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
November 11, 1997
Date of Report
(Date of Earliest Event Reported)
LUCAS EDUCATIONAL SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-24374 33-0611764
(State or other (Commission File No.) (IRS Employer I.D. No.)
Jurisdiction)
P. O. Box 789
Templeton, California 93465
(Address of Principal Executive Offices)
Registrant's Telephone Number
(805) 434-3982
MIRADOR EQUITY PARTNERS, LTD.
1500 Quail Street, Suite #550
Newport Beach, California 92660
(Former Name or Former Address if changed Since Last Report)
<PAGE>
Item 1. Changes in Control of Registrant.
(a) Pursuant to an Agreement and Plan of Reorganization dated
November 7, 1997 (the "Plan"), between the Registrant; Lucas Educational
Systems, Inc., a Nevada corporation ("Lucas"); and Jerry R. Lucas, Cheryl W.
Lucas and William R. Murray, the sole stockholders of Lucas (sometimes
collectively called the "Lucas Stockholders"), the Lucas Stockholders became
the controlling stockholders of the Registrant in a transaction viewed as a
reverse acquisition, and Lucas became a wholly-owned subsidiary
of the Registrant. The Plan was treated as a recapitalization of Lucas
for accounting purposes, and the effective date of the Plan was November 11,
1997.
The Plan was adopted, ratified and approved by the sole member of
the Board of Directors of the Registrant, and by the Board of Directors and
all of the Lucas Stockholders.
The source of the consideration used by the Lucas Stockholders to
acquire their respective interest in the Registrant was the exchange of 100%
of the outstanding common stock of Lucas pursuant to the Plan.
The basis of the "control" by the Lucas Stockholders is
stock ownership. See the table below under Paragraph (b) of this Item.
The former principal stockholder of the Registrant and his number of
pre-split and pre-Plan shares owned and the percentage of ownership of such
outstanding voting securities of the Registrant prior to the completion of the
Plan was Jehu Hand, Esq., President and a director, 90,500 shares or 21%.
This ownership computation takes into account the prior expiration of an
option of Mr. Hand to acquire 40,000 pre-split and pre-Plan shares of the
Registrant and the compromise of a promissory note payable to Mr. Hand which
was previously convertible into 155,500 pre-split and pre-Plan shares, all as
reported in the Registrant's 10-KSB Annual Report for the year ended March 31,
1997, which has been filed with the Securities and Exchange Commission and
which is incorporated herein by reference. See Item 7.
Pursuant to the Plan, the Registrant was required:
1. To issue 8,700,000 post-split shares, pro rata, to the Lucas
Stockholders, in exchange for all of the outstanding shares of common stock of
Lucas;
2. To effect a forward split of the outstanding common stock of
the Registrant on the basis of 4.357 shares for one share, increasing the
424,600 pre-Plan outstanding shares of the Registrant to approximately
1,850,000 shares, depending upon rounding resulting from the forward
split; and
3. Following resignations, in seriatim, of the sole director and
executive officer of the Registrant, to designate and elect, in
seriatim, Jerry R. Lucas, Cheryl W. Lucas and William R. Murray, as
directors and executive officers of the Company, to serve until the next
annual meeting of stockholders and until their respective successors are
elected and qualified or until their prior resignation or termination. These
persons served in these same capacities for Lucas prior to the completion of
the Plan. Resumes of these persons are included below under the
caption "Management" of Item 2.
Taking into account the shares issued to the Lucas Stockholders, the
4.357 for one forward split of the pre-Plan outstanding shares of common
voting stock of the Registrant, and 168,750 post-split shares to be issued to
certain consultants as outlined below under subparagraph (b) below, there are
or will be 10,718,750 outstanding shares of common stock of the Registrant as
a result of the foregoing.
A copy of the Plan, including any material exhibits and related
instruments, accompanies this Report, which, by this reference, is
incorporated herein; the foregoing summary is modified in its entirety by such
reference. See Item 7.
(b) The following table contains information regarding
shareholdings of the Registrant's current directors and executive officers and
those persons or entities who beneficially own more than 5% of the Company's
common stock, after taking into account the completion of the Plan, to wit:
Amount and Nature Percent
of Beneficial of
Name Title Ownership Class
Jerry R. Lucas President and Director 4,250,000 39.6%
(Joint Tenants)
Cheryl W. Lucas Secretary/Treasurer 4,250,000 39.6%
(Joint Tenants) and Director
William R. Murray Vice President 200,000 1.8%
All directors and executive officers
as a group (3) 81.0%
* The Board of Directors of the Registrant has adopted a
written compensation agreement (the "Consultant's
Compensation Agreement No. 1"[the " Compensation Plan"])
pursuant to which two individual consultants, one of its
attorneys and a "due diligence" consult ant, (collectively,
the Consultants), are to be issued an aggregate total of
168,750 post-split shares of common stock of the Registrant at
a price of $0.01 per share. Immediately following the filing of
this Report, the Registrant intends to file an S-8 Registration
Statement with the Securities and Exchange Commission
covering these shares, and a copy of the Compensation Plan will
be filed as an exhibit to this Registration Statement. Such
Registration Statement, on its filing, shall be deemed to have
been incorporated herein by reference.
Item 2. Acquisition or Disposition of Assets.
(a) See Item 1 of this Report. The consideration exchanged
under the Plan was negotiated at "arms length" between the directors and
executive officers of the Registrant and the Lucas Stockholders, and the sole
member of the Board of Directors of the Registrant used criteria used in
similar proposals involving the Registrant in the past, including the relative
value of the assets of the Registrant; its present and past business
operations; the future potential of Lucas; its management; and the potential
benefit to the stockholders of the Registrant. The sole member of the Board of
Directors determined in his good faith that the consideration for the exchange
was reasonable, under these circumstances.
No director, executive officer or person who may be deemed to be
an affiliate of the Registrant had any direct or indirect interest in Lucas
prior to the completion of the Plan.
(b) The Registrant, through its wholly-owned subsidiary, Lucas,
intends to continue the business operations formerly conducted by Lucas, which
are described below under the caption Business. Also see the
financial statements of Lucas accompanying this Report, which are
described in Item 7, for a description of any assets of Lucas and a
description of its facilities.
Business
The Registrant, through its wholly-owned Nevada subsidiary, Lucas
Educational Systems, Inc. ("Lucas Educational Systems") is engaged in the
business of selling educational systems to public entities and private
individuals, though it has not had any previous material operations.
Lucas Educational Systems, was founded December 5, 1996 by Jerry
R. and Cheryl W. Lucas, who were its principal shareholders, prior to the
completion of the Plan.
Lucas Learning System
It was formed to develop, produce and market the extraordinary
learning and memory techniques and related products that have been developed
by Mr. Lucas over the past 30 years. These techniques (The Lucas Learning
System(Trademark)) enable anyone to learn, memorize and retain any subject
matter more thoroughly and effectively than using traditional repetition-based
methods of learning and memorization. The Lucas Learning System(Trademark)
(LLS (Trademark)) makes learning fun again. It is based on visual-reinforced
association, which is how children learn before they are able to read.
Because of its extraordinary effectiveness in creating an ability to retain
information, Mr. Lucas has trademarked the following phrase to describe his
system, "Learning that lasts"(Trademark).
Mr. Lucas' vision is to change the way people learn --"Making a
difference in people's lives." The premise of The Lucas Learning
System (Trademark) is that memory requires that something be "registered" in
the mind and that it is much easier for a picture of something tangible to
register than an intangible concept, word, phrase, etc.
Lucas Educational Systems' products not only teach an extraordinarily
effective way of learning, but they also apply the technique to specific
subject matter, maximizing the learning process and minimizing the effort
required by the user to acquire knowledge. Numerous religious and educational
leaders, as well as seminar attendees have endorsed its technique and
products.
License
Mr. Lucas has granted Lucas Educational Systems an exclusive,
worldwide, 99-year license to the technique for a wide variety of products -
many complete, but several more in various stages of design and development.
Lucas Educational Systems also intends to design and develop additional, as
yet, unformulated products. In return for the license, Mr. Lucas will be paid
royalties of 8% on revenues realized by Lucas Educational Systems related to
sales of the technique and products. (A copy of the license accompanies this
Report and is incorporated herein by reference. [See Item 7.]) During the
term of the license, Mr. Lucas will have the right to resell certain products
through his seminars and he retains rights to certain usages of these
products; the products will be purchased from Lucas Educational Systems at its
cost plus a percentage markup.
Although potential additional business ventures of Mr. Lucas will not be
owned or licensed to Lucas Educational Systems, it is expected to derive
significant promotional and advertising benefit from them, including:
A planned recreational theme park, which would be centered around the
characters created for the contemplated children's series of products;
Two television learning programs for children utilizing a number of
characters and concepts developed by Mr. Lucas;
Day care schools utilizing the LLS(Trademark) learning techniques; and
seminars and speeches given by Mr. Lucas - Dr. Memory(Trademark).
It will have the marketing rights to the characters and products made
possible by these various ventures.
Copyrights
Lucas Educational Systems' current and future products are and will be
protected by copyrights. The Lucas Learning System(Trademark) is applied in
all of the products to make learning fun, easy and long lasting.
Company's Market
The market for the Company's products is great, consisting of among
others:
Parents who desire to help their children learn easier and to make
learning enjoyable.
People of all ages who desire to be able to memorize certain
Biblical verses and facts.
Business people who desire to remember names and faces easier.
Students who desire to study effectively and retain what they study
for college entrance exams.
Students and others who wish to learn and retain grammar rules.
Students and others who wish to learn and retain foreign languages
(or foreign students who wish to learn English).
Just about everybody who desires to be able to learn easier and
retain in memory what they have learned longer.
Many of the products have already been developed and are currently
being sold by Mr. Lucas in seminars given by him. Several of the products
help people in learning and memorizing Bible verses and facts. Others help
children learn various subjects, such as the multiplication times tables, U.S.
states and their capitals and the U.S. presidents. One is directed at
helping people remember names and faces. And, several are aimed at teaching
people foreign languages, including English.
One of the products, The Memory Book, is a former nationwide best
seller and was number two on the New York Times' "Best Seller" list for 50
weeks. The publishing rights to this book belong to the original publisher,
but the book will be purchased at a large discount and resold by Lucas
Educational Systems. In addition, Mr. Lucas has written an updated, more
detailed and comprehensive book, "Learning How To Learn," the rights to which
are included in the license to Lucas Educational Systems.
Marketing Channels
Mr. Lucas has experience with direct marketing of his products using
television appearances and spot commercials. Direct marketing typically
provides a higher percentage of revenues to the Company. Consequently, based
on the success realized previously by Mr. Lucas and the broad potential appeal
of his products, Lucas Educational Systems intends to sell its products, at
least initially, directly to consumers. Methods used to reach customers may
include: two-minute spot commercials; QVC Shopping Network; talk-show
appearances on both Christian and secular programs; an Internet web site with
commercial capabilities; and joint-ventures with video game companies,
software companies and the National Basketball Association.
In addition, the Registrant believes that the more expanded time and
visual-demonstration format of infomercials may allow viewers to more fully
understand the benefit of Lucas Educational Systems products. As a result,
Lucas Educational Systems will research using this channel as a means of
presenting the full range of products. This would have the added advantage of
helping viewers realize the broad applicability of the technique to all fields
of study, which could well result in customer requests for new products.
Management
Names Title or Position Age
Jerry R. Lucas President and Director 57
William R. Murray Vice President 56
Cheryl W. Lucas Secretary/Treasurer and Director 43
Resumes
Jerry R. Lucas. President, age 57. Mr. Lucas was Phi Beta Kappa graduate of
Ohio State University, he has written extensively on learning and
memory training. Learning and memory training have been passions of his since
his childhood days. While still in the NBA, Mr. Lucas co-authored The Memory
Book, which was number two on the New York Times' "Best Seller" list for 50
weeks. The book sold over three million copies. Mr. Lucas has 30 years'
experience in developing, promoting and selling learning and memory training
products. His promotional efforts have been greatly aided by his expertise in
another field-basketball. He was voted one of the top 50 basketball players
of all time, having been a three-time college All-American at Ohio State and a
seven-time All-Pro with the New York Knicks. He is one of only two players to
average over 20 points and 20 rebounds per game during an entire NBA season-a
feat he accomplished twice.
William R. Murray. Vice President, age 56. Mr. Murray has over 30 years'
experience, including significant management experience relating to Lucas
Educational Systems intended operations. Early in his career, he was
responsible for ordering and stock control for a major grocer. From 1986 to
1989, he was in charge of product development and inventory/warehouse
management for Edwin Cole Ministries, an operation similar in distribution
channels and merchandising approach to Lucas Educational Systems. In
addition, Mr. Murray has considerable experience in booking engagements for
various individuals and groups, which will be invaluable in providing Mr.
Lucas with opportunities to appear on talk-shows and the like.
Cheryl W. Lucas. Secretary/Treasurer, age 43. Mrs. Lucas is President and
Director of Second Chance for Love Humane Society, was Vice President of
Marketing of CCI Communications. She was also Vice President of the Latin
American Division of Parker International. She received a B.A. Degree in
Criminal Justice in 1976 from California State University.
Risk Factors
Limited Operating History. The Registrant was founded on June 11,
1992; and accordingly, has only a limited operating history upon which an
evaluation of the Registrant and its prospects can be based. Its prospects
must be considered in light of the risks, expenses and difficulties
frequently encountered by companies in their early stage of development,
particularly companies in new and rapidly evolving markets. To address these
risks, it must, among other things, respond to competitive developments. There
can be no assurance that the Registrant will be successful in addressing such
risks.
Future Capital Requirements; Uncertainty of Future Funding. The
Registrant presently has extremely limited operating capital. It will require
substantial additional funding in order to realize its goals of commencing
nationwide marketing of its products and services. Depending upon the growth
of its business operations and the acceptance of its products and services,
the Registrant will need to raise substantial additional funds through equity
or debt financing, which may be very difficult for such a speculative
enterprise. There can be no assurance that such additional funding will be
made available to the Registrant, or if made available, that the terms thereof
will be satisfactory to the Registrant. Furthermore, any equity funding will
cause a substantial decrease in the proportional ownership interests of
existing stockholders.
Governmental Regulation. The Registrant is not currently subject to
direct regulation by any government agency, other than regulations applicable
to businesses generally.
No Market for Common Stock; No Market for Shares. There is
currently no market for the Registrant's common stock. Management will seek a
listing of the Registrant's common stock on the OTC Bulletin Board of
the National Association of Securities Dealers, Inc. (the "NASD"), under the
symbol "LESI"; however, there can be no assurance that such market will ever
develop or be maintained. Any market price that may develop for shares of
common stock of the Registrant is likely to be very volatile, and factors such
as success or lack thereof in developing and marketing the Registrant's
products and services, competition, governmental regulation and fluctuations
in operating results may all have a significant effect. In addition, the
stock markets generally have experienced, and continue to experience, extreme
price and volume fluctuations which have affected the market price of many
small capital companies and which have often been unrelated to the operating
performance of these companies. These broad market fluctuations, as well as
general economic and political conditions, may adversely affect the market
price of the Registrant's common stock in any market that may develop.
