U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15 OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 2-94117-D
Eclipse Corporation
----------------------------------------------
(Name of small business issuer in its charter)
COLORADO 84-0867911
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
Holly Sugar Building, Suite 330, 2 N. Cascade Avenue,Colorado Springs,CO 80903
(Address of Principal Executive Office) (Zip Code)
Issuer's telephone number: (719) 520-1800
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes _X_ No ___
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment. [ X ]
State issuer's revenues for its most recent fiscal year: $ 705,279
---------
The aggregate market value of the voting stock held by non- affiliates
(40,769,400 shares of Common Stock) was $774,618.60 as of March 11, 1997. The
stock price for computation purposes was $0.019, based on the closing sale price
for the Registrant's Common Stock on NASDAQ OTC Bulletin Board on March 11,
1997. This value is not intended to be a representation as to the value or worth
of the Registrant's shares of Common Stock. The number of shares of
non-affiliates of the Registrant has been calculated by subtracting shares held
by persons affiliated with the Registrant from outstanding shares. For purposes
of this calculation, each of the Registrant's officers, directors and persons
holding 5% or more of the outstanding Common Stock is deemed to be an affiliate.
The number of shares outstanding of the Registrant's Common Stock as of March
11, 1997 was 87,349,400 shares.
<PAGE>
ECLIPSE CORPORATION
INDEX TO ANNUAL REPORT
ON FORM 10-KSB
Page
PART I
Item 1. DESCRIPTION OF BUSINESS ....................... 3
Item 2. DESCRIPTION OF PROPERTIES ..................... 7
Item 3. LEGAL PROCEEDINGS ............................. 8
Item 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER 8
PART II
Item 5.MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS ............................. 8
Item 6.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ............. 9
Item 7. FINANCIAL STATEMENTS .......................... 11
Item 8.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE ............. 11
PART III
Item 9.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS - COMPLIANCE WITH SECTION 16(a) OF
THE EXCHANGE ACT ............................. 11
Item 10. EXECUTIVE COMPENSATION ....................... 13
Item 11.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT ....................................... 13
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 14
Item 13. EXHIBITS AND REPORTS ON FORM 8-K ............... 17
<PAGE>
PART I
Item 1. DESCRIPTION OF BUSINESS
(a) Business Development.
-------------------------
Eclipse Corporation, a Colorado corporation (the"Company"), was organized
on December 8, 1981, under the name, "Microtech Medical Systems, Inc." The
Company initially engaged in the development, assembly and marketing of
microdilution test panels used by microbiology laboratories, clinics and
doctors' offices in performing antibiotic susceptibility testing and
identification of bacteria procedures.
On October 10, 1996 the Company's shareholders approved the sale of its
medical-related enterprises in connection with the Company's entry into
manufactured housing, real estate, and related businesses. At that time, the
Company changed its name to Eclipse Corporation. The Company is currently
engaged in the development, marketing and sale of manufactured housing and
subdivision lots designed and designated for manufactured housing.
(b) Business of Issuer.
----------------------------
The Company is operating as a dealer of manufactured homes, directly and
through sub-dealers, and as a developer of subdivisions catering to the
manufactured housing industry. The Company, until the sale of its medical
industry related business, also developed, assembled and marketed medical test
kits.
Prior Medical Test Kit Business
The Company entered into an asset purchase agreement dated June 27, 1996
with the Company's prior manager, Jerry G. Kilgore, pursuant to which the
Company sold its medical test kit business to Mr. Kilgore effective June 12,
1996. Since June 12, 1996 the subject line of business has been treated as a
discontinued operation. The sale of the medical test kit manufacturing
operation, including licenses, inventories and operating assets was approved by
the Company's shareholders on October 10, 1996. Under present management, the
Company entered the real estate industry, with particular emphasis upon
manufactured housing.
The Company's name was changed to Eclipse Corporation following shareholder
approval of October 10, 1996 and the Company's executive offices relocated to 2
N. Cascade Avenue, Holly Sugar Building, Suite 330, Colorado Springs, CO, 80903.
The telephone number is 719/520-1800 and the telecopy number is 719/520-1824.
Real Property Development - Community at Bear Creek
On September 30, 1996, the Company purchased 30 platted and approximately
25 unplatted lots located in the Community at Bear Creek in Colorado Springs, El
Paso County, Colorado. The Community at Bear Creek is a subdivision specifically
zoned for manufactured housing. The Company has models on display and a sales
facility located within the subdivision. The property was acquired by the
Company from Glacier Valley Holding Corporation in consideration of $700,000,
consisting of the assignment of negotiable instruments and contracts in the face
value of $230,000, and the issuance of 6,250,000 shares of restricted common
stock in the Company, and the assumption of a note in the amount of $303,973.00
secured by a Deed of Trust upon the property. The subdivision is located on the
west side of Colorado Springs, Colorado in a scenic area.
Products and Services
Subdivision lots located at Bear Creek are anticipated to be specifically
designed and platted to accommodate manufactured homes. These lots are
anticipated to be integrated into the broader Community at Bear Creek, which
includes common areas and other amenities, as well as a homeowners' association
to provide and maintain such amenities. The homeowners' association has
previously been established at an adjacent portion of the development.
Development
The Company intends to complete final construction and development of the
lots located in its portion of the Community at Bear Creek during 1997. Based
upon preliminary construction budget estimates obtained by the Company, it is
currently estimated that the lot development will require $500,000 to complete.
While the Company currently has assets which could be converted into working
capital for such development, the Company is actively seeking alternative
financing in the form of equity investments and/or the incurrence of additional
debt. There can be no assurance that the Company will be able to obtain such
financing, however. Additionally, there is no assurance that the lots can be
sold for the projected price, although the Company anticipates that the
Company's portion of the Community at Bear Creek, when developed, will generate
an approximate cash flow of $700,000.
The Company is currently examining the possibility of acquiring additional
portions of the Community at Bear Creek. The Company intends to market the lots
through its on-site models, sales office and through advertising.
Major Customers
The Company anticipates its major customers will fall into two categories.
The first category is other manufactured housing dealers who have previously
purchased lots located within the Community at Bear Creek and other manufactured
housing dealers who wish to do so. Typically, sales to manufactured housing
dealers are made in blocks of several lots per transaction to dealers who are
motivated to create additional outlets for manufactured housing units sold
through their dealerships. The second group of customers which the Company
anticipates are those resulting from direct sales through the Company's
manufactured housing dealership division discussed below.
Government Regulation
A portion of the lots purchased by the Company located in the Community at
Bear Creek are already platted in sizes designed to accommodate double- and
triple-wide manufactured houses. The remaining lots acquired by the Company are
currently platted as single-wide lots. The Company is currently filing new
applications with governmental authorities to re-plat that portion of the
project acquired for purposes of lot sizes, road re-alignment, etc. [The
Company's final development plans are currently being reviewed the by City of
Colorado Springs Planning, Development and Finance Department prior to their
implementation. Presently, the City of Colorado Springs has not agreed to the
specific plans proposed by the Company. However, the Company feels that such
approval will be forthcoming. Such governmental approval may require alteration
in the Company's development plans, and there is no assurance that approval, if
obtained, will not require the Company to incur increased development costs.]
Competition
The Company faces competition from the existing Phase I development of the
Community at Bear Creek, as well as potential of additional available ground
development at the Community at Bear Creek. Competition comes from existing
companies with lots or potential lots in nearly the same location as those owned
by the Company. There can be no assurance that the Company will be able to
competitively price its lots with those owned by other developers. Additionally,
the Community at Bear Creek, in general, faces competition from other
manufactured home communities and individual real estate parcel sales located in
areas adjacent to or near the City of Colorado Springs, as well as competition
from builders of traditionally-built houses which are also able to compete in
the low-end housing market (under $125,000).
Business Outlook
In the last few years, the demand for manufactured housing has increased
within the United States and, particularly, within the El Paso County area. The
Company feels the potential for the low cost housing market within its targeted
region will continue to be strong. The lots owned by the Company at the
Community at Bear Creek will permit home sales in the under-$125,000 market.
First home buyers and seniors appear to be the most likely prospective
purchasers at this time. Accordingly, the Company intends to continue to
emphasize the area of manufactured housing, and, to that end, the Company is
currently reviewing the feasibility of acquiring additional manufactured housing
subdivisions or participating in additional business ventures in the area of
manufactured housing through mergers, acquisitions, joint ventures or other
business related transactions. The Company has reviewed several such prospects,
but has not entered into any agreements or letters of intent to acquire or merge
with any particular company. The Company has not conducted, nor have others made
available to it, results of any market research studies which show the Company's
contemplated business activities to be capable of further implementation.
In the event the Company is unable to complete a merger/acquisition, the
Company will continue to use its best efforts to market and expand its existing
subdivision. There can be no assurance that the Company will be successful in
the acquisition or development of new subdivisions or have sufficient resources
to do so.
Manufactured Housing Dealership
The Company has acquired a manufactured housing dealership. On August 1,
1996, the Company entered into an agreement with Columbine Home Sales llc to
manage its manufactured housing dealership. Subsequently, pursuant to option,
the Company acquired portions of the assets of Columbine Home Sales llc and
became a full-fledged manufactured housing dealer on November 1, 1996. The
manufactured housing dealership was acquired by the Company for a total purchase
price of $289,074.91, consisting of the following:
1. 13,500,000 shares of restricted Common Stock of the
Company;
2. $29,000 cash;
3. $14,151.63 management fee forgiveness; and
4. $95,873.38, representing future adjustable proceeds from
the sale of certain manufactured homes acquired from
the seller.
For purposes of determining the purchase price, the fair market value
assigned by the Company to the restricted Common Stock of the Company was
determined by the Board to be $.011 per share. The Company additionally granted
the seller a three-year option to purchase additional shares of restricted
Common Stock of the Company up to 13,500,000 shares at $.035 per share.
Products and Services
The Company's manufactured home dealership division is a dealer for the
following manufacturers: Silver Crest, Western Homes Construction, Palm Harbor
Homes, Masterpiece Homes, Redman Homes, Cavco Litchfield, Guerdon Homes, Oak
Creek Homes, American Homestar Corporation, Silver Creek Homes, Showcase Homes
and Perfect Steel Systems. It has floorline credit financing through Greentree
Financial Services, Inc., and Deutsche Financial Services Corporation. The
Company's manufactured home dealership has sub-dealer agreements with Grantham
Realty of Ordway, Colorado, and Outpost Homes Company of Walsenburg, Colorado.
The Company's sales and services with respect to manufactured homes are centered
around its models located at the Community at Bear Creek discussed above, and at
its retail lot facility located in Colorado Springs, Colorado, which houses its
office for manufactured housing sales, as well as model show homes.
Product Development
The Company has an on-going program of developing and updating its product
line to improve its sales and to increase its regional share of the manufactured
home market. The Company maintains contact with major manufacturers in order to
broaden not only the sources, but also the availability, of new and existing
products. The Company is also intending to increase the number of sub-dealers
with which it has contractual relations in order to maintain or increase its
competitive position within the regional manufactured housing industry. The
Company feels failure to do so would have a negative effect upon the Company's
ability to increase sales. As the Company is dependent upon its relationships
with manufacturers, the importance of broadening the availability of
manufacturer's represented is significant, especially in view of the need of
supply sources during periods of maximum activity in seasonal home business. A
broad source of supply enables the Company to conserve working capital and
reduces its dependence upon floorline financing in order to assure its ability
to meet customer requirements and a variety of products to offer.
Major Customers
The Company is presently not dependent on any major customers in its
manufactured housing division.
Competitive Conditions
The manufactured housing dealership industry is characterized by intense
competition involving many companies which have extensive experience as
manufactured housing dealers and which possess substantially greater financial
and personnel resources than the Company. At present, the Company's competitive
position in the regional market is not significant. The Company believes it is
competitive in the local Colorado Springs market, due in part to its combination
of subdivision development discussed above and manufactured housing dealership.
The Company currently is under contract with a construction company specializing
in the installation of manufactured homes which it feels makes its overall
pricing more competitive.
In marketing its products, the Company faces competition from existing
companies with products which are similar, such as manufactured houses, mobile
and modular homes and traditionally- built structures, and there is no assurance
that the Company will be able to retain its dealership relations with
manufacturers listed above or maintain or expand its sub-dealer network The
Company's direct El Paso County competitors include the following: Seeger Homes,
Inc., Willmax Homes of Colorado, Nationwide Homes and Westar/American Homestar .
Business Outlook and Company Diversification Efforts
The Company has a stated goal of further developing its business through
the vertical integration of other aspects of the manufactured housing industry.
Accordingly, it is the Company's intent to seek merger or joint venture
opportunities with manufacturers of homes, obtain additional sub-dealers, and
become positioned in the finance industry to enable it to finance the retail
purchaser of manufactured houses in their acquisitions of products offered by
the company. Additionally, the Company is seeking to acquire, to merger or to
establish joint ventures with companies which utilize, as a part of their
product, the pre- manufactured housing units in their industry.
In the near term, the emphasis of the Company will be in the areas of
acquiring and developing additional manufactured housing subdivisions and the
expansion of its subdealership network.
Employees
The Company has 3 full-time employees and 1 part-time or contract employee.
Item 2. DESCRIPTION OF PROPERTIES
Sales Lot
The Company leases approximately 4.5 acres for its model display and sales
office complex located at 4326 N. Nevada, Colorado Springs, Colorado, at a cost
of approximately $6,000 per month from two separate lessors. The Company
believes this facility is adequate to handle its current manufactured housing
sales and service needs and is in good condition for that purpose.
Model Homes
The Company owns two lots with model homes upon a portion of the Community
at Bear Creek adjacent to its existing subdivision development as discussed
above in Item 1.
Community at Bear Creek
The Company owns 30 platted and approximately 25 unplatted lots located in
the Community at Bear Creek in Colorado Springs, El Paso County, Colorado, as
more fully discussed above in Item 1.
Investments in Real Estate or Interests in Real Estate
The Company has invested and intends to seek further investments in
subdivisions which may be utilized for manufactured housing. The Company feels
that the development of such subdivisions and related real estate best enhance
and expand the Company's manufactured housing dealership. Additionally, the
availability of manufactured structures enhance and accelerate the sale of lots
located in subdivisions designed for manufactured housing upon which the Company
intends to concentrate. The Company initially intends to emphasize the regional
Colorado market, which can best be serviced by the Company's manufactured
housing dealership and the Company's subdealers. The Company has used a
combination of equity and debt financing with respect to its Community at Bear
Creek subdivision, and proposes to continue the acquisition of subdivisions
utilizing such methodology.
Description of Real Estate and Operating Data
The property, which is currently composed of developed and undeveloped
lots, is to be sold to owners of or dealers in manufactured housing. The
developed lots are currently being marketed for the foregoing purpose while the
Company is in the process of completing engineering and obtaining governmental
approvals for the development of the undeveloped lots, as discussed in Item 1.
The Company currently holds fee simple title to the Community at Bear Creek
property, and the encumbrance thereon is a note payable in the amount of
$303,793.00, bearing interest at 15.5% per annum, payable in monthly interest
only payments of $3,923.99, with final principal and interest due July 25, 1997.
The note is collateralized by a First Deed of Trust on the Company's Bear Creek
Subdivision property.
Present plans of the Company for the development of the existing
undeveloped portion of the Company's property of the Community at Bear Creek is
anticipated to be complete by the end of the third quarter, 1997, at which time
the undeveloped portion will then be marketed as completed lots for manufactured
housing.
General competitive conditions are anticipated by the Company to remain, as
set forth hereinabove in Item 1.
Management of the Company feels that the existing liability insurance
covering the developed and undeveloped lots at the Community at Bear Creek is
adequate.
Item 3. LEGAL PROCEEDINGS
The Company knows of no material pending legal proceedings to which the
Company is a party or of which any of its properties is a subject, and no such
proceedings are known to the Company to be contemplated by governmental
authorities.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following matters were submitted to a vote of the shareholders of the
Company at the Company's annual meeting on October 10, 1996 and approved:
1. Proposal to amend the Articles of Incorporation to effect a change
of the name of the Company from Microtech Medical Systems, Inc. to Eclipse
Corporation;
(a) Number of Shares Voted FOR: 39,752,600
(b) Number of Shares Voted AGAINST: 40,000
(c) Number of Shares ABSTAINING: 8,500
2. Proposal to amend the Articles of Incorporation to effect a
designation of 500,000 shares of stock as Preferred Stock;
(a) Number of Shares Voted FOR: 36,717,100
(b) Number of Shares Voted AGAINST: 3,076,500
(c) Number of Shares ABSTAINING: 7,500
3. Proposal to amend the Articles of Incorporation to effect a
1-for-100 reverse stock split, to be implemented at management's
discretion;
(a) Number of Shares Voted FOR: 38,260,100
(b) Number of Shares Voted AGAINST: 1,533,500
(c) Number of Shares ABSTAINING: 7,500
4. Proposal to amend the Articles of Incorporation to effect a sale of
the medical test kit business.
(a) Number of Shares Voted FOR: 38,122,600
(b) Number of Shares Voted AGAINST: 1,671,000
(c) Number of Shares ABSTAINING: 7,500
Also at the above meeting, Kenneth M. Cahill, James A. Humpal, J.
Royce Renfrow, Darel A. Tiegs and Thomas M. Dines were elected to serve as
Directors of the Company until the next annual meeting of shareholders and
until their successors are elected and qualified.
PART II
Item 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(a) Principal Market or Markets.
------------------------------------
The Company's stock is traded on the over-the-counter market, and is
presently quoted on the NASDAQ OTC Bulletin Board under the symbol, "ECLP."
Following table sets forth the high and low bid prices of the Common Stock
during the two years ended December 31, 1996 on the NASDAQ OTC Bulletin Board.
The prices are believed to be representative interdealer quotations, without
retail mark-up, mark-down or commissions, and may not represent prices at which
actual transactions occurred.
<TABLE>
<CAPTION>
Bid
---
High Low
---- ---
<S> <C> <C>
Quarter Ended March 31, 1996 $.04 $.02
Quarter Ended June 30, 1996 $.06 $.03
Quarter Ended September 30, 1996 $.038 $.038
Quarter Ended December 31, 1996 $.025 $.012
Bid
---
High Low
---- ---
Quarter Ended March 31, 1995 $.005 $.005
Quarter Ended June 30, 1995 $.0075 $.005
Quarter Ended September 30, 1995 $.12 $.005
Quarter Ended December 31, 1995 $.0625 $.02
</TABLE>
(b) Approximate Number of Holders of Common Stock. The number of holders of
record of the Company's $.0005 par value Common Stock at March 11, 1997, was
approximately 346.
(c) Dividends. The Company has followed the policy of re- investing
earnings in the business, and, consequently, has not paid any cash dividends. At
the present time, no change in this policy is under consideration by the Board
of Directors. The payment of cash dividends in the future will be determined by
the Board of Directors in light of conditions then existing, including the
Company's earnings, financial requirements and conditions, opportunities for
re-investing earnings, business conditions, Colorado law and other factors.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following summarizes the Company's results of operations and financial
condition, and should be read in conjunction with the financial statements.
Liquidity and Capital Resources
-------------------------------
There are several components which affect the Company's ability to meet its
financial needs, including funds generated from operations, levels of accounts
receivable and inventories, capital expenditures, short-term borrowing capacity,
and the ability to obtain long-term capital on reasonable terms. At the end of
1996, the Company's working capital was $522,406, a decrease of $ $183,413 from
December 31, 1995. The decrease is primarily attributable to the Company's
increasing its holdings in its new industry.
The following current portion of long-term debt is due and payable on or
before December 31, 1997:
<PAGE>
Description Principal Amount
----------- -----------------
1. Note in the amount of $303,973.00 payable $303,793.00
bearing interest at 15.5% per annum, payable in
monthly interest only payments of $3,923.99, with
final principal and interest due July 25, 1997.
Note collateralized by a First Deed of Trust on
the Company's Bear Creek Subdivision property.
Total $303,793.00
Less: Current Maturities $303,793.00
Total Long-Term Debt as of December 31, 1996 $-0-
In order to meet its obligations at maturity with respect to the
outstanding principal and interest on such notes payable, the Company may be
required to restructure the terms of such notes and/or refinance such notes
through additional third-party debt and/or equity financing. The Company can
make no assurance that it will be able to restructure such notes or alter the
ultimate terms thereof. In addition, there can be no assurance that the Company
will be successful in obtaining such third-party financing, or that anticipated
cash from operations will render refinancing unnecessary.
Although the Company currently has no available credit facilities other
than floorlines, the Company believes that, based on its current projections,
its cash, capital resources and cash from operations should be sufficient to
meets its liquidity and financing requirements in 1997, other than third-party
financing necessary to complete the development of its subdivision located at
the Community at Bear Creek. The Company can make no assurance, however, that it
will meet its current projections. In addition to seeking additional financing
for the Community at Bear Creek project, the Company has explored alternative
sources of liquidity, including additional third- party debt and/or equity
financing.
Results of Operations
---------------------
Total revenues for the year ended December 31, 1996 were $705,279, an
increase (decrease) of $230,188, or more than 48 percent compared with the year
ended December 31, 1995. The increase from 1995 to 1996 was primarily due to an
increase in medical test kit sales and the discontinuance of that operation,
along with the increase in activity in the Company's real estate oriented
business.
Cost of sales as a percentage of total revenue was 67 percent, and 52
percent in 1996 and 1995, respectively. Increase in the cost of sales percentage
from 1995 to 1996 was primarily the result of discontinuing the medical test kit
operations and the start-up of the real estate business.
Gross profits were $232,751, or 33 percent of sales in 1996, compared to
$227,131 or 48 percent of sales in 1995.
Selling and general and administrative expenses in 1996 were 128,834, and
as a percentage of total revenues were 18 percent and 28 percent in 1996 and
1995, respectively. Selling expenses include advertising, sales commissions,
brochures and other promotional material and certain salary expenses. General
and administrative expense costs include all corporate overhead, management
fees, all occupancy costs and interest. While general and administrative
expenses are primarily fixed expenses, the Company achieved a reduction in these
expenses, primarily again to its management contract with InnerCircle Group
Incorporated. In addition, the Company was able to increase its total revenues
in 1996 from 1995 without proportionally increasing general administrative
expenses by its change of business emphasis.
Interest income (net of interest expense) of 1996 was $44,895 compared to
interest income (net of interest expense) of $24,177 in 1995. The increase of
interest income of $20,718 during the year resulted primarily from an increase
in investments.
As a result, the Company recorded $245,428 net income in 1996 compared to
$92,348 in 1995.
Item 7. FINANCIAL STATEMENTS
The report of the independent auditors on the financial statements appear
at Pages F-2 and F-3, and the financial statements and most of the financial
statements appear at Pages F-4 through F-18 hereof. These financial statements
and related financial information required to be filed hereunder are
incorporated herein by reference.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
(a) Directors and Executive Officers.
-----------------------------------------
The names and ages of the Directors and executive officers of the Company
are as follows:
Name Age Position Since
---- --- -------- -----
Kenneth M. Cahill 60 Chairman of the Board 6/96
of Directors, President and
Chief Executive Officer
J.Royce Renfrow 53 Secretary and Director 6/96
Darel A. Tiegs 52 Vice President and Director 6/96
James A. Humpal 42 Treasurer and Director 6/96
Thomas M. Dines 49 Director 8/96
<PAGE>
The Directors serve until the next annual meeting of shareholders, or until
their successors are elected.
The following sets forth information concerning the principal occupations
and business experience of each of the officers and Directors of the Company:
Kenneth M. Cahill, Chairman of the Board, President and Chief Executive
Officer. Mr. Cahill joined the Company as Director, Chief Executive Officer and
President in June of 1996. From 1980 to May 1996, Mr. Cahill served as Director
of Operations for Larken, Inc., a hotel operator. Mr. Cahill directed Larken's
day-to-day marketing and training initiatives for over 76 hotels. In 1984, Mr.
Cahill formed Arcadia, Inc., where, as its Chief Executive Officer, he
concentrated Arcadia's efforts in the areas of gaming and hospitality. Since May
1996, Mr. Cahill has also served as a Vice President of InnerCircle Group
Incorporated, a management and consulting company. Since May 1996, Mr. Cahill
has also served as a Director and as the President and CEO of Gallery Rodeo
International, a publicly- traded company involved in the real estate and gaming
industries.
