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): March 27, 1997
(March 14, 1997)
LASERSIGHT INCORPORATED
-----------------------
Exact name of registrant as specified in its charter
Delaware
--------------------------------------------
State or other jurisdiction of incorporation
0-19671 65-0273162
------- ----------
Commission File Number I.R.S. Employer
Identification No.
12161 Lackland Road, St. Louis, Missouri 63146
----------------------------------------------
Address of Principal Executive Offices
Registrant's telephone number, including area code: (314) 469-3220
--------------
<PAGE>
Item 5. Other Events.
On March 14, 1997, the Registrant executed two agreements amending the remaining
obligations related to the 1993 acquisition of LaserSight Centers Incorporated
("Centers"), as subsequently revised in the 1995 settlement of a stockholder's
derivative action, both of which have been previously reported. The amended
purchase agreement (the "Amended Purchase Agreement"), and royalty agreement
(the "Amended Royalty Agreement") were each approved by a special committee of
the Registrant's Board of Directors, consisting of disinterested directors.
Pursuant to the Amended Purchase Agreement, the Registrant issued 625,000
unregistered shares of its common stock, par value $.001 per share ("Common
Stock") to a group of former shareholders and former optionholders (the "Former
Centers Holders") of Centers, which group includes two trusts established by the
Chairman of the Board of the Registrant and certain former officers and
directors of the Registrant.
The Registrant believes the following factors, when compared to the previous
agreements in place, were among the most important considerations in approving
the amended agreements:
Amended Purchase Agreement
- --------------------------
Maximum share issuance was reduced by 3.2 percent from 1,265,333 to
1,225,000 (625,000 issued currently and 600,000 contingently issuable based on
future earnings, with one contingent share being issued for each $4.00 of PRK
Earnings).
All of the contingently issuable shares are tied to PRK earnings, which are
defined in the agreement as generally similar to operating income, but not
reflecting general corporate overhead, depreciation, amortization, taxes or
interest expense. Formerly, all shares were issuable upon the attainment of $5
million in refractive revenues, regardless of earnings, while revenues were more
broadly defined. In addition, certain shares would have become issuable in the
event of a business combination as defined in the original agreement.
The Registrant believes that the uncertainties inherent in the previous
agreement, as described above, added significant complexity to outsiders'
understanding of the Registrant's future obligations. Management has been told
that it negatively affected the Registrant's ability to utilize equity financing
and that it has been a barrier to analyst coverage.
There are registration rights on only approximately 82,600 of the issued
shares and only piggyback registration rights on the contingently issuable
shares. Formerly, there were demand registration rights for all shares.
The Registrant has the discretion to discontinue, sell or transfer at any
time the Registrant's business related to PRK services. Therefore, the
Registrant has no obligation to continue in this business or to ensure the
earnout to the Former Centers Holders.
The earn-out period expires in five years, one year sooner than the
previous agreement.
Centers is no longer designated as the Registrant's exclusive
representative in the United States and Canada for the sale and distribution of
ophthalmic refractive lasers or related refractive procedures.
Since the original purchase of Centers, the Food & Drug Administration has
approved the use of PRK, using other companies' lasers, in the United States,
making PRK service related business plans more opportunistic. Based upon the
Registrant's business plan, goodwill will be recorded currently based on the
value of the 625,000 shares issued and amortized over the estimated life of PRK
services in the United States, currently estimated to be 10 to 12 years.
Amended Royalty Agreement
- -------------------------
The amount of royalty has been reduced 50 percent (from $86 to $43 per
procedure) from the previous agreement.
Royalty obligations will not begin for five years, or until all
contingently issuable shares have been issued, whichever comes first.
The procedures applicable to the royalty agreement has been more narrowly
defined than the previous agreement and only includes PRK related services
performed on excimer laser equipment owned or operated by Centers or its
affiliates, reducing the scope of obligation to make royalty payments. Other
royalty revenues of the Registrant are specifically excluded.
*****
This Current Report contains forward-looking statements regarding future events
and future performance of the Registrant that involve risks and uncertainties
that could materially affect actual results. Investors should refer to documents
that the Registrant files from time to time with the Securities and Exchange
Commission for a description of certain factors that could cause actual results
to vary from current expectations and the forward-looking statements contained
herein. Such filings include, without limitation, the Registrant's Annual Report
on Form 10-K, Quarterly Reports on Form 10-Q, other Current Reports on Form 8-K
and the Registrant's prospectus dated July 12, 1996 (File No. 333-2109).
Item 7. Financial Statements, ProForma Financial Information and Exhibits.
