Registration No. 333-36655
As filed with the Securities and Exchange Commission on November 20, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LASERSIGHT INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 3845 65-0273162
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification Number)
incorporation Code Number)
or organization)
12161 Lackland Road
St. Louis, Missouri 63146
(314) 469-3220
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Mr. Gregory L. Wilson Copies to:
Chief Financial Officer Jacques K. Meguire, Esq.
LaserSight Incorporated Theresa Fritz Sleight, Esq.
12161 Lackland Road Sonnenschein Nath & Rosenthal
St. Louis, Missouri 63146 8000 Sears Tower
(314) 469-3220 Chicago, Illinois 60606
(Name, address, including zip code, (312) 876-8000
and telephone number, including area
code, of agent for service)
Approximate date of commencement of proposed sale to public: From time to
time after the Registration Statement is declared effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is to be a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
registration statement of the earlier effective registration statement for the
same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Title of Each Class of Amount to be Proposed Maximum Offering Proposed Maximum Amount of
Securities to be Registered Registered (1) Price per Share Aggregate Offering Price Registration Fee
(1)
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 6,630,400 $3.92 (4) $25,991,168 $7,876,11
shs. (2)(3)
Common Stock, $.001 par value 790,000 shs. (5) $5.91 (6) $4,668,900 $1,414.82
Total(7)................. $9,290.93
<FN>
(1) In the event of a stock split, stock dividend, or similar transaction
involving the Common Stock of the Company, in order to prevent
dilution, the number of shares of Common Stock registered hereby shall
be automatically increased to cover the additional shares of Common
Stock in accordance with Rule 416.
(2) Represents the Company's good-faith estimate of the number of shares of
Common Stock issuable (i) upon the conversion of the 1,295 shares of
the Company's Series B Convertible Participating Preferred Stock (the
"Series B Preferred Stock") outstanding as of the date hereof and (ii)
in lieu of cash payments in respect of shares of the Series B Preferred
Stock in connection with the conversion thereof. The number of shares
indicated equals 200% of the number of shares that would have been
issuable if all 1,295 shares of such the Series B Preferred Stock had
been converted into Common Stock on November 18, 1997. The actual
number of shares of Common Stock issuable upon the conversion of the
Series B Preferred Stock will be determined by reference to a
fluctuating conversion price that depends, among other things, on the
market price of the Common Stock prior to the date of a conversion
thereof.
(3) Pursuant to Rule 416, there are also registered hereby an indeterminate
number of shares of Common Stock issuable upon conversion of the Series
B Preferred Stock resulting from the fluctuating conversion rate of the
Series B Preferred Stock.
(4) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c). Based on the average of the high and low
prices reported for the Common Stock on The Nasdaq Stock Market on
November 13, 1997.
(5) Includes the registration for resale of 790,000 shares of Common Stock
issuable upon exercise of warrants (the "Warrants") issued in
connection with the foregoing private placement.
(6) Equals the exercise price of the Warrants.
(7) Of which $9,134.47 was paid on September 29, 1997. An additional fee of
$156.46 is being paid with this Amendment No. 1.
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION DATED NOVEMBER 20, 1997
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS
7,420,400 Shares*
LASERSIGHT INCORPORATED
Common Stock ($.001 par value)
This Prospectus relates to an aggregate of 7,420,400 shares (the "Shares") of
common stock, $.001 par value (the "Common Stock"), of LaserSight Incorporated,
a Delaware corporation (the "Company") being offered for sale from time to time
by the selling shareholders named in this Prospectus (the "Selling
Shareholders"):
(i) 6,630,400 shares (the "Conversion Shares") issuable upon the
conversion of the Company's outstanding Series B Convertible
Participating Preferred Stock (the "Series B Preferred Stock"),
(ii) up to 790,000 shares (the "1997 Warrant Shares") issuable upon the
exercise of warrants issued in connection with the Company's private
placement of the Series B Preferred Stock in August 1997 (the "1997
Warrants"),
(iii) an indeterminate number of shares (the "Payment Shares") issuable
at the holders' option in lieu of certain default payments under
certain circumstances to holders of the Series B Preferred Stock. The
current best estimate of the number of these shares is zero.
* The actual numbers of Conversion Shares and Payment Shares will depend on the
closing price of the Common Stock during the 20- or 30-day period before the
Series B Preferred Stock is converted and, with respect to the Payment Shares,
the amount of payments accrued on the Series B Preferred Stock, in the event
that payments are owed and holders of the Series B Preferred Stock elect to take
them in the form of Common Stock. See "The Offering," "Selling Shareholders" and
"Plan of Distribution." The shares of Common Stock offered hereby includes the
resale of such presently indeterminate number of shares of Common Stock as shall
be issued upon the above conversions. The number of shares of Common Stock
indicated to be issuable in connection with such transactions and offered for
resale hereby is an estimate based upon the current market price history of the
Common Stock, is subject to adjustment and could be materially less or more than
such estimated amount depending upon factors which cannot be predicted by the
Company at this time, including, among others, the future conversion price of
the Series B Preferred Stock and the decisions by the holders of Series B
Preferred Stock as to when to convert such shares. If, however, such conversion
price were determined on the basis of market prices equal to those prevailing
during the period ended on November 18, 1997, the Company would be obligated to
issue approximately 3,315,200 shares of Common Stock if all 1,295 shares of
Series B Preferred Stock expected to be outstanding after giving effect to the
Proposed Optional Redemption (as defined below) were converted into Common
Stock. Under the terms of a registration rights agreement between the Company
and the purchasers of the Series B Preferred Stock, the Company is required to
register up to an additional 3,315,200 shares of Common Stock as a reserve. This
presentation is not intended to constitute a prediction as to the future market
price of the Common Stock or as to when holders will elect to convert shares of
Series B Preferred Stock into shares of Common Stock. See "Risk Factors--Effect
of Conversion of Series B Preferred Stock" and "Description of Securities."
<PAGE>
If all of the 1997 Warrants are exercised, the Company would realize $4,668,900
in proceeds. See "Use of Proceeds." The Company will not receive any proceeds
from any sale of Resale Shares by the Selling Shareholders. The Company has been
advised by the Selling Shareholders that there are no underwriting arrangements
with respect to the sale of Common Stock, that the Resale Shares may be offered
hereby from time to time for the account of Selling Shareholders in transactions
on The Nasdaq Stock Market, in negotiated transactions or a combination of both
at prices related to prevailing market prices, or at negotiated prices. See
"Selling Shareholders" and "Plan of Distribution." The Company will pay the
expenses in connection with the registration of the Shares (other than any
underwriting discounts and selling commissions, and fees and expenses of counsel
and other advisors, if any, to the Selling Shareholders) estimated to be
$35,000.
The Common Stock is traded on The Nasdaq Stock Market under the symbol "LASE."
On November 18, 1997, the closing sale price for the Common Stock was $4.00 per
share. The "Variable Conversion Price" equals the lower of $6.68 per share or
the average of the lowest three closing bid prices during a 20- or 30-trading
day period. For the trading period preceding November 18, 1997, the Variable
Conversion Price was $3.90625 per share.
THE SHARES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE
5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is November __, 1997.
<PAGE>
TABLE OF CONTENTS
Documents Incorporated by Reference Description of Securities
The Company Plan of Distribution
The Offering Selling Shareholders
Risk Factors Legal Matters
Use of Proceeds Experts
Capitalization Available Information
No dealer, salesman or other person has been authorized to give any information
or to make any representation other than those contained or incorporated by
reference in this Prospectus in connection with the offerings described herein,
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company or the Selling Shareholders.
Neither the delivery of this Prospectus nor any offer, sale or exchange made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs or operations of the Company since the date of
this Prospectus, or that the information herein is correct as of any time
subsequent to such date.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents of the Company filed with the Securities and Exchange
Commission (the "Commission") under the Securities Exchange Act of 1934 (the
"Exchange Act") are incorporated by reference in this Prospectus:
A. The Company's Annual Report on Form 10-K for the year ended December
31, 1996;
B. The Company's Quarterly Report on Form 10-Q for the quarters ended
March 31, June 30, and September 30, 1997;
C. The Company's Current Reports on Form 8-K filed on February 25, March
18, March 27, April 8, April 25, July 1, July 31, August 13, September
2, September 11, September 15, September 29, and November 7, 1997;
D. The description of the Common Stock contained in the Company's Form
8-A/A (Amend. No. 3) filed on September 29, 1997; and
E. The Company's Revised Preliminary Proxy Statement dated November 5,
1997.
All reports and other documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such reports and documents.