Dilution. Dilution usually results from the substantially lower
prices paid by insiders for their securities in a company when compared with
the price being paid by other investors. Jerry R. Lucas and Cheryl W. Lucas
jointly received 8,500,000 "unregistered" and "restricted" post-split shares
of the Registrant under the Plan and William R. Murray received 200,000
"unregistered" and "restricted" post-split shares under the Plan. Lucas had a
Total Stockholders' Equity (Deficit) of approximately ($756) as of September
30, 1997. See Financial Statements of Lucas for the periods ended June 30,
1997 (audited) and September 30, 1997 (unaudited) and the Pro Forma Combined
Balance Sheets and Statements of Operations of the Registrant and Lucas,
taking into account the completion of the Plan, and as described under Item 7.
The Board of Directors has also adopted a Consultants' Plan pursuant
to which post-split shares will be issued for $0.01 per share for services
rendered by two individuals consultants to the Company (collectively, the
"Consultants") for an aggregate total of 168,750 shares ($1,687)of the
Company's common stock. The Consultants are as follows, to-wit: Leonard W.
Burningham, Esq., 118,750 shares; and Dennis Nielsen, 50,000 shares. Mr.
Burningham is one of the attorneys for the Registrant and Mr. Neilsen is a
"due diligence" consultant.
An S-8 Registration Statement covering the shares of common stock to
be issued to these Consultants has been or will be filed with the Securities
and Exchange Commission at or about the time of the filing of this Report,
together with a copy of the Plan, and is or will, on filing, be incorporated
herein by reference.
The issuance of the securities to Mr. and Mrs. Lucas, Mr. Murray and
to these Consultants, as aforesaid, has and will substantially dilute the
interest of other stockholders in the Registrant.
Future Sales of Common Stock. There is presently no market for
the shares of common stock of the Registrant. See the Risk Factor "No Market
for Common Stock; No Market for Shares," above. There are presently 2,018,750
shares of common stock of the Registrant which are believed to be freely
tradeable in the over-the-counter market. The sale of the securities by the
Consultants could have a substantial adverse effect on any market which may
develop in the Registrant's securities, and potential investors in the
Registrant's securities should carefully weigh the present limited "public
float" of the Registrant's securities. Future sales of securities by Mr. and
Mrs. Lucas and Mr. Murray pursuant to Rule 144 of the Securities and Exchange
Commission may also have an adverse impact on any market which may develop in
the Registrant's securities. Presently, Rule 144 requires a one year holding
period prior to public sale of "restricted securities" in accordance with this
Rule; Mr. and Mrs. Lucas and Mr. Murray could each sell (I) an amount equal to
1% of the total outstanding securities of the Registrant in any three month
period or (ii) the average weekly reported volume of trading in such
securities on all national securities and exchanges or reported through the
automated quotation system of a registered securities association during the
four calendar weeks preceding the filing of notice under Rule 144, with the
one year holding period to have commenced on November 11, 1997.
Voting Control. By virtue of their collective ownership of
approximately 81% of the Registrant's outstanding voting securities, Mr. and
Mrs. Lucas and Mr. Murray have the ability to elect all of the Registrant's
directors, who in turn elect all executive officers, without regard to the
votes of other stockholders. Collectively, these persons may be deemed to
have absolute control over the management and affairs of the Registrant.
Dependence on Key Personnel. The Registrant's performance is
substantially dependent on the performance of its executive officers and key
employees. Given the Registrant's early stage of development, the Registrant
is dependent on its ability to retain and motivate high quality personnel,
especially its current management. The Registrant does not have a "key
person" life insurance policy on any of its employees. The loss of the
services of any of its executive officers, especially those of Mr. and Mrs.
Lucas or other key employees could have a material adverse effect on the
business, operating results or financial condition of the Registrant.
Dividends. The Registrant does not anticipate paying dividends on
its common stock in the foreseeable future. Future dividends, if any, will
depend upon the Registrant's earnings, if any, and subscribers who anticipate
the need of cash dividends from their investment should refrain from the
purchase of the Shares being offered hereby.
Penny Stock. The Registrant's securities are deemed to be "penny
stock" as defined in Rule 3a51-1 of the Securities and Exchange Commission;
this designation may have an adverse effect on the development of any public
market for the Registrant's shares of common stock or, if such a market
develops, its continuation, as broker-dealers are required to personally
determine whether an investment in the securities is suitable for customers
prior to any solicitation of any offer to purchase these securities.
Penny stocks are securities (I) with a price of less than five
dollars per share; (ii) that are not traded on a "recognized" national
exchange; (iii) whose prices are not quoted on the NASDAQ automated quotation
system (NASDAQ-listed stocks must still meet requirement (I) above); or (iv)
of an issuer with net tangible assets less than $2,000,000 (if the issuer has
been in continuous operation for at least three years) or $5,000,000 (if in
continuous operation for less than three years), or with average annual
revenues of less than $6,000,000 for the last three years.
Section 15(g) of the Securities Exchange Act of 1934, as amended,
and Rule 15g-2 of the Securities and Exchange Commission require
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in
a penny stock for the investor's account. Potential investors in the
Registrant's common stock are urged to obtain and read such disclosure
carefully before purchasing any shares that are deemed to be "penny stock."
Further, Rule 15g-9 of the Securities and Exchange Commission
requires broker-dealers in penny stocks to approve the account of any investor
for transactions in such stocks before selling any penny stock to that
investor. This procedure requires the broker-dealer to (I) obtain from the
investor information concerning his or her financial situation, investment
experience and investment objectives; (ii) reasonably determine, based on that
information, that transactions in penny stocks are suitable for the investor
and that the investor has sufficient knowledge and experience as to be
reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a
signed and dated copy of such statement from the investor, confirming that it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it
more difficult for purchasers of the Registrant's common stock to resell their
shares to third parties or to otherwise dispose of them.
Indemnification of Directors, Officers, Employees and Agents. The
Certificate of Incorporation provides for indemnification to the fullest
extent allowed under the Delaware Corporation Laws Annotated. Generally,
under the Delaware General Corporation Law, a corporation has the power to
indemnify any person who is made a party to any civil, criminal,
administrative or investigative proceeding, other than action by or any right
of the corporation, by reason of the fact that such person was a director,
officer, employee or agent of the corporation, against expenses, including
reasonable attorney's fees, judgments, fines and amounts paid in settlement of
any such actions; provided, however, in any criminal proceeding, the
indemnified person shall have had no reason to believe the conduct committed
was unlawful. It is the position of the Securities and Exchange Commission
that indemnification against liabilities for violations of the federal
securities laws, rules and regulations is against public policy.
Item 3. Bankruptcy or Receivership.
None; not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
There has been no change in the Registrant's certifying accountant
during the past two years; the Registrant has not filed audited financial
statements with any previous 10-KSB Annual Report, claiming an exemption
therefrom under Rule 3-12 of Regulation S-X.
On completion of the Plan with Lucas, the new directors and executive
officers engaged Thurman Shaw & Company, L.C. of Salt Lake City, Utah, to
audit the financial statements of the Registrant for the previous three years
ended March 31, 1997, 1996 and 1995, copies of which have been filed with the
Securities and Exchange Commission as part of the Registrant's 10-KSB/A1 for
the fiscal year ended March 31, 1997, and which is incorporated herein by
reference.
Item 5. Other Events.
See Item 1.
Item 6. Resignations of Directors and Executive Officers.
As a result of the completion of the Plan, Jehu Hand, Esq. resigned
as the sole director and executive officer of the Registrant, and designated,
in seriatim, the directors and executive officers of Lucas to serve in their
same capacities in which they served under Lucas, until the next annual
meeting of stockholders and until their respective successors are elected and
qualified or until their prior resignation or termination. See Item 1(a).
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
Financial Statements for the three months ended September 30, 1997,
(unaudited) and from inception (December 5, 1996) to June 30, 1997 (audited)
for Lucas Educational Systems, Inc.
Report of Independent Auditor's Report
Balance Sheets
Statement of Operations
Statement of Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
(b) Pro Forma Financial Information.
Combined Balance Sheets, Combined Statements of Operations of Mirador
Equity Partners, LTD. and Lucas Educational Systems, Inc. as of September 30,
1997.
Report
Combined Balance Sheets
Combined Statements of Operations
Notes to Financial Statements
Exhibits.
Exhibit
Description of Exhibit* Number
Agreement and Plan of Exchange 2
Certificate of Amendment of Certificate of 3
Incorporation reflecting name change to
"Lucas Educational Systems, Inc." and forward
split of shares
Licensing and Royalty Agreement 10
Documents Incorporated by Reference*
S-8 Registration Statement to be filed simultaneously with or immediately
following the filing of this Report.
10-SB Registration Statement, as amended, filed June 17, 1994.
10-KSB Annual Report for the year ended March 31, 1997.
10-KSB/A1 Annual Report for the year ended March 31, 1997.
* Summaries of any exhibit are modified in their
entirety by this reference to each exhibit.
Item 8. Change in Fiscal Year.
None; not applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
None; not applicable.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
LUCAS EDUCATIONAL SYSTEMS, INC.
Date: 11/26/97 By:/s/Jerry R. Lucas
--------- -------------------------------
Jerry R. Lucas
President and Director
<PAGE>
LUCAS EDUCATIONAL SYSTEMS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited)
AND
FROM INCEPTION (DECEMBER 5, 1996) TO JUNE 30, 1997
AND
INDEPENDENT AUDITOR'S REPORT
David T. Thomson [letterhead]
Independent Auditor's Report
Board of Directors
LUCAS EDUCATIONAL SYSTEMS, INC.
Salt Lake City, Utah
I have audited the accompanying balance sheet of Lucas Educational Systems,
Inc. (A development stage company) as of June 30, 1997 and the related
statements of operations, stockholders' equity and cash flows from inception
(December 5, 1996) to June 30, 1997. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on the financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. 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. I believe that my audit provides a reasonable basis
for my opinion.
In my opinion, the financial statement referred to above present fairly, in
all material respects, the financial position of Lucas Educational Systems,
Inc.(A development stage company) as of June 30, 1997, and the results of its
operations and its cash flows from Inception (December 5, 1996) to June 30,
1997 in conformity with generally accepted accounting principles.
As discussed on Note 1, the Company has been in the development stage since
its inception on December 5, 1996. The Company has limited operating capital
with current liabilities exceeding current assets by $374, and development
stage deficit of $63. Realization of a major portion of the assets is
dependent upon the Company's ability to meet its future financing
requirements, and the success of future operations. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements as of June 30, 1997 and from inception to June 30,
1997, were audited by me and in my report dated August 18, 1997 I included the
above explanatory paragraph which described conditions that raised substantial
doubt about the Company's ability to continue as a going concern, but I have
not performed any auditing procedures since that date.
/s/David T. Thomson, P.C.
Salt Lake City,
Utah August 18, 1997
<TABLE>
LUCAS EDUCATIONAL SYSTEMS, INC.
(A Development Stage Company)
BALANCE SHEETS
<CAPTION>
ASSETS
September 30, June 30,
1997 1997
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash in bank $ 71 $ 91
Total Current Assets 71 91
OTHER ASSETS
Organization costs, less amortization
of $77 and $54 388 411
Total Other Assets 388 411
TOTAL ASSETS $ 459 $ 502
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,215 $ 465
Total Current Liabilities 1,215 465
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock; $.001 par value, 5,000,000
shares authorized, no shares issued
and outstanding
Common stock; $.001 par value, 50,000,000
shares authorized, 1,000 shares
issued and outstanding 1 1
Capital in excess of par value 99 99
Earnings (deficit) accumulated during the
development stage (856) (63)
Total Stockholders' Equity (Deficit) (756) 37
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 459 $ 502
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
LUCAS EDUCATIONAL SYSTEMS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<CAPTION>
For the From Earnings (Loss)
Three Months Inception Accumulated
Ended (December 5, 1996) During the
September 30, to June 30, Development
1997 1997 Stage
(Unaudited) (Unaudited)
<S> <C> <C> <C>
REVENUE $ - $ - $ -
EXPENSES
Bank charges 20 9 29
Amortization 23 54 77
Professional fees 750 - 750
793 63 856
NET INCOME (LOSS) $ (793) $ (63) $ (856)
EARNINGS (LOSS) PER SHARE $ (0.79) $ (0.44) $ (2.14)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
LUCAS EDUCATIONAL SYSTEMS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<CAPTION>
Earnings
(Loss)
Accumulated
Common Stock Capital in During the
Excess of Development
Shares Amount Par Value Stage
<S> <C> <C> <C> <C>
BALANCE, December 5, 1996
(inception) - $ - $ - $ -
Shares issued to initial
stockholders for cash,
at $.01 per share,
June 1997 1,000 1 99 -
Net income (loss) from
December 5, 1996 (inception)
to June 30, 1997 - - - (63)
BALANCE, June 30, 1997 1,000 1 99 (63)
Net income (loss) for the
three months ended
September 30, 1997
(Unaudited) - - - (793)
BALANCE, September 30,
1997 (Unaudited) 1,000 $ 1 $ 99 $ (856)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
LUCAS EDUCATIONAL SYSTEMS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<CAPTION>
For the From Earnings (Loss)
Three Months Inception Accumulated
Ended (December 5, 1996) During the
September 30, to June 30, Development
1997 1997 Stage
(Unaudited) (Unaudited)
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING
ACTIVITIES:
Bank charges $ (20) $ (9) $ (29)
Cash used in operating activities (20) (9) (29)
CASH FLOW FROM INVESTING ACTIVITIES: - - -
CASH FLOWS FROM FINANCING ACTIVITIES: - - -
Sale of common stock - 100 100
Cash provided by financing activities - 100 100
NET INCREASE (DECREASE) IN CASH (20) 91 71
CASH - BEGINNING OF PERIOD 91 - -
CASH - END OF PERIOD $ 71 $ 91 $ 71
RECONCILIATION OF NET INCOME
(LOSS) TO NET CASH
PROVIDED (USED) BY OPERATING
ACTIVITIES
NET INCOME (LOSS) $ (793) $ (63) $ (856)
Adjustment to reconcile net
income (loss) to net
cash provided (used) by
operating activities
Amortization of organization costs 23 54 77
Changes in assets and liabilities
Organization costs - (465) (465)
Accounts payable 750 465 1,215
Total Adjustments 773 54 827
NET CASH PROVIDED (USED)
BY OPERATING ACT $ (20) $ (9) $ (29)
</TABLE>
The accompanying notes are an integral part of these financial statements.
LUCAS EDUCATIONAL SYSTEMS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized under the laws of the State of Nevada
on December 5, 1996 and has elected a fiscal year end of June 30th. The
Company was formed for the purpose of engaging in the business of selling
educational systems to public entities or private individuals. The Company has
not commenced planned principle operations and is considered a development
stage company as defined in SFAS No. 7. The Company, has at the present time,
not paid any dividends and any dividends that may be paid in the future will
depend upon the financial requirements of the Company and other relevant
factors.
Net Earnings Per Share - The computation of net income (loss) per share of
common stock is based on the weighted average number of shares outstanding
during the period presented.
Organization Costs - The Company is amortizing its organization costs, which
reflect amounts expended to organize the Company, over sixty (60) months using
the straight-line method.
Income Taxes - Due to losses and no operations at September 30, 1997 and June
30, 1997 no provisions for income taxes has been made. There are no deferred
income taxes resulting from income and expense items being reported for
financial accounting and tax reporting purposes in different periods. The
Company at June 30, 1997 has a net operating loss carry forward(NOL) at $63.
The NOL will expire in the year 2012. A valuation allowance of $9 has been
established for those tax credits which are not expected to be realized.
