SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 26, 1998
Sunrise Technologies International, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-17816 77-0148208
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(State of or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
47265 Fremont Boulevard, Fremont, California 94538
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 623-9001
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(Former name or former address, if changed since last report)
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
Exhibit Description
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4 Instruments Defining the Rights of Security Holders
4.1 Form of 12% Convertible Subordinated Pay-In-Kind
Note Due 2001
4.2 Form of U.S. Note and Warrant Purchase Agreement
4.3 Form of Warrant for the Purchase of Shares of
Common Stock
4.4 Form of Registration Rights Agreement
99.1 Press Release of Registrant dated January 27, 1998
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S
On January 26, 1998, Sunrise Technologies International, Inc. (the
"Registrant") issued and sold, without registration under the Securities
Act of 1933, as amended (the "Securities Act"), an aggregate principal
amount of $9,350,000 in 12% convertible subordinated pay-in-kind notes due
2001 (the "Notes"), and accompanying warrants to purchase common stock (the
"Warrants") through a private placement (the "Private Placement").
Closings of tranches of the Private Placement were held on January 13,
1998, January 16, 1998 and January 26, 1998 (each, a "Closing"). The Notes
and Warrants were offered and sold by the Registrant in reliance on
Regulation D under the Securities Act to "accredited investors" within the
meaning of Rule 501 under the Securities Act and were offered in reliance
on Regulation S under the Securities Act to non "U.S. Persons." However,
no sales of the Notes were made in reliance on Regulation S. The Notes
issued in reliance on Regulation D under the Securities Act are convertible
into Common Stock at a conversion price of $3.00 of Notes for each share of
Common Stock, and a Warrant to purchase one share of Common Stock, at an
exercise price of $3.00, was issued without additional consideration for
each $5.00 of Notes purchased.
The Notes are convertible at any time prior to Maturity, as
hereinafter defined, at the option of the holders thereof, at the
respective conversion price set forth above, subject to adjustment for any
stock dividends, certain distributions, stock splits, combinations or
reclassifications of Common Stock. The Warrants are exercisable at any
time for five years from the date of issuance, by presentation and
surrender thereof to the Registrant, together with a duly executed Purchase
Form and full and proper payment of the exercise price. The Notes mature
January 15, 2001 (the "Maturity"), subject to extension to January 15, 2003
(the "Extended Maturity Date"). An aggregate of 5,969,492 shares of Common
Stock have been reserved for issuance upon conversion of the Notes, and an
aggregate of 4,837,038 shares of Common Stock have been reserved for
issuance upon exercise of the Warrants, assuming the Notes are not retired
until the Extended Maturity Date. The Registrant has agreed to register
under the Securities Act the shares of Common Stock issuable upon
conversion of the Notes and the shares of Common Stock issuable upon
exercise of the Warrants.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
(Registrant)
DATE: January 27, 1998 By: /s/ Timothy A. Marcotte
---------------------------------
Name: Timothy A. Marcotte
Title: Vice President, Finance and
Chief Financial Officer
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EXHIBIT 4.1
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
12% CONVERTIBLE SUBORDINATED PAY-IN-KIND NOTE DUE 2001
$_________
January ___, 1998
ALL CAPITALIZED TERMS SHALL BE DEEMED TO HAVE THE DEFINITIONS ASCRIBED TO
THEM IN THE PURCHASE AGREEMENTS, AS DEFINED IN SECTION 1 OF THIS DOCUMENT.
1. PRINCIPAL AND INTEREST. SUNRISE TECHNOLOGIES INTERNATIONAL,
INC., a corporation duly organized and existing under the laws of the State
of Delaware (the "Company", which term includes any successor), for value
received, hereby promises to pay to the order of ______________, or any
successor in interest registered on the books of the company (the "Holder")
in lawful money of the United States at the address of the Holder set forth
below, the principal sum of ____________________ and 00/100 Dollars
($_________) on December 15, 2001 (the "Maturity Date") (unless earlier
converted into shares of Common Stock (as hereinafter defined, as described
in Section 2), together with simple interest from the date hereof, computed
on the basis of a 360-day year of twelve 30-day months in arrears from the
date of original issuance hereof or for the most recent date to which
interest has been paid or duly provided for, semi-annually on January 15
and July 15 (each hereinafter called an "Interest Payment Date") to Holders
of record of the Notes at the close of business on the immediately
preceding June 15 or December 15, whether or not a Business Day, in each
year commencing July 15, 1998, at the rate set forth in the following
paragraph until the principal hereof is paid or made available for payment.
The interest rate on this Note will be 12% per annum from the
date of original issuance. On each Interest Payment Date through and
including the Extended Maturity Date, the Company may, at its option and in
its sole discretion, in lieu of the payment in whole or in part of interest
in cash on this Note pay interest on this Note through the issuance of
additional notes (the "Secondary Notes") in an aggregate principal amount
equal to the amount of interest that would be payable with respect to this
Note, if such interest were paid in cash. On each such Interest Payment
Date, the Company shall have authenticated the Secondary Notes for
<PAGE>
original issuance to each holder on the relevant Record Date in the
aggregate principal amount required to pay such interest. Notwithstanding
any other provision of this paragraph to the contrary, the Company may pay
in cash in lieu of issuing Secondary Notes in any denomination of less than
$500, which shall be determined with respect to the aggregate amount of
Notes held by each holder as shown by the records of the Company.
Except as previously provided herein, the terms "Note" or
"Notes" shall include all Secondary Notes that may be issued hereunder.
The Company shall have the right to extend the term of this Note for an
additional period commencing on the date immediately following the Maturity
Date and terminating on January 15, 2003 (the "Extended Maturity Date"),
which extension will result in the issuance of additional Warrants, as
defined below, to the Holder.
Upon payment in full of all principal and interest payable
hereunder or conversion as provided in Section 2, this Note shall be
surrendered to the Company for cancellation.
This Note and certain other similar notes aggregating
$9,350,000 principal amount have been issued pursuant to a U.S. Note and
Warrant Purchase Agreement dated of even date herewith among the Company,
the Holder and certain other investors (the "U.S. Purchase Agreement") and
an Offshore Note and Warrant Purchase Agreement dated of even date herewith
among the Company, the Holder and certain other investors (the "Offshore
Purchase Agreement"). Pursuant to the U.S. Purchase Agreement and the
Offshore Purchase Agreement (collectively, the "Purchase Agreements"),
warrants (the "Warrants") to purchase the Company's Common Stock have also
been issued to the Holder.
2. CONVERSION.
(a) HOLDER'S RIGHT TO CONVERT. Subject to and upon
compliance with the provisions of this Section 2, the Holder of this Note
shall be entitled, at his option, at any time on or after January 15, 1998,
to convert the principal amount of this Note (or any portion hereof that is
a multiple of $1,000 or a whole multiple thereof) into shares of the
Company's common stock, par value $0.001 per share (the "Common Stock") at
the conversion price (the "Conversion Price") of $3.00 for each share of
Common Stock (appropriately adjusted for any combination, consolidation,
stock split or other recapitalization).
(b) COMPANY'S RIGHT TO CONVERT. Subject to and upon
compliance with the provisions of this Section 2, the Company shall be
entitled, at its option, any time after January 15, 1999, if the Current
Market Price exceeds $10.00 per share (appropriately adjusted for any
combination, consolidation, stock split or recapitalization), to convert
the principal amount of this Note (or any portion hereof that is a multiple
of $1,000 or a whole multiple thereof) into shares of the Common Stock at a
conversion price of $3.00 per share (appropriately adjusted for any
combination, consolidation, stock split or other recapitalization).
(c) AUTOMATIC CONVERSION. This Note shall be automatically
converted into shares of Common Stock at the Conversion Price immediately
upon the closing of a merger with
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or into any other corporation, or a reorganization, or a sale or conveyance
of all or substantially all of its assets to any other entity in a
transaction in which the stockholders of the Company immediately before the
transaction own immediately after the transaction less than a majority of
the outstanding voting securities of the surviving entity (or its parent).
(d) MECHANICS OF CONVERSION. Before any Holder of this Note
shall be entitled to convert the same into shares of Common Stock, he shall
surrender this Note at the office of the Company or of any transfer or
conversion agent for this Note and shall deliver the conversion notice
attached hereto (the "Conversion Notice") to the Company (which shall be
irrevocable) at such office that he elects to convert the same (except that
no such Conversion Notice shall be necessary in the event of an automatic
conversion pursuant to Section 2(c) hereof). If so required by the
Company, this Note and the Conversion Notice shall also be accompanied by
proper assignments thereof to the Company or in blank for transfer and any
requisite federal and state transfer taxes. The Company shall, as soon as
practicable thereafter, issue and deliver at such office to such Holder of
this Note certificate(s) for the number of full shares of Common Stock to
which such Holder shall be entitled as aforesaid and a check or cash in
respect of any fraction of a share of Common Stock issuable upon such
conversion. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of this Note
to be converted (except that in the case of an automatic conversion
pursuant to Section 2(c) hereof, such conversion shall be deemed to have
been made immediately prior to the closing of the offering referred to in
Section 2(c) and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all
purposes as the record holders of such shares of Common Stock on such date.
(e) RECLASSIFICATION, ETC. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities into which this Note is convertible into the
same or a different number of securities of any class or classes, the
shares of Common Stock or other securities into which this Note is
convertible shall thereafter be convertible into the kind and number of
shares of stock or other securities or property of the Company or otherwise
to which the Holder would have been entitled if immediately prior to such
change the Holder had acquired the shares of Common Stock or other
securities into which this Note is convertible. If shares of the Company's
Common Stock or other securities purchasable hereunder are subdivided or
combined into a greater or smaller number of shares, the Conversion Price
under this Note shall be proportionately reduced in case of subdivision of
shares or proportionately increased in the case of combination of shares.
No adjustment on account of cash dividends or interest on the Company's
Common Stock or other securities into which this Note is convertible will
be made to the Conversion Price under this Note.
