<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
LIGHTTOUCH VEIN & LASER, INC.
(Name of Small Business Issuer in its charter)
NEVADA 87-0575118
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10663 MONTGOMERY ROAD, CINCINNATI, OHIO 45242
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (513) 891-8346
Securities to be registered under Section 12(b) of the Act: NONE
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK, $0.001 PAR VALUE
(Title of class)
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
LightTouch Vein & Laser, Inc. (formerly Strachan, Inc.) (the "Company")
was organized under the laws of the State of Nevada on May 1, 1981.
Effective October 1, 1999, it acquired LightTouch Vein & Laser, Inc.
("LightTouch"), a company incorporated on March 12, 1997 under the laws of
the State of Ohio. Effective October 22, 1999, Strachan, Inc. changed its
name to LightTouch Vein & Laser, Inc. The Company's offices are located at
10663 Montgomery Road, Cincinnati, Ohio 45242, and its telephone number is
(513) 891-8346. Its registered office and records are located at One East
First Street, Reno, Nevada.
The Company, through LightTouch, its wholly-owned subsidiary, provides
aesthetic laser and cosmetic surgery services in the Cincinnati, Ohio, area.
Since Ohio law mandates that a professional association may render
professional services only through officers, employees, and agent who are
themselves duly licensed, certified, or otherwise legally authorized to
render the professional service, LightTouch has engaged Vein & Laser Center,
Inc. as the actual provider of all medical services. LightTouch provides
administrative support services to this medical practice.
Vein & Laser Center, Inc. is an Ohio corporation. Colin C. Herd, M.D.,
a principal shareholder of the Company, is its president and sole
shareholder. Under the terms of a Medical Director and Administrative
Services Agreement entered into as of July 30, 1997, Vein & Laser has sole
responsibility for all medical and professional matters relating to the
operations of the medical practice and LightTouch's laser center. Vein &
Laser carries its own professional liability insurance coverage. LightTouch
is responsible for billing and collecting payments from patients, scheduling
patient appointments, assisting with record keeping functions, and providing
medical support staff. LightTouch carries the property damage insurance
protecting the center's premises and personal property located therein, as
well as general liability insurance. LightTouch is obligated to pay Vein &
Laser the amounts it collects on behalf of Vein & Laser. A minimum weekly
amount is paid by LightTouch to Vein & Laser and the parties reconcile the
accounts after each calendar quarter.
SERVICES OFFERED
LightTouch offers the following types of aesthetic laser and cosmetic
surgery services:
1. Cosmetic laser procedures (approximately 54% of sales) include facial
resurfacing (removal of freckles, age spots, moles, warts, and
birthmarks), laser treatment for scar improvement and stretch marks,
laser hair removal, and laser tooth whitening.
2. Vein treatments (approximately 28% of sales) refers to laser vein
elimination to treat conditions such as spider veins.
3. Hair replacement (approximately 10% of sales)
4. Body contouring (approximately 8% of sales) includes liposuction,
body wraps, and therapeutic massage treatments.
All of the services are rendered at LightTouch's offices.
LightTouch also operates a mobile laser rental service under the name
Tri-State Mobile Laser Services, through which it rents mobile laser
equipment to physicians and hospitals within a 600-mile radius of Cincinnati.
MARKETING AND ADVERTISING
The target market for LightTouch's services is generally comprised of
men and women between the ages of 35 and 55 who have discretionary income.
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LightTouch employs both in-house and outside marketing efforts, which
include yellow page advertising, internal point of sale materials, and
selected broadcast vehicles. In addition, an infomercial is currently being
developed.
COMPETITION
Management of the Company believes that cosmetic laser services will
attract more competitors since this field is gaining in popularity and
acceptance by consumers. Also, management believes that the cost of cosmetic
lasers will decrease, enabling others to enter the market. There can be no
assurance with LightTouch will be able to compete with others who will enter
the market.
Currently, LightTouch competes with a few other centers in the greater
Cincinnati area which offer the full range of services offered by LightTouch.
There are also numerous other businesses which offer one or more of the
services. Some businesses focus exclusively on one type of service, such as
hair replacement centers, and other businesses offer a service as a
complement to others. For example, many day spas offer body wraps and
massage treatments in addition to beauty salon services.
PATENTS, TRADEMARKS, LICENSES, FRANCHISES
The body wraps used by LightTouch are used under a license agreement
with VMM Enterprises, Inc., an unrelated third party. Under the terms of the
License and Distribution Agreement dated August 26, 1998, LightTouch was
required to pay an initial fee of $9,950 in exchange for an exclusive license
to use the body wrap products in the greater Cincinnati area.
Government Approvals and Regulation
The practice of medicine is highly regulated, primarily by state
regulatory authorities. The growing popularity of cosmetic laser procedures
has attracted concern from regulatory authorities. While the American Board
of Plastic Surgery requires a five-year surgical residency, anyone with a
medical degree can perform cosmetic procedures. Further, many procedures are
performed in offices rather than in hospitals. Should an emergency arise
during the procedures, offices may not be equipped to handle the emergency.
Lastly, authorities are concerned about the growing trend in multiple
procedures, such as combining a face-lift with liposuction, which may keep
patients on a surgical table too long, putting them at risk for
complications. Certain states have initiated stricter regulations for
in-office surgeries. Management of the Company is not aware of any stricter
regulations being considered in the State of Ohio. However, here can be no
assurance that stricter regulations will not be enacted in the future,
impairing LightTouch's business.
LightTouch, via Vein & Laser Center, Inc., does not perform any plastic
surgery procedures. It performs only cosmetic services.
EMPLOYEES
As of December 31, 1999, the Company had 20 employees, 18 of which were
full-time. LightTouch has employment agreements with its employees which
contain provisions relating to the nondisclosure of company trade secrets and
confidential information and non-competition after termination. During the
two-year period following termination of employment, employees agree not to
hire other employees of LightTouch, solicit any business of LightTouch, or
engage in any business that competes with LightTouch anywhere within 200
miles of any LightTouch location. LightTouch has initiated legal
proceedings against former employees to enforce the provisions of employment
contracts. See Part II - Item 2. Legal Proceedings.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The acquisition of LightTouch effective October 1, 1999 has been
accounted for as a reverse acquisition with LightTouch being the deemed
acquiror for accounting purposes. The transaction has been accounted for as
the issuance of shares by LightTouch for the net assets of the Company.
Accordingly, the financial statements included with this registration
statement reflect the financial position, results of operations, and cash
flows of LightTouch from August 1, 1997, consolidated with those of the
Company from October 1, 1999.
The Company's fiscal year end is December 31. The following is a
summary of certain selected financial information based on the pro forma
combined financial statements as of and for the nine months ended September
30, 1999, as of and for the year ended December 31, 1998, and as of and for
the period from August 1, 1997 to December 31, 1997. Reference should be
made to the financial statements attached to this registration statement to
put the following summary in context.
BALANCE SHEET DATA:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
------------------ ----------------- -----------------
<S> <C> <C> <C>
Working capital $ 106,893 $(185,196) $(223,327)
Long-term debt............ $ 0 $ 86,297 $ 0
Total assets.............. $ 362,976 $ 129,170 $ 63,995
Shareholders' equity
(deficiency)............ $ 294,284 $(218,169) $(182,381)
</TABLE>
STATEMENT OF OPERATIONS DATA:
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED AUGUST 1, 1997 TO
SEPTEMBER 30, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
------------------ ----------------- -----------------
<S> <C> <C> <C>
Net sales................. $ 1,980,463 $ 1,830,128 $ 609,880
Income (loss) from
operations............. $ (55,123) $ (81,797) $ (267,381)
Net income (loss)......... $ (137,546) $ (207,788) $ (272,381)
</TABLE>
RESULTS OF OPERATIONS
LightTouch has experienced increased sales since it began operations in
August 1997. On an ANNUALIZED basis, net sales from increased from
approximately $1,460,000 in 1997 to $1,830,000 in 1998 and $2,640,000 in
1999. Management believes that the increase in sales from 1997 to 1998 was
due to an increase in sales staff, and that the increase from 1998 to 1999
was due to more experienced sales personnel and expanding the kinds of
services offered to patients. During 1999, LightTouch introduced therapeutic
massage (for body contouring), tooth whitening laser treatments, and power
facial peel treatments.
As a result of increased sales revenues, losses from operations and net
losses are decreasing with each year. On an ANNUALIZED basis, the loss from
operations decreased from approximately $640,000 in 1997 to $82,000 in 1998
and $73,500 in 1999. Also on an ANNUALIZED basis, the net loss decreased
from approximately $650,000 in 1997 to $210,000 in 1998 and $180,000 in 1999.
Management is not aware of any other known trends, events, or
uncertainties that have had or that are reasonably expected to have a
material impact on the net sales or revenues or income from continuing
operations. While the operations of LightTouch appear to be improving, there
can be no assurance that the Company will be profitable. LightTouch only
recently began operations in August 1997 and it is engaging in a business
industry which is also relatively new.
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LIQUIDITY AND CAPITAL RESOURCES
Since August 1997, LightTouch has been financed primarily through the
sale of stock and loans from its officers. Proceeds from the sale of stock
were $172,000 during the year ended December 31, 1998 and $650,000 during the
nine months ended September 30, 1999. At December 31, 1998 and September 30,
1999, amounts owed to related parties were $249,140 and $-0-, respectively.
At September 30, 1999, the Company had working capital of $106,893, as
compared to a working capital deficiency of $185,196 at December 31, 1998.
The improvement was due large part to the conversion of $300,000 in debt to
equity by Gregory F. Martini, the sole officer and director and a principal
shareholder of the Company. See Part I - Item 7. Certain Relationships and
Related Transactions. In addition, LightTouch sold shares for gross proceeds
of $200,000.
Management is not aware of any known trends, events, or uncertainties
that could have a material impact on the Company's short-term or long-term
liquidity. Management expects to address any future liquidity needs through
the issuance of debt and/or equity securities, bank loans, loans from
shareholders, and lease financing of equipment. There can be no assurance
that any such financing will be available when needed and on terms favorable
to the Company. At this time, the Company does not have any material
commitments for capital expenditures.
PLAN OF OPERATION
The Company proposes to grow by acquiring established facilities that
have an existing physician with experience in laser and vein treatments, a
cosmetic orientation towards the practice, break-even or profitable
operations, and a strong interest in having an ownership interest in the
Company. Management believes that it can build a strong brand name
recognition for centers and create operating efficiencies through economies
of scale. As of the date of this registration statement, there were no
agreements, understandings, or arrangements for any such acquisitions.
ITEM 3. DESCRIPTION OF PROPERTY.
Neither the Company nor LightTouch owns any real property. LightTouch
leases approximately 6,000 square feet of medical office space in Cincinnati,
Ohio, from Intram Investment Corporation, a stockholder of LightTouch. The
lease expires July 31, 2007, and requires monthly lease payments of $10,000,
adjusted each August 1. The base rent is currently $10,000 per month. See
Part I - Item 7. Certain Relationships and Related Transactions.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table provides certain information as to the officers and
directors individually and as a group, and the holders of more than 5% of the
Common Stock of the Company, as of December 31, 1999:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF OWNER NUMBER OF SHARES OWNED PERCENT OF CLASS (1)
------------------------- ---------------------- --------------------
<S> <C> <C>
Gregory F. Martini 2,965,057 (2)(3) 39.53%
10826 Omaha Trace
Union, KY 41091
Colin C. Herd, M.D. 2,628,129 (3)(4) 34.14%
11375 Brittany Woods
Cincinnati, OH 45249
Officers and Directors as a group 2,965,057 (2) 39.53%
(1 person)
</TABLE>
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(1) This table is based on 7,500,002 shares of Common Stock outstanding on
December 31, 1999. Where the persons listed on this table have the right
to obtain additional shares of common stock within 60 days from December
31, 1999, these additional shares are deemed to be outstanding for the
purpose of computing the percentage of class owned by such persons, but are
not deemed to be outstanding for the purpose of computing the percentage of
any other person.
(2) Includes 134,775 shares owned of record by Intram Investment Corporation, a
company owned and controlled by Mr. Martini, and 2,830,282 shares owned of
record by Plymouth Partners, LP, a Delaware limited partnership. Mr.
Martini is the president of the corporate general partner of Plymouth
Partners, LP.
(3) Mr. Martini and Dr. Herd may be deemed to be the "parents" of the Company
within the meaning of the rules and regulations under federal securities
laws.
(4) Includes 202,164 shares owned of record by various trusts for Dr. Herd's
children for which his wife serves as trustee.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Gregory F. Martini 38 President, Secretary , Treasurer,
and Director
</TABLE>
The term of office of each director of the Company ends at the next
annual meeting of the Company's stockholders or when the director's successor
is elected and qualified. No date for the next annual meeting of
stockholders is specified in the Company's Bylaws, nor has a meeting been
fixed by the Board of Directors. The term of office of each officer of the
Company ends at the next annual meeting of the Company's Board of Directors,
which is expected to take place immediately after the next annual meeting of
stockholders, or when such officer's successor is elected and qualified.
GREGORY F. MARTINI, has been the sole officer and director of the
Company since January 20, 1999. He has been the Treasurer, and a director of
LightTouch since its inception in March 1997, and was the President from
March 1997 to December 1999 . In December 1999, he took on the positions of
Chief Executive Officer and Chief Financial Officer for LightTouch. He has
also been the president and a director of Intram Investment Corporation, a
private corporation located in Union, Kentucky, which renders investment
advice to individuals and firms. From May 1996 to June 1998, Mr. Martini was
the managing director and head of high yield capital markets for Union Bank
of Switzerland, New York, New York. He was employed by Citicorp Securities,
Inc., New York, New York, in a similar capacity from June 1993 to April 1995.
While at Citicorp he was responsible for 30 professionals in sales,
research, and trading, and managed over $250 million of inventory in high
yield securities. From October 1989 to September 1991, he was a managing
director at BT Securities, New York, New York, where he had responsibility
for managing that firm's high yield debt securities. Mr. Martini was vice
president, high yield securities for Salomon Brothers, New York, New York,
from April 1986 to October 1989. From June 1983 to April 1986, he was a
portfolio manager of fixed income securities for Union Central Life Insurance
Co., Cincinnati, Ohio. Mr. Martini received a bachelors degree in finance
and accounting from Xavier University in Cincinnati, Ohio, in 1984, and
received his designation as a chartered financial analyst (CFA) in 1987.
Mr. Martini may be deemed to be the "promoter" of the Company within the
meaning of the Rules and Regulations under federal securities laws.
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KEY EMPLOYEES
DR. COLIN C. HERD has been the Secretary and a director of LightTouch
since July 1997, and the President since December 1999. In addition, he
serves as the Medical Director of LightTouch. Dr. Herd founded The Vein and
Laser Center of Cincinnati in July 1996. He was the first in the Cincinnati
area to perform laser facial rejuvenation procedures. Dr. Herd received his
Bachelor of Science degree in 1979 and his medical degree in 1983 from the
University of Toronto. Originally starting practice in primary care,
including an extensive amount of obstetrics, he later focused on
sclerotherapy, a non-surgical treatment for problem veins, and laser
treatment for veins. In 1994, he became a member and fellow of the American
Society for Lasers in Medicine and Surgery, which is dedicated to education
in laser applications. From 1990 to 1993, Dr. Herd worked as an assistant
and preceptor in a center that exclusively performed hair transplants. He
began performing hair transplants on his own in 1993.
ITEM 6. EXECUTIVE COMPENSATION.
Mr. Martini is serving without any compensation.
There is no employment agreement with the executive officer of the
Company. The Company does not pay compensation to its director, nor does the
Company compensate its director for attendance at meetings. The Company does
reimburse the director for reasonable expenses incurred during the course of
his performance. The Company does not offer stock options or similar
incentive compensation to its officer or director. The Company anticipates
that some form of incentive based compensation may be offered in the future.
STOCK OPTION PLAN
On October 4, 1999, the shareholders adopted the 1999 Stock Option Plan,
which provides for the granting of both incentive stock options and
non-qualified options to eligible employees, officers, and directors.
Initially, 750,000 shares of common stock were reserved for issuance pursuant
to the exercise of stock options under this plan. The plan is administered
by the board of directors.
Each option granted under the plan will be evidenced by a written option
agreement between the Company and the optionee. Incentive stock options may
be granted only to employees as defined by the Internal Revenue Code. The
option price of any incentive stock option may not be less than 100% of the
fair market value per share on the date of grant of the option; provided,
however, that any incentive stock option granted under the plan to a person
owning more than 10% of the total combined voting power of the common stock
will have an option price of not less than 110% of the fair market value per
share on the date of grant of the incentive stock option. The exercise
period of options granted under the plan may not exceed ten years from the
date of grant thereof. Incentive stock options granted to a person owning
more than 10% of the total combined voting power of the common stock cannot
be exercisable for no more than five years. No portion of any option will be
exercisable prior to the first anniversary of the grant date.
An option may not be exercised unless the optionee then is an employee,
officer, or director of the company or its subsidiaries, and unless the
optionee has remained continuously as an employee, officer, or director of
the company since the date of grant of the option. If the optionee ceases to
be an employee, officer, or director of the company or any subsidiary other
than by reason of death, disability, retirement, or for cause, all options
granted to such optionee, fully vested to such optionee but not yet
exercised, will terminate 90 days after the date the optionee ceases to be an
employee, officer, or director. All options which are not vested to an
optionee, under the conditions stated in this paragraph for which employment
ceases, will immediately terminate on the date the optionee ceases employment
or association.
As of December 31, 1999, 145,000 incentive stock options and 25,000
non-qualified options had been granted. Of the incentive stock options, at
December 31, 1999, 40,000 are vested, 21,000 will vest in December 2000,
42,000 will vest in December 2001, 21,000 will vest in December 2002, and
21,000 will vest in December 2003. All of the
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non-qualified options are vested as of December 31, 1999. All of the options
are exercisable at $0.74 per share and expire in December 2006. None of the
options was granted to an officer or director of the Company.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Vein & Laser Center, Inc. is an Ohio corporation. Colin C. Herd, M.D.,
a principal shareholder of the Company, is its president and sole
shareholder. Under the terms of a Medical Director and Administrative
Services Agreement entered into as of July 30, 1997, Vein & Laser has sole
responsibility for all medical and professional matters relating to the
operations of the medical practice and LightTouch's laser center. LightTouch
is responsible for billing and collecting payments from patients, scheduling
patient appointments, assisting with record keeping functions., and providing
medical support staff. LightTouch is obligated to pay Vein & Laser the
amounts it collects on behalf of Vein & Laser. A minimum weekly amount is
paid by LightTouch to Vein & Laser and the parties reconcile the accounts
after each calendar quarter, including compensation of $5,000 for Dr. Herd.
From July 30, 1997 through November 12, 1998, Gregory F. Martini and Dr.
Colin C. Herd each purchased 1,260 shares of LightTouch common stock for
$126,000. Each exchanged his 1,260 LightTouch shares for 2,830,283 shares
of the Company's Common Stock in the Share Exchange.
On July 30, 1997, LightTouch entered into a Lease Agreement with Intram
Investment Corporation for its office space, a company which is owned and
controlled by Gregory F. Martini, an officer, director, and principal
stockholder of LightTouch and the Company. The lease expires July 30, 2007.
On January 16, 1998, the agreement was modified to require weekly payments of
$2,307.69 beginning February 6, 1998. Rent paid under the lease for the
period August 1, 1997 to December 31, 1997 was $55,000. Rent paid for the
year ended December 31, 1998 was $132,000.
On August 22, 1997, LightTouch entered into a Lease Agreement with
Intram Investment Corporation for laser equipment. The lease was for a term
of 36 months commencing September 1, 1997, and required base rent of
$269,802.72, payable in equal monthly installments of $7,494.52. LightTouch
is responsible for the costs of maintenance and insurance. On January 18,
1998, the Agreement was modified to require weekly payments of $1,729.50
beginning February 6, 1998. Effective July 15, 1999, the Agreement was
further modified to require weekly payments of $1,018.33.
On September 26, 1997, LightTouch borrowed $25,000 from Gregory F.
Martini. The promissory note, which was executed by the LightTouch and Dr.
Colin C. Herd, required 11 payments of $2,500. The note was paid in full on
May 26, 1998.
On January 20, 1998, LightTouch borrowed $250,000 from Intram Investment
Corporation with interest at 13% per annum. Payments were to be made in
weekly installments of $5,018.53 beginning February 6, 1998. Dr. Colin C.
Herd personally guaranteed payment of $125,000 of the amount and pledged
1,260 shares of LightTouch common stock as collateral. On December 18, 1998,
the due date of the note was extended to May 12, 2000. On December 31, 1998,
Intram transferred the note to Gregory R. Martini. On July 7, 1999, 120
shares of LightTouch common stock were issued to Gregory F. Martini as
payment of the outstanding principal balance and accrued interest in the
amount of $200,000. These shares were later exchanged for 269,550 shares of
the Company's Common Stock in the Share Exchange.
On July 31, 1998, LightTouch entered into a Lease Agreement with Intram
Investment Corporation for liposuction equipment and computer software. The
lease was for a term of 24 months commencing August 1, 1998, and required
base rent of $17,552.88, payable in equal monthly installments of $884.57.
LightTouch is responsible for the costs of maintenance and insurance.
Effective July 15, 1999, the Agreement was modified to require monthly
payments of $1.00.
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On August 24, 1998, Intram Investment Corporation loaned LightTouch
$15,000 with interest at 10% per annum. Payments were to be made in weekly
installments of $3,000 beginning September 4, 1998. This loan has been paid.
On September 10, 1998, Gregory F. Martini loaned LightTouch $15,000 on the
same terms. This loan has also been paid.
On September 1, 1998, Intram Investment Corporation loaned LightTouch
$17,013.93. The promissory note required weekly payments of $5,018.53
beginning August 7, 1999. This loan has been paid.
On September 4, 1998, Intram Investment Corporation loaned LightTouch
$30,000. The promissory note required weekly payments of $5,018.53 beginning
September 24, 1999. This loan has been paid.
On October 23, 1998, LightTouch entered into a Lease Agreement with
Intram Investment Corporation for laser equipment and computer software. The
lease was for a term of 30 months commencing October 30, 1998, and required
base rent of $111,633.90, payable in equal weekly installments of $917.30.
LightTouch is responsible for the costs of maintenance, taxes, and insurance.
On November 12, 1998, Intram Investment Corporation loaned LightTouch
$25,000. The promissory note required 11 bi-weekly payments of $2,500
beginning November 28, 1998. Dr. Colin C. Herd was a co-maker of this note.
This loan has been paid.
On January 8, 1999, Intram Investment Corporation loaned LightTouch
$50,000 with interest at 3% per month. Dr. Colin C. Herd, an officer and
director of LightTouch, personally guaranteed payment of $25,000 of the
amount. On January 28, 1999, Intram loaned another $50,000 with interest at
3% per month. Dr. Herd also personally guaranteed payment of $25,000 of this
amount. On July 7, 1999, 60 shares of LightTouch common stock were issued to
Intram as payment of the loans in the amount of $100,000. These shares were
later exchanged for 134,775 shares of the Company's Common Stock in the
Share Exchange.
On February 19, 1999, LightTouch entered into a Lease Agreement with
Intram Investment Corporation for two vehicles. The lease was for a term of
12 months commencing March 1, 1999, and required base rent of $24,911.28
payable in 12 equal monthly installments of $2,075.94. LightTouch is
responsible for the costs of maintenance and insurance on the vehicles.
On March 31, 1999, LightTouch entered into a Lease Agreement with
Gregory R. Martini for the lease of computer equipment on a month-to-month
basis. The lease requires payment of $100 per month.
On April 1, 1999, LightTouch entered into a Lease Agreement with Intram
Investment Corporation for laser equipment and a vehicle. The lease was for
a term of 24 months beginning April 16, 1999, and required base rent of
$77,040.08, payable in equal weekly installments of $740.77. LightTouch is
responsible for the costs of maintenance, insurance, and licensing.
On May 1, 1999, LightTouch purchased equipment consisting of a power
chair, surgical lamps, miscellaneous office supplies, aesthetician set-up, an
autoclave, a smoke evacuator and stools from Intram Investment Corporation
for $15,725. Intram had purchased the equipment from another laser center
on March 9, 1999.
ITEM 8. DESCRIPTION OF SECURITIES.
The authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, each with $0.001 par value per share, and 25,000,000
shares of Preferred Stock, each with $0.001 par value per share.
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COMMON STOCK
Each share of Common Stock has one vote with respect to all matters
voted upon by the shareholders. The shares of Common Stock do not have
cumulative voting rights.
Holders of Common Stock are entitled to receive dividends, when and if
declared by the Board of Directors, out of funds of the Company legally
available therefor. The Company has never declared a dividend on its Common
Stock and has no present intention of declaring any dividends in the future.
Holders of Common Stock do not have any preemptive rights or other
rights to subscribe for additional shares, or any conversion rights. Upon a
liquidation, dissolution, or winding up of the affairs of the Company,
holders of the Common Stock will be entitled to share ratably in the assets
available for distribution to such stockholders after the payment of all
liabilities.
The outstanding shares of the Common Stock of the Company are fully paid
and non-assessable.
The registrar and transfer agent for the Company's Common Stock is
Interwest Stock Transfer, Inc., 1981 East 4800 South, Suite 100, Salt Lake
City, Utah 89117.
PREFERRED STOCK
The Articles of Incorporation permit the Board of Directors, without
further shareholder authorization, to issue Preferred Stock in one or more
series and to fix the price and the terms and provisions of each series,
including dividend rights and preferences, conversion rights, voting rights,
redemption rights, and rights on liquidation, including preferences over the
Common Stock, all of which could adversely affect the rights of the holders
of the Common Stock. The Board of Directors has not issued nor established a
series of Preferred Stock.
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PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
The Company's Common Stock is not traded on a registered securities
exchange, or on NASDAQ. The Company's Common Stock is quoted on the OTC
Bulletin Board, and has been trading under the symbol "LTVL" since December
1999. The following table sets forth the range of high and low bid
quotations for each fiscal quarter since the stock began trading. These
quotations reflect inter-dealer prices without retail mark-up, mark-down, or
commissions and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED HIGH BID LOW BID
<S> <C> <C>
December 31, 1999................... $3.00 $1.06
</TABLE>
On January 18, 2000, the closing price for the Common Stock was $3.5625.
As of December 31, 1999 there were 47 record holders of the Company's
Common Stock. Since the Company's inception, no cash dividends have been
declared on the Company's Common Stock.
ITEM 2. LEGAL PROCEEDINGS.
From August 31, 1999 to October 18, 1999, LightTouch filed four suits in
the Court of Common Pleas for Hamilton County, Ohio. Each of the suits is
against former employees of LightTouch and alleges breach of the non-compete
clause of the former employee's employment contract with LightTouch. Most of
the suits also allege intentional interference with the employment contract
against the current employers of the former employees. To recover money
damages from the defendants, LightTouch will have to prove that the
employment contract provision was breached and a dollar amount in loss of
business that it suffered as a result. LightTouch will not be able to
recover its attorney fees even if it is successful in these suits.
1. Filed August 31, 1999 against Michelle Hoffman nka Michelle Barnes,
Tina Cluxton, and Radiant Laser and Hair Removal, Inc. LightTouch
seeks injunctive relief and a judgment of $250,000 against each of
Michelle Hoffman and Tina Cluxton for breach of the non-compete
clause; judgment in the amount of $1,000,000 against Michelle Hoffman
and Tina Cluxton for conversion of a patient list and procedures
manual; judgment in the amount of $250,000 for actual damages and
$1,000,000 for punitive damages against Radiant Laser and Hair Removal
for intentional interference with LightTouch's employment contract;
judgment against Michelle Hoffman for $4,275 in actual damages and
$500,000 in punitive damages for failing to provide the means by which
LightTouch could properly charge patients for treatment; and judgment
against Tina Cluxton for $37,550 in actual damages and $1,000,000 in
punitive damages for failing to provide the means by which LightTouch
could properly charge patients for treatment. As of January 31, 2000,
no trial date had been set. The proceedings are still in the
discovery stage.
2. Filed August 31, 1999 against Karen M. Miller and Joseph C. Russell,
M.D. dba Anderson Cosmetic Hair & Vein Center. LightTouch seeks
injunctive relief and a judgment of $250,000 against Karen Miller for
breach of the non-compete clause; judgment of $250,000 against Karen
Miller for disclosure of LightTouch's confidential information;
judgment in the amount of $1,000,000 against Karen Miller for
conversion of a patient list; and judgment in the amount of $250,000
for actual damages and $1,000,000 for punitive damages against Dr.
Russell for intentional interference with LightTouch's employment
contract. As of January 31, 2000, no trial date had been set. The
proceedings are still in the discovery stage.
11
<PAGE>
3. Filed August 31, 1999 against Cathy A. Miller and Michael Leadbetter,
M.D. dba The Plastic Surgery Group, Inc. LightTouch had sought
injunctive relief and a judgment of $250,000 against Cathy Miller for
breach of the non-compete clause; judgment of $250,000 against Cathy
Miller for disclosure of LightTouch's confidential information;
judgment in the amount of $1,000,000 against Cathy Miller for
conversion of a patient list; and judgment in the amount of $250,000
for actual damages and $1,000,000 for punitive damages against Dr.
Leadbetter for intentional interference with LightTouch's employment
contract. As of January 31, 2000, this had been dismissed by
LightTouch.
4. Filed October 18, 1999 against Lisa Bowcock. LightTouch seeks
injunctive relief, a judgment of $250,000 for breach of the non-
compete clause, and a judgment of $250,000 for disclosure of
LightTouch's confidential information. A trial date of August 28,
2000 has been scheduled for this case.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Company has sold shares of Common Stock
which were not registered under the Securities Act of 1933, as amended, as
follows:
Effective October 1, 1999, the Company issued 6,750,000 shares in
exchange for all of the issued and outstanding shares of LightTouch to 8
persons, in reliance on the exemption from registration contained in Section
4(2) of the Securities Act of 1933 for a transaction not involving a public
offering. No underwriters were used and no commissions were paid.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.7502 of the General Corporation Law of Nevada and Article XI
of the Company's Articles of Incorporation permit the Company to indemnify
its officers and directors and certain other persons against expenses in
defense of a suit to which they are parties by reason of such office, so long
as the persons conducted themselves in good faith and the persons reasonably
believed that their conduct was in the Company's best interests or not
opposed to the Company's best interests, and with respect to any criminal
action or proceeding, had no reasonable cause to believe their conduct was
unlawful. Indemnification is not permitted in connection with a proceeding
by or in the right of the corporation in which the officer or director was
adjudged liable to the corporation or in connection with any other proceeding
charging that the officer or director derived an improper personal benefit,
whether or not involving action in an official capacity.
