposal of any
hazardous substance (defined below) or allow or suffer any other entity or
person to do so. "Hazardous substance" shall mean any flammable or related
material and any other substance or material defined or designated as a
hazardous or toxic substance, material or waste by a governmental law, order,
regulation or ordinance presently in effect or as amended or promulgated in
the future and shall include, without limitation:
(i) Those substances included within the definitions of
"hazardous substances", "hazardous materials", "toxic substances" or
"solid waste" in CERCLA, RCRA, the Hazardous Materials Transportation Act,
40 U.S.C. Sections 1801 ET SEQ., the Clean Water Act, 33 U.S.C. ET SEQ., the
Clean Water Act, 42 U.S.C. 7401 ET SEQ., the Toxic Substance Control Act, 15
U.S.C. 2601 ET SEQ., and the Safe Drinking Water Act, 42 U.S.C. 300f through
300j, and in the regulations promulgated pursuant to said laws;
(ii) Those substances listed in the United States Department
of Transportation Table (49 CFR 172.101 and amendments thereto) or by the
Environmental Protection Agency (or any successor agency) as hazardous
substances (40 CFR Part 302 and amendments thereto);
(iii) Such other substances, materials and wastes which are
or become regulated under applicable local, state or federal law, or the
United States government, or which are classified as hazardous or toxic under
federal, state or local laws or regulations; and
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(iv) Any material, waste or substance which is (A) petroleum,
(B) asbestos, (C) polychlorinated biphenyls or (D) designated as a "hazardous
substance" pursuant to Section 311 or the Clean Water Act, 33 U.S.C. Sections
1251 ET SEQ. (33 U.S.C. 1321) or listed pursuant to Section 307 of the Clean
Water Act (33 U.S.C. 1317).
6.13.2 The foregoing notwithstanding, Tenant shall be entitled to
use and maintain such limited quantities of materials that may otherwise be
defined as "hazardous substances," "hazardous materials," "toxic substances,"
or "solid waste" as used in the ordinary course of Tenant's business;
provided, that such "materials" are properly maintained, stored, and disposed
of, Tenant complies with all laws, ordinances, rules and regulations
applicable thereto and Tenant bears all responsibility and liability therefor.
6.13.3 Except as caused by the wilful acts or omissions of
Landlord, its agents, servants, employees, contractors or subcontractors,
Tenant shall protect, indemnify and hold harmless Landlord, its partners,
directors, officers, employees, agents, successors and assigns, the Property
and Landlord's management agent for the Property from and against any and all
claims, losses, damages, costs, expenses, liabilities, fines, penalties,
charges, administrative and judicial proceedings and orders, judgments,
remedial action requirements, enforcement actions of any kind (including,
without limitation, attorneys' fees and costs at trial and on appeal)
directly or indirectly arising out of or attributable to, in whole or in
part, the breach of any of the covenants, representations and warranties of
this Paragraph 6.13, or the use, generation, manufacture, production,
storage, release, threatened release, discharge, disposal, or presence of
hazardous substance on, under, from or about the Premises. The foregoing
indemnity shall further apply to any residual contamination on, under, from
or about the Premises, the Property, or affecting any natural resources
arising in connection with the use, generation, manufacturing, production,
handling, storage, transport, discharge or disposal of any such hazardous
substance, and irrespective of whether any of such activities were or will be
undertaken in accordance with environmental laws or other applicable laws,
regulations, codes and ordinances.
6.13.4 Upon notification of Tenant by Landlord, Landlord reserves
the right to request appropriate governmental officials to inspect the
Premises, from time to time, in order to determine Tenant's compliance
herewith.
SECTION 7
ALTERATIONS AND IMPROVEMENTS
7.1 Landlord shall diligently perform and install or cause to be
installed the improvements to the Premises required of it as specifically set
forth on Exhibit C attached hereto and incorporated herein ("Landlord's
Work"). Except as so set forth, Tenant otherwise accepts the Premises in its
"as is" condition. Tenant shall be entitled to the Tenant Work Allowance set
forth in Exhibit D attached hereto.
7.1.1 Prior to performing any such Tenant Work, Tenant agrees to
furnish Landlord with a complete detailed set of plans and specifications.
Landlord reserves the right to require such set of plans
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and specifications to be drawn by a registered architect which architect
shall be previously approved in writing by Landlord. Plans and specifications
are not approved by Landlord for engineering design and by approving such
plans and specifications, the Landlord does not assume any liability or
responsibility whatsoever therefor or for any defect in any structure
constructed from such plans and specifications. The Landlord shall not be
liable to the Tenant or any other person for any damage, loss or prejudice
suffered or claimed on account of its approval or disapproval of any plans,
drawings, specification or the construction or performance of any work
whether or not pursuant to such approved plans, drawings and specifications.
7.2 Tenant shall diligently perform and install or cause to be
installed the improvements and work to the Premises required of it as
specifically set forth on said Exhibit D ("Tenant's Work"). All of the
Tenant's Work shall be performed by licensed, bonded and insured contractors
substantially in accordance with the plans, specifications and related
requirements established pursuant to this Section 7 and said Exhibit D.
7.2.1 Tenant shall observe and perform all of its obligations
under this Lease (except its obligations to pay Minimum Monthly Rent and
Additional Rent), from the earlier of the date upon which Tenant first enters
the Premises or the date upon which the Premises is made available for
Tenant's Work until the Commencement Date of the Lease, in the same manner as
though the Lease Term began upon such date.
7.2.2 Tenant, at its own expense, shall comply with all laws,
rules, orders, ordinances, directions, regulations and requirements of
federal, state, county and municipal authorities now in force or which
hereafter may be in force ("Requirements"), which shall impose any duty upon
Landlord or Tenant with respect to the improvement, use, occupation or
alteration of the Premises by Tenant, including, but not limited to the
Americans with Disabilities Act ("ADA") which may be applicable thereto.
Tenant agrees to indemnify and save Landlord harmless from and against any
penalty, damage or charge imposed for any violation by Tenant, its assignees,
subtenants, licensees, agents and employees of any said Requirements.
7.3 Tenant shall not make any additions, alterations, improvements or
changes ("improvements") in or to the Premises without the prior written
approval of Landlord. Except as provided in Exhibit C hereof, any improvements
shall be at the sole cost and expense of Tenant. Any improvements shall be
made promptly and in good and workmanlike manner and in compliance with all
insurance requirements and with all applicable permits, authorizations,
building regulations, zoning laws, environmental regulations, laws regarding
the physically disabled and all other governmental rules, regulations,
ordinances, statutes and laws, now or hereafter in effect pertaining to the
Premises or Tenant's use thereof. Any improvements made by Tenant shall at
Landlord's option become the property of Landlord upon the expiration or
sooner termination of this Lease. However, Landlord shall have the right to
require Tenant to remove such improvements, at Tenant's sole cost and
expense, upon such termination of this Lease and to surrender the Premises in
the same condition as it was prior to the making of any or all such
improvements, ordinary wear and tear excepted.
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7.4 Landlord may require Tenant, at Tenant's sole cost and expense, to
furnish a bond or other security satisfactory to Landlord to assure diligent
and faithful performance of any work at the Premises to be performed by
Tenant.
7.5 Tenant shall indemnify and hold Landlord, the Property and
Landlord's managing agent for the Property free of and harmless from any and
all liabilities, losses, claims, damages or otherwise based upon or in any
manner growing out of any alterations or construction undertaken by Tenant
whether specifically under the terms of this Lease or otherwise, including
all costs, including but not limited to damages, expenses, court costs and
attorney's fees incurred in or resulting from claims made by any person or
persons, by other tenants of premises in the Property, their subtenants,
agents, employees, customers and invitees.
7.5.1 Before undertaking any alterations or construction, Tenant
or Tenant Contractor shall obtain and pay for a commercial liability
insurance policy insuring Landlord and Tenant against any liability which may
arise on account of such proposed alterations or construction work in limits
of not less than $1,000,000.00 combined single limit coverage; a copy of
such policy shall be delivered to Landlord prior to the commencement of any
such proposed work. Tenant shall also maintain at all times "all-risk"
casualty insurance in the name of Landlord and Tenant as their interests may
appear in the amount adequate to cover the cost of replacement of all
alterations, decorations, additions, or improvements in and to the Premises
and all trade fixtures therein, in the event of casualty loss. Tenant shall
deliver to Landlord copies of such insurance policies or certificates which
shall contain a clause requiring the insurer to give Landlord not less than
ten (10) days prior written notice of cancellation of such policies.
7.6 Tenant will indemnify Landlord against any lien, encumbrance or
charge upon fixtures, equipment, or personal property located within the
Premises.
7.7 All signs shall be designed, constructed and installed in
accordance with Exhibit F attached hereto and incorporated by this reference
herein or such uniform sign criteria as may be promulgated by Landlord in
lieu thereof. All such signage shall be installed by the Commencement Date.
SECTION 8
REPAIRS
8.1 At Tenant's sole expense, Tenant shall keep in good order,
condition and repair the Premises and every part thereof, including, without
limiting the generality of the foregoing, all plumbing, heating, ventilating
and air conditioning systems, electrical and lighting facilities and
equipment within the Premises, fixtures, interior walls and interior surfaces
of exterior walls, ceilings, windows (including glass and casings), doors
(including casings and locks), plate glass and skylights located within the
Premises. Landlord reserves the right to procure and maintain the ventilating
and air conditioning system maintenance contract for the entire Property,
including the Premises, and if Landlord so elects, the cost thereof shall be
included in the Property's Operating Cost.
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Tenant shall promptly replace any portion of the Premises or system
or equipment in the Premises which cannot be fully repaired, regardless of
whether the benefit of such replacement extends beyond the Lease Term.
Tenant shall be solely responsible and shall indemnify, protect, defend and
hold Landlord harmless as a result of any penetrations or perforations of the
roof caused by Tenant. Tenant shall also be responsible, at Tenant's sole
cost, to comply with all Requirements relating to the Premises including, but
not limited to, the obligation to make all improvements, alterations or
modifications required by such Requirements. It is the intention of Landlord
and Tenant that, at all times during the Lease Term, Tenant shall maintain
the Premises in an attractive, first-class and fully operative condition.
Tenant shall also be responsible for all repairs to the Property
which are made necessary by any act or omission of Tenant or any of its
affiliates, employees, contractors, subtenants, visitors, patrons, guests or
invitees.
If Tenant fails to perform Tenant's obligations under this Section
8.1, Landlord may enter upon the Premises after ten (10) days written notice
to Tenant (except in the case of emergency, in which event, no notice shall
be required), perform such obligations on Tenant's behalf and put the
Premises in good order, condition and repair, without liability to Tenant for
any loss or damage that may accrue to Tenant's merchandise, fixtures, or
other property or to Tenant's business by reason thereof and the cost for
making such repairs plus ten percent (10%) for administrative overhead shall
be due and payable as Additional Rent to Landlord together with Tenant's next
Minimum Monthly Rent installment.
8.2 Landlord agrees to keep in good order, condition and repair the
foundations, exterior walls and roof of the Premises (but excluding the
exterior and interior of all windows, doors, roll-up doors and any plate
glass) except for reasonable wear and tear and except for any damage thereto
caused by any act or commision of Tenant or its agents, employees, servants,
contractors, subtenants, licensees, customers or business invitees. It is an
express condition precedent to all obligations of Landlord to repair and
maintain that Tenant shall have notified Landlord in writing of the need for
such repairs or maintenance. The cost of such repairs shall be included in
the Property's Operating Cost as aforesaid. All work shall be completed in a
timely manner in workmanlike quality. Except as may be otherwise expressly
provided for in this Lease, there shall be no abatement of Minimum Monthly
Rent, Additional Rent or any other payment due to Landlord under this Lease
and no liability of Landlord by reason of any injury to or interference with
Tenant's business arising from the making of any repairs, alterations or
improvements under this Lease.
SECTION 9
PARKING AND COMMON AREAS
9.1 Tenant, its agents, employees, servants, contractors, subtenants,
licensees, customers and business invitees shall have the nonexclusive right,
in common with Landlord and all others to whom Landlord has or may hereafter
grant rights, to use such common areas of the Property (including, but not
limited to, the parking lot(s), walkways, corridors, halls, passageways and
ramps, sidewalks, access roads, landscape and planted areas, public rest
rooms and other public facilities) as designated from time to time by
Landlord in its sole discretion (collectively, "Common Areas"), subject to
such rules and regulations as Landlord may from time to time impose. Tenant
agrees that it, its agents, employers, servants, contractors,
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subtenants, invitees and licensees shall abide by such rules and regulations.
Landlord may at any time close any such Common Areas to make repairs or
changes, to prevent the acquisition of public rights in such Common Areas, or
to discourage noncustomer parking. Landlord shall operate, manage, equip,
light, repair and maintain the Common Areas for their intended purposes, as
Landlord shall determine. Landlord reserves the right to dedicate all or
portions of such Common Areas and other portions of the Property for public
utility purposes. Landlord may do such other acts in and to the Common Areas
as in its sole judgment may be desirable. Tenant shall not at any time
interfere with the rights of Landlord, other tenants, its and their agents,
employees, servants, contractors, subtenants, licensees, customers and
business invitees to use any part of the parking lot or Common Areas.
Landlord shall not be subject to any liability, nor shall Tenant be entitled
to any compensation, or reduction or abatement of rent, by reason of any
alteration or diminution of the Common Areas, and no such alteration or
diminution of the Common Areas, shall be deemed constructive or actual
eviction.
9.2 Notwithstanding the foregoing, Tenant shall be obligated to pay its
share of the Property's Operating Cost as set forth in Section 3 above.
SECTION 10
SERVICES
10.1 Landlord agrees to provide Tenant, as Landlord deems necessary, and
subject to (i) limitations contained in any governmental controls now or
hereafter imposed or matters beyond Landlord's control, (ii) cessation for
necessity and (iii) Tenant's obligation in connection with the Property's
Operating Cost, the following services:
10.1.1 [Intentionally omitted]
10.1.2 Regular refuse and trash disposal.
10.1.3 Water and sewer for water reasonably used in the Premises
and the Common Areas with the exception of commercial enterprises which
require water for the conduct of their business, the latter cost thereof
being paid as additional rent hereunder as billed to such Tenant by Landlord;
and
10.1.4 Landscaping, streetscaping, parking lot repair and
maintenance and sweeping, electrical power and water for the Common Areas and
lighting for the Common Areas.
10.2 Upon twenty-four hours notice to Tenant, Landlord reserves the
right to enter the Premises to install and maintain pipes, energy submeters,
conduits and other appurtenances in the soffit or other space about the
ceilings or ceiling line, the walls and under any floors of the Premises,
which appurtenances or the like may be for other tenants of the building in
which the Premises is situated.
SECTION 11
TAXES
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11.1 Tenant shall be liable for and shall pay before delinquency (and,
upon demand by Landlord, Tenant shall furnish Landlord with satisfactory
evidence of the payment thereof) all taxes, fees, bonds and assessments of
whatsoever kind or nature, and penalties and interest thereon, if any, levied
against Tenant's property or any other personal property of whatsoever kind
and to whomsoever belonging situate or installed in or upon the Premises
whether or not affixed to the realty. If at any time during the Term of this
Lease any such taxes on personal property are assessed as part of the tax on
the real property of which the Premises is a part, then in such event Tenant
shall pay to Landlord the amount of such additional taxes as may be levied
against the real property by reason thereof.
11.2 If at any time during the Term, under the laws of the United
States, Nevada or any political subdivision thereof, a tax or excise on rents
or other tax (except income tax), however described, is levied or assessed by
the United States, Nevada or said political subdivision against Landlord on
account of any rent reserved under this Lease, all such tax or excise on
rents or other taxes shall be paid by Tenant. Whenever Landlord shall receive
any statement or bill for any such tax or shall otherwise be required to make
any payment on account thereof, Tenant shall pay, as additional rent, the
amount due hereunder within ten (10) days after demand therefor accompanied
by delivery to Tenant of a copy of such tax statement, if any.
SECTION 12
UTILITIES
12.1 Tenant shall pay all charges for gas, heat, electricity, power,
excessive refuse disposal, environmental waste disposal, air conditioning,
telephone service (collectively "Utilities") charged or attributable to the
Premises, and all other services or utilities used in, upon or about the
Premises by Tenant during the Term. To the extent the costs therefor are not
separately metered or billed to Tenant, but are a cost of the Property,
including water, sewer service charges and rentals and customary refuse
disposal, Landlord shall estimate in advance and Tenant shall pay as
Additional Rent and in the manner and at the time(s) Tenant pays its share of
the Property's Operating Cost under Section 3 above, all charges for
Utilities and all other services or utilities used in, upon or about the
Premises by Tenant.
12.1.1 With respect to any utility or service mentioned herein
which is not separately metered or billed to Tenant, if Landlord determines
that Tenant's use of such utility or service is excessive or abnormal such
that it is unfair to assess Tenant and other tenants therefor on a pro-rata
square footage basis, Landlord shall so notify Tenant. Such written notice
shall contain Landlord's estimate of a fair percentage of the overall cost of
such utility or service which should be billed to Tenant. If, within thirty
(30) days after Tenant's receipt of such notice, Landlord and Tenant are
unable to agree upon a fair percentage of the overall cost of such utility or
service to be paid by Tenant, then, and in such event, Tenant shall
thereafter, at Tenant's election, either (i) pay the percentage of overall
cost set forth in Landlord's notice, or (ii) cause such utility or service to
be separately metered to Tenant or separately contracted for by Tenant, so
that Tenant will pay separately, at Tenant's sole expense, for such utility
or service (in which case Landlord shall not assess Tenant for any pro-rata
share of such utility or service). The cost of any separate meter shall be
paid by Tenant.
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SECTION 13
INSURANCE
13.1 Tenant shall, at all times during the Term, at its sole cost and
expense, procure and maintain in full force and effect a policy or policies
of commercial general liability insurance coverage written on an occurrence
form and issued by an insurance carrier having an A.M. Best rating of at
least A-VIII and authorized to transact business in the State of Nevada
assuring against (i) loss, damage or liability for injury or death to persons
and loss or damage to property, (ii) advertising injury, and (iii) any
contractual liability, occurring from any cause whatsoever in connection
with the Premises or Tenant's use thereof. Such liability insurance shall be
in amounts of not less than One Million Dollars ($1,000,000.00) combined
single limit coverage. Such insurance shall also cover and include all
exterior signs maintained by Tenant hereunder. Landlord shall be named as an
additional insured (and at Landlord's option, any other persons, firms or
corporations designated by Landlord shall be additional named assureds) under
each such policy of insurance.
13.2 Tenant shall, at all times during the Term, at its sole cost and
expense, procure and maintain in full force and effect "all-risk" casualty
insurance, plus boiler and machinery coverage, if applicable, and such
further coverages as Landlord may require, covering not less than 100% of the
full replacement value of the Tenant's improvements on the Premises and the
personal property therein. Tenant and Landlord, as their interests may appear,
shall be the named assureds (and at Landlord's option, any other persons,
firms or corporations designated by Landlord shall be additionally named
assureds) under each such policy of insurance.
13.3 The minimum limits of policies of insurance required of Tenant
under this Lease shall in no event limit the liability of Tenant under this
Lease. A certificate issued by the insurance carrier for each policy of
insurance required to be maintained by Tenant hereunder together with a copy
of each such policy or certificate shall be delivered to Landlord and all
other named assureds on or before the Commencement Date hereof and
thereafter, as to policy renewals within thirty (30) days prior to the
expiration of the term of each such policy. Each certificate of insurance and
each such policy of insurance required to be maintained by Tenant hereunder
shall be in form and substance satisfactory to Landlord and shall expressly
evidence insurance coverage as required by this Lease and shall contain an
endorsement or provision requiring not less than thirty (30) days prior
written notice to Landlord and all other named assureds of the cancellation,
diminution in the perils insured against, or reduction of the amount of
coverage of the particular policy in question.
In the event Tenant shall fail to procure such insurance, or to
deliver such policies or certificates and appropriate endorsements, Landlord
may, at its option, procure such policies for the account of Tenant, and the
cost thereof plus a ten percent (10%) administrative charge shall be paid by
Tenant to
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Landlord as Additional Rent within five (5) days after delivery to
Tenant of bills therefor. The amounts of the insurance required hereunder
shall be subject to adjustment from time to time as requested by Landlord,
based upon inflation, increased liability awards, recommendations of
professional insurance advisors, and other relevant factors.
13.4 Tenant shall not use or occupy, or permit the Premises to be used
or occupied, in a manner which will increase the rates of insurance for the
Premises or the Property. Tenant shall also not use or occupy, or permit the
Premises to be used or occupied, in a manner which will make void or voidable
any insurance then in force with respect thereto or the Property, or which
will make it impossible to obtain casualty or other insurance with respect
thereto or the Property. If by reason of the failure of Tenant to comply with
the provisions of this Section, the other insurance rates for the Premises or
the Property be higher than they otherwise would be, Tenant shall reimburse
Landlord, as Additional Rent, on the first day of the calendar month next
succeding notice by Landlord to Tenant of said increase, for that part of all
insurance premiums thereafter paid by Landlord which shall have been charged
because of such failure of Tenant.
13.5 Tenant hereby waives any and all rights of recovery from Landlord,
its partners, officers, agents and employees for any loss or damange,
including consequential loss or damage, caused by any peril or perils
(including negligent acts) enumerated in each form of insurance policy
required to be maintained by Tenant hereunder.
13.5.1 Each policy of insurance procured by Tenant as provided in
this Section shall contain an express waiver of any and all rights of
subrogation thereunder whatsoever against Landlord, its partners, officers,
agents and employees. All such policies shall be written as primary policies
and not contributing with or in excess of the coverage, if any, which
Landlord may carry. Any other provision contained in this Section or
elsewhere in this Lease nothwithstanding, the amounts of all insurance
required hereunder to be procured by Tenant shall be not less than an amount
sufficient to prevent Landlord from becoming a co-insurer.
13.6 Tenant shall replace, at the expense of Tenant, any and all plate
and other glass damaged or broken from any cause whatsoever in and about the
Premises. Landlord may insure, and keep insured, at Tenant's expense, all
plate and other glass in the Premises for and in the name of Landlord. Bills
for the premiums thereof shall be rendered by Landlord to Tenant at such
times as Landlord may elect, and shall be due from, and payable by, Tenant
when rendered, and the amount thereof shall be deemed to be, and be paid as,
Additional Rent.
13.7 Tenant agrees that it will not keep, use, sell or offer for sale in
or upon the Premises any article or permit any activity which may be
prohibited by the standard form of casualty or public liability insurance
policy. Tenant agrees to pay any increase in premiums for insurance which may
be carried by Landlord on the Premises or the building of which it is a part,
resulting from the type of merchandise sold or services rendered by Tenant or
activities in the Premises, whether or not Landlord has consented to the
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same. In determining whether increased premiums are the result of Tenant's use
of the Premises, a schedule, issued by the organization making the insurance
rate on the Premises, showing various components of such rate, shall be
conclusive evidence of the several items and charges which make up the
respective rate(s) on the Premises.
13.8 Tenant shall not use or occupy the Premises or any part thereof, or
suffer or permit the same to be used or occupied for any business or purpose
deemed extra hazardous on account of fire or otherwise. In the event Tenant's
use and/or occupancy causes any increase of premium for insurance on the
Premises or any part thereof above the rate for the least hazardous type of
occupancy legally permitted in the Premises, Tenant shall pay such additional
premium on the insurance policy that may be carried by Landlord for its
protection. Bills for such additional premiums shall be rendered by Landlord
to Tenant at such time as Landlord may elect, and shall be due from and
payable by Tenant when rendered in writing, but such increase in the rate of
insurance shall not be deemed a breach of this covenant by Tenant. Failure to
pay amounts due hereunder shall be a breach of the Lease.
13.9 Tenant during the Term shall indemnify and save harmless Landlord,
the Property and Landlord's managing agent for the Property from and against
any and all claims and demands whether for injuries to persons or loss of
life, or damage to property, occurring within the Premises or elsewhere on
the Property, or arising out of the use and occupancy of the Premises by
Tenant, or occasioned wholly or in part by any act or omission of Tenant, its
subtenants, agents, contractors, employees, licensees, invitees or
concessionaires, excepting, however, such claims and demands, whether for
injuries to persons or loss of life, or damage to property, caused by the
willful misconduct of Landlord. In case Landlord shall be made a party to
any litigation, in the absence of any willful misconduct on the Landlord's
part, then Tenant shall protect and hold Landlord harmless and shall pay all
costs, expenses and attorney's fees that may be incurred or paid by Landlord in
enforcing the covenants and agreements of this Lease. In case Tenant shall be
made a party to any litigation solely because of the Landlord's wilful
misconduct, then Landlord shall protect and hold Tenant harmless and shall pay
all costs, expenses and attorney's fees that may be incurred or paid by Tenant
in enforcing the covenants and agreements of this Lease.
13.10 Landlord shall, at all times during the Term, subject to
Tenant's obligation for its pro-rata share of the Property's Operating Cost,
procure and maintain in full force and effect "all risk" insurance against
perils included therein, including business income loss for up to one (1)
year, boiler and machinery coverage and such further coverage as Landlord may
conclude is necessary covering not less that 80% of the current replacement
value of the building in which the Premises is situated and its improvements,
including but not limited to earthquake and flood coverage. The insurer
therefor shall meet the minimum requirements as otherwise set forth above.
Mortgagee(s) of the Property or any portion thereof may be named as
additional insureds thereon.
13.01.1 Landlord in connection with such casualty insurance shall
endeavor to obtain the agreement of each mortgage of the Property or the
Premises to make proceeds of such insurance available for repair and
restoration of Landlord's Work in accordance with the provisions of Section
20 of this Lease.
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13.11 Landlord shall, at all times during the Term, subject to Tenant's
obligation for its pro-rata share of the Property's Operating Cost, procure
and maintain in full force and effect a policy or policies of commercial
general liability insurance assuring against loss or damage or liability for
injury or death to persons and loss or damage to property occurring from any
cause whatsoever in connection with the Property but not necessarily included
within the Premises. Such liability insurance shall be in an amount of not
less than Two Million Dollars ($2,000,000.00), combined single limit
coverage. Such insurance shall also cover and include all exterior signs
maintained by Landlord hereunder. The insurer therefor shall meet the minimum
requirements as otherwise set forth above. Mortgagee(s) of the Property or
any portion thereof may be named as additional insureds thereon.
SECTION 14
LIENS
14.1 Tenant shall at all times indemnify, save and holds Landlord, the
Premises, the Property and the leasehold created by this Lease free of and
harmless from any claims, liens, demands, charges, encumbrances, litigation
and judgments arising directly or indirectly out of any use, occupancy or
activity of Tenant, or out of any work performed, material furnished, or
obligations incurred by Tenant in, upon or otherwise in connection with the
Premises. Tenant shall give Landlord written notice at least ten (10) days
prior to the commencement of any such work on the Premises to afford Landlord
the opportunity of filing appropriate notices of nonresponsibility. Tenant
shall, at its sole cost and expense, within fifteen (15) days after filing
of any lien of record, obtain the discharge and release thereof. Nothing
contained herein shall prevent Landlord, at the cost and for the account of
Tenant, from obtaining said discharge and release in the event Tenant fails
or refuses to do the same within said fifteen (15) day period.
SECTION 15
INDEMNIFICATION
15.1 Tenant hereby indemnifies, saves and holds Landlord, the Premises,
the Property, the leasehold estate, and Landlord's management agent for the
Property, free of and harmless from any and all liabilities, losses, costs,
expenses, including attorney's fees (at trial and on appeal), causes of
action, suits, judgments, claims, liens and demands of any kind whatsoever
in connection with, arising out of, or by reasons of any act, omission or
negligence of Tenant, its agent, employees, servants, contractors,
subtenants, licensees, customers or business invitees while in, upon or about
or in any way connected with the Premises or the Property or arising from any
accident, injury or damage, howsoever and by whomsoever caused, to any person
or property whatsoever, occurring in, upon, about or in way connected with the
Premises or any portion thereof other than solely as a result of the wilful
misconduct of Landlord.
15.2 Landlord shall not be liable to Tenant or to any other person
whatsoever for any damage occasioned by falling plaster, electricity,
plumbing, gas, water, steam, sprinkler or other pipe and sewage system or by
the bursting, running or leaking of any tank, washstand, closet or waste of
other pipes, nor for
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any damages occasioned by water being upon or coming through the roof,
skylight, vent, trapdoor or otherwise or for any damage arising from any acts
or neglect of co-tenants or other occupants of the Property or of adjacent
property or of the public, nor shall Landlord be liable in damages or
otherwise for any failure to furnish, or interruption of, service of any
utility.
15.3 Landlord hereby indemnifies, saves and holds Tenant and the
leasehold estate free of and harmless from any and all liabilities, losses,
costs, expenses, including attorneys' fees (at trial and on appeal), causes
of action, suits, judgments, claims, liens and demands of any kind whatsoever
directly arising solely out of the willful misconduct of Landlord or its
employees, while in, upon, about or in any way connected with the Premises or
the Property.
15.4 Each party's indemnity rights and obligations under this Lease
(whether set forth in Section 15 or elsewhere) shall survive the expiration or
termination of the Lease.
SECTION 16
SUBORDINATION
16.1 Tenant agrees upon request of Landlord to subordinate this Lease
and Tenant's rights hereunder to the lien of any mortgage, deed of trust or
other encumbrance, together with any renewals, extensions or replacements
thereof, now or hereafter placed, charged or enforced against the Premises,
or any portion thereof, or any property of which the Premises is a part and
to execute and deliver at any time, and from time to time, upon demand by
Landlord, such documents as may be required to effectuate such subordination,
and in the event that Tenant shall fail, neglect or refuse to execute and
deliver any such documents to be executed by it within ten (10) days after
request by Landlord, Tenant hereby appoints Landlord, its successors and
assigns, the attorney-in-fact of Tenant irrevocably to execute and deliver
any and all such documents for and on behalf of Tenant. Tenant acknowledges
that the power of attorney granted hereby is coupled with an interest.
Failure of Tenant to execute any statements or instruments necessary or
desirable to effectuate the provisions of this Section within ten (10) days
after written request by the Landlord, shall constitute a default under this
Lease. In that event, Landlord, in addition to any other rights or remedies
it might have, shall have the right, by written notice to Tenant to terminate
this Lease as of a date not less than twenty (20) days after the date of
Landlord's notice. Landlord's election to terminate shall not release Tenant
of any liability for its default.
16.2 In the event that the mortgage or beneficiary of any such mortgage
or deed of trust elects to have this Lease a prior lien to its mortgage or
deed of trust, then and in such event, upon such mortgage's or beneficiary's
giving written notice to Tenant to that effect this Lease shall be deemed
prior in lien to such mortgage or deed of trust, whether this Lease is dated
prior to or subsequent to the date of recordation of such mortgage or deed of
trust.
16.3 Tenant shall, in the event of the exercise of any power of sale
under any deed of trust or, any proceedings are brought for the foreclosure
of a lien, affecting property in which Premises are situated, attorn
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to the purchaser upon any such foreclosure or sale and recognize such
purchaser as the Landlord under this Lease.
SECTION 17
ASSIGNMENT AND SUBLETTING
17.1 Tenant shall not assign this lease or any interest herein, nor lease
or sublet the Premises, or any part thereof, or any right or privilege
appurtenant thereto, nor permit the occupancy or use or any part thereof by
any other person, without the written consent of Landlord first had and
obtained, and a consent to one assignment, subletting, occupancy or use,
shall not be construed as a consent to any subsequent assignment, subletting,
occupancy or use.
17.1.1 In the event that Tenant shall seek Landlord's consent to
assign or otherwise transfer this Lease or sublet the Premises, Tenant shall
provide to Landlord the name, address, financial statement and business
experience resume for the immediately preceding financial periods up to three
(3) years of the proposed assignee, transferee or subtenant and such other
information concerning such proposed assignee, transferee or subtenant as
Landlord may require. This information shall be in writing and shall be
received by Landlord no less than thirty (30) days prior to the effective
date of the proposed assignment, transfer or sublease. Any consent by
Landlord to any assignment or sublease, or to the operation of a
concessionaire or licensee, of the like shall not constitute a waiver of the
necessity for such consent to any subsequent assignment or sublease, or
operation by a concessionaire or licensee or the like.
17.2 In the absence of an express agreement in writing to the contrary
executed by Landlord, no assignment, mortgage, pledge, hypothecation,
encumbrance, subletting or license hereof or hereunder shall act as a release
of Tenant from any of the terms, covenants and conditions of the Lease on the
part of Tenant to be kept and performed.
17.3 The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation hereof, or the termination of this Lease by Landlord
pursuant to any provisions contained herein, shall not work a merger, but at
the option of Landlord, shall either terminate any or all existing subleases
or subtenancies, or operate as an assignment to the Landlord of any and all
such subleases or subtenancies.
17.4 Tenant shall reimburse Landlord the greater of $500.00 or
Landlord's actual costs and attorney's fees incurred in connection with the
processing and documentation of any requested transfer.
17.5 If Tenant is a corporation or a partnership, or a limited
liability company the issuance of any additional stock or partnership or
membership interest, as the case may be, and/or the transfer, assignment or
hypothecation of any stock or interest in such corporation, partnership or
limited liability company in the
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aggregate in excess of ten percent (10%) of such interest, as the same may be
constituted as of the date of this Lease, shall be deemed an assignment within
the meaning of this Section 17.
17.6 No subletting or assignment, even with the consent of Landlord,
shall relieve Tenant of its obligation to pay rent and to perform all its
other obligations under this Lease. Moreover, Tenant shall indemnify and hold
Landlord harmless, as provided in Paragraph 15.1, for any acts or omission by
an assignee or subtenant. Each transferee, other than Landlord, shall assume
all obligations of Tenant under this Lease and shall be liable jointly and
severally with Tenant for, the payment of all rent, and for the due performance
of all Tenant's obligations under this Lease. No transfer shall be binding
upon Landlord unless any document memorializing the transfer is delivered to
Landlord and, if the transfer is an assignment of sublease, both the
assignee/subtenant and Tenant deliver to Landlord and executed document which
contains: (i) a covenant of assumption by the assignee/subtenant, and (ii)
an indemnification agreement by Tenant both satisfactory in substance and form
to Landlord and consistent with the requirements of this Section provided that
the failure of the assignee/subtenant or Tenant to execute the instrument of
assumption shall not release either from any obligation under this Lease.
The acceptance by Landlord of any payment due under this Lease from
any other person shall not be deemed to be a waiver by Landlord of any
provisions of this Lease or to be a consent to any transfer. Consent by
Landlord to one or more transfers shall not operate as a waiver or estoppel
to the future enforcement by Landlord of its rights under this Lease.
SECTION 18
INSOLVENCY AND DEATH
18.1 It is understood and agreed that neither this Lease nor any
interest herein or hereunder, nor any estate hereby created in favor
of Tenant, shall pass by operation of law under any state or federal
insolvency, bankruptcy or inheritance act, or any similar law now or
hereafter in effect, to any trustee, receiver, assignee for the
benefit of creditors, heir, legatee, devisee, or any other person
whomsoever without the express prior written consent of Landlord.
18.2
SECTION 19
CONDEMNATION
19.1 In the event of any taking of or damage to all or any part of the
Premises (or any interest therein) prior to the expiration or earlier
termination of this Lease and by reason of any exercise of the power of
eminent domain (whether by condemnation proceedings or otherwise) or by
reason of any transfer of all or any part of the Premises (or any interest
therein) made in avoidance of such an exercise, the rights and obligations
of Landlord and Tenant with respect thereto shall be as set forth in this
Section. Such taking, damage and/or transfer are all referred to as
"Appropriation".
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19.2 If the entire Premises be Appropriated, this Lease shall terminate
and expire as of the date of such Appropriation, and Landlord and Tenant
shall be released from further liability hereunder.
19.3 If the Appropriation shall be greater than on-third (1/3) of the
floor space of the Premises and the remainder will not be reasonably adequate
for the operation of Tenant's business after Landlord completes such repairs
or alterations as Landlord elects to make, either Landlord or Tenant shall
have the option to terminate this lease by notifying the other party hereto
of such election in writing within thirty (30) days after such Appropriation.
19.3.1 Subject to the provisions of paragraph 19.3 above, if after
such Appropriation the remaining part thereof is suitable for the purposes
for which Tenant has leased the Premises, this Lease shall continue in full
force and effect, but the Minimum Monthly Rent shall be reduced in an amount
equal to that proportion of the Minimum Monthly Rent which the floor space of
the portion taken bears to the total floor space of the Premises. In the
event a partial Appropriation does not terminate this Lease, Tenant, at
Tenant's expense, shall make repairs and restoration to the remaining premises
to the extent of alterations made by Tenant and shall also repair or replace
its fixtures, furniture, furnishings and equipment. If Tenant has closed,
Tenant shall promptly reopen for business.
19.4 If any part of the Property comprising more than 25% of the
acreage of the Property, but not including the Premises, shall be
appropriated, Landlord shall have the right, at its option, to terminate this
Lease by notifying Tenant within six (6) months of such Appropriation.
19.5 All awards payable on account of such Appropriation shall be
payable to Landlord, and Tenant hereby waives any and all rights thereto and
interest therein; provided, however, that Tenant shall be entitled to a
separate award for the Tenant's relocation costs, but Landlord shall have no
obligation with respect thereto.
19.6 No temporary taking of the Premises by governmental authority
shall terminate this Lease. Any award specifically attributable to a
temporary taking of the Premises shall belong entirely to Landlord and the
Tenant shall only be entitled to abatement of Minimum Monthly Rent during
that time. A temporary taking shall be deemed to be a taking of the use or
occupancy of the Premises for a period not to exceed ninety (90) days.
SECTION 20
DAMAGE OR DESTRUCTION
20.1 In the case of the total or partial destruction of the
improvements on the Premises, or any portion thereof, whether by fire or
other casualty, this Lease shall not terminate except as otherwise
specifically provided herein. Tenant shall be entitled to a reduction in the
Minimum Monthly Rent in an amount equal to that proportion of the Minimum
Monthly Rent which the number of square feet of floor space in the unusable
portion bears to the total number of rentable square feet of the Premises.
Said reduction shall be prorated so that the Minimum Monthly Rent shall only be
reduced for those days any
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given area is actually unusable. Further, if a portion of the Premises is so
damaged or destroyed so as to preclude Tenant from operating its business,
then there shall be a full abatement of Minimum Monthly Rent until operations
may be resumed. Subject to the availability of casualty insurance proceeds as
provided in Section 13 above, Landlord shall promptly undertake to repair and
restore the building in which the Premises is situated including Common Areas
therein consistent with the provisions of Paragraph 20.2 below. Thereafter,
Tenant shall in accordance with Paragraph 20.2 below promptly undertake and
with reasonable dispatch repair and reconstruct the Premises and other
improvements of Tenant on the Premises. To the extent insurance proceeds are
insufficient therefor, Tenant shall be liable for any such difference. In
determining what constitutes reasonable dispatch, consideration shall be
given to delays caused by labor disputes, civil commotion, war, warlike
operations, invasion, rebellion, hostilities, military or usurped power,
sabotage, governmental regulations or control, fire or other casualty,
inability to obtain any materials or services, acts of God and other causes
beyond Tenant's reasonable control.
20.2 The provisions of this Section 20 with respect to repair and
reconstruction by Landlord shall be limited as to that which is necessary to
place the Property in the condition specified for Landlord's Work in said
Exhibit C or like condition and when placed in such condition the Premises
shall be deemed restored and rendered tenantable, promptly following which time
Tenant, but not more than ninety (90) days thereafter subject to extension of
time for Force Majeure (as defined in Section 29 below) and Landlord delays
in the completion of its repair or restoration work, at Tenant's expense,
shall perform Tenant's work and any and all modification, addition or
alteration subsequent thereto, and Tenant shall also repair or replace its
stock in trade, fixtures, furniture, furnishings, floor coverings and
equipment, and if Tenant has closed, Tenant shall reopen for business within
ninety (90) days, subject to extension of time for Force Majeure and Landlord
delays in the completion of its repair or restoration, after Landlord has
completed Landlord's repairs.
20.2.1 If the Premises cannot be restored and Tenant's business
opened within one hundred & twenty (120) days of such damage, or destruction
based upon an estimate therefor made by Landlord's architect following such
damage or destruction, then and in such events, Tenant may, within thirty (30)
days after written notice from Landlord estimating the time to complete such
repair or restoration (which notice shall be given to Tenant within thirty
(30) days of such damage or destruction), elect to terminate this Lease by
written notice to Landlord.
20.3 All insurance proceeds payable under any casualty
insurance policy procured and maintained by Tenant shall be payable solely to
Tenant and/or its mortgagee with the provision that such proceeds shall be
made available for repair and restoration of the Premises. Tenant shall in
no case be entitled to compensation or damages on account of any annoyance or
inconvenience in making repairs under any provision of this Lease. Except to
the extent provided for in this Section 20, neither the rent payable by
Tenant nor any of Tenant's other obligations under any provision of this
Lease shall be affected by any damage to or destruction of the Premises or
any portion thereof by any cause whatsoever.
20.4 All insurance proceeds payable under any casualty insurance
policy procured and maintained by Landlord shall be payable solely to
Landlord and/or its mortgagee(s), and Tenant shall have no interest therein.
Landlord shall endeavor to see that the proceeds are made available for repair
and
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restoration as required of Landlord. Tenant shall in no case be entitled
to compensation or damages on account of any annoyance or inconvenience in
making repairs under any provision of this Lease. Except to the extent
provided for in this Section 20, neither the rent payable by Tenant nor any
of Tenant's other obligations under any provision of this Lease shall be
affected by any damage to or destruction of the Premises or any portion
thereof by any cause whatsoever.
