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): June 25, 1998 (June 5, 1998)
LASERSIGHT INCORPORATED
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Exact name of registrant as specified in its charter
Delaware
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State or other jurisdiction of incorporation
0-19671 65-0273162
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Commission File Number I.R.S. Employer
Identification No.
12249 Science Drive, Suite 160, Orlando, Florida 32826
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Address of Principal Executive Offices
Registrant's telephone number, including area code: (407) 382-2700
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Item 5. Other Events.
The following summary of the TLC Private Placement and the Pequot
Private Placement (as such terms are defined below) recently completed by
LaserSight Incorporated, a Delaware corporation (the "Company"), does not
purport to be complete and is subject in all respects to the provisions of the
documents relating thereto filed as exhibits to this Current Report on Form 8-K.
TLC Private Placement
Securities Purchase Agreement. On June 5, 1998, the Company entered
into a Securities Purchase Agreement (the "TLC Agreement") with The Laser Center
Inc. ("TLC"), pursuant to which the Company issued to TLC 2,000,000 shares of
the newly-created Series C Convertible Preferred Stock (the "Series C Preferred
Stock") of the Company with a face value of $4.00 per share, resulting in an
aggregate offering price of $8 million (the "TLC Private Placement"). The Series
C Preferred Stock is convertible on a fixed, one-for-one basis (subject to
anti-dilution adjustments upon the occurrence of a stock split, stock dividend
or similar event) into 2,000,000 shares of the Company's common stock, par value
$.001 per share ("Common Stock"), at the option of TLC at any time until June 5,
2001, on which date all shares of Series C Preferred Stock then outstanding will
automatically be converted into shares of Common Stock.
The TLC Agreement provides that so long as TLC continues to be the
record holder of at least 5% of the Company's then outstanding Common Stock or
Series C Preferred Stock which is convertible into at least 5% of the Company's
then outstanding Common Stock, TLC shall have the right to participate in any
below-market equity financing transaction so as to maintain its percentage
ownership of the outstanding Common Stock immediately prior to the closing of
such financing. The following issuances of the Company's securities, however, do
not constitute a below-market third party financing for purposes of this
provision: (i) the grant of options or warrants, or the issuance of securities,
under any employee or director stock option, stock purchase or restricted stock
plan of the Company, (ii) the issuance of Common Stock pursuant to any
contingent obligation of the Company existing as of June 5, 1998, (iii) the
issuance of securities upon the exercise or conversion of the Company's options,
warrants or other convertible securities outstanding as of June 5, 1998, (iv)
the declaration of a rights dividend to holders of Common Stock in connection
with the adoption of a stockholder rights plan, (v) the issuance of securities
in connection with a merger, acquisition, joint venture or similar arrangement,
or (vi) the issuance of the Company's Series D Convertible Participating
Preferred Stock (the "Series D Preferred Stock").
The TLC Agreement also provides that TLC has the right to nominate one
candidate to stand for election as a member of the Company's Board of Directors
for as long as TLC owns at least 7.5% of the Company's outstanding Common Stock
or Series C Preferred Stock which is convertible into 7.5% of the Company's
outstanding Common Stock.
The Company did not pay any placement agent, underwriting or similar
fees or commissions in connection with the TLC Private Placement. The TLC
Agreement and the Certificate of Designation, Preferences and Rights of Series C
Convertible Participating Preferred Stock are attached hereto as Exhibits 99.1
and 99.2, respectively, and are incorporated herein by reference.
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Registration Rights Agreement. Pursuant to the terms of a Registration
Rights Agreement between the Company and TLC executed in connection with the TLC
Private Placement, the Company agreed to prepare, and on or prior to July 20,
1998, file with the Securities and Exchange Commission (the "SEC") a
registration statement on such form as is then available in order to effect the
registration of the shares of Common Stock issuable upon conversion of the
Series C Preferred Stock. The Company has agreed to use its reasonable best
efforts to keep the registration statement continuously effective at all times
until June 5, 2000, subject to certain "black-out" rights. The TLC Registration
Rights Agreement is attached hereto as Exhibit 99.3, and is incorporated herein
by reference.
Standstill Agreement. The Company and TLC also executed a Standstill
Agreement in connection with the TLC Private Placement which prohibits TLC from
acquiring any voting securities or instruments which are convertible into the
voting securities of the Company until the earlier of August 4, 1998 or the date
the Company adopts a stockholders rights plan. Such Standstill Agreement is
attached hereto as Exhibit 99.4, and is incorporated herein by reference.
Use of Proceeds. The net proceeds to the Company from the TLC Private
Placement, after deduction of estimated expenses, was approximately $7.9
million. The Company used the net proceeds from the TLC Private Placement to (i)
repurchase all issued and outstanding shares of its Series B Convertible
Participating Preferred Stock on June 5, 1998 for approximately $6.3 million,
and (ii) the balance for general corporate purposes, including to facilitate the
implementation of the Company's strategic plan.
Pequot Private Placement
Securities Purchase Agreement. On June 12, 1998, the Company entered
into a Securities Purchase Agreement (the "Pequot Agreement") with Pequot
Private Equity Fund, L.P., Pequot Scout Fund, L.P., and Pequot Offshore Private
Equity Fund, Inc. (collectively, the "Pequot Funds"), whereby the Company
issued, collectively, to the Pequot Funds 2,000,000 shares of the newly-created
Series D Preferred Stock of the Company with a face value of $4.00 per share,
resulting in an aggregate offering price of $8 million (the "Pequot Private
Placement"). The Series D Preferred Stock is convertible on a one-for-one basis
into an equal number of shares of Common Stock, subject to certain anti-dilution
adjustments described below, at the option of the Pequot Funds at any time until
June 12, 2001, on which date all shares of Series D Preferred Stock then
outstanding will automatically be converted into shares of Common Stock.
The Series C Preferred Stock and the Series D Preferred Stock generally
have similar rights and preferences. However, unlike the holders of the Series C
Preferred Stock, the holders of the Series D Preferred Stock are entitled to
certain anti-dilution adjustments if the Company issues or sells any shares of
Common Stock (or Common Stock equivalents) before June 12, 2001 at a price per
share (or having a conversion or exercise price per share) less than the $4.00
per share. In the event of such an issuance, subject to all applicable listing
rules of The Nasdaq Stock Market, the conversion price of the Series D Preferred
Stock will be adjusted in order to allow the Series D Preferred Stock to convert
into that number of shares of Common Stock which will maintain the Series D
Preferred Stock holders' percentage level of ownership of the Company's Common
Stock outstanding (including Series C Preferred Stock and Series D Preferred
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Stock which is convertible into Common Stock) as such ownership exists
immediately prior to such below-market issuance. This anti-dilution adjustment
only relates to the conversion price of the Series D Preferred Stock and does
not result in adjustments to the number of shares of Common Stock held by the
holders of the Series D Preferred Stock. This anti-dilution adjustment will not
be triggered by the issuance of the Company's securities under the following
circumstances (collectively, the "Excluded Securities"): (i) a public offering
of the Company's equity securities, (ii) the grant of options or warrants, or
the issuance of securities, under any employee or director stock option, stock
purchase or restricted stock plan of the Company, (iii) the issuance of Common
Stock pursuant to any contingent obligation of the Company existing as of June
12, 1998, (iv) securities issued upon the exercise or conversion of the
Company's options, warrants or other convertible securities outstanding as of
June 12, 1998, (v) declaration of a rights dividend to holders of Common Stock
in connection with the adoption of a stockholder rights plan by the Company, and
(vi) securities issued in connection with a merger, acquisition, joint venture
or similar arrangement which is approved by a majority of the Company's Board of
Directors that are not then employees of the Company (the "Outside Directors"),
and (vii) securities issued in connection with the establishment of a strategic
relationship which is approved by a majority of the Outside Directors.
The holders of the Series D Preferred Stock have, in addition to the
voting rights of the Series C Preferred Stock, the exclusive right, voting
separately as a single class to elect one director (the "Series D Preferred
Director") of the Company, with the remaining directors to be elected by the
other classes of stock entitled to vote therefore at each meeting of
stockholders held for the purpose of electing directors. The right of the
holders of Series D Preferred Stock to vote for the election of directors may be
exercised at any annual meeting or at any special meeting called for such
purpose or at any adjournment thereof, or by the written consent, delivered to
the Secretary of the Company, of the holders of a majority of all shares of
Series D Preferred Stock outstanding as of the record date of such written
consent. The voting rights with respect to the Series D Preferred Director will
terminate and thereafter be of no force or effect if on any date the Board of
Directors fixes the record date for a meeting of the Company's stockholders at
which directors will be elected (the "Determination Date"), that number of full
shares of Common Stock into which all then outstanding shares of Series D
Preferred Stock, if any, could be converted pursuant to the term of the Series D
Preferred Stock is less than 7.5% of all then outstanding shares of Common Stock
on the Determination Date.
Upon termination of the voting rights with respect to the Series D
Preferred Director pursuant to the terms of the Series D Preferred Stock, the
Series D Preferred Director then in office will serve until the date of the
Company's next meeting at which directors are elected. Thereafter, so long as
the holders of the Series D Preferred Stock own in the aggregate at least 7.5%
of the outstanding Common Stock as of any Determination Date (for purposes of
this calculation all shares of Series D Preferred Stock shall be deemed to be
converted to shares of Common Stock pursuant to the terms of the Series D
Preferred Stock) then the holders of the Series D Preferred Stock shall have the
right to designate a nominee (who is reasonably acceptable to the Company's
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Board of Directors) to stand for election as a director at the next meeting of
the Company's stockholders at which directors will be elected. If such nominee
is elected but does not serve such nominee's complete term on the Company's
Board of Directors by reason of the resignation, death, removal or inability to
serve, then holders of the Series D Preferred Stock shall be entitled to
designate a successor (who is reasonably acceptable to the Company's Board of
Directors) to fill such vacancy until the next meeting for the election of
directors. If such nominee is not elected to the Board, the holders of the
Series D Preferred Stock will, in addition to those rights described in the
following paragraph, be entitled to appoint an additional Non-Voting Observer
(as defined below). For purposes of this provision the phrase "outstanding
Common Stock" shall mean the Common Stock shown as outstanding on the Company's
Quarterly Report on Form 10-Q for the most recent quarter and shall not be
determined on a dilutive basis.
If the Series D Preferred Director is not an employee of Dawson Samberg
Capital Management, Inc., then the Pequot Funds, collectively, shall also be
entitled to designate a non-voting observer (the "Non-Voting Observer") to
attend and participate in (but not to vote at) all meetings of the Board and any
committee thereof. The Non-Voting Observer has the same rights with respect to
the receipt of notices of meetings of the Board or a committee thereof and
access and limitations to information concerning the business and operations of
the Company as members of the Board, and is entitled to participate in
discussions and consult with the Board without voting.
The Pequot Agreement also provides that during the six-month period
immediately after June 12, 1998 (the "Future Financing Period"), the Company
will not enter into any agreement with an investor which includes the issuance
of (i) Common Stock, (ii) preferred stock which is convertible into Common
Stock, or (iii) options or warrants to purchase Common Stock or preferred stock
which is convertible into Common Stock on terms more favorable than those given
to the Pequot Funds. If during the Future Financing Period the Company should
enter into a financing agreement with an investor (a "Financing Agreement") on
monetary terms or non-monetary terms (e.g., corporate governance rights) which
are more favorable than the terms which have been provided to the Pequot Funds,
the Company will remedy such situation so that the terms of the investment
contemplated by the Pequot Private Placement will be amended to reflect such
more favorable terms, including, the Company's issuance of additional Common
Stock, preferred stock or warrants (as may be agreed to by the parties) if
necessary to accomplish the foregoing. For purposes of this provision, the
issuance of Excluded Securities will not be deemed a "Financing Agreement".
The Pequot Agreement further provides that during the period commencing
on June 12, 1998 and continuing until the first to occur of: (i) June 12, 2001
or (ii) the Pequot Funds cease to own in the aggregate at least 5% of the Common
Stock outstanding (for purposes of this calculation, all shares of Preferred
Stock will be deemed to be converted to shares of Common Stock pursuant to the
terms of the Preferred Stock), prior to seeking financing from any third party
consisting of an issuance by the Company of (i) Common Stock, (ii) preferred
stock convertible into Common Stock, or (iii) options or warrants to purchase
Common Stock or preferred stock convertible into Common Stock, the Company is
required to offer to the Pequot Funds such financing opportunity on a pari passu
basis in order to maintain the Pequot Funds' percentage level of ownership of
the Company's Common Stock outstanding (including Series C Preferred Stock and
Series D Preferred Stock which is convertible into Common Stock) as such
ownership existed immediately after the closing of the Pequot Private Placement.
This "right of first offer" does not apply in the event of an issuance of
Excluded Securities.
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The Company did not pay any placement agent, underwriting or similar
fees or commissions in connection with the Pequot Private Placement. The Pequot
Agreement and the Certificate of Designation, Preferences and Rights of Series D
Convertible Participating Preferred Stock are attached hereto as Exhibits 99.5
and 99.6, respectively, and are incorporated herein by reference.
Registration Rights Agreement. Pursuant to the terms of a Registration
Rights Agreement between the Company and the Pequot Funds executed in connection
with the Pequot Private Placement, the Company agreed to prepare, and on or
prior to July 27, 1998, file with the Securities and Exchange Commission a
registration statement on such form as is then available in order to effect the
registration of all of the Series C Conversion Shares. The Company has agreed to
use its reasonable best efforts to keep the registration statement continuously
effective at all times until December 12, 2000, subject to certain "black-out"
rights. The Pequot Registration Rights Agreement is attached hereto as Exhibit
99.7, and is incorporated herein by reference.
Standstill Agreement. The Company and The Pequot Funds also executed a
Standstill Agreement in connection with the Pequot Private Placement which
prohibits the Pequot Funds from acquiring in excess of 15% of any voting
securities or instruments which are convertible into the voting securities of
the Company until the earlier of August 11, 1998 or the date on which the
Company adopts a stockholders right plan. Such Standstill Agreement is attached
hereto as Exhibit 99.8, and is incorporated herein by reference.
Use of Proceeds. The net proceeds to the Company from the Pequot
Private Placement, after deduction of estimated expenses, was approximately $7.9
million. The Company intends to use the net proceeds from the Pequot Private
Placement for general corporate purposes, including to facilitate the
implementation of the Company's strategic plan. Pending such use, the Company
intends to invest the net proceeds in short-term, interest-bearing investment
grade securities.
* * * *
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 and other Current Reports on Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits*
Exhibit 99.1 Securities Purchase Agreement dated June 5, 1998 by
and between LaserSight Incorporated and TLC The Laser
Center Inc.
Exhibit 99.2 Certificate of Designation, Preferences and Rights of
Series C Convertible Participating Preferred Stock.
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Exhibit 99.3 Registration Rights Agreement dated June 5, 1998 by
and between LaserSight Incorporated and TLC The Laser
Center Inc.
Exhibit 99.4 Standstill Agreement dated June 5, 1998 by and
between LaserSight Incorporated and TLC The Laser
Center Inc.
Exhibit 99.5 Securities Purchase Agreement dated June 12, 1998
among LaserSight Incorporated, Pequot Private Equity
Fund, L.P., Pequot Scout Fund, L.P., Pequot Offshore
Private Equity Fund, Inc.
Exhibit 99.6 Certificate of Designation, Preferences and Rights of
Series D Convertible Participating Preferred Stock.
Exhibit 99.7 Registration Rights Agreement dated June 12, 1998
among LaserSight Incorporated, Pequot Private Equity
Fund, L.P., Pequot Scout Fund, L.P., Pequot Offshore
Private Equity Fund, Inc.
Exhibit 99.8 Standstill Agreement dated June 12, 1998 among
LaserSight Incorporated, Pequot Private Equity Fund,
L.P., Pequot Scout Fund, L.P., Pequot Offshore
Private Equity Fund, Inc.
*The Company undertakes to provide to the Commission upon its request the
schedules omitted from this exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LASERSIGHT INCORPORATED
Date: June 25, 1998 By: /s/ Michael R. Farris
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Michael R. Farris
Chief Executive Officer
7
EXHIBIT 99.1
SECURITIES PURCHASE AGREEMENT
between
LASERSIGHT INCORPORATED
and
TLC THE LASER CENTER INC.
June 5, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 PURCHASE AND SALE OF PREFERRED STOCK
1.1 Purchase of Preferred Stock
1.2 Form of Payment
1.3 Transfer of Preferred Stock
1.4 Registration of the Securities
ARTICLE 2 PURCHASER'S REPRESENTATIONS AND WARRANTIES
2.1 Investment Purpose
2.2 Accredited Investor Status
2.3 Reliance on Exemptions
2.4 Information
2.5 Governmental Review
2.6 Transfer or Resale
2.7 Authorization
2.8 Binding Effect
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization and Qualification
3.2 Authorization; Enforcement
3.3 Capitalization
3.4 Issuance of Shares
3.5 No Conflicts
3.6 SEC Documents
3.7 Absence of Certain Changes
3.8 Absence of Litigation
3.9 Disclosure
3.10 S-3 Registration
3.11 No General Solicitation
3.12 No Integrated Offering
3.13 No Brokers
3.14 Intellectual Property
3.15 Employee Benefit Plans
3.16 Subsidiaries
3.17 Tax Matters
3.18 Environmental Matters
3.19 Compliance with Laws; Permits
3.20 Insurance
3.21 Property
ARTICLE 4 COVENANTS
4.1 Best Efforts
<PAGE>
TABLE OF CONTENTS
(continued)
4.2 Securities Laws
4.3 Reporting Status
4.4 Use of Proceeds.
4.5 Expenses
4.6 Board Representation
4.7 Listing
4.8 Prospectus Delivery Requirement
4.9 Rights of First Offer
4.10 Standstill
4.11 Stockholder Rights Plan
4.12 Financial Statement Disclosure
ARTICLE 5 TRANSFER OF SECURITIES
5.1 Restrictive Legend
5.2 Notice of Proposed Transfer
5.3 Termination of Restrictions
5.4 Compliance with Rule 144 and Rule 144A
5.5 Non-Applicability of Restrictions on Transfer
ARTICLE 6 CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
6.1 Conditions to the Company's Obligation to Sell
ARTICLE 7 CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE
7.1 Conditions to Purchaser's Obligation to Purchase
ARTICLE 8 GOVERNING LAW; MISCELLANEOUS
8.1 Governing Law; Jurisdiction
8.2 Counterparts
8.3 Headings
8.4 Severability
8.5 Entire Agreement; Amendments
8.6 Notice
8.7 Successors and Assigns
8.8 Third Party Beneficiaries
8.9 Survival
8.10 Indemnification
8.11 Stamp Tax and Delivery Costs
8.12 Public Filings; Publicity
8.13 Further Assurances
8.14 Remedies
<PAGE>
TABLE OF CONTENTS
(continued)
8.15 Termination
<PAGE>
SECURITIES PURCHASE AGREEMENT
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This SECURITIES PURCHASE AGREEMENT ("Agreement") is entered into as of
June 5, 1998, by and between LaserSight Incorporated, a Delaware corporation
(the "Company"), with its headquarters located at 12249 Science Drive, Suite
160, Orlando, Florida 32826 and TLC The Laser Center Inc., an Ontario
corporation, with its headquarters located at 5600 Explorer Drive, Suite 301,
Mississauga, Ontario, Canada L4W 442 ("Purchaser"), with regard to the
following:
RECITALS
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A. The Company and the Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Section 4(2) of the Securities Act of 1933 (the "Securities
Act") and Regulation D ("Regulation D") of the Securities and Exchange
Commission (the "SEC") promulgated under the Securities Act.
B. The Purchaser desires to purchase, upon the terms and conditions
stated in this Agreement, 2,000,000 shares of Series C Convertible Participating
Preferred Stock (the "Preferred Stock") of the Company set forth in the
Certificate of Designation, Preferences and Rights of Series C Convertible
Participating Preferred Stock (the "Certificate of Designation") attached hereto
as Exhibit A, which shall be convertible into shares of the Company's common
stock, $.001 par value per share ("Common Stock"). The shares of Common Stock
issuable upon the conversion of or otherwise pursuant to the Preferred Stock are
referred to herein as the "Conversion Shares". The Preferred Stock and the
Conversion Shares are collectively referred to herein as the "Securities."
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
in the form attached hereto as Exhibit B (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act and applicable state securities laws and a Standstill
Agreement in the form attached hereto as Exhibit C (the "Standstill Agreement"),
pursuant to which Purchaser agrees to restrict its purchase of the Company's
voting securities. The Registration Rights Agreement, the Certificate of
Designation, and the Standstill Agreement are collectively referred to herein as
the "Ancillary Documents".
AGREEMENTS
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NOW, THEREFORE, in consideration of the foregoing recitals (which are
incorporated into and deemed a part of this Agreement), their respective
promises contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and Purchaser
hereby agree as follows:
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ARTICLE 1
PURCHASE AND SALE OF PREFERRED STOCK
1.1 Purchase of Preferred Stock. Subject to the terms and conditions of
this Agreement, on June 5, 1998 or, if later, the date on which all conditions
set forth in Articles 6 and 7 hereof have been either satisfied or waived, or
such other date as may be determined by mutual agreement of Purchaser and the
Company, but in no event later than June 30, 1998 (the "Closing Date"), the
Company agrees to issue and sell to Purchaser, and Purchaser agrees to purchase
from the Company (the "Closing"), 2,000,000 shares of Preferred Stock at a price
of U.S.$4.00 per share resulting in an aggregate purchase price of
U.S.$8,000,000 (the "Purchase Price").
The Closing shall take place on the Closing Date at 10:00 A.M. Eastern
Time at the offices of Arent Fox Kintner Plotkin & Kahn, PLLC, 1050 Connecticut
Avenue, N.W., Washington, D.C., or at such other time and place as shall be
agreed upon by the parties.
1.2 Form of Payment. Purchaser shall pay the Purchase Price by wire
transfer of United States Dollars to the account designated by the Company.
1.3 Transfer of Preferred Stock. The Securities shall, when issued, be
unregistered and therefore subject to the restrictions on sale, distribution and
transfer imposed under the Securities Act and under applicable securities laws
or blue sky laws of any state or foreign jurisdiction.
1.4 Registration of the Securities. Pursuant to the terms of the
Registration Rights Agreement, the Company shall, at its own expense, prepare,
and within 45 days after the Closing Date, file with the SEC a registration
statement on such form as is then available in order to effect the registration
of the Conversion Shares (the "Registration Statement"). The Company shall use
all reasonable best efforts to have the Registration Statement declared
effective as soon as possible after the filing thereof and to remain effective
for the Registration Period (as defined in the Registration Rights Agreement).
ARTICLE 2
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants to the Company as set forth in this
Article 2. Purchaser does not make any other representations or warranties,
express or implied, to the Company in connection with the transactions
contemplated hereby and any and all prior representations and warranties, if
any, which may have been made by Purchaser to the Company in connection with the
transactions contemplated hereby shall be deemed to have been merged in this
Agreement and any such prior representations and warranties, if any, shall not
survive the execution and delivery of this Agreement.
2.1 Investment Purpose. Purchaser is purchasing the Securities for
Purchaser's own account for investment only and not with a view toward or in
connection with the public sale or distribution thereof. Purchaser will not,
directly or indirectly, offer, sell, pledge or otherwise transfer the Securities
or any interest therein except pursuant to transactions that are exempt from the
registration requirements of the Securities Act and/or sales registered under
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the Securities Act. Purchaser understands that Purchaser must bear the economic
risk of this investment indefinitely, unless the Securities are registered
pursuant to the Securities Act and any applicable securities laws or blue sky
laws of any state or foreign jurisdiction an exemption from such registration is
available, and that the Company has no intention or obligation to register any
of the Securities other than as contemplated by Section 1.4 hereof and the
Registration Rights Agreement.
2.2 Accredited Investor Status. Purchaser represents and warrants, that
it is an Accredited Investor (as that term is defined in Rule 501 promulgated by
the SEC under the Securities Act), that it has such knowledge and experience in
business and financial matters as to be capable of evaluating the merits and
risks of the investment contemplated to be made hereunder, and that it (i) was
not formed or organized for the specific purpose of investing in the Company;
(ii) understands that such investment bears a high degree of risk and could
result in a total loss of its investment; and (iii) has sufficient financial
strength to hold the same as an investment and to bear the economic risks of
such investment (including possible loss of such investment) for an indefinite
period of time.
2.3 Reliance on Exemptions. Purchaser acknowledges that the Securities
being sold to it hereunder are being sold pursuant to a private offering
exemption under the Securities Act and are not being registered under the
Securities Act or under the securities laws or blue sky laws of any state or
foreign jurisdiction and understands that the Company is relying upon the truth
and accuracy of, and Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of Purchaser to acquire the Securities.
2.4 Information. Purchaser has been furnished all materials relating to
the business, finances and operations of the Company and materials relating to
the offer and sale of the Securities which it has specifically requested,
including without limitation the Company's Annual Report on Form 10-K and 10-K/A
for the year ended December 31, 1997, its Quarterly Report on Form 10-Q for the
period ended March 31, 1998, its Current Reports on Form 8-K filed with the SEC
on March 13, 1998, March 16, 1998 and March 18, 1998, the description of the
Common Stock contained in the Company's Form 8-A/A (Amendment No. 3) filed with
the SEC on September 29, 1997 and Proxy Statement dated May 28, 1998 (such
documents, including any financial statements and related notes included in such
documents collectively the "Furnished SEC Documents"). Purchaser and its
advisors have been given the opportunity to obtain information and to examine
all documents referred to herein and to ask questions of, and to receive answers
from, the Company or any person acting on its behalf concerning the Company and
the terms and conditions of this investment, and to obtain any additional
information, to the extent the Company possesses such information or could
acquire it without unreasonable effort or expense, to verify the accuracy of any
information previously furnished. All such questions have been answered to
Purchaser's full satisfaction, and all information and agreements, documents,
records and books pertaining to this investment which Purchaser has requested
have been made available to Purchaser or Purchaser's advisors. Purchaser
understands that its investment in the Securities involves a high degree of
risk, including without limitation the risks and uncertainties disclosed under
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the caption "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Risk Factors and Uncertainties" in the Furnished SEC
Documents. In making its investment decision, Purchaser has not relied on any
oral or written representation, other than those contained in the Furnished SEC
Documents or this Agreement (including the schedules hereto) and the Ancillary
Documents, with respect to the Securities, the Company, its business or
prospects, or other matters, provided that, the Company provided Purchaser with
certain financial projections. Such projections were prepared by the Company in
good faith based on information available to the party who prepared such
projections at the time such projections were prepared. However, Purchaser
acknowledges that such projections (i) were not updated from the date on which
such projections were prepared and such projections do not reflect the effects
of the transactions contemplated by this Agreement, and (ii) contain
forward-looking statements and assumptions regarding future events and future
performance of the Company which involve risks and uncertainties that could
materially effect actual results of the Company's operations. In making its
decision to invest in the Company, Purchaser has relied solely upon independent
investigations made by Purchaser and Purchaser's advisors.
2.5 Governmental Review. Purchaser understands that no federal or state
agency or any other government or governmental agency has passed upon or made
any recommendation or endorsement of the Securities.
2.6 Transfer or Resale. Purchaser understands that (i) the Securities
have not been and are not being registered under the Securities Act or under the
securities laws or blue sky laws of any state or foreign jurisdiction, and may
not be offered, sold, pledged or otherwise transferred unless subsequently
registered thereunder or an exemption from such registration is available, and
neither the Company nor any other person is under any obligation to register the
Securities under the Securities Act or under the securities laws or blue sky
laws of any state or foreign jurisdiction or to comply with the terms and
conditions of any exemption thereunder (in each case, other than pursuant to
this Agreement or the Registration Rights Agreement), and (ii) any sale of the
Securities made in reliance on Rule 144 under the Securities Act, or a successor
rule ("Rule 144"), may be made only in accordance with the terms of Rule 144 and
Article 5 hereof and further, if Rule 144 is not applicable, any resale of the
Securities without registration under the Securities Act under circumstances in
which the seller may be deemed to be an underwriter (as that term is defined in
the Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the SEC thereunder.
2.7 Authorization. Purchaser represents and warrants that as of the
Closing Date the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein have been duly authorized
by it. The fulfillment of and compliance with the terms of this Agreement will
not (i) conflict with or result in a breach of the terms, conditions or
provisions of, (ii) constitute a default under, or (iii) result in a violation
of, breach of or default under (A) its charter or constituent document, (B) any
law, statute, rule or regulation to which it is subject, or (C) any agreement,
instrument, order, judgment or decree to which it is subject or is a party to or
by which it is bound.
<PAGE>
2.8 Binding Effect. Purchaser represents and warrants that this
Agreement constitutes its valid and binding obligation, enforceable in
accordance with its terms, except (i) as limited by bankruptcy, insolvency or
other laws affecting the enforcement of creditors' rights generally or by
equitable principles in any action (legal or equitable), (ii) that the
availability of equitable relief is subject to the discretion of the court
before which any proceeding thereof may be brought, and (iii) that the
enforceability of the indemnification provisions may be limited by applicable
securities laws or public policy.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser, except as disclosed
or reflected (including, in the case of financial statements, provided for) in
the disclosure schedules delivered herewith, as set forth in this Article 3. The
Company does not make any other representations or warranties, express or
implied, to Purchaser in connection with the transactions contemplated hereby
and any and all prior representations and warranties, if any, which may have
been made by the Company to Purchaser in connection with the transactions
contemplated hereby shall be deemed to have been merged in this Agreement and
any such prior representations and warranties, if any, shall not survive the
execution and delivery of this Agreement.
3.1 Organization and Qualification. Each of the Company and its
subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated, and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted or are presently expected to be conducted during the Company's current
fiscal year. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
where the failure so to qualify or be in good standing would have a Material
Adverse Effect. For purposes of this Agreement, "Material Adverse Effect" means
any material adverse effect on the business, operations, assets, properties,
liabilities, condition (financial or otherwise) or operating results of the
Company and its subsidiaries, taken as a whole on a consolidated basis, or on
the transactions contemplated hereby.
3.2 Authorization; Enforcement.
(a) The Company has the requisite corporate power and
authority to enter into and perform this Agreement and the Ancillary Documents,
and to issue, sell and perform its obligations with respect to the Securities in
accordance with the terms hereof and thereof;
(b) the execution, delivery and performance of this Agreement
and the Ancillary Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation the
issuance of the Securities) have been duly authorized by all necessary corporate
action and, except as set forth on Schedule 3.2 hereof, no further consent or
authorization of the Company, its board of directors, or its stockholders or any
other person, body or agency is required with respect to any of the transactions
<PAGE>
contemplated hereby or (whether under rules of The NASDAQ Stock Market, the
National Association of Securities Dealers or otherwise);
(c) this Agreement, the Ancillary Documents and certificates
for the Securities have been duly executed and delivered by the Company; and
(d) this Agreement, the Ancillary Documents and the Securities
constitute legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except (i) to the
extent that such validity or enforceability may be subject to or affected by any
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement thereof, creditors' rights
or remedies of creditors generally, or by other equitable principles of general
application, (ii) that the availability of equitable relief is subject to the
discretion of the court before which any proceeding thereof may be brought, and
(iii) that the enforceability of indemnification provisions may be limited by
applicable securities law or public policy.
3.3 Capitalization. The capitalization of the Company as of the date
hereof, including the authorized capital stock, the number of shares issued and
outstanding, the number of shares reserved for issuance pursuant to the
Company's stock option plans, the number of shares reserved for issuance
pursuant to securities (other than the Securities) exercisable for, or
convertible into or exchangeable for any shares of Common Stock is set forth on
Schedule 3.3. All of such shares of capital stock have been, or upon issuance in
accordance with the terms of the relevant security will be, validly issued,
fully paid and nonassessable. No shares of capital stock of the Company
(including the Securities) are subject to preemptive rights or any other similar
rights of the stockholders of the Company or any liens or encumbrances imposed
or suffered by the Company. Except as disclosed in Schedule 3.3, as of the date
of this Agreement, there are no outstanding options, warrants, scrip, rights to
subscribe for, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries. The Company shall provide Purchaser
with a written update of this representation signed by the Company's Chief
Executive Officer or Chief Financial Officer on behalf of the Company as of the
Closing Date.
3.4 Issuance of Shares. As of the Closing the Securities will be duly
authorized, validly issued, fully paid and non-assessable, and free from all
taxes, liens, claims and encumbrances imposed or suffered by the Company and
will not be subject to preemptive rights or other similar rights of stockholders
of the Company.
3.5 No Conflicts. The execution, delivery and performance of this
Agreement and the Ancillary Documents by the Company, and the consummation by
the Company of transactions contemplated hereby and thereby (including, without
limitation, the issuance and reservation for issuance, as applicable, of the
Securities) will not (i) result in a violation of the Certificate of
Incorporation or By-laws, or (ii) conflict with, or constitute a default (or an
<PAGE>
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries, or
by which any property or asset of the Company or any of its subsidiaries, is
bound or affected (only with respect to this Agreement, except for such possible
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect). Neither the Company nor any of its subsidiaries is in violation
of its Certificate of Incorporation or other organizational documents, and
neither the Company nor any of its subsidiaries, is in default (and no event has
occurred which has not been waived which, with notice or lapse of time or both,
would put the Company or any of its subsidiaries in default) under, nor has
there occurred any event giving others (with notice or lapse of time or both)
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, except for possible violations, defaults or rights as
would not, individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Company and its subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any governmental entity, except
for possible violations the sanctions for which either singly or in the
aggregate would not have a Material Adverse Effect. Except as set forth on
Schedule 3.5, or except (i) such as may be required under the Securities Act in
connection with the performance of the Company's obligations pursuant to the
Registration Rights Agreement, (ii) filing of a Form D with the SEC, and (iii)
compliance with the state securities laws or blue sky laws of applicable
jurisdictions, the Company is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or to perform its
obligations in accordance with the terms hereof. The Common Stock is listed on
The NASDAQ Stock Market, the Company is not in violation of the listing
requirements of The NASDAQ Stock Market and the Company is not aware of any
proceedings pending or contemplated to seek to have the Common Stock delisted
from The NASDAQ Stock Market.