Darel A. Tiegs, Director and Vice President. Mr. Tiegs joined the Company
in June of 1996. From 1972 to 1975, Mr. Tiegs was Vice President of Norwest
Bank, where he gained extensive experience in all facets of the real estate
industry. Mr. Tiegs headed projects, including residential developments,
shopping centers, hospitals and casinos. From 1984 to the present, he has been
President and part owner of Superior Homes, a company specializing in the
construction, warranty work and installation of modular homes. Since May 1996,
Mr. Tiegs has also served as a Director and as Vice President of Gallery Rodeo
International, a publicly-traded company involved in the real estate and gaming
industries.
J. Royce Renfrow, Director, Corporate Secretary and General Counsel. Mr.
Renfrow joined the Company as General Counsel, Corporate Secretary and Director
in June 1996. Mr. Renfrow practiced law in a small firm specializing in real
estate and corporate law from 1969 until May 1996. From 1969 to the present, Mr.
Renfrow has served as President and as General Counsel for Speedway Gas and Oil
Co., Inc., a small firm which provides management services for oil and gas
companies. From 1989 to 1992, Mr. Renfrow served as Vice President and General
Counsel of a small, privately-held medical start-up company, MedLogic Global
Corporation. From May 1996 until the present, Mr. Renfrow has served as
Corporate Secretary and General Counsel to InnerCircle Group Incorporated, a
management consulting company. Since May 1996, Mr. Renfrow has also served as a
Director, General Counsel and Corporate Secretary of Gallery Rodeo
International, a publicly-traded company involved in the real estate and gaming
industries.
James A. Humpal, Director and Treasurer. Mr. Humpal joined the Company in
June of 1996 as Treasurer and Director From 1989 to 1991, Mr. Humpal served as
General Manager of the Holiday Inn-Columbus in Ohio. From 1991 to 1992, he began
work for Larken, Inc., as a General Manager of the Holiday Inn-Tucson in
Arizona. In 1992 and until May 1996, Mr. Humpal served as Vice President of
Operations of Larken, Inc. Since May 1996, Mr. Humpal has also served as
Director and Treasurer of Gallery Rodeo International, a publicly-traded company
involved in the real estate and gaming industries.
Thomas M. Dines, Director. Mr. Dines was appointed as a Director of the
Company in August 1996. For the last five years, Mr. Dines has been a real
estate broker doing business under his own name. He has extensive experience in
real estate, loans, creation, estate settlement, banking and appraisal. He also
has expertise in the areas of income, rental, farm and ranch property
management. Mr. Dines has served as President of several corporations, including
Mountain Securities Corporation, where he was President from 1995 to 1996 and
remains as such. He has been a Member and Director of Mountain Securities for
over 27 years.
<PAGE>
(b) Directorships.
---------------------
Kenneth M. Cahill, Darel A. Tiegs, J. Royce Renfrow and James A. Humpal
have also been selected as Directors of Sierra-Rockies Corporation.
Item 10. EXECUTIVE COMPENSATION
No executive officer, including the Chief Executive Officer, received any
compensation during 1996.
The Company did not grant any options or SAR's in 1996. Similarly, no
Directors fees were paid during 1996.
The following table sets forth information with respect to the Chief
Executive Officers concerning the exercise of options during the fiscal year
ending December 31, 1996 and unexercised options held as of the end of that
fiscal year:
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Value of
Shares Unexercised
Underlying In-the-Money
Unexercised Options at
Name Shares Acquired Options at FY-End($)(1)(2)
on Exercise (#) Value Realized FY-End(#)(1)
--------------- -------------- ------------
<S> <C> <C> <C> <C>
Kenneth M. Cahill .............. - 0 - $ 0.00 - 0 - $ 0.00
Jerry G. Kilgore ............... 7,500,000 $16,500.00 3,000,000 $6,000.00
<FN>
(1) All options are presently exercisable. (2) Market value of underlying
securities minus the exercise price. Based on closing sale price of $ 0.02 per
share on the 11th day of March, 1997. (3) Exercise price equal to $0.02 per
share.
</FN>
</TABLE>
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information regarding beneficial ownership
as of March 11, 1997 of the Company's common stock by any person who is known by
the Company to be the beneficial owner of more than five (5%) percent of the
Company's voting securities, and by each Director and by officers and Directors
of the Company as a group. Although authorized for Preferred Shares, the Company
has issued only Common Stock.
<TABLE>
<CAPTION>
Name and Address Number of Percentage
Shares of Class
<S> <C> <C>
Kenneth M. Cahill 12,880,000 14.75%
Holly Sugar Building - Suite 330
2 N. Cascade Avenue
Colorado Springs, CO 80903
Darel A. Tiegs 6,708,750(2) 7.68%
Holly Sugar Building - Suite 330
2 N. Cascade Avenue
Colorado Springs, CO 80903
J. Royce Renfrow 6,708,750(1) 7.68%
Holly Sugar Building - Suite 330
2 N. Cascade Avenue
Colorado Springs, CO 80903
James A. Humpal 536,700 * .61%
Holly Sugar Building - Suite 330
2 N. Cascade Avenue
Colorado Springs, CO 80903
Thomas M. Dines 20,000 * .02%
16 Heather Drive
Colorado Springs, CO 80906-3114
Glacier Valley Holding Corporation 6,225,000 7.13%
13 S. Tejon - Suite 502
Colorado Springs, CO 80903
Columbine Home Sales LLC 13,500,000 15.45%
4320 N. Nevada Avenue
Colorado Springs, CO 80907
All Officers and Directors as 26,854,200(1)(2) 30.74%
a Group (5 persons)
<FN>
* Represents less than 1% of the Company's outstanding Common
Stock
(1) Represents shares held by R Lazy J Trust with J. Royce Renfrow as
Trustee. The beneficiaries under the R Lazy J Trust are Seadon T. Renfrow,
Stephanie J. Renfrow and other members of the Renfrow family, excluding J. Royce
Renfrow.
(2) Represents shares held by The Tiegs Family Trust with Darel A. Tiegs as
Trustee. The beneficiaries under The Tiegs Family Trust are Scott D. Tiegs, Beth
L. Tiegs and other members of the Tiegs family, excluding Darel A. Tiegs.
</FN>
</TABLE>
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Settlement Agreement with Jerry Kilgore and Related Matters
Beginning on or about October 1, 1992 and continuing through approximately
April 21, 1994, Mr. Jerry Kilgore, who during such period was the President and
Treasurer and a Director of the Company, made several unauthorized investments
of Company funds, which investments were not made on behalf, or recorded in the
name, of the Company. Also, during fiscal years 1991, 1992 and 1993 and until
approximately the end of the first quarter of 1994, Mr. Kilgore made several
payments of Company funds ostensibly as compensation for services to the
company, which payments were made to relatives and/or associates of Mr. Kilgore
and were unsupported by any contracts or appropriate invoices. Mr. Kilgore also
took bonus payments during such period which were not duly authorized. As a
result of these unauthorized investments and payments, and after giving effect
to partial reimbursements made by Mr. Kilgore to the Company, Mr. Kilgore's
liability to the Company as of March 1, 1995 was determined by the Board of
Directors to be $422,774.24, which included interest retroactive to the date of
the first misappropriation of Company funds.
On August 28, 1995 the Company entered into a Settlement Agreement (the
"Settlement Agreement") with Mr. Kilgore, the purpose of which was to facilitate
Mr. Kilgore's satisfaction of his debt to the Company over a period of time, in
recognition of fact that he lacked the financial capacity to repay immediately
the misappropriated funds. While Mr. Kilgore no longer serves as President and
Treasurer or as a Director of the Company, the Settlement Agreement acknowledged
that his continued employment is necessary for the continued operation of the
business of the Company, and he has agreed to be employed by the Company and to
serve in an advisory capacity to the Company's Board of Directors for certain
limited purposes.
Concurrently with the execution of the Settlement Agreement, Mr. Kilgore
made and issued to the Company an interest-bearing Promissory Note (the "Note")
payable to the Company in the amount of $422,774.24. The Note was collateralized
by (1) Mr. Kilgore's approximately 19 million shares of the Common Stock of the
Company,(2) his outstanding options to acquire 10,500,000 shares of such Common
Stock (as well as the shares of the Sun Wireless TV, Inc., an Arizona
corporation ("Valley"), (3) a promissory note in the principal amount of
$235,000 issued to Mr. Kilgore on August 10, 1994, by Carolina
Multi-Communications Corp., a Nevada corporation ("CM-CC") and (4) Mr. Kilgore's
residential real property located in Denver, Colorado. The Settlement Agreement
also granted the Company full authority to receive payment of any principal,
interest, dividends or any other distribution from CM- CC and/or the shares of
stock in Valley and to liquidate or otherwise dispose of the same at any time.
Lastly, the Settlement Agreement provides that within sixty days after the
Note is paid in full, Mr. Kilgore must remit to the Company a sum equal to a
reasonable attorneys' fees, accounting fees, Directors' fees and any other costs
and expenses incurred by the Company relating to and arising from Mr. Kilgore's
misappropriation of funds, the investigation thereof, the preparation, execution
and performance of the Settlement Agreement and any other effort to recover the
Company's funds.
On June 27, 1996 Mr. Kilgore sold all of the 26,835,000 shares of common
stock of the Company owned by him (the "Shares") to Kenneth M. Cahill
("Cahill"), the Tiegs Family Trust (an affiliate of Darel A. Tiegs) ("Tiegs"),
the R Lazy J Trust (an affiliate of J. Royce Renfrow) ("Renfrow"), and James A.
Humpal ("Humpal"), each of whom are currently Directors of the Company, for an
aggregate purchase price of $561,946 in cash, pursuant to an Agreement dated May
16, 1996 (the "Sale Agreement") between Mr. Kilgore, Cahill, Tiegs and Renfrow.
Cahill, Tiegs, Renfrow and Humpal shall be collectively referred to herein as
the "Purchasers."
Pursuant to the Sale Agreement, of the total purchase price amount of
$561,946, (1) $63,000 was paid by the Purchasers to Mr. Kilgore, and (2)
$498,346 was paid by the Purchasers directly to the Company on behalf of Mr.
Kilgore, as payment in full of all amounts due by Mr. Kilgore to the Company
pursuant to the Settlement Agreement and the Note.
In connection with the Sale Agreement, on June 27, 1996 the members of the
Company's Board of Directors, Charles L. Diehl and J. Kenneth McClatchey,
resigned from the Board of Directors and as Company officers, and Kenneth M.
Cahill, J. Royce Renfrow, James A. Humpal and Darel A. Tiegs were appointed as
Board members to fill the four vacancies on the Board. In addition, Kenneth M.
Cahill was appointed as Chief Executive Officer and President of the Company,
Darel A. Tiegs was appointed as Vice President, and J. Royce Renfrow was
appointed as Corporate Secretary and General Counsel.
As additional consideration for the sale of the Shares, the Purchasers
agreed to submit to the Company's new Board of Directors a proposal to sell the
Company's medical testing products manufacturing operations to Mr. Kilgore. The
Purchasers, as new Directors of the Company, also agreed to vote in favor of
this asset sale transaction and to recommend to the shareholders of the Company
the approval of such sale.
Following the consummation of the transaction contemplated in the Sale
Agreement, Mr. Kilgore continues to hold options to purchase up to 3,000,000
shares of the Company's Common Stock. Pursuant to the Sale Agreement, Mr.
Kilgore has agreed that, upon exercise of any of such options, he will appoint
one or more of the Purchasers as proxy to vote the shares acquired upon such
exercise at any shareholder meeting. In addition, Mr. Kilgore has agreed that he
will use his best efforts in obtaining proxies for approximately 5,000,000
additional shares of the Company's outstanding Common Stock in order to obtain
shareholder approval of any transaction requiring shareholder approval,
including the sale of the Company's medical laboratory testing products
manufacturing operations to Mr. Kilgore.
The Sale Agreement also contemplates that Mr. Kilgore will remain as an
employee of the Company until the sale of the medical testing products
manufacturing operations has been consummated. Mr. Kilgore will continue to be
paid a salary of $9,250 per month until his employment terminates upon such
sale.
In connection with the transactions contemplated by the Settlement
Agreement and the resignation of its former Directors, Messrs. Diehl and
McClatchey, the Company has entered into an Indemnification Agreement with
Messrs. Diehl and McClatchey, dated June 27, 1996 pursuant to which the Company
has acknowledged its continuing obligation to indemnify Messrs. Kilgore, Diehl
and McClatchey for claims that may be asserted against such persons in
connection with the Settlement Agreement transactions. The Indemnification
Agreement provides that the Company will indemnify the former Directors against
such claims to the fullest extent permitted by the Company's Articles of
Incorporation and Colorado Corporation Law.
Agreement for Sale of Medical Testing Products Manufacturing Operations to
Mr. Kilgore
The Company has entered into an Asset Purchase Agreement dated June 27,
1996 (the "Asset Purchase Agreement"), between the Company and Mr. Kilgore,
pursuant to which the Company has agreed to sell its medical testing products
manufacturing operations, including all licenses, contracts, inventories,
operating assets, personal and real property, and any other assets related to
such operations to Mr. Kilgore for $251,000. That on the 31st day of December,
1996, the agreement between the company and Mr. Kilgore was modified, a credit
toward Mr. Kilgore's purchase price of $50,000 of benefits which the company had
agreed to pay on his behalf, and, accordingly, the promissory note evidencing a
portion of the purchase price for said operation was reduced to $200,000.
InnerCircle Group Management Agreement
In June 1996 the Company entered into an agreement with InnerCircle Group
Incorporated ("InnerCircle") with respect to the management of the Company.
InnerCircle is a company that provides general managerial services to various
businesses. Kenneth M. Cahill, Darel A. Tiegs, James A. Humpal and J. Royce
Renfrow each own a 25% equity interest in InnerCircle and are employees of
InnerCircle. As employees of InnerCircle, they are obligated to assume the
following roles in the Company: (1) Kenneth M. Cahill: President/CEO and
Director; (2) Darel A. Tiegs: Vice President and Director; (3) James A. Humpal:
Treasurer and Director; and (4) J. Royce Renfrow: Corporate Secretary/General
Counsel and Director.
Under the agreement, InnerCircle is to provide the following services: (1)
general and administrative business office services, including the use of Class
A office space, as necessary, furniture, equipment, fixtures and secretarial
services; (2) general legal and accounting services necessary for the day-to-day
operation of the Company's offices and activities, not including outside legal
and accounting services; (3) planning, structuring, development and financing,
if applicable, of projects to be considered on behalf of the Company, including
the completion of project approved; and (4) the compliance with appropriate
corporate and securities laws of the state of incorporation of the Company and
the United States, including filing of appropriate reports, forms and documents
with the various regulatory authorities. The Company paid to InnerCircle Group
Incorporated (IGI), an affiliate of the Company, management fees totaling
$65,000 per month for 6 months during the year ended December 31, 1996. IGI also
forgave fees during the year totaling $90,000.
Transactions with Gallery Rodeo International
In August 1996, the Company purchased from Gallery Rodeo International
("Gallery"), a corporation controlled by the Company's Board of Directors, a
promissory note dated July 14, 1995, issued by Elk Creek Partners Limited
Partnership, in the principal amount of $500,000. The Company paid Gallery
$450,000 in cash for this note. The note bears interest at a rate of ten percent
(10%) per annum, payable in equal monthly installments of $4,166.67. Principle
and accrued but unpaid interest under the note is due and payable in full on
July 13, 2000. The note is secured by certain real property (including a casino
building and lot) located in Cripple Creek, Colorado.
In August 1996, the Company purchased from Gallery a promissory note dated
June 30, 1995, issued by Colorado Escrow, Inc., in the principal amount of
$208,133.34. The Company paid Gallery $200,000 in cash for this note. The note
bears interest at a rate of seven and one-half percent (7.5%) per annum, payable
in equal monthly installments of $1,300.87. Principle and accrued but unpaid
interest under the note is due and payable in full on November 27, 1997. Kenneth
Cahill, the President and CEO and a Director of the Company, owns, directly or
indirectly, approximately 70% of Colorado Escrow, Inc.
Kenneth M. Cahill is the Chairman of the Board, Chief Executive Officer,
and President of Gallery. Darel A. Tiegs and J. Royce Renfrow collectively own
890,975 shares of Gallery's Common Stock (approximately 5.6% of the outstanding
shares) and are each officers of Gallery. James A. Humpal is also an officer of
Gallery.
During 1996, the Company paid $3,500 in consulting fees to Thomas M. Dines,
a Director of the Company.
Item 13. EXHIBITS AND REPORTS ON FORM 8-K (Footnotes on following page)
(a) Exhibits
The following exhibits are submitted herewith:
Number Description
------ -----------
(a)(1) Financial Statements. Reference is made the Index
to Financial Statements of the Company on Page F-1
of this report.
3.1.1 Articles of Incorporation of the Company, as
amended. (1)
3.1.2 Amendment to Articles of Incorporation (Article I)
as approved by shareholders at Annual Shareholders'
Meeting on October 10, 1996 changing the name of the
corporation to Eclipse Corporation.
3.2 By-Laws (1)
3.2.1 Amendments to By-Laws adopted June 27, 1996
(amending Section 23), and August 15, 1996 (amending
Section 13), both of which are incorporated into
January 15, 1997 Restatement of By-Laws.
4.1 Form of Underwriters Warrant (1)
10.1 Lease Agreement (2)
10.2 Incentive Stock Option Plan (2)
10.3 Distribution Agreement with Innovative Diagnostic
Systems, Inc. (2)
10.4 Settlement Agreement between the Company and Jerry
G. Kilgore (3)
10.6 Asset Purchase Agreement dated June 27, 1996 between
the Company and Jerry G. Kilgore and amendment
thereto.
10.7 Management Agreement between the Company and
InnerCircle Group, Incorporated, dated July 9, 1996.
10.8 Promissory Note Purchase Agreement between the
Company and Gallery Rodeo International dated
July 9, 1996.
10.9 Promissory Note Purchase Agreement between the
Company and Gallery Rodeo International dated August
1, 1996.
10.10 Purchase Agreement between the Company and Glacier
Valley Holding Corporation dated September 30, 1996.
10.11 Purchase Agreement between the Company and Columbine
Home Sales llc dated the 1st day of November, 1996.
10.12 Lease Agreement between the Company and Ram Holding
Corporation dated the 1st day of December, 1996.
(b) Reports on Form 8-K
Reference is made to the dates of the Company's current
reports on Form 8-K:
Date Item Disclosed
6/27/96 Changes in Control
Acquisition or Disposition of Assets
8/27/96 Changes in Registrant's Certified Acct.
10/11/96 Acquisition of Assets
Footnotes from prior page:
(1) Incorporated by reference to the exhibit of the same number
(except where noted otherwise) as filed with the Registrant's
Form S-18 (File No. 33-14106).
(2) Incorporated by reference to the exhibit of the same number
(except where noted otherwise) as filed with the Registrant's
Annual Report on Form 10-K for the fiscal year ending December
31, 1990.
(3) Incorporated by reference to the exhibit of the same number
(except where noted otherwise) as filed with the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1994.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
(Registrant): ECLIPSE CORPORATION
By: /s/ Kenneth M. Cahill Date: April 14, 1997
--------------------- --------------
Kenneth M. Cahill
President
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the date indicated.
By: /s/ Kenneth M. Cahill Date: April 14, 1997
---------------------- ---------------
Kenneth M. Cahill
President
Director
By: /s/ Darel A. Tiegs Date: April 14, 1997
---------------------- --------------
Darel A. Tiegs
Vice President
Director
By: /s/ James A. Humpal Date: April 14, 1997
---------------------- --------------
James A. Humpal
Treasurer
Director
By: /s/ J. Royce Renfrow Date: April 14, 1997
---------------------- ---------------
J. Royce Renfrow
Corporate Sect'y/Gen. Counsel
Director
By: /s/ Thomas M. Dines Date: April 14, 1997
--------------------- ---------------
Thomas M. Dines
Director
<PAGE>
ECLIPSE CORPORATION
Index To Financial Statements
Page
Independent Auditors' Reports................................. F-2
Balance Sheet, December 31, 1996.............................. F-4
Statements of Operations, for the years ended
December 31, 1996 and 1995 ................................... F-6
Statement of Shareholders' Equity, January 1, 1995
through December 31, 1996 .................................... F-7
Statements of Cash Flows, for the years ended
December 31, 1996 & 1995 ..................................... F-8
Summary of Significant Accounting Policies.................... F-10
Notes to Financial Statements................................. F-12
F-1
<PAGE>
To the Board of Directors
Eclipse Corporation
INDEPENDENT AUDITORS' REPORT
We have audited the balance sheet of Eclipse Corporation (formerly
Microtech Medical Systems, Inc.) as of December 31, 1996 and the related
statements of operations, shareholders' equity and cash flows for the year ended
December 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly
the financial position of Eclipse Corporation, as of December 31, 1996 and the
results of its operations and its cash flows for the year ended December 31,
1996 in conformity with generally accepted accounting principles.
Cordovano and Company, P.C. Denver, Colorado
March 12, 1997
F-2
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and Board of Directors
Microtech Medical Systems, Inc.
Aurora, Colorado
We have audited the balance sheet (not separately included herein) of
Eclipse Corporation formerly Microtech Medical Systems, Inc.) as of December 31,
1995) and the accompanying related statements of operations, changes in
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly
in all material respects, the financial position of Eclipse Corporation as of
December 31, 1995, and the results of its operations and its cash flows for the
year ended December 31, 1995 of Microtech Medical Systems, Inc., in conformity
with generally accepted accounting principles.
HEIN - ASSOCIATES LLP
Denver, Colorado
March 7, 1996
F-3
<PAGE>
ECLIPSE CORPORATION
-------------------
<TABLE>
<CAPTION>
Balance Sheet
December 31, 1996
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ................................... $ 2,955
Restricted cash ............................................. 52,706
Receivables:
Trade, net of allowance of $5,080 ........................... 25,917
Notes, related parties (Note C) ............................. 228,134
Employee .................................................... 3,000
Accrued interest ............................................ 19,439
Inventory, at cost .......................................... 2,084,528
Prepaid expenses ............................................ 143,288
-------
TOTAL CURRENT ASSETS ........................................ 2,559,967
NOTES RECEIVABLE (Note C) ................................... 652,283
PROPERTY AND EQUIPMENT, less accumulated
depreciation of $221 (Note D) ............................... 143,687
OTHER ASSETS
Deferred charges, less accumulated
amortization of $2,200 ...................................... 11,000
Other ....................................................... 576
---
$3,367,513
==========
</TABLE>
See accompanying summary of significant accounting policies and
notes to financial statements.
F-4
<PAGE>
ECLIPSE CORPORATION
<TABLE>
<CAPTION>
Balance Sheet, Concluded December 31, 1996
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C>
CURRENT LIABILITIES
Accounts payable .............................................. $ 178,980
Accrued expenses .............................................. 7,354
Flooring lines ................................................ 1,091,230
Notes payable (Note E) ........................................ 528,793
Deferred revenue .............................................. 221,929
Customer deposits ............................................. 9,275
-----
TOTAL CURRENT LIABILITIES ..................................... 2,037,561
COMMITMENTS (Note H) .......................................... --
SHAREHOLDERS' EQUITY (Note F)
Preferred stock, $.0005 par value, 500,000 shares
authorized, -0- issued and outstanding ........................ --
Common stock, $.0005 par value, 200,000,000 shares
authorized, 87,330,900 issued and outstanding ................. 37,578
Additional paid-in capital .................................... 1,280,852
Retained earnings ............................................. 11,522
------
TOTAL SHAREHOLDERS' EQUITY .................................... 1,329,952
---------
$3,367,513
==========
</TABLE>
See accompanying summary of significant accounting policies and
notes to financial statements.
F-5
<PAGE>
ECLIPSE CORPORATION
<TABLE>
<CAPTION>
Statements of Operations
For The Years Ended
December 31,
------------
1996 1995
---- ----
<S> <C> <C>
NET SALES ................................ $ 529,322 $ --
COST OF SALES ............................ (425,244) --
--------
GROSS PROFIT ............................. 104,078 --
OPERATING EXPENSES
Management fees, related parties (Note B) 300,000 --
Selling, general and administrative ...... 80,625 --
------
380,625 --
-------
INCOME (LOSS) FROM OPERATIONS ............ (276,547) --
OTHER INCOME (EXPENSE)
Interest and dividend income ............. 63,668 --
Interest expense ......................... (18,773) --
Other income (expense), net .............. (466) --
----
TOTAL OTHER INCOME (EXPENSE) ............. 44,429 --
INCOME (LOSS) BEFORE INCOME TAXES ........ (232,118) --
INCOME TAX (EXPENSE) BENEFIT (Note G) .... -- --
________ ________
INCOME (LOSS) FROM CONTINUING OPERATIONS . (232,118) --
DISCONTINUED OPERATIONS (Note A):
Net income from medical product
development operations, net of
$64,315 and $27,000 in income taxes ..... 433,773 92,348
Gain on sale of operations, net of
$-0- in income taxes ..................... 43,773 --
- - - ------ ------
NET INCOME ............................... $ 245,428 $ 92,348
============ ============
NET INCOME (LOSS) PER SHARE,
CONTINUING OPERATIONS .................... $ * $ *
============ =============
NET INCOME (LOSS) PER SHARE ............. $ * $ *
============ =============
WEIGHTED AVERAGE SHARES OUTSTANDING ..... 72,060,067 62,992,000
========== ==========
</TABLE>
* Less than $.01 per share.