SECTION 21
TENANT BANKRUPTCY
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21.1 As used in this Section 21, "Tenant's Bankruptcy" means
(a) the application by Tenant or any Guarantor of Tenant or its or their
consent to the appointment of a receiver, trustee, or liquidator of Tenant or
any Guarantor or Tenant or a substantial part of its or their assets, (b) the
filing of a voluntary petition in bankruptcy or the admission in writing by
Tenant or any Guarantor of Tenant of its inability to pay its debts as they
become due, (c) the making by Tenant or any Guarantor of Tenant of an
assignment for the benefit of its creditors, (d) the filing of a petition or
an answer seeking a reorganization or an arrangement with its creditors or an
attempt to take advantage of any insolvency law, (e) the filing of an answer
admitting the material allegations of a petition filed against Tenant or any
Guarantor of Tenant in any bankruptcy, reorganization, or insolvency
proceeding, (f) the entering of an order, judgment, or decree by any court of
competent jurisdiction, adjudicating Tenant or any Guarantor of Tenant a
bankrupt or an insolvent, approving a petition seeking such reorganization,
or appointing a receiver, trustee, or liquidator of Tenant or any Guarantor
of Tenant or of all or a substantial part of its or their assets, or (g) the
commencing of any proceeding under any bankruptcy, reorganization,
arrangement, insolvency, readjustment, receivership, or similar law, and the
continuation of such order, judgment, decree, or proceeding unstayed for any
period of sixty (60) consecutive days after the expiration of any stay
thereof.
21.2 Neither Tenant's interest in this Lease, nor any estate
created by this Lease in Tenant nor any interest in this Lease or in such
estate, shall pass to any trustee or receive or assignee for the benefit of
creditors or otherwise by operation of law except as may specifically be
provided by the Bankruptcy Code Title 11 U.S.C. (the "Bankruptcy Code").
21.3 In addition to Landlord's remedies under Section 25.
Landlord may, at its sole discretion and without notice, invoke the following
provisions:
(a) Upon Tenant's Bankruptcy, this Lease and all
rights of Tenant under it shall automatically terminate with the same force
and effect as if the date of any such event were the date stated in this
Lease for the expiration of the Term, and Tenant shall vacate and surrender
the Premises, but shall remain liable as provided in this Lease. The Landlord
reserves any and all remedies provided in this Lease or at law or in equity.
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(b) If this Lease is not terminated in accordance with
Paragraph 21.3(a) above because such termination is not allowed under the
Bankruptcy Code (hereinafter defined), upon the filing of a petition by or
against Tenant under the Bankruptcy Code, Tenant, as debtor and as debtor in
possession, and any trustee who may be appointed, agree:
(1) To perform promptly each and every obligation of
Tenant under this Lease until such time as this Lease is either rejected or
assumed by order of a United States Bankruptcy Court or other United States
Court of competent jurisdiction; or deemed rejected by operation of law,
pursuant to 11 U.S.C. Section 365(C)(4);
(2) To pay monthly in advance on the first day of each
month as reasonable compensation for use and occupancy of the Premises an
amount equal to all Minimum Monthly Rent and all Additional Rent;
(3) To reject or assume this Lease within sixty (60) days
of the filing of such petition under Chapter 7 of the Bankruptcy Code or
within thirty (30) days of filing of a petition under any other Chapter;
(4) To be deemed conclusively to have rejected this Lease
in the event of the failure to comply with any of the above;
(5) To have consented to the entry of an order by an
appropriate United States Bankruptcy Court providing all of this above,
waiving notice and hearing of the entry of same; and
(6) That this is a "lease of real property" as such term
is used in the Bankruptcy Code.
(c) Notwithstanding anything in this Lease to the contrary, all
amounts payable by Tenant to or on behalf of Landlord under this Lease,
whether or not expressly denominated as Minimum Monthly Rent or Additional
Rent, shall constitute "rent" for the purposes of Section 502 (b) (7) of the
Bankruptcy Code, including, without limitation, reasonable attorney's fees
incurred by Landlord by reason of Tenant's Bankruptcy.
(d) Included within and in addition to any other conditions or
obligations imposed upon Tenant in the event of assumption or assignment are
the following:
(1) In the event of assignment, the execution and delivery
to Landlord of an instrument by which the assignee assumes all of the
obligations arising under this Lease from and after the date of assignment
pursuant to the provisions of the Bankruptcy Code;
(2) The cure of all monetary defaults and the
reimbursement of all pecuniary losses resulting from any such default within
thirty (30) days of assumption or assignment;
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(3) The prior written consent of any Mortgagee to which
this Lease has been assigned as collateral security;
(4) The Premises, at all times, remains a single unit and
no physical changes of any kid are made thereto unless in compliance with the
applicable provisions of this Lease;
(5) The use of the Premises as set forth in Section 6.1
shall not change; and
(6) Landlord shall be given adequate assurance of future
performance under the Lease.
(e) Nothing contained in this Section 21 shall be deemed in any
manner to limit Landlord's rights and remedies under the Bankruptcy Code, as
presently existing or as may hereafter be amended. If the Bankruptcy Code is
interpreted or amended during the Term of this Lease to so permit, or is
superseded by an act so permitting, the following additional acts shall be
deemed an Event of Default under this Lease: (a) if Tenant is adjudicated
insolvent by the United States Bankruptcy Court or (b) if a petition is
filed by or against Tenant under the Bankruptcy Code and such petition is not
vacated within twenty (20) days. In either of such events, this Lease and all
rights of Tenant under it shall automatically terminate with the same force
and effect as if the date of either such event were the date stated in this
Lease for the expiration of the Term, and Tenant shall vacate and surrender
the Premises, but shall remain liable as provided in this Lease. Landlord
reserves any and all rights and remedies provided in this Lease or at law.
(f) No default by Tenant, either prior to or subsequent to the
filing of any such petition, shall be deemed to have been waived unless
expressly done so in writing by Landlord.
(g) On the occurrence of a default, Landlord shall be entitled,
at its sole discretion.
(1) To apply any or all of the Security Deposit in payment
of (i) any Minimum Monthly Rent or Additional Rent then due and unpaid, (ii)
any expense incurred by Landlord in curing any such default, or (iii) any
damages incurred by Landlord by reason of such default (including, by way of
example rather than of limitation, that of reasonable attorneys' fees), in
which event Tenant shall, immediately on its receipt of a written demand
therefor from Landlord, pay to Landlord a sum equaling the amount so applied,
so as to restore the said sum to its original amount; or
(2) At Landlord's election to retain any or all of such
not otherwise applied pursuant to the provisions of Section 21.3(g)(1) in
liquidation of any or all damages suffered by Landlord by reason of such
default.
(h) To the extent permitted by applicable law, the provisions
of this Section 21 shall be controlling to the extent of any conflict with
any other provisions of this Lease.
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SECTION 22
RIGHT OF ACCESS
22.1 Landlord and its authorized agents and representatives shall be
entitled to enter the Premises, with prior notice to Tenant, at any time for
the purpose of observing, posting or keeping posted thereon notices provided
for hereunder, and such other notices as Landlord may deem necessary or
appropriate for protection of Landlord or its interest in the Premises; for
the purpose of inspecting or protecting the Premises or any portion thereof;
to inspect the Premises relative to concerns over use, storage or disposal of
hazardous waste and chemicals; and for the purpose of making repairs to the
Premises or any other portion of the Property and performing any work therein
or thereon which Landlord may elect or be required to make hereunder, or
which may be necessary to comply with any laws, ordinances, rules,
regulations or requirements of any public authority or any applicable
standards that may, from time to time, be established by an Insurance
Services Office or any similar body, or which Landlord may deem necessary or
appropriate to prevent waste, loss, damage or deterioration to or in
connection with the Premises or any other portion of the Property or for any
other lawful purpose. Landlord shall have the right to use any means which
Landlord may deem proper to open all doors in the Premises in an emergency.
Entry onto the Premises obtained by Landlord by any such means shall not be
deemed to be forcible or unlawful entry into, or a detainer of the Premises,
or an eviction of Tenant from the Premises or any portion thereof. Nothing
contained herein shall impose or be deemed to impose any duty on the part of
Landlord to do any work or repair, maintenance, reconstruction or
restoration, which under any provision of this Lease is required to be done
by Tenant. The performance thereof by Landlord shall not constitute a waiver
of Tenant's default in failing to do the same.
22.2 Landlord may, during the progress of any work on the Premises,
keep and store upon the Premises all necessary materials, tools and
equipment. Landlord shall not in any event be liable for any inconvenience,
annoyance, disturbance, loss of business or quiet enjoyment, or other damage
or loss to Tenant by reason of making any such repairs or performing any such
work upon the Premises, or on account of bringing materials, supplies and
equipment into, upon or through the Premises during the course thereof, and
the obligations of Tenant under this Lease shall not thereby be affected in
any manner whatsoever.
22.3 Landlord, its authorized agents and representatives, shall be
entitled to enter the Premises, with prior notice to Tenant, at all times for
the purpose of exhibiting the same to prospective purchasers and, during the
final six (6) months of the Term of this Lease, Landlord shall be entitled to
exhibit the Premises for lease and post signs therein announcing the same.
SECTION 23
EXPENDITURES BY LANDLORD
23.1 Whenever under any provision of this Lease, Tenant shall be
obligated to make any payment or expenditure, or do any act or thing, or to
incur any liability whatsoever, and Tenant fails, refuses or
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neglects to perform as herein required, Landlord shall be entitled, but shall
not be obligated, to make any such payment or to do any such act or thing, or
to incur any such liability, all on behalf of and at the cost and for the
account of Tenant. In such event, the amount thereof with interest thereon
at the rate of eighteen percent (18%) per annum shall constitute and be
collectible as Additional Rent on demand.
SECTION 24
ESTOPPEL CERTIFICATE
24.1 Tenant agrees that within ten (10) days of any demand therefor by
Landlord, Tenant will execute and deliver to Landlord and/or Landlord's
designee a recordable certificate stating that this Lease is in full force
and effect, such defenses or offsets as are claimed by Tenant, if any, the
date to which all rentals have been paid, and such other information
concerning the Lease, the Premises and Tenant as Landlord or said designee
may request. In the event that Tenant fails to execute and/or deliver any
such certificate or offset statement to Landlord within said (10) days,
Tenant hereby irrevocably appoints Landlord as Tenant's duly authorized
attorney-in-fact for the purpose of executing and delivering any such
certificate or offset statement, and Tenant hereby grants Landlord all power
and authority necessary to execute and deliver such documents on behalf of
Tenant. Tenant acknowledges that the power of attorney granted hereby is
coupled with an interest.
SECTION 25
TENANT'S DEFAULT; LANDLORD'S REMEDIES
24.1 Tenant's compliance with each and every covenant and obligation
hereof on its part to be performed hereunder is a condition precedent to
each and every covenant and obligation of Landlord hereunder. Any one or
more of the following shall be a "Default" under this Lease:
25.1.1 Tenant shall default in the payment of any sum of money
required to be paid hereunder and such default continues for seven (7) days
after the date any such payment was due; or
25.1.2 Tenant shall default in the performance of any other term,
covenant or condition of this Lease on the part of Tenant to be kept and
performed and such default continues for twenty (20) days after written
notice thereof from Landlord to Tenant; provided, however, that is the
default complained of in such notice is of such a nature that the same can be
rectified or cured, but cannot with reasonable diligence be done within said
twenty (20) day period, then such default shall be deemed to be rectified or
cured if Tenant shall, within said twenty (20) day period, commence to
rectify and cure the same and shall thereafter complete such rectification
and cure with all due diligence, and in any event, within forty (40) days
from the date of giving of such notice; or
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25.1.3 Tenant should vacate or abandon the Premises during the Term
of this Lease. Abandonment is defined to include, but is not limited to, any
absence by Tenant from the Premises for thirty (30) consecutive days (or
longer) or forty-five (45) days (whether consecutive or not) in any calendar
year; or
25.1.4 There is filed any petition in bankruptcy or Tenant is
adjudicated as a bankrupt or insolvent, or there is appointed a receiver or
trustee to take possession of Tenant or of all or substantially all of the
assets of Tenant, or there is a general assignment by Tenant for the benefit
of creditors, or any action is taken by or against Tenant under any state or
federal insolvency or bankruptcy act, or any similar law now or hereafter in
effect, including, without limitation, the filing of execution or attachment
against Tenant and such levy continued in effect for a period of twenty (20)
days. The provisions hereof shall also apply to any guarantor of this Lease
or occupant of the Premises; or
25.1.5 Tenant does, or permits to be done, any act which creates a
mechanic's lien or claim thereof against the Premises or the Property and
fails to timely discharge same; or
25.1.6 Tenant fails to furnish Landlord with a copy of any
insurance policy or certificate required to be furnished by Tenant to
Landlord when due, and such default shall continue for ten (10) days after
written notice from Landlord; or
25.1.7 Tenant's causing, permitting or suffering to be done any
act (i) required by this Lease to have the prior written consent of Landlord,
unless such consent is so obtained, or (ii) prohibited by this Lease; or
25.1.8 Tenant shall fail to occupy the Premises on the
Commencement Date as fixed herein; or
25.1.9 Assignment, sublease, encumbrances or other transfer of the
Lease by Tenant, either voluntarily or by operation of law, whether by
judgment, execution, transfer by intestacy or testacy, or their means,
without the prior written consent of Landlord.
25.1.10 The discovery by Landlord that any financial statement
provided by Tenant, or by any affiliate, successor or guarantor of Tenant was
materially false.
25.2 In the event of a default as designated in this Section or
elsewhere herein, in addition to any other rights or remedies provided for
herein or available at law or in equity, Landlord, at its sole option, shall
have the following rights:
25.2.1 The right to declare the Term of this Lease ended and to
re-enter the Premises and take possession thereof, and to terminate all of
the rights of Tenant in and to the Premises; or
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25.2.2 The right without declaring the Term of this Lease ended,
to re-enter the Premises and to occupy the same, or any portion thereof, for
and on account of Tenant as hereinafter provided, applying any monies
received first to the payment of such expenses as Landlord may have paid,
assumed or incurred in recovering possession of the Premises, including
costs, expenses, attorneys' fees, and expenditures placing the same in good
order and condition, or preparing or altering the same for reletting, and all
other expenses, commissions and charges paid, assumed or incurred by Landlord
in or in connection with reletting the Premises and then to the fulfillment
of the covenants of Tenant. Any such reletting as provided for herein may be
for the remainder of the Term of this Lease or for a longer or shorter
period. Such reletting shall be for such rent and on such other terms and
conditions as Landlord, in its sole discretion, deems appropriate. Landlord
may execute any lease made pursuant to the terms hereof either in Landlord's
own name or in the name of Tenant, or assume Tenant's interest in and to any
existing subleases to any tenant of the Premises, as Landlord may see fit,
and Tenant shall have no right or authority whatsoever to collect any rent
from such tenants, subtenants, licensees or concessionaires on the Premises.
In any case, and whether or not the Premises or any part thereof be relet,
Tenant, until the end of what would have been the term of this Lease in the
absence of such default and whether or not the Premises or any part thereof
shall have been relet shall be liable to Landlord and shall pay to Landlord
monthly an amount equal to the amount due as Minimum Monthly Rent, less the
net proceeds for said month, if any, of any reletting effected for the
account of Tenant pursuant to the provisions of this subparagraph, after
deducting all of Landlord's expenses in connection with such reletting,
including, without limitation, all repossession costs, brokerage commissions,
legal expenses, court costs, attorneys' fees, expenses of employees,
alteration costs, and expenses of preparation for such reletting (all said
costs are cumulative and shall be applied against proceeds of reletting until
paid in full). Landlord reserves the right to bring such actions for the
recovery of any deficits remaining unpaid by Tenant to Landlord hereunder as
Landlord may deem advisable from time to time without being obligated to
await the end of the Term for a final determination of tenant's account and
the commencement or maintenance of one or more actions by Landlord in this
connection shall not bar Landlord from bringing any subsequent actions for
further accruals pursuant to the provisions of this Section; or
25.2.3 The right, even though it may have relet all or any portion
of the Premises in accordance with the provisions above, to thereafter at any
time elect to terminate this Lease for such previous default on the part of
Tenant, and to terminate all of the rights of Tenant in and to the Premises.
25.3 Pursuant to said rights of re-entry above, Landlord may remove all
persons from the Premises and may, but shall not be obligated to remove all
property therefrom, and may, but shall not be obligated to, enforce any
rights Landlord may have against said property or store the same in any
public or private warehouse or elsewhere at the cost and for the account of
Tenant or the owner or owners thereof. Tenant agrees to hold Landlord free of
and harmless from any liability whatsoever for the removal and/or storage of
any such property, whether of Tenant or any third party whomsoever. Anything
contained herein to the contrary notwithstanding, Landlord shall not be
deemed to have terminated this Lease or the liability of Tenant to pay any
rent or other sum of money thereafter to accrue hereunder, or Tenant's
liability for damages under any of the provisions hereof, by any such
re-entry, or by any action in unlawful detainer or otherwise to obtain
possession of the Premises, unless Landlord shall have specifically, with
reference to this Section, notified Tenant in writing that it has so elected
to terminate this Lease. Tenant covenants and agrees
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that the service by Landlord of any notice pursuant to the unlawful detainer
statutes of the State of Nevada and the surrender of possession pursuant to
such notice shall not (unless Landlord elects to the contrary at the time of,
or at any time subsequent to, the service of such notice to Tenant) be deemed
to be a termination of this Lease, or the termination of any liability
hereunder of Tenant to Landlord.
25.4 [Intentionally Omitted]
25.5 In any action brought by Landlord or Tenant to enforce any of its
rights under or arising from this Lease, the prevailing party shall be
entitled to receive its court costs and legal expenses, including reasonable
attorneys' fees, at trial and on appeal, whether such action is prosecuted to
judgment or not. Tenant's use of occupancy of the Premises, and/or any claim
of injury or damage. In the event Landlord commence any proceedings for
non-payment of any rent, Tenant will not interpose any counterclaim of
whatever nature or description in any such proceedings.
25.6 The waiver by Landlord of any particular default or breach of any
of the terms, covenants or conditions hereof on the part of Tenant to be kept
and performed shall not be a waiver of any preceding or subsequent breach of
the same or any other term, covenant or condition contained herein.
Landlord's failure to insist upon strict performance of any of the terms,
conditions or covenants herein shall not be deemed to be a waiver of any
rights or remedies of Landlord. The subsequent acceptance of rent or any
other payment hereunder by Tenant to Landlord shall not be construed to be a
waiver of any preceding breach by Tenant of any term, covenant or condition
of this Lease other than the failure of Tenant to pay the particular rental
or other payment or portion thereof so accepted, regardless of Landlord's
knowledge of such preceding breach at the time of acceptance of such rental
or payment. No payment by Tenant or receipt by Landlord of a lesser amount
than the rent herein provided shall be deemed to be other than on account of
the earliest rent due and payable hereunder, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment as
rent be deemed to be other than on account of the earliest rent due and
payable hereunder, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction, and Landlord may accept any such check or payment without
prejudice to Landlord's right to recover the balance of such rent or pursue
any other remedy provided in this Lease. This Section 25 may not be waived.
25.7
SECTION 26
QUIET POSSESSION
26.1 Tenant, upon paying the Minimum Monthly Rent, Additional Rent and
all other charges and monies herein required of Tenant, and upon Tenant's
performance of all of the terms, covenants and conditions of this Lease on
its part to be kept and performed, may quietly have, hold and enjoy the
Premises
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during the Term of this Lease without any disturbance from Landlord or from
any other person claiming through Landlord.
SECTION 27
CONVEYANCE BY LANDLORD
27.1 In the event of any sale, transfer or exchange of the Premises by
Landlord, Landlord shall be and is hereby relieved of all liability under any
and all of its covenants and obligations contained in or derived from this
Lease, arising out of any act, occurrence or omission relating to the
Premises occurring after the consummation of such sale, transfer, conveyance
or exchange. Tenant agrees to attorn to such purchaser, transferee or grantee.
SECTION 28
DEFAULT BY LANDLORD
28.1 It is agreed that in the event Landlord fails or refuses to
perform any of the provisions, covenants or conditions of this Lease on
Landlord's part to be kept or performed, that Tenant, prior to exercising any
right or remedy Tenant may have against Landlord on account of such default,
shall give written notice to Landlord of such default, specifying in said
notice the default with which Landlord is charged and Landlord shall not be
deemed in default if the same is cured within thirty (30) days of receipt of
said notice. Notwithstanding any other provisions hereof, Tenant agrees that
if the default complained of in the notice provided for by this Section is of
such nature that the same can be rectified or cured by Landlord, but cannot
with reasonable diligence be rectified or cured by Landlord within said
thirty (30) day period, then such default shall be deemed to be rectified or
cured if Landlord within a thirty (30) day period shall commence the
rectification and curing thereof and shall continue thereafter with all due
diligence to cause such rectification and curing to proceed.
28.2 The liability of Landlord to Tenant for any default by Landlord
under the terms of this Lease shall be limited to the equity interest of
Landlord in the Property and Tenant agrees to look solely to Landlord's
equity interest in the Property for any recovery of any judgment from
Landlord; it being intended that Landlord shall not be personally liable for
any judgment or deficiency whatsoever.
SECTION 29
FORCE MAJEURE
29.1 Whenever a day is appointed herein on which, or a period of time
is appointed in which, either party hereto is required to do or complete any
act, matter or thing, the time for the doing or completion thereof shall be
extended by a period of time equal to the number of days on or during which
such party is
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prevented for or is unreasonably interfered with the doing or completion of
such act, matter or thing because of labor disputes, civil commotion, war,
warlike operation, sabotage, governmental regulations or control, fire or
other casualty, inability to obtain any materials, or to obtain fuel or
energy, weather or other acts of God, or other causes beyond such party's
reasonable control (financial inability excepted); provided, however, that
nothing contained herein shall excuse Tenant from the prompt payment of any
rent or charge required of Tenant hereunder.
SECTION 30
NOTICES
30.1 Any and all notices and demands by or from Landlord to Tenant, or
by or from Tenant to Landlord, required or desired to be given hereunder
shall be in writing and shall be validly given or made if served either
personally, or delivered by recognized commercial courier (such as Federal
Express), or if deposited in the United States mail, certified or registered,
postage prepaid, return receipt requested. If such notice or demand be served
by registered or certified mail in the manner provided, service shall be
conclusively deemed given two (2) days after mailing or upon receipt,
whichever is sooner.
30.1.1 Any notice or demand to Landlord shall be addressed to
Landlord at:
Plaza North c/o Ken Templeton Realty
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3311 South Rainbow Blvd. Suite 225
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Las Vegas, Nevada 89146
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ATTN: Director of Property Management
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with copy to: --
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--
--------------------------------------------
--
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ATTN: --
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30.1.2 Any notice or demand to Tenant shall be addressed to Tenant
at the Premises with a copy to:
TrueVision International, Inc.
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1720 Louisiana Blvd. Ms. Suite 100
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Albuquerque, NM 87110
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ATTN: John Norm
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30.2 Any party hereto may change its address for the purpose of
receiving notices or demands as herein provided by a written notice given in
the manner aforesaid to the other party hereto, which notice of change of
address shall not become effective, however, until the actual receipts
thereof by the other party.
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SECTION 31
REMEDIES CUMULATIVE
31.1 The various rights, options, elections and remedies of Landlord
contained in this Lease shall be cumulative and no one of them shall be
construed as exclusive of any other, or of any right, priority or remedy
allowed or provided for by law and not expressly waived in this Lease.
SECTION 32
SUCCESSORS AND ASSIGNS
32.1 The terms, provisions, covenants and conditions contained in this
Lease shall apply to, bind and inure to the benefit of the heirs,
executors, administrators, legal representatives, successors and
assigns of Landlord and Tenant (where permitted), respectively.
SECTION 33
PARTIAL INVALIDITY
33.1 If any term, covenant or condition of this Lease or any
application thereof, should be held by a court of competent jurisdiction to
be invalid, void or unenforceable, all terms, covenants and conditions of
this Lease, and all applications thereof, not held invalid, void or
unenforceable, shall continue in full force and effect and shall in no way be
affected, impaired or invalidated thereby.
SECTION 34
TIME OF THE ESSENCE
34.1 Time is of the essence of this Lease and all of the terms,
covenants and conditions hereof.
SECTION 35
ENTIRE AGREEMENT
35.1 This Lease contains the entire agreement of the parties hereto and
any and all oral and written agreements, understandings, representations,
warranties, promises and statements of the parties hereto and their
respective officers, directors, partners, agents and brokers with respect to
the subject matter of this Lease and any matter covered or mentioned in this
Lease shall be merged in this Lease and no such prior oral or written
agreement, understanding, representation, warranty, promise or statement shall
be
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ATTORNEY'S FEES
39.1 In the event either party initiates legal proceedings for the
enforcement or interpretation of this Lease, or any provision hereof, the
prevailing party in such proceedings shall be entitled to recover from the
other party the costs of such proceedings, including reasonable attorneys'
fees. If either party is involuntarily made a party defendant to any
litigation concerning this Lease, the Premises, or the Property, by reason of
any act or omission of the other, the latter shall protect, defend, indemnify
and hold the former harmless from all claims, damages, losses, suits,
proceedings, actions, causes of action, responsibility, liability, demands,
costs and expenses, judgments and executions by reason thereof, including
reasonable attorneys' fees.
SECTION 40
GAMING/VENDING MACHINES
40.1 No vending machines, slot machine, gambling game or device, or
other "gaming" of any type as defined by Nevada law or requiring a gaming
license issued by the State of Nevada shall be permitted in or on the
Premises without the prior written consent of Landlord, which consent is
strictly within Landlord's unfettered discretion.
SECTION 41
CLAIMS BARRED/JURY WAIVER
41.1 ANY CLAIM, DEMAND, RIGHT OR DEFENSE OF ANY KIND BY TENANT WHICH
IS BASED UPON OR ARISES IN CONNECTION WITH THIS LEASE OR THE NEGOTIATIONS
PRIOR TO THE EXECUTION HEREOF, SHALL BE BARRED UNLESS TENANT COMMENCES AN
ACTION THEREON OR INTERPOSES A DEFENSE BY REASON THEREOF WITHIN SIX (6)
MONTHS AFTER THE DATE OF THE OCCURRENCE OF THE EVENT OR OF THE ACTION UPON
WHICH THE CLAIM, DEMAND OR RIGHT OR DEFENSE RELATES, WHICHEVER APPLIES.
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41.2 TO THE EXTENT PERMITTED BY APPLICABLE LAW, LANDLORD AND TENANT
HEREBY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY CLAIM, ACTION, PROCEEDING OR
COUNTERCLAIM BY EITHER LANDLORD OR TENANT AGAINST EACH OTHER ON ANY MATTER
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE. THE RELATIONSHIP OF
LANDLORD AND TENANT OR TENANT'S USE OR OCCUPANCY OF THE PREMISES.
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SECTION 42
GENERAL PROVISIONS
42.1 The captions appearing at the commencement of the Sections hereof
are descriptive only and for convenience of reference to this Lease and in no
way whatsoever define, limit or describe the scope or intent of this
Lease,nor in any way affect this Lease.
42.2 Masculine or feminine pronouns shall be substituted for the
neuter form and vice versa, and the plural shall be substituted for the
singular form and vice versa, in any place or places herein in which the
context requires such substitution(s).
42.3 The laws of the State of Nevada shall govern the validity,
construction performance, enforcement and effect of this Lease. Any legal
action under this Lease or in any way pertaining to this Lease must be
instituted and maintained in Clark County, Nevada.
42.4 Whenever in this Lease any words of obligation or duty are used
in connection with either party, such words shall have the same force and
effect as though framed in the form of express covenants on the part of the
party obligated.
42.5 In the event Tenant now or hereafter shall consist of more than
one person, firm or corporation, then and in such event, all such persons,
firms or corporations shall be jointly and severally liable as Tenant
thereunder.
42.6 The submission of this Lease for examination does not constitute
a reservation of or option to lease the Premises.
42.6.1 Upon acceptance of Tenant's offer to lease under the terms
hereof and receipt by Landlord of said deposit in connection with Tenant's
submission of said offer, Landlord shall be entitled to retain such deposit
and apply same to damages, costs and expenses incurred by Landlord in the
event Tenant fails to occupy the Premises. if Landlord declines said offer,
any such deposit shall be returned to Tenant.
42.7 Should any claim or lien be filed against the Premises, or any
action or proceeding be instituted affecting the title to the Premises,
Tenant shall give landlord written notice thereof as soon as Tenant obtains
actual or constructive knowledge thereof.
42.8 This Lease shall not be construed either for or against Landlord
or Tenant, but this Lease shall be interpreted in accordance with the general
tenor of its language.
42.9 Tenant agrees and acknowledges that landlord has bargained for
Tenant's full and faithful compliance with the terms of the Lease, and
Tenant's full and faithful payment of all Minimum Monthly
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Rent, Additional Rent and other charges and monies to be paid by Tenant.
Therefore, if Landlord has granted Tenant any construction allowance, tenant
improvement allowance, free rent, or other monetary concession, all such
concessions and/or benefits to Tenant shall be effective only so long as
Tenant is not in default of any term, covenant or provision of this Lease.
Thus, should Tenant default hereunder, in addition to any amounts owing from
Tenant to Landlord as a result of such default, the full amount of any such
construction allowance, tenant improvement allowance, free rent and/or other
monetary concession shall be immediately due and payable by Tenant to
Landlord upon demand.
42.10 Tenant acknowledges that, by entering into this Lease with
Landlord, Tenant has not become a third-party beneficiary of any lease
between Landlord and any other tenant of the Property, and that no part of
the inducement to Tenant to enter into this Lease was any promise or covenant
of Landlord, express or implied, to enforce any other lease for the benefit
of Tenant.
42.11 Tenant agrees to deliver to Landlord during the Term, such
financial statements, tax returns and other information respecting the
condition or operations, financial or otherwise, of Tenant as may from time
to time be requested by Landlord. Such records shall e delivered to
Landlord no later than thirty (30) days following its request.
42.12 In the event Tenant shall, at any time, fail to perform any of
its duties or obligations under this Lease and Landlord should, pursuant to
any provision of this Lease, pay any amount which Tenant is then required to
reimburse to Landlord as Additional Rent, Landlord shall be entitled to
recover as further Additional Rent an administrative allowance equal to ten
percent (10%) of the amount paid by Landlord (or such greater percentage as
may be otherwise specifically set forth elsewhere in this Lease).
42.13 Tenant shall not record or file this Lease or any form of
Memorandum of Lease or any assignment or security document pertaining to
this Lease or any part of Tenant's interest therein without the prior written
consent of Landlord, which consent may be subject to such conditions as
Landlord shall deem appropriate. If such consent is granted Tenant will pay
all recording fees, costs, taxes and other expenses for the recording.
However, upon the request of Landlord, both parties shall execute a
memorandum or "short form" of this Lease for recordation in a form
customarily used for such purposes. Said memorandum or short form of this
Lease shall describe the parties, the Premises and the Lease Term and shall
incorporate this Lease by reference.
42.14 The waiver by Landlord of any term, covenant or condition herein
contained shall not be deemed to be a waiver of such terms, covenant or
condition for any preceding or subsequent breach of the same or any other
term, covenant or condition herein contained.
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42.16 Landlord reserves the right, at any time and from time to time
for the general welfare of the Property, the avoidance of nuisance and the
maintenance of a good reputation, safety, order and cleanliness in the
Premises and at the Property, to impose rules and regulations governing the
conduct of tenants and the use of the Common Areas in the Property. Tenant
agrees to comply with such rules and regulations as are set forth on Exhibit E
hereto, and as are hereafter imposed by Landlord as if they had existed and
been attached hereto at the time of execution of this Lease. Landlord shall
not be responsible to Tenant for the nonperformance by any other tenant or
occupant of the Property of any such rules and regulations.
42.17 Tenant covenants and agrees to keep the terms and provisions of
the Lease confidential, and not to disclose said terms and provisions to any
person or entity whatsoever (except as my be required by law, or by any
governmental entity). Tenant acknowledges that Landlord may have made special
concessions to Tenant to induce Tenant to execute this Lease, which if known,
could damage Landlord's further business and/or bargaining power. Tenant
therefore agrees that any breach of the covenant contained in this paragraph
by Tenant shall be an automatic and incurable default of this Lease and that
Tenant shall be fully liable for any and all damages, including with
limitation, monetary damages, caused to Landlord and that Landlord may
thereupon exercise such other rights and remedies as it may have under this
Lease or at law or in equity.
42.18 Tenant shall perform or cause Tenant's contractors to perform
all work in the making and/or installation of any repairs, alterations
or improvements in a manner so as to avoid any labor dispute which causes or is
likely to cause stoppage or impairment of work or delivery services or any
other services in the Property. In the event there shall be any such stoppage
or impairment as the result of any such labor dispute or potential labor
dispute, Tenant shall immediately undertake such action as may be necessary
to eliminate such dispute or potential dispute, including, but not limited to
(i) removing all disputants from the job site until such time as the labor
dispute no longer exists, (ii) seeking an injunction in the event of a breach
of contract between Tenant and Tenant's contractor, and (iii) filing
appropriate unfair labor practice charges in the event of a union
jurisdictional dispute.
42.19 If Tenant is a corporation, or partnership, or limited liability
company, the person(s) executing this Lease on behalf of Tenant represents
and warrants to Landlord that Tenant is a validly existing corporation,
partnership or limited liability company, as the case may be, all things
necessary to qualify it to do business in Nevada have been accomplished prior
to the date of this Lease, all franchise and other corporate taxes have been
paid to the date of this Lease, all forms, reports, fees, and taxes required
to be filed or paid by said corporation, or partnership, or limited liability
company in compliance with applicable laws will be filed and paid when due,
and this Lease is the valid and binding obligation of the Tenant, enforceable
in accordance with its terms.
41
<PAGE>
42.20 Landlord reserves the absolute right to effect such other
tenancies in the Property as Landlord, in the exercise of its own
business judgment, shall determine. Tenant does not rely on the
fact, nor does Landlord represent, that any specific tenant or
number of tenants shall or shall not, during the term of this Lease
or any extension thereof, occupy any portion of the Property. There
are no other representations or warranties between the parties
hereto,
42.21 and all reliance with respect to representations is solely on
such representations and agreements as are contained in the Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
date set forth above.
LANDLORD TENANT
Flamingo '84, a Nevada Limited Partnership True Vision Laser Centers
International, Inc.
Phoenix Plaza III
By Ken Templeton By John Homan
7/27/99 7/21/99
- ------------------------------------ ---------------------------------
Date Date
General Partner President
Title:------------------------------ Title:---------------------------
42
<PAGE>
ADDENDUM TO LEASE
BY THIS ADDENDUM TO LEASE, attached to and made a part of that certain
Lease of even date between FLAMINGO '84, A NEVADA LIMITED PARTNERSHIP D.B.A.
PHOENIX PLAZA III, as Landlord, and TRUE VISION LASER CENTERS INTERNATIONAL,
INC., as Tenant, the parties hereby amend and supplement the Lease as follows:
1. FIRST YEAR PROPERTY OPERATING COST SHALL HAVE A BASIS OF $0.26 PER
SQUARE FOOT. DURING SUBSEQUENT YEARS PROPERTY OPERATING COSTS SHALL
BE BASED UPON ACTUAL EXPENSES.
2. THE TIME PERIOD FROM THE OCCUPANCY DATE OF JULY 15, 1999, UNTIL THE
COMMENCEMENT DATE OF AUGUST 1, 1999 GIVEN FREE OF RENT AND CAM TO
TENANT.
3. Provided Tenant shall not have been in default under this Lease (with
all applicable cure period(s) having expired), Landlord agrees during the
original Term to endeavor to give Tenant written notice of the availability of
additional lease space of at lease N/A square feet within the Property, which
space from time to time becomes available.
3.1 Tenant, upon receipt of a written notice hereunder, shall have
five (5) business days thereafter to notify Landlord in writing of Tenant's
interest in leasing such available space. If Tenant so notifies Landlord of
its interest, then Landlord and Tenant shall attempt to reach mutual
agreement on a lease for such additional space; provided, however, if no such
mutual agreement shall be reached within thirty (30) days of such notification
then Landlord shall be free to offer such available space to any other
interested party and Tenant shall have no further right with respect thereto.
3.1.1 If Tenant declines in writing as to its interest in
available space, or if Tenant fails to notify Landlord in writing within said
five (5) business day period, then Landlord shall have no further obligation
to negotiate with Tenant therefor and Landlord shall be free to offer such
available space to any other interested party.
3.1.2 If the parties fail to reach an agreement, or Tenant
specifically declines to be interested in available space, or Tenant fails to
timely respond to another notice from Landlord as to available space, then
this entire Section 3 shall thereafter become null and void.
3.2 The foregoing agreement on the part of Landlord to notify Tenant
is a courtesy only and is not, under any circumstances, intended, implied or
agreed to establish or create in Tenant an (i) option to lease or (ii) a
right of first refusal or any other right for such available space.
4. Provided Tenant is and has, at all times been, in compliance with
each and every term, covenant and condition of this Lease on Tenant's part to
be kept or performed, Tenant shall have the right and option to extend this
Lease for consecutive additional term(s) of years each
("Extension Term"). There are no further rights granted to extend the Term.
<PAGE>
4.1 The first such Extension Term shall commence on the expiration
of the original Term of this Lease, and each succeeding Extension Term, if
any, shall commence on the expiration of the immediately preceding Extension
Term.
4.2 The option to extend shall be exercised by Tenant giving
Landlord notice in writing of such election to extend at least six (6)
months, but not more than nine (9) months, prior to the respective expiration
date of the then Term or Extension Term, as the case may be. The second (and
any subsequent) Extension Term may not be effected unless the first (and the
immediately preceding) Extension Term is timely exercised.
4.2.1 The option(s) to extend the Term are not severable from
the Lease and any permitted transfer of this Lease shall include transfer of
the rights, benefits and obligations under this Addendum.
4.3 Each such Extension Term shall be on the same terms, covenants
and conditions as provided herein for the original Term, except that the
Minimum Monthly Rent provided in Section 3 of the Lease shall be adjusted as
provided in paragraph 3.1(b) of this Lease document.
LANDLORD TENANT
FLAMINGO '84, A NEVADA LIMITED TRUE VISION LASER CENTERSINTERNATIONAL,
PARTNERSHIP INC.
PHOENIX PLAZA III
BY: Ken Templeton By: John Numan, President
/s/ Ken Templeton 7/21/99 /s/ John Numan 7/21/99
- --------------------------- --------------------------
Date Date
President
Title: Title:
--------------------- ---------------------
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
DESCRIPTION OF PROPERTY
THE FOLLOWING LAND SITUATED IN THE COUNTY OF CLARK, STATE OF NEVADA. DESCRIBED
AS FOLLOWS
THAT PORTION OF THE SOUTHWEST QUARTER (SW 1/4) OF THE SOUTHEAST QUARTER (SE
1/4) OF SECTION 14, TOWNSHIP 21 SOUTH, RANGE 60 EAST, M D B &M, ACCORDING TO
THE OFFICIAL PLAT OF SAID LAND ON FILE IN THE OFFICE OF THE BUREAU OF LAND
MANAGEMENT, CLARK COUNTY, NEVADA, AND BEING MORE PARTICULARLY DESCRIBED AS
FOLLOWS
PARCELS TWO (2) AND THREE (3), AS SHOWN BY MAP THEREOF ON FILE IN FILE 61
OF PARCEL MAPS, PAGE 45, IN THE OFFICE OF THE COUNTY RECORDER TO SAID
CLARK COUNTY, NEVADA
AND
A PARCEL OF LAND SITUATED IN THE SOUTHWEST ONE-QUARTER (SW 1/4) OF THE
SOUTHEAST OF THE QUARTER (SE 1/4) OF SECTION 14, TOWNSHIP 21 SOUTH, RANGE: 60
EAST, CLARK COUNTY, NEVADA ALSO BEING A PORTION OF PARCEL ONE AND PARCEL FOUR
OF PARCEL MAP, FILE 61, PAGE 45, OFFICIAL RECORDS OF CLARK COUNTY, NEVADA,
AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS
BEGINNING AT THE SOUTHEAST CORNER OF SAID PARCEL ONE, SAID POINT BEING A
POINT ON THE NORTHERLY RIGHT-OF-WAY LINE OF FLAMINGO ROAD AND PROCEEDING
NORTH 89" 50'07" WEST, 30 00 FEET ALONG SAID RIGHT-OF-WAY LINE TO THE SOUTHEAST
CORNER OF SAID PARCEL FOUR AND THE TRUE POINT OF BEGINNING.
HENCE NORTH 89"50'07" WEST, 107 04 FEET ALONG SAID RIGHT-OF-WAY LINE
HENCE NORTH 00"09'53" EAST, 96 FEET
HENCE SOUTH 89"50'07" EAST, 107 04 FEET,
HENCE SOUTH 00"09'53" WEST, 96 11 FEET TO THE TRUE POINT OF BEGINNING
<PAGE>
EXHIBIT A-2
SITE PLAN
KEN TEMPLETON REALTY AND INVESTMENTS
PHOENIX PLAZA III
FLAMENGO ROAD
?????
KEN TEMPLETON REALTY AND INVESTMENTS
PHOENIX PLAZA III PARTIAL SOUTH ELEVATION
<PAGE>
EXHIBIT B
MEMORANDUM OF COMMENCEMENT DATE
Commencement Date shall be August 1, 1999
<PAGE>
EXHIBIT C
LANDLORD'S WORK
Tenant has inspected the Premises prior to the execution herof and accepts
same as provided in Paragraph 7.1 of the Lease. There are no works or
improvements, construction or installation to be performed by Landlord SPACE
IS TAKEN "AS-IS" CONDITION. Tenant upon vacancy of space will restore space
to the same condition it was received upon move in (i.e.) floorings, walls,
doors, etc.
<PAGE>
EXHIBIT D
TENANT'S WORK
1. Tenant's Work:
Tenant, at its expense, shall construct, furnish or install ALL
improvements, equipment or fixtures within the Premises, and shall be
responsible for obtaining ALL approvals, and payment of ALL fees and
connection charges required by government agencies that are necessary for
Tenant's occupancy and use of the Premises (collectively, "Tenant's Work").