12
<PAGE>
PART F/S
The following financial statements are being filed:
Pro Forma Financial Statements of Strachan, Inc. dba LightTouch Vein & Laser,
Inc.
Accountants Compilation Report
Pro Forma Consolidating Balance Sheet (unaudited)
Pro Forma Consolidating Statement of Operations (unaudited)
Summary of Significant Assumptions
LightTouch Vein & Laser, Inc. - September 30, 1999
Accountants Compilation Report
Balance Sheet as of September 30, 1999 (unaudited)
Statement of Operations for Nine Months Ended September 30, 1999
(unaudited)
LightTouch Vein & Laser, Inc. - Years Ended December 31, 1998 and 1997
Independent Auditor's Report
Balance Sheets as of December 31, 1998 and 1997
Statements of Operations for year ended December 31, 1998 and period from
August 1, 1997 to December 31, 1997
Statements of Stockholders' Deficiency for period from August 1, 1997 to
December 31, 1998
Statements of Cash Flow for year ended December 31, 1998 and period from
August 1, 1997 to December 31, 1997
Notes to Financial Statements
Strachan, Inc. - September 30, 1999
Accountants Compilation Report
Balance Sheet as of September 30, 1999 (unaudited)
Statement of Operations for Nine Months Ended September 30, 1999
(unaudited)
Strachan, Inc. - June 30, 1999 and December 31, 1998 and 1997
Report of Independent Certified Public Accountants
Balance Sheets as of June 30, 1999 and December 31, 1998
Statements of Operations for the Six Months Ended June 30, 1999, Years
Ended December 31, 1998 and 1997, and the Period May 1, 1981 to
June 30, 1999
Statement of Changes in Stockholders' Equity Period from May 1, 1981 to
June 30, 1999
Statement of Cash Flows for the Six Months Ended June 30, 1999, Years
Ended December 31, 1998 and 1997, and the Period May 1, 1981 to
June 30, 1999
Notes to Financial Statements
13
<PAGE>
STRACHAN, INC.
DBA LIGHTTOUCH VEIN & LASER, INC.
PRO FORMA FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
WITH
ACCOUNTANTS' COMPILATION REPORT
<PAGE>
STRACHAN, INC.
dba LIGHTTOUCH VEIN & LASER, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Accountants Compilation Report 1
Pro Forma Consolidating Financial Statements:
Balance Sheet 2
Statement of Operations 3
Summary of Significant Assumptions 4-5
</TABLE>
<PAGE>
Board of Directors and Shareholders
Strachan, Inc.
dba LightTouch Vein & Laser, Inc.:
We have compiled the accompanying pro forma consolidating balance sheet of
Strachan, Inc. dba LightTouch Vein & Laser, Inc. as of September 30, 1999, and
the related consolidating statement of pro forma income for the nine months then
ended.
The objective of this pro forma financial information is to show what the
significant effects on the historical financial information might have been had
the transaction occurred at an earlier date. However, the pro forma financial
statements are not necessarily indicative of the results of operations or
related effects on financial position that would have been attained had the
above-mentioned transaction actually occurred earlier.
The accompanying presentation and this report were prepared to facilitate a
share exchange and reorganization and should not be used for any other purpose.
A compilation is limited to presenting in the form of pro forma financial
statements information that is the representation of management and does not
include evaluation of the support for the assumptions underlying the pro
forma transactions. We have not examined or reviewed the accompanying pro
forma financial statements and, accordingly, do not express an opinion or any
other form of assurance on them.
Management has elected to omit substantially all of the disclosures and the
statement of cash flows required by generally accepted accounting principles.
If the omitted disclosures were included in the financial statements, they
might influence the user's conclusions about the Company's financial
position, results of operations, and cash flows. Accordingly, these financial
statements are not designed for those who are not informed about such matters.
/s/ Clark, Schaefer, Hackett & Co.
- ----------------------------------
Cincinnati, Ohio
October 29, 1999
<PAGE>
STRACHAN, INC.
dba LIGHTTOUCH VEIN & LASER, INC.
PRO FORMA CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 1999
ASSETS
------
<TABLE>
<CAPTION>
LightTouch Vein Pro Forma
Strachan, Inc. & Laser, Inc. Adjustments Consolidated
-------------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
Current assets:
Cash $ - 105,444 - 105,444
Accounts receivable - 55,141 - 55,141
Note receivable - stockholder - 15,000 - 15,000
-------------- --------------- ----------- ------------
Total current assets - 175,585 - 175,585
Property and equipment - net - 58,633 - 58,633
Note receivable - stockholder, less
current portion - 102,477 - 102,477
Other assets - 26,281 - 26,281
-------------- --------------- ----------- ------------
$ - 362,976 - 362,976
============== =============== =========== ============
LIABILITIES AND SHAREHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $ 2,900 51,192 - 54,092
Other current liabilities - 14,600 - 14,600
-------------- --------------- ----------- ------------
Total current liabilities 2,900 65,792 - 68,692
-------------- --------------- ----------- ------------
Shareholders' equity (deficit):
Common stock, no par value;
7,000 shares authorized; 3,005
shares issued and outstanding - 10,000 (10,000) -
Common stock, $.001 par value,
100,000,000, share authorized;
7,500,000 shares issued and outstanding 460 - 297,184 297,644
Preferred stock, $.001 par value,
25,000,000 shares authorized; - - - -
Additional paid-in capital 31,540 902,000 (902,000) 31,540
Accumulated deficit (34,900) (614,816) 614,816 (34,900)
-------------- --------------- ----------- ------------
(2,900) 297,184 - 294,284
-------------- --------------- ----------- ------------
$ - 362,976 - 362,976
============== =============== =========== ============
</TABLE>
See summary of significant assumptions and accountant's report.
-2-
<PAGE>
STRACHAN, INC.
dba LIGHTTOUCH VEIN & LASER, INC.
PRO FORMA CONSOLIDATING STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
LightTouch Vein Pro Forma
Strachan, Inc. & Laser, Inc. Adjustments Consolidated
-------------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales $ - 1,980,463 - 1,980,463
Costs and expenses
Cost of sales - 1,248,495 - 1,248,495
Selling, general and
administrative 2,900 784,191 - 787,091
--------------- -------------- ----------- ---------
2,900 2,032,686 - 2,035,586
--------------- -------------- ----------- ---------
Loss from operations (2,900) (52,223) - (55,123)
Other income (expense) - net - (826) - (826)
Interest expense - (81,597) - (81,597)
--------------- -------------- ----------- ---------
Net loss $ (2,900) (134,646) - (137,546)
=============== ============== =========== =========
</TABLE>
See summary of significant assumptions and accountant's report.
-3-
<PAGE>
STRACHAN, INC.
dba LIGHTTOUCH VEIN & LASER, INC.
Summary of Significant Assumptions
1. DESCRIPTION OF TRANSACTION
On October 1, 1999, Strachan, Inc. ("the Company") underwent a business
combination with LightTouch Vein & Laser, Inc. pursuant to a closing
under an Agreement and Plan of Share Exchange dated October 1, 1999.
Prior to the combination, the Company had a total of 460,000 common
shares issued and outstanding. As the first step in the closing process
the Company agreed to effect a forward stock split of approximately
1.63-for-1 on its outstanding shares of common stock so that the
460,000 shares outstanding will be split to 750,000 shares.
On the effective date the Company issued an additional 6,750,000 common
shares in exchange for 100% of the issued and outstanding common stock
of LightTouch Vein & Laser, Inc., such that LightTouch Vein & Laser,
Inc., after the exchange, became a wholly owned subsidiary of the
Company.
As a result of, and immediately following, these transactions, the
Company had 7,500,000 common shares issued and outstanding. The
shareholders of LightTouch as a group will own 90% of the then
outstanding shares of common stock of the Company.
For pro forma financial statement purposes, the transaction is
accounted for as a recapitalization of LightTouch Vein & Laser, Inc.,
which is designated the accounting acquiree.
Immediately after the effective date, Strachan will do business as
(dba) LightTouch Vein & Laser, Inc.
See accountants' compilation report.
-4-
<PAGE>
2. BASIS OF PRESENTATION
The accompanying pro forma consolidating statements of operations ise
presented for the interim period ended September 30, 1999. It is based
upon historical results of the combining entitles as follows: Strachan,
Inc. and LightTouch Vein & Laser, Inc. for the nine months ended
September 30, 1999. It has been computed assuming the transaction was
consummated at the beginning of each period presented, and includes all
adjustments which give effect to events that are directly attributable
to the transaction, are factually supportable, and are expected to have
a continuing impact on the Company.
The pro forma consolidating balance sheet is presented as of September
30, 1999. It is based upon historical financial position of the
combining entities at September 30, 1999. It has been computed assuming
the transaction was consummated on September 30, 1999 and includes
adjustments which give effect to events that are directly attributable
to the transaction and are factually supportable.
3. BALANCE SHEET ADJUSTMENTS
(a) To eliminate the pro forma investment by Strachan, Inc. in
LightTouch Vein & Laser, Inc.
See accountants' compilation report.
-5-
<PAGE>
STRACHAN, INC.
FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
WITH
ACCOUNTANTS' COMPILATION REPORT
<PAGE>
STRACHAN, INC.
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Accountants Compilation Report 1
Financial Statements:
Balance Sheet 2
Statement of Operations 3
</TABLE>
<PAGE>
[LETTERHEAD]
Board of Directors and Shareholders
Strachan, Inc.:
We have compiled the accompanying balance sheet of Strachan, Inc. as of
September 30, 1999, and the related consolidating statement of income for the
nine months then ended.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not examined or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures and the
statement of cash flows required by generally accepted accounting principles. If
the omitted disclosures were included in the financial statements, they might
influence the user's conclusions about the Company's financial position, results
of operations, and cash flows. Accordingly, these financial statements are not
designed for those who are not informed about such matters.
/s/ Clark, Schaefer, Hackett & Co.
Cincinnati, Ohio
October 29, 1999
<PAGE>
STRACHAN, INC
BALANCE SHEET
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets $ -
Property and equipment -
Other assets -
------------
$ -
------------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 2,900
------------
Total current liabilities 2,900
------------
Shareholders' equity (deficit):
Common stock, $.001 par value,
100,000,000, share authorized;
7,500,000 shares issued and outstanding 460
Additional paid-in capital 31,540
Accumulated deficit (34,900)
------------
(2,900)
------------
$ -
============
</TABLE>
See accountant's report.
-2-
<PAGE>
STRACHAN, INC.
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C>
Net Sales $ -
Costs and expenses
Selling, general and administrative 2,900
------------
2,900
------------
Loss from operations (2,900)
Other income (expense) - net -
Interest expense -
------------
Net loss $ (2,900)
============
</TABLE>
See accountant's report.
-3-
<PAGE>
LIGHTTOUCH VEIN & LASER, INC.
FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
WITH
ACCOUNTANTS' COMPILATION REPORT
<PAGE>
LIGHTTOUCH VEIN & LASER, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Accountants Compilation Report 1
Financial Statements:
Balance Sheet 2
Statement of Operations 3
</TABLE>
<PAGE>
[LOGO]
CERITIFIED PUBLIC ACCOUNTANTS
BUSINESS CONSULTANTS
Board of Directors and Shareholders
LightTouch Vein & Laser, Inc.:
We have compiled the accompanying balance sheet of LightTouch Vein & Laser,
Inc. as of September 30, 1999, and the related statement of income for the
nine months then ended.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not examined or
reviewed the accompanying financial statements and, accordingly, do not
express an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures and the
statement of cash flows required by generally accepted accounting principles.
If the omitted disclosures were included in the financial statements, they
might influence the user's conclusions about the Company's financial
position, results of operations, and cash flows. Accordingly, these financial
statements are not designed for those who are not informed about such matters.
/s/ Clark, Schaefer, Hackett & Co.
Cincinnati, Ohio
October 29, 1999
<PAGE>
LIGHTTOUCH VEIN & LASER, INC.
BALANCE SHEET
SEPTEMBER 30, 1999
ASSETS
<TABLE>
<CAPTION>
<S> <C>
Current Assets:
Cash $ 105,444
Accounts receivable 55,141
Note receivable - stockholder 15,000
------------
Total current assets 175,585
Property and equipment - net 58,633
Note receivable - stockholder, less current portion 102,477
Other assets 26,281
------------
$
362,976
============
Current liabilities:
Accounts payable $ 51,192
Other current liabilities 14,600
------------
Total current liabilities 65,792
------------
Shareholders' equity (deficit):
Common stock, no par value;
7,000 shares authorized: 3,005
shares issued and outstanding 10,000
Additional paid-in capital 902,000
Accumulated deficit (614,816)
------------
297,184
------------
$ 362,976
============
</TABLE>
See accountant's report.
-2-
<PAGE>
LIGHTTOUCH VEIN & LASER, INC.
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C>
Net Sales $ 1,980,463
Costs and expenses
Cost of sales 1,248,495
Selling, general and administrative 784,191
-------------
2,032,686
-------------
Loss from operations (52,223)
Other income (expense) - net (826)
Interest expense (81,597)
-------------
Net loss $ (134,646)
=============
</TABLE>
See accountant's report
-3-
<PAGE>
STRACHAN, INC.
FINANCIAL STATEMENTS AND REPORT
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
JUNE 30, 1999, DECEMBER 31, 1998, AND DECEMBER 31, 1997
<PAGE>
ANDERSEN ANDERSEN & STRONG, L.C. 941 East 3300 South, Suite 202
- -------------------------------- Salt Lake City, Utah 84106
Certified Public Accountants and Telephone 801-486-0096
Business Consultants Fax 801-486-0098
Member SEC Practice Section of the AICPA E-mail [email protected]
Board of Directors
Strachan, Inc.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheets of Strachan, Inc. (a
development stage company) at June 30, 1999, December 31, 1998, and December
31, 1997 and the statements of operations, stockholders' equity and cash
flows for the six months ended June 30, 1999 and years ended December 31,
1998, 1997 and 1996 the period May 1, 1981 (date of inception) to June 30,
1999. 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 audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the balance sheet is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the balance sheet. An audit also
includes assessing the accounting principles used and significant estimates
made by management as well as evaluating the overall balance sheet
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Strachan, Inc. at June 30,
1999, and December 31, 1998 and the results of operations and cash flows for
the six months ended June 30, 1999 and the years ended December 31, 1998,
1997 and 1996 and the period May 1, 1981 (date of inception) to June 30,
1999, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is in the development
stage and does not have the working capital necessary for its planned
activity, which raises substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are described in
Note 4. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Andersen, Andersen & Strong
Salt Lake City, Utah
October 5, 1999
A member of ACF International with affiliated offices worldwide
<PAGE>
STRACHAN, INC.
(DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
JUNE 30, 1999, AND DECEMBER 31, 1998
================================================================================
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
-------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ - $ -
-------- --------
Total Current Assets $ - $ -
======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,900 $ -
-------- --------
Total Current Liabilities 2,900 -
-------- --------
STOCKHOLDERS' EQUITY - Note 5
Common Stock
100,000,000 shares authorized, at $0.001
par value; 460,000 shares issued and
outstanding 460 460
Capital in excess of par value 31,540 31,540
Deficit accumulated during the
development stage (34,900) (32,000)
-------- --------
Total Stockholders' Equity (Deficiency) (2,900) -
-------- --------
$ - $ -
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STRACHAN, INC.
(DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND THE
YEARS ENDED DECEMBER 31, 1998 AND 1997, AND THE PERIOD MAY 1, 1981
(DATE OF INCEPTION) TO JUNE 30, 1999
================================================================================
<TABLE>
<CAPTION>
MAY 1, 1981
(DATE OF INCEPTION) TO
1999 1998 1997 JUNE 30, 1999
-------- -------- -------- -------------
<S> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ -
EXPENSES 2,900 10,000 - 34,900
-------- -------- -------- --------
NET LOSS $ (2,900) $(10,000) $ - $(34,900)
======== ======== ======== ========
NET LOSS PER COMMMON
SHARE
Basic $ - $ (0.02) $ -
======== ======== ========
AVERAGE OUTSTANDING
SHARES
Basic 460,000 450,000 440,000
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STRACHAN, INC.
(DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM MAY 1, 1981 (DATE OF INCEPTION) TO JUNE 30, 1999
================================================================================
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN
--------------- EXCESS OF ACCUMULATED
SHARES AMOUNT PAR VALUE DEFICIT
------ ------ --------- -------
<S> <C> <C> <C> <C>
BALANCE MAY 1, 1981 (date of inception) - $ - $ - $ -
Issuance of common stock for cash
at $.05 - September 9, 1993 120,000 120 5,880 -
Issuance of common stock for cash
at $.05 - September 18, 1993 80,000 80 3,920 -
Issuance of common stock for cash
at $.05 - December 6, 1993 120,000 120 5,880 -
Issuance of common stock for cash
at $.05 - December 18, 1993 120,000 120 5,880 -
Net operating loss for the year ended
December 31, 1993 - - - (22,000)
------- ------ --------- --------
BALANCE DECEMBER 31, 1997 440,000 440 21,560 (22,000)
Issuance of common stock for cash
at $.50 - April 25, 1998 20,000 20 9,980 -
Net operating loss for the year
ended December 31, 1998 - - - (10,000)
------- ------ --------- --------
BALANCE DECEMBER 31, 1998 460,000 460 31,540 (32,000)
Net operating loss for the six
months ended June 30, 1999 - - - (2,900)
------- ------ --------- --------
BALANCE JUNE 30, 1999 460,000 $ 460 $ 31,540 $(34,900)
======= ====== ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STRACHAN, INC.
(DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND THE
YEARS ENDED DECEMBER 31, 1998, AND 1997, AND THE PERIOD MAY 1, 1981
(DATE OF INCEPTION) TO JUNE 30, 1999
================================================================================
<TABLE>
<CAPTION>
MAY 1, 1981
(DATE OF INCEPTION) TO
1999 1998 1997 JUNE 30, 1999
-------- -------- -------- -------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (2,900) $(10,000) $ - $(34,900)
Adjustments to reconcile net loss to
net cash provided by operating
activities
Change in accounts payable 2,900 - - 2,900
-------- -------- -------- --------
Net Cash (Used) From Operations - (10,000) - (32,000)
-------- -------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES - - - -
-------- -------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issuance of common stock - 10,000 - 32,000
-------- -------- -------- --------
Net Increase (Decrease) in Cash - - - -
Cash at Beginning of Period - - - -
-------- -------- -------- --------
Cash at End of Period $ - $ - $ - $ -
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STRACHAN, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ORGANIZATION
The Company was incorporated under the laws of the state of Nevada on May 1,
1981 with authorized common stock of 2,500 shares with no par value. On April
5, 1998 the authorized common stock was increased to 100,000,000 shares with
a par value $0.001.
On April 5, 1998 the Company completed a forward stock split of one share of
its outstanding stock for two hundred shares. This report has been prepared
showing after stock split shares with a par value of $0.001 from its
inception.
The company has been in the development stage since inception and has been
primarily engaged in the business of developing mining properties. During
1994 the company abandoned its remaining assets and settled its liabilites
and since that date has remained inactive.
See note 5 - subsequent events - for acquisition and reorganization of
Company
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING METHODS
The Company recognizes income and expenses based on the accrual method of
accounting.
DIVIDEND POLICY
The Company has not yet adopted a policy regarding payment of dividends.
INCOME TAXES
At December 31, 1998, the Company had a net operating loss carry forward of
$32,000. The tax benefit from the loss carry forward has been fully offset by
a valuation reserve because the use of the future tax benefit is doubtful
since the Company has no operations. The loss carryforward will expire in
2019.
ESTIMATES AND ASSUMPTIONS
Management uses estimates and assumptions in preparing financial statements
in accordance with generally accepted accounting principles. Those estimates
and assumptions affect the reported amounts of the assets and liabilities,
the disclosure of contingent assets and liabilities, and the reported
revenues and expenses. Actual results could vary from the estimates that were
assumed in preparing these financial statements.
<PAGE>
STRACHAN, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments, including accounts payable,
are considered by management to be their estimated fair values. These values
are not necessarily indicative of the amounts that the Company could realize
in a current market exchange.
EARNINGS (LOSS) PER SHARE
Earnings (loss) per share amounts are computed based on the weighted average
number of shares actually outstanding, after the stock split, in accordance
with FASB statement No 128.
3. RELATED PARTY TRANSACTIONS
After the completion of the transactions outlined in note 5 related parties
will have acquired 79% of the outstanding stock of the Company.
4. GOING CONCERN
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital and the management of the Company has developed a
strategy, which it believes will accomplish this objective through additional
equity funding, as needed, and the acquisition outlined in note 5 which will
enable the Company to continue operations for the coming year.
5. SUBSEQUENT EVENTS
During October 1999 the Company plans to acquire all of the outstanding stock
of LightTouch Vein & Laser, Inc. (LightTouch), in a stock for stock
exchange, by the issuance of 6,750,000 common shares of the Company. After
the acquisition, LightTouch will became a wholly owned subsidiary of the
Company and the former shareholders of LightTouch will own 90% of the
outstanding stock of the Company.
LightTouch was organized in the state of Ohio on July 31, 1997 and is in the
business of cosmetic laser treatment and hair restoration.
On October 4, 1999, prior to the above planned transaction, and as part of
the plan of acquisition and reorganization, the Company changed its name to
LightTouch Vein & Laser, Inc. and completed a forward stock split of its
outstanding common shares of one share of its outstanding stock for 1.6304347
shares making total outstanding shares of 750,000 and by increasing its
authorized stock to include 25,000,000 shares of preferred stock with a par
value of $0.001. The terms and conditions of the preferred shares will be
determined at the date of issuance.
<PAGE>
STRACHAN, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
5. SUBSEQUENT EVENTS - (continued)
After the completion of the outlined transactions the outstanding common
stock of the Company will be 7,500,000.
Included in the following is a unaudited summary balance sheet of LightTouch
Vein & Laser, Inc. (subsidiary) at September 30, 1999
<TABLE>
<S> <C>
ASSETS
Current assets $302,106
Other assets 333,474
--------
$635,580
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 49,507
Stockholders' equity 586,073
--------
$635,580
========
</TABLE>
<PAGE>
LIGHTTOUCH VEIN & LASER INC
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997
<PAGE>
LIGHTTOUCH VEIN & LASER INC
FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report 1
Financial Statements:
Balance Sheets, December 31, 1998 and 1997 2
Statement of Operations, from Inception
(August 1, 1997) to December 31, 1997 and
the Year Ended December 31, 1998 3
Statement of Stockholders Deficiency from
Inception (August 1, 1997) to December 31,
1997 and the Year Ended December 31, 1998 4
Statements of Cash Flows, from Inception
(August 1, 1997) to December 31, 1997 and
the Year Ended December 31, 1998 5 - 6
Notes to Financial Statements 7 - 11
</TABLE>
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Lighttouch Vein & Laser, Inc.
We have audited the accompanying balance sheets of Lighttouch Vein & Laser,
Inc. (the "Company") as of December 31, 1998 and 1997 and the related
statements of operations, deficiency, and cash flows for the period from
inception (August 1, 1997) to December 31, 1997 and the year ended December
31, 1998. 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 audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Lighttouch Vein & Laser, Inc
as of December 31, 1998 and 1997 and the results of its operations and its
cash flows for the period from inception (August 1, 1997) to December 31,
1997 and the year ended December 31, 1998 in conformity with generally
accepted accounting principles.
/s/ Wiener, Goodman & Company, P.C.
WIENER, GOODMAN & COMPANY, P.C.
Certified Public Accountants
August 27, 1999
-1-
<PAGE>
LIGHTTOUCH VEIN & LASER, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
December 31,
--------------------------------
1998 1997
-------------- -------------
<S> <C> <C>
Current Assets:
Cash $ 55,460 $ 388
Accounts receivable 20,386 21,661
Other current assets - 1,000
--------- --------
Total Current Assets 75,846 23,049
Fixed assets - net 38,807 39,079
Other assets 14,517 1,867
--------- --------
Total Assets $129,170 $ 63,995
========= ========
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY)
Current Liabilities:
Accounts payable $ 27,705 $ 84,263
Other current liabilities 70,494 62,113
Current portion of notes payable to
officer/shareholder 162,843 100,000
--------- --------
Total Current Liabilities 261,042 246,376
Long-term debt 86,297 -
--------- --------
Total Liabilities 347,339 246,376
--------- --------
Stockholders' (Deficiency):
Common stock - no par value;
authorized 7,000 shares, outstanding
2,620 and 900 shares 2,620 900
Additional Paid-in capital 259,380 89,100
(Deficit) (480,169) (272,381)
--------- --------
Total Stockholders' (Deficiency) (218,169) (182,381)
--------- --------
Total Liabilities and
Stockholders' (Deficiency) $ 129,170 $ 63,995
========= ========
</TABLE>
See notes to financial statements
-2-
<PAGE>
LIGHTTOUCH VEIN & LASER, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended From Inception
December 31, August 1, 1997 to
1998 December 31, 1997
-------------- -------------------
<S> <C> <C>
Net sales $ 1,830,128 $ 609,880
----------- ----------
Cost and Expenses:
Cost of sales 1,026,007 485,264
Selling, general and administrative 885,918 391,997
----------- ----------
1,911,925 877,261
----------- ----------
(Loss) from operations (81,797) (267,381)
Other income - net 2,902 -
Interest expense 128,893 5,000
----------- ----------
Net (loss) $ (207,788) $ (272,381)
=========== ==========
</TABLE>
See notes to financial statements
-3-
<PAGE>
LIGHTTOUCH VEIN & LASER, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
Common Stock
------------ Additional
Shares Par Paid-In
Outstanding Value Capital (Deficit) Total
----------- --------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, August 1, 1997 - $ - $ - $ - $ -
Sale of common stock
(valued at $1.00 per share) 900 900 89,100 90,000
Net (loss) - - - (272,381) (272,381)
--------- ------- --------- ---------- ----------
Balance, December 31, 1997 900 900 89,100 (272,381) (182,381)
Sale of common stock
(valued at $1.00 per share) 1,720 1,720 170,280 - 172,000
Net (loss) - - - (207,788) (207,788)
--------- ------- --------- ---------- ----------
Balance, December 31, 1998 2,620 $ 2,620 $ 259,380 $ (480,169) $ (218,169)
========= ======= ========= ========== ==========
</TABLE>
See notes to financial statements
-4-
<PAGE>
LIGHTTOUCH VEIN & LASER, INC.
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Year Ended From inception
December 31, August 1, 1997 to
1998 December 31, 1997
------------ -----------------
<S> <C> <C>
Cash flows from operation activities
Net (loss) $ (207,788) $ (272,381)
Adjustments to reconcile net (loss) to
net cash provided by operating
activities:
Depreciation and amortization 8,014 3,369
Changes in operating assets and
liabilities (58,552) 121,848
---------- ----------
Net Cash Used in Operating
Activities (258,326) (147,164)
---------- ----------
Cash flows from investing activities:
Purchase of property and equipment (7,742) (42,448)
---------- ----------
Cash flows from financing activities:
Proceeds from sale of stock 172,000 90,000
Proceeds from borrowings - 100,000
Pepayment of borrowings (100,000) -
Proceeds from officer loans 364,129 -
Repayment to officer loans (114,989) -
---------- ----------
Net Cash Provided by financing
Activities 321,140 190,000
---------- ----------
Net increase in cash 55,072 388
Cash - beginning of year 388 -
---------- ----------
Cash - end of year $ 55,460 $ 388
========== ==========
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable $ 1,275 $ (21,661)
(Increase) decrease in prepaid expenses 1,000 (1,000)
(Increase) in other assets (12,650) (1,867)
Increase (decrease) in accounts payable (56,558) 84,263
Increase in accrued expenses 8,381 62,113
---------- ----------
$ (58,552) $ 121,848
========== ==========
</TABLE>
See notes to financial statements
-5-
<PAGE>
LIGHTTOUCH VEIN & LASER, INC.
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Year Ended From Inception
December 31, August 1, 1997 to
1998 December 31, 1997
------------ -----------------
<S> <C> <C>
Supplementary Information:
Cash paid during the year for:
Interest $ 127,893 $ 6,000
========= ========
Taxes $ - $ -
========= ========
Details of acquisition
Fair value of assets acquired $ - $102,338
--------- --------
Liabilities assumed $ - $ 97,338
--------- --------
Cost of acquisition 50 shares of
Lighttouch common stock valued at
$100 per share $ - $ 5,000
--------- --------
Non Cash Financing Activities:
Issuance of new debt $ 250,000 $ -
========= ========
</TABLE>
See notes to financial statements
-6-
<PAGE>
LIGHTTOUCH VEIN & LASER INC
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Lighttouch Vein & Laser, Inc ("Lighttouch") or (the "Compnay") , is
engaged in the use of aesthetic lasers for cosmetic surgery. The center
integrates laser treatments, vein treatments and other specific cosmetic
surgical procedures. The four (4) areas of service are; cosmetic laser
procedures, vein treatments, hair replacement, and body contouring.
USE OF ESTIMATES
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that effect 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.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of accounts receivable.
Exposure to losses on receivables is principally dependant on each customer's
financial condition. The Company controls its exposure to credit risk through
credit approvals, credit limits and monitoring procedures.
DEPRECIATION AND AMORTIZATION
Property and equipment are stated at historical cost less
accumulated depreciation. Depreciation and amortization are calculated using
the straight - line method over their estimated useful lives.
EVALUATION OF LONG-LIVED ASSETS
Long - lived assets are assessed for recoverability on an ongoing
basis. In evaluating the fair value and future benefits of long - lived
assets, their carrying value would be reduced by the excess, if any, of the
long - lived asset over management's estimate of the anticipated undiscounted
future net cash flows of the related long - lived asset. As of December 31,
1998, management concluded that no valuation allowance was required.
-7-
<PAGE>
LIGHTTOUCH VEIN & LASER INC
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
RECLASSIFICATION
Certain reclassifications have been made to prior year balances in
order to conform with the current year's presentation.
2. ACQUISITION
On July 31, 1997, the Company acquired the assets, primarily
consisting of accounts receivable and fixed assets and liabilities primarily
consisting of accounts payable and notes payable of Personal Best Hair
Restoration and Cosmetic Surgery Center, Inc. for 50 shares of Lighttouch
Vein & Laser, Inc. stock valued at $5,000.
The acquisition has been accounted for under the purchase method of
accounting and includes the results of operations of the acquired entity from
August 1, 1997, date of acquisition, to December 31, 1997. Goodwill which
arose in connection with the acquisition in the amount of $718 was expensed.
3. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
December 31,
----------------------------
1998 1999
------- -------
<S> <C> <C>
Machinery and equipment $45,190 $42,448
Furniture and fixtures 5,000 -
------- -------
50,190 42,448
Less accumulated depreciation 11,383 3,369
------- -------
$38,807 $39,079
======= =======
</TABLE>
4. INCOME TAXES
At December 31, 1998, the Company has a net operating loss ("NOL")
carryforward of approximately $480,000 for financial reporting and tax purposes
expiring in the years 2003 and 2004. The Company has not reflected any benefit
of such net operating loss carryforward in the accompanying financial statements
in accordance with Financial Accounting Standards Board Statement No. 109 as the
realization of this deferred tax asset is not more than likely.
-8-
<PAGE>
LIGHTTOUCH VEIN & LASER INC
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
5. DEBT
<TABLE>
<CAPTION>
December 31,
----------------------------
1998 1997
---------- ----------
<S> <C> <C>
Note payable to officer/stockholder,
interest at 13%, principal and
interest, in the amount of $5,019,
payable weekly through July 2000 (1) $249,140 $ -
Note payable to related party
interest at 12% due December
31, 1997 - 50,000
Note payable to related party
interest at 12% due December
31, 1999 (1) - 50,000
-------- --------
249,140 100,000
Less amounts due in one year 162,843 100,000
-------- --------
Long - term debt $ 86,297 $ -
======== ========
</TABLE>
(1) An officer/stockholder of the Company has personally guaranteed
$125,000 of this loan.
The Company incurred interest expense in the amounts of $127,760 and
$5,000 for the year ended December 31, 1998 and for the period August 1, 1997,
date of inception to December 31, 1997 respectively was recorded.
During July 1999, amounts owed by the Corporation to an
officer/stockholder in the amount of $200,000 was exchanged for 120 shares of
common stock of Lighttouch, valued at $1,666 per common share. The exchange was
in connection with the Company's private offiering. See Note 7 of Notes to
Financial Statements.
-9-
<PAGE>
LIGHTTOUCH VEIN & LASER INC
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
6. COMMITMENTS AND CONTINGENCIES
LEASES
(a) The Company leases its facilities under a ten year operating lease
with Intram Investment Corporation which is owned by an officer/stockholder of
the Company. The lease expires July, 2007. Rent and executory charges for the
periods ending December 31, 1998 and for the period August 1, 1997, date of
inception, to December 31,1997 were $132,000 and $55,000 respectively.
Following is a schedule of future minimum lease payments for operating
leases as of December 31, 1998:
<TABLE>
<S> <C>
1999 $ 558,287
2000 336,548
2001 244,709
2002 239,469
2003 235,634
Thereafter 605,000
----------
$2,219,647
==========
</TABLE>
In addition, the Company is obligated under various month to month
leases for equipment. Rent expense for the year ending December 31, 1998 and for
the period August 1, 1997, date of inception, to December 31, 1997 were $219,772
and $88,582, respectively.
COMMITMENT
The Company has employment contracts with various stockholders/officers
and employees of the Company, the terms of which expire at various times through
November 30, 2004. Such agreements provide for annual compensation adjusted
annually for cost-of-living changes as well as incentive compensation if
specified management goals are attained. The aggregate commitment for future
salaries excluding bonuses was approximately $1,283,500.
-10-
<PAGE>
LIGHTTOUCH VEIN & LASER INC
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company entered into a Medical Director and Administrative
Service Agreement with Dr. Herd (an officer/stockholder of the Company) which
currently entitles him to annual compensation of $100,000 without expiration.
7. SUBSEQUENT EVENTS:
During January 1999 Lighttouch received two (2) loans from Intram
Investment Corporation ("Intram"), a related party, for $50,000 each bearing
interest at 3% per month. During July 1999 Intram was repaid in exchange for
60 shares of common stock of the Company valued at $1,666 per share. The
exchange was in connection with the Company's July 1999 private offering.
On January 15, 1999 Lighttouch acquired Tristate Laser Corporation's
("Tristate"), assets and assumed certain liabilities and obligations in
exhange for 53 shares of Lighttouch common stock (valued at $25,000).
Tristate is engaged in the business of laser technology. Lighttouch also
entered into a five (5) year employment agreement with Dr. William Taylor,
expiring November 30, 2003.
During January 1999 Dr. Lanard purchased 132 shares of the Company's
common stock in exchange for a note receivable in the amount of $125,000
payable monthly with interest at 8% through December 31, 2006.
During June 1999, the Company concluded a private offering of its
common stock, selling 301 shares of common stock for $500,000.
-11-
<PAGE>
PART III
The following exhibits are included with this registration statement:
<TABLE>
<CAPTION>
REGULATION
S-B NUMBER DOCUMENT
<S> <C>
2.1 Agreement and Plan of Share Exchange
3.1 Amended and Restated Articles of Incorporation
3.2 Bylaws
10.1 Lease Agreement with Intram Investment Corporation dated
July 30, 1997
10.2 Lease Agreement with Intram Investment Corporation dated
August 22, 1997
10.3 Promissory Note to Intram Investment Corporation dated
January 20, 1998
10.4 Lease Agreement with Intram Investment Corporation dated
July 31, 1998
10.5 Promissory Note to Intram Investment Corporation dated
August 24, 1998
10.6 Promissory Note to Intram Investment Corporation dated
September 1, 1998
10.7 Promissory Note to Intram Investment Corporation dated
September 4, 1998
10.8 Promissory Note to Gregory F. Martini dated September 10, 1998*
10.9 Lease Agreement with Intram Investment Corporation dated
October 23, 1998
10.10 Promissory Note to Intram Investment Corporation dated
November 12, 1998
10.11 Promissory Note to Intram Investment Corporation dated
January 28, 1999
10.12 Purchase Agreement between Tri-State Laser Corporation and Light
Touch Vein & Laser, Inc. dated January 15, 1999
10.13 Lease Agreement with Intram Investment Corporation dated
February 19, 1999
10.14 Lease Agreement with Gregory F. Martini dated March 31, 1999
10.15 Lease Agreement with Intram Investment Corporation dated
April 1, 1999
10.16 Medical Director and Administrative Service Agreement
10.17 1999 Stock Option Plan
10.18 License and Distribution Agreement with VMM Enterprises, Inc.
21 Subsidiaries of the Registrant
27 Financial Data Schedule
</TABLE>
* To be filed by amendment
14
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
LIGHTTOUCH VEIN & LASER, INC.
Date: February 1, 2000 By: /s/ Gregory F. Martini
------------------------------
Gregory F. Martini, President
15
<PAGE>
AGREEMENT AND PLAN OF SHARE EXCHANGE
AGREEMENT AND PLAN OF SHARE EXCHANGE (the "Agreement") dated this 4th day of
October, 1999, by and between STRACHAN, INC., a Nevada corporation
("STRACHAN"), and LIGHTTOUCH VEIN & LASER, INC., an Ohio corporation
("LIGHTTOUCH").
WHEREAS, the Board of Directors of STRACHAN and the Board of Directors of
LIGHTTOUCH deem it advisable and in the best interests of STRACHAN and
LIGHTTOUCH that STRACHAN acquire LIGHTTOUCH by exchanging all of the issued
and outstanding shares of LIGHTTOUCH for shares of STRACHAN (the "Share
Exchange"); and
WHEREAS, the Sole Director of STRACHAN and the Board of Directors of
LIGHTTOUCH have approved and adopted this Agreement as a "plan of
reorganization" within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
provisions and conditions contained herein, and for other goods and valuable
consideration, the adequacy and receipt of which are hereby acknowledged, the
parties hereto agree that all of the issued and outstanding capital stock of
LIGHTTOUCH shall be acquired by STRACHAN, upon and subject to the following
terms and conditions:
ARTICLE I
GENERAL TERMS AND PROVISIONS
SECTION 1.01. EFFECTIVENESS. STRACHAN shall issue new STRACHAN Common Stock
in exchange for the outstanding LIGHTTOUCH Stock on the terms provided
herein, and LIGHTTOUCH shall become a subsidiary of STRACHAN with an
Effective Date of October 1, 1999.
SECTION 1.02. TAKING OF NECESSARY ACTION. STRACHAN and LIGHTTOUCH shall
take all such actions as may be necessary or appropriate in order to
effectuate the transactions contemplated by this Agreement. If, at any time
after the Effective Date, any further action is necessary or desirable to
carry out the purpose of this Agreement or to vest STRACHAN with title to any
or all of the properties, assets, rights, approvals, immunities, of
LIGHTTOUCH, the officers and directors of STRACHAN and its subsidiary, at the
expense of STRACHAN, shall take such necessary or desirable action.
SECTION 1.03. NAME CHANGE. Immediately after the Effective Date, STRACHAN
shall change its name to "LightTouch Vein & Laser, Inc."
ARTICLE II
EXCHANGE OF SHARES
SECTION 2.01. EXCHANGE OF SHARES. On the Effective Date, STRACHAN shall
issue 2,246.25 new post-split shares of STRACHAN Common Stock for each share
of Common Stock of LIGHTTOUCH for a total issuance of 6,750,000 shares, as
set forth on Schedule A attached hereto.
<PAGE>
SECTION 2.02. STOCK LEGENDS.
(a) Certificates representing shares of STRACHAN Common Stock issued to
LIGHTTOUCH shareholders shall bear a legend restricting transfer of the
shares of the Common Stock represented by such certificate in substantially
the form set forth below:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") or
applicable state law, and are "restricted securities" as that
term is defined in Rule 144 under the Act. The securities may
not be offered for sale, sold, or otherwise transferred except
pursuant to an effective registration statement under the Act and
applicable state law, the availability of which is to be
established to the satisfaction of the Company."
(b) STRACHAN shall, from time to time, make stop transfer notations in its
records to ensure compliance in connection with any proposed transfer of
the shares with the Act, and all applicable state securities laws.
SECTION 2.03. RIGHT TO DISSENT. LIGHTTOUCH shall comply with the provisions
of the Ohio General Corporation Law with regard to dissenters' rights.
LIGHTTOUCH represents that holders of at least 80% of the outstanding stock
of LIGHTTOUCH will agree to the share exchange described herein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of STRACHAN and LIGHTTOUCH represents to the other as follows:
SECTION 3.01. CAPITALIZATION. It has no obligation under any agreement with
any person to register any of its securities under the 1933 Act or any
applicable state securities laws and, during the three years preceding the
date of this Agreement, it has not sold or issued any of its securities in a
transaction which was not registered under the 1933 Act or any applicable
state securities law or exempt from such registration. There are no
preemptive rights with respect to any of its securities.
(a) LIGHTTOUCH. LIGHTTOUCH represents and warrants that its authorized
capital stock consists of 7,000 shares of Common Stock, no par value, of
which 3,005 shares are issued and outstanding as of the date of this
Agreement. All of the issued and outstanding shares of LIGHTTOUCH are
validly issued, fully paid, and nonassessable.
(b) STRACHAN. STRACHAN represents and warrants that its authorized
capital stock consists of 100,000,000 shares of Common Stock, $0.001 par
value per share, of which 460,000 of the shares are issued and outstanding
as of the date of this Agreement.
2
<PAGE>
SECTION 3.02. PRINCIPAL SHAREHOLDERS. No person owns of record or, to the
best of its knowledge, owns beneficially five percent or more of any class of
the issued and outstanding shares of its voting securities, except as set
forth as follows: see attached Schedule A to this Agreement.
SECTION 3.03. NO SUBSIDIARIES. It has no subsidiaries.
SECTION 3.04. OPTIONS AND OTHER RIGHTS. There are no outstanding options,
warrants, or rights to subscribe for, purchase, or receive shares of its
common stock or any other securities convertible into common stock.
ARTICLE IV
CONDITIONS PRECEDENT TO THE SHARE EXCHANGE
The obligations of the parties under this Agreement are subject to the
satisfaction of the following express conditions precedent at or before the
Effective Date:
SECTION 4.01. COMPLIANCE WITH LAWS. All statutory requirements for the
valid consummation by it of the transactions contemplated by this Agreement
shall have been fulfilled.
SECTION 4.02. BLUE SKY FILINGS. All Blue Sky filings and permits or orders
required to carry out the transactions contemplated by this Agreement shall
have been made and received containing no term or condition reasonably
unacceptable to it.
SECTION 4.03. ADEQUATE PROCEEDINGS. All corporate and other proceedings in
connection with the transactions contemplated herein and all documents
incident thereto shall be reasonably satisfactory in form and substance to it
and its counsel.
SECTION 4.04. CERTIFICATE OF PRESIDENT AND SECRETARY. Each corporation
shall have furnished to the other a certificate of the President or Vice
President and the Secretary of the respective company, dated as of the
Effective Date, to the effect that the representations and warranties of the
respective company in this Agreement are true and correct at and as of the
Effective Date, that no error, misstatement, or omission has been discovered
or is known with respect to such representations and warranties, and that the
respective company has complied with all the agreements and has satisfied all
the covenants on its part to be performed at or prior to the Effective Date.
SECTION 4.05. NO ADVERSE CHANGE. Between the date of execution of this
Agreement and the Effective Date, STRACHAN and LIGHTTOUCH (a) except in the
ordinary course of its business, shall not have incurred any liabilities or
obligations (direct or contingent) or disposed of any of its assets, or
entered into any material transaction or suffered or experienced any
materially adverse change in its condition, financial or otherwise, and (b)
shall not have increased its issued and outstanding shares of common stock or
any other securities.
3
<PAGE>
SECTION 4.06 STOCK SPLIT. Prior to the Effective Date, STRACHAN shall have
effected a forward stock split of 1.63-for-1 on its outstanding shares of
Common Stock so that the 460,000 shares outstanding will be split to 750,000
shares.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. ASSIGNMENT. This Agreement may not be assigned nor any of the
performances hereunder delegated by operation of law or otherwise by any
party hereto, and any purported assignment or delegation shall be void.
SECTION 5.02. HEADINGS. The article and section headings of this Agreement
are inserted for convenience of reference only and do not constitute a part
of this Agreement.
SECTION 5.03. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors, legal representatives, assigns, and transferors.
SECTION 5.04. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof.
There are no representations, warranties, conditions, or other obligations
except as herein specifically provided. Any waiver, amendment, or
modification hereof must be in writing. A waiver in one instance shall not
be deemed to be a continuing waiver or waiver in other instance.
SECTION 5.05. COUNTERPARTS. This Agreement may be executed in counterparts
and each counterpart hereof shall be deemed to be an original, but all such
counterparts together shall constitute but one agreement an original, but all
such counterparts together shall constitute but one agreement.
SECTION 5.06. NOTICES. All notices, requests, instructions, or other
documents to be given hereunder shall be deemed given if in writing, sent
registered mail:
to STRACHAN: to LIGHTTOUCH:
Attn: Gregory F. Martini Attn: Gregory F. Martini
10663 Montgomery Road 10663 Montgomery Road
Cincinnati, OH 45242 Cincinnati, OH 45242
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
STRACHAN, INC.
By: /s/ Gregory F. Martini
------------------------------------
Gregory F. Martini, President
LIGHTTOUCH VEIN & LASER, INC.
By: /s/ Gregory F. Martini
------------------------------------
Gregory F. Martini, President
5
<PAGE>
SCHEDULE A
The principal shareholders of LightTouch Vein & Laser, Inc. are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
NO. OF NO. OF
LIGHTTOUCH STRACHAN POST-
SHAREHOLDER SHARES SPLIT SHARES PERCENTAGE
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Gregory F. Martini 1,380 3,099,834 41.33%
Colin C. Herd, M.D. 1,260 2,830,283 37.74%
Margaret Lanard, M.D. 132 296,506 3.95%
Tri-State Laser Corporation 53 119,052 1.59%
Intram Investment Corporation 60 134,775 1.80%
Gary Lessis 30 67,388 0.90%
Wayne Perrone 60 134,775 1.80%
Parnelli Groh 30 67,388 0.90%
Existing Strachan shareholders 750,000 10.00%
Total 3,005 7,500,000 100.00%
- -----------------------------------------------------------------------------
</TABLE>
6
<PAGE>
FILED IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
OCT 22 1999
NO. C2935-81
----------
/s/ Dean Heller
---------------
DEAN HELLER, SECRETARY OF STATE
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
STRACHAN, INC.
The undersigned, being the President and Secretary of Strachan, Inc., a
Nevada corporation (hereinafter referred to as the "Corporation"), having
been authorized to execute these Amended and Restated Articles of
Incorporation, hereby certifies to the Secretary of State of the State of
Nevada that:
FIRST: The Corporation desires to amend and restate its Articles of
Incorporation as currently in effect as hereinafter provided.
SECOND: The provisions set forth in these Amended and Restated Articles
of Incorporation supersede the original Articles of Incorporation and all
amendments thereto. These Amended and Restated Articles of Incorporation
correctly set forth the provisions of the Articles of Incorporation, as
amended to the date hereof.
THIRD: The Board of Directors duly adopted and declared the
advisability of the Amended and Restated Articles of Incorporation.
FOURTH: Shareholders of the Corporation holding 450,000 of the 460,000
outstanding shares (97.83%) of the Corporation's common stock approved and
adopted the amendments contained in the Amended and Restated Articles of
Incorporation by written consent dated October 4, 1999.
FIFTH: The Articles of Incorporation of the Corporation, as amended and
restated, are set forth on Exhibit A attached hereto.
/s/ Gregory F. Martini
-------------------------------------------
Gregory F. Martini, President and Secretary
ACKNOWLEDGMENT
State of Ohio
County of Hamilton
----------------
On 10/6, 1999, personally appeared before me, a Notary Public,
Gregory F. Martini, who acknowledged that he executed the above instrument.
(Notary Stamp or Seal) /s/ Linda M. Maybury
------------------------------------
Notary Public
LINDA M. MAYBURY
Notary Public, State of Ohio
My Commission Expires Apr. 26, 2001
<PAGE>
Exhibit A
ARTICLE I
NAME
The name of this Corporation is LightTouch Vein & Laser, Inc.
ARTICLE II
PURPOSES AND POWERS
The Corporation is organized to engage in any and all lawful acts and/or
activities for which corporations may be organized under the laws of the State
of Nevada.
ARTICLE III
AUTHORIZED CAPITAL STOCK
The amount of total authorized capital stock which the Corporation shall
have authority to issue is 100,000,000 shares of common stock, each with
$0.001 par value, and 25,000,000 shares of preferred stock, each with $0.001
par value. To the fullest extent permitted by the laws of the State of Nevada
(currently set forth in NRS 78.195), as the same now exists or may hereafter
be amended or supplemented, the Board of Directors may fix and determine the
designations, rights, preferences or other variations of each class or series
within each class of capital stock of the Corporation.
No cumulative voting, on any matter to which shareholders shall be
entitled to vote, shall be allowed for any purpose.
The authorized stock of this Corporation may be issued at such time,
upon such terms and conditions and for such consideration as the Board of
Directors shall, from time to time, determine. Shareholders shall not have
pre-emptive rights to acquire unissued shares of the stock of this
Corporation.
ARTICLE IV
DIRECTORS
The Governing Board shall be styled as Directors. The Directors are
hereby granted the authority to do any act on behalf of the Corporation as
may be allowed by law. Any action taken in good faith, shall be deemed
appropriate and in each instance where the Nevada General Corporation Law
provides that the Directors may act in certain instances where the Articles
of Incorporation so authorize, such action by the Directors, shall be deemed
to exist in these Articles and the authority granted by said Act shall be
imputed hereto without the same specifically having been enumerated herein.
A-1
<PAGE>
The Board of Directors may consist of from one (1) to nine (9) directors,
as determined, from time to time, by the then existing Board of Directors.
ARTICLE V
NON-ASSESSABLE STOCK
The capital stock, after the amount of the subscription price has been
paid in, shall not be subject to assessment to pay the debts of said
Corporation, whether issued for money, services, property or otherwise. The
private property of the stockholders shall not be subject to the payment of
corporate debts to any extent whatever.
ARTICLE VI
PERSONAL LIABILITY
Pursuant to NRS 78.037, neither the Directors, the Officers, nor the
Stockholders of the Corporation shall have any personal liability for damages
or for breach of fiduciary duty except for acts or omissions which include
misconduct or fraud.
ARTICLE VII
INCORPORATOR
The names and addresses of the incorporators of this Corporation are:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Mary Jo Hanes 302 East Carson, Suite 1000
Las Vegas, Nevada 89101
Judith MacMillan 302 East Carson, Suite 1000
Las Vegas, Nevada 89101
Joyce Leavitt 302 East Carson, Suite 1000
Las Vegas, Nevada 89101
</TABLE>
ARTICLE VIII
COMMON DIRECTORS
As provided by Nevada Revised Statutes 78.140, without repeating the
section in full here, the same is adopted and no contract or other transaction
between this Corporation and any of its officers, agents, or directors shall be
deemed void or voidable solely for that reason. The balance
A-2
<PAGE>
of the provisions of the code section cited, as it now exists, allowing such
transactions, is hereby incorporated into this Article as though more fully
set forth, and such Article shall be read and interpreted to provide the
greatest latitude in its application.
ARTICLE IX
LIABILITY OF DIRECTORS AND OFFICERS
No Director, Officer, or Agent, to include counsel, shall be personally
liable to the Corporation or its stockholders for monetary damages for any
breach or alleged breach of fiduciary or professional duty by such person
acting in such capacity. It shall be presumed that in accepting the position
as an Officer, Director, Agent, or Counsel, said individual relied upon and
acted in reliance upon the terms and protections provided for by this
Article. Notwithstanding the foregoing sentences, a person specifically
covered by this Article, shall be liable to the extent provided by applicable
law, for acts or omissions which involve intentional misconduct, fraud, or a
knowing violation of law, or for the payment of dividends in violation of NRS
78.300.
ARTICLE X
ELECTION REGARDING NRS 78.378-78.3793 AND 78.411-78.444
This Corporation shall NOT be governed by nor shall the provisions of
NRS 78.378 through and including 78.3793 and NRS 78.411 through and including
78.444 in any way whatsoever affect the management, operation or be applied
in this Corporation.
ARTICLE XI
INDEMNIFICATION
The Corporation shall indemnify, to the fullest extent permitted by
applicable law in effect from time to time, any person against all liability
and expense (including attorneys' fees) incurred by reason of the fact that
he is or was a director or officer of the Corporation, he is or was serving
at the request of the Corporation as a director, officer, employee, or agent
of, or in any similar managerial or fiduciary position of, another
corporation, partnership, joint venture, trust or other enterprise. The
Corporation shall also indemnify any person who is serving or has served the
Corporation as a director, officer, employee, or agent of the Corporation to
the extent and in the manner provided in any bylaw, resolution of the
shareholders or directors, contract, or otherwise, so long as such provision
is legally permissible.
/s/ Gregory F. Martini
-------------------------------------------
Gregory F. Martini, President and Secretary
A-3
<PAGE>
ACKNOWLEDGMENT
State of Ohio )
)ss.
County of Hamilton )
On 10/6, 1999, personally appeared before me, a Notary Public,
Gregory F. Martini who acknowledged that he executed the above instrument.
(Notary Stamp or Seal) /s/ Linda M. Maybury
------------------------------------
Notary Public
LINDA M. MAYBURY
Notary Public, State of Ohio
My Commission Expires Apr. 26, 2001
A-4
<PAGE>
FILED IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
OCT 22 1999
NO. C2935-81
----------
/s/ Dean Heller
---------------
DEAN HELLER, SECRETARY OF STATE
THIS FORM SHOULD ACCOMPANY RESTATED ARTICLES (PURSUANT TO NRS 78.403(b))
OF INCORPORATION FOR A NEVADA CORPORATION
1. Name of corporation: Strachan, Inc.
-----------------
2. Date of adoption of Amended and Restated Articles: October 4, 1999
-----------------
3. If the articles were amended, please indicate what changes have been
made:
(a) Was there a name change? Yes /x/ No / / If yes, what is the
new name?
LightTouch Vein & Laser, Inc.
-----------------------------
(b) Did you change the resident agent? Yes / / No /x/ If yes, please
indicate the new resident agent and address.
--------------------------------------------------------------
(c) Did you change the purposes? Yes / / No /x/ Did you add
Banking? / / Gaming? / / Insurance? / / None of these? /x/
(d) Did you change the capital stock? Yes /x/ No / / If yes, what
is the new capital stock?
Added 25,000,000 shares of Preferred Stock, $.001 par value
per share
--------------------------------------------------------------
(e) Did you change the directors? Yes / / No /x/ If yes, indicate
the change:
--------------------------------------------------------------
(f) Did you add the directors liability provision? Yes / / No /x/
(g) Did you change the period of existence? Yes / / No /x/ If yes,
what is the new existence?
------------------------------------
(h) If none of the above apply, and you have amended or modified
the articles, how did you change your articles?
(1) Article II Principal Office was eliminated; (2) the
super-majority voting requirement contained in Article XI
Election Regarding NRS 78.378-78.3793 and 78.411-78.444 was
eliminated; and (3) Article XI Indemnification was added.
--------------------------------------------------------------
/s/ Gregory F. Martini 10/6/99
- ----------------------------------------- -------------------
Gregory F. Martini, President Date
State of Ohio )
)ss.
County of Hamilton )
On 10/6, 1999, personally appeared before me, a Notary Public, Greg F.
Martini, who acknowledged that he executed the above instrument.
(Notary Stamp or Seal) /s/ Linda M. Maybury
------------------------------------
Notary Public
LINDA M. MAYBURY
Notary Public, State of Ohio
My Commission Expires Apr. 26, 2001
<PAGE>
BY-LAWS
OF
STRACHAN, INC.
ARTICLE I - OFFICES
The principal office of the corporation in the State of Utah shall be
located in the Residence of the President County of Salt Lake. The
corporation may have such other offices, either within or without the State
of incorporation as the board of directors may designate or as the business
of the corporation may from time to time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on the 1st day of
April In each year, beginning with the year 1994 at the hour 2:00 o'clock
P.M., for the purpose of electing directors and for the transaction of such
other business as may come before the meeting. If the day fixed for the
annual meeting shall be a legal holiday such meeting shall be held on the
next succeeding business day.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the president or by the
directors, and shall be called by the president at the request of the holders
of not less than 45 percent of all the outstanding shares of the corporation
entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the State
unless otherwise prescribed by statute, as the place of meeting for any annual
meeting or for any special meeting called by the directors. A waiver of notice
signed by all stockholders entitled to vote at a meeting may designate any
place, either within or without the state unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or
if a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.
4. NOTICE OF MEETING.
<PAGE>
Written or printed notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than 10 nor more than 45 days
before the date of the meeting, either personally or be 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. 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.
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 directors
of the corporation may provide that the stock transfer books shall be closed
for a stated period but not to exceed, in any case, 5 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 3 days immediately preceding such meeting. In
lieu of closing the stock transfer books, the 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 5 days and, in case of a meeting of
stockholders, not less than 3 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 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 has been made as provided in this section, such determination
shall apply to any adjournment thereof.
6. VOTING LISTS.
The officer or agent having charge of the stock transfer books for
shares of the corporation shall make, at least 3 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
5 days prior to such meeting, shall be kept on file at the principal office
of the corporation and shall be subject to the inspection of any stockholder
during the whole time of the meeting. The original stock transfer book shall
be prima facie evidence as to who are the stockholders entitled to examine
such list or transfer books or to vote at the meeting of stockholders.
7. QUORUM.
At any meeting of stockholders 80% of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of
<PAGE>
stockholders. If less than said number 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.
8. PROXIES.
At all meetings of 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.
9. VOTING.
Each stockholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by proxy, for each share of stock entitled
to vote held by such stockholders, Upon the demand of any stockholder, the
vote for directors and upon any question before the meeting shall be by
ballot, All elections for directors shall be decided by plurality vote; all
other questions shall be decided by majority vote except as otherwise
provided by the Certificate of Incorporation or the laws of this State,
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as
follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
8. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be taken at a
meeting of the shareholders, or any other action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
<PAGE>
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its
board of directors. The directors shall in all cases act as a board, and they
may adopt such rules and regulations for the conduct of their meetings and
the management of the corporation, as they may deem proper, not inconsistent
with these by-laws and the laws of this State.
2. NUMBER TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be (1-9) ONE to NINE.
Each director shall hold office until the next annual meeting of stockholders
and until his successor shall have been elected and qualified.
3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without other notice
than this by-law immediately after, and at the same place as, the annual
meeting of stockholders. The directors may provide by resolution, the time
and place for the holding of additional regular meetings without other notice
than such resolution.
4. SPECIAL MEETINGS.
Special meetings of the 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 directors may fix the place for holding any special
meeting of the directors called by them.
5. NOTICE.
Notice of any special meeting shall be given at least 10 days previously
thereto by written notice delivered personally, or by telegram or mailed to
each director at his business address. 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.
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.
6. QUORUM
At any meeting of the directors TWO shall constitute a quorum for the
transaction of business, but if less than said number is present at a
meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice.
7. MANNER OF ACTING.
<PAGE>
The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the
removal of directors without cause may be filled by a vote of a majority of
the directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause shall be filled
by vote of the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the
unexpired term of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without
cause only by vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified
in the notice, the resignation shall take effect upon receipt thereof by the
board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance
at each regular or special meeting of the board may be authorized. Nothing
herein contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the
directors at which action on any corporate matter is taken shall be presumed
to have assented to the action taken 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.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an
executive committee and other committees, each consisting of three or more
directors, Each such committee shall serve at the pleasure of the board.
<PAGE>
ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, a vice-president,
a secretary and a treasurer, each of whom shall be elected by the directors.
Such other officers and assistant officers as may be deemed necessary may be
elected or appointed by the directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified or until his
death or until he shall resign or shall have been removed in the manner
hereinafter provided.
3. REMOVAL.
Any officer or agent elected or appointed by the directors may be
removed by the directors whenever in their judgment the best interests of the
corporation would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the
unexpired portion of the term.
5. PRESIDENT.
The president shall be the principal executive officer of the
corporation and, subject to the control of the directors, shall in general
supervise and control all of the business and affairs of the corporation. He
shall, when present, preside at all meetings of the stockholders and of the
directors. He may sign, with the secretary or any other proper officer of the
corporation thereunto authorized by the directors, certificates for shares of
the corporation, any deeds, mortgages, bonds, contracts, or other instruments
which the directors have authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the directors
or by these by-laws to some other officer or agent of the corporation, or
shall be required by law to be otherwise signed or executed; and in general
shall perform all duties incident to the office of president and such other
duties as may be prescribed by the directors from time to time.
