Registration No. 333-68495
As filed with the Securities and Exchange Commission on February 1, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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LASERSIGHT INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 3845 65-0273162
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification identification Number)
organization) Code Number)
3300 University Boulevard, Suite 140
Winter Park, Florida 32792
(407) 678-9900
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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Mr. Gregory L. Wilson Copy to:
Chief Financial Officer Mark L. Dosier, Esq.
LaserSight Incorporated Sonnenschein Nath & Rosenthal
3300 University Boulevard, Suite 140 8000 Sears Tower
Winter Park, Florida 32792 Chicago, Illinois 60606
(407) 678-9900 (312) 876-8000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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Approximate date of commencement of proposed sale to public: From time
to time after the Registration Statement is declared effective.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering.[ ]_____
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If this Form is to be a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
registration statement of the earlier effective registration statement for
the same offering. [ ]_____
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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The information contained in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION DATED FEBRUARY 1, 1999
PROSPECTUS
1,687,500 Shares
LASERSIGHT INCORPORATED
Common Stock
This Prospectus relates to an aggregate of 1,687,500 shares of common
stock of LaserSight Incorporated being offered for sale from time to time by the
selling stockholders named in this Prospectus as follows:
o 750,000 shares of LaserSight common stock issuable upon the exercise
from time to time of warrants issued to Mercacorp, Inc. with an
exercise price of $4.00 per share.
o 750,000 shares of LaserSight common stock issuable upon the exercise
from time to time of warrants issued to Mercacorp with an exercise
price of $5.00 per share.
o 187,500 shares of LaserSight common stock issued to Frederic B. Kremer
and certain other parties in connection with the Letter Agreement
dated September 9, 1998 between LaserSight and the other parties
thereto.
We have agreed to pay certain expenses in connection with the registration
of the common stock by this Prospectus and to indemnify the selling stockholders
named in this Prospectus against certain liabilities, including liabilities
under the Securities Act.
We have been advised by the selling stockholders named in this Prospectus
that there are no underwriting arrangements with respect to the sale of the
common stock being registered by this Prospectus, and that the selling
stockholders may offer the shares in transactions on The Nasdaq Stock Market, in
negotiated transactions, or a combination of both at prices related to
prevailing market prices, or at negotiated prices. LaserSight common stock is
traded on The Nasdaq Stock Market under the symbol "LASE." On January 29, 1999,
the last reported sale price for LaserSight common stock was $5.00 per share.
These securities involve a high degree of risk. See "Risk Factors"
beginning on page 4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is ________________, 1999.
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TABLE OF CONTENTS
Overview of LaserSight Incorporated Selling Stockholders
Risk Factors Plan of Distribution
Forward-Looking Statements Legal Matters
Use of Proceeds Experts
Capitalization Where to Find More Information
Description of Securities Documents Incorporated by Reference
You should rely only on the information incorporated by reference or
provided in this Prospectus or any Prospectus Supplement. We have not authorized
anyone else to provide you with information that is different. We are not making
an offer of the securities in any state where the offer is not permitted. You
should not assume that the information in this Prospectus or any Prospectus
Supplement is accurate as of any date other than the date on the front of those
documents.
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OVERVIEW OF LASERSIGHT INCORPORATED
Operating Segment Information
LaserSight Incorporated operates in two major operating segments:
technology and health care services. Our technology segment includes LaserSight
Technologies, Inc., LaserSight Patents, Inc. and LaserSight Centers
Incorporated. LaserSight Technologies develops, manufactures and markets
ophthalmic lasers designed to correct common vision disorders. These lasers
utilize a one millimeter scanning laser beam to ablate microscopic layers of
corneal tissue in order to reshape the cornea and to correct the eye's point of
focus in persons with nearsightedness, farsightedness and astigmatism.
LaserSight Patents licenses various patents related to the use of excimer
lasers to ablate biological tissue. LaserSight Centers is a developmental-stage
company through which we may, in the future, provide laser surgery and other
related eye care surgical services.
Since December 31, 1997, our health care services segment has consisted of
MRF, Inc. which operates under the name of the Farris Group. The Farris Group
provides health care and vision care consulting services to hospitals, managed
care companies and physicians. Until that date, this segment had also included
MEC Health Care, Inc. and LSI Acquisition, Inc. Under LaserSight's ownership,
MEC was a vision managed care company which managed vision care programs for
health maintenance organizations and other insured enrollees and LSIA was a
physician practice management company which managed the ophthalmic practice
known as the "Northern New Jersey Eye Institute".
Organizational Information
We were incorporated in Delaware in 1987 but were inactive until 1991. In
April 1993, we acquired LaserSight Centers in a stock-for-stock exchange with
additional shares issued in March 1997 pursuant to an amended purchase
agreement. In February 1994, LaserSight acquired The Farris Group. In July 1994,
we were reorganized as a holding company. In October 1995, we acquired MEC. In
July 1996, our LSIA subsidiary acquired the assets of the Northern New Jersey
Eye Institute. In August of 1997 we formed LaserSight Patents which then
acquired certain patents from International Business Machines Corporation. On
December 30, 1997, we sold MEC and LSIA in a transaction that was effective as
of December 1, 1997. In April 1998, we acquired the assets of the medical
products division of Schwartz Electro-Optics, Inc.
Principal Office
LaserSight's principal office and mailing address are 3300 University
Boulevard, Suite 140, Winter Park, Florida 32792.
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RISK FACTORS
In addition to the other information we provide or incorporate by reference
in this Prospectus, you should carefully consider the following risks before
deciding whether to invest in our common stock. In evaluating the risks of
investing in our common stock, you should also evaluate the other information
set forth or incorporated by reference in this Prospectus, including our
financial statements and the notes accompanying them.
INDUSTRY AND COMPETITION RISKS
WE MAY ENCOUNTER DIFFULTIES COMPETING IN THE HIGHLY COMPETITIVE VISION
CORRECTION INDUSTRY. The vision correction industry is subject to intense,
increasing competition, and there can be no assurance that we will be able to
compete successfully against our current and future competitors. Many of our
competitors have existing products and distribution systems in the marketplace
and are substantially larger, better financed, and better known. Two of our
principal competitors, Summit Technology, Inc. and Autonomous Technology
Corporation, recently entered into a merger agreement. If the proposed merger is
approved by stockholders, it is anticipated that the merger would be completed
during the first quarter of 1999. If completed, the market presence, technology
base and distribution capabilities of the combined entity would be substantial.
Further, the merger would provide Autonomous with licenses to use certain
patents owned by Visx, Inc., the absence of which has been delaying or
preventing the manufacture and sale of its LADARVision System in the United
States.
OUR COMPETITORS MAY HAVE OR RECEIVE BROADER REGULATORY APPROVALS. A number
of lasers manufactured by other companies have either received, or are much
further advanced in the process of receiving, Food and Drug Administration
approval for specific procedures, and, accordingly, may have or develop a higher
level of acceptance in some markets than our lasers. In addition to laser
systems of Summit, Visx and others already approved for commercial sale in the
U.S., Nidek Co., Ltd. obtained FDA approval of its EC-5000 excimer laser system
in December 1998. Other manufacturers, including Bausch & Lomb, are expected to
obtain approval during 1999, giving them the right to market their systems
commercially in the U.S. We have not yet received the GMP (Good Manufacturing
Practices) clearance from the FDA that is required for the commercial sale of
our LSX laser system. Based on the current status of development efforts, we
believe that it is reasonable to expect such FDA clearance in the next four to
seven months. However, we cannot provide any assurance as to the receipt or the
timing of receipt of such clearance. The established market presence in the U.S.
of previously-approved laser systems, as well as the entry of new competitors
into the market upon receipt of regulatory approvals, could impede our ability
to successfully introduce our LSX system and have a material adverse effect on
our business, financial condition and results of operations.
NEW PRODUCTS OR TECHNOLOGIES COULD ERODE DEMAND FOR OUR PRODUCTS OR MAKE
THEM OBSOLETE. In addition to competing with eyeglasses, contact lenses and
radial keratotomy, excimer laser vision correction competes or may compete with
newer technologies such as intraocular lenses, corneal rings and surgical
techniques using different types of lasers. To date, we have not been materially
affected by the introduction of new or advanced technologies in the laser vision
correction industry. Two products that may become competitive within the next
one to three years are intraocular lenses and corneal rings. Both of these
procedures involve lens implants that require an invasive surgical procedure,
unlike an excimer laser, and their ultimate market acceptance is unknown at this
time. To the extent that any of these or other new technologies are perceived to
be clinically superior or economically more attractive than excimer laser vision
correction, they could erode demand for our excimer laser products, cause a
reduction in selling prices of such products or render such products obsolete.
In addition, if one or more competing technologies achieve broader market
acceptance or render our PRK and LASIK lasers procedures obsolete, it could have
a material adverse effect on our business, financial condition and results of
operations.
While we do not anticipate that additional technical difficulties will
arise that would further delay or prevent the successful development,
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introduction and marketing of our A*D*K keratome product, there can be no
assurance that new difficulties will not arise. Unanticipated logistical issues,
such as the manufacturer's failure to meet expected production goals, may arise
which could further delay the commercialization of the product. As is typical in
the case of new and rapidly evolving industries, demand and market for
recently-introduced technology and products is uncertain, and there can be no
assurance that our A*D*K product or future new products and enhancements will be
accepted in the marketplace. In addition, announcements of new products, whether
for sale in the near future or at some later date, may cause customers to defer
purchasing our existing products.
BROAD MARKET ACCEPTANCE OF LASER-BASED EYE TREATMENT IS UNCERTAIN. We
believe that whether we achieve profitability and growth will depend, in part,
upon broad acceptance of PRK or LASIK in the U.S. and other countries. There can
be no assurance that PRK or LASIK will be accepted by either the
ophthalmologists or the public as an alternative to existing methods of treating
refractive vision disorders. The acceptance of PRK and LASIK may be adversely
affected by:
o The cost of the procedure
o Possible concerns relating to safety and efficacy
o The public's general resistance to surgery
o The effectiveness and lower cost of alternative methods of
correcting refractive vision disorders
o The lack of long-term follow-up data
o The possibility of unknown side effects
o The lack of third-party reimbursement for the procedures
o Possible future unfavorable publicity involving patient outcomes
from the use of PRK or LASIK systems
o The possible shortages of ophthalmologists trained in the
procedures.
The failure of PRK or LASIK to achieve broad market acceptance could have a
material adverse effect on our business, financial condition and results of
operations.
FINANCIAL AND LIQUIDITY RISKS
WE HAVE EXPERIENCED AND MAY CONTINUE TO EXPERIENCE LOSSES AND OPERATING
CASH FLOW DEFICITS. We experienced significant net losses and deficits in cash
flow from operations for the fiscal years ended December 31, 1996 and 1997 and
for the nine months ended September 30, 1998, as set forth in the following
table. We cannot assure you that we will be able to regain or sustain
profitability or positive operating cash flow.
<TABLE>
<CAPTION>
For the Nine Month Period Ended For the Twelve Month Period Ended
September 30, December 31,
---------------------------------- -----------------------------------
1998 1997 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Loss $5.9 million $5.5 million $7.3 million $4.1 million
Deficit in Cash Flow From
Operations $9.7 million $3.0 million $4.4 million $4.2 million
</TABLE>
Although we achieved profitability during 1994 and 1995, we had a deficit in
cash flow from operations of $1.9 million during 1995. In addition, we incurred
losses in 1991 through 1993. As of November 30, 1998, we had an accumulated
deficit of $20.8 million. We expect to report a loss and deficit in cash flow
from operations for the fourth quarter of 1998.
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WE COULD EXPERIENCE UNANTICIPATED EXPENSES IF OUR UNCOLLECTIBLE RECEIVABLES
EXCEED OUR RESERVES. Although we monitor the status of our receivables and
maintain a reserve for estimated losses, we cannot assure you that our reserves
for estimated losses, which was approximately $1.9 million at September 30,
1998, will be sufficient to cover the amount of our actual write-offs over time.
At September 30, 1998, our trade accounts and notes receivable totaled
approximately $13.6 million, and accrued commissions, the payment of which
generally depends on the collection of such net trade accounts and notes
receivable, totaled approximately $2.1 million. Actual write-offs that
materially exceed amounts reserved could have a material adverse effect on our
consolidated financial condition and results of operations. The amount of any
loss that we may have to recognize in connection with our inability to collect
receivables is principally dependent on our customer's ongoing financial
condition, their ability to generate revenues from our laser systems, and our
ability to obtain and enforce legal judgments against delinquent customers.
Approximately 94% of our net receivables at September 30, 1998 related to
international accounts. Our ability to evaluate the financial condition and
revenue generating ability of our prospective customers located outside of the
United States, and our ability to obtain and enforce legal judgments against
non-U.S. customers, is generally more limited than for our customers located in
the U.S. See "--Company and Business Risks--We are Subject to Risks Associated
with our International Sales."
WE MAY EXPERIENCE DIFFICULTY COLLECTING RESTRUCTURED RECEIVABLES WITH
EXTENDED PAYMENT TERMS. At September 30, 1998, we had extended the original
payment terms of laser customer accounts totaling approximately $963,000 by
periods ranging from 12 to 60 months. Such restructured receivables represent
approximately seven percent of our net receivables as of that date. Our
liquidity and operating cash flow would be adversely affected if additional
extensions become necessary in the future. In addition, it may be more difficult
to collect laser system receivables if the payment schedule extends beyond the
expected or actual economic life of the system, which we estimate to be
approximately five to seven years. To date, we do not believe any payment
schedules extend beyond the economic life of the applicable systems.
WE MAY EXPERIENCE LIQUIDITY PROBLEMS AND THERE IS UNCERTAINTY REGARDING THE
TERMS OR AVAILABILITY OF ADDITIONAL CAPITAL. During the eleven months ended
November 30, 1998, we experienced a $12.7 million deficit in cash flow from
operations. We expect that any improvements in cash flow from operations will
depend on, among other things, our ability to market, produce and sell our new
LSX laser systems in larger quantities and our ability to market, produce and
sell our A*D*K product on a commercial basis. During the third quarter of 1998,
LSX laser system sales accounted for the majority of laser systems sold, and we
expect sales of our LSX laser system to make a more significant contribution to
our operating results in the future. Because we are still in the process of
completing the clinical validation of our A*D*K product, we do not believe that
regular commercial shipments of that product will begin until the second quarter
of 1999, although limited shipments may occur in the first quarter.
We believe that our balances of cash and cash equivalents, together with
our cash flows from operations, should be sufficient to fund our anticipated
working capital requirements through the second quarter of 1999 in accordance
with our current business plan. Our belief regarding future working capital
requirements is based on various factors and assumptions including the
anticipated timely entry into the international marketplace with keratome
related products in the U.S. market with both our keratome related products and
LSX system, the anticipated timely collection of receivables, and the absence of
unanticipated product development costs. These factors and assumptions are
subject to certain contingencies and uncertainties, some of which are beyond our
control. If we do not collect a material portion of current receivables in a
timely manner, experience significant further delays in the shipment of our
A*D*K product or in the FDA clearance and entry into the U.S. market, of our LSX
laser system, or experience less market demand for our products than we
anticipate, our liquidity could be materially and adversely affected.
In view of our anticipated working capital needs and the uncertainties
associated with the timing of our cash receipts and expenditures, we are
currently seeking additional debt or equity financing to increase our available
working capital. We cannot provide you with any assurance as to the terms,
timing or availability of such financing. We also cannot assure you that we will
not seek additional debt or equity financing in the future to implement our
business plan or any changes thereto in response to future developments or
unanticipated contingences. We currently do not have any commitments for
additional financing. We cannot be certain that additional financing will be
available in the future to the extent required or that, if available, it will be
on acceptable terms. If we
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raise additional funds by issuing equity or convertible debt securities, the
terms of the new securities could have rights, preferences and privileges senior
to those of our common stock. If we raise additional funds through debt
financing, the terms of the debt could require a substantial portion of our cash
flow from operations to be dedicated to the payment of principal and interest
and may render us more vulnerable to competitive pressures and economic
downturns.
COMMON STOCK RISKS
THE MARKET PRICE OF OUR COMMON STOCK HAS BEEN VOLATILE. The volatility of
our common stock imposes a greater risk of capital losses on stockholders as
compared to less volatile stocks. In addition, such volatility makes it
difficult to ascribe a stable valuation to a stockholder's holdings of
LaserSight common stock. Factors such as announcements of technological
innovations or new products by LaserSight or its competitors, changes in
domestic or foreign governmental regulations or regulatory approval processes,
developments or disputes relating to patent or proprietary rights, public
concern as to the safety and efficacy of the procedures for which the laser
system is used, and changes in reports and recommendations of security analysts,
have and may continue to have a significant impact on the market price of
LaserSight common stock. Moreover, the possibility exists that the stock market,
and in particular the securities of technology companies such as LaserSight,
could experience extreme price and volume fluctuations unrelated to operating
performance.
VARIATIONS IN OUR SALES AND OPERATING RESULTS MAY IMPACT OUR STOCK PRICE.
Our operating results have fluctuated in the past, and may continue to fluctuate
in the future, as a result of a variety of factors, many of which are outside of
our control. For example, we have historically operated with little or no
backlog because our products are generally shipped as orders are received, and a
significant portion of orders for a particular quarter have been received and
shipped near the end of the quarter. As a result, our operating results for any
quarter often depend on orders received and laser systems shipped late in that
quarter. Other factors that may cause our operating results to fluctuate
include:
o timing of regulatory approvals and the introduction of new
products;
o reductions, cancellations or fulfillment of major orders;
o the addition or loss of significant customers;
o our relative mix of business;
o changes in pricing by us or our competitors;
o changes in personnel and employee utilization rates;
o costs related to expansion of our business;
o increased competition; and
o budget decisions by our customers.
As a result of these fluctuations, we believe that period-to-period
comparisons of our operating results cannot necessarily be relied upon as
indicators of future performance. In some quarters our operating results may
fall below the expectations of securities analysts and investors due to any of
the factors described above. In such event, the trading price of our common
stock would likely decline.
THE SIGNIFICANT NUMBER OF SHARES ELIGIBLE FOR FUTURE SALE AND DILUTIVE
STOCK ISSUANCES MAY ADVERSELY EFFECT OUR STOCK PRICE. Sales, or the possibility
of sales, of substantial amounts of our common stock in the public market after
the date of this Prospectus could adversely affect the market price of our
common stock. As of January 29, 1999, substantially all of LaserSight's
13,192,635 shares of common stock outstanding were freely tradable without
restriction or further registration under the Securities Act, except to the
extent such shares are held by "affiliates" of LaserSight as that term is
defined in Rule 144 under the Securities Act or subject only to the satisfaction
of a prospectus delivery requirement.
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Shares of common stock which LaserSight may issue in connection with future
acquisitions or financings or pursuant to outstanding warrants or agreements
could also adversely effect the market price of our common stock and cause
significant dilution in our earnings per share and net book value per share.
o We may be required to issue more than 2.2 million additional
shares of common stock upon the exercise of outstanding warrants
and to satisfy certain contingent contractual obligations. See
"Description of Securities -- Warrants and other Agreements to
Issue Shares."
o In addition, the 4 million outstanding shares of Series C and
Series D Preferred Stock may be converted into common stock at any
time. See "Description of Securities -- Preferred Stock."
o The anti-dilution provisions of certain of our existing securities
and obligations require us to issue additional shares if we issue
shares of common stock below specified price levels. If a future
share issuance triggers these adjustments, the beneficiaries of
such provisions effectively receive some protection from declines
in the market price of our common stock, while our other
stockholders incur additional dilution of their ownership
interest.
We may include similar anti-dilution provisions in securities issued in
connection with future financings. Some of the factors we consider when we
determine whether to include such provisions are our cash resources, the trading
history of our common stock, the negotiating position of the selling party or
the investors, and the extent to which we estimate that the expected benefit
from the acquisition or financing exceeds the expected dilutive effect of the
price-protection provision.
CERTAIN ANTI-TAKEOVER MEASURES MAY HAVE AN ADVERSE EFFECT ON OUR STOCK
PRICE. Certain provisions of our certificate of incorporation, by-laws and
Delaware law could delay or frustrate the removal of incumbent directors,
discourage potential acquisition proposals and delay, defer or prevent a change
in control of LaserSight, even if such events could be beneficial, in the short
term, to the interests of our stockholders. For example, our certificate of
incorporation allows us to issue preferred stock with rights senior to those of
the common stock without stockholder action. LaserSight also is subject to
provisions of Delaware corporation law that prohibit a publicly-held Delaware
corporation from engaging in a broad range of business combinations with a
person who, together with affiliates and associates, owns 15% or more of the
corporation's common stock (an "interested stockholder") for three years after
the person became an interested stockholder, unless the business combination is
approved in a prescribed manner. We also have adopted a stockholder rights
agreement and declared a dividend distribution of one preferred share purchase
right ("Right") on each outstanding share of common stock. The Rights would
cause substantial dilution to a person or group that attempts to acquire 15% or
more of our common stock on terms not approved by our Board of Directors.