(c) Exhibits.
Exhibit 99.1. Second Amendment dated March 14, 1997 to Agreement for
-------------- Purchase and Sale of Stock by and among LaserSight
Centers Incorporated, its stockholders and LaserSight
Incorporated.
Exhibit 99.2. Amendment to Royalty Agreement dated March 14, 1997 by
-------------- and between LaserSight Centers Incorporated, Laser
Partners and LaserSight Incorporated.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the Regis-
trant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
LaserSight Incorporated
Date: March 27, 1997 By: /s/ Michael R. Farris
-------------------------
Michael R. Farris
Chief Executive Officer
EXHIBIT 99-1
SECOND AMENDMENT TO AGREEMENT
FOR PURCHASE AND SALE OF STOCK
This Second Amendment to Agreement for Purchase and Sale of Stock dated as
of March 14, 1997 (the "Second Amendment") is entered into among LaserSight
Incorporated, a Delaware corporation (the "Buyer"), LaserSight Centers
Incorporated, a Delaware corporation (the "Corporation"), and the undersigned
individuals and entities named on the signature pages hereof (collectively,
"Sellers").
RECITALS
--------
A. Buyer, the Corporation and the Sellers entered into a certain agreement
for Purchase and Sale of Stock dated December 3, 1992 which was amended and
restated on January 15, 1993 and further amended by an Amendment to Agreement
for Purchase and Sale of Stock as of April 5, 1993 (the "First Amendment") and
by a Lasersight Centers Incorporated Consent of Shareholders dated as of July
10, 1995 (as so amended, "Current Agreement").
B. The parties desire to amend the Current Agreement.
C. The Audit Committee of the Board of Directors of Buyer (the "LaserSight
Board") has recommended that the LaserSight Board approve the Second Amendment,
and the LaserSight Board has approved the Second Amendment.
AGREEMENTS
----------
The parties agree as follows:
1. Paragraph 1.2 of the Current Agreement is hereby deleted and the
following substituted therefore:
1.2 As full payment for the transfer of the Shares by Sellers to
Buyer, Buyer shall deliver to Sellers unregistered shares of Buyer's
common stock, par value $.001 ("LSI Stock"), pursuant to the following
terms and conditions:
(a) 500,000 shares of LSI Stock were issued on the Closing Date,
divided proportionately among Sellers as set forth on Exhibit A to
the First Amendment, the previous receipt of which shares is
acknowledged by the Sellers; and
(b) Up to 1,225,000 additional shares of LSI Stock (collectively,
the "Earnout Shares") shall be issuable as follows:
(i) Within 30 days after the date of the Second Amendment,
625,000 Earnout Shares (the "Initial Earn-Out Shares") to be
issued and allocated among the Sellers as set forth under the
column captioned "Number of Initial Earn-Out Shares" on Exhibit
A to the Second Amendment; and
(ii) Up to an additional 600,000 Earnout Shares (the
"Contingent Earn-Out Shares") to be issued according to the
following formula as calculated for each fiscal quarter
commencing after the date of the Second Amendment, but before
the fifth anniversary of the Second Amendment):
===================================================================
PRK Earnings (as defined in Paragraph = Number of
1.2(c)) for such fiscal quarter Contingent
$4.00 Earn-Out Shares
===================================================================
The Contingent Earn-Out Shares shall be allocated among the
Sellers according to the percentages set forth under the column
captioned "Percentage of LCI Shares" on Exhibit A to the Second
Amendment. Sellers shall in no event be entitled to any Contin-
gent Earnout Shares in respect of any fiscal quarter commencing
after the fifth anniversary of the Second Amendment.
(c) For purposes hereof, "PRK Earnings" in respect of a fiscal
quarter means PRK Revenues (as defined below) for such fiscal
quarter minus PRK Expenses (as defined below) for such fiscal
quarter.
For purposes hereof, "PRK Revenues" means the sum of:
(i) all per procedure revenues received by Buyer or a
Subsidiary (as defined below) in connection with the utilization
of a fixed or mobile excimer laser to perform photorefractive
keratectomy ("PRK") and treat myopia, astigmatism and hyperopia;
provided that such excimer laser is owned or operated by Buyer
or a Subsidiary,
(ii) revenues received by Buyer or a Subsidiary from managed
care companies or employers which are specifically designated in
the contract with Buyer or such Subsidiary (as applicable) as
being in exchange for arranging for the delivery of PRK, and
(iii) any license fee, royalty or similar payment received
by Buyer or the Corporation that is exclusively on account of
patents which have been assigned to the Corporation pursuant to
the Current Agreement.
