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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 16, 2000
Sunrise Technologies International, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-10428 77-01148208
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
3400 W. Warren Avenue, Fremont, California 94538
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 623-9001
N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
FDA APPROVAL OF HYPERION(TM) LTK SYSTEM
The U.S. Food and Drug Administration has approved the Company's
HYPERION(TM) LTK (Laser Thermal Keratoplasty) System. The laser time for the
SUNRISE LTK(TM) Procedure is three seconds per eye and involves no cutting or
removal of corneal eye tissue. The HYPERION(TM) LTK System gently heats eye
tissue outside the center of the cornea, thereby causing it to steepen and
reduce hyperopia (farsightedness).
Approval of the Company's premarket approval application for the
HYPERION(TM) LTK Laser System is for the temporary reduction of hyperopia in
patients with +0.75 to +2.50 diopters of MRSE with less than or equal to
+/-0.75 diopters of astigmatism, who are 40 years of age or older with
documented stability of refraction for the prior 6 months, as demonstrated by a
change of less than or equal to 0.50D in spherical and cylindrical components of
the manifest refraction. The magnitude of correction with this treatment
diminishes over time, with some patients retaining some or all of their
refractive correction.
The Company develops Holmium laser-based systems which utilize a
patented process for shrinking collagen developed by Dr. Bruce Sand (the "Sand
Process") in correcting ophthalmic conditions.
TERMINATION OF ROYALTY PAYMENTS AND ISSUANCE OF WARRANTS TO DR. BRUCE SAND
On June 16, 2000, the Company entered into an Amended and Restated
Patent and Technology Assignment Agreement, a Royalty Acceleration Agreement and
other related agreements (the "Sand Agreements") with Bruce J. Sand, M.D.,
F.A.C.S. ("Dr. Sand"). Under previous agreements with Dr. Sand from 1992 and
1994 (the "Former Agreements"), the Company acquired certain patent and patent
applications used in reshaping the cornea using a laser as well as other
technologies and products (the "Patent Rights and Related Technology") in
exchange for payment of up to 4% of the Company's gross profits from sales of
such products or instruments. In addition, the Company was required to pay 4% of
its gross profits earned for each procedure using such technologies on its
instruments for a period of three years for each instrument. Under the Sand
Agreements entered into on June 16, 2000:
- Dr. Sand agreed to assign to the Company irrevocably and on an
exclusive basis the Patent Rights and Related Technology and Dr.
Sand's patent for the prevention of regression of refractive
keratoplasty.
- Dr. Sand and the Company agreed to terminate the payment of all
royalties to Dr. Sand under the Former Agreements.
- The Company issued to Dr. Sand a warrant (the "Sand Warrant") to
purchase 750,000 shares of the Common Stock of the Company at an
exercise price of $.01 per share, exercisable at any time prior
to 5:00 p.m. eastern time on June 16, 2005. Dr. Sand agreed that
he would sell no more than 250,000 of such shares in any fiscal
quarter of the Company.
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- The Company and Dr. Sand agreed to designate as "the Sand
Process" the method of shrinking collagen comprising the step of
irradiating tissue with laser energy to create a public
association of the designation with the method.
In addition, for legal services rendered by Edward Vincent King, Jr.,
Dr. Sand's attorney, the Company issued a warrant to purchase 67,500 shares of
the Company's Common Stock, with the same terms as the Sand Warrant and of which
the holder agreed not to sell more than 22,500 shares in any fiscal quarter of
the Company.
The foregoing description is a summary of the material terms of the Sand
Agreements and the Warrants and reference is made to the terms of such
agreements attached as exhibits to this Form 8-K.
BANK LINE OF CREDIT AND GUARANTEE
Pursuant to a Loan and Security Agreement (the "Bank Loan Agreement")
entered into by the Company and Silicon Valley Bank (the "Bank") on June 29,
2000, the Bank has agreed to provide a secured revolving credit line in an
amount up to $10,000,000. The credit line has a one-year term, and advances made
under the secured credit line will bear interest at the Bank's prime rate.
Interest will be payable monthly. The line of credit is secured by all of the
assets of the Company other than the Company's intellectual property, which is
the subject of a negative pledge.