COMPANY AND BUSINESS RISKS
WE DEPEND ON OUR KEY PERSONNEL FOR OUR FUTURE SUCCESS. Our ability to
maintain our competitive position depends in part upon the continued
contributions of our executive officers and other key employees, especially
Michael R. Farris, our President and Chief Executive Officer, and J. Richard
Crowley, the President and Chief Operating Officer of our LaserSight
Technologies subsidiary. A loss of one or more such officers or key employees,
especially of Mr. Farris or Mr. Crowley, could have a material adverse effect on
our business. We do not carry "key man" insurance on Mr. Farris, Mr. Crowley or
any other officers or key employees.
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As we continue the clinical development of our excimer lasers and other
products and prepare for regulatory approvals and other commercialization
activities, we will need to continue to implement and expand our operational,
financial and management resources and controls. While to date we haven't
experienced problems recruiting or retaining the personnel necessary to
implement such actions, there can be no assurance that such problems won't arise
in the future. If we fail to attract and retain qualified individuals for
necessary positions, and if we are unable to effectively manage growth in our
domestic and international operations, it could have a material adverse effect
on our business, financial condition and results of operations.
PROBLEMS RELATED TO THE "Y2K ISSUE" COULD ADVERSELY AFFECT OUR BUSINESS. As
many computer systems, software programs and other equipment with embedded chips
or processors use only two digits rather than four to define the applicable
year, they may be unable to process accurately certain data, during or after the
year 2000. As a result, LaserSight as well as other business and governmental
entities are at risk for possible miscalculations or systems failures which
could cause material disruptions in business operations. This is commonly known
as the Year 2000 ("Y2K") issue. The Y2K issue concerns not only information
systems and technology used by LaserSight, but also concerns third parties, such
as our customers, vendors and distributors, using information systems and
technology that may interact with or affect our operations.
We have implemented a Y2K readiness program with the objective of having
all of our significant information systems and technology functioning properly
with respect to Y2K before January 1, 2000. We have developed a comprehensive
plan to assess the actual and potential Y2K impact on our operations, both in
information technology ("IT") areas and non-information technology ("Non-IT")
areas, as well as our product offerings. Our assessment included our
manufacturing and operating systems and the readiness of vendors and other third
parties upon whom we rely.
o IT Systems. Our IT systems are microcomputer-based and consist of
standard software purchased from outside vendors. All software is
being identified and assessed to determine the extent of
modification required in order to be Y2K compliant. We believe
that all software will be made Y2K compliant before the end of
June 1999 through vendor-provided updates or replacement with
other Y2K compliant hardware and software. We, as has been planned
for some time, are also replacing our financial and accounting
software, and expect to have the majority of such new software
implemented by the end of March 1999. The vendors of our financial
and accounting software have represented to us that the software
is Y2K compliant. Our IT inventory related to Y2K compliance is
approximately 90% complete, the remediation assessment of problem
areas is approximately 90% complete, and testing, including
validation of compliance, is expected to be completed by the end
of April 1999.
o Non-IT Systems. For our Non-IT systems, we have identified third
parties with which we have a significant relationship that, in the
event of a Y2K failure, could have a material impact on our
business, financial condition or results of operations. The third
parties include utility suppliers, material and supply vendors,
communication vendors and our significant distributors. Some of
these relationships, especially those associated with certain
suppliers, are material to us and a Y2K failure by one or more of
these parties could have a material adverse effect on our
business, financial condition and results of operations. We are
corresponding with these business partners and service providers
to assess their ability to support our operations with respect to
each of their Y2K issues. The issues that are identified as part
of this process are being prioritized in order of significance to
our operations and we will take corrective action as appropriate.
We have contacted approximately 98% of our vendors, business
partners and service providers. Approximately 90% have responded
to date, and we are continue to assess their responses.
o Products. We are not aware of any Y2K problems with our current
production model, the LSX, as all applicable components and the
software have been validated and tested. Older models, generally
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manufactured in the first half of 1998 and earlier, may require
upgraded software and/or hardware. We are taking steps to promptly
notify affected users and, except for those users under warranty
or service contract, offer such upgrades at additional cost to the
user. Such upgrades are currently available and, in addition to
resolving potential Y2K problems, also provide for more efficient
system performance.
We intend to develop contingency plans for Y2K issues which, if not timely
resolved, could have a significant impact on our operations. These plans will be
designed to minimize the impact of failure to achieve Y2K compliance. Such
contingency plans are expected to be developed by the end of March 1999.
We estimate the costs to address Y2K issues will total $150,000, of which
approximately $50,000 has been incurred to date. Such costs will be expensed as
incurred, and will exclude the costs of our new financial and accounting
software. Y2K compliance related costs are estimated to be 50% of our total IT
expense budget through the end of 1999. No material IT projects are expected to
be delayed. The costs and time necessary to complete the Y2K modification and
testing processes are based on our best estimates, which were derived utilizing
numerous assumptions of future events including the continued availability of
certain resources, third party modification plans and other factors. Our Y2K
readiness program is an ongoing process and the estimates of costs and
completion dates for various components of the Y2K readiness program described
above are subject to change.
Due to the general uncertainty inherent in our Y2K compliance, mainly
resulting from our dependence upon the Y2K compliance of the government
agencies, suppliers, vendors and distributors with whom we and our service
providers deal, we are unable to determine at this time our most reasonably
likely worst case scenario. While we expect our Y2K compliance efforts to reduce
significantly our level of uncertainty about the impact of Y2K issues affecting
IT and Non-IT systems and our product offerings, we can not assure you that
costs related to the lack of Y2K compliance of third parties, business
interruptions, litigation and other liabilities related to Y2K issues will not
have a material adverse effect on our business, financial condition and results
of operations.
GOVERNMENT REGULATION AND REGULATORY DECISIONS MAY ADVERSELY AFFECT OUR
BUSINESS. Our laser products are subject to strict governmental regulations
which materially affect our ability to manufacture and market these products and
directly impact our overall prospects. All laser devices marketed in interstate
commerce are subject to the laser regulations required by the Radiation Control
for Health and Safety Act, as administered by the FDA. The regulations impose
design and performance standards, labeling and reporting requirements, and
submission conditions in advance of marketing for all medical laser products.
Our laser systems produced for medical use require PMA approval by the FDA
before we can ship our laser systems for use in the U.S. Each separate medical
device requires a separate FDA submission, and specific protocols have to be
submitted to the FDA for each claim made for each medical device.
If and when our laser systems receive PMA approval by the FDA, we will be
required to obtain GMP clearance with respect to our manufacturing facilities.
These regulations impose certain procedural and documentation requirements with
respect to our manufacturing and quality assurance activities. Our facilities
will be subject to inspections by the FDA, and if any noncompliance with GMP
guidelines is noted during facility inspections, the marketing of our laser
products may be adversely affected. In addition, if any of our suppliers of
significant components or sub-assemblies cannot meet our quality requirements,
we could be delayed in producing commercial systems for the U.S. market.
Additionally, product and procedure labeling and all forms of promotional
activities are subject to examination by the FDA, and current FDA enforcement
policy prohibits the marketing of approved medical devices for unapproved uses.
Noncompliance with these requirements may result in warning letters, fines,
injunctions, recall or seizure of products, suspension of manufacturing, denial
or withdrawal of PMAs, and criminal prosecution.
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<PAGE>
Laser products marketed in foreign countries are often subject to local
laws governing health product development processes which may impose additional
costs for overseas product development. In particular, all member countries of
the European Economic Union ("EU") require CE Mark certification of compliance
with the EU medical directives as the standard for regulatory approval for sale
of laser systems in EU member countries. Both of our LSX and LaserScan 2000
laser systems have received CE Mark certification, the former of which was
received in September 1998.
We cannot determine the costs or time it will take to complete the approval
process and the related clinical testing for our medical laser products. Future
U.S. legislative or administrative requirements, or elsewhere, may adversely
affect our ability to obtain or retain regulatory approval for our laser
products. The failure to obtain required approvals on a timely basis could have
a material adverse effect on our business, financial condition and results of
operations.
UNCERTAINTY CONCERNING POSSIBLE PATENT INFRINGEMENT ALLEGATIONS COULD
ADVERSELY EFFECT OUR BUSINESS. There are a number of U.S. and foreign patents
covering methods and apparatus for performing corneal surgery that we do not own
or have the right to use. If we were found to infringe a patent in a particular
market, LaserSight and its customers may be enjoined from making, using and
selling that product in the market and be liable for damages for any past
infringement of such rights. In order to continue using such rights, we would be
required to obtain a license which may require us to make royalty, per procedure
or other fee payments. There can be no assurance that we or our customers will
be successful in securing licenses, or that if we obtain licenses, such licenses
will be on acceptable terms. Alternatively, we might be required to redesign the
infringing aspects of these products. Any redesign efforts that we undertake
could be expensive and might require regulatory review. Furthermore, the
redesign efforts could delay the reintroduction of these products into certain
markets, or may be so significant as to be impractical. If redesign efforts were
impractical, we could be prevented from manufacturing and selling the infringing
products, which would have a material adverse effect on our business, financial
and results of operations.
While we are not currently involved in any material patent litigation, we
have been the subject of patent infringement allegations in the past and such
allegations are common in our industry. In 1992, Summit and Visx formed a U.S.
partnership, Pillar Point Partners, to pool certain of their patents related to
corneal sculpting technologies. As part of their agreement to dissolve Pillar
Point in June 1998, Summit and Visx granted each other a worldwide, royalty free
cross-license whereby each party will have full rights to license all existing
patents owned by either company relating to laser vision correction for use with
their systems. In connection with our March 1996 settlement of litigation with
Pillar Point regarding alleged infringement by our lasers of certain U.S.
patents, we agreed to notify Pillar Point before we begin manufacturing or
selling our laser systems in the U.S. While we are not contractually obligated
to anyone to obtain a license prior to the selling our lasers in the U.S., one
or more of our competitors may assert that such a license is required. As of the
date of this Prospectus, we have not obtained a U.S. license from either Summit
or Visx, and the terms of any license, if such license is granted, have not been
determined.
WE ARE REQUIRED TO MAKE PAYMENTS UNDER OUR A*D*K LICENSE AGREEMENT.
In addition to the risk that the A*D*K will not be accepted in the marketplace,
we are required to make certain minimum payments to the licensors under our
A*D*K limited exclusive license agreement. Under the agreement, we are required
to pay a total of $300,000 in two installments due six and 12 months after the
date of our receipt of completed limited production molds and to provide an
excimer laser. We provided the laser during the quarter ended June 30, 1998, and
we expect to accept and receive such molds once we determine that the product is
ready to be commercially shipped. We currently anticipate regular commercial
shipments to commence in the second quarter of 1999, although limited shipments
may occur in the first quarter. In addition, commencing seven months after such
date, we will be required to make royalty payments equal to 50% of our defined
gross profits from A*D*K sales, with a minimum royalty of $400,000 per calendar
quarter for a period of eight quarters.
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<PAGE>
WE ARE SUBJECT TO CERTAIN RISKS ASSOCIATED WITH OUR INTERNATIONAL SALES.
Our international sales accounted for 88% of our total revenues during the nine
month period ended September 30, 1998. We expect sales to international accounts
will continue to represent a comparable percentage of our total sales unless and
until our systems are cleared for commercial distribution in the U.S., or with
respect to those products that do not require regulatory approval, otherwise
enter the U.S. market. The majority of our international sales for the nine
months ended September 30, 1998 were to customers in Canada, China, Brazil,
Mexico, Italy, Argentina, South Africa, and Turkey. Our business, financial
condition and international results of operations may be adversely affected by
present economic instability in Brazil and the impact of that instability on
other South American countries, future economic instability in other countries
in which we have sold or may sell, increases in duty rates, difficulties in
obtaining export licenses, ability to maintain or increase prices, and
competition. In addition, international sales may be limited or disrupted by:
o The imposition of government controls
o Export license requirements
o Political instability
o Trade restrictions
o Changes in tariffs
o Difficulties in staffing and coordinating communications among and
managing international operations.
Because all of our sales have been denominated in U.S. dollars, we do not
have exposure to typical foreign currency fluctuation risk. However, due to our
significant export sales, we are subject to currency exchange rate fluctuations
in the U.S. dollar, which could increase the effective price in local currencies
of our products. This could in turn result in reduced sales, longer payment
cycles and greater difficulty in collecting receivables. See "--We Could
Experience Unanticipated Expenses if Our Uncollectible Receivables Exceed our
Reserves" above. Although we have not experienced any material adverse effect on
our operations as a result of such regulatory, political and other factors, such
factors may have a material adverse effect on our operations in the future or
require us to modify our business practices.
INADEQUACY OR UNAVAILABILITY OF INSURANCE MAY EXPOSE US TO SUBSTANTIAL
PRODUCT LIABILITY CLAIMS. Our business exposes us to potential product liability
risks that are inherent in the development, testing, manufacture, marketing and
sale of medical devices for human use. We have agreed in the past, and we will
likely agree in the future, to indemnify certain medical institutions and
personnel who conduct and participate in our clinical studies. While we maintain
product liability insurance, we cannot assure you that any such liability will
be covered by our insurance or that damages will not exceed the limits of our
coverage. Even if a claim is covered by insurance, the costs of defending a
product liability, malpractice, negligence or other action, and the assessment
of damages in excess of insurance coverage, could have a material adverse effect
on our business, financial condition and results of operations. Our "claims
made" product liability insurance coverage is limited to $10 million and our
general liability insurance coverage is limited to $6 million, including up to
$5 million of coverage under an excess liability policy. Further, product
liability insurance may not continue to be available, either at existing or
increased levels of coverage, on commercially reasonable terms.
WE RELY ON SUPPLIERS FOR CERTAIN CRITICAL COMPONENTS AND SYSTEMS.
LaserSight currently purchases certain components used in the production,
operation and maintenance of its laser systems and related products from a
limited number of suppliers and certain key components are provided by a single
vendor. Any interruption in the supply of critical laser components could have a
material adverse effect on our business, financial condition and results of
operations. For example, the A*D*K product will be manufactured exclusively for
LaserSight by Frantz Medical Development Ltd., an ISO 9001 company experienced
in the manufacture of engineering-grade medical devices. We also have exclusive
supply arrangements for certain key laser system components with TUI
Lasertechnik und Laserintegration GmbH. If any of our key suppliers cease
providing us with products of acceptable quality and quantity in a timely
fashion, we would have to locate and contract with a substitute supplier. We
cannot assure you that such substitute suppliers could be located and qualified
in a timely manner or could provide required products on commercially reasonable
terms.
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ACQUISITION RISKS
RISKS ASSOCIATED WITH PAST AND POSSIBLE FUTURE ACQUISITIONS. We have made
several significant acquisitions since 1994, including The Farris Group in 1994,
Photomed in 1997 and 1998, IBM Patents in August 1997 and our acquisition of
certain assets of SEO Medical in April 1998. Although we are currently focusing
on our existing operations, we may in the future selectively pursue strategic
acquisitions of, investments in, or enter into joint ventures or other strategic
alliances with, companies whose business or technology complement our business.
We may not be able to identify suitable candidates to acquire or enter into
joint ventures or other arrangements with or we may not be able to obtain
financing on satisfactory terms for such activities. In addition, with respect
to our recent acquisitions as well as any future transactions, we could have
difficulty assimilating the personnel, technology and operations of the acquired
company, which would prevent us from realizing expected synergies, and may incur
unanticipated liabilities and contingencies. This could disrupt our ongoing
business and distract our management and other resources. We cannot assure you
that we would succeed in overcoming these risks or any other problems in
connection with any acquisitions we may make or joint ventures or arrangements
we may enter into.
AMORTIZATION AND CHARGES RELATING TO OUR SIGNIFICANT INTANGIBLE ASSETS
COULD ADVERSELY EFFECT OUR STOCK PRICE AND REPORTED NET INCOME OR LOSS. Goodwill
is an intangible asset that represents the difference between the total purchase
price of the acquisitions and the amount of such purchase price allocated to the
fair value of the net assets acquired. Goodwill and other intangible assets are
amortized over a period of time, with the amount amortized in a particular
period constituting a non-cash expense that reduces our net income or increases
our net loss. Of our total assets at September 30, 1998, approximately $16.9
million or 34% were intangible assets. The following table presents an overview
of our significant intangible assets and goodwill at September 30, 1998:
<TABLE>
<CAPTION>
Value of Assets Amortization Period
-------------------------- --------------------------
<S> <C> <C>
Goodwill $6.7 million 12-20 years
Cost of Patents $4.5 million 8 - 17 years
Acquired Licenses and Technology $5.7 million 31 months - 12 years
</TABLE>
A reduction in net income resulting from the amortization of goodwill and other
intangible assets may have an adverse impact upon the market price of our common
stock. In addition, in the event of a sale or liquidation of LaserSight or our
assets, there can be no assurance that the value of such intangible assets would
be recovered.
In accordance with SFAS 121, we review intangible assets for impairment
whenever events or changes in circumstances, including a history of operating or
cash flow losses, indicate that the carrying amount of an asset may not be
recoverable. If we determine that an intangible asset is impaired, a noncash
impairment charge would be recognized. We continue to assess the current results
and future prospects of TFG in view of the substantial reduction in the
subsidiary's operating results in 1996 and 1997. TFG's operating results have
improved in 1998 when compared to 1996 and 1997. If TFG is unsuccessful in
continuing to improve its financial performance, some or all of the carrying
amount of goodwill recorded, $3,790,000 at September 30, 1998, may be subject to
an impairment adjustment.
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OTHER RISKS
The risks described above under are not the only risks facing our company.
There may be additional risks and uncertainties not presently known to us or
that we have deemed immaterial which could also negatively impact our business
operations. If any of the foregoing risks actually occur, it could have a
material adverse effect on our business, financial condition and results of
operations. In that event, the trading price of our common stock could decline,
and you may lose all or part of your investment.
FORWARD-LOOKING STATEMENTS
This Prospectus, and the documents incorporated by reference, contain
certain "forward-looking" statements as described in Section 27A of the
Securities Act and Section 21E of the Exchange Act. These statements involve
known and unknown risks, uncertainties and other factors that may cause our
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance, or
achievements expressed or implied by such forward-looking statements. Such
factors include, among other things, those listed under "Risk Factors" and
elsewhere in this Prospectus and the documents incorporated by reference.
In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "could," "expects," "plans," "intends,"
"anticipates," "believes," "estimates," "predicts," "potential" or "continue" or
the negative of such terms and other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable based on currently available information, we cannot
guarantee future results, levels of activity, performance or achievements.
Moreover, neither we nor anyone else assumes responsibility for the accuracy and
completeness of such statements. We are under no duty to update any of the
forward-looking statements after the date of this Prospectus.
USE OF PROCEEDS
LaserSight will not receive any proceeds from the sale of the common stock
being registered by this Prospectus. If all of the warrants issued to Mercacorp
are exercised, LaserSight will realize proceeds in the amount of $6,750,000.
These proceeds will be contributed to LaserSight's working capital and used for
general corporate purposes.
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CAPITALIZATION
The following table sets forth LaserSight's actual capitalization at
September 30, 1998 and proforma capitalization on that date assuming exercise of
the warrants into common stock.
<TABLE>
<CAPTION>
Actual Proforma
------ --------
<S> <C> <C>
Long-term obligations $ 500,000 $ 500,000
Stockholders' equity:
Convertible Preferred Stock, Series C,
Par value $.001 per share, authorized
2,000,000; actual 2,000,000 shares 2,000 2,000
Convertible Preferred Stock, Series
D, par value $.001 per share,
Authorized 2,000,000; actual
2,000,000 shares 2,000 2,000
Common Stock, par value $.001 per
Share authorized 40,000,000 shares;
Actual 13,312,835 shares 13,313 14,813
Additional paid-in capital 59,073,323 65,821,823
Stock subscription receivable (1,140,000) (1,140,000)
Accumulated deficit (17,730,224) (17,730,224)
Treasury stock, at cost 155,200 shares (576,884) (576,884)
----------- ------------
Total capitalization and stockholders' equity $40,143,528 $46,893,528
=========== ============
</TABLE>
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DESCRIPTION OF SECURITIES
Capital Stock Overview
As of the date of this Prospectus, LaserSight is authorized to issue up to
40,000,000 shares of common stock, $.001 par value, and 10,000,000 shares of
preferred stock, $.001 par value, issuable in series. As of January 29, 1999,
LaserSight had the following shares of capital stock issued and outstanding:
o 13,192,635 shares of common stock, not including any shares of
common stock issuable upon the conversion of preferred stock or
the exercise of outstanding options and warrants to acquire common
stock
o 2,000,000 shares of Series C Preferred Stock
o 2,000,000 shares of Series D Preferred Stock.
All references to LaserSight's common stock in this Prospectus include the
associated preferred stock purchase rights issued pursuant to the Stockholders
Rights Agreement, dated as of July 2, 1998 between LaserSight and American Stock
Transfer & Trust Company as Rights Agent.
Common Stock
Holders of LaserSight common stock are entitled to one vote for each share
held on all matters submitted to a vote of stockholders and do not have
cumulative voting rights. Accordingly, holders of a majority of the shares of
common stock entitled to vote in any election of directors may elect all of the
directors standing for election. Holders of common stock are entitled to share
pro rata in such dividends and other distributions as may be declared by the
Board of Directors out of funds legally available for that purpose. Upon the
liquidation or dissolution of LaserSight, the holders of common stock are
entitled to share proportionally in all assets available for distribution to
such holders. Holders of common stock have no preemptive, redemption or
conversion rights. The outstanding shares of common stock issued are fully paid
and nonassessable.