6. VICE-PRESIDENT.
In the absence of the president or in event of his death, inability or
refusal to act, the vice-president shall perform the duties of the president,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the president. The vice-president shall perform such other
duties as from time to time may be assigned to him by the President or by the
directors.
7. SECRETARY
The secretary shall keep the minutes of the stockholders' and of the
directors, meetings in one
<PAGE>
or more books provided for that purpose, see that all notices are duly given
in accordance with the provisions of these by-laws or as required, be custodian
of the corporate records and of the seal of the corporation and keep a register
of the post office address of each stockholder which shall be furnished to the
secretary by such stockholder, have general charge of the stock transfer books
of the corporation and 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 directors.
8. TREASURER.
If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties
as the directors shall determine. He shall have charge and custody of and be
responsible for all funds and securities of the corporation; receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in
such banks, trust companies or other depositories as shall be selected in
accordance with these by-laws and in general perform all of the duties
incident to the office of treasurer and such other duties as from time to
time may be assigned to him by the president or by the directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by reason
of the fact that he is also a director of the corporation.
ARTICLE V -- CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents, to
enter into any contract or execute and deliver any instrument in the name of
and on behalf of the corporation, and such authority may be general or
confined to specific instances.
2. LOANS.
No loans shall be contracted on behalf of the corporation and no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the directors. Such authority may be general or confined to
specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the corporation, shall
be signed by such officer or officers, agent or agents of The corporation and
in such manner as shall from time to time be determined by resolution of the
directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited
from time to time to
<PAGE>
the credit of the corporation in such banks, trust companies or other
depositaries as the directors may select.
ARTICLE VI -- CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be in such
form as shall be determined by the directors. Such certificates shall be
signed by the president and by the secretary or by such other officers
authorized by law and by the directors, All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of the
stockholders, The number of shares and date of issue, shall be entered on the
stock transfer books of the corporation. All certificates surrendered to the
corporation for transfer shall be canceled and no new certificate shall be
issued until the former certificate for a like number of shares shall have
been surrendered and canceled, except that in case of a lost, destroyed or
mutilated certificate a new one may be issued therefor upon such terms and
indemnity to the corporation as the directors may prescribe.
2. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, 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 shall
be entered on the transfer book of the corporation which shall be kept at its
principal office.
(b) The corporation shall be entitled to treat the holder of record of
any share 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 expressly provided by the laws of this state.
<PAGE>
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall begin on the 1st day of January
in each year.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the corporation may
pay, dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE IX - SEAL
The directors shall provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the corporation, the state
of incorporation, year of incorporation and the words, "Corporate Seal".
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions
of these by-laws or under the provisions of the articles of incorporation, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
ARTICLE XI - AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may be
adopted by a vote of the stockholders representing a majority of all the
shares issued and outstanding, at any annual stockholders' meeting or at any
special stockholders' meeting when the proposed amendment has been set out in
the notice of such meeting.
<PAGE>
As of October 4, 1999, Article I, Section 1 of the Bylaws of the
Corporation is hereby amended to state as follows:
Section 1. PRINCIPAL OFFICES. The principal office for the transaction of
the business of the corporation is fixed and located at 10663 Montgomery Road,
Cincinnati, Ohio. The Board of Directors may change the principal office from
one location to another as from time to time may be necessary. Any change of
this location shall be noted by the Secretary on these Bylaws opposite this
section, or this section may be amended to state the new location.
<PAGE>
LEASE AGREEMENT
This Lease Agreement, made this 30th day of July, 1997, by and between
INTRAM INVESTMENT CORPORATION, whose address is 11157 Snider Road,
Cincinnati, Ohio, 45249, hereinafter referred to as "Landlord", and LIGHT
TOUCH VEIN & LASER, INC., whose address is 10663 Montgomery Road, Cincinnati,
Ohio, 45242, hereinafter referred to as "Tenant".
WITNESSETH:
1. PREMISES.
The Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, for the term and upon the terms and conditions as set forth herein,
the premises known as 10663 Montgomery Road, Cincinnati, Ohio, 45242,
described as follows,
("Premises"): SITUATE IN SECTION 5, TOWN 4, ENTIRE RANGE 1, SYCAMORE TOWNSHIP,
CITY OF MONTGOMERY, HAMILTON COUNTY, STATE OF OHIO, AND BEING
ALL OF UNIT "A" AND "B" OF THE MONTGOMERY MEDICAL AND CINCINNATI
SPORTSMEDICINE CONDOMINIUM, THE DECLARATION AND BY-LAWS OF WHICH
ARE RECORDED IN OFFICIAL RECORD BOOK 5973, PAGES 1659-1720 AND
THE DRAWINGS OF WHICH ARE RECORDED IN PLAT BOOK 68, PAGES 23 AND
24. ALL REFERENCES ARE TO THE HAMILTON COUNTY, OHIO REGISTERED
LAND OFFICE.
2. TERM.
The term of this Lease Agreement shall be for a term of ten (10)
years, commencing on August 1, 1997, and terminating on July 31, 2007, unless
terminated as provided herein.
3. USE AND CARE OF PREMISES.
The Tenant shall not use or knowingly permit any part of the
Premises to be used for any unlawful purpose. The Tenant shall keep the
Premises and every part thereof in a clean and wholesome
<PAGE>
condition and generally that it will in all respects and at all times fully
comply with all lawful health, fire and police regulations. In addition, the
Tenant will keep the sidewalk areas and the delivery area in a clean and
wholesome condition, free from all trash. The Tenant will not use outside
storage of any kind on the Premises.
4. RENT.
A. The Tenant shall pay to the Landlord the sum of Ten Thousand
($10,000.00) Dollars per month during the term of this Lease Agreement,
subject to adjustments as set forth herein. The Tenant shall commence paying
the Rent on August 1, 1997, and on the first day of each month thereafter,
during the term of this Lease Agreement.
B. Commencing August 1, 1998 and on every August 1st thereafter
during the term of this Lease Agreement, the monthly rent for the next twelve
(12) consecutive months shall be increased by the percentage increase in the
Consumer Price Index as published by the Bureau of Labor Statistics, United
States Department of Labor (hereinafter referred to as the "Index") equal to
the percentage increase in the Index for the period commencing July 1st of
the preceding calendar year to June 30th of the then current calendar year.
(EXAMPLE: MONTHLY RENTAL IS $10,000.00; CPI ON JULY 1ST IS 100 AND ON JUNE
30TH OF NEXT YEAR IS 103.5, THEN PERCENTAGE INCREASE IN CPI IS 3.5%; NEW
MONTHLY RENT IS $10,350.00, EFFECTIVE AUGUST 1ST)
C. There shall be no rent reduction if the Consumer Price Index
decreases or rent determined August 1st every year
2
<PAGE>
shall become the base rent for purposes of determining any increase.
5. ADDITIONAL RENT.
Tenant shall pay to Landlord as additional Rent over and above the
amount set forth in Paragraph 4. (RENT) hereof, the monthly condominium fees
and assessments for the Premises due the Montgomery Medical and Cincinnati
Sports Medicine Center Condominium Association, Inc., or its successor
("Association"). These fees and assessments are presently $___________. In
addition to the above monthly fees and assessments, if any capital
(non-recurring) assessments are made by the Association as to the Premises,
such assessments shall also be paid by Tenant if such assessment is made
during the Lease Term.
6. REAL ESTATE TAXES AND ASSESSMENTS.
The Tenant shall pay, in addition to the Rent (and any adjustments
thereto) as set forth in Paragraph 4. (RENT) and Paragraph 5. (ADDITIONAL
RENT) hereof, all real estate taxes and assessments on the Premises. If
Landlord pays such real estate taxes and assessments, Landlord shall send
notice of such payment to Tenant who will reimburse Landlord in full within
fifteen (15) days of such notice.
7. UTILITY CHARGES.
The Tenant shall be solely responsible for the payment of any and
all utility charges incurred at the Premises, including, but not limited to,
electric, gas, water, telephone, refuse removal and all other fees and
charges.
3
<PAGE>
8. INSURANCE.
A. Landlord covenants and agrees that it will, at all times, keep
the building and improvements on the Premises insured against loss by fire
with extended coverage in an amount not less than one hundred percent (100%)
of the replacement value of said building above the foundation, and will keep
all such insurance in full force and effect during the entire term of this
Lease Agreement.
B. Tenant agrees to reimburse Landlord its cost of such fire and
extended coverage insurance on the Premises within fifteen (15) days of
Landlord providing Tenant with notice of Landlord's payment of such insurance.
C. The Tenant shall, at all times during the term of this Lease
Agreement, at its sole expense, carry and maintain for the benefit of the
Landlord and Tenant, public liability insurance against claims for bodily
injury, death or property damage occurring in the common areas of the Premises,
or on the exterior of the building, or in, on or about the street, sidewalk,
parking lots or premises adjacent to the Premises with limits of at least
$100,000/$300,000 for injury or death to any person, and $50,000 with respect
to damage to property. The Tenant shall name the Landlord as an additional
insured on said insurance coverage, and shall provide to the Landlord evidence
of such insurance coverage. The Tenant shall hold the Landlord harmless from
any personal liability claims that may arise.
D. The Tenant, during the term of this Lease Agreement shall
assume all risks of loss, injury or damage of any kind or nature whatsoever
to the contents, trade fixtures or other property
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<PAGE>
in the Premises; provided Tenant may procure insurance to cover such tangible
personal property.
9. TRADE FIXTURES
The Tenant may install equipment and fixtures necessary for the
operation of Tenant's business, and Landlord agrees that such equipment and
fixtures are the property of the Tenant. However, all such trade fixtures and
equipment must be removed from the Premises upon the termination of this
Lease Agreement. Any and all damages to the Premises caused by the removal of
said fixtures and equipment shall be repaired to the satisfaction of the
Landlord and paid for by the Tenant.
10. FIRE AND CASUALTY.
A. In the event that the Premises are destroyed or so damaged by
fire, explosion or other casualty ("Casualty") so that the Premises are
rendered partially or wholly untenantable, the Landlord shall immediately
undertake to restore the Premises to their former condition and shall
complete said restoration as expeditiously as possible; provided, however,
the Landlord shall not be required to restore the Premises if the cost
thereof exceeds the insurance proceeds available or if more than fifty
percent (50%) of the Premises are destroyed or rendered untenantable. If the
Landlord elects not to restore the Premises for either reason, then Landlord
shall give written notice to Tenant of that effect within fifteen (15) days
after such determination is made, and the Lease Agreement shall terminate and
all obligations under this Agreement shall cease and come to an end.
B. If Landlord elects to repair the Premises and so notifies the
Tenant, and if said Premises cannot be restored or
5
<PAGE>
repaired by Landlord for occupancy within one hundred fifty (150) days
following said Casualty, in such manner as to permit Tenant to reasonably
carry on its normal business operation, such determination to be made within
thirty (30) days after the occurrence of said Casualty, the Tenant shall have
the right to terminate this Lease Agreement by giving written notice to the
Landlord to that effect within fifteen (15) days after such determination.
C. If Tenant shall be deprived of the occupancy of any portion of
the Premises because of such Casualty or the repairs necessitated thereby,
then a reduction in the Rent shall occur, corresponding to the proportion of
the Premises unusable by the Tenant bears to the total Premises.
11. REPAIRS AND MAINTENANCE.
A. The Tenant covenants and agrees, at its own expense, to keep the
interior of the Premises, including maintenance and repair of doors, door
jambs, thresholds, air conditioning, plumbing and electrical systems, at all
times in good repair, order and condition. If such repairs are necessitated
by a fire or other peril provided for in the Landlord's insurance policy,
then the Landlord shall be responsible for such repairs and shall pay such out
of the insurance proceeds received under said policy. The Tenant will commit
no waste and will make no structural repairs or changes to the premises.
B. The Tenant shall maintain the exterior of the building as well
as all common areas in the building, including but not limited to structural
repairs, the roof, walls and parking area, and any other damage not covered
by the insurance policy on
6
<PAGE>
the building, and shall make all replacements when reasonably necessary.
12. LEASEHOLD IMPROVEMENTS.
The Tenant may, upon the prior written approval of the Landlord,
make leasehold improvements to the Premises.
13. CONDITION OF PREMISES.
The Tenant has examined the Premises and by executing this Lease
Agreement agrees to accept the Premises in its present "as is" condition.
14. ASSIGNMENT.
This Lease Agreement shall be nonassignable by the Tenant and the
Tenant shall not sublet the Premises. This Lease Agreement is assignable by
the Landlord.
15. SIGNS.
Subject to the terms of this Lease Agreement, the Tenant may install
such signs as it deems necessary on the building of which the Premises are a
part; however, the content, style and placement must be approved by the
Landlord. All signs must comply with any and all governmental and condominium
regulations relative thereto.
16. LANDLORD'S RULES AND REGULATIONS.
The Landlord shall have the right from time to time to promulgate
reasonable rules and regulations concerning the management and operation of
the building of which the Premises are a part. These rules and regulations
shall apply to and be binding on the Tenant and other tenants of the building.
Said rules and regulations may include, without limitation, such things as what
7
<PAGE>
signs are permitted, their size, location, etc., no obstruction or placing of
merchandise in the hallways and common areas; hours of operation of the various
businesses in the building, hours of full heat and air conditioning, etc. These
rules and regulations shall be published by the Landlord from time to time, and
given to the Tenant and the other tenants of the building.
17. DEFAULT.
A. If the Tenant defaults in the performance of any of the terms,
covenants, or conditions of this Lease Agreement, the Landlord may give to
Tenant written notice of such default, and if the Tenant does not cure such
default within fifteen (15) days after the giving of such notice (or, if such
default is of such nature that it cannot be completely cured within such
fifteen (15) days, if Tenant does not commence such curing within such fifteen
(15) days and thereafter proceed with reasonable diligence and in good faith
to cure such default), then the Landlord may, at its option, upon reasonable
notice to the Tenant, cure such breach at the expense of Tenant, and the
reasonable amount of all expenses incurred by the Landlord, together with
interest at the rate of ten percent (10%) per annum, shall be deemed additional
rent payable with the following monthly rental installment due from Tenant.
B. If the Tenant defaults in the payment of rent, additional rent
or reimbursement of Landlord for a period of fifteen (15) days after such
rental payment or reimbursement becomes due, or if the Tenant shall fail to
perform any of the other terms, covenants, conditions and obligations of this
Lease Agreement by it to be kept and performed, then, in any of such events,
it shall be lawful for the Landlord, upon election and
8
<PAGE>
Tenant's failure to cure such default as provided for herein, to declare the
lease term ended, and to re-enter upon the Premises either with or without
process of law, the Tenant waiving any demand for possession of such
Premises and improvements thereon, and the Landlord may have such other
remedy as the law and this Lease Agreement may afford. Upon the termination
of the term hereof, at such election of the Landlord, or in any other way,
the Tenant shall surrender and deliver up the Premises peaceably to the
Landlord immediately upon the termination of the term.
18. LANDLORD'S RIGHTS.
At any time upon request of the Landlord, without prior notice, the
Tenant must give any representatives of Landlord access during normal
business hours to, and permit any of them to examine, audit, copy or make
extracts from, any and all books, records and documents in possession of the
Tenant, its agents or any independent contractor relating to the Tenant's
affairs and to inspect the Premises.
19. INDEMNIFICATION.
The Tenant hereby agrees to defend, indemnify and hold the Landlord
harmless from and against any and all claims, lawsuits, liabilities, losses,
damages and expenses (including without limitation cleanup costs and
reasonable attorney's fees arising by reason of any of the aforesaid or an
action against the Landlord under this indemnity) arising directly or
indirectly from, out of or by reason of any breach of this Lease Agreement by
Tenant occurring during the term of this Lease Agreement. Tenant's
obligations under this Paragraph are without any exclusion whatsoever.
9
<PAGE>
The Landlord hereby agrees to defend, indemnify and hold the Tenant
harmless from and against any and all claims, lawsuits, liabilities, losses,
damages and expenses (including without limitation cleanup costs and
reasonable attorney's fees arising by reason of any of the aforesaid or an
action against the Tenant under this indemnity) arising directly or
indirectly from, out of or by reason of any breach of this Lease Agreement by
Landlord occurring during the term of this Lease Agreement. Landlord's
obligations under this Paragraph are without any exclusion whatsoever.
The Tenant will pay all loss and damage occasioned by or growing
out of the use and occupancy of the Premises by the Tenant and/or its agents
or employees, or any person upon the Premises by invitation or license of
said Tenant, and the Tenant will indemnify, protect and save the Landlord
harmless from and against any loss or liability thereby or therefrom, and
against any expense, costs and attorney fees incurred in connection with any
such claim.
20. SURVIVAL
The provisions herein shall survive the expiration or sooner
termination of this Lease Agreement.
21. QUIET ENJOYMENT.
Upon due performance of the covenants and agreements to be
performed by the Tenant under this Lease Agreement, the Landlord covenants
that the Tenant shall and may at all times peaceably and quietly have, hold
and enjoy the Premises during the term of this Lease Agreement.
10
<PAGE>
22. SUBORDINATION.
This Lease Agreement is subject and subordinate to all mortgages
which now or hereafter affect such Lease Agreement, or the real property of
which the Premises forms a part, and to all renewals, modifications,
consolidations, replacements and extensions thereof. This clause shall be
self-operative and no further instrument of subordination shall be required
by any mortgagee. In confirmation of such subordination, the Tenant shall
execute promptly any subordination certificate that the Landlord may request.
In the event the Landlord defaults in the payment of any amounts which may
be due from the Landlord to any mortgagee, then the Tenant shall have the
privilege of making the rent payments called for under this Lease Agreement
directly to any such mortgagee and the rights of the Tenant shall not be cut
off or affected by foreclosure of any said mortgagee, so long as the Tenant
shall not be in default hereunder.
23. EMINENT DOMAIN.
If the Premises or such part thereof as will make the Premises
unusable for the purposes herein leased be taken or condemned for any public
or quasi-public purpose by any lawful power or authority by the exercise of
the right of condemnation or eminent domain, then Landlord in the first
instance and Tenant in the second instance, shall have the option to
terminate this Lease Agreement, said termination to be effective from the
date when possession of the part so taken shall be required for the use and
purpose for which it has been appropriated. If the Tenant continues the Lease
Agreement, the rent shall be abated proportionately as to the part so taken.
11
<PAGE>
The Landlord shall receive the entire award from the taking,
whether for the whole or part of the Premises, and whether such amount be
awarded as compensation for diminution in value to the leasehold or to the
fee of the premises, or as to damage to the residue. Provided, however, that
Landlord shall not be entitled to any portion of any separate award or
payment made to Tenant for loss of business and for moving expenses.
24. SURRENDER OF PREMISES.
Upon the expiration or earlier termination of this Lease Agreement,
the Tenant shall surrender the Premises to the Landlord in good order and
condition, except for ordinary wear and tear. The Tenant shall remove from
the Premises on or prior to such expiration or earlier termination, all of
its property situated thereon, and shall repair any damage caused by such
removal.
25. LANDLORD WARRANTY.
The Landlord covenants that the Premises herein being leased are
zoned for the purposes intended, and the Landlord is well seized of and has
good title to lease the Premises; will warrant and defend the title thereto,
and will indemnify Tenant against any damage and expense Tenant may suffer by
reason of any lien, encumbrance, restriction or defect in title to or
description herein of the Premises.
26. ACCESS TO PREMISES.
The Landlord shall be permitted to enter the Premises at any
reasonable time on reasonable notice to the Tenant.
12
<PAGE>
27. NO WAIVER.
The failure of either party to insist on strict performance of any
term, covenants, or condition hereof, or to exercise any option herein
contained shall not be construed as a waiver of such term, covenant,
condition, or option in any other instance.
28. NOTICES.
If either party desires to give notice to the other in connection
with and according to the terms of this Lease Agreement, such notice shall be
given by registered or certified mail, and it shall be deemed given when
deposited in the United States mail with postage prepaid, and such notice
shall be addressed as follows:
LANDLORD: INTRAM INVESTMENT CORPORATION
c/o Gregory F. Martini
11157 Snider Road
Cincinnati, Ohio, 45249
TENANT: LIGHT TOUCH VEIN & LASER, INC.
c/o Colin Herd, M.D.
10663 Montgomery Road
Cincinnati, Ohio, 45242
Nothing herein contained shall be construed as prohibiting the
parties respectively from changing the place at which notice is to be given,
but not such change shall be effective unless and until it shall have been
accomplished by written notice given in the manner set forth in this section.
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<PAGE>
29. BINDING EFFECT.
This Lease Agreement shall be binding upon and inure to the benefit
of and be enforceable by the respective heirs, successors and assigns of the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Lease Agreement
on the date and year first above written.
SIGNED IN THE PRESENCE OF: LANDLORD:
INTRAM INVESTMENT CORPORATION
[ILLEGIBLE] By: /s/ Gregory F. Martini
- --------------------------------- -----------------------------------
Gregory F. Martini, President
[ILLEGIBLE]
- ---------------------------------
TENANT:
LIGHT TOUCH VEIN & LASER, INC.
[ILLEGIBLE] By: /s/ Colin Herd
- --------------------------------- -----------------------------------
Colin Herd, Secretary
[ILLEGIBLE]
- ---------------------------------
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<PAGE>
STATE OF OHIO COUNTY OF HAMILTON, SS:
BE IT REMEMBERED, That on this 30th day of July, 1997, before me, the
subscriber, a Notary Public in and for said state, personally came Gregory F.
Martini President of INTRAM INVESTMENT CORPORATION and acknowledged the
signing thereof to be his and its voluntary act and deed, pursuant to
authority of its Board of Directors.
IN TESTIMONY THEREOF, I have hereunto subscribed my name and affixed my seal
on this day and year aforesaid.
/s/ Paul E. Balash
------------------------------------
Notary Public [SEAL]
STATE OF OHIO, COUNTY OF HAMILTON, SS:
BE IT REMEMBERED, That on this 30th day of July, 1997, before me, the
subscriber, a Notary Public in and for said state, personally came Colin
Herd, Secretary of LIGHT TOUCH VEIN & LASER, INC. and acknowledged the
signing thereof to be his and its voluntary act and deed, pursuant to
authority of its Board of Directors.
IN TESTIMONY THEREOF, I have hereunto subscribed my name and affixed my seal
on this day and year aforesaid.
/s/ Paul E. Balash
------------------------------------
Notary Public [SEAL]
15
<PAGE>
MODIFICATION AGREEMENT
THIS AGREEMENT is entered into between INTRAM INVESTMENT CORPORATION an
Ohio corporation (hereinafter referred to as INTRAM whose address is 11157
Snider Road, Cincinnati, Ohio 45249, and LIGHTTOUCH VEIN & LASER, INC., an
Ohio corporation (hereinafter referred to as LIGHTTOUCH) whose address is
10663 Montgomery Road, Cincinnati, Ohio 45242.
WHEREAS INTRAM is the owner of certain equipment as set forth in Exhibit
"A" attached hereto; and
WHEREAS LIGHTTOUCH leased said equipment from INTRAM as set forth in a
Lease Agreement dated the 22nd day of August 1997, (hereinafter referred to
as LEASE), and further modified by an Actions Taken By the Board of Directors
of Intram Investment Corporation and LightTouch Vein & Laser, Inc., dated
January 16, 1998.
NOW, THEREFORE, the parties agree to modify the terms and conditions set
forth in LEASE, effective the 15th day of July, 1999, as follows:
3. RENT
Lessee shall pay to Lessor the rental of $1018.33 per week for the
rental of the equipment as set forth in Exhibit "A" attached hereto.
All other terms and conditions of the LEASE shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have hereunto set their hands this day
of July, 1999.
Witness: INTRAM INVESTMENT CORPORATION
[ILLEGIBLE] By: /s/ Gregory F. Martini
- --------------------------------- ----------------------------------
Gregory F. Martini, President
[ILLEGIBLE]
- ---------------------------------
LIGHTTOUCH VEIN & LASER, INC.
[ILLEGIBLE] By: /s/ Colin C. Herd
- --------------------------------- ----------------------------------
Colin C. Herd, Secretary
[ILLEGIBLE]
- ---------------------------------
<PAGE>
L E A S E
This Lease is between INTRAM INVESTMENT CORP., an Ohio Corporation
(hereinafter referred to as INTRAM) whose address is 11157 Snider Road,
Cincinnati, Ohio, 45249 and LIGHT TOUCH VEIN & LASER, INC., an Ohio
Corporation (hereinafter referred to as LIGHT TOUCH) whose address is 10663
Montgomery Road, Cincinnati, Ohio, 45242.
WHEREAS, INTRAM has purchased certain laser equipment as more
particularly described in EXHIBIT "A" attached hereto, and
WHEREAS, LIGHT TOUCH desires to lease said equipment from INTRAM and
INTRAM is agreeable to leasing said equipment to LIGHT TOUCH.
NOW THEREFORE, the parties agree as follows:
1. EQUIPMENT
INTRAM hereby leases to LIGHT TOUCH upon the terms and conditions set
forth herein, the equipment more particularly described in EXHIBIT "A"
attached hereto (hereinafter referred to as "EQUIPMENT").
2. TERM
The term of this Lease shall be thirty-six (36) months and shall begin
September 1, 1997.
3. RENT
LIGHT TOUCH shall pay to INTRAM a base rent of Two Hundred Sixty-nine
Thousand Eight Hundred Two and 72/100 Dollars
<PAGE>
($269,802.72) payable in equal monthly installments of Seven Thousand Four
Hundred Ninety-four and 52/100 Dollars ($7,494.52).
4. USE AND CARE OF EQUIPMENT
LIGHT TOUCH shall not use or knowingly permit any part of the EQUIPMENT
to be used for any unlawful purpose. LIGHT TOUCH shall keep the EQUIPMENT and
every part thereof in a clean and wholesome condition and generally that it
will, in all respects, and at all times, fully comply with all lawful health,
fire and police regulations.
5. INSURANCE
LIGHT TOUCH shall, at all times, insure the PREMISES and equipment on
said EQUIPMENT against fire, theft and damage during the term of this Lease.
6. REPAIRS AND MAINTENANCE
LIGHT TOUCH covenants and agrees, at its own expense, to keep the
EQUIPMENT, at all times in good repair, order and condition. LIGHT TOUCH will
commit no waste to the EQUIPMENT.
7. ASSIGNMENT
This Lease shall be nonassignable by LIGHT TOUCH. LIGHT TOUCH shall not
sublet the EQUIPMENT.
9. REMEDIES
INTRAM shall have all remedies available to it upon default of any of
the terms and conditions of this Lease as provided by Ohio Law.
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<PAGE>
IN WITNESS WHEREOF, the parties have hereunto set their hands on the day
and year first above written.
Witnesses: INTRAM INVESTMENT CORP.
/s/ Kim L. Hartman By: /s/ Gregory F. Martini
- ---------------------------------- ----------------------------------
Gregory F. Martini, President
Dated: 8/22/97
-------------------------------
LIGHT TOUCH VEIN & LASER, INC.
/s/ [ILLEGIBLE] By: /s/ Colin Herd
- ---------------------------------- ----------------------------------
Dr. Colin Herd, President
Dated: 8/22/97
-------------------------------
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<PAGE>
EXHIBIT "A"
1 - Endermologie Table
1 - Endermologie System
1 - 755,Alexandrite Laser System
1 - Medlite Q-Switched/Laser System
1 - Model CB Erbium/YAG Laser
1 - Copper Vapor Laser System
4
<PAGE>
PROMISSORY NOTE
$250,000.00 January, 20, 1998
Cincinnati, Ohio
FOR VALUE RECEIVED, LIGHT TOUCH VEIN & LASER, INC., an Ohio corporation,
promises to pay to INTRAM INVESTMENT CORPORATION, the sum of Two Hundred Fifty
Thousand Dollars ($250,000.00), for a period of eighteen (18) months, at
thirteen percent (13%) interest per annum, with no pre-payment penalty.
Payments will be made in weekly installments of Five Thousand Eighteen and
53/100 Dollars ($5,018.53), with the first payment due on the 6th day of
February, 1998.
FURTHER, LIGHT TOUCH VEIN & LASER, INC. agrees:
1. No debts outside the normal course of business shall be incurred; and
2. No expenditures over One Thousand Dollars ($1000.00) shall be made
without the prior consent of Intram Investment Corporation; and
3. Any and all capital infusion must be used to pay this debt first; and
This Note is secured by a Security Agreement dated January 9, 1998, and a
personal guaranty of Colin C. Herd, dated January 20, 1998, in the amount of One
Hundred Twenty-five Thousand Dollars ($125,000.00), or Fifty Percent (50%) of
the outstanding balance due on this Note.
LIGHT TOUCH-VEIN & LASER, INC.
By: /s/ Colin C. Herd
--------------------------------
Colin C. Herd
THIS NOTE SHALL BE FULLY PAID MARCH 1,
1999 BY AN ACCELERATED PAYMENT SCHEDULE
OF $5018.00/week.
<PAGE>
PERSONAL GUARANTY
Now comes, Colin C. Herd, and hereby personally guarantees payment up to
One Hundred Twenty-five Thousand Dollars ($125,000.00), on the Promissory Note
from Light Touch Vein & Laser, Inc. (corporation) to Intram, Investment
Corporation, dated January 9, 1998, in the amount of $250,000.00, or 50% of the
outstanding balance on this Note.
Colin C. Herd further provides his 400 shares of stock in, Corporation as
collateral on said Note.
WITNESS:
/s/ [ILLEGIBLE] /s/ Colin C. Herd
- ----------------------------- --------------------------------
Colin C. Herd
/s/ Kim L. Hartman Date: 1/20/98
- ----------------------------- ---------------------------
<PAGE>
MODIFICATION TO PERSONAL GUARANTY
Now comes, Colin C. Herd, and hereby modifies the January 20, 1998 Personal
Guaranty on the Promissory Note from Light Touch Vein & Laser, Inc. to Intram
Investment Corporation, dated January 9, 1998.
Colin C. Herd further provides his additional 860 shares of stock in Light
Touch Vein & Laser, Inc., for a total of 1260 shares of stock of Light Touch
Vein & Laser, Inc. as collateral on said Note.
WITNESS:
/s/ Kim L. Hartman /s/ Colin C. Herd
- -------------------------- -------------------------------
Colin C. Herd
/s/ Julie Crossley 11/12/98
- -------------------------- -------------------------------
<PAGE>
PERSONAL GUARANTY
Now comes, Colin C. Herd, and hereby personally guarantees payment up to
One Hundred Twenty-five Thousand Dollars ($125,000.00), on the Promissory
Note from Light Touch Vein & Laser, Inc. (Corporation) to Intram Investment
Corporation, dated January 9, 1998, in the amount of $250,000.00, or
50% of the outstanding balance due on this Note.