(f) NOTICE OF ADJUSTMENT. Upon any adjustment of the
securities issuable upon conversion of this Note, the Conversion Price for
the shares, and/or any increase or decrease in the number of shares into
which this Note is convertible upon conversion of this Note, the Company
shall give written notice thereof, by first class mail, postage prepaid,
addressed to the Holder at the address of the Holder as shown on the books
of the Company.
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(g) FRACTIONAL SHARES. The Company shall not be required to
issue fractions of shares of Common Stock upon conversion of this Note. In
lieu of any fractional shares to which the Holder of this Note would
otherwise be entitled, the Company shall pay cash equal to such fraction
multiplied by the fair market value of the Common Stock as determined by
the Board of Directors of the Company, whose determination shall be
conclusive.
(h) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Company shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of this Note such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion in full of this
Note; and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion in full of
this Note, the Company will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock solely for the
purpose of effecting the conversion of the Common Stock into which this
Note is convertible such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion in full of the Common
Stock into which this Note is convertible; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion in full of the Common Stock into which this Note is
convertible, the Company will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
(i) NO RIGHTS AS STOCKHOLDER. This Note does not entitle the
Holder to any voting rights or other rights as a stockholder of the Company
prior to the conversion hereof.
3. SUBORDINATION.
(a) "Senior Indebtedness" means the principal of and premium,
if any, and interest on indebtedness of the Company for money borrowed from
commercial banks, equipment lessors, government instrumentalities or other
financial institutions under a secured or unsecured line of credit, term
loan or equipment lease.
(b) The Company agrees and the Holder of this Note, by
acceptance thereof, agrees, expressly for the benefit of the present and
future holders of Senior Indebtedness, that, except as otherwise provided
herein, upon: (i) an event of default under any Senior Indebtedness; or
(ii) any dissolution, winding up or liquidation of the Company, whether or
not in bankruptcy, insolvency or receivership proceedings, the Company
shall not pay, and the Holder of this Note shall not be entitled to
receive, any amount in respect of the principal and interest of this Note
unless and until the Senior Indebtedness shall have been paid or otherwise
discharged. Upon: (1) an event of default under any Senior Indebtedness;
or (2) any
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<PAGE>
dissolution, winding up or liquidation of the Company, any payment or
distribution of assets of the Company, which the Holder of this Note would
be entitled to receive but for the provisions hereof, shall be paid by the
liquidating trustee or agent or other person making such payment or
distribution directly to the holders of Senior Indebtedness ratably
according to the aggregate amounts remaining unpaid on Senior Indebtedness
after giving effect to any concurrent payment or distribution to the
holders of Senior Indebtedness. Subject to the payment in full of the
Senior Indebtedness and until this Note is paid in full, the Holder of this
Note shall be subrogated to the rights of the holders of the Senior
Indebtedness (to the extent of payments or distributions previously made to
the holders of Senior Indebtedness pursuant to this paragraph 3(b) to
receive payments or distributions of assets of the Company applicable to
the Senior Indebtedness).
(c) This Section 3 is not intended to impair, as between the
Company, its creditors (other than the holders of Senior Indebtedness) and
the Holder of this Note, the unconditional and absolute obligation of the
Company to pay the principal of and interest on this Note or to affect the
relative rights of the Holder of this Note and the other creditors of the
Company, other than the holders of Senior Indebtedness. Nothing in this
Note shall prevent the Holder of this Note from exercising all remedies
otherwise permitted by applicable law upon default under this Note, subject
to the rights, if any, of the holders of Senior Indebtedness in respect to
cash, property or securities of the Company received upon the exercise of
any such remedy.
4. REDEMPTION. This Note may not be redeemed prior to the
Maturity Date. Should the Company elect to extend the term of this Note,
the Note may not be redeemed prior to the Extended Maturity Date.
5. PLACE OF PAYMENT. All payments due to the Holder hereunder
shall be paid to the Holder at the address which the Holder shall have
given written notice to the Company.
6. EVENTS OF DEFAULT AND REMEDIES. If any of the following events
of default (individually, an "Event of Default") shall occur for any reason
whatsoever (and whether it shall be voluntary or involuntary or occur or be
affected by operation of law or otherwise):
(a) The Company fails to make payment when due of any
principal or interest payable under this Note, and such failure continues
for a period of ten days after written notice that such payment is due and
unpaid;
(b) The Company defaults in the observance or performance of
any material agreement or condition under this Note or the Warrants, and
such default continues for a period of 30 days after written notice of such
default is given to the Company by the Holder;
(c) Any representation or warranty made by the Company in the
Purchase Agreements shall prove to have been false in any material respect
on the date when made;
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<PAGE>
(d) The Company shall default under any material agreement
for borrowed money which causes the other party thereto to accelerate such
obligation;
(e) The Company shall: (i) file, or consent by answer or
otherwise to the filing against it of a petition for relief or
reorganization or arrangement or any other petition in bankruptcy or
insolvency law of any jurisdiction; (ii) make an assignment for the benefit
of its creditors; (iii) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers of itself or of any
substantial part of its property; (iv) be adjudicated insolvent or be
liquidated; or (v) take appropriate action for the purpose of any of the
foregoing; or
(f) A court or governmental authority of competent
jurisdiction shall enter an order appointing a custodian, receiver, trustee
or other officer with similar powers with respect to the Company or any
substantial amount of its properties, or if an order for relief with
respect to the Company shall be entered in any case or proceeding for
liquidation or reorganization or otherwise to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding up or liquidation of the Company, or if any petition
for any such relief shall be filed against the Company, and such order or
petition shall not be dismissed or stayed within 70 days after the date of
such filing,
then automatically upon the occurrence of such Event of Default the entire
unpaid principle amount of, and the unpaid accrued interest on, this Note
shall become immediately due and payable.
7. ADDITIONAL REMEDIES. If any Event of Default hereunder shall
have occurred, the Holder may proceed to protect and enforce its rights
under this Note by exercising such remedies as are available to it in
respect thereof under the terms of this Note or applicable law, either by
suit in equity or by action at law, or both, whether for specific
performance of any agreement contained in this Note or in aid of the
exercise of any power granted in this Note. No remedy is intended to be
exclusive and each such remedy shall be cumulative.
8. TRANSFER.
(a) The transfer of this Note is registrable by the Holder
hereof in person or by his attorney duly authorized in writing on the books
of the Company. Upon surrender and cancellation of this Note upon any such
transfer, a new Note for the same aggregate principal amount will be issued
to the transferee in exchange herefor.
(b) The Company and any transfer or conversion agent may deem
and treat the person in whose name this Note shall be registered upon the
books of the Company as the absolute owner of this Note (whether or not his
Note shall be overdue and notwithstanding any notation of ownership or
other writing hereon) for all other purposes, and neither the Company nor
any transfer or conversion agent shall be affected by any notice to the
contrary. All such payments shall be valid and effectual to satisfy and
discharge the liability on this Note to the extent of the sum or sums so
paid.
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9. ATTORNEY FEES. If the indebtedness represented by this Note or
any part thereof is collected in bankruptcy, receivership or other judicial
proceedings or if this Note is placed in the hands of attorneys for
collection after default, the Company agrees to pay, in addition to the
principal and interest payable hereunder, reasonable attorneys' fees and
costs incurred by the Holder.
10. NOTICES. All notices, reports and other communications
required or permitted hereunder shall be in writing and may be delivered in
person, by telecopy with written confirmation, overnight delivery service
or U.S. mail, in which event it may be mailed by first-class, certified or
registered, postage prepaid, addressed to the Holder at its address as
shown on the books of the Company or to the Company at 47265 Fremont
Boulevard, Fremont, California 94538 Attention: Mr. Timothy A. Marcotte.
Each such notice, report or other communication shall for all
purposes under this Note be treated as effective or having been given when
delivered if delivered personally or, if sent by mail, at the earlier of
its receipt or five days after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed
and mailed as aforesaid or, if sent by telecopier with written
confirmation, at the earlier of: (i) 24 hours after confirmation of
transmission by the sending telecopier machine; or (ii) delivery of written
confirmation.
11. AMENDMENTS, CONSENTS AND WAIVERS. This Note may be amended at
any time and from time to time to add to, eliminate or modify the terms and
provisions hereof and the rights of the Holder hereunder with the written
consent of the Company and the Holder; provided, however, that no such
change shall terminate or impair the subordination provisions of this Note
without the prior written consent of the holders of Senior Indebtedness.
Any amendment, waiver or consent by the Holder of this Note shall be
conclusive and binding upon such Holder and any future Holder of this Note
and of any Note issued in exchange or substitution herefor, irrespective of
whether or not any notation of such amendment, waiver or consent is made
upon this Note or such exchanged or substituted Note. The Company hereby
waives presentment, demand for performance, notice of non-performance,
protest, notice of protest and notice of dishonor. No delay on the part of
the Holder in exercising any right hereunder shall operate as a waiver of
such right or any other right.
12. NO RECOURSE. No recourse shall be had for the payment of the
principal or interest on this Note, or any claim based hereon, or otherwise
in respect hereof, this Note, against any incorporator, stockholder,
officer or director, as such, past, present or future, of the Company or
any successor Company, whether by virtue of any constitution, statute or
rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part
of the consideration for the issue hereof, expressly waived and released.
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13. PAYMENT DUE ON HOLIDAYS. If the principal of or interest on
this Note falls due on a Saturday, Sunday or legal holiday at the place of
payment, such payment shall be made on the next succeeding business day and
such extended time shall be included in computing interest.
14. SEVERABILITY. If any provision of this Note shall be held
invalid under any applicable laws, such invalidity shall not affect any
other provision of this Note that can be given effect without the invalid
provision and, to this end, the provisions hereof are severable.
15. GOVERNING LAW. This Note is being delivered in and shall be
construed in accordance with the laws of the State of California, without
regard to the conflicts of laws provisions thereof.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
Company has caused this Note to be executed and delivered by its proper and
duly authorized officers as of the date first above written.
SUNRISE TECHNOLOGIES INTERNATIONAL,
INC.