In order to assure that Tenant's Work is acceptable to Landlord, and that it
does not damage the structural elements of the building or interfere with
building services or use by other tenants of such building, Tenant agrees
that Tenant's Plans and Specifications shall be submitted to and PREAPPROVED
by Landlord and shall be performed in accordance with all applicable laws,
ordinances, codes and other governmental requirements. Landlord shall have
seventy-two (72) hours (not including weekends) in which to approve in
writing Tenant's Plans and Specifications. If Tenant begins work prior to
receiving written approval, Landlord may withhold up to ten percent (10%) of
Tenant Buildout Allowance. Further, Tenant hereby agrees to employ the
services of a licensed General Contractor, approved by Landlord, for all
Tenant's Work.
2. Completion of Tenant's Work:
After completion of Tenant's Work, Tenant shall, unless previously
accomplished, promptly submit to Landlord the following:
A. Written verification by Tenant's architect/general contractor
that Tenant's Work has been completed pursuant to the approved plans and
specifications;
B. A copy of the recorded Notice of Completion and of the Certificate
of Occupancy issued with respect to the premises;
C. Copies of signed and notarized lien releases or other evidence
reasonably satisfactory to Landlord that all of Tenant's Work has been paid
in full and that no claim of any mechanic or materials may become a lien on
the Premises or the Property and evidence that workmen's compensation (SIIS),
and any union dues (if applicable) have been paid in full;
D. Tenant shall furnish to Landlord for its permanent files one (1)
reproducible set of "as-built" drawings showing Tenant's Work as constructed
or installed in the Premises;
E. Written acknowledgment by Tenant of the commencement date of the
Term of the Lease as issued by Landlord; and
F. Original paid invoices covering all of Tenant's Work.
<PAGE>
EXHIBIT D-2
REQUIREMENTS FOR GENERAL CONTRACTOR
1. Nevada Contractors License with sufficient Bid Limit.
2. Post $2,000.00 Surety Bond naming Plaza Properties.
3. Liability Insurance naming Tenant as additional insured in the amount
of Two Million Dollars and 00/100 ($2,000,000.00) aggregate or One
Million Dollars and 00/1000 ($1,000,000.00) per occurrence.
4. A copy of the current SIIS certificate issued to the Tenant must be
submitted.
5. T.D.C. Construction to Review: Plans drawn by a Nevada Licensed
Architect or by General Contractor to
include Electrical Load Calculations,
Mechanical, Plumbing Plans prior to
start or construction. NOTE: Subject to
Landlord approval.
6. All subcontractors that work for the General Contractor must have a
Nevada Contractors License, Liability Insurance and SIIS Insurance.
7. If power is available via the developer, a one time charge of $50.00
will be due up front prior to commencement of Tenant Improvements to
cover costs during the Tenant Improvements. (A $50.00 fee must be
included with paperwork submitted for approval.) If power is not
available via the developer, Tenant shall be solely responsible.
8. Unconditional releases must be used on all invoices and at final
payment the subcontractor must sign and submit a final unconditional
release and submit a FINAL SIIS certification prior to final payment.
9. Contractor and Tenant understand that the Owner will file a NOTICE OF
NON-RESPONSIBILITY.
10. Subject to T.D.C. approval of General Contractors Resume, Financial
Statement(s), and Qualifications.
NOTE: All requirements for General Contractor are to do Tenant
Improvements at any Templeton project.
THESE REQUIREMENTS HAVE BEEN RECEIVED AND AGREED TO THIS 21 DAY OF JULY, 1999.
TENANT: /s/ Illegible DATE: Illegible
---------------------------------------- --------------
ADDRESS OF THE IMPROVEMENT:
--------------------------------------------------
GENERAL CONTRACTOR: DATE:
--------------------------------- --------------
TEMPLETON DEVELOPMENT CORP.: DATE:
------------------------ --------------
<PAGE>
EXHIBIT E
RULES AND REGULATIONS
1. No aerial will be erected on the roof or exterior walls of the
Office/Retail Center without the written consent of Lessor/Landlord. Any
aerial installed without such written consent shall be subject to
removal without notice at Lessee's/Tenant's expense.
2. Lessee/Tenant shall not, without the written consent of Lessor/Landlord,
use in or about the Office/Retail Center any advertising or promotional
media such as searchlights, loudspeakers, phonographs, or other similar
visual or audio media which can be seen or heard outside the Leased
Property.
3. Lessee/Tenant shall keep the Leased Property at a temperature
sufficiently high to prevent freezing of water pipes and fixtures.
4. The exterior areas immediately adjoining the Leased Property shall be
kept clean and free from dirt and rubbish by Lessee/Tenant to the
satisfaction of Lessor/Landlord, and Lessee/Tenant shall not place or
permit any obstructions or merchandise in such areas.
5. Lessee/Tenant shall keep the Leased Property free from pests and vermin.
6. Lessee/Tenant shall not burn any trash or garbage of any kind in or about
the Office/Retail Center.
7. Lessee/Tenant shall not make noises, cause disturbances, or create odors
which may be offensive to Lessor/Landlord or to other Lessee/tenants of
the Office/Retail Center of their employees, agents, servants, customers,
or invitees.
8. Due to health risks, Lessee/Tenant shall not smoke cigarettes, cigars,
etc. within the Leased Premises as adjacent Tenant's may be put at risk
or find the odor offensive.
9. Lessee/Tenant, lessee/tenants employees, and agents shall not solicit
business, distribute handbills or other advertising matter to automobiles
parked in the parking area or in other common areas.
10. Lessee/Tenant shall refrain from keeping, displaying or selling any
merchandise or any other object outside of the interior of the Leased
Property or in any portion of sidewalks, walkways or other parts of the
Office/Retail Center, except with the permission of the Lessor/Landlord.
11. The floors, skylights, windows, doors and transoms that reflect or admit
light in passageways, or into any place in the Office/Retail Center,
shall not be covered or obstructed by any of the Lessee/Tenants. Water
closets and other water apparatus shall not be used for the disposal of
sweepings, rubbish, rags, ashes, chemicals, or the refuse from electric
batteries, or other injurious substances. Any damage resulting from such
misuse shall be paid for by the Lessee/Tenant.
12. No sign, advertisement, or notice shall be inscribed, painted, or affixed
on any part of the outside or inside of the Office/Retail Center unless
first approved in writing by the Lessor/Landlord.
13. No additional locks shall be placed on any exterior doors of the Leased
Property and the Lessee/Tenant shall not permit any duplicate keys to be
made.
14. The Lessor/Landlord or its agents shall have the right to enter the
Leased Property, during reasonable times for inspections, to install
telegraph wires, electric wires, and to make such repairs, additions and
alterations a Lessor/Landlord shall deem necessary for the safety,
improvements, preservation and restoration of the Office/Retail Center.
<PAGE>
15. No lessee/tenant shall do or permit anything to be done in the Leased
Property which will cause the increase of the rate of fire insurance,
interfere with the rights of other tenants, injury or annoy other
lessee/tenants, conflict with any of the rules and ordinances of the
Board of Health.
16. Each Lessee/Tenant shall comply with all laws, rules, orders, ordinances
and regulations of the City, County, State or Federal Government and with
other governmental authority having jurisdiction over the Office/Retail
Center, only as applicable to Tenant's use of the Demised Premises.
17. No animals, including birds and watchdogs, nor bicycles or other vehicles
shall be kept in or about the Leased Property or permitted therein,
except guide dogs and fish as provided in Sec. 47.
18. If Lessee's/Tenants desire to introduce signalling, telegraphic,
telephonic or other wires and instruments, the Lessor/Landlord will
direct the electricians as to where and how the same are to be placed, and
without such directions no placing, boring, or cutting for wires will be
permitted. Lessor/Landlord in all cases retains the right to require the
placing and using of such electrical protecting devices to prevent the
transmission of excessive currents of electricity into or through the
building.
19. Lessee/Tenants shall not use or keep in the Leased Property any
explosives, kerosene, gasoline, benzine, camphene, burning fluid or other
illuminating materials.
20. No Lessee/Tenant, or employee of any tenant, shall go upon the roof of
the Office/Retail Center with out the written consent of the
Lessor/Landlord.
21. No room or rooms shall be occupied or used as sleeping or lodging
apartments at any time, nor shall the Lessee/Tenant sublet any part of
the Leased Property, or permit any other person to have or use desk space
therein without the prior written consent of the Lessor/Landlord.
22. The Lessor/Landlord reserves the right to rescind any of these rules and
regulations to make such other and further rules and regulations, in
Lessor's/Landlord's judgement, may from any time to time be needed for
the safety, care, maintenance, operation and cleanliness of the
Office/Retail Center.
23. Lessor/Landlord shall have the right from time to time to designate areas
within the common area parking for the purpose of parking employee
automobiles.
24. No vehicles shall be parked over a 48 hour period.
25. No recreational vehicles or trucks larger than a pickup truck shall be
parked in common area by Lessee/tenant or his employees for longer than a
24 hour period.
/S/[ILLEGIBLE] 7/??/99
_______________________________ ______________________________
TENANT DATE
<PAGE>
SIGN CRITERIA
FOR
PHOENIX PLAZA
This criteria has been established for the purpose of assuring a coordinated
sign program for the mutual benefits of all tenants at this shopping center.
The intent of the following sign criteria is to offer the tenant as much
flexibility as possible and to encourage differant types and color of script.
The specified signs will offer both maximum identity and maximum aesthetic
quality which benefits the tenant and the shopping center. Compliance will
be strictly enforced; and any installed nonconforming or unaproved sign shall
be corrected at the expense of the Tenant.
A. General Requirements
1. Prior to applying to County Planning Department for approval and
permits, each Tenant shall submit to the landlord or his agent
for approval before facrication, at least two (2) copies of
detailed drawings indicating the location, size, layout, design
and color of the proposed signs, including all lettering and/or
graphics.
2. All signs shall be reviewed by the Landlord or his agent for
conformity with this criteria and overall design quality. Approval
or disapproval of sign submittals based on aesthetics or design
shall remain the sole right of the Landlord. No sign shall be
installed until such approval shall have been granted in writing
by the Landlord.
3. All permits for signs and installation thereof shall be obtained by
the tenant or his representative. The expense of fabrication and
installation of all signs, including permits, shall be the
responsibility of the tenant, who shall also be responsible for
compliance with all applicable codes and with these criteria.
4. Signage shall be required to be installed within one hundred twenty
(120) days of the beginning of the lease term or date of occupancy,
whichever shall occur first.
5. Tenant shall be responsible for removal of signs upon termination
of lease. All structure preformations shall be stucco patched by
Tenant or Tenant's contractor. Tenant is also responsible for
removal of any leased panels on the pylon sign. The cost to remove
any signs left by tenant will be deducted from the security deposit
prior to refunding.
B. General Specifications
1. No projections beyond the sign area will be permitted. Signage
area is to be within limits as indicated by Landlord in this
criteria.
2. Except as provided herein, no advertising placards, banners,
pennants, names, insignia, trademarks or other descriptive material
shall be affixed or maintained upon the glass panels and supports
of the show windows and doors or upon the exterior walls of
building or store front.
3. All signs and their installations shall comply with all local
building and electrical codes.
4. Signs shall be composed of individual or script lettering. Sign
boxes and cans will not be permitted. Logos will be considered on a
case by case basis. Colors will also be approved on a case by case
basis.
5. If a logo is desired, or required by franchise, a detailed drawing
of the logo must be submitted with a copy of the letterhead,
business card, franchise trademark, and/or franchise requirements
to justify the request.
6. Wording of each sign shall not include the product sold except as a
part of the Tenant's trade name or insignia. Therefore, Tenants
shall display only trade names, or their basic product name, i.e.,
"John's Liqour" "Cleaners" or a combination thereof.
C. Design Requirements
1. The width of the Tenant facia sign shall not exceed 80% of the
width of the Demised Premises. Lettering shall center on Demised
Premises unless prior approvals or directions are obtianed from
Landlord or his agent.
1
<PAGE>
2. Size of letters shall be a maximum of 24" and 5" in depth. Any
exceptions will require prior written consent of the Landlord.
3. All letters will have colored 1/8" or better plastic faces. Trim
cap retainers on faces and returns must be in gold and are
mandatory.
4. All letters will be individually illuminated from within 30 MA
single or double tube white neon. No exposed neon will be
permitted. All openings shall be properly sealed to prevent light
leaks.
5. Each Tenant will be permitted to place upin each entrance of its
Demised Premises not more than 144 square inches of gold leaf or
decal application lettering, not to exceed two inches (2") in
height, indicating hours of business, emergency telephone number,
etc. Any exceptions will require written consent of the Landlord.
6. Painted lettering will not be permitted.
7. Each Tenant who has a non-customer door for receiving merchandise
may have uniformly applied on said door, in located as directed by
the project architect, in two inches (2") high block letters, the
Tenant's name and address. In the case that more than one Tenant
uses the same door, each Tenant;s name and address shall be
applied. Color of letters will be selected by the project architect.
D. General Construction Requirements
1. Tenant shall be responsible for the manufacture, complete
installation and maintenance of all signs, including providing
electrical to the sign for its operation.
2. All signs are to be installed under the direction of the Project
Contractor's superintendent or representative.
3. Tenant shall be fully responsible fo rthe operation of tenant's
sign contractors.
4. Tenant's sign contractor shall repair any damage to any portion on
the structure and finish caused by his work.
5. All penetrations of the building structure required for sign
installation shall be sealed in a watertight condition and shall be
patched to match adjacent finish.
6. No exposed lamps or tubing will be permitted.
7. No animated, flashing or audible signs will be permitted.
8. No exposed raceways, cabinets, cross-overs, conduits, conductors,
transformers, or other equipment shall be permitted unless approved
by Landlord prior to construction. Any exposed ducts shall be
painted-out to match adjacent material.
9. No signmaker's label or other identification will be permitted on
exposed surface of sign, except for those required by local
ordinance, in which case shall be placed in an inconspicuous
location.
10. No signs of any sort shall be permitted on building's roof.
2
<PAGE>
F. Sign Contractor General Requirements
1. All companies bidding to manufacture these signs are advised that
no substitutes will be accepted by purchaser whatsoever, unless
indicated in the specifications and approval by Landlord and
Tenant. Any deviation from these specifications may result in
purchaser's refusal to accept same.
2. All manufacturers are advised that prior to acceptance and final
payment, each unit will be inspected for conformity. Any signs
found not in conformity will be rejected and removed at the
Tenant's expense.
3. Entire display shall be guaranteed for 90 days against defects in
material and workmanship.
Defective parts shall be replaced without charge.
4. Sign company shall carry workman's compensation and public
liability insurance against all damage suffered or done to any and
all persons and/or property while engaged in the construction or
erection of signs in the amount of $300,000.00.
5. Lessee's sign contractor shall completely install and connect sign
display. Primary wiring at sign location stipulated by Landlord to
be provided by Lessee's contractor and completed prior to sign
installation.
6. If damage is caused to any portion of the sign or structure due to
faulty installation, sign contractor shall be responsible for any
costs to remedy and/or cure damages.
Sign Company agrees to abide by the above criteria for said project and
warrants that the installation of sign by ______________________________ is
correct.
- --------------------------
Sign Company Authorization
/s/ illegible 7/24/99
-------------------------------------
TENANT DATE
<PAGE>
DISCLOSURE REGARDING REAL ESTATE AGENCY RELATIONSHIPS
LEASE/RENTAL
When you enter into a discussion with a real estate agent regarding a
real estate transaction, you should understand what type of agency
relationship or representation you wish to have with that agent. For the
purpose of this form being used with a lease, Landlord/Lessor and
Tenant/Lessee shall be synonymous.
LESSOR'S AGENT
A leasing agent under a listing/management agreement with a Lessor acts as
the agent for the Lessor only. A subagent, or "cooperating agent", is one who
has agreed to work for the Lessor's agent, usually through a multiple listing
service. A subagent may work in a different real estate office. A Lessor's
agent or subagent has, without limitation, the following affirmative
obligations:
To the Lessor:
(a) A fiduciary duty of utmost care, integrity, honesty, and loyalty in
dealings with the Lessor.
To the Lessee or Lessor:
(a) Diligent exercise of reasonable skill and care in performance of
the agent's duties
(b) A duty of honest and fair dealing and good faith
(c) A duty to disclose all facts known to the agent materially
affecting the value or desirability of property that are not known
to, or within the diligent attention and observation of, the parties.
An agent is not obligated to reveal to either party any confidential
information obtained from the other party unless the information involved the
affirmative duties.
LESSEE'S AGENT
A leasing agent can agree to act as agent for the Lessee only if the Lessee
consents to that representation. Then the agent is not the Lessor's agent or
subagent even if that agent receives compensation from the Lessor. An agent
acting only for a Lessee has, without limitation, the following affirmative
obligations:
To the Lessee:
(a) Fiduciary duty of utmost care, integrity, honesty, and loyalty in
dealings with the Lessee.
To the Lessee and Lessor:
(a) Diligent exercise of reasonable skill and care in performance of
the agent's duties.
(b) A duly of honest and fair dealing and good faith.
(c) A duty to disclose all facts known to the agent materially
affecting the value or desirability of property that are not known
to, or within the diligent attention and observation of, the parties.
An agent is not obligated to reveal to either party any confidential
information obtained from the other party unless that information involves
the above affirmative duties.
AGENT REPRESENTING BOTH LESSOR AND LESSEE
A real estate agent acting directly or through an associate licensee, can
legally be the agent of both the Lessor and the Lessee in a transaction, but
only with the knowledge and written consent of both the Lessor and the
Lessee. In a dual agency situation, the agent has, without limitation, the
following affirmative obligations to both the Lessor and Lessee:
(a) A fiduciary duty of utmost care, integrity, honesty and loyalty in
the dealings with either Lessor or the Lessee.
(b) Other duties to the Lessor and the Lessee as stated above in their
respective sections.
When representing both Lessor and Lessee, the agent must have the express
permission of the respective party in order to disclosed confidential
information to the other party, such as the Lessor's willingness to accept a
price less than the listing price or the Lessee's willingness to pay a price
greater than the asking price.
The above duties to the agent in a real estate transaction do not relieve a
Lessor or Lessee from the responsibility to protect their own interests. You
should carefully read all agreements to ensure that they adequately express
your understanding of the transaction. A real estate agent is a person
qualified to advise about real estate. If legal or tax advice is desired,
consult a competent professional in that field.
Throughout the transaction you may receive more than one disclosure form. The
law requires each agent assisting in the transaction to present you with this
disclosure form. You should read its contents each time it is presented to
you, considering the relationship between you and the real estate agent in
your specific transaction.
THE DISCLOSURE
Ken Templeton Realty & Investments, Inc. is the agent of the Jerry Buzz Horden
Real Estate Firm
JERRY BUZZ HORDEN #14208 7.16.99
- ---------------------------------------- -------------------------------
Licensee Date
THE CONFIRMATION
I/We acknowledge receipt of a copy of this disclosure and conform my/our
understanding of the disclosed agency relationship.
Lessee/Lessor /s/[ILLEGIBLE] Date 7/21/99 Time am/pm
-------------------- --------------- ---------
Lessee/Lessor /s/ Date 7/27/99 Time am/pm
-------------------- --------------- ---------
Ken Templeton Realty
Investments, Inc. By Jerry Buzz Horden Date 7.16.99
- --------------------------------- --------------------- ----------------
Real Estate Firm Licensee
<PAGE>
EXHIBIT 10.33
OFFICE BUILDING LEASE
BY AND BETWEEN
RAINBOW CORPORATE CENTER LIMITED PARTNERSHIP
(LANDLORD)
AND
TRUE VISION LASER CENTERS, INC.
(TENANT)
Landlord /s/ Tenant
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<PAGE>
OFFICE BUILDING LEASE
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. LEASE OF PREMISES......................................... 1
2. DEFINITIONS............................................... 1
Base Rent (initial)....................................... 1
Base Year: ............................................... 1
Broker(s): ............................................... 1
Commencement Date: ....................................... 1
Common Areas: ............................................ 1
Expense Stop: ............................................ 1
Expiration Date: ......................................... 1
Index (Section 5.2): ..................................... 1
Landlord's Mailing Address: .............................. 1
Tenant's Mailing Address ................................. 1
Monthly Installments of Base Rent (initial) .............. 1
Parking .................................................. 1
Premises: ................................................ 2
Project: ................................................. 2
Rentable Area: ........................................... 2
Security Deposit (Section 7): ............................ 2
State: ................................................... 2
Tenant's First Adjustment Date (Section 5.2): ............ 2
Tenants Proportionate Share: ............................. 2
Tenants Use Clause (Article S): .......................... 2
Term: .................................................... 2
Tenant's Improvement Allowance ........................... 2
3. EXHIBITS AND ADDENDA...................................... 2
4. DELIVERY OF POSSESSION.................................... 2
5. RENT...................................................... 3
Base Rent................................................. 3
Adjusted Base Rent........................................ 3
Project Operating Costs................................... 4
Definition of Rent........................................ 6
Rent Control.............................................. 6
Taxes Payable by Tenant................................... 6
Cost Savings or Mandated Special Improvements............. 6
</TABLE>
Landlord /s/ Tenant
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<PAGE>
<TABLE>
<S> <C> <C>
No Liability for Providing Services....................... 7
6. INTEREST AND LATE CHARGES................................. 7
7. SECURITY DEPOSIT.......................................... 7
8. TENANT'S USE OF THE PREMISES.............................. 8
Uses Prohibited........................................... 8
Permitted Uses............................................ 8
Control of Building or Project by Landlord................ 9
License................................................... 9
Tenant's Responsibility Regarding Hazardous Substances:... 9
Hazardous Substances................................ 9
Tenant's Restrictions............................... 9
Environmental Clean-up.............................. 9
Tenant's Indemnity.................................. 10
Parking............................................. 10
9. SERVICES AND UTILITIES.................................... 10
10. CONDITION OF THE PREMISES................................. 11
11. CONSTRUCTION, REPAIRS AND MAINTENANCE..................... 11
12. ALTERATIONS AND ADDITIONS................................. 13
13. LEASEHOLD IMPROVEMENTS; TENANT'S PROPERTY................. 14
14. RULES AND REGULATIONS..................................... 14
15. CERTAIN RIGHTS RESERVED BY LANDLORD....................... 14
16. ASSIGNMENT AND SUBLETTING................................. 15
17. HOLDING OVER.............................................. 17
18. SURRENDER OF PREMISES..................................... 18
19. DESTRUCTION OR DAMAGE..................................... 18
20. EMINENT DOMAIN............................................ 19
21. INDEMNIFICATION........................................... 20
22. TENANT'S INSURANCE........................................ 21
</TABLE>
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<TABLE>
<S> <C> <C>
23. WAIVER OF SUBROGATION..................................... 22
24. SUBORDINATION AND ATTORNMENT.............................. 22
25. TENANT ESTOPPEL/LENDER AGREEMENTS......................... 23
26. TRANSFER OF LANDLORD'S INTEREST........................... 23
27. DEFAULT................................................... 24
Tenant's Default.......................................... 24
Remedies.................................................. 25
Landlord's Default........................................ 26
28. BROKERAGE FEES............................................ 26
29. NOTICES................................................... 27
30. GOVERNMENT ENERGY OR UTILITY CONTROLS..................... 27
31. RELOCATION OF PREMISES.................................... 27
32. QUIET ENJOYMENT........................................... 27
33. OBSERVANCE OF LAW......................................... 27
34. FORCE MAJEURE............................................. 28
35. CURING TENANT'S DEFAULTS.................................. 28
36. SIGN CONTROL.............................................. 28
37. NEITHER PARTY IS DRAFTER.................................. 28
38. DISCLOSURE................................................ 28
39. MISCELLANEOUS............................................. 28
Accord and Satisfaction; Allocation of Payments........... 28
Addenda................................................... 28
Attorneys' Fees........................................... 29
Captions, Articles and Section Numbers.................... 29
Changes Requested by Lender............................... 29
Consent................................................... 29
Corporate Authority....................................... 29
Counterparts.............................................. 29
Execution of Lease; No Option............................. 29
</TABLE>
Landlord /s/ Tenant
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<PAGE>
<TABLE>
<S> <C> <C>
Furnishing of Financial Statements; Tenant's
Representations......................................... 29
Further Assurances........................................ 29
Mortgagee Protection...................................... 29
Prior Agreements; Amendments.............................. 30
Recording................................................. 30
Severability.............................................. 30
Successors and Assigns.................................... 30
Time of the Essence....................................... 30
Waiver.................................................... 30
Waiver of Jury Trial...................................... 30
Partial Invalidity........................................ 30
Time...................................................... 30
Choice of Law............................................. 30
Non-Discrimination Clause................................. 30
Independently Provided Services........................... 31
Third Party Contract................................. 31
Indemnity............................................ 31
No Consequential Damages............................. 31
Act of Landlord........................................... 31
</TABLE>
Landlord /s/ Tenant
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<PAGE>
OFFICE BUILDING LEASE
This Lease between RAINBOW CORPORATE CENTER LIMITED PARTNERSHIP ("Landlord"),
and TRUE VISION INTERNATIONAL, INC. ("Tenant"), is dated July 30, 1999.
1. LEASE OF PREMISES.
In consideration of the rent (as defined at Section 5.4) and the provisions
of this Lease, Landlord leases to Tenant and Tenant leases from Landlord the
Premises shown by diagonal lines on the floor plan attached hereto as Exhibit
"A" and further described at Section 2. The Premises are located within the
Building and Project described in Section 2m. Tenant shall have the
non-exclusive right (unless otherwise provided herein) in common with
Landlord, other tenants, subtenants and invitees, to use of the Common Areas
(as defined at Section 2.e below). If, upon completion of the space plans for
the Premises, Landlord's architect or space planner determines that the
rentable area of the Premises differs from that set forth in Section 2.m
below then Landlord shall so notify Tenant and the Base Rent (as shown in
Section 2.a below) shall be promptly adjusted in proportion to the change in
square footage.
2. DEFINITIONS.
As used in this Lease, the following terms shall have the following meanings:
a. BASE RENT: $1.85 per rentable sq. ft. (INITIAL)(SUBJECT TO ADJUSTMENT
AS DESCRIBED IN SECTION 1, ABOVE):
b. BASE YEAR: N/A
c. BROKER(S):
LANDLORDS: CB Richard Ellis, Inc.
TENANT'S: Ken Templeton Realty & Investments, Inc.
d. COMMENCEMENT DATE: December 1, 1999, OR UPON COMPLETION OF THE TENANT
IMPROVEMENTS AND ISSUANCE OF THE CERTIFICATE OF OCCUPANCY ON THE
DEMISED PREMISES. Tenant shall execute the Commencement Letter set
forth in Exhibit "G" within 15 days of Delivery of Possession (as
defined below).
e. COMMON AREAS: the building lobbies, common corridors and hallways,
restrooms, garage and parking areas, stairways, elevators and other
generally understood public or common areas. Landlord shall have the
right to regulate or restrict the use of the Common Areas.
f. EXPENSE STOP: (fill-in if applicable); $4.80 per rentable sq. ft.
g. EXPIRATION DATE: Sixty (60) months from Commencement Date, unless
otherwise sooner terminated in accordance with the provisions of this
Lease.
h. INDEX: United States Department of Labor, Bureau of Labor Statistics
Consumer Price Index for All Urban Consumers, Long Beach - Anaheim
Average, on Subgroup "All Items" (1988 = 100).
i. LANDLORD'S MAILING ADDRESS: 3811 W. Charleston Blvd., Suite 110, Las
Vegas, NV 89102
j. TENANT'S MAILING ADDRESS: 1720 Louisiana Blvd. NE, Suite 103,
Albuquerque New Mexico 87110
k. MONTHLY INSTALLMENTS OF BASE RENT (INITIAL): $1.85 per rentable square
foot per month (SUBJECT TO ADJUSTMENT AS DESCRIBED IN SECTION 1,
ABOVE).
l. PARKING: Tenant shall be permitted to park cars on a non-exclusive
basis in the area(s) designated by Landlord for parking. Tenant shall
abide by any and all parking regulations and rules established from
time
Landlord /s/ Tenant 1
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<PAGE>
to time by Landlord or Landlord's parking operator. Landlord reserves
the right to separately charge Tenant for use of reserved and/or
covered parking.
m. PREMISES: That portion of the Building containing approximately * 12,141
square feet of Rentable Area, shown by diagonal lines on Exhibit "A"
located on the 1st floor of the Building and known as Rainbow Corporate
Center. * RENTABLE SQUARE FOOTAGE IS BASED ON AN ESTIMATED LOAD FACTOR
OF 13%. FINAL LOAD FACTOR IS SUBJECT TO CHANGE BASED ON FINAL BUILDING
SQUARE FOOTAGE USING BOMA STANDARD MEASUREMENT.
n. PROJECT: The building of which the Premises are a part (the
"Building") and any other buildings or improvements on the real
property (the "Property") located at 777 N. Rainbow Boulevard, Las
Vegas, Nevada and further described as Exhibit "B". The Project is
known as Rainbow Corporate Center.
o. RENTABLE AREA: As to both the Premises and the Project, the respective
measurements shall be calculated according to the BOMA Method of
measurement in effect at the time of execution of this Lease (SUBJECT
TO ADJUSTMENT AS DESCRIBED IN SECTION 1, ABOVE).
p. SECURITY DEPOSIT: One (1) month's rent.
q. STATE: the State of Nevada.
r. TENANT'S FIRST ADJUSTMENT DATE: If the Commencement Date is other then
on the first day of a month the first day of the calendar month
following, the Commencement Date plus twelve (12) months.
s. TENANT'S PROPORTIONATE SHARE: Such share is a fraction, the numerator
of which is the Rentable Area of the Premises, and the denominator of
which is the Rentable Area of the Project, as determined by Landlord
from time to time.
t. TENANT'S USE: Optical Laser treatment center and related uses
(including but not limited to a multimedia center).
u. TERM: the period commencing on the Commencement Date and expiring at
midnight on the Expiration Date unless extended pursuant to Exhibit "F"-
Renewal Options.
v. TENANT'S IMPROVEMENT ALLOWANCE: Landlord shall provide a tenant
improvement allowance of up to $30.00 per useable square foot.
3. EXHIBITS AND ADDENDA.
The exhibits and addenda listed below (unless lined out) are incorporated by
reference in this Lease:
a. Exhibit "A" - Floor Plan showing the Premises.
b. Exhibit "B" - Site Plan of the Project.
c. Exhibit "C" - Tenant's Preliminary Space Plan/Tenant's Work/Landlord's
Work.
d. Exhibit "D" - Rules and Regulations.
e. Exhibit "E" - Guarantee.
f. Exhibit "F" - Renewal Options.
g. Exhibit "G" - Commencement Letter.
h. Exhibit "H" - Signage Criteria.
i. Exhibit "I" - Tenant Estoppel Letter.
j. Exhibit "J" - Corporate Resolution of Tenant.
k. Exhibit "K" - Standard Work Letter
4. DELIVERY OF POSSESSION.
Landlord /s/ Tenant 2
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If for any reason Landlord does not deliver possession of the Premises to
Tenant on the Commencement Date, Landlord and Tenant agree to execute a
written addendum to this Lease within ten (10) days of delivery of possession
extending the Expiration Date in 2.g. so that the initial term of the Lease
will be for five (5) years.
Landlord shall not be subject to any liability for such failure to deliver
possession and the validity of this Lease shall not be impaired, but Rent
shall be abated until delivery of possession; except that if Landlord's
failure to so deliver possession on the Commencement Date is attributable to:
(i) Tenant's delays in the reasonable approval or preparation of plans and
specifications for improvements, (ii) unreasonable delays caused by the
Tenant's contractors or agents in performing services for which Tenant is
responsible, or (iii) Tenant's negligence or willful misconduct, then
Landlord shall be entitled to full performance by Tenant (including the
payment of rent) from the Commencement Date. "Delivery of possession" shall
be deemed to occur on the date Landlord completes the Tenant's improvements
as defined in Exhibit "C". If Landlord permits Tenant to enter into
possession of the Premises before the Commencement Date, such possession shall
be subject to the provisions of this Lease, including, without limitation,
the payment of Rent. By entry hereunder, Tenant shall be deemed to have
accepted the Premises as being in good and sanitary order, condition and
repair, subject to all applicable zoning, municipal, county and state laws,
ordinances and regulations governing and regulating the use of the Premises
and any covenants or restrictions of record, and accepts this Lease subject
thereto as to all matters disclosed thereby and by any exhibits attached
hereto. Tenant acknowledges that neither Landlord nor Landlord's agent has
made any representation or warranty as to the present or future suitability
of the Premises for the conduct of Tenant's business. If Tenant is a
corporation it will, prior to Delivery of Possession, execute and deliver to
Landlord the resolution set forth on Exhibit "J".
5. RENT.
5.1. Payment of BASE RENT. Tenant agrees to pay the Base Rent for the
Premises. Monthly Installments of Base Rent shall be payable in advance
on the first day of each calendar month of the Term. If the Term begins
(or ends) on other than the first (or last) day of a calendar month, the
Base Rent for the partial month shall be prorated on a per diem basis.
Tenant shall pay Landlord the first Monthly Installment of Base Rent
when Tenant executes the Lease. Tenant shall be liable for interest and
late charges (see Section 6 below) if Tenant fails to pay any Rent when
due.
No payment by Tenant or receipt by Landlord of lesser amounts of rent
than those herein stipulated shall be deemed to be other than on account
of the earliest unpaid stipulated rent. No endorsement or statement on
any check or any letter accompanying any check or payment as rent shall
be deemed an accord and satisfaction, and Landlord may accept such check
or payment without prejudice to Landlord's right to recover the balance
of such rent or pursue any other remedy provided in this Lease. Any
credit due to Tenant hereunder by reason of overpayment of additional
rent shall first be applied to any damages or rent owned to Landlord by
Tenant if Tenant shall be in default when said credit shall be owed.
5.2 ADJUSTED BASE RENT.
a. The Base Rent (and the corresponding Monthly Installments of Base
Rent) set forth at Section 2a shall be adjusted annually (the
"Adjustment Date"), commencing on Tenant's First Adjustment Date.
Adjustments, if any, shall be based upon increases (if any) in the
Index. The Index in publication three (3) months before the
Commencement Date shall be the "Base Index". The Index in
publication three (3) months before each Adjustment Date shall be
the "Comparison Index". As of each Adjustment Date, the Base Rent
payable during the ensuing twelve-month period shall be determined
by increasing the initial Base Rent by a percentage equal to the
percentage increase, if any, in the Comparison Index over the Base
Index. If the Comparison Index for any Adjustment Date is equal to
or less than the Comparison Index for the preceding Adjustment Date
(or the Base Index, in the case of First Adjustment Date), the Base
Rent for the ensuing twelve-month period shall remain the amount of
Base Rent payable during the preceding twelve-month period. When the
Base Rent payable as of each Adjustment Date is determined, Landlord
shall promptly give Tenant written notice of such adjusted Base Rent
and the manner in which it was computed. The Base Rent as so
adjusted from time to time shall be the "Base Rent," "Rent" or
"Adjusted Rent" for all purposes under this Lease.
b. If at any Adjustment Date the Index no longer exists in the form
described in this Lease, Landlord may
Landlord /s/ Tenant 3
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<PAGE>
substitute any substantially equivalent official index published by
the Bureau of Labor Statistics or its successor. Landlord shall use
any appropriate conversion factors to accomplish such substitution.
The substitute index shall then become the "Index" hereunder.
5.3 PROJECT OPERATING COSTS.
a. In order that the rent payable during the Term reflect in Project
Operating Costs, Tenant agrees to pay to Landlord as rent, Tenant's
Proportionate Share of all increases in costs, expenses and
obligations attributable to the Project and its operation, all as
provided below.
b. Tenant shall pay to Landlord, in addition to the Base Rent and all
other payments due under this Lease, an amount equal to Tenant's
Proportionate Share of such the Project Operating Costs in
accordance with the provisions of this Section 5.3b.
1. The term "Project Operating Costs" shall include all those items
described in the following subparagraphs (a) and (b) if incurred
by the Landlord. However, in no way, does the following list of
Project Operating Costs obligate the Landlord to perform any of
the items listed thereunder:
(a) All taxes, assessments, water and sewer charges and other
similar governmental charges levied on or attributable to
the Building or Project or their operation, including
without limitation, (i) real property taxes or assessments
levied or assessed against the Building or Project, (ii)
assessments or charges levied or assessed against the
Building or Project by any redevelopment agency, (iii) any
tax measured by gross rentals received from the leasing of
the Premises, Building or Project, excluding any net
income, franchise, capital stock, estate or inheritance
taxes imposed by the state or federal government or their
agencies, branches or departments; provided that if at any
time during the Term any governmental entity levies,
assesses or imposes on Landlord any (1) general or special,
ad valorem or specific, excise, capital levy or other tax,
assessment, levy or charge directly on the rent received
under this Lease or on the rent received under any other
leases of space in the Building or Project, or (2) any
license fee, excise or franchise tax, assessment, levy or
charge measured by or based, in whole or in part, upon such
rent, or (3) any transfer, transaction, or similar tax,
assessment, levy or charge based directly or indirectly
upon the transaction represented by this Lease or such
other leases, or (4) any occupancy, use, per capita or
other tax, assessment, levy or charge based directly or
indirectly upon the use or occupancy of the Premises or
other premises within the Building or Project, then any
such taxes, assessments, levies and charges shall be deemed
to be included in the term Project Operating Costs. If at
any time during the Term the assessed valuation of, or
taxes on, the Project are not based on a completed Project
having at least eighty-five percent (85%) of the Rentable
Area occupied, then the "taxes" component of Project
Operating Costs shall be adjusted by Landlord to reasonably
approximate the taxes which would have been payable if the
Project were completed and at least eighty-five percent
(85%) occupied.
(b) All sums expended in connection with the Building and
Project for all general maintenance and repairs; relocation
of facilities; resurfacing; painting; striping; restriping;
cleaning; snow removal; sweeping and janitorial services;
maintenance and repair of sidewalks, curbs, Building and
Project signs, landscaping, irrigation or sprinkling
systems; planting and landscaping; lighting and other
utilities; directional signs and other markers and bumpers;
all roof repairs and maintenance including but not limited
to patching, resurfacing and preventative maintenance and
painting or renovation of the exterior portion of all or
any part of the improvements constructed on the Building
and Project; maintenance and repair of any fire protection
systems, lighting systems, storm drainage systems and any
other utility systems; all cost or expense incurred by
reason of any repairs or modifications to the Building and
Project and/or its improvements and/or for repair or
installation of equipment for energy or safety purposes;
personnel to implement such services including, if Landlord
deems necessary, the cost of a
Landlord /s/ Tenant 4
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<PAGE>
maintenance supervisor and/or the cost of security guards;
all costs and expenses pertaining to a security alarm
system for the tenants and/or Building and Project; all
costs, expenses, taxes and/or surcharges levied or imposed
upon or against the Building and Project, parking spaces or
areas, the Building and Project and/or Landlord and all
payments to or for public transit or car-pooling facilities
or as otherwise required by any government agency having
jurisdiction over the Building and Project; all costs
incurred by Landlord in connection with complying with
applicable federal, state, county, borough or municipal
laws, ordinances, rules, regulations, directives, orders
and/or requirements now or hereafter in force with respect
to the Building and Project and/or its Building and
Project; reserves for future maintenance and repair work
and reserves for replacement of existing capital
improvements in the Building and Project which Tenant
hereby authorizes Landlord to use as Landlord deems
necessary; personal property taxes on the improvements
located on the Building and Project; fees incurred in
managing the Building and Project and in the performance,
management and supervision of the Common Area maintenance
services and obligations and/or administering the
accounting, bookkeeping and collection of the expenses in
connection with the Building and Project; and public
liability and property damage insurance covering the
Building and Project in amounts as required by Landlord.
Landlord may cause any or all of said services to be
provided by an independent contractor or contractors.
Landlord shall have the right, from time to time, to
allocate some or all of the Project Operating Costs for the
Project among different portions, such as office or retail
portions, of the Project ("Cost Pools"), in accordance with
generally accepted accounting principles. The Project
Operating Costs within each such Cost Pool shall be
allocated and charged to the tenants within such Cost Pool
as an amount per square foot of Rentable Area, based on the
total Rentable Area within such Cost Pool.
(2) Tenant's Proportionate Share of Project Operating Costs shall be
payable by Tenant to Landlord as follows:
(a) Beginning with the calendar year following the Base Year
and for each calendar year thereafter ("Comparison Year"),
Tenant shall pay Landlord an amount equal to Tenant's
Proportionate Share of the Project Operating Costs incurred
by Landlord in the Comparison Year which exceeds the total
amount of Project Operating Costs payable by Landlord for
the Base Year. This excess is referred to as the "Excess
Expenses."
(b) To provide for current payments of Excess Expenses, Tenant
shall, at Landlord's request, pay as additional rent during
each Comparison Year, an amount equal to Tenant's
Proportionate Share of the Excess Expenses payable during
such Comparison Year, as estimated by Landlord from time to
time. Such payments shall be made in monthly installments,
commencing on the first day of the month following the
month in which Landlord notifies Tenant of the amount it is
to pay hereunder and continuing until the first day of the
month following the month in which Landlord gives Tenant a
new notice of estimated Excess Expenses. It is the
intention hereunder to estimate from time to time the
amount of the Excess Expenses for each Comparison Year and
Tenant's Proportionate Share thereof, and then to make an
adjustment in the following year based on the actual Excess
Expenses incurred for that Comparison Year.
(c) On or before April 1 of each Comparison Year after the
first Comparison Year (or as soon thereafter as is
practical), Landlord shall deliver to Tenant a statement
setting forth Tenant's Proportionate Share of the Excess
Expenses for the preceding Comparison Year. If Tenant's
Proportionate Share of the actual Excess Expenses for the
previous Comparison Year exceeds the total of the estimated
monthly payments made by Tenant for such year, Tenant shall
pay Landlord the amount of the deficiency within ten (10)
days of the receipt of the statement. If such total exceeds
Tenant's Proportionate Share of the actual Excess Expenses
for such Comparison Year, then Landlord shall credit
against Tenant's next ensuing monthly installment(s) of
additional rent an amount equal to the
Landlord /s/ Tenant 5
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\
<PAGE>
difference until the credit is exhausted. If a credit is
due from Landlord on the Expiration Date, Landlord shall pay
Tenant the amount of the credit. The obligations of Tenant
and Landlord to make payments required under this Section 5.3
shall survive the Expiration Date.