PRK Revenues shall not include any revenues received by Buyer or a
Subsidiary from:
(i) the manufacture, sale or servicing of excimer lasers,
(ii) any license fee, royalty or similar payment received by
Buyer that relate in whole or in part to patents, trade secrets,
know-how or other similar intellectual property which has not
been assigned to the Corporation pursuant to the Current
Agreement,
(iii) managed care companies or employers in exchange for
Buyer or a Subsidiary arranging for the delivery of eye care
services other than PRK or for eye care services which include
PRK without any identifiable fee attributable thereto, and
(iv) laser procedures which do not involve the use of an
excimer laser (e.g., follow-up treatment related to the removal
of cataracts, iridotomy, treatment of glaucoma, etc.).
For purposes hereof, "PRK Expenses" means all expenses incurred
by Buyer in connection with PRK Revenue, including without limitation
fees paid to optometrists and ophthalmologists, per procedure royalty
fees paid to third parties, and other operating expenses directly
attributable to the performance of PRK procedures, including without
limitation costs of personnel and other direct operating costs, but
excluding depreciation or amortization expense, any cost properly
capitalizable under generally accepted accounting principles (GAAP),
and general corporate, management, selling, marketing and
administrative expenses which are not directly related to the
performance of PRK procedures, provided that such expenses shall
include amortization expenses related to (i) any patent transferred to
Corporation by any of the Sellers, or (ii) patents which relate to PRK
and are purchased and held by, or transferred to, the Corporation.
For purposes hereof, "Subsidiary" means a corporation,
partnership or limited liability company of which Buyer or its other
Subsidiaries own, directly or indirectly, more than 80% of the shares,
or ownership interests, as applicable, necessary to elect the board of
directors or other governing body, as applicable, of such corporation,
partnership or limited liability company.
(d) PRK Earnings shall be calculated by Buyer within 60 days
after the end of each fiscal quarter commencing after the date of the
Second Amendment. Certificates for any Contingent Earn-Out Shares
issuable in respect of such fiscal quarter shall be mailed to Sellers
within 90 days after the end of such fiscal quarter.
(e) No fractional Earnout Shares will be issued; each Seller who
would otherwise be entitled to a fractional Earnout Share shall
receive in lieu thereof an amount of cash (rounded to the nearest
whole cent), without interest, equal to such fractional Earnout Share
multiplied by the closing price of LSI Stock as of the date of the
Second Amendment as reported by the NASDAQ Stock Market or such other
securities exchange or national market system on which LSI Stock is
then listed.
2. Paragraph 1.3 of the Current Agreement is hereby deleted and the
following is substituted therefore:
1.3 (a) If during the period commencing on the date of the Second
Amendment and concluding on the date on which all Sellers are able to
resell Contingent Earn-Out Shares without registration and without the
satisfaction of any limitation or condition Buyer proposes or is
required to file with the Securities and Exchange Commission ("SEC") a
registration statement under the Securities Act relating to any shares
of LSI Stock (other than a registration statement on Form S-8 or Form
S-4 or any successor forms thereto, or any registration form that does
not permit the inclusion therein of the Contingent Earn-Out Shares)
(the "Registration Statement"), Buyer will each such time give prompt
written notice of its intention to do so to all Sellers. Upon the
written request of any such Sellers (collectively, "Requesting
Holders") given within 10 days after the delivery or mailing of such
notice from Buyer, Buyer will use commercially reasonable efforts to
cause the Contingent Earn-Out Shares then outstanding which such
Requesting Holders shall have requested to be included (subject to the
limitations set forth in Sections 1.3(b) and 1.3(c) below) in such
Registration Statement (the "Requested Shares") so as to permit the
public sale or other disposition of such Requested Shares, provided
that if the total number of Requested Shares exceeds 10% of the total
number of shares to be registered pursuant to the Registration
Statement, then the number of Requested Shares to be included for the
account of each Requesting Holder may at Buyer's option be reduced on
a pro rata basis in accordance with the number of Contingent Earn-Out
Shares then held by such Requesting Holder.
(b) If the Registration Statement of which Buyer gives notice
relates to an underwritten public offering, Buyer shall so advise the
holders as a part of the written notice given pursuant to Section
1.3(a) above. In such event, the right of any Requesting Holder to
registration shall be conditioned upon such Requesting Holder's
execution of the underwriting agreement agreed to among Buyer and the
managing underwriters selected by Buyer for such underwritten
offering.