Cash and Gash Equivalents - For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments purchased with a maturity
of three months or less to be cash equivalents. Through September 30, 1997 and
June 30, 1997 the Company did not have non-cash investing and financing
activities.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2 - COMMON STOCK TRANSACTIONS
The Company at June 11, 1997 sold 1,000 shares of common stock to initial
stockholders at $.01 per share for $100.
NOTE 3 - RELATED PARTY TRANSACTIONS
An officer of the Company is providing a mailing address to the Company
without charge. This service has been determined by the Company to have only
nominal value. As of September 30, 1997 and June 30, 1997 no compensation has
been paid or accrued to any officers or directors of the Corporation.
NOTE 4 - AGREEMENTS
On January 7, 1997, the Company entered into a consulting agreement with Smith
Consulting Services, Inc., a Utah corporation (Smith). The agreement is for
one year. Smith is to provide consulting services as outlined in the agreement
up to 15 hours per week for services rendered. Smith will receive shares of
the Company's common stock in an amount that will equal nine and one half
percent (9 1/2%) of the total issued and outstanding shares of common stock of
the Company after the completion of a merger or reorganization of the Company
with a public company. The Company will also reimburse Smith for certain fees
and costs as outlined in the agreement.
NOTE 5 - SUBSEQUENT EVENT
On August 13, 1997 the Company entered into a licensing and Royalty agreement
with Jerry R. and Chris W. Lucas (Licensor). The Company was granted exclusive
rights, license and privilege to develop, produce, manufacture, print, market,
sell, license, lease, rent, exhibit, broadcast, distribute, and otherwise
exploit licensor's properly as outlined in the agreement throughout the world
through December 31, 2096. The Company will pay a quarterly royalty of 8% of
the gross receipts as per provisions of the agreement.
<PAGE>
LUCAS EDUCATIONAL SYSTEMS, INC.
(Formerly Mirador Equity Partners, Ltd.)
LUCAS EDUCATIONAL SYSTEMS, INC.
PROFORMA COMBINED FINANCIAL STATEMENTS
(Unaudited)
September 30, 1997
<PAGE>
LUCAS EDUCATIONAL SYSTEMS, INC.
(Formerly Mirador Equity Partners, Ltd.)
LUCAS EDUCATIONAL SYSTEMS, INC
PROFORMA COMBINED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited proforma combined balance sheet and statement of
operations aggregates the unaudited balance sheet and statement of operations
of Mirador Equity Partners, Ltd. (Mirador) (A Delaware Corporation) as of
September 30, 1997, and the unaudited balance sheet and statement of
operations of Lucas Educational Systems, Inc. (Lucas) (a Nevada Corporation)
as of September 30, 1997, giving effect to a transaction which was completed
on November 7, 1997, wherein Mirador acquired Lucas as a wholly-owned
subsidiary (the "Acquisition"). This business combination is treated as a
recapitalization of Lucas with the issuance of shares for the net assets of
Mirador. Mirador issued common stock in exchange for all of the issued and
outstanding shares of Lucas. The following proforma balance sheet and
statement of operations uses management assumptions as described in the notes
and the historical financial information available at September 30, 1997. The
financial statements for Mirador at September 30, 1997 were unaudited and were
prepared by management with no opinion expressed on the financial statements.
The financial statements of Lucas at September 30, 1997 were unaudited and
were prepared by management and no opinion was expressed on those financial
statements. Again, the format and amounts used in these proforma financial
statements are based on those financial statements.
The Proforma combined balance sheet and statement of operations should be read
in conjunction with the separate financial statements and related notes
thereto of Mirador and Lucas. The proforma condensed combined financial
statements are not necessarily indicative of the condensed combined balance
sheet and statement of operations which might have existed for the period
indicated or the results of operations as they may be now or in the future.
<TABLE>
LUCAS EDUCATIONAL SYSTEMS, INC.
(Formerly Mirador Equity Partners, Ltd.)
LUCAS EDUCATIONAL SYSTEMS, INC.
PROFORMA COMBINED BALANCE SHEET
(Unaudited)
SEPTEMBER 30, 1997
Mirador Lucas
Equity Educational Proforma
Partners Systems Increase Proforma
Ltd. Inc. (Decrease) Combined
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ - $ 71 $ - $ 71
Total Current Assets - 71 - 71
OTHER ASSETS
Intangible assets, net - 388 - 388
Total Other Assets - 388 - 388
TOTAL ASSETS $ - $ 459 $ - $ 459
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 1,197 $ 1,215 $ (1,197) $1,215
Total Current Liabilities 1,197 1,215 (1,197) 1,215
STOCKHOLDERS EQUITY
Preferred Stock, $.001 par
value, 5,000,000 shares
authorized, no shares issued
and outstanding - - - -
Common stock, $.001 par value,
50,000,000 shares authorized,
10,718,750 shares issued and
outstanding 425 1 1,425 (1) 10,719
8,700 (2)
(1)(2)
169 (4)
Additional paid-in capital 821 99 (1,425)(1)
(8,700)(2)
(2,443)(3)
1,519 (4)
16,197 (5)
1 (2)
Retained earnings (deficit) (2,443) (856) (2,443)(3)(17,544)
(1,688)(4)
(15,000)(5)
Total Stockholders' Equity (1,197) (756) 1,197 (756)
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $ - $ 459 - $ 459
</TABLE>
The accompanying notes are an integral part of the proforma condensed combined
balance sheet.
<TABLE>
LUCAS EDUCATIONAL SYSTEMS, INC.
(Formerly Mirador Equity Partners, Ltd.)
LUCAS EDUCATIONAL SYSTEMS, INC.
PROFORMA COMBINED STATEMENT OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED SEPTEMBER 30, 1997
<CAPTION>
Mirador Lucas
Equity Educational Proforma
Partners Systems Increase Proforma
Ltd. Inc. (Decrease) Combined
<S> <C> <C> <C> <C>
REVENUE $ - $ - $ - $ -
EXPENSES
General and Administrative $ - $ 15 $ (15)(3)$ -
Bank charges 20 - - 20
Amortization 23 - - 23
Professional fees 750 - 1,688 (4)17,438
15,000 (5)
793 15 16,673 17,481
NET INCOME (LOSS) (793) (15) (16,673) $(17,481)
EARNINGS PER SHARE $ (0.00) $ (0.00) $ (0.00)
</TABLE>
The accompanying notes are an integral part of the proforma condensed combined
financial statements.
LUCAS EDUCATIONAL SYSTEMS, INC.
(Formerly Mirador Equity Partners, Ltd.)
LUCAS EDUCATIONAL SYSTEMS, INC.
PROFORMA COMBINED NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Mirador Equity Partners, Ltd.-The Company was incorporated under the laws of
the State of Delaware on June 11, 1992, for the purpose of seeking out
business opportunities, including acquisitions. The Company is a development
stage company and since inception, the Company's activities have been limited
to organizational matters.
Lucas Educational Systems, Inc.-The Company was organized under the laws of
the State of Nevada on December 5, 1996. The Company was formed for the
purpose of engaging in the business of selling educational systems to public
entities or private individuals. The Company is in the development stage and
has not commenced principal business activities.
Proforma Adjustments- (1)Prior to the Acquisition, Mirador effected a forward
split of its shares on a 4.357 for 1 basis. (2)Mirador acquired all of the
issued and outstanding shares of Lucas in exchange for 8,700,000 (post-split)
unregistered and restricted shares of previously authorized but unissued
common stock of Mirador. The acquisition has been treated as a
recapitalization of Lucas. (3)This is part of the recapitalization transaction
and entry. It eliminates the retained deficit of Mirador accounting for the
transaction as if the shares were exchanged by Lucas for the net assets of
Mirador. (4)Mirador issued 168,750 shares of its common stock at a price of
$.01 per share for a total of $1,688 for services rendered. (5)Mirador
officers and directors paid $1,197 of outstanding liabilities of the Company.
Also, a financial consultant to Lucas paid $15,000 for legal fees associated
with the reorganization. The total of $16,197 was treated as a contribution
to capital.
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT (the "Plan") is made this 7th day of November,
1997, between Mirador Equity Partners, Ltd., a Delaware corporation
("Mirador"); Jehu Hand, the principal stockholder and sole director and
executive officer of Mirador ("Hand"); Lucas Educational Systems, Inc., a
Nevada corporation ("Lucas Educational"); and the persons listed in Exhibit A
hereof who are the owners of record of all of the outstanding common stock of
Lucas Educational and who execute and deliver a copy of this Plan (the "Lucas
Educational Stockholders").
Mirador wishes to acquire all of the outstanding common stock of
Lucas Educational in exchange for common stock of Mirador in a transaction
qualifying as a tax-free exchange pursuant to Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended; and
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, IT IS AGREED:
Section 1
Exchange of Stock
1.1 Number of Shares. The Lucas Educational Stockholders
agree to transfer to Mirador at the closing (the "Closing") 100% of the
outstanding securities of Lucas Educational, which are listed in Exhibit A
hereof attached hereto and incorporated herein by reference (the "Lucas
Educational Shares"), in exchange for 8,700,000 post-split shares (as outlined
below in Section 1.5 hereof) of the one mill ($0.001) par value "unregistered"
and "restricted" common voting stock of Mirador.
1.2 Delivery of Certificates by Lucas Educational
Stockholders. The transfer of the Lucas Educational Shares by the Lucas
Educational Stockholders shall be effected by the delivery to Mirador at the
Closing of stock certificate or certificates representing the transferred
shares duly endorsed in blank or accompanied by stock powers executed in
blank, with all signatures witnessed or guaranteed to the satisfaction of
Mirador and with all necessary transfer taxes and other revenue stamps affixed
and acquired at the Lucas Educational Stockholders' expense.
1.3 Further Assurances. At the Closing and from time to
time thereafter, the Lucas Educational Stockholders shall execute such
additional instruments and take such other action as Mirador may request in
order to exchange and transfer clear title and ownership in the Lucas
Educational Shares to Mirador.
1.4 Resignation of Present Sole Director and Executive
Officer and Designation of New Directors and Executive Officers. On Closing,
the sole present director and executive officer of Mirador, Jehu Hand, Esq.,
shall resign and designate the directors and executive officers nominated by
Lucas Educational to serve in his place and stead, until the next respective
annual meetings of the stockholders and Board of Directors of Mirador, and
until their respective successors shall be elected and qualified or until
their respective prior resignations or terminations.
1.5 The Closing shall be subject to the Certificate of
Incorporation of Mirador being amended to effect a forward split of its
424,600 currently outstanding shares of common stock on a basis of 4.357 for
one (resulting in there being approximately 1,850,000 outstanding post-split
shares [depending upon rounding]), while retaining the present authorized
capital, shares and par value, with appropriate adjustments in the stated
capital and capital surplus accounts of Mirador, and to change the name of
Mirador to "Lucas Educational Systems, Inc."
1.6 Assets and Liabilities of Mirador at Closing.
Mirador shall have no material assets and no liabilities at Closing, and all
costs incurred by Mirador incident to the Plan shall have been paid or
satisfied.
Section 2
Closing
The Closing contemplated by Section 1.1 shall be held at the
offices of Leonard W. Burningham, Esq., Suite 205 Hermes Building, 455 East
500 South, Salt Lake City, Utah 84111, unless another place or time is agreed
upon in writing by the parties. The Closing may be accomplished by wire,
express mail or other courier service, conference telephone communications or
as otherwise agreed by the respective parties or their duly authorized
representatives.
Section 3
Representations and Warranties of Mirador and Hand
Mirador and Hand represent and warrant to, and covenant with, the
Lucas Educational Stockholders and Lucas Educational as follows:
3.1 Corporate Status. Mirador is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and is licensed or qualified as a foreign corporation in all
states in which the nature of its business or the character or ownership of
its properties makes such licensing or qualification necessary (Delaware
only.) Mirador is a publicly held company, having previously and lawfully
offered and sold a portion of its securities in accordance with applicable
federal and state securities laws, rules and regulations. There is presently
no public market for these or any other securities of Mirador.
3.2 Capitalization. The authorized capital stock of
Mirador consists of 20,000,000 shares of one mill ($0.001) par value common
voting stock, of which 424,600 shares are issued and outstanding, all fully
paid and non-assessable; and 1,000,000 shares of one mill ($0.001) par value
preferred stock, of which no shares are issued and outstanding. There are no
outstanding options, warrants or calls pursuant to which any person has the
right to purchase any authorized and unissued common stock of Mirador,
exclusive of 168,750 shares to be issued to two consultants as outlined in the
Consent of the Sole Director adopting, ratifying and approving this Plan.
3.3 Financial Statements. The financial statements of
Mirador furnished to the Lucas Educational Stockholders and Lucas Educational,
consisting of unaudited financial statements for the periods ended March 31,
1996 and 1995, attached hereto as Exhibit B and incorporated herein by
reference, and unaudited financial statements for the period ended September
30, 1997, attached hereto as Exhibit B-1 and incorporated herein by reference,
are correct and fairly present the financial condition of Mirador at such
dates and for the periods involved; such statements were prepared in
accordance with generally accepted accounting principles consistently applied,
and no material change has occurred in the matters disclosed therein, except
as indicated in Exhibit C, which is attached hereto and incorporated herein by
reference. Such financial statements do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading.
3.4 Undisclosed Liabilities. Mirador has no liabilities
of any nature except to the extent reflected or reserved against in its
balance sheets, whether accrued, absolute, contingent or otherwise, including,
without limitation, tax liabilities and interest due or to become due, except
as set forth in Exhibit C.
3.5 Interim Changes. Since the date of its balance
sheets, except as set forth in Exhibit C, there have been no (1) changes in
financial condition, assets, liabilities or business of Mirador which, in the
aggregate, have been materially adverse; (2) damages, destruction or losses of
or to property of Mirador, payments of any dividend or other distribution in
respect of any class of stock of Mirador, or any direct or indirect
redemption, purchase or other acquisition of any class of any such stock; or
(3) increases paid or agreed to in the compensation, retirement benefits or
other commitments to employees.
3.6 Title to Property. Mirador has good and marketable
title to all properties and assets, real and personal, reflected in its
balance sheets, and the properties and assets of Mirador are subject to no
mortgage, pledge, lien or encumbrance, except for liens shown therein or in
Exhibit C, with respect to which no default exists.
3.7 Litigation. There is no litigation or proceeding
pending, or to the knowledge of Mirador, threatened, against or relating to
Mirador, its properties or business, except as set forth in Exhibit C.
Further, no officer, director or person who may be deemed to be an affiliate
of Mirador is party to any material legal proceeding which could have an
adverse effect on Mirador (financial or otherwise), and none is party to any
action or proceeding wherein any has an interest adverse to Mirador.
3.8 Books and Records. From the date of this Plan to the
Closing, Mirador will (1) give to the Lucas Educational Stockholders and Lucas
Educational or their respective representatives full access during normal
business hours to all of its offices, books, records, contracts and other
corporate documents and properties so that the Lucas Educational Stockholders
and Lucas Educational or their respective representatives may inspect and
audit them; and (2) furnish such information concerning the properties and
affairs of Mirador as the Lucas Educational Stockholders and Lucas Educational
or their respective representatives may reasonably request.
3.9 Tax Returns. Mirador has filed all federal and state
income or franchise tax returns required to be filed or has received currently
effective extensions of the required filing dates.