BY:
--------------------------------
NAME: C. Russell Trenary, III
TITLE: President and
Chief Executive Officer
Attest:
BY:
--------------------
NAME: Eric M. Fogel
TITLE: Secretary
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EXHIBIT 4.2
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SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
_______________________________________________
U.S. NOTE AND WARRANT PURCHASE AGREEMENT
_______________________________________________
<PAGE>
TABLE OF CONTENTS
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Page
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1. PURCHASE AND SALE OF NOTES AND WARRANTS . . . . . . . 1
1.1 Issue of Notes and Warrants . . . . . . . . 1
2. CLOSING DATE; DELIVERY. . . . . . . . . . . . . . . . 2
2.1 Closing . . . . . . . . . . . . . . . . . . 2
2.2 Delivery. . . . . . . . . . . . . . . . . . 2
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . 3
3.1 Organization. . . . . . . . . . . . . . . . 3
3.2 Capitalization. . . . . . . . . . . . . . . 3
3.3 Authority . . . . . . . . . . . . . . . . . 3
3.4 Securities Filings. . . . . . . . . . . . . 4
3.5 Issuance of the Notes . . . . . . . . . . . 4
3.6 No Conflict with Law or Documents . . . . . 4
3.7 Consents, Approvals and Private Offering. . 5
3.8 Absence of Certain Developments . . . . . . 5
3.9 Litigation. . . . . . . . . . . . . . . . . 5
3.10 Registration Rights . . . . . . . . . . . . 5
3.11 Disclosure. . . . . . . . . . . . . . . . . 5
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. . . 6
4.1 Legal Power . . . . . . . . . . . . . . . . 6
4.2 Due Execution . . . . . . . . . . . . . . . 6
4.3 Investment Representations. . . . . . . . . 6
4.4 Pennsylvania Requirements . . . . . . . . . 7
5. COVENANTS OF THE COMPANY. . . . . . . . . . . . . . . 7
5.1 Information . . . . . . . . . . . . . . . . 7
5.2 Conducting the Offering . . . . . . . . . . 8
6. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . 8
6.1 Conditions to Obligations of the Purchaser. 8
6.2 Conditions to Obligations of the Company. . 9
7. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . 10
7.1 Governing Law . . . . . . . . . . . . . . . 10
7.2 Successors and Assigns. . . . . . . . . . . 10
7.3 Entire Agreement. . . . . . . . . . . . . . 10
7.4 Separability. . . . . . . . . . . . . . . . 10
7.5 Amendment and Waiver. . . . . . . . . . . . 10
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TABLE OF CONTENTS (Continued)
-----------------------------
7.6 Notices . . . . . . . . . . . . . . . . . . 10
7.7 Fees and Expenses . . . . . . . . . . . . . 10
7.8 Titles and Subtitles. . . . . . . . . . . . 11
7.9 Counterparts. . . . . . . . . . . . . . . . 11
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SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
U.S. NOTE AND WARRANT PURCHASE AGREEMENT
This agreement (the "Agreement") is made as of the Closing Date (as
hereinafter defined) by and between Sunrise Technologies International,
Inc., a Delaware corporation (the "Company"), with its principal office at
47265 Fremont Boulevard, Fremont, California 94538 and each of the
purchasers who are signatories hereto and any other purchasers who are made
a party to this Agreement pursuant to Section 1(d) (individually, a
"Purchaser" and collectively, the "Purchasers").
RECITALS
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The Company is undertaking the placement and sale (the "Offering") of
up to $10,000,000 12% Convertible Subordinated Pay-In-Kind Notes due 2001
(the "Notes") with Warrants, as hereinafter defined. The Notes will be
convertible into shares of the Company's $.001 par value common stock (the
"Common Stock") commencing on the Closing Date (as hereinafter defined) at
a conversion price (the "Conversion Price") as described in the Notes.
Each Purchaser will receive one warrant to purchase Common Stock (the
"Warrants") for each $5.00 in Notes purchased by such Purchaser. Each
Warrant entitles the holder to purchase one share of Common Stock for $3.00
during the five year period commencing on the Closing Date. The Notes and
Warrants will be sold by the Company to Purchasers pursuant to Regulations
D and S under the Securities Act of 1933, as amended (the "Act")
(individually, the "Regulation D Purchasers" and "Regulation S
Purchasers"). Regulation D Purchasers will purchase Notes and Warrants
pursuant to this Agreement and Regulation S Purchasers will purchase Notes
and Warrants pursuant to an Offshore Unit and Warrant Purchase Agreement of
even date herewith (the "Offshore Agreement"). Offers and sales of Notes
will only be made pursuant to the Confidential Private Offering Summary
dated November 24, 1997, as supplemented (together with all amendments,
exhibits and attachments thereto, the "Offering Materials").
AGREEMENT
---------
In consideration of the mutual promises, representations, warranties
and conditions set forth in the Agreement, the Company and each Purchaser
(severally and not jointly) agree as follows:
1. PURCHASE AND SALE OF NOTES AND WARRANTS.
1.1 ISSUE OF NOTES AND WARRANTS.
(a) The Company has authorized the issuance and sale of
up to $10,000,000 Notes, up to 5,969,492 shares of Common Stock, assuming
the term of the Notes is extended and the Notes remain outstanding until
January 15, 2003 (the "Conversion Shares") pursuant to the exchange of the
Notes, and up to 4,837,038 additional shares of Common Stock (the "Warrant
Shares") pursuant to the exercise of up to 4,837,038 Warrants, assuming the
term
<PAGE>
of the Notes is extended after January 15, 2001 and additional Warrants are
issued at an assumed price of $3.00, pursuant to the provisions of this
Agreement and an Offshore Agreement made as of the Closing Date.
(b) In reliance upon the Purchaser's representations
and warranties contained in Section 4 hereof, and subject to the terms and
conditions set forth herein, the Company hereby agrees to sell to each
Purchaser the aggregate amount of Notes set forth below such Purchaser's
signature on the subscription page bearing such Purchaser's name.
(c) In reliance upon the representations and warranties
of the Company contained herein, and subject to the terms and conditions
set forth herein, each Purchaser hereby agrees to purchase the amount of
Notes set forth on the subscription page bearing such Purchaser's name at
the purchase price set forth above. Each Purchaser shall severally, and
not jointly, be liable for only the amount of Notes that appear on the
subscription page hereof that relates to such Purchaser.
(d) The Company's agreement with each of the Purchasers
is a separate agreement, and the sale of the Notes to each of the
Purchasers is a separate sale.
2. CLOSING DATE; DELIVERY.
2.1 CLOSING.
(a) The initial closing of the sale and purchase of the
Notes under this Agreement (the "Closing"), together with the initial
closing of the sale and purchase of the Notes under the Offshore Agreement,
shall be held at 10:00 a.m. (Pacific Standard Time) on or before January
15, 1998 (the "Closing Date"), at the offices of the Company, Fremont,
California, or at such other time and place as the Company decides. There
is no minimum amount of Notes required for an initial closing.
(b) From time to time prior to and following the
Closing Date, the Company may, but shall not be obligated to, offer and
sell the balance of the Notes authorized but not sold as of the Closing
Date herein to other purchasers (the "Other Purchasers") at one or more
subsequent closings in the sole discretion of the Company. By executing
this Agreement, the Purchasers hereunder agree to the inclusion of such
Other Purchasers as parties to this Agreement and the Registration Rights
Agreement referenced in Section 6.1(d) herein (the "Registration Rights
Agreement"), and it shall be a condition to each subsequent closing that
the Other Purchasers shall become parties to this Agreement and the
Registration Rights Agreement and subject to the terms hereof and thereof.
If such a subsequent closing is held, the terms "Closing" and "Closing
Date", as used herein, shall be deemed to apply to the initial closing and
each such subsequent closing.
2.2 DELIVERY. At the Closing, subject to the terms and
conditions hereof, the Company will deliver to each Purchaser the Notes
subscribed for by such Purchasers, dated as
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of the Closing Date, and Warrants, against payment of the purchase price
therefor by wire transfer, unless other means of payment shall have been
agreed upon by the Purchasers and the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Subject to and except as disclosed by the Company in the Offering
Materials, the Company hereby represents and warrants to each Purchaser as
of the date hereof as follows, and all such representations and warranties
shall be true and correct as of the Closing Date as if then made and shall
survive the Closing:
3.1 ORGANIZATION. The Company and a corporation identified
in the SEC Filings (as hereinafter defined) as its subsidiary (the
"Subsidiary") are each a corporation, duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation. The Company and the Subsidiary have all requisite power and
authority to own or lease their properties and to conduct their businesses
as now conducted. The Company holds all licenses and permits required for
the conduct of its business as now conducted, which, if not obtained, would
have a material adverse effect on the business, financial condition or
results of operations of the Company taken as a whole. Each of the Company
and the Subsidiary is qualified as a foreign or domestic corporation and is
in good standing in all states where the conduct of its business or its
ownership or leasing of property requires such qualification, except where
failure to so qualify would not have a material adverse effect on the
business, financial condition or results of operations of the Company taken
as a whole.
3.2 CAPITALIZATION. The authorized, issued and out-standing
capital stock of the Company on September 30, 1997 is as set forth in the
Company's Quarterly Report on Form 10-Q for the period ended September 30,
1997 (the "1997 Third Quarter Form 10-Q") which is included in the Offering
Materials (Tab B). Since September 30, 1997, there has been no material
change in the capitalization of the Company, except as has been described
in the Offering Materials. All of the issued and outstanding shares of
Common Stock have been duly authorized, validly issued and are fully paid
and nonassessable. Except as stated in the Offering Materials and except
for rights granted under the Company's stock plans, there are no existing
subscriptions, options, warrants, calls, commitments, agreements,
conversion or other rights of any character (contingent or otherwise) to
purchase or otherwise acquire from the Company at any time, or upon the
happening of any stated event, any shares of the capital stock of the
Company.