(d) Tenant's Proportionate Share of Excess Expenses in any
Comparison Year having less than 365 days shall be
appropriately prorated.
(e) If any dispute arises as to the amount of any additional
rent due hereunder, Tenant shall have the right after
reasonable notice and at reasonable times to inspect
Landlord's accounting records at Landlord's accounting
office and, if after such inspection Tenant still disputes
the amount of additional rent owed, a certification as to the
proper amount shall be made by Landlord's certified public
accountant, which certification shall be final and conclusive.
Tenant agrees to pay the cost of such certification unless
it is determined that Landlord's original statement overstated
Project Operating Costs by more than ten percent (10%).
(f) If this Lease sets forth an Expense Stop at Section 25, then
during the Term Tenant shall be liable for Tenant's
Proportionate Share of any actual Project Operating Costs
which exceed the amount of the Expense Stop. Tenant shall
make current payments of such excess costs during the Term
in the same manner as is provided for payment of Excess
Expenses under the applicable provisions of
Section 5.3b(2)(b) and (c) above.
5.4 DEFINITION OF RENT. All costs and expenses which Tenant assumes or
agrees to pay to Landlord under this Lease shall be deemed additional
rent (which, together with the Base Rent is sometimes referred to as the
"Rent"). The Rent shall be paid to the Building manager (or other person)
and at such place, as Landlord may from time to time designate in
writing, without any prior demand therefor and without deduction or
offset, in lawful money of the United States of America.
5.5 RENT CONTROL. If the amount of Rent or any other payment due under this
Lease violates the terms of any governmental restrictions on such Rent
or payment, then the Rent or payment due during the period of such
restrictions shall be the maximum amount allowable under those
restrictions. Upon termination of the restrictions, Landlord shall, to
the extent it is legally permitted, recover from Tenant the difference
between the amounts received during the period of the restrictions and
the amounts Landlord would have received had there been no restrictions.
5.6 TAXES PAYABLE BY TENANT. In addition to the Rent and any other charges
to be paid by Tenant hereunder, Tenant shall reimburse Landlord upon
demand for any and all taxes payable by Landlord (other than net income
taxes) which are not otherwise reimbursable under this Lease, whether or
not now customary or within the contemplation of the parties, where such
taxes are upon, measured by or reasonably attributable to (a) the cost
or value of Tenant's equipment, furniture, fixtures and other personal
property located in the Premises, or the cost or value of any leasehold
improvements made in or to the Premises by or for Tenant, other than
work made by Landlord, regardless of whether title to such improvements
is held by Tenant or Landlord; (b) the gross or net Rent payable under
this Lease, including, without limitation, any rental or gross receipts
tax levied by any taxing authority with respect to the receipt of the
Rent hereunder, (c) the possession, leasing, operation, management,
maintenance, alteration, repair, use or occupancy by Tenant of the
Premises or any portion thereof, or (d) this transaction or any document
to which Tenant is a party creating or transferring an interest or an
estate in the Premises. If it becomes unlawful for Tenant to reimburse
Landlord for any costs as required under this Lease, the Base Rent shall
be revised to net Landlord the same net Rent after imposition of any tax
or other charge upon Landlord as would have been payable to Landlord but
for the reimbursement being unlawful.
5.7 COST SAVINGS OR MANDATED SPECIAL IMPROVEMENTS
(a) For any Lease Year during the Term which is included in the useful
life of a "Special Improvement," Tenant shall pay as additional rent
an amount equal to the product of (i) the "Special Improvement
Amortization" per square foot of Rentable Area in the Building,
multiplied by (ii) the number of square feet of Rentable Area in the
Premises.
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(b) "SPECIAL IMPROVEMENTS" shall be allowable to pass through
expenditure as they pertain to any equipment, device or other
improvement acquired or installed subsequent to the commencement of
the construction of Project which effects all tenants in the Project
and is intended or necessary: (i) to achieve economies in the
operation, maintenance and repair of the Project; (ii) to comply
with any statute, ordinance, code, controls or guidelines which
shall be enacted after the execution of this lease document, or
(iii) to comply with any other future governmental requirement with
respect to the Project, including without limitation, fire, health,
safety or construction requirements, as it pertains to the common
areas of the Project.
(c) "SPECIAL IMPROVEMENT AMORTIZATION" shall mean the amount
determined by multiplying the actual cost, including financing
costs, of each Special Improvement acquired by Landlord by the
constant annual percentage required to fully amortize such cost over
the useful life of the Special Improvement (as reasonably determined
by GAAP). The Special Improvement Amortization shall be allocated
and charged to Tenant in accordance with generally accepted
accounting and management practices and as an amount per square foot
of Rentable Area.
5.8 NO LIABILITY FOR PROVIDING SERVICES The inclusion of the improvements,
facilities and services set forth in this Lease, shall not be deemed to
impose an obligation upon Landlord to either have said improvements or
facilities or to provide those services unless; (i) the Project already
has the same, or (ii) Landlord already provides the services, or (iii)
Landlord has agreed elsewhere in this Lease to provide the same or some
of them. The Landlord may contract for Security Personnel to monitor
the Common Areas of the Project. The extent and scope of the use of
Security Personnel to monitor the Common Area, including the Parking
Area, shall be under Landlord's sole control. The use of Security
Personnel to monitor the Common Facilities shall be for the protection
of the capital improvements of the Project and shall not create nor
impose upon Landlord or its agents an obligation or duty to protect or
defend the property or personal well being of Tenant, its employees,
guests or agents.
6. INTEREST AND LATE CHARGES.
If Tenant fails to pay when due any Rent or other amounts or charges
which Tenant is obligated to pay under the terms of this Lease, the unpaid
amounts shall bear interest at the maximum rate then allowed by law from said
due date until paid in full. Tenant acknowledges that the late payment of any
Monthly Installment of Base Rent will cause Landlord to lose the use of that
money and incur costs and expenses not contemplated under this Lease,
including without limitation, administrative and collection costs and
processing and accounting expenses, the exact amount of which is extremely
difficult to ascertain. Therefore, in addition to interest, if any such
installment is not received by Landlord within five (5) days from the date it
is due, Tenant shall pay Landlord a late charge equal to ten percent (10%) of
such installment. Landlord and Tenant agree that this late charge represents
a reasonable estimate of such costs and expenses and is fair compensation to
Landlord for the loss suffered from such nonpayment by Tenant. Acceptance of
any interest or late charge shall not constitute a waiver of Tenant's default
with respect to such nonpayment by Tenant nor prevent Landlord from
exercising any other rights or remedies available to Landlord under this
Lease.
7. SECURITY DEPOSIT.
Tenant agrees to deposit with Landlord the Security Deposit set forth at
Section 2p upon execution of this Lease, as security for Tenant's faithful
performance of its obligations under this Lease. Landlord and Tenant agree
that the Security Deposit may be commingled with funds of Landlord and
Landlord shall have no obligation or liability for payment of interest on
such deposit. Tenant shall not mortgage, assign, transfer or encumber the
Security Deposit without the prior written consent of Landlord and any
attempt by Tenant to do so shall be void, without force or effect and shall
not be binding upon Landlord.
If Tenant fails to pay any Rent or other amount when due and payable under
this Lease, or fails to perform any of the terms hereof, Landlord may
appropriate and apply or use all or any portion of the Security Deposit for
Rent payments or any other amount then due and unpaid, for payment of any
amount for which Landlord has become obligated as a result of Tenant's
default or breach, and for any loss or damage sustained by Landlord as a
result of Tenant's default or breach, and Landlord may so apply or use this
deposit without prejudice to any other remedy Landlord may have by reason of
Tenant's default or breach. If Landlord so uses any of the Security Deposit,
Tenant shall, within ten (10) days after written demand therefor, restore the
Security Deposit to the full amount originally deposited; Tenant's failure to
do so shall constitute an act of default hereunder and Landlord shall have
the right to exercise any remedy provided for at Article 27 hereof. Within a
reasonable time after the Term (or any extension thereof) has expired or
Tenant has vacated the Premises, whichever shall last occur, and
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provided Tenant is not then in default on any of its obligations hereunder,
Landlord shall return the Security Deposit to Tenant or, if Tenant has
assigned its interest under this Lease, to the last assignee of Tenant. If
Landlord sells its interest in the Premises, Landlord may deliver this
deposit to the purchaser of Landlords interest and thereupon be relieved of
any further liability or obligation with respect to the Security Deposit.
The retention or application of such Security Deposit by Landlord pursuant to
this Section does not constitute a limitation on or waiver of Landlord's
right to seek further remedy under law or equity.
8. TENANT'S USE OF THE PREMISES.
a. USES PROHIBITED. Tenant shall not do or permit anything to be done
in or about the Premises nor bring or keep anything therein which will in any
way increase the existing rate of, or affect any, fire or other insurance
upon the Premises, Building and/or Project or cause a cancellation of any
insurance policy covering said Premises, Project or Building or any part
thereof or any of its contents. Tenant shall not do or permit or suffer
anything to be done in or about the Premises which will in any way obstruct
or interfere with the rights of other tenants or occupants of the Building or
Project or injure or annoy them (and Tenant shall take all necessary action
to prevent odors, emissions, fumes, liquids or other substances or excessive
noise from escaping or extending beyond the Premises), nor shall Tenant use
or allow the Premises to be used for any improper, immoral, unlawful or
objectionable or offensive purpose, nor shall Tenant cause, maintain, or
suffer or permit any nuisance in, on or about the Premises. Tenant shall not
commit or allow to be committed any waste in or upon the Premises and shall
refrain from using or permitting the use of the Premises or any portion
thereof as living quarters, sleeping quarters or for lodging purposes.
Further, Tenant will not use or permit the Premises or any part thereof to be
used for any disorderly, unlawful or extra hazardous purpose and will not
manufacture any commodity therein. Tenant will not use or permit the Premises
to be used for any purposes that interfere with the use and enjoyment by
other tenants of the Building nor which, in Landlord's opinion, impair the
reputation or character of the Project. Tenant will not use or permit the
Premises to be used for any gaming purposes or activities, without the prior
written consent of the Landlord, which consent may be withheld in Landlord's
sole discretion. Tenant shall keep the Common Areas clear of any obstruction
or unauthorized use related to Tenant's operations. Under no circumstances
shall the right herein granted to use the Common Areas be deemed to include
the right to store any property, temporarily or permanently, on the Common
Areas. Any such storage shall be permitted only by the prior written consent
of Landlord or Landlord's designated agent, which consent may be revoked at
any time. In the event that any unauthorized storage shall occur, then
Landlord shall have the right, without notice, in addition to such other
rights and remedies that it may have, to remove the property and charge the
cost to Tenant, which cost shall be immediately payable upon demand by
Landlord.
b. PERMITTED USES. Tenant shall use the Premises solely for the
purposes set forth in Tenant's Use clause (Section 21). Tenant shall not use
or occupy the Premises in violation of law or any covenant, condition or
restriction affecting the Building or Project or the certificate of occupancy
issued for the Building or Project, and shall, upon notice from Landlord,
immediately discontinue any use of the Premises which is declared by any
governmental authority having jurisdiction to be a violation of law or the
certificate of occupancy. Tenant, at Tenant's own cost and expense, shall
comply with all laws, ordinances, regulations, rules and/or any directions of
any governmental agencies or authorities having jurisdiction which shall, by
reason of the nature of Tenant's use or occupancy of the Premises, impose any
duty upon Tenant or Landlord with respect to the Premises or its use or
occupation. A judgment of any court of competent jurisdiction or the
admission by Tenant in any action or proceeding against Tenant that Tenant
has violated any such laws, ordinances, regulations, rules and/or directions
in the use of the Premises shall be deemed to be a conclusive determination
of that fact as between Landlord and Tenant. Tenant shall not do or permit to
be done anything which will invalidate or increase the cost of any fire,
extended coverage or other insurance policy covering the Building or Project
and/or property located therein, and shall comply with all rules, orders,
regulations, requirements and recommendations of the Insurance Services
Office or any other organization performing a similar function. Tenant shall
promptly upon demand reimburse Landlord for any additional premium charged
for such policy by reason of Tenant's failure to comply with the provisions
of this Article.
c. CONTROL OF BUILDING OR PROJECT BY LANDLORD. Landlord shall at all
times have the exclusive control and
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management of the Common Areas of the Building or Project. For the purposes
of this Lease, "Common Areas" or "Common Area" shall include but not be
limited to all automobile parking areas, access roads, driveways, entrances,
retaining walls and exits thereto, truck way or ways, loading docks, package
pick-up stations, washrooms, pedestrian malls, courts, sidewalks and ramps,
landscaped areas, exterior stairways, and other areas, improvements,
facilities and special services provided by Landlord for the general use, in
common, of tenants of the Building or Project, and their officers, agents,
employees and invitees. With respect to the Common Areas, Landlord shall have
the right from time to time to employ personnel; establish, modify and
enforce reasonable rules and regulations; construct, maintain and operate
lighting facilities; police the Common Areas and facilities; from time to
time to change the area, level, location and arrangement of parking areas and
other facilities hereinabove referred to; to restrict parking by Tenant, its
officers, agents and employees to employee parking areas; to enforce parking
charges (by operation of meters or otherwise), with appropriate provisions
for free parking ticket validating by Tenant; to close all or any portion of
the Common Areas to such extent as may, in the opinion of Landlord's counsel,
be legally sufficient to prevent a dedication thereof or the accrual of any
interest therein by any person or the public; temporarily close all or any
portion of the parking areas or facilities to discourage non-customer parking;
and to do and perform such other acts in and to the Common Areas as, in the
use of good business judgment, Landlord shall determine to be advisable with
a view to the improvement of the convenience and use thereof by tenants of the
Building or Project, their employees, invitees and customers. Tenant shall
not utilize any name selected by Landlord from time to time for the Building
and/or the Project as any part of Tenant's corporate or trade name. Landlord
shall have the right to change the number or designation of the Building
and/or the Project without notice or liability.
d. LICENSE: All Common Areas and facilities which Tenant may be
permitted to use and occupy for Tenant's purposes shall be used and occupied
under a revocable license. If the amount of such areas or facilities be
diminished, such diminution shall not be deemed a constructive or actual
eviction of Tenant and Landlord shall not be subject to any liability, nor
shall Tenant be entitled to any compensation of diminution or abatement of
rent.
c. TENANT'S RESPONSIBILITY REGARDING HAZARDOUS SUBSTANCES:
(1) HAZARDOUS SUBSTANCES. The term "Hazardous Substances," as used
in this Lease, shall include, without limitation, flammables, explosives,
radioactive materials, asbestos, polychlorinated biphenyls (PCBs), chemicals
known to cause cancer or reproductive toxicity, pollutants, contaminants,
hazardous wastes, toxic substances or related materials, petroleum and
petroleum products, and substances declared to be hazardous or toxic under
any law or regulation now or hereafter enacted or promulgated by any
governmental authority.
(2) TENANT'S RESTRICTIONS. Tenant shall not cause or permit to occur:
(a) Any violation of any federal, state, or local law,
ordinance, or regulation now or hereafter enacted, related to environmental
conditions on, under, or about the Premises, or arising from Tenant's use or
occupancy of the Premises, including, but not limited to soil and ground
water conditions; or
(b) The use, generation, release, manufacture, refining,
production, processing, storage, or disposal of any Hazardous Substance on,
under, or about the Premises, or the transportation to or from the Premises
of any Hazardous Substance.
(3) ENVIRONMENTAL CLEAN-UP.
(a) Tenant shall, at Tenant's own expense, comply with all laws
regulating the use, generation, storage, transportation, or disposal of
Hazardous Substances ("Laws").
(b) Tenant shall, at Tenant's own expense, make all submissions
to, provide all information required by, and comply with all requirements of
all governmental authorities (the "Authorities") under the Laws.
Landlord /s/ Tenant 9
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(c) Should any Authority or any third party demand that a cleanup
plan be prepared and that a clean-up be undertaken because of any deposit,
spill, discharge, or other release of Hazardous Substances that occurs during
the term of this Lease, at, or from the Premises, or which arises at any time
from Tenant's use or occupancy of the Premises, then Tenant shall, at
Tenant's own expense, prepare and submit the required plans and all related
bonds and other financial insurances; and Tenant shall carry out all such
cleanup plans.
(d) Tenant shall promptly provide all information regarding the
use, generation, storage, transportation, or disposal of Hazardous Substances
that is requested by Landlord. If Tenant fails to fulfill any duty imposed
under this Paragraph (3) within a reasonable time, Landlord may do so; and
in such case, Tenant shall cooperate with Landlord in order to prepare all
documents Landlord deems necessary or appropriate to determine the
applicability of the Laws to the Premises and Tenant's use thereof, and for
compliance therewith, and Tenant shall execute all documents promptly upon
Landlord's request. No such action by Landlord and no attempt made by
Landlord to mitigate damages under any Law shall constitute a waiver of any
of Tenant's obligations under this Paragraph (3).
(4) TENANTS'S INDEMNITY.
(a) Tenant shall not indemnify, defend, and hold harmless
Landlord, the manager of the property, and their respective officers,
directors, beneficiaries, shareholders, partners, agents, and employees from
all fines, suits, procedures, claims, and actions of every kind, and all
costs associated therewith (including attorneys' and consultants' fees)
arising out of or in any way connected with any deposit, spill, discharge, or
other release of Hazardous Substances that occurs during the term of this
Lease, at, or from the Premises, or which arises at any time from Tenant's
use or occupancy of the Premises, or from Tenant's failure to provide all
information, make all submissions, and take all steps required by all
Authorities under the Laws and all other environmental laws.
(b) Tenant's obligations and liabilities under Section 8c(3)(c)
and Section 8c(4)(a) shall survive the expiration of this Lease.
f. PARKING.
Landlord shall cause to be maintained, an automobile parking area
("Parking Area") within the Project for the benefit and use of the visitors
and patrons and employees of Tenant, and other tenants and occupants of the
Project, subject to any and all conditions as set forth in this Lease. The
Parking Area shall include the automobile parking stalls, driveways,
entrances, exits, sidewalks and attendant pedestrian passageways and
other areas designated for parking. Landlord shall determine the nature and
extent of the Parking Area and make such changes which, in its opinion, are
in the best interests of all persons using the Parking Area. Nothing
contained in this Lease shall be deemed to create liability upon Landlord for
any damage to motor vehicles of visitors or employees, unless ultimately
determined to be caused by the negligence or willful misconduct of Landlord.
Landlord shall also have the right to establish, amend, and enforce against
all users of the Parking Area reasonable rules and regulations as Landlord
may deem necessary and advisable for the proper and efficient operation and
maintenance of the Parking Area.
9. SERVICES AND UTILITIES.
Tenant shall be responsible for all utilities and janitorial services
relating to the Premises including but not limited to all instillation,
hookups, meter fees and connections. Landlord shall not be responsible for,
or in default hereunder or be liable for any damages (including any
consequential damages) directly or indirectly resulting from, nor shall the
Rent be abated for any reason of (i) the installation, use or interruption of
use of any equipment in connection with the foregoing services, (ii) failure
caused by accident or any condition or event beyond the reasonable control of
Landlord, or by the
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making of necessary repairs or improvements to the Premises, Building or
Project, or (iii) the limitation, curtailment or rationing of, or
restrictions on, use of water, electricity, gas or any other form of energy
serving the Premises, Building or Project. Landlord shall not be liable under
any circumstances for a loss of or injury to property or business, however
occurring, through or in connection with or incidental to any such services.
Tenant shall not, without the written consent of Landlord, use any utilities
or services (including but not limited to all utilities, trash disposal, etc)
above and beyond that which is usually furnished or supplied for the use of
premises as general office space, as determined by Landlord. Tenant shall
not, without the written consent of Landlord, use any apparatus or device in
the Premises, including without limitation, electronic data processing
machines, punch card machines or machines using in excess of 120 volts, which
consumes more electricity than is usually furnished or supplied for the use
of premises as general office space, as determined by Landlord. Tenant shall
not connect any apparatus with electric current, except through existing
electrical outlets in the Premises. Tenant shall not consume water or
electric current in excess of that usually furnished or supplied for the use
of premises as general office space (as determined by Landlord), without
first procuring the written consent of Landlord, which Landlord may refuse,
and in the event of consent, Landlord may have installed a water meter or
electrical current meter in the Premises to measure the amount of water or
electric current consumed. The cost of any such meter and or its
installation, maintenance and repair shall be paid for by the Tenant and
Tenant agrees to pay to Landlord promptly upon demand for all such water and
electric current consumed as shown by said meters, at the rates charged for
such services by the local public utility plus any additional expense incurred
in keeping account of the water and electric current so consumed. If a
separate meter is not installed, the excess cost for such water and electric
current shall be established by an estimate made by a utility company or
electrical engineer hired by Landlord at Tenant's expense. Nothing contained
in this Section shall restrict Landlord's right to require at any time
separate metering of utilities furnished to the Premises. In the event
utilities are separately metered, Tenant shall pay promptly upon demand for
all utilities consumed at utility rates charged by the local public utility
plus any additional expense incurred by Landlord in keeping account of the
utilities so consumed.
10. CONDITION OF THE PREMISES.
Tenants taking possession of the Premises shall be deemed conclusive evidence
that as of the date of taking possession the Premises are in good order and
satisfactory condition, except for such matters as to which Tenant gave
Landlord notice on or before the Commencement Date. No promise of Landlord to
alter, remodel, repair or improve the Premises, the Building or the Project
and no representation, express or implied, respecting any matter or thing
relating to the Premises, Building, Project or this Lease (including,
without limitation, the condition of the Premises, the Building or the
Project) have been made to Tenant by Landlord or its Broker or Sales Agent
other than as may be contained herein or in a separate exhibit or addendum
signed by Landlord and Tenant.
11. CONSTRUCTION, REPAIRS AND MAINTENANCE.
a. Landlord shall construct Landlord's Standard Improvements to the
Premises as described in Exhibit "k" at Tenant's expense as part of Tenant's
Improvement Allowance (as described below). Landlord shall maintain in good
order, condition and repair the Building and all other portions of the
Premises not the obligation of Tenant or of any other tenant in the Building.
b. Landlord's contractor shall complete Tenant's work as that term is
defined to Exhibit "k". Tenant shall be allowed an Improvement Allowance (as
described in Exhibit "k") for all improvements to be constructed (both
Landlord's Standard Improvements and Tenant's work). To the extent that all
such improvements are estimated to cost more than the Improvement Allowance,
Tenant shall pay the difference to Landlord as set forth below. Tenant shall
pay to Landlord in cash one-half (1/2) of the additional estimated cost at
the time construction of the Improvements is commenced, with payment of the
balance of the actual costs above the Improvement Allowance prior to Tenant
taking possession of the Premises.
c. If Tenant fails to keep and preserve the Premises, Landlord may at
its option, put or cause the same to be put in the condition and state of
repair agreed upon, and in such case, upon receipt of written statements from
Landlord, Tenant shall promptly pay the entire cost thereof as additional
rent. Landlord shall have the right, without liability, to enter the Premises
for the purpose of making such repairs upon the failure of the Tenant to do
so.
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d. Should Tenant commence the installation of fixtures, equipment and any
other installations ("Tenant's Work) Tenant shall diligently pursue such
installation and work to completion. All of Tenant's Work shall be at
Tenant's sole cost and expense and shall be pursuant to plans and
specifications which meet with Landlord's reasonable approval. If
required by Landlord, Tenant shall provide its own trash container(s) as
needed for containment and removal of construction debris from Tenant's
Work and Tenant shall remove said trash containers prior to opening for
business. The location of the trash containers shall be designated by
Landlord. Tenant and its contractor, if any, shall keep the Common Areas
free of all construction and related debris. Prior to opening for
business, Tenant shall remove all construction and related debris
from the Premises and Common Area, and all such areas shall be in broom
clean condition and the Common Area shall be returned to the condition
it was in prior to commencement of Tenant's work. Tenant's contractor
shall name Landlord, its partners, and the manager of the Project, as
additional named insureds on contractor's insurance policies. All
Tenant's work shall be undertaken and completed in a good, workmanlike
manner, and shall obtain all necessary governmental permits, licenses
and approvals with respect thereto and shall fully comply with all
governmental statutes, ordinances, rules and regulations pertaining
thereto. Tenant covenants that no work by Tenant or Tenant's employees,
agents or contractors shall disrupt or cause a slowdown or stoppage of
any work conducted by Landlord on the Premises or Project of which it is
a part.
e. Landlord and Tenant shall each do all acts required to comply with all
applicable laws, ordinances, and rules of any public authority relating
to their respective maintenance obligations as set forth herein.
f. Tenant expressly waives the benefits of any statute now or hereafter in
effect which would otherwise afford the Tenant the right to make repairs
at Landlord's expense or to terminate this Lease because of Landlord's
failure to keep the Premises in good order, condition and repair.
g. Tenant shall not place a load upon any floor of the Premises which
exceeds the load per square foot which such floor was designed to carry,
as determined by Landlord or Landlord's structural engineer. The cost of
any such determination made by Landlord's structural engineer shall be
paid for by Tenant upon demand. Tenant shall not install business
machines or mechanical equipment which cause noise or vibration to such
a degree as to be objectionable to Landlord or other Building tenants.
h. Except as otherwise expressly provided in this Lease, Landlord shall
have no liability to Tenant nor shall Tenant's obligations under this
Lease be reduced or abated in any manner whatsoever by reason of any
inconvenience, annoyance, interruption or injury to business arising
from Landlord's making any repairs or changes which Landlord is required
or permitted by this Lease or by any other tenant's lease or required by
law to make in or to any portion of the Project, Building or the
Premises. Landlord shall nevertheless use reasonable efforts to
minimize any interference with Tenant's business in the Premises.
i. Tenant shall give Landlord prompt notice of any damage to or defective
condition in any part or appurtenance of the Building's mechanical,
electrical, plumbing, HVAC or other systems serving, located in, or
passing through the Premises.
j. Upon the expiration or earlier termination of this Lease, Tenant shall
return the Premises to Landlord clean and in the same condition as on
the date Tenant took possession, except for normal wear and tear. Any
damage to the Premises, including any structural damage resulting from
Tenant's use or from the removal of Tenant's fixtures, furnishings and
equipment pursuant to Sections 12 and 13 shall be repaired by Tenant at
Tenant's expense.
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k. Throughout the term of this Lease all Tenant's construction, use of
the Premise and alterations, additions and/or improvements to the
Premises shall be in accordance with all applicable laws, ordinances
and regulations of all duly constituted authorities, including,
without limitation, Title III of the Americans with Disabilities
Act of 1990, all regulations issued thereunder and the Accessibility
Guidelines for Buildings and Facilities issued pursuant thereto, as
the same are in effect on the date hereof and may be hereafter
modified, amended or supplemented ("Applicable Laws"). Further, any
costs, expenses, required alterations/changes/modifications and/or
damages arising from continued compliance with all Applicable Laws
shall be the responsibility of Tenant at Tenant's sole cost and
expense. All alterations/changes/modifications to the Premise as
required by Applicable Laws shall be made in a timely manner so as
to avoid any liability and/or damages arising therefrom.
12. ALTERATIONS AND ADDITIONS.
a. Tenant shall not make any additions, alterations or improvements to
the Premises without obtaining the prior written consent of
Landlord. Landlords consent may be conditioned on Tenants removing
any such additions, alterations or improvements upon the expiration
of the Term and restoring the Premises to the same condition as on
the date tenant took possession. All work with respect to any
addition, alteration or Improvement shall be done in a good and
workmanlike manner by properly qualified and licensed personnel
approved by Landlord, and such work shall be diligently prosecuted
to completion. Landlord may, at Landlords option, require that any
such work be performed by Landlords contractor, in which case the
cost of such work shall be paid for before commencement of the work.
Tenant shall pay to Landlord upon completion of any such work by
Landlord's contractor, and administrative fee of fifteen percent
(15%) of the cost of the work. Any such alterations, additions or
improvements consented to by Landlord including any roof penetration
shall be made at Tenant's sole cost and expense. Tenant shall
provide its own trash container or containers for construction
debris, shall promptly remove all construction and related debris
from the Premises and all Common Areas; immediately following
completion of construction shall return the Premises and Common
Areas to the condition they were in immediately prior to
construction; shall repair and restore any portions of the Common
Areas harmed as result of the construction activities to the
condition they were in immediately prior to construction; shall use
service entrances to the Premises, if any; will conduct no core
drilling, jack hammering or excessive noise during business hours;
will disrupt other tenants as little as possible; and will pay to
Landlord the amount of any and all damage to the roof caused by the
penetration thereof, and the amount of any and all damages to the
Premises, Building and/or Project as a result of roof leaks caused
by the penetration. Tenant shall secure any and all governmental
permits, approvals or authorizations required in connection with any
such work, and shall indemnify, defend Landlord against, and hold
Landlord harmless from any and all liability, costs, damages
(including any damage to the Building, Premises, Common Areas or any
part of the Project), expenses (including attorneys' fees) and any
and all liens resulting therefrom. All alterations, additions and
improvements (and expressly including all light fixtures and floor
coverings), except trade fixtures, appliances and equipment which do
not become a part of the Premises, shall immediately become the
property of Landlord without any obligation to pay therefor. Upon
the expiration or sooner termination of the Term hereof, Tenant shall,
upon written demand by Landlord, given at least thirty (30) days
prior to the end of the Term, at Tenant's sole cost and expense,
forthwith and with all due diligence, remove any alterations,
additions or improvements made by Tenant, designated by Landlord to
be removed, and Tenant shall, forthwith and with all due diligence,
at its sole cost and expense, repair any damage to the Building
and/or Premises caused by such removal. Tenant shall, upon the
request of Landlord, execute and deliver to Landlord a consent to
alteration letter in form and content required by Landlord.
Landlord's review and/or approval of any request for alterations,
additions or improvements in or to the Premises, and/or the plans or
specifications with respect thereto, shall create no responsibility
or liability on the part of Landlord, nor shall such review or
approval evidence or constitute a representation or warranty by
Landlord with respect to the action or undertaking approved or the
completeness, accuracy, design sufficiency or compliance of such
plans or specifications with laws, ordinances, rules and/or
regulations of any governmental agency or authority.
b. Tenant shall keep Tenants leasehold interest, and any additions or
improvements which are or become
Landlord /s/ Tenant 13
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the property of Landlord under this Lease, free and clear of all
attachment or judgment liens. Before the actual commencement of
any work for which a claim or lien may be filed, Tenant shall give
Landlord notice of the intended commencement date a sufficient
time before that date to enable Landlord to post notices of
non-responsibility or any other notices which Landlord deems
necessary for the proper protection of Landlords interest in the
Premises, Building or the Project, and Landlord shall have the
right to enter the Premises and post such notices at any
reasonable time.
c. Landlord may require, at Landlords sole option, that Tenant
provide to Landlord, at Tenants expense, a lien and completion
bond in an amount equal to at least one and one-half (1 1/2) times
the total estimated cost of any additions, alterations or
improvements to be made in or to the Premises, to protect Landlord
against any liability for mechanic's and materialmen's liens and
to insure timely completion of the work. Nothing contained in this
Section 12c shall relieve Tenant of its obligation under Section
12b to keep the Premises, Building and Project free of all liens.
d. Unless their removal is required by Landlord as provided in
Section 12a, all additions, alterations and improvements made to
the Premises shall become the property of Landlord and be
surrendered with the Premises upon the expiration of the Term;
provided, however, Tenant's equipment, machinery and trade
fixtures which can be removed without damage to the Premises shall
remain the property of Tenant and may be removed, subject to the
provisions of Section 13b.
e. All Alterations shall at all times (a) comply with all laws,
rules, orders, and regulations of governmental authorities having
jurisdiction thereof and all Insurance requirements, (b) comply
with the Building's rules and regulations now or hereafter in
existence, and (c) comply with the plans and tenant's
specifications approved by Owner.
13. LEASEHOLD IMPROVEMENTS, TENANT'S PROPERTY.
a. All fixtures, equipment, improvements and appurtenances attached
to or built into the Premises at the commencement of or during the
Term, whether or not by or at the expense of Tenant ("Leasehold
Improvements"), shall be and remain a part of the Premises, shall
be the property of Landlord and shall not be removed by Tenant,
except as expressly provided in Section 13b.
b. All movable partitions, business and trade fixtures, machinery and
equipment, communications equipment and office equipment located
in the Premises and acquired by or for the account of Tenant,
without expense to Landlord, which can be removed without
structural damage to the Building, and all furniture, furnishings
and other articles of movable personal property owned by Tenant
and located in the Premises (collectively "Tenant's Property")
shall be and shall remain the property of Tenant and may be
removed by Tenant at any time during the Term; provided that if
any of Tenant's Property is removed, Tenant shall promptly repair
any damage to the Premises or to the Building resulting from such
removal. No Tenant's Property shall be considered an addition,
alteration or improvement to the Premises as used in Section 12.
14. RULES AND REGULATIONS.
Tenant agrees to comply with (and cause its agents, contractors, employees and
invitees to comply with) the rules and regulations attached hereto as Exhibit
"D" and with such reasonable modifications thereof and additions thereto as
Landlord may from time to time make provided said additions/modifications are
reasonable and are uniformly applied to all tenants. Landlord shall not be
responsible for any violation of said rules and regulations by other tenants
or occupants of the Building or Project.
15. CERTAIN RIGHTS RESERVED BY LANDLORD.
Landlord reserves the following rights, exercisable without liability to
Tenant for (a) damage or injury to property, person or business, (b) causing
an actual or constructive eviction from the Premises, or (c) disturbing
Tenant's use or possession of the Premises:
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a. To name the Building and Project and to change the name or street
address of the Building or Project;
b. To install and maintain all signs on the exterior and interior of
the Building and Project;
c. To have pass keys to the Premises and all doors within the Premises,
excluding Tenant's vaults and safes;
d. At any time during the Term, and on reasonable prior notice to
Tenant, to inspect the Premises, and to show the Premises to any
prospective purchaser or mortgagee of the Project, or to any
assignee of any mortgage on the Project, or to others having an
interest in the Project or Landlord, and during the last six months
of the Term, to show the Premises to prospective tenants hereof; and
e. To enter the Premises for the purpose of making inspections,
repairs, alterations, additions or improvements to the Premises or
the Building (including, without limitation, checking, calibrating,
adjusting or balancing controls and other parts of the HVAC system),
and to take all steps as may be necessary or desirable for the
safety, protection, maintenance or preservation of the Premises or
the Building or Landlord's interest therein, or as may be necessary
or desirable for the operation or improvement of the Building or in
order to comply with laws, orders or requirements of governmental or
other authority. To protect the interests of Landlord in the
Premises, to improve or repair the Premises or any other portion of
the Building, or as otherwise permitted in this Lease. During the
last one hundred and eighty (180) days of the Term, or when an
uncured tenant default exists, Landlord may enter the Premises with
prospective tenants. If Tenant permanently vacates the Premises and
fails to pay rent, Landlord may enter the Premises and enter them
without abatement of rent and without liability to Tenant. Landlord
shall at all times have and retain a key of code which unlocks all
of the doors in the Premises, excluding Tenant's vaults and safes,
and Landlord shall have the right to use any and all means which
Landlord may deem proper to open the doors in an emergency in order
to obtain entry to the Premises. Any entry to the Premises obtained
by Landlord pursuant to this Section shall not under any
circumstances be deemed to be a forcible or unlawful entry into, or
a detainer of the Premises, or an eviction of Tenant from the
Premises. Landlord agrees to use its best efforts (except in an
emergency) to minimize interference with Tenant's business in the
Premises in the course of any such entry.
16. ASSIGNMENT AND SUBLETTING
No assignment of this Lease or sublease of all or any part of the Premises
shall be permitted, except as provided in this Article 16.
a. Tenant shall not, without prior written consent of Landlord, assign
or hypothecate this Lease or any interest herein or sublet the
Premises or any part thereof, or permit the use of the Premises by
any party other than Tenant. Any of the foregoing acts without such
consent shall be void and shall, at the option of Landlord,
terminate this Lease. This Lease shall not, nor shall any interest
in Tenant herein, be assignable by operation of law without the
written consent of Landlord.
b. If at any time or from time to time during the Term Tenant desires
to assign this Lease or sublet all or any part of the Premises,
Tenant shall give notice to Landlord setting forth the terms and
provisions of the proposed assignment or sublease, and the identity
of the proposed assignee or subtenant. Tenant shall promptly supply
Landlord with such information concerning the business background
and financial condition of such proposed assignee or subtenant as
Landlord may reasonably request. Landlord shall have the option,
exercisable by notice given to Tenant within thirty (30) days after
Tenant's notice is given, either to sublet such space from Tenant at
the rental and on the other terms set forth in this Lease for the
term set forth in Tenant's notice, or, in the case of an assignment,
to terminate this Lease. If Landlord does not exercise such option,
Tenant may assign the Lease or sublet such space to such proposed
assignee or subtenant on the following further conditions:
(1) Landlord shall have the right to approve such proposed assignee
or subtenant, which approval shall not be unreasonably withheld;
Landlord /s/ Tenant 15
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(2) The assignment or sublease shall be on the same terms set forth in
the notice given to Landlord:
(3) No assignment or sublease shall be valid and no assignee or
sublessee shall take possession of the Premises until an executed
counterpart of such assignment or sublease has been
delivered to Landlord:
(4) No assignee or sublessee shall have a further right to assign or
sublet except on the terms herein contained; and
(5) Any sums or other economic consideration received by Tenant as a
result of such assignment or subletting, however denominated
under the assignment or sublease, which exceed, in the
aggregate, (i) the total sums which Tenant is obligated to
pay Landlord under this Lease (prorated to reflect obligations
allocable to any portion of the Premises subleased), plus
(ii) any real estate brokerage commissions or fees payable in
connection with such assignment or subletting, shall be paid
to Landlord as additional rent under this Lease without affecting
or reducing any other obligations of Tenant hereunder.
c. In determining whether to grant consent to the Tenant's sublet or
assignment request, the Landlord may consider any reasonable factor.
Landlord and Tenant agree that any one of the following factors or any
other reasonable factor, will be reasonable grounds for deciding the
Tenant's request:
(1) financial strength of the proposed subtenant/assignee must be at
least equal to that of the existing tenant;
(2) business reputation of the proposed subtenant/assignee must be in
accordance with generally acceptable commercial standards;
(3) use of the premises by the proposed subtenant/assignee must be
identical to the use permitted by this lease;
(4) percentage rents of the proposed subtenant/assignee, or the
prospect of percentage rents, must be at least equal to that
of the existing tenant;
(5) managerial and operational skills of the proposed
subtenant/assignee must be the same as those of the existing
tenant;
(6) use of the premises by the proposed subtenant/assignee will not
violate or create any potential violation of any laws;
(7) use of the premises will not violate any other agreements affecting
the premises, the Landlord or other tenants.
d. Notwithstanding the provisions of above, Tenant may assign this Lease or
sublet the Premises or any portion thereof, without Landlord's consent
and without extending any recapture or termination option to Landlord,
to any entity which controls, is controlled by or is under common
control with Tenant, provided that (i) the assignee or sublessee
assumes, in full, the obligations of Tenant under this Lease, (ii)
Tenant remains fully liable under this Lease, and (iii) the use of the
Premises under Article 8 remains unchanged. Notwithstanding the above,
the following transfers shall be deemed assignments hereunder.
(1) A transfer by Operation of Law or otherwise, of Tenant's interest
in this Lease, or
(2) A transfer of a majority interest in Tenant (whether stock,
partnership interest, or otherwise) in a single transaction or a
related series of transactions.
c. No subletting or assignment shall release Tenant of Tenant's obligations
under this Lease or alter the
Landlord /s/ Tenant 16
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primary liability of Tenant to pay the Rent and to perform all other
obligations to be performed by Tenant hereunder. The acceptance of Rent
by Landlord from any other person shall not be deemed to be a waiver
by Landlord of any provision hereof. Consent to one assignment or
subletting shall not be deemed consent to any subsequent assignment or
subletting. In the event of default by an assignee or subtenant of
Tenant or any successor of Tenant in the performance of any of the
terms hereof, Landlord may proceed directly against Tenant without the
necessity of exhausting remedies against such assignee, subtenant or
successor. Landlord may consent to subsequent assignments of the Lease
or sublettings or amendments or modifications to the Lease with
assignees of Tenant, without notifying Tenant, or any successor of
Tenant, and without obtaining its or their consent thereto and any
such actions shall not relieve Tenant of liability under this Lease.
f. If Tenant breaches any of the terms and provisions of the Lease,
Landlord may elect to receive directly from Subtenant all sums due or
payable to Tenant by Subtenant pursuant to the Sublease, and upon
receipt of a written notice from Landlord referencing this Section.
Subtenant shall thereafter pay to Landlord any and all sums becoming due
or payable under the Sublease.
g. Neither the giving of such written notice to Subtenant nor the receipt
of such direct payments from Subtenant shall cause Landlord to assume
any of Tenant's duties, obligations and/or liabilities under the
Sublease, nor shall such event impose upon Landlord the duty or
obligation to honor the Sublease nor subsequently to accept Subtenant's
attornment.
h. If Tenant assigns the Lease or sublets the Premises or requests the
consent of Landlord to any assignment or subletting or if Tenant
requests the consent of Landlord for any act that Tenant proposes to
do, then Tenant shall, upon demand, pay Landlord an administrative
fee of One Hundred Fifty and No/100ths Dollars ($150.00) plus any
attorney's fees reasonably incurred by Landlord in connection with
such act or requests.
i. Landlord shall have the option to terminate this Lease rather than
approve an assignment or sublet.
17. HOLDING OVER.
a. If after expiration of the Term, Tenant remains in possession of the
Premises with Landlord's permission (express or implied), Tenant
shall become a tenant from month to month only, upon all the
provisions of this Lease (except as to term and Rent), but all Rent
payable by tenant shall be increased to one hundred fifty percent
(150%) of Rent payable by Tenant at the expiration of the Term.