Any statement contained in a document incorporated or deemed to be incorporated
in this Prospectus by reference shall be modified or superseded for the purpose
of this Prospectus to the extent that a statement contained in this Prospectus
or in any other subsequently filed document which also is or is deemed to be
incorporated in this Prospectus by reference modifies or replaces such
statement.
<PAGE>
The Company will provide without charge to each person, including any beneficial
owner, to whom a copy of this Prospectus has been delivered, on the written or
oral request of such person, a copy of any and all of the information that has
been or may be incorporated by reference in this Prospectus (not including
exhibits to the information that is incorporated by reference into the
information that this Prospectus incorporates). Written requests for such copies
should be directed to Secretary, LaserSight Incorporated, 12161 Lackland Road,
St. Louis, Missouri 63146; telephone no: (314) 469-3220.
THE COMPANY
LaserSight Incorporated and its subsidiaries operate in two major operating
segments: technology and health care services. The Company's principal
wholly-owned operating subsidiaries include: LaserSight Technologies, Inc.
("LaserSight Technologies"), LaserSight Patents, Inc. ("LaserSight Patents"),
MRF, Inc. ("MRF" or "The Farris Group"), and MEC Health Care, Inc. ("MEC"), and
LSI Acquisition, Inc. ("LSIA").
The technology segment of the Company's operations includes LaserSight
Technologies and related subsidiaries. These entities develop, manufacture and
market ophthalmic lasers with a galvanometric scanning system primarily for use
in performing photorefractive keratectomy ("PRK") which utilizes a one
millimeter scanning laser beam to ablate microscopic layers of corneal tissue in
order to reshape the cornea and to correct the eye's point of focus in persons
with myopia (nearsightedness), hyperopia (farsightedness) and astigmatism. In
addition, they license and hold title to various patents related to the use of
excimer lasers to ablate biological tissue and related to microkeratome design
and usage.
The health care services segment includes MEC, LSIA and MRF. MEC is a total
vision care managed care company which manages complete vision care programs for
health maintenance organizations ("HMOs") and other insured enrollees. LSIA is a
physician practice management company which currently manages the ophthalmic
practice known as "Northern New Jersey Eye Institute" or "NNJEI" under a service
agreement. MRF is a consulting firm that develops and implements vertical
integration strategies for hospitals and managed care companies, including the
identification, negotiation and acquisition of physician practices and the
development of physician networks.
The Company was incorporated in Delaware in 1987, but was inactive until
1991. In April 1993, the Company acquired its LaserSight Centers Incorporated
("LaserSight Centers") subsidiary in a stock-for-stock exchange. In February
1994, the Company acquired the stock of MRF, Inc. In July 1994, the Company was
reorganized as a holding company. In October 1995, the Company acquired its MEC
subsidiary in a merger. In July 1996, the Company's LSIA subsidiary acquired the
assets of the NNJEI's ophthalmic practice.
As used herein, the term the "Company" refers to LaserSight Incorporated and
its subsidiaries, unless the context otherwise requires. The Company's principal
offices and mailing address are 12161 Lackland Road, St. Louis, Missouri 63146,
and its telephone number is (314) 469-3220.
<PAGE>
THE OFFERING
Common Stock outstanding as of November 13, 1997 9,984,672 shares
Shares Offered by Selling Shareholders:
Common Stock issued to date upon conversion of None.
Series B Preferred Stock
Common Stock issuable upon conversion of Minimum: 1,995,532 shares(1)
outstanding Series B Preferred Stock Maximum: Indeterminate(2)
Common Stock issuable upon exercise of
1997 Warrants 790,000 shares
Other
Risk Factors The Shares involve a high
degree of risk. Investors
should carefully consider the
information set forth under
"Risk Factors."
Proceeds to the Company if the 1997 Warrants $4,668,900
are exercised in full
Use of proceeds Working capital; general
corporate purposes.
The Nasdaq Stock Market trading symbol LASE
- ----------------------------
(1) The minimum quantity, 20% of the shares outstanding on August 29, 1997, is
based on the current limit on shares which can be issued without shareholder
approval, pursuant to Rule 4460(i) of the NASDAQ National Market.
(2) In the event of a conversion, the actual number of shares of Common Stock
issuable will equal (i) the original purchase price of the shares of
Preferred Stock ($10,000 per share) to be converted divided by (ii) a
conversion price equal to the lesser of $6.68 per share or the average of
the three lowest closing bid prices of the Common Stock during the 20
consecutive trading days preceding such conversion (30 trading days if the
five day average closing bid price on February 25, 1998 is less than $5.14),
but in no event more than 1,995,532 shares without shareholder approval. If
a conversion occurs when the Common Stock is not listed on the Nasdaq
National Market, the American Stock Exchange or the New York Stock Exchange,
the otherwise-applicable conversion price will be multiplied by 0.93. In the
event that the Company were to exercise its option to redeem shares of
Series B Preferred Stock before January 26, 1998, the actual number of
shares of Common Stock issuable would be the number determined pursuant to
the first sentence, decreased by the redeemed face amount, and adjusted by a
premium initially ranging from 4% up to 14% (with the rate varying from
October 28, 1997 to January 26, 1998). See "Description of
Securities--Preferred Stock."
For the foreseeable future, the Company does not anticipate paying
dividends on the Common Stock, and thus does not anticipate paying any
participating dividends on the Series B Preferred Stock. The actual number
of shares of Common Stock to be issued as dividends on Preferred Stock will
equal the amount of dividends paid on the Common Stock, if any, through the
date of the conversion thereof, divided by the market price of the Common
Stock on the date preceding such event. See "Description of
Securities--Preferred Stock."
<PAGE>
RISK FACTORS
The Shares offered hereby involve a high degree of risk. In addition, this
Prospectus contains forward-looking statements (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act) which involve
risks and uncertainties. Included in the following Risk Factors are factors that
could affect the Company's actual results and could cause the Company's actual
results to differ in material respects from the results discussed in any
forward-looking statements made by, or on behalf of, the Company in this
Prospectus and the documents incorporated by reference herein. In addition to
the other information contained or incorporated by reference in this Prospectus,
purchasers of the Shares should carefully consider the following risk factors:
Company-Related Uncertainties
-----------------------------
Obligation to Redeem Preferred Stock if Stockholder Approval Not Obtained.
If for any reason the Company's shareholders do not approve by December 26, 1997
the possible issuance of an indefinite number of shares of Common Stock upon the
conversion of the Company's outstanding Series B Preferred Stock, the Company
will be obligated to redeem, at the Special Redemption Price (as defined), a
number of shares of Series B Preferred Stock sufficient to permit the conversion
of 200% of the remaining shares of Series B Preferred Stock without breaching
any obligation of the Company under its listing agreement with the Nasdaq
National Market. The "Special Redemption Price" means a cash payment equal to
the greater of (i) the liquidation preference of $10,000 per share of Series B
Preferred Stock multiplied by 125% or (ii) the current market value of the
shares of Common Stock which the holders of such shares of Series B Preferred
Stock would otherwise be entitled to receive upon the conversion if such shares
were converted into Common Stock, in either case together with interest on such
greater amount at the rate of up to 2% for each whole or partial month during
which such delay continues beyond five business days after the event which
required such redemption. The estimated amount of the Company's redemption
obligation is $11,315,000 (including a premium of 25% or approximately
$2,263,000), assuming a Variable Conversion Price of $3.90625 per share and a
market price of the Common Stock of $4.00 per share (based on market data on the
Nasdaq National Market as of November 18, 1997) and completion of the redemption
by January 2, 1998. The Company has not established a reserve of cash or
marketable securities to satisfy this obligation if it were to arise, and there
can be no assurance that the Company will have available the cash or other
resources to satisfy any such future redemption obligation, or that such
redemption would not have a material adverse effect on the Company's financial
position or liquidity.
Potentially Unlimited Number of Common Shares Issuable Upon Conversion of
Preferred Stock. The number of shares of Common Stock issuable upon each
conversion of the Series B Preferred Stock will depend on the market price of
the Common Stock during the period immediately preceding such conversion and
will increase as the market price of the Common Stock declines below $6.68 per
share (the maximum conversion price of the Series B Preferred Stock). There is
no limit on the number of shares of Common Stock issuable in connection with the
conversions of Series B Preferred Stock, except that the issuance of more than
1,995,532 shares of Common Stock in connection with such conversions is subject
to the approval of the Company's shareholders at a special meeting of
shareholders scheduled for December __, 1997. The following table illustrates
the illustrates how changes in the market price of the Common Stock could effect
the number of shares issuable upon such conversions:
<PAGE>
Assumed Number of As % of Common Shares
Conversion Conversion Assumed Outstanding
Price(1) Shares Issuable After Conversion(2)
$1.00 12,950,000 56.5%
$2.00 6,475,000 39.3%
$3.00 4,316,667 30.2%
$4.00 3,237,500 24.5%
$5.00 2,590,000 20.6%
$6.00 2,158,333 17.8%
$6.68 1,938,622 16.3%
(maximum conversion price)
1 Such Conversion Price is based on the lesser of $6.68 per share or the
Variable Conversion Price. For this purpose, "Variable Conversion Price"
means the average of the three lowest closing bid prices per share of the
Common during the Lookback Period (as defined) (subject to equitable
adjustment for any stock splits, stock dividends, reclassifications or
similar events during the Lookback Period). For this purpose, "Lookback
Period" means the 20 (or, under certain circumstances, 30) consecutive
trading days immediately preceding the conversion date. As of November 18,
1997 the Variable Conversion Price was $3.90625 per share.