See accompanying summary of significant accounting policies and
notes to financial statements.
F-6
<PAGE>
ECLIPSE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
STATEMENT OF SHAREHOLDERS' EQUITY
January 1, 1995 through December 31, 1996
Additional
Preferred Stock Common Stock Paid-in Retained
Shares Par Value Shares Par Value Capital Earnings Total
------ --------- ------ --------- ------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995 ...... -- -- 59,080,900 $ 29,540 $ 1,010,605 $ (326,254) $ 713,891
Net Income ................. -- -- -- -- -- 92,348 92,348
BALANCE, DECEMBER 31, 1995 ...... -- -- 59,080,900 29,540 1,010,605 (233,906) 806,239
-- -- 7,500,000 3,750 12,750 -- 16,500
Shares issued for
acquisition of land
(Note A) .................. -- -- 6,250,000 3,113 163,095 -- 166,208
Shares issued for exercise
of stock option ........... -- -- 1,000,000 500 500 -- 1,000
Shares issued to acquire
assets of manufactured
housing dealership ........ -- -- 13,500,000 675 93,902 -- 94,577
Net income ................. -- -- -- -- -- 245,428 245,428
BALANCE, DECEMBER 31, 1996 -- -- 87,330,900 $ 37,578 $ 1,280,852 $ 11,522 $ 1,329,952
== =========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
F-7
<PAGE>
ECLIPSE CORPORATION
<TABLE>
<CAPTION>
Statements of Cash Flows
For The Years Ended
December 31,
------------
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income ................................... $ 245,428 $ 92,349
Transactions not requiring cash:
Depreciation and amortization ................ 2,421 9,113
Gain on sale of discontinued
operations ................................... (43,773) --
Unauthorized transaction recoveries .......... -- (12,000)
Bad debt expense ............................. -- 13,794
Deferred income taxes ........................ 69,000 (9,000)
Other, net ................................... -- 4,602
Changes in current assets and
current liabilities: Receivables,
inventory and other
current assets ............................... (203,384) (20,289)
Accounts payable and other
current liabilities .......................... 339,869 32,550
------- ------
NET CASH PROVIDED BY
OPERATING ACTIVITIES ......................... 409,561 111,119
------- -------
INVESTING ACTIVITIES
Repayments, former president (Note A) ........ -- 12,000
Changes in certificates of deposit ........... 51,359 (100,000)
Purchase of property and equipment ........... (328,060) (26,000)
Retirements of property and equipment ........ 30,920 --
Payments for deferred charges ................ (13,200) --
Purchase of notes receivable,
related parties, (Note B) .................... (836,644) --
--------
NET CASH (USED IN)
INVESTING ACTIVITIES ......................... (1,095,625) (114,000)
---------- --------
FINANCING ACTIVITIES
Proceeds from long-term debt ................. 165,000 --
Proceeds from sale of common stock ........... 17,500 --
------
NET CASH PROVIDED BY
FINANCING ACTIVITIES ......................... 182,500 --
-------
NET DECREASE IN CASH ......................... (503,564) (2,881)
Cash at beginning of year .................... 506,519 509,400
------- -------
CASH AT END OF YEAR .......................... $ 2,955 $ 506,519
=========== ===========
</TABLE>
See accompanying summary of significant accounting policies and
notes to financial statements.
F-8
<PAGE>
ECLIPSE CORPORATION
<TABLE>
<CAPTION>
Combined Statements of Cash Flows
For The Years Ended
December 31,
------------
1996 1995
---- ----
<S> <C> <C>
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest .......................................... $ 12,073 $ --
Income taxes ...................................... $ -- $ --
NONCASH INVESTING AND FINANCING TRANSACTIONS:
Inventory purchased for flooring
lines and debt .................................... $1,151,230 $ --
Land purchased for debt and stock ................. $ 470,001 $ --
Property acquired for stock ....................... $ 94,577 $ --
Deferred gain on note receivable from
former president .................................. $ 126,056 $ --
</TABLE>
See accompanying summary of significant accounting policies and
notes to financial statements.
F-9
<PAGE>
ECLIPSE CORPORATION
Summary of Significant Accounting Policies
December 31, 1996
Revenue and cost recognition
- ----------------------------
Revenue from all home sales is recognized upon the closing of the sale using
the deposit method. All customer deposits and advances for homes are treated
as liabilities. Costs incurred in connection with the finished homes,
marketing and selling, as well as general and administrative costs are charged
to expense as incurred.
Use of estimates
- -----------------
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Cash equivalents
- ----------------
For the purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.
Restricted cash
- ---------------
Restricted cash consists of a certificate of deposit which secures a required
letter of credit for water and sewer taps on a development.
Accounts receivable
- --------------------
The Company provides an allowance for doubtful accounts, as needed, for
accounts deemed uncollectible. The allowance for doubtful accounts as of
December 31, 1996 totaled $5,080.
Inventory
- ----------
Inventory consists of 28 finished prefabricated homes, which are valued at
cost on a specific identification basis, and $748,730 of land held for sale.
Property, equipment and depreciation
- -------------------------------------
Fixed assets are stated at cost. Depreciation is computed over the
estimated useful life of the assets using the straight-line method. Depreciation
expense was $221 for the period ended December 31, 1996.
Deferred revenues
- ------------------
Deferred revenues consist of curtailment payments of $95,873
related to the acquisition of inventory from Columbine Home Sales, LLC which
are anticipated to be realized upon sale of the inventory and a deferred gain
of $126,056 related to sale of the discontinued operations which will be
recognized when received from the former president.
F-10
<PAGE>
ECLIPSE CORPORATION
Summary of Significant Accounting Policies, Concluded
December 31, 1996
Income Taxes
- -------------
The Company accounts for income taxes under the liability method,
which requires recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax assets
and liabilities are determined based on the difference between the financial
statements and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse.
Impact of recently issued accounting standards
- ----------------------------------------------
In March 1995, the Financial Accounting Standards Board (FASB) established an
accounting standard for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets to be held and
used for long-lived assets and certain identifiable intangibles to be disposed
of. This standard requires that long-lived assets and certain identifiable
intangibles to be held and used by an entity be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. This standard is effective for financial
statements beginning after December 15, 1995. Management implemented this
standard during 1996. The standard did not have a material impact on its
financial statements.
During 1995, the FASB established Financial Accounting Standard No. 123,
"Accounting for Stock-Based Compensation". This Statement establishes financial
accounting and reporting standards for stock- based employee compensation plans.
This Statement defines a fair value based method of accounting for an employee
stock option or similar equity instrument and encourages all entities to adopt
that method of accounting for all of their employee stock compensation plans.
However, it also allows an entity to continue to measure compensation cost for
those plans using the intrinsic value based method of accounting prescribed by
APB Opinion No. 25, "Accounting for Stock Issued to Employees". Entities
electing to remain with the accounting in Opinion 25 must make pro forma
disclosures of net income, and if presented, earnings per share, as if the fair
value based method of accounting defined in this Statement has been applied.
This standard is effective for financial statements beginning after December 15,
1995. Management implemented this standard during 1996. The standard did not
have a material impact on its financial statements.
F-11
<PAGE>
ECLIPSE CORPORATION
Notes to Financial Statements
December 31, 1996
Note A: Nature of operations
- -----------------------------
The Company was incorporated in Colorado on December 8, 1981 to
develop and manufacture a line of products for sale to clinical
microbiology laboratories throughout the United States.
Settlement Agreement
--------------------
Former President The Company's former president was involved in
various alleged unauthorized transactions. On August 28, 1995, the Company
entered into a Settlement Agreement with the former president, the purpose
of which was to facilitate the former president's satisfaction of his debt
to the Company over a period of time.
Concurrently with the execution of the settlement agreement, the
former president issued to the Company an interest- bearing promissory note
payable to the Company in the amount of $422,774. As a part of the
agreement, within sixty days after the note was paid in full, the former
president was to remit to the Company a sum equal to reasonable fees and
costs incurred by the Company relating to and arising from the unauthorized
transactions. This note and related expenses were paid in full on June 27,
1996.
Change in control
------------------
On June 27, 1996, the Company's former president, sold 26,835,000
shares of his common stock, representing 40.3 percent of the Company's
outstanding common stock, to a new control group for approximately $561,946
in cash. $63,000 was paid by the purchasers directly to the former
president, and $498,346 was paid directly to the Company on behalf of the
former president, as payment in full of all amounts due by the former
president to the Company pursuant to the settlement agreement and note as
described above.
In connection with this sale, two prior members of the Company's Board
of Directors resigned and four new Board members and three new officers,
including a new president, affiliated with the new control group were
appointed. The prior directors and former president retained their options
to purchase an aggregate of 7,000,000 shares of common stock (4,000,000
options exercisable at $.001 per share and 3,000,000 options exercisable at
$.02 per share).
F-12
<PAGE>
ECLIPSE CORPORATION
Notes to Financial Statements, Continued
December 31, 1996
Note A: Nature of operations, continued - Discontinued Operations
- -----------------------------------------------------------------
On October 10, 1996, shareholders approved the sale of the Company's
medical test kit operations, pursuant to an asset purchase agreement dated
June 27, 1996, between the Company and its former president. The Company
agreed to sell its medical test kit manufacturing operations, including all
licenses, inventories, and operating assets to the former president for
$251,000. In payment for the assets, the former president delivered $1,000
in cash and a note for $250,000. This agreement was amended on December 31,
1996, to apply a credit of $50,000 toward the purchase price for benefits
which the Company had agreed to pay on behalf of the former president.
Accordingly, the note was reduced to $200,000. The note bears interest at
prime plus 1 percent and is due and payable on June 1, 2001.
On October 10, 1996, the Company changed its name from Microtech
Medical Systems, Inc. to Eclipse Corporation.
The Company recorded a net gain on the sale of the discontinued
operations of $169,830 of which $126,056 is deferred until the note
receivable is collected.
Where appropriate, the financial statements reflect the operating
results of the discontinued operations separately from continuing
operations. Prior years have been restated. Operating results for the
discontinued operations were:
<TABLE>
<CAPTION>
December 31,
-------------
1996 1995
---- ----
<S> <C> <C>
Operating revenue................ $ 175,957 $ 475,091
----------- -----------
Income before income taxes....... 498,088 119,348
Income tax expense............... 64,315 27,000
------ ------
Income from operations........... $ 433,773 $ 92,348
=========== ===========
</TABLE>
Acquisition
------------
On August 1, 1996, the Company entered into an agreement with
Columbine Home Sales, LLC (CHS) to manage its manufactured housing
dealership. Subsequently, pursuant to option, the Company acquired portions
of the assets of CHS and became a full-fledged manufactured housing dealer
on November 1, 1996. The manufactured housing dealership was acquired by
the Company for a total purchase price of $289,075, consisting of (1)
13,500,000 shares of the
F-13
<PAGE>
ECLIPSE CORPORATION
Notes to Financial Statements, Continued
December 31, 1996
Note A: Nature of operations, concluded
- -----------------------------------------
Company's restricted common stock, (2) $29,000 cash, (3) $14,152 in
management fee forgiveness, and (4) $95,873 representing future adjustable
proceeds from the sale of certain manufactured homes acquired from CHS.
For purposes of determining the purchase price, the fair market value
assigned by the Company to the restricted common stock of the Company was
determined by the Board of Directors to be approximately $.011 per share.
The Company additionally granted CHS a three-year option to purchase
additional shares of restricted common stock of the Company up to
13,500,000 shares at $.035 per share.
Note B: Related party transactions
- -----------------------------------
In August, 1996, the Company acquired a promissory note from
Sierra-Rockies Corporation (SRC) (formerly Gallery Rodeo International) in
the principal amount of $208,133. Payor of the note is Colorado Escrow,
Inc. SRC is an affiliate of the Company.
Effective July 1, 1996, the Company acquired a promissory note
receivable and a deed of trust from SRC for $450,000. The principal amount
of the note is $500,000 and the payor is Elk Creek Partners Limited
Partnership, a Minnesota LLP (D&D Gaming).
Effective August 1, 1996, the Company agreed to manage CHS in exchange
for 2 percent of gross sales. Effective November 1, 1996, the Company
acquired all of the assets of CHS in exchange for 13,500,000 shares of
common stock and a waiver of commissions totaling $14,152. Two members of
CHS are also directors and shareholders of the Company.
The Company paid to InnerCircle Group Incorporated (IGI), an affiliate
of the Company, management fees totaling $65,000 per month for 6 months
during the year ended December 31, 1996. IGI also forgave fees during the
year totaling $90,000. The principal shareholders of IGI are also either
principal shareholders or directors of the Company.
The Company advanced $65,500 to SRC during the year ended December 31,
1996. During 1996, $24,630 of the advances were repaid and $40,870 were
reclassified to prepaid management fees.
F-14
<PAGE>
ECLIPSE CORPORATION
Notes to Financial Statements, Continued
December 31, 1996
<TABLE>
<CAPTION>
Note C: Notes receivable
- -------------------------
Notes receivable at December 31, 1996 consisted of the following:
<S> <C>
Note receivable from affiliate, interest
at 7.50 percent due in monthly installments
of $1,301, balance due November 27, 1997,
collateralized by real estate ............................... $ 208,134
Note receivable from officer and director,
non-interest bearing, due on demand .......................... 20,000
Note receivable from D&D Gaming, interest at
10.00 percent due in monthly
installments of $4,167, balance due July 13, 2000,
collateralized by real estate ................................ 500,000
Note receivable from former president,
interest at 9.25 percent due in monthly
installments of $1,542, balance due
June 1, 2001 ................................................. 200,000
-- ---- -------
928,134
Less: Discounts .............................................. (47,717)
Current maturities ........................................... (228,134)
--------
$ 652,283
=========
</TABLE>
<TABLE>
<CAPTION>
Note D: Property and equipment
- --------------------------------
Listed below are the major classes of property and equipment as of December
31, 1996:
<S> <C>
Land, leasehold improvements ............................. $ 72,346
Building ................................................. 21,334
Computer equipment ....................................... 3,859
Furniture and fixtures ................................... 46,369
143,908
Less: accumulated depreciation ........................... (221)
----
$ 143,687
=========
</TABLE>
Depreciation expense for the years ended December 31, 1996 and 1995
totaled $221, and $9,113.
F-15
<PAGE>
ECLIPSE CORPORATION
Notes to Financial Statements, Continued
December 31, 1996
Note E: Notes payable
- ----------------------
<TABLE>
<CAPTION>
Notes payable at December 31, 1996 consisted of the following:
<S> <C>
Note to individual, interest at
15.50 percent due in monthly installments
of $3,923, balance due August 25, 1997,
collateralized by real estate ................................ $303,793
Note to individual, interest at 18.00
percent due in monthly installments of
$2,475, balance due June 4, 1997,
collateralized by note receivable ............................ 165,000
Note to RAM Holding, Corp., interest at
12.00 percent, balance due December 2,
1996, currently in default,
collateralized by real estate ................................ 60,000
$528,793
</TABLE>
Note F: Stockholders' equity
- ------------------------------
During 1996, the Company's shareholders approved the authorization of
500,000 shares of $.0005 par value preferred stock. The preferred shares
may be issued as and when the Board of Directors shall determine in one or
more series. The Board of Directors is vested with the authority to
establish and designate series, to fix the number of shares therein, and
the variations in the relative rights, preferences, and limitations as
between series, including voting powers, number of shares, dividends,
redemption privileges and conversion rights.
The Company has reserved 10,000,000 shares of its common stock for
issuance under the terms of an incentive stock option plan, which was
adopted during 1986. Under the plan, the Board of Directors has the
authority to grant, with certain restrictions, stock options to employees
of the Company. In a prior year, the Company had granted 7,500,000 options
with an exercise price of approximately $.002 per share to the Company's
former president. The options were exercised during 1996.
F-16
<PAGE>
ECLIPSE CORPORATION
Notes to Financial Statements, Continued
December 31, 1996
Note F: Stockholders' equity, continued
- ----------------------------------------
In prior years, the Company granted 12,000,000 non-qualified stock
options, with an exercise price of $.001 per share, primarily to the
Company's former president and to the directors. During 1994, options were
exercised to purchase 8,000,000 shares of common stock (including 7,000,000
options of the former president). The outstanding options are vested and
exercisable through December 1997 (1,000,000 options) and October 1998
(3,000,000 options). In February 1996, an additional 3,000,000 options were
granted to the Company's two Board members. These options are exercisable
at $.02 per share for five years.
Note G: Income taxes
- ---------------------
Deferred tax assets and liabilities result from temporary differences
between financial statement and tax bases of assets and liabilities. The
amounts which give rise to the net deferred tax asset (liability) as of
December 31, 1996 and 1995, are as follows:
<TABLE>
<CAPTION>
December 31,
------------
1996 1995
---- ----
<S> <C> <C>
Deferred tax assets:
Note receivable from former president .......... $ -- $ 79,000
Compensation on options granted at
less than fair market value .................... -- 22,000
Net operating loss carryforward ................ 56,705 --
Other, net ..................................... -- 7,000
-----
56,705 108,000
Valuation allowance ............................ (56,705) (39,000)
------- -------
NET DEFERRED TAX ASSET ......................... $ -- $ 69,000
========== ==========
</TABLE>
F-17
<PAGE>
ECLIPSE CORPORATION
Notes to Financial Statements, Concluded
December 31, 1996
Note G: Income taxes, continued
- ---------------------------------
Income tax expense differed from the amounts computed by applying the
U.S. Federal income tax rates to pretax earnings as a result of the
following:
<TABLE>
<CAPTION>
December 31,
------------
1996 1995
---- ----
<S> <C> <C>
Computed "expected" tax expense ................... $ 25 % $ 34 %
Changes in income taxes resulting from:
State income taxes ............................ 2 % 2 %
Valuation allowance ................................ - % (9)%
Permanent differences .............................. - % (3)%
Other .............................................. (14)% (1)%
--- --
$ 13 % $ 23 %
========== ========
</TABLE>
Note H: Commitments
- --------------------
The Company leases land under an operating lease that expires in May
1999. Rent expense under the lease for the years ended December 31, 1996
and 1995 was $5,000 and $-0-, respectively. The total minimum rental
commitments at December 31, 1996 are as follows:
1997.................................. $ 60,000
1998.................................. $ 60,000
1999.................................. $ 25,000
F-18
BY-LAWS OF
ECLIPSE CORPORATION
AMENDMENT 4 - RESTATEMENT OF JANUARY 15, 1997
The By-laws of Eclipse Corporation are restated, amended and readopted as
follows:
ARTICLE I - OFFICES
Section 1. The principal office of the Corporation in the State of Colorado
shall be located in the City of Colorado Springs, County of El Paso, State of
Colorado. The Corporation may have such other offices either within or without
the State of Colorado as the Board of Directors may designate or as the business
of the Corporation may require from time to time.
Section 2. The registered office of the Corporation shall be designated in
the Articles of Incorporation or amendments thereof.
ARTICLE II - SHAREHOLDERS
Section 1 - Annual Meetings
The annual meeting of the shareholders of the Corporation, unless otherwise
prescribed by statue, shall 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
ten percent (10%) of all the outstanding shares of the Corporation entitled to
vote at the meeting for the purpose of electing directors and for the
transaction of such other business as may come before the meeting.
Section 2 - Special Meetings
Special meetings of the shareholders for any purpose or purposes unless
otherwise prescribed by statute may be called by the Board of Directors or by
the President and shall be called by the President or Secretary at the written
request of the holders of ten percent (10%) of the shares then outstanding and
entitled to vote at the meeting.
Section 3 - Place of Meetings
All meetings of shareholders shall be held at the principal office of the
Corporation or at such other place as shall be designated in the notices or
waivers of notice of such meetings.
Section 4 - Notice of Meetings
Written notice stating the place, date, and hour of the meeting and in case
of a special meeting, the purpose or purposes for which the meeting is called,
shall, unless otherwise prescribed by statute, be delivered not less than ten
(10) nor more than fifty (50) days before the date of the meeting either
personally or by mail by or at the direction of the President or the Secretary
or the officer or other persons calling the meeting to each shareholder of
record entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States Mail addressed to the
shareholder at his address as it appears in the stock transfer books of the
Corporation with postage thereon prepaid unless said shareholder shall have
previously filed with the Secretary of the Corporation a written request that
notices intended for him be mailed to some other address, in which case, it
shall be mailed to the address designated in such request. If three successive
letters mailed to the last known address of any shareholder of record are
returned as undeliverable, no further notices to such shareholder shall be
necessary, until another address for shareholder is made known to the
corporation.
Section 5 - Closing of Transfer Books or Fixing of Record Date
For the purpose of determining shareholders entitled to notice of or to
vote at any meeting of shareholders or at any adjournment thereof, the
shareholders entitled to receive payment of any dividends or in order to make a
determination of shareholders for any other proper purpose, the Board of
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 fifty (50) days. The
stock transfer book shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders and such book
shall be closed for at least ten (10) days immediately preceding such meeting.
In lieu of closing the stock transfer book, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders.
Such date in any case shall be not more than fifty (50) days and in the case of
a meeting of the shareholders, not less than ten (10) days prior to the date on
which the particular event requiring such determination of shareholders is to be
taken. If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof.
Section 6 - Voting Record
The officer or agent having charge of the stock transfer books for shares
of the Corporation shall make a complete record of the shareholders entitled to
vote at each meeting of the shareholders, or any adjournment thereof, arranged
in alphabetical order with the address of and number of shares held by each.
Such record shall be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole time
of the meeting for the purposes thereof.
Section 7 - Quorum
One-third of the outstanding shares of the Corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. If less than one-third of the outstanding shares are represented
at a meeting, a majority of the shares so represented may adjourn the meeting
from time to time without further notice. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally noticed. The
shareholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
Section 8 - Proxies
At all meetings of shareholders, a shareholder may vote in person or by
proxy executed in writing by a shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid after
eleven (11) months from the date of the substitution unless otherwise provided
in the proxy.
Section 9 - Voting
Except as otherwise provided by the Articles of Incorporation, each
outstanding share entitled to vote shall be entitled to one vote upon each
matter submitted to a vote at a meeting of the shareholders ,and except as
otherwise provided by statute or by the Articles of Incorporation, any corporate
actions shall be authorized by a majority of votes cast at a meeting of
shareholders by the holder of the shares entitled to vote thereon.
Section 10 - No Cumulative Voting.
There shall be no cumulative voting of shares.
ARTICLE III - BOARD OF DIRECTORS
Section 1 - General Powers
The business and affairs of the Corporation shall be managed by its Board
of Directors.
Section 2 - Number, Tenure and Qualifications
The number of the directors of the Corporation shall be five (5) unless and
until otherwise determined by vote of a majority of the entire Board of
Directors.
Except as may otherwise be provided herein or in the Articles of
Incorporation, the members of the Board of Directors of the Corporation, who
need not be shareholders, shall be elected by a majority of the votes cast at a
meeting of shareholders, by the holders of shares entitled to vote in the
election.
Each director shall hold office until the next annual meeting of the
shareholders or until his successor shall have been elected and qualified.
Section 3 - Regular Meetings
The regular meetings of the Board of Directors shall be held without other
notice than this by-law immediately after and at the same place as the annual
meeting of shareholders. The Board of Directors may provide by resolution the
time and place, either within or without the State of Colorado, for the holding
of additional regular meetings without other notice than such resolution;
provided, however, that in case of any regular meeting, notice of such action
shall be given to each director who was absent within the time provided and in
the manner set forth in Section 5 of this Article III with respect to special
meetings, unless such notice shall be waived in the manner set forth in Section
4 of this Article III.
Section 4 Special Meetings
Special meetings of the Board of Directors may be called by or at the
request of the President or any two directors. The person or persons authorized
to call special meetings of the Board of Directors may fix any place, either
within or without the State of Colorado, as a place for holding any special
meeting of the Board of Directors may fix any place, either within or without
the State of Colorado, as a place for holding any special meeting of the Board
of Directors called by them.