3.3 AUTHORITY. The Company has all requisite corporate power
and authority to enter this Agreement, the Warrant Agreement and the
Registration Rights Agreement, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement, the Warrant Agreement and the Registration Rights Agreement and
the consummation of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary corporate action on the part of the
Company, and upon their execution and delivery by the Company, such
documents will constitute valid and binding obligations of the
3
<PAGE>
Company, enforceable against the Company in accordance with their terms,
except as the indemnification provisions of the Registration Rights
Agreement may be limited by principles of public policy, and subject as to
enforceability to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditor's rights from
time to time in effect and subject to general equity principles.
3.4 SECURITIES FILINGS. The Company has filed with the
Securities and Exchange Commission (the "SEC") the documents set forth in
the Offering Materials included herein under Tab A (the "SEC Filings").
The Company has filed with the SEC all reports and all other filings
required to be filed with the SEC under the rules and regulations of the
SEC.
(a) The SEC Filings, when filed, conformed in all
material respects to the requirements of the Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the SEC thereunder as of their respective filing dates and
did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The documents or portions thereof that
were incorporated by reference in the SEC Filings pursuant to the
requirements of the Exchange Act, when such incorporated documents or
portions were first filed with the SEC, conformed in all material respects
with any applicable requirements of the Exchange Act and the rules and
regulations of the SEC thereunder.
(b) The consolidated financial statements of the
Company included in the SEC Filings fairly presented in all material
respects the financial position and results of operations of the Company
and the Subsidiary at their respective dates and for the respective periods
to which they apply; and such financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved except as otherwise stated therein.
(c) Notwithstanding any provision therein to the
contrary, it is understood by the Company and the Purchaser that the
Company is not representing or warranting any statement in the SEC Filings
relating to future, anticipated or possible circumstances, occurrences or
developments.
3.5 ISSUANCE OF THE NOTES. The Notes, when issued against
payment therefor pursuant to the terms of this Agreement, will be duly and
validly authorized and issued, fully paid and nonassessable.
3.6 NO CONFLICT WITH LAW OR DOCUMENTS. The execution,
delivery and consummation of this Agreement, the Warrant Agreement and the
Registration Rights Agreement and the transactions contemplated hereby and
thereby will not: (a) conflict with any provisions of the certificate of
incorporation of the Company, as amended to date, or the bylaws of the
Company, as amended to date, or the governing documents of any Subsidiary;
or (b) result in any violation of or default or loss of a benefit under, or
permit the acceleration of any obligation under (in each case, upon the
giving of notice, the passage of time, or both) any mortgage,
4
<PAGE>
indenture, lease, agreement or other instrument, permit, franchise,
license, judgement, order, decree, law, ordinance, rule or regulation
applicable to the Company, any Subsidiary or their respective properties.
3.7 CONSENTS, APPROVALS AND PRIVATE OFFERING. Except for any
filings required under federal and applicable state securities laws, all of
which shall have been made as of the Closing Date to the extent required as
of such time, no consent, approval, order or authorization of, or
registration, declaration or filing with, any federal, state, local or
foreign governmental authority is required to be made or obtained by the
Company in connection with the execution and delivery of this Agreement,
the Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby.
3.8 ABSENCE OF CERTAIN DEVELOPMENTS. Except as described in
the Offering Materials, since September 30, 1997, the Company has not: (a)
incurred or become subject to any material liabilities (absolute or
contingent) except current liabilities incurred, and liabilities under
contracts entered into, in the ordinary course of business, consistent with
past practices; (b) mortgaged, pledged or subjected to any lien, charge or
other encumbrance any of its assets, tangible or intangible; (c) sold,
assigned or transferred any of its assets or canceled any debts or
obligations except in the ordinary course of business, consistent with past
practices; (d) suffered any extraordinary losses, or waived any rights of
substantial value; (e) entered into any material transaction other than in
the ordinary course of business, consistent with past practices; or (f)
otherwise had any change in its condition, financial or otherwise, except
as shown on or reflected in the consolidated balance sheet as of
September 30, 1997 that is included in the 1997 Third Quarter Form 10-Q,
except for changes in the ordinary course of business, consistent with past
practices, none of which individually or in the aggregate has been
materially adverse, and excepted further that the Company continues to
incur additional substantial losses of the nature set forth in and/or
otherwise contemplated by the Offering Materials. Except as described in
the SEC Filings, neither the Company nor any Subsidiary has entered into
any agreement since September 30, 1997 of the type that would be required
under the SEC's rules and regulations to be filed as an exhibit to an
Annual Report on Form 10-K.
3.9 LITIGATION. Except as described in the Offering
Materials, to the Company's knowledge, there are no actions, suits,
proceedings or investigations pending against or affecting the Company or
any Subsidiary that in the aggregate could reasonably be anticipated to
result in any material adverse effect on the Company.
3.10 REGISTRATION RIGHTS. Except for shares issued or
issuable in connection with the Company's existing stock option plans and
those disclosed in the Offering Materials, the Company has not granted any
rights to have any of the Company's securities registered under the Act.
3.11 DISCLOSURE. The Offering Materials taken as a whole do
not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
5
<PAGE>
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser hereby represents, warrants and covenants with
the Company as follows:
4.1 LEGAL POWER. Purchaser has the requisite corporate,
partnership, trust or fiduciary power, as appropriate, and is authorized,
if Purchaser is a corporation, partnership, limited liability company or
trust, to enter into this Agreement and the Registration Rights Agreement,
to purchase the Notes hereunder, and to carry out and perform its
obligations under the terms of this Agreement and the Registration Rights
Agreement.
4.2 DUE EXECUTION. Each of this Agreement and the
Registration Rights Agreement has been duly authorized, if Purchaser is a
corporation, partnership, limited liability company, trust or fiduciary,
executed and delivered by the Purchaser and, upon due execution and
delivery by the Company, this Agreement and the Registration Rights
Agreement will be valid and binding agreements of the Purchaser.
4.3 INVESTMENT REPRESENTATIONS.
(a) Purchaser is acquiring the Notes for its own
account, not as nominee or agent, for investment and not with a view to or
for resale in connection with, any distribution or public offering thereof
within the meaning of the Act, except pursuant to an effective registration
statement under the Act.
(b) Purchaser understands that: (i) neither the Notes,
the Conversion and Warrant Shares nor the Warrants have not been registered
under the Act by reason of a specific exemption therefrom, and may not be
transferred or resold except pursuant to an effective registration
statement or exemption from registration; (ii) each certificate
representing the Shares and shares issuable pursuant to the Warrants
(unless such shares have been registered prior to the exercise of such
Warrants) will be endorsed with the following legends:
A) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE
ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS; and
6
<PAGE>
B) Any legend required to be placed thereon by applicable
federal or state securities laws;
and (iii) the Company will instruct any transfer agent not to register the
transfer of any of the Shares unless the conditions specified in the
foregoing legends are satisfied.
(c) Purchaser has received and reviewed the Offering
Materials. In addition, Purchaser has been furnished with such materials
and has been given access to such information relating to the Company as it
or its qualified representative has requested and has been afforded the
opportunity to ask questions regarding the Company and the Notes, all as
Purchaser has found necessary to make an informed investment decision.
(d) Purchaser is an "accredited investor" as such term
is defined in Rule 501 of the Act and was not formed for the specific
purpose of acquiring the Notes and Warrants.
(e) Purchaser is not a resident of Canada or any
territory thereof.
4.4 PENNSYLVANIA REQUIREMENTS.
Each Purchaser who is a Pennsylvania resident, or which has its
principal place of business in Pennsylvania and is not an "institutional
investor" within the meaning of the Pennsylvania Securities Act of 1972 and
the regulations thereunder, hereby agrees not to sell the Shares for a
period of 12 months from the date hereof, except in accordance with the
requirements of section 203(d) of such act and regulation 204.011
thereunder.
5. COVENANTS OF THE COMPANY.
5.1 INFORMATION. So long as the Company is subject to the
periodic reporting requirements of the Exchange Act pursuant to Section 13
or 15(d), the Company shall deliver to each holder of Notes or Warrants all
annual, quarterly or other reports furnished to the public security
holders; provided that if the Company is not subject to the requirements of
Section 13 or 15(d) of the Exchange Act, the Company will promptly furnish
to each holder of Shares or Warrants: (i) as soon as available, and in any
event within 90 days after the end of each fiscal year of the Company, a
consolidated balance sheet of the Company and its consolidated
subsidiaries, if any, as of the end of such fiscal year and the related
consolidated statements of income, stockholders' equity and cash flows for
such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all prepared in accordance with
generally accepted accounting principles and reported on by independent
certified public accountants of recognized national standing; and (ii) as
soon as available, and in any event within 45 days after the end of each of
the first three fiscal quarters of each fiscal year of the Company, a
consolidated balance sheet of the Company and its consolidated
subsidiaries, if any, as of the end of such quarter and the related
consolidated statements of income and stockholders' equity (together with
any other quarterly financial statements being prepared by the Company
7
<PAGE>
at such time), setting forth in each case in comparative form the figures
for the corresponding quarter and the corresponding portion of the
Company's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation and consistency by the chief
financial officer or the chief accounting officer of the Company.
5.2 CONDUCTING THE OFFERING. The Company will conduct the
offering under Regulation D and Regulation S of the Act, and the Company
represents as follows:
(a) SALES TO ACCREDITED INVESTORS. The Company will
only make offers and sales of the Notes to Regulation D Purchasers or
potential Regulation D Purchasers it reasonably believes to be "accredited
investors" as that term is defined in Rule 501(a) under the Act;
(b) REGULATION D COMPLIANCE. Offers and sales of Notes
will be made in compliance with Regulation D, and the Company has not and
shall not offer to sell the Notes by any form of general solicitation or
general advertising that is prohibited by Rule 502(c) promulgated under the
Act.
(c) COMPLIANCE GENERALLY. The Company has and will
observe all securities laws and regulations applicable to it in any
jurisdiction in which it has or may offer, sell or deliver Notes and it
will not, directly or indirectly, offer, sell or deliver Notes or
distribute or publish any prospectus, circular, advertisement or other
offering material in relation to the Notes in or from any state in the
United States or country or jurisdiction except under circumstances that
will result in compliance with any applicable laws and regulations.