Such monthly rent shall be payable in advance on or before the first
day of each month. If either party desires to terminate such month to
month tenancy, it shall give the other party not less than thirty
(30) days advance written notice of the date of termination.
b. During the period in which Tenant holds over Tenant shall pay, in
addition to the increased Base Rent hereof, all Adjusted Rent as set
forth in this Lease except that any provisions that limit the amount
or defer the payment of such Adjusted Rent or Percentage Rent shall
be null and void.
c. No option to extend or renew this Lease shall have been deemed to
have occurred by Tenant's holdover. Any and all options to extend or
renew set forth in this Lease shall be deemed terminated and shall be
of no further effect as of the first date the Tenant holds over.
d. In addition to the payment of the increased Rent as set forth above
and all Adjusted Rent, Tenant shall be liable to Landlord for all
costs, losses, claims or liabilities (including attorney's fees) which
Landlord may incur as a result of Tenant's failure to surrender
possession of the Premises to Landlord upon the expiration or earlier
termination of this Lease.
e. In the event Landlord shall commence proceedings to dispossess Tenant
by reason of Tenant's default or Tenant's holdover after the
expiration of the tenancy hereby created, then Tenant shall pay as
additional rent, in addition to costs and disbursements, minimum
legal fees of $1,000 for each proceeding so commenced. In the event
said legal fees exceed $1,000 for each proceeding, Tenant shall pay,
as
Landlord /s/ Tenant 17
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Additional Rent, the full amount of the legal fees, in addition to
costs and disbursements.
f. In no way shall the increased Rent set forth in subsection (b) hereof
or any other monetary or nonmonetary requirements set forth in this
Lease be construed to constitute liquidated damages for Landlord's
losses resulting from Tenant's holdover.
g. Nothing contained herein shall be construed to constitute Landlord's
consent to Tenant holding over at the expiration or earlier
termination of this Lease term or give Tenant the right to hold over
after the expiration or earlier termination of the Lease term.
18. SURRENDER OF PREMISES.
a. Tenant shall peaceably surrender the Premises to Landlord on the
Expiration Date, in broom-clean condition and in as good condition as
when Tenant took possession, except for (i) reasonable wear and tear,
(ii) loss by fire or other casualty, and (iii) loss by condemnation.
Tenant shall, on Landlord's request, remove Tenant's Property on or
before the Expiration Date and promptly repair all damage to the
Premises or Building caused by such removal.
b. If Tenant abandons or surrenders the Premises, or is dispossessed by
process of law or otherwise, any of Tenant's Property left on the
Premises shall be deemed to be abandoned, and, at Landlord's option,
title shall pass to Landlord under this Lease as by a bill of sale.
If Landlord elects to remove all or any part of such Tenant's
Property, the cost of removal, including repairing any damage to the
Premises or Building caused by such removal, including repairing andy
damage to the Premises or Building caused by such removal, shall be
paid by tenant. On the Expiration Date Tenant shall surrender all
keys to the Premises.
19. DESTRUCTION OR DAMAGE.
a. If the Premises or the portion of the Building necessary for Tenants
occupancy is damaged by fire, earthquake, act of God, the elements of
other casualty, Landlord shall, subject to the provisions of this
Article, promptly repair the damage, if such repairs can, in
Landlord's opinion, be completed within (90) ninety days. If Landlord
determines that repairs can be completed within ninety (90) days,
this Lease shall remain in full force and effect, except that if
such damage is not the result of the negligence or willful misconduct
of Tenant or Tenants agents, employees, contractors, licensees or
invitees, the Base Rent shall be abated to the extent tenant's use of
the Premises is impaired, commencing with the date of damage and
continuing until completion of the repairs required of Landlord under
Section 19d.
b. If in Landlord's opinion, such repairs to the Premises or portion of
the Building necessary for tenant's occupancy cannot be completed
within ninety (90) days, Landlord may elect, upon notice to Tenant
given within thirty (30) days after the date of such fire or other
casualty, to repair such damage, in which event this Lease shall
continue in full force and effect, but the Base Rent shall be
partially abated as provided in Section 19a. If Landlord does not so
elect to make such repairs, this Lease shall terminate as of the date
of such fire or other casualty.
c. If any other portion of the Building or Project is totally destroyed
or damaged to the extent that in Landlord's opinion repair thereof
cannot be completed within ninety (90) days, Landlord may elect upon
notice to Tenant given within thirty (30) days after the date of such
fire or other casualty, to repair such damage, in which event this
Lease shall continue in full force and effect, but the Base Rent
shall be partially abated as provided in Section 19a. If Landlord
does not elect to make such repairs, this Lease shall terminate as of
the date of such fire or other casualty. Notwithstanding the
foregoing, if such repairs to the Premise or portion of the Building
necessary for tenant's occupancy cannot be substantially completed
within (90) days, Tenant shall have the right to terminate this lease
as of the date of such fire, or other casualty. Tenant shall be
required to provide Landlord with written notice within fifteen (15)
days of its election to terminate this lease.
d. If the Premises are to be repaired under this Article, Landlord shall
repair at its cost any injury or damage to the Building and Building
Standard Work in the Premises. Tenant shall be responsible at its
Landlord /s/ Tenant 18
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sole cost and expense for the repair, restoration and replacement
of any other Leasehold Improvements and Tenant's Property.
Landlord shall not be liable for any loss of business,
inconvenience or annoyance arising from any repair or restoration
of any portion of the Premises, Building or Project as a result of
any damage from fire or other casualty.
e. This Lease shall be considered an express agreement governing any
case of damage to or destruction of the Premises, Building or
Project by fire or other casualty, and any present or future law
which purports to govern the rights of Landlord and Tenant in such
circumstances in the absence of express agreement, shall have no
application.
f. Nothing in this Section shall require Landlord is (i) restore,
repair, or replace any Leasehold Improvements, inventory,
furniture, chattels, signs, contents, fixtures (including Trade
Fixtures), or personal property of Tenant located on, in, under,
above, or which serve the Premises, or (ii) rebuild the Premises
in the condition and state that existed before any such damage or
destruction.
g. Despite anything contained to the contrary in this Section, and
without limiting Landlord's rights or remedies hereunder, Rent
shall not be abated under this Section if in Landlord's opinion
any such damage or destruction is caused by any fault, neglect,
default, negligence, act, or admission of Tenant or those for whom
Tenant is in law responsible or any other person entering upon the
Premises under express or implied invitation of Tenant.
h. Despite anything contained in this Lease to the contrary, and
without limiting Landlord's right or remedies hereunder:
(1) If damage or destruction occurs to the Premises, Building or
Project or any part thereof by reason of any cause in respect
of which there are no proceeds of insurance available to
Landlord, or
(2) If the proceeds of insurance are insufficient to pay Landlord
for the costs of rebuilding or making fit the Premises,
Building or Project or any part thereof (including the
Premises), or
(3) If any mortgage or other person entitled to the proceeds of
insurance does not consent to the payment to Landlord of such
proceeds for such purpose, or
(4) If in Landlord's opinion any such damage or destruction is
caused by any fault, neglect, default, negligence, act, or
omission of Tenant, or those for whom Tenants is in the law
responsible, or any other person entering upon the Premises
under express or implied invitation of Tenant,
then Landlord may, without obligation or liability to Tenant,
terminate this Lease on 30 days' written notice to Tenant and all
Rent shall be adjusted as of, and Tenant shall vacate and
surrender the Premises on, such termination date.
20. EMINENT DOMAIN.
a. If the whole of the Building or Premises is lawfully taken by
condemnation or in any other manner for any public oar quasi
public purpose, this Lease shall terminate as of the date of such
taking, and Rent shall be prorated to such date. If less than the
whole of the Building or Premises is so taken, this Lease shall be
unaffected by such taking, provided that (i) Tenant shall have the
right to terminate this Lease by notice to Landlord given within
ninety (90) days after the date of such taking if twenty percent
(20%) or more of the Premises is taken and the remaining area of
the Premises is not reasonably sufficient for Tenant to continue
operation of its business, and (ii) Landlord shall have the right
to terminate this Lease by notice to Tenant given within ninety
(90) days after the date of such taking. If either Landlord or
Tenant so elects to terminate this Lease, the Lease shall
terminate on the thirtieth (30th) day after either such notice.
The Rent shall be prorated to the date of termination. If this
Lease continues in force upon such partial taking, the Base Rent
and Tenant's Proportionate Share shall be equitably adjusted
according to the remaining Rentable Area of the Premises and
Project.
Landlord /s/ Tenant 19
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b. In the event of any taking, partial or whole, all of the proceeds
of any award, judgment or settlement payable by the condemning
authority shall be the exclusive property of Landlord, and Tenant
hereby assigns to Landlord all of its right, title and interest in
any award, judgment or settlement from the condemning authority.
Tenant, however, shall have the right, to the extent that
Landlord's award is not reduced or prejudiced, to claim from the
condemning authority (but not from Landlord) such compensation as
may be recoverable by Tenant in its own right for relocation
expenses and damage to Tenant's personal property.
c. In the event of a partial taking of the Premises which does not
result in a termination of this Lease, Landlord shall restore the
remaining portion of the Premises as nearly as practicable to its
condition prior to the condemnation or taking, but only to the
extent of Building Standard Work. Tenant shall be responsible at
its sole cost and expense for the repair, restoration and
replacement of any other Leasehold Improvements and Tenant's
Property, except if such condemnation or taking is the result of
code or regulatory violations of Landlord.
21. INDEMNIFICATION.
a. Except for Landlord's gross negligence or wilful misconduct Tenant
shall indemnify and hold Landlord or its agents, servants,
employees, or any other Person for whom Landlord is in law
responsible, harmless against and from liability and claims of any
kind for loss or damage to property of Tenant or any other person,
or for any injury to or death of any person, arising out of,
(1) Tenant's use and occupancy of the Premises, or any work,
activity or other things allowed or suffered by tenant to be done
in, on or about the Premises; (2) any breach or default by Tenant of
any of Tenant's obligations under this Lease; or (3) any negligent
or otherwise tortious act or omission of Tenant, its agents,
employees, invitees or contractors. Tenant shall at Tenant's
expense, and by counsel satisfactory to Landlord, defend Landlord
in any action or proceeding arising from any such claim and shall
indemnify Landlord against all costs, attorneys' fees, expert
witness fees and any other expenses incurred in such action or
proceeding. As a material part of the consideration for Landlord's
execution of this Lease, Tenant hereby assumes all risk of damage
or injury to any person or property in, on or about the Premises
from any cause.
b. Except for Landlord's gross negligence or wilful misconduct,
Tenant acknowledges and agrees that Landlord shall not be liable
or responsible in any way to Tenant or any other person for:
(1) any Injury arising from or out of any occurrence in, upon,
at, or relating to the Premises, Building and/or Project or
any part thereof or any loss or damage to property (including
loss of use thereof) of Tenant or any other Person located in
the Premises, Building and/or Project;
(2) (without limiting the generality of the foregoing provisions
of this Section) any Injury to Tenant or any other Person or
loss or damage to property resulting from: fire; smoke;
explosion; falling plaster, ceiling tiles, fixtures, or
signs; broken glass; steam; gas; fumes; vapors; odors; dust;
dirt; grease; acid; oil; any hazardous material or substance;
debris; noise; air or noise pollution; theft; breakage;
vermin; electricity, computer or electronic equipment or
systems malfunction or stoppage; water; rain; flood;
flooding; freezing; tornado; windstorm; snow; sleet; hail;
frost; ice; excessive heat or cold; sewage; sewer backup;
toilet overflow; or leaks or discharges from any part of the
Premises, Building and/or Project (including the Premises),
or from any pipes, sprinklers, appliances, equipment
(including, without limitation, heating, ventilating, and
air-conditioning equipment); electrical or other wiring;
plumbing fixtures; roof(s), windows, skylights, doors,
trapdoors, or subsurface of any floor or ceiling of any part
of the Premises, Building and/or Project or from the street
or any other place, or by dampness or climatic conditions,
or from any other cause whatsoever;
(3) any Injury, loss, or damage caused by other tenants or any
Person in the Premises, Building and/or Project, or by
occupants of adjacent property thereto, or by the public, or
by construction or renovation, or by any private, public, or
quasi-public work, or by interruption, cessation, or failure
of any public or other utility service, or caused by Force
Majeure.
Landlord /s/ Tenant 20
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(4) any injury to Tenant or any other Person or any loss or damage
suffered to the Premises or the contents thereof by reason of
Landlord or its representatives entering the Premises to undertake
any work therein, or to exercise any of Landlord's rights or
remedies hereunder, or to fulfill any of Landlord's obligations
hereunder, or in the case of emergency; or
(5) any Injury, loss, or damage to property caused by perils insured
against or required to be insured against by Tenant. Tenant shall
promptly indemnify and hold Landlord harmless from and against
any and all claims in connection with any Injury or any loss or
damage to property referred to in this Section.
22. TENANT'S INSURANCE.
a. All insurance required to be carried by Tenant hereunder shall be
issued by responsible insurance companies acceptable to Landlord and
Landlord's lender and qualified to do business in the State. Each
policy shall name Landlord, and at Landlord's request any mortgagee
of Landlord, as an additional insured, as their respective interests
may appear. Each policy shall contain (i) a cross-liability
endorsement, (ii) a provision that such policy and the coverage
evidenced thereby shall be primary and non-contributing with respect
to any policies carried by Landlord and that any coverage carried by
Landlord shall be excess insurance, and (iii) a waiver by the insurer
of any right of subrogation against Landlord, its agents, employees
and representatives, which arises or might arise by reason of any
payment under such policy or by reason of any act or omission of
Landlord, its agents, employees or representatives. A copy of each
paid up policy (authenticated by the insurer) or certificate of the
insurer evidencing the existence and amount of each insurance policy
required hereunder shall be delivered to Landlord before the date
Tenant is first given the right of possession of the Premises, and
thereafter within thirty (30) days after any demand by Landlord
therefor. Landlord may, at anytime and from time to time, inspect
and/or copy any insurance policies required to be maintained by
Tenant hereunder. No such policy shall be cancelable except after
twenty (20) days written notice to Landlord and Landlord's lender.
Tenant shall furnish Landlord with renewals or "binders" of any such
policy at lease ten (10) days prior to the expiration thereof. Tenant
agrees that if Tenant does not take out and maintain such insurance,
Landlord may (but shall not be required to) procure said insurance on
Tenant's behalf and charge the Tenant the premiums together with a
twenty-five percent (25%) handling charge, payable upon demand.
Tenant shall have the right to provide such insurance coverage
pursuant to blanket policies obtained by the Tenant, provided such
blanket policies expressly afford coverage to the Premises, Landlord,
Landlord's mortgagee and Tenant as required by this Lease.
b. Beginning on the date Tenant is given access to the Premises for any
purpose and continuing until expiration of the Term, Tenant shall
procure, pay for and maintain in effect policies of casualty
insurance covering (i) all Leasehold Improvements (including any
alterations, additions or improvements as may be made by Tenant
pursuant to the provisions of Article 12 hereof), and (ii) trade
fixtures, merchandise and other personal property from time to time
in, on or about the Premises, in an amount not less than one hundred
percent (100%) of their actual replacement cost from time to time,
providing protection against any peril included within the
classification "Fire and Extended Coverage" together with insurance
against sprinkler damage, vandalism and malicious mischief. The
proceeds of such insurance shall be used for the repair or
replacement of the property so insured. Upon termination of this
Lease following a casualty as is set forth herein, the proceeds under
(i) shall be paid to Landlord, and the proceeds under (ii) above shall
be paid to Tenant.
c. Beginning on the date Tenant is given access to the Premises for any
purpose and continuing until expiration of the Term, Tenant shall
procure, pay for and maintain in effect workers compensation
insurance as required by law and comprehensive public liability and
property damage insurance with respect to the construction of
improvements on the Premises, the use, operation or condition of the
Premises and the operations of Tenant in, on or about the Premises,
providing personal injury and broad form property damage coverage for
not less than One Million Dollars ($1,000,000.00) combined single
limit for bodily injury, death and property damage liability.
d. Not less than every three (3) years during the Term, Landlord and
Tenant shall mutually agree to
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increases in all of Tenant's insurance policy limits for all
insurance to be carried by Tenant as set forth in this Article. In
the event Landlord and Tenant cannot mutually agree upon the
amounts of said increases, then Tenant agrees that all insurance
policy limits as set forth in this Article shall be adjusted for
increases in the cost of living in the same manner as is set forth
in Section 5.2 hereof for the adjustment of the Base Rent.
c. Tenant shall not use, or allow the Premises to be used for any
purpose which may be prohibited by the form of fire insurance
policy required to be carried under this Lease. Tenant shall pay
any increase in premiums for casualty and fire (including all risk
coverage) insurance that may be charged during the Term of this
Lease on the amount of such insurance which may be carried by
Landlord on the Premises, the Building or the Project resulting
from Tenant's occupancy whether or not Landlord has consented
thereto. In such event, Tenant shall also pay any additional
premium on the insurance policy that Landlord may carry for its
protection against rent loss through fire or casualty. In
determining whether increased premiums are the result of Tenant's
use of the Premises, a schedule, issued by the organization
setting the insurance rate on the Premises, showing the various
components of such rate, shall be conclusive evidence of the several
items and charges which make up the casualty and fire insurance rate
on the Premises. Landlord shall deliver bills for such additional
premiums to Tenant at such times as Landlord may elect, and Tenant
shall immediately reimburse Landlord therefor.
23. WAIVER OF SUBROGATION.
Landlord and Tenant each hereby waive all rights of recovery against the
other and against the officers, employees, agents and representatives of the
other, on account of loss by or damage to the waiving party of its property
or the property of others under its control, to the extent that such loss or
damage is insured against under any fire and extended coverage insurance
policy which either may have in force at the time of the loss or damage.
Tenant shall, upon obtaining the policies of insurance required under this
Lease, give notice to its insurance carrier or carriers that the foregoing
mutual waiver of subrogation is contained in this Lease.
24. SUBORDINATION AND ATTORNMENT.
a. Upon written request of Landlord, or any mortgagee or deed of trust
beneficiary of Landlord, or ground lessor of Landlord
(collectively "Mortgage") Tenant shall, in writing, subordinate
its rights hereunder to the Mortgage, or to the interest of any
lease in which Landlord is lessee, and to all advances made or
hereafter to be made thereunder, provided, that so long as Tenant
is not in default under this Lease, this Lease shall not be
terminated nor shall Tenant's quiet enjoyment of the Premises be
disturbed. Before signing any subordination agreement, Tenant
shall have the right to obtain from any lender or lessor or
Landlord requesting such subordination, an agreement in writing
providing that, as long as Tenant is not in default hereunder,
this Lease shall remain in effect for the full Term. The holder of
any security interest may, upon written notice to Tenant, elect to
have this Lease prior to its security interest, regardless of the
time of the granting or recording of such security interest.
b. This Lease and Tenant's rights hereunder are and will remain
subject and subordinate to each and every Mortgage (and all
voluntary and involuntary advances thereon) that may now or
hereafter encumber the Property, and to all increases, renewals,
recastings, modifications, consolidations, participations,
replacements, and extensions thereof (collectively referred to as
the "Mortgage," which as used herein also includes a trust
indenture and a deed of trust). If the holder of a Mortgage
becomes the owner of the Property by reason of foreclosure or
acceptance of a deed in lieu of foreclosure, at such holder's
election Tenant will be bound to such holder or its designee under
all terms and conditions of this Lease, and Tenant will be deemed
to have attorned to and recognized such holder or its designee as
Landlord's successor-in-interest for the remainder of the Term.
c. The foregoing is self-operative and no further instrument of
subordination and/or attornment will be necessary unless required
by Landlord or the holder of a Mortgage, in which case Tenant,
within ten (10) days after written request, will execute and
deliver without charge any documents acceptable to Landlord or
such holder in order to confirm the subordination and/or
attornment set forth above. As used in this subparagraph and in
the preceding subparagraph above, whenever the context allows, the
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words "holder of a Mortgage" (or words of similar import) also
include a purchaser of the Property at a foreclosure sale.
d. However, should the holder of a Mortgage request that this Lease and
Tenant's rights hereunder be made superior, rather than subordinate,
to the Mortgage, then Tenant, within ten (10) days after written
request, will execute and deliver without charge a form acceptable to
the holder of the Mortgage.
e. If Tenant fails to execute and deliver any documents as and when
required by this Section, then, notwithstanding any other provision
of this Lease, without the requirement of notice from Landlord such
failure will constitute a default under this Lease beyond any
applicable grace period, entitling Landlord to the same rights and
remedies as if such default were with respect to non-payment of Base
Rent.
f. In the event of any foreclosure sale, transfer in lieu of foreclosure
or termination of lease in which Landlord is lessee, Tenant shall
attorn to the purchaser, transferee or lessor as the case may be, and
recognize that party as Landlord under this Lease, provided such party
acquires and accepts the Premises subject to this Lease.
25. TENANT ESTOPPEL/LENDER AGREEMENTS
a. Within no more than 10 days after receipt of written request, the
Tenant shall furnish to the Landlord a certificate (as more fully set
forth on Exhibit "I"), duly acknowledged, certifying, to the extent
true:
(1) that this Lease is in full force and effect;
(2) that the Tenant knows of no default hereunder on the part of the
Landlord, or if it has reason to believe that such a default
exists, the nature thereof in reasonable detail;
(3) the amount of the rent being paid and the last date to which
rent has been paid;
(4) that this Lease has not been modified, or if it has been
modified, the terms and dates of such modifications;
(5) that the Term of this Lease has been commenced;
(6) the Commencement and Expiration Dates;
(7) whether all work to be performed by the Landlord has been
completed;
(8) whether any renewal term option has been exercised;
(9) whether there exist any claims or deductions from, or defenses
to, the payment of rent; and
(10) such other matters as may be reasonably requested by the
Landlord.
b. If the Tenant fails to execute and deliver to the Landlord a
completed certificate as required under this Section, the Tenant
hereby appoints the Landlord as his attorney-in-fact to execute and
deliver such certificate for and on behalf of the Tenant.
16. TRANSFER OF LANDLORD'S INTEREST.
In the event of any sale or transfer by Landlord of the Premises, Building or
Project, and assignment of this Lease by Landlord, Landlord shall be and is
hereby entirely freed and relieved of any and all liability and obligations
contained in or derived from this Lease arising out of any act, occurrence or
omission relating to the Premises, Building, Project or Lease occurring after
the consummation of such sale or transfer, providing the purchaser shall
expressly assume all of the covenants and obligations of Landlord under this
Lease. If any security deposit or prepaid Rent has been paid by Tenant.
Landlord may transfer the security deposit or prepaid Rent to Landlord's
successor and upon such transfer, Landlord shall
Landlord /s/ Tenant 23
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be relieved of any and all further liability with respect thereto.
27. DEFAULT.
27.1. Tenant's Default. The occurrence of any one or more of the following
events shall constitute a default and breach of this Lease by Tenant:
a. If Tenant abandons or vacates the Premises; or
b. If Tenant fails to pay any Rent or any other charges required to
be paid by Tenant under this Lease and such failure continues for
five (5) days after such payment is due and payable; or
c. If Tenant fails to promptly and fully perform any other covenant,
condition or agreement contained in this Lease and such failure
continues for fifteen (15) days after written notice thereof from
Landlord to Tenant; or
d. If a writ of attachment or execution is levied on this Lease or on
any of Tenant's Property; or
e. If Tenant makes a general assignment for the benefit of creditors,
or provides for an arrangement, composition, extension or
adjustment with its creditors; or
f. If Tenant files a voluntary petition for relief or if a petition
against Tenant in a proceeding under the federal bankruptcy laws
or other insolvency laws is filed and not withdrawn or dismissed
within forty-five (45) days thereafter, or if under the provisions
of any law providing for reorganization or winding up of
corporations, any court of competent jurisdiction assumes
jurisdiction, custody or control of Tenant or any substantial part
of its property and such jurisdiction, custody or control remains
in force unrelinquished, unstayed or unterminated for a period of
forty-five (45) days; or
g. If in any proceeding or action in which Tenant is a party, a
trustee, receiver, agent or custodian is appointed to take charge
of the Premises or Tenant's Property (or has the authority to do
so) for the purpose of enforcing a lien against the Premises or
Tenant's Property; or
h. If Tenant is a partnership or consists of more than one (1)
person or entity, if any partner of the partnership or other
person or entity is involved in any of the acts or events
described in subparagraphs d through g above.
i. Tenant will be in "Chronic Default" under this Lease if Tenant
commits a default (either a Monetary or Non-Monetary Default)
during any 365-day period in which any of the following
combinations of default has already occurred (even though said
defaults may have been timely cured):
(1) Two Monetary Defaults; or
(2) Three Non-Monetary Defaults; or
(3) One Monetary Default and two Non-Monetary Defaults.
If Tenant is in Chronic Default, Landlord may immediately exercise
any or all remedies available under this Lease or at law or in
equity, all without giving Tenant any notice or an opportunity to
cure the last default causing Tenant's Chronic Default
(notwithstanding any notice and cure provision or other lease
provision to the contrary).
j. For the purposes of subsection i. above,
(1) a Monetary Default occurs if Tenant fails to pay; (i) Base
Rent, Adjusted Rent or Project Operating Costs, or (ii) any
utility charges or other sums due pursuant to this Lease, in
excess of $5,000.00, when due, following any applicable grace
periods granted herein;
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(2) a Non-Monetary Default occurs if Tenant fails to perform any
of its obligations under this Lease other timely payment of
money.
27.2 Remedies. In the event of Tenant's default hereunder, then in addition
to any other rights or remedies Landlord may have under any law,
Landlord shall have the right, at Landlord's option, without further
notice or demand of any kind to do the following:
a. Terminate this Lease and Tenant's right to possession of the
Premises and reenter the Premises and take possession thereof, and
Tenant shall have no further claim to the Premises or under this
Lease; or
b. Continue this Lease in effect, reenter and occupy the Premises for
the account of Tenant, and collect any unpaid Rent or other charges
which have or thereafter become due and payable; or
c. Reenter the Premises under the provisions of subparagraph b, and
thereafter elect to terminate this Lease and Tenant's right to
possession of the Premises.
If Landlord reenters the Premises under the provisions of subparagraphs b or
c above, Landlord shall not be deemed to have terminated this Lease or the
obligation of Tenant to pay any Rent or other charges thereafter accruing,
unless Landlord notifies Tenant in writing of Landlord's election to
terminate this Lease. In the event of any reentry or retaking of possession
by Landlord, Landlord shall have the right, but not the obligation to remove
all or any part of Tenant's Property in the Premises and to place such
property in storage at a public warehouse at the expense and risk of Tenant.
If Landlord elects to relet the Premises for the account of Tenant, the rent
received by Landlord from such reletting shall be applied as follows: first,
to the payment of any indebtedness other than Rent due hereunder from Tenant
to Landlord; second, to the payment of any costs of such reletting; third, to
the payment of the cost of any alterations or repairs to the Premises; fourth
to the payment of Rent due and unpaid hereunder, and the balance, if any,
shall be held by Landlord and applied in payment of future Rent as it becomes
due. If that portion of rent received from the reletting which is applied
against the Rent due hereunder is less than the amount of the Rent due,
Tenant shall pay the deficiency to Landlord promptly upon demand by Landlord.
Such deficiency shall be calculated and paid monthly. Tenant shall also pay
to Landlord, as soon as determined, any costs and expenses incurred by
Landlord in connection with such reletting or in making alterations and
repairs to the Premises, which are not covered by the rent received from the
reletting.
27.3 Should Landlord elect to terminate this Lease under the provisions of
subparagraph a or c above, Landlord may recover as damages from Tenant
the following:
a. Landlord may, at its option, at any time after this Lease is
terminated upon prior written notice to Tenant, require Tenant to
pay Landlord the "Accelerated Rent" due and owing for the remainder
of the Lease Term.
b. The "Accelerated Rent" for purposes of this Section shall be an
amount equal to the Base Rent and Adjusted Rent payable over the
balance of the term of this Lease (as if this Lease hadn't been
terminated) less any sums obtained by Landlord from any reletting.
Nothing herein to the contrary shall require Landlord to relet the
Premises.
c. Any other amount necessary to compensate Landlord for all detriment
proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of things would be
likely to result therefrom, including, but not limited to, any
costs or expenses (including attorneys' fees), incurred by Landlord
in (a) retaking possession of the Premises, (b) maintaining the
Premises after Tenant's default, (c) preparing the Premises for
reletting to a new tenant, including any repairs or alterations,
and (d) reletting the Premises, including broker's commissions.
The waiver by Landlord of any breach of any term, covenant or
condition of this Lease shall not be deemed a waiver of such term,
covenant or condition or of any subsequent breach of the same or
any other term, covenant or condition. Acceptance of Rent by
Landlord subsequent to any breach hereof shall not be deemed a
waiver of any preceding breach other than the failure to pay the
particular Rent so accepted, regardless of Landlord's knowledge of
any breach at the time of such acceptance of Rent. Landlord shall
not be deemed to have waived any term, covenant or condition unless
Landlord gives
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<PAGE>
Tenant written notice of such waiver.
d. In the event of a breach or threatened breach by Tenant of any of
the terms, covenants, conditions, provisions or agreements of this
Lease, Landlord shall have the rights of injunction. Mention in
this Lease of any particular remedy shall not preclude Landlord
from any other remedy, as law or in equity.
e. Tenant hereby expressly waives any and all rights of redemption
granted by or under any present or future law in the event of
Tenant's being evicted or dispossessed for any cause, or in the
event of Landlord's obtaining possession of the Premises, by reason
of the violation by Tenant of any of the terms, covenants,
conditions, provisions or agreements of this Lease, or otherwise.
f. If Tenant notifies Landlord or otherwise unequivocally demonstrates
an intention to repudiate this Lease, Landlord may, at its option,
consider such anticipatory repudiation a breach of this Lease. In
addition to any other remedies available to it hereunder or at
law or in equity, Landlord may retain all rent paid upon execution
of the Lease and the security deposit, if any, to be applied to
damages of Landlord incurred as a result of such repudiation,
including without limitation attorney's fees, brokerage fees, costs
of reletting, loss of rent, etc. It is agreed between the parties
that for the purpose of calculating Landlord's damages, in a
Project which has other available space at the time of Tenant's
breach, the Premises covered by this Lease shall be deemed the last
space rented, even though the Premises may be rerented prior to
such other vacant space. Tenant shall pay, in full, to Landlord,
for all the unamortized costs of tenant improvements constructed or
installed within the Premises to the date of the breach, and for
materials ordered at its request for the Premises.
g. If Tenant vacates or abandons the Premises any property that Tenant
leaves in the Premises shall be deemed to have been abandoned and
may either be retained by Landlord as the property of Landlord or
may be disposed of at public or private sale in accordance with
applicable law as Landlord sees fit. The proceeds of any public or
private sale of Tenant's property, or the then current fair market
value of any property retained by Landlord shall be applied by
Landlord against (i) the expenses of Landlord for removal, storage
or sale of the property; (ii) the arrears of rent or future rent
payable under this Lease; and (iii) any other damages to which
Landlord may be entitled hereunder. Further, Landlord may, upon
presentation of evidence of a claim valid upon its face of ownership
or for security interest in any of Tenant's property abandoned in the
Premises, turn over such property to the claimant with no liability
to Tenant.
27.4. LANDLORD'S DEFAULT. If Landlord fails to perform any covenant,
condition or agreement contained in this Lease within thirty (30) days
after receipt of written notice from Tenant specifying such default,
or if such default cannot reasonably be cured within thirty (30) days,
if Landlord fails to commence to cure within that thirty (30) day
period, then Landlord shall be liable to Tenant for any damages
sustained by Tenant as a result of Landlord's breach; provided,
however, it is expressly understood and agreed that if Tenant obtains a
money judgment against Landlord resulting from any default or other
claim arising under this Lease, that judgment shall be satisfied only
out of the rents, issues, profits, and other income actually received
on account of Landlord's right, title and interest in the Premises,
Building or Project, and no other real, personal or mixed property of
Landlord (or of any of the partners which comprise Landlord, if any)
wherever situated, shall be subject to levy to satisfy such judgment.
If, after notice to Landlord of default, Landlord (or any first
mortgagee or first deed of trust beneficiary of Landlord) fails to
cure the default as provided herein, then Tenant shall have the right to
cure that default at Landlord's expense. Tenant shall not have the
right to terminate this Lease or to withhold, reduce or offset any
amount against any payments of Rent or any other charges due and
payable under this Lease except as otherwise specifically provided
herein.
28. BROKERAGE FEES.
Tenant warrants and represents that it has not dealt with any real estate
broker or agent in connection with this Lease or its negotiation except those
noted in Section 2.c. Tenant shall indemnify and hold Landlord harmless from
any cost, expense or liability (including costs of suit and reasonable
attorney's fees) for any compensation, commission or fees claimed by any
other real estate broker or agent in connection with this Lease or its
negotiation by reason of any act of Tenant.
Landlord /s/ Tenant 26
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29. NOTICES.
All notices, approvals and demands permitted or required to be given under
this Lease shall be in writing and deemed duly served or given if personally
delivered or sent by certified or registered U.S. mail, postage prepaid, and
addressed as follows: (a) if to Landlord, to Landlord's Mailing Address and
to the Building manager, and (b) if to Tenant, to Tenant's Mailing Address;
provided, however, notices to Tenant shall be deemed duly served or given if
delivered or mailed to Tenant at the Premises. Landlord and Tenant may from
time to time by notice to the other designee another place for receipt of
future notices.
30. GOVERNMENT ENERGY OR UTILITY CONTROLS.
In the event of imposition of federal, state or local government controls,
rules, regulations, or restrictions on the use or consumption of energy or
other utilities during the Term, both Landlord and Tenant shall be bound
thereby in the event of a difference in interpretation by Landlord and Tenant
of any such controls, the interpretation of Landlord shall prevail, and
Landlord shall have the right to enforce compliance therewith, including the
right to entry into the Premises to effect compliance.
31. INTENTIONALLY OMITTED.
32. QUIET ENJOYMENT.
Tenant, upon paying the Rent and performing all of its obligations under this
Lease, shall peaceably and quietly enjoy the Premises, subject to the terms of
this Lease and to any mortgage, lease, or other agreement to which this Lease
may be subordinate.
33. OBSERVANCE OF LAW.
Tenant shall not use the Premises or permit anything to be done in or about
the Premises which will in anyway conflict with any law, statute, ordinance
or governmental rule or regulation now in force or which may hereafter be
enacted or promulgated. Tenant shall, at its sole cost and expense, promptly
comply with all laws, statutes, ordinances and governmental rules,
regulations or requirements now in force or which may hereafter be in force,
and with the requirements of any board of fire insurance underwriters or
other similar bodies now or hereafter constituted, relating to, or affecting
the condition, use or occupancy of the Premises, excluding structural changes
not related to or affected by Tenants improvements or acts. The judgment of
any court of competent jurisdiction or the admission of Tenant in any action
against tenant, whether Landlord is a party thereto or not, that Tenant has
violated any law, ordinance or governmental rule, regulation or requirement,
shall be conclusive of that fact as between Landlord and Tenant.
34. FORCE MAJEURE.
Any prevention, delay or stoppage of work to be performed by Landlord or
Tenant which is due to strikes, labor disputes, inability to obtain labor,
materials, equipment or reasonable substitutes therefor, acts of God,
governmental restrictions or regulations or controls, judicial orders, enemy
or hostile government actions, civil commotion, fire or other casualty, or
other causes beyond the reasonable control of the party obligated to perform
hereunder, shall excuse performance of the work by that party for a period
equal to the duration of that prevention, delay or stoppage. Nothing in this
Article 34 shall excuse or delay Tenants obligation to pay Rent or other
charges under this Lease.
35. CURING TENANT'S DEFAULTS.
If Tenant defaults in the performance of any of its obligations under this
Lease, Landlord may (but shall not be obligated to) without waiving such
default, perform the same for the account at the expense of Tenant. Tenant
shall pay Landlord all costs of such performance promptly upon receipt of a
bill therefor.
36. SIGN CONTROL.
Tenant shall comply with all signage requirements set forth in Exhibit "H"
and shall further not affix, paint, erect or inscribe any sign, projection,
awning, signal or advertisement of any kind to any part of the Premises,
Building or Project,
Landlord /s/ Tenant 27
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including without limitation, the inside or outside of windows or doors,
without the written consent of Landlord. Landlord shall have the right to
remove any signs or other matter, installed without Landlord's permission,
without being liable to Tenant by reason of such removal, and to charge the
cost of removal to Tenant as additional rent hereunder, payable within ten
(10) days of written demand by Landlord.
37. NEITHER PARTY IS DRAFTER.
The parties agree that neither party shall be deemed the drafter of this
Lease and that in the event this Lease is ever construed by a court of law or
equity, such court shall not construe this Lease or any provision against
either party as drafter of the Lease. The parties acknowledge that each of
the parties hereto have contributed substantially and materially to the
preparation of this Lease.
38. DISCLOSURE.
Landlord discloses, and Tenant acknowledges, that real estate licensees of
THe MDL Group, of which Curtis W. Anderson is Broker, has an interest as a
principal to this real estate lease.
39. MISCELLANEOUS.
a. ACCORD AND SATISFACTION; ALLOCATION OF PAYMENTS. No payment by
Tenant or receipt by Landlord of a lesser amount than the Rent
provided for in this Lease shall be deemed to be other than on
account of the earliest due Rent, nor shall any endorsement or
statement on any check or letter accompanying any check or payment
as Rent be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlords right to
recover the balance of the Rent or pursue any other remedy provided
for in this Lease. In connection with the foregoing, Landlord shall
have the absolute right in its sole discretion to apply any payment
received from Tenant to any account or other payment of Tenant then
not current and due or delinquent.
b. ADDENDA. If any provision contained in an addendum to this Lease is
inconsistent with any other provision herein, the provision
contained in the addendum shall control, unless otherwise provided in
the addendum.
c. ATTORNEY'S FEES. If any action or proceeding is brought by either
party against the other pertaining to or arising out of this Lease,
the finally prevailing party shall be entitled to recover all costs
and expenses, including reasonable attorneys fees, incurred on account
of such action or proceeding.
d. CAPTIONS, ARTICLES AND SECTION NUMBERS. The captions appearing
within the body of this Lease have been inserted as a matter of
convenience and for reference only and in no way define, limit or
enlarge the scope or meaning of this Lease. All references to
Article and Section numbers refer to Articles and Sections in this
Lease.
e. CHANGES REQUESTED BY LEADER. Neither Landlord nor Tenant shall
unreasonably withhold its consent to changes or amendments to this
Lease requested by the lender on Landlord's interest, so long as
these changes do not alter the basic business terms of this Lease or
otherwise materially diminish any rights or materially increase any
obligations of the party Choice of Law. This Lease shall be construed
and enforced in accordance with the laws of the State.
f. CONSENT. Notwithstanding anything contained in this Lease to the
contrary, Tenant shall have no claim, and hereby waives the right to
any claim against Landlord for money damages by reason of any
refusal, withholding or delaying by Landlord of any consent,
approval or statement of satisfaction, and in such event, Tenant's
only remedies therefor shall be an action for specific performance,
injunction or declaratory judgment to enforce any right such
consent, etc.
g. CORPORATE AUTHORITY. If Tenant is a corporation, each individual
signing this Lease on behalf of Tenant respects and warrants that he
is duly authorized to execute and deliver this Lease on behalf of
Landlord /s/ Tenant 28
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the corporation, and that this Lease is binding on Tenant in
accordance with its terms. Tenant shall, at Landlord's request,
deliver a certified copy of a resolution of its board of directors
authorizing such execution.
h. COUNTERPARTS. This Lease may be executed in multiple counterparts,
all of which shall constitute one and the same Lease.
i. EXECUTION OF LEASE; NO OPTION. The submission of this Lease to
Tenant shall be for examination purposes only, and does not and
shall not constitute a reservation of or option for Tenant to lease,
or otherwise create any interest of Tenant in the Premises or any
other premises within the Building or Project. Execution of this
Lease by Tenant and its return to Landlord shall not be binding on
Landlord, notwithstanding any time interval, until Landlord has in
fact signed and delivered this Lease to Tenant.
j. FURNISHING OF FINANCIAL STATEMENTS; TENANT'S REPRESENTATIONS. In
order to induce Landlord to enter into this Lease Tenant agrees that
it shall promptly furnish Landlord, from time to time, upon
Landlord's written request, with financial statements reflecting
Tenant's current financial condition. Tenant represents and warrants
that all financial statements, records and information furnished by
Tenant to Landlord in connection with this Lease are true, correct
and complete in all respects.
k. FURTHER ASSURANCES. The parties agree to promptly sign all
documents reasonably requested to give effect to the provisions of
this Lease.
l. MORTGAGEE PROTECTION. Tenant agrees to send by certified or
registered mail to any first mortgagee or first deed of trust
beneficiary of Landlord whose address has been furnished to Tenant,
a copy of any notice of default served by Tenant on Landlord. If
Landlord fails to cure such default within the time provided for in
this Lease, such mortgagee or beneficiary shall have an additional
thirty (30) days to cure such default; provided that if such default
cannot reasonably be cured within that thirty (30) day period, then
such mortgagee or beneficiary shall have such additional time to
cure the default as is reasonably necessary under the circumstances.
m. PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all of the
agreements of the parties with respect to any matter covered or
mentioned in this Lease, and no prior agreement or understanding
pertaining to any such matter shall be effective for any purpose. No
provisions of this Lease may be amended or added to except by an
agreement in writing signed by the parties or their respective
successors in interest.
n. RECORDING. Tenant shall not record this Lease without the prior
written consent of Landlord. Tenant, upon the request of Landlord,
shall execute and acknowledge a "short form" memorandum of this
Lease for recording purposes.
o. SEVERABILITY. A final determination by a court of competent
jurisdiction that any provision of this Lease is invalid shall not
affect the validity of any other provision, and any provision so
determined to be invalid shall, to the extent possible, be construed
to accomplish its intended effect.
p. SUCCESSORS AND ASSIGNS. This Lease shall apply to and bind the
heirs, personal representatives, and permitted successors and
assigns of the parties.
q. TIME OF THE ESSENCE. Time is of the essence of this Lease.
r. WAIVER. No delay or omission in the exercise of any right or remedy
of Landlord upon any default by Tenant shall impair such right or
remedy or be construed as a waiver of such default.
s. WAIVER OF JURY TRIAL.