Section 5 - Notice
Notice of any special meeting shall be given at least two (2) days
previously thereto by written notice delivered personally or mailed to each
director at his business address or by telegram. If mailed, such notice shall be
deemed to be delivered when deposited in the United States Mail so addressed
with postage thereon prepaid. If notice is given by telegram, such notice shall
be deemed to be delivered when the telegram is delivered to the telegraph
company. Any director may waive notice of any meeting. The attendance of a
director at a meeting shall constitute a waiver of notice of such meeting except
where a director attends a meeting for the express purpose of objection to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at nor the purpose of any
special meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting.
Section 6 - Quorum
The majority of the number of directors fixed by Section 2 of this Article
III shall constitute a quorum for the transaction of business at any meeting of
the Board of Directors, but if less than such majority is present at a meeting,
a majority of the directors present may adjourn the meeting from time to time
without further notice.
Section 7 - Manner of Acting
The action of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors, and at all
meetings of the Board of Directors, each director present shall have one vote.
Section 8 - Action Without a Meeting
The action required or permitted to be taken by the Board of Directors in a
meeting may be taken without a meeting if a consent in writing setting forth the
action so taken shall be signed by all of the directors.
Section 9 - Vacancies
Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of a majority of the remaining directors, though less than a
quorum of the Board of Directors. A director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office. Any directorship
filled by reason of an increase in the number of directors may be filled by
election by the Board of Directors for a term of office continuing only until
the next election of directors by the shareholders.
Section 10 - Compensation
By resolution of the Board of Directors, each director may be paid his
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a stated salary as a director or a fixed sum for attendance at each
meeting of the Board of Directors or both. No such payments shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 11 - Removal
Any director may be removed, with or without cause, at anytime by the
shareholders at a special meeting of the shareholders called for that purpose.
Section 12 - Presumption of Assent
If a director is present at a meeting of the Board of Directors at which
action or any corporate matter is taken he shall be presumed to have assented to
the action taken unless the dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such action with the
person acting as the Secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
Section 13 - Chairman; Committees
At a meeting of the Board of Directors, the Chairman of the Board, if any,
and if present, shall preside. If there shall be no Chairman or he shall be
absent, then the President shall preside, and in his absence, the Chairman
chosen by the directors shall preside.
The Board of Directors, by resolution adopted by a majority of the entire
Board, may from time to time designate from among its members an executive
committee and such other committees, and alternate members thereof, as they deem
desirable, each consisting of three or more members, with such powers and
authority (to the extent permitted by law) as may be provided in such
resolution. Each such committee shall serve at the pleasure of the Board.
Section 14 - Contracts
No contract or other transaction between this Corporation and any other
corporation shall be impaired, affected, or invalidated, nor shall any director
be liable in any way by reason of the fact that any one or more of the directors
of this Corporation is or are interested in, or is a director or officer, or are
directors or officers of such other corporation, provided that such facts are
disclosed or made known to the Board of Directors. Any director, personally and
individually, may be a party to or may be interested in any contract or
transaction of this Corporation, and no director shall be liable in any way by
reason of such interest, provided that the fact of such interest be disclosed or
made known to the Board of Directors, and provided that the Board of Directors
shall authorize, approve or ratify such contract or transaction by the vote (not
counting the vote of any such director) of a majority of a quorum,
notwithstanding the presence of any such director at the meeting at which such
action is taken. Such director or directors may be counted in determining the
presence of a quorum at such meeting. This section shall not be construed to
impair or invalidate or in any way affect any contract or other transaction
which would otherwise be valid under the law (common, statutory or otherwise
applicable thereto).
ARTICLE IV - OFFICERS
Section 1 - Number
The officers of the Corporation shall be a President, one or more Vice
Presidents (the number thereof to be determined by the Board of Directors), a
Secretary, and a Treasurer, each of whom shall be elected by the Board of
Directors. Such other officers and assistant officers as may be deemed necessary
may be elected or appointed by the Board of Directors. Any two or more offices
may be held by the same person, except the offices of President and Secretary.
Section 2 - Election and Term of Office
The officers of the Corporation to be elected by the Board of Directors
shall be elected annually by the Board of Directors at the first meeting of the
Board of Directors held after each annual meeting of the shareholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as conveniently may be. 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.
Section 3 - Removal
Any officer or agent may be removed by the Board of Directors whenever in
its judgment the best interest of the Corporation will be served thereby. Such
removal shall be without prejudice to the contract rights, if any, of the person
so removed. Election or appointment of an officer or agent shall not in and of
itself create contract rights.
Section 4 - Vacancies
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise may be filled by the Board of Directors for the
unexpired portion of the term.
Section 5 - President
The President shall be principal, executive officer of the Corporation, and
subject to the control of the Board of Directors, shall, in general, supervise
and control all of the business affairs of the Corporation. He shall, when
present, preside at all meetings of the shareholders and of the Board of
Directors unless a Chairman of the Board has been elected. He may sign with the
Secretary or any other proper officer of the Corporation thereunto authorized by
the Board of Directors, certificates for the shares of the Corporation, any
deeds, mortgages, bonds, contracts, or other instruments which the Board of
Directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
the By-laws to some other officer or agent of the Corporation or shall be
required by law to be otherwise signed and executed and, in general, shall
perform all duties incident to the office of President and such other duties as
may be prescribed by the Board of Directors from time to time.
Section 6 - Vice President
In the absence of the President or in the event of his death, inability or
refusal to act, the Vice President (or in the event there is more than one Vice
President, the Vice President in the order designated at the time of their
election, or in the absence of any designation, then in the order of their
election, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting shall
have all of the powers of and be subject to all of the restrictions upon the
President. Any Vice President may sign with the Secretary or any Assistant
Secretary certificates for the shares of the Corporation and shall perform such
other duties as from time to time may be assigned to him by the President or by
the Board of Directors.
Section 7 - Secretary
The Secretary shall: (a) keep the minutes of the proceedings of the
shareholders and of the Board of Directors in one or more books provided for
that purpose; (b) see that all notices are duly given in accordance with the
provisions of these By-laws or as required by law; (c) be the custodian of the
corporate records and of the seal of the Corporation and see that the seal of
the Corporation is affixed to all documents, and execution of which on behalf of
the Corporation under its seal is duly authorized;
(d) keep a register of the post office address of each shareholder which
shall be furnished to the Secretary by such shareholder; (e) sign with the
President or Vice President certificates for shares of the Corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
Corporation; and (g) in general, perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors.
Section 8 - Treasurer
The Treasurer shall: (a) have charge and custody of and be responsible for
all funds and securities of the Corporation (b) receive and give receipts for
monies due and all such monies in the name of the Corporation in such banks,
trust companies or other depositories as shall be selected in accordance with
the provisions of Article V of these By-laws; and (c) in general, perform all of
the duties incident to the office of Treasurer and 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 Board of Directors. If
required by the Board of Directors to do so, the Treasurer shall give bond for
the faithful discharge of his duties in such sum and with such surety or
sureties as the Board of Directors shall determine.
Section 9 - Assistant Secretaries and Assistant Treasurers
The Assistant Secretary, when authorized by the Board of Directors, may
sign with the President or a Vice President certificates for shares of the
Corporation, the issuance of which shall have been authorized by a resolution of
the Board of Directors. The Assistant Secretary and Assistant Treasurer shall
respectively, if required by the Board of Directors, give bonds for the faithful
discharge of their duties in such sums and with such sureties as the Board of
Directors shall determine. The Assistant Secretaries and Assistant Treasurers,
in general, shall perform such duties as assigned to them by the Secretary or
the Treasurer respectively or by the President or Board of Directors.
Section 10 - Salaries
The salaries of the officers shall be fixed from time to time by the Board
of Directors, and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the Corporation.
ARTICLE V - CONTRACTS, LOANS
AND DEPOSITS
Section 1 - Contracts
The Board of Directors may authorize any officer or officers, agent or
agents to enter into any contract or execute and deliver any instrument in the
name of and on behalf of the Corporation, and such authority may be general or
confined to specific instances.
Section 2 - Loans
No loan shall be contracted on behalf of the Corporation and no evidence of
indebtedness shall be issued in its name unless authorized by a resolution of
the Board of Directors. Such authority may be general or confined to specific
instances.
Section 3 - Checks, Drafts, Etc.
All checks, drafts, or other orders of the payment of money, notes, or
other evidences of indebtedness issues in the name of the Corporation shall be
signed by such officer or officers, agent or agents of the Corporation and in
such manner as shall from time to time be determined by resolution of the Board
of Directors.
Section 4 - Deposits
All funds of the Corporation not otherwise employed shall be deposited from
time to time to the credit of the Corporation at such banks, trust companies, or
other depositories as the Board of Directors may select.
ARTICLE VI - CERTIFICATES OF SHARES
AND THEIR TRANSFER
Section 1 - Certificates for Shares
Certificates representing shares of the Corporation shall be in such form
as shall be determined by the Board of Directors. Such certificates shall be
signed by the Chairman of the Board, the President, or a Vice President and by
the Secretary or an Assistant Secretary and sealed with the Corporate seal or a
facsimile thereof. The signatures of such officers upon the certificates may be
facsimiles if the certificate is manually signed on behalf of a transfer agent
or registrar other then the Corporation itself or one of its employees. Each
certificate for shares shall be consecutively numbered or otherwise identified.
The name and address of the person to whom the shares represented thereby are
issued with the number of shares and date of issue shall be entered on the stock
transfer books of the Corporation. All certificates surrendered to the
Corporation for transfer shall be canceled and no new certificate shall be
issued until the former certificate for a like number of shares shall have been
surrendered and canceled. Except in the 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 Board of Directors may prescribe.
Section 2 - Transfer of Shares
Transfer of shares of the Corporation shall be made only on the stock
transfer books of the Corporation by the older of record thereof or by his legal
representative who shall furnish proper evidence of authority to transfer or by
his attorney thereunto authorized by power of attorney duly executed and filed
with the Secretary of the Corporation and on surrender for cancellation to the
certificate for such shares. The person whose name shares stand on the books of
the Corporation shall be deemed by the Corporation to be owner thereof for all
purposes.
ARTICLE VII - FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of Directors
from time to time subject to applicable law.
ARTICLE VIII - DIVIDENDS
The Board of Directors may from time to time declare and the Corporation
may pay dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law and consistent resolution by the Board of Directors.
ARTICLE IX - CORPORATE SEAL
The Corporate seal shall be in such form as shall be approved from time to
time by the Board of Directors.
ARTICLE X - WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or director
of the Corporation under the provisions of these By-laws or under the provisions
of the Articles of Incorporation or under the provisions of the statues of the
State of Colorado, 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
Section 1 - By Shareholders
All By-laws of the Corporation shall be subject to alteration or repeal,
and new By-laws may be made by a majority vote of the shareholders at any
regular or special meeting.
Section 2 - By Directors
The Board of Directors shall have power to make, adopt, alter, amend, and
repeal from time to time the By-laws of the Corporation; provided however, that
the shareholders entitled to vote with respect thereto as in this Article XI
above provided may alter, amend, or repeal By-laws made by the Board of
Directors, except that the Board of Directors shall have no power to change the
quorum for meetings of shareholders or of the Board of Directors, or to change
any provisions of the By-laws with respect to the removal of directors or the
filing of vacancies in the Board resulting form the removal by the shareholders.
If any By-laws regulating an impending election of directors are adopted,
amended, or repealed by the Board of Directors, there shall be set forth in the
notice of the next meeting of shareholders for the election of directors, the
By-law so adopted, amended, or repealed, together with a concise statement of
the changes made.
ARTICLE XII - INDEMNITY
Any person made a party to any action, suit, or proceeding by reason of the
fact that he as testator or intestate representative, is or was a director,
officer, or employee of the Corporation or of any corporation in which he served
as such at the request of the Corporation shall be indemnified by the
Corporation against the reasonable expenses, including attorney fees, actual and
necessary, incurred by him in connection with the defense of such action, suits,
or proceedings, or in connection with any appeal therein, except in relation to
matters as to which it shall be adjudged in such action, suit, or proceeding, or
in connection with any appeal therein that such officer, director, or employee
is liable for negligence or misconduct in the performance of his duties. Such
indemnification shall be consistent with the provisions of the Articles of
Incorporation of the Corporation.
The amount of indemnity to which any officer or director may be entitled
shall be fixed by the Board of Directors, except that in the case where there is
no disinterested majority of the Board available, the amount shall be fixed by
an arbitration pursuant to the then existing rules of the American Arbitration
Association. The undersigned certifies that the foregoing By-laws have been
adopted as the first By-laws of the Corporation in accordance with the
requirements of the statutes of the State of Colorado.
Dated this _____ day of ____________________, 19___.
_________________________________
Secretary
MICROTECH MEDICAL SYSTEMS, INC.
Secretarial Certificate
I, J. Royce Renfrow, do hereby certify that I am the duly elected Corporate
Secretary and the keeper of the record of MICROTECH MEDICAL SYSTEMS, INC., a
corporation organized and existing under the laws of the State of Colorado, and
that the following is a true and correct copy of certain resolutions duly
adopted at a meeting of the Board of Directors thereof, convened and held in
accordance with the By-Laws of said Corporation on the 16th day of October,
1996, and that such resolutions are now in full force and effect:
"RESOLVED, that the corporate officers are hereby authorized to issue to
Glacier Valley Holding Corporation six million two twenty-five thousand
(6,225,000) shares of common stock in the Corporation, restricted pursuant to
Rule 144 pursuant to Agreement of September 30, 1996, in partial consideration
of the Corporation s purchase of a portion of the Community at Bear Creek
Subdivision.
IN WITNESS WHEREOF, I have affixed my name as Corporate Secretary and have
caused the corporate seal of said Corporation to be hereunto affixed, this
_______ day of October, 1996.
_____________________________________
Corporate Secretary
Sworn to and subscribed before me, this _____________ day of October, 1996.
_____________________________________
Notary Public
_____________________________________
My Commission Expires
<PAGE>
NOTE: Original of the Amendment is attached here.
BY-LAWS OF
MICROTECH MEDICAL SYSTEMS, INC.
AMENDMENT 3 - SECTION 13 AMENDED
Pursuant to Corporate Resolution passed August 15, 1996, the By- Laws of
Microtech Medical Systems, Inc., are hereby amended as follows:
Section 13. Number, Tenure and Qualifications. The number of directors of
the corporation shall be five. Each director shall hold office until the next
annual or special meeting of shareholders at which a new Board of Directors is
elected and until his successor shall have been elected and qualified. Directors
need not be residents of Colorado or shareholders of the corporation.
Dated this 15th day of August, 1996.
________________________________________
J. ROYCE RENFROW, Corporate Secretary
<PAGE>
BY-LAWS OF
MICROTECH MEDICAL SYSTEMS, INC.
AMENDMENT 2 - SECTION 23 AMENDED
Pursuant to Corporate Resolution passed June 27, 1996, the By- Laws of
Microtech Medical Systems, Inc., are hereby amended as follows:
Section 23. Informal Action by Directors. Any action required to be taken
at a meeting of the Board of Directors, or any other action which may be taken
at a meeting of the Board of Directors, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the directors with respect to the subject matter thereof. Directors or any
committee designated by the directors may participate in a meeting of the Board
of Directors or committee by means of conference telephone or similar
communications equipment by which all persons participating in the meting can
hear each other at the same time. Such participation shall constitute presence
in person at the meeting. Any written consent may be signed by the directors on
separate counterparts and the facsimile transmission of a director's signature
shall be deemed the equivalent of the original signature thus transmitted.
Dated this ________ day of __________________, 1996.
________________________________________
J. ROYCE RENFROW, Corporate Secretary
EXHIBIT "D"
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (hereinafter referred to as the "Agreement")
is entered into as of ________________________, 1996 between Microtech Medical
Systems, Inc., ("MMSI"), also referred to as the "Seller," and Jerry G. Kilgore
or a related affiliate, also referred to as the "Purchaser."
RECITALS
Whereas, the Board of Directors of MMSI intends to direct the Company into
new business ventures, in areas other than medical laboratory test products with
its inherent high level of regulation, competition, product liability risks, and
manufacturing complexity.
And Whereas, MMSI completed a secondary stock offering in January, 1988 in
order to seek to acquire or participate in business ventures which could result
in a substantial change in this Company's business and operations.
And Whereas, the laboratory test kit products have only a small niche
appeal to select microbiology laboratories, and has found only limited
acceptance of a narrow spectrum of products related to antibiotic susceptibility
testing of fastidious and anaerobic bacteria.
Therefore, the Board of MMSI, in an effort to redirect and concentrate its
efforts on acquisitions and related activities and thereby enhance the valuation
of the Company, is desirous of selling its operations which manufacture the test
products.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
1.1 Asset Purchase: Seller shall sell, assign, transfer and deliver to
Purchaser, and Purchaser shall purchase from Seller, by appropriate assignment
and bill of sale one hundred percent (100%) interest in the whole interest of
Seller's right, title and interest in and to any and all authorizations,
licenses, contracts and assets directly or indirectly related to its medical
laboratory products ("Operations"), including without limitation all licenses,
contracts, inventories, operating assets, personal property, real property, and
any other asset related to the operations, as of the commencement date of this
Agreement. Seller makes no representations or warranties concerning the
Purchased Assets, as defined herein.
1.2 Purchase Price: In exchange for the sale of the Purchased Assets
described in Section 1.1 above, and in consideration for all liabilities,
including accounts payable and leases, to be assumed by Purchaser relating to
the manufacturing operations, Purchaser shall agree to pay Seller the sum
certain of Two Hundred Fifty-One Thousand Dollars ($251,000), see 1.3. Purchaser
hereby represents, covenants and agrees that Seller shall not in any way be
liable for any contracts, obligations or liabilities of the operations of any
nature whatsoever (whether accrued, absolute or contingent, whether disclosed or
undisclosed, whether known or unknown, whether due or to become due, whether
related to the Purchased Assets and the associated manufacturing operations or
otherwise, and regardless of when asserted) not specifically provided for in
this Agreement, which unassumed liabilities shall be the sole responsibility of
Purchaser.
1.2.1 Assumption of Manufacturing Operations Responsibilities:
Purchaser hereby assumes and agrees to fully perform in timely manner
any and all of Seller's duties and obligations in the manufacturing
operations, referenced herein from and after the date of this
Agreement, as if it were the original purchaser therein.
1.3 Method of Purchase:
1.3.1 Down Payment: The non-refundable down payment shall be One
Thousand Dollars ($1,000), which amount shall be paid to Seller upon
the date this Agreement is executed by the parties hereto.
1.3.2 Balance of Purchase Price: The balance of the purchase
price shall be paid to Seller as follows:
(a) Payment: Two Hundred Fifty Thousand Dollars ($250,000) on or
before June 1, 2001. In the event that the $250,000 payment is not
made on the required date, the Purchaser shall, within ten (10)
business days of such default, provide Seller with a convertible
financing received by the Purchaser from one or more lenders.
(b) Promissory Note: At closing, Purchaser shall sign a
Promissory Note in the amount of Two Hundred Fifty Thousand Dollars
($250,000) due to Seller on or before June 1, 2001, to bear interest
at Colorado National Bank Prime Lending Rate on date of sale plus one
percent (1%) interest payable monthly and due on the fifth of each
month, with a final balloon payment of $250,000 to be made on the due
date.
(c) Collateral: Security for the note is to be:
1. The Three Million Share Option granted to Mr. Kilgore by
the Board of Directors of MMSI in October, 1993, said option to
be pledged as security at closing and held by the Board. Upon
exercise of the option, the issued shares shall be pledged and
held by the Board, along with a signed proxy giving the Directors
the right to vote the shares at any shareholder meeting.
2. Southland Life Insurance policy on life of Jerry G.
Kilgore.
3. Stock in Valley of Sun of approximately sixteen thousand
six hundred (16,600) shares.
4. Promissory note of Carolina Multicommunications
Corporation in the amount of Two Hundred Thirty-Five Thousand
Dollars ($235,000.00).
1.3.3 Closing: The closing of the sale of the Purchased Assets
shall be simultaneous with the signing by Purchaser of the Two Hundred
Fifty Thousand Dollar ($250,000) promissory note, as required by
Section 1.3.2(b) hereof, following shareholder approval.
ARTICLE II
2.1 Notices: All notes, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given and
effective (i) upon receipt if delivered in person, by cable or telegram, (ii)
one business day after depositing prepaid with a national overnight express
delivery service (e.g., Federal Express or Airborne) or (iii) three business
days after deposit in the United States Mail (registered or certified mail,
postage prepaid, return receipt requested):
If to Seller:
Microtech Medical Systems, Inc.
320 E. Costilla
Colorado Springs, CO 80903
If the Purchaser:
Jerry G. Kilgore
12931 E. Cedar Street
Denver, CO
or such other address as specified by the parties in writing from time to
time.
2.2 Press Release: Unless otherwise required by law, none of the parties
hereto shall make any public announcement nor issue any press release regarding
the transactions set forth herein without the prior approval of the other
parties, which approval shall not be unreasonably withheld. Following the
closing, appropriate press releases and SEC filings may be prepared and issued
by the new Board of Directors. Purchaser hereby consents to Seller disclosing
the terms and/or a copy of this Agreement to shareholders and underwriters of
Seller.
2.3 Amendments: This Agreement may be amended or modified only by a written
instrument executed by the parties hereto.
2.4 Expenses: Except as otherwise expressly herein provided, each party to
this Agreement shall pay its own expenses (including, without limitation, the
fees and expense of its agents, representatives, counsel and accountants)
incidental to the negotiation, preparation, execution and performance of this
Agreement.
2.5 Counterparts: This Agreement may be executed in any number of
counterparts by FAX, with hard copy sent first class mail, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
2.6 Parties in Interest - Assignment: This Agreement shall inure to the
benefit of and be binding upon Purchaser, Seller and their respective successors
and assigns. Nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies under, or by reason of, this
Agreement. The rights and responsibilities of Seller and Purchaser hereunder may
be assigned to any party without the other party's prior written consent.
2.7 Applicable Law: The rights and obligations of the parties shall be
construed under and governed by the laws of the State of Colorado. Venue and
jurisdiction for judicial enforcement of this Agreement shall be Arapahoe
County, Colorado.
2.8 Waiver: No provision in this Agreement shall be deemed waived by course
of conduct, unless such waiver is in writing signed by all parties and stating
specifically that it was intended to modify this Agreement.
2.9 Captions - Interpretation: Section headings contained herein are
descriptive only, and shall have no legal effect. Each party has reviewed and
discussed this Agreement with counsel, and any question of construction shall
not be resolved by any rule of interpretation providing for interpretation
against the drafting party.
2.10 Severability: In the event that any term or provision of this
Agreement is determined to be or would be void, unenforceable, or contrary to
law, such term or provision is voided; however, the remainder of this Agreement
shall continue in full force and effect, provided that such continuation would
not diminish the benefits of this Agreement for any party.
2.11 Arbitration:
(a) Should a dispute arise under this Agreement which cannot be
resolved informally between the parties hereto, either Purchaser or Seller
may request that such dispute be submitted to arbitration for resolution.
Arbitration under this section shall take place at a location mutually
agreeable to Purchaser and Seller.
(b) Purchaser shall select one arbitrator, and Seller shall select
another arbitrator, within fifteen (15) days of a request for arbitration
hereunder, and the arbitrators so chosen shall select a third arbitrator
within fifteen (15) days of the later arbitrator's selection. Each such
arbitrator shall be an individual or firm unaffiliated with any of the
parties and with expertise in the manufacturing operations. If Purchaser or
Seller fails to designate a third arbitrator, then such arbitrator shall be
designated by the American Arbitration Association upon request of
Purchaser or Seller.
(c) The decision of a majority of the arbitrators shall be final,
conclusive and binding on the parties hereto and may be submitted to a
court of appropriate jurisdiction for enforcement thereof.
2.12 Attorney's Fees: If any action, suit or proceeding is commenced to
establish, maintain, or enforce any right or remedy under this Agreement, the
party not prevailing therein shall pay, in addition to any damages or other
award, all reasonable attorney's fees and litigation expenses incurred therein
by the prevailing party.
2.13 Entire Agreement: This Agreement constitutes the entire Agreement
between the parties governing the matters addressed herein. No prior agreement
or representation, whether oral or written, shall have any force or effect
thereon.
2.14 Commencement Date: The commencement date of this Agreement is
__________________________________________.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first-above written.
SELLER:
MICROTECH MEDICAL SYSTEMS, INC.