(d) BLUE SKY COMPLIANCE. The Company will comply with
the state securities or blue sky laws of each state in which Notes will be
offered.
6. CONDITIONS TO CLOSING.
6.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASER. Each
Purchaser's obligation to purchase the Notes at the Closing is subject to
the fulfillment, at or prior to such Closing, of all of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in
Section 3 hereof shall be true and correct in all material respects on the
Closing Date with the same force and effect as if they had been made on and
as of said date; except as described in or contemplated by the Offering
Materials, the business, assets, financial condition and results of
operations of the Company shall not have been adversely affected in any
material way prior to the Closing Date; and the Company shall have
performed all obligations and conditions herein required to be performed by
it on or prior to the Closing Date.
8
<PAGE>
(b) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby and all documents and instruments incident to such transactions
shall be reasonably satisfactory in substance and form to the Purchaser.
(c) QUALIFICATIONS, LEGAL INVESTMENT. All authori-
zations, approvals or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful sale and issuance of the Notes pursuant to this
Agreement shall have been duly obtained and shall be effective on and as of
the Closing Date. No stop order or other order enjoining the sale of the
Shares shall have been issued and no proceedings for such purpose shall be
pending or, to the knowledge of the Company, threatened by the SEC, or any
commissioner of corporations or similar officer of any state having
jurisdiction over this transaction. At the time of the Closing, the sale
and issuance of the Notes shall be legally permitted by all laws and
regulations to which the Purchaser and the Company are subject.
(d) REGISTRATION RIGHTS AGREEMENT. The Company shall
have entered into the Registration Rights Agreement in substantially the
form included in the Offering Materials (Tab C).
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to issue and sell the Notes at the Closing is subject to the
fulfillment to the Company's satisfaction, on or prior to the Closing, of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties made by each Purchaser in Section 4 hereof
shall be true and correct at the Closing Date with the same force and
effect as if they had been made on and as of the Closing Date.
(b) PERFORMANCE OF OBLIGATIONS. Each Purchaser shall
have performed and complied with all agreements and conditions herein
required to be performed or complied with by them on or before the Closing
Date, and each Purchaser shall have delivered payment to the Company in
respect of its purchase of Notes. Notwithstanding the above, the Company
may reject any subscription for the Notes in its sole and absolute
discretion.
(c) QUALIFICATIONS, LEGAL INVESTMENT. All authori-
zations, approvals or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful sale and issuance of the Notes pursuant to this
Agreement shall have been duly obtained and shall be effective on and as of
the Closing Date. No stop order or other order enjoining the Sale of the
Notes shall have been issued and no proceedings for such purpose shall be
pending or, to the knowledge of the Company, threatened by the SEC or any
commissioner of corporations or similar officer of any state having
jurisdiction over this transaction. At the time of the Closing, the sale
and issuance of the Share shall be legally permitted by all laws and
regulations to which each Purchaser and the Company are subject.
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<PAGE>
7. MISCELLANEOUS.
7.1 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California as applied to
agreements among California residents, made and to be performed entirely
within the State of California without regard to principles of conflict of
laws.
7.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and
be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.
7.3 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto
and thereto, and the other documents delivered pursuant hereto and thereto,
constitute the full and entire understanding and agreement among the
parties with regard to the subjects hereof and no party shall be liable or
bound to any other party in any manner by any representations, warranties,
covenants or agreements except as specifically set forth herein or therein.
Nothing in this Agreement, express or implied, is intended to confer upon
any party, other than the parties hereto and their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided herein.
7.4 SEPARABILITY. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall to the extent
practicable, be modified so as to make it valid, legal and enforceable and
to retain as nearly as practicable the intent of the parties, and the
validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
7.5 AMENDMENT AND WAIVER. Except as otherwise provided
herein, any term of this Agreement may be amended, and the observance of
any term of this Agreement may be waived (either generally or in a
particular instance, either retroactively or prospectively, and either for
a specified period of time or indefinitely), with the written consent of
the Company and the Purchasers owning a majority of the Notes. Any
amendment or waiver effected in accordance with this section shall be
binding upon each future holder of any security purchased under this
Agreement (including securities into which such securities have been
converted) and the Company.
7.6 NOTICES. All notices and other communications required
or permitted hereunder shall be in writing and shall be deemed effectively
given upon personal delivery, on the first business day following mailing
by overnight courier, or on the fifth day following mailing by registered
or certified mail, return receipt requested, postage prepaid, addressed to
the Company and the Purchaser at the respective addresses included herein.
7.7 FEES AND EXPENSES. The Company and each Purchaser shall
bear its own expenses and legal fees incurred on its behalf with respect to
this Agreement and the transactions contemplated hereby.
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7.8 TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and
are not to be considered in construing this Agreement.
7.9 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one instrument.
11
EXHIBIT 4.3
- -----------
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
No. 1998-1 ______ Shares
FOR VALUE RECEIVED, SUNRISE TECHNOLOGIES INTERNATIONAL, INC., a
corporation duly organized and existing under the laws of the State of
Delaware (the "Company," which term includes any successor), with its
principal office at 47265 Fremont Boulevard, Fremont, California 94538,
hereby certifies that ____________________________ (the "Holder") is
entitled, subject to the provisions of this Warrant, to purchase from the
Company, at any time before 5:00 p.m. (Eastern Standard Time) on January
15, 2003 (the "Expiration Date"), the number of fully paid and
nonassessable shares of Common Stock of the Company set forth above,
subject to adjustment as hereinafter provided.
The Holder may purchase such number of shares of Common Stock at a
purchase price per share (as appropriately adjusted pursuant to Section 6
hereof) of $3.00 (the "Exercise Price"). Should the Company exercise its
right to extend the maturity date of its 12% Convertible Subordinated Pay-
In-Kind Notes Due 2001 (the "Notes"), the Holder will be entitled to
receive additional warrants for the purchase of shares of Common Stock.
The Holder may purchase such number of additional shares of Common Stock at
a purchase price per share (as appropriately adjusted pursuant to Section 6
hereof) equal to the Current Market Price, as hereinafter defined, at the
first maturity date of the Notes. The term "Common Stock" shall mean the
aforementioned Common Stock of the Company, together with any other equity
securities that may be issued by the Company in addition thereto or in
substitution therefor as provided herein.
The number of shares of Common Stock to be received upon the exercise
or exchange of this Warrant and the price to be paid for a share of Common
Stock are subject to adjustment from time to time as hereinafter set forth.
The shares of Common Stock deliverable upon such exercise or exchange, as
adjusted from time to time, are hereinafter sometimes referred to as
"Warrant Shares."
<PAGE>
Section 1. EXERCISE OF WARRANT. This Warrant may be exercised in
whole or in part on any business day on or before the Expiration Date by
presentation and surrender hereof to the Company at its principal office at
the address set forth in the initial paragraph hereof (or at such other
address as the Company may hereafter notify the Holder in writing) with the
Purchase Form annexed hereto duly executed and accompanied by proper
payment of the Exercise Price in lawful money of the United States of
America in the form of a check, subject to collection, for the number of
Warrant Shares specified in the Purchase Form. If this Warrant should be
exercised in part only, the Company shall, upon surrender of this Warrant,
execute and deliver a new Warrant evidencing the rights of the Holder
thereof to purchase the balance of the Warrant Shares purchasable
hereunder. Upon receipt by the Company of this Warrant and such Purchase
Form, together with proper payment of the Exercise Price, at such office,
the Holder shall be deemed to be the holder of record of the Warrant
Shares, notwithstanding that the stock transfer books of the Company shall
then be closed or that certificates representing such Warrant Shares shall
not then be actually delivered to the Holder. The Company shall pay any
and all documentary stamp or similar issue or transfer taxes payable in
respect of the issue or delivery of the Warrant Shares.
Section 2. RESERVATION OF SHARES. The Company hereby agrees that at
all times there shall be reserved for issuance and delivery upon exercise
or exchange of this Warrant all shares of its Common Stock or other shares
of capital stock of the Company from time to time issuable upon exercise or
exchange of this Warrant. All such shares shall be duly authorized and,
when issued upon the exercise or exchange of the Warrant in accordance with
the terms hereof, shall be validly issued, fully paid and nonassessable,
free and clear of all liens, security interests, charges and other
encumbrances or restrictions on sale (other than as provided in the
Company's certificate of incorporation and any restrictions on sale set
forth herein or pursuant to applicable federal and state securities laws)
and free and clear of all preemptive rights.
Section 3. FRACTIONAL INTEREST. The Company will not issue a
fractional share of Common Stock upon exercise or exchange of this Warrant.
Instead, the Company will deliver its check for the current market value of
the fractional share. The current market value of a fraction of a share is
determined as follows: multiply the current market price of a full share by
the fraction of a share and round the result to the nearest cent.
Section 4. ASSIGNMENT OR LOSS OF WARRANT.
(a) Except as provided in Section 9, the Holder of this
Warrant shall be entitled, without obtaining the consent of the Company, to
assign its interest in this Warrant, or any of the Warrant Shares, in whole
or in part to any bona fide officer, director or partner of Holder,
provided, however, that the transferee, prior to any such transfer, agrees
in writing, in form and substance satisfactory to the Company, to be bound
by the terms of this Agreement and provides the Company with an opinion of
counsel in such form reasonably acceptable to the Company, that such
transfer would not be in violation of the Act or any applicable state
securities or blue sky laws. Subject to the provisions hereof and of
Section 9, upon surrender of this Warrant to the Company or at the office
of its stock transfer agent or warrant agent, with
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the Assignment Form annexed hereto duly executed and funds sufficient to
pay any transfer tax, the Company shall, without charge, execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees
named in such instrument of assignment and, if the Holder's entire interest
is not being assigned, in the name of the Holder, and this Warrant shall
promptly be canceled.
(b) Upon receipt of evidence satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant, and (in the
case of loss, theft or destruction) of indemnification satisfactory to the
Company, and upon surrender and cancellation of this Warrant, if mutilated,
the Company shall execute and deliver a new Warrant of like tenor and date.