3.6 SEC Documents. Except as disclosed in Schedule 3.6, since December
31, 1996, the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Securities Exchange Act of 1934 (the "Exchange
Act") (all of the foregoing filed after December 31, 1995 and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being referred to herein as the "SEC
Documents"). The Company has delivered to Purchaser true and complete copies of
the Furnished SEC Documents, except for exhibits, schedules and incorporated
documents. Each of the SEC Documents as originally filed or as amended complied
in all material respects with the requirements of its respective report or form
and did not on the date of filing contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein were
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and as of the date hereof, there is no
fact or facts not disclosed in the SEC Documents which relates specifically to
<PAGE>
the Company which individually or the aggregate, may have a Material Adverse
Effect. The consolidated financial statements of the Company (including any
related schedules or notes thereto) included in the SEC Documents were prepared
in accordance with generally accepted accounting principles, consistently
applied, and the applicable rules and regulations of the SEC during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they do not include footnotes or are condensed or summary statements)
and present accurately and completely, in all material respects, the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal, year-end audit adjustments). To the extent required by
the rules of the SEC applicable thereto, the SEC Documents contain a complete
and accurate list of all material undischarged written or oral contracts,
agreements, leases or other instruments to which the Company or any subsidiary
is a party or by which the Company or any subsidiary is bound or to which any of
the properties or assets of the Company or any subsidiary is subject (each a
"Contract"). Except as set forth in Schedule 3.6, none of the Company, its
subsidiaries or, to the best knowledge of the Company, any of the other parties
thereto, is in breach or violation of any Contract, which breach or violation
would have a Material Adverse Effect. No event, occurrence or condition exists
which, with the lapse of time, the giving of notice, or both, would become a
default by the Company or its subsidiaries thereunder which would have a
Material Adverse Effect.
3.7 Absence of Certain Changes. Except as disclosed in Schedule 3.7 or
disclosed or reflected in the Furnished SEC Documents, since March 31, 1998,
there has been no change or development in the business, properties, operations,
financial condition or results of operations of the Company which individually
or in the aggregate would have a Material Adverse Effect.
3.8 Absence of Litigation. Except as disclosed in Schedule 3.8 or as
disclosed or reflected in the Furnished SEC Documents, there is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, or self-regulatory organization or body pending or, to the
knowledge of the Company or any of its subsidiaries, threatened against or
affecting the Company, any of its subsidiaries, or any of their respective
directors or officers in their capacities as such, which could reasonably be
expected to result in an unfavorable decision, ruling or finding which would
have a Material Adverse Effect or would adversely affect the transactions
contemplated by this Agreement or any of the documents contemplated hereby or
which would adversely affect the validity or enforceability of, or the authority
or ability of the Company to perform its obligations under, this Agreement or
any of such other documents. There are no facts known to the Company which, if
known by a potential claimant or governmental authority, could reasonably be
expected to give rise to a claim or proceeding which, if asserted or conducted
with results unfavorable to the Company or any of its subsidiaries, could
reasonably be expected to have a Material Adverse Effect.
3.9 Disclosure. No information relating to or concerning the Company
set forth in this Agreement contains an untrue statement of a material fact. The
Company has not omitted to state a material fact necessary in order to make the
statements made herein or therein, in light of the circumstances under which
they were made, not misleading.
<PAGE>
3.10 S-3 Registration. The Company is currently eligible to register
the resale by Purchaser of the Securities on a registration statement on Form
S-3 under the Securities Act.
3.11 No General Solicitation. Neither the Company nor any person acting
for the Company has conducted any "general solicitation," as described in Rule
502(c) under Regulation D, with respect to any of the Securities being offered
hereby.
3.12 No Integrated Offering. Neither the Company, nor any of its
Affiliates (as defined herein), nor any person acting on its or their behalf,
has directly or indirectly made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would prevent the
parties hereto from consummating the transactions contemplated hereby pursuant
to an exemption from registration under the Securities Act pursuant to the
provisions of Regulation D. The transactions contemplated hereby are exempt from
the registration requirements of the Securities Act, assuming the accuracy of
the representations and warranties herein contained of Purchaser. For purposes
hereof, "Affiliate" shall mean any entity controlling, controlled by or under
common control with a designated person or entity; for the purposes of this
definition, "control" shall have the meaning presently specified for that word
in Rule 405 promulgated by the SEC under the Securities Act. With respect to any
entity which is a limited partnership, Affiliate shall also mean any general or
limited partner of such limited partnership, or any person or entity which is a
general partner in a general or limited partnership which is a general partner
of such limited partnership.
3.13 No Brokers. The Company has taken no action which would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments by Purchaser relating to this Agreement or the transactions
contemplated hereby.
3.14 Intellectual Property.
(a) "Intellectual Property" means any and all right, title and interest
of the Company or any of its subsidiaries in and to: all patents, registered
tradenames, trademarks and servicemarks and registered copyrights and
applications therefor owned by the Company or any of its subsidiaries
(collectively, "Company Rights"); unregistered tradenames, trademarks,
servicemarks, and copyrights, trade secrets, customer lists, methodologies,
proprietary development and marketing information and know-how, inventions,
inventors' notes, drawings, and designs associated with any of the foregoing,
relating to the business of the Company. Set forth in Schedule 3.14(a) is a true
and correct list of the Company Rights.
(b) The Company or its subsidiaries are the owners of all right, title
and interest in and to the Company Rights, free and clear of all claims, liens,
encumbrances, licenses and other interests, except for those specifically
disclosed or reflected in the Furnished SEC Documents, on Schedule 3.8, or on
Schedule 3.14(b), and neither the Company nor any subsidiary of the Company
infringes on or is in conflict with any right of any other person with respect
to any Company Rights nor is there any claim of infringement made by a third
party against or involving the Company or any of its subsidiaries, which
infringement, conflict or claim, individually or in the aggregate, could
<PAGE>
reasonably be expected to result in an unfavorable decision, ruling or finding
which would have a Material Adverse Effect. Except as provided in the agreements
disclosed in Schedule 3.14(b), the Company has the right to bring actions for
infringement of the Intellectual Property.
3.15 Employee Benefit Plans.
(A) Identification. Schedule 3.15(a) contains a complete and
accurate list of all employee benefit plans (within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
sponsored by the Company or to which the Company contributes on behalf of its
employees (the "Employee Benefit Plans"). The Company has provided or made
available to Purchaser copies of all plan documents, determination letters,
pending determination letter applications, trust instruments, insurance
contracts, administrative services contracts, annual reports, actuarial
valuations, summary plan descriptions, summaries of material modifications,
administrative forms and other documents that constitute a part of or are
incident to the administration of the Employee Benefit Plans. In addition, the
Company has provided or made available to Purchaser a written description of all
existing practices engaged in by the Company that constitute Employee Benefit
Plans. Except as set forth on Schedule 3.15(a) and subject to the requirements
of the Internal Revenue Code of 1986, as amended (the "Code") and ERISA, each of
the Employee Benefit Plans can be terminated or amended at will by the Company.
Except as set forth on Schedule 3.15(a), no unwritten amendment exists with
respect to any Employee Benefit Plan.
(B) Administration. To the best knowledge of the Company, each
Employee Benefit Plan has been administered and maintained in compliance with
all applicable laws, rules and regulations, except where the failure to be in
compliance would not, individually or in the aggregate, result in a Material
Adverse Effect. To the best of the knowledge of the Company, the Company has (i)
made all necessary filings with respect to such Employee Benefit Plans,
including the timely filing of Form 5500 if applicable, and (ii) made all
necessary filings, reports and disclosures pursuant to and have complied with
all requirements of the Internal Revenue Service ("IRS") Voluntary Compliance
Resolution Program, if applicable, with respect to all profit sharing retirement
plans and pension plans in which employees of the Company participate.
(C) Examinations. Except as set forth on Schedule 3.15(c), the
Company has not received any notice that any Employee Benefit Plan is currently
the subject of an audit, investigation, enforcement action or other similar
proceeding conducted by any state or federal agency.
(D) Prohibited Transactions. To the best of the knowledge of
the Company, no prohibited transactions (within the meaning of Section 4975 of
the Code or Sections 406 and 407 of ERISA) have occurred with respect to any
Employee Benefit Plans.
(E) Claims and Litigation. No pending or, to the actual
knowledge of the Company, threatened claims, suits, or other proceedings exist
with respect to any Employee Benefit Plan other than normal benefit claims filed
by participants or beneficiaries.
<PAGE>
(F) Qualification. The Company has applied for a favorable
determination letter or ruling from the IRS for each of the Employee Benefit
Plans intended to be qualified within the meaning of Section 401(a) of the Code
and/or tax-exempt within the meaning of Section 501(a) of the Code. Except as
set forth on Schedule 3.15(f), no proceedings exist or, to the actual knowledge
of the Company has been threatened that could result in the revocation of any
such favorable determination letter or ruling.
(G) Funding Status. Neither the Company nor any member of a
"Controlled Group" (within the meaning of Section 412(n)(6)(B)) of the Code with
the Company sponsors any plans which (i) are subject to the minimum funding
requirements of Code Section 412 or ERISA Section 302, or (ii) are subject to
Title IV of ERISA assumptions.
(H) Excise Taxes. To the best of the knowledge of the Company,
neither the Company nor any member of a Controlled Group has any liability to
pay excise taxes with respect to any Employee Benefit Plan under applicable
provisions of the Code or ERISA.
(I) Multi-employer Plans. Neither the Company nor any member
of a Controlled Group is or ever has been obligated to contribute to a
multi-employer plan within the meaning of Section 3(37) of ERISA.
(J) Pension Benefit Guaranty Corporation. None of the Employee
Benefit Plans are subject to the requirements of Title IV of ERISA.
(K) Retirees. The Company has no obligation or commitment to
provide medical, dental or life insurance benefits to or on behalf of any of its
employees who may retire or any of its former employees who have retired except
as may be required pursuant to the continuation of coverage provisions of
Section 4980B of the Code and Sections 601 through 608 of ERISA.
3.16 Subsidiaries. Except as set forth on Schedule 3.16, the Company
does not own, whether directly or indirectly, any capital stock or other
proprietary interest directly or indirectly, in any corporation, association,
trust, partnership, joint venture or other entity which is currently involved in
the Company's ordinary course of business. Except as set forth on Schedule 3.16,
with respect to each of the Company's subsidiaries (i) the Company owns directly
or indirectly all of such subsidiary's outstanding capital stock, and (ii) there
are no outstanding options, warrants, rights, contracts, commitments,
understandings or arrangements by which such subsidiary is bound to issue any
additional shares of capital stock or any security convertible thereunto or
exercisable or exchangeable therefor.
3.17 Tax Matters.
(a) For purposes of this Agreement, (i) "Taxes" shall mean all
taxes, assessments, charges, duties, fees, levies or other governmental charges
(including interest, penalties or additions associated therewith) (including,
without limitation, federal, state, city, county, local, foreign, or other
income, franchise, capital, withholding, real or tangible property, employment,
unemployment compensation, transfer, sales, use, excise and all other taxes of
<PAGE>
any kind) imposed by the United States or any state, city, country, country or
foreign government or subdivision or agency thereof, whether disputed or not,
and (ii) "Transaction" means one or more transactions, acts, events, or
omissions of whatever nature.
(b) The Company has filed on a timely basis all returns and
reports, including all estimated returns and reports of every kind and have
timely given all notices, in respect of Taxes required to be filed or given
under applicable law within the applicable statute of limitations period by any
of them, except where the failure to so file or to give such notice and would
not have a Material Adverse Effect, or except where proper action has been taken
by the Company to extend the relevant filing deadline. Such returns, reports and
notices are complete and accurate in all material respects. All Taxes shown on
such returns or reports have been, and all Taxes subsequently assessed with
respect to the periods and or Transactions to which such returns or reports
relate have been or will be, timely, and fully paid, except for amounts which
the Company is contesting in good faith, or which the failure to pay would not
have had a Material Adverse Effect. The provisions in the financial statements
(and the notes and schedules related thereto) contained in the Furnished SEC
Documents for Taxes currently payable and for deferred Taxes are adequate in all
material respects to provide for such Taxes for which the Company and its
Subsidiaries taken as a whole may be liable in respect of periods or
Transactions through the dates thereof.
(c) No fact or condition relating to any past or present
Transaction, except as set forth on Schedule 3.17, which, if known to any tax
authority having jurisdiction, would likely result in a successful challenge by
such authority of the treatment or omission of such factor or condition on any
tax return, report or notice of the Company or its Subsidiaries, and no issue
has arisen in any examination of the Company by the IRS that, in either case, if
raised with respect to any other period no so examined would result in a
proposed material deficiency for any other period not so examined, if upheld.
The Company and its Subsidiaries have made all payments or estimated Taxes
required to be made under Section 6655 of the Internal Revenue Code of 1986, as
amended (the "Code") and any comparable provisions of state, local or foreign
law. Except as set forth on Schedule 3.17, to the Company's knowledge there is
no pending nor threatened or contemplated action, audit, proceeding or
investigation for the assessment or collection of Taxes from the Company. There
are no requests for rulings, outstanding subpoenas or requests for information
with respect to Taxes of the Company, proposed reassessments of any property
owned or leased by the Company, or similar matters pending with respect to any
taxing authority.
3.18 Environmental Matters. Except as listed in Schedule 3.18:
(a) There are, with respect to the Company and its
subsidiaries, or any predecessor of the foregoing, no present violations of
Environmental Law (as defined herein), nor to the knowledge of the Company, any
actions, activities, circumstances, conditions, events, incidents, or
contractual obligations which may give rise to any Environmental Liability and
neither the Company nor its subsidiaries has received any notice with respect to
any of the foregoing nor is any litigation pending or threatened in connection
with any of the foregoing.
<PAGE>
(b) To the knowledge of the Company and except in the normal
course of the Company's or its subsidiaries' business (i) no Hazardous Materials
are present on or about any real property currently owned, leased or used by the
Company or its subsidiaries, and (ii) no Hazardous Materials were present on or
about any real property previously owned, leased or used by the Company or its
subsidiaries during the period the property was owned, leased or used by the
Company or its subsidiaries.
(c) To the knowledge of the Company, no Hazardous Materials
have been released on or about, or where they may pose a threat of migration to,
any real property currently owned, leased or used by the Company or its
subsidiaries and no Hazardous Materials were released on or about any real
property previously owned, leased or used by the Company or its subsidiaries
during the period the property was owned, leased or used by the Company or its
subsidiaries, except as may be required in the normal course of business and in
material compliance with applicable Environmental Law.
(d) To the knowledge of the Company, no asbestos-containing
materials or PCBs are present on or about any property currently owned, leased
or used by the Company or its subsidiaries.
(e) To the knowledge of the Company, there are not now, nor
have there ever been, any underground storage tanks or similar facilities of any
kind on or under any real property currently or previously owned, leased or used
by the Company or its subsidiaries.
(f) For purposes of this Section 3.18, capitalized terms used
herein shall have The following meanings:
"Environmental Laws" shall mean, at any date, all provisions
of federal, state, local or foreign law (including applicable principles of
common and civil law), statutes, ordinances, rules, regulations, published
standards and directives that have the force and effect of laws, statutes,
regulations, permits, licenses, judgments, writs, injunctions, decrees and
orders enacted, promulgated or issued by an), Public Authority, and all
indemnity agreements and other contractual obligations, as in effect at such
date, relating to (i) the protection of the environment, including the air,
surface and subsurface soils, surface waters, groundwaters and natural
resources, and (ii) occupational health and safety and exposure of persons to
Hazardous Materials. Environmental Laws shall include the Comprehensive
Environmental Response, Compensation and Liability Act 42 U.S.C. ss.ss.9601 et
seq., and any other laws imposing or creating liability with respect to
Hazardous Materials.
"Environmental Liability" shall mean any liabilities,
obligations, costs, losses, payments or damages, including compensatory and
punitive damages, incurred (i) to contain, remove, clean up, assess, abate or
otherwise remedy any actual or alleged release or threatened release of
Hazardous Materials, any actual or alleged contamination (by Hazardous
Materials) of air, surface or subsurface soil, groundwater or surface water, or
any personal injury or damage to natural resources or property resulting from
any such release or contamination, pursuant to the requirements of any
Environmental Law or in response to any claim by any Public Authority or other
third party under any Environmental Law; (ii) to modify facilities or processes
<PAGE>
or take any other remedial action in response to any claim by any Public
Authority of non-compliance with any Environmental Law, (iii) as a result of the
imposition of any civil or criminal fine or penalty by any Public Authority for
the violation or alleged violation of any Environmental Law, or (iv) as a result
of any action, suit, proceeding or claim by any third party under any
Environmental Law. The term "Environmental Liability" shall include: (i)
reasonable fees of counsel and consultants (but not any corporate allocation for
management time or for the use of similar in-house services or facilities) and
(ii) the costs and expenses of any investigation undertaken to ascertain the
existence or extent of any potential or actual Environmental Liability.
"Hazardous Material" shall mean any substance regulated by any
Environmental Law or which may now or in the future form the basis for any
Environmental Liability.
"Public Authority" shall mean any supranational, national,
regional, state or local government court, governmental agency, authority,
board, bureau, instrumentality or regulatory body.
3.19 Compliance with Laws; Permits. Except as provided in Schedule
3.19, the Company and its subsidiaries are in compliance, and have been
conducted in compliance with, all federal, state, local and foreign laws, rules,
ordinances, codes, consents, authorizations, registrations, regulations,
decrees, directives, judgments and orders applicable to it except where the
failure to comply would not individually or in the aggregate have a Material
Adverse Effect. The Company has all federal, state, local and foreign
governmental licenses, permits, qualifications and authorizations ("Permits")
necessary in the conduct of its business as currently conducted. All such
Permits are in full force and effect and no violations have been recorded in
respect of any such Permit; no proceeding is pending or, to the best knowledge
of the Company, threatened to revoke or limit any such Permit and no such Permit
will be suspended, cancelled or adversely modified as a result of the execution
and delivery of this Agreement or the Ancillary Documents and the consummation
of the transactions contemplated hereby or thereby, except where failure to have
such Permit would not individually or in the aggregate have a Material Adverse
Effect.
3.20 Insurance. The Company and its Subsidiaries maintains fire, flood,
windstorm, hurricane and casualty insurance policies, with extended coverage
(subject to reasonable deductibles), with licensed carriers sufficient to allow
them to replace any of their property that might be damaged or destroyed and to
the best knowledge of the Company have liability insurance reasonably adequate
to protect them and their financial condition against the risks involved in the
business conducted by them. Neither the Company nor any of its Subsidiaries has
done anything by way of action or inaction which might invalidate any of such
policies in whole or in part.
3.21 Property. The Company and its subsidiaries have good and
marketable title, or a valid leasehold interest in or contractual right to use,
all of their assets and properties, free and clear of any mortgages, judgments,
claims liens, security interests, pledges, escrows, charges or other
encumbrances of any kind or character whatsoever ("Encumbrances") except in each
case for permitted encumbrances and such defects in title and such other liens
<PAGE>
and Encumbrances which do not individually or in the aggregate have a Material
Adverse Effect on the value to the Company of the properties and assets of the
Company and its subsidiaries taken as a whole.
ARTICLE 4
COVENANTS
4.1 Best Efforts. The parties shall use their best efforts timely to
satisfy each of the conditions described in Articles 6 and 7 of this Agreement.
4.2 Securities Laws. The Company shall file a Form D with respect to
the Securities with the SEC as required under Regulation D and shall provide a
copy thereof to Purchaser within 15 days after the Closing Date. The Company
shall file a Form 8-K disclosing this Agreement and the transactions
contemplated hereby with the SEC within five business days following the Closing
Date. The Company shall, on or prior to the Closing Date, take such action as is
necessary to sell the Securities to Purchaser under applicable securities laws
of the states of the United States, and shall provide evidence of any such
action so taken to Purchaser on or prior to the Closing Date.
4.3 Reporting Status. So long as Purchaser beneficially owns any of the
Securities, the Company shall use its best efforts to timely file all reports
required to be filed by it with the SEC pursuant to the Exchange Act, and the
Company shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would permit such termination.
4.4 Use of Proceeds. The Company shall use the proceeds from the sale
of the Securities to (i) redeem its Series B Convertible Participating Preferred
Stock (the "Series B Preferred Stock"), 525 shares of which are currently issued
and outstanding, if the Series B Preferred Stock is outstanding as of the date
of the Closing Date, and (ii) implement its strategic business plan, including,
without limitation, the acquisition of related technology through asset and
business acquisitions, mergers and joint ventures.
4.5 Expenses. Each of the Company and Purchaser shall pay all the costs
and expenses incurred by it or on its behalf in connection with this Agreement
and the consummation of the transactions contemplated hereby.
4.6 Board Representation. On or at any time within 90 days after the
Closing Date, Purchaser may provide the Company with (i) the name of an
individual (the "TLC Initial Nominee") Purchaser recommends be appointed to the
Company's Board of Directors (the "Board"), and (ii) all information related to
the TLC Initial Nominee as would be required by Regulation 14A promulgated by
the SEC under the Exchange Act to be included in a proxy statement related to a
meeting of the Company's stockholders at which directors would be elected (the
"Proxy Information"). Within 30 days after the Company's receipt of all Proxy
Information relating to such individual, the Board shall consider the
qualifications of the TLC Initial Nominee and, subject to its fiduciary duties,
either appoint the TLC Initial Nominee to serve on the Board until the next
<PAGE>
election of directors by the Company's stockholders or notify Purchaser that the
Board has determined that such appointment would not be consistent with the
Board's fiduciary duties. At any time within 90 days after the Company's
notifies Purchaser of the Board's determination not to appoint the TLC Initial
Nominee, Purchaser may provide the Company with the name of, together with Proxy
Information relating to, one or more individuals (the "TLC Alternative Nominee")
that Purchaser recommends be appointed to the Board. Within 30 days after the
Company's receipt of all Proxy Information relating to the TLC Alternative
Nominee, the Board shall consider the qualifications of such TLC Alternative
Nominee and, subject to its fiduciary duties, either appoint the TLC Alternative
Nominee to serve on the Board until the next election of directors by the
Company's stockholders or notify Purchaser that the Board has determined that
such appointment would not be consistent with the Board's fiduciary duties. This
process shall continue until the Board and Purchaser have agreed upon an
individual nominated by Purchaser to serve on the Board (the "TLC Nominee"). The
Company shall increase the size of the Company's Board of Directors to the
extent necessary to accommodate the appointment of the TLC Nominee. Thereafter,
for as long as Purchaser holds of record (such amount to be determined by
considering the total of the following (i) the number of full shares of Common
Stock into which shares of Preferred Stock then held by Purchaser could be
converted pursuant to terms of the Certificate of Designation, and (ii) that
number of full shares of Common Stock then held by the Purchaser) at least 7.5%
of the Common Stock outstanding on any date the Board fixes the record date for
the meeting of the Company's stockholders at which directors will be elected,
Purchaser shall have the right to designate a nominee to stand for election as a
director at the next meeting at which directors are to be elected. If such
nominee of the Purchasers is not the TLC Nominee, then similar to the process
described in the first four sentences of this Section 4.6, Purchaser shall
submit recommendations for an individual to stand for election as a director and
the Proxy Information related thereto to the committee of the Board responsible
for director nominations. Such committee shall consider the qualifications of
such individual and, subject to its fiduciary duties, either nominate such
individual for election at such meeting of stockholders or notify Purchaser that
such committee has determined that such appointment would not be consistent with
its fiduciary duties (in which case the process shall continue until the
committee and Purchaser have agreed upon an individual to stand for election as
a director at the next meeting at which directors are to be elected).
4.7 Listing. The Company shall use its best efforts to continue the
listing and trading of its Common Stock on Nasdaq, the New York Stock Exchange
or American Stock Exchange; and comply in all respects with the Company's
reporting, filing and other obligations under the by-laws or rules of the Nasdaq
or such exchange, as applicable. In connection with the first issuance of the
Conversion Shares, the Company shall take the necessary actions to have the
Conversion Shares approved for quotation on The NASDAQ Stock Market.
4.8 Prospectus Delivery Requirement. Purchaser understands that the
Securities Act requires delivery of a prospectus relating to the Conversion
Shares in connection with any sale or other disposition thereof pursuant to the
Registration Statement, and Purchaser shall comply with the applicable
prospectus delivery requirements of the Securities Act in connection with any
such sale or other disposition.
<PAGE>
4.9 Rights of First Offer.
(a) During the period commencing on the Closing Date and
continuing until the date on which the sum of (i) the number of full shares of
Common Stock into which shares of Preferred Stock for which Purchaser was the
record holder could be converted pursuant to terms of the Certificate of
Designation, and (ii) that number of full shares of Common Stock then held by
the Purchaser, is less than five percent (5%) of the then total outstanding
Common Stock, prior to the Company finalizing a financing (the "Proposed
Offering") with an investor which includes the issuance of equity securities, or
any security convertible into or exercisable, directly or indirectly, for equity
securities of the Company (collectively, the "Equity Securities") at a price
which is less than the closing bid price (the "Market Price") for a share of
Common Stock (on the date of the Proposed Offering Notice (as defined herein))
as reported by The NASDAQ Stock Market, or such other securities exchange or
national market system on which Common Stock is then listed, the Company shall
provide written notice to Purchaser (the "Proposed Offering Notice") which
includes a description in reasonable detail of the Proposed Offering, including
the type and amount of Equity Securities proposed to be issued and the
consideration the Company desires to receive therefore. The Proposed Offering
Notice shall constitute an offer to Purchaser to purchase a portion (a
"Maintenance Amount") of the securities being offered (the "Offered Securities")
in connection with the Proposed Offering on a pari passu basis in order to
maintain Purchaser's percentage level of ownership of the Company's Common Stock
outstanding as such ownership exists on the date of the Proposed Offering
Notice. For purposes of determining whether a Proposed Offering includes the
issuance of Equity Securities at a price which is less than the Market Price,
the total consideration to be received by the Company in connection with such
Proposed Offering will be divided by the total of (i) shares of Common Stock to
be issued in connection with the Proposed Offering, (ii) options and warrants to
purchase Common Stock to be issued in connection with the Proposed Offering
(assuming such options and warrants have been fully exercised), and (iii)
preferred stock (and options and warrants to purchase such preferred stock) to
be issued in connection with the Proposed Offering which are convertible into
Common Stock (assuming such preferred stock, options and warrants shall be
deemed to have been converted to Common Stock pursuant to the terms thereof
utilizing the Market Price).
(b) Purchaser shall have five business days after receipt of
the Proposed Offering Notice (unless Purchaser earlier indicates that it has no
interest in purchasing the Offered Securities), to decide whether or not to
acquire the Maintenance Amount, after which (if Purchaser has not agreed to
purchase the above-mentioned Maintenance Amount on the terms set forth in the
Proposed Offering Notice or such other terms as are mutually acceptable to the
Company and Purchaser) the Company shall be permitted to seek and obtain a
third-party purchaser to acquire the entire amount of the Offered Securities,
provided that the closing of such acquisition by such third party purchaser
occurs within 120 days from the date of the Proposed Offering Notice and
provided that the acquisition of the Offered Securities by such third-party
purchaser is on terms not materially different than those terms set forth in the
Proposed Offering Notice.
<PAGE>
(c) The parties acknowledge and agree that the requirements of
this Section 4.9 shall not apply to a public offering of the Company's equity
securities. For purposes of this Section 4.9, the following will not be deemed a
"Proposed Offering": (i) the grant of options or warrants, or the issuance of
securities, under any employee or director stock option, stock, purchase or
restricted stock plan of the Company, (ii) the issuance of Common Stock pursuant
to any contingent obligation of the Company existing as of the Closing and
described on Schedule 3.3, (iii) the issuance of securities upon the exercise or
conversion of the Company's options, warrants or other convertible securities
outstanding as of the date hereof, (iv) declaration of a rights dividend to
holders of Common Stock in connection with the adoption of a stockholder rights
plan by the Company, and (v) the issuance of securities in connection with a
merger, acquisition, joint venture or similar arrangement. The consummation of
the Company's financing transaction (the "Dawson Samberg Financing") with Dawson
Samberg Capital Management, Inc. and its affiliates ("Dawson Samberg") shall not
trigger any rights of Purchaser under this Section 4.9.
(d) Nothing contained in this Section 4.9 will require the
Company to issue Equity Securities or take any action which is inconsistent with
the listing rules of The NASDAQ Stock Market.
4.10 Standstill. Pursuant to the terms of the Standstill Agreement for
the period specified therein, Purchaser shall not acquire any voting securities
or instruments which are convertible into the voting securities of the Company.
4.11 Stockholder Rights Plan. Prior to or in connection with the Dawson
Samberg Financing, the Company shall either (i) enter into an agreement with
Dawson Samberg providing that neither Dawson Samberg nor any entity Affiliate
will purchase any voting securities of the Company after the consummation of the
Dawson Samberg Financing without the approval of a majority of the members of
the Company's Board of Directors (the "Board"), or (ii) subject to the Board's
fiduciary duties, the Company will adopt a stockholder rights plan which would
be triggered should any investor acquire more than 15% of the Common Stock
outstanding without the approval of the Board.
4.12 Financial Statement Disclosure. The Company shall deliver to
Purchaser (a) as soon as available, but in any event within 45 days after the
end of each month during each of the Company's fiscal years, a Company prepared
consolidated balance sheet, consolidated income statement, and consolidated
statement of cash flow covering the Company's consolidated operations during
such period; and (b) as soon as available, but in any event within 90 days after
the end of each of the Company's fiscal years, consolidated financial statements
of the Company for each such fiscal year, audited by independent certified
public accountants. Such audited financial statements shall include a
consolidated balance sheet, consolidated profit and loss statement, and
consolidated statement of cash flow and such accountants' letter to management
when available.
<PAGE>
ARTICLE 5
TRANSFER OF SECURITIES
The Securities shall not be transferable except upon the conditions
specified in this Article 5, which conditions are intended to insure compliance
with the provisions of the Securities Act and state securities laws in respect
of the transfer of any such Securities.
5.1 Restrictive Legend.
(A) Unless and until otherwise permitted by this Article 5,
each certificate for the Preferred Stock and the Conversion Shares issued to
Purchaser or to any subsequent transferee of such Securities shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"These Shares have not been registered under the Securities
Act of 1933 and may not be offered for sale, sold, transferred
or otherwise disposed of unless registered under such Act or
unless an exemption from such registration is available.
Further, such transfer is subject to the conditions specified
in a Securities Purchase Agreement dated as of June 5, 1998
pursuant to which such shares were issued and sold by
LaserSight Incorporated (the "Company"), a copy of which
Agreement will be furnished by the Company to the holder
hereof upon request and without charge."
(B) The Company may order its transfer agents for Common Stock
to stop the transfer of any of the Securities bearing the legend set forth in
Subsection (a) of this Section 5.1 until the conditions of this Article 5 with
respect to the transfer of such Securities have been satisfied.
5.2 Notice of Proposed Transfer. If, prior to any transfer or sale of
any Securities not registered under the Securities Act, Purchaser desiring to
effect such transfer or sale shall deliver a written notice to the Company
describing briefly the manner of such transfer or sale and a written opinion of
counsel for Purchaser (provided that such counsel, and the form and substance of
such opinion, are reasonably satisfactory to the Company) to the effect that
such transfer or sale may be effected without the registration of such
Securities under the Securities Act, the Company shall thereupon permit or cause
its transfer agent to permit such transfer or sale to be effected; provided,
however, that if in such written notice the transferring Purchaser represents
and warrants to the Company that the transfer or sale is to a purchaser or
transferee whom the transferring Purchaser knows or reasonably believes to be a
"qualified institutional buyer," as that term is defined in Rule 144A
promulgated by the SEC under the Securities Act ("Rule 144A"), no opinion shall
be required unless reasonably requested in writing by the Company within five
days after receipt of such written notice, in which case Purchaser shall deliver
to Company such a written opinion of counsel.
<PAGE>
5.3 Termination of Restrictions.
(A) Notwithstanding the foregoing provisions of this Article
5, the restrictions imposed by this Article 5 upon the transferability of
Securities shall terminate as to any particular share of such Securities when
(i) such Security shall have been effectively registered under the Securities
Act and sold by Purchaser thereof in accordance with such registration, or (ii)
a written opinion to the effect that such restrictions are no longer required or
necessary under any federal or state securities law or regulation have been
received from counsel for Purchaser thereof (provided that such counsel, and the
form and substance of such opinion, are reasonably satisfactory to the Company)
or counsel for the Company, or (iii) such Security shall have been sold without
registration under the Securities Act in compliance with Rule 144, or (iv) the
Company is reasonably satisfied that Purchaser of such Security shall, in
accordance with the terms of Subsection (k) of Rule 144, be entitled to sell
such Security pursuant to such Subsection, or (v) a letter or an order shall
have been issued to Purchaser thereof by the staff of the SEC or the SEC stating
that no enforcement action shall be recommended by such staff or taken by the
SEC, as the case may be, if such Security is transferred without registration
under the Securities Act in accordance with the conditions set forth in such
letter or order and such letter or order specifies that no subsequent
restrictions on transfer are required.
(B) Whenever the restrictions imposed by this Article 5 shall
terminate, as hereinabove provided, a Purchaser who then holds any particular
Securities then outstanding as to which such restrictions shall have terminated
shall be entitled to receive from the Company, without expense to Purchaser, one
or more new certificates for such Securities not bearing the restrictive legend
set forth in Section 5.1(a) hereof.
5.4 Compliance with Rule 144 and Rule 144A. At the written request of
Purchaser who proposes to sell any of Securities in compliance with Rule 144,
the Company shall furnish to Purchaser, within 10 days after receipt of such
request, a written statement as to whether or not the Company is in compliance
with the filing requirements of the SEC as set forth in such Rule. For purposes
of effecting compliance with Rule 144A, in connection with any resales of any
Securities that hereafter may be effected pursuant to the provisions of Rule
144A, Purchaser desiring to effect such resale and each prospective
institutional purchaser of such shares designated by Purchaser shall have the
right, at any time the Company is not subject to Section 13 or 15(d) of the
Securities and Exchange Act, to obtain from the Company, upon the written
request of Purchaser and at the Company's expense the documents specified in
Section (d)(4)(i) of Rule 144A, as such rule may be amended from time to time.
5.5 Non-Applicability of Restrictions on Transfer. Notwithstanding the
provisions of Section 5.2 hereof, any record owner of Securities may from time
to time transfer all or part of such record owner's Securities (i) to a nominee
identified in writing to the Company as being the nominee of or for such record
owner, and any nominee of or for a beneficial owner of Securities identified in
writing to the Company as being the nominee of or for such beneficial owner may
from time to time transfer all or part of the Securities registered in the name
of such nominee but held as nominee on behalf of such beneficial owner, to such
beneficial owner, (ii) to an Affiliate of such record owner, or (iii) if such
<PAGE>
record owner is a partnership or limited liability company or the nominee of a
partnership or limited liability company, to a partner, member, retired partner
or member, or estate of a partner, member or retired partner or member, of such
partnership or limited liability company, so long as such transfer is in
accordance with the transferee's interest in such partnership or limited
liability company and is without consideration; provided, however, that (1) such
record owner shall deliver a written notice to the Company describing in
reasonable detail the manner of such transfer or sale prior to the consummation
of such transfer or sale, (2) each such transferee shall remain subject to all
restrictions on the transfer of Securities herein contained, and (3) if
reasonably requested in writing by the Company within five days after receipt of
such written notice, such record owner shall deliver to the Company such
additional information requested by the Company or its counsel (in form and
substance reasonably satisfactory to the Company and such counsel) that the
proposed transfer is within the scope of this Section 5.5 or a written opinion
of counsel for such record owner (provided that such counsel, and the form and
substance of such opinion, are reasonably satisfactory to the Company) to the
effect that such transfer or sale may be effected without the registration of
such Securities under the Securities Act.