2 Assumes that the aggregate number of shares outstanding at the time of
conversion equals the 9,982,672 shares of Common Stock outstanding on
November 13, 1997 plus the number of shares issuable in connection with such
conversion. Also assumes that all shares of Preferred Stock are converted at
the conversion price indicated.
In addition, in the event of a liquidation of the Company, the holders of
the Series B Preferred Stock would be entitled to receive distributions in
preference to the holders of the Common Stock.
Past Losses and Operating Cash Flow Deficits; No Assurance of Future Profits
or Positive Operating Cash Flows. The Company incurred losses of $4.1 million
and $5.5 million during 1996 and the first nine months of 1997, respectively.
During such 1996 and 1997 periods, the Company had a deficit in cash flow from
operations of $4.2 million and $3.0 million, respectively. Although the Company
achieved profitability during 1995, it had a deficit in cash flow from
operations of $1.9 million during that year. In addition, the Company incurred
losses in 1991 through 1993. As of September 30, 1997, the Company had an
accumulated deficit of $10.1 million. There can be no assurance that the Company
can regain or sustain profitability or positive operating cash flow.
Uncollectible Receivables Could Exceed Reserves. At September 30, 1997, the
Company's trade accounts and notes receivable aggregated approximately
$11,090,000, net of total allowances for collection losses and returns of
approximately $1,650,500. Approximately 87% of net receivables at September 30,
1997 relate to international accounts. Accrued commissions, the payment of which
generally depends on the collection of such net trade accounts and notes
receivable, aggregated approximately $1,551,000 at September 30, 1997. Exposure
to collection losses on technology-related receivables is principally dependent
on its customers ongoing financial condition and their ability to generate
revenues from the Company's laser systems. The Company's ability to evaluate the
financial condition and revenue generating ability of prospective customers
located outside of the United States is generally more limited than for
customers located in the United States. The Company monitors the status of its
receivables and maintains a reserve for estimated losses. The Company's
operating history has been relatively short. There can be no assurance that the
<PAGE>
current reserves for estimated losses ($1,393,000 at September 30, 1997) will be
sufficient to cover actual write-offs over time. Actual write-offs that
materially exceed amounts reserved could have a material adverse effect on the
Company's financial condition, liquidity and results of operations.
Possible Dilutive Issuance of Common Stock--LaserSight Centers. The Company
has agreed, based on a previously-reported acquisition agreement (the "Centers
Agreement") entered into in 1993 and modified in July 1995 and March 1997, to
issue to the former shareholders and option holders (including two trusts
related to the Chairman of the Board of the Company and certain former officers
and directors of the Company) of LaserSight Centers, the Company's
development-stage subsidiary, up to 600,000 unregistered shares of Common Stock
(the "Centers Earnout Shares") based on the Company's future pre-tax operating
income through March 2002 from performing PRK, PTK or other refractive laser
surgical procedures. The Centers Earnout Shares are to be issued at the rate of
one share per $4.00 of such operating income. As of September 30, 1997, the
Company had not accrued any amount of such pre-tax operating income. There can
be no assurance that the issuance of Centers Earnout Shares will be accompanied
by an increase in the Company's per share operating results. The Company is not
obligated to pursue strategies that may result in the issuance of Centers
Earnout Shares. It may be in the interest of the Chairman of the Board for the
Company to pursue business strategies that maximize the issuance of Centers
Earnout Shares.
Possible Dilutive Issuance of Common Stock--Florida Laser Partners. Based on
a previously-reported royalty agreement entered into in 1993 and modified in
July 1995 and March 1997, the Company is obligated to pay to a partnership whose
partners include the Chairman of the Board of the Company and certain former
officers and directors of the Company a royalty of up to $43 (payable in cash or
shares of Common Stock based on its then-current market value (the "Royalty
Shares")), for each eye on which laser refractive optical surgical procedure is
conducted on an excimer laser system owned or operated by LaserSight Centers or
its affiliates. No such payment obligation has arisen as of September 30, 1997
because royalties do not begin to accrue until the earlier of March 2002 or the
delivery of an additional 600,000 Centers Earnout Shares (none of which had
accrued as of such date). There can be no assurance that the issuance of Royalty
Shares will be accompanied by an increase in the Company's per share operating
results. It may be in the interest of the Chairman of the Board for the Company
to pursue business strategies that maximize the issuance of Royalty Shares.
Possible Dilutive Issuance of Common Stock--The Farris Group. To the extent
that an earnout provision relating to the Company's acquisition of The Farris
Group in 1994 is satisfied based on certain annual pre-tax income targets
through December 31, 1998, the Company would be required to issue to the former
owner of such company (Mr. Michael R. Farris, the President and Chief Executive
Officer of the Company) an aggregate of up to 750,000 shares of Common Stock
(collectively, the "Farris Earnout Shares"). To date, 406,700 Farris Earnout
Shares have been issued based on the operating results of the Farris Group
through December 31, 1995. As a result of the loss incurred by The Farris Group
during 1996, no Farris Earnout Shares became issuable for such year. If
additional Farris Earnout Shares become issuable, goodwill and the resulting
amortization expense will increase. There can be no assurance that the issuance
of Farris Earnout Shares will be accompanied by an increase in the Company's per
share operating results.
Acquisition- and Financing-Related Contingent Commitments to Issue
Additional Common Shares. The Company has agreed in connection with its
acquisition of the assets of the Northern New Jersey Eye Institute in July 1996
to issue up to 102,798 additional shares of Common Stock if the fair market
value of the Common Stock in July 1998 is less than $15 per share. The Company
may from time to time include similar provisions in future acquisitions and
financings. The factors to be considered by the Company in including such
provisions may include the Company's cash resources, the trading history of the
<PAGE>
Company's common stock, the negotiating position of the selling party or the
investors as applicable, and the extent to which the Company determines that the
expected benefit from the acquisition or financing exceeds the potential
dilutive effect of the price-protection provision. Persons who are the
beneficiaries of such provisions effectively receive limited protection from
declines in the market price of the Common Stock, but other shareholders of the
Company can expect to incur additional dilution of their ownership interest in
the event of a decline in the price of the Common Stock.
Potential Liquidity Constraints. During the quarter ended September 30,
1997, the Company experienced a $2.2 million deficit in cash flow from
operations (73% of the year-to-date deficit), largely resulting from the low
level of laser system sales and the increase in the Company's research,
development and regulatory expenses. During the quarter, the Company also
experienced significant decreases in the amount of working capital (from $6.4
million to $4.5 million) and cash and cash equivalents (from $3.1 million to
$1.2 million). Although the Company expects cash flow from operations to improve
somewhat in the fourth quarter of 1997 and first quarter of 1998 relative to the
level for the third quarter of 1997, such improvement will depend on, among
other things, the Company's ability to sell and produce its new LaserScan LSX
laser systems and its Automated Disposable Keratome (ADK) product. See
"--Technology-Related Uncertainties--New Products". Subject to these factors,
the Company believes that its balances of cash and cash equivalents, together
with expected operating cash flows and the availability of its revolving credit
facility with Foothill Capital Corporation ("FCC") will be sufficient to fund
its anticipated working capital requirements for the next 12-month period based
on modest growth and anticipated collection of receivables. However, a failure
to collect timely a material portion of current receivables or unexpected delays
in the shipment of the Company's LaserScan LSX or ADK products could have a
material adverse effect on the Company's liquidity.
Uncertainty Regarding Availability or Terms of Capital to Satisfy Possible
Additional Needs. The Company may need additional capital (i) to finance any
future negative cash flow from operations, (ii) to introduce its laser systems
into the United States market after receiving FDA approval. The Company believes
the earliest these expenses might occur is the latter half of 1998, and (iii) to
satisfy certain cash payment obligations under its PMA acquisition agreement of
July 1997. (Such cash payment obligations under the PMA acquisition agreement
include $1.75 million payable in the event the FDA approves the PMA before July
29, 1998 and $1.0 million payable in the event that the FDA approves the
Company's scanning laser for commercial sale in the U.S. before April 1, 1998.)
