<PAGE>
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) February 25, 1998
----------------------
PREMIER LASER SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 0-25242 33-0472684
---------------------------------------- ------------ -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3 Morgan, Irvine, California 92660
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 859-0656
-----------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 25, 1998, Premier Laser Systems, Inc., a California
corporation ("Premier") entered into a Stock Purchase Agreement (the "Stock
Purchase Agreement") with Ophthalmic Imaging Systems, a California corporation
("Ophthalmic" or "OISI"), wherein, among other things Premier agreed to make an
offer to all Ophthalmic shareholders with a view to acquiring Ophthalmic and
Ophthalmic agreed to recommend Premier's offer and not to solicit any
acquisition proposals competing with Premier's proposal. A copy of the Stock
Purchase Agreement is attached hereto as Exhibit 99.1 and is hereby incorporated
by reference.
Under the Stock Purchase Agreement, Premier is committed to offering each
Ophthalmic shareholder, in exchange for each Ophthalmic share, $1.75 per share
in cash, $0.25 in value (measured by a formula in the Stock Purchase Agreement)
of Premier Class A Common Stock, one Class C Warrant and one Class D Warrant
(collectively, the "Warrants"), each exercisable for fractional shares of
Premier Class A Common Stock having a value (at the measurement dates) of $0.25,
but with the exercisability of such Warrants dependent on the achievement of
certain sales targets for Ophthalmic products. Premier, with the assistance of
its investment and financial advisor, valued the combination of the cash and
securities at $2.18 per Ophthalmic share (the "Offer Value"). A fuller
description of these targets and the terms of the Warrants is contained in each
of Exhibits 99.2 and 99.3.
Simultaneously with signing the Stock Purchase Agreement, Premier entered
into individual purchase agreements ("Private Purchase Agreement" or "Private
Purchase Agreements") with Mark S. Blumenkranz, M.D. and Recia Blumenkranz, M.D.
(collectively, the "Blumenkranzes"); Stanley Chang, M.D. ("Chang") and JB
Oxford & Company ("JBO") providing for these parties to sell to Premier 421,052,
50,000 and 259,308 shares, respectively, of Ophthalmic common stock.
Additionally, JBO sold to Premier, pursuant to the terms of its Private Purchase
Agreement, warrants (the "JBO Warrants") to purchase 250,000 shares of
Ophthalmic common stock. Premier exercised the JBO Warrants on February 26,
1998. The above sales and the exercise of the JBO Warrants have resulted in
Premier's owning 2,131,758 shares, or approximately 51.3% of the Ophthalmic
shares as of February 26, 1998. The sales, which occurred on February 26, 1998,
together with the exercise of the JBO Warrants, resulted in an aggregate
consideration of $2,137,184.80, using the Offer Value. The Private Purchase
Agreement with the Blumenkranzes (Mark Blumenkranz being an Ophthalmic director)
provides for rescission if Premier fails to make, or withdraws, the offer to all
stockholders provided for in the Stock Purchase Agreement. The Private Purchase
Agreement with the Blumenkranzes and JBO provide for a purchase price adjustment
that will make the purchase consideration received thereunder equal to the
purchase consideration paid to Ophthalmic shareholders pursuant to the offer.
The Warrant Certificate representing the JBO Warrants, the Underlying Warrant
Agreement between JBO and Ophthalmic, and Ophthalmic's Consent to Transfer the
JBO Warrants are attached hereto as Exhibits 99.15, 99.17, and 99.16,
respectively.
To permit the offer contemplated by the Stock Purchase Agreement and the
sales of Ophthalmic shares to Premier accomplished by the Private Purchase
Agreements, Ophthalmic's board of directors, after considering the terms of the
Stock Purchase Agreement and an opinion as to the fairness of Premier's offer to
Ophthalmic's shareholders (other than Premier and its affiliates), rendered by
Ophthalmic's independent financial advisors, modified Ophthalmic's previously
adopted rights plan.
The Private Purchase Agreements with the Blumenkranzes, Chang and JBO are
attached as Exhibits 99.4, 99.8 and 99.12 and are incorporated herein by
reference. Each of the Private Purchase Agreements involved the granting of
warrants
-1-
<PAGE>
and these documents are filed as Exhibits 99.5, 99.6, 99.9, 99.10, 99.13 and
99.14. Registration rights were granted pursuant to Registration Rights
Agreements with the Blumenkranzes, Chang and JBO and these documents are filed
as Exhibits 99.7, 99.11, and 99.18.
Premier intends to commence an offer for all Ophthalmic shares it does
not own as soon as practicable and to accept all shares validly tendered in
response to such offer as soon as possible after a registration statement being
filed with respect to the non-cash consideration becomes effective. Such offer
will be made only by a Prospectus/Offer to Exchange conforming to the Securities
Act of 1933 and any applicable state securities laws, and to the Securities
Exchange Act of 1934.
Prior to acquiring the Ophthalmic shares pursuant to the Private Purchase
Agreements and exercise of the JBO Warrants, Premier had acquired 1,151,398
Ophthalmic shares for cash in various open market transactions over the past
twelve months.
Premier's existing cash and other working capital were sufficient to
provide the funds required in connection with the acquisition of the Ophthalmic
shares pursuant the open market transactions and the Private Purchase
Agreements, and are sufficient to provide the funds required in connection with
the acquisition of the additional Ophthalmic shares pursuant to the offer
contemplated under the Stock Purchase Agreement without any borrowings.
Ophthalmic is engaged in the business of designing, developing,
manufacturing and marketing digital imaging systems and image enhancement
software for use by practitioners in the ocular health field.
-2-
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
A. Financial Statements of Ophthalmic.
----------------------------------
Financial Statements of Ophthalmic prepared in accordance with Regulation
S-X consisting of the Balance Sheet as of August 31, 1997 and 1996 and
Statements of Operations for the years ended August 31, 1997, 1996 and
1995, Statements of Stockholders' Equity for the years ended August 31,
1997, 1996 and 1995, and Statements of Cash Flows for the years ended
August 31, 1997, 1996 and 1995, together with the Reports of Independent
Auditors filed with this report are listed on the Index to Financial
Statements on Page F-1 of this report.
The unaudited financial statements of Ophthalmic prepared in accordance
with Regulation S-X consisting of the Condensed Balance Sheet as of
November 30, 1997, Condensed Statements of Operations for the three months
ended November 30, 1997 and 1996, and Condensed Statements of Cash Flows
for the three months ended November 30, 1997 and 1996 filed with this
report are listed in the Index to Financial Statements on page F-1 of this
report.
B. Pro Forma Financial Information.
-------------------------------
The pro forma combined financial statements for the combined companies
required to be filed pursuant to this item are listed in the Index to
Financial Statements on page F-1 of this report.
C. Exhibits.
--------
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
Exhibit 99.1 Stock Purchase Agreement dated February 25, 1998 between
Premier and Ophthalmic.
Exhibit 99.2 Form of Class C Warrant.
Exhibit 99.3 Form of Class D Warrant.
Exhibit 99.4 Purchase Agreement dated February 25, 1998 between Premier
and Mark S. Blumenkranz, M.D. and Recia Blumenkranz, M.D.
Exhibit 99.5 Class C Warrant dated February 25, 1998 issued by Premier to
Mark S. Blumenkranz, M.D. and Recia Blumenkranz, M.D.
Exhibit 99.6 Class D Warrant dated February 25, 1998 issued by Premier to
Mark S. Blumenkranz, M.D. and Recia Blumenkranz, M.D.
Exhibit 99.7 Registration Rights Agreement dated February 25, 1998
between Premier and Mark S. Blumenkranz, M.D. and Recia
Blumenkranz, M.D.
Exhibit 99.8 Purchase Agreement dated February 25, 1998 between Premier
and Stanley Chang, M.D.
</TABLE>
-3-
<PAGE>
Exhibit 99.9 Class C Warrant dated February 25, 1998 issued by Premier to
Stanley Chang, M.D.
Exhibit 99.10 Class D Warrant dated February 25, 1998 issued by Premier to
Stanley Chang, M.D.
Exhibit 99.11 Registration Rights Agreement dated February 25, 1998
between Premier and Stanley Chang, M.D.
Exhibit 99.12 Purchase Agreement dated February 25, 1998 between Premier
and JB Oxford & Company.
Exhibit 99.13 Class C Warrant dated February 25, 1998 issued by Premier to
JB Oxford & Company.
Exhibit 99.14 Class D Warrant dated February 25, 1998 issued by Premier to
JB Oxford & Company.
Exhibit 99.15 Series C Warrant Certificate dated November 21, 1995 issued
by Ophthalmic to JB Oxford & Company.
Exhibit 99.16 Consent to Transfer of Warrant dated February 25, 1998
between Ophthalmic and Premier.
Exhibit 99.17 Warrant Agreement dated November 21, 1995 between Ophthalmic
and JB Oxford & Company.
Exhibit 99.18 Registration Rights Agreement dated February 25, 1998
between Premier and JB Oxford & Company.
Exhibit 99.19 Premier press release dated February 26, 1998.
Exhibit 99.20 Premier press release dated February 27, 1998.
Exhibit 99.21 Consent of Ernst & Young LLP, Independents Auditors to
Ophthalmic.
-4-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PREMIER LASER SYSTEMS, INC.
Date: March 9, 1998 By: /s/ Michael L. Hiebert
------------------------------
Michael L. Hiebert
Chief Financial Officer
-5-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
TO CURRENT REPORT ON FORM 8-K
<TABLE>
<CAPTION>
Page
----
<S> <C>
(a) Financial Statements of Business Acquired
-----------------------------------------
Report of Ernst & Young LLP, Independent Auditors.................. F-2
Audited Balance Sheet as of August 31, 1997........................ F-3
Audited Statements of Operations for the years ended August 31,
1997 and 1996.................................................... F-4
Audited Statements of Stockholders' Equity for the years ended
August 31, 1997 and 1996......................................... F-5
Audited Statements of Cash Flows for the years ended August 31,
1997 and 1996.................................................... F-6
Notes to Audited Financial Statements for the years ended August
31, 1997 and 1996................................................ F-7
Report of Ernst & Young LLP, Independent Auditors.................. F-21
Audited Balance Sheet as of August 31, 1996........................ F-22
Audited Statements of Operations for the years ended August 31,
1996 and 1995.................................................... F-23
Audited Statements of Stockholders' Equity for the years ended
August 31, 1996 and 1995......................................... F-24
Audited Statements of Cash Flows for the years ended August 31,
1996 and 1995.................................................... F-25
Notes to Audited Financial Statements for the years ended August
31, 1996 and 1995................................................ F-26
Unaudited Condensed Balance Sheet as of November 30, 1997.......... F-37
Unaudited Condensed Statements of Operations for the three months
ended November 30, 1997 and 1996................................. F-38
Unaudited Condensed Statements of Cash Flows for the three months
ended November 30, 1997 and 1996................................. F-39
Notes to Unaudited Condensed Financial Statements for the three
months ended November 30, 1997 and 1996.......................... F-40
(b) Pro Forma Financial Information
-------------------------------
Unaudited Pro Forma Condensed Combined Financial Statements........ F-43
Unaudited Pro Forma Condensed Combined Balance Sheet as of
December 31, 1997............................................... F-44
Unaudited Pro Forma Condensed Combined Statement of Operations
for the nine months ended December 31, 1997..................... F-45
Unaudited Pro Forma Condensed Combined Statement of Operations
for the year ended March 31, 1997............................... F-46
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements...................................................... F-47
</TABLE>
F-1
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Board of Directors and Stockholders
Ophthalmic Imaging Systems
We have audited the accompanying balance sheet of Ophthalmic Imaging Systems as
of August 31, 1997, and the related statements of operations, stockholders'
equity, and cash flows for the years ended August 31, 1997 and 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ophthalmic Imaging Systems at
August 31, 1997, and the results of its operations and its cash flows for the
years ended August 31, 1997 and 1996, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Sacramento, California
October 21, 1997,
except for Note 10
as to which the date is
November 18, 1997
F-2
<PAGE>
Ophthalmic Imaging Systems
Balance Sheet
August 31, 1997
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and equivalents $ 142,300
Accounts receivable, net of allowance for
doubtful accounts of approximately $100,000 1,644,541
Inventories 794,052
Prepaid expenses and other current assets 93,408
-----------
Total current assets 2,674,301
Furniture and equipment, net 380,782
Other assets 7,385
-----------
$ 3,062,468
===========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings $ 311,002
Accounts payable 816,509
Accrued liabilities 794,305
Accrued warrant appreciation right 251,497
Deferred extended warranty revenue 93,614
Customer deposits 125,538
Notes payable 2,234
-----------
Total current liabilities 2,394,699
Commitments
Stockholders' equity:
Preferred stock, no par value, 20,000,000 shares
authorized; none issued or outstanding -
Common stock, no par value, 20,000,000 shares authorized;
3,905,428 shares issued and outstanding 10,244,615
Deferred compensation (306,894)
Accumulated deficit (9,269,952)
-----------
Total stockholders' equity 667,769
-----------
$ 3,062,468
===========
</TABLE>
SEE ACCOMPANYING NOTES.
F-3
<PAGE>
Ophthalmic Imaging Systems
Statements of Operations
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,
1997 1996
---------------------------
<S> <C> <C>
Revenues:
Net sales $ 6,480,055 $ 6,672,667
Other revenue 145,561 200,984
----------- -----------
6,625,616 6,873,651
Cost of sales 4,885,004 4,797,324
----------- -----------
Gross profit 1,740,612 2,076,327
OPERATING EXPENSES:
Sales and marketing 1,624,470 1,652,965
General and administrative 1,089,670 722,462
Research and development 1,070,192 846,034
----------- -----------
Total operating expenses 3,784,332 3,221,461
----------- -----------
Loss from operations (2,043,720) (1,145,134)
OTHER INCOME (EXPENSE):
Interest income 13,912 20,618
Interest expense (80,746) (288,667)
----------- -----------
Net loss $(2,110,554) $(1,413,183)
=========== ===========
Net loss per share $ (.59) $ (.64)
=========== ===========
Shares used in the calculation of
net loss per share 3,597,879 2,204,506
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
F-4
<PAGE>
Ophthalmic Imaging Systems
Statements of Stockholders' Equity
Years ended August 31, 1997 and 1996
<TABLE>
<CAPTION>
Common Stock Total
----------------------- Deferred Accumulated Stockholders'
Shares Amount Compensation Deficit Equity
--------- ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Balances at August 31, 1995 875,112 $ 6,674,639 $ - $(5,746,215) $ 928,424
Sale of common stock through
private placement 1,368,421 1,074,841 - - 1,074,841
Options exercised 11,000 10,230 - - 10,230
Issuance of common stock upon
exercise of warrants 1,052,631 1,180,486 - - 1,180,486
Net loss - - - (1,413,183) (1,413,183)
--------- ----------- --------- ----------- -----------
Balances at August 31, 1996 3,307,164 8,940,196 - (7,159,398) 1,780,798
Options exercised 52,400 152,286 - - 152,286
Issuance of common stock upon
exercise of warrants 545,864 757,097 - - 757,097
Deferred compensation related to
stock options granted to
non-employees - 395,036 (395,036) - -
Stock option compensation
expense - - 88,142 - 88,142
Net loss - - - (2,110,554) (2,110,554)
--------- ----------- --------- ----------- -----------
Balances at August 31, 1997 3,905,428 $10,244,615 $(306,894) $(9,269,952) $ 667,769
========= =========== ========= =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
F-5
<PAGE>
Ophthalmic Imaging Systems
Statements of Cash Flows
Increase (Decrease) in Cash and Equivalents
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,
1997 1996
---------------------------
<S> <C> <C>
Operating activities:
Net loss $(2,110,554) $(1,413,183)
Adjustments to reconcile net loss to
net cash used in operating activities:
Accrued warrant appreciation right 27,215 211,782
Depreciation and amortization 142,148 102,156
Provision for doubtful accounts (6,116) (5,338)
Stock option compensation expense 88,142 -
Net changes in operating assets and liabilities:
Accounts receivable (566,421) 239,943
Inventories 786,483 (405,040)
Prepaid expenses and other current assets (28,460) (475)
Other assets 79,250 (79,797)
Accounts payable (120,950) (164,714)
Accrued liabilities 196,664 75,716
Deferred extended warranty revenue 12,417 6,100
Customer deposits 88,757 (27,610)
----------- -----------
Net cash used in operating activities (1,411,425) (1,460,460)
INVESTING ACTIVITY:
Capital expenditures for furniture and
equipment (161,735) (215,884)
FINANCING ACTIVITIES:
Proceeds from short-term borrowings 308,000 150,000
Repayment of short-term borrowings (546,998) -
Principal payments on notes payable (6,250) (5,093)
Issuance of common stock 909,383 2,265,557
----------- -----------
Net cash provided by financing activities 664,135 2,410,464
----------- -----------
Net (decrease) increase in cash and equivalents (909,025) 734,120
Cash and equivalents, beginning of year 1,051,325 317,205
----------- -----------
Cash and equivalents, end of year $ 142,300 $ 1,051,325
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
F-6
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements
August 31, 1997
1. ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS
Ophthalmic Imaging Systems (the Company), was incorporated in California in July
1986. The Company is primarily engaged in the business of designing, developing,
manufacturing, and marketing digital imaging systems, image enhancements and
analysis software, and related products and services for use by practitioners in
the ocular healthcare field.
USE OF ESTIMATES
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles which require the Company's management
to make estimates and assumptions that affect the amounts reported therein.
Actual results could vary from such estimates.
CONCENTRATIONS OF CREDIT RISK AND EXPORT SALES
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of temporary cash investments and trade
receivables. The Company places its temporary cash investments with high credit
quality financial institutions. Concentrations of credit risk with respect to
trade receivables are limited due to the Company's policy of requiring deposits
from customers, the number of customers and their geographic dispersion. The
Company maintains reserves for potential credit losses and such losses have
historically been within management's expectations. No single customer during
fiscal 1997 or 1996 comprised 10% or more of net sales.
Revenues from sales to customers located outside of the United States (primarily
Europe) accounted for approximately 30% and 29% of net sales during the years
ended August 31, 1997 and 1996, respectively.
INVENTORIES
Inventories, which consist primarily of purchased system parts, subassemblies
and assembled systems are stated at the lower of cost (determined using the
first-in, first-out method) or market.
F-7
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
1. ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
FURNITURE AND EQUIPMENT
Furniture and equipment are stated at cost and depreciated or amortized on a
straight-line basis over the estimated useful lives of the assets. The estimated
useful lives generally range from three to seven years.
REVENUE RECOGNITION AND WARRANTIES
The Company recognizes revenue from the sale of its products when the goods are
shipped to its customers. The Company generally provides a one-year warranty
covering materials and workmanship and accruals are provided for anticipated
warranty expenses.
Customers may purchase extended warranty coverage for additional one or two year
periods. Revenues from the sale of these extended warranties are deferred and
recognized as other revenue on a straight-line basis over the term of the
extended warranty contract.
INCOME TAXES
Deferred income taxes are accounted for pursuant to Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," as a result of
differences in the timing of recognition of certain revenues and expenses for
financial statement and income tax reporting purposes.
General business credits are accounted for as a reduction of federal income
taxes payable under the flow-through method.
NET LOSS PER SHARE
Net loss per share is computed using the weighted average number of shares of
common stock outstanding. Common equivalent shares from stock options and
warrants are excluded from the computation because their effect is antidilutive.
F-8
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
1. ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
NET LOSS PER SHARE (CONTINUED)
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings per Share," which is required for both interim and annual periods
ending after December 15, 1997. At that time, the Company will be required to
change the method currently used to compute earnings per share and to restate
all prior periods. Under the new requirements for calculating primary earnings
per share, the dilutive effect of stock options will be excluded. The impact of
Statement No. 128 on the calculation of primary and fully diluted earnings per
share is not expected to be material.
STATEMENT OF CASH FLOWS
For purposes of the statement of cash flows, the Company considers highly liquid
investments with original maturities of three months or less as cash
equivalents.
Cash paid for interest amounted to approximately $64,000 and $67,000 during the
years ended August 31, 1997 and 1996, respectively. Cash paid for income taxes
amounted to approximately $800 for each of the years ended August 31, 1997 and
1996.
STOCK BASED COMPENSATION
In accordance with the provisions of Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123") which the
Company adopted in 1996, the Company has elected to follow Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and
related Interpretations in accounting for its stock option plans. Under APB 25,
if the exercise price of the Company's employee stock options equals or exceeds
the fair value of the underlying stock on the date of grant as determined by the
Company's Board of Directors, no compensation expense is recognized. See Note 7
for pro forma disclosures required by SFAS 123.
F-9
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
1. ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
LONG-LIVED ASSETS
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" ("SFAS 121"). SFAS 121 requires impairment
losses to be recognized for long-lived assets used in operations when indicators
of impairment are present and the estimated undiscounted cash flows to be
generated by those assets are less than their carrying amounts. The impairment
loss is measured by comparing the fair value of the asset to its carrying
amount. The adoption of SFAS No. 121 had no effect on the Company's financial
position or results of operations for the year ended August 31, 1997.
2. INVENTORIES
Inventories consist of the following as of August 31, 1997:
<TABLE>
<S> <C>
Raw materials $ 526,090
Work-in-process 139,182
Finished goods 128,780
---------
$ 794,052
=========
</TABLE>
3. FURNITURE AND EQUIPMENT
Furniture and equipment consists of the following as of August 31, 1997:
<TABLE>
<S> <C>
Research and manufacturing equipment $ 554,147
Office furniture and equipment 358,537
Demonstration equipment 183,938
Vehicles 58,991
----------
1,155,613
Less accumulated depreciation and amortization (774,831)
----------
$ 380,782
==========
</TABLE>
F-10
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
4. SHORT-TERM BORROWINGS
The Company entered into a revolving line of credit agreement (the "Credit
Agreement") with a bank (the "Bank") which expired on November 7, 1997. The
maximum amount available under the terms of the Credit Agreement is $750,000 and
is based upon eligible outstanding accounts receivable balances. Borrowings
under the Credit Agreement bear interest at the Bank's prime lending rate plus
three percent (11% as of August 31, 1997) and are secured by substantially all
assets of the Company. The Credit Agreement contains certain restrictive
covenants which provide for, among other things, certain working capital and net
worth balances and ratios. The Company was not in compliance with the various
restrictive covenants as of August 31, 1997. In addition, the Credit Agreement
restricts the Company's ability to 1) enter into any merger or acquisition, 2)
pay dividends or repurchase stock, 3) mortgage existing assets or 4) loan money
or guarantee the loans of others without the Bank's prior approval. As of August
31, 1997, borrowings in the amount of $311,000 were outstanding related to the
Credit Agreement. Subsequent to year-end the Credit Agreement was converted to a
full recourse accounts receivable credit agreement (Note 10).
5. ACCRUED LIABILITIES
Accrued liabilities consist of the following as of August 31, 1997:
<TABLE>
<S> <C>
Accrued compensation $402,389
Accrued warranty expenses 170,200
Other accrued liabilities 221,716
--------
$794,305
========
</TABLE>
6. COMMITMENTS
LEASES
The Company leases its facility under a noncancelable operating lease which
expires in June 1998. The lease agreement provides for minimum lease payments
of approximately $84,000 for the year ended August 31, 1998.
Rental expense charged to operations for all operating leases was approximately
$126,000 and $88,000 during the years ended August 31, 1997 and 1996,
respectively.
F-11
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
6. COMMITMENTS (CONTINUED)
EMPLOYMENT AGREEMENTS
The Company has employment agreements with two of its executive officers. The
agreement with the chief executive officer calls for an annual salary of
$150,000 and a performance based bonus plan, which has yet to be determined by
the Company's compensation committee. The agreement with the president/chief
operating officer calls for an annual salary of $140,000 and an annual bonus not
to exceed $42,000. In addition, the Company's board of directors granted the
president/chief operating officer incentive stock options covering 100,000
shares of common stock. Both agreements have a 24 month term expiring in July
1999.
7. STOCKHOLDERS' EQUITY
COMMON STOCK
Of the 16,094,572 shares of common stock authorized but unissued as of August
31, 1997, the following shares are reserved for issuance:
<TABLE>
<S> <C>
Common stock warrants 1,299,750
Stock option plans 1,338,267
---------
2,638,017
=========
</TABLE>
PRIVATE PLACEMENT
In November 1995, the Company completed a private placement of 1,368,421 shares
of its common stock with detachable warrants. The net proceeds from this
offering was approximately $1,075,000. Along with each share of common stock
issued the purchasers were given an "A Warrant" and a "B Warrant" to purchase
shares of the Company's common stock. The A and B Warrants per share exercise
prices are $1.25 and $1.75, respectively. The number of shares exercisable as
well as the per share exercise prices of the A and B Warrants are subject to
adjustment upon the occurrence of certain events. The A and B Warrants expired
on February 19, 1997 as amended and November 21, 1997, respectively. In May
1996, 1,052,631 A Warrants were exercised resulting in net proceeds to the
Company of approximately $1,180,000. During the year ended August 31, 1997,
210,526 and 335,338 A and B warrants, respectively, were exercised resulting in
aggregate net proceeds to the Company of approximately $757,000.
F-12
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
7. STOCKHOLDERS' EQUITY (CONTINUED)
PRIVATE PLACEMENT (CONTINUED)
The private placement underwriter was issued a warrant to purchase 250,000
shares of the Company's common stock at $.95 per share. The number of shares
exercisable as well as the per share exercise price are subject to adjustment
upon the occurrence of certain events. This warrant expires on November 21,
1999. In addition, the underwriter will receive as a commission, 10% of the
proceeds received by the Company upon exercise of the A and B Warrants described
above.
OTHER WARRANTS
In February 1993, the Company issued a warrant to the Bank that provided a line-
of-credit (Note 4). The warrant was amended several times in connection with
amendments to the line-of-credit as well as the current Credit Agreement. The
warrant is currently exercisable for 50,000 shares of common stock at an
exercise price of $1.73 per share and it expires in November 2000. This warrant
includes a provision wherein the Bank can require the Company to pay in cash the
difference between the fair market value (as defined) of the underlying common
stock of the warrant and the exercise price (the "Appreciation Right"). The Bank
informed the Company of its intent to exercise the Appreciation Right on May 23,
1996. The Company has accrued the entire amount of the Appreciation Right and it
is reflected as a current liability on the accompanying balance sheet. For
purposes of the statement of operations, the amount has been recorded as
additional interest expense for the year ended August 31, 1996. The Appreciation
Right is due on April 1, 1998.
During February 1993, in consideration for providing bridge loans, each of the
two officers, then employed by the Company, was issued a warrant to purchase
16,667 shares of the Company's common stock at an exercise price of $18.00 per
share. These warrants expire in February 1998. During fiscal 1995, one of the
warrants to purchase 16,667 shares was canceled.
STOCK OPTION PLANS
At August 31, 1997, the Company has three stock-based compensation plans, which
are described below. The Company applies APB 25 and related Interpretations in
accounting for its stock options because, as discussed below, the alternative
fair value accounting
F-13
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
7. STOCKHOLDERS' EQUITY (CONTINUED)
STOCK OPTION PLANS (CONTINUED)
provided for under SFAS 123 requires use of option valuation models that were
not developed for use in valuing stock options. Under APB 25, because the
exercise price of the Company's stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.
During March 1992, the Company adopted a Stock Option Plan (the "Plan") under
which the board of directors is authorized to grant options to key directors,
executives, employees and others for the purchase of up to 116,667 shares of the
Company's common stock at prices not less than the fair market value of the
common stock on the date of grant. The term over which the options are
exercisable, which may not exceed five years, is determined by the board of
directors at the time of the grant. Pursuant to the Plan, options to purchase
100,000 shares of the Company's common stock at an exercise price of $3.00 per
share were granted (50,000 options each) to the Company's chief executive
officer and chief financial officer. The options granted were fully vested on
the grant date and expired in March 1997. During the year ended August 31, 1997,
prior to the expiration of these options, options to purchase 50,000 shares were
exercised. Options to purchase the remaining 50,000 shares of the Company's
common stock subsequently expired in March 1997. In April 1997, the board of
directors granted options to purchase 50,000 shares of the Company's common
stock at an exercise price of $2.75 to the Company's chief executive
officer/chief financial officer. The options granted vest 25,000 on the date of
grant and 25,000 in April 1998. These options expire in April 2002.
In December 1992 and January 1993, the Company's board of directors and
shareholders, respectively, approved a second Stock Option Plan (the "Option
Plan") under which all officers, employees, directors and consultants may
participate. The Plan expires December 2002. Options granted under the Option
Plan may be either incentive stock options or non-qualified stock options and
will generally have a term of ten years from the date of grant, unless otherwise
specified in the option agreement. The exercise prices of incentive stock
options granted under the Option Plan will be at 100% of the fair market value
of the Company's common stock on the date of grant. The exercise prices of non-
qualified stock options granted under the Option Plan cannot be less than 85% of
the fair market value of the Company's common stock on the date of grant. The
maximum number of shares of the Company's common stock which may be optioned and
sold under the Option Plan is 150,000, of which 13,608 remained available for
the granting of
F-14
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
7. STOCKHOLDERS' EQUITY (CONTINUED)
STOCK OPTION PLANS (CONTINUED)
options as of August 31, 1997. As of August 31, 1997, stock options to purchase
122,992 shares at exercise prices ranging from $.94 to $4.25 were granted and
outstanding under the Option Plan. During the year ended August 31, 1997 and
1996, 2,400 and 11,000 options were exercised, respectively.
In August 1995, the Company's board of directors approved a Nonstatutory Stock
Option Plan (the "Nonstatutory Plan") under which all officers, employees,
directors and consultants may participate. The Nonstatutory Plan expires
November 2005. Options granted under the Nonstatutory Plan are non-qualified
stock options and will generally have a term of five years from the date of
grant, unless otherwise specified in the option agreement. The exercise prices
under the Nonstatutory Plan will be at 100% of the fair market value of the
Company's common stock on the date of grant. The maximum number of shares of the
Company's common stock which may be optioned and sold under the Nonstatutory
Plan is 1,035,000, of which 50,000 options remained available for granting as of
August 31, 1997. As of August 31, 1997, stock options to purchase 985,000 shares
at exercise prices ranging from $0.94 to $4.50 were granted and outstanding
under the Nonstatutory Plan and none of the granted options were exercised.
A summary of the status of the Company's stock option plans and changes during
the periods is presented below:
<TABLE>
<CAPTION>
Weighted Average
Options Exercise Price
--------------------------------
<S> <C> <C>
Balance at August 31, 1995 744,171 $ 1.54
Options granted 290,000 $ 2.53
Options canceled (250) $ .94
Options exercised (at $.94) (11,000) $ .94
---------
Balance at August 31, 1996 1,022,921 $ 1.83
Options granted 346,500 $ 2.70
Options canceled (59,029) $ 3.14
Options exercised
(at $.94 to $3.00) (52,400) $ 2.91
---------
Balance at August 31, 1997 1,257,992 $ 1.96
=========
</TABLE>
The weighted average fair value of options granted during the years ended August
31, 1997 and August 31, 1996 was $2.26 and $.93, respectively.
F-15
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
7. STOCKHOLDERS' EQUITY (CONTINUED)
STOCK OPTION PLANS (CONTINUED)
The following table summarizes information about the stock options outstanding
at August 31, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------------------- ------------------------
Weighted-Average
Range of Remaining Weighted-Average Weighted-Average
Exercise Prices Number Contractual Life Exercise Price Number Exercise Price
- --------------- --------------------------------------------- ------------------------
<S> <C> <C> <C> <C> <C>
$0.94-$1.38 759,492 5.1 $1.30 330,513 $1.30
$1.38-$3.00 390,000 4.0 $2.59 167,708 $2.57
$3.00-$4.50 108,500 4.3 $4.34 21,531 $4.32
--------- -------
1,257,992 $1.96 519,752 $1.84
========= =======
</TABLE>
Pro forma information regarding net loss and net loss per share is required by
SFAS 123, which also requires that the information be determined as if the
Company has accounted for its employee stock options granted subsequent to
August 31, 1995 under the fair value method of that Statement. The fair value of
each option grant is estimated on the date of grant using the Black-Scholes
option pricing model with the following weighted-average assumptions for the
years ended August 31, 1996 and 1997, respectively; dividend yield of zero;
volatility factors of the expected market price of the Company's common stock
ranged from 1.052 to 1.125 for both years; risk-free interest rate of 6%; and a
weighted-average expected life of 5 years.
The Black-Scholes option valuation, model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
F-16
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
7. STOCKHOLDERS' EQUITY (CONTINUED)
STOCK OPTION PLANS (CONTINUED)
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information follows:
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,
1997 1996
---------------------------
<S> <C> <C>
Pro forma net loss $(2,326,390) $(1,453,678)
=========== ===========
Pro forma net loss per share $ (.65) $ (.66)
=========== ===========
</TABLE>
During the year ended August 31, 1997, the Company recorded deferred
compensation of approximately $395,000 for financial reporting purposes to
reflect the deemed fair value of the certain options granted to non-employees.
Deferred compensation is being amortized over the vesting period of the related
options. For the year ended August 31, 1997, the amortized deferred compensation
expense was approximately $88,000.
Since SFAS 123 is applicable only to options granted subsequent to August 31,
1995, its pro forma effect will not be fully realized until 2000.
F-17
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
8. INCOME TAXES
There was no provision (benefit) for income taxes during the years ended August
31, 1997 or 1996.
The significant components of the Company's deferred tax assets and liabilities
as of August 31, 1997 are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Net operating loss carryforwards $ 1,310,000
Inventory reserves 549,000
Accrued warrant appreciation right 99,000
Payroll related accruals 98,000
Warranty accrual 67,000
Sales and accounts receivable reserves 39,000
Uniform capitalization 29,000
Other 3,000
------------
Total deferred tax assets 2,194,000
Valuation allowance (2,192,000)
------------
Net deferred tax assets 2,000
Deferred tax liabilities:
Depreciation 2,000
------------
Total deferred tax liabilities 2,000
------------
Net deferred taxes $ -
============
</TABLE>
The valuation allowance as of August 31, 1996 was approximately $1,473,000
resulting in a net increase in the allowance of approximately $719,000 for the
year.
F-18
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
8. INCOME TAXES (CONTINUED)
The principal reasons for the difference between the effective tax rate and the
federal statutory income tax rate are presented in the following table:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
1997 1996
-----------------------
<S> <C> <C>
Federal benefit expected at statutory rates $(718,000) $(480,000)
Net operating loss with no current benefit 718,000 480,000
-----------------------
$ - $ -
=======================
</TABLE>
In connection with the Company's private placement of common stock (Note 7) a
change of ownership (as defined in Section 382 of the Internal Revenue Code of
1986, as amended) occurred. As a result of this change, the Company's federal
and state net operating loss carryforwards generated through November 21, 1996
(approximately $4,800,000 and $2,500,000, respectively) and the Company's
federal and state Research and Development credits (approximately $126,000 and
$79,000, respectively) will be subject to a total annual limitation in the
amount of approximately $107,000.
As a consequence of the limitation, as discussed above, the Company has at
August 31, 1997 a net operating loss carryover of approximately $3,580,000 for
federal income tax purposes which expires between 2007 and 2011, and a net
operating loss carryforward of approximately $1,521,000 for state income tax
purposes which expires between 1997 and 2002.
9. 401(k) PLAN
The Company has a tax deferred investment plan (the "401(k) Plan"). All full-
time employees are eligible to participate in the 401(k) Plan. The 401(k) Plan
originally required mandatory employer contributions of 10% of the participants
contributions. The 401(k) Plan was subsequently amended to provide for
discretionary employer contributions. The Company did not make any matching
contributions during either of the years ended August 31, 1997 or 1996.
F-19
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
10. SUBSEQUENT EVENT
On November 18, 1997, the Company entered into an accounts receivable credit
agreement (the "Agreement") with the Bank, and all amounts outstanding under the
Credit Agreement were considered to be the initial advance under the Agreement.
The Agreement allows for up to an 80% advance rate on eligible accounts
receivable balances, and the maximum borrowing base under the Agreement is $1.2
million. The Bank has full recourse against the Company. The Agreement expires
in November 1998. Borrowings under the Agreement bear interest at the Bank's
prime lending rate plus 4%. In addition, the Bank will charge monthly an
administrative fee equal to the greater of .5% of the average daily balance for
the month or $1,200. Under the terms of the Agreement, borrowings are secured by
substantially all of the Company's assets.
F-20
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Ophthalmic Imaging Systems
We have audited the accompanying balance sheet of Ophthalmic Imaging Systems as
of August 31, 1996, and the related statements of operations, stockholders'
equity, and cash flows for the years ended August 31, 1996 and 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ophthalmic Imaging Systems at
August 31, 1996, and the results of its operations and its cash flows for the
years ended August 31, 1996 and 1995, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Sacramento, California
October 11, 1996
except for Note 10
as to which the date is
November 21, 1996
F-21
<PAGE>
Ophthalmic Imaging Systems
Balance Sheet
August 31, 1996
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and equivalents $ 1,051,325
Accounts receivable, net of allowance for
doubtful accounts of approximately $106,000 1,072,004
Inventories 1,580,535
Prepaid expenses and other current assets 64,948
-----------
Total current assets 3,768,812
Furniture and equipment, net 361,195
Other assets 86,635
-----------
$ 4,216,642
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 550,000
Accounts payable 937,459
Accrued liabilities 597,641
Accrued warrant appreciation right 224,282
Current portion of deferred extended
warranty revenue 70,961
Customer deposits 36,781
Current portion of notes payable 5,002
-----------
Total current liabilities 2,422,126
Notes payable, less current portion 3,482
Deferred extended warranty revenue, less
current portion 10,236
Commitments (Note 6)
Stockholders' equity:
Preferred stock, no par value, 20,000,000
shares authorized; none issued or
outstanding -
Common stock, no par value, 20,000,000
shares authorized; 3,307,164 shares
issued and outstanding 8,940,196
Accumulated deficit (7,159,398)
-----------
Total stockholders' equity 1,780,798
-----------
$ 4,216,642
===========
</TABLE>
See accompanying notes.
F-22
<PAGE>
Ophthalmic Imaging Systems
Statements of Operations
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31
1996 1995
--------------------------------
<S> <C> <C>
REVENUES:
Net sales $ 6,672,667 $ 6,724,339
Other revenue 200,984 234,900
----------- -----------
6,873,651 6,959,239
Cost of sales 4,797,324 4,616,322
----------- -----------
Gross profit 2,076,327 2,342,917
OPERATING EXPENSES:
Sales and marketing 1,652,965 1,545,390
General and administrative 722,462 441,245
Research and development 846,034 691,358
----------- -----------
Total operating expenses 3,221,461 2,677,993
----------- -----------
Loss from operations (1,145,134) (335,076)
OTHER INCOME (EXPENSE):
Interest income 20,618 10,657
Interest expense (288,667) (31,857)
----------- -----------
Net loss $(1,413,183) $ (356,276)
=========== ===========
Net loss per share $ (.64) $ (.41)
=========== ===========
Shares used in the calculation of
net loss per share 2,204,506 875,112
=========== ===========
</TABLE>
See accompanying notes.
F-23
<PAGE>
Ophthalmic Imaging Systems
Statements of Stockholders' Equity
Years ended August 31, 1996 and 1995
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
--------------------- ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT DEFICIT EQUITY
---------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at August 31,
1994 875,112 $6,674,639 $(5,389,939) $ 1,284,700
Net loss - - (356,276) (356,276)
---------------------------------------------------------
Balance at August 31,
1995 875,112 6,674,639 (5,746,215) 928,424
Sale of common stock
through private
placement 1,368,421 1,074,841 - 1,074,841
Options exercised 11,000 10,230 - 10,230
Issuance of common
stock upon exercise
of warrants 1,052,631 1,180,486 - 1,180,486
Net loss - - (1,413,183) (1,413,183)
---------------------------------------------------------
Balance at August 31,
1996 3,307,164 $8,940,196 $(7,159,398) $ 1,780,798
=========================================================
See accompanying notes.
</TABLE>
F-24
<PAGE>
Ophthalmic Imaging Systems
Statements of Cash Flows
Increase (Decrease) in Cash and Equivalents
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31
1996 1995
-------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (1,413,183) $ (356,276)
Adjustments to reconcile net loss to
net cash used in operating activities:
Accrued warrant appreciation right 211,782 12,500
Depreciation and amortization 102,156 115,334
Provision for doubtful accounts (5,338) (42,200)
Gain on sale of assets - (4,294)
Net changes in operating assets and liabilities:
Accounts receivable 239,943 (300,832)
Inventories (405,040) (304,835)
Prepaid expenses and other current assets (475) (4,113)
Other assets (79,797) 313
Accounts payable (164,714) 394,865
Accrued liabilities 75,716 29,866
Deferred extended warranty revenue 6,100 (26,218)
Customer deposits (27,610) (296,748)
------------ -----------
Net cash used in operating activities (1,460,460) (782,638)
INVESTING ACTIVITIES:
Capital expenditures for furniture and equipment (215,884) (106,297)
Proceeds from the sale of furniture and equipment - 4,682
------------ -----------
Net cash used in investing activities (215,884) (101,615)
FINANCING ACTIVITIES:
Proceeds from short term borrowings 150,000 400,000
Principal payments on notes payable (5,093) (9,285)
Issuance of common stock 2,265,557 -
------------ -----------
Net cash provided by financing activities 2,410,464 390,715
------------ -----------
Net increase (decrease) in cash and equivalents 734,120 (493,538)
Cash and equivalents, beginning of year 317,205 810,743
------------ -----------
Cash and equivalents, end of year $ 1,051,325 $ 317,205
============ ===========
</TABLE>
See accompanying notes.
F-25
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements
August 31, 1996
1. ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS
Ophthalmic Imaging Systems (the Company), was incorporated in California in July
1986. The Company is primarily engaged in the business of designing, developing,
manufacturing, and marketing digital imaging systems, image enhancements and
analysis software, and a glaucoma detection diagnostic instrument for use by
practitioners in the ocular healthcare field.
CONCENTRATIONS OF CREDIT RISK AND EXPORT SALES
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of temporary cash investments and trade
receivables. The Company places its temporary cash investments with high credit
quality financial institutions. Concentrations of credit risk with respect to
trade receivables are limited due to the Company's policy of requiring deposits
from customers, the number of customers and their geographic dispersion. The
Company maintains reserves for potential credit losses and such losses have
historically been within management's expectations. No single customer during
fiscal 1996 or 1995 comprised 10% or more of net sales.
Revenues from sales to customers located outside of the United States (primarily
Europe) accounted for approximately 29% and 25% of net sales during the years
ended August 31, 1996 and 1995, respectively.
INVENTORIES
Inventories, which consist primarily of purchased system parts, subassemblies
and assembled systems are stated at the lower of cost (determined using the
first-in, first-out method) or market.
FURNITURE AND EQUIPMENT
Furniture and equipment are stated at cost and depreciated or amortized on a
straight-line basis over the estimated useful lives of the assets. The estimated
useful lives generally range from three to seven years.
F-26
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
1. ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
REVENUE RECOGNITION AND WARRANTIES
The Company recognizes revenue from the sale of its products when the goods are
shipped to its customers. The Company generally provides a one-year warranty
covering materials and workmanship and accruals are provided for anticipated
warranty expenses.
Customers may purchase extended warranty coverage for additional one or two
year periods. Revenues from the sale of these extended warranties are deferred
and recognized as other revenue on a straight-line basis over the term of the
extended warranty contract.
INCOME TAXES
Deferred income taxes are accounted for pursuant to Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," (SFAS 109) as a
result of differences in the timing of recognition of certain revenues and
expenses for financial statement and income tax reporting purposes.
General business credits are accounted for as a reduction of federal income
taxes payable under the flow-through method.
NET LOSS PER SHARE
Net loss per share is computed using the weighted average number of shares of
common stock outstanding. Common equivalent shares from stock options and
warrants are excluded from the computation because their effect is antidilutive.
STATEMENT OF CASH FLOWS
For purposes of the statement of cash flows, the Company considers highly liquid
investments with original maturities of three months or less as cash
equivalents.
Cash paid for interest amounted to approximately $67,000 and $19,000 during the
years ended August 31, 1996 and 1995, respectively. Cash paid for income taxes
amounted to approximately $800 during each of the years ended August 31, 1996
and 1995.
F-27
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
1. ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
ACCOUNTING FOR STOCK BASED COMPENSATION
The Company accounts for its stock option plans in accordance with the
provisions of the Accounting Principles Board's Opinion No. 25 (APB 25),
"Accounting for Stock Issued to Employees." In 1995, the Financial Accounting
Standards Board released Statement of Financial Accounting Standard No. 123
(SFAS 123), "Accounting for Stock Based Compensation." SFAS 123 provides an
alternative to APB 25 and is effective for fiscal years beginning after December
15, 1995. The Company expects to continue to account for its stock plans in
accordance with APB 25. Accordingly, SFAS 123 is not expected to have any
material impact on the Company's financial position or results of operations.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying amounts reported in the accompanying balance sheet for cash and
cash equivalents approximate their respective fair values. The carrying amounts
of the Company's borrowings under its debt agreements approximate their fair
value. The fair value was based on the Company's current incremental borrowing
rates for similar types of borrowing arrangements.
USE OF ESTIMATES
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles which require the Company's management
to make estimates and assumptions that affect the amounts reported therein.
Actual results could vary from such estimates.
RECLASSIFICATIONS
Certain amounts in the fiscal 1995 financial statements have been reclassified
to conform with the presentation of the fiscal 1996 financial statements.
F-28
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
2. INVENTORIES
Inventories consist of the following as of August 31, 1996:
<TABLE>
<S> <C>
Raw materials $1,058,427
Work-in-process 196,840
Finished goods 325,268
----------
$1,580,535
==========
</TABLE>
3. FURNITURE AND EQUIPMENT
Furniture and equipment consists of the following as of August 31, 1996:
<TABLE>
<S> <C>
Research and manufacturing equipment $ 423,296
Office furniture and equipment 329,247
Demonstration equipment 183,938
Vehicles 58,991
----------
995,472
Less accumulated depreciation and
amortization (634,277)
----------
$ 361,195
==========
</TABLE>
4. SHORT-TERM BORROWINGS
The Company entered into a revolving line of credit agreement (the "Credit
Agreement") with a bank (the "Bank") which expired on October 5, 1996. The
maximum amount available under the terms of the Credit Agreement is $750,000,
and is based upon eligible outstanding accounts receivable balances. Borrowings
under the Credit Agreement bear interest at the Bank's prime lending rate plus
two and one-half percent (10.75% as of August 31, 1996) and are secured by
virtually all assets of the Company. The Credit Agreement contains certain
restrictive covenants which provide for, among other things, certain working
capital and net worth balances and ratios, and limitations on the amount of net
loss the Company may incur in a quarter. The Company was not in compliance with
the restrictive covenants for the quarter ending August 31, 1996. The Company
received a waiver from the Bank for the covenant violations. In addition, the
Credit Agreement restricts the Company's ability to 1) enter into any merger or
acquisition, 2) pay dividends or repurchase stock, 3) mortgage existing assets
or 4) loan money or guarantee the loans of others without the Bank's prior
approval. As of August 31, 1996, borrowings in the amount of $550,000 were
outstanding related to the Credit Agreement. Subsequent to year-end the Credit
Agreement was amended (Note 10).
F-29
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
5. ACCRUED LIABILITIES
Accrued liabilities consist of the following as of August 31, 1996:
<TABLE>
<S> <C>
Accrued compensation $264,923
Accrued warranty expenses 105,700
Other accrued liabilities 227,018
--------
$597,641
========
</TABLE>
6. COMMITMENTS
LEASES
The Company leases its facility under a noncancelable operating lease, which
expires in June 1998. The lease agreement provides for minimum lease payments
of approximately $101,000 and $84,000 for the years ended August 31, 1997 and
1998, respectively.
Rental expense charged to operations for all operating leases was approximately
$88,000 and $89,000 during the years ended August 31, 1996 and 1995,
respectively.
EMPLOYMENT AGREEMENTS
During March 1992, the Company entered into employment agreements with its
president and its chief financial officer. The employment agreements had a
36-month term, expiring in March 1995, and provided, among other things, for
annual salaries of $115,000 for each officer and the payment of a royalty to
each officer of $250 per unit for sales of the Glaucoma-Scope. The royalty
payments survive the termination of the employment agreements and are to extend
indefinitely. During the years ended August 31, 1996 and 1995 the royalties
amounted to approximately $3,000 and $8,000, respectively.
During fiscal 1993, the Company restructured its executive management pursuant
to which the Company's president resigned that position to become vice president
in charge of International Sales. His employment contract was amended to a
36-month term expiring June 1996 which provides, among other things, for a
revised annual salary of $80,000 and a commission equal to one percent (1%) of
revenues generated from selected sales to purchasers outside of the United
States and Canada. Also, during fiscal 1993 the Company's chief financial
officer assumed the additional role of president. His
F-30
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
6. COMMITMENTS (CONTINUED)
EMPLOYMENT AGREEMENTS (CONTINUED)
employment agreement was subsequently amended to a 36-month term expiring April
1997, pursuant to which amendment the officer agreed, among other things, to
reduce his annual salary to $92,000 commencing retroactive to May 1993. During
1995, his annual salary was increased to $120,000, pursuant to the Company
having achieved certain performance goals stipulated in his employment
agreement. In addition, also pursuant to the amendment to his employment
contract, the Company's board of directors granted the new president incentive
stock options covering 33,333 shares of the Company's common stock pursuant to
the Company's second Option Plan (Note 7). In November 1995, the Company
extended his employment agreement which now expires in November 1998.
7. STOCKHOLDERS' EQUITY
COMMON STOCK
Of the 16,692,836 shares of common stock authorized but unissued as of August
31, 1996, the following shares are reserved for issuance:
<TABLE>
<S> <C>
Common stock warrants 2,024,211
Stock option plans 1,290,667
---------
3,314,878
=========
</TABLE>
PRIVATE PLACEMENT
In November 1995, the Company completed a private placement of 1,368,421 shares
of its common stock with detachable warrants. The net proceeds from this
offering was approximately $1,075,000. Along with each share of common stock
issued the purchasers were given an "A Warrant" and a "B Warrant" to purchase
shares of the Company's common stock. The A and B Warrants per share exercise
prices are $1.25 and $1.75, respectively. The number of shares exercisable as
well as the per share exercise prices of the A and B Warrants are subject to
adjustment upon the occurrence of certain events. The A and B Warrants expire on
February 19, 1997 as amended and November 21, 1997, respectively. In addition,
the A and B Warrants are subject to redemption by the Company at $.10 per
warrant commencing May 21, 1996 and May 21, 1997 (the "Redemption Dates"),
respectively. The A and B Warrant redemption provisions are only available if
the Company's common stock price exceeds $2.25 and $2.50, respectively for the
twenty trading days immediately preceding the corresponding Redemption Dates.
F-31
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
7. STOCKHOLDERS' EQUITY (CONTINUED)
PRIVATE PLACEMENT (CONTINUED)
The private placement underwriter was issued a warrant to purchase 250,000
shares of the Company's common stock at $.95 per share. The number of shares
exercisable as well as the per share exercise price are subject to adjustment
upon the occurrence of certain events. This warrant expires on November 21,
1999. In addition, the underwriter will receive as a commission, 10% of the
proceeds received by the Company upon exercise of the A and B Warrants described
above.
In May 1996, 1,052,631 A Warrants were exercised resulting in net proceeds to
the Company of approximately $1,180,000.
OTHER WARRANTS
During May 1992, the Company issued a warrant to purchase 23,333 shares of its
common stock to the underwriter of the Company's initial public offering. The
exercise price of the warrant is $21.60 per share. The warrant is exercisable
between May 1993 and May 1997.
In February 1993, the Company issued a warrant to the Bank that provided a line-
of-credit (Note 4). The warrant has been amended several times in connection
with amendments to the line-of-credit as well as the current Credit Agreement.
The warrant is currently exercisable for 50,000 shares of common stock at an
exercise price of $1.73 per share and it expires in November 2000. This warrant
includes a provision wherein the share and it expires in November 2000. This
warrant includes a provision wherein the Bank can require the Company to pay in
cash the difference between the fair market value (as defined) of the underlying
common stock of the warrant and the exercise price (the "Appreciation Right").
The Bank informed the Company of its intent to exercise the Appreciation Right
on May 23, 1996. The Company has accrued the entire amount of the Appreciation
Right and it is reflected as a current liability on the accompanying balance
sheet. For purposes the statements of operations, the amount has been recorded
as additional interest expense.
During February 1993, in consideration for providing bridge loans, each of the
two officers was issued a warrant to purchase 16,667 shares of the Company's
common stock at an exercise price of $18.00 per share. These warrants expire in
February 1998. During fiscal 1995, one of the warrants to purchase 16,667
shares was canceled.
F-32
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
7. STOCKHOLDERS' EQUITY (continued)
STOCK OPTION PLANS
During March 1992, the Company adopted a Stock Option Plan (the "Plan") under
which the board of directors is authorized to grant options to key directors,
executives, employees and others for the purchase of up to 116,667 shares of the
Company's common stock at prices not less than the fair market value of the
common stock on the date of grant. The term over which the options are
exercisable, which may not exceed five years, is determined by the board of
directors at the time of the grant. Pursuant to the Plan, options to purchase
100,000 shares of the Company's common stock at an exercise price of $3.00 per
share were granted (50,000 options each) to the Company's chief executive
officer and chief financial officer. The options granted were fully vested on
the grant date and expire in March 1997.
In December 1992 and January 1993, the Company's board of directors and
shareholders, respectively, approved a second Stock Option Plan (the "Option
Plan") under which all officers, employees, directors and consultants may
participate. The Plan expires December 2002. Options granted under the Option
Plan may be either incentive stock options or non-qualified stock options and
will generally have a term of ten years from the date of grant, unless otherwise
specified in the option agreement. The exercise prices of incentive stock
options granted under the Option Plan will be at 100% of the fair market value
of the Company's common stock on the date of grant. The exercise prices of
non-qualified stock options granted under the Option Plan cannot be less than
85% of the fair market value of the Company's common stock on the date of grant.
The maximum number of shares of the Company's common stock which may be
optioned and sold under the Option Plan is 150,000. As of August 31, 1996,
stock options to purchase 97,921 shares at exercise prices ranging from $.94 to
$1.38 were granted under the Option Plan. During the year ended August 31,
1996, 11,000 of the granted options have been exercised.
In August 1995, the Company's board of directors approved a Nonstatutory Stock
Option Plan (the "Nonstatutory Plan") under which all officers, employees,
directors and consultants may particpate. The Nonstatutory Plan expires
November 2005. Options granted under the Nonstatutory Plan are non-qualified
stock options and will generally have a term of five years from the date of
grant, unless otherwise specified in the option agreement. The exercise prices
under the Nonstatutory Plan will be at 100% of the fair market value of the
Company's common stock on the date of grant. The maximum
F-33
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
7. STOCKHOLDERS' EQUITY (CONTINUED)
STOCK OPTION PLANS (CONTINUED)
number of shares of the Company's common stock which may be optioned and sold
under the Nonstatutory Plan is 1,035,000. As of August 31, 1996, stock options
to purchase 825,000 shares at exercise prices ranging from $1.38 to $3.00 were
granted under the Nonstatutory Plan, and none of the granted options have been
exercised.
8. INCOME TAXES
There was no provision (benefit) for income taxes during the years ended August
31, 1996 or 1995.
The significant components of the Company's deferred tax assets and liabilities
as of August 31, 1996 are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Net operating loss carryforwards $ 809,000
Inventory reserves 329,000
Accrued warrant appreciation right 93,000
Uniform capitalization 81,000
Payroll related accruals 64,000
Sales and accounts receivable reserves 49,000
Warranty accrual 43,000
Other 11,000
-----------
Total deferred tax assets 1,479,000
Valuation allowance (1,473,000)
-----------
Net deferred tax assets 6,000
Deferred tax liabilities:
Accelerated depreciation for tax purposes 1,000
State franchise taxes 5,000
-----------
Total deferred tax liabilities 6,000
-----------
Net deferred taxes $ -
===========
</TABLE>
The valuation allowance as of August 31, 1995 was approximately $2,325,000
resulting in a net decrease in the allowances of approximately $851,000 for the
year.
F-34
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
8. INCOME TAXES (CONTINUED)
The principal reasons for the difference between effective tax rate and the
federal statutory income tax rate are presented in the following table:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31
1996 1995
-----------------------
<S> <C> <C>
Federal benefit expected at statutory rates $(480,000) $(121,000)
Net operating loss with no current benefit 480,000 121,000
-----------------------
$ - $ -
=======================
</TABLE>
In connection with the Company's private placement of common stock (Note 7) a
change of ownership (as defined in Section 382 of the Internal Revenue Code of
1986, as amended) occurred. As a result of this change, the Company's federal
and state net operating loss carryforwards generated through November 21, 1995
(approximately $4,800,000 and $2,500,000, respectively) and the Company's
federal and state Research and Development credits (approximately $126,000 and
$79,000, respectively) will be subject to a total annual limitation in the
amount of approximately $107,000.
As a consequence of the limitation, the Company has at August 31, 1996 a net
operating loss carryover of approximately $2,226,000 for federal income tax
purposes which expires between 2007 and 2010, and a net operating loss
carryforward of approximately $845,000 for state income tax purposes which
expires between 1997 and 2001.
9. 401(k) PLAN
The Company has a tax deferred investment plan (the "401(k) Plan"). All full-
time employees are eligible to participate in the 401(k) Plan. The 401(k) Plan
originally required mandatory employer contributions of 10% of the participants
contributions. The 401(k) Plan was subsequently amended to provide for
discretionary employer contributions. The Company did not make any matching
contributions during the year ended August 31, 1996 and approximately $8,500
during the year ended August 31, 1995.
F-35
<PAGE>
Ophthalmic Imaging Systems
Notes to Financial Statements (continued)
10. SUBSEQUENT EVENT
On November 21, 1996, the Company and the Bank amended the Credit Agreement
(Note 4). The amendment to the Credit Agreement included extending the maturity
date to March 5, 1997, and establishing limitations on the amount of net loss
the Company may incur in a quarter. The amended Credit Agreement also requires
the Company to obtain at a minimum $500,000 in new equity by December 6, 1996,
and an additional $250,000 by January 6, 1997.
F-36
<PAGE>
OPHTHALMIC IMAGING SYSTEMS
CONDENSED BALANCE SHEET
NOVEMBER 30, 1997
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
CASH AND EQUIVALENTS $ 227,513
ACCOUNTS RECEIVABLE, NET 1,662,224
INVENTORIES, NET 936,309
PREPAID EXPENSES AND OTHER CURRENT ASSETS 60,073
-----------
TOTAL CURRENT ASSETS 2,886,119
FURNITURE AND EQUIPMENT, NET OF ACCUMULATED
DEPRECIATION AND AMORTIZATION OF $804,290 369,849
OTHER ASSETS 9,216
-----------
$ 3,265,184
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
BORROWINGS UNDER LINE OF CREDIT $ 397,932
ACCOUNTS PAYABLE 687,326
ACCRUED LIABILITIES 1,185,215
ACCRUED WARRANT APPRECIATION RIGHT 251,497
DEFERRED EXTENDED WARRANTY REVENUE 127,673
CUSTOMER DEPOSITS 315,743
CURRENT PORTION OF NOTES PAYABLE 700
-----------
TOTAL CURRENT LIABILITIES 2,966,086
NOTES PAYABLE, LESS CURRENT PORTION --
COMMITMENTS
STOCKHOLDERS' EQUITY:
PREFERRED STOCK, NO PAR VALUE, 20,000,000
SHARES AUTHORIZED; NONE ISSUED OR OUTSTANDING --
COMMON STOCK, NO PAR VALUE, 20,000,000 SHARES
AUTHORIZED; 3,905,428 ISSUED AND OUTSTANDING 10,278,615
DEFERRED COMPENSATION (312,213)
ACCUMULATED DEFICIT (9,667,304)
-----------
TOTAL STOCKHOLDERS' EQUITY 299,098
-----------
$ 3,265,184
===========
</TABLE>
SEE ACCOMPANYING NOTES.
F-37
<PAGE>
OPHTHALMIC IMAGING SYSTEMS
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NOVEMBER 30,
1997 1996
------------------------------
<S> <C> <C>
NET REVENUES $1,901,877 $ 884,246
COST OF SALES 1,181,996 621,532
----------------------------
GROSS PROFIT 719,881 262,714
OPERATING EXPENSES:
SALES AND MARKETING 572,418 496,978
GENERAL AND ADMINISTRATIVE 323,418 282,768
RESEARCH AND DEVELOPMENT 212,268 264,781
----------------------------
TOTAL OPERATING EXPENSES 1,108,104 1,044,527
----------------------------
LOSS FROM OPERATIONS (388,223) (781,813)
OTHER EXPENSE, NET (9,129) (13,722)
----------------------------
NET LOSS $ (397,352) $ (795,535)
============================
SHARES USED IN THE CALCULATION OF
NET LOSS PER SHARE 3,905,428 3,320,969
============================
NET LOSS PER SHARE $ (0.10) $ (0.24)
============================
</TABLE>
SEE ACCOMPANYING NOTES.
F-38
<PAGE>
OPHTHALMIC IMAGING SYSTEMS
CONDENSED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND EQUIVALENTS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NOVEMBER 30,
1997 1996
-------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
NET LOSS $(397,352) $ (795,535)
ADJUSTMENTS TO RECONCILE NET LOSS TO
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 29,459 31,622
STOCK OPTION COMPENSATION EXPENSE 28,681 --
NET (INCREASE) DECREASE IN
CURRENT ASSETS OTHER THAN CASH
AND EQUIVALENTS (126,605) 190,107
NET INCREASE IN CURRENT LIABILITIES
OTHER THAN SHORT-TERM BORROWINGS 485,991 247,986
-----------------------------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 20,174 (325,820)
INVESTING ACTIVITIES:
PURCHASES OF FURNITURE AND EQUIPMENT (18,526) (104,668)
NET (INCREASE) DECREASE IN OTHER ASSETS (1,831) 23,462
-----------------------------
NET CASH USED IN INVESTING ACTIVITIES (20,357) (81,206)
FINANCING ACTIVITIES:
PRINCIPAL PAYMENTS ON NOTES PAYABLE (1,534) (1,386)
NET PROCEEDS FROM (REPAYMENTS OF)
LINE-OF-CREDIT BORROWINGS 86,930 (269,000)
NET PROCEEDS FROM SALE OF COMMON STOCK -- 85,491
-----------------------------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 85,396 (184,895)
-----------------------------
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS 85,213 (591,921)
-----------------------------
CASH AND EQUIVALENTS AT BEGINNING OF
PERIOD 142,300 1,051,325
-----------------------------
CASH AND EQUIVALENTS AT END OF PERIOD $ 227,513 $ 459,404
=============================
</TABLE>
SEE ACCOMPANYING NOTES.
F-39
<PAGE>
Ophthalmic Imaging Systems
Notes to Condensed Financial Statements
Three Month Periods ended November 30, 1997 and 1996
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
THE ACCOMPANYING UNAUDITED CONDENSED BALANCE SHEET AS OF NOVEMBER 30, 1997,
CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED NOVEMBER
30, 1997 AND 1996 AND THE CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE MONTH
PERIODS ENDED NOVEMBER 30, 1997 AND 1996 HAVE BEEN PREPARED IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOR INTERIM FINANCIAL INFORMATION AND
WITH THE INSTRUCTIONS TO FORM 10-QSB AND ITEM 310(B) OF REGULATION S-B.
ACCORDINGLY, THEY DO NOT INCLUDE ALL OF THE INFORMATION AND FOOTNOTE DISCLOSURES
REQUIRED BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOR COMPLETE FINANCIAL
STATEMENTS. IT IS SUGGESTED THAT THESE CONDENSED FINANCIAL STATEMENTS BE READ IN
CONJUNCTION WITH THE AUDITED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED IN
THE REGISTRANT'S (THE COMPANY'S) ANNUAL REPORT FOR THE FISCAL YEAR ENDED AUGUST
31, 1997 ON FORM 10-KSB. IN THE OPINION OF MANAGEMENT, THE ACCOMPANYING
CONDENSED FINANCIAL STATEMENTS INCLUDE ALL ADJUSTMENTS, CONSISTING ONLY OF
NORMAL RECURRING ADJUSTMENTS, NECESSARY FOR A FAIR PRESENTATION OF THE COMPANY'S
FINANCIAL POSITION AND RESULTS OF OPERATIONS FOR THE PERIODS PRESENTED. THE
RESULTS OF OPERATIONS FOR THE PERIOD ENDED NOVEMBER 30, 1997 ARE NOT NECESSARILY
INDICATIVE OF THE OPERATING RESULTS FOR THE FULL YEAR.
CERTAIN AMOUNTS IN THE FISCAL 1997 FINANCIAL STATEMENTS HAVE BEEN RECLASSIFIED
TO CONFORM WITH THE PRESENTATION IN THE FISCAL 1998 FINANCIAL STATEMENTS.
NOTE 2. NET LOSS PER SHARE
NET LOSS PER SHARE IS COMPUTED USING THE WEIGHTED AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING. COMMON EQUIVALENT SHARES FROM STOCK OPTIONS AND
WARRANTS ARE EXCLUDED FROM THE COMPUTATION OF NET LOSS PER SHARE BECAUSE THEIR
EFFECT IS ANTIDILUTIVE.
F-40
<PAGE>
Ophthalmic Imaging Systems
Notes to Condensed Financial Statements
Three Month Periods ended November 30, 1997 and 1996
(Unaudited)
NOTE 3. LINE OF CREDIT
IN APRIL 1995, THE COMPANY ENTERED INTO A REVOLVING LINE OF CREDIT AGREEMENT
(THE "CREDIT AGREEMENT") WITH A BANK (THE "BANK") WHICH, AFTER SEVERAL
AMENDMENTS, EXPIRED ON NOVEMBER 7, 1997. THE MAXIMUM AMOUNT AVAILABLE UNDER THE
TERMS OF THE CREDIT AGREEMENT WAS $750,000 AND WAS BASED UPON ELIGIBLE
OUTSTANDING ACCOUNTS RECEIVABLE BALANCES. BORROWINGS UNDER THE CREDIT AGREEMENT
BORE INTEREST AT THE BANK'S PRIME LENDING RATE PLUS THREE PERCENT AND WERE
SECURED BY VIRTUALLY ALL ASSETS OF THE COMPANY. THE CREDIT AGREEMENT ALSO
CONTAINED CERTAIN RESTRICTIVE COVENANTS WHICH PROVIDED FOR, AMONG OTHER THINGS,
CERTAIN WORKING CAPITAL AND NET WORTH BALANCE AND RATIOS. THE CREDIT AGREEMENT
WAS SUBSEQUENTLY CONVERTED TO A FULL RECOURSE ACCOUNTS RECEIVABLE CREDIT
AGREEMENT.
ON NOVEMBER 18, 1997, THE COMPANY ENTERED INTO AN ACCOUNTS RECEIVABLE CREDIT
AGREEMENT (THE "AGREEMENT") WITH THE BANK, AND ALL AMOUNTS OUTSTANDING UNDER THE
CREDIT AGREEMENT WERE CONSIDERED TO BE THE INITIAL ADVANCE UNDER THE AGREEMENT.
THE AGREEMENT ALLOWS FOR UP TO AN 80% ADVANCE RATE ON ELIGIBLE ACCOUNTS
RECEIVABLE BALANCES, AND THE MAXIMUM BORROWING BASE UNDER THE AGREEMENT IS $1.2
MILLION. THE BANK HAS FULL RECOURSE AGAINST THE COMPANY AND THE AGREEMENT
EXPIRES IN NOVEMBER 1998. BORROWINGS UNDER THE AGREEMENT BEAR INTEREST AT THE
BANK'S PRIME LENDING RATE PLUS 4%. IN ADDITION, THE BANK WILL CHARGE MONTHLY AN
ADMINISTRATIVE FEE EQUAL TO THE GREATER OF 1/2% OF THE AVERAGE DAILY BALANCE
FOR THE MONTH OR $1,200. UNDER THE TERMS OF THE AGREEMENT, BORROWINGS ARE
SECURED BY SUBSTANTIALLY ALL OF THE COMPANY'S ASSETS.
NOTE 4. PRIVATE PLACEMENT
IN NOVEMBER 1995, THE COMPANY COMPLETED A PRIVATE PLACEMENT OF 1,368,421 SHARES
OF ITS COMMON STOCK WITH DETACHABLE WARRANTS. THE NET PROCEEDS FROM THIS
OFFERING WAS APPROXIMATELY $1,075,000. ALONG WITH EACH SHARE OF COMMON STOCK
ISSUED, THE PURCHASERS WERE GIVEN AN "A WARRANT" AND "B WARRANT" TO PURCHASE
SHARES OF THE COMPANY'S COMMON STOCK. THE A AND B WARRANTS PER SHARE EXERCISE
PRICES WERE $1.25 AND $1.75, RESPECTIVELY. THE A AND B WARRANTS EXPIRED ON
FEBRUARY 19, 1997 AS AMENDED AND NOVEMBER 21, 1997, RESPECTIVELY.
THE PRIVATE PLACEMENT UNDERWRITER WAS ISSUED A WARRANT TO PURCHASE 250,000
SHARES OF THE COMPANY'S COMMON STOCK AT $.95 PER SHARE. THE NUMBER OF SHARES
EXERCISABLE AS WELL AS THE PER SHARE EXERCISE PRICE ARE SUBJECT TO ADJUSTMENT
UPON THE OCCURRENCE OF CERTAIN EVENTS. THIS WARRANT EXPIRES ON NOVEMBER 21,
1999. IN ADDITION, THE UNDERWRITER WILL RECEIVE AS A COMMISSION, 10% OF THE
PROCEEDS RECEIVED BY THE COMPANY UPON EXERCISE OF THE A AND B WARRANTS DESCRIBED
ABOVE.
F-41
<PAGE>
Ophthalmic Imaging Systems
Notes to Condensed Financial Statements
Three Month Periods ended November 30, 1997 and 1996
(Unaudited)
NOTE 5. NONSTATUTORY STOCK OPTION PLAN
IN OCTOBER 1997, THE COMPANY'S BOARD OF DIRECTORS APPROVED THE 1997 NONSTATUTORY
STOCK OPTION PLAN (THE "PLAN") UNDER WHICH ALL OFFICERS, EMPLOYEES DIRECTORS AND
CONSULTANTS MAY PARTICIPATE. THE PLAN EXPIRES IN OCTOBER 2002. OPTIONS GRANTED
UNDER THE PLAN ARE NON-QUALIFIED STOCK OPTIONS AND WILL HAVE A TERM OF NOT
LONGER THAN TEN (10) YEARS FROM THE DATE OF GRANT, UNLESS OTHERWISE SPECIFIED IN
THE OPTION AGREEMENT. THE EXERCISE PRICES UNDER THE PLAN WILL GENERALLY BE AT
100% OF THE FAIR MARKET VALUE OF THE COMPANY'S COMMON STOCK ON THE DATE OF
GRANT. THE MAXIMUM NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK WHICH MAY BE
OPTIONED AND SOLD UNDER THE PLAN IS 1,000,000, OF WHICH 861,500 OPTIONS REMAINED
AVAILABLE FOR GRANTING AS OF NOVEMBER 30, 1997. AS OF NOVEMBER 30, 1997, STOCK
OPTIONS TO PURCHASE 138,500 SHARES AT EXERCISE PRICES OF $1.09 WERE GRANTED AND
OUTSTANDING UNDER THE PLAN AND NONE OF THE GRANTED OPTIONS WERE EXERCISED.
F-42
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements
give effect to Premier's cumulative purchases through February 26, 1998 of 51%
of OISI's outstanding common shares, accounted for as a purchase business
combination. The pro forma condensed combined statements of operations for the
year ended March 31, 1997 and the nine month period ending December 31, 1997
have been prepared as if the acquisition had occurred on April 1, 1996. The pro
forma condensed combined balance sheet as of December 31, 1997 has been prepared
as if the acquisition had occurred on December 31, 1997. Premier's condensed
financial information included in these pro forma condensed combined financial
statements was derived from the unaudited pro forma condensed combined financial
information included in its Form 8-K/A filed on November 14, 1997. Accordingly,
Premier's condensed statements of operations included in these pro forma
condensed combined statements of operations for the year ended March 31, 1997
and for the nine months ended December 31, 1997 give effect to Premier's
September 30, 1997 acquisition of EyeSys Technologies, Inc. as if it had
occurred on April 1, 1996 and April 1, 1997, respectively.
The unaudited pro forma adjustments are described in the accompanying notes.
The unaudited pro forma adjustments represent Premier's preliminary
determination of the necessary adjustments and are based upon certain
assumptions Premier considers reasonable under the circumstances. Final amounts
may differ from those set forth below.
The unaudited pro forma financial information presented does not consider
any future events which may occur. The unaudited pro forma financial information
presented does not attempt to quantify any operating expense synergies or cost
reductions of the combined operations of Premier and OISI that may be realized.
Nor does the unaudited pro forma financial information consider the incremental
expense, capital or conversion costs which may be incurred.
THE UNAUDITED PRO FORMA FINANCIAL INFORMATION IS PRESENTED FOR
INFORMATIONAL PURPOSES ONLY AND IS NOT NECESSARILY INDICATIVE OF THE OPERATING
RESULTS OR FINANCIAL POSITION THAT WOULD HAVE OCCURRED HAD THE ACQUISITION BEEN
CONSUMMATED AT THE DATES INDICATED, NOR IS IT NECESSARILY INDICATIVE OF FUTURE
OPERATING RESULTS OR FINANCIAL POSITION OF PREMIER FOLLOWING THE ACQUISITION.
The unaudited pro forma condensed financial information should be read in
conjunction with the consolidated financial statements of Premier and the
financial statements of OISI and the related notes thereto contained in (i)
Premier's Annual Report on Form 10-K for the fiscal year ended March 31, 1997,
as amended, and (ii) OISI's audited financial statements for the fiscal years
ended August 31, 1997, 1996 and 1995 included in this Form 8-K, and (iii)
Premier's Form 8-K/A filed on November 14, 1997.
F-43
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
PREMIER LASER SYSTEMS, INC.
<TABLE>
<CAPTION>
As of December 31, 1997 (1)
------------------------------------------------------------------
Pro Forma
Pro Forma Condensed
Premier Laser OISI Adjustments Combined (3)
------------- ---------- ----------- -------------
ASSETS
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 7,482,315 $ 227,513 $ (2,479,488) (2) $ 5,230,340
Short-term investments 9,737,929 - - 9,737,929
Restricted cash 2,150,000 - - 2,150,000
Accounts receivable, net 8,155,927 1,662,224 - 9,818,151
Inventories 6,817,980 936,309 - 7,754,289
Prepaid expenses and other
current assets 3,529,982 60,073 - 3,590,055
------------ ----------- ------------ ------------
Total Current Assets 37,874,133 2,886,119 (2,479,488) 38,280,764
------------ ----------- ------------ ------------
Property and equipment,
net 1,282,856 369,849 - 1,652,705
Intangibles, net 9,357,723 - 1,581,000 (2) 10,938,723
Goodwill 5,297,661 - 57,000 (2) 5,354,661
Other assets 1,152,641 9,216 (882,642)(4(a)) 279,215
------------ ----------- ------------ ------------
$ 54,965,014 $ 3,265,184 $ (1,724,130) $ 56,506,068
============ =========== ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,151,051 $ 687,326 $ - $ 3,838,377
Line of credit 1,935,529 397,932 - 2,333,461
Accrued compensation and
related costs 496,175 333,337 - 829,512
Accrued liabilities 2,351,796 1,546,791 835,320 (2) 4,733,907
Notes payable and current
portion of capital lease
obligations 204,301 700 - 205,001
------------ ----------- ------------ ------------
Total current liabilities 8,138,852 2,966,086 835,320 11,940,258
------------ ----------- ------------ ------------
Long-term liabilities:
Capital lease obligations 169,933 - - 169,933
Minority interest in
consolidated subsidiary - - 146,558 (4(b)) 146,558
------------ ----------- ------------ ------------
Total long-term liabilities 169,933 - 146,558 316,491
------------ ----------- ------------ ------------
Commitments and contingencies
Shareholders' equity
Common stock 69,561,989 10,278,615 (10,033,525)(2)(4(c)) 69,807,079
Common stock-Class E-1 4,769,878 - - 4,769,878
Common stock-Class E-2 4,769,878 - - 4,769,878
Class A warrants 2,295,328 - - 2,295,328
Class B warrants 1,491,797 - - 1,491,797
Warrants to purchase Class A
common stock 192,130 - - 192,130
Deferred compensation - (312,213) 312,213 (4(c)) -
Accumulated deficit (36,424,771) (9,667,304) 7,015,304 (2)(4(c)) (39,076,771)
------------ ----------- ------------ ------------
Total shareholders' equity 46,656,229 299,098 (2,706,008) 44,249,319
------------ ----------- ------------ ------------
$ 54,965,014 $ 3,265,184 $ (1,724,130) $ 56,506,068
============ =========== ============ ============
</TABLE>
See notes to Unaudited Pro Forma Condensed Combined Financial Statements
F-44
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
PREMIER LASER SYSTEMS, INC.
<TABLE>
<CAPTION>
Pro Forma Nine Months Ended December 31, 1997 (1)
--------------------------------------------------------------------
Pro Forma
Pro Forma Condensed
Premier Laser OISI Adjustments Combined (3)
----------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Net sales $ 13,407,609 $ 5,357,840 $ - $ 18,765,449
Cost of sales 7,810,533 4,083,260 - 11,893,793
------------ ----------- ---------- ------------
Gross profit 5,597,076 1,274,580 - 6,871,656
Selling and marketing expenses 4,110,067 1,374,040 5,484,107
Research and development expenses 2,288,182 785,034 22,950 (2) 3,096,166
General and administrative expenses 3,662,819 880,412 126,303 (2) 4,669,534
In-process research and development
related to EyeSys Technologies, Inc. 9,200,000 - - 9,200,000
acquisition
Merger related and integration costs 2,146,912 - - 2,146,912
------------ ----------- ---------- ------------
Loss from operations (15,810,904) (1,764,906) (149,253) (17,725,063)
Interest income (expense), net 401,929 (48,684) - 353,245
Other income (expense), net 1,263,212 - - 1,263,212
Minority interest in net loss of
consolidated subsidiary - - 888,659 (4(d)) 888,659
------------ ----------- ---------- ------------
Net income (loss) $(14,145,763) $(1,813,590) $ 739,406 $(15,219,947)
============ =========== ========== ============
Net loss per share $ (1.22) $ (0.48) $ (1.31)
============ =========== ============
Shares used in the computation of
net loss per share 11,550,210 3,810,604 11,577,232
============ =========== ============
</TABLE>
See notes to Unaudited Pro Forma Condensed Combined Financial Statements
F-45
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
PREMIER LASER SYSTEMS, INC.
<TABLE>
<CAPTION>
Pro Forma Year Ended March 31, 1997 (1)
---------------------------------------------------------
Pro Forma
Premier Pro Forma Condensed
Laser OISI Adjustments Combined (3)
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales $13,628,641 $ 5,963,625 $ - $ 19,592,266
Cost of sales 8,880,761 4,057,852 - 12,938,613
----------- ----------- --------- ------------
Gross profit 4,747,880 1,905,773 - 6,653,653
Selling and marketing expenses 6,444,437 1,622,063 - 8,066,500
Research and development expenses 2,786,237 975,612 30,600(2) 3,792,449
General and administrative expenses 3,665,213 892,277 168,404(2) 4,725,894
Write off of investment in Mattan
Corporation 881,010 - - 881,010
Termination of strategic alliance
with IBC 331,740 - - 331,740
In-process research and development
acquired in the Data.Site
acquisition 250,000 - - 250,000
----------- ----------- --------- ------------
Loss from operations (9,610,757) (1,584,179) (199,004) (11,393,940)
Interest income (expense), net (227,529) (226,887) - (454,416)
Minority interest in net loss of
consolidated subsidiary - - 887,422(4(d)) 887,422
------------ ----------- --------- ------------
Net income (loss) $(9,838,286) $(1,811,066) $ 688,418 $(10,960,934)
=========== =========== ========= ============
Net loss per share $ (1.39) $ (0.58) $ (1.54)
=========== =========== ============
Shares used in the computation of
net loss per share 7,069,994 3,107,293 7,097,016
=========== =========== ============
</TABLE>
See notes to Unaudited Pro Forma Condensed Combined Financial Statements
F-46
<PAGE>
Notes To Unaudited Pro Forma
Condensed Combined Financial Statements
1. Basis of Presentation
Premier's condensed combined financial information included in these pro
forma condensed combined financial statements was derived from the
unaudited pro forma condensed combined financial information included in
its Form 8-K/A filed on November 14, 1997. Accordingly, Premier's condensed
statements of operations included in these pro forma condensed combined
statements of operations for the year ended March 31, 1997 and for the nine
months ended December 31, 1997 give effect to Premier's September 30, 1997
acquisition of Eyesys Technologies, Inc. as if it had occurred on April 1,
1996 and April 1, 1997, respectively.
The unaudited pro forma condensed financial information gives effect to
Premier's cumulative purchases through February 26, 1998 of 51% of OISI's
voting common stock, accounted for as a purchase business combination.
Accordingly, the pro forma financial information reflects the combination
of OISI's balances, the allocation of the excess purchase price over the
amount paid for Premier's 51% ownership interest (see Note 2) and a 49%
minority interest in OISI's net losses and net assets.
OISI's condensed financial information included in these pro forma
condensed combined financial statements was derived from its historical
financial statements which are based on a fiscal year ending August 31.
Accordingly, the results of operations for OISI included in the unaudited
pro forma condensed combined statements of operations for the year ended
March 31, 1997 and the nine month period ended December 31, 1997 were
derived from OISI's historical financial statements for the twelve months
ended February 28, 1997 and the nine months ended November 30, 1997; and,
the balance sheet amounts included in the unaudited pro forma condensed
combined balance sheet at December 31, 1997 were derived from OISI's
historical balance sheet at November 30, 1997.
2. Purchase Business Combination
Premier's aggregate purchase price for 51% of the outstanding common shares
of OISI amounted to $4,442,000 and consisted of cash of $3,362,000 (of
which $883,000 was paid prior to December 31, 1997), 27,022 shares of
Premier common stock valued at $245,000 and estimated related expenses of
$835,000. For purposes of allocating the purchase price, the carrying
values of OISI's recorded assets and liabilities were assumed to represent
their fair values. The excess of Premier's purchase price over its 51%
share of the carrying value of OISI's net assets amounted to $4,290,000 and
has been preliminarily allocated to the following intangible assets in the
pro forma condensed financial statements on the basis of 51% of the
estimated fair values:
<TABLE>
<S> <C>
In process research and development $2,652,000
==========
Developed technology (five year life) $ 153,000
Assembled work force (five year life) 357,000
Trade names and trademark (thirteen year life) 561,000
Customer related intangible assets (ten year life) 510,000
----------
$1,581,000
==========
Goodwill (twenty year life) $ 57,000
==========
</TABLE>
The amount allocated to in process research and development was determined
in part by independent appraisal and is expected to be expensed entirely in
the quarter ending March 31, 1998. The amount is reflected in the pro forma
condensed combined balance sheet as a direct charge to the accumulated
deficit at December 31, 1997.