By:________________________________
PURCHASER:
_____________________________________
JERRY G. KILGORE
<PAGE>
AMENDMENT
TO
ASSET PURCHASE AGREEMENT DATED JUNE 27,1996
Section 1.3 of Article 1 of the Asset Purchase Agreement between
Microtech Medial Systems, Inc. ("MMSI"), now known as Eclipse
Corporation, also referred to as "Seller," and Jerry G. Kilgore
or a related affiliate, also referred to as "Purchaser," is
hereby amended as follows:
Section 1.3 Method of Purchase:
1.3.1 Down Payment: The non-refundable down
payment shall be One Thousand Dollars ($1,000), which
amount shall be paid to Seller upon the date this
Agreement is executed by the parties hereto.
1.3.2 Balance of Purchase Price: The balance of the purchase
price is to be paid as follows:
(a) Payment: Two Hundred Fifty-Thousand Dollars ($250,000)
on or before June 1, 2001. In the event that the
$250,000 payment is not made on the required date, the
Purchaser shall, within ten (10) business days of such
default, provide Seller with a convertible financing
received by the Purchaser from one or more lenders.
1 . Fifty Thousand Dollars ($50,000) in insurance
premiums described in the MMSI Settlement
Agreement (paragraph 2h) shall be applied to the
purchase price as of the commencement date of the
Agreement.
2. Two Hundred Thousand Dollars ($200,000) Promissory
Note set forth hereinbelow.
(b) Promisso[y Note: At closing, Purchaser shall sign a
Promissory Note in the amount of Two Hundred Thousand
Dollars ($200,000) due to Seller on or before June 1,
2001, to bear interest at Colorado National Bank prime
Lending Rate on date of sale, plus one percent (1%),
interest payable monthly and due on the fifth of each
month, with a final balloon payment of $200,000 to be
made on the due date.
(c) Collateral: Security for the note is to be:
1 . The Three Million Share Option granted to Mr.
Kilgore by the Board of Directors of MMSI in
October, 1993, said option to be pledged as
<PAGE>
security at closing and held by the Board. Upon
exercise of the option, the issued shares shall be
pledged and held by the Board, along with a signed
proxy giving the Directors the right to vote the
shares at any shareholder meeting.
2. Stock in Valley of Sun of approximately sixteen
thousand six hundred (16,600) shares.
3. Promissory note of Carolina Multicommunications
Corporation the amount of Two Hundred Thirty-Five
Thousand Dollars ($235,000).
1.3.3 Closing: The closing of the sale of the Purchased
Assets shall be simultaneous with the signing by Purchaser
of the Two Hundred Thousand Dollar ($200,000) promissory
note, as required by Section 1.3.2 (c) hereof, following
Shareholder approval.
IN WITNESS WHEREOF, the parties have duly executed this Amendment
to the Asset Purchase Agreement Dated June 27, 1996
on the 31st day of December, 1996.
SELLER: PURCHASER:
ECLIPSE CORPORATION
(formerly MMSI)
- ------------------------
JERRY G. KILGORE By:___________________________
Its: Secretary
MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT made and entered into effective this 9th day of July, 1996,
by and between INNERCIRCLE GROUP INCORPORATED hereinafter referred to as "IGI",
and MICROTECH MEDICAL SYSTEMS, INC., a corporation organized and existing under
the laws of the State of Colorado, hereinafter referred to as "Company".
W I T N E S S E T H
WHEREAS, the Company wishes to retain IGI, which is owned by Officers and
Directors of the Company to perform business and management services with
respect to the general and administrative day-to-day operations of the Company;
and
WHEREAS, IGI has certain knowledge and experience related to the activities
of the Company, and to the management services to be performed hereunder; and
WHEREAS, IGI performs similar business and management services to other
public and for private companies in order to enable all companies to attain
certain economies and scale, reduce costs and expenses which Company could not
attain individually;
WHEREAS, IGI will become acquainted with the business of the Company, and
will also receive, develop or otherwise acquire information pertaining to the
Company's business and plans which are confidential to the Company, and
NOW THEREFORE, the parties agree as follows:
1. Work to be performed and services to be rendered.
a. Under the general supervision and direction of the Board of Directors or
such other representative of the Company so designated by the Board of
Directors, IGI shall during the following term from time to time make available
management and consulting services as requested as specifically described on
Exhibit A, attached hereto and incorporated herein by reference.
b. Exhibit A shall constitute a requisition for services of IGI, which
shall include a definition of the scope of the enterprises involved, together
with any special requirements, such as the nature of reports or documentation
required. Any alterations or changes to the items specifically set forth in
Exhibit A shall be in the form of a letter from the Company representative to
IGI, and IGI shall respond as to whether or not IGI can undertake the desired
project, provide an estimate of the number and type of man-hours and length of
time required, and applicable total compensation which may be necessary.
Thereafter, the Company shall respond to IGI in writing whether to proceed on
the basis outlined via the letter requisition and response.
c. As part of the management services provided Company by IGI pursuant to
Exhibit A, IGI agrees to provide, at its expense, the following as Officers and
Directors of Company:
Kenneth M. Cahill President/CEO and Director
Darel A. Tiegs Vice President and Director
James A. Humpal Treasurer and Director
J. Royce Renfrow Corporate Secretary/General Counsel
and Director
d. IGI agrees to correct any errors which arise from work provided to the
Company which are brought to IGI's attention within ninety (90) days after
completion thereof, but shall not be liable for any loss or damage arising out
of the Company's enterprises or other Company actions resulting from the work
undertaken by IGI.
e. This agreement may be terminated at any time by either party for default
of the other including without limitation, failure to make adequate progress in
the services being rendered, without liability to the party in default except
for payment for acceptable, properly completed service of IGI and theretofore
performed which may be claimed and accepted by Company at its option. This
agreement may be terminated by either party upon prior written notice thirty
(30) days in advance of the effective date of termination. In the case of IGI
and ___________ (___) days in advance of the effective date in the case of
Company. In the event of termination by Company which is not for cause or
default, Company shall pay compensation to IGI for work theretofore performed at
the rate herein provided. At Company's request and expense, IGI shall prepare a
report of progress to the date of termination.
2. Compensation.
a. In full and complete consideration of the satisfactory performance of
the work and performance of services by IGI, including attendance at Company
Board Meetings, the Company will pay IGI as mutually agreed upon by the parties
hereto as set forth in Exhibit A.
3. Confidentiality.
a. The parties agree that the Company does not wish to acquire from IGI, or
for IGI to either induce the use of or use in connection with the performance of
IGI's services to the Company any information which is confidential to a third
party, acquired either prior to or subsequent to IGI's retention as management
by the Company. IGI agrees to maintain such information and confidence and not
to disclose it to the Company or any of its representatives or to use it in a
course of the discharge of IGI's responsibilities as management to the Company,
except with the written permission of such third party. IGI agrees that all
records, papers, reports, descriptive and pictorial material, printed or written
technical information, drawings, reproductions thereof, samples, models, and
tools, applied to or produced by IGI during its performance of the work under
this agreement, shall be considered Company's property, the nature and contents
of which shall not be disclosed to others without prior written permission from
the Company and shall be delivered to the Company upon completion of the related
portions of such work. IGI further agrees that all information regarding
technical arrangements, procedures, skills, affairs, engineering, developments,
and any other information relating to the business, research, engineering,
developments, trade secrets, marketing plans, or contemplated actions of the
Company acquired by IGI in connection with the performance of work under this
agreement will be held in confidence by IGI and will not be disclosed to any
other person, firm, or corporation without Company's prior written consent.
Further, IGI, without the express written permission of the Company, will not
use or induce the use of any confidential information of the Company on behalf
of any third party.
b. IGI will maintain in confidence and use best efforts to preserve the
confidentiality of all information held in confidence by the Company in
connection with retention as management by the Company or developed or acquired
by IGI and maintained in IGI's custody in the event that IGI contracts with
associates and/or independent contractors to assist IGI in the performance of
work under this agreement. IGI agrees that all such associates and/or
subcontractors shall execute an agreement commensurate in scope with this
agreement.
c. IGI will promptly and fully disclose to the Company all discoveries,
improvements, designs, developments and ideas hereinafter referred to as
intellectual property, whether patentable or not, conceived by IGI or IGI's
employees or agents (either solely or jointly with others) during the term of
this agreement which relate to or which result from or which were suggested by
any of the IGI work that IGI may perform for the Company. IGI agrees that all
such intellectual property, whether patentable or not, shall be and remain the
sole and exclusive property of the Company or its nominees, and that any and all
intellectual property relating in any way to any product, process, or service
(including but not limited to marketing and business plans) for which the
Company retained IGI as management to it in the research, development, or sale
thereof, and which IGI, or IGI's employees or agents, disclosed to anyone within
one (1) year after the termination of this agreement shall be presumed to have
been made during the term of this agreement, and shall be presumed to be the
sole and exclusive property of the Company.
d. Notwithstanding the above, there shall be no restrictions on the use or
disclosure of information by IGI of information received from a third party of
which is legally entitled to make an unrestricted disclosure. The parties
further recognize that IGI performs services on behalf of others during the
pendency of this agreement. IGI in keeping such information, services, and other
matters regarding such other customers confidential does not violate the terms
of this agreement. IGI however represents to the Company that IGI has no prior
obligations or agreements with others which would in any way conflict with
agreement contained herein.
e. IGI agrees that all writings prepared by IGI, IGI's employees or agents
(either solely or jointly with others) which relate in any way either to the
business and technical activities of the Company shall be deemed "works made for
hire" and all rights therein including the copyrights or any other rights shall
be the sole property of the Company, and that such writings shall be held in
confidence by IGI until written authorization to publish is obtained from the
Company or its duly designated representative.
4. General.
a. Independent Contractor. In forming this agreement, IGI is acting as an
independent contractor not as an employee or agent of the Company. IGI has no
authority hereunder to assume or create any obligation or responsibility
expressed or implied on behalf of or in the name of the Company or to bind the
Company in any manner whatsoever.
b. IGI shall not at any time during the term of this agreement and for a
period of one (1) year thereafter, without the written consent of the Company,
either directly or indirectly act as management or consultant to any third party
or any project which uses or could reasonably be presumed to use the trade
secret information relating to the enterprises being developed pursuant to or
contemporaneously with this IGI agreement or to compete with the Company in the
development, production or sale of any product, process, or service covered by
trade secrets for which IGI was involved in research, development, or sale for
the Company while retained by the Company as management, directly or indirectly
competing with the Company in the "research, development, or sale of any
product, process or service" shall include but not be limited to engaging in
business as an owner, partner, agent or as an employee of any person, firm, or
corporation which is engaged in developing, producing, or selling a product,
process, or service or being interested directly or indirectly in any such
business conducted by any person, firm or corporation.
c. The parties agree that any portion of this agreement which a Court of
competent jurisdiction shall determine to be void or unenforceable as against
public policy or for any other reason, shall be deemed to be severable from the
agreement and shall have no effect on the other covenants or provisions in the
agreement. IGI further agrees that the Court shall be empowered upon the request
of the Company to reform and construe any provision which would otherwise be
void or unenforceable in a manner so that it will be valid and enforceable to
the maximum extent permitted by law.
d. IGI understands that the confidential information of the Company is any
information either generated or collected by or utilized in the operations of
the Company which relates to the actual or anticipated business or research and
development of the Company, or is suggested by or results from any task assigned
to IGI or work performed by IGI for or on behalf of the Company and which has
not been made available generally to the public.
e. This agreement supersedes all previous agreements, written or oral,
relating to the above subject matter and shall be changed only by written
agreement. f. That this agreement shall be construed according to the laws of
the state of Colorado.
IN WITNESS WHEREOF, the parties have caused this agreement to be executed
effective the date first written above.
MICROTECH MEDICAL SYSTEMS, INC.
BY:
_________________________________ ____________________
Date Title
INNERCIRCLE GROUP INCORPORATED
By:
_________________________________ _____________________
Date
Title
<PAGE>
EXHIBIT A
1. Management and Business Services to Be Performed
(a) General and administrative business office
services, including use of Class A office space, as
necessary, furniture, equipment, fixtures and secretarial
services.
(b) General legal and accounting services necessary
for the day-to-day operation of the Company's offices and
activities, not including outside legal and accounting
services.
(c) Planning, structuring, development, financing, if
applicable, of projects to be considered on behalf of the
Company, including the completion of projects approved.
(d) The compliance with appropriate corporate and
securities laws of the state of incorporation of the company
and the United States, including filing of appropriate
reports, forms and documents with the various regulatory
authorities.
(e) Similar services of a scope and upon such other
projects as to which the parties shall agree.
2. Compensation
IGI shall be paid a minimum of Sixty-Five Thousand and
No/100 ($65,000.00) Dollars per month, commencing the ninth (9th)
day of July, 1996 until the termination of this agreement.
Compensation shall be reviewed every quarter and adjusted based
upon performance and additional duties undertaken by IGI on
behalf of Company.
3. Reimbursement of Costs and Expenses
IGI will be reimbursed by Company for all costs and
expenses reasonably incurred by IGI in the performance of the
services provided for hereinabove, including fees and expenses on
behalf of outside Directors.
AGREEMENT
AGREEMENT, dated as of and effective July 1, 1996 by and between
GALLERY RODEO INTERNATIONAL (the "Seller"), and MICROTECH MEDICAL
SYSTEMS, INC., and assigns (the "Purchaser")
WHEREAS: the Seller is the owner and holder of a Promissory Note
(the "Note") dated July 14, 1995 in the amount of Five Hundred
Thousand and No/100 ($500,000.00) Dollars secured by a Deed of
Trust (the "Deed of Trust") of even date encumbering the real
property described in Exhibit A hereto made a part hereof by
reference;
AND WHEREAS: Purchaser desires to acquire and Seller desires to
sell said Note and Deed of Trust in exchange for the payment of
Four Hundred Fifty Thousand and No/100 ($450,000.00) Dollars
NOW THEREFORE, IT IS AGREED THAT:
1. Sale. At the closing, the Seller shall sell its one
hundred percent (100%) interest in the Note and second Deed of
Trust, copies of which are attached hereto as Exhibits B and C
and made a part hereof by reference, and the Purchaser shall buy
said interest free and clear of all liens, claims and
encumbrances.
2. Consideration. Purchaser and Seller agree the
consideration for said Note and Deed of Trust shall be as
follows:
2.1 Four Hundred Fifty Thousand and No/100
($450,000.00) Dollars, of which Two Hundred Thousand and
No/100 ($200,0000.00) Dollars shall be paid to Seller upon
execution of this agreements down payment and the remainder
of which shall be paid to Seller in cash or certified funds
at closing.
3. Closing.
3.1 The following shall be accomplished at closing:
3.1.1 The Seller shall sell and transfer the Note
in the face amount of Five Hundred Thousand
($500,000.00) Dollars and second Deed of Trust as set
forth above which is owned or beneficially controlled
by Seller and the Purchaser of said Note and Deed of
Trust and shall deliver to Seller an executed
assignment of the Note and Deed of Trust in standard
form.
3.1.2 Seller and Purchaser shall execute other
necessary documentation to accomplish the purposes set
forth herein at closing.
3.2 Closing shall be the 3rd day of July, 1996, at 320
E. Costilla, Colorado Springs, Colorado, 80903, at 11:00 A.M.
4. Representations, Warranties and Covenants of Both
Parties.
4.1 Representations, Warranties and Covenants of the
Seller.
The Seller covenants, warrants, and represents as follows:
4.1.1 The Seller will convey to the Purchaser at
the closing good and marketable title to said Note and
Deed of Trust. The Seller owns the Note and Deed of
Trust free and clear of all liens, encumbrances and
charges. The Seller presently has such title.
(a) The Seller is currently in full
compliance with all Covenants, Conditions and
Agreements set forth in the Deed of Trust and
further, Covenants and Represents that this
Agreement does not violate any such Agreements or
Warranties of Seller with Owners of the within
described property or others.
4.1.2 Copies of the Seller's Note and Deed of
Trust, including all amendments thereto, have been
delivered to the Purchaser, and such copies are true,
complete and correct in every particular.
4.1.3 The Seller has the power to enter into this
agreement and to carry out its obligations hereunder.
No court or other proceedings are necessary to
authorize the consummation of this agreement and the
transactions contemplated hereby. This agreement has
been duly executed and delivered by the Seller, and
constitutes a valid and binding obligation of the
Seller. The execution and performance of this
agreement by the Seller does not violate, or result in
a breach of, or constitute a default under any
judgment, order or decree to which he may be subject.
Neither the execution and delivery of this agreement,
nor the consummation of the transaction contemplated
hereby, nor compliance with the terms and provisions
hereof, will result in the creation or imposition of
any lien, charge or encumbrance upon any of the
Seller's assets pursuant to the terms of, or conflict
in any way with the provision of, or constitute a
default under, or require the consent of any other
party to, any indenture, mortgage, deed of trust,
agreement, lease or other instrument to which the
Seller is a party or by which he may be bound, or to
which he may be subject.
4.1.4 The Seller has not become in any way
obligated for any broker's, finder's, agent's or
similar fee with respect to the transactions
contemplated by this agreement other than to its
accountants and attorneys.
4.1.5 No representation or warranty of the Seller
made in this Agreement, nor in any document,
certificate, or schedule required to be furnished
pursuant to this agreement, contains or will contain
any untrue statement of a material fact, and copies of
any documents furnished to the Purchaser will be true
and correct copies of such documents.
4.1.6 The Seller does not have any knowledge of
any claim, litigation, threatened litigation or any
other action which has been instituted or threatened
affecting its ability to perform its obligations under
this agreement.
4.1.7 All of the foregoing representations and
warranties will be true on and as of the closing date.
4.2 REPRESENTATIONS and WARRANTIES of the Purchaser.
The Purchaser represents and warrants as follows:
4.2.1 It is a corporation duly organized and
validly existing and in good standing under laws of the
State of its incorporation.
4.2.2 It has the corporate power to enter into
this agreement and to carry out its obligations
hereunder. The execution and delivery of this
agreement and the consummation of the transactions
contemplated have been duly authorized by its board of
director; no other corporate proceedings are necessary
to authorize its officers to effectuate this agreement
and the transactions contemplated thereby. This
agreement has been duly executed and delivered by it,
and constitutes a valid obligation binding on it. The
execution and performance of this agreement by it does
not violate, or result in a breach of, or constitute a
default under, any judgement, order or decree to which
it may be subject, nor does such making or performance
constitute a violation of or conflict with any
provision of its charter or by-laws.
4.2.3 It has not employed any broker, finder or
agent, nor has it otherwise become in any way obligated
for any broker's, finder's, agent's or similar fee with
respect to the transactions contemplated by this
agreement.
4.2.4 The execution and carrying out of this
agreement and compliance with the provisions hereof by
it will not violate, with or without giving notice
and/or the passage of time, any provisions of law
applicable to it.
4.2.5 The Purchaser does not have any knowledge
of any claim, litigation, threatened litigation or any
other action which has been instituted or threatened
affecting its ability to perform its obligations under
this agreement.
4.2.6 All of the foregoing representations and
warranties will be true on and as of the closing date.
5. INDEMNIFICATION.
5.1 Nothing herein to the contrary withstanding, the
Seller's obligations under this agreement for breach of
promise, misrepresentation, breach of warranty or
nonfulfillment of any obligation or agreement, negligence,
promissory estoppel, detrimental reliance or any other
action which arises out of the transactions herein
contemplated shall be only as follows:
5.1.1 any and all damage, loss, deficiency, costs
or expenses resulting from any other misrepresentation,
breach of warranty or non-fulfillment of any obligation
or agreement on the Seller's part under this Agreement,
including without limitation any and all actions,
suits, proceedings, judgements and reasonable legal and
other expenses incident to the foregoing.
5.1.2 Said notice shall be to the Seller of any
claim or litigation the existence of which gives rise
to the operation of the foregoing indemnity, and Seller
shall have the power to investigate and defend such
claim at his expense with power to settle such claim,
unless the amount claimed and the reasonably estimated
expenses of defense exceed the amount set forth in
5.1.1 above.
5.1.3 If the Seller fails to defend, the
Purchaser may defend such claim with power to settle
and the Seller shall pay the costs and expenses thereof
and the amount of any settlement or judgment up to the
amount set forth Section 4.1 above; provided however,
that in any case, no settlement shall bind the Seller
to pay any amount which is not first approved in
writing by the Seller.
5.1.4 If the amount claimed and the reasonably
estimated expenses of defense exceed the amount set
forth in Section 5.1.1 above then either (1) the Seller
may defend (and assume the entire risk of the
settlement or judgement and costs of defending the same
(whether or not they exceed the amount set forth in
Section 5.1.1 above) or (2) the Seller may notify the
Purchaser (within 10 days of receiving written notice
of the claim from the Purchaser) that the Purchaser is
to defend such claim with power to settle and the
Seller shall pay the costs and expenses thereof and the
amount of any settlement or judgment (but the total
liability of the Seller shall not be in excess of the
amount se forth in Section 5.1.1 above).
5.2 Whether or not the transactions herein contemplated
shall be consummated, the Purchaser will pay the fees,
expenses and disbursements of the Purchaser and its agents,
representatives, accountants and counsel incurred in
connection with the subject matter of this agreement and any
amendments thereto, and the Seller will pay such fees,
expenses and disbursements of the Seller and its agents,
representatives, accountants and counsel (if not otherwise
accrued).
6. Termination. This agreement may be terminated by the
Purchaser under any of the following circumstances by notice in
writing if during the period from the date hereof to the closing
date any of the following shall occur:
6.1 The Purchaser shall learn of any fact or condition
with respect to the Seller's Note and Deed of Trust which is
substantially at variance with one or more of the
representations or warranties as set forth above or with
other written information provided to the Purchaser by the
Seller, and after written notice thereof the Seller shall be
unable to furnish reasonable assurance satisfactory to the
Purchaser.
6.2 The Seller shall commit a substantial breach of
any one or more of the obligations or prohibitions set forth
in Section 1 of this agreement and shall be unable to
furnish reasonable assurance satisfactory to the Purchaser.
6.3 On the occurrence of any of the events specified
in Sections 4.1.1 to 4.1.6 above, the parties may agree upon
an amount by which the consideration shall be reduced on
account of such event, in which case the Purchaser shall
not terminate this Agreement and the consideration shall be
so reduced.
7. After the Closing. Subsequent to the closing:
7.1 Each party to this agreement shall at the request
of any other furnish, execute and deliver such documents,
instruments, opinions of counsel, certificates, notices or
other further assurances as counsel of the requesting party
shall reasonably deem necessary or desirable for effecting
complete consummation of this agreement.
8. Miscellaneous.
8.1 Each and every one of the representations,
warranties, covenants and agreements made herein by any
party (including any statements made in the Disclosure
Schedules and in any certificates, schedules, exhibits,
instruments or documents furnished pursuant to or
concurrently with this Agreement), shall survive the closing
and the consummation of the transactions contemplated by
this Agreement, notwithstanding any investigation heretofore
or hereafter made by the parties hereto.
8.2 All notices, approvals or other communications to
be sent or given to the Seller shall be deemed validly and
properly given or made if in writing and delivered by hand
or registered or certified mail, return receipt requested,
and addressed to [name and address], with a copy to [name
and address].
8.3 All notices, approvals or other communications to
be sent or given to the Purchaser shall be deemed validly
and properly given or made if in writing and delivered by
hand or registered or certified mail, return receipt
requested, and addressed to [name and address], with a copy
to [name and address].
8.4 Any of the parties hereto may give notice to the
others at any time by the methods specified above of a
change in the address at which, or the person to whom,
notices addressed to it are to be delivered in the future.
8.5 This agreement, together with the Note and Deed of
Trust and other documents delivered pursuant hereto,
constitutes the entire agreement among the parties hereto
and supersedes all prior correspondence, conversations and
negotiations. This agreement shall be binding upon and inure
to the benefit of the successors and assigns of the parties.
The title of the Sections of this agreement have been
assigned thereto for convenience only and shall not be
construed as limiting, defining or affecting the substantive
terms of the agreement.
8.6 The parties agree, upon the request of any other
party, to execute any agreements, documents or instruments
consistent with this agreement which are necessary to
consummate the transactions contemplated in this agreement.
8.7 This agreement may be executed in any number of
counterparts, each of which shall be taken to be an
original.
8.8 No modification of this agreement shall be valid
unless such modification is in writing and signed by all of
the parties to this agreement.
8.9 No waiver of any provision of this agreement shall
be valid unless in writing and signed by the person or party
against whom charged.
8.10 The invalidity or unenforceability of any
particular provision of this agreement shall not affect the
other provisions of this agreement, and this agreement shall
be construed as if such invalid or unenforceable provision
was omitted. All parties hereto having participated
actively in the negotiation and drafting of this agreement,
and each party having been represented by counsel, the terms
of this agreement shall not be construed against, nor more
favorably to, any party, regardless of their responsibility
for its preparation.