(c) Notwithstanding any other provisions of this Section 1.3, if
the managing underwriter or underwriters advise Buyer that marketing
factors require a limit on the number of shares to be underwritten,
Buyer may (subject to the limitations set forth below) exclude all
Requested Shares from, or limit the number of Requested Shares to be
included in, the Registration Statement and underwriting. In such
event, Buyer shall so advise all Requesting Holders, and the number of
Requested Shares and other shares ("Other Shares") requested to be
included in such Registration Statement and underwriting by other
persons or entities that are then stockholders of Buyer ("Other
Holders"), after providing for all shares that Buyer proposes to offer
and sell for its own account, shall be allocated among Requesting
Holders and Other Holders pro rata on the basis of (i) the number of
Requested Shares then held by such Requesting Holders and (ii) the
aggregate number of Other Shares then held by Other Holders. If any
Requested Shares or Other Shares are excluded or withdrawn from such
Registration Statement and underwriting for any reason other than
pursuant to the previous sentence, then Buyer shall offer to
Requesting Holders and Other Holders the right to include additional
Requested Shares or Other Shares, as applicable, in the Registration
Statement and underwriting in an amount equal to the number of shares
so excluded or withdrawn, with such additional shares to be allocated
among Requesting Holders and Other Holders requesting additional
inclusion, on the same basis as in the preceding sentence.
(d) In the case of each Registration Statement effected by Buyer
pursuant to this Paragraph 1.3, Buyer will advise each Requesting
Holder in writing as to the initial filing of each Registration
Statement and as to the effectiveness thereof. Buyer will use
reasonable efforts to: (i) furnish such number of prospectuses and
other documents incident thereto, including any amendment of or
supplement to the prospectus, as a Requesting Holder from time to time
may reasonably request; and (ii) cause all such Requested Shares that
are registered under a Registration Statement to be listed on each
securities exchange or national market system on which Buyer's common
stock is then listed.
(e) Each Seller shall from time to time promptly supply to Buyer
in writing any information relating to such Seller, his holdings of
LSI Stock, and his intended plan of distribution as Buyer may
reasonably request in order for it to comply with the rules of the SEC
relating to such registration statement.
(f) All expenses incurred in connection with the registration
effected pursuant to this Section 1.3, including without limitation
all registration, filing, and qualification fees (including blue sky
fees and expenses), printing expenses, escrow fees, fees and
disbursements of counsel for Buyer, expenses of special audits
incidental to or required by such registration shall be the
responsibility of Buyer and any other stockholders of Buyer
registering shares at the same time, if applicable, provided that the
Sellers shall be responsible for (i) all discounts and brokers' and
underwriters' fees and commissions associated with Requested Shares,
and (ii) all expenses of the Sellers' counsel.
3. Paragraph 1.4(a) of the Current Agreement is hereby deleted and the
following is substituted therefore:
1.4(a) [Intentionally left blank.]
4. Paragraphs 3.7(a), 3.7(b), 3.7(c), 3.7(f) and 8.4 of the Current
Agreement are hereby deleted.
5. Paragraph 9.5 of the Current Agreement is hereby deleted.
6. It is a condition precedent to Buyer's obligations under the Second
Amendment and the Current Agreement that:
(a) Each Seller shall have completed, dated and executed a
Seller's Certificate in the form attached to the Second Amendment as
Exhibit B and each Seller who is not an "accredited investor" (as
defined in Regulation D of the SEC) shall have established to the
satisfaction of the Buyer that such Seller, either alone or with such
Seller's "purchaser representative" (as defined in such Regulation D),
has such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of an investment in
the Earnout Shares.
(b) Buyer shall have entered into:
(i) a settlement agreement, in form and of substance which
is satisfactory to Buyer, determined in Buyer's sole discretion,
related to the action known as Public Company Publishing, Inc.
v. LaserSight Incorporated, Case Number 96-546-CV-ORL-19 pending
in the United States District, Middle District of Florida,
Orlando Division, and
(ii) an Amendment to Royalty Agreement among the
Corporation, Buyer and Laser Partners, a Florida general
partnership, which amends the Royalty Agreement dated January
15, 1993 between the Corporation and such partnership.
7. The Sellers shall cause to be delivered to Samuel S. Duffey, c/o Duffey
& Dolan, P.A., 1515 Ringling Blvd., Suite 800, Sarasota, Florida, in person or
by registered mail, return receipt requested, on or before March 1, 1997
certificates evidencing 75,000 shares of LSI Stock, duly executed for transfer
or accompanied by executed stock powers (in either case with all signatures
guaranteed by a member firm of the New York Stock Exchange).