The amounts and lives above represent Premier management's preliminary
determinations and are based on certain assumptions considered by
management to be reasonable under the circumstances. Final amounts may
differ.
F-47
<PAGE>
Notes to Unaudited Pro Forma
Condensed Combined Financial Statements (continued)
The pro forma condensed combined statements of operations include the
following amounts to reflect the amortization of the aforementioned
intangible assets for the periods indicated:
<TABLE>
<CAPTION>
Nine-months ended Year ended
December 31, 1997 March 31, 1997
----------------- --------------
<S> <C> <C>
Developed technology $ 22,950 $ 30,600
======== ========
Assembled workforce $ 53,550 $ 71,400
Customer-related intangible 38,250 51,000
Trademarks and trade names 32,365 43,154
Goodwill 2,138 2,850
-------- --------
$126,303 $168,404
======== ========
</TABLE>
3. Contingent Consideration
In connection with Premier's purchase of 980,360 shares of OISI common
stock, 1,960,720 warrants to purchase additional shares of Premier common
stock were issued. The warrants become exercisable in two equal increments
in 1998 and 1999 only in the event that net sales of qualified products, as
defined, exceed certain defined amounts for each period. In the event that
the sales targets are achieved for both years, additional purchase price of
$490,000 would be recorded as an increase to goodwill. The unaudited pro
forma condensed combined financial statements do not include adjustments
for the contingent consideration. The effect of including the contingent
consideration in the purchase allocation would not be material to pro forma
total assets, pro forma amortization expense, pro forma net loss, or pro
forma net loss per share for the nine months ended December 31, 1997 and
the year ended March 31, 1997.
4. Pro Forma Combination Eliminations and Minority Interest
The following pro forma adjustments were made to reflect the combination
of OISI's balances with Premier's and the 49% minority interest in OISI's
net assets and net losses:
(a) Reflects the elimination of Premier's existing investment in OISI at
December 31, 1997.
(b) Reflects the 49% minority interest in OISI's net assets at December
31, 1997.
(c) Reflects the elimination of the equity of OISI upon the consolidation
with Premier.
(d) Reflects the 49% minority interest in the net loss of OISI.
F-48
<PAGE>
Notes to Unaudited Pro Forma
Condensed Combined Financial Statements (continued)
5. Net Loss Per Common Share
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share. Statement No. 128
replaced the previously reported primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes the dilutive effects of options, warrants, and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. All earnings per share
amounts for all periods have been presented, and where necessary, restated to
conform to the Statement No. 128 requirements. The pro forma condensed combined
shares used in the computation of net loss per share have been increased by
27,022 shares of Premier common stock (See Note 2).
F-49
<PAGE>
INDEX TO EXHIBITS
Exhibit 99.1 Stock Purchase Agreement dated February 25, 1998 between Premier
and Ophthalmic.
Exhibit 99.2 Form of Class C Warrant.
Exhibit 99.3 Form of Class D Warrant.
Exhibit 99.4 Purchase Agreement dated February 25, 1998 between Premier and
Mark S. Blumenkranz, M.D. and Recia Blumenkranz, M.D.
Exhibit 99.5 Class C Warrant dated February 25, 1998 issued by Premier to Mark
S. Blumenkranz, M.D. and Recia Blumenkranz, M.D.
Exhibit 99.6 Class D Warrant dated February 25, 1998 issued by Premier to Mark
S. Blumenkranz, M.D. and Recia Blumenkranz, M.D.
Exhibit 99.7 Registration Rights Agreement dated February 25, 1998 between
Premier and Mark S. Blumenkranz, M.D. and Recia Blumenkranz, M.D.
Exhibit 99.8 Purchase Agreement dated February 25, 1998 between Premier and
Stanley Chang, M.D.
Exhibit 99.9 Class C Warrant dated February 25, 1998 issued by Premier to
Stanley Chang, M.D.
Exhibit 99.10 Class D Warrant dated February 25, 1998 issued by Premier to
Stanley Chang, M.D.
Exhibit 99.11 Registration Rights Agreement dated February 25, 1998 between
Premier and Stanley Chang, M.D.
Exhibit 99.12 Purchase Agreement dated February 25, 1998 between Premier and
JB Oxford & Company.
Exhibit 99.13 Class C Warrant dated February 25, 1998 issued by Premier to
JB Oxford & Company.
Exhibit 99.14 Class D Warrant dated February 25, 1998 issued by Premier to
JB Oxford & Company.
Exhibit 99.15 Series C Warrant Certificate dated November 21, 1995 issued by
Ophthalmic to JB Oxford & Company.
Exhibit 99.16 Consent to Transfer of Warrant dated February 25, 1998 between
Ophthalmic and Premier.
Exhibit 99.17 Warrant Agreement dated November 21, 1995 between Ophthalmic
and JB Oxford & Company.
I-1
<PAGE>
Exhibit 99.18 Registration Rights Agreement dated February 25, 1998 between
Premier and JB Oxford & Company.
Exhibit 99.19 Premier press release dated February 26, 1998.
Exhibit 99.20 Premier press release dated February 27, 1998.
Exhibit 99.21 Consent of Ernst & Young LLP, Independent Auditors to
Ophthalmic.
I-2
<PAGE>
EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
by and between
Premier Laser Systems, Inc.
and
Ophthalmic Imaging Systems
dated as of
February 25, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE I THE OFFER................................................. 1
SECTION 1.1 The Offer................................................. 1
SECTION 1.2 Ophthalmic Actions........................................ 3
ARTICLE II AMENDMENT TO RIGHTS PLAN; CLOSING OF THE PRIVATE
ACQUISITION............................................... 4
Amendment to Rights Plan; Closing of the Private
SECTION 2.1 Acquisition............................................... 4
ARTICLE III [NOT USED]................................................ 4
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF OPHTHALMIC.............. 4
SECTION 4.1 Organization and Qualification; No Subsidiaries........... 4
SECTION 4.2 Capitalization............................................ 5
SECTION 4.3 Authority Relative to this Agreement...................... 5
SECTION 4.4 No Violation.............................................. 6
SECTION 4.5 SEC Reports and Financial Statements...................... 6
Compliance with Applicable Laws and Permits; Regulatory
SECTION 4.6 Matters................................................... 6
SECTION 4.7 Change of Control......................................... 7
SECTION 4.8 Litigation................................................ 7
SECTION 4.9 Information............................................... 7
SECTION 4.10 Employee Benefit Plans.................................... 8
SECTION 4.11 Taxes..................................................... 9
SECTION 4.12 Intellectual Property..................................... 9
SECTION 4.13 Contracts................................................. 10
SECTION 4.14 Voting Requirements....................................... 10
SECTION 4.15 Absence of Certain Changes................................ 10
SECTION 4.16 Rights Agreement.......................................... 10
SECTION 4.17 Brokers................................................... 11
SECTION 4.18 Opinion of Investment Banker.............................. 11
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PREMIER................. 11
SECTION 5.1 Organization and Qualification............................ 11
SECTION 5.2 Authority Relative to this Agreement...................... 11
SECTION 5.3 No Violation.............................................. 12
SECTION 5.4 Information............................................... 12
SECTION 5.5 Funds; Reservation of Shares.............................. 12
SECTION 5.6 Intention to Propose a Merger............................. 12
SECTION 5.7 Ownership of Shares....................................... 12
SECTION 5.8 SEC Reports and Financial Statements...................... 12
SECTION 5.9 Absence of Certain Changes................................ 13
SECTION 5.10 Capitalization............................................ 13
ARTICLE VI COVENANTS................................................. 13
SECTION 6.1 Conduct of Business of Ophthalmic......................... 13
SECTION 6.2 Covenants of Premier...................................... 14
SECTION 6.3 Access to Information; Confidentiality.................... 15
SECTION 6.4 Efforts................................................... 15
SECTION 6.5 Public Announcements...................................... 16
SECTION 6.6 Employee Benefit Arrangements; Warrants................... 16
SECTION 6.7 Notification of Certain Matters........................... 17
SECTION 6.8 Rights Agreement.......................................... 17
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
SECTION 6.9 State Takeover Laws....................................... 18
SECTION 6.10 No Solicitation........................................... 18
SECTION 6.11 Indemnification........................................... 19
SECTION 6.12 Conditions................................................ 20
ARTICLE VII CONDITIONS TO CONSUMMATE THE TRANSACTIONS HEREUNDER....... 20
SECTION 7.1 Conditions................................................ 20
SECTION 7.2 Conditions to Obligations of Premier...................... 20
SECTION 7.3 Conditions of Premier to Close the Offer.................. 20
ARTICLE VIII TERMINATION; AMENDMENTS; WAIVER........................... 21
SECTION 8.1 Termination............................................... 21
SECTION 8.2 Effect of Termination..................................... 21
SECTION 8.3 Fees and Expenses......................................... 21
SECTION 8.4 Amendment................................................. 22
SECTION 8.5 Extension; Waiver......................................... 22
ARTICLE IX MISCELLANEOUS............................................. 22
SECTION 9.1 Non-Survival of Representations and Warranties............ 22
General Release of Ophthalmic Executive Officers and
SECTION 9.2 Directors................................................. 22
SECTION 9.3 Entire Agreement; Assignment.............................. 22
SECTION 9.4 Validity.................................................. 23
SECTION 9.5 Notices................................................... 23
SECTION 9.6 Governing Law............................................. 24
SECTION 9.7 Descriptive Headings...................................... 24
SECTION 9.8 Counterparts.............................................. 24
SECTION 9.9 Parties in Interest....................................... 24
SECTION 9.10 Certain Definitions....................................... 24
SECTION 9.11 Specific Performance...................................... 24
SECTION 9.12 Fiduciary Duty............................................ 24
SECTION 9.13 Obligation of Premier..................................... 24
</TABLE>
ii
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), is dated as of February 25,
1998, by and between Premier Laser Systems, Inc., a California corporation
("Premier"), and Ophthalmic Imaging Systems, a California corporation
("Ophthalmic").
WHEREAS, the respective Boards of Directors of Premier and Ophthalmic have
approved the acquisition of up to all the outstanding shares of common stock
of Ophthalmic by Premier on the terms and subject to the conditions set forth
in this Agreement;
WHEREAS, pursuant to this Agreement Premier has agreed to commence an
exchange offer (the "Offer") to exchange for each outstanding share of
Ophthalmic's common stock, no par value (the "Common Stock") (including the
associated preferred share purchase rights (the "Rights") issued pursuant to
the Rights Agreement, dated as of December 31, 1997, between Ophthalmic and
American Securities Transfer, Inc., as Rights Agent (the "Rights Agreement"),
which Rights together with the Common Stock are hereinafter referred to as the
"Shares"): (a) $1.75 net in cash (the "Cash Consideration"), (b) that number
of shares of Premier Class A Common Stock, no par value (the "Premier Common
Stock") equal to the Exchange Ratio (as defined herein) (the "Stock
Consideration"), (c) one Premier Class C Warrant (a "Class C Warrant"), and
(d) one Premier Class D Warrant (a "Class D Warrant", and together with a
Class C Warrant, the "Warrants" or the "Warrant Consideration") (the Cash
Consideration, the Stock Consideration and the Warrant Consideration together
constitute the "Offer Consideration");
WHEREAS, the Board of Directors of Ophthalmic (the "Ophthalmic Board") has,
in light of and subject to the terms and conditions set forth herein, (i)
determined that the Offer Consideration and the Offer, and the transactions
contemplated hereby, are fair to and in the best interest of Ophthalmic and
its stockholders; and (ii) resolved to approve and adopt this Agreement and
the transactions contemplated hereby and to recommend acceptance of the Offer
to Ophthalmic's stockholders;
WHEREAS, the respective Boards of Directors of Premier and Ophthalmic
contemplate that upon completion of the Offer, the parties may pursue a merger
providing all stockholders of Ophthalmic remaining after consummation of the
Offer an economic benefit similar to the Offer Consideration;
WHEREAS, Premier and Ophthalmic desire to make certain representations,
warranties, covenants and agreements in connection with the Offer, and also to
prescribe various conditions to the Offer; and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, Premier and certain stockholders of Ophthalmic will enter into
certain Purchase Agreements providing for the acquisition of Shares by Premier
from the holders named therein in exchange for the same consideration as being
exchanged pursuant to the Offer (the "Private Acquisition");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
for other good and valuable consideration, intending to be legally bound
hereby, Premier and Ophthalmic agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1 of this Agreement and none of the events set forth
in Annex I hereto (the "Exchange Offer Conditions") shall have occurred and be
existing, as promptly as practicable, but in no event later than the fifth
business day from the
1
<PAGE>
date of this Agreement, Premier shall commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended, including the
rules and regulations promulgated thereunder (the "Exchange Act")), a tender
offer for any and all Shares in exchange for the Offer Consideration and shall
use reasonable best efforts to consummate the Offer. The obligation of Premier
to accept for exchange and to exchange the Offer Consideration for any Shares
tendered pursuant thereto will be subject only to the satisfaction of the
conditions set forth in Annex I hereto. This Offer shall be made by means of a
Prospectus/Offer to Exchange (the "Offer to Purchase") containing the terms
set forth in this Agreement and the conditions set forth in Annex I.
Notwithstanding anything to the contrary in clause (iii) of Annex I hereto,
Premier shall be required to make a reasonable determination that any of the
events set forth in paragraphs (a) through (h) of Annex I shall have occurred
in order to refuse payment of the Offer Consideration for the tendered Shares
or to terminate the Offer in connection with any purported failure to meet a
condition specified in such paragraphs (a) through (h) of Annex I.
(b) The Offer Consideration shall consist of: (x) the Cash Consideration,
(y) the Stock Consideration, and (z) the Warrant Consideration. The Stock
Consideration is equal to that number of shares of Premier Common Stock equal
to the Exchange Ratio. "Exchange Ratio" means the quotient (rounded to the
nearest 1/100,000) determined by dividing $0.25 by closing sales prices for
Premier Common Stock as reported on The Nasdaq Stock Market, Inc. ("NASDAQ")
as published in The Wall Street Journal or, if not published therein, in
another authoritative source) for either (i) the fifteen (15) consecutive
trading days (each, a "Trading Day") ending five Trading Days immediately
preceding the Expiration Date (as defined below) or (ii) the thirty (30)
consecutive Trading Days ending twenty (20) Trading Days prior to the
Expiration Date, whichever yields the fewer number of shares of Premier Common
Stock (the "Premier Average Price"). The Class C Warrants and the Class D
Warrants shall be substantively in the forms attached as Exhibits A and B
hereto, respectively.
(c) Without the prior written consent of Ophthalmic, Premier shall not
decrease the Offer Consideration or change the form of consideration payable
in the Offer, decrease the number of Shares sought to be purchased in the
Offer, impose additional conditions to the Offer or amend any other term of
the Offer in any manner adverse to the holders of Common Stock. The Offer
shall remain open until the date that is 20 business days (as such term is
defined in Rule 14d-1(c)(6) under the Exchange Act) after the commencement of
the Offer (the "Expiration Date"), unless Premier shall have extended the
period of time for which the Offer is open pursuant to, and in accordance
with, the two succeeding sentences or as may be required by applicable law, in
which event the term "Expiration Date" shall mean the latest time and date as
the Offer, as so extended, may expire. Subject to the terms of the Offer and
this Agreement and the satisfaction of all the Exchange Offer Conditions as of
any Expiration Date, Premier shall accept for exchange and exchange the Offer
Consideration for all Shares validly tendered and not withdrawn pursuant to
the Offer as promptly as practicable after such Expiration Date; provided
that, if on any scheduled Expiration Date of the Offer all of the Exchange
Offer Conditions shall not have been satisfied or waived, unless this
Agreement has been terminated pursuant to Section 8.1 hereof, the Offer may,
but need not, be extended from time to time without the consent of Ophthalmic
for such period of time as is reasonably expected by Premier to be necessary
to satisfy the unsatisfied conditions; provided further that the Offer may be
extended by Premier without the consent of Ophthalmic for any period required
by any rule, regulation, interpretation or position of the SEC or the staff
thereof applicable to the Offer.
(d) Concurrently with the commencement of the Offer, Premier shall file with
the Securities and Exchange Commission ("SEC") a Tender Offer Statement on
Schedule 14D-1 in accordance with the Exchange Act with respect to the Offer
(together with all amendments, supplements, and exhibits thereto, including
the Offer to Purchase, the "Schedule 14D-1") and a Registration Statement on
Form S-4 (the "Form S-4") in accordance with the Securities Act of 1933, as
amended (the "Securities Act") to register the Premier Common Stock and the
Warrants to be issued in connection with the Offer (together with all
amendments, supplements, and exhibits thereto, including the Prospectus in the
form of the Offer to Purchase, the "Registration Statement"). The Schedule
14D-1 and the Registration Statement are referred to collectively herein as
the "Offer Documents". Ophthalmic and its counsel shall be given a reasonable
opportunity to review and comment and on the Offer Documents and all
amendments and supplements thereto prior to their filing with the SEC or
dissemination to
2
<PAGE>
stockholders of Ophthalmic. Premier agrees to provide Ophthalmic and its
counsel in writing with any comments Premier and its counsel may receive from
the SEC or its staff with respect to the Offer Documents promptly after
receipt of such comments and shall provide Ophthalmic and its counsel with
reasonable opportunity to review and comment on the response of Premier to
such comments. Premier represents that the Offer Documents will comply in all
material respects with the provisions of applicable federal and state
securities laws, and, on the date filed with the SEC and on the date first
published, sent or given to Ophthalmic's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by Premier with respect to
information supplied by Ophthalmic in writing for inclusion in the Offer
Documents. Ophthalmic shall provide Premier with such information as Premier
may reasonably request in connection with the preparation of the Offer
Documents. Each of Premier and Ophthalmic agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become incomplete, false or misleading in any material
respect and Premier further agrees to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and to be
disseminated to stockholders of Ophthalmic, in each case, as and to the extent
required by applicable federal and state securities laws.
(e) Notwithstanding any other provision of this Agreement, each holder of
Shares tendered for exchange pursuant to this Offer who would otherwise have
been entitled to receive a fraction of a share of Premier Common Stock (after
taking into account all shares tendered by such holder) shall receive, in lieu
thereof, cash in an amount equal to the fractional part of the Premier Common
Stock multiplied by the "market price" of one share of Premier Common Stock,
payable as part of the Offer Consideration. The "market price" of one share of
Premier Common Stock shall be the closing price of such common stock as
reported on NASDAQ (as published in The Wall Street Journal or, if not
published therein, any other authoritative source) on the last Trading Date
preceding the Expiration Date.
SECTION 1.2 Ophthalmic Actions.
(a) Ophthalmic hereby approves and consents to the Offer and represents,
that the Ophthalmic Board, at a meeting duly called and held, has (i)
determined by unanimous vote of its directors that each of the transactions
contemplated hereby, is fair to and in the best interests of Ophthalmic and
its stockholders, (ii) approved the Offer and adopted this Agreement in
accordance with the California General Corporation Law ("CGCL") and pursuant
to Article Six of the Restated Articles of Incorporation of Ophthalmic, and
(iii) resolved to recommend that the stockholders of Ophthalmic accept the
Offer and tender their Shares thereunder to Premier; provided, however, that
such recommendation and approval may be withdrawn, modified or amended only in
accordance with Section 6.10 of this Agreement. Ophthalmic further represents
that, prior to the execution hereof, Cowen & Company (the "Investment
Banker"), has delivered to the Ophthalmic Board its written opinion that, as
of the date thereof, the financial terms of the Offer are fair, from a
financial point of view to the holders of shares of Common Stock (other than
Premier and its affiliates). Ophthalmic hereby consents to the inclusion in
the Offer Documents of the recommendations of the Ophthalmic Board described
in this Section 1.2(a).
(b) Ophthalmic shall file with the SEC, as promptly as possible after the
filing by Premier of the Schedule 14D-1, a Solicitation/Recommendation
Statement on Schedule 14D-9 in accordance with the Exchange Act (together with
all amendments, supplements, and exhibits thereto, the "Schedule 14D-9"),
which shall contain the recommendation referred to in Section 1.2(a)(iii) of
this Agreement; provided that subject to Section 6.10 of this Agreement, such
recommendation may be withdrawn, modified, or amended. Premier and its counsel
shall be given reasonable opportunity to review and comment on the Schedule
14D-9 prior to its filing with the SEC. Ophthalmic agrees to provide Premier
and its counsel in writing with any comments Ophthalmic or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after receipt of such comments. Ophthalmic represents that the Schedule 14D-9
will comply in all material respects with the provisions of applicable federal
and state securities laws and, on the date filed with the SEC and on the date
first published, sent or given to Ophthalmic's stockholders, shall not contain
any untrue statement of a material fact
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or omit to state any material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by Ophthalmic with respect to information supplied by Premier in writing
for inclusion in the Schedule 14D-9. Each of Ophthalmic and Premier agree
promptly to correct any information provided by either of them for use in the
Schedule 14D-9 if and to the extent that it shall have become false or
misleading, and Ophthalmic further agrees to take all steps necessary to cause
the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to the holders of Shares, in each case, as and to the extent
required by applicable federal and state securities laws.
(c) In connection with the Offer, Ophthalmic shall furnish or cause to be
furnished to Premier with mailing labels, security position listings, any
available non-objecting beneficial owner lists and any available listing or
computer list containing the names and addresses of the record holders of the
Common Stock as of the most recent practicable date and shall furnish Premier
with such additional available information (including, but not limited to,
updated lists of holders of Common Stock and their addresses, mailing labels
and lists of security positions and non-objecting beneficial owner lists) and
such other assistance as Premier or its agents may reasonably request in
communicating the Offer to Ophthalmic's record and beneficial stockholders.
Subject to the requirements of applicable law, and except for such steps as
are necessary to disseminate the Offer Documents and any other documents
necessary to consummate the transactions contemplated hereby, Premier and its
affiliates, associates, agents and advisors, shall keep such information
confidential and use the information contained in any such labels, listings
and files only in connection with the Offer and, if this Agreement shall be
terminated, shall deliver to Ophthalmic all copies of, and extracts and
summaries from, such information then in their possession.
ARTICLE II
AMENDMENT TO RIGHTS PLAN; CLOSING OF THE PRIVATE ACQUISITION
SECTION 2.1 Amendment to Rights Plan; Closing of the Private
Acquisition. Provided that this Agreement is not earlier terminated, the
Ophthalmic Board shall amend the Rights Plan in accordance with Section 4.16
simultaneously with the closing of the Private Acquisition.
ARTICLE III
[NOT USED]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF OPHTHALMIC
Ophthalmic represents and warrants to Premier as follows:
SECTION 4.1 Organization and Qualification; No Subsidiaries. Ophthalmic is a
corporation duly organized, validly existing and in good standing under the
laws of the state of California and is in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or
operated, or the business conducted, by it require such qualification, except
where failure to be in good standing or to so qualify would not have a
Material Adverse Effect on Ophthalmic. Except as set forth in Section 4.1 of
the Ophthalmic Disclosure Schedule, Ophthalmic has the requisite corporate
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to have such power, or authority and
governmental approvals would not, individually or in the aggregate, have a
Material Adverse Effect. The term "Material Adverse Effect on Ophthalmic," as
used in this Agreement, means any change in or effect on the business,
financial condition or results of operations of
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Ophthalmic that would have, individually or in the aggregate, a material
adverse impact on Ophthalmic. Ophthalmic has heretofore made available to
Premier a complete and correct copy of its Restated Articles of Incorporation
(including all Certificates of Determination) and By-Laws, each as amended to
the date hereof. Such Restated Articles of Incorporation, By-Laws and
equivalent organizational documents are in full force and effect. Except as
set forth in Section 4.1 or the Ophthalmic Disclosure Schedule, Ophthalmic is
not in violation of any provision of its Restated Articles of Incorporation,
By-Laws, or equivalent organizational documents. Ophthalmic does not have any
subsidiaries.
SECTION 4.2 Capitalization. The authorized capital stock of Ophthalmic
consists of 20,000,000 of shares of Common Stock and 20,000,000 shares of
preferred stock ("Preferred Stock"), of which 100,000 shares are designated
Series A Junior Participating Preferred Stock, no par value ("Junior Preferred
Stock"). As of the close of business on February 25, 1998, 3,905,428 shares of
Common Stock were issued and outstanding, and no shares of Common Stock were
held in treasury. Ophthalmic has no shares of Preferred Stock issued and
outstanding. As of the date hereof, except for (i) 1,514,742 Common Stock
reserved for issuance pursuant to outstanding options granted by Ophthalmic
("Ophthalmic Options"), (ii) 250,000 shares of Common Stock reserved for
issuance pursuant to outstanding warrants ("Ophthalmic Warrants") and (iii)
100,000 shares of Junior Preferred Stock reserved for issuance upon exercise
of the Rights, there are not now, and at the Expiration Date there will not
be, any existing options, warrants, calls, subscriptions, or other rights, or
other agreements or commitments, obligating Ophthalmic to issue, transfer or
sell any shares of capital stock of Ophthalmic or bonds, debentures, notes or
other indebtedness having general voting rights (or convertible into
securities having such rights) of, or other equity interest in, Ophthalmic or
securities convertible into or exchangeable for such shares or equity interest
or obligating Ophthalmic to grant, extend or enter into any such option,
warrant, call, subscription or other right, agreement, arrangement or
commitment other than as set forth in Section 6.1 of the Ophthalmic Disclosure
Schedule. Since February 12, 1998, Ophthalmic has not issued any shares of its
capital stock, except pursuant to Ophthalmic Options and Ophthalmic Warrants
outstanding on such date. All issued and outstanding shares of Common Stock
are and all shares of Common Stock which may be issued pursuant to the
exercise of outstanding Ophthalmic Options and Ophthalmic Warrants will be,
when issued in accordance with the respective terms thereof, duly authorized
and validly issued, fully paid and nonassessable, and such issuance will not
violate any preemptive rights under law or otherwise. Except as contemplated
by the Offer contemplated by this Agreement and pursuant to the Private
Acquisition, there are no outstanding contractual obligations of Ophthalmic to
repurchase, redeem or otherwise acquire any shares of Common Stock or the
capital stock of Ophthalmic.
SECTION 4.3 Authority Relative to this Agreement.
(a) Ophthalmic has the requisite corporate power and authority to execute
and deliver this Agreement and, to the extent required by applicable law or
Ophthalmic's Restated Articles of Incorporation, subject to the approval and
adoption of any Proposed Merger by the stockholders of Ophthalmic, if
required, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Ophthalmic and the consummation by
Ophthalmic of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Ophthalmic,
subject, in the case of the Proposed Merger, to any necessary approval thereof
by the stockholders of Ophthalmic. This Agreement has been duly and validly
executed and delivered by Ophthalmic, and, assuming this Agreement constitutes
a valid and binding obligation of Premier, this Agreement constitutes a valid
and binding agreement of Ophthalmic, enforceable against Ophthalmic in
accordance with its terms (except in all cases as such enforceability may be
limited to applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting the enforcement of creditor's rights generally and
except that the availability of the equitable remedy of specific performance
or injunctive relief is subject to the discretion of any court before which
any proceeding may be brought).
(b) Except as set forth in this Section 4.3 of the Ophthalmic Disclosure
Schedule, other than in connection with, or in compliance with, the provisions
of the CGCL with respect to the transactions contemplated hereby, the federal
securities laws, the securities laws of the various states, the rules of
NASDAQ, and other than notices to or filings with the Internal Revenue Service
or the Pension Benefit Guaranty Corporation with respect to
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employee benefit plans, or under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), no authorization, consent or approval
of, or filing with, any Governmental Entity (as hereinafter defined) is
necessary for the consummation by Ophthalmic of the transactions contemplated
by this Agreement other than authorizations, consents and approvals the
failure to obtain, or filings the failure to make, which would not,
individually in the aggregate, have a Material Adverse Effect on Ophthalmic.
As used in this Agreement, the term "Governmental Entity" means any government
or subdivision thereof, domestic, foreign or supranational or any
administrative, governmental or regulatory authority, agency, commission,
tribunal or body, domestic, foreign or supranational.
SECTION 4.4 No Violation. Neither the execution or delivery of this
Agreement by Ophthalmic nor the consummation by Ophthalmic of the transactions
contemplated hereby will (i) constitute a breach or violation of any provision
of the Restated Articles of Incorporation or By-Laws of Ophthalmic, (ii)
except as set forth in Section 4.4 of the Ophthalmic Disclosure Schedule,
constitute a breach, violation or default (or any event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in the
creation of any lien or encumbrance upon any material property or asset of
Ophthalmic under, any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument to which Ophthalmic, or by which it or
any of its properties or assets, are bound, or (iii) subject to the receipt of
the requisite consents, approvals, or authorizations of, or filings with
Governmental Entities under federal securities laws, applicable corporate and
securities laws, the rules of NASDAQ and the Boston Stock Exchange, and laws
relating to employee benefit plans, conflict with or violate any order,
judgment or decree, or to the knowledge of Ophthalmic, any statute, ordinance,
rule or regulation applicable to Ophthalmic, or by which it or any of its
properties or assets may be bound or affected, other than, in the case of the
foregoing clauses (ii) or (iii), conflicts, breaches, violations, defaults,
terminations, accelerations or creation of liens and encumbrances which,
individually or in the aggregate, would not have a Material Adverse Effect on
Ophthalmic.
SECTION 4.5 SEC Reports and Financial Statements. Ophthalmic has filed with
the SEC, and has made available to Premier, copies of all forms, reports and
documents ("Ophthalmic SEC Reports") required to be filed by it since
September 1, 1994 under the Securities Act or the Exchange Act. None of such
Ophthalmic SEC Reports (as of their respective filing dates) contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (except any statement or omission therein which as been corrected
or otherwise disclosed or updated in a subsequent Ophthalmic SEC Report). The
audited and unaudited consolidated financial statements of Ophthalmic included
in any Ophthalmic SEC Report on Form 10-QSB or Form 10-KSB have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis (except as otherwise stated in such financial statements,
including the related notes or, in the case of unaudited statements, as
permitted by Form 10-QSB of the SEC rules), comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto and fairly present the financial
position of Ophthalmic as of the dates thereof and the results of its
operations and changes in financial position for the periods then ended,
subject, in the case of the unaudited financial statements, to year-end audit
adjustments, and except for the absence of certain footnote information in the
unaudited statements. Except as set forth in Section 4.5 of the Ophthalmic
Disclosure Schedule, Ophthalmic does not have any liabilities or obligations
of any nature (whether absolute, accrued, contingent, unmatured, unaccrued,
unliquidated, unasserted, conditional or otherwise), except for liabilities or
obligations (i) reflected or reserved against on the balance sheet as at
November 30, 1997 (including the notes thereto and the other disclosure made
in Ophthalmic's Form 10-QSB for the quarter ended November 30, 1997) included
in the Ophthalmic SEC Reports, or (ii) incurred in the ordinary course of
business consistent with past practice since such date.
SECTION 4.6 Compliance with Applicable Laws and Permits; Regulatory
Matters. Except as set forth in Section 4.6 of the Ophthalmic Disclosure
Schedule, to the knowledge of Ophthalmic, it has in effect and holds all
permits, licenses, orders, authorizations, registrations, approvals and other
analogous instruments, and
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Ophthalmic has made all filings and registrations and the like necessary or
required by law to conduct its business as presently conducted, other than
such permits, licenses, orders, authorizations, registrations, approvals, and
other instruments, the absence of which do not have a Material Adverse Effect
on Ophthalmic. Ophthalmic has not received any written governmental notices
within two years of the date hereof of any violation by Ophthalmic of any such
laws, rules, regulations or orders. Except as set forth in Section 4.6 of the
Ophthalmic Disclosure Schedule or where the failure to comply would not have a
Material Adverse Effect, to the knowledge of Ophthalmic, Ophthalmic is not in
default or noncompliance under any (a) permits, consents, or similar
instruments, and (b) the business and local and county laws, ordinances,
regulations, judgments, orders, decrees or rules of any court, arbitrator or
governmental, regulatory or administrative agency or entity, other than such
default or noncompliance which is not reasonably likely to have a Material
Adverse Effect on Ophthalmic. Without limiting the generality of the
foregoing, except as set forth in Section 4.6 of the Ophthalmic Disclosure
Schedule, all of the products presently marketed by Ophthalmic have been
approved or cleared to market pursuant to valid and subsisting Premarket
Approval or Section 510(k) Clearances issued by the United States Food and
Drug Administration ("FDA"). Ophthalmic has never conducted any clinical
trials which have required Investigational Device Exemptions ("IDE's"). No
written notification has been furnished to Ophthalmic of any medical
complications arising in connection with or resulting from clinical trials
conducted by Ophthalmic either directly or under its direction, or from the
use of its products following FDA approval or clearance. Ophthalmic has not
received any written complaint nor has Steven Verdooner, during the past six
months, been made aware of any oral complaint made with respect to such
procedures and no Medical Device Reports have been filed by Ophthalmic or have
been required to be filed. Except as set forth in Section 4.6 of the
Ophthalmic Disclosure Schedule, the design, manufacture and distribution of
all of Ophthalmic products, to the extent required, has been conducted, and
shall continue through the Expiration Date to be conducted, substantially in
accordance with "good manufacturing practices" as required by the FDA.
SECTION 4.7 Change of Control. Except as provided by the terms of any
Ophthalmic Warrant, any Ophthalmic stock option plan, or any Ophthalmic
Options, or as set forth on Section 4.7 of the Ophthalmic Disclosure Schedule,
the transactions contemplated by this Agreement will not constitute a "change
of control" under, require the consent from or the giving of notice to a third
party pursuant to, permit a third party to terminate or accelerate vesting or
repurchase rights, or create any other detriment under the terms, conditions
or provisions of any material note, bond, mortgage, indenture, license, lease,
contract, agreement or other instrument or obligation to which Ophthalmic is a
party or by which it or any of its properties or assets may be bound, except
where the adverse consequences resulting from such change of control or where
the failure to obtain such consents or provide such notices would not,
individually or in the aggregate, have a Material Adverse Effect on
Ophthalmic.
SECTION 4.8 Litigation. Except as disclosed in an SEC Report or in Section
4.8 of the Ophthalmic Disclosure Schedule, or otherwise fully covered by
insurance, there is no suit, claim, action, proceeding or investigation
pending or, to the knowledge of Ophthalmic, threatened, against Ophthalmic,
individually or in the aggregate, which would have a Material Adverse Effect
on Ophthalmic or would reasonably be expected to prevent or materially delay
the consummation of the transactions contemplated by this Agreement. Except as
disclosed in the Ophthalmic SEC Reports filed prior to the date of this
Agreement, Ophthalmic is not subject to any outstanding order, writ,
injunction or decree which, individually or in the aggregate, would have a
Material Adverse Effect on Ophthalmic or would reasonably be expected to
prevent or materially delay the consummation of the transactions contemplated
hereby.
SECTION 4.9 Information. None of the written information supplied by
Ophthalmic (other than projections of future financial performance) expressly
for inclusion or incorporation by reference in the Offer Documents, will, at
the time filed with the SEC, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. Notwithstanding the foregoing, no
representation is made by Ophthalmic with respect to (i) any forward-looking
information which may have been supplied by Ophthalmic, whether or not
included by Premier in any Offer Document or (ii) statements made in any of
the foregoing documents based upon information supplied by Premier.
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SECTION 4.10 Employee Benefit Plans.
(a) Section 4.10(a)/(b) of the Ophthalmic Disclosure Schedule includes a
complete list of all material employee benefit plans and programs providing
benefits to any employee or former employee of Ophthalmic sponsored or
maintained by Ophthalmic or to which Ophthalmic contributes or is obligated to
contribute ("Plans") and all written employment, severance, consulting and
other compensation contracts between Ophthalmic and any current or former
director, officer, or employee thereof ("Employment Contracts"). Ophthalmic is
not party to any oral Employment Contracts that are not terminable at will.
Without limiting the generality of the foregoing, the term "Plans" includes
all employee welfare benefit plans within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended, and the
regulations thereunder ("ERISA"), and all employee pension benefit plans
within the meaning of Section 3(2) of ERISA.
(b) With respect to each Plan, Ophthalmic has made available to Premier (to
the extent requested) a true, correct and complete copy of: (i) all plan
documents, benefit schedules, trust agreements, and insurance contracts and
other funding vehicles; (ii) the most recent Annual Report (Form 5500 Series)
and accompanying schedule, if any; (iii) the current summary plan description,
if any; (iv) the most recent annual financial report, if any; (v) the most
recent actuarial report, if any; (vi) the most recent determination letter
from the United States Internal Revenue Service (the "IRS"), if any; and (vii)
each Employment Contract.
(c) Except as set forth in Section 4.10(d) of the Ophthalmic Disclosure
Schedule, all Plans are in compliance, in all material respects with all
applicable provisions of ERISA, the Code and all laws and regulations
applicable to the Plans. With respect to each Plan that is intended to be a
"qualified plan" within the meaning of Section 401(a) of the Code ("Qualified
Plans"), the IRS has issued a favorable determination letter.
(d) Except as set forth in Section 4.10(d) of the Ophthalmic Disclosure
Schedule, all contributions required to be made by Ophthalmic to any Plan
under applicable law or regulation or by any plan document or other
contractual undertaking, and all premiums due or payable with respect to
insurance policies funding any Plan, have been timely made or paid in full or,
to the extent not required to be made or paid, have been fully reflected in
the financial statements of Ophthalmic included in the Ophthalmic SEC Reports
to the extent required under generally accepted accounting principles.
(e) No Plan is subject to Title IV or Section 302 of ERISA or Section 412 or
4971 of the Code. Without limiting the generality of the foregoing, no Plan is
a "multi-employer plan" within the meaning of Section 4001(a)(3) of ERISA (a
"Multi-Employer Plan") or a plan that has two or more contributing sponsors at
least two of whom are not under common control, within the meaning of Section
4063 of ERISA and which is subject to Title IV of ERISA (a "Multiple Employer
Plan").
(f) There does not now exist, nor do any circumstances exist that would
reasonably be expected to result in, any liability under (i) Title IV of
ERISA, (ii) Section 302 of ERISA, (iii) Sections 412 and 4971 of the Code,
(iv) the continuation coverage requirements of Section 601 et seq. of ERISA
and Section 4980B of the Code, or (v) corresponding or similar provisions of
foreign laws or regulations, other than a liability that arises solely out of,
or relate solely to, the Plans, that would be a liability of Ophthalmic or any
of its subsidiaries following the Expiration. Without limiting the generality
of the foregoing, (i) neither of Ophthalmic nor any ERISA Affiliate of
Ophthalmic has engaged in any transaction described in Section 4069 or Section
4204 or 4212 of ERISA, (ii) no liability under Title IV or a violation of
Section 302 of ERISA has been incurred by Ophthalmic that has not been
satisfied in full, and Ophthalmic is not aware of any condition that exists
that presents a material risk to Ophthalmic of incurring any such liability,
other than liability for premiums due to the Pension Benefit Guaranty
Corporation (which premiums have been paid when due) and for contributions due
to a pension plan (which contributions have been paid through the end of
1997), and (iii) no Plan or any trust established thereunder has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, as of the last day of the
most recent fiscal year of each Plan ended prior to the Expiration Date. An
"ERISA Affiliate" means any entity, trade or business that is a member of a
group
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described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA that includes Ophthalmic or any of its subsidiaries, or that is a
member of the same "controlled group" as Ophthalmic or any of its
subsidiaries, pursuant to Section 4001(a)(14) of ERISA.
(g) To the knowledge of Ophthalmic, there are no pending, threatened or
anticipated claims by or on behalf of any Plan, by any employee or beneficiary
covered under any such Plan, or otherwise involving any such Plan (other than
routine claims for benefits).
SECTION 4.11 Taxes.
(a) Except as set forth in Section 4.11 of the Ophthalmic Disclosure
Schedule, Ophthalmic has (i) timely filed all income Tax Returns (as
hereinafter defined), and all other material Tax Returns required to be filed
by or with respect to it, or requests for extensions have been filed, granted,
and have not expired, for the periods ending on or after December 31, 1996,
and on or before the date of the most recent fiscal year and immediately
preceding the date hereof, and to the knowledge of Ophthalmic all such Tax
Returns are true, correct and complete in all material respects, and (ii) to
the knowledge of Ophthalmic, all Taxes (as hereinafter defined) shown as due
and payable on such Tax Returns have been paid, and (iii) made adequate
provision in Ophthalmic's financial statements for payment of all Taxes
anticipated to be payable in respect of all taxable periods or portions
thereof ending on or before the date hereof, except where the failures to so
file or pay or make adequate provision would not, individually or in the
aggregate, have a Material Adverse Effect on Ophthalmic. There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any Tax Return of Ophthalmic. Ophthalmic (i) has not been a
member of a group filing consolidated returns for federal income tax purposes,
or (ii) is not a party to a Tax sharing or Tax indemnity agreement or any
other agreement of a similar nature that remains in effect. There is no audit
examination, deficiency, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes due and owing by Ophthalmic which would,
individually or in the aggregate, have a Material Adverse Effect on
Ophthalmic. There are no Tax liens upon any of the assets or property of
Ophthalmic, except liens for current Taxes not yet due and payable. As soon as
practicable after the public announcement of the execution of this Agreement,
Ophthalmic will provide Premier with written schedules with respect to income
taxes of (i) the taxable years of Ophthalmic as to which the statutes of
limitations with respect to Taxes have not expired and (ii) with respect to
such taxable years, those years for which examinations have been completed,
those years for which examinations are presently being conducted, those years
for which examinations have not been initiated and those years for which
required Tax Returns have not yet been filed.
(b) For purposes of this Agreement, the term "Taxes" means all taxes, levies
or other assessments, including, without limitation, income, gross receipts,
excise, property, sales, license, payroll, withholding and franchise taxes,
imposed by the United States or any state or local government or subdivision
or agency thereof, including any interest, penalties or additions thereto. For
purposes of this Agreement, the term "Tax Return" means any report, return or
other information or document required to be supplied to a taxing authority in
connection with Taxes.
SECTION 4.12 Intellectual Property.
(a)(i) Ophthalmic owns, has the right to acquire or is licensed or otherwise
has the right to use (in each case, free and clear of any liens or
encumbrances of any kind), all Intellectual Property (as defined below) used
in or necessary for the conduct of its business as currently conducted, (ii)
no claims are pending or, to the knowledge of Ophthalmic, threatened, that
Ophthalmic is infringing on or otherwise violating the rights of any person
with regard to any Intellectual Property, and (iii) to the knowledge of
Ophthalmic, no person is infringing on or otherwise violating any right of
Ophthalmic with respect to any Intellectual Property owned by and/or licensed
to Ophthalmic.
(b) For purposes of this Agreement, "Intellectual Property" shall mean
material patents, copyrights, trademarks (registered or unregistered), service
marks, brand names, trade dress, trade names, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to
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register, the foregoing; and trade secrets and rights in any jurisdiction to
limit the use or disclosure thereof by any person.
SECTION 4.13 Contracts. Each material note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Ophthalmic is a party or by which it or any of its properties or assets may be
bound (the "Material Contracts") is in full force and effect, except where
failure to be in full force and effect would not have a Material Adverse
Effect on Ophthalmic, and there are no defaults by Ophthalmic or, to
Ophthalmic's knowledge, any other party thereto, thereunder, except those
defaults that would not have a Material Adverse Effect on Ophthalmic.
SECTION 4.14 Voting Requirements. No vote of the holders of the class or
series of Ophthalmic's capital stock is necessary in connection with this
Agreement, except as may be required in connection with the approval of the
Proposed Merger.
SECTION 4.15 Absence of Certain Changes. Except as disclosed in the
Ophthalmic SEC Reports filed prior to the date of this Agreement or in Section
4.15 of the Ophthalmic Disclosure Schedule, there has not been, since August
31, 1997, any event that has had or that is reasonably expected to have a
Material Adverse Effect on Ophthalmic. Except as disclosed in the Ophthalmic
SEC Reports filed prior to the date of this Agreement or in Section 4.15 of
the Ophthalmic Disclosure Schedule, since August 31, 1997, Ophthalmic has
conducted its business only in the ordinary course of business consistent with
past practices and there has not been, directly or indirectly:
(i) any exchange or grant by Ophthalmic or any increase in compensation
to any director or executive officer of Ophthalmic or, except in the
ordinary course of business and consistent with past practice or as
required under employment agreements in effect as of or prior to the date
of this Agreement, of any employee of Ophthalmic;
(ii) any grant by Ophthalmic to any such director, executive officer or
employee of any increase in severance or termination pay, except as
required under employment, severance or termination agreements or plans in
effect as of the date of this Agreement;
(iii) except as contemplated by this Agreement, any entry by Ophthalmic
into any employment, severance or termination agreement with any such
director or executive officer, or, except in the ordinary course of
business consistent with past practice, employee;
(iv) except in the ordinary course of business and consistent with past
practice or as required under employment agreements in effect as of or
prior to the date of this Agreement, any material adoption or material
increase in exchanges to or benefits under any profit sharing, bonus,
deferred compensation, savings, insurance, pension, retirement or other
employee benefit plan for or with any employees of Ophthalmic;
(v) any change in accounting methods, principles or practices by
Ophthalmic materially affecting its assets, liabilities or business, except
insofar as may have been required by change in generally accepted
accounting principles; or
(vi) any agreement to do any of the things described in the preceding
clauses (i) through (v).
SECTION 4.16 Rights Agreement. The Ophthalmic Board has duly authorized and
Ophthalmic will execute an amendment (the "Rights Agreement Amendment") to the
Rights Agreement (without redeeming the Rights) which will permit the
execution or delivery of this Agreement, the making of the Offer, the
acquisition of Shares pursuant to the Offer and the consummation of the
Proposed Merger without (i) causing any Rights issued pursuant to the Rights
Agreement to become exercisable or to separate from the stock certificates to
which they are attached, (ii) causing Premier or any of its Affiliates to be
an Acquiring Person (as each such term is defined in the Rights Agreement), or
(iii) triggering other provisions of the Rights Agreement, including giving
rise to a Distribution Date (as such term is defined in the Rights Agreement),
and the Rights Agreement Amendment shall be in full force and effect from and
after the date hereof until such time as, after being advised
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by its outside counsel with respect to fiduciary obligations, the Board of
Directors of Ophthalmic determines in good faith by a majority vote that it is
necessary to terminate or revise such amendment or the Rights Agreement in the
exercise of its fiduciary obligations under applicable law.
SECTION 4.17 Brokers. Except for the engagement of the Investment Banker,
none of Ophthalmic, or any of its officers, directors or employees has
employed any broker or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the transactions
contemplated by this Agreement.
SECTION 4.18 Opinion of Investment Banker. Ophthalmic has received the
written opinion of the Investment Banker to the effect that, as of the date
such opinion, the financial terms of the Offer are fair, from a financial
point of view to the holders of shares of Common Stock (other than Premier and
its affiliates).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PREMIER
Premier represents and warrants to Ophthalmic as follows:
SECTION 5.1 Organization and Qualification. Premier is a corporation duly
organized, validly existing and in good standing under the laws of its state
or jurisdiction of incorporation and is in good standing as a foreign
corporation in each other jurisdiction where the properties owned, leased or
operated, or the business conducted, by it require such qualification and
where failure to be in good standing or to so qualify would have a Material
Adverse Effect on Premier. Premier has the requisite corporate power and
authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted,
except where the failure to have such power, or authority and governmental
approvals would not, individually or in the aggregate, have a Material Adverse
Effect. The term "Material Adverse Effect on Premier", as used in this
Agreement, means any change in or effect on the business, financial condition
or results of operations of Premier or any of its subsidiaries that would,
individually or in the aggregate, be materially adverse to Premier and its
subsidiaries taken as a whole. Premier has heretofore made available to
Ophthalmic a complete and correct copy of its Articles of Incorporation
(including all Certificates of Determination) and By-Laws, each as amended to
the date hereof. Such Articles of Incorporation, By-Laws and equivalent
organizational documents are in full force and effect. Premier is not in
violation of any provision of its Articles of Incorporation, By-Laws, or
equivalent organizational documents.
SECTION 5.2 Authority Relative to this Agreement.
(a) Premier has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Premier and no other corporate proceedings on the part
of Premier is necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly
executed and delivered by Premier and, assuming this Agreement constitutes a
valid and binding obligation of Ophthalmic, this Agreement constitutes a valid
and binding agreement Premier, enforceable against Premier in accordance with
its terms.
(b) Other than in connection with, or in compliance with, the provisions of
the CGCL with respect to the transactions contemplated hereby, the Exchange
Act, the securities laws of the various states, no authorization, consent or
approval of, or filing with, any Governmental Entity is necessary for the
consummation by Premier of the transactions contemplated by this Agreement
other than authorizations, consents and approvals the failure to obtain, or
filings the failure to make, which would not, in the aggregate, have a
Material Adverse Effect on Premier.
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SECTION 5.3 No Violation. Neither the execution or delivery of this
Agreement by Premier nor the consummation by Premier of the transactions
contemplated hereby will (i) constitute a breach or violation of any provision
of the Articles of Incorporation or By-Laws of Premier, (ii) constitute a
breach, violation or default (or any event which, with notice or lapse of time
or both, would constitute a default) under, or result in the termination of,
or accelerate the performance required by, or result in the creation of any
lien or encumbrance upon any of the material property or asset of Premier or
any of its subsidiaries under, any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument to which Premier or any
of its subsidiaries is a party or by which they or any of their respective
properties or assets are bound, or (iii) subject to the receipt of the
requisite consents, approvals, or authorizations of, or filings with
Governmental Entities under federal securities laws, applicable corporate and
securities laws, the rules of NASDAQ and laws relating to employee benefit
plans, conflict with or violate any order, judgment or decree, or to the
knowledge of Premier, any statute, ordinance, rule or regulation applicable to
Premier, or by which it or any of its properties or assets may be bound or
affected, other than, in the case of the foregoing clauses (ii) or (iii),
conflicts, breaches, violations, defaults, terminations, accelerations or
creation of liens and encumbrances which, individually or in the aggregate,
would not have a Material Adverse Effect on Premier.
SECTION 5.4 Information. None of the information supplied by Premier in
writing (other than projections of future financial performance) specifically
for inclusion or incorporation by reference in (i) the Schedule 14D-9, or (ii)
the Other Filings will, at the respective times filed with the SEC or other
Governmental Entity contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which
they were made, not misleading. Notwithstanding the foregoing, no
representation is made by Premier with respect to statements made in any of
the foregoing documents based upon information supplied in writing by
Ophthalmic.
SECTION 5.5 Funds; Reservation of Shares. Premier has on the date hereof and
will have at the time of acceptance for exchange and exchange of Shares
pursuant to the Offer and at the Expiration Date, the funds necessary and will
have reserved for issuance the Premier Common Stock, the Premier Common Stock
issuable upon exercise of the Warrants and the Warrants to consummate the
Offer and the transactions contemplated thereby on a timely basis in
accordance with this Agreement, which Premier Common Stock and Warrants when
issued, will be duly authorized and validly issued, fully paid and
nonassessable, and such issuance will not violate any preemptive rights under
law or otherwise.
SECTION 5.6 Intention to Propose a Merger. As of the date hereof, Premier
presently intends to, at a reasonable time following its acceptance for
exchange and exchange for shares pursuant to the Offer, propose a merger with
Premier providing holders of shares of Common Stock at such time an economic
benefit similar to that of the Offer Consideration (the "Proposed Merger").
SECTION 5.7 Ownership of Shares. Except as disclosed on the latest Schedule
13D as filed by Premier with the SEC prior to the date of this Agreement with
respect to the Common Stock, none of Premier or its Subsidiaries or affiliates
owns (beneficially or otherwise) any shares of Common Stock. From the date of
this Agreement through the Expiration Date, except for those Private
Acquisitions entered into concurrently herewith, none of Premier or its
Subsidiaries or affiliates shall purchase or otherwise acquire beneficial
ownership of any additional shares of Common Stock.
SECTION 5.8 SEC Reports and Financial Statements. Premier has filed and has
made available to Ophthalmic all forms, reports and documents ("Premier SEC
Reports") required to be filed by it with the SEC since April 1, 1994. None of
such Premier SEC Reports (as of their respective filing dates) contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (except any statement or omission therein which as been corrected
or otherwise disclosed or updated in a subsequent Premier SEC Report). The
audited and unaudited consolidated financial statements of Premier included in
any Premier SEC Report on Form 10-Q or Form 10-K have been prepared in
accordance with generally accepted
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accounting principles applied on a consistent basis (except as otherwise
stated in such financial statements, including the related notes or, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC rules),
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto and fairly present the financial position of Premier as of the dates
thereof and the results of its operations and changes in financial position
for the periods then ended, subject, in the case of the unaudited financial
statements, to year-end audit adjustments, and except for the absence of
certain footnote information in the unaudited statements. Premier does not
have any liabilities or obligations of any nature (whether absolute, accrued,
contingent, unmatured, unaccrued, unliquidated, unasserted, conditional or
otherwise), except for liabilities or obligations (i) reflected or reserved
against on the balance sheet as at December 31, 1997 (including the notes
thereto and the other disclosure made in Ophthalmic's Form 10-Q for the
quarter ended December 31, 1997) included in the Premier SEC Reports, or (ii)
incurred in the ordinary course of business consistent with past practice
since such date, in each case of clauses (i) and (ii) which, individually or
in the aggregate, would not have a Material Adverse Effect on Premier.
SECTION 5.9 Absence of Certain Changes. Except as disclosed in the Premier
SEC Reports filed prior to the date of this Agreement and made available to
Ophthalmic, there has not been since March 31, 1997 any event that has had or
that is reasonably expected to have a Material Adverse Effect on Premier.
SECTION 5.10 Capitalization. The Premier Common Stock and Warrants (i) when
issued upon exchange for the Shares in accordance with the Offer and (ii) in
the case of Premier Common Stock if and when issued pursuant to the Warrants
in accordance with the respective terms thereof, will be duly authorized,
validly issued, fully paid, nonassessable and such issuances will not violate
any pre-emptive rights under applicable laws, Premier's Articles of
Incorporation or By-Laws, material contract or agreement or otherwise.
ARTICLE VI
COVENANTS
SECTION 6.1 Conduct of Business of Ophthalmic. Except as contemplated by
this Agreement or as expressly agreed to in writing by Premier, during the
period from the date of this Agreement to the earliest of (a) August 30, 1998,
(b) the termination of this Agreement, or (c) the closing of the Proposed
Merger, Ophthalmic will conduct its operations according to its ordinary and
usual course of business and consistent with past practice and will use its
reasonable efforts, to preserve intact the business organization of
Ophthalmic, to keep available the services of its and their present officers
and key employees, and to preserve the good will of those having business
relationships with it. Without limiting the generality of the foregoing, and
except as (y) otherwise expressly provided in this Agreement, or (z) required
by law, prior to the earlier of the Expiration Date or the termination of this
Agreement, Ophthalmic will not, without the prior written consent of Premier
(which consent shall not be unreasonably withheld):
(i) except with respect to annual bonuses made in the ordinary course of
business consistent with past practice, adopt or amend in any material
respect any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, pension, retirement, employment or
other employee benefit agreement, trust, plan or other arrangement for the
benefit or welfare of any director, officer or employee of Ophthalmic or
increase in any manner the compensation or fringe benefits of any director,
officer or employee of Ophthalmic or pay any benefit not required by any
existing agreement or place any assets in any trust for the benefit of any
director, officer or employee of Ophthalmic (in each case, except with
respect to employees, non-executive officers and directors in the ordinary
course of business consistent with past practice);
(ii) incur any material indebtedness for borrowed money (other than under
existing lines of credit or under that certain factoring arrangement with
Imperial Bank dated as November 18, 1997) or guarantee any such
indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of Ophthalmic,
guarantee any debt securities of another person, enter into any "keep
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well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of
any of the foregoing, or make any loans or advances outside the ordinary
course of business to, or capital contributions to, or investments in, any
other person;
(iii) expend funds for capital expenditures (as determined under
generally accepted accounting principles) in excess of $100,000 per fiscal
quarter;
(iv) sell, lease, license, mortgage or otherwise encumber or subject to
any lien or otherwise dispose of any of its properties or assets other than
immaterial properties or assets (or immaterial portions of properties or
assets), except (i) in the ordinary course of business consistent with past
practice or (ii) pursuant to contracts or agreements in force as of the
date of this Agreement;
(v) (x) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (y) split, combine
or reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (z) purchase, redeem or otherwise acquire
any shares of capital stock of Ophthalmic or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(vi) except pursuant to the exercise of outstanding Ophthalmic Options or
Ophthalmic Warrants, or as disclosed in Section 6.1 of the Ophthalmic
Disclosure Schedule, authorize for issuance, issue, deliver, sell or agree
or commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise), pledge or otherwise encumber any shares of its
capital stock or the capital stock of any of its subsidiaries, any other
voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities or any other securities or equity equivalents
(including without limitation stock appreciation rights);
(vii) except as contemplated by this Agreement, amend its Restated
Articles of Incorporation, By-Laws or equivalent organizational documents;
(viii) make or agree to make any acquisition of assets which is material
to Ophthalmic except for purchases of inventory, supplies and material in
the ordinary course of business;
(ix) settle, pay or compromise any claims, individually or in the
aggregate in an amount in excess of $100,000 (other than repayment of
Ophthalmic's indebtedness to Imperial Bank), other than in consultation and
cooperation with Premier, and, with respect to any such settlement, with
the prior written consent of Premier, which consent shall not be
unreasonably withheld;
(x) make any material Tax election or settle or compromise any material
Tax liability (whether with respect to amount or timing); or
(xi) except in the ordinary course of business, modify, amend or
terminate any material contract or waive or release or assign any material
rights or claims.
SECTION 6.2 Covenants of Premier. From the date of this Agreement until the
earliest of (a) August 30, 1998, (b) the termination of this Agreement, and
(c) the closing of the Proposed Merger, Premier covenants and agrees that it
shall (x) continue to conduct its business and the business of its
Subsidiaries in a manner designed in its reasonable judgment, to enhance the
long-term value of the Premier Common Stock and the business prospects of
Premier and its Subsidiaries, and (y) take no action which would (i)
materially adversely affect the ability of any party to this Agreement to
obtain any consents, approvals, or authorizations required for the
transactions contemplated hereby without imposition of a condition or
restriction of any materially adverse conditions or restrictions, or (ii)
materially adversely affect the ability of any party to perform its covenants
and agreements under this Agreement; provided, that the foregoing shall not
prevent Premier from discontinuing or disposing of any of its properties,
assets, or business if such action is, in the judgment of Premier, desirable
in the conduct of the business of Premier and its Subsidiaries.
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SECTION 6.3 Access to Information; Confidentiality. From the date hereof
until the earlier of the Expiration Date or the termination of this Agreement,
upon reasonable notice and subject to applicable laws, Premier and Ophthalmic
shall afford each other, and each other's accountants, counsel, and other
representatives, during normal business hours during the period of time prior
to the Expiration Date, reasonable access to all of its properties, books,
contracts, commitments, and records and, during such period, each of Premier
and Ophthalmic shall furnish promptly to the other (a) a copy of each report,
schedule, and other document filed or received by it during such period
pursuant to the requirements of federal and state securities laws, (b) a copy
of all filings made with any Governmental Entities in connection with the
transactions contemplated by this Agreement and all written communications
received from such Governmental Entities related thereto, and (c) all other
information concerning its business, properties, and personnel as such other
party may reasonably request. Each party hereto shall, and shall cause its
advisors and representatives to (x) conduct its investigation in such a manner
that will not unreasonably interfere with the normal operations, customers or
employee relations of the other and shall be in accordance with procedures
established by the parties having due regard for the foregoing, and (y)
refrain from using for any purposes other than as set forth in this Agreement
and shall treat as confidential all such information obtained by each
hereunder or in connection herewith and not otherwise known to them prior to
the Expiration Date. Except as otherwise agreed to in writing by Ophthalmic,
until the Expiration Date, Premier and its Subsidiaries and affiliates will be
bound by, and all information received with respect to Ophthalmic pursuant to
this Section 6.3 shall be subject to that certain confidentiality agreement
entered into with Premier on February 12, 1998 (the "Ophthalmic
Confidentiality Agreement"). Except as otherwise agreed to in writing by
Premier, until the Expiration Date, Ophthalmic will be bound by, and all
information received with respect to Premier pursuant to this Section 6.3
shall be subject to that certain Confidentiality Agreement entered into with
Ophthalmic on February 20, 1998 (the "Premier Confidentiality Agreement").
SECTION 6.4 Efforts.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement, including (i)
obtaining all necessary opinions, waivers, consents and approvals and effect
all necessary registrations and filings and (ii) defending any lawsuit or
other legal proceedings challenging this Agreement or the Offer. In case at
any time after the Expiration Date any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall take all such necessary
action. Without limiting the foregoing, each of Ophthalmic and Premier shall
make all necessary filings with Governmental Entities as promptly as
practicable in order to facilitate prompt consummation of the transactions
contemplated by the Offer and this Agreement. In addition, each of Premier and
Ophthalmic will use its reasonable best efforts (including, without
limitation, exchange of any required fees) and will cooperate fully with each
other to (i) comply as promptly as practicable with all governmental
requirements applicable to the transactions contemplated by the Offer and this
Agreement, including the making of all filings necessary or proper under
applicable laws and regulations to consummate and make effective the
transactions contemplated by the Offer and this Agreement, including, but not
limited to, cooperation in the preparation and filing of the Offer Documents,
the Schedule 14D-9 and any actions or filings related thereto, and any
amendments to any thereof, and (ii) obtain promptly all consents, waivers,
approvals, authorizations or permits of, or registrations or filings with or
notifications to (any of the foregoing being a "Consent"), any Governmental
Entity necessary for the consummation of the transactions contemplated by the
Offer and this Agreement. Premier and Ophthalmic shall furnish to each other
such necessary information and reasonable assistance as Premier or Ophthalmic
may reasonably request in connection with the foregoing. In addition, if at
any time prior to the Expiration Date any event or circumstance relating to
either Ophthalmic or Premier or any of their respective subsidiaries, should
be discovered by Ophthalmic or Premier, as the case may be, and which should
be set forth in an amendment to the Offer Documents or Schedule 14D-9, the
discovering party will promptly inform the other party of such event or
circumstance.
(b) Without limiting Section 6.4(a), Premier and Ophthalmic shall each (i)
take any and all steps necessary to avoid or eliminate each and every
impediment under any antitrust, competition, or trade regulation law that
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may be asserted by any Governmental Entity with respect to the Offer so as to
enable consummation thereof to occur as soon as reasonably possible, including
without limitation, proposing, negotiating, committing to and effecting, by
consent decree, hold separate order, or otherwise, the sale, divestiture or
disposition of such assets or businesses of Premier or Ophthalmic as may be
required in order to avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order in any suit or
proceeding, which would otherwise have the effect of preventing or delaying
consummation of the Offer or the Proposed Merger; and (ii) use its reasonable
best efforts to avoid the entry of, or to have vacated or terminated, any
decree, order, or judgment that would restrain, prevent or delay the
consummation of the Offer, including without limitation defending through
litigation on the merits any claim asserted in any court by any party. Each
party hereto shall promptly notify the other parties of any written
communication to that party from any Governmental Entity and permit the other
parties to review in advance any proposed communication to any Governmental
Entity. Premier and Ophthalmic shall not (and shall cause their respective
affiliates and representatives not to) agree to participate in any meeting
with any Governmental Entity in respect of any filings, investigation or other
inquiry unless it consults with the other party in advance and, to the extent
permitted by such Governmental Entity, gives the other party the opportunity
to attend and participate thereat. Each of the parties hereto will coordinate
and cooperate fully with the other parties hereto in exchanging such
information and providing such assistance as such other parties may reasonably
request in connection with the foregoing.
SECTION 6.5 Public Announcements. From the date of this Agreement, until the
Expiration Date or the termination of this Agreement, each of Ophthalmic and
Premier agree to consult promptly with each other prior to issuing any press
release or otherwise making any public statement with respect to the Offer,
the Proposed Merger and the other transactions contemplated hereby, agree to
provide to the other party for review a copy of any such press release or
statement, and shall not issue any such press release or make any such public
statement prior to such consultation and review, unless required by applicable
law or any listing agreement with a securities exchange.
SECTION 6.6 Employee Benefit Arrangements; Warrants. (a) Each of Ophthalmic
and Premier agrees that it will take all corporate action to amend or adopt
new stock options and/or stock incentive plans and warrants to provide for the
issuance of Premier Common Stock rather than Common Stock issuable upon
exercise of such plan or plans or warrants, effective as of the Expiration
Date as set forth below.
(i) Vested Options. The value of outstanding, unexercised, vested
Ophthalmic Options of a holder (the "Vested Options") shall be equal to the
product of (x) $2.18 multiplied by (y) the number of shares of Common Stock
issuable upon exercise thereof (the "Aggregate Ophthalmic Option Value").
On the Expiration Date, each Vested Option of a holder shall be exchanged
for Premier options (the "Premier Options") issuable for that number of
shares of Premier Common Stock (the "Vested Exchange Rate") equal to (xx)
the Aggregate Ophthalmic Option Value of a holder divided by (yy) the
Premier Average Price. The exercise price per share of Premier Common Stock
issuable to a holder upon exercise of the Premier Options (the "Vested
Exercise Price") shall be equal to (xxx) the aggregate exercise price for
all Vested Options exchanged by such holder divided by (yyy) the number of
shares of Premier Common Stock issuable to such holder upon exercise of the
Premier Options exchanged therefor. Ophthalmic Options granted under
Ophthalmic's 1997 Stock Option Plan shall vest on the Expiration Date and
shall be Vested Options.
(ii) Unvested Options. Unless earlier terminated, each outstanding,
unexercised, unvested Ophthalmic Option shall vest (a "Subsequently Vesting
Option") on the earlier of (aa) its scheduled vesting date and (bb) with
respect to any Ophthalmic employee who is employed by Ophthalmic, Premier
or any of their affiliates six (6) months after the Expiration Date, six
(6) months following the Expiration Date (the "Measurement Date"). On the
Measurement Date, the Subsequently Vesting Option of a holder shall be
exchanged for Premier Options issuable for that number of shares of Premier
Common Stock equal to (xx) the Aggregate Ophthalmic Option Value of a
holder attributable to such Subsequently Vesting Options divided by (yy)
the Premier Average Price calculated using the Measurement Date in lieu of
the Expiration Date. The exercise price per share of Premier Common Stock
issuable to a holder upon exercise of such
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Subsequently Vesting Options shall be equal to (xxx) the aggregate exercise
price for all Subsequently Vesting Options of such holder that vested on
such Measurement Date divided by (yyy) the number of shares of Premier
Common Stock issuable upon exercise of the Premier Options exchanged
therefor. Ophthalmic Options not granted under Ophthalmic's 1997 Stock
Option Plan shall vest as provided in this Section 6.1(a)(ii).
(iii) Exchange and Pricing Election. Notwithstanding anything to the
contrary contained in Section 6.6(a)(ii), each holder of Ophthalmic Options
not granted under Ophthalmic's 1997 Stock Option Plan may elect, by
providing written notice to Ophthalmic prior to the Expiration Date, to
have such holder's Ophthalmic Options exchanged, when vested as provided in
Section 6.6(a)(ii), for Premier Options at the Vested Exchange Rate for an
exercise price equal to the Vested Exercise Price.
(iv) Termination of Employment. For a period of six (6) months following
the Expiration Date, Ophthalmic Options issued to officers or employees of
Ophthalmic, which have not earlier vested as provided herein, shall vest on
the date of termination of such officer or employee "without cause" by
Ophthalmic or Premier, as determined in the reasonable discretion of
Ophthalmic, in which case such Ophthalmic Options shall be exchanged in
accordance with Section 6.6(a)(ii) (with the date of such termination being
the Measurement Date), or Section 6.6(a)(i) if a valid election is made by
such officer or employee pursuant to Section 6.6(a)(iii).
(b) Following the Expiration Date, Premier shall provide or cause its
Subsidiaries to provide generally to officers and employees of Ophthalmic
employee benefits, including without limitation, pension benefits, health and
welfare benefits, life insurance and vacation, and severance arrangements, on
terms and conditions which when taken as a whole are no less favorable than
those currently provided by Premier and its Subsidiaries to their similarly
situated officers and employees. Premier does not currently provide its
officers and employees with pension benefits or severance plans. For purposes
of participation and vesting under any employee benefit plan of Ophthalmic and
its Subsidiaries, the service of the employees of Ophthalmic prior to the
Expiration Date shall be treated as service with the Premier or its
subsidiaries participating in such employee benefit plans. Premier shall, and
shall cause its Subsidiaries to, honor in accordance with their terms, all
Employment Contracts, and all provisions for vested benefits or other vested
amounts earned or accrued through the Expiration Date under the Plans.
(c) For a period of ninety (90) days following the Expiration Date, Premier
shall provide or cause its Subsidiaries to provide generally to officers and
employees of Ophthalmic severance benefits equal to one week's pay for each
full year of service to Ophthalmic to each such officer or employee that is
terminated without cause by Premier or its Subsidiary. The phrase "without
cause" shall not apply to those officers and employees that are terminated
because they do not elect to work for Premier or its Subsidiaries.
SECTION 6.7 Notification of Certain Matters. Premier and Ophthalmic shall
promptly notify each other orally and in writing of (i) the occurrence or non-
occurrence of any fact or event which would be reasonably likely (A) to cause
any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Expiration Date or (B) to cause any covenant, condition or agreement under
this Agreement not to be complied with or satisfied in any material respect
and (ii) any failure of Ophthalmic or Premier, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that no such notification shall
affect the representations or warranties of any party or the conditions to the
obligations of any party hereunder. Each of Ophthalmic and Premier shall give
prompt notice to the other of any notice or other communication from any third
party alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement.
SECTION 6.8 Rights Agreement. Ophthalmic covenants and agrees that, unless
the Board of Directors of Ophthalmic determines in good faith by a majority
vote that taking such action is necessary in the exercise of its fiduciary
obligations under applicable law, it will not (i) redeem the Rights, (ii)
amend the Rights Agreement except as provided in Section 4.16, or (iii) take
any action which would allow any Person (as defined in the
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Rights Agreement) other than Premier to acquire beneficial ownership of 20% or
more of the Common Stock without causing a Distribution Date (as such term is
defined in the Rights Agreement) to occur.
SECTION 6.9 State Takeover Laws. Ophthalmic covenants and agrees that,
unless the Board of Directors of Ophthalmic determines in good faith by a
majority vote that taking such action is proscribed in the exercise of its
fiduciary obligations under applicable law, it shall, upon the request of
Premier, take all reasonable steps to assist in any challenge by Premier to
the validity or applicability to the transactions contemplated by this
Agreement, including the Offer and the Proposed Merger, of any state takeover
law.
SECTION 6.10 No Solicitation.
(a) Ophthalmic represents and warrants to, and covenants and agrees with,
Premier that Ophthalmic does not have any agreement, arrangement or
understanding with any potential third party acquiror that, directly or
indirectly, would be violated, or require any exchanges, by reason of the
execution, delivery and/or consummation of this Agreement. Ophthalmic shall,
and it shall cause its officers, directors, employees, investment bankers,
attorneys and other agents and representatives to, immediately cease any
existing discussions or negotiations with any person other than Premier (a
"Third Party") heretofore conducted with respect to any Acquisition
Transaction (as hereinafter defined). Ophthalmic shall not, and it shall
prohibit its officers, directors, employees, investment bankers, attorneys and
other agents and representatives from taking any action to, directly or
indirectly, (w) solicit, initiate, continue, facilitate or encourage
(including by way of furnishing or disclosing non-public information) any
inquiries, proposals or offers from any Third Party with respect to any
acquisition or purchase of a material portion of the assets (other than in the
ordinary course of business) or business of, or any significant equity
interest in (including by way of a tender offer), or any merger, consolidation
or business combination with, or any recapitalization or restructuring, or any
similar transaction involving, Ophthalmic (the foregoing being referred to
collectively as an "Acquisition Transaction"), or (x) negotiate, explore or
otherwise communicate in any way with any Third Party with respect to any
Acquisition Transaction, (y) enter into, approve or recommend any agreement,
arrangement or understanding requiring Ophthalmic to abandon, terminate or
fail to recommend that its stockholders accept the Offer or any other
transaction contemplated hereby, or (z) withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to Premier, the approval
or recommendation by the Ophthalmic Board of the Offer, or this Agreement;
provided, however, that nothing herein shall prevent the Ophthalmic Board from
taking, and disclosing to Ophthalmic's shareholders, a position contemplated
by Rules 14d-9 and 14e-2 promulgated under the Exchange Act with respect to
any tender offer. Ophthalmic will promptly notify Premier of the receipt of
any proposal relating to an Acquisition Transaction. Notwithstanding anything
to the contrary in the foregoing, Ophthalmic may, in response to an
unsolicited written proposal with respect to an Acquisition Transaction
involving an Acquisition Transaction from a Third Party (i) furnish or
disclose non-public information to such Third Party and (ii) negotiate,
explore or otherwise communicate with such Third Party, in each case only if
(a) after being advised (x) by its outside counsel with respect to its
fiduciary obligations and (y) with respect to the financial terms of any such
proposed Acquisition Transaction, the Board of Directors of Ophthalmic
determines in good faith by a majority vote that taking such action is
necessary in the exercise of its fiduciary obligations under applicable law
(the proposal with respect to an Acquisition Transaction meeting the
requirements of this clause (a), a "Superior Proposal") and (b) prior to
furnishing or disclosing any non-public information to, or entering into
discussions or negotiations with, such Third Party, Ophthalmic receives from
such Third Party an executed confidentiality agreement (which Ophthalmic is
hereby expressly permitted to negotiate with such party) with terms no less
favorable in the aggregate to Ophthalmic than those contained in the
Ophthalmic Confidentiality Agreement, but which confidentiality agreement
shall not provide for any exclusive right to negotiate with Ophthalmic or any
exchanges by Ophthalmic and need not contain any "standstill" or similar
provisions. In addition, the Ophthalmic Board may approve or recommend (and,
in connection therewith withdraw or modify its approval or recommendation of
the Offer or this Agreement) a Superior Proposal and may terminate this
Agreement solely to enter into a definitive agreement with respect to a
Superior Proposal provided, however, that Ophthalmic shall not, and shall
cause its affiliates not to, enter into a definitive agreement with respect to
a Superior Proposal unless Ophthalmic concurrently terminates this Agreement
in accordance with the terms hereof and pays any Termination Fee required
under Section 8.3(b).
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(b) Ophthalmic shall promptly (but in any event within one business day of
Ophthalmic becoming aware of same) advise Premier of the receipt by
Ophthalmic, any of its subsidiaries or any of Ophthalmic's bankers, attorneys
or other agents or representatives of any written inquiries or proposals
relating to an Acquisition Transaction and any actions taken pursuant to
Section 6.9(a), and shall promptly (but in any event within one business day
of Ophthalmic becoming aware of same) provide Premier with a copy of any such
written inquiry or proposal. Ophthalmic shall keep Premier reasonably informed
of the status and content of and material developments (including the calling
of meetings of the Ophthalmic Board to take action with respect to such
Acquisition Transaction) with respect to any discussions regarding any
Acquisition Transaction with a Third Party. Ophthalmic agrees that it will not
enter into any agreement with respect to a Superior Proposal unless and until
Premier has been given notice of the identity of the parties making such
Superior Proposal, the material terms thereof and material developments
referred to in the preceding sentence at least two business days prior to the
entering into such agreement.
SECTION 6.11 Indemnification.
(a) Premier shall, and in the event of a Proposed Merger, shall cause the
surviving corporation of the Proposed Merger (and its successors and assigns)
to, indemnify, defend, and hold harmless the present directors, officers,
employees, and agents of Ophthalmic (each, an "Indemnified Party") after the
Expiration Date against all costs, fees, or expenses (including reasonable
attorneys' fees) judgments, fines, penalties, losses, damages, liabilities,
and amounts paid in settlement in connection with any claim, action, suit,
proceeding, or investigation, whether civil, administrative, or investigative,
arising out of actions or omissions occurring at or prior to the Expiration
Date (including the transactions contemplated by this Agreement), unless such
actions or omissions constitute fraud or willful misconduct, to the full
extent permitted under California law and by Ophthalmic's Restated Articles of
Incorporation and By-Laws as in the effect as of the date hereof, including
any provisions relating to advances of expenses incurred in the defense of any
action, suit, or proceeding for a period of five years after the date hereof.
If indemnification is sought hereunder, the Indemnified Party shall notify
Premier of the commencement of the litigation, proceeding, or other action, or
any overt threat with respect to any of the foregoing; provided, however, that
the failure to provide such notification shall not relieve Premier from its
indemnification obligations hereunder or otherwise to such Indemnified Party
unless and only to the extent that such failure shall materially and adversely
affect the ability of Premier to defend such litigation, proceeding, or other
action. Following such notification, Premier may elect to assume the defense
of such litigation, proceeding, or other action (and the costs related
thereto) and, upon such defense of such election, Premier shall not be liable
for any legal costs subsequently incurred by such Indemnified Party (other
than the costs of investigation or the production of documents or witnesses)
unless (i) Premier fails to provide legal counsel reasonably satisfactory to
such Indemnified Party in a timely manner, or (ii) such Indemnified Party
shall have reasonably concluded that (A) the representation of such
Indemnified Party by legal counsel selected by Premier would be inappropriate
due to actual or potential conflicts of interest or (B) there may be a legal
defense available to such Indemnified Party that are different from or
additional to those available to the Premier or any other Indemnified Party
represented by such legal counsel. Nothing set forth herein shall preclude any
Indemnified Party from retaining its own counsel at its own expense. Premier
shall, and shall cause the surviving corporation of any Proposed Merger and
all other relevant Premier Subsidiaries to apply such rights of
indemnification in good faith and to the fullest extent permitted by
applicable law.
(b) Incident to any information furnished or disclosed by Premier or any
Premier Subsidiary in connection with the Offer Documents and the Schedule
14D-9, and subject to applicable law, Premier shall indemnify, defend, and
hold harmless Indemnified Parties against all costs, fees, or expenses
(including reasonable attorneys' fees), judgments, fines, penalties, losses,
damages, liabilities, and amounts paid in settlement in connection with any
claim, action, suit, proceeding, or investigation, whether civil,
administrative, or investigative, arising out of or under the securities laws
or any state blue sky or securities laws based in whole or in part on (i) any
untrue statement or alleged untrue statement of a material fact contained in
such documents including any amendment or supplement to such document, (ii)
any omission or alleged omission to state in such documents a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (iii) any violation of
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Premier or any Premier Subsidiary of the securities laws or any state blue sky
or securities laws in connection with such documents; provided, however, that
neither Premier or any Premier Subsidiary will be liable in any such case to
the extent that any such claim, action, suit, or investigation is based on any
untrue statement or alleged untrue statement or omission or alleged omission
made in such Offer Document or Schedule 14D-9 or any amendment or supplement
thereto in reliance upon and in conformity with information furnished in
writing to Premier or any Premier Subsidiary by Ophthalmic or any Indemnified
Party specifically for use therein.
(c) If Premier or the surviving corporation in any Proposed Merger or any of
its successors or assigns shall consolidate with or merge into any other
corporation or entity and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any person, corporation or entity, then in
each case, proper provision shall be made so that the successors and assigns
of Premier shall assume the obligations set forth in this Section 6.11.
(d) For five years from the Expiration Date, Premier shall use its best
efforts to maintain in effect, if available, directors' and officers'
insurance liability in an amount equal to $2,000,000, covering those persons
who are currently covered by the directors' and officers' liability insurance
policy maintained by Ophthalmic.
(e) The provisions of this Section 6.11 are intended to be for the benefit
of and shall be enforceable by, each Indemnified Party, his or her heirs and
representatives, and shall survive the consummation of the Offer and be
binding on all successors and assigns of Premier and the surviving corporation
of any Proposed Merger.
SECTION 6.12 Conditions. Prior to consummating the exchange pursuant to the
Offer, Premier shall use its best efforts to (a) cause the Premier Common
Stock and the Premier Common Stock issuable upon exercise of the Warrants to
be listed on NASDAQ, (b) cause the Form S-4 to have been declared effective by
the Commission, and (c) deposit the Offer Consideration with the Exchange
Agent.
ARTICLE VII
CONDITIONS TO CONSUMMATE THE TRANSACTIONS HEREUNDER
SECTION 7.1 Conditions. The respective obligations of each of Premier and
Ophthalmic to consummate the transactions contemplated hereby are subject to
the satisfaction, at or before the time each action is to be taken, of the
condition that no statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated or enforced by any
court of competent jurisdiction or other Governmental Entity which prohibits
the consummation of the Offer or any other transactions contemplated hereunder
provided, however, that Ophthalmic and Premier shall use their reasonable best
efforts to have any such order, decree, or injunction vacated.
SECTION 7.2 Conditions to Obligations of Premier. In the event the Offer
shall not have been terminated, the obligations of Premier to make the Offer
and to consummate the exchange pursuant to the Offer shall be further subject
to the following conditions:
(a) Performance of Obligations of Ophthalmic. Ophthalmic shall have
performed the obligations required to be performed by it under Section 4.16.
(b) Private Acquisition. The Private Acquisition shall have been
consummated.
SECTION 7.3 Conditions of Premier to Close the Offer. Prior to consummating
the exchange pursuant to the Offer, Premier shall have (a) caused the Premier
Common Stock, the Premier Common Stock issuable upon exercise of the Warrants
and the Warrants to be listed on NASDAQ, (b) caused the Form S-4 to have been
declared effective by the Commission, and (c) deposited the Offer
Consideration with the Exchange Agent.
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ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.1 Termination. This Agreement shall be terminated if the Offer
shall not have been consummated by August 21, 1998, if each party has used its
best efforts to consummate the transaction, and may be terminated:
(a) by the mutual written consent of Premier and Ophthalmic, by action of
their respective Boards of Directors;
(b) by Ophthalmic, if Ophthalmic is not in material breach of any of its
representations contained in this Agreement and if (i) Premier fails to
commence the Offer as provided in Section 1.1, or (ii) at any time following
the Expiration Date, as it may be extended pursuant to Section 1.1(c), Premier
shall not have accepted for exchange and exchanged the Offer Consideration for
all Shares tendered pursuant to the Offer in accordance with the terms hereof
and thereof, or (iii) if Premier should withdraw, abandon, or terminate the
Offer without purchasing all Shares validly tendered pursuant to the Offer;
provided that all conditions to the Offer shall have been satisfied or waived
in accordance with the terms hereof;
(c) by either Premier or Ophthalmic, if any court of competent jurisdiction
in the United States or other United States Governmental Entity has issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Offer and such order, decree, ruling or other action
shall have become final and nonappealable; provided, however, that the party
seeking to terminate this Agreement shall have used its reasonable best
efforts to remove or lift such order, decree, ruling or other action;
(d) by Ophthalmic if, prior to the acceptance for exchange of Common Stock
pursuant to the Offer, (i) there shall have occurred, on the part of Premier,
a material breach of any representation or warranty, covenant or agreement
contained in this Agreement which is not curable or (ii) Ophthalmic (A) to the
extent permitted by Section 6.10, enters into a definitive agreement with
respect to a Superior Proposal and (B) concurrently pays any Termination Fee
required under Section 8.3(b); or
(e) by Premier, prior to the exchange for Common Stock pursuant to the
Offer, if the Ophthalmic Board shall have withdrawn or modified (including by
amendment of the Schedule 14D-9) in a manner adverse to Premier its approval
or recommendation of the Offer or, this Agreement shall have approved or
recommended Superior Proposal, or shall have resolved to effect any of the
foregoing.