3.10 Confidentiality. Until the Closing (and thereafter
if there is no Closing), Mirador and its representatives will keep
confidential any information which they obtain from the Lucas Educational
Stockholders or from Lucas Educational concerning the properties, assets and
business of Lucas Educational. If the transactions contemplated by this Plan
are not consummated by November 15, 1997, Mirador will return to Lucas
Educational all written matter with respect to Lucas Educational obtained by
Mirador in connection with the negotiation or consummation of this Plan.
3.11 Investment Intent. Mirador is acquiring the Lucas
Educational Shares to be transferred to it under this Plan for investment and
not with a view to the sale or distribution thereof, and Mirador has no
commitment or present intention to liquidate Lucas Educational or to sell or
otherwise dispose of the Lucas Educational Shares.
3.12 Corporate Authority. Mirador has full corporate
power and authority to enter into this Plan and to carry out its obligations
hereunder and will deliver to the Lucas Educational Stockholders and Lucas
Educational or their respective representatives at the Closing a certified
copy of resolutions of its Board of Directors authorizing execution of this
Plan by its officers and performance thereunder, and the sole director
adopting and delivering such resolutions is the duly elected and incumbent
director of Mirador.
3.13 Due Authorization. Execution of this Plan and
performance by Mirador hereunder have been duly authorized by all requisite
corporate action on the part of Mirador, and this Plan constitutes a valid and
binding obligation of Mirador and performance hereunder will not violate any
provision of the Articles of Incorporation, Bylaws, agreements, mortgages or
other commitments of Mirador.
3.14 Environmental Matters. Mirador has no knowledge of
any assertion by any governmental agency or other regulatory authority of any
environmental lien, action or proceeding, or of any cause for any such lien,
action or proceeding related to the business operations of Mirador. In
addition, to the best knowledge of Mirador, there are no substances or
conditions which may support a claim or cause of action against Mirador or any
of its current or former officers, directors, agents or employees, whether by
a governmental agency or body, private party or individual, under any
Hazardous Materials Regulations. "Hazardous Materials" means any oil or
petrochemical products, PCB's, asbestos, urea formaldehyde, flammable
explosives, radioactive materials, solid or hazardous wastes, chemicals, toxic
substances or related materials, including, without limitation, any substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," or "toxic substances" under any applicable
federal or state laws or regulations. "Hazardous Materials Regulations" means
any regulations governing the use, generation, handling, storage, treatment,
disposal or release of hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act and the Federal Water Pollution Control
Act.
3.15 Access to Information Regarding Lucas Educational. Mirador
acknowledges that it has been delivered copies of what has been represented to
be documentation containing all material information respecting Lucas
Educational and its present and contemplated business operations, potential
acquisitions, management and other factors; that it has had a reasonable
opportunity to review such documentation and discuss it, to the extent
desired, with its legal counsel, directors and executive officers; that it has
had, to the extent desired, the opportunity to ask questions of and receive
responses from the directors and executive officers of Lucas Educational, and
with the legal and accounting firms of Lucas Educational, with respect to such
documentation; and that to the extent requested, all questions raised have
been answered to its complete satisfaction.
Section 4
Representations, Warranties and Covenants of Lucas Educational
and the Lucas Educational Stockholders
Lucas Educational and the Lucas Educational Stockholders represent
and warrant to, and covenant with, Mirador as follows:
4.1 Lucas Educational Shares. The Lucas Educational
Stockholders are the record and beneficial owners of all of the Lucas
Educational Shares listed in Exhibit A, free and clear of adverse claims of
third parties; and Exhibit A correctly sets forth the names, addresses and the
number of Lucas Educational Shares respectively owned by the Lucas
Educational Stockholders.
4.2 Corporate Status. Lucas Educational is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada and is licensed or qualified as a foreign corporation in all
states in which the nature of its business or the character or ownership of
its properties makes such licensing or qualification necessary.
4.3 Capitalization. The authorized capital stock of
Lucas Educational consists of 50,000,000 shares of common voting stock, one
mill ($0.001) par value, of which 1,000 shares are issued and outstanding, all
fully paid and non-assessable; and 5,000,000 shares of preferred stock, one
mill ($0.001) par value per share, of which no shares are issued and
outstanding. There are no outstanding options, warrants or calls pursuant to
which any person has the right to purchase any authorized and unissued capital
stock of Lucas Educational, except to the extent that two consultants have
rendered services to Lucas Educational and are to be issued 168,750 shares of
Mirador as the successor to Lucas Educational, as outlined in Section 3.2
hereof.
4.4 Financial Statements. The financial statements of
Lucas Educational furnished to Mirador, consisting of audited financial
statements from the date of inception (December 5, 1996) to June 30, 1997, and
an unaudited balance sheet and income statement for the period ended September
30, 1997, attached hereto as Exhibit D, and incorporated herein by reference,
are correct and fairly present the financial condition of Lucas Educational as
of these dates and for the periods involved, and such statements were prepared
in accordance with generally accepted accounting principles consistently
applied. These financial statements do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading.
4.5 Undisclosed Liabilities. Lucas Educational has no
material liabilities of any nature except to the extent reflected or reserved
against in the balance sheets, whether accrued, absolute, contingent or
otherwise, including, without limitation, tax liabilities and interest due or
to become due, except as set forth in Exhibit E attached hereto and
incorporated herein by reference.
4.6 Interim Changes. Since the date of these balance
sheets, except as set forth in Exhibit E, there have been no (1) changes in
the financial condition, assets, liabilities or business of Lucas Educational,
in the aggregate, have been materially adverse; (2) damages, destruction or
loss of or to the property of Lucas Educational, payment of any dividend or
other distribution in respect of the capital stock of Lucas Educational, or
any direct or indirect redemption, purchase or other acquisition of any such
stock; or (3) increases paid or agreed to in the compensation, retirement
benefits or other commitments to their employees.
4.7 Title to Property. Lucas Educational has good and
marketable title to all properties and assets, real and personal, proprietary
or otherwise, reflected in these balance sheets, and the properties and assets
of Lucas Educational are subject to no mortgage, pledge, lien or encumbrance,
except as reflected in the balance sheet or in Exhibit E, with respect to
which no default exists.
4.8 Litigation. There is no litigation or proceeding
pending, or to the knowledge of Lucas Educational, threatened, against or
relating to Lucas Educational or its properties or business, except as set
forth in Exhibit E. Further, no officer, director or person who may be deemed
to be an affiliate of Lucas Educational is party to any material legal
proceeding which could have an adverse effect on Lucas Educational (financial
or otherwise), and none is party to any action or proceeding wherein any has
an interest adverse to Lucas Educational.
4.9 Books and Records. From the date of this Plan to the
Closing, the Lucas Educational Stockholders will cause Lucas Educational to
(1) give to Mirador and its representatives full access during normal business
hours to all of its offices, books, records, contracts and other corporate
documents and properties so that Mirador may inspect and audit them; and (2)
furnish such information concerning the properties and affairs of Lucas
Educational as Mirador may reasonably request.
4.10 Tax Returns. Lucas Educational has filed all federal
and state income or franchise tax returns required to be filed or has received
currently effective extensions of the required filing dates.
4.11 Confidentiality. Until the Closing (and continuously
if there is no Closing), Lucas Educational, the Lucas Educational Stockholders
and their representatives will keep confidential any information which they
obtain from Mirador concerning its properties, assets and business. If the
transactions contemplated by this Plan are not consummated by November 15,
1997, Lucas Educational, the Lucas Educational Stockholders will return to
Mirador all written matter with respect to Mirador obtained by them in
connection with the negotiation or consummation of this Plan.
4.12 Investment Intent. The Lucas Educational
Stockholders are acquiring the shares to be exchanged and delivered to them
under this Plan for investment and not with a view to the sale or distribution
thereof, and the Lucas Educational Stockholders have no commitment or present
intention to liquidate the Company or to sell or otherwise dispose of the
Mirador shares. The Lucas Educational Stockholders shall execute and deliver
to Mirador on the Closing an Investment Letter attached hereto as Exhibit F
and incorporated herein by reference, acknowledging the "unregistered" and
"restricted" nature of the shares of Mirador being received under the Plan in
exchange for the Lucas Educational Shares, and receipt of certain material
information regarding Mirador.
4.13 Corporate Authority. Lucas Educational has full
corporate power and authority to enter into this Plan and to carry out its
obligations hereunder and will deliver to Mirador or its representative at the
Closing a certified copy of resolutions of its Board of Directors authorizing
execution of this Plan by its officers and performance thereunder.
4.14 Due Authorization. Execution of this Plan and
performance by Lucas Educational hereunder have been duly authorized by all
requisite corporate action on the part of Lucas Educational, and this Plan
constitutes a valid and binding obligation of Lucas Educational and
performance hereunder will not violate any provision of the Articles of
Incorporation, Bylaws, agreements, mortgages or other commitments of Lucas
Educational.
4.15 Environmental Matters. Lucas Educational and the
Lucas Educational Stockholders have no knowledge of any assertion by any
governmental agency or other regulatory authority of any environmental lien,
action or proceeding, or of any cause for any such lien, action or proceeding
related to the business operations of Lucas Educational or its predecessors.
In addition, to the best knowledge of Lucas Educational, there are no
substances or conditions which may support a claim or cause of action against
Lucas Educational or any of its current or former officers, directors, agents,
employees or predecessors, whether by a governmental agency or body, private
party or individual, under any Hazardous Materials Regulations. "Hazardous
Materials" means any oil or petrochemical products, PCB's, asbestos, urea
formaldehyde, flammable explosives, radioactive materials, solid or hazardous
wastes, chemicals, toxic substances or related materials, including, without
limitation, any substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," or "toxic
substances" under any applicable federal or state laws or regulations.
"Hazardous Materials Regulations" means any regulations governing the use,
generation, handling, storage, treatment, disposal or release of hazardous
materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conservation and
Recovery Act and the Federal Water Pollution Control Act.
4.15 Access to Information Regarding Mirador. Lucas Educational
and the Lucas Educational Stockholders acknowledge that they have been
delivered copies of what has been represented to be documentation containing
all material information respecting Mirador and its present and contemplated
business operations, potential acquisitions, management and other factors;
that they have had a reasonable opportunity to review such documentation and
discuss it, to the extent desired, with their legal counsel, directors and
executive officers; that they have had, to the extent desired, the opportunity
to ask questions of and receive responses from the directors and executive
officers of Mirador, and with the legal and accounting firms of Mirador, with
respect to such documentation; and that to the extent requested, all questions
raised have been answered to their complete satisfaction.
Section 5
Conditions Precedent to Obligations of Lucas Educational, the Lucas
Educational Stockholders
All obligations of Lucas Educational and the Lucas Educational
Stockholders under this Plan are subject, at their option, to the fulfillment,
before or at the Closing, of each of the following conditions:
5.1 Representations and Warranties True at Closing. The
representations and warranties of Mirador contained in this Plan shall be
deemed to have been made again at and as of the Closing and shall then be true
in all material respects and shall survive the Closing.
5.2 Due Performance. Mirador shall have performed and
complied with all of the terms and conditions required by this Plan to be
performed or complied with by it before the Closing.
5.3 Officers' Certificate. Lucas Educational and the
Lucas Educational Stockholders shall have been furnished with a certificate
signed by the President of Mirador, in such capacity and personally, attached
hereto as Exhibit G and incorporated herein by reference, dated as of the
Closing, certifying (1) that all representations and warranties of Mirador
contained herein are true and correct; and (2) that since the date of the
financial statements (Exhibit B hereto), there has been no material adverse
change in the financial condition, business or properties of Mirador, taken as
a whole.
5.4 Opinion of Counsel of Mirador. Lucas Educational and
the Lucas Educational Stockholders shall have received an opinion of counsel
for Mirador, dated as of the Closing, to the effect that (1) the
representations of Sections 3.1, 3.2 and 3.12 are correct; (2) except as
specified in the opinion, counsel knows of no inaccuracy in the
representations in 3.5, 3.6 or 3.7; and (3) the shares of Mirador to be issued
to the Lucas Educational Stockholders under this Plan will, when so issued, be
validly issued, fully paid and non-assessable.
5.5 Assets and Liabilities of Mirador. Mirador shall
have no material assets and no liabilities at Closing, and all costs, expenses
and fees incident to the Plan shall have been paid.
5.6 Resignation of Sole Director and Executive Officer
and Designation of New Directors and Executive Officers. The present sole
director and executive officer of Mirador shall resign, and shall have
designated nominees of Lucas Educational as directors and executive officers
of Mirador to serve in their place and stead, until the next respective annual
meetings of the stockholders and Board of Directors of Mirador, and until
their respective successors shall be elected and qualified or until their
respective prior resignations or terminations.
5.7 Forward Split and Name Change of Mirador. The
requirements of Section 1.5 hereof shall have been fully satisfied at Closing.
Section 6
Conditions Precedent to Obligations of Mirador
All obligations of Mirador under this Plan are subject, at its
option, to the fulfillment, before or at the Closing, of each of the following
conditions:
6.1 Representations and Warranties True at Closing. The
representations and warranties of Lucas Educational and the Lucas Educational
Stockholders contained in this Plan shall be deemed to have been made again at
and as of the Closing and shall then be true in all material respects and
shall survive the Closing.
6.2 Due Performance. Lucas Educational and the Lucas
Educational Stockholders shall have performed and complied with all of the
terms and conditions required by this Plan to be performed or complied with by
them before the Closing.
6.3 Officers' and Stockholders' Certificate. Mirador
shall have been furnished with a certificate signed by the President of Lucas
Educational, attached hereto as Exhibit H and incorporated herein by
reference, dated as of the Closing, certifying (1) that all representations
and warranties of Lucas Educational and the Lucas Educational Stockholders
contained herein are true and correct; and (2) that since the date of the
financial statements (Exhibit D), there has been no material adverse change in
the financial condition, business or properties of Lucas Educational, taken as
a whole.
6.4 Opinion of Counsel of Lucas Educational. Mirador
shall have received an opinion of counsel for Lucas Educational, dated as of
the Closing, to the effect that (1) the representations of Sections 4.2, 4.3
and 4.13 are correct; (2) except as specified in the opinion, counsel knows of
no inaccuracy in the representations in 4.6, 4.7 or 4.8; (3) the Lucas
Educational Shares to be delivered to Mirador under this Plan will, when so
delivered, have been validly issued, fully paid and non-assessable.
6.5 Books and Records. The Lucas Educational
Stockholders or the Board of Directors of Lucas Educational shall have caused
Lucas Educational to make available all books and records of Lucas
Educational, including minute books and stock transfer records; provided,
however, only to the extent requested in writing by Mirador at Closing.
6.6 Acceptance by Lucas Educational Stockholders. The
terms of this Plan shall have been accepted by the Lucas Educational
Stockholders who own not less than 50.1% of the outstanding Lucas Educational
Shares by their execution and delivery of a copy of the Plan and related
instruments.
Section 7
Termination
Prior to Closing, this Plan may be terminated (1) by mutual
consent in writing; (2) by either the sole director of Mirador or Lucas
Educational and the Lucas Educational Stockholders if there has been a
material misrepresentation or material breach of any warranty or covenant by
the other party; or (3) by either the sole director of Mirador or Lucas
Educational and the Lucas Educational Stockholders if the Closing shall not
have taken place, unless adjourned to a later date by mutual consent in
writing, by the date fixed in Section 2.