8.11 This agreement shall be binding upon and inure to
the benefit of the parties and their respective heirs, legal
representatives, executors, administrators successors and
assigns.
8.12 Whenever in this agreement words, including
pronouns, are used in the masculine, they shall be read and
construed in the feminine or neuter wherever they would so
apply, and wherever in this agreement words, including
pronouns, are used in the singular, they shall be read and
construed in the plural, wherever they would so apply.
8.13 This agreement shall be subject to and governed
by the laws of the State of Colorado, including its choice
of laws, irrespective of the residence of the parties.
Seller:
GALLERY RODEO INTERNATIONAL
BY:__________________________________
Its:__________________________________
Purchaser:
MICROTECH MEDICAL SYSTEMS, INC.
BY:__________________________________
Its:__________________________________
<PAGE>
NOTE: Original Promissory Note and Deed of Trust are attached here.
AGREEMENT
AGREEMENT, dated as of and effective August 1, 1996 by and
between GALLERY RODEO INTERNATIONAL (the "Seller"), and MICROTECH
MEDICAL SYSTEMS, INC., and assigns (the "Purchaser")
WHEREAS: the Seller is the owner and holder of a Promissory Note
(the "Note") dated June 30, 1995 in the amount of Two Hundred
Eight Thousand One Hundred Thirty-Three and 34/100 ($208,133.34)
Dollars secured by a Deed of Trust (the "Deed of Trust") of even
date encumbering the real property described in Exhibits A and B,
respectively, hereto made a part hereof by reference, as
amended by Amendment dated May 9, 1996 described in Exhibit C
hereto and made a part hereof by reference;
AND WHEREAS: Purchaser desires to acquire and Seller desires to
sell said Note and Deed of Trust in exchange for the payment of
Two Hundred Thousand and No/100 ($200,000.00) Dollars
NOW THEREFORE, IT IS AGREED THAT:
1. Sale. At the closing, the Seller shall sell its one
hundred percent (100%) interest in the Note and Deed of Trust,
copies of which are attached hereto as Exhibits B and C and made
a part hereof by reference, and the Purchaser shall buy said
interest free and clear of all liens, claims and encumbrances.
2. Consideration. Purchaser and Seller agree the
consideration for said Note and Deed of Trust shall be as
follows:
2.1 Two Hundred Thousand and No/100 ($200,000.00)
Dollars, shall be paid to Seller in cash or certified funds
at closing.
3. Closing.
3.1 The following shall be accomplished at closing:
3.1.1 The Seller shall sell and transfer the Note
in the face amount of Two Hundred Eight Thousand One
Hundred Thirty-Three and 34/100 ($208,133.34) Dollars
and Deed of Trust as set forth above which is owned or
beneficially controlled by Seller and the Purchaser of
said Note and Deed of Trust and shall deliver to Seller
an executed assignment of the Note and Deed of Trust in
standard form.
3.1.2 Seller and Purchaser shall execute other
necessary documentation to accomplish the purposes set
forth herein at closing.
3.2 Closing shall be the 9th day of August, 1996, at 2
N. Cascade Avenue, Suite 330, Colorado Springs, Colorado,
80903, at 10:00 A. M.
4. Representations, Warranties and Covenants of Both
Parties.
4.1 Representations, Warranties and Covenants of the
Seller.
The Seller covenants, warrants, and represents as
follows:
4.1.1 The Seller will convey to the Purchaser at
the closing good and marketable title to said Note and
Deed of Trust. The Seller owns the Note and Deed of
Trust free and clear of all liens, encumbrances and
charges. The Seller presently has such title.
(a) The Seller is currently in full
compliance with all Covenants, Conditions and
Agreements set forth in the Deed of Trust and
further, Covenants and Represents that this
Agreement does not violate any such Agreements or
Warranties of Seller with Owners of the within
described property or others.
4.1.2 Copies of the Seller's Note and Deed of
Trust, including all amendments thereto, have been
delivered to the Purchaser, and such copies are true,
complete and correct in every particular.
4.1.3 The Seller has the power to enter into this
agreement and to carry out its obligations hereunder.
No court or other proceedings are necessary to
authorize the consummation of this agreement and the
transactions contemplated hereby. This agreement has
been duly executed and delivered by the Seller, and
constitutes a valid and binding obligation of the
Seller. The execution and performance of this
agreement by the Seller does not violate, or result in
a breach of, or constitute a default under any
judgment, order or decree to which he may be subject.
Neither the execution and delivery of this agreement,
nor the consummation of the transaction contemplated
hereby, nor compliance with the terms and provisions
hereof, will result in the creation or imposition of
any lien, charge or encumbrance upon any of the
Seller's assets pursuant to the terms of, or conflict
in any way with the provision of, or constitute a
default under, or require the consent of any other
party to, any indenture, mortgage, deed of trust,
agreement, lease or other instrument to which the
Seller is a party or by which he may be bound, or to
which he may be subject.
4.1.4 The Seller has not become in any way
obligated for any broker's, finder's, agent's or
similar fee with respect to the transactions
contemplated by this agreement other than to its
accountants and attorneys.
4.1.5 No representation or warranty of the Seller
made in this Agreement, nor in any document,
certificate, or schedule required to be furnished
pursuant to this agreement, contains or will contain
any untrue statement of a material fact, and copies of
any documents furnished to the Purchaser will be true
and correct copies of such documents.
4.1.6 The Seller does not have any knowledge of
any claim, litigation, threatened litigation or any
other action which has been instituted or threatened
affecting its ability to perform its obligations under
this agreement.
4.1.7 All of the foregoing representations and
warranties will be true on and as of the closing date.
4.2 REPRESENTATIONS and WARRANTIES of the Purchaser.
The Purchaser represents and warrants as follows:
4.2.1 It is a corporation duly organized and
validly existing and in good standing under laws of the
State of its incorporation.
4.2.2 It has the corporate power to enter into
this agreement and to carry out its obligations
hereunder. The execution and delivery of this
agreement and the consummation of the transactions
contemplated have been duly authorized by its board of
director; no other corporate proceedings are necessary
to authorize its officers to effectuate this agreement
and the transactions contemplated thereby. This
agreement has been duly executed and delivered by it,
and constitutes a valid obligation binding on it. The
execution and performance of this agreement by it does
not violate, or result in a breach of, or constitute a
default under, any judgement, order or decree to which
it may be subject, nor does such making or performance
constitute a violation of or conflict with any
provision of its charter or by-laws.
4.2.3 It has not employed any broker, finder or
agent, nor has it otherwise become in any way obligated
for any broker's, finder's, agent's or similar fee with
respect to the transactions contemplated by this
agreement.
4.2.4 The execution and carrying out of this
agreement and compliance with the provisions hereof by
it will not violate, with or without giving notice
and/or the passage of time, any provisions of law
applicable to it.
4.2.5 The Purchaser does not have any knowledge
of any claim, litigation, threatened litigation or any
other action which has been instituted or threatened
affecting its ability to perform its obligations under
this agreement.
4.2.6 All of the foregoing representations and
warranties will be true on and as of the closing date.
5. INDEMNIFICATION.
5.1 Nothing herein to the contrary withstanding, the
Seller's obligations under this agreement for breach of
promise, misrepresentation, breach of warranty or
nonfulfillment of any obligation or agreement, negligence,
promissory estoppel, detrimental reliance or any other
action which arises out of the transactions herein
contemplated shall be only as follows:
5.1.1 any and all damage, loss, deficiency, costs
or expenses resulting from any other misrepresentation,
breach of warranty or non-fulfillment of any obligation
or agreement on the Seller's part under this Agreement,
including without limitation any and all actions,
suits, proceedings, judgements and reasonable legal and
other expenses incident to the foregoing.
5.1.2 Said notice shall be to the Seller of any
claim or litigation the existence of which gives rise
to the operation of the foregoing indemnity, and Seller
shall have the power to investigate and defend such
claim at his expense with power to settle such claim,
unless the amount claimed and the reasonably estimated
expenses of defense exceed the amount set forth in
5.1.1 above.
5.1.3 If the Seller fails to defend, the
Purchaser may defend such claim with power to settle
and the Seller shall pay the costs and expenses thereof
and the amount of any settlement or judgment up to the
amount set forth Section 4.1 above; provided however,
that in any case, no settlement shall bind the Seller
to pay any amount which is not first approved in
writing by the Seller.
5.1.4 If the amount claimed and the reasonably
estimated expenses of defense exceed the amount set
forth in Section 5.1.1 above then either (1) the Seller
may defend (and assume the entire risk of the
settlement or judgement and costs of defending the same
(whether or not they exceed the amount set forth in
Section 5.1.1 above) or (2) the Seller may notify the
Purchaser (within 10 days of receiving written notice
of the claim from the Purchaser) that the Purchaser is
to defend such claim with power to settle and the
Seller shall pay the costs and expenses thereof and the
amount of any settlement or judgment (but the total
liability of the Seller shall not be in excess of the
amount se forth in Section 5.1.1 above).
5.2 Whether or not the transactions herein contemplated
shall be consummated, the Purchaser will pay the fees,
expenses and disbursements of the Purchaser and its agents,
representatives, accountants and counsel incurred in
connection with the subject matter of this agreement and any
amendments thereto, and the Seller will pay such fees,
expenses and disbursements of the Seller and its agents,
representatives, accountants and counsel (if not otherwise
accrued).
6. Termination. This agreement may be terminated by the
Purchaser under any of the following circumstances by notice in
writing if during the period from the date hereof to the closing
date any of the following shall occur:
6.1 The Purchaser shall learn of any fact or condition
with respect to the Seller's Note and Deed of Trust which is
substantially at variance with one or more of the
representations or warranties as set forth above or with
other written information provided to the Purchaser by the
Seller, and after written notice thereof the Seller shall be
unable to furnish reasonable assurance satisfactory to the
Purchaser.
6.2 The Seller shall commit a substantial breach of
any one or more of the obligations or prohibitions set forth
in Section 1 of this agreement and shall be unable to
furnish reasonable assurance satisfactory to the Purchaser.
6.3 On the occurrence of any of the events specified
in Sections 4.1.1 to 4.1.6 above, the parties may agree upon
an amount by which the consideration shall be reduced on
account of such event, in which case the Purchaser shall
not terminate this Agreement and the consideration shall be
so reduced.
7. After the Closing. Subsequent to the closing:
7.1 Each party to this agreement shall at the request
of any other furnish, execute and deliver such documents,
instruments, opinions of counsel, certificates, notices or
other further assurances as counsel of the requesting party
shall reasonably deem necessary or desirable for effecting
complete consummation of this agreement.
8. Miscellaneous.
8.1 Each and every one of the representations,
warranties, covenants and agreements made herein by any
party (including any statements made in the Disclosure
Schedules and in any certificates, schedules, exhibits,
instruments or documents furnished pursuant to or
concurrently with this Agreement), shall survive the closing
and the consummation of the transactions contemplated by
this Agreement, notwithstanding any investigation heretofore
or hereafter made by the parties hereto.
8.2 All notices, approvals or other communications to
be sent or given to the Seller shall be deemed validly and
properly given or made if in writing and delivered by hand
or registered or certified mail, return receipt requested,
and addressed to:
Gallery Rodeo International
Holly Sugar Building - Suite 330
2 N. Cascade Avenue
Colorado Springs, CO 80903
8.3 All notices, approvals or other communications to
be sent or given to the Purchaser shall be deemed validly
and properly given or made if in writing and delivered
by hand or registered or certified mail, return receipt
requested, and addressed to:
Microtech Medical Systems, Inc.
Holly Sugar Building - Suite 330
2 N. Cascade Avenue
Colorado Springs, CO 80903
8.4 Any of the parties hereto may give notice to the
others at any time by the methods specified above of a
change in the address at which, or the person to whom,
notices addressed to it are to be delivered in the future.
8.5 This agreement, together with the Note and Deed of
Trust and other documents delivered pursuant hereto,
constitutes the entire agreement among the parties hereto
and supersedes all prior correspondence, conversations and
negotiations. This agreement shall be binding upon and inure
to the benefit of the successors and assigns of the parties.
The title of the Sections of this agreement have been
assigned thereto for convenience only and shall not be
construed as limiting, defining or affecting the substantive
terms of the agreement.
8.6 The parties agree, upon the request of any other
party, to execute any agreements, documents or instruments
consistent with this agreement which are necessary to
consummate the transactions contemplated in this agreement.
8.7 This agreement may be executed in any number of
counterparts, each of which shall be taken to be an
original.
8.8 No modification of this agreement shall be valid
unless such modification is in writing and signed by all of
the parties to this agreement.
8.9 No waiver of any provision of this agreement shall
be valid unless in writing and signed by the person or party
against whom charged.
8.10 The invalidity or unenforceability of any
particular provision of this agreement shall not affect the
other provisions of this agreement, and this agreement shall
be construed as if such invalid or unenforceable provision
was omitted. All parties hereto having participated
actively in the negotiation and drafting of this agreement,
and each party having been represented by counsel, the terms
of this agreement shall not be construed against, nor more
favorably to, any party, regardless of their responsibility
for its preparation.
8.11 This agreement shall be binding upon and inure to
the benefit of the parties and their respective heirs, legal
representatives, executors, administrators successors and
assigns.
8.12 Whenever in this agreement words, including
pronouns, are used in the masculine, they shall be read and
construed in the feminine or neuter wherever they would so
apply, and wherever in this agreement words, including
pronouns, are used in the singular, they shall be read and
construed in the plural, wherever they would so apply.
8.13 This agreement shall be subject to and governed
by the laws of the State of Colorado, including its choice
of laws, irrespective of the residence of the parties.
Seller:
GALLERY RODEO INTERNATIONAL
BY:________________________________
Its: ______________________________
Purchaser:
MICROTECH MEDICAL SYSTEMS, INC.
BY:________________________________
Its:_______________________________
<PAGE>
NOTE: The original Promissory Note and Deed of Trust are attached here.
AGREEMENT OF SALE
AGREEMENT, dated as of and effective this 30th day of September,
1996, by and between MICROTECH MEDICAL SYSTEMS, INC., a Colorado
corporation (the "Buyer"), and GLACIER VALLEY HOLDING
CORPORATION, a Colorado corporation (the "Seller).
WHEREAS: the Seller is the owner of a real estate development
known as Community at Bear Creek Phase III and other assets,
AND WHEREAS: Buyer is the owner of a certain real estate sale
contract, note secured by deed of trust and is prepared to issue
certain shares of common stock in itself to exchange for said
real estate development,
AND WHEREAS: it is the intention of the parties hereto that,
upon consummation of the transaction herein contemplated, the
Buyer will acquire one hundred percent (100%) said real estate
development, Seller will acquire a one hundred (100%) percent
interest in said real estate sales contract, note and deed of
trust and certain shares of common stock in Buyer.
NOW THEREFORE, IT IS AGREED THAT:
1. Sale of Community at Bear Creek, Phase III.
1.1 Other than as disclosed, the Seller represents
that it owns the tangible and intangible assets (the "Assets")
including one hundred (100%) percent of the real estate as listed
in Disclosure Schedule 1.1, attached hereto and incorporated
herein by reference, free and clear of all liens and
encumbrances, other than disclosed herein and will have such
ownership on the Closing Date. Seller shall execute a General
Warranty Deed to Buyer transferring ownership of said assets at
closing.
1.2 In payment for said real estate subject to deed as
set forth on Disclosure Schedule 1.1, Buyer shall transfer the
following property to Seller:
1.2.1 The Buyer shall make a downpayment consisting
of the assignment of a certain sales contract in the amount of
One Hundred Twenty Thousand and No/100 ($120,000.00) Dollars upon
the real property described therein, a copy of which contract is
attached hereto and incorporated herein by reference as
Disclosure Schedule 1.2.1 at the time of execution of the
contract.
1.2.2 The assignment and transfer at closing to Seller
of a certain note and deed of trust upon Lot 9, Mountaindale
Equestrian Estates, Fremont County, Colorado, in the amount of
One Hundred Ten Thousand and No/100 ($110,000.00) Dollars, a copy
of which is attached hereto as Disclosure Schedule 1.2.2 and
incorporated herein by reference.
1.2.3 The balance of the purchase price shall be
paid to Seller by the issuance of sixty-two thousand two hundred
fifty (62,250) shares of common stock in Buyer following an
anticipated one hundred to one reverse split currently being
accomplished by Buyer. In the event said reverse split does not
occur (or is not 100 to 1), the price per share and shares issued
shall be adjusted accordingly. The common stock issued to Seller
shall be subject to piggyback registration rights in Seller upon
Buyer's next public offering, provided, however, fifty (50%)
percent of the stock so registered shall be subject to a lock-up
agreement of standard form for a period of one (1) year.
2. Representations, Warranties and Covenants of Both
Parties.
2.1 Representations, Warranties and Covenants of the
Seller.
The Seller covenants, warrants, and represents as follows:
2.1.1 The Seller owns its assets (as, in part,
defined in Section 1.1), free and clear of all liens,
encumbrances and charges and, except as will be set forth in
Disclosure Schedule Number 1.1 and those arising involuntarily by
operation of law. The Seller presently has such title. All of
the Seller's assets are in the possession of the Seller.
With respect to the real estate owned by the Seller and
the encumbrances thereon, as set forth in Disclosure Schedule
Number 1.1, the Seller specifically Covenants, Warrants and
Represents as follows:
(A) The Seller is currently in full compliance
with all Covenants, Conditions and Agreements set forth in the
various Deeds of Trusts listed on Disclosure Schedule Number 1.1
and further, Covenants, Warrants and Represents that this
Agreement does not violate any such Agreements of Corporation
with Owners of said encumbrances.
(B) The holder of the note and deed of trust
(James L. Wright, Jr.) as set forth in Disclosure Schedule 1.1
has agreed to the assumption of the note and deed of trust by
Buyer, partial release schedule in exchange for proportionate
reduction in note of approximately Ten Thousand One Hundred
Twenty-Six and 53/100 ($10,126.53) Dollars per lot, and has
further agreed to subordinate said note and deed of trust to a
note and deed of trust for development costs incurred by Buyer in
preparation of the project site for sale in an amount determined
to be reasonable.
2.1.2 Copies of the Seller's Articles of Incorporation
and By-Laws, including all amendments thereto, have been
delivered to the Buyer, and such copies are true, complete and
correct in every particular. The Seller is currently in good
standing with the State of Colorado.
2.1.3 The Seller has the power to enter into this
agreement and to carry out its obligations hereunder. The
execution and delivery of this agreement and the consummation of
the transaction contemplated have been duly authorized by the
Seller. No other company, court or other proceedings are
necessary to authorize the consummation of this agreement and the
transactions contemplated hereby. This agreement has been duly
executed and delivered by the Seller, and constitutes a valid and
binding obligation of the Seller and the Seller. The execution
and performance of this agreement by the Seller does not violate,
or result in a breach of, or constitute a default under any
judgment, order or decree to which he may be subject, nor does
such making or performance constitute a violation of or conflict
with any provision of the Seller's Articles of Incorporation or
By-Laws. Neither the execution and delivery of this agreement,
nor the consummation of the transaction contemplated hereby, nor
compliance with the terms and provisions hereof, will result in
the creation or imposition of any lien, charge or encumbrance
upon any of the Seller's assets pursuant to the terms of, or
conflict in any way with the provision of, or constitute a
default under, or require the consent of any other party to, any
indenture, mortgage, deed of trust, agreement, lease or other
instrument to which the Seller or the Seller is a party or by
which it or they may be bound, or to which it or he may be
subject.
2.1.4 Disclosure Schedule Number 2.1.4 will contain a
list of all outstanding vendor purchase orders and accounts
payable of the Seller. Said lists will be true, complete and
correct in all material respects to the best of Seller's
knowledge. The Seller's relations with its customers are
satisfactory, and the Seller has no reason to believe that any
dispute (other than those which arose or may arise in the
ordinary course of business) will arise between it and any of
them or any reason to believe that any of them will terminate its
business relationship with the Seller, or, after consummation
hereof, with the Buyer.
2.1.5 The purchase contemplated hereby does not
require the approval or consent of any governmental authority
having jurisdiction over the Seller.
2.1.6 From the date of this Agreement to the Closing
Date the Seller will not have, except with the written consent of
the Buyer: (i) mortgaged, pledged or subjected to lien, charge
or any other encumbrance, any of the real estate or other assets
being sold to Buyer pursuant to this Agreement, other than as may
arise involuntarily by operation of law or as may be distributed
to the Seller as contemplated by this agreement; (ii) sold,
assigned or transferred any of its assets other than in the
ordinary course of business or as may be distributed to the
Seller as contemplated by this agreement; (iii) suffered any
material damages or losses to its assets; (iv) entered into any
transactions other than in the ordinary course of business in
accordance with good business practice; (v) permitted the
occurrence of any event not consistent with the representations
and warranties herein.
2.1.7 To the extent of the Seller's and Seller's
knowledge, neither the Seller nor the Seller has any notice of
any actions, suits, claims, proceedings, or investigations
(whether or not purportedly on behalf of or against the Seller)
pending and no knowledge of any that are threatened against or
affecting the Seller's real estate at law or in equity, or before
or by any federal, state, municipal or other governmental court,
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, unless set forth in Schedule 2.1.7. The
Seller is not in default with respect to any order, writ,
injunction or decree of any court or federal, state municipal or
other governmental department, commission, board, bureau, agency
or instrumentality affecting its business. There are no
violations of any laws, regulations and orders applicable to the
Seller's assets being sold hereby, including without limitation
all environmental and pollution control requirements that are
presently applicable or that have been announced as being
applicable at some future date.
2.1.8 The premises, owned by the Seller does not
encroach on the property of others, and there are no violations
of any building or zoning or other laws by the premises.
2.1.9 The Seller is not a party to any lease, license,
contract or royalty agreement affecting or relating to the
Seller's property being sold other than those as will be listed
and described in Disclosure Schedules attached hereto.
2.1.10 Neither the Seller nor the Seller has become in
any way obligated for any broker's, finder's, agent's or similar
fee with respect to the transactions contemplated by this
agreement other than to its accountants and attorneys.
2.1.11 No representation or warranty of the Seller made
in this Agreement, nor in any document, certificate, or schedule
required to be furnished pursuant to this agreement, contains or
will contain any untrue statement of a material fact, and copies
of any documents furnished to the Buyer will be true and correct
copies of such documents.
2.1.12 All of the foregoing representations and
warranties will be true on and as of the closing date.
2.2 REPRESENTATIONS and WARRANTIES of the BUYER. The Buyer
represents and warrants as follows:
2.2.1 It is a corporation duly organized and validly
existing and in good standing under laws of the State of
Colorado.
2.2.2 It has the power to enter into this
agreement and to carry out its obligations hereunder. The
execution and delivery of this agreement and the consummation of
the transactions contemplated have been duly authorized by its
Board of Board of Directors; no other proceedings are necessary
to authorize its Officers to effectuate this agreement and the
transactions contemplated thereby. This agreement has been duly
executed and delivered by it, and constitutes a valid obligation
binding on it. The execution and performance of this agreement
by it does not violate, or result in a breach of, or constitute a
default under, any judgment, order or decree to which it may be
subject, nor does such making or performance constitute a
violation of or conflict with any provision of its charter or by-
laws. Neither the execution and delivery of this agreement, nor
the consummation of the transactions contemplated hereby, nor
compliance with the terms and provisions hereof, will result in
the creation or imposition of any lien, charge or encumbrance
upon any of its property or assets pursuant to the terms of, or
conflict in any way with the provisions of, or constitute a
default under, or require the consent of any other party to, any
indenture, mortgage, deed of trust, agreement, lease or other
instrument to which it is a party or by which it may be bound, or
to which it may be subject.
2.2.3 It has not employed any broker, finder or agent,
nor has it otherwise become in any way obligated for any
broker's, finder's, agent's or similar fee with respect to the
transactions contemplated by this agreement.
2.2.4 The execution and carrying out of this agreement
and compliance with the provisions hereof by it will not violate,
with or without giving notice and/or the passage of time, any
provisions of law applicable to it.
2.2.5 The Buyer does not have any knowledge of any
claim, litigation, threatened litigation or any other action
which has been instituted or threatened affecting its ability to
perform its obligations under this agreement.
2.2.6 All of the foregoing representations and
warranties will be true on and as of the closing date.