SECTION 8.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith become void
and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, other than the provisions in Sections
8.2, 8.3, 9.2, 9.3, 9.5, 9.6, 9.10 and 9.11, and the last sentence in Section
6.3, which shall survive any such termination. Nothing contained in this
Section 8.2 shall relieve any party from liability for any breach of this
Agreement.
SECTION 8.3 Fees and Expenses.
(a) Except as otherwise specifically provided herein, all costs and expenses
incurred in connection with the Offer, this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses.
(b) In the event that this Agreement is terminated as a result of a material
breach by Ophthalmic, then Ophthalmic shall promptly pay to Premier in lieu of
any other right to damages, a termination fee of $500,000. Thereafter,
Ophthalmic shall promptly pay to Premier an additional $250,000 (collectively,
the "Termination Fee") if Ophthalmic enters into a definitive agreement with
respect to a Superior Proposal within six (6) months of the date of
termination. For purposes of this Section 8.3, a "material breach by
Ophthalmic" shall include any action by Ophthalmic, its officers, directors,
employees, investment bankers, attorneys and other agents and representatives
(i) to redeem the Rights, (ii) to amend, terminate or waive rights under the
Rights Agreement (other than the Rights Agreement Amendment), (iii) to
solicit, initiate, continue, facilitate or encourage
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(including by way of furnishing or disclosing non-public information) any
Acquisition Transaction, (iv) to negotiate, explore or otherwise communicate
in any way with any Third Party with respect to any Acquisition Transaction,
(v) enter into, approve or recommend any agreement, arrangement or
understanding requiring Ophthalmic to abandon, terminate or fail to recommend
that its stockholders accept the Offer or any other transaction contemplated
hereby, or (vi) withdraw or modify (including by Amendment of the Schedule
14D-9), or propose publicly to withdraw or modify, in a manner adverse to
Premier, the approval or recommendation by the Ophthalmic Board of the Offer
or this Agreement.
(c) In the event that this Agreement is terminated as a result of a material
breach by Premier, then Premier shall promptly pay to Ophthalmic in lieu of
any other right to damages, a termination fee of $500,000. For purposes of
this Section 8.3, a "material breach by Premier" shall include any action by
Premier to withdraw the Offer unless (i) following good faith efforts by
Premier, all of the conditions set forth in Annex I have not been satisfied,
or (ii) a material breach by Ophthalmic has occurred.
SECTION 8.4 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties.
SECTION 8.5 Extension; Waiver. Subject to Section 1.3(c), at any time
Premier and Ophthalmic may (i) extend the time for the performance of any of
the obligations or other acts of the other, (ii) waive any inaccuracies in the
representations and warranties contained herein of the other or in any
document, certificate or writing delivered pursuant hereto by the other, or
(iii) waive compliance by the other with any of the agreements or conditions.
Any agreement on the part of any party to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed on behalf of
such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Expiration Date. Notwithstanding the foregoing, the agreements set forth
in Sections 6.5, 8.3(a), 9.1 and 9.2 shall, and if the Offer closes, Sections
5.4, 5.5 and 6.6, shall, survive indefinitely. If the Offer closes, Section
6.11 shall survive until the expiration of the applicable statute of
limitations period. The agreements set forth in Section 9.3 shall survive as
provided therein.
SECTION 9.2 General Release of Ophthalmic Executive Officers and Directors.
(a) Premier and Ophthalmic hereby release the present officers and directors
of Ophthalmic (each, a "Releasee"), of and from all actions, causes of action,
suits, demands and all other claims whatsoever which Premier and/or Ophthalmic
ever had, now has, or which Premier or Ophthalmic hereafter can, shall or may
have against any Releasee in connection with such Releasee's role as officer
or director of Ophthalmic, arising out of actions or omissions occurring on or
prior to the date of this Agreement, unless such actions or omissions
constitute self-dealing, fraud or willful misconduct.
(b) Premier and Ophthalmic hereby waive any rights they may have under
Section 1542 of the California Civil Code, which reads:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
SECTION 9.3 Entire Agreement; Assignment.
(a) This Agreement (including the documents and the instruments referred to
herein) constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties with
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respect to the subject matter hereof and thereof, except for the Ophthalmic
Confidentiality Agreement, the Premier Confidentiality Agreement and
provisions of that certain standstill agreement entered into by and between
Premier and Ophthalmic in February 1998 (the "Standstill Agreement"), which
continue in effect. The Termination Date (as provided in the Standstill
Agreement) is hereby extended to that date which ends two (2) months following
the earlier of (i) the termination of this Agreement and (ii) the Expiration
Date if Premier shall not have accepted for exchange and exchanged the Offer
Consideration for all Shares tendered pursuant to the Offer in accordance with
terms hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or obligations
hereunder will be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other party
(except that Premier may assign its rights, interest and obligations to any
affiliate or direct or indirect subsidiary of Premier without the consent of
Ophthalmic provided that no such assignment shall relieve Premier of any
liability for any breach by such assignee). Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
SECTION 9.4 Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
SECTION 9.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or telecopier to the
respective parties as follows:
If to Premier:
Premier Laser Systems, Inc.
3 Morgan
Irvine, California 92718
Attention: President and Chief Executive Officer
Facsimile Number: (714) 952-7218
with a copy to:
Paul, Hastings, Janofsky & Walker LLP
695 Town Center Drive
17th Floor
Costa Mesa, California 92626
Attn: William J. Simpson, Esq.
Facsimile Number: (714) 979-1921
If to Ophthalmic:
Ophthalmic Imaging Systems
221 Lathrop Way, Suite I
Sacramento, California 95815
Attn: President
Facsimile Number: (916) 646-0207
with a copy to:
Carlton Fields, Attorneys at Law
One Harbour Place
777 S. Harbour Island Boulevard
Tampa, Florida 33602-5799
Attention: Richard A. Denmon, Esq.
Facsimile Number: (813) 229-4133
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or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above;
provided that notice of any change of address shall be effective only upon
receipt thereof.
SECTION 9.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
SECTION 9.7 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
SECTION 9.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 9.9 Parties in Interest. This Agreement, except for Sections 6.6,
6.11 and 9.2, shall be binding upon and inure solely to the benefit of each
party hereto, and nothing in this Agreement, express or implied, is intended
to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
SECTION 9.10 Certain Definitions. As used in this Agreement:
(a) the term "affiliate," as applied to any person, shall mean any other
person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise;
(b) the term "Person" or "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act); and
(c) the term "Subsidiary" or "subsidiaries" means, with respect to Premier
or any other person, any corporation, partnership, joint venture or other
legal entity of which Premier, or such other person, as the case may be
(either alone or through or together with any other subsidiary), owns,
directly or indirectly, stock or other equity interests the holders of which
are generally entitled to more than 50% of the vote for the election of the
board of directors or other governing body of such corporation or other legal
entity.
SECTION 9.11 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy
to which they are entitled at law or in equity, except for termination fees
and expenses.
SECTION 9.12 Fiduciary Duty. Notwithstanding anything to the contrary in
this Agreement, no provision of this Agreement shall be construed to prevent
the exercise by any director of Ophthalmic (or the actions of Ophthalmic
thereon) of his or her fiduciary duty as contemplated to be exercised under
Section 6.10 of this Agreement.
SECTION 9.13 Obligation of Premier. Whenever this Agreement requires Premier
to take any action, such requirement shall be deemed to include an undertaking
by Premier to cause the Premier Subsidiaries to take such action.
[Signature page follows]
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[SIGNATURE PAGE--STOCK PURCHASE AGREEMENT]
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized,
all as of the day and year first above written.
PREMIER LASER SYSTEMS, INC.
/s/ Colette Cozean
By: _________________________________
Colette Cozean, Ph.D.
Chief Executive Officer
OPHTHALMIC IMAGING SYSTEMS
/s/ Steven Verdooner
By: _________________________________
Steven Verdooner
Chief Executive Officer
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ANNEX I
Conditions to the Offer. Notwithstanding any other provisions of the Offer,
Premier shall not be required to accept for exchange or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c)
promulgated under the Exchange Act, exchange for any tendered Shares and may
terminate or amend the Offer, if (i) the Rights have not been redeemed or
invalidated or are otherwise inapplicable to the Offer, (ii) Premier does not
receive all applicable governmental and Nasdaq authorizations, consents,
orders and appraisals, including the continued effectiveness of its Form S-4
filed in connection with the transactions contemplated by the Agreement, (iii)
at any prior to the time of acceptance for exchange or exchange for any
Shares, any of the following events shall occur:
(a) there shall have been instituted or be pending any action or
proceeding before any court or governmental, administrative or regulatory
authority or agency, domestic or foreign (each, a "Governmental Entity"),
or by any other person, domestic or foreign, before any court or
Governmental Entity, (i) challenging or seeking to, or which is reasonably
likely to, make illegal, materially delay or otherwise directly or
indirectly restrain or prohibit or seeking to, or which is reasonably
likely to, impose voting, procedural, price or other requirements, in
addition to those required by federal securities laws and the CGCL (each as
in effect on the date of the Prospectus/Offer to Exchange is filed with the
SEC in connection with the Offer), in connection with the making of the
Offer, the acceptance for exchange of, or exchange for, any Shares by
Premier or any other affiliate of Premier or other business combination
with Ophthalmic, or seeking to obtain material damages in connection
therewith; (ii) seeking to prohibit or limit materially the ownership or
operation by Ophthalmic, Premier or any of their subsidiaries of all or any
material portion of the business or assets of Ophthalmic, Premier or any of
their subsidiaries, or to compel Ophthalmic, Premier or any of their
subsidiaries to dispose of or hold separate all or any material portion of
the business or assets of Ophthalmic, Premier or any of their subsidiaries;
(iii) seeking to impose or confirm limitations on the ability of Premier or
any other affiliate of Premier to exercise effectively full rights of
ownership of any Shares (including the Rights associated with Shares),
including, without limitation, the right to vote any Shares acquired by
Premier pursuant to the Offer or otherwise on all matters properly
presented to Ophthalmic's shareholders; (iv) seeking to require divestiture
by Premier or any other affiliate of Premier of any Shares; (v) seeking any
material diminution in the benefits expected to be derived by Premier, or
any other affiliate of Premier as a result of the transactions contemplated
by the Offer or any other similar business combination with Ophthalmic;
(vi) otherwise directly or indirectly relating to the Offer or which
otherwise, in the reasonable judgment of Premier and Ophthalmic, might
materially adversely affect Ophthalmic or Premier, or any other affiliate
of Premier; or (vii) which otherwise, in the reasonable judgment of Premier
and Ophthalmic, is reasonably likely to materially adversely affect the
business, operations (including, without limitation, results of
operations), properties (including, without limitation, intangible
properties), condition (financial or otherwise), assets or liabilities
(including, without limitation, contingent liabilities) or prospects of
either Ophthalmic or Premier;
(b) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to (i) Premier, Ophthalmic or any subsidiary or affiliate of
Premier or (ii) the Offer or other business combination by Premier or any
affiliate of Premier with Ophthalmic, by any legislative body, court,
government or governmental, administrative or regulatory authority or
agency, domestic or foreign, which, in the sole judgment of Premier, is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (vii) of paragraph (a)
above;
(c) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on Nasdaq, the New York
Stock Exchange (NYSE) or any other securities exchange, (ii) any decline,
measured from the close of business on February 25, 1998, in the Standard &
Poor's 500 Index by an amount in excess of 20%, (iii) any material adverse
change in United States currency exchange rates or a suspension of, or
limitation on, currency exchange markets, (iv) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (v) any limitation (whether or not
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mandatory) by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, on, or other event that, in the
sole judgment of Premier, might affect the extension of credit by banks or
other lending institutions, (vi) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States or (vii) in the case of any of the
foregoing existing on February 25, 1998, a material acceleration or
worsening thereof;
(d) Ophthalmic shall have, directly or indirectly, (i) split, combined or
otherwise changed, or authorized or proposed a split, combination or other
change of, the Shares or its capitalization, (ii) issued or sold, or
authorized or proposed the issuance, distribution or sale of, additional
Shares (other than the issuance of Shares under options and warrants
outstanding prior to the date of this Offer to Exchange, in accordance with
the terms of such options as such terms have been publicly disclosed prior
to the date of this Offer to Exchange), shares of any other class of
capital stock, other voting securities or any securities convertible into,
or rights, warrants or options, conditional or otherwise, to acquire, any
of the foregoing, (iii) declared or paid, or proposed to declare or pay,
any dividend or other distribution, whether payable in cash, securities or
other property, on or with respect to any shares of capital stock of
Ophthalmic, (iv) altered or proposed to alter any material term of any
outstanding security (including the Rights) other than to amend the Rights
Agreement to make the Rights inapplicable to Premier, (v) authorized,
recommended, proposed or entered into an agreement, agreement in principle
or arrangement or understanding with respect to any merger, consolidation,
liquidation, dissolution, business combination, acquisition of assets,
disposition of assets, release or relinquishment of any material
contractual or other right of Ophthalmic or any comparable event not in the
ordinary course of business, (vi) authorized, recommended, proposed or
entered into, or announced its intention to authorize, recommend, propose
or enter into, any agreement, arrangement or understanding with any person
or group that in the sole judgment of Premier could adversely affect either
the value of Ophthalmic or any of its subsidiaries, joint ventures or
partnerships or the value of the Shares to Premier or any affiliate of
Premier, (vii) entered into or amended any employment, change in control,
severance, executive compensation or similar agreement, arrangement or plan
with or for the benefit of any of its employees, consultants or directors,
or made grants or awards thereunder, other than in the ordinary course of
business or entered into any agreements, arrangements or plans so as to
provide for increased or accelerated benefits to any such persons, (viii)
except as may be required by law, taken any action to terminate or amend
any employee benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended) of Ophthalmic or any of
its subsidiaries, or Premier shall have become aware of any such action
that was not disclosed in publicly available filings prior to the date of
this Offer to Exchange, or (ix) except as contemplated by this Agreement
amended or authorized or proposed any amendment to Ophthalmic's Restated
Articles of Incorporation or Bylaws, or Premier shall have become aware
that Ophthalmic shall have proposed or adopted any such amendment that was
not disclosed in publicly available filings prior to the date of the
Prospectus/Offer to Exchange;
(e) any person or group shall have entered into a definitive agreement or
an agreement in principle or made a proposal with respect to a tender offer
or exchange offer or a merger, consolidation or other business combination
with Ophthalmic;
(f) any approval, permit, authorization or consent of any governmental
authority or agency needed for the Offer shall not have been obtained on
terms satisfactory to Premier or Premier shall have been notified by
Ophthalmic that such terms are not satisfactory to Ophthalmic;
(g) the Agreement shall have been terminated in accordance with its
terms; or
(h) Ophthalmic's Board of Directors shall have publicly withdrawn or
modified in any manner adverse to Premier its recommendation that
shareholders accept the Offer.
The foregoing conditions (including those set forth in clauses (i) and (ii) of
the initial paragraph) are for the benefit of Premier and may be asserted by
Premier regardless of the circumstances giving rise to any such conditions
and, consent may be waived by Premier, in whole or in part, at any time and
from time to time, in their reasonable discretion, in each case, subject to
the terms of the Agreement. The failure by Premier at any
27
<PAGE>
time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time.
The capitalized terms used in this Annex I shall have the meanings set forth
in the Agreement to which it is annexed.
28
<PAGE>
EXHIBIT "A"
FORM OF CLASS C WARRANT
<PAGE>
EXHIBIT "B"
FORM OF CLASS D WARRANT
<PAGE>
EXHIBIT 99.2
CLASS C WARRANT
TO PURCHASE COMMON STOCK
NO PAR VALUE OF
PREMIER LASER SYSTEMS, INC.
__ Warrants (Partial Shares)/1// __________, 1998
This certifies that _________________________________________ ("Holder"),
for value received, is entitled, subject to the other terms set forth below, to
purchase from Premier Laser Systems, Inc., a California corporation (the
"Company"), having a place of business at 3 Morgan, Irvine, California 92618, at
any time from the Notice Date defined below until 5:00 P.M. (California time) on
the ninetieth day following the Notice Date (the "Expiration Date"), unless
earlier terminated pursuant to the provisions of Section 2.4 hereof, at which
time this Warrant shall expire and become void, a fraction of a share, of the
Company's Common Stock, no par value (the "Common Stock") in an amount
determined pursuant to Section 2 below. The purchase or exercise price per
share (the "Exercise Price") shall be one cent ($0.01) regardless of the number
of Warrants which must be exercised to obtain a Warrant Share (as defined
below).
The number and character of the securities purchasable upon exercise of
this Warrant are subject to adjustment as provided in Section 3.3 hereof.
This Warrant is subject to the following terms and conditions:
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
1.1 DURATION OF EXERCISE OF WARRANT. This Warrant is exercisable at
the option of Holder at any time from the Notice Date until 5:00 P.M.
(California time) on the Expiration Date for all or a portion of the shares of
Common Stock that may be purchased hereunder. This Warrant shall be exercised
upon surrender to the Company of this Warrant properly endorsed with a completed
and executed Subscription Agreement in the form attached hereto as Exhibit A,
and upon payment in cash or cashier's check of the aggregate Exercise Price for
the number of shares of Common Stock for which this Warrant is being exercised
(the "Warrant Shares"). The Company agrees that any Warrant Shares purchased
under this Warrant shall be deemed to be issued to Holder as the record
/1// (Does not represent ___ shares - See Paragraph 2 for computation.)
-1-
<PAGE>
2. NOTICE OF EXERCISABILITY AND DETERMINATION OF NUMBER OF WARRANT SHARES.
2.1 Condition to Exercise. This Warrant shall not become exercisable unless
the Net Sales of Qualified Products (both as defined herein) for the twelve
(12) month period ended August 31, 1998 (the "Determination Date") equal or
exceed Seven Million Dollars ($7,000,000). "Net Sales" shall mean net sales of
Qualified Products as determined by generally accepted accounting principles,
as consistently applied by Ophthalmic Imaging Systems ("OIS"). "Qualified
Products" shall mean products sold by and in connection with the current core
business of OIS including: (i) products related to or arising out of such
current core products; (ii) products under development as of the date hereof;
and (iii) those same products if sold by any successor owner of OIS'
operations. As soon as practicable after the Determination Date, the Company
shall determine the Net Sales of Qualified Products for the twelve (12) month
period ended on the Determination Date and shall mail to the holder of the
Warrant, and shall publish in a newspaper of national circulation a notice
(the "Exercise Notice") stating whether this condition to exercisability has
been met. The date of such mailing and publication is the "Notice Date."
2.2 Shares Issuable. To determine the number of Warrant Shares for which the
Warrant may be exercised, the Company shall determine the average Closing
Price (as defined below) of the Common Stock for the (i) fifteen (15)
consecutive trading days immediately preceding the Determination Date and (ii)
the thirty (30) consecutive trading days ending fifteen (15) trading days
prior to the Determination Date, and shall calculate the number of shares of
the Common Stock, or fraction thereof, which could be purchased at the greater
of such two average Closing Prices for a purchase price of twenty-five cents
($0.25). The result of this calculation shall be the "Share Factor." The Share
Factor shall be multiplied by the number of Warrants stated on the first page
of this Warrant to determine the number of whole shares for which this Warrant
may be exercised. Fractional shares resulting from aggregate exercises shall
be rounded to the nearest whole share.
2.3 Notice. The Exercise Notice sent to the Holder shall state the number of
Warrant Shares for which the Warrant has become exercisable.
2.4 Exercise. If the Exercise Notice states that the condition stated in
Section 2.1 has not been satisfied, then the Notice Date shall become the
Expiration Date, this Warrant shall expire effective as of the Notice Date and
the Holder shall have no further rights hereunder. If the Exercise Notice
states the condition has been met, this Warrant shall thereafter be
exercisable for the number of whole shares determined as provided in
Section 2.2 and specified in the applicable Exercise Notice.
2.5 Closing Price. For purposes of any computation pursuant to this Section
2, the term "Closing Price" for any day shall mean the last reported sale
price, regular way, of the Common Stock, or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices,
regular way, for such day, in either case on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or if it
is not listed or admitted to trading on any national securities exchange, but
is traded on Nasdaq, the closing sale price of the Common Stock or, in case no
sale is reported, the average of the closing bid and asked quotations for the
Common Stock on Nasdaq, or any comparable system.
3. CERTAIN NOTICES.
3.1 Notice of Certain Events. If at any time after the Determination Date
and before the Expiration Date:
3.1.1 the Company shall declare any cash dividend upon its Common Stock;
3.1.2 the Company shall declare any dividend upon its Common Stock
payable in stock (other than a dividend payable solely in shares of Common
Stock) or make any special dividend or other distribution to the holders of
its Common Stock;
3.1.3 the Company shall offer for subscription pro rata to the holders of
its Common Stock any additional shares of stock of any class or other
rights;
2
<PAGE>
3.1.4 there shall be any capital reorganization or reclassification of
the capital stock of the Company; or consolidation or merger of the Company
with, or sale or leases, exchanges or other conveyances (other than
pledges, mortgages and liens related to loans) of substantially all of its
assets to, another corporation;
3.1.5 there shall be a voluntary or involuntary dissolution, liquidation
or winding-up of the Company; or
3.1.6 any purchase, retirement, or redemption by the Company of its
Common Stock;
then, in any one or more of said cases, the Company shall give to the
registered holder of this Warrant, by the means specified in Section 7 herein,
(i) at least twenty (20) days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to vote in
respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, and (ii) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up, at least twenty (20) days' prior written notice of
the date when the same shall take place; provided, however, that the Company
shall not be required to send any notice pursuant to this Section 3.1 if the
Company determines the condition in Section 2.1 has not been met. Any notice
given in accordance with the foregoing clause (i) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto. Any notice given
in accordance with the foregoing clause (ii) shall also specify the date on
which the holders of Common Stock shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding-up, conversion or public offering, as the case may be. If Holder does
not exercise this Warrant prior to the occurrence of an event described above,
Holder shall not be entitled to receive the benefits accruing to then existing
holders of Common Stock.
3.2 Notice of Adjustment. Upon the happening of an event requiring an
adjustment of the amount or the kind of securities or property purchasable
hereunder, the Company shall forthwith give notice to the Holder which
indicates the event requiring the adjustment, the adjusted number of Warrant
Shares that may be acquired or the amount or kind of any such securities or
property so purchasable upon exercise of this Warrant, as the case may be, and
setting forth in reasonable detail the method of calculation and the facts
upon which such calculation is based. The Company's independent public
accountant shall determine the method for calculating the adjustment and shall
prepare a certificate setting forth such calculations, the reason for the
methodology chosen, and the facts upon which such calculation is based. Such
certificate shall accompany the notice to be provided to the Holder pursuant
to this Section 3.2.
3.3 Adjustment of Purchase Price and Number of Warrant Shares. The number
and kind of securities that may be acquired upon the exercise of this Warrant
shall be subject to adjustment following the Determination Date and prior to
the earlier of the exercise of, or the Expiration Date of this Warrant, upon
the happening of any of the following events:
(a) Dividends, Subdivisions, Combinations, or Consolidations of Common
Stock.
(i) In the event the Company shall declare, pay, or make any dividend upon
its outstanding Common Stock payable in Common Stock or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock, then the Share Factor shall be adjusted so that the
number of Warrant Shares that may thereafter be purchased upon the exercise of
the rights represented hereby shall be increased in proportion to the increase
in the number of outstanding shares of Common Stock through such dividend or
subdivision. In case the Company shall at any time combine the outstanding
shares of its Common Stock into a smaller number of shares of Common Stock,
the Share Factor shall be adjusted so that number of Warrant Shares that may
thereafter be acquired upon the exercise of the rights represented hereby
shall be decreased in proportion to the decrease through such combination. In
each case, the Exercise Price will not be adjusted.
(ii) If the Company declares, pays or makes any dividend or other
distribution upon its outstanding Common Stock payable in securities or other
property (excluding cash dividends and dividends payable in
3
<PAGE>
Common Stock, but including, without limitation, shares of any other class of
the Company's stock or stock or other securities convertible into or
exchangeable for shares of Common Stock or any other class of the Company's
stock or other interests in the Company or its assets ("Convertible
Securities")), a proportionate part of those securities or that other property
shall be set aside by the Company and delivered to the Holder in the event
that the Holder exercises this Warrant. The securities and other property then
deliverable to the Holder upon the exercise of this Warrant shall be in the
same ratio to the total securities and property set aside for the Holder as
the number of Warrant Shares with respect to which this Warrant is then
exercised as to the total number of Warrant Shares that may be acquired
pursuant to this Warrant at the time the securities or property were set aside
for the Holder.
(iii) If the Company shall declare a dividend payable in money on its
outstanding Common Stock and at substantially the same time shall offer to its
shareholders a right to purchase new shares of Common Stock from the proceeds
of such dividend or for an amount substantially equal to the dividend, all
shares of Common Stock so issued shall, for purposes of this Warrant, be
deemed to have been issued as a stock dividend subject to the adjustments set
forth in Section 3.3 (a)(i).
(iv) If the Company shall declare a dividend payable in money on its
outstanding Common Stock and at substantially the same time shall offer to its
shareholders a right to purchase new shares of a class of stock (other than
Common Stock), Convertible Securities, or other interests from the proceeds of
such dividend or for an amount substantially equal to the dividend, all shares
of stock, Convertible Securities, or other interests so issued or transferred
shall, for purposes of this Warrant, be deemed to have been issued as a
dividend or other distribution subject to Section 3.3(a)(ii).
(v) If the Company shall declare a dividend payable in cash on its
outstanding Common Stock, such dividend shall be deemed to have been issued as
a dividend or other distribution subject to Section 3.3(a)(i).
(b) Effect of Reclassification, Reorganization, Consolidation, Merger, or
Sale of Assets.
(i) Upon the occurrence of any of the following events, the Company shall
cause an effective provision to be made so that the Holder shall have the
right thereafter, by the exercise of this Warrant, to acquire for the Exercise
Price described in this Warrant the kind and amount of shares of stock and
other securities, property and interests as would be issued or payable with
respect to or in exchange for the number of Warrant Shares that are then
purchasable pursuant to this Warrant as if such Warrant Shares had been issued
to the Holder immediately prior to such event: (A) reclassification, capital
reorganization, or other change of outstanding Common Stock (other than a
change as a result of an issuance of Common Stock under Subsection 3.3(a)),
(B) consolidation or merger of the Company with or into another corporation or
entity (other than a consolidation or merger in which the Company is the
continuing corporation and that does not result in any reclassification,
capital reorganization or other change of the outstanding shares of Common
Stock or the Warrant Shares issuable upon exercise of this Warrant), or (C)
spin-off of assets, a subsidiary or any affiliated entity, or the sale, lease,
conveyance (other than pledges, mortgages and liens related to loans) or
exchange of a significant portion of the Company's assets taken as a whole, in
a transaction pursuant to which the Company's shareholders of record are to
receive securities or other interests in a successor entity. Any such
provision made by the Company for adjustments with respect to this Warrant
shall be as nearly equivalent to the adjustments otherwise provided for in
this Warrant as is reasonably practicable. The foregoing provisions of this
Section 3.3(b)(i) shall similarly apply to successive reclassifications,
capital reorganizations and similar changes of shares of Common Stock and to
successive consolidations, mergers, spin-offs, sales, leases or exchanges.
(ii) If any sale or exchange of all, or substantially all, of the Company's
assets or business or any dissolution, liquidation or winding up of the
Company (a "Termination of Business") shall be proposed, the Company shall
deliver written notice to the Holder of this Warrant in accordance with
Section 3.2 hereof as a condition precedent to the consummation of that
Termination of Business. If the result of the Termination of Business is that
shareholders of the Company are to receive securities or other interests of a
successor entity, the provisions of Section 3.3(b)(i) above shall apply.
However, if the result of the Termination of Business is that shareholders of
the Company are to receive money or property other than securities or other
interests in a
4
<PAGE>
successor entity, the Holder of this Warrant shall be entitled to exercise
this Warrant and, with respect to any Warrant Shares purchasable pursuant to
this Warrant so acquired, shall be entitled to all of the rights of the other
shareholders of Common Stock with respect to any distribution by the Company
in connection with the Termination of Business. In the event no successor
entity is involved and Section 3.3(b)(i) does not apply, all acquisition
rights under this Warrant shall terminate at the close of business on the date
as of which shareholders of record of the Common Stock shall be entitled to
participate in a distribution of the assets of the Company in connection with
the Termination of Business; provided, that, in no event shall that date be
less than 20 days after delivery to the Holder of this Warrant of the written
notice described above and in Section 3.2 hereof. If the termination of
acquisition rights under this Warrant is to occur as a result of the event at
issue, a statement to that effect shall be included in that written notice.
(c) Obligation of Successors or Transferees. The Company shall not effect
any consolidation, merger, or sale or conveyance of assets within the meaning
of Section 3.3(b)(i)(B)-(C) unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and mailed or delivered to
the Holder pursuant to Section 8 herein, the obligation to deliver to the
Holder such shares of stock, securities, or assets as, in accordance with the
foregoing provisions, the Holder may be entitled to acquire. In no event shall
the securities received pursuant to this Section be registerable or
transferable other than pursuant and subject to the terms of this Warrant.
(d) Application of This Section. The provisions of this Section 3.3 shall
apply to successive events that may occur from time to time but shall only
apply to a particular event if it occurs prior to the expiration of this
Warrant either by its terms or by its exercise in full.
(e) Definition of Common Stock. Unless the context requires otherwise,
whenever reference is made in this Section 3.3 to the issue or sale of shares
of Common Stock, the term "Common Stock" shall mean (i) the no par value Class
A Common Stock of the Company, (ii) any other class of stock ranking on a
parity with, and having substantially similar rights and privileges as the
Company's no par value Class A Common Stock, and (iii) any Convertible
Security convertible into either (i) or (ii). However, subject to the
provisions of Section 3.3(b)(i) above, Common Stock issuable upon the exercise
of this Warrant shall include only shares of Common Stock designed as no par
value Class A Common Stock of the Company as of the date of this Warrant.
(f) Company-Held Stock. For purposes of Sections 3.3(a) above, shares of
Common Stock owned or held at any relevant time by, or for the account of, the
Company in its treasury or otherwise, shall not be deemed to be outstanding
for purposes of the calculation and adjustments described therein.
4. ISSUE TAX. The issuance of certificates for Warrant Shares upon the
exercise of the Warrant shall be made without charge to Holder of any issue
tax or other governmental charges in respect thereof; provided, however, that
the Company shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the then holder of the Warrant being
exercised.
5. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing contained
in this Warrant shall be construed as conferring upon Holder the right to vote
or to consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matters
or any rights whatsoever as a stockholder of the Company, until, and only to
the extent that, this Warrant shall have been exercised. Except as provided in
Section 3.1 in the event of a dividend on the Common Stock payable in shares
of Common Stock, 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. The Company covenants, however, that until the
Termination Date, for so long as this Warrant remains at least partially
unexercised, it will furnish the Holder with copies of all reports and
communications furnished to the stockholders of the Company. No provisions
hereof, in the absence of affirmative action by Holder to purchase Warrant
Shares, and no mere enumeration herein of the
5
<PAGE>
rights or privileges of Holder shall give rise to any liability of Holder for
the Exercise Price or as a stockholder of the Company whether such liability
is asserted by the Company or by its creditors.
6. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
7. NOTICES. Any notice required or permitted under this Warrant shall be in
writing and either delivered personally, telegraphed or telecopied or sent by
certified or registered mail, postage prepaid, and shall be deemed to be
given, dated and received when so delivered personally, telegraphed or
telecopied or, if mailed, five (5) business days after the date of mailing to
the following address or facsimile number, or to such other address or
addresses as such person may subsequently designate by notice given hereunder.
If to the Company: Premier Laser Systems, Inc.
Attention: Secretary
3 Morgan Irvine, California 92618
Facsimile: 714 951-7218
with a copy to: Paul, Hastings, Janofsky & Walker LLP
Attention: Peter J. Tennyson, Esq.
695 Town Center Drive, 17th Floor
Costa Mesa, California 92626-1924
Facsimile: 714 979-1921
If to Holder: As Holder's address appears
on a register of Warrants
maintained by the Company's
transfer agent.
8. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of
the Company relating to the Common Stock issuable upon the exercise of this
Warrant shall survive the exercise and termination of this Warrant. All of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the Holder.
9. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The descriptive 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 California.
10. EXCHANGE, ASSIGNMENT, COMBINATION AND REPLACEMENT OF WARRANTS.
(a) This Warrant is exchangeable, without expense other than as provided in
this Section 10, at the option of the Holder upon the reasonable request,
presentation and surrender hereof to the Company for other Warrants of
different denominations entitling the Holder thereof to acquire in the
aggregate the same number of Warrant Shares that may be acquired hereunder.
(b) All of the covenant and provisions of this Warrant by or for the benefit
of the Holder shall be binding upon and shall inure to the benefit of, its
successors and permitted assigns hereunder. This Warrant and all rights
hereunder are transferrable and may be sold, transferred, assigned, or
hypothecated upon surrender of this Warrant to the Company, together with a
duly executed assignment in the form attached hereto as Exhibit B (the
"Assignment Form"), whereupon the Company shall, without charge, execute and
deliver a new Warrant containing the same terms and conditions of this Warrant
in the name of the assignee as named in the Assignment Form, and this Warrant
shall be canceled at that time. This Warrant, if properly assigned, may be
exercised by a new Holder without first having the new Warrant issued.
6
<PAGE>
(c) This Warrant may be delivered or combined with other Warrants that carry
the same rights upon the reasonable request, presentation and surrender of
this Warrant at the office of the Company, together with a written notice
signed by the Holder, specifying the names and denominations in which new
Warrants are to be issued.
(d) The Company will execute and deliver to the Holder a new Warrant of like
tenor and date upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction, or mutilation of this Warrant;
provided, that (i) in the case of loss, theft, or destruction, the Company
receives a reasonably satisfactory indemnity or bond, or (ii) in the case of
mutilation, the Holder shall provide and surrender this Warrant to the Company
for cancellation.
(e) Any new Warrant executed and delivered by the Company in substitution or
replacement of this Warrant shall constitute a contractual obligation of the
Company regardless of whether this Warrant was lost, stolen, destroyed or
mutilated, and shall be enforceable by any Holder thereof.
(f) The Holder shall pay all transfer and excise taxes applicable to any
issuance of new Warrants under this Section 10.
11. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise of
this Warrant. The Company shall, in lieu of issuing any fractional share,
round such fractional shares to the nearest whole share.
12. BEST EFFORTS. The Company covenants that it will not, by amendment of
its Articles of Incorporation or bylaws, or through any reorganization,
transfer of assets, consolidation, merger, dissolution, reissue or sale of
securities, or any other voluntary action, avoid or seek to avoid the
observation or performance for any term of this Warrant, but will at all times
in good faith assist in carrying out all those terms and in taking all action
necessary or appropriate to protect the rights of the Holder against dilution
or other impairment.
13. FURTHER ASSURANCES. The Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue, duly authorized fully paid and nonassessable Warrants and Common Stock
and other securities issuable upon exercise of this Warrant from time to time
and not in violation of any pre-emptive rights.
(Signature page follows.)
7
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
duly authorized officer effective as of , 1998.
PREMIER LASER SYSTEMS, INC.
By: _________________________________
Colette Cozean, Ph.D.
Chief Executive Officer
8
<PAGE>
EXHIBIT A
PREMIER LASER SYSTEMS, INC.
COMMON STOCK WARRANT
FORM OF SUBSCRIPTION AGREEMENT
(TO BE SIGNED AND DELIVERED
UPON EXERCISE OF WARRANT)
PREMIER LASER SYSTEMS, INC.
3 Morgan
Irvine, California 92618
Attention: Secretary
The undersigned, the holder of the within Warrant, hereby irrevocably elects
to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, shares of Common Stock (the "Stock") of Premier
Laser Systems, Inc. (the "Company") and herewith makes payment of
Dollars ($ ) therefor and requests that the certificates for such shares
be issued in the name of, and delivered to, , whose address is
. A copy of the Exercise Notice (as defined in the Warrant)
evidencing that the Warrant is exercisable for at least the number of shares
covered by this agreement is attached.
The address set forth below is the true and correct address of the
undersigned.
-------------------------------------
(Name)
-------------------------------------
(Address)
-------------------------------------
-------------------------------------
If said number of shares shall not be all the shares exercisable or
purchasable under the within Warrant, a new Warrant is to be issued in the
name of the undersigned for the balance remaining of the Warrants.
Dated: ,
-------------------------------------
Name of holder must conform in all
respects to name of holder as
specified on the face of the Warrant
or with the name of the assignee
appearing on the assignment form
attached hereto.)
-------------------------------------
(signature)
-------------------------------------
(print name)
-------------------------------------
(print title)
A-1
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the receipt and adequacy of which are each hereby
confirmed, the undersigned, , hereby sells, assigns and transfers
unto all of the undersigned's right, title and interest in and to
an aggregate of ( ) warrants to purchase shares of the Common
Stock of Premier Laser Systems, Inc. (the "Corporation") standing in the name
of the undersigned on the books of the Corporation and evidenced by that
certain Class C Warrant, dated , (the "Warrant"), and does
hereby irrevocable constitute and appoint as attorney-in-fact
to effect the reissue of the Warrant as necessary and the transfer of said
Warrant on the books of the Corporation with full power of substitution upon
presentation to the Corporation of this Assignment Form together with the
Warrant.
Dated: ,
Signature: __________________________
Printed Name: _______________________
B-1
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EXHIBIT 99.3
CLASS D WARRANT
TO PURCHASE COMMON STOCK
NO PAR VALUE OF
PREMIER LASER SYSTEMS, INC.
__ Warrants (Partial Shares)/1/ __________, 1998
This certifies that _________________________________________ ("Holder"),
for value received, is entitled, subject to the other terms set forth below, to
purchase from Premier Laser Systems, Inc., a California corporation (the
"Company"), having a place of business at 3 Morgan, Irvine, California 92618, at
any time from the Notice Date defined below until 5:00 P.M. (California time) on
the ninetieth day following the Notice Date (the "Expiration Date"), unless
earlier terminated pursuant to the provisions of Section 2.4 hereof, at which
time this Warrant shall expire and become void, a fraction of a share, of the
Company's Common Stock, no par value (the "Common Stock") in an amount
determined pursuant to Section 2 below. The purchase or exercise price per
share (the "Exercise Price") shall be one cent ($0.01) regardless of the number
of Warrants which must be exercised to obtain a Warrant Share (as defined
below).
The number and character of the securities purchasable upon exercise of
this Warrant are subject to adjustment as provided in Section 3.3 hereof.
This Warrant is subject to the following terms and conditions:
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
1.1 DURATION OF EXERCISE OF WARRANT. This Warrant is exercisable at
the option of Holder at any time from the Notice Date until 5:00 P.M.
(California time) on the Expiration Date for all or a portion of the shares of
Common Stock that may be purchased hereunder. This Warrant shall be exercised
upon surrender to the Company of this Warrant properly endorsed with a completed
and executed Subscription Agreement in the form attached hereto as Exhibit A,
and upon payment in cash or cashier's check of the aggregate Exercise Price for
the number of shares of Common Stock for which this Warrant is being exercised
(the "Warrant Shares"). The Company agrees that any Warrant Shares purchased
under this Warrant shall be deemed to be issued to Holder as the record owner of
such shares as of the close of business on the date on which this Warrant shall
___________________________
/1/ (Does not represent ___ shares - See Paragraph 2 for computation.)
-1-
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2. NOTICE OF EXERCISABILITY AND DETERMINATION OF NUMBER OF WARRANT SHARES.
2.1 Condition to Exercise. This Warrant shall not become exercisable unless
the Net Sales of Qualified Products (both as defined herein) for the twelve
(12) month period ended December 31, 1999 (the "Determination Date") equal or
exceed Eleven Million Six Hundred Dollars ($11,600,000). Except as set forth
below, "Net Sales" shall mean net sales of Qualified Products as determined by
generally accepted accounting principles, as consistently applied by
Ophthalmic Imaging Systems ("OIS"). "Qualified Products" shall mean products
sold by and in connection with the current core business of OIS including: (i)
products related to or arising out of such current core products; (ii)
products under development as of the date hereof; and (iii) those same
products if sold by any successor owner of OIS' operations. For the purposes
of this Class D Warrant only, firm purchase orders or purchase agreements from
purchasers seeking shipment of goods by December 31, 1999, and which are
accompanied by at least a 10% deposit, shall be deemed to be December 1999
sales. As soon as practicable after the Determination Date, the Company shall
determine the Net Sales of Qualified Products for the twelve (12) month period
ended on the Determination Date and shall mail to the holder of the Warrant,
and shall publish in a newspaper of national circulation a notice (the
"Exercise Notice") stating whether this condition to exercisability has been
met. The date of such mailing and publication is the "Notice Date."
2.2 Shares Issuable. To determine the number of Warrant Shares for which the
Warrant may be exercised, the Company shall determine the average Closing
Price (as defined below) of the Common Stock for the (i) fifteen (15)
consecutive trading days immediately preceding the Determination Date and (ii)
the thirty (30) consecutive trading days ending fifteen (15) trading days
prior to the Determination Date, and shall calculate the number of shares of
the Common Stock, or fraction thereof, which could be purchased at the greater
of such two average Closing Prices for a purchase price of twenty-five cents
($0.25). The result of this calculation shall be the "Share Factor." The Share
Factor shall be multiplied by the number of Warrants stated on the first page
of this Warrant to determine the number of whole shares for which this Warrant
may be exercised. Fractional shares resulting from aggregate exercises shall
be rounded to the nearest whole share.
2.3 Notice. The Exercise Notice sent to the Holder shall state the number of
Warrant Shares for which the Warrant has become exercisable.
2.4 Exercise. If the Exercise Notice states that the condition stated in
Section 2.1 has not been satisfied, then the Notice Date shall become the
Expiration Date, this Warrant shall expire effective as of the Notice Date and
the Holder shall have no further rights hereunder. If the Exercise Notice
states the condition has been met, this Warrant shall thereafter be
exercisable for the number of whole shares determined as provided in
Section 2.2 and specified in the applicable Exercise Notice.
2.5 Closing Price. For purposes of any computation pursuant to this Section
2, the term "Closing Price" for any day shall mean the last reported sale
price, regular way, of the Common Stock, or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices,
regular way, for such day, in either case on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or if it
is not listed or admitted to trading on any national securities exchange, but
is traded on Nasdaq, the closing sale price of the Common Stock or, in case no
sale is reported, the average of the closing bid and asked quotations for the
Common Stock on Nasdaq, or any comparable system.
3. CERTAIN NOTICES.
3.1 Notice of Certain Events. If at any time after the Determination Date
and before the Expiration Date:
3.1.1 the Company shall declare any cash dividend upon its Common Stock;
3.1.2 the Company shall declare any dividend upon its Common Stock
payable in stock (other than a dividend payable solely in shares of Common
Stock) or make any special dividend or other distribution to the holders of
its Common Stock;
3.1.3 the Company shall offer for subscription pro rata to the holders of
its Common Stock any additional shares of stock of any class or other
rights;
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3.1.4 there shall be any capital reorganization or reclassification of
the capital stock of the Company; or consolidation or merger of the Company
with, or sale or leases, exchanges or other conveyances (other than
pledges, mortgages and liens related to loans) of substantially all of its
assets to, another corporation;
3.1.5 there shall be a voluntary or involuntary dissolution, liquidation
or winding-up of the Company; or
3.1.6 any purchase, retirement, or redemption by the Company of its
Common Stock;
then, in any one or more of said cases, the Company shall give to the
registered holder of this Warrant, by the means specified in Section 7 herein,
(i) at least twenty (20) days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to vote in
respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, and (ii) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up, at least twenty (20) days' prior written notice of
the date when the same shall take place; provided, however, that the Company
shall not be required to send any notice pursuant to this Section 3.1 if the
Company determines the condition in Section 2.1 has not been met. Any notice
given in accordance with the foregoing clause (i) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto. Any notice given
in accordance with the foregoing clause (ii) shall also specify the date on
which the holders of Common Stock shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding-up, conversion or public offering, as the case may be. If Holder does
not exercise this Warrant prior to the occurrence of an event described above,
Holder shall not be entitled to receive the benefits accruing to then existing
holders of Common Stock.
3.2 Notice of Adjustment. Upon the happening of an event requiring an
adjustment of the amount or the kind of securities or property purchasable
hereunder, the Company shall forthwith give notice to the Holder which
indicates the event requiring the adjustment, the adjusted number of Warrant
Shares that may be acquired or the amount or kind of any such securities or
property so purchasable upon exercise of this Warrant, as the case may be, and
setting forth in reasonable detail the method of calculation and the facts
upon which such calculation is based. The Company's independent public
accountant shall determine the method for calculating the adjustment and shall
prepare a certificate setting forth such calculations, the reason for the
methodology chosen, and the facts upon which such calculation is based. Such
certificate shall accompany the notice to be provided to the Holder pursuant
to this Section 3.2.
3.3 Adjustment of Purchase Price and Number of Warrant Shares. The number
and kind of securities that may be acquired upon the exercise of this Warrant
shall be subject to adjustment following the Determination Date and prior to
the earlier of the exercise of, or the Expiration Date of this Warrant, upon
the happening of any of the following events:
(a) Dividends, Subdivisions, Combinations, or Consolidations of Common Stock
(i) In the event the Company shall declare, pay, or make any dividend upon
its outstanding Common Stock payable in Common Stock or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock, then the Share Factor shall be adjusted so that the
number of Warrant Shares that may thereafter be purchased upon the exercise of
the rights represented hereby shall be increased in proportion to the increase
in the number of outstanding shares of Common Stock through such dividend or
subdivision. In case the Company shall at any time combine the outstanding
shares of its Common Stock into a smaller number of shares of Common Stock,
the Share Factor shall be adjusted so that number of Warrant Shares that may
thereafter be acquired upon the exercise of the rights represented hereby
shall be decreased in proportion to the decrease through such combination. In
each case, the Exercise Price will not be adjusted.
(ii) If the Company declares, pays or makes any dividend or other
distribution upon its outstanding Common Stock payable in securities or other
property (excluding cash dividends and dividends payable in
3
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Common Stock, but including, without limitation, shares of any other class of
the Company's stock or stock or other securities convertible into or
exchangeable for shares of Common Stock or any other class of the Company's
stock or other interests in the Company or its assets ("Convertible
Securities")), a proportionate part of those securities or that other property
shall be set aside by the Company and delivered to the Holder in the event
that the Holder exercises this Warrant. The securities and other property then
deliverable to the Holder upon the exercise of this Warrant shall be in the
same ratio to the total securities and property set aside for the Holder as
the number of Warrant Shares with respect to which this Warrant is then
exercised as to the total number of Warrant Shares that may be acquired
pursuant to this Warrant at the time the securities or property were set aside
for the Holder.
(iii) If the Company shall declare a dividend payable in money on its
outstanding Common Stock and at substantially the same time shall offer to its
shareholders a right to purchase new shares of Common Stock from the proceeds
of such dividend or for an amount substantially equal to the dividend, all
shares of Common Stock so issued shall, for purposes of this Warrant, be
deemed to have been issued as a stock dividend subject to the adjustments set
forth in Section 3.3 (a)(i).
(iv) If the Company shall declare a dividend payable in money on its
outstanding Common Stock and at substantially the same time shall offer to its
shareholders a right to purchase new shares of a class of stock (other than
Common Stock), Convertible Securities, or other interests from the proceeds of
such dividend or for an amount substantially equal to the dividend, all shares
of stock, Convertible Securities, or other interests so issued or transferred
shall, for purposes of this Warrant, be deemed to have been issued as a
dividend or other distribution subject to Section 3.3(a)(ii).
(v) If the Company shall declare a dividend payable in cash on its
outstanding Common Stock, such dividend shall be deemed to have been issued as
a dividend or other distribution subject to Section 3.3(a)(i).
(b) Effect of Reclassification, Reorganization, Consolidation, Merger, or
Sale of Assets.
(i) Upon the occurrence of any of the following events, the Company shall
cause an effective provision to be made so that the Holder shall have the
right thereafter, by the exercise of this Warrant, to acquire for the Exercise
Price described in this Warrant the kind and amount of shares of stock and
other securities, property and interests as would be issued or payable with
respect to or in exchange for the number of Warrant Shares that are then
purchasable pursuant to this Warrant as if such Warrant Shares had been issued
to the Holder immediately prior to such event: (A) reclassification, capital
reorganization, or other change of outstanding Common Stock (other than a
change as a result of an issuance of Common Stock under Subsection 3.3(a)),
(B) consolidation or merger of the Company with or into another corporation or
entity (other than a consolidation or merger in which the Company is the
continuing corporation and that does not result in any reclassification,
capital reorganization or other change of the outstanding shares of Common
Stock or the Warrant Shares issuable upon exercise of this Warrant), or (C)
spin-off of assets, a subsidiary or any affiliated entity, or the sale, lease,
conveyance (other than pledges, mortgages and liens related to loans) or
exchange of a significant portion of the Company's assets taken as a whole, in
a transaction pursuant to which the Company's shareholders of record are to
receive securities or other interests in a successor entity. Any such
provision made by the Company for adjustments with respect to this Warrant
shall be as nearly equivalent to the adjustments otherwise provided for in
this Warrant as is reasonably practicable. The foregoing provisions of this
Section 3.3(b)(i) shall similarly apply to successive reclassifications,
capital reorganizations and similar changes of shares of Common Stock and to
successive consolidations, mergers, spin-offs, sales, leases or exchanges.
(ii) If any sale or exchange of all, or substantially all, of the Company's
assets or business or any dissolution, liquidation or winding up of the
Company (a "Termination of Business") shall be proposed, the Company shall
deliver written notice to the Holder of this Warrant in accordance with
Section 3.2 hereof as a condition precedent to the consummation of that
Termination of Business. If the result of the Termination of Business is that
shareholders of the Company are to receive securities or other interests of a
successor entity, the provisions of Section 3.3(b)(i) above shall apply.
However, if the result of the Termination of Business is that
4
<PAGE>
shareholders of the Company are to receive money or property other than
securities or other interests in a successor entity, the Holder of this
Warrant shall be entitled to exercise this Warrant and, with respect to any
Warrant Shares purchasable pursuant to this Warrant so acquired, shall be
entitled to all of the rights of the other shareholders of Common Stock with
respect to any distribution by the Company in connection with the Termination
of Business. In the event no successor entity is involved and Section
3.3(b)(i) does not apply, all acquisition rights under this Warrant shall
terminate at the close of business on the date as of which shareholders of
record of the Common Stock shall be entitled to participate in a distribution
of the assets of the Company in connection with the Termination of Business;
provided, that, in no event shall that date be less than 20 days after
delivery to the Holder of this Warrant of the written notice described above
and in Section 3.2 hereof. If the termination of acquisition rights under this
Warrant is to occur as a result of the event at issue, a statement to that
effect shall be included in that written notice.
(c) Obligation of Successors or Transferees. The Company shall not effect
any consolidation, merger, or sale or conveyance of assets within the meaning
of Section 3.3(b)(i)(B)-(C) unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and mailed or delivered to
the Holder pursuant to Section 8 herein, the obligation to deliver to the
Holder such shares of stock, securities, or assets as, in accordance with the
foregoing provisions, the Holder may be entitled to acquire. In no event shall
the securities received pursuant to this Section be registerable or
transferable other than pursuant and subject to the terms of this Warrant.
(d) Application of this Section. The provisions of this Section 3.3 shall
apply to successive events that may occur from time to time but shall only
apply to a particular event if it occurs prior to the expiration of this
Warrant either by its terms or by its exercise in full.
(e) Definition of Common Stock. Unless the context requires otherwise,
whenever reference is made in this Section 3.3 to the issue or sale of shares
of Common Stock, the term "Common Stock" shall mean (i) the no par value Class
A Common Stock of the Company, (ii) any other class of stock ranking on a
parity with, and having substantially similar rights and privileges as the
Company's no par value Class A Common Stock, and (iii) any Convertible
Security convertible into either (i) or (ii). However, subject to the
provisions of Section 3.3(b)(i) above, Common Stock issuable upon the exercise
of this Warrant shall include only shares of Common Stock designed as no par
value Class A Common Stock of the Company as of the date of this Warrant.
(f) Company-Held Stock. For purposes of Sections 3.3(a) above, shares of
Common Stock owned or held at any relevant time by, or for the account of, the
Company in its treasury or otherwise, shall not be deemed to be outstanding
for purposes of the calculation and adjustments described therein.
4. ISSUE TAX. The issuance of certificates for Warrant Shares upon the
exercise of the Warrant shall be made without charge to Holder of any issue
tax or other governmental charges in respect thereof; provided, however, that
the Company shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the then holder of the Warrant being
exercised.
5. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing contained
in this Warrant shall be construed as conferring upon Holder the right to vote
or to consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matters
or any rights whatsoever as a stockholder of the Company, until, and only to
the extent that, this Warrant shall have been exercised. Except as provided in
Section 3.1 in the event of a dividend on the Common Stock payable in shares
of Common Stock, 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. The Company covenants, however, that until the
Termination Date, for so long as this Warrant remains at least partially
unexercised, it will furnish the Holder with copies of all reports and
communications furnished to the stockholders of the Company. No provisions
hereof, in the
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absence of affirmative action by Holder to purchase Warrant Shares, and no
mere enumeration herein of the rights or privileges of Holder shall give rise
to any liability of Holder for the Exercise Price or as a stockholder of the
Company whether such liability is asserted by the Company or by its creditors.
6. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
7. NOTICES. Any notice required or permitted under this Warrant shall be in
writing and either delivered personally, telegraphed or telecopied or sent by
certified or registered mail, postage prepaid, and shall be deemed to be
given, dated and received when so delivered personally, telegraphed or
telecopied or, if mailed, five (5) business days after the date of mailing to
the following address or facsimile number, or to such other address or
addresses as such person may subsequently designate by notice given hereunder.
If to the Company: Premier Laser Systems, Inc.
Attention: Secretary
3 Morgan Irvine, California
92618 Facsimile: 714 951-7218
with a copy to: Paul, Hastings, Janofsky & Walker LLP
Attention: Peter J. Tennyson, Esq.
695 Town Center Drive, 17th Floor
Costa Mesa, California 92626-1924
Facsimile: 714 979-1921
If to Holder: As Holder's address appears
on a register of Warrants
maintained by the Company's
transfer agent.
8. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of
the Company relating to the Common Stock issuable upon the exercise of this
Warrant shall survive the exercise and termination of this Warrant. All of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the Holder.
9. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The descriptive 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 California.
10. EXCHANGE, ASSIGNMENT, COMBINATION AND REPLACEMENT OF WARRANTS.
(a) This Warrant is exchangeable, without expense other than as provided in
this Section 10, at the option of the Holder upon the reasonable request,
presentation and surrender hereof to the Company for other Warrants of
different denominations entitling the Holder thereof to acquire in the
aggregate the same number of Warrant Shares that may be acquired hereunder.
(b) All of the covenant and provisions of this Warrant by or for the benefit
of the Holder shall be binding upon and shall inure to the benefit of, its
successors and permitted assigns hereunder. This Warrant and all rights
hereunder are transferrable and may be sold, transferred, assigned, or
hypothecated upon surrender of this Warrant to the Company, together with a
duly executed assignment in the form attached hereto as Exhibit B (the
"Assignment Form"), whereupon the Company shall, without charge, execute and
deliver a new Warrant containing the same terms and conditions of this Warrant
in the name of the assignee as named in the Assignment
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Form, and this Warrant shall be canceled at that time. This Warrant, if
properly assigned, may be exercised by a new Holder without first having the
new Warrant issued.
(c) This Warrant may be delivered or combined with other Warrants that carry
the same rights upon the reasonable request, presentation and surrender of
this Warrant at the office of the Company, together with a written notice
signed by the Holder, specifying the names and denominations in which new
Warrants are to be issued.
(d) The Company will execute and deliver to the Holder a new Warrant of like
tenor and date upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction, or mutilation of this Warrant;
provided, that (i) in the case of loss, theft, or destruction, the Company
receives a reasonably satisfactory indemnity or bond, or (ii) in the case of
mutilation, the Holder shall provide and surrender this Warrant to the Company
for cancellation.
(e) Any new Warrant executed and delivered by the Company in substitution or
replacement of this Warrant shall constitute a contractual obligation of the
Company regardless of whether this Warrant was lost, stolen, destroyed or
mutilated, and shall be enforceable by any Holder thereof.
(f) The Holder shall pay all transfer and excise taxes applicable to any
issuance of new Warrants under this Section 10.
11. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise of
this Warrant. The Company shall, in lieu of issuing any fractional share,
round such fractional shares to the nearest whole share.
12. BEST EFFORTS. The Company covenants that it will not, by amendment of
its Articles of Incorporation or bylaws, or through any reorganization,
transfer of assets, consolidation, merger, dissolution, reissue or sale of
securities, or any other voluntary action, avoid or seek to avoid the
observation or performance for any term of this Warrant, but will at all times
in good faith assist in carrying out all those terms and in taking all action
necessary or appropriate to protect the rights of the Holder against dilution
or other impairment.
13. FURTHER ASSURANCES. The Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue, duly authorized fully paid and nonassessable Warrants and Common Stock
and other securities issuable upon exercise of this Warrant from time to time
and not in violation of any pre-emptive rights.
(Signature Page follows.)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
duly authorized officer effective as of , 1998.
PREMIER LASER SYSTEMS, INC.
By: _________________________________
Colette Cozean, Ph.D.
Chief Executive Officer
8
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EXHIBIT A
PREMIER LASER SYSTEMS, INC.
COMMON STOCK WARRANT
FORM OF SUBSCRIPTION AGREEMENT
(TO BE SIGNED AND DELIVERED
UPON EXERCISE OF WARRANT)
PREMIER LASER SYSTEMS, INC.
3 Morgan
Irvine, California 92618
Attention: Secretary
The undersigned, the holder of the within Warrant, hereby irrevocably elects
to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, shares of Common Stock (the "Stock") of Premier
Laser Systems, Inc. (the "Company") and herewith makes payment of
Dollars ($ ) therefor and requests that the certificates for such shares
be issued in the name of, and delivered to, , whose address is
. A copy of the Exercise Notice (as defined in the Warrant)
evidencing that the Warrant is exercisable for at least the number of shares
covered by this agreement is attached.
The address set forth below is the true and correct address of the
undersigned.
-------------------------------------
(Name)
-------------------------------------
(Address)
-------------------------------------
-------------------------------------
If said number of shares shall not be all the shares exercisable or
purchasable under the within Warrant, a new Warrant is to be issued in the
name of the undersigned for the balance remaining of the Warrants.
Dated: ,
-------------------------------------
Name of holder must conform in all
respects to name of holder as
specified on the face of the Warrant
or with the name of the assignee
appearing on the assignment form
attached hereto.)
-------------------------------------
(signature)
-------------------------------------
(print name)
-------------------------------------
(print title)
A-1
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the receipt and adequacy of which are each hereby
confirmed, the undersigned, , hereby sells, assigns and transfers
unto all of the undersigned's right, title and interest in and to
an aggregate of ( ) warrants to purchase shares of the Common
Stock of Premier Laser Systems, Inc. (the "Corporation") standing in the name
of the undersigned on the books of the Corporation and evidenced by that
certain Class D Warrant, dated , (the "Warrant"), and does
hereby irrevocable constitute and appoint as attorney-in-fact
to effect the reissue of the Warrant as necessary and the transfer of said
Warrant on the books of the Corporation with full power of substitution upon
presentation to the Corporation of this Assignment Form together with the
Warrant.
Dated: ,
Signature: __________________________
Printed Name: _______________________
B-1
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EXHIBIT 99.4
_______________________
PURCHASE AGREEMENT
DATED AS OF FEBRUARY 25, 1998
BY AND BETWEEN
PREMIER LASER SYSTEMS, INC.
AND
SELLER
_______________________
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS............................................... 2
1.1 Defined Terms................................................ 2
ARTICLE II PURCHASE AND SALE OF SHARES............................... 4
2.1 Purchase and Sale of Shares.................................. 4
2.2 Purchase Consideration....................................... 5
2.3 Closing...................................................... 5
2.4 Purchase Consideration Adjustment............................ 6
2.5 Rescission of Tender Offer................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES............................ 7
3.1 Representations and Warranties of Premier.................... 7
3.2 Representations and Warranties of Seller..................... 9
ARTICLE IV COVENANTS................................................. 12
4.1 Covenants of the Seller...................................... 12
4.2 Covenants of Premier......................................... 13
4.3 Reasonable Best Efforts...................................... 14
ARTICLE V CONDITIONS TO CLOSING..................................... 14
5.1 Conditions to Obligation of Premier.......................... 14
5.2 Conditions to Obligations of the Seller...................... 15
ARTICLE VI INDEMNIFICATION........................................... 15
6.1 Indemnification by Premier................................... 15
6.2 Losses Net of Insurance, etc................................. 16
6.3 Termination of Indemnification............................... 16
6.4 Procedures Relating to Indemnification Under Article VI...... 16
6.5 Arbitration.................................................. 18
ARTICLE VII GENERAL PROVISIONS........................................ 19
7.1 Termination, Abandonment or Rescission of Purchase Agreement. 19
7.2 Counterparts................................................. 20
7.3 Notices...................................................... 21
7.4 Governing Law................................................ 22
7.5 Interpretation............................................... 22
7.6 Successors and Assigns....................................... 22
</TABLE>
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<S> <C>
7.7 Entire Agreement; No Oral Waiver; Construction.............. 22
7.8 Severability................................................ 23
7.9 No Third-party Rights....................................... 23
7.10 Remedies.................................................... 23
7.11 Further Assurances.......................................... 23
7.12 Survival of Representations................................. 23
7.13 No Restrictions on Directors................................ 24
</TABLE>
-ii-
<PAGE>
This Purchase Agreement ("Purchase Agreement") is made and entered
into as of February 25, 1998, by and between Premier Laser Systems, Inc., a
California corporation ("Premier") and Mark S. Blumenkranz, M.D. and Recia
Blumenkranz (collectively, the "Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Seller owns in the aggregate, and on the Closing Date (as
defined herein) the Seller will own, of record and beneficially, 421,052 shares
of Ophthalmic Imaging Systems, a California corporation (the "Company") common
stock, no par value (the "Common Stock") (including the associated preferred
share purchase rights (the "Rights")) issued pursuant to the Rights Agreement,
dated as of December 31, 1997, as amended (the "Rights Agreement"), between
Company and American Securities Transfer, Inc. (the "Rights Agent") (the Rights
together with the Common Stock constitute the "Shares");
WHEREAS, the Seller holds certain officer or director positions with
the Company that require fiduciary duties with respect to the Company;
WHEREAS, Premier is currently attempting to purchase additional shares
of the Company Common Stock under separate purchase agreements (the "Other
Agreements"), between Premier and a number of sellers who hold no defined
fiduciary responsibilities to the Company;
WHEREAS, as a condition and an inducement to the Seller to enter into
this Purchase Agreement, Premier has agreed to commence a tender offer (the
"Tender Offer") for the remainder of the Company Common Stock following the
completion of the transactions related to this Purchase Agreement and the Other
Agreements and if such Tender Offer is subsequently withdrawn, abandoned, or
terminated by Premier without Premier having purchased all Shares validly
tendered thereunder, such Shares will be re-exchanged to Sellers by Premier for
the consideration paid pursuant hereto by Premier;
WHEREAS, concurrent with the execution of this Purchase Agreement, and
as a condition hereto and thereto, the Company and Premier will enter into a
Stock Purchase Agreement (the "Acquisition Agreement") of even date herewith
setting forth the terms and conditions of such Tender Offer and the acquisition
by Premier of any such Company Common Stock;
WHEREAS, the parties want to insure that the Seller receives
compensation for his shares of Company Common Stock tendered under this Purchase
Agreement at a rate equal to that which is to be paid under the Tender Offer;
<PAGE>
WHEREAS, the Stock Consideration (as herein defined) could appreciate
or decline in value between the Closing Date and the date the Tender Offer
closes;
WHEREAS, in order to insure Seller receives the same per share
compensation relative to the parties who tender shares under the Tender Offer,
the number of shares of Premier Common Stock (as herein defined) issued to
Seller may need to be retroactively readjusted at the Tender Offer's closing;
WHEREAS, the Seller desires to sell, and Premier wishes to purchase,
the Shares upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Defined Terms. Terms not otherwise defined herein shall have the
-------------
following meanings:
"Acquisition Agreement" means the Stock Purchase Agreement by and between
---------------------
Premier and Company of even date herewith, as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Affiliate" means, when used with respect to another Person, any Person who
---------
is, whether directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control with such Person.
"Beneficially Own" has the meaning given such term in Rule 13d-3 under the
----------------
Exchange Act, as in effect on the date hereof. As used herein, the phrases
"beneficial ownership" and "beneficial owner" have correlative meanings.
"Business Combination" means (i) any merger, reorganization, share exchange
--------------------
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company, (ii) any purchase or sale of all
or any significant portion of the assets of the Company, (iii) any issuance or
other sale by the Company of any shares of Company Common Stock or (iv) any
issuance or other sale by the Company of securities representing 20% or more of
beneficial ownership of the Company or any of its Subsidiaries (as defined
herein).
-2-
<PAGE>
"Business Day" means any day that is not a Saturday, Sunday or other day on
------------
which banks are required or authorized by law to be closed in California.
"Closing Date" means the earlier of (i) the second Business Day following
------------
the date hereof and (ii) such other date and time as the parties shall otherwise
mutually agree.
"Dollars" and "$" mean lawful currency of the United States of America.
------- -
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Governmental Authority" means any foreign, federal, state or local
----------------------
government or any court, administrative agency or commission or other
governmental agency or authority, whether domestic or foreign.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory ore other), charge or security
interest; or any preference, priority or other arrangement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"material adverse effect" with respect to any Person means a material
-----------------------
adverse effect (i) on the financial condition, business, liabilities,
properties, assets or results of operations of such Person and its subsidiaries,
taken as a whole, or (ii) on the ability of such Person to perform its
obligations under or to consummate the transactions contemplated by this
Purchase Agreement.
"Person" means an individual, partnership, limited liability company,
------
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Purchase Agreement" means this Purchase Agreement, as amended,
------------------
supplemented or otherwise modified from time to time in accordance with its
terms.
"Registration Rights Agreement" means the Registration Rights Agreement in
-----------------------------
the form of Exhibit "A" to be executed by and between Premier and the Seller on
the Closing Date.
"Restrictions" means, when used with respect to any specified security, any
------------
stockholders or other trust agreement, option, warrant, escrow, proxy, buy-sell
agreement, power of attorney or other contract, agreement or arrangement which
(i) grants to any Person the right to sell or otherwise dispose of or vote such
specified security or any interest therein
-3-
<PAGE>
or (ii) restricts the transfer of, or the exercise of any rights or the
enjoyment of any benefits by reason of, the ownership of such specified
security.
"Stock Component" means the quotient (rounded to the nearest 1/100,000)
---------------
determined by dividing $0.25 by the average closing sales price for Premier
Common Stock (as hereinafter defined) as reported on The Nasdaq Stock Market,
Inc. ("NASDAQ") as published in The Wall Street Journal or, if not published
therein, an another authoritative source, for either (i) fifteen (15)
consecutive trading days (each, a "Trading Day") immediately preceding the
Closing Date or (ii) the thirty (30) consecutive Trading Days ending fifteen
(15) Trading Days prior to the Closing Date, whichever yields the lowest number
of shares of Premier Common Stock. Notwithstanding any other provision of this
Purchase Agreement, if Seller would have otherwise have been entitled to receive
a fraction of a share of Premier Common Stock (after taking into account all
shares tendered by Seller) he, she or it shall receive, in lieu thereof, cash in
an amount equal to the fractional part of the Premier Common Stock multiplied by
the "market price" of one share of Premier Common Stock, payable as part of the
Purchase Consideration. The "market price" of one share of Premier Common Stock
shall be the closing price of such common stock as reported on NASDAQ (as
published in the Wall Street Journal or, if not published therein, any other
authoritative source) on the last Trading Day preceding the Closing Date.
"Subsidiary" of any Person means another Person, an amount of the voting
----------
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its board of directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first Person.
"Transactions" means the transactions described in Section 2.3(b).
------------
ARTICLE II
PURCHASE AND SALE OF SHARES
---------------------------
2.1 Purchase and Sale of Shares. Upon the terms and subject to the
---------------------------
conditions of this Purchase Agreement, Premier agrees to purchase from the
Seller, and the Seller agrees to sell to Premier, the Shares free and clear of
any Lien or Restriction created by the Seller (other than any Lien or
Restriction imposed pursuant to the terms of this Purchase Agreement) or
otherwise binding upon any such Shares in exchange for the Purchase
Consideration (as defined in Section 2.2 of Purchase Agreement), as may be
adjusted pursuant to Section 2.4 hereof.
-4-
<PAGE>
2.2 Purchase Consideration. Premier shall pay to Seller in respect
----------------------
of each share of Company Common Stock sold and purchased hereunder (a) $1.75 net
in cash (the "Cash Consideration"); (b) that number of shares of Premier Class A
Common Stock, no par value (the "Premier Common Stock"), equal to the Stock
Component (the "Stock Consideration"); (c) one Premier Class C Warrant (the
"Class C Warrant"); and (d) one Premier Class D Warrant (the "Class D Warrant"
together with the Class C Warrant, the "Warrant Consideration") (the Cash
Consideration, the Stock Consideration and the Warrant Consideration together
constitute the "Purchase Consideration").
2.3 Closing.
-------
(a) Unless this Purchase Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1(a) and subject to the satisfaction or waiver of the conditions set
forth in Article V, the closing (the "Closing") of the transactions contemplated
-------
by Section 2.1 will take place on the earlier of (i) the second Business Day
following the date hereof and (ii) such other date, time and place as the
parties shall otherwise mutually agree (in either event, the date of the Closing
being referred to herein as the "Closing Date").
------------
(b) At the Closing, the following actions (collectively, the
"Transactions") shall occur:
- -------------
(i) Premier shall pay or cause to be paid the aggregate Cash
Consideration to or for the account of the Seller by wire transfer to such
bank account (the "Designated Bank Account") as the Seller shall designate
in writing prior to the Closing Date;
(ii) At the effective time of the Closing, Premier shall issue
shares of Premier Common Stock constituting the Stock Consideration to the
Seller as directed by the Seller in writing prior to the Closing Date;
(iii) At the effective time of the Closing, Premier shall issue the
warrants constituting the Warrant Consideration (in the form attached
hereto as Exhibits "B" and "C") to the Seller as directed by the Seller in
writing prior to the Closing Date;
(iv) The parties shall execute and deliver, the Registration Rights
Agreement;
(v) The Seller shall deliver or cause to be delivered to Premier or
its designee such documents as Premier may reasonably request, including
certificates for all Shares to evidence the transfer to Premier of good and
marketable title in and
-5-
<PAGE>
to all of the Shares owned by the Seller free and clear of any Lien or
Restriction on such Shares (other than any Lien or Restriction imposed
pursuant to the terms of this Purchase Agreement) or the applicable federal
or state securities laws, and
(vi) Each party shall take such other actions, and shall execute and
deliver such other instruments or documents, as shall be required under
Article V.
2.4 Purchase Consideration Adjustment. In order to insure that
---------------------------------
Seller receives the same per share Purchase Consideration as that to be paid
under the Tender Offer, Seller hereby agrees to allow Premier to retroactively
readjust the amount of Purchase Consideration previously paid or granted to
Seller if, at the Expiration Date (as that term is defined and used within the
Acquisition Agreement) the Cash Consideration, the Stock Consideration or the
Warrant Consideration that Seller would have received under the Tender Offer
differs from that initially paid or granted to Seller under this Purchase
Agreement. If such Warrant Consideration amounts are disparate, Premier shall
either grant Seller the right to purchase additional shares of Premier Common
Stock (the "Additional Warrant Shares") or cancel Seller's existing
documentation evidencing the Warrant Consideration and reissue new documentation
evidencing the reduced number of shares Seller is eligible to purchase.
Similarly, if the Stock Consideration amounts are found to be disparate, Premier
shall either issue Seller additional shares of Premier Common Stock (the
"Additional Stock Payment Shares") or cancel Seller's existing shares and
reissue a certificate evidencing fewer shares to the effect that Seller shall
ultimately receive the same per share Stock Compensation as would have been
provided under the Tender Offer. If the amounts of Cash Consideration are
disparate and in Seller's favor, Premier shall pay Seller the additional cash.
If such difference is in Premier's favor, Seller shall remit the difference in
cash to Premier. The readjustment and exchange of Cash Consideration shall be
completed to the effect that Seller receives the same per share Cash
Consideration as he or she would have under the Tender Offer.
2.5 Rescission of Tender Offer. If (i) Premier withdraws, abandons,
--------------------------
or terminates the Tender Offer without Premier purchasing all Shares validly
tendered, (ii) the Tender Offer expires without Premier purchasing all Shares
validly tendered, or (iii) the Acquisition Agreement is terminated pursuant to
Section 7.1(b) hereof, then at the election of either Premier or Seller: (a)
this Purchase Agreement shall be rescinded; (b) Seller shall return the Purchase
Consideration to Premier; (c) the certificates representing the shares of Stock
Consideration and the documentation evidencing the Warrant Consideration shall
be canceled; and (d) Premier shall return the certificates evidencing the
shares of Company Common Stock to the Seller. The Stock Consideration and
Warrant Consideration issued to Seller and the Shares purchased by Premier shall
be legended to reflect the possibility of such recission.
-6-
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
3.1 Representations and Warranties of Premier. Premier represents
-----------------------------------------
and warrants to the Seller as of the date hereof and as of the Closing Date as
follows:
(a) Organization, Standing and Corporate Power. Premier is duly
------------------------------------------
organized, validly existing and in good standing under the laws of the State of
California and has the requisite corporate power and authority to carry on its
business as now being conducted. Premier is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed (individually or in the aggregate) could not reasonably
be expected to have a material adverse effect with respect to Premier.
(b) Corporate Authorization. The execution, delivery and performance
-----------------------
by Premier of this Purchase Agreement and the consummation by Premier of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, including by resolution of the Board of Directors of Premier.
This Purchase Agreement has been duly executed and delivered by Premier and
constitutes a valid and binding agreement of Premier, enforceable against
Premier in accordance with its terms (subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar
laws affecting creditors' rights generally from time to time in effect and to
general principles of equity, including concepts of materiality, reasonableness,
good faith and fair dealing, regardless of whether in a proceeding or equity or
at law).
(c) No Conflict. Other than the filing of a Form 4 and an amendment
-----------
to Premier's report on Schedule 13D under the Exchange Act, and no filing with,
and no permit, authorization, consent or approval of, any Governmental Authority
is necessary for the execution of this Purchase Agreement or the Registration
Rights Agreement by Premier and the consummation by Premier of the transactions
contemplated hereby and thereby, except for such filings the failure of which to
be made, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on Premier, and its Subsidiaries, taken as a
whole, or to prevent or materially delay the consummation of the transactions
contemplated hereby and thereby. Neither the execution and delivery of this
Purchase Agreement or the Registration Rights Agreement by Premier nor the
consummation by Premier of the transactions contemplated hereby or thereby, nor
compliance by Premier with any of the provisions hereof or thereof (i) conflicts
with or results in any breach of the Articles of Incorporation or bylaws of
Premier, (ii) contravenes, conflicts with or would constitute a violation of any
provision of any law, regulation, judgment, injunction, order or
-7-
<PAGE>
decree binding upon Premier, or (iii) constitutes a default under or gives rise
to any right of termination, cancellation or acceleration of any right or
obligation of Premier or any of its Subsidiaries or to a loss of any benefit to
which Premier or any of its Subsidiaries is entitled under any provision of any
agreement, contract or other instrument binding on Premier or any of its
Subsidiaries or any license, franchise, permit or other similar authorization
held by Premier or any of its Subsidiaries, except, in the case of clauses (ii)
and (iii), for any such contravention, conflict, violation, default,
termination, cancellation, acceleration or loss that would not have a material
adverse effect on Premier or any of its Subsidiaries taken as a whole.
(d) No Required Vote. No vote of the holders of any class of the
----------------
outstanding capital stock of Premier is necessary to approve this Purchase
Agreement or the Transactions.
(e) Reservation of Premier Common Stock. The Premier Common Stock and
-----------------------------------
Warrant Consideration to be issued to Seller as Purchase Consideration pursuant
to this Purchase Agreement and any Premier Common Stock purchasable upon
exercise of such Warrant Consideration, have been reserved solely for issuance
and delivery to Seller, and when issued, will be duly and validly issued, fully
paid and nonassessable, and such issuances will not violate any pre-emptive
rights under applicable law, Premier's Articles of Incorporation or bylaw,
contract or agreement, or otherwise.
(f) Limitations on Transferability. Premier acknowledges that the
------------------------------
Shares are being acquired from an Affiliate of the Company without registration
under the Securities Act or the securities laws of any other applicable
jurisdiction, and that such Shares are being sold to Premier pursuant to an
exemption thereto. Premier is acquiring the Shares solely for its own account,
for investment purposes only, and not with an intent or view to their
distribution within the meaning of Section 2(11) of the Securities Act. Premier
understands that such Shares may not be freely transferable without registration
under the Securities Act or the securities laws of any other applicable
jurisdiction unless subsequently registered or an exemption therefrom is
available. Premier also acknowledges that the transferability of the Shares is
limited by the terms of this Purchase Agreement.
(g) Legend. In furtherance of the agreements contained in Section
------
3.1(f) and in keeping with the possibility that Tender Offer might not be
consummated, Premier agrees that the certificate or certificates representing
the Shares Beneficially Owned by Premier following the Closing shall bear, until
the consummation of the Tender Offer is effected, the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND ARE SUBJECT TO POSSIBLE
-8-
<PAGE>
EXCHANGE UNDER THAT CERTAIN PURCHASE AGREEMENT (THE "PURCHASE AGREEMENT")
OF EVEN DATE HEREWITH BETWEEN PREMIER LASER SYSTEMS, INC. AND THE HOLDER.
The Company will exchange certificates without the foregoing legend
upon the request of Premier at such time as the restrictions imposed by this
Purchase Agreement are no longer applicable.
3.2 Representations and Warranties of Seller. The Seller represents
----------------------------------------
and warrants to Premier as of the date hereof and as of the Closing Date as
follows:
(a) Organization, Standing and Power of the Seller. The Seller has
----------------------------------------------
the requisite power and authority and legal capacity to enter into and perform
all of its obligations under this Purchase Agreement, to consummate the
Transactions (including transferring the Shares to Premier). Neither the
execution and delivery of this Purchase Agreement by the Seller nor the
consummation by the Seller of the Transactions nor compliance by the Seller with
the provisions hereof conflicts with or results in a breach of any agreement,
other than such agreements, the conflict with or breach of which, individually
or in the aggregate, could not reasonably be expected to prevent or materially
delay the consummation of the Transactions.
(b) Enforceability. This Purchase Agreement has been duly and validly
--------------
authorized, executed and delivered by the Seller and constitutes the Seller's
valid and binding agreement, enforceable against the Seller in accordance with
its terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity, including concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding at equity or at law).
(c) Title to Shares. At the Closing the Seller will be the direct and
---------------
record owner of the Shares. Other than options to purchase 105,000 shares of
Company Common Stock, the Seller does not own or have the right to acquire,
whether presently exercisable or at any time in the future, any shares of
Company Common Stock or any securities convertible into or exercisable or
exchangeable for Shares including, but not limited to, any options held by
Seller. No person has the right to acquire, and the Seller is not a party to any
contract, understanding, commitment, arrangement or other agreement to sell,
transfer or otherwise dispose of, any shares of Company Common Stock owned by or
issuable to the Seller. At the Closing, the Seller will have good and valid
title to the Shares, free and clear of any Liens or Restrictions and they will
have the full legal right, power and authority to assign, transfer and deliver
such shares to Premier pursuant hereto. On the Closing Date, the
-9-
<PAGE>
Seller will have the sole voting power, and sole power of disposition, with
respect to all of such Shares and there will be no restrictions on the Seller's
ability to transfer such Shares.
(d) No Conflict. Except for the filing of a Form 4 with the
-----------
Securities and Exchange Commission, Nasdaq, the Boston Stock Exchange, and the
Company, no filing with, and no permit, authorization, consent or approval of,
any Governmental Authority is necessary for the execution of this Purchase
Agreement by the Seller and the consummation by the Seller of the transactions
contemplated hereby, other than such filings the failure of which to be made,
individually or in the aggregate, could not reasonably be expected to have a
material adverse effect on the Seller, if any, taken as a whole, or to prevent
or materially delay the consummation of the Transactions.
(e) Investment Intention. The Seller is acquiring the Stock
--------------------
Consideration and the Warrant Consideration for its own account as principal for
investment and not with a view to resale or distribution or with any present
intention of distributing or selling the same. The Seller is fully aware that
the Stock Consideration and the Warrant Consideration have not been registered
under the Securities Act or under any applicable state securities laws, and are
being offered and sold in reliance on exemptions from the registration
requirements of the Securities Act and all such laws. The Seller is an
"accredited investor" as such term is defined in Regulation D promulgated under
the Securities Act. The Seller is able to bear the economic risk of the
investment in the Stock Consideration and the Warrant Consideration and has such
knowledge and experience in financial and business matters, and knowledge of the
business of Premier, as to be capable of evaluating the merits and risks of a
prospective investment.
(f) Limitations on Transferability. Seller acknowledges that it may
------------------------------
not transfer any of the Stock Consideration or the Warrant Consideration
received by it pursuant hereto unless and until the same are registered under
the Securities Act and any applicable state securities laws, or unless an
exemption from such registration is available. Seller acknowledges that
transferability of the Stock Consideration and Warrant Consideration also is
limited by the terms of this Purchase Agreement.
(g) Legend. In furtherance of the agreements contained in Sections
------
3.2(e) and (f), the Seller agrees that the certificate or certificates
representing:
(i) the Stock Consideration Beneficially Owned by Seller shall
bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER ANY
APPLICABLE STATE SECURITIES LAWS. THE
-10-
<PAGE>
SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (I) COVERED BY AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, (II) THE SALE IS MADE PURSUANT TO RULE 144 UNDER THE ACT,
IF AVAILABLE, AND EXEMPTIONS FROM REGISTRATION UNDER APPLICABLE STATE
SECURITIES LAWS OR (III) AN OPINION IS OBTAINED FROM COUNSEL TO THE HOLDER,
REASONABLY SATISFACTORY TO COUNSEL TO PREMIER LASER SYSTEMS, INC. THAT AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER THE ACT AND ALL APPLICABLE
STATE SECURITIES LAWS. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON TRANSFER AND ARE SUBJECT TO POSSIBLE
CANCELLATION UNDER THAT CERTAIN PURCHASE AGREEMENT (THE "PURCHASE
AGREEMENT") OF EVEN DATE HEREWITH BETWEEN PREMIER LASER SYSTEMS, INC. AND
THE HOLDER.