Colin C. Herd further provides his 400 shares of stock in Corporation as
collateral on said Note.
WITNESS:
/s/ [ILLEGIBLE] /s/ Colin C. Herd
- ------------------------------ ---------------------------
Colin C. Herd
/s/ Kim L. Hartman Date: 1/20/98
- ------------------------------ ----------------------
<PAGE>
MODIFICATION AGREEMENT
THIS AGREEMENT is entered into between INTRAM INVESTMENT CORPORATION, an
Ohio corporation (hereinafter referred to as INTRAM) whose address is 11157
Snider Road, Cincinnati, Ohio 45249, and LIGHTTOUCH VEIN & LASER, INC., an Ohio
corporation (hereinafter referred to as LIGHTTOUCH) whose address is 10663
Montgomery Road, Cincinnati, Ohio 45242.
WHEREAS, INTRAM is the owner of certain equipment as set forth in Exhibit
"A" attached hereto; and
WHEREAS, LIGHTTOUCH leased said equipment from INTRAM as set forth in a
Lease Agreement dated the 31st day of July, 1998 (hereinafter referred to as
LEASE),
NOW, THEREFORE, the parties agree to modify the terms and conditions set
forth in LEASE, effective the 15th day of July, 1999, as follows:
3. RENT
---------
Lessee shall pay to Lessor the rental of $1.00 per month for
the rental of the equipment as set forth in Exhibit "A" attached
hereto.
All other terms and conditions of the LEASE shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have hereunto set their hands this 7th day
of July, 1999.
Witness: INTRAM INVESTMENT CORPORATION
/s/ [ILLEGIBLE] By: /s/ Gregory F. Martini
- ------------------------- ------------------------------------
/s/ [ILLEGIBLE] Gregory F. Martini, President
- -------------------------
LIGHTTOUCH VEIN & LASER, INC.
/s/ [ILLEGIBLE] By: /s/ Colin C. Herd
- ------------------------- ------------------------------------
/s/ [ILLEGIBLE] Colin C. Herd, Secretary
- -------------------------
<PAGE>
LEASE
This Lease is between INTRAM INVESTMENT CORP., an Ohio Corporation
(hereinafter referred to as "INTRAM") whose address is 11157 Snider Road,
Cincinnati, Ohio, 45249 and LIGHT TOUCH VEIN & LASER, INC., an Ohio Corporation
(hereinafter referred to as "LIGHT TOUCH") whose address is 10663 Montgomery
Road, Cincinnati, Ohio, 45242.
WHEREAS, INTRAM has purchased certain liposuction equipment and computer
software as more particularly described in EXHIBIT "A", and
WHEREAS, LIGHT TOUCH desires to lease said equipment from INTRAM and
INTRAM is agreeable to leasing said equipment to LIGHT TOUCH.
NOW THEREFORE, the parties agree as follows:
1. EQUIPMENT
---------
INTRAMM hereby leases to LIGHT TOUCH upon the terms and conditions set
forth herein, the equipment more particularly described as EXHIBIT "A",
attached hereto (hereinafter referred to as "EQUIPMENT").
2. TERM
----
The term of this Lease shall be twenty four months (24) months, commencing
August 1, 1998, and ending July 31, 2000.
<PAGE>
3. RENT
----
LIGHT TOUCH shall pay a base rent to INTRAM of Seventeen Thousand Five
Hundred Fifty-two and 88/100 Dollars ($17,552.88), payable in equal monthly
installments of Eight Hundred Eighty-Four and 57/100 Dollars ($884.57), due and
payable on the first day of each month, commencing August 1, 1998. A 10% penalty
shall be assessed should rent not be paid on or before the first day of each
month.
Time is of the essence as to rent payments.
4. SECURITY DEPOSIT
----------------
A security deposit of Eight Hundred Eighty-four and 57/100 Dollars
($884.57) shall be delivered to INTRAM at the signing of this Lease. INTRAM
acknowledges receipt of said Security Deposit by its signature on this LEASE.
5. USE AND CARE OF EQUIPMENT
-------------------------
LIGHT TOUCH shall not use or knowingly permit any part of the EQUIPMENT to
be used for any unlawful purpose. LIGHT TOUCH shall keep the EQUIPMENT and every
part thereof in a clean and wholesome condition and generally that it will, in
all respects, and at all times, fully comply with all lawful health, fire and
police regulations.
<PAGE>
6. INSURANCE
---------
LIGHT TOUCH shall, at all times, insure the EQUIPMENT against fire, theft
and damage during the term of this Lease. LIGHT TOUCH shall provide proof of
insurance, which shall be in an amount of at least double the equipment value,
and provide proof to INTRAM that insurance is in full force and effect.
7. REPAIRS AND MAINTENANCE
-----------------------
LIGHT TOUCH covenants and agrees, at its own expense, to keep the
EQUIPMENT at all times in good repair, order and condition. LIGHT TOUCH will
commit no waste to the EQUIPMENT. LIGHT TOUCH shall allow INTRAM to inspect the
EQUIPMENT. INTRAM shall provide LIGHT TOUCH with a 24-hour notice of its desire
to inspect EQUIPMENT.
8. ASSIGNMENT
----------
This Lease shall be nonassignable by LIGHT TOUCH. LIGHT TOUCH shall not
sublet the EQUIPMENT.
9. REMEDIES
--------
INTRAM shall have all remedies available to it upon default of any of the
terms and conditions of this LEASE as provided by Ohio Law.
<PAGE>
Included in these remedies is the right of INTRAM to, upon default of
any payments envisioned under this LEASE, be permitted to remove all
EQUIPMENT without delay and LIGHT TOUCH will not interfere with such removal.
Should INTRAM be forced to employ legal representation or costs to effect its
remedies, LIGHT TOUCH shall be responsible to pay all costs, included but not
limited to attorneys fees.
IN WITNESS WHEREOF, the parties have hereunto set their hands.
Witnesses: INTRAM INVESTMENT CORP.
/s/ [ILLEGIBLE] By: /s/ Gregory F. Martini
- -------------------------- --------------------------------
Gregory F. Martini, President
/s/ Julie Crossley Date: 7-31-98
- -------------------------- -----------------------
LIGHT TOUCH VEIN AND LASER, INC.
/s/ [ILLEGIBLE] By: /s/ Colin C. Herd
- -------------------------- --------------------------------
Colin C. Herd, Director
/s/ Julie Crossley Date: 7-31-98
- -------------------------- -------------------------
<PAGE>
PROMISSORY NOTE
$15,000.00 August 24,1998
Cincinnati, Ohio
FOR VALUE RECEIVED, COLIN C. HERD and VEIN & LASER CENTER, INC., an Ohio
corporation, jointly and severally, promise to pay to INTRAM INVESTMENT
CORPORATION, the sum of Fifteen Thousand Dollars ($15,000.00), at ten percent
(10%) interest per annum, with no prepayment penalty, pursuant to the
following schedule:
<TABLE>
<CAPTION>
Payment Due on or Before: Amount Due:
------------------------ ----------
<S> <C>
September 4, 1998 $3,000.00
September 11, 1998 $3,000.00
September 18, 1998 $3,000.00
September 25, 1998 $3,000.00
October 2, 1998 $3,000.00
October 7, 1998 $1,500.00
</TABLE>
The Maker hereby waives presentment, notice of non-payment and protest.
/s/ Colin C. Herd
-------------------------------
COLIN C. HERD, Individually
VEIN & LASER CENTER, INC.
By: /s/ Colin C. Herd
----------------------------
Colin C. Herd, President
<PAGE>
PROMISSORY NOTE
$17,013.93 September 1, 1998
FOR VALUE RECEIVED, LIGHT TOUCH VEIN & LASER, INC., an Ohio corporation,
promises to pay to INTRAM INVESTMENT CORPORATION, the sum of Seventeen
Thousand Thirteen and 93/100 Dollars ($17,013.93).
Said Note is to be repaid in seven (7) weekly installments of Five Thousand
Eighteen and 53/100 Dollars ($5,018.53) each, beginning August 7, 1999, with
the final payment due and owing on September 20, 1999.
The Maker hereby waives presentment, notice of non-payment and protest.
LIGHT TOUCH VEIN & LASER, INC.
By: /s/ Colin C. Herd
------------------------------
Colin C. Herd, Director
<PAGE>
PROMISSORY NOTE
$30,000.00 September 4, 1998
FOR VALUE RECEIVED, LIGHT TOUCH VEIN & LASER, INC., an Ohio corporation,
promises to pay to INTRAM INVESTMENT CORPORATION, the sum of Thirty Thousand and
00/100 Dollars.
Said Note is to be repaid in seven (7) weekly installments Five Thousand
Eighteen and 53/100 Dollars ($5,018.53) each, beginning September 24, 1999, and
a final payment of Eight Thousand One Hundred Three and 17/100 Dollars
($8,103.17) due and owing on November 12, 1999.
The Maker hereby waives presentment, notice of non-payment and protest.
LIGHT TOUCH VEIN & LASER, INC.
By: /s/ Colin C. Herd
------------------------------
Colin C. Herd, Director
<PAGE>
LEASE
This Lease is between INTRAM INVESTMENT CORP., an Ohio Corporation
(hereinafter referred to as "INTRAM") whose address is 11157 Snider Road,
Cincinnati Ohio, 45249 and LIGHT TOUCH VEIN & LASER, INC., an Ohio
Corporation (hereinafter referred to as "LIGHT TOUCH") whose address is 10663
Montgomery Road, Cincinnati, Ohio, 45242.
WHEREAS, INTRAM has purchased certain laser equipment and computer
software as more particularly described in EXHIBIT "A", and
WHEREAS, LIGHT TOUCH desires to lease said equipment from INTRAM and
INTRAM is agreeable to leasing said equipment to LIGHT TOUCH.
NOW THEREFORE, the parties agree as follows:
1. EQUIPMENT
INTRAM hereby leases to LIGHT TOUCH upon the terms and conditions set
forth herein, the equipment more particularly described as EXHIBIT "A",
attached hereto (hereinafter referred to as "EQUIPMENT").
2. TERM
The term of this Lease shall be thirty months (30) months commencing
October 30, 1998, and ending April 13, 2001.
3. RENT
LIGHT TOUCH shall pay a base rent to INTRAM of One Hundred Eleven
Thousand Six
<PAGE>
Hundred Thirty-three 90/100 Dollars ($111,633.90), payable in equal weekly
installments of Eight Hundred Sixty-five and 38/100 Dollars ($865.38), plus
sales tax, at a rate of six percent (6%), in the sum of Fifty-one and 92/100
Dollars ($51.92), for a total weekly payment of Nine Hundred Seventeen and
30/100 Dollars ($917.30), due and payable on each Friday of the week, with
the first payment due and owing on October 30, 1998. A 10% penalty of
Ninety-one and 73/100 Dollars ($91.73) shall be assessed should rent not be
paid on or before the due date each week.
Time is of the essence as to rent payments.
4. SECURITY DEPOSIT
A security deposit of Nine Hundred Seventeen and 30/100 Dollars
($917.30) shall be delivered to INTRAM at the signing of this Lease. INTRAM
acknowledges receipt of said Security Deposit by its signature on this LEASE.
5. USE AND CARE OF EQUIPMENT
LIGHT TOUCH shall not use or knowingly permit any part of the EQUIPMENT
to be used for any unlawful purpose. LIGHT TOUCH shall keep the EQUIPMENT and
every part thereof in a clean and wholesome condition and generally that it
will, in all respects, and at all times, fully comply with all lawful health,
fire and police regulations.
6. TAXES AND INSURANCE
LIGHT TOUCH shall, at all times, insure the EQUIPMENT against fire, theft
and damage during the term of this Lease.
LIGHT TOUCH shall, at all times, carry liability insurance on EQUIPMENT,
with a
2
<PAGE>
policy limit of at least $1,000,000.00.
INTRAM shall be named as an additional insured on the insurance coverage.
LIGHT TOUCH shall provide proof of insurance and provide proof to INTRAM
that insurance is in full force and effect.
LIGHT TOUCH shall assume and be responsible for any and all taxes,
including, but not limited to the personal property tax, on EQUIPMENT.
7. REPAIRS, MAINTENANCE AND MODIFICATIONS
LIGHT TOUCH covenants and agrees at its own expense, to keep the EQUIPMENT
in good repair, order and condition at all times. LIGHT TOUCH will commit no
waste to the EQUIPMENT.
LIGHT TOUCH shall make no modifications to EQUIPMENT without the
written consent of INTRAM.
LIGHT TOUCH shall allow INTRAM to inspect the EQUIPMENT. LIGHT TOUCH
shall provide INTRAM with a 24-hour notice of its desire to inspect EQUIPMENT.
8. ASSIGNMENT
This Lease shall be non-assignable by LIGHT TOUCH. LIGHT TOUCH shall
not sublet the EQUIPMENT.
3
<PAGE>
9. DEFAULT
A. Events of Default. The occurrence of any one or more of the
following events shall constitute a material default and breach of this Lease
by LIGHT TOUCH, which, if not cured within any applicable time permitted for
cure hereinbelow, shall give rise to INTRAM remedies set forth in Paragraph
10.
(i) Failure by LIGHT TOUCH to make any payment of rent or any other
payment required to be made by LIGHT TOUCH hereunder, as and
when due, where such failure shall continue for a period of
fifteen (15) days after written notice given by INTRAM; or
(ii) Failure by LIGHT TOUCH to observe or perform any of the
covenants, conditions, or provisions of this Lease to be
observed or performed by LIGHT TOUCH, other than described
in paragraph (a) above, where such failure shall continue
for a period of fifteen (15) days after written notice
thereof from INTRAM to LIGHT TOUCH; provided, however that
if the nature of LIGHT TOUCH'S default is such that more
than fifteen (15) days are reasonably required for its cure,
then LIGHT TOUCH shall not be deemed to be default if LIGHT
TOUCH commenced such cure within such fifteen (15) day
period and thereafter diligently prosecutes such cure to
completion; or
(iii) Filing by or against LIGHT TOUCH of a petition to have LIGHT
TOUCH adjudged bankrupt or a petition for reorganization or
arrangement under any law relating to bankruptcy (unless, in
the case of a petition filed against
4
<PAGE>
LIGHT TOUCH, the same is dismissed within (60) days); or
(iv) Appointment of a trustee or receiver to take possession of
LIGHT TOUCH'S interest in this LEASE, and the appointment of
such trustee or receiver is not vacated and possession restored
to LIGHT TOUCH within thirty (30) days after such appointment;
or
(v) LIGHT TOUCH'S interest in this LEASE shall be sold under
execution; or
(vi) LIGHT TOUCH takes advantage, whether voluntarily or
involuntarily, of a debtor relief proceeding under any present
or future law, whereby the rent or any part hereof, is or
proposed to be, reduced or payment deferred; or
(vii) Making by LIGHT TOUCH of any general arrangement or assignment
for the benefit of creditors; or
(viii) Attachment, execution, or other judicial seizure of LIGHT
TOUCH'S interest in this LEASE, if not satisfied or dissolved
within ten (10) days after written notice from INTRAM to LIGHT
TOUCH to obtain satisfaction thereof; or
(ix) LIGHT TOUCH'S insolvency or admission of an inability to pay
its debts as they mature.
The notice and cure periods herein are in lieu of, and not in addition
to, any notice of cure periods as provided by law.
10. REMEDIES
INTRAM shall have all remedies available to it upon default of any of
the terms and conditions of this LEASE as provided by Ohio law.
5
<PAGE>
Included in these remedies is the right of INTRAM to, upon default of
any payments envisioned under this LEASE, be permitted to removed all
EQUIPMENT without delay and LIGHT TOUCH will not interfere with such removal.
Should INTRAM be forced to employ legal representation or costs to effect its
remedies, LIGHT TOUCH shall be responsible to pay all costs, included but not
limited to attorney's fees.
Additionally, LIGHT TOUCH agrees that upon its default of any terms and
conditions of this LEASE, it will assign and transfer the Softlight License
Agreement entered into between LIGHT TOUCH and Thermolase Corporation, dated
10/7/98, to INTRAM, or its successors and assigns.
IN WITNESS WHEREOF, the parties have hereunto set their hands.
Witness: INTRAM INVESTMENT COMPANY
/s/ Kim L. Hartman BY: /s/ Gregory F. Martini
- ------------------------------ --------------------------------
Gregory F. Martini, President
/s/ Julie Crossley Date: 10-23-98
- ------------------------------ ------------------------------
Witness: LIGHT TOUCH VEIN & LASER, INC.
/s/ Kim L. Hartman BY: /s/ Colin C. Herd
- ------------------------------ --------------------------------
Colin C. Herd, Director
Julie Crossley Date: 10-23-98
- ------------------------------ ------------------------------
6
<PAGE>
PROMISSORY NOTE
$25,000.00 November 12, 1998
Cincinnati, Ohio
FOR VALUE RECEIVED, COLIN C. HERD and VEIN & LASER CENTER INC, an Ohio
corporation jointly and severally, promise to pay to INTRAM INVESTMENT
CORPORATION, the sum of Twenty-five Thousand Dollars ($25,000), in eleven
(11) installments of Two Thousand Five Hundred Dollars ($2,500.00), with
payments to be bi-weekly as follows:
<TABLE>
<S> <C> <C> <C>
November 28 1998 $2,500.00 February 20, 1999 $2,500.00
December 12,1999 $2,500.00 March 6, 1999 $2,500.00
December 26,1999 $2,500.00 March 20, 1999 $2,500.00
January 9, 1999 $2,500.00 April 3, 1999 $2,500.00
January 23,1999 $2,500.00 April 17, 1999 $2,500.00
February 6, 1999 $2,500.00
</TABLE>
If this note is in default and is placed for collection, Colin C. Herd and
Vein & Laser Center Inc., shall pay all reasonable costs of collection and
attorneys' fees.
The maker hereby waives presentment, notice of non-payment and protest.
/s/ Colin C. Herd
----------------------------------
Colin C. Herd, Individually
VEIN & LASER CENTER, INC.
By: /s/ Colin C. Herd
-----------------------------
Colin C. Herd, President
<PAGE>
PROMISSORY NOTE
$50,000,00 January 28, 1999
FOR VALUE RECEIVED, Light Touch Vein & Laser Inc., an Ohio corporation,
promises to pay to Intram Investment Corporation, an Ohio corporation, the sum
of Fifty Thousand Dollars ($50,000.00) plus interest at the rate of three
percent (3%) per month.
Interest payments are due and payable on the 28th day of each month,
beginning February 28,1999.
This Note is payable upon demand.
LIGHT TOUCH VEIN & LASER, INC.
By: /s/ Gregory F. Martini
----------------------------------
Gregory F. Martini, President
By: /s/ Colin C. Herd
----------------------------------
Colin C. Herd, Secretary
<PAGE>
PERSONAL GUARANTY
Now comes Colin C. Herd, on the 28th day of January, 1999, and hereby
personally guarantees payment up to Twenty-five Thousand Dollars ($25,000.00)
on the Promissory Note from Light Touch Vein & Laser, Inc. to, Intram
Investment Corporation, dated January 28, 1999, in the amount of $50,000.00.
Until terminated, this guaranty shall remain in force notwithstanding
any extension, compromise, adjustment, forbearance, waiver release or
discharge of any party, obligator or guarantor, or release in whole or in
part of any security granted for said indebtedness or compromise or
adjustment therein. The undersigned waives notice thereto.
This guaranty shall be binding upon and inure to the benefit of the
parties, their successors, assigns and personal representatives.
WITNESSES:
/s/ Kim L. Hartman /s/ Colin C. Herd
- --------------------- -------------------------
Signature Colin C. Herd
Kim L. Hartman
- ---------------------
Print Name
/s/ Julie Crossley
- ---------------------
Signature
Julie Crossley
- ---------------------
Print Name
<PAGE>
PROMISSORY NOTE
$50,000.00 January 8, 1999
FOR VALUE RECEIVED, Light Touch Vein & Laser, Inc., an Ohio corporation,
promises to pay to Intram Investment Corporation, an Ohio corporation, the
sum of Fifty Thousand Dollars ($50,000.00), plus interest at the rate of
three percent (3%) per month.
Interest payments are due and payable on the 8th of each month,
beginning February 1, 1999.
This Note is payable upon demand.
LIGHT TOUCH VEIN & LASER, INC.
By: /s/ Gregory F. Martini
------------------------------------
Gregory F. Martini, President
By: /s/ Colin C. Herd
------------------------------------
Colin C. Herd, Secretary
<PAGE>
PERSONAL GUARANTY
Now comes Colin C. Herd, on the 8th day of January, 1999, and hereby
personally guarantees payment up to Twenty-five Thousand Dollars ($25,000.00)
on the Promissory Note from Light Touch Vein & Laser, Inc. to Intram
Investment Corporation, dated January 8, 1999, in the amount of $50,000.00.
Until terminated this guaranty shall remain in force notwithstanding any
extension, compromise, adjustment, forbearance, waiver release or discharge of
any party, obligator or guarantor, or release in whole or in part of any
security granted for said indebtedness or compromise or adjustment therein.
The undersigned waives notice thereto.
This guaranty shall be binding upon and inure to the benefit of the
parties, their successors, assigns and personal representatives.
WITNESSES:
/s/ Kim L. Hartman /s/ Colin C. Herd
- --------------------- -------------------------
Signature Colin C. Herd
Kim L. Hartman
- ---------------------
Print Name
/s/ Julie Crossley
- ---------------------
Signature
Julie Crossley
- ---------------------
Print Name
<PAGE>
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT made and entered into by and between TRI-STATE
LASER CORPORATION, which has its principal place of business at 3731 State
Route 50, Williamsburg, OH 45176 (hereinafter referred to as "Seller"), and
LIGHT TOUCH VEIN & LASER, INC., whose address is 10663 Montgomery Road,
Cincinnati, OH 45242 (hereinafter referred to as "Purchaser").
WITNESSETH:
WHEREAS, Seller is the owner of certain tangible and intangible assets
used in the business of laser surgery; and
WHEREAS, Seller desires to sell and convey such assets, certain
liabilities and obligations to Purchaser upon the provisions set forth; and
WHEREAS, Purchaser desires to purchase such assets, assume certain
liabilities and obligations from Seller for the purpose of conducting the
business engaged in by Seller.
NOW, THEREFORE, in consideration of the above premises and the mutual
promises, covenants, understandings, representations and warranties
hereinafter contained, the parties agree as follow:
<PAGE>
1. AGREEMENT.
Seller agrees to sell and convey to Purchaser all of the tangible
and intangible assets as hereinafter set forth in Paragraph 2. The agreements
of Seller and Purchaser herein are expressly conditioned upon the terms,
conditions, covenants, representations and warranties as hereinafter set
forth.
2. PROPERTY PURCHASED.
A. ASSETS. The properties which Seller shall convey hereunder
shall be certain tangible and intangible assets used by Seller in the
operation of its business, including the name "TRI-STATE LASER" as shown on
the attached schedule designated "ASSETS" (Exhibit "A").
B. LIABILITIES. Seller acknowledges that Purchaser is acquiring
Seller's ASSETS and is assuming certain liabilities of Seller and obligations
of Seller as shown on the attached schedule designated "LIABILITIES and
OBLIGATIONS" (Exhibit "B"). Seller will indemnify and hold Purchaser harmless
against all claims for product, service and liability against Seller arising
out of operations by Seller before Closing
Such indemnity includes all claims which may
accrue before closing which may be asserted before or after closing and which
may be known or unknown by Seller.
Purchaser will indemnify and hold Seller harmless
against all claims for product, service and
2
<PAGE>
liability agreement arising out of operation by Purchaser after closing
except as described above.
3. PURCHASE PRICE.
A. The total purchase price for the ASSETS shall be 53 shares of
LIGHT TOUCH VEIN & LASER, INC. Additionally, Seller shall deliver to
Purchaser an executed Employment Agreement with Allen Taylor (TAYLOR),
President of Tri-State Laser Corporation. Terms and conditions are set forth
in the EMPLOYMENT CONTRACT attached hereto as Exhibit "C".
4. REPRESENTATIONS AND WARRANTIES OF SELLER.
A. The Seller warrants and covenants as follows:
i. That the Seller is a corporation duly organized, existing
and in good standing under the laws of the State of Ohio, has full power and
lawful authority to carry on its current business and to execute and carry
out the terms, conditions and provisions of this Agreement, and that the
execution and delivery of this Agreement by Seller has been duly authorized
by proper corporate action, and that on the Closing Date the Seller will have
all necessary corporate power and authority to consummate this Agreement as
provided herein, and that this Agreement constitutes a valid obligation
binding upon Seller in accordance with its terms.
ii. That Seller shall introduce Purchaser to all customers
and shall assist Purchaser in obtaining assurances of continued business from
said customers during the
3
<PAGE>
transition period.
iii. That as of the Closing date, the ASSETS shall be operable
and usable for their intended purpose and the inventory will be usable or
salable in the Seller's ordinary business.
iv. That there is no litigation, investigation or proceeding
pending, or to the best of Seller's knowledge threatened against the ASSETS
and/or the Seller's business operations which might materially and adversely
affect the ASSETS or Seller's business operations.
v. That the execution and performance of the terms, conditions
and provisions of this Agreement and the consummation of the transactions
contemplated hereunder by the Seller, to the best of Seller's knowledge, will
not violate the provisions of any law, contract, agreement, mortgage, lease,
pledge agreement, security agreement or other agreement or instrument of any
nature.
B. The warranties, representations and covenants set forth in
this Agreement shall survive the Closing Date for a period of two (2) year
from the date of closing except for a period of four (4) years from the date
of closing for any and all tax liabilities.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
A. Purchaser represents, warrants and covenants that Purchaser
has full power and lawful authority to execute and carry out the terms of
this Agreement.
4
<PAGE>
B. That there are no lawsuits, actions or proceedings pending or
threatened which could effect Purchaser's ability to consummate the
transaction.
C. That the execution and delivery of the Agreement and
consummation of the transaction will not be in conflict with any agreements
or encumbrances to which the Purchaser is bound.
6. TITLE AND CONVEYANCE OF ASSETS.
Seller shall convey to Purchaser good and merchantable title to the
ASSETS by a Bill of Sale and Assignment with covenants of warranty, only as
provided by manufacturers of equipment, free of all liens and encumbrances
whatsoever in the form attached hereto as "Exhibit D".
7. CONDUCT OF BUSINESS PENDING CLOSING.
Seller covenants, represents and warrants in favor of Purchaser
that pending completion of the Closing, unless otherwise agreed to in writing
by Purchaser:
A. Between the date hereof and the Closing Date, Seller will not,
without the Purchaser's knowledge and consent, engage in any sale, enter into
any contract, incur any liability or permit any act or transaction to occur
which materially adversely affects the ASSETS of Seller's business, and which
is outside the ordinary course of business.
B. Seller will use its best efforts to preserve the business and
all ASSETS in good order and repair and preserve the goodwill of its
suppliers, customers and other necessary business
5
<PAGE>
relationships with Seller.
8. ASSUMPTION OF EMPLOYMENT CONTRACTS.
Seller specifically assigns all Employment Contracts currently in
force with its employees to Purchaser. Purchaser may, at its option, elect to
require all employees of Seller to sign new Employment Contracts with
Purchaser.
9. CLOSING.
This Agreement shall close (the "Closing") and all deliveries of
documents and the consideration shall take place as agreed to by the parties.
10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER.
A. All obligations of Purchaser under this Agreement shall be
subject to the fulfillment by Seller of each of the following conditions,
except to the extent any such conditions are expressly waived in writing by
Purchaser at or prior to the date of Closing:
i. All of the representations, warranties and covenants made
by Seller shall be true as of the date of this Agreement and shall likewise
be true in all material respects as of the Closing date as if made at and as
of such date.
ii. Purchaser shall have received at Closing a certificate of
the Secretary of Seller, dated the Closing Date, in the form and substance
reasonably satisfactory to Purchaser's counsel stating that:
6
<PAGE>
(1) Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio, and is
duly qualified to do business and is in good standing in the State of Ohio.
(2) Seller has the full power and authority to make,
execute, deliver and perform this Agreement.
(3) All corporate and other proceedings required to be
taken by Seller authorizing Seller to enter into and carry out this Agreement
and the transactions contemplated hereby, have been duly and are properly
taken, that the same are in full force and effect, this Agreement constitutes
a valid obligation binding upon Seller in accordance with its terms and that
complete copies of which, executed by all directors and shareholders are
attached thereto.
iii. Purchaser shall have received at the Closing date the
following:
(1) A consent by Seller to use the name "TRI-STATE LASER".
(2) A fully-executed Employment Contract between
Purchaser and TAYLOR.
(3) Bill of Sale properly executed by Seller conveying
the Assets.
(4) Such other instruments and documents that Purchaser
shall reasonably request for the purpose of further perfecting its title in
Seller's ASSETS.
7
<PAGE>
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER.
A. All obligations of Seller under this Agreement shall be
subject to their receipt of the following at or prior to the date of Closing:
i. All of the representations, warranties and covenants made
by Purchaser shall be true as of the date of this Agreement and shall
likewise be true in all material respects as of the Closing date as if made
at and as of such date;
ii. Seller shall have received at Closing, a statement from
Purchaser that:
(1) Purchaser has the full power and authority to make,
execute, deliver and perform this Agreement.
(2) All corporate and other proceedings required to be
taken by Purchaser authorizing Purchaser to enter into and carry out this
Agreement and the transactions contemplated hereby, have been duly and are
properly taken, that the same are in full force and effect, this Agreement
constitutes a valid obligation binding upon Purchaser in accordance with its
terms and that complete copies of which, executed by all directors and
shareholders are attached thereto.
iii. Seller shall have received, on the day of closing, the
required stock certificates pursuant to
8
<PAGE>
Paragraph 3, an executed Employment Contract between Purchaser and
Taylor, and all ancillary agreements that are referenced to in this
Agreement.
12. DEFAULT.
A. If either the Purchaser or the Seller breaches or defaults on
any of the terms, conditions, warranties and representation set forth herein,
then the other party shall notify the breaching party in writing of the
breach and provide thirty (30) days to cure the breach (unless a different
time period is set forth in the Agreement). If the breaching party has not
cured the breach or default within the time permitted herein, the Seller
shall have the right to exercise all its rights permitted by law. The Seller
shall be entitled to collect its costs, including reasonable attorney fees.
