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 1, 1999
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-10428 77-0148208
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(State of or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
3400 West Warren Avenue, Fremont California 94538
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 623-9001
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(Former name or address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS.
On January 1, 1999, 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 $10,000,000 in 5% convertible subordinated pay-in-kind notes due
2001 (the "Notes"), and accompanying warrants to purchase common stock (the
"Warrants") through a private placement. The Notes and Warrants were
offered and sold by the Registrant in reliance on Regulation D under the
Securities Act to an "accredited investor" within the meaning of Rule 501
under the Securities Act. The Notes mature December 31, 2001. An
aggregate of 1,875,000 shares of common stock have been reserved for
issuance upon conversion of the Note, and an aggregate of 148,950 shares of
common stock have been reserved for issuance upon exercise of the Warrants.
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.
<PAGE>
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 12% Convertible Subordinated Pay-In-Kind Note Due 2001
4.2 Note and Warrant Purchase Agreement
4.3 Warrant for the Purchase of Shares of Common Stock
4.4 Registration Rights Agreement
99.1 Press Release of Registrant dated January 11, 1999
<PAGE>
SIGNATURES
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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 12, 1999 By: /s/ Timothy A. Marcotte
---------------------------------------
Name: Timothy A. Marcotte
Title: Vice President, Finance
and Chief Financial Officer
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, PROVIDED THAT AN
OPINION OF COUNSEL WILL NOT BE REQUIRED FOR SALES OR TRANSFERS MADE
PURSUANT TO RULE 144 UNDER THE ACT.
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
5% CONVERTIBLE SUBORDINATED PAY-IN-KIND NOTE DUE 2001
$10,000,000 January 1, 1999
ALL CAPITALIZED TERMS SHALL BE DEEMED TO HAVE THE DEFINITIONS ASCRIBED TO
THEM IN THE PURCHASE AGREEMENT, 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 Aragon Ventures LLC, a
Nevada limited liability company, 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 as then shown on the books of the
Company, the principal sum of Ten Million and 00/100 Dollars ($10,000,000)
on December 31, 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 through the Maturity Date (unless earlier
converted into shares of Common Stock) (the "Interest Payment Date") to
Holders of record of the Notes on the Maturity Date, 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 5% per annum from the
date of original issuance. On the Interest Payment 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
the Interest Payment Date, the Company shall have authenticated the
Secondary Notes for original issuance to each Holder on the record date in
the aggregate principal amount required to pay such interest. The
Secondary Notes will mature on the Maturity Date, will bear interest and
have interest paying features identical to this Note, and will have the
identical right to convert into Common Stock as this Note. 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 the Holder as shown by the records of the Company.
<PAGE>
Except as previously provided herein, the terms "Note" or
"Notes" shall include all Secondary Notes that may be issued hereunder.
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 have been issued pursuant to a Note and Warrant
Purchase Agreement dated of even date herewith between the Company and the
Holder (the "Purchase Agreement"), and is subject to the benefits contained
in a Registration Rights Agreement dated of even date herewith between the
Company and the Holder (the "Registration Rights Agreement"). Pursuant to
the Purchase Agreement, warrants to purchase the Company's Common Stock
(the "Warrants") have also been issued to the Holder.
2. CONVERSION.
(a) HOLDER'S OBLIGATION TO CONVERT. Subject to and upon
compliance with the provisions of this Section 2, the Holder of this Note
shall be required, on the date the Company receives conditional approval
from the Ophthalmic Device Panel of the Food and Drug Administration (the
"FDA") related to the premarket application filed by the Company with the
FDA in December 1998 related to its Hyperion LTK SystemTM (the "Panel
Approval"), to convert one-half of the principal amount of this Note into
shares of the Company's common stock, par value $0.001 per share (the
"Common Stock") at the conversion price (the "Conversion Event No. 1
Conversion Price") of $4.00 for each share of Common Stock (appropriately
adjusted for any combination, consolidation, stock split or other
recapitalization). In addition, the Holder of this Note shall be required,
on the date the Company receives FDA approval to market the Company's
Hyperion LTK SystemTM in the United States (the "FDA Approval"), to convert
the remaining portion of the Note into shares of Common Stock at the
conversion price (the "Conversion Event No. 2 Conversion Price") of $8.00
per share of Common Stock (appropriately adjusted for any combination,
consolidation, stock split or other recapitalization). The Conversion
Event No. 1 Conversion Price and Conversion Event No. 2 Conversion Price
shall be, where applicable, referred to herein as the "Conversion Price."