ARTICLE 6
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
6.1 Conditions to the Company's Obligation to Sell. The obligation of
the Company hereunder to issue and sell the Securities to Purchaser at the
Closing is subject to the satisfaction, as of the Closing Date and with respect
to Purchaser, of each of the following conditions thereto, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:
(A) Purchaser shall have executed the signature page to this
Agreement and the Ancillary Documents, as applicable, and delivered the
same to the Company.
(B) The Purchase Price shall have been delivered to the
Company.
(C) The Company shall have received notice from the Company's
senior lender, Foothill Capital Corporation ("Foothill"), that Foothill
has been paid all amounts owed by the Company.
(D) The representations and warranties of Purchaser shall be
true and correct as of the date when made and as of the Closing as
though made at that time (except for representations and warranties
that speak as of a specific date), and Purchaser shall have performed,
satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the applicable Purchaser at or prior to
the Closing.
(E) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
<PAGE>
jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which restricts or prohibits the
consummation of any of the transactions contemplated by this Agreement.
ARTICLE 7
CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE
7.1 Conditions to Purchaser's Obligation to Purchase. The obligation of
Purchaser hereunder to purchase the Securities on the Closing Date is subject to
the satisfaction of each of the following conditions, provided that these
conditions are for Purchaser's sole benefit and may be waived by Purchaser at
any time in Purchaser's sole discretion:
(A) The Company shall have executed the signature page to this
Agreement, the Registration Rights Agreement and delivered the same to
Purchaser.
(B) At the Closing, the Company shall have delivered to
Purchaser duly executed certificates for the Preferred Stock.
(C) The Common Stock shall be listed on The NASDAQ Stock
Market and trading in the Common Stock shall not have been suspended by
The NASDAQ Stock Market or the SEC or other regulatory authority.
(D) Purchaser shall have received notice from Foothill, that
Foothill has been paid all amounts owed by the Company.
(E) Concurrently with the Closing, the Company shall redeem
the Series B Preferred Stock.
(F) The representations and warranties of the Company shall be
true and correct as of the date when made and as of the Closing Date as
though made at that time and the Company shall have performed,
satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing.
Purchaser shall have received a certificate, executed by the Chief
Executive Officer or Chief Financial Officer of the Company, dated as
of the Closing Date to the foregoing effect.
(G) Purchaser shall have completed to their satisfaction all
business, legal, accounting and financial due diligence with respect to
the Company.
(H) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any
of the transactions contemplated by this Agreement.
<PAGE>
(I) Purchaser shall have received an opinion of Sonnenschein
Nath & Rosenthal, dated as of the Closing Date, in the form attached
hereto as Exhibit D.
ARTICLE 8
GOVERNING LAW; MISCELLANEOUS
8.1 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in that state, without giving effect to the
principles of conflicts of law. The parties hereto irrevocably consent to the
jurisdiction of the United States federal courts and state courts located in the
County of New Castle in the State of Delaware in any suit or proceeding based on
or arising under this Agreement or the transactions contemplated hereby and
irrevocably agree that all claims in respect of such suit or proceeding may be
determined in such courts. The Company and Purchaser irrevocably waives the
defense of an inconvenient forum to the maintenance of such suit or proceeding.
Service of process upon the Company or Purchaser mailed by certified mail,
return receipt requested, shall be deemed in every respect effective service of
process upon the Company in any suit or proceeding arising hereunder. Nothing
herein shall affect Purchaser's right to serve process in any other manner
permitted by law. A final non-appealable judgment in any such suit or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.
8.2 Counterparts. This Agreement may be executed in two or more
counterparts, including, without limitation, by facsimile transmission, all of
which counterparts shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered
to the other party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause additional
original executed signature pages to be delivered to the other parties.
8.3 Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
8.4 Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
8.5 Entire Agreement; Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived other than by an instrument in writing signed by
the party to be charged with enforcement and no provision of this Agreement may
be amended other than by an instrument in writing signed by the Company and
Purchaser.
<PAGE>
8.6 Notice. Any notice herein required or permitted to be given shall
be in writing and may be personally served or delivered by nationally-recognized
overnight courier or by facsimile-machine confirmed telecopy, and shall be
deemed delivered at the time and date of receipt (which shall include telephone
line facsimile transmission). Each party shall provide notice to the other party
of any change in address. The addresses for such communications shall be:
If to the Company:
LaserSight Incorporated
12249 Science Drive
Suite 160
Orlando, Florida 32826
Telecopy: (407) 382-2701
Attention: Chief Financial Officer
After June 30, 1998:
LaserSight Incorporated
3300 University Boulevard
Suite 140
Orlando, Florida 32792
Telecopy: (407) 678-9981
Attention: Chief Financial Officer
with a copy to:
Sonnenschein Nath & Rosenthal
One Metropolitan Square
Suite 3000
St. Louis, Missouri 63102
Telecopy: (314) 259-5959
Attention: Alan B. Bornstein
If to Purchaser:
TLC The LaserCenter, Inc.
5600 Explorer Drive
Suite 301
Mississauga, Ontario
Canada L4W 442
Telecopy: (905) 602-7956
Attention: Elias Vamvakas
with a copy to:
<PAGE>
Arent Fox Kintner Plotkin & Kahn, PLLC
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5339
Telecopy: (202) 857-6395
Attention: Jeffrey E. Jordan
8.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor Purchaser shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other. The
provisions of this Agreement which are for each of the Purchaser's benefit as a
purchaser of holder of Securities are also for the benefit of, and enforceable
by, any subsequent holder of such Securities.
8.8 Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
8.9 Survival. All representations and warranties in this Agreement
shall survive the execution and delivery of this Agreement and the Closing. All
agreements contained herein shall survive the Closing until, by their respective
terms, they are no longer operative
8.10 Indemnification. The Company shall indemnify and hold harmless
Purchaser against and from any losses, claims, damages, liabilities or expenses
("Losses") insofar as such Losses (or actions in respect thereof) arise out of
or are based upon (i) the falsity or incorrectness as of the Closing Date of any
representation or warranty of the Company contained in or made pursuant to
Article 3 hereof, or (ii) the existence of any condition, event or fact
constituting, or which with notice or passage of time, or both, would constitute
a default in the observance of any of the Company's undertakings or covenants
hereunder, under the Registration Rights Agreement or the Company's Certificate
of Incorporation and By-laws. The Company shall also pay all attorney's and
accountant's fees and costs and court costs incurred by Purchaser in enforcing
the indemnification provided for in this Section 8.10. Notwithstanding the
foregoing, the Company expressly agrees and acknowledges that the right of
indemnification granted herein to Purchaser of shall not be deemed to be the
exclusive remedy available to Purchaser for any of the matters described in this
Section 8.10.
8.11 Stamp Tax and Delivery Costs. The Company will pay all stamp and
other taxes, if any, which may be payable in respect of the sale or other
transfer of the Securities to Purchaser and the issuance thereof to Purchaser or
its nominee, and will save Purchaser harmless against any loss or liability
resulting from nonpayment or delay in payment of any such tax. The Company will
also pay all reasonable costs of delivery to Purchaser, or Purchaser's nominee,
of the Securities to be purchased by Purchaser or otherwise transferred to
Purchaser.
8.12 Public Filings; Publicity. No party hereto shall make any public
statement regarding the transactions contemplated hereby unless the language and
timing of such statement has been approved by both the Company and Purchaser.
<PAGE>
Notwithstanding the foregoing, each of the parties hereto may, in documents
required to be filed by it with the SEC or other regulatory bodies, make such
statements with respect to the transactions contemplated hereby as each may be
advised is legally necessary upon advice of its counsel; provided, however, that
the party making such determination shall immediately notify the other party
that it intends to make a public announcement and the parties hereto shall, in
good faith, attempt to agree on any public announcements or publicity statements
with respect thereto (which approval shall not be unreasonably withheld or
delayed).
8.13 Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
8.14 Remedies. No provision of this Agreement providing for any remedy
to a Purchaser shall limit any remedy which would otherwise be available to
Purchaser at law or in equity. Nothing in this Agreement shall limit any rights
a Purchaser may have with any applicable federal or state securities laws with
respect to the investment contemplated hereby.
8.15 Termination. In the event that the Closing shall not have occurred
on or before June 30, 1998, unless the parties agree otherwise, this Agreement
shall terminate at the close of business on such date.
<PAGE>
IN WITNESS WHEREOF, Purchaser and the Company have caused this
Agreement to be duly executed as of the date first above written.
LASERSIGHT INCORPORATED: TLC THE LASER CENTER INC.
By: /s/ Michael R. Farris By: /s/ R. J. Kelly
--------------------------- ------------------------
Michael R. Farris Name: Ronald J. Kelly
President and CEO Title: Vice-President of Acquisitions
SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
EXHIBIT 99.2
LASERSIGHT INCORPORATED
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES C CONVERTIBLE PARTICIPATING
PREFERRED STOCK
We, Michael R. Farris and Gregory L. Wilson, the President and
Secretary of LaserSight Incorporated, a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), do hereby certify that,
pursuant to the authority confirmed upon the Board of Directors by the
Certificate of Incorporation of the Corporation, as amended and restated, the
Board of Directors on June 4, 1998, adopted the following resolution creating a
series of 2,000,000 shares of Preferred Stock designated as Series C Convertible
Participating Preferred Stock with a face amount of $4.00 per share:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the
Corporation's Certificate of Incorporation, as amended and restated, a series of
Preferred Stock of the Corporation be and it hereby is created, and that the
designation and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
1. Designation and Number.
(a) There is hereby designated a series of Preferred Stock to
be known as "Series C Convertible Participating Preferred Stock." The number of
shares constituting the Series C Convertible Participating Preferred Stock (the
"Series C Preferred Stock") shall be 2,000,000, which number may not be
increased without the approval of the holders of a majority of the then
outstanding shares of the Series C Preferred Stock.
(b) The Series C Preferred Stock shall, with respect to
dividend rights and rights on liquidation, dissolution or winding up, (i) rank
senior to the Common Stock, par value $.001 per share, of the Corporation (the
"Common Stock"), (ii) senior to any capital stock of the Corporation ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series C Preferred Stock (the "Junior Stock"), (iii) pari passu with any
class or series of capital stock of the Corporation hereafter created
specifically ranking, by its terms, on parity with the Series C Preferred Stock
(the "Pari Passu Stock"), and (iv) junior to any class or series of capital
stock of the Corporation hereafter created (with the consent of the holders of a
majority of all shares of Series C Preferred Stock outstanding on the date of
such creation) specifically ranking, by its terms, senior to the Preferred Stock
(the "Senior Stock").
<PAGE>
2. Dividends. The holders of the Series C Preferred Stock shall be
entitled to such dividends paid and distributions made to the holders of Common
Stock to the same extent as if the holders of the Series C Preferred Stock had
converted their shares of Series C Preferred Stock pursuant to the provisions of
Section 6 and had been issued such Common Stock on the day before the record
date for said dividend or distribution, provided that the holders of the Series
C Preferred Stock will not receive dividends or distributions which are payable
in Common Stock. Payments under the preceding sentence shall be made
concurrently with dividends and distributions to the holders of Common Stock.
3. Voting Rights. In addition to any voting rights provided by law, the
holder of each share of Series C Preferred Stock shall be entitled to vote upon
all matters upon which holders of the Common Stock have the right to vote, and
the shares of Series C Preferred Stock held by each such holder shall be
entitled to the number of votes equal to the largest number of full shares of
Common Stock into which such shares of Series C Preferred Stock could be
converted pursuant to the provisions of Section 6 at the record date for the
determination of the stockholders entitled to vote on such matters. Except as
required by law or as otherwise specifically set forth in this Certificate of
Designation, the holders of shares of Series C Preferred Stock and Common Stock
shall vote together as a single class and not as separate classes.
4. No Reissuance of Shares. Shares of Series C Preferred Stock
converted, purchased, or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the conversion, purchase
or acquisition thereof. None of such shares of Series C Preferred Stock shall be
reissued by the Corporation.
5. Liquidation, Dissolution or Winding Up.
(a) In the event of any voluntary or involuntary liquidation,
distribution of assets (other than the payment of dividends), dissolution or
winding up of the Corporation (each, a "Liquidation"), the assets of the
Corporation available for distribution to the Corporation's stockholders shall
be paid or distributed in the following order: (i) first to satisfy all required
payments to holders of Senior Stock, (ii) second to pay the holders of the
Series C Preferred Stock the Preferred Amount Per Share (as defined in Section
11) and satisfy all required payments to the holders of Pari Passu Stock, and
(iii) third to satisfy any required payments to holders of Junior Stock. If,
upon any such Liquidation, whether voluntary or involuntary, the assets to be
distributed to the holders of the Series C Preferred Stock and holders of Pari
Passu Stock shall be insufficient to permit payment of the full amount required
to be paid to the holders of the Series C Preferred Stock and holders of Pari
Passu Stock, then the entire assets of the Corporation to be distributed among
the holders of the Series C Preferred Stock and the holders of Pari Passu Stock
shall be distributed ratably among such holders.
(b) Upon the completion of the distribution required by
Section 5(a), the remaining assets of the Corporation available for distribution
to shareholders shall be distributed among the holders of the Senior Stock,
<PAGE>
Series C Preferred Stock, Pari Passu Stock and Junior Stock based on the number
of shares of Common Stock held by each (assuming conversion of all such Senior
Stock, Series C Preferred Stock, Pari Passu Stock and Junior Stock at the then
effective conversion price of each such security).
(c) After the payment to the holders of shares of the Series C
Preferred Stock and Pari Passu Stock of the full amount of any liquidating
distribution to which they are entitled under this Section 5, the holders of the
Series C Preferred Stock as such shall have no right or claim to any of the
remaining assets of the Corporation.
6. Conversion.
(a) Each holder of Series C Preferred Stock may, at any time
and from time to time, convert each of such holder's shares of Series C
Preferred Stock into a number of shares of Common Stock, equal to the quotient
of the Preferred Amount Per Share divided by the Conversion Price (such quotient
being referred to herein as the "Conversion Ratio").
(b) In order for a holder of Series C Preferred Stock to
effect a conversion of Series C Preferred Stock into shares of Common Stock such
holder shall: (i) fax a copy of the fully executed notice of conversion in the
form of Exhibit A hereto ("Notice of Conversion") to the Corporation, and (ii)
surrender or cause to be surrendered the certificates representing the Series C
Preferred Stock being converted accompanied by duly executed stock powers and
the original executed version of the Notice of Conversion as soon as practicable
thereafter.
(c) Within seven business days after the Corporation's receipt
of a Notice of Conversion, the Corporation shall require the Corporation's
transfer agent to promptly issue and deliver to the holder of Series C Preferred
Stock who provided the Notice of Conversion (i) that number of shares of Common
Stock issuable upon conversion of such shares of Series C Preferred Stock being
converted, and (ii) a certificate representing the number of shares of Series C
Preferred Stock not being converted, if any.
(d) The Corporation shall at all times reserve and keep
available for issuance upon the conversion of the Series C Preferred Stock, free
from any preemptive rights, such number of its authorized but unissued shares of
Common Stock as will from time to time be necessary to permit the conversion of
all outstanding shares of Series C Preferred Stock into shares of Common Stock,
and shall take all action required to increase the authorized number of shares
of Common Stock if necessary to permit the conversion of all outstanding shares
of Series C Preferred Stock.
(e) The Conversion Price shall be subject to adjustment from
time to time as follows:
(i) In case the Corporation shall at any time or from
time to time after the date hereof (A) pay any dividend, or make any
distribution, on the outstanding shares of Common Stock in shares of Common
Stock, (B) subdivide the outstanding shares of Common Stock, (C) combine the
<PAGE>
outstanding shares of Common Stock into a smaller number of shares or (D) issue
by reclassification of the shares of Common Stock any shares of capital stock of
the Corporation, then, and in each such case, the Conversion Price in effect on
the record date therefor, if applicable, or the effective date thereof,
whichever is earlier, shall be adjusted so that the holder of any shares of
Series C Preferred Stock thereafter convertible into Common Stock pursuant to
this Certificate of Designation shall be entitled to receive the number and type
of shares of Common Stock or other securities of the Corporation which such
holder would have owned or have been entitled to receive after the happening of
any of the events described above, had such shares of Series C Preferred Stock
been converted into Common Stock immediately prior to the happening of such
event or the record date therefor, as applicable. An adjustment made pursuant to
this clause (i) shall become effective (x) in the case of any such dividend or
distribution, immediately after the close of business on the record date for the
determination of holders of shares of Common Stock entitled to receive such
dividend or distribution, or (y) in the case of such subdivision,
reclassification or combination, at the close of business on the day upon which
such corporate action becomes effective.
(ii) If the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend or other distribution and shall thereafter, and before such dividend or
distribution is paid or delivered to stockholders entitled thereto, legally
abandon its plan to pay or deliver such dividend or distribution, then no
adjustment in the Conversion Price then in effect shall be made by reason of the
taking of such record, and any such adjustment previously made as a result of
the taking of such record shall be reversed.
(f) The issuance of certificates for shares of Common Stock
upon conversion of the Series C Preferred Stock shall be made without charge to
the holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Series C Preferred Stock which is
being converted.
(g) The Corporation will at no time close its transfer books
against the transfer of any Series C Preferred Stock, or of any shares of Common
Stock issued or issuable upon the conversion of any shares of Series C Preferred
Stock in any manner which interferes with the timely conversion of such Series C
Preferred Stock, except as may otherwise be required to comply with applicable
securities laws.
(h) As used in this paragraph 6, the term "Common Stock" shall
mean and include the Corporation's authorized Common Stock, as constituted on
the date of filing of this Certificate of Designation, and shall also include
any capital stock of any class of the Corporation thereafter authorized which
shall neither be limited to a fixed sum or percentage in respect of the rights
of the holders thereof to participate in dividends nor be entitled to a
preference in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, provided that the
shares of Common Stock receivable upon conversion of shares of Series C
Preferred Stock shall include only shares designated as Common Stock of the
<PAGE>
Corporation on the date of filing of this instrument, or in case of any
reorganization or reclassification of the outstanding shares thereof, the stock,
securities or assets to be issued in exchange for such Common Stock pursuant
thereto.
(i) In the case of a proposed reorganization of the
Corporation or a proposed reclassification or recapitalization of the capital
stock of the Corporation (except a transaction for which provision for
adjustment is otherwise made in this Section 6), each share of Series C
Preferred Stock shall thereafter be convertible into the number of shares of
stock or other securities or property to which a holder of the number of shares
of Common Stock of the Corporation deliverable upon conversion of such Series C
Preferred Stock would have been entitled upon such reorganization,
reclassification or recapitalization; and, in any such case, appropriate
adjustment (as determined in the reasonable discretion of the Corporation's
Board of Directors) shall be made in the application of the provisions herein
set forth with respect to the rights and interests thereafter of the holders of
the Series C Preferred Stock.
(j) No fractional shares of Common Stock or scrip shall be
issued upon conversion of shares of Series C Preferred Stock. If more than one
share of Series C Preferred Stock shall be surrendered for conversion at any one
time by the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Series C Preferred Stock so surrendered.
7. Reports as to Adjustment. Upon any adjustment of the Conversion
Price pursuant to the provisions of Section 6, then, and in each such case, the
Corporation shall within 30 days after the occurrence of the event creating such
adjustment, deliver to each of the holders of the Series C Preferred Stock and
the Common Stock, a certificate signed by an officer of the Corporation setting
forth in reasonable detail the event requiring the adjustment, the method by
which such adjustment was calculated and the Conversion Price in effect
following such adjustment.
8. Certain Covenants. Any registered holder of Series C Preferred Stock
may proceed to protect and enforce its rights and the rights of any other
holders of Series C Preferred Stock with any and all remedies available at law
or in equity.
9. Protective Provisions. So long as shares of Series C Preferred Stock
are outstanding, the Corporation shall not without first obtaining the approval
(by vote or written consent, as provided by law) of the holders of at least a
majority of the then outstanding shares of Series C Preferred Stock:
(a) alter or change the rights, preference or privileges of
the shares of Series C Preferred Stock or otherwise amend this Certificate of
Designation or the Amended and Restated Certificate of Incorporation of the
Corporation so as to affect adversely the shares of Series C Preferred Stock; or
(b) increase the authorized number of shares of Series C
Preferred Stock or issue additional shares of Series C Preferred Stock.
<PAGE>
10. Conversion at Maturity. Each share of Series C Preferred Stock
outstanding on the third anniversary of the Issue Date shall automatically be
converted into shares of Common Stock in accordance with the terms of Section 6
utilizing the Conversion Ratio then in effect.
11. Definitions. In addition to any other terms defined herein, for
purposes of this Certificate of Designation, the following terms shall have the
meanings indicated:
"Conversion Price," determined as of any date, shall initially
equal $4.00 and shall be subject to adjustment as provided in paragraph (e) of
Section 6.
The term "distribution" shall include the transfer of cash or
property to the holders of a class of capital stock of the Corporation, without
consideration, whether by way of dividend or otherwise (except a dividend in
shares of such class of stock). The time of any distribution by way of dividends
shall be the date of declaration thereof.
"Issue Date" shall mean the date the Corporation first issues
a share of Series C Preferred Stock.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger or
otherwise) of such entity.
"Preferred Amount Per Share" shall mean, with respect to each
share of Series C Preferred Stock, $4.00 (as adjusted to reflect stock
dividends, stock splits, subdivisions, reclassifications or combinations
occurring after the Issue Date).
<PAGE>
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
this 5th day of June, 1998.
LASERSIGHT INCORPORATED
By: /s/ Michael R. Farris
------------------------------
Michael R. Farris
President and Chief Executive Officer
ATTEST:
/s/ Gregory L. Wilson
- --------------------------
Gregory L. Wilson
Secretary
SIGNATURE PAGE TO CERTIFICATE OF DESIGNATION
<PAGE>
EXHIBIT A
---------
NOTICE OF CONVERSION
As of the date written below, the undersigned hereby irrevocably elects to
convert (the "Conversion") ________ shares of the Series C Convertible Preferred
Stock (the "Series C Preferred Stock") into shares of common stock, $.001 par
value ("Common Stock") of Lasersight Incorporated (the "Corporation") according
to the conditions of the Certificate of Designation, Preferences and Rights of
Series C Convertible Preferred Stock of the Corporation.
The undersigned covenants that all offers and sales by the undersigned of the
securities issuable to the undersigned upon conversion of this Series C
Preferred Stock shall be made pursuant to registration of the Common Stock under
the Securities Act of 1933, as amended (the "Act"), or pursuant to an exemption
from registration under the Act.
In the event of partial exercise, please reissue an appropriate Series C
Preferred Stock certificate(s) for the shares of Series C Preferred Stock which
shall not have been converted.
Date of Conversion:____________________________________
Applicable Conversion Price:___________________________
Number of Shares of
Common Stock to be Issued:_____________________________
Signature:_____________________________________________
Name:__________________________________________________
Address:_______________________________________________
_______________________________________________
EXHIBIT 99.3
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This REGISTRATION RIGHTS AGREEMENT ("Agreement") is made as of June 5,
1998, by and among LaserSight Incorporated, a Delaware corporation (the
"Company"), with headquarters located at 12249 Science Drive, Suite 160,
Orlando, Florida 32826, and TLC The Laser Center Inc., an Ontario corporation,
with headquarters located at 5600 Explorer Drive, Suite 301, Mississauga,
Ontario, Canada L4W 442 ("Purchaser"), with regard to the following:
RECITALS
--------
A. In connection with the Securities Purchase Agreement dated of even
date herewith by and among the Company and Purchaser (the "Securities Purchase
Agreement"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to Purchaser 2,000,000 shares of
the Series C Convertible Preferred Stock of the Company (the "Preferred Stock")
that is convertible into shares (the "Conversion Shares") of the Company's
common stock, par value $.001 per share (the "Common Stock") pursuant to the
terms and subject to the limitations and conditions set forth in the Certificate
of Designation, Preferences and Rights of the Series C Convertible Preferred
Stock (the "Certificate of Designation").
B. To induce Purchaser to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide to the Holders certain rights to a
registration by the Company under the Securities Act of 1933 and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws.
AGREEMENTS
----------
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Purchaser agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
specified:
Advice: See Section 4 hereof.
Agreement: See the introductory paragraphs hereto.
Blackout Event means a determination by the Board made in good faith,
after consulting with outside securities counsel, that the registration of
Registrable Securities under the Securities Act or the continuation of the
disposition of Registrable Securities pursuant to an effective Registration
Statement at such time (i) would have a material adverse effect upon a proposed
<PAGE>
material sale of all (or substantially all) of the assets of the Company or a
material merger, reorganization, recapitalization or similar current transaction
materially affecting the capital structure or equity ownership of the Company,
or (ii) would require the Company to make a public disclosure of information,
which disclosure would have a material adverse effect on the Company.
Blackout Period: See Section 3(a) hereof.
Board: The Board of Directors of the Company.
Certificate of Designation: See the introductory paragraphs hereof.
Claim: See Section 6(a) hereof.
Common Stock: See the introductory paragraphs hereto.
Company: See the introductory paragraphs hereto.
Conversion Shares: See the introductory paragraphs hereto.
Exchange Act: The Securities Exchange Act of 1934 and the rules and
regulations of the SEC promulgated thereunder.
Form S-3: Form S-3 of the SEC under the Securities Act or any successor
form.
Holdback Period: See Section 3(b) hereof.
Holder: Any registered holder of a Registrable Security or Registrable
Securities.
Indemnified Person: See Section 6(c) hereof.
Indemnifying Person: See Section 6(c) hereof.
Losses: See Section 6(a) hereof.
NASD: See Section 4(j) hereof.
Other Holders: See Section 2.2(a) hereof.
Other Shares: See Section 2.2(a) hereof.
Other Investors: Any holder of equity securities of the Company or any
securities convertible into or exercisable or exchangeable for such equity
securities, which holder is entitled by written agreement with the Company to
have some or all of such securities included in a Registration Statement.
<PAGE>
Participant: See Section 6(a) hereof.
Person: An individual, trustee, corporation, partnership, limited
liability company, trust, unincorporated association, business association, firm
or other legal entity.
Piggy-Back Registration Statement: See Section 2.2(a) hereof.
Preferred Stock: See the introductory paragraphs hereto.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Purchaser: See the introductory paragraphs hereto.
Registrable Securities means any of the Conversion Shares and any other
securities issued or issuable with respect to any Preferred Stock or Conversion
Shares by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable Securities held by
a Holder, such securities shall cease to be Registrable Securities when (i) a
Registration Statement with respect to the offering of such securities by the
Holder thereof shall have been declared effective under the Securities Act and
such securities shall have been disposed of by such Holder pursuant to such
Registration Statement, (ii) such securities may at the time of determination be
sold to the public pursuant to Rule 144 without any restriction on the amount of
securities which may be sold by such Holder without the lapse of any further
time or the satisfaction of any condition, or (iii) such securities shall have
been otherwise transferred by such Holder and new certificates for such
securities not bearing a legend restricting further transfer shall have been
delivered by the Company or its transfer agent, and subsequent disposition of
such securities shall not require registration or qualification under the
Securities Act or any similar state law.
Registration Expenses: See Section 5(b) hereof.
Registration Period: See Section 2.1(b) hereof.
Registration Statement: Any registration statement of the Company filed
with the SEC under the Securities Act, including the Prospectus, all amendments
and supplements to such registration statement, post-effective amendments, all
exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
Requested Shares: See Section 2.2(a) hereof.
<PAGE>
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC providing for public offers and sales of securities made in
compliance therewith resulting in offers and sales by subsequent holders that
are not affiliates of an issuer of such securities being free of the
registration and prospectus delivery requirements of the Securities Act.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission or any successor federal
agency charged with the enforcement of the federal securities laws.
Securities Act: See the introductory paragraphs hereto.
Securities Purchase Agreement: See the introductory paragraphs hereto.
Shelf Registration Statement: See Section 2.1(a) hereof.
Subsidiary: Any corporation of which the Company owns securities
representing a majority of the outstanding voting power or any partnership of
which the Company (or a Subsidiary) holds a majority of the general partner
interest.
Underwritten Offering: A public offering of Common Stock, or other
securities convertible into, or exercisable or exchangeable for, Common Stock
that is underwritten on a firm commitment basis; provided that such offering
shall be exclusively for the account of any one or more of the Company or
Purchaser (or any of Purchaser's assignees).
2. REGISTRATION RIGHTS
2.1 Shelf Registration.
(A) The Company shall:
(i) prepare and, on or prior to 45 days after the date of this
Agreement, file with the SEC a Registration Statement in respect of all
the Registrable Securities on an appropriate form for a secondary
offering to be made on a continuous basis by the Company pursuant to
Rule 415 (the "Shelf Registration Statement"); and
(ii) subject to Section 3 hereof, use its reasonable best
efforts to cause the Shelf Registration Statement to become effective
as soon as practicable after such filing.
In addition to the Registrable Securities, the Company may include in the Shelf
Registration Statement shares of Common Stock held by Other Investors.
<PAGE>
(B) The Company shall use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective at all times until such date as is
the earlier of : (i) the date on which all of the Registrable Securities have
been sold, (ii) the date on which all of the Registrable Securities may be
immediately sold to the public without registration conditions or limitations,
whether pursuant to Rule 144 or otherwise, and (iii) the date which is the two
year anniversary of the date hereof. (The period of time commencing on the date
the Shelf Registration Statement is declared effective and ending on the
earliest of the foregoing dates shall be referred to as the "Registration
Period")). Subject to Section 3 hereof, the Company shall use its reasonable
best efforts to amend and supplement the Prospectus contained in the Shelf
Registration Statement in order to permit such Prospectus to be lawfully
delivered until the end of the Registration Period.
(C) In connection with the Shelf Registration Statement, the Company
shall:
(I) mail to each Holder a copy of the Prospectus forming part
of the Shelf Registration Statement;
(II) otherwise comply in all material respects with all
applicable federal securities laws, rules and regulations.
(D) Each Holder shall notify the Company at least five business days
prior to any sale of Registrable Securities by such Holder pursuant to the Shelf
Registration Statement. During such five-day period, the Company has the right
to notify Holder that the Holder may not sell Registrable Securities pursuant to
the Shelf Registration Statement due to either a Blackout Period or Holdback
Period then being in effect or then being invoked. Upon such notice being
provided Holder agrees not to sell any Registrable Securities pursuant to the
Shelf Registration Statement until the Company has notified Holder that the
Blackout Period or Holdback Period, as applicable, is no longer in effect.
(E) Subject to Section 3 hereof, the Company shall promptly supplement
and amend the Shelf Registration Statement if required by the Securities Act, or
if reasonably requested by the Holders of a majority of the Registrable
Securities then transferrable pursuant to such Shelf Registration Statement.
(F) Each Holder agrees to notify the Company promptly, but in any event
within three business days, after the date on which all Registrable Securities
owned by such Holder have been sold by such Holder so that the Company may
comply with its obligation to terminate the Shelf Registration Statement in
accordance with Item 512 of Regulation S-K.
2.2 Piggy-Back Registration Rights.
(a) If during the Registration Period the Company proposes or is
required to file with the SEC a registration statement (the "Piggy-Back
Registration Statement") under the Securities Act in connection with an
Underwritten Offering of Common Stock (other than a registration statement that
does not permit the inclusion therein of the Registrable Securities), the
Company will each such time give prompt written notice of its intention to do so
<PAGE>
to each Holder. Upon the written request of any Holder given within 10 days
after the delivery or mailing of such notice from the Company, the Company will
use commercially reasonable efforts to include in such Piggy-Back Registration
Statement that number of the Conversion Shares specified by Holder in such
written request (subject to the limitations set forth in this Section 2.2(a) and
in Section 2.2(b) below) (the "Requested Shares") so as to permit the public
sale of such Requested Shares, provided that if the managing underwriter or
underwriters advise the Company that marketing factors require a limit on the
number of shares to be underwritten, the Company 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 Piggy-Back Registration Statement and
underwriting. In such event, the Company shall so advise each requesting Holder,
and the number of Requested Shares and other shares ("Other Shares") requested
to be included in such Piggy-Back Registration Statement and underwriting by
other persons or entities that are then stockholders of the Company ("Other
Holders"), after providing for all shares that the Company proposes to offer and
sell for its own account, shall be allocated among the Requesting Holders and
Other Holders pro rata on the basis of (i) the number of Requested Shares then
held by the requesting Holders and (ii) the aggregate number of Other Shares
then held by Other Holders.
(b) The right of any Holder to registration shall be conditioned upon
(i) such Holder's execution of the underwriting agreement agreed to among the
Company and the managing underwriters selected by the Company for such
underwritten offering, (ii) such Holder's completion and execution of all
customary questionnaires and other documents which must be executed in
connection with such underwriting agreement, and (iii) such Holder supplying the
Company and the underwriter such additional information as may be necessary to
register such Holder's Registrable Securities.
3. BLACKOUT AND HOLDBACK EVENTS
(a) During any period of up to 90 days' duration following the
occurrence of a Blackout Event (a "Blackout Period"), the Company shall not be
required to file, or cause to be declared effective, under the Securities Act
any Registration Statement hereunder, or, if applicable, the Holders will
discontinue the offer and sale of Registrable Securities pursuant to the Shelf
Registration Statement or a Piggy-back Registration Statement.
(b) The Holders shall not, if requested by the managing underwriter or
underwriters of an Underwritten Offering, effect any public or private sale of
any Common Stock, including a sale pursuant to Rule 144, during the period
("Holdback Period") beginning 14 days prior to, and ending 90 days after, the
effective date of the registration statement relating to such Underwritten
Offering.
(c) The aggregate number of days during which one or more Blackout
Periods or Holdback Periods are in effect shall not exceed 180 days during the
Registration Period, provided that the aggregate number of days during which one
or more Blackout Periods or Holdback Periods are in effect shall not exceed 90
days in any 12 month period during the Registration Period.