Section 8
General Provisions
8.1 Further Assurances. At any time, and from time to
time, after the Closing, each party will execute such additional instruments
and take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise to
carry out the intent and purposes of this Plan.
8.2 Waiver. Any failure on the part of any party hereto
to comply with any of its obligations, agreements or conditions hereunder may
be waived in writing by the party to whom such compliance is owed.
8.3 Brokers. Each party represents to the other parties
hereunder that no broker or finder has acted for it in connection with this
Plan, and agrees to indemnify and hold harmless the other parties against any
fee, loss or expense arising out of claims by brokers or finders employed or
alleged to have been employed by he/she/it.
8.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been given if
delivered in person or sent by prepaid first-class registered or certified
mail, return receipt requested, as follows:
If to Mirador: 1500 Quail Street, Suite 550
Newport Beach, California 92660
With a copy to: Jehu Hand, Esq.
Hand & Hand
Suite 200, The Pavilion
24901 Dana Point Harbor Drive
Dana Point, California 92629
If to Lucas Educational:P. O. Box 789
Templeton, California 93465
With a copy to: Leonard W. Burningham, Esq.
455 East 500 South, #205
Salt Lake City, Utah 84111
If to the Lucas Educational To the Addresses listed in
Exhibit A
Stockholders:
8.5 Entire Agreement. This Plan constitutes the entire
agreement between the parties and supersedes and cancels any other agreement,
representation, or communication, whether oral or written, between the parties
hereto relating to the transactions contemplated herein or the subject matter
hereof.
8.6 Headings. The section and subsection headings in
this Plan are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Plan.
8.7 Governing Law. This Plan shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
except to the extent pre-empted by federal law, in which event (and to that
extent only), federal law shall govern.
8.8 Assignment. This Plan shall inure to the benefit of,
and be binding upon, the parties hereto and their successors and assigns;
provided however, that any assignment by any party of its rights under this
Plan without the prior written consent of the other parties shall be void.
8.9 Counterparts. This Plan may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement and
Plan of Reorganization effective the day and year first above written.
MIRADOR EQUITY PARTNERS, LTD.
Date: By:/s/Jehu Hand
-----------------------------------
Jehu Hand, President
Date: /s/Jehu Hand
-----------------------------------
Jehu Hand
LUCAS EDUCATIONAL SYSTEMS, INC.
Date: 11/7/97 By:/s/Jerry R. Lucas
-----------------------------------
Jerry R. Lucas, President
LUCAS EDUCATIONAL STOCKHOLDERS
Date: 11/7/97 /s/Jerry R. Lucas
-----------------------------------
Jerry R. Lucas
Date: 11/7/97 /s/Cheryl W. Lucas
------------------------------------
Cheryl W. Lucas
Date: /s/William R. Murray
------------------------------------
William R. Murray
EXHIBIT A
Number of Shares of
Number of Shares Mirador
Owned of to be
Name and Address Lucas Educational Received in Exchange
Jerry R. Lucas 977.012 8,500,000
and Cheryl W. Lucas
P. O. Box 789
Templeton, California 93465
William R. Murray 22.988 200,000
200 San Luis St., Apt. 31
Avila Beach, California 93424
<PAGE>
EXHIBIT B
MIRADOR EQUITY PARTNERS, LTD.
FINANCIAL STATEMENTS
FOR THE PERIODS ENDED
MARCH 31, 1997 AND 1996 (UNAUDITED)
<TABLE>
MIRADOR EQUITY PARTNERS, LTD.
(A Development Stage Company) Statements or Financial Position
<CAPTION>
ASSETS
March 31, March 31,
1997 1996
<S> <C> <C>
CURRENT ASSETS - CASH $ $
OTHER ASSETS
Organization Costs, net of accumulated
amortization of $263 and $210 (Note 1) 53
TOTAL ASSETS $ $ 53
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES - Accounts payable $ 1,167 $ 1,057
STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value; 1,000,000
shares authorized; no shares issued and
outstanding Common Stock. $.001 par value:
20,000.000 shares authorized; 424,600 and
400,000 shares issued and outstanding 425 425
Additional paid-in Capital 821 821
Accumulated deficit during the development stage (2,413) (2,250)
TOTAL STOCKHOLDERS' EQUITY (1,167) (1,004)
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ $ 53
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
MIRADOR EQUITY PARTNERS, LTD.
(A Development Stage Company) Statements of Operations
<CAPTION>
CUMULATIVE
FROM
FOR THE INCEPTION
YEAR ENDED (June 11, 1992)
TO TO
March 31 1997 March 31 1996 March 31 1997
<S> <C> <C> <C>
REVENUES $ $ $
OPERATING EXPENSES
General and Administrative 110 110 2,150
Amortization 53 54 263
TOTAL OPERATING EXPENSES 173 164 2,413
NET (LOSS) $ (163) $ (164) $ (2,413)
NET (LOSS) PER SHARE $ (nil) $ (nil) $ .01
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 424,600 424,600 418,913
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
MIRADOR EQUITY PARTNERS, LTD. Statement of Changes in Stockholders'
(A Development Stage Company) Equity From Inception (June 11, 1992)
Through March 31, 1997
<CAPTION>
Accumulated
Deficit
Common Stock Additional During the
Paid-In Development
Shares Amount Capital Stage Total
<S> <C> <C> <C> <C> <C>
Issuance of common stock
for cash 400,000 $ 400 $ 100 $ $ 500
Net (loss) (269) (269)
Balances at
March 31, 1993 400,000 400 100 (269) 231
Net (loss) (221) (221)
Contribution to capital 500 500
Sale of shares in
private placement 24,600 25 221 246
on September 30, 1993
Balances at
March 31, 1994 424,600 $ 425 $ 821 $ (490) $ 756
Net (loss) (unaudited) (1,596) (1,596)
Balances at
March 31, 1995
(unaudited) 424,600 $ 425 $ 821 $(2,086) $ (840)
Net (loss) (unaudited) (164) (164)
Balances at
March 31, 1996
(unaudited) 424,600 $ 425 $ 825 $ (2,250)$(1,004)
Net (loss) (unaudited) (163) (163)
Balances at March 31,
1997 (unaudited) 424,600 $ 425 $ 825 $ (2,413)$(1,167)
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<TABLE>
MIRADOR EQUITY PARTNERS, LTD.
(A Development Stage Company) Statements of Cash Flows
<CAPTION>
CUMULATIVE
FOR THE FOR THE FROM INCEPTION
YEAR YEAR June 11, 1992
ENDED ENDED TO
March 31, 1997 March 31, 1996 March 31, 1997
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) $ (163) $ (164) $ (2,413)
Add item not requiring the use
of cash - amortization 53 54 263
Increase (decrease) in accounts
payable 110 110 1,167
Net cash flows from operating
activities (983)
CASH FLOWS FROM INVESTING ACTIVITIES
Organization Costs 0 0 (263)
CASH FLOWS FROM FINANCING ACTIVITIES
Contribution to Capital 0 0 500
Sale of common stock 0 0 746
Net Cash flows from financing
activities 0 0 1,246
NET INCREASE IN CASH
CASH BALANCE AT BEGINNING OF PERIOD 0 0 0
CASH BALANCE AT END OF PERIOD $ 0 $ 0 $ 0
</TABLE>
The accompanying notes are an integral part of the financial statements.
MIRADOR EQUITY PARTNERS, LTD.
(A Development Stage Company) Notes to Financial Statements
NOTE I ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated under the laws of the State of Delaware on
June 11, 1992, for the purpose of seeking out business opportunities,
including acquisitions. The Company is in the development stage and will
be very dependent on the skills, talents, and abilities of management to
successfully implement its business plan. Due to the Company's lack of
capital, it is likely that the Company will not be able to compete with
larger and more experienced entities for business opportunities which are
lower risk and are more attractive for such entities. Business
opportunities in which the Company may participate will likely be highly
risky and speculative. Since inception, the Company's activities have
been limited to organizational matters. Organizational costs are
amortized on a straight-line basis over five years.
The financial statements as of and for the years ended March 31, 1997,
1996 and 1995 are unaudited, pursuant to the exemption provided by Rule
3-12 of Regulation S-X.
NOTE 2 CASH AND CASH EQUIVALENTS
The Company considers all short-term investments with an original
maturity of three months or less to be cash equivalents.
NOTE 3 RELATED PARTY TRANSACTIONS
The officer and director of the Company currently serves without
compensation.
An officer of the Corporation has advanced certain expenses on behalf of
the Company. As of March 31, 1995, 1996 and 1997 such expenses totaled
$947, $ 1,057 and $ 1,167. The Company has given the officer a demand
promissory note convertible into 155,500 shares of common stock at the
officer's option, which is included in accounts payable, representing
$1,555 of this obligation.
NOTE 4 INCOME TAXES
The fiscal year end of the Company is March 31st and an income tax return
has not been filed. However, if an income tax return had been filed, the
Company would have a net operating loss carry forward of $2,413 that would
begin expiring in the year 2010.
NOTE 5 STOCK OPTION PLAN
The Company has stock option plans for directors, officers, employees,
advisors, and employees of companies that do business with the Company,
which provide for non-qualified and qualified stock options. The Stock
Option Committee of the Board determines the option price which cannot be
less than the fair market value at the date of the grant of 110% of the
fair market value if the Optionee holds 10% or more of the Company's
common stock. The price per share of share subject to a Non-Qualified
Option shall not be less than 85% of the fair market value at the date of
the grant. Options generally expire either three months after termination
of employment, or ten years after date of grant (five years if the
optionee holds 10% or more of the Company's common stock at the time of
grant).
Options outstanding:
Shares allocated 2,000,000
Option price $ .50
Balance at inception -
Granted 40,000
Balance outstanding at
March 31, 1993 40,000
Granted -
Balance outstanding at
March 31, 1994 40,000
Granted 20,000
Lapsed 20,000
Balance Outstanding at
March 31, 1995 40,000
Year exercisable:
1997 40,000
<PAGE>
EXHIBIT B-1
UNAUDITED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 1997
<TABLE>
MIRADOR EQUITY PARTNERS, LTD.
(A Company in the Development Stage)
<CAPTION>
BALANCE SHEETS
ASSETS
March 31, September 30,
1997 1997
<S> <C> <C>
TOTAL ASSETS $ 0 $ 0
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES Accounts payable $ 1,167 $ 1,197
STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value; 1,000,000
shares authorized; no shares issued and
outstanding
Common Stock, $.001 Par value; 20,000,000
shares authorized; 424,600 shares issued
and outstanding 425 425
Additional paid-in Capital 821 821
Accumulated deficit during the development
stage (2,413) (2,443)
TOTAL STOCKHOLDERS' EQUITY (1,167) (1,197)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 0 $ 0
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
MIRADOR EQUITY PARTNERS, LTD.
(A Company in the Development Stage)
<CAPTION>
STATEMENTS OF OPERATIONS
CUMULATIVE
FOR THE SIX MONTHS FOR THE THREE MONTHS FROM INCEPTION
ENDED ENDED (JUNE 11, 1992)
September 30, September 30, TO
1997 1996 1997 1996 September 30, 1997
<S> <C> <C> <C> <C> <C>
REVENUES $ 0 $ 0 $ 0 $ 0 $ 0
OPERATING EXPENSES
General and
Administrative 30 30 15 15 2,180
Amortization 28 14 263
TOTAL OPERATING
EXPENSES 30 58 15 29 (2,443)
NET (LOSS) $ (30) $ (58) $ (15) $ (29) $ (2,443)
NET (LOSS) PER
SHARE $ (Nil) $(Nil) $(Nil) $(Nil) $ (.01)
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 424,000 424,600 424,600 424,000 420,214
</TABLE>
See accompanying Notes to Financial Statements.
<TABLE>
MIRADOR EQUITY PARTNERS, LTD.
(A Company in the Development stage)
<CAPTION>
STATEMENTS OF CASH FLOWS
CUMULATIVE
FOR THE SIX MONTHS FOR THE THREE FROM INCEPTION
ENDED MONTHS ENDED (June 11, 1992)
September 30, September 30, TO
1997 1996 1997 1996 September 30, 1997
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net (loss) $ (30) $ (58) $ (15) $ (29) $ (2,443)
Add item not requiring
the use of cash 0 28 0 14 263
Increase (decrease)
in accounts payable 30 30 15 15 (1,197)
Net cash flows from operating
activities 0 0 0 0 (983)
CASH FLOWS FROM INVESTING ACTIVITIES
Organizational Costs 0 0 0 0 (263)
CASH FLOWS FROM FINANCING ACTIVITIES
Contribution to Capital 0 0 0 0 500
Sale of Common Stock 0 0 0 0 746
Net cash flows from
financing activities 0 0 0 0 1,246
NET INCREASE (DECREASE) IN CASH (763)
CASH BALANCE AT BEGINNING
OF PERIOD 0 0 0 0 763
CASH BALANCE AT END OF
PERIOD $ 0 $ 0 $ 0 $ 0 $ 0
</TABLE>
See accompanying Notes to Financial Statements.
MIRADOR EQUITY PARTNERS, LTD.
(A Company in the Development Stage)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 1997
1. Comments
The accompanying financial statements are unaudited, but in the opinion of
the management of the Company, contain all adjustments, consisting of only
normal recurring accruals, necessary to present fairly the financial position
at September 30, 1997, the results of operations for the three and six months
ended September 30, 1997 and 1996, and the cash flows for the three and six
months ended September 30, 1997 and 1996.
Reference is made to the Company's Form 10-KSB for the year ended March
31, 1997. The results of operations for the three months ended September 30,
1997 are not necessarily indicative of the results of operations to be
expected for the full fiscal year ending March 31, 1998.
<PAGE>
EXHIBIT C
None.
<PAGE>
EXHIBIT D
LUCAS EDUCATIONAL SYSTEMS, INC.
FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited)
AND
FROM INCEPTION (DECEMBER 5, 1996) TO JUNE 30, 1997
(Audited)
(See Item 7 above.)
<PAGE>
EXHIBIT E
None.
<PAGE>
EXHIBIT F
Mirador Equity Partners, Inc.
1500 Quail Street, Suite 550
Newport Beach, California 92660
Re: Exchange of shares of Lucas Educational Systems, Inc.,
a Nevada corporation ("Lucas Educational"), for shares
of Mirador Equity Partners, Ltd., a Delaware
corporation ("Mirador" or the "Company")
Dear Ladies and Gentlemen:
Pursuant to that certain Agreement and Plan of Reorganization (the
"Plan") between the undersigned, Lucas Educational, the other stockholders of
Lucas Educational and Mirador, I acknowledge that I have approved this
exchange; that I am aware of all of the terms and conditions of the Plan; that
I have received and personally reviewed a copy of the Plan and any and all
material documents regarding the Company, including, but not limited to
Articles of Incorporation, Bylaws, minutes of meetings of directors and
stockholders, financial statements and reports filed with the Securities and
Exchange Commission during the past twelve months. I represent and warrant
that no director or officer of the Company or any associate of either has
solicited this exchange; that I am an "accredited investor" as that term is
known under the Rules and Regulations of the Securities and Exchange
Commission (see Exhibit "A" hereto); and/or, I represent and warrant that I
have sufficient knowledge and experience to understand the nature of the
exchange and am fully capable of bearing the economic risk of the loss of my
entire cost basis.