8. Nothing contained in the Second Amendment or in the Current Agreement
shall create, or imply that any of Buyer or any Subsidiary has, any duty or
obligation to perform or arrange for the performance of PRK by a fixed or mobile
excimer laser (the "Business"). The LaserSight Board may in its discretion
discontinue, sell or transfer the Business at any time.
9. If any term of the Second Amendment conflicts with one or more terms of
the Current Agreement, the term of the Second Amendment shall prevail. Except as
amended hereby, the Current Agreement remains in full force and effect.
10. No amendment or waiver of any provision of the Second Amendment shall
be effective against a party hereto unless the same shall be in writing and
signed by such party.
11. All notices, requests, demands and other communications hereunder shall
be in writing and shall be delivered in person or sent by registered or
certified mail, postage prepaid or by facsimile to the following addresses for
the Sellers and the Buyer:
If to the Sellers: Francis E. O'Donnell, Jr., M.D.
1028 South Kirkwood
St. Louis, Missouri 63122
with a copy to: Samuel Sears
Star Tobacco Co.
16 South Market
Petersburg, Virginia 23803
Telecopy No.: (804) 861-6215
If to Buyer: LaserSight Incorporated
12161 Lackland Road
St. Louis, Missouri 63146
Attention: Chief Executive Officer
Telecopy No.: (314) 576-1073
with a copy to: Sonnenschein Nath & Rosenthal
One Metropolitan Square
Suite 3000
St. Louis, Missouri 63102
Attention: Alan B. Bornstein
Telecopy No.: (314) 259-5959
Any party may change its address for receiving notice by written notice given to
the others named above.
12. Each party to the Second Amendment shall pay its own expenses in
connection with the transactions contemplated hereby. If any action is brought
by any party to enforce any provision of the Second Amendment or the Current
Agreement, the prevailing party shall be entitled to recover court costs,
arbitration expenses and reasonable attorneys fees.
13. The Second Amendment may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one in the same document.
14. The Second Amendment shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, except as may otherwise be
provided in the Seller's Certificate.
15. The Second Amendment and the documents referred to herein contain the
entire understanding among the parties with respect to the transactions
contemplated hereby and supersedes all other agreements, understandings and
undertakings among the parties on the subject matter hereof.
16. The Second Amendment and the Current Agreement shall be governed by and
construed in accordance with the internal substantive laws of the State of
Missouri and the parties hereby irrevocably and unconditionally consent and
submit to the jurisdiction of Missouri courts over all matters relating to the
Current Agreement and the Second Amendment. Each party agrees that service of
process and any action or proceeding hereunder may be made upon such party by
certified mail, return receipt requested to the address for notice set forth
herein. Each party irrevocably waives any objection it may have to the venue of
any action, suit or proceeding brought in such courts or to the convenience of
the form and each party irrevocably waives the right to proceed in any other
jurisdiction. Final judgment in any such action, suit or other proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the
judgment, a certified or true copy of which shall be conclusive evidence of the
fact that the amount of any indebtedness or liability of any party therein
described.
17. The Second Amendment and the Current Agreement shall be deemed
severable, and the invalidity or unenforceability of any term or provision
hereof shall not affect the validity or enforceability of the Second Amendment
or the Current Agreement or of any other term or provision hereof.
18. None of the Sellers shall issue or cause the publication of any press
release or other announcement with respect to the Second Amendment or the
transactions contemplated hereby without the written consent of the Buyer.
IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as
of the day and year first above written.
LASERSIGHT CENTERS LASERSIGHT INCORPORATED
INCORPORATED
/s/ Michael R. Farris /s/ Michael R. Farris
By: ---------------------------- By:-----------------------------------
Title: Michael R. Farris
--------------------------- President and Chief Executive Officer
SELLERS:
/s/ Robert Qualls
--------------------------------------
Robert Qualls
/s/ Jean A. Ipema
--------------------------------------
Jean A. Ipema
/s/ Jonnie R. Williams
--------------------------------------
Jonnie R. Williams
/s/ Kathleen M. O'Donnell, Trustee
--------------------------------------
Kathleen M. O'Donnell, as Trustee for
Irrevocable Trust Number 7 for the
benefit of Francis E. O'Donnell, Jr.,
M.D., and the Francis E. O'Donnell,Jr.,
Descendant's Trust
/s/ J. T. Lin
--------------------------------------
J. T. Lin
/s/ John Overby
--------------------------------------
John Overby
/s/ Rambert L. Simons, Jr.