(1) Landlord and Tenant waive any right to a trial by jury in any
action or proceeding based upon,
Landlord /s/ Tenant 29
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<PAGE>
or related to, the subject matter of this Lease. This waiver is
knowingly, intentionally, and voluntarily made by Tenant, and Tenant
acknowledges that neither Landlord nor any person acting on behalf
of Landlord has made any representations of fact to induce this
waiver of trial by jury or in any way to modify or nullify its
effect.
(2) Tenant further acknowledges that he has been represented (or has had
the opportunity to be represented) in the signing of this Lease and
in the making of this waiver by independent legal counsel, selected
of his own free will, and that he has had the opportunity to discuss
this waiver with counsel.
(3) Tenant further acknowledges that he has read and understands the
meaning and ramifications of this waiver provision, and, as evidence
of this fact, signs his initials.
t. PARTIAL INVALIDITY. If any term, covenant, or condition of this Lease or
the application thereof to any person or circumstance is, to any extent,
invalid or unenforceable, the remainder of this Lease, or the application
of such term, covenant or condition to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each term, covenant or condition of this Lease shall
be valid and be enforced to the fullest extent permitted by law.
u. TIME. Time is of the essence of this Lease and each and all of its
provisions in which performance is a factor.
v. CHOICE OF LAW. This Lease shall be governed by the laws of the state in
which the Premises is located.
w. NON-DISCRIMINATION CLAUSE. Tenant herein covenants by and for himself,
his heirs, executors, administrators, and assigns, and all persons
claiming under or through him, and this Lease is made and accepted upon
and subject to the following conditions: That there shall be no
discrimination against or segregation of any person or group of persons
on account of sex, race, color, creed, religion, marital status, national
origin, or ancestry, in the leasing, subleasing, transferring, use, or
enjoyment of the land herein leased nor shall Tenant himself, or any
person claiming under or through him, establish or permit any such
practice or practices of discrimination or segregation with reference to
the selection, location, number, use, or occupancy, of tenants, lessees,
sublessee, subtenants, or vendees in the land herein leased.
x. INDEPENDENTLY PROVIDED SERVICES
(1) THIRD PARTY CONTRACT. This Lease is entirely separate and distinct
from and independent of any and all agreements that Tenant may at any
time enter into with any third party for the provision of services,
which include, but are not limited to, telecommunications, office
automation, repair, maintenance services, computer and photocopying
("Independent Services"). Tenant acknowledges that Landlord has no
obligation of any type concerning the provision of Independent
Services, and agrees that any cessation or interruption of
Independent Services or any other act or neglect by the third party
providing the Independent Services shall not constitute a default or
constructive eviction by Landlord.
(2) INDEMNITY. Tenant agrees, except to the extent of the gross
negligence of Landlord, its partners, employees, agents and/or
assigns, to hold harmless and defend Landlord, its partners,
employees, agents and assigns from any claim Tenant may have arising
in any way out of the provision (or lack thereof) of the Independent
Services which Tenant has contracted to receive from the third
parties.
(3) NO CONSEQUENTIAL DAMAGES. In no event shall Landlord be liable to
Tenant for incidental, consequential, indirect or special damages
(including lost profits) which may arise in any way out of a claim
concerning independent Services.
y. ACT OF LANDLORD. No act or conduct of Landlord, including without
limitation, the acceptance of keys
Landlord /s/ Tenant 30
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to the Premises, shall constitute an acceptance of the surrender of
the Premises by Tenant before the expiration of the Term. Only a
written notice from Landlord to Tenant shall constitute acceptance
of the surrender of the Premises and accomplish a termination of the
Lease. Landlord's consent to or approval of any act by Tenant
requiring Landlord's consent or approval shall not be deemed to
waive or render unnecessary Landlord's consent to or approval of any
subsequent act by Tenant.
Landlord /s/ Tenant 31
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<PAGE>
The parties hereto have executed this Lease as of the dates set forth below.
Date:
- ------------------------------------ ------------------------------------
LANDLORD: TENANT:
- ------------------------------------ ------------------------------------
RAINBOW CORPORATE CENTER TRUE VISION INTERNATIONAL, INC.
LIMITED PARTNERSHIP
By: Corporate Partners, LLC /s/ [illegible]
-------------------------------- ------------------------------------
By: By: [illegible]
-------------------------------- --------------------------------
Title: Title: President
----------------------------- -----------------------------
By:
--------------------------------
Title:
-----------------------------
Landlord Tenant 32
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INTENTIONALLY BLANK
Landlord /s/ Tenant 33
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<PAGE>
EXHIBIT "A"
FLOOR PLAN SHOWING THE PREMISES
To be added at a later date.
Landlord /s/ Tenant 34
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<PAGE>
EXHIBIT "B"
SITE PLAN OF THE PROJECT
Landlord /s/ Tenant 35
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<PAGE>
EXHIBIT "C"
TENANT'S PRELIMINARY SPACE PLAN
To be added at a later date.
Landlord /s/ Tenant 36
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EXHIBIT "D"
RULES AND REGULATIONS
1. Tenant shall not obstruct or interfere with the rights of other tenants of
the building/project, or in any way injure or annoy such tenants or
persons. Tenant will not conduct any activity within the premises, which
will create excessive traffic or noise anywhere in the building/project.
2. Canvassing, soliciting and peddling in the building/project are
prohibited and Tenant shall cooperate to prevent such activities.
3. Tenant shall not bring or keep within the building/project any animal,
bicycle, motorcycle, or other type of vehicle except as required by law.
4. All office equipment and any other device of any electrical or mechanical
nature shall be placed by Tenant in the premises in settings approved by
Landlord, so as to absorb or prevent any vibration, noise, or annoyance.
Tenant shall not construct, maintain, use or operate within the premises,
or elsewhere in the building/project or outside of the building/project
any equipment or machinery which produces music, sound or noise, which is
audible beyond the premises. Tenant shall not cause improper noises,
vibrations or odors within the building/project.
5. Tenant shall not deposit any trash, refuse, cigarettes, or other
substances of any kind within or out of the building/project, except in
the refuse containers provided therefore. No material shall be placed in
the trash boxes or receptacles if such material is of such nature that it
may not be disposed of in the ordinary and customary manner of removing
and disposing of office building/project trash and garbage without being
in violation of any law or ordinance governing such disposal. Tenant
shall be charged the cost of removal for any items left by Tenant that
cannot be so removed. All garbage and refuse disposal shall be made only
through entryways and elevators provided for such purposes and at such
times as Landlord shall designate. Tenant shall not introduce into the
building/project any substance which might add an undue burden to the
cleaning or maintenance of the premises or the building/project. Tenant
shall exercise its best efforts to keep the sidewalks, entrances,
passages, courts, lobby areas, garages or parking areas, elevators,
escalators, stairways, vestibules, public corridors and halls in and
about the building/project (hereinafter referred to as "Common Areas")
clean and free from rubbish. No tenant shall cause any unnecessary labor
by reason of such tenant's carelessness or indifference in the
preservation of good order and cleanliness. Landlord shall not be
responsible to any tenant for any loss of property on the premises,
however occurring, or for any damage done to the effects of any tenant by
the cleaning service or any other employee or any other person.
6. Tenant shall use the Common Areas only as a means of ingress and egress,
and Tenant shall permit no loitering by any persons upon Common Areas or
elsewhere within the building/project. The Common Areas and roof of the
building/project are not for the use of the general public, and Landlord
shall in all cases retain the right to control or prevent access thereto
by all persons whose presence, in the judgement of the Landlord, shall be
prejudicial to the safety, character, reputation or interests of the
building/project and its tenants. Tenant shall not enter or install
equipment in the mechanical rooms, air conditioning rooms, electrical
closets, janitorial closets, or similar areas or go upon the roof of the
building/project without the prior written consent of Landlord. No tenant
shall install any radio or television antenna, loudspeaker, or other
device on the roof or exterior walls of the building/project.
7. Without limitation upon any of the provisions of the Lease, Tenant shall
not mark, paint, drill into, cut, string wires within, or in any way
deface any part of the building/project, without the prior written
consent of Landlord, and as Landlord may direct. Upon removal of any wall
decorations or installments or floor coverings by Tenant, any damage to
the walls or floors shall be re-paired by Tenant at Tenant's sole cost
and expense. Tenant shall not lay linoleum or similar floor coverings so
that the same shall come into direct contact with the floor of the
premises and, if linoleum or other similar floor covering is to be used,
an interlining of builder's deadening felt shall be first affixed to the
floor, by a paste or other materials soluble in water. The use of cement
or other similar adhesive material is expressly prohibited. Floor
distribution boxes for electric and telephone wires must remain
accessible at all times.
Landlord /s/ Tenant 37
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<PAGE>
8. Tenant shall not use the washrooms, restrooms and plumbing fixtures of the
building/project, and appurtenances thereto, for any other purpose than
the purpose for which they were constructed, and Tenant shall not deposit
any sweepings, rubbish, rags or other improper substances therein. Tenant
shall not waste water in interfering or tampering with the faucets or
otherwise. If Tenant's servants, employees, agents, contractors, jobbers,
licensees, invitees, guests or visitors cause any damage to such
washrooms, restrooms, plumbing fixtures, or appurtenances, such damage
shall be repaired at Tenant's expense, and Landlord shall not be
responsible therefore.
9. Subject to applicable fire or other safety regulations, all doors opening
onto Common Areas and all doors upon the perimeter of the premises shall
be kept closed and, during non-business hours, locked; except when in use
for ingress or egress. If Tenant used the premises after regular business
hours or on non-business days, Tenant shall lock any entrance doors to
the building/project or to the premises used by Tenant immediately after
using such doors. Tenants shall cooperate with energy conservation by
limiting use of lights to areas occupied during non-business hours.
10. Employees of Landlord shall not receive or carry messages for or to Tenant
or any other person, nor contract with nor render free or paid services
to Tenant or Tenant's servants, employees, contractors, jobbers, agents,
invitees, licensees, guests or visitors. In the event that any of
Landlord's employees perform any such services, such employees shall be
deemed to be the agents of Tenant regardless of whether or how payment
is arranged for such services, and Tenant hereby indemnifies and holds
Landlord harmless from any and all liability in connection with any such
services and any associated injury or damage to property or injure or
death to person resulting therefrom.
11. All keys to the exterior doors of the premises shall be obtained by
Tenant from Landlord, and Tenant shall pay to Landlord a reasonable
deposit determined by Landlord from time to time for such keys. Tenant
shall not make duplicate copies of such keys. Tenant shall, upon the
termination of its tenancy, provide Landlord with the combinations to all
combination locks on safes, safe cabinets and vaults and deliver to
Landlord all keys to the building/project, the premises and all interior
doors, cabinets, and other key-controlled mechanisms therein, whether or
not such keys were furnished to Tenant by Landlord. In the event of the
loss of any key furnished to Tenant by Landlord, Tenant shall pay to
Landlord the cost of replacing the same or of changing the lock or locks
opened by such lost key if Landlord shall deem it necessary to make such
a change. The word "key" as used here shall refer to keys, keycards, and
all such means of obtaining access through restricted access systems.
12. For purposes hereof, the terms "Landlord", "Tenant", "building/project"
and "premises" are defined as those terms in the Lease to which these
Rules and Regulations are attached. The term "building/project" shall
include the premises, and any obligations of Tenant hereunder with regard
to the building/project shall apply with equal force to the premises and
to other parts of the building/project.
13. These Rules and Regulations are in addition to, and shall not be
construed to in any way modified or amend, in whole or in part, the
agreements, covenants, conditions and provisions of any lease of the
premises in the building/project.
Landlord /s/ Tenant 38
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<PAGE>
EXHIBIT "E"
GUARANTY OF LEASE
IN CONSIDERATION OF, and as an inducement for the granting, execution and
delivery of that certain Lease, covering premises known as Rainbow Corporate
Center, and dated __________, 1999 ("Lease"), between RAINBOW CORPORATE
CENTER LIMITED PARTNERSHIP ("Landlord"), and TRUE VISION INTERNATIONAL, INC.,
("Tenant"), and in further consideration of the sum of One and no/100 Dollars
($1.00), and other good and valuable consideration paid by Landlord to the
undersigned, the undersigned ("Guarantor"), hereby guarantees to the
Landlord, its successors and assigns, the full and prompt payment of rent,
including, but not limited to, the Base Rent, common Area Maintenance
Charges, utility charges, if applicable, Percentage Rent, Adjustment, real
estate taxes and any and all other sums and charges payable by Tenant, its
successors and assigns under the Lease; and the full performance and
observance of all the covenants, terms, conditions and agreements herein
provided to be performed and observed by Tenant, its successors and assigns;
and Guarantor hereby covenants and agrees to and with Landlord, its
successors and assigns, in the payment of any such sums, or in the
performance of any of the terms, covenants, provisions or conditions
contained in the Lease, Guarantor will forthwith pay such rent to Landlord,
its successors and assigns, and any arrears thereof, and will forthwith pay
to Landlord all damages that may arise in consequence of any default by
Tenant, its successors and assigns under the Lease, including, without
limitation, all reasonable attorney's fees incurred by Landlord or caused by
any such default and by the enforcement of this Guaranty of Lease
("Guaranty").
This Guaranty is an absolute and unconditional Guaranty of payment and of
performance. It shall be enforceable against Guarantor, its successors and
assigns, without the necessity for any suit or proceedings on Landlord's part
of any kind or nature whatsoever against Tenant, its successors and assigns,
and without the necessity of any notice of non-payment, non-performance or
non-observance, or of any notice of acceptance of this Guaranty, or of any
other notice or demand to which Guarantor might otherwise be entitled, all of
which Guarantor hereby expressly waives; and Guarantor hereby expressly
agrees that the validity of this Guaranty and the obligations of Guarantor
hereunder shall not in any way be terminated or diminished, affected or
impaired by reason of the assertion or the failure to assert by Landlord
against Tenant, or Tenant's successors and assigns, of any of the rights or
remedies reserved to Landlord pursuant to the provisions of the lease.
The Guaranty shall be a continuing Guaranty, and the liability of
Guarantor hereunder shall in no way be affected, modified, or diminished by
reason of any assignment, renewal, modification or extension of the Lease or
by reason of any modification or waiver of or change in any of the terms,
covenants, conditions or provisions of said Lease, or by reason of any
extension of time that may be granted by Landlord to Tenant, its successors
or assigns, or by reason of any dealings or transactions or matters or things
occurring between Landlord and Tenant, its successors or assigns, whether or
not notice thereof is given to Guarantor.
Notwithstanding anything contained in this Guaranty to the contrary, this
Guaranty (and the liability of the Guarantor herein) shall cease and
terminate upon the happening of the earlier of: (i) the expiration of three
(3) years from the Commencement Date, or (ii) the successful funding, to the
Tenant, of a minimum of Five Million Dollars and no/100 ($5,000,000.00) from
its anticipated offering (as evidenced by documentation reasonably acceptable
to Landlord).
All terms used herein and not otherwise defined shall have the same
meaning as given to them in the Lease.
If the Lease shall be renewed, or its term extended, or if the Tenant
holds over beyond the term of the Lease, the obligations hereunder of
Guarantor shall extend and apply for any period beyond the date specified in
the Lease for the expiration of said term, either pursuant to any option
granted under the Lease or otherwise, the obligations hereunder of Guarantor
shall extend and apply with respect to the full and faithful performance and
observance of all of the covenants, terms, and conditions of the Lease and of
any such modification thereof.
Guarantor does not require any notice of Tenant's non-payment,
non-performance, or non-observance of the covenants, terms, and conditions of
the Lease. Guarantor hereby expressly waives the right to receive such notice.
Insofar as the payment by Tenant of any sums of money to Landlord is
involved, this Guaranty is a guaranty of payment and not of collection, and
shall remain in full force and effect until payment in full to Landlord of
all sums payable under the Lease. Guarantor waives any right to require that
any action be brought against Tenant.
Landlord /s/ Tenant 39
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<PAGE>
Guarantor waives any right to require that resort be had to any security
or to any other credit in favor of Tenant.
Guarantor expressly agrees (without in any way limiting its liability
under any other provision of this Guaranty) that Guarantor shall, at the
request of Landlord, enter into a new lease with Landlord on the same terms
and conditions as contained in the Lease immediately prior to its
termination, for a term commencing of the termination date of the Lease and
ending on the expiration date of the Lease. If the Lease shall be terminated
due to a default by Tenant thereunder.
Neither Guarantor's obligation to make payment in accordance with the
terms of this Guaranty nor any remedy for the enforcement thereof shall be
impaired, modified, released, or limited in any way by any impairment,
modification, release, or limitation of the liability of Tenant or its estate
in bankruptcy, resulting from the operation of any present or future
provision of the Bankruptcy Code of the United States or from the decision of
any court interpreting the same.
If applicable, Guarantor represents and warrants this Guaranty has been
duly authorized by all necessary corporate action on Guarantor's part, has
been duly calculated and delivered by a duly authorized officer, and
constitutes Guarantor's valid and legally binding agreement in accordance
with its terms.
The liability of Guarantor is coextensive with the of Tenant and also
joint and several, and action may be brought against Guarantor and carried to
final judgment either with or without making Tenant a party thereto.
Until all of Tenant's obligations under the Lease are fully performed,
Guarantor (a) waives any rights that Guarantor may have against Tenant by
reason of any one or more payments or acts in compliance with the obligations
of Guarantor under this Guaranty, and (b) subordinates any liability or
indebtedness of Tenant held by Guarantor to the obligations of Tenant to
Landlord under this Lease.
Guarantor waives the benefit of any statute of limitations affecting
Guarantor's liability under this Guaranty.
The Lease and this Guaranty shall be governed by, interpreted under the
laws of, and enforced in the courts of the title of the premises.
Guarantor irrevocably appoints Tenant as its agent for service of
process related to this Guaranty.
Guarantor hereby waives the right to trial by jury in any action or
proceeding that may hereafter be initiated by Landlord against Guarantor in
respect of this Guaranty.
Guarantor will pay to Landlord all of Landlord's expenses, including, but
not limited to, attorneys' fees incurred in enforcing this Guaranty.
This Guaranty and the Lease embodies the entire Agreement between the
parties relating to the subject matter contained herein. There are no
representations, promises, warranties, understandings or agreements, express
or implied, or otherwise, except for those expressly referred to or set forth
herein or in the Lease. No modification of this Guaranty or the Lease shall
be binding unless evidenced by an Agreement in writing signed by both
Landlord and Guarantor.
Guarantor hereby expressly waives any and all benefit it may have
pursuant to any statute that requires enforcement of any obligation under the
Lease to be made against Tenant and Tenant's property prior to enforcement of
any obligation under the Lease against Guarantor or Guarantor's property.
All of Landlord rights and remedies under this Guaranty are intended to
be distinct, separate and cumulative and no such right and remedy therein or
herein mentioned is intended to be in exclusion of or a waiver of any of the
others.
GUARANTOR:
By:
----------------------------
Title: ADDRESS:
-------------------------
Landlord /s/ Tenant 40
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By:
- ------------------------------- --------------------------------
- -------------------------------
Title:
- ------------------------------- -----------------------------
TELEPHONE NUMBER: ADDRESS:
- ------------------------------- -----------------------------------
-----------------------------------
-----------------------------------
SOCIAL SECURITY NUMBER: TELEPHONE NUMBER:
- ------------------------------- -----------------------------------
SOCIAL SECURITY NUMBER:
-----------------------------------
Landlord /s/ Tenant 41
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EXHIBIT "J"
RENEWAL OPTION
If, immediately prior to the expiration of the initial term of this Lease,
this Lease shall be in force and effect and provided that Tenant, not less
than six (6) months prior to the expiration of such term, shall have given to
Landlord written notice of Tenant's desire to renew this Lease, the giving of
such notice by Tenant shall be effective to renew this Lease and extend the
term hereof as to the premises and, without the necessity for execution of
any further instrument by either party, for an additional two (2) lease terms
of five (5) years each (the "Renewal Term(s)") from and after the expiration
of said initial term (or the then prior Renewal Term). The Renewal Term(s)
shall be on the same covenants, agreements, terms, provisions and conditions
as are contained herein for the initial term except Tenant shall have no
further right to extend the term of this Lease. Base Rent for each year
during the entirety of such Renewal Term(s) on the premises shall, however,
be at the "Renewal Rate" (as hereinafter defined).
The "Renewal Rate" for purposes of calculating annual Base Rent payable
during such Renewal Term(s) shall be the amount equal to the total rent being
paid at the time of the expiration of the then preceding term (whether the
initial term or a prior Renewal term) plus the Cost of Living Adjustment plus
all other sums to be paid to Landlord by Tenant pursuant to the Lease. In no
event shall the total rent during any year of any Renewal Term(s) be less
than the total rent paid during the prior preceding year.
Upon request at any time within ninety (90) days preceding the date
prescribed for exercise of any option to extend this Lease, Landlord agrees
to furnish to Tenant upon its written request all data and information to the
extent that same is in possession of Landlord or its agents and to the extent
necessary or proper for Tenant to determine the probable rental rate for
Renewal Term(s). If at the time Tenant gives notice of its desire to renew
this Lease for the Renewal Term(s), Landlord should allege that Tenant is not
then entitled to exercise such renewal option by reason of any default in the
performance of Tenant's obligations hereunder existing at such time, then
Landlord must, within ten (10) days after receipt by Landlord of notice of
Tenant's desire to renew and extend the term of this Lease, give Tenant
written notice specifying the alleged default on the part of Tenant, an
Tenant shall thereupon have thirty (30) days from the receipt of such notice
from Landlord (plus such additional reasonable period of time as may be
required with respect to those items, which, by their very nature, cannot be
cured within such thirty [30] day period) within which to remedy such alleged
default, and if Tenant shall have cured all such defaults within the said
respective time periods allowed, then the previous existence of such default
shall not constitute a reason for invalidating Tenant's notice to exercise
its renewal option.
At any time after Tenant has exercised its option to extend this Lease for
the Renewal Term(s), Landlord and Tenant, upon request of either, will sign
and acknowledge a written memorandum evidencing such facts, setting out the
date to which such Renewal Term(s) will extend, and the rental rates which
will be applicable during such Renewal Term(s). The rental rates applicable
during such Renewal Term(s) shall be the Renewal Rate which shall be subject
to adjustments during the Renewal Term(s) on account of changes in Ad
Valorero Tax Factor or Operating Expense Factor during such Renewal Term(s).
Landlord /s/ Tenant 42
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EXHIBIT "G"
COMMENCEMENT LETTER
The Commencement date of that Lease by and between RAINBOW CORPORATE
CENTER LIMITED PARTNERSHIP as Landlord and TRUE VISION INTERNATIONAL, INC.,
as Tenant, is hereby acknowledged and agreed to be _________.
Accordingly, the Expiration Date is acknowledged and agreed to be
__________.
LANDLORD:
RAINBOW CORPORATE CENTER
LIMITED PARTNERSHIP
By: Corporate Partners, LLC
By:
------------------------------
Its:
------------------------------
TENANT:
TRUE VISION INTERNATIONAL, INC.
By:
------------------------------
Its:
------------------------------
Landlord /s/ Tenant 43
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EXHIBIT "H"
SIGNAGE CRITERIA
GENERAL
Signs are not only effective as Tenant identification but are a source
of interest, excitement and good advertising when designed with taste and in
harmony with the design standards of the office complex. The sign regulations
herein have been set up for the purpose of achieving the best possible effect
for office identification and overall design, while allowing each tenant
creativity within the limits of their leasehold. Experience has proven that
all Tenants in the building benefit by the establishment of sign controls
such as herein set forth.
1. APPROVALS
A. The design and construction of Tenant's exterior sign MUST receive
written approval by Landlord prior to fabrication and installation.
Landlord's approval shall be based on:
1) Conformity to the sign criteria established for the building,
including fabrication and method of installation.
2) Harmony of the proposed sign with design standards of the building
and co-tenants.
Landlord has the specific right to refuse approval of any sign which
does not conform to the specific criteria set forth herein.
B. Unless Landlord and design consultant have both received the above
described plans in the quantities set forth above, Landlord will not
approve Tenant's exterior sign.
The sign drawings are to be prepared by a reputable STATE licensed
sign contractor. The sign drawings must indicate the following
information:
1) A scaled storefront drawing reflecting the proposed sign design
and all dimensions, as it relates to the storefront elevation of
tenant's premises.
2) A plot plan and elevation indicating location of Tenant's sign.
C. All drawings marked "Disapproved" or "Approved as Noted" must be
re-submitted as here and above set forth in Paragraph "B" with
required corrections. Tenant or it's sign contractor will not be
permitted to commence installation of the exterior sign, unless the
following conditions have occurred:
1) A stamped set of the final sign drawings reflecting Landlord or
Landlord's design consultant's approval are retained at tenant's
premises at all times during the installation of design and for a
period of thirty (30) days thereafter.
2) Tenant and/or tenants sign contractor shall obtain all necessary
permits and approvals.
Landlord /s/ Tenant 44
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<PAGE>
II. GENERAL SIGN CRITERIA AND RESTRICTIONS
A. All tenant signage shall be located only on the space and on the
surface specially provided for same on the building exterior. No
other signage is permitted on the exterior of the premises. Tenants
with a corner unit may be permitted additional signage providing
secondary signage does not exceed size of primary sign, the total
does not exceed the maximum allowed by City codes and Landlord grants
approval.
B. Tenant is responsible to field verify that Tenant's proposed signage
will fit attractively on Tenant's signband area prior to fabrication
of signage. Signable area shall be centered on the fascia vertically
and horizontally, except in cases where available storefront has been
divided to allow equal signage for Tenants.
C. The face colors and type styles of all signs shall be subject to
Landlord's approval. In the event the Tenant does not have an
established exterior sign identity, Landlord recommends that the
lettering style be designed by the sign contractor to reflect a
visually exciting look. Established trade logos and signage shall be
permitted providing they conform to the criteria described herein.
D. The Tenant shall pay for all signs, their installation (including
final connection, transformers and all other labor and materials)
and maintenance. Tenant sign contractor must file, pay for and obtain
any licenses, permits and variances as required for sign installation.
Landlord /s/ Tenant 45
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<PAGE>
EXHIBIT "I"
TENANT ESTOPPEL LETTER
___________________________ (Lender)
___________________________
___________________________
___________________________
___________________________
Attention:
RE: Lease between ______________________________________ as LANDLORD and
_______________________________ as TENANT, dated ___________________
on property known as _____________________________________located at
_______________________________________________, Nevada.
Dear Sirs/Madam:
The undersigned, as Tenant(s) under the subject Lease, understands that
you (Lender) are or will be making a mortgage loan to Landlord which will be
secured by property, including the Premises of the subject Lease, and hereby
certifies, represents, warrants, confirms and agrees with you as follows for
your reliance of your successors and assigns:
1. That the undersigned has accepted possession and is in actual occupancy
of the Premises of the subject Lease;
2. That the Premises of the subject Lease are fully open for business and
are in use by the undersigned, its employees and invitees;
3. That any and all improvements and space required to be furnished by
Landlord according to the subject Lease have been completed in all
respects and accepted by the undersigned;
4. That Landlord has completely fulfilled all of Landlord's duties and
obligations of an inducement nature;
5. That the subject Lease has not been modified, altered, amended, changed,
supplemented, terminated, or superseded in any manner except as follows:
(Write "NONE" if there are none);
6. That the subject Lease sets forth all agreements and understandings of
Landlord and the undersigned, as Tenant;
7. That there are no offsets or credit against rentals, that there are no
claims or defenses to enforcement of the subject Lease, that rentals have
not been prepaid except as provided by the subject Lease terms;
8. That no broker or other intermediary is entitled to receive any leasing,
brokerage or other compensation out of or with respect to rentals of any
kind under the subject Lease;
9. That the undersigned has no notice of a prior sale, transfer, assignment,
hypothecation or pledge of the subject Lease or rents thereunder.
10. That the term of the subject Lease is for _______________ (______) years.
The primary Lease term commenced on ________________________ and expires
on ________________________.
11. That the monthly rental is __________________________________________ and
____/100 Dollars ($_________), and rent has been paid to _________________.
12. That the undersigned hereby acknowledges and agrees that existing parking
facilities meet the requirements of
Landlord /s/ Tenant 46
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<PAGE>
the subject Lease;
13. That the undersigned agrees to notify you at the above shown address,
or such address as you may hereafter specify, of any material default
on the part of Landlord after the date hereof unless the undersigned
is advised by you that the contemplated mortgage loan from you to
Landlord will not be made;
14. That the undersigned agrees that without your written consent, the
undersigned will not: (a) modify or in any manner alter the terms for
the subject Lease; (b) pay the rent or any other sums becoming due
under the terms of the subject Lease more than two (2) months in
advance; or (c) accept Landlord's waiver of or release from the
performance of any obligations of Tenant under the subject Lease;
15. That should you advise the undersigned that Landlord is in default in
the indebtedness to you and request that payment of all future rentals
be made directly to you pursuant to an Assignment of Leases and Rents,
the undersigned agrees that the undersigned agrees that the undersigned
shall make all future rental payments under the subject Lease directly
to you until instructed otherwise by you;
16. That the undersigned will in no event look to you for the return of any
Security Deposit under the subject Lease, except as is actually
received by you. Pursuant to the subject Lease, Tenant has not made a
Security Deposit;
17. That none of the following events have occurred: (a) the filing by or
against the undersigned of a petition in bankruptcy, insolvency,
reorganization, or an action for the appointment of a receiver or
trustee; or (b) the making of an assignment for the benefit of
creditors;
18. That the subject Lease is in full force and effect, is not in default,
and is hereby ratified and confirmed;
19. That at the date hereof, there are no defaults by Landlord or the
undersigned, as Tenant, in their respective performances of any of the
agreements, duties, obligations, terms and conditions of the subject
Lease by then respectively to be performed which exist on the date
hereof, and that no event has occurred which, after the passage of time
or after the expiration of any grace period, right of cure period, or
any other period provided by law or by the Lease, would constitute a
default under the subject Lease;
20. That the undersigned has not subleased or assigned, whether outright
or by collateral assignment, all or any portion of the undersigned's
rights under the subject Lease;
21. That the entity, person and/or officer executing this certification is
empowered by action, resolution or at law to execute the same, and this
certificate shall be binding on the undersigned, its successors and
assigns.
TENANT: __________________________________
By: ______________________________
Name: ____________________________
Its: _____________________________
Date: ____________________________
Landlord /s/ Tenant 47
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<PAGE>
EXHIBIT "J"
CORPORATE RESOLUTION OF TENANT
RESOLVED, that _____________________________, the ______________________ of the
corporation and/or ______________________, the _________________________ of
the corporation are hereby authorized to sign on behalf of _______________ a
Nevada Corporation, the leases between ______________________________________
a Nevada Corporation and ______________________________________________.
I hereby certify that the above resolution was duly passed at a special
and/or general meeting of the Board of Directors of _________________________,
a Nevada Corporation, held on ___________________________________________, at
which were present and voting, a majority of the directors; that the resolution
has not been altered or amended subsequent to its adoption; and that said
resolution is now in full force and effect.
By:
------------------------------------
Secretary
Date:
----------------------------------
ATTEST: [illegible]
---------------------------
President
Date: 8/9/99
-----------------------------
Landlord /s/ Tenant 48
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<PAGE>
EXHIBIT "K"
WORK LETTER
1. Landlord's Standard improvements:
a. Partitions: 3 5/8" metal studs (25 ga.)
b. Wall Surfaces: 5/8" type "x" Sheetrock both sides with one coat
primer and one coat finish semi-gloss enamel
c. Draperies: Vertical blinds-building standard color
d. Carpeting: Shaw 30 oz. or equal
e. Doors: 3' 8'-1 3/4" solid core natural birch with KD painted metal
frames
f. Electrical and Telephone Outlets: per Tenant requirements
g. Ceiling: 2x4-15/16" white Armstrong or equal ceiling grid with
Armstrong "second look" trguial tiles
h. Lighting: per Tenant requirements
i. Heating and Air Conditioning Ducts: water source heat pumps with
flex ducting as required
j. Sound Proofing: R-11 sound batt-per Tenant requirements
k. Plumbing: Kohler or equal per Tenant requirements
l. Entrance Doors: 3'8' - 1 3/4" solid natural birch with KD metal
frames
2. Preparation of Plans and Specifications:
Within 14 days after the date of this Lease Tenant shall prepare,
at its cost, and deliver to Landlord for its approval three (3) copies
of preliminary plans and specifications for the completion of the
"Tenant's Work" and the Premises, which plans and specifications shall
itemize the work to be done by each party, including a cost estimate
any work required of Landlord in excess of Landlord's Standard
Improvements. Landlord shall approve said preliminary plans and
specifications and preliminary cost estimate or specify with
particularity its objection thereto within ten (10) days following
receipt thereof. Failure to so approve or disapprove within said period
of time shall constitute approval thereof. If Landlord shall reject
said preliminary plans and specifications either partially or totally
and they cannot in good faith be modified within ten (10) days after
such rejection to be acceptable to Landlord, this Lease shall terminate
and neither party shall thereafter be obligated to the other party for
any reason whatsoever having to do with this Lease, except that Tenant
shall be refunded any security deposit or prepaid rent. The plans and
specifications, when approved by Lessee, shall supersede any prior
agreement concerning improvements.
3. Construction:
If Landlord's cost of constructing all of the improvements in the
Premises (including Landlord's Standard Improvements) exceeds the cost
of $30.00 per rentable sq. ft. ("Improvement Allowance"), Tenant shall
pay to Landlord, in cash, before the commencement such construction a
sum equal to such excess over the Improvement Allowance.
If the final plans and specifications are approved by Landlord and
Tenant and Tenant pays Landlord such excess over the Improvement
Allowance, then Landlord shall construct Landlord's Standard
Improvements and the improvements specified as Landlord's responsibility
under the Plans and specifications substantially in accordance with the
said approved final plans and specifications an
Landlord /s/ Tenant 49
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<PAGE>
all applicable rules, regulations laws or ordinances.
4. Completion:
Tenant shall obtain a building permit to construct the
improvements as soon as possible.
The term "completion" as used in this Work Letter, is hereby
defined to mean date the building department of the municipality
having jurisdiction over the Premises shall have made a final
inspection of the improvements and authorized a final release of
restrictions on the use of public utilities connection therewith
and the same are in broom-clean condition.
If Landlord shall be delayed at any time in the progress of the
construction of the improvements or any portion thereof by extra work,
changes in construction ordered by Tenant, or by strikes, lockouts, fire,
delay in transportation, unavoidable casualties, rain or weather
conditions, governmental procedures or delays, or by any other cause
beyond Landlord's control, then the Commencement Date established in
Section 2.d of the Lease shall be extended by the period of such delay.
5. Work done by Tenant:
Any work done by Tenant shall be done only with Landlord's prior
written consent and; (i) in conformity with this Lease; (ii) a valid
building permit; (iii) in compliance with all applicable rules,
regulations, laws ordinances; (iv) be done in a good and workmanlike
manner of good and sufficient materials. All work shall be done by
contractors approved by Landlord, it being understood that all plumbing,
mechanical, electrical wiring and ceiling work are to be done only by
contractors designated by Landlord.
6. Construction Rules:
The Tenant's Contractors and subcontractors are required to check
in with the Landlord's Property Manager for instructions and coordination
prior to going on the site.
All Tenant Contractors are to comply with Project rules and
regulations as set forth by Landlord.
Tenant's Contractors will not be permitted to start work until they:
Have all necessary building permits and have posted such permits
on the wall in the Tenant's space.
Furnish proper evidence of required insurance coverage.
Sign for and take possession of keys to service doors of
premises (if any) and acknowledge proper installation and
operation of said service door.
Furnish names and phone numbers (office and home) of
contractor's supervisory personnel.
Have a set of Landlord approved drawings in the space at all
times.
Acknowledge receipt of a copy of these Construction Rules.
Furnish proper evidence that all fees and/or deposits required
to commence work have been fully paid.
All contractors are required to furnish the Landlord's Property
Manager with certificates showing evidence of the following insurance
coverage prior to commencing any work.
The Insurance shall: (i) be issued by insurance companies authorized
to do business in the State of Nevada with a current financial rating
of at least an A-Class XV or better as rated in the most recent
edition of Best's Key Rating Guide; (ii) be issued as a primary
policy; (iii) contain an endorsement requiring thirty (30) days
written notice from the insurance company to Landlord before
cancellation or material change and, (iv) shall be written with
minimum coverage's and
Landlord /s/ Tenant 50
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<PAGE>
limits as required by law and the following:
"All risk" builders' risk insurance in an amount equal to 100% of
the replacement cost of the improvements on a non-reporting,
completed value basis, coverage against the perils or damage
resulting from water damage;
Owner's Protective Liability Insurance in an amount of not less
than $1,000,000 naming Landlord as a Named Insured;
Unless otherwise waived, in writing, by Landlord, a performance
bond from Tenant's general contractor in an amount equal to the
contract sum or contract amount set forth in the construction
contract between Tenant and its general contractor providing for
the construction;
Independent Contractors coverage; and
All other insurance and is reasonably required by Landlord or as
is customarily carried by contractors in the Las Vegas, Nevada area.
Landlord /s/ Tenant 51
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<PAGE>
ADDENDUM #1
This is ADDENDUM 1 to the LEASE by and between RAINBOW CORPORATE LIMITED
PARTNERSHIP (hereinafter known as "Landlord") and TRUE VISION LASER CENTERS,
INC. (hereinafter known as "Tenant") dated __________, 1999.
1. TYPE OF LEASE:
This is a Modified Gross Lease. Tenant shall pay for their own utility
charges and janitorial within their premises,
2. BASE RENT: (subject to adjustment as described in Section 1. of the Lease)
3. ESCALATIONS;
Base rent shall escalate annually per the Consumer Price Index, U.S. All
Cities Average with a Floor of three percent (3%) and a ceiling of five
percent (7%).
4. RENT ABATEMENT:
During the time period to commence with breaking ground for the parking
garage, to a date thirty (30) days after the completion of the parking garage.
Tenant shall be entitled to a rent credit equal to fifty percent (50%) of the
rent otherwise due and payable, such credit not to exceed fifty percent (50%)
of six (6) months rent.
5. SIGNAGE:
Tenant shall be allowed to place signage on the south, east and west building
fascia surface area at a level above the second floor, size to allow maximum
visibility consistent with space available on the fascia area of the
building. Landlord will respond with size, location, style and color of the
signs prior to the execution of the Lease Document.
6. PARKING:
Parking ratio will be approximately 5:1000 per square foot of the rentable
area. Tenant shall be required to take two (2) covered garage parking spaces
per 1,000 useable square feet at an initial rate of Forty and no/100 dollars
($40.00) per space, per month, or such rental rate as Landlord shall
determine from time to time. Tenant shall be provided with two exclusive
patient parking spaces near the elevator entrance of the Building as
designated by Landlord.
7. TENANT'S EXTERIOR ENTRANCE:
Landlord will allow Tenant, at tenant's cost, to expand single-glass door
entrance on the north end of the first floor, to a double-glass door entrance.
Landlord will allow appropriate signage above such entrance at Tenant's
expense, subject to Landlords approval. Tenant will also have its standard
entrance off main hall of first floor.
6. SUBCONTRACTORS:
Notwithstanding anything to the contrary set forth in Section 11.b. of the
Lease, Landlord's contractor shall act as the general contractor for the
construction of the improvements and shall use those certain subcontractors
designated by Tenant for the design, construction and/or installation of
Tenant's work; provided however, that (i) such subcontractor's are first
approved by Landlord's contractor, which approval shall not be unreasonably
withheld, and (ii) such subcontractors are duly licensed in Nevada (if
required), and (iii) such subcontractors carry worker's compensation and
liability insurance as is customary in the Las Vegas, Nevada area, and, (iv)
any delays in delivering the Premises to Tenant by the Commencement Date
which are caused by such subcontractors shall not cause this Lease to be
terminated nor shall any rent be abated from the Commencement Date until
possession is actually given.
9. AMERICANS WITH DISABILITIES ACT:
Landlord /s/ Tenant 52
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<PAGE>
Please be advised that an owner or tenant of real property may be subject to
the American With Disabilities Act (the ADA), a Federal law codified at 42
USC Section 12101 et seq. Among other requirements of the ADA that could
apply to your property, Title III of the ADA requires owners and tenants of
"public accommodations" to remove barriers to access by disabled persons and
provide auxiliary aids and services for hearing, vision or speech impaired
persons by January 28, 1992. The regulations under Title III of the ADA are
codified at 28 CFR Part 38.
We recommend that you and your attorney review the ADA and the regulations,
and, if appropriate, your proposed lease or purchase agreement to determine
if this law would apply to you, and the nature of the requirements. These are
legal issues. You are responsible for conducting your own independent
investigation of these issues. CB Richard Ellis cannot give you legal advice
on these issues.
10. HAZARDOUS WASTE:
Landlord agrees to disclose to Broker and to prospective tenants any and all
information which Landlord has regarding present and future zoning and
environmental matters affecting the Property and regarding the condition of
the Property, including, but not limited to structural, mechanical and soils
conditions, the presence and location of asbestos, PCB transformers, other
toxic, hazardous or contaminated substances, and underground storage tanks
in, on, or about the Property. Broker is authorized to disclose any such
information to prospective purchasers/tenants/subtenants.
AGREED AND ACCEPTED:
LANDLORD: TENANT:
RAINBOW CORPORATE CENTER LIMITED TRUE VISION INTERNATIONAL, INC.
PARTNERSHIP
BY: Corporate Partners, LLC.