(ii) the Warrant Consideration Beneficially Owned by Seller
shall bear the following legend:
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
NOR UNDER ANY APPLICABLE STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR
THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (I) COVERED BY AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, (II) THE SALE IS MADE PURSUANT TO RULE 144 UNDER THE ACT,
IF AVAILABLE, AND EXEMPTIONS FROM REGISTRATION UNDER APPLICABLE STATE
SECURITIES LAWS OR (III) AN OPINION IS OBTAINED FROM COUNSEL TO THE HOLDER,
REASONABLY SATISFACTORY TO COUNSEL TO PREMIER LASER SYSTEMS, INC. THAT AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER THE ACT AND ALL APPLICABLE
STATE SECURITIES LAWS. THIS WARRANT AND THE SHARES OF COMMON STOCK
PURCHASABLE HEREUNDER ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND ARE
SUBJECT TO POSSIBLE CANCELLATION UNDER THAT CERTAIN PURCHASE AGREEMENT (THE
"PURCHASE AGREEMENT") OF EVEN DATE HEREWITH BETWEEN PREMIER LASER SYSTEMS,
INC. AND HOLDER.
-11-
<PAGE>
Premier will exchange certificates without the foregoing legend upon the
request of Seller at such time as (i) the restrictions imposed by this Purchase
Agreement are no longer applicable; and (ii) the holder thereof may sell such
shares or warrants without registration of such sale under the Securities Act,
as evidenced (if requested by Premier) by an opinion of counsel to such holder.
(h) No Broker. No investment banker, broker, finder, consultant or
---------
intermediary is entitled to be paid any investment banking, brokerage, finder's
or similar fee or commission by any Seller in connection with this Purchase
Agreement or the Transactions for which the Seller or Premier would be liable
following the Closing.
ARTICLE IV
COVENANTS
---------
4.1 Covenants of the Seller.
-----------------------
(a) Binding Obligations. Notwithstanding, and without in any way
-------------------
limiting, any other provision of this Purchase Agreement, the Seller
acknowledges that, subject to the satisfaction (or waiver by it) of the
conditions set forth in Section 5.2, its obligation to consummate the
Transactions, including the sale to Premier of the Shares, is absolute and
unconditional and shall not terminate except in accordance with Section 7.1,
irrespective of, without limitation, any receipt of the Company of any proposal
for a Business Combination or any resolution by the Board of Directors of the
Company to approve a Business Combination or otherwise.
(b) Return of Purchase Consideration. If (i) Premier withdraws,
--------------------------------
abandons, or terminates the Tender Offer without Premier purchasing all Shares
validly tendered, (ii) the Tender Offer expires without Premier purchasing all
Shares validly tendered, or (iii) this Purchase Agreement is terminated pursuant
to Section 7.1 hereof, then this Purchase Agreement shall be rescinded and
Seller agrees to return the Purchase Consideration to Premier.
(c) Exchange of Stock Consideration or Warrant Consideration. In the
--------------------------------------------------------
event the Stock Consideration or Warrant Consideration must be adjusted as
described in Section 2.4, Seller hereby agrees to return to Premier, within five
(5) business days after notice, the certificate(s) reflecting the shares of
Premier Common Stock and/or the documentation related to the Warrant
Consideration for reissuance.
-12-
<PAGE>
4.2 Covenants of Premier.
--------------------
(a) Restriction on Transfer of Shares. Following the Closing and
---------------------------------
until the consummation of the transactions contemplated under the Tender Offer,
Premier shall not, directly or indirectly, without prior written consent of the
Seller and except pursuant to or as expressly contemplated hereby, offer for
sale, sell (including short sales), transfer, tender, pledge, encumber, assign
or otherwise dispose of (including by gift), or enter into any contract, option,
or other arrangement or understanding (including any profit-sharing agreement)
with respect to or consent to the offer for sale, sale, transfer, tender,
pledge, encumbrance, assignment or other disposition of, any or all of the
Shares, or commit or agree to take any of the foregoing actions.
(b) Registration Rights Agreement. Premier shall cause the parties to
-----------------------------
enter into that certain Registration Rights Agreement in the form of Exhibit
"A."
(c) Purchases of Company Common Stock Prior to the Closing. Premier
------------------------------------------------------
agrees to use its best efforts to purchase or otherwise acquire, concurrently
with or prior to the Closing, such number of shares of Company Common Stock, in
negotiated transactions or otherwise, as is necessary so that the Premier's
percentage of beneficial ownership of the Company Common Stock, shall at the
Closing constitute at least 50.1%.
(d) Tender Offer. Following the Closing, Premier agrees to use its
------------
best efforts to effect a tender offer (the "Tender Offer") for the purchase of
the then remaining outstanding shares of Company Common Stock.
(e) Return of Certificates. If Premier shall fail to commence the
----------------------
Tender Offer within five (5) days of the execution and delivery of this Purchase
Agreement or if (i) Premier withdraws, abandons, or terminates the Tender Offer
without Premier purchasing all Shares validly tendered, (ii) the Tender Offer
expires without Premier purchasing all Shares validly tendered, or (iii) the
Acquisition Agreement is terminated pursuant to Section 7.1(b) hereof, then at
the election of Premier or Seller this Purchase Agreement shall be rescinded and
upon Seller's return of the Purchase Consideration to Premier, Premier shall
promptly return the certificate(s) evidencing Seller's Shares.
(f) Execution of Acquisition Agreement. Premier concurrently
----------------------------------
herewith, shall execute and deliver the Acquisition Agreement and the Other
Agreements, and shall use its best efforts to satisfy the terms and conditions
of, to perform the obligations to be performed by it under, and the consummation
of the transactions contemplated by, the Acquisition Agreement.
-13-
<PAGE>
4.3 Reasonable Best Efforts. Subject to the terms and conditions of
-----------------------
this Purchase Agreement, each party will use its reasonable best efforts to
take, or cause to be taken, all actions to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Purchase Agreement, except as
may be required by the Seller in performing his or her fiduciary duties as an
officer or director of the Company.
ARTICLE V
CONDITIONS TO CLOSING
---------------------
5.1 Conditions to Obligation of Premier. The obligation of Premier
-----------------------------------
to consummate the purchase of the Shares is further subject to the satisfaction
(or waiver by Premier) of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Seller set forth in this Purchase Agreement qualified as to
materiality shall be true and correct and those not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Purchase Agreement and as of the Closing Date as though made on and as of the
Closing Date, except for those representations and warranties which address
matters only as of a particular date (which shall have been true and correct in
all material respects as of such date). Premier shall have received a
certificate signed by the Seller to the effect set forth in this paragraph.
(b) Performance of Obligations of the Seller. The Seller shall have
----------------------------------------
performed in all material respects all of the covenants and obligations required
to be performed by them under this Purchase Agreement at or prior to the Closing
Date, and Premier shall have received a certificate signed by the Seller to the
effect set forth in this paragraph.
(c) No Injunction. No preliminary or permanent injunction or order
-------------
that would prohibit or restrain the consummation of the transactions
contemplated hereunder shall be in effect and no Governmental Authority or other
Person shall have commenced or threatened to commence an action or proceeding
seeking to enjoin the consummation of such transactions or to impose liability
on the parties hereto in connection therewith.
(d) Acquisition Agreement. Premier and the Company shall have
---------------------
executed and delivered, contemporaneously with this Purchase Agreement, the
Acquisition Agreement
-14-
<PAGE>
by and between Premier and the Company, dated February 25, 1998, and Company
shall not be in breach or default of its obligations and agreements thereunder.
5.2 Conditions to Obligations of the Seller. The obligations of the
---------------------------------------
Seller to effect the Transactions are further subject to the satisfaction (or
waiver by the Seller) of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Premier set forth in this Purchase Agreement qualified as to
materiality shall be true and correct and those not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Purchase Agreement and as of the Closing Date as though made on and as of the
Closing Date, except for those representations and warranties which address
matters only as of a particular date (which shall have been true and correct in
all material respects as of such date), and the Seller shall have received a
certificate signed on behalf of Premier to the effect set forth in this
paragraph.
(b) Performance of Obligations of Premier. Premier shall have
-------------------------------------
performed in all material respects all of the covenants and obligations required
to be performed by it under this Purchase Agreement at or prior to the Closing
Date, and the Seller shall have received a certificate signed on behalf of
Premier to the effect set forth in this paragraph.
(c) Registration Rights Agreement. The parties shall have entered
-----------------------------
into that certain Registration Rights Agreement in the form of Exhibit "A."
(d) Acquisition Agreement. Premier and the Company shall have
---------------------
executed and delivered, contemporaneously with this Purchase Agreement, the
Acquisition Agreement by and between Premier and the Company, dated February 25,
1998, and Premier shall not be in breach or default of its obligations and
agreements thereunder.
ARTICLE VI
INDEMNIFICATION
---------------
6.1 Indemnification by Premier. From and after the date of this
--------------------------
Purchase Agreement, whether or not the Transactions are consummated, Premier
shall indemnify the Seller and its respective Affiliates, directors, officers,
employees, partners, stockholders, agents and representatives (including
attorneys and accountants) (collectively, the "Representatives") against and
hold them harmless from any loss, liability, claim, damage or expense (including
reasonable legal fees and expenses ("Loss") suffered or incurred by any such
indemnified party arising from or relating to any lawsuit by any governmental
body
-15-
<PAGE>
or any present or former stockholder of the Company naming any of the parties
entitled to indemnification hereunder (each an "indemnified party") and seeking
to enjoin or otherwise prevent, prohibit or impede the consummation of the
Transactions or otherwise challenging the Transactions.
6.2 Losses Net of Insurance, etc. The amount of any Loss for which
-----------------------------
indemnification is provided under this Article VI shall be net of any amounts
actually recovered by the indemnified party under insurance policies (net of the
cost of obtaining such recovery). If Seller is entitled to indemnification under
insurance policies, it shall, at the request of Premier, use its reasonable best
efforts to obtain such indemnification under such insurance policies before
seeking indemnification from Premier, and any expenses incurred in connection
therewith shall be advanced by the party obligated to provide such
indemnification (the "indemnifying party"). It is understood that the
indemnification obligation of Premier is secondary and supplemental to any
indemnification under any insurance policy maintained for the benefit of the
indemnified party. The indemnify party shall not be relieved of its obligation
to advance fees and expenses to the indemnified party in accordance with Section
6.4 (or to indemnify any indemnified person under this Article VI) by reason of
any claim under any insurance policy, but shall be entitled to receive, and the
indemnified party does hereby assign to the indemnifying party the right to
receive, direct payment of any recovery under any such claim.
6.3 Termination of Indemnification. The obligations to indemnify and
------------------------------
hold harmless a party hereto shall not terminate, except that the obligations of
Premier pursuant to Section 6.1 terminate upon a termination by either party
pursuant to Section 7.1(a), but only with respect to actions or omissions from
and after the time of such termination.
6.4 Procedures Relating to Indemnification Under Article VI.
-------------------------------------------------------
(a) An indemnified party entitled to any indemnification in respect
of, arising out of or involving a claim or demand made by any Person against the
indemnify party (a "Third Party Claim") shall notify the indemnifying party in
writing, and in reasonable detail of the Third Party Claim within 10 Business
Days after receipt by such indemnified party of written notice of the Third
Party Claim; provided; however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
indemnifying party shall have been actually and materially prejudiced as a
result of such failure (it being understood that the indemnifying party shall
not be liable for any expenses incurred during the period in which the
indemnified party failed to give notice).
(b) If a Third Party Claim is made against an indemnified party, the
indemnifying party shall be entitled to participate in the defense thereof and,
if it so chooses
-16-
<PAGE>
and unconditionally acknowledges its obligations to indemnify the indemnified
party with respect to such Third Party Claim, to assume the defense thereof with
counsel selected by the indemnifying party and not reasonably objected to by the
indemnified party. Should the indemnifying party so elect to assume the defense
of a Third Party Claim, the indemnified party shall have the right to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the indemnifying party (except that, for
any period following receipt of notice of any Third Party Claim during which the
indemnifying party has failed to assume the defense of such claim, the
indemnifying party shall pay such fees and expenses as in incurred), it being
understood that the indemnifying party shall control such defense; provided,
that the indemnifying party shall not take any action in the conduct of such
defense that would materially adversely affect the indemnified party without the
consent of the indemnified party. The indemnified party shall also have the
right to employ no more than one separate counsel for all indemnified party (and
no more than one local counsel in any jurisdiction where it is reasonably
necessary) not reasonably objected to by the indemnifying party, at the expense
of the indemnifying party, but only if: (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party or parties would present
such counsel with a conflict of interest, (ii) the actual or potential
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or are in addition to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall in writing authorize the indemnified party to
employ separate counsel at the expense of the indemnifying party.
(c) If the indemnifying party elects to assume the defense of any
Third Party Claim, all of the indemnified parties, shall cooperate with the
indemnifying party in the defense or prosecution thereof. Such cooperation
shall include (upon the indemnifying party's reasonable request) the provision
to the indemnifying party of existing records and information which are
reasonably relevant to such Third Party Claim, and making themselves (in the
case of individuals) and using reasonable best efforts to make their employees
and their Representatives, if any, available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder, and to attend depositions, give testimony or otherwise appear at any
trial or hearing to the extent reasonably requested by the indemnifying party.
Whether or not the indemnifying party shall have assumed the defense of a Third
Party Claim, the indemnifying party shall not admit any liability with respect
to, or settle, compromise or discharge, such Third Party Claim without the
indemnified party's prior written consent, which consent shall not be
unreasonably withheld. If the indemnifying party shall have assumed the defense
of a Third Party Claim, the indemnified party shall agree to any settlement,
compromise or discharge of a Third
-17-
<PAGE>
Party Claim which the indemnifying party may recommend and which by its terms
obligates the indemnifying party to pay the full amount of the liability in
connection with such Third Party Claim, which releases the indemnified party
completely in connection with such Third Party Claim, and which would not
otherwise adversely affect the indemnified party.
(d) Notwithstanding the foregoing, the indemnifying party shall not be
entitled to assume the defense of any Third Party Claim (but shall be liable for
the reasonable fees and expenses of counsel incurred by the indemnified party in
defending such Third Party Claim, which fees and expenses the indemnifying party
shall pay as incurred in advance of the final disposition of such Third Party
Claim) if the Third Party Claim seeks an order, injunction or other equitable
relief or relief for other than money damages against the indemnified party
which the indemnified party reasonably determines, after conferring with its
outside counsel, cannot be separated from any related claim for money damages;
provided, however, that the foregoing shall not apply to any Third Party Claim
prior to the Closing seeking to enjoin or otherwise prevent, prohibit or impede
the consummation of the Transactions, which Third Party Claim prior to the
Closing shall be defended jointly by the indemnifying party and the indemnified
party, it being understood and agreed that (i) only one counsel (plus only one
local counsel in any jurisdiction where it is reasonably necessary) shall be
permitted for all of the indemnified party and (ii) if the parties cannot in
good faith agree on a particular matter, such dispute shall be resolved in good
faith by the indemnifying party, with a good faith effort to balance the
interests of both the indemnified parties and the indemnifying party. If such
equitable relief or other relief portion of the Third Party Claim can be so
separate from that for money damages, the indemnifying party shall be entitled
to assume the defense of the portion relating to the money damages. In the
event that the indemnifying party is not permitted to assume the defense of any
Third Party Claim pursuant to this Section 6.4(d), the indemnified party shall
not agree to any settlement, compromise or discharge of such Third Party Claim
which by its terms obligates the indemnifying party without the prior written
consent of the indemnifying party.
(e) In the event that the indemnified party is entitled to obtain
counsel at the indemnifying party's expense in accordance with Section 6.4(b) or
Section 6.4(d), indemnifying party shall reimburse the indemnified party for the
reasonable fees, costs and expenses of such counsel upon presentation of
invoices detailing with reasonable specificity the nature of the services
provided and the basis of the fees, costs and expenses incurred.
6.5 Arbitration. In the event that any parties are unable to resolve
-----------
any dispute related to or arising under the Transactions contemplated hereunder,
the exclusive method for resolving such dispute shall be binding, nonappealable
arbitration in Irvine, California initiated by a party by a written notice to
the other party demanding arbitration and specifying the claim to be arbitrated.
Such arbitration shall be conducted pursuant to the Expedited Procedures of the
Commercial Arbitration Rule (the "Rules") of the American
-18-
<PAGE>
Arbitration Association ("AAA), with the following modifications. The party
initiating the arbitration (the "Claimant") shall appoint its arbitrator in its
request for arbitration (the "Request"). The other party (the "Respondent")
shall appoint its arbitrator within 15 Business Days of receipt of the Request
and shall notify the Claimant of such appointment in writing. If the Respondent
fails to appoint an arbitrator within such 15 Business Day period, the
arbitrator named in the Request shall decide the controversy or claim as a sole
arbitrator. Otherwise, the two arbitrators appointed by the parties shall
appoint a third arbitrator within 15 Business Days after the Respondent has
notified Claimant of the appointment of the Respondent's arbitrator. When the
third arbitrator has accepted the appointment, the two party-appointed
arbitrators shall promptly notify the parties of such appointment. If the two
arbitrators appointed by the parties fail or are unable to so appoint a third
arbitrator, then the appointment of the third arbitrator shall be made by the
AAA, which shall promptly notify the parties of the appointment. The third
arbitrator shall act as chairperson of the panel. Upon appointment of the third
arbitrator, the arbitrators shall proceed to commence and conduct all
proceedings promptly and in accordance with the Rules. The arbitral award shall
be in writing and shall be final and binding on the parties to the arbitration.
The arbitrator shall be instructed to award costs, including reasonable
attorneys' fees and disbursements, which shall be paid by the party against whom
the award is entered. Judgment upon the award may be entered by any court having
jurisdiction thereof or having jurisdiction over the parties or their assets,
without review of the merits of the award.
ARTICLE VII
GENERAL PROVISIONS
------------------
7.1 Termination, Abandonment or Rescission of Purchase Agreement.
------------------------------------------------------------
(a) This Purchase Agreement may be terminated and the purchase and
sale of the Shares abandoned at any time prior to the Closing:
(i) by mutual consent of Premier and the Seller in writing;
(ii) by either Premier or the Seller if the Closing shall not
have occurred prior to February 27, 1998 (other than due to the failure of
the party seeking to terminate this Purchase Agreement to perform its
obligations under this Purchase Agreement required to be performed at or
prior to such date);
(iii) by Premier or Seller, if any Governmental Authority within
the United States or any country or other jurisdiction in which Premier,
directly or
-19-
<PAGE>
indirectly, has material assets or operations shall have issued an order,
decree or taken any other action permanently enjoining, restraining or
otherwise prohibiting the Transactions, and such order, decree, ruling or
other action shall have become final and nonappealable; or
(iv) by Premier, if after the date of this Purchase Agreement the
Company issues (A) any shares of Company Common Stock (other than upon the
conversion, exercise or exchange of securities outstanding on the date of
this Purchase Agreement that are convertible into or exercisable or
exchangeable for shares of Company Common Stock) or (B) any securities
convertible into or exercisable or exchangeable for shares of Company
Common Stock which result in the percentage of Company Common Stock
beneficially held by the Seller, together with the percentage of Company
Common Stock beneficially held by Premier falling below 50.1% of the
ownership of all Company Common Stock (assuming the conversion, exercise or
exchange of all securities referred to in clause (B)).
(b) This Purchase Agreement and the purchase and sale of the Shares
thereunder, at the election of either Premier or Seller, shall be rescinded
following the Closing in the event that:
(i) Premier withdraws, abandons, or terminates the Tender Offer
without Premier purchasing all Shares validly tendered;
(ii) the Tender Offer expires without Premier purchasing all
Shares validly tendered; or
(iii) in the event the Acquisition Agreement is terminated.
(c) In the event of termination of this Purchase Agreement by either
Premier or the Seller as provided in Section 7.1(a), this Purchase Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of Premier or the Seller, other than Section 2.5, Article
VI and Article VII. Nothing contained in this Section shall relieve any party
for any willful breach of the representations, warranties, covenants or
agreements set forth in this Purchase Agreement.
7.2 Counterparts. This Purchase Agreement may be executed in one or
------------
more counterparts, all of which shall be considered one and the same agreement,
and shall become a binding agreement when one or more counterparts have been
signed by each party and delivered to the other parties.
-20-
<PAGE>
7.3 Notices. All notices, requests, demands or other communications
-------
provided herein shall be made in writing and shall be deemed to have been duly
given if delivered as follows:
If to Premier:
Premier Laser Systems, Inc.
3 Morgan
Irvine, California 92618
Attn: Secretary
Fax: (714) 951-7218
with a copy to:
Paul, Hastings, Janofsky & Walker LLP
695 Town Center Drive, 17/th/ Floor
Costa Mesa, California 92626-1924
Attn: Peter J. Tennyson, Esq.
Fax: (714) 979-1921
If to Seller:
Mark S. Blumenkranz, M.D.
20 Larguita Lane
Portola Valley, California 94028
Fax: (650) 851-8796
with a copy to:
Quinn, Emanuel, Urquhart, Oliver & Hedges
865 S. Figueroa Street, 10/th/ Floor
Los Angeles, California 90017
Attention: Steve G. Madison
Fax: (213) 624-0643
or to such other address as any party shall have specified by notice in writing
to the other parties. All such notices, requests, demands and communications
shall be deemed to have been received on (i) the date of delivery if sent by
messenger, (ii) on the Business Day following the Business Day on which
delivered to a recognized courier service if sent by overnight courier or (iii)
on the date received, if sent by fax.
-21-
<PAGE>
7.4 Governing Law. This Purchase Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California as applied to
contracts entered into and to be performed in California and without regard to
the application of principles of conflict of laws.
7.5 Interpretation. When a reference is made in this Purchase
--------------
Agreement to an Article or Section, such reference shall be to an Article or
Section of this Purchase Agreement unless otherwise indicated. The table of
contents and headings contained in this Purchase Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Purchase Agreement. Whenever the words "include," "includes" or
"including" are used in this Purchase Agreement, they shall be deemed to be
followed by the words "without limitation."
7.6 Successors and Assigns. Except as otherwise expressly provided
----------------------
in this Purchase Agreement, neither this Purchase Agreement nor any of the
rights, interests or obligations under this Purchase Agreement shall be
assigned, in whole or in part, by operation of law or otherwise by any of the
parties without the prior written consent of the other parties, except that
Premier, prior to or after the consummation of the transactions contemplated by
Sections 2.1 and 2.2, may assign, in its sole discretion, any or all of its
rights, interests and obligations under this Purchase Agreement to any wholly
owned Subsidiary of Premier. However, no such assignment shall relieve Premier
of any of its obligations under this Purchase Agreement. Subject to the
preceding sentence, this Purchase Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors,
assigns and heirs.
7.7 Entire Agreement; No Oral Waiver; Construction. This Purchase
----------------------------------------------
Agreement and the agreements, certificates and other documents contemplated
hereby and thereby, including the Acquisition Agreement, constitute the entire
agreement among the parties pertaining to the subject matter hereof and
supersede all prior and contemporaneous agreements, understandings and
representations, whether oral or written, of the parties in connection
therewith. No covenant or condition or representation not expressed in this
Purchase Agreement shall affect or be effective to interpret, change or restrict
this Purchase Agreement. No prior drafts of this Purchase Agreement and no
words or phrases from any such prior drafts shall be admissible into evidence in
any action, suit or other proceeding involving this Purchase Agreement or the
transactions contemplated hereby. This Purchase Agreement may not be amended,
changed or terminated orally, nor shall any amendment, change, termination or
attempted waiver of any of the provisions of this Purchase Agreement be binding
on any party unless in writing signed by the parties hereto. No modification,
waiver, termination, rescission, discharge or cancellation of this Purchase
Agreement and no waiver of any provision of or default under this Purchase
Agreement shall affect the right of
-22-
<PAGE>
any party thereafter to enforce any other provision or to exercise any right or
remedy in the event of any other default, whether or not similar.
7.8 Severability. If any provision of this Purchase Agreement (or
------------
any portion thereof) shall be declared by any court of competent jurisdiction to
be illegal, void or unenforceable, all other provisions of this Purchase
Agreement (and portions thereof) shall not be affected and shall remain in full
force and effect.
7.9 No Third-party Rights. Nothing in this Purchase Agreement,
---------------------
expressed or implied, shall or is intended to confer upon any Person other than
the parties hereto or their respective successors or assigns, any rights or
remedies of any nature or kind whatsoever under or by reason of this Purchase
Agreement.
7.10 Remedies. Each of the parties hereto acknowledges and agrees
--------
that (i) the provisions of this Purchase Agreement are reasonable and necessary
to protect the proper and legitimate interests of the other parties hereto, and
(ii) the other parties hereto would be irreparably damaged in the event any of
the provisions of this Purchase Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties hereto shall be entitled to preliminary and permanent injunctive
relief to prevent breaches of the provisions of this Purchase Agreement by the
other parties hereto without the necessity of proving irreparable injury or
actual damages or of posting any bond, and to enforce specifically the terms and
provisions hereof and thereof, which rights shall be cumulative and in addition
to any other remedy to which the parties hereto may be entitled hereunder or at
law or equity.
7.11 Further Assurances. From time to time, at the reasonable request
------------------
of any other party hereto and without further consideration, each party hereto
shall execute and deliver such additional documents and take all such further
action as may be necessary to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Purchase
Agreement.
7.12 Survival of Representations.
---------------------------
(a) All representations and warranties contained herein or made
pursuant hereto shall survive the Closing. The expiration of any representation
and warranty shall not affect any claim for indemnification made prior to the
date of such expiration.
(b) The representations and warranties made by any party in this
Purchase Agreement or in any agreement, certificate, schedule or exhibit
delivered in connection with this Purchase Agreement may be fully and completely
relied upon by each other party unless the party seeking to avoid such
representation or warranty can demonstrate that the
-23-
<PAGE>
investigation made by or on behalf of such other party actually revealed or
disclosed the inaccuracy in question.
7.1 No Restrictions on Directors. Notwithstanding anything to the
----------------------------
contrary in this Purchase Agreement, it is understood and agreed that no
provision of this Purchase Agreement and the Registration Rights Agreement and
the transactions contemplated hereby and thereby shall in any way limit or
restrict the actions of any Person to the extent such Person is acting in such
Person's capacity as a director on the Board of Directors of Premier or the
Company, and nothing in this Purchase Agreement or the Registration Rights
Agreement is intended to, or shall be deemed to, restrict the exercise of
fiduciary duties by any such Person in such capacity.
[Signature Pages Follow]
-24-
<PAGE>
[SIGNATURE PAGE FOR PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties have executed, delivered and entered
into this Purchase Agreement as of the day and year first above written.
"Premier"
PREMIER LASER SYSTEMS, INC.
By:/s/ Colette Cozean
---------------------------
Name:_________________________
Title:________________________
"Seller"
/s/ Mark S. Blumenkranz
------------------------------
Name: Mark S. Blumenkranz, M.D.
/s/ Recia Blumenkranz
------------------------------
Name: Recia Blumenkranz, M.D.
-25-
<PAGE>
EXHIBIT "A"
REGISTRATION RIGHTS AGREEMENT
<PAGE>
EXHIBIT "B"
FORM OF CLASS C WARRANT
<PAGE>
EXHIBIT "C"
FORM OF CLASS D WARRANT
<PAGE>
EXHIBIT 99.5
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER
ANY APPLICABLE STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS (I) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, (II) THE SALE IS MADE
PURSUANT TO RULE 144 UNDER THE ACT, IF AVAILABLE, AND EXEMPTIONS FROM
REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS OR (III) AN OPINION IS
OBTAINED FROM COUNSEL TO THE HOLDER, REASONABLY SATISFACTORY TO COUNSEL TO
PREMIER LASER SYSTEMS, INC. THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE
UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE
SHARES OF COMMON STOCK PURCHASABLE HEREUNDER ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND ARE SUBJECT TO POSSIBLE CANCELLATION UNDER THAT CERTAIN PURCHASE
AGREEMENT (THE "PURCHASE AGREEMENT") OF EVEN DATE HEREWITH BETWEEN PREMIER LASER
SYSTEMS, INC. AND HOLDER.
CLASS C WARRANT
TO PURCHASE COMMON STOCK
NO PAR VALUE OF
PREMIER LASER SYSTEMS, INC.
421,052 Warrants (Partial Shares)/1/ February 25, 1998
This certifies that Mark S. Blumenkranz, M.D. and Recia Blumenkranz, M.D.
(collectively, the "Holder"), for value received, is entitled, subject to the
other terms set forth below, to purchase from Premier Laser Systems, Inc., a
California corporation (the "Company"), having a place of business at 3 Morgan,
Irvine, California 92618, at any time from the Notice Date defined below until
5:00 P.M.
- -------------------
/1/ (Does not represent 421,052 shares - See Paragraph 2 for computation.)
-1-
<PAGE>
(California time) on the ninetieth day following the Notice Date (the
"Expiration Date"), unless earlier terminated pursuant to the provisions of
Section 2.4 hereof, at which time this Warrant shall expire and become void, a
fraction of a share, of the Company's Common Stock, no par value (the "Common
Stock") in an amount determined pursuant to Section 2 below. The purchase or
exercise price per share (the "Exercise Price") shall be one cent ($0.01)
regardless of the number of Warrants which must be exercised to obtain a Warrant
Share (as defined below).
The number and character of the securities purchasable upon exercise of
this Warrant are subject to adjustment as provided in Section 3.3 hereof.
This Warrant is subject to the following terms and conditions:
1. Exercise; Issuance of Certificates; Payment for Shares.
1.1 Duration of Exercise of Warrant. This Warrant is exercisable at
the option of Holder at any time from the Notice Date until 5:00 P.M.
(California time) on the Expiration Date for all or a portion of the shares of
Common Stock that may be purchased hereunder. This Warrant shall be exercised
upon surrender to the Company of this Warrant properly endorsed with a completed
and executed Subscription Agreement in the form attached hereto as Exhibit A,
and upon payment in cash or cashier's check of the aggregate Exercise Price for
the number of shares of Common Stock for which this Warrant is being exercised
(the "Warrant Shares"). The Company agrees that any Warrant Shares purchased
under this Warrant shall be deemed to be issued to Holder as the record owner of
such shares as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for such shares. Certificates for the
Warrant Shares so purchased, together with any other securities or property to
which Holder is entitled upon such exercise, shall be delivered to Holder by the
Company or its transfer agent at the Company's expense as soon as practicable
after the rights represented by this Warrant have been exercised. Each stock
certificate so delivered shall be in such denominations of Common Stock as may
be reasonably requested by Holder and shall be registered in the name of Holder
or such other name as shall be designated by Holder. If, upon exercise of this
Warrant, fewer than all of the shares issuable upon exercise of this Warrant are
purchased, one or more new warrants substantially in the form of, and on the
terms contained in, this Warrant will be issued for the remaining number of
shares not exercised.
1.2 Securities to be Fully Paid; Reservation of Warrant Shares. The
Company covenants and agrees that all Warrants and Warrant Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance,
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<PAGE>
be duly authorized, validly issued, fully paid and nonassessable and such
issuance will not violate any pre-emptive rights under applicable law, the
Premier Articles of Incorporation or By-laws, contracts, or agreement, or
otherwise. The Company covenants that it will at all times from the date hereof
reserve and keep available a sufficient number of shares of its authorized but
unissued Common Stock (or other securities) solely for issuance and delivery to
Holder upon exercise of this Warrant. The Company will take all such reasonable
action as may be necessary to assure that such Warrants and Warrant Shares may
be issued as provided herein without violation of any applicable law or
regulation.
2. Notice of Exercisability and Determination of Number of Warrant
Shares.
2.1 Condition to Exercise. This Warrant shall not become exercisable
unless the Net Sales of Qualified Products (both as defined herein) for the
twelve (12) month period ended August 31, 1998 (the "Determination Date") equal
or exceed Seven Million Dollars ($7,000,000). "Net Sales" shall mean net sales
of Qualified Products as determined by generally accepted accounting principles,
as consistently applied by Ophthalmic Imaging Systems ("OIS"). "Qualified
Products" shall mean products sold by and in connection with the current core
business of OIS including: (i) products related to or arising out of such
current core products; (ii) products under development as of the date hereof;
and (iii) those same products if sold by any successor owner of OIS' operations.
As soon as practicable after the Determination Date, the Company shall determine
the Net Sales of Qualified Products for the twelve (12) month period ended on
the Determination Date and shall mail to the holder of the Warrant, and shall
publish in a newspaper of national circulation a notice (the "Exercise Notice")
stating whether this condition to exercisability has been met. The date of such
mailing and publication is the "Notice Date."
2.2 Shares Issuable. To determine the number of Warrant Shares for
which the Warrant may be exercised, the Company shall determine the average
Closing Price (as defined below) of the Common Stock for the (i) fifteen (15)
consecutive trading days immediately preceding the Determination Date and (ii)
the thirty (30) consecutive trading days ending fifteen (15) trading days prior
to the Determination Date, and shall calculate the number of shares of the
Common Stock, or fraction thereof, which could be purchased at the greater of
such two average Closing Prices for a purchase price of twenty-five cents
($0.25). The result of this calculation shall be the "Share Factor." The Share
Factor shall be multiplied by the number of Warrants stated on the first page of
this Warrant to determine the number of whole shares for which this Warrant may
be exercised. Fractional shares resulting from aggregate exercises shall be
rounded to the nearest whole share.
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<PAGE>
2.3 Notice. The Exercise Notice sent to the Holder shall state the
number of Warrant Shares for which the Warrant has become exercisable.
2.4 Exercise. If the Exercise Notice states that the condition
stated in Section 2.1 has not been satisfied, then the Notice Date shall become
the Expiration Date, this Warrant shall expire effective as of the Notice Date
and the Holder shall have no further rights hereunder. If the Exercise Notice
states the condition has been met, this Warrant shall thereafter be exercisable
for the number of whole shares determined as provided in Section 2.2 and
specified in the applicable Exercise Notice.
2.5 Closing Price. For purposes of any computation pursuant to this
Section 2, the term "Closing Price" for any day shall mean the last reported
sale price, regular way, of the Common Stock, or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices,
regular way, for such day, in either case on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or if it is
not listed or admitted to trading on any national securities exchange, but is
traded on Nasdaq, the closing sale price of the Common Stock or, in case no sale
is reported, the average of the closing bid and asked quotations for the Common
Stock on Nasdaq, or any comparable system.
3. Certain Notices.
3.1 Notice of Certain Events. If at any time after the
Determination Date and before the Expiration Date:
3.1.1 the Company shall declare any cash dividend upon its
Common Stock;
3.1.2 the Company shall declare any dividend upon its Common
Stock payable in stock (other than a dividend payable solely in shares of Common
Stock) or make any special dividend or other distribution to the holders of its
Common Stock;
3.1.3 the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
3.1.4 there shall be any capital reorganization or
reclassification of the capital stock of the Company; or consolidation or merger
of the Company with, or sale of leases, exchanges or other conveyances (other
than pledges, mortgages and liens related to loans) of substantially all of its
assets to, another corporation;
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<PAGE>
3.1.5 there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
3.1.6 any purchase, retirement, or redemption by the Company of
its Common Stock;
then, in any one or more of said cases, the Company shall give to the registered
holder of this Warrant, by the means specified in Section 8 herein, (i) at least
twenty (20) days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, and (ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding-up, at least twenty (20) days' prior written notice of the date when the
same shall take place; provided, however, that the Company shall not be required
to send any notice pursuant to this Section 3.1 if the Company determines the
condition in Section 2.1 has not been met. Any notice given in accordance with
the foregoing clause (i) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto. Any notice given in accordance with the
foregoing clause (ii) shall also specify the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, winding-up, conversion or public
offering, as the case may be. If Holder does not exercise this Warrant prior to
the occurrence of an event described above, Holder shall not be entitled to
receive the benefits accruing to then existing holders of Common Stock.
3.2 Notice of Adjustment. Upon the happening of an event requiring
an adjustment of the amount or the kind of securities or property purchasable
hereunder, the Company shall forthwith give notice to the Holder which indicates
the event requiring the adjustment, the adjusted number of Warrant Shares that
may be acquired or the amount or kind of any such securities or property so
purchasable upon exercise of this Warrant, as the case may be, and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. The Company's independent public accountant shall
determine the method for calculating the adjustment and shall prepare a
certificate setting forth such calculations, the reason for the methodology
chosen, and the facts upon which such calculation is based. Such certificate
shall accompany the notice to be provided to the Holder pursuant to this Section
3.2.
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<PAGE>
3.3 Adjustment of Purchase Price and Number of Warrant Shares. The
number and kind of securities that may be acquired upon the exercise of this
Warrant shall be subject to adjustment following the Determination Date and
prior to the earlier of the exercise of, or the Expiration Date of this Warrant,
upon the happening of any of the following events:
(a) Dividends, Subdivisions, Combinations, or Consolidations of
Common Stock.
(i) In the event the Company shall declare, pay, or make
any dividend upon its outstanding Common Stock payable in Common Stock or shall
effect a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock, then the Share Factor shall be adjusted so
that the number of Warrant Shares that may thereafter be purchased upon the
exercise of the rights represented hereby shall be increased in proportion to
the increase in the number of outstanding shares of Common Stock through such
dividend or subdivision. In case the Company shall at any time combine the
outstanding shares of its Common Stock into a smaller number of shares of Common
Stock, the Share Factor shall be adjusted so that number of Warrant Shares that
may thereafter be acquired upon the exercise of the rights represented hereby
shall be decreased in proportion to the decrease through such combination. In
each case, the Exercise Price will not be adjusted.
(ii) If the Company declares, pays or makes any dividend or
other distribution upon its outstanding Common Stock payable in securities or
other property (excluding cash dividends and dividends payable in Common Stock,
but including, without limitation, shares of any other class of the Company's
stock or stock or other securities convertible into or exchangeable for shares
of Common Stock or any other class of the Company's stock or other interests in
the Company or its assets ("Convertible Securities")), a proportionate part of
those securities or that other property shall be set aside by the Company and
delivered to the Holder in the event that the Holder exercises this Warrant. The
securities and other property then deliverable to the Holder upon the exercise
of this Warrant shall be in the same ratio to the total securities and property
set aside for the Holder as the number of Warrant Shares with respect to which
this Warrant is then exercised as to the total number of Warrant Shares that may
be acquired pursuant to this Warrant at the time the securities or property were
set aside for the Holder.
(iii) If the Company shall declare a dividend payable in
money on its outstanding Common Stock and at substantially the same time shall
offer to its shareholders a right to purchase new shares of Common Stock from
the proceeds of such dividend or for an amount substantially equal to the
dividend, all shares of
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Common Stock so issued shall, for purposes of this Warrant, be deemed to have
been issued as a stock dividend subject to the adjustments set forth in Section
3.3(a)(i).
(iv) If the Company shall declare a dividend payable in money
on its outstanding Common Stock and at substantially the same time shall offer
to its shareholders a right to purchase new shares of a class of stock (other
than Common Stock), Convertible Securities, or other interests from the proceeds
of such dividend or for an amount substantially equal to the dividend, all
shares of stock, Convertible Securities, or other interests so issued or
transferred shall, for purposes of this Warrant, be deemed to have been issued
as a dividend or other distribution subject to Section 3.3(a)(ii).
(v) If the Company shall declare a dividend payable in cash
on its outstanding Common Stock, such dividend shall be deemed to have been
issued as a dividend or other distribution subject to Section 3.3(a)(i).
(b) Effect of Reclassification, Reorganization, Consolidation,
Merger, or Sale of Assets.
(i) Upon the occurrence of any of the following events, the
Company shall cause an effective provision to be made so that the Holder shall
have the right thereafter, by the exercise of this Warrant, to acquire for the
Exercise Price described in this Warrant the kind and amount of shares of stock
and other securities, property and interests as would be issued or payable with
respect to or in exchange for the number of Warrant Shares that are then
purchasable pursuant to this Warrant as if such Warrant Shares had been issued
to the Holder immediately prior to such event: (A) reclassification, capital
reorganization, or other change of outstanding Common Stock (other than a change
as a result of an issuance of Common Stock under Subsection 3.3(a)), (B)
consolidation or merger of the Company with or into another corporation or
entity (other than a consolidation or merger in which the Company is the
continuing corporation and that does not result in any reclassification, capital
reorganization or other change of the outstanding shares of Common Stock or the
Warrant Shares issuable upon exercise of this Warrant), or (C) spin-off of
assets, a subsidiary or any affiliated entity, or the sale, lease, conveyance
(other than pledges, mortgages and liens related to loans) or exchange of a
significant portion of the Company's assets taken as a whole, in a transaction
pursuant to which the Company's shareholders of record are to receive securities
or other interests in a successor entity. Any such provision made by the Company
for adjustments with respect to this Warrant shall be as nearly equivalent to
the adjustments otherwise provided for in this Warrant as is reasonably
practicable. The foregoing provisions of this Section 3.3(b)(i) shall similarly
apply to successive reclassifications, capital reorganizations and similar
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<PAGE>
changes of shares of Common Stock and to successive consolidations, mergers,
spin-offs, sales, leases or exchanges.
(ii) If any sale or exchange of all, or substantially all, of
the Company's assets or business or any dissolution, liquidation or winding up
of the Company (a "Termination of Business") shall be proposed, the Company
shall deliver written notice to the Holder of this Warrant in accordance with
Section 3.2 hereof as a condition precedent to the consummation of that
Termination of Business. If the result of the Termination of Business is that
shareholders of the Company are to receive securities or other interests of a
successor entity, the provisions of Section 3.3(b)(i) above shall apply.
However, if the result of the Termination of Business is that shareholders of
the Company are to receive money or property other than securities or other
interests in a successor entity, the Holder of this Warrant shall be entitled to
exercise this Warrant and, with respect to any Warrant Shares purchasable
pursuant to this Warrant so acquired, shall be entitled to all of the rights of
the other shareholders of Common Stock with respect to any distribution by the
Company in connection with the Termination of Business. In the event no
successor entity is involved and Section 3.3(b)(i) does not apply, all
acquisition rights under this Warrant shall terminate at the close of business
on the date as of which shareholders of record of the Common Stock shall be
entitled to participate in a distribution of the assets of the Company in
connection with the Termination of Business; provided, that, in no event shall
--------------
that date be less than 20 days after delivery to the Holder of this Warrant of
the written notice described above and in Section 3.2 hereof. If the termination
of acquisition rights under this Warrant is to occur as a result of the event at
issue, a statement to that effect shall be included in that written notice.
(c) Obligation of Successors or Transferees. The Company shall not
effect any consolidation, merger, or sale or conveyance of assets within the
meaning of Section 3.3(b)(i)(B)-(C) unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and mailed or delivered to
the Holder pursuant to Section 8 herein, the obligation to deliver to the Holder
such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, the Holder may be entitled to acquire. In no event shall the
securities received pursuant to this Section be registerable or transferable
other than pursuant and subject to the terms of this Warrant.
(d) Application of this Section. The provisions of this Section 3.3
shall apply to successive events that may occur from time to time but shall
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<PAGE>
only apply to a particular event if it occurs prior to the expiration of this
Warrant either by its terms or by its exercise in full.
(e) Definition of Common Stock. Unless the context requires
otherwise, whenever reference is made in this Section 3.3 to the issue or sale
of shares of Common Stock, the term "Common Stock" shall mean (i) the no par
value Class A Common Stock of the Company, (ii) any other class of stock ranking
on a parity with, and having substantially similar rights and privileges as the
Company's no par value Class A Common Stock, and (iii) any Convertible Security
convertible into either (i) or (ii). However, subject to the provisions of
Section 3.3(b)(i) above, Common Stock issuable upon the exercise of this Warrant
shall include only shares of Common Stock designed as no par value Class A
Common Stock of the Company as of the date of this Warrant.
(f) Company-Held Stock. For purposes of Sections 3.3(a) above, shares
of Common Stock owned or held at any relevant time by, or for the account of,
the Company in its treasury or otherwise, shall not be deemed to be outstanding
for purposes of the calculation and adjustments described therein.
4. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of the Warrant shall be made without charge to Holder of any issue tax
or other governmental charges in respect thereof; provided, however, that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the then holder of the Warrant being exercised.
5. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Warrant shall be construed as conferring upon Holder the right
to vote or to consent or to receive notice as a stockholder in respect of
meetings of stockholders for the election of directors of the Company or any
other matters or any rights whatsoever as a stockholder of the Company, until,
and only to the extent that, this Warrant shall have been exercised. Except as
provided in Section 3.1 in the event of a dividend on the Common Stock payable
in shares of Common Stock, 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. The Company covenants, however, that until the
Termination Date, for so long as this Warrant remains at least partially
unexercised, it will furnish the Holder with copies of all reports and
communications furnished to the stockholders of the Company. No provisions
hereof, in the absence of affirmative action by Holder to purchase Warrant
Shares, and no mere enumeration herein of the rights or privileges of Holder
shall give rise to any
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<PAGE>
liability of Holder for the Exercise Price or as a stockholder of the Company
whether such liability is asserted by the Company or by its creditors.
6. Registration Rights. Holder shall have registration rights with
respect to the Warrant Shares issuable on exercise of this Warrant, as more
fully set forth in that certain Registration Rights Agreement dated February 25,
1998 by and among the Company, Holder and others.
Further, the Company shall, with a view to making available to the
Holders of the Common Stock issuable upon exercise of the Warrant the benefits
of certain rules and regulations of the Securities and Exchange Commission (the
"Commission") (including, without limitation, Rule 144 under the Securities Act)
which may permit the sale of such Warrant Shares to the public without
registration, file required reports under Section 13 or 15(d), of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), use commercially
reasonable efforts to make available to the Holders of such benefits, and in
furtherance of (but without limiting) the foregoing:
(a) make and keep public information available as those terms are
defined in Rule 144 under the Securities Act or any successor provision thereto;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) so long as the Holders own any Warrants or Warrant Shares, furnish
the Holders forthwith upon request a written statement by the Company as to
compliance with the reporting requirements of Rule 144 or any successor
provision thereto, and of the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of the Company with the Commission, and
such other reports and documents of the Company and other information in the
possession of or reasonably obtainable by the Company as the Holders may
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Holders to sell any such securities without
registration.
7. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
8. Notices. Any notice required or permitted under this Warrant shall be
in writing and either delivered personally, telegraphed or telecopied or sent by
certified
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<PAGE>
or registered mail, postage prepaid, and shall be deemed to be given, dated and
received when so delivered personally, telegraphed or telecopied or, if mailed,
five (5) business days after the date of mailing to the following address or
facsimile number, or to such other address or addresses as such person may
subsequently designate by notice given hereunder.
If to the Company: Premier Laser Systems, Inc.
Attention: Secretary
3 Morgan
Irvine, California 92618
Facsimile: 714 951-7218
with a copy to: Paul, Hastings, Janofsky & Walker LLP
Attention: Peter J. Tennyson, Esq.
695 Town Center Drive, 17th Floor
Costa Mesa, California 92626-1924
Facsimile: 714 979-1921
If to Holder: As Holder's address appears on a
register of Warrants maintained by the
Company's transfer agent.
9. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of the
Company relating to the Common Stock issuable upon the exercise of this Warrant
shall survive the exercise and termination of this Warrant. All of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the Holder.
10. Descriptive Headings and Governing Law. The descriptive 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 California.
11. Exchange, Assignment, Combination and Replacement of Warrants.
(a) This Warrant is exchangeable, without expense other than as
provided in this Section 11, at the option of the Holder upon the reasonable
request,
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<PAGE>
presentation and surrender hereof to the Company for other Warrants of different
denominations entitling the Holder thereof to acquire in the aggregate the same
number of Warrant Shares that may be acquired hereunder.
(b) All of the covenant and provisions of this Warrant by or for the
benefit of the Holder shall be binding upon and shall inure to the benefit of,
its successors and permitted assigns hereunder. This Warrant and all rights
hereunder are transferrable and may be sold, transferred, assigned, or
hypothecated upon surrender of this Warrant to the Company, together with a duly
executed assignment in the form attached hereto as Exhibit B (the "Assignment
Form"), whereupon the Company shall, without charge, execute and deliver a new
Warrant containing the same terms and conditions of this Warrant in the name of
the assignee as named in the Assignment Form, and this Warrant shall be canceled
at that time. This Warrant, if properly assigned, may be exercised by a new
Holder without first having the new Warrant issued.
(c) This Warrant may be delivered or combined with other Warrants that
carry the same rights upon the reasonable request, presentation and surrender of
this Warrant at the office of the Company, together with a written notice signed
by the Holder, specifying the names and denominations in which new Warrants are
to be issued.
(d) The Company will execute and deliver to the Holder a new Warrant
of like tenor and date upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Warrant; provided, that (i) in the case of loss, theft, or destruction, the
Company receives a reasonably satisfactory indemnity or bond, or (ii) in the
case of mutilation, the Holder shall provide and surrender this Warrant to the
Company for cancellation.
(e) Any new Warrant executed and delivered by the Company in
substitution or replacement of this Warrant shall constitute a contractual
obligation of the Company regardless of whether this Warrant was lost, stolen,
destroyed or mutilated, and shall be enforceable by any Holder thereof.
(f) The Holder shall pay all transfer and excise taxes applicable to
any issuance of new Warrants under this Section 11.
12. Fractional Shares. No fractional shares shall be issued upon exercise
of this Warrant. The Company shall, in lieu of issuing any fractional share,
round such fractional shares to the nearest whole share.
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13. Best Efforts. The Company covenants that it will not, by amendment of
its Articles of Incorporation or bylaws, or through any reorganization, transfer
of assets, consolidation, merger, dissolution, reissue or sale of securities, or
any other voluntary action, avoid or seek to avoid the observation or
performance for any term of this Warrant, but will at all times in good faith
assist in carrying out all those terms and in taking all action necessary or
appropriate to protect the rights of the Holder against dilution or other
impairment.
14. Further Assurances. The Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue, duly authorized fully paid and nonassessable Warrants and Common Stock
and other securities issuable upon exercise of this Warrant from time to time
and not in violation of any pre-emptive rights.
(Signature Page Follows)
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<PAGE>
[SIGNATURE PAGE - CLASS C WARRANT]
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer effective as of ________ __, 1998.
PREMIER LASER SYSTEMS, INC.
By: /s/ COLETTE COZEAN
----------------------------------------
Colette Cozean, Ph.D.
Chief Executive Officer
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<PAGE>
EXHIBIT A
PREMIER LASER SYSTEMS, INC.
COMMON STOCK WARRANT
FORM OF SUBSCRIPTION AGREEMENT
(To be signed and delivered
upon exercise of Warrant)
PREMIER LASER SYSTEMS, INC.
3 Morgan
Irvine, California 92618
Attention: Secretary
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _______________ shares of Common Stock (the "Stock") of
Premier Laser Systems, Inc. (the "Company") and herewith makes payment of
__________________________ Dollars ($________) therefor and requests that the
certificates for such shares be issued in the name of, and delivered to,
______________, whose address is ____________________________________. A copy
of the Exercise Notice (as defined in the Warrant) evidencing that the Warrant
is exercisable for at least the number of shares covered by this agreement is
attached.
If the exercise of this Warrant is not covered by a registration statement
effective under the Securities Act of 1933, as amended (the "Act"), the
undersigned represents that:
(i) the undersigned is acquiring such Stock for investment for his own
account, not as nominee or agent, and not with a view to the distribution
thereof and the undersigned has not signed or otherwise arranged for the
selling, granting any participation in, or otherwise distributing the same;
(ii) the undersigned has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
undersigned's investment in the Stock;
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(iii) the undersigned has received all of the information the undersigned
has requested from the Company and considers necessary or appropriate for
deciding whether to purchase the shares of Stock;
(iv) the undersigned has the ability to bear the economic risks of his
prospective investment;
(v) the undersigned understands and agrees that (A) he may be unable to
readily liquidate his investment in the shares of Stock and that the shares must
be held indefinitely unless a subsequent disposition thereof is registered or
qualified under the Act and applicable state securities laws or is exempt from
such registration or qualification, and that the Company is not required to
register the same or to take any action or make such an exemption available
except to the extent provided in the within Warrant; (B) the exemption from
registration under the Act afforded by Rule 144 promulgated by the Securities
and Exchange Commission ("Rule 144") depends upon the satisfaction of various
conditions by the undersigned and the Company and that, if applicable, Rule 144
affords the basis for sales under certain circumstances in limited amounts, and
that if such exemption is utilized by the undersigned, such conditions must be
fully complied with by the undersigned and the Company, as required by Rule 144;
and (C) among the conditions required for use of Rule 144 is the availability of
current information to the public about the Company, and the undersigned
understands that the Company has not made such information available and has no
present plans to do so;
(vi) the undersigned either (A) is familiar with the definition of and
the undersigned is an "accredited investor" within the meaning of such term
under Rule 501 of Regulation D promulgated under the Act, or (B) is providing
representations and warranties reasonably satisfactory to the Company and its
counsel, to the effect that the sale and issuance of Stock upon exercise of such
Warrant may be made without registration under the Act or any applicable state
securities and Blue Sky laws; and
(vii) the address set forth below is the true and correct address of the
undersigned.
-------------------------------------
(Name)
-------------------------------------
(Address)
-------------------------------------
-------------------------------------
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If said number of shares shall not be all the shares exercisable or
purchasable under the within Warrant, a new Warrant is to be issued in the name
of the undersigned for the balance remaining of the Warrants.
DATED:
---------------------
--------------------------------------------------
(Name of holder must conform in all respects to
name of holder as specified on the face of the
Warrant or with the name of the assignee appearing
on the assignment form attached hereto.)
--------------------------------------------------
(signature)
--------------------------------------------------
(print name)
--------------------------------------------------
(print title)
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<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the receipt and adequacy of which are each hereby
confirmed, the undersigned,_____________________, hereby sells, assigns and
transfers unto___________________ all of the undersigned's right, title and
interest in and to an aggregate of __________ (___) warrants to purchase shares
of the Common Stock of Premier Laser Systems, Inc. (the "Corporation) standing
in the name of the undersigned on the books of the Corporation and evidenced by
that certain Class __ Warrant, dated ________ __, ___ (the "Warrant"), and does
hereby irrevocable constitute and appoint __________________ as attorney-in-fact
to effect the reissue of the Warrant as necessary and the transfer of said
Warrant on the books of the Corporation with full power of substitution upon
presentation to the Corporation of this Assignment Form together with the
Warrant.
Dated: ____________ __, ___
Signature: ___________________________
Printed Name: ___________________________
B-1
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EXHIBIT 99.6
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER
ANY APPLICABLE STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS (I) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, (II) THE SALE IS MADE
PURSUANT TO RULE 144 UNDER THE ACT, IF AVAILABLE, AND EXEMPTIONS FROM
REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS OR (III) AN OPINION IS
OBTAINED FROM COUNSEL TO THE HOLDER, REASONABLY SATISFACTORY TO COUNSEL TO
PREMIER LASER SYSTEMS, INC. THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE
UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE
SHARES OF COMMON STOCK PURCHASABLE HEREUNDER ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND ARE SUBJECT TO POSSIBLE CANCELLATION UNDER THAT CERTAIN PURCHASE
AGREEMENT (THE "PURCHASE AGREEMENT") OF EVEN DATE HEREWITH BETWEEN PREMIER LASER
SYSTEMS, INC. AND HOLDER.
CLASS D WARRANT
TO PURCHASE COMMON STOCK
NO PAR VALUE OF
PREMIER LASER SYSTEMS, INC.
421,052 Warrants (Partial Shares)/1/ February 25, 1998
This certifies that Mark S. Blumenkranz, M.D. and Recia Blumenkranz, M.D.
(collectively, the "Holder"), for value received, is entitled, subject to the
other terms set forth below, to purchase from Premier Laser Systems, Inc., a
California corporation (the "Company"), having a place of business at 3 Morgan,
Irvine, California 92618, at any time from the Notice Date defined below until
5:00 P.M.
_______________
/1/ (Does not represent 421,052 shares - See Paragraph 2 for computation.)
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(California time) on the ninetieth day following the Notice Date (the
"Expiration Date"), unless earlier terminated pursuant to the provisions of
Section 2.4 hereof, at which time this Warrant shall expire and become void, a
fraction of a share, of the Company's Common Stock, no par value (the "Common
Stock") in an amount determined pursuant to Section 2 below. The purchase or
exercise price per share (the "Exercise Price") shall be one cent ($0.01)
regardless of the number of Warrants which must be exercised to obtain a Warrant
Share (as defined below).
The number and character of the securities purchasable upon exercise of
this Warrant are subject to adjustment as provided in Section 3.3 hereof.
This Warrant is subject to the following terms and conditions:
1. Exercise; Issuance of Certificates; Payment for Shares.
1.1 Duration of Exercise of Warrant. This Warrant is exercisable at
the option of Holder at any time from the Notice Date until 5:00 P.M.
(California time) on the Expiration Date for all or a portion of the shares of
Common Stock that may be purchased hereunder. This Warrant shall be exercised
upon surrender to the Company of this Warrant properly endorsed with a completed
and executed Subscription Agreement in the form attached hereto as Exhibit A,
and upon payment in cash or cashier's check of the aggregate Exercise Price for
the number of shares of Common Stock for which this Warrant is being exercised
(the "Warrant Shares"). The Company agrees that any Warrant Shares purchased
under this Warrant shall be deemed to be issued to Holder as the record owner of
such shares as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for such shares. Certificates for the
Warrant Shares so purchased, together with any other securities or property to
which Holder is entitled upon such exercise, shall be delivered to Holder by the
Company or its transfer agent at the Company's expense as soon as practicable
after the rights represented by this Warrant have been exercised. Each stock
certificate so delivered shall be in such denominations of Common Stock as may
be reasonably requested by Holder and shall be registered in the name of Holder
or such other name as shall be designated by Holder. If, upon exercise of this
Warrant, fewer than all of the shares issuable upon exercise of this Warrant are
purchased, one or more new warrants substantially in the form of, and on the
terms contained in, this Warrant will be issued for the remaining number of
shares not exercised.
1.2 Securities to be Fully Paid; Reservation of Warrant Shares. The
Company covenants and agrees that all Warrants and Warrant Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance,
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be duly authorized, validly issued, fully paid and nonassessable and such
issuance will not violate any pre-emptive rights under applicable law, the
Premier Articles of Incorporation or By-laws, contracts, or agreement, or
otherwise. The Company covenants that it will at all times from the date hereof
reserve and keep available a sufficient number of shares of its authorized but
unissued Common Stock (or other securities) solely for issuance and delivery to
Holder upon exercise of this Warrant. The Company will take all such reasonable
action as may be necessary to assure that such Warrants and Warrant Shares may
be issued as provided herein without violation of any applicable law or
regulation.
2. Notice of Exercisability and Determination of Number of Warrant Shares.
2.1 Condition to Exercise. This Warrant shall not become exercisable
unless the Net Sales of Qualified Products (both as defined herein) for the
twelve (12) month period ended December 31, 1999 (the "Determination Date")
equal or exceed Eleven Million Six Hundred Dollars ($11,600,000). Except as set
forth below, "Net Sales" shall mean net sales of Qualified Products as
determined by generally accepted accounting principles, as consistently applied
by Ophthalmic Imaging Systems ("OIS"). "Qualified Products" shall mean products
sold by and in connection with the current core business of OIS including: (i)
products related to or arising out of such current core products; (ii) products
under development as of the date hereof; and (iii) those same products if sold
by any successor owner of OIS' operations. For the purposes of this Class D
Warrant only, firm purchase orders or purchase agreements from purchasers
seeking shipment of goods by December 31, 1999, and which are accompanied by at
least a 10% deposit, shall be deemed to be December 1999 sales. As soon as
practicable after the Determination Date, the Company shall determine the Net
Sales of Qualified Products for the twelve (12) month period ended on the
Determination Date and shall mail to the holder of the Warrant, and shall
publish in a newspaper of national circulation a notice (the "Exercise Notice")
stating whether this condition to exercisability has been met. The date of such
mailing and publication is the "Notice Date."
2.2 Shares Issuable. To determine the number of Warrant Shares for
which the Warrant may be exercised, the Company shall determine the average
Closing Price (as defined below) of the Common Stock for the (i) fifteen (15)
consecutive trading days immediately preceding the Determination Date and (ii)
the thirty (30) consecutive trading days ending fifteen (15) trading days prior
to the Determination Date, and shall calculate the number of shares of the
Common Stock, or fraction thereof, which could be purchased at the greater of
such two average Closing Prices for a purchase price of twenty-five cents
($0.25). The result of this calculation shall be the "Share Factor." The Share
Factor shall be multiplied by the number of
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Warrants stated on the first page of this Warrant to determine the number of
whole shares for which this Warrant may be exercised. Fractional shares
resulting from aggregate exercises shall be rounded to the nearest whole share.
2.3 Notice. The Exercise Notice sent to the Holder shall state the
number of Warrant Shares for which the Warrant has become exercisable.
2.4 Exercise. If the Exercise Notice states that the condition
stated in Section 2.1 has not been satisfied, then the Notice Date shall become
the Expiration Date, this Warrant shall expire effective as of the Notice Date
and the Holder shall have no further rights hereunder. If the Exercise Notice
states the condition has been met, this Warrant shall thereafter be exercisable
for the number of whole shares determined as provided in Section 2.2 and
specified in the applicable Exercise Notice.
2.5 Closing Price. For purposes of any computation pursuant to this
Section 2, the term "Closing Price" for any day shall mean the last reported
sale price, regular way, of the Common Stock, or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices,
regular way, for such day, in either case on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or if it is
not listed or admitted to trading on any national securities exchange, but is
traded on Nasdaq, the closing sale price of the Common Stock or, in case no sale
is reported, the average of the closing bid and asked quotations for the Common
Stock on Nasdaq, or any comparable system.
3. Certain Notices.
3.1 Notice of Certain Events. If at any time after the
Determination Date and before the Expiration Date:
3.1.1 the Company shall declare any cash dividend upon its
Common Stock;
3.1.2 the Company shall declare any dividend upon its Common
Stock payable in stock (other than a dividend payable solely in shares of Common
Stock) or make any special dividend or other distribution to the holders of its
Common Stock;
3.1.3 the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
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<PAGE>
3.1.4 there shall be any capital reorganization or
reclassification of the capital stock of the Company; or consolidation or merger
of the Company with, or sale of leases, exchanges or other conveyances (other
than pledges, mortgages and liens related to loans) of substantially all of its
assets to, another corporation;
3.1.5 there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
3.1.6 any purchase, retirement, or redemption by the Company of
its Common Stock;
then, in any one or more of said cases, the Company shall give to the registered
holder of this Warrant, by the means specified in Section 8 herein, (i) at least
twenty (20) days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, and (ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding-up, at least twenty (20) days' prior written notice of the date when the
same shall take place; provided, however, that the Company shall not be required
to send any notice pursuant to this Section 3.1 if the Company determines the
condition in Section 2.1 has not been met. Any notice given in accordance with
the foregoing clause (i) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto. Any notice given in accordance with the
foregoing clause (ii) shall also specify the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, winding-up, conversion or public
offering, as the case may be. If Holder does not exercise this Warrant prior to
the occurrence of an event described above, Holder shall not be entitled to
receive the benefits accruing to then existing holders of Common Stock.
3.2 Notice of Adjustment. Upon the happening of an event requiring
an adjustment of the amount or the kind of securities or property purchasable
hereunder, the Company shall forthwith give notice to the Holder which indicates
the event requiring the adjustment, the adjusted number of Warrant Shares that
may be acquired or the amount or kind of any such securities or property so
purchasable upon exercise of this Warrant, as the case may be, and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. The Company's independent public accountant shall
determine the method for calculating
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the adjustment and shall prepare a certificate setting forth such calculations,
the reason for the methodology chosen, and the facts upon which such calculation
is based. Such certificate shall accompany the notice to be provided to the
Holder pursuant to this Section 3.2.
3.3 Adjustment of Purchase Price and Number of Warrant Shares. The
number and kind of securities that may be acquired upon the exercise of this
Warrant shall be subject to adjustment following the Determination Date and
prior to the earlier of the exercise of, or the Expiration Date of this Warrant,
upon the happening of any of the following events:
(a) Dividends, Subdivisions, Combinations, or Consolidations of
Common Stock.
(i) In the event the Company shall declare, pay, or make
any dividend upon its outstanding Common Stock payable in Common Stock or shall
effect a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock, then the Share Factor shall be adjusted so
that the number of Warrant Shares that may thereafter be purchased upon the
exercise of the rights represented hereby shall be increased in proportion to
the increase in the number of outstanding shares of Common Stock through such
dividend or subdivision. In case the Company shall at any time combine the
outstanding shares of its Common Stock into a smaller number of shares of Common
Stock, the Share Factor shall be adjusted so that number of Warrant Shares that
may thereafter be acquired upon the exercise of the rights represented hereby
shall be decreased in proportion to the decrease through such combination. In
each case, the Exercise Price will not be adjusted.
(ii) If the Company declares, pays or makes any dividend or
other distribution upon its outstanding Common Stock payable in securities or
other property (excluding cash dividends and dividends payable in Common Stock,
but including, without limitation, shares of any other class of the Company's
stock or stock or other securities convertible into or exchangeable for shares
of Common Stock or any other class of the Company's stock or other interests in
the Company or its assets ("Convertible Securities")), a proportionate part of
those securities or that other property shall be set aside by the Company and
delivered to the Holder in the event that the Holder exercises this Warrant. The
securities and other property then deliverable to the Holder upon the exercise
of this Warrant shall be in the same ratio to the total securities and property
set aside for the Holder as the number of Warrant Shares with respect to which
this Warrant is then exercised as to the total number of Warrant Shares that may
be acquired pursuant to this Warrant at the time the securities or property were
set aside for the Holder.
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(iii) If the Company shall declare a dividend payable in
money on its outstanding Common Stock and at substantially the same time shall
offer to its shareholders a right to purchase new shares of Common Stock from
the proceeds of such dividend or for an amount substantially equal to the
dividend, all shares of Common Stock so issued shall, for purposes of this
Warrant, be deemed to have been issued as a stock dividend subject to the
adjustments set forth in Section 3.3 (a)(i).
(iv) If the Company shall declare a dividend payable in
money on its outstanding Common Stock and at substantially the same time shall
offer to its shareholders a right to purchase new shares of a class of stock
(other than Common Stock), Convertible Securities, or other interests from the
proceeds of such dividend or for an amount substantially equal to the dividend,
all shares of stock, Convertible Securities, or other interests so issued or
transferred shall, for purposes of this Warrant, be deemed to have been issued
as a dividend or other distribution subject to Section 3.3(a)(ii).
(v) If the Company shall declare a dividend payable in cash
on its outstanding Common Stock, such dividend shall be deemed to have been
issued as a dividend or other distribution subject to Section 3.3(a)(i).
(b) Effect of Reclassification, Reorganization, Consolidation,
Merger, or Sale of Assets.
(i) Upon the occurrence of any of the following events, the
Company shall cause an effective provision to be made so that the Holder shall
have the right thereafter, by the exercise of this Warrant, to acquire for the
Exercise other securities, property and interests as would be issued or payable
with respect to or in exchange for the number of Warrant Shares that are then
purchasable pursuant to this Warrant as if such Warrant Shares had been issued
to the Holder immediately prior to such event: (A) reclassification, capital
reorganization, or other change of outstanding Common Stock (other than a change
as a result of an issuance of Common Stock under Subsection 3.3(a)), (B)
consolidation or merger of the Company with or into another corporation or
entity (other than a consolidation or merger in which the Company is the
continuing corporation and that does not result in any reclassification, capital
reorganization or other change of the outstanding shares of Common Stock or the
Warrant Shares issuable upon exercise of this Warrant), or (C) spin-off of
assets, a subsidiary or any affiliated entity, or the sale, lease, conveyance
(other than pledges, mortgages and liens related to loans) or exchange of a
significant portion of the Company's assets taken as a whole, in a transaction
pursuant to which the Company's shareholders of record are to receive securities
or other interests in a successor entity. Any such provision made by the Company
for adjustments with
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respect to this Warrant shall be as nearly equivalent to the adjustments
otherwise provided for in this Warrant as is reasonably practicable. The
foregoing provisions of this Section 3.3(b)(i) shall similarly apply to
successive reclassifications, capital reorganizations and similar changes of
shares of Common Stock and to successive consolidations, mergers, spin-offs,
sales, leases or exchanges.
(ii) If any sale or exchange of all, or substantially all,
of the Company's assets or business or any dissolution, liquidation or winding
up of the Company (a "Termination of Business") shall be proposed, the Company
shall deliver written notice to the Holder of this Warrant in accordance with
Section 3.2 hereof as a condition precedent to the consummation of that
Termination of Business. If the result of the Termination of Business is that
shareholders of the Company are to receive securities or other interests of a
successor entity, the provisions of Section 3.3(b)(i) above shall apply.
However, if the result of the Termination of Business is that shareholders of
the Company are to receive money or property other than securities or other
interests in a successor entity, the Holder of this Warrant shall be entitled to
exercise this Warrant and, with respect to any Warrant Shares purchasable
pursuant to this Warrant so acquired, shall be entitled to all of the rights of
the other shareholders of Common Stock with respect to any distribution by the
Company in connection with the Termination of Business. In the event no
successor entity is involved and Section 3.3(b)(i) does not apply, all
acquisition rights under this Warrant shall terminate at the close of business
on the date as of which shareholders of record of the Common Stock shall be
entitled to participate in a distribution of the assets of the Company in
connection with the Termination of Business; provided, that, in no event shall
-------- ----
that date be less than 20 days after delivery to the Holder of this Warrant of
the written notice described above and in Section 3.2 hereof. If the termination
of acquisition rights under this Warrant is to occur as a result of the event at
issue, a statement to that effect shall be included in that written notice.
(c) Obligation of Successors or Transferees. The Company shall not
effect any consolidation, merger, or sale or conveyance of assets within the
meaning of Section 3.3(b)(i)(B)-(C) unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and mailed or delivered to
the Holder pursuant to Section 8 herein, the obligation to deliver to the Holder
such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, the Holder may be entitled to acquire. In no event shall the
securities received pursuant to this Section be registerable or transferable
other than pursuant and subject to the terms of this Warrant.
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<PAGE>
(d) Application of this Section. The provisions of this Section 3.3
shall apply to successive events that may occur from time to time but shall only
apply to a particular event if it occurs prior to the expiration of this Warrant
either by its terms or by its exercise in full.
(e) Definition of Common Stock. Unless the context requires
otherwise, whenever reference is made in this Section 3.3 to the issue or sale
of shares of Common Stock, the term "Common Stock" shall mean (i) the no par
value Class A Common Stock of the Company, (ii) any other class of stock ranking
on a parity with, and having substantially similar rights and privileges as the
Company's no par value Class A Common Stock, and (iii) any Convertible Security
convertible into either (i) or (ii). However, subject to the provisions of
Section 3.3(b)(i) above, Common Stock issuable upon the exercise of this Warrant
shall include only shares of Common Stock designed as no par value Class A
Common Stock of the Company as of the date of this Warrant.
(f) Company-Held Stock. For purposes of Sections 3.3(a) above, shares
of Common Stock owned or held at any relevant time by, or for the account of,
the Company in its treasury or otherwise, shall not be deemed to be outstanding
for purposes of the calculation and adjustments described therein.
4. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of the Warrant shall be made without charge to Holder of any issue tax
or other governmental charges in respect thereof; provided, however, that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the then holder of the Warrant being exercised.
5. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Warrant shall be construed as conferring upon Holder the right
to vote or to consent or to receive notice as a stockholder in respect of
meetings of stockholders for the election of directors of the Company or any
other matters or any rights whatsoever as a stockholder of the Company, until,
and only to the extent that, this Warrant shall have been exercised. Except as
provided in Section 3.1 in the event of a dividend on the Common Stock payable
in shares of Common Stock, 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. The Company covenants, however, that until the
Termination Date, for so long as this Warrant remains at least partially
unexercised, it will furnish the Holder with copies of all reports and
communications furnished to the stockholders of the Company. No provisions
hereof,
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in the absence of affirmative action by Holder to purchase Warrant Shares, and
no mere enumeration herein of the rights or privileges of Holder shall give rise
to any liability of Holder for the Exercise Price or as a stockholder of the
Company whether such liability is asserted by the Company or by its creditors.
6. Registration Rights. Holder shall have registration rights with
respect to the Warrant Shares issuable on exercise of this Warrant, as more
fully set forth in that certain Registration Rights Agreement dated February 25,
1998 by and among the Company, Holder and others.
Further, the Company shall, with a view to making available to the
Holders of the Common Stock issuable upon exercise of the Warrant the benefits
of certain rules and regulations of the Securities and Exchange Commission (the
"Commission") (including, without limitation, Rule 144 under the Securities Act)
which may permit the sale of such Warrant Shares to the public without
registration, file required reports under Section 13 or 15(d), of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), use commercially
reasonable efforts to make available to the Holders of such benefits, and in
furtherance of (but without limiting) the foregoing:
(a) make and keep public information available as those terms are
defined in Rule 144 under the Securities Act or any successor provision thereto;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) so long as the Holders own any Warrants or Warrant Shares, furnish
the Holders forthwith upon request a written statement by the Company as to
compliance with the reporting requirements of Rule 144 or any successor
provision thereto, and of the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of the Company with the Commission, and
such other reports and documents of the Company and other information in the
possession of or reasonably obtainable by the Company as the Holders may
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Holders to sell any such securities without
registration.
7. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
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8. Notices. Any notice required or permitted under this Warrant shall be
in writing and either delivered personally, telegraphed or telecopied or sent by
certified or registered mail, postage prepaid, and shall be deemed to be given,
dated and received when so delivered personally, telegraphed or telecopied or,
if mailed, five (5) business days after the date of mailing to the following
address or facsimile number, or to such other address or addresses as such
person may subsequently designate by notice given hereunder.
If to the Company: Premier Laser Systems, Inc.
Attention: Secretary
3 Morgan
Irvine, California 92618
Facsimile: 714 951-7218
with a copy to: Paul, Hastings, Janofsky & Walker LLP
Attention: Peter J. Tennyson, Esq.
695 Town Center Drive, 17th Floor
Costa Mesa, California 92626-1924
Facsimile: 714 979-1921
If to Holder: As Holder's address appears on a register of Warrants
maintained by the Company's transfer agent.
9. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of the
Company relating to the Common Stock issuable upon the exercise of this Warrant
shall survive the exercise and termination of this Warrant. All of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the Holder.
10. Descriptive Headings and Governing Law. The descriptive 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 California.
11. Exchange, Assignment, Combination and Replacement of Warrants.
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(a) This Warrant is exchangeable, without expense other than as
provided in this Section 11, at the option of the Holder upon the reasonable
request, presentation and surrender hereof to the Company for other Warrants of
different denominations entitling the Holder thereof to acquire in the aggregate
the same number of Warrant Shares that may be acquired hereunder.
(b) All of the covenant and provisions of this Warrant by or for the
benefit of the Holder shall be binding upon and shall inure to the benefit of,
its successors and permitted assigns hereunder. This Warrant and all rights
hereunder are transferrable and may be sold, transferred, assigned, or
hypothecated upon surrender of this Warrant to the Company, together with a duly
executed assignment in the form attached hereto as Exhibit B (the "Assignment
Form"), whereupon the Company shall, without charge, execute and deliver a new
Warrant containing the same terms and conditions of this Warrant in the name of
the assignee as named in the Assignment Form, and this Warrant shall be canceled
at that time. This Warrant, if properly assigned, may be exercised by a new
Holder without first having the new Warrant issued.
(c) This Warrant may be delivered or combined with other Warrants that
carry the same rights upon the reasonable request, presentation and surrender of
this Warrant at the office of the Company, together with a written notice signed
by the Holder, specifying the names and denominations in which new Warrants are
to be issued.
(d) The Company will execute and deliver to the Holder a new Warrant
of like tenor and date upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Warrant; provided, that (i) in the case of loss, theft, or destruction, the
Company receives a reasonably satisfactory indemnity or bond, or (ii) in the
case of mutilation, the Holder shall provide and surrender this Warrant to the
Company for cancellation.
(e) Any new Warrant executed and delivered by the Company in
substitution or replacement of this Warrant shall constitute a contractual
obligation of the Company regardless of whether this Warrant was lost, stolen,
destroyed or mutilated, and shall be enforceable by any Holder thereof.
(f) The Holder shall pay all transfer and excise taxes applicable to
any issuance of new Warrants under this Section 11.
12. Fractional Shares. No fractional shares shall be issued upon exercise
of this Warrant. The Company shall, in lieu of issuing any fractional share,
round
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such fractional shares to the nearest whole share.
13. Best Efforts. The Company covenants that it will not, by amendment of
its Articles of Incorporation or bylaws, or through any reorganization, transfer
of assets, consolidation, merger, dissolution, reissue or sale of securities, or
any other voluntary action, avoid or seek to avoid the observation or
performance for any term of this Warrant, but will at all times in good faith
assist in carrying out all those terms and in taking all action necessary or
appropriate to protect the rights of the Holder against dilution or other
impairment.
14. Further Assurances. The Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue, duly authorized fully paid and nonassessable Warrants and Common Stock
and other securities issuable upon exercise of this Warrant from time to time
and not in violation of any pre-emptive rights.
(Signature Page Follows)
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[SIGNATURE PAGE - CLASS D WARRANT]
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer effective as of ________ __, 1998.
PREMIER LASER SYSTEMS, INC.
By: /s/ COLETTE COZEAN
---------------------------
Colette Cozean, Ph.D.
Chief Executive Officer
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EXHIBIT A
PREMIER LASER SYSTEMS, INC.
COMMON STOCK WARRANT
FORM OF SUBSCRIPTION AGREEMENT
(To be signed and delivered
upon exercise of Warrant)
PREMIER LASER SYSTEMS, INC.
3 Morgan
Irvine, California 92618
Attention: Secretary
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _______________ shares of Common Stock (the "Stock") of
Premier Laser Systems, Inc. (the "Company") and herewith makes payment of
__________________________ Dollars ($________) therefor and requests that the
certificates for such shares be issued in the name of, and delivered to,
______________, whose address is ____________________________________. A copy
of the Exercise Notice (as defined in the Warrant) evidencing that the Warrant
is exercisable for at least the number of shares covered by this agreement is
attached.
If the exercise of this Warrant is not covered by a registration statement
effective under the Securities Act of 1933, as amended (the "Act"), the
undersigned represents that:
(i) the undersigned is acquiring such Stock for investment for his own
account, not as nominee or agent, and not with a view to the distribution
thereof and the undersigned has not signed or otherwise arranged for the
selling, granting any participation in, or otherwise distributing the same;
(ii) the undersigned has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
undersigned's investment in the Stock;
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(iii) the undersigned has received all of the information the undersigned
has requested from the Company and considers necessary or appropriate for
deciding whether to purchase the shares of Stock;
(iv) the undersigned has the ability to bear the economic risks of his
prospective investment;
(v) the undersigned understands and agrees that (A) he may be unable to
readily liquidate his investment in the shares of Stock and that the shares must
be held indefinitely unless a subsequent disposition thereof is registered or
qualified under the Act and applicable state securities laws or is exempt from
such registration or qualification, and that the Company is not required to
register the same or to take any action or make such an exemption available
except to the extent provided in the within Warrant; (B) the exemption from
registration under the Act afforded by Rule 144 promulgated by the Securities
and Exchange Commission ("Rule 144") depends upon the satisfaction of various
conditions by the undersigned and the Company and that, if applicable, Rule 144
affords the basis for sales under certain circumstances in limited amounts, and
that if such exemption is utilized by the undersigned, such conditions must be
fully complied with by the undersigned and the Company, as required by Rule 144;
and (C) among the conditions required for use of Rule 144 is the availability of
current information to the public about the Company, and the undersigned
understands that the Company has not made such information available and has no
present plans to do so;
(vi) the undersigned either (A) is familiar with the definition of and
the undersigned is an "accredited investor" within the meaning of such term
under Rule 501 of Regulation D promulgated under the Act, or (B) is providing
representations and warranties reasonably satisfactory to the Company and its
counsel, to the effect that the sale and issuance of Stock upon exercise of such
Warrant may be made without registration under the Act or any applicable state
securities and Blue Sky laws; and
(vii) the address set forth below is the true and correct address of the
undersigned.
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(Name)
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(Address)
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If said number of shares shall not be all the shares exercisable or
purchasable under the within Warrant, a new Warrant is to be issued in the name
of the undersigned for the balance remaining of the Warrants.
DATED:________________________
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(Name of holder must conform in all
respects to name of holder as specified
on the face of the Warrant or with the
name of the assignee appearing on the
assignment form attached hereto.)
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(signature)
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(print name)
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(print title)
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the receipt and adequacy of which are each hereby
confirmed, the undersigned,_____________________, hereby sells, assigns and
transfers unto___________________ all of the undersigned's right, title and
interest in and to an aggregate of __________ (___) warrants to purchase shares
of the Common Stock of Premier Laser Systems, Inc. (the "Corporation) standing
in the name of the undersigned on the books of the Corporation and evidenced by
that certain Class __ Warrant, dated ________ __, ___ (the "Warrant"), and does
hereby irrevocable constitute and appoint __________________ as attorney-in-fact
to effect the reissue of the Warrant as necessary and the transfer of said
Warrant on the books of the Corporation with full power of substitution upon
presentation to the Corporation of this Assignment Form together with the
Warrant.
Dated: ____________ __, ___
Signature: ___________________________
Printed Name: ___________________________
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EXHIBIT 99.7
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of February 25, 1998, by and between Premier Laser Systems, Inc., a
California corporation ("Premier" or the "Company") and Mark S. Blumenkranz,
M.D. and Recia Blumenkranz, M.D. (collectively, the "Holder").
WHEREAS, the Holder acquired the Purchased Shares and may acquire the
Contingent Shares (each as defined below), pursuant to the terms of a Purchase
Agreement, dated as of February 25, 1998 (the "Purchase Agreement"), and the
Warrants (as defined below) issued in connection therewith, by and between the
Company and Holder.
WHEREAS, as an inducement to entering into the Purchase Agreement, and as
a condition to the acquisition of the Purchased Shares and the potential future
acquisition of the Contingent Shares by the Holder in connection therewith, the
Company has agreed to provide certain registration rights to the Purchaser as
set forth in this Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the foregoing,
the mutual covenants and agreements set forth in the Purchase Agreement and
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, agree as follows:
1. Certain Definitions. Capitalized terms used herein without
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definition shall have the meaning given to such terms in the Purchase Agreement.
As used in this Agreement, the following capitalized defined terms shall have
the following meanings:
"Contingent Shares" shall mean the shares of the Premier Common
Stock issued by the Company to the Holder pursuant to the terms of the Class C
Warrant and the Class D Warrant.