--------------------------------------
Rambert Simmons
/s/ Paul Lamb
--------------------------------------
Paul Lamb
/s/ Vincent R. Keating
--------------------------------------
Vincent R. Keating
/s/ W. Douglas Hajjar
--------------------------------------
W. Douglas Hajjar
/s/ Samuel S. Duffey
--------------------------------------
Samuel S. Duffey
/s/ George W. Rozakis, M.D.
--------------------------------------
George W. Rozakis, M.D.
/s/ Polly P. Knapp
--------------------------------------
Polly P. Knapp
/s/ William C. Wilemon
--------------------------------------
William C. Wilemon
L&R Medical Associates
/S/ David J. Latraverse
By: --------------------------------
David J. Latraverse
President
Title:------------------------------
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A-1
Centers Shares Owned Number
or Percentage of of Initial
Name Under Option LCI Shares Earn-Out Shares (1)
- ---- ------------ ---------- -------------------
<S> <C> <C> <C>
Jonnie R. Williams.............................. 380,000 34.9747 218,591.875
Kathleen M. O'Donnell, as Trustee for Irrevocable
Trust No. 7 for the benefit of Francis E.
O'Donnell, Jr., M.D.......................... 349,000 32.1215 200,759.375
Robert Qualls................................... 137,500 12.6553 79,095.625
Rambert Simmons................................. 50,000 4.6019 28,761.875
Kathleen M. O'Donnell, as Trustee for Francis E.
O'Donnell, Jr., Descendant's Trust........... 45,000 4.1417 25,885.625
Paul Lamb....................................... 20,000 1.8408 11,505.000
J.T. Lin........................................ 20,000 1.8408 11,505.000
Vinent R. Keating.............................. 15,000 1.3806 8,628.750
W. Douglas Hajjar............................... 15,000 1.3806 8,628.750
Samuel S. Duffey................................ 15,000 1.3806 8,628.750
John Overby..................................... 15,000 1.3806 8,628.750
Jean A. Ipema................................... 3,000 0.2761 1,725.625
Rozakis, M.D.................................... 10,000 0.9204 5,752.500
Polly P. Knapp.................................. 7,850 0.7225 4,515.625
William C. Wilemon.............................. 3,100 0.2853 1,783.125
L&R Medical Associates.......................... 1,050 0.0966 603.750
----- ------ -------
TOTALS.................................. 1,086,500 100.0000 625,000.000
========= ======== ===========
===================================================================================================================
(1) Fractional shares are to be paid in cash as provided in the Second Amendment.
</TABLE>
EXHIBIT 99.2
AMENDMENT TO ROYALTY AGREEMENT
------------------------------
This Amendment to Royalty Agreement (the "Amendment") dated as of March 14,
1997 is entered into among Laser Partners, a Florida general partnership
("Recipient"), LaserSight Centers Incorporated, a Delaware corporation
("Grantor"), and LaserSight Incorporated, a Delaware corporation ("LSI").
RECITALS
--------
A. Recipient and Grantor have entered into a Royalty Agreement dated
January 15, 1993 (the "Royalty Agreement").
B. Recipient and LSI have entered into an Exchange Agreement dated January
25, 1993 (the "Exchange Agreement").
C. Grantor, LSI and the shareholders of the Corporation have entered into a
certain Agreement for Purchase and Sale of Stock dated December 3, 1992, as
amended and restated on January 15, 1993, as further amended by an Amendment to
Agreement for Purchase and Sale of Stock on April 5, 1993 and by a LaserSight
Centers Incorporated Consent of Shareholders dated as of July 10, 1995, and as
further amended by a Second Amendment to Agreement for Purchase and Sale of
Stock (the "Second Amendment") dated as of the date hereof (as so amended, the
"Stock Purchase Agreement") pursuant to which LSI has acquired all of the issued
and outstanding stock of Grantor.
D. LSI, Grantor and Recipient desire to amend the Royalty Agreement as set
forth herein.
E. The Audit Committee of the Board of Directors of LSI (the "LaserSight
Board") has recommended that the LaserSight Board approve the Amendment, and the
LaserSight Board has approved the Amendment.