If FDA Approval occurs prior to receipt by the Company of the Panel
Approval, then the entire Note shall immediately convert into Common Stock,
half at the Conversion Event No. 1 Conversion Price and the other half at
the Conversion Event No. 2 Conversion Price at the time of receipt by the
Company of the FDA Approval.
(b) AUTOMATIC CONVERSION. As long as the consideration is
equal to or exceeds $6.00 per share of Common Stock, this Note shall be
automatically converted into shares of Common Stock at the applicable
Conversion Price immediately upon the closing of a merger with 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).
(c) 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, or the applicable portion, at the office of the
Company or of any transfer or conversion agent for this Note and shall
deliver the conversion notice available from the Company (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(b)
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. The Company shall, as soon as
practicable thereafter, issue and deliver to the registered address of the
<PAGE>
Holder: (i) certificate(s) for the number of full shares of Common Stock to
which the Holder shall be entitled as aforesaid; and (ii) 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(b) hereof, 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).
(d) 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.
(e) 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 then shown on the
books of the Company.
(f) 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.
(g) 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.
(h) 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.
<PAGE>
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 hereof, 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. However, principal and interest on this Note may be paid if
funds are segregated for payment of all Senior Indebtedness. Upon: (1) an
event of default under any Senior Indebtedness; or (2) any 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.
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;
<PAGE>
(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) The Company shall default on any material provision
contained in the Purchase Agreement or the Registration Rights Agreement;
(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, in all cases set forth in clauses (a) through and including (f),
automatically upon the occurrence of such Event of Default the entire
unpaid principal 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 or Notes 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. All transfer taxes incurred by the Holder and costs associated with
converting this Note into shares of Common Stock shall be borne by the
Company.
<PAGE>
9. ATTORNEYS FEES. Should any legal action be brought to collect,
enforce or interpret any part of this Note or if this Note is placed in the
hands of attorneys for collection after an Event of Default, the Company
agrees to pay, in addition to the principal and interest payable hereunder,
reasonable attorneys' fees, expenses and costs (including, without
limitation, fees, expenses and costs on any appeal) incurred by the Holder.
In addition, the Holder shall be reimbursed for an amount not to exceed
$2,500 for its attorneys' fees in connection with the review of the terms
of this Note.
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 3400 West Warren
Avenue, 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 diligence, presentment, protest, demand of payment, notice of
protest, dishonor and nonpayment, and waives the legal effect of Holder's
failure to give all notices not expressly provided for herein. 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. The Company further waives, to
the full extent permitted by law, the right to plead any and all statutes
of limitation as a defense to any demand on this Note, or on an agreement
hereafter securing this Note.
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
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.
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.
<PAGE>
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. USURY LAWS. It is the intention of the parties hereto to
conform strictly to applicable usury laws as in effect from time to time
during the term of this Note. Accordingly, if the transaction contemplated
hereby would be usurious under applicable law (including the laws of the
United States of America, or of any other jurisdiction whose laws may be
mandatorily applicable), then, in that event, notwithstanding anything to
the contrary in this Note, it is agreed that the aggregate of all
consideration that constitutes interest under applicable law that is
contracted for, charged or received under this Note or otherwise in
connection with this Note shall under no circumstances exceed the maximum
amount of interest allowed by applicable law, and any excess shall be
credited to the Company by the Holder (or if such consideration shall have
been paid in full, such excess refunded to the Company by the Holder).