The transfer agent and registrar for LaserSight common stock is American
Stock Transfer & Trust Company.
Preferred Stock
LaserSight's certificate of incorporation authorizes the Board of
Directors, without further stockholder approval, to issue up to an aggregate of
10,000,000 shares of preferred stock in one or more series. The Board of
Directors may fix or alter the designations, preferences, rights and any
qualifications, limitations or restrictions of the shares of each series of
preferred stock, including:
o dividend rights
o dividend rates
o conversion rights
o voting rights
o terms of redemption
o redemption price or prices
o liquidation preferences
The rights, preferences and privileges of holders of common stock may be
adversely affected by, the rights of the holders of shares of any series of
preferred stock which LaserSight may designate and issue in the future.
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Series A and Series B Preferred Stock
All previously issued and outstanding shares of LaserSight's Series A
Preferred Stock, par value $.001 per share, and Series B Preferred Stock, par
value $.001 per share, have been converted, redeemed or repurchased.
Series C Preferred Stock
On June 5, 1998, LaserSight issued 2,000,000 shares of Series C Preferred
Stock. The Series C Preferred Stock is convertible into common stock at the
option of the holders of the Series C Preferred Stock at any time until June 5,
2001. After June 5, 2001, all shares of Series C Preferred Stock then
outstanding will automatically convert into an equal number of shares of common
stock. For a more detailed description of the terms of the Series C Preferred
Stock see LaserSight's Form 8-A/A (Amendment No. 4) filed with the SEC on June
25, 1998.
Series D Preferred Stock
On June 12, 1998, LaserSight issued 2,000,000 shares of Series D Preferred
Stock. The Series D Preferred Stock is convertible into common stock at the
option of the holders of the Series D Preferred Stock at any time until June 12,
2001. After June 12, 2001, all shares of Series D Preferred Stock then
outstanding will automatically convert into an equal number of shares of common
stock.
The holders of the Series D Preferred Stock are entitled to anti-dilution
adjustments if LaserSight issues or sells any shares of common stock, or
securities convertible into or exercisable for common stock, before June 12,
2001 at a price per share, or having a conversion or exercise price per share,
less than $4.00. In the event of such an issuance, 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
LaserSight common stock outstanding as such ownership exists immediately prior
to such below $4.00 per share issuance. This anti-dilution adjustment only
relates to the conversion price of the Series D Preferred Stock that has not
been converted and does not result in adjustments to the number of shares of
common stock, if any, held by the holders of the Series D Preferred Stock. For a
more detailed description of the terms of the Series D Preferred Stock see
LaserSight's Form 8-A/A (Amendment No. 4) filed with the SEC on June 25, 1998.
Series E Preferred Stock
The Board of Directors has designated 500,000 shares of Series E Junior
Participating Preferred Stock in connection with the adoption of the
Stockholders Rights Agreement described below. Because of the nature of the
Series E Preferred Stock dividend, liquidation and voting rights, the value of
the one one-thousandth interest in a share of Series E Preferred Stock
purchasable upon exercise of each preferred share purchase right should
approximate the value of one share of common stock. The Series E Preferred Stock
purchasable upon exercise of the preferred share purchase rights will not be
redeemable. Each share of Series E Preferred Stock will be entitled to the
greater of (A) a preferential quarterly dividend payment of $1.00 per share, or
(B) an aggregate dividend of 1,000 times the dividend declared per share of
common stock. In the event of liquidation, the holders of the Series E Preferred
Stock will be entitled to a preferential liquidation payment of $1,000 per
share, plus an amount equal to 1,000 times the aggregate amount to be
distributed per share of common stock. Each share of Series E Preferred Stock
will have 1,000 votes, voting together with the common stock. Finally, in the
event of any merger, consolidation or other transaction in which shares of
common stock are exchanged, each share of Series E Preferred Stock will be
entitled to receive 1,000 times the amount received per share of common stock.
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Stockholder Rights Plan
LaserSight's Board of Directors adopted the Stockholder Rights Agreement in
July 1998 and declared a dividend of one Right on each outstanding share of
common stock. The Rights are payable to stockholders of record as of the close
of business on July 13, 1998 (the "Record Date"). Subject to certain exceptions,
each Right, when exercisable, entitles the holder thereof to purchase from
LaserSight one-thousandth of a share of Series E Preferred Stock of LaserSight
at an exercise price of $20.00 per one-thousandth of a Preferred Share (the
"Purchase Price"), subject to adjustment. The terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between LaserSight and American
Stock Transfer & Trust Company as Rights Agent.
Until the earlier to occur of (A) 10 days following a public announcement
that a person or group of affiliated or associated persons has become an
"Acquiring Person" (as defined below), or (B) 10 business days, or such later
date as may be determined by action of LaserSight's Board of Directors prior to
such time as any person or group becomes an Acquiring Person, following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in a person or group
becoming an Acquiring Person (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced by common stock certificates.
Subject to certain exceptions, an "Acquiring Person" is a person or group
of affiliated or associated persons who have acquired beneficial ownership of
15% or more of LaserSight's outstanding common stock. In no event however, will
LaserSight, any subsidiary of LaserSight, or any employee benefit plan of
LaserSight or its subsidiaries be deemed to be an Acquiring Person. In addition,
no person shall become an Acquiring Person as the result of an acquisition of
common stock by LaserSight which increases the proportionate number of shares
beneficially owned by such person and its affiliates and associates to 15% or
more of the common stock then outstanding. However, if such person becomes the
beneficial owner of 15% or more of the common stock then outstanding by reason
of share acquisitions by LaserSight and, after such share acquisitions, (A)
acquires beneficial ownership of an additional number of shares of common stock
which exceeds the lesser of 10,000 shares of common stock or 0.25% of the
then-outstanding common stock, and (B) beneficially owns after such acquisition
15% or more of the aggregate number of common stock then outstanding, then such
person shall be deemed to be an Acquiring Person. Moreover, If LaserSight's
Board of Directors determines in good faith that a person who would otherwise be
an Acquiring Person has become such inadvertently, and such person divests as
promptly as practicable a sufficient number of shares of common stock so that
such person would no longer be an Acquiring Person, then such person shall not
be deemed to be an Acquiring Person for any purposes of the Rights Agreement.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on July 2, 2008, unless the Rights are earlier redeemed or exchanged by
LaserSight, as described below.
The Purchase Price payable, and the number of shares of Series E Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (A) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Series E Preferred Stock, (B) upon the grant to holders of the Series E
Preferred Stock of certain rights or warrants to subscribe for or purchase
Series E Preferred Stock at a price, or securities convertible into Series E
Preferred Stock with a conversion price, less than the then-current market price
of the Series E Preferred Stock, or (C) upon the distribution to holders of the
Series E Preferred Stock of evidences of indebtedness, assets or capital stock
excluding regular periodic cash dividends paid out of earnings or retained
earnings or dividends payable in shares of Series E Preferred Stock or of
subscription rights or warrants other than those referred to above. With certain
exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. LaserSight will not be required to issue fractional shares of common
stock or Series E Preferred Stock other than fractions which are integral
multiples of one-thousandth of a share of Series E Preferred Stock, which may,
at the election of LaserSight, be evidenced by depositary receipts. In lieu of
such issuance of fractional shares, an adjustment in cash may be made based on
18
<PAGE>
the market price of common stock or Series E Preferred Stock on the last trading
day prior to the date of exercise.
Subject to certain exceptions described in the Rights Agreement, if any
person or group becomes an Acquiring Person, then each holder of a Right will
have the right to receive upon exercise of such Right that number of common
stock or, in certain circumstances, cash, property or other securities of
LaserSight, having a market value of two times the exercise price of the Right.
If at any time after the time that any person or group becomes an Acquiring
Person, LaserSight is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
proper provision will be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person, any Associate or Affiliate thereof,
and certain transferees thereof, which will be void, will thereafter have the
right to receive, upon the exercise thereof at the then-current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right.
At any time after the time that any person or group becomes an Acquiring
Person and prior to the acquisition by such person or group of 50% or more of
the outstanding common stock, LaserSight's Board of Directors may exchange the
Rights, subject to certain exceptions, in whole or in part, at an exchange ratio
of one share of common stock or one-thousandth of a share of Series E Preferred
Stock per Right.
At any time prior to the time that any person becomes an Acquiring Person,
LaserSight's Board of Directors may redeem the Rights in whole, but not in part,
at a price of $.01 per Right, subject to adjustment (the "Redemption Price"),
which may at LaserSight's option be paid in cash, common stock or other
consideration deemed appropriate by the Board of Directors. The redemption of
the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish;
provided, however, that no redemption will be permitted or required after the
time that any person becomes an Acquiring Person. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of the Rights will be to receive the Redemption
Price.
The terms of the Rights may be amended by LaserSight's Board of Directors
without the consent of the holders of the Rights, except that from and after
such time as any person becomes an Acquiring Person no such amendment may make
the Rights redeemable if the Rights are not then redeemable in accordance with
the terms of the Rights Agreement or may adversely affect the interests of the
holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a LaserSight stockholder, including, without limitation, the right to
vote or to receive dividends.
The Rights will have anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire LaserSight on
terms not approved by LaserSight's Board of Directors.
Warrants and Other Agreements to Issue Shares
In connection with the establishment of its credit facility with Foothill
Capital Corporation in April 1997, LaserSight issued warrants to purchase shares
of LaserSight common stock to Foothill. These warrants provide for anti-dilution
adjustments that would be triggered upon certain issuances of LaserSight
securities. In connection with its sale of Series B Preferred Stock in August
1997 and subsequent conversion of such preferred shares into LaserSight common
stock, the sale of the Series C Preferred Stock and the Series D Preferred Stock
such anti-dilution adjustments have resulted in (A) an increase in the number of
Foothill warrants to approximately 583,604, and (B) a reduction to the exercise
price of the Foothill warrants to approximately $5.20 per share. Additional
anti-dilution adjustments to the Foothill warrants could also result from any
future below-market sales of common stock by LaserSight. The Foothill warrants
may be exercised at any time through April 1, 2002.
19
<PAGE>
In connection with its sale of the Series B Preferred Stock in August 1997,
LaserSight issued warrants to purchase a total of 750,000 shares of common stock
at a price of $5.91 per share to the former holders of LaserSight's Series B
Preferred Stock. The Series B warrants are exercisable at any time before August
29, 2002. Certain anti-dilution adjustments and other agreements by LaserSight
and the former Series B Preferred Stock holders have resulted in (A) an increase
in the number of Series B warrants to approximately 762,616, and (B) a reduction
to the exercise price of Series B warrants to approximately $2.71 per share. As
of January 29, 1999, 140,625 of such warrants have been exercised. LaserSight is
obligated to maintain the effectiveness of the registration of the Series B
warrant shares under the Securities Act.
LaserSight also issued warrants to purchase a total of 40,000 shares of
common stock at a price of $5.91 per share to four individuals associated with
the placement agent for the Series B Preferred Stock. These warrants are
exercisable at any time before August 29, 2002. LaserSight's sale of the Series
C Preferred Stock and the Series D Preferred Stock triggered anti-dilution
adjustments which resulted in (i) an increase in the number of warrants to
approximately 40,673, and (ii) a reduction to the exercise price of the warrants
to approximately $5.81 per share.
Based on previously-reported agreements entered into in 1993 in connection
with our acquisition of LaserSight Centers, and modified in July 1995 and March
1997, LaserSight may be obligated as follows:
o To issue up to 600,000 unregistered shares of common stock to the
former stockholders and option holders of LaserSight Centers.
These former stockholders and option holders include two trusts
related to our Chairman of the Board and certain of former
LaserSight officers and directors. These contingent shares will be
issued only if we achieve certain pre-tax operating income levels
through March 2002. Such income levels must be related to our use
of a fixed or mobile excimer laser to perform certain specified
types of laser surgery, the arranging for the delivery of certain
types of laser surgery or receipt of license or royalty fees
associated with patents held by LaserSight Centers. The contingent
shares are issuable at the rate of one share per $4.00 of such
operating income.
o To pay to a partnership whose partners include our Chairman of the
Board and certain of our former officers and directors a royalty
of up to $43 for each eye on which certain specified types of
laser surgery is performed on a fixed or mobile excimer laser
system owned or operated by LaserSight Centers or its affiliates.
This royalty may be paid either in cash or in shares of LaserSight
common stock
o Royalties do not begin to accrue until the earlier of March 2002
or the delivery of all of the 600,000 contingent shares.
As of January 29, 1999, we have not accrued any obligation to issue
contingent shares or royalty shares. We cannot assure you that any issuance of
contingent shares or royalty shares will be accompanied by an increase in our
per share operating results. We are not obligated to pursue strategies that may
result in the issuance of contingent shares or royalty shares. It may be in the
interest of our Chairman of the Board for us to pursue business strategies that
maximize the issuance of contingent shares and royalty shares.
If the FDA approves a LaserSight-manufactured laser system for general
commercial use in the treatment of farsightedness that uses part or all of the
know-how of the laser technology we acquired from Photomed, we would be required
to issue to the former Photomed stockholders additional shares of common stock
with a market value of up to $1.0 million. If such approval is not received by
June 1, 1999, this obligation will decrease by approximately $2,740 per day each
day thereafter, and the obligation will be eliminated entirely on June 1, 2000.
As of February 1, 1999, the number of additional shares to be issued would have
been 204,000. Depending on whether and when such FDA approval is received and
the average closing price of LaserSight common stock for the 10-day period
immediately prior to the date of any such approval, the actual number of
additional shares of common stock to be issued could be more or less than this
number.
20
<PAGE>
In connection with our acquisition of the medical products division of
Schwartz Electro-Optics, Inc. in April 1998, LaserSight agreed to issue up to
223,280 additional shares of common stock if the average of the bid and ask
prices of common stock for the five trading day period immediately prior to
April 15, 1999 is less than $5.00 per share. All 223,280 shares of Common Stock
will be issued unless such price is more than $2.36 per share.
Delaware Law and Certain Charter Provisions
Certain provisions of LaserSight's certificate of incorporation and
Delaware corporate law described in this section may delay or make more
difficult acquisitions or changes in control of LaserSight that are not approved
by the Board of Directors.
LaserSight is subject to the provisions of Section 203 of the Delaware
General Corporation Law. Subject to certain exceptions, Section 203 prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless the
interested stockholder attained such status with the approval of the Board of
Directors or unless the business combination is approved in a prescribed manner.
A "business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder which is not
shared pro rata with the other stockholders of the corporation. Subject to
certain exceptions, an "interested stockholder" is a person who, together with
affiliates and associates, owns, or within three years did own, 15% or more of
the corporation's voting stock.
The Delaware General Corporation Law provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's certificate of incorporation or by-laws,
unless a corporation's certificate of incorporation or by-laws, as the case may
be, requires a greater percentage. LaserSight's by-laws may, subject to the
provisions of Delaware General Corporation Law, be amended or repealed by a
majority vote of the Board of Directors.
LaserSight's certificate of incorporation contains certain provisions that
eliminate a director's liability for monetary damages for a breach of fiduciary
duty, except in certain circumstances involving certain wrongful acts. These
acts include the breach of a director's duty of loyalty or acts or omissions
which involve intentional misconduct or a knowing violation of law. The
certificate of incorporation contains provisions indemnifying the directors and
officers of LaserSight to the fullest extent permitted by the Delaware General
Corporation Law. LaserSight also has a directors and officers liability
insurance policy which provides for indemnification of its directors and
officers against certain liabilities incurred in their capacities as such.
LaserSight believes that these provisions will assist LaserSight in attracting
and retaining qualified individuals to serve as directors.
21
<PAGE>
SELLING STOCKHOLDERS
The following table describes the beneficial ownership of LaserSight common
stock by the selling stockholders named in this Prospectus, and the number of
shares of common stock to be offered by the selling stockholders. Unless
otherwise indicated, each person has sole investment and voting power over the
shares listed in the table, subject to community property laws, where
applicable. For purposes of this table, a person or group of persons is deemed
to have "beneficial ownership" of any shares which such person has the right to
acquire within 60 days. For purposes of computing the percentage of outstanding
shares held by each person or group of persons named in the table, any security
which such person or group of persons has the right to acquire within 60 days is
deemed to be outstanding for the purpose of computing the percentage ownership
for such person or persons, but is not deemed to be outstanding for the purpose
of computing the percentage ownership of any other person.
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned Common Stock Beneficially
Prior To Offering Owned After The Offering
------------------ -------------------------
Share of
Selling Shareholder Number of Percent of Common Stock Number of Percent of
Shares Outstanding to be Sold Shares Outstanding
--------- ----------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C>
Mercacorp, Inc. 1,500,000 10.2% 1,500,000 -- --
Frederic B. Kremer 401,385 3.0% 90,000 311,385 2.4%
Linda Kremer 296,890 2.3% 90,000 206,890 1.6%
Robert Sataloff, Trustee for Alan
Stewart Kremer, u/t/d December 27,
1991 12,370 * 3,750 8,620 *
Robert Sataloff, Trustee for Mark
Adam Kremer, u/t/d December 27,
1991 12,370 * 3,750 8,620 *
* Less than 1%.
</TABLE>
PLAN OF DISTRIBUTION
The shares of LaserSight common stock being registered pursuant to this
Prospectus are being registered on behalf of the selling shareholders named in
this Prospectus. All costs, expenses and fees in connection with registration of
the shares offered by this Prospectus will be paid by LaserSight. Brokerage
commissions and similar selling expenses, if any, attributable to the sale of
shares shall be paid by the selling shareholders. The selling shareholders may
sale the shares registered by this Prospectus from time to time in one or more
types of transactions including (A) over-the-counter market transactions, (B)
negotiated transactions, (C) through put or call options transactions relating
to the shares, (D) through short sales of shares, or (E) a combination of such
methods of sale. The shares may be sold at market prices prevailing at the time
of sale, or at negotiated prices. These transactions may or may not involve
securities brokers or dealers. The selling shareholders have advised LaserSight
that they have not entered into any agreements, understandings or arrangements
with any underwriters or broker-dealers regarding the sale of their securities,
nor is there an underwriter or coordinating broker acting in connection with the
proposed sale of shares by the selling shareholders.
The selling shareholders may sell shares directly to purchasers or to or
through broker-dealers, which may act as agents or principals. These
broker-dealers may receive compensation in the form of discounts, concessions,
22
<PAGE>
or commissions from the selling shareholders or the purchasers of shares for
whom such broker-dealers may act agents or to whom they sell as principal, or
both. Any such compensation may be equal to, less than or in excess of customary
amounts.
The selling shareholders named in this Prospectus and any broker-dealers
that act in connection with the sale of shares might be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by such broker-dealers and any profit on the resale of
the shares sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act. Because selling
shareholders may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, the selling shareholders will be subject to the
prospectus delivery requirements of the Securities Act. LaserSight has informed
the selling shareholders that the anti-manipulative provisions of Regulation M
promulgated under the Exchange Act may apply to their sales in the market.
Selling shareholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act, provided
they meet the criteria and conform to the requirements of such Rule.
Upon LaserSight being notified by a selling shareholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplement to this
Prospectus will be filed, if required, pursuant to Rule 424(b) under the Act,
disclosing (A) the name of each such selling shareholder and of the
participating broker-dealer(s), (B) the number of shares involved, (C) the price
at which such shares were sold, (D) the commissions paid or discounts or
concessions allowed to such broker-dealer(s), where applicable, (E) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this Prospectus, and (F) other facts
material to the transaction.
LaserSight has agreed to indemnify each selling shareholder against certain
liabilities, including liabilities arising under the Securities Act. The selling
shareholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act.
LEGAL MATTERS
The legality of the shares offered hereby has been passed upon for
LaserSight by Sonnenschein Nath & Rosenthal, Chicago, Illinois.
EXPERTS
The consolidated financial statements of LaserSight and its subsidiaries as
of December 31, 1997 and 1996 and for each of the years in the three-year period
ended December 31, 1997 have been incorporated herein by reference and in the
Registration Statement in reliance upon the report of KPMG LLP, independent
certified public accountants, upon the authority of said firm as experts in
accounting and auditing.
WHERE TO FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's Pubic Reference Room at 450 Fifth Street, N.W., Washington, D.C. Please
call the SEC at 1-800-SEC-0330 for further information on the operation of the
Public Reference Room. Our SEC filings are also available to the public from our
Internet site at www.lase.com or at the SEC's Internet site at
http://www.sec.gov. The other information at those Internet sites is not part of
this Prospectus. Such reports, proxy statements and other information concerning
LaserSight can also be inspected at the offices of the National Association of
23
<PAGE>
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
This Prospectus is only part of a Registration Statement on Form S-3 that
we have filed with the SEC under the Securities Act. We have also filed exhibits
and schedules with the Registration Statement that are not included in this
Prospectus, and you should refer to the applicable exhibit or schedule for a
complete description of any statement referring to any contract or other
document. A copy of the Registration Statement, including the exhibits and
schedules thereto, may be inspected without charge at the Public Reference Room
of the SEC described above, and copies of such material may be obtained from
such office upon payment of the fees prescribed by the SEC.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this Prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act until the selling
stockholders sell all of the shares being registered by this Prospectus:
A. Annual Report on Form 10-K for the year ended December 31, 1997,
as amended by a Form 10-K/A filed on April 29, 1998;
B. Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998, June 30, 1998 (as amended by a Form 10-Q/A filed on August
19, 1998), and September 30, 1998;
C. Current Reports on Form 8-K filed on January 2, January 14,
January 20, January 22, February 17, February 27, March 13, March
16, March 18, June 8, June 16, June 25, July 8, 1998 and August 4,
1998; and
D. The description of the Common Stock contained in LaserSight's Form
8-A/A (Amendment No. 4) filed on June 25, 1998.