In addition, the Company may seek alternative sources of capital to fund its
product development activities, to consummate future strategic acquisitions, and
to accelerate its implementation of managed care strategies. Except for up to
$3.2 million of additional borrowing available under its credit facility with
FCC (subject to the reduction of such availability amount in monthly
installments of $1.333 million commencing in August 1998 and to the Company's
continued compliance with financial and other covenants), the Company has no
present commitments to obtain such capital, and no assurance can be given that
the Company will be able to obtain additional capital on terms satisfactory to
the Company. The $4 million outstanding principal amount of the FCC term loan is
payable in monthly installments of $1.333 million between May and July 1998. To
the extent that future financing requirements are satisfied through the sale of
equity securities, holders of Common Stock may experience significant dilution
in earnings per share and in net book value per share. The FCC financing or
other debt financing could result in a substantial portion of the Company's cash
flow from operations being dedicated to the payment of principal and interest on
such indebtedness and may render the Company more vulnerable to competitive
pressures and economic downturns.
<PAGE>
Dependence on Key Personnel. The Company is dependent on its executive
officers and other key employees, especially Michael R. Farris, its President
and Chief Executive Officer. A loss of one or more such officers or key
employees, especially of Mr. Farris, could have a material adverse effect on the
Company's business. The Company does not carry "key man" insurance on Mr. Farris
or any other officers or key employees.
Risks Associated with Past and Possible Future Acquisitions. The Company has
made several significant corporate acquisitions in the last four years,
including MRF in 1994, MEC in 1995, the assets of NNJEI in 1996, Photomed in
1997, and the IBM laser patents in 1997. These prior acquisitions, as well as
any future acquisition, may not achieve adequate levels of revenue,
profitability or productivity or may not otherwise perform as expected.
Acquisitions involve special risks, including risks associated with
unanticipated liabilities and contingencies, diversion of management attention
and possible adverse effects on earnings resulting from increased goodwill
amortization, increased interest costs, the issuance of additional securities
and difficulties related to the integration of the acquired business. Although
the Company is currently focusing on its existing operations, the future ability
of the Company to achieve growth through acquisitions will depend on a number of
factors, including the availability of attractive acquisition opportunities, the
availability of funds needed to complete acquisitions, the availability of
working capital needed to fund the operations of acquired businesses and the
effect of existing and emerging competition on operations. Should additional
acquisitions be sought, there can be no assurance that the Company will be able
to successfully identify additional suitable acquisition candidates, complete
additional acquisitions or integrate acquired businesses into its operations.
Amortization of Significant Intangible Assets. Of the Company's total assets
at September 30, 1997, approximately $31.1 million (57%) represents intangible
assets, of which approximately $14.8 million reflects goodwill which is being
amortized using an estimated life ranging from 12 to 25 years, approximately
$11.5 million reflects the cost of patents which are being amortized over a
period ranging from 8 to 17 years, and approximately $4.8 million reflects the
cost of licenses and technology acquired which is being amortized over a period
ranging from 31 months to 12 years. Goodwill is an intangible asset that
represents the difference between the total purchase price of an acquisition and
the amount of such purchase price allocated to the fair value of the net assets
acquired. Goodwill and other intangibles are amortized over a period of time,
with the amount amortized in a particular period constituting a non-cash expense
that reduces the Company's operating results in that period. A reduction in net
income resulting from the amortization of goodwill and other intangibles may
have an adverse impact upon the market price of the Company's Common Stock. In
addition, in the event of a sale or liquidation of the Company or its assets,
there can be no assurance that the value of such intangible assets would be
recovered.
Health Care Services-Related Uncertainties
------------------------------------------
Risks Associated with Managed Care Contracts. As an increasing percentage of
optometric and ophthalmologic patients are coming under the control of managed
care entities, the Company believes that its success will, in part, depend on
the Company's ability to negotiate contracts with HMOs, employer groups and
other private third-party payors pursuant to which services will be provided on
a risk-sharing or capitated basis. Under some of such agreements, the eye care
provider accepts a predetermined amount per month per patient in exchange for
providing all necessary covered services to the enrolled patients. Such
contracts pass much of the risk of providing care from the payor to the
provider. The proliferation of such contracts in markets served by the Company
could result in greater predictability of revenues, but greater unpredictability
of expenses. There can, however, be no assurance that the Company will be able
<PAGE>
to negotiate satisfactory arrangements on a risk-sharing or capitated basis. In
addition, to the extent that patients or enrollees covered by such contracts
require more frequent or extensive care than anticipated, operating margins may
be reduced or, in the worst case, the revenues derived from such contracts may
be insufficient to cover the costs of the services provided. As a result, the
Company may incur additional costs, which would reduce or eliminate anticipated
earnings under such contracts and could have a material adverse affect on the
Company's results of operations.
Health Care Regulation - General. The Company is subject to extensive state,
federal and local regulations. The Company is also subject to laws and
regulations relating to business corporations in general. The Company believes
its operations are in substantial compliance with applicable law. However, there
can be no assurance that review of the Company's business, its affiliates, and
contractual arrangements by courts or health care, tax, labor, and other
regulatory authorities will not result in determinations that could adversely
affect the operations of the Company. Also, there can be no assurance that the
health care regulatory environment will not change and restrict the Company's
existing operations or limit the expansion of the Company's business. The health
care industry is presently experiencing sweeping and dynamic change. Much of
this change has been prompted by market forces. Numerous legislative proposals
and laws also have prompted other changes in the industry. In recent years a
number of governmental and other public initiatives have developed to reform the
health care system in the United States. If adopted, certain of these
initiatives could substantially alter the method of delivery and reimbursement
for medical care services in this country. There can be no assurance that
current or future legislative initiates or governmental regulation will not
adversely affect the business of the Company.
More generally, in recent years there have been changes in statutes and
regulations regarding the provision of health care services and the Company
anticipates that such statutes and regulations will continue to be the subject
of future modification. The Company cannot predict what changes may be enacted,
and what effect changes in these regulations might have upon the Company and its
prospects. It is possible that federal or state legislation could contain
provisions resulting in governmental price ceilings (even on procedures for
which government health insurance is not available) which may adversely affect
the ophthalmic laser market or otherwise adversely affect the Company's business
in the United States. The uncertainty regarding additional health care statutes
or regulations, and the enactment of reform legislation, could have an adverse
affect on the development and growth of the Company's business and might result
in additional volatility in the market price of the Company's securities.
Health Care Regulation - Referrals. The health care industry is subject to
"anti-referral" and "anti-kickback" laws governing patient referrals, and other
laws concerning fee splitting with non-physicians. Although the Company believes
that its operations are in substantial compliance with existing applicable laws,
the Company's business operations have not been the subject of judicial or
regulatory review. There can be no assurance that the Company's business will
not be reviewed in the future, and if reviewed or challenged that the Company
would prevail. Any such review or challenge of the Company's business could
result in determinations that could adversely affect the operations of the
Company. There can be no assurance that the health care regulatory environment
will not change so as to restrict the Company's existing operations or their
expansion. Aspects of certain health care reforms as proposed in the past, such
as further reductions in Medicare and Medicaid payments and additional
prohibitions on physician ownership, directly or indirectly, of facilities to
which they refer patients, if adopted, could adversely affect the Company.
<PAGE>
Corporate Practice of Medicine. The laws of many states prohibit business
corporations or other non-professional corporations such as the Company from
practicing medicine and employing physicians to practice medicine. The Company
intends to perform only non-medical administrative services, does not intend to
represent to the public or patients of participating providers that it offers
medical services, and does not intend to exercise influence or control over the
practice of medicine by the participating providers with whom it affiliates
pursuant to contractual arrangements. Accordingly, the Company believes that its
intended operations will not be in violation of applicable state laws relating
to the practice of medicine. However, the laws in most states regarding the
corporate practice of medicine have been subjected to limited judicial and
regulatory interpretation and, therefore, no assurances can be given that the
Company's activities will be found to be in compliance, if challenged. The laws
of many states also prohibit non-professional corporations such as the Company
and other entities that are not owned entirely by physicians from employing
physicians, optometrists and other similar professionals having control over
clinical decision-making, or engaging in other activities that are deemed to
constitute the practice of medicine. Some states also prohibit non-professional
corporations from owning, maintaining or operating an office or facility for the
practice of medicine. Some states also prohibit non-professional corporations
from owning, maintaining or operating an office or facility for the practice of
medicine. These laws may be construed to permit arrangements under which the
physicians are not employed by or otherwise controlled as to clinical matters by
the party supplying such facilities and non-professional services but provide
services under contract with such an entity.