16. GOVERNING LAW. This Note is being delivered in and shall be
construed in accordance with the laws of the State of Nevada, 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: /s/ C. Russell Trenary, III
-----------------------------------
NAME: C. Russell Trenary, III
TITLE: President and
Chief Executive Officer
Attest:
BY: /s/ Timothy A. Marcotte
-----------------------------------
NAME: Timothy A. Marcotte
TITLE: Vice President, Finance
and Chief Financial Officer
EXHIBIT 4.2
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SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
_______________________________________________
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. . . . . . . . . . . . 2
3.1 Organization . . . . . . . . . . . . . . . . . . . . . . 2
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . 3
3.3 Authority. . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Securities Filings . . . . . . . . . . . . . . . . . . . 3
3.5 Issuance of the Notes. . . . . . . . . . . . . . . . . . 4
3.6 No Conflict with Law or Documents. . . . . . . . . . . . 4
3.7 Consents, Approvals and Private Offering . . . . . . . . 4
3.8 Absence of Certain Developments. . . . . . . . . . . . . 4
3.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . 5
3.10 Registration Rights. . . . . . . . . . . . . . . . . . . 5
3.11 No Brokers or Finder . . . . . . . . . . . . . . . . . . 5
3.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . . 5
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. . . . . . . . . . . 5
4.1 Legal Power. . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Due Execution. . . . . . . . . . . . . . . . . . . . . . 5
4.3 Investment Representations . . . . . . . . . . . . . . . 6
4.4 Subordination. . . . . . . . . . . . . . . . . . . . . . 7
5. COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . 7
5.1 Information. . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Conducting the Offering. . . . . . . . . . . . . . . . . 7
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.1 Governing Law. . . . . . . . . . . . . . . . . . . . . . 9
7.2 Successors and Assigns . . . . . . . . . . . . . . . . . 9
7.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . 9
7.4 Separability . . . . . . . . . . . . . . . . . . . . . . 10
7.5 Amendment and Waiver . . . . . . . . . . . . . . . . . . 10
7.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 10
7.7 Fees and Expenses. . . . . . . . . . . . . . . . . . . . 10
7.8 Titles and Subtitles . . . . . . . . . . . . . . . . . . 10
7.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . 10
<PAGE>
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
NOTE AND WARRANT PURCHASE AGREEMENT
This note and warrant purchase 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 3400 West Warren Avenue, Fremont, California
94538, and Aragon Ventures LLC, a Delaware limited liability company, with
its principal office at 50 West Liberty Street, Suite 880, Reno, Nevada
89501, which is a signatory hereto (the "Purchaser").
RECITALS
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The Company is undertaking the placement and sale (the "Offering") of
$10,000,000 5% 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") pursuant to the terms of the Notes at conversion prices
(each a "Conversion Price") as described in the Notes. 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 the Notes, pay interest on the Notes 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 the Notes, if such interest were paid in cash. The Purchaser
will receive 148,950 warrants to purchase Common Stock (the "Warrants") for
the $10,000,000 in Notes purchased by the Purchaser. Each Warrant entitles
the holder to purchase one share of Common Stock for $.01 during the five
(5) year period commencing on the Closing Date (the "Warrant Shares"). The
Notes and Warrants will be sold by the Company to the Purchaser pursuant to
Regulation D under the Securities Act of 1933, as amended (the "Act"). The
offer and sale of Notes will only be made pursuant to the materials
supplied by the Company to the Purchaser, 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 the Purchaser
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 of Notes, up to 1,875,000 shares of Common Stock,
assuming the Notes remain outstanding until December 31, 2001 (the
"Conversion Shares") pursuant to the exchange of the Notes, and up to
148,950 Warrant Shares pursuant to the exercise of up to 148,950 Warrants,
pursuant to the provisions of this Agreement made as of the Closing Date.
The Company has also authorized the issuance and sale of up to 281,250
shares of Common Stock, assuming the Notes remain outstanding until
December 31, 2001 pursuant to the exchange of the Secondary Notes.
<PAGE>
(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 the
Purchaser the aggregate amount of Notes set forth below the Purchaser's
signature on the subscription page bearing the 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, the Purchaser hereby agrees to purchase the amount of
Notes set forth on the subscription page bearing the Purchaser's name at
the purchase price set forth above. The Purchaser shall be liable for only
the amount of Notes that appear on the subscription page hereof that
relates to the Purchaser.
2. CLOSING DATE; DELIVERY.
2.1 CLOSING. The closing of the sale and purchase of the
Notes under this Agreement (the "Closing") shall be as of January 1, 1999
(the "Closing Date").
2.2 DELIVERY. At the Closing, subject to the terms and
conditions hereof, the Company will deliver to the Purchaser the Notes
subscribed for by the Purchaser, dated as 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 Purchaser
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 the 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 Laser Biotech, Inc. (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.
<PAGE>
3.2 CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company on September 30, 1998 is as set forth in the
Company's Quarterly Report on Form 10-Q for the period ended September 30,
1998 (the "1998 Third Quarter Form 10-Q") which is part of the Offering
Materials. Since September 30, 1998, there has been no material change in
the capitalization of the Company, except as described in Amendment No. 1
to the Registration Statement of the Company on Form S-2, as amended to
date (the "Registration Statement"), which is a part of 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 and the Registration Rights Agreement
in substantially the form included in the Offering Materials (the
"Registration Rights Agreement"), and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
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 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 (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
<PAGE>
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.