You may request a copy of any of these filings, at no cost, by writing or
telephoning us at the following address: LaserSight Incorporated, 3300
University Boulevard, Suite 140, Winter Park, Florida 32792; telephone: (407)
678-9900; Attn: Corporate Secretary.
24
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
SEC registration fee $ 2,237.73
Legal fees and expenses 10,000.00
Accountants' fees 2,500.00
Nasdaq Listing fees 21,250.00
Miscellaneous 1,512.27
-----------
Total $37,500.00
===========
The foregoing items, except for the SEC registration fee, are estimated.
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law ("DGCL"), inter alia,
empowers a Delaware corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (other than an action by or in the right of the corporation)
by reason of the fact that such person is or was a director, officer, employee
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Similar indemnity is
authorized for such persons against expenses (including attorneys' fees) actual
and reasonably incurred in connection with the defense or settlement of any such
threatened, pending or completed action or suit by or in the right of the
corporation if such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation, and
provided further that (unless a court of competent jurisdiction otherwise
provides) such person shall not have been adjudged liable to the corporation.
Any such indemnification may be made only as authorized in each specific case
upon a determination by the shareholders or disinterested directors or by
independent legal counsel in a written opinion that indemnification is proper
because the indemnitee has met the applicable standard of conduct. The Charter
provides that directors and officers shall be indemnified as described above in
this paragraph to the fullest extent permitted by the DGCL; provided, however,
that any such person seeking indemnification in connection with a proceeding (or
part thereof) initiated by such person shall be indemnified only if such
proceeding (or part thereof) was authorized by the board of directors of
LaserSight.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in such capacity,
or arising out of his status as such, whether or not the corporation would
otherwise have the power to indemnify him under Section 145.
The Charter provides that, to the fullest extent permitted by the DGCL, no
director of LaserSight shall be personally liable to LaserSight or its
stockholders for monetary damages for breach of fiduciary as a director. Section
102(b)(7) of the DGCL currently provides that such provisions do not eliminate
the liability of a director (i) for a breach of the director's duty of loyalty
to LaserSight or its stockholders, (ii) for acts or omissions not in good faith
II-1
<PAGE>
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the DGCL (relating to the declaration of dividends and
purchase or redemption of shares in violation of the DGCL), or (iv) for any
transaction from which the director derived an improper personal benefit.
Reference is made to the Charter and By-laws filed as Exhibits 4.1 and 4.2
hereto, respectively.
LaserSight maintains directors' and officers' liability insurance policies
covering certain liabilities of persons serving as officers and directors and
providing reimbursement to LaserSight for its indemnification of such persons.
Item 16. Exhibits
The exhibit index set forth on page II-5 of this Registration Statement is
hereby incorporated herein by reference.
Item 17. Undertakings.
(a) Rule 415 Offering
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in
the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
II-2
<PAGE>
(b) Filings Incorporating Subsequent Exchange Act Documents by
Reference
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Acceleration of Effectiveness.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Pre-Effective
Amendment No.1 to Registration Statement to be filed on its behalf by the
undersigned, thereunto duly authorized, in the City of Winter Park, State of
Florida, this 1st day of February 1999.
LASERSIGHT INCORPORATED
By: /s/ Gregory L. Wilson
---------------------
Gregory L. Wilson, Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No.1 to Registration Statement has been signed by the
following persons in the capacities on the dates indicated.
/s/ Michael R. Farris* February 1, 1999
- ------------------------------------------------
Michael R. Farris, President, Chief Executive
Officer, and Director
/s/ Francis E. O'Donnell, Jr., M.D.* February 1, 1999
- ------------------------------------------------
Francis E. O'Donnell, Jr., M.D., Chairman of the
Board and Director
/s/ J. Richard Crowley* February 1, 1999
- ------------------------------------------------
J. Richard Crowley, Director
/s/ Terry A. Fuller, Ph.D.* February 1, 1999
- ------------------------------------------------
Terry A. Fuller, Ph.D., Director
/s/ Gary F. Jonas* February 1, 1999
- ------------------------------------------------
Gary F. Jonas, Director
/s/ Richard C. Lutzy* February 1, 1999
- ------------------------------------------------
Richard C. Lutzy, Director
/s/ David T. Pieroni* February 1, 1999
- ------------------------------------------------
David T. Pieroni, Director
/s/ Thomas Quinn* February 1, 1999
- ------------------------------------------------
Thomas Quinn, Director
/s/ Juliet Tammenoms Bakker* February 1, 1999
- ------------------------------------------------
Juliet Tammenoms Bakker, Director
/s/ Gregory L. Wilson February 1, 1999
- ------------------------------------------------
Gregory L. Wilson, Chief Financial Officer
(Principal financial and accounting officer)
- ---------------------
*/ By: /s/ Gregory L. Wilson
---------------------------------------
(Gregory L. Wilson, as Attorney-in-Fact)
II-4
<PAGE>
INDEX TO EXHIBITS
Exhibit
No. Description
--- -----------
4.1 Certificate of Incorporation (incorporated by reference to
Exhibit 1 to the Form 8-A/A (Amendment No. 4) filed by the
Company on June 25, 1998).
4.2 By-laws (incorporated by reference to Exhibit 3 to the
Company's Annual Report on Form 10-K for the fiscal year
ending December 31, 1992 filed by the Company on March 31,
1993).
4.3 Rights Agreement, dated as of July 2, 1998, between
LaserSight Incorporated and American Stock Transfer & Trust
Company, as Rights Agent, which includes (i) as Exhibit A
thereto the form of Certificate of Designation of the Series
E Junior Participating Preferred Stock, (ii) as Exhibit B
thereto the form of Right certificate (separate certificates
for the Rights will not be issued until after the
Distribution Date) and (iii) as Exhibit C thereto the
Summary of Stockholder Rights Agreement. (incorporated by
reference to Exhibit 99.1 to the Form 8-K filed by the
Company on July 8, 1998).
5.1 Opinion of Sonnenschein Nath & Rosenthal.
10.1 Purchase Agreement, dated June 7, 1997, among and between
LaserSight Technologies, Inc. and TUI Lasertechnik und
Laserintegration GmbH.
10.2 License and Royalty Agreement, dated September 10, 1997,
among LaserSight Technologies, Inc., Luis A. Ruiz, M.D. and
Sergio Lenchig.
10.3 Manufacturing Agreement, dated September 10, 1997, between
LaserSight Technologies, Inc. and Frantz Medical Development
Ltd.
23.1 Consent of KPMG LLP.
23.2 Consent of Sonnenschein Nath & Rosenthal (included in
Exhibit 5.1).
24.1* Powers of Attorney.
- ------------------
*/ Previously filed
II-5
EXHIBIT 5.1
SONNENSCHEIN NATH & ROSENTHAL
8000 SEARS TOWER
CHICAGO, ILLINOIS 60026
February 1, 1999
LaserSight Incorporated
3300 University Boulevard, Suite 140
Orlando, Florida 32792
Gentlemen:
We have acted as counsel to LaserSight Incorporated, a Delaware
corporation (the "Company"), in connection with the registration by the Company
under the Securities Act of 1933 (the "Act") pursuant to the Company's
Registration Statement on Form S-3 (File No. 333-68495) filed with the
Securities and Exchange Commission (the "Commission") on December 7, 1998, as
amended by Amendment No. 1 thereto filed or to be filed with the Commission on
or about the date of this letter (as so amended, the "Registration Statement")
of an aggregate of up to 1,687,500 shares (the "Shares") of the Company's common
stock, par value $.001 per share (the "Common Stock"), issued or issuable from
time to time by the Company as follows:
(i) an aggregate of up to 1,500,000 shares (the "Warrant Shares")
issuable upon the exercise of outstanding warrants to purchase
Common Stock (such warrants, the "Warrants") issued by the
Company to Meracorp, Inc.; and
(ii) an aggregate of up to 187,500 shares (the "Kremer Shares")
issued to Frederic B. Kremer and certain other parties in
connection with a Letter Agreement dated September 9, 1998
between LaserSight and the other parties thereto.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the Registration
Statement, the Certificate of Incorporation of the Company as currently in
effect, the By-laws of the Company as currently in effect, various resolutions
of the Board of Directors of the Company, and such agreements, instruments,
certificates of public officials, certificates of officers or representatives of
the Company, the Selling Stockholders (as defined in the Registration Statement)
and others, and such other documents, certificates and records, and have made
such other investigations, as we have deemed necessary or appropriate as a basis
for the opinions set forth herein.
We have assumed the legal capacity of all natural persons, the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted to
us as certified or photostatic copies and the authenticity of the originals of
such latter documents. In making our examination of documents executed by
<PAGE>
parties other than the Company, we have assumed that such parties had the power,
corporate and otherwise, to enter into and perform their respective obligations
thereunder and have also assumed the due authorization by all requisite action,
corporate and otherwise, and the execution and delivery by such parties of such
documents and the validity and binding effect thereof. As to any facts material
to the opinions expressed herein, we have relied upon oral or written statements
and representations of officers and other representatives of the Company, the
Selling Stockholders and others.
Based upon and subject to the foregoing, we are of the opinion that,
when sold by the Selling Stockholders pursuant to the Registration Statement,
and provided no stop order shall have been issued by the Commission relating
thereto:
(i) the Warrant Shares, when issued, sold and delivered in the
manner and for the consideration contemplated by the terms of
the Warrants and as stated in the Registration Statement and
any Prospectus Supplement relating thereto, will be validly
issued, fully paid and non-assessable; and
(ii) the Kremer Shares, when sold and delivered in the manner
contemplated by the Registration Statement and any Prospectus
Supplement relating thereto, will be validly issued, fully
paid and non-assessable.
The opinions set forth above are subject to the qualifications that (a)
enforcement of the Company's obligations under the Warrants may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to or affecting creditors' rights generally and
(ii) general principles of equity (regardless of whether such enforcement is
sought in a proceeding at law or in equity), and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as Exhibit 5.1 to the Registration Statement. We also
consent to the reference to our firm under the caption "Legal Matters" in the
prospectus contained in the Registration Statement. We do not, in giving such
consent, admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act.
Very truly yours,
/s/ SONNENSCHEIN NATH & ROSENTHAL
PURCHASE AGREEMENT
------------------
THIS AGREEMENT entered into this 9th day of June, 1997, by and between
LASERSIGHT TECHNOLOGIES, INC. ("LST"), a Florida corporation, whose address is
12249 Science Drive, Suite 160, Orlando, FL USA 32826, and TUI LASERTECHNIK UND
LASERINTEGRATION GmbH, a German corporation, whose address is Lochhamer Schlog
19, D-82166 Grafelfing/Munchen, Germany ("TUI").
Background
TUI is in the business of manufacturing certain lasers and/or laser
components, including an excimer laser, which contains, as a major component, an
excimer licensed technology.
LST manufactures and sells laser systems for use in ophthalmologic
medical applications, including excimer laser systems for vision correction
applications.
TUI is in the process of developing a certain small laser head
technology ("Laser"), which is an ArF excimer laser as described in the
technical specifications attached hereto as Exhibit 1.4. TUI is willing to sell
the Lasers to LST and to grant LST a limited license to use the technology of
TUI incorporated therein ("Licensed Technology") for use in any and all of LST's
ophthalmic laser systems, including, but not limited to, LS300, LaserScan 2000,
and LaserScan LSX (the "Systems") on the terms and conditions set forth herein.
Terms of Agreement
IN CONSIDERATION of the mutual promises and obligations contained in
this Agreement, the parties agree as follows:
1. LIMITED EXCLUSIVITY.
1.1 Exclusive Purchase Rights. During the Term (as defined
herein) of this Agreement, LST shall purchase from TUI and TUI shall sell to LST
on an exclusive basis, the Lasers. TUI hereby grants LST a license to use the
Licensed Technology incorporated in the Laser according to the terms of this
Agreement. During the Term, as long as LST is not in default (as defined in
Article 6), TUI agrees that it will not, for or on behalf of any competitor of
LST in the small-beam scanning laser market in LST's Field of Application, as
such term is defined in Exhibit 1.1 attached hereto and incorporated herein by
reference, (i) enter into any agreement to sell, promote, market or distribute
the Lasers or the Licensed Technology or (ii) sell, promote, market or
distribute the Lasers or the Licensed Technology. Notwithstanding the foregoing
rights of exclusivity, if LST licenses its patent covering the Field of
Application to an unaffiliated person or entity, other than by licenses existing
as of the date of this Agreement, then TUI shall have the right to sell Lasers
to such persons or entities within the Field of Application. LST agrees during
the Term not to purchase laserheads for the Field of Application from any
supplier other than TUI, except that LST may continue to purchase laserheads
from MPB without restriction.
1.2 Redesign of Licensed Technology. LST agrees that LST will
not materially improve or redesign the MPB Technology. LST does intend to make
process improvements in its rework process and to correct certain design flaws
in the areas of optics mounts and electrode securement. Such improvements and
corrections shall not be deemed to be material improvements or redesigns from
the existing technical state of the Lasers as defined LST's technical manuals,
copies of which have been provided to TUI.
<PAGE>
1.3 Loss of Exclusive Purchase Rights. TUI shall have the
right to terminate the exclusive purchase rights of LST if (a) LST does not meet
the minimum purchase requirements set forth in Exhibit 3.1 for a period of one
(1) quarter plus a forty-five (45) day cure period, or (b) if LST is past due on
the payment of three (3) or more Laser units for more than forty-five (45) days
after the due date for payment for such units. Termination will be effective
immediately upon LST's receipt of notice from TUI. Termination of exclusivity by
TUI upon the occurrence of either of the events set forth in this Section 1.3
shall not result in the loss of LST's rights to purchase the Lasers at the
purchase prices set forth in Article 3.
1.4 Non-Circumvention by TUI. The specifications of the Laser
and the Licensed Technology are set forth in Exhibit 1.4. LST acknowledges that
TUI is continuously developing and improving its excimer laser technology and
that, as part of this process, TUI may improve the Licensed Technology. TUI
shall not circumvent the exclusive rights granted LST under Section 1.1 by
making minor modifications, as defined in Exhibit 1.4, to the design and
specifications of the Laser, or the Licensed Technology. The exclusive rights
granted LST under Section 1.1 of this Agreement shall not apply to, and TUI
shall not be deemed to have circumvented the intent of Section 1.1 as a result
of, a major modification, as defined in Exhibit 1.4, to the Laser, provided,
however, that TUI agrees to inform LST of any demonstrable major modification,
as defined in Exhibit 1.4, to the Laser or the Licensed Technology, and the
technical improvements and price influences. LST shall have the right to have
any such major modification incorporated into future purchases of the Lasers
under this Agreement at mutually agreed upon prices and on terms no less
favorable than those offered to other customers of TUI..
2. TERM.
2.1 Initial Term. The initial term of this Agreement shall
begin on the date of Acceptance (as defined below) of the first production Laser
to be delivered by TUI to LST as set forth in Section 3.1 ("Effective Date") and
shall continue in full force and effect for a period of eighteen (18) months
thereafter ("Initial Term"), unless otherwise terminated by other provisions of
this Agreement. "Acceptance" of a Laser means, after functional testing by LST
in a laser system, the Laser has met all LST-defined technical specifications.
2.2 Optional Renewal by LST. Provided that TUI has not
terminated pursuant to Section 1.3 LST's exclusive purchase rights as set forth
in Section 1.1, LST shall have the option to renew this Agreement for an
additional eighteen (18) months ("Renewal Term"). The terms and conditions of
purchase for Lasers for the Renewal Term shall be mutually agreed to by the
parties, but the minimum purchase requirements shall be not less than the
minimum purchase requirements, and no more than one hundred twenty-five percent
(125%) of the minimum purchase requirements, applicable to the Initial Term. For
purposes of this Agreement, "Term" shall mean the Initial Term and the Renewal
Term, if any.
3. PURCHASE PRICE; TERMS
3.1 Purchase Price and Terms. LST shall purchase from TUI, and
TUI shall sell to TUI, Lasers according to the specifications set forth in
Exhibit 1.4, and for the purchase price and on the terms set forth in Exhibit
3.1. TUI must deliver three prototype Lasers to LST. After Acceptance of all
three prototype Lasers, LST shall purchase Lasers in the minimum quantities and
for the purchase prices and on the terms set forth in Exhibit 3.1 attached
hereto and incorporated herein by reference. The first purchase order by LST is
conditional on Acceptance of the three prototype Lasers and is made prior to
such Acceptance solely for planning purposes to enable TUI to obtain needed
quantities of parties, supplies and equipment.
3.2 Delivery, Testing, and Payment. LST shall set forth in
each purchase order sent to TUI the number of units requested (which shall not
exceed thirty (30) units), their requested delivery date(s) and delivery
<PAGE>
destinations for ordered Lasers, which delivery date will not be less than sixty
(60) days from the date of the purchase order. TUI shall invoice LST for each
order for Lasers upon delivery, as defined in Section 4.1, of such Lasers to
LST. LST shall have the right to accept or reject any Laser based upon
acceptance testing as described in Exhibit 3.2 ("Product Acceptance"). LST shall
notify TUI in writing of Product Acceptance or rejection within fourteen (14)
days after delivery. All invoices shall be due thirty (30) days after written
notification of Product Acceptance. If LST fails to make a required payment to
TUI on or before ninety (90) days from the due date, then TUI shall have the
right to charge a late fee on such amount at the rate of 1.5% per month
commencing on such ninetieth (90th) day until such invoice is paid in full.
4. RISK OF LOSS
4.1 TUI's Responsibility. TUI shall be solely responsible for
the proper handling, all risks of physical damage, protection from theft and
security of Lasers prior to delivery of such units to LST. For purposes of this
Agreement, "delivery" means the time when LST receives possession of the Laser
from the shipping agent or carrier.
4.2 LST's Responsibility. LST shall be solely responsible for
the proper handling, all risks of physical damage, protection from theft and
security of Lasers after delivery from TUI.
5. WARRANTY TUI warrants that Lasers following Product Acceptance by
LST, will be free from defects in materials and workmanship for a period of one
(1) year after delivery to an LST customer but no longer than fifteen (15)
months after the date of delivery to LST. If any defect in materials or
workmanship appears in any Laser during such period, whether the Laser is in the
control of LST or any customer of LST or other user of a System, TUI will be
responsible for the replacement of the defective Laser or components therein
without charge. In order to effect timely warranty repair, TUI will provide LST
a limited number of warranty replacement Lasers to be kept by LST at its
facilities. Each defective Laser in the hands of an LST customer will be
replaced with a warranty replacement Laser and the defective Laser will be
returned to TUI, shipping and insurance prepaid. After repair of the defective
Laser, TUI will return the Laser to LST shipping and insurance prepaid. LST will
arrange for the shipping of the warranty replacement Laser to the customer and
will invoice TUI for the shipping expense.
Any replacements of optics will be performed in the field by LST or its
trained distributors. TUI shall provide LST and its designated distributors all
necessary spare parts, inventory, training, and training materials for
replacement of optics and optics alignment. The spare parts shall be warranted
for a period of ninety (90) days from installation in the customer's unit, but
not to exceed twelve (12) months from delivery to LST. The provisions of this
Article 5 shall survive any termination of this Agreement.
6. TERMINATION
6.1 Termination by TUI.
(a) TUI may terminate only the exclusivity set
forth in this Agreement if, at the end of any calendar quarter, LST has not
placed with TUI firm purchase orders for the minimum number of Lasers required
for such quarter as set forth in Exhibit 3.1, and LST has not cured such default
by placing on or before forty-five (45) days into the immediately subsequent
quarter firm purchase orders for the number of Lasers by which such prior
quarter's purchase orders failed to meet the minimum purchase requirements,
exclusive of the minimum purchase requirements for such subsequent quarter.
However, TUI must continue to sell Lasers to LST on a nonexclusive basis.
(b) TUI may terminate this Agreement if LST
fails to pay invoices for any three (3) or more Lasers for more than thirty (30)
<PAGE>
days after the due date, as determined in accordance with Section 3.2, provided
that TUI has given LST written notice of such default and such default has not
been cured within fourteen (14) days after delivery of such notice.
6.2 Termination by LST. LST may terminate this Agreement
as follows:
(a) if TUI fails to deliver to LST in a timely
manner the number of Lasers set forth in any
purchase order; or
(b) if more than ten percent (10%) of the Lasers
delivered pursuant to any purchase order are rejected by LST for failure to meet
LST's Product Acceptance testing, provided that LST has given TUI written notice
of such rejection and TUI is not able to cure or resolve the problems giving
rise to such rejection, to the reasonable satisfaction of LST, on or before
thirty (30) days after delivery of such notice.