AGREEMENTS
----------
The parties agree as follows:
1. Paragraph 2 of the Royalty Agreement is hereby deleted and the following
is substituted therefore:
2. Grant of Royalty. Effective upon the first to occur of (i) the
fifth anniversary of the date of the Amendment, or (ii) the issuance of
600,000 unregistered shares of LSI's common stock, par value $.001 ("LSI
Stock"), pursuant to Section 1.2(b)(ii) of the Stock Purchase Agreement,
Grantor hereby irrevocably grants to Recipient a perpetual royalty (the
"Royalty Payment") to be calculated by multiplying (i) the Royalty Fee (as
defined in Paragraph 3), by (ii) each eye on which photorefractive
keratectomy ("PRK") is performed by a fixed or mobile excimer laser which
is owned or operated by Grantor, LSI or a Subsidiary (as defined herein) of
LSI ("Laser Procedure"). The obligation to make Royalty Payments pursuant
to this Paragraph 2 is perpetual and nonterminable.
For purposes hereof, "Subsidiary" means a corporation, partnership or
limited liability company of which LSI or its other Subsidiaries own,
directly or indirectly, more than 80% of the shares, or ownership
interests, as applicable, necessary to elect the board of directors or
other governing body, as applicable, of such corporation, partnership or
limited liability company.
The parties acknowledge and agree that the term "Laser Procedure" does
not include (i) procedures which do not involve both an excimer laser and
the performance of PRK (e.g., follow-up treatment related to the removal of
cataracts, iridotomy, treatment of glaucoma, etc.), (ii) Laser Procedures
which are performed by a third party in connection with any license,
royalty or other similar arrangement granted by Grantor, LSI or a
Subsidiary, and (iii) Laser Procedures which are performed pursuant to a
contract with an insurance company, health maintenance organization,
preferred provider organization, or a similar managed care company or an
employer, pursuant to which Grantor, LSI or a Subsidiary agrees to arrange
for the delivery of eye care services other than PRK or for eye care
services which include PRK without any identifiable fee attributable
thereto.
2. Paragraph 3 of the Royalty Agreement is hereby deleted and the following
is substituted therefore:
3. Royalty Fee. The Royalty Fee shall be the lesser of (i) $43.00, or
(ii) the product of 6.66% times the average fee received during the
relevant period by Grantor, LSI or a Subsidiary, as applicable, for
performing PRK on an eye. The Royalty Payment may be paid, in LSI's sole
discretion, in cash or through the issuance of unregistered shares of LSI
Stock pursuant to the terms and conditions of Paragraph 4.
3. Paragraph 4 of the Royalty Agreement is hereby deleted and the following
is substituted therefore:
4. Payment of Royalty Fee.
--------------------------
(a) Within 60 days after the end of each fiscal quarter commencing
after the date of this Amendment in which Grantor is obligated to make
Royalty Payments pursuant to Paragraph 2, LSI will provide Recipient with a
statement setting forth the number of Laser Procedures performed during
such fiscal quarter (the "Statement").
(b) If all or any portion of a Royalty Payment is to be paid in cash,
then at the same time the Statement is delivered to Recipient, Grantor
shall also deliver to Recipient a LSI check for all or any portion of the
Royalty Payment.
(c) If all or any portion of a Royalty Payment is to be paid through
the issuance of LSI Stock, then at the same time the Statement is delivered
to Recipient, Grantor shall also deliver to Recipient a copy of a letter
which had been sent by LSI to LSI's transfer agent instructing such
transfer agent to issue shares of LSI Stock pursuant to this Paragraph 4.
(d) If all or any portion of the Royalty Payment is to be paid through
the issuance of LSI Stock, the number of shares of LSI Stock to be issued
shall be determined by dividing (i) the total amount of the Royalty Payment
to be paid in LSI Stock, by (ii) the average closing price of a share of
LSI common stock for the ten calendar day period immediately preceding the
date of the letter to the transfer agent described in Section 4(c), as
reported by the NASDAQ Stock Market or such other securities exchange or
national market system on which LSI Stock is then listed.
No fractional share of LSI Stock will be issued; Recipient who would
otherwise be entitled to a fractional share of LSI Stock shall receive in
lieu thereof an amount of cash (rounded to the nearest whole cent), without
interest, equal to such fractional share of LSI Stock multiplied by the
closing price of a share of LSI Stock as of the date of the Amendment as
reported by the NASDAQ Stock Market or such other securities exchange or
national market system on which LSI Stock is then listed.
4. Paragraph 5 of the Royalty Agreement is hereby deleted and the following
is substituted therefore:
5. Books and Records. Recipient shall have the right to inspect the books
and records of Grantor which are necessary to confirm the number of Laser
Procedures on which Royalty Payments were calculated. Such inspection must occur
during normal business hours with at least 48 hours advance notice.