BY: BY: [ILLEGIBLE]
-------------------------------- ------------------------------------
TITLE: TITLE: PRESIDENT
----------------------------- ---------------------------------
DATED: BY:
----------------------------- ------------------------------------
TITLE:
---------------------------------
DATED: 8/9/99
---------------------------------
Landlord /s/ Tenant 53
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<PAGE>
EXHIBIT 10.34
---------------------------------------------------------
---------------------------------------------------------
STOCK PURCHASE AGREEMENT AND PLAN OF REORGANIZATION
Dated February 23, 1998
by and among
TOP FORM, INC.,
TRUEVISION LASER CENTERS OF ALBUQUERQUE, INC.
and
TRUEVISION LASER CENTERS, INC., One of Its Shareholders
---------------------------------------------------------
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<PAGE>
TABLE OF CONTENTS
INTRODUCTION .............................................................5
RECITALS..................................................................5
ARTICLES I. PLAN OF REORGANIZATION........................................5
1.01 Sale and Transfer of TrueVision Albuquerque Stock...............5
1.02 Consideration...................................................5
1.03 Assignment of Contracts and Assumption of
Obligations.....................................................6
1.04 Plan of Reorganization..........................................6
ARTICLE II. CLOSING.......................................................6
2.01 Closing Date....................................................6
2.02 Delivery........................................................6
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS...............7
3.01 Title to Shares.................................................7
3.02 Authorization...................................................7
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF TRUEVISION
ALBUQUERQUE...............................................................7
4.01 Organization....................................................8
4.02 Capitalization..................................................8
4.03 TrueVision Albuquerque Subsidiaries.............................8
4.04 Validity of Agreement...........................................8
4.05 TrueVision Albuquerque Financial Statements.....................8
4.06 Events Since Date of TrueVision Albuquerque Balance Sheet.......9
4.07 Properties.....................................................11
4.08 Accounts Receivable............................................11
4.09 Taxes..........................................................12
4.10 Compensation...................................................12
4.11 Compliance with Law............................................12
4.12 Litigation.....................................................13
4.13 Contracts......................................................13
4.14 Real Property..................................................14
4.15 Proprietary Rights.............................................15
<PAGE>
4.16 Toxic Wastes; Employee Safety, etc.............................15
4.17 Insurance......................................................15
4.18 Bank Accounts..................................................16
4.19 No Conflict....................................................16
4.20 No Default.....................................................16
4.21 Certain Advances...............................................16
4.22 Related Parties................................................17
4.23 Copies of Certain Documents....................................17
4.24 Underlying Documents...........................................17
4.25 Disclosure.....................................................17
4.26 Effect of Agreement............................................17
4.27 Indemnification of Top Form....................................18
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF TOP FORM.....................19
5.01 Organization...................................................19
5.02 Validity of Agreement..........................................19
5.03 Effect of Agreement............................................19
5.04 Top Form Corporae Documents....................................19
5.05 Top Form Interim Finanical Statements..........................20
5.06 Adverse Changes................................................20
5.07 Registration of Top Form Common................................20
5.08 Shares of Top Form Common Stock................................21
5.09 Top Form Board Action..........................................21
5.10 Subsequent Private Placement of Top Form Common................21
5.11 Indemnification of TrueVision Albuquerque and
the Shareholder................................................21
ARTICLE VI. ACCESS TO INFORMATION; CONFIDENTIALITY........................22
6.01 Access.........................................................22
6.02 Confidentiality................................................23
ARTICLE VII. COVENANTS OF TRUEVISION ALBUQUERQUE AND CERTAIN
SHAREHOLDERS..............................................................23
7.01 Conduct of Business............................................23
7.02 Notice of Certain Adverse Changes, Defaults
or Claim.......................................................24
7.03 Actions Requiring Consent......................................24
7.04 Implementation of Representations and Warranties...............24
7.05 Communications.................................................24
7.06 Other Negotiations.............................................24
7.07 Cooperation....................................................25
<PAGE>
ARTICLE VIII. COVENANTS OF TOP FORM.......................................25
8.01 Implementation of Representations and Warranties...............25
8.02 Communications.................................................25
8.03 Options and Warrants...........................................25
8.04 Additional SEC Documents.......................................26
ARTICLE IX. SECURITIES LAW MATTERS........................................26
9.01 Securities Act Exemptions......................................26
9.02 Stock Restrictions.............................................26
9.03 Other Securities Qualifications................................26
9.04 Representations of Top Form....................................26
9.05 Legend Restrictions............................................27
ARTICLE X. CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDER...................27
10.01 Accuracy of Representations and Warranties.....................27
10.02 Fulfillment of Covenants.......................................27
10.03 Approval of Sale...............................................27
10.04 No Litigation..................................................27
ARTICLE XI. CONDITIONS TO OBLIGATIONS OF TOP FORM.........................28
11.01 Accuracy of Representations and Warranties.....................28
11.02 Fulfillment of Covenants.......................................28
11.03 Approval of Sale...............................................28
11.04 Consents Obtained..............................................28
11.05 No Litigation..................................................28
11.06 Accountant's Review............................................28
11.07 Accounting Treatment...........................................29
11.08 Top Form Review................................................29
11.09 Resignation of Directors.......................................29
11.10 Sale of TrueVision Albuquerque Stock...........................29
ARTICLE XII. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS............................................................29
ARTICLE XIII. PAYMENT OF EXPENSES.........................................29
13.01 Expenses.......................................................29
13.02 Brokers........................................................30
ARTICLE XIV. GENERAL PROVISIONS...........................................30
<PAGE>
14.01 Notices........................................................30
14.02 Headings.......................................................31
14.03 Counterparts...................................................31
14.04 Assignment.....................................................31
14.05 Waiver.........................................................31
14.06 Entire Agreement...............................................31
14.07 Good Faith.....................................................31
14.08 Applicable Law.................................................32
14.09 Severability...................................................32
SCHEDULE OF EXHIBITS......................................................33
<PAGE>
STOCK PURCHASE AGREEMENT AND PLAN OF REORGANIZATION
THIS STOCK PURCHASE AGREEMENT is made and entered into as of the twenty
third day of February, 1998, by and among Top Form, Inc., a Delaware
corporation ("Top Form"); TrueVision Laser Centers of Albuquerque, Inc., a
New mexico corporation ("TrueVision Albuquerque"); and the majority
shareholder of TrueVision Albuquerque, TrueVision Laser Centers, Inc., a
Nevada corporation (the "Shareholder").
R E C I T A L S:
A. The Shareholder is the holder of not less than eight-four percent
(84%) of the outstanding voting stock of TrueVision Albuquerque (the
"TrueVision Albuquerque Stock");
B. Top Form desires to purchase from the Shareholder, and the
Shareholder desires to sell to Top Form, all of the outstanding TrueVision
Albuquerque Stock owned by it in exchange for Common Stock of Top Form (the
"Top Form Common"), the exchange of certain warrants (the "Consultant's
Warrants") issued by TrueVision Albuquerque pursuant to a consulting
agreement with RB&A, Inc. (the "Consulting Agreement") and certain warrants
to purchase additional Top Form Common Stock; and
C. The parties desire to effect the transaction pursuant to plan of
reorganization under Section 368(a)(1)(B), of the Internal Revenue Code of
1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree as follows:
ARTICLE I.
PLAN OF REORGANIZATION
1.01 SALE AND TRANSFER OF TRUEVISION ALBUQUERQUE STOCK.
Subject to the terms and conditions of this Agreement, on the Closing Date
(as hereinafter defined) the Shareholder agrees to sell, and Top Form agrees
to purchase, all of the shares of TrueVision Albuquerque Stock owned by the
Shareholder.
1.02 CONSIDERATION. As payment for the TrueVision Albuquerque
<PAGE>
Stock, Top Form shall issue and deliver an aggregate of 18,666,667 shares of
Top Form Common, the Consultant's Warrants to purchase 4,000,000 shares of
Top Form Common at an exercise price of $.09 per share, and in addition,
warrants entitling the Shareholder to purchase an additional 18,666,667
shares of Top Form Common at various exercise prices as set forth on
Exhibit 1.02 hereto ("Top Form Warrants"), which shall be delivered to the
Shareholder. The Top Form warrants shall be exercisable for a term of one
year from the date they are granted by Top Form and shall include customary
terms and conditions.
1.03 ASSIGNMENT OF CONTRACTS AND ASSUMPTION OF OBLIGATIONS. As
additional consideration for the consummation of the transactions
contemplated by this Agreement, Top Form shall assume TrueVision
Albuquerque's obligation to perform up to fifty (50) laser correction
surgical procedures (the "TrueVision Surgeries") which have been granted to
certain shareholders of TrueVision Albuquerque's parent corporation,
TrueVision Laser Centers, Inc. ("TrueVision" or "Shareholder"). The
indebtedness which exists as of the Closing Date between TrueVision
Albuquerque and TrueVision shall be reduced by the sum of $1,000 for each
TrueVision Surgery performed by Top Form in accordance with this provision up
to a maximum amount of $50,000 of such indebtedness. Top Form further agrees
to cause to be paid to TrueVision, on behalf of TrueVision Albuquerque, from
the net proceeds of the offering of Top Form's Common Stock (as defined in
Section 5.10 hereof), the sum of $125,000 towards the balance of the
indebtedness existing as of the Closing Date between TrueVision and
TrueVision Albuquerque.
1.04 PLAN OF REORGANIZATION. The parties hereby adopt this Agreement as
a plan of reorganization under Section 368(a)(1)(B) of the Code.
ARTICLE II.
CLOSING
2.01 CLOSING DATE. The Closing of the purchase and sale of the
TrueVision Albuquerque Stock hereunder (the "Closing") shall be held at the
offices of TrueVision Albuquerque at 1:00 p.m. on March 31, 1998, or at such
other time and place upon which Top Form and TrueVision Albuquerque may agree
in writing (the "Closing Date"); provided, however, that any agreement
postponing the
<PAGE>
Closing Date beyond March 31, 1998 shall also require the consent of all the
parties hereto.
2.02 DELIVERY. At the Closing, the Shareholder shall deliver to Top
Form a stock certificate or certificates, duly endorsed with signatures
guaranteed, representing the shares of TrueVision Albuquerque Stock to be
purchased from such Shareholder and totaling an aggregate of eighty-four
thousand (84,000) shares, and the Consultant's Warrant to purchase 18,000
shares of TrueVision Albuquerque Stock duly endorsed with appropriate
signature guarantees for transfer. Upon receipt of the stock certificate or
stock certificates and Consultant's Warrant referenced in the preceding
sentence, Top Form shall issue and deliver to the Shareholder an aggregate
of 18,666,667 shares and Warrants to purchase an aggregate of 18,666,667
shares of Top Form, and shall deliver a warrant in exchange for the
Consultant's Warrant to acquire 4,000,000 shares of Top Form at $0.09 per
share on substantially the same terms and conditions as are recited in the
Consultant's Warrant.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS AND HOLDER OF
CONSULTANT'S WARRANT
The Shareholder and the holder of the Consultant's Warrant each
represent and warrant to Top Form as set forth below that:
3.01 TITLE TO SHARES. Each of them is the owner, beneficially and of
record, of either the shares of TrueVision Albuquerque Stock or the
Consultant's Warrant to be sold by such Shareholder or Warrant Holder
hereunder, free and clear of any liens, encumbrances, security agreements,
options, claims, charges or restrictions of any nature whatsoever. Further,
that such Shareholder shall cause its shareholders to vote in favor of the
consummation of the transactions contemplated by this Agreement, at any
meeting of such Shareholder which may be required hereunder.
3.02 AUTHORIZATION. Such Shareholder has the full power and authority
to execute and deliver this Agreement and to execute and deliver the
Consulting Agreement as a part hereof. This Agreement constitutes the valid
and binding obligation of such Shareholder, enforceable in accordance with
its terms, except as enforcement
<PAGE>
may be limited by applicable bankruptcy laws or other similar laws affecting
creditors' rights generally and by principles of equity.
ARTICLE IV.
JOINT REPRESENTATIONS AND WARRANTIES OF
TRUEVISION ALBUQUERQUE AND THE SHAREHOLDER
Subject to and except for the information which is set forth in a list
of exceptions, identified by the Section in this Article to which they
pertain, and contained in a schedule delivered to Top Form prior to the
execution of this Agreement and signed for identification on behalf of Top
Form and TrueVision Albuquerque (the "TrueVision Albuquerque Schedule"),
TrueVision Albuquerque and the Shareholder represents and warrants to Top
Form that;
4.01 ORGANIZATION. TrueVision Albuquerque is a corporation duly
organized, validly existing and in good standing under the laws of the State
of New Mexico, and has full corporate power and authority to carry on its
business as it is now being conducted. TrueVision Albuquerque is duly
qualified to do business and is in good standing in each jurisdiction in
which the nature of its business or properties make such qualification
necessary, except where the failure to be so qualified will not have a
material adverse effect on TrueVision Albuquerque.
4.02 CAPITALIZATION. The authorized capital stock of TrueVision
Albuquerque consists of 100,000 shares of Common Stock all of which is issued
and outstanding. All such outstanding shares have been duly authorized, are
validly issued, fully paid and non-assessable and not subject to preemptive
rights created by statute, TrueVision Albuquerque's Articles of Incorporation
or Bylaws or any agreement to which TrueVision Albuquerque is a party or by
which it is bound. All such outstanding shares have been issued in accordance
with all applicable state and federal securities laws. Except as set forth
herein, and except as required by the Consulting Agreement and Consultant's
Warrant, there are no options, warrants, calls, rights, commitments or
agreements of any character to which TrueVision Albuquerque is a party or by
which it is bound obligating TrueVision Albuquerque to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of its
capital stock or obligating TrueVision Albuquerque to grant, extend or enter
into any such option, warrant, call, right, commitment or agreement.
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4.03 TRUEVISION ALBUQUERQUE SUBSIDIARIES. TrueVision Albuquerque owns
no shares of capital stock directly or indirectly, of any other corporation,
partnership or joint venture interest.
4.04 VALIDITY OF AGREEMENT. TrueVision Albuquerque and the Shareholder
have full corporate power and authority to execute and deliver this
Agreement. This Agreement constitutes the valid and binding obligation of
TrueVision Albuquerque, enforceable in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy laws or other similar
laws affecting creditors' rights generally and by principles of equity. The
execution and delivery of this Agreement by TrueVision Albuquerque, and the
consummation of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action, and such execution and delivery
do not require the consent, approval or authorization of any person, public
authority or other entity.
4.05 TRUEVISION ALBUQUERQUE FINANCIAL STATEMENTS. TrueVision
Albuquerque has furnished to Top Form true and correct copies of its
unaudited consolidated statements of operations, statements of shareholders'
equity and statements of changes in financial condition for its fiscal year
ended September 30, 1997, and for the interim period from October 1, 1997 to
January 31,1998, and TrueVision Albuquerque's unaudited consolidated balance
sheets as of the end of each such fiscal period (the balance sheet as of
September 30, 1997, and as of January 31, 1998, hereinafter referred to as
the "TrueVision Albuquerque Balance Sheets", and all such financial
statements, together with the notes thereto, being hereinafter referred to
collectively as the "TrueVision Albuquerque Financial"). All of the
TrueVision Albuquerque Financials: (i) are in accordance with TrueVision
Albuquerque's books and records; (ii) present fairly the financial position
of TrueVision Albuquerque and the results of its operations as of the
respective dates and for the periods indicated thereon (subject to normal
audit adjustments); and (iii) have been prepared in accordance with generally
accepted accounting principles, applied on a consistent basis. At the date of
the TrueVision Albuquerque Balance Sheets, TrueVision Albuquerque had no
material liabilities or obligations, fixed, contingent or otherwise, not set
forth on or reserved against in the TrueVision Albuquerque Financials, or the
accompanying notes thereto, or in the TrueVision Albuquerque Schedule. For
purposes of this Agreement, "materiality" shall mean
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amounts in excess of $10,000 either individually or in the aggregate.
4.06 EVENTS SINCE DATE OF TRUEVISION ALBUQUERQUE BALANCE SHEETS. Since
the date of the TrueVision Albuquerque Balance Sheet, except as otherwise
contemplated by this Agreement, and except as described in the TrueVision
Albuquerque Schedule, TrueVision Albuquerque has conducted its business only
in the ordinary and usual course and, without: (i) limiting the generality of
the foregoing
(a) TrueVision Albuquerque has not sustained any damage,
destruction or loss by reason of fire, explosion, earthquake, casualty, labor
trouble, requisition or taking of property by any government or agency
thereof, windstorm, embargo, riot, act of God or public enemy, flood,
accident, revocation of license or right to do business, total or partial
termination, suspension, default or modification of contracts, governmental
restriction or regulation, other calamity, or other similar or dissimilar
event (whether or not covered by insurance) materially and adversely
affecting the condition (financial or otherwise), business, net worth,
assets, properties or operations of TrueVision Albuquerque taken as a whole.
(b) There have been no changes in the condition (financial or
otherwise), business, net worth, assets, properties, operations, obligations
or liabilities (fixed or contingent) of TrueVision Albuquerque which, in the
aggregate, have had or may be reasonably expected to have (whether before or
after the Closing Date) a materially adverse effect on the condition
(financial or otherwise), business, net, worth, assets, properties or
operations of TrueVision Albuquerque as a whole.
(c) Except with respect to the Consultant's Warrants, TrueVision
Albuquerque has not issued, or authorized for issuance, any equity security,
bond, note or other security or granted, or entered into, any commitment or
obligation to issue or sell any such equity security, bond, note or other
security, whether pursuant to offers, stock option agreements, stock bonus
agreements, stock purchase plans, incentive compensation plans, warrants,
calls, conversion rights or otherwise.
(d) Except with respect to those obligations contained in the
Consulting Agreement, TrueVision Albuquerque has not
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incurred additional debt for borrowed money, nor incurred any obligation or
liability (fixed, contingent or otherwise) except in the ordinary and usual
course of business.
(e) TrueVision Albuquerque has not declared or made any dividend,
payment or other distribution on or with respect to any share of its capital
stock.
(f) TrueVision Albuquerque has not purchased, redeemed or
otherwise acquired or committed itself to acquire for a consideration,
directly or indirectly, any share or shares of its capital stock.
(g) TrueVision Albuquerque has not mortgaged, pledged, otherwise
encumbered or subjected to lien any of its assets or properties, tangible or
intangible, nor committed itself to do any of the foregoing, except for liens
for current taxes which are not yet due and payable and purchase money liens
arising out of the purchase or sale of products or service made in the
ordinary and usual course of business.
(h) TrueVision Albuquerque has not disposed of, or agreed to
dispose of, any asset or property, tangible or intangible, except in the
ordinary and usual course of business, and in each case for a consideration
at least equal to the fair value of such asset or property, nor leased or
licensed to others (including officers and directors), or agreed to lease or
license, any asset or property.
(i) TrueVision Albuquerque has not purchased or agreed to purchase
or otherwise acquire any debt or equity securities of any corporation,
partnership, joint ventures, firm or other entity.
(j) Except with respect to those obligations contained in the
Consulting Agreement, TrueVision Albuquerque has not entered into any
transaction or contract, or made any commitment to do the same, except in
the ordinary and usual course of business and not involving an amount in any
case in excess of $10,000 nor waived any right of substantial value or
cancelled any debt or claim or voluntarily suffered any extraordinary loss.
(k) TrueVision Albuquerque has not sold, assigned, transferred or
conveyed, or committed itself to sell, assign, transfer or convey, any
Proprietary Right (as defined in Section 4.15).
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(l) TrueVision Albuquerque has not effected or agreed to any
amendment or supplement to any employee profit sharing, stock option, stock
purchase, pension, bonus, incentive, retirement, medical reimbursement, life
insurance, deferred compensation or any other employee benefit plan or
arrangement.
(m) TrueVision Albuquerque has not effected or agreed to effect
any change in its directors or executive management.
(n) TrueVision Albuquerque has not effected or committed itself to
effect any amendment or modification to its Articles of Incorporation or
Bylaws.
4.07 PROPERTIES. The TrueVision Albuquerque Balance Sheets reflects
all of the assets and properties, real and personal, used by TrueVision
Albuquerque in its business or otherwise held by it, except for: (i) property
acquired or disposed of in the ordinary and usual course of business since
the date of such balance sheet; and (ii) property not required under
generally accepted accounting principles to be reflected thereon. Except as
set forth in the TrueVision Albuquerque Schedule, TrueVision Albuquerque has
good and marketable title to all assets and properties listed on the
TrueVision Albuquerque Balance Sheet and thereafter acquired, free and clear
of any imperfections of title, lien, claim, encumbrance, restriction, charge
or equity of any nature whatsoever, except for the lien of current taxes not
yet due and payable. All of the fixed assets and properties listed on the
TrueVision Albuquerque Balance Sheet and thereafter acquired are in good
operating condition and are free from any material defect.
4.08 ACCOUNTS RECEIVABLE. All of the accounts receivable of TrueVision
Albuquerque shown on the TrueVision Albuquerque Balance Sheet or thereafter
acquired arose and are collectible in the ordinary and usual course of
TrueVision Albuquerque's business, except that the value of any account
receivable the collection of which is doubtful or which is subject to a
defense or set-off has been written down to an amount not in excess of
realizable market value or adequate reserves or allowances therefor have been
provided. The values at which accounts receivable are carried reflect the
accounts receivable valuation policy of TrueVision Albuquerque, which is
consistent with its past practice and in accordance with generally accepted
accounting principles applied on a consistent basis.
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4.09 TAXES. TrueVision Albuquerque has duly filed with the appropriate
United States, state, local and foreign governmental agencies, all tax
returns and reports required to be filed and, and except with respect to
state sales taxes due to the New Mexico Department of Revenue in the
approximate sum of $50,000, has paid or accrued in full all taxes, interest,
penalties, assessments or deficiencies, if any, due to, or claimed to be due
by, any taxing authority. The TrueVision Albuquerque Balance Sheet includes
adequate provision for all such taxes, interest, penalties, assessments or
deficiencies, if any, through the date indicated thereon. TrueVision
Albuquerque has not executed or filed with any taxing authority any agreement
extending the period for assessment or collection of any taxes. TrueVision
Albuquerque is not a party to any pending action or proceeding, nor, to the
best of its knowledge, is any such action or proceeding threatened by any
governmental authority for the assessment or collection of taxes, interest,
penalties, assessments or deficiencies, and no claim for assessment or
collection of taxes, interest, penalties, assessments or deficiencies has been
asserted against it. No issue has been raised by any federal, state, local,
or foreign taxing authority in connection with an audit or examination of
TrueVision Albuquerque's tax returns, business or properties which has not
been settled or resolved.
4.10 COMPENSATION. The TrueVision Albuquerque Schedule contains a
full and complete list of all persons who served as directors, officers,
employees or consultants of TrueVision Albuquerque at January 31, 1998,
specifying their names and job designations, the annual compensation paid or
payable to such persons and the basis of such compensation, whether fixed or
commission or a combination thereof. Except as otherwise disclosed in the
TrueVision Albuquerque Schedule, since January 31, 1998, there has been no
material change in compensation, by means of wages, salaries, bonuses,
gratuities or otherwise, to any such director, officer, employee or consultant
of TrueVision Albuquerque.
4.11 COMPLIANCE WITH LAW. Except for possible minor exceptions, the
curing or non-curing of which would not have a material effect on the
condition (financial or otherwise), business, net worth, assets, properties,
or operations of TrueVision Albuquerque has been conducted in accordance with
all applicable laws, regulations, orders and other requirements of
governmental authorities, including, without limiting the
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generality of the foregoing, all laws, regulations and orders relating to
employment practices and procedures and the health and safety of employees.
TrueVision Albuquerque has not received any notice of alleged violations of
any of the foregoing.
4.12 LITIGATION. Except as set forth in the TrueVision Albuquerque
Schedule, there is no claim, dispute, action, proceeding, suit, appeal or
investigation, at law or in equity, pending against TrueVision Albuquerque or
involving any of its business or properties, before any court, agency,
authority, arbitration panel or other tribunal, and, to the best knowledge of
TrueVision Albuquerque and the Shareholder, none has been threatened. To the
best knowledge of TrueVision Albuquerque and the Shareholder, there are no
facts which, if known to shareholders, customers, governmental authorities or
other persons, would result in any such claim, dispute, action, proceeding,
suit, appeal or investigation which would have a material adverse effect on
the condition (financial or otherwise), business, net worth, assets,
properties or operations of TrueVision Albuquerque Schedule. TrueVision
Albuquerque is not subject to any order, writ, injunction or decree of any
court, agency, authority, arbitration panel or other tribunal, or in default
with respect to any notice, order, writ, injunction or decree.
4.13 CONTRACTS. The TrueVision Albuquerque Schedule contains a full
and complete list (subject in the case of clause (i) below to the dollar
amount indicated therein) of each partially or totally executory contract or
agreement to which TrueVision Albuquerque is a party, or by which it is bound
in any respect, including, without limitation, any and all: (i) contracts or
agreements for the purchase, sale, lease or other disposition of equipment,
goods, materials, research and development, supplies, studies, or capital
assets, or for the performance of services, in any case involving more than
$10,000, except that such limitation as to dollar amount shall not apply as
to any contracts or agreements covered by Section 4.22; (ii) contracts or
agreements for the joint performance of work or services, and all other joint
venture or teaming agreements, (iii) management or employment contracts,
consulting contracts, collective bargaining contracts or termination and
severance agreements; (iv) notes, mortgages, deeds of trues, loan agreements,
security agreements, guarantees, debentures, indentures, credit agreements
and other evidences of indebtedness; (v) pension, retirement, profit sharing,
deferred
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compensation, bonus, incentive, life insurance, hospitalization, or other
employee benefit plans or arrangements (including, without limitation, any
contracts or agreements with trustees, insurance companies or others relating
to any such employee benefit plan or arrangement); (vi) stock option, stock
purchase, warrant, repurchase or other contracts or agreements relating to
any shares of capital stock; (vii) contracts or agreements with agents,
brokers, consignees, sales representatives or distributors; (viii) contracts
or agreements with any director, officer, employee, consultant or
shareholder; (ix) powers of attorney or similar authorizations granted to
third parties; and (x) licenses, sublicensees, royalty agreements, and other
contracts or agreements to which TrueVision Albuquerque is a party, or
otherwise subject, relating to technical assistance or to Proprietary Rights
(as defined in Section 4.15). Except with respect to the Consulting Agreement
and to the extent specifically described in the TrueVision Albuquerque
Schedule, TrueVision Albuquerque is not a party to, nor bound by, any
contract or agreement which: (A) TrueVision Albuquerque can reasonably
foresee will result in any material loss upon the performance thereof
(including any material liability for penalties or damages, whether
liquidated, direct, indirect, incidental or consequential, or down time
charges); and (B) is not reflected or adequately reserved against on the
TrueVision Albuquerque Balance Sheets. No party has raised any claim, dispute
or controversy or withheld payments from TrueVision Albuquerque with respect
to any of its contracts nor has TrueVision Albuquerque received notice or
warning of alleged nonperformance, delay in delivery or other noncompliance
with respect to the obligations of TrueVision Albuquerque under any of its
contracts, nor are there any facts which exist indicating that any of such
contracts may be totally or partially terminated or suspended by the other
party thereto. TrueVision Albuquerque has not entered into any contract or
agreement containing covenants limiting its right to compete in any business
with any person. As used in this Agreement, the terms "contract" and
"agreement" mean and include every contract, agreement and commitment whether
written or oral.
4.14 REAL PROPERTY. The TrueVision Albuquerque Schedule contains a full
and complete list of all real property leased by TrueVision Albuquerque. All
such property is held under valid and enforceable leases, copies of which
have been delivered to Top Form and as to which neither party to the lease is
in material default. TrueVision Albuquerque does not own any real property in
fee simple. To the best knowledge of TrueVision
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Albuquerque, the operations of TrueVision Albuquerque on any of such real
property, nor any improvement thereon, violate any applicable building code,
zoning requirement, or pollution control ordinance or any other regulation or
statute applicable to such real property.
4.15 PROPRIETARY RIGHTS. The TrueVision Albuquerque Schedule contains a
full and complete list of all trademarks, trade names, service marks, and
copyrights, or applications therefor, owned or used by TrueVision
Albuquerque. TrueVision Albuquerque owns, or possesses adequate licenses or
other rights to use, all trademarks, trademark applications, service marks,
trade names, copyrights, inventions, drawings, computer software, designs,
trade secrets, customer lists, proprietary know-how or information, or other
rights with respect thereto (collectively referred to as "Proprietary
Rights") required for or incident to the operation, sale and use of all
products and services sold or provided by TrueVision Albuquerque, free and
clear of any right, lien, encumbrance or claim of others, including without
limitation present or former employees of TrueVision Albuquerque or their
former employers; provided, however, that the possibility exists that other
persons, completely independent of TrueVision Albuquerque or its employees or
agents, could have developed trade secrets, customer information or items of
technical information similar or identical trade secrets or technical
information. TrueVision Albuquerque has taken reasonable security measures to
protect the secrecy and confidentiality of such of its Proprietary Rights,
the value of which depends upon such secrecy and confidentiality.
4.16 TOXIC WASTES; EMPLOYEE SAFETY ETC. To the best of its knowledge,
TrueVision Albuquerque makes adequate provision for the control, removal,
disposal and storage of all toxic wastes, if any, generated by its business
operations. TrueVision Albuquerque is not presently in violation of any
federal or state law, regulation, ordinance, or the like governing protection
of the environment and human health and safety regarding toxic wastes.
TrueVision Albuquerque is not presently in violation of any provision of OSHA
or any regulation promulgated thereunder. No action, proceeding, claim, suit
or the like is pending or has been
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threatened against by any government agency or any person with respect to
toxic wastes, occupational health and safety or environmental damage, nor is
TrueVision Albuquerque aware of any potential claims concerning any such
matters.
4.17 INSURANCE. The TrueVision Albuquerque Schedule contains a full and
complete list of all policies of insurance to which TrueVision Albuquerque is
a party or is a beneficiary or named insured, and TrueVision Albuquerque has
in full force and effect, with all premiums due thereon paid, the policies of
insurance set forth therein. All the insurable properties of TrueVision
Albuquerque are insured in amounts and coverage and against risks and losses
which are adequate and usual for similar properties and businesses.
4.18 BANK ACCOUNTS. The TrueVision Albuquerque Schedule contains a full
and complete list of all the bank accounts of TrueVision Albuquerque together
with the names of the persons authorized to draw thereon. All cash in such
accounts is held in demand deposits and is not subject to any restriction or
limitation as to withdrawal.
4.19 NO CONFLICT. The execution and delivery of this Agreement by
TrueVision Albuquerque and the performance of its obligations hereunder:
(i) are not in violation or breach of, and will not conflict with or
constitute a default under, any of the terms of its Articles of Incorporation
or Bylaws, or any note, debt instrument, security agreement, lease, deed of
trust or mortgage, or any other contract, agreement or commitment binding
upon TrueVision Albuquerque or any of its assets or properties; (ii) will not
result in the creation or imposition of any lien, encumbrance, equity or
restriction in favor of any third party upon any of its assets or properties;
and (iii) will not conflict with or violate any applicable law, rule,
regulation, judgment, order or decree of any government, governmental
instrumentality or court having jurisdiction over TrueVision Albuquerque or
any of its assets or properties. The TrueVision Albuquerque Schedule contains
a full and complete list of all necessary consents, waivers and approvals of
third parties required to be obtained by TrueVision Albuquerque in connection
with the execution and delivery of this Agreement by TrueVision Albuquerque
and the performance of its obligations hereunder.
4.20 NO DEFAULT. TrueVision Albuquerque has in all respects performed,
or is now performing, the obligations of, and is not in
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material default (and would not by the lapse of time and/or the giving of
notice be in material default) in respect of, any note, debt instrument,
"security agreement, option to purchase, lease, deed of trust or mortgage, or
any other material contract, agreement or commitment binding upon it or its
assets or properties. Each of the material contracts, agreements or other
instruments described on the TrueVision Albuquerque Schedule is a legal,
binding, and enforceable obligation by or against it. To the best knowledge
of TrueVision Albuquerque, no party with whom it has an agreement or
contract, which is of material importance to the condition (financial or
otherwise), business, net worth, assets, properties, or operations of
TrueVision Albuquerque taken as a whole, is in default thereunder or has
breached any terms of provisions thereof in a material way.
4.21 CERTAIN ADVANCES. There are no receivables of TrueVision
Albuquerque owing by directors, officers, employees, consultants or its
shareholders, or owing by any affiliate of any director or officer of
TrueVision Albuquerque, other than advances in the ordinary and usual course
of business to officers and employees for reimbursable business expenses.
4.22 RELATED PARTIES. No officer or director of TrueVision Albuquerque,
or any affiliate of any such person, has, either directly or indirectly:
(i) an interest in any corporation, partnership, firm or other person or
entity which furnishes or sells products or services which are similar to
those furnished or sold by TrueVision Albuquerque; or (ii) a beneficial
interest in any contract or agreement to which TrueVision Albuquerque is a
party or by which TrueVision Albuquerque may be bound. For purposes of this
Section 4.22, there shall be disregarded any interest which arises solely
from the ownership of less than a one (1) percent equity interest in a
corporation whose stock is regularly traded on any national securities
exchange or in the over-the-counter market.
4.23 COPIES OF CERTAIN DOCUMENTS. The TrueVision Albuquerque Schedule
contains true and complete copies of: (i) its currently effective Articles of
Incorporation, certified by the Secretary of State of New Mexico; (ii) its
currently effective Bylaws, certified by the Secretary of TrueVision
Albuquerque; and (iii) all federal and other tax returns filed by TrueVision
Albuquerque since its inception.
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4.24 UNDERLYING DOCUMENTS. All underlying documents listed or described
in the TrueVision Albuquerque Schedule have heretofore been furnished to Top
Form. All such documents furnished to Top Form are true and correct copies,
and there are no amendments or modifications thereto, except as expressly
noted in the TrueVision Albuquerque Schedule. The minute books of TrueVision
Albuquerque contain full, complete and accurate records of all meetings and
other corporate actions taken by the directors and shareholders of TrueVision
Albuquerque, and Top Form has heretofore been furnished true and correct
copies of all documents and records contained in said minute books.
4.25 DISCLOSURE. Neither this Agreement, the TrueVision Albuquerque
Schedule, nor any other written statement or certificate furnished by
TrueVision Albuquerque or the Shareholders to Top Form in connection with the
transactions contemplated hereby, when taken together, contain any untrue
statement of a material fact or omit to state any material fact necessary to
make any statement, in light of the circumstances under which such statement
is made, not misleading.
4.26 EFFECT OF AGREEMENT. The execution, delivery and performance by the
Shareholder and by TrueVision Albuquerque of this Agreement, and the
consummation of the transactions herein contemplated, will not conflict with,
or result in a breach of the terms of, or constitute a default under or
violation of, any law or regulation of any governmental authority or any
provision of the Articles of Incorporation or Bylaws of either, or any
agreement or instrument to which the Shareholder or TrueVision Albuquerque is
a party or by which they are bound or to which they are subject. No consent
of any person not a party to this Agreement and no consent of any
governmental authority is required to be obtained on the part of the
Shareholder or TrueVision Albuquerque to permit the consummation of the
transactions contemplated by this Agreement, which consents will not have
been received before the Closing Date.
4.27 INDEMNIFICATION OF TOP FORM. TrueVision Albuquerque and the
Shareholder, agree, jointly and severally, to indemnify, defend and hold Top
Form, its officers, directors, employees and attorneys (all such persons and
entities being collectively referred to as the "Top Form Group"), harmless
from and against any and all losses, damages, costs and expense herein called
a "Loss"), which they or any member of the Top Form Group
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may at any time sustain or incur by reason of: (i) any inaccuracy or breach
of any of the representations, warranties or covenants of TrueVision
Albuquerque or the Shareholder contained herein or in any certificate
delivered pursuant hereto, or (ii) any claim or claims whether or not
presently known to the Top Form Group, which arise in connection with the
operation of the business of TrueVision Albuquerque, where the event which
gives rise to such claim occurred prior to the date of this Agreement, or
(iii) any claim or claims arising out of the failure of TrueVision
Albuquerque or the Shareholder to discharge any of their obligations pursuant
to this Agreement. In any action in respect of which indemnity may be sought
hereunder by a party hereto shall be brought against such party, the other
party shall be entitled to participate in the defense thereof at its own
expense and to settle any such action on such terms as it shall see fit so
long as the party entitled to indemnification hereunder shall be released
from any liability by reason of such settlement. In such event, the party
required to provide indemnification shall receive full cooperation and access
to all relevant and non-privileged records. The indemnification provisions of
this Section shall not be deemed exclusive and shall not prejudice any other
rights or remedies, at law or in equity, of any party under this Agreement
with respect to any matter relating to the terms, provisions, covenants or
conditions of this Agreement or any transaction contemplated hereby.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF TOP FORM
Top Form represents and warrants to TrueVision Albuquerque and the
Shareholder that:
5.01 ORGANIZATION. Top Form is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
full corporate power and authority to carry on its business as now being
conducted.
5.02 VALIDITY OF AGREEMENT. Top Form has full corporate power and
authority to execute and deliver this Agreement. This Agreement constitutes
the valid and binding obligation of Top
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Form, enforceable in accordance with its terms, except as enforcement may be
limited by applicable bankruptcy laws or other similar laws affecting
creditors' rights generally and by principles of equity. The execution and
delivery of this Agreement by Top Form, and the consummation of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action, and such execution and delivery do not require the consent,
approval or authorization of any person, public authority or other entity.
5.03 EFFECT OF AGREEMENT. The execution, delivery and performance by Top
Form of this Agreement, and the consummation of the transactions herein
contemplated, will not conflict with, or result in a breach of the terms of,
or constitute a default under or violation of, any law or regulation of any
governmental authority or any provision of the Articles of Incorporation or
Bylaws of Top Form, or any agreement or instrument to which Top Form is a
party or by which it is bound or to which it is subject. No consent of any
person not a party to this Agreement and no consent of any governmental
authority is required to be obtained on the part of Top Form to permit the
consummation of the transactions contemplated by this Agreement, which
consent will not have been received before the Closing Date.
5.04 TOP FORM CORPORATE DOCUMENTS. Top Form has furnished to TrueVision
Albuquerque, and to the Shareholder, true and complete copies of all
corporate documents (other than preliminary drafts of material) that Top Form
has filed with any federal, state or local governmental agency during the
last five (5) year time period, (the "Top Form Documents"). As of their
respective filing dates (except as thereafter amended) the Top Form Documents
complied in all material respects with applicable law. The financial
statements of Top Form which have been furnished to TrueVision Albuquerque
the "Top Form Financials") comply as to form in all material respects with
applicable, accounting requirements and with the published rules and
regulations of the Securities and Exchange Commission ("SEC") with respect
thereto, have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by the rules and regulations of the SEC) and fairly
present the consolidated financial position of Top Form as at the dates
thereof and the results of its operations and changes in financial position
for
<PAGE>
the periods then ended (subject in the case of unaudited statements, to
normal recurring audit adjustments).
5.05 TOP FORM INTERIM FINANCIAL STATEMENTS. Top Form has also furnished
to TrueVision Albuquerque and the Shareholder copies of preliminary financial
information for the current month period ended January 31, 1998 (the "Interim
Financials"). The Interim Financials are preliminary in nature and are
subject to review and revision by management, as well as to normal recurring
audit adjustments.
5.06 ADVERSE CHANGES. Except as disclosed in the Top Form Documents or
in the Interim Financials in the form delivered hereunder, or except as
contemplated by this Agreement, or on account of the transactions
contemplated hereby, since December 31, 1997, there has not been any material
adverse change in the results of operations, financial condition, assets or
business of Top Form taken as a whole (other than on account of matters which
affect generally the economy or the industries in which Top Form is engaged).
5.07 REGISTRATION OF TOP FORM COMMON. For a period of two years from and
after the Closing Date, Top Form shall use its best efforts to: (i) file an
effective registration statement with the SEC registering all Top Form Common
on Form 10 as permitted by the Securities Exchange Act of 1934, as amended
("Exchange Act"), and to continue to file periodic reports with the SEC as
required by the Exchange Act; (ii) register for resale pursuant to the
Securities Act of 1933, as amended (the "Securities Act") and applicable
state securities laws, up to twenty percent (20%) of the Top Form Common
received by the Shareholder, on a prorata basis, in this transaction
(hereafter referred to as the "Registration Rights"); and (iii) conduct an
initial public offering of its shares of Common Stock in accordance with the
Securities Act. The Registration Rights shall be subject to approval by any
managing underwriter that Top Form may engage with respect to the public
offering of its shares in accordance with an effective registration statement
filed pursuant to the Securities Act.
5.08 SHARES OF TOP FORM STOCK. The shares of Top Form Common will, when
issued and delivered in accordance with this Agreement, be duly and validly
authorized and issued, fully paid and non-assessable.
<PAGE>
5.09 TOP FORM BOARD ACTION. Effective at the Closing Date: (i) Top
Form's board of directors ("Top Form Board") shall appoint no less than five
additional directors at least three of whom shall be nominated by TrueVision
Albuquerque, and the remaining two directors shall be "independent directors,
to serve on the Top Form Board for a period of no less than one year from and
after the Closing Date; (ii) shall approve and implement a resolution of the
Top Form Board issuing to all shareholders of Top Form as of the Closing
Date, warrants to purchase up to 1,075,000 shares of Top Form common stock on
the same terms, conditions and exercise price as the Top Form Warrants;
(iii) the Top Form Board shall take such other and further corporate action
as required to carry out the terms and conditions of this Agreement, and
effect the deliveries and obligations of this Agreement, and effect the
deliveries and obligations created hereunder. At the conclusion of the
Closing and after all deliveries contemplated hereunder have been satisfied,
Top Form's current directors, Will Noyes and Daniel Noyes shall resign as
directors.