<PAGE>
(d) The Company shall promptly notify the Holders in writing of any
decision not to file a Registration Statement or not to cause a Registration
Statement to be declared effective or to discontinue sales of Registrable
Securities pursuant to this Section 3, which notice shall set forth the reason
for such decision (but not disclosing any nonpublic material information) and
shall include an undertaking by the Company promptly to notify the Holders as
soon as sales may resume.
4. REGISTRATION PROCEDURES
In connection with the filing of the Shelf Registration Statement or a
Piggy-Back Registration Statement by the Company, the Company shall effect such
registrations to permit the sale of the Registrable Securities covered thereby
in accordance with the intended method or methods of disposition thereof, and in
connection with such Registration Statement the Company shall:
(a) A reasonable time before the filing of the Shelf Registration
Statement, Piggy-Back Registration Statement or any Prospectus or any amendments
or supplements thereto, the Company shall afford to Purchaser an opportunity to
review the Shelf Registration Statement, Piggy-Back Registration Statement or
any Prospectus or any amendments or supplements thereto.
(b) Notify the selling Holders of Registrable Securities promptly (but
in any event within five business days), and confirm such notice in writing: (I)
when a Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective under the Securities Act, and (ii)
of the issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that purpose.
(c) Use its reasonable best efforts to prevent the issuance of any
order suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Securities for sale
in any jurisdiction and, if any such order is issued, to use its reasonable best
efforts to obtain the withdrawal of any such order at the earliest practicable
time.
(d) Furnish to each selling Holder of Registrable Securities at the
sole expense of the Company one conformed copy of the Shelf Registration
Statement or Piggy-Back Registration Statement, as applicable, and each
post-effective amendment thereto and, if requested, all documents incorporated
or deemed to be incorporated therein by reference and all exhibits.
(e) Deliver to each selling Holder of Registrable Securities at the
sole expense of the Company as many copies of the Prospectus or Prospectuses
(including each form of preliminary prospectus) and each amendment or supplement
thereto and any documents incorporated by reference therein as such Persons may
reasonably request; and, subject to the last paragraph of this Section 4, the
<PAGE>
Company consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders of Registrable Securities in connection
with the offering and sale of the Registrable Securities covered by such
Prospectus and any amendment or supplement thereto.
(f) Prior to any public offering of Registrable Securities, to use its
reasonable best efforts to register or qualify, and to cooperate with the
selling Holders of Registrable Securities in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions within the United States as any selling Holder reasonably
requests; keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to be kept
effective and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the applicable Registration Statement; provided, however,
that the Company shall not be required to (A) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 4(f), (B) subject itself to general taxation in any such jurisdiction,
(C) file a general consent to service of process in any such jurisdiction, (D)
provide any undertakings that cause the Company material expense or burden, or
(E) make any change in its charter or by-laws, which in each case the Board
determines to be contrary to the best interests of the Company and its
stockholders.
(g) Cooperate with the selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold, which certificates shall not bear any
restrictive legends and shall be in a form in compliance with any applicable
rules of a stock exchange on which the Common Stock is then listed; and enable
such Registrable Securities to be in such denominations and registered in such
names as Holders may reasonably request.
(h) Upon the occurrence of any event or any information becoming known
to the Company that makes any statement made in such Registration Statement or
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect, as promptly as practicable
prepare and (subject to Section 4(a) hereof) file with the SEC, at the sole
expense of the Company, a supplement or post-effective amendment to such
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities being sold thereunder, any such Prospectus will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(i) Comply with all applicable rules and regulations of the SEC and
make generally available to its security holders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 90 days
after the end of any 12-month period (or 120 days after the end of any 12-month
period if such period is a fiscal year) commencing on the first day of the first
<PAGE>
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(j) Cooperate with each seller of Registrable Securities covered by any
Registration Statement in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD").
(k) Use its reasonable best efforts to cause all Registrable Securities
relating to any Registration Statement to be listed on each securities exchange,
if any, on which similar securities issued by the Company are then listed.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request. The
Company may exclude from such registration the Registrable Securities of any
seller so long as such seller fails to furnish such information within a
reasonable time after receiving such request. Each seller as to which any
Registration Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such seller not materially
misleading.
Each Holder of Registrable Securities understands that the Securities
Act may require delivery of a Prospectus in connection with any sale thereof
pursuant to a Registration Statement, and each such Holder shall comply with the
applicable Prospectus delivery requirements of the Securities Act in connection
with any such sale.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon actual receipt of any notice from the Company
of the happening of any event of the kind described in Section 4(b)(ii) hereof
or any information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect,
such Holder will forthwith discontinue disposition of such Registrable
Securities covered by such Registration Statement or Prospectus to be sold by
such Holder until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(e) hereof, or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto. In the event the Company shall give any such notice, the
Registration Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each seller of Registrable Securities covered by such Registration
Statement, as the case may be, shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 4(e) hereof or (y)
the Advice.
<PAGE>
5. REGISTRATION EXPENSES
(a) All Registration Expenses shall be borne by the Company.
Notwithstanding the foregoing, the sellers of the Registrable Securities being
registered shall pay all (i) brokerage or underwriting fees, discounts and
commissions attributable to the sale of such Registrable Securities, (ii) the
fees and disbursements of any counsel or other advisors or experts retained by
such sellers (severally or jointly), and (iii) transfer taxes on resale of any
of the Registrable Securities by such sellers.
(b) For purposes of this Agreement, "Registration Expenses" shall mean
all fees and expenses incident to the compliance with this Agreement by the
Company (other than fees and expenses referred to in the second sentence of
Section 5(a) hereof), including, without limitation, (i) all registration and
filing fees, including, without limitation, (A) any SEC or NASD filing fees and
(B) fees and expenses of compliance with state securities or blue sky laws, (ii)
duplicating and copying expenses, (iii) messenger, telephone and delivery
expenses incurred by the Company, (iv) all fees and disbursements of counsel for
the Company, (v) fees and expenses of all other Persons retained by the Company,
including annual or special audit and "comfort" letters, (vi) stock exchange
listing fees and expenses, if any, and (vii) the expenses relating to printing
and distributing the Shelf Registration Statement, Piggy-Back Registration
Statement and any other documents necessary in order to comply with this
Agreement.
<PAGE>
6. INDEMNIFICATION AND CONTRIBUTION
(a) The Company agrees to indemnify and hold harmless each Holder of
Registrable Securities, the officers and directors of each such Person, and each
Person, if any, who controls any such Person within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a
"Participant"), from and against any and all losses, claims, damages and
liabilities (collectively, "Losses") (including, without limitation, the
reasonable legal fees and other expenses actually incurred in connection with
any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand (a "Claim")) caused by, arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment thereto) or Prospectus
(as amended or supplemented from time to time) or any preliminary prospectus, or
caused by, arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the case of the Prospectus in light of the
circumstances under which they were made, not misleading, except insofar as such
Losses are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Participant furnished to the Company in writing by such
Participant expressly for use therein; provided, however, that the Company will
not be liable if such untrue statement or omission or alleged untrue statement
or omission was contained or made in any preliminary prospectus and corrected in
the Prospectus or any amendment or supplement thereto and the Prospectus does
not contain any other untrue statement or omission or alleged untrue statement
or omission of a material fact that was the subject matter of the related
proceeding and any such Loss suffered or incurred by the Participants resulted
from any Claim by any Person who purchased Registrable Securities which are the
subject thereof from such Participant and it is established in the related
proceeding that such Participant failed to deliver or provide a copy of the
Prospectus (as amended or supplemented) to such Person with or prior to the
confirmation of the sale of such Registrable Securities sold to such Person if
required by applicable law, unless such failure to deliver or provide a copy of
the Prospectus (as amended or supplemented) was a result of noncompliance by the
Company with this Agreement.
(b) Each Participant agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, and each Person who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to each Participant,
but only with reference to information relating to such Participant furnished to
the Company, in writing by such Participant expressly for use in such
Registration Statement or Prospectus, any amendment or supplement thereto, or
any preliminary prospectus. The liability of any Participant under this
paragraph shall in no event exceed the proceeds received by such Participant
from sales of Registrable Securities giving rise to such obligations.
(c) If any Claim shall be brought or asserted against any Person in
respect of which indemnity may be sought pursuant to either of the two preceding
paragraphs, such Person (the "Indemnified Person") shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Person") in
<PAGE>
writing, and the Indemnifying Person shall retain counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and
any others the Indemnifying Person may reasonably designate in such Claim and
shall pay the reasonable fees and expenses actually incurred by such counsel
related to such proceeding; provided, however, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which it
may have hereunder or otherwise. In any such proceeding, any Indemnified Person
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary, (ii) the Indemnifying Person shall have failed within a reasonable
period of time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person or any affiliate and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The Indemnifying Person shall not, in connection with any one such
proceeding or separate but substantially similar related proceedings in the same
jurisdiction arising out of the same general allegations, be liable for the fees
and expenses of more than one separate firm (in addition to any local counsel)
for all Indemnified Persons, and all such fees and expenses shall be reimbursed
promptly as they are incurred. If the Company shall be the Indemnifying Person,
any such separate firm for the Indemnified Persons shall be designated in
writing by Participants who sold a majority in interest of Registrable
Securities sold by all such Participants and reasonably acceptable to the
Company. If the Company shall be the Indemnified Person, any such separate firm
for the Company, its directors, its officers who sign a Registration Statement
and such control Persons of the Company shall be designated in writing by the
Company. No Indemnifying Person shall be liable for any settlement of any
proceeding effected without its prior written consent (which consent shall not
be unreasonably withheld or delayed), but if settled with such consent or if
there be a final judgment for the plaintiff for which the Indemnified Person is
entitled to indemnification pursuant to this Agreement, the Indemnifying Person
shall indemnify and hold harmless each Indemnified Person from and against any
loss or liability by reason of such settlement or judgment. No Indemnifying
Person shall, without the prior written consent of the Indemnified Persons
(which consent shall not be unreasonably withheld or delayed), effect any
settlement or compromise of any pending or threatened proceeding in respect of
which any Indemnified Person is or could have been a party, or indemnity could
have been sought hereunder by such Indemnified Person, unless such settlement
involves only the payment of money damages that are actually paid by the
Indemnifying Person or includes an unconditional written release of such
Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 6 is for any reason unavailable to, or insufficient
to hold harmless, an Indemnified Person in respect of any Losses, then each
Indemnifying Person under such paragraphs, in lieu of indemnifying such
Indemnified Person thereunder and in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such Losses, in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Person or Persons on the one hand
<PAGE>
and the Indemnified Person or Persons on the other in connection with the
statements or omissions or alleged statements or omissions that resulted in such
Losses (or actions in respect thereof) as well as any other relevant equitable
considerations. The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Indemnifying Person on the one hand or
such Indemnified Person, as the case may be, on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the Losses referred to
in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any reasonable legal or other expenses actually
incurred by such Indemnified Person in connection with investigating or
defending any such Claim. Notwithstanding the provisions of this Section 6, in
no event shall a Participant be required to contribute any amount in excess of
the amount by which proceeds received by such Participant from sales of
Registrable Securities exceeds the amount of any damages that such Participant
has otherwise been required to pay or has paid by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(f) Any Losses for which an indemnified party is entitled to
indemnification or contribution under this Section shall be paid by the
Indemnifying Person to the Indemnified Person as such Losses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect regardless of (i) any
investigation made by or on behalf of any of Purchaser, any Holder, any person
who controls Purchaser or any Holder, or any officers or directors of Purchaser
or such Holder, and (ii) any termination of this Agreement.
(g) The indemnity and contribution covenants contained in this Section
6 are in addition to any liability which any Indemnifying Person may otherwise
have to any Indemnified Person.
7. RULE 144
The Company will file the reports required to be filed by it under the
Exchange Act in a timely manner in accordance with the requirements of the
Exchange Act. The Company will also take such further action as any Holder of
Registrable Securities issued by the Company may reasonably request, to the
extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144(k).
<PAGE>
8. MISCELLANEOUS
(a) The provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of (i) the
Company and (ii) the Holders of not less than a majority in aggregate amount of
the then-outstanding Registrable Securities; provided, however, that Section 4
and this Section 8(a) may not be amended, modified or supplemented without the
prior written consent of each Holder (including any person who was a Holder of
Registrable Securities disposed of pursuant to any Registration Statement)
affected by any such amendment, modification or supplement. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Securities whose securities are being sold pursuant to a Registration Statement
and that does not directly or indirectly affect, impair, limit or compromise the
rights of other Holders of Registrable Securities may be given by Holders of at
least a majority in aggregate amount of the Registrable Securities being sold by
such Holders pursuant to such Registration Statement.
(b) Any notice herein required or permitted to be given shall be in
writing and may be personally served or delivered by nationally-recognized
overnight courier or by facsimile-machine confirmed telecopy, and shall be
deemed delivered at the time and date of receipt (which shall include telephone
line facsimile transmission). Each party shall provide notice to the other party
of any change in address. The addresses for such communications shall be:
If to the Company:
LaserSight Incorporated
12249 Science Drive
Suite 160
Orlando, Florida 32826
Telecopy: (407) 382-2701
Attention: Chief Financial Officer
After June 30, 1998:
LaserSight Incorporated
3300 University Boulevard
Suite 140
Orlando, Florida 32792
Telecopy: (407) 678-9981
Attention: Chief Financial Officer
<PAGE>
with a copy to:
Sonnenschein Nath & Rosenthal
One Metropolitan Square
Suite 3000
St. Louis, Missouri 63102
Telecopy: (314) 259-5959
Attention: Alan B. Bornstein
If to Purchaser:
TLC The Laser Center Inc.
5600 Explorer Drive
Suite 301
Mississauga, Ontario
Canada L4W 442
Telecopy: (905) 602-7956
Attention: Elias Vamvakas
with a copy to:
Arent Fox Kintner Plotkin & Kahn, PLLC
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5339
Telecopy: (202) 857-6395
Attention: Jeffrey E. Jordan
(c) This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto, and the Holders;
provided, however, that this Agreement shall not inure to the benefit of, or be
binding upon, a successor or assign of a Holder unless and to the extent such
successor or assign holds Registrable Securities.
(d) This Agreement may be executed in two or more counterparts,
including, without limitation, by facsimile transmission, all of which
counterparts shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause additional
original executed signature pages to be delivered to the other parties.
(e) The headings in this Agreement are for convenience of reference and
shall not form a part of, or affect the interpretation of, this Agreement.
(f) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts made and to be
performed in that state. The parties hereto irrevocably consent to the
jurisdiction of the United States federal courts and state courts located in the
<PAGE>
County of New Castle in the State of Delaware, in any suit or proceeding based
on or arising under this Agreement and irrevocably agree that all claims in
respect of such suit or proceeding may be determined in such courts. The parties
hereto irrevocably waive the defense of an inconvenient forum to the maintenance
of such suit or proceeding. The parties hereto further agree that service of
process upon the parties hereto mailed by first class mail shall be deemed in
every respect effective service of process upon each such party in any such suit
or proceeding. Nothing herein shall affect either party's right to serve process
in any other manner permitted by law. The parties hereto agree that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
(g) Whenever the consent or approval of Holders of a specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company or its affiliates (as such term is defined in
Rule 405 under the Securities Act) shall not be counted in determining whether
such consent or approval was given by the Holders of such required percentage.
(h) Holders of Registrable Securities are intended third party
beneficiaries of the agreements made hereunder between the Company and Purchaser
and shall have the right to enforce this Agreement to the extent they deem such
enforcement necessary or advisable to protect their rights hereunder.
(i) This Agreement, together with the Securities Purchase Agreement and
the other agreements among the parties of even date herewith or therewith, is
intended by the parties as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Company with respect to the Registrable Securities. This Agreement supersedes
all prior agreements and understandings among the parties with respect to such
subject matter.
(j) The Company agrees that during the time period beginning on the
dated hereof and continuing until the Company has satisfied its obligations
hereunder or until such obligations have expired, the Company will not enter
into any agreement related to the registration of its securities which is
inconsistent with the rights granted to the Holders pursuant to this Agreement.
The rights granted to Purchaser pursuant to this Agreement do not conflict with
any other agreements to which the Company is a party.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
LASERSIGHT INCORPORATED TLC THE LASER CENTER INC.
By: /s/ Michael R. Farris By: /s/ R. J. Kelly
-------------------------- ------------------------
Michael R. Farris Name: Ronald J. Kelly
President and CEO Title: Vice-President of Acquisitions
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
EXHIBIT 99.4
STANDSTILL AGREEMENT
--------------------
This Standstill Agreement (the "Agreement") is made as of June 5, 1998
(the "Effective Date") between TLC The Laser Center Inc., an Ontario corporation
("TLC"), and LaserSight Incorporated, a Delaware corporation (the "Company").
WHEREAS, TLC currently owns 251,000 shares of the Company's Common Stock
$.001 par value (the "TLC Shares");
WHEREAS, simultaneously with the delivery of this Agreement, TLC is
purchasing 2,000,000 shares of the Company's Series C Convertible Participating
Preferred Stock (the "Series C Preferred Stock") pursuant to the terms of a
Securities Purchase Agreement, dated June 5, 1998, between TLC and the Company
(the "Purchase Agreement");
WHEREAS, the parties hereto wish to set forth their agreements regarding
future purchases by TLC of the Company's voting securities;
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:
1. Standstill Provisions. TLC acknowledges that TLC's execution and
delivery of this Agreement is a condition precedent to the Company agreeing to
issue the Series C Preferred Stock and that TLC will not, and will direct its
affiliates, directors, officers, employees and agents not to, directly or
indirectly, unless in any such case specifically permitted in writing to do so
by the Board of Directors of the Company:
(i) other than pursuant to the terms of the Purchase Agreement
and other than the TLC Shares and Series C Preferred Stock, purchase,
acquire or own, or offer or agree to purchase, acquire or own, directly
or indirectly, any voting securities or direct or indirect rights
(pursuant to an exchange, conversion, pledge or otherwise) or options to
acquire any voting securities of the Company; provided that the
acquisition and owning of voting securities as a result of any of the
following will not be deemed a violation of this Agreement: (A) any
dividend or distribution on the outstanding TLC Shares or Series C
Preferred Stock, (B) any subdivision of the outstanding TLC Shares or
Series C Preferred Stock, or (C) any reclassification of the TLC Shares
or Series C Preferred Stock.
(ii) other than pursuant to a prior written agreement with the
Company, acquire or affect the control of the Company or directly or
indirectly participate in or encourage the formation of any "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) which owns
or seeks to acquire ownership of voting securities of the Company, or to
acquire or affect control of the Company;
<PAGE>
(iii) other than pursuant to the terms of the Purchase Agreement,
otherwise act, directly or indirectly, alone or in concert with others,
to seek to control or to influence in any manner the management, board
of directors, policies or affairs of the Company, or propose or seek to
effect or negotiate with or provide financial assistance (by loan,
capital contribution or otherwise) or information to any party with
respect to any form of business combination transaction (including,
without limitation, a merger, consolidation or acquisition or
disposition of significant assets of the Company or any other entity)
with the Company or any affiliate thereof or any restructuring,
recapitalization or similar transaction with respect to the Company or
any affiliate thereof; or
(iv) instigate, encourage, assist or render advice to or make any
recommendation or proposal to any person or other entity to engage in
any of the actions covered by clauses (i) through (iii) of this Section
1(a), or render advice with respect to voting securities of the Company.
(b) For purposes of this Agreement, the term "voting
securities" shall mean (i) any securities which are entitled to vote
upon any matters, whether such securities are entitled to vote on such
matters in all events or only upon the occurrence of a default or other
contingencies, or (ii) any options, warrants, rights or securities which
by their terms may be convertible into or exchangeable for any security
described in clause (i) of this sentence.
2. Representations and Warranties. TLC represents and warrants to the
Company, and the Company represents and warrants to TLC:
(a) such party has the full legal right, power and authority to
enter into and perform this Agreement and the execution and delivery of
this Agreement by such party has been duly authorized by all necessary
corporate action;
(b) this Agreement is a valid and binding obligation of such
party, enforceable against such party in accordance with its terms,
except that such enforcement may be subject to (i) bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law); and
(c) neither the execution, delivery or performance of this
Agreement by such party conflicts with or constitutes a violation of or
default under such party's certificate of incorporation or by-laws, any
statute, law, regulation, order or decree applicable to such party, or
any contract, commitment, agreement, arrangement or restriction of any
kind to which such party is a party or by which such party is bound.
<PAGE>
3. Notices. Any notice herein required or permitted to be given shall be
in writing and may be personally served or delivered by nationally-recognized
overnight courier or by facsimile-machine confirmed telecopy, and shall be
deemed delivered at the time and date of receipt (which shall include telephone
line facsimile transmission). Each party shall provide notice to the other party
of any change in address. The addresses for such communications shall be:
If to the Company:
LaserSight Incorporated
12249 Science Drive
Suite 160
Orlando, Florida 32826
Telecopy: (407) 382-2701
Attention: Chief Financial Officer
After June 30, 1998:
LaserSight Incorporated
3300 University Boulevard
Suite 140
Orlando, Florida 32792
Telecopy: (407) 678-9981
Attention: Chief Financial Officer
with a copy to:
Sonnenschein Nath & Rosenthal
One Metropolitan Square
Suite 3000
St. Louis, Missouri 63102
Telecopy: (314) 259-5959
Attention: Alan B. Bornstein
If to Purchaser:
TLC The Laser Center Inc.
5600 Explorer Drive
Suite 301
Mississauga, Ontario
Canada L4W 442
Telecopy: (905) 602-7956
Attention: Elias Vamvakas
<PAGE>
with a copy to:
Arent Fox Kintner Plotkin & Kahn, PLLC
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5339
Telecopy: (202) 857-6395
Attention: Jeffrey E. Jordan
4. Agreement Term. This Agreement shall terminate on the date which is
the first to occur of (i) sixty (60) days after the Effective Date, or (ii) the
date on which the Company's Board of Directors adopts a stockholder's rights
plan.
5. No Waiver. No failure or delay by any party hereto in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise of
any right, power or privilege.
6. Remedies. Each party hereto acknowledges that money damages would be
an inadequate remedy for any breach of this Agreement and that the Company (in
the case of a breach by TLC) or TLC (in the case of a breach by the Company)
shall be entitled to specific performance and injunctive or other equitable
relief as a remedy for any such breach. Each party hereto waives any requirement
for the securing or posting of any bond in connection with any such remedy. No
party hereto shall take any action to impede the other party from seeking to
enforce any such equitable remedy. Such remedy shall not be exclusive, but shall
be in addition to all other remedies available at law or equity.
7. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without giving
effect to the principles of conflict of laws thereof.
8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto were upon one instrument.
9. Headings. The descriptive headings of the sections of this Agreement
are solely for the convenience of the parties hereto and shall not affect the
meaning or construction of any of the provisions of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
LASERSIGHT INCORPORATED TLC THE LASER CENTER INC.
By: /s/ Michael R. Farris By: /s/ R. J. Kelly
-------------------------- ----------------------
Michael R. Farris Name: Ronald J. Kelly
President and CEO Title: Vice-President of Acquisitons
SIGNATURE PAGE TO STANDSTILL AGREEMENT
EXHIBIT 99.5
SECURITIES PURCHASE AGREEMENT
among
LASERSIGHT INCORPORATED
and
PEQUOT FUNDS
June 12, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE 1
PURCHASE AND SALE OF COMMON STOCK
1.1 Purchase of Common Stock
1.2 Form of Payment
1.3 Transfer of Common Stock
1.4 Registration of the Securities
ARTICLE 2
PURCHASER'S REPRESENTATIONS AND WARRANTIES
2.1 Investment Purpose
2.2 Accredited Investor Status
2.3 Reliance on Exemptions
2.4 Information
2.5 Governmental Review
2.6 Transfer or Resale
2.7 Authorization
2.8 Binding Effect
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization and Qualification
3.2 Authorization; Enforcement
3.3 Capitalization
3.4 Issuance of Shares
3.5 No Conflicts
3.6 SEC Documents
3.7 Absence of Certain Changes
3.8 Absence of Litigation
3.9 Disclosure
3.10 S-3 Registration
3.11 No General Solicitation
3.12 No Integrated Offering
3.13 No Brokers
3.14 Intellectual Property
3.15 Employee Benefit Plans
<PAGE>
TABLE OF CONTENTS
(continued)
3.17 Equity Investments; Subsidiaries
3.18 Title to Assets and Properties; Insurance
3.19 Compliance with Laws; Permits
3.20 Taxes
3.21 Environmental Matters
3.22 Suppliers and Customers
3.23 Holding Company Act and Investment Company Act
3.24 Foreign Corrupt Practices
3.25 Accounts Receivable
3.26 Series B Preferred Stock
3.27 Foothill Capital Corporation
ARTICLE 4
COVENANTS
4.1 Best Efforts
4.2 Securities Laws
4.3 Reporting Status
4.4 Use of Proceeds
4.5 Future Financings
4.6 Rights of First Offer
4.7 Expenses
4.8 Corporate Governance
4.9 Listing
4.10 Prospectus Delivery Requirement
4.11 Transactions with Affiliates
4.12 Stockholders Rights Plan
ARTICLE 5
TRANSFER OF SECURITIES
5.1 Restrictive Legend
5.2 Notice of Proposed Transfer
5.3 Termination of Restrictions
5.4 Compliance with Rule 144 and Rule 144A
5.5 Non-Applicability of Restrictions on Transfer
<PAGE>
TABLE OF CONTENTS
(continued)
ARTICLE 6
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
6.1 Conditions to the Company's Obligation to Sell
ARTICLE 7
CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE
7.1 Conditions to Purchaser's Obligation to Purchase
ARTICLE 8
GOVERNING LAW; MISCELLANEOUS
8.1 Governing Law; Jurisdiction
8.2 Counterparts
8.3 Headings
8.4 Severability
8.5 Entire Agreement; Amendments
8.6 Notice
8.7 Successors and Assigns
8.8 Third Party Beneficiaries
8.9 Survival
8.10 Indemnification
8.11 Stamp Tax and Delivery Costs
8.12 Public Filings; Publicity
8.13 Further Assurances
8.14 Remedies
8.15 Termination
<PAGE>
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT ("Agreement") is entered into as of
June 12, 1998, by and among LaserSight Incorporated, a Delaware corporation (the
"Company"), with its headquarters located at 12249 Science Drive, Suite 160,
Orlando, Florida 32826 and the purchasers (collectively, the "Purchasers" and
each individually, a "Purchaser") named on the execution pages hereof, with
regard to the following:
RECITALS
A. The Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Section 4(2) of the Securities Act of 1933 (the "Securities
Act") and Regulation D ("Regulation D") of the Securities and Exchange
Commission (the "SEC") promulgated under the Securities Act.
B. The Purchasers desire to purchase, upon the terms and conditions
stated in this Agreement, 2,000,000 shares of the Company's Series D Convertible
Participating Preferred Stock (the "Preferred Stock") issued pursuant to the
Certificate of Designation, Preferences and Rights of Series D Convertible
Participating Preferred Stock (the "Certificate of Designation") attached hereto
as Exhibit A, which shall be convertible into shares of the Company's common
stock, $.001 par value per share ("Common Stock"). The shares of Common Stock
issuable upon the conversion of the Preferred Stock are referred to herein as
the "Conversion Shares". The Preferred Stock and the Conversion Shares are
collectively referred to herein as the "Securities."
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
of even date herewith in the form attached hereto as Exhibit B (the
"Registration Rights Agreement"), pursuant to which the Company has agreed to
provide certain registration rights under the Securities Act and applicable
state securities laws and a Standstill Agreement in the form attached hereto as
Exhibit C (the "Standstill Agreement"), pursuant to which the Purchasers agree
to restrict the Purchaser's acquisition of the Company's voting securities. The
Registration Rights Agreement, the Certificate of Designation and the Standstill
Agreement are collectively referred to herein as the "Ancillary Documents").
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals (which are
incorporated into and deemed a part of this Agreement), their respective
promises contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Purchasers
hereby agree as follows:
<PAGE>
ARTICLE 1
PURCHASE AND SALE OF COMMON STOCK
1.1 Purchase of Common Stock. Subject to the terms and conditions of
this Agreement, on June 12, 1998 or, if later, the date on which all conditions
set forth in Articles 6 and 7 hereof have been either satisfied or waived, or
such other date as may be determined by mutual agreement of the Purchasers and
the Company, but in no event later than June 15, 1998 (the "Closing Date"), the
Company agrees to issue and sell to each Purchaser, and each Purchaser severally
agrees to purchase from the Company (the "Closing"), the number of shares of
Preferred Stock indicated below at a price of $4.00 per share resulting in an
aggregate purchase price of $8,000,000 (the "Purchase Price"):
<TABLE>
<CAPTION>
No. of Shares of
Purchaser Preferred Stock Purchase Price
--------- --------------- --------------
<S> <C> <C>
Pequot Private Equity Fund, L.P. 1,553,331 $6,213,324
Pequot Scout Fund, L.P. 250,000 1,000,000
Pequot Offshore Private Equity Fund, Inc. 196,669 786,676
--------- ----------
Total 2,000,000 $8,000,000
========= ==========
</TABLE>
Each Purchaser's obligation to purchase Common Stock hereunder is
distinct and separate from each other Purchaser's obligation to purchase, and no
Purchaser shall be required to purchase hereunder more than the number of shares
of Preferred Stock set forth opposite its name immediately above. The
obligations of the Company with respect to each Purchaser shall be separate from
the obligations of each other Purchaser and, except as provided in Section
6.1(c) hereof, shall not be conditioned as to any Purchaser upon the performance
of obligations of any other Purchaser. The Closing shall take place on the
Closing Date at 10:00 A.M., Eastern Time, at the offices of Fried, Frank,
Harris, Shriver & Jacobson, One New York Plaza 26th Floor, New York, New York
10004, or at such other time and place as shall be agreed upon by the parties.
At the Closing, the Company shall deliver to each Purchaser a
certificate or certificates representing the shares of Preferred Stock purchased
by such Purchaser, registered in the name of such Purchaser or its nominee.
Delivery of such certificates to a Purchaser shall be made against receipt at
the Closing by the Company from such Purchaser of the purchase price therefor,
which shall be paid by wire transfer to an account designated at least one
business day prior to the Closing by the Company.
1.2 Form of Payment. Upon satisfaction of the conditions contained in
Section 7.1, each Purchaser shall pay its respective portion of the Purchase
Price by wire transfer to the account designated by the Company.
<PAGE>
1.3 Transfer of Common Stock. The Securities shall, when issued, be
unregistered and therefore subject to the restrictions on sale, distribution and
transfer imposed under the Securities Act and under applicable securities laws
or blue sky laws of any state or foreign jurisdiction.
1.4 Registration of the Securities. Pursuant to the terms of the
Registration Rights Agreement, the Company shall, at its own expense, prepare,
and within 45 days after the Closing Date, file with the SEC a registration
statement on such form as is then available in order to effect the registration
of the Conversion Shares (the "Registration Statement"). The Company shall use
all reasonable best efforts to have the Registration Statement declared
effective as soon as practicable after the filing thereof and to remain
effective for the Registration Period (as defined in the Registration Rights
Agreement).
ARTICLE 2
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Each Purchaser represents and warrants, solely with respect to itself
and its purchase hereunder and not with respect to any other Purchaser or the
purchase hereunder by any other Purchaser (and no Purchaser shall be deemed to
make or have any liability for any representation or warranty made by any other
Purchaser), to the Company as set forth in this Article 2. No Purchaser makes
any other representations or warranties, express or implied, to the Company in
connection with the transactions contemplated hereby and any and all prior
representations and warranties, if any, which may have been made by a Purchaser
to the Company in connection with the transactions contemplated hereby shall be
deemed to have been merged in this Agreement and any such prior representations
and warranties, if any, shall not survive the execution and delivery of this
Agreement.
2.1 Investment Purpose. Such Purchaser is purchasing the Preferred
Stock for Purchaser's own account for investment only and not with a view toward
or in connection with the public sale or distribution thereof. Such Purchaser
will not, directly or indirectly, offer, sell, pledge or otherwise transfer the
Preferred Stock or any interest therein except pursuant to transactions that are
exempt from the registration requirements of the Securities Act and/or sales
registered under the Securities Act. Such Purchaser understands that it must
bear the economic risk of this investment indefinitely, unless the Securities
are registered pursuant to the Securities Act and any applicable securities laws
or blue sky laws of any state or foreign jurisdiction an exemption from such
registration is available, and that the Company has no intention or obligation
to register any of the Securities other than as contemplated by Section 1.4
hereof and the Registration Rights Agreement.
2.2 Accredited Investor Status. Such Purchaser represents and warrants
that it is an Accredited Investor (as that term is defined in Rule 501
promulgated by the SEC under the Securities Act), that it has such knowledge and
experience in business and financial matters as to be capable of evaluating the
merits and risks of the investment contemplated to be made hereunder, and that
<PAGE>
it (i) was not formed or organized for the specific purpose of investing in the
Company; (ii) understands that such investment bears a high degree of risk and
could result in a total loss of its investment; and (iii) has sufficient
financial strength to hold the same as an investment and to bear the economic
risks of such investment (including possible loss of such investment) for an
indefinite period of time.
2.3 Reliance on Exemptions. Such Purchaser acknowledges that the
Securities being sold to it hereunder are being sold pursuant to a private
offering exemption under the Securities Act and are not being registered under
the Securities Act or under the securities laws or blue sky laws of any state or
foreign jurisdiction and understands that the Company is relying upon the truth
and accuracy of, and such Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the Securities.
2.4 Information. Such Purchaser has been furnished all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which it has specifically
requested, including without limitation the Company's Annual Report on Form 10-K
and 10-K/A for the year ended December 31, 1997, its Quarterly Report on Form
10-Q for the period ended March 31, 1998, its Current Reports on Form 8-K filed
with the SEC on March 13, 1998, March 16, 1998 and March 18, 1998, the
description of the Common Stock contained in the Company's Form 8-A/A (Amendment
No. 3) filed with the SEC on September 29, 1997 and Proxy Statement dated May
28, 1998 (such documents, including any financial statements and related notes
included in such documents, collectively the "Furnished SEC Documents"). Such
Purchaser and its advisors have been given the opportunity to obtain information
and to examine all documents referred to herein and to ask questions of, and to
receive answers from, the Company or any person acting on its behalf concerning
the Company and the terms and conditions of this investment, and to obtain any
additional information, to the extent the Company possesses such information or
could acquire it without unreasonable effort or expense, to verify the accuracy
of any information previously furnished. All such questions have been answered
to such Purchasers' full satisfaction, and all information and agreements,
documents, records and books pertaining to this investment which such Purchaser
has requested have been made available to the Purchasers or their advisors. Such
Purchaser understands that its investment in the Securities involves a high
degree of risk, including without limitation the risks and uncertainties
disclosed under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Risks Factors and Uncertainties" in the
Furnished SEC Documents. In making its investment decision, such Purchaser has
not relied on any oral or written representation, other than those contained in
the Furnished SEC Documents or this Agreement (including the schedules hereto)
and the Ancillary Documents, with respect to the Securities, the Company, its
business or prospects, or other matters. In making its decision to invest in the
Company, such Purchaser has relied solely upon independent investigations made
by the Purchasers and their advisors.