I further understand that immediately prior to the completion of
the Plan, Mirador had little, if any assets, of any measurable value, and that
in actuality, the completion of the Plan and the exchange of my shares of
Lucas Educational for shares of Mirador results in a decrease in the actual
percentage of ownership that my shares of Lucas Educational represented in
Lucas Educational prior to the completion of the Plan.
I understand that you have and will make books and records of your
Company available to me for my inspection in connection with the contemplated
exchange of my shares, options or warrants, and that I have been encouraged to
review the information and ask any questions I may have concerning the
information of any director or officer of the Company or of the legal and
accounting firms for the Company. I understand that the accountant for the
Company is Terrence J. Dunne, CPA, Suite 1100, West 717 Sprague, Spokane,
Washington 99204, Telephone (509) 747-6752; and that legal counsel for Mirador
is Jehu Hand, Esq., Suite 200, The Pavilion, 24901 Dana Point Harbor Drive,
Dana Point, California 92629, Telephone #(714) 489-2400; Mr. Hand is also the
sole director and executive officer of Mirador.
I also understand that I must bear the economic risk of ownership
of any of the Mirador shares, options or warrants for a long period of time,
the minimum of which will be one (1) year, as these shares are "unregistered"
shares and may not be sold unless any subsequent offer or sale is registered
with the United States Securities and Exchange Commission or otherwise exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "Act"), or other applicable laws, rules and regulations.
I intend that you rely on all of my representations made herein
and those in the personal questionnaire (if applicable) I provided to Lucas
Educational for use by Mirador as they are made to induce you to issue me the
shares of Mirador under the Plan, and I further represent (of my personal
knowledge or by virtue of my reliance on one or more personal
representatives), and agree as follows, to-wit:
1. That the shares being acquired are being received for
investment purposes and not with a view toward further distribution;
2. That I have a full and complete understanding of the phrase
"for investment purposes and not with a view toward further distribution";
3. That I understand the meaning of "unregistered" shares and
know that they are not freely tradeable;
4. That any stock certificate issued by you to me in connection
with the shares being acquired shall be imprinted with a legend restricting
the sale, assignment, hypothecation or other disposition unless it can be made
in accordance with applicable laws, rules and regulations;
5. I agree that the stock transfer records of your Company
shall reflect that I have requested the Company not to effect any transfer of
any stock certificate representing any of the shares being acquired unless I
shall first have obtained an opinion of legal counsel to the effect that the
shares may be sold in accordance with applicable laws, rules and regulations,
and I understand that any opinion must be from legal counsel satisfactory to
the Company and, regardless of any opinion, I understand that the exemption
covered by any opinion must in fact be applicable to the shares;
6. That I shall not sell, offer to sell, transfer, assign,
hypothecate or make any other disposition of any interest in the shares,
options or warrants being acquired except as may be pursuant to any applicable
laws, rules and regulations;
7. I fully understand that my shares which are being exchanged
for shares of the Company are "risk capital," and I am fully capable of
bearing the economic risks attendant to this investment, without
qualification; and
8. I also understand that without approval of counsel for
Mirador, all shares of Mirador to be issued and delivered to me in exchange
for my shares of Lucas Educational shall be represented by one certificate
only and which such certificate shall be imprinted with the following legend
or a reasonable facsimile thereof on the front and reverse sides thereof:
The shares, options or warrants of stock represented
by this certificate have not been registered under the
Securities Act of 1933, as amended, and may not be
sold or otherwise transferred unless compliance with
the registration provisions of such Act has been made
or unless availability of an exemption from such
registration provisions has been established, or
unless sold pursuant to Rule 144 under the Act.
Any request for more than one stock certificate must be
accompanied by a letter signed by the requesting stockholder setting forth all
relevant facts relating to the request. Mirador will attempt to accommodate
any stockholders' request where Mirador views the request is made for valid
business or personal reasons so long as in the sole discretion of Mirador, the
granting of the request will not facilitate a "public" distribution of
unregistered shares of Mirador.
You are requested and instructed to issue a stock certificate as
follows, to-wit:
________________________________________________________
(Name(s) and Number of Shares)
________________________________________________________
(Address)
________________________________________________________
(City, State and Zip Code)
If joint tenancy with full rights of survivorship is
desired, put the initials JTRS after your names.
Dated this ________ day of __________________________, 1997.
Very truly yours,
/s/Jerry R. Lucas
-----------------------------
/s/Cheryl W. Lucas
-----------------------------
Dated this 11th day of November, 1997.
Very truly yours,
/s/William R. Murray
-----------------------------
<PAGE>
EXHIBIT G
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Mirador Equity Partners, Ltd., a
Delaware corporation ("Mirador"), represents and warrants the following as
required by the Agreement and Plan of Reorganization (the "Plan") between
Mirador and Lucas Educational, a Nevada corporation ("Lucas Educational"), and
the stockholders of Lucas Educational (the "Lucas Educational Stockholders"),
to-wit:
1. That he is the President of Mirador and has been authorized
and empowered by its Board of Directors to execute and deliver this
Certificate to Lucas Educational and the Lucas Educational Stockholders;
2. Based upon his personal knowledge, information, belief and
opinions of counsel for Mirador regarding the Plan:
(I) All representations and warranties of Mirador
contained within the Plan are true and correct;
(ii) Mirador has complied with all terms and provisions
required of it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of Mirador as set forth in its
financial statements for the periods ended March 31,
1996 and 1995, except as set forth in Exhibit C to the
Plan.
MIRADOR EQUITY PARTNERS, LTD.
By:/s/Jehu Hand
----------------------
Jehu Hand, President
By:/s/Jehu Hand
----------------------
Jehu Hand, Personally
<PAGE>
EXHIBIT H
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Lucas Educational Systems, Inc.,
a Nevada corporation ("Lucas Educational"), represents and warrants the
following as required by the Agreement and Plan of Reorganization (the "Plan")
between Lucas Educational, its stockholders (the "Lucas Educational
Stockholders") and Mirador Equity Partners, Ltd., a Delaware corporation
("Mirador"), to-wit:
1. That he is the President of Lucas Educational and has been
authorized and empowered by its Board of Directors to execute and deliver this
Certificate to Mirador;
2. Based on his personal knowledge, information, belief:
(I) All representations and warranties of Lucas
Educational contained within the Plan are true and
correct;
(ii) Lucas Educational has complied with all terms and
provisions required of it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of Lucas Educational as set forth
in its financial statements for the period from
inception to June 30, 1997, and the period ended
September 30, 1997, except as set forth in Exhibit E
to the Plan.
LUCAS EDUCATIONAL SYSTEMS, INC.
By/s/Jerry R. Lucas
-------------------------
Jerry R. Lucas, President
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
MIRADOR EQUITY PARTNERS, LTD.
Mirador Equity Partners, Ltd., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: The name of the Corporation is Mirador Equity
Partners, Ltd.
SECOND: The following amendments were first adopted by the
Board of Directors and then adopted by certain stockholders of the Corporation
owning a majority of the outstanding voting securities of the Corporation, in
the manner prescribed by Sections 141, 228 and 242, respectively, of the
General Corporation Law of the State of Delaware.
RESOLVED, that the name of the Corporation be changed as follows,
to-wit:
ARTICLE FIRST: The name of the Corporation is "Lucas Educational
Systems, Inc."
FURTHER, RESOLVED that the Corporation effect a forward split of
the Corporation's $0.001 par value common stock on the basis of
4.357 shares for one, with any fractional shares to be rounded up
to the nearest whole share, while retaining the present authorized
shares and par value, with appropriate adjustments being made in
the additional paid in capital and stated capital accounts of the
Corporation; and
FURTHER, RESOLVED, that such amendments take effect on filing with
the office of the Secretary of State of the State of Delaware.
THIRD: These amendments do not provide for any exchange,
reclassification or cancellation of issued shares.
FOURTH: These amendments do increase the 424,600 common shares
currently outstanding to approximately 1,850,000 common shares, and increase
the stated capital from $424.60 to $1,850.
IN WITNESS WHEREOF, Mirador Equity Partners has caused this
Certificate to be signed by Jehu Hand, its President and Secretary, this 4th
day of November, 1997.
MIRADOR EQUITY PARTNERS, LTD.
By:/s/Jehu Hand
----------------------------------
Jehu Hand, President and Secretary
LICENSING AND ROYALTY AGREEMENT
THIS LICENSING AGREEMENT dated as of the 13 th day of August, 1997, by
and between Jerry R. Lucas and Cheri W. Lucas ("Licensor"), and Lucas
Educational Systems, Inc., a Nevada Corporation ("Licensee") is entered into
with reference to the following.
WHEREAS, Licensor owns all right, title and interest now or hereafter
existing (including, but not limited to, rights of copyright, trademark,
service mark and/or patent) in and to that certain memory training technique
and learning system presently entitled The Lucas Learning System(Trademark)
(the "Technique"), two television programs incorporating the Technique which
are tentatively entitled "Dr. Memory(Trademark)" and "WOW" (the "Programs")
and all of the characters, symbols, designs, logos, computer programs,
techniques, music, literary material and any other matters, ideas or things,
now existing or hereafter created, derived from, connected with and/or based
on, directly or indirectly, the Technique or the Programs (the foregoing shall
individually and collectively be referred to as "Licensor's Property");
WHEREAS, Licensor has the exclusive right to grant licenses for the use
and exploitation of Licensor's Property; and
WHEREAS Licensee desires the exclusive right, as applicable, to develop,
produce, manufacture, print, market, sell, license, lease, rent, exhibit,
broadcast, distribute and otherwise exploit Licensor's Property in the
territory identified below (each item of Licensor's Property actually
exploited by Licensee hereunder is sometimes hereinafter individually and
collectively referred to as the "Exploited Property").
NOW THEREFORE, in consideration of the premises and the mutual promises
contained herein, the parties hereto do hereby agree as follows:
1. Grant of License
1.1 Licensor hereby grants, assigns and sets over unto Licensee, and
Licensee hereby accepts, the exclusive right, license and privilege (the
"Licensee"), as applicable, to develop, produce, manufacture, print, market,
sell, license, lease, rent, exhibit, broadcast, distribute and otherwise
exploit Licensor's Property throughout the world (the "Territory") for a term
commencing upon the date hereof and ending on December 31, 2096 (the "Term")
unless sooner terminated pursuant to Section 3.2, below. The License is
subject to all the terms and conditions hereof, each of which shall operate as
express conditions precedent to the License. Included within the License is
the right to exploit those existing products enumerated on Schedule "A" hereto
and to develop and exploit those products currently in development and
enumerated on Schedule "B" hereto and to exploit those characters and songs
enumerated on Schedule "C" hereto. Notwithstanding the foregoing, Licensor
reserves to itself and excludes from the License the following which may be
used, given, exercised, and/or exploited, as applicable, by Licensor or its
assignees or licensees without any charge, lien, encumbrance, limitation or
claim of any nature whatsoever in favor of Licensee: personal endorsements by
Jerry Lucas personally or as Dr. Memory or by his family; two television
programs incorporating the Technique which are tentatively entitled "Dr.
Memory " and "WOW" (the "Programs"); any and all electronic reproductions of
said television programs including videos, CD Roms and audio cassettes
(including all constituent elements thereof); speeches given or seminars
taught personally by Jerry Lucas; the right to develop and establish any
theme, amusement and/or recreational park(s) based on or related to Licensor's
Property; the right to develop and establish preschools, schools and learning
centers based on or related to the Licensor's Property; the right to develop,
produce and/or exploit motion pictures (including all constituent elements
thereof) based on or related to the Licensor's Property; the right to
develop, produce and/or exploit a daily syndicated newspaper column
tentatively known as Remember This; the right to consult with and/or teach for
SER - Jobs for Progress, Inc.
1.2 The License shall terminate and revert to Licensor, free and clear
of any claim, lien, encumbrance or charge in favor of Licensee or any person,
firm, corporation, association, partnership, organization or other enterprise
organized or operating under the laws of any jurisdiction (individually and
collectively "Person") deriving rights through or by means of Licensee, upon
expiration or termination of the Term, immediately and without any action or
notice by Licensor, Licensee or any Person. Licensee shall not at any time
enter into any agreement with any Person for the exercise of any rights
involving Licensor's Property after expiration of the Term.
1.3 Prior to undertaking any exploitation of Licensor's Property
pursuant to the License, Licensee shall in each instance give Licensor written
notice thereof, which notice shall set forth in sufficient detail all of the
material terms of such intended exploitation, and Licensee shall not undertake
the particular form of exploitation of Licensor's Property described in said
notice unless Licensor gives its approval thereof, in writing. Licensor shall
not act unreasonably in withholding such approval. Without limiting the
generality of the foregoing, such notice to Licensor shall include, without
limitation, (I) whether the form of exploitation in question will be
undertaken by Licensee itself or by a third party licensee(s) of Licensee,
(ii) if the latter, the name and a description of such third party
licensee(s), and (iii) the material terms of any and all agreements intended
to be entered into as part of such exploitation. To eliminate any doubt,
Licensee understands and agrees that each and every form of exploitation of
Licensor's Property under this Agreement requires Licensor's prior written
consent as aforesaid. By way of example, if Licensee desired to enter into a
licensing agreement with a toy company for the manufacture and sale of games,
puzzles and toys based upon the Dr. Memory or WOW Television Programs,
Licensee must first notify Licensor of such intended exploitation, providing
Licensor with the name of the toy company involved and all of the material
terms and conditions of the agreement to be entered into by Licensee with such
toy company, and Licensee shall only proceed with such exploitation of
Licensor's Property if Licensor, in writing, gives its approval thereof.
1.4 All rights in and to Licensor's Property not expressly herein
granted to Licensee (including without limitation those reserved rights set
forth in subparagraph 1.1 above) are expressly reserved and retained by
Licensor and, subject to the terms and conditions hereof, may be freely
exercised by Licensor or its assignees or licensees without any charge, lien,
encumbrance, limitation or claim of any nature whatsoever in favor of
Licensee. Without limiting the generality of the foregoing, all copyrights,
trademarks, service marks and/or patents in and to Licensor's property are and
shall remain the sole and exclusive property of Licensor. Licensee has no
rights to develop and/or produce any television programs incorporating the
Technique without the express written approval of Licensor.
1.5 Licensee acknowledges and agrees that all of Licensor's property
is and shall be, as between Licensor and Licensee, the sole and exclusive
property of Licensor, whether created by or under the direction of Licensee or
its licensees. Subject to the terms and conditions of this Agreement, Licensee
acknowledges and agrees that Licensor shall retain the free and unencumbered
right, license and privilege to use or authorize others to use, among other
things, elements of Licensor's Property in connection with promotional and
publicity activities relating to Licensor.
1.6 Licensee acknowledges that Licensor's Property has extensive
goodwill, publicity, recognition and secondary meaning in the public in the
Territory. Licensee acknowledges and agrees that any artwork, designs, visual
representations, photographs, characters, symbols, techniques, literary
material, ideas, logos, music, film or videotape based on or relating to, and
any such goodwill, publicity, recognition or secondary meaning, or any
additional rights, title or interest of any nature or description whatsoever
accruing to Licensor's Property, or any element thereof, created in whole or
in part by Licensee or its licensees or resulting from or derived in whole or
in part by any actions, statements or endeavors of the parties under this
Agreement, shall inure to the sole benefit of Licensor, as owner and employer,
shall be deemed transferred, assigned and conveyed to Licensor by Licensee
upon creation and thereupon be and become the sole and exclusive property of
Licensor, for all purposes hereunder, shall be deemed a part, portion and
element of Licensor's Property for all purposes, shall vest immediately and
irrevocably in Licensor as owner and employer upon creation and shall be free
and unencumbered of any right, claim, title, charge, lien, encumbrance,
limitation or claim in favor of Licensee, not expressly set forth in this
Agreement.