"Contingent Share Shelf Registration Statement" has the meaning
set forth in Section 2(a)(ii)(B).
"Expiration Date" has the meaning set forth within the
Prospectus/Offer to Exchange that the Company intends to utilize to effect a
tender offer (the "Tender Offer") to purchase those shares of Ophthalmic Imaging
Systems ("OIS") common stock not already owned by the Company.
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"Form S-3" means the registration statement on Form S-3
promulgated under the Securities Act by the SEC for use in registering
securities issued by certain publicly traded companies and any similar form
subsequently prescribed by the SEC as the successor to Form S-3.
"Person" shall mean an individual or a corporation, partnership,
limited liability company, association or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Prospectus" shall mean any prospectus included in a Shelf
Registration Statement (as defined herein), or a registration statement with
respect to an underwritten offering in which the Purchaser participates, as
contemplated by Section 5(b), including any resale prospectus and any
preliminary prospectus, and any amendment or supplement thereto, and in each
case including all material incorporated by reference therein.
"Purchase" shall mean the Company's purchase of Holder's shares of
OIS common stock under the Purchase Agreement.
"Purchased Shares" shall mean the shares of Premier Common Stock
issued by the Company to the Holder at the Closing of the transactions
contemplated by the Purchase Agreement.
"Purchased Share Shelf Registration Statement" has the meaning set
forth in Section 3(a)(i).
"Registration Expenses" shall mean any and all expenses incident
to the performance of or compliance with this Agreement, including, without
limitation: (i) all applicable registration and filing fees imposed by the SEC
and such securities exchange or exchanges on which Common Shares are then listed
or The Nasdaq Stock Market ("Nasdaq") (ii) all fees and expenses incurred in
connection with compliance with state securities or "blue sky" laws (including
reasonable fees and disbursements of counsel for the Company in connection with
qualification of any of the Shares under any state securities or blue sky laws
and the preparation of a blue sky memorandum) and compliance with the rules of
the NASD; (iii) all expenses of any Persons in preparing or assisting in
preparing, printing and distributing the Shelf Registration Statement, any
Prospectus, certificates and other documents relating to the performance of and
compliance with this Agreement; (iv) all fees and expenses incurred in
connection with the listing, if any, of any of the Shares on any securities
exchange or exchanges pursuant to Section 4(j) hereof; (v) the fees and
disbursements of counsel for the Company and of the independent public
accountants of the
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Company, including the expenses relating to any special audits or "cold comfort"
letters required by or incident to such performance and compliance; and (vi) the
reasonable fees and disbursements of a single counsel for the Purchaser.
Registration Expenses shall specifically exclude underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
Shares by the Purchaser.
"SEC" shall mean the Securities and Exchange Commission or any
successor entity.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Shares" shall mean, collectively, the Purchased Shares and the
Contingent Shares issued to the Holder pursuant to the Purchase Agreement or the
Warrant and any equity securities issued or issuable directly or indirectly with
respect to the Purchased Shares or the Contingent Shares issued to the Holder by
way of replacement, stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise.
"Shelf Registration Statements" shall mean, collectively, the
Purchased Share Shelf Registration Statement, the Contingent Share Shelf
Registration Statement and any other registration statement as filed by the
Company pursuant to Section 3(a) of this Agreement.
"Warrants" shall mean the Class C Warrant and Class D Warrant
issued by the Company to Purchaser.
2. Registrable Securities.
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(a) The securities entitled to the benefits of this Agreement are
the Shares.
(b) Any subsequent holder of the Shares shall be entitled to the
benefits of this Agreement as a holder of any such Shares (a "Purchaser"). A
Person is deemed to be a Purchaser whenever such Person owns Shares or has the
right to acquire such Shares, whether or not such acquisition has actually been
effected and disregarding any legal restrictions upon the exercise of such
right.
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3. Registration Under the Securities Act.
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(a) (i) Subject to Section 7(b) below, the Company shall
prepare and promptly file a registration statement on Form S-3 or an amendment
to an existing registration statement on Form S-3, either of which may include
shares of the Premier Common Stock for resale by other Company shareholders (the
"Purchased Share Shelf Registration Statement"), registering the Purchased
Shares for resale by the Purchaser and shall use its reasonable best efforts to
cause the Purchased Share Shelf Registration Statement to be declared effective
by the SEC as soon as practicable following the Expiration Date.
(ii) (A) The Company shall use its reasonable best
efforts to cause each installment of Contingent Shares, if any, issued by the
Company to the Purchaser pursuant to the terms of the Purchase Agreement and the
Warrants to be registered pursuant to an effective registration statement under
the Securities Act as soon as practicable after the exercise of the Warrants.
(B) Notwithstanding the foregoing, if there is a
Suspension Event (as defined in Section 7(b) below) occurring at the time of
issuance of any Contingent Shares, in lieu of delivering to the Purchaser
Contingent Shares registered under the Securities Act, the Company may give
notice to the Purchaser of the Suspension Event and deliver to the Purchaser
Contingent Shares issued without registration under the Securities Act and file
as soon as practicable thereafter a registration statement on Form S-3 or an
amendment to an existing registration statement on Form S-3, either of which may
include shares of Premier Common Stock for resale by the Company stockholders
(in each case, a "Contingent Share Shelf Registration Statement"), registering
the Contingent Shares for resale by the Purchaser. The Company shall use its
reasonable best efforts to cause each Contingent Share Shelf Registration
Statement to be declared effective by the SEC as soon as practicable thereafter.
(iii) The Company agrees to use its reasonable best
efforts to keep the Purchased Share Shelf Registration Statement and any
Contingent Share Shelf Registration Statement continuously effective (and to
include a Prospectus at all times meeting the requirements of the Securities
Act, including (S) 10(a)(3) thereof) for a period of one year from the date of
effectiveness of such Shelf Registration Statement (such period is referred to
as the "Shelf Period").
(b) The Company shall pay all Registration Expenses in
connection with a registration pursuant to this Agreement.
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4. Registration Procedures. In connection with the obligations of
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the Company under Section 3 hereof, the Company will use its best efforts to
effect the registration and sale of the Shares in accordance with the intended
method of distribution thereof, and pursuant thereto, the Company will, as
expeditiously as possible:
(a) prepare and file with the SEC, as soon as practicable
within the time period set forth in Section 3 hereof, and use its reasonable
best efforts to have declared effective by the SEC, the Shelf Registration
Statements, which shall (i) be available for public resale of the Shares by the
Purchaser, and (ii) comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith; provided, however, that before filing
a Shelf Registration Statement or Prospectus, or any amendments, post-effective
amendments, or supplements thereto, with the SEC, the Company will furnish to
the Purchaser and its underwriters, if any, with copies of all such proposed
documents to be filed, which documents will be subject to the reasonable review
of the Purchaser and its underwriter, and the Company will not file any
Registration Statement or Prospectus to which the Purchaser of the underwriter,
if any, shall reasonably object;
(b) furnish to each Purchaser, without change, at least one
signed copy of the applicable Shelf Registration Statement and any post-
effective amendments thereto, including financial statements and schedules
whether included therein or incorporated by reference thereto no later than two
days following its filing with the SEC, which, in any event will be no later
than two business days prior to the effective date of such Shelf Registration
Statement;
(c) (i) to prepare and file with the SEC such amendments,
supplements and post-effective amendments to the Shelf Registration Statements
as may be necessary to keep each such Shelf Registration Statement continuously
effective for the period set forth in Section 3(a)(iii) of this Agreement; (ii)
cause any Prospectus to be amended or supplemented as required and to be filed
as required by Rule 424 or any similar rule that may be adopted under the
Securities Act; (iii) respond as promptly as practicable to any comments
received from the SEC with respect to the Shelf Registration Statements or any
amendments thereto; and (iv) comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by the Shelf
Registration Statements during the applicable period in accordance with the
intended method or methods of distribution by the Purchaser and as reasonably
requested by a Purchaser or any underwriter of the Shares.
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(d) furnish to each Purchaser and any managing underwriter,
upon request and without charge, as many copies of any Prospectus and any
amendment or supplement thereto as such Person may reasonably request;
(e) use its reasonable best efforts to register or qualify the
Shares under all applicable state securities or blue sky laws of such
jurisdictions in the United States and its territories and possessions as the
Purchaser may reasonably request in writing and keep such registration or
qualification effective during the period the Shelf Registration Statement is
required to be kept effective under Section 3(a)(iii) hereof; provided, however,
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that in connection therewith, the Company shall not be required to (i) qualify
as a foreign corporation to do business or to register as a broker or dealer in
any such jurisdiction where it would not otherwise be required to qualify or
register but for this Section 4(e), (ii) subject itself to taxation in any such
jurisdiction with respect to such registration or qualification, or (iii) file a
general consent to service of process in any such jurisdiction;
(f) notify each Purchaser and any managing underwriter
promptly and, if requested by the Purchaser, confirm in writing, (i) when the
Shelf Registration Statements and any post-effective amendments thereto have
become effective, (ii) when any amendment or supplement to a Prospectus has been
filed with the SEC, except for an amendment via incorporation by reference of
subsequent filings under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of the Shelf
Registration Statements or any part thereof or the initiation of any proceedings
for that purpose, (iv) if the Company receives any notification with respect to
the suspension of the qualification of the Shares for offer or sale in any
jurisdiction or the initiation of any proceeding for such purpose, and (v) of
the happening of any event during the periods that any of the Shelf Registration
Statements are effective as a result of which (A) the Shelf Registration
Statements contain any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or (B) a Prospectus as then amended or supplemented
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(g) in the event of a stop order or suspension in the sale of
the Shares, use all reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of the Shelf Registration Statements by the
SEC or any state securities authority or otherwise prohibiting the offer and
sale of the Shares as promptly as possible;
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(h) furnish to the Purchaser upon request and without charge,
at least one conformed copy of the Shelf Registration Statements and any post-
effective amendments thereto (including documents incorporated therein by
reference or exhibits thereto, unless requested);
(i) cooperate with the Purchaser and any underwriter to
facilitate the timely preparation and delivery of certificates representing
Shares to be sold and not bearing any restrictive legend and enable certificates
for such Shares to be issued for such numbers of Shares and registered in such
names as the Purchaser may reasonably request;
(j) use its reasonable best efforts to cause all Shares to be
listed on any securities exchange or inter-dealer quotation service on which the
Shares are then listed, including on Nasdaq if the Shares are then so included;
(k) use its reasonable best efforts to make available adequate
current public information about the Company as contemplated by Rule 144(c)
promulgated under the Securities Act;
(l) use its best efforts to cause the Shares covered by a
Shelf Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable Purchaser or
any underwriter of the Shares to consummate the disposition; and
(m) upon the occurrence of any event referenced in last
sentence of Section 7(a)(ii) below, prepare and promptly file a supplement or
post-effective amendment to the Shelf Registration Statement and the related
Prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of the
Shares, the Prospectus will not contain an untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein not
misleading under the circumstances in which they were made; provided, however, a
period of suspension of the distribution of Shares under Section 7(a) hereof as
a result of an occurrence of an event under the last sentence of Section
7(b)(ii) shall not exceed a period of thirty (30) days during any twelve (12)
month period.
5. Certain Agreements of the Purchaser.
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(a) The Purchaser agrees to furnish to the Company in writing
such information regarding the Purchaser and its proposed distribution of Shares
as the Company may from time to time reasonably request in connection with the
preparation of
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the Shelf Registration Statements or any registration statement as contemplated
by Section 5(b) of this Agreement or the registration or qualification of the
Shares under state securities or blue sky laws, and report to the Company within
ten (10) days after the end of each month all sales or other dispositions of
Shares made by them during such month.
(b) To the extent timely notified in writing by the Company
or the managing underwriters, the Purchaser agrees, if requested by the Company
in the case of a Company initiated non-underwritten offering or if requested by
the managing underwriter or underwriters in an underwritten offering initiated
by the Company or by a shareholder of the Company pursuant to demand
registration rights, not to effect any public sale or distribution of any Shares
(including a sale pursuant to Rule 144 under the Securities Act) during the ten
(10) day period prior to, and during the forty-five (45) day period beginning
on, the date of effectiveness of each Company initiated offering made pursuant
to a registration statement, provided that the Purchaser shall be entitled to
participate in an underwritten offering pro rata with all other holders of
shares of Common Stock to be included in any such registration, if, in the
reasonable opinion of the managing underwriter of any such underwritten
registration such shares may be included in such registration without having an
adverse effect on the marketability or the price of any shares of the Premier
Common Stock proposed to be offered in such underwritten registration and the
Purchaser agrees to enter into an underwriting agreement with such underwriters
containing such representations and warranties by the Purchaser and such terms
and provisions, including without limitation, provisions with respect to
indemnification and contribution, as are customarily contained in underwriting
agreements and deliver customary opinions of counsel and closing certificates.
6. Indemnification.
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(a) Indemnification by the Company. The Company agrees to
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indemnify,to the fullest extent permitted by law, and hold harmless each
Purchaser, its officers, directors, employees, partners, agents, and each Person
who controls (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act and the rules and regulations promulgated thereunder)
such Purchaser or acts on behalf of such Purchaser, and each other Person who
participates as an underwriter in the offering or sale of the Shares as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to which such Person may become subject (A)
that arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in Shelf Registration Statements or any
registration statement as contemplated by
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Section 5(b) of this Agreement or any amendments thereto, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, (B) that arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus or any amendment or supplement
thereto, or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading or (C) that arise out
of or are based upon any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law, which violation or alleged violation arises out of the Shelf
Registration Statements or Prospectuses or any registration statement as
contemplated by Section 5(b) of this Agreement;
(ii) against any loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or alleged untrue statement, any omission or alleged
omission, if such settlement is effected with the written consent of the
Company, which consent shall not be unreasonably withheld; and
(iii) subject to the limitations set forth in Section
6(b), against any expense (including reasonable fees and disbursements of
counsel) reasonably incurred in investigating, preparing or defending against
any litigation, investigation or proceeding by any governmental agency or body,
commenced or threatened, in each case whether or not a party, or any claim
whatsoever based upon any such untrue statement or alleged untrue statement,
omission or alleged omission that relates to the sale by the Purchaser under
Shelf Registration Statements or any registration statement as contemplated by
Section 5(b) of this Agreement, to the extent that any such expense is not paid
under subparagraph (i) or (ii) above; provided, however, that the indemnity
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provided pursuant to this Section 6(a)(i), (ii) and (iii) shall not apply to the
Purchaser with respect to any loss, liability, claim, damage or expense that
arises out of or is based upon (1) any untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information furnished to the Company by the Purchaser for use in
the Shelf Registration Statements or any other registration statement
contemplated by this Agreement or any amendment thereto or a Prospectus or any
amendment or supplement thereto, or (2) trades made by the Purchaser in
violation of Section 7(a) below after receiving the notice from the Company
required pursuant thereto. The indemnification provided under this Section 6(a)
shall remain in full force and effect regardless of any investigation made
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by any Purchaser or underwriter, and no such investigation may be asserted in an
attempt to mitigate any liabilities hereunder.
(b) Indemnification by the Purchaser. The Purchaser agrees to
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indemnify and hold harmless the Company and its directors and officers,
including each director of the Company and each officer of the Company who
signed any Shelf Registration Statement or any registration statement with
respect to an underwritten offering in which the Purchaser participates, as
contemplated by Section 5(b) of this Agreement, and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act, to
the same extent as the indemnity contained in Section 6(a) hereof, but only
insofar as such loss, liability, claim, damage or expense arises out of or is
based upon (i) any untrue statement or alleged untrue statement or omission or
alleged omission made in the Shelf Registration Statements or any registration
statement with respect to an underwritten offering in which the Purchaser
participates, as contemplated by Section 5(b) of this Agreement or any amendment
thereto or a Prospectus or any amendment or supplement thereto in reliance upon
and in conformity with information prepared and furnished to the Company by the
Purchaser for use therein or (ii) trades made by the Purchaser in violation of
Section 7(a) below; provided. that, in the case of the Purchaser's obligation
set forth in this Section 6(b) relating to Section 6(a)(ii) above, such
settlement must be effected with the written consent of the Purchaser, which
consent shall not be unreasonably withheld.
(c) Conduct of Indemnification Proceedings. The indemnified
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party shall give reasonably prompt written notice to the indemnifying party of
any action or proceeding commenced against it in respect of which indemnity may
be sought hereunder, but failure to so notify the indemnifying party (i) shall
not relieve it from any liability that it may have under the indemnity agreement
provided in Section 6(a) or (b) above, unless and to the extent it did not
otherwise learn of such action and the lack of notice by the indemnified party
materially prejudices the indemnifying party or results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) shall not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided under Section 6(a) or
(b) above. After receipt of such notice, the indemnifying party shall be
entitled to participate in and, at its option, jointly with the indemnifying
party so notified, to assume the defense of such action or proceeding at such
indemnifying party's own expense with counsel chosen by such indemnifying party
and approved by the indemnified party or parties, which approval shall not be
unreasonably withheld; provided, however, that, if the defendants in any such
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action or proceeding include both the indemnified party and the indemnifying
party and the indemnified party reasonably determines, upon advice of counsel,
that a conflict of interest exists or that there may be legal defenses available
to it that are different from or in addition to those available to the
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indemnifying party, then the indemnified party shall be entitled to counsel the
reasonable fees and expenses of which shall be paid by the indemnifying party.
If the indemnifying party does not assume the defense of any such action or
proceeding, after having received the notice referred to in the first sentence
of this paragraph, the indemnifying party will pay the reasonable fees and
expenses of counsel for the indemnified party. In such event, however, the
indemnifying party will not be liable for any settlement effected without the
written consent of such indemnifying party, which consent shall not be
unreasonably withheld. If the indemnifying party assumes the defense of any
such action or proceeding in accordance with this paragraph, such indemnifying
party shall not be liable for any fees and expenses of counsel for the
indemnified party incurred thereafter in connection with such action or
proceeding except as set forth in the proviso in the second sentence of this
Section 6(c).
(d) The obligations of the Company and the Purchaser under
thisSection 6 shall survive the completion of any offering of the Shares
pursuant to any Shelf Registration Statement.
7. Suspension of Shelf Registration Requirement.
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(a) The Purchaser agrees that he, she or it will not effect
any sales of Shares pursuant to any Shelf Registration Statement after he, she
or it has received notice from the Company to suspend sales as a result of the
occurrence or existence of any Suspension Event (as defined in Section 7(b)
below) until such time as the Company provides notice to such holder that all
Suspension Events have ceased to exist. All such information relating to a
Suspension Event obtained by Purchaser shall be treated as confidential and
shall not be used by the Purchaser for any purpose. The Company shall notify the
Purchaser promptly after any Suspension Event occurs or ceases to exist to the
extent he or it continues to hold Shares and with respect to the cessation of a
Suspension Event, to the extent he or it has been provided notice of a
Suspension Event. In addition, the Purchaser agrees that he, she or it will not
effect any sales of Shares pursuant to the Shelf Registration Statements after
he or it has received notice from the Company to suspend sales because the
Registration Statements, any Prospectus or any supplement thereto contains an
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, until the Company notifies such holder
that the misstatement or omission has been corrected. The Company shall not
suspend the shelf registration requirements under this section for more than a
period of thirty (30) days during any (12) month period.
-11-
<PAGE>
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation to file the Shelf Registration Statements
and make any filings with any state securities authority, to use its reasonable
best efforts to cause the Shelf Registration Statements or any state securities
filings to become effective, or to amend or supplement the Shelf Registration
Statement or any state securities filings shall be temporarily suspended in the
event of and during a Suspension Event. A "Suspension Event" shall exist at
such times (i) that the Company is not eligible to use Form S-3 for the
registration contemplated by Section 3(a) hereof or (ii) as circumstances exist,
that the Company's Board of Directors, in good faith and as evidenced by a
resolution in accordance therewith, determines make it impractical or
inadvisable for the Company to file, amend or supplement a Shelf Registration
Statement or such filings or to cause the Shelf Registration Statements or such
filings to become effective (such circumstances to include, without limitation,
(A) the Company conducting an underwritten primary offering and being advised in
writing, with such writing being made available to Purchaser upon reasonable
request, by the underwriters that sale of Shares under the Shelf Registration
Statements would have a material adverse effect on the Company's offering or (B)
pending negotiations relating to, or consummation of, a transaction material to
the Company or the occurrence of some other event (x) where any of the foregoing
would require disclosure under applicable securities laws of material
information in the Shelf Registration Statements (or any other document
incorporated into a Shelf Registration Statement by reference) or such state
securities filings and (y) as to which the Company has a bona fide business
purpose for preserving confidentiality or which renders the Company unable to
comply with SEC requirements. Suspension of the Company's obligations pursuant
to this Section 7(b) shall continue only for so long as a Suspension Event or
its effect is continuing.
8. Miscellaneous.
-------------
(a) Amendments and Waivers. Except as specifically provided
----------------------
herein, the provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified, supplemented or waived, nor may consent
to departures therefrom be given, without the written consent of the Company and
each Purchaser specifically affected thereby.
(b) Notices. Unless otherwise provided, all notices or other
-------
communications required or permitted to be given to the parties hereto shall be
in writing and shall be deemed to have been given if personally delivered,
including personal delivery by facsimile, provided that the sender receives
telephonic or electronic confirmation that the facsimile was received by the
recipient and that such facsimile is followed the same day by mailing by
certified or registered mail return receipt requested, first class postage
prepaid (a
-12-
<PAGE>
"Mailing"), upon receipt of courier delivery or the third day following a
Mailing, addressed as follows (or at such other address as the addressed party
may have substituted by notice pursuant to this Section 8(b):
(i) If to the Company:
Premier Laser Systems, Inc.
3 Morgan
Irvine, California 92618
Attn: Secretary
Fax: (714) 951-7218
with a copy to:
Paul, Hastings, Janofsky & Walker LLP
695 Town Center Drive, 17/th/ Floor
Costa Mesa, California 92626-1924
Attn: Peter J. Tennyson, Esq.
Fax: (714) 979-1921
(ii) If to Purchaser:
Mark S. Blumenkranz, M.D.
20 Larguita Lane
Portola Valley, California 94028
Fax: (650) 851-8796
with a copy to:
Quinn, Emanuel, Urquhart, Oliver & Hedges
865 S. Figueroa Street, 10/th/ Floor
Los Angeles, California 90017
Attention: Steve G. Madison
Fax: (213) 624-0643
or to such other address as any party may have furnished in writing to the other
parties in the manner provided above.
-13-
<PAGE>
(c) Successors and Assigns. This Agreement shall inure to
----------------------
the benefit of and be binding on the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Purchasers of the Shares; provided, however, the Company
shall not assign its responsibilities hereunder without the express written
consent of the Purchasers.
(d) Counterparts. This Agreement may be executed in any
------------
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Any party may
execute this Agreement by facsimile signature, and shall provide promptly to all
other parties an originally executed Agreement.
(e) Headings and Interpretation. The headings in this
---------------------------
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof. In construing the meaning of this Agreement, no party
hereto shall be deemed the drafter of this Agreement and this Agreement shall be
construed according to its fair meaning and not strictly against any person as
the drafter hereof.
(f) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California without giving
effect to the conflicts of law provisions thereof.
(g) Entire Agreement. This Agreement is intended by the
----------------
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. This Agreement supersedes all
prior oral and written agreements and understandings and all contemporaneous
written agreements and understandings between the parties with respect to such
subject matter.
(h) No Inconsistent Agreements. The Company will not on or
--------------------------
after the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with the rights granted to Purchasers in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Purchasers hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any such agreements.
(i) Remedies. All remedies under this Agreement, or by law or
--------
otherwise afforded to any party hereto, shall be cumulative and not alternative.
Any Person having rights under any provision of this Agreement will be entitled
to enforce such rights
-14-
<PAGE>
specifically to recover damages caused by reason of any breach of any provision
of this Agreement and to exercise all other rights granted by law. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or other security) for specific performance and for
other injunctive relief in order to enforce or prevent violation of the
provisions of this Agreement.
(j) Rule 144. With a view to making available certain
---------
exemptions form the registration provisions of the Securities Act for the sale
of Shares, the Company covenants that:
(i) At all times that the Premier Common Stock is
registered under Section 12(b) or 12(g) of the Exchange Act, the Company will
use its best efforts to timely file the reports required to be filed by the
Company under the Securities Act and the Exchange Act (or, if the Company is not
registered under Section 12(b) or 12(g) of the Exchange Act and is not otherwise
required to file such reports under Sections 13 or 15(d) thereunder, it will,
upon the request of any Purchaser, make publicly available such other
information required under Rule 144 of the Securities Act ("Rule 144") for so
long as necessary to permit sales pursuant to Rule 144), and the Company will
take such further action as any Purchaser may reasonably request to the extent
required from time to time to enable such Purchaser to sell the Shares without
registration under the Securities Act within the limitations of the exemptions
provided by: (x) Rule 144, as such rule may be amended from time to time, and
(y) any similar rule or regulation hereafter adopted by the SEC. Upon the
request of the Purchaser, the Company will deliver to Purchaser a written
statement as to whether it has complied with such requirements.
(ii) So long as the Shares constitute "Restricted
Securities" as that term is used in Rule 144, the Company will furnish each
Purchaser a copy of the annual and quarterly reports of the Company and such
other public reports as the Purchaser may reasonably request.
(Signature Page Follows)
-15-
<PAGE>
[SIGNATURE PAGE FOR REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
"PREMIER"
PREMIER LASER SYSTEMS, INC.
By: /s/ COLETTE COZEAN
----------------------------------
Title:
----------------------------------
"PURCHASER"
/s/ MARK S. BLUMENKRANZ, M.D.
----------------------------------------
NAME: Mark S. Blumenkranz, M.D.
"SELLER"
/s/ RECIA BLUMENKRANZ, M.D.
-----------------------------------------
NAME: Recia Blumenkranz, M.D.
-16-
<PAGE>
[SIGNATURE PAGE FOR REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
"PREMIER"
PREMIER LASER SYSTEMS, INC.
By:
----------------------------------
Title:
----------------------------------
"PURCHASER"
/s/ MARK S. BLUMENKRANZ, M.D.
----------------------------------------
NAME: Mark S. Blumenkranz, M.D.
"SELLER"
-----------------------------------------
NAME: Recia Blumenkranz, M.D.
-17-
<PAGE>
[SIGNATURE PAGE FOR REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
"PREMIER"
PREMIER LASER SYSTEMS, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
"PURCHASER"
----------------------------------------
NAME: Mark S. Blumenkranz, M.D.
"SELLER"
/s/ RECIA BLUMENKRANZ, M.D.
-----------------------------------------
NAME: Recia Blumenkranz, M.D.
-18-
<PAGE>
EXHIBIT 99.8
________________________
PURCHASE AGREEMENT
DATED AS OF FEBRUARY 25, 1998
BY AND BETWEEN
PREMIER LASER SYSTEMS, INC.
AND
STANLEY CHANG, M.D.
________________________
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS................................................. 1
1.1 Defined Terms.................................................. 1
ARTICLE II PURCHASE AND SALE OF SHARES................................. 4
2.1 Purchase and Sale of Shares.................................... 4
2.2 Purchase Consideration......................................... 4
2.3 Closing Date................................................... 4
ARTICLE III REPRESENTATIONS AND WARRANTIES.............................. 5
3.1 Representations and Warranties of Premier...................... 5
3.2 Representations and Warranties of Seller....................... 7
ARTICLE IV COVENANTS................................................... 10
4.1 Covenant of the Seller......................................... 10
4.2 Covenants of Premier........................................... 10
4.3 Reasonable Best Efforts........................................ 10
ARTICLE V CONDITIONS TO CLOSING....................................... 11
5.1 Conditions to Obligation of Premier............................ 11
5.2 Conditions to Obligations of the Seller........................ 11
ARTICLE VI INDEMNIFICATION............................................. 12
6.1 Indemnification by Premier..................................... 12
6.2 Losses Net of Insurance, etc................................... 12
6.3 Termination of Indemnification................................. 13
6.4 Procedures Relating to Indemnification Under Article VI........ 13
6.5 Arbitration.................................................... 15
ARTICLE VII GENERAL PROVISIONS.......................................... 16
7.1 Termination of Purchase Agreement.............................. 16
7.2 Counterparts................................................... 17
7.3 Notices........................................................ 17
7.4 Governing Law.................................................. 18
7.5 Interpretation................................................. 18
7.6 Successors and Assigns......................................... 18
7.7 Entire Agreement; No Oral Waiver; Construction................. 19
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.8 Severability.................................................. 19
7.9 No Third-party Rights......................................... 19
7.10 Remedies...................................................... 19
7.11 Further Assurances............................................ 20
7.12 Survival of Representations................................... 20
7.13 No Restrictions on Directors.................................. 20
</TABLE>
-ii-
<PAGE>
This Purchase Agreement ("Purchase Agreement") is made and entered
into as of February 25, 1998, by and between Premier Laser Systems, Inc., a
California corporation ("Premier") and Stanley Chang, M.D. (the "Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Seller owns in the aggregate, and on the Closing Date (as
defined herein) the Seller will own, of record and beneficially, 50,000 shares
of Ophthalmic Imaging Systems, Inc., a California corporation (the "Company")
common stock, no par value (the "Common Stock") (including the associated
preferred share purchase rights (the "Rights")) issued pursuant to the Rights
Agreement, dated as of December 31, 1997, as amended (the "Rights Agreement"),
between Company and American Securities Transfer, Inc. (the "Rights Agent") (the
Rights together with the Common Stock constitute the "Shares");
WHEREAS, the Seller desires to sell, and Premier wishes to purchase,
the Shares upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Defined Terms. Terms not otherwise defined herein shall have the
-------------
following meanings:
"Acquisition Agreement" means the Stock Purchase Agreement by and between
---------------------
Premier and Company of even date herewith, as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Affiliate" means, when used with respect to another Person, any Person who
---------
is, whether directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control with such Person.
"Beneficially Own" has the meaning given such term in Rule 13d-3 under the
----------------
Exchange Act, as in effect on the date hereof. As used herein, the phrases
"beneficial ownership" and "beneficial owner" have correlative meanings.
<PAGE>
"Business Combination" means (i) any merger, reorganization, share exchange
--------------------
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company, (ii) any purchase or sale of all
or any significant portion of the assets of the Company, (iii) any issuance or
other sale by the Company of any shares of Company Common Stock or (iv) any
issuance or other sale by the Company of securities representing 20% or more of
beneficial ownership of the Company or any of its Subsidiaries (as defined
herein).
"Business Day" means any day that is not a Saturday, Sunday or other day on
------------
which banks are required or authorized by law to be closed in California.
"Closing Date" means the earlier of (i) the second Business Day following
------------
satisfaction or waiver of the conditions set forth in Article V and (ii) such
other date and time as the parties shall otherwise mutually agree.
"Dollars" and "$" mean lawful currency of the United States of America.
------- -
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Governmental Authority" means any foreign, federal, state or local
----------------------
government or any court, administrative agency or commission or other
governmental agency or authority, whether domestic or foreign.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory ore other), charge or security
interest; or any preference, priority or other arrangement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"Material Adverse Effect" with respect to any Person means a material
-----------------------
adverse effect (i) on the financial condition, business, liabilities,
properties, assets or results of operations of such Person and its subsidiaries,
taken as a whole, or (ii) on the ability of such Person to perform its
obligations under or to consummate the transactions contemplated by this
Purchase Agreement.
"Person" means an individual, partnership, limited liability company,
------
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Purchase Agreement" means this Purchase Agreement, as amended,
------------------
supplemented or otherwise modified from time to time in accordance with its
terms.
-2-
<PAGE>
"Registration Rights Agreement" means the Registration Rights Agreement in
-----------------------------
the form of Exhibit "A" to be executed by and between Premier and the Seller on
the Closing Date.
"Restrictions" means, when used with respect to any specified security, any
------------
stockholders or other trust agreement, option, warrant, escrow, proxy, buy-sell
agreement, power of attorney or other contract, agreement or arrangement which
(i) grants to any Person the right to sell or otherwise dispose of or vote such
specified security or any interest therein or (ii) restricts the transfer of, or
the exercise of any rights or the enjoyment of any benefits by reason of, the
ownership of such specified security.
"Stock Component" means the quotient (rounded to the nearest 1/100,000)
---------------
determined by dividing $0.25 by the average closing sales price for Premier
Common Stock (as hereinafter defined) as reported on The Nasdaq Stock Market,
Inc. ("NASDAQ") as published in The Wall Street Journal or, if not published
therein, an another authoritative source, for either (i) fifteen (15)
consecutive trading days (each, a "Trading Day") immediately preceding the
Closing Date or (ii) the thirty (30) consecutive Trading Days ending fifteen
(15) Trading Days prior to the Closing Date, whichever yields the lowest number
of shares of Premier Common Stock. Notwithstanding any other provision of this
Purchase Agreement, if Seller would have otherwise have been entitled to receive
a fraction of a share of Premier Common Stock (after taking into account all
shares tendered by Seller) he, she or it shall receive, in lieu thereof, cash in
an amount equal to the fractional part of the Premier Common Stock multiplied by
the "market price" of one share of Premier Common Stock, payable as part of the
Purchase Consideration. The "market price" of one share of Premier Common Stock
shall be the closing price of such common stock as reported on NASDAQ (as
published in the Wall Street Journal or, if not published therein, any other
authoritative source) on the last Trading Day preceding the Closing Date.
"Subsidiary" of any Person means another Person, an amount of the voting
----------
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its board of directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first Person.
"Transactions" means the transactions described in Section 2.3(b).
------------
-3-
<PAGE>
ARTICLE II
PURCHASE AND SALE OF SHARES
---------------------------
2.1 Purchase and Sale of Shares. Upon the terms and subject to the
---------------------------
conditions of this Purchase Agreement, Premier agrees to purchase from the
Seller, and the Seller agrees to sell to Premier, the Shares free and clear of
any Lien or Restriction created by the Seller (other than any Lien or
Restriction imposed pursuant to the terms of this Purchase Agreement) or
otherwise binding upon any such Shares for the Purchase Consideration (as
defined in Section 2.2 of Purchase Agreement).
2.2 Purchase Consideration. Premier shall pay to Seller in respect
----------------------
of each share of Company Common Stock sold and purchased hereunder (a) $1.75 net
in cash (the "Cash Consideration"); (b) that number of Premier Class A Common
Stock, no par value (the "Premier Common Stock"), equal to the Stock Component
(the "Stock Consideration"); (c) one Premier Class C Warrant (the "Class C
Warrant"), and (d) one Premier Class D Warrant (the "Class D Warrant" together
with the Class C Warrant, the "Warrants") (the Cash Consideration, the Stock
Consideration and the Warrants together constitute the "Purchase
Consideration").
2.3 Closing Date.
------------
(a) Unless this Purchase Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1(a) and subject to the satisfaction or waiver of the conditions set
forth in Article V, the closing (the "Closing") of the transactions contemplated
-------
by Section 2.1 will take place on the earlier of (i) the second Business Day
following satisfaction or waiver of the conditions set forth in Article V and
(ii) such other date and time as the parties shall otherwise mutually agree (in
either event, the date of Closing being referred to herein as the "Closing
Date").
(b) At the Closing, the following actions (collectively, the
"Transactions") shall occur:
(i) Premier shall pay or cause to be paid the aggregate Cash
Consideration to or for the account of the Seller by wire transfer to such
bank account (the "Designated Bank Account") as the Seller shall designate
in writing prior to the Closing Date;
(ii) At the effective time of the Closing, Premier shall issue
shares of Premier Common Stock to the Seller as directed by the Seller in
writing prior to the Closing Date;
-4-
<PAGE>
(iii) At the effective time of the Closing, Premier shall issue the
Warrants (in the form attached hereto as Exhibits "B" and "C") to the
Seller as directed by the Seller in writing prior to the Closing Date;
(iv) The parties shall execute and deliver, the Registration Rights
Agreement;
(v) The Seller shall deliver or cause to be delivered to Premier or
its designee such documents as Premier may reasonably request, including
certificates for all Shares to evidence the transfer to Premier of good and
marketable title in and to all of the Shares owned by the Seller free and
clear of any Lien or Restriction on such Shares (other than any Lien or
Restriction imposed pursuant to the terms of this Purchase Agreement) or
the applicable federal or state securities laws, and
(vi) Each party shall take such other actions, and shall execute
and deliver such other instruments or documents, as shall be required under
Article V.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
3.1 Representations and Warranties of Premier. Premier represents
-----------------------------------------
and warrants to the Seller as of the date hereof and as of the Closing Date as
follows:
(a) Organization, Standing and Corporate Power. Premier is duly
------------------------------------------
organized, validly existing and in good standing under the laws of the State of
California and has the requisite corporate power and authority to carry on its
business as now being conducted. Premier is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed (individually or in the aggregate) could not reasonably
be expected to have a material adverse effect with respect to Premier.
(b) Corporate Authorization. The execution, delivery and performance
by Premier of this Purchase Agreement and the consummation by Premier of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, including by resolution of the Board of Directors of Premier.
This Purchase Agreement has been duly executed and delivered by Premier and
constitutes a valid and binding agreement of Premier, enforceable against
Premier in accordance with its terms (subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar
laws affecting
-5-
<PAGE>
creditors' rights generally from time to time in effect and to general
principles of equity, including concepts of materiality, reasonableness, good
faith and fair dealing, regardless of whether in a proceeding or equity or at
law).
(c) No Conflict. Other than the filing of a Form 4 and an amendment
-----------
to Premier's report on Schedule 13D under the Exchange Act, and no filing with,
and no permit, authorization, consent or approval of, any Governmental Authority
is necessary for the execution of this Purchase Agreement or the Registration
Rights Agreement by Premier and the consummation by Premier of the transactions
contemplated hereby and thereby, except for such filings the failure of which to
be made, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on Premier, and its Subsidiaries, taken as a
whole, or to prevent or materially delay the consummation of the transactions
contemplated hereby and thereby. Neither the execution and delivery of this
Purchase Agreement or the Registration Rights Agreement by Premier nor the
consummation by Premier of the transactions contemplated hereby or thereby, nor
compliance by Premier with any of the provisions hereof or thereof (i) conflicts
with or results in any breach of the Articles of Incorporation or bylaws of
Premier, (ii) contravenes, conflicts with or would constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon Premier, or (iii) constitutes a default under or gives rise to any right of
termination, cancellation or acceleration of any right or obligation of Premier
or any of its Subsidiaries or to a loss of any benefit to which Premier or any
of its Subsidiaries is entitled under any provision of any agreement, contract
or other instrument binding on Premier or any of its Subsidiaries or any
license, franchise, permit or other similar authorization held by Premier or any
of its Subsidiaries, except, in the case of clauses (ii) and (iii), for any such
contravention, conflict, violation, default, termination, cancellation,
acceleration or loss that would not have a material adverse effect on Premier or
any of its Subsidiaries taken as a whole.
(d) No Required Vote. No vote of the holders of any class of the
----------------
outstanding capital stock of Premier is necessary to approve this Purchase
Agreement or the Transactions.
(e) Reservation of Premier Common Stock. The Premier Common Stock and
-----------------------------------
Warrants to be issued to Seller as Purchase Consideration pursuant to this
Purchase Agreement, and any Premier Common Stock purchasable upon exercise of
such Warrants, have been reserved solely for issuance and delivery to Seller,
and when issued, will be duly and validly issued, fully paid and nonassessable,
and such issuances will not violate any pre-emptive rights under applicable law,
Premier's Articles of Incorporation or bylaw, contract or agreement, or
otherwise.
-6-
<PAGE>
3.2 Representations and Warranties of Seller. The Seller represents
----------------------------------------
and warrants to Premier as of the date hereof and as of the Closing Date as
follows:
(a) Organization, Standing and Power of the Seller. The Seller has
----------------------------------------------
the requisite power and authority and legal capacity to enter into and perform
all of its obligations under this Purchase Agreement, to consummate the
Transactions (including transferring the Shares to Premier). Neither the
execution and delivery of this Purchase Agreement by the Seller nor the
consummation by the Seller of the Transactions nor compliance by the Seller with
the provisions hereof conflicts with or results in a breach of any agreement,
other than such agreements, the conflict with or breach of which, individually
or in the aggregate, could not reasonably be expected to have a material adverse
effect on the Seller, if any, taken as a whole, or to prevent or materially
delay the consummation of the Transactions.
(b) Enforceability. This Purchase Agreement has been duly and validly
--------------
authorized, executed and delivered by the Seller and constitutes the Seller's
valid and binding agreement, enforceable against the Seller in accordance with
its terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity, including concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding at equity or at law).
(c) Title to Shares. At the Closing the Seller will be the direct and
---------------
record owner of the Shares. Other than options to purchase 20,000 shares of
Company Common Stock, the Seller does not own or have the right to acquire,
whether presently exercisable or at any time in the future, any shares of
Company Common Stock or any securities convertible into or exercisable or
exchangeable for Shares including, but not limited to, any options held by
Seller. No person has the right to acquire, and the Seller is not a party to any
contract, understanding, commitment, arrangement or other agreement to sell,
transfer or otherwise dispose of, any shares of Company Common Stock owned by or
issuable to the Seller. At the Closing, the Seller will have good and valid
title to the Shares, free and clear of any Liens or Restrictions and they will
have the full legal right, power and authority to assign, transfer and deliver
such shares to Premier pursuant hereto. On and after the Closing Date, the
Seller will have the sole voting power, and sole power of disposition, with
respect to all of such Shares and there will be no restrictions on the Seller's
ability to transfer such Shares.
(d) No Conflict. Except for the filing of a Form 4 with the
-----------
Securities and Exchange Commission, Nasdaq, the Boston Stock Exchange, and the
Company, no filing with, and no permit, authorization, consent or approval of,
any Governmental Authority is necessary for the execution of this Purchase
Agreement by the Seller and the consummation
-7-
<PAGE>
by the Seller of the transactions contemplated hereby, other than such filings
the failure of which to be made, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the Seller, if any,
taken as a whole, or to prevent or materially delay the consummation of the
Transactions.
(e) Investment Intention. The Seller is acquiring the Premier Common
--------------------
Stock and the Warrants for its own account as principal for investment and not
with a view to resale or distribution or with any present intention of
distributing or selling the same. The Seller is fully aware that the Premier
Common Stock and the Warrants have not been registered under the Securities Act
or under any applicable state securities laws, and are being offered and sold in
reliance on exemptions from the registration requirements of the Securities Act
and all such laws. The Seller is an "accredited investor" as such term is
defined in Regulation D promulgated under the Securities Act. The Seller is
able to bear the economic risk of the investment in the Premier Common Stock and
the Warrants and has such knowledge and experience in financial and business
matters, and knowledge of the business of Premier, as to be capable of
evaluating the merits and risks of a prospective investment.
(f) Limitations on Transferability. Seller acknowledges that it may
------------------------------
not transfer any of the Premier Common Stock or the Warrants received by it
pursuant hereto unless and until the same are registered under the Securities
Act and any applicable state securities laws, or unless an exemption from such
registration is available. Seller acknowledges that transferability of the
Premier Common Stock and Warrants also is limited by the terms of this Purchase
Agreement.
(g) Legend. In furtherance of the agreements contained in Sections
------
3.2(e) and (f), the Seller agrees that the certificate or certificates
representing:
(i) the Premier Common Stock beneficially owned by Seller shall
bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER ANY
APPLICABLE STATE SECURITIES LAWS. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS (I) COVERED BY AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, (II) THE
SALE IS MADE PURSUANT TO RULE 144 UNDER THE ACT, IF AVAILABLE, AND
EXEMPTIONS FROM REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS OR
(III) AN OPINION IS
-8-
<PAGE>
OBTAINED FROM COUNSEL TO THE HOLDER, REASONABLY SATISFACTORY TO COUNSEL TO
PREMIER LASER SYSTEMS, INC. THAT AN EXEMPTION FROM REGISTRATION IS
AVAILABLE UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS.
(ii) the Warrants beneficially owned by Seller shall bear the
following legend:
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
NOR UNDER ANY APPLICABLE STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR
THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (I) COVERED BY AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, (II) THE SALE IS MADE PURSUANT TO RULE 144 UNDER THE ACT,
IF AVAILABLE, AND EXEMPTIONS FROM REGISTRATION UNDER APPLICABLE STATE
SECURITIES LAWS OR (III) AN OPINION IS OBTAINED FROM COUNSEL TO THE HOLDER,
REASONABLY SATISFACTORY TO COUNSEL TO PREMIER LASER SYSTEMS, INC. THAT AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER THE ACT AND ALL APPLICABLE
STATE SECURITIES LAWS.
Premier will exchange certificates without the foregoing legend upon the
request of Seller at such time as (i) the restrictions imposed by this Purchase
Agreement are no longer applicable; and (ii) the holder thereof may sell such
shares or warrants without registration of such sale under the Securities Act,
as evidenced (if requested by Premier) by an opinion of counsel to such holder.
(h) No Broker. No investment banker, broker, finder, consultant or
---------
intermediary is entitled to be paid any investment banking, brokerage, finder's
or similar fee or commission by any Seller in connection with this Purchase
Agreement or the Transactions for which the Seller or Premier would be liable
following the Closing.
-9-
<PAGE>
ARTICLE IV
COVENANTS
---------
4.1 Covenant of the Seller.
----------------------
(a) Binding Obligations. Notwithstanding, and without in any way
-------------------
limiting, any other provision of this Purchase Agreement, the Seller
acknowledges that, subject to the satisfaction (or waiver by it) of the
conditions set forth in Section 5.2, its obligation to consummate the
Transactions, including the sale to Premier of the Shares, is absolute and
unconditional and shall not terminate except in accordance with Section 7.1,
irrespective of, without limitation, any receipt of the Company of any proposal
for a Business Combination or any resolution by the Board of Directors of the
Company to approve a Business Combination or otherwise.
4.2 Covenants of Premier.
--------------------
(a) Registration Rights Agreement. Premier shall cause the parties to
-----------------------------
enter into that certain Registration Rights Agreement in the form of Exhibit
"A."
(b) Purchases of Company Common Stock Prior to the Closing. Premier
------------------------------------------------------
agrees to use its best efforts to purchase or otherwise acquire, concurrently
with or prior to the Closing, such number of shares of Company Common Stock, in
negotiated transactions or otherwise, as is necessary so that the Premier's
percentage of beneficial ownership of the Company Common Stock, shall at the
Closing constitute at least 50.1%.
(c) Tender Offer. Following the Closing, Premier agrees to use its
------------
best efforts to effect a tender offer (the "Tender Offer") for the purchase of
the then remaining outstanding shares of Company Common Stock.
4.3 Reasonable Best Efforts.
-----------------------
(a) Subject to the terms and conditions of this Purchase Agreement,
each party will use its reasonable best efforts to take, or cause to be taken,
all actions to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the transactions
contemplated by this Purchase Agreement.
(b) Each party hereby agrees, while this Purchase Agreement is in
effect, and except as contemplated hereby, not to intentionally and knowingly
take any action with the intention and knowledge that such action would make any
of its representations or warranties contained herein untrue or incorrect in any
material respect to have the effect of
-10-
<PAGE>
preventing or disabling it from performing any of its obligations under this
Purchase Agreement.
ARTICLE V
CONDITIONS TO CLOSING
---------------------
5.1 Conditions to Obligation of Premier. The obligation of Premier
-----------------------------------
to consummate the purchase of the Shares is further subject to the satisfaction
(or waiver by Premier) of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Seller set forth in this Purchase Agreement qualified as to
materiality shall be true and correct and those not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Purchase Agreement and as of the Closing Date as though made on and as of the
Closing Date, except for those representations and warranties which address
matters only as of a particular date (which shall have been true and correct in
all material respects as of such date). Premier shall have received a
certificate signed by the Seller to the effect set forth in this paragraph.
(b) Performance of Obligations of the Seller. The Seller shall have
----------------------------------------
performed in all material respects all of the covenants and obligations required
to be performed by them under this Purchase Agreement at or prior to the Closing
Date, and Premier shall have received a certificate signed by the Seller to the
effect set forth in this paragraph.
(c) No Injunction. No preliminary or permanent injunction or order
-------------
that would prohibit or restrain the consummation of the transactions
contemplated hereunder shall be in effect and no Governmental Authority or other
Person shall have commenced or threatened to commence an action or proceeding
seeking to enjoin the consummation of such transactions or to impose liability
on the parties hereto in connection therewith.
5.2 Conditions to Obligations of the Seller. The obligations of the
---------------------------------------
Seller to effect the Transactions are further subject to the satisfaction (or
waiver by the Seller) of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Premier set forth in this Purchase Agreement qualified as to
materiality shall be true and correct and those not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Purchase Agreement and as of the Closing Date as though made
-11-
<PAGE>
on and as of the Closing Date, except for those representations and warranties
which address matters only as of a particular date (which shall have been true
and correct in all material respects as of such date), and the Seller shall have
received a certificate signed on behalf of Premier to the effect set forth in
this paragraph.
(b) Performance of Obligations of Premier. Premier shall have
-------------------------------------
performed in all material respects all of the covenants and obligations required
to be performed by it under this Purchase Agreement at or prior to the Closing
Date, and the Seller shall have received a certificate signed on behalf of
Premier to the effect set forth in this paragraph.
(c) Registration Rights Agreement. The parties shall have entered
-----------------------------
into that certain Registration Rights Agreement in the form of Exhibit "A."
ARTICLE VI
INDEMNIFICATION
---------------
6.1 Indemnification by Premier. From and after the date of this
--------------------------
Purchase Agreement, whether or not the Transactions are consummated, Premier
shall indemnify the Seller and its respective Affiliates, directors, officers,
employees, partners, stockholders, agents and representatives (including
attorneys and accountants) (collectively, the "Representatives") against and
hold them harmless from any loss, liability, claim, damage or expense (including
reasonable legal fees and expenses ("Loss") suffered or incurred by any such
indemnified party arising from or relating to any lawsuit by any governmental
body or any present or former stockholder of the Company naming any of the
parties entitled to indemnification hereunder (each an "indemnified party") and
seeking to enjoin or otherwise prevent, prohibit or impede the consummation of
the Transactions or otherwise challenging the Transactions.
6.2 Losses Net of Insurance, etc. The amount of any Loss for which
-----------------------------
indemnification is provided under this Article VI shall be net of any amounts
actually recovered by the indemnified party under insurance policies (net of the
cost of obtaining such recovery). If Seller is entitled to indemnification under
insurance policies, it shall, at the request of Premier, use its reasonable best
efforts to obtain such indemnification under such insurance policies before
seeking indemnification from Premier, and any expenses incurred in connection
therewith shall be advanced by the party obligated to provide such
indemnification (the "indemnifying party"). It is understood that the
indemnification obligation of Premier is secondary and supplemental to any
indemnification under any insurance policy maintained for the benefit of the
indemnified party. The indemnify party shall not be relieved of its obligation
to advance fees and expenses to the indemnified party
-12-
<PAGE>
in accordance with Section 6.4 (or to indemnify any indemnified person under
this Article VI) by reason of any claim under any insurance policy, but shall be
entitled to receive, and the indemnified party does hereby assign to the
indemnifying party the right to receive, direct payment of any recovery under
any such claim.
6.3 Termination of Indemnification. The obligations to indemnify and
------------------------------
hold harmless a party hereto shall not terminate, except that the obligations of
Premier pursuant to Section 6.1 terminate upon a termination by either party
pursuant to Section 7.1(a), but only with respect to actions or omissions from
and after the time of such termination.
6.4 Procedures Relating to Indemnification Under Article VI.
-------------------------------------------------------
(a) An indemnified party entitled to any indemnification in respect
of, arising out of or involving a claim or demand made by any Person against the
indemnify party (a "Third Party Claim") shall notify the indemnifying party in
writing, and in reasonable detail of the Third Party Claim within 10 Business
Days after receipt by such indemnified party of written notice of the Third
Party Claim; provided; however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
indemnifying party shall have been actually and materially prejudiced as a
result of such failure (it being understood that the indemnifying party shall
not be liable for any expenses incurred during the period in which the
indemnified party failed to give notice).
(b) If a Third Party Claim is made against an indemnified party, the
indemnifying party shall be entitled to participate in the defense thereof and,
if it so chooses and unconditionally acknowledges its obligations to indemnify
the indemnified party with respect to such Third Party Claim, to assume the
defense thereof with counsel selected by the indemnifying party and not
reasonably objected to by the indemnified party. Should the indemnifying party
so elect to assume the defense of a Third Party Claim, the indemnified party
shall have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
indemnifying party (except that, for any period following receipt of notice of
any Third Party Claim during which the indemnifying party has failed to assume
the defense of such claim, the indemnifying party shall pay such fees and
expenses as in incurred), it being understood that the indemnifying party shall
control such defense; provided, that the indemnifying party shall not take any
action in the conduct of such defense that would materially adversely affect the
indemnified party without the consent of the indemnified party. The indemnified
party shall also have the right to employ no more than one separate counsel for
all indemnified party (and no more than one local counsel in any jurisdiction
where it is reasonably necessary) not reasonably objected to by the indemnifying
party, at the expense of the indemnifying party, but only if: (i) the use of
counsel chosen by the indemnifying party to represent the indemnified party
-13-
<PAGE>
or parties would present such counsel with a conflict of interest, (ii) the
actual or potential defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or are in addition to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of the institution
of such action or (iv) the indemnifying party shall in writing authorize the
indemnified party to employ separate counsel at the expense of the indemnifying
party.
(c) If the indemnifying party elects to assume the defense of any
Third Party Claim, all of the indemnified parties, shall cooperate with the
indemnifying party in the defense or prosecution thereof. Such cooperation
shall include (upon the indemnifying party's reasonable request) the provision
to the indemnifying party of existing records and information which are
reasonably relevant to such Third Party Claim, and making themselves (in the
case of individuals) and using reasonable best efforts to make their employees
and their Representatives, if any, available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder, and to attend depositions, give testimony or otherwise appear at any
trial or hearing to the extent reasonably requested by the indemnifying party.
Whether or not the indemnifying party shall have assumed the defense of a Third
Party Claim, the indemnifying party shall not admit any liability with respect
to, or settle, compromise or discharge, such Third Party Claim without the
indemnified party's prior written consent, which consent shall not be
unreasonably withheld. If the indemnifying party shall have assumed the defense
of a Third Party Claim, the indemnified party shall agree to any settlement,
compromise or discharge of a Third Party Claim which the indemnifying party may
recommend and which by its terms obligates the indemnifying party to pay the
full amount of the liability in connection with such Third Party Claim, which
releases the indemnified party completely in connection with such Third Party
Claim, and which would not otherwise adversely affect the indemnified party.
(d) Notwithstanding the foregoing, the indemnifying party shall not be
entitled to assume the defense of any Third Party Claim (but shall be liable for
the reasonable fees and expenses of counsel incurred by the indemnified party in
defending such Third Party Claim, which fees and expenses the indemnifying party
shall pay as incurred in advance of the final disposition of such Third Party
Claim) if the Third Party Claim seeks an order, injunction or other equitable
relief or relief for other than money damages against the indemnified party
which the indemnified party reasonably determines, after conferring with its
outside counsel, cannot be separated from any related claim for money damages;
provided, however, that the foregoing shall not apply to any Third Party Claim
prior to the Closing seeking to enjoin or otherwise prevent, prohibit or impede
the consummation of the Transactions, which Third Party Claim prior to the
Closing shall be defended jointly by the
-14-
<PAGE>
indemnifying party and the indemnified party, it being understood and agreed
that (i) only one counsel (plus only one local counsel in any jurisdiction where
it is reasonably necessary) shall be permitted for all of the indemnified party
and (ii) if the parties cannot in good faith agree on a particular matter, such
dispute shall be resolved in good faith by the indemnifying party, with a good
faith effort to balance the interests of both the indemnified parties and the
indemnifying party. If such equitable relief or other relief portion of the
Third Party Claim can be so separate from that for money damages, the
indemnifying party shall be entitled to assume the defense of the portion
relating to the money damages. In the event that the indemnifying party is not
permitted to assume the defense of any Third Party Claim pursuant to this
Section 6.4(d), the indemnified party shall not agree to any settlement,
compromise or discharge of such Third Party Claim which by its terms obligates
the indemnifying party without the prior written consent of the indemnifying
party.
(e) In the event that the indemnified party is entitled to obtain
counsel at the indemnifying party's expense in accordance with Section 6.4(b) or
Section 6.4(d), indemnifying party shall reimburse the indemnified party for the
reasonable fees, costs and expenses of such counsel upon presentation of
invoices detailing with reasonable specificity the nature of the services
provided and the basis of the fees, costs and expenses incurred.
6.5 Arbitration. In the event that any parties are unable to resolve
-----------
any dispute related to or arising under the Transactions contemplated hereunder,
the exclusive method for resolving such dispute shall be binding, nonappealable
arbitration in Irvine, California initiated by a party by a written notice to
the other party demanding arbitration and specifying the claim to be arbitrated.
Such arbitration shall be conducted pursuant to the Expedited Procedures of the
Commercial Arbitration Rule (the "Rules") of the American Arbitration
Association ("AAA), with the following modifications. The party initiating the
arbitration (the "Claimant") shall appoint its arbitrator in its request for
arbitration (the "Request"). The other party (the "Respondent") shall appoint
its arbitrator within 15 Business Days of receipt of the Request and shall
notify the Claimant of such appointment in writing. If the Respondent fails to
appoint an arbitrator within such 15 Business Day period, the arbitrator named
in the Request shall decide the controversy or claim as a sole arbitrator.
Otherwise, the two arbitrators appointed by the parties shall appoint a third
arbitrator within 15 Business Days after the Respondent has notified Claimant of
the appointment of the Respondent's arbitrator. When the third arbitrator has
accepted the appointment, the two party-appointed arbitrators shall promptly
notify the parties of such appointment. If the two arbitrators appointed by the
parties fail or are unable to so appoint a third arbitrator, then the
appointment of the third arbitrator shall be made by the AAA, which shall
promptly notify the parties of the appointment. The third arbitrator shall act
as chairperson of the panel. Upon appointment of the third arbitrator, the
arbitrators shall proceed to commence and conduct all proceedings promptly and
in accordance with the Rules. The arbitral award shall be in writing and shall
be final and binding on the parties to
-15-
<PAGE>
the arbitration. The arbitrator shall be instructed to award costs, including
reasonable attorneys' fees and disbursements, which shall be paid by the party
against whom the award is entered. Judgment upon the award may be entered by any
court having jurisdiction thereof or having jurisdiction over the parties or
their assets, without review of the merits of the award.
ARTICLE VII
GENERAL PROVISIONS
------------------
7.1 Termination of Purchase Agreement.
---------------------------------
(a) This Purchase Agreement may be terminated and the purchase and
sale of the Shares abandoned at any time prior to the Closing:
(i) by mutual consent of Premier and the Seller in writing;
(ii) by either Premier or the Seller if the Closing shall not
have occurred prior to February 27, 1998 (other than due to the failure of
the party seeking to terminate this Purchase Agreement to perform its
obligations under this Purchase Agreement required to be performed at or
prior to such date);
(iii) by Premier or Seller, if any Governmental Authority within
the United States or any country or other jurisdiction in which Premier,
directly or indirectly, has material assets or operations shall have issued
an order, decree or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Transactions, and such order,
decree, ruling or other action shall have become final and nonappealable;
or
(iv) by Premier, if after the date of this Purchase Agreement
the Company issues (A) any shares of Company Common Stock (other than upon
the conversion, exercise or exchange of securities outstanding on the date
of this Purchase Agreement that are convertible into or exercisable or
exchangeable for shares of Company Common Stock) or (B) any securities
convertible into or exercisable or exchangeable for shares of Company
Common Stock which result in the percentage of Company Common Stock
beneficially held by the Seller, together with the percentage of Company
Common Stock beneficially held by Premier falling below 50.1% of the
ownership of all Company Common Stock (assuming the conversion, exercise or
exchange of all securities referred to in clause (B)).
-16-
<PAGE>
(b) In the event of termination of this Purchase Agreement by either
Premier or the Seller as provided in Section 7.1(a), this Purchase Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of Premier or the Seller, other than this Article VII.
Nothing contained in this Section shall relieve any party for any willful breach
of the representations, warranties, covenants or agreements set forth in this
Purchase Agreement.
7.2 Counterparts. This Purchase Agreement may be executed in one or
------------
more counterparts, including electronically transmitted counterparts, all of
which shall be considered one and the same agreement, and shall become a binding
agreement when one or more counterparts have been signed by each party and
delivered to the other parties.
7.3 Notices. All notices, requests, demands or other communications
-------
provided herein shall be made in writing and shall be deemed to have been duly
given if delivered as follows:
If to Premier:
Premier Laser Systems, Inc.
3 Morgan
Irvine, California 92618
Attn: Secretary
Fax: (714) 951-7218
with a copy to:
Paul, Hastings, Janofsky & Walker LLP
695 Town Center Drive, 17/th/ Floor
Costa Mesa, California 92626-1924
Attn: Peter J. Tennyson, Esq.
Fax: (714) 979-1921
If to Seller:
Stanley Chang, M.D.
79 Greenacres Avenue
Scarsdale, New York 10582
Fax: (212) 305-5962
-17-
<PAGE>
with a copy to:
Quinn, Emanuel, Urquhart, Oliver & Hedges
865 S. Figueroa Street, 10/th/ Floor
Los Angeles, California 90017
Attention: Steve G. Madison
Fax: (213) 624-0643
or to such other address as any party shall have specified by notice in writing
to the other parties. All such notices, requests, demands and communications
shall be deemed to have been received on (i) the date of delivery if sent by
messenger, (ii) on the Business Day following the Business Day on which
delivered to a recognized courier service if sent by overnight courier or (iii)
on the date received, if sent by fax.
7.4 Governing Law. This Purchase Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California as applied to
contracts entered into and to be performed in California and without regard to
the application of principles of conflict of laws.
7.5 Interpretation. When a reference is made in this Purchase
--------------
Agreement to an Article or Section, such reference shall be to an Article or
Section of this Purchase Agreement unless otherwise indicated. The table of
contents and headings contained in this Purchase Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Purchase Agreement. Whenever the words "include," "includes" or
"including" are used in this Purchase Agreement, they shall be deemed to be
followed by the words "without limitation."
7.6 Successors and Assigns. Except as otherwise expressly provided
----------------------
in this Purchase Agreement, neither this Purchase Agreement nor any of the
rights, interests or obligations under this Purchase Agreement shall be
assigned, in whole or in part, by operation of law or otherwise by any of the
parties without the prior written consent of the other parties, except that
Premier, prior to or after the consummation of the transactions contemplated by
Sections 2.1 and 2.2, may assign, in its sole discretion, any or all of its
rights, interests and obligations under this Purchase Agreement to any wholly
owned Subsidiary of Premier. However, no such assignment shall relieve Premier
of any of its obligations under this Purchase Agreement. Subject to the
preceding sentence, this Purchase Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors,
assigns and heirs.
-18-
<PAGE>
7.7 Entire Agreement; No Oral Waiver; Construction. This Purchase
----------------------------------------------
Agreement and the agreements, certificates and other documents contemplated
hereby and thereby, including the Acquisition Agreement, constitute the entire
agreement among the parties pertaining to the subject matter hereof and
supersede all prior and contemporaneous agreements, understandings and
representations, whether oral or written, of the parties in connection
therewith. No covenant or condition or representation not expressed in this
Purchase Agreement shall affect or be effective to interpret, change or restrict
this Purchase Agreement. No prior drafts of this Purchase Agreement and no
words or phrases from any such prior drafts shall be admissible into evidence in
any action, suit or other proceeding involving this Purchase Agreement or the
transactions contemplated hereby. This Purchase Agreement may not be amended,
changed or terminated orally, nor shall any amendment, change, termination or
attempted waiver of any of the provisions of this Purchase Agreement be binding
on any party unless in writing signed by the parties hereto. No modification,
waiver, termination, rescission, discharge or cancellation of this Purchase
Agreement and no waiver of any provision of or default under this Purchase
Agreement shall affect the right of any party thereafter to enforce any other
provision or to exercise any right or remedy in the event of any other default,
whether or not similar.
7.8 Severability. If any provision of this Purchase Agreement (or
------------
any portion thereof) shall be declared by any court of competent jurisdiction to
be illegal, void or unenforceable, all other provisions of this Purchase
Agreement (and portions thereof) shall not be affected and shall remain in full
force and effect.
7.9 No Third-party Rights. Nothing in this Purchase Agreement,
---------------------
expressed or implied, shall or is intended to confer upon any Person other than
the parties hereto or their respective successors or assigns, any rights or
remedies of any nature or kind whatsoever under or by reason of this Purchase
Agreement.
7.10 Remedies. Each of the parties hereto acknowledges and agrees
--------
that (i) the provisions of this Purchase Agreement are reasonable and necessary
to protect the proper and legitimate interests of the other parties hereto, and
(ii) the other parties hereto would be irreparably damaged in the event any of
the provisions of this Purchase Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties hereto shall be entitled to preliminary and permanent injunctive
relief to prevent breaches of the provisions of this Purchase Agreement by the
other parties hereto without the necessity of proving irreparable injury or
actual damages or of posting any bond, and to enforce specifically the terms and
provisions hereof and thereof, which rights shall be cumulative and in addition
to any other remedy to which the parties hereto may be entitled hereunder or at
law or equity.
-19-
<PAGE>
7.11 Further Assurances. From time to time, at the reasonable request
------------------
of any other party hereto and without further consideration, each party hereto
shall execute and deliver such additional documents and take all such further
action as may be necessary to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Purchase
Agreement.
7.12 Survival of Representations.
---------------------------
(a) All representations and warranties contained herein or made
pursuant hereto shall survive the Closing. The expiration of any representation
and warranty shall not affect any claim for indemnification made prior to the
date of such expiration.
(b) The representations and warranties made by any party in this
Purchase Agreement or in any agreement, certificate, schedule or exhibit
delivered in connection with this Purchase Agreement may be fully and completely
relied upon by each other party unless the party seeking to avoid such
representation or warranty can demonstrate that the investigation made by or on
behalf of such other party actually revealed or disclosed the inaccuracy in
question.
7.13 No Restrictions on Directors. Notwithstanding anything to the
----------------------------
contrary in this Purchase Agreement, it is understood and agreed that no
provision of this Purchase Agreement and the Registration Rights Agreement and
the transactions contemplated hereby and thereby shall in any way limit or
restrict the actions of any Person to the extent such Person is acting in such
Person's capacity as a director on the Board of Directors of Premier, and
nothing in this Purchase Agreement or the Registration Rights Agreement is
intended to, or shall be deemed to, restrict the exercise of fiduciary duties by
any such Person in such capacity.
[Signature Page Follows]
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<PAGE>
[SIGNATURE PAGE FOR PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties have executed, delivered and entered into
this Purchase Agreement as of the day and year first above written.
"Premier"
PREMIER LASER SYSTEMS, INC.
By:/s/ Colette Cozean
---------------------------
Name:_________________________
Title:________________________
"Seller"
/s/ Stanley Chang
------------------------------
Name:_________________________
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<PAGE>
EXHIBIT "A"
REGISTRATION RIGHTS AGREEMENT
<PAGE>
EXHIBIT "B"
FORM OF CLASS C WARRANT
<PAGE>
EXHIBIT "C"
FORM OF CLASS D WARRANT
<PAGE>
EXHIBIT 99.9
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER
ANY APPLICABLE STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS (I) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, (II) THE SALE IS MADE
PURSUANT TO RULE 144 UNDER THE ACT, IF AVAILABLE, AND EXEMPTIONS FROM
REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS OR (III) AN OPINION IS
OBTAINED FROM COUNSEL TO THE HOLDER, REASONABLY SATISFACTORY TO COUNSEL TO
PREMIER LASER SYSTEMS, INC. THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE
UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS.
CLASS C WARRANT
TO PURCHASE COMMON STOCK
NO PAR VALUE OF
PREMIER LASER SYSTEMS, INC.
50,000 Warrants (Partial Shares)/1/ February 25, 1998
This certifies that Stanley Chang, M.D. ("Holder"), for value received, is
entitled, subject to the other terms set forth below, to purchase from Premier
Laser Systems, Inc., a California corporation (the "Company"), having a place of
business at 3 Morgan, Irvine, California 92618, at any time from the Notice Date
defined below until 5:00 P.M. (California time) on the ninetieth day following
the Notice Date (the "Expiration Date"), unless earlier terminated pursuant to
the provisions of Section 2.4 hereof, at which time this Warrant shall expire
and become void, a fraction of a share, of the Company's Common Stock, no par
value (the "Common Stock") in an amount determined pursuant to Section 2 below.
The purchase or exercise price per share (the "Exercise Price") shall be
___________________________
/1/ (Does not represent 50,000 shares - See Paragraph 2 for computation.)
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one cent ($0.01) regardless of the number of Warrants which must be exercised to
obtain a Warrant Share (as defined below).
The number and character of the securities purchasable upon exercise of
this Warrant are subject to adjustment as provided in Section 3.3 hereof.
This Warrant is subject to the following terms and conditions:
1. Exercise; Issuance of Certificates; Payment for Shares.
1.1 Duration of Exercise of Warrant. This Warrant is exercisable at
the option of Holder at any time from the Notice Date until 5:00 P.M.
(California time) on the Expiration Date for all or a portion of the shares of
Common Stock that may be purchased hereunder. This Warrant shall be exercised
upon surrender to the Company of this Warrant properly endorsed with a completed
and executed Subscription Agreement in the form attached hereto as Exhibit A,
and upon payment in cash or cashier's check of the aggregate Exercise Price for
the number of shares of Common Stock for which this Warrant is being exercised
(the "Warrant Shares"). The Company agrees that any Warrant Shares purchased
under this Warrant shall be deemed to be issued to Holder as the record owner of
such shares as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for such shares. Certificates for the
Warrant Shares so purchased, together with any other securities or property to
which Holder is entitled upon such exercise, shall be delivered to Holder by the
Company or its transfer agent at the Company's expense as soon as practicable
after the rights represented by this Warrant have been exercised. Each stock
certificate so delivered shall be in such denominations of Common Stock as may
be reasonably requested by Holder and shall be registered in the name of Holder
or such other name as shall be designated by Holder. If, upon exercise of this
Warrant, fewer than all of the shares issuable upon exercise of this Warrant are
purchased, one or more new warrants substantially in the form of, and on the
terms contained in, this Warrant will be issued for the remaining number of
shares not exercised.
1.2 Securities to be Fully Paid; Reservation of Warrant Shares. The
Company covenants and agrees that all Warrants and Warrant Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable and
such issuance will not violate any pre-emptive rights under applicable law, the
Premier Articles of Incorporation or By-laws, contracts, or agreement, or
otherwise. The Company covenants that it will at all times from the date hereof
reserve and keep available a sufficient number of shares of its authorized but
unissued Common Stock (or other securities) solely for issuance and delivery to
Holder upon exercise of this Warrant. The Company will take all such
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reasonable action as may be necessary to assure that such Warrants and Warrant
Shares may be issued as provided herein without violation of any applicable law
or regulation.
2. Notice of Exercisability and Determination of Number of Warrant
Shares.
2.1 Condition to Exercise. This Warrant shall not become exercisable
unless the Net Sales of Qualified Products (both as defined herein) for the
twelve (12) month period ended August 31, 1998 (the "Determination Date") equal
or exceed Seven Million Dollars ($7,000,000). "Net Sales" shall mean net sales
of Qualified Products as determined by generally accepted accounting principles,
as consistently applied. by Ophthalmic Imaging Systems ("OIS"). "Qualified
Products" shall mean products sold by, and in connection with the current core
business of OIS including: (i) products related to or arising out of such
current core products; (ii) products under development as of the date hereof;
and (iii) those same products if sold by any successor owner of OIS' operations.
As soon as practicable after the Determination Date, the Company shall determine
the Net Sales of Qualified Products for the twelve (12) month period ended on
the Determination Date and shall mail to the holder of the Warrant, and shall
publish in a newspaper of national circulation a notice (the "Exercise Notice")
stating whether this condition to exercisability has been met. The date of such
mailing and publication is the "Notice Date."
2.2 Shares Issuable. To determine the number of Warrant Shares for
which the Warrant may be exercised, the Company shall determine the average
Closing Price (as defined below) of the Common Stock for the (i) fifteen (15)
consecutive trading days immediately preceding the Determination Date and (ii)
the thirty (30) consecutive trading days ending fifteen (15) trading days prior
to the Determination Date, and shall calculate the number of shares of the
Common Stock, or fraction thereof, which could be purchased at the greater of
such two average Closing Prices for a purchase price of twenty-five cents
($0.25). The result of this calculation shall be the "Share Factor." The Share
Factor shall be multiplied by the number of Warrants stated on the first page of
this Warrant to determine the number of whole shares for which this Warrant may
be exercised. Fractional shares resulting from aggregate exercises shall be
rounded to the nearest whole share.
2.3 Notice. The Exercise Notice sent to the Holder shall state the
number of Warrant Shares for which the Warrant has become exercisable.
2.4 Exercise. If the Exercise Notice states that the condition
stated in Section 2.1 has not been satisfied, then the Notice Date shall become
the Expiration Date, this Warrant shall expire effective as of the Notice Date
and the Holder shall have no further rights hereunder. If the Exercise Notice
states the condition has been met, this
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Warrant shall thereafter be exercisable for the number of whole shares
determined as provided in Section 2.2 and specified in the applicable Exercise
Notice.
2.5 Closing Price. For purposes of any computation pursuant to this
Section 2, the term "Closing Price" for any day shall mean the last reported
sale price, regular way, of the Common Stock, or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices,
regular way, for such day, in either case on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or if it is
not listed or admitted to trading on any national securities exchange, but is
traded on Nasdaq, the closing sale price of the Common Stock or, in case no sale
is reported, the average of the closing bid and asked quotations for the Common
Stock on Nasdaq, or any comparable system.
3. Certain Notices.
3.1 Notice of Certain Events. If at any time after the
Determination Date and before the Expiration Date:
3.1.1 the Company shall declare any cash dividend upon its
Common Stock;
3.1.2 the Company shall declare any dividend upon its Common
Stock payable in stock (other than a dividend payable solely in shares of Common
Stock) or make any special dividend or other distribution to the holders of its
Common Stock;
3.1.3 the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
3.1.4 there shall be any capital reorganization or
reclassification of the capital stock of the Company; or consolidation or merger
of the Company with, or sale of leases, exchanges or other conveyances (other
than pledges, mortgages and liens related to loans) of substantially all of its
assets to, another corporation;
3.1.5 there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
3.1.6 any purchase, retirement, or redemption by the Company of
its Common Stock;
then, in any one or more of said cases, the Company shall give to the registered
holder of this Warrant, by the means specified in Section 8 herein, (i) at least
twenty (20) days'
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prior written notice of the date on which the books of the Company shall close
or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, and (ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, winding-up, at least
twenty (20) days' prior written notice of the date when the same shall take
place; provided, however, that the Company shall not be required to send any
notice pursuant to this Section 3.1 if the Company determines the condition in
Section 2.1 has not been met. Any notice given in accordance with the foregoing
clause (i) shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto. Any notice given in accordance with the foregoing clause (ii)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, winding-up, conversion or public offering, as
the case may be. If Holder does not exercise this Warrant prior to the
occurrence of an event described above, Holder shall not be entitled to receive
the benefits accruing to then existing holders of Common Stock.
3.2 Notice of Adjustment. Upon the happening of an event requiring
an adjustment of the amount or the kind of securities or property purchasable
hereunder, the Company shall forthwith give notice to the Holder which indicates
the event requiring the adjustment, the adjusted number of Warrant Shares that
may be acquired or the amount or kind of any such securities or property so
purchasable upon exercise of this Warrant, as the case may be, and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. The Company's independent public accountant shall
determine the method for calculating the adjustment and shall prepare a
certificate setting forth such calculations, the reason for the methodology
chosen, and the facts upon which such calculation is based. Such certificate
shall accompany the notice to be provided to the Holder pursuant to this Section
3.2.
3.3 Adjustment of Purchase Price and Number of Warrant Shares. The
number and kind of securities that may be acquired upon the exercise of this
Warrant shall be subject to adjustment following the Determination Date and
prior to the earlier of the exercise of, or the Expiration Date of this Warrant,
upon the happening of any of the following events:
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(a) Dividends, Subdivisions, Combinations, or Consolidations of
Common Stock.
(i) In the event the Company shall declare, pay, or make
any dividend upon its outstanding Common Stock payable in Common Stock or shall
effect a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock, then the Share Factor shall be adjusted so
that the number of Warrant Shares that may thereafter be purchased upon the
exercise of the rights represented hereby shall be increased in proportion to
the increase in the number of outstanding shares of Common Stock through such
dividend or subdivision. In case the Company shall at any time combine the
outstanding shares of its Common Stock into a smaller number of shares of Common
Stock, the Share Factor shall be adjusted so that number of Warrant Shares that
may thereafter be acquired upon the exercise of the rights represented hereby
shall be decreased in proportion to the decrease through such combination. In
each case, the Exercise Price will not be adjusted.
(ii) If the Company declares, pays or makes any dividend
or other distribution upon its outstanding Common Stock payable in securities or
other property (excluding cash dividends and dividends payable in Common Stock,
but including, without limitation, shares of any other class of the Company's
stock or stock or other securities convertible into or exchangeable for shares
of Common Stock or any other class of the Company's stock or other interests in
the Company or its assets ("Convertible Securities")), a proportionate part of
those securities or that other property shall be set aside by the Company and
delivered to the Holder in the event that the Holder exercises this Warrant. The
securities and other property then deliverable to the Holder upon the exercise
of this Warrant shall be in the same ratio to the total securities and property
set aside for the Holder as the number of Warrant Shares with respect to which
this Warrant is then exercised as to the total number of Warrant Shares that may
be acquired pursuant to this Warrant at the time the securities or property were
set aside for the Holder.
(iii) If the Company shall declare a dividend payable in
money on its outstanding Common Stock and at substantially the same time shall
offer to its shareholders a right to purchase new shares of Common Stock from
the proceeds of such dividend or for an amount substantially equal to the
dividend, all shares of Common Stock so issued shall, for purposes of this
Warrant, be deemed to have been issued as a stock dividend subject to the
adjustments set forth in Section 3.3 (a)(i).
(iv) If the Company shall declare a dividend payable in
money on its outstanding common Stock and at substantially the same time shall
offer to its shareholders a right to purchase new shares of a class of stock
(other than Common
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Stock), Convertible Securities, or other interests from the proceeds of such
dividend or for an amount substantially equal to the dividend, all shares of
stock, Convertible Securities, or other interests so issued or transferred
shall, for purposes of this Warrant, be deemed to have been issued or
transferred shall, for purposes of this Warrant, be deemed to have been issued
as a dividend or other distribution subject to Section 3.3.(a)(ii).
(v) If the Company shall declare a dividend payable in
cash on its outstanding Common Stock, such dividend shall be deemed to have been
issued as a dividend or other distribution subject to Section 3.3(a)(i).
(b) Effect of Reclassification, Reorganization, Consolidation,
Merger, or Sale of Assets.
(i) Upon the occurrence of any of the following events,
the Company shall cause an effective provision to be made so that the Holder
shall have the right thereafter, by the exercise of this Warrant, to acquire for
the Exercise Price described in this Warrant the kind and amount of shares of
stock and other securities, property and interests as would be issued or payable
with respect to or in exchange for the number of Warrant Shares that are then
purchasable pursuant to this Warrant as if such Warrant Shares had been issued
to the Holder immediately prior to such event: (A) reclassification, capital
reorganization, or other change of outstanding Common Stock (other than a change
as a result of an issuance of Common Stock under Subsection 3.3(a)), (B)
consolidation or merger of the Company with or into another corporation or
entity (other than a consolidation or merger in which the Company is the
continuing corporation and that does not result in any reclassification, capital
reorganization or other change of the outstanding shares of Common Stock or the
Warrant Shares issuable upon exercise of this Warrant), or (C) spin-off of
assets, a subsidiary or any affiliated entity, or the sale, lease, conveyance
(other than pledges, mortgages and liens related to loans) or exchange of a
significant portion of the Company's assets taken as a whole, in a transaction
pursuant to which the Company's shareholders of record are to receive securities
or other interests in a successor entity. Any such provision made by the Company
for adjustments with respect to this Warrant shall be as nearly equivalent to
the adjustments otherwise provided for in this Warrant as is reasonably
practicable. The foregoing provisions of this Section 3.3(b)(i) shall similarly
apply to successive reclassifications, capital reorganizations and similar
changes of shares of Common Stock and to successive consolidations, mergers,
spin-offs, sales, leases or exchanges.
(ii) If any sale or exchange of all, or substantially all,
of the Company's assets or business or any dissolution, liquidation or winding
up of the Company (a "Termination of Business") shall be proposed, the Company
shall deliver written notice to the Holder of this Warrant in accordance with
Section 3.2 hereof as a
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condition precedent to the consummation of that Termination of Business. If the
result of the Termination of Business is that shareholders of the Company are to
receive securities or other interests of a successor entity, the provisions of
Section 3.3(b)(i) above shall apply. However, if the result of the Termination
of Business is that shareholders of the Company are to receive money or property
other than securities or other interests in a successor entity, the Holder of
this Warrant shall be entitled to exercise this Warrant and, with respect to any
Warrant Shares purchasable pursuant to this Warrant so acquired, shall be
entitled to all of the rights of the other shareholders of Common Stock with
respect to any distribution by the Company in connection with the Termination of
Business. In the event no successor entity is involved and Section 3.3(b)(i)
does not apply, all acquisition rights under this Warrant shall terminate at the
close of business on the date as of which shareholders of record of the Common
Stock shall be entitled to participate in a distribution of the assets of the
Company in connection with the Termination of Business; provided, that, in no
-------- ----
event shall that date be less than 20 days after delivery to the Holder of this
Warrant of the written notice described above and in Section 3.2 hereof. If the
termination of acquisition rights under this Warrant is to occur as a result of
the event at issue, a statement to that effect shall be included in that written
notice.
(c) Obligation of Successors or Transferees. The Company shall
not effect any consolidation, merger, or sale or conveyance of assets within the
meaning of Section 3.3(b)(i)(B)-(C) unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and mailed or delivered to
the Holder pursuant to Section 8 herein, the obligation to deliver to the Holder
such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, the Holder may be entitled to acquire. In no event shall the
securities received pursuant to this Section be registerable or transferable
other than pursuant and subject to the terms of this Warrant.
(d) Application of this Section. The provisions of this Section
3.3 shall apply to successive events that may occur from time to time but shall
only apply to a particular event if it occurs prior to the expiration of this
Warrant either by its terms or by its exercise in full.
(e) Definition of Common Stock. Unless the context requires
otherwise, whenever reference is made in this Section 3.3 to the issue or sale
of shares of Common Stock, the term "Common Stock" shall mean (i) the no par
value Class A Common Stock of the Company, (ii) any other class of stock ranking
on a parity with, and having substantially similar rights and privileges as the
Company's no par value Class A Common Stock, and (iii) any Convertible Security
convertible into either (i) or (ii). However, subject to the provisions of
Section 3.3(b)(i) above, Common Stock issuable
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upon the exercise of this Warrant shall include only shares of Common Stock
designed as no par value Class A Common Stock of the Company as of the date of
this Warrant.