3.5 ISSUANCE OF THE NOTES. The Notes and the Secondary
Notes, when issued against payment therefor pursuant to the terms of this
Agreement, and the Common Stock, when issued upon conversion of the Notes
and the Secondary Notes and the exercise of the Warrants, each will be: (i)
duly and validly authorized and issued, fully paid and nonassessable; and
(ii) freely transferable and free of all liens and encumbrances excepting
only restrictions on transfer created by state and federal law and
encumbrances created by the Purchaser.
3.6 NO CONFLICT WITH LAW OR DOCUMENTS. The execution,
delivery and consummation of this 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 the 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, indenture, lease,
agreement or other instrument, permit, franchise, license, judgement,
order, decree, law, ordinance, rule or regulation applicable to the
Company, the Subsidiary or their respective properties, including, but not
limited to, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
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, 1998, 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, 1998 that is included in the 1998 Third Quarter Form 10-Q and as
revised in the Registration Statement, 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. The Company spent approximately $750,000 for capital
expenditures in calendar year 1998 and currently projects spending an
additional $900,000 for capital expenditures in calendar year 1999. At the
<PAGE>
Company's current rate of cash expenditures, the Company anticipates that
it will be required to raise additional working capital during the second
quarter of 1999 to fund its operations. Except as described in the SEC
Filings, neither the Company nor any Subsidiary has entered into any
agreement since September 30, 1998 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 NO BROKERS OR FINDER. None of the Company, the
Subsidiary or any of their directors, officers, employees or agents have
retained, employed or used any broker or finder in connection with the
transaction provided for herein.
3.12 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.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents, warrants and covenants with
the Company as follows:
4.1 LEGAL POWER. Purchaser has the requisite power to enter
into this Agreement and the Registration Rights Agreement, to purchase the
Warrants and 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 will be valid and binding agreements of the
Purchaser.
<PAGE>
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, PROVIDED THAT AN OPINION OF COUNSEL WILL NOT BE REQUIRED
FOR SALES OR TRANSFERS MADE PURSUANT TO RULE 144 UNDER THE ACT; and
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.
<PAGE>
(d) Purchaser is an "accredited investor" as such term
is defined in Rule 501 of the Act.
(e) Purchaser is not a resident of Canada or any
territory thereof.
4.4 SUBORDINATION.
The Purchaser understands that the Notes are subordinate to the
Senior Indebtedness (as defined in the Notes), and, in this regard, agrees,
on an unconditional basis, to execute, if required, subordination
agreements with respect to any Senior Indebtedness.
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 Notes 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 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 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 the Purchaser if the Company
reasonably believes the Purchaser is an "accredited investor" 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.
<PAGE>
(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. The
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.
(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
authorizations, 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 Notes shall be legally permitted by all laws and
regulations to which the Purchaser and the Company are subject.
<PAGE>
(d) REGISTRATION RIGHTS AGREEMENT. The Company shall
have entered into the Registration Rights Agreement.
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 the 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. The Purchaser shall
have performed and complied with all agreements and conditions herein
required to be performed or complied with by it on or before the Closing
Date, and the Purchaser shall have delivered payment to the Company in
respect of his purchase of Notes.
(c) QUALIFICATIONS, LEGAL INVESTMENT. All
authorizations, 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 Notes shall be legally permitted by all laws and
regulations to which the Purchaser and the Company are subject.
7. MISCELLANEOUS.
7.1 GOVERNING LAW. This Agreement shall be governed by and
construed under the internal laws of the State of Nevada.
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 other documents
delivered pursuant hereto, 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.
<PAGE>
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 Purchaser. 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 at 3400 West Warren Avenue, Fremont, California 94538
Attention: Mr. Timothy A. Marcotte, or to the Purchaser at 50 West Liberty
Street, Suite 880, Reno, Nevada 89501, with a copy to Tomlinson, Zisko,
Morosoli & Maser LLP, 200 Page Mill Road, Second Floor, Palo Alto,
California, 94306, attention: Timothy Tomlinson, Esq.
7.7 FEES AND EXPENSES. The Company and the Purchaser shall
bear its own expenses and legal fees incurred on its behalf with respect to
this Agreement and the transactions contemplated hereby; provided, however,
the Company shall reimburse Purchaser for its legal fees and expenses in
connection with the acquisition of the Notes and related due diligence in
an amount not to exceed $10,000.
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.