5. Paragraph 6 of the Royalty Agreement is hereby deleted and the following
is substituted therefore:
6. Miscellaneous.
(a) This Agreement constitutes the entire understanding of the
parties, shall supersede and replace any prior agreements, and shall not be
amended or otherwise altered except in writing, executed by the parties.
(b) All notices, requests, demands and other communications hereunder
shall be in writing and shall be delivered in person or sent by registered
or certified mail, postage prepaid or by facsimile to the following
addresses:
If to Recipient:
Laser Partners
c/o Francis E. O'Donnell, Jr., M.D.
1028 South Kirkwood
St. Louis, Missouri 63122
<PAGE>
with a copy to:
Samuel Sears
Star Tobacco Co.
16 South Market
Petersburg, Virginia 23803
(804) 861-6215
If to LSI:
LaserSight Incorporated
12161 Lackland Road
St. Louis, Missouri 63146
Attention: Chief Executive Officer
Telecopy No.: (314) 576-1073
with a copy to:
Sonnenschein Nath & Rosenthal
One Metropolitan Square
Suite 3000
St. Louis, Missouri 63102
Attention: Alan B. Bornstein
Telecopy No.: (314) 259-5959
Any party may change its address for receiving notice by written notice
given to the others named above.
(c) It is a condition precedent to LSI's obligations under the
Amendment and the Royalty Agreement that:
(i) Recipient shall have completed, dated and executed the
Recipient's Certificate in the form attached to the Amendment as
Exhibit A and, if Recipient is not an "accredited investor" (as
defined in Regulation D of the SEC), Recipient shall have established
to the satisfaction of LSI that Recipient, either alone or with its
"purchaser representative" (as defined in such Regulation D), has such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the LSI
Shares.
(ii) LSI shall have entered into:
(A) a settlement agreement, in form and of substance which
is satisfactory to LSI, determined in LSI's sole discretion,
related to the action known as Public Company Publishing, Inc. v.
LaserSight Incorporated, Case Number 96-546-CV-ORL-19 pending in
the United States District, Middle District of Florida, Orlando
Division, and
(B) a Second Amendment to Agreement for Purchase and Sale of
Stock among the Grantor, LSI and the Sellers (as defined
therein), which amends the Agreement for Purchase and Sale of
Stock dated January 15, 1993 between such parties.
(d) Each party to this Agreement shall pay its own costs and expenses
in connection with the transactions contemplated hereby. If any action is
brought by either party to enforce any provision of this Agreement, the
prevailing party shall be entitled to recover court costs, arbitration
expenses and reasonable attorneys fees.
(e) This Agreement shall be governed by and construed in accordance
with the internal substantive laws of the State of Missouri and the parties
hereby irrevocably and unconditionally consent and submit to the
jurisdiction of Missouri courts over all matters relating to the Agreement
and the Amendment. Each party agrees that service of process and any action
or proceeding hereunder may be made upon such party by certified mail,
return receipt requested to the address for notice set forth herein. Each
party irrevocably waives any objection it may have to the venue of any
action, suit or proceeding brought in such courts or to the convenience of
the form and each party irrevocably waives the right to proceed in any
other jurisdiction. Final judgment in any such action, suit or other
proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment, a certified or true copy of which shall be
conclusive evidence of the fact that the amount of any indebtedness or
liability of any party therein described.
6. The Exchange Agreement is hereby terminated and has no further force or
effect.
7. Nothing contained in the Amendment or in the Royalty Agreement shall
create, or imply that any of LSI or any Subsidiary has, any duty or obligation
to perform or arrange for the performance of PRK by a fixed or mobile excimer
laser (the "Business"). The LaserSight Board may in its discretion discontinue,
sell or transfer the Business at any time.
8. If any term of the Amendment conflicts with the terms of the Royalty
Agreement, the term of the Amendment shall prevail. Except as amended hereby,
the Royalty Agreement remains in full force and effect.
9. The Amendment may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one in the same document.
10. Neither the Recipient nor any of the partners of Recipient shall issue
or cause the publication of any press release or other announcement with respect
to the Amendment or the transactions contemplated hereby without the written
consent of LSI.
IN WITNESS WHEREOF, the parties hereto have duly executed the Amendment as
of the date first above written.
LASERSIGHT INCORPORATED LASER PARTNERS,
a Florida general partnership
/s/ Michael R. Farris /s/ Jonnie R. Williams
By:--------------------------- By: ------------------------------
Michael R. Farris Jonnie R. Williams,
President and Chief Executive Officer Managing Partner
LASERSIGHT CENTERS INCORPORATED
/s/ Michael R. Farris
By: --------------------------
Title: -----------------------