Professional Liability. Although the Company does not intend to engage in
the practice of medicine, there can be no assurance that the Company will not
have liability arising from the medical services, utilization review, peer
review, or other similar activities, of the participating providers. Under its
contractual arrangements, the Company requires all participating providers to
carry professional liability insurance and other insurance necessary to insure
against such risks, and, where possible, to add the Company as an additional
insured under such professional liability insurance policies and other
applicable policies of the participating provider. It is unlikely that such
insurers will add the Company as an additional insured. The Company carries
general liability and casualty insurance, but there can be no assurance that
claims in excess of any insurance coverage will not be asserted against the
Company. The availability and cost of such insurance is beyond the control of
the Company, and the cost of such insurance to the Company may have an adverse
effect on the Company's operations. Additionally, successful claims of liability
asserted against the Company that exceed applicable policy limits could have a
material adverse effect on the Company's results of operations and financial
condition.
Competition. The Company will compete with other companies which seek to
acquire the business assets of, provide management and other services to, and
affiliate with existing provider practices. Other companies are actively engaged
in businesses similar to that of the Company, some of which have substantially
greater financial resources and longer operating histories than the Company and
are located in areas where the Company may seek to expand in the future. The
Company assumes that additional companies with similar objectives may enter the
Company's markets and compete with the Company and there can be no assurance
that the Company will be able to compete effectively with such companies.
Additionally, the market for vision care is becoming increasingly competitive.
The Company's participating providers may compete with many other providers.
Competition is based on many factors including marketing and financial strength,
public image and the strength of established relationships in the industry.
There can be no assurance that the Company's participating providers can
successfully compete in their respective markets. (See "Business -
Competition").
<PAGE>
Insurance Regulation. Federal and state laws regulate insurance companies,
HMOs and other managed care organizations. Many states also regulate the
establishment and operation of networks of health care providers. Generally,
these laws do not apply to the hiring and contracting of physicians by other
health care providers. There can be no assurance that regulators in the states
in which the Company operates would not apply these laws to require licensure of
the Company's health care operations as an HMO, an insurer or a provider
network. The Company believes that it is in compliance with these laws in the
states in which it presently does business, but there can be no assurance that
interpretations of these laws by the regulatory authorities in these states or
in the states in which the Company may expand its managed care operations will
not require licensing or a restructuring of some or all of the Company's managed
care operations, or that if licensing is required, that the Company could
complete such licensing in a timely manner. In addition, there can be no
assurance that the Company's strategy to expand its managed vision care business
will not subject it to regulation in other states.
Dependence on Major Customer. Blue Cross and Blue Shield of Maryland
("BC/BS") accounted for 44.4% and 49.1% of the revenues of the Company's health
care services segment during the year ended 1996 and the nine months ended
September 30, 1997, respectively. Such revenues represented 22.5% and 26.4% of
the Company's consolidated revenues during such 1996 and 1997 periods,
respectively. A termination of or failure to renew the agreements between BC/BS
and the Company could have a material adverse effect on the Company's results of
operations and financial condition.
Technology-Related Uncertainties
--------------------------------
Government Regulation. The Company's laser products are subject to strict
governmental regulations which materially affect the Company's ability to
manufacture and market these products and directly impact the Company's overall
prospects. All laser devices to be marketed in interstate commerce are subject
to the laser regulations required by the Radiation Control for Health and Safety
Act, as administered by the U.S. Food and Drug Administration (the "FDA"). Such
Act imposes design and performance standards, labeling and reporting
requirements, and submission conditions in advance of marketing for all medical
laser products. The Company's laser systems produced for medical use require
pre-market approval by the FDA before they can be marketed in the United States.
Each separate medical device requires a separate FDA submission, and specific
protocols have to be submitted to the FDA for each claim made for each medical
device. In addition, laser products marketed in foreign countries are often
subject to local laws governing health product development processes which may
impose additional costs for overseas product development. The Company cannot
determine the costs or time it will take to complete the approval process and
the related clinical testing for its medical laser products. Future legislative
or administrative requirements in the United States, or elsewhere, may adversely
affect the Company's ability to obtain or retain regulatory approval for its
laser products. The failure to obtain required approvals on a timely basis could
have a material adverse effect on the Company's business, financial condition
and results of operations.
The Company has completed clinical studies in Phase 2a and 2b for PRK. Such
data were presented to the FDA and on September 17, 1997 the Company was granted
permission to expand into Phase 3 Myopic PRK studies. The Phase 3 PRK clinical
investigation is now under way. The Company is also conducting a Phase 2 trial
for PARK (Photo-Astigmatic Refractive Keratectomy). The FDA has informed the
Company that it may combine the results from all its studies in its PMA
application. That application is being prepared for submission in late 1997 or
early 1998. The Company also has an Investigational Device Exemption approved by
the FDA for the treatment of glaucoma by laser trabeculodissection. The Company
has recently completed a Phase 1 study in blind eyes and will be submitting the
<PAGE>
results to the FDA to request expansion into a small population of sighted
glaucoma patients.
Uncertainty Concerning Patents. Should LaserSight Technologies' lasers
infringe upon any valid and enforceable patents in international markets, or by
Pillar Point Partners (a partnership of which the general partners are
subsidiaries of Visx and Summit Technologies) in the U.S., then LaserSight
Technologies may be required to license such technology from them. In connection
with its settlement of litigation with Pillar Point Partners, the Company agreed
to notify Pillar Point Partners before the Company begins manufacturing or
selling its laser systems in the United States. Should such licenses not be
obtained, LaserSight Technologies might be prohibited from manufacturing or
marketing its PRK-UV lasers in these countries where patents are in effect. The
Company's revenues from international sales for 1996 and the nine months ended
September 30, 1997 were 47% and 42%, respectively, of the total revenues.
Competition. The vision correction industry is subject to intense,
increasing competition. The Company competes against both alternative and
traditional medical technologies (such as eyeglasses, contact lenses and radial
keratotomy ("RK")) and other laser manufacturers. Many of the Company's
competitors have existing products and distribution systems in the marketplace
and are substantially larger, better financed, and better known. A number of
lasers manufactured by other companies have either received, or are much further
advanced in the process of receiving, FDA approval for specific procedures, and,
accordingly, may have or develop a higher level of acceptance in some markets
than the Company's lasers. The entry of new competitors into the markets for the
Company's products could cause downward pressure on the prices of such products
and a material adverse effect on Company's business, financial condition and
results of operations.
Technological Change. Technological developments in the medical and laser
industries are expected to continue at a rapid pace. Newer technologies and
surgical techniques could be developed which may offer better performance than
the Company's laser systems. The success of any competing alternatives to PRK
could have a material adverse effect on the Company's business, financial
condition and results of operations.
New Products. There can be no assurance that the Company will not experience
difficulties that could delay or prevent the successful development,
introduction and marketing of its new LaserScan LSX excimer laser and other new
products and enhancements, or that its new products and enhancements will be
accepted in the marketplace, including the disposable microkeratome product
licensed in September 1997. As is typical in the case of new and rapidly
evolving industries, demand and market acceptance for recently introduced
technology and products are subject to a high level of uncertainty. In addition,
announcements of new product offerings may cause customers to defer purchasing
existing Company products.
Uncertainty of Market Acceptance of Laser-Based Eye Treatment. The Company
believes that its achievement of profitability and growth will depend in part
upon broad acceptance of PRK or LASIK in the United States and other countries.
There can be no assurance that PRK or LASIK will be accepted by either the
ophthalmologists or the public as an alternative to existing methods of treating
refractive vision disorders. The acceptance of PRK and LASIK may be affected
adversely by their cost, possible concerns relating to safety and efficacy,
general resistance to surgery, the effectiveness and lower cost of alternative
methods of correcting refractive vision disorders, the lack of long-term
follow-up data, the possibility of unknown side effects, the current lack of
third-party reimbursement for the procedures, any future unfavorable publicity
involving patient outcomes from use of PRK or LASIK systems, and the possible
<PAGE>
shortages of ophthalmologists trained in the procedures. The failure of PRK or
LASIK to achieve broad market acceptance could have a material adverse effect on
the Company's business, financial condition and results of operations.
International Sales. International sales may be limited or disrupted by the
imposition of government controls, export license requirements, political
instability, trade restrictions, changes in tariffs, difficulties in staffing
and coordinating communications among and managing international operations.
Additionally, the Company's business, financial condition and international
results of operations may be adversely affected by increases in duty rates,
difficulties in obtaining export licenses, ability to maintain or increase
prices, and competition. To date, all sales made by the Company have been
denominated in U.S. dollars. Due to its export sales, however, the Company is
subject to currency exchange rate fluctuations in the U.S. dollar, which could
increase the price in local currencies of the Company's products. This could in
turn result in longer payment cycles and greater difficulty in collection of
receivables. See "--Receivables" above. Although the Company has not experienced
any material adverse effect on its operations as a result of such regulatory,
political and other factors, there can be no assurance that such factors will
not have a material adverse effect on the Company's operations in the future or
require the Company to modify its current business practices.