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, PROVIDED THAT AN
OPINION OF COUNSEL WILL NOT BE REQUIRED FOR SALES OR TRANSFERS MADE
PURSUANT TO RULE 144 UNDER THE ACT.
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
No. 1999-W1 148,950 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 3400 West Warren Avenue, Fremont, California 94538,
hereby certifies that Aragon Ventures LLC (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 December 31, 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 $.01 (the "Exercise Price"). 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."
Section 1. EXERCISE OF AND PAYMENT FOR WARRANT.
(a) CASH EXERCISE. The purchase rights represented by this
Warrant may be exercised by the Holder, in whole or in part, by the
surrender of this Warrant at the principal office of the Company, located
at the address set forth herein, accompanied by the form of Notice of Cash
Exercise attached hereto as Exhibit A-1, and by the payment to the Company,
by cash or by certified, cashier's or other check acceptable to the
Company, of an amount equal to the aggregate Exercise Price of the shares
being purchased.
<PAGE>
(b) NET ISSUE EXERCISE. In lieu of exercising this Warrant
pursuant to Section 1(a), the Holder may elect to receive shares equal to
the value of this Warrant determined in the manner described below (or of
any portion thereof remaining unexercised) by surrender of this Warrant at
the principal office of the Company together with the form of Notice of
Cashless Exercise attached hereto as Exhibit A-2, in which event the
Company shall issue to the Holder a number of shares of the Company's
Common Stock computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to the Holder.
Y = the number of shares of Common Stock purchasable under this
Warrant (at the date of such calculation).
A = the fair market value of one share of the Company's Common
Stock (at the date of such calculation).
B = Exercise Price (as adjusted to the date of such calculation).
(c) FAIR MARKET VALUE. For purposes of this Section 1, fair
market value of one share of the Company's Common Stock shall mean, if the
Common Stock is not traded in the Over-The-Counter Market Summary, on the
NASDAQ National Market System or on an exchange, the per share fair market
value of the Common Stock shall be as determined by mutual agreement of the
Company and the Holder; provided, however, that if such agreement cannot be
reached within twenty (20) calendar days, such value shall be determined by
an independent appraiser appointed in good faith by the Company's Board of
Directors. The cost of such appraisal shall be borne by the Company.
(d) AUTOMATIC EXERCISE. To the extent this Warrant is not
previously exercised, and if the fair market value of one share of the
Company's Common Stock is greater than the Exercise Price, as adjusted,
this Warrant shall be deemed automatically exercised in accordance with
Section 1(b) hereof (even if not surrendered) immediately before its
expiration. For purposes of such automatic exercise, the fair market value
of one share of the Company's Common Stock upon such expiration shall be
the fair market value determined pursuant to Section 1(c) above. To the
extent this Warrant or any portion thereof is deemed automatically
exercised pursuant to this Section 1(d), the Company agrees to notify the
Holder within a reasonable period of time of the number of shares of the
Company's Common Stock, if any, Holder is to receive by reason of such
automatic exercise.
(e) MISCELLANEOUS. Upon receipt by the Company of this
Warrant and the applicable exercise form, together with proper payment of
the Exercise Price, if appropriate, 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.
<PAGE>
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) This Warrant is freely transferable in whole or in part
as long as the proposed transfer or resale is in compliance with the Act
and any applicable state securities laws. 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,
member 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 the
Assignment Form annexed hereto as Exhibit B 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.
<PAGE>
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 December 31, 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;
then the number and kind of securities purchasable upon exercise or
exchange of this Warrant and 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.
<PAGE>
(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 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.
<PAGE>
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 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, PROVIDED THAT AN OPINION OF COUNSEL WILL NOT BE REQUIRED FOR SALES OR
TRANSFERS MADE PURSUANT TO RULE 144 UNDER THE ACT."
Section 10. REGISTRATION RIGHTS. The Holder of this Warrant is
entitled to the benefits of the Registration Rights Agreement, of even date
herewith, a copy of which is on file at the offices of the Company.
Section 11. 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 12. 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 13. 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 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
Nevada.
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 1,
1999.