<PAGE>
2.5 Governmental Review. Such Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.
2.6 Transfer or Resale. Such Purchaser understands that (i) the
Securities have not been and are not being registered under the Securities Act
or under the securities laws or blue sky laws of any state or foreign
jurisdiction, and may not be offered, sold, pledged or otherwise transferred
unless subsequently registered thereunder or an exemption from such registration
is available, and neither the Company nor any other person is under any
obligation to register the Securities under the Securities Act or under the
securities laws or blue sky laws of any state or foreign jurisdiction or to
comply with the terms and conditions of any exemption thereunder (in each case,
other than pursuant to this Agreement or the Registration Rights Agreement), and
(ii) any sale of the Securities made in reliance on Rule 144 under the
Securities Act, or a successor rule ("Rule 144"), may be made only in accordance
with the terms of Rule 144 and Article 5 hereof and further, if Rule 144 is not
applicable, any resale of the Securities without registration under the
Securities Act under circumstances in which the seller may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder.
2.7 Authorization. Such Purchaser represents and warrants that as of
the Closing Date the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein have been duly
authorized by it. The fulfillment of and compliance with the terms of this
Agreement will not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, or (iii) result in
a violation of, breach of or default under (A) its partnership agreement or
certificate of limited partnership, or other charter or constituent document,
(B) any law, statute, rule or regulation to which it is subject, or (C) any
agreement, instrument, order, judgment or decree to which it is subject or is a
party or by which it is bound.
2.8 Binding Effect. Such Purchaser represents and warrants that this
Agreement constitutes its valid and binding obligation, enforceable in
accordance with its terms, except (i) as limited by bankruptcy, insolvency or
other laws affecting the enforcement of creditors' rights generally or by
equitable principles in any action (legal or equitable), (ii) that the
availability of equitable relief is subject to the discretion of the court
before which any proceeding thereof may be brought, and (iii) that the
enforceability of the indemnification provisions may be limited by applicable
securities laws or public policy.
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Purchaser, except as
disclosed (including, in the case of financial statements, provided for) in the
disclosure schedules delivered herewith, as set forth in this Article 3. The
Company does not make any other representations or warranties, express or
implied, to Purchasers in connection with the transactions contemplated hereby
and any and all prior representations and warranties, if any, which may have
been made by the Company to a Purchaser in connection with the transactions
contemplated hereby shall be deemed to have been merged in this Agreement and
any such prior representations and warranties, if any, shall not survive the
execution and delivery of this Agreement.
3.1 Organization and Qualification. Each of the Company and its
subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated, and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted or are presently expected to be conducted during the Company's current
fiscal year. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
where the failure so to qualify or be in good standing would have a Material
Adverse Effect. For purposes of this Agreement, "Material Adverse Effect" means
any material adverse effect on the business, operations, assets, properties,
prospects, liabilities, condition (financial or otherwise) or operating results
of the Company and its subsidiaries, taken as a whole on a consolidated basis,
or on the transactions contemplated hereby.
3.2 Authorization; Enforcement.
(a) The Company has the requisite corporate power and
authority to enter into and perform this Agreement, and to issue, sell and
perform its obligations with respect to the Preferred Stock, and when converted,
the Conversion Shares in accordance with the terms hereof and thereof;
(b) the execution, delivery and performance of this Agreement
and the Ancillary Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation the
issuance of the Preferred Stock and reservation for issuance of the Conversion
Shares) have been duly authorized by all necessary corporate action and, except
for the filing of the Certificate of Designation and except as set forth on
Schedule 3.2 hereof, no further consent or authorization of the Company, its
board of directors, or its stockholders or any other person, body or agency is
required with respect to any of the transactions contemplated hereby (whether
under rules of The NASDAQ Stock Market, the National Association of Securities
Dealers, Inc. or otherwise);
(c) this Agreement, the Ancillary Documents, and the
certificates for the Preferred Stock have been, and, when issued the Conversion
Shares, will be duly executed and delivered by the Company; and
<PAGE>
(d) this Agreement, the Ancillary Documents and the Preferred
Stock constitute legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except (i) to the
extent that such validity or enforceability may be subject to or affected by any
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement thereof, creditors' rights
or remedies of creditors generally, or by other equitable principles of general
application, (ii) that the availability of equitable relief is subject to the
discretion of the court before which any proceeding thereof may be brought, and
(iii) that the enforceability of indemnification provisions may be limited by
applicable securities law or public policy.
3.3 Capitalization. The capitalization of the Company as of the date
hereof, including the authorized capital stock, the number of shares issued and
outstanding, the number of shares reserved for issuance pursuant to the
Company's stock option plans, the number of shares reserved for issuance
pursuant to securities (other than the Preferred Stock) exercisable for, or
convertible into or exchangeable for any shares of Common Stock and the number
of shares reserved for issuance upon conversion of the Preferred Stock is set
forth on Schedule 3.3. All of such shares of capital stock have been, or upon
issuance in accordance with the terms of the relevant security will be, validly
issued, fully paid and nonassessable. No shares of capital stock of the Company
(including the Securities) are subject to preemptive rights or any other similar
rights of the stockholders of the Company or any liens or encumbrances imposed
or suffered by the Company. Except as disclosed in Schedule 3.3, as of the date
of this Agreement, there are no outstanding options, warrants, scrip, rights to
subscribe for, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries. The Company shall provide each
Purchaser with a written update of this representation signed by the Company's
Chief Executive Officer or Chief Financial Officer on behalf of the Company as
of the Closing Date. Except as set forth in Schedule 3.3, since December 31,
1997, the Company has not declared or paid any dividend or made any other
distribution of cash, stock or other property with respect to the Common Stock.
Except as set forth in Schedule 3.3 or as contemplated by this Agreement or the
Ancillary Documents or except for the right to vote its shares of Common Stock
for the election of directors, no person has the right to nominate or elect one
or more directors of the Company. The Preferred Stock issued to Purchasers at
the Closing under this Agreement represents, in the aggregate, 9.17% of Total
Current and Potential Shares (as defined on Schedule 3.3).
3.4 Issuance of Shares. The Preferred Stock and Conversion Shares are
duly authorized and reserved for issuance, and upon conversion of the Preferred
Stock in accordance with the terms of the Certificate of Designation will be,
validly issued, fully paid and non-assessable with no personal liability
attaching to the owners thereof, and free from all taxes, liens, claims and
encumbrances imposed or suffered by the Company and will not be subject to
preemptive rights or other similar rights of stockholders of the Company.
<PAGE>
3.5 No Conflicts. The execution, delivery and performance of this
Agreement and the Ancillary Documents by the Company, and the consummation by
the Company of transactions contemplated hereby and thereby (including, without
limitation, the issuance and reservation for issuance, as applicable, of the
Securities) will not (i) result in a violation of the Certificate of
Incorporation or By-laws, or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
result in any loss of benefit under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any Contract (as
defined herein) to which the Company or any of its subsidiaries is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations) applicable
to the Company or any of its subsidiaries, or by which any property or asset of
the Company or any of its subsidiaries, is bound or affected, or (iv) result in
the creation or imposition of an Encumbrance (as defined herein) upon the
Company's properties or assets (except with respect to items (ii), (iii) and
(iv) of this Section 3.5 such possible conflicts, defaults, terminations,
amendments, accelerations, cancellations, violations and Encumbrances as would
not individually or in the aggregate, have a Material Adverse Effect). Neither
the Company nor any of its subsidiaries is in violation of its Certificate of
Incorporation or other organizational documents, and neither the Company nor any
of its subsidiaries, is in default (and no event has occurred which has not been
waived which, with notice or lapse of time or both, would put the Company or any
of its subsidiaries in default) under, nor has there occurred any event giving
others (with notice or lapse of time or both) any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, except
for possible violations, defaults or rights as would not individually or in the
aggregate, have a Material Adverse Effect. The businesses of the Company and its
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental entity, except for possible violations the
sanctions for which either singly or in the aggregate would not have a Material
Adverse Effect. Except as set forth on Schedule 3.5, or except (i) such as may
be required under the Securities Act in connection with the performance of the
Company's obligations pursuant to the Registration Rights Agreement, (ii) filing
of the Certificate of Designation with the Secretary of State of Delaware, (iii)
filing of a Form D with the SEC, and (iv) compliance with the state securities
laws or blue sky laws of applicable jurisdictions, the Company is not required
to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or to perform its obligations in accordance
with the terms hereof. The Common Stock is listed on The NASDAQ Stock Market,
the Company is not in violation of the listing requirements of The NASDAQ Stock
Market and the Company is not aware of any fact (including any proceedings
pending or, to the best of the Company's knowledge, contemplated) that could
result in the Common Stock being delisted from The NASDAQ Stock Market. The
Company is not aware of any fact that could result in a refusal by The NASDAQ
Stock Market to approve the Conversion Shares for listing.
3.6 SEC Documents. Except as disclosed in Schedule 3.6, since December
31, 1996, the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Securities Exchange Act of 1934 (the "Exchange
<PAGE>
Act") (all of the foregoing filed after December 31, 1995 and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being referred to herein as the "SEC
Documents"). The Company has delivered to each Purchaser true and complete
copies of the Furnished SEC Documents, except for exhibits, schedules and
incorporated documents. Each of the SEC Documents as originally filed or as
amended complied in all material respects with the requirements of its
respective report or form and did not on the date of filing contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and as of the date
hereof, there is no fact or facts not disclosed in the SEC Documents which
relate specifically to the Company which individually or in the aggregate, may
have a Material Adverse Effect. The consolidated financial statements of the
Company (including any related schedules or notes thereto) included in the SEC
Documents were prepared in accordance with generally accepted accounting
principles, consistently applied, and the applicable rules and regulations of
the SEC during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they do not include footnotes or are condensed
or summary statements) and present accurately and completely, in all material
respects, the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal, year-end audit adjustments). To the
extent required by the rules of the SEC applicable thereto, the SEC Documents
contain a complete and accurate list of all material undischarged written or
oral contracts, agreements, leases or other instruments to which the Company or
any subsidiary is a party or by which the Company or any subsidiary is bound or
to which any of the properties or assets of the Company or any subsidiary is
subject (each a "Material Contract"). Except as set forth in Schedule 3.6, none
of the Company, its subsidiaries or, to the best knowledge of the Company, any
of the other parties thereto, is in breach or violation of any Material
Contract, which breach or violation would have a Material Adverse Effect. To the
best knowledge of the Company, no event, occurrence or condition exists which,
with the lapse of time, the giving of notice, or both, would become a default by
the Company or its subsidiaries thereunder which would have a Material Adverse
Effect. Except as set forth in Schedule 3.6, there are no liabilities or
obligations (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due and regardless of when asserted), except (i)
liabilities and obligations in the respective amounts reserved against in the
Company's balance sheet or the footnotes thereto as of December 31, 1997
included in the Furnished SEC Documents, (ii) liabilities and obligations
incurred after December 31, 1997 in the ordinary course of business consistent
(in amount and kind) with past practice (none of which is a liability resulting
from breach of contract breach of warranty, tort, infringement, claim or
lawsuit) and that do not exceed $25,000 in the aggregate, (iii) liabilities and
obligations disclosed in the Furnished SEC Documents, and (iv) liabilities and
obligations which would not individually or in the aggregate, have a Material
Adverse Effect. Since December 31, 1997, the Company has operated its business
only in the ordinary course and there has not been individually or in the
aggregate, any change that would have a Material Adverse Effect (a "Material
Adverse Change") other than changes disclosed in the SEC Documents or otherwise
<PAGE>
set forth in Schedule 3.6. The financial projections furnished by the Company to
the Purchasers, dated as of May 4, 1998 were prepared by the Company in good
faith based on (i) the best available information to management, and (ii) the
assumptions reflected in such projections. From the date of such projections
through the Closing Date, there has not occurred any events or circumstances
which would cause such projections to materially change as of the Closing Date.
Purchasers acknowledge that such projections (i) were not updated from the date
on which such projections were prepared and such projections do not reflect the
effects of the transactions contemplated by this Agreement or the effects of the
Company's private placement of its Series C Convertible Participating Preferred
Stock which was closed on June 5, 1998, and (ii) contain forward looking
statements and assumptions regarding future events and future performance of the
Company which involve risk and uncertainties that could materially effect actual
results of the Company's operations.
3.7 Absence of Certain Changes. Except as disclosed in Schedule 3.7,
since December 31, 1997, the business of the Company and its subsidiaries has
been conducted in the ordinary course, consistent with past practice and there
has not been (a) any Material Adverse Change, nor has any event or change
occurred which could reasonably result in a Material Adverse Change, in the
condition (financial or otherwise), results of operations, business, assets,
liabilities or prospects of the Company or its subsidiaries or any event or
condition which could reasonably be expected to have such a Material Adverse
Change, (b) any waiver or cancellation of any valuable right of the Company or
its subsidiaries, or the cancellation of any material debt or claim held by the
Company or its subsidiaries, (c) any payment, discharge or satisfaction of any
claim, liability or obligation of the Company or its subsidiaries other than in
the ordinary course of business except where such payment, discharge or
satisfaction would not, individually or in the aggregate, have a Material
Adverse Effect, (d) the placement of any Encumbrance upon the assets of the
Company or its subsidiaries other than any Permitted Encumbrance (as defined
herein), (e) any declaration or payment of dividends on, or other distribution
with respect to, or any direct or indirect redemption or acquisition of, any
securities of the Company, (f) any issuance of any stock, bonds or other
securities of the Company or its subsidiaries which is not disclosed in Schedule
3.3 or the Furnished SEC Documents, (g) any sale, assignment or transfer of any
tangible or intangible assets of the Company or its subsidiaries except in the
ordinary course of business, (h) any loan by the Company or its subsidiaries to
any officer, director, employee, consultant or shareholder of the Company or its
subsidiaries (other than advances to such persons in the ordinary course of
business in connection with travel and travel related expenses), (i) any damage,
destruction or loss (whether or not covered by insurance) materially and
adversely affecting the assets, property, condition (financial or otherwise),
results of operations or prospects of the Company or its subsidiaries, (j) any
increase, direct or indirect, in the compensation paid or payable to any officer
or director of the Company or its subsidiaries, other than in the ordinary
course of business, to any other employee, consultant or agent of the Company or
its subsidiaries, (k) any change in the accounting methods, practices or
policies of the Company or its subsidiaries, (l) any indebtedness incurred for
borrowed money by the Company or its subsidiaries other than in the ordinary
course of business, (m) any amendment to or termination of any material
agreement to which the Company or its subsidiaries is a party other than the
expiration of any such agreement in accordance with its terms or as disclosed in
<PAGE>
the Furnished SEC Documents, (n) to the Company's knowledge, any change in the
laws or regulations governing the Company or its subsidiaries, (o) any Material
Adverse Change in the manner of business or operations of the Company or its
subsidiaries (including, without limitation, material accelerations or material
deferrals of the payment of accounts payable or other current liabilities or
material deferrals of the collection of accounts or notes receivable), (p) any
capital expenditures or commitments therefor by the Company or its subsidiaries
other than in the ordinary course of business, (q) any amendment of the articles
of incorporation, bylaws or other organizational documents of the Company or its
subsidiaries which is not disclosed in the Furnished SEC Documents, (r) any
material transaction entered into by the Company or its subsidiaries other than
in the ordinary course of business or any other material transactions entered
into by the Company or its subsidiaries whether or not in the ordinary course of
business which is not disclosed in the Furnished SEC Documents, or (s) any
agreement or commitment (contingent or otherwise) by the Company or its
subsidiaries to do any of the foregoing. For purposes of this Agreement,
"Permitted Encumbrance" shall mean (i) Encumbrances for unpaid taxes that either
(A) are not yet due and payable, or (B) for which a reserve with respect to such
obligation is established on the books of the Company, (ii) the interests of
lessors under operating leases and purchase money liens of lessors under capital
leases, (iii) Encumbrances arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or other similar
encumbrances in the ordinary course of business of the Company, (iv)
Encumbrances arising from deposits made in connection with obtaining worker's
compensation or other unemployment insurance, (v) with respect to any real
property, easements, rights of way, zoning and similar covenants and
restrictions, and similar Encumbrances and that do not individually or in the
aggregate materially impair the property of the Company, (vi) Encumbrances
resulting from any judgment or award that would not result in a Material Adverse
Change, and (vii) other Encumbrances which arise in the ordinary course of
business and which individually and in the aggregate do not materially impair
the Company's use of such property or its ability to obtain financing by using
such asset as collateral.
3.8 Absence of Litigation. Except as disclosed in Schedule 3.8 or as
disclosed in the Furnished SEC Documents, there is no civil, criminal or
administrative action, suit, proceeding, inquiry, claim, notices, hearing or
investigation at law or in equity (a "Litigation") before or by any court,
arbitrator or similar panel, public board, government agency, or self-regulatory
organization or body pending or, to the knowledge of the Company or any of its
subsidiaries, threatened against or affecting the Company, any of its
subsidiaries, or any of their respective assets (including Intangibles (as
defined herein)) or directors or officers in their capacities as such. There are
no facts known to the Company which, if known by a potential claimant or
governmental authority, could give rise to a claim or proceeding which, if
asserted or conducted with results unfavorable to the Company or any of its
subsidiaries, could reasonably be expected to have a Material Adverse Effect.
Except as set forth in Schedule 3.8, neither the Company nor its subsidiaries is
subject to any order, writ, injunction or decree of any court of any federal,
state, municipal or other domestic or foreign governmental department,
commission, board, bureau, agency or instrumentality which could have a Material
Adverse Effect.
<PAGE>
3.9 Disclosure. Neither this Agreement, the SEC Documents nor any
certificate, instrument or written statement furnished or made to the Purchasers
by or on behalf of the Company in connection with this Agreement or the
Ancillary Documents contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
and therein not misleading. There is no fact which is not disclosed in the
Furnished SEC Documents or fact which the Company has not disclosed to the
Purchasers or their counsel and of which the Company is aware which materially
and adversely affects, or which could materially and adversely affect, the
Company or its subsidiaries or the business, financial condition, operations,
property, affairs or prospects of the Company or its subsidiaries or the ability
of the Company or its subsidiaries to perform its obligations under the
Agreement or any of the Ancillary Documents.
3.10 S-3 Registration. The Company is currently eligible to register
the resale of the Conversion Shares by the Purchasers pursuant to a registration
statement on Form S-3 under the Securities Act.
3.11 No General Solicitation. Neither the Company nor any person acting
for the Company has conducted any "general solicitation," as described in Rule
502(c) under Regulation D, with respect to any of the Securities being offered
hereby.
3.12 No Integrated Offering. Neither the Company, nor any of its
Affiliates (as defined herein), nor any person acting on its or their behalf,
has directly or indirectly made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would prevent the
parties hereto from consummating the transactions contemplated hereby pursuant
to an exemption from registration under the Securities Act pursuant to the
provisions of Regulation D. The transactions contemplated hereby are exempt from
the registration requirements of the Securities Act, assuming the accuracy of
the representations and warranties herein contained of each Purchaser. For
purposes hereof, "Affiliate" shall mean any entity controlling, controlled by or
under common control with a designated person or entity; for the purposes of
this definition, "control" shall have the meaning presently specified for that
word in Rule 405 promulgated by the SEC under the Securities Act. With respect
to any entity which is a limited partnership, Affiliate shall also mean any
general or limited partner of such limited partnership, or any person or entity
which is a general partner in a general or limited partnership which is a
general partner of such limited partnership.
3.13 No Brokers. The Company has taken no action which would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments by the Purchasers relating to this Agreement or the transactions
contemplated hereby.
3.14 Intellectual Property. Each of the Company and its subsidiaries
owns or possesses adequate and enforceable rights to use all material patents,
patent applications, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, licenses, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other similar rights and proprietary
<PAGE>
knowledge (collectively, "Intangibles") used or necessary for the conduct of its
business as now being conducted and as described in the Company's Annual Report
on Form 10-K and Form 10-K/A for its most recently ended fiscal year. To the
Company's knowledge, neither the Company nor any subsidiary of the Company
infringes on or is in conflict with any right of any other person with respect
to any Intangibles nor is there any claim of infringement made by a third party
against or involving the Company or any of its subsidiaries, which infringement,
conflict or claim, individually or in the aggregate, could reasonably be
expected to result in an unfavorable decision, ruling or finding which would
have a Material Adverse Effect.
3.15 Employee Benefit Plans.
(a) Identification. Schedule 3.15(a) contains a complete and
accurate list of all employee benefit plans (within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
sponsored by the Company or to which the Company contributes on behalf of its
employees (the "Employee Benefit Plans") and each employment, severance or
change in control agreement to which the Company is a party. The Company has
provided or made available to the Purchasers copies of all plan documents,
determination letters, pending determination letter applications, VCR Submission
(as defined below), trust instruments, insurance contracts, administrative
services contracts, annual reports, actuarial valuations, summary plan
descriptions, summaries of material modifications, administrative forms and
other documents that constitute a part of or are incident to the administration
of the Employee Benefit Plans. In addition, the Company has provided or made
available to the Purchasers a written description of all existing practices
engaged in by the Company that constitute Employee Benefit Plans. Except as set
forth on Schedule 3.15(a) and subject to the requirements of the Internal
Revenue Code of 1986, as amended (the "Code") and ERISA, each of the Employee
Benefit Plans can be terminated or amended (without material cost to the
Company) at will by the Company. Except as set forth on Schedule 3.15(a), no
unwritten amendment exists with respect to any Employee Benefit Plan. The
Company has no plan or commitment, whether legally binding or not, to establish
any new Employee Benefit Plan, to enter into any employment severance or change
in control agreement or to modify or to terminate any Employee Benefit Plan or
agreement.
(b) Administration. Each Employee Benefit Plan has been
administered and maintained in compliance with all applicable laws, rules and
regulations, except where the failure to be in compliance would not,
individually or in the aggregate, result in a Material Adverse Effect. To the
best of the knowledge of the Company, the Company has (i) made all necessary
filings with respect to such Employee Benefit Plans, including the timely filing
of Form 5500 if applicable, and (ii) made all necessary filings, reports and
disclosures pursuant to and have complied with all requirements of the Internal
Revenue Service ("IRS") Voluntary Compliance Resolution Program ("VCR
Submission"), if applicable, with respect to all profit sharing retirement plans
and pension plans in which employees of the Company participate.
(c) Examinations. Except as set forth on Schedule 3.15(c), the
Company has not received any notice that any Employee Benefit Plan is currently
the subject of an audit, investigation, enforcement action or other similar
proceeding conducted by any state or federal agency.
<PAGE>
(d) Prohibited Transactions. To the best of the knowledge of
the Company, no prohibited transactions (within the meaning of Section 4975 of
the Code or Sections 406 and 407 of ERISA) have occurred with respect to any
Employee Benefit Plans.
(e) Claims and Litigation. No pending or, to the actual
knowledge of the Company, threatened claims, suits, or other proceedings exist
with respect to any Employee Benefit Plan other than normal benefit claims filed
by participants or beneficiaries.
(f) Qualification. As set forth in more detail on Schedule
3.15(f), the Company has applied a favorable determination letter or ruling from
the IRS for each of the Employee Benefit Plans intended to be qualified within
the meaning of Section 401(a) of the Code and/or tax-exempt within the meaning
of Section 501(a) of the Code. Except as set forth on Schedule 3.15(f), no
proceedings exist or, to the actual knowledge of the Company has been threatened
that could result in the revocation of any such favorable determination letter
or ruling.
(g) Funding Status. Neither the Company nor any member of a
"Controlled Group" (within the meaning of Section 412(n)(6)(B) of the Code) with
the Company sponsors any plans which (i) are subject to the minimum funding
requirements of Code Section 412 or ERISA Section 302, or (ii) are subject to
Title IV of ERISA assumptions.
(h) Excise Taxes. To the best of the knowledge of the
Company, neither the Company nor any member of a Controlled Group has any
liability to pay excise taxes with respect to any Employee Benefit Plan under
applicable provisions of the Code or ERISA.
(i) Multi-employer Plans. Neither the Company nor any member
of a Controlled Group is or ever has been obligated to contribute to a
multi-employer plan within the meaning of Section 3(37) of ERISA and neither the
Company nor the Controlled Group has ever contributed to any plan subject to
Title IV of ERISA.
(j) Pension Benefit Guaranty Corporation. None of the
Employee Benefit Plans are subject to the requirements of Title IV of ERISA.
(k) Retirees. The Company has no obligation or commitment to
provide medical, dental or life insurance benefits to or on behalf of any of its
employees who may retire or any of its former employees who have retired except
as may be required pursuant to the continuation of coverage provisions of
Section 4980B of the Code and Sections 601 through 608 of ERISA.
<PAGE>
(l) Change in Control. The execution of, and performance of
the transactions contemplated in, this Agreement will not (either alone or upon
the occurrence of any additional or subsequent events) constitute an event under
an Employee Benefit Plan or employment, severance or change in control agreement
that will or may result in any, payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee of the
Company. No payment or benefit which will or may be made by the Company, any of
its subsidiaries, Purchasers or any of their respective affiliates by reason of
such execution or performance may be characterized as an "excess parachute
payment," within the meaning of Section 28OG(b)(1) of the Code or which will not
be deductible for federal tax purposes by virtue of Section 162(m) of the Code.
(m) Insurance. With respect to each Employee Benefit Plan
which is an employee welfare benefit plan (within the meaning of Section 3(l) of
ERISA), all claims incurred by the Company are (i) insured pursuant to a
contract of insurance whereby the insurance company bears any risk of loss with
respect to such claims, or (ii) covered under a contract with a health
maintenance organization which bears the liability for claims.
(n) Labor Disputes. No work stoppage or labor strike against
the Company is pending or threatened. The Company is not now, nor has been in
the past (i) involved in or threatened with any labor dispute, grievance, or
litigation relating to labor matters, including, without limitation, violation
of any federal, state or local labor, safety or employment laws (domestic or
foreign), charges of unfair labor practices or discrimination complaints which
could have a Material Adverse Effect; (ii) engaged in any unfair labor practices
within the meaning of the National Labor Relations Act or the Railway Labor Act,
or (iii) a party to, or bound by, any collective bargaining agreement or union
contract and no such agreement or contract is currently being negotiated by the
Company or any of its affiliates. No employees of the Company are currently
represented by any labor union for purposes of collective bargaining and no
activities the purpose of which is to achieve such representation are threatened
or ongoing. The Company (i) is in compliance with all applicable federal, state
and local laws, rules and regulations (domestic and foreign) respecting
employment, employment practices, labor, terms and conditions of employment and
wages and hours, except for such possible non-compliance as would not,
individually or in the aggregate, have a Material Adverse Effect; (ii) has
withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments; (iii) is not liable for any arrears of wages
or any taxes or any penalty for failure to comply with any of the foregoing; and
(iv) is not liable for any payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits.
3.16 Agreements.
(a) Except as set forth on Schedule 3.16, the Company or its
subsidiaries are not a party to, and are not bound or subject to, any indenture,
mortgage, guaranty, lease, license or other contract, agreement or
understanding, written or oral (a "Contract"), other than any Contract which (i)
<PAGE>
pursuant to its terms, has expired, been terminated or fully performed by the
parties, and in each case, under which the Company and its subsidiaries have no
liability, contingent or otherwise, or (ii) involves monthly payments to or from
the Company and/or its subsidiaries (as opposed to an indemnity agreement or
similar contract under which a party is not required to make fixed monthly
payments) which monthly payments do not aggregate on an annual basis to $150,000
or more, and in each case, is not material to the business, condition (financial
or otherwise) or, operations of the Company or its subsidiaries.
(b) Each of such Contracts is, as of the date hereof, and will
continue after the Closing to be, legal, valid, binding and in full force and
effect and enforceable in accordance with its terms. There is no breach,
violation or default by the Company (or, to the best knowledge of the Company,
any other party) under any such Contract except where such breach, violation or
default would not, individually or in the aggregate, have a Material Adverse
Effect, and no event (including, without limitation, the consummation of the
transactions contemplated by this Agreement) which, with notice or lapse of time
or both, would (A) constitute a breach, violation or default by the Company (or,
to the best knowledge of the Company, any other party) under any such Contract
except where such breach, violation or default would not, individually or in the
aggregate, have a Material Adverse Effect, or (B) to the best knowledge of the
Company give rise to any lien or right of termination, modification,
cancellation, prepayment, suspension, limitation, revocation or acceleration
against the Company under any such Contract. Except as set forth on Schedule
3.16, the Company is not or, to the knowledge of the Company, no other party to
any of such Contracts (i) is in arrears in respect of the performance or
satisfaction of the terms and conditions on its part to be performed or
satisfied under any of such Contracts or (ii) has granted or has been granted
any waiver or indulgence under any of such Contracts or has repudiated any
provision thereof.
3.17 Equity Investments; Subsidiaries. Set forth on Schedule 3.17 is a
list of all of the Company's subsidiaries. Except as set forth on Schedule 3.17,
the Company does not own, whether directly or indirectly, any capital stock or
other proprietary interest directly or indirectly, in any corporation,
association, trust, partnership, joint venture or other entity which is
currently involved in the Company's ordinary course of business.
3.18 Title to Assets and Properties; Insurance.
(a) The Company has good and marketable title, or a valid
leasehold interest in or contractual right to use, all of its assets and
properties, free and clear of any mortgages, judgments, claims liens, security
interests, pledges, escrows, charges or other encumbrances of any kind or
character whatsoever ("Encumbrances") except in each case for Permitted
Encumbrances and such defects in title and such other liens and Encumbrances
which do not individually or in the aggregate materially detract from the value
to the Company of the properties and assets of the Company and its subsidiaries
taken as a whole.
<PAGE>
(b) The Company and its subsidiaries maintain insurance
(including D&O insurance) in such amounts (to the extent available in the public
market), including self-insurance, retainage and deductible arrangements, and of
such a character as is reasonable for companies engaged in the same or similar
business. Schedule 3.18(b) sets forth a list of all insurance coverage carried
by the business and/or the Company, the carrier and terms and amount of
coverage.
3.19 Compliance with Laws; Permits. Except as provided in Schedule
3.19, the Company and its subsidiaries are in compliance, and have been
conducted in compliance with, all federal, state, local and foreign laws, rules,
ordinances, codes, consents, authorizations, registrations, regulations,
decrees, directives, judgments and orders applicable to it except where the
failure to comply would not individually or in the aggregate have a Material
Adverse Effect. The Company has all federal, state, local and foreign
governmental licenses, permits, qualifications and authorizations ("Permits")
necessary in the conduct of its business as currently conducted. All such
Permits are in full force and effect and no violations have been recorded in
respect of any such Permit; no proceeding is pending or, to the best knowledge
of the Company, threatened to revoke or limit any such Permit and no such Permit
will be suspended, cancelled or adversely modified as a result of the execution
and delivery of this Agreement or the Ancillary Documents and the consummation
of the transactions contemplated hereby or thereby, except where failure to have
such Permit would not individually or in the aggregate have a Material Adverse
Effect.
3.20 Taxes.
(a) For purposes of this Agreement, (i) "Taxes" shall mean all
taxes, assessments, charges, duties, fees, levies or other governmental charges
(including interest, penalties or additions associated therewith) (including,
without limitation, federal, state, city, county, local, foreign, or other
income, franchise, ad valorem, value added, excise, real or personal property,
asset, franchise taxes withheld, capital, withholding, real or tangible
property, employment, unemployment compensation, transfer, sales, use, excise
and all other taxes of any kind whatsoever imposed by the United States or any
state, city, country, country or foreign government or subdivision or agency
thereof, whether disputed or not, and (ii) "Transaction" means one or more
transactions, acts, events, or omissions of whatever nature.
(b) The Company has filed on a timely basis all returns and
reports, including all estimated returns and reports of every kind and have
timely given all notices, in respect of Taxes required to be filed or given
under applicable law within the application statute of limitations period by any
of them, or except where proper action has been taken by the Company to extend
the relevant filing deadline. Such returns, reports and notices are complete and
accurate in all material respects. All Taxes shown on such returns or reports
have been, and all Taxes subsequently assessed with respect to the periods and
or Transactions to which such returns or reports relate have been or will be,
timely, and fully paid, except for amounts which the Company is contesting in
good faith. The provisions in the financial statements (and the notes and
schedules related thereto) contained in the Furnished SEC Documents for Taxes
<PAGE>
currently payable and for deferred Taxes are adequate in all material respects
to provide for such Taxes for which the Company and its Subsidiaries taken as a
whole may be liable in respect of periods or Transactions through the dates
thereof.
(c) No fact or condition relating to any past or present
Transaction, except as set forth in the Company Disclosure Schedule, which, if
known to any tax authority having jurisdiction, would likely result in a
successful challenge by such authority of the treatment or omission of such
factor or condition on any tax return, report or notice of the Company or its
Subsidiaries, and no issue has arisen in any examination of the Company by the
IRS that, in either case, if raised with respect to any other period no so
examined would result in a proposed material deficiency for any other period not
so examined, if upheld. The Company and its Subsidiaries have made all payments
or estimated Taxes required to be made under Section 6655 of the Code and any
comparable provisions of state, local or foreign law. Except as set forth on
Schedule 3.20, there is no pending nor, to the Company's knowledge, threatened
or contemplated action, audit, proceeding or investigation for the assessment or
collection of Taxes from the Company. There are no requests for rulings,
outstanding subpoenas or requests for information with respect to Taxes of the
Company, proposed reassessments of any property owned or leased by the Company,
or similar matters pending with respect to any taxing authority.
3.21 Environmental Matters. Except as listed in Schedule 3.21:
(a) There are, with respect to the Company and its
subsidiaries, or any predecessor of the foregoing, no present violations of
Environmental Law (as defined herein), any actions, activities, circumstances,
conditions, events, incidents, or contractual obligations which may give rise to
any liability of the Company pursuant to any Environmental Law and neither the
Company nor its subsidiaries has received any notice with respect to any of the
foregoing nor is any Litigation pending or threatened in connection with any of
the foregoing.
(b) To the knowledge of the Company and except in the normal
course of the Company's or its subsidiaries' business, (i) no Hazardous
Materials are present on or about any real property currently owned, leased or
used by the Company or its subsidiaries, and (ii) no Hazardous Materials were
present on or about any real property previously owned, leased or used by the
Company or its subsidiaries during the period the property was owned, leased or
used by the Company or its subsidiaries.