B. Purchaser shall have the right to terminate this Contract if
Seller is found to be in default (and the default is not cured pursuant to
Paragraph 11. a.), or in any other way found to have violated the
representations and warranties contained in Paragraphs 4, 5 and 7
13. ASSIGNMENT
This Agreement is nonassignable by either party except by written
agreement of the parties.
14. AMENDMENT.
This Agreement shall not be amended or modified except by means of
a written instrument executed by Seller and Purchaser.
9
<PAGE>
15. PARTIES IN INTEREST.
This Agreement shall inure to the benefit of and be binding upon
the Seller and Purchaser and their respective heirs, successors and assigns.
Nothing in this Agreement, express or implied, is intended to confer upon any
other person, other than the parties hereto, any rights or remedies under or
by reason of this Agreement.
16. NOTICES.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly delivered if in
person or if mailed by certified mail, return receipt requested, to the
address set forth above.
17. ENTIRE AGREEMENT.
This Agreement shall be governed by the law of the State of Ohio.
This Agreement sets forth the entire understanding of the parties hereto and
supersedes any and all prior agreements, arrangements and understandings
relating to the subject matter hereof. No party shall be deemed or construed
to have made any representation or warranty as a result of execution of this
Agreement nor shall any representation or warranty be implied from such
execution except representations and warranties which are expressly set forth
herein.
10
<PAGE>
IN WITNESS WHEREOF, the Purchaser and Seller have executed this Purchase
Agreement as of the date set forth below their respective signatures.
PURCHASER: SELLER:
LIGHT TOUCH VEIN & LASER, INC. TRI-STATE LASER CORPORATION
By: /s/ Gregory F. Martini By: /s/ William Allen Taylor
--------------------------- -------------------------------
Gregory F. Martini William Allen Taylor
Its: President Its: President
-------------------------- ------------------------------
Dated: 1/18/99 Dated: 1/15/99
------------------------ ----------------------------
11
<PAGE>
LEASE AGREEMENT
This Lease is entered into on the 19th day of February, 1999, by and
between INTRAM INVESTMENT CORPORATION ("Intram"), an Ohio corporation, whose
address is 11157 Snider Road, Cincinnati, Ohio 45249, and LIGHT TOUCH VEIN &
LASER, INC. ("Light Touch"), an Ohio corporation, whose address is 10663
Montgomery Road, Cincinnati, Ohio 45242.
WHEREAS, Intram is the owner of certain vehicles as set forth in
Exhibit "A" attached hereto; and
WHEREAS, Light Touch desires to lease said vehicles from Intram; and
WHEREAS, Intram is agreeable to leasing the vehicles to Light Touch.
NOW THEREFORE, the parties agree as follows:
1. VEHICLES
Intram hereby leases to Light Touch upon the terms and conditions set
forth herein, the vehicles set forth in Exhibit "A" attached hereto.
2. TERM
The term of this Lease shall be twelve months (12) months, commencing
March 1, 1999.
3. RENT
Light Touch shall pay a base rent to Intram of Twenty-four Thousand
Nine Hundred Eleven and 28/100 Dollars ($24,911.28), payable in twelve (12)
equal monthly installments of Two Thousand Seventy-five and 94/100 Dollars
($2,075.94), due and payable on the first day of each month. A 10% penalty of
Two Hundred Seven and 59/100 Dollars ($207.59) shall be assessed to the rental
payment should rent not be paid on or before the due date each month.
<PAGE>
Time is of the essence as to rent payments.
4. SECURITY DEPOSIT
A security deposit of Two Thousand Seventy-five and 94/100 Dollars
($2075.94) shall be delivered to Intram at the signing of this Lease. Intram
acknowledges receipt of said security deposit by its signature on this LEASE.
5. TITLE
Light Touch will ensure that the vehicles' titles are registered in the
name of Intram Investment Corporation. Light Touch is responsible for the costs
of all license, title and registration costs. Light Touch will maintain the
vehicles' registration as required by law.
6. MAINTENANCE
Light Touch shall, at its own expense, service the vehicles according
to the manufacturers recommendations and keep them in good condition and running
order. Light Touch shall make no modifications to the vehicles without
permission from Intram. Light Touch shall also keep complete maintenance books
on the vehicles. Light Touch shall not use or knowingly permit the automobiles
to be used for any unlawful purpose.
6. INSURANCE
Light Touch shall, during the term of this Lease, insure the vehicles
with a minimum coverage of commercial auto coverage with limits as set forth in
the Light Touch Vein & Laser, Inc. Property and Casualty Insurance Policy
effective 12-31-98. Intram shall be named as "Loss
2
<PAGE>
Payee" on said policy. Upon request, Light Touch shall furnish a copy of the
insurance policy to Intram.
7. INDEMNIFICATION
Light Touch shall indemnify and hold Intram harmless from any and all
liability arising out of any use of the vehicles.
8. ASSIGNMENT
This Lease shall be non-assignable by Light Touch.
9. TRAFFIC TICKETS
Light Touch is responsible for any and all traffic and/or parking
tickets issued to the driver of any of the vehicles.
10. DEFAULT
Light Touch will be in default and, subject to any right it may have to
cure the default, Intram may terminate this Lease early if:
1) Payment is not made when due;
2) A lien or other claim is made against this Lease or one or both of the
vehicles;
3) A bankruptcy petition is filed by or against Light Touch;
4) Ligbt Touch does not comply with any terms of this Lease.
Should Light Touch default, Intram may, as applicable law permits, peacefully
take back the
3
<PAGE>
vehicles without notifying Light Touch. Light Touch may recover any personal
property in the vehicle only if it claims the property within 20 days after
vehicle is taken back by Intram. Light Touch is responsible for all expenses
involved in the repossession, storing and transporting of the vehicles, as
well as all legal costs and attorneys' fees, to the extent permitted by law.
IN WITNESS WHEREOF, the parties have hereunto set their hands.
Witness: INTRAM INVESTMENT CORPORATION
/s/ Kim L. Hartman BY: /s/ Gregory F. Martini
- ------------------------ ----------------------------------
Gregory F. Martini, President
/s/ Julie Crossley
- ------------------------
Witness: LIGHT TOUCH VEIN & LASER, INC.
/s/ Kim L. Hartman BY: /s/ Colin C. Herd
- ------------------------ ----------------------------------
Colin C. Herd, Secretary
/s/ Julie Crossley
- ------------------------
4
<PAGE>
LEASE AGREEMENT
FOR GOOD C0NSIDERATION it is agreed that Gregory F. Martini, whose
address is 11157 Snider Road, Cincinnati, Ohio 45249, ("MARTINI") is the
owner of certain equipment ("EQUIPMENT") listed on Exhibit "A" attached
hereto, and does hereby lease to Light Touch Vein & Laser, Inc., an Ohio
corporation, whose address is 10663 Montgomery Road, Cincinnati, Ohio 45242,
("LIGHT TOUCH") said EQUIPMENT.
The term of this Lease shall be month to month, commencing April 1,
1999.
LIGHT TOUCH shall pay the sum of One Hundred and 00/100 ($100.00)
Dollars per month to MARTINI, at the above address, payable on the first day of
each month, beginning April 1, 1999. A security deposit of $100.00 is due upon
the execution of this Lease Agreement. A ten (10%) percent penalty shall be
assessed to the rental payment should rent not be paid on or before the due
date.
LIGHT TOUCH shall not use or knowingly permit any part of the
EQUIPMENT to be used for any unlawful purpose. LIGHT TOUCH shall keep the
EQUIPMENT and every part thereof in a clean and wholesome condition. LIGHT
TOUCH shall, at its own expense, keep the EQUIPMENT in good repair, order and
condition at all times. LIGHT TOUCH shall commit no waste to the EQUIPMENT.
LIGHT TOUCH shall make no modifications to the EQUIPMENT without prior
written consent from MARTINI.
LIGHT TOUCH shall be responsible, for any and all taxes and
insurance on said EQUIPMENT. MARTINI shall be named as an additional insured
on the insurance policy. LIGHT TOUCH shall provide proof of insurance and
provide proof to MARTINI that insurance is in full force and effect.
<PAGE>
LIGHT TOUCH shall not assign this lease. LIGHT TOUCH shall not sublet
the EQUIPMENT.
Either party hereto may terminate this Lease Agreement at any time.
Said termination must be given to the other party, in writing, at least thirty
(30) days before the next rental payment due date.
MARTINI shall have all remedies available to him upon default of any of
the terms and conditions of this Lease Agreement as provided by Ohio law.
IN WITNESS WHEREOF, the parties hereto have signed their names on this
31st day of March, 1999.
Witnesses:
/s/ Julie Crossley /s/ Gregory F. Martini
- ------------------------- ------------------------------------
Gregory F. Martini
/s/ Kim L. Hartman
- -------------------------
LIGHT TOUCH VEIN & LASER, INC.
/s/ Julie Crossley By: /s/ Colin C. Herd
- ------------------------- ---------------------------------
Colin C. Herd, Director
/s/ Kim L. Hartman
- -------------------------
-2-
<PAGE>
LEASE AGREEMENT
This Lease is entered into on the 1st day of April, 1999, by and between
INTRAM INVESTMENT CORPORATION, an Ohio Corporation (hereinafter referred to
as "Lessor") whose address is 11157 Snider Road, Cincinnati, Ohio 45249 and
LIGHT TOUCH VEIN & LASER, INC. dba Tri-State Laser, an Ohio corporation,
(hereinafter referred to as "Lessee") whose address is 10663 Montgomery Road,
Cincinnati, Ohio 45242.
WHEREAS, Lessor has purchased certain equipment particularly described
in ASSETS - EXHIBIT "A"; and
WHEREAS, Lessee desires to lease said equipment from Lessor; and
WHEREAS, Lessor is agreeable to leasing the equipment to Lessee.
NOW THEREFORE, the parties agree as follows:
1. EQUIPMENT
Lessor hereby leases to Lessee upon the terms and conditions set forth
herein, the equipment as more particularly described as ASSETS - EXHIBIT "A",
attached hereto (hereinafter referred to as "EQUIPMENT").
2. TERM
The term of this Lease shall be twenty-four (24) months, commencing
April 16, 1999, and terminating April 6, 2001 at 12:00 midnight.
3. RENT
Lessee shall pay a base rent to Lessor of Seventy-seven Thousand Forty and
08/100
<PAGE>
Dollars ($77,040.08), payable in equal weekly installments of Seven Hundred
Forty and 77/100 ($740.77), due and payable on each Friday of the week, with
the first payment due and owing on April 16, 1999. A 10% penalty of
Seventy-four and 08/100 Dollars ($74.08) shall be assessed to the rental
payment should rent not be paid on or before the due date each week.
Time is of the essence as to rent payments.
4. SECURITY DEPOSIT
A security deposit of Three Thousand One Hundred Eighty-five and 31/100
Dollars ($3,185.31), representing one (1) month's base rent, shall be
delivered to Lessor at the signing of this Lease. Lessor acknowledges receipt
of said security deposit by its signature on this LEASE.
5. USE AND CARE OF EQUIPMENT
Lessee shall not use or knowingly permit any part of the EQUIPMENT to be
used for any unlawful purpose. Lessee shall keep the EQUIPMENT and every part
thereof in a clean and wholesome condition and generally that it will, in all
respects, and at all times, fully comply with all lawful health, fire and
police regulations.
6. INSURANCE
Lessee shall, at all times, insure the EQUIPMENT against fire, theft and
damage during the term of this Lease. Lessee shall provide proof of
insurance, which shall be in an amount of at least equal to the replacement
value of EQUIPMENT, and provide proof to Lessor that insurance
2
<PAGE>
is in full force and effect.
Lessee shall, at all times, carry liability insurance on EQUIPMENT, with
a policy limit of at least $1,000,000.00.
Lessor shall be named as an additional insured on the insurance
coverage.
7. TAXES, TITLE AND LICENSE
Lessee shall assume and be responsible for any and all taxes, including,
but not limited to the personal property tax, as well as title and licensing
cost, on EQUIPMENT.
8. INDEMNIFICATION
Lessee shall indemnify and hold Lessor harmless from any and all
liability arising out of any use of the EQUIPMENT.
9. REPAIRS, MAINTENANCE AND MODIFICATIONS
Lessee covenants and agrees, at its own expense, to keep the EQUIPMENT
in good repair, order and condition at all times. Lessee will commit no waste
to the EQUIPMENT.
Lessee shall make no modifications to EQUIPMENT without the written
consent of Lessor.
Lessee shall allow Lessor to inspect the EQUIPMENT. Lessor shall provide
Lessee with a 24-hour notice of its desire to inspect EQUIPMENT.
10. ASSIGNMENT
This Lease shall be non-assignable by Lessee. Lessee shall not sublet the
EQUIPMENT.
3
<PAGE>
11. DEFAULT
A. Events of Default. The occurrence of any one or more of the
following events shall constitute a material default and breach of this Lease
by Lessee, which, if not cured within any applicable time permitted for cure
hereinbelow, shall give rise to Lessor remedies set forth in Paragraph 12.
(i) Failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when
due, where such failure shall continue for a period of fifteen
(15) days after written notice given by Lessor; or
(ii) Failure by Lessee to observe or perform any of the covenants,
conditions, or provisions of this Lease to be observed or
performed by Lessee, other than described in paragraph (a)
above, where such failure shall continue for a period of
fifteen (15) days after written notice thereof from Lessor to
Lessee; provided, however that if the nature of Lessee's
default is such that more than fifteen (15) days are reasonably
required for its cure, then Lessee shall not be deemed to be
default if Lessee commenced such cure within such fifteen (15)
day period and thereafter diligently prosecutes such cure to
completion; or
(iii) Filing by or against Lessee of a petition to have
Lessee adjudged bankrupt or a petition for
reorganization or arrangement under any law relating to
bankruptcy (unless, in the case of a petition filed
against Lessee, the same is dismissed within sixty
(60) days); or
4
<PAGE>
iv) Appointment of a trustee or receiver to take possession
of Lessee's interest in this LEASE, and the appointment
of such trustee or receiver is not vacated and
possession restored to Lessee within thirty (30) days
after such appointment; or
(v) Lessee's interest in this LEASE shall be sold under
execution; or
(vi) Lessee takes advantage, whether voluntarily or
involuntarily, of a debtor relief proceeding under any
present or future law, whereby the rent or any part
hereof, is or proposed to be, reduced or payment
deferred; or
(vii) Making by Lessee of any general agreement or assignment
for the benefit of creditors; or
(viii) Attachment, execution, or other judicial seizure of
Lessee's interest in this LEASE, if not satisfied or
dissolved within ten (10) days after written notice
from Lessor to Lessee to obtain satisfaction thereof;
or
(ix) Lessee's insolvency or admission of an inability to pay
its debts as they mature.
The notice and cure periods herein are in lieu of and not in addition
to, any notice of cure periods as provided by law.
12. REMEDIES
Lessor shall have all remedies available to it upon default of any of
the terms and conditions of this LEASE as provided by Ohio law.
5
<PAGE>
Included in these remedies is the right of Lessor to, upon default of
any payments envisioned under this LEASE, be permitted to remove all
EQUIPMENT without delay and Lessee will not interfere with such removal.
Should Lessor be forced to employ legal representation or costs to effect its
remedies, Lessee shall be responsible to pay all costs, included but not
limited to attorney's fees.
IN WITNESS WHEREOF, the parties have hereunto set their hands.
Witness: INTRAM INVESTMENT CORPORATION
/s/ Kim L. Hartman BY: /s/ Gregory F. Martini
- ------------------------- ------------------------------
/s/ Julie Crossley Gregory F. Martini, President
- -------------------------
LIGHT TOUCH VEIN & LASER, INC.
dba Tri-State Laser
/s/ Kim L. Hartman BY: /s/ Colin C. Herd
- ------------------------- ------------------------------
/s/ Julie Crossley Colin C. Herd, Director
- -------------------------
6
<PAGE>
MEDICAL DIRECTOR AND
ADMINISTRATIVE SERVICES AGREEMENT
This Medical Director and Administrative Services Agreement
("Agreement") is entered into as of July 30, 1997 ("Effective Date") by and
among LIGHT TOUCH VEIN & LASER, INC., an Ohio corporation ("Light Touch") and
VEIN & LASER CENTER, INC., an Ohio professional association ("Physician
Group").
RECITALS
A. Physician Group operates a medical practice (the "Practice") and
has entered into and throughout the term of this Agreement may continue to
enter into arrangements with insurers, HMOs and other third-party payors
("Payors") to provide or arrange for the provision of health care services to
persons covered by those Payors ("Enrollees").
B. Physician Group has entered into written employment agreements with
physicians and other health care providers and health care professionals
("Employed Providers") licensed to practice in the State of Ohio and the
Commonwealth of Kentucky. Physician Group may also enter into independent
contractor agreements with various physicians and other health care providers
and health care professionals ("Contracting Providers") to assist Physician
Group in providing or arranging for the provision of health care services to
Enrollees and other patients of Physician Group (collectively, "Patients").
C. Light Touch engages in the business of owning laser centers and
providing certain administrative and support services concerning the
day-to-day affairs of medical practices, and has established existing laser
centers ("Centers") at the sites listed on EXHIBIT A.
D. Light Touch desires to engage Physician Group to serve as medical
director of the Centers, and Physician Group desires to obtain the use of the
Centers for its Employed Providers.
E. Physician Group desires to secure certain administrative services
from Light Touch in connection with its operation of the Practice.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties agree as follows:
I. RESPONSIBILITIES OF PHYSICIAN GROUP
1.1 MEDICAL DIRECTOR. Physician Group shall assume responsibility for
the professional medical services rendered at the Centers, and shall appoint
one of its Employed Providers as the medical director of each Center.
Physician Group and the medical directors shall, to the best of their
ability, assist Light Touch in the proper
<PAGE>
operation and management of the Centers. Physician Group agrees to provide,
and shall cause its Employed Providers to provide, professional medical
services to Patients at the Centers, and provide medical direction services
at the Centers during the hours of operation of the Centers. Physician Groups
duties as medical director of the Centers shall include the responsibilities
listed on EXHIBIT B.
1.2. SOLE RESPONSIBILITY FOR ALL MEDICAL AND PROFESSIONAL MATTERS. All
medical and professional matters relating to the operations of the Practice
and the Centers, and the performance of medical services for Patients shall
be the sole responsibility of Physician Group. Physician Group shall use and
occupy the Centers exclusively for the practice of medicine. Physician Group
expressly acknowledges that the medical practice or practices conducted at
these facilities shall be conducted solely by Employed Providers and
Contracting Providers.
1.3. EMPLOYED PROVIDERS AND CONTRACTING PROVIDERS. Unless otherwise
agreed to by the parties, Physician Group shall have complete control of and
responsibility for the hiring, engagement, compensation, supervision
evaluation, and termination of all Employed Providers and Contracting
Providers, although at the request of Physician Group, Light Touch shall
consult with Physician Group respecting such matters. With respect to
physicians, Physician Group shall only employ and contract with licensed
physicians meeting applicable credentialing guidelines established by
Physician Group. Physician Group shall be responsible for the payment of
salaries and wages, compensation, payroll taxes, employee benefits, and all
other taxes and charges now or hereafter applicable to Employed Providers,
Contracting Providers and other licensed health care professional personnel
employed by Physician Group. Physician Group shall consult with Light Touch
with regard to the terms of contracts entered into between Physician Group
and Employed Providers, Contracting Providers, or other licensed health care
professional employees and the terms and conditions of their employment or
engagement as independent contractors, as applicable.
1.4. FEES, CHARGES AND PAYOR AGREEMENTS. Physician Group shall, after
consultation with Light Touch, determine the fees, charges, premiums, or other
amounts due in connection with its delivery of health care services to
Patients. Such fees, charges, premiums, or other amounts, regardless of
whether determined on a fee-for-service, capitated, prepaid, or other basis,
shall be reasonable and consistent with the fees, charges, premiums and other
amounts due to health care providers for similar services within the community
under the type of reimbursement program involved.
1.5. COMPLIANCE WITH LAW. Physician Group shall require all of its
Employed Providers and Contracting Providers to comply with all laws,
regulations, and ethical and professional standards applicable to the
practice of medicine. Employed Providers and Contracting Providers who are
physicians shall at all times be licensed to practice medicine in the State
of Ohio and all other states in which a Center is located and at which such
physician provides patients medical services is located.
1.6. CENTERS; HOURS OF OPERATION; STAFFING. Physician Group shall
conduct the Practice from the current location(s) set forth in EXHIBIT A and
any future Centers. Changes in or additions to the Centers at which Physician
Group provides medical director services and conducts the Practice shall
require the consent of both parties which consent shall not be unreasonably
withheld. Any additional or substitute Center
<PAGE>
shall be deemed to be part of the Practice for the purposes of this
Agreement. The hours of operation and the medical staffing of the Centers
shall be established by the agreement of Physician Group and Light Touch from
time to time hereafter.
1.7. QUALITY ASSURANCE. Physician Group shall rigorously monitor
utilization and quality of services provided by Employed Providers and
Contracting Providers, shall develop, maintain and administer quality
assurance programs and performance standards and shall take all steps
necessary to remedy any and all deficiencies in the efficiency or the
quality of medical care provided.
1.8. PATIENT REFERRALS. The parties agree that the benefits to Physician
Group hereunder do not require, are not payment for, and are not in any way
contingent upon the admission, referral or any other arrangements for the
provision of any item or service offered by Light Touch or any Affiliate of
Light Touch to any of Physician Group's Patients in any facility or laboratory
controlled, managed or operated by Light Touch or any Affiliate of Light Touch.
1.9. PROFESSIONAL DUES AND EDUCATION EXPENSES. Physician Group and its
Employed providers shall be solely responsible for the cost of membership in
professional associations, and continuing professional education. Physician
Group shall ensure that each of its Employed Providers participates in such
continuing medical education as is necessary for such provider to remain
current with professional licensure and community standards.
1.10. PROFESSIONAL INSURANCE ELIGIBILITY. Physician Group shall obtain
and retain professional liability insurance by assuring that its Employed
Providers and Contracting Providers are insurable or instituting proceedings
to terminate any Employed Provider who is not insurable or loses his or her
insurance eligibility. Termination shall be effective no more than thirty
(30) days from such determination. Physician Group shall require all Employed
Providers and Contracting Providers to participate in an on-going risk
management program. It is understood that Physician Group and its Employed
Providers and Contracting Providers who are physicians shall, at Physician
Group's cost, at all times be covered by malpractice insurance with coverage
in usual and customary amounts for practitioners of the same profession and
specialties in Ohio and, if applicable, other states. Physician Group shall
ensure that its written agreements with Contracting Providers and Contracting
Providers who are physicians require such physicians to at all times be
covered by malpractice insurance in amounts that are usual and customary for
practitioners of the same profession and specialty in Ohio and, if applicable,
other states. Such malpractice policies shall name Light Touch as
an additional insured.
1.11. FEES FOR PROFESSIONAL SERVICES. Physician Group shall be solely
responsible for legal, accounting and other professional services incurred by
Physician Group in operating the Practice absent a violation by Physician
Group of any provisions of this Agreement.
1.12. ACCOUNTING. Physician Group shall direct and maintain the
operation of an appropriate accounting system with respect to Physician
Group's operation of the
-3-
<PAGE>
Practice and shall perform all bookkeeping and accounting services required
for the operation of the Practice, including the maintenance, custody and
supervision of business records, ledgers and reports; the establishment,
administration and implementation of accounting procedures, controls and
systems.
II. RESPONSIBILITIES OF LIGHT TOUCH
2.1. GENERAL RESPONSIBILITY. Light Touch shall have general
responsibility for staffing, equipping and operating the Centers, including
fiscal services, administrative services, and other strategic and tactical
support services with respect to the Centers, except as otherwise provided in
this Agreement. Light Touch shall perform all required functions in
accordance with sound management techniques. Notwithstanding Light Touch's
general and specific rights and responsibilities set forth in this Agreement,
Physician Group shall have full authority and control with respect to all
medical, professional and ethical determinations over Physician Group's
Practice and the provision of medical services at the Centers to the extent
required by federal, state and local laws, rules and regulation. Light Touch
shall not engage in activities which constitute the practice of medicine
under applicable law. Light Touch shall neither exercise control over nor
interfere with the physician-patient relationship, which shall be maintained
strictly between the physicians of Physician Group and their Patients.
2.2. RESPONSIBILITIES WITH REGARD TO SELECTED PATIENT- RELATED MATTERS.
(a) PATIENT RELATIONS, SCHEDULING, ETC. Light Touch shall assist
Physician Group in maintaining positive Patient relations by, among other
things, in conjunction with and at the direction of Physician Group:
scheduling Patient appointments; responding to Patient grievances and
complaints in matters other than medical evaluation, diagnosis, and treatment.
(b) RECORDKEEPING. Light Touch shall assist Physician Group in
maintaining Patient medical records in accordance with applicable laws
concerning their confidentiality and retention, and promptly making such
records available to Physician Group's Employed Providers, Contracting
Providers and other appropriate recipients. Notwithstanding the foregoing
sentence, Patient medical records shall be and shall remain the property of
Physician Group, and the content thereof shall be solely the responsibility
of Physician Group.
(c) QUALITY ASSURANCE. Light Touch shall assist Physician Group,
in accordance with criteria established by Physician Group, in the
development and implementation of appropriate quality assurance programs,
including development of performance and utilization standards, sampling
techniques for case review, and preparation of appropriately documented
studies. Notwithstanding the foregoing, Light Touch shall not perform any
duties that constitute the corporate practice of medicine.
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2.3. BILLING. Light Touch shall submit on a timely basis all bills and
necessary documentation required by Patients and Payors in order to obtain
payment in connection with Physician Group's delivery of health care services
at the Practice or its arrangement for the delivery of such services. In
seeking such payment, Light Touch shall act as Physician Group's exclusive
agent in billing and collecting professional fees, charges and other amounts
owed to Physician Group for services rendered by it and its Employed Providers
at the Centers. In this connection, Physician Group hereby appoints Light
Touch, during the term of this Agreement, as Physician Group's true and lawful
attorney-in-fact, with power of substitution, for the following purposes
relating to the Practice:
(i) To bill Physician Group's Patients on Physician Group's
behalf.
(ii) To collect accounts receivable generated by such billings
on Physician Group's behalf, including, where deemed appropriate by Light Touch
and approved in advance by Physician Group, settling and compromising claims,
assigning such accounts receivable to a collection agency or the bringing of
legal action against a Patient or Payor on Physician Group's behalf.
(iii) To receive payments on behalf of Physician Group from
Patients and Payors, to cause such payments to be deposited into appropriate
depository accounts (each such depository account, a "Collections Account").
2.4. OTHER RESPONSIBILITIES.
(a) INSURANCE. PROPERTY AND LIABILITY INSURANCE. Light Touch shall
obtain and maintain during the term of this Agreement (a) property damage
insurance protecting the Centers' premises and the personal property located
therein against such hazards and in such amounts as Light Touch determines
are reasonably prudent; and (b) general liability insurance in such amounts
as Light Touch determines are reasonably prudent.
(b) PERSONNEL. Light Touch shall furnish the services of all
personnel other than physicians, nurses, physician assistants or other health
care professionals required for the operation of the Practice. Except as
specifically provided in this SECTION 2.4(b) Light Touch has the power to
recruit, hire, train, promote, assign, set the compensation level for, and
discharge all nonprofessional personnel. Any nonprofessional personnel
employed by Light Touch who perform patient care services shall perform such
services under the exclusive direction, supervision and control of Physician
Group, while all other services of Light Touch personnel shall be performed
under the exclusive direction, supervision and control of Light Touch. If
Physician Group is dissatisfied with the services of any personnel employed
by Light Touch, Physician Group shall consult with Light Touch. Light Touch
shall in good faith determine whether the performance of that employee could
be brought to acceptable levels through counsel and assistance, or whether,
if requested by Physician Group (provided that such employee is not an
officer or senior manager of Light Touch), such employee should be removed
from providing services
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for Physician Group. Employee assignments shall be made with the intention of
assuring consistent and continued rendering of high quality medical support
services and to ensure prompt availability and accessibility of individual
medical support personnel to physicians in order to develop constant,
familiar and routine working relationships between individual physicians and
individual members of the medical support personnel.
III. FINANCIAL ARRANGEMENTS
3.1. FEES FOR PROFESSIONAL SERVICES. Physician Group shall bill
Patients for the services of its Employed Providers and Contracting Providers
at the rates and/or fees established by Physician Group from time to time,
which rates and fees may be incorporated into the overall global fees charged
to Patients for services and procedures performed at the Centers. Light Touch
shall bill and collect for its services and the technical fees related to the
Centers. Physician Group's initial fees and rates are attached hereto as
EXHIBIT 3.1. Light Touch acknowledges that the services provided by
Physicians Group are unlikely to be covered by insurance plans, health
maintenance organizations and other similar Payors, and that Patients will
primarily be financially responsible for Physician Groups' fees. Physician
Group agrees to charge reasonable fees for its services, and may adjust its
fees from time to time, subject to the provisions of Section 1.4.
Light Touch shall pay to Physician Group the amount Light Touch collects
on behalf of Physician Group hereunder. In recognition of the services of
Physician Group hereunder, including services as medical director, Light
Touch shall pay to Physician Group a minimum weekly payment equal to the
Guaranteed Payment. The Guaranteed Payment shall equal the sum of the minimum
compensation listed on EXHIBIT C for the Employed Providers, total CME
expenses, malpractice insurance, physicians' assistants, nurses, accounting
and miscellaneous expenses, and Contracting Providers. Within thirty (30)
days of the end of each calendar quarter, Light Touch will reconcile the
amount due to, or payable from, Physician Group for such quarter, determined
by comparing the amount paid to Physician during such quarter (including the
Guaranteed Payments) against the actual collections by Light Touch on
Physician Group's behalf (based on billings in accordance with Exhibit 3.1).
IV. REPRESENTATIONS AND WARRANTIES; COVENANTS
4.1 REPRESENTATIONS AND WARRANTIES AND COVENANTS OF PHYSICIAN GROUP.
(a) Physician Group hereby represents and warrants to Light Touch
as follows:
(i) Physician Group is and shall remain during the term of
this Agreement a professional corporation duly organized, validly existing
and in good standing under the laws of the State of Ohio, actively engaged in
the practice of
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medicine, and possessing full corporate power and authority to own its
properties and to conduct the business in which it engages.
(ii) Physician Group has full corporate power and authority
to execute and deliver this Agreement and to engage in the transactions and
obligations contemplated by this Agreement. Upon its execution, this
Agreement shall constitute a valid and binding obligation of Physician Group,
enforceable in ACCORDANCE WITH ITS TERMS, EXCEPT as limited by applicable
BANKRUPTCY, INSOLVENCY, MORATORIUM, OR OTHER SIMILAR LAWS affecting generally
the rights of creditors and by principles of equity. The party executing this
Agreement on behalf of Physician Group is duly authorized to do SO.