6.3 Effect of Termination. In the event of any termination of
this Agreement, TUI will timely fulfill all orders placed by LST prior to the
date of notice of termination, if requested by LST.
7. CONFIDENTIALITY/PROPRIETARY INFORMATION
7.1 Confidentiality. The parties agree that any and all
confidential and/or proprietary information ("Confidential Information")
furnished by one party to the other in the course of performing this Agreement
shall be and remain the property of the disclosing party. During the Term of
this Agreement and for a period of three years (3) years thereafter, the
recipient of any such Confidential Information agrees not to reveal, disclose,
divulge, sell, license, exchange, lease or in any other way transfer this
Confidential Information to any third party.
7.2 Exclusions. The provisions of Paragraph 7.1 shall not
apply to (i) information that was previously known to the recipient free of any
obligation to keep it confidential as evidenced by written records, (ii)
information that is or has been in the public domain, or (iii) information given
to the recipient through no fault of the recipient, by third persons who are
under no obligation of confidence to the disclosing party.
7.3 Remedies for Breach. The parties agree that monetary
damages for breach of obligations under this Article 7 may not be adequate and
that the non-breaching party shall be entitled to injunctive relief with respect
thereto.
8. USE OF TRADEMARKS
8.1 Trademarks. TUI hereby acknowledges LST's exclusive right
to own and utilize the tradename or trademark, "CeraLase." TUI may grant LST
permission to use certain TUI designated trademarks, service marks and other
symbols ("TUI Marks") in LST's advertising and promotion of the Systems
utilizing the Lasers. LST hereby acknowledges TUI's ownership of the TUI Marks
and agrees not to assert any rights in the TUI Marks. The TUI Marks may only be
used by LST and/or LST affiliates to advertise and promote LST's Systems
incorporating the Lasers and not for any other reason. LST agrees to limit its
use of "CeraLase" to products using the Lasers.
8.2 No Other Rights. Except as expressly provided in this
Agreement, nothing in this Agreement shall be deemed to grant a party any
license, sublicense, copyright interest, proprietary right or other claim
against or interest in the other party's copyrights, patents, or other
intellectual property, or to that of any unaffiliated third party.
8.3 Restrictions on Affiliates. Except as expressly provided
in this Agreement, neither party will use, or permit their respective employees,
<PAGE>
affiliates, agents and subcontractors to use, the trademarks, service marks,
logos, tradenames or other proprietary designations of the other party or the
other party's affiliates, whether registered or unregistered, without such other
party's prior written consent.
9. ESCROW OF SPECIFICATIONS. TUI agrees to provide in written form to
counsel for LST, to be held by such counsel in escrow during the Term of this
Agreement, copies of the written specifications, designs, drawings,
manufacturing and assembly processes and procedures relating to the Lasers and
the Licensed Technology. LST agrees to notify TUI of any change of escrow agent
in writing within fifteen (15) days of any change.
If TUI breaches any of its material obligations under this
Agreement, including, but not limited to, non-delivery of Lasers on time; or
failure of more than 10% of Lasers to pass acceptance testing, which breach, if
curable, is not cured within thirty (30) days written notice from LST, then LST
shall have access to the information in the escrow account as a nonexclusive
licensee for purposes of manufacturing Lasers itself or for contracting with
another supplier to manufacture the Lasers for a period of one (1) year after
LST or its other supplier has commenced manufacturing using the escrowed
information.
If TUI is able to satisfy LST that TUI is again capable of
manufacturing Lasers in an acceptable manner and time, then TUI may recommence
the manufacture of Lasers for LST.
10. RELATIONSHIP OF THE PARTIES. The parties' relationship to each
other in the performance of this Agreement is that of independent contractors.
Nothing contained in this Agreement will place the parties in the relationship
of partners, joint venturers, or employer-employee, and, except as set forth
herein, neither party will have any right to obligate or bind the other in any
manner whatsoever, nor to represent to third parties that it has any right to
enter into any binding obligation on the other's behalf.
11. DISPUTE RESOLUTION; ARBITRATION. Any dispute arising out of or
related to this Agreement which cannot be resolved by negotiation, shall be
submitted for amicable settlement to a neutral third party for conciliation in
New York City. Requests for conciliation shall be made pursuant to the
International Chamber of Commerce ("ICC") Rules for Optional Conciliation,
whereunder the president of the ICC shall appoint a Conciliation Committee
consisting of two members of the same nationalities of the two parties and a
third member from a third country, who shall preside as chairman of the
Committee. If the conciliation has not been accomplished within sixty (60) days
by way of a settlement of the suit or a basis for settlement, the either party
may proceed to arbitration without prejudice. The parties agree to split evenly
the expenses for conciliation, regardless of the outcome.
In the event that the dispute has not been settled by negotiation or
conciliation, the dispute shall be finally settled by binding arbitration in
accordance with the Rules of Arbitration of the ICC by three (3) arbitrators
appointed in accordance with this paragraph. The decision of the arbitrators
shall be final and binding on the parties. Venue for all proceedings shall be in
New York City. The costs of arbitration, including the fees and expenses of the
Arbitrators and any administrative expenses, shall be shared equally by the
parties regardless of the outcome. Each party shall bear the cost of preparing
and presenting its case. The language of arbitration shall be English.
The parties each shall, within twenty (20) business days, choose one
arbitrator who shall be independent of the parties to the arbitration and whose
training, professional activity and nationality are suitable to them. The two
chosen arbitrators shall promptly choose a third arbitrator. If they are unable
to choose a third arbitrator within ten (10) business days after they are both
chosen, then the third arbitrator shall be chosen by the ICC Court of
Arbitration. The parties agree that the arbitrators shall have no power or
authority to make awards or issue orders of any kind except as expressly
permitted by this Agreement, and in no event shall the arbitrators have the
authority to make any award that provides for punitive or exemplary damages. The
<PAGE>
arbitrators' decision shall follow the plain meaning of the relevant documents
and shall be final and binding. The award may be confirmed and enforced in any
court of competent jurisdiction. All post-award proceedings shall be governed by
the ICC.
12. INDEMNIFICATION/LIMITATION OF LIABILITY
12.1 Indemnification by LST. LST agrees to indemnify, defend
and hold harmless TUI, its subsidiaries, affiliates, employees, agents and
assigns from any and all liability to third parties (including, but not limited
to, liabilities, judgments, damages, losses, claims, costs and expenses,
including reasonable attorneys' fees) arising from (i) a breach by LST of its
obligations under this Agreement, and (ii) the acts, errors, representations,
misrepresentations, or negligence of LST, its employees, affiliates,
distributors or agents.
12.2 Indemnification by TUI. TUI agrees to indemnify, defend
and hold harmless LST, its subsidiaries, affiliates, employees, agents and
assigns from any and all liability to third parties (including, but not limited
to, liabilities, judgments, damages, losses, claims, costs and expenses,
including reasonable attorneys' fees) arising from (i) a breach by TUI of its
obligations under this Agreement, and (ii) the acts, errors, representations,
misrepresentations, or negligence of TUI or its employees.
12.3 Limitation of Liability. Neither party shall be liable to
the other for any loss of profit, special, exemplary, punitive, incidental or
consequential damages that such party, its employees, agents or assigns, may
suffer which are caused by or result from the performance or nonperformance of
this Agreement.
13. ATTORNEYS' FEES. In the event that either party is required to
enforce or preserve any of its rights hereunder, the non-prevailing party shall
pay all of the prevailing party's reasonable attorneys' fees and costs,
including allocable costs of in-house counsel, incurred in connection with any
such action, post-judgment collection proceedings, and arbitration award
proceedings .
14. FORCE MAJEURE. Neither party shall be deemed to be in default under
this Agreement for any delay or failure to perform resulting from (a) accidents,
fire, labor disputes, acts of nature or other causes beyond its reasonable
control and without its fault or negligence, (b) acts or omissions of the party,
or (c) compliance with any law, regulation ruling, order or requirement of any
federal, state or municipal government or department or agency or court of
competent jurisdiction. Any delay resulting therefrom shall extend performance
accordingly or excuse performance, in whole or in part, as may be reasonable.
15. NO ASSIGNMENT. This Agreement may not be assigned by any party by
operation of law, or otherwise, except with the prior written consent of the
other party, which shall not be unreasonably withheld; provided that the
exclusivity rights of LST as set forth in Article 3 shall be binding upon any
permitted assignee of TUI.
16. SEVERABILITY. If any part of this Agreement proves to be invalid or
unenforceable for any reason, then such invalidity will affect only the portion
of the Agreement which is invalid. In all other respects this Agreement will
stand as if such invalid or unenforceable provision had not been a part thereof,
and the remainder of the Agreement shall remain in full force and effect.
17. WAIVER. Failure on the part of any party to complain of any act or
failure to act of any other party or to declare any party in default,
irrespective of the duration of such failure, will not constitute a waiver of
rights hereunder. No waiver hereunder will be effective unless it is in writing
and executed by the party waiving the breach or default.
<PAGE>
18. NOTICES. Any notice to be given by the parties must be in writing,
and will be deemed to have been given if delivered personally, if sent either by
national express courier service, or if sent by registered mail to the parties
at the following addresses or such other address designated by notice, or if
sent by facsimile transmission (with a courtesy copy by certified mail in the
manner prescribed above postmarked the same day as the facsimile transmission).
Any notice will be deemed to have been given on the day it was received.
Notices to LST shall be addressed to:
LaserSight Technologies, Inc.
12249 Science Drive, Suite 160
Orlando, Florida 32826
Fax: (407) 382-2701
Attention: Dr. Howard Apple, Vice President
Product Development
With a copy to:
J. Bennett Grocock, Esquire
Grocock, Loftis & Abramson
126 E. Jefferson Street
Orlando, Florida 32801
Fax: (407) 425-0032
Notices to TUI shall be addressed to:
TUI Lasertechnik und Laserintegration GmbH
Lochhamer Schlog 19
D-82166 Grafelfing/Munchen
Germany
Fax: +49898545610
Attention: Dr. Thomas Weber, President
19. ENTIRE AGREEMENT. This Agreement, together with the Exhibits
hereto, constitutes the entire Agreement between the parties with respect to the
subject matter hereof and all prior agreements and representations of the
parties related to these matters, whether written or oral, are merged herein and
shall be of no further force or effect. This Agreement cannot be changed or
modified except in writing signed by both parties.
[Signatures on next page]
[Rest of page left intentionally blank]
<PAGE>
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date set forth above.
"LST"
LASERSIGHT TECHNOLOGIES, INC.
By: /s/William Kern
-------------------------
William Kern, President
"TUI"
TUI LASERTECNIK UND
LASERINTEGRATION GmbH
By: /s/Thomas Weber
-------------------------
Thomas Weber, President
<PAGE>
EXHIBIT 1.1
FIELD OF APPLICATION
Field of application shall mean applications in vision correction
utilizing lasers, namely PRK, PTK, LASIK(TM), and glaucoma treatments (as
practiced under U.S. Patents 5,370,641 and 5,549,598) using a small excimer
laser beam spot of a diameter less than 2mm at the surface of the eye and a
scanning system to ablate the corneal material to obtain a certain shape.
<PAGE>
EXHIBIT 1.4
SPECIFICATIONS OF LASERS
AND
MINOR AND MAJOR MODIFICATIONS
1. Specifications. The Lasers shall be designed and manufactured
according to the following specifications:
Technical Specifications as of May 7, 1997, are:
(a) Output energy: 5-8 mJ
(b) Repetition rate: 0-200Hz
(c) Laser gas: ArF-Premix, wavelength 193 nm
(d) Excitation Scheme: discharge excited, electrode and pin
material solid brass or nickel
(e) Preionization: spark, inductive decoupled
preionization pins
(f) Switching circuit: low-inductance CC-transfer circuit,
Thyratron switched
(g) Resonator: planar, directly mounted to laser
tube
(h) Dust collection: internal electrostatic precipator
(i) Sealing: sealed with plastic/rubber seals
(e.g. VITON O-ring)
All technical specifications are present in the excimer laser head that
will be included in the prototype excimer laser system to be delivered to
LaserSight in April 1997.
2. Minor Modification or Change. For purposes of the Agreement, a minor
modification or change to the Laser or the Licensed Technology means:
(a) a change or modification that requires little change or no
change to the parts of the laser Systems ; or
(b) a change or modification that gives small (less than
twenty percent (20%)) performance increase in output energy, maximum repetition
rate, static/passive gas lifetime, or electrode/preionization pin lifetime; or
(c) a change or modification that requires little or no
development time or expense.
3. Major Modification or Change. For purposes of the Agreement, a major
modification or change to the Laser or the Licensed Technology means:
(a) redesign of laser parts using new principle of operation
from the existing design; or
(b) a change or modification that gives twenty percent (20%)
or greater increase in performance of any material function; or
(c) requires aggregate research and development expenditures
of DM50,000 or more to develop.
<PAGE>
EXHIBIT 3.1
MINIMUM PURCHASE REQUIREMENTS
AND
ADDITIONAL TERMS AND CONDITIONS OF PURCHASE
1. Minimum Purchase Requirements. After Acceptance of the first
production Laser, LST shall provide TUI with firm purchase orders for the
purchase of Lasers in the minimum amounts for the quarters set forth below.
<TABLE>
<CAPTION>
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 5 Quarter 6
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Units per
Quarter 3 8 14 20 22 22
Cumulative Total
3 11 25 45 67 89
</TABLE>
2. Overages and Shortages. If LST purchases by delivery of firm
purchase orders more than the minimum purchase requirements for any quarter,
then the excess amount shall be applied to the minimum purchase requirements of
the immediately subsequent quarter. If LST purchases by delivery of firm
purchase orders less than the minimum purchase requirements for any quarter,
then the LST may make up such deficiency in the immediately subsequent quarter
by purchasing that number of Lasers which equals the amount of such deficiency,
exclusive of the minimum purchase requirements for that subsequent quarter.
3. Purchase Prices. The purchase price for the first thirty Lasers
shall be $26,667 each. The purchase price for the next fifty-nine (59) Lasers
shall be $20,000 each. The purchase price for the thirty-first (31st) through
ninetieth (90th) Lasers shall be subject to adjustment in the event of material
increases in the cost to TUI of parts, supplies, or equipment. In the event of
any such price increase, TUI shall provide LST with written documentation
reasonably satisfactory to LST supporting such price increase at least sixty
(60) days prior to the price increase.
<PAGE>
EXHIBIT 3.2
PRODUCT ACCEPTANCE
TUI and LST will perform the same product acceptance tests at TUI prior
to shipment and at LST (Orlando or Costa Rica) after delivery (Final
Acceptance).
Each laser will be inspected for completeness of subassemblies, loose,
missing, or damaged parts.
Each laser will be tested for functioning input/output signals and for
functioning electromechanical subassemblies; i.e., gas manifold, fan motor, etc.
After any passivation steps, each laser must meet minimum power and
beam size requirements at specified repetition rates. Exact methods and
parameters are to be determined with reference to the detailed draft
"Requirements for Cera-Tube Mini-Lasers" (February 10, 1997).
The Laser will be tested in a simulated use test fixture incorporating
aperture, power stability feedback, focusing lens and beam optics train. Each
laser must meet minimal requirements for beam size, energy/pulse, power at
different repetition rates, and energy variation over a simulated treatment
time. Exact methods and parameters are to be determined with reference to the
detailed draft "Requirements for Cera-Tube Mini-Lasers: (February 10, 1997).
To be financed by June 30, 1997.
LICENSE AND ROYALTY AGREEMENT
-----------------------------
This License and Royalty Agreement ("Agreement"), is made and entered
into as of this 10th day of September, 1997, by and among LASERSIGHT
TECHNOLOGIES, INC., a Delaware corporation ("Licensee"), LUIS A. RUIZ, M.D. and
SERGIO LENCHIG (collectively, "Licensors").
WHEREAS, Licensors are the owners of the entire, right, title and
interest in and to a certain U.S. letters patent and foreign patents, as
identified on Schedule A attached hereto and made a part hereof, pertaining to a
device for use in human corneal refractive surgery (collectively, the "Licensed
Patents");
WHEREAS, Licensors have certain know-how and confidential technical
information directed to the Licensed Patents (collectively, the "Licensed
Technology");
WHEREAS, Licensee desires to acquire a world wide, limited license to
make, have made, use or sell the devices described in or covered by any claims
of the Licensed Patents (the "Devices") in those countries identified on
Schedule A (the "Territory") and throughout the world, in accordance with the
terms and conditions provided herein; and
WHEREAS, Licensors are willing to grant such a license to Licensee in
accordance with the terms and conditions provided herein;
NOW, THEREFORE, for and in consideration of the mutual promises and
valuable consideration set forth herein, the parties hereto mutually agree as
follows:
1. Grant of License.
(a) Limited License. Licensors hereby grant to Licensee during
the Term a world-wide, non-exclusive, terminable, non-transferable,
non-sublicensable (except as provided herein) right and license to
make, have made, use and sell the Devices under the Licensed Patents
and the Licensed Technology (the "Limited License"). As used herein,
the term Licensed Patents shall include those items listed on Schedule
A, and any reissues, divisionals, continuations, and
continuations-in-part. As used herein, the term Licensed Technology is
limited to that information known to Licensors as of the Effective Date
and specifically excludes any information of Licensors concerning
proprietary software developed or owned by Licensors.
(b) Conversion to Exclusive License. Upon the occurrence of
(i) a ruling by a court of competent jurisdiction, or (ii) a settlement
or other similar agreement between Licensors and Chiron Vision
Corporation ("Chiron"), which concludes the litigation between
<PAGE>
Licensors and Chiron related to the Licensed Patents or the Licensed
Technology (the "Litigation"), and terminates all of Chiron's rights in
connection with the Licensed Patents and the Licensed Technology,
Licensors shall give notice of such resolution to Licensee. After
receiving such notice, Licensee shall have sixty (60) days (the "Notice
Period") to convert the Limited License (the "Exclusive Option") into
an exclusive license (the "Exclusive License"). In the event Licensee
so exercises the Exclusive Option, the sole effect will be to amend
Section 1(a) to change the word "non-exclusive" to "exclusive". All
other terms and conditions of Section 1(a) shall remain in full force
and effect. At such time (the "Exclusive Date"), Licensors represent
and warrant that no other party shall have any right, title or interest
in, to or under the Licensed Patents or the Licensed Technology. Upon
the conclusion of the Notice Period and if Licensee does not exercise
the Exclusive Option, nothing contained in this Agreement shall prevent
Licensor from granting additional licenses to the Licensed Patents and
Licensed Technology.
2. Term. This Agreement shall be effective as of the date first set
forth above (the "Effective Date"), and shall commence on the earlier of (i) the
date Licensee commences shipment of the disposable microkeratomes, or (ii)
ninety (90) days subsequent to the date Licensee has received delivery of
completed Limited Production Molds (as defined herein) (the "Commencement
Date"), and shall continue thereafter for a period of thirty-one (31)
consecutive months (the "Initial Term"), unless earlier terminated as provided
for herein. This Agreement thereafter shall renew for additional one (1) year
terms (each a "Renewal Term", and collectively "Renewal Terms", and the Initial
Term together with Renewal Terms shall constitute the "Term") as follows:
(a) Resolution of Litigation. If within thirty (30) days prior
to the termination of the Initial Term or Renewal Term, as the case may
be, the Litigation has been resolved in accordance with Section 1(b),
and Licensee has exercised the Exclusive Option, Licensee shall have
the sole option to renew this Agreement upon the same terms and
conditions set forth herein; provided, however, with respect to
Licensee's obligations pursuant to Section 5 of this Agreement,
Licensee shall be obligated to pay to Licensors, in addition to the
compensation described in Section 5(b) which has not been paid, if any,
only the payments described in Section 5(a)(v) and Section 5(e), and
the amount of such payments may be adjusted as mutually agreed by the
parties. Should Licensee fail to exercise the Exclusive Option, the
parties may mutually agree to renew this Agreement upon terms and
conditions as agreed upon by the parties.
(b) Continuing Litigation. If within thirty (30) days prior to
the termination of the Initial Term or Renewal Term, as the case may
be, the Litigation has not been resolved in accordance with Section
1(b), Licensee shall have the sole option to renew this Agreement upon
the terms and conditions as set forth herein; provided, however, with
respect to Licensee's obligations pursuant to Section 5 of this
Agreement, Licensee shall be obligated to pay to Licensors only the
payments described in Section 5(a)(v) and Section 5(e), and the amount
of such payments may be adjusted as mutually agreed by the parties.
3. Ownership of Intellectual Property.
(a) Licensee acknowledges that Licensors have all right, title
<PAGE>
and interest in the Licensed Patents and the Licensed Technology, and
that as between Licensors and Licensee, Licensors have the exclusive
right to use the Licensed Patents and the Licensed Technology, except
as otherwise provided herein. Licensee shall not, at any time, file any
trademark or patent application with the United States Patent and
Trademark Office or any other governmental entity, any copyright
registration with the U.S. Copyright Office or with any other
governmental entity for the Licensed Patents and the Licensed
Technology. Licensee shall not use any of the Licensed Patents and the
Licensed Technology except in accordance with this Agreement. Any
patent or copyright registration obtained or applied for anywhere in
the world that contains the Licensed Patents and the Licensed
Technology or any substantially similar design, shall be transferred to
Licensors without compensation. Notwithstanding anything set forth in
this Section 3(a) to the contrary, the parties acknowledge and agree
that U.S. Letters Patent No. 5,586,980, dated December 24, 1996 (the
"Kremer Patent"), is the sole and exclusive property of LaserSight
Incorporated ("LaserSight"), an affiliate of Licensee, and that the
provisions of this Section 3(a) shall not apply to LaserSight's
activities in connection with the Kremer Patent.