(f) Company-Held Stock. For purposes of Sections 3.3(a) above,
shares of Common Stock owned or held at any relevant time by, or for the account
of, the Company in its treasury or otherwise, shall not be deemed to be
outstanding for purposes of the calculation and adjustments described therein.
4. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of the Warrant shall be made without charge to Holder of any issue tax
or other governmental charges in respect thereof; provided, however, that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the then holder of the Warrant being exercised.
5. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Warrant shall be construed as conferring upon Holder the right
to vote or to consent or to receive notice as a stockholder in respect of
meetings of stockholders for the election of directors of the Company or any
other matters or any rights whatsoever as a stockholder of the Company, until,
and only to the extent that, this Warrant shall have been exercised. Except as
provided in Section 3.1 in the event of a dividend on the Common Stock payable
in shares of Common Stock, 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. The Company covenants, however, that until the
Termination Date, for so long as this Warrant remains at least partially
unexercised, it will furnish the Holder with copies of all reports and
communications furnished to the stockholders of the Company. No provisions
hereof, in the absence of affirmative action by Holder to purchase Warrant
Shares, and no mere enumeration herein of the rights or privileges of Holder
shall give rise to any liability of Holder for the Exercise Price or as a
stockholder of the Company whether such liability is asserted by the Company or
by its creditors.
6. Registration Rights. Holder shall have registration rights with
respect to the Warrant Shares issuable on exercise of this Warrant, as more
fully set forth in that certain Registration Rights Agreement dated February 25,
1998 by and among the Company, Holder and others.
Further, the Company shall, with a view to making available to the
Holders of the Common Stock issuable upon exercise of the Warrant the benefits
of certain rules and regulations of the Securities and Exchange Commission (the
"Commission") (including, without limitation, Rule 144 under the Securities Act)
which may permit the
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sale of such Warrant Shares to the public without registration, file required
reports under Section 13 or 15(d), of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), use commercially reasonable efforts to make
available to the Holders of such benefits, and in furtherance of (but without
limiting) the foregoing:
(a) make and keep public information available as those terms are
defined in Rule 144 under the Securities Act or any successor provision thereto;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) so long as the Holders own any Warrants or Warrant Shares,
furnish the Holders forthwith upon request a written statement by the Company as
to compliance with the reporting requirements of Rule 144 or any successor
provision thereto, and of the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of the Company with the Commission, and
such other reports and documents of the Company and other information in the
possession of or reasonably obtainable by the Company as the Holders may
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Holders to sell any such securities without
registration.
7. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
8. Notices. Any notice required or permitted under this Warrant shall be
in writing and either delivered personally, telegraphed or telecopied or sent by
certified or registered mail, postage prepaid, and shall be deemed to be given,
dated and received when so delivered personally, telegraphed or telecopied or,
if mailed, five (5) business days after the date of mailing to the following
address or facsimile number, or to such other address or addresses as such
person may subsequently designate by notice given hereunder.
If to the Company: Premier Laser Systems, Inc.
Attention: Secretary
3 Morgan
Irvine, California 92618
Facsimile: 714 951-7218
with a copy to: Paul, Hastings, Janofsky & Walker LLP
Attention: Peter J. Tennyson, Esq.
695 Town Center Drive, 17th Floor
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Costa Mesa, California 92626-1924
Facsimile: 714 979-1921
If to Holder: As Holder's address appears on a
register of Warrants maintained by
the Company's transfer agent.
9. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of the
Company relating to the Common Stock issuable upon the exercise of this Warrant
shall survive the exercise and termination of this Warrant. All of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the Holder.
10. Descriptive Headings and Governing Law. The descriptive 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 California.
11. Exchange, Assignment, Combination and Replacement of Warrants.
(a) This Warrant is exchangeable, without expense other than as
provided in this Section 11, at the option of the Holder upon the reasonable
request, presentation and surrender hereof to the Company for other Warrants of
different denominations entitling the Holder thereof to acquire in the aggregate
the same number of Warrant Shares that may be acquired hereunder.
(b) All of the covenant and provisions of this Warrant by or for the
benefit of the Holder shall be binding upon and shall inure to the benefit of,
its successors and permitted assigns hereunder. This Warrant and all rights
hereunder are transferrable and may be sold, transferred, assigned, or
hypothecated upon surrender of this Warrant to the Company, together with a duly
executed assignment in the form attached hereto as Exhibit B (the "Assignment
Form"), whereupon the Company shall, without charge, execute and deliver a new
Warrant containing the same terms and conditions of this Warrant in the name of
the assignee as named in the Assignment Form, and this Warrant shall be canceled
at that time. This Warrant, if properly assigned, may be exercised by a new
Holder without first having the new Warrant issued.
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(c) This Warrant may be delivered or combined with other Warrants
that carry the same rights upon the reasonable request, presentation and
surrender of this Warrant at the office of the Company, together with a written
notice signed by the Holder, specifying the names and denominations in which new
Warrants are to be issued.
(d) The Company will execute and deliver to the Holder a new Warrant
of like tenor and date upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Warrant; provided, that (i) in the case of loss, theft, or destruction, the
Company receives a reasonably satisfactory indemnity or bond, or (ii) in the
case of mutilation, the Holder shall provide and surrender this Warrant to the
Company for cancellation.
(e) Any new Warrant executed and delivered by the Company in
substitution or replacement of this Warrant shall constitute a contractual
obligation of the Company regardless of whether this Warrant was lost, stolen,
destroyed or mutilated, and shall be enforceable by any Holder thereof.
(f) The Holder shall pay all transfer and excise taxes applicable to
any issuance of new Warrants under this Section 11.
12. Fractional Shares. No fractional shares shall be issued upon exercise
of this Warrant. The Company shall, in lieu of issuing any fractional share,
round such fractional shares to the nearest whole share.
13. Best Efforts. The Company covenants that it will not, by amendment of
its Articles of Incorporation or bylaws, or through any reorganization, transfer
of assets, consolidation, merger, dissolution, reissue or sale of securities, or
any other voluntary action, avoid or seek to avoid the observation or
performance for any term of this Warrant, but will at all times in good faith
assist in carrying out all those terms and in taking all action necessary or
appropriate to protect the rights of the Holder against dilution or other
impairment.
14. Further Assurances. The Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue, duly authorized fully paid and nonassessable Warrants and Common Stock
and other securities issuable upon exercise of this Warrant from time to time
and not in violation of any pre-emptive rights.
(Signature Page Follows)
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[SIGNATURE PAGE - CLASS C WARRANT]
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer effective as of ________ __, 1998.
PREMIER LASER SYSTEMS, INC.
By: /s/ COLETTE COZEAN
------------------------------------
Colette Cozean, Ph.D.
Chief Executive Officer
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EXHIBIT A
PREMIER LASER SYSTEMS, INC.
COMMON STOCK WARRANT
FORM OF SUBSCRIPTION AGREEMENT
(To be signed and delivered
upon exercise of Warrant)
PREMIER LASER SYSTEMS, INC.
3 Morgan
Irvine, California 92618
Attention: Secretary
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _______________ shares of Common Stock (the "Stock") of
Premier Laser Systems, Inc. (the "Company") and herewith makes payment of
__________________________ Dollars ($________) therefor and requests that the
certificates for such shares be issued in the name of, and delivered to,
______________, whose address is ____________________________________. A copy
of the Exercise Notice (as defined in the Warrant) evidencing that the Warrant
is exercisable for at least the number of shares covered by this agreement is
attached.
If the exercise of this Warrant is not covered by a registration statement
effective under the Securities Act of 1933, as amended (the "Act"), the
undersigned represents that:
(i) the undersigned is acquiring such Stock for investment for his own
account, not as nominee or agent, and not with a view to the distribution
thereof and the undersigned has not signed or otherwise arranged for the
selling, granting any participation in, or otherwise distributing the same;
(ii) the undersigned has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
undersigned's investment in the Stock;
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(iii) the undersigned has received all of the information the undersigned
has requested from the Company and considers necessary or appropriate for
deciding whether to purchase the shares of Stock;
(iv) the undersigned has the ability to bear the economic risks of his
prospective investment;
(v) the undersigned understands and agrees that (A) he may be unable to
readily liquidate his investment in the shares of Stock and that the shares must
be held indefinitely unless a subsequent disposition thereof is registered or
qualified under the Act and applicable state securities laws or is exempt from
such registration or qualification, and that the Company is not required to
register the same or to take any action or make such an exemption available
except to the extent provided in the within Warrant; (B) the exemption from
registration under the Act afforded by Rule 144 promulgated by the Securities
and Exchange Commission ("Rule 144") depends upon the satisfaction of various
conditions by the undersigned and the Company and that, if applicable, Rule 144
affords the basis for sales under certain circumstances in limited amounts, and
that if such exemption is utilized by the undersigned, such conditions must be
fully complied with by the undersigned and the Company, as required by Rule 144;
and (C) among the conditions required for use of Rule 144 is the availability of
current information to the public about the Company, and the undersigned
understands that the Company has not made such information available and has no
present plans to do so;
(vi) the undersigned either (A) is familiar with the definition of and
the undersigned is an "accredited investor" within the meaning of such term
under Rule 501 of Regulation D promulgated under the Act, or (B) is providing
representations and warranties reasonably satisfactory to the Company and its
counsel, to the effect that the sale and issuance of Stock upon exercise of such
Warrant may be made without registration under the Act or any applicable state
securities and Blue Sky laws; and
(vii) the address set forth below is the true and correct address of the
undersigned.
________________________________________
(Name)
________________________________________
(Address)
________________________________________
________________________________________
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<PAGE>
If said number of shares shall not be all the shares exercisable or
purchasable under the within Warrant, a new Warrant is to be issued in the name
of the undersigned for the balance remaining of the Warrants.
DATED:____________________________
________________________________________
(Name of holder must conform in all
respects to name of holder as specified
on the face of the Warrant or with the
name of the assignee appearing on the
assignment form attached hereto.)
________________________________________
(signature)
________________________________________
(print name)
________________________________________
(print title)
A-3
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the receipt and adequacy of which are each hereby
confirmed, the undersigned, _____________________, hereby sells, assigns and
transfers unto ___________________ all of the undersigned's right, title and
interest in and to an aggregate of __________ (___) warrants to purchase shares
of the Common Stock of Premier Laser Systems, Inc. (the "Corporation) standing
in the name of the undersigned on the books of the Corporation and evidenced by
that certain Class __ Warrant, dated ________ __, ___ (the "Warrant"), and does
hereby irrevocable constitute and appoint __________________ as attorney-in-fact
to effect the reissue of the Warrant as necessary and the transfer of said
Warrant on the books of the Corporation with full power of substitution upon
presentation to the Corporation of this Assignment Form together with the
Warrant.
Dated: ____________ __, ____
Signature: ___________________________
Printed Name: ___________________________
B-1
<PAGE>
EXHIBIT 99.10
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER
ANY APPLICABLE STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS (I) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, (II) THE SALE IS MADE
PURSUANT TO RULE 144 UNDER THE ACT, IF AVAILABLE, AND EXEMPTIONS FROM
REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS OR (III) AN OPINION IS
OBTAINED FROM COUNSEL TO THE HOLDER, REASONABLY SATISFACTORY TO COUNSEL TO
PREMIER LASER SYSTEMS, INC. THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE
UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS.
CLASS D WARRANT
TO PURCHASE COMMON STOCK
NO PAR VALUE OF
PREMIER LASER SYSTEMS, INC.
50,000 Warrants (Partial Shares)/1/ February 25, 1998
This certifies that Stanley Chang, M.D. ("Holder"), for value received, is
entitled, subject to the other terms set forth below, to purchase from Premier
Laser Systems, Inc., a California corporation (the "Company"), having a place of
business at 3 Morgan, Irvine, California 92618, at any time from the Notice Date
defined below until 5:00 P.M. (California time) on the ninetieth day following
the Notice Date (the "Expiration Date"), unless earlier terminated pursuant to
the provisions of Section 2.4 hereof, at which time this Warrant shall expire
and become void, a fraction of a share, of the Company's Common Stock, no par
value (the "Common Stock") in an amount determined pursuant to Section 2 below.
The purchase or exercise price per share (the "Exercise Price") shall be one
cent ($0.01) regardless of the number of Warrants which must be exercised to
obtain a Warrant Share (as defined below).
_______________
/1/ (Does not represent 50,000 shares - See Paragraph 2 for computation.)
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<PAGE>
The number and character of the securities purchasable upon exercise of
this Warrant are subject to adjustment as provided in Section 3.3 hereof.
This Warrant is subject to the following terms and conditions:
1. Exercise; Issuance of Certificates; Payment for Shares.
1.1 Duration of Exercise of Warrant. This Warrant is exercisable at
the option of Holder at any time from the Notice Date until 5:00 P.M.
(California time) on the Expiration Date for all or a portion of the shares of
Common Stock that may be purchased hereunder. This Warrant shall be exercised
upon surrender to the Company of this Warrant properly endorsed with a completed
and executed Subscription Agreement in the form attached hereto as Exhibit A,
and upon payment in cash or cashier's check of the aggregate Exercise Price for
the number of shares of Common Stock for which this Warrant is being exercised
(the "Warrant Shares"). The Company agrees that any Warrant Shares purchased
under this Warrant shall be deemed to be issued to Holder as the record owner of
such shares as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for such shares. Certificates for the
Warrant Shares so purchased, together with any other securities or property to
which Holder is entitled upon such exercise, shall be delivered to Holder by the
Company or its transfer agent at the Company's expense as soon as practicable
after the rights represented by this Warrant have been exercised. Each stock
certificate so delivered shall be in such denominations of Common Stock as may
be reasonably requested by Holder and shall be registered in the name of Holder
or such other name as shall be designated by Holder. If, upon exercise of this
Warrant, fewer than all of the shares issuable upon exercise of this Warrant are
purchased, one or more new warrants substantially in the form of, and on the
terms contained in, this Warrant will be issued for the remaining number of
shares not exercised.
1.2 Securities to be Fully Paid; Reservation of Warrant Shares. The
Company covenants and agrees that all Warrants and Warrant Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable and
such issuance will not violate any pre-emptive rights under applicable law, the
Premier Articles of Incorporation or By-laws, contracts, or agreement, or
otherwise. The Company covenants that it will at all times from the date hereof
reserve and keep available a sufficient number of shares of its authorized but
unissued Common Stock (or other securities) solely for issuance and delivery to
Holder upon exercise of this Warrant. The Company will take all such reasonable
action as may be necessary to assure that such Warrants and Warrant Shares may
be issued as provided herein without violation of any applicable law or
regulation.
-2-
<PAGE>
2. Notice of Exercisability and Determination of Number of Warrant Shares.
2.1 Condition to Exercise. This Warrant shall not become exercisable
unless the Net Sales of Qualified Products (both as defined herein) for the
twelve (12) month period ended December 31, 1999 (the "Determination Date")
equal or exceed Eleven Million Six Hundred Dollars ($11,600,000). Except as set
forth below, "Net Sales" shall mean net sales of Qualified Products as
determined by generally accepted accounting principles, as consistently applied
by Ophthalmic Imaging Systems ("OIS"). "Qualified Products" shall mean products
sold by, and in connection with the current core business of OIS including: (i)
products related to or arising out of such current core products; (ii) products
under development as of the date hereof; and (iii) those same products if sold
by any successor owner of OIS' operations. For the purposes of this Class D
Warrant only, firm purchase orders or purchase agreements from purchasers
seeking shipment of goods by December 31, 1999, and which are accompanied by at
least a 10% deposit, shall be deemed to be December 1999 sales. As soon as
practicable after the Determination Date, the Company shall determine the Net
Sales of Qualified Products for the twelve (12) month period ended on the
Determination Date and shall mail to the holder of the Warrant, and shall
publish in a newspaper of national circulation a notice (the "Exercise Notice")
stating whether this condition to exercisability has been met. The date of such
mailing and publication is the "Notice Date."
2.2 Shares Issuable. To determine the number of Warrant Shares for
which the Warrant may be exercised, the Company shall determine the average
Closing Price (as defined below) of the Common Stock for the (i) fifteen (15)
consecutive trading days immediately preceding the Determination Date and (ii)
the thirty (30) consecutive trading days ending fifteen (15) trading days prior
to the Determination Date, and shall calculate the number of shares of the
Common Stock, or fraction thereof, which could be purchased at the greater of
such two average Closing Prices for a purchase price of twenty-five cents
($0.25). The result of this calculation shall be the "Share Factor." The Share
Factor shall be multiplied by the number of Warrants stated on the first page of
this Warrant to determine the number of whole shares for which this Warrant may
be exercised. Fractional shares resulting from aggregate exercises shall be
rounded to the nearest whole share.
2.3 Notice. The Exercise Notice sent to the Holder shall state the
number of Warrant Shares for which the Warrant has become exercisable.
2.4 Exercise. If the Exercise Notice states that the condition stated
in Section 2.1 has not been satisfied, then the Notice Date shall become the
Expiration Date, this Warrant shall expire effective as of the Notice Date and
the Holder shall have no further rights hereunder. If the Exercise Notice states
the condition has been met, this
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<PAGE>
Warrant shall thereafter be exercisable for the number of whole shares
determined as provided in Section 2.2 and specified in the applicable Exercise
Notice.
2.5 Closing Price. For purposes of any computation pursuant to this
Section 2, the term "Closing Price" for any day shall mean the last reported
sale price, regular way, of the Common Stock, or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices,
regular way, for such day, in either case on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or if it is
not listed or admitted to trading on any national securities exchange, but is
traded on Nasdaq, the closing sale price of the Common Stock or, in case no sale
is reported, the average of the closing bid and asked quotations for the Common
Stock on Nasdaq, or any comparable system.
3. Certain Notices.
3.1 Notice of Certain Events. If at any time after the
Determination Date and before the Expiration Date:
3.1.1 the Company shall declare any cash dividend upon its
Common Stock;
3.1.2 the Company shall declare any dividend upon its Common
Stock payable in stock (other than a dividend payable solely in shares of Common
Stock) or make any special dividend or other distribution to the holders of its
Common Stock;
3.1.3 the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
3.1.4 there shall be any capital reorganization or
reclassification of the capital stock of the Company; or consolidation or merger
of the Company with, or sale or leases, exchanges or other conveyances (other
than pledges, mortgages and liens related to loans) of substantially all of its
assets to, another corporation;
3.1.5 there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
3.1.6 any purchase, retirement, or redemption by the Company of
its Common Stock;
then, in any one or more of said cases, the Company shall give to the registered
holder of this Warrant, by the means specified in Section 8 herein, (i) at least
twenty (20) days'
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<PAGE>
prior written notice of the date on which the books of the Company shall close
or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, and (ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, winding-up, at least
twenty (20) days' prior written notice of the date when the same shall take
place; provided, however, that the Company shall not be required to send any
notice pursuant to this Section 3.1 if the Company determines the condition in
Section 2.1 has not been met. Any notice given in accordance with the foregoing
clause (i) shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto. Any notice given in accordance with the foregoing clause (ii)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, winding-up, conversion or public offering, as
the case may be. If Holder does not exercise this Warrant prior to the
occurrence of an event described above, Holder shall not be entitled to receive
the benefits accruing to then existing holders of Common Stock.
3.2 Notice of Adjustment. Upon the happening of an event requiring an
adjustment of the amount or the kind of securities or property purchasable
hereunder, the Company shall forthwith give notice to the Holder which indicates
the event requiring the adjustment, the adjusted number of Warrant Shares that
may be acquired or the amount or kind of any such securities or property so
purchasable upon exercise of this Warrant, as the case may be, and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. The Company's independent public accountant shall
determine the method for calculating the adjustment and shall prepare a
certificate setting forth such calculations, the reason for the methodology
chosen, and the facts upon which such calculation is based. Such certificate
shall accompany the notice to be provided to the Holder pursuant to this Section
3.2.
3.3 Adjustment of Purchase Price and Number of Warrant Shares. The
number and kind of securities that may be acquired upon the exercise of this
Warrant shall be subject to adjustment following the Determination Date and
prior to the earlier of the exercise of, or the Expiration Date of this Warrant,
upon the happening of any of the following events:
(a) Dividends, Subdivisions, Combinations, or Consolidations of
Common Stock.
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<PAGE>
(i) In the event the Company shall declare, pay, or make
any dividend upon its outstanding Common Stock payable in Common Stock or shall
effect a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock, then the Share Factor shall be adjusted so
that the number of Warrant Shares that may thereafter be purchased upon the
exercise of the rights represented hereby shall be increased in proportion to
the increase in the number of outstanding shares of Common Stock through such
dividend or subdivision. In case the Company shall at any time combine the
outstanding shares of its Common Stock into a smaller number of shares of Common
Stock, the Share Factor shall be adjusted so that number of Warrant Shares that
may thereafter be acquired upon the exercise of the rights represented hereby
shall be decreased in proportion to the decrease through such combination. In
each case, the Exercise Price will not be adjusted.
(ii) If the Company declares, pays or makes any dividend or
other distribution upon its outstanding Common Stock payable in securities or
other property (excluding cash dividends and dividends payable in Common Stock,
but including, without limitation, shares of any other class of the Company's
stock or stock or other securities convertible into or exchangeable for shares
of Common Stock or any other class of the Company's stock or other interests in
the Company or its assets ("Convertible Securities")), a proportionate part of
those securities or that other property shall be set aside by the Company and
delivered to the Holder in the event that the Holder exercises this Warrant. The
securities and other property then deliverable to the Holder upon the exercise
of this Warrant shall be in the same ratio to the total securities and property
set aside for the Holder as the number of Warrant Shares with respect to which
this Warrant is then exercised as to the total number of Warrant Shares that may
be acquired pursuant to this Warrant at the time the securities or property were
set aside for the Holder.
(iii) If the Company shall declare a dividend payable in
money on its outstanding Common Stock and at substantially the same time shall
offer to its shareholders a right to purchase new shares of Common Stock from
the proceeds of such dividend or for an amount substantially equal to the
dividend, all shares of Common Stock so issued shall, for purposes of this
Warrant, be deemed to have been issued as a stock dividend subject to the
adjustments set forth in Section 3.3 (a)(i).
(iv) If the Company shall declare a dividend payable in
money on its outstanding common Stock and at substantially the same time shall
offer to its shareholders a right to purchase new shares of a class of stock
(other than Common Stock), Convertible Securities, or other interests from the
proceeds of such dividend or for an amount substantially equal to the dividend,
all shares of stock, Convertible Securities, or other interests so issued or
transferred shall, for purposes of this Warrant, be deemed to have been issued
or transferred shall, for purposes of this Warrant, be deemed
-6-
<PAGE>
to have been issued as a dividend or other distribution subject to Section
3.3.(a)(ii).
(v) If the Company shall declare a dividend payable in cash
on its outstanding Common Stock, such dividend shall be deemed to have been
issued as a dividend or other distribution subject to Section 3.3(a)(i).
(b) Effect of Reclassification, Reorganization, Consolidation,
Merger, or Sale of Assets.
(i) Upon the occurrence of any of the following events, the
Company shall cause an effective provision to be made so that the Holder shall
have the right thereafter, by the exercise of this Warrant, to acquire for the
Exercise other securities, property and interests as would be issued or payable
with respect to or in exchange for the number of Warrant Shares that are then
purchasable pursuant to this Warrant as if such Warrant Shares had been issued
to the Holder immediately prior to such event: (A) reclassification, capital
reorganization, or other change of outstanding Common Stock (other than a change
as a result of an issuance of Common Stock under Subsection 3.3(a)), (B)
consolidation or merger of the Company with or into another corporation or
entity (other than a consolidation or merger in which the Company is the
continuing corporation and that does not result in any reclassification, capital
reorganization or other change of the outstanding shares of Common Stock or the
Warrant Shares issuable upon exercise of this Warrant), or (C) spin-off of
assets, a subsidiary or any affiliated entity, or the sale, lease, conveyance
(other than pledges, mortgages and liens related to loans) or exchange of a
significant portion of the Company's assets taken as a whole, in a transaction
pursuant to which the Company's shareholders of record are to receive securities
or other interests in a successor entity. Any such provision made by the Company
for adjustments with respect to this Warrant shall be as nearly equivalent to
the adjustments otherwise provided for in this Warrant as is reasonably
practicable. The foregoing provisions of this Section 3.3(b)(i) shall similarly
apply to successive reclassifications, capital reorganizations and similar
changes of shares of Common Stock and to successive consolidations, mergers,
spin-offs, sales, leases or exchanges.
(ii) If any sale or exchange of all, or substantially all,
of the Company's assets or business or any dissolution, liquidation or winding
up of the Company (a "Termination of Business") shall be proposed, the Company
shall deliver written notice to the Holder of this Warrant in accordance with
Section 3.2 hereof as a condition precedent to the consummation of that
Termination of Business. If the result of the Termination of Business is that
shareholders of the
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<PAGE>
Company are to receive securities or other interests of a successor entity, the
provisions of Section 3.3(b)(i) above shall apply. However, if the result of the
Termination of Business is that shareholders of the Company are to receive money
or property other than securities or other interests in a successor entity, the
Holder of this Warrant shall be entitled to exercise this Warrant and, with
respect to any Warrant Shares purchasable pursuant to this Warrant so acquired,
shall be entitled to all of the rights of the other shareholders of Common Stock
with respect to any distribution by the Company in connection with the
Termination of Business. In the event no successor entity is involved and
Section 3.3(b)(i) does not apply, all acquisition rights under this Warrant
shall terminate at the close of business on the date as of which shareholders of
record of the Common Stock shall be entitled to participate in a distribution of
the assets of the Company in connection with the Termination of Business;
provided, that, in no event shall that date be less than 20 days after delivery
- -------- ----
to the Holder of this Warrant of the written notice described above and in
Section 3.2 hereof. If the termination of acquisition rights under this Warrant
is to occur as a result of the event at issue, a statement to that effect shall
be included in that written notice.
(c) Obligation of Successors or Transferees. The Company shall not
effect any consolidation, merger, or sale or conveyance of assets within the
meaning of Section 3.3(b)(i)(B)-(C) unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and mailed or delivered to
the Holder pursuant to Section 8 herein, the obligation to deliver to the Holder
such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, the Holder may be entitled to acquire. In no event shall the
securities received pursuant to this Section be registerable or transferable
other than pursuant and subject to the terms of this Warrant.
(d) Application of this Section. The provisions of this Section 3.3
shall apply to successive events that may occur from time to time but shall only
apply to a particular event if it occurs prior to the expiration of this Warrant
either by its terms or by its exercise in full.
(e) Definition of Common Stock. Unless the context requires
otherwise, whenever reference is made in this Section 3.3 to the issue or sale
of shares of Common Stock, the term "Common Stock" shall mean (i) the no par
value Class A Common Stock of the Company, (ii) any other class of stock ranking
on a parity with, and having substantially similar rights and privileges as the
Company's no par value Class A Common Stock, and (iii) any Convertible Security
convertible into either (i) or (ii). However, subject to the provisions of
Section 3.3(b)(i) above, Common Stock issuable upon the exercise of this Warrant
shall include only shares of Common Stock designed as no par value Class A
Common Stock of the Company as of the date of this Warrant.
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<PAGE>
(f) Company-Held Stock. For purposes of Sections 3.3(a) above, shares
of Common Stock owned or held at any relevant time by, or for the account of,
the Company in its treasury or otherwise, shall not be deemed to be outstanding
for purposes of the calculation and adjustments described therein.
4. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of the Warrant shall be made without charge to Holder of any issue tax
or other governmental charges in respect thereof; provided, however, that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the then holder of the Warrant being exercised.
5. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Warrant shall be construed as conferring upon Holder the right
to vote or to consent or to receive notice as a stockholder in respect of
meetings of stockholders for the election of directors of the Company or any
other matters or any rights whatsoever as a stockholder of the Company, until,
and only to the extent that, this Warrant shall have been exercised. Except as
provided in Section 3.1 in the event of a dividend on the Common Stock payable
in shares of Common Stock, 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. The Company covenants, however, that until the
Termination Date, for so long as this Warrant remains at least partially
unexercised, it will furnish the Holder with copies of all reports and
communications furnished to the stockholders of the Company. No provisions
hereof, in the absence of affirmative action by Holder to purchase Warrant
Shares, and no mere enumeration herein of the rights or privileges of Holder
shall give rise to any liability of Holder for the Exercise Price or as a
stockholder of the Company whether such liability is asserted by the Company or
by its creditors.
6. Registration Rights. Holder shall have registration rights with
respect to the Warrant Shares issuable on exercise of this Warrant, as more
fully set forth in that certain Registration Rights Agreement dated February 25,
1998 by and among the Company, Holder and others.
Further, the Company shall, with a view to making available to the
Holders of the Common Stock issuable upon exercise of the Warrant the benefits
of certain rules and regulations of the Securities and Exchange Commission (the
"Commission") (including, without limitation, Rule 144 under the Securities Act)
which may permit the sale of such Warrant Shares to the public without
registration, file required reports under Section 13 or 15(d), of the Securities
Exchange Act of 1934, as amended (the "Exchange
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<PAGE>
Act"), use commercially reasonable efforts to make available to the Holders of
such benefits, and in furtherance of (but without limiting) the foregoing:
(a) make and keep public information available as those terms are
defined in Rule 144 under the Securities Act or any successor provision thereto;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) so long as the Holders own any Warrants or Warrant Shares, furnish
the Holders forthwith upon request a written statement by the Company as to
compliance with the reporting requirements of Rule 144 or any successor
provision thereto, and of the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of the Company with the Commission, and
such other reports and documents of the Company and other information in the
possession of or reasonably obtainable by the Company as the Holders may
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Holders to sell any such securities without
registration.
7. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
8. Notices. Any notice required or permitted under this Warrant shall be
in writing and either delivered personally, telegraphed or telecopied or sent by
certified or registered mail, postage prepaid, and shall be deemed to be given,
dated and received when so delivered personally, telegraphed or telecopied or,
if mailed, five (5) business days after the date of mailing to the following
address or facsimile number, or to such other address or addresses as such
person may subsequently designate by notice given hereunder.
If to the Company: Premier Laser Systems, Inc.
Attention: Secretary
3 Morgan
Irvine, California 92618
Facsimile: 714 951-7218
with a copy to: Paul, Hastings, Janofsky & Walker LLP
Attention: Peter J. Tennyson, Esq.
695 Town Center Drive, 17th Floor
Costa Mesa, California 92626-1924
Facsimile: 714 979-1921
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<PAGE>
If to Holder: As Holder's address appears
on a register of Warrants
maintained by the Company's
transfer agent.
9. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of the
Company relating to the Common Stock issuable upon the exercise of this Warrant
shall survive the exercise and termination of this Warrant. All of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the Holder.
10. Descriptive Headings and Governing Law. The descriptive 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 California.
11. Exchange, Assignment, Combination and Replacement of Warrants.
(a) This Warrant is exchangeable, without expense other than as
provided in this Section 11, at the option of the Holder upon the reasonable
request, presentation and surrender hereof to the Company for other Warrants of
different denominations entitling the Holder thereof to acquire in the aggregate
the same number of Warrant Shares that may be acquired hereunder.
(b) All of the covenant and provisions of this Warrant by or for the
benefit of the Holder shall be binding upon and shall inure to the benefit of,
its successors and permitted assigns hereunder. This Warrant and all rights
hereunder are transferrable and may be sold, transferred, assigned, or
hypothecated upon surrender of this Warrant to the Company, together with a duly
executed assignment in the form attached hereto as Exhibit B (the "Assignment
Form"), whereupon the Company shall, without charge, execute and deliver a new
Warrant containing the same terms and conditions of this Warrant in the name of
the assignee as named in the Assignment Form, and this Warrant shall be canceled
at that time. This Warrant, if properly assigned, may be exercised by a new
Holder without first having the new Warrant issued.
(c) This Warrant may be delivered or combined with other Warrants that
carry the same rights upon the reasonable request, presentation and surrender of
this Warrant at the office of the Company, together with a written notice signed
by the Holder, specifying the names and denominations in which new Warrants are
to be issued.
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(d) The Company will execute and deliver to the Holder a new Warrant
of like tenor and date upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Warrant; provided, that (i) in the case of loss, theft, or destruction, the
Company receives a reasonably satisfactory indemnity or bond, or (ii) in the
case of mutilation, the Holder shall provide and surrender this Warrant to the
Company for cancellation.
(e) Any new Warrant executed and delivered by the Company in
substitution or replacement of this Warrant shall constitute a contractual
obligation of the Company regardless of whether this Warrant was lost, stolen,
destroyed or mutilated, and shall be enforceable by any Holder thereof.
(f) The Holder shall pay all transfer and excise taxes applicable to
any issuance of new Warrants under this Section 11.
12. Fractional Shares. No fractional shares shall be issued upon exercise
of this Warrant. The Company shall, in lieu of issuing any fractional share,
round such fractional shares to the nearest whole share.
13. Best Efforts. The Company covenants that it will not, by amendment of
its Articles of Incorporation or bylaws, or through any reorganization, transfer
of assets, consolidation, merger, dissolution, reissue or sale of securities, or
any other voluntary action, avoid or seek to avoid the observation or
performance for any term of this Warrant, but will at all times in good faith
assist in carrying out all those terms and in taking all action necessary or
appropriate to protect the rights of the Holder against dilution or other
impairment.
14. Further Assurances. The Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue, duly authorized fully paid and nonassessable Warrants and Common Stock
and other securities issuable upon exercise of this Warrant from time to time
and not in violation of any pre-emptive rights.
(Signature Page Follows)
-12-
<PAGE>
[SIGNATURE PAGE - CLASS D WARRANT]
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer effective as of ________ __, 1998.
PREMIER LASER SYSTEMS, INC.
By: /s/ COLETTE COZEAN
-------------------------
Colette Cozean, Ph.D.
Chief Executive Officer
-13-
<PAGE>
EXHIBIT A
PREMIER LASER SYSTEMS, INC.
COMMON STOCK WARRANT
FORM OF SUBSCRIPTION AGREEMENT
(To be signed and delivered
upon exercise of Warrant)
PREMIER LASER SYSTEMS, INC.
3 Morgan
Irvine, California 92618
Attention: Secretary
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _______________ shares of Common Stock (the "Stock") of
Premier Laser Systems, Inc. (the "Company") and herewith makes payment of
__________________________ Dollars ($________) therefor and requests that the
certificates for such shares be issued in the name of, and delivered to,
______________, whose address is ____________________________________. A copy
of the Exercise Notice (as defined in the Warrant) evidencing that the Warrant
is exercisable for at least the number of shares covered by this agreement is
attached.
If the exercise of this Warrant is not covered by a registration statement
effective under the Securities Act of 1933, as amended (the "Act"), the
undersigned represents that:
(i) the undersigned is acquiring such Stock for investment for his own
account, not as nominee or agent, and not with a view to the distribution
thereof and the undersigned has not signed or otherwise arranged for the
selling, granting any participation in, or otherwise distributing the same;
(ii) the undersigned has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
undersigned's investment in the Stock;
A-1
<PAGE>
(iii) the undersigned has received all of the information the undersigned
has requested from the Company and considers necessary or appropriate for
deciding whether to purchase the shares of Stock;
(iv) the undersigned has the ability to bear the economic risks of his
prospective investment;
(v) the undersigned understands and agrees that (A) he may be unable to
readily liquidate his investment in the shares of Stock and that the shares must
be held indefinitely unless a subsequent disposition thereof is registered or
qualified under the Act and applicable state securities laws or is exempt from
such registration or qualification, and that the Company is not required to
register the same or to take any action or make such an exemption available
except to the extent provided in the within Warrant; (B) the exemption from
registration under the Act afforded by Rule 144 promulgated by the Securities
and Exchange Commission ("Rule 144") depends upon the satisfaction of various
conditions by the undersigned and the Company and that, if applicable, Rule 144
affords the basis for sales under certain circumstances in limited amounts, and
that if such exemption is utilized by the undersigned, such conditions must be
fully complied with by the undersigned and the Company, as required by Rule 144;
and (C) among the conditions required for use of Rule 144 is the availability of
current information to the public about the Company, and the undersigned
understands that the Company has not made such information available and has no
present plans to do so;
(vi) the undersigned either (A) is familiar with the definition of and
the undersigned is an "accredited investor" within the meaning of such term
under Rule 501 of Regulation D promulgated under the Act, or (B) is providing
representations and warranties reasonably satisfactory to the Company and its
counsel, to the effect that the sale and issuance of Stock upon exercise of such
Warrant may be made without registration under the Act or any applicable state
securities and Blue Sky laws; and
(vii) the address set forth below is the true and correct address of the
undersigned.
-------------------------
(Name)
-------------------------
(Address)
-------------------------
-------------------------
A-2
<PAGE>
If said number of shares shall not be all the shares exercisable or
purchasable under the within Warrant, a new Warrant is to be issued in the name
of the undersigned for the balance remaining of the Warrants.
DATED:________________________
----------------------------------------
(Name of holder must conform in all
respects to name of holder as specified
on the face of the Warrant or with the
name of the assignee appearing on the
assignment form attached hereto.)
----------------------------------------
(signature)
----------------------------------------
(print name)
----------------------------------------
(print title)
A-3
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the receipt and adequacy of which are each hereby
confirmed, the undersigned,_____________________, hereby sells, assigns and
transfers unto___________________ all of the undersigned's right, title and
interest in and to an aggregate of __________ (___) warrants to purchase shares
of the Common Stock of Premier Laser Systems, Inc. (the "Corporation) standing
in the name of the undersigned on the books of the Corporation and evidenced by
that certain Class __ Warrant, dated ________ __, ___ (the "Warrant"), and does
hereby irrevocable constitute and appoint __________________ as attorney-in-fact
to effect the reissue of the Warrant as necessary and the transfer of said
Warrant on the books of the Corporation with full power of substitution upon
presentation to the Corporation of this Assignment Form together with the
Warrant.
Dated: ____________ __, ___
Signature: ___________________________
Printed Name: ___________________________
B-1
<PAGE>
EXHIBIT 99.11
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of February 25, 1998, by and between Premier Laser Systems, Inc., a
California corporation ("Premier" or the "Company") and Stanley Chang, M.D. (the
"Holder").
WHEREAS, the Holder acquired the Purchased Shares and may acquire the
Contingent Shares (each as defined below), pursuant to the terms of a Purchase
Agreement, dated as of February 25, 1998 (the "Purchase Agreement"), and the
Warrants (as defined below) issued in connection therewith, by and between the
Company and Holder.
WHEREAS, as an inducement to entering into the Purchase Agreement, and as
a condition to the acquisition of the Purchased Shares and the potential future
acquisition of the Contingent Shares by the Holder in connection therewith, the
Company has agreed to provide certain registration rights to the Purchaser as
set forth in this Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the foregoing,
the mutual covenants and agreements set forth in the Purchase Agreement and
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, agree as follows:
1. Certain Definitions. Capitalized terms used herein without
-------------------
definition shall have the meaning given to such terms in the Purchase Agreement.
As used in this Agreement, the following capitalized defined terms shall have
the following meanings:
"Contingent Shares" shall mean the shares of the Premier Common
Stock issued by the Company to the Holder pursuant to the terms of the Class C
Warrant and the Class D Warrant.
"Contingent Share Shelf Registration Statement" has the meaning set
forth in Section 2(a)(ii)(B).
"Expiration Date" has the meaning set forth within the
Prospectus/Offer to Exchange that the Company intends to utilize to effect a
tender offer (the "Tender Offer") to purchase those shares of Ophthalmic Imaging
Systems ("OIS") common stock not already owned by the Company.
-1-
<PAGE>
"Form S-3" means the registration statement on Form S-3 promulgated
under the Securities Act by the SEC for use in registering securities issued by
certain publicly traded companies and any similar form subsequently prescribed
by the SEC as the successor to Form S-3.
"Person" shall mean an individual or a corporation, partnership,
limited liability company, association or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Prospectus" shall mean any prospectus included in a Shelf
Registration Statement (as defined herein), or a registration statement with
respect to an underwritten offering in which the Holder participates, as
contemplated by Section 5(b), including any resale prospectus and any
preliminary prospectus, and any amendment or supplement thereto, and in each
case including all material incorporated by reference therein.
"Purchase" shall mean the Company's purchase of Holder's shares of
OIS common stock under the Purchase Agreement.
"Purchased Shares" shall mean the shares of Premier Common Stock
issued by the Company to the Holder at the Closing of the transactions
contemplated by the Purchase Agreement.
"Purchased Share Shelf Registration Statement" has the meaning set
forth in Section 3(a)(i).
"Registration Expenses" shall mean any and all expenses incident to
the performance of or compliance with this Agreement, including, without
limitation: (i) all applicable registration and filing fees imposed by the SEC
and such securities exchange or exchanges on which Common Shares are then listed
or The Nasdaq Stock Market ("Nasdaq") (ii) all fees and expenses incurred in
connection with compliance with state securities or "blue sky" laws (including
reasonable fees and disbursements of counsel for the Company in connection with
qualification of any of the Shares under any state securities or blue sky laws
and the preparation of a blue sky memorandum) and compliance with the rules of
the NASD; (iii) all expenses of any Persons in preparing or assisting in
preparing, printing and distributing the Shelf Registration Statement, any
Prospectus, certificates and other documents relating to the performance of and
compliance with this Agreement; (iv) all fees and expenses incurred in
connection with the listing, if any, of any of the Shares on any securities
exchange or exchanges pursuant to Section 4(j) hereof; (v) the fees and
disbursements of counsel for the Company and of the independent public
accountants of the
-2-
<PAGE>
Company, including the expenses relating to any special audits or "cold comfort"
letters required by or incident to such performance and compliance; and (vi) the
reasonable fees and disbursements of a single counsel for the Holder.
Registration Expenses shall specifically exclude underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
Shares by the Holder.
"SEC" shall mean the Securities and Exchange Commission or any
successor entity.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Shares" shall mean, collectively, the Purchased Shares and the
Contingent Shares issued to the Holder pursuant to the Purchase Agreement or the
Warrant and any equity securities issued or issuable directly or indirectly with
respect to the Purchased Shares or the Contingent Shares issued to the Holder by
way of replacement, stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise.
"Shelf Registration Statements" shall mean, collectively, the
Purchased Share Shelf Registration Statement, the Contingent Share Shelf
Registration Statement and any other registration statement as filed by the
Company pursuant to Section 3(a) of this Agreement.
"Warrants" shall mean the Class C Warrant and Class D Warrant issued
by the Company to Purchaser.
2. Registrable Securities.
----------------------
(a) The securities entitled to the benefits of this Agreement are
the Shares.
(b) Any subsequent holder of the Shares shall be entitled to the
benefits of this Agreement as a holder of any such Shares (a "Purchaser"). A
Person is deemed to be a Purchaser whenever such Person owns Shares or has the
right to acquire such Shares, whether or not such acquisition has actually been
effected and disregarding any legal restrictions upon the exercise of such
right.
-3-
<PAGE>
3. Registration Under the Securities Act.
-------------------------------------
(a) (i) Subject to Section 7(b) below, the Company shall prepare
and promptly file a registration statement on Form S-3 or an amendment to an
existing registration statement on Form S-3, either of which may include shares
of the Premier Common Stock for resale by other Company shareholders (the
"Purchased Share Shelf Registration Statement"), registering the Purchased
Shares for resale by the Purchaser and shall use its reasonable best efforts to
cause the Purchased Share Shelf Registration Statement to be declared effective
by the SEC as soon as practicable following the Expiration Date.
(ii) (A) The Company shall use its reasonable best efforts to
cause each installment of Contingent Shares, if any, issued by the Company to
the Purchaser pursuant to the terms of the Purchase Agreement and the Warrants
to be registered pursuant to an effective registration statement under the
Securities Act as soon as practicable after the exercise of the Warrants.
(B) Notwithstanding the foregoing, if there is a
Suspension Event (as defined in Section 7(b) below) occurring at the time of
issuance of any Contingent Shares, in lieu of delivering to the Purchaser
Contingent Shares registered under the Securities Act, the Company may give
notice to the Purchaser of the Suspension Event and deliver to the Purchaser
Contingent Shares issued without registration under the Securities Act and file
as soon as practicable thereafter a registration statement on Form S-3 or an
amendment to an existing registration statement on Form S-3, either of which may
include shares of Premier Common Stock for resale by the Company stockholders
(in each case, a "Contingent Share Shelf Registration Statement"), registering
the Contingent Shares for resale by the Purchaser. The Company shall use its
reasonable best efforts to cause each Contingent Share Shelf Registration
Statement to be declared effective by the SEC as soon as practicable thereafter.
(iii) The Company agrees to use its reasonable best
efforts to keep the Purchased Share Shelf Registration Statement and any
Contingent Share Shelf Registration Statement continuously effective (and to
include a Prospectus at all times meeting the requirements of the Securities
Act, including (S) 10(a)(3) thereof) for a period of one year from the date of
effectiveness of such Shelf Registration Statement (such period is referred to
as the "Shelf Period").
(b) The Company shall pay all Registration Expenses in connection
with a registration pursuant to this Agreement.
-4-
<PAGE>
4. Registration Procedures. In connection with the obligations of the
-----------------------
Company under Section 3 hereof, the Company will use its best efforts to effect
the registration and sale of the Shares in accordance with the intended method
of distribution thereof, and pursuant thereto, the Company will, as
expeditiously as possible:
(a) prepare and file with the SEC, as soon as practicable within
the time period set forth in Section 3 hereof, and use its reasonable best
efforts to have declared effective by the SEC, the Shelf Registration
Statements, which shall (i) be available for public resale of the Shares by the
Purchaser, and (ii) comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith; provided, however, that before filing
a Shelf Registration Statement or Prospectus, or any amendments, post-effective
amendments, or supplements thereto, with the SEC, the Company will furnish to
the Purchaser and its underwriters, if any, with copies of all such proposed
documents to be filed, which documents will be subject to the reasonable review
of the Purchaser and its underwriter, and the Company will not file any
Registration Statement or Prospectus to which the Purchaser of the underwriter,
if any, shall reasonably object;
(b) furnish to each Purchaser, without change, at least one signed
copy of the applicable Shelf Registration Statement and any post-effective
amendments thereto, including financial statements and schedules whether
included therein or incorporated by reference thereto no later than two days
following its filing with the SEC, which, in any event will be no later than two
business days prior to the effective date of such Shelf Registration Statement;
(c) (i) to prepare and file with the SEC such amendments,
supplements and post-effective amendments to the Shelf Registration Statements
as may be necessary to keep each such Shelf Registration Statement continuously
effective for the period set forth in Section 3(a)(iii) of this Agreement; (ii)
cause any Prospectus to be amended or supplemented as required and to be filed
as required by Rule 424 or any similar rule that may be adopted under the
Securities Act; (iii) respond as promptly as practicable to any comments
received from the SEC with respect to the Shelf Registration Statements or any
amendments thereto; and (iv) comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by the Shelf
Registration Statements during the applicable period in accordance with the
intended method or methods of distribution by the Purchaser and as reasonably
requested by a Purchaser or any underwriter of the Shares.
-5-
<PAGE>
(d) furnish to each Purchaser and any managing underwriter, upon
request and without charge, as many copies of any Prospectus and any amendment
or supplement thereto as such Person may reasonably request;
(e) use its reasonable best efforts to register or qualify the
Shares under all applicable state securities or blue sky laws of such
jurisdictions in the United States and its territories and possessions as the
Purchaser may reasonably request in writing and keep such registration or
qualification effective during the period the Shelf Registration Statement is
required to be kept effective under Section 3(a)(iii) hereof; provided, however,
-------- -------
that in connection therewith, the Company shall not be required to (i) qualify
as a foreign corporation to do business or to register as a broker or dealer in
any such jurisdiction where it would not otherwise be required to qualify or
register but for this Section 4(e), (ii) subject itself to taxation in any such
jurisdiction with respect to such registration or qualification, or (iii) file a
general consent to service of process in any such jurisdiction;
(f) notify each Purchaser and any managing underwriter promptly and,
if requested by the Purchaser, confirm in writing, (i) when the Shelf
Registration Statements and any post-effective amendments thereto have become
effective, (ii) when any amendment or supplement to a Prospectus has been filed
with the SEC, except for an amendment via incorporation by reference of
subsequent filings under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of the Shelf
Registration Statements or any part thereof or the initiation of any proceedings
for that purpose, (iv) if the Company receives any notification with respect to
the suspension of the qualification of the Shares for offer or sale in any
jurisdiction or the initiation of any proceeding for such purpose, and (v) of
the happening of any event during the periods that any of the Shelf Registration
Statements are effective as a result of which (A) the Shelf Registration
Statements contain any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or (B) a Prospectus as then amended or supplemented
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(g) in the event of a stop order or suspension in the sale of the
Shares, use all reasonable best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Shelf Registration Statements by the SEC or
any state securities authority or otherwise prohibiting the offer and sale of
the Shares as promptly as possible;
-6-
<PAGE>
(h) furnish to the Purchaser upon request and without charge, at
least one conformed copy of the Shelf Registration Statements and any post-
effective amendments thereto (including documents incorporated therein by
reference or exhibits thereto, unless requested);
(i) cooperate with the Purchaser and any underwriter to facilitate
the timely preparation and delivery of certificates representing Shares to be
sold and not bearing any restrictive legend and enable certificates for such
Shares to be issued for such numbers of Shares and registered in such names as
the Purchaser may reasonably request;
(j) use its reasonable best efforts to cause all Shares to be listed
on any securities exchange or inter-dealer quotation service on which the Shares
are then listed, including on Nasdaq if the Shares are then so included;
(k) use its reasonable best efforts to make available adequate
current public information about the Company as contemplated by Rule 144(c)
promulgated under the Securities Act;
(l) use its best efforts to cause the Shares covered by a Shelf
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable Purchaser or
any underwriter of the Shares to consummate the disposition; and
(m) upon the occurrence of any event referenced in last sentence of
Section 7(a)(ii) below, prepare and promptly file a supplement or post-effective
amendment to the Shelf Registration Statement and the related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Shares, the Prospectus
will not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading under the
circumstances in which they were made; provided, however, a period of suspension
of the distribution of Shares under Section 7(a) hereof as a result of an
occurrence of an event under the last sentence of Section 7(b)(ii) shall not
exceed a period of thirty (30) days during any twelve (12) month period.
5. Certain Agreements of the Purchaser.
-----------------------------------
(a) The Purchaser agrees to furnish to the Company in writing such
information regarding the Purchaser and its proposed distribution of Shares as
the Company may from time to time reasonably request in connection with the
preparation of
-7-
<PAGE>
the Shelf Registration Statements or any registration statement as contemplated
by Section 5(b) of this Agreement or the registration or qualification of the
Shares under state securities or blue sky laws, and report to the Company within
ten (10) days after the end of each month all sales or other dispositions of
Shares made by them during such month.
(b) To the extent timely notified in writing by the Company or the
managing underwriters, the Purchaser agrees, if requested by the Company in the
case of a Company initiated non-underwritten offering or if requested by the
managing underwriter or underwriters in an underwritten offering initiated by
the Company or by a shareholder of the Company pursuant to demand registration
rights, not to effect any public sale or distribution of any Shares (including a
sale pursuant to Rule 144 under the Securities Act) during the ten (10) day
period prior to, and during the forty-five (45) day period beginning on, the
date of effectiveness of each Company initiated offering made pursuant to a
registration statement, provided that the Purchaser shall be entitled to
participate in an underwritten offering pro rata with all other holders of
shares of Common Stock to be included in any such registration, if, in the
reasonable opinion of the managing underwriter of any such underwritten
registration such shares may be included in such registration without having an
adverse effect on the marketability or the price of any shares of the Premier
Common Stock proposed to be offered in such underwritten registration and the
Purchaser agrees to enter into an underwriting agreement with such underwriters
containing such representations and warranties by the Purchaser and such terms
and provisions, including without limitation, provisions with respect to
indemnification and contribution, as are customarily contained in underwriting
agreements and deliver customary opinions of counsel and closing certificates.
6. Indemnification.
---------------
(a) Indemnification by the Company. The Company agrees to
------------------------------
indemnify, to the fullest extent permitted by law, and hold harmless each
Purchaser, its officers, directors, employees, partners, agents, and each Person
who controls (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act and the rules and regulations promulgated thereunder)
such Purchaser or acts on behalf of such Purchaser, and each other Person who
participates as an underwriter in the offering or sale of the Shares as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to which such Person may become subject (A)
that arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in Shelf Registration Statements or any
registration statement as contemplated by
-8-
<PAGE>
Section 5(b) of this Agreement or any amendments thereto, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, (B) that arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus or any amendment or supplement
thereto, or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading or (C) that arise out
of or are based upon any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law, which violation or alleged violation arises out of the Shelf
Registration Statements or Prospectuses or any registration statement as
contemplated by Section 5(b) of this Agreement;
(ii) against any loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or alleged untrue statement, any omission or alleged
omission, if such settlement is effected with the written consent of the
Company, which consent shall not be unreasonably withheld; and
(iii) subject to the limitations set forth in Section 6(b),
against any expense (including reasonable fees and disbursements of counsel)
reasonably incurred in investigating, preparing or defending against any
litigation, investigation or proceeding by any governmental agency or body,
commenced or threatened, in each case whether or not a party, or any claim
whatsoever based upon any such untrue statement or alleged untrue statement,
omission or alleged omission that relates to the sale by the Purchaser under
Shelf Registration Statements or any registration statement as contemplated by
Section 5(b) of this Agreement, to the extent that any such expense is not paid
under subparagraph (i) or (ii) above; provided, however, that the indemnity
-------- -------
provided pursuant to this Section 6(a)(i), (ii) and (iii) shall not apply to the
Purchaser with respect to any loss, liability, claim, damage or expense that
arises out of or is based upon (1) any untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information furnished to the Company by the Purchaser for use in
the Shelf Registration Statements or any other registration statement
contemplated by this Agreement or any amendment thereto or a Prospectus or any
amendment or supplement thereto, or (2) trades made by the Purchaser in
violation of Section 7(a) below after receiving the notice from the Company
required pursuant thereto. The indemnification provided under this Section 6(a)
shall remain in full force and effect regardless of any investigation made
-9-
<PAGE>
by any Purchaser or underwriter, and no such investigation may be asserted in an
attempt to mitigate any liabilities hereunder.
(b) Indemnification by the Purchaser. The Purchaser agrees to
--------------------------------
indemnify and hold harmless the Company and its directors and officers,
including each director of the Company and each officer of the Company who
signed any Shelf Registration Statement or any registration statement with
respect to an underwritten offering in which the Purchaser participates, as
contemplated by Section 5(b) of this Agreement, and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act, to
the same extent as the indemnity contained in Section 6(a) hereof, but only
insofar as such loss, liability, claim, damage or expense arises out of or is
based upon (i) any untrue statement or alleged untrue statement or omission or
alleged omission made in the Shelf Registration Statements or any registration
statement with respect to an underwritten offering in which the Purchaser
participates, as contemplated by Section 5(b) of this Agreement or any amendment
thereto or a Prospectus or any amendment or supplement thereto in reliance upon
and in conformity with information prepared and furnished to the Company by the
Purchaser for use therein or (ii) trades made by the Purchaser in violation of
Section 7(a) below; provided. that, in the case of the Purchaser's obligation
set forth in this Section 6(b) relating to Section 6(a)(ii) above, such
settlement must be effected with the written consent of the Purchaser, which
consent shall not be unreasonably withheld.
(c) Conduct of Indemnification Proceedings. The indemnified party
--------------------------------------
shall give reasonably prompt written notice to the indemnifying party of any
action or proceeding commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify the indemnifying party (i) shall not
relieve it from any liability that it may have under the indemnity agreement
provided in Section 6(a) or (b) above, unless and to the extent it did not
otherwise learn of such action and the lack of notice by the indemnified party
materially prejudices the indemnifying party or results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) shall not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided under Section 6(a) or
(b) above. After receipt of such notice, the indemnifying party shall be
entitled to participate in and, at its option, jointly with the indemnifying
party so notified, to assume the defense of such action or proceeding at such
indemnifying party's own expense with counsel chosen by such indemnifying party
and approved by the indemnified party or parties, which approval shall not be
unreasonably withheld; provided, however, that, if the defendants in any such
-------- -------
action or proceeding include both the indemnified party and the indemnifying
party and the indemnified party reasonably determines, upon advice of counsel,
that a conflict of interest exists or that there may be legal defenses available
to it that are different from or in addition to those available to the
-10-
<PAGE>
indemnifying party, then the indemnified party shall be entitled to counsel the
reasonable fees and expenses of which shall be paid by the indemnifying party.
If the indemnifying party does not assume the defense of any such action or
proceeding, after having received the notice referred to in the first sentence
of this paragraph, the indemnifying party will pay the reasonable fees and
expenses of counsel for the indemnified party. In such event, however, the
indemnifying party will not be liable for any settlement effected without the
written consent of such indemnifying party, which consent shall not be
unreasonably withheld. If the indemnifying party assumes the defense of any
such action or proceeding in accordance with this paragraph, such indemnifying
party shall not be liable for any fees and expenses of counsel for the
indemnified party incurred thereafter in connection with such action or
proceeding except as set forth in the proviso in the second sentence of this
Section 6(c).
(d) The obligations of the Company and the Purchaser under this
Section 6 shall survive the completion of any offering of the Shares pursuant to
any Shelf Registration Statement.
7. Suspension of Shelf Registration Requirement.
--------------------------------------------
(a) The Purchaser agrees that he, she or it will not effect any
sales of Shares pursuant to any Shelf Registration Statement after he, she or it
has received notice from the Company to suspend sales as a result of the
occurrence or existence of any Suspension Event (as defined in Section 7(b)
below) until such time as the Company provides notice to such holder that all
Suspension Events have ceased to exist. All such information relating to a
Suspension Event obtained by Purchaser shall be treated as confidential and
shall not be used by the Purchaser for any purpose. The Company shall notify the
Purchaser promptly after any Suspension Event occurs or ceases to exist to the
extent he or it continues to hold Shares and with respect to the cessation of a
Suspension Event, to the extent he or it has been provided notice of a
Suspension Event. In addition, the Purchaser agrees that he, she or it will not
effect any sales of Shares pursuant to the Shelf Registration Statements after
he or it has received notice from the Company to suspend sales because the
Registration Statements, any Prospectus or any supplement thereto contains an
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, until the Company notifies such holder
that the misstatement or omission has been corrected. The Company shall not
suspend the shelf registration requirements under this section for more than a
period of thirty (30) days during any (12) month period.
-11-
<PAGE>
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation to file the Shelf Registration Statements
and make any filings with any state securities authority, to use its reasonable
best efforts to cause the Shelf Registration Statements or any state securities
filings to become effective, or to amend or supplement the Shelf Registration
Statement or any state securities filings shall be temporarily suspended in the
event of and during a Suspension Event. A "Suspension Event" shall exist at
such times (i) that the Company is not eligible to use Form S-3 for the
registration contemplated by Section 3(a) hereof or (ii) as circumstances exist,
that the Company's Board of Directors, in good faith and as evidenced by a
resolution in accordance therewith, determines make it impractical or
inadvisable for the Company to file, amend or supplement a Shelf Registration
Statement or such filings or to cause the Shelf Registration Statements or such
filings to become effective (such circumstances to include, without limitation,
(A) the Company conducting an underwritten primary offering and being advised in
writing, with such writing being made available to Purchaser upon reasonable
request, by the underwriters that sale of Shares under the Shelf Registration
Statements would have a material adverse effect on the Company's offering or (B)
pending negotiations relating to, or consummation of, a transaction material to
the Company or the occurrence of some other event (x) where any of the foregoing
would require disclosure under applicable securities laws of material
information in the Shelf Registration Statements (or any other document
incorporated into a Shelf Registration Statement by reference) or such state
securities filings and (y) as to which the Company has a bona fide business
purpose for preserving confidentiality or which renders the Company unable to
comply with SEC requirements. Suspension of the Company's obligations pursuant
to this Section 7(b) shall continue only for so long as a Suspension Event or
its effect is continuing.
8. Miscellaneous.
-------------
(a) Amendments and Waivers. Except as specifically provided herein,
----------------------
the provisions of this Agreement, including the provisions of this sentence, may
not be amended, modified, supplemented or waived, nor may consent to departures
therefrom be given, without the written consent of the Company and each
Purchaser specifically affected thereby.
(b) Notices. Unless otherwise provided, all notices or other
-------
communications required or permitted to be given to the parties hereto shall be
in writing and shall be deemed to have been given if personally delivered,
including personal delivery by facsimile, provided that the sender receives
telephonic or electronic confirmation that the facsimile was received by the
recipient and that such facsimile is followed the same day by mailing by
certified or registered mail return receipt requested, first class postage
prepaid (a
-12-
<PAGE>
"Mailing"), upon receipt of courier delivery or the third day following a
Mailing, addressed as follows (or at such other address as the addressed party
may have substituted by notice pursuant to this Section 8(b):
(i) If to the Company:
Premier Laser Systems, Inc.
3 Morgan
Irvine, California 92618
Attn: Secretary
Fax: (714) 951-7218
with a copy to:
Paul, Hastings, Janofsky & Walker LLP
695 Town Center Drive, 17/th/ Floor
Costa Mesa, California 92626-1924
Attn: Peter J. Tennyson, Esq.
Fax: (714) 979-1921
(ii) If to Purchaser:
Premier Laser Systems, Inc.
3 Morgan
Irvine, California 92618
Attn: Secretary
Fax: (714) 951-7218
with a copy to:
Paul, Hastings, Janofsky & Walker LLP
695 Town Center Drive, 17/th/ Floor
Costa Mesa, California 92626-1924
Attn: Peter J. Tennyson, Esq.
Fax: (714) 979-1921
or to such other address as any party may have furnished in writing to the other
parties in the manner provided above.
-13-
<PAGE>
(c) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding on the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Purchasers of the Shares; provided, however, the Company shall not
assign its responsibilities hereunder without the express written consent of the
Purchasers.
(d) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Any party may execute
this Agreement by facsimile signature, and shall provide promptly to all other
parties an originally executed Agreement.
(e) Headings and Interpretation. The headings in this Agreement are
---------------------------
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof. In construing the meaning of this Agreement, no party hereto
shall be deemed the drafter of this Agreement and this Agreement shall be
construed according to its fair meaning and not strictly against any person as
the drafter hereof.
(f) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California without giving
effect to the conflicts of law provisions thereof.
(g) Entire Agreement. This Agreement is intended by the parties as
----------------
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all
prior oral and written agreements and understandings and all contemporaneous
written agreements and understandings between the parties with respect to such
subject matter.
(h) No Inconsistent Agreements. The Company will not on or after
--------------------------
the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with the rights granted to Purchasers in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Purchasers hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any such agreements.
(i) Remedies. All remedies under this Agreement, or by law or
--------
otherwise afforded to any party hereto, shall be cumulative and not alternative.
Any Person having rights under any provision of this Agreement will be entitled
to enforce such rights
-14-
<PAGE>
specifically to recover damages caused by reason of any breach of any provision
of this Agreement and to exercise all other rights granted by law. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or other security) for specific performance and for
other injunctive relief in order to enforce or prevent violation of the
provisions of this Agreement.
(j) Rule 144. With a view to making available certain exemptions
--------
form the registration provisions of the Securities Act for the sale of Shares,
the Company covenants that:
(i) At all times that the Premier Common Stock is registered
under Section 12(b) or 12(g) of the Exchange Act, the Company will use its best
efforts to timely file the reports required to be filed by the Company under the
Securities Act and the Exchange Act (or, if the Company is not registered under
Section 12(b) or 12(g) of the Exchange Act and is not otherwise required to file
such reports under Sections 13 or 15(d) thereunder, it will, upon the request of
any Purchaser, make publicly available such other information required under
Rule 144 of the Securities Act ("Rule 144") for so long as necessary to permit
sales pursuant to Rule 144), and the Company will take such further action as
any Purchaser may reasonably request to the extent required from time to time to
enable such Purchaser to sell the Shares without registration under the
Securities Act within the limitations of the exemptions provided by: (x) Rule
144, as such rule may be amended from time to time, and (y) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of the Purchaser, the
Company will deliver to Purchaser a written statement as to whether it has
complied with such requirements.
(ii) So long as the Shares constitute "Restricted Securities"
as that term is used in Rule 144, the Company will furnish each Purchaser a copy
of the annual and quarterly reports of the Company and such other public reports
as the Purchaser may reasonably request.
(Signature Page Follows)
-15-
<PAGE>
[SIGNATURE PAGE FOR REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
"PREMIER"
PREMIER LASER SYSTEMS, INC.
By: /s/ COLETTE COZEAN
------------------------------------
Title:
---------------------------------
"PURCHASER"
/s/ STANLEY CHANG
---------------------------------------
Name: Stanley Chang, M.D.
-16-
<PAGE>
[SIGNATURE PAGE FOR REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
"PREMIER"
PREMIER LASER SYSTEMS, INC.
By:
------------------------------------
Title:
---------------------------------
"PURCHASER"
/s/ STANLEY CHANG
---------------------------------------
Name: Stanley Chang, M.D.
-17-
<PAGE>
EXHIBIT 99.12
_______________________
PURCHASE AGREEMENT
DATED AS OF FEBRUARY 25, 1998
BY AND BETWEEN
PREMIER LASER SYSTEMS, INC.
AND
JB OXFORD & COMPANY
_______________________
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS................................................ 2
-----------
1.1 Defined Terms.............................................. 2
-------------
ARTICLE II PURCHASE AND SALE OF SECURITIES............................ 4
-------------------------------
2.1 Purchase and Sale of Securities............................ 4
-------------------------------
2.2 Purchase Consideration..................................... 5
----------------------
2.3 Closing.................................................... 5
-------
2.4 Purchase Consideration Adjustment.......................... 6
---------------------------------
ARTICLE III REPRESENTATIONS AND WARRANTIES............................. 7
------------------------------
3.1 Representations and Warranties of Premier.................. 7
-----------------------------------------
3.2 Representations and Warranties of Seller................... 9
----------------------------------------
ARTICLE IV COVENANTS.................................................. 12
---------
4.1 Covenants of the Seller.................................... 12
-----------------------
4.2 Covenants of Premier....................................... 12
--------------------
4.3 Reasonable Best Efforts.................................... 13
-----------------------
ARTICLE V CONDITIONS TO CLOSING...................................... 13
---------------------
5.1 Conditions to Obligation of Premier........................ 13
-----------------------------------
5.2 Conditions to Obligations of the Seller.................... 14
---------------------------------------
ARTICLE VI INDEMNIFICATION; ARBITRATION............................... 15
----------------------------
6.1 Indemnification Procedures................................. 15
--------------------------
6.2 Arbitration................................................ 15
-----------
ARTICLE VII GENERAL PROVISIONS......................................... 16
------------------
7.1 Termination of Purchase Agreement.......................... 16
---------------------------------
7.2 Counterparts............................................... 17
------------
7.3 Notices.................................................... 17
-------
7.4 Governing Law.............................................. 18
-------------
7.5 Interpretation............................................. 19
--------------
7.6 Successors and Assigns..................................... 19
----------------------
7.7 Entire Agreement; No Oral Waiver; Construction............. 19
----------------------------------------------
7.8 Severability............................................... 20
------------
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.9 No Third-party Rights...................................... 20
---------------------
7.10 Remedies................................................... 20
--------
7.11 Further Assurances......................................... 20
------------------
7.12 Survival of Representations................................ 20
---------------------------
</TABLE>
-ii-
<PAGE>
This Purchase Agreement together with any addenda thereto (the
"Purchase Agreement"), is made and entered into as of February 25, 1998, by and
between Premier Laser Systems, Inc., a California corporation ("Premier") and JB
Oxford & Company, a Utah corporation (the "Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Seller owns in the aggregate, and on the Closing Date (as
defined herein) the Seller will own, of record 259,308 shares of Ophthalmic
Imaging Systems, a California corporation (the "Company") common stock, no par
value (the "Common Stock"), including the associated preferred share purchase
rights (the "Rights") issued pursuant to the Rights Agreement, dated as of
December 31, 1997, as amended (the "Rights Agreement"), between Company and
American Securities Transfer, Inc. (the "Rights Agent") (the Rights together
with the Common Stock constitute the "Shares");
WHEREAS, the Seller entered into a Warrant Agreement, dated November
21, 1995 (the "Warrant Agreement"), with the Company, under which Seller was
granted and owns, and on the Closing Date will own, of record a warrant, in the
form attached hereto as Exhibit "D" (the "Warrant"), to purchase 250,000 shares
of Company Common Stock (the Warrant together with the Shares constitute the
"Securities");
WHEREAS, Premier is currently attempting to purchase additional shares
of the Company Common Stock under separate purchase agreements (the "Other
Agreements"), between Premier and a number of other sellers;
WHEREAS, as a condition and an inducement to the Seller to enter into
this Purchase Agreement, Premier has agreed to commence a tender offer (the
"Tender Offer") for the remainder of the Company Common Stock following the
completion of the transactions related to this Purchase Agreement and the Other
Agreements, such Tender Offer to be at a tender price equal to or greater to the
purchase price per Share payable pursuant to this Purchase Agreement;
WHEREAS, concurrent with the execution of this Purchase Agreement, and
as a condition hereto and thereto, the Company and Premier will enter into a
Stock Purchase Agreement (the "Acquisition Agreement") of even date herewith
setting forth the terms and conditions of such Tender Offer and the acquisition
by Premier of any such Company Common Stock;
WHEREAS, the parties want to insure that the Seller receives
compensation for its shares of Company Common Stock tendered under this Purchase
Agreement at a rate equal to that which is to be paid under the Tender Offer;
<PAGE>
WHEREAS, the Stock Consideration (as herein defined) could appreciate
or decline in value between the Closing Date and the date the Tender Offer
closes;
WHEREAS, in order to insure Seller receives the same per share
compensation relative to the parties who tender shares under the Tender Offer,
the Purchase Consideration (as herein defined) issued to Seller may need to be
retroactively readjusted at the Tender Offer's closing;
WHEREAS, the Seller desires to sell, and Premier wishes to purchase,
the Securities upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Defined Terms. Terms not otherwise defined herein shall have the
-------------
following meanings:
"Affiliate" means, when used with respect to another Person, any Person who
---------
is, whether directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control with such Person.
"Beneficially Own" has the meaning given such term in Rule 13d-3 under the
----------------
Exchange Act, as in effect on the date hereof. As used herein, the phrases
"beneficial ownership" and "beneficial owner" have correlative meanings.
"Business Combination" means (i) any merger, reorganization, share exchange
--------------------
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company, (ii) any purchase or sale of all
or any significant portion of the assets of the Company, (iii) any issuance or
other sale by the Company of any shares of Company Common Stock or (iv) any
issuance or other sale by the Company of securities representing 20% or more of
beneficial ownership of the Company or any of its Subsidiaries (as defined
herein).
"Business Day" means any day that is not a Saturday, Sunday or other day on
------------
which banks are required or authorized by law to be closed in California.
-2-
<PAGE>
"Dollars" and "$" mean lawful currency of the United States of America.
------- -
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Governmental Authority" means any foreign, federal, state or local
----------------------
government or any court, administrative agency or commission or other
governmental agency or authority, whether domestic or foreign.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory ore other), charge or security
interest; or any preference, priority or other arrangement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"material adverse effect" with respect to any Person means a material
-----------------------
adverse effect (i) on the financial condition, business, liabilities,
properties, assets or results of operations of such Person and its subsidiaries,
taken as a whole, or (ii) on the ability of such Person to perform its
obligations under or to consummate the transactions contemplated by this
Purchase Agreement.
"Person" means an individual, partnership, limited liability company,
------
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Purchase Agreement" means this Purchase Agreement, as amended,
------------------
supplemented or otherwise modified from time to time in accordance with its
terms.
"Registration Rights Agreement" means the Registration Rights Agreement in
-----------------------------
the form of Exhibit "A" to be executed by and between Premier and the Seller on
the Closing Date.
"Restrictions" means, when used with respect to any specified security, any
------------
stockholders or other trust agreement, option, warrant, escrow, proxy, buy-sell
agreement, power of attorney or other contract, agreement or arrangement which
(i) grants to any Person the right to sell or otherwise dispose of or vote such
specified security or any interest therein or (ii) restricts the transfer of, or
the exercise of any rights or the enjoyment of any benefits by reason of, the
ownership of such specified security.
"Stock Component" means the quotient (rounded to the nearest 1/100,000)
---------------
determined by dividing $0.25 by the average closing sales price for Premier
Common Stock (as hereinafter defined) as reported on The Nasdaq Stock Market,
Inc. ("NASDAQ") as
-3-
<PAGE>
published in The Wall Street Journal or, if not published therein, an another
authoritative source, for either (i) fifteen (15) consecutive trading days
(each, a "Trading Day") immediately preceding the Closing Date or (ii) the
thirty (30) consecutive Trading Days ending fifteen (15) Trading Days prior to
the Closing Date, whichever yields the lowest number of shares of Premier Common
Stock. Notwithstanding any other provision of this Purchase Agreement, if Seller
would have otherwise have been entitled to receive a fraction of a share of
Premier Common Stock (after taking into account all shares tendered by Seller)
he, she or it shall receive, in lieu thereof, cash in an amount equal to the
fractional part of the Premier Common Stock multiplied by the "market price" of
one share of Premier Common Stock, payable as part of the Purchase
Consideration. The "market price" of one share of Premier Common Stock shall be
the closing price of such common stock as reported on NASDAQ (as published in
the Wall Street Journal or, if not published therein, any other authoritative
source) on the last Trading Day preceding the Closing Date.
"Subsidiary" of any Person means another Person, an amount of the voting
----------
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its board of directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first Person.
"Transactions" means the transactions described in Section 2.3(b).
------------
ARTICLE II
PURCHASE AND SALE OF SECURITIES
-------------------------------
2.1 Purchase and Sale of Securities. Upon the terms and subject to
-------------------------------
the conditions of this Purchase Agreement, Premier agrees to purchase from the
Seller, and the Seller agrees to sell to Premier, the Securities free and clear
of any Lien or Restriction created by the Seller or otherwise binding upon any
such Securities in exchange for the Purchase Consideration (as defined in
Section 2.2 of Purchase Agreement), as may be adjusted pursuant to Section 2.4
hereof.
2.2 Purchase Consideration.
----------------------
(a) Purchase Consideration for the Shares. Premier shall pay to
-------------------------------------
Seller in respect of each share of Company Common Stock sold and purchased
hereunder (a) $1.75 net in cash (the "Share Cash Consideration"); (b) that
number of shares of Premier Class A Common Stock, no par value (the "Premier
Common Stock") equal to the Stock Component (the "Share Stock Consideration");
(c) one Premier Class C Warrant (the "Class
-4-
<PAGE>
C Warrant"); and (d) one Premier Class D Warrant (the "Class D Warrant" together
with the Class C Warrant issued under this Section 2.2(a) constitute the
"Warrant Consideration for Shares").
(b) Purchase Consideration for the Warrant. Premier shall pay
--------------------------------------
to Seller in respect of each share of Common Stock eligible for purchase under
the Warrant (a) $0.80 net in cash (the "Warrant Cash Consideration"); (b) that
number of shares of Premier Common Stock equal to the Stock Component (the
"Warrant Stock Consideration"); (c) one Class C Warrant; and (d) one Class D
Warrant (the Class D Warrant together with the Class C Warrant issued under this
Section 2.2(b) constitute the "Warrant Consideration for Warrant") (the Share
Cash Consideration together with the Warrant Cash Consideration shall constitute
the "Cash Consideration") (the Share Stock Consideration together with the
Warrant Stock Consideration shall constitute the "Stock Consideration") (the
Warrant Consideration for Shares together with the Warrant Consideration for
Warrant shall constitute the "Warrant Consideration") (the Cash Consideration,
Stock Consideration and Warrant Consideration together shall constitute the
"Purchase Consideration").
2.3 Closing.
-------
(a) Unless this Purchase Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1(a) and subject to the satisfaction or waiver of the conditions set
forth in Article V, the closing (the "Closing") of the transactions contemplated
-------
by Section 2.1 will take place on the earlier of (i) the second Business Day
following the date hereof and (ii) such other date, time and place as the
parties shall otherwise mutually agree (in either event, the date of the Closing
being referred to herein as the "Closing Date").
------------
(b) At the Closing, the following actions (collectively, the
"Transactions") shall occur:
- -------------
(i) Premier shall pay or cause to be paid the aggregate Cash
Consideration to or for the account of the Seller by wire transfer to such
bank account (the "Designated Bank Account") as the Seller shall designate
in writing prior to the Closing Date;
(ii) At the effective time of the Closing, Premier shall issue
shares of Premier Common Stock constituting the Stock Consideration to the
Seller as directed by the Seller in writing prior to the Closing Date;
-5-
<PAGE>
(iii) At the effective time of the Closing, Premier shall issue the
warrants constituting the Warrant Consideration (in the form attached
hereto as Exhibits "B" and "C") to the Seller as directed by the Seller in
writing prior to the Closing Date;
(iv) The parties shall execute and deliver, the Registration Rights
Agreement;
(v) The Seller shall deliver or cause to be delivered to Premier or
its designee such documents as Premier may reasonably request, including
certificates for all Securities to evidence the transfer to Premier of good
and marketable title in and to all of the Securities owned by the Seller
free and clear of any Lien or Restriction on such Securities (other than
any Lien or Restriction imposed pursuant to the terms of this Purchase
Agreement or the Warrant Agreement) or the applicable federal or state
securities laws, and
(vi) Each party shall take such other actions, and shall execute
and deliver such other instruments or documents, as shall be required under
Article V.
2.4 Purchase Consideration Adjustment. In order to insure that
---------------------------------
Seller receives the same per share Purchase Consideration as that to be paid
under the Tender Offer, Seller hereby agrees to allow Premier to retroactively
readjust the amount of Purchase Consideration previously paid or granted to
Seller if, at the Expiration Date (as that term is defined and used within the
Acquisition Agreement) the Cash Consideration, the Stock Consideration or the
Warrant Consideration that Seller would have received under the Tender Offer
differs from that initially paid or granted to Seller under this Purchase
Agreement. If such Warrant Consideration amounts are disparate, Premier shall
either grant Seller the right to purchase additional shares of Premier Common
Stock (the "Additional Warrant Shares") or cancel Seller's existing
documentation evidencing the Warrant Consideration and reissue new documentation
evidencing the reduced number of shares Seller is eligible to purchase.
Similarly, if the Stock Consideration amounts are found to be disparate, Premier
shall either issue Seller additional shares of Premier Common Stock (the
"Additional Stock Payment Shares") or cancel Seller's existing shares and
reissue a certificate evidencing fewer shares to the effect that Seller shall
ultimately receive the same per share Stock Compensation as would have been
provided under the Tender Offer. If the amounts of Cash Consideration are
disparate and in Seller's favor, Premier shall pay Seller the additional cash.
If such difference is in Premier's favor, Seller shall remit the difference in
cash to Premier. The readjustment and exchange of Cash Consideration shall be
completed to the effect that Seller receives the same per share Cash
Consideration as he, she or it would have under the Tender Offer.
-6-
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
3.1 Representations and Warranties of Premier. Premier represents
-----------------------------------------
and warrants to the Seller as of the date hereof and as of the Closing Date as
follows:
(a) Organization, Standing and Corporate Power. Premier is duly
------------------------------------------
organized, validly existing and in good standing under the laws of the State of
California and has the requisite corporate power and authority to carry on its
business as now being conducted. Premier is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed (individually or in the aggregate) could not reasonably
be expected to have a material adverse effect with respect to Premier.
(b) Corporate Authorization. The execution, delivery and performance
-----------------------
by Premier of this Purchase Agreement and the consummation by Premier of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, including by resolution of the Board of Directors of Premier.
Premier has the requisite corporate power, authority and legal capacity to enter
into and perform all of its obligations under this Purchase Agreement and to
consummate the Transactions hereunder. This Purchase Agreement has been duly
executed and delivered by Premier and constitutes a valid and binding agreement
of Premier, enforceable against Premier in accordance with its terms (subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally from time
to time in effect and to general principles of equity, including concepts of
materiality, reasonableness, good faith and fair dealing, regardless of whether
in a proceeding or equity or at law).
(c) No Conflict. Other than the filing of a Form 4 and an amendment
-----------
to Premier's report on Schedule 13D under the Exchange Act, and no filing with,
and no permit, authorization, consent or approval of, any Governmental Authority
is necessary for the execution of this Purchase Agreement or the Registration
Rights Agreement by Premier and the consummation by Premier of the transactions
contemplated hereby and thereby, except for such filings the failure of which to
be made, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on Premier, and its Subsidiaries, taken as a
whole, or to prevent or materially delay the consummation of the transactions
contemplated hereby and thereby. Neither the execution and delivery of this
Purchase Agreement or the Registration Rights Agreement by Premier nor the
consummation by Premier of the transactions contemplated hereby or thereby, nor
compliance by Premier with any of the provisions hereof or thereof (i) conflicts
with or results in any breach of the
-7-
<PAGE>
Articles of Incorporation or bylaws of Premier, (ii) contravenes, conflicts with
or would constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon Premier, or (iii) constitutes
a default under or gives rise to any right of termination, cancellation or
acceleration of any right or obligation of Premier or any of its Subsidiaries or
to a loss of any benefit to which Premier or any of its Subsidiaries is entitled
under any provision of any agreement, contract or other instrument binding on
Premier or any of its Subsidiaries or any license, franchise, permit or other
similar authorization held by Premier or any of its Subsidiaries, except, in the
case of clauses (ii) and (iii), for any such contravention, conflict, violation,
default, termination, cancellation, acceleration or loss that would not have a
material adverse effect on Premier or any of its Subsidiaries taken as a whole.
(d) No Required Vote. No vote of the holders of any class of the
----------------
outstanding capital stock of Premier is necessary to approve this Purchase
Agreement or the Transactions.
(e) Reservation of Premier Common Stock. The Premier Common Stock and
-----------------------------------
Warrant Consideration to be issued to Seller as Purchase Consideration pursuant
to this Purchase Agreement and any Premier Common Stock purchasable upon
exercise of such Warrant Consideration, have been reserved solely for issuance
and delivery to Seller, and when issued, will be duly and validly issued, fully
paid and nonassessable, and such issuances will not violate any pre-emptive
rights under applicable law, Premier's Articles of Incorporation or bylaw,
contract or agreement, or otherwise.
(f) Limitations on Transferability. Premier acknowledges that the
------------------------------
Securities are being acquired from an Affiliate of the Company without
registration under the Securities Act or the securities laws of any other
applicable jurisdiction, and that such Securities are being sold to Premier
pursuant to an exemption thereto. Premier is acquiring the Securities solely
for its own account, for investment purposes only, and not with an intent or
view to their distribution within the meaning of Section 2(11) of the Securities
Act. Premier understands that such Securities may not be freely transferable
without registration under the Securities Act or the securities laws of any
other applicable jurisdiction unless subsequently registered or an exemption
therefrom is available.
(g) No Broker. No investment banker, broker, finder, consultant or
---------
intermediary is entitled to be paid any investment banking, brokerage, finder's
or similar fee or commission by Seller in connection with this Purchase
Agreement or the Transactions for which Premier would be liable following the
Closing.