(iii) The consummation of the transactions contemplated by
this Agreement will not: result in a breach of the terms, provisions, or
conditions of or constitute a default under the Articles of Incorporation,
By-Laws or other enabling or governing instruments of Physician Group or any
agreement to which Physician Group is a party or by which it is bound; or, to
the best knowledge of Physician Group, constitute a violation of any
applicable law or regulation.
(b) Physician Group hereby covenants to Light Touch that it shall
not, without the prior written consent of Light Touch, take any action to
terminate or nullify, or release any Employed Provider from, the terms of any
noncompetition covenant set forth in any employment agreement between
Physician Group and such Employed Provider.
4.2. COVENANTS AND WARRANTIES OF LIGHT TOUCH. Light Touch hereby
represents and warrants to Physician Group as follows:
(a) Light Touch is and shall remain during the term of this
Agreement a corporation which is duly organized, validly existing and in good
standing under the laws of the State of Ohio, possessing full corporate power
and authority to own its properties and to conduct the business in which it
engages.
(b) Light Touch has full corporate power and authority to execute
and deliver this Agreement and to engage in the transactions and obligations
contemplated by this Agreement. Upon its execution, this Agreement shall
constitute a valid and binding obligation of Light Touch, enforceable in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, moratorium, or other similar laws affecting generally the rights
of creditors and by principles of equity. The party executing this Agreement
on behalf of Light Touch is duly authorized to do so.
(c) The consummation of the transactions contemplated by this
Agreement will not: result in any breach of the terms, provisions or
conditions of or constitute a default under the Certificate of Incorporation,
By-Laws or other enabling or governing instruments of Light Touch or any
agreement to which Light Touch is a party or by which it is bound; or, to the
best knowledge of Light Touch, constitute a violation of any applicable law
or regulation.
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V. TERM AND TERMINATION
5.1. TERM. This Agreement shall commence on the Effective Date and
shall continue for a period of ten (10) years (the "Initial Term"), unless
sooner terminated pursuant to this Article V. Thereafter, this Agreement shall
automatically continue in effect for additional terms of five (5) years each
(each such additional term, a "Renewal Term"), unless Light Touch notifies
Physician Group in writing not less than twelve (12) months or more than
fifteen (15) months prior to the expiration of the Initial Term or any then
current Renewal Term of its intent to terminate this Agreement at the end of
such term, or unless this Agreement is terminated pursuant to Section 5.2,
Section 5.3 or Section 8.11 hereof.
5.2. EVENTS OF DEFAULT. Each of the following shall constitute an "Event
of Default" (the party causing such default is referred to as the "Breaching
Party" and the other party is referred to as the "Non-Breaching Party"):
(a) The Breaching Party fails to make any payment required under
this Agreement.
(b) The Breaching Party admits in writing its inability to pay its
debts as they mature, makes any general assignment for the benefit of
creditors, or seeks to avail itself of any law for the release of insolvent
debtors.
(c) Insolvency, bankruptcy, dissolution, liquidation, or
receivership proceedings are commenced by or with the consent of the
Breaching Party, or are pending for more than sixty (60) days against the
Breaching Party.
(d) The Breaching Party fails to observe or otherwise breaches any
material term, condition, covenant, or warranty of this Agreement.
5.3. TERMINATION. Subject to the provisions of this Article V, the
Non-Breaching Party may terminate this Agreement upon the occurrence of an
Event of Default in accordance with the following:
(a) In the event of the occurrence of an Event of Default referred
to in Section 5.2(a) above, upon the expiration of thirty (30) days after
written notice, which notice shall specify the amount of such payment and
when it was due, unless the amount due is paid within such thirty (30) days.
(b) In the event of the occurrence of any other Event of Default,
upon the expiration of ninety (90) days after written notice, which notice
shall specify the nature and extent of such Event of Default to the Breaching
Party, unless such Event of Default is remedied within such ninety (90) days
or, in the case of an Event of Default which cannot reasonably be remedied
within ninety (90) days, unless the Breaching Party has made a good faith
effort to begin to cure such Event of Default within such ninety (90) days.
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5.4. DUTIES UPON TERMINATION OR EXPIRATION OF THIS AGREEMENT.
(a) If this Agreement is terminated upon expiration of its term,
or earlier as provided in Sections 5.3 or 8.11:
(i) Neither party shall be released or discharged from any
obligation, debt or liability which has previously accrued or been incurred
and remains to be performed upon the date of termination or expiration;
(ii) Any sums of money owing by one party to the other shall
be paid immediately;
(iii) Physician Group shall return to Light Touch all
originals and copies of the Proprietary Information of any of the Protected
Parties (as those terms are defined in Article VI) which are in the
possession of Physician Group or any other person or entity to whom it has
delivered such originals and copies; and
(iv) Damages and any other remedies available at law or in
equity may be sought and collected by the Non-Breaching Party from the
Breaching Party in the event of a termination pursuant to Section 5.3 hereof.
VI. RESTRICTIVE COVENANTS
6.1. COVENANT REGARDING PROPRIETARY INFORMATION. In the course of the
relationship created pursuant to this Agreement, Physician Group will have
access to certain methods, trade secrets, processes, ideas, systems,
procedures, inventions, discoveries, concepts, software in various stages of
development, designs, drawings, specifications, models, data, documents,
diagrams, flow charts, research, economic and financial analysis,
developments, procedures, know-how, policy manuals, financial data, form
contracts, marketing ad other techniques, plans, materials, forms,
copyrightable materials and trade information regarding the operations of
Light Touch and/or of its Affiliates (collectively, the "Protected Parties").
The foregoing, together with the existence and terms of this Agreement, are
referred to in this Agreement as "Proprietary Information". Physician Group
shall maintain all such Proprietary Information in. strict secrecy and shall
not divulge such information to any third parties, except as may be necessary
for the discharge of its obligations under this Agreement. Physician Group
shall take all necessary and proper precautions against disclosure of any
Proprietary Information to unauthorized persons by any of its officers,
directors, employees or agents. All officers, directors, employees and agents
of Physician Group who will have access to all or any part of the Proprietary
Information may be required to execute an agreement, at the reasonable
request of Light Touch, valid under the law of the jurisdiction in which such
agreement is executed, and in a form acceptable to Light Touch and its
counsel, committing themselves to maintain the Proprietary Information in
strict confidence and not to disclose it to any unauthorized person or
entity. The Protected Parties not party to this Agreement are hereby
specifically made third party beneficiaries of this Section 6.1, with the
power to enforce the provisions hereof. Upon termination of this Agreement
for any reason, Physician Group and
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each of its Employed Providers and Contracting Providers shall cease all use
of any of the Proprietary Information and, at the request of Light Touch,
shall execute such documents as may be necessary to evidence Physician
Group's abandonment of any claim thereto. The parties recognize that a breach
of this Section 6.1 cannot be adequately compensated in money damages and
therefore agree that injunctive relief shall be available to the Protected
Parties as their respective interests may appear.
The obligations of Physician Group under this Section 6.1 shall not
apply to information: (i) which is a matter of public knowledge on or becomes
a matter of public knowledge after the Effective Date of this Agreement,
other than as a breach of the confidentiality terms of this Agreement or as a
breach of the confidentiality terms of any other agreement between Physician
Group and Light Touch or its Affiliates; or (ii) was lawfully obtained by
Physician Group on a nonconfidential basis other than in the course of
performance under this Agreement and from some entity other than Light Touch
or its Affiliates or from some person other than one employed or engaged by
Light Touch or its Affiliates, which entity or person has no obligation of
confidentiality to Light Touch or its Affiliates.
6.2. COVENANTS NOT TO COMPETE DURING THE TERM. The parties recognize
that the services to be provided by Light Touch shall be feasible only if
Physician Group operates an active medical practice to which Physician Group
and Employed Providers devote full time and attention. To that end:
(a) RESTRICTIVE COVENANTS BY PHYSICIAN GROUP. During the term of
this Agreement, Physician Group shall not establish, operate or provide
physician or other health care services at any medical office, clinic or
other health care facility providing services substantially similar to those
provided by Physician Group pursuant to this Agreement anywhere other than at
the Centers and as may be approved in writing by Light Touch. Physician Group
shall also not enter into any medical director or management or
administrative services agreement or arrangement with any person or entity
other than Light Touch without Light Touch's prior written approval.
(b) RESTRICTIVE COVENANTS BY EMPLOYED PHYSICIANS. Physician Group
shall obtain and enforce noncompetition agreements with its Employed
Providers who are physicians the substance and form of which is set forth as
EXHIBIT D hereto and which Physician Group shall not revise without the prior
written consent of Light Touch.
6.3. COVENANT NOT TO COMPETE FOLLOWING TERMINATION. For three (3) years
following the termination of this Agreement by Light Touch pursuant to
Section 5.3 or by either party pursuant to Section 8.11, Physician Group
shall not enter into any medical director or management or administrative
services agreement or any similar arrangement with any person or entity for
the provision of the same or similar services as Light Touch provides to
Physician Group under this Agreement.
6.4. COVENANT NOT TO SOLICIT. During the term of this Agreement and for
three (3) years following the termination of this Agreement, Physician Group
shall not:
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(a) Directly or indirectly solicit, recruit or hire, or induce any
party to solicit, recruit or hire any person who is an employee of, or who
has entered into an independent contractor arrangement with, Light Touch or
any Affiliate of Light Touch (excluding any person who performs patient
services);
(b) Directly or indirectly, whether for itself or for any other
person or entity, call upon, solicit, divert or take away, or attempt to
solicit, call upon, divert or take away any of Light Touch's customers,
business, or clients; or
(c) Disrupt, damage, impair or interfere with the business of
Light Touch.
6.5. ENFORCEMENT. Light Touch and Physician Group acknowledge and agree
that since a remedy at law for any breach or attempted breach of the
provisions of this Article VI or of Article VII shall be inadequate, either
party shall be entitled to specific performance and injunctive or other
equitable relief in case of any such breach or attempted breach, in addition
to whatever other remedies may exist by law. All parties hereto also waive
any requirement for the securing or posting of any bond in connection with
the obtaining of any such injunctive or other equitable relief. If any
provision of Article VI or Article VII relating to the restrictive period,
scope of activity restricted and/or other provisions described therein shall
be declared by a court of competent jurisdiction to exceed the maximum time
period, scope of activity restricted or geographical area such court deems
reasonable and enforceable under applicable law, the time period, scope of
activity restricted and/or area of restriction held reasonable and
enforceable by the court shall thereafter be the restrictive period, scope of
activity restricted and/or the territory applicable to the restrictive
covenant provisions in this Article VI or Article VII. The invalidity or
non-enforceability of this Article VI or Article VII in any respect shall not
affect the validity or enforceability of the remainder of this Article VI or
Article VII or of any other provisions of this Agreement.
VII. INFORMATION AND RECORDS
7.1. OWNERSHIP OF RECORDS. At all times during and after the term of
this Agreement, including any extensions or renewals hereof, all business
records, including but not limited to, business agreements, books of account,
general administrative records and all information generated under or
contained in the management information system pertaining to Light Touch's
obligations hereunder, and other business information of any kind or nature,
except for Patient medical records and Physician Group's Records (as defined
in Section 7.2 below), shall be and remain the sole property of Light Touch;
PROVIDED that after termination of this Agreement Physician Group shall be
entitled to reasonable access to such records and information, including the
right to obtain copies thereof, for any purpose related to patient care or
the defense of any claim relating to patient care or the business of Light
Touch or Physician Group.
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7.2. PHYSICIAN GROUP'S BUSINESS AND FINANCIAL RECORDS. At all times
during and after the term of this Agreement, the financial, corporate and
personnel records and information relating exclusively to the business and
activities of Physician Group, as distinguished from the business and
activity of Light Touch, hereinafter referred to as "Physician Group's
Records," shall be and remain the sole property of Physician Group.
7.3. ACCESS TO RECORDS. Each party shall be entitled, upon request and
with reasonable advance notice, to obtain access to all records of the other
party directly related to the performance of such party's obligations
pursuant to this Agreement; provided, however, that such right shall not
allow for access to records that must necessarily be kept confidential.
Either party, at its expense, shall have the right to make copies of any
records to which it has access pursuant to this Section.
7.4. CONFIDENTIALITY OF RECORDS. Light Touch and Physician Group shall
adopt procedures for maintaining the confidentiality of the records relating
to the operations of Light Touch and Physician Group which do not constitute
Proprietary Information, which information is not otherwise available to
third parties publicly or by law, and shall comply with all applicable
federal and state statutes and regulations relating to such records. Patient
medical records and other privileged Patient information shall not be
disclosed or utilized by Physician Group or Light Touch or their agents or
employees except as required or permitted by applicable laws and regulations.
VIII. MISCELLANEOUS
8.1. INDEPENDENT CONTRACTOR STATUS OF PARTIES. In the performance of
the work, duties and obligations under this Agreement, it is mutually
understood and agreed that each party is at all times acting and performing
as an independent contractor with respect to the other and that no
relationship of partnership joint venture or employment is created by this
Agreement. Neither party, nor any other person performing services on behalf
of such party pursuant to this Agreement, shall have any right or claim
against the other party for Social Security benefits, workers' compensation
benefits, disability benefits, unemployment insurance benefits, health
benefits, vacation pay, sick leave or any other employee benefits of any kind.
8.2. NO WAIVER. The waiver by any party to this Agreement of any breach
of any term or condition of this Agreement shall not constitute a waiver of
subsequent breaches. No waiver by any party of any provision of this
Agreement shall be deemed to constitute a waiver of any other provision.
8.3. NOTICES. If, at any time after the execution of this Agreement, it
shall become necessary or convenient for one of the parties to serve any
notice, demand or communication upon the other party, such notice, demand, or
communication shall be in writing and shall be served personally, by
nationally recognized overnight courier which provides confirmation of
delivery, or by depositing the same in the United States mail, registered or
certified, return receipt requested, postage prepaid and,
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(a) If intended for Physician Group, then the notice shall be
addressed to:
Vein & Laser, Inc.
10663 Montgomery Road
Cincinnati, Ohio 45242
Attn: Colin Herd, M.D.
(b) If intended for Light Touch, then the notice shall be
addressed to:
Light Touch Vein & Laser, Inc.
10663 Montgomery Road
Cincinnati, Ohio 45242
Attn: Greg Martini
or to such other address as either party may have furnished to the other
party in writing as the place for the service of notice. Any notice so mailed
shall be deemed to have been given three (3) days after the same has been
deposited in the United States mall; when delivered if the same has been
given personally; or the next business day if the same has been delivered to
a nationally recognized overnight courier service.
8.4. ASSIGNMENT. Neither party may sell, transfer, assign, or otherwise
convey its rights or obligations under this Agreement without the prior
written consent of the other, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, Light Touch shall have the right to
(a) assign its rights and/or delegate all or any of its obligations to any of
its Affiliates; and/or (b) subcontract some portion of its obligations
hereunder to a third party which is not an Affiliate of Light Touch, in each
case without the consent of Physician Group.
8.5. SUCCESSORS AND ASSIGNS. Subject to the provisions of this
Agreement respecting assignment, the terms, covenants and conditions
contained herein shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties hereto.
8.6. SEVERABILITY . Nothing contained in this Agreement shall be
construed to require the commission of an act contrary to law, and whenever
there is any conflict between any provision of this Agreement and any
statute, law, ordinance or regulation, the latter shall prevail. In such
event, and in any case in which any provision of this Agreement is determined
to be in violation of a statute, law, ordinance or regulation, the affected
provision(s) shall be limited only to the extent necessary to bring it within
the requirements of the law and, insofar as possible under the circumstances,
to carry out the purposes of this Agreement. The other provisions of this
Agreement shall remain in full force and effect, and the invalidity or
unenforceability of any provision hereof shall not affect the validity and
enforceability of the other provisions of this Agreement, nor the
availability of all remedies in law or equity to the parties with respect to
such other provisions.
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8.7. THIRD PARTIES. Except as provided in Article VII, nothing in this
Agreement shall be construed to create any duty to, any standard of care with
reference to or any liability to anyone not a party to this Agreement.
8.8. HEADINGS. The headings used in this Agreement are for convenience
of reference only and shall have no force or effect in the construction or
interpretation of the provisions of this Agreement.
8.9. TIME OF THE ESSENCE. Time is of the very essence of each and all
of the agreements, covenants and conditions of this Agreement.
8.10. GOVERNING . This Agreement shall be interpreted in accordance with
and governed by the laws of the State of Ohio, to the jurisdiction of which
each of the parties hereby submits.
8.11. CONTRACT MODIFICATIONS FOR PROSPECTIVE LEGAL EVENTS. In the event
any state or federal laws or regulations, now existing or enacted or
promulgated after the Effective Date of this Agreement, are interpreted by
judicial decision, a regulatory agency or legal counsel of both parties in
such a manner as to indicate that the structure of this Agreement may be in
violation of such laws or regulations (a "Structural Issue"), either party
may terminate this Agreement, on not less than ninety (90) days written
notice to the other party, or negotiate and enter into an amendment of the
provisions of this Agreement in such manner as to alleviate such violation.
In the event that the parties are unable to agree upon such amendment within
thirty (30) days after the determination that such amendment is necessary, a
party may elect either to terminate this Agreement, on not less than ninety
(90) days written notice to the other party.
The parties agree that an amendment to accomplish the purposes set forth
in this Section 8.11 may require reorganization of Physician Group or Light
Touch, or both, and may require either or both parties to obtain appropriate
regulatory licenses and approvals. If (a) such reorganization or obtaining
such regulatory licenses and approvals is not reasonably possible, either
party shall have the right to terminate this Agreement on not less than
ninety (90) days written notice to the other party; or (b) such
reorganization or obtaining such regulatory licenses and approvals would
require Light Touch or Physician Group to incur a material economic detriment
or would result in a material economic detriment for Light Touch or Physician
Group, Light Touch or Physician Group, as the case may be, shall have the
right to terminate this Agreement on not less than ninety (90) days written
notice to Physician Group or Light Touch, as the case may be.
In the event that either party elects to terminate this Agreement in
accordance with the provisions of this Section 8.11, Light Touch shall have
the right, exercisable by the delivery of a written notice to Physician Group
at any time within sixty (60) days after the delivery by either party of
notice of termination of this Agreement, to require Physician Group to
purchase from Light Touch all of the assets used by Physician Group in
connection with the conduct of the medical practice at the Centers (the
"Practice Assets"). In the event that Light Touch fails to exercise such
right within the
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first thirty (30) days of such sixty (60) day period, Physician Group shall
have the right, exercisable by delivery of a written notice to Light Touch at
any time during the last thirty (30) days of such sixty (60) day period, to
require Light Touch to sell to Physician Group all of the Practice Assets.
If Light Touch elects to exercise the right to require Physician Group
to purchase the Purchase Assets from Light Touch or if Physician Group elects
to exercise the right to require Light Touch to sell the Purchase Assets to
Physician Group: (a) the purchase price for the practice assets shall be
their appraised fair market value (which shall be determined by appraiser(s)
mutually agreeable to the parties); (b) 25% of such purchase price shall be
payable to Light Touch at the closing for such sale of the Practice Assets in
immediately available funds to such bank account as is designated by Light
Touch, and the balance of such purchase price shall be payable in such
immediately available funds within six (6) months after the closing; and (c)
the closing for such sale of the Practice Assets shall occur on such date as
is designated in writing by Light Touch (if Light Touch elects to exercise
such right) or Physician Group (if Physician Group elects to exercise such
right) which date shall be not later than five (5) business days after the
date of delivery by Light Touch or Physician Group of notice of its exercise
of its right to require Physician Group to purchase or to require Light Touch
to sell all of the Practice Assets, as the case may be.
Light Touch shall have no claim against Physician Group, and Physician
Group shall have no claim against Light Touch, pursuant to the provisions of
Section 4.1(a) (iii) hereof or Section 4.2(c) hereof, respectively, which is
based upon or arises out of a Structural Issue.
8.12. LANGUAGE CONSTRUCTION. The language in all parts of this Agreement
shall be construed, in all cases, according to its fair meaning, and not for
or against either party hereto. The parties acknowledge that each party and
its counsel have reviewed and revised this Agreement and that the normal rule
of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this
Agreement.
8.13. INDEMNIFICATION. Physician Group shall indemnify, hold harmless
and defend Light Touch, its officers, directors, shareholders, employees,
agents and independent contractors (the "Light Touch Group") from and against
any and all liabilities, losses, damages, claims, causes of action, and
expenses (including reasonable attorneys' fees and disbursements (a "Light
Touch Loss")), caused or asserted to have been caused, directly or
indirectly, by or as a result of the performance of medical services or any
other acts or omissions by Physician Group, and/or its partners, agents,
employees and/or subcontractors (other than Light Touch) during the term
hereof except with respect to any Light Touch Loss which is the result of any
gross negligence or willful misconduct by a member of the Light Touch Group.
Light Touch shall indemnify, hold harmless and defend Physician Group, its
officers, directors, partners employees, agents and independent contractors
(the "Physician Group") from and against any and all liabilities, losses,
damages, claims, causes of action, and expenses (including reasonable
judgment attorneys' fees and disbursements) (a
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"Physician Group Loss"), caused or asserted to have been caused, directly or
indirectly, by or as a result of the performance of any acts of omissions by
Light Touch and/or its shareholders, agents, employees and/or subcontractors
during the term hereof except with respect to any Physician Group Loss which
is the result of any gross negligence or willful misconduct by a member of
the Physician Group.
8.14. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes
all prior and contemporaneous agreements, understandings, negotiations and
discussions, whether written or oral, between or among parties regarding the
subject matter of this Agreement.
8.15. INCORPORATION BY REFERENCE. All exhibits and other attachments to
this Agreement are incorporated by reference into this Agreement by such
reference.
8.16. AMENDMENTS ONLY IN WRITING. This Agreement may not be amended or
modified in any respect whatsoever, except by an instrument in writing signed
by the parties hereto.
8.17. COUNTERPARTS. This Agreement may be executed in one or more
Counterparts, each of which shall be considered an original and all of which
shall constitute one and the same agreement. This Agreement shall not become
effective until it has been executed by all of the parties hereto.
8.18. COMMERCIAL IMPRACTICABILITY. No party to this Agreement shall be
liable for any failure to perform its obligations hereunder where such
failure results from any cause beyond that party's reasonable control,
including, for example, an act of God, labor disturbance such as a strike or
walkout, war, riot, fire, storm, accident, government regulation or
interference, or mechanical, electronic or communications failure.
8.19. ELECTION OF REMEDIES. The respective rights of the parties to this
Agreement shall be cumulative. Each party shall have all other rights and
remedies consistent with this Agreement as law and equity may provide. No
exercise by any party of one right or remedy shall be deemed to be an
exclusive election of rights or remedies.
8.20. SURVIVAL. The provisions of Articles III, IV, V, VI, VII and VIII
shall survive any termination of this Agreement.
8.21. THIRD PARTY BENEFICIARIES. Except with respect to Affiliates of
Light Touch, nothing in this Agreement shall be construed to create any duty
to, any standard of care with reference to, or any liability to any Person
not a party to this Agreement. The Affiliates of Light Touch are intended
third party beneficiaries of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, Light Touch and Physician Group have caused this
Agreement to be executed by their duly authorized respective officers as of
the Effective Date.
LIGHT TOUCH VEIN & LASER, INC.
By: /s/ Gregory F. Martini
---------------------------------
Title: PRESIDENT
-------------------------------
VEIN & LASER CENTER, INC.
By: /s/ Colin C. Herd
--------------------------------
Title: President
-------------------------------
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LIGHTTOUCH VEIN & LASER, INC.
1999 STOCK OPTION PLAN
1. PURPOSE OF PLAN. The purpose of this 1999 Stock Option Plan is to
promote the interests of LightTouch Vein & Laser, Inc. (the "Company") and
its shareholders, by encouraging Employees and Non-Employee Directors to
acquire a proprietary interest in the Company. Such investments should
increase the personal interest and the special effort of such persons in
providing for the continued success and progress of the business of the
Company and should enhance the Company's efforts to attract and retain
competent Employees and Non-Employee Directors.
2. DEFINITIONS. The following terms when used herein shall have the
meanings set forth below, unless a different meaning is plainly required by
the context:
(a) BOARD. The Board of Directors of the Company.
(b) CAUSE. (i) The unauthorized use or disclosure of the
confidential information or trade secrets of the Company, which use or
disclosure causes material harm to the Company, (ii) conviction of, or a plea
of "guilty" or "no contest" to, a felony under the laws of the United States
or any state thereof, (iii) gross negligence or (iv) continued failure to
perform assigned duties after receiving written notification from the Board.
The foregoing, however, shall not be deemed an exclusive list of all acts or
omissions that the Company may consider as grounds for the discharge of an
Optionee.
(c) CHANGE OF CONTROL. (i)The consummation of a merger or
consolidation of the Company with or into another entity or any other
corporate reorganization, if more than 50% of the combined voting power of
the continuing or surviving entity's securities outstanding immediately after
such merger, consolidation or other reorganization is owned by persons who
were not shareholders of the Company immediately prior to such merger,
consolidation or other reorganization; or (ii) the sale, transfer or other
disposition of all or substantially all of the Company's assets. A
transaction shall not constitute a Change in Control if its sole purpose is
to change the state of the Company's incorporation or to create a holding
company that will be owned in substantially the same proportions by the
persons who held the Company's securities immediately before such transaction.
(d) CODE. The Internal Revenue Code of 1986, as it may be amended
from time to time. Reference to any section of the Code shall include any
provision successor thereto.
(e) COMMITTEE. The Committee provided for in Section 7.
(f) COMMON STOCK. Shares of the Company's common stock, $.001 par
value per share.
(g) COMPANY. LightTouch Vein & Laser, Inc., a Nevada corporation.
<PAGE>
(h) DISABILITY. Permanent and total disability within the meaning of
section 22(e)(3) of the Code.
(i) EMPLOYEES. Any full-time employee of the Company or any of its
majority-owned subsidiaries.
(j) FAIR MARKET VALUE. The fair market value of a share of Common
Stock on a given date, as determined by the Committee.
(k) INCENTIVE OPTION. An option defined in section 422 of the Code,
which meets the requirements of Sections 5 and 6 of this Plan.
(l) NON-EMPLOYEE DIRECTOR. A member of the Board who is not an
Employee.
(m) NON-QUALIFIED OPTION. An option which is not an Incentive
Option.
(n) OPTION. An Incentive Option or a Non-Qualified Option granted
to an Optionee pursuant to the Plan.
(o) OPTION AGREEMENT. A written agreement between the Company and
an Option evidencing the grant of an Option and containing terms and
conditions concerning the exercise of the Option.
(p) OPTION PRICE. The price to be paid for shares to be purchased
pursuant to the exercise of an Option.
(q) OPTIONEE. An Employee or Non-Employee Director who has been
granted an Option or the personal representative, heir or legatee of an
Optionee who has the right to exercise the Option upon the death of the
Optionee.
(r) PLAN. This 1999 Stock Option Plan, as it may be amended from
time to time.
(s) TEN PERCENT HOLDER. The holder of more than 10% of the issued
and outstanding stock of the Company. For the purpose hereof, an individual
is considered to own all of the Common Stock owned by his brothers, sisters,
spouse, ancestors and lineal descendants and his pro rata share of all Common
Stock owned by corporations, partnerships, estates and trusts in which he has
an interest.
3. ELIGIBILITY AND PARTICIPATION. Employees and Non-Employee Directors
are eligible to receive Options under the Plan. In determining the Employees
to whom Options shall be granted, the number of shares to be covered by each
Option and whether the Options shall be Incentive Options or Non-Qualified
Options, the Committee shall take into account the duties of the respective
Employees, their present and potential contribution to the success of the
Company, their anticipated number of years of active service remaining and
such other factors as it deems relevant in connection with accomplishing the
purposes of the Plan. The Committee may from time to time in its
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discretion grant Non-Qualified Options to Non-Employee Directors of the
Company. An individual who has been granted an Option may be granted an
additional Option or Options as the Committee shall so determine.
4. SHARES SUBJECT TO THE PLAN. Subject to the adjustments provided for
in Section 8 of this Plan, 750,000 authorized but unissued shares of Common
Stock shall be reserved for issuance pursuant to this Plan. Shares of Common
Stock subject to, but not delivered under, an Option terminating or expiring
for any reason prior to its exercise in full shall be deemed available for
Options to be granted thereafter during the term of the Plan.
5. TERMS AND CONDITIONS OF OPTIONS. All Options granted hereunder
shall be subject to the following terms and conditions.
(a) TO WHOM OPTIONS MAY BE GRANTED. Options shall be granted only
to Employees and Non-Employee Directors. In the case of Incentive Options,
Options shall not be granted to any Ten Percent Holder unless such Incentive
Option is granted at 110% of the Fair Market Value of the Common Stock at
the time of the grant of the Incentive Option.
(b) NON-TRANSFERABILITY OF OPTION. The Option shall not be
transferable by the Optionee otherwise than by bequest or the laws of
descent and distribution, and shall be exercisable during the Optionee's
lifetime only by the Optionee.
(c) TERMINATION OF OPTIONS.
(i) If an Employee Optionee's employment by the Company
shall terminate for any reason other than death, Disability or termination
for Cause, the Option shall terminate six months (three months in the case of
an Incentive Option) after the Optionee's employment terminates (unless the
Optionee dies during such period), or on the Option's expiration date, if
earlier, and shall be exercisable during such period after termination of
employment only with respect to the number of shares which the Optionee was
entitled to purchase on the day preceding the termination of the Optionee's
employment, except that the Committee may, in specific cases, and in its sole
discretion, permit the exercise by an Optionee of all, or a part of, the
unexercised Option within the period referred to above after the Optionee's
employment terminates.
(ii) If an Employee Optionee's employment shall terminate
because of discharge for Cause, the Option shall terminate on the date of the
Optionee's discharge.
(iii) In the event of an Employee Optionee's death or
Disability while in the employ of the Company, or the Optionee's death within
six months (three months in the case of an Incentive Option) after the
termination of the Optionee's employment (other than by reason of discharge
for cause), the Option shall terminate upon the earliest to occur of (i) 12
months after the date of the Optionee's death or Disability or (ii) the
Option's expiration date. The Option shall be exercisable during such period
after the Optionee's death or Disability with respect to the number of shares
as to which the Option shall have been exercisable on the day preceding the
Optionee's death or Disability, as the case may be.