Potential Product Liability Claims; Limited Insurance. As a producer of
medical devices, the Company may face liability for damages to users of such
devices in the event of product failure. The testing and use of human care
products entails an inherent risk of negligence or other action. An award of
damages in excess of the Company's insurance coverage could have a material
adverse effect on the Company's business, financial condition and results of
operations. While the Company maintains product liability insurance, there can
be no assurance that any such liability of the Company will be included within
its insurance coverage or that damages will not exceed the limits of its
coverage. The Company's current insurance coverage limitation is $6,000,000,
including up to $5,000,000 of coverage under an excess liability policy.
Manufacturing Risks. The Company contracts with third parties for certain
components used in its lasers. Several of these components are currently
provided by a single vendor. If any of these sole-source suppliers were to cease
providing components to the Company, the Company would have to locate and
contract with a substitute supplier, and there can be no assurances that such
substitute supplier could be located and qualified in a timely manner or could
provide required components on commercially reasonable terms. An interruption in
the supply of laser components could have a material adverse effect on the
Company's business, financial condition and results of operations.
No Backlog; Concentration of Sales at End of Quarter. The Company has
historically operated with little or no backlog because its products are
generally shipped as orders are received. Historically, the Company has received
and shipped a significant portion of its orders for a particular quarter near
the end of the quarter. As a result, the Company's operating results for any
quarter often depend on orders received and laser systems shipped late in that
quarter. Any delay in such orders or shipments may cause a significant
fluctuation in period-to-period operating results.
<PAGE>
USE OF PROCEEDS
If all of the 1997 Warrants (with an exercise price of $5.91 per share) are
exercised, the Company will realize proceeds in the amount of $4,668,900. Such
proceeds will be contributed to the working capital of the Company and used for
general corporate purposes. The Company will not receive any proceeds from any
sale of the Shares by the Selling Shareholders.
CAPITALIZATION
The following table sets forth (i) the capitalization of the Company at
September 30, 1997, and (ii) the capitalization of the Company at such date, as
adjusted to reflect the redemption of 305 shares of Series B Preferred Stock on
October 28, 1997.
<TABLE>
<CAPTION>
September 30, 1997
------------------
Actual Pro forma
<S> <C> <C>
Current portion of capital lease obligation $ 224,549 $ 224,549
============ ============
Long-term obligations $ 971,018 $ 971,018
Redeemable Convertible Preferred Stock:
Par value $.001 per share; authorized
10,000,000 shares; actual 1,600;
pro forma 1,295 14,374,027 11,633,978
Stockholders' Equity:
Common Stock, par value $.001 per share
authorized 20,000,000 shares; actual and
pro forma 10,149,872 shares 10,150 10,150
Additional paid-in capital 40,018,241 39,586,290
Paid-in capital-warrants 592,500 592,500
Stock subscription receivable (1,140,000) (1,140,000)
Accumulated deficit (10,112,240) (10,112,240)
Treasury stock, actual and pro forma,
170,200 shares (632,709) (632,709)
-------------- ---------------
Total capitalization and stockholders' equity $ 44,080,987 $ 40,908,987
============== ===============
</TABLE>
DESCRIPTION OF SECURITIES
The following description of the Company's capital stock is not complete and
is subject in all respects to the Delaware General Corporation Law (the "DGCL")
and to the provisions of the Company's Certificate of Incorporation, as amended
(the "Charter"), and By-Laws.
The authorized capital stock of the Company consists of 20,000,000 shares of
Common Stock and 10,000,000 shares of preferred stock, $.001 par value, issuable
in series. As of November 13, 1997, 9,984,672 shares of Common Stock were
outstanding (not including shares issuable upon the exercise of outstanding
stock options or upon the conversion of outstanding preferred stock). As of
<PAGE>
November 18, 1997, the only shares of preferred stock outstanding were 1,295
shares of the Series B Preferred Stock.
Common Stock
Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of Common Stock are entitled to share pro rata in
such dividends and other distributions, if any, as may be declared by the Board
of Directors out of funds legally available therefor, subject to any prior
rights accruing to any holders of preferred stock. Upon the liquidation or
dissolution of the Company, the holders of Common Stock are entitled to share
proportionally in all assets available for distribution to such holders. Holders
of Common Stock have no preemptive, redemption or conversion rights. The
outstanding shares of Common Stock issued are fully paid and nonassessable.
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.
Preferred Stock
The Board of Directors is authorized, subject to certain limitations
prescribed by law, without further stockholder approval, to issue from time to
time up to an aggregate of 10,000,000 shares of preferred stock in one or more
series and to fix or alter the designations, preferences, rights and any
qualifications, limitations or restrictions of the shares of each such series,
including the dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption (including sinking fund provisions), redemption price or
prices, liquidation preferences and the number of shares constituting any series
or designations of such series. The rights, preferences and privileges of
holders of Common Stock are subject to, and may be adversely affected by, the
rights of the holders of shares of any series of preferred stock which the
Company may designate and issue.
Series A Convertible Preferred Stock
On January 10, 1996, the Company issued 116 shares of Series A Convertible
Preferred Stock, par value $.001 per share (the "Series A Preferred Stock"). All
of such shares had been converted into Common Stock.
Series B Convertible Participating Preferred Stock
On August 29, 1997, the Company issued 1,600 shares of Series B Preferred
Stock. On October 28, 1997, the Company completed an optional redemption of 305
of such shares by paying $3,172,000 (including the 4% redemption premium).
The Series B Preferred Stock is convertible into Common Stock at the option
of the holders of the Series B Preferred Stock at any time until August 29,
2000, on which date all Series B Preferred Stock remaining outstanding will
automatically be converted into Common Stock. The conversion price will equal
the lesser of $6.68 per share of Common Stock or the average of the three lowest
closing bid prices of the Common Stock during the 20 trading days preceding the
conversion date (during the 30 trading days preceding the conversion date should
the five-day average price of the Common Stock on February 25, 1998 be less than
$5.138 per share). The Company has the option (after the sale or license of the
<PAGE>
IBM patents and subject to the absence of any mandatory redemption events or
defaults having occurred, and subject to certain procedures) to elect to redeem
up to 640 shares of the Series B Preferred Stock (40% of the amount initially
issued) for cash at premium initially equal to 6.75% through November 27, 1997,
and increasing to 10% through December 27, 1997, and 14% through January 26,
1998. Dividends on the Series B Preferred Stock are payable only to the extent
that dividends are payable on the Company's Common Stock. Each outstanding share
of Series B Preferred Stock shall entitle the holder thereof to a liquidation
preference equal to the sum of $10,000 plus the amount of unpaid dividends, if
any, accrued on such share.
In addition, the Series B Preferred Stock is subject to redemption at the
option of its holders should the Company default on certain obligations. Under
these provisions, if for any reason the Company's shareholders do not approve by
December 26, 1997 the possible issuance of an indefinite number of shares of
Common Stock upon conversion of the Series B Preferred Stock, will be obligated
to redeem, at the Special Redemption Price (as defined below), a sufficient
number of shares of Series B Preferred Stock which will permit conversion of
200% of the remaining shares of Series B Preferred Stock without breaching any
obligation of the Company under the Company's listing agreement with the Nasdaq
National Market. The "Special Redemption Price" means a cash payment equal to
the greater of (i) the liquidation preference of $10,000 multiplied by 125% or
(ii) the current value of the Common Stock, using the price per share of Common
Stock, which the holders of such shares of Series B Preferred Stock would
otherwise be entitled to receive upon conversion. Such redemption must be
completed within five business days of the event which required such redemption.
Any delay in payment will cause such redemption amount to accrue interest at the
rate of 1% per month during the first 30 days, pro rated daily (2% monthly, pro
rated daily, thereafter).
Delaware Law and Certain Charter Provisions
The Company is subject to the provisions of Section 203 of the DGCL. Subject
to certain exceptions, Section 203 prohibits a publicly-held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the interested
stockholder attained such status with the approval of the corporation's board of
directors or unless the business combination is approved in a prescribed manner.
A "business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder which is not
shared pro rata with the other stockholders of the Company. Subject to certain
exceptions, an "interested stockholder" is a person who, together with
affiliates and associates, owns, or within three years did own, 15% or more of a
corporation's voting stock.