Section 5. RIGHTS OF THE HOLDER. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either
at law or equity, and the rights of the Holder are limited to those set
forth in this Warrant. Nothing contained in this Warrant shall be
construed as conferring upon the Holder hereof the right to vote or to
consent or to receive notice as a stockholder of the Company on any matters
or with respect to any rights whatsoever as a stockholder of the Company.
No dividends or interest shall be payable or accrued in respect of this
Warrant or the interest represented hereby or the Warrant Shares
purchasable hereunder until, and only to the extent that, this Warrant
shall have been exercised or exchanged in accordance with its terms.
Section 6. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The
number and kind of securities purchasable upon the exercise or exchange of
this Warrant and the Exercise Price shall be subject to adjustment from
time to time upon the occurrence of certain events, as follows:
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If at any time
after January 15, 1998, the Company:
(A) pays a dividend or makes a distribution on its
Common Stock in shares of its Common Stock;
(B) subdivides its outstanding shares of Common Stock
into a greater number of shares;
(C) combines its outstanding shares of Common Stock
into a smaller number of shares;
(D) makes a distribution on its Common Stock in shares
of its capital stock other than Common Stock; or
(E) issues by reclassification of its Common Stock any
shares of its capital stock;
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then the Exercise Price in effect immediately prior to such action shall be
adjusted so that the Holder may receive, upon exercise or exchange of this
Warrant and payment of the same aggregate consideration, the number of
shares of capital stock of the Company which the Holder would have owned
immediately following such action if the Holder had exercised or exchanged
the Warrant immediately prior to such action.
The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution and immediately after
the effective date in the case of a subdivision, combination or
reclassification.
(b) DEFERRAL OF ISSUANCE OR PAYMENT. In any case in which an
event covered by this Section 6 shall require that an adjustment in the
Exercise Price be made effective as of a record date, the Company may elect
to defer until the occurrence of such event: (i) issuing to the Holder, if
this Warrant is exercised after such record date, the shares of Common
Stock and other capital stock of the Company, if any, issuable upon such
exercise over and above the shares of Common Stock or other capital stock
of the Company, if any, issuable upon such exercise on the basis of the
Exercise Price in effect prior to such adjustment; and (ii) paying to the
Holder by check any amount in lieu of the issuance of fractional shares
pursuant to Section 3.
(c) WHEN NO ADJUSTMENT REQUIRED. No adjustment need be made
for a change in the par value or no par value of the Common Stock.
(d) CURRENT MARKET PRICE. The "Current Market Price" per
share of Common Stock on any date is the average of the Quoted Prices of
the Common Stock for the 30 consecutive trading days prior to the date in
question. The "Quoted Price" of the Common Stock is the last reported
sales price of the Common Stock as reported by NASDAQ, or the primary
national securities exchange on which the Common Stock is then quoted;
provided, however, that if quotes for the Common Stock are not reported by
NASDAQ and the Common Stock is neither traded on the NASDAQ National
Market, on a national securities exchange, on the NASDAQ Small Cap Market
nor on the OTC Electronic Bulletin Board, the price referred to above shall
be the price reflected in the over-the-counter market as reported by the
National Quotation Bureau, Inc. or any organization performing a similar
function.
(e) NO ADJUSTMENT UPON EXERCISE OF WARRANTS. No adjustments
shall be made under any Section herein in connection with the issuance of
Warrant Shares upon exercise or exchange of the Warrants.
(f) COMMON STOCK DEFINED. Whenever reference is made in
Section 6(a) to the issue of shares of Common Stock, the term "Common
Stock" shall include any equity securities of any class of the Company
hereinafter authorized which shall not be limited to a fixed sum or
percentage in respect of the right of the holders thereof to participate in
dividends or distributions of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company. Subject to the
provisions of Section 8 hereof, however, shares issuable
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upon exercise or exchange hereof shall include only shares of the class
designated as Common Stock of the Company as of the date hereof or shares
of any class or classes resulting from any reclassification or
reclassifications thereof or as a result of any corporate reorganization as
provided for in Section 8 hereof.
Section 7. OFFICERS' CERTIFICATE. Whenever the Exercise Price shall
be adjusted as required by the provisions of Section 6, the Company shall
forthwith file in the custody of its secretary or an assistant secretary at
its principal office an officers' certificate showing the adjusted Exercise
Price determined as herein provided, setting forth in reasonable detail the
facts requiring such adjustment and the manner of computing such
adjustment. Each such officers' certificate shall be signed by the
chairman, president or chief financial officer of the Company and by the
secretary or any assistant secretary of the Company. Each such officers'
certificate shall be made available at all reasonable times for inspection
by the Holder or any holder of a Warrant executed and delivered pursuant to
Section 4 hereof.
Section 8. RECLASSIFICATION, REORGANIZATION, CONSOLIDATION OR
MERGER. In the event of any reclassification, capital reorganization or
other change of outstanding shares of Common Stock of the Company (other
than a subdivision or combination of the outstanding Common Stock and other
than a change in the par value of the Common Stock) or in the event of any
consolidation or merger of the Company with or into another corporation
(other than a merger in which merger the Company is the continuing
corporation and that does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the
class issuable upon exercise or exchange of this Warrant) or in the event
of any sale, lease, transfer or conveyance to another corporation of the
property and assets of the Company as an entirety or substantially as an
entirety, the Company shall use its best efforts to cause effective
provisions to be made so that the Holder shall have the right thereafter,
by exercising this Warrant, to purchase the kind and amount of shares of
stock and other securities and property (including cash) receivable upon
such reclassification, capital reorganization and other change,
consolidation, merger, sale or conveyance by a holder of the number of
shares of Common Stock that might have been received upon exercise or
exchange of this Warrant immediately prior to such reclassification,
capital reorganization, change, consolidation, merger, sale or conveyance.
Any such provision shall include provisions for adjustments in respect of
such shares of stock and other securities and property that shall be as
nearly equivalent as may be practicable to the adjustments provided for in
this Warrant. The foregoing provisions of this Section 8 shall similarly
apply to successive reclassifications, capital reorganizations and changes
of shares of Common Stock and to successive consolidations, mergers, sales
or conveyances.
Section 9. TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933:
REGISTRATION RIGHTS.
(a) No sale, transfer, assignment, hypothecation or other
disposition of this Warrant or of the Warrant Shares shall be made unless
any such transfer, assignment or other disposition will comply with the
rules and statutes administered by the Securities and Exchange Commission
and: (i) a Registration Statement under the Act including such shares is
currently in effect; or (ii) in the opinion of counsel, which counsel and
which opinion shall be
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reasonably satisfactory to the Company, a current Registration Statement is
not required for such disposition of the shares. Each stock certificate
representing Warrant Shares issued upon exercise or exchange of this
Warrant shall bear the following legend (unless, in the opinion of counsel,
which counsel and which opinion shall be reasonably satisfactory to the
Company, such legend is not required):
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS."
(b) The Company agrees that during the term of this Warrant,
the Holder shall have the right, pursuant to the terms of the Registration
Rights Agreement, among the Company and certain purchasers of the Company's
Common Stock, to require the Company to register the Warrant Shares.
Section 10. MODIFICATION AND WAIVER. Neither this Warrant nor any
term hereof may be changed, waived, discharged or terminated other than by
an instrument in writing signed by the Company and by the holder hereof.
Section 11. NOTICES. Any notice, request or other document required
or permitted to be given or delivered to the holder hereof or the Company
shall be delivered or shall be sent by certified mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to
the Company at the address indicated therefor in the first paragraph of
this Warrant.
Section 12. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description
headings of the several sections and paragraphs of this Warrant are
inserted for convenience only and do not
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constitute a part of this Warrant. This Warrant shall be construed and
enforced in accordance with, and the rights of the parties shall be
governed by, the laws of the State of Delaware.
IN WITNESS WHEREOF, the Company has duly caused this Warrant to be
signed by its duly authorized officer and to be dated as of January 15,
1998.
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
By:
---------------------------------------
Name: C. Russell Trenary, III
Title: President and
Chief Executive Officer
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PURCHASE FORM
-------------
Dated:_______________, ____
The undersigned hereby irrevocably elects to exercise the within
Warrant to purchase ________ shares of Common Stock and hereby makes
payment of _______________ in payment of the exercise price thereof.
Signature
---------------------------
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ASSIGNMENT FORM
---------------
Dated:_______________, ____
FOR VALUE RECEIVED, ____________________ hereby sells assigns and
transfers unto ____________________ (the "Assignee"),
(please type or print in block letters)
______________________________________________________________________
(insert address)
its right to purchase up to ______ shares of Common Stock represented by
this Warrant and does hereby irrevocably constitute and appoint
____________________ Attorney, to transfer the same on the books of the
Company, with full power of substitution in the premises.
Signature
--------------------------
9
EXHIBIT 4.4
- -----------
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
_______________________________________________________
REGISTRATION RIGHTS AGREEMENT
________________________________________________________
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is entered into
as of the Closing Date (as defined herein) by and among Sunrise
Technologies International, Inc., a Delaware corporation, and the persons
whose signatures appear on the execution pages of this Agreement.
This Agreement is made pursuant to the U.S. Note and Warrant Purchase
Agreement and the Offshore Note and Warrant Purchase Agreement between the
Company and each of the Purchasers listed (the "Purchase Agreements"). In
order to induce the Purchasers to enter into the Purchase Agreement, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution of this Agreement by the Company is a condition
to the closing under the Purchase Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
Capitalized terms used herein without definition shall have their
respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
CLOSING DATE: The date assigned thereto in the Purchase Agreement.
COMMON STOCK: The common stock, $.001 par value per share, of the
Company.
COMPANY: Sunrise Technologies International, Inc., a Delaware
corporation.
CONVERSION SHARE: Shares issuable pursuant to the exchange of the
Notes.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
LOSSES: See Section 6 hereof.
NOTE: The Note issued to investor pursuant to the Purchase
Agreement.
PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430(A) under the Securities
Act, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and all other amendments and
supplements to the prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by
reference in such prospectus.
<PAGE>
PURCHASE AGREEMENT: The U.S. Note and Warrant Purchase Agreement and
the Offshore Note and Warrant Purchase Agreement by and among the Company
and the Purchasers thereunder pursuant to which the Note and Warrants were
issued.
REGISTRATION EXPENSES: All reasonable expenses incurred by the
Company in complying with Section 3 hereof, including all registration and
filing fees, printing expenses, fees and disbursements of counsel for the
Company, and blue sky fees and expenses in all states in which there is an
exemption for issuance of stock traded on the Nasdaq National Market and
such other states listed in Schedule 1 attached hereto.
PURCHASERS: The purchasers listed on the signature pages to the
Purchase Agreements.
REGISTRABLE SECURITIES: All Conversion Shares and Warrant Shares
which are Restricted Securities, and any Common Stock issued or issuable in
respect of the Conversion Shares and the Warrant Shares, pursuant to any
stock split, stock dividend, recapitalization or similar event. The Notes
and Warrants are not Registrable Securities hereunder.
REGISTRATION STATEMENT: Any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions
of this Agreement, including the Prospectus, amendments and supplements to
such registration statement, including post-effective amendments, all
exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
RESTRICTED SECURITIES: The Conversion Shares and the Warrant Shares
upon original issuance thereof, and at all times subsequent thereto, until,
in the case of any such security, it is no longer required to bear the
legend set forth on such security pursuant to the terms of the security,
the Purchase Agreement and applicable law.
RULE 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC (excluding Rule 144A)
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
SHELF REGISTRATION: See Section 3(a) hereof.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration
in which securities of the Company are sold to an underwriter for
reoffering to the public.
WARRANTS: The warrants to purchase shares of Common Stock issued to
Purchasers pursuant to the Purchase Agreement.
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WARRANT SHARES: The shares of Common Stock issued or issuable to
Purchasers pursuant to the exercise of the Warrants.
2. SECURITIES SUBJECT TO THIS AGREEMENT
The securities entitled to the benefits of this Agreement are
the Registrable Securities.
3. SHELF REGISTRATION
(a) SHELF REGISTRATION. The Company shall, not later than
the 90th day after the final Closing Date of the Offering (the "Filing
Date"), prepare and file with the SEC a Registration Statement for an
offering to be made on a continuous basis pursuant to Rule 415 (or any
appropriate similar rule that may be adopted by the SEC) under the
Securities Act covering the Registrable Securities (the "Shelf
Registration"). The Shelf Registration shall be on a form permitting
registration of such Registrable Securities for resale by such holders in
the manner or manners reasonably designated by them (including, without
limitation, one or more underwritten offerings).
(b) EFFECTIVENESS. The Company shall use reasonable efforts
to cause the Shelf Registration to become effective under the Securities
Act as soon as practicable following the Filing Date. Subject to the
requirements of the Securities Act including, without limitation,
requirements relating to updating prospectuses through post-effective
amendments or otherwise, the Company shall use reasonable efforts to keep
the Shelf Registration continuously effective until the Expiration Date (as
such term is defined in the Warrants); provided, that in the event of a
Suspension Period, as set forth in Section 5(d) hereof, the Company shall
extend the period of effectiveness of such Shelf Registration by the number
of days of each such Suspension Period, and provided further that the
Company shall not be required to keep the Shelf Registration effective with
respect to any Registrable Securities that may be sold in accordance with
Rule 144 under the Securities Act.
(c) PRIORITY ON SHELF REGISTRATION. If any of the
Registrable Securities to be registered pursuant to the Shelf Registration
are to be sold in a firm commitment underwritten offering, and if the
managing underwriters advise the Company and the holders of such
Registrable Securities that in their opinion the amount of Registrable
Securities proposed to be sold in such offering exceeds the amount of
Registrable Securities which can be sold in such offering, there shall be
included in such firm commitment underwritten offering the amount of such
Registrable Securities requested to be included in such registration which
in the opinion of such underwriters can be sold, and such amount shall be
allocated pro rata among the holders of such Registrable Securities
requested to be included in such registration on the basis of the number
shares of Common Stock represented by Registrable Securities requested to
be included therein by such holders.
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<PAGE>
4. HOLDBACK AGREEMENTS.
(a) RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE
SECURITIES. Each holder of Registrable Securities whose Registrable
Securities are covered by a Registration Statement filed pursuant to
Section 3 hereof agrees, if requested by the managing underwriters in an
underwritten offering (to the extent timely notified in writing by the
Company or the managing underwriters), not to effect any public sale or
distribution of securities of the Company of any class included in such
Registration Statement, including a sale pursuant to Rule 144 (except as
part of such underwritten offering), during the 10-day period prior to, and
the 90-day period beginning on, the effective date of any underwritten
offering made pursuant to such Registration Statement.
The foregoing provisions shall not apply to any holder of
Registrable Securities if such holder is prevented by applicable statute or
regulation from entering into any such agreement; PROVIDED, HOWEVER, that
any such holder shall undertake in its request to participate in any such
underwritten offering not to effect any public sale or distribution of the
class of Registrable Securities covered by such Registration Statement
(except as part of such underwritten offering) during such period unless it
has provided five business days prior written notice of such sale or
distribution to the managing underwriter or underwriters.
5. EXPENSES AND PROCEDURES.
(a) EXPENSES OF REGISTRATION. All Registration Expenses
(exclusive of underwriting discounts and commissions) shall be borne by the
Company. Each holder shall bear all underwriting discounts, selling
commissions, sales concessions and similar expenses applicable to the sale
of securities attributable to the Registrable Securities sold by such
holder.
(b) REGISTRATION PROCEDURES. In the case of each
registration, qualification or compliance effected by the Company pursuant
to Section 3, the Company will keep the holders advised as to the
initiation of registration, qualification and compliance and as to the
completion thereof. At its expense, the Company will furnish such number
of Prospectuses and other documents incident thereto as the holders from
time to time may reasonably request.
(c) INFORMATION. The Company may require each seller of
Registrable Securities as to which any registration is being effected to
furnish such information regarding the distribution of such Registrable
Securities as the Company may from time to time reasonably request and the
Company may exclude from such registration the Registrable Securities of
any seller who unreasonably fails to furnish such information after
receiving such request.
(d) DELAY OR SUSPENSION. Notwithstanding anything herein to
the contrary, the Company may, at any time, delay the filing of the Shelf
Registration for a period of up to 60 days following the Filing Date or
suspend the effectiveness of any Registration Statement for a period of up
to 90 days in the aggregate in any calendar year, as appropriate (a
"Suspension Period"), by giving notice to each holder of Registrable
Securities to be included in the
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Registration Statement, if the Company shall have determined that the
Company may be required to disclose any material corporate development
which disclosure may have a material effect on the Company. Each holder of
Registrable Securities agrees by acquisition of such Registrable Securities
that, upon receipt of any notice from the Company of a Suspension Period,
such holder shall forthwith discontinue disposition of such Registrable
Securities covered by such Registration Statement or Prospectus until such
holder (i) is advised in writing by the Company that the use of the
applicable Prospectus may be resumed, (ii) has received copies of a
supplemental or amended prospectus, if applicable, and (iii) has received
copies of any additional or supplemental filings which are incorporated or
deemed to be incorporated by reference in such Prospectus. The Company
shall prepare, file and furnish to each holder of Registrable Securities
immediately upon the expiration of any Suspension Period, appropriate
supplements or amendments, if applicable, to the Prospectus and appropriate
documents, if applicable, incorporated by reference in the Registration
Statement.
6. INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY. The Company shall, without
limitation as to time, indemnify and hold harmless, to the full extent
permitted by law, each holder of Registrable Securities, its officers,
directors, agents and employees, each person who controls such holder
(within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act), and the officers, directors, agents or employees of any
such controlling person, from and against all losses, claims, damages,
liabilities, costs (including, without limitation, all reasonable
attorneys' fees) and expenses (collectively, "Losses"), as incurred,
arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement,
Prospectus or preliminary prospectus, or arising out of or based upon any
omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein in light of the
circumstances under which they were made (in the case of any Prospectus)
not misleading, except insofar as the same are based solely upon
information furnished to the Company by such holder for use therein;
PROVIDED, HOWEVER, that the Company shall not be liable in any such case to
the extent that any such Loss arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in any preliminary prospectus or Prospectus if: (i) such holder failed to
send or deliver a copy of the Prospectus or Prospectus supplement with or
prior to the delivery of written confirmation of the sale of Registrable
Securities; and (ii) the Prospectus or Prospectus supplement would have
corrected such untrue statement or omission. If requested, the Company
shall also indemnify underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the
distribution, their officers, directors, agents and employees and each
person who controls such persons (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) to the same extent as
provided above with respect to the indemnification of the holders of
Registrable Securities.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. In
connection with any Registration Statement in which a holder of Registrable
Securities is participating, such holder of Registrable Securities shall
furnish to the Company in writing such information as the
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Company may reasonably request for use in connection with any Registration
Statement or Prospectus. Such holder hereby agrees to indemnify and hold
harmless, to the full extent permitted by law, the Company, and its
officers, directors, agents and employees, each person who controls the
Company (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, agents or
employees of any such controlling person, from and against all Losses
arising out of or based upon any untrue statement of a material fact
contained in any Registration Statement, Prospectus or preliminary
prospectus, or arising out of or based upon any omission of a material fact
required to be stated therein or necessary to make the statements therein
in light of the circumstances under which they were made (in the case of
any Prospectus) not misleading, to the extent, but only to the extent, that
such untrue statement or omission is contained in any information so
furnished in writing by such holder to the Company for use in such
Registration Statement, Prospectus or preliminary prospectus. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any holder and any of
their respective directors, officers, agents, employees or controlling
persons (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and shall survive the transfer of such securities
by such holder. The Company shall be entitled to receive indemnities from
accountants, underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution to the
same extent as provided above with respect to information so furnished by
such persons specifically for inclusion in any Registration Statement,
Prospectus or preliminary prospectus, PROVIDED, that the failure of the
Company to obtain any such indemnity shall not relieve the Company of any
of its obligations hereunder.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any action or
proceeding (including any governmental investigation or inquiry) shall be
brought or any claim shall be asserted against any person entitled to
indemnity hereunder (an "indemnified party"), such indemnified party shall
promptly notify the party from which such indemnity is sought (the
"indemnifying party") in writing, and the indemnifying party shall assume
the defense thereof, including the employment of counsel reasonably
satisfactory to the indemnified party and the payment of all fees and
expenses incurred in connection with the defense thereof. All such fees
and expenses (including any fees and expenses incurred in connection with
investigating or preparing to defend such action or proceeding) shall be
paid to the indemnified party, as incurred, within 20 days of written
notice thereof to the indemnifying party; PROVIDED, HOWEVER, that if, in
accordance with this Section 6, the indemnifying party is not liable to the
indemnified party, such fees and expenses shall be returned promptly to the
indemnifying party. Any such indemnified party shall have the right to
employ separate counsel in any such action, claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such
counsel shall be the expense of such indemnified party unless: (a) the
indemnifying party has agreed to pay such fees and expenses; (b) the
indemnifying party shall have failed promptly to assume the defense of such
action, claim or proceeding and to employ counsel reasonably satisfactory
to the indemnified party in any such action, claim or proceeding; or (c)
the named parties to any such action, claim or proceeding (including any
impleaded parties) include both such indemnified party and the indemnifying
party, and such indemnified party shall have been advised by counsel that
there may be one or more legal defenses available to it which are different
from or
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additional to those available to the indemnifying party (in which case, if
such indemnified party notifies the indemnifying party in writing that it
elects to employ separate counsel at the expense of the indemnifying party,
the indemnifying party shall not have the right to assume the defense of
such action, claim or proceeding on behalf of such indemnified party, it
being understood, however, that the indemnifying party shall not, in
connection with any one such action, claim or proceeding or separate but
substantially similar or related actions, claims or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel) at any time for
all such indemnified parties, unless in the opinion of counsel for such
indemnified party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to such
action, claim or proceeding, in which event the indemnifying party shall be
obligated to pay the fees and expenses of such additional counsel or
counsels). No indemnifying party will consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the release of such indemnified party from all liability in respect
to such claim or litigation without the written consent (which consent will
not be unreasonably withheld) of the indemnified party. No indemnified
party shall consent to entry of any judgment or enter into any settlement
without the written consent (which consent will not be unreasonably
withheld) of the indemnifying party from which indemnity or contribution is
sought.
(d) CONTRIBUTION. If the indemnification provided for in
this Section 6 is unavailable to an indemnified party under Section 6(a) or
6(b) hereof (other than by reason of exceptions provided in those Sections)
in respect of any Losses, then each applicable indemnifying party in lieu
of indemnifying such indemnified party shall contribute to the amount paid
or payable by such indemnified party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified party in connection with the actions,
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party and the indemnified party shall be determined by reference to, among
other things, whether any action in question, including any untrue
statement or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or relates
to information supplied by, such indemnifying party or indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be deemed
to include, subject to the limitations set forth in Section 6(c), any legal
or other fees or expenses reasonably incurred by such party in connection
with any action, suit, claim, investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by
pro rata allocation or by any other method of allocation which does not
take into account the equitable considerations referred to in the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
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7. RULE 144
The Company shall file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder, and will take such further action as any
holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 or Rule 144A. Upon the
request of any holder of Registrable Securities, the Company shall deliver
to such holder a written statement as to whether the Company has complied
with such information and requirements. Notwithstanding the foregoing,
nothing in this Section 7 shall be deemed to require the Company to
register any of its securities under any section of the Exchange Act.
8. UNDERWRITTEN REGISTRATIONS.
If any of the Registrable Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment
banker or investment bankers and manager or mangers that will administer
the offering will be selected by the Company.
No person may participate in any underwritten registration
hereunder unless such person: (i) agrees to sell such person's Registrable
Securities on the basis provided in any underwriting arrangements approved
by the persons entitled hereunder to approve such arrangements; and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of
such underwriting arrangements.
9. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company obtains the written
consent of holders of at least a majority of the then outstanding
Registrable Securities affected by such amendment, modification or
supplement. Notwithstanding the foregoing, a waiver or consent to depart
from the provisions hereof with respect to a matter which relates
exclusively to the rights of holders of Registrable Securities whose
securities are being sold pursuant to a Registration Statement and which
does not directly or indirectly affect the rights of holders of Registrable
Securities whose securities are not being sold pursuant to such
Registration Statement may be given by holders of a majority of the
Registrable Securities being sold by such holders.
(b) NOTICES. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, next day air courier, telex, or telecopy: (i)
if to a holder of Registrable Securities, at the most current address given
by such holder to the Company in accordance with the provisions of this
Section
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9(b), which address initially is, with respect to each purchaser, the
address set forth on the signature page attached hereto; and (ii) if to the
Company, initially at the address set forth on the first page of the
Purchase Agreement, attention: Secretary and, thereafter, at such other
address, notice of which is given in accordance with the provisions of this
Section 9(b), with a copy to Holleb & Coff, Chicago, Illinois, attention:
Eric M. Fogel, Esq.
All such notices and communications shall be deemed to
have been duly given: when delivered by hand, if personally delivered; two
business days after being deposited in the mail, postage prepaid, if
mailed; one business day after being sent by next day air courier; when
answered back, if telexed; and when receipt acknowledged, if telecopied.
(c) TRANSFER OF REGISTRATION RIGHTS. The rights granted to
the holders pursuant to this Agreement to cause the Company to register
securities may be assigned in connection with the transfer, assignment or
sale of any Registrable Security to the extent such securities and rights
may be transferred, assigned or sold pursuant to applicable laws and to the
agreements to which the particular holder is a party; provided, however,
that no transfer or assignment of such rights shall be effective or valid
unless the purchaser, transferee or assignee, after giving effect to the
transfer, assignment or sale of the Registrable Securities, owns or has the
right to acquire at least 5,000 shares of Common Stock.
(d) COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
(e) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(f) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without
regard to principles of conflict of laws.
(g) SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their best efforts to find
and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of
the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such which may be
hereafter declared invalid, void or unenforceable.
(h) ENTIRE AGREEMENT. This Agreement is intended by the
parties to be a final expression of their agreement and a complete and
exclusive statement of the agreement and
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understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, warranties nor
undertakings, other than those set forth or referred to herein with respect
to the registration rights granted by the Company with respect to the
securities sold pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(i) ATTORNEYS' FEES. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to
recover reasonable attorneys' fees in addition to its costs and expenses
and any other available remedy.
(j) EXPIRATION. This Agreement shall expire on the earlier
of: (i) the date on which all Registrable Securities have been sold by the
Purchasers; or (ii) the fifth anniversary of the final Closing Date.
IN WITNESS WHEREOF, the parties have executed this agreement as of
the date first written above.
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
By:
-------------------------------------
Name: C. Russell Trenary, III
Title: President and Chief
Executive Officer
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SCHEDULE I
California
Florida
Georgia
Illinois
Nevada
New York
North Carolina
Exhibit 99.1
- ------------
SUNRISE
TECHNOLOGIES
FOR IMMEDIATE RELEASE
CONTACT: Susan Lorigan
Investor Relations (510) 623-9001
SUNRISE TECHNOLOGIES INTERNATIONAL, INC. SUCCESSFULLY
COMPLETES $9.35 MILLION PRIVATE FINANCING
FREMONT, CALIFORNIA, JANUARY 27, 1998 -- Sunrise Technologies
International, Inc. (OTC:SNRS) -- today announced the completion of its
private placement of 12% Convertible Subordinated Pay-In-Kind Notes Due
2001 and Warrants for a total amount of $9,350,000.
According to C. Russell Trenary, III, President and CEO, "A portion
of the funds will be used to complete the final phase of our clinical
study, submit our PMA (pre-market approval), and plan our launch activities
associated with the Sunrise Corneal Shaping system for the treatment of
hyperopia. The remaining proceeds will be used to fund operations into the
year 2000. It is also worth noting that over 80% of the money raised came
from ophthalmologists who have seen our clinical data or have experience
using our system for treating hyperopia."
Mr. Trenary added, "Two challenges facing Sunrise were to get our
technology into the final phase of our FDA clinical study and to raise
enough money to complete the FDA process. It has been six months since our
new management team assumed leadership after the sale of the dental
business, and I believe that with the completion of this successful
offering we have addressed those two key issues."
"I am very pleased to have completed this private placement in such a
short time. We managed to raise over twice as much money compared to our
1997 private placement with significantly less dilution to our
stockholders," stated Timothy A. Marcotte, Vice President, Finance and
Chief Financial Officer.
Founded in 1987, the Company produces and markets high technology
products revolutionizing treatment methods in eye care. The Company
develops Holmium laser-based systems which utilize a patented process for
shrinking collagen developed by Dr. Bruce Sand (the "Sand Process") in
correcting ophthalmic conditions. Its CorneaSparing LTK [Trademark] System*
is a non-contact simultaneous application for correction of hyperopia
(farsightedness), presbyopia (loss of focus due to natural aging), and
overcorrection resulting from PRK and LASIK treatments for myopia. The
system is currently in use in Europe and the Americas, and is in FDA
clinical trials in the United States.
Except for historical information, this news release contains certain
forward-looking statements that involve risk and uncertainties which may
cause actual results to differ materially from the statements made,
including market potential, regulatory clearances, business growth, and
other risks listed from time to time in the Company's Securities and
Exchange Commission filings. These forward-looking statements represent the
Company's judgment, as of the date of this release, and the Company
disclaims any intent or obligation to update these forward-looking
statements.
Internet users can access Sunrise's World Wide Web site at
http://www.sunrise-tech.com.
* Caution--Investigational Device: Federal law restricts this device to
investigational use in the U.S.