1.7 Licensee agrees not to attack, dispute or make any adverse claim
with respect to (I) Licensor's title, rights or interest in and to Licensor's
Property or any element thereof, or (ii) the validity of the License, and
hereby waives, releases and remises any rights or privilege it may have as a
member of the general public to use or authorize the use of Licensor's
Property, or any element thereof, in any manner not specifically authorized
herein. Licensee agrees that nothing contained herein is intended or shall be
construed as an assignment or grant to Licensee of any right, title and
interest, and Licensee shall not by this Agreement or its performance
hereunder acquire any such right, title or interest in Licensor's Property, or
any element thereof, except as expressly provided herein.
2. Exploited Property
2.1 The following shall apply to each item of Licensor's Property
which is exploited by being manufactured or printed and distributed to the
public, by sale or otherwise (for purposes of clarification only, examples of
such Exploited Property include, but are not limited to, stuffed animals,
posters, books, computer programs, games, puzzles, paper goods, and
educational seminars or courses and related study materials): Prior to
distribution of such particular item of Licensor's Property to the public,
Licensee agrees to submit to Licensor free of cost three (3) true and correct
samples thereof in the exact form in which it will be distributed to the
public, including all packaging and wrapping material and all promotional and
display material relating to such item (collectively the "Materials").
Licensee and, if applicable, its licensees shall not commence distribution of
the item in question until Licensor or its authorized representative has
approved in writing said true and correct samples and the Materials submitted
by Licensee, and Licensee and, if applicable its licensees agree to
manufacture and distribute such item only in the exact form and only with the
Materials for which a written approval of Licensor is in effect. Licensor
shall have the right to withdraw and terminate the effect of an approval given
pursuant to this subparagraph 2.1 by notice in writing to Licensee and such
withdrawal and termination of approval shall be effective on a date sixty (60)
days after service of said notice. Without limiting the generality of any
other provision of this Agreement and by way of elimination of doubt, in no
event shall Licensee or its licensees undertake to authorize any billboard,
television, radio or other mass media advertising in connection with any
particular item of Licensor's Property without Licensor's prior written
consent thereto as provided in this subparagraph 2.1.
2.2 The following shall apply to each item of Licensor's Property
which is exploited by being produced and distributed, broadcast and/or
exhibited (for purposes of clarification only, examples of such Exploited
Property include, but are not limited to, videos and stage productions):
2.2.1 Prior to commencement of production, Licensee agrees to
submit to Licensor a true and correct copy of the script (or if no script is
available, a detailed outline or treatment) of the particular proposed
production (the "Work") in the exact form in which it will be produced for
distribution, broadcast and/or exhibition, including all then available
promotional, display and packaging material relating thereto (collectively the
"Production Materials"). Licensee and, if applicable, its licensees shall not
commence production of the Work until Licensor or its authorized
representative has approved in writing said true and correct script, outline
or treatment, and Licensee and, if applicable, its licensees agree to produce
the Work substantially in the form for which a written approval by Licensor is
in effect. Moreover, Licensee and, if applicable, its licensees shall only
utilize Production Materials (including those substantially created) for which
a written approval is in effect.
2.2.2. When applicable, after completion of principal photography
but prior to completion of post production, Licensee agrees to have Licensor
view a true and correct copy of the Work which may be released and distributed
and/or exhibited only after written approval thereof by Licensor is in effect.
Without limiting the generality of any other provision of this Agreement and
by way of elimination of doubt, in no event shall any video or similar Work be
distributed, broadcast and/or exhibited without Licensor having final cut
approval and having delivered such approval in writing to Licensee.
2.3 With respect to each item of Licensor's Property which is
exploited in a manner different than that described in subparagraphs 2.1 or
2.2 above (for purposes of clarification only, examples of such Exploited
Property include, but are not limited to, the licensing of a character from
one of the Programs for use on the packaging of a breakfast cereal, the
licensing of the right to use one of such characters in a parade, and the
licensing of the right to use one of such characters in the advertising
campaign for a product or service), Licensor and Licensee shall mutually agree
upon an appropriate approval procedure in each instance which will result in
Licensor having rights of approval with respect to such Exploited Property
comparable to those rights of approval provided in said subparagraphs.
2.4 Licensee agrees that all copies, prints, productions or other
forms of Licensor's Property distributed to the public, by sale or otherwise,
shall be of such high standard and of such style, appearance and quality as to
be adequate and suited to their exploitation to the best advantage and to the
protection and enhancement of Licensor's Property and the goodwill pertaining
thereto. The manner, policy, style and method of exploitation shall in no
manner reflect adversely upon Licensor or in any manner disparage, harm or
bring into disrepute any elements of Licensor's Property.
2.5 Licensee agrees that it and, if applicable, its licensees will
indelibly mark and affix in type large enough to be read on each copy of
Exploited Property distributed, including all promotional or display material
and all packaging or wrapping material relating thereto, all applicable
notices of copyright, trademark, service mark, and/or patent as are required
by applicable law and/or requested by Licensor, from time to time, to protect
any of Licensor's interests in Licensor's Property. As an example of the
foregoing, a poster of one of the characters from the Programs would contain
the following notice:
"copyright (year of first publication) Jerry Lucas. Unauthorized
duplication is strictly prohibited"
2.6 Licensee agrees to procure copyright, trademark, service mark
and/or patent protection (as applicable) for Licensor's Property and for
anything created by Licensee or its licensees in connection with Licensor's
Property hereunder, at Licensee's expense but for the benefit of and under the
name of Licensor.
2.7 From time to time during the Term, and on. request of Licensor,
Licensee agrees to sell to Licensor, at Licensee's actual unit cost plus
twenty-five per cent (25%) of unit cost, samples, prints or copies, as
applicable, of the Exploited Property, in reasonable amounts requested by
Licensor. Actual unit cost is defined as the actual amount paid by Licensee
for manufacture, duplication or printing of items. An example subject to this
clause 2.7 is as follows: The unit cost of an item might be $10.00. Licensor
would pay $10.00 plus $2.50, which is 25% of actual unit cost, to Licensee for
this item. These items may be sold only at seminars or speeches given
personally by Jerry R. Lucas. There will be no royalty payments made by
Licensee to Licensor on these purchases.
3. Consideration
3.1 In consideration for the rights granted Licensee herein, Licensee
shall pay to Licensor the following Royalties:
3.1.1 With respect to Exploited Property sold directly by Licensee
to the public (or to wholesalers, distributors, retailers or the like for
ultimate sale to the public), or with respect to Exploited Property exploited
directly by Licensee via lease, rental, syndication or similar methods, and
with respect to Licensor's Property licensed to third party licensees for
exploitation, eight percent (8%) of Licensee's Gross Receipts. "Gross
Receipts" shall mean the aggregate of all revenues actually received by or
credited to Licensee which is derived by Licensee from exploitation of
Exploited Property. No Royalties will be paid on Shipping and Handling
Receipts.
3.1.2 No royalties shall be payable with respect to Exploited
Property sold but later returned (unless Licensee is nevertheless paid in
connection therewith) or with respect to Exploited Property acquired by
Licensor pursuant to subparagraphs 2.1 and 2.7 above.
3.1.3 Licensee shall send to Licensor a complete and detailed
royalty statement, together with payment of Royalties due to Licensor
hereunder, on or before the 15th day of February for the quarter annual period
ending December 31st; the 15th day of May for the quarter annual period ending
March 31 st; the 15th day of August for the quarter annual period ending June
30 and the 15th day of November for the quarter annual period ending September
30. Licensee shall add to such royalty statements such additional information
and attach -such additional substantiating documentation and schedules as,
from time to time, shall be reasonably requested by Licensor. Each royalty
statement shall be certified by the president or a vice-president of Licensee
as being true, accurate and complete and Licensee shall simultaneously
therewith pay to Licensor such sums as indicated in the statement for the
period to which the statement refers as may be due and payable to Licensor.
All payments hereunder shall be in U.S. dollars. In the event, however,
Licensor desires and so notifies Licensee, Licensee shall make any and all of
such payments by wire or cable transfer to such bank account or similar
institutional banking association as Licensor may designate in writing from
time to time.
3.1.4 Licensee shall be solely responsible for and shall pay all
taxes and duties of whatever nature (except for income taxes payable by
Licensor in respect of monies Licensor receives under this Agreement) incurred
in connection with the sale, exploitation or distribution of the Exploited
Property and Licensor shall have no responsibility or liability thereof.
3.1.5 In the event any royalty payment is not made at the date
above stated, in addition to the amount due, a late charge equal to ten (10%)
percent per annum of said amount shall be paid to Licensor. Neither the
billing nor collection of any late charge will relieve Licensee of its
obligation to make timely payments or act as a waiver of any other rights or
remedies available to Licensor under this Agreement.
4. Books and Records
4.1 Licensee agrees to keep accurate books and records covering all
transactions relative to this Agreement. At any time within four (4) years
after any statement is rendered to Licensor hereunder, Licensor shall have the
right to give Licensee written notice of Licensor's intention to examine
Licensee's books and records with respect to such statement. Such examination
shall be made during Licensee's usual business hours at the place where such
books and records are maintained or, at Licensor's option, at the principal
executive offices of Licensee. In addition to any such statements rendered
herein, the examination of books and records shall extend to any and all
documents which reflect or are likely to reflect:
4.1.1 The value of production, exploitation, rentals, leases,
license and/or sales of any of the Exploited Property.
4.1.2 Persons to whom the Exploited Property has been or may be
sold, rented, syndicated, leased or licensed.
4.1.3 The name of any Person deriving rights from Licensee with
respect to the Exploited Property.
4.2 In the event that any such examination and inspection shall
indicate that Licensee shall have made errors to the detriment of Licensor in
excess of five (5%) percent of the Royalties earned by Licensor during the
period(s) for which such examination and inspection relates, then Licensee, in
addition to the Royalties due Licensor, shall be solely responsible for and
shall pay the reasonable costs of such examination.
5. Licensee's Additional Responsibilities
5.1 It is the essence of this Agreement that Licensee shall develop,
produce, manufacture, print, market, distribute, sell and/or otherwise exploit
Licensor's Property in an ethical manner and in accordance with the provisions
and the intent of this Agreement, and shall not engage in unfair or
anti-competitive business practices. Licensee shall perform its obligations
hereunder in accordance with all applicable international, national, federal,
state and local laws, treaties and government orders and regulations. Where
applicable, Licensee's policy of sale, distribution and marketing shall be of
a high standard and such policy shall in no manner reflect adversely upon
Licensee or Licensor. Where applicable, Licensee shall manufacture and produce
only Exploited Property which is of uniform high quality and which conform
strictly to the standards and specifications required by this Agreement.
5.2 Licensee shall not cause or permit any expenses to be charged to
Licensor without Licensor's prior approval in writing in each instance.
5.3 Licensee shall require each Person deriving rights from Licensee
with respect to the Exploited Property to abide by the restrictions set forth
in this paragraph 5.
6. Protection of Licensor's Property
Licensee shall take all action necessary or desirable to protect
Licensor's Property and all rights (including, but not limited to, copyrights,
trademarks, service marks and/or patents) associated therewith. Each party
hereto shall notify the other in writing of any infringement or imitation of
Licensor's Property which comes to such party's attention. Licensee shall
take, at Licensee's expense, all steps necessary, including litigation, to
prevent infringements of Licensor's Property. All such claims, suits, actions
or proceedings shall be undertaken in Licensee's and/or Licensor's name.
Licensee shall not enter into any settlement of any such claim, suit, action
or proceeding without Licensor's approval, which shall not be unreasonably
withheld. All costs of prosecution of any such claim, suit, action or
proceeding commenced or prosecuted by Licensee, alone or together with
Licensor, shall be borne by Licensee, provided that Licensee shall have the
right to deduct such costs from any recovery before sharing such recovery
(fifty percent (50%) to each) with Licensor. In the event that Licensor, at
its option, undertakes the sole control and prosecution of any such claim,
suit, action or proceeding, then Licensor shall be responsible for and shall
bear the cost of its own counsel and shall be entitled to the entire recovery
therefrom.
7. Licensor's Warranties
7.1 Licensor represents and warrants that, to the best of its
knowledge, it is the sole owner of all right, title and interest in and to
Licensor's Property, and that there is no claim or litigation against Licensor
as defendant, existing or threatened, involving the title or ownership of
Licensor's Property.
7.2 Licensor represents and warrants that it has the full right, power
and authority to enter into this Agreement and to grant to Licensee the rights
herein granted and that Licensee's use of the Licensor's Property and the
rights herein granted in accordance with the provisions and conditions of this
Agreement will not violate or infringe upon the right of any third party,
including but not limited to, copyrights, trademarks, service marks, patents,
rights of privacy and rights of publicity.
7.3 Licensor hereby agrees to indemnify and hold Licensee harmless
from and against any claims, liabilities, demands, actions, costs and expenses
(including reasonable attorney's fees) asserted against or incurred by
Licensee arising in whole or in part out of any breach or alleged breach by
Licensor of this Agreement or the representations or warranties made by
Licensor hereunder which is reduced to a final nonappealable judgment or a
settlement with Licensor's written consent, which consent shall not be
unreasonably withheld. Licensee shall give Licensor prompt notice of any such
claim, liability, demand, action, cost or expense for which Licensor may incur
indemnity liability hereunder, and Licensor shall have the option, at its own
cost, to undertake and conduct the defense of any claim made or suit so
commenced.
7.4 Licensee agrees to give Licensor written notice of any claim,
demand or action ("Claim") to which the foregoing indemnity applies promptly
after obtaining knowledge thereof and shall make available to Licensor all
documents and information in possession of Licensee material to such claim.
Promptly after receipt of such notice or upon obtaining knowledge of any such
Claim, Licensor agrees to assume the defense of the Claim on behalf of itself
and Licensee. Licensee shall thereafter have the right to participate in the
defense of the Claim through counsel of its choice at its own expense;
provided that the final control and disposition of same (by settlement,
compromise or otherwise) shall remain with Licensor. If Licensor fails to
promptly assume the defense of any Claim, Licensee may do so and Licensor
shall promptly reimburse Licensee for all reasonable costs and expenses
(including but not limited to attorney's fees) incurred in connection
therewith as such are incurred.
8. Licensee's Warranties
8.1 Licensee represents and warrants that it has the full right, power
and authority to enter into this Agreement.
8.2 Licensee hereby agrees to indemnify and hold Licensor harmless
from and against any claims, liabilities, demands, actions, costs and expenses
(including reasonable attorney's fees) asserted against or incurred by
Licensor arising in whole or in part out of any breach or alleged breach by
Licensee of this Agreement or the representations or warranties made by
Licensee hereunder or from any claims arising out of the manufacture, sale,
use or possession of any Exploited Property hereunder, which is reduced to a
final non-appealable judgment or a settlement with Licensee's written consent,
which consent shall not be unreasonably withheld. Licensor shall give Licensee
prompt notice of any such claim, liability, demand, action, cost or expense
for which Licensee may incur indemnity liability hereunder, and Licensee shall
have the option, at its own cost, to undertake and conduct the defense of any
claim made or suit so commenced.