3. INVESTIGATION. During the period prior to the closing
date, the Seller shall cause the Buyer to have free access to the
offices, facilities, records, files, books of account and copies
of tax returns of the Seller for the purposes of conducting an
investigation of the subject property and title thereto, and all
other matters relating to the subject property and assets;
provided, however, that such investigation shall be conducted in
any manner that does not unreasonably interfere with the Seller's
normal operations. The Seller shall cause the Seller's personnel
to aid and assist such investigation and shall make its counsel,
accountants, engineers, employees and other representatives
available for such purposes. During such investigation the Buyer
shall have the right to make copies of such records, files, tax
returns and other materials as it may deem advisable. The Buyer
and its representatives shall treat all information originally
obtained in such investigation and not otherwise known to it or
already in the public domain as confidential and shall not use
such information in the conduct of its business, and shall return
to the Seller all copies of received or made of material
belonging to the Seller as follows:
(A) As to tax documents and matters, the same
shall be confidential forever and shall be returned if the
transaction is not consummated.
(B) As to all other matters, if this transaction
is not consummated, the same shall be confidential forever and
the same shall be returned; if it is consummated, the same shall
remain confidential.
4. INDEMNIFICATION.
4.1 Nothing herein to the contrary withstanding, the
Seller's obligations under this agreement for breach of promise,
misrepresentation, breach of warranty or nonfulfillment of any
obligation or agreement, negligence, promissory estoppel,
detrimental reliance or any other action which arises out of the
transactions herein contemplated shall be only as follows:
(A) all liabilities or obligations of the Seller
as of the Closing Date (other than those specifically disclosed
to the Buyer pursuant hereto) for taxes (but in any case
excluding taxes resulting from Internal Revenue Code Section 338
or any transaction contemplated by this agreement) and any
reasonable legal and other expenses which may be incurred by the
Buyer and its successors and assigns relating thereto; and
(B) any and all damage, loss, deficiency, costs
or expenses resulting from any other misrepresentation, breach of
warranty or non-fulfillment of any obligation or agreement on the
Seller's part under this Agreement, including without limitation
any and all actions, suits, proceedings, judgments and reasonable
legal and other expenses incident to the foregoing.
4.2 Said notice shall be to the Seller of any claim or
litigation the existence of which gives rise to the operation of
the foregoing indemnity, and Seller shall have the power to
investigate and defend such claim at his expense with power to
settle such claim, unless the amount claimed and the reasonably
estimated expenses of defense exceed the amount set forth in
Section 4.1 above.
4.2.1 If the Seller fails to defend, the Buyer
may defend such claim with power to settle and the Seller shall
pay the costs and expenses thereof and the amount of any
settlement or judgment up to the amount set forth Section 4.1
above; provided however, that in any case, no settlement shall
bind the Seller to pay any amount which is not first approved in
writing by the Seller.
4.2.2 If the amount claimed and the reasonably
estimated expenses of defense exceed the amount set forth in
Section 4.1 above then either (1) the Seller may defend (and
assume the entire risk of the settlement or judgment and costs of
defending the same (whether or not they exceed the amount set
forth in Section 4.1 above) or (2) the Seller may notify the
Buyer (within 10 days of receiving written notice of the claim
from the Buyer) that the Buyer is to defend such claim with power
to settle and the Seller shall pay the costs and expenses thereof
and the amount of any settlement or judgment (but the total
liability of the Seller shall not be in excess of the amount se
forth in Section 4.1 above).
4.3 Whether or not the transactions herein
contemplated shall be consummated, the Buyer will pay the fees,
expenses and disbursements of the Buyer and its agents,
representatives, accountants and counsel incurred in connection
with the subject matter of this agreement and any amendments
thereto, and the Seller will pay such fees, expenses and
disbursements of the Seller and its agents, representatives,
accountants and counsel (if not otherwise accrued).
5. Termination. This agreement may be terminated by the
Buyer under any of the following circumstances by notice in
writing if during the period from the date hereof to the closing
date any of the following shall occur:
5.1 The Seller's assets being sold shall suffer any
loss from fire, flood, explosion or other casualty which
substantially affects the use thereof or, irrespective of
insurance, their value.
5.2 The Buyer shall learn of any fact or condition
with respect to the Seller's real property being sold hereunder
which is substantially at variance with one or more of the
representations or warranties as set forth above or with other
written information provided to the Buyer by the Seller, and
after written notice thereof the Seller shall be unable to
furnish reasonable assurance satisfactory to the Buyer.
5.3 The Seller or the Seller shall commit a
substantial breach of any one or more of the obligations or
prohibitions set forth in Section 2.1.10 of this agreement and
shall be unable to furnish reasonable assurance satisfactory to
the Buyer.
5.4 On the occurrence of any of the events specified
in Sections 5.1 to 5.3 above, the parties may agree upon an
amount by which the consideration shall be reduced on account of
such event, in which case the Buyer shall not terminate this
Agreement and the consideration shall be so reduced. If the
occurrence is a loss due to fire, flood, explosion or other
casualty, the Buyer shall have the right at its election within
ten (10) days after such event to either terminate or to require
consummation of this agreement with that portion of any insurance
proceeds received which relates to the damage to the operating
assets included in the assets transferred.
6. No Liability for Failure to Consummate. If this
agreement shall not be consummated either because it is
terminated pursuant to a reasonable application of Sections 5.1,
5.2, 5.3, or 5.4 to the actual facts or because of the inability
of any of the parties by reason or causes beyond its control to
carry out its performance as contemplated by this Agreement, the
downpayment set forth in Paragraph 1.2.1 shall be refunded to
Buyer, and no party shall be liable to any other for loss,
damage, or expense and the only remedy of any party shall be to
terminate or cancel this agreement.
7. Closing.
7.1 Prior to the Closing. Seller shall cooperate in any
documents, applications, and procedures which may be required by
the State of Colorado, County of El Paso, City of Colorado
Springs. This obligation of Sellers shall be a continuing one
and shall survive the closing of this agreement.
7.1.1 Any fees and costs incurred by the respective
parties shall be the sole obligation of the party so incurring.
7.2 Closing Date. The closing date shall be October 9,
1996, or such earlier or later date as may be mutually agreed
upon by the parties. The closing shall take place on the closing
date at Capital Title Services, 2 N. Nevada Avenue, Colorado
Springs, CO.
7.3 During the closing.
7.3.1 The Buyer shall deliver such opinions of
counsel, receipts, certifications, notices and further assurances
as counsel for the Seller may reasonably request, including a
certificate executed by the Buyer's Board of Directors that the
representations and warranties made in this agreement by the
Buyer are correct as of the closing date with the same force as
though made on the closing date, and an opinion of its counsel,
to the following effects:
(A) that all corporate action necessary for the
Buyer to authorize the execution and delivery of this Agreement
and the transactions contemplated thereby have been duly and
validly taken, and the Agreements constitute legal, valid,
binding and enforceable obligations, except as limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights and remedies of creditors
generally, and except as the remedy of specific performance,
rests in the discretion of the court;
(B) The Seller shall deliver to the Buyer, a
General Warranty Deed representing the real estate listed in
Disclosure Schedule 1.1, consents to assumption of indebtedness
and development cost subordination upon said real estate, as set
forth in Disclosure Schedule 1.1 and Secretarial Certificate
setting forth resolutions of the Board of Directors and/or
shareholders of the corporation authorizing sale of said
property, together with authorization to the Officers of the
Corporation to consummate the transaction contemplated by this
Agreement.
(C) The Seller and Seller shall deliver to the
Buyer, in form and substance mutually satisfactory to the parties
any and all other documents, including, but not limited to
assignments, deeds, consents to assignment, bills of sales,
releases, and transfers necessary to accomplish the transactions
herein contemplated, and Buyer shall deliver to Seller The
Seller shall deliver to the Buyer, in form and substance mutually
satisfactory to the parties, the promissory notes and other
documents necessary to accomplish the transactions herein
contemplated.
7.4 At Closing. The following shall be accomplished at
closing:
7.4.1 Delivery of documents set forth above in Section
8.3.
7.4.2 At closing, Buyer shall tender executed
instructions to Buyer's transfer agent to issue Seller
approximately sixty-two thousand two hundred fifty (62,250)
shares of common stock in Buyer, which is to be issued pursuant
to Paragraph 1.2.3 above.
8. After the Closing. Subsequent to the closing:
8.1 Each party to this agreement shall at the request
of any other furnish, execute and deliver such documents,
instruments, opinions of counsel, certificates, notices or other
further assurances as counsel of the requesting party shall
reasonably deem necessary or desirable for effecting complete
consummation of this agreement.
8.2 The Buyer shall give the Seller access to the
files and records delivered to the Buyer hereunder during usual
business hours as may be required in connection with tax matters
or other legitimate needs so long as the operations of the Buyer
are not unreasonably interfered with.
9. Miscellaneous.
9.1 Each and every one of the representations,
warranties, covenants and agreements made herein by any party
(including any statements made in the Disclosure Schedules and in
any certificates, schedules, exhibits, instruments or documents
furnished pursuant to or concurrently with this Agreement), shall
survive the closing and the consummation of the transactions
contemplated by this Agreement, notwithstanding any investigation
heretofore or hereafter made by the parties hereto.
9.2 All notices, approvals or other communications to
be sent or given to the Seller shall be deemed validly and
properly given or made if in writing and delivered by hand or
registered or certified mail, return receipt requested, and
addressed to Glacier Valley Holding Corporation, Seller, 13 S.
Tejon Street, Colorado Springs, CO, 80903.
All notices, approvals or other communications to
be sent or given to the Buyer shall be deemed validly and
properly given or made if in writing and delivered by hand or
registered or certified mail, return receipt requested, and
addressed to Microtech Medical Systems, Inc., Holly Sugar
Building, Suite 330, 2 N. Cascade Avenue, Colorado Springs, CO,
80903.
Any of the parties hereto may give notice to the
others at any time by the methods specified above of a change in
the address at which, or the person to whom, notices addressed to
it are to be delivered in the future.
9.3 This agreement, together with the Disclosure
Schedules and other documents delivered pursuant hereto,
including the lease of the Premises, if any, constitutes the
entire agreement among the parties hereto and supersedes all
prior correspondence, conversations and negotiations. This
agreement may be executed in several counterparts that together
shall constitute but one and the same agreement. This agreement
shall be binding upon and inure to the benefit of the successors
and assigns of the parties. The title of the Sections of this
agreement have been assigned thereto for convenience only and
shall not be construed as limiting, defining or affecting the
substantive terms of the agreement. This agreement may be
amended only by a writing executed by the parties hereto. This
agreement shall be construed and interpreted according to the
laws of the State of Colorado.
9.4 The parties agree, upon the request of any other
party, to execute any agreements, documents or instruments
consistent with this agreement which are necessary to consummate
the transactions contemplated in this agreement.
9.5 This agreement may be executed in any number of
counterparts, each of which shall be taken to be an original.
9.6 No modification of this agreement shall be valid
unless such modification is in writing and signed by all of the
parties to this agreement.
9.7 No waiver of any provision of this agreement shall
be valid unless in writing and signed by the person or party
against whom charged.
9.8 The invalidity or unenforceability of any
particular provision of this agreement shall not affect the other
provisions of this agreement, and this agreement shall be
construed as if such invalid or unenforceable provision was
omitted. All parties hereto having participated actively in the
negotiation and drafting of this agreement, and each party having
been represented by counsel, the terms of this agreement shall
not be construed against, nor more favorably to, any party,
regardless of their responsibility for its preparation.
9.9 This agreement shall be binding upon and inure to
the benefit of the parties and their respective heirs, legal
representatives, executors, administrators, successors and
assigns.
9.10 This agreement and any documents or instruments
delivered pursuant to this agreement constitute the entire
agreement and understanding between the parties and supersede any
prior agreement and understanding relating to the subject matter
of this agreement.
9.11 Whenever in this agreement words, including
pronouns, are used in the masculine, they shall be read and
construed in the feminine or neuter wherever they would so apply,
and wherever in this agreement words, including pronouns, are
used in the singular, they shall be read and construed in the
plural, wherever they would so apply.
9.12 This agreement shall be subject to and governed
by the laws of the State of Colorado, including its choice of
laws, irrespective of the residence of the parties.
SELLER:
GLACIER VALLEY HOLDING CORP.
BY:
__________________________________
Its
__________________________________
ATTEST:
BY: __________________________
Its: __________________________
BUYER:
MICROTECH MEDICAL SYSTEMS, INC.
BY:
_________________________________
Its:
_________________________________
STATE OF }
} ss.
COUNTY OF }
On this _____ day of _______________, 19___, before me
personally appeared _______________, to me known as the
__________ of _______________ and who executed the within
instrument, and who acknowledged the same to be in behalf of said
Seller by authority of its Board of Directors and said
_______________ acknowledged said instrument to be the free act
and deed of said Seller.
______________________________
Notary Public
My Commission Expires:
STATE OF }
} ss.
COUNTY OF }
On this _____ day of _______________, 19___, before me
personally appeared _______________, to me known as the
__________ of _______________ and who executed the within
instrument, and who acknowledged the same to be in behalf of said
Seller by authority of its Board of Directors and said
_______________ acknowledged said instrument to be the free act
and deed of said Buyer.
______________________________
Notary Public
My Commission Expires:
<PAGE>
DISCLOSURE SCHEDULE 1.1
TO
AGREEMENT OF SALE
BETWEEN
MICROTECH MEDICAL SYSTEMS, INC.
AND
GLACIER VALLEY HOLDING CORPORATION
DATED THE 30TH OF SEPTEMER 1996
1. Description of Property
A portion of the Community at Bear Creek, comprising
Phase II of that development, as set forth in Exhibit "A"
attached hereto and incorporated herein by reference, with the
exception of one lot which Seller has previously agreed to deed
to James L. Wright, Jr., pursuant to an unrelated transaction and
in consideration for his release of Seller from liability under
note and deed of trust being assumed by Buyer and subordination
of said note and deed of trust to a note and deed of trust for
development costs upon said property.
2. Encumbrances
A. Promissory Note payable to James L. Wright, Jr.,
in the amount of Three Hundred Three Thousand Seven Hundred
Ninety-Three and No/100 ($303,793.00) Dollars, dated the 25th day
of July, 1996, secured by Deed of Trust of even date, copies of
which are attached hereto and incorporated herein by reference.
B. Taxes for 1996, payable in 1997, which shall be
prorated to date of closing.
3. Assumptions
Assumption of Three Hundred Thousand Seven Hundred
Ninety-Three and No/100 ($303,793.00) Dollar Promissory Note
dated July 25, 1996 secured by Deed of Trust, copies of which are
attached to this Disclosure Schedule 1.1 as Exhibits "B" and "C",
and incorporated herein by reference.
<PAGE>
NOTE: Original Map of Bear Creek Filing No. 2, Legal Description,
Promossory Note and Deed of Trust are attached here.
<PAGE>
DISCLOSURE SCHEDULE 1.2.1
TO
AGREEMENT OF SALE
BETWEEN
MICROTECH MEDICAL SYSTEMS, INC.
AND
GLACIER VALLEY HOLDING CORPORATION
DATED THE 30th OF SEPTEMER 1996
See attached.
<PAGE>
NOTE: Original Contract attached here.
<PAGE>
DISCLOSURE SCHEDULE 1.2.2
TO
AGREEMENT OF SALE
BETWEEN
MICROTECH MEDICAL SYSTEMS, INC.
AND
GLACIER VALLEY HOLDING CORPORATION
DATED THE 30th OF SEPTEMER 1996
See attached.
<PAGE>
NOTE: Original Promissory Note and Deed of Trust are attached here.
<PAGE>
DISCLOSURE SCHEDULE 2.1.4
TO
AGREEMENT OF SALE
BETWEEN
MICROTECH MEDICAL SYSTEMS, INC.
AND
GLACIER VALLEY HOLDING CORPORATION
DATED THE 30TH OF SEPTEMER 1996
None.
<PAGE>
DISCLOSURE SCHEDULE 2.1.7
TO
AGREEMENT OF SALE
BETWEEN
MICROTECH MEDICAL SYSTEMS, INC.
AND
GLACIER VALLEY HOLDING CORPORATION
DATED THE 30TH OF SEPTEMER 1996
None.
AGREEMENT made this 1st day of November, 1996, between
COLUMBINE HOME SALES, LLC, a Colorado Limited Liability
Company with its principal place of business at 4326 North
Nevada, Colorado Springs, Colorado ("Seller"), and ECLIPSE
CORPORATION, a Colorado corporation, with its principal
place of business at 2 North Cascade, Suite 330, Colorado
Springs, Colorado ("Purchaser"), a Colorado Corporation.
Recitals
WHEREAS, Seller is engaged in the business of a dealer
and distributorship of modular homes in Colorado Springs,
Colorado, and elsewhere; and
WHEREAS, Seller desires to sell the business together
with a portion of its related assets, and
WHEREAS, Seller's Board of Managers, and the owners and
holders of one hundred (100%) percent of the interests of
the limited liability company, have duly authorized and
approved the sale of Seller's assets subject to this
Agreement, and
WHEREAS, Purchaser has been managing Seller's business
pursuant to Mangement Contract dated August 1, 1996, and
WHEREAS, Purchaser has the authority to acquire all or
any part of the business and property of any company
conducting any business which Purchaser is authorized to
conduct, including the distribution and sale of manufactured
homes, and
WHEREAS, Purchaser's Board of Directors determined that
the purchase of a portion of Seller's assets on the terms
set forth below is desirable and is consistent with the
Purchaser's objectives.
IT IS THEREFORE AGREED:
1. Sale of business. Seller shall sell to Purchaser,
and Purchaser shall purchase and acquire, all Seller's
assets shown on Exhibit 1, a copy of which is attached
hereto and incorporated herein by reference, together with
the going concern value, and other intangible assets of the
manufactured housing dealership owned and operated by Seller
in Colorado Springs, Colorado, under the name of Columbine
Homes Sales, LLC, subject to such changes as have occurred
and shall occur in the ordinary course of its business
between November 1, 1996, and the date of closing, and
subject also to the liabilities to be assumed by the
Purchaser as set forth in Exhibit 2, a copy of which is
attached hereto and incorporated herein by reference.
Included in said sale as more fully described in Exhibit 1
are the following assets:
(a) Sales proceeds in progress commenced on or after
November 1, 1996, as provided hereinbelow;
(b) Assignment of subdealership agreements with
Grantham Realty, Ordway, Colorado, and Outpost
Homes Company, Walsenburg, Colorado.
(c) Assignment of contracts and agreements with the
following manufacturers: Silver Crest, Western
Homes Corporation, Palm Harbor Homes, Masterpiece
Homes, Redman Homes, Inc., Cavco Litchfield,
Guerdon, Oak Creek Homes, American Homestar
Corporation, Silver Creek Homes, ShowCase Homes
and other manufacturrs, if any.
(d) Assignment of agreement regarding steel buildings
with Perfect Steel Systems dated April 23, 1996.
(e) Leases (3) of retail lot facility located at 4326
N. Nevada, Colorado Springs, Colorado.
(f) Office building located at retail lot facility at
4326 N. Nevada, Colorado Springs, Colorado.
(g) Assignment and assumption of GreenTree Financial
Servicing Corporation and Deutsche Financial
Services Corporation floorlines.
(h) Various manufactured homes either for sale or as
models.
(i) Various furniture, fixtures and equipment.
(j) Superior Home construction contract.
2. Purchase price.
(a) Stock. In consideration for such sale, Purchaser
shall issue to Seller or its nominee(s) shares of
common stock restricted pursuant to Rule 144,
fully paid and non-assessable, more fully
described in paragraph 5, valued at market value
on October 31, 1996 in the amount of thirteen
million five hundred thousand (13,500,000) shares
in exchange for the agreed value of the purchase
price of Seller's sales contracts, furniture,
fixtures, equipment, lot improvements, sales model
and good will, One Hundred Fifty Thousand and
No/100 ($150,000.00) Dollars. Additionally,
Purchaser shall issue options to purchase common
stock in Purchaser, exercisable within a term of
three (3) years, of thirteen million five hundred
thousand (13,500,000) additional shares at the
current price as of October 31, 1996, based upon
the last previous trade on October 28, 1996 of
$.035 per share.
(b) Adjustable Cash. In conjunction with the
assumption of the Green Tree Financial Servicing
Corporation and Deutsche Financial Services
floorlines of credit as provided hereinbelow, the
parties agree that as of October 31, 1996, the
effective date of said assumptions, there is
principal owed by Seller through curtailment
payments, of which every payment of original
invoices received is Ninety-Five Thousand Eight
Hundred Seventy-Three and 38/100 ($95,873.38)
Dollars, in accordance with exhibit attached
hereto and incorporated herein by reference. The
parties further agree that, when each model
subject to said floorlines have been sold, the
actual amount of principal above will be
determined and adjusted in the event Purchaser did
not receive full payment of original invoice and
Seller shall have the payment of the adjusted
$95,873.38 in cash at closing of each home if
original invoice is received, the minimum of which
is shown on Exhibit 3.
(c) Execution of Sub-Dealer contract between the
parties as shown on Exhibit 4, a copy of which is
attached hereto and incorporated herein by
reference.
(d) Credit for approximately Twenty-Nine and No/100
($29,000.00) Dollars heretofore assumed or paid by
Purchaser to Sub-Dealers and Sierra-Rockies
Development Corporation on behalf of Seller
pursuant to Management Contract dated August 1,
1996.
(e) Forgiveness and waiver of management's fees due
Purchaser under Management Agreement dated August
1, 1996 or _____________________________________
($_______________) Dollars.
3. Assumption of liabilities and contracts.
(a) Liabilities. In further consideration for such
sale, Purchaser shall assume and discharge, and
indemnify Seller against, all debts, liabilities, and
obligations of Seller as shown on the schedule as shown
on Exhibit 2, which obligations shall be certified by
Seller to be true and correct as of November 1, 1996.
Seller shall pay, be responsible for, and hold
Purchaser harmless from all its liabiities,
obligations, accounts payable, claims, demands and
debts in existence prior to November 1, 1996.
(b) Ordinary business liabilities. In addition,
Purchaser shall assume and discharge, and indemnify
Seller against, all debts, obligations, and liabilities
of Seller which have arisen or will arise in the
ordinary course of its business between November 1,
1996, and the date of closing, and all income,
franchise, sales, and other tax liabilities incurred
for all taxable periods up to the date of closing,
including all income, franchise, sales, and other tax
liabilities arising out of this transaction.
(c) Tax returns. All income, franchise, sales, and
other tax returns and reports of the Seller for the
period from November 1,1996, to the date of closing
shall be prepared jointly by the parties accountants,
but all such returns shall be executed by Seller's
officers or directors as required by law.
(d) Indemnity. Purchaser shall have the benefit of and
perform all contracts and commitments listed on Exhibit
2 made in the ordinary course of Seller's business
which are outstanding on the date of closing, and shall
indemnify Seller against all liabilities under such
contracts and commitments, except that Purchaser shall
not be responsible for the breach of any such contract
or commitment which occurs before the date of closing.
4. Approval of interest holders. This agreement is
subject to the approval of Purchaser's Board of Directors.
Purchaser shall call a meeting of its Board of Directors for
November 20, 1996, for the purpose of considering and
approving this agreement and taking all other action
required by Purchaser to consummate this contract.
5. Shares.
(a) New shares. If Purchaser's Board of Directors
approves this agreement, upon closing Purchaser shall
forthwith execute and file all documents and take all
steps necessary to permit the issuance of the
appropriate shares of common stock in Purchaser to
Seller or its designees immediately following closing.
(b) Limited transfer restriction. The preferences,
privileges, and voting power of the shares and the
restrictions thereon are to be as follows: voting
preference shares may be originally issued only to
Seller, or its nominees, and shall not, for a period of
one year from the date of issuance, be sold, assigned,
or otherwise transferred, except to Purchaser's or
Seller's interest holders.
(c) Treatment of Stock. In order that Seller may
distribute such shares readily to its interest
holders, the share certificates issued by Purchaser
shall be in the denominations, amounts, and names
requested by Seller prior to closing. If Purchaser
effects a stock split, stock dividend, reverse stock
split, spin-off, or similar change in its capital
structure between the date of this agreement and the
date set for closing, there shall be an equitable
adjustment to the number of shares to be issued in
accordance with the terms of this paragraph to reflect
such change or changes. Purchaser shall bear all
necessary and reasonable expenses incurred by Seller in
the distribution of such shares to Seller's interest
holders, except that Seller shall bear those expenses
referred to in paragraph 6 of this agreement.