(b) Licensee shall not oppose or seek to cancel or challenge,
in any forum, including, but not limited to, the United States Patent
and Trademark Office or any other governmental authority, any
application or registration of any trademark, service mark or patent
which contains the Licensed Patents or the Licensed Technology.
Licensee shall not oppose or seek to cancel or challenge, in any forum,
including, but not limited to, the U.S. Copyright Office, any
application or registration of a design containing the Licensed Patents
or the Licensed Technology. Licensee shall not object to, or file any
action or lawsuit because of, any use by Licensors of the Licensed
Patents or the Licensed Technology, whether such use is by Licensors
directly or through different licensees or authorized users unless such
use conflicts with the terms of this Agreement.
(c) Nothing in this Agreement gives Licensee any right, title,
or interest in any of Licensors' intellectual property except the right
to use in accordance with the terms of this Agreement.
(d) Licensee acknowledges that all designs, artwork,
compilations or derivatives ("Works") included in the Licensed Patents
or the Licensed Technology are the sole property of Licensors. Licensee
acknowledge that any Works, other than trademarks or service marks,
created by it pursuant to this Agreement that contain the Licensed
Patents or the Licensed Technology are also the property of Licensors.
Licensee hereby assigns to Licensors any right, title or interest they
may have in Works, other than trademarks or service marks, developed
under this Agreement to Licensors. Licensee warrants they have and will
maintain appropriate agreements with their employees and independent
contractors to give effect to this Section. Accordingly, Licensee shall
not copy, use, assign or otherwise transfer any rights in any Works or
any derivatives thereof included, except in accordance with this
Agreement. Licensee shall not attempt to obtain or assert copyright
rights in any artwork or design, other than with respect to trademarks
and service marks, which contains the Licensed Patents and the Licensed
Technology, without the express written authorization of Licensors.
Notwithstanding anything set forth in this Section 3(d), the parties
<PAGE>
acknowledge and agree that the Kremer Patent is the sole and exclusive
property of LaserSight and that the provisions of this Section 3(d)
shall not apply to LaserSight's activities in connection with the
Kremer Patent.
(e) Licensee acknowledges that its material breach of this
Agreement will result in immediate and irreparable damage to Licensors,
and that money damages alone would be inadequate to compensate
Licensors. Therefore, in the event of a material breach of this
Agreement by Licensee, Licensors, in addition to other remedies, may
immediately obtain and enforce injunctive relief prohibiting the
material breach or compelling specific performance.
4. Limitations on the Limited License. The Limited License is subject
to the following additional limitations:
(a) Distribution. In the event Licensee sells or distributes
the Products (as defined herein) to any person, firm or corporation
related in any manner to Licensee or its officers, directors or major
stockholders, or to an exclusive distributor, Licensee shall make Gross
Profit Payments with respect to such sales or distribution based upon
the Sales Price (as defined herein) generally charged to Licensee's
normal distribution network.
(b) No Other Use. Licensee shall not use the Products, the
Licensed Patents or the Licensed Technology for any purpose other than
in connection with this Agreement.
(c) Selection of Manufacturer. Licensors and Licensee shall
mutually agree on the manufacturer of the Products. Licensee shall (i)
be responsible for the cost of the manufacture of the Products, (ii)
shall enter into contracts for the manufacture of the Device, and (iii)
be responsible for the purchase of those items identified in Section
5(c)(iii) which are necessary to complete the Product.
(d) Premium Rights. Licensee shall not manufacture, sell, or
distribute the Products as Premiums, for publicity purposes, for fund
raising, as giveaways, in combination sales, or for disposal under
similar methods of merchandising except as provided in this subsection;
provided, however, during the first two (2) calendar quarters following
the Commencement Date, Licensee shall have the right to grant Premiums
in an amount not to exceed five percent (5%) of the total disposable
microkeratomes produced during the applicable calendar quarter, and
such amount will be reduced to one percent (1%) for each calendar
quarter thereafter. For purposes of this Agreement, "Premium" shall be
defined as any time the Products are sold or given away for the
purposes of increasing the sale, promoting, or publicizing any other
product, service or establishment, including incentives for sales
force, trade or consumer promotions.
(e) Notices. Licensee shall stamp on the Products or any
packaging for the Products such intellectual property notices as
reasonably directed from time to time by Licensors.
<PAGE>
(f) Quality Control. All of the Products, with the exception
of those items described in subsection 5(c)(iii)(H), (I) and (L)
(collectively, the "Excluded Items"), manufactured pursuant to this
Agreement shall be manufactured and produced in accordance with the
specifications developed and provided to Licensee by Licensors.
5. Consideration.
(a) Limited License. As consideration for the Limited
License, Licensee shall pay the following jointly to
Licensors:
(i) $400,000 U.S. shall be paid to Licensors
upon the signing of this Agreement;
(ii) $150,000 U.S. shall be paid to Licensors on
the date six (6) months after the
Commencement Date, and $150,000 U.S. shall
be paid to Licensors on the date twelve (12)
months after the Commencement Date;
(iii) within thirty (30) days after the
Commencement Date, Licensee shall deliver
pursuant to the directions of Licensors a
LaserScan LSX laser system with a list price
of $300,000 U.S. which shall receive the
full manufacturers warranty given to other
customers of Licensee of these products;
(iv) after the Commencement Date, Licensee shall
provide Licensors with the necessary
equipment and supplies to upgrade Licensors
existing LaserScan 2000 with a Ceralase
laser head and eye tracking system and
Licensee will install such upgrade at such
time and in a manner as mutually agreed to
by the parties; and
(v) fifty percent (50%) of the Gross Profit (as
defined herein) ("Gross Profit Payment")
shall be paid to Licensors no later than
forty-five (45) days after the end of each
calendar quarter during the Term.
(b) Exclusive License. Upon conversion to the Exclusive
License, if ever, and as consideration for the Exclusive License,
Licensee, in addition to the consideration under Section 5(a), shall
pay the following jointly to Licensors:
(i) $400,000 U.S. shall be paid to Licensee
within thirty (30) days after the
Exclusive Date;
(ii) $150,000 U.S. shall be paid to Licensee on
the date which is six (6) months after the
Exclusive Date, and $150,000 U.S. on the
date twelve (12) months after the Exclusive
Date; and
<PAGE>
(iii) within six (6) months after the Exclusive
Date, Licensee shall deliver pursuant to the
directions of Licensors a LaserScan LSX
laser system with a list price of $300,000
U.S. which shall receive the full
manufacturers warranty given to other
customers of Licensee of these products.
(c) Calculation of Gross Profits. "Gross Profit" shall be
calculated by Licensee within forty-five (45) days after the end of
each calendar quarter during the Term and shall be determined as
follows:
(i) the sum of (A) the Cost of Goods Sold (as
defined herein), (B) any royalty fee imposed
(i) by a court, or (ii) in connection with a
settlement agreement, within the Territory
that determines that the Devices sold by
Licensee infringe the intellectual property
rights of a third party not affiliated with
Licensee or resolves any such dispute, as
applicable, and (C) distribution discounts
and sales commissions associated with the
Products; provided, however, for purposes of
this calculation distribution discounts and
sales commissions shall not exceed 35% of
gross sales, shall be subtracted from the
total invoiced amounts of all sales of the
Products, less any credits for returns
actually made and supported by credit
memoranda issued to the customer (the "Sales
Price");
(ii) any rebates and commissions from
manufacturers, distributors or other sources
shall be deducted from the Cost of Goods
Sold;
(iii) for purposes of determining Gross Profit,
all amounts invoiced by Licensee shall be
included which are the result of Licensee's
sale of the Devices and other related
components including, but not limited to,
(A) disposable microkeratome with gear box,
suction ring and suction handle, (B) motor,
(C) motor power cord, (D) tonometer, (E)
suction and power supply, (F) foot switch,
(G) tubing, (H) user's manual, (I) sterile
packaging, (J) control consoles, (K) blades,
(L) replacement parts, (M) lid speculum, and
other component parts which are manufactured
utilizing the Licensed Patents and/or the
Licensed Technology (collectively, the
"Products").
(d) Cost of Goods Sold. "Cost of Goods Sold" shall include (i)
the manufacturing costs from an OEM vendor of the Products, (ii)
packaging costs associated with the manufacture and distribution of the
Products, (iii) sterilization costs associated with the Products, and
(iv) shipping costs associated with the Products.
(e) Minimum Gross Profit Payments. Commencing on the date
which is seven (7) months after the Commencement Date (the "Minimum
Gross Profit Date"), and continuing through the balance of the Term,
the quarterly Gross Profit Payments which will be paid by Licensee to
<PAGE>
Licensors during each calendar quarter shall equal or exceed $400,000
U.S., and after the Exclusive Date this quarterly amount shall increase
to $600,000 U.S. (each a "Minimum Payment Requirement"). Licensee
acknowledges that Minimum Payment Requirements are a floor for the
Gross Profit Payments and Licensee shall use its best efforts to ensure
the Gross Profit Payments exceed the Minimum Payment Requirements.
Notwithstanding anything set forth herein to the contrary, each Minimum
Payment Requirement shall be adjusted as follows (the "Minimum Payment
Requirement Adjustment"):
(i) if the Minimum Gross Profit Date occurs in any
month other than January, the Minimum Payment
Requirement for the calendar quarter in which the
Minimum Gross Profit Date occurs shall be reduced to
the amount resulting from multiplying the applicable
Minimum Payment Requirement, times a fraction, the
numerator of which shall be the number of months
remaining in the calendar quarter in which the Gross
Profit Payment Date occurs, and the denominator of
which shall be four (4) months. A related adjustment
shall be made to the Minimum Payment Requirement for
the calendar quarter during which this Agreement
terminates whereby the Minimum Payment Requirement
then in effect shall be reduced to the amount
resulting from multiplying such Minimum Payment
Requirement, times a fraction, the numerator of which
shall be the difference between the number of months
remaining in the calendar quarter in which the Gross
Profit Payment Date falls and four (4) months, and
the denominator of which shall be four (4) months;
and
(ii) if at any time during the Term, (A) a royalty is
imposed in connection with the sale of the Device, or
(B) an injunction is issued by a court of competent
jurisdiction whereby Licensee is prevented from
distributing the Products or any other dispute arises
in connection with the Licensed Patents or the
Licensed Technology (collectively, a "Patent
Dispute"), the Minimum Payment Requirement then in
effect shall be reduced to the amount resulting from
multiplying such Minimum Payment Requirement times
eighty percent (80%). Any such adjustment shall
remain in effect until such time as the Patent
Dispute is finally resolved in a manner acceptable to
Licensee or the royalty is no longer imposed in
connection with the sale of the Device, as the case
may be. If the Minimum Payment Requirement is reduced
as result of a Patent Dispute such reduction shall
only affect the Minimum Payment Requirements
prospectively. If the duration of any such event or
events described above is less than a calendar year,
any such adjustment shall be pro-rated based on the
number of months during which such event is
continuing.
(f) Minimum Gross Profit Payment Reconciliation. Within
forty-five (45) days after the end of each calendar quarter
after the Minimum Gross Profit Date, Licensee shall calculate
the Minimum Gross Profit Payment shortfall (the "Gross Profit
<PAGE>
Payment Shortfall") by subtracting (i) the aggregate of all
quarterly Gross Profit Payments made to Licensors during the
immediately preceding calendar quarter, from (ii) the Minimum
Payment Requirement then in effect as reduced by the Minimum
Payment Requirement Adjustments, if any. If the Gross Profit
Payment Shortfall is a positive number no further action will
be necessary. If the Gross Profit Payment Shortfall is a
negative number, then Licensee agrees to pay the amount of the
Gross Profit Payment Shortfall in cash to Licensors within
forty-five (45) days after the end of the applicable calendar
quarter; provided, however, if in any prior calendar quarter
Gross Profit Payments have exceeded the Minimum Payment
Requirement for the applicable calendar quarter ("Excess Gross
Profit Payment"), Licensee shall be entitled to offset such
Gross Profit Payment Shortfall by a draw down against the
aggregate of all Excess Gross Profit Payments which have been
previously paid to Licensors by Licensee during the current
calendar year and not previously drawn against, if any.
6. Statement, Payments and Penalties.
(a) No later than forty-five (45) days after each calendar
quarter ending in March, June, September and December, Licensee shall
submit to Licensors full and accurate statements (each a "Quarterly
Statement") showing the quantity, description, Cost of the Goods, and
Gross Profits of the Products distributed and/or sold during the
preceding months, including any additional information kept in the
normal course of business by Licensee which is appropriate to enable an
independent determination of the amount due hereunder with respect to
the Products. All Gross Profit Payments then due shall be made
simultaneously with the submission of each Quarterly Statement.
Quarterly Statements shall be submitted whether or not they reflect any
sales or whether any Gross Profit Payments need to be made.
(b) Failure to submit timely or accurate Quarterly Statements
and/or Gross Profit Payments shall result in an additional charge of 1%
per month on any balance unpaid as of the applicable reporting period
or the maximum allowed by applicable law, whichever is lower.
(c) The receipt and/or acceptance by Licensors of the
Quarterly Statements or Gross Profit Payments, or any payments paid
hereunder, shall not preclude Licensors from questioning the
correctness thereof. In the event that any inconsistencies or mistakes
are discovered in Quarterly Statements or payments, they shall
immediately be rectified by Licensee and the appropriate payment shall
be made by Licensee.
(d) Licensee shall, unless otherwise directed in writing by
Licensors, send all Gross Profit Payments by wire transfer as directed
by Licensors, and shall send all statements to Licensors by mail and
facsimile transmission with delivery confirmed to the addressee at the
addresses set out in Section 25.
7. Records and Right to Audit.
<PAGE>
(a) Licensee each shall keep, maintain and preserve in its
principal place of business during the Term, any renewal periods and at
least five (5) years following termination or expiration, complete and
accurate books, accounts, records and other materials covering all
transactions related to this Agreement in a manner such that the
information contained in the statements referred to in Section 6 can be
readily determined including, without limitation, customer records,
invoices, correspondence and banking, financial and other records in
Licensee's possession or under its control. Licensors may designate an
independent auditor or auditors and such independent auditor or
auditors shall have the right to inspect and audit all materials
related to this Agreement, subject to the confidentiality requirements
set forth in Section 23.
(b) Such materials shall be available for inspection and audit
(including photocopying) at any time during (i) the Term, and (ii) the
period six (6) months immediately following Licensors receipt of its
final payment due hereunder in the event of termination or expiration;
however, such inspection or audit shall not occur more often than once
every twelve (12) months during the Term, and shall take place during
reasonable business hours and upon at least five (5) days notice by
Licensors and/or their representatives. Licensee will cooperate and
will not cause or permit any interference with Licensors and/or their
representatives in the performance of their duties of inspection and
audit. Licensors, and/or their representatives, shall have free and
full access to said materials for inspection and audit purposes.
(c) Should any audit indicate an underpayment of five percent
(5%) or more of the Gross Profit Payments due Licensors for the period
since (i) the Commencement Date, or (ii) date of the last audit,
whichever is later, the reasonable cost of the audit shall be paid by
Licensee. Should any audit indicate an underpayment of ten percent
(10%) or more, during the same period, Licensee shall pay Licensors an
additional fee equal to ten percent (10%) of the underpayment. Payment
of the audit cost and any additional fees is in addition to the full
amount of any underpayment, including interest as provided in Section
6(b), shall be paid by Licensee if the results of such audit indicate
an underpayment of ten percent (10%) or more. Licensee shall cure any
contract breaches discovered during the audit, provide amended reports
if required, and submit the amount of any underpayment including
interest, additional fees and, if applicable, the cost of the audit
within sixty (60) days from the date of the delivery to Licensee of the
results of the audit.
8. Disclosure of Licensed Patents/Licensed Technology. Upon execution
of this Agreement, Licensors shall promptly disclose to Licensee all information
it possesses relating to the Licensed Patents and the Licensed Technology.
Licensors shall continue to provide any technical assistance reasonably
requested by Licensee from time to time during the Term.
9. Maintenance of Patents. Licensors shall be responsible for all
payments, including, without limitation, payments of maintenance fees, required
to keep the Licensed Patents in force for their full terms.
<PAGE>
10. Additional Filings; Approvals. If Licensee (i) desires to market
the Products in any country where regulatory approval is required but not
granted as of the Effective Date, (ii) desires to obtain patent protection
relating to any further discoveries, inventions, technology, know-how,
enhancements, improvements, modifications or other developments relating to the
Licensed Patents or the Licensed Technology in any country where such patent
protection may be granted and has not been granted as of the Effective Date, or
(iii) is required to file with any governmental or other licensing agency any
form or application related to the Products, including without limitation, the
filings or applications described in Section 22(a), Licensors shall provide all
assistance reasonably necessary to enable Licensee to obtain such regulatory
approval, licensing approval or patent protection, as the case may be. The costs
of obtaining all relevant approvals or protection shall be borne solely by
Licensee.
11. Patent Litigation.
(a) Infringement of the Licensed Technology. Should Licensee
or Licensors learn of any infringements of the Licensed
Patents or the Licensed Technology or any part thereof by any
third party, they or it shall promptly notify the other party.
If Licensee has not exercised the Exclusive Option, Licensors
shall have the sole right but not the obligation to pursue
such infringements. Should Licensors pursue such an
infringement, Licensee will cooperate therein as reasonably
requested by Licensors. If any monetary settlement or judgment
is obtained as a result of a suit for infringement, the
proceeds obtained shall be the sole property of Licensors.
If Licensee has exercised the Exclusive Option and
Licensors decline to pursue such an infringement, Licensee may
institute and prosecute suits for infringement in its own name
and at its own expense, and Licensors will join as parties
plaintiff in such suits and cooperate therein as reasonably
requested by Licensee. If any monetary settlement or judgment
is obtained as a result of a suit for infringement, the
proceeds obtained shall be applied first to recover Licensors'
and Licensee's reasonable expenses in proportion to the amount
each expended in such suit, and any excess proceeds shall be
equally divided between Licensee and Licensors.
(b) Defense of Licensed Technology. With the exception of the
Litigation, should any litigation by a third party against
Licensee alleging that the manufacture, use or sale of the
Devices infringes any patent or rights under a patent of such
third party arise, Licensee shall promptly notify Licensors of
such litigation, and Licensors shall defend and/or settle such
litigation at their sole cost and expense; provided however,
the terms and conditions of any such settlement which affect
the rights and/or obligations of Licensee under this Agreement
shall be subject to Licensee's prior approval. In addition,
Licensors shall indemnify and hold harmless Licensee for any
costs and expenses incurred by Licensee in connection with
such third party litigation including, without limitation,
reasonable attorneys' fees, expert witness fees and accounting
fees.
<PAGE>
12. Representations and Warranties.
(a) Licensors. Licensors, and each of them, represent,
warrant and covenant:
(i) that they are the sole and exclusive owners
of the Licensed Patents and Licensed
Technology and that they have full legal
capacity, power and authority to (A) enter
into this Agreement, (B) fully perform all
of their obligations hereunder, and (C)
grant the license concerning the Licensed
Patents and Licensed Technology in the
Territory, provided, however, Licensors make
no representation or warranty concerning the
Licensed Patents and Licensed Technology
outside the Territory;
(ii) that to their knowledge all of the Licensed
Patents and the Licensed Technology known to
Licensors has been or will be promptly
disclosed to Licensee and included in the
license granted hereunder;
(iii) that Schedule A represents a complete and
accurate list of all jurisdictions and
registration numbers related to such
jurisdictions where the Licensed Patents
have been registered, and there are no other
jurisdictions where the Licensed Patents
have been registered or an application for
registration has been made;
(iv) that except for the license granted to
Chiron pursuant to that certain Amended and
Restated License Agreement dated effective
January 1, 1994, they have not, individually
or collectively, previously licensed, used
or disclosed the LicensedPatents or the
Licensed Technology or any part thereof
anywhere in the world, and will not do so
during the Term; provided, however, if
Licensee fails to exercise the Exclusive
Option, Licensors shall not be prevented
from granting additional licenses to the
Licensed Technology and the Licensed
Patents;
(v) that to their knowledge no part of the
Licensed Patents or the Licensed Technology
is being infringed in the Territory;
(vi) that to their knowledge each of the Licensed
Patents are valid and enforceable, and no
part of the Licensed Technology will
infringe the rights of any third parties in
the Territory;
(vii) that prior to the Commencement Date the
disposable microkeratome will have been
adequately tested and shall be safe and
effective for its intended use provided it
is properly used by qualified surgeons
specialized in refractive surgery.
<PAGE>
(b) Licensee. Licensee represents, warrants and covenants:
(i) that it has the full legal power and
authority to enter into this Agreement and
to fully perform all of its obligations
hereunder;
(ii) that its performance hereunder will comply
with all applicable laws, ordinances,
regulations and codes;
(iii) Licensee shall use its best efforts to begin
the distribution and sale of Products by the
Commencement Date and shall use its best
efforts to continue the bona fide
manufacture, distribution and sale of the
Products during the Term; and
(iv) during the Term, Licensee shall not tie the
sale of the Device to any other product.