8.3 Licensee agrees to give Licensor written notice of any claim,
demand or action ("Claim") to which the foregoing indemnity applies promptly
after obtaining knowledge thereof and shall make available to Licensor all
documents and information in possession of Licensee material to such claim.
Promptly after receipt of such notice or upon obtaining knowledge of any such
Claim, Licensee agrees to assume the defense of the Claim on behalf of itself
and Licensor. Licensor shall thereafter have the right to participate in the
defense of the Claim through counsel of its choice at its own expense;
provided that the final control and disposition of same (by settlement,
compromise or otherwise) shall remain with Licensee. If Licensee fails to
promptly assume the defense of any Claim, Licensor may do so and Licensee
shall promptly reimburse Licensor for all reasonable costs and expenses
(including but not limited to attorney's fees) incurred in connection
therewith as such are incurred.
9. Restrictions on Assignment
Any attempt by Licensee to grant or to assign or part with possession or
control of the rights granted it under this Agreement shall constitute a
material breach of this Agreement and such grant and/or assignment shall be
null, void and without effect ab initio.
1O. Insurance
Licensee shall obtain and maintain at Licensee's sole cost and expense
throughout the Term and for at least three (3) years thereafter liability
insurance including, but not limited to, products liability insurance and
producers errors and omissions insurance with respect to the Exploited
Property naming Licensee as insured and Licensor as additional named insured,
which insurance shall provide, among other things, protection against any and
all claims, demands and causes of action arising out of defects; failure to
perform; defamation; copyright, trademark, service mark and/or patent
infringement; and infringement of privacy rights. Licensee shall require each
Person deriving rights from Licensee with respect to the Exploited Property to
obtain similar insurance with respect to the Exploited Property to which such
Person is granted any rights.
Such insurance shall be written by such insurers in such amounts or
limits with such deductibles and in such form as may be reasonably required by
Licensor. Such insurance policy shall also include a provision requiring the
insurance company to give Licensor prompt written notice, not exceeding thirty
(30) days, of any revision, modification or cancellation thereof. Promptly
after securing such policy, Licensee shall furnish Licensor with a certificate
of insurance or, at Licensor's request, a copy of the insurance policy.
Licensee's agreement (and the agreement of Licensee's subcontractors,
agents and licensees) to maintain such insurance is not an admission or
concession by Licensor that Licensor is in any manner liable to any person
with respect to any alleged or actual defects or errors or omissions with
respect to the Exploited Property, all such liability being borne by Licensee.
11. Termination
11.1 In addition to the rights granted in Paragraph 3.2 above,
Licensor shall have the right to immediately terminate this Agreement upon the
occurrence of the following:
11.1.1 If Licensee shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect or shall consent to the entering of an
order for relief in any involuntary case under such law or shall
consent to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, sequestrator (or similar appointee) of Licensee or any
substantial part of Licensee's property or if Licensee shall make any
assignment for the benefit of creditors or take any corporate act in
furtherance of the foregoing or is not able to pay its debts
when they become due or shall call a meeting of its creditors or shall cease
the conduct of its business; or
11.1.2 If a court having jurisdiction over the affairs or property
of Licensee shall enter a decree or order for relief in respect of Licensee or
any of its property in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect or shall appoint a
receiver, liquidator, assignee, trustee, sequestrator (or similar appointee)
of Licensee or any substantial part of Licensee's property or shall order the
winding up or liquidation of Licensee's affairs and such decree or order shall
remain unstaid and in effect for a period of thirty (30) consecutive days.
11.2 Licensor shall have the right, upon written notice to Licensee,
to terminate this Agreement if Licensee shall breach any of its material
obligations, covenants, representations or warranties as set forth under the
terms and conditions of this Agreement, which breach is not cured within
thirty (30) days after Licensee's receipt of written notice from Licensor
advising Licensee of the occurrence and nature of such breach; provided that
if such breach is incurable, the aforesaid "cure period" shall not be
applicable thereto.
11.3 Licensee shall have the right, upon thirty (30) days prior
written notice to Licensor, to terminate this Agreement in the event that
governmental regulations or other causes arising out of a state or national
emergency or war render Licensee's performance under this Agreement materially
impaired.
11.4 Notwithstanding any termination of this Agreement, Licensee shall
continue to account to Licensor pursuant to the provisions of this Agreement
for all sums which may be due and payable to Licensor.
12. Return of Materials
Upon the termination or expiration of this Agreement Licensee and its
licensees shall either immediately destroy or turn over to Licensor, as
Licensor in each instance shall elect, all materials utilized in the
development, production, manufacture and exploitation of the Exploited
Property, including without limitation, all artwork, photographs, positives,
negatives, master tapes, video tapes, plates and the like and any and all
other materials and things relating to, created in connection with, used with
or developed for the exploitation of Licensor's Property hereunder which is
then in the possession of Licensee and its licensees.
13. Notices
Notices by either party to the other shall be given in writing either in
person or by certified or registered mail, return receipt requested, postage
prepaid. All statements, payments and notices shall be given at the following
addresses of Licensor and Licensee unless written notice of change of address
is given.
If to Licensor: With a copy to:
Jerry and/or Cheri Lucas
P. O. Box 728 Templeton, CA 93465
If to Licensee: With a copy to:
Lucas Educational Systems, Inc. Leonard W. Burningham
P. O. Box 789 # 205 Hermes Building
Templeton, CA 93465 455 East Fifth South
Salt Lake City, Utah 84111
Notice shall be deemed effective forty-eight (48) hours after
posting.
14. Assignment
This Agreement and all rights and obligations under this Agreement are
personal to the parties hereto and no assignment of this Agreement or the
rights and obligations thereunder shall be valid without the prior written
consent of the non-assigning party. Notwithstanding the above, Licensor may
assign its rights and obligations to any corporation, person or partnership
which owns at least fifty percent (50%) of the then outstanding common stock
or any partnership for which Licensor is a general partner. In the event of
such an assignment, Licensor shall be relieved of all of its obligations
hereunder.
15. Construction
This Agreement shall be deemed a contract under and shall be construed
and enforced in accordance with the laws of the state of
California applicable to contracts fully executed and performed therein.
Should any dispute occur under or based in any manner upon this Agreement or
the actions or statements of the parties undertaken in connection with this
Agreement, both parties consent to and will submit to the exclusive
jurisdiction of a Federal or State Court in California.
16. Cumulative Remedies
All Licensor and Licensee's rights and remedies pursuant to this
Agreement shall be cumulative. A party's exercise of its rights under any one
provision of this Agreement or its rights at law shall not be deemed an
election of remedies. The waiver by either party of any breach of this
Agreement shall not be a waiver of any preceding or succeeding breach of the
same provision hereof and any waiver by either party shall not be deemed to be
a waiver of that party's right to exercise its rights or remedies under any
other provisions hereunder or shall effect either party's right to thereafter
enforce any provision hereto or to exercise any right or remedy in the event
of any other breach, whether or not similar. Neither party shall be deemed to
have waived any provision of this Agreement except by an instrument in writing
signed by a duly authorized agent of the party to be charged.
17. Entire Agreement
This Agreement constitutes the entire understanding between the parties
hereto and shall not be modified or amended unless by a document in writing
signed by both parties hereto.
18. Headings
Introductory headings at the beginning of the paragraphs hereof are
solely for the convenience of the parties and shall not be deemed to be a
limitation upon or description of the contents of any such paragraph.
19. Representations
All statements contained in this Agreement, in any certificate, royalty
statement, schedule or other instrument delivered by or on behalf of Licensee
on the one hand, or Licensor, on the other, pursuant hereto, or in connection
with the transactions contemplated hereby, shall be deemed representations and
warranties hereunder by Licensee on the one hand, and Licensor, on the other,
respectively. All such representations, warranties, agreements and covenants
shall survive throughout the Term and any investigation at any time made by or
on behalf of Licensee, on the one hand, or Licensor, on the other.
20. Invalid Provisions
The invalidity or unenforceability of any particular provision hereto
shall not affect the other provisions hereof, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provision was
omitted.
21 . Gender and Number
As used herein, the masculine, feminine or neuter gender, and the
singular or plural number or tense, shall be deemed to include the other
whenever the context so indicates.
22. Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed to be an original, and taken together shall constitute one and the same
instrument.
23. Time is of the Essence
Time is of the essence with respect to this Agreement.
24. No Third Party Beneficiaries
Nothing in this Agreement, expressed or implied, is intended or shall be
construed or confer upon any person, firm, or corporation other than the
parties hereto, any right, remedy or claim, legal or equitable,
under or by reason of this Agreement or any provision hereof, this Agreement
and all of its provisions being intended to be and being for the sole and
exclusive benefit of the parties hereto.
25. Schedules
Each and every schedule to this Agreement, and certificate, schedule or
instrument delivered pursuant to the terms hereof, is incorporated herein in
full by this reference and constitutes a part of this Agreement for all
purposes.
26. Cooperation
Each party hereto agrees to execute such further documents and otherwise
do all such acts as necessary or appropriate or requested by the other party
in order to fully effectuate and implement the provisions of this Agreement.
27. No Partnership
This Agreement does not constitute and shall not be construed to
constitute an agency, a partnership or a joint venture between Licensor or
Licensee. Licensee shall not have authority to obligate or bind Licensor in
any manner whatsoever, subject to the provisions stated herein and only as
Licensor may specifically approve in writing prior thereto. Licensor and
Licensee shall be deemed independent contractors in all respects.
28. Approvals
Any approvals required by Licensor or requested of Licensor pursuant to
the terms hereof shall be given by telegram or in writing to Licensee within a
reasonable time from date of receipt by Licensor of the materials required for
it to determine whether or not approval shall be rendered. In the event no
response by Licensor is made within thirty (30) days from receipt of said
materials the approval requested by Licensee shall be deemed not given.
29. Attorney's Fees
In the event of any controversy, claim or dispute arising out of or
related to this Agreement or the breach thereof, or otherwise concerning the
terms or performance of this Agreement, the prevailing party in such dispute
shall be entitled to receive its reasonable costs and attorney's fees from the
other party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Jerry R. Lucas and Cheri W. Lucas
By:/s/Jerry R. Lucas
---------------------------------
Jerry R. Lucas
By:/s/Cheri W. Lucas
---------------------------------
Cheri W. Lucas
Lucas Educational Systems, Inc.
By:/s/William Murray
----------------------------------
William Murray
Vice President
SCHEDULE "A" TO
LICENSING AND ROYALTY AGREEMENT
Existing Products
1. Bible Memory Made Easy Videos - Videos are finished. All product needed for
production is in existence.
2. Dr. Memory's Alphabet Friends - Reading and Writing curriculum
3. Dr. Memory's See and Know Picture Words - Sight word curriculum
4. Ready Set Remember - Teaches States and Capitals and the Presidents
A set of overhead transparencies needs to be produced for schools.
5. Ready Set Remember The Times Tables - Teaches 2 x 2 to 12 x 12
A set of overhead transparencies needs to be produced for schools.
6. Grammar Graphics and Picture Perfect Punctuation - Three volumes finished
7. Dr. Memory's Addition and Subtraction - Curriculum for adding and
subtracting
8. Dr. Memory's Spanish - Curriculum that teaches English speaking people
1,600 Spanish vocabulary words
9. Learning How to Learn - The Ultimate Learning and Memory Instruction Book
that teaches all of the Lucas Learning System
10. The Jerry Lucas How to Learn Course - Course including videos, audios and
workbooks that teaches all of the Lucas Learning System This course needs to
be redone to modernize it
11. How to remember Names and Faces - This course needs to be redone to
modernize it - It should be in several formats
12. View-A-Verse - A Bible memory course that teaches Bible verses
13. Around the Table - Facts in Acts - A board game that teaches all of the
facts in the book of Acts in the Bible
14. His Word - The Book of Mark - A course that teaches the book of Mark from
the Bible word for word
15. Proverbs Training in Wisdom - Teaches the memory of chapters from the book
of Proverbs from the Bible - Two volumes (chapters) are finished.
16. Ready Set Believe - Book that teaches various facts from the Bible This is
the book from which the Bible memory videos will be produced - This book will
be renamed and be sold as a supplement to the Bible video course. A set of
overhead transparencies needs to be produced for Christian schools.
17. College Preparatory Course - This course prepares students to be able to
learn as college students - Even though all of the basics are finished other
actual examples are needed from college professors.
18. Remember This - This is a proposed daily newspaper column that will teach
readers to learn some basic information every day such as a state and capital
or how to spell a difficult word. This column should make our products more in
demand. (This right may also be retained by Licensor.)
SCHEDULE "B" TO
LICENSING AND ROYALTY AGREEMENT
Products in Development or Contemplated
1. Dr. Memory's English Vocabulary - This curriculum will teach Spanish
speaking people 1,600 English vocabulary words. This curriculum will be
developed when Jerry Lucas teaches 250 teachers in Puerto Rico for Ser - Jobs
for Progress, Inc.
2. Other Foreign Vocabulary Curriculas - Perhaps other vocabulary courses to
teach other foreign languages to English speaking people may be developed.
3. Dr. Memory's Colors - This will be a children's book to teach colors.
4. Dr. Memory's Numbers - This will be a children's book to teach numbers.
5. Dr. Memory's Letters - This will be a children's book to teach letters.
6. Dr. Memory's Shapes - This will be a children's book to teach shapes.
7. Other Dr. Memory children's books will no doubt be developed.
8. See What I Mean - This will be a children's dictionary that enables
children to "see" the meaning of the first English vocabulary words they
learn. It will teach other basics as well.
9. Dr. Memory Television Program - Even though this program will not be owned
by or produced by the Company, the Company will benefit greatly if it becomes
a reality.
10. WOW Television Program - Even though this program will not be owned by or
produced by the Company, the Company will benefit greatly if it becomes a
reality.
11. Remember This - This is a proposed daily newspaper column that will teach
readers to learn some basic information every day such as a state and capital
or how to spell a difficult word. Even though this program will not be owned
by or produced by the Company, the Company will benefit greatly if it becomes
a reality. (This right may also be retained by Licensor.)
12. Proverbs Training in Wisdom - Other volumes will be produced if demand
warrants.
SCHEDULE "C" TO
LICENSING AND ROYALTY AGREEMENT
Characters and Songs
Characters
Dr. Memory - BeeLieve - Remembear - Mighty Mouth - Archibald
Al Phabet - Autopaint - Silly Bull - Sourpuss
The Learnin' Blues
Hard, Boring, Tiring, No-Fun, Time Consuming and Yuk
Magic Mouse - Mighty Mouth - Nosey - The Notetaker
The Mystery Word Detective - Call-A-Flower - Lip Trip
The Wow Kids - Professor Practical - Captain Blast - Melody
The Visualizer - Big Tow - The Cartuner- Little Faith - Dr. Chirp
Spot- Male Box- Big Red- Line-O-Matic- Dash-O-Matic
Colossal Color Cleaner - The Learnin' Lab - The Rock Wall - Buzz Stop
Songs
Dr. Memory - Professor Practical - Wow - Learning Can be Fun
Alphabet Friends - I'm Special - Food
Pain in the Brain, the Neck and the Heart- Nosey
Seeing a Picture in My Mind - Grin and Bear It - Teach Me Well
Please Don't Steal the Towels