(d) Piggy Back Registration Rights and SEC
registration. If Purchaser's Board of Directors
approves and closes this agreement, Purchaser shall, in
its next public offering include stock issued pursuant
hereto, file with the Securities and Exchange
Commission and appropriate state agencies, if
necessary, a registration statement covering the
shares, and take all other necessary action to validate
the issuance of such shares. Seller shall cooperate
with Purchaser and its counsel in preparing and filing
any such registration, and Seller shall furnish
information and execute all documents that are
reasonably requested in connection with such
registration. Purchaser shall pay all fees and expenses
incurred by its counsel and accountants in preparing
the registration statements. Upon registration, the
parties agree to enter into a lock-up agreement of
standard form restricting sale of shares issued Seller
hereunder to twenty (20%) percent of total shares so
issued for a period of one year.
6. Sublease Agreement. Seller shall sublet to
Purchaser its retail sales lot located at 4326 N. Nevada
Avenue, Colorado Springs, CO, 80907, at the same rental and
under the same terms and conditions as set forth in Seller's
existing three (3) leases upon said lot.
7. Representations of Seller. Seller warrants and
represents the following are now true and will be true at
closing:
(a) Assets and liabilities. The assets and liabilities
set forth in this Agreement and the exhibits attached
hereto are certified to be true and complete statments
as of that date, and Seller shall hold Purchaser
harmless from any and all liens, claims and
encumbrances pertaining to said assets and
liabililities.
(b) Seller shall deed lots owned by Seller upon which
Purchaser is to sell model homes as purchased
hereinabove or to be sold pursuant to the terms of this
Agreement at the closing of said manufactured home at a
price specified on Exhibit 1.
(b) No change. There will be no changes in its
financial conditions following November 1, 1996, except
those that have taken place in the ordinary course of
business.
(c) Authority. Its Board of Managers and interest
holders have duly authorized and approved the execution
of this agreement and the sale of a portion of its
assets. Copies of the minutes of the managers' and
interest holders' meetings at which such authorization
and approval were granted, duly certified by Seller's
Secretary, are annexed as Exhibit 3.
(d) Taxes. Its federal income tax returns have been
filed with the Internal Revenue Service for all years
through the fiscal year ended December 31, 1995 and
(1) It has filed all required federal, state, and
local tax returns and reports
(2) Such returns are correct, true
and complete
(3) All such taxes, including
sales, corporate franchise,
property, excise and use taxes,
have been paid or are otherwise
adequately provided for on latest
corporate financial statements and
(4) The company is not presently
involved in any dispute with any
taxing authority and has not
received notice of any deficiency,
audit, or other indication of
deficiency from any tax authority,
not otherwise disclosed to
Purchaser.
(e) Inventory and Equipment. As of the date of
closing, Purchaser is familiar with inventory, if any,
and equipment purchased and accepts same "as is."
8. Conduct of business. Seller covenants with Purchaser
that pending the closing:
(a) Its business will be conducted only in the ordinary
course.
(b) No dividend or other distribution or payment will
be declared or paid with respect to its outstanding
shares, and it will not redeem, purchase, or otherwise
acquire such shares.
(c) It will make no changes in any of its contracts or
commitments, except those that occur in the ordinary
course of business.
(d) It will make no new contracts or commitments,
except contracts in the ordinary course of business for
the purchase of merchandise, materials, and supplies.
(e) It will make no expenditures for any alterations,
additions, or improvements to any of its property.
(f) It will fully comply with the provisions of the
Uniform Commercial Code in force in the State of
Colorado relating to the bulk transfer of assets.
9. Representations of purchaser. Purchaser warrants and
represents the following are now true and will be true at
closing:
(a) Duly organized corporation. It is a corporation
duly organized and existing under the laws of the State
of Colorado, a publicly traded corporation with
sufficient authorized and unissued shares to close this
agreement.
(b) Authority. Its Board of Directors have duly
authorized the execution of this agreement
(c) Balance sheet. The balance sheet of Eclipse
Corporation as shown on its 1996 second quarter 10Q
dated and certified June 30, 1996, is a true and
complete statement, as of that date, of its financial
condition and of its assets and liabilities, and there
have been no changes in its financial condition since
June 30, 1996, except those that have occurred in the
ordinary course of its business.
10. Purchaser's covenants. Purchaser covenants with
Seller that pending the closing:
(a) Its business will be conducted only in the ordinary
course.
(b) No dividend or other distribution or payment will
be declared or paid with respect to its outstanding
shares except the regular quarter-annual dividends at
no greater rates than those declared during the
calendar year 1989, and it will not redeem, purchase,
or otherwise acquire such shares.
(c) No change will be made in its authorized and
outstanding shares, except when required to comply with
the terms of this agreement.
11. Management Contract of August 1, 1996. The
parties hereto agree that the Management Contract of August
1, 1996 shall be terminated effective with the closing of
this Agreement, and that any obligation either party has to
the other shall be merged in said closing.
12. Closing. The closing shall take place at the office
of Eclipse Corporation, 2 North Cascade, Suite 330, Colorado
Springs, Colorado, upon five days' notice from Purchaser to
Seller, but in no event later than November 15, 1996. Time
is of the essence. At the closing, upon the delivery to
Seller, or its nominees, of certified copies of its request
to its transfer agent to issue certificates for shares in
Eclipse Corporation, the indemnity agreements referred to in
paragraph 3, a certified copy of the resolution of approval
referred to in paragraph 4, Seller shall execute and deliver
all deeds, bills of sale, conveyances, and other
instruments, are necessary to vest title in Purchaser to a
portion of Seller's assets. All representations and
covenants shall survive the closing.
13. No violation or breach. The parties represent to
each other that their performance of this agreement,
including any conditions or surviving warranties or
representations, is not in violation of any law, statute,
local ordinance, state or federal regulation, court order,
or administrative order or ruling, and that such performance
is not in violation of any agreement by which either of them
are bound.
14. Governing law. This agreement shall be construed
and interpreted under the laws of the State of Colorado.
15. Binding effect. This agreement shall inure to the
benefit of and be binding upon the parties and their
respective successors and assigns.
16. Counterparts. This agreement may be executed
simultaneously in any number of counterparts, each of which
shall be deemed an original, but all of which together shall
constitute one and the same instrument.
17. Notices. All notices, requests, demands, and other
communications hereunder shall be in writing, and be deemed
to have been duly given if delivered or mailed, first class
postage prepaid, to the address of the appropriate party as
shown on the first page of this agreement.
18. Non-waiver. No delay or failure by either party to
exercise any right hereunder, and no partial or single
exercise of any such right, shall constitute a waiver of
that or any other right, unless otherwise expressly provided
herein.
19. Headings. Headings in this agreement are for
reference and convenience only and shall not be used to
interpret or construe its provisions.
20. Time of essence. Time is of the essence of this
agreement.
21. Entire agreement modification. This agreement
supersedes all prior agreements and constitutes the entire
agreement between the parties hereto with respect to the
subject matter hereof. It may not be amended or modified
except by an instrument executed by the parties.
In witness whereof the parties have signed this
instrument the day and year first above written.
COLUMBINE HOME SALES LLC ECLIPSE CORPORATION
By: _______________________________ By:____________________________________
Its President Its President
Attest: Attest:
_______________________________ _______________________________________
Secretary Secretary
<PAGE>
EXHIBIT 1
TO
PURCHASE AGREEMENT
DATED NOVEMBER 1, 1996
BETWEEN
COLUMBINE HOME SALES LLC and ECLIPSE CORPORATION
1. Manufactured Homes Located at Retail Manufactured Housing
Lot, 4326 N. Nevada Avenue, Colorado Springs, CO, 80907.
(a) Manufactured home serving as office on sales lot
(b) Palm Harbor Model "Santa Cruz," Serial No. 22379
(c) Silver Creek Model "501," Serial No. 1398
(d) Silver Creek Model "201," Serial No. 1374
(e) Masterpiece Model "ValueMaster 3080," Serial No.
3531
(f) Cavco Model "Screamer," Serial No. 1481
(g) Cavco Model "260-28P," Serial No. 3718
(h) Redman Model "Silvercrest," Serial No. 4714
(i) Silver Creek Model "101," Serial No. 1382
(j) Palm Harbor Model "Picaso", Serial No. 2461
(k) Homestar Model "824," Serial No. 746
Premises is currently being leased pursuant to various Lease
Agreements (3), copies of which attached hereto as Exhibit "1-A"
and incorporated herein by reference, and Purchaser assumes same.
2. Lot 22, Bear Creek Filing No. 1, El Paso County, Colorado,
together with Model Home located thereon.
Palm Harbor Model "Pikes Peak," Serial No. 22497
3. Lot 11, Bear Creek Filing No. 1, El Paso County, Colorado.
4. Modular Home Located on Lots Not Belonging to Seller:
(a) Cavco Model "21024E," Serial No. 4122
5. Modular Homes Located at Various Sub-Dealers:
(a) Silver Creek Model 501, Serial No. 71363
(b) Silver Creek Model 501, Serial No. 71370
(c) Palm Harbor Model "Santa Cruz," Serial No. 22388
6. All manufactured homes listed hereinabove are subject to
floorlines of Green Tree Financial Servicing Corporation and
Deutsche Financial Services, but assumed by Purchaser, as set
forth in the Agreement, excluding manufactured home set forth in
Paragraph 1(a).
7. Model Home Furniture and Office Equipment.
(a) Fixtures and equipment located at manufactured home
sales lot, 4326 N. Nevada Avenue, Colorado Springs,
Colorado:
5 Desks
5 Office Chairs
1 Couch and Matching Loveseat
2 End Tables
1 Lamp
9 Chrome Padded Chairs
3 Book Shelves
7 File Cabinets
1 Computer and Stand
1 Typewriter
1 Fax/Printer Machine
1 Konica 2203 Copier
6 Telephones
1 Two-Door Cabinet
(b) Model Home Furniture -
(i) Model "Santa Cruz": 1 Couch and Matching
Loveseat
7 Matching Pillows
1 Wood Coffee Table
1 Wood Trunk
1 Wood Two-Door Cabinet
2 Wood Decor Ladders
4 Pictures
2 Large and 2 Small Wool
Covers
1 Artificial Plant
1 Small Wall Cabinet
1 Small Lantern and 1 Large
Lantern
2 Old Sewing Machines
21 Accessories
1 Round Dining Room Table with
4 Matching Chairs
1 Wood and Leather Chair
1 Wood Chest
2 Wood Tables
1 Saddle and 2 Ropes
(ii) Model "501": 1 Couch
9 Pillows
2 Leather and Wood Chairs
1 Large Wool Cover and 2 Small
Covers
1 Two-Piece Painted Wood Hutch
2 Wood Benches
1 Glass Top Table with Metal
Stand
1 Small Glass Top Table with
Metal Stand
4 Wood Kitchen Chairs
31 Accessories
1 Small Wood Table
2 Artificial Plants
1 Fran Wolfelder Picture
(iii) Model "201": 1 Painted End Table
1 Wood Painted Table and 5
Chairs
1 Square Painted Table
1 Blue and Yellow Cabinet with
Glass Doors
3 Artificial Plants
1 Floor Fan
9 Accessories
2 Mirrors
1 Painted Blue Stand
4 Assorted Pictures
1 Picasso Painting
1 Blue Drop-Leaf Table
4 Placemats
6 Accessories
1 Wood Bench
(iv) Model "ValueMaster 3080": 2 Bamboo Multi-
colored Loveseats
1 Round Table with Glass Top
1 Blue Trunk
1 Black Stand
1 Artificial Palm Tree
17 Accessories
1 Aluminum Bird
1 Black Tiered Table with
Multi-colored Dots
3 Wood and Leather Chairs
1 Wool Blanket
2 Small Bamboo Stands
1 Round Bamboo Base
<PAGE>
NOTE: Original Lease Agreement is attached here.
<PAGE>
EXHIBIT 2
TO
PURCHASE AGREEMENT
DATED NOVEMBER 1, 1996
BETWEEN
COLUMBINE HOME SALES LLC and ECLIPSE CORPORATION
1. Floorline of Green Tree Financial Servicing Corporation at
the October 31, 1996 amount of Six Hundred Twenty-Nine Thousand,
Nine Hundred Ninety-Eight and 40/100 ($629,998.40) Dollars.
2. Floorline of Deutsche Financial Services at the October 31,
1996 amount of Three Hundred Thirty-Five Thousand, Six Hundred
Fifty-Nine and No/100 ($335,659.00) Dollars.
3. Sub-Dealer contracts with Outpost Homes Company and Grantham
Realty.
4. Manufacturing/Dealership/Franchise Contracts or Agreements
with:
(a) Silver Crest Western Homes Corporation
(b) Palm Harbor Homes
(c) Masterpiece Homes
(d) Redman Homes
(e) Cavco Litchfield
(f) Guerdon
(g) Oak Creek Homes
(h) American Homestar Corporation
(i) Any other manufacturers with whom Seller has an
agreement.
5. Steel Building Franchise Agreement with:
(a) Perfect Steel Systems dated April 23, 1996.
6. Manufactured House Installation Agreement dated January 1,
1996 between Seller and Superior Homes, Inc.
<PAGE>
EXHIBIT 3
TO
PURCHASE AGREEMENT
DATED NOVEMBER 1, 1996
BETWEEN
COLUMBINE HOME SALES LLC and ECLIPSE CORPORATION
See attached.
<PAGE>
NOTE: Original Table is attached here.
<PAGE>
ADDENDUM NO. 1
TO
AGREEMENT DATED NOVEMBER 1, 1996
BY AND BETWEEN
COLUMBINE HOME SALES llc and ECLIPSE CORPORATION
The parties hereto agree that the number of shares of stock
issued pursuant to Paragraph 2(a) of the Agreement dated November
1, 1996 between Columbine Home Sales llc, a Colorado Limited
Liability Company ("Seller"), and Eclipse Corporation, a Colorado
corporation ("Purchaser") shall be adjusted upon mutual
agreement, if necessary, following final analysis of the
transaction and stock valuation from tax and accounting
viewpoints.
The parties further agree that Purchaser's transfer agent
will not be requested to issue shares of stock provided in said
Paragraph 2(a) until final analysis has occurred and has been
approved by both parties.
Dated, this 1st day of November, 1996.
COLUMBINE HOME SALES llc ECLIPSE CORPORATION
By:_____________________ By:__________________________
Darel A. Tiegs James A. Humpal
Its: Manager Its: Treasurer
By:__________________________
J. Royce Renfrow
Its: Corp. Secretary / Gen. Counsel
LEASE AGREEMENT
THIS AGREEMENT made and entered into this 1st day of December, 1996
by and between RAM Holding Corporation, Assignee of Colorado
Commercial Brokers, Inc., hereinafter "Landlord" and Eclipse
Corporation, Assignee of Columbine Home Sales, Limited Liability
Company, hereinafter "Tenant",
W I T N E S S E T H :
The Assignors of the parties having previously entered into a Lease
dated August 15, 1995, and the parties wishing to modify that lease
and agree upon new terms, Landlord does hereby lease to the Tenant
and the Tenant does hereby take and hire from the Landlord the
following described property in the County of El Paso and State of
Colorado, to wit:
See Attached.
TERM: The term of this lease shall commence on December 1, 1996
and continue for a period of thirty (30) months, expiring on May 1,
1999. Tenant has an option to extend this lease upon the same terms
and conditions, excepting the condition of rental, for an additional
term of twenty-four (24) months upon giving thirty (30) days' notice
to Landlord prior to the end of the initial term. The fixed annual
minimum rent during each year of the extended term shall be the sum
equal to the product resulting from multiplying the fixed annual
minimum rent for the final full lease year of the initial term by the
number - which shall in no event be less than one (1) - found by
dividing the index (as defined below) for the first full calendar
month in which falls the beginning of the extended term for which
such fixed annual minimum rent is being computed, by the index for
the first month of the initial term of this Lease. Such index shall
be defined as the Consumer Price Index for all urban consumers,
published by the United States Department of Labor, Bureau of Labor
Statistics (national average).
RENT: The Tenant agrees to pay to the Landlord as rent for the
leased premises the sum of $5000.00 per month, which shall be paid in
the following manner:
1) $5000.00 due and payable on the first day of each month
commencing December 1, 1996 and continuing thereafter during the
term of the lease.
2) Late Payment Fee. In the event rent set forth hereinabove
is not paid within five (5) days of its due date, a penalty of
ten (10%) percent will be added to the rent then due.
USE: The Tenant expressly covenants and agrees to use the
leased premises for the sale of modular homes and for no other
purpose whatsoever without the written prior consent of the Landlord
to such change in use, which consent however shall not be
unreasonably withheld. Tenant shall use the premises for no purpose
which is unlawful or contrary to any zoning regulations or ordinances
in effect.
PERSONAL PROPERTY TAXES: Tenant shall pay all personal property
taxes accruing under the terms of this lease for personal property
owned by Tenant and kept on the leased premises.
REAL PROPERTY TAXES: Landlord shall pay all real property taxes
on the subject real property.
UTILITIES: All utilities used on the leased premises during the
term of this lease shall be paid for by the Tenant.
INSURANCE: Tenant agrees to pay the premium for sufficient fire
and extended coverage insurance on the leased premises during the
term of this lease to cover the cost of rebuilding or repairing the
leased premises in the event of total or partial destruction thereof.
Tenant agrees to carry and maintain public liability insurance for
the leased premises in a minimum amount of $300,000. Tenant shall
furnish Landlord with appropriate certificates of insurance coverage.
MAINTENANCE: Tenant shall be responsible for the exterior and
interior maintenance of the leased premises during the term of this
lease. All repairs, alterations or additions to the interior of the
premises shall be made by the Tenant, provided however that all
replacements or major repairs to the plumbing, heating or electrical
systems on the leased premises which are not necessitated by the
negligence of the Tenant shall be paid for by the Landlord. All
other repairs not specifically listed herein are to be paid by the
Tenant.
INSPECTION: Landlord can enter upon and inspect the leased
premises at all reasonable times during the term hereof.
IMPROVEMENTS: All improvements placed upon the leased premises
of a permanent nature by the Tenant shall be and become the property
of Landlord at the expiration of this lease. The Landlord shall be
under no obligation to reimburse the Tenant for any sums of money so
expended in making permanent improvements on the leased premises.
DESTRUCTION OF PREMISES: Should the leased premises be
destroyed or rendered uninhabitable through no act or fault of the
Tenant, either by fire, act of God or otherwise, then this lease may
be forthwith terminated by the Tenant at its option unless the
parties agree that such premises shall be reconstructed from
insurance proceeds and if such reconstruction is performed, then rent
hereunder shall be suspended for a period of 90 days or until the re-
occupancy of the premises by Tenant, whichever shall first occur.
DEFAULT: The Tenant promises and agrees that if default be made
in the payments of rent or in the performance of any of the
conditions of this lease, that this lease may be forthwith terminated
at the election of the Landlord and the Tenant will immediately
surrender and deliver up possession of the leased premises to the
Landlord upon receiving written notice from the Landlord of the
breach of the conditions of this lease and the election of the
Landlord to so terminate this lease. In the event of such default by
Tenant then the Landlord, besides other rights and remedies which it
may have, shall have the immediate right of re-entry and the right to
remove all persons and property from the leased premises at the
expense of the Tenant. Should the Landlord elect to re-enter as
herein provided or should it take possession pursuant to legal
proceedings or pursuant to any notice provided for by law, it may
either terminate this lease or it may, from time to time, without
terminating this lease, re-let or release the leased premises or any
part thereof for such amount of rental and upon such terms and
conditions as Landlord in its sole discretion and judgment may deem
advisable. Landlord may make such alterations, improvements and
repairs to the leased premises as it may deem advisable. No such re-
letting or releasing of the leased premises by Landlord under the
circumstances set forth in this paragraph shall be construed as the
election on Landlord's part to terminate or cancel this lease unless
a written notice of such termination or cancellation is mailed by the
Landlord to the Tenant at the address of the leased premises nor
shall such re-letting release the Tenant from liability to the
Landlord for any and all damages of whatsoever type or nature which
the Landlord may have or will suffer or incur as a result of Tenant's
breach of any of the terms, covenants, provisions and conditions
herein contained. Notwithstanding any such re-letting or releasing
without termination of this lease by the Landlord, Landlord may at
any time thereafter elect to terminate the lease for such previous
breach by the Tenant. In the event it should become necessary for
Landlord to employ an attorney to enforce any of the provisions
hereof, Landlord shall be entitled to recovery from Tenant for his
costs in such behalf expended plus a reasonable attorney's fee.
In the event this lease is terminated by reason of the default of
Tenant, it is understood and agreed that the Landlord shall be
entitled to retain any advance rental or deposit herein made, to
partially compensate Landlord for damages suffered by reason of such
default. Nothing herein contained shall be construed however as
precluding the Landlord from recovering from Tenant any further or
additional damages which it may have suffered by reason of such
default of the Tenant as provided herein.
SURRENDER AND HOLDING OVER: Upon expiration of the term of this
lease, or any extension thereof, the Tenant agrees to surrender and
deliver up possession of the leased premises to the Landlord in as
good condition and repair as the same are at this time, ordinary wear
and tear excepted. In the event the leased premises shall be damaged
beyond reasonable wear and tear, the Tenant agrees to immediately pay
Landlord such sum of money as shall be reasonable expended by the
Landlord in restoring the leased premises to its former condition.
Should the Tenant continue in possession of the leased premises after
the expiration of this lease without a written extension or renewal
hereof, such possession shall be on a month-to-month basis only and
then at a monthly rate herein specified.
NO WAIVER: The failure of Landlord to insist in any one or more
instances upon a strict performance of any of the obligations,
covenants or agreements herein contained shall in no wise be
construed to constitute a waiver, relinquishment or release of such
obligations, covenants or agreements, and no forbearance by the
Landlord of any default hereunder shall in any manner be construed as
constituting a waiver of such default.
TENANT'S DUTIES RE SIDEWALK OR WALKWAYS: The Tenant shall keep
the sidewalks and walkways in front of and around the leased premises
free and clear of ice and snow and free from litter, dirt, debris and
obstructions.
BANKRUPTCY: If the Tenant shall be declared insolvent or
bankrupt or if any assignment of his property shall be made for the
benefit of his creditors or others or if the Tenant's leasehold
interest herein shall be levied upon under execution or taken by
virtue of any writ of any Court of Law or if the Trustee in
Bankruptcy or a Receiver is appointed for the property of the Tenant,
then and upon the happening of any one of these events the Landlord
may, at its option, immediately and with or without notice terminate
and cancel this lease and immediately retake possession of the leased
premises without thereby occasioning any forfeiture of the
obligations of the Tenant previously accrued under this lease.
EMINENT DOMAIN: In the event all or any part of the leased
premises shall be taken by right of eminent domain, or in the event
the Landlord makes a conveyance of all or any part of the leased
premises in lieu of taking by right of eminent domain, then this
lease shall, at the option of the Landlord, cease and terminate. In
such event the Tenant shall not be required to make any further
rental payments to the Landlord and the Tenant shall have the right
to remove from the leased premises any and all furniture, machinery
and fixtures set forth herein. In such event of a taking of all or
part of the leased premises by right of eminent domain or a
conveyance in lieu of such taking, the Landlord shall receive the
entire award or price with the condemning or taking governmental
authority will pay for the leased premises.
MISCELLANEOUS:
This lease agreement is further subject to any and all
special conditions which are contained in this lease in the
appropriate space provided therefor.
Wherever used herein the singular shall include the plural
and the use of any gender shall be applicable to all genders.
This lease shall bind and benefit alike the heirs,
successors and assigns of the parties hereto.
IN WITNESS WHEREOF the parties hereto have set their hands and
affixed their seals on the day and year first above written.
DATED this _____ day of _________________, 1996.
RAM HOLDING CORPORATION
BY: _________________________________
Cary Carpenter, President
ECLIPSE CORPORATION
BY: __________________________________
<PAGE>
ATTACHMENT
TO
LEASE AGREEMENT DATED DECEMBER 1, 1996
BETWEEN
RAM HOLDING CORPORATION and ECLIPSE CORPORATION
LEGAL DESCRIPTIONS.
4326 N. Nevada, Colorado Springs, Colorado, 80907:
Parcel 1: Approximately 100 feet of frontage x 175 depth
for a sales lot for modular homes.
Parcel 2: Approximately 200 feet x 175 feet depth for
sales office for modular homes.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 55,661
<SECURITIES> 0
<RECEIVABLES> 923,693
<ALLOWANCES> 5,080
<INVENTORY> 2,084,528
<CURRENT-ASSETS> 143,288
<PP&E> 155,263
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,367,513
<CURRENT-LIABILITIES> 2,037,561
<BONDS> 0
0
0
<COMMON> 1,329,952
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,367,513
<SALES> 529,322
<TOTAL-REVENUES> 0
<CGS> 425,244
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 380,625
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (44,429)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (232,118)
<DISCONTINUED> 477,546
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 245,428
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