5.10 SUBSEQUENT PRIVATE PLACEMENT OF TOP FORM COMMON. Within sixty (60)
days after the Closing Date, Top Form shall cause to offer for sale, pursuant
to applicable exemptions from registration permitted under Regulation D
promulgated under the Securities Act and under applicable state securities
exemptions, additional shares of Top Form common stock to accredited
investors, in order to raise a maximum of $3,000,000 in equity capital, upon
terms and conditions to be approved by the Top Form Board.
5.11 INDEMNIFICATION OF TRUEVISION ALBUQUERQUE AND THE SHAREHOLDER. Top
Form agrees to indemnify, defend and hold TrueVision Albuquerque, the
Shareholder, their respective officers, directors, employees and attorneys
(all such persons and entities being collectively referred to as the
"TrueVision Group"), harmless from and against any and all losses, damages,
costs and expenses, including attorneys' fees (any such loss, damage, cost or
expense herein called a "Loss"), which they or any member of the Truevision
Group may at any time sustain or incur by reason of: (i) any inaccuracy or
breach of any of the representations, warranties or covenants of Top Form
contained herein or in any certificate delivered pursuant hereto, or (ii) any
claim or claims whether or not presently known to the Top Form Group, which
arise in connection with the operation of the business of Top Form, where the
event which gives rise to such claim occurred prior to the date of this
Agreement, or (iii) any
<PAGE>
claim or claims arising out of the failure of Top Form to discharge any of
its obligations pursuant to this Agreement. In any action in respect of which
indemnity may be sought hereunder by a party hereto shall be brought against
such party, the other party shall be entitled to participate in the defense
thereof at its own expense and to settle any such action on such terms as it
shall see fit so long as the party entitled to indemnification hereunder shall
be released from any liability by reason of such settlement. In such event,
the party required to provide indemnification shall receive full cooperation
and access to all relevant and non-privileged records. The indemnification
provisions of this Section shall not be deemed exclusive and shall not
prejudice any other rights or remedies, at law or in equity, of any party
under this Agreement with respect to any matter relating to the terms,
provisions, covenants or conditions of this Agreement or any transaction
contemplated hereby.
ARTICLE VI.
ACCESS TO INFORMATION: CONFIDENTIALITY
6.01 ACCESS.
(a) Prior to the Closing Date, TrueVision Albuquerque shall afford
representatives of Top Form reasonable access to the officers and personnel
of TrueVision Albuquerque and to such of its financial, contractual and other
records as shall be reasonably necessary for Top Form's investigation of
TrueVision Albuquerque and its business and operations.
(b) Prior to the Closing Date, Top Form shall afford
representatives of TrueVision Albuquerque reasonable access to the officers
and personnel of Top Form and to such of their financial, contractual and
other records as shall be reasonably necessary for TrueVision Albuquerque's
investigation of Top Form and its business and operations.
(c) Top Form shall make available to the Shareholder the
opportunity to ask questions of and receive answers from appropriate officers
or representatives of Top Form concerning the terms and conditions of the
transactions contemplated by this Agreement and to obtain any additional
information which Top Form possesses or can acquire without unreasonable
effort or expense
<PAGE>
that is necessary to verify the accuracy of the information furnished to the
Shareholder hereunder.
6.02 CONFIDENTIALITY.
(a) No information concerning TrueVision Albuquerque not previously
disclosed to the public or in the public domain which is contained herein or
in the TrueVision Albuquerque Schedule, or which shall have been furnished to
or obtained by Top Form as provided in Section 6.01(a), shall be disclosed to
any person other than Top Form's employees, legal counsel, financial
advisers, or accountants in confidence, or used for any purpose other than as
contemplated herein. In the event that the purchase and sale of the TrueVision
Albuquerque Stock shall not be consummated, Top Form shall return to
TrueVision Albuquerque all such information in its possession which is in
written form.
(b) No information concerning Top Form not previously disclosed to
the public or in the public domain which is contained herein or which shall
have been furnished to or obtained by TrueVision Albuquerque or any
Shareholder as provided in Section 6.01(b) or 6.01(c), shall be disclosed by
them to any person other than their respective employees, legal counsel,
financial advisors, or accountants in confidence, or used for any purpose
other than as contemplated herein. In the event that the purchase and sale of
the TrueVision Albuquerque Stock shall not be consummated, each such person
shall return to Top Form all such information in their possession which is in
written form.
ARTICLE VII.
COVENANTS OF TRUEVISION ALBUQUERQUE AND THE SHAREHOLDER
TrueVision Albuquerque and the Shareholder hereby jointly and severally
covenant:
7.01 CONDUCT OF BUSINESS. From and after the execution and delivery of
this Agreement and until the Closing Date or the termination of this
Agreement, whichever shall first occur: (i) TrueVision Albuquerque shall not
engage in any activities or transactions which shall be outside the ordinary
course of its
<PAGE>
business without the prior written consent of Top Form, which consent shall
not be unreasonably withheld; (ii) such persons will use their best efforts
to preserve the existing licenses, franchises, rights and privileges
pertinent to the business and operations of TrueVision Albuquerque; and (iii)
such persons will use their best efforts to preserve intact the business
organization of TrueVision Albuquerque and to preserve its goodwill and
relationships with its suppliers, customers, employees and others with whom
it deals.
7.02 NOTICE OF CERTAIN ADVERSE CHANGES, DEFAULTS OR CLAIMS. TrueVision
Albuquerque shall give prompt notice to Top Form of any material adverse
change to the properties or business of TrueVision Albuquerque, or any
notice of default received by it, subsequent to the date of this Agreement
and prior to the Closing Date, under any instrument or agreement to which
TrueVision Albuquerque is a party or by which any of its property is bound,
or of the assertion of any claim which, if upheld, would render inaccurate
any representation contained herein.
7.03 ACTIONS REQUIRING CONSENT. Between the date hereof and the Closing
Date or, the termination of this Agreement, whichever shall first occur,
TrueVision Albuquerque shall not, without the prior written consent of Top
Form, which consent shall not unreasonably be withheld, take any action of
the type described in clauses (c) through (n) of Section 4.06.
7.04 IMPLEMENTATION OF REPRESENTATIONS AND WARRANTIES. Such persons
shall use all reasonable efforts to render accurate as of the Closing Date
their representations and warranties contained in this Agreement, and shall
refrain from taking any action which would render inaccurate as of the
Closing Date any of such representations or warranties.
7.05 COMMUNICATIONS. Between the date hereof and the Closing Date, such
persons shall furnish no communication to the public with respect to the
transactions contemplated by this Agreement without the prior approval of Top
Form as to the content thereof, which approval of Top Form as to the content
thereof, which approval shall not unreasonably be withheld by Top Form.
7.06 OTHER NEGOTIATIONS. Between the date hereof and the Closing Date
of the termination of this Agreement, whichever shall first occur, such
persons will disclose to Top Form all bona fide inquiries from other persons,
firms or corporations concerning the
<PAGE>
possible acquisition of TrueVision Albuquerque (by consolidation, merger,
sale or exchange of assets, sale of stock or otherwise) or equity securities
of TrueVision Albuquerque; and neither TrueVision Albuquerque nor the
Shareholder will solicit an acquisition of TrueVision Albuquerque by another
person, firm or corporation, whether by consolidation, merger or purchase or
sale of business or assets or by the sale or exchange of stock, nor will
TrueVision Albuquerque solicit the sale of any of its capital stock or other
equity securities to any other person, firm or corporation. Nothing contained
in this Section shall be construed as limiting the rights of the Board of
Directors of TrueVision Albuquerque to discharge their fiduciary
responsibilities in response to unsolicited offers from third parties.
7.07 COOPERATION. The Shareholder shall cooperate, and will use its best
efforts to have the other present officers, directors and employees of
TrueVision Albuquerque cooperate, with Top Form, at its request, on and after
the Closing Date and without further consideration, in endeavoring to effect
the collection of accounts or notes receivable owing to TrueVision
Albuquerque at the Closing Date, and, at Top Form's expense, in furnishing
information, evidence, testimony and other assistance in connection with any
actions, proceedings, arrangements or disputes relating to adjustment of
federal income or any other taxes of TrueVision Albuquerque for all periods
prior to the Closing Date and in connection with any other actions,
proceedings, arrangements or disputes whatsoever involving TrueVision
Albuquerque and based upon contracts, arrangements or acts which were in
effect or occurred on or prior to the Closing Date.
ARTICLE VIII.
COVENANTS OF TOP FORM
Top Form hereby covenants:
8.01 IMPLEMENTATION OF REPRESENTATIONS AND WARRANTIES. Top Form shall
use all reasonable efforts to render accurate as of the Closing Date its
representations and warranties contained in this Agreement, and shall refrain
from taking any action which would render inaccurate as of the Closing Date
any of such representations or warranties.
<PAGE>
8.02 COMMUNICATIONS. Between the date hereof and the Closing Date (except
to the extent required by state or federal securities laws), Top Form shall
furnish no communication to the public with respect to the transactions
contemplated by this Agreement without the prior approval of TrueVision
Albuquerque as to the content thereof, which approval shall not unreasonably
be withheld by TrueVision Albuquerque.
8.03 REGISTRATION OF TOP FORM COMMON. Top Form will use its best efforts
to file and maintain an effective Registration Statement with the SEC and
applicable state securities commissions covering the resale of up to twenty
percent (20%) of the Top Form Common to be received by the Shareholder
pursuant to Section 1.02 hereof as soon as practicable after the Closing
Date. Filing and maintaining such registration with the SEC and applicable
state securities commissions shall be subject to approval by any managing
underwriter that Top Form may engage with respect to the offering and sale of
any of its securities in any underwritten public offering.
8.04 ADDITIONAL SEC DOCUMENTS. Top Form shall furnish to TrueVision
Albuquerque and the Shareholder copies of all documents, if any, (other than
preliminary material and documents which describe this Agreement and the
transactions contemplated hereby) that Top Form files with the SEC from the
date hereof through the Closing Date.
ARTICLE IX.
SECURITIES LAW MATTERS
9.01 SECURITIES ACT EXEMPTIONS. The Top Form Common to be issued
pursuant to this Agreement shall not be registered under the Securities Act,
in reliance upon exemptions from such registration contained in Sections
3(a)(10) and/or Section 4(2) of the Securities Act.
9.02 STOCK RESTRICTIONS. The certificates representing the shares of Top
Form Common issued pursuant to this Agreement shall bear a restrictive legend
in substantially the following form (and appropriate stock transfer orders
shall be placed against the transfer thereof):
<PAGE>
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT'). THE SHARES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT
UNDER THE CIRCUMSTANCES SPECIFIED BY A SHAREHOLDER'S AGREEMENT, A
COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF THE CORPORATION."
9.03 OTHER SECURITIES QUALIFICATIONS. Top Form shall prepare and file
with appropriate state securities or "Blue Sky" authorities, all applications
for qualification or approval (or notices required to perfect exemptions from
such compliance) as may be required in connection with the issuance of the
Top Form Common to the Shareholder as contemplated by this Agreement.
9.04 REPRESENTATIONS OF TOP FORM. Top Form represents and warrants to
the Shareholder that it is acquiring the TrueVision Albuquerque Stock for its
own account for investment and not with a view to, or for sale in connection
with, any distribution thereof, and without any present intention of selling
the same; provided, however, that any disposition thereof will at all times
be within its control.
9.05 LEGEND RESTRICTIONS. It is understood that the certificates
representing the TrueVision Albuquerque Stock purchased hereunder shall be
endorsed with a legend restricting transfer as necessary to conform to the
requirements of the Securities Act.
ARTICLE I.
CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDER
The obligations of the Shareholder under this Agreement are, at the
option of the Shareholder, subject to the satisfaction at or prior to the
Closing of the following conditions:
10.01 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made by Top Form in this Agreement shall be
true in all material respects as of the Closing Date with the same force and
effect as though such representations and warranties had been made as of the
Cosing Date, except for changes contemplated by the Agreement, and Top Form
shall have delivered to TrueVision Albuquerque and the Shareholder a
<PAGE>
certificate to such effect dated the Closing Date and signed by its President
and Chief Executive Officer.
10.02 FULFILLMENT OF COVENANTS. All of the terms, covenants and
conditions of this Agreement to be complied with and performed by Top Form at
or before the Closing Date shall have been duly complied with and performed,
and Top Form shall have delivered to TrueVision Albuquerque and the
Shareholder a certificate to such effect dated the Closing Date and signed by
its President and Chief Executive Officer.
10.03 APPROVAL OF SALE. All authorizations, consents and approvals of
all federal, state and local governmental agencies and authorities required
to be obtained in order to permit consummation of the transactions
contemplated by this Agreement shall have been obtained.
10.04 NO LITIGATION. There shall be no litigation pending which has been
brought for the purpose of enjoining any transaction contemplated by this
Agreement or which would have the effect, if successful, of imposing a
material liability upon TrueVision Albuquerque the Shareholder because of
such transaction.
ARTICLE XI.
CONDITIONS TO OBLIGATIONS OF TOP FORM
The obligations of Top Form under this Agreement are, at the option of
Top Form, subject to the satisfaction at or prior to the Closing of the
following conditions:
11.01 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made by TrueVision Albuquerque and the
Shareholder in this Agreement shall be true in all material respects as of
the Closing Date with the same force and effect as though such
representations and warranties had been made as of the Closing Date, except
for changes contemplated by this Agreement, and TrueVision Albuquerque shall
have delivered to Top
<PAGE>
Form a certificate to such effect dated the Closing Date and signed by its
President and Chief Executive Officer.
11.02 FULFILLMENT OF COVENANTS. All of the terms, covenants and
conditions of this Agreement to be complied with and performed by TrueVision
Albuquerque or the Shareholder at or before the Closing Date shall have been
duly complied with and performed, and TrueVision Albuquerque shall each have
delivered to Top Form a certificate to such effect dated the Closing Date and
signed by its President and Chief Executive Officer.
11.03 APPROVAL OF SALE. All authorizations, consents and approvals of all
federal, state and local governmental agencies and authorities required to be
obtained in order to permit consummation of the transactions contemplated by
this Agreement shall have been obtained.
11.04 CONSENTS OBTAINED. TrueVision Albuquerque and the Shareholder
shall have delivered to Top Form the written consent or approval of each
person or organization whose consent or approval shall be required in order
to permit them to consummate the transactions contemplated hereby or in order
to avoid any breach or termination of any agreement to which they are a party.
11.05 NO LITIGATION. There shall be no litigation pending which has been
brought for the purpose of enjoining any transaction contemplated by this
Agreement or which would have the effect, if successful, of imposing a
material liability upon Top Form, or any of its officers or directors because
of such transaction.
11.06 ACCOUNTANT'S REVIEW. Top Form shall have received from Zapken,
Loeb, Libock and Company, LLP a letter to the effect that on the basis of
their "acquisition review" of TrueVision Albuquerque, not constituting a full
audit, nothing has come to their attention which has caused them to believe
that the accounts or balances to which they applied their procedures should
be adjusted.
11.07 ACCOUNTING TREATMENT. Top Form shall have received from Zapken,
Loeb, Libock and Company, LLP, a written analysis stating that the business
combination resulting from the consummation of the transactions contemplated
by this Agreement may be accounted for on a pooling of interests basis in
accordance
<PAGE>
with generally accepted accounting principles and in accordance with all
rules, regulations and policies of the SEC.
11.08 TOP FORM REVIEW. There shall not have come to the attention of Top
Form, as a result of any investigation performed pursuant to Section 6.01
hereof, any information, not previously disclosed to Top Form, which is
likely to materially and adversely affect the business, property or
operations of TrueVision Albuquerque following the Closing Date.
11.09 RESIGNATION OF DIRECTORS. All persons serving as directors of
TrueVision Albuquerque shall have tendered their resignations to be effective
as of the Closing Date.
11.10 SALE OF TRUEVISION ALBUQUERQUE STOCK. Not less then eighty-four
percent (84%) of the shares of TrueVision Albuquerque Stock outstanding as of
the Closing Date shall have been tendered by the Shareholder for purchase by
Top Form hereunder.
ARTICLE XII.
SURVIVAL OF REPRESENTATIONS WARRANTIES AND COVENANTS
The representations, warranties and covenants of the parties contained
in this Agreement or in any certificate or instrument delivered pursuant
hereto shall survive the Closing hereunder.
ARTICLE XIII.
PAYMENT OF EXPENSES
13.01 EXPENSES. Except as provided herein, the parties shall each pay
their own legal and accounting fees and other out-of-pocket expenses incurred
incident to the preparation and carrying out of this Agreement and the
transactions herein contemplated, whether or not such transactions are
consummated; provided however, in the event that the Shareholder, TrueVision
Albuquerque or TrueVision, or any of them, shall fail to consummate the
transactions contemplated by this Agreement, for reasons other than a
material breach by Top Form of the the terms of this Agreement, TrueVision
Albuquerque shall pay to Top Form as a "break-up" fee all actual accounting
and legal expenses incurred by Top Form up to a maximum of $15,000. In the
event that such transactions are
<PAGE>
consummated, the reasonable legal and accounting fees and other expenses of
TrueVision Albuquerque shall be borne by Top Form following the Closing. All
other expenses shall be deemed to be expenses of the Shareholder, and the
Shareholder, jointly and severally, shall assume and be responsible for the
payment thereof.
13.02 BROKERS. Each of the parties represents that it has dealt with no
broker or finder in connection with any of the transactions contemplated by
this Agreement and, insofar as it knows, no broker or other person is
entitled to any commission or finder's fee in connection with any such
transaction. Each party agrees to indemnify and hold the other parties
harmless against any loss, liability, damage, claim or expense incurred by
reason of any brokerage commission or finder's fee alleged to be payable
because of any act, omission or statement of the indemnifying party.
ARTICLE XIV.
GENERAL PROVISIONS
14.01 NOTICES. Any notice, request, instruction or other document to be
given hereunder by a party to any other party shall be in writing and
effective when delivered personally or sent by certified mail with return
receipt requested, postage prepaid, as follows:
To Top Form:
Topform, Inc.
3107 West Colorado Ave.
Suite 128
Colorado Springs, CO 80904
Attn: Will Noyes, President
To TrueVision:
TrueVision Laser Center of Albuquerque, Inc.
1720 Louisiana NE, Suite 100
Albuquerque, NM 87110
Attn: John Homan, President
<PAGE>
To Shareholder:
TrueVision Laser Centers, Inc.
PO Box 1529
San Diego, CA 92101
or to such other addresses or other persons as may be designated in writing
by any of the parties, by notice given as aforesaid.
14.02 HEADINGS. The headings of the several sections of this Agreement
are inserted for the convenience of reference only and are not intended to
affect the meaning or interpretation of this Agreement.
14.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and when so executed each counterpart shall be deemed to be an
original, and said counterparts together shall constitute one and the same
instrument.
14.04 ASSIGNMENT. None of the parties may assign or transfer any rights
or obligations under this Agreement.
14.05 WAIVER. Any party hereto may, by written notice to the others: (i)
waive any of the conditions to its obligations hereunder or extend the time
for the performance of any of the obligations or actions of the others; (ii)
waive any inaccuracies in the representations of the others contained in
this Agreement or in any documents delivered pursuant to this Agreement;
(iii) waive compliance with any of the covenants of the others contained in
this Agreement; or (iv) waive or modify performance of any of the obligations
of the others. No action taken pursuant to this Agreement, including without
limitation any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, condition or agreement contained herein. Waiver of
the breach of any one or more provisions of this Agreement shall not be
deemed or construed to be a waiver of other breaches or subsequent breaches
of the same provisions.
14.06 ENTIRE AGREEMENT. This Agreement, including the schedules and
exhibits hereto, constitutes the entire agreement between the parties
pertaining to the subject matter contained herein and supersedes all prior
and contemporaneous agreements,
<PAGE>
representations, and understandings of the parties. No supplement,
modification, or amendment of this Agreement shall be binding unless executed
in writing by the party sought to be bound.
14.07 GOOD FAITH. Each of the parties hereto agree that it or they shall
act in good faith in an attempt to cause all the conditions precedent to
their respective obligations hereunder to be satisfied.
14.08 APPLICABLE LAW. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of Nevada.
14.09 SEVERABILITY. Should any provision of this Agreement be determined
to be invalid, it shall be severed from this Agreement and the remaining
provisions of the Agreement shall remain in full force and effect.
Witness the due execution of this Agreement by the parties hereto as of
the date first set forth above.
TOP FORM, INC.
By /s/ William J. Noyes
---------------------------
Title: President
TRUEVISION LASER CENTERS
OF ALBUQUERQUE, INC.
By /s/ John Homan
---------------------------
Title: President and CEO
SHAREHOLDER:
TRUEVISION LASER CENTERS, INC.
<PAGE>
By /s/ [ILLEGIBLE]
---------------------------
Title: President and CEO
SCHEDULE OF ATTACHMENTS
Section
Exhibit/Schedule Title
1.02 Top Form Warrants
1.03 Consulting Agreement
4.0 TrueVision Albuquerque Schedule
<PAGE>
EXHIBIT 10.35
MANAGEMENT CONTINUITY AGREEMENT
THIS AGREEMENT, made this seventh day of September, 1998, between John
C. Homan ("Executive") and Topform, Inc., a Delaware corporation (the
"Company").
WITNESSETH:
WHEREAS, the Company desires to assure itself of continuity of
management in the event of any actual or threatened change in the control of
the Company, and
WHEREAS, the Company believes it is important that Executive be able to
assess and advise the Company of whether supporting a change in control would
be in the best interests of the Company and its shareholders without being
influenced by the uncertain effect of such a change upon Executive's role
within the Company, and
WHEREAS, Executive has been employed by the Company and its predecessors
since December of 1995 and the Company wishes to demonstrate to Executive the
Company's concern for his welfare;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
ARTICLE I. OPERATION OF AGREEMENT.
1.1. This Agreement will be binding immediately upon the execution by the
parties hereto, but will operate as an employment contract only during the
"Term of Employment" as described below.
1.2. The "Term of Employment" is the period beginning on the date of a
"Change of Control" and ending on the earliest or:
(a) Executive's 70th birthday;
(b) Executive's death;
(c) the date on which the Agreement terminates in accordance with
paragraph 1.4 below; and
(d) the date on which all rights and obligations of the parties hereto
have been satisfied in accordance with the terms of this Agreement.
Neither the expiration of the Term or Employment nor the termination of
this Agreement will relieve the Company of the obligations to provide
Executive, in accordance with the terms hereof, the payments, benefits and
coverage to which he has become entitled under this Agreement.
1.3. "Change of Control" means a change of control of the Company of a
nature that would be required to be reported in responses to item 6(e) of
Schedule 14A (or in response to any similar item on any similar schedule or
form) promulgated under the Securities Exchange Act of 1934 (the "Act"),
whether or not the Company is then subject to such reporting requirement;
provided, however, that, without limitation, such a Change of Control shall
be deemed to have occurred if:
(a) any person or group (as such terms are used in connection with
Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial owner" (as
defined in Rule 13d and 13d-5 under the Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined voting
power of the Company's then outstanding securities; or
(b) The Company is a party to a merger, consolidation, sale of assets
or other reorganization, or
<PAGE>
a proxy contest, as a consequence of which members of the Board of Directors
in office immediatley prior to such transaction or even constitute less than
a majority of the Board or Directors thereafter; or
(c) during any period of twenty-four consecutive months, individuals
who at the beginning of such period constituted the Board of Directors
(including for this purpose any new director whose election or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
Notwithstanding the foregoing provisions of this paragraph 1.3, a
"Change of Control" will not be deemed to have occurred solely because of the
acquisition of securities of the Company (or any reporting requirement under
the Act relating thereto) by an employee benefit plan maintained by the
Company for its employees.
1.4. Either the Company or Executive may, by giving 60 days' written notice
to the other party, terminate the Agreement as of the third, or any
subsequent, anniversary of the Change of Control.
ARTICLE II. EMPLOYMENT
2.1. The Company agrees to employ Executive throughout the Term of Employment
as President of the Company without reducing Executive's authority or status
and without imposing on Executive travel requirements or other duties
substantially more onerous than those to which he was subject immediately
prior to the Change of Control. The Company agrees to provide Executive with
an office and executive secretarial support similar to those provided
immediately before change of Control and further agrees that Executive's
situs of employment will be in San Diego, California, or at the Executive's
option, such other location in the vicinity to which The Company's executive
headquarters may be moved.
2.2. Executive agrees, subject to paragraph 4.4 below, to remain in the
Company's employ during the Term of Employment, as described in paragraph 2.1.
Excluding periods of vacation and sick leave, Executive agrees to devote
reasonable attention and time during normal business hours to the business
and affairs of the Company to the extent necessary to discharge
responsibilities assigned to Executive hereunder and to use reasonable
efforts to perform such responsibilities faithfully and efficiently. No
greater time, attention or effort to discharge responsibilities shall be
rquired of Executive than was required prior to the Change of Control.
Executive may:
(a) serve on corporate, civic and charitable boards or committees,
(b) deliver lectures, fulfill speaking engagements and teach at
educational institutions and
(c) manage personal investments
(d) manage such other ventures or businesses of any type similar to
those managed prior to the "Change in Control".
so long as such activities do not significantly interfere with the
performance of Executive's responsibilities. To the extent that any such
activities have been conducted by Executive prior to the Change of Control,
such prior conduct, and any subsequent conduct similar in nature and scope,
shall not be deemed to interfere with the performance of Executive's
responsibilities.
2.3. For purposes of this Agreement, employment by a subsidiary of the
Company will be deemed to be employment by the Company, and the Company may
cause its obligations hereunder to be discharged through such a subsidiary,
provided that the Company will remain liable for the discharge of all such
obligations and that the rights, benefits, authority and status of the
Executive are in no way diminished thereby. A subsidiary is any corporation
more than 50% of the voting stock of which is owned by the Company or another
subsidiary of the Company.
<PAGE>
ARTICLE III. COMPENSATION
3.1. The Company will pay as compensation to Executive for his services as an
employee during the Term of Employment:
(a) base annual salary at a rate equal to the highest rate that
Executive would have reasonably expected to receive without a
Change of Control, but in no case less than the rate of base salary
in effect for Executive immediately prior to the Change of Control;
plus
(b) an annual bonus equal to the average bonus (as a percentage of base
salary) paid to the Executive for the three full fiscal years of
the Company immediately preceding the Change of Control,
3.2. In addition, for his services as an employee during the term of
Employment, Executive will:
(a) participate fully in the Company's stock option plan (and/or any
successor plan);
(b) participate fully in all pension, profit sharing and similar
benefit plans of the Company;
(c) participate fully, together with his dependents and beneficiaries
in all life insurance plans, accident and health plans and other
welfare plans, maintained or sponsored by the Company immediately
prior to the Change of Control, or receive substantially equivalant
coverage (or the full value thereof in cash) from the Company;
(d) participate fully in additional benefit plans offered by the
Company to executives before or after the Change of Control; and
(e) receive fringe benefits (which shall not include any benefit
referred to elsewhere in this Article III) substantially equivalent
to those provided to Executive immediately prior to the Change of
Control as well as reimbursement, upon proper accounting of
reasonable expenses and disbursements incurred by Executive in the
course of his duties.
3.3. Amounts payable under this Article III for services rendered by
Executive during his employment constitute reasonable compensation for such
services. If any such amount (or, if by reason of such amount, any other
amount in the nature of compensation payable to Executive) is determined to
be subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), or any successor provision, the
Company will pay to Executive in cash an additional amount necessary to cause
the total payments (including the additional payment required by this
paragraph 3.3) and benefits received by him under this Article III (net of
all federal and state taxes, including all taxes payable under Section 4999
of the Code) to be equal to the total payments and benefits Executive would
have received under this Article III (net of all federal, state and local
taxes) if Section 4999 of the Code had not applied. This paragraph 3.3 does
not apply to amounts payable under Article 4.
ARTICLE IV. TERMINATION OF EMPLOYMENT
4.1. In the event Executive's employment is terminated by the Company during
the Term of Employment for any reason other than "Cause" (as defined in
paragraph 4.5 below) the Company will pay Executive:
(a) a lump sum cash payment, payable within ninety (90) days of his
termination, equal to 300% of the sum of:
(i) Executive's highest annual base salary in effect at any time
prior to his termination, or the rate that would be in effect
during the unexpired term of any agreement that existed prior
to a Change of Control, which ever is greater, plus
(ii) the highest aggregate amount included by the Company on his
Form W-2 and/or 1099 for fringe benefits (limited in accordance
with paragraph 3.2(e) above) provided in any of the three
calendar years prior to his termination, plus
<PAGE>
(iii) his highest bonus for any of the three full fiscal years of
the Company immediately proceding his termination, plus
(b) a lump sum cash payment, payable within ninety (90) days of his
termination equal to 300% of the employer contribution made for his
benefit under the Company's employee benefit plans for the last
fiscal year of the Company ending prior to the Change of Control.
4.2. In the event of termination described in paragraph 4.3 above, Executive,
together with his dependents and beneficiaries, will continue following his
termination to participate fully in accordance with paragraph 3.2(c) above in
all life insurance plans, accident and health plans and other welfare plans,
maintained or sponsored by the Company immediately prior to the Change of
Control, or receive substantially equivalent coverage (or the fill value
thereof in cash) from the Company, until the later of
(a) the end of Executive's Term of Employment, or
(b) the third anniversary of his termination.
The period of time between such a termination and the next following
anniversary of the Change of Control will be counted as service with the
Company for purposes of any benefit plan of the Company in which Executive is
participating at the time of the termination.
4.3. In the event of a termination described in paragraph 4.1 above,
Executive will become immediately entitled to exercise any and all stock
options previously granted to him by the Company notwithstanding any
provision to the contrary of the option or any plan under which it was
granted.
4.4. (a) Upon the occurrence of any breach by the Company of this Agreement
within the meaning of paragraph 4.4(b), below, Executive may give the Company
written notice of his intention to resign effective the 30th day following
the date of such notice. If the Company does not fully remedy such breach
within 15 days of the date of such notice, Executive's resignation will
become effective on such 30th day. If Executive resigns in accordance with
this paragraph during the Term of Employment, his employment will be deemed
to have been terminated by the Company for, reasons other than Cause (and he
will be deemed to have offered to continue to provide services to the
Company) and he will be entitled to all the payments and rights and benefits
described in paragraphs 4.1, 4.2 and 4.3; provided that such payments and
rights and benefits will in no event be less than they would have been had
such termination taken place on the date that the Company first breached this
Agreement.
(b) The following events are breaches by the Company of this Agreement
within the meaning of this paragraph 4.4(b):
(i) any reduction of, or failure to pay Executive's salary or
bonus as described in paragraph 3.1 above;
(ii) any failure to provide the benefits required by paragraph
3.2 above or to make any payment which might be due in
accordance with paragraph 3.3 above;
(iii) assignment to Executive of any duties inconsistent in any
respect with his position (including status, offices and
titles), authority, duties or responsibilities as
contemplated by paragraph 2.1 above or any other action by
the Company which results in a diminution of such position,
authority, duties or responsibilities;
(iv) failure after a Change of Control to comply with and satisfy
paragraph 8.1 or 8.2 below;
(v) relation of the Company's principal executive offices, or
any event that causes Executive to have his principal place of
work changed, to any location outside the area;
<PAGE>
(vi) any requirement by the Company that Executive travel away
from his office in the course of his duties significantly
more than the number of consecutive days or aggregate days
in any calendar year than was required of him prior to the
Change of Control; and
(vii) without limiting the generality or effect of the foregoing,
any other material breach of this Agreement by the Company
or any successor thereto or transferee of substantially all
the assets thereof.
4.5. If Executive is dismissed by the Company for Cause, he will not be
entitled to payments, benefits or acceleration of exercisability of options
provided under paragraphs 4.1, 4.2 or 4.3 above. "Cause" means only the
willful commission by Executive of theft, embezzlement or other serious and
substantial crimes against the Company. For purposes of this definition, no
act or omission shall be considered to have been "willful" unless it was not
in good faith and Executive had knowledge at the time that the act or
omission was not in the best interest of the Company.
4.6. If Executive's employment is alleged to the terminated for Cause or if
Executive's right to resign under paragraph 4A is disputed, Executive may
initiate binding arbitration in San Diego, California, before the American
Arbitration Association by Serving a notice to arbitrate upon the Company or,
at Executive's election, institute judicial proceedings in either case
within 90 days of the effective date of his termination or, if later, his
receipt of notice of termination, or such longer period as may be reasonably
necessary for Executive to take such action if illness or incapacity should
impair his taking such action within the 90 day period. The Company agrees
(i) to pay the costs and expenses (including fees of counsel
to Executive of any such arbitration and/or juidical
proceeding, including Executive's counsel fees), and
(ii) to pay interest to Executive on any amounts ultimately
found to be due to Executive hereunder during any period of
time that such amounts are withheld pen dins arbitration
and/or judicial proceedings. Such interest will be at the
base rate most recently announced by the prior to the
commencement of the arbitration.
4.7. Termination of employment due to the death or total permanent
disability of Executive will not be considered a termination for purposes of
this Article 4.
4.8. If Executive dies following a termination of employment which entitled
him to benefits under this Article 4 but prior to receipt of all such
benefits:
(a) his beneficiary (as designated to the Company in writing) or, if
none, his estate, will be entitled to receive all unpaid amounts
due hereunder, and
(b) his beneficiary or estate will be entitled to exercise options in
accordance with paragraph 4.3 above and the terms of the options.
ARTICLE V. NO OBLIGATION TO MITIGATE
There shall be no requirement on The Executive's part to seek other
employment or otherwise mitigate in order to be entitled to the Sail amount
of any payments or benefits hereunder.
ARTICLE VI. LIMITATION
6.1. Notwithstanding any other provision of this Agreement, and except as
provided in paragraph 6.2 below. The payments or benefits to which Executive
will be entitled under Article 4 of this Agreement will be reduced to the
extent necessary so that Executive will not be liable for the federal excise
tax levied on certain excess "parachute payments" under section 4999 of the
Code.
<PAGE>
6.2. The limitation of paragraph 6.1 will not apply if:
(a) the difference between
(i) the present value of all payments to which Executive is
entitled under Article 4 of this Agreement determined
without regard to paragraph 6-1" less
(ii) the present value of all federal, state, and other income
and excise taxes for which Executive is liable as a result
of such payments;
exceeds
(b) the difference between
(i) the present value of all payments to which Executive is
entitled under Article 4 of this Agreement calculated as
if the limitation of paragraph 6.1 applies, less
(ii) the present value of all federal, state, and other income
withholding taxes which Executive is liable as a result of
such reduced payments.
Present values will be determined using the interest rate specified in
section 280G of the code and will be the present values as of the date on
which Executive's employment terminates (unless it is necessary to use a
different date in order to avoide adverse consequences under section 280 C).
6.3. (a) Whether payments to the Executive are to be reduced pursuant to
paragraph 6.1, and the extent to which they are to be so reduced,
will be determined by the Executive. Executive may, at the expense
of the Company, hire an accounting firm, law firm or employment
consulting firm selected by Executive to assist him in such
determination.
(b) If a reduction is made pursuant to paragraph 6.1, Executive will
have the right to determine which payments and benefits will be
reduced,
ARTICLE VII. EXPENSES
7.1. It is the intent of the Company That The Executive not be required to
incur any expenses associated with the enforcement of his rights under this
Agreement by legal action or arbitration proceeding because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Executive hereunder. Accordingly, if Executive determines in
good faith that the Company has failed to comply with any of its obligations
under this Agreement, or if the Company or any other person takes any action
to declare this Agreement void or unenforceable, or institutes any legal
action or arbitration proceeding designed to deny Executive, or to recover
from him, the benefits intended to be provided hereunder, or in the event of
actions instituted as contemplated by paragraph 4.6 above, the Company
irrevocably authorizes Executive from time to time to retain counsel of his
choice, at the expense of the Company as hereafter provided, to represent
Executive in connection with any and all actions and proceedings, whether by
or against the Company or any director, officer, stockholder or other person
affiliated with the Company, which may adversely affect Executive's rights
under this Agreement. In addition, notwithstanding any existing or prior
attorney client relationship between the Company and such counsel, the
Company irrevocably consents to Executive's entering into an attorney-client
relationship with such counsel and agrees that a confidential relationship
shall exist between Executive and such counsel. Without limiting the effect
of paragraph 4.6 above or of the foregoing provisions of this paragraph 7.1,
the Company shall pay or cause to be paid and shall be solely responsible for
any and all attorneys' and related fees and expenses incurred by Executive as
a result of the Company's failure to perform under this Agreement.
7.2. Without limiting the effect of paragraph 7.1 above, in order to ensure
the benefits intended to be provided to the Executive under such paragraph,
the Company will, if a Change of Control becomes likely or occurs use
reasonable efforts to obtain an irrevocable $5,000,000 letter of credit
issued by a bank having combined capital and surplus in excess of
$100,000,000, or alternatively to place that amount in escrow or trust with
such a bank, to provide a fund for the benefit of Executive and other
employees of the Company
<PAGE>
with similar agreements with respect to enforcement of their rights under
their agreements, all on such terms as the Company shall consider appropriate
when it obtains such a letter of credit or establishes such a fund.
ARTICLE VIII. MERGER OR ACQUISITION
8.1. If the Company is at any time before or after a Change of Control
merged with or consolidated into or with any other corporation or other
entity (whether or not the Company is the surviving entity), or if
substantially all of the assets of the Company are transferred to another
corporation or other entity, the corporation or other entity resulting from
such merger or consolidation, or the acquirer of such assets, shall by
agreement in term and substance satisfactory to Executive) expressly assume
the obligations of the Company under this Agreement. In any event, however,
the provisions of this Agreement shall be binding upon and inclusive to the
benefit of the corporation or other entity resulting from such merger or
consolidation or the acquirer of such assets, and this Article 8 will apply
in the event of any subsequent merger or consolidation or transfer of assets.
8.2. In the event of any merger, consolidation or sale of assets described
above, nothing contained in this Agreement will detract from or otherwise
limit Executive's right to or privilege of participation in any stock option
or purchase plan or any bonus, profit sharing, pension, group insurance,
hospitalization or other incentive or benefit plan or arrangement which may
be or become applicable to executives of the corporation resulting from such
merger or consolidation or the corporation acquiring such assets of the
Company.
8.3. In the event of any merger, consolidation or sale of assets described
above, references to the Company in this Agreement shall, unless the context
used suggest, otherwise, be deemed to include the entity resulting from such
merger or consolidation or the acquirer of such assets of the Company.
ARTICLE IX. WITHHOLDING
Any payments required to be made by the Company hereunder to Executive or his
dependents, beneficiaries or estate will be subject to The withholding of
such amounts relating to tax and/or other payroll deductions as may be
required by law.
ARTICLE X. AMENDMENT
No amendment, change or modification of this Agreement may be made except in
writing signed by both parties.
ARTICLE XI. GENERAL
11.1. The provisions of this Agreement shall be binding upon and shall inure
to the benefit of Executive, his executors, administration, legal
representatives and assigns, and the Company and its successors.
11.2. The validity, interpretation and effect of this Agreement shall be
governed by the laws of the Sate of California.
11.3. There shall be no right of set-off or counterclaim, with respect to
any claim, debt or obligation, against any payments to Executive, his
dependents, beneficiaries or estate provided for in this Agreement.
11.4. No right or interest to or in any payments shall be assignable by
Executive; provided, however, that this provision shall not preclude him from
designating one or more beneficiaries to receive any amount that may be
payable after his death and shall not preclude the legal representative of his
estate from assigning any right hereunder to the person or persons entitled
thereto under his will or, in the case of intestacy, to the person or persons
entitled thereto under the laws of intestacy applicable to his estate. The
term "beneficiary," as used in this Agreement shall mean a beneficiary or
beneficiaries so designated to receive any such amount, or if no beneficiary
has been so designated, the legal representative of the Executive's estate.
11.5. No right, benefit or interest hereunder shall be subject to
anticipation, alienation, sale,
<PAGE>
assignment, encumbrance, charge, pledge, hypothecation, or set-off in respect
of any claim, debt or obligation, or to execution, attachment, levy or
similar process, or assignment by operation of law. Any attempt, voluntary or
involuntary, to effect any action specified in the immediately proceding
sentence to the flail extent permitted by law, be null, void and of no effect.
11.6. Commencing on the date of the Change of Control, this Agreement shall
govern Exeucitve's employment and compensation by the Company and the other
matters referred to herein, and any employment or severance agreement,
arrangement or policy otherwise applicable to the Executive superseded by
this Agreement.
11.7. The invalidity or unenforceability of any provision of this Agreement
shall not affect the valid enforceability of any other provision.
IN WITNESS WHEREOF, duly executed and delivered as of the date act
forth above.
Topform, Inc.
By /s/ Frank Seifert
---------------------------------
Frank Seifert
Executive
By /s/ John C. Homan
---------------------------------
John C. Homan
<PAGE>
June 18, 1999
Mr. Frank Seifert
1720 Louisiana NE
Suite 100
Albuquerque, New Mexico 87110
Re: Long-term Disability Insurance
Dear Mr. Seifert:
As discussed, the Board of True Vision International has agreed to
reimburse me the cost of my Long-term Disability coverage, plus any Income
Tax ensuing from such reimbursement. Attached is a request for reimbursement
for such insurance for $239.14.
If you have any questions regarding this matter, please feel free to contact
me at 505-256-3534.
Very Truly Yours,
/s/ John C. Homan
- -----------------
John C. Homan
President
Agreed: /s/ Frank Seifert Date: 6-18-99
-------------------- -------------
Frank Seifert
<PAGE>
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
1.) TrueVision Laser Center of Albuquerque, Inc.
2.) TrueVision of Nevada, Inc.
<PAGE>
[LETTERHEAD OF PANNELL KERR FORSTER]
CONSENT OF
INDEPENDENT PUBLIC ACCOUNTANT
We consent to the use in the Form SB-2 of TrueVision International, Inc. and
Subsidiary of our report dated May 24, 1999, relating to the consolidated
financial statements of TrueVision International, Inc. and Subsidiary, and to
the reference to us under the heading "Experts" in such registration
statement.
/s/ Pannell Kerr Forster
----------------------------
San Diego, California PANNELL KERR FORSTER
September 9, 1999 Certified Public Accountants
A Professional Corporation
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<PAGE>
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