(c) To the knowledge of the Company, no Hazardous Materials
have been released on or about, or where they may pose a threat of migration to,
any real property currently owned, leased or used by the Company or its
subsidiaries and no Hazardous Materials were released on or about any real
property previously owned, leased or used by the Company or its subsidiaries
during the period the property was owned, leased or used by the Company or its
subsidiaries, except as may be required in the normal course of business and in
material compliance with applicable Environmental Law.
<PAGE>
(d) To the knowledge of the Company, no asbestos-containing
materials or PCBs are present on or about any property currently owned, leased
or used by the Company or its subsidiaries.
(e) To the knowledge of the Company, there are not now, nor
have there ever been, any underground storage tanks or similar facilities of any
kind on or under any real property currently or previously owned, leased or used
by the Company or its subsidiaries.
(f) For purposes of this Section 3.21, capitalized terms used
herein shall have The following meanings:
"Environmental Laws" shall mean, at any date, all provisions
of federal, state, local or foreign law (including applicable principles of
common and civil law), statutes, ordinances, rules, regulations, published
standards and directives that have the force and effect of laws, statutes,
regulations, permits, licenses, judgments, writs, injunctions, decrees and
orders enacted, promulgated or issued by an), Public Authority, and all
indemnity agreements and other contractual obligations, as in effect at such
date, relating to (i) the protection of the environment, including the air,
surface and subsurface soils, surface waters, groundwaters and natural
resources, and (ii) occupational health and safety and exposure of persons to
Hazardous Materials. Environmental Laws shall include the Comprehensive
Environmental Response, Compensation and Liability Act 42 U.S.C. ss.ss.9601 et
seq., and any other laws imposing or creating liability with respect to
Hazardous Materials.
"Environmental Liability" shall mean any liabilities,
obligations, costs, losses, payments or damages, including compensatory and
punitive damages, incurred (i) to contain, remove, clean up, assess, abate or
otherwise remedy any actual or alleged release or threatened release of
Hazardous Materials, any actual or alleged contamination (by Hazardous
Materials) of air, surface or subsurface soil, groundwater or surface water, or
any personal injury or damage to natural resources or property resulting from
any such release or contamination, pursuant to the requirements of any
Environmental Law or in response to any claim by any Public Authority or other
third party under any Environmental Law; (ii) to modify facilities or processes
or take any other remedial action in response to any claim by any Public
Authority of non-compliance with any Environmental Law, (iii) as a result of the
imposition of any civil or criminal fine or penalty by any Public Authority for
the violation or alleged violation of any Environmental Law, or (iv) as a result
of any action, suit, proceeding or claim by any third party under any
Environmental Law. The term "Environmental Liability" shall include: (i)
reasonable fees of counsel and consultants (but not any corporate allocation for
management time or for the use of similar in-house services or facilities) and
(ii) the costs and expenses of any investigation undertaken to ascertain the
existence or extent of any potential or actual Environmental Liability.
"Hazardous Material" shall mean any substance regulated by any
Environmental Law or which may now or in the future form the basis for any
Environmental Liability.
<PAGE>
"Public Authority" shall mean any supranational, national,
regional, state or local government court, governmental agency, authority,
board, bureau, instrumentality or regulatory body.
3.22 Suppliers and Customers. The Company does not have any knowledge
of any termination, cancellation or threatened termination or cancellation or
limitation of, or any material modification or change in, or expressed material
dissatisfaction with the business relationship between the Company or its
subsidiaries and any supplier or vendor of the Company or its subsidiaries, in
each case, of materials or services in an amount in excess of [$50,000] per
year.
3.23 Holding Company Act and Investment Company Act. Neither the
Company nor its subsidiaries is: (i) a "public utility company" or a "holding
company," or an "affiliate" or a "subsidiary company" of a "holding company," or
an "affiliate" of such a "subsidiary company," as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended, or (ii) a "public
utility," as defined in the Federal Power Act, as amended, or (iii) an
"investment company" or an "affiliated person" thereof or an "affiliated person"
of any such "affiliated person," as such terms are defined in the Investment
Company Act of 1940, as amended.
3.24 Foreign Corrupt Practices. To the Company's best knowledge, the
Company has no notice and neither the Company, nor any of its subsidiaries, nor
any director, officer, agent, employee or other person acting on behalf of the
Company or any subsidiary has violated or is in violation of any provision of
the U.S. Foreign Corrupt Practices Act of 1977, as amended. To the Company's
best knowledge, the Company has no notice and neither the Company, nor any of
its subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any subsidiary has, in the course of his
actions or, on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity, made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.
3.25 Accounts Receivable. The accounts receivable of the Company and
its subsidiaries reflected in the SEC Documents, to the extent uncollected on
the date hereof, are, and the accounts receivable of the Company and the
subsidiaries relating to the operation of the Company to be reflected on the
books of the Company on the Closing Date (the "Accounts Receivable") will be, in
all material respects, valid, existing and collectible (taking into
consideration the allowance for sales returns and doubtful accounts set forth in
the financial statements) using reasonably diligent collection methods taking
into account the size and nature of the receivable, and represents amounts due
for goods sold and delivered or services performed. There are not, and on the
date of Closing there will not be, any material refunds, discounts, set-offs,
defenses, counterclaims or other adjustments payable or assessable with respect
to the Accounts Receivable.
<PAGE>
3.26 Series B Preferred Stock. As of the date hereof, there are no
outstanding shares of the Corporation's Series B Convertible Participating
Preferred Stock ("Series B Preferred Stock") and no obligation to issue Series B
Preferred Stock exists.
3.27 Foothill Capital Corporation. As of the date hereof, the Company
has paid all amounts owed to Foothill Capital Corporation.
ARTICLE 4
COVENANTS
4.1 Best Efforts. The parties shall use their best efforts timely to
satisfy each of the conditions described in Articles 6 and 7 of this Agreement.
4.2 Securities Laws. The Company shall file a Form D with respect to
the Securities with the SEC as required under Regulation D and shall provide a
copy thereof to each Purchaser within 15 days after the Closing Date. The
Company shall file a Form 8-K disclosing this Agreement and the transactions
contemplated hereby with the SEC within five business days following the Closing
Date. The Company shall, on or prior to the Closing Date, take such action as is
necessary to sell the Securities to each Purchaser under applicable securities
laws of the states of the United States, and shall provide evidence of any such
action so taken to each Purchaser on or prior to the Closing Date.
4.3 Reporting Status. So long as any Purchaser beneficially owns any of
the Securities, the Company shall use its best efforts to timely file all
reports required to be filed by it with the SEC pursuant to the Exchange Act,
and make and keep public information available as those terms are defined in
Rule 144 and the Company shall not terminate its status as an issuer required to
file reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would permit such termination.
4.4 Use of Proceeds. The Company shall use the Purchase Price to
facilitate the implementation of its strategic plan (e.g., the acquisition of
related technology through asset and business acquisitions, mergers and joint
ventures) and other general corporate purposes.
<PAGE>
4.5 Future Financings.
(a) During the period commencing on the Closing Date and
continuing for a period of six months immediately thereafter (the "Future
Financing Period"), the Company will not enter into any agreement ("Financing
Agreement") with an investor which includes the issuance of equity securities,
or any security convertible into or exercisable, directly or indirectly, for
equity securities of the Company (collectively, the "Equity Securities") on
terms materially more favorable than those given to the Purchasers. For purposes
of this Section 4.5, terms will be deemed materially more favorable than the
terms given to the Purchasers if without the prior written consent of each of
the Purchasers (i) the Equity Securities related to the Financing Agreement are
issued at less than the Dilutive Issue Price (as defined in the Certificate of
Designation), or (ii) the Financing Agreement grants the investor non-monetary
rights (e.g., registration rights, voting rights or other corporate governance
rights) which are materially greater or more favorable than those granted to
Purchasers, taking into consideration all relevant factors.
(b) If during the Future Financing Period the Company should
enter into a Financing Agreement with an investor on terms which are materially
more favorable to such investor than the terms which have been provided to the
Purchasers, the Company will remedy such situation so that the terms of the
investment contemplated by this Agreement will be amended to reflect such more
favorable terms, including the Company's issuance of additional Common Stock,
preferred stock or warrants (as may be agreed to by the parties and not
inconsistent with (i) the Delaware General Corporation Law, (ii) the listing
rules of The NASDAQ Stock Market, or (iii) the rules and regulations of the SEC)
if necessary to accomplish the foregoing. Purchasers acknowledge that
adjustments to the Conversion Ratio (as defined in the Certificate of
Designation) pursuant to Section 6(e)(ii) of the Certificate of Designation
shall be considered when determining if the Company has satisfied its
obligations under this Section 4.5.
(c) The obligations under this Section 4.5 shall expire and be
of no further force or effect at the conclusion of the Future Financing Period.
For purposes of this Section 4.5, the following will not be deemed a "Financing
Agreement" (collectively, the "Excluded Securities"): (i) a public offering of
the Company's securities, (ii) the grant of options or warrants, or the issuance
of securities, under any employee or director stock option, stock purchase or
restricted stock plan of the Company, (iii) the issuance of Common Stock
pursuant to any contingent obligation of the Company existing as of the Closing
and described on Schedule 3.3, (iv) the issuance of securities upon the exercise
or conversion of the Company's options, warrants or other convertible securities
outstanding as of the date hereof, (v) declaration of a rights dividend to
holders of Common Stock in connection with the adoption of a Stockholder Rights
Plan by the Company, (vi) the issuance of securities in connection with a
merger, acquisition, joint venture or similar arrangement which was approved by
majority of the Company's Board of Directors that are not employees of the
Company ("Outside Directors"), and (vii) the issuance of securities in
connection with the establishment of a strategic relationship which is approved
by a majority of the Outside Directors.
<PAGE>
4.6 Rights of First Offer.
(a) During the period commencing on the Closing Date and
continuing until the first to occur of (such date will be referred to as the
"RFR Period"): (i) the expiration of the three year period immediately after the
Closing Date, or (ii) Purchasers cease to own in the aggregate at least 5% of
the Common Stock outstanding, prior to seeking (for purposes of this
calculation, all shares of Preferred Stock will be deemed to be converted to
shares of Common Stock pursuant to the terms of the Certificate of Designation),
financing from any third party consisting of an issuance by the Company of
Equity Securities (the "Proposed Offering"), the Company shall provide written
notice to the Purchasers (the "Proposed Offering Notice"), such notice to
include a description in reasonable detail of the Proposed Offering including
the type and amount of securities proposed to be issued and the consideration
the Company desires to receive therefor. The Proposed Offering Notice shall
constitute an offer to the Purchasers to purchase a portion (a "Maintenance
Amount") of the securities being offered (the "Offered Securities") in
connection with the Proposed Offering on a pari passu basis in order to maintain
the Purchasers' percentage level of ownership of the Company's Common Stock
outstanding as such ownership exists on the date of the Proposed Offering
Notice.
(b) The Purchasers shall have 10 business days after receipt
of the Proposed Offering Notice (unless the Purchasers earlier indicate that
they have no interest in purchasing the Offered Securities), to decide whether
or not to acquire the Maintenance Amount, after which (if the Purchasers have
not agreed to purchase the above-mentioned Maintenance Amount on the terms set
forth in the Proposed Offering Notice or such other terms as are mutually
acceptable to the Company and the Purchasers) the Company shall be permitted to
seek and obtain a third-party purchaser to acquire the entire amount of the
Offered Securities, provided that the closing of such acquisition by such third
party purchaser occurs within 90 days from the date of the Proposed Offering
Notice and provided that the acquisition of the Offered Securities by such
third-party purchaser is on terms no more favorable to such third-party
purchaser than those terms set forth in the Proposed Offering Notice.
(c) For purposes of this Section 4.6, the issuance of Excluded
Securities will not be deemed a "Proposed Offering".
4.7 Expenses.
(a) Except as set forth in this Section 4.7, the Company and
each Purchaser shall pay all the costs and expenses incurred by it or on its
behalf in connection with this Agreement and the consummation of the
transactions contemplated hereby.
(b) Within 15 business days from the receipt of a billing
statement from Purchasers, the Company shall pay and shall reimburse Purchasers
for all of Purchasers reasonable documented out-of-pocket costs and expenses
incurred in connection with this transaction, including, without limitation, the
fees and expenses of counsel retained by Purchasers in connection with the
<PAGE>
negotiation and preparation of this Agreement and agreements related hereto and
the consummation of the transactions contemplated hereby and thereby; provided,
however, in no event shall the liability of the Company under this Section 4.7
in the aggregate exceed $50,000.
4.8 Corporate Governance.
(a) Board Representation. If the Purchasers are no longer able
to appoint and elect a member of the Company's Board of Directors (the "Board")
pursuant to the terms of the Certificate of Designation, but the Purchasers (and
entities which are affiliated with the general partner of any Purchaser) in the
aggregate own at least 7.5% of the Common Stock outstanding on any date the
Board fixes the record date for a meeting of the Company's stockholders at which
directors will be elected (for purposes of this calculation all shares of
Preferred Stock shall be deemed to be converted to shares of Common Stock
pursuant to the terms of the Certificate of Designation), then the Purchasers
shall have the right to designate a nominee (who is reasonably acceptable to the
Board) to stand for election as a director at the next meeting of the Company's
stockholders at which directors will be elected. The Purchasers shall submit to
the Board all information related to such reasonably acceptable nominee as would
be required by Regulation 14A promulgated by the SEC under the Exchange Act to
be included in a proxy statement related to a meeting of the Company's
stockholders at which directors would be elected. If the Purchaser's nominee is
elected but such nominee does not serve such nominee's complete term on the
Board by reason of the resignation, death, removal or inability to serve, then
Purchasers shall be entitled to designate a successor (who is reasonably
acceptable to the Board) to fill such vacancy until the next meeting for the
election of directors. If the Purchasers' nominee is not elected to the Board,
the Purchasers will, in addition to those rights set forth in Section 4.8(b)
below, be entitled to appoint an additional Non-Voting Observer (as defined in
Section 4.8(b)). The Company's obligations, and the Purchasers' rights, under
this Section 4.8(a) shall cease upon Purchasers (and entities which are
affiliated with the general partner of any Purchaser) in the aggregate ceasing
to own at least 7.5% of the Common Stock outstanding on any date the Board fixes
the record date for a meeting of the Company's stockholders at which directors
will be elected (for purposes of this calculation all shares of Preferred Stock
shall be deemed to be converted to shares of Common Stock pursuant to the terms
of the Certificate of Designation). For purposes of this paragraph 4.8(a), the
phrase "Common Stock outstanding" shall mean the Common Stock shown as
outstanding on the Company's Quarterly Report on Form 10-Q for the most recent
quarter and shall not be determined on a dilutive basis.
(b) Non-Voting Observer; Other Matters.
(i) If the member of the Board appointed by the
Purchasers pursuant to the Certificate of Designation or in accordance with
Section 4.8(a), assuming such nominee is elected to the Board (the "Pequot
Nominee"), is not an employee of Dawson Samberg Capital Management, Inc., then
for as long as the Purchasers own in the aggregate at least 7.5% of the Common
Stock outstanding (for purposes of this calculation, all shares of Preferred
Stock shall be deemed to be converted to shares of Common Stock pursuant to the
terms of the Certificate of Designation) the Purchasers, collectively, shall
<PAGE>
also be entitled to designate a non-voting observer (the "Non-Voting Observer")
to attend and participate in (but not to vote at) all meetings of the Board and
any committee thereof. The Non-Voting Observer shall have the same rights and
responsibilities with respect to the receipt of notices of meetings of the Board
or a committee thereof and access and limitations to information concerning the
business and operations of the Company as members of the Board, and shall be
entitled to participate in discussions and consult with the Board without
voting.
(ii) In addition to any requirements specified in
the Company's by-laws, the Company shall notify the Pequot Nominee and the
Non-Voting Observer, if applicable, by telecopy, of (a) every meeting (or action
by written consent) of the Board and (b) every meeting (or action by written
consent) of the board of directors of the subsidiaries and of any committee of
the Board or the board of directors of the subsidiaries, to the extent, in the
case of this clause (b), that the Pequot Nominee is on the board of directors of
the subsidiaries or is on such committee of the Board of the Company or the
subsidiaries, at the same time other members of such boards of directors or
committees are so notified.
(iii) The Company shall, upon request therefor,
promptly reimburse the Pequot Nominee and the Non-Voting Observer, if
applicable, for all reasonable expenses incurred by them in connection with
their attendance at meetings of the Board or of committees of the Board in
accordance with the procedures and policies utilized by the Company to reimburse
other members of the Board and committees of the Board. The foregoing shall be
in addition to, and not in lieu of (or in duplication of), any indemnification
or reimbursement obligations of the Company under the certificate of
incorporation or by-laws of the Company. The Non-Voting Observer shall be
entitled to indemnification from the Company to the maximum extent permitted by
law as though he or she were a director of the Company.
4.9 Listing. The Company shall use its best efforts to continue the
listing and trading of its Common Stock on The NASDAQ Stock Market, the New York
Stock Exchange or American Stock Exchange; and comply in all respects with the
Company's reporting, filing and other obligations under the by-laws or rules of
The NASDAQ Stock Market or such exchange, as applicable. As of the Closing the
Conversion Shares shall be approved for quotation on The NASDAQ Stock Market.
4.10 Prospectus Delivery Requirement. Each Purchaser understands that
the Securities Act requires delivery of a prospectus relating to the Securities
in connection with any sale or other disposition thereof pursuant to the
Registration Statement, and each Purchaser shall comply with the applicable
prospectus delivery requirements of the Securities Act in connection with any
such sale or other disposition.
4.11 Transactions with Affiliates. The Company will not, and will not
permit any subsidiaries to, engage in any transaction or group of related
transactions (including, without limitation, the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
affiliate (other than the Company), except in the ordinary course and pursuant
<PAGE>
to the reasonable requirements of the Company's or the subsidiaries' business
and upon fair and reasonable terms no less favorable to the Company or such
subsidiaries than would be obtainable in a comparable arm's-length transaction
with a person not an affiliate. The Company will not be deemed in default of
this Section 4.11 in connection with carrying out its obligations pursuant to
those agreements or transactions described in the Furnished SEC Documents.
4.12 Stockholders Rights Plan. Within 30 days after the Closing Date
the Board will implement a stockholders rights plan which would be triggered
should any investor acquire more than 15% of the Company's outstanding voting
securities without the approval of the Board.
ARTICLE 5
TRANSFER OF SECURITIES
The Securities shall not be transferable except upon the conditions
specified in this Article 5, which conditions are intended to insure compliance
with the provisions of the Securities Act and state securities laws in respect
of the transfer of any such Securities.
5.1 Restrictive Legend.
(a) Unless and until otherwise permitted by this Article 5,
each certificate for the Preferred Stock and the Conversion Shares issued to
Purchasers or to any subsequent transferee of such Shares shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"These Shares have not been registered under the Securities
Act of 1933 and may not be offered for sale, sold, transferred
or otherwise disposed of unless registered under such Act or
unless an exemption from such registration is available.
Further, such transfer is subject to the conditions specified
in a Securities Purchase Agreement dated as of June 12, 1998
pursuant to which such shares were issued and sold by
LaserSight Incorporated (the "Company"), a copy of which
Agreement will be furnished by the Company to the holder
hereof upon request and without charge."
<PAGE>
(b) The Company may order its transfer agent for the Common
Stock to stop the transfer of any of the Securities bearing the legend set forth
in Subsection (a) of this Section 5.1 until the conditions of this Article 5
with respect to the transfer of such Securities have been satisfied.
5.2 Notice of Proposed Transfer. If, prior to any transfer or sale of
any Securities, Purchaser desiring to effect such transfer or sale shall deliver
a written notice to the Company describing briefly the manner of such transfer
or sale and a written opinion of counsel for such Purchaser (provided that such
counsel, and the form and substance of such opinion, are reasonably satisfactory
to the Company) to the effect that such transfer or sale may be effected without
the registration of such Securities under the Securities Act, the Company shall
thereupon permit or cause its transfer agent to permit such transfer or sale to
be effected; provided, however, that if in such written notice the transferring
Purchaser represents and warrants to the Company that the transfer or sale is to
a purchaser or transferee whom the transferring Purchaser knows or reasonably
believes to be a "qualified institutional buyer," as that term is defined in
Rule 144A promulgated by the SEC under the Securities Act ("Rule 144A"), no
opinion shall be required unless reasonably requested in writing by the Company
within five days after receipt of such written notice, in which case such
Purchaser shall deliver to Company such a written opinion of counsel.
5.3 Termination of Restrictions.
(a) Notwithstanding the foregoing provisions of this Article
5, the restrictions imposed by this Article 5 upon the transferability of
Securities shall terminate as to any particular share of such Securities when
(i) such Security shall have been effectively registered under the Securities
Act and sold by Purchaser thereof in accordance with such registration, or (ii)
a written opinion to the effect that such restrictions are no longer required or
necessary under any federal or state securities law or regulation have been
received from counsel for Purchaser thereof (provided that such counsel, and the
form and substance of such opinion, are reasonably satisfactory to the Company)
or counsel for the Company, or (iii) such Security shall have been sold without
registration under the Securities Act in compliance with Rule 144, or (iv) the
Company is reasonably satisfied that Purchaser of such Security shall, in
accordance with the terms of Subsection (k) of Rule 144, be entitled to sell
such Security pursuant to such Subsection, or (v) a letter or an order shall
have been issued to Purchaser thereof by the staff of the SEC or the SEC stating
that no enforcement action shall be recommended by such staff or taken by the
SEC, as the case may be, if such Security is transferred without registration
under the Securities Act in accordance with the conditions set forth in such
letter or order and such letter or order specifies that no subsequent
restrictions on transfer are required.
(b) Whenever the restrictions imposed by this Article 5 shall
terminate, as hereinabove provided, a Purchaser who then holds any particular
Securities then outstanding as to which such restrictions shall have terminated
shall be entitled to receive from the Company, without expense to such
Purchaser, one or more new certificates for such Securities not bearing the
restrictive legend set forth in Section 5.1(a) hereof.
<PAGE>
5.4 Compliance with Rule 144 and Rule 144A. At the written request of
any Purchaser who proposes to sell any of Securities in compliance with Rule
144, the Company shall furnish to such Purchaser, within 10 days after receipt
of such request, a written statement as to whether or not the Company is in
compliance with the filing requirements of the SEC as set forth in such Rule.
For purposes of effecting compliance with Rule 144A, in connection with any
resales of any Securities that hereafter may be effected pursuant to the
provisions of Rule 144A, any Purchaser desiring to effect such resale and each
prospective institutional purchaser of such shares designated by such Purchaser
shall have the right, at any time the Company is not subject to Section 13 or
15(d) of the Securities and Exchange Act, to obtain from the Company, upon the
written request of such Purchaser and at the Company's expense the documents
specified in Section (d)(4)(i) of Rule 144A, as such rule may be amended from
time to time.
5.5 Non-Applicability of Restrictions on Transfer. Notwithstanding the
provisions of Section 5.2 hereof, any record owner of Securities may from time
to time transfer all or part of such record owner's Securities (i) to a nominee
identified in writing to the Company as being the nominee of or for such record
owner, and any nominee of or for a beneficial owner of Securities identified in
writing to the Company as being the nominee of or for such beneficial owner may
from time to time transfer all or part of the Securities registered in the name
of such nominee but held as nominee on behalf of such beneficial owner, to such
beneficial owner, (ii) to an Affiliate of such record owner, or (iii) if such
record owner is a partnership or limited liability company or the nominee of a
partnership or limited liability company, to a partner, member, retired partner
or member, or estate of a partner, member or retired partner or member, of such
partnership or limited liability company, so long as such transfer is in
accordance with the transferee's interest in such partnership or limited
liability company and is without consideration; provided, however, that (1) such
record owner shall deliver a written notice to the Company describing in
reasonable detail the manner of such transfer or sale prior to the consummation
of such transfer or sale, (2) each such transferee shall remain subject to all
restrictions on the transfer of Securities herein contained, and (3) if
reasonably requested in writing by the Company within five days after receipt of
such written notice, such record owner shall deliver to the Company such
additional information requested by the Company or its counsel (in form and
substance satisfactory to the Company and such counsel) that the proposed
transfer is within the scope of this Section 5.5 or a written opinion of counsel
for such record owner (provided that such counsel, and the form and substance of
such opinion, are reasonably satisfactory to the Company) to the effect that
such transfer or sale may be effected without the registration of such
Securities under the Securities Act.
<PAGE>
ARTICLE 6
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
6.1 Conditions to the Company's Obligation to Sell. The obligation of
the Company hereunder to issue and sell the Preferred Stock to any Purchaser at
the Closing is subject to the satisfaction, as of the Closing Date and with
respect to such Purchaser, of each of the following conditions thereto, provided
that these conditions are for the Company's sole benefit and may be waived by
the Company at any time in its sole discretion:
(a) Such Purchaser shall have executed this Agreement and the
Ancillary Documents and delivered the same to the Company.
(b) Such Purchaser shall have wired same-day funds to the
account designated by the Company equal to the applicable portion of
the Purchase Price.
(c) The aggregate Purchase Price delivered by all of the
Purchasers for the Preferred Stock purchased at the Closing shall equal
at least $8,000,000.
(d) The representations and warranties of such Purchaser shall
be true and correct as of the date when made and as of the Closing as
though made at that time (except for representations and warranties
that speak as of a specific date), and such Purchaser shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the applicable Purchaser at or
prior to the Closing.
(e) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which restricts or prohibits the
consummation of any of the transactions contemplated by this Agreement.
<PAGE>
ARTICLE 7
CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE
7.1 The obligation of each Purchaser hereunder to purchase the
Preferred Stock to be purchased by it on the Closing Date is subject to the
satisfaction of each of the following conditions, provided that these conditions
are for each Purchaser's sole benefit and may be waived by such Purchaser at any
time in such Purchaser's sole discretion:
(a) The Company shall have executed this Agreement and the
Ancillary Documents and delivered the same to Purchasers.
(b) The Company shall have delivered to each of the Purchasers
duly executed certificates for the Preferred Stock being so purchased
by such Purchaser.
(c) The Conversion Shares shall be approved for quotation on
The NASDAQ Stock Market and trading in the Common Stock shall not have
been suspended by The NASDAQ Stock Market or the SEC or other
regulatory authority.
(d) The representations and warranties of the Company shall be
true and correct as of the date when made and as of the Closing as
though made at that time and the Company shall have performed,
satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing.
Purchaser shall have received a certificate, executed by the Chief
Executive Officer or Chief Financial Officer of the Company, dated as
of the Closing Date to the foregoing effect.
(e) The Purchasers shall have completed to their satisfaction
all business, legal, accounting and financial due diligence with
respect to the Company.
(f) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which restricts or prohibits the
consummation of any of the transactions contemplated by this Agreement.
(g) Purchasers shall have received the Officer's Certificate
described in Section 3.3 dated as of the Closing Date.
(h) Purchaser shall have received an opinion of Sonnenschein
Nath & Rosenthal, dated as of the Closing Date, in the form attached
hereto as Exhibit D.
(i) The aggregate Purchase Price delivered by all of the
Purchasers for the Preferred Stock purchased at the Closing shall equal
$8,000,000.
<PAGE>
(j) The Company shall have delivered to the Purchasers
certificates of good standing of the Company and the subsidiaries which
are organized pursuant to the corporate laws of a State within the
United States as of a date no earlier than ten days prior to the
Closing.
(k) The Company shall have delivered to the Purchasers a
certificate executed by its secretary certifying (i) a copy of the
Company's certificate of incorporation and the by-laws, (ii)
resolutions authorizing the execution of this Agreement and the
Ancillary Documents, and (iii) incumbency matters.
(l) The Certificate of Designation shall have been approved
for filling by the Delaware Secretary of State.
(m) Purchasers shall have received evidence in a form
reasonably satisfactory to Purchasers, that the Company has repaid all
amounts owed to Foothill Capital Corporation and has repurchased all
outstanding shares of the Company's Series B Convertible Participating
Preferred Stock.
(n) Without limiting the generality of Section 7.1(d), no
Material Adverse Effect shall have occurred, nor shall any event or
events have occurred which would reasonably likely to have a Material
Adverse Effect.
ARTICLE 8
GOVERNING LAW; MISCELLANEOUS
8.1 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the Delaware General Corporation Law (in
respect of matters of corporation law) and the laws of the State of New York (in
respect of all other matters) applicable to contracts made and to be performed
in the State of New York, without giving effect to the principles of conflicts
of law. The parties hereto irrevocably consent to the jurisdiction of the United
States federal courts and state courts located in the County of New Castle in
the State of Delaware or the County of New York in any suit or proceeding based
on or arising under this Agreement or the transactions contemplated hereby and
irrevocably agree that all claims in respect of such suit or proceeding may be
determined in such courts. The Company and each Purchaser irrevocably waives the
defense of an inconvenient forum to the maintenance of such suit or proceeding.
Service of process upon the Company or any Purchaser mailed by certified mail,
return receipt requested, shall be deemed in every respect effective service of
process upon the Company in any suit or proceeding arising hereunder. Nothing
herein shall affect Purchaser's right to serve process in any other manner
permitted by law. A final non-appealable judgment in any such suit or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.
<PAGE>
8.2 Counterparts. This Agreement may be executed in two or more
counterparts, including, without limitation, by facsimile transmission, all of
which counterparts shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered
to the other party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause additional
original executed signature pages to be delivered to the other parties.
8.3 Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
8.4 Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
8.5 Entire Agreement; Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor any Purchaser makes any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be waived other than by an instrument in
writing signed by the party to be charged with enforcement and no provision of
this Agreement may be amended other than by an instrument in writing signed by
the Company and each Purchaser.
8.6 Notice. Any notice herein required or permitted to be given shall
be in writing and may be personally served or delivered by nationally-recognized
overnight courier or by facsimile-machine confirmed telecopy, and shall be
deemed delivered at the time and date of receipt (which shall include telephone
line facsimile transmission). Each party shall provide notice to the other party
of any change in address. The addresses for such communications shall be:
If to the Company:
LaserSight Incorporated
12249 Science Drive
Suite 160
Orlando, Florida 32826
Telecopy: (407) 382-2701
Attention: Chief Financial Officer
<PAGE>
After June 30, 1998:
LaserSight Incorporated
3300 University Boulevard
Suite 140
Orlando, Florida 32792
Telecopy: (407) 678-9981
Attention: Chief Financial Officer
with a copy to:
Sonnenschein Nath & Rosenthal
One Metropolitan Square
Suite 3000
St. Louis, Missouri 63102
Telecopy: (314) 259-5959
Attention: Alan B. Bornstein
If to the Purchasers:
c/o Dawson Samberg Capital Management, Inc.
354 Pequot Avenue, P.O. Box 760
Southport, Connecticut 06490
Telecopy: (203) 254-3259
Attention: Juliet Bakker
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004-1980
Telecopy: (212) 859-8586
Attention: Aryeh Davis
8.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor any Purchaser shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other. The
provisions of this Agreement which are for each of the Purchaser's benefit as a
purchaser of holder of Securities are also for the benefit of, and enforceable
by, any subsequent holder of such Securities.
8.8 Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
<PAGE>
8.9 Survival. All representations and warranties in this Agreement
shall survive the execution and delivery of this Agreement and the Closing. All
agreements contained herein shall survive the Closing until, by their respective
terms, they are no longer operative.
8.10 Indemnification.
(a) The Company shall indemnify and hold harmless each Purchaser, their
respective officers, directors, partners, employees, attorneys, agents,
representatives, successors and assigns (each a "Purchaser Entity") from any (a)
Losses (as defined herein) insofar as such Losses (or actions in respect
thereof) incurred or suffered by a Purchaser Entity (whether incurred or
suffered directly or indirectly through ownership of capital stock of the
Company) arise out of or are based upon or are incurred as a result of (i) the
breach or falsity or incorrectness as of the Closing Date of any representation
or warranty, covenants or agreements of the Company contained in or made
pursuant to this Agreement, or (ii) the existence of any condition, event or
fact constituting, or which with notice or passage of time, or both, would
constitute a default in the observance of any of the Company's undertakings or
covenants hereunder, under the Ancillary Documents or the Company's certificate
of incorporation and by-laws. The Company shall also pay all reasonable
attorney's and accountant's fees and costs and court costs incurred by any
Purchaser in enforcing the indemnification provided for in this Section 8.10.
Notwithstanding the foregoing, the Company expressly agrees and acknowledges
that the right of indemnification granted herein to each Purchaser of shall not
be deemed to be the exclusive remedy available to such Purchaser for any of the
matters described in this Section 8.10.
(b) For purposes of this Section 8.10, "Losses" shall mean each and all
of the following items. claims, losses, (including, without limitation, losses
of earnings) liabilities, obligations, payments, damages (actual, punitive or
consequential), charges, judgments, fines, penalties, amounts paid in
settlement; costs and expenses (including, without limitation, interest which
may be imposed in connection therewith, costs and expenses of investigation,
actions, suits, proceedings, demands, assessments and fees, expenses and
disbursements of counsel, consultants and other experts). Any payment (or deemed
payment) by the Company to a Purchaser pursuant to this Section 8.10 shall be
treated for federal income tax purposes as an adjustment to the price paid by
such Purchaser for the Preferred Stock pursuant to this Agreement.
(c) Within five days after a party seeking indemnification under this
Section 8.10 shall become aware of the facts indicating that a claim for
indemnification may be warranted, such party shall give to the party from whom
indemnification is being sought a claim notice relating to such Losses (a "Claim
Notice"). Each Claim Notice shall specify the nature of the claim, the
applicable provision(s) of this Agreement or other instrument under which the
claim for indemnity arises and, if possible, the amount or the estimated amount
thereof.
8.11 Stamp Tax and Delivery Costs. The Company will pay all stamp and
other taxes, if any, which may be payable in respect of the sale or other
<PAGE>
transfer of the Securities to Purchasers and the issuance thereof to the
Purchasers or their nominee, and will save Purchasers harmless against any loss
or liability resulting from nonpayment or delay in payment of any such tax. The
Company will also pay all reasonable costs of delivery to Purchasers, or
Purchasers' nominee, of the Securities to be purchased by Purchasers or
otherwise transferred to Purchasers.
8.12 Public Filings; Publicity. No party hereto shall make any public
statement regarding the transactions contemplated hereby unless the language and
timing of such statement has been approved by both the Company and Purchasers.
Notwithstanding the foregoing, each of the parties hereto may, in documents
required to be filed by it with the SEC or other regulatory bodies, make such
statements with respect to the transactions contemplated hereby as each may be
advised is legally necessary upon advice of its counsel; provided, however, that
the party making such determination shall immediately notify the other party
that it intends to make a public announcement and the parties hereto shall, in
good faith, attempt to agree on any public announcements or publicity statements
with respect thereto (which approval shall not be unreasonably withheld or
delayed).