The DGCL provides generally that the affirmative vote of a majority of the
shares entitled to vote on any matter is required to amend a corporation's
certificate of incorporation or by-laws, unless a corporation's certificate of
incorporation or by-laws, as the case may be, requires a greater percentage. In
addition, the By-Laws of the Company may, subject to the provisions of DGCL, be
amended or repealed by a majority vote of the Company's Board of Directors.
The Charter contains certain provisions permitted under the DGCL relating to
the liability of directors. These provisions eliminate a director's liability
for monetary damages for a breach of fiduciary duty, except in certain
circumstances involving certain wrongful acts, such as the breach of a
director's duty of loyalty or acts or omissions which involve intentional
misconduct or a knowing violation of law. The Charter contains provisions
indemnifying the directors and officers of the Company to the fullest extent
permitted by the DGCL. The Company also has a directors' and officers' liability
insurance policy which provides for indemnification of its directors and
<PAGE>
officers against certain liabilities incurred in their capacities as such. The
Company believes that these provisions will assist the Company in attracting and
retaining qualified individuals to serve as directors.
Warrants
In connection with the private placement of Series A Preferred Stock on
January 10, 1996, the Company issued to its placement agent, Spencer Trask
Securities Incorporated ("Spencer Trask") and to an assignee of Spencer Trask,
the 1996 Warrants to purchase an aggregate of 17,509 shares of Common Stock at
an exercise price of $13.25 per share. The 1996 Warrants may be exercised at any
time through January 10, 1999.
In connection with the establishment of its FCC credit facility in April
1997, the Company issued to FCC the 1997 FCC Warrants to purchase an aggregate
of 500,000 shares of Common Stock at an exercise price of $6.0667 per share. In
addition, the 1997 FCC Warrants have certain anti-dilution features which
provide for approximately 50,000 additional shares pursuant to the issuance of
the Series B Preferred Stock. The 1997 FCC Warrants may be exercised after March
31, 1998 and then prior to April 1, 2002.
In connection with the 1997 Private Placement, the Company agreed to issue
to the holders and the Placement Agent the Series B Warrants to purchase 750,000
and 40,000 shares, respectively, of Series B Convertible Participating Preferred
Stock at $5.91 per share. The Series B Warrants will be exercisable for a period
of five years from the date of issuance for Common Stock. The Company will be
obligated to register the shares of Common Stock issuable upon exercise and
conversion of the Series B Warrants for resale under the Securities Act.
PLAN OF DISTRIBUTION
Sale by the Selling Shareholders--Conversion Shares. The Company will issue
the Conversion Shares upon the conversion from time to time of the 1,295 shares
of Series B Preferred Stock presently outstanding by the holders thereof
pursuant to the terms of the Series B Preferred Stock. (The Company has redeemed
305 shares of Series B Preferred Stock on October 28, 1997 and may at its option
redeem up to an additional 335 shares on or before January 26, 1998. Any shares
of Series B Preferred Stock not so converted or redeemed before January 26, 1998
will be automatically converted into Conversion Shares on August 29, 2000.) The
Company will receive no proceeds from the resale of the Conversion Shares.
Sale by the Selling Shareholders--1997 Warrant Shares. The Company will
issue Warrant Shares from time to time upon the exercise of the 1997 Warrants by
the holders thereof. The Company will receive from such holders the exercise
price of the 1997 Warrants upon such exercise. The Company will not receive any
of the proceeds from resales of the 1997 Warrant Shares. The Series B Preferred
Stock and 1997 Warrants were issued by the Company in a private placement in
August 1997. See "Description of Securities."
Sale by the Selling Shareholders--Payment Shares. The Company may issue the
Payment Shares in accordance with the terms of the Series B Preferred Stock. The
Payment Shares, if any, will become payable upon the election of the holders of
the Series B Preferred Stock under certain default circumstances. See
"Description of Securities."
<PAGE>
Pursuant to this Prospectus, all or a portion of the Shares may be sold from
time to time by the Selling Shareholders or, subject to certain conditions,
their pledgees, donees, transferees or other successors-in-interest, including,
without limitation, Bear, Stearns International Limited. The Company has been
advised by the Selling Shareholders that there are no underwriting arrangements
with respect to the sale of Common Stock and that the Shares will be offered for
sale in transactions on The Nasdaq Stock Market, in negotiated transactions or
through a combination of both, at prices related to such prevailing market
prices at the time of sale, or at negotiated prices. The Selling Shareholders
may effect such transactions by selling the Shares to or through broker-dealers,
and such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders and/or the purchasers
of the Shares for which such broker-dealers may act as agent or to whom they
sell as principal, or both (which compensation may be in excess of customary
commissions). In addition, any securities covered by this Prospectus which
qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than
pursuant to this Prospectus.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers.
The Selling Shareholders and any broker-dealer who acts in connection with
the resale of the Shares hereunder, may be deemed to be an "underwriter" within
the meaning of Section 2(11) of the Securities Act, and any commissions received
by them and/or profit on any resale thereof as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to the Common Stock for a period of one
business day prior to the commencement of such distribution. In addition and
without limiting the foregoing, the Selling Shareholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Regulation M. These provisions may
limit the timing of purchases and sales of shares of Common Stock by the Selling
Shareholders.
A supplement to this Prospectus will be filed, if required, to disclose (a)
the name of the participating broker-dealer(s), (b) the number of Shares
involved, (c) the price at which such Shares were sold, (d) the commissions paid
or discounts or concessions allowed to such broker-dealer(s), where applicable,
and (e) other facts material to the transaction, including the name and other
information regarding the Selling Shareholders.
The Company will maintain the effectiveness of the Registration Statement
until such time as all of the Shares have been disposed of in accordance with
the intended methods of disposition set forth in the Registration Statement or
the Shares are no longer subject to volume or manner of sale restrictions under
the securities laws.
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth certain information with regard to the
beneficial ownership of Series B Preferred Stock by the Selling Shareholders,
the beneficial ownership of Common Stock by the Selling Shareholders (where
indicated by footnote, on a pro forma as if all 1,295 outstanding shares of
Series B Preferred Stock had been converted into Common Stock November 18,
1997), and the number of shares of Common Stock to be offered by the Selling
Shareholders (also on a pro forma basis where indicated). The actual number of
shares of Common Stock beneficially owned or offered may vary and will be
reflected in a supplement to this Prospectus. See "The Offering."
<TABLE>
<CAPTION>
Shares of
Preferred Shares of
Stock Common Stock Beneficially Common Common Stock
Presently Owned Stock Beneficially Owned
Selling Shareholder Owned (1) Prior to the Offering to be Sold After the Offering
- --------------------- ----------- ---------------------- ---------- ------------------
Conversion Warrant Number Percent of
Shares(1) Shares(2) of Shares Outstanding*
--------- --------- --------- ------------
<S> <C> <C> <C> <C>
CC Investments, LDC 404 1,034,240 234,375 1,268,615 -- --
Societe Generale 243 662,080 140,625 762,705 -- --
Shepherd Investments 324 829,440 187,500 1,016,940 -- --
International, Ltd.
Stark International 324 829,440 187,500 1,016,940 -- --
Harlan P. Kleiman N/A -- 26,516 26,516
Robert K. Schacter N/A -- 8,188 8,188
Thomas J. Griesel N/A -- 1,416 1,416
Steven Lamar N/A -- 3,880 3,880 -- --
- --------------
<FN>
* Without giving effect to the exercise of the 1997 Warrants offered hereby.
1 As of the date of this Prospectus, no Selling Shareholder owned any shares
of Common Stock. Such number of Conversion Shares indicated is the pro forma
number that would have been owned by a Selling Shareholder if it had
converted all of its shares of Series B Preferred Stock into Common Stock as
of November 18, 1997, without giving effect to the NASDAQ 20% Limit, but
after giving effect to the Company's redemption of 305 shares of Series B
Preferred Stock on October 28, 1997. The actual number of Conversion Shares
to be received by such Selling Shareholder, which may be more or less than
the number indicated, will be reflected in a supplement to this Prospectus
following the conversion of such Series B Preferred Stock.
2 Assumes the exercise in full by such Selling Shareholder of a warrant to
purchase Common Stock. See "Description of Securities--Warrants."
</FN>
</TABLE>
LEGAL MATTERS
The legality of the Shares offered hereby has been passed upon for the
Company by Sonnenschein Nath & Rosenthal, Chicago, Illinois.