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<PAGE>
(iv) If a Non-Employee Director Optionee ceases to serve as a
director of the Company, for any reason, such Optionee may exercise the
Option regarding the number of shares of Common Stock as to which the Option
shall have been exercisable on the day immediately preceding the Optionee's
termination as director, at any time within a period ending on the earlier of
(a) 90 days after the termination of Optionee's termination as director or
(b) the Option's expiration date.
(d) LIMITATION ON INCENTIVE OPTIONS. If the aggregate value
(determined at the time the Option is granted) with respect to which Options
are exercisable for the first time by an Optionee during any calendar year
under the Plan or any other plan of the Company exceeds $100,000, then
notwithstanding anything contained herein, such Option shall be treated as a
Non-Qualified Option to the extent of the excess.
6. OTHER TERMS AND CONDITIONS OF OPTION AGREEMENTS. The Committee
shall have the power, subject to the limitations contained in the Plan, to
prescribe any terms and conditions regarding the grant or exercise of any
Option under the Plan and in particular shall prescribe the following terms
and conditions which shall be contained in the Option Agreement for all
Options:
(a) TYPE OF OPTION. Whether the Option is an Incentive Option or a
Non-Qualified Option.
(b) NUMBER OF SHARES OF COMMON STOCK. The number of shares of
Common Stock to which it pertains.
(c) EXERCISE PRICE. The exercise price of the Option, which shall
not be less than 100% of the Fair Market Value of the Common Stock at the
time of the grant of an Incentive Option, except as otherwise provided in
Section 5(a).
(d) THE TERM OF OPTION. The term of the Option, which shall not
exceed 10 years from the date on which the Option is granted, unless, in the
case of an Incentive Option, the Optionee is a Ten Percent Holder, in which
case the term shall not exceed five years.
(e) HOW EXERCISED. The method or time when the Option may be
exercised in whole or in part, including, but not limited to, whether it may
be exercised by delivery of previously owned shares of Common Stock.
(f) WITHHOLDING OF TAXES. For a Non-Qualified Option, the
provisions for the withholding of Federal, state and local income or other
taxes which are due in connection with the exercise of the Non-Qualified
Option.
7. ADMINISTRATION. The Plan shall be administered by a Committee
appointed by the Board consisting of two or more directors of the Company or
the entire Board of the Company. In the event that the Company becomes a
public Company, the members of the Committee shall thereafter be "outside
directors" within the meaning of Section 162(m) of the Code (or any successor
provision thereto). In accordance with and subject to the provisions of the
Plan, the Committee
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<PAGE>
shall have full power and authority to interpret the provisions and supervise
the administration of the Plan. All decisions, determinations and selections
made by the Committee pursuant to the provisions of the Plan shall be final.
Each Option granted shall be evidenced by an Option Agreement containing such
terms and conditions as may be approved by the Committee and which shall not
be inconsistent with the Plan.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Notwithstanding the
limitations set forth in Section 4, in the event of a merger, consolidation,
reorganization, stock dividend, stock split or other change in corporate
structure or capitalization affecting the Common Stock, the Committee shall
make an appropriate adjustment in the maximum number of shares available
under the Plan or to any one individual and in the number, kind and Option
Price of Common Stock subject to Options granted under the Plan. Any such
adjustment regarding an Incentive Option shall be made so as not to
constitute a modification, extension or renewal of the Incentive Option
within the meaning of section 424(h) of the Code.
9. TIME OF GRANTING OPTIONS. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board or by the shareholders of
the Company, and no action taken by the Committee (other than the granting of
a specific Option), shall constitute the granting of an Option hereunder. The
granting of an Option pursuant to the Plan shall take place only on the date
such Option is approved by the Committee.
10. AMENDMENT AND DISCONTINUANCE. The Board may, at any time, amend,
modify or terminate the Plan; provided that such actions may not be taken
without the approval of the Company's shareholders if such approval is
required by any applicable law or the rules of any national securities
exchange or system on which the Common Stock is then listed or reported.
11. RESTRICTIONS ON TRANSFER OF SHARES. Any shares issued upon exercise
of an Option shall be subject to such special forfeiture conditions, rights
of repurchase, rights of first refusal and other transfer restrictions as the
Board may determine. Such restrictions shall be set forth in the applicable
Stock Option Agreement and shall apply in addition to any restrictions that
may apply to holders of shares generally.
12. VESTING UPON CHANGE IN CONTROL. Upon a Change in Control, any then
outstanding Options held by Optionees shall become fully vested and
immediately exercisable. Furthermore, if provided in an Option Agreement,
upon a Change in Control, the Optionee shall have the right to sell the
Option back to the Company for an amount generally equal to the excess of the
Fair Market Value of the Common Stock subject to the Option over the Option
Price, provided that such payment does not adversely affect the ability of
the Company to use the pooling-of-interests accounting method in respect of
any proposed transaction in connection with a Change in Control.
13. EFFECTIVENESS AND TERMINATION OF THE PLAN.
(a) EFFECTIVE DATE. The Plan shall become effective upon its
adoption by the Board. The Plan shall be rescinded and all Options granted
hereunder shall be null and void unless within 12 months from the date of the
adoption of the Plan by the Board it shall have been approved
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<PAGE>
by the holders of a majority of the outstanding Common Stock present or
represented and entitled to vote on the Plan at a shareholders' meeting,
(b) TERMINATION DATE. The Plan shall terminate on the earliest to
occur of (i) the date when all the Common Stock available under the Plan
shall have been acquired through the exercise of Options granted under the
Plan, (ii) 10 years after the date of adoption of the Plan by the Board or
(iii) such other date as the Board may determine.
14. NO GRANTING OF EMPLOYMENT RIGHTS. Neither the Plan, nor any action
taken under the Plan, shall be construed as giving any Employee the right to
receive Options under the Plan nor shall an award of Options under the Plan
be construed as giving any Employee any right with respect to continuance of
employment by the Company. The Company expressly reserves the right to
terminate, with or without cause, any Employee's employment at any time,
except as may otherwise be provided by a written agreement between the
Company and the Employee.
15. GOVERNING LAW. The provisions of the Plan shall be construed,
administered and enforced according to the laws of the State of Nevada and
shall be construed in such a fashion that all Incentive Options shall qualify
as "incentive stock options" within the meaning of section 422 of the Code.
DATED: , 1999
-----------------
LIGHTTOUCH VEIN & LASER, INC.
By: /s/ Gregory Martini
-----------------------------------
Title: President of LightTouch Nevada
--------------------------------
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<PAGE>
LICENSE AND DISTRIBUTION AGREEMENT
THIS LICENSE AND DISTRIBUTION AGREEMENT (this "AGREEMENT") is effective as of
August 26, 1998, between VMM ENTERPRISES, INC. ("WE" or "US" or "OUR"), and
LightTouch Vein, Laser & Hair Center, Inc. ("YOU" or "YOUR") (collectively,
you and we are referred to as the "PARTIES" and individually sometimes
referred to as a "PARTY").
BACKGROUND INFORMATION
Along with the inventor, Victoria Morton, we have developed various
techniques, methods and proprietary materials, systems, products, processes,
solutions and knowledge (collectively, the "SYSTEM") which when properly
utilized and applied enable customers to improve their appearance by reducing
inches. We have also developed a number of associated and compatible products
and solutions for use when providing services associated with the System and
for retail sale (the "PRODUCTS"). Many of these Products incorporate
confidential and proprietary formulas, contents and materials and constitute
our trade secrets. We consider both the System and the various ingredients
and solutions in the Products as our confidential and proprietary information
(the "CONFIDENTIAL INFORMATION"). You want to utilize the System to provide
services to customers and to sell them the Products. We are willing to train
you regarding use of the System and to sell you the Products at our standard
published wholesale prices on the conditions described in this Agreement. You
want to obtain the Products from us in order to secure a continuous source
of supply.
OPERATIVE TERMS:
<PAGE>
Accordingly, you and we agree as follows:
1. GRANT OF LICENSE.
(a) APPOINTMENT: We appoint you as our licensee for use of the System.
In consideration for the appointment and our initial training, you agree to
pay us an initial fee of $9,950.00 when you sign this Agreement. In
consideration, we will provide you with our standard initial training in the
use of the System. It is further understood that the initial fee, and/or any
deposit, are not refundable.
(b) SALES EFFORTS: You agree to use your best efforts to market, promote
and sell the services associated with the System and the Products at retail.
You further agree to commence business activities by beginning to perform
wraps to customers before the end of the 4th calendar month following the
effective date. We may market and sell similar products on a wholesale or
retail basis to anyone else and to or from any other location, regardless of
the location, except as stated below.
(c) EXCLUSIVITY: Exclusive rights for the operation of the System or
sale of the Products are granted as follows:
(i) From the effective date of this Agreement until the end of 4
calendar months, we will not grant a license to anyone else within a
geographic area surrounding your location that contains a population
of 50,000 based on the contiguous zip codes and street boundaries
based on currently available information in our possession (the
"TRADE AREA");
zip codes: 45103, 45102, 45157, 45106, 45176
Total pop - 54,453 See Exhibit A.
paid an add'l $500 for extra pop
JJ
CH
(ii) After that time period, if you attain the sales level of 100
body wraps per month and continue to maintain that
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level on an average basis during each calendar quarter, we will not
grant a license for anyone to operate a similar business within that
Trade Area. If you no longer achieve the minimum threshold average
of 100 wraps per month during any calendar quarter, we reserve the
right to open the area for additional License sales.
We will notify you of our intention to open up your area and you will
be given 60 days to meet your 100 wraps per month minimum. If you
feel you have a legitimate reason for not meeting this minimum the
Board will consider a written request for extension. If such
extension is denied the 60 day period will go into effect the date
of the denial.
2. TERM. This Agreement is effective as of August 26, 1998 (regardless of
the actual date of signature) and continues perpetually.
3. CERTAIN ACKNOWLEDGMENTS. To induce us to enter into this Agreement, you
represent and warrant to us the following:
(a) You have conducted an independent investigation of your proposed
business and have determined that its success involves business risks that
are dependent entirely upon your own business abilities. You have had the
opportunity to consult with your own legal and other advisors in connection
with starting your business under this Agreement. You acknowledge that
determining the application of, and complying with, federal, state and local
laws, rules and regulations to the sale of the system and the operation of
your business are solely your responsibility. We are not responsible for
rendering any legal advice regarding the sale of the System or the operation
of your business.
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(b) You acknowledge that we have not made and you have not received or
relied upon any guarantee, express or implied, as to the revenues, profits or
success of your business as a result of entering into this Agreement.
(c) Whereas we have an interest in your success, and are willing to give
assistance from time to time, it is understood, that you are not relying on
us to furnish any advice, guidance or assistance with respect to the
established or continuing operation of your business in the form of marketing
assistance or advice or any other business assistance.
(d) You are not relying on, nor have you received, any representations
or warranties from us as to whether:
(i) your business will earn, can earn, or is likely to earn any
profits or income;
(ii) there is a market for the services you plan to offer; or
(iii) we will provide, or assist you in finding any locations (or
locator companies) for you to operate your business.
(e) You understand and acknowledge that we will not be exercising any
control over your method of operations or give you any significant
assistance. Specifically, we have no control over and have no obligation to
provide any assistance with respect to, any of the following activities:
(i) site approval or selection, and site design or appearance;
(ii) hours of operations;
(iii) production techniques;
(iv) accounting practices or establishing accounting systems;
(v) personnel, policies or practices; and
(vi) promotional campaigns.
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(f) You understand that we have not furnished you with any directives or
required of you our approval with respect to selecting the location of your
business, its appearance, the fixtures and equipment utilized, the format and
design of your business location, uniforms of employees, hours of operation,
housekeeping and similar items.
(g) We have not placed any restrictions on the geographic area or
territory in which you may advertise to promote the Products, or solicit
customers, except that you are restricted to operating from one fixed
location within the Trade Area.
(h) You are solely responsible for the development and implementation of
your own training, marketing and sales programs.
(i) You understand that we are not required to repurchase any of the
Products from you if you are either unsatisfied with their nature and
quality or you are dissatisfied with the business or financial results of
your business. However, if this Agreement terminates or expires, we have the
right to repurchase all or any portion of the Products we have sold to you,
at our option, at the price you paid.
4. TRADEMARKS AND SERVICE MARKS. You must not use the service marks,
trademarks or trade name "SUDDENLY SLENDER" or any of our other service marks
(the "MARKS") in any manner whatsoever, including as a part of any other
trade name, service mark or trademark. Our Marks are for our exclusive use.
You acknowledge that your use of the Marks would constitute an infringement
of our rights and cause confusion with the public. You may distinguish our
wrap system as, "the body wrap process invented by Victoria Morton".
5. THE SYSTEM. We grant you the right and license to use the System in your
business. You acknowledge and agree that the success of the System depends
not only on your utilizing the methods and techniques that we impart to you
in training buy also the solutions and Products associated with it. The
license is personal to you. You will not sublicense, or permit
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<PAGE>
anyone else to use the System unless we otherwise specifically approve. You
acknowledge that we own the System. You will not in any manner represent that
you have any ownership in any portion of it. You will not, directly or
indirectly, at any time, do or cause to be done, any act or thing contesting
or in any way impairing or intending to impair any part of our right, title
and interest in and to the System or its validity.
(a) CONFIDENTIALITY: You acknowledge and agree that the System and the
ingredients in the Products are proprietary, confidential and constitute our
trade secrets. Accordingly, you must not, directly or indirectly, sell,
grant, pledge, hypothecate, assign, convey, transfer, publish, display, make
available or in any other manner disclose to any third party, the System or
the components of the Products. Should you hear or know of any one else using
or duplicating the formula, you are contractually obligated to notify us
immediately or be in danger of your License as such non-disclosure could
damage VMM Enterprises, Inc. and the value of all Licenses. You must keep our
training manuals and other information that we designate as confidential in a
secure place and use sufficient restrictions to prevent unauthorized
disclosure to unauthorized persons. If you fail to do so, we may terminate
this Agreement. If you neglect or fail to protect the confidentiality of the
System, or permit any unauthorized disclosure of it to a third person, we may
terminate this Agreement and exercise any and all other rights and remedies
available to us, including equitable or injunctive relief.
(b) LABELING: You must not remove, deface or substitute any labels,
brands or other items on any of the Products we sell to you.
6. PRODUCT REQUIREMENTS.
(a) REQUIREMENTS: You will purchase from us, and we will sell to you,
all of your requirements for the Products. You may, at your option, sell
other products at your location.
(b) PRICING: We will sell the Products to you at our published wholesale
prices as in effect at the time of sale. We will give you 15 days
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advance notice of any changes to our price schedule. You agree to pay us the
purchase price for the Products in full prior to shipment. We will ship the
Products to the location you designate. You are responsible for paying all
handling, shipping, transportation and insurance costs for delivery of the
Products to the location you designate.
(c) RESALE OF PRODUCTS: You understand that you may resell the Products
at any price you determine. We may suggest certain retail prices for the
Products to you as well as certain pricing strategies. Nevertheless, the prices
at which you sell the Products are to be determined solely by you. You must
not engage in any wholesale business involving the Products.
7. WARRANTIES. We pride ourselves on prompt service and high quality
products. WE HAVE NO LIABILITY WITH RESPECT TO THE PRODUCTS UNDER THIS
AGREEMENT FOR CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES OR LOST PROFITS,
EVEN IF WE HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. In no case
will our liability exceed the cost of the Products on which a claim for
damages is based.
We undertake no obligation regarding, and offer no, warranty to you, whether
express or implied, including an implied warranty of merchantability or
fitness for a particular purpose as to the Products that we sell to you. The
Products are sold on an "as is" basis. You bear the entire risk as to the
quality of the Products.
8. SHIPMENT AND ALLOCATION. To place an order for the Products, you agree to
notify us in accordance with our standard procedures. No orders will be
effective unless we have communicated acceptance to you or have commenced
shipment to you. We will ship all of the Products to you F.O.B. Clearwater,
Florida from our facility located at 172 N. Belcher, Clearwater, Florida
33765 (or such other location we determine from time to time). We make no
representation to you regarding the timing of shipments of Products to you
from the time we accept your order. You recognize that timing can vary based
on a multitude of factors, many of which are beyond our control.
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<PAGE>
9. INSPECTION AND ACCEPTANCE. You agree to inspect the Products immediately
when you receive them and promptly notify us in writing of any evident
Product defects. The Products will be deemed accepted by you if we have not
received any claim of defect from you within 5 business days of your receipt
of them. We will pay reasonable return transportation costs if we receive
defective merchandise from you within 10 business days after you receive them.
10. RISK OF LOSS. Risk of loss, casualty or damage to the Products passes to
you as soon as we deliver the Products to the carrier for shipment. We will
not be liable, or under any obligation to you whatsoever, for failure to
deliver under, or for delay in making delivery pursuant to, any purchase
orders from you that we have accepted; if such failure or delay results from
causes not directly attributable to, or controlled by, us.
11. REPORTS AND RECORDS. By the 10th day of each month, you agree to send us
fully completed reports of your sales for the immediately preceding calendar
month on forms we prescribe from time to time. You agree to keep accurate
business records and keep them at your business location. You further agree,
we may inspect them at any time after giving you reasonable notice.
12. TRANSFER. You may only transfer your rights under this Agreement to a
person we have approved who agrees to be bound by all of its terms. We may
require the transferee to sign and deliver our then-current standard form as a
condition of our approval. We will charge a then-current transfer fee
(currently $3,800) to cover our training, administrative, legal and
evaluation costs.
13. RELATIONSHIP OF THE PARTIES. You and we are independent contractors.
Neither you nor we are agents, legal representatives, subsidiaries, joint
ventures, partners, employees or servants of the other for any purpose.
Neither you nor we will be obligated by, or have any liability under, any
agreements or representations made by the other, nor will we be obligated for
any damages to any person or property directly or
8
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indirectly arising out of the operation of your business, whether or not
caused by your negligence or willful action or failure to act. We also have
no liability for any sales, use, excise, gross receipts, property, income or
other taxes, that you incur in connection with the operation of your business
or otherwise.
14. INDEMNIFICATION. You agree to indemnify, defend and hold us (and our
affiliates, stockholders, directors, officers, employees, agents and assigns)
harmless from and against and reimburse them for, any losses, liabilities,
claims, fines, penalties, charges, obligations, taxes or damages (actual or
consequential) arising out of any claim or proceeding (including governmental
actions or proceedings), and all reasonable costs and expenses of defending
any claim or proceeding brought against any of them or any action or
proceeding in which any of them is named as a party (including, without
limitation, attorneys' fees and litigation expenses), which any of them may
suffer, sustain or incur directly or indirectly, by reason of, arising from
or in connection with, the operation of your business.
15. TERMINATION.
(a) BY YOU: You may terminate this Agreement only if we materially
breach this Agreement and fail to correct such breach after 60 days prior
written notice detailing the nature of the breach and a suggested method for
cure. Our cure period will be extended a reasonable time if the breach cannot
be cured within such 60 days. We will be excused if our ability to cure is
restricted by our good faith efforts to comply with any applicable law,
ordinance, rule, regulation or other requirement of a governmental authority
or any agency.
(b) BY US: We may terminate this Agreement on 30 days advance written
notice to you if:
9
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(i) you breach any of the provisions of this Agreement and fail to
cure such breach within 30 days after notice from us;
(ii) you fail to continuously open and operate the business utilizing
the System and the Products;
(iii) you fail to pay us when due amounts due us for purchases of
the Products or otherwise, or you breach any other agreement between
you and us;
(iv) you file a petition of bankruptcy or reorganization, or have
an involuntary petition filed against you, that is not discharged
within 30 days, or you are adjudicated bankrupt or insolvent, have a
receiver or trustee appointed for your affairs, or engage in any
assignment for the benefit of creditors;
(v) you violate any law, regulation or ordinance that we consider
may detrimentally affect our reputation; or
(vi) you fail to start business by performing wraps for customers by
the end of the 4th month following the effective date.
16. POST-TERMINATION OBLIGATIONS. If this Agreement expires or is otherwise
terminated, you and we, respectively, agree as follows:
(a) PAYMENT: You will immediately pay us all amounts owed to us.
(b) PENDING ORDERS: We may cancel any or all of your pending orders for
Products. We will not be responsible to you (or any customer) for Products
ordered prior to, but to be delivered after, termination. However, at our
option, we many continue to ship Products to you on our then-standard terms
and conditions.
(c) RETURN OF MATERIALS: You will immediately return to us all
information, brochures, documents and other materials relating to the
10
<PAGE>
Products and the System. Your obligations of confidentiality and
indemnification survive any termination or expiration of this Agreement.
(d) REPURCHASE OF PRODUCTS: We may, at our option, require you to sell
us all, or any part, of the new, unused, undamaged and unaltered Products in
original packaging remaining in your inventory. The purchase price for
repurchase of such Products will be the price you paid us, exclusive of all
freight and handling charges for transporting the Products from you to our
designated location.
17. COMPETITIVE RESTRICTIONS. During the term of this Agreement and for a
period of 2 years after its termination or expiration, unless we otherwise
permit in writing, you agree not to, directly or indirectly (whether as an
owner, partner, associate, member, manager, trustee, independent contractor,
agent, consultant, employee, stockholder, director, officer or otherwise of
another or on your account) do any of the following within the Trade Area or
(i) within 25 miles of the location of our business; or (ii) within 25 miles
of any other business utilizing the System and selling the Products under a
license, distribution or other agreement with us:
(a) SIMILAR SERVICES: You agree not to engage in, or render the same or
similar services or contribute your knowledge to, any work or activity that
relates to or involves the System or the Products or that is in any way
competitive with the sale of the Products or any person utilizing the System.
(b) COMPETITIVE BUSINESS: You agree not to operate a business which (i)
markets, sells or promotes methods, techniques and services similar to the
System, including the provision of body wrap services (a "COMPETITIVE
BUSINESS"); or (ii) grants or has granted franchises or licenses, or
establishes or has established partnerships or joint ventures, or sells
distributorships or business opportunities, for the development and/or
operation of a Competitive Business.
(c) NO SOLICITATION: You agree not to induce, or attempt to induce, or
solicit any of our employees, licensees, distributors, representatives,
11
<PAGE>
vendors, subcontractors or suppliers to accept employment or an affiliation
involving work that may be for a Competitive Business with another firm or
corporation of which you are an employee, owner, partner, shareholder,
consultant or agent.
(d) NO INTERFERENCE: You agree not to solicit, divert, contact, take
away or interfere with any of our (or that of any of our licensees)
customers, suppliers, licensees, distributors, representatives, clients,
trade or patronage, in existence or that you know or have been contacted or
solicited for business relationships as of the date of termination or
expiration.
18. CONFIDENTIAL INFORMATION. You acknowledge that we have developed a
number of associated compatible products and solutions for use when providing
services associated with the System and for retail sale of Products. Many of
these items incorporate confidential and proprietary formulas, contents and
materials and constitute our trade secrets. We consider both the System and
the various ingredients and solutions in the Products as confidential and
proprietary information (the "CONFIDENTIAL INFORMATION"). You understand that
the System, the ingredients in the Products and Confidential Information are
proprietary, trade secrets and confidential. You agree that you:
(i) will not use the Confidential Information in any other
business or capacity;
(ii) will maintain the absolutely confidentiality of the
Confidential Information during and after the termination or expiration
of this Agreement;
(iii) will not make unauthorized copies of any portion of the
Confidential Information disclosed, whether such copies are made in
written or printed form or in other tangible form or via electronic
medium; and
(iv) will adopt and implement all reasonable procedures that we
prescribe from time to time to prevent unauthorized use or disclosure
of Confidential Information.
12
<PAGE>
19. NOTICES. Any and all notices necessary or desirable to be served under
this Agreement must be written and must be (a) personally delivered, or (b)
sent by facsimile telecopier to the number indicated for the intended
recipient below, or (c) sent by reputable airborne courier (i.e., Federal
Express) or (d) sent by certified mail, postage pre-paid, return receipt
requested, addressed to the intended recipient as follows:
(i) IF TO US:
VMM Enterprises, Inc.
172 N. Belcher
Clearwater, Florida 33765
Attention: Jorgen Jensen
Fax No.: (813) 298-0337
(ii) IF TO YOU:
LIGHTTOUCH VEIN, LASER & HAIR CENTER, INC.
10663 MONTGOMERY ROAD, FIRST FLOOR
CINCINNATI, OHIO 45242
Attention: JULIE CROSSLEY
Fax No.: (513) 936-5189
or to such other address as any party may indicate for itself in a written
notice sent to the other parties in accordance with this Agreement. Any
notice sent by: (1) personal service or by facsimile telecopier is deemed
delivered when actually received by the intended recipient; (2) mail is
deemed delivered on the 5th business day after the postmark date; and (3)
reputable airborne courier is deemed delivered 2 business days after deposit
with the courier.
13
<PAGE>
20. MISCELLANEOUS.
(a) SEVERABILITY: If any of the provisions of this Agreement are held
invalid for any reason, the remainder will not be affected and will remain in
full force and effect in accordance with its terms.
(b) LITIGATION OR ARBITRATION EXPENSES: In any action or dispute, at law
or in equity, that may arise under or otherwise relate to the terms of this
Agreement, the prevailing party will be entitled to full reimbursement of its
litigation or arbitration expenses from the other party. Litigation or
arbitration expenses include attorneys' fees, defense costs, witness fees and
other related expenses including paralegal fees, travel and lodging expenses
and court costs. Reimbursement is due within 30 days of written notice after
prevailing.
(c) WAIVERS: No waiver of any provision of this Agreement will be valid
unless in writing and signed by the person against whom it is sought to be
enforced. The failure by either party to insist upon strict performance of
any provision will not be construed as a waiver or relinquishment of the
right to insist upon strict performance of the same provision at any other
time, or any other provision of this Agreement.
(d) ARBITRATION: Any dispute or claim between you and us must be
submitted to binding arbitration to the office of the American Arbitration
Association (the "AAA") closest to our headquarters. The arbitration will be
conducted in accordance with the AAA's rules, except that they must follow
applicable law. All arbitration proceedings must be conducted on an
individual basis and not on a class-wide or consolidated basis with anyone
else.
(e) GOVERNING LAW: This Agreement is governed by Florida law. The courts
of Pinellas County, Florida have exclusive venue and jurisdiction in any
controversy relating to or arising out of this Agreement. All parties waive
any objections to venue in Pinellas County.
14
<PAGE>
(f) ENTIRE AGREEMENT: This Agreement is the entire agreement between the
parties relating to its subject matter, and supersedes all prior agreements,
proposals, representations and commitments, oral or otherwise. This Agreement
may only be amended by an instrument signed by the authorized representatives
of both parties.
(g) BACKGROUND INFORMATION: Both parties agree that the background
information at the beginning of this Agreement is accurate.
(h) EFFECTIVE DATE: The effective date of this Agreement is August 26,
1998, regardless of the actual date of signature. This Agreement is not
effective until accepted and signed by us.
(i) CONSTRUCTION: The headings of sections are for convenience only and
do not define, limit or construe the contents of such sections. In computing
periods from a specified date to a later specified date, the words "FROM" and
"COMMENCING ON" or "BEGINNING ON" (and the like) mean "FROM AND INCLUDING"
and the words "TO," "UNTIL" and "ENDING ON" (and the like) mean "TO BUT
EXCLUDING." "INCLUDING" means "INCLUDING, BUT NOT LIMITED TO." "A OR B" means
A or B or both.
(j) CONTINUING OBLIGATIONS: All obligations of the parties which
expressly or by their nature survived the expiration or termination of this
Agreement continue in full force and effect subsequent to and regardless of
the expiration or termination of this Agreement and until they are satisfied
or by their nature expire.
(k) COUNTERPARTS: The parties may sign this Agreement in counterparts.
Each signed counterpart will be an original; and all of them constitute one
and the same agreement.
(l) PRONOUNS: All words used in this Agreement, regardless of the
number or gender in which they are used, will be construed to include any
other number, singular or plural, in any other gender, masculine, feminine or
neuter, as the context of this Agreement may require.
15
<PAGE>
(m) CUMULATIVE REMEDIES: Any and all remedies available to the parties
in the event of a breach of this Agreement by the other party will be
cumulative. The exercise of any particular remedy will not be exclusive to
the ability to seek other remedies for any breach of this agreement.
(n) TIMING: Time is of the essence of this Agreement. However, whenever
the time for the performance of any action or condition contained in this
Agreement falls on a Saturday, Sunday or legal holiday, such time will be
extended to the next business date. Indications of time of day mean time at
Clearwater, Florida.
Intending to be bound, the parties sign below:
VMM ENTERPRISES, INC.
/s/ LIGHTTOUCH VEIN, LASER & HAIR CENTER, INC.
----------------------------------------------
(Signature)
By: /s/ Jorgen Jensen /s/ Colin Herd MD, COO
----------------------------- ----------------------------------------------
Name: Jorgen Jensen COLIN HERD MD, COO
--------------------------- ----------------------------------------------
(Print Name)
Title: Deputy Executive Director
--------------------------
Date: 9/21/98 Date: Aug/26/98
--------------------------- -----------------------------------------
16
<PAGE>
SUBSIDIARIES OF THE REGISTRANT
The only subsidiary of LightTouch Vein & Laser, Inc. is an Ohio corporation,
LightTouch Vein & Laser, Inc., which does business under that name.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PRO
FORMA FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1999 AND THE AUDITED FINANCIAL STATEMENTS AS OF AND FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1998 OF LIGHTTOUCH VEIN & LASER, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> SEP-30-1999 DEC-31-1998
<CASH> 105,444 55,460
<SECURITIES> 0 0
<RECEIVABLES> 55,141 20,386
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 175,585 75,846
<PP&E> 78,745 50,190
<DEPRECIATION> 20,112 11,383
<TOTAL-ASSETS> 362,976 129,170
<CURRENT-LIABILITIES> 68,692 261,042
<BONDS> 0 86,297
0 0
0 0
<COMMON> 297,644 2,620
<OTHER-SE> (3,360) (220,789)
<TOTAL-LIABILITY-AND-EQUITY> 362,976 129,170
<SALES> 1,980,463 1,830,128
<TOTAL-REVENUES> 1,980,463 1,830,128
<CGS> 1,248,495 1,026,007
<TOTAL-COSTS> 1,248,495 1,026,007
<OTHER-EXPENSES> 787,091 885,918
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 81,597 128,893
<INCOME-PRETAX> (137,546) (207,788)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (137,546) (207,788)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (137,546) (207,788)
<EPS-BASIC> (.018) (.031)
<EPS-DILUTED> (.018) (.031)
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