In connection with the secured credit line, The David A. Brewer Trust (a
living trust dated June 9, 1999) (the "Trust") agreed to guaranty any advance
under the secured credit line. Prior to entering into this guaranty arrangement,
David A. Brewer was the beneficial owner of approximately 4.4% of the Company's
outstanding Common Stock. As compensation for the guaranty, pursuant to a master
warrant (the "Master Warrant"), which may be exercised in whole or in part at
any time and from time to time, the Trust will receive (i) 25,000 shares of
Common Stock of the Company whether or not the secured credit line is drawn
upon, (ii) 0.000195 shares of Common Stock of the Company per $1.00 drawn from
the secured credit line for each day such amount remains outstanding, (iii)
25,000 shares of Common Stock of the Company per $1,000,000 drawn down by the
Company up to $7,000,000 (on a prorated basis), and (iv) 0.000289 shares Common
Stock of the Company per $1.00 drawn down by the Company in excess of $7,000,000
for each day such amount remains outstanding. The determination of the warrants
issuable under clause (iv) is subject to offset by the warrants to be issued
under clause (iii). The exercise price for shares of the Company's Common Stock
issuable upon exercise of the Master Warrant is $5.00 per share, and the Master
Warrant is exercisable for five years from the date of issuance.
Upon an event of default by the Company under the Bank Loan Agreement,
the Trust will assume all of the Bank's rights under the Bank Loan Agreement,
and the Company will deliver a 10% Convertible Secured Promissory
Payment-in-Kind Note to evidence all amounts then owed under the Bank Loan
Agreement. The Guarantee Note, if issued, will bear interest at 10% and will be
convertible, at the option of the holder of the Guarantee Note into shares of
the Company's Common Stock based upon the average sales prices of the Company's
Common Stock for each day during the period commencing 10 days prior to the
event of default under the Bank Loan Agreement and ending 20 days after such
event. The Company, subject to such
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conversion rights, may redeem the Guarantee Note at any time for the designated
principal amount and any unpaid interest.
The foregoing description is a summary of the material terms of the
agreements between the Company, the Bank and the Trust, and reference is made to
the terms of such agreements attached as exhibits to this Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
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EXHIBIT NO. EXHIBIT DESCRIPTION
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10.1 Royalty Acceleration Agreement dated as of June 16, 2000 between
Sunrise Technologies International, Inc. and Bruce J. Sand.
10.2 Amended and Restated Patent and Technology Assignment Agreement
dated as of June 16, 2000 between Sunrise Technologies
International, Inc. and Bruce J. Sand.
10.3 Warrant dated as of June 16, 2000 issued by Sunrise Technologies
International, Inc. to Bruce J. Sand.
10.4 Warrant dated as of June 16, 2000 issued by Sunrise Technologies
International, Inc. to Edward Vincent King, Jr.
10.5 Loan and Security Agreement dated June 29, 2000 between Silicon
Valley Bank and Sunrise Technologies International, Inc.
10.6 Negative Pledge Agreement dated as of June 29, 2000 between
Sunrise Technologies International, Inc. and Silicon Valley Bank.
10.7 Third Party Pledge and Security Agreement dated June 29, 2000
between Sunrise Technologies International, Inc. and Silicon
Valley Bank.
10.8 Agreement dated as of July 3, 2000 between the David A. Brewer
Trust and Sunrise Technologies International, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SUNRISE TECHNOLOGIES
INTERNATIONAL, INC.
By: /s/ PETER E. JANSEN
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Peter E. Jansen, Vice President,
Finance and Chief Financial Officer
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EXHIBIT INDEX
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EXHIBIT NO. EXHIBIT DESCRIPTION
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<S> <C>
10.1 Royalty Acceleration Agreement dated as of June 16, 2000 between
Sunrise Technologies International, Inc. and Bruce J. Sand.
10.2 Amended and Restated Patent and Technology Assignment Agreement
dated as of June 16, 2000 between Sunrise Technologies
International, Inc. and Bruce J. Sand.
10.3 Warrant dated as of June 16, 2000 issued by Sunrise Technologies
International, Inc. to Bruce J. Sand.
10.4 Warrant dated as of June 16, 2000 issued by Sunrise Technologies
International, Inc. to Edward Vincent King, Jr.
10.5 Loan and Security Agreement dated June 29, 2000 between Silicon
Valley Bank and Sunrise Technologies International, Inc.
10.6 Negative Pledge Agreement dated as of June 29, 2000 between
Sunrise Technologies International, Inc. and Silicon Valley Bank.
10.7 Third Party Pledge and Security Agreement dated June 29, 2000
between Sunrise Technologies International, Inc. and Silicon
Valley Bank.
10.8 Agreement dated as of July 3, 2000 between the David A. Brewer
Trust and Sunrise Technologies International, Inc.
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