<PAGE>
EXPERTS
The consolidated financial statements of LaserSight Incorporated and
subsidiaries as of December 31, 1996 and for each of the years in the two-year
period then ended have been incorporated herein by reference and in the
Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein and
in the Registration Statement upon the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of LaserSight Incorporated and
subsidiaries for the year ended December 31, 1994 have been incorporated herein
and in the Registration Statement in reliance upon the report of Lovelace, Roby
& Company, P.A., independent certified public accountants, incorporated by
reference herein and in the Registration Statement upon the authority of said
firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with any amendments thereto, the "Registration Statement") under
the Securities Act with respect to the Shares offered hereby. This Prospectus,
which constitutes a part of the Registration Statement, does not contain all of
the information set forth in the Registration Statement, certain items of which
are contained in schedules and exhibits to the Registration Statement as
permitted by the rules of the Commission. For further information with respect
to the Company and the Shares offered hereby, reference is made to the
Registration Statement and the exhibits and the schedules thereto. Statements
contained in this Prospectus as to the contents of any contract or any document
referred to are not necessarily complete. With respect to each such contract or
other document filed as an exhibit to the Registration Statement, reference is
made to the exhibit for a more complete description of the matters involved, and
each such statement shall be deemed qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Exchange Act
and, in accordance therewith, files periodic reports, proxy statements and other
information with the Commission. A copy of the Registration Statement, including
exhibits and schedules thereto, filed by the Company with the Commission, as
well as other reports, proxy statements and other information filed by the
Company may be inspected without charge at the office of the Commission, 450
Fifth Street, N.W., Washington, D.C., and at the following Regional Offices of
the Commission: 7 World Trade Center, Suite 1300, New York, New York, and 500
West Madison Street, Suite 1400, Chicago, Illinois. Copies of such material can
be obtained, upon payment of prescribed fees at the Public Reference Room of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The address of such site is http://www.sec.gov. Such reports, proxy
statements and other information concerning the Company can also be inspected at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Securities and Exchange Commission registration fee........... $ 9,290.93
Legal fees and expenses....................................... $ 20,000.00
Accountants' fees............................................. $ 5,000.00
Miscellaneous................................................. $ 709.07
-------------
Total...................................................... $ 35,000.00
=============
---------------------------------------
The foregoing items, except for the Securities and Exchange Commission
registration fee, are estimated.
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law authorizes a corporation
to indemnify its directors and officers as well as other employees and
individuals in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act. In addition, pursuant to the
authority of Delaware law, the Certificate of Incorporation, as amended, of the
Company also eliminates this monetary liability of directors to the fullest
extent permitted by Delaware law.
The Company maintains directors' and officers' liability insurance policies
covering certain liabilities of persons serving as officers and directors and
providing reimbursement to the Registrant for its indemnification of such
persons.
Item 16. Exhibits
Exhibit No. Description
5.1 Opinion of Sonnenschein Nath & Rosenthal.
23.1 Consent of KPMG Peat Marwick LLP.*
23.2 Consent of Lovelace, Roby & Company, P.A.*
23.3 Consent of Sonnenschein Nath & Rosenthal (see Exhibit 5.1).
24.1 Powers of Attorney.*
- ------------------------------------
* Previously filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing Form S-3 and has duly caused this Amendment to
Registration Statement to be filed on its behalf by the undersigned, thereunto
duly authorized in the County of St. Louis, State of Missouri, this 20th day of
November, 1997.
LASERSIGHT INCORPORATED
By: /s/ Gregory L. Wilson
-------------------------------------------
Gregory L. Wilson, Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed by the following persons in the
capacities on the dates indicated.
/s/ Michael R. Farris* November 20, 1997
- ---------------------------------------------
Michael R. Farris, President, Chief Executive
Officer, and Director
/s/ Francis E. O'Donnell, Jr., M.D.* November 20, 1997
- ---------------------------------------------
Francis E. O'Donnell, Jr., M.D., Chairman of the
Board and Director
/s/ J. Richard Crowley* November 20, 1997
- ---------------------------------------------
J. Richard Crowley, Director
- ---------------------------------------------
Terry A. Fuller, Ph.D., Director
/s/ Richard C. Lutzy* November 20, 1997
- ---------------------------------------------
Richard C. Lutzy, Director
/s/ David T. Pieroni* November 20, 1997
- ---------------------------------------------
David T. Pieroni, Director
/s/ Thomas Quinn* November 20, 1997
- ---------------------------------------------
Thomas Quinn, Director
/s/ Gregory L. Wilson November 20, 1997
- ---------------------------------------------
Gregory L. Wilson, Chief Financial Officer
(Principal accounting officer)
- ---------------------
*/ By: /s/ Gregory L. Wilson
------------------------------------------
(Gregory L. Wilson, as Attorney-in-Fact)
<PAGE>
INDEX TO EXHIBITS
Exhibit
No. Description
--- -----------
5.1 Opinion of Sonnenschein Nath & Rosenthal.
23.1 Consent of KPMG Peat Marwick LLP.*
23.2 Consent of Lovelace, Roby & Company, P.A.*
23.3 Consent of Sonnenschein Nath & Rosenthal (see Exhibit 5.1).
24.1 Powers of Attorney.*
- ------------------------------------
* Previously filed.
EXHIBIT 5.1
-----------
SONNENSCHEIN NATH & ROSENTHAL
8000 SEARS TOWER
CHICAGO, IL 60606-6404
Jacques K. Meguire
(312) 876-8169
November 19, 1997
LaserSight Incorporated
12161 Lackland Road
St. Louis, Missouri 63146
Gentlemen:
We have acted as counsel to LaserSight Incorporated, a Delaware
corporation (the "Company"), in connection with the registration by the Company
under the Securities Act of 1933 (the "Act") pursuant to the Company's
Registration Statement on Form S-3 filed on September 29, 1997 as amended by
Amendment No. 1 thereto, filed on or about the date of this letter, (File No.
333-36655)(the "Registration Statement") of an aggregate of up to 7,420,400
shares (the "Shares") of the Company's common stock, par value $.001 per share
(the "Common Stock") issued or issuable from time to time by the Company as
follows:
(i) up to 6,630,400 shares (the "Conversion Shares") issuable
upon the conversion or exchange of the 1,295 outstanding shares of the
Company's Series B Convertible Participating Preferred Stock (the
"Series B Preferred Stock"),
(ii) up to 790,000 shares (the "Warrant Shares") issuable upon
the exercise of outstanding warrants to purchase Common Stock (the
"Warrants") issued by the Company in connection with the private
placement of the Series B Preferred Stock in August 1997, and
(iii) an indeterminate number of shares (the "Payment Shares")
issuable at the option of the holders of the Series B Preferred Stock
in lieu of certain default payments (the Company's current best
estimate of the number of these shares is zero).
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the Certificate of
Amendment of Certificate of Incorporation of LaserSight Incorporated (the
"Charter") as currently in effect, various resolutions of the Board of Directors
<PAGE>
LaserSight Incorporated
November 19, 1997
Page 2
of the Company, and such agreements, instruments, certificates of public
officials and others, and such other documents, certificates and records, and
have made such other investigations, as we have deemed necessary or appropriate
as a basis for the opinions set forth herein.
We have assumed the legal capacity of all natural persons, the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted to
us as certified or photostatic copies and the authenticity of the originals of
such latter documents. In making our examination of documents executed by
parties other than the Company, we have assumed that such parties had the power,
corporate and otherwise, to enter into and perform their respective obligations
thereunder and have also assumed the due authorization by all requisite action,
corporate and otherwise, and the execution and delivery by such parties of such
documents and the validity and binding effect thereof. As to any facts material
to the opinions expressed herein, we have relied upon oral or written statements
and representations of officers and other representatives of the Company, the
Selling Stockholders and others.
Based upon and subject to the foregoing, we are of the following
opinions:
(i) subject to the action contemplated to be taken by the
shareholders of the Company pursuant to Section 4.12 of the Securities
Purchase Agreement dated as of August 29, 1997 between the Company and
the holders of the Series B Preferred Stock, when issued to the holders
of Series B Preferred Stock in accordance with the Charter, the
Conversion Shares and Payment Shares will be duly authorized, validly
issued, fully paid and nonassessable;
(ii) subject to the action contemplated to be taken by the
shareholders of the Company pursuant to Section 4.12 of the Securities
Purchase Agreement dated as of August 29, 1997 between the Company and
the holders of the Series B Preferred Stock, when issued to the holders
of the Warrants upon the exercise thereof in accordance with the
respective warrant agreements (including the payment of the exercise
price specified therein), the Warrant Shares will be duly authorized,
validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 to the Registration Statement. We also consent to the reference to
our firm under the caption "Legal Matters" in the prospectus contained in the
<PAGE>
LaserSight Incorporated
November 19, 1997
Page 3
Registration Statement. We do not, in giving such consent, admit that we are
within the category of persons whose consent is required under Section 7 of the
Act.
Very truly yours,
SONNENSCHEIN NATH & ROSENTHAL
By: /s/ Jacques K. Meguire
-------------------------
Jacques K. Meguire