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
By: /s/ C. Russell Trenary, III
------------------------------------
Name: C. Russell Trenary, III
Title: President and
Chief Executive Officer
<PAGE>
EXHIBIT A-1
NOTICE OF EXERCISE OF WARRANT
BY CASH PAYMENT OF EXERCISE PRICE
__________________
Date
Sunrise Technologies
International, Inc. Exercise Price of Warrant
3400 West Warren Avenue Before Exercise: $__________
Fremont, CA 94538 Exercise Price Being
Attn: Exercised: $__________
Mr. Timothy A. Marcotte, Exercise Price: $__________
Vice President, Finance and per share
Chief Financial Officer
Number of Shares of
Common Stock to be
issued Under this Notice: ___________
Remainder Exercise Price
(if any) After Issuance: $__________
CASH EXERCISE
-------------
Ladies and Gentlemen:
The undersigned registered Holder of the Warrant delivered herewith,
hereby irrevocably exercises such Warrant for, and purchases thereunder,
shares of the Common Stock of Sunrise Technologies International, Inc., a
Delaware corporation, as provided below. Capitalized terms used herein,
unless otherwise defined herein, shall have the meanings given in the
Warrant. The portion of the Exercise Price to be applied toward the
purchase of Common Stock pursuant to this Notice of Exercise is
$_____________, thereby leaving a remainder Exercise Price (if any) equal
to $__________. Such exercise shall be pursuant to the cash exercise
provisions of Section 1(a) of the Warrant. Therefore, the Holder makes
payment with this Notice of Exercise by way of cash or certified, cashier's
or other check acceptable to the Company in the amount of $__________.
Such check is payment in full under the Warrant for __________ shares of
Common Stock based upon the Exercise Price of $__________ per share, as
currently in effect under the Warrant. Holder requests that the
certificates for the purchased shares of Common Stock be issued in the name
of and delivered to ___________________. To the extent the foregoing
exercise is for less than the full Exercise Price, a replacement Warrant
representing the remainder of the Exercise Price (and otherwise of like
form, tenor and effect) should be delivered to Holder along with the share
certificates evidencing the Common Stock issued in response to this Notice
of Exercise.
<PAGE>
------------------------------------
By:
------------------------------
Its:
------------------------------
The execution to this Notice of Exercise must exactly correspond to
the name of the Holder as typed on Warrant.
<PAGE>
EXHIBIT A-2
NOTICE OF EXERCISE OF WARRANT
PURSUANT TO NET ISSUE ("CASHLESS") EXERCISE PROVISIONS
_________________
Date
Sunrise Technologies
International, Inc. Exercise Price of Warrant
3400 West Warren Avenue Before Exercise: $__________
Fremont, CA 94538 Exercise Price Being
Attn: Exercised: $__________
Mr. Timothy A. Marcotte, Exercise Price: $__________
Vice President, Finance and per share
Chief Financial Officer
Number of Shares of
Common Stock to be
issued Under this Notice: ___________
Remainder Exercise Price
(if any) After Issuance: $__________
CASHLESS EXERCISE
-----------------
Ladies and Gentlemen:
The undersigned registered Holder of the Warrant delivered herewith,
hereby irrevocably exercises such Warrant for, and purchases thereunder,
shares of the Common Stock of Sunrise Technologies International, Inc., a
Delaware corporation, as provided below. Capitalized terms used herein,
unless otherwise defined herein, shall have the meanings contained in the
Warrant. The portion of the Exercise Price to be applied toward the
purchase of Common Stock pursuant to this Notice of Exercise is
$__________, thereby leaving a remainder Exercise Price (if any) equal to
$__________. Such exercise shall be pursuant to the net issue exercise
provisions of Section 1(b) of the Warrant; therefore, Holder makes no
payment with this Notice of Exercise. The number of shares to be issued
pursuant to this exercise shall be determined by reference to the formula
in Section 1(b) of the Warrant which requires the use of the current per
share fair market value of the Company's Common Stock. The current fair
market value of one share of the Company's Common Stock shall be determined
in the manner provided in Section 1(c) of the Warrant, which amount has
been determined or agreed to by Holder and the Company to be $__________,
which figure is acceptable to Holder for calculations of the number of
shares of Common Stock issuable pursuant to this Notice of Exercise.
Holder requests that the certificates for the purchased shares of Common
Stock be issued in the name of and delivered to ____________________. To
the extent the foregoing exercise is for less than the full Exercise Price
of the Warrant, a replacement Warrant representing the remainder of the
Exercise Price (and otherwise of like form, tenor and effect) shall be
delivered to Holder along with the share certificate evidencing the Common
Stock issued in response to this Notice of Exercise.
<PAGE>
------------------------------------
By:
------------------------------
Its:
------------------------------
The execution to this Notice of Exercise must exactly correspond to
the name of the Holder as typed on the Warrant.