3.2 Representations and Warranties of Seller. The Seller represents
----------------------------------------
and warrants to Premier as of the date hereof and as of the Closing Date as
follows:
-8-
<PAGE>
(a) Organization, Standing and Corporate Power of the Seller. The
--------------------------------------------------------
Seller has the requisite corporate power and authority and legal capacity to
enter into and perform all of its obligations under this Purchase Agreement, to
consummate the Transactions (including transferring the Securities to Premier)
and to comply with Sections 4.1(a), 4.1(b) and 4.1(c)). Neither the execution
and delivery of this Purchase Agreement by the Seller nor the consummation by
the Seller of the Transactions nor compliance by the Seller with the provisions
hereof conflicts with or results in a breach of any agreement entered into by
the Seller, other than such agreements, the conflict with or breach of which,
individually or in the aggregate, could not reasonably be expected to prevent or
materially delay the consummation of the Transactions.
(b) Corporate Authorization. The execution, delivery and performance
-----------------------
by Seller of this Purchase Agreement and the consummation by Seller of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, including by resolution of the Board of Directors of Seller.
This Purchase Agreement has been duly executed and delivered by Seller and
constitutes a valid and binding agreement of Seller, enforceable against Seller
in accordance with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including concepts of materiality, reasonableness, good
faith and fair dealing, regardless of whether in a proceeding or equity or at
law).
(c) Title to Securities. At the Closing the Seller will be the direct
-------------------
and record owner of the Securities. Except as set forth in the immediately
preceding sentence or on Schedule 3.2(c), the Seller does not own or have the
right to acquire, whether presently exercisable or at any time in the future,
any shares of Company Common Stock or any securities convertible into or
exercisable or exchangeable for Securities including, but not limited to, any
options held by Seller. No person has the right to acquire, and the Seller is
not a party to any contract, understanding, commitment, arrangement or other
agreement to sell, transfer or otherwise dispose of, any shares of Company
Common Stock owned by or issuable to the Seller. At the Closing, the Seller
will have good and valid title to the Securities, free and clear of any Liens or
Restrictions and it will have the full legal right, power and authority to
assign, transfer and deliver such Securities to Premier pursuant hereto. At the
Closing, the Seller will have the sole voting power, and sole power of
disposition, with respect to all of such Securities and there will be no
restrictions on the Seller's ability to transfer such Securities.
(d) No Conflict. Except for the filing of a Form 4 with the
-----------
Securities and Exchange Commission, Nasdaq, the Boston Stock Exchange, and the
Company, no filing with, and no permit, authorization, consent or approval of,
any Governmental Authority is necessary for the execution of this Purchase
Agreement by the Seller and the consummation
-9-
<PAGE>
by the Seller of the transactions contemplated hereby, other than such filings
the failure of which to be made, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the Seller, if any,
taken as a whole, or to prevent or materially delay the consummation of the
Transactions.
(e) Investment Intention. The Seller is acquiring the Stock
--------------------
Consideration and the Warrant Consideration for its own account as principal for
investment and not with a view to resale or distribution or with any present
intention of distributing or selling the same. The Seller is fully aware that
the Stock Consideration and the Warrant Consideration have not been registered
under the Securities Act or under any applicable state securities laws, and are
being offered and sold in reliance on exemptions from the registration
requirements of the Securities Act and all such laws. The Seller is an
"accredited investor" as such term is defined in Regulation D promulgated under
the Securities Act. The Seller is able to bear the economic risk of the
investment in the Stock Consideration and the Warrant Consideration and has such
knowledge and experience in financial and business matters, and knowledge of the
business of Premier, as to be capable of evaluating the merits and risks of a
prospective investment.
(f) Limitations on Transferability. Seller acknowledges that it may
------------------------------
not transfer any of the Stock Consideration or the Warrant Consideration
received by it pursuant hereto unless and until the same are registered under
the Securities Act and any applicable state securities laws, or unless an
exemption from such registration is available. Seller acknowledges that
transferability of the Stock Consideration and Warrant Consideration also is
limited by the terms of this Purchase Agreement.
(g) Legend. In furtherance of the agreements contained in Sections
------
3.2(e) and (f), the Seller agrees that the certificate or certificates
representing:
(i) the Stock Consideration beneficially owned by Seller shall
bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER ANY
APPLICABLE STATE SECURITIES LAWS. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS (I) COVERED BY AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, (II) THE
SALE IS MADE PURSUANT TO RULE 144 UNDER THE ACT, IF AVAILABLE, AND
EXEMPTIONS FROM REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS OR
(III) AN OPINION IS
-10-
<PAGE>
OBTAINED FROM COUNSEL TO THE HOLDER, REASONABLY SATISFACTORY TO COUNSEL TO
PREMIER LASER SYSTEMS, INC. THAT AN EXEMPTION FROM REGISTRATION IS
AVAILABLE UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS. THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND ARE SUBJECT TO POSSIBLE CANCELLATION UNDER THAT CERTAIN
PURCHASE AGREEMENT OF EVEN DATE HEREWITH BETWEEN PREMIER LASER SYSTEMS,
INC. AND THE HOLDER.
(ii) the Warrant Consideration beneficially owned by Seller
shall bear the following legend:
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
NOR UNDER ANY APPLICABLE STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR
THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (I) COVERED BY AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, (II) THE SALE IS MADE PURSUANT TO RULE 144 UNDER THE ACT,
IF AVAILABLE, AND EXEMPTIONS FROM REGISTRATION UNDER APPLICABLE STATE
SECURITIES LAWS OR (III) AN OPINION IS OBTAINED FROM COUNSEL TO THE HOLDER,
REASONABLY SATISFACTORY TO COUNSEL TO PREMIER LASER SYSTEMS, INC. THAT AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER THE ACT AND ALL APPLICABLE
STATE SECURITIES LAWS. THIS WARRANT AND THE SHARES OF COMMON STOCK
PURCHASABLE HEREUNDER ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND ARE
SUBJECT TO POSSIBLE CANCELLATION UNDER THAT CERTAIN PURCHASE AGREEMENT OF
EVEN DATE HEREWITH BETWEEN PREMIER LASER SYSTEMS, INC. AND HOLDER.
Premier will exchange certificates without the foregoing legend upon the
request of Seller at such time as (i) the restrictions imposed by this Purchase
Agreement are no longer applicable; and (ii) the holder thereof may sell such
shares or warrants without registration of such sale under the Securities Act,
as evidenced (if requested by Premier) by an opinion of counsel to such holder.
(h) No Broker. No investment banker, broker, finder, consultant or
---------
intermediary is entitled to be paid any investment banking, brokerage, finder's
or similar fee or
-11-
<PAGE>
commission by Premier in connection with this Purchase Agreement or the
Transactions for which the Seller would be liable following the Closing.
ARTICLE IV
COVENANTS
---------
4.1 Covenants of the Seller.
-----------------------
(a) Binding Obligations. Notwithstanding, and without in any way
-------------------
limiting, any other provision of this Purchase Agreement, the Seller
acknowledges that, subject to the satisfaction (or waiver by it) of the
conditions set forth in Section 5.2, its obligation to consummate the
Transactions, including the sale to Premier of the Securities, is absolute and
unconditional and shall not terminate except in accordance with Section 7.1,
irrespective of, without limitation, any receipt of the Company of any proposal
for a Business Combination or any resolution by the Board of Directors of the
Company to approve a Business Combination or otherwise.
(b) Exchange of Stock Consideration or Warrant Consideration. In the
--------------------------------------------------------
event the Stock Consideration or Warrant Consideration must be adjusted as
described in Section 2.4, Seller hereby agrees to return to Premier, within five
(5) business days after notice, the certificate(s) reflecting the shares of
Premier Common Stock and/or the documentation related to the Warrant
Consideration for reissuance.
(c) Consent to Transfer of Warrant. Seller shall use its best efforts
------------------------------
to cause the Company to execute the Consent to Transfer of Warrant in the form
attached hereto as Exhibit "E."
4.2 Covenants of Premier.
--------------------
(a) Registration Rights Agreement. Premier shall cause the parties to
-----------------------------
enter into that certain Registration Rights Agreement in the form of Exhibit
"A."
(b) Purchases of Company Common Stock Prior to the Closing. Premier
------------------------------------------------------
agrees to use its best efforts to purchase or otherwise acquire, concurrently
with or prior to the Closing, such number of shares of Company Common Stock, in
negotiated transactions or otherwise, as is necessary so that the Premier's
percentage of beneficial ownership of the Company Common Stock, shall at the
Closing constitute at least 50.1%.
-12-
<PAGE>
(c) Tender Offer. Following the Closing, Premier agrees to use its
------------
best efforts to effect a tender offer (the "Tender Offer") for the purchase of
the then remaining outstanding shares of Company Common Stock.
(d) Execution of Acquisition Agreement. Premier concurrently
----------------------------------
herewith, shall execute and deliver the Acquisition Agreement and the Other
Agreements, and shall use its best efforts to satisfy the terms and conditions
of, to perform the obligations to be performed by it under, and the consummation
of the transactions contemplated by, the Acquisition Agreement.
4.3 Reasonable Best Efforts. Subject to the terms and conditions of
-----------------------
this Purchase Agreement, each party will use its reasonable best efforts to
take, or cause to be taken, all actions to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Purchase Agreement.
ARTICLE V
CONDITIONS TO CLOSING
---------------------
5.1 Conditions to Obligation of Premier. The obligation of Premier
-----------------------------------
to consummate the purchase of the Securities is further subject to the
satisfaction (or waiver by Premier) of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Seller set forth in this Purchase Agreement qualified as to
materiality shall be true and correct and those not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Purchase Agreement and as of the Closing Date as though made on and as of the
Closing Date, except for those representations and warranties which address
matters only as of a particular date (which shall have been true and correct in
all material respects as of such date). Premier shall have received a
certificate signed by the Seller to the effect set forth in this paragraph.
(b) Performance of Obligations of the Seller. The Seller shall have
----------------------------------------
performed in all material respects all of the covenants and obligations required
to be performed by them under this Purchase Agreement at or prior to the Closing
Date, and Premier shall have received a certificate signed by the Seller to the
effect set forth in this paragraph.
-13-
<PAGE>
(c) No Injunction. No preliminary or permanent injunction or order
-------------
that would prohibit or restrain the consummation of the transactions
contemplated hereunder shall be in effect and no Governmental Authority or other
Person shall have commenced or threatened to commence an action or proceeding
seeking to enjoin the consummation of such transactions or to impose liability
on the parties hereto in connection therewith.
(d) Consent to Transfer of Warrant. Premier shall have received a
------------------------------
Consent to Transfer of Warrant in the form attached hereto as Exhibit "E"
executed by the Company.
(e) Acquisition Agreement. Premier and the Company shall have
---------------------
executed and delivered, contemporaneously with this Purchase Agreement, the
Acquisition Agreement by and between Premier and the Company, dated February 25,
1998, and Company shall not be in breach or default of its obligations and
agreements thereunder.
5.2 Conditions to Obligations of the Seller. The obligations of the
---------------------------------------
Seller to effect the Transactions are further subject to the satisfaction (or
waiver by the Seller) of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Premier set forth in this Purchase Agreement qualified as to
materiality shall be true and correct and those not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Purchase Agreement and as of the Closing Date as though made on and as of the
Closing Date, except for those representations and warranties which address
matters only as of a particular date (which shall have been true and correct in
all material respects as of such date), and the Seller shall have received a
certificate signed on behalf of Premier to the effect set forth in this
paragraph.
(b) Performance of Obligations of Premier. Premier shall have
-------------------------------------
performed in all material respects all of the covenants and obligations required
to be performed by it under this Purchase Agreement at or prior to the Closing
Date, and the Seller shall have received a certificate signed on behalf of
Premier to the effect set forth in this paragraph.
(c) Registration Rights Agreement. The parties shall have entered
-----------------------------
into that certain Registration Rights Agreement in the form of Exhibit "A."
(d) Acquisition Agreement. Premier and the Company shall have executed
---------------------
and delivered, contemporaneously with this Purchase Agreement, the Acquisition
Agreement by and between Premier and the Company, dated February 25, 1998, and
Premier shall not be in breach or default of its obligations and agreements
thereunder.
-14-
<PAGE>
ARTICLE VI
INDEMNIFICATION; ARBITRATION
----------------------------
6.1 Indemnification Procedures.
--------------------------
(a) Premier agrees to indemnify and hold harmless Seller and each
person who controls Seller within the meaning of Section 15 of the Securities
Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934,
as amended, from and against any and all losses, claims, damages, liabilities
and judgments (including without limiting the generality of the foregoing the
reasonable fees and expenses of counsel incurred in connection with any action,
suit or governmental or regulatory proceeding) resulting from and Indemnifiable
Matter. "Indemnifiable Matter" means a claim by or on behalf of a shareholder
or former shareholder of the Company alleging, in substance, that Seller's
entry into and performance of this Purchase Agreement breached a fiduciary or
substantially similar obligation owed to such person (a "Fiduciary Duty Claim");
provided, however, (i) no matter shall constitute and Indemnifiable Matter
- -------- -------
unless the Tender Offer is not completed (regardless of the reason therefor),
and (ii) a claim shall not constitute an Indemnifiable Matter if it is
accompanied by the assertion of other causes of action that do not constitute a
Fiduciary Duty Claim (including without limiting the generality of the foregoing
a claim founded on alleged misrepresentations or omissions or other misconduct
by Seller in advising a brokerage client).
(b) In case any action shall be brought against Seller or any person
controlling Seller, as herein above provided, based upon an Indemnifiable
Matter, Seller or such person shall promptly notify Premier in writing and
Premier shall assume the defense thereof, including the employment of counsel
selected by Seller or such controlling person and reasonably satisfactory to
premier and payment of all fees and expenses. Premier shall not be liable for
the settlement of any such action effected without the written consent of
Premier, but if settled with the written consent of Premier, premier agrees to
indemnify and hold harmless Seller and each such controlling person from and
against any loss or liability by reason of such settlement. Premier shall not,
without prior written consent of the indemnified party, effect any settlement of
any pending or threatened proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes and unconditional
release of such indemnified party from all liability for claims that are the
subject matter of such proceeding.
6.2 Arbitration. In the event that any parties are unable to resolve
-----------
any dispute related to or arising under the Transactions contemplated hereunder,
the exclusive method for resolving such dispute shall be binding, nonappealable
arbitration in Irvine,
-15-
<PAGE>
California initiated by a party by a written notice to the other party demanding
arbitration and specifying the claim to be arbitrated. Such arbitration shall be
conducted pursuant to the Expedited Procedures of the Commercial Arbitration
Rule (the "Rules") of the American Arbitration Association ("AAA), with the
following modifications. The party initiating the arbitration (the "Claimant")
shall appoint its arbitrator in its request for arbitration (the "Request"). The
other party (the "Respondent") shall appoint its arbitrator within 15 Business
Days of receipt of the Request and shall notify the Claimant of such appointment
in writing. If the Respondent fails to appoint an arbitrator within such 15
Business Day period, the arbitrator named in the Request shall decide the
controversy or claim as a sole arbitrator. Otherwise, the two arbitrators
appointed by the parties shall appoint a third arbitrator within 15 Business
Days after the Respondent has notified Claimant of the appointment of the
Respondent's arbitrator. When the third arbitrator has accepted the appointment,
the two party-appointed arbitrators shall promptly notify the parties of such
appointment. If the two arbitrators appointed by the parties fail or are unable
to so appoint a third arbitrator, then the appointment of the third arbitrator
shall be made by the AAA, which shall promptly notify the parties of the
appointment. The third arbitrator shall act as chairperson of the panel. Upon
appointment of the third arbitrator, the arbitrators shall proceed to commence
and conduct all proceedings promptly and in accordance with the Rules. The
arbitral award shall be in writing and shall be final and binding on the parties
to the arbitration. The arbitrator shall be instructed to award costs, including
reasonable attorneys' fees and disbursements, which shall be paid by the party
against whom the award is entered. Judgment upon the award may be entered by any
court having jurisdiction thereof or having jurisdiction over the parties or
their assets, without review of the merits of the award.
ARTICLE VII
GENERAL PROVISIONS
------------------
7.1 Termination of Purchase Agreement.
---------------------------------
(a) This Purchase Agreement may be terminated and the purchase and
sale of the Securities abandoned at any time prior to the Closing:
(i) by mutual consent of Premier and the Seller in writing;
(ii) by either Premier or the Seller if the Closing shall not
have occurred prior to February 27, 1998 (other than due to the failure of
the party seeking to terminate this Purchase Agreement to perform its
obligations under this Purchase Agreement required to be performed at or
prior to such date);
-16-
<PAGE>
(iii) by Premier or Seller, if any Governmental Authority within
the United States or any country or other jurisdiction in which Premier,
directly or indirectly, has material assets or operations shall have issued
an order, decree or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Transactions, and such order,
decree, ruling or other action shall have become final and nonappealable;
or
(iv) by Premier, if after the date of this Purchase Agreement
the Company issues (A) any shares of Company Common Stock (other than upon
the conversion, exercise or exchange of securities outstanding on the date
of this Purchase Agreement that are convertible into or exercisable or
exchangeable for shares of Company Common Stock) or (B) any securities
convertible into or exercisable or exchangeable for shares of Company
Common Stock which result in the percentage of Company Common Stock
beneficially held by the Seller, together with the percentage of Company
Common Stock beneficially held by Premier falling below 50.1% of the
ownership of all Company Common Stock (assuming the conversion, exercise or
exchange of all securities referred to in clause (B)).
(b) In the event of termination of this Purchase Agreement by either
Premier or the Seller as provided in Section 7.1(a), this Purchase Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of Premier or the Seller, other than this Article VII.
Nothing contained in this Section shall relieve any party for any material
breach of the representations, warranties, covenants or agreements set forth in
this Purchase Agreement.
7.2 Counterparts. This Purchase Agreement may be executed in one or
------------
more counterparts, all of which shall be considered one and the same agreement,
and shall become a binding agreement when one or more counterparts have been
signed by each party and delivered to the other parties.
7.3 Notices. All notices, requests, demands or other communications
-------
provided herein shall be made in writing and shall be deemed to have been duly
given if delivered as follows:
-17-
<PAGE>
If to Premier:
Premier Laser Systems, Inc.
3 Morgan
Irvine, California 92618
Attn: Secretary
Fax: (714) 951-7218
with a copy to:
Paul, Hastings, Janofsky & Walker LLP
695 Town Center Drive, 17/th/ Floor
Costa Mesa, California 92626-1924
Attn: Peter J. Tennyson, Esq.
Fax: (714) 979-1921
If to Seller:
JB Oxford & Company
9665 Wilshire Blvd., Ste. 300
Beverly Hills, California 90212
Attention: Scott Monson, Esq.
Fax: (310) 385-2237
with a copy to:
Irell & Manella LLP
333 So. Hope Street, Ste. 3300
Los Angeles, California 90071
Attention: Richard Wirthlin, Esq.
Fax: (213) 229-0515
or to such other address as any party shall have specified by notice in writing
to the other parties. All such notices, requests, demands and communications
shall be deemed to have been received on (i) the date of delivery if sent by
messenger, (ii) on the Business Day following the Business Day on which
delivered to a recognized courier service if sent by overnight courier or (iii)
on the date received, if sent by fax.
7.4 Governing Law. This Purchase Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California as applied to
contracts
-18-
<PAGE>
entered into and to be performed in California and without regard to the
application of principles of conflict of laws.
7.5 Interpretation. When a reference is made in this Purchase
--------------
Agreement to an Article or Section, such reference shall be to an Article or
Section of this Purchase Agreement unless otherwise indicated. The table of
contents and headings contained in this Purchase Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Purchase Agreement. Whenever the words "include," "includes" or
"including" are used in this Purchase Agreement, they shall be deemed to be
followed by the words "without limitation."
7.6 Successors and Assigns. Except as otherwise expressly provided
----------------------
in this Purchase Agreement, neither this Purchase Agreement nor any of the
rights, interests or obligations under this Purchase Agreement shall be
assigned, in whole or in part, by operation of law or otherwise by any of the
parties without the prior written consent of the other parties, except that
Premier, prior to or after the consummation of the transactions contemplated by
Sections 2.1 and 2.2, may assign, in its sole discretion, any or all of its
rights, interests and obligations under this Purchase Agreement to any wholly
owned Subsidiary of Premier. However, no such assignment shall relieve Premier
of any of its obligations under this Purchase Agreement. Subject to the
preceding sentence, this Purchase Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors,
assigns and heirs.
7.7 Entire Agreement; No Oral Waiver; Construction. This Purchase
----------------------------------------------
Agreement, any addenda and the agreements, certificates and other documents
contemplated hereby and thereby, including the Acquisition Agreement, constitute
the entire agreement among the parties pertaining to the subject matter hereof
and supersede all prior and contemporaneous agreements, understandings and
representations, whether oral or written, of the parties in connection
therewith. No covenant or condition or representation not expressed in this
Purchase Agreement shall affect or be effective to interpret, change or restrict
this Purchase Agreement. No prior drafts of this Purchase Agreement and no
words or phrases from any such prior drafts shall be admissible into evidence in
any action, suit or other proceeding involving this Purchase Agreement or the
transactions contemplated hereby. This Purchase Agreement may not be amended,
changed or terminated orally, nor shall any amendment, change, termination or
attempted waiver of any of the provisions of this Purchase Agreement be binding
on any party unless in writing signed by the parties hereto. No modification,
waiver, termination, rescission, discharge or cancellation of this Purchase
Agreement and no waiver of any provision of or default under this Purchase
Agreement shall affect the right of any party thereafter to enforce any other
provision or to exercise any right or remedy in the event of any other default,
whether or not similar.
-19-
<PAGE>
7.8 Severability. If any provision of this Purchase Agreement (or
------------
any portion thereof) shall be declared by any court of competent jurisdiction to
be illegal, void or unenforceable, all other provisions of this Purchase
Agreement (and portions thereof) shall not be affected and shall remain in full
force and effect.
7.9 No Third-party Rights. Nothing in this Purchase Agreement,
---------------------
expressed or implied, shall or is intended to confer upon any Person other than
the parties hereto or their respective successors or assigns, any rights or
remedies of any nature or kind whatsoever under or by reason of this Purchase
Agreement.
7.10 Remedies. Each of the parties hereto acknowledges and agrees
--------
that (i) the provisions of this Purchase Agreement are reasonable and necessary
to protect the proper and legitimate interests of the other parties hereto, and
(ii) the other parties hereto would be irreparably damaged in the event any of
the provisions of this Purchase Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties hereto shall be entitled to preliminary and permanent injunctive
relief to prevent breaches of the provisions of this Purchase Agreement by the
other parties hereto without the necessity of proving irreparable injury or
actual damages or of posting any bond, and to enforce specifically the terms and
provisions hereof and thereof, which rights shall be cumulative and in addition
to any other remedy to which the parties hereto may be entitled hereunder or at
law or equity.
7.11 Further Assurances. From time to time, at the reasonable request
------------------
of any other party hereto and without further consideration, each party hereto
shall execute and deliver such additional documents and take all such further
action as may be necessary to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Purchase
Agreement.
7.12 Survival of Representations.
---------------------------
(a) All representations and warranties contained herein or made
pursuant hereto shall survive the Closing. The expiration of any representation
and warranty shall not affect any claim for indemnification made prior to the
date of such expiration.
(b) The representations and warranties made by any party in this
Purchase Agreement or in any agreement, certificate, schedule or exhibit
delivered in connection with this Purchase Agreement may be fully and completely
relied upon by each other party unless the party seeking to avoid such
representation or warranty can demonstrate that the investigation made by or on
behalf of such other party actually revealed or disclosed the inaccuracy in
question.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
[SIGNATURE PAGE FOR PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties have executed, delivered and entered
into this Purchase Agreement as of the day and year first above written.
"Premier"
PREMIER LASER SYSTEMS, INC.
By: /s/ Colette Cozean
-------------------------
Name:________________________
Title:_______________________
"Seller"
JB OXFORD & COMPANY
By:__________________________
Name:________________________
Title: ______________________
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<PAGE>
IN WITNESS WHEREOF, the parties have executed, delivered and entered
into this Purchase Agreement as of the day and year first above written.
"Premier"
PREMIER LASER SYSTEMS, INC.
By:__________________________
Name:________________________
Title:_______________________
"Seller"
JB OXFORD & COMPANY
-----------------------------
Name:/s/ Stephen Rubenstein
------------------------
PRESIDENT
STEPHEN RUBENSTEIN
<PAGE>
EXHIBIT "A"
REGISTRATION RIGHTS AGREEMENT
<PAGE>
EXHIBIT "B"
FORM OF CLASS C WARRANT
<PAGE>
EXHIBIT "C"
FORM OF CLASS D WARRANT
<PAGE>
EXHIBIT "D"
FORM OF WARRANT
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<PAGE>
EXHIBIT "E"
CONSENT TO TRANSFER OF WARRANT
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<PAGE>
EXHIBIT 99.13
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER
ANY APPLICABLE STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS (I) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, (II) THE SALE IS MADE
PURSUANT TO RULE 144 UNDER THE ACT, IF AVAILABLE, AND EXEMPTIONS FROM
REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS OR (III) AN OPINION IS
OBTAINED FROM COUNSEL TO THE HOLDER, REASONABLY SATISFACTORY TO COUNSEL TO
PREMIER LASER SYSTEMS, INC. THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE
UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE
SHARES OF COMMON STOCK PURCHASABLE HEREUNDER ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND ARE SUBJECT TO POSSIBLE CANCELLATION UNDER THAT CERTAIN PURCHASE
AGREEMENT (THE "PURCHASE AGREEMENT") OF EVEN DATE HEREWITH BETWEEN PREMIER LASER
SYSTEMS, INC. AND HOLDER.
CLASS C WARRANT
TO PURCHASE COMMON STOCK
NO PAR VALUE OF
PREMIER LASER SYSTEMS, INC.
409,308 Warrants (Partial Shares)/1/ February 25, 1998
This certifies that JB Oxford & Company ("Holder"), for value received, is
entitled, subject to the other terms set forth below, to purchase from Premier
Laser Systems, Inc., a California corporation (the "Company"), having a place of
business at 3 Morgan, Irvine, California 92618, at any time from the Notice Date
defined below until 5:00 P.M. (California time) on the ninetieth day following
the Notice Date (the
_______________
/1/ (Does not represent 409,308 shares - See Paragraph 2 for computation.)
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<PAGE>
"Expiration Date"), unless earlier terminated pursuant to the provisions of
Section 2.4 hereof, at which time this Warrant shall expire and become void, a
fraction of a share, of the Company's Common Stock, no par value (the "Common
Stock") in an amount determined pursuant to Section 2 below. The purchase or
exercise price per share (the "Exercise Price") shall be one cent ($0.01)
regardless of the number of Warrants which must be exercised to obtain a Warrant
Share (as defined below).
The number and character of the securities purchasable upon exercise of
this Warrant are subject to adjustment as provided in Section 3.3 hereof.
This Warrant is subject to the following terms and conditions:
1. Exercise; Issuance of Certificates; Payment for Shares.
1.1 Duration of Exercise of Warrant. This Warrant is exercisable at
the option of Holder at any time from the Notice Date until 5:00 P.M.
(California time) on the Expiration Date for all or a portion of the shares of
Common Stock that may be purchased hereunder. This Warrant shall be exercised
upon surrender to the Company of this Warrant properly endorsed with a completed
and executed Subscription Agreement in the form attached hereto as Exhibit A,
and upon payment in cash or cashier's check of the aggregate Exercise Price for
the number of shares of Common Stock for which this Warrant is being exercised
(the "Warrant Shares"). The Company agrees that any Warrant Shares purchased
under this Warrant shall be deemed to be issued to Holder as the record owner of
such shares as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for such shares. Certificates for the
Warrant Shares so purchased, together with any other securities or property to
which Holder is entitled upon such exercise, shall be delivered to Holder by the
Company or its transfer agent at the Company's expense as soon as practicable
after the rights represented by this Warrant have been exercised. Each stock
certificate so delivered shall be in such denominations of Common Stock as may
be reasonably requested by Holder and shall be registered in the name of Holder
or such other name as shall be designated by Holder. If, upon exercise of this
Warrant, fewer than all of the shares issuable upon exercise of this Warrant are
purchased, one or more new warrants substantially in the form of, and on the
terms contained in, this Warrant will be issued for the remaining number of
shares not exercised.
1.2 Securities to be Fully Paid; Reservation of Warrant Shares. The
Company covenants and agrees that all Warrants and Warrant Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable and
such issuance will not violate any pre-emptive rights under applicable law, the
Premier Articles of Incorporation or By-
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<PAGE>
laws, contracts, or agreement, or otherwise. The Company covenants that it will
at all times from the date hereof reserve and keep available a sufficient number
of shares of its authorized but unissued Common Stock (or other securities)
solely for issuance and delivery to Holder upon exercise of this Warrant. The
Company will take all such reasonable action as may be necessary to assure that
such Warrants and Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation.
2. Notice of Exercisability and Determination of Number of Warrant
Shares.
2.1 Condition to Exercise. This Warrant shall not become exercisable
unless the Net Sales of Qualified Products (both as defined herein) for the
twelve (12) month period ended August 31, 1998 (the "Determination Date") equal
or exceed Seven Million Dollars ($7,000,000). "Net Sales" shall mean net sales
of Qualified Products as determined by generally accepted accounting principles,
as consistently applied by Ophthalmic Imaging Systems ("OIS"). "Qualified
Products" shall mean products sold by and in connection with the current core
business of OIS including: (i) products related to or arising out of such
current core products; (ii) products under development as of the date hereof;
and (iii) those same products if sold by any successor owner of OIS' operations.
As soon as practicable but in no event later than thirty (30) days after the
Determination Date, the Company shall determine the Net Sales of Qualified
Products for the twelve (12) month period ended on the Determination Date and
shall mail to the holder of the Warrant, and shall publish in a newspaper of
national circulation a notice (the "Exercise Notice") stating whether this
condition to exercisability has been met. The date of such mailing and
publication is the "Notice Date."
2.2 Shares Issuable. To determine the number of Warrant Shares for
which the Warrant may be exercised, the Company shall determine the average
Closing Price (as defined below) of the Common Stock for the (i) fifteen (15)
consecutive trading days immediately preceding the Determination Date and (ii)
the thirty (30) consecutive trading days ending fifteen (15) trading days prior
to the Determination Date, and shall calculate the number of shares of the
Common Stock, or fraction thereof, which could be purchased at the greater of
such two average Closing Prices for a purchase price of twenty-five cents
($0.25). The result of this calculation shall be the "Share Factor." The Share
Factor shall be multiplied by the number of Warrants stated on the first page of
this Warrant to determine the number of whole shares for which this Warrant may
be exercised. Fractional shares resulting from aggregate exercises shall be
rounded to the nearest whole share.
2.3 Notice. The Exercise Notice sent to the Holder shall state the
number of Warrant Shares for which the Warrant has become exercisable.
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<PAGE>
2.4 Exercise. If the Exercise Notice states that the condition
stated in Section 2.1 has not been satisfied, then the Notice Date shall become
the Expiration Date, this Warrant shall expire effective as of the Notice Date
and the Holder shall have no further rights hereunder. If the Exercise Notice
states the condition has been met, this Warrant shall thereafter be exercisable
for the number of whole shares determined as provided in Section 2.2 and
specified in the applicable Exercise Notice.
2.5 Closing Price. For purposes of any computation pursuant to this
Section 2, the term "Closing Price" for any day shall mean the last reported
sale price, regular way, of the Common Stock, or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices,
regular way, for such day, in either case on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or if it is
not listed or admitted to trading on any national securities exchange, but is
traded on Nasdaq, the closing sale price of the Common Stock or, in case no sale
is reported, the average of the closing bid and asked quotations for the Common
Stock on Nasdaq, or any comparable system.
3. Certain Notices.
3.1 Notice of Certain Events. If at any time after the
Determination Date and before the Expiration Date:
3.1.1 the Company shall declare any cash dividend upon its
Common Stock;
3.1.2 the Company shall declare any dividend upon its Common
Stock payable in stock (other than a dividend payable solely in shares of Common
Stock) or make any special dividend or other distribution to the holders of its
Common Stock;
3.1.3 the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
3.1.4 there shall be any capital reorganization or
reclassification of the capital stock of the Company; or consolidation or merger
of the Company with, or sale or leases, exchanges or other conveyances (other
than pledges, mortgages and liens related to loans) of substantially all of its
assets to, another corporation;
3.1.5 there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
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<PAGE>
3.1.6 any purchase, retirement, or redemption by the Company of
its Common Stock;
then, in any one or more of said cases, the Company shall give to the registered
holder of this Warrant, by the means specified in Section 8 herein, (i) at least
twenty (20) days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, and (ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding-up, at least twenty (20) days' prior written notice of the date when the
same shall take place; provided, however, that the Company shall not be required
to send any notice pursuant to this Section 3.1 if the Company determines the
condition in Section 2.1 has not been met. Any notice given in accordance with
the foregoing clause (i) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto. Any notice given in accordance with the
foregoing clause (ii) shall also specify the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, winding-up, conversion or public
offering, as the case may be. If Holder does not exercise this Warrant prior to
the occurrence of an event described above, Holder shall not be entitled to
receive the benefits accruing to then existing holders of Common Stock.
3.2 Notice of Adjustment. Upon the happening of an event requiring
an adjustment of the amount or the kind of securities or property purchasable
hereunder, the Company shall forthwith give notice to the Holder which indicates
the event requiring the adjustment, the adjusted number of Warrant Shares that
may be acquired or the amount or kind of any such securities or property so
purchasable upon exercise of this Warrant, as the case may be, and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. The Company's independent public accountant shall
determine the method for calculating the adjustment and shall prepare a
certificate setting forth such calculations, the reason for the methodology
chosen, and the facts upon which such calculation is based. Such certificate
shall accompany the notice to be provided to the Holder pursuant to this Section
3.2.
3.3 Adjustment of Purchase Price and Number of Warrant Shares. The
number and kind of securities that may be acquired upon the exercise of this
Warrant shall be subject to adjustment following the Determination Date and
prior to the earlier of the exercise of, or the Expiration Date of this Warrant,
upon the happening of any of the following events:
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<PAGE>
(a) Dividends, Subdivisions, Combinations, or Consolidations of
Common Stock.
(i) In the event the Company shall declare, pay, or make any
dividend upon its outstanding Common Stock payable in Common Stock or shall
effect a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock, then the Share Factor shall be adjusted so
that the number of Warrant Shares that may thereafter be purchased upon the
exercise of the rights represented hereby shall be increased in proportion to
the increase in the number of outstanding shares of Common Stock through such
dividend or subdivision. In case the Company shall at any time combine the
outstanding shares of its Common Stock into a smaller number of shares of Common
Stock, the Share Factor shall be adjusted so that number of Warrant Shares that
may thereafter be acquired upon the exercise of the rights represented hereby
shall be decreased in proportion to the decrease through such combination. In
each case, the Exercise Price will not be adjusted.
(ii) If the Company declares, pays or makes any dividend or
other distribution upon its outstanding Common Stock payable in securities or
other property including, without limitation, shares of any other class of the
Company's stock or stock or other securities convertible into or exchangeable
for shares of Common Stock or any other class of the Company's stock or other
interests in the Company or its assets ("Convertible Securities"), that portion
of those securities or other property that would have been distributed to Holder
had Holder already exercised this Warrant shall be set aside by the Company and
delivered to the Holder in the event that the Holder exercises this Warrant. The
securities and other property then deliverable to the Holder upon the exercise
of this Warrant shall be in the same ratio to the total securities and property
set aside for the Holder as the number of Warrant Shares with respect to which
this Warrant is then exercised as to the total number of Warrant Shares that may
be acquired pursuant to this Warrant at the time the securities or property were
set aside for the Holder.
(b) Effect of Reclassification, Reorganization, Consolidation,
Merger, or Sale of Assets.
(i) Upon the occurrence of any of the following events, the
Company shall cause an effective provision to be made so that the Holder shall
have the right thereafter, by the exercise of this Warrant, to acquire for the
Exercise Price described in this Warrant the kind and amount of shares of stock
and other securities, property and interests as would be issued or payable with
respect to or in exchange for the number of Warrant Shares that are then
purchasable pursuant to this Warrant as if such Warrant Shares had been issued
to the Holder immediately prior to such event: (A) reclassification, capital
reorganization, or other change of outstanding Common Stock
-6-
<PAGE>
(other than a change as a result of an issuance of Common Stock under Subsection
3.3(a)), (B) consolidation or merger of the Company with or into another
corporation or entity (other than a consolidation or merger in which the Company
is the continuing corporation and that does not result in any reclassification,
capital reorganization or other change of the outstanding shares of Common Stock
or the Warrant Shares issuable upon exercise of this Warrant), or (C) spin-off
of assets, a subsidiary or any affiliated entity, or the sale, lease, conveyance
(other than pledges, mortgages and liens related to loans) or exchange of a
significant portion of the Company's assets taken as a whole, in a transaction
pursuant to which the Company's shareholders of record are to receive securities
or other interests in a successor entity. Any such provision made by the Company
for adjustments with respect to this Warrant shall be as nearly equivalent to
the adjustments otherwise provided for in this Warrant as is reasonably
practicable. The foregoing provisions of this Section 3.3(b)(i) shall similarly
apply to successive reclassifications, capital reorganizations and similar
changes of shares of Common Stock and to successive consolidations, mergers,
spin-offs, sales, leases or exchanges.
(ii) If any sale or exchange of all, or substantially all, of
the Company's assets or business or any dissolution, liquidation or winding up
of the Company (a "Termination of Business") shall be proposed, the Company
shall deliver written notice to the Holder of this Warrant in accordance with
Section 3.2 hereof as a condition precedent to the consummation of that
Termination of Business. If the result of the Termination of Business is that
shareholders of the Company are to receive securities or other interests of a
successor entity, the provisions of Section 3.3(b)(i) above shall apply.
However, if the result of the Termination of Business is that shareholders of
the Company are to receive money or property other than securities or other
interests in a successor entity, the Holder of this Warrant shall be entitled to
exercise this Warrant and, with respect to any Warrant Shares purchasable
pursuant to this Warrant so acquired, shall be entitled to all of the rights of
the other shareholders of Common Stock with respect to any distribution by the
Company in connection with the Termination of Business. In the event no
successor entity is involved and Section 3.3(b)(i) does not apply, all
acquisition rights under this Warrant shall terminate at the close of business
on the date as of which shareholders of record of the Common Stock shall be
entitled to participate in a distribution of the assets of the Company in
connection with the Termination of Business; provided, that, in no event shall
-------- ----
that date be less than 20 days after delivery to the Holder of this Warrant of
the written notice described above and in Section 3.2 hereof. If the termination
of acquisition rights under this Warrant is to occur as a result of the event at
issue, a statement to that effect shall be included in that written notice.
(c) Obligation of Successors or Transferees. The Company shall not
effect any consolidation, merger, or sale or conveyance of assets within the
meaning of Section 3.3(b)(i)(B)-(C) unless prior to or simultaneously with the
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<PAGE>
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and mailed or delivered to
the Holder pursuant to Section 8 herein, the obligation to deliver to the Holder
such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, the Holder may be entitled to acquire. In no event shall the
securities received pursuant to this Section be registerable or transferable
other than pursuant and subject to the terms of this Warrant.
(d) Application of this Section. The provisions of this Section 3.3
shall apply to successive events that may occur from time to time but shall only
apply to a particular event if it occurs prior to the expiration of this Warrant
either by its terms or by its exercise in full.
(e) Definition of Common Stock. Unless the context requires
otherwise, whenever reference is made in this Section 3.3 to the issue or sale
of shares of Common Stock, the term "Common Stock" shall mean (i) the no par
value Class A Common Stock of the Company, (ii) any other class of stock ranking
on a parity with, and having substantially similar rights and privileges as the
Company's no par value Class A Common Stock, and (iii) any Convertible Security
convertible into either (i) or (ii). However, subject to the provisions of
Section 3.3(b)(i) above, Common Stock issuable upon the exercise of this Warrant
shall include only shares of Common Stock designed as no par value Class A
Common Stock of the Company as of the date of this Warrant.
(f) Company-Held Stock. For purposes of Sections 3.3(a) above, shares
of Common Stock owned or held at any relevant time by, or for the account of,
the Company in its treasury or otherwise, shall not be deemed to be outstanding
for purposes of the calculation and adjustments described therein.
4. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of the Warrant shall be made without charge to Holder of any issue tax
or other governmental charges in respect thereof; provided, however, that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the then holder of the Warrant being exercised.
5. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Warrant shall be construed as conferring upon Holder the right
to vote or to consent or to receive notice as a stockholder in respect of
meetings of stockholders for the election of directors of the Company or any
other matters or any rights whatsoever as a stockholder of the Company, until,
and only to the extent that, this Warrant shall have been exercised. Except as
provided in Section 3.1 in the event of a dividend on the
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<PAGE>
Common Stock payable in shares of Common Stock, 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. The Company covenants, however,
that until the Termination Date, for so long as this Warrant remains at least
partially unexercised, it will furnish the Holder with copies of all reports and
communications furnished to the stockholders of the Company. No provisions
hereof, in the absence of affirmative action by Holder to purchase Warrant
Shares, and no mere enumeration herein of the rights or privileges of Holder
shall give rise to any liability of Holder for the Exercise Price or as a
stockholder of the Company whether such liability is asserted by the Company or
by its creditors.
6. Registration Rights. Holder shall have registration rights with
respect to the Warrant Shares issuable on exercise of this Warrant, as more
fully set forth in that certain Registration Rights Agreement dated February 25,
1998 by and between the Company and Holder.
Further, the Company shall, with a view to making available to the
Holders of the Common Stock issuable upon exercise of the Warrant the benefits
of certain rules and regulations of the Securities and Exchange Commission (the
"Commission") (including, without limitation, Rule 144 under the Securities Act)
which may permit the sale of such Warrant Shares to the public without
registration, file required reports under Section 13 or 15(d), of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), use commercially
reasonable efforts to make available to the Holders of such benefits, and in
furtherance of (but without limiting) the foregoing:
(a) make and keep public information available as those terms are
defined in Rule 144 under the Securities Act or any successor provision thereto;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) so long as the Holders own any Warrants or Warrant Shares, furnish
the Holders forthwith upon request a written statement by the Company as to
compliance with the reporting requirements of Rule 144 or any successor
provision thereto, and of the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of the Company with the Commission, and
such other reports and documents of the Company and other information in the
possession of or reasonably obtainable by the Company as the Holders may
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Holders to sell any such securities without
registration.
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<PAGE>
7. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
8. Notices. Any notice required or permitted under this Warrant shall be
in writing and either delivered personally, telegraphed or telecopied or sent by
certified or registered mail, postage prepaid, and shall be deemed to be given,
dated and received when so delivered personally, telegraphed or telecopied or,
if mailed, five (5) business days after the date of mailing to the following
address or facsimile number, or to such other address or addresses as such
person may subsequently designate by notice given hereunder.
If to the Company: Premier Laser Systems, Inc.
Attention: Secretary
3 Morgan
Irvine, California 92618
Facsimile: 714 951-7218
with a copy to: Paul, Hastings, Janofsky & Walker LLP
Attention: Peter J. Tennyson, Esq.
695 Town Center Drive, 17th Floor
Costa Mesa, California 92626-1924
Facsimile: 714 979-1921
If to Holder: As Holder's address appears
on a register of Warrants
maintained by the Company's
transfer agent.
9. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of the
Company relating to the Common Stock issuable upon the exercise of this Warrant
shall survive the exercise and termination of this Warrant. All of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the Holder.
10. Descriptive Headings and Governing Law. The descriptive 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
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accordance with, and the rights of the parties shall be governed by, the laws of
the State of California.
11. Exchange, Assignment, Combination and Replacement of Warrants.
(a) This Warrant is exchangeable, without expense other than as
provided in this Section 11, at the option of the Holder upon the reasonable
request, presentation and surrender hereof to the Company for other Warrants of
different denominations entitling the Holder thereof to acquire in the aggregate
the same number of Warrant Shares that may be acquired hereunder.
(b) All of the covenant and provisions of this Warrant by or for the
benefit of the Holder shall be binding upon and shall inure to the benefit of,
its successors and permitted assigns hereunder. This Warrant and all rights
hereunder are transferrable and may be sold, transferred, assigned, or
hypothecated upon surrender of this Warrant to the Company, together with a duly
executed assignment in the form attached hereto as Exhibit B (the "Assignment
Form"), whereupon the Company shall, without charge, execute and deliver a new
Warrant containing the same terms and conditions of this Warrant in the name of
the assignee as named in the Assignment Form, and this Warrant shall be canceled
at that time. This Warrant, if properly assigned, may be exercised by a new
Holder without first having the new Warrant issued.
(c) This Warrant may be delivered or combined with other Warrants that
carry the same rights upon the reasonable request, presentation and surrender of
this Warrant at the office of the Company, together with a written notice signed
by the Holder, specifying the names and denominations in which new Warrants are
to be issued.
(d) The Company will execute and deliver to the Holder a new Warrant
of like tenor and date upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Warrant; provided, that (i) in the case of loss, theft, or destruction, the
Company receives a reasonably satisfactory indemnity or bond, or (ii) in the
case of mutilation, the Holder shall provide and surrender this Warrant to the
Company for cancellation.
(e) Any new Warrant executed and delivered by the Company in
substitution or replacement of this Warrant shall constitute a contractual
obligation of the Company regardless of whether this Warrant was lost, stolen,
destroyed or mutilated, and shall be enforceable by any Holder thereof.
(f) The Holder shall pay all transfer and excise taxes applicable to
any issuance of new Warrants under this Section 11.
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<PAGE>
12. Fractional Shares. No fractional shares shall be issued upon exercise
of this Warrant. The Company shall, in lieu of issuing any fractional share,
round such fractional shares to the nearest whole share.
13. Best Efforts. The Company covenants that it will not, by amendment of
its Articles of Incorporation or bylaws, or through any reorganization, transfer
of assets, consolidation, merger, dissolution, reissue or sale of securities, or
any other voluntary action, avoid or seek to avoid the observation or
performance for any term of this Warrant, but will at all times in good faith
assist in carrying out all those terms and in taking all action necessary or
appropriate to protect the rights of the Holder against dilution or other
impairment.
14. Further Assurances. The Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue, duly authorized fully paid and nonassessable Warrants and Common Stock
and other securities issuable upon exercise of this Warrant from time to time
and not in violation of any pre-emptive rights.
(Signature Page Follows)
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<PAGE>
[SIGNATURE PAGE - CLASS C WARRANT]
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer effective as of ________ __, 1998.
PREMIER LASER SYSTEMS, INC.
By: /s/ COLETTE COZEAN
--------------------------
Colette Cozean, Ph.D.
Chief Executive Officer
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<PAGE>
EXHIBIT A
PREMIER LASER SYSTEMS, INC.
COMMON STOCK WARRANT
FORM OF SUBSCRIPTION AGREEMENT
(To be signed and delivered
upon exercise of Warrant)
PREMIER LASER SYSTEMS, INC.
3 Morgan
Irvine, California 92618
Attention: Secretary
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _______________ shares of Common Stock (the "Stock") of
Premier Laser Systems, Inc. (the "Company") and herewith makes payment of
__________________________ Dollars ($________) therefor and requests that the
certificates for such shares be issued in the name of, and delivered to,
______________, whose address is ____________________________________. A copy
of the Exercise Notice (as defined in the Warrant) evidencing that the Warrant
is exercisable for at least the number of shares covered by this agreement is
attached.
If the exercise of this Warrant is not covered by a registration statement
effective under the Securities Act of 1933, as amended (the "Act"), the
undersigned represents that:
(i) the undersigned is acquiring such Stock for investment for his own
account, not as nominee or agent, and not with a view to the distribution
thereof and the undersigned has not signed or otherwise arranged for the
selling, granting any participation in, or otherwise distributing the same;
(ii) the undersigned has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
undersigned's investment in the Stock;
A-1
<PAGE>
(iii) the undersigned has received all of the information the undersigned
has requested from the Company and considers necessary or appropriate for
deciding whether to purchase the shares of Stock;
(iv) the undersigned has the ability to bear the economic risks of his
prospective investment;
(v) the undersigned understands and agrees that (A) he may be unable to
readily liquidate his investment in the shares of Stock and that the shares must
be held indefinitely unless a subsequent disposition thereof is registered or
qualified under the Act and applicable state securities laws or is exempt from
such registration or qualification, and that the Company is not required to
register the same or to take any action or make such an exemption available
except to the extent provided in the within Warrant; (B) the exemption from
registration under the Act afforded by Rule 144 promulgated by the Securities
and Exchange Commission ("Rule 144") depends upon the satisfaction of various
conditions by the undersigned and the Company and that, if applicable, Rule 144
affords the basis for sales under certain circumstances in limited amounts, and
that if such exemption is utilized by the undersigned, such conditions must be
fully complied with by the undersigned and the Company, as required by Rule 144;
and (C) among the conditions required for use of Rule 144 is the availability of
current information to the public about the Company;
(vi) the undersigned either (A) is familiar with the definition of and
the undersigned is an "accredited investor" within the meaning of such term
under Rule 501 of Regulation D promulgated under the Act, or (B) is providing
representations and warranties reasonably satisfactory to the Company and its
counsel, to the effect that the sale and issuance of Stock upon exercise of such
Warrant may be made without registration under the Act or any applicable state
securities and Blue Sky laws; and
(vii) the address set forth below is the true and correct address of the
undersigned.
--------------------------
(Name)
--------------------------
(Address)
--------------------------
--------------------------
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<PAGE>
If said number of shares shall not be all the shares exercisable or
purchasable under the within Warrant, a new Warrant is to be issued in the name
of the undersigned for the balance remaining of the Warrants.
DATED:________________________
-----------------------------------------
(Name of holder must conform in all
respects to name of holder as specified
on the face of the Warrant or with the
name of the assignee appearing on the
assignment form attached hereto.)
-----------------------------------------
(signature)
-----------------------------------------
(print name)
-----------------------------------------
(print title)
A-3
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the receipt and adequacy of which are each hereby
confirmed, the undersigned,_____________________, hereby sells, assigns and
transfers unto___________________ all of the undersigned's right, title and
interest in and to an aggregate of __________ (___) warrants to purchase shares
of the Common Stock of Premier Laser Systems, Inc. (the "Corporation) standing
in the name of the undersigned on the books of the Corporation and evidenced by
that certain Class __ Warrant, dated ________ __, ___ (the "Warrant"), and does
hereby irrevocable constitute and appoint __________________ as attorney-in-fact
to effect the reissue of the Warrant as necessary and the transfer of said
Warrant on the books of the Corporation with full power of substitution upon
presentation to the Corporation of this Assignment Form together with the
Warrant.
Dated: ____________ __, ___
Signature: ___________________________
Printed Name: ___________________________
B-1
<PAGE>
EXHIBIT 99.14
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER
ANY APPLICABLE STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS (I) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, (II) THE SALE IS MADE
PURSUANT TO RULE 144 UNDER THE ACT, IF AVAILABLE, AND EXEMPTIONS FROM
REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS OR (III) AN OPINION IS
OBTAINED FROM COUNSEL TO THE HOLDER, REASONABLY SATISFACTORY TO COUNSEL TO
PREMIER LASER SYSTEMS, INC. THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE
UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE
SHARES OF COMMON STOCK PURCHASABLE HEREUNDER ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND ARE SUBJECT TO POSSIBLE CANCELLATION UNDER THAT CERTAIN PURCHASE
AGREEMENT (THE "PURCHASE AGREEMENT") OF EVEN DATE HEREWITH BETWEEN PREMIER LASER
SYSTEMS, INC. AND HOLDER.
CLASS D WARRANT
TO PURCHASE COMMON STOCK
NO PAR VALUE OF
PREMIER LASER SYSTEMS, INC.
409,308 Warrants (Partial Shares)/1/ February 25, 1998
This certifies that JB Oxford & Company ("Holder"), for value received, is
entitled, subject to the other terms set forth below, to purchase from Premier
Laser Systems, Inc., a California corporation (the "Company"), having a place of
business at 3 Morgan, Irvine, California 92618, at any time from the Notice Date
defined below until 5:00 P.M. (California time) on the ninetieth day following
the Notice Date (the
- ----------------
/1/ (Does not represent 409,308 shares - See Paragraph 2 for computation.)
-1-
<PAGE>
"Expiration Date"), unless earlier terminated pursuant to the provisions of
Section 2.4 hereof, at which time this Warrant shall expire and become void, a
fraction of a share, of the Company's Common Stock, no par value (the "Common
Stock") in an amount determined pursuant to Section 2 below. The purchase or
exercise price per share (the "Exercise Price") shall be one cent ($0.01)
regardless of the number of Warrants which must be exercised to obtain a Warrant
Share (as defined below).
The number and character of the securities purchasable upon exercise of
this Warrant are subject to adjustment as provided in Section 3.3 hereof.
This Warrant is subject to the following terms and conditions:
1. Exercise; Issuance of Certificates; Payment for Shares.
1.1 Duration of Exercise of Warrant. This Warrant is exercisable at
the option of Holder at any time from the Notice Date until 5:00 P.M.
(California time) on the Expiration Date for all or a portion of the shares of
Common Stock that may be purchased hereunder. This Warrant shall be exercised
upon surrender to the Company of this Warrant properly endorsed with a completed
and executed Subscription Agreement in the form attached hereto as Exhibit A,
and upon payment in cash or cashier's check of the aggregate Exercise Price for
the number of shares of Common Stock for which this Warrant is being exercised
(the "Warrant Shares"). The Company agrees that any Warrant Shares purchased
under this Warrant shall be deemed to be issued to Holder as the record owner of
such shares as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for such shares. Certificates for the
Warrant Shares so purchased, together with any other securities or property to
which Holder is entitled upon such exercise, shall be delivered to Holder by the
Company or its transfer agent at the Company's expense as soon as practicable
after the rights represented by this Warrant have been exercised. Each stock
certificate so delivered shall be in such denominations of Common Stock as may
be reasonably requested by Holder and shall be registered in the name of Holder
or such other name as shall be designated by Holder. If, upon exercise of this
Warrant, fewer than all of the shares issuable upon exercise of this Warrant are
purchased, one or more new warrants substantially in the form of, and on the
terms contained in, this Warrant will be issued for the remaining number of
shares not exercised.
1.2 Securities to be Fully Paid; Reservation of Warrant Shares. The
Company covenants and agrees that all Warrants and Warrant Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable and
such issuance will not violate any pre-emptive rights under applicable law, the
Premier Articles of Incorporation or By-
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<PAGE>
laws, contracts, or agreement, or otherwise. The Company covenants that it will
at all times from the date hereof reserve and keep available a sufficient number
of shares of its authorized but unissued Common Stock (or other securities)
solely for issuance and delivery to Holder upon exercise of this Warrant. The
Company will take all such reasonable action as may be necessary to assure that
such Warrants and Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation.
2. Notice of Exercisability and Determination of Number of Warrant Shares.
2.1 Condition to Exercise. This Warrant shall not become exercisable
unless the Net Sales of Qualified Products (both as defined herein) for the
twelve (12) month period ended December 31, 1999 (the "Determination Date")
equal or exceed Eleven Million Six Hundred Dollars ($11,600,000). Except as set
forth below, "Net Sales" shall mean net sales of Qualified Products as
determined by generally accepted accounting principles, as consistently applied
by Ophthalmic Imaging Systems ("OIS"). "Qualified Products" shall mean products
sold by and in connection with the current core business of OIS including: (i)
products related to or arising out of such current core products; (ii) products
under development as of the date hereof; and (iii) those same products if sold
by any successor owner of OIS' operations. For the purposes of this Class D
Warrant only, firm purchase orders or purchase agreements from purchasers
seeking shipment of goods by December 31, 1999, and which are accompanied by at
least a 10% deposit, shall be deemed to be December 1999 sales. As soon as
practicable after the Determination Date, the Company shall determine the Net
Sales of Qualified Products for the twelve (12) month period ended on the
Determination Date and shall mail to the holder of the Warrant, and shall
publish in a newspaper of national circulation a notice (the "Exercise Notice")
stating whether this condition to exercisability has been met. The date of such
mailing and publication is the "Notice Date."
2.2 Shares Issuable. To determine the number of Warrant Shares for
which the Warrant may be exercised, the Company shall determine the average
Closing Price (as defined below) of the Common Stock for the (i) fifteen (15)
consecutive trading days immediately preceding the Determination Date and (ii)
the thirty (30) consecutive trading days ending fifteen (15) trading days prior
to the Determination Date, and shall calculate the number of shares of the
Common Stock, or fraction thereof, which could be purchased at the greater of
such two average Closing Prices for a purchase price of twenty-five cents
($0.25). The result of this calculation shall be the "Share Factor." The Share
Factor shall be multiplied by the number of Warrants stated on the first page of
this Warrant to determine the number of whole shares for which this Warrant may
be exercised. Fractional shares resulting from aggregate exercises shall be
rounded to the nearest whole share.
-3-
<PAGE>
2.3 Notice. The Exercise Notice sent to the Holder shall state the
number of Warrant Shares for which the Warrant has become exercisable.
2.4 Exercise. If the Exercise Notice states that the condition
stated in Section 2.1 has not been satisfied, then the Notice Date shall become
the Expiration Date, this Warrant shall expire effective as of the Notice Date
and the Holder shall have no further rights hereunder. If the Exercise Notice
states the condition has been met, this Warrant shall thereafter be exercisable
for the number of whole shares determined as provided in Section 2.2 and
specified in the applicable Exercise Notice.
2.5 Closing Price. For purposes of any computation pursuant to this
Section 2, the term "Closing Price" for any day shall mean the last reported
sale price, regular way, of the Common Stock, or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices,
regular way, for such day, in either case on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or if it is
not listed or admitted to trading on any national securities exchange, but is
traded on Nasdaq, the closing sale price of the Common Stock or, in case no sale
is reported, the average of the closing bid and asked quotations for the Common
Stock on Nasdaq, or any comparable system.
3. Certain Notices.
3.1 Notice of Certain Events. If at any time after the
Determination Date and before the Expiration Date:
3.1.1 the Company shall declare any cash dividend upon its
Common Stock;
3.1.2 the Company shall declare any dividend upon its Common
Stock payable in stock (other than a dividend payable solely in shares of Common
Stock) or make any special dividend or other distribution to the holders of its
Common Stock;
3.1.3 the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
3.1.4 there shall be any capital reorganization or
reclassification of the capital stock of the Company; or consolidation or merger
of the Company with, or sale or leases, exchanges or other conveyances (other
than pledges, mortgages and liens related to loans) of substantially all of its
assets to, another corporation;
-4-
<PAGE>
3.1.5 there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
3.1.6 any purchase, retirement, or redemption by the Company of
its Common Stock;
then, in any one or more of said cases, the Company shall give to the registered
holder of this Warrant, by the means specified in Section 8 herein, (i) at least
twenty (20) days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, and (ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding-up, at least twenty (20) days' prior written notice of the date when the
same shall take place; provided, however, that the Company shall not be required
to send any notice pursuant to this Section 3.1 if the Company determines the
condition in Section 2.1 has not been met. Any notice given in accordance with
the foregoing clause (i) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto. Any notice given in accordance with the
foregoing clause (ii) shall also specify the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, winding-up, conversion or public
offering, as the case may be. If Holder does not exercise this Warrant prior to
the occurrence of an event described above, Holder shall not be entitled to
receive the benefits accruing to then existing holders of Common Stock.
3.2 Notice of Adjustment. Upon the happening of an event requiring
an adjustment of the amount or the kind of securities or property purchasable
hereunder, the Company shall forthwith give notice to the Holder which indicates
the event requiring the adjustment, the adjusted number of Warrant Shares that
may be acquired or the amount or kind of any such securities or property so
purchasable upon exercise of this Warrant, as the case may be, and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. The Company's independent public accountant shall
determine the method for calculating the adjustment and shall prepare a
certificate setting forth such calculations, the reason for the methodology
chosen, and the facts upon which such calculation is based. Such certificate
shall accompany the notice to be provided to the Holder pursuant to this Section
3.2.
3.3 Adjustment of Purchase Price and Number of Warrant Shares. The
number and kind of securities that may be acquired upon the exercise of this
Warrant
-5-
<PAGE>
shall be subject to adjustment following the Determination Date and prior to the
earlier of the exercise of, or the Expiration Date of this Warrant, upon the
happening of any of the following events:
(a) Dividends, Subdivisions, Combinations, or Consolidations of
Common Stock.
(i) In the event the Company shall declare, pay, or make any
dividend upon its outstanding Common Stock payable in Common Stock or shall
effect a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock, then the Share Factor shall be adjusted so
that the number of Warrant Shares that may thereafter be purchased upon the
exercise of the rights represented hereby shall be increased in proportion to
the increase in the number of outstanding shares of Common Stock through such
dividend or subdivision. In case the Company shall at any time combine the
outstanding shares of its Common Stock into a smaller number of shares of Common
Stock, the Share Factor shall be adjusted so that number of Warrant Shares that
may thereafter be acquired upon the exercise of the rights represented hereby
shall be decreased in proportion to the decrease through such combination. In
each case, the Exercise Price will not be adjusted.
(ii) If the Company declares, pays or makes any dividend or
other distribution upon its outstanding Common Stock payable in securities or
other property including, without limitation, shares of any other class of the
Company's stock or stock or other securities convertible into or exchangeable
for shares of Common Stock or any other class of the Company's stock or other
interests in the Company or its assets ("Convertible Securities")), that portion
of those securities or other property that would have been distributed to Holder
had Holder already exercised this Warrant shall be set aside by the Company and
delivered to the Holder in the event that the Holder exercises this Warrant. The
securities and other property then deliverable to the Holder upon the exercise
of this Warrant shall be in the same ratio to the total securities and property
set aside for the Holder as the number of Warrant Shares with respect to which
this Warrant is then exercised as to the total number of Warrant Shares that may
be acquired pursuant to this Warrant at the time the securities or property were
set aside for the Holder.
(b) Effect of Reclassification, Reorganization, Consolidation,
Merger, or Sale of Assets.
(i) Upon the occurrence of any of the following events, the
Company shall cause an effective provision to be made so that the Holder shall
have the right thereafter, by the exercise of this Warrant, to acquire for the
Exercise other securities, property and interests as would be issued or payable
with respect to or in
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<PAGE>
exchange for the number of Warrant Shares that are then purchasable pursuant to
this Warrant as if such Warrant Shares had been issued to the Holder immediately
prior to such event: (A) reclassification, capital reorganization, or other
change of outstanding Common Stock (other than a change as a result of an
issuance of Common Stock under Subsection 3.3(a)), (B) consolidation or merger
of the Company with or into another corporation or entity (other than a
consolidation or merger in which the Company is the continuing corporation and
that does not result in any reclassification, capital reorganization or other
change of the outstanding shares of Common Stock or the Warrant Shares issuable
upon exercise of this Warrant), or (C) spin-off of assets, a subsidiary or any
affiliated entity, or the sale, lease, conveyance (other than pledges, mortgages
and liens related to loans) or exchange of a significant portion of the
Company's assets taken as a whole, in a transaction pursuant to which the
Company's shareholders of record are to receive securities or other interests in
a successor entity. Any such provision made by the Company for adjustments with
respect to this Warrant shall be as nearly equivalent to the adjustments
otherwise provided for in this Warrant as is reasonably practicable. The
foregoing provisions of this Section 3.3(b)(i) shall similarly apply to
successive reclassifications, capital reorganizations and similar changes of
shares of Common Stock and to successive consolidations, mergers, spin-offs,
sales, leases or exchanges.
(ii) If any sale or exchange of all, or substantially all, of
the Company's assets or business or any dissolution, liquidation or winding up
of the Company (a "Termination of Business") shall be proposed, the Company
shall deliver written notice to the Holder of this Warrant in accordance with
Section 3.2 hereof as a condition precedent to the consummation of that
Termination of Business. If the result of the Termination of Business is that
shareholders of the Company are to receive securities or other interests of a
successor entity, the provisions of Section 3.3(b)(i) above shall apply.
However, if the result of the Termination of Business is that shareholders of
the Company are to receive money or property other than securities or other
interests in a successor entity, the Holder of this Warrant shall be entitled to
exercise this Warrant and, with respect to any Warrant Shares purchasable
pursuant to this Warrant so acquired, shall be entitled to all of the rights of
the other shareholders of Common Stock with respect to any distribution by the
Company in connection with the Termination of Business. In the event no
successor entity is involved and Section 3.3(b)(i) does not apply, all
acquisition rights under this Warrant shall terminate at the close of business
on the date as of which shareholders of record of the Common Stock shall be
entitled to participate in a distribution of the assets of the Company in
connection with the Termination of Business; provided, that, in no event shall
--------------
that date be less than 20 days after delivery to the Holder of this Warrant of
the written notice described above and in Section 3.2 hereof. If the termination
of acquisition rights under this Warrant is to occur as a result of the event at
issue, a statement to that effect shall be included in that written notice.
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<PAGE>
(c) Obligation of Successors or Transferees. The Company shall not
effect any consolidation, merger, or sale or conveyance of assets within the
meaning of Section 3.3(b)(i)(B)-(C) unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and mailed or delivered to
the Holder pursuant to Section 8 herein, the obligation to deliver to the Holder
such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, the Holder may be entitled to acquire. In no event shall the
securities received pursuant to this Section be registerable or transferable
other than pursuant and subject to the terms of this Warrant.
(d) Application of this Section. The provisions of this Section 3.3
shall apply to successive events that may occur from time to time but shall only
apply to a particular event if it occurs prior to the expiration of this Warrant
either by its terms or by its exercise in full.
(e) Definition of Common Stock. Unless the context requires
otherwise, whenever reference is made in this Section 3.3 to the issue or sale
of shares of Common Stock, the term "Common Stock" shall mean (i) the no par
value Class A Common Stock of the Company, (ii) any other class of stock ranking
on a parity with, and having substantially similar rights and privileges as the
Company's no par value Class A Common Stock, and (iii) any Convertible Security
convertible into either (i) or (ii). However, subject to the provisions of
Section 3.3(b)(i) above, Common Stock issuable upon the exercise of this Warrant
shall include only shares of Common Stock designed as no par value Class A
Common Stock of the Company as of the date of this Warrant.
(f) Company-Held Stock. For purposes of Sections 3.3(a) above, shares
of Common Stock owned or held at any relevant time by, or for the account of,
the Company in its treasury or otherwise, shall not be deemed to be outstanding
for purposes of the calculation and adjustments described therein.
4. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of the Warrant shall be made without charge to Holder of any issue tax
or other governmental charges in respect thereof; provided, however, that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the then holder of the Warrant being exercised.
5. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Warrant shall be construed as conferring upon Holder the right
to vote or to consent or to receive notice as a stockholder in respect of
meetings of stockholders
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<PAGE>
for the election of directors of the Company or any other matters or any rights
whatsoever as a stockholder of the Company, until, and only to the extent that,
this Warrant shall have been exercised. Except as provided in Section 3.1 in the
event of a dividend on the Common Stock payable in shares of Common Stock, 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. The
Company covenants, however, that until the Termination Date, for so long as this
Warrant remains at least partially unexercised, it will furnish the Holder with
copies of all reports and communications furnished to the stockholders of the
Company. No provisions hereof, in the absence of affirmative action by Holder to
purchase Warrant Shares, and no mere enumeration herein of the rights or
privileges of Holder shall give rise to any liability of Holder for the Exercise
Price or as a stockholder of the Company whether such liability is asserted by
the Company or by its creditors.
6. Registration Rights. Holder shall have registration rights with
respect to the Warrant Shares issuable on exercise of this Warrant, as more
fully set forth in that certain Registration Rights Agreement dated February 25,
1998 by and between the Company and Holder.
Further, the Company shall, with a view to making available to the
Holders of the Common Stock issuable upon exercise of the Warrant the benefits
of certain rules and regulations of the Securities and Exchange Commission (the
"Commission") (including, without limitation, Rule 144 under the Securities Act)
which may permit the sale of such Warrant Shares to the public without
registration, file required reports under Section 13 or 15(d), of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), use commercially
reasonable efforts to make available to the Holders of such benefits, and in
furtherance of (but without limiting) the foregoing:
(a) make and keep public information available as those terms are
defined in Rule 144 under the Securities Act or any successor provision thereto;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) so long as the Holders own any Warrants or Warrant Shares, furnish
the Holders forthwith upon request a written statement by the Company as to
compliance with the reporting requirements of Rule 144 or any successor
provision thereto, and of the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of the Company with the Commission, and
such other reports and documents of the Company and other information in the
possession of or reasonably obtainable by the Company as the Holders may
reasonably request in availing itself of any rule or regulation
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<PAGE>
of the Commission allowing the Holders to sell any such securities without
registration.
7. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
8. Notices. Any notice required or permitted under this Warrant shall be
in writing and either delivered personally, telegraphed or telecopied or sent by
certified or registered mail, postage prepaid, and shall be deemed to be given,
dated and received when so delivered personally, telegraphed or telecopied or,
if mailed, five (5) business days after the date of mailing to the following
address or facsimile number, or to such other address or addresses as such
person may subsequently designate by notice given hereunder.
If to the Company: Premier Laser Systems, Inc.
Attention: Secretary
3 Morgan
Irvine, California 92618
Facsimile: 714 951-7218
with a copy to: Paul, Hastings, Janofsky & Walker LLP
Attention: Peter J. Tennyson, Esq.
695 Town Center Drive, 17th Floor
Costa Mesa, California 92626-1924
Facsimile: 714 979-1921
If to Holder: As Holder's address appears on a
register of Warrants maintained by the
Company's transfer agent.
9. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of the
Company relating to the Common Stock issuable upon the exercise of this Warrant
shall survive the exercise and termination of this Warrant. All of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the Holder.
10. Descriptive Headings and Governing Law. The descriptive headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and
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<PAGE>
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 California.
11. Exchange, Assignment, Combination and Replacement of Warrants.
(a) This Warrant is exchangeable, without expense other than as
provided in this Section 11, at the option of the Holder upon the reasonable
request, presentation and surrender hereof to the Company for other Warrants of
different denominations entitling the Holder thereof to acquire in the aggregate
the same number of Warrant Shares that may be acquired hereunder.
(b) All of the covenant and provisions of this Warrant by or for the
benefit of the Holder shall be binding upon and shall inure to the benefit of,
its successors and permitted assigns hereunder. This Warrant and all rights
hereunder are transferrable and may be sold, transferred, assigned, or
hypothecated upon surrender of this Warrant to the Company, together with a duly
executed assignment in the form attached hereto as Exhibit B (the "Assignment
Form"), whereupon the Company shall, without charge, execute and deliver a new
Warrant containing the same terms and conditions of this Warrant in the name of
the assignee as named in the Assignment Form, and this Warrant shall be canceled
at that time. This Warrant, if properly assigned, may be exercised by a new
Holder without first having the new Warrant issued.
(c) This Warrant may be delivered or combined with other Warrants that
carry the same rights upon the reasonable request, presentation and surrender of
this Warrant at the office of the Company, together with a written notice signed
by the Holder, specifying the names and denominations in which new Warrants are
to be issued.
(d) The Company will execute and deliver to the Holder a new Warrant
of like tenor and date upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Warrant; provided, that (i) in the case of loss, theft, or destruction, the
Company receives a reasonably satisfactory indemnity or bond, or (ii) in the
case of mutilation, the Holder shall provide and surrender this Warrant to the
Company for cancellation.
(e) Any new Warrant executed and delivered by the Company in
substitution or replacement of this Warrant shall constitute a contractual
obligation of the Company regardless of whether this Warrant was lost, stolen,
destroyed or mutilated, and shall be enforceable by any Holder thereof.
-11-
<PAGE>
(f) The Holder shall pay all transfer and excise taxes applicable to
any issuance of new Warrants under this Section 11.
12. Fractional Shares. No fractional shares shall be issued upon exercise
of this Warrant. The Company shall, in lieu of issuing any fractional share,
round such fractional shares to the nearest whole share.
13. Best Efforts. The Company covenants that it will not, by amendment of
its Articles of Incorporation or bylaws, or through any reorganization, transfer
of assets, consolidation, merger, dissolution, reissue or sale of securities, or
any other voluntary action, avoid or seek to avoid the observation or
performance for any term of this Warrant, but will at all times in good faith
assist in carrying out all those terms and in taking all action necessary or
appropriate to protect the rights of the Holder against dilution or other
impairment.
14. Further Assurances. The Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue, duly authorized fully paid and nonassessable Warrants and Common Stock
and other securities issuable upon exercise of this Warrant from time to time
and not in violation of any pre-emptive rights.
(Signature Page Follows)
-12-
<PAGE>
[SIGNATURE PAGE - CLASS D WARRANT]
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer effective as of ________ __, 1998.
PREMIER LASER SYSTEMS, INC.
By: /s/ COLETTE COZEAN
-------------------------------------
Colette Cozean, Ph.D.
Chief Executive Officer
-13-
<PAGE>
EXHIBIT A
PREMIER LASER SYSTEMS, INC.
COMMON STOCK WARRANT
FORM OF SUBSCRIPTION AGREEMENT
(To be signed and delivered
upon exercise of Warrant)
PREMIER LASER SYSTEMS, INC.
3 Morgan
Irvine, California 92618
Attention: Secretary
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _______________ shares of Common Stock (the "Stock") of
Premier Laser Systems, Inc. (the "Company") and herewith makes payment of
__________________________ Dollars ($________) therefor and requests that the
certificates for such shares be issued in the name of, and delivered to,
______________, whose address is ____________________________________. A copy
of the Exercise Notice (as defined in the Warrant) evidencing that the Warrant
is exercisable for at least the number of shares covered by this agreement is
attached.
If the exercise of this Warrant is not covered by a registration statement
effective under the Securities Act of 1933, as amended (the "Act"), the
undersigned represents that:
(i) the undersigned is acquiring such Stock for investment for his own
account, not as nominee or agent, and not with a view to the distribution
thereof and the undersigned has not signed or otherwise arranged for the
selling, granting any participation in, or otherwise distributing the same;
(ii) the undersigned has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
undersigned's investment in the Stock;
A-1
<PAGE>
(iii) the undersigned has received all of the information the undersigned
has requested from the Company and considers necessary or appropriate for
deciding whether to purchase the shares of Stock;
(iv) the undersigned has the ability to bear the economic risks of his
prospective investment;
(v) the undersigned understands and agrees that (A) he may be unable to
readily liquidate his investment in the shares of Stock and that the shares must
be held indefinitely unless a subsequent disposition thereof is registered or
qualified under the Act and applicable state securities laws or is exempt from
such registration or qualification, and that the Company is not required to
register the same or to take any action or make such an exemption available
except to the extent provided in the within Warrant; (B) the exemption from
registration under the Act afforded by Rule 144 promulgated by the Securities
and Exchange Commission ("Rule 144") depends upon the satisfaction of various
conditions by the undersigned and the Company and that, if applicable, Rule 144
affords the basis for sales under certain circumstances in limited amounts, and
that if such exemption is utilized by the undersigned, such conditions must be
fully complied with by the undersigned and the Company, as required by Rule 144;
and (C) among the conditions required for use of Rule 144 is the availability of
current information to the public about the Company;
(vi) the undersigned either (A) is familiar with the definition of and
the undersigned is an "accredited investor" within the meaning of such term
under Rule 501 of Regulation D promulgated under the Act, or (B) is providing
representations and warranties reasonably satisfactory to the Company and its
counsel, to the effect that the sale and issuance of Stock upon exercise of such
Warrant may be made without registration under the Act or any applicable state
securities and Blue Sky laws; and
(vii) the address set forth below is the true and correct address of the
undersigned.
------------------------------------------
(Name)
------------------------------------------
(Address)
------------------------------------------
------------------------------------------
A-2
<PAGE>
If said number of shares shall not be all the shares exercisable or
purchasable under the within Warrant, a new Warrant is to be issued in the name
of the undersigned for the balance remaining of the Warrants.
DATED:
----------------------
--------------------------------------------------
(Name of holder must conform in all respects to
name of holder as specified on the face of the
Warrant or with the name of the assignee appearing
on the assignment form attached hereto.)
--------------------------------------------------
(signature)
--------------------------------------------------
(print name)
--------------------------------------------------
(print title)
A-3
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the receipt and adequacy of which are each hereby
confirmed, the undersigned,_____________________, hereby sells, assigns and
transfers unto___________________ all of the undersigned's right, title and
interest in and to an aggregate of __________ (___) warrants to purchase shares
of the Common Stock of Premier Laser Systems, Inc. (the "Corporation) standing
in the name of the undersigned on the books of the Corporation and evidenced by
that certain Class __ Warrant, dated ________ __, ___ (the "Warrant"), and does
hereby irrevocable constitute and appoint __________________ as attorney-in-fact
to effect the reissue of the Warrant as necessary and the transfer of said
Warrant on the books of the Corporation with full power of substitution upon
presentation to the Corporation of this Assignment Form together with the
Warrant.
Dated: ____________ __, ___
Signature: ___________________________
Printed Name: ___________________________
B-1
<PAGE>
EXHIBIT 99.15
THE WARRANTS AND UNDERLYING SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM OR
OTHERWISE IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF SUCH ACT. IN ADDITION, THE WARRANTS AND UNDERLYING SHARES MAY BE
TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE
WARRANT AGREEMENT DATED NOVEMBER 21, 1995, BETWEEN ISSUER AND THE INITIAL
HOLDER OF THE WARRANTS THEREIN NAMED, A COMPLETE AND CORRECT COPY OF
WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF ISSUER AND
WILL BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT
CHARGE.
SERIES C WARRANT CERTIFICATE
Evidencing Series C Warrants
to Purchase Common Stock
OPHTHALMIC IMAGING SYSTEMS
No. WC-1 250,000 Series C Warrants
This Warrant Certificate certifies that JB Oxford & Company ("JBO") or
registered assigns, is the registered holder of Series C Warrants (the
"Warrants") to purchase Common Stock, no par value ("Common Stock") of
-------- ------------
Ophthalmic Imaging Systems, a California corporation ("Issuer"). Each Warrant
------
entitles the holder, but only subject to the conditions set forth herein and in
the Warrant Agreement referred to below, to purchase from Issuer at any time
prior to 5:00 P.M., local time, on November 21, 1999, or, if such day is not a
Business Day, the next succeeding Business Day (the "Expiration Date"), one
---------------
fully paid and nonassessable share of the Common Stock of Issuer (collectively,
the "Warrant Shares") at a price (the "Exercise Price") of $0.95 per Warrant
-------------- --------------
Share payable in lawful money of the United States of America, upon surrender of
this Warrant Certificate, execution of the annexed Form of Election to Purchase
and payment of the Exercise Price at the office of Issuer at 221 Lathrop Way,
Suite I, Sacramento, CA 95818, or such other address as Issuer may specify in
writing to the registered holder of the Warrants evidenced hereby (the "Warrant
-------
Office"). The Exercise Price and number of Warrant Shares purchasable upon
- ------
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events as set forth in the Warrant Agreement referred to below.
Issuer may deem and treat the registered holder(s) of the Warrants
evidenced hereby as the absolute owner(s) thereof (notwithstanding any notation
of ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof and of any distribution to the holder(s) hereof, and for all
other purposes, and Issuer shall not be affected by any notice to the contrary.
<PAGE>
Warrant Certificates, when surrendered at the Warrant Office by the
registered holder hereof in person or by a legal representative duly authorized
in writing, may be exchanged, in the manner and subject to the limitations
provided in the Warrant Agreement, but without payment of any service charge,
for another Warrant Certificate or Warrant Certificates of like tenor evidencing
in the aggregate a like number of Warrants.
Upon due presentment for registration of transfer of this Warrant
Certificate at the Warrant Office, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued in exchange for this Warrant Certificate to the
transferee(s) and, if less than all the Warrants evidenced hereby are to be
transferred, to the registered holder hereof, subject to the limitations
provided in the Warrant Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
This Warrant Certificate is one of the Warrant Certificates referred to in
the Warrant Agreement dated November 21, 1995, between Issuer and the purchasers
set forth on the signature pages thereto (the "Warrant Agreement"). Said Warrant
-----------------
Agreement is hereby incorporated by reference in and made a part of this Warrant
Certificate and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of Issuer
and the holders.
IN WITNESS WHEREOF, Issuer has caused this Warrant Certificate to be signed
by its duly authorized officers and has caused its corporate seal to be affixed
hereunto.
OPHTHALMIC IMAGING SYSTEMS
By: /s/ STEVEN R. VERDOONER
--------------------------------------
Name: Steven R. Verdooner
-----------------------------
Title: President
----------------------------
(CORPORATE SEAL)
ATTEST:
/s/ STEVEN R. VERDOONER
- -------------------------------------
Secretary
<PAGE>
EXHIBIT 99.16
CONSENT TO TRANSFER OF WARRANT
------------------------------
THIS CONSENT TO TRANSFER OF WARRANT ("Consent") is made and entered into as
of this 25th day of February, 1998, by and between Ophthalmic Imaging Systems, a
California corporation (the "Company") and Premier Laser Systems, Inc., a
California corporation ("Premier").
R E C I T A L S:
- - - - - - - -
A. Company and JB Oxford & Company, a Utah corporation ("JBO"), are
parties to a Warrant Agreement, dated November 21, 1995 (the "Warrant
Agreement"), pursuant to which Company granted to JBO a warrant ("Warrant") to
purchase 250,000 shares of Company common stock according to the terms and
conditions found within the Warrant Agreement. A copy of the Warrant Agreement
is attached hereto and incorporated herein as "Exhibit A".
---------
B. JBO and Premier are entering into that certain Purchase Agreement (the
"Purchase Agreement") and in the form attached hereto as "Exhibit B" under which
---------
Premier will be purchasing certain securities to include the Warrant and all
rights thereunder.
C. The Warrant Agreement at Section 4(b) provides that the Company shall
register the transfer upon surrender of the certificate evidencing the Warrant,
"accompanied (if so required by it) by a written instrument or instruments of
transfer in form satisfactory to it, duly executed by the registered holder or
holders thereof or by the duly appointed legal representative thereof."
D. Premier desires (i) Company's approval of Purchase Agreement as a form
satisfactory to effect transfer of the Warrant from JBO to Premier (the
"Transfer") and (ii) Company's consent to registering the Transfer on the
Company's records, provided that the closing contemplated under the Purchase
Agreement has been effected and that a copy of the executed Purchase Agreement
and the certificate evidencing the Warrant have been delivered to the Company.
A G R E E M E N T:
- - - - - - - - -
NOW, THEREFORE, in consideration of the mutual covenants and agreement
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which the parties hereby acknowledge, the parties hereto agree as
follows:
1. Company's Covenants. Company hereby agrees:
-------------------
-1-
<PAGE>
(a) that the Company approves of the Purchase Agreement as a form
satisfactory to effect the Transfer; and
(b) that upon the occurrence of the closing contemplated under the
Purchase Agreement and upon the delivery of a copy of the executed Purchase
Agreement together with the certificate evidencing the Warrant, the Company
shall (i) register the transfer upon the warrant register maintained at the
Company; and (ii) perform and be bound by all of the terms and conditions of the
Warrant Agreement and any amendments thereto with Premier as the current Holder.