13. Termination.
(a) Termination by Licensors. This Agreement may be terminated
by Licensors in the event any of the following defaults occur:
(i) Licensee fails to make any payment due or
fails to deliver any required statement, and
fails to cure such default within fifteen
(15) days from receipt of notice from
Licensors; provided, however, Licensors and
Licensee acknowledge and agree that an
underpayment of any Gross Profit Payment
shall not constitute a failure to make a
payment hereunder;
(ii) Licensee attempts to grant or grants a
sublicense other than as provided pursuant
to Section 31 or attempts to assign or
assigns any right or duty under this
Agreement to any person or entity without
the prior written consent of Licensors;
(iii) Licensee, or any related entities,
manufacture, distribute or sell any products
infringing upon or competing with the
Licensed Patents. Nothing herein is intended
to prohibit or restrict Licensee, or any
related entities, from continuing to sell
their existing products or their utilization
or disposition of the Kremer Patent;
(iv) Licensee materially breaches any provision
in this Agreement in addition to those set
out above in this section, and fails to cure
such breach within thirty (30) days from
receipt of notice from Licensors.
(b) Termination by Licensee.
<PAGE>
(i) Licensors materially breach any provision in
this Agreement, and fail to cure such breach
within thirty (30) days from receipt of
notice from Licensors.
(c) Termination by Parties.
(i) If the parties determine that they are
unable to arrange for the manufacture or
continued manufacture of the Device which is
safe and effective for its intended use,
this Agreement shall terminate; provided,
however, nothing set forth in this Section
13(c)(i) shall relieve Licensors from their
obligations set forth in Sections 18 and 22
of this Agreement.
14. Effect of Expiration or Termination.
(a) Other Rights/Remedies. Any termination of this Agreement
will be without prejudice to the rights and remedies of either party
with respect to any provisions or covenants arising out of breaches
committed prior to such termination.
(b) Effect of Expiration or Termination. On the date (the
"Termination Date") which is the later to occur of (i) ninety (90) days
after expiration or termination of this Agreement for any reason, or
(ii) the date after which Licensee's obligations under that certain
Manufacturing Agreement between Licensee and Frantz Medical Development
Ltd. attached hereto as Exhibit B, terminate, Licensee shall
immediately cease all further use of the Products, the Licensed Patents
or the Licensed Technology, directly or indirectly, or any derivation
of the Products, the Licensed Patents or the Licensed Technology. Until
payment to Licensors of any monies due it, Licensors shall have a lien
on any units of Devices not then disposed of by Licensee and on any
monies due Licensee from any person or firm with respect to sales of
the Products.
(c) Disposal of Inventory. After the Termination Date,
Licensee shall have no further right to manufacture the Products or
other products utilizing the Licensed Patents or the Licensed
Technology, but may continue to distribute its remaining inventory of
Products in existence at the time of expiration or termination for a
period of ninety (90) days, provided all statements (including Final
Statement) and payments then due have been delivered and that during
the disposal period Licensee deliver all statements and payments due in
accordance with Sections 6 and comply with all other terms and
conditions of this Agreement. Licensors shall have the option for
thirty (30) days (the "Option Period"), to purchase all remaining stock
after said ninety (90) day period at a price which shall equal
Licensee's actual Cost of Goods Sold. During the Option Period,
Licensee shall not sell its remaining inventory of Products in
liquidating its inventory at a price that is less than that charged by
Licensee to its normal distribution network during the Term. In the
event Licensors elect not to purchase Licensee's remaining inventory,
<PAGE>
Licensee will destroy any remaining inventory within thirty (30) days.
(d) Reversion of Rights. After the Termination Date, all
rights granted to Licensee in this Agreement shall revert to Licensors,
including, but not limited to, the right to manufacture and sell
Products. Nothing contained herein shall be construed to allow Licensee
to utilize the Licensed Patents or the Licensed Technology after the
Termination Date.
(e) Final Statement. Thirty (30) days before the expiration of
this Agreement, Licensee shall furnish a statement to Licensors showing
the number and description of Products on hand or in process ("Final
Statement"). If this Agreement is terminated for any reason, such
statement shall be furnished within thirty (30) days after notice of
termination. Licensors shall have the right to conduct physical
inventories to ascertain or verify the amount of remaining inventory.
15. Survival of Rights.
(a) The terms and conditions of this Agreement necessary to
protect the rights and interests of Licensors in the Licensed Patents
and the Licensed Technology and the Products including, but not limited
to, Licensee's obligations under Sections 3, 7, 11, 14, 15, 18, 19, 21
and 23, shall survive the termination or expiration of this Agreement.
(b) The terms and conditions of this Agreement providing for
any activity following the effective date of termination or expiration
of this Agreement shall survive until such time as those terms and
conditions have been fulfilled or satisfied.
16. Marketing Strategy. Licensee shall be responsible for funding the
development and implementation of a sales and marketing strategy related to the
Products.
17. Additional Obligations. Licensee covenants that during the Term, it
shall not manufacture, distribute, market, promote in any manner or sell any
microkeratome; provided, however, the parties acknowledge and agree that
Licensee's utilization or disposition of the Kremer Patent shall not constitute
a violation of this Section 17.
18. Mold Use and Manufacture. The Molds are the exclusive property of
Licensors which Licensee is permitted to use during the Term of this Agreement.
Licensors agree to provide Licensee with (i) dual cavity automatic production
molds ("Final Production Molds"), and (ii) single cavity limited production
molds ("Limited Production Molds"), each capable of producing disposable
microkeratomes which are safe and effective for their intended use
(collectively, the "Molds"). Licensors shall be solely responsible for the
payment of all costs incurred to complete product design, manufacture,
engineering and testing of the Molds; provided, however, Licensors and Licensee
shall share equally in the cost of manufacturing the Limited Production Molds.
Licensee will make no other molds to manufacture disposable microkeratomes. In
the event the Molds need to be replaced, as determined by the manufacturer
thereof, Licensors and Licensee shall share equally in the cost of such
replacement. If this Agreement is terminated subsequent to the production of the
<PAGE>
replacement Molds, Licensors shall reimburse Licensee for Licensee's share of
the cost of replacing the Molds.
19. Return of Molds. Within fifteen (15) days following the Termination
Date, Licensee shall return the Molds to Licensors.
20. Payment of Taxes. Licensors represent that they are not subject to
any such tax and no taxes should be deducted, however, if any tax is lawfully
imposed and Licensee is required by law to withhold it, Licensee shall notify
Licensors in order to allow Licensors to contest such imposition. All
consideration paid to Licensors pursuant to this Agreement shall not take into
account any national, federal, state, province, municipal or other government
excise, sales, use, occupational or like taxes, duties, customs or penalties now
in force or enacted in the future (collectively, a "Tax"). If any Tax is
imposed, Licensors shall be responsible for the payment of such Tax. If Licensee
is required by law, rule or regulation to pay or withhold any Tax in connection
with any consideration paid to Licensors pursuant to this Agreement, Licensee
shall be entitled to reduce the applicable Minimum Payment Requirement by the
amount of any such Tax paid or withheld by Licensee during the applicable year.
The parties agree to use reasonable efforts to pursue any certificate of
exemption or similar document or proceeding if advised by counsel that
consideration paid to Licensors pursuant to this Agreement may be exempted from
any Tax.
21. Product Liability. Licensee agrees to indemnify, defend and hold
Licensors their successors and assigns harmless from and against any and all
liability, loss, damage, cost or expense (including reasonable attorneys' fees
and disbursements) arising out of any claims of personal injury or property
damage based on the use, manufacture or sale (other than claims arising in
connection with the design, engineering and/or the specifications of the Devices
delivered pursuant to Section 4(f)) of the Products manufactured and sold by
Licensee, their subsidiary, affiliated and controlled companies. At all times
during the Term, Licensee shall procure and maintain product liability insurance
coverage related to the Products sold pursuant to this Agreement in the amount
of $2 million per year in the aggregate. Licensee shall cause Licensors to be
named as additional insureds under any such insurance policy. Evidence of
insurance coverage will be made available to Licensors upon request.
22. Additional Obligations-Liquidated Damages. Upon execution of this
Agreement, Licensors shall deliver and/or provide to Licensee or its designee:
(a) all engineering and manufacturing drawings, diagrams,
schematics, reports and specifications, bill of materials, testing
procedures and testing data, assembly instructions and other related
items utilized in connection with the manufacture of the Devices and
the Products, technical support in connection with the filing of United
States Food and Drug Administration ("FDA") form 510(k) and application
for CE mark; assistance in establishing and, thereafter, maintaining
the design and associated documentation of the Products; and
(b) purchase orders for the Molds relating to the Device as
may be necessary for the manufacturer to achieve project schedules.
<PAGE>
Licensors acknowledge and agree that Licensee would incur substantial damages in
the event Licensee reasonably determines that Licensors have not satisfied their
obligations set forth in Section 18 and/or this Section 22, and that such
damages would be difficult to calculate. Licensors further acknowledge and agree
that all amounts of money paid and all other property previously paid or
delivered to Licensors by Licensee is a reasonable estimate of Licensee's
damages in the event of default by Licensors pursuant to Section 18 and/or this
Section 22.
23. Confidentiality. Both during and after the Term, none of the
parties shall in any manner, directly or indirectly, disclose or divulge to any
person or entity (other than such party's employees, agents or consultants) any
information related to the Licensed Patents, the Licensed Technology or other
confidential and proprietary trade secret information disclosed to them pursuant
to this Agreement; provided, that such confidentiality obligations will not
apply to (a) matters of public knowledge in the industry; (b) matters known or
disclosed to any party under no obligation of confidentiality either before
entering this Agreement or thereafter; (c) matters which are required to be
disclosed or divulged by law; and (d) matters which the parties hereto mutually
agree in writing to disclose.
24. Force Majeure. Neither party shall be liable for failure to perform
hereunder if such failure is occasioned by any cause beyond such party's
control, including, without limitation, war or civil disturbance, fire, flood,
accident, explosion, interruption of transportation, embargo, inability to
procure or shortage of materials or equipment, interruption of production
facilities, governmental order or regulation (including, without limitation, the
FDA), or labor dispute. Suspension of a party's performance for any such cause
shall be limited to the period of time during which such cause is in effect,
plus a reasonable time thereafter. Such suspension shall not affect the running
of the Term and shall not be regarded as a breach of this Agreement.
25. Notice. Every notice, request, demand, and other communication
contemplated by this Agreement shall be in writing and deemed to have been made
either when personally delivered to the respective party, or three days after it
is deposited, postage prepaid, with an express mail service, or 10 days after it
is deposited, postage prepaid, in the United States mail to the addresses stated
below or such changed address as any party may give by written notice to the
other, provided that concurrently with such deposits a copy of any notice is
sent by telefacsimile:
If to LICENSORS: Luis A. Ruiz, M.D. and
Sergio Lenchig
Calle 120 No. 20A-44, Apartment 401
Santafe de Bogota, Colombia
South America
Facsimile: 57-1-213-8462 - Attn: Sergio
Lenchig
Facsimile: 57-1-218-5730 - Attn: Luis A.
Ruiz, M.D.
with a copy to: Allan S. Buffenstein, Esq.
Mezzullo & McCandlish
1111 East Main Street, 15th Floor
<PAGE>
Richmond, Virginia 23219
Facsimile: 804-775-3800
If to LICENSEE: LaserSight Technologies, Inc.
12249 Science Drive, Suite 160
Orlando, Florida 32826
Attention: President
Facsimile: 407-382-2701
with a copy to: Alan B. Bornstein, Esq.
Sonnenschein Nath & Rosenthal
One Metropolitan Square, Suite 3000
St. Louis, Missouri 63102
Facsimile: 314-259-5959
26. Waiver. Neither waiver by either party of any breach or default
under this Agreement by the other party, nor the failure of either party to
exercise promptly its rights in the event of such breach or default, shall be
construed as a waiver of any subsequent breach or default, or of any term,
condition or provision of this Agreement.
27. Attorneys Fees. In the event that either party incurs costs and
fees, including attorneys' fees, in enforcing its or their rights under this
Agreement, the party substantially prevailing in any suit or action, including
any appeal, shall be entitled to recover from the other such costs and
attorneys' fees.
28. Severability. Each provision hereof is intended to be severable and
the invalidity or illegality of any portion of this Agreement shall not affect
the validity or legality of the remainder hereof.
29. Governing Law. The validity, formulation, interpretation and
performance of this Agreement shall be governed by the laws of the State of
Virginia, without giving effect to choice of law principles. The parties do
hereby irrevocably submit themselves to the personal jurisdiction of the United
States Federal Court for the Eastern District of Virginia and do hereby
irrevocably agree to service of such court's process upon them, and with respect
to Licensors, on their counsel, Allan S. Buffenstein of Mezzullo & McCandlish,
so long as they remain counsel to Licensors and thereafter until such time as it
is verified to Licensee in writing that Licensors' successor counsel has agreed
to accept such service on Licensors' behalf.
30. Entire Agreement. This Agreement represents the entire agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior or contemporaneous understandings between the parties. This
Agreement may not be amended, supplemented or modified except by a subsequent
written agreement signed by both parties hereto.
31. Assignment. This Agreement and all rights granted pursuant to its
terms shall be personal to Licensee and shall not be assigned, sublicensed or
transferred in whole or in part without the prior written consent of Licensors;
provided, however, Licensee may assign or transfer its interest in this
<PAGE>
Agreement in connection with the sale or transfer of all or substantially all of
its assets. Licensors may assign this Agreement, in whole or in part, provided
that Licensors agree to continue to provide technical assistance to Licensee
under Section 8(a). Licensee may sublicense the Patents only for the purpose of
having the Device manufactured and/or in order to sell and distribute the Device
and for no other purpose whatsoever.
32. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
be deemed one and the same instrument. The English language version of this
Agreement shall be the official version of this Agreement.
33. Captions. The captions contained herein are intended for
convenience of reference only and shall not be used to interpret any of the
terms or provisions hereof.
34. Additional Documents. The parties hereto agree to execute,
acknowledge and deliver such further documents as may be necessary or proper to
carry out the purpose and intent of this Agreement.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto, by their respective duly
authorized officers, have executed this Agreement as of the date first written
above.
LICENSORS: LUIS A. RUIZ, M.D.
/s/Luis A. Ruiz, M.D.
-----------------------------------
Luis A. Ruiz, M.D.
SERGIO LENCHIG
/s/Sergio Lenchig
-----------------------------------
Sergio Lenchig
LICENSEE: LASERSIGHT TECHNOLOGIES, INC.
By:/s/J. Richard Crowley
--------------------------------
J. Richard Crowley
Chief Operating Officer
<PAGE>
SCHEDULE A
Licensed Patents
ISSUED PATENTS:
1. United States: U.S. Patent No. 5,133,726/RE35,421
2. Brazil: Pat. No. PI9001714
3. Columbia: Pat. No. 144267
4. Taiwan: Pat. No. 179735
5. Portugal: 94986
6. Germany: Pat. No. 69005285 (derived from EPO Patent 442156)
7. Spain: Pat. No. 2048415 (derived from EPO Patent 442156)
8. Sweden: Pat. No. G94986 (derived from EPO Patent 442156)
9. Japan: Pat. No. 1859284
PENDING PATENT APPLICATIONS:
1. Austria Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
2. Belgium Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
3. Switzerland Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
4. Denmark Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
5. France Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
6. United Kingdom Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
7. Greece Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
8. Italy Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
9. Luxembourg Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
10. Netherlands Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
11. Liechtenstein Patent Appln. No. 90201166.7 (derived from EPO Patent 442156)
MANUFACTURING AGREEMENT
-----------------------
Agreement made as of the 10th day of September, 1997 between LaserSight
Technologies, Inc. ("LaserSight"), a Delaware corporation (a wholly owned
subsidiary of LaserSight Incorporated, a Delaware corporation), and Frantz
Medical Development Ltd.
("Frantz"), a New York corporation.
R E C I T A L S
A. LaserSight is engaged in the development, manufacture and
marketing of ophthalmic lasers.
B. Frantz is engaged in the development and manufacture of various
products, including medical devices.
C. LaserSight has been granted a worldwide limited license (the
"License") to practice the Patents (hereinafter defined) for the manufacture and
sale of Products (hereinafter defined) pursuant to a Licensing and Royalty
Agreement among LaserSight, Luis A. Ruiz, M.D. and Sergio Lenchig (collectively,
"Ruiz/Lenchig") (the "License Agreement").
D. LaserSight desires to grant a sublicense to Frantz and Frantz
desires to secure the exclusive worldwide right to manufacture Products
exclusively for LaserSight.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained the parties agree as follows:
1. Definitions
"Automatic Corneal Shaper System" shall mean the complete system used
to perform LASIK surgery which includes (i) disposable microkeratome with gear
box, suction ring and suction handle, (ii) motor, (iii) motor power cord, (iv)
tonometer, (v) suction and power supply, (vi) foot switch, (vii) tubing, (viii)
user's manual, (ix) sterile packaging, (x) control consoles, (xi) blades, (xii)
replacement parts, (xiii) lid speculum, and other component parts which are
manufactured utilizing the Patents.
"Contract Year" shall mean each 12 consecutive month period beginning
on January 1 and ending on December 31.
"Patents" shall mean U.S. Patent #5,133,726 and Patent Reissue #35,421,
both with respect to a microkeratome device, including all United States and
<PAGE>
foreign patents related thereto which may be issued in the future including
amendments, reissues, improvements thereon, etc.
"Product" or "Products" shall mean disposable microkeratomes which are
manufactured utilizing the Patents.
"Purchase" shall mean to order and take delivery of Products.
"Specifications" shall mean the latest specifications for Products
agreed to by LaserSight and Frantz which have been developed by Ruiz/Lenchig and
pursuant to which Frantz is manufacturing Products for LaserSight. The
Specifications may only be amended or changed by written agreement of LaserSight
and Frantz.
2. License To Manufacture Products
LaserSight hereby grants Frantz an exclusive worldwide sublicense, even
as to LaserSight, under the License Agreement solely for the purpose of
manufacturing Products exclusively for LaserSight.
If Chiron Vision Corporation ("Chiron") as agent, owner, or assignee,
or any other agent, owner or assignee of U.S. Patent 4,840,175 ("Peymen")
institutes any action which causes LaserSight to cease distributing Products in
the United States (a "Trigger Event"), LaserSight and Frantz agree as follows:
(a) 90 days following its receipt of notice of a Trigger Event, Frantz
shall cease manufacturing Products in the United States.
(b) Within 30 days after Frantz receives notice of the institution of a
Trigger Event, Frantz shall determine the feasibility of its manufacturing
Products outside of the United States. In the event Frantz decides to cause
Products to be manufactured outside of the United States, Frantz shall:
(i) continue to have full responsibility for the manufacture
of Products, including all quality and warranty requirements as specified in
Paragraph 8; and
(ii) reduce Products price by an amount equal to fifty percent
of any reduction in Product manufacturing costs on a per unit basis resulting
from the change in the location of the manufacturing site to a manufacturing
site located outside of the United States, after any initial transfer or
start-up expenditures.
In all other respects the terms and conditions of this
Agreement shall remain in full force and effect.
<PAGE>
(c) In the event Frantz elects to not manufacture Product outside of
the United States, this Agreement shall terminate and within 60 days after such
election is made, Frantz shall transfer and cause to be delivered to LaserSight,
at the expense of LaserSight, all molds, engineering drawings and other
properties previously delivered by LaserSight pursuant to Paragraph 4.
(d) If Frantz elects not to manufacture Product outside of the United
States, Frantz shall offer reasonable assistance, as Frantz shall determine, to
LaserSight to establish offshore manufacturing. LaserSight shall pay Frantz for
any direct, reasonable expenses associated with such assistance. Frantz shall
offer to sell to LaserSight any confidential properties related to the
manufacture of Product which have been developed at Frantz's sole expense which
may include process, further design, or other know-how proprietary to Frantz
(the "Manufacturing Know-How"). In consideration for the receipt of the
Manufacturing Know-How, LaserSight shall negotiate with Frantz in good faith to
pay a royalty not to exceed $3.00 per unit of Product produced by or on behalf
of LaserSight utilizing the Manufacturing Know-How for the duration of the
License Agreement. The sum of such contemplated royalty payment and transfer
price to LaserSight shall not exceed the transfer price associated with Products
as were being previously produced in the U.S.
3. Obligations of Frantz
Frantz shall be responsible for the production and manufacture of
Products in accordance with the Specifications, as may be amended from time to
time in accordance with this Agreement. Frantz acknowledges and agrees that it
shall have a limited supply of Product packaged on or before October 22, 1997.
The parties acknowledge and agree that such supply of Product shall be
considered "pre-production" Product and shall be subject to further modification
as requested by LaserSight. Notwithstanding anything set forth herein to the
contrary, if Frantz (i) fails to have a limited supply of Product packaged on or
before October 22, 1997, and (ii) such failure was caused solely by Frantz,
LaserSight shall have the option to terminate this Agreement upon 10 days prior
written notice to Frantz, and LaserSight shall be entitled to pursue all legal
and equitable remedies to which it may be entitled in connection with such
breach.