<PAGE>
EXHIBIT B
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
-------------------------
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 person
whose signature appears on the execution pages of this Agreement.
This Agreement is made pursuant to the Note and Warrant Purchase
Agreement between the Company and the Purchaser listed (the "Purchase
Agreement"). In order to induce the Purchaser 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
Note, or any subdivided portion of the Note.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
INCIDENTAL REGISTRATION: See Section 8 hereof.
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.
PURCHASE AGREEMENT: The Note and Warrant Purchase Agreement by and
among the Company and the Purchaser thereunder pursuant to which the Note
and Warrants were issued.
REGISTRATION EXPENSES: All reasonable expenses incurred by the
Company in complying with Sections 3 and 8 hereof, including all
registration and filing fees, printing expenses, reasonable fees and
disbursements of counsel for the Company and counsel for the holders of
Registrable Securities, 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.
<PAGE>
PURCHASER: The purchaser listed on the signature page to the
Purchase Agreement.
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
the Purchaser pursuant to the Purchase Agreement.
WARRANT SHARES: The shares of Common Stock issued or issuable to the
Purchaser 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, as soon as
possible, but not later than April 30, 1999, 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).
<PAGE>
(b) EFFECTIVENESS. The Company shall use reasonable efforts
to cause the Shelf Registration to become effective under the Securities
Act and comply with applicable state securities laws 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 90th day after 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(k)
under the Securities Act, provided that the holder is not subject to any
volume limitations on sales.
(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.
4. HOLDBACK AGREEMENTS.
(d) 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
Sections 3 and 8 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.
(e) 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.
<PAGE>
(f) REGISTRATION PROCEDURES. In the case of each
registration, qualification or compliance effected by the Company pursuant
to Sections 3 and 8, 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.
(g) 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.
(h) 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 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. During the pendency of a Suspension Period,
a holder of Registrable Securities will be allowed to sell the Registrable
Securities under Rule 144 if it is otherwise available to such holder.
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.
(i) 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
<PAGE>
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.
(j) 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 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. In no event shall
any holder of Registrable Securities be subject to an indemnification and
contribution obligation under this Section 6 which exceeds the proceeds
derived from the sale of its Registrable Securities, less its applicable
portion of the Registration Expenses.
(k) 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
<PAGE>
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 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.
(l) 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.
<PAGE>
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.
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. INCIDENTAL REGISTRATION.
If the Company at any time (other than pursuant to Section 3)
proposes to register any of its securities under the Securities Act for
sale to the public, whether for its own account or for the account of other
security holders or both (except with respect to registration statements on
Forms S-4, S-8 or any successor to such forms or another form not available
for registering the Registrable Securities for sale to the public) (the
"Incidental Registration"), each such time it will promptly give written
notice to all holders of the Registrable Securities of its intention to do
so. Upon the written request of any such holder, received by the Company
within 30 days after the giving of any such notice by the Company, to
register any or all of its Registrable Securities, the Company will use its
best efforts to cause the Registrable Securities as to which registration
shall have been so requested to be included in the securities to be covered
by the Registration Statement proposed to be filed by the Company, all to
the extent requisite to permit the sale or other disposition by the holder
(in accordance with its written request) of such Registrable Securities so
registered. If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the holders of Registrable Securities as part of the written notice
given pursuant to this Section 8. In such event the right of any holder of
Registrable Securities to registration pursuant to this Section 8 shall be
conditioned upon such holder's participation in such underwriting to the
extent provided herein. All holders of Registrable Securities proposing to
distribute their securities through such underwriting shall (together with
the Company and the other stockholders of the Company distributing their
securities through such underwriting) enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for
underwriting by the Company. Notwithstanding any other provision of this
Section 8, if the underwriter determines that marketing factors require a
limitation on the number of shares to be underwritten, the underwriter may
(subject to the allocation priority set forth below) exclude from such
registration and underwriting all of the Registrable Securities which would
otherwise be underwritten pursuant hereto. The Company shall so advise all
holders of securities requesting registration of any limitations on the
number of shares to be underwritten, and the number of shares of securities
that are entitled to be included in the registration and underwriting shall
<PAGE>
be allocated in the following manner. First, the securities (other than
Registrable Securities) of the Company held by officers and directors of
the Company shall be excluded from such registration and underwriting to
the extent required by such limitation, and, if a limitation on the number
of shares is still required, the number of shares that may be included in
the registration and underwriting shall be allocated among holders of
Registrable Securities and other stockholders of the Company in proportion,
as nearly as practicable, to the respective amounts of shares of the
capital stock of the Company owned by them. Notwithstanding the foregoing
provisions, the Company may withdraw any Registration Statement referred to
in this Section 8 without hereby incurring any liability to the holders of
Registrable Securities. If any holder of Registrable Securities
disapproves of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to the Company and the underwriter. Any
Registrable Securities or other securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration. In any
underwritten offering, the Company will undertake to comply with applicable
state securities laws and seek to have the Company counsel's opinion
addressed to the holders of the Registrable Securities, as well as the
underwriter.