8.13 Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
8.14 Remedies. No provision of this Agreement providing for any remedy
to a Purchaser shall limit any remedy which would otherwise be available to such
Purchaser at law or in equity. Nothing in this Agreement shall limit any rights
a Purchaser may have with any applicable federal or state securities laws with
respect to the investment contemplated hereby.
8.15 Termination. In the event that the Closing shall not have occurred
on or before June 15, 1998, unless the parties agree otherwise, this Agreement
shall terminate at the close of business on such date.
[Remainder of page intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the undersigned Purchasers and the Company have
caused this Agreement to be duly executed as of the date first above written.
LASERSIGHT INCORPORATED PEQUOT PRIVATE EQUITY FUND, L.P.
By: /s/ Michael R. Farris By: Dawson Samberg Capital Management, Inc.
---------------------------- Investment Manager
Michael R. Farris
President and CEO By: /s/ Amiel Peretz
--------------------------------------
Name: Amiel Peretz
--------------------------------------
Title: CFO
--------------------------------------
PEQUOT SCOUT FUND, L.P.
By: Dawson Samberg Capital Management, Inc.
Investment Manager
By: /s/ Amiel Peretz
--------------------------------------
Name: Amiel Peretz
--------------------------------------
Title: CFO
--------------------------------------
PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC.
By: /s/ Amiel Peretz
--------------------------------------
Name: Amiel Peretz
--------------------------------------
Title: CFO
--------------------------------------
SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
EXHIBIT 99.6
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES D CONVERTIBLE PARTICIPATING PREFERRED STOCK
OF
LASERSIGHT INCORPORATED
We, Michael R. Farris and Gregory L. Wilson, the President and
Secretary, respectively, of LaserSight Incorporated, a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), do hereby
certify that, pursuant to the authority confirmed upon the Board of Directors by
the Certificate of Incorporation of the Corporation, as amended and restated,
the Board of Directors on June 12, 1998, adopted the following resolution
creating a series of 2,000,000 shares of Preferred Stock designated as Series D
Convertible Participating Preferred Stock with a face amount of $4.00 per share:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the
Corporation's Certificate of Incorporation, as amended and restated, a series of
Preferred Stock of the Corporation be and it hereby is created, and that the
designation and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
1. Designation and Number.
(a) There is hereby designated a series of Preferred Stock to
be known as "Series D Convertible Participating Preferred Stock." The number of
shares constituting the Series D Convertible Participating Preferred Stock (the
"Series D Preferred Stock") shall be 2,000,000, which number may not be
increased without the approval of the holders of a majority of the then
outstanding shares of the Series D Preferred Stock.
(b) The Series D Preferred Stock shall, with respect to
dividend rights and rights on liquidation, dissolution or winding up, (i) rank
senior to the Common Stock, par value $.001 per share, of the Corporation (the
"Common Stock"), (ii) rank senior to any capital stock of the Corporation
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series D Preferred Stock (the "Junior Stock"), (iii) rank
pari passu with the Corporation's Series C Convertible Participating Preferred
Stock and pari passu with any class or series of capital stock of the
Corporation hereafter created which specifically ranks, by its terms, on parity
with the Series D Preferred Stock (the "Pari Passu Stock"), and (iv) rank junior
to any class or series of capital stock of the Corporation hereafter created
(with the consent of the holders of a majority of all shares of Series D
Preferred Stock outstanding on the date of such creation) specifically ranking,
by its terms, senior to the Series D Preferred Stock (the "Senior Stock").
<PAGE>
2. Dividends. The holders of the Series D Preferred Stock shall be
entitled to such dividends paid and distributions made to the holders of Common
Stock to the same extent as if the holders of the Series D Preferred Stock had
converted their shares of Series D Preferred Stock pursuant to the provisions of
Section 6 and had been issued such Common Stock on the day before the record
date for said dividend or distribution, provided that the holders of the Series
D Preferred Stock will not receive dividends or distributions which are
described in Section 6(e)(i) and payable in Common Stock. Payments under the
preceding sentence shall be made concurrently with dividends and distributions
to the holders of Common Stock.
3. Voting Rights.
(a) In addition to any voting rights provided by law and the
special voting rights provided in Section 3(b), the holder of each share of
Series D Preferred Stock shall be entitled to vote upon all matters upon which
holders of the Common Stock have the right to vote, and the shares of Series D
Preferred Stock held by each such holder shall be entitled to the number of
votes equal to the largest number of full shares of Common Stock into which such
shares of Series D Preferred Stock could be converted pursuant to the provisions
of Section 6 of this Certificate of Designation at the record date for the
determination of the stockholders entitled to vote on such matters, or if no
such record date is established, at the date such vote is taken or any written
consent of stockholders is solicited. Except as required by law or as otherwise
specifically set forth in this Certificate of Designation, the holders of shares
of Series D Preferred Stock and Common Stock shall vote together as a single
class and not as separate classes.
(b) Subject to the terms of Section 3(d), the holders of the
Series D Preferred Stock shall have, in addition to the other voting rights set
forth herein, the exclusive right, voting separately as a single class to elect
one director of the Corporation, with the remaining directors to be elected by
the other classes of stock entitled to vote therefore at each meeting of
stockholders held for the purpose of electing directors (the "Series D Preferred
Director"). The right of the holders of Series D Preferred Stock to vote for the
election of directors may be exercised at any annual meeting or at any special
meeting called for such purpose or at any adjournment thereof, or by the written
consent, delivered to the Secretary of the Corporation, of the holders of a
majority of all shares of Series D Preferred Stock outstanding as of the record
date of such written consent.
(c) With respect to the Series D Preferred Director, within
twenty-five (25) days after the Issue Date, the Board of Directors of the
Corporation shall call for a special meeting or written consent of the holders
of shares of Series D Preferred Stock to elect the Series D Preferred Director.
Any director elected pursuant to this Section 3, shall serve as a director until
his successor is elected and qualified. In the event of a vacancy in respect of
any directorship elected by the holders of shares of Series D Preferred Stock
pursuant to this clause (c), the Corporation agrees to call a special meeting of
the holders of shares of Series D Preferred Stock at the request of the majority
of the holders of outstanding Series D Preferred Stock, in order that the
holders of the Series D Preferred Stock may elect a successor director, and at
which meeting the holders of Series D Preferred Stock shall be entitled to the
same voting rights as provided in the first sentence of the prior paragraph.
<PAGE>
(d) The voting rights with respect to the Series D Preferred
Director will terminate and thereafter be of no force or effect if on any date
the Corporation's Board of Directors fixes the record date for a meeting of the
Corporation's stockholders at which directors will be elected (the
"Determination Date"), that number of full shares of Common Stock into which all
then outstanding shares of Series D Preferred Stock, if any, could be converted
pursuant to Section 6 is less than 7.5% of all then outstanding shares of Common
Stock on the Determination Date. Upon termination of the voting rights with
respect to the Series D Preferred Director pursuant to the terms of this Section
3(d), the Series D Preferred Director then in office will serve until the date
of the Corporation's next meeting at which directors are elected.
4. No Reissuance of Shares. Shares of Series D Preferred Stock
converted, purchased, or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the conversion, purchase
or acquisition thereof. None of such shares of Series D Preferred Stock shall be
reissued by the Corporation.
5. Liquidation, Dissolution or Winding Up.
(a) In the event of any voluntary or involuntary liquidation,
distribution of assets (other than the payment of dividends), dissolution or
winding up of the Corporation (each, a "Liquidation"), the assets of the
Corporation available for distribution to the Corporation's stockholders shall
be paid or distributed in the following order: (i) first to satisfy all required
payments to holders of Senior Stock, (ii) second to pay the holders of the
Series D Preferred Stock the Preferred Amount Per Share (as defined in Section
11) and satisfy all required payments to the holders of Pari Passu Stock, and
(iii) third to satisfy any required payments to holders of Junior Stock. If,
upon any such Liquidation, whether voluntary or involuntary, the assets to be
distributed to the holders of the Series D Preferred Stock and holders of Pari
Passu Stock shall be insufficient to permit payment of the full amount required
to be paid to the holders of the Series D Preferred Stock and holders of Pari
Passu Stock, then the entire assets of the Corporation to be distributed among
the holders of the Series D Preferred Stock and the holders of Pari Passu Stock
shall be distributed ratably among such holders.
(b) Upon the completion of the distribution required by
Section 5(a), the remaining assets of the Corporation available for distribution
to shareholders shall be distributed among the holders of the Senior Stock,
Series D Preferred Stock, Pari Passu Stock and Junior Stock based on the number
of shares of Common Stock held by each (assuming conversion of all such Senior
Stock, Series D Preferred Stock, Pari Passu Stock and Junior Stock at the then
effective conversion price of each such security).
(c) After the payment to the holders of shares of the Series D
Preferred Stock and Pari Passu Stock of the full amount of any liquidating
distribution to which they are entitled under this Section 5, the holders of the
Series D Preferred Stock as such shall have no right or claim to any of the
remaining assets of the Corporation.
<PAGE>
6. Conversion.
(a) Each holder of Series D Preferred Stock may, at any time
and from time to time, convert each of such holder's shares of Series D
Preferred Stock into a number of shares of Common Stock equal to the Conversion
Ratio (as defined herein). For purposes hereof, the Conversion Ratio shall equal
either (i) the quotient of the Preferred Amount Per Share divided by the
Conversion Price, or (ii) in the event of a Dilutive Issuance (as defined in
Section 6(e)(ii)) the Conversion Ratio shall be that number calculated pursuant
to Section 6(e)(ii).
(b) In order for a holder of Series D Preferred Stock to
effect a conversion of Series D Preferred Stock into shares of Common Stock such
holder shall: (i) fax a copy of the fully executed notice of conversion in the
form of Exhibit A hereto ("Notice of Conversion") to the Corporation, and (ii)
surrender or cause to be surrendered the certificates representing the Series D
Preferred Stock being converted accompanied by duly executed stock powers and
the original executed version of the Notice of Conversion as soon as practicable
thereafter.
(c) As soon as reasonably possible, but in no event later than
seven days, after the Corporation's receipt of a Notice of Conversion, the
Corporation shall require the Corporation's transfer agent to promptly issue and
deliver to the holder of Series D Preferred Stock who provided the Notice of
Conversion (i) that number of shares of Common Stock issuable upon conversion of
such shares of Series D Preferred Stock being converted, and (ii) a certificate
representing the number of shares of Series D Preferred Stock not being
converted, if any.
(d) The Corporation shall at all times reserve and keep
available for issuance upon the conversion of the Series D Preferred Stock, free
from any preemptive rights, such number of its authorized but unissued shares of
Common Stock as will from time to time be necessary to permit the conversion of
all outstanding shares of Series D Preferred Stock into shares of Common Stock,
and shall take all action required to increase the authorized number of shares
of Common Stock if necessary to permit the conversion of all outstanding shares
of Series D Preferred Stock.
<PAGE>
(e) The Conversion Price and Conversion Ratio shall be subject
to adjustment from time to time as follows:
(i) In case the Corporation shall at any time or from
time to time after the date hereof (A) pay any dividend, or make any
distribution, on the outstanding shares of Common Stock in shares of Common
Stock, (B) subdivide the outstanding shares of Common Stock, (C) combine the
outstanding shares of Common Stock into a smaller number of shares or (D) issue
by reclassification of the shares of Common Stock any shares of capital stock of
the Corporation, then, and in each such case, the Conversion Price in effect on
the record date therefor, if applicable, or the effective date thereof,
whichever is earlier, shall be adjusted so that the holder of any shares of
Series D Preferred Stock thereafter convertible into Common Stock pursuant to
this Certificate of Designation shall be entitled to receive the number and type
of shares of Common Stock or other securities of the Corporation which such
holder would have owned or have been entitled to receive after the happening of
any of the events described above, had such shares of Series D Preferred Stock
been converted into Common Stock immediately prior to the happening of such
event or the record date therefor, as applicable. An adjustment made pursuant to
this clause (i) shall become effective either (1) in the case of any such
dividend or distribution, immediately after the close of business on the record
date for the determination of holders of shares of Common Stock entitled to
receive such dividend or distribution, or (2) in the case of such subdivision,
reclassification or combination, at the close of business on the day upon which
such corporate action becomes effective.
(ii) Except with respect to Excluded Securities (as
defined in Section 11), if the Corporation issues or sells (a "Dilutive
Issuance") any shares of Common Stock (or a combination of Common Stock and
Common Stock Equivalents (as defined in Section 11)) after the Issue Date where
the Dilutive Issue Price (as defined herein) associated with such Dilutive
Issuance is less than $4.00 per share then effective immediately as of the date
of the Dilutive Issuance the Conversion Ratio shall be adjusted in accordance
with the following formula:
CR' = PS + ((AF x .1359) x NS)
------------------------
PS
where:
CR' = the adjusted Conversion Ratio;
PS = the number of shares of Series D Preferred Stock outstanding
immediately prior to the Dilutive Issuance;
AF = a fraction having a numerator of PS and a denominator of
2,000,000; and
NS = the number of shares resulting from dividing (i) Total
Receipts (as defined herein), by (ii) the Dilutive Issue
Price.
For purposes of this Section 6(e)(ii) the following definitions shall apply:
"Adjusted Total Receipts" shall mean Total Receipts
related to the relevant Dilutive Issuance as reduced by the Black-Scholes Amount
(as defined herein);
<PAGE>
"Total Receipts" shall mean the cash consideration
received by the Corporation in connection with the Dilutive Issuance (before the
deduction of commissions or other expenses paid or incurred by the Corporation
in connection with the Dilutive Issuance);
"Dilutive Issue Price" shall mean the number
resulting from dividing Adjusted Total Receipts by the total number of shares of
Common Stock issued in connection with the Dilutive Issuance (treating for
purposes of this calculation all Common Stock Equivalents issued in connection
with such Dilutive Issuance as having been converted, exchanged or exercised in
accordance with the terms thereof utilizing the conversion price in effect as of
the date of the Dilutive Issuance), provided that for purposes of computing the
Dilutive Issue Price any warrants to purchase shares of Common Stock issued in
connection with the Dilutive Issuance shall not be deemed Common Stock
Equivalents and shall not be considered when calculating the Dilutive Issue
Price.
"Black-Scholes Amount" shall be an amount determined
by calculating the "Black-Scholes" value of all warrants to purchase share of
Common Stock issued in connection with the Dilutive Event as calculated by the
Corporation, using the following variable values: (i) the current market price
of the Common Stock equal to the closing trade price on the last trading day
before the date of the Dilutive Issuance; (ii) volatility of the Common Stock
equal to the volatility of the Common Stock during the 100 trading day period
immediately preceding the date of the Dilutive Issuance; (iii) a risk free rate
equal to the interest rate on the United States treasury bill or treasury note
with a maturity corresponding to the latest maturity of any of the warrants
issued in connection with the Dilutive Issuance; and (iv) an exercise price
equal to the exercise price of such warrant on the date of the Dilutive
Issuance.
Nothing contained in this Section 6(e)(ii) shall require the
Corporation to issue Common Stock or Common Stock Equivalents in an amount which
would violate Rule 4460(i) of The NASDAQ Stock Market (the "Rule").
(iii) For purposes of paragraph (e)(i) of this
Section 6 of this Certificate of Designation, the number of shares of Common
Stock at any time outstanding shall mean the aggregate of all shares of Common
Stock then outstanding (other than any shares of Common Stock then owned or held
by or for the account of the Corporation) treating for purposes of this
calculation all Common Stock Equivalents then outstanding as having been
converted, exchanged or exercised.
(iv) If the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend or other distribution and shall thereafter, and before such dividend or
distribution is paid or delivered to stockholders entitled thereto, legally
abandon its plan to pay or deliver such dividend or distribution, then no
adjustment in the Conversion Price then in effect shall be made by reason of the
taking of such record, and any such adjustment previously made as a result of
the taking of such record shall be reversed.
(f) The issuance of certificates for shares of Common Stock
upon conversion of the Series D Preferred Stock shall be made without charge to
the holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
<PAGE>
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Series D Preferred Stock which is
being converted.
(g) The Corporation will at no time close its transfer books
against the transfer of any Series D Preferred Stock, or of any shares of Common
Stock issued or issuable upon the conversion of any shares of Series D Preferred
Stock in any manner which interferes with the timely conversion of such Series D
Preferred Stock, except as may otherwise be required to comply with applicable
securities laws.
(h) As used in this paragraph 6, the term "Common Stock" shall
mean and include the Corporation's authorized Common Stock, as constituted on
the date of filing of this Certificate of Designation, and shall also include
any capital stock of any class of the Corporation thereafter authorized which
shall neither be limited to a fixed sum or percentage in respect of the rights
of the holders thereof to participate in dividends nor be entitled to a
preference in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, provided that the
shares of Common Stock receivable upon conversion of shares of Series D
Preferred Stock shall include only shares designated as Common Stock of the
Corporation on the date of filing of this instrument, or in case of any
reorganization or reclassification of the outstanding shares thereof, the stock,
securities or assets to be issued in exchange for such Common Stock pursuant
thereto.
(i) In the case of a Sale of the Corporation (as defined in
Section 11), proposed reorganization of the Corporation or a proposed
reclassification or recapitalization of the capital stock of the Corporation
(except a transaction for which provision for adjustment is otherwise made in
this Section 6), each share of Series D Preferred Stock shall thereafter be
convertible into the number of shares of stock or other securities or property
to which a holder of the number of shares of Common Stock of the Corporation
deliverable upon conversion of such Series D Preferred Stock would have been
entitled upon such Sale of the Corporation, reorganization, reclassification or
recapitalization; and, in any such case, appropriate adjustment (as determined
in the reasonable discretion of the Corporation's Board of Directors) shall be
made in the application of the provisions herein set forth with respect to the
rights and interests thereafter of the holders of the Series D Preferred Stock.
The Corporation shall not effect any Sale of the Corporation unless prior to or
simultaneously with the consummation thereof the successor corporation or
purchaser, as the case may be, shall assume by written instrument the obligation
to deliver to the holders of the Series D Preferred Stock such shares of stock,
securities or assets as, in accordance with the foregoing provisions, each such
holder is entitled to receive.
(j) No fractional shares of Common Stock or scrip shall be
issued upon conversion of shares of Series D Preferred Stock. If more than one
share of Series D Preferred Stock shall be surrendered for conversion at any one
time by the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Series D Preferred Stock so surrendered.
(k) The Corporation will not, by amendment of its Articles of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
<PAGE>
any of the terms to be observed or performed hereunder by the Corporation, but
at all times in good faith carry out the Corporation's obligations under this
Section 6 and in the taking of all required actions as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Series D Preferred Stock.
7. Reports as to Adjustment. Upon any adjustment of the Conversion
Price pursuant to the provisions of Section 6, then, and in each such case, the
Corporation shall within 10 days after the occurrence of the event creating such
adjustment, deliver to Dawson Samberg Capital Management, Inc. ("DSCM") a
certificate signed by an officer of the Corporation setting forth in reasonable
detail the event requiring the adjustment, the method by which such adjustment
was calculated and the Conversion Price in effect following such adjustment.
8. Certain Covenants.
(a) The Corporation covenants that without the approval of a
majority of the holders of the then outstanding Series D Preferred Stock the
Corporation will not perform a Dilutive Issuance which would have the effect of
requiring the Corporation to adjust, pursuant to Section 6(e)(ii), the
Conversion Ratio to a level which could then result in the issuance of a number
of shares of Common Stock which would violate the Rule.
(b) If the Corporation breaches the covenant contained in
Section 8(a) then prior to consummating such Dilutive Issuance the Corporation
shall be obligated to repurchase (and such holders will be obligated to sell),
on a pro rata basis, from the holders of the Series D Preferred Stock that
number of shares of Series D Preferred Stock which would reduce the number of
shares of Series D Preferred Stock outstanding immediately prior to such
Dilutive Issuance to a level that would result, after considering the adjustment
to the Conversion Ratio pursuant to Section 6(e)(ii) resulting from such
Dilutive Issuance, in a potential issuance of a number of shares of Common Stock
which would be in compliance with the Rule. The purchase price for each share of
Series D Preferred Stock to be purchased pursuant to this Section 8(b) shall be
the greater of (i) $4.00 as increased by an annualized repurchase premium of 10%
calculated from the Issue Date through the date of repurchase pursuant to this
Section 8(b), or (ii) the current market price of the Common Stock equal to the
closing trade price on the trading day immediately preceding the repurchase
pursuant to this Section 8(b).
(c) Within 60 days after the Issue Date, the Corporation shall
prepare a written request to be sent to The NASDAQ Stock Market asking for a
written ruling as to whether the number of shares of Common Stock which could be
issuable pursuant to Section 6(e)(ii) is subject to the limitations contained in
the Rule. On or before the end of such 60 day period, the Corporation shall
supply DSCM with a draft of such written request. DSCM shall provide the
Corporation with comments on such draft, if any, within 15 days after receipt
thereof; within 10 days after the Corporation's receipt of such comments the
Corporation will submit such written request to The NASDAQ Stock Market. If the
NASDAQ Stock Market rules that the number of shares of Common Stock which may be
issuable pursuant to Section 6(e)(ii) is not limited by the Rule then (i) the
last sentence of Section 6(e)(ii) shall be of no further force or effect, and
(ii) the covenants, agreements, rights and obligations contained in Sections
8(a) and 8(b) shall thereafter be of no further force or effect.
<PAGE>
(d) Any registered holder of Series D Preferred Stock may
proceed to protect and enforce its rights and the rights of any other holders of
Series D Preferred Stock with any and all remedies available at law or in
equity.
9. Protective Provisions. So long as shares of Series D Preferred Stock
are outstanding, the Corporation shall not without first obtaining the approval
(by vote or written consent, as provided by law) of the holders of at least a
majority of the then outstanding shares of Series D Preferred Stock:
(a) alter or change the rights, preference or privileges of
the shares of Series D Preferred Stock or otherwise amend this Certificate of
Designation or the Amended and Restated Certificate of Incorporation of the
Corporation so as to affect adversely the shares of Series D Preferred Stock;
(b) increase the authorized number of shares of Series D
Preferred Stock or issue additional shares of Series D Preferred Stock (except
pursuant to Section 6 hereof); or
(c) create or issue Senior Stock.
10. Conversion at Maturity. Each share of Series D Preferred Stock
outstanding on the third anniversary of the Issue Date shall automatically be
converted into shares of Common Stock in accordance with the terms of Section 6
utilizing the Conversion Ratio then in effect.
11. Definitions. In addition to any other terms defined herein, for
purposes of this Certificate of Designation, the following terms shall have the
meanings indicated:
"Conversion Price," determined as of any date, shall initially
equal $4.00 and shall be subject to adjustment as provided in paragraph (e) of
Section 6.
"Common Stock Equivalent" shall mean securities convertible
into, or exchangeable or exercisable for, shares of Common Stock.
"Excluded Securities" shall mean (i) shares of the
Corporation's equity securities issued in connection with a public offering
thereof, (ii) the grant of options or warrants, or the issuance of securities,
under any employee or director stock option, stock purchase or restricted stock
plan of the Corporation, (iii) the issuance of Common Stock pursuant to any
contingent obligation described on Schedule 3.3 to the Securities Purchase
Agreement dated June 12, 1998, among the Corporation and the initial holders of
the Series D Preferred Stock, (iv) securities issued upon the exercise or
conversion of the Corporation's options, warrants or other Convertible
Securities outstanding as of the Issue Date, (v) declaration of a rights
dividend to holders of Common Stock in connection with the adoption of a
stockholder rights plan by the Corporation, and (vi) securities issued in
connection with a merger, acquisition, joint venture or similar arrangement
which is approved by a majority of the Corporation's Board of Directors that are
not then employees of the Corporation (the "Outside Directors"), and (vii)
securities issued in connection with the establishment of a strategic
relationship which is approved by a majority of the Outside Directors.
<PAGE>
The term "distribution" shall include the transfer of cash or
property to the holders of a class of capital stock of the Corporation, without
consideration, whether by way of dividend or otherwise (except a dividend in
shares of such class of stock). The time of any distribution by way of dividends
shall be the date of declaration thereof.
"Issue Date" shall mean the date the Corporation first issues
a share of Series D Preferred Stock.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger or
otherwise) of such entity.
"Preferred Amount Per Share" shall mean, with respect to each
share of Series D Preferred Stock, $4.00 (as adjusted to reflect stock
dividends, stock splits, subdivisions, reclassifications or combinations
occurring after the Issue Date).
"Sale of the Corporation" shall mean consolidation or merger
of the Corporation with or into any other corporation or corporations, or a
sale, conveyance or disposition of all or substantially all of the assets of the
Corporation.
<PAGE>
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
this 12th day of June, 1998.
LASERSIGHT INCORPORATED
By: /s/ Michael R. Farris
------------------------------
Michael R. Farris
President and Chief Executive Officer
ATTEST:
/s/ Gregory L. Wilson
- --------------------------
Gregory L. Wilson
Secretary
SIGNATURE PAGE TO CERTIFICATE OF DESIGNATION
<PAGE>
EXHIBIT A
NOTICE OF CONVERSION
As of the date written below, the undersigned hereby irrevocably elects to
convert (the "Conversion")______ shares of the Series D Convertible Preferred
Stock (the "Series D Preferred Stock") into shares of common stock, $.001 par
value ("Common Stock") of Lasersight Incorporated (the "Corporation") according
to the conditions of the Certificate of Designation, Preferences and Rights of
Series D Convertible Preferred Stock of the Corporation.
The undersigned covenants that all offers and sales by the undersigned of the
securities issuable to the undersigned upon conversion of this Series D
Preferred Stock shall be made pursuant to registration of the Common Stock under
the Securities Act of 1933, as amended (the "Act"), or pursuant to an exemption
from registration under the Act.
In the event of partial exercise, please reissue an appropriate Series D
Preferred Stock certificate(s) for the shares of Series D Preferred Stock which
shall not have been converted.
Date of Conversion:_________________________
Applicable Conversion Price:________________
Number of Shares of
Common Stock to be Issued:__________________
Signature:__________________________________
Name:_______________________________________
Address:____________________________________
____________________________________
EXHIBIT 99.7
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT ("Agreement") is made as of June 12,
1998 by and among LaserSight Incorporated, a Delaware corporation (the
"Company"), with headquarters located at 12249 Science Drive, Suite 160,
Orlando, Florida 32826 and the purchasers (collectively, the "Purchasers" and
each individually a "Purchaser") set forth on the execution pages hereof, with
regard to the following:
RECITALS
A. In connection with the Securities Purchase Agreement dated of even
date herewith by and among the Company and Purchasers (the "Securities Purchase
Agreement"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to Purchasers 2,000,000 shares
of the Series D Convertible Participating Preferred Stock of the Company (the
"Preferred Stock") that is convertible into shares (the "Conversion Shares") of
the Company's common stock, par value $.001 per share (the "Common Stock")
pursuant to the terms and subject to the limitations and conditions set forth in
the Certificate of Designation, Preferences and Rights of the Preferred Stock
(the "Certificate of Designation").
B. To induce the Purchasers to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide to the Holders certain
rights to registration by the Company under the Securities Act of 1933 and the
rules and regulations thereunder, or any similar successor statute
(collectively, the "Securities Act") and applicable state securities laws.
AGREEMENTS
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Purchasers agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
specified:
Advice: See Section 4 hereof.
Agreement: See the introductory paragraphs hereto.
Blackout Event: means a determination by the Board made in good faith,
after consulting with outside securities counsel, that the registration of
Registrable Securities under the Securities Act or the continuation of the
disposition of Registrable Securities pursuant to an effective Registration
Statement at such time (i) would have a material adverse effect upon a proposed
material sale of all (or substantially all) of the assets of the Company or a
<PAGE>
material merger, reorganization, recapitalization or similar current transaction
materially affecting the capital structure or equity ownership of the Company,
or (ii) would require the Company to make a public disclosure of information,
which disclosure a majority of the outside directors determine in good faith
would have a material adverse effect on the Company.
Blackout Period: See Section 3(a) hereof.
Board: The Board of Directors of the Company.
Certificate of Designation: See the introductory paragraphs hereof.
Claim: See Section 6(a) hereof.
Common Stock: See the introductory paragraphs hereto.
Company: See the introductory paragraphs hereto.
Conversion Shares: See the introductory paragraphs hereto.
Exchange Act: The Securities Exchange Act of 1934 and the rules and
regulations of the SEC promulgated thereunder.
Form S-3: Form S-3 of the SEC under the Securities Act or any successor
form.
Holdback Period: See Section 3(b) hereof.
Holder: Any registered holder of a Registrable Security or Registrable
Securities.
Indemnified Person: See Section 6(c) hereof.
Indemnifying Person: See Section 6(c) hereof.
Losses: See Section 6(a) hereof.
NASD: See Section 4(j) hereof.
Other Holders: See Section 2.2(a) hereof.
Other Shares: See Section 2.2(a) hereof.
Participant: See Section 6(a) hereof.
Person: An individual, trustee, corporation, partnership, limited
liability company, trust, unincorporated association, business association, firm
or other legal entity.
Piggyback Registration Statement: See Section 2.2(a) hereof.
<PAGE>
Preferred Stock: See the introductory paragraphs hereto.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Purchasers: See the introductory paragraphs hereto.
Registrable Securities means the Conversion Shares and any other
securities issued or issuable in respect of the Preferred Stock or Conversion
Shares by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable Securities held by
a Holder, such securities shall cease to be Registrable Securities when (i) a
Registration Statement with respect to the offering of such securities by the
Holder thereof shall have been declared effective under the Securities Act and
such securities shall have been disposed of by such Holder pursuant to such
Registration Statement, or (ii) such securities may at the time of determination
be sold to the public pursuant to Rule 144 without any restrictions or
limitations whatsoever (including restrictions or limitations related to
affiliates) on the amount of securities which may be sold by such Holder without
the lapse of any further time or the satisfaction of any condition.
Notwithstanding phrase (ii) in the immediately preceding sentence, Conversion
Shares shall continue to be Registerable Securities for purposes of Section 2.2
until such time as the Holder thereof ceases to own at least 200,000 shares of
Conversion Shares (or such number of shares of Preferred Stock which may be
convertible into at least 200,000 shares of Common Stock).
Registration Expenses: See Section 5(b) hereof.
Registration Period: See Section 2.1(b) hereof.
Registration Statement: Any registration statement of the Company filed
with the SEC under the Securities Act, including the Prospectus, all amendments
and supplements to such registration statement, post-effective amendments, all
exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC providing for public offers and sales of securities made in
compliance therewith resulting in offers and sales by subsequent holders that
are not affiliates of an issuer of such securities being free of the
registration and prospectus delivery requirements of the Securities Act.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
<PAGE>
SEC: The Securities and Exchange Commission or any successor federal
agency charged with the enforcement of the federal securities laws.
Securities Act: See the introductory paragraphs hereto.
Securities Purchase Agreement: See the introductory paragraphs hereto.
Shelf Registration Statement: See Section 2.1(a) hereof.
Subsidiary: Any corporation of which the Company owns securities
representing a majority of the outstanding voting power or any partnership of
which the Company (or a Subsidiary) holds a majority of the general partner
interest.
Underwritten Offering: A public offering of Common Stock, or other
securities convertible into, or exercisable or exchangeable for, Common Stock
that is underwritten on a firm commitment basis.
2. SHELF REGISTRATION
2.1 Shelf Registration Statement.
(a) The Company shall:
(i) prepare and, no more than 45 days after the date of this
Agreement, file with the SEC a Registration Statement in respect of all
the Registrable Securities on an appropriate form for a secondary
offering to be made on a continuous basis by the Company pursuant to
Rule 415 (the "Shelf Registration Statement"); and
(ii) subject to Section 3 hereof, use its best efforts to
cause the Shelf Registration Statement to become effective as soon as
practicable after such filing.
In addition to the Registrable Securities, the Company may include in the Shelf
Registration Statement shares of Common Stock held by TLC The Laser Center Inc.,
Schwartz Electro-Optics, Inc. and such other parties as may be agreed to by
Purchasers holding a majority of the Preferred Stock and Conversion Shares then
outstanding.
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective at all times until such date as is
the earlier of : (i) the date on which all of the Registrable Securities have
been sold, (ii) the date on which all of the Registrable Securities may be
immediately sold to the public without registration conditions or limitations
whatsoever (including limitations or restrictions related to affiliates),
whether pursuant to Rule 144 or otherwise, and (iii) subject to this Section and
Section 3, the date which is 30 months after the date hereof. (The period of
time commencing on the date the Shelf Registration Statement is declared
effective and, subject to this Section and Section 3, ending on the earliest of
the foregoing dates is referred to as the "Registration Period.") Subject to
Section 3 hereof, the Company shall use its best efforts to amend or supplement
<PAGE>
the Prospectus contained in the Shelf Registration Statement in order to permit
such Prospectus to be lawfully delivered until the end of the Registration
Period. The Registration Period shall be extended by duration of (i) any period
during which a Holder is unable to utilize the Prospectus until the Company
amends or supplements the related Registration Statement pursuant to Section
4(h), and (ii) any Blackout Period.
(c) In addition to complying with the requirements of Section 4, in
connection with the Shelf Registration Statement, the Company shall (i) mail to
each Holder a copy of the Prospectus forming part of the Shelf Registration
Statement, and (ii) otherwise comply in all respects with all applicable federal
securities laws, rules and regulations.
(d) Each Holder shall notify the Company at least five business days
prior to any sale of Registrable Securities by such Holder pursuant to the Shelf
Registration Statement. During such five-day period, the Company shall have the
right to notify Holder that the Holder may not sell Registrable Securities
pursuant to the Shelf Registration Statement due to either a Blackout Period or
Holdback Period then being in effect or then being invoked. Upon such notice
being provided, Holder shall not sell any Registrable Securities pursuant to the
Shelf Registration Statement until the Company has notified Holder that the
Blackout Period or Holdback Period, as applicable, is no longer in effect.
(e) Subject to Sections 3 and 4 hereof, the Company shall promptly
supplement or amend the Shelf Registration Statement if required by the
Securities Act to keep such Registration Statement effective during the
Registration Period, or if reasonably requested by the Holders of at least 30%
of the Registrable Securities then transferrable pursuant to such Shelf
Registration Statement.
(f) Each Holder shall notify the Company promptly, but in any event
within three business days, after the date on which all Registrable Securities
owned by such Holder have been sold by such Holder so that the Company may
comply with its obligation to terminate the Shelf Registration Statement in
accordance with Item 512 of Regulation S-K.