4. Obligations of LaserSight
The parties acknowledge and agree that Ruiz/Lenchig have undertaken
certain obligations to pay for and/or provide (or cause to be provided) certain
items related to the development of Products. The full and timely performance of
these obligations by Ruiz/Lenchig and the execution of the License Agreement are
essential elements and conditions precedent to the full and timely performance
by LaserSight and Frantz of their respective obligations under this Agreement.
<PAGE>
LaserSight shall be responsible for the following obligations:
(a) LaserSight shall provide Frantz with Specifications, design and
design documentation for Products and the Automatic Corneal Shaper System,
including establishing and, thereafter, maintaining the design and associated
documentation. Configuration control shall be maintained by Frantz utilizing a
formal change control system the same or substantially similar to the standard
procedures used by Frantz.
(b) LaserSight shall provide Frantz with a complete Automatic Corneal
Shaper System during its production (for a duration of at least one month) to
allow testing and product review by Frantz of final production Product.
(c) LaserSight shall provide to the mold maker designated by Frantz
purchase orders for (i) dual cavity automatic production molds, and (ii) single
cavity limited production molds, as may be necessary for Frantz to achieve
project schedules.
(d) LaserSight shall be responsible for the cost of any major repairs
and revisions to molds; provided, however, if such repairs or revisions are the
result of any cause or event attributable to Frantz (normal wear and tear
excepted), Frantz shall be responsible for the cost of any such repair or
revision. Such revisions shall be documented and authorized by Frantz's Mold
Revision Route Sheet Procedure.
(e) LaserSight shall provide Frantz with all documentation, reports,
studies, protocols, and data regarding the quality, manufacture and distribution
of Product and participate in the timely design reviews at each major phase and
as required to support project objectives, as determined by Frantz.
(f) Lasersight shall coordinate the performance of all clinical trials
necessary to assure clinical efficacy of Products. Written reports shall be
provided to Frantz within 14 days of the completion of such trials.
(g) LaserSight shall (i) provide Frantz with special tooling and
special equipment required to produce packaging material and packaging for
Products distribution, or (ii) make arrangements for the packaging and
sterilization of Products.
(h) LaserSight shall ensure that all requirements for trademarks,
labeling and package design are satisfied. Frantz shall be responsible for the
implementation and control of all packaging and labeling that is shipped with
Products.
(i) LaserSight shall provide Frantz with all instructional inserts that
are required to be shipped with Products.
<PAGE>
5. Purchase of Products
(a) No later than October first of each year, LaserSight shall furnish
Frantz with a forecast of the number of Products it expects to order during each
month of the succeeding Contract Year. No later than April first of each year,
LaserSight shall furnish Frantz with an updated forecast of the number of
Products it expects to order during each remaining month of such year. Such
forecasts and updates shall merely represent reasonable estimates based upon
LaserSight's then current business plans and shall not be Purchase commitments.
LaserSight's obligation to make firm Purchase commitments for Products shall be
governed by Paragraph 5(b).
(b) During the term of this Agreement, on or before each January 1,
April 1, July 1 and October 1, LaserSight shall place firm Purchase orders for
the quantities of Products to be delivered during April, May and June; July,
August and September; October, November and December; and January, February and
March, respectively (each a "Quarterly Purchase Order"). Upon the issuance of a
Quarterly Purchase Order by LaserSight and receipt by Frantz, the obligation of
LaserSight to Purchase Product shall be firm and noncancellable; provided,
however, 90 days following the receipt of notice of a Trigger Event, Frantz
shall cease manufacturing Products and LaserSight shall be responsible for
taking delivery of Product which is produced in accordance with outstanding
Quarterly Purchase Orders during such 90 day period. Each Quarterly Purchase
Order shall be placed on LaserSight's standard purchase order form. Deliveries
shall be made according to delivery dates identified on such purchase orders,
subject to Paragraph 5(c). All terms and conditions of this Agreement shall
supersede any terms and conditions of any Quarterly Purchase Order to the extent
the same may modify or is inconsistent therewith. Frantz shall be deemed to have
accepted a Quarterly Purchase Order, except to the extent of the quantities it
expressly rejects in writing within 10 business days of receipt of such order.
Frantz shall not unreasonably reject quantities which are consistent with (i)
the most recent October annual forecast, or (ii) the updated annual forecast
furnished in April, as applicable, to be delivered by LaserSight to Frantz.
(c) No later than September 30, 1997, LaserSight shall issue to Frantz
an initial blanket purchase order for a minimum of 200,000 units of Product for
delivery during the period commencing on the calendar month immediately
following the month during which production of Product commences and terminating
30 months immediately thereafter; provided, however, 90 days following its
receipt of notice of a Trigger Event, Franz shall cease manufacturing Products,
notwithstanding anything set forth herein to the contrary.
(d) Delivery terms shall be F.O.B. Frantz's manufacturing facility or
designated sterilizing facility. Frantz shall ship Products in the manner
specified in the applicable LaserSight purchase order or as otherwise directed
by LaserSight in writing prior to shipment.
<PAGE>
6. Minimum Purchase
LaserSight shall purchase 50,000 units of Product in each Contract
Year. The number of units of Product for any partial Contract Year shall be
prorated by multiplying 50,000 units of Product times a fraction the numerator
of which shall be the number of days the Agreement was in effect during such
Contract Year, and the denominator of which shall be 365.
7. Price and Payment
Initial Product pricing shall be based upon Attachment "A" annexed to
this Agreement.
Any scrap cost incurred by Frantz over and above 5% of the cost of
goods sold of Products, as determined by Frantz, shall be an extra cost invoiced
to LaserSight on a quarterly basis and shall be due and payable 30 days after
billing; provided, however (i) in no event shall such scrap cost incurred by
Frantz exceed 20% of the cost of goods sold of Products, and (ii) Frantz shall
notify LaserSight immediately in the event such scrap cost equals or exceeds 5%
of the cost of goods sold of Products. Scrap cost shall have been due to the
inability to meet specific design requirements which are identified as
questionable areas during final design reviews following clinical trials.
Payment for monthly shipments shall be due to Frantz by bank check or
wire transfer 45 days after the date of invoice or shipment, whichever is later.
Any increase in direct Product costs resulting from a change in Product
Specifications shall be added to the price of Product. Such increase in price
shall include a cost markup of 10%. Any decrease in direct Product costs
resulting from Product design modifications or process improvements, whether
initiated or conceived by Frantz or LaserSight, shall be shared equally by
Frantz and LaserSight.
Price adjustments shall be made on an annual basis and be based upon
the increase in the current producers price index over the base producers price
index (for finished goods less food and energy as quoted by the U.S. Department
of Labor, Bureau of Labor Statistics). The method for calculation of such price
adjustments are set forth on Attachment "B."
8. Products Quality and Warranties
Frantz shall maintain quality systems in compliance with ISO 9002 and
FDA/GMP requirements, details of which shall be set forth in a Quality Plan for
Products to be provided by Frantz to LaserSight.
<PAGE>
Frantz shall develop a Products Master Checklist/Plan and maintain
elements of Product Master Record in accordance with the requirements defined by
LaserSight.
Engineering changes shall be accomplished using Frantz change control
procedures.
At least once every six months, LaserSight and Frantz shall jointly
participate in quality and regulatory reviews to define quality plans and
objectives.
Frantz warrants that Products manufactured pursuant to this Agreement
shall meet the Specifications and be free from defects in material and
workmanship for a period which shall be the lesser of (i) 24 months from
delivery to LaserSight, or (ii) the shelf life of Products as determined by
Frantz based upon tests of verification and validation relating to Sterilization
of Products and adhesives utilized in connection with producing Product. The
foregoing warranty shall not extend to any Products or part which has been
subject to accident or abuse or which has not been used, operated or maintained
in the manner prescribed in Products' instructions or with respect to which
unauthorized repair or alteration has taken place. During the term of this
warranty, Frantz shall replace defective Products or parts thereof without
charge within 30 days following receipt of such defective Products by Frantz.
Frantz shall bear all shipping costs for the return of defective Products to
Frantz and of shipping replacement Products to LaserSight or LaserSight's
customers, as applicable. Frantz shall have the right to designate the carrier
for the return of defective Products.
The warranty of Frantz is limited to replacement of defective Products.
Return authorization must be received prior to the return of any Products.
Products must be cleaned prior to return and be returned in properly identified
biohazard containers.
EXCLUSION OF WARRANTIES- THE FOREGOING WARRANTY IS IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, WARRANTIES OF
MERCHANTABILITY. IT IS EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES THAT
PURSUANT TO THIS AGREEMENT, FRANTZ MAKES NO WARRANTY OF ANY KIND, EXPRESS OR
IMPLIED, TO ANY PURCHASER OF PRODUCTS OTHER THAN LASERSIGHT.
9. Term, Renewal and Termination
Subject to the earlier termination of the License Agreement as set
forth herein, the initial term of this Agreement shall be 60 months commencing
with the first full month of production of Products by Frantz. This Agreement
shall automatically be renewed at the expiration of the initial term for an
additional one-year period, if not terminated in writing by either party at
least three months prior to the expiration of the initial term or any renewal
term, as applicable.
This Agreement may also be terminated by LaserSight or Frantz upon the
occurrence of any of the following events:
<PAGE>
(a) if any party is in default with respect to a material obligation
under this Agreement, the affected party may give written notice of such default
to the defaulting party; thereafter, unless such default is cured or a
substantial effort has been initiated and continued to effect a cure within 30
days after the receipt of such notice, the non-defaulting party, in addition to
its other remedies, may elect to terminate this Agreement by additional written
notice to the defaulting party;
(b) immediately upon notice to the other party, if LaserSight or Frantz
(i) is adjudicated to be insolvent or bankrupt or a
petition in bankruptcy is filed by or against
LaserSight or Frantz and such petition is not
dismissed within 60 days after it is filed;
(ii) admits in writing its inability to pay its debts as
they become due; or
(iii) executes an assignment for the benefit of its
creditors.
If Frantz, after consultation with LaserSight, reasonably determines
that Frantz is unable to manufacture Products in a reliable and consistent
manner as required by the clinical performance of Products, then Frantz shall
continue producing Products for a period of six months, or for such shorter
period as may be approved or directed by LaserSight, immediately following the
date of such determination, and at the conclusion of such period this Agreement
shall be terminated. Within 30 days after the date of such termination, Frantz
shall deliver the Manufacturing Know-How to LaserSight, without charge.
Notwithstanding anything set forth in this Agreement to the contrary, Frantz
shall not be liable to any party for any damages or pecuniary loss suffered by
any party as a result of such decision to terminate except for the obligations
which survive termination as set forth in the next paragraph.
No termination shall affect either party's rights to receive damages or
other legal or equitable relief. The obligations under Paragraphs 8 (Products
Quality and Warranties), 10 (Product Recalls), 11 (Product Liability Insurance),
16 (Confidentiality), 17 (Indemnification), and 18 (Patent Litigation) shall
survive expiration or termination of this Agreement. Neither expiration or
termination of this Agreement shall relieve either party of any liability for a
breach or default which occurred prior to expiration or termination with respect
to any right or obligation which existed prior thereto.
Notwithstanding anything set forth in this Agreement to the contrary,
if the License Agreement terminates for any reason, (i) LaserSight shall be
responsible for taking delivery of Product which is produced in accordance with
outstanding Quarterly Purchase Orders during the period which is 90 days
immediately following the date of such termination; and (ii) after such 90 day
period, LaserSight's obligations pursuant to this Agreement shall terminate and
LaserSight shall not be liable to any party for any damages or pecuniary loss
<PAGE>
suffered by any party as a result of such termination except for the obligations
which survive termination as set forth in the immediately preceding paragraph.
10. Return of Property
Within 10 days after the termination of this Agreement for any reason,
Frantz shall return to LaserSight all items which have been previously delivered
to Frantz pursuant to Paragraph 4.
11. Product Recalls
In the event (i) any governmental authority issues a request, directive
or order that Product be recalled, (ii) a court of competent jurisdiction orders
such a recall, or (iii) LaserSight and Frantz, after consultation, reasonably
determine that Product should be recalled, the parties agree to take all
appropriate corrective action. In the event that such recall results from any
cause or event attributable to Frantz, Frantz shall be responsible for all
expenses of the recall. In all other cases, LaserSight shall be responsible for
the expenses of recall. For the purposes of this Agreement, the expenses of
recall shall include, without limitation, the expenses associated with (i)
providing notice of recall to purchasers of Product, (ii) destruction or return
of the recalled Product, and (iii) LaserSight's costs for Product recalled, but
not any direct and normal recurring expenses of LaserSight or Frantz.
12. Product Liability Insurance
Frantz shall maintain product liability insurance with single limits of
not less than $2 million in the aggregate per year for use of Products in
surgical procedures. The additional cost to Frantz of such insurance, if any,
shall be added to the unit price of Product as a separate charge based upon
Product units shipped and such cost shall be reviewed and revised annually, if
required. Frantz shall cause the insurance policy to name LaserSight as an
insured party.
For a period of two years after termination of this Agreement, each
party shall maintain product liability insurance with single limits of not less
than $2 million in the aggregate per year and provide the other party with
evidence of the continued existence of such insurance.
13. Customer Complaint Procedure
LaserSight (as manufacturer of record) shall provide Frantz, at least
monthly, with customer complaint information and Frantz shall be provided with
access to all information regarding the clinical performance of Products.
<PAGE>
Customer complaints shall be processed by LaserSight. Frantz shall
cooperate in such processing based upon receipt of written complaints following
the return of Products in question.
14. Regulatory Authority Matters
LaserSight shall have the responsibility for filing form 510(k) with
the FDA.
LaserSight shall have the responsibility to file with the FDA all
medical device incidence reports and provide Frantz with copies thereof to
support product improvement activities.
LaserSight shall provide Frantz with all necessary documentation and
information including but not limited to design, manufacturing and Patent
information to meet all regulatory requirements.
15. Force Majeure
The failure of either party to perform an obligation under this
Agreement, except the obligation to make payments, shall not subject such party
to any liability to the other, and the performance of such party may be delayed,
if such failure is caused by circumstances beyond that party's reasonable
control such as acts of God, fire, explosion, flood, drought, war, riot,
sabotage, embargo, strikes or other labor trouble, failure in whole or in part
of suppliers to deliver materials, equipment or machinery on schedule,
interruption of or delay in transportation or compliance with any order or
regulation of any government entity acting with authority (including, without
limitation, the FDA). The party claiming the benefit of this Section shall give
immediate notice to the other party, shall use its best efforts to avoid or
remove such cause or causes of non performance, and shall otherwise continue to
perform hereunder. LaserSight may terminate this agreement upon 30 days advance
written notice given to Frantz, if Frantz has invoked this Section to excuse its
performance for a continuous period of at least 30 days, provided LaserSight
reasonably determines and submits to Frantz satisfactory supporting evidence
that it can remedy such non-performance more expeditiously than Frantz.
Suspension of a party's performance for such cause as described herein shall not
affect the running of the term of this Agreement.
16. Notices
Any notice shall be in writing, delivered by hand or sent to the other
party at its address stated below by certified mail, return receipt requested,
postage prepaid, and shall be deemed to be received upon hand delivery or 48
hours after it is deposited in the United States mail, without regard as to when
<PAGE>
or whether such notice is actually received, provided that concurrently with the
mailing a copy is sent by telefacsimile. Such notices shall be directed as
follows:
If to LaserSight: LaserSight Technologies, Inc.
12249 Science Drive, Suite 160
Orlando, Florida 32826
Attn: President
Facsimile: (407) 382-2701
And a copy sent
simultaneously to: Alan B. Bornstein, Esq.
Sonnenschein Nath & Rosenthal
One Metropolitan Square, Suite 3000
St. Louis, Missouri 63102
Facsimile: (314) 259-5959
If to Frantz: Frantz Medical Development Ltd.
595 Madison Avenue - 34th Floor
New York, New York 10022
Attn: President
Facsimile: (212) 751-6313
And a copy sent
simultaneously to: Richard M. Rosenberg, Esq.
Shatz, Meier & Scher, LLP
18 East 48th Street - 14th Floor
New York, New York 10017
Facsimile: (212) 644-2298
17. Confidentiality
(a) Both during and after the term of this Agreement, each party shall
maintain in confidence all proprietary information obtained from the other
party, and all information concerning the other party, except a party may
disclose:
(i) information which is generally available to the
public through no fault of the disclosing party;
(ii) information which was available to the disclosing
party prior to receipt thereof from the other party
under no obligation of confidentiality either before
entering this Agreement or thereafter;
(iii) information received by the disclosing party from a
third party not under any obligation of
confidentiality to the other party;
<PAGE>
(iv) information which is required to be disclosed or
divulged by law; and
(v) information which the parties hereto mutually agree
in writing to disclose.
(b) Upon the expiration or termination of this Agreement, each party
shall promptly return to the other all documents and materials proprietary to
it.
18. Indemnification
LaserSight agrees to indemnify, defend and hold Frantz, its officers,
directors, shareholders, employees, its permitted sublicensees and its
subcontractors harmless against any and all liability, loss, damages, cost or
expenses (including reasonable attorneys' fees and legal disbursements) that
Frantz may incur, suffer or be required to pay as a consequence of a third party
claim or suit brought against Frantz or its employees, its sublicensees or
subcontractors arising out of or with respect to any alleged violation by
Products of patent, trademark, tradename or proprietary right of a third party,
or promotion, labeling, packaging, distribution or sale of Products or resulting
from other LaserSight activities including physician training, provided,
however, that in no event shall LaserSight be required to pay more than $2
million per year in the aggregate for indemnification under this Paragraph 18.
Frantz agrees to indemnify, defend and hold LaserSight, its officers,
directors, shareholders, employees, its permitted sublicensees and its
subcontractors harmless against any and all liability, loss, damages, cost or
expenses (including reasonable attorneys' fees and legal disbursements) that
LaserSight may incur, suffer or be required to pay as a consequence of a third
party claim or suit brought against LaserSight or its employees, its
sublicensees or subcontractors arising out of or with respect to defects in the
manufacture of Products, provided, however, that in no event shall Frantz be
required to pay more than $2 million per year in the aggregate for
indemnification under this Paragraph 18.
The obligations of the indemnifying party under this Paragraph 18 are
conditioned upon (i) written notice given to the indemnifying party of a written
claim or lawsuit which is alleged to be covered by this indemnity; such notice
to be given within 15 days after the indemnified party has received written
notice of such claim or lawsuit; and (ii) full cooperation of the indemnified
party with the indemnifying party in any regard in the investigation and defense
of any threatened claim or lawsuit alleged to be covered by this indemnity.
Any indemnity shall be void as to any claim or lawsuit for which
settlement or any offer of settlement is made without the prior written consent
of the indemnifying party, such consent shall not be unreasonably withheld.
<PAGE>
19. Patent Litigation
Patent infringement defense and enforcement shall be the responsibility
of LaserSight and shall proceed in accordance with the terms and conditions set
forth in the License Agreement. Frantz shall cooperate with LaserSight to
support LaserSight's patent position.
20. Assignment
Neither party may assign the Agreement without the prior written
consent of the other party; provided however, LaserSight may assign or transfer
its interest in this Agreement in connection with the sale or transfer of all or
substantially all of its assets.
21. Miscellaneous
This Agreement may only be amended by a written instrument executed by
each of the parties hereto.
This Agreement constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof, and supersedes all prior agreements
and understandings of the parties, oral and written, with respect to the subject
matter hereof.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio.
The headings contained herein are for the sole purpose of convenience
of reference and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this Agreement.
This Agreement shall inure to the benefit of, and shall be binding
upon, the parties hereto and their respective successors and permitted assigns.
The failure of any of the parties hereto to at any time enforce any of
the provisions of this Agreement shall not be deemed or construed to be a waiver
of any such provision, nor to in any way affect the validity of this Agreement
or any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any breach of
any of the provisions of this Agreement shall be effective unless set forth in a
written instrument executed by the party or parties against whom or which
enforcement of such waiver is sought, and no waiver of any such breach shall be
construed or deemed to be a waiver of any other or subsequent breach.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which shall be deemed one and the
same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed by duly authorized officers as of the date and year first above
written.
LASERSIGHT TECHNOLOGIES, INC.
By:/s/J. Richard Crowley
--------------------------------------
J. Richard Crowley
Its: President
--------------------------------------
FRANTZ MEDICAL DEVELOPMENT LTD.
By: /s/Mark G. Frantz
--------------------------------------
Mark G. Frantz, President
EXHIBIT 23.1
Independent Auditors' Consent
The Board of Directors
LaserSight Incorporated
We consent to incorporation by reference in the registration statement on Form
S-3 (Registration No. 333-68495) of LaserSight Incorporated, to be filed with
the Securities and Exchange Commission on February 1, 1999 of our report dated
February 27, 1998, relating to the consolidated balance sheets of LaserSight
Incorporated and subsidiaries as of December 31, 1997 and 1996 and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1997, which report
appears in the December 31, 1997 annual report on Form 10-K of LaserSight
Incorporated and to the reference to our firm under the heading "Experts" in the
prospectus.
/s/ KPMG LLP
St. Louis, Missouri
February 1, 1999