2. Authority to Execute Agreement. Each individual executing this Consent
------------------------------
on behalf of a corporation represents that he or she is duly authorized to
execute and deliver this Consent on behalf of the corporation and agrees to
deliver evidence of his or her authority to the other party upon request.
IN WITNESS WHEREOF, Company and Premier have executed this Consent as of
the date first set forth above.
COMPANY OPHTHALMIC IMAGING SYSTEMS,
a California corporation
By: /s/ STEVEN VERDOONER
-----------------------------
Name: STEVEN VERDOONER
Its: CEO
PREMIER PREMIER LASER SYSTEMS, INC.,
a California corporation
By: /s/ COLETTE COZEAN
-----------------------------
Name:
Its:
-2-
<PAGE>
EXHIBIT 99.17
================================================================================
OPHTHALMIC IMAGING SYSTEMS
and
JB OXFORD & COMPANY
and
Each of the Purchasers Set Forth on the Signature Pages Hereto
-----------------------
WARRANT AGREEMENT
-----------------------
Dated November 21, 1995
===============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINITIONS.................................................. 1
SECTION 2. REPRESENTATIONS AND WARRANTIES............................... 4
SECTION 3. ISSUANCE OF WARRANTS......................................... 5
SECTION 4. REGISTRATION, TRANSFER AND EXCHANGE OF CERTIFICATES.......... 5
SECTION 5. MUTILATED OR MISSING WARRANT CERTIFICATES.................... 6
SECTION 6. DURATION AND EXERCISE OF WARRANTS............................ 6
SECTION 7. NO FRACTIONAL SHARES......................................... 7
SECTION 8. PAYMENT OF TAXES............................................. 7
SECTION 9. WARRANT HOLDER RIGHTS; DIVIDENDS AND DISTRIBUTIONS........... 7
SECTION 10. RESERVATION AND ISSUANCE OF WARRANT SHARES................... 8
SECTION 11. OBTAINING OF GOVERNMENTAL APPROVALS AND STOCK EXCHANGE
LISTINGS.................................................... 8
SECTION 12. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES
PURCHASABLE................................................. 8
SECTION 13. NOTICES TO WARRANT HOLDERS................................... 11
SECTION 14. RESTRICTIONS ON TRANSFER..................................... 12
SECTION 15. REGISTRATION................................................. 17
SECTION 16. COVENANTS OF ISSUER.......................................... 17
SECTION 17. AMENDMENTS AND WAIVERS....................................... 17
SECTION 18. SPECIFIC PERFORMANCE......................................... 17
SECTION 19. NOTICES...................................................... 17
SECTION 20. BINDING EFFECT............................................... 18
</TABLE>
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 21. TERMINATION.................................................. 18
SECTION 22. COUNTERPARTS................................................. 18
SECTION 23. CALIFORNIA LAW............................................... 18
SECTION 24. BENEFITS OF THIS WARRANT AGREEMENT........................... 19
SECTION 25. SEVERABILITY................................................. 19
SECTION 26. NONWAIVER.................................................... 19
SECTION 27. REPURCHASE OPTION............................................ 19
SECTION 28. ENTIRE AGREEMENT............................................. 20
</TABLE>
EXHIBIT A-1 TO WARRANT AGREEMENT
EXHIBIT A-2 TO WARRANT AGREEMENT
EXHIBIT A-3 TO WARRANT AGREEMENT
ANNEX TO WARRANT CERTIFICATES
EXHIBIT B TO WARRANT AGREEMENT
<PAGE>
WARRANT AGREEMENT
-----------------
WARRANT AGREEMENT dated November 21, 1995, between OPHTHALMIC IMAGING
SYSTEMS, a California corporation ("Issuer"), JB OXFORD & COMPANY, a Utah
------
corporation ("JBO") and each of the purchasers set forth on the signature pages
hereto (the "Holders").
PREAMBLE
Issuer and each of the Holders are parties to a Purchase Agreement of an
even date herewith (the "Purchase Agreement") pursuant to which the Holders have
------------------
agreed to purchase a minimum of 789,475 and a maximum of 1,368,421 shares of
Common Stock, no par value, per share (the "Shares") in the Issuer.
Issuer and JBO are parties to an Investment Banking Agreement, dated
September 7, 1995, pursuant to which JBO has agreed to perform certain
investment banking and consulting services to the Issuer (the "Investment
Banking Agreement").
In order to induce (i) the Holders to enter into the Purchase Agreement and
to purchase the Shares, and (ii) JBO to enter into the Investment Banking
Agreement and perform the investment banking and consulting services described
herein, Issuer has agreed to execute and deliver this Warrant Agreement and to
issue to the Holders and JBO the Warrants hereinafter described to each Holder
and JBO, in the amount and type as described on Exhibit B hereto.
---------
Accordingly, in consideration of the premises, and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1.
DEFINITIONS
-----------
The following terms used herein shall have the meanings indicated below,
unless the context otherwise requires:
"Closing Price" shall mean, for any day, the closing price reported on the
-------------
Composite Transactions Tape, or if the Common Stock is not reported on the
Composite Transactions Tape, the last sale price regular way of the Common Stock
on the principal national securities exchange on which the Common Stock is
listed or admitted to trading or, in case no such sale takes place on such day,
the average of the closing bid and asked prices regular way, in either case on
such securities exchange or, if the Common Stock is not listed or admitted to
trading on such an exchange, the closing sales price, or if there is no closing
sales price, the average of the closing bid and asked prices, in the
over-the-counter market as reported by the National Association of Securities
Dealers'
<PAGE>
Automated Quotation System ("NASDAQ"), or, if not so reported, as reported by
the National Quotation Bureau, Incorporated, or any successor thereof.
"Commission" shall mean the Securities and Exchange Commission or any
----------
entity succeeding to any or all of its functions.
"Common Stock" shall mean the Common Stock, no par value, of Issuer.
------------
"Contractual Obligation" shall mean, as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Convertible Securities" shall mean any stock or other securities
----------------------
convertible into or exchangeable for shares of Common Stock.
"Moving Average Market Price Per Share" on any date shall be deemed to be:
-------------------------------------
(i) the average of the daily Closing Prices for the 10 consecutive
trading days immediately preceding such date; provided, that if such closing
--------
prices are determined with reference to National Quotation Bureau, Incorporated,
the Moving Average Market Price Per Share on any date shall be deemed to be the
average of the daily closing bid and asked prices for the 30 consecutive trading
days immediately preceding such date; or
(ii) if no such prices are furnished, the fair market value per Warrant
or Non Public Warrant Share, as the case may be, being purchased, as determined
by an independent investment banking firm mutually selected by the Issuer and
the Holders of a majority of the Warrants or Non Public Warrant Shares, as the
case may be, being purchased.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
------------
or any successor federal statute.
"Exercise Price" shall mean (i) in the case of Series A Warrants, an
--------------
exercise price of $1.25 per Warrant Share, (ii) in the case of Series B
Warrants, an exercise price of $1.75 per Warrant Share and (iii) in the case of
Series C Warrants, $.95 per Warrant Share, in each case subject to adjustment as
provided in Section 12.
"Expiration Date" shall mean (i) in the case of Series A Warrants, November
---------------
21, 1996, (ii) in the case of the Series B Warrants, November 21, 1997 and (iii)
in the case of the Series C Warrants, November 21, 1999, or, in each case, if
such day is not a Business Day, the next succeeding Business Day.
<PAGE>
"Fair Market Price Per Share" on any date shall be (i) the low trade price
---------------------------
on such date on the nationally recognized exchange or quotation bureau on which
the shares have most frequently traded in the past year, or (ii) if the shares
have not traded on a nationally recognized exchange or quotation bureau in the
last year, the Moving Average Market Price Per Share.
"Non-Public Warrant Shares" shall mean Warrant Shares that have not been
-------------------------
sold to the public and are required to bear the legend set forth in Section
14(b).
"Requirement of Law" shall mean as to any Person, the Certificate of
------------------
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Rights" shall mean any rights to subscribe for or to purchase, or any
------
options or warrants for the purchase of, shares of Common Stock or Convertible
Securities. The term "Rights" shall include, without limitation, the Warrants.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
--------------
successor statute, and the rules and regulations promulgated thereunder.
"Series A Warrant" shall mean a Series A Warrant issued pursuant to this
----------------
Warrant Agreement, a form of which is attached hereto as Exhibit A-1, entitling
-----------
the recordholder thereof to purchase from Issuer at the Warrant Office one share
(subject to adjustment as provided in Section 12) of Common Stock at the
Exercise Price at any time before 5:00 P.M., local time, on the Expiration Date.
"Series B Warrant" shall mean a Series B Warrant issued pursuant to this
----------------
Warrant Agreement, a form of which is attached hereto as Exhibit A-2, entitling
-----------
the recordholder thereof to purchase from the Issuer at the Warrant Office one
share (subject to adjustment as provided in Section 12) of Common Stock at the
Exercise Price at anytime before 5:00 P.M., local time, on the Expiration Date.
"Series C Warrant" shall mean a Series C Warrant issued pursuant to this
----------------
Warrant Agreement, a form of which is attached hereto as Exhibit A-3, entitling
-----------
the record holder thereof to purchase from Issuer at the Warrant Office one
share (subject to adjustment as provided in Section 12) of Common Stock at the
Exercise Price at any time before 5:00 P.M., local time, on the Expiration Date.
"Warrants" shall mean the Series A Warrants, the Series B Warrants and the
--------
Series C Warrants, collectively.
"Warrant Certificate" shall mean a certificate evidencing one or more
-------------------
Warrants, substantially in the form of (i) Exhibit A-1 hereto in the case of the
-----------
Series A Warrants, (ii) Exhibit A-2 hereto in the case of the Series B Warrants
-----------
and (iii) Exhibit A-3 hereto in the case of the Series C Warrants, in each case,
-----------
with such changes therein as may be required to reflect any adjustments made
pursuant to Section 12.
<PAGE>
"Warrant Office" shall mean the office or agency of Issuer at which the
--------------
Warrant Register shall be maintained and where the Warrants may be presented for
exercise, exchange, substitution and transfer, which office or agency will be
the office of Issuer and which office or agency may be changed by Issuer
pursuant to notice in writing to the Persons named in the Warrant Register as
the holders of the Warrants.
"Warrant Percentage" shall mean 26.16% in the case of the Series A
------------------
Warrants, 26.16% in the case of the Series B Warrants and 4.78% in the case of
the Series C Warrants.
"Warrant Register" shall mean the register, substantially in the form of
----------------
Exhibit B hereto, maintained by Issuer at the Warrant Office.
- ---------
"Warrant Shares" shall mean the shares of Common Stock issuable or issued
--------------
upon exercise of the Warrants, as the number of such shares may be adjusted from
time to time pursuant to Section 12.
SECTION 2.
REPRESENTATIONS AND WARRANTIES
------------------------------
Issuer hereby represents and warrants as follows:
(a) Issuer is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of California, has the corporate power
and authority to execute and deliver this Warrant Agreement and the Warrant
Certificates, to issue the Warrants and to perform its obligations under this
Warrant Agreement and the Warrant Certificates.
(b) The execution, delivery and performance by Issuer of this Warrant
Agreement and the Warrant Certificates, the issuance of the Warrants and the
issuance of the Warrant Shares upon exercise of the Warrants have been duly
authorized by all necessary corporate action and do not and will not violate, or
result in a breach of, or constitute a default under, or require any consent
under, or result in the creation of a lien upon the assets of Issuer pursuant
to, any Requirement of Law or any Contractual Obligation binding upon Issuer.
(c) This Warrant Agreement has been duly executed and delivered by Issuer
and constitutes the legal, valid and binding obligation of Issuer, enforceable
in accordance with its terms, subject to the effect of any bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and to equitable principles relating to the
availability of equitable remedies. When the Warrants and Warrant Certificates
have been issued as contemplated hereby, each of the Warrants and the Warrant
Certificates will constitute the legal, valid and binding obligation of Issuer,
enforceable in accordance with its terms, subject to the effect of any
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and to equitable principles relating to
the availability of equitable remedies.
<PAGE>
(d) The Warrant Shares, when issued upon exercise of the Warrants in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable and free of preemptive rights.
(e) As of the date hereof (i) Issuer's authorized capital stock consists of
20,000,000 shares of Common Stock, of which 2,243,533 (including 1,368,421
shares issued pursuant to the Purchase Agreement) shares are issued and
outstanding, and 20,000,000 shares of Preferred Stock, no par value, no shares
of which are issued and outstanding, (ii) the Warrant Shares issuable to (a)
the Holders upon exercise of the Series A Warrants would, if issued on the date
hereof, represent 26.16%, (b) the Holders upon exercise of the Series B Warrants
would, if issued on the date hereof, represent 26.16%, and (c) JBO upon exercise
of the Series C Warrants would, if issued on the date hereof, represent 4.78%
of the sum of (A) 2,243,533 shares, being the number of shares of Common Stock
that will be outstanding at the time of Closing, plus (B) 2,986,842 shares,
----
being the number of Warrant Shares, (iii) except for 744,171 (a) shares of
Common Stock issuable upon exercise of options outstanding under the Company's
stock option plans, (b) 556,496 shares of Common Stock reserved for issuance
under the Company's stock option plans and (c) approximately 140,835 shares of
Common Stock reserved for issue upon exercise of warrants outstanding prior to
the date of the offering, there are no outstanding Rights or Convertible
Securities or other rights to obtain any shares of Common Stock or any other
security convertible into or exchangeable for shares of Common Stock or
Warrants, and (iv) 2,986,842 authorized shares of Common Stock have been
reserved for issuance upon the exercise of the Warrants.
SECTION 3.
ISSUANCE OF WARRANTS
--------------------
Issuer hereby agrees to issue and deliver to (i) the Holders on the Closing
Series A Warrants and Series B Warrants, in each case evidencing rights to
purchase up to 1,368,421 Warrant Shares and (ii) JBO on the Closing Date Series
C Warrants evidencing rights to purchase 250,000 Warrant Shares, in each case
subject to adjustment as provided in Section 12, at any time on or before 5:00
P.M., local time, on the Expiration Date at a price per share equal to the
Exercise Price. On the Closing Date, simultaneously with the purchase of the
Shares by the Holders pursuant to the Purchase Agreement, Issuer shall deliver
to the Holders and JBO one or more Warrant Certificates evidencing the Warrants
in the amounts and type described on Exhibit B hereto.
---------
SECTION 4.
REGISTRATION, TRANSFER AND EXCHANGE OF CERTIFICATES
---------------------------------------------------
(a) Issuer shall maintain at the Warrant Office the Warrant Register for
registration of the Warrants and Warrant Certificates and transfers thereof. On
the Closing Date, Issuer shall register the outstanding Warrants and Warrant
Certificates in the names and amounts set forth on Exhibit B hereto. Issuer may
deem and treat the registered holder(s) of the Warrant Certificates as the
absolute owner(s) thereof and the Warrants represented thereby (notwithstanding
any notation of ownership or other writing on the Warrant Certificates made by
any Person) for the purpose of any exercise thereof or any distribution to the
holder(s) thereof, and for all other purposes, and Issuer shall not be affected
by any notice to the contrary.
-5-
<PAGE>
(b) Subject to Section 14, Issuer shall register the transfer of any
outstanding Warrants in the Warrant Register upon surrender of the Warrant
Certificate(s) evidencing such Warrants to Issuer at the Warrant Office,
accompanied (if so required by it) by a written instrument or instruments of
transfer in form satisfactory to it, duly executed by the registered holder or
holders thereof or by the duly appointed legal representative thereof. Upon any
such registration of transfer, new Warrant Certificate(s) evidencing such
transferred warrants shall be issued to the transferee(s) and the surrendered
Warrant Certificate(s) shall be canceled. If less than all the warrants
evidenced by Warrant Certificate(s) surrendered for transfer are to be
transferred, new Warrant Certificate(s) shall be issued to the holder
surrendering such Warrant Certificate(s) evidencing such remaining number of
Warrants.
(c) Warrant Certificates may be exchanged at the option of the holder(s)
thereof, when surrendered to Issuer at the Warrant Office, for another Warrant
Certificate of like tenor and representing in the aggregate a like number of
Warrants. Warrant Certificates surrendered for exchange shall be canceled.
(d) No charge shall be made for any such transfer or exchange except for
any tax or other governmental charge imposed in connection therewith. Except as
provided in Sections 14(b) and (c), each Warrant Certificate issued upon
transfer or exchange shall bear the legend set forth in Section 14(b) if the
Warrant Certificate presented for transfer or exchange bore such legend.
SECTION 5.
MUTILATED OR MISSING WARRANT CERTIFICATES
-----------------------------------------
If any Warrant Certificate shall be mutilated, lost, stolen or destroyed,
Issuer shall issue, in exchange and substitution for and upon cancellation of
the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent number of Warrants, but only upon receipt
of evidence satisfactory to Issuer of such loss, theft or destruction of such
Warrant Certificate and, if requested, indemnity satisfactory to it. No service
charge shall be made for any such substitution, but all expenses and reasonable
charges associated with procuring such indemnity and all stamp, tax and other
governmental duties that may be imposed in relation thereto shall be borne by
the holder of such Warrant Certificate. Each Warrant Certificate issued in any
such substitution shall bear the legend set forth in Section 14(b) if the
Warrant Certificate for which such substitution was made bore such legend.
SECTION 6.
DURATION AND EXERCISE OF WARRANTS
---------------------------------
(a) The Warrants evidenced by a Warrant Certificate shall be exercisable
in whole or in part by the registered holder thereof on any Business Day at any
time on or after the date hereof and prior to 5:00 P.M., local time, on the
Expiration Date.
-6-
<PAGE>
(b) Subject to the provisions of this Warrant Agreement, upon
presentation of the Warrant Certificate evidencing the Warrants to be exercised,
with the form of election to purchase on the reverse thereof duly completed and
signed by the registered holder or holders thereof, to the issuer at Warrant
Office, and upon payment of the aggregate Exercise Price for the number of
Warrant Shares in respect of which such Warrants are being exercised in lawful
money of the United States of America, Issuer shall issue and cause to be
delivered to or upon the written order of the registered holder(s) of such
Warrants and in such name or names as such registered holder(s) may designate, a
certificate for the Warrant Share or Warrant Shares issued upon such exercise of
such Warrants. Any Person(s) so designated to be named therein shall be deemed
to have become holder(s) of record of such Warrant Share or Warrant Shares as of
the date of exercise of such Warrants.
(c) If less than all of the Warrants evidenced by a Warrant Certificate
are exercised at any time, a new Warrant Certificate or Certificates shall be
issued for the remaining number of Warrants evidenced by such Warrant
Certificate. Each new Warrant Certificate so issued shall bear the legend set
forth in Section 14(b) if the Warrant Certificate presented in connection with
partial exercise thereof bore such legend. All Warrant Certificates surrendered
upon exercise of warrants shall be canceled.
SECTION 7.
NO FRACTIONAL SHARES
--------------------
Issuer shall not be required to issue fractional shares of Common Stock
upon exercise of the Warrants but may pay for any such fraction of a share an
amount in cash equal to the Moving Average Market Price Per Share of such share
multiplied by such fraction.
SECTION 8.
PAYMENT OF TAXES
----------------
Issuer will pay all taxes (other than any applicable income or similar
taxes payable by the holders of the Warrants or Warrant Shares) attributable to
the initial issuance of Warrant Shares upon the exercise of the Warrants;
provided that Issuer shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issue of any Warrant Certificate or
any Certificate for Warrant Shares in a name other than that of the registered
holder of a Warrant Certificate surrendered upon the exercise of a Warrant, and
Issuer shall not be required to issue or deliver such certificates unless or
until the person or persons requesting the issuance thereof shall have paid to
Issuer the amount of such tax or shall have established to the satisfaction of
Issuer that such tax has been paid.
SECTION 9.
WARRANT HOLDER RIGHTS: DIVIDENDS AND DISTRIBUTIONS
--------------------------------------------------
The Warrants shall not (prior to exercise hereof) confer upon the holders
thereof the right to vote as shareholders of Issuer, the right to receive
dividends or distributions of Issuer if declared and paid or any other right as
shareholders of Issuer.
-7-
<PAGE>
SECTION 10.
RESERVATION AND ISSUANCE OF WARRANT SHARES
------------------------------------------
(a) Issuer will at all times have authorized, and reserve and keep
available, free from preemptive rights, for the purpose of enabling it to
satisfy any obligation to issue Warrant shares upon the exercise of the
Warrants, the number of shares of Common Stock deliverable upon exercise of all
outstanding Warrants.
(b) Before taking any action which would cause an adjustment pursuant to
Section 12 hereof reducing the Exercise Price below the then par value (if any)
of the Warrant Shares issuable upon exercise of the Warrants, Issuer will take
any corporate action which may be necessary in order that Issuer may validly and
legally issue fully paid and nonassessable Warrant Shares at the Exercise Price
as so adjusted.
(c) Issuer covenants that all Warrant Shares will, upon issuance in
accordance with the terms of this Warrant Agreement, be fully paid and
nonassessable and free from all taxes with respect to the issuance thereof and
from all liens, charges and security interests created (whether by affirmative
action or inaction) by Issuer.
SECTION 11.
OBTAINING OF GOVERNMENTAL APPROVALS
-----------------------------------
AND STOCK EXCHANGE LISTINGS
---------------------------
Issuer will, at its own expense, (a) obtain and keep effective any and all
permits, consents and approvals of Governmental Authorities which may from time
to time be required of Issuer in order to satisfy its obligations hereunder, and
(b) take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
each securities exchange, if any, on which the Common Stock is then listed.
SECTION 12.
ADJUSTMENT OF EXERCISE PRICE AND
--------------------------------
NUMBER OF WARRANT SHARES PURCHASABLE
------------------------------------
Prior to the Expiration Date, the Exercise Price and the number of Warrant
Shares purchasable upon the exercise of each Warrant are subject to adjustment
from time to time upon the occurrence of any of the events enumerated in this
Section 12.
(a) In the event that Issuer shall at any time after the date of this
Agreement (i) declare a dividend on Common Stock in shares of Common Stock or
other securities of Issuer, (ii) split or subdivide the outstanding Common
Stock, (iii) combine the outstanding Common Stock into a smaller number of
shares, or (iv) issue by reclassification of its Common Stock any shares or
other securities of Issuer, then, in each such event, the number of Warrant
Shares purchasable upon exercise of each Warrant immediately prior thereto shall
be adjusted so that the holder shall be entitled to receive the kind and number
of such shares or other securities of Issuer which the holder
-8-
<PAGE>
would have owned or have been entitled to receive after the happening of any of
the events described above had such Warrant been exercised immediately prior to
the happening of such event (or any record date with respect thereto). Such
adjustment shall be made whenever any of the events listed above shall occur. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of the event retroactive to the record
date, if any, for the event.
(b) (i) In the event that Issuer shall at any time after the date of
this Agreement issue any shares of Common Stock or other securities convertible
into shares of Common Stock (excluding shares of Common Stock issued upon
exercise of the Warrants) at a price below the then applicable Exercise Price of
the Warrants or Fair Market Price Per Share, then in each such event (an
"Adjustment Event"), the number of Warrant Shares purchasable upon exercise of
----------------
each Warrant immediately prior thereto shall be adjusted so that the holder of
any Series A Warrant, Series B Warrant or Series C Warrant, as the case may be,
exercised shall be entitled to receive the number of Warrant Shares (the
"Adjusted Number") determined by multiplying the number of Warrant Shares
---------------
purchasable upon exercise of such Warrants immediately prior thereto by a
fraction determined by multiplying the number of Warrant Shares of such series
purchasable upon exercise of such Warrants immediately prior thereto by a
fraction determined by dividing (x) a number (the "Aggregate Adjusted Number")
-------------------------
equal to the Warrant Percentage of the sum of (A) the number of shares of Common
Stock outstanding immediately following such Adjustment Event (assuming the
exercise of all outstanding Warrants), plus (B) the Aggregate Adjusted Number of
----
Warrant Shares by (y) the number of unexercised Warrants of such series
--
outstanding at the time such calculation is made; provided, however, that no
-------- -------
such adjustment shall be made for the issuance of shares of Common Stock under
the circumstances contemplated in Section 12(f) hereof. Notwithstanding the
foregoing, the issue of Common Stock pursuant to exercise of options granted
under the Company's stock option plans or pursuant to exercise of warrants
existing on the date hereof shall not be an Adjustment Event.
(ii) In the event that at any time after the date of this Agreement,
Issuer shall in any manner grant any Rights or issue or sell any Convertible
Securities, then the total maximum number of shares of Common Stock issuable
pursuant to such Rights or upon conversion or exchange of the total maximum
amount of such Convertible Securities shall (as of the later to occur of (x) the
date of the granting of such Rights or issuance or sale of such Convertible
Securities or (y) the date such rights become exercisable or such Convertible
Securities become convertible) be deemed to be outstanding and to have been
issued or sold for purposes of paragraph (b) (i) hereof; provided, that, except
--------
as provided in the following proviso, no further adjustment of the number of
Warrant Shares issuable upon exercise of the Warrants shall be made upon the
actual issue of shares of Common Stock so deemed to have been issued, and
further provided, that, upon the expiration or termination of any unexercised
- ----------------
Rights or conversion or exchange privileges for which any adjustment was made
pursuant to paragraph (b) (i) and this paragraph (b) (ii), then the number of
Warrant Shares issuable upon exercise of the Warrants shall be readjusted, and
shall thereafter be such number as would have prevailed had the number of shares
of Common Stock issuable upon exercise of the Warrants been originally adjusted
(or had the original adjustment not been required, as the case may be) on the
basis of the shares of Common Stock, if any, actually issued or sold upon the
exercise of such Rights or conversion or exchange privileges; provided, however,
-------- -------
that no such readjustment shall have the effect of decreasing the number of
Warrant Shares issuable upon exercise of the Warrants by an amount in
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<PAGE>
excess of the amount of the adjustment initially made for the issuance, sale or
grant of such Rights or Convertible Securities.
(c) No adjustment in the number of Warrant Shares shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the aggregate number of Warrant Shares purchasable upon exercise of all
Warrants; provided that any adjustments which by reason of this Section 12(c)
--------
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment; provided, however, that notwithstanding the
--------
foregoing, all such adjustments shall be made no later than three years from the
date of the first event that would have required an adjustment but for this
paragraph. All calculations under this Section 12 shall be made to the nearest
cent or to the nearest hundredth of a share, as the case may be.
(d) If at any time, as a result of an adjustment made pursuant to this
Section 12, the holder of any Warrant thereafter exercised shall become entitled
to receive any shares of Issuer other than shares of Common Stock, thereafter
the number of such other shares so receivable upon exercise of any Warrant shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Warrant Shares
contained in this Section 12, and the provisions of this Agreement with respect
to the Warrant Shares shall apply on like terms to such other shares.
(e) Whenever the number of Warrant Shares purchasable upon the exercise
of a Warrant is adjusted, the Exercise Price per Warrant Share payable upon
exercise of such Warrant shall be adjusted by multiplying such Exercise Price
immediately prior to such adjustment by a fraction, the numerator of which shall
be the number of Warrant Shares purchasable upon the exercise of such Warrant
immediately prior to such adjustment, and the denominator of which shall be the
number of Warrant Shares purchasable immediately after such adjustment.
(f) In the event of any capital reorganization of Issuer, or of any
reclassification of the Common Stock (other than a reclassification referred to
in paragraph (a) (iv) above), or in case of the consolidation of Issuer with or
the merger of Issuer with or into any other corporation (other than a
consolidation or merger in which the Company is the surviving corporation) or of
the sale the properties and assets of Issuer as, or substantially as, an
entirety to any other corporation, each Warrant shall, after such capital
reorganization, reclassification of Common Stock, consolidation, merger or sale,
and in lieu of being exercisable for Warrant Shares, be exercisable, upon the
terms and conditions specified in this Warrant Agreement, for the number of
shares of stock or other securities or assets to which holder of the number of
Warrant Shares purchasable upon exercisable of such Warrant immediately prior to
such capital organization, reclassification of Common Stock, consolidation,
merger or sale would have been entitled upon such capital organization,
reclassification of Common Stock, consolidation, merger or sale; and in any such
case, if necessary, the provisions set forth in this Section 12 with respect to
the rights thereafter of the holders of the Warrants shall be appropriately
adjusted so as to be applicable, as nearly as they may reasonably be, to any
shares of stock or other securities or assets thereafter deliverable on the
exercise of the Warrants. Issuer shall not effect any such consolidation, merger
or sale, unless prior to or simultaneously with the
-10-
<PAGE>
consummation thereof, the successor corporation (if other than Issuer) resulting
from such consolidation or merger or the corporation purchasing such assets or
the appropriate corporation or entity shall assume, by written instrument, the
obligation to deliver to holder of each Warrant the shares of stock, securities
or assets to which, in accordance with the foregoing provisions, such holder may
be entitled and all other obligations of Issuer under this Warrant Agreement.
The provisions of this paragraph (f) shall apply to successive reorganizations,
reclassification, consolidations, mergers and sales.
(g) Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon exercise of the Warrants, Warrant Certificates
theretofore or thereafter issued may continue to express the same Exercise Price
per share and number and kind of shares as are stated on the Warrant
Certificates initially issuable pursuant to this Agreement.
(h) If any question shall at any time arise with respect to the adjusted
Exercise Price or Warrant Shares issuable upon exercise, such question shall be
determined by the independent auditors of Issuer and such determination shall be
binding upon Issuer and the holders of the Warrants and Warrant Shares.
(i) In case any event shall occur as to which the other provisions of this
Section 12 are not strictly applicable the failure to make any adjustment would
result in an unfair enlargement or dilution of the purchase rights represented
by the Warrants in accordance with the essential intent and principles hereof,
then, in each such case, the independent auditors of Issuer shall give its
opinion as to the adjustment, if any, on a basis consistent with the essential
intent and principles established in this Section 12, necessary to preserve,
without enlargement or dilution, the purchase rights presented by the Warrants.
Upon receipt of such opinion, Issuer shall promptly mail a copy thereof to the
registered holders of the Warrants and shall make the adjustment described
therein.
SECTION 13.
NOTICES TO WARRANT HOLDERS
--------------------------
Upon any adjustment of the Exercise Price or number of Warrant Shares
issuable upon exercise pursuant to Section 12, Issuer shall promptly, but in any
event within 10 days thereafter, cause to be given to each of the registered
holders of the Warrants, at its address appearing on the Warrant Register by
first-class mail, postage prepaid, a certificate signed by its chief financial
officer setting forth the Exercise Price as so adjusted and/or number of Warrant
Shares issuable upon the exercise of each Warrant as so adjusted and describing
in reasonable detail the facts accounting for such adjustment and the method of
calculation used. Where appropriate, such certificate may be given in advance
and included as a part of the notice required to be mailed under the other
provisions of this Section 13.
In the event:
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<PAGE>
(a) Issuer shall authorize the grant of Rights or the offer or issuance of
Common Stock or Convertible Securities to holders of Common Stock; or
(b) Issuer shall declare a dividend or other distribution to all holders
of Common Stock payable in evidences of its indebtedness, securities, cash or
assets; or
(c) of any consolidation or merger to which Issuer is a party and for which
approval of any shareholders of Issuer is required, or of the conveyance or
transfer of the properties and assets of Issuer substantially as an entirety, or
of any capital reorganization or reclassification or change of the Common Stock
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination); or
(d) of the voluntary or involuntary dissolution, liquidation or winding up
of Issuer; or
(e) Issuer shall authorize any other action which would require an
adjustment of the Exercise Price or number of Warrant Shares issuable upon
exercise pursuant to Section 12;
then Issuer shall cause to be given to each of the registered holders of the
Warrants at its address appearing on the Warrant Register, at least 12 business
days prior to the applicable record date hereinafter specified (or as
expeditiously as possible after the occurrence of any involuntary dissolution,
liquidation or winding up referred to in clause (d) above), by first-class mail,
postage prepaid, a written notice stating (i) the date as of which the holders
of record of Common Stock to be entitled to receive any such rights, warrants or
distribution are to be determined, or (ii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective (or has become effective, in the case of any
involuntary dissolution, liquidation or winding up), and the date as of which it
is expected that holders of record of Common Stock shall be entitled to exchange
their shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up. The failure to give the notice required by this
Section 13 or any defect therein shall not affect the legality or validity any
distribution, right, warrant, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up, or vote upon any action.
SECTION 14.
RESTRICTIONS ON TRANSFER
------------------------
(a) Each Holder and JBO represents (and upon any exercise of the Warrants
represents) that:
(i) it is an accredited investor as that term is defined in the
Securities Act if such investor is a domiciliary or citizen of the United
States, or
-12-
<PAGE>
(ii) if the investor is not a domiciliary or citizen of the United
states, that the Offer or sale of the Units and the Common Stock issuable upon
exercise of the Warrants will only be made (i) pursuant to an exemption from the
registration requirements of the Securities Act, or (ii) if the offer is not
made to a person in the United States, and either (A) at time the buy order is
originated, the buyer is outside the United States, or the seller and any person
acting on its behalf reasonably believe that the buyer is outside the United
States, or (B) the transaction is executed in, on or through the facilities of a
designated offshore securities market outside the United States, as specified in
Rule 902(a) of Regulation S, and neither the seller nor any person acting on its
behalf knows that the transaction has been pre-arranged with a buyer in the
United States. In addition, such sellers will not (and no one acting on their
behalf will) solicit purchasers in the United States or otherwise engage in
selling efforts in the United States.
Such purchasers of the Units will resell the securities comprising the
Units only (i) in accordance with Rule 904 of Regulation S under the Securities
Act, (ii) pursuant to an exemption from registration under the Securities Act,
or (iii) in a transaction registered under the Securities Act. Additionally,
prior to forty days after the closing of the offering (the "Restricted Period"),
the securities will not be offered or sold in the United States or to U.S.
persons as defined by Rule 902(o) of the Regulation S, other than to
distributors, unless the securities are registered under the Securities Act, or
an exemption from the registration requirements of the Securities Act is
available. In addition, a holder of the securities who is a distributor, dealer,
subunderwriter or other securities professional, will not prior to the
expiration of the restricted period resell the securities to a U.S. person as
defined by Rule 902(o) of Regulation S unless the securities are registered
under the Securities Act, or an exemption from registration under the Act is
available.
(iii) it will be acquiring the Warrant Shares for its own account, for
investment and not with a view to any distribution public offering within the
meaning of the Securities Act but subject to any requirement of law that the
disposition of its property shall at all times be within its control.
(b) Each Holder and JBO acknowledges that the Warrants and the Non Public
Warrant Shares issuable upon exercise thereof have not been registered and will
not be registered except as otherwise provided herein under the Securities Act
and agrees that it will not sell or otherwise transfer any of its Warrants or
Non Public Warrant Shares except upon the terms and conditions specified herein.
(c) (i) Each Holder and JBO agrees, and each subsequent transferee
described in paragraph (ii) below shall agree, that it will not transfer any
Warrants or Non Public Warrant Shares except:
(A) pursuant to Rule 144 under the Securities Act;
(B) pursuant to Rule 144A under the Securities Act;
(C) pursuant to Regulation S under the Securities Act;
-13-
<PAGE>
(D) pursuant to any other exemption from, or otherwise in a
transaction not subject to, the registration requirements
of the Securities Act (as confirmed in an opinion of
counsel to the transferor to the effect that the proposed
transfer may be effected without registration under the
Securities Act);
(E) outside the United States in compliance with Rule 904
under the Securities Act;
(F) a transfer by such Holder or JBO, as the case may be, to
any Affiliate or wholly owned Subsidiary of such Holder or
JBO, as the case may be, (including any partnership or
limited partnership of which such Holder or JBO, as the
case may be, or any Affiliate thereof is a general
partner); or
(G) pursuant to an effective registration statement under the
Securities Act.
(ii) Each Warrant Certificate and each certificate for the Warrant
Shares issued to a Holder or JBO or to a subsequent transferee pursuant to
Section 14(c) (i) (B), (D) (unless the legal opinion delivered in connection
therewith is to the effect that the first paragraph of such legend is not
required in order to ensure compliance with the Securities Act) or (E) shall
include a legend in substantially the following form:
THE [WARRANTS AND UNDERLYING SHARES] [SHARES] REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, (THE "ACT") AND MAY NOT BE SOLD OR TRANSFERRED
EXCEPT PURSUANT TO AN EXEMPTION FROM, OR OTHERWISE IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF SUCH
ACT. IN ADDITION, THE [WARRANTS AND UNDERLYING SHARES] [SHARES]
MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS
SPECIFIED IN THE WARRANT AGREEMENT, DATED NOVEMBER 21, 1995,
BETWEEN ISSUER AND THE INITIAL HOLDER OF THE WARRANTS NAMED
THEREIN, A COMPLETE AND CORRECT COPY OF WHICH IS AVAILABLE FOR
INSPECTION AT THE PRINCIPAL OFFICE OF ISSUER AND WILL BE FURNISHED
TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE. THIS
WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON
UNLESS REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
(d) Each Holder and JBO agrees, and each subsequent transferee described
in paragraph (c)(ii) above shall agree, that it will give each person to whom it
transfers any Warrants or Warrant Shares notice of any restrictions on transfer
thereof.
-14-
<PAGE>
(e) The restrictions set forth in Section 14(c) shall terminate and cease
to be effective with respect to any Warrants or Warrant Shares registered under
the Securities Act or transferred pursuant to clause (A), (C) or (G) of Section
14(c)(i). Whenever such restrictions shall so terminate the holder of such
Warrants and/or Warrant Shares shall be entitled to receive from Issuer, without
expense (other than transfer taxes, if any), Warrant Certificates or
certificates for such Warrant Shares not bearing the legend set forth in Section
14(c) at which time Issuer will rescind any transfer restrictions relating
thereto.
(f) With a view to making available to each Holder and JBO and subsequent
holders of the Non Public Warrant Shares the benefits of certain rules and
regulations of the Commission (including, without limitation, Rule 144 and Rule
144A under the Securities Act) which may permit the sale of Non Public Warrant
Shares without registration, Issuer agrees to take any and all such actions as
may be required of it by applicable law, rule or regulation to make available to
each Holder and JBO and such subsequent holders such benefits, including without
limitation, to:
(i) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act or any successor
provision thereto;
(ii) so long as Rule 144A is available to any Holder or JBO and,
such holders, make and keep available the information specified in Rule
144A(d)(4) under the Securities Act or any successor provision thereto;
(iii) file with the Commission in a timely manner all reports and
other documents required of Issuer under the Securities Act and the Exchange
Act; and
(iv) so long as any Holder, JBO or any other holder owns any
Warrants or Non Public Warrant Shares, furnish to each such holder forthwith
upon request a written statement by Issuer as to its compliance with the
information or reporting requirements of Rule 144 and Rule 144A or any successor
provision thereto, and of the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of Issuer filed with the Commission, and
such other reports and documents of Issuer and other information in the
possession of or reasonably obtainable by Issuer as such holder may reasonably
request in availing itself of any rule or regulation of the Commission allowing
such holder to sell any such securities without registration.
(g) Notwithstanding the foregoing, subject to the completeness and
accuracy of each Purchaser's representations and warranties in the Purchase
Agreement, upon the exercise of any Warrant by a person who is a non-U.S.
Person, the Company shall instruct the Company's transfer agent to issue stock
certificates with only the following restrictive legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED TO A NON-
U.S. PERSON AND ARE RESTRICTED AND MAY NOT BE SOLD OR TRANSFERRED
EXCEPT IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT OF
1933, AS AMENDED,
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<PAGE>
(THE "ACT"), OR AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM.
The Company shall instruct the Company's transfer agent to issue stock
certificates in the name of Purchaser (or its nominee (being a non-U.S. Person)
or such non-U.S. Persons as may be designated by Purchaser prior to the Closing)
and in such denominations to be specified at exercise representing the number of
shares of Common Stock issuable upon such exercise, as applicable. If the stock
certificates are issued to Purchaser upon exercise, the Company will after forty
(40) days, if requested in writing by the Purchaser and Purchaser submits the
original stock certificate bearing the above legend for cancellation and
reissue, issue a new stock certificate bearing no legend whatsoever; provided,
however, that if the nominee or other non-U.S. Person in whose name a
certificate or certificates for shares are requested to be restricted is other
than Purchaser, or if there has been a regulatory development including, but not
limited to, an amendment or proposed amendment of Regulation S, or any
"no-action" or interpretive guidance whether oral or written from the Securities
and Exchange Commission, which call into question the ability of the Company to
issue to Purchaser the Warrant Shares without registration or a restrictive
legend under the Securities Act, the Company may require prior to issuance of a
certificate in the name of Purchaser or such other person, that it receive
reasonable transfer documentation including an opinion of counsel in the form
attached to the Purchase Agreement as Exhibit G that the issuance of
certificates without restrictive legend and/or in such other name does not and
will not cause a violation of the Securities Act; and provided further that if
reasonable transfer documentation is provided, the Company warrants that no
instructions other than these instructions will be given to the transfer agent
and that the shares into which the Warrant are exercisable will not be subject
to any transfer limitations other than those imposed by applicable securities
laws. Nothing in this section 14(g), however, shall affect in any way
Purchaser's or nominee's obligations and agreement to comply with all applicable
securities laws upon resale of the Securities.
(h) If, solely as a result of the Company's wrongful refusal to honor
Purchaser's instruction in willful contravention of this Agreement, or wrongful
refusal or failure to transfer or issue the Warrant Shares in willful
contravention of this Agreement, any Purchaser suffers any loss, the Company
shall reimburse Purchaser for such loss unless Purchaser shall have breached any
of its representations, warranties or covenants set forth in this Agreement or
otherwise taken or omitted to take actions, which actions or omissions
constitute gross negligence bad faith or willful misconduct.
(i) Each Holder and JBO agrees, and each subsequent transferee described
in paragraph (c)(ii) above shall agree, that, upon exercise of Warrants it
shall give (i) written certification that it is not a U.S. person and that the
Warrant is not being exercised on behalf of a U.S. person or (ii) written
opinion of counsel to the effect that the warrant and the securities delivered
upon exercise thereof have been registered under the Act or are exempt from
registration thereunder.
Warrants may not be exercised within the United States and the Warrant
Shares may not be delivered within the United States upon exercise, other than
in offerings deemed to meet the definition of "offshore transaction" pursuant to
paragraph (i)(3) of Rule 902 under the Securities Act, unless registered under
the Securities Act or an exemption from such registration is available.
-16-
<PAGE>
SECTION 15.
REGISTRATION
------------
The holders of the Warrant Shares shall be entitled to the registration
rights described in the Registration Rights Agreement, attached as Exhibit A to
the Shareholders' Agreement.
SECTION 16.
COVENANTS OF ISSUER
-------------------
(a) Issuer shall not amend its Articles of Incorporation or By-Laws so as
to adversely affect the powers or special rights of the holders of Warrant
Shares, except with the consent of the holders of a majority of the Warrants
and/or Non Public Warrant Shares.
(b) Issuer shall allow the holders of Warrants and Non Public Warrant
Shares, acting together, to appoint one representative to attend meetings of the
board of directors in a purely observatory capacity with no rights to vote or
participate in any manner. Issuer shall give such representative reasonable
advance notice, under the circumstances, of all meetings of the board of
directors in accordance with the principles of Section 19 hereof unless such
notice would be impracticable, in which case reasonable alternative notice will
be given.
SECTION 17.
AMENDMENTS AND WAIVERS
----------------------
Any provision of this Warrant Agreement may be amended, supplemented,
waived, discharged or terminated by a written instrument signed by Issuer and
the holders of a majority of the outstanding Warrants (or in the case of
Sections 14 through 25, the holders of a majority of the outstanding Warrants
and Non Public Warrant Shares); provided that the Exercise Price may not be
--------
increased, the number of Warrant Shares issuable upon exercise of the Warrants
may not be reduced (except pursuant to Section 12(b)(ii) hereof), the Expiration
Date may not be changed to an earlier date and this Section may not be amended
except with the consent of the holders of all outstanding Warrants and/or Non
Public Warrant Shares, as the case may be.
SECTION 18.
SPECIFIC PERFORMANCE
--------------------
The holders of the Warrants and/or Non Public Warrant Shares shall have the
right to specific performance by Issuer of the provisions of this Warrant
Agreement. Issuer hereby irrevocably waives, to the extent that it may do so
under applicable law, any defense based on the adequacy of a remedy at law which
may be asserted as a bar to the remedy of specific performance in any action
brought against Issuer for specific performance of this Warrant Agreement by the
holders of the Warrants and/or Non Public Warrant Shares.
SECTION 19.
NOTICES
-------
(a) Any notice or demand to be given or made by the holders to or on
Issuer pursuant to this Warrant Agreement shall be sufficiently given or made if
sent by mail, first-class or registered, postage prepaid, addressed to Issuer at
the Warrant Office.
17
<PAGE>
(b) Any notice to be given by Issuer to the holders of the Warrants or
the Warrant Shares shall be sufficiently given if sent by first-class mail,
postage prepaid, addressed to such holder as such holder's name and address
shall appear on the Warrant Register or the Common Stock registry of Issuer, as
the case may be.
SECTION 20.
BINDING EFFECT
--------------
This Warrant Agreement shall be binding upon and inure to the sole and
exclusive benefit of Issuer, its successors and assigns, each Holder, JBO and
the registered holders from time to time of the Warrants and the Warrant Shares.
SECTION 21.
TERMINATION
-----------
This Warrant Agreement shall terminate and be of no further force and
effect at the close of business on the Expiration Date or the date on which none
of the Warrants shall be outstanding (whether by reason of the exercise thereof
or the redemption thereof by Issuer), except that the provisions of Sections 15
and 16(h) shall continue in full force and effect after such termination.
SECTION 22.
COUNTERPARTS
------------
This Warrant Agreement may be executed in one or more separate counterparts
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument.
SECTION 23.
CALIFORNIA LAW
--------------
THIS WARRANT AGREEMENT AND EACH WARRANT CERTIFICATE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, AS APPLIED
TO AGREEMENTS MADE AND PERFORMED WITHIN THE STATE OF CALIFORNIA, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. ISSUER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY CALIFORNIA STATE COURT SITTING IN THE COUNTY OF LOS ANGELES
OR ANY FEDERAL COURT SITTING IN THE COUNTY OF LOS ANGELES IN RESPECT OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE WARRANT AGREEMENT
OR THE WARRANT CERTIFICATES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. ISSUER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL
-18-
<PAGE>
BY JURY AND ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY
CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN ANY INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
ANY PURCHASER TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ISSUER IN ANY OTHER JURISDICTION.
SECTION 24.
BENEFITS OF THIS WARRANT AGREEMENT
----------------------------------
Nothing in this Warrant Agreement shall be construed to give to any Person
other than Issuer and the registered holders of the Warrants and the Warrant
Shares any legal or equitable right, remedy or claim under this Warrant
Agreement.
SECTION 25.
SEVERABILITY
------------
Any provision of this Warrant Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Warrant
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 26.
NONWAIVER
---------
No course of dealing or any delay or failure to exercise any right, power
or remedy hereunder on the part of a holder of a Warrant shall operate as a
waiver of or otherwise prejudice such holder's rights, powers or remedies
hereunder.
SECTION 27.
REPURCHASE OPTION
-----------------
(a) At any time after May 21, 1996, the Issuer shall have the right to
repurchase the Series A Warrants at a price of $0.10 per Series A Warrant
("Repurchase Price"); provided, that, the Closing Price per share of Common
--------- -----
Stock for each of the immediately preceding twenty consecutive trading days was
greater than $2.25 per share.
(b) At any time after May 21, 1997, the Issuer shall have the right to
repurchase the Series B Warrants at a price of $0.10 per Series B Warrant
("Repurchase Price"); provided, that, the Closing Price per share of Common
--------- -----
Stock for each of the immediately preceding twenty consecutive trading days was
greater than $2.50 per share.
-19-
<PAGE>
(c) The Issuer may repurchase such Warrants on a date designated in
writing by the Issuer to each holder (the "Call Closing Date"). The Call Closing
Date shall be no later than 30 days after giving of such written notice.
(d) On the Call Closing Date, the Holders shall surrender their Warrants
to the Issuer without representation or warranty (other than that the holder
has good and valid title thereto free and clear of liens, claims, encumbrances
and restrictions of any kind), against payment therefor by (at the option of the
Holder) (i) wire transfer to an account in a bank located in the United States
designated by the Holder for such purpose upon adequate advance notice or (ii) a
certified or official bank check payable to the order of the Holder.
(e) In the event the Company exercises the right to repurchase the
Warrants, such Warrants will be exercisable until 5:00 P.M., local time on the
date for redemption fixed in such notice. If any Warrant called for repurchase
is not exercised by such time, it will cease to be exercisable and the holder
will be entitled only to the Repurchase Price.
SECTION 28.
ENTIRE AGREEMENT
----------------
This Warrant Agreement and the documents referred to herein contain the
entire agreement of the parties and supersede any and all prior agreements among
the parties with respect to the subject matter hereof.
-20-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be duly executed and delivered by their proper and duly authorized officers,
as of the date and year first above written.
OPHTHALMIC IMAGING SYSTEMS
By: /s/ STEVEN R. VERDOONER
---------------------------------------
Name: Steven R. Verdooner
Title: President
JB OXFORD & COMPANY
By: /s/ BRUCE COLE
--------------------------------------
Name: Bruce Cole
Title:
--------------------------------
-21-
<PAGE>
EXHIBIT 99.18
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of February 25, 1998, by and between Premier Laser Systems,
Inc., a California corporation ("Premier" or the "Company") and JB Oxford &
Company, a Utah corporation (the "Holder").
WHEREAS, the Holder acquired the Purchased Shares and may acquire the
Contingent Shares (each as defined below), pursuant to the terms of a Purchase
Agreement, dated as of February __, 1998 (the "Purchase Agreement"), and the
Warrants (as defined below) issued in connection therewith, by and between the
Company and Holder.
WHEREAS, as an inducement to entering into the Purchase Agreement, and
as a condition to the acquisition of the Purchased Shares and the potential
future acquisition of the Contingent Shares by the Holder in connection
therewith, the Company has agreed to provide certain registration rights to the
Purchaser as set forth in this Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the foregoing,
the mutual covenants and agreements set forth in the Purchase Agreement and
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used herein without
-------------------
definition shall have the meaning given to such terms in the Purchase Agreement.
As used in this Agreement, the following capitalized defined terms shall have
the following meanings:
"Contingent Shares" shall mean the shares of the Premier Common
Stock issued by the Company to the Holder pursuant to the terms of the Class C
Warrant and the Class D Warrant.
"Contingent Share Shelf Registration Statement" has the meaning
set forth in Section 2(a)(ii)(B).
"Expiration Date" has the meaning set forth within the
Prospectus/Offer to Exchange that the Company intends to utilize to effect a
tender offer (the "Tender Offer") to purchase those shares of Ophthalmic Imaging
Systems ("OIS") common stock not already owned by the Company.
<PAGE>
"Form S-3" means the registration statement on Form S-3
promulgated under the Securities Act by the SEC for use in registering
securities issued by certain publicly traded companies and any similar form
subsequently prescribed by the SEC as the successor to Form S-3.
"Person" shall mean an individual or a corporation, partnership,
limited liability company, association or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Prospectus" shall mean any prospectus included in a Shelf
Registration Statement (as defined herein), or a registration statement with
respect to an underwritten offering in which the Purchaser participates, as
contemplated by Section 5(b), including any resale prospectus and any
preliminary prospectus, and any amendment or supplement thereto, and in each
case including all material incorporated by reference therein.
"Purchase" shall mean the Company's purchase of Holder's shares
of OIS common stock under the Purchase Agreement.
"Purchased Shares" shall mean the shares of Premier Common Stock
issued by the Company to the Holder at the Closing of the transactions
contemplated by the Purchase Agreement.
"Purchased Share Shelf Registration Statement" has the meaning
set forth in Section 3(a)(i).
"Registration Expenses" shall mean any and all expenses incident
to the performance of or compliance with this Agreement, including, without
limitation: (i) all applicable registration and filing fees imposed by the SEC
and such securities exchange or exchanges on which Common Shares are then listed
or The Nasdaq Stock Market ("Nasdaq") (ii) all fees and expenses incurred in
connection with compliance with state securities or "blue sky" laws (including
reasonable fees and disbursements of counsel for the Company in connection with
qualification of any of the Shares under any state securities or blue sky laws
and the preparation of a blue sky memorandum) and compliance with the rules of
the NASD; (iii) all expenses of any Persons in preparing or assisting in
preparing, printing and distributing the Shelf Registration Statement, any
Prospectus, certificates and other documents relating to the performance of and
compliance with this Agreement; (iv) all fees and expenses incurred in
connection with the listing, if any, of any of the Shares on any securities
exchange or exchanges pursuant to Section 4(j) hereof; (v) the fees and
disbursements of counsel for the Company and of the independent public
accountants of the
-2-
<PAGE>
Company, including the expenses relating to any special audits or "cold comfort"
letters required by or incident to such performance and compliance; and (vi) the
reasonable fees and disbursements of a single counsel for the Purchaser.
Registration Expenses shall specifically exclude underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
Shares by the Purchaser.
"SEC" shall mean the Securities and Exchange Commission or any
successor entity.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
"Shares" shall mean, collectively, the Purchased Shares and the
Contingent Shares issued to the Holder pursuant to the Purchase Agreement or the
Warrant and any equity securities issued or issuable directly or indirectly with
respect to the Purchased Shares or the Contingent Shares issued to the Holder by
way of replacement, stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise.
"Shelf Registration Statements" shall mean, collectively, the
Purchased Share Shelf Registration Statement, the Contingent Share Shelf
Registration Statement and any other registration statement as filed by the
Company pursuant to Section 3(a) of this Agreement.
"Warrants" shall mean the Class C Warrant and Class D Warrant
issued by the Company to Purchaser.
2. REGISTRABLE SECURITIES.
----------------------
(a) The securities entitled to the benefits of this Agreement
are the Shares.
(b) Any subsequent holder of the Shares shall be entitled to the
benefits of this Agreement as a holder of any such Shares (a "Purchaser"). A
Person is deemed to be a Purchaser whenever such Person owns Shares or has the
right to acquire such Shares, whether or not such acquisition has actually been
effected and disregarding any legal restrictions upon the exercise of such
right.
-3-
<PAGE>
3. REGISTRATION UNDER THE SECURITIES ACT.
-------------------------------------
(a) (i) Subject to Section 7(b) below, the Company shall
prepare and promptly file a registration statement on Form S-3 or an amendment
to an existing registration statement on Form S-3, either of which may include
shares of the Premier Common Stock for resale by other Company shareholders (the
"Purchased Share Shelf Registration Statement"), registering the Purchased
Shares for resale by the Purchaser and shall use its reasonable best efforts to
cause the Purchased Share Shelf Registration Statement to be declared effective
by the SEC as soon as practicable following the Expiration Date.
(ii) (A) The Company shall use its reasonable best
efforts to cause each installment of Contingent Shares, if any, issued by the
Company to the Purchaser pursuant to the terms of the Purchase Agreement and the
Warrants to be registered pursuant to an effective registration statement under
the Securities Act as soon as practicable after the exercise of the Warrants.
(B) Notwithstanding the foregoing, if there is a
Suspension Event (as defined in Section 7(b) below) occurring at the time of
issuance of any Contingent Shares, in lieu of delivering to the Purchaser
Contingent Shares registered under the Securities Act, the Company may give
notice to the Purchaser of the Suspension Event and deliver to the Purchaser
Contingent Shares issued without registration under the Securities Act and file
as soon as practicable thereafter a registration statement on Form S-3 or an
amendment to an existing registration statement on Form S-3, either of which may
include shares of Premier Common Stock for resale by the Company stockholders
(in each case, a "Contingent Share Shelf Registration Statement"), registering
the Contingent Shares for resale by the Purchaser. The Company shall use its
reasonable best efforts to cause each Contingent Share Shelf Registration
Statement to be declared effective by the SEC as soon as practicable thereafter
but in any event not later than 120 days after termination of the Suspension
Event.
(iii) The Company agrees to use its reasonable best efforts
to keep the Purchased Share Shelf Registration Statement and any Contingent
Share Shelf Registration Statement continuously effective (and to include a
Prospectus at all times meeting the requirements of the Securities Act,
including (S) 10(a)(3) thereof) for a period of one year from the date of
effectiveness of such Shelf Registration Statement (such period is referred to
as the "Shelf Period").
-4-
<PAGE>
(b) The Company shall pay all Registration Expenses in
connection with a registration pursuant to this Agreement.
4. REGISTRATION PROCEDURES. In connection with the obligations of
-----------------------
the Company under Section 3 hereof, the Company will use its best efforts to
effect the registration and sale of the Shares in accordance with the intended
method of distribution thereof, and pursuant thereto, the Company will, as
expeditiously as possible:
(a) prepare and file with the SEC, as soon as practicable within
the time period set forth in Section 3 hereof, and use its reasonable best
efforts to have declared effective by the SEC, the Shelf Registration
Statements, which shall (i) be available for public resale of the Shares by the
Purchaser, and (ii) comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith; provided, however, that before filing
a Shelf Registration Statement or Prospectus, or any amendments, post-effective
amendments, or supplements thereto, with the SEC, the Company will furnish to
the Purchaser and its underwriters, if any, with copies of all such proposed
documents to be filed, which documents will be subject to the reasonable review
of the Purchaser and its underwriter, and the Company will not file any
Registration Statement or Prospectus to which the Purchaser of the underwriter,
if any, shall reasonably object;
(b) furnish to each Purchaser, without change, at least one
signed copy of the applicable Shelf Registration Statement and any post-
effective amendments thereto, including financial statements and schedules
whether included therein or incorporated by reference thereto no later than two
days following its filing with the SEC, which, in any event will be no later
than two business days prior to the effective date of such Shelf Registration
Statement;
(c) (i) to prepare and file with the SEC such amendments,
supplements and post-effective amendments to the Shelf Registration Statements
as may be necessary to keep each such Shelf Registration Statements continuously
effective for the period set forth in Section 3(a)(iii) of this Agreement; (ii)
cause any Prospectus to be amended or supplemented as required and to be filed
as required by Rule 424 or any similar rule that may be adopted under the
Securities Act; (iii) respond as promptly as practicable to any comments
received from the SEC with respect to the Shelf Registration Statements or any
amendments thereto; and (iv) comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by the Shelf
Registration Statements during the applicable period in accordance with the
intended method or methods of
-5-
<PAGE>
distribution by the Purchaser and as reasonably requested by a Purchaser or any
underwriter of the Shares.
(d) furnish to each Purchaser and any managing underwriter, upon
request and without charge, as many copies of any Prospectus and any amendment
or supplement thereto as such Person may reasonably request;
(e) use its commercially reasonable efforts to register or
qualify the Shares under all applicable state securities or blue sky laws of
such jurisdictions in the United States and its territories and possessions as
the Purchaser may reasonably request in writing and keep such registration or
qualification effective during the period the Shelf Registration Statement is
required to be kept effective under Section 3(a)(iii) hereof; provided, however,
-------- -------
that in connection therewith, the Company shall not be required to (i) qualify
as a foreign corporation to do business or to register as a broker or dealer in
any such jurisdiction where it would not otherwise be required to qualify or
register but for this Section 4(e), (ii) subject itself to taxation in any such
jurisdiction with respect to such registration or qualification, or (iii) file a
general consent to service of process in any such jurisdiction;
(f) notify each Purchaser and any managing underwriter promptly
and, if requested by the Purchaser, confirm in writing, (i) when the Shelf
Registration Statements and any post-effective amendments thereto have become
effective, (ii) when any amendment or supplement to a Prospectus has been filed
with the SEC, except for an amendment via incorporation by reference of
subsequent filings under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of the Shelf
Registration Statements or any part thereof or the initiation of any proceedings
for that purpose, (iv) if the Company receives any notification with respect to
the suspension of the qualification of the Shares for offer or sale in any
jurisdiction or the initiation of any proceeding for such purpose, and (v) of
the happening of any event during the periods that any of the Shelf Registration
Statements are effective as a result of which (A) the Shelf Registration
Statements contain any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or (B) a Prospectus as then amended or supplemented
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
-6-
<PAGE>
(g) in the event of a stop order or suspension in the sale of
the Shares, use all reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of the Shelf Registration Statements by the
SEC or any state securities authority or otherwise prohibiting the offer and
sale of the Shares as promptly as possible;
(h) furnish to the Purchaser upon request and without charge, at
least one conformed copy of the Shelf Registration Statements and any post-
effective amendments thereto (including documents incorporated therein by
reference or exhibits thereto, unless requested);
(i) cooperate with the Purchaser and any underwriter to
facilitate the timely preparation and delivery of certificates representing
Shares to be sold and not bearing any restrictive legend and enable certificates
for such Shares to be issued for such numbers of Shares and registered in such
names as the Purchaser may reasonably request;
(j) use its reasonable best efforts to cause all Shares to be
listed on any securities exchange or inter-dealer quotation service on which the
Shares are then listed, including on Nasdaq if the Shares are then so included;
(k) use its reasonable best efforts to make available adequate
current public information about the Company as contemplated by Rule 144(c)
promulgated under the Securities Act;
(l) use its best efforts to cause the Shares covered by a Shelf
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable Purchaser or
any underwriter of the Shares to consummate the disposition; and
(m) upon the occurrence of any event referenced in last sentence
of Section 7(b)(ii) below, prepare and promptly file a supplement or post-
effective amendment to the Shelf Registration Statement and the related
Prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of the
Shares, the Prospectus will not contain an untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein not
misleading under the circumstances in which they were made; provided, however, a
period of suspension of the distribution of Shares under Section 7(a) hereof as
a result of an occurrence of an event under the last sentence of Section
7(b)(ii) shall not exceed a period of thirty (30) days during any twelve (12)
month period.
-7-
<PAGE>
5. CERTAIN AGREEMENTS OF THE PURCHASER.
-----------------------------------
(a) The Purchaser agrees to furnish to the Company in writing
such information regarding the Purchaser and its proposed distribution of Shares
as the Company may from time to time reasonably request in connection with the
preparation of the Shelf Registration Statements or any registration statement
as contemplated by Section 5(b) of this Agreement or the registration or
qualification of the Shares under state securities or blue sky laws, and report
to the Company within ten (10) days after the end of each month all sales or
other dispositions of Shares made by them during such month.
(b) To the extent timely notified in writing by the Company or
the managing underwriters, the Purchaser agrees, if requested by the Company in
the case of a Company initiated non-underwritten offering or if requested by the
managing underwriter or underwriters in an underwritten offering initiated by
the Company or by a shareholder of the Company pursuant to demand registration
rights, not to effect any public sale or distribution of any Shares (including a
sale pursuant to Rule 144 under the Securities Act) during the ten (10) day
period prior to, and during the forty-five (45) day period beginning on, the
date of effectiveness of each Company initiated offering made pursuant to a
registration statement, provided that the Purchaser shall be entitled to
participate in an underwritten offering pro rata with all other holders of
shares of Common Stock to be included in any such registration, if, in the
reasonable opinion of the managing underwriter of any such underwritten
registration such shares may be included in such registration without having an
adverse effect on the marketability or the price of any shares of the Premier
Common Stock proposed to be offered in such underwritten registration and the
Purchaser agrees to enter into an underwriting agreement with such underwriters
containing such representations and warranties by the Purchaser and such terms
and provisions, including without limitation, provisions with respect to
indemnification and contribution, as are customarily contained in underwriting
agreements and deliver customary opinions of counsel and closing certificates.
-8-
<PAGE>
6. INDEMNIFICATION.
---------------
(a) Indemnification by the Company. The Company agrees to
------------------------------
indemnify, to the fullest extent permitted by law, and hold harmless each
Purchaser, its officers, directors, employees, partners, agents, and each Person
who controls (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act and the rules and regulations promulgated thereunder)
such Purchaser or acts on behalf of such Purchaser, and each other Person who
participates as an underwriter in the offering or sale of the Shares as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to which such Person may become subject (A)
that arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in Shelf Registration Statements or any
registration statement as contemplated by Section 5(b) of this Agreement or any
amendments thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (B) that arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or (C) that arise out of or are based upon any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law, which violation or alleged
violation arises out of the Shelf Registration Statements or Prospectuses or any
registration statement as contemplated by Section 5(b) of this Agreement;
(ii) against any loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or alleged untrue statement, any omission or alleged
omission, if such settlement is effected with the written consent of the
Company, which consent shall not be unreasonably withheld; and
(iii) subject to the limitations set forth in Section 6(b),
against any expense (including reasonable fees and disbursements of counsel)
reasonably incurred in investigating, preparing or defending against any
litigation, investigation or proceeding by any governmental agency or body,
commenced or threatened, in each case whether or not a party, or any claim
whatsoever based upon any such untrue statement or
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<PAGE>
alleged untrue statement, omission or alleged omission that relates to the sale
by the Purchaser under Shelf Registration Statements or any registration
statement as contemplated by Section 5(b) of this Agreement, to the extent that
any such expense is not paid under subparagraph (i) or (ii) above; provided,
--------
however, that the indemnity provided pursuant to this Section 6(a)(i), (ii) and
- -------
(iii) shall not apply to the Purchaser with respect to any loss, liability,
claim, damage or expense that arises out of or is based upon (1) any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information furnished to the Company by the
Purchaser for use in the Shelf Registration Statements or any other registration
statement contemplated by this Agreement or any amendment thereto or a
Prospectus or any amendment or supplement thereto, or (2) trades made by the
Purchaser in violation of Section 7(a) below after receiving the notice from the
Company required pursuant thereto. The indemnification provided under this
Section 6(a) shall remain in full force and effect regardless of any
investigation made by any Purchaser or underwriter, and no such investigation
may be asserted in an attempt to mitigate any liabilities hereunder.
(b) Indemnification by the Purchaser. The Purchaser agrees to
--------------------------------
indemnify and hold harmless the Company and its directors and officers,
including each director of the Company and each officer of the Company who
signed any Shelf Registration Statement or any registration statement with
respect to an underwritten offering in which the Purchaser participates, as
contemplated by Section 5(b) of this Agreement, and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act, to
the same extent as the indemnity contained in Section 6(a) hereof, but only
insofar as such loss, liability, claim, damage or expense arises out of or is
based upon (i) any untrue statement or alleged untrue statement or omission or
alleged omission made in the Shelf Registration Statements or any registration
statement with respect to an underwritten offering in which the Purchaser
participates, as contemplated by Section 5(b) of this Agreement or any amendment
thereto or a Prospectus or any amendment or supplement thereto in reliance upon
and in conformity with information prepared and furnished to the Company by the
Purchaser for use therein or (ii) trades made by the Purchaser in violation of
Section 7(a) below; provided. that, in the case of the Purchaser's obligation
set forth in this Section 6(b) relating to Section 5(a)(ii) above, such
settlement must be effected with the written consent of the Purchaser, which
consent shall not be unreasonably withheld.
(c) Conduct of Indemnification Proceedings. The indemnified
--------------------------------------
party shall give reasonably prompt written notice to the indemnifying party of
any action or proceeding commenced against it in respect of which indemnity may
be sought hereunder, but failure to so notify the indemnifying party (i) shall
not relieve it from any liability that it may have under the indemnity agreement
provided in Section 6(a) or (b) above, unless and
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<PAGE>
to the extent it did not otherwise learn of such action and the lack of notice
by the indemnified party materially prejudices the indemnifying party or results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) shall not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided under Section 6(a) or (b) above. After receipt of such notice, the
indemnifying party shall be entitled to participate in and, at its option,
jointly with the indemnifying party so notified, to assume the defense of such
action or proceeding at such indemnifying party's own expense with counsel
chosen by such indemnifying party and approved by the indemnified party or
parties, which approval shall not be unreasonably withheld; provided, however,
-------- -------
that, if the defendants in any such action or proceeding include both the
indemnified party and the indemnifying party and the indemnified party
reasonably determines, upon advice of counsel, that a conflict of interest
exists or that there may be legal defenses available to it that are different
from or in addition to those available to the indemnifying party, then the
indemnified party shall be entitled to counsel the reasonable fees and expenses
of which shall be paid by the indemnifying party. If the indemnifying party does
not assume the defense of any such action or proceeding, after having received
the notice referred to in the first sentence of this paragraph, the indemnifying
party will pay the reasonable fees and expenses of counsel for the indemnified
party. In such event, however, the indemnifying party will not be liable for any
settlement effected without the written consent of such indemnifying party,
which consent shall not be unreasonably withheld. If the indemnifying party
assumes the defense of any such action or proceeding in accordance with this
paragraph, such indemnifying party shall not be liable for any fees and expenses
of counsel for the indemnified party incurred thereafter in connection with such
action or proceeding except as set forth in the proviso in the second sentence
of this Section 5(c).
(d) The obligations of the Company and the Purchaser under this
Section 5 shall survive the completion of any offering of the Shares pursuant to
any Shelf Registration Statement.
7. SUSPENSION OF SHELF REGISTRATION REQUIREMENT.
--------------------------------------------
(a) The Purchaser agrees that he, she or it will not effect any
sales of Shares pursuant to any Shelf Registration Statement after he, she or it
has received notice from the Company to suspend sales as a result of the
occurrence or existence of any Suspension Event (as defined in Section 7(b)
below) until such time as the Company provides notice to such holder that all
Suspension Events have ceased to exist. All such information relating to a
Suspension Event obtained by Purchaser shall be treated as confidential and
shall not be used by the Purchaser for any purpose. The Company shall
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<PAGE>
notify the Purchaser promptly after any Suspension Event occurs or ceases to
exist to the extent he or it continues to hold Shares and with respect to the
cessation of a Suspension Event, to the extent he or it has been provided notice
of a Suspension Event. In addition, the Purchaser agrees that he, she or it will
not effect any sales of Shares pursuant to the Shelf Registration Statements
after he or it has received notice from the Company to suspend sales because the
Registration Statements, any Prospectus or any supplement thereto contains an
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, until the Company notifies such holder
that the misstatement or omission has been corrected. The Company shall not
suspend the shelf registration requirements under this section for more than a
period of thirty (30) days during any (12) month period.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation to file the Shelf Registration Statements
and make any filings with any state securities authority, to use its reasonable
best efforts to cause the Shelf Registration Statements or any state securities
filings to become effective, or to amend or supplement the Shelf Registration
Statement or any state securities filings shall be temporarily suspended in the
event of and during a Suspension Event. A "Suspension Event" shall exist at
such times (i) that the Company is not eligible to use Form S-3 for the
registration contemplated by Section 3(a) hereof or (ii) as circumstances exist,
that the Company's Board of Directors, in good faith and as evidenced by a
resolution in accordance therewith, determines make it impractical or
inadvisable for the Company to file, amend or supplement a Shelf Registration
Statement or such filings or to cause the Shelf Registration Statements or such
filings to become effective (such circumstances to include, without limitation,
(A) the Company conducting an underwritten primary offering and being advised in
writing, with such writing being made available to Purchaser upon reasonable
request, by the underwriters that sale of Shares under the Shelf Registration
Statements would have a material adverse effect on the Company's offering or (B)
pending negotiations relating to, or consummation of, a transaction material to
the Company or the occurrence of some other event (x) where any of the foregoing
would require disclosure under applicable securities laws of material
information in the Shelf Registration Statements (or any other document
incorporated into a Shelf Registration Statement by reference) or such state
securities filings and (y) as to which the Company has a bona fide business
purpose for preserving confidentiality or which renders the Company unable to
comply with SEC requirements. Suspension of the Company's obligations pursuant
to this Section 7(b) shall continue only for so long as a Suspension Event or
its effect is continuing, but in any event not to exceed 30 days.
-12-
<PAGE>
8. MISCELLANEOUS.
-------------
(a) Amendments and Waivers. Except as specifically provided
----------------------
herein, the provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified, supplemented or waived, nor may consent
to departures therefrom be given, without the written consent of the Company and
each Purchaser specifically affected thereby.
(b) Notices. Unless otherwise provided, all notices or other
-------
communications required or permitted to be given to the parties hereto shall be
in writing and shall be deemed to have been given if personally delivered,
including personal delivery by facsimile, provided that the sender receives
telephonic or electronic confirmation that the facsimile was received by the
recipient and that such facsimile is followed the same day by mailing by
certified or registered mail return receipt requested, first class postage
prepaid (a "Mailing"), upon receipt of courier delivery or the third day
following a Mailing, addressed as follows (or at such other address as the
addressed party may have substituted by notice pursuant to this Section 8(b):
(i) If to the Company:
Premier Laser Systems, Inc.
3 Morgan
Irvine, California 92618
Attn: Secretary
Fax: (714) 951-7218
with a copy to:
Paul, Hastings, Janofsky & Walker LLP
695 Town Center Drive, 17/th/ Floor
Costa Mesa, California 92626-1924
Attn: Peter J. Tennyson, Esq.
Fax: (714) 979-1921
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<PAGE>
(ii) If to Purchaser:
JB Oxford & Company
9665 Wilshire Blvd., Ste. 300
Beverly Hills, California 90212
Attention: Scott Monson, Esq.
Fax: (310) 385-2237 Fax:
with a copy to:
Irell & Manella LLP
333 So. Hope Street, Ste. 3300
Los Angeles, California 90071
Attention: Richard Wirthlin, Esq.
Fax: (213) 229-0515
or to such other address as any party may have furnished in writing to the other
parties in the manner provided above.
(c) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding on the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Purchasers of the Shares; provided, however, the Company shall not
assign its responsibilities hereunder without the express written consent of the
Purchasers.
(d) Counterparts. This Agreement may be executed in any number
------------
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Any party may execute this
Agreement by facsimile signature, and shall provide promptly to all other
parties an originally executed Agreement.
(e) Headings and Interpretation. The headings in this Agreement
---------------------------
are for convenience of reference only and shall not limit or otherwise affect
the meaning hereof. In construing the meaning of this Agreement, no party hereto
shall be deemed the drafter of this Agreement and this Agreement shall be
construed according to its fair meaning and not strictly against any person as
the drafter hereof.
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<PAGE>
(f) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California without giving
effect to the conflicts of law provisions thereof.
(g) Entire Agreement. This Agreement is intended by the parties
----------------
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all
prior oral and written agreements and understandings and all contemporaneous
written agreements and understandings between the parties with respect to such
subject matter.
(h) No Inconsistent Agreements. The Company will not on or
--------------------------
after the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with the rights granted to Purchasers in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Purchasers hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any such agreements.
(i) Remedies. All remedies under this Agreement, or by law or
--------
otherwise afforded to any party hereto, shall be cumulative and not alternative.
Any Person having rights under any provision of this Agreement will be entitled
to enforce such rights specifically to recover damages caused by reason of any
breach of any provision of this Agreement and to exercise all other rights
granted by law. The parties hereto agree and acknowledge that money damages may
not be an adequate remedy for any breach of the provisions of this Agreement and
that any party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or other security) for specific
performance and for other injunctive relief in order to enforce or prevent
violation of the provisions of this Agreement.
(j) Rule 144. with a view to making available certain
--------
exemptions from the registration provisions of the Securities Act for the sale
of Shares, the Company covenants that:
(i) At all times that the Premier Common Stock is
registered under Section 12(b) or 12(g) of the Exchange Act, the Company will
use its best efforts to timely file the reports required to be filed by the
Company under the Securities Act and the exchange Act (or, if the Company is not
registered under Section 12(b) or 12(g) of the Exchange Act and is not otherwise
required to file such reports under Sections 13 or 15(d) thereunder, it will,
upon the request of any Purchaser, make publicly available such
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<PAGE>
other information required under Rule 144 of the Securities Act ("Rule 144") for
so long as necessary to permit sales pursuant to Rule 144), and the Company will
take such further action as any Purchaser may reasonably request to the extent
required from time to time to enable such Purchaser to sell the Shares without
registration under the Securities Act within the limitations of the exemptions
provided by: (x) Rule 144, as such rule may be amended from time to time, and
(y) any similar rule or regulation hereafter adopted by the SEC. Upon the
request of the Purchaser, the Company will deliver to Purchaser a written
statement as to whether it has complied with such requirements.
(ii) So long as the Shares constitute "Restricted Securities" as
that term is used in Rule 144, the Company will furnish each Purchaser a copy of
the annual and quarterly reports of the Company and such other public reports as
the Purchaser may reasonably request.
(SIGNATURE PAGE Follows)
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<PAGE>
[SIGNATURE PAGE FOR REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
"PREMIER"
PREMIER LASER SYSTEMS, INC.
By: /s/ Colette Cozean
---------------------------
Title:___________________________
"PURCHASER"
_________________________________
Name:____________________________
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<PAGE>
[SIGNATURE PAGE FOR REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
"PREMIER"
PREMIER LASER SYSTEMS, INC.
By:
Title:
"PURCHASER"
JB OXFORD & COMPANY
/s/ Scott G. Manson
By: SCOTT G. MANSON
Title:GENERAL COUNSEL, ASST. SECRETARY
<PAGE>
EXHIBIT 99.19
Thursday February 26, 7:31 am Eastern Time
Company Press Release
Premier Laser Systems Acquires 51% of Ophthalmic
Imaging Systems Stock Through Private Purchase
Agrees to Commence Tender Offer
IRVINE, Calif.--(BW HealthWire)--Feb. 26, 1998--Premier Laser Systems Inc.
(Nasdaq NM:PLSIA - news) Thursday announced that it has acquired approximately
51% of the outstanding stock of Sacramento, Calif.-based Ophthalmic Imaging
Systems (Nasdaq:OISI - news) through private purchases. Premier had previously
purchased approximately 29.5% of the outstanding Ophthalmic Imaging's stock in
the open market.
As part of the acquisition, Premier has agreed with OIS that Premier will
commence a tender offer within five business days to acquire the remaining
outstanding shares of OIS. Pursuant to the tender offer, Premier intends to
offer, in return for each share of OIS tendered, $1.75 in cash, $0.25 in Premier
stock and two warrants, each of which permit the holder to acquire $0.25 worth
of stock for a nominal purchase price if OIS meets certain future revenue goals.
The terms of the proposed tender offer are identical to the terms of the private
purchase Premier completed today. Premier's acquisition of certain OIS shares is
subject to rescission in the event Premier does not acquire shares under its
tender offer.
The directors of OIS have unanimously approved the transaction and
recommend that OIS shareholders accept Premier's offer to tender their shares.
Premier Chairman, President and CEO Colette Cozean, Ph.D., said: ``We are truly
pleased to have the opportunity to join forces with such an exceptional company
and strong management team and that their Board of Directors has voiced
unanimous agreement. ``We believe we will be able to rapidly improve OIS'
performance through our international distribution channels for their products,
manufacturing expertise, product synergies and economies of scale. We further
believe that the strength of our balance sheet and position in the ophthalmic
market combined with OIS' innovative technology and product line should provide
excellent opportunities for the shareholders and employees of both companies.''
Cowen & Company, OIS' financial advisor, has delivered to the Board of
Directors of OIS its opinion that as of the date of the opinion the terms of the
offer are fair from a financial point of view to the holders of OIS common stock
(other than Premier and its affiliates).
<PAGE>
Ophthalmic Imaging System's CEO, Steven Verdooner said: ``OIS is very
pleased and excited about this opportunity. Premier's corporate strategy
continues to demonstrate a strong commitment to the ophthalmic field through the
acquisition of innovative, market-leading products. We believe that OIS will be
an important part of Premier's continued growth and offers a new dimension to
its ophthalmology business.''
The completion of the tender offer is subject to customary conditions,
including registration with the Securities and Exchange Commission of the
securities to be offered to the OIS shareholders.
OIS is engaged in the business of designing, developing, manufacturing and
marketing digital imaging systems and image enhancement and analysis software
for use by practitioners in the ocular health field.
Premier Laser Systems develops, manufactures and markets several lines of
proprietary medical lasers, fiber optic delivery systems, corneal topography
systems and associated products and services for a variety of dental, ophthalmic
and surgical applications.
The statements in this news release that relate to future events or performance,
statements about growth, company performance, distribution channels, levels of
sales and market size, future manufacturing capacity and efficiencies, future
product shipment rates, future product introductions are forward-looking
statements that involve risks and uncertainties, including risks associated with
uncertainties related to the development of markets for and commercial
acceptance of the company's products and services, the availability of
components, competitors' product introductions, patent or other litigation, and
other risks identified in the company's SEC filings. Actual results may differ
from those described in these forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date hereof.
<PAGE>
EXHIBIT 99.20
Friday, February 27, 1998
Company Press Release
Premier Laser Systems Tender Offer For
Ophthalmic Imaging Systems Stock to Commence Following
Effectiveness of Registration Statement
IRVINE, CA (February 27, 1998) . . . . . . . Premier Laser Systems, Inc.
(Nasdaq NM: PLSIA) announced today that it has agreed with Sacramento-based
Ophthalmic Imaging Systems (Nasdaq:OISI) that Premier's tender offer for OIS'
stock will commence promptly following the effectiveness of Premier's related
registration statement. Premier intends to file the registration next week in
order to register common stock, and common stock underlying warrants, to be
offered to OIS' shareholders. As previously announced, Premier intends to
offer, in return for each share of OIS tendered, $1.75 in cash, $0.25 in Premier
stock and two warrants, each of which permit the holder to acquire $0.25 worth
of stock for a nominal purchase price if OIS meets certain future revenue goals.
OIS is engaged in the business of designing, developing, manufacturing and
marketing digital imaging systems and image enhancement and analysis software
for use by practitioners in the ocular health field.
Premier Laser Systems develops, manufactures and markets several lines of
proprietary medical lasers, fiber optic delivery systems, corneal topography
systems and associated products and services for a variety of dental, ophthalmic
and surgical applications.
<PAGE>
EXHIBIT 99.21
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements, (Form S-3 No. 333-45539) pertaining to Premier Laser Systems, Inc.
for the registration of 1,144,916 shares of its Class A Common Stock and 28,290
Class B Warrants, (Form S-3 No. 333-04219) pertaining to Premier Laser Systems,
Inc. for the registration of 9,156,243 shares of its Class A Common Stock and
2,005,873 Class B Warrants, (Form S-4 No. 333-29573) pertaining to Premier Laser
Systems, Inc. for the registration of 1,990,250 shares of its Class A Common
Stock and options to purchase 165,250 shares of its Class A Common Stock, (Form
S-8 No. 333-01680) pertaining to the 1995 Stock Option Plan of Premier Laser
Systems, Inc., (Form S-8 No. 333-27151) pertaining to the February 1996 Stock
Option Plan of Premier Laser Systems, Inc., (Form S-8 No. 333-29497) pertaining
to the 1997 Stock Option Plan of Premier Laser Systems, Inc., of our reports
dated October 21, 1997, except for Note 10 as to which the date is November 18,
1997, and October 11, 1996, except for Note 10 as to which the date is November
21, 1996, with respect to the financial statements of Ophthalmic Imaging Systems
included in its Annual Reports (Form 10-KSB) for the years ended August 31, 1997
and 1996, respectively, and included in the Current Report on Form 8-K of
Premier Laser Systems, Inc. dated February 25, 1997, filed with the Securities
and Exchange Commission.
ERNST & YOUNG LLP
Sacramento, California
March 4, 1998