<PAGE>
2.2 Piggyback Registration Rights.
(a) So long as the Holders hold Registrable Securities, if the Company
proposes or is required to file with the SEC a registration statement (the
"Piggyback Registration Statement") under the Securities Act in connection with
an Underwritten Offering of Common Stock (other than a registration statement on
a form that does not permit the inclusion therein of the Registrable
Securities), the Company will each such time give prompt written notice of its
intention to do so to each Holder. Upon the written request of any Holder given
within 10 days after the delivery or mailing of such notice by the Company, the
Company will use reasonable best efforts to include in such Piggyback
Registration Statement that number of the Conversion Shares specified by Holder
in such written request (subject to the limitations set forth in this Section
2.2(a) and in Section 2.2(b) below) (the "Requested Shares") so as to permit the
public sale of such Requested Shares; provided that if the managing underwriter
or underwriters of such Underwritten Offering advise the Company that marketing
factors require a limit on the number of shares to be underwritten, the Company
may (subject to the limitations set forth in the following sentence and based on
the written recommendation of the underwriter) exclude or limit the number of
Requested Shares to be sold pursuant to such Piggyback Registration Statement.
In such event, the Company shall so advise each requesting Holder, and the
number of Requested Shares and other shares ("Other Shares") requested to be
included in such Piggyback Registration Statement and underwriting by other
persons or entities that are then stockholders of the Company ("Other Holders"),
after providing for all shares that the Company proposes to offer and sell for
its own account, shall be allocated among the Requesting Holders and Other
Holders pro rata on the basis of (i) the number of Requested Shares then held by
the requesting Holders and (ii) the aggregate number of Other Shares then held
by Other Holders.
(b) The right of any Holder to registration shall be conditioned upon
(i) such Holder's execution of the underwriting agreement agreed to among the
Company and the managing underwriters for such Underwritten Offering, (ii) such
Holder's completion and execution of all customary questionnaires and other
documents which must be executed in connection with such underwriting agreement,
and (iii) such Holder supplying the Company and the underwriter such additional
information as may be necessary to register such Holder's Registrable
Securities.
3. BLACKOUT AND HOLDBACK EVENTS
(a) During any period of up to 90 days' duration following the
occurrence of a Blackout Event (a "Blackout Period"), the Company shall not be
required to file, or cause to be declared effective, under the Securities Act
any Registration Statement hereunder and, if applicable, the Holders will
discontinue the offer and sale of Registrable Securities pursuant to any
effective Shelf Registration Statement or a Piggyback Registration Statement.
(b) The Holders shall not, if requested by the managing underwriter or
underwriters of an Underwritten Offering, effect any public or private sale of
any Common Stock, including a sale pursuant to Rule 144, during the period
("Holdback Period") beginning 14 days prior to, and ending 90 days after, the
effective date of the registration statement relating to such Underwritten
Offering.
<PAGE>
(c) The aggregate number of days during which one or more Blackout
Periods or Holdback Periods are in effect shall not exceed 225 days during the
Registration Period, provided that the aggregate number of days during which one
or more Blackout Periods or Holdback Periods are in effect shall not exceed 90
days during any 12-month period.
(d) The Company shall promptly notify the Holders in writing of any
decision not to file a Registration Statement or not to cause a Registration
Statement to be declared effective or to discontinue sales of Registrable
Securities pursuant to this Section 3, which notice shall set forth the reason
for such decision (but not disclosing any nonpublic material information) and
shall include an undertaking by the Company promptly to notify the Holders as
soon as sales may resume. If the Company shall give any notice of postponement
of the filing or effectiveness of any registration statement or shall request
the Holders not to sell Registrable Securities pursuant to an effective
Registration Statement, the Company shall not, during the period of postponement
or withdrawal, sell any Common Stock for its own account pursuant to a
Registration Statement or permit any stockholder of the Company to sell Common
Stock pursuant to an effective Registration Statement, in either case other than
pursuant to a registration statement on Form S-8 (or an equivalent registration
form then in effect).
4. REGISTRATION PROCEDURES
In connection with the filing of the Shelf Registration Statement or a
Piggyback Registration Statement by the Company, the Company shall effect such
registrations to permit the sale of the Registrable Securities covered thereby
in accordance with the intended method or methods of disposition thereof, and in
connection with such Registration Statement the Company shall:
(a) At least 3 business days before the filing of the Shelf
Registration Statement or Piggyback Registration Statement, and a reasonable
time before the filing of or any Prospectus or any amendments or supplements
thereto, the Company shall afford to Purchasers an opportunity to review a draft
of the Shelf Registration Statement, Piggyback Registration Statement or any
Prospectus or any amendments or supplements thereto, as applicable, except for
such portions thereof which outside securities counsel to the Company has
advised the Company contain material non-public information. The Holders of
Registrable Securities included or intended to be included in a Registration
Statement shall have a reasonable opportunity to comment on the sections of any
such Registration Statement or related Prospectus captioned "Selling
Stockholders" or "Plan or Distribution" (or the equivalent) and the Company
shall not file any Registration Statement that includes in such sections
statements concerning any such Holder, its holdings of Registrable Securities,
or its intended method or methods of distribution as to which such Holder shall
reasonably object.
<PAGE>
(b) Notify the selling Holders of Registrable Securities promptly (but
in any event within five business days), and confirm such notice in writing: (i)
when a Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective under the Securities Act, and (ii)
of the issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that purpose.
(c) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Securities for sale
in any jurisdiction and, if any such order is issued, to use its best efforts to
obtain the withdrawal of any such order at the earliest practicable time.
(d) Furnish to each selling Holder of Registrable Securities and each
managing underwriter, if any, at the sole expense of the Company one conformed
copy of the Shelf Registration Statement or Piggyback Registration Statement, as
applicable, and each post-effective amendment thereto and, if requested, all
documents incorporated or deemed to be incorporated therein by reference and all
exhibits.
(e) Deliver to each selling Holder of Registrable Securities, and the
underwriters, if any, at the sole expense of the Company as many copies of the
Prospectus or Prospectuses (including each form of preliminary prospectus) and
each amendment or supplement thereto and any documents incorporated by reference
therein as such Persons may reasonably request; and, subject to the last
paragraph of this Section 4, the Company consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders of
Registrable Securities and the underwriters, agents or dealers, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.
(f) Prior to any public offering of Registrable Securities, to use its
reasonable best efforts to register or qualify, and to cooperate with the
selling Holders of Registrable Securities, the managing underwriter or
underwriters, if any, and respective counsel, in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities laws of such jurisdictions within the United States as any selling
Holder or the managing underwriter or underwriters reasonably request; keep each
such registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
applicable Registration Statement; provided, however, that the Company shall not
be required to (A) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 4(f), (B) subject itself
to general taxation in any such jurisdiction, (C) file a general consent to
service of process in any such jurisdiction, (D) provide any undertakings that
cause the Company unreasonable material expense or burden, or (E) make any
change in its charter or by-laws, which in each case the Board, in good faith,
determines to be contrary to the best interests of the Company and its
stockholders.
<PAGE>
(g) Cooperate with the selling Holders of Registrable Securities and
the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold, which certificates shall not bear any restrictive legends and shall be
in a form in compliance with any applicable rules of a stock exchange on which
the Common Stock is then listed; and enable such Registrable Securities to be in
such denominations and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request.
(h) Upon the occurrence of any event or any information becoming known
to the Company that makes any statement made in such Registration Statement or
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect, as promptly as practicable
prepare and (subject to Section 4(a) hereof) file with the SEC, at the sole
expense of the Company, a supplement or post-effective amendment to such
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities being sold thereunder, any such Prospectus will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(i) Comply with all applicable rules and regulations of the SEC and
make generally available to its security holders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 90 days
after the end of any 12-month period (or 120 days after the end of any 12-month
period if such period is a fiscal year) commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(j) Cooperate with each seller of Registrable Securities covered by any
Registration Statement in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD").
(k) Use its reasonable best efforts to cause all Registrable Securities
relating to any Registration Statement to be listed on each securities exchange
or national market system, if any, on which similar securities issued by the
Company are then listed.
(l) In connection with any Underwritten Offering, enter into an
underwriting agreement as is customary in underwritten offerings of common
equity similar to the Common Stock, and take all such other actions as are
reasonably requested by the managing underwriter or underwriters in order to
expedite or facilitate the registration or the disposition of such Registrable
Securities and, in such connection:
(i) make such representations and warranties to, and covenants
with, the underwriters with respect to the business of the Company and
its subsidiaries, as applicable (including any acquired business,
properties or entity, if applicable), and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be
<PAGE>
incorporated by reference therein, in each case, as are customarily
made by issuers to underwriters in firm-commitment underwritten
offerings of common equity similar to the Common Stock, and confirm the
same in writing if and when requested;
(ii) obtain the written opinions of counsel to the Company in
form, scope and substance reasonably satisfactory to the managing
underwriter or underwriters, addressed to the underwriters covering the
matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by the
managing underwriter or underwriters;
(iii) obtain "comfort" letters and updates thereof in form,
scope and substance reasonably satisfactory to the managing underwriter
or underwriters from the independent certified public accountants of
the Company (and, if necessary, any other independent certified public
accountants of any subsidiary or of any business acquired by the
Company for which financial statements and financial data are, or are
required to be, included or incorporated by reference in the
Registration Statement), addressed to each of the underwriters, such
letters to be in customary form and covering matters of the type
customarily covered in "comfort" letters in connection with
underwritten offerings and such other matters as reasonably requested
by the managing underwriter or underwriters as permitted by the
Statement on Auditing Standards No. 72; and
(iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 6 hereof (or such other
provisions and procedures acceptable to Holders of a majority of the
Registrable Securities covered by such Registration Statement and the
managing underwriter or underwriters or agents) with respect to all
parties to be indemnified pursuant to said Section. The above shall be
done at each closing under such underwriting agreement, or as and to
the extent required thereunder.
(l) Make available for inspection by any underwriter participating in
any such disposition of Registrable Securities, if any, and any attorney,
accountant or other agent retained by any such underwriter, at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and instruments of the Company and its
subsidiaries, as applicable, as shall be reasonably necessary to conduct a
reasonable investigation within the meaning of Section 11 of the Securities Act,
and cause the officers, directors and employees of the Company and its
Subsidiaries, as applicable, to supply all information reasonably requested by
any such Inspector in connection with such Registration Statement.
<PAGE>
(m) Enter into such customary agreements (including, if applicable, an
underwriting agreement) and take such other actions as the Holders of a majority
of the Registrable Securities participating in such offering shall reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities. The Holders of the Registrable Securities which are to be
distributed by such underwriters shall be parties to such underwriting agreement
and may, at their option, require that the Company make to and for the benefit
of such Holders the representations, warranties and covenants of the Company
which are being made to and for the benefit of such underwriters and which are
of the type customarily provided to institutional investors in secondary
offerings.
(n) Use its reasonable best efforts to take all other steps reasonably
necessary or advisable to effect the registration of the Registrable Securities
covered by a Registration Statement.
(o) Cause to be maintained a transfer agent and registrar for all
Registrable Securities covered by a Registration Statement.
(p) Deliver promptly to each Holder participating in the offering and
each underwriter, if any, copies of all correspondence between the SEC and the
Company, its counsel or auditors with the SEC or its staff with respect to a
Registration Statement, other than those portions of any such correspondence
which contain information subject to attorney-client privilege or a request for
confidential treatment with respect to the Company, and, upon receipt of such
confidentiality agreements as the Company may reasonably request, make
reasonably available for inspection by any underwriter, if any, participating in
any disposition to be effected pursuant to a Registration Statement and by any
attorney, accountant or other agent retained by any such underwriter, all
pertinent financial and other records, pertinent corporate documents and
properties of the Company, and cause all of the Company's officers, directors
and employees to supply all information reasonably requested by any such
underwriter, attorney, account or agent in connection with such registration
statement.
(q) Make reasonably available to its employees and personnel and
otherwise provide reasonable assistance to the underwriters (taking into account
the needs of the Company's businesses and the requirements of the marketing
process) in the marketing of Registrable Securities in any unwritten offering.
(r) Promptly prior to the filing of any document which (i) is to be
incorporated by reference into the registration statement or the prospectus
(after the initial filing of such registration statement), and (ii) contains
disclosure specifically referring to the Holders provide copies of such document
to counsel for the selling Holders of Registrable Securities and to each
managing underwriter, if any, and make the Company's representatives reasonably
available for discussion of such information and make such changes in such
information concerning the selling Holders prior to the filing thereof as
counsel for such selling holders or underwriters may reasonably request.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request. The
<PAGE>
Company may exclude from such registration the Registrable Securities of any
seller so long as such seller fails to furnish such information within a
reasonable time after receiving such request. Each seller as to which any
registration is being effected shall furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such seller not materially misleading.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon actual receipt of any notice from the Company
of the happening of any event of the kind described in Section 4(b)(ii) hereof
or any information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect,
such Holder will forthwith discontinue disposition of such Registrable
Securities covered by such Registration Statement or Prospectus to be sold by
such Holder until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(e) hereof, or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto. In the event the Company shall give any such notice, the
Registration Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each seller of Registrable Securities covered by such Registration
Statement, as the case may be, shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 4(e) hereof or (y)
the Advice.
Each Holder of Registrable Securities understands that the Securities
Act may require delivery of a Prospectus in connection with any sale thereof
pursuant to a Registration Statement, and each such Holder shall comply with the
applicable Prospectus delivery requirements of the Securities Act in connection
with any such sale.
5. REGISTRATION EXPENSES
(a) All Registration Expenses shall be borne by the Company.
Notwithstanding the foregoing, the sellers of the Registrable Securities being
registered shall pay all (i) brokerage or underwriting fees, discounts and
commissions attributable to the sale of such Registrable Securities, (ii) the
fees and disbursements of any counsel or other advisors or experts retained by
such sellers (severally or jointly), and (iii) transfer taxes on resale of any
of the Registrable Securities by such sellers.
(b) For purposes of this Agreement, "Registration Expenses" shall mean
all fees and expenses incident to the compliance with this Agreement by the
Company (other than fees and expenses referred to in the second sentence of
Section 5(a) hereof), including, without limitation, (i) all registration and
filing fees, including, without limitation, (A) any SEC or NASD filing fees and
(B) fees and expenses of compliance with state securities or blue sky laws, (ii)
printing expenses if the printing of prospectuses is requested by the managing
underwriter or underwriters, if any, as the case may be, duplicating and copying
expenses, (iii) messenger, telephone and delivery expenses incurred by the
Company, (iv) all fees and disbursements of counsel for the Company, (v) fees
and expenses of all other Persons retained by the Company, including annual or
special audit and "comfort" letters, (vi) stock exchange listing fees and
<PAGE>
expenses, if any, and (vii) the expenses relating to printing and distributing
the Shelf Registration Statement, Piggyback Registration Statement and any other
documents necessary in order to comply with this Agreement.
6. INDEMNIFICATION AND CONTRIBUTION
(a) The Company shall indemnify and hold harmless each Holder of
Registrable Securities, the officers, partners (and directors, officers,
employees and stockholders thereof), employees, stockholders and directors of
each such Person (each, a "Participant"), from and against any and all losses,
claims, damages and liabilities, joint or several, actions or proceedings
(commenced or threatened) (collectively, "Losses") (including, without
limitation, the reasonable legal fees and other expenses (including settlements
made pursuant to the terms of Section 10(c)) actually incurred in connection
with any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand (a "Claim")) caused by, arising out of or based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment thereto) or Prospectus
(as amended or supplemented from time to time) or any preliminary prospectus,
(ii) or caused by, arising out of or based upon any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in the case of the Prospectus in light of the
circumstances under which they were made, not misleading, except insofar as such
Losses are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written
information relating to any Participant furnished to the Company by such
Participant expressly for use therein, or (iii) any violation by the Company of
any federal, state or common law rule or regulation applicable to the Company
and relating to action required of or inaction by the Company in connection with
any such registration, and the Company will reimburse any such indemnified party
for any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending such Claim as such expenses are
incurred; provided, however, that the Company will not be liable if such untrue
statement or omission or alleged untrue statement or omission was contained or
made in any preliminary prospectus and corrected in the Prospectus or any
amendment or supplement thereto and the Prospectus does not contain any other
untrue statement or omission or alleged untrue statement or omission of a
material fact that was the subject matter of the related proceeding and any such
Loss suffered or incurred by the Participants resulted from any Claim by any
Person who purchased Registrable Securities which are the subject thereof from
such Participant and it is established in the related proceeding that such
Participant failed to deliver or provide a copy of the Prospectus (as amended or
supplemented) to such Person with or prior to the confirmation of the sale of
such Registrable Securities sold to such Person if required by applicable law,
unless such failure to deliver or provide a copy of the Prospectus (as amended
or supplemented) was a result of noncompliance by the Company with this
Agreement. Such indemnity and reimbursement of expenses shall remain in full
force and effect regardless of any investigation made by as on behalf of such
indemnified party and shall survive the transfer of such securities by such
Holder.
(b) Each Participant shall, severally and not jointly, indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement, and each Person who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to each Participant, but only
with reference to information relating to such Participant furnished to the
<PAGE>
Company, in writing by such Participant expressly for use in such Registration
Statement or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the net proceeds received by such Participant from sales of
Registrable Securities giving rise to such obligations.
(c) If any Claim shall be brought or asserted against any Person in
respect of which indemnity may be sought pursuant to either of the two preceding
paragraphs, such Person (the "Indemnified Person") shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Person") in
writing, and the Indemnifying Person shall retain counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and
any others the Indemnifying Person may reasonably designate in such Claim and
shall pay the reasonable fees and expenses actually incurred by such counsel
related to such proceeding; provided, however, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which it
may have hereunder or otherwise. In any such proceeding, any Indemnified Person
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary, (ii) the Indemnifying Person shall have failed within a reasonable
period of time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person or any affiliate and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The Indemnifying Person shall not, in connection with any one such
proceeding or separate but substantially similar related proceedings in the same
jurisdiction arising out of the same general allegations, be liable for the fees
and expenses of more than one separate firm (in addition to any local counsel)
for all Indemnified Persons, and all such fees and expenses shall be reimbursed
promptly as they are incurred. If the Company shall be the Indemnifying Person,
any such separate firm for the Indemnified Persons shall be designated in
writing by Participants who sold a majority in interest of Registrable
Securities sold by all such Participants and reasonably acceptable to the
Company. If the Company shall be the Indemnified Person, any such separate firm
for the Company, its directors, its officers who sign a Registration Statement
and such control Persons of the Company shall be designated in writing by the
Company. No Indemnifying Person shall be liable for any settlement of any
proceeding effected without its prior written consent (which consent shall not
be unreasonably withheld or delayed), but if settled with such consent or if
there be a final judgment for the plaintiff for which the Indemnified Person is
entitled to indemnification pursuant to this Agreement, the Indemnifying Person
shall indemnify and hold harmless each Indemnified Person from and against any
loss or liability by reason of such settlement or judgment. No Indemnifying
Person shall, without the prior written consent of the Indemnified Persons
(which consent shall not be unreasonably withheld or delayed), effect any
settlement or compromise of any pending or threatened proceeding in respect of
which any Indemnified Person is or could have been a party, or indemnity could
have been sought hereunder by such Indemnified Person, unless such settlement
involves only the payment of money damages that are actually paid by the
Indemnifying Person or includes an unconditional written release of such
Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding.
<PAGE>
(d) If the indemnification provided for in the first and second
paragraphs of this Section 6 is for any reason unavailable to, or insufficient
to hold harmless, an Indemnified Person in respect of any Losses, then each
Indemnifying Person under such paragraphs, in lieu of indemnifying such
Indemnified Person thereunder and in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such Losses, in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Person or Persons on the one hand
and the Indemnified Person or Persons on the other in connection with the
statements or omissions or alleged statements or omissions that resulted in such
Losses (or actions in respect thereof) as well as any other relevant equitable
considerations. The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Indemnifying Person on the one hand or
such Indemnified Person, as the case may be, on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances. If, however, the allocation provided in the second
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative fault,
but also the relative benefits of the indemnifying party and the indemnified
party as well as any other relevant equitable considerations.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the Losses referred to
in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any reasonable legal or other expenses actually
incurred by such Indemnified Person in connection with investigating or
defending any such Claim. Notwithstanding the provisions of this Section 6, in
no event shall a Participant be required to contribute any amount in excess of
the amount by which net proceeds received by such Participant from sales of
Registrable Securities exceed the amount of any damages that such Participant
has otherwise been required to pay or has paid by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(f) Any Losses for which an indemnified party is entitled to
indemnification or contribution under this Section shall be paid by the
Indemnifying Person to the Indemnified Person as such Losses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect regardless of (i) any
investigation made by or on behalf of any of Purchaser, any Holder, any person
who controls Purchasers or any Holder, or any officers or directors of
Purchasers or such Holder, and (ii) any termination of this Agreement.
(g) The indemnity and contribution covenants contained in this Section
6 are in addition to any liability which any Indemnifying Person may otherwise
have to any Indemnified Person.
<PAGE>
7. RULE 144
The Company will file the reports required to be filed by it under the
Exchange Act in a timely manner in accordance with the requirements of the
Exchange Act. The Company will also take such further action as any Holder of
Registrable Securities issued by the Company may reasonably request, to the
extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144(k).
8. MISCELLANEOUS
(a) The provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of (i) the
Company and (ii) the Holders of not less than a majority in aggregate amount of
the then-outstanding Registrable Securities; provided, however, that Section 4
and this Section 8(a) may not be amended, modified or supplemented without the
prior written consent of each Holder (including any person who was a Holder of
Registrable Securities disposed of pursuant to any Registration Statement)
affected by any such amendment, modification or supplement. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Securities whose securities are being sold pursuant to a Registration Statement
and that does not directly or indirectly affect, impair, limit or compromise the
rights of other Holders of Registrable Securities may be given by Holders of at
least a majority in aggregate amount of the Registrable Securities being sold by
such Holders pursuant to such Registration Statement.
(b) Any notice herein required or permitted to be given shall be in
writing and may be personally served or delivered by nationally-recognized
overnight courier or by facsimile-machine confirmed telecopy, and shall be
deemed delivered at the time and date of receipt (which shall include telephone
line facsimile transmission). Each party shall provide notice to the other party
of any change in address. The addresses for such communications shall be:
If to the Company:
LaserSight Incorporated
12249 Science Drive
Suite 160
Orlando, Florida 32826
Telecopy: (407) 382-2701
Attention: Chief Financial Officer
<PAGE>
If after June 30, 1998:
LaserSight Incorporated
3300 University Boulevard
Suite 140
Orlando, Florida 32792
Telecopy: (407) 678-9981
Attention: Chief Financial Officer
with a copy to:
Sonnenschein Nath & Rosenthal
One Metropolitan Square
Suite 3000
St. Louis, Missouri 63102
Telecopy: (314) 259-5959
Attention: Alan B. Bornstein
If to the Purchasers:
c/o Dawson Samberg Capital Management, Inc.
354 Pequot Avenue, P.O. Box 760
Southport, Connecticut 06490
Telecopy: (203) 254-3259
Attention: Juliet Bakker
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004-1980
Telecopy: (212) 859-8586
Attention: Aryeh Davis
(c) This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto, and the Holders;
provided, however, that this Agreement shall not inure to the benefit of, or be
binding upon, a successor or assign of a Holder unless and to the extent such
successor or assign holds Registrable Securities. If any Person shall acquire
Registrable Securities from any Holder, in any manner (except for any
acquisition in violation of this Agreement, the Securities Purchase Agreement or
applicable law) whether by operation of law or otherwise, such transferee shall
promptly notify the Company and such Registrable Securities acquired from such
Holder shall be held subject to all of the terms of this Agreement, and by
taking and holding such Registrable Securities such Person shall be entitled to
receive the benefits of and be conclusively deemed to have agreed to be bound by
and to perform all of the terms and provisions of this Agreement. If the Company
shall so request, any such successor or assign shall agree in writing to acquire
and hold the Registrable Securities acquired from such Holder subject to all of
the terms hereof.
(d) This Agreement may be executed in two or more counterparts,
including, without limitation, by facsimile transmission, all of which
counterparts shall be considered one and the same agreement and shall become
<PAGE>
effective when counterparts have been signed by each party and delivered to the
other party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause additional
original executed signature pages to be delivered to the other parties.
(e) The headings in this Agreement are for convenience of reference and
shall not form a part of, or affect the interpretation of, this Agreement.
(f) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed in such State. The parties hereto irrevocably consent to the
jurisdiction of the United States federal courts and New York State courts
located in the Borough of Manhattan in the State of New York, in any suit or
proceeding based on or arising under this Agreement and irrevocably agree that
all claims in respect of such suit or proceeding may be determined in such
courts. The parties hereto irrevocably waive the defense of an inconvenient
forum to the maintenance of such suit or proceeding. Service of process upon any
party hereto mailed by first-class mail shall be deemed in every respect
effective service of process upon such party in any such suit or proceeding.
Nothing herein shall affect any party's right to serve process in any other
manner permitted by law. A final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
(g) Whenever the consent or approval of Holders of a specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company or its affiliates (as such term is defined in
Rule 405 under the Securities Act) shall not be counted in determining whether
such consent or approval was given by the Holders of such required percentage.
(h) Holders of Registrable Securities are intended third-party
beneficiaries of the agreements made hereunder among the Company and Purchasers
and shall have the right to enforce this Agreement to the extent they deem such
enforcement necessary or advisable to protect their rights hereunder.
(i) This Agreement, together with the Securities Purchase Agreement and
the other agreements among the parties of even date herewith or therewith, is
intended by the parties as a final expression of their agreement and to be a
complete and exclusive statement of their agreement and understanding in respect
of the subject matter hereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the Registrable
Securities. This Agreement supersedes all prior agreements and understandings
among the parties with respect to such subject matter.
<PAGE>
(j) During the time period beginning on the date hereof and continuing
until the Company has satisfied its obligations hereunder or until such
obligations have expired, the Company will not enter into any agreement related
to the registration of its securities which is inconsistent with the rights
granted to the Holders pursuant to this Agreement. The rights granted to
Purchasers pursuant to this Agreement do not conflict with any other agreements
to which the Company is a party.
(k) If Registrable Securities are held by a nominee for the beneficial
owner thereof, the beneficial owner thereof may, at its option, be treated as
the Holder of such Registrable Securities for purposes of any request or other
action by any Holder or Holders of Registrable Securities pursuant to this
Agreement (or any determination of any number or percentage of shares
constituting Registrable Securities held by any Holder or Holders of Registrable
Securities contemplated by this Agreement), provided that the Company shall have
received assurances reasonably satisfactory to it of such beneficial ownership.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
LASERSIGHT INCORPORATED PEQUOT PRIVATE EQUITY FUND, L.P.
By: /s/ Michael R. Farris By: Dawson Samberg Capital Management, Inc.
----------------------- Investment Manager
Michael R. Farris
President and CEO
By: /s/ Amiel Peretz
------------------------------
Name: Amiel Peretz
----------------------------
Title: CFO
---------------------------
PEQUOT SCOUT FUND, L.P.
By: Dawson Samberg Capital Management, Inc,
Investment Manager
By: /s/ Amiel Peretz
------------------------------
Name: Amiel Peretz
----------------------------
Title: CFO
---------------------------
PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC.
By: /s/ Amiel Peretz
------------------------------
Name: Amiel Peretz
----------------------------
Title: CFO
---------------------------
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
EXHIBIT 99.8
STANDSTILL AGREEMENT
--------------------
This Standstill Agreement (the "Agreement") is made as of June 12, 1998
(the "Effective Date") between LaserSight Incorporated, a Delaware corporation
(the "Company"), and the purchasers (collectively, the "Purchasers" and each
individually, a "Purchaser") named on the execution pages hereof.
WHEREAS, simultaneously with the delivery of this Agreement, the
Purchasers are, collectively, purchasing 2,000,000 shares of the Company's
Series D Convertible Participating Preferred Stock (the "Series D Preferred
Stock") pursuant to the terms of a Securities Purchase Agreement, dated June 12,
1998, between the Purchasers and the Company (the "Purchase Agreement");
WHEREAS, the parties hereto wish to set forth their agreements regarding
future purchases by the Purchasers and their affiliates of the Company's voting
securities;
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:
1. Standstill Provisions. (a) Each of the Purchasers acknowledge that
each of their respective execution and delivery of this Agreement is a condition
precedent to the Company agreeing to issue the Series D Preferred Stock and that
none of the Purchasers will, and each Purchaser will direct its affiliates,
directors, officers, employees and agents not to, directly or indirectly, unless
in any such case specifically permitted in writing to do so by the Board of
Directors of the Company:
(i) other than pursuant to the terms of the Purchase Agreement
and other than the Series D Preferred Stock, purchase, acquire or own,
or offer or agree to purchase, acquire or own, directly or indirectly,
when aggregated with the other Purchasers, in excess of 15% of the
voting securities or direct or indirect rights (pursuant to an exchange,
conversion, pledge or otherwise) or options to acquire, when aggregated
with the other Purchasers, in excess of 15% of the voting securities of
the Company; provided that the acquisition and owning of voting
securities as a result of any of the following will not be deemed a
violation of this Agreement: (A) any dividend or distribution on the
outstanding Series D Preferred Stock, (B) any subdivision of the
outstanding Series D Preferred Stock, or (C) any reclassification of the
Series D Preferred Stock;
(ii) other than pursuant to a prior written agreement with the
Company, acquire or affect the control of the Company or directly or
indirectly participate in or encourage the formation of any "group"
(within the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934) which owns or seeks to acquire ownership of voting securities
of the Company, or to acquire or affect control of the Company;
<PAGE>
(iii) other than pursuant to the terms of the Purchase Agreement,
otherwise act, directly or indirectly, alone or in concert with others,
to seek to control or to influence in any manner the management, board
of directors, policies or affairs of the Company, or propose or seek to
effect or negotiate with or provide financial assistance (by loan,
capital contribution or otherwise) or information to any party with
respect to any form of business combination transaction (including,
without limitation, a merger, consolidation or acquisition or
disposition of significant assets of the Company or any other entity)
with the Company or any affiliate thereof or any restructuring,
recapitalization or similar transaction with respect to the Company or
any affiliate thereof; or
(iv) instigate, encourage, assist or render advice to or make any
recommendation or proposal to any person or other entity to engage in
any of the actions covered by clauses (i) through (iii) of this Section
1(a), or render advice with respect to voting securities of the Company.
(b) For purposes of this Agreement, the term "voting securities" shall
mean (i) any securities which are entitled to vote upon any matters, whether
such securities are entitled to vote on such matters in all events or only upon
the occurrence of a default or other contingencies, or (ii) any options,
warrants, rights or securities which by their terms may be convertible into or
exchangeable for any security described in clause (i) of this Section 1(b).
2. Representations and Warranties. Each of the Purchasers represents and
warrants to the Company, and the Company represents and warrants to the
Purchasers:
(a) such party has the full legal right, power and authority to
enter into and perform this Agreement and the execution and delivery of
this Agreement by such party has been duly authorized by all necessary
corporate action;
(b) this Agreement is a valid and binding obligation of such
party, enforceable against such party in accordance with its terms,
except that such enforcement may be subject to (i) bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law); and
(c) neither the execution, delivery or performance of this
Agreement by such party conflicts with or constitutes a violation of or
default under such party's certificate of incorporation or by-laws, any
statute, law, regulation, order or decree applicable to such party, or
any contract, commitment, agreement, arrangement or restriction of any
kind to which such party is a party or by which such party is bound.
3. Notices. Any notice herein required or permitted to be given shall be
in writing and may be personally served or delivered by nationally-recognized
overnight courier or by facsimile-machine confirmed telecopy, and shall be
deemed delivered at the time and date of receipt (which shall include telephone
line facsimile transmission). Each party shall provide notice to the other party
of any change in address. The addresses for such communications shall be:
<PAGE>
If to the Company:
LaserSight Incorporated
12249 Science Drive
Suite 160
Orlando, Florida 32826
Telecopy: (407) 382-2701
Attention: Chief Financial Officer
After June 30, 1998:
LaserSight Incorporated
3300 University Boulevard
Suite 140
Orlando, Florida 32792
Telecopy: (407) 678-9981
Attention: Chief Financial Officer
with a copy to:
Sonnenschein Nath & Rosenthal
One Metropolitan Square
Suite 3000
St. Louis, Missouri 63102
Telecopy: (314) 259-5959
Attention: Alan B. Bornstein
If to Purchaser:
c/o Dawson Samberg Capital Management, Inc.
354 Pequot Avenue, P.O. Box 760
Southport, Connecticut 06490
Telecopy: (203) 254-3259
Attention: Juliet Bakker
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004-1980
Telecopy: (212) 859-8586
Attention: Aryeh Davis
<PAGE>
4. Agreement Term. This Agreement shall terminate on the date which is
the first to occur of (i) sixty (60) days after the Effective Date, or (ii) the
date on which the Company's Board of Directors adopts a stockholder's rights
plan.
5. No Waiver. No failure or delay by any party hereto in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise of
any right, power or privilege.
6. Remedies. Each party hereto acknowledges that money damages would be
an inadequate remedy for any breach of this Agreement and that the Company (in
the case of a breach by any of the Purchasers) or the Purchasers (in the case of
a breach by the Company) shall be entitled to specific performance and
injunctive or other equitable relief as a remedy for any such breach. Each party
hereto waives any requirement for the securing or posting of any bond in
connection with any such remedy. No party hereto shall take any action to impede
the other party from seeking to enforce any such equitable remedy. Such remedy
shall not be exclusive, but shall be in addition to all other remedies available
at law or equity.
7. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without giving
effect to the principles of conflict of laws thereof.
8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto were upon one instrument.
9. Headings. The descriptive headings of the sections of this Agreement
are solely for the convenience of the parties hereto and shall not affect the
meaning or construction of any of the provisions of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
LASERSIGHT INCORPORATED PEQUOT PRIVATE EQUITY FUND, L.P.
By: /s/ Michael R. Farris By: Dawson Samberg Capital Management, Inc.
------------------------- Investment Manager
Michael R. Farris
President and CEO
By: /s/ Amiel Peretz
-----------------------
Name: Amiel Peretz
----------------------
Title: CFO
----------------------
PEQUOT SCOUT FUND, L.P.
By: Dawson Samberg Capital Management, Inc,
Investment Manager
By: /s/ Amiel Peretz
------------------------
Name: Amiel Peretz
-----------------------
Title: CFO
----------------------
PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC.
By: /s/ Amiel Peretz
------------------------
Name: Amiel Peretz
-----------------------
Title: CFO
---------------------
SIGNATURE PAGE TO STANDSTILL AGREEMENT