9. UNDERWRITTEN REGISTRATIONS.
If any of the Registrable Securities covered by Sections 3 and
8 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, in consultation with the holders of
Registrable Securities.
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.
10. MISCELLANEOUS.
(m) 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.
<PAGE>
(n) 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 10(b), which address initially is, with respect to each purchaser,
the address set forth on the signature page attached hereto, with a copy to
Tomlinson, Zisko, Morosoli & Maser, LLP, 200 Page Mill Road, Second Floor,
Palo Alto, California, 94306, attention: Timothy Tomlinson, Esq.; 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 10(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.
(o) 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.
(p) 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.
(q) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(r) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada without regard
to principles of conflict of laws.
(s) 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.
<PAGE>
(t) 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 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.
(u) 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.
(v) 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: /s/ C. Russell Trenary, III
-----------------------------------
Name: C. Russell Trenary, III
Title: President and
Chief Executive Officer
EXHIBIT 99.1
- ------------
SUNRISE
TECHNOLOGIES
FOR IMMEDIATE RELEASE
CONTACT: Investor Relations
Susan Lorigan (510) 623-9001
Ed Coghlan (510) 771-2399
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
ANNOUNCES $10 MILLION PRIVATE PLACEMENT
FREMONT, CALIFORNIA, JANUARY 11, 1999 -- SUNRISE TECHNOLOGIES
INTERNATIONAL, INC. (NASDAQ/NMS:SNRS) -- today announced it has completed a
$10 million private placement that will position the Company for an
expected 1999 launch in the U.S. of the Sunrise LTK System for treatment of
hyperopia (+.75 - +2.50 diopters). The funding will allow the Company to
build its production inventory and capacity and increase sales and
marketing infrastructure prior to approval by the U.S. Food and Drug
Administration (FDA). The Company recently announced in December 1998,
that it completed and submitted its pre-market approval application (PMA)
to the FDA for its Sunrise LTK System for the treatment of hyperopia (+.75
- - +2.50 diopters). Also, the Company recently completed an $11.8 million
private placement of common stock. The Company raised all funds from both
of these offerings exclusively through its own efforts and without a
placement agent.
The cash was received in return for a convertible note with warrant from a
single investor. The note bears interest at 5% and will convert into
common stock when the Company achieves two milestone events. $5 million in
common stock priced at $4 per share must be converted from debt when the
FDA's Ophthalmic Devices Panel recommends conditional approval of the
Sunrise LTK System. An additional $5 million in common stock priced at
$8.00 per share must be converted when the Company receives final approval
to market the Sunrise LTK System in the United States.
According to C. Russell Trenary III, President and CEO, "We feel this shows
how sophisticated investors view the Sunrise opportunity and is a
significant step toward our anticipated product launch in 1999.
Additionally, we plan to expand ongoing clinical trials for higher levels
of hyperopia, presbyopia, and treatment for unsuccessful excimer laser
procedures for myopia."
The Sunrise LTK System differs from excimer laser procedures (PRK and
LASIK) and traditional incisional surgeries (Radial Keratotomy) because no
corneal tissue is cut or removed. It is an office based instrument that
applies two rings of laser energy to the mid-periphery of the cornea. Each
ring of energy is applied in 1.4 seconds and gently heats collagen in the
cornea to change corneal shape. The application of energy is accomplished
without physically contacting the cornea with instrumentation or other
apparatus. The patient sits upright opposite the ophthalmic surgeon, and
total chair time, including focusing, is designed to be less than five
minutes.
<PAGE>
Founded in 1987, the Company produces and markets high technology products
designed to revolutionize 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. These Systems* incorporate 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 presbyopia and
over correction indication continue under clinical investigation in the
U.S. and are expected to be the subjects of future submissions to the FDA
for pre-market approval. The System is currently commercially available in
Europe and the Americas and is in 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 (SEC) 